SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
_________________
FORM 10-Q
(Mark One)
[ X ] Quarterly report pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
For the twelve weeks ended April 25, 1998.
OR
[ ] Transition report pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
Commission file number 01-19592
GENERAL NUTRITION COMPANIES, INC.
(Exact name of Registrant as specified in its charter)
DELAWARE 04-3056351
(state or other jurisdiction of (I.R.S. Employer
Incorporation or organization) Identification No.)
300 Sixth Avenue 15222
Pittsburgh, Pennsylvania (Zip Code)
(Address of principal executive office)
Registrant's telephone number, including area code:
(412) 288-4600
Indicate by a check mark whether the registrant (1) has
filed all reports required to be filed by section 13 or 15(d) of
the Securities Exchange Act of 1934 during the preceding 12
months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes X No ____
As of May 28, 1998, the number of shares outstanding of the
registrant's common stock was 82,654,613.
PART 1 - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
GENERAL NUTRITION COMPANIES, INC AND SUBSIDIARIES
Consolidated Balance Sheets
(in thousands, except share data)
April 25, January 31,
1998 1998
(unaudited)
ASSETS
Current Assets:
Receivables, net $ 83,714 $ 75,274
Inventories 278,187 244,196
Deferred taxes 13,042 14,190
Other current assets 23,891 29,305
Total current assets 398,834 362,965
Note due from related parties 23,579 21,960
Property, plant, and equipment, net 229,060 207,975
Other assets 34,602 33,895
Deferred financing fees, net of
accumulated amortization of
$2,917 and $2,646 3,440 3,710
Goodwill, net of accumulated
amortization of $65,053 and
$62,327 322,496 303,433
$1,012,011 $ 933,938
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Accounts payable $ 127,687 $ 126,905
Accrued salaries, wages,
vacations and related taxes 20,784 23,542
Accrued income taxes 19,325 4,825
Other current liabilities 68,407 65,392
Long-term debt, current portion 979 940
Total current liabilities 237,182 221,604
Long-term debt 377,838 357,408
Deferred taxes 3,067 4,214
Commitments and contingencies 0 0
Put options 71,522 0
Shareholders' Equity:
Common stock, $.01 par value: 826 819
Authorized 200,000,000 shares,
issued and outstanding, 82,644,885
shares at April 25, 1998 and
81,930,801 shares at January
31, 1998
Additional paid-in capital 181,274 171,224
Stock options outstanding 7,110 7,693
Subscriptions receivable (4,265) (3,598)
Accumulated earnings 205,130 174,892
Accumulated other comprehensive (369) (318)
income (loss)
389,706 350,712
Put options (67,304) 0
322,402 350,712
$1,012,011 $933,938
Notes to Consolidated Financial Statements are an integral part of these
statements.
GENERAL NUTRITION COMPANIES, INC AND SUBSIDIARIES
Consolidated Statements of Operations
(in thousands, except per share data)
(unaudited)
12 Weeks Ended
April 25, April 26,
1998 1997
Net revenue $ 327,617 $ 273,059
Cost of sales, including costs of
warehousing, distribution and
occupancy 195,852 166,380
Selling, general and administrative 77,572 62,299
Operating earnings 54,193 44,380
Interest expense 5,259 5,117
Earnings before income taxes 48,934 39,263
Income taxes 18,696 15,404
Net earnings 30,238 23,859
Other comprehensive income (loss):
Foreign currency translation
adjustment, net (51) (239)
Other comprehensive income
(loss), net (51) (239)
Comprehensive income $ 30,187 $ 23,620
Basic earnings per share $ 0.37 $ 0.29
Basic weighted average common shares 82,424 81,129
Diluted earnings per share $ 0.36 $ 0.29
Diluted weighted average 84,700 82,963
common shares
Notes to the Consolidated Financial Statements are an integral part of
these statements.
