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 26, 1997.
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 4-3056351
(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 24, 1997, the number of shares outstanding of the
registrant's common stock was 80,230,426.
PART 1 - FINANCIAL INFORMATION,
ITEM 1. FINANCIAL STATEMENTS
GENERAL NUTRITION COMPANIES, INC. AND SUBSIDIARIES
Consolidated Balance Sheets
(in thousands, except share data)
April 26, February 1,
1997 1997
(unaudited)
ASSETS
Current Assets:
Receivables $ 63,893 $ 58,711
Inventories 209,102 198,361
Deferred taxes 18,903 18,903
Other current assets 19,656 17,498
Total current assets 311,554 293,473
Property, plant and equipment, net 176,627 175,352
Other assets 48,019 44,404
Deferred financing fees, net of
accumulated amortization of
$1,742 and $1,538 4,614 3,066
Goodwill, net of accumulated
amortization of $55,234 and $52,907 262,586 263,060
$ 803,400 $ 779,355
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Accounts payable $ 102,490 $ 79,958
Accrued salaries, wages, vacations
and related taxes 18,544 17,198
Accrued income taxes 21,695 7,008
Other current liabilities 54,196 54,637
Long-term debt, current portion 971 984
Total current liabilities 197,896 159,785
Long-term debt 367,163 377,885
Deferred taxes on income 1,460 1,462
Commitments and contingencies - -
Shareholders' Equity:
Common stock, $.01 par value:
Authorized 200,000,000 shares,
issued and outstanding,
including shares in treasury,
91,752,080 shares at April 26, 1997
and 91,287,289 shares at
February 1, 1997 918 913
Additional paid-in capital 326,027 319,297
Stock options outstanding 8,916 10,917
Subscriptions receivable (3,379) (3,295)
Currency translation adjustment 244 483
Accumulated earnings 95,386 71,527
428,112 399,842
Treasury stock, at cost, 11,500,000
shares at April 26, 1997 and
10,000,000 shares at
February 1, 1997 (191,231) (159,619)
236,881 240,223
$ 803,400 $ 779,355
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 26, April 27,
1997 1996
Net revenue $ 273,059 $ 230,167
Cost of sales, including costs of
warehousing, distribution and occupancy 166,380 141,332
Selling, general and administrative 59,895 49,386
Amortization of goodwill 2,404 2,221
Operating earnings 44,380 37,228
Interest expense 5,117 2,948
Earnings before income taxes 39,263 34,280
Income taxes 15,404 14,102
Net earnings $ 23,859 $ 20,178
Primary earnings per share $ 0.29 $ 0.22
Average number of shares outstanding 82,951 92,206
Fully diluted earnings per share $ 0.29 $ 0.22
Average number of shares outstanding 82,963 92,210
Notes to Consolidated Financial Statements are an integral part of these
statements.
GENERAL NUTRITION COMPANIES, INC. AND SUBSIDIARIES
Consolidated Statements of Cash Flows
(unaudited)
12 Weeks Ended
April 26, April 27,
1997 1996
(in thousands)
Cash flows from operating activities:
Net earnings $ 23,859 $ 20,178
Adjustments to reconcile net
earnings to net cash provided by
operating activities:
Depreciation and amortization 10,113 9,176
Amortization of deferred financing fees 204 133
Other, principally loss on disposal of
fixed assets 72 19
Change in operating assets and liabilities:
Increase in receivables (4,268) (6,810)
Increase in inventories (10,741) (14,493)
(Increase) decrease in other assets (326) 95
Increase in accrued taxes 14,687 13,071
Increase in accounts payable
and accrued liabilities 4,641 6,819
Decrease in other working capital items (200) (6,432)
Total adjustments 14,182 1,578
Net cash provided by operating activities 38,041 21,756
Cash flows from investing activities:
Capital expenditures (8,962) (12,505)
Increase in franchisee notes receivable (1,137) (1,533)
Payments for store acquisitions (1,877) (2,216)
Loan to related party (3,295) (1,750)
Net cash used in investing activities (15,271) (18,004)
Cash flows from financing activities:
Net payments on revolving credit facility (10,500) (24,999)
Retirement of long-term debt - (34,001)
Book balance bank overdraft 17,004 17,650
Decrease in capital lease obligations (235) (411)
Redemption of redeemable preferred stock (168) (8)
Net proceeds from issuance of common stock 3,012 38,628
Proceeds from sale of put options 1,720 -
Net payments for treasury stock (31,612) -
Increase in deferred financing fees (1,752) (536)
Net cash used in financing (22,531) (3,677)
Effect of exchange rate changes on cash (239) (75)
Net change in cash - -
Beginning and ending balance, cash $ - $ -
Supplemental disclosures of cash flow information:
Cash paid during the period for:
Interest $ 4,643 $ 2,724
Income taxes $ 3,886 $ 598
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 26, 1997 and February 1, 1997 and the results of
operations for the twelve weeks ended April 26, 1997 and April 27, 1996.
