Document_and_Entity_Informatio
Document and Entity Information | 9 Months Ended | |
Sep. 30, 2014 | Oct. 24, 2014 | |
Document and Entity Information | ' | ' |
Entity Registrant Name | 'GNC HOLDINGS, INC. | ' |
Entity Central Index Key | '0001502034 | ' |
Document Type | '10-Q | ' |
Document Period End Date | 30-Sep-14 | ' |
Amendment Flag | 'false | ' |
Current Fiscal Year End Date | '--12-31 | ' |
Entity Current Reporting Status | 'Yes | ' |
Entity Filer Category | 'Large Accelerated Filer | ' |
Entity Common Stock, Shares Outstanding | ' | 88,862,489 |
Document Fiscal Year Focus | '2014 | ' |
Document Fiscal Period Focus | 'Q3 | ' |
Consolidated_Balance_Sheets
Consolidated Balance Sheets (USD $) | Sep. 30, 2014 | Dec. 31, 2013 |
In Thousands, unless otherwise specified | ||
Current assets: | ' | ' |
Cash and cash equivalents | $148,243 | $226,217 |
Receivables, net | 139,719 | 144,833 |
Inventories (Note 3) | 592,793 | 547,916 |
Prepaids and other current assets | 37,909 | 47,081 |
Total current assets | 918,664 | 966,047 |
Long-term assets: | ' | ' |
Goodwill (Note 4) | 673,583 | 666,346 |
Brands (Note 4) | 720,000 | 720,000 |
Other intangible assets, net (Note 4) | 135,904 | 142,774 |
Property, plant and equipment, net | 230,817 | 206,754 |
Other long-term assets | 42,015 | 38,426 |
Total long-term assets | 1,802,319 | 1,774,300 |
Total assets | 2,720,983 | 2,740,347 |
Current liabilities: | ' | ' |
Accounts payable | 147,805 | 135,164 |
Current portion, long-term debt (Note 5) | 4,793 | 5,443 |
Deferred revenue and other current liabilities | 113,078 | 106,459 |
Total current liabilities | 265,676 | 247,066 |
Long-term liabilities: | ' | ' |
Long-term debt (Note 5) | 1,338,605 | 1,341,656 |
Deferred tax liabilities, net | 285,447 | 282,377 |
Other long-term liabilities | 60,510 | 53,669 |
Total long-term liabilities | 1,684,562 | 1,677,702 |
Total liabilities | 1,950,238 | 1,924,768 |
Commitments and Contingencies (Note 7) | ' | ' |
Common stock, $0.001 par value, 300,000 shares authorized: | ' | ' |
Class A, 113,912 shares issued and 89,587 shares outstanding and 24,325 shares held in treasury at September 30, 2014 and 112,961 shares issued and 93,989 shares outstanding and 18,972 shares held in treasury at December 31, 2013 | 113 | 112 |
Paid-in-capital | 875,721 | 847,886 |
Retained earnings | 860,818 | 700,108 |
Treasury stock, at cost | -964,827 | -734,482 |
Accumulated other comprehensive income | -1,080 | 1,955 |
Total stockholders’ equity | 770,745 | 815,579 |
Total liabilities and stockholders’ equity | $2,720,983 | $2,740,347 |
Consolidated_Balance_Sheets_Pa
Consolidated Balance Sheets (Parenthetical) (USD $) | Sep. 30, 2014 | Dec. 31, 2013 |
Common stock, par value (in dollars per share) | $0.00 | $0.00 |
Common stock, shares authorized | 300,000,000 | 300,000,000 |
Class A Common Stock | ' | ' |
Common stock, shares issued | 113,912,000 | 112,961,000 |
Common stock, shares outstanding | 89,587,000 | 93,989,000 |
Common stock, shares held in treasury | 24,325,000 | 18,972,000 |
Consolidated_Statements_of_Inc
Consolidated Statements of Income (USD $) | 3 Months Ended | 9 Months Ended | ||
In Thousands, except Per Share data, unless otherwise specified | Sep. 30, 2014 | Sep. 30, 2013 | Sep. 30, 2014 | Sep. 30, 2013 |
Income Statement [Abstract] | ' | ' | ' | ' |
Revenue | $656,326 | $674,501 | $2,005,999 | $2,015,226 |
distribution and occupancy | 408,578 | 421,311 | 1,245,953 | 1,250,191 |
Gross profit | 247,748 | 253,190 | 760,046 | 765,035 |
Compensation and related benefits | 82,331 | 79,283 | 245,896 | 239,932 |
Advertising and promotion | 20,319 | 16,751 | 59,408 | 53,473 |
Other selling, general and administrative | 32,814 | 31,798 | 105,615 | 98,182 |
Management realignment (Note 2) | 7,473 | 0 | 7,473 | 0 |
International franchise receivable reserves (Note 2) | 4,446 | 163 | 4,446 | 363 |
Reversal of contingent purchase price (Note 2) | -4,313 | 0 | -4,313 | 0 |
Other (income) expense, net (Note 2) | -4,047 | -779 | -9,510 | -1,080 |
Operating income | 108,725 | 125,974 | 351,031 | 374,165 |
Interest expense, net (Note 5) | 11,781 | 11,237 | 34,987 | 33,353 |
Income before income taxes | 96,944 | 114,737 | 316,044 | 340,812 |
Income tax expense (Note 10) | 32,630 | 41,704 | 111,940 | 123,448 |
Net income | $64,314 | $73,033 | $204,104 | $217,364 |
Earnings per share: | ' | ' | ' | ' |
Basic (in dollars per share) | $0.72 | $0.77 | $2.24 | $2.24 |
Diluted (in dollars per share) | $0.71 | $0.76 | $2.23 | $2.22 |
Weighted average common shares outstanding: | ' | ' | ' | ' |
Basic (in shares) | 89,814 | 95,183 | 91,056 | 97,189 |
Diluted (in shares) | 90,233 | 96,078 | 91,635 | 98,096 |
Dividends declared per share: (in dollars per share) | $0.16 | $0.15 | $0.48 | $0.45 |
Consolidated_Statements_of_Com
Consolidated Statements of Comprehensive Income (USD $) | 3 Months Ended | 9 Months Ended | ||
In Thousands, unless otherwise specified | Sep. 30, 2014 | Sep. 30, 2013 | Sep. 30, 2014 | Sep. 30, 2013 |
Statement of Comprehensive Income [Abstract] | ' | ' | ' | ' |
Net income | $64,314 | $73,033 | $204,104 | $217,364 |
Other comprehensive (loss) income: | ' | ' | ' | ' |
Foreign currency translation adjustments | -3,851 | 428 | -3,035 | -878 |
Comprehensive income | $60,463 | $73,461 | $201,069 | $216,486 |
Consolidated_Statements_of_Sto
Consolidated Statements of Stockholders' Equity (USD $) | Total | Treasury Stock | Paid-in- Capital | Retained Earnings | Accumulated Other Comprehensive Income/(Loss) | Class A Common Stock | Class A Common Stock |
In Thousands, except Share data, unless otherwise specified | USD ($) | USD ($) | USD ($) | USD ($) | USD ($) | Common Stock | |
USD ($) | |||||||
Balance (in usd) at Dec. 31, 2012 | $882,039 | ($423,900) | $810,094 | $492,687 | $3,047 | ' | $111 |
Balance (in shares) at Dec. 31, 2012 | ' | ' | ' | ' | ' | ' | 99,244,000 |
Increase (Decrease) in Stockholders' Equity | ' | ' | ' | ' | ' | ' | ' |
Comprehensive income (loss) | 216,486 | ' | ' | 217,364 | -878 | ' | ' |
Repurchase of treasury stock (in shares) | ' | ' | ' | ' | ' | ' | -5,328,000 |
Repurchase of treasury stock | -238,406 | -238,406 | ' | ' | ' | ' | ' |
Common stock dividends | -43,344 | ' | ' | -43,344 | ' | ' | ' |
Conversions to common stock (in shares) | ' | ' | ' | ' | ' | ' | 959,000 |
Conversions to common stock | 21,245 | ' | 21,244 | ' | ' | ' | 1 |
Non-cash stock-based compensation | 5,861 | ' | 5,861 | ' | ' | ' | ' |
Balance (in usd) at Sep. 30, 2013 | 843,881 | -662,306 | 837,199 | 666,707 | 2,169 | ' | 112 |
Balance (in shares) at Sep. 30, 2013 | ' | ' | ' | ' | ' | ' | 94,875,000 |
Balance (in usd) at Dec. 31, 2013 | 815,579 | -734,482 | 847,886 | 700,108 | 1,955 | ' | 112 |
Balance (in shares) at Dec. 31, 2013 | ' | ' | ' | ' | ' | 93,989,000 | 93,989,000 |
Increase (Decrease) in Stockholders' Equity | ' | ' | ' | ' | ' | ' | ' |
Comprehensive income (loss) | 201,069 | ' | ' | 204,104 | -3,035 | ' | ' |
Repurchase of treasury stock (in shares) | ' | ' | ' | ' | ' | ' | -5,326,000 |
Repurchase of treasury stock | -230,345 | -230,345 | ' | ' | ' | ' | ' |
Common stock dividends | -43,394 | ' | ' | -43,394 | ' | ' | ' |
Conversions to common stock (in shares) | ' | ' | ' | ' | ' | ' | 924,000 |
Conversions to common stock | 22,691 | ' | 22,690 | ' | ' | ' | 1 |
Non-cash stock-based compensation | 5,145 | ' | 5,145 | ' | ' | ' | ' |
Balance (in usd) at Sep. 30, 2014 | $770,745 | ($964,827) | $875,721 | $860,818 | ($1,080) | ' | $113 |
Balance (in shares) at Sep. 30, 2014 | ' | ' | ' | ' | ' | 89,587,000 | 89,587,000 |
Consolidated_Statements_of_Cas
Consolidated Statements of Cash Flows (USD $) | 9 Months Ended | |
In Thousands, unless otherwise specified | Sep. 30, 2014 | Sep. 30, 2013 |
CASH FLOWS FROM OPERATING ACTIVITIES: | ' | ' |
Net income | $204,104 | $217,364 |
Adjustments to reconcile net income to net cash provided by operating activities: | ' | ' |
Depreciation and amortization expense | 41,418 | 37,922 |
Amortization of debt costs | 1,343 | 1,887 |
Increase in provision for inventory losses | 16,129 | 13,315 |
Gain on sale of corporate owned stores to franchisees | -9,662 | -946 |
International franchise receivable reserves (Note 2) | 4,446 | 363 |
Reversal of contingent purchase price (Note 2) | -4,313 | 0 |
Decrease (increase) in receivables | 1,288 | -23,567 |
Increase in inventory | -62,513 | -66,304 |
Decrease in prepaids and other current assets | 9,898 | 4,217 |
Increase in accounts payable | 8,863 | 36,091 |
Increase (decrease) in deferred revenue and other current liabilities | 8,518 | -13,021 |
Other operating activities | 18,495 | 8,827 |
Net cash provided by operating activities | 238,014 | 216,148 |
CASH FLOWS FROM INVESTING ACTIVITIES: | ' | ' |
Capital expenditures | -55,236 | -33,631 |
Cash paid for acquisitions, net of cash acquired | -6,402 | 0 |
Other investing activities | 631 | -633 |
Net cash used in investing activities | -61,007 | -34,264 |
CASH FLOWS FROM FINANCING ACTIVITIES: | ' | ' |
Dividends paid to shareholders | -43,287 | -43,309 |
Payments on long-term debt | -4,243 | -2,850 |
Proceeds from exercised stock options | 20,186 | 10,282 |
Tax benefit from exercise of stock options | 2,504 | 10,963 |
Repurchase of treasury stock | -230,345 | -238,406 |
Net cash used in financing activities | -255,185 | -263,320 |
Effect of exchange rate on cash and cash equivalents | 204 | 573 |
Net decrease in cash and cash equivalents | -77,974 | -80,863 |
Beginning balance, cash and cash equivalents | 226,217 | 158,541 |
Ending balance, cash and cash equivalents | $148,243 | $77,678 |
NATURE_OF_BUSINESS
NATURE OF BUSINESS | 9 Months Ended |
Sep. 30, 2014 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ' |
NATURE OF BUSINESS | ' |
NATURE OF BUSINESS | |
General Nature of Business. GNC Holdings, Inc., a Delaware corporation (“Holdings,” and collectively with its subsidiaries and, unless the context requires otherwise, its and their respective predecessors, the “Company”), is a global specialty retailer of health and wellness products, which include: vitamins, minerals and herbal supplements, sports nutrition products, diet products and other wellness products. | |
The Company is vertically integrated, as its operations consist of purchasing raw materials, formulating and manufacturing products and selling the finished products through its three segments: Retail, Franchising and Manufacturing/Wholesale. Corporate retail store operations are located in the United States, Canada, Puerto Rico and Ireland, which began in 2014 with the acquisition of THSD d/b/a The Health Store ("The Health Store"). In addition, the Company offers products domestically through GNC.com, LuckyVitamin Corp. ("Lucky Vitamin"), www.drugstore.com, and internationally in the United Kingdom, which began in 2013 with the acquisition of Discount Supplements, Ltd. (“Discount Supplements”). Franchise stores are located in the United States and over 50 other countries (including distribution centers where retail sales are made). The Company operates its primary manufacturing facilities in South Carolina and distribution centers in Arizona, Indiana, Pennsylvania and South Carolina. The Company manufactures the majority of its branded products, but also merchandises various third-party products. Additionally, the Company licenses the use of its trademarks and trade names. | |
The processing, formulation, packaging, labeling and advertising of the Company’s products are subject to regulation by various federal agencies, including the Food and Drug Administration (the “FDA”), the Federal Trade Commission, the Consumer Product Safety Commission, the United States Department of Agriculture and the Environmental Protection Agency. These activities are also regulated by various agencies of the states and localities in which the Company’s products are sold. | |
Recent Significant Transactions. In August 2014, the board of directors of Holdings approved a multi-year program to repurchase up to an aggregate of $500.0 million of Holdings' common stock. This replaces the repurchase program established in November 2013. Holdings repurchased $230.3 million of common stock during the nine months ended September 30, 2014 and has utilized $40.0 million of the current repurchase program. | |
In October 2013, the Company acquired Discount Supplements, an online retailer of multi-brand sports nutrition products in the United Kingdom. The aggregate purchase price of Discount Supplements was $33.3 million. | |
On April 17, 2014, the Company acquired The Health Store, a nine store chain based in Dublin, Ireland. The aggregate purchase price of The Health Store was $8.9 million. |
BASIS_OF_PRESENTATION_AND_SUMM
BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 9 Months Ended |
Sep. 30, 2014 | |
Accounting Policies [Abstract] | ' |
BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | ' |
BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |
The accompanying unaudited consolidated financial statements have been prepared in accordance with the rules and regulations of the U.S. Securities and Exchange Commission. The year-end consolidated balance sheet was derived from audited financial statements, but does not include all disclosures required by accounting principles generally accepted in the United States of America (“U.S. GAAP”). These interim consolidated financial statements should be read in conjunction with the consolidated financial statements and notes included in the Company’s audited financial statements in Holdings’ Annual Report on Form 10-K filed for the year ended December 31, 2013. There have been no material changes to the application of significant accounting policies and significant judgments and estimates since December 31, 2013. | |
The accompanying unaudited consolidated financial statements include all adjustments (consisting of a normal and recurring nature) that management considers necessary for a fair statement of financial information for the interim periods. Interim results are not necessarily indicative of the results that may be expected for the remainder of the year ending December 31, 2014. | |
Principles of Consolidation. The consolidated financial statements include the accounts of Holdings and all of its subsidiaries. All material intercompany transactions have been eliminated in consolidation. | |
The Company has no relationships with unconsolidated entities or financial partnerships, such as entities often referred to as structured finance or special purpose entities, which would have been established for the purpose of facilitating off balance sheet arrangements or other contractually narrow or limited purposes. | |
Use of Estimates. The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions. Accordingly, these estimates and assumptions affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the dates of the financial statements, and the reported amounts of revenues and expenses during the reporting periods. Some of the most significant estimates pertaining to the Company include the valuation of inventories, the allowance for doubtful accounts and income taxes. On a regular basis, management reviews its estimates utilizing currently available information, changes in facts and circumstances, historical experience and reasonable assumptions. After such reviews and if deemed appropriate, those estimates are adjusted accordingly. Actual results could differ from those estimates. | |
Management realignment. For the three and nine months ended September 30, 2014, the Company incurred $7.5 million of expenses associated with the changes among the executive leadership team. These expenses related principally to $5.7 million in executive severance, $0.5 million of accelerated non-cash stock-based compensation expense net of forfeitures, and $1.3 million for the recruiting and hiring of new executive leadership. | |
International franchise receivable reserve. For the three and nine months ended September 30, 2014, the Company recorded a $4.4 million reserve against receivables with its international franchisees. An allowance for international franchisees is calculated based on unpaid, non-collateralized amounts associated with their receivable balance. The collectability of receivables from certain international franchisees has become uncertain due principally to the current financial condition of our franchisees. | |
Reversal of contingent purchase price. During the three and nine months ended September 30, 2014, the Company reversed $4.3 million of contingent purchase price associated with Discount Supplements based on changes in the probability that all required targets of the purchase agreement would be met ("Reversal of Contingent Purchase Price"). | |
Other (Income) Expense, net. Other (income) expense, which includes the gain on sale of corporate owned stores to franchisees and foreign currency (gain) loss, was a gain of $4.0 million and $9.5 million for the three and nine months ended September 30, 2014, respectively, compared to a gain of $0.8 million and $1.1 million for the same periods in 2013, respectively. | |
Revision. Certain amounts in the consolidated financial statements of prior year periods have been revised to conform to the current period's presentation. Specifically, the gain resulting from the sale of Company-owned stores is presented in "Other (income) expense, net" on the consolidated statements of income and the related cash proceeds are presented in "Other investing activities" on the consolidated statements of cash flows. These revisions are not material to any of the prior year periods. | |
Recent Accounting Pronouncements | |
In July 2013, the Financial Accounting Standards Board ("FASB") issued accounting standard ASU 2013-11, regarding the presentation of an unrecognized tax benefit when a net operating loss carryforward, a similar tax loss, or a tax credit carryforward exists. This standard requires entities to present an unrecognized tax benefit as a reduction of a deferred tax asset for a net operating loss (“NOL”) or tax credit carryforward whenever the NOL or tax credit carryforward would be available to reduce the additional taxable income or tax due if the tax position is disallowed. This accounting standard update requires entities to assess whether to net the unrecognized tax benefit with a deferred tax asset as of the reporting date. This guidance is effective for fiscal years beginning after December 15, 2013, with early adoption permitted. The Company adopted this guidance during the first quarter of 2014. The adoption of this guidance did not have a material impact on the Company’s consolidated financial statements. | |
In May 2014, the FASB issued accounting standard ASU 2014-09, which updates revenue recognition guidance relating to contracts with customers. This standard states that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. This standard is effective for fiscal years beginning after December 15, 2016. The Company is currently evaluating the impact this guidance will have on the consolidated financial statements. | |
In June 2014, the FASB issued accounting standard ASU 2014-12, which updates guidance on performance stock awards. The update states that for any award that has a performance target that affects vesting and that could be achieved after the requisite period, that performance target should still be treated as a performance condition. This standard is effective for fiscal years beginning after December 15, 2015. The Company is currently evaluating the impact this guidance will have on the consolidated financial statements. |
INVENTORIES
INVENTORIES | 9 Months Ended | |||||||
Sep. 30, 2014 | ||||||||
Inventory Disclosure [Abstract] | ' | |||||||
INVENTORIES | ' | |||||||
INVENTORIES | ||||||||
The net carrying value of inventories consisted of the following: | ||||||||
30-Sep-14 | 31-Dec-13 | |||||||
(unaudited) | ||||||||
(in thousands) | ||||||||
Finished product ready for sale | $ | 512,887 | $ | 458,366 | ||||
Work-in-process, bulk product and raw materials | 72,558 | 81,575 | ||||||
Packaging supplies | 7,348 | 7,975 | ||||||
Total | $ | 592,793 | $ | 547,916 | ||||
GOODWILL_AND_INTANGIBLE_ASSETS
GOODWILL AND INTANGIBLE ASSETS, NET | 9 Months Ended | ||||||||||||||||||||||||||
Sep. 30, 2014 | |||||||||||||||||||||||||||
Goodwill and Intangible Assets Disclosure [Abstract] | ' | ||||||||||||||||||||||||||
GOODWILL AND INTANGIBLE ASSETS, NET | ' | ||||||||||||||||||||||||||
GOODWILL AND INTANGIBLE ASSETS, NET | |||||||||||||||||||||||||||
For the nine months ended September 30, 2014 and 2013, the Company acquired 22 and 13 franchise stores, respectively. These acquisitions were accounted for using the acquisition method of accounting and the Company recorded the acquired inventory, fixed assets, franchise rights and goodwill, with an applicable reduction to receivables and cash. The total purchase price associated with these acquisitions was $3.1 million and $2.1 million, respectively, of which $1.6 million and $1.3 million, respectively, was paid in cash. | |||||||||||||||||||||||||||
On April 17, 2014, the Company acquired the assets and assumed the liabilities of The Health Store, which was accounted for as a business combination. The total purchase price for this acquisition was approximately $8.9 million. Of the purchase price, $6.9 million was allocated to goodwill, $0.8 million to amortizable intangibles, and $0.3 million to working capital. | |||||||||||||||||||||||||||
The following table summarizes the Company’s goodwill activity: | |||||||||||||||||||||||||||
Retail | Franchising | Manufacturing/ | Total | ||||||||||||||||||||||||
Wholesale | |||||||||||||||||||||||||||
(in thousands) | |||||||||||||||||||||||||||
Balance at December 31, 2013 | 346,202 | $ | 117,303 | $ | 202,841 | $ | 666,346 | ||||||||||||||||||||
Acquired franchise stores | 1,328 | — | — | 1,328 | |||||||||||||||||||||||
Acquisition of The Health Store | 6,853 | — | — | 6,853 | |||||||||||||||||||||||
Translation effect of exchange rates | (944 | ) | — | — | (944 | ) | |||||||||||||||||||||
Balance at September 30, 2014 (unaudited) | $ | 353,439 | $ | 117,303 | $ | 202,841 | $ | 673,583 | |||||||||||||||||||
Intangible assets other than goodwill consisted of the following: | |||||||||||||||||||||||||||
Retail | Franchise | Operating | Other | Total | |||||||||||||||||||||||
Brand | Brand | Agreements | Intangibles | ||||||||||||||||||||||||
(in thousands) | |||||||||||||||||||||||||||
Balance at December 31, 2013 | $ | 500,000 | $ | 220,000 | $ | 125,665 | $ | 17,109 | $ | 862,774 | |||||||||||||||||
Acquired franchise stores | — | — | — | 635 | 635 | ||||||||||||||||||||||
Acquisition of The Health Store | — | — | — | 788 | 788 | ||||||||||||||||||||||
Amortization expense | — | — | (4,990 | ) | (3,155 | ) | (8,145 | ) | |||||||||||||||||||
Translation effect of exchange rates | — | — | — | (148 | ) | (148 | ) | ||||||||||||||||||||
Balance at September 30, 2014 (unaudited) | $ | 500,000 | $ | 220,000 | $ | 120,675 | $ | 15,229 | $ | 855,904 | |||||||||||||||||
The following table reflects the gross carrying amount and accumulated amortization for each major intangible asset: | |||||||||||||||||||||||||||
Weighted- | 30-Sep-14 | 31-Dec-13 | |||||||||||||||||||||||||
Average | |||||||||||||||||||||||||||
Life | Cost | Accumulated | Carrying | Cost | Accumulated | Carrying | |||||||||||||||||||||
Amortization | Amount | Amortization | Amount | ||||||||||||||||||||||||
(unaudited) | |||||||||||||||||||||||||||
(in thousands) | |||||||||||||||||||||||||||
Brands - retail | — | $ | 500,000 | $ | — | $ | 500,000 | $ | 500,000 | $ | — | $ | 500,000 | ||||||||||||||
Brands - franchise | — | 220,000 | — | 220,000 | 220,000 | — | 220,000 | ||||||||||||||||||||
Retail agreements | 30.3 | 31,000 | (8,091 | ) | 22,909 | 31,000 | (7,301 | ) | 23,699 | ||||||||||||||||||
Franchise agreements | 25 | 70,000 | (21,117 | ) | 48,883 | 70,000 | (19,017 | ) | 50,983 | ||||||||||||||||||
Manufacturing agreements | 25 | 70,000 | (21,117 | ) | 48,883 | 70,000 | (19,017 | ) | 50,983 | ||||||||||||||||||
Other intangibles | 8.2 | 20,904 | (6,664 | ) | 14,240 | 20,327 | (3,995 | ) | 16,332 | ||||||||||||||||||
Franchise rights | 3 | 6,098 | (5,109 | ) | 989 | 5,463 | (4,686 | ) | 777 | ||||||||||||||||||
Total | 23.4 | $ | 918,002 | $ | (62,098 | ) | $ | 855,904 | $ | 916,790 | $ | (54,016 | ) | $ | 862,774 | ||||||||||||
The following table represents future estimated amortization expense of intangible assets with finite lives at September 30, 2014: | |||||||||||||||||||||||||||
Years ending December 31, | Estimated | ||||||||||||||||||||||||||
amortization | |||||||||||||||||||||||||||
expense | |||||||||||||||||||||||||||
(unaudited) | |||||||||||||||||||||||||||
(in thousands) | |||||||||||||||||||||||||||
2014 | $ | 2,726 | |||||||||||||||||||||||||
2015 | 10,668 | ||||||||||||||||||||||||||
2016 | 9,790 | ||||||||||||||||||||||||||
2017 | 7,774 | ||||||||||||||||||||||||||
2018 | 7,670 | ||||||||||||||||||||||||||
Thereafter | 97,276 | ||||||||||||||||||||||||||
Total | $ | 135,904 | |||||||||||||||||||||||||
LONGTERM_DEBT_INTEREST_EXPENSE
LONG-TERM DEBT / INTEREST EXPENSE | 9 Months Ended | |||||||||
Sep. 30, 2014 | ||||||||||
Debt Disclosure [Abstract] | ' | |||||||||
LONG-TERM DEBT / INTEREST EXPENSE | ' | |||||||||
LONG-TERM DEBT / INTEREST EXPENSE | ||||||||||