GENERAL NUTRITION COMPANIES, INC AND SUBSIDIARIES
Consolidated Statements of Cash Flows
(in thousands)
(unaudited)
12 Weeks Ended
April 25, April 26,
1998 1997
Cash flows from operating activities:
Net earnings $ 30,238 $ 23,859
Adjustments to reconcile net earnings
to net cash provided by operating
activities:
Depreciation and amortization 12,189 10,113
Amortization of deferred financing
fees 271 204
Other 1 72
Change in operating assets and
liabilities:
Increase in receivables (9,020) (4,268)
Increase in inventories (30,331) (10,741)
Increase in other assets (1,302) (326)
Increase in accrued taxes 14,500 14,687
Increase in accounts
payable and accrued liabilities 6,897 8,506
(Increase) decrease in
other working capital items 3,420 (200)
Total adjustments (3,375) 18,047
Net cash provided by operating
activities 26,863 41,906
Cash flows from investing activities:
Capital expenditures (27,115) (8,962)
Decrease (increase) in
franchisee notes receivable 580 (1,137)
Payments for franchise store
acquisitions (28,766) (1,877)
Loan to related party (1,140) (3,295)
Net cash used in investing
activities (56,441) (15,271)
Cash flows from financing activities:
Net borrowings (payments) on
revolving credit facility 20,800 (10,500)
(Decrease) increase in book
balance bank overdraft (3,864) 13,139
Decrease in capital lease
obligations (331) (235)
Redemption of redeemable
preferred stock 0 (168)
Net proceeds from issuance of
common stock 8,807 3,012
Proceeds from sale of put options 4,218 1,720
Net payments for treasury stock 0 (31,612)
Increase in deferred financing fees (1) (1,752)
Net cash provided by (used in)
financing activities 29,629 (26,396)
Effect of exchange rate changes on (51) (239)
cash
Net change in cash 0 0
Beginning balance, cash 0 0
Ending balance, cash $ 0 $ 0
Supplemental disclosures of cash
flow information:
Cash paid during the period for:
Interest $ 3,940 $ 4,643
Income taxes $ 3,959 $ 3,886
Notes to Consolidated Financial Statements are an integral part of
these statements.
GENERAL NUTRITION COMPANIES, INC.
Notes to Consolidated Financial Statements
(Unaudited)
1.Basis of Reporting. In the opinion of General Nutrition
Companies, Inc. (the "Company"), the information furnished
includes all adjustments necessary for fair presentation of
the consolidated financial position of the Company at April
25, 1998 and January 31, 1998 and the results of operations
for the twelve weeks ended April 25, 1998 and April 26, 1997.
All such adjustments are of a normal and recurring nature.
Certain information and footnote disclosures normally included
in the financial statements prepared in accordance with
generally accepted accounting principles have been either
condensed or omitted. It is suggested that these consolidated
financial statements be read in conjunction with the financial
statements and footnotes included in the Company's 1997 Annual
Report on Form 10-K for the fiscal year ended on January 31,
1998 filed with the Securities and Exchange Commission. The
consolidated financial statements include the accounts of the
Company and its wholly owned subsidiaries after the
elimination of intercompany balances and transactions. The
results of operations and cash flows for the twelve weeks
ended April 25, 1998 and April 26, 1997 are not necessarily
indicative of the operating results for the full year.
The preparation of financial statements in conformity with
generally accepted accounting principles requires management
to make estimates and assumptions that affect the reported
amounts of assets and liabilities and disclosure of contingent
assets and liabilities at the date of the financial statements
and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those
estimates.
2.New Accounting Pronouncements. In June 1997, the FASB
issued Statement of Financial Accounting Standard (SFAS) No.
130 "Reporting Comprehensive Income." SFAS No. 130
establishes standards for reporting comprehensive income and
its components, some of which have been historically excluded
from the Statement of Operations and recorded directly to the
equity section of an entity's statement of financial position.
SFAS No. 130 also requires that the cumulative balance of
these items of other comprehensive income are reported
separately from retained earnings and additional paid-in
capital in the equity section of a statement of financial
position. This statement is effective for fiscal years
beginning after December 15, 1997. The Company has adopted SFAS
No. 130 in the first quarter of 1998 and has elected to include
the required items of other comprehensive income in its
Consolidated Statements of Operations.
In June 1997, the FASB issued Statement of Financial
Accounting Standard No. 131 "Disclosures about Segments of an
Enterprise and Related Information." SFAS No. 131 establishes
standards for the way public companies report selected
information about operating segments in both quarterly and
annual financial statements to their shareholders. It also
established standards for related disclosures about products
and services, geographic areas, and major customers. SFAS No.