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 1996 Annual Report on Form 10-K for the fiscal year ended on
February 1, 1997 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 26, 1997 and April 27, 1996 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.Earnings Per Share. In February 1997, the Financial Accounting
Standards Board issued Statement of Financial Accounting Standards
("SFAS") No. 128, "Earnings per Share", which establishes standards for
computing and presenting earnings per share and applies to entities with
publicly held common stock or potential common stock. This Statement is
effective for financial statements issued for periods ending after
December 15, 1997, including interim periods; earlier application is not
permitted. This Statement requires restatement of all prior-period
earnings per share data presented. The basic earnings per share and
diluted earnings per share as defined by SFAS No. 128 for the 12 weeks
ended April 26, 1997 and April 27, 1996 approximates the historically
presented primary and fully diluted earnings per share.
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 26, 1997 and February
1, 1997, cash overdrafts of $17.0 million and $3.9 million,
respectively, were included in accounts payable. At April 26, 1997, the
Company had $332.4 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 1997
presentation.
5.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 February 1, 1997.
On June 24, 1996, an action was commenced against the Company in the
Court of Chancery of the State of Delaware entitled LaValla v. Thomas H.
Lee et al., Civil Action No. 15080. Plaintiff asserts that the Company
is liable for a violation of Section 11 of the Securities Act of 1933,
arising out of allegedly false and misleading statements in the
Prospectus and Registration Statement for a public offering of common
stock of the Company which took place on February 7, 1996. Plaintiff
also alleges that two directors and shareholders of the Company, Thomas
H. Lee (a director at the time of the offering) and Thomas R. Shepherd,
are liable for a violation of Section 11 of the Securities Act of 1933,
arising out of the same allegedly false and misleading statements in the
Prospectus and Registration Statement. Plaintiff seeks certification of
the action as a class action, purportedly on behalf of all persons other
than defendants who purchased shares of the Company's common stock
during the public offering. The Company disputes the allegations
contained in the complaint and intends to defend the action vigorously.
The LaValla case has been stayed in court pending resolution of the
Klein case summarized below.
On August 2, 1996, an action was commenced against the Company in the
United States District Court for the Western District of Pennsylvania
entitled Klein et al. v. General Nutrition Companies, Inc. et al., Civil
Action No. 96-1455. Plaintiffs assert that the Company is liable for
violations of Sections 11 and 12(a)(2) 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
Registration Statement for a public offering of common stock of the
Company which took place on February 7, 1996, 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 allege 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. Plaintiffs seek
certification of the action as a class action, purportedly on behalf of
all persons other than defendants who purchased shares of the Company's
common stock during the proposed class period from February 7 through
May 28, 1996. 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.
6.Inventories. Inventories consist of the following:
April 26, February 1,
1997 1997
(in thousands)
Product ready for sale $ 174,257 $ 158,800
Unpackaged bulk product and
raw materials 31,736 36,121
Packaging supplies 3,109 3,440
$ 209,102 $ 198,361
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
FORWARD-LOOKING STATEMENTS
This 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 fillings of the company
with the Securities and Exchange Commission.
