Document and Entity Information
Document and Entity Information - shares | 3 Months Ended | |
Mar. 31, 2019 | Apr. 25, 2019 | |
Document and Entity Information | ||
Entity Registrant Name | GNC Holdings, Inc. | |
Entity Central Index Key | 0001502034 | |
Document Type | 10-Q | |
Document Period End Date | Mar. 31, 2019 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --12-31 | |
Entity Current Reporting Status | Yes | |
Entity Filer Category | Accelerated Filer | |
Entity Emerging Growth Company | false | |
Entity Small Business | false | |
Entity Common Stock, Shares Outstanding (in shares) | 83,969,311 | |
Document Fiscal Year Focus | 2019 | |
Document Fiscal Period Focus | Q1 |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) $ in Thousands | Mar. 31, 2019 | Dec. 31, 2018 |
Current assets: | ||
Cash and cash equivalents | $ 137,117 | $ 67,224 |
Receivables, net | 119,352 | 127,317 |
Inventory | 410,951 | 465,572 |
Forward contracts for the issuance of convertible preferred stock | 0 | 88,942 |
Prepaid and other current assets | 17,528 | 55,109 |
Total current assets | 684,948 | 804,164 |
Long-term assets: | ||
Goodwill | 79,111 | 140,764 |
Brand name | 300,720 | 300,720 |
Other intangible assets, net | 75,463 | 92,727 |
Property, plant and equipment, net | 95,574 | 155,095 |
Right-of-use assets | 401,456 | |
Total Equity method investments | 97,803 | 0 |
Other long-term assets | 35,062 | 34,380 |
Total long-term assets | 1,085,189 | 723,686 |
Total assets | 1,770,137 | 1,527,850 |
Current liabilities: | ||
Accounts payable | 174,682 | 148,782 |
Current debt | 0 | 158,756 |
Current lease liabilities | 117,093 | |
Deferred revenue and other current liabilities | 107,770 | 120,169 |
Total current liabilities | 399,545 | 427,707 |
Long-term liabilities: | ||
Long-term debt | 888,353 | 993,566 |
Deferred income taxes | 15,304 | 39,834 |
Lease liabilities | 401,617 | |
Other long-term liabilities | 43,007 | 82,249 |
Total long-term liabilities | 1,348,281 | 1,115,649 |
Total liabilities | 1,747,826 | 1,543,356 |
Contingencies | ||
Convertible preferred stock | 211,395 | 98,804 |
Stockholders’ deficit: | ||
Common stock | 130 | 130 |
Additional paid-in capital | 1,009,041 | 1,007,827 |
Retained earnings | 538,439 | 613,637 |
Treasury stock, at cost | (1,725,349) | (1,725,349) |
Accumulated other comprehensive loss | (11,345) | (10,555) |
Total stockholders’ deficit | (189,084) | (114,310) |
Total liabilities, mezzanine equity and stockholders’ deficit | $ 1,770,137 | $ 1,527,850 |
Consolidated Statements of Oper
Consolidated Statements of Operations - USD ($) shares in Thousands, $ in Thousands | 3 Months Ended | |
Mar. 31, 2019 | Mar. 31, 2018 | |
Income Statement [Abstract] | ||
Revenue | $ 564,764 | $ 607,533 |
Cost of sales, including warehousing, distribution and occupancy | 361,673 | 400,659 |
Gross profit | 203,091 | 206,874 |
Selling, general, and administrative | 148,303 | 160,730 |
Loss on net asset exchange for the formation of the joint ventures | 19,514 | 0 |
Other income, net | (208) | (245) |
Operating income | 35,482 | 46,389 |
Interest expense, net | 32,956 | 21,773 |
Loss on debt refinancing | 0 | 16,740 |
Loss on forward contracts for the issuance of convertible preferred stock | 16,787 | 0 |
(Loss) income before income taxes | (14,261) | 7,876 |
Income tax expense | 1,956 | 1,686 |
(Loss) income before income from equity method investments | (16,217) | 6,190 |
Income from equity method investments | 955 | 0 |
Net (loss) income | $ (15,262) | $ 6,190 |
(Loss) earnings per share: | ||
Basic (in dollars per share) | $ (0.23) | $ 0.07 |
Diluted (in dollars per share) | $ (0.23) | $ 0.07 |
Weighted average common shares outstanding: | ||
Basic weighted-average shares (in shares) | 83,510 | 83,232 |
Diluted weighted-average shares (in shares) | 83,510 | 83,368 |
Consolidated Statements of Comp
Consolidated Statements of Comprehensive Income - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2019 | Mar. 31, 2018 | |
Statement of Comprehensive Income [Abstract] | ||
Net (loss) income | $ (15,262) | $ 6,190 |
Other comprehensive loss: | ||
Periodic revaluation of interest rate swap, net of tax benefit of $0.7 million | (1,464) | 0 |
Reclassification adjustment for interest recognized in Consolidated Statement of Operations, net of tax expense of $0.1 million | 236 | 0 |
Net change in unrecognized loss on interest rate swaps, net of tax | (1,228) | 0 |
Foreign currency translation gain (loss) | 438 | (846) |
Other comprehensive loss | (790) | (846) |
Comprehensive (loss) income | $ (16,052) | $ 5,344 |
Consolidated Statements of Co_2
Consolidated Statements of Comprehensive Income Consolidated Statements of Comprehensive Income (Parenthetical) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2019 | Mar. 31, 2018 | |
Statement of Other Comprehensive Income [Abstract] | ||
Tax benefit | $ 0.7 | $ 0 |
Tax expense | $ 0.1 | $ 0 |
Consolidated Statements of Stoc
Consolidated Statements of Stockholders' Deficit - USD ($) shares in Thousands, $ in Thousands | Total | Common Stock | Treasury Stock | Paid-in Capital | Retained Earnings | Accumulated Other Comprehensive Loss |
Beginning balance (in shares) at Dec. 31, 2017 | 83,567 | |||||
Beginning balance at Dec. 31, 2017 | $ (185,921) | $ 130 | $ (1,725,349) | $ 1,001,315 | $ 543,814 | $ (5,831) |
Increase (Decrease) in Stockholders' Equity | ||||||
Comprehensive income | 5,344 | 6,190 | (846) | |||
Dividend forfeitures on restricted stock | 42 | 42 | ||||
Restricted stock awards (in shares) | 149 | |||||
Restricted stock awards | 0 | |||||
Minimum tax withholding requirements (in shares) | (54) | |||||
Minimum tax withholding requirements | (223) | (223) | ||||
Stock-based compensation | 1,512 | 1,512 | ||||
Ending balance (in shares) at Mar. 31, 2018 | 83,662 | |||||
Ending balance at Mar. 31, 2018 | (179,246) | $ 130 | (1,725,349) | 1,002,604 | 550,046 | (6,677) |
Beginning balance (in shares) at Dec. 31, 2018 | 83,886 | |||||
Beginning balance at Dec. 31, 2018 | (114,310) | $ 130 | (1,725,349) | 1,007,827 | 613,637 | (10,555) |
Increase (Decrease) in Stockholders' Equity | ||||||
Comprehensive income | (16,052) | (15,262) | (790) | |||
Dividend forfeitures on restricted stock | 0 | 0 | ||||
Restricted stock awards (in shares) | 121 | |||||
Restricted stock awards | 0 | |||||
Minimum tax withholding requirements (in shares) | (41) | |||||
Minimum tax withholding requirements | (120) | (120) | ||||
Stock-based compensation | 1,334 | 1,334 | ||||
Ending balance (in shares) at Mar. 31, 2019 | 83,966 | |||||
Ending balance at Mar. 31, 2019 | $ (189,084) | $ 130 | $ (1,725,349) | $ 1,009,041 | $ 538,439 | $ (11,345) |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2019 | Mar. 31, 2018 | |
Cash flows from operating activities: | ||
Net (loss) income | $ (15,262) | $ 6,190 |
Adjustments to reconcile net (loss) income to net cash provided by operating activities: | ||
Depreciation and amortization expense | 10,190 | 12,105 |
Equity income from equity method investments | (955) | 0 |
Amortization of debt costs | 7,988 | 3,609 |
Stock-based compensation | 1,334 | 1,512 |
Loss on forward contracts for the issuance of convertible preferred stock | 16,787 | 0 |
Loss on net asset exchange for the formation of the joint ventures | 19,514 | 0 |
Gains on refranchising | (21) | 0 |
Loss on debt refinancing | 0 | 16,740 |
Third-party fees associated with refinancing | 0 | (15,753) |
Changes in assets and liabilities: | ||
(Increase) decrease in receivables | (12,567) | 11,840 |
(Increase) in inventory | (6,886) | (22,766) |
Increase in prepaid and other current assets | (3,658) | (9,473) |
Increase in accounts payable | 57,722 | 21,791 |
Increase in deferred revenue and accrued liabilities | (627) | 388 |
Other operating activities | (4,848) | (1,111) |
Net cash provided by operating activities | 68,711 | 25,072 |
Cash flows from investing activities: | ||
Capital expenditures | (3,017) | (3,732) |
Refranchising proceeds | 710 | 465 |
Store acquisition costs | (43) | (116) |
Proceeds from Sales of Assets, Investing Activities | 101,000 | 0 |
Payments to Acquire Equity Method Investments | (13,079) | 0 |
Net cash provided by (used in) investing activities | 85,571 | (3,383) |
Cash flows from financing activities: | ||
Borrowings under revolving credit facility | 22,000 | 50,000 |
Payments on revolving credit facility | (22,000) | (32,500) |
Proceeds from the issuance of convertible preferred stock | 199,950 | 0 |
Original issuance discount and revolving credit facility fees | (10,365) | (35,216) |
Fees associated with the issuance of convertible preferred stock | (12,564) | (2,183) |
Minimum tax withholding requirements | (120) | (223) |
Net cash used in financing activities | (84,411) | (31,960) |
Effect of exchange rate changes on cash and cash equivalents | 22 | 141 |
Net increase (decrease) in cash and cash equivalents | 69,893 | (10,130) |
Beginning balance, cash and cash equivalents | 67,224 | 64,001 |
Ending balance, cash and cash equivalents | 137,117 | 53,871 |
Non-cash investing activities: | ||
Capital expenditures in current liabilities | 1,115 | 1,203 |
Non-cash financing activities: | ||
Original issuance discount | 0 | 19,587 |
Tranche B-1 | ||
Cash flows from financing activities: | ||
Payments on term loan facility | (147,312) | (1,138) |
Tranche B-2 | ||
Cash flows from financing activities: | ||
Payments on term loan facility | $ (114,000) | $ (10,700) |
NATURE OF BUSINESS
NATURE OF BUSINESS | 3 Months Ended |
Mar. 31, 2019 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
NATURE OF BUSINESS | 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 health and wellness brand with a diversified, omni-channel business. The Company's assortment of performance and nutritional supplements, vitamins, herbs and greens, health and beauty, food and drink and other general merchandise features innovative private-label products as well as nationally recognized third-party brands, many of which are exclusive to GNC. The Company's operations consist of purchasing raw materials, formulating and manufacturing products and selling the finished products through its three reportable segments, U.S. and Canada, International, and Manufacturing / Wholesale (refer to Note 12, "Segments" for more information). Corporate retail store operations are located in the United States, Canada, Puerto Rico and Ireland. In addition, the Company offers products on the internet through GNC.com and third-party websites. Franchise locations exist in the United States and approximately 50 other countries. Additionally, the Company licenses the use of its trademarks and trade names In February 2019, the Company entered into two joint ventures to operate its e-commerce business and retail business, respectively, in China, which will accelerate its presence and maximize the Company's opportunities for growth in the Chinese supplement market. Under the terms of the agreement, the Company contributed its China business and retained 35% interest in the joint ventures. In March 2019, the Company announced a strategic joint venture with International Vitamin Corporation ("IVC") regarding the Company's manufacturing business, which enables the Company to increase its focus on product innovation while IVC manages manufacturing and integrates with the Company's supply chain thereby driving more efficient usage of capital. Under the terms of the agreement, the Company received $101 million and contributed its Nutra manufacturing and Anderson facility net assets in exchange for an initial 43% |
BASIS OF PRESENTATION
BASIS OF PRESENTATION | 3 Months Ended |
Mar. 31, 2019 | |
Accounting Policies [Abstract] | |
BASIS OF PRESENTATION | BASIS OF PRESENTATION The accompanying unaudited Consolidated Financial Statements, which have been prepared in accordance with the applicable rules of the Securities and Exchange Commission ("SEC"), include all adjustments (of a normal and recurring nature) that management considers necessary to fairly state the Company's results of operations, financial position and cash flows. The March 31, 2019 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 Footnotes included in the Company’s audited financial statements in its Annual Report on Form 10-K for the year ended December 31, 2018 , as filed with the SEC on March 13, 2019 (the "2018 10-K"). Interim results are not necessarily indicative of the results that may be expected for the remainder of the year ending December 31, 2019 . Recently Adopted Accounting Pronouncements Adoption of the New Lease Standard In February 2016, the Financial Accounting Standards Board ("FASB") issued ASU 2016-02, which requires lessees to recognize a right-of-use asset and a lease liability, initially measured at the present value of the lease payments for all leases with a term greater than 12 months. This standard is effective for annual reporting periods, and interim periods therein, beginning after December 15, 2018 and is required to be applied using a modified retrospective approach. In July 2018, the FASB issued ASU 2018-11, which provides companies with the option to apply the new lease standard either at the beginning of the earliest comparative period presented or in the period of adoption. The Company adopted ASU 2016-02 and its related amendments (collectively known as "ASC 842") during the first quarter of fiscal 2019 electing the optional transition relief amendment that allows for a cumulative-effect adjustment in the period of adoption and did not restate prior periods. In transitioning to ASC 842, the Company elected to use the practical expedient package available under the guidance for leases that commenced before the effective date and did not elect to use hindsight. The Company has implemented new lease management and accounting system and updated its processes and internal controls to comply with the new standard. The Company leases substantially all of our retail stores in the U.S. and Canada segment, including most of the domestic franchise stores that are leased and sublease to franchisees, the four distribution centers in the United States and retail stores in Ireland. In addition, the Company has leased office locations, vehicles and equipment to support our store and supply chain operations. All of the Company's leases are classified as operating leases. The Company determines if a contract contains a lease at inception. The lease liabilities are recognized based on the present value of the future minimum lease payments over the term at the commencement date for leases exceeding 12 months. The lease agreements generally contain lease and non-lease components. Non-lease components primarily include payments for maintenance and utilities. The minimum lease payments include only fixed lease components, as well as any variable rate payments that depend on an index, initially measured using the index at the lease commencement date. Lease terms may include options to renew when it is reasonably certain that the Company will exercise an option. The Company estimates its incremental borrowing rate, which is estimated to approximate the interest rate on a collateralized basis with similar terms and payments for each lease, using a portfolio approach. The right-of-use assets recognized are initially equal to the lease liability, adjusted for any lease payments made on or before the commencement dates and lease incentives. The Company recognized lease liabilities of $550.2 million on January 1, 2019. A right-of-use asset of $504.2 million was recognized based on the lease liability, adjusted for the reclassification of deferred rent of $53.3 million and prepaid rent of $7.3 million . Additionally, the Company recognized $79.8 million of right-of-use asset impairment charges for certain of the Company's stores for which it was previously determined that the carrying value of the such stores' assets were not recoverable. The right-of-use asset impairment charges were recorded as a reduction to January 1, 2019 (opening day) retained earnings, net of tax of $19.8 million . The new lease standard has no impact on the timing or classification of the Company's cash flows as reported in the Consolidated Statement of Cash Flows. The lease liabilities for the operating leases are amortized using the effective interest method. The right-of-use asset is amortized by taking the difference between total rent expense recorded on straight line basis and the lease liability amortization. When the right-of-use asset for an operating lease is impaired, lease expense is no longer recognized on a straight-line basis. For impaired leases, the Company continues to amortize the lease liability using the same effective interest method as before the impairment charge and the right-of-use asset is amortized on a straight-line basis. Refer to Note 8 "Leases" for additional information relating to the impact of adopting ASC 842. Recently Issued Accounting Pronouncements |