Long-term debt consisted of the following: | ||||||||||
September 30, | December 31, | |||||||||
2014 | 2013 | |||||||||
(unaudited) | ||||||||||
(in thousands) | ||||||||||
Senior Credit Facility | $ | 1,343,110 | $ | 1,345,987 | ||||||
Other | 288 | 1,112 | ||||||||
Total debt | 1,343,398 | 1,347,099 | ||||||||
Less: current maturities | (4,793 | ) | (5,443 | ) | ||||||
Long-term debt | $ | 1,338,605 | $ | 1,341,656 | ||||||
In 2013, the Company amended and restated its existing $1.4 billion term loan facility (the “Term Loan Facility”) to, among other amendments, increase borrowings by $252.5 million and extend the maturity date of the Term Loan Facility to March 2019. The Company also increased the amount available for borrowing under the $80.0 million revolving credit facility (the “Revolving Credit Facility” and, together with the Term Loan Facility, the “Senior Credit Facility”) to $130.0 million, extended the maturity date of the Revolving Credit Facility to March 2017, and effected changes in the interest rates applicable to amounts outstanding under the Revolving Credit Facility. | ||||||||||
For the nine months ended September 30, 2014 and 2013, net interest expense was $35.0 million and $33.4 million, respectively, and consisted primarily of interest on outstanding borrowings under the Term Loan Facility. Interest under both the Term Loan Facility and the Revolving Credit Facility is based on variable rates. At both September 30, 2014 and December 31, 2013, the interest rate under the Term Loan Facility was 3.25%. The Revolving Credit Facility was undrawn and had outstanding letters of credit of $1.1 million at both September 30, 2014 and December 31, 2013. At both September 30, 2014 and December 31, 2013, the commitment fee on the undrawn portion of the Revolving Credit Facility was 0.5%, and the outstanding letters of credit fee was 2.50%. | ||||||||||
As of September 30, 2014, the Company believes that it is in compliance with all covenants under the Senior Credit Facility. |
FINANCIAL_INSTRUMENTS
FINANCIAL INSTRUMENTS | 9 Months Ended | |||||||||||||||
Sep. 30, 2014 | ||||||||||||||||
Financial Instruments, Owned, at Fair Value [Abstract] | ' | |||||||||||||||
FINANCIAL INSTRUMENTS | ' | |||||||||||||||
FINANCIAL INSTRUMENTS | ||||||||||||||||
At September 30, 2014 and December 31, 2013, the Company’s financial instruments consisted of cash and cash equivalents, receivables, franchise notes receivable, accounts payable, certain accrued liabilities and long-term debt. The carrying amount of cash and cash equivalents, receivables, accounts payable and accrued liabilities approximates their respective fair values because of the short maturities of these instruments. Based on the interest rates currently available and their underlying risk, the carrying value of the franchise notes receivable approximates their respective fair values. These fair values are reflected net of reserves for uncollectible amounts. As considerable judgment is required to determine these estimates and assumptions, changes in the assumptions or methodologies may have an effect on these estimates. The Company determined the estimated fair values of its debt by using currently available market information. The fair value measurement for debt is classified as a Level 2 input on the fair value hierarchy, as defined in the Company’s Annual Report on Form 10-K for the year ended December 31, 2013. The actual and estimated fair values of the Company’s financial instruments are as follows: | ||||||||||||||||
30-Sep-14 | 31-Dec-13 | |||||||||||||||
Carrying | Fair | Carrying | Fair | |||||||||||||
Amount | Value | Amount | Value | |||||||||||||
(unaudited) | ||||||||||||||||
(in thousands) | ||||||||||||||||
Cash and cash equivalents | $ | 148,243 | $ | 148,243 | $ | 226,217 | $ | 226,217 | ||||||||
Receivables, net | 139,719 | 139,719 | 144,833 | 144,833 | ||||||||||||
Franchise notes receivable, net | 18,286 | 18,286 | 10,163 | 10,163 | ||||||||||||
Accounts payable | 147,805 | 147,805 | 135,164 | 135,164 | ||||||||||||
Long-term debt (including current portion) | 1,343,398 | 1,306,455 | 1,347,099 | 1,343,732 | ||||||||||||
COMMITMENTS_AND_CONTINGENCIES
COMMITMENTS AND CONTINGENCIES | 9 Months Ended |
Sep. 30, 2014 | |
Commitments and Contingencies Disclosure [Abstract] | ' |
COMMITMENTS AND CONTINGENCIES | ' |
COMMITMENTS AND CONTINGENCIES | |
Litigation | |
The Company is engaged in various legal actions, claims and proceedings arising in the normal course of business, including claims related to breach of contracts, products liabilities, intellectual property matters and employment-related matters resulting from the Company’s business activities. | |
The Company records accruals for outstanding legal matters when it believes it is probable that a loss will be incurred and the amount of such loss can be reasonably estimated. The Company evaluates, on a quarterly basis, developments in legal matters that could affect the amount of any accrual and developments that would make a loss contingency both probable and reasonably estimable. If a loss contingency is not both probable and estimable, the Company does not establish an accrued liability. Currently, none of the Company’s accruals for outstanding legal matters are material individually or in the aggregate to the Company’s financial position. However, if the Company ultimately is required to make a payment in connection with an adverse outcome in any of the matters discussed below, it is possible that it could have a material adverse effect on the Company’s business, financial condition, results of operations or cash flows. | |
The Company’s contingencies are subject to substantial uncertainties, including for each such contingency the following, among other factors: (i) the procedural status of the case; (ii) whether the case has or may be certified as a class action suit; (iii) the outcome of preliminary motions; (iv) the impact of discovery; (v) whether there are significant factual issues to be determined or resolved; (vi) whether the proceedings involve a large number of parties and/or parties and claims in multiple jurisdictions or jurisdictions in which the relevant laws are complex or unclear; (vii) the extent of potential damages, which are often unspecified or indeterminate; and (viii) the status of settlement discussions, if any, and the settlement posture of the parties. Consequently, except as otherwise noted below with regard to a particular matter, the Company cannot predict with any reasonable certainty the timing or outcome of the legal matters described below, and the Company is unable to estimate a possible loss or range of loss. | |
As a manufacturer and retailer of nutritional supplements and other consumer products that are ingested by consumers or applied to their bodies, the Company has been and is currently subjected to various product liability claims. Although the effects of these claims to date have not been material to the Company, it is possible that current and future product liability claims could have a material adverse effect on its business or financial condition, results of operations or cash flows. The Company currently maintains product liability insurance with a deductible/retention of $4.0 million per claim with an aggregate cap on retained loss of $10.0 million. The Company typically seeks and has obtained contractual indemnification from most parties that supply raw materials for its products or that manufacture or market products it sells. The Company also typically seeks to be added, and has been added, as an additional insured under most of such parties’ insurance policies. The Company is also entitled to indemnification by Numico for certain losses arising from claims related to products containing ephedra or Kava Kava sold prior to December 5, 2003. However, any such indemnification or insurance is limited by its terms and any such indemnification, as a practical matter, is limited to the creditworthiness of the indemnifying party and its insurer, and the absence of significant defenses by the insurers. Consequently, the Company may incur material products liability claims, which could increase its costs and adversely affect its reputation, revenue and operating income. | |
Hydroxycut Claims. In 2009, the FDA issued a warning on several Hydroxycut-branded products manufactured by Iovate Health Sciences U.S.A., Inc. (“Iovate”) based on 23 reports of liver injuries from consumers who claimed to have used the products between 2002 and 2009. As a result, Iovate voluntarily recalled 14 Hydroxycut-branded products. | |
Following the recall, the Company was named, among other defendants, in multiple lawsuits related to Hydroxycut-branded products in several states. The United States Judicial Panel on Multidistrict Litigation consolidated pretrial proceedings of many of the pending actions in the Southern District of California (In re: Hydroxycut Marketing and Sales Practices Litigation, MDL No. 2087), and Iovate previously accepted the Company’s tender request for defense and indemnification under its purchasing agreement with the Company in these matters. | |
As of September 30, 2014, there were 76 pending lawsuits related to Hydroxycut in which the Company had been named: 70 individual, largely personal injury claims and six putative class action cases, generally inclusive of claims of consumer fraud, misrepresentation, strict liability and breach of warranty. In May 2013, the parties to the individual personal injury cases signed a Master Settlement Agreement, under which the Company is not required to make any payments. Settlement payments are being made exclusively by Iovate and dismissals are expected to be entered in these actions in the near term. The parties in the consolidated class actions reached a settlement, which was approved by the Court on October 20, 2014 and which does not require the Company to make any payments. Following final resolution of the individual personal injury cases and the settlement of the consolidated class action suits, all of the Hydroxycut claims currently pending against the Company will be resolved without any payment by the Company. | |
DMAA / Aegeline Claims. Prior to December 2013, the Company sold products manufactured by third parties that contained derivatives from geranium known as 1.3-dimethylpentylamine/ dimethylamylamine/13-dimethylamylamine, or “DMAA,” which were recalled from its stores in November 2013, and/or Aegeline, a compound extracted from bael trees. As of September 30, 2014, the Company was named in 21 lawsuits involving products containing DMAA and/or Aegeline, including 18 personal injury cases and three putative class action cases. As a general matter, the proceedings associated with these cases, which generally seek indeterminate money damages, are in the early stages, and any liabilities that may arise from these matters are not probable or reasonably estimable at this time. The Company is contractually entitled to indemnification by its third-party vendor with regard to these matters, although the Company’s ability to obtain full recovery in respect of any such claims against it is dependent upon the creditworthiness of the vendor and/or its insurance coverage and the absence of any significant defenses available to its insurer. | |
On October 13, 2014, the U.S. District Court for the Northern District of Florida preliminarily approved a settlement agreement among the parties to two of the three putative class action cases in which the Company is named and scheduled a hearing with regard to final approval of the proposed settlement in February 2015. The proposed settlement does not require any payment by the Company. | |
California Wage and Break Claims. In November 2008, 98 plaintiffs filed individual claims against the Company in the Superior Court of the State of California for the County of Orange, alleging that they were not provided all of the rest and meal periods to which they were entitled under California law, and that the Company failed to pay them split shift and overtime compensation to which they were entitled under California law. The plaintiffs also allege derivative claims for inaccurate wage statements, failure to pay wages due at termination, and penalty claims under the California Labor Code. The cases were removed to the U.S. District Court for the Central District of California, and in June 2013, a trial was conducted that resulted in a verdict in favor of the Company with respect to the claims of seven of the plaintiffs. The claims of 20 other plaintiffs have been resolved and the claims of 71 plaintiffs remain, with respect to which discovery is ongoing. As any liabilities that may arise from these matters are not probable or reasonably estimable at this time, no liability has been accrued in the accompanying financial statements. | |
