PITTSBURGH, March 6, 2008 /PRNewswire via COMTEX/ -- General Nutrition Centers, Inc. ("GNC" or the "Company"), the largest global specialty retailer of nutritional supplements, today reported its financial results for the quarter and year ended Dec. 31, 2007.
General Nutrition Centers, Inc. is an indirect wholly-owned subsidiary of GNC Parent LLC, which was acquired on March 16, 2007 by affiliates of Ares Management LLC and Ontario Teachers' Pension Plan Board. As such, the financial results presented in this press release represent the aggregate of the financial results of General Nutrition Centers, Inc. from Jan. 1, 2007 through March 15, 2007, predecessor, and the results from March 16, 2007 to Dec. 31, 2007, successor.
For the fourth quarter of 2007, the Company reported consolidated revenues of $376.1 million, an increase of 7.6% over the consolidated revenues of $349.7 million for the same quarter of 2006. Revenue increased in each of the Company's business segments: retail by 3.6%; franchise by 9.1% and manufacturing/wholesale by 41.6%. Same store sales improved 0.2% in domestic company-owned stores and 3.8% in Canadian company-owned stores.
Earnings before income taxes, depreciation and amortization (EBITDA) was $45.6 million for the fourth quarter of 2007, compared to $18.3 million for the same quarter of 2006, an increase of $27.3 million. Included in EBITDA for the fourth quarter of 2006 was $17.8 million of discretionary payments made to stock option holders in conjunction with a distribution made to shareholders in Dec. 2006, and a loss of $0.1 million related to the sale of the Company's Australian manufacturing facility. Excluding these one-time expenses, adjusted EBITDA increased $9.4 million or 26.0% over the adjusted EBITDA of $36.2 million in the same quarter of 2006. Also included in EBITDA for each of the fourth quarters of 2007 and 2006 was $0.6 million of non-cash, stock-based compensation expense.
For the year ended Dec. 31, 2007, the Company reported consolidated revenues of $1.553 billion, an increase of 4.4% over the consolidated revenues of $1.487 billion for the same period of 2006. Revenue increased in each of the Company's business segments: retail by 4.1%; franchise by 3.8% and manufacturing/ wholesale by 8.3%. Same store sales improved 1.4% in domestic company-owned stores and 8.5% in Canadian company-owned stores.
EBITDA was $125.5 million for 2007, compared to $138.4 million in 2006. Included in 2007, as a result of the acquisition, was $65.3 million of transaction related costs, including $34.6 million of transaction fees and expenses; $15.3 million of compensation expense (including $3.8 million of non-cash, stock-based compensation resulting from the cancellation of all outstanding stock options), and $15.4 million of non-cash purchase accounting adjustments included in cost of sales. Included in EBITDA in 2006 was $22.6 million of discretionary payments made in conjunction with distributions to shareholders in March 2006 and Dec. 2006 and a loss of $1.2 million related to the sale of the Company's Australian manufacturing facility. Excluding these one-time items, adjusted EBITDA increased $28.6 million or 17.6% to $190.8 million in 2007, compared to $162.2 million in 2006. Also included in EBITDA in 2007 and 2006 was $2.2 million and $2.5 million, respectively, of non-cash, stock-based compensation expense.
EBITDA and adjusted EBITDA are non-GAAP financial measures within the meaning of the Securities and Exchange Commission's Regulation G. Management has included this information because it believes it represents a more effective means by which to measure the Company's operating performance. This press release contains a reconciliation of the non-GAAP measure to the financial measure calculated and presented in accordance with GAAP which is most directly comparable to the applicable non-GAAP financial measure.
GNC, headquartered in Pittsburgh, Pa., is the largest global specialty retailer of nutritional products; including vitamin, mineral, herbal and other specialty supplements and sports nutrition, diet and energy products. GNC has more than 4,900 retail locations throughout the United States (including 978 franchise and 1,358 Rite Aid store-within-a-store locations) and franchise operations in 49 international markets. The company -- which is dedicated to helping consumers Live Well -- also offers products and product information online at http://www.gnc.com/.
This release contains certain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 with respect to our financial condition, results of operations and business that is not historical information. Forward-looking statements can be identified by the use of terminology such as "subject to," "believes," "anticipates," "plans," "expects," "intends," "estimates," "projects," "may," "will," "should," "can," the negatives thereof, variations thereon and similar expressions, or by discussions of strategy. GNC believes there is a reasonable basis for our expectations and beliefs, but they are inherently uncertain, we may not realize our expectations and our beliefs may not prove correct. We undertake no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future events or otherwise. Actual results could differ materially from those described or implied by such forward-looking statements. Factors that may materially affect such forward- looking statements include, among others:
-- significant competition in our industry;
-- unfavorable publicity or consumer perception of our products;
-- the incurrence of material products liability and product recall
-- costs of compliance and our failure to comply with governmental
-- the failure of our franchisees to conduct their operations profitably
and limitations on our ability to terminate or replace under-
-- economic, political and other risks associated with our international
-- our failure to keep pace with the demands of our customers for new
products and services;
-- the lack of long-term experience with human consumption of some of our
products with innovative ingredients;
-- disruptions in our manufacturing system or losses of manufacturing
-- increases in the frequency and severity of insurance claims,
particularly for claims for which we are self-insured;
-- loss or retirement of key members of management;
-- increases in the cost of borrowings and unavailability of additional
debt or equity capital;
-- the impact of our substantial indebtedness on our operating income and
our ability to grow;
-- the failure to adequately protect or enforce our intellectual property
rights against competitors;
-- changes in applicable laws relating to our franchise operations; and
-- our inability to expand our franchise operations to attract new