REVENUE
REVENUE | 3 Months Ended |
Mar. 31, 2019 | |
Revenue from Contract with Customer [Abstract] | |
REVENUE | REVENUE Revenue is recognized when obligations under the terms of a contract with the customer are satisfied. Generally, this occurs with the transfer of control of products or services. The Company satisfies performance obligations either over time or at a point in time as discussed in further detail below. Revenue is measured as the amount of consideration expected to be received in exchange for transferring goods or providing services. Applicable sales tax collected concurrent with revenue-producing activities is excluded from revenue. U.S. and Canada Revenue The following is a summary of revenue disaggregated by major source in the U.S. and Canada segment: Three months ended March 31, 2019 2018 U.S. company-owned product sales: (1) (in thousands) Protein $ 80,257 $ 87,670 Performance supplements 74,778 75,616 Weight management 30,779 39,787 Vitamins 47,056 50,371 Herbs / Greens 15,873 16,158 Wellness 47,200 47,701 Health / Beauty 46,388 48,054 Food / Drink 28,243 25,360 General merchandise 6,800 7,062 Total U.S. company-owned product sales $ 377,374 $ 397,779 Wholesale sales to franchisees 58,257 57,160 Royalties and franchise fees 8,472 8,748 Sublease income 10,976 11,765 Cooperative advertising and other franchise support fees 5,067 5,533 Other (2) 29,011 31,429 Total U.S. and Canada revenue $ 489,157 $ 512,414 (1) Includes GNC.com sales. (2) Includes revenue primarily related to Canada operations and loyalty programs, myGNC Rewards and PRO Access. International Revenues The following is a summary of the revenue disaggregated by major source in the International reportable segment: Three months ended March 31, 2019 2018 (in thousands) Wholesale sales to franchisees $ 25,437 $ 21,760 Royalties and franchise fees 6,202 6,621 Other (1) 9,284 11,684 Total International revenue $ 40,923 $ 40,065 (1) Includes revenue primarily related to China operations prior to the newly formed joint ventures in China effective February 13, 2019 and company-owned stores located in Ireland. Manufacturing / Wholesale Revenue The following is a summary of the revenue disaggregated by major source in the Manufacturing / Wholesale reportable segment: Three months ended March 31, 2019 2018 (in thousands) Third-party contract manufacturing (1) $ 15,783 $ 32,722 Intersegment sales (1) 35,505 64,663 Wholesale partner sales 18,901 22,332 Total Manufacturing / Wholesale revenue $ 70,189 $ 119,717 (1) The decrease in third-party contract manufacturing and intersegment sales for the three months ended March 31, 2019 compared to the prior year quarter is due to the transaction with IVC for the newly formed manufacturing joint venture effective March 1, 2019. Revenue by Geography The following is a summary of the revenue by geography: Three months ended March 31, 2019 2018 Total revenues by geographic areas (1) : (in thousands) United States $ 535,943 $ 572,231 Foreign 28,821 35,302 Total revenues $ 564,764 $ 607,533 (1) Geographic areas are defined based on legal entity jurisdiction. Balances from Contracts with Customers Contract assets represent amounts related to the Company's contractual right to consideration for completed performance obligations not yet invoiced. As of December 31, 2018, the Company had contract assets of $25.5 million for specialty manufacturing recorded within prepaid and other current assets on the Consolidated Balance Sheet (with a corresponding reduction to inventory at cost). Due to the contribution of the Nutra manufacturing net assets to the manufacturing joint venture with IVC on March 1, 2019, the Company has no contract assets on the Consolidated Balance Sheet as of March 31, 2019. Contract liabilities include payments received in advance of performance under the contract, and are realized with the associated revenue recognized under the contract. The Company's PRO Access and loyalty program points are recorded within deferred revenue and other current liabilities on the Consolidated Balance Sheets. Deferred franchise and license fees are recorded within deferred revenue and other current liabilities and other long-term liabilities on the Consolidated Balance Sheets. The following table presents changes in the Company’s contract liabilities during the three months ended March 31, 2019: Three months ended March 31, 2019 Balance at Beginning of Period Recognition of revenue included in beginning balance Contract liability, net of revenue, recognized during the period Balance at the End of Period (in thousands) Deferred franchise and license fees $ 33,464 (2,861 ) 668 $ 31,271 PRO Access and loyalty program points 24,836 (12,423 ) 12,863 25,276 Gift card liability 3,416 (1,523 ) 181 2,074 As of March 31, 2019, the Company had deferred franchise fees with unsatisfied performance obligations extending throughout 2029 of $31.3 million , of which approximately $7.2 million |
INVENTORY
INVENTORY | 3 Months Ended |
Mar. 31, 2019 | |
Inventory Disclosure [Abstract] | |
INVENTORY | INVENTORY The net realizable value of inventory consisted of the following: March 31, 2019 December 31, 2018 (in thousands) Finished product ready for sale $ 410,951 $ 416,113 Work-in-process, bulk product and raw materials (1) — 46,520 Packaging supplies (1) — 2,939 Inventory $ 410,951 $ 465,572 |
LONG-TERM DEBT _ INTEREST EXPEN
LONG-TERM DEBT / INTEREST EXPENSE | 3 Months Ended |
Mar. 31, 2019 | |
Debt Disclosure [Abstract] | |
LONG-TERM DEBT / INTEREST EXPENSE | LONG-TERM DEBT / INTEREST EXPENSE Long-term debt consisted of the following: March 31, December 31, (in thousands) Tranche B-1 Term Loan $ — $ 147,289 Tranche B-2 Term Loan (net of $11.4 million and $17.5 million discount) 446,799 554,760 FILO Term Loan (net of $10.2 million and $10.9 million discount) 264,768 264,086 Unpaid original issuance discount — 11,445 Notes 177,440 175,504 Debt issuance costs (654 ) (762 ) Total debt 888,353 1,152,322 Less: current debt — (158,756 ) Long-term debt $ 888,353 $ 993,566 On February 28, 2018, the Company amended and restated its Senior Credit Facility, which included an extension of the maturity date of a portion of the term loan from March 2019 to March 2021 (the "Tranche B-2 Term Loan"). The remaining term loan continued to have a maturity date of March 2019 ("the Tranche B-1 Term Loan"). Provided that all outstanding amounts under the convertible senior notes exceeding $50.0 million have not been repaid, refinanced, converted or effectively discharged prior to May 2020 ("Springing Maturity Date"), the maturity date of the Tranche B-2 Term Loan becomes the Springing Maturity Date, subject to certain adjustments. In connection with the debt refinancing, the Company recognized a loss of $16.7 million during the first quarter of 2018, which primarily includes third-party fees. As of March 31, 2019, the Company had paid down the Tranche B-1 Term Loan and had $446.8 million Tranche B-2 Term Loan outstanding. The Company also had a new asset-based credit agreement (the "ABL Credit Agreement"), consisting of: • a $264.8 million asset-based Term Loan Facility advanced on a “first-in, last-out” basis (the "FILO Term Loan") with a maturity date of December 2022 (which maturity date will become May 2020, subject to certain adjustments, should the Springing Maturity Date be triggered); and • a $100 million asset-based Revolving Credit Facility (the "Revolving Credit Facility") with a maturity date of August 2022 (which maturity date will become May 2020, subject to certain adjustments, should the Springing Maturity Date be triggered). In connection with the contribution of the Nutra manufacturing and Anderson facility net assets to the manufacturing joint venture with IVC, the Revolving Credit Facility decreased from $100 million to $81 million effective March 2019. As of March 31, 2019 there were no borrowings outstanding on the Revolving Credit Facility. The Tranche B-2 Term Loan requires annual aggregate principal payments of at least $43 million and bears interest at a rate of, at the Company's option, LIBOR plus a margin of 8.75% per annum subject to change under certain circumstances (with a minimum and maximum margin of 8.25% and 9.25% , respectively, per annum), or prime plus a margin of 7.75% per annum subject to change under certain circumstances (with a minimum and maximum margin of 7.25% and 8.25% , respectively, per annum). Any mandatory repayments as defined in the credit agreement shall be applied to the remaining annual aggregate principal payments in direct order of maturity. As discussed in further detail below, in November 2018, the Company paid $100 million on the Tranche B-2 Term Loan and elected to use the payment to satisfy the scheduled amortization payments on the Term Loan Facility through December 2020. The Term Loan Agreement is secured by a (i) first lien on certain assets of the Company primarily consisting of capital stock issued by General Nutrition Centers, Inc. ("Centers") and its subsidiaries, intellectual property and equipment (“Term Priority Collateral”) and (ii) second lien on certain assets of the Company primarily consisting of inventory and accounts receivable (“ABL Priority Collateral”). The Term Loan Agreement is guaranteed by all material, wholly-owned domestic subsidiaries of the Company (the “U.S. Guarantors”) and by General Nutrition Centres Company, an unlimited liability company organized under the laws of Nova Scotia (together with the U.S. Guarantors, the “Guarantors”). There are no scheduled amortization payments associated with the FILO Term Loan, which bears interest at a rate of LIBOR plus a margin of 7.00% per annum subject to decrease under certain circumstances (with a minimum possible interest rate of LIBOR plus a margin of 6.50% per annum). Outstanding borrowings under the Revolving Credit Facility bear interest at a rate of LIBOR plus 1.75% (subject to an increase or decrease of 0.25% based on the amount available to be drawn under the Revolving Credit Facility). The Company is also required to pay an annual fee to revolving lenders equal to a maximum of 2.0% (subject to adjustment based on the amount available to be be drawn under the Revolving Credit Facility) on outstanding letters of credit and an annual commitment fee of 0.375% on the undrawn portion of the Revolving Credit Facility subject to an increase to 0.5% based on the amount available to drawn under the Revolving Credit Facility. The FILO Term Loan and Revolving Credit Facility are secured by a (i) first lien on ABL Priority Collateral and (ii) second lien on Term Priority Collateral. The FILO Term Loan and Revolving Credit Facility are guaranteed by the Guarantors. Under the Company’s Term Loan Agreement and ABL Credit Agreement (collectively, the "Credit Facilities"), the Company is required to make certain mandatory prepayments, including a requirement to prepay first the Tranche B-2 Term Loan (until repaid in full) and second the FILO Term Loan (until repaid in full, but only if such prepayment is permitted under the ABL Credit Agreement) in each case annually with amounts based on excess cash flow, as defined in the Company’s Credit Facilities, based on the results of the Company for the prior fiscal year. The payment will be 75% of excess cash flow for each such fiscal year, subject to a reduction to 50% based on the attainment of a certain Consolidated Net First Lien Leverage Ratio, and will be reduced by certain scheduled debt payment amounts. The Company made the first excess cash flow payment in April 2019 of $9.8 million with respect to the year ending December 31, 2018. The Company expects this excess cash flow payment to be between $25 million and $35 million at 50% with respect to the year ending December 31, 2019, which is expected to be paid in the second quarter of 2020. At March 31, 2019, the interest rates under the Tranche B-2 Term Loan and the FILO Term Loan were 11.3% and 9.5% , respectively. At December 31, 2018, the interest rate under the Tranche B-1 Term Loan, Tranche B-2 Term Loan, and the FILO Term Loan were 5.7% , 11.8% , and 9.5% , respectively. At March 31, 2019, the Company had $74.2 million available under the Revolving Credit Facility, after giving effect to $6.2 million utilized to secure letters of credit and $0.6 million reduction to borrowing ability as a result of decrease in net collateral. The Company’s Credit Facilities contain customary covenants, including limitations on the ability of GNC Corporation, Centers, and Centers' subsidiaries to, among other things, incur debt, grant liens on their assets, enter into mergers or liquidations, sell assets, make investments or acquisitions, make optional payments in respect of, or modify, certain other debt instruments, pay dividends or other payments on capital stock, or enter into arrangements that restrict their ability to pay dividends or grant liens. In addition, the Term Loan Agreement requires compliance, as of the end of each fiscal quarter of the Company, with a maximum Consolidated Net First Lien Leverage Ratio initially set at 5.50 to 1.00 through December 31, 2018 and decreasing to 5.00 to 1.00 from March 31, 2019 to December 31, 2019 and 4.25 to 1.00 thereafter. Depending on the amount available to be drawn under the Revolving Credit Facility, the ABL Credit Agreement requires compliance as of the end of each fiscal quarter of the Company with a minimum Fixed Charge Coverage Ratio of 1.00 to 1.00. The Company is currently in compliance, and expects to remain in compliance over the next twelve months, with the terms of its Credit Facilities. In connection with the strategic investment from Harbin Pharmaceutical Group Co., Ltd ("Harbin") and the manufacturing joint venture with IVC, the Company received (i) $100 million investment from Harbin in November 2018, which was utilized to pay a portion of the Tranche B-2 Term Loan and elected to use the payment to satisfy the scheduled amortization payments through December 2020, (ii) approximately $200 million from Harbin in the first quarter of 2019 and (iii) $101 million from IVC in the first quarter of 2019. The Company applied such proceeds to pay down the remaining balance of the Tranche B-1 Term Loan that matured in March 2019. The remaining proceeds together with cash generated from operating activities were utilized to pay $114.0 million of the Tranche B-2 and the original issuance discount due to the Tranche B-2 Term Loan lenders at 2% of the outstanding balance. Convertible Debt The Company maintains $ 188.6 million in principal amount of 1.5% convertible senior notes due in 2020 (the "Notes"). The Notes consist of the following components: March 31, 2019 December 31, 2018 (in thousands) Liability component Principal $ 188,565 $ 188,565 Conversion feature (9,788 ) (11,489 ) Discount related to debt issuance costs (1,337 ) (1,572 ) Net carrying amount $ 177,440 $ 175,504 Interest Rate Swaps On June 13, 2018, the Company entered into two interest rate swaps with notional amounts of $275 million and $225 million to limit the exposure of its variable interest rate debt by effectively converting it to a fixed interest rate. The Company receives payments based on the one-month LIBOR and makes payments based on a fixed rate. The Company receives payments with a floor of 0.00% and 0.75% , respectively, on the $275 million and $225 million interest rate swaps, which aligns with the related debt instruments. The interest rate swap agreements had