In July 2011, Charles Brewer, on behalf of himself and all others similarly situated, sued General Nutrition Corporation in federal court, alleging state and federal wage and hour claims (U.S. District Court, Northern District of California, Case No. 11CV3587). In October 2011, Mr. Brewer filed an amended complaint alleging, among other matters, meal, rest break and overtime violations. In January 2013, the Court conditionally certified a Fair Labor Standards Act class with respect to one of Plaintiff’s claims. As any liabilities that may arise from these matters are not probable or reasonably estimable at this time, no liability has been accrued in the accompanying financial statements. | |
In February 2012, former Senior Store Manager, Elizabeth Naranjo, individually and on behalf of all others similarly situated sued General Nutrition Corporation in the Superior Court of the State of California for the County of Alameda (Case No. RG 12619626), alleging, among other matters, meal, rest break, and overtime violations. As any liabilities that may arise from these matters are not probable or reasonably estimable at this time, no liability has been accrued in the accompanying financial statements. | |
FLSA Matters. In June 2010, Dominic Vargas and Anne Hickok, on behalf of themselves and all others similarly situated, sued General Nutrition Corporation and the Company in federal court (U.S. District Court, Western District of Pennsylvania, Case No. 2:5-mc-2025), alleging, generally, that plaintiffs were required to perform work on an uncompensated basis and that the Company failed to pay overtime for such work. Class notice was mailed to putative class members in November 2012 and discovery regarding opt-in plaintiffs is ongoing. As of September 30, 2014, an immaterial liability has been accrued in the accompanying financial statements. | |
Jason Olive v. General Nutrition Corp. In April 2012, Jason Olive filed a complaint in the Superior Court of California, County of Los Angeles (Case No. BC482686), for misappropriation of likeness in which he alleges that the Company continued to use his image in stores after the expiration of the license to do so in violation of common law and California statutes. Mr. Olive is seeking compensatory, punitive and statutory damages and attorneys’ fees and costs, and a trial in this matter is currently scheduled for December 2014. As of September 30, 2014, an immaterial liability has been accrued in the accompanying financial statements. | |
Commitments | |
In addition to operating leases obtained in the normal course of business, the Company maintains certain purchase commitments with various vendors to ensure its operational needs are fulfilled. As of September 30, 2014, such future purchase commitments consisted of $3.2 million. Other commitments related to the Company’s business operations cover varying periods of time and are not significant. All of these commitments are expected to be fulfilled with no adverse consequences to the Company’s operations or financial condition. | |
Environmental Compliance | |
In March 2008, the South Carolina Department of Health and Environmental Control (the “DHEC”) requested that the Company investigate contamination associated with historical activities at its South Carolina facility. These investigations have identified chlorinated solvent impacts in soils and groundwater that extend offsite from the facility. The Company entered into a Voluntary Cleanup Contract with the DHEC regarding the matter on September 24, 2012. Pursuant to such contract, the Company will submit a plan for additional investigations to the DHEC and will implement the plan upon DHEC’s approval. After the Company completes the investigations to understand the extent of the chlorinated solvent impacts, the Company will develop appropriate remedial measures for DHEC approval. At this stage of the investigation, however, it is not possible to estimate the timing and extent of any remedial action that may be required, the ultimate cost of remediation, or the amount of the Company’s potential liability, therefore no liability is recorded. | |
In addition to the foregoing, the Company is subject to numerous federal, state, local and foreign environmental and health and safety laws and regulations governing its operations, including the handling, transportation and disposal of the Company’s non-hazardous and hazardous substances and wastes, as well as emissions and discharges from its operations into the environment, including discharges to air, surface water and groundwater. Failure to comply with such laws and regulations could result in costs for remedial actions, penalties or the imposition of other liabilities. New laws, changes in existing laws or the interpretation thereof, or the development of new facts or changes in their processes could also cause the Company to incur additional capital and operating expenditures to maintain compliance with environmental laws and regulations and environmental permits. The Company is also subject to laws and regulations that impose liability and cleanup responsibility for releases of hazardous substances into the environment without regard to fault or knowledge about the condition or action causing the liability. Under certain of these laws and regulations, such liabilities can be imposed for cleanup of previously owned or operated properties, or for properties to which substances or wastes were sent in connection with current or former operations at its facilities. The presence of contamination from such substances or wastes could also adversely affect the Company’s ability to sell or lease its properties, or to use them as collateral for financing. From time to time, the Company has incurred costs and obligations for correcting environmental and health and safety noncompliance matters and for remediation at or relating to certain of the Company’s properties or properties at which the Company’s waste has been disposed. However, compliance with the provisions of national, state and local environmental laws and regulations has not had a material effect upon the Company’s capital expenditures, earnings, financial position, liquidity or competitive position. The Company believes it has complied with, and is currently complying with, its environmental obligations pursuant to environmental and health and safety laws and regulations and that any liabilities for noncompliance will not have a material adverse effect on its business, financial performance or cash flows. However, it is difficult to predict future liabilities and obligations, which could be material. |
STOCKBASED_COMPENSATION_PLANS
STOCK-BASED COMPENSATION PLANS | 9 Months Ended | |||||||||||||
Sep. 30, 2014 | ||||||||||||||
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | ' | |||||||||||||
STOCK-BASED COMPENSATION PLANS | ' | |||||||||||||
STOCK-BASED COMPENSATION PLANS | ||||||||||||||
The Company has outstanding stock-based compensation awards that were granted by the Compensation Committee (the “Compensation Committee”) of Holdings’ board of directors under the following two stock-based employee compensation plans: | ||||||||||||||
• | the GNC Holdings, Inc. 2011 Stock and Incentive Plan (the “2011 Stock Plan”) adopted in March 2011; and | |||||||||||||
• | the GNC Acquisition Holdings Inc. 2007 Stock Incentive Plan adopted in March 2007 (as amended, the “2007 Stock Plan”). | |||||||||||||
Both plans have provisions that allow for the granting of stock options, restricted stock and other stock-based awards and are available to certain eligible employees, directors, consultants or advisors as determined by the Compensation Committee. Stock options under the plans were granted with exercise prices at or above fair market value on the date of grant, typically vest over a four- or five-year period, and expire seven or ten years from the date of grant. | ||||||||||||||
Up to 8.5 million shares of common stock may be issued under the 2011 Stock Plan (subject to adjustment to reflect certain transactions and events specified in the 2011 Stock Plan for any award grant). If any award granted under the 2011 Stock Plan expires, terminates or is cancelled without having been exercised in full, the number of shares underlying such unexercised award will again become available for awards under the 2011 Stock Plan. The total number of shares of common stock available for awards under the 2011 Stock Plan will be reduced by (i) the total number of stock options or stock appreciation rights exercised, regardless of whether any of the shares of common stock underlying such awards are not actually issued to the participant as the result of a net settlement, and (ii) any shares of common stock used to pay any exercise price or tax withholding obligation. In addition, the number of shares of common stock that are subject to restricted stock, performance shares or other stock-based awards that are not subject to the appreciation of the value of a share of common stock (“Full Share Awards”) that may be granted under the 2011 Stock Plan is limited by counting shares granted pursuant to such awards against the aggregate share reserve as 1.8 shares for every share granted. If any stock option, stock appreciation right or other stock-based award that is not a Full Share Award is cancelled, expires or terminates unexercised for any reason, the shares covered by such awards will again be available for the grant of awards under the 2011 Stock Plan. If any shares of common stock that are subject to restricted stock, performance shares or other stock-based awards that are Full Share Awards are forfeited for any reason, 1.8 shares of common stock for each Full Share Award forfeited will again be available for the grant of awards under the 2011 Stock Plan. | ||||||||||||||
The Company will not grant any additional awards under the 2007 Stock Plan. No stock appreciation rights, restricted stock, deferred stock or performance shares were granted under the 2007 Stock Plan. | ||||||||||||||
The Company utilizes the Black Scholes model to calculate the fair value of options under both the 2011 Stock Plan and the 2007 Stock Plan. The grant-date fair value of the Company’s restricted stock awards and restricted stock units is based on the closing price of a share of the Company’s common stock on the New York Stock Exchange on the date of the grant. The resulting compensation cost is recognized in the Company’s financial statements over the vesting period. The Company recognized $5.1 million and $5.9 million of total non-cash stock-based compensation expense for the nine months ended September 30, 2014 and 2013, respectively. At September 30, 2014, there was approximately $7.9 million of total unrecognized compensation cost related to non-vested stock-based compensation for all awards previously made that are expected to be recognized over a weighted average period of approximately 1.6 years. All expense for the non-cash stock-based compensation plans is recorded to paid-in-capital. | ||||||||||||||
During the nine months ended September 30, 2014, the total intrinsic value of options exercised and stock awards converted was $12.7 million and the total amount received by Holdings from the exercise of options and stock awards converted was $20.2 million. The total tax impact associated with the exercise of options and stock awards converted for the nine months ended September 30, 2014 was a benefit of $2.5 million, which was recorded to paid-in-capital. | ||||||||||||||
During the nine months ended September 30, 2013, the total intrinsic value of options exercised and stock awards converted was $32.6 million, and the total amount received by Holdings from the exercise of options and stock awards converted was $10.3 million. The total tax impact associated with the exercise of options and stock awards converted for the nine months ended September 30, 2013 was a benefit of $11.0 million, which was recorded to paid-in-capital. | ||||||||||||||
Stock Options | ||||||||||||||
The following table sets forth a summary of stock options under all plans for the nine months ended September 30, 2014: | ||||||||||||||
Total Options | Weighted | Weighted | Aggregate | |||||||||||
Average | Average | Intrinsic | ||||||||||||
Exercise | Remaining | Value (in | ||||||||||||
Price | Contractual Term | thousands) | ||||||||||||
(in years) | ||||||||||||||
Outstanding at December 31, 2013 | 1,887,154 | $ | 24.14 | |||||||||||
Granted | 175,000 | 33.13 | ||||||||||||