RESULTS OF OPERATIONS
Revenue
Consolidated revenue for the twelve weeks ended April 26, 1997 was
$273.1 million, an increase of 18.6% from the same period in 1996. 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 26, Total April 27, Total
1997 Revenue 1996 Revenue
(in millions) (in millions)
Retail $ 201.6 73.8% $ 169.9 73.8%
Franchising 53.6 19.6% 43.3 18.8%
Manufacturing 17.9 6.6% 17.0 7.4%
Total $ 273.1 100.0% $ 230.2 100.0%
Retail Revenue. Domestically, the Company's products are sold
through retail outlets 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, Nature Food Centres, 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 revenue by operating retail entity and corresponding store
information:
Retail Revenue
12 weeks 12 weeks
Ended % of Ended % of
April 26, Total April 27, Total
1997 Revenue 1996 Revenue
(in millions) (in millions)
General Nutrition Centers $ 181.5 90.0% $ 158.2 93.1%
Other domestic stores 16.1 8.0% 9.4 5.5%
International stores 4.0 2.0% 2.3 1.4%
201.6 100.0% 169.9 100.0%
Operating
Company-Owned
Store Locations
April 26, April 27,
1997 1996
General Nutrition Centers 1,798 1,524
Other domestic stores 65 100
International stores 45 20
1,908 1,644
Revenue at GNC increased 14.7% for the twelve weeks ended April 26, 1997
when compared with the same period in 1996, the result of 274 net new store
openings and favorable comparable store sales gains of 5.6% during the
quarter. The Company believes that this increase is attributable to its
new marketing efforts. The Company's marketing emphasis has been
significantly altered in an effort to attract and retain both new and
existing customers. Internally, the Company has developed a new marketing
strategy by: i) creating a new chief marketing officer position; ii)
contracting a major New York advertising agency with strong retail and
strategic experience and; iii) assembling a scientific affairs group to
enhance scientific credibility for the Company and its products. This new
collective marketing group has focused its efforts on mainstream health
issues of targeted customer groups such as women, senior citizens, etc.,
through the use of major network TV, print, media, and complementary in-
store fixtures and signage. The Company believes that the combined efforts
of these key marketing initiatives should continue to have a positive
impact on revenue through the remainder of the year.
Other domestic retail revenue, comprised of Nature's Fresh, Nature Food
Centres, and Amphora, increased 71.3% to $16.1 million for the twelve week
period ended April 26, 1997 when compared to $9.4 million of the same
period in 1996.
Franchising Revenue. Revenue from the franchise segment increased
23.8% for the twelve weeks ended April 26, 1997 when compared with the same
period in 1996. The increase continues to be driven by both new store
openings, 205 net new openings since April 27, 1996, coupled with strong
franchisee comparable store sales gains of 11.7% domestically, and 10.7%
internationally.
Product sales at wholesale prices and royalties on retail sales,
representing the core of Franchising's ongoing revenues, comprised 94.0% of
total franchise revenue in the twelve weeks ended April 26, 1997. The
remaining revenue included sales of stores, fixtures, franchise award fees
and interest income on franchise accounts receivable. Total system-wide
franchise retail sales were $100.7 million for the twelve weeks ending
April 26, 1997, an increase of $20.2 million or 25% when compared with the
same period in 1996.