an effective date of June 29, 2018. The $225 million interest rate swap expires on February 28, 2021, and the $275 million interest rate swap expires on June 30, 2021. The notional amount of the $225 million interest rate swap is scheduled to decrease to $175 million on June 30, 2019, $125 million on June 30, 2020 and $75 million on December 31, 2020. The Company designated these instruments as cash flow hedges deemed effective upon initiation. The interest rate swaps are recognized on the balance sheet at fair value. Changes in fair value are recorded within other comprehensive gain (loss) on the Consolidated Balance Sheet and reclassified into the Consolidated Statement of Operations as interest expense in the period in which the underlying transaction affects earnings. The fair values of the derivative financial instruments included in the Consolidated Balance Sheets consisted of the following: (in thousands, except percentages) Fair Value at Notional Amount Fixed Rate Balance Sheet Classification March 31, 2019 December 31, 2018 Accounting cash flow hedges: Interest rate swap $ 275,000 2.82 % Other long-term liabilities $ 3,641 $ 2,371 Interest rate swap 225,000 2.74 % Other long-term liabilities 1,348 839 Net carrying amount $ 500,000 Total liabilities $ 4,989 $ 3,210 At March 31, 2019, there was a cumulative unrealized loss of $3.4 million , net of tax, related to these interest rate swaps included in accumulated other comprehensive income loss. This loss would be immediately recognized in the Consolidated Statement of Operations if these instruments fail to meet certain cash flow hedge requirements. As of March 31, 2019, the amount included in accumulated other comprehensive loss related to the interest rate swaps to be reclassified into earnings during the next 12 months is not material. Refer to Note 7, "Fair Value Measurements of Financial Instruments" for more information on how the interest rate swaps are valued. Interest Expense Interest expense consisted of the following: Three months ended March 31, 2019 2018 (in thousands) Tranche B-1 Term Loan coupon $ 928 $ 8,058 Tranche B-2 Term Loan coupon 16,468 6,824 FILO Term Loan coupon 6,751 2,122 Revolving Credit Facility 123 132 Terminated revolving credit facility — 316 Amortization of discount and debt issuance costs 6,043 1,755 Subtotal 30,313 19,207 Notes: Coupon 707 707 Amortization of conversion feature 1,701 1,610 Amortization of discount and debt issuance costs 244 244 Total Notes 2,652 2,561 Other (9 ) 5 Interest expense, net $ 32,956 $ 21,773 |
EQUITY METHOD INVESTMENTS
EQUITY METHOD INVESTMENTS | 3 Months Ended |
Mar. 31, 2019 | |
Equity Method Investments and Joint Ventures [Abstract] | |
EQUITY METHOD INVESTMENTS | EQUITY METHOD INVESTMENTS In February 2019, the Company contributed its China business in exchange for 35% ownership of each of the newly formed joint ventures (the “HK JV” and the "China JV"). The HK JV includes the operation of the cross-border China e-commerce business, and has an exclusive right to use the Company’s trademarks to manufacture and distribute the Company’s products in China (excluding Hong Kong, Taiwan and Macau) via e-commerce channels. The China JV is a retail-focused joint venture to operate GNC's brick-and-mortar retail business in China and it will have an exclusive right to use the Company's trademarks to manufacture and distribute the Company's products in China (excluding Hong Kong, Taiwan and Macau) via retail stores and pharmacies. The HK JV closed in February 2019 and the China JV agreement is expected to be completed in the second or third quarter of 2019 following the satisfaction of certain routine regulatory and legal requirements. In March 2019, the Company received $101 million from IVC and contributed the net assets of the Nutra manufacturing and Anderson facilities in exchange for an initial 43% equity interest in a newly formed joint venture (the “Manufacturing JV”). In addition, the Company made a capital contribution of $10.7 million to the Manufacturing JV for its share of short-term working capital needs. Over the next four years, GNC expects to receive an additional $75 million , adjusted up or down based on the Manufacturing JV's future performance, from IVC as IVC’s ownership of the joint venture increases to 100% . The Manufacturing JV is responsible for the manufacturing of the products previously produced by the Company’s Nutra manufacturing facility. Gain (loss) from the net asset exchange In connection with the formation of the joint ventures, the Company deconsolidated its China business and the Nutra manufacturing business effective in the first quarter of 2019 and recorded a pre-tax gain of $5.8 million and loss of $25.3 million , respectively, which is recorded within loss on net asset exchange for the formation of the joint ventures on the Consolidated Statements of Operations. The $5.8 million gain from the Harbin transaction is calculated based on the difference between the fair value of the 35% equity interest in the HK JV and China JV, less the carrying value of the contributed China business, including $2.4 million of cash, and third-party closing fees. The $25.3 million loss from the Manufacturing JV transaction is calculated based on the fair value of the 43% equity interest retained in the Manufacturing JV and the $101 million in cash received, less the carrying value of the contributed Nutra and Anderson facilities and third-party closing fees. The Company's interest in the joint ventures are accounted for as equity method investments due to the Company’s ability to exercise significant influence over the management decisions of the joint ventures. Under the equity method, the Company's share of profits and losses from the joint ventures is recorded within equity income (loss) from equity method investments in the Consolidated Statement of Operations. The following table provides a reconciliation of equity method investments on the Company’s Consolidated Balance Sheets: March 31, 2019 December 31, 2018 (in thousands) Manufacturing JV $ 75,434 $ — Manufacturing JV capital contribution 10,714 — HK JV and China JV 10,700 — Income from equity method investments 955 — Total Equity method investments $ 97,803 $ — In connection with the transaction with IVC, the Company entered into a lease for warehouse space within the Anderson facility. Refer to Note 8, "Leases" for more information on the lease with the Manufacturing JV. Subsequent to the formation of the Manufacturing JV, the Company purchased approximately $21 million finished goods from the Manufacturing JV during the period ended March 31, 2019 and had approximately $20 million and $4 million |
FAIR VALUE MEASUREMENTS AND FIN
FAIR VALUE MEASUREMENTS AND FINANCIAL INSTRUMENTS | 3 Months Ended |
Mar. 31, 2019 | |
Fair Value Disclosures [Abstract] | |
FAIR VALUE MEASUREMENTS AND FINANCIAL INSTRUMENTS | FAIR VALUE MEASUREMENTS AND FINANCIAL INSTRUMENTS Accounting Standards Codification 820, Fair Value Measurements and Disclosures defines fair value as a market-based measurement that should be determined based on the assumptions that marketplace participants would use in pricing an asset or liability. As a basis for considering such assumptions, the standard establishes a three-tier fair value hierarchy which prioritizes the inputs used in measuring fair value as follows: Level 1 — observable inputs such as quoted prices in active markets for identical assets and liabilities; Level 2 — observable inputs such as quoted prices for similar assets or liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets that are not active, other inputs that are observable, or can be corroborated by observable market data; and Level 3 — unobservable inputs for which there are little or no market data, which require the reporting entity to develop its own assumptions. The carrying amounts of cash and cash equivalents, receivables, accounts payable, accrued liabilities and the Revolving Credit Facility approximate their respective fair values. Based on the interest rates currently available and their underlying risk, the carrying value of franchise notes receivable recorded in other long-term assets approximates its fair value. The carrying value and estimated fair value of the forward contracts for the issuance of convertible preferred stock, the Term Loan Facility, net of discount, Notes (net of the equity component classified in stockholders' equity and discount) and the interest rate swaps were as follows: March 31, 2019 December 31, 2018 Carrying Amount Fair Value Carrying Amount Fair Value (in thousands) Assets: Forward contracts for the issuance of convertible preferred stock $ — $ — $ 88,942 $ 88,942 Liabilities: Tranche B-1 Term Loan $ — $ — $ 147,289 $ 145,080 Tranche B-2 Term Loan 446,799 430,938 554,760 511,766 FILO Term Loan 264,768 267,204 264,086 260,125 Notes 177,440 134,854 175,504 131,628 Interest rate swaps 4,989 4,989 3,210 3,210 The forward contracts for the issuance of convertible preferred stock are measured at fair value, as of the valuation date, using a single factor binomial lattice model (the "Lattice Model") which incorporates the terms and conditions of the convertible preferred stock and is based on changes in the prices of the underlying common share price over successive periods of time. Key assumptions of the Lattice Model include the current price of the underlying stock and its historical and expected volatility, risk-neutral interest rates and the instruments remaining term. These assumptions require significant management judgment and are considered Level 3 inputs. The forward contracts were revalued at each reporting period with changes in fair value recognized in the Consolidated Statements of Operations. The forward contracts settled upon issuance on January 2, 2019 and February 13, 2019. |
LEASES
LEASES | 3 Months Ended |
Mar. 31, 2019 | |
Leases [Abstract] | |
LEASES | The Company has operating leases for retail stores, distribution centers, other leased office locations, vehicles and certain equipment with remaining lease terms of 1 year to 14 years , some of which include options to extend the leases for up to 10 years . On the Company’s Consolidated Balance Sheets as of March 31, 2019, the Company had lease liabilities of $518.7 million , of which $117.1 million are classified as current, and right-of-use assets of $401.5 million . The Company has elected to apply the short-term lease exemption for all asset classes and excluded them from the balance sheet. Lease payments for short-term leases are recognized on a straight-line basis over the lease term. The short-term rent expense recognized during the three months ended March 31, 2019 is immaterial. The components of the Company's rent expense, which is recorded within cost of sales on the Consolidated Statements of Operations, was as follows: Three months ended March 31, 2019 (in thousands) Company-owned and franchise stores: Operating leases $ 36,602 Variable lease costs (1) 21,509 Total company-owned and franchise stores 58,111 Other 2,188 Total rent expense $ 60,299 (1) Includes percent and contingent rent, landlord related taxes and common operating expenses. The weighted average remaining lease term and weighted average discount rate were as follows: Three months ended March 31, 2019 Weighted average remaining lease term 4.6 years Weighted average discount rate 10 % Supplemental cash flow information related to leases was as follows: Three months ended March 31, 2019 (in thousands) Operating cash flow information: Cash paid for amounts included in the measurement of operating lease liabilities $ 44,936 Right-of-use assets obtained in exchange for new operating lease liabilities $ 6,442 The Company recorded sublease revenue, within revenue on the Consolidated Statements of Operations, of $11.0 million and $11.8 million in the three months ended March 31, 2019 and 2018, respectively, relating to subleases with its franchisees, which includes rental income and other occupancy related items. Maturities of the lease liabilities (undiscounted lease payments, as defined in Note 2 "Basis of Presentation") as of March 31, 2019 were as follows: Operating Leases for Company-Owned and Franchise Stores Operating Leases for Other (1) Total Operating Leases Sublease Income from Franchisees Rent on Operating Leases, net of Sublease Revenue (in thousands) 2019 (remainder) $ 120,954 $ 4,270 $ 125,224 $ (23,783 ) $ 101,441 2020 135,834 4,964 140,798 (27,829 ) 112,969 2021 109,994 3,643 113,637 (22,697 ) 90,940 2022 84,925 2,342 87,267 (17,882 ) 69,385 2023 63,125 1,180 64,305 (13,384 ) 50,921 Thereafter 136,071 6,703 142,774 (29,548 ) 113,226 Total future obligations $ 650,903 $ 23,102 $ 674,005 $ (135,123 ) $ 538,882 Less amounts representing interest (155,295 ) Present value of lease obligations $ 518,710 (1) Includes various leases for warehouses, vehicles, and various equipment at our facility As of March 31, 2019, leases that the Company has entered into but have not yet commenced are immaterial. In connection with the transaction with IVC for the Manufacturing JV effective March 1, 2019, the Company leased warehouse space within the Anderson facility from the Manufacturing JV for a term of one year . The lease was accounted for as sale leaseback transaction and classified as an operating lease included in the current lease liabilities on the Consolidated Balance Sheet. Disclosures related to periods prior to adoption of ASU 2016-02 The Company adopted ASU 2016-02 using a modified retrospective adoption method at January 1, 2019 as noted in Note 2. "Basis of Presentation." As required, the following disclosure is provided for periods prior to adoption. Minimum future rent obligations for non-cancelable operating leases, excluding optional renewal periods, were as follows for the period ending December 31, 2018 and exclude landlord related taxes, common operating expenses, and percent and contingent rent. Operating Leases for Company-Owned and Franchise Stores Operating Leases for Other (1) Total Operating Leases Sublease Income from Franchisees Rent on Operating Leases, net of Sublease Revenue (in thousands) 2019 $ 162,910 $ 6,071 $ 168,981 $ (29,867 ) $ 139,114 2020 126,312 5,574 131,886 (23,631 ) 108,255 2021 95,000 4,185 99,185 (16,782 ) 82,403 2022 64,735 2,479 67,214 (10,285 ) 56,929 2023 39,798 1,290 41,088 (4,717 ) 36,371 Thereafter 56,200 6,703 62,903 (4,238 ) 58,665 Total future obligations $ 544,955 $ 26,302 $ 571,257 $ (89,520 ) $ 481,737 |