Exercised | (896,861 | ) | 22.6 | |||||||||||
Forfeited | (290,014 | ) | 30.12 | |||||||||||
Outstanding at September 30, 2014 | 875,279 | $ | 25.52 | 5.7 | $ | 11,571 | ||||||||
Exercisable at September 30, 2014 | 272,852 | $ | 20.4 | 4.5 | $ | 5,004 | ||||||||
The weighted fair value per share of options granted during the nine months ended September 30, 2014 and 2013 was $7.89 and $14.20, respectively. Fair value of options vested during the nine months ended September 30, 2014 and 2013 was $1.9 million and $2.2 million, respectively. | ||||||||||||||
The Black Scholes model utilizes the following assumptions in determining a fair value: price of underlying stock, award exercise price, expected term, risk-free interest rate, expected dividend yield and expected stock price volatility over the award’s expected term. Due to the utilization of these assumptions, the existing models do not necessarily represent the definitive fair value of awards for future periods. As the initial public offering (the “IPO”) occurred during the second quarter of 2011, the option term has been estimated by considering both the vesting period, which typically for both plans has been four or five years, and the contractual term, which historically has been either seven or ten years. Prior to the IPO, the fair value of the common stock was estimated based upon the net enterprise value of the Company, discounted to reflect the lack of liquidity and control associated with the stock. Since the consummation of the IPO, the fair value of the common stock has been based upon the closing price of the common stock as reported on the New York Stock Exchange. Volatility is estimated based upon the current peer group average utilized by the Company. | ||||||||||||||
The assumptions used in the Company's Black Scholes valuation related to stock option grants made during the nine months ended September 30, 2014 were as follows: | ||||||||||||||
Dividend yield | 1.90% | |||||||||||||
Expected option life | 4.8 years | |||||||||||||
Volatility factor percentage of market price | 31.10% | |||||||||||||
Discount rate | 1.70% | |||||||||||||
Restricted Stock Awards | ||||||||||||||
The following table sets forth a summary of restricted stock awards granted under the 2011 Stock Plan and related information for the nine months ended September 30, 2014: | ||||||||||||||
Restricted | Weighted | |||||||||||||
Stock | Average | |||||||||||||
Grant-Date | ||||||||||||||
Fair Value | ||||||||||||||
Outstanding at December 31, 2013 | 114,981 | $ | 25.16 | |||||||||||
Granted | 10,404 | 36.52 | ||||||||||||
Vested | (32,165 | ) | 30.75 | |||||||||||
Forfeited | (46,474 | ) | 24.04 | |||||||||||
Outstanding at September 30, 2014 | 46,746 | $ | 24.96 | |||||||||||
Restricted Stock Units – Time Vesting and Performance Vesting | ||||||||||||||
Under the 2011 Stock Plan, the Company granted time vesting and performance vesting restricted stock units. Time vesting restricted stock units vest over a period of three years. Performance vesting restricted stock units vest based on the passage of time and the achievement of certain criteria; based on the extent to which the targets are achieved, vested shares may range from 0% to 200% of the original share amount. The unrecognized compensation cost related to the performance vesting restricted stock units is adjusted as necessary to reflect changes in the probability that the vesting criteria will be achieved. | ||||||||||||||
The following table sets forth a summary of restricted stock units and performance stock units granted under the 2011 Stock Plan and related information for the nine months ended September 30, 2014: | ||||||||||||||
Time | Weighted | Performance | Weighted | |||||||||||
Vesting | Average | Vesting | Average | |||||||||||
Restricted | Grant-Date | Restricted | Grant-Date | |||||||||||
Stock Units | Fair Value | Stock Units | Fair Value | |||||||||||
Outstanding at December 31, 2013 | 141,298 | $ | 40.81 | 55,366 | $ | 45.94 | ||||||||
Granted | 151,412 | 43.99 | 130,798 | 44.62 | ||||||||||
Vested | (1,174 | ) | 46.47 | — | — | |||||||||
Forfeited | (164,296 | ) | 43.45 | (129,171 | ) | 45.26 | ||||||||
Outstanding at September 30, 2014 | 127,240 | $ | 41.13 | 56,993 | $ | 44.45 | ||||||||
SEGMENTS
SEGMENTS | 9 Months Ended | |||||||||||||||
Sep. 30, 2014 | ||||||||||||||||
Segment Reporting [Abstract] | ' | |||||||||||||||
SEGMENTS | ' | |||||||||||||||
SEGMENTS | ||||||||||||||||
The Company has three reportable segments, each of which represents an identifiable component of the Company for which separate financial information is available. This information is utilized by management to assess performance and allocate assets accordingly. The Company’s management evaluates segment operating results based on several indicators. The primary key performance indicators are sales and operating income or loss for each segment. Operating income or loss, as evaluated by management, excludes certain items that are managed at the consolidated level, such as distribution and warehousing, impairments and other corporate costs. The Retail reportable segment includes the Company’s corporate store operations in the United States, Canada, Puerto Rico, and Ireland, and its websites GNC.com, Lucky Vitamin, and Discount Supplements. The Franchise reportable segment represents the Company’s franchise operations, both domestically and internationally. The Manufacturing/Wholesale reportable segment represents the Company’s manufacturing operations in South Carolina and the Wholesale sales business. This segment supplies the Retail and Franchise segments, along with various third parties, with finished products for sale. The Warehousing and Distribution and Corporate costs represent the Company’s administrative expenses. The accounting policies of the segments are the same as those described in the “Basis of Presentation and Summary of Significant Accounting Policies.” | ||||||||||||||||
The following table represents key financial information of the Company’s segments: | ||||||||||||||||
Three months ended September 30, | Nine months ended September 30, | |||||||||||||||
2014 | 2013 | 2014 | 2013 | |||||||||||||
(unaudited) | ||||||||||||||||
(in thousands) | ||||||||||||||||
Revenue: | ||||||||||||||||
Retail | $ | 480,691 | $ | 487,271 | $ | 1,495,197 | $ | 1,483,228 | ||||||||
Franchise | 114,106 | 117,780 | 327,763 | 335,985 | ||||||||||||
Manufacturing/Wholesale: | ||||||||||||||||
Intersegment revenues | 62,247 | 66,231 | 194,862 | 199,248 | ||||||||||||
Third Party | 61,529 | 69,450 | 183,039 | 196,013 | ||||||||||||
Subtotal Manufacturing/Wholesale | 123,776 | 135,681 | 377,901 | 395,261 | ||||||||||||
Subtotal segment revenues | 718,573 | 740,732 | 2,200,861 | 2,214,474 | ||||||||||||
Elimination of intersegment revenues | (62,247 | ) | (66,231 | ) | (194,862 | ) | (199,248 | ) | ||||||||
Total revenue | $ | 656,326 | $ | 674,501 | $ | 2,005,999 | $ | 2,015,226 | ||||||||
Operating income: | ||||||||||||||||
Retail | $ | 89,370 | $ | 92,580 | $ | 277,916 | $ | 291,507 | ||||||||
Franchise | 40,316 | 41,616 | 121,639 | 116,694 | ||||||||||||
Manufacturing/Wholesale | 22,917 | 28,436 | 69,359 | 76,869 | ||||||||||||
Unallocated corporate and other costs: | ||||||||||||||||
Warehousing and distribution costs | (17,277 | ) | (17,513 | ) | (50,258 | ) | (50,737 | ) | ||||||||
Corporate costs | (19,128 | ) | (19,145 | ) | (60,152 | ) | (60,168 | ) | ||||||||
Management realignment | (7,473 | ) | — | (7,473 | ) | — | ||||||||||
Subtotal unallocated corporate and | ||||||||||||||||
other costs | (43,878 | ) | (36,658 | ) | (117,883 | ) | (110,905 | ) | ||||||||
Total operating income | 108,725 | 125,974 | 351,031 | 374,165 | ||||||||||||
Interest expense, net | 11,781 | 11,237 | 34,987 | 33,353 | ||||||||||||
Income before income taxes | $ | 96,944 | $ | 114,737 | $ | 316,044 | $ | 340,812 | ||||||||
INCOME_TAXES
INCOME TAXES | 9 Months Ended |
Sep. 30, 2014 | |
Income Tax Disclosure [Abstract] | ' |
INCOME TAXES | ' |
INCOME TAXES | |
The Company recognized $111.9 million of income tax expense (or 35.4% of pre-tax income) during the nine months ended September 30, 2014 compared to $123.4 million (or 36.2% of pre-tax income) for the same period in 2013. The decrease in the tax rate is principally due to reductions in state taxes and the permanent difference related to the non-taxable Reversal of Contingent Purchase Price liability of $4.3 million. | |
The Company files a consolidated U.S. federal tax return and various consolidated and separate tax returns as prescribed by the tax laws of the state, local and international jurisdictions in which it operates. The Company’s 2010 and 2011 federal income tax returns have been examined by the Internal Revenue Service. The Company has various state, local and international jurisdiction tax years open to examination (the earliest open period is 2009), and the Company also has certain state and local jurisdictions currently under audit. As of September 30, 2014, the Company believes that it has appropriately reserved for potential federal, state and international income tax exposures. | |
At September 30, 2014 and December 31, 2013, the Company had $11.3 million and $10.8 million of unrecognized tax benefits, respectively. As of September 30, 2014, the Company is not aware of any tax positions for which it is reasonably possible that the amounts of unrecognized tax benefits will significantly increase or decrease within the next 12 months. The amount of unrecognized tax benefits that, if recognized, would affect the effective tax rate is approximately $11.3 million. The Company recognizes accrued interest and penalties related to unrecognized tax benefits in income tax expense. The Company had accrued approximately $4.2 million at both September 30, 2014 and December 31, 2013, respectively, for potential interest and penalties associated with uncertain tax positions. To the extent interest and penalties are not assessed with respect to the ultimate settlement of uncertain tax positions, amounts previously accrued will be reduced and reflected as a reduction of the overall income tax provision. |
SUBSEQUENT_EVENTS
SUBSEQUENT EVENTS | 9 Months Ended |
Sep. 30, 2014 | |
Subsequent Events [Abstract] | ' |
SUBSEQUENT EVENTS | ' |
SUBSEQUENT EVENTS | |
On October 23, 2014, the board of directors authorized and declared a cash dividend for the fourth quarter of 2014 of $0.16 per share of common stock, payable on or about December 26, 2014 to stockholders of record as of the close of business on December 12, 2014. |
BASIS_OF_PRESENTATION_AND_SUMM1
BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) | 9 Months Ended |
Sep. 30, 2014 | |
Accounting Policies [Abstract] | ' |
Principles of Consolidation | ' |
Principles of Consolidation. The consolidated financial statements include the accounts of Holdings and all of its subsidiaries. All material intercompany transactions have been eliminated in consolidation. | |
The Company has no relationships with unconsolidated entities or financial partnerships, such as entities often referred to as structured finance or special purpose entities, which would have been established for the purpose of facilitating off balance sheet arrangements or other contractually narrow or limited purposes. | |
Use of Estimates | ' |
Use of Estimates. The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions. Accordingly, these estimates and assumptions affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the dates of the financial statements, and the reported amounts of revenues and expenses during the reporting periods. Some of the most significant estimates pertaining to the Company include the valuation of inventories, the allowance for doubtful accounts and income taxes. On a regular basis, management reviews its estimates utilizing currently available information, changes in facts and circumstances, historical experience and reasonable assumptions. After such reviews and if deemed appropriate, those estimates are adjusted accordingly. Actual results could differ from those estimates. | |
Recent Accounting Pronouncements | ' |
Recent Accounting Pronouncements | |