131 is effective for fiscal years beginning after December 15,
1997. This statement is not required to be applied to interim
financial statements in the initial year of its application.
The Company does not believe that SFAS No. 131 will have a
material effect on the disclosures in its consolidated
financial statements.
3.Cash. The Company utilizes a cash management system under
which a book balance cash overdraft exists for the Company's
primary disbursement accounts. This overdraft represents
uncleared checks in excess of cash balances in bank accounts.
The Company's funds are borrowed on an as needed basis to pay
for clearing checks. At April 25, 1998 and January 31, 1998,
cash overdrafts of $28.5 million and $32.6 million,
respectively, were included in accounts payable. At April 25,
1998, the Company had $320.6 million available on its revolving
credit facility after excluding $2.9 million restricted for
letters of credit.
4.Reclassifications. Certain amounts reported in previously
issued financial statements have been reclassified to conform
to the 1998 presentation.
5.Put Options. During the first quarter ended April 25, 1998,
the Company sold put options on 2.0 million shares of the
Company's common stock and recorded proceeds of $4.2 million.
The amount related to the Company's potential obligation has
been recorded from shareholders' equity to put options. The
2.0 million options outstanding at April 25, 1998 expire in July
1998 and have exercise prices ranging from $34.43 to $36.00 per
share with an average price of $35.76.
6.Legal Proceedings. Certain Company subsidiaries are named as
defendants in legal actions brought in federal and state courts
by certain parties seeking damages resulting from the ingestion
of certain products containing manufactured L-Tryptophan. No
provision has been made in the financial statements for any loss
that may result to the Company from these actions. See Note 13
in the Company's Form 10-K for the fiscal year ended January
31, 1998.
On June 24, 1996, a putative class action, Lavalla v. Lee et
al, C.A. No. 15080, was commenced against the Company and two
directors and shareholders in the Court of Chancery of the State
of Delaware, Newcastle County, alleging violations of the
federal securities laws arising out of the Prospectus and
Registration Statement (the "Prospectus") for a public offering
of common stock of the Company which took place on February 7,
1996 (the "Public Offering"). The action was dismissed without
prejudice on December 29, 1997 pursuant to the parties'
stipulation. The named plaintiff, Gaetan Lavalla, subsequently
became a named plaintiff in Klein et al v. General Nutrition
Companies, Inc. et al, Civil Action No. 96-1455, another
putative class action filed on August 2, 1996, in the United
States District Court for the Western District of Pennsylvania.
In Klein, plaintiffs asserted that the Company is liable for
violations of Sections 11 and 12(a) of the Securities Act of
1933 and Section 1-501(a) of the Pennsylvania Securities Act,
arising out of allegedly false and misleading statements in the
Prospectus, and for violations of Section 10(b) of the
Securities Exchange Act of 1934 and for negligent
misrepresentation arising out of allegedly false and misleading
public statements during the period from the Public Offering
through May 28, 1996. Plaintiffs also alleged that certain
officers, directors and shareholders of the Company, as well as
the underwriters for the Public Offering, are liable for other
violations of the federal and state securities laws and for
negligent misrepresentation.
Defendants moved to dismiss the Complaint on December 2, 1996
and plaintiffs subsequently filed an Amended Complaint dated
March 21, 1997, which among other things, added Gaetan Lavalla
as a named plaintiff. On March 30, 1998 the Court granted the
motions of all defendants to dismiss the Amended Complaint with
prejudice. On April 20, 1998, the plaintiffs filed a Notice of
Appeal with the United States Court of Appeals for the Third
Circuit. The Company disputes the allegations contained in the
complaint and intends to defend the action vigorously.
The Company is presently engaged in various other legal actions
and governmental proceedings, and although ultimate liability
cannot be determined at the present time, the Company is
currently of the opinion that the amount of any such liability
from these other actions and proceedings when taking into
consideration the Company's product liability coverage, will
not have a material adverse impact on its financial position,
results of operations or liquidity.