LEASES | The Company has operating leases for retail stores, distribution centers, other leased office locations, vehicles and certain equipment with remaining lease terms of 1 year to 14 years , some of which include options to extend the leases for up to 10 years . On the Company’s Consolidated Balance Sheets as of March 31, 2019, the Company had lease liabilities of $518.7 million , of which $117.1 million are classified as current, and right-of-use assets of $401.5 million . The Company has elected to apply the short-term lease exemption for all asset classes and excluded them from the balance sheet. Lease payments for short-term leases are recognized on a straight-line basis over the lease term. The short-term rent expense recognized during the three months ended March 31, 2019 is immaterial. The components of the Company's rent expense, which is recorded within cost of sales on the Consolidated Statements of Operations, was as follows: Three months ended March 31, 2019 (in thousands) Company-owned and franchise stores: Operating leases $ 36,602 Variable lease costs (1) 21,509 Total company-owned and franchise stores 58,111 Other 2,188 Total rent expense $ 60,299 (1) Includes percent and contingent rent, landlord related taxes and common operating expenses. The weighted average remaining lease term and weighted average discount rate were as follows: Three months ended March 31, 2019 Weighted average remaining lease term 4.6 years Weighted average discount rate 10 % Supplemental cash flow information related to leases was as follows: Three months ended March 31, 2019 (in thousands) Operating cash flow information: Cash paid for amounts included in the measurement of operating lease liabilities $ 44,936 Right-of-use assets obtained in exchange for new operating lease liabilities $ 6,442 The Company recorded sublease revenue, within revenue on the Consolidated Statements of Operations, of $11.0 million and $11.8 million in the three months ended March 31, 2019 and 2018, respectively, relating to subleases with its franchisees, which includes rental income and other occupancy related items. Maturities of the lease liabilities (undiscounted lease payments, as defined in Note 2 "Basis of Presentation") as of March 31, 2019 were as follows: Operating Leases for Company-Owned and Franchise Stores Operating Leases for Other (1) Total Operating Leases Sublease Income from Franchisees Rent on Operating Leases, net of Sublease Revenue (in thousands) 2019 (remainder) $ 120,954 $ 4,270 $ 125,224 $ (23,783 ) $ 101,441 2020 135,834 4,964 140,798 (27,829 ) 112,969 2021 109,994 3,643 113,637 (22,697 ) 90,940 2022 84,925 2,342 87,267 (17,882 ) 69,385 2023 63,125 1,180 64,305 (13,384 ) 50,921 Thereafter 136,071 6,703 142,774 (29,548 ) 113,226 Total future obligations $ 650,903 $ 23,102 $ 674,005 $ (135,123 ) $ 538,882 Less amounts representing interest (155,295 ) Present value of lease obligations $ 518,710 (1) Includes various leases for warehouses, vehicles, and various equipment at our facility As of March 31, 2019, leases that the Company has entered into but have not yet commenced are immaterial. In connection with the transaction with IVC for the Manufacturing JV effective March 1, 2019, the Company leased warehouse space within the Anderson facility from the Manufacturing JV for a term of one year . The lease was accounted for as sale leaseback transaction and classified as an operating lease included in the current lease liabilities on the Consolidated Balance Sheet. Disclosures related to periods prior to adoption of ASU 2016-02 The Company adopted ASU 2016-02 using a modified retrospective adoption method at January 1, 2019 as noted in Note 2. "Basis of Presentation." As required, the following disclosure is provided for periods prior to adoption. Minimum future rent obligations for non-cancelable operating leases, excluding optional renewal periods, were as follows for the period ending December 31, 2018 and exclude landlord related taxes, common operating expenses, and percent and contingent rent. Operating Leases for Company-Owned and Franchise Stores Operating Leases for Other (1) Total Operating Leases Sublease Income from Franchisees Rent on Operating Leases, net of Sublease Revenue (in thousands) 2019 $ 162,910 $ 6,071 $ 168,981 $ (29,867 ) $ 139,114 2020 126,312 5,574 131,886 (23,631 ) 108,255 2021 95,000 4,185 99,185 (16,782 ) 82,403 2022 64,735 2,479 67,214 (10,285 ) 56,929 2023 39,798 1,290 41,088 (4,717 ) 36,371 Thereafter 56,200 6,703 62,903 (4,238 ) 58,665 Total future obligations $ 544,955 $ 26,302 $ 571,257 $ (89,520 ) $ 481,737 |
CONTINGENCIES
CONTINGENCIES | 3 Months Ended |
Mar. 31, 2019 | |
Commitments and Contingencies Disclosure [Abstract] | |
CONTINGENCIES | CONTINGENCIES 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, product liability matters, intellectual property matters and employment-related matters resulting from the Company's business activities. 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 for such matters. If the Company ultimately is required to make any payments 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. 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 per policy year. 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. 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 product liability claims, which could increase its costs and adversely affect its reputation, revenue and operating income. Litigation 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 the Company's stores in November 2013, and/or Aegeline, a compound extracted from bael trees. As of March 31, 2019, the Company was named in 27 personal injury lawsuits involving products containing DMAA and/or Aegeline. The majority of these matters are currently stayed pending final resolution. One matter is scheduled for trial in June 2019. The Company is contractually entitled to indemnification by its third-party vendors 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 vendors and/or their insurance coverage and the absence of any significant defenses available to their insurers. California Wage and Break Claims. On February 29, 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. The complaint contains eight causes of action, alleging, among other matters, meal, rest break and overtime violations for which indeterminate money damages for wages, penalties, interest, and legal fees are sought. In June 2018, the Court granted in part and denied in part the Company's Motion for Decertification. In August 2018, the plaintiff voluntarily dismissed the class action claims alleging overtime violations. As of March 31, 2019, an immaterial liability has been accrued in the accompanying financial statements. The Company intends to vigorously defend against the remaining class action claims asserted in this action. Trial is currently scheduled for September 2019. Pennsylvania Fluctuating Workweek . On September 18, 2013, Tawny Chevalier and Andrew Hiller commenced a class action in the Court of Common Pleas of Allegheny County, Pennsylvania. Plaintiff asserted a claim against the Company for a purported violation of the Pennsylvania Minimum Wage Act ("PMWA"), challenging the Company's utilization of the "fluctuating workweek" method to calculate overtime compensation, on behalf of all employees who worked for the Company in Pennsylvania and who were paid according to the fluctuating workweek method. In October 2014, the Court entered an order holding that the use of the fluctuating workweek method violated the PMWA. In September 2016, the Court entered judgment in favor of Plaintiffs and the class in an immaterial amount, which has been recorded as a charge in the accompanying Consolidated Financial Statements. Plaintiffs subsequently filed a petition for an award of attorney's fees, costs and incentive payment. The court awarded an immaterial amount in legal fees. The Company appealed the adverse judgment and the award of attorney's fees. On December 22, 2017, the Pennsylvania Superior Court held that the Company correctly determined the "regular rate" by dividing weekly compensation by all hours worked (rather than 40), but held that the regular rate must be multiplied by 1.5 (rather than 0.5) to determine the amount of overtime owed. Taking accumulated interest into account, the net result of the Superior Court's decision was to reduce the Company's liability by an immaterial amount, which has been reflected in the accompanying Consolidated Financial Statements. The Company filed a petition for appeal to the Pennsylvania Supreme Court on January 22, 2018. The Pennsylvania Supreme Court accepted the Company's petition for appeal and the Company filed its appellant’s brief on August 27, 2018. Oral argument occurred in April 2019 and the Company awaits the Court’s ruling. Jason Olive v. General Nutrition Corp. In April 2012, Jason Olive filed a complaint in the Superior Court of California, County of Los Angeles, 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. The trial in this matter began on July 20, 2016 and concluded on August 8, 2016. The jury awarded plaintiff immaterial amounts for actual damages and emotional distress damages, which are accrued in the accompanying Consolidated Financial Statements. The jury refused to award plaintiff any of the profits he sought to disgorge, or punitive damages. The court entered judgment in the case on October 14, 2016. In addition to the verdict, the Company and Mr. Olive sought attorneys' fees and other costs from the Court. The Court refused to award attorney's fees to either side but awarded plaintiff an immaterial amount for costs. Plaintiff has appealed the judgment, and separately, the order denying attorney's fees. The Company has cross-appealed the judgment and the Court's denial of attorney fees. Argument occurred in October 2018. On November 2, 2018, the Court affirmed the trial court's decision in part and reversed in part, reversing the denial of Mr. Olive's motion for attorneys' fees and remanding the matter to the trial court for further proceedings regarding his attorneys' fees and costs. On November 16, 2018, the Company filed a motion for reconsideration of the Court’s decision. On December 27, 2018, the Court reversed, in part, its November 2, 2018 ruling and held that there was no prevailing party for the purposes of the attorneys’ fee award. Olive has filed a petition for review with the Supreme Court of the State of California and the Company has opposed that petition. On April 17, 2019, the California Supreme Court denied Olive’s petition for review. Oregon Attorney General. On October 22, 2015, the Attorney General for the State of Oregon sued the Company in Multnomah County Circuit Court for alleged violations of Oregon’s Unlawful Trade Practices Act, in connection with its sale in Oregon of certain third-party products. The Company is vigorously defending itself against these allegations. Along with its Amended Answer and Affirmative Defenses, the Company filed a counterclaim for declaratory relief, asking the court to make certain rulings in favor of the Company, and adding USPlabs, LLC and SK Laboratories as counterclaim defendants. In March 2018, the Oregon Attorney General filed a motion for summary judgment relating to its first claim for relief, which the Company contested. The Company filed a cross motion for summary judgment on the first claim for relief, which the Oregon Attorney General contested. Following oral argument in August 2018, the Court denied the State’s motion for summary judgment and granted in part and denied in part the Company’s motion for summary judgment. The parties are in the process of exchanging discovery. Trial is currently scheduled to begin in September 2019. As any losses that may arise from this matter are not probable or reasonably estimable at this time, no liability has been accrued in the accompanying Consolidated Financial Statements. Moreover, the Company does not anticipate that any such losses are likely to have a material impact on the Company, its business or results of operations. The Company is contractually entitled to indemnification and defense by its third-party vendors. Ultimately, however, the Company's ability to obtain full recovery in respect of any such claims against it is dependent upon the creditworthiness of its vendors and/or their insurance coverage and the absence of any significant defenses available to their insurers. E-Commerce Pricing Matters . In April 2016, Jenna Kaskorkis, et al. filed a complaint against General Nutrition Centers, Inc. followed by similar cases brought forth by Ashley Gennock in May 2016 and Kenneth Harrison in December 2016. Plaintiffs allege that the Company's promotional pricing on its website was misleading and did not fairly represent promotions based on average retail prices over a trended period of time being consistent with prices advertised as promotional. The Company attended a mediation with counsel for all plaintiffs and reached a tentative agreement in the third quarter of 2017 on many of the key terms of a settlement. The matters have been effectively stayed while the parties remain in discussions. The Company currently expects any settlement to be in a form that does not require the recording of a contingent liability, except an immaterial amount the Company has accrued in the accompanying Consolidated Financial Statements. Government Regulation In November 2013, the Company received a subpoena from the U.S. Department of Justice ("DOJ") for information related to its investigation of a third party product vendor, USPlabs, LLC. The Company fully cooperated with the investigation of the vendor and the related products, all of which were discontinued in 2013. In December 2016, the Company reached agreement with the DOJ in connection with the Company's cooperation, which agreement acknowledges the Company relied on the representations and written guarantees of USPlabs and the Company's representation that it did not knowingly sell products not in compliance with the Federal Food, Drug and Cosmetic Act (the "FDCA"). Under the agreement, which includes an immaterial payment to the federal government, the Company will take a number of actions to broaden industry-wide knowledge of prohibited ingredients and improve compliance by vendors of third party products. These actions are in keeping with the leadership role the Company has taken in setting industry quality and compliance standards, and the Company's commitment over the course of the agreement ( 60 months) to support a combination of its own and the industry's initiatives. Some of these actions include maintaining and continuously updating a list of restricted ingredients that will be prohibited from inclusion in any products that are sold by the Company. Vendors selling products to the Company for the sale of such products by the Company will be required to warrant that the products sold do not contain any of these restricted ingredients. In addition, the Company will develop and maintain a list of ingredients that the Company believes comply with the applicable provisions of the FDCA. Environmental Compliance As part of soil and groundwater remediation conducted at the Nutra manufacturing facility pursuant to an investigation conducted in partnership with the South Carolina Department of Health and Environmental Control (the "DHEC"), we completed additional investigations with the DHEC's approval, including the installation and operation of a pilot vapor extraction system under a portion of the facility in the second half of 2016, which was an immaterial cost to the Company. After an initial monitoring period, in October of 2017 the DHEC approved a work plan for extended monitoring of such system and the contamination into 2021. While the Company contributed the net assets of the Nutra manufacturing and Anderson facilities to the Manufacturing JV in March of 2019 (refer to Note 6 “Equity Method Investments” for additional information), we retained certain liabilities, including historical environmental liabilities, related to the facilities. As such, the Company and the Manufacturing Joint Venture will continue to consult with the DHEC on the next steps in the work after their review of the results of the extended monitoring is complete. At this stage of the investigation, however, it is not possible to estimate the timing and extent of any additional remedial action that may be required, the ultimate cost of remediation, or the amount of our potential liability. Therefore, no liability has been recorded in the Company's Consolidated Financial Statements. 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 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, including certain historic liabilities retained by the Company pursuant to the terms of the Manufacturing JV. 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 that were sent in connection with current or former operations at its facilities. |
MEZZANINE EQUITY (Notes)
MEZZANINE EQUITY (Notes) | 3 Months Ended |
Mar. 31, 2019 | |
Temporary Equity Disclosure [Abstract] | |
