GNC 2011 Annual Report Download - page 24

Table of Contents
have incurred costs and obligations for correcting environmental and health and safety noncompliance matters and for remediation at or relating to certain of
its properties or properties at which its waste has been disposed. However, compliance with the provisions of national, state, and local environmental laws and
regulations has not had a material effect upon our capital expenditures, earnings, financial position, liquidity or competitive position. We believe we are
currently in compliance with our environmental obligations pursuant to environmental and health and safety laws and regulations in all material respects, and
that any liabilities for noncompliance will not have a material adverse effect on our business or financial performance.
Item 1A. Risk Factors.
The following risk factors could cause our financial performance to differ significantly from the goals, plans, objectives, intentions and expectations
expressed in this report. If any of the following risks and uncertainties actually occur, our business, financial condition or operating results could be harmed
substantially.
Risks Relating to Our Business and Industry
We may not effectively manage our growth, which could materially harm our business.
We expect that our business will continue to grow, which may place a significant strain on our management, personnel, systems and resources. We must
continue to improve our operational and financial systems and managerial controls and procedures, and we will need to continue to expand, train and manage
our technology and workforce. We must also maintain close coordination among our technology, compliance, accounting, finance, marketing and sales
organizations. We cannot assure you that we will manage our growth effectively. If we fail to do so, our business could be materially harmed.
Our continued growth will require an increased investment by us in technology, facilities, personnel and financial and management systems and
controls. It also will require expansion of our procedures for monitoring and assuring our compliance with applicable regulations, and we will need to
integrate, train and manage a growing employee base. The expansion of our existing businesses, any expansion into new businesses and the resulting growth
of our employee base will increase our need for internal audit and monitoring processes that are more extensive and broader in scope than those we have
historically required. We may not be successful in identifying or implementing all of the processes that are necessary. Further, unless our growth results in an
increase in our revenues that is proportionate to the increase in our costs associated with this growth, our operating margins and profitability will be adversely
affected.
We operate in a highly competitive industry. Our failure to compete effectively could adversely affect our market share, revenues, and growth prospects.
The U.S. nutritional supplements retail industry is large and highly fragmented. Participants include specialty retailers, supermarkets, drugstores, mass
merchants, multi level marketing organizations, on-line merchants, mail-order companies and a variety of other smaller participants. We believe that the
market is also highly sensitive to the introduction of new products, which may rapidly capture a significant share of the market. In the United States, we also
compete for sales with heavily advertised national brands manufactured by large pharmaceutical and food companies, as well as other retailers. In addition, as
some products become more mainstream, we experience increased price competition for those products as more participants enter the market. Our
international competitors include large international pharmacy chains, major international supermarket chains, and other large U.S. based companies with
international operations. Our wholesale and manufacturing operations compete with other wholesalers and manufacturers of
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