7.Inventories. Inventories consist of the following:
April 25, January 31,
1998 1998
(in thousands)
Product ready for sale $232,777 $201,155
Unpackaged bulk product and
raw materials 40,933 39,203
Packaging supplies 4,477 3,838
$278,187 $244,196
8.Subsequent Event. During the second quarter of 1998, the
Company purchased 1.0 million shares of its common stock in the
open market at an average price of $34.16 per share totaling
an aggregate amount of $34.2 million. Additionally, the
Company's Board of Directors authorized up to an additional
$300 million to be available to purchase its shares in the
open market.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF
OPERATIONS AND FINANCIAL CONDITION
FORWARD-LOOKING STATEMENTS
This quarterly report on Form 10-Q contains statements
relating to future results of the Company (including certain
projections and business trends) that are "forward-looking
statements" as defined in the Private Securities Litigation
Reform Act of 1995. Actual results may differ materially from
those projected as a result of certain risks and uncertainties,
including but not limited to changes in political and economic
conditions; demand for and market acceptance of new and existing
products, as well as other risks and uncertainties detailed from
time to time in the filings of the Company with the Securities
and Exchange Commission.
RESULTS OF OPERATIONS
Revenue
Consolidated revenue for the twelve weeks ended April 25,
1998 was $327.6 million, an increase of 20% from the same period
in 1997. Below is a comparison of revenue for each of the
Company's businesses for the twelve-week period:
Consolidated Revenue
12 weeks 12 weeks
Ended % of Ended % of
April 25, Total April 26, Total
1998 Revenue 1997 Revenue
(in millions) (in millions)
Retail $ 240.4 73.4% $ 201.6 73.8%
Franchising 56.9 17.4% 53.6 19.6%
Manufacturing 30.3 9.2% 17.9 6.6%
Total $ 327.6 100.0% $ 273.1 100.0%
Retail Revenue. Domestically, the Company's products
are sold through retail stores operating primarily under the
General Nutrition Centers and GNC Live Well store names ("GNC").
The Company also operates retail stores under the Nature's Fresh
and Amphora names. Internationally, products are sold through
retail outlets operating under the names of Health and Diet
Centres and General Nutrition Centres in the United Kingdom,
Canada, and New Zealand. Presented below is a summary of retail
revenue and corresponding store information:
Retail Revenue
12 weeks 12 weeks
Ended % of Ended % of
April 25, Total April 26, Total
1998 Revenue 1997 Revenue
General Nutrition
Centers $ 218.5 90.9% $ 181.5 90.0%
Other domestic stores 15.0 6.2% 16.1 8.0%
International stores 6.9 2.9% 4.0 2.0%
$ 240.4 100.0% $ 201.6 100.0%
Operating Company-Owned Store Locations
April 25, April 26,
1998 1997
General Nutrition Centers 2,204 1,798
Other domestic stores 44 65
International stores 88 45
2,336 1,908
Revenue for GNC stores increased 20.4% for the twelve weeks ended
April 25, 1998 when compared with the same period in 1997, the
result of 406 net new or acquired store openings and favorable
comparable store sales gains of 5.6% during the quarter.
The Company's increase in comparable store sales were generated
from the success of its marketing efforts focusing on the men's
and women's brands as well as the continued demand for sports
nutrition and herbal products.
The initial results of the store expansion in Canada have been
favorable and therefore the Company has accelerated the store
openings in the Canadian markets, opening 14 new stores in the
first quarter for a total of 48 at April 25, 1998. The Company
continues to operate 39 stores in the United Kingdom and 1 in New
Zealand.
Franchising Revenue. Revenue from the franchise segment
increased 6.2% for the twelve weeks ended April 25, 1998 compared
with the same period in 1997. This increase is primarily the
result of franchise stores comparable store sales increase of
15.6% for the quarter and is significant as domestically, the
number of operating franchise locations decreased to 1,062 by the
end of the first quarter versus 1,086 at the end of the first
quarter in 1997. The store decrease is the result of the
Company's accelerated franchise repurchase program with 299
franchise stores repurchased in 1997 and the first quarter of
1998.
Although there was a decrease in domestic locations in the first
quarter, the franchise program continues its strong growth
potential as 83 more franchise stores were awarded in the twelve
weeks ending April 25, 1998. There are now 436 domestic and 409
international stores awarded or part of development agreements
that have not yet been opened.
