GNC Corporation Reports Third Quarter and First Nine Months 2005 Financial Results

PITTSBURGH, Nov 03, 2005 /PRNewswire via COMTEX/ -- GNC Corporation ("GNC" or the "Company"), the largest global specialty retailer of nutritional supplements, today reported its financial results for the quarter and nine-month period ended September 30, 2005.

The Company reported consolidated revenues of $322.6 million for the third quarter ended September 30, 2005 compared to consolidated revenues of $323.1 million for the same quarter of the prior year, a slight decrease of 0.2%. The Company was able to offset a 32.4% decline in the diet category in our domestic company-owned locations with gains in sales of sports nutrition, herbs and vitamin products. For the third quarter of 2005, same store sales in domestic company-owned stores increased 1.0%. Same store sales in our domestic franchise stores declined 4.7% in the quarter.

EBITDA of $25.5 million for the third quarter ended September 30, 2005, was negatively affected by $1.9 million of unusual costs, including $1.0 million from a legal settlement relating to a third-party product lawsuit and hurricane related losses of $0.9 million. EBITDA for the third quarter of 2004 was $31.6 million which included a $1.3 million charge for a withdrawn securities offering.

Net Income for the third quarter ended September 30, 2005, was $3.2 million compared to $8.5 million for the third quarter of 2004.

Revenue for the nine months ended September 30, 2005, was $992.3 million compared to $1,043.4 million for the same period in 2004. Our domestic same store sales decreased for the first nine months of 2005 by 4.3% in our company-owned locations and 6.5% in our franchise locations. These declines in same store sales resulted in a $51.1 million decrease in total revenue for the nine months ended September 30, 2005. Total sales in our diet category were down 34.6% or $55.2 million in our domestic company-owned locations and were partially offset by gains in the sports nutrition, herbs and vitamin categories.

EBITDA for the nine months ended September 30, 2005 was $84.5 million compared to $115.4 million for the same period in 2004. Net Income for the nine months ended September 30, 2005 was $13.0 million, compared to $39.1 million for the same period in 2004.

For the nine months ended September 30, 2005, the Company generated $34.7 million in cash from operating activities, with ending cash on the consolidated balance sheet of $62.4 million. Additionally, in January 2005, the Company utilized $39.4 million of cash to repay a portion of its Senior Credit Facility in conjunction with the issuance of $150.0 million of 8-5/8% Senior Notes. At September 30, 2005, the Company had $473.9 million of total debt outstanding, with its revolver undrawn.

Bruce Barkus, President and CEO of GNC comments, "Our team continues to focus on the business strategies established at the beginning of the year. We are delighted to announce a 1.0% positive comp in our domestic company-owned stores. The strength of our core business in sports, herbs and vitamins has clearly offset the continuing challenges we face in diet."

As of September 30, 2005, GNC Corporation, headquartered in Pittsburgh, Pennsylvania, operated 2,633 company-owned stores in the U.S. and Canada and had 1,212 domestic franchised locations, 1,114 Rite Aid "store-within-a-store" locations and 822 international franchised locations. GNC is the largest global specialty retailer of nutritional supplements, which includes vitamin, mineral and herbal supplements (VMHS), sports nutrition products, diet and energy products and other wellness products.

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;
- costs of compliance and our failure to comply with governmental
regulations;
- the failure of our franchisees to conduct their operations profitably
and limitations on our ability to terminate or replace under-performing
franchisees;
- economic, political and other risks associated with our international
operations;
- our failure to keep pace with the demands of our customers for new
products and services;
- disruptions in our manufacturing system or losses of manufacturing
certifications;
- 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; and
- the failure to adequately protect or enforce our intellectual property
rights against competitors.

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