GNC 2011 Annual Report Download - page 31

Table of Contents
returns of products from customers and a loss of sales as a replacement product was not available. Through December 31, 2010, we estimate that we have
refunded approximately $3.5 million to our retail customers and approximately $1.6 million to our wholesale customers for Hydroxycut product returns. Our
results of operations may continue to be affected by the Hydroxycut recall. Any additional recall, withdrawal or seizure of any of the products we formulate,
manufacture or sell would require significant management attention, would likely result in substantial and unexpected expenditures and could materially and
adversely affect our business, financial condition or results of operations. Furthermore, a recall, withdrawal or seizure of any of our products could materially
and adversely affect consumer confidence in our brands and decrease demand for our products.
Our operations are subject to environmental and health and safety laws and regulations that may increase our cost of operations or expose us to
environmental liabilities.
Our operations are subject to environmental and health and safety laws and regulations, and some of our operations require environmental permits and
controls to prevent and limit pollution of the environment. We could incur significant costs as a result of violations of, or liabilities under, environmental laws
and regulations, or to maintain compliance with such environmental laws, regulations, or permit requirements. For example, in March 2008, the South
Carolina DHEC requested that we investigate contamination associated with historical activities at our South Carolina facility. These investigations have
identified chlorinated solvent impacts in soils and groundwater that extend offsite from our facility. We are continuing these investigations in order to
understand the extent of these impacts and develop appropriate remedial measures for DHEC approval. At this stage of the investigation, however, it is not
possible to accurately estimate the timing and extent of any remedial action that may be required, the ultimate cost of remediation or the amount of our
potential liability.
In addition to the foregoing, we are subject to numerous federal, state, local, and foreign environmental and health and safety laws and regulations
governing our operations, including the handling, transportation, and disposal of our non-hazardous and hazardous substances and wastes, as well as
emissions and discharges from its operations into the environment, including discharges to air, surface water, and groundwater. Failure to comply with such
laws and regulations could result in costs for remedial actions, penalties, or the imposition of other liabilities. New laws, changes in existing laws or the
interpretation thereof, or the development of new facts or changes in their processes could also cause us to incur additional capital and operating expenditures
to maintain compliance with environmental laws and regulations and environmental permits. We also are subject to laws and regulations that impose liability
and cleanup responsibility for releases of hazardous substances into the environment without regard to fault or knowledge about the condition or action
causing the liability. Under certain of these laws and regulations, such liabilities can be imposed for cleanup of previously owned or operated properties, or for
properties to which substances or wastes that were sent in connection with current or former operations at its facilities. The presence of contamination from
such substances or wastes could also adversely affect our ability to sell or lease our properties, or to use them as collateral for financing.
We are not insured for a significant portion of our claims exposure, which could materially and adversely affect our operating income and profitability.
We have procured insurance independently for the following areas: (1) general liability; (2) product liability; (3) directors and officers liability;
(4) property insurance; (5) workers' compensation insurance; and (6) various other areas. In addition, although we believe that we will continue to be able to
obtain insurance in these areas in the future, because of increased selectivity by insurance providers, we may only be able to obtain such insurance at
increased rates and/or with reduced coverage levels. Furthermore, we are self-insured for other areas,
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