In July 2013, the Financial Accounting Standards Board ("FASB") issued accounting standard ASU 2013-11, regarding the presentation of an unrecognized tax benefit when a net operating loss carryforward, a similar tax loss, or a tax credit carryforward exists. This standard requires entities to present an unrecognized tax benefit as a reduction of a deferred tax asset for a net operating loss (“NOL”) or tax credit carryforward whenever the NOL or tax credit carryforward would be available to reduce the additional taxable income or tax due if the tax position is disallowed. This accounting standard update requires entities to assess whether to net the unrecognized tax benefit with a deferred tax asset as of the reporting date. This guidance is effective for fiscal years beginning after December 15, 2013, with early adoption permitted. The Company adopted this guidance during the first quarter of 2014. The adoption of this guidance did not have a material impact on the Company’s consolidated financial statements. | |
In May 2014, the FASB issued accounting standard ASU 2014-09, which updates revenue recognition guidance relating to contracts with customers. This standard states that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. This standard is effective for fiscal years beginning after December 15, 2016. The Company is currently evaluating the impact this guidance will have on the consolidated financial statements. | |
In June 2014, the FASB issued accounting standard ASU 2014-12, which updates guidance on performance stock awards. The update states that for any award that has a performance target that affects vesting and that could be achieved after the requisite period, that performance target should still be treated as a performance condition. This standard is effective for fiscal years beginning after December 15, 2015. The Company is currently evaluating the impact this guidance will have on the consolidated financial statements. |
INVENTORIES_Tables
INVENTORIES (Tables) | 9 Months Ended | |||||||
Sep. 30, 2014 | ||||||||
Inventory Disclosure [Abstract] | ' | |||||||
Schedule of Net Carrying Value of Inventories | ' | |||||||
The net carrying value of inventories consisted of the following: | ||||||||
30-Sep-14 | 31-Dec-13 | |||||||
(unaudited) | ||||||||
(in thousands) | ||||||||
Finished product ready for sale | $ | 512,887 | $ | 458,366 | ||||
Work-in-process, bulk product and raw materials | 72,558 | 81,575 | ||||||
Packaging supplies | 7,348 | 7,975 | ||||||
Total | $ | 592,793 | $ | 547,916 | ||||
GOODWILL_AND_INTANGIBLE_ASSETS1
GOODWILL AND INTANGIBLE ASSETS, NET (Tables) | 9 Months Ended | ||||||||||||||||||||||||||
Sep. 30, 2014 | |||||||||||||||||||||||||||
Goodwill and Intangible Assets Disclosure [Abstract] | ' | ||||||||||||||||||||||||||
Schedule of Goodwill Activity | ' | ||||||||||||||||||||||||||
The following table summarizes the Company’s goodwill activity: | |||||||||||||||||||||||||||
Retail | Franchising | Manufacturing/ | Total | ||||||||||||||||||||||||
Wholesale | |||||||||||||||||||||||||||
(in thousands) | |||||||||||||||||||||||||||
Balance at December 31, 2013 | 346,202 | $ | 117,303 | $ | 202,841 | $ | 666,346 | ||||||||||||||||||||
Acquired franchise stores | 1,328 | — | — | 1,328 | |||||||||||||||||||||||
Acquisition of The Health Store | 6,853 | — | — | 6,853 | |||||||||||||||||||||||
Translation effect of exchange rates | (944 | ) | — | — | (944 | ) | |||||||||||||||||||||
Balance at September 30, 2014 (unaudited) | $ | 353,439 | $ | 117,303 | $ | 202,841 | $ | 673,583 | |||||||||||||||||||
Schedule of Intangible Asset Activity | ' | ||||||||||||||||||||||||||
Intangible assets other than goodwill consisted of the following: | |||||||||||||||||||||||||||
Retail | Franchise | Operating | Other | Total | |||||||||||||||||||||||
Brand | Brand | Agreements | Intangibles | ||||||||||||||||||||||||
(in thousands) | |||||||||||||||||||||||||||
Balance at December 31, 2013 | $ | 500,000 | $ | 220,000 | $ | 125,665 | $ | 17,109 | $ | 862,774 | |||||||||||||||||
Acquired franchise stores | — | — | — | 635 | 635 | ||||||||||||||||||||||
Acquisition of The Health Store | — | — | — | 788 | 788 | ||||||||||||||||||||||
Amortization expense | — | — | (4,990 | ) | (3,155 | ) | (8,145 | ) | |||||||||||||||||||
Translation effect of exchange rates | — | — | — | (148 | ) | (148 | ) | ||||||||||||||||||||
Balance at September 30, 2014 (unaudited) | $ | 500,000 | $ | 220,000 | $ | 120,675 | $ | 15,229 | $ | 855,904 | |||||||||||||||||
Schedule of Gross Carrying Amount and Accumulated Amortization for Each Major Intangible Asset | ' | ||||||||||||||||||||||||||
The following table reflects the gross carrying amount and accumulated amortization for each major intangible asset: | |||||||||||||||||||||||||||
Weighted- | 30-Sep-14 | 31-Dec-13 | |||||||||||||||||||||||||
Average | |||||||||||||||||||||||||||
Life | Cost | Accumulated | Carrying | Cost | Accumulated | Carrying | |||||||||||||||||||||
Amortization | Amount | Amortization | Amount | ||||||||||||||||||||||||
(unaudited) | |||||||||||||||||||||||||||
(in thousands) | |||||||||||||||||||||||||||
Brands - retail | — | $ | 500,000 | $ | — | $ | 500,000 | $ | 500,000 | $ | — | $ | 500,000 | ||||||||||||||
Brands - franchise | — | 220,000 | — | 220,000 | 220,000 | — | 220,000 | ||||||||||||||||||||
Retail agreements | 30.3 | 31,000 | (8,091 | ) | 22,909 | 31,000 | (7,301 | ) | 23,699 | ||||||||||||||||||
Franchise agreements | 25 | 70,000 | (21,117 | ) | 48,883 | 70,000 | (19,017 | ) | 50,983 | ||||||||||||||||||
Manufacturing agreements | 25 | 70,000 | (21,117 | ) | 48,883 | 70,000 | (19,017 | ) | 50,983 | ||||||||||||||||||
Other intangibles | 8.2 | 20,904 | (6,664 | ) | 14,240 | 20,327 | (3,995 | ) | 16,332 | ||||||||||||||||||
Franchise rights | 3 | 6,098 | (5,109 | ) | 989 | 5,463 | (4,686 | ) | 777 | ||||||||||||||||||
Total | 23.4 | $ | 918,002 | $ | (62,098 | ) | $ | 855,904 | $ | 916,790 | $ | (54,016 | ) | $ | 862,774 | ||||||||||||
Schedule of Future Estimated Amortization Expense of Other Intangible Assets, Net, with Definite Lives | ' | ||||||||||||||||||||||||||
The following table represents future estimated amortization expense of intangible assets with finite lives at September 30, 2014: | |||||||||||||||||||||||||||
Years ending December 31, | Estimated | ||||||||||||||||||||||||||
amortization | |||||||||||||||||||||||||||
expense | |||||||||||||||||||||||||||
(unaudited) | |||||||||||||||||||||||||||
(in thousands) | |||||||||||||||||||||||||||
2014 | $ | 2,726 | |||||||||||||||||||||||||
2015 | 10,668 | ||||||||||||||||||||||||||
2016 | 9,790 | ||||||||||||||||||||||||||
2017 | 7,774 | ||||||||||||||||||||||||||
2018 | 7,670 | ||||||||||||||||||||||||||
Thereafter | 97,276 | ||||||||||||||||||||||||||
Total | $ | 135,904 | |||||||||||||||||||||||||
LONGTERM_DEBT_INTEREST_EXPENSE1
LONG-TERM DEBT / INTEREST EXPENSE (Tables) | 9 Months Ended | |||||||||
Sep. 30, 2014 | ||||||||||
Debt Disclosure [Abstract] | ' | |||||||||
Schedule of Long-term Debt | ' | |||||||||
Long-term debt consisted of the following: | ||||||||||
September 30, | December 31, | |||||||||
2014 | 2013 | |||||||||
(unaudited) | ||||||||||
(in thousands) | ||||||||||
Senior Credit Facility | $ | 1,343,110 | $ | 1,345,987 | ||||||
Other | 288 | 1,112 | ||||||||
Total debt | 1,343,398 | 1,347,099 | ||||||||
Less: current maturities | (4,793 | ) | (5,443 | ) | ||||||
Long-term debt | $ | 1,338,605 | $ | 1,341,656 | ||||||
FINANCIAL_INSTRUMENTS_Tables
FINANCIAL INSTRUMENTS (Tables) | 9 Months Ended | |||||||||||||||
Sep. 30, 2014 | ||||||||||||||||
Financial Instruments, Owned, at Fair Value [Abstract] | ' | |||||||||||||||
Schedule of Carrying Amount and Estimated Fair Values of the Financial Instruments | ' | |||||||||||||||
The actual and estimated fair values of the Company’s financial instruments are as follows: | ||||||||||||||||
30-Sep-14 | 31-Dec-13 | |||||||||||||||
Carrying | Fair | Carrying | Fair | |||||||||||||
Amount | Value | Amount | Value | |||||||||||||
(unaudited) | ||||||||||||||||
(in thousands) | ||||||||||||||||
Cash and cash equivalents | $ | 148,243 | $ | 148,243 | $ | 226,217 | $ | 226,217 | ||||||||
Receivables, net | 139,719 | 139,719 | 144,833 | 144,833 | ||||||||||||
Franchise notes receivable, net | 18,286 | 18,286 | 10,163 | 10,163 | ||||||||||||
Accounts payable | 147,805 | 147,805 | 135,164 | 135,164 | ||||||||||||
Long-term debt (including current portion) | 1,343,398 | 1,306,455 | 1,347,099 | 1,343,732 | ||||||||||||
STOCKBASED_COMPENSATION_PLANS_
STOCK-BASED COMPENSATION PLANS (Tables) | 9 Months Ended | |||||||||||||
Sep. 30, 2014 | ||||||||||||||
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | ' | |||||||||||||
Schedule of Stock Options Under All Plans | ' | |||||||||||||
The following table sets forth a summary of stock options under all plans for the nine months ended September 30, 2014: | ||||||||||||||
Total Options | Weighted | Weighted | Aggregate | |||||||||||
Average | Average | Intrinsic | ||||||||||||
Exercise | Remaining | Value (in | ||||||||||||
Price | Contractual Term | thousands) | ||||||||||||
(in years) | ||||||||||||||
Outstanding at December 31, 2013 | 1,887,154 | $ | 24.14 | |||||||||||
Granted | 175,000 | 33.13 | ||||||||||||
Exercised | (896,861 | ) | 22.6 | |||||||||||
Forfeited | (290,014 | ) | 30.12 | |||||||||||
Outstanding at September 30, 2014 | 875,279 | $ | 25.52 | 5.7 | $ | 11,571 | ||||||||
Exercisable at September 30, 2014 | 272,852 | $ | 20.4 | 4.5 | $ | 5,004 | ||||||||
Valuation Assumptions Used for Stock Option Grants | ' | |||||||||||||
The assumptions used in the Company's Black Scholes valuation related to stock option grants made during the nine months ended September 30, 2014 were as follows: | ||||||||||||||
Dividend yield | 1.90% | |||||||||||||
Expected option life | 4.8 years | |||||||||||||
Volatility factor percentage of market price | 31.10% | |||||||||||||
Discount rate | 1.70% | |||||||||||||
Summary of Restricted Stock Awards Granted Under the 2011 Stock Plan and Related Information | ' | |||||||||||||
The following table sets forth a summary of restricted stock awards granted under the 2011 Stock Plan and related information for the nine months ended September 30, 2014: | ||||||||||||||
Restricted | Weighted | |||||||||||||
Stock | Average | |||||||||||||
Grant-Date | ||||||||||||||
Fair Value | ||||||||||||||
Outstanding at December 31, 2013 | 114,981 | $ | 25.16 | |||||||||||
Granted | 10,404 | 36.52 | ||||||||||||
Vested | (32,165 | ) | 30.75 | |||||||||||
Forfeited | (46,474 | ) | 24.04 | |||||||||||
Outstanding at September 30, 2014 | 46,746 | $ | 24.96 | |||||||||||
Schedule of Share-based Compensation, Restricted Stock and Restricted Stock Units Activity | ' | |||||||||||||
The following table sets forth a summary of restricted stock units and performance stock units granted under the 2011 Stock Plan and related information for the nine months ended September 30, 2014: | ||||||||||||||
Time | Weighted | Performance | Weighted | |||||||||||
Vesting | Average | Vesting | Average | |||||||||||
Restricted | Grant-Date | Restricted | Grant-Date | |||||||||||
Stock Units | Fair Value | Stock Units | Fair Value | |||||||||||
Outstanding at December 31, 2013 | 141,298 | $ | 40.81 | 55,366 | $ | 45.94 | ||||||||
Granted | 151,412 | 43.99 | 130,798 | 44.62 | ||||||||||
Vested | (1,174 | ) | 46.47 | — | — | |||||||||
Forfeited | (164,296 | ) | 43.45 | (129,171 | ) | 45.26 | ||||||||
Outstanding at September 30, 2014 | 127,240 | $ | 41.13 | 56,993 | $ | 44.45 | ||||||||
SEGMENTS_Tables
SEGMENTS (Tables) | 9 Months Ended | |||||||||||||||
Sep. 30, 2014 | ||||||||||||||||
Segment Reporting [Abstract] | ' | |||||||||||||||
Schedule of Key Financial Information of the Segments | ' | |||||||||||||||
The following table represents key financial information of the Company’s segments: | ||||||||||||||||
Three months ended September 30, | Nine months ended September 30, | |||||||||||||||
2014 | 2013 | 2014 | 2013 | |||||||||||||
(unaudited) | ||||||||||||||||
(in thousands) | ||||||||||||||||
Revenue: | ||||||||||||||||
Retail | $ | 480,691 | $ | 487,271 | $ | 1,495,197 | $ | 1,483,228 | ||||||||
Franchise | 114,106 | 117,780 | 327,763 | 335,985 | ||||||||||||
Manufacturing/Wholesale: | ||||||||||||||||
Intersegment revenues | 62,247 | 66,231 | 194,862 | 199,248 | ||||||||||||
Third Party | 61,529 | 69,450 | 183,039 | 196,013 | ||||||||||||
Subtotal Manufacturing/Wholesale | 123,776 | 135,681 | 377,901 | 395,261 | ||||||||||||
Subtotal segment revenues | 718,573 | 740,732 | 2,200,861 | 2,214,474 | ||||||||||||
Elimination of intersegment revenues | (62,247 | ) | (66,231 | ) | (194,862 | ) | (199,248 | ) | ||||||||
Total revenue | $ | 656,326 | $ | 674,501 | $ | 2,005,999 | $ | 2,015,226 | ||||||||
Operating income: | ||||||||||||||||
Retail | $ | 89,370 | $ | 92,580 | $ | 277,916 | $ | 291,507 | ||||||||
Franchise | 40,316 | 41,616 | 121,639 | 116,694 | ||||||||||||
Manufacturing/Wholesale | 22,917 | 28,436 | 69,359 | 76,869 | ||||||||||||
Unallocated corporate and other costs: | ||||||||||||||||
Warehousing and distribution costs | (17,277 | ) | (17,513 | ) | (50,258 | ) | (50,737 | ) | ||||||||