Mezzanine equity | NOTE 10. MEZZANINE EQUITY Holdings is authorized to issue up to 60.0 million shares of preferred stock, par value $0.001 per share. On February 13, 2018, the Company entered into a Securities Purchase Agreement (as amended from time to time, the “Securities Purchase Agreement”) by and between the Company and Harbin Pharmaceutical Group Holdings Co., Ltd. (the “Investor”), pursuant to which the Company agreed to issue and sell to the Investor, and the Investor agreed to purchase from the Company, 299,950 shares of a newly created series of convertible preferred stock of the Company, designated the “Series A Convertible Preferred Stock” (the “Convertible Preferred Stock”), for a purchase price of $1,000 per share, or an aggregate of approximately $300 million (the “Securities Purchase”). The Convertible Preferred Stock is convertible into 56.1 million shares of the Company's Common Stock at an initial conversion price of $5.35 per share, subject to customary anti-dilution adjustments. On November 7, 2018, The Company entered into an Amendment to the Securities Purchase Agreement with the Investor. Pursuant to the terms of the Securities Purchase Agreement, the Investor assigned its interest in the Securities Purchase Agreement to Harbin and funded the $300 million investment in three separate tranches. The shares of Convertible Preferred Stock was issued as follows: (i) 100,000 shares of Convertible Preferred Stock issued on November 8, 2018 for a total purchase price of $100 million (the "Initial Issuance"), (ii) 50,000 shares of Convertible Preferred Stock issued on January 2, 2019 for a total purchase price of $50 million (the "Second Issuance") and (iii) 149,950 shares of Convertible Preferred Stock issued on February 13, 2019 for a total purchase price of approximately $150 million (the “Third Issuance”). Holders of shares of Convertible Preferred Stock are entitled to receive cumulative preferential dividends, payable quarterly in arrears, at an annual rate of 6.5% of the stated value of $1,000 per share, subject to increase in connection with the payment of dividends in kind. Dividends are payable, at the Company's option, in cash from legally available funds or in kind by issuing additional shares of Convertible Preferred Stock with such stated value equal to the amount of payment being made or by increasing the stated value of the outstanding Convertible Preferred Stock by the amount per share of the dividend or in a combination thereof. As of March 31, 2019, the Company had issued a total of 299,950 shares of Convertible Preferred Stock. The Convertible Preferred Stock was recorded as Mezzanine Equity, net of issuance cost, on the Consolidated Balance Sheets because they are redeemable at the option of the holder if a fundamental change occurs, which includes change in control or delisting. The guaranteed Second Issuance and Third Issuance were considered forward contracts that represented an obligation to both parties until the shares were issued. The forward contracts were recorded at fair value on the Consolidated Balance Sheets as of December 31, 2018, with any changes in fair value recorded in earnings in the Consolidated Statements of Operations. The Company recorded a $16.8 million loss on forward contracts for the issuance of Convertible Preferred Stock during the quarter ended March 31, 2019. Upon issuance of the shares associated with the forward contracts, the carrying value of the forward contracts were recorded to Mezzanine Equity. As of March 31, 2019, there were $4.7 million cumulative undeclared dividends related to the issued and outstanding Convertible Preferred Stock, of which $3.7 million |
EARNINGS PER SHARE
EARNINGS PER SHARE | 3 Months Ended |
Mar. 31, 2019 | |
Earnings Per Share [Abstract] | |
EARNINGS PER SHARE | EARNINGS PER SHARE The following table represents the Company's basic and dilutive weighted-average shares: Three months ended March 31, 2019 2018 (in thousands) Basic weighted average shares 83,510 83,232 Effect of dilutive stock-based compensation awards — 136 Diluted weighted average shares 83,510 83,368 For the three months ended March 31, 2019, all 4.0 million outstanding stock-based awards were excluded from the computation of diluted earnings per share ("EPS") because the Company was in a net loss position and as a result, inclusion of the awards would have been anti-dilutive. For the three months ended March 31, 2018, the following awards were not included in the computation of diluted EPS because the impact of applying the treasury stock method was antidilutive or because certain conditions have not been met with respect to the Company's performance awards. Antidilutive: Time-based options and restricted stock awards 3,206 Performance-based restricted stock awards 536 Contingently issuable: Performance-based restricted stock awards — Performance-based restricted stock awards with a market condition 315 Total stock-based awards excluded from diluted EPS 4,057 The Company has applied the if-converted method to calculate dilution on the Convertible Preferred Stock and the Notes in the current quarter, which has resulted in all 42.9 million and 2.9 million shares underlying the Convertible Preferred Stock and the Notes, respectively, being anti-dilutive. The computations for basic and diluted earnings per common share are as follows: Three months ended March, 31 2019 2018 (in thousands, except per share data) Earnings (loss) per common share - Basic Net (loss) income $ (15,262 ) $ 6,190 Cumulative undeclared convertible preferred stock dividend 3,716 — Net income (loss) attributable to common shareholders (18,978 ) 6,190 Weighted average common shares outstanding - basic 83,510 83,232 Earnings (loss) per common share - basic $ (0.23 ) $ 0.07 Earnings (loss) per common share - Diluted Net (loss) income $ (15,262 ) $ 6,190 Cumulative undeclared convertible preferred stock dividend 3,716 — Net income (loss) attributable to common shareholders (18,978 ) 6,190 Weighted average common shares outstanding - diluted 83,510 83,368 Earnings (loss) per common share - diluted $ (0.23 ) $ 0.07 |
SEGMENTS
SEGMENTS | 3 Months Ended |
Mar. 31, 2019 | |
Segment Reporting [Abstract] | |
SEGMENTS | SEGMENTS The Company aggregates its operating segments into three reportable segments, which include U.S. and Canada, International and Manufacturing / Wholesale. Warehousing and distribution costs have been allocated to each reportable segment based on estimated utilization and benefit. The Company's chief operating decision maker (its chief executive officer) evaluates segment operating results based primarily on performance indicators, including revenue and operating income. Operating income of each reportable segment excludes certain items that are managed at the consolidated level, such as corporate costs. The Manufacturing / Wholesale segment manufactures and sells product to the U.S. and Canada and International segments at cost with a markup, which is eliminated at consolidation. The following table represents key financial information for each of the Company's reportable segments: Three months ended March 31, 2019 2018 (in thousands) Revenue: U.S. and Canada $ 489,157 $ 512,414 International 40,923 40,065 Manufacturing / Wholesale: Intersegment revenues 35,505 64,663 Third party 34,684 55,054 Subtotal Manufacturing / Wholesale 70,189 119,717 Total reportable segment revenues 600,269 672,196 Elimination of intersegment revenues (35,505 ) (64,663 ) Total revenue $ 564,764 $ 607,533 Operating income: U.S. and Canada $ 52,100 $ 43,490 International 14,050 14,464 Manufacturing / Wholesale 15,344 14,964 Total reportable segment operating income 81,494 72,918 Corporate costs (26,261 ) (26,479 ) Loss on net asset exchange for the formation of the joint ventures (19,514 ) — Other (237 ) (50 ) Unallocated corporate costs, loss on net asset exchange and other (46,012 ) (26,529 ) Total operating income 35,482 46,389 Interest expense, net 32,956 21,773 Loss on debt refinancing — 16,740 Loss on forward contracts for the issuance of convertible preferred stock 16,787 — (Loss) income before income taxes $ (14,261 ) $ 7,876 |
INCOME TAXES
INCOME TAXES | 3 Months Ended |
Mar. 31, 2019 | |
Income Tax Disclosure [Abstract] | |
INCOME TAXES | INCOME TAXES The Company recognized $2.0 million of income tax expense during the three months ended March 31, 2019 compared with $1.7 million in the prior year quarter. The Company's income tax expense is based on income, statutory tax rates and tax planning opportunities available in the jurisdictions in which it operates. The Company’s year-to-date tax provision is calculated by applying the most recent annualized effective tax rate to year-to - date pre-tax ordinary income. The Company’s most recent annualized effective tax rate was impacted by a gain for tax purposes resulting from the newly formed manufacturing joint venture as well as the establishment of a partial valuation allowance for attributes generated in the current year that may not be realizable. The tax impact of unusual or infrequent items are recorded discretely in the interim period in which they occur. The Company discretely recorded the tax impact of the loss on forward contracts for the issuance of convertible preferred stock. This loss was not deductible for income tax purposes. At March 31, 2019 and December 31, 2018 , the Company had $6.6 million and $6.9 million of unrecognized tax benefits, respectively, excluding interest and penalties, which if recognized, would affect the effective tax rate. The Company recognizes accrued interest and penalties related to unrecognized tax benefits in income tax expense. The Company accrued $2.1 million at March 31, 2019 and $2.0 million at December 31, 2018 , 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 reversed as a reduction to income tax expense. |
BASIS OF PRESENTATION (Policies
BASIS OF PRESENTATION (Policies) | 3 Months Ended |
Mar. 31, 2019 | |
Accounting Policies [Abstract] | |
Basis of Presentation | The accompanying unaudited Consolidated Financial Statements, which have been prepared in accordance with the applicable rules of the Securities and Exchange Commission ("SEC"), include all adjustments (of a normal and recurring nature) that management considers necessary to fairly state the Company's results of operations, financial position and cash flows. |
Recent Accounting Pronouncements | Recently Adopted Accounting Pronouncements Adoption of the New Lease Standard In February 2016, the Financial Accounting Standards Board ("FASB") issued ASU 2016-02, which requires lessees to recognize a right-of-use asset and a lease liability, initially measured at the present value of the lease payments for all leases with a term greater than 12 months. This standard is effective for annual reporting periods, and interim periods therein, beginning after December 15, 2018 and is required to be applied using a modified retrospective approach. In July 2018, the FASB issued ASU 2018-11, which provides companies with the option to apply the new lease standard either at the beginning of the earliest comparative period presented or in the period of adoption. The Company adopted ASU 2016-02 and its related amendments (collectively known as "ASC 842") during the first quarter of fiscal 2019 electing the optional transition relief amendment that allows for a cumulative-effect adjustment in the period of adoption and did not restate prior periods. In transitioning to ASC 842, the Company elected to use the practical expedient package available under the guidance for leases that commenced before the effective date and did not elect to use hindsight. The Company has implemented new lease management and accounting system and updated its processes and internal controls to comply with the new standard. The Company leases substantially all of our retail stores in the U.S. and Canada segment, including most of the domestic franchise stores that are leased and sublease to franchisees, the four distribution centers in the United States and retail stores in Ireland. In addition, the Company has leased office locations, vehicles and equipment to support our store and supply chain operations. All of the Company's leases are classified as operating leases. The Company determines if a contract contains a lease at inception. The lease liabilities are recognized based on the present value of the future minimum lease payments over the term at the commencement date for leases exceeding 12 months. The lease agreements generally contain lease and non-lease components. Non-lease components primarily include payments for maintenance and utilities. The minimum lease payments include only fixed lease components, as well as any variable rate payments that depend on an index, initially measured using the index at the lease commencement date. Lease terms may include options to renew when it is reasonably certain that the Company will exercise an option. The Company estimates its incremental borrowing rate, which is estimated to approximate the interest rate on a collateralized basis with similar terms and payments for each lease, using a portfolio approach. The right-of-use assets recognized are initially equal to the lease liability, adjusted for any lease payments made on or before the commencement dates and lease incentives. The Company recognized lease liabilities of $550.2 million on January 1, 2019. A right-of-use asset of $504.2 million was recognized based on the lease liability, adjusted for the reclassification of deferred rent of $53.3 million and prepaid rent of $7.3 million . Additionally, the Company recognized $79.8 million of right-of-use asset impairment charges for certain of the Company's stores for which it was previously determined that the carrying value of the such stores' assets were not recoverable. The right-of-use asset impairment charges were recorded as a reduction to January 1, 2019 (opening day) retained earnings, net of tax of $19.8 million . The new lease standard has no impact on the timing or classification of the Company's cash flows as reported in the Consolidated Statement of Cash Flows. The lease liabilities for the operating leases are amortized using the effective interest method. The right-of-use asset is amortized by taking the difference between total rent expense recorded on straight line basis and the lease liability amortization. When the right-of-use asset for an operating lease is impaired, lease expense is no longer recognized on a straight-line basis. For impaired leases, the Company continues to amortize the lease liability using the same effective interest method as before the impairment charge and the right-of-use asset is amortized on a straight-line basis. Refer to Note 8 "Leases" for additional information relating to the impact of adopting ASC 842. Recently Issued Accounting Pronouncements |
REVENUE (Tables)
REVENUE (Tables) | 3 Months Ended |
Mar. 31, 2019 | |
Revenue from Contract with Customer [Abstract] | |
Disaggregation of Revenue | U.S. and Canada Revenue The following is a summary of revenue disaggregated by major source in the U.S. and Canada segment: Three months ended March 31, 2019 2018 U.S. company-owned product sales: (1) (in thousands) Protein $ 80,257 $ 87,670 Performance supplements 74,778 75,616 Weight management 30,779 39,787 Vitamins 47,056 50,371 Herbs / Greens 15,873 16,158 Wellness 47,200 47,701 Health / Beauty 46,388 48,054 Food / Drink 28,243 25,360 General merchandise 6,800 7,062 Total U.S. company-owned product sales $ 377,374 $ 397,779 Wholesale sales to franchisees 58,257 57,160 Royalties and franchise fees 8,472 8,748 Sublease income 10,976 11,765 Cooperative advertising and other franchise support fees 5,067 5,533 Other (2) 29,011 31,429 Total U.S. and Canada revenue $ 489,157 $ 512,414 (1) Includes GNC.com sales. (2) Includes revenue primarily related to Canada operations and loyalty programs, myGNC Rewards and PRO Access. International Revenues The following is a summary of the revenue disaggregated by major source in the International reportable segment: Three months ended March 31, 2019 2018 (in thousands) Wholesale sales to franchisees $ 25,437 $ 21,760 Royalties and franchise fees 6,202 6,621 Other (1) 9,284 11,684 Total International revenue $ 40,923 $ 40,065 (1) Includes revenue primarily related to China operations prior to the newly formed joint ventures in China effective February 13, 2019 and company-owned stores located in Ireland. Manufacturing / Wholesale Revenue The following is a summary of the revenue disaggregated by major source in the Manufacturing / Wholesale reportable segment: Three months ended March 31, 2019 2018 (in thousands) Third-party contract manufacturing (1) $ 15,783 $ 32,722 Intersegment sales (1) 35,505 64,663 Wholesale partner sales 18,901 22,332 Total Manufacturing / Wholesale revenue $ 70,189 $ 119,717 (1) The decrease in third-party contract manufacturing and intersegment sales for the three months ended March 31, 2019 compared to the prior year quarter is due to the transaction with IVC for the newly formed manufacturing joint venture effective March 1, 2019. Revenue by Geography The following is a summary of the revenue by geography: Three months ended March 31, 2019 2018 Total revenues by geographic areas (1) : (in thousands) United States $ 535,943 $ 572,231 Foreign 28,821 35,302 Total revenues $ 564,764 $ 607,533 |
