GNC 2011 Annual Report Download - page 105

Table of Contents
NOTE 15. LONG-TERM LEASE OBLIGATIONS (Continued)
Minimum future obligations for non-cancelable operating leases with initial or remaining terms of at least one year in effect at December 31, 2010 are
as follows:
Company
Retail
Stores
Franchise
Retail
Stores Other Sublease Income Total
(in thousands)
2011 $ 106,103 $ 23,095 $ 4,812 $ (23,095) $ 110,915
2012 83,492 17,310 3,758 $ (17,310) 87,250
2013 63,591 11,491 2,928 $ (11,491) 66,519
2014 49,411 6,806 2,192 $ (6,806) 51,603
2015 35,677 3,454 1,237 $ (3,454) 36,914
Thereafter 76,383 4,708 1,245 $ (4,708) 77,628
$ 414,657 $ 66,864 $ 16,172 $ (66,864) $ 430,829
NOTE 16. COMMITMENTS AND CONTINGENCIES
Litigation
The Company is engaged in various legal actions, claims and proceedings arising in the normal course of business, including claims related to breach of
contracts, products liabilities, intellectual property matters and employment-related matters resulting from the Company's business activities. As with most
actions such as these, an estimation of any possible and/or ultimate liability cannot always be determined. The Company continues to assess the requirement
to account for additional contingencies in accordance with the standard on contingencies. If the Company is required to make a payment in connection with an
adverse outcome in these matters, it could have a material impact on its financial condition and operating results.
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 impact on its business or financial condition. The
Company currently maintains product liability insurance with a deductible/retention of $3.0 million per claim with an aggregate cap on retained loss of
$10.0 million. The Company typically seeks and has obtained contractual indemnification from most parties that supply raw materials for its products or that
manufacture or market products it sells. The Company also typically seeks to be added, and has been added, as an additional insured under most of such
parties' insurance policies. The Company is also entitled to indemnification by Numico for certain losses arising from claims related to products containing
ephedra or Kava Kava sold prior to December 5, 2003. However, any such indemnification or insurance is limited by its terms and any such indemnification,
as a practical matter, is limited to the creditworthiness of the indemnifying party and its insurer, and the absence of significant defenses by the insurers. The
Company may incur material products liability claims, which could increase its costs and adversely affect its reputation, revenues and operating income.
Hydroxycut Claims. On May 1, 2009, the FDA issued a warning on several Hydroxycut-branded products manufactured by Iovate Health Sciences
U.S.A., Inc. ("Iovate"). The FDA warning was based on 23 reports of liver injuries from consumers who claimed to have used the products between 2002 and
2009. As a result, Iovate voluntarily recalled 14 Hydroxycut-branded products.
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