Revenue at Franchising is generated primarily through sales of
products to franchises at wholesale prices and royalties on
franchises' retail sales. Additional revenue is generated
through the initial franchise license fee, sales of stores,
fixtures and graphic materials, as well as interest earned on
franchise accounts receivable. Retail sales from domestic and
international franchise locations were $107.4 million for the
twelve weeks ended April 25, 1998 an increase of 6.7% over the
same period in 1997.
Presented below is the number of operating franchise stores and
the number of outstanding development agreements and the number
of franchises awarded but not yet open:
Number of Operating Franchise Locations
April 25, 1998 April 26, 1997
Franchise Locations Domestic International Domestic International
At beginning of period 1,074 151 1,049 125
Added during period 67 7 55 5
Closed or converted 79 0 18 3
during period
At end of period 1,062 158 1,086 127
Development agreements 436 409 261 371
and stores awared but
not yet open
Manufacturing Revenue. Revenue at Manufacturing increased
to $88.7 million or 29.9% in the first quarter of 1998 versus
1997. Revenue at the Company's South Carolina facility was $84.4
million or 95.2% of total Manufacturing revenue. Sales to third-
party customers were $26.8 million for the first quarter, an 86%
increase over the first quarter of 1997. Sales from
Manufacturing to other segments of the Company were $58.4 for the
twelve weeks ended April 25, 1998 compared with $50.4 million in
the first twelve weeks of 1997. These sales are eliminated from
the Company's consolidated revenue numbers. The Company
anticipates continuing sales increases at Manufacturing as a
result of the acceleration of the store opening program, both
company-owned and franchised, and the continuing demand from
third-party customers.
Analysis of Consolidated Operating Costs and Expenses
12 Weeks 12 Weeks
Ended Ended
April 25, April 26,
1998 1997
($ in thousands)
Cost of sales, including costs of
warehousing, distribution, and
occupancy $195,852 $166,380
Percent of net revenue 59.8% 60.9%
Selling, general and administrative $ 77,572 $ 62,299
Percent of net revenue 23.7% 22.8%
Operating earnings $ 54,193 $ 44,380
Percent of net revenue 16.5% 16.3%
Cost of sales including the cost of warehousing,
distribution and occupancy decreased as a percentage of net
revenue by 1.1% in the twelve weeks ended April 25, 1998 when
compared with the same period in 1997. The decrease was achieved
through reductions in product costs from volume purchases as well
as the Company's success in leveraging its warehousing,
distribution and occupancy costs against the increased sales
volume.
Selling, general and administrative costs increased $15.3 million
or .9% of consolidated revenue in the first quarter of 1998
compared with 1997. The dollar increase was due primarily to the
increased number of company-owned stores and the Company's first
sponsorship of the Olympic Games in February.
Non-Operating Expense Analysis
Interest expense for the quarter increased $0.2 million to
$5.3 million, when compared to the same period in 1997. The
increase in interest expense was the result of $20.4 million of
additional borrowings made since the second quarter of 1997 to
fund the Company's franchise store buyback program and increased
capital expenditures. Interest expense for the remainder of the
year is expected to remain higher than the previous year as a
result of these additional borrowings and future borrowings to
fund the accelerated opening of new stores and potential
purchases of Company stock.
Review of Financial Condition
Analysis of Liquidity and Capital Resources
In the first twelve weeks of 1998, the Company's business
segments continued to contribute to increased earnings from
continuing operations. The Company's cash flows from operating,
investing and financing activities as reflected in the
Consolidated Statements of Cash Flows is summarized as follows:
12 Weeks 12 Weeks
Ended Ended
April 25, April 26,
1998 1997
(in thousands)
Cash provided by (used in):
Operating activities $ 26,863 $ 41,906
Investing activities (56,441) (15,271)
Financing activities 29,629 (26,396)
Effect of exchange rate (51) (239)
Net change in cash $ 0 $ 0
Operating Activities. Cash provided by operating activities
for the twelve weeks ended April 25, 1998 was $26.9 million
versus $41.9 million for the same period in 1997, a decrease of
$15.0 million or 36%. Net earnings, adjusted for non-cash
charges and before changes in operating assets and liabilities,
increased by 24.7% to $42.7 million for the twelve week period
ended April 25, 1998, compared with $34.2 million in the same
period in 1997. Unfavorable changes in operating assets and
liabilities of $15.8 million contributed to the decrease in net
cash provided by operating activities of $15.0 million for the
quarter when compared with the first quarter of 1997. This
decrease was due principally to a $30.3 million increase in
inventory in 1998 as compared to a $10.7 million increase in
1997. The $30.3 million increase in 1998 was due principally to
several large quantity purchases of high sales volume inventory
to receive favorable volume discount pricing and to prepare to
supply the accelerated number of new stores expected to open this
year.