Contract with Customer | The following table presents changes in the Company’s contract liabilities during the three months ended March 31, 2019: Three months ended March 31, 2019 Balance at Beginning of Period Recognition of revenue included in beginning balance Contract liability, net of revenue, recognized during the period Balance at the End of Period (in thousands) Deferred franchise and license fees $ 33,464 (2,861 ) 668 $ 31,271 PRO Access and loyalty program points 24,836 (12,423 ) 12,863 25,276 Gift card liability 3,416 (1,523 ) 181 2,074 |
INVENTORY (Tables)
INVENTORY (Tables) | 3 Months Ended |
Mar. 31, 2019 | |
Inventory Disclosure [Abstract] | |
Schedule of Net Realizable Value of Inventory | The net realizable value of inventory consisted of the following: March 31, 2019 December 31, 2018 (in thousands) Finished product ready for sale $ 410,951 $ 416,113 Work-in-process, bulk product and raw materials (1) — 46,520 Packaging supplies (1) — 2,939 Inventory $ 410,951 $ 465,572 |
LONG-TERM DEBT _ INTEREST EXP_2
LONG-TERM DEBT / INTEREST EXPENSE (Tables) | 3 Months Ended |
Mar. 31, 2019 | |
Debt Disclosure [Abstract] | |
Schedule of Long-term Debt | Long-term debt consisted of the following: March 31, December 31, (in thousands) Tranche B-1 Term Loan $ — $ 147,289 Tranche B-2 Term Loan (net of $11.4 million and $17.5 million discount) 446,799 554,760 FILO Term Loan (net of $10.2 million and $10.9 million discount) 264,768 264,086 Unpaid original issuance discount — 11,445 Notes 177,440 175,504 Debt issuance costs (654 ) (762 ) Total debt 888,353 1,152,322 Less: current debt — (158,756 ) Long-term debt $ 888,353 $ 993,566 |
Components of Convertible Debt | The Notes consist of the following components: March 31, 2019 December 31, 2018 (in thousands) Liability component Principal $ 188,565 $ 188,565 Conversion feature (9,788 ) (11,489 ) Discount related to debt issuance costs (1,337 ) (1,572 ) Net carrying amount $ 177,440 $ 175,504 |
Schedule of Derivative Instruments in Statement of Financial Position, Fair Value [Table Text Block] | The fair values of the derivative financial instruments included in the Consolidated Balance Sheets consisted of the following: (in thousands, except percentages) Fair Value at Notional Amount Fixed Rate Balance Sheet Classification March 31, 2019 December 31, 2018 Accounting cash flow hedges: Interest rate swap $ 275,000 2.82 % Other long-term liabilities $ 3,641 $ 2,371 Interest rate swap 225,000 2.74 % Other long-term liabilities 1,348 839 Net carrying amount $ 500,000 Total liabilities $ 4,989 $ 3,210 |
Schedule of Interest Expense | Interest expense consisted of the following: Three months ended March 31, 2019 2018 (in thousands) Tranche B-1 Term Loan coupon $ 928 $ 8,058 Tranche B-2 Term Loan coupon 16,468 6,824 FILO Term Loan coupon 6,751 2,122 Revolving Credit Facility 123 132 Terminated revolving credit facility — 316 Amortization of discount and debt issuance costs 6,043 1,755 Subtotal 30,313 19,207 Notes: Coupon 707 707 Amortization of conversion feature 1,701 1,610 Amortization of discount and debt issuance costs 244 244 Total Notes 2,652 2,561 Other (9 ) 5 Interest expense, net $ 32,956 $ 21,773 |
EQUITY METHOD INVESTMENTS (Tabl
EQUITY METHOD INVESTMENTS (Tables) | 3 Months Ended |
Mar. 31, 2019 | |
Equity Method Investments and Joint Ventures [Abstract] | |
Summary of Equity Method Investments | The following table provides a reconciliation of equity method investments on the Company’s Consolidated Balance Sheets: March 31, 2019 December 31, 2018 (in thousands) Manufacturing JV $ 75,434 $ — Manufacturing JV capital contribution 10,714 — HK JV and China JV 10,700 — Income from equity method investments 955 — Total Equity method investments $ 97,803 $ — |
FAIR VALUE MEASUREMENTS AND F_2
FAIR VALUE MEASUREMENTS AND FINANCIAL INSTRUMENTS (Tables) | 3 Months Ended |
Mar. 31, 2019 | |
Fair Value Disclosures [Abstract] | |
Schedule of Actual and Estimated Fair Values of the Financial Instruments | The carrying value and estimated fair value of the forward contracts for the issuance of convertible preferred stock, the Term Loan Facility, net of discount, Notes (net of the equity component classified in stockholders' equity and discount) and the interest rate swaps were as follows: March 31, 2019 December 31, 2018 Carrying Amount Fair Value Carrying Amount Fair Value (in thousands) Assets: Forward contracts for the issuance of convertible preferred stock $ — $ — $ 88,942 $ 88,942 Liabilities: Tranche B-1 Term Loan $ — $ — $ 147,289 $ 145,080 Tranche B-2 Term Loan 446,799 430,938 554,760 511,766 FILO Term Loan 264,768 267,204 264,086 260,125 Notes 177,440 134,854 175,504 131,628 Interest rate swaps 4,989 4,989 3,210 3,210 |
LEASES (Tables)
LEASES (Tables) | 3 Months Ended |
Mar. 31, 2019 | |
Leases [Abstract] | |
Summary of Rent Expense | The components of the Company's rent expense, which is recorded within cost of sales on the Consolidated Statements of Operations, was as follows: Three months ended March 31, 2019 (in thousands) Company-owned and franchise stores: Operating leases $ 36,602 Variable lease costs (1) 21,509 Total company-owned and franchise stores 58,111 Other 2,188 Total rent expense $ 60,299 (1) Includes percent and contingent rent, landlord related taxes and common operating expenses. The weighted average remaining lease term and weighted average discount rate were as follows: Three months ended March 31, 2019 Weighted average remaining lease term 4.6 years Weighted average discount rate 10 % Supplemental cash flow information related to leases was as follows: Three months ended March 31, 2019 (in thousands) Operating cash flow information: Cash paid for amounts included in the measurement of operating lease liabilities $ 44,936 Right-of-use assets obtained in exchange for new operating lease liabilities $ 6,442 |
Summary of Minimum Future Rent Obligations | Maturities of the lease liabilities (undiscounted lease payments, as defined in Note 2 "Basis of Presentation") as of March 31, 2019 were as follows: Operating Leases for Company-Owned and Franchise Stores Operating Leases for Other (1) Total Operating Leases Sublease Income from Franchisees Rent on Operating Leases, net of Sublease Revenue (in thousands) 2019 (remainder) $ 120,954 $ 4,270 $ 125,224 $ (23,783 ) $ 101,441 2020 135,834 4,964 140,798 (27,829 ) 112,969 2021 109,994 3,643 113,637 (22,697 ) 90,940 2022 84,925 2,342 87,267 (17,882 ) 69,385 2023 63,125 1,180 64,305 (13,384 ) 50,921 Thereafter 136,071 6,703 142,774 (29,548 ) 113,226 Total future obligations $ 650,903 $ 23,102 $ 674,005 $ (135,123 ) $ 538,882 Less amounts representing interest (155,295 ) Present value of lease obligations $ 518,710 |
Schedule of Future Minimum Rental Payments for Operating Leases [Table Text Block] | Minimum future rent obligations for non-cancelable operating leases, excluding optional renewal periods, were as follows for the period ending December 31, 2018 and exclude landlord related taxes, common operating expenses, and percent and contingent rent. Operating Leases for Company-Owned and Franchise Stores Operating Leases for Other (1) Total Operating Leases Sublease Income from Franchisees Rent on Operating Leases, net of Sublease Revenue (in thousands) 2019 $ 162,910 $ 6,071 $ 168,981 $ (29,867 ) $ 139,114 2020 126,312 5,574 131,886 (23,631 ) 108,255 2021 95,000 4,185 99,185 (16,782 ) 82,403 2022 64,735 2,479 67,214 (10,285 ) 56,929 2023 39,798 1,290 41,088 (4,717 ) 36,371 Thereafter 56,200 6,703 62,903 (4,238 ) 58,665 Total future obligations $ 544,955 $ 26,302 $ 571,257 $ (89,520 ) $ 481,737 |
EARNINGS PER SHARE (Tables)
EARNINGS PER SHARE (Tables) | 3 Months Ended |
Mar. 31, 2019 | |
Earnings Per Share [Abstract] | |
Schedule of Weighted Average Number of Shares | The following table represents the Company's basic and dilutive weighted-average shares: Three months ended March 31, 2019 2018 (in thousands) Basic weighted average shares 83,510 83,232 Effect of dilutive stock-based compensation awards — 136 Diluted weighted average shares 83,510 83,368 |
Schedule of Antidilutive and Contingently Issuable Securities Excluded from Computation of Earnings Per Share | he following awards were not included in the computation of diluted EPS because the impact of applying the treasury stock method was antidilutive or because certain conditions have not been met with respect to the Company's performance awards. Antidilutive: Time-based options and restricted stock awards 3,206 Performance-based restricted stock awards 536 Contingently issuable: Performance-based restricted stock awards — Performance-based restricted stock awards with a market condition 315 Total stock-based awards excluded from diluted EPS 4,057 |
Computations for Basic and Diluted Earnings per Common Share | The computations for basic and diluted earnings per common share are as follows: Three months ended March, 31 2019 2018 (in thousands, except per share data) Earnings (loss) per common share - Basic Net (loss) income $ (15,262 ) $ 6,190 Cumulative undeclared convertible preferred stock dividend 3,716 — Net income (loss) attributable to common shareholders (18,978 ) 6,190 Weighted average common shares outstanding - basic 83,510 83,232 Earnings (loss) per common share - basic $ (0.23 ) $ 0.07 Earnings (loss) per common share - Diluted Net (loss) income $ (15,262 ) $ 6,190 Cumulative undeclared convertible preferred stock dividend 3,716 — Net income (loss) attributable to common shareholders (18,978 ) 6,190 Weighted average common shares outstanding - diluted 83,510 83,368 Earnings (loss) per common share - diluted $ (0.23 ) $ 0.07 |
SEGMENTS (Tables)
SEGMENTS (Tables) | 3 Months Ended |
Mar. 31, 2019 | |
Segment Reporting [Abstract] | |
Schedule of Key Financial Information of the Segments | The following table represents key financial information for each of the Company's reportable segments: Three months ended March 31, 2019 2018 (in thousands) Revenue: U.S. and Canada $ 489,157 $ 512,414 International 40,923 40,065 Manufacturing / Wholesale: Intersegment revenues 35,505 64,663 Third party 34,684 55,054 Subtotal Manufacturing / Wholesale 70,189 119,717 Total reportable segment revenues 600,269 672,196 Elimination of intersegment revenues (35,505 ) (64,663 ) Total revenue $ 564,764 $ 607,533 Operating income: U.S. and Canada $ 52,100 $ 43,490 International 14,050 14,464 Manufacturing / Wholesale 15,344 14,964 Total reportable segment operating income 81,494 72,918 Corporate costs (26,261 ) (26,479 ) Loss on net asset exchange for the formation of the joint ventures (19,514 ) — Other (237 ) (50 ) Unallocated corporate costs, loss on net asset exchange and other (46,012 ) (26,529 ) Total operating income 35,482 46,389 Interest expense, net 32,956 21,773 Loss on debt refinancing — 16,740 Loss on forward contracts for the issuance of convertible preferred stock 16,787 — (Loss) income before income taxes $ (14,261 ) $ 7,876 |
NATURE OF BUSINESS (Details)
NATURE OF BUSINESS (Details) $ in Millions | 1 Months Ended | 3 Months Ended | |
Mar. 31, 2019USD ($)country | Feb. 28, 2019USD ($)joint_ventures | Mar. 31, 2019USD ($)segmentcountry | |
Schedule of Equity Method Investments [Line Items] | |||
Number of reportable segments | segment | 3 | ||
Number of international countries in which franchise stores are located | country | 50 | 50 | |
Number of joint ventures | joint_ventures | 2 | ||
JV Framework | |||
Schedule of Equity Method Investments [Line Items] | |||
Equity method investment ownership (percentage) | 35.00% | ||
Manufacturing JV | |||
Schedule of Equity Method Investments [Line Items] | |||
Proceeds for investment in newly formed joint venture | $ | $ 101 | $ 101 | $ 101 |
Manufacturing JV | International Vitamin Corporation | |||
Schedule of Equity Method Investments [Line Items] | |||
Ownership interest (percentage) | 43.00% |
BASIS OF PRESENTATION - Recent
BASIS OF PRESENTATION - Recently Adopted Accounting Pronouncements (Details) - USD ($) $ in Thousands | Jan. 02, 2019 | Mar. 31, 2019 | Jan. 01, 2019 |
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||
Present value of lease obligations | $ 518,710 | ||
Right-of-use assets | $ 401,456 | ||
Accounting Standards Update 2016-02 | |||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||
Present value of lease obligations | $ 550,200 | ||
Right-of-use assets | 504,200 | ||
Deferred rent | 53,300 | ||
Prepaid rent | 7,300 | ||
Right-of-use asset impairment | $ (79,800) | ||
Impact of the adoption of ASC 842 | (59,936) | ||
Retained Earnings | Accounting Standards Update 2016-02 | |||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||
Impact of the adoption of ASC 842 | (59,936) | ||
Retained Earnings | Accounting Standards Update 2016-02, Right-Of-Use Asset Impairment | |||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||
Impact of the adoption of ASC 842 | $ (19,800) |
REVENUE - Disaggregation of Re
REVENUE - Disaggregation of Revenue (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2019 | Mar. 31, 2018 | |
Disaggregation of Revenue [Line Items] | ||
Revenue | $ 564,764 | $ 607,533 |
Operating Segment | ||
Disaggregation of Revenue [Line Items] | ||
Revenue | 600,269 | 672,196 |
Operating Segment | U.S. and Canada | ||
Disaggregation of Revenue [Line Items] | ||
Revenue | 489,157 | 512,414 |
Operating Segment | U.S. and Canada | Product Sales | ||
Disaggregation of Revenue [Line Items] | ||
Revenue | 377,374 | 397,779 |
Operating Segment | U.S. and Canada | Protein | ||
Disaggregation of Revenue [Line Items] | ||
Revenue | 80,257 | 87,670 |
Operating Segment | U.S. and Canada | Performance supplements | ||
Disaggregation of Revenue [Line Items] | ||
Revenue | 74,778 | 75,616 |
Operating Segment | U.S. and Canada | Weight management | ||
Disaggregation of Revenue [Line Items] | ||
Revenue | 30,779 | 39,787 |
Operating Segment | U.S. and Canada | Weight management | ||
Disaggregation of Revenue [Line Items] | ||
Revenue | 47,056 | 50,371 |
Operating Segment | U.S. and Canada | Herbs / Greens | ||
Disaggregation of Revenue [Line Items] | ||
Revenue | 15,873 | 16,158 |
Operating Segment | U.S. and Canada | Wellness | ||
Disaggregation of Revenue [Line Items] | ||
Revenue | 47,200 | 47,701 |
Operating Segment | U.S. and Canada | Health / Beauty | ||
Disaggregation of Revenue [Line Items] | ||
Revenue | 46,388 | 48,054 |
Operating Segment | U.S. and Canada | Food / Drink | ||
Disaggregation of Revenue [Line Items] | ||
Revenue | 28,243 | 25,360 |
Operating Segment | U.S. and Canada | General merchandise | ||
Disaggregation of Revenue [Line Items] | ||
Revenue | 6,800 | 7,062 |
Operating Segment | U.S. and Canada | Wholesale sales to franchisees | ||
Disaggregation of Revenue [Line Items] | ||
Revenue | 58,257 | 57,160 |
Operating Segment | U.S. and Canada | Royalties and franchise fees | ||
Disaggregation of Revenue [Line Items] | ||
Revenue | 8,472 | 8,748 |
Operating Segment | U.S. and Canada | Sublease income | ||
Disaggregation of Revenue [Line Items] | ||
Revenue | 10,976 | 11,765 |
Operating Segment | U.S. and Canada | Cooperative advertising and other franchise support fees | ||
Disaggregation of Revenue [Line Items] | ||
Revenue | 5,067 | 5,533 |
Operating Segment | U.S. and Canada | Other | ||
Disaggregation of Revenue [Line Items] | ||
Revenue | 29,011 | 31,429 |
Operating Segment | International | ||
Disaggregation of Revenue [Line Items] | ||
Revenue | 40,923 | 40,065 |
Operating Segment | International | Wholesale sales to franchisees | ||
Disaggregation of Revenue [Line Items] | ||
Revenue | 25,437 | 21,760 |
Operating Segment | International | Royalties and franchise fees | ||
Disaggregation of Revenue [Line Items] | ||
Revenue | 6,202 | 6,621 |
Operating Segment | International | Other | ||
Disaggregation of Revenue [Line Items] | ||
Revenue | 9,284 | 11,684 |
Operating Segment | Manufacturing / Wholesale | ||
