Segment Information

9 Months Ended

Jun. 30, 2012

Segment Information

Segment Information

10. Segment Information

        We are organized by sales segments on a worldwide basis. We evaluate performance based on a number of factors; however, the primary measures of performance are the net sales and income or loss from operations (before corporate allocations) of each segment, as these are the key performance indicators that we review. Operating income or loss for each segment does not include the impact of any intercompany transfer pricing mark-up, corporate general and administrative expenses, interest expense and other miscellaneous income/expense items. Corporate general and administrative expenses include, but are not limited to, human resources, legal, finance, and various other corporate level activity related expenses. Such unallocated expenses remain within Corporate.

        All our products fall into one or more of these four segments:

• •

  Wholesale—This segment sells products worldwide under various brand names and third-party private labels, each targeting specific market groups which include virtually all major mass merchandisers, club stores, drug store chains and supermarkets. This segment also sells products to independent pharmacies, health food stores, the military and other retailers.

  •

  European Retail—This segment generates revenue through its 676 Holland & Barrett stores (including 10 franchised stores in Singapore, six franchised stores in Cyprus, three franchised stores in both Malta and United Arab Emirates and one franchised store in Hungary), 189 Julian Graves stores, which have subsequently been placed into UK Administration (See Note 1), and 51 GNC (UK) stores in the U.K., 106 De Tuinen stores (including 10 franchised locations) in the Netherlands and 42 Nature's Way stores in Ireland. Our revenue generated from this segment consists of sales of proprietary brand and third-party products as well as franchise fees.

  •

  Direct Response/E-Commerce—This segment generates revenue through the sale of proprietary brand and third-party products primarily through mail order catalog and internet. Catalogs are strategically mailed to customers who order by mail, internet, or by phone.

  •

  North American Retail—This segment generates revenue through its 430 owned and operated Vitamin World stores selling proprietary brand and third-party products and through its Canadian operation of 80 owned and operated Le Naturiste stores.

        The following table represents key financial information of our business segments:

	Wholesale		European Retail(2)		Direct Response/ E-Commerce		North American Retail		Corporate/ Manufacturing(1)			Consolidated
Three months ended June 30, 2012:
Net sales	$	480,137	$	182,876	$	76,198	$	60,268	$	—		$	799,479
Income (loss) from operations		74,043		19,297		16,339		6,092		(21,538	)		94,233
Depreciation and amortization		9,911		4,051		2,674		816		8,711			26,163
Capital expenditures		131		6,955		81		215		12,518			19,900
Three months ended June 30, 2011:
Net sales	$	458,460	$	179,970	$	67,853	$	57,055	$	—		$	763,338
Income (loss) from operations		86,589		31,185		16,880		4,910		(21,506	)		118,058
Depreciation and amortization		10,251		4,039		2,661		823		7,985			25,759
Capital expenditures		81		3,058		—		114		3,465			6,718
Nine months ended June 30, 2012:
Net sales	$	1,373,560	$	548,870	$	207,976	$	178,141	$	—		$	2,308,547
Income (loss) from operations		180,355		92,269		43,291		14,576		(59,249	)		271,242
Depreciation and amortization		29,726		12,027		8,024		2,745		25,960			78,482
Capital expenditures		632		16,228		81		503		24,131			41,575
Nine months ended June 30, 2011:
Net sales	$	1,319,527	$	530,526	$	193,576	$	168,414	$	—		$	2,212,043
Income (loss) from operations		223,213		88,797		45,936		8,823		(223,043	)		143,726
Depreciation and amortization		28,888		11,906		7,987		2,481		25,310			76,572
Capital expenditures		422		15,044		27		895		19,093			35,481

(1)

Income from operations for the nine months ended June 30, 2011 included a fair value adjustment to our inventory of $122,104, as well as Merger expenses relating to the Acquisition of $614 and $44,479 for the three and nine months ended June 30, 2011, respectively. There were no Merger expenses recorded following our fiscal year end September 30, 2011.

(2)

Income from operations for the three and nine months ended June 30, 2012 included an impairment charge of $20,106 relating to Julian Graves Limited (See note 1).

• Total assets by segment:

	June 30, 2012		September 30, 2011
Wholesale	$	2,519,623	$	2,527,402
European Retail		904,660		883,892
Direct Response / E-Commerce		773,700		781,464
North American Retail		96,866		99,466
Corporate / Manufacturing(1)		652,286		803,332
Consolidated assets	$	4,947,135	$	5,095,556

(1)

Total assets decreased for the Corporate / Manufacturing segment as a result of the $225,000 prepayment of the term loan B-1.