Segment Information

12 Months Ended

Sep. 30, 2014

Segment Information

Segment Information

20.    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.

        All of 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 in the United States. This segment also sells products to independent pharmacies, health food stores, the military and other retailers.

• European Retail—This segment generates revenue through its 755 Holland & Barrett stores (including franchised stores in the following countries: 29 in China, 28 in Singapore, 11 in United Arab Emirates, 9 in Cyprus, four in Malta and one in each of Gibraltar and Iceland), 146 De Tuinen stores (including 6 franchised locations) in the Netherlands, 53 GNC branded UK stores, 47 Nature's Way stores in Ireland and 15 Essenza stores in Belgium, as well as internet-based sales from www.hollandandbarrett.com, www.hollandandbarrett.co.uk, www.hollandandbarrett.ie, 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 the internet 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 414 owned and operated Vitamin World stores selling proprietary brand and third-party products, as well as internet-based sales from www.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 2014:
Net sales	$	1,879,481	$	850,797	$	250,224		$	225,276		$	3,205,778	$	—		$	3,205,778
Income (loss) from operations(1)		177,069		191,207		(141,660	)		(26,975	)		199,641		(96,901	)		102,740
Depreciation and amortization		36,092		18,048		11,319			3,344			68,803		37,754			106,557
Capital expenditures		482		42,315		1,456			14,095			58,348		46,859			105,207
Fiscal 2013:
Net sales	$	1,938,921	$	743,861	$	246,731		$	233,528		$	3,163,041	$	—		$	3,163,041
Income (loss) from operations(2)		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

(1)	Includes charges of $171,590 and $35,744 for the Direct Response/E-Commerce and North American Retail segments, respectively, relating to the goodwill and intangible asset impairment charges (see Note 8).
(2)	Includes charges of $32,695 relating to the facility restructuring (see Note 3) and $12,000 relating to the accrual of an anticipated legal settlement (see Note 12).

        Total assets by segment as of September 30 are as follows:

	2014		2013
Reportable Business Segments:
Wholesale	$	2,581,069	$	2,553,857
European Retail		948,010		924,979
Direct Response / E-Commerce		512,642		692,685
North American Retail		107,442		119,395
Total Reportable Business Segments:		4,149,163		4,290,916
Corporate / Manufacturing		728,559		782,400
Consolidated assets	$	4,877,722	$	5,073,316

        Total net sales by location of customer for the fiscal years ended September 30, are as follows:

	2014		2013		2012
United States	$	1,934,668	$	2,024,178	$	1,938,751
United Kingdom		767,173		675,378		641,752
Canada		118,814		129,476		111,047
Netherlands		116,107		98,673		84,167
Ireland		40,235		36,655		33,341
Other foreign countries		228,781		198,681		190,675
Consolidated net sales	$	3,205,778	$	3,163,041	$	2,999,733

        Long-lived assets—Property, plant and equipment as of September 30, are as follows:

	2014		2013
United States	$	399,296	$	397,464
United Kingdom		146,814		124,666
Netherlands		15,778		13,768
Ireland		4,454		5,486
Canada		10,687		11,752
Other foreign countries		20,173		18,393
Consolidated long-lived assets	$	597,202	$	571,529

        Approximately 35%, 32% and 31% of our net sales for the fiscal years ended September 30, 2014, 2013 and 2012, 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:

	2014			2013
Total Assets		27	%		26	%
Total Liabilities		6	%		3	%