Disaggregation of Revenue [Line Items] | ||
Revenue | 70,189 | 119,717 |
Operating Segment | Manufacturing / Wholesale | Third-party contract manufacturing(1) | ||
Disaggregation of Revenue [Line Items] | ||
Revenue | 15,783 | 32,722 |
Operating Segment | Manufacturing / Wholesale | Wholesale partner sales | ||
Disaggregation of Revenue [Line Items] | ||
Revenue | 18,901 | 22,332 |
Intersegment Eliminations | ||
Disaggregation of Revenue [Line Items] | ||
Revenue | (35,505) | (64,663) |
Intersegment Eliminations | Manufacturing / Wholesale | ||
Disaggregation of Revenue [Line Items] | ||
Revenue | (35,505) | (64,663) |
Intersegment Eliminations | Manufacturing / Wholesale | Intersegment sales(1) | ||
Disaggregation of Revenue [Line Items] | ||
Revenue | 35,505 | 64,663 |
United States | ||
Disaggregation of Revenue [Line Items] | ||
Revenue | 535,943 | 572,231 |
Foreign | ||
Disaggregation of Revenue [Line Items] | ||
Revenue | $ 28,821 | $ 35,302 |
REVENUE - Contract with Custom
REVENUE - Contract with Customer (Details) - USD ($) | 3 Months Ended | |
Mar. 31, 2019 | Dec. 31, 2018 | |
Contract With Customer [Line Items] | ||
Contract assets | $ 0 | $ 25,500,000 |
Deferred franchise and license fees | ||
Contract liabilities: | ||
Balance at Beginning of Period | 33,464,000 | |
Recognition of revenue included in beginning balance | (2,861,000) | |
Contract liability, net of revenue, recognized during the period | 668,000 | |
Balance at the End of Period | 31,271,000 | |
Deferred revenue, expected to be recognized over next 12 months | 7,200,000 | |
PRO Access and loyalty program points | ||
Contract liabilities: | ||
Balance at Beginning of Period | 24,836,000 | |
Recognition of revenue included in beginning balance | (12,423,000) | |
Contract liability, net of revenue, recognized during the period | 12,863,000 | |
Balance at the End of Period | 25,276,000 | |
Gift card liability | ||
Contract liabilities: | ||
Balance at Beginning of Period | 3,416,000 | |
Recognition of revenue included in beginning balance | (1,523,000) | |
Contract liability, net of revenue, recognized during the period | 181,000 | |
Balance at the End of Period | $ 2,074,000 |
INVENTORY (Details)
INVENTORY (Details) - USD ($) $ in Thousands | Mar. 31, 2019 | Dec. 31, 2018 |
Inventory Disclosure [Abstract] | ||
Finished product ready for sale | $ 410,951 | $ 416,113 |
Work-in-process, bulk product and raw materials | 0 | 46,520 |
Packaging supplies | 0 | 2,939 |
Inventory | $ 410,951 | $ 465,572 |
LONG-TERM DEBT _ INTEREST EXP_3
LONG-TERM DEBT / INTEREST EXPENSE - Schedule of Long-Term Debt (Details) - USD ($) | Mar. 31, 2019 | Dec. 31, 2018 | Nov. 30, 2018 | Mar. 31, 2018 | Feb. 28, 2018 |
Debt Instrument | |||||
Net carrying amount | $ 888,353,000 | $ 1,152,322,000 | |||
Unpaid original issuance discount | 0 | 11,445,000 | $ 19,587,000 | ||
Debt issuance costs | (654,000) | (762,000) | |||
Less: current debt | 0 | (158,756,000) | |||
Long-term debt | 888,353,000 | 993,566,000 | |||
FILO Term Loan | Term Loan | FILO Asset-based Term Loan Facility | |||||
Debt Instrument | |||||
Origination issuance discount (OID) | 10,200,000 | 10,900,000 | |||
Net carrying amount | 264,768,000 | 264,086,000 | |||
FILO Term Loan | Revolving Credit Facility | |||||
Debt Instrument | |||||
Net carrying amount | 0 | ||||
Convertible Senior Notes | Notes | |||||
Debt Instrument | |||||
Origination issuance discount (OID) | 9,788,000 | 11,489,000 | |||
Net carrying amount | 177,440,000 | 175,504,000 | |||
Tranche B-1 | Term Loan Facility | Term Loan Facility Due March 2019 | |||||
Debt Instrument | |||||
Net carrying amount | 0 | 147,289,000 | |||
Tranche B-2 | Term Loan Facility | Amended Term Loan Facility Due March 2021 | |||||
Debt Instrument | |||||
Origination issuance discount (OID) | 11,400,000 | 17,500,000 | |||
Net carrying amount | $ 446,799,000 | $ 554,760,000 | $ 100,000,000 | $ 446,800,000 |
LONG-TERM DEBT _ INTEREST EXP_4
LONG-TERM DEBT / INTEREST EXPENSE - Narrative (Details) - USD ($) | Mar. 11, 2019 | Feb. 28, 2018 | Mar. 31, 2019 | Feb. 28, 2019 | Nov. 30, 2018 | Mar. 31, 2019 | Mar. 31, 2018 | Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | Mar. 01, 2019 |
Debt Instrument | |||||||||||
Borrowings outstanding | $ 888,353,000 | $ 888,353,000 | $ 1,152,322,000 | ||||||||
Loss on debt refinancing | 0 | $ 16,740,000 | |||||||||
Unpaid original issuance discount | 0 | 0 | 19,587,000 | 11,445,000 | |||||||
Original issuance discount and revolving credit facility fees | 10,365,000 | 35,216,000 | |||||||||
Preferred Stock | Securities Purchase Agreement Amendment, Initial Issuance | |||||||||||
Debt Instrument | |||||||||||
Amount received on investment | $ 100,000,000 | ||||||||||
Manufacturing JV | |||||||||||
Debt Instrument | |||||||||||
Proceeds for investment in newly formed joint venture | 101,000,000 | $ 101,000,000 | 101,000,000 | ||||||||
Harbin Pharmaceutical Group Holdings Co., Ltd. | |||||||||||
Debt Instrument | |||||||||||
Proceeds for investment in newly formed joint venture | 200,000,000 | ||||||||||
Revolving Credit Facility | |||||||||||
Debt Instrument | |||||||||||
Commitment fee on undrawn portion of revolving credit facility | 0.50% | ||||||||||
FILO Term Loan | Revolving Credit Facility | |||||||||||
Debt Instrument | |||||||||||
Borrowings outstanding | 0 | 0 | |||||||||
Maximum borrowing capacity | $ 100,000,000 | $ 100,000,000 | $ 81,000,000 | ||||||||
FILO Asset-based Term Loan Facility | |||||||||||
Debt Instrument | |||||||||||
Loss on debt refinancing | 16,700,000 | ||||||||||
FILO Asset-based Term Loan Facility | FILO Term Loan | Term Loan | |||||||||||
Debt Instrument | |||||||||||
Borrowings outstanding | 264,768,000 | 264,768,000 | 264,086,000 | ||||||||
Maximum borrowing capacity | $ 264,800,000 | ||||||||||
Origination issuance discount (OID) | $ 10,200,000 | $ 10,200,000 | $ 10,900,000 | ||||||||
Effective interest rate | 9.50% | 9.50% | 9.50% | ||||||||
FILO Asset-based Term Loan Facility | FILO Term Loan | Term Loan | LIBOR | |||||||||||
Debt Instrument | |||||||||||
Basis spread on variable rate | 7.00% | ||||||||||
FILO Asset-based Term Loan Facility | FILO Term Loan | Term Loan | LIBOR | Minimum | |||||||||||
Debt Instrument | |||||||||||
Basis spread on variable rate | 6.50% | ||||||||||
Amended Term Loan Facility Due March 2021 | Term Loan Facility | |||||||||||
Debt Instrument | |||||||||||
Minimum for notes repayment, refinanced, converted, discharged, or prepaid, For maturity date extension trigger | $ 50,000,000 | ||||||||||
Revolving Credit Facility | |||||||||||
Debt Instrument | |||||||||||
Line of credit facility, remaining borrowing capacity | $ 74,200,000 | $ 74,200,000 | |||||||||
Revolving Credit Facility | Letter Of Credit | |||||||||||
Debt Instrument | |||||||||||
Minimum fixed charge coverage ratio | 1 | 1 | |||||||||
Revolving Credit Facility | Through December 31, 2018 | Letter Of Credit | |||||||||||
Debt Instrument | |||||||||||
Maximum net first lien leverage ratio | 5.50 | 5.50 | |||||||||
Revolving Credit Facility | March 31, 2019 to December 31, 2019 | Letter Of Credit | |||||||||||
Debt Instrument | |||||||||||
Maximum net first lien leverage ratio | 5 | 5 | |||||||||
Revolving Credit Facility | Thereafter | Letter Of Credit | |||||||||||
Debt Instrument | |||||||||||
Maximum net first lien leverage ratio | 4.25 | 4.25 | |||||||||
Revolving Credit Facility | FILO Term Loan | Letter Of Credit | |||||||||||
Debt Instrument | |||||||||||
Letters of credit outstanding | $ 6,200,000 | $ 6,200,000 | |||||||||
Reduction to borrowing ability | 600,000 | 600,000 | |||||||||
Notes | Convertible Senior Notes | |||||||||||
Debt Instrument | |||||||||||
Borrowings outstanding | 177,440,000 | 177,440,000 | $ 175,504,000 | ||||||||
Principal | 188,565,000 | 188,565,000 | 188,565,000 | ||||||||
Origination issuance discount (OID) | 9,788,000 | 9,788,000 | 11,489,000 | ||||||||
Unamortized debt issuance costs | $ 1,337,000 | $ 1,337,000 | $ 1,572,000 | ||||||||
Interest rate | 1.50% | 1.50% | |||||||||
Tranche B-1 | |||||||||||
Debt Instrument | |||||||||||
Payments on term loan facility | $ 147,312,000 | 1,138,000 | |||||||||
Tranche B-1 | Amended Term Loan Facility Due March 2021 | Term Loan Facility | |||||||||||
Debt Instrument | |||||||||||
Effective interest rate | 5.70% | ||||||||||
Tranche B-1 | Term Loan Facility Due March 2019 | Term Loan Facility | |||||||||||
Debt Instrument | |||||||||||
Borrowings outstanding | $ 0 | 0 | $ 147,289,000 | ||||||||
Payments on term loan facility | $ 114,000,000 | ||||||||||
Tranche B-1 | Term Loan Facility Due March 2019 | FILO Term Loan | |||||||||||
Debt Instrument | |||||||||||
Commitment fee on undrawn portion of revolving credit facility | 0.375% | ||||||||||
Potential increase of unused capacity fee | 0.50% | ||||||||||
Tranche B-1 | Term Loan Facility Due March 2019 | FILO Term Loan | Letter Of Credit | |||||||||||
Debt Instrument | |||||||||||
Fee on outstanding balance | 2.00% | ||||||||||
Tranche B-1 | Term Loan Facility Due March 2019 | FILO Term Loan | LIBOR | |||||||||||
Debt Instrument | |||||||||||
Basis spread on variable rate | 1.75% | ||||||||||
Potential increase (decrease) on basis spread of variable rate | 0.25% | ||||||||||
Tranche B-2 | |||||||||||
Debt Instrument | |||||||||||
Payments on term loan facility | 114,000,000 | $ 10,700,000 | |||||||||
Tranche B-2 | Amended Term Loan Facility Due March 2021 | Term Loan Facility | |||||||||||
Debt Instrument | |||||||||||
Borrowings outstanding | $ 446,800,000 | 446,799,000 | $ 100,000,000 | 446,799,000 | 554,760,000 | ||||||
Annual principal payment | $ 43,000,000 | ||||||||||
Origination issuance discount (OID) | $ 11,400,000 | $ 11,400,000 | $ 17,500,000 | ||||||||
Current OID due, percent | 2.00% | 2.00% | |||||||||
Effective interest rate | 11.30% | 11.30% | 11.80% | ||||||||
Tranche B-2 | Amended Term Loan Facility Due March 2021 | Term Loan Facility | Forecast | |||||||||||
Debt Instrument | |||||||||||
Mandatory prepayment, percent of excess cash flows | 50.00% | ||||||||||
Tranche B-2 | Amended Term Loan Facility Due March 2021 | Term Loan Facility | Initial Rate | |||||||||||
Debt Instrument | |||||||||||
Mandatory prepayment, percent of excess cash flows | 75.00% | ||||||||||
Tranche B-2 | Amended Term Loan Facility Due March 2021 | Term Loan Facility | Reduced Rate | |||||||||||
Debt Instrument | |||||||||||
Mandatory prepayment, percent of excess cash flows | 50.00% | ||||||||||
Payments for excess cash flows | $ 9,800,000 | ||||||||||
Tranche B-2 | Amended Term Loan Facility Due March 2021 | Term Loan Facility | Minimum | Reduced Rate | Forecast | |||||||||||
Debt Instrument | |||||||||||
Payments for excess cash flows | $ 25,000,000 | ||||||||||
Tranche B-2 | Amended Term Loan Facility Due March 2021 | Term Loan Facility | Maximum | Reduced Rate | Forecast | |||||||||||
Debt Instrument | |||||||||||
Payments for excess cash flows | $ 35,000,000 | ||||||||||
Tranche B-2 | Amended Term Loan Facility Due March 2021 | Term Loan Facility | LIBOR | |||||||||||
Debt Instrument | |||||||||||
Basis spread on variable rate | 8.75% | ||||||||||
Tranche B-2 | Amended Term Loan Facility Due March 2021 | Term Loan Facility | LIBOR | Minimum | |||||||||||
Debt Instrument | |||||||||||
Basis spread on variable rate | 8.25% | ||||||||||
Tranche B-2 | Amended Term Loan Facility Due March 2021 | Term Loan Facility | LIBOR | Maximum | |||||||||||
Debt Instrument | |||||||||||
Basis spread on variable rate | 9.25% | ||||||||||
Tranche B-2 | Amended Term Loan Facility Due March 2021 | Term Loan Facility | Prime | |||||||||||
Debt Instrument | |||||||||||
Basis spread on variable rate | 7.75% | ||||||||||
Tranche B-2 | Amended Term Loan Facility Due March 2021 | Term Loan Facility | Prime | Minimum | |||||||||||
Debt Instrument | |||||||||||
Basis spread on variable rate | 7.25% | ||||||||||
Tranche B-2 | Amended Term Loan Facility Due March 2021 | Term Loan Facility | Prime | Maximum | |||||||||||
Debt Instrument | |||||||||||
Basis spread on variable rate | 8.25% |
LONG-TERM DEBT _ INTEREST EXP_5
LONG-TERM DEBT / INTEREST EXPENSE - Components of Convertible Debt (Details) - USD ($) $ in Thousands | Mar. 31, 2019 | Dec. 31, 2018 |
Liability component | ||
Net carrying amount | $ 888,353 | $ 1,152,322 |
Convertible Senior Notes | Notes | ||
Debt Instrument | ||
Interest rate | 1.50% | |
Liability component | ||
Principal | $ 188,565 | 188,565 |
Conversion feature | (9,788) | (11,489) |
Discount related to debt issuance costs | (1,337) | (1,572) |
Net carrying amount | $ 177,440 | $ 175,504 |
LONG-TERM DEBT _ INTEREST EXP_6
LONG-TERM DEBT / INTEREST EXPENSE - Interest Rate Swaps (Details) | Dec. 31, 2020USD ($) | Jun. 30, 2020USD ($) | Jun. 30, 2019USD ($) | Mar. 31, 2019USD ($) | Jun. 13, 2018USD ($)interest_rate_swap |
Debt Instrument | |||||
Notional amount | $ 500,000,000 | ||||
Interest rate swaps | |||||
Debt Instrument | |||||
Number of interest rate swaps | interest_rate_swap | 2 | ||||
Interest Rate Swap One | |||||
Debt Instrument | |||||
Notional amount | 275,000,000 | $ 275,000,000 | |||
Floor interest rate (percentage) | 0.00% | ||||
Interest Rate Swap Two | |||||
Debt Instrument | |||||
Notional amount | $ 225,000,000 | $ 225,000,000 | |||
Floor interest rate (percentage) | 0.75% | ||||
Forecast | Interest Rate Swap Two | |||||
Debt Instrument | |||||
Notional amount | $ 75,000,000 | $ 125,000,000 | $ 175,000,000 |
LONG-TERM DEBT _ INTEREST EXP_7
LONG-TERM DEBT / INTEREST EXPENSE - Schedule of Derivative Financial Instruments (Details) - USD ($) | 3 Months Ended | |||
Mar. 31, 2019 | Mar. 31, 2018 | Dec. 31, 2018 | Jun. 13, 2018 | |
Derivatives, Fair Value [Line Items] | ||||
Notional amount | $ 500,000,000 | |||
Derivative liability | 4,989,000,000 | $ 3,210,000,000 | ||
Cumulative unrealized loss, net of tax | (1,464,000) | $ 0 | ||
Interest Rate Swap One | ||||
Derivatives, Fair Value [Line Items] | ||||
Notional amount | $ 275,000,000 | $ 275,000,000 | ||
Fixed rate (percentage) | 2.82% | |||
Derivative liability | $ 3,641,000,000 | 2,371,000,000 | ||
Interest Rate Swap Two | ||||
Derivatives, Fair Value [Line Items] | ||||
Notional amount | $ 225,000,000 | $ 225,000,000 | ||
Fixed rate (percentage) | 2.74% | |||
Derivative liability | $ 1,348,000,000 | $ 839,000,000 | ||
Interest rate swaps | ||||
Derivatives, Fair Value [Line Items] | ||||
Cumulative unrealized loss, net of tax | $ (3,400,000) |
LONG-TERM DEBT _ INTEREST EXP_8
LONG-TERM DEBT / INTEREST EXPENSE - Schedule of Interest Expense (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2019 | Mar. 31, 2018 | |
Debt Instrument | ||
Other | $ (9) | $ 5 |
Interest expense, net | 32,956 | 21,773 |
Revolving Credit Facility | ||
Debt Instrument | ||
Interest expense (excluding amortization) | 0 | 316 |
Senior Credit Facility | ||
Debt Instrument | ||
Amortization of discount and debt issuance costs | 6,043 | 1,755 |
Interest expense | 30,313 | 19,207 |
Senior Credit Facility | FILO Term Loan | Revolving Credit Facility | ||
Debt Instrument | ||
Interest expense (excluding amortization) | 123 | 132 |
FILO Asset-based Term Loan Facility | FILO Term Loan | Term Loan | ||
Debt Instrument | ||
Interest expense (excluding amortization) | 6,751 | 2,122 |
Notes | Convertible Senior Notes | ||
Debt Instrument | ||
Interest expense (excluding amortization) | 707 | 707 |
Amortization of conversion feature | 1,701 | 1,610 |
Amortization of discount and debt issuance costs | 244 | 244 |
Interest expense | 2,652 | 2,561 |
Tranche B-1 | Senior Credit Facility | Term Loan Facility | ||
Debt Instrument | ||
Interest expense (excluding amortization) | 928 | 8,058 |
Tranche B-2 | Senior Credit Facility | Term Loan Facility | ||
Debt Instrument | ||
Interest expense (excluding amortization) | $ 16,468 | $ 6,824 |
EQUITY METHOD INVESTMENTS - Nar
EQUITY METHOD INVESTMENTS - Narrative (Details) - USD ($) $ in Millions | 1 Months Ended | 3 Months Ended | 47 Months Ended | ||
Mar. 31, 2019 | Feb. 28, 2019 | Mar. 31, 2019 | Jan. 31, 2023 | Jan. 01, 2023 | |
JV Framework | |||||
Schedule of Equity Method Investments [Line Items] | |||||
Equity method investment ownership (percentage) | 35.00% | ||||
Cash contributed | $ 2.4 | ||||
