Segment Information

12 Months Ended

Sep. 30, 2013

Segment Information

Segment Information

23.    Segment Information

        We are organized by 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/Manufacturing.

        Effective October 1, 2012, we reorganized our segments to better align them with how we currently review operating results for the purposes of allocating resources and managing performance. After this reorganization, we continue to have four reportable segments as follows: 1) Wholesale, 2) European Retail, 3) Direct Response/E-Commerce and 4) North American Retail. In accordance with ASC 280, Segment Reporting, we have reclassified all prior period amounts to conform to our new reportable segment presentation. The reclassification of prior period amounts did not have a material impact on the Company's financial statements, and were as follows:

• •

  The European Retail Segment now includes the results of the European direct response/e-commerce business, which was previously reported in the Direct Response/E-Commerce segment.

  •

  The North American Retail segment now includes the results of Vitamin World's e-commerce business, which was previously reported in the Direct Response/E-Commerce segment.

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

• •

  Wholesale—This segment sells products 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 736 Holland & Barrett stores (including franchised stores in the following countries: 29 in China, 23 in Singapore, seven in each of United Arab Emirates and Cyprus, four in Malta and one in each of Gibraltar and Iceland), 57 GNC (UK) stores in the U.K., 127 De Tuinen stores (including seven franchised locations) in the Netherlands, 47 Nature's Way stores in Ireland and 13 Essenza stores in Belgium which were acquired in June of 2013, as well as internet-based sales from www.hollandandbarret.com, www.detuinen.nl and www.gnc.co.uk. Such revenue 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 (www.puritan.com) under the Puritan's Pride tradename. Catalogs are strategically mailed to customers who order by mail, internet or phone.

  •

  North American Retail—This segment generates revenue through its 421 owned and operated Vitamin World stores selling proprietary brand and third- party products, as well as internet based sales fromwww.vitaminworld.com.

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

	Total Reportable Business Segments
	Wholesale		European Retail		Direct Response/ E-Commerce		North American Retail		Total		Corporate / Manufacturing			Consolidated
Fiscal 2013:
Net sales	$	1,938,921	$	743,861	$	246,731	$	233,528	$	3,163,041	$	—		$	3,163,041
Income (loss) from operations		231,812		170,479		39,104		24,538		465,933		(136,168	)		329,765
Depreciation and amortization		36,517		14,320		10,137		2,708		63,682		46,954			110,636
Capital expenditures		971		27,198		4,411		5,557		38,137		91,083			129,220
Fiscal 2012:
Net sales	$	1,826,780	$	699,675	$	239,409	$	233,869	$	2,999,733	$	—		$	2,999,733
Income (loss) from operations		241,504		157,540		46,179		26,758		471,981		(77,611	)		394,370
Depreciation and amortization		39,692		13,988		10,504		3,196		67,380		34,891			102,271
Capital expenditures		804		22,428		131		596		23,959		62,355			86,314
Fiscal 2011:
Net sales	$	1,764,755	$	653,630	$	229,774	$	216,268	$	2,864,427	$	—		$	2,864,427
Income (loss) from operations		283,775		125,233		51,060		16,694		476,762		(239,441	)		237,321
Depreciation and amortization		38,840		13,288		10,438		3,197		65,763		33,912			99,675
Capital expenditures		652		19,338		40		955		20,985		23,014			43,999

        Total assets by segment as of September 30, 2013 and 2012 are as follows:

	2013		2012
Reportable Business Segments:
Wholesale	$	2,553,857	$	2,531,145
European Retail		924,979		864,231
Direct Response / E-Commerce		692,685		772,240
North American Retail		119,395		91,510
Total Reportable Business Segments:		4,290,916		4,259,126
Corporate / Manufacturing		782,400		798,121
Consolidated assets	$	5,073,316	$	5,057,247

        Total net sales by location of customer are as follows:

	2013		2012		2011
United States	$	2,024,178	$	1,938,751	$	1,898,535
United Kingdom		675,378		641,752		596,927
Canada		129,476		111,047		95,639
Netherlands		98,673		84,167		80,221
Ireland		36,655		33,341		33,774
Other foreign countries		198,681		190,675		159,331
Consolidated net sales	$	3,163,041	$	2,999,733	$	2,864,427

        Long-lived assets—Property, plant and equipment

	2013		2012
United States	$	397,464	$	358,648
United Kingdom		124,666		113,929
Netherlands		13,768		10,101
Ireland		5,486		4,782
Canada		11,752		12,503
Other foreign countries		18,393		12,716
Consolidated long-lived assets	$	571,529	$	512,679

        Approximately 32%, 31% and 32% of our net sales for the fiscal years ended September 30, 2013, 2012 and 2011, respectively, were denominated in currencies other than U.S. dollars, principally British pounds, euros, Renminbi and Canadian dollars. A significant weakening of such currencies versus the U.S. dollar could have a material adverse effect on the Company, as this would result in a decrease in our consolidated operating results.

        Foreign subsidiaries accounted for the following percentages of total assets and total liabilities as of September 30, 2013 and 2012:

	2013			2012
Total Assets		26	%		25	%
Total Liabilities		5	%		5	%