Presented below are the number of operating franchise stores, the number of
franchises awarded but not yet open, and the number of outstanding
development agreements:
Number of Operating Franchise Locations
April 26, 1997 April 27, 1996
Franchise Locations Domestic International Domestic International
At beginning of period 1,049 125 848 111
Added during period 55 5 61 4
Closed or converted
during period 18 3 15 1
At end of period 1,086 127 894 114
Stores awarded but
not yet open 222 1 237 -
Development agreements 39 370 5 408
Manufacturing Revenue. Total revenue generated by the Company's
manufacturing segment, including sales to other segments of the Company and
sales to various other third-parties, increased to $68.3 million, or
32.9%, in the twelve weeks ended April 26, 1997 when compared with $51.4
million for the same period in 1996. Third - party revenues for the
current quarter remained consistent with the first quarter of 1996 due to
the increasing demand on the manufacturing capacity for the Company's own
product. Intersegment sales activity, accounting for the majority of the
increase in total manufacturing revenue for the current quarter, increased
46.5% to $50.4 million from $34.4 million in the first quarter of 1996.
The increase in intersegment sales activity was due to the strong demand
for product by existing GNC stores, as well as product requirement needs of
new stores added through the Company's ongoing store expansion program.
The Company's international manufacturing operations contributed $3.5
million and $2.6 million in third - party revenue and $.5 million and $.2
million in intersegment revenue for the twelve week periods ended April 26,
1997 and April 27, 1996, respectively.
Analysis of Consolidated Operating Costs and Expenses
12 Weeks 12 Weeks
Ended Ended
April 26, April 27,
1997 1996
(in thousands)
Cost of sales, including
costs of warehousing,
distribution and occupancy $ 166,380 $ 141,332
Percent of net revenue 60.9% 61.4%
Selling, general and administrative $ 62,299 $ 51,607
Percent of net revenue 22.8% 22.4%
Operating earnings $ 44,380 $ 37,228
Percent of net revenue 16.3% 16.2%
Cost of sales, including the cost of warehousing, distribution and
occupancy decreased as a percentage of net revenue by .5% to 60.9% in the
first quarter of 1997, when compared with the same quarter in 1996. The
decrease in cost of sales as a percentage of net revenue was primarily the
result of the Company's ability to successfully leverage expenses against
rising revenues, including occupancy costs, which are primarily fixed in
nature.
Selling, general and administrative costs increased in the first
quarter as a percentage of net revenue when compared with the same quarter
in 1996 by .4%, primarily attributable to the Company's retail segment. In
retail, increases in selling, general and administrative expenses were
recognized as a result of increased bonus accruals, which are directly
related to store profits, and expenses relating to the development of the
marketing and scientific affairs groups.
Non-Operating Income (Expense) Analysis
Interest expense for the quarter increased $ 2.2 million to $5.1
million when compared to the same period in 1996. The increase in interest
expense was the result of $191.2 million of additional borrowings made
since the second quarter of 1996 to fund the Company's stock repurchase
activity. Interest expense for the remainder of the year should remain
higher than the previous year as a result of these additional borrowings.
Review of Financial Condition
Analysis of Liquidity and Capital Resources
In the first twelve weeks of 1997, 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 26, April 27,
1997 1996
(in thousands)
Cash provided by (used in):
Operating activities $ 38,041 $ 21,756
Investing activities (15,271) (18,004)
Financing activities (22,531) (3,677)
Effect of exchange rate changes
on cash (239) (75)
Net change in cash $ - $ -
Operating Activities. Cash provided by operating activities for the
twelve weeks ended April 26, 1997 was $38.0 million versus $21.8 million
for the same period in 1996, an increase of $16.2 million or 74.3%. Net
earnings, adjusted for non-cash charges and before changes in operating
assets and liabilities, increased by 15.9% to $34.2 million for the twelve
week period ended April 26, 1997, compared with $29.5 million in the same
period in 1996. Favorable changes in operating assets and liabilities of
$11.5 million contributed to the increase in net cash provided by operating
activities of $16.2 million for the quarter when compared with the first
quarter of 1996.
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 were $9.0 million and $12.5 million for the twelve week period
ended April 26, 1997 and April 27, 1996, respectively.
Financing Activities. Cash used in financing activities increased
$18.9 million for the twelve weeks ended April 26, 1997 versus the same
period in 1996. In 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. In the first quarter of 1996, the Company repaid
$25.0 million on its line of credit. At April 26, 1997, the Company had
$332.4 million available on its revolving credit facility after excluding
$2.9 million restricted for letters of credit. Subsequent to April 26,
1997, the Company sold put options to repurchase 1.0 million of the
Company's stock for $21.5 million. The options were sold for $1.4 million
and expire during the fourth quarter of 1997.