Corporate costs | (19,128 | ) | (19,145 | ) | (60,152 | ) | (60,168 | ) | ||||||||
Management realignment | (7,473 | ) | — | (7,473 | ) | — | ||||||||||
Subtotal unallocated corporate and | ||||||||||||||||
other costs | (43,878 | ) | (36,658 | ) | (117,883 | ) | (110,905 | ) | ||||||||
Total operating income | 108,725 | 125,974 | 351,031 | 374,165 | ||||||||||||
Interest expense, net | 11,781 | 11,237 | 34,987 | 33,353 | ||||||||||||
Income before income taxes | $ | 96,944 | $ | 114,737 | $ | 316,044 | $ | 340,812 | ||||||||
NATURE_OF_BUSINESS_Details
NATURE OF BUSINESS (Details) (USD $) | 1 Months Ended | 2 Months Ended | 9 Months Ended | 1 Months Ended | 0 Months Ended | ||
Aug. 31, 2014 | Sep. 30, 2014 | Sep. 30, 2014 | Sep. 30, 2014 | Oct. 31, 2013 | Apr. 17, 2014 | Apr. 17, 2014 | |
segment | Minimum | Discount Supplements | The Health Store | The Health Store | |||
country | store | ||||||
General Nature of Business | ' | ' | ' | ' | ' | ' | ' |
Number of primary segments | ' | ' | 3 | ' | ' | ' | ' |
Number of international countries in which franchise stores are located (over 50 countries) | ' | ' | ' | 50 | ' | ' | ' |
Recent Significant Transactions | ' | ' | ' | ' | ' | ' | ' |
Amount of shares authorized to repurchase | $500,000,000 | ' | ' | ' | ' | ' | ' |
Amount of shares repurchased | ' | 40,000,000 | 230,300,000 | ' | ' | ' | ' |
Aggregate purchase price of acquisition | ' | ' | ' | ' | $33,300,000 | $8,900,000 | ' |
Number of Stores | ' | ' | ' | ' | ' | ' | 9 |
BASIS_OF_PRESENTATION_AND_SUMM2
BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details) (USD $) | 3 Months Ended | 9 Months Ended | ||
In Thousands, unless otherwise specified | Sep. 30, 2014 | Sep. 30, 2013 | Sep. 30, 2014 | Sep. 30, 2013 |
Restructuring Cost and Reserve | ' | ' | ' | ' |
Management realignment | ($7,473) | $0 | ($7,473) | $0 |
International franchise receivable reserves | 4,446 | 163 | 4,446 | 363 |
Reversal of contingent purchase price | 4,313 | 0 | 4,313 | 0 |
Other Income (Expense), Net | -4,047 | -779 | -9,510 | -1,080 |
Executive Severance | ' | ' | ' | ' |
Restructuring Cost and Reserve | ' | ' | ' | ' |
Management realignment | ' | ' | -5,700 | ' |
Accelerated Non-Cash Stock-Based Compensation Expense, Net of Forfeitures | ' | ' | ' | ' |
Restructuring Cost and Reserve | ' | ' | ' | ' |
Management realignment | ' | ' | -500 | ' |
Recruiting and Hiring of New Executive Leadership | ' | ' | ' | ' |
Restructuring Cost and Reserve | ' | ' | ' | ' |
Management realignment | ' | ' | ($1,300) | ' |
INVENTORIES_Details
INVENTORIES (Details) (USD $) | Sep. 30, 2014 | Dec. 31, 2013 |
In Thousands, unless otherwise specified | ||
Inventory Disclosure [Abstract] | ' | ' |
Finished product ready for sale | $512,887 | $458,366 |
Work-in-process, bulk product and raw materials | 72,558 | 81,575 |
Packaging supplies | 7,348 | 7,975 |
Total | $592,793 | $547,916 |
GOODWILL_AND_INTANGIBLE_ASSETS2
GOODWILL AND INTANGIBLE ASSETS, NET (Details) (USD $) | Sep. 30, 2014 | Dec. 31, 2013 | Sep. 30, 2014 | Sep. 30, 2013 | Apr. 17, 2014 | Apr. 17, 2014 |
Franchise Stores | Franchise Stores | The Health Store | The Health Store | |||
store | store | |||||
Acquisitions | ' | ' | ' | ' | ' | ' |
Number of franchise stores acquired | ' | ' | 22 | 13 | ' | ' |
Total purchase prices associated with acquisitions | ' | ' | $3,100,000 | $2,100,000 | $8,900,000 | ' |
Cash paid | ' | ' | 1,600,000 | 1,300,000 | ' | ' |
Goodwill | 673,583,000 | 666,346,000 | ' | ' | ' | 6,900,000 |
Amortizable intangible assets | ' | ' | ' | ' | ' | 800,000 |
Working capital | ' | ' | ' | ' | ' | $300,000 |
GOODWILL_AND_INTANGIBLE_ASSETS3
GOODWILL AND INTANGIBLE ASSETS, NET (Details 2) (USD $) | 9 Months Ended |
In Thousands, unless otherwise specified | Sep. 30, 2014 |
Goodwill [Roll Forward] | ' |
Balance at December 31, 2013 | $666,346 |
Translation effect of exchange rates | -944 |
Balance at September 30, 2014 (unaudited) | 673,583 |
Acquired Franchise Stores | ' |
Goodwill [Roll Forward] | ' |
Acquired goodwill | 1,328 |
Acquisition of The Health Store | ' |
Goodwill [Roll Forward] | ' |
Acquired goodwill | 6,853 |
Retail | ' |
Goodwill [Roll Forward] | ' |
Balance at December 31, 2013 | 346,202 |
Translation effect of exchange rates | -944 |
Balance at September 30, 2014 (unaudited) | 353,439 |
Retail | Acquired Franchise Stores | ' |
Goodwill [Roll Forward] | ' |
Acquired goodwill | 1,328 |
Retail | Acquisition of The Health Store | ' |
Goodwill [Roll Forward] | ' |
Acquired goodwill | 6,853 |
Franchising | ' |
Goodwill [Roll Forward] | ' |
Balance at December 31, 2013 | 117,303 |
Translation effect of exchange rates | 0 |
Balance at September 30, 2014 (unaudited) | 117,303 |
Franchising | Acquired Franchise Stores | ' |
Goodwill [Roll Forward] | ' |
Acquired goodwill | 0 |
Franchising | Acquisition of The Health Store | ' |
Goodwill [Roll Forward] | ' |
Acquired goodwill | 0 |
Manufacturing/ Wholesale | ' |
Goodwill [Roll Forward] | ' |
Balance at December 31, 2013 | 202,841 |
Translation effect of exchange rates | 0 |
Balance at September 30, 2014 (unaudited) | 202,841 |
Manufacturing/ Wholesale | Acquired Franchise Stores | ' |
Goodwill [Roll Forward] | ' |
Acquired goodwill | 0 |
Manufacturing/ Wholesale | Acquisition of The Health Store | ' |
Goodwill [Roll Forward] | ' |
Acquired goodwill | $0 |
GOODWILL_AND_INTANGIBLE_ASSETS4
GOODWILL AND INTANGIBLE ASSETS, NET (Details 3) (USD $) | 9 Months Ended | ||||||
In Thousands, unless otherwise specified | Sep. 30, 2014 | Sep. 30, 2014 | Sep. 30, 2014 | Sep. 30, 2014 | Dec. 31, 2013 | Sep. 30, 2014 | Dec. 31, 2013 |
Operating Agreements | Other Intangibles | Retail Brand | Retail Brand | Franchise Brand | Franchise Brand | ||
Indefinite-lived Intangible Assets [Roll Forward] | ' | ' | ' | ' | ' | ' | ' |
Balance at beginning of the period (in usd) | $720,000 | ' | ' | $500,000 | $500,000 | $220,000 | $220,000 |
Balance at the end of the period (unaudited) (in usd) | 720,000 | ' | ' | 500,000 | 500,000 | 220,000 | 220,000 |
Finite-lived Intangible Assets [Roll Forward] | ' | ' | ' | ' | ' | ' | ' |
Balance at beginning of the period (in usd) | ' | 125,665 | 17,109 | ' | ' | ' | ' |
Acquired franchise stores | 635 | 0 | 635 | ' | ' | ' | ' |
Acquisition of The Health Store | 788 | 0 | 788 | ' | ' | ' | ' |
Amortization expense | -8,145 | -4,990 | -3,155 | ' | ' | ' | ' |
Translation effect of exchange rates | -148 | 0 | -148 | ' | ' | ' | ' |
Balance at the end of the period (unaudited) (in usd) | 135,904 | 120,675 | 15,229 | ' | ' | ' | ' |
Finite-Lived and Indefinite Lived Intangible Assets [Roll Forward] | ' | ' | ' | ' | ' | ' | ' |
Balance at beginning of the period (in usd) | 862,774 | ' | ' | ' | ' | ' | ' |
Balance at the end of the period (in usd) | $855,904 | ' | ' | ' | ' | ' | ' |
GOODWILL_AND_INTANGIBLE_ASSETS5
GOODWILL AND INTANGIBLE ASSETS, NET (Details 4) (USD $) | 9 Months Ended | |
In Thousands, unless otherwise specified | Sep. 30, 2014 | Dec. 31, 2013 |
Finite Lived and Indefinite Lived Intangible Assets | ' | ' |
Balance at beginning of the period (in usd) | $720,000 | ' |
Balance at the end of the period (unaudited) (in usd) | 720,000 | ' |
Finite-Lived Intangible Asset, Useful Life | '23 years 4 months 24 days | ' |
Finite-Lived Intangible Assets, Accumulated Amortization | -62,098 | -54,016 |
Finite-Lived Intangible Assets, Carrying Amount | 135,904 | ' |
Intangible Assets, Gross (Excluding Goodwill) | 918,002 | 916,790 |
Intangible Assets, Net (Excluding Goodwill) | 855,904 | 862,774 |
Operating Agreements | ' | ' |
Finite Lived and Indefinite Lived Intangible Assets | ' | ' |
Finite-Lived Intangible Assets, Carrying Amount | 120,675 | 125,665 |
Retail Agreements | ' | ' |
Finite Lived and Indefinite Lived Intangible Assets | ' | ' |
Finite-Lived Intangible Asset, Useful Life | '30 years 3 months 18 days | ' |
Finite-Lived Intangible Assets, Gross | 31,000 | 31,000 |
Finite-Lived Intangible Assets, Accumulated Amortization | -8,091 | -7,301 |
Finite-Lived Intangible Assets, Carrying Amount | 22,909 | 23,699 |
Franchise Agreements | ' | ' |
Finite Lived and Indefinite Lived Intangible Assets | ' | ' |
Finite-Lived Intangible Asset, Useful Life | '25 years | ' |
Finite-Lived Intangible Assets, Gross | 70,000 | 70,000 |
Finite-Lived Intangible Assets, Accumulated Amortization | -21,117 | -19,017 |
Finite-Lived Intangible Assets, Carrying Amount | 48,883 | 50,983 |
Manufacturing Agreements | ' | ' |
Finite Lived and Indefinite Lived Intangible Assets | ' | ' |
Finite-Lived Intangible Asset, Useful Life | '25 years | ' |
Finite-Lived Intangible Assets, Gross | 70,000 | 70,000 |
Finite-Lived Intangible Assets, Accumulated Amortization | -21,117 | -19,017 |
Finite-Lived Intangible Assets, Carrying Amount | 48,883 | 50,983 |
Other Intangibles | ' | ' |
Finite Lived and Indefinite Lived Intangible Assets | ' | ' |
Finite-Lived Intangible Asset, Useful Life | '8 years 2 months 12 days | ' |
Finite-Lived Intangible Assets, Gross | 20,904 | 20,327 |
Finite-Lived Intangible Assets, Accumulated Amortization | -6,664 | -3,995 |
Finite-Lived Intangible Assets, Carrying Amount | 14,240 | 16,332 |
Franchise Rights | ' | ' |
Finite Lived and Indefinite Lived Intangible Assets | ' | ' |
Finite-Lived Intangible Asset, Useful Life | '3 years | ' |
Finite-Lived Intangible Assets, Gross | 6,098 | 5,463 |
Finite-Lived Intangible Assets, Accumulated Amortization | -5,109 | -4,686 |
Finite-Lived Intangible Assets, Carrying Amount | 989 | 777 |
Brands - Retail | ' | ' |
Finite Lived and Indefinite Lived Intangible Assets | ' | ' |
Balance at beginning of the period (in usd) | ' | 500,000 |
Balance at the end of the period (unaudited) (in usd) | 500,000 | 500,000 |
Brands - Franchise | ' | ' |
Finite Lived and Indefinite Lived Intangible Assets | ' | ' |
Balance at beginning of the period (in usd) | ' | 220,000 |
Balance at the end of the period (unaudited) (in usd) | $220,000 | $220,000 |
GOODWILL_AND_INTANGIBLE_ASSETS6
GOODWILL AND INTANGIBLE ASSETS, NET (Details 5) (USD $) | Sep. 30, 2014 |
In Thousands, unless otherwise specified | |
Goodwill and Intangible Assets Disclosure [Abstract] | ' |
2014 | $2,726 |
2015 | 10,668 |
2016 | 9,790 |
2017 | 7,774 |
2018 | 7,670 |
Thereafter | 97,276 |
Total | $135,904 |
LONGTERM_DEBT_INTEREST_EXPENSE2
LONG-TERM DEBT / INTEREST EXPENSE (Details) (USD $) | 3 Months Ended | 9 Months Ended | 9 Months Ended | 12 Months Ended | 9 Months Ended | 12 Months Ended | ||||||||
Sep. 30, 2014 | Sep. 30, 2013 | Sep. 30, 2014 | Sep. 30, 2013 | Sep. 30, 2014 | Sep. 30, 2013 | Dec. 31, 2013 | Dec. 31, 2013 | Sep. 30, 2014 | Dec. 31, 2013 | Sep. 30, 2014 | Dec. 31, 2013 | Sep. 30, 2014 | Dec. 31, 2013 | |
Term Loan Facility | Term Loan Facility | Term Loan Facility | Term Loan Facility | Revolving Credit Facility | Revolving Credit Facility | Revolving Credit Facility | Revolving Credit Facility | Letter Of Credit | Letter Of Credit | |||||
Maximum | Maximum | Maximum | ||||||||||||
Long-term Debt | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Maximum borrowing capacity | ' | ' | ' | ' | ' | ' | $1,400,000,000 | ' | ' | ' | ' | $80,000,000 | ' | ' |
Line of Credit Facility, Potential Borrowing Capacity Increase | ' | ' | ' | ' | ' | ' | ' | 252,500,000 | ' | ' | ' | ' | ' | ' |
Line of Credit Facility, Borrowing Capacity Increase Limit | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 130,000,000 | ' | ' | ' |
Interest expense, net | 11,781,000 | 11,237,000 | 34,987,000 | 33,353,000 | 35,000,000 | 33,400,000 | ' | ' | ' | ' | ' | ' | ' | ' |
Interest rate (as a percent) | ' | ' | ' | ' | 3.25% | ' | 3.25% | ' | ' | ' | ' | ' | ' | ' |
Revolving Credit Facility pledged to secure letters of credit | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | $1,100,000 | $1,100,000 |
Commitment fee respect of unutilized revolving loan commitments (as a percent) | ' | ' | ' | ' | ' | ' | ' | ' | 0.50% | 0.50% | ' | ' | ' | ' |
Fee for letters of credit to lenders (as a percent) | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 2.50% | 2.50% |
LONGTERM_DEBT_INTEREST_EXPENSE3
LONG-TERM DEBT / INTEREST EXPENSE (Details 2) (USD $) | Sep. 30, 2014 | Dec. 31, 2013 |
In Thousands, unless otherwise specified | ||
Debt Instrument | ' | ' |
Total debt | $1,343,398 | $1,347,099 |
Less: current maturities | -4,793 | -5,443 |
Long-term debt | 1,338,605 | 1,341,656 |
Senior Credit Facility | ' | ' |
Debt Instrument | ' | ' |
Total debt | 1,343,110 | 1,345,987 |
Other | ' | ' |
Debt Instrument | ' | ' |
Total debt | $288 | $1,112 |
FINANCIAL_INSTRUMENTS_Details
FINANCIAL INSTRUMENTS (Details) (USD $) | Sep. 30, 2014 | Dec. 31, 2013 |
In Thousands, unless otherwise specified | ||
