NOTE 9. SEGMENTS

The Company has three reportable segments, each of which represents an identifiable component of the Company for which separate financial information is available. This information is utilized by management to assess performance and allocate assets accordingly. The Company’s management evaluates segment operating results based on several indicators. The primary key performance indicators are sales and operating income or loss for each segment. Operating income or loss, as evaluated by management, excludes certain items that are managed at the consolidated level, such as distribution and warehousing, impairments and other corporate costs. The Retail reportable segment includes the Company’s corporate store operations in the United States, Canada and Puerto Rico and its GNC.com and LuckyVitamin.com businesses. The Franchise reportable segment represents the Company’s franchise operations, both domestically and internationally. The Manufacturing/Wholesale reportable segment represents the Company’s manufacturing operations in South Carolina and the Wholesale sales business. This segment supplies the Retail and Franchise segments, along with various third parties, with finished products for sale. The Warehousing and Distribution and Corporate costs represent the Company’s administrative expenses. The accounting policies of the segments are the same as those described in the “Basis of Presentation and Summary of Significant Accounting Policies.”

The following table represents key financial information of the Company’s segments:

	Three months ended September 30,				Nine months ended September 30,
	2013		2012		2013		2012
	(unaudited)
	(in thousands)
Revenue:
Retail	$	487,271	$	445,008	$	1,483,228	$	1,373,460
Franchise	118,873		108,785		337,320		313,809
Manufacturing/Wholesale:
Intersegment revenues	66,231		65,813		199,248		202,931
Third Party	69,450		67,814		196,013		177,692
Subtotal Manufacturing/Wholesale	135,681		133,627		395,261		380,623
Subtotal segment revenues	741,825		687,420		2,215,809		2,067,892
Elimination of intersegment revenues	(66,231)		(65,813)		(199,248)		(202,931)
Total revenue	$	675,594	$	621,607	$	2,016,561	$	1,864,961

Operating income:
Retail	$	92,580	$	86,257	$	291,507	$	277,050
Franchise	41,612		36,319		116,687		103,038
Manufacturing/Wholesale	28,436		26,455		76,869		73,150
Unallocated corporate and other costs:
Warehousing and distribution costs	(17,513)		(16,181)		(50,737)		(47,601)
Corporate costs	(19,141)		(20,749)		(60,161)		(63,720)
Transaction related costs	—		(924)		—		(1,610)
Subtotal unallocated corporate and
other costs	(36,654)		(37,854)		(110,898)		(112,931)
Total operating income	125,974		111,177		374,165		340,307
Interest expense, net	11,237		12,080		33,353		32,958
Income before income taxes	$	114,737	$	99,097	$	340,812	$	307,349