Investing Activities. The Company's primary investing
activities have been for capital expenditures made in connection
with new store construction, the remodeling of existing stores,
and expansion requirements at both the manufacturing and
distribution facilities. Capital expenditures for the twelve
weeks ended April 25, 1998 increased $18.1 million or 202% from
the same period in 1997 due principally to the accelerated
opening of new company stores and increased spending for
manufacturing and distribution facilities. Additionally, the
Company has spent $28.8 million for franchise store acquisitions
in the twelve weeks ended April 25, 1998 compared to $1.9 million
in the same period in 1997, as a result of an accelerated buyback
program of existing franchise store locations, which commenced in
the third quarter of 1997.
Financing Activities. Cash provided by financing activities
increased $56.0 million for the twelve weeks ended April 25, 1988
versus the same period in 1997. In the first quarter of 1998,
the Company borrowed $20.8 million on its line of credit
facility, primarily to fund the aforementioned increase in
capital expenditures and franchise store acquisitions.
Additionally in 1998, the Company received proceeds of $4.2
million by selling put options giving the Company the potential
obligation to purchase 2.0 million shares of its own stock for
$71.5 million. For the twelve weeks ended April 26, 1997, the
Company repurchased 1.5 million shares of its own stock for
$31.6 million with borrowed funds, and repaid $10.5 million on
the line of credit. At April 25, 1998, the Company had $320.6
million available on its revolving credit facility after
excluding $2.9 million restricted for letters of credit.
Subsequent to April 25, 1998, the Company purchased 1.0 million
shares of its common stock in the open market for approximately
$34.2 million, and also purchased put options for approximately
$2.6 million, thereby reducing the Company's aforementioned
potential obligation to purchase shares of its stock by $18.0
million. Additionally, subsequent to April 25, 1998, the Company
received proceeds of $2.1 million by selling additional put
options giving the Company the potential obligation to purchase
1.0 million shares of its stock for approximately $31.8 million.
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
There have been no material developments in the matters
disclosed or incorporated by reference in Part 1 Item 3.
Legal proceedings of the Company's Annual Report on Form
10-K for the fiscal year ended January 31, 1998.
ITEM 3a. Quantitative and Qualitative Disclosure about Market Risk
Market Risk. The Company is exposed to certain market
risks from transactions that are entered into during the
normal course of business. The Company's policies do not
permit active trading of, or speculation in, derivative
financial instruments. The Company's primary market risk
exposure relates to interest rate risk. The Company manages
its interest rate risk in order to balance its exposure
between fixed and variable rates while attempting to
minimize its interest costs.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(11.1) Computation of net earnings per share is attached.
(23) Interim review report of the Company's
independent accountants, Deloitte & Touche LLP, for
the first fiscal quarter ended April 25, 1998 is
attached.
(23.1) Letter in lieu of consent of the Company's
independent accountants, Deloitte & Touche LLP, for
the first fiscal quarter ended April 25, 1998 is
attached.
(27) Financial Data Schedule is attached.
(27.1) Restated Financial Data Schedule for the periods ended
July 19, 1997, October 12, 1996, and April 27, 1996 is
attached.
No current reports on Form 8-K were filed during the first fiscal quarter.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned thereunto duly authorized.
GENERAL NUTRITION COMPANIES, INC.
By: /s/ Edwin J. Kozlowski
Edwin J. Kozlowski
Executive Vice President, Chief
Financial Officer, and Principal
Accounting Officer
DATE: June 9, 1998