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
None.
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 26, 1997 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 26, 1997 is attached.
(27) Financial Data Schedule 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 10, 1997
Exhibit 11.1
GENERAL NUTRITION COMPANIES, INC. AND SUBSIDIARIES
Computation of Net Earnings Per Share
12 Weeks 12 Weeks
Ended Ended
April 26, 1997 April 27, 1996
(in thousands except per share amounts)
Net earnings available for common shares $ 23,859 $ 20,178
Common stock 81,129 89,563
Outstanding options 1,822 2,643
Primary weighted average common shares 82,951 92,206
Common stock 81,129 89,563
Outstanding options 1,834 2,647
Fully diluted weighted average common shares 82,963 92,210
Primary earnings per share $ 0.29 $ 0.22
Full diluted earnings per share $ 0.29 $ 0.22
EXHIBIT 23
INDEPENDENT ACCOUNTANTS' REPORT
To The Board of Directors and Stockholders of
General Nutrition Companies, Inc.
Pittsburgh, Pennsylvania
We have reviewed the accompanying consolidated balance sheet
of General Nutrition Companies, Inc. and subsidiaries as of
April 26, 1997 and the related consolidated statements of
operations and cash flows for the twelve weeks ended April
26, 1997 and April 27, 1996. These financial statements are
the responsibility of the Company's management.
We conducted our review in accordance with standards
established by the American Institute of Certified Public
Accountants. A review of interim financial information
consists principally of applying analytical procedures to
financial data and of making inquiries of persons
responsible for financial and accounting matters. It is
substantially less in scope than an audit conducted in
accordance with generally accepted auditing standards, the
objective of which is the expression of an opinion regarding
the financial statements taken as a whole. Accordingly, we
do not express such an opinion.
Based on our review, we are not aware of any material
modifications that should be made to such consolidated
financial statements for them to be in conformity with
generally accepted accounting principles.
We have previously audited, in accordance with generally
accepted auditing standards, the consolidated balance sheet
of General Nutrition Companies, Inc. and subsidiaries as of
February 1, 1997, and the related consolidated statements of
operations, stockholders' equity, and cash flows for the
year then ended (not presented herein); and in our report
dated March 31, 1997, we expressed an unqualified opinion on
those consolidated financial statements. In our opinion,
the information set forth in the accompanying consolidated
balance sheet as of February 1, 1997 is fairly stated, in
all material respects, in relation to the consolidated
balance sheet from which it has been derived.
Deloitte & Touche LLP
Pittsburgh, Pennsylvania
May 13, 1997
EXHIBIT 23.1
June 10, 1997
General Nutrition Companies, Inc.
921 Penn Avenue
Pittsburgh, Pennsylvania
Dear Sirs:
We have made a review, in accordance with standards
established by the American Institute of Certified Public
Accountants, of the unaudited interim financial information
of General Nutrition Companies, Inc. and subsidiaries for
the twelve weeks ended April 26, 1997 and April 27, 1996, as
indicated in our report dated May 13, 1997; because we did
not perform an audit, we expressed no opinion on that
information.
We are aware that our report referred to above, which was
included in your Quarterly Report on Form 10-Q for the
quarter ended April 26, 1997, is incorporated by reference
in Registration Statement Nos. 33-58096, 33-68590, 33-93370,
333-00128, and 333-21397 on Form S-8.
We also are aware that the aforementioned report, pursuant
to Rule 436(c) under the Securities Act of 1933, is not
considered a part of the Registration Statement prepared or
certified by an accountant or a report prepared or certified
by an accountant within the meaning of Sections 7 and 11 of
that Act.
Yours truly,
Deloitte & Touche LLP
Pittsburgh, Pennsylvania
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