Finished goods purchased | 21 | ||||
Accounts payable | $ 20 | 20 | |||
Accounts receivable | 4 | 4 | |||
Manufacturing JV | |||||
Schedule of Equity Method Investments [Line Items] | |||||
Proceeds for investment in newly formed joint venture | 101 | $ 101 | $ 101 | ||
Manufacturing JV Capital Contribution | |||||
Schedule of Equity Method Investments [Line Items] | |||||
Capital contribution | $ 10.7 | ||||
GNC Hong Kong Limited | JV Framework | |||||
Schedule of Equity Method Investments [Line Items] | |||||
Equity method investment ownership (percentage) | 35.00% | 35.00% | 35.00% | ||
Manufacturing JV | International Vitamin Corporation | |||||
Schedule of Equity Method Investments [Line Items] | |||||
Equity method investment ownership (percentage) | 43.00% | 43.00% | |||
Forecast | Manufacturing JV | International Vitamin Corporation | |||||
Schedule of Equity Method Investments [Line Items] | |||||
Equity method investment ownership (percentage) | 100.00% | ||||
Subsequent Event | Forecast | Manufacturing JV | |||||
Schedule of Equity Method Investments [Line Items] | |||||
Proceeds for investment in newly formed joint venture | $ 75 | ||||
China Business | Disposal group, dispsed of by sale | |||||
Schedule of Equity Method Investments [Line Items] | |||||
Deconsolidation, gain (loss) | $ 5.8 | ||||
Nutra Manufacturing Business | Disposal group, dispsed of by sale | |||||
Schedule of Equity Method Investments [Line Items] | |||||
Deconsolidation, gain (loss) | $ (25.3) |
EQUITY METHOD INVESTMENTS - Sum
EQUITY METHOD INVESTMENTS - Summary of Equity Method Investments (Details) - USD ($) $ in Thousands | Mar. 31, 2019 | Dec. 31, 2018 |
Schedule of Equity Method Investments [Line Items] | ||
Income from equity method investments | $ 955 | $ 0 |
Total Equity method investments | 97,803 | 0 |
Manufacturing JV | ||
Schedule of Equity Method Investments [Line Items] | ||
Equity method investment, unerlying equity in net assets | 75,434 | 0 |
Manufacturing JV Capital Contribution | ||
Schedule of Equity Method Investments [Line Items] | ||
Equity method investment, unerlying equity in net assets | 10,714 | 0 |
HK JV and China JV | ||
Schedule of Equity Method Investments [Line Items] | ||
Equity method investment, unerlying equity in net assets | $ 10,700 | $ 0 |
FAIR VALUE MEASUREMENTS AND F_3
FAIR VALUE MEASUREMENTS AND FINANCIAL INSTRUMENTS - Schedule of Carrying Amount and Estimated Fair Values of the Financial Instruments (Details) - USD ($) $ in Thousands | Mar. 31, 2019 | Dec. 31, 2018 |
Actual and estimated fair values of the financial instruments | ||
Derivative liability | $ 4,989,000 | $ 3,210,000 |
FILO Asset-based Term Loan Facility | FILO Term Loan | Level 2 | Carrying Amount | ||
Actual and estimated fair values of the financial instruments | ||
Long-term debt | 264,768 | 264,086 |
FILO Asset-based Term Loan Facility | FILO Term Loan | Level 2 | Fair Value | ||
Actual and estimated fair values of the financial instruments | ||
Long-term debt | 267,204 | 260,125 |
Notes | Notes | Level 2 | Carrying Amount | ||
Actual and estimated fair values of the financial instruments | ||
Long-term debt | 177,440 | 175,504 |
Notes | Notes | Level 2 | Fair Value | ||
Actual and estimated fair values of the financial instruments | ||
Long-term debt | 134,854 | 131,628 |
Tranche B-1 | Amended Term Loan Facility Due March 2021 | Term Loan Facility | Level 2 | Carrying Amount | ||
Actual and estimated fair values of the financial instruments | ||
Long-term debt | 0 | 147,289 |
Tranche B-1 | Amended Term Loan Facility Due March 2021 | Term Loan Facility | Level 2 | Fair Value | ||
Actual and estimated fair values of the financial instruments | ||
Long-term debt | 0 | 145,080 |
Tranche B-2 | Amended Term Loan Facility Due March 2021 | Term Loan Facility | Level 2 | Carrying Amount | ||
Actual and estimated fair values of the financial instruments | ||
Long-term debt | 446,799 | 554,760 |
Tranche B-2 | Amended Term Loan Facility Due March 2021 | Term Loan Facility | Level 2 | Fair Value | ||
Actual and estimated fair values of the financial instruments | ||
Long-term debt | 430,938 | 511,766 |
Forward contracts for the issuance of convertible preferred stock | Level 2 | Carrying Amount | ||
Actual and estimated fair values of the financial instruments | ||
Derivative asset | 0 | 88,942 |
Forward contracts for the issuance of convertible preferred stock | Level 2 | Fair Value | ||
Actual and estimated fair values of the financial instruments | ||
Derivative asset | 0 | 88,942 |
Interest rate swaps | Level 2 | Carrying Amount | ||
Actual and estimated fair values of the financial instruments | ||
Derivative liability | 4,989 | 3,210 |
Interest rate swaps | Level 2 | Fair Value | ||
Actual and estimated fair values of the financial instruments | ||
Derivative liability | $ 4,989 | $ 3,210 |
LEASES - Narrative (Details)
LEASES - Narrative (Details) - USD ($) $ in Thousands | 3 Months Ended | ||
Mar. 31, 2019 | Mar. 31, 2018 | Mar. 01, 2019 | |
Lessee, Lease, Description [Line Items] | |||
Renewal term period | 10 years | ||
Sublease revenue | $ 11,000 | ||
Sublease revenue | $ 11,800 | ||
Present value of lease obligations | 518,710 | ||
Current lease liabilities | 117,093 | ||
Right-of-use assets | $ 401,456 | ||
Minimum | |||
Lessee, Lease, Description [Line Items] | |||
Remaining lease term | 1 year | ||
Maximum | |||
Lessee, Lease, Description [Line Items] | |||
Remaining lease term | 14 years | ||
JV Framework | |||
Lessee, Lease, Description [Line Items] | |||
Lease term | 1 year |
LEASES - Summary of Leases (Det
LEASES - Summary of Leases (Details) $ in Thousands | 3 Months Ended |
Mar. 31, 2019USD ($) | |
Lessee, Lease, Description [Line Items] | |
Operating leases | $ 36,602 |
Variable lease costs | 21,509 |
Rent expense | $ 60,299 |
Weighted average remaining lease term | 4 years 7 months 6 days |
Weighted average discount rate | 10.00% |
Cash paid for amounts included in the measurement of operating lease liabilities | $ 44,936 |
Right-of-use assets obtained in exchange for new operating lease liabilities | 6,442 |
Operating Leases for Company-Owned and Franchise Stores | |
Lessee, Lease, Description [Line Items] | |
Rent expense | 58,111 |
Other | |
Lessee, Lease, Description [Line Items] | |
Rent expense | $ 2,188 |
LEASES - Minimum Future Rent Ob
LEASES - Minimum Future Rent Obligations, After Adoption (Details) $ in Thousands | Mar. 31, 2019USD ($) |
Minimum Future Obligations | |
2019 (remainder) | $ 125,224 |
2020 | 140,798 |
2021 | 113,637 |
2022 | 87,267 |
2023 | 64,305 |
Thereafter | 142,774 |
Total future obligations | 674,005 |
Less amounts representing interest | (155,295) |
Present value of lease obligations | 518,710 |
Sublease Income from Franchisees | |
2019 (remainder) | 23,783 |
2020 | 27,829 |
2021 | 22,697 |
2022 | 17,882 |
2023 | 13,384 |
Thereafter | 29,548 |
Total future obligations | 135,123 |
Rent on Operating Leases, net of Sublease Revenue | |
2019 (remainder) | 101,441 |
2020 | 112,969 |
2021 | 90,940 |
2022 | 69,385 |
2023 | 50,921 |
Thereafter | 113,226 |
Total future obligations | 538,882 |
Operating Leases for Company-Owned and Franchise Stores | |
Minimum Future Obligations | |
2019 (remainder) | 120,954 |
2020 | 135,834 |
2021 | 109,994 |
2022 | 84,925 |
2023 | 63,125 |
Thereafter | 136,071 |
Total future obligations | 650,903 |
Operating Leases for Other | |
Minimum Future Obligations | |
2019 (remainder) | 4,270 |
2020 | 4,964 |
2021 | 3,643 |
2022 | 2,342 |
2023 | 1,180 |
Thereafter | 6,703 |
Total future obligations | $ 23,102 |
LEASES - Minimum Future Rent _2
LEASES - Minimum Future Rent Obligations, Before Adoption (Details) $ in Thousands | Dec. 31, 2018USD ($) |
Minimum Future Obligations | |
2019 | $ 168,981 |
2020 | 131,886 |
2021 | 99,185 |
2022 | 67,214 |
2023 | 41,088 |
Thereafter | 62,903 |
Total future obligations | 571,257 |
Sublease Income from Franchisees | |
2019 | (29,867) |
2020 | (23,631) |
2021 | (16,782) |
2022 | (10,285) |
2023 | (4,717) |
Thereafter | (4,238) |
Total future obligations | (89,520) |
Rent on Operating Leases, net of Sublease Revenue | |
2019 | 139,114 |
2020 | 108,255 |
2021 | 82,403 |
2022 | 56,929 |
2023 | 36,371 |
Thereafter | 58,665 |
Total future obligations | 481,737 |
Operating Leases for Company-Owned and Franchise Stores | |
Minimum Future Obligations | |
2019 | 162,910 |
2020 | 126,312 |
2021 | 95,000 |
2022 | 64,735 |
2023 | 39,798 |
Thereafter | 56,200 |
Total future obligations | 544,955 |
Operating Leases for Other | |
Minimum Future Obligations | |
2019 | 6,071 |
2020 | 5,574 |
2021 | 4,185 |
2022 | 2,479 |
2023 | 1,290 |
Thereafter | 6,703 |
Total future obligations | $ 26,302 |
CONTINGENCIES (Details)
CONTINGENCIES (Details) | Feb. 29, 2012action | Dec. 31, 2016 | Mar. 31, 2019USD ($)lawsuit |
Product Liability | |||
Commitments and contingencies | |||
Deductible/retention per claim | $ 4,000,000 | ||
Aggregate cap on retained loss | $ 10,000,000 | ||
DMAA Claims | Product Liability | |||
Commitments and contingencies | |||
Number of pending lawsuits in which company is named | lawsuit | 27 | ||
Elizabeth Naranjo, California Wage and Break Claims | |||
Commitments and contingencies | |||
Number of claims filed | action | 8 | ||
Violations of Oregon Unlawful Trade Practices Act | |||
Commitments and contingencies | |||
Loss contingency accrual | $ 0 | ||
Subpoena from Department of Justice Related to USP Labs | |||
Commitments and contingencies | |||
Term of settlement agreement | 60 months |
MEZZANINE EQUITY Narrative (Det
MEZZANINE EQUITY Narrative (Details) $ / shares in Units, $ in Thousands | Feb. 13, 2019USD ($)shares | Jan. 02, 2019USD ($)shares | Nov. 09, 2018USD ($)shares | Nov. 08, 2018USD ($)tranche | Feb. 13, 2018USD ($)$ / sharesshares | Mar. 31, 2019USD ($)$ / sharesshares | Mar. 31, 2018USD ($) | Mar. 31, 2019USD ($)$ / sharesshares |
Temporary Equity [Line Items] | ||||||||
Preferred stock, shares authorized (in shares) | 60,000,000 | 60,000,000 | ||||||
Preferred Stock, par value (in dollars per share) | $ / shares | $ 0.001 | $ 0.001 | ||||||
Loss on forward contracts for the issuance of convertible preferred stock | $ | $ 16,787 | $ 0 | ||||||
Cumulative undeclared convertible preferred stock dividend | $ | $ 3,716 | $ 0 | $ 4,700 | |||||
Redeemable Convertible Preferred Stock | ||||||||
Temporary Equity [Line Items] | ||||||||
Convertible preferred stock, shares issued (in shares) | 299,950 | 299,950 | ||||||
Series A Preferred Stock | ||||||||
Temporary Equity [Line Items] | ||||||||
Preferred Stock, par value (in dollars per share) | $ / shares | $ 1,000 | $ 1,000 | ||||||
Dividend rate (as a percentage) | 6.50% | |||||||
SPA Amendment, Private Placement | Redeemable Convertible Preferred Stock | ||||||||
Temporary Equity [Line Items] | ||||||||
Convertible preferred stock issued (in shares) | 299,950 | |||||||
Price per share (in dollars per share) | $ / shares | $ 1,000 | |||||||
Consideration received | $ | $ 300,000 | $ 300,000 | ||||||
Number of tranches | tranche | 3 | |||||||
Shares converted (in shares) | 56,100,000 | |||||||
Initial conversion price (in dollars per share) | $ / shares | $ 5.35 | |||||||
SPA Amendment, Initial Issuance | ||||||||
Temporary Equity [Line Items] | ||||||||
Convertible preferred stock issued (in shares) | 100,000 | |||||||
Consideration received | $ | $ 100,000 | |||||||
SPA Amendment, First Subsequent Issuance | ||||||||
Temporary Equity [Line Items] | ||||||||
Convertible preferred stock issued (in shares) | 50,000 | |||||||
Consideration received | $ | $ 50,000 | |||||||
SPA Amendment, Second Subsequent Issuance | ||||||||
Temporary Equity [Line Items] | ||||||||
Convertible preferred stock issued (in shares) | 149,950 | |||||||
Consideration received | $ | $ 150,000 |
EARNINGS PER SHARE - Schedule
EARNINGS PER SHARE - Schedule of Weighted Average Number of Shares (Details) - shares shares in Thousands | 3 Months Ended | |
Mar. 31, 2019 | Mar. 31, 2018 | |
Earnings Per Share [Abstract] | ||
Basic weighted-average shares (in shares) | 83,510 | 83,232 |
Effect of dilutive stock-based compensation awards (in shares) | 0 | 136 |
Diluted weighted-average shares (in shares) | 83,510 | 83,368 |
EARNINGS PER SHARE - Schedul_2
EARNINGS PER SHARE - Schedule of Antidilutive and Contingently Issuable Shares (Details) - shares shares in Thousands | 3 Months Ended | |
Mar. 31, 2019 | Mar. 31, 2018 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Antidilutive awards excluded from diluted EPS (in shares) | 4,000 | |
Total stock-based awards excluded from diluted EPS | 4,057 | |
Convertible Common Stock [Member] | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Total stock-based awards excluded from diluted EPS | 42,900 | 2,900 |
Performance-based restricted stock awards | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Contingently issuable awards excluded from diluted EPS (in shares) | 0 | |
Performance-based restricted stock awards with a market condition | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Contingently issuable awards excluded from diluted EPS (in shares) | 315 | |
Time-based options and restricted stock awards | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Antidilutive awards excluded from diluted EPS (in shares) | 3,206 | |
Performance-based restricted stock awards | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Antidilutive awards excluded from diluted EPS (in shares) | 536 |
EARNINGS PER SHARE - Computatio
EARNINGS PER SHARE - Computations for Basic and Diluted Earnings per Common Share (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 3 Months Ended | 5 Months Ended | |
Mar. 31, 2019 | Mar. 31, 2018 | Mar. 31, 2019 | |
Earnings Per Share [Abstract] | |||
Net (loss) income | $ (15,262) | $ 6,190 | |
Cumulative undeclared convertible preferred stock dividend | 3,716 | 0 | $ 4,700 |
Net income (loss) attributable to common shareholders | $ (18,978) | $ 6,190 | |
Basic weighted-average shares (in shares) | 83,510 | 83,232 | |
Basic (in dollars per share) | $ (0.23) | $ 0.07 | |
Diluted weighted-average shares (in shares) | 83,510 | 83,368 | |
Diluted (in dollars per share) | $ (0.23) | $ 0.07 |
SEGMENTS (Details)
SEGMENTS (Details) $ in Thousands | 3 Months Ended | |
Mar. 31, 2019USD ($)segment | Mar. 31, 2018USD ($) | |
Segment Reporting Information [Line Items] | ||
Number of reportable segments | segment | 3 | |
Revenue: | ||
Revenue | $ 564,764 | $ 607,533 |
Operating income: | ||
Operating income | 35,482 | 46,389 |
Loss on net asset exchange for the formation of the joint ventures | (19,514) | 0 |
Interest expense, net | (32,956) | (21,773) |
Loss on debt refinancing | 0 | 16,740 |
Loss on forward contracts for the issuance of convertible preferred stock | 16,787 | 0 |
(Loss) income before income taxes | (14,261) | 7,876 |
Operating Segment | ||
Revenue: | ||
Revenue | 600,269 | 672,196 |
Operating income: | ||
Operating income | 81,494 | 72,918 |
Operating Segment | U.S. and Canada | ||
Revenue: | ||
Revenue | 489,157 | 512,414 |
Operating income: | ||
Operating income | 52,100 | 43,490 |
Operating Segment | International | ||
Revenue: | ||
Revenue | 40,923 | 40,065 |
Operating income: | ||
Operating income | 14,050 | 14,464 |
Operating Segment | Manufacturing / Wholesale | ||
Revenue: | ||
Revenue | 70,189 | 119,717 |
Operating income: | ||
Operating income | 15,344 | 14,964 |
Intersegment Eliminations | ||
Revenue: | ||
Revenue | (35,505) | (64,663) |
Intersegment Eliminations | Manufacturing / Wholesale | ||
Revenue: | ||
Revenue | (35,505) | (64,663) |
Reportable Legal Entities | Manufacturing / Wholesale | ||
Revenue: | ||
Revenue | 34,684 | 55,054 |
Corporate costs | ||
Operating income: | ||
Operating income | (46,012) | (26,529) |
Corporate costs | (26,261) | (26,479) |
Unallocated corporate costs, loss on net asset exchange and other | $ 237 | $ 50 |
INCOME TAXES (Details)
INCOME TAXES (Details) - USD ($) $ in Thousands | 3 Months Ended | ||
Mar. 31, 2019 | Mar. 31, 2018 | Dec. 31, 2018 | |
Income Tax Disclosure [Abstract] | |||
Income tax benefit | $ 1,956 | $ 1,686 | |
Discrete tax benefit | 6,600 | $ 6,900 | |
Interest and penalties accrued related to unrecognized tax benefits | $ 2,100 | $ 2,000 |