Carrying Amount | ' | ' |
Actual and estimated fair values of the financial instruments | ' | ' |
Cash and cash equivalents | $148,243 | $226,217 |
Receivables, net | 139,719 | 144,833 |
Franchise notes receivable, net | 18,286 | 10,163 |
Accounts payable | 147,805 | 135,164 |
Long-term debt (including current portion) | 1,343,398 | 1,347,099 |
Fair Value | ' | ' |
Actual and estimated fair values of the financial instruments | ' | ' |
Cash and cash equivalents | 148,243 | 226,217 |
Receivables, net | 139,719 | 144,833 |
Franchise notes receivable, net | 18,286 | 10,163 |
Accounts payable | 147,805 | 135,164 |
Long-term debt (including current portion) | $1,306,455 | $1,343,732 |
COMMITMENTS_AND_CONTINGENCIES_
COMMITMENTS AND CONTINGENCIES (Details) (USD $) | 9 Months Ended | 0 Months Ended | 1 Months Ended | 9 Months Ended | 9 Months Ended | |||||
Sep. 30, 2014 | Sep. 30, 2014 | Nov. 04, 2008 | Jun. 30, 2013 | Sep. 30, 2014 | Jan. 07, 2013 | Sep. 30, 2014 | Sep. 30, 2014 | Sep. 30, 2014 | Oct. 13, 2014 | |
Environmental Issue | California Wage And Break Claims | California Wage And Break Claims | California Wage And Break Claims | California Wage And Break Claims | Product Liability | Product Liability | Product Liability | Subsequent Event | ||
plaintiff | plaintiff | plaintiff | claim | Hydroxycut Claims | DMAA Claims | claim | ||||
product | action | |||||||||
report | claim | |||||||||
lawsuit | lawsuit | |||||||||
action | ||||||||||
claim | ||||||||||
Commitments and contingencies | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Deductible/retention per claim out of total product liability insurance | ' | ' | ' | ' | ' | ' | $4,000,000 | ' | ' | ' |
Aggregate cap on retained loss for deductible/retention per claim out of total product liability insurance | ' | ' | ' | ' | ' | ' | 10,000,000 | ' | ' | ' |
Number of reports of liver injuries | ' | ' | ' | ' | ' | ' | ' | 23 | ' | ' |
Number of Hydroxycut-branded products recalled | ' | ' | ' | ' | ' | ' | ' | 14 | ' | ' |
Number of pending lawsuits in which company is named | ' | ' | ' | ' | 71 | ' | ' | 76 | 21 | ' |
Number of individual, largely personal injury claims pending | ' | ' | ' | ' | ' | ' | ' | 70 | 18 | ' |
Number of putative class action cases pending against the company | ' | ' | ' | ' | ' | ' | ' | 6 | 3 | ' |
Number of putative class action cases where court approved a settlement | ' | ' | ' | ' | ' | ' | ' | ' | ' | 2 |
Number of plaintiffs who filed individual claims against the company | ' | ' | 98 | ' | ' | ' | ' | ' | ' | ' |
Number of plaintiffs whose claim trial conducted | ' | ' | ' | 7 | ' | ' | ' | ' | ' | ' |
Number of plaintiffs whose claims have been resolved | ' | ' | ' | ' | 20 | ' | ' | ' | ' | ' |
Loss Contingency, Number of State And Federal Wage Claims | ' | ' | ' | ' | ' | 1 | ' | ' | ' | ' |
Accrued contingent liability | ' | ' | ' | ' | 0 | ' | ' | ' | ' | ' |
Amount of future purchase commitments | 3,200,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Cost of remediation | ' | $0 | ' | ' | ' | ' | ' | ' | ' | ' |
STOCKBASED_COMPENSATION_PLANS_1
STOCK-BASED COMPENSATION PLANS (Details) (USD $) | 9 Months Ended | |
In Millions, except Share data, unless otherwise specified | Sep. 30, 2014 | Sep. 30, 2013 |
plan | ||
Stock-based compensation plans | ' | ' |
Number of stock-based employee compensation plans | 2 | ' |
Non-cash stock-based compensation expense | $5.10 | $5.90 |
Total unrecognized compensation cost related to non-vested stock awards | 7.9 | ' |
Weighted average period over which compensation cost is expected to be recognized | '1 year 7 months 6 days | ' |
Total intrinsic value of awards exercised | 12.7 | 32.6 |
Total amount of cash received from the exercise of options | 20.2 | 10.3 |
Tax benefit associated with the exercise of awards | 2.5 | 11 |
Minimum | ' | ' |
Stock-based compensation plans | ' | ' |
Vesting period | '4 years | ' |
Expiration period | '7 years | ' |
Maximum | ' | ' |
Stock-based compensation plans | ' | ' |
Vesting period | '5 years | ' |
Expiration period | '10 years | ' |
Stock Option | ' | ' |
Stock-based compensation plans | ' | ' |
Weighted average date fair value per share of options granted (in dollars per share) | $7.89 | $14.20 |
Fair value of options vested | $1.90 | $2.20 |
Stock Option | Minimum | ' | ' |
Stock-based compensation plans | ' | ' |
Vesting period | '4 years | ' |
Expiration term | '7 years | ' |
Stock Option | Maximum | ' | ' |
Stock-based compensation plans | ' | ' |
Vesting period | '5 years | ' |
Expiration term | '10 years | ' |
2011 Stock Plan | ' | ' |
Stock-based compensation plans | ' | ' |
Number of shares authorized for issuance | 8,500,000 | ' |
Number of shares reserved for every share granted that are Full Share Awards | 1.8 | ' |
Number of shares available for grant for every share forfeited that are Full Share Awards | 1.8 | ' |
2011 Stock Plan | Performance Vesting Restricted Stock Units | ' | ' |
Stock-based compensation plans | ' | ' |
Granted (in shares) | 130,798 | ' |
2011 Stock Plan | Performance Vesting Restricted Stock Units | Minimum | ' | ' |
Stock-based compensation plans | ' | ' |
Vesting Rights Percentage | 0.00% | ' |
2011 Stock Plan | Performance Vesting Restricted Stock Units | Maximum | ' | ' |
Stock-based compensation plans | ' | ' |
Vesting Rights Percentage | 200.00% | ' |
2011 Stock Plan | Time Vesting Restricted Stock Units | ' | ' |
Stock-based compensation plans | ' | ' |
Vesting period | '3 years | ' |
Granted (in shares) | 151,412 | ' |
2007 Stock Plan | ' | ' |
Stock-based compensation plans | ' | ' |
Granted (in shares) | 0 | ' |
STOCKBASED_COMPENSATION_PLANS_2
STOCK-BASED COMPENSATION PLANS (Details 2) (Stock Option, USD $) | 9 Months Ended |
In Thousands, except Share data, unless otherwise specified | Sep. 30, 2014 |
Stock Option | ' |
Total Options | ' |
Outstanding, beginning of period (in shares) | 1,887,154 |
Granted (in shares) | 175,000 |
Exercised (in shares) | -896,861 |
Forfeited (in shares) | -290,014 |
Outstanding, ending of period (in shares) | 875,279 |
Exercisable at the end of the period (in shares) | 272,852 |
Weighted Average Exercise Price | ' |
Outstanding, beginning of period (in dollars per share) | $24.14 |
Granted (in dollars per share) | $33.13 |
Exercised (in dollars per share) | $22.60 |
Forfeited (in dollars per share) | $30.12 |
Outstanding, end of period (in dollars per share) | $25.52 |
Exercisable at the end of the period (in dollars per share) | $20.40 |
Weighted Average Remaining Contractual Term (in years) | ' |
Options, Outstanding, Weighted Average Remaining Contractual Term | '5 years 8 months 12 days |
Options, Exercisable, Weighted Average Remaining Contractual Term | '4 years 6 months |
Aggregate Intrinsic Value | ' |
Outstanding at the end of the period | $11,571 |
Exercisable at the end of the period | $5,004 |
STOCKBASED_COMPENSATION_PLANS_3
STOCK-BASED COMPENSATION PLANS (Details 3) (Employee Stock Option) | 9 Months Ended |
Sep. 30, 2014 | |
Employee Stock Option | ' |
Stock-based compensation plans | ' |
Dividend yield | 1.90% |
Expected option life | '4 years 9 months 12 days |
Volatility factor percentage of market price | 31.10% |
Discount rate | 1.70% |
STOCKBASED_COMPENSATION_PLANS_4
STOCK-BASED COMPENSATION PLANS (Details 4) (2011 Stock Plan, Restricted Stock, USD $) | 9 Months Ended |
Sep. 30, 2014 | |
2011 Stock Plan | Restricted Stock | ' |
Restricted Stock | ' |
Outstanding, beginning of period (in shares) | 114,981 |
Granted (in shares) | 10,404 |
Vested ( in shares) | -32,165 |
Forfeited (in shares) | -46,474 |
Outstanding, end of period (in shares) | 46,746 |
Weighted Average Grant-Date Fair Value | ' |
Outstanding, beginning of period (in dollars per share) | $25.16 |
Granted (in dollars per share) | $36.52 |
Vested ( in dollars per share) | $30.75 |
Forfeited (in dollars per share) | $24.04 |
Outstanding, end of period (in dollars per share) | $24.96 |
STOCKBASED_COMPENSATION_PLANS_5
STOCK-BASED COMPENSATION PLANS (Details 5) (2011 Stock Plan, USD $) | 9 Months Ended |
Sep. 30, 2014 | |
Time Vesting Restricted Stock Units | ' |
Time Vesting and Performance Vesting Restricted Stock Units | ' |
Outstanding, beginning of period (in shares) | 141,298 |
Granted (in shares) | 151,412 |
Vested ( in shares) | -1,174 |
Forfeited (in shares) | -164,296 |
Outstanding, end of period (in shares) | 127,240 |
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Weighted Average Grant Date Fair Value [Abstract] | ' |
Outstanding, beginning of period (in dollars per share) | $40.81 |
Granted (in dollars per share) | $43.99 |
Vested ( in dollars per share) | $46.47 |
Forfeited (in dollars per share) | $43.45 |
Outstanding, end of period (in dollars per share) | $41.13 |
Performance Vesting Restricted Stock Units | ' |
Time Vesting and Performance Vesting Restricted Stock Units | ' |
Outstanding, beginning of period (in shares) | 55,366 |
Granted (in shares) | 130,798 |
Vested ( in shares) | 0 |
Forfeited (in shares) | -129,171 |
Outstanding, end of period (in shares) | 56,993 |
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Weighted Average Grant Date Fair Value [Abstract] | ' |
Outstanding, beginning of period (in dollars per share) | $45.94 |
Granted (in dollars per share) | $44.62 |
Vested ( in dollars per share) | $0 |
Forfeited (in dollars per share) | $45.26 |
Outstanding, end of period (in dollars per share) | $44.45 |
SEGMENTS_Details
SEGMENTS (Details) (USD $) | 3 Months Ended | 9 Months Ended | ||
In Thousands, unless otherwise specified | Sep. 30, 2014 | Sep. 30, 2013 | Sep. 30, 2014 | Sep. 30, 2013 |
segment | ||||
Segment Reporting [Abstract] | ' | ' | ' | ' |
Number of reportable segments | ' | ' | 3 | ' |
Revenue: | ' | ' | ' | ' |
Total revenue | $656,326 | $674,501 | $2,005,999 | $2,015,226 |
Operating income: | ' | ' | ' | ' |
Operating income | 108,725 | 125,974 | 351,031 | 374,165 |
Restructuring Charges | -7,473 | 0 | -7,473 | 0 |
Interest expense, net | 11,781 | 11,237 | 34,987 | 33,353 |
Income before income taxes | 96,944 | 114,737 | 316,044 | 340,812 |
Operating Segment | ' | ' | ' | ' |
Revenue: | ' | ' | ' | ' |
Total revenue | 718,573 | 740,732 | 2,200,861 | 2,214,474 |
Operating Segment | Intersegment Revenues | ' | ' | ' | ' |
Revenue: | ' | ' | ' | ' |
Total revenue | -62,247 | -66,231 | -194,862 | -199,248 |
Operating Segment | Retail | ' | ' | ' | ' |
Revenue: | ' | ' | ' | ' |
Total revenue | 480,691 | 487,271 | 1,495,197 | 1,483,228 |
Operating income: | ' | ' | ' | ' |
Operating income | 89,370 | 92,580 | 277,916 | 291,507 |
Operating Segment | Franchise | ' | ' | ' | ' |
Revenue: | ' | ' | ' | ' |
Total revenue | 114,106 | 117,780 | 327,763 | 335,985 |
Operating income: | ' | ' | ' | ' |
Operating income | 40,316 | 41,616 | 121,639 | 116,694 |
Operating Segment | Manufacturing/ Wholesale | ' | ' | ' | ' |
Revenue: | ' | ' | ' | ' |
Total revenue | 123,776 | 135,681 | 377,901 | 395,261 |
Operating income: | ' | ' | ' | ' |
Operating income | 22,917 | 28,436 | 69,359 | 76,869 |
Operating Segment | Manufacturing/ Wholesale | Intersegment Revenues | ' | ' | ' | ' |
Revenue: | ' | ' | ' | ' |
Total revenue | 62,247 | 66,231 | 194,862 | 199,248 |
Operating Segment | Manufacturing/ Wholesale | Third Party | ' | ' | ' | ' |
Revenue: | ' | ' | ' | ' |
Total revenue | 61,529 | 69,450 | 183,039 | 196,013 |
Corporate, Non-Segment | ' | ' | ' | ' |
Operating income: | ' | ' | ' | ' |
Warehousing and distribution costs | -17,277 | -17,513 | -50,258 | -50,737 |
Corporate costs | -19,128 | -19,145 | -60,152 | -60,168 |
Restructuring Charges | -7,473 | 0 | -7,473 | 0 |
Subtotal unallocated corporate and other costs | ($43,878) | ($36,658) | ($117,883) | ($110,905) |
INCOME_TAXES_Details
INCOME TAXES (Details) (USD $) | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2014 | Sep. 30, 2013 | Sep. 30, 2014 | Sep. 30, 2013 | Dec. 31, 2013 | |
Income Tax Disclosure [Abstract] | ' | ' | ' | ' | ' |
Income tax expense | $32,630,000 | $41,704,000 | $111,940,000 | $123,448,000 | ' |
Effective income tax rate (as a percent) | ' | ' | 35.40% | 36.20% | ' |
Reversal of contingent purchase price | 4,313,000 | 0 | 4,313,000 | 0 | ' |
Unrecognized tax benefits | 11,300,000 | ' | 11,300,000 | ' | 10,800,000 |
Unrecognized tax benefits that would affect the effective tax rate | 11,300,000 | ' | 11,300,000 | ' | ' |
Interest and penalties accrued related to unrecognized tax benefits | $4,200,000 | ' | $4,200,000 | ' | $4,200,000 |
SUBSEQUENT_EVENTS_Details
SUBSEQUENT EVENTS (Details) (Scenario, Forecast, USD $) | 0 Months Ended |
Oct. 23, 2014 | |
Scenario, Forecast | ' |
Subsequent events | ' |
Dividends declared per share (in dollars per share) | $0.16 |