GNC 2011 Annual Report Download - page 69

Table of Contents
revenue and expense growth rates, foreign exchange rates, devaluation and inflation. While we make estimates based on historical experience, current
expectations and assumptions that we believe are reasonable, if actual results, including future cash flows, differ from our estimates, our estimates may differ
from actual impairment recognized. There has been no impairment recorded in the years ended December 31, 2010, 2009 or 2008.
Self-Insurance
We have procured insurance for such areas as: (1) general liability; (2) product liability; (3) directors and officers liability; (4) property insurance; and
(5) ocean marine insurance. We are self-insured for such areas as: (1) medical benefits; (2) workers' compensation coverage in the State of New York with a
stop loss of $250,000; (3) physical damage to our tractors, trailers and fleet vehicles for field personnel use; and (4) physical damages that may occur at the
corporate store locations. We are not insured for certain property and casualty risks due to the frequency and severity of a loss, the cost of insurance and the
overall risk analysis. Our associated liability for this self-insurance was not significant as of December 31, 2010 and 2009. Prior to 2003, General Nutrition
Companies, Inc. was included as an insured under several of its then ultimate parent's global insurance policies.
We carry product liability insurance with a retention of $3.0 million per claim with an aggregate cap on retained losses of $10.0 million. We carry
general liability insurance with retention of $110,000 per claim with an aggregate cap on retained losses of $600,000. The majority of our workers'
compensation and auto insurance are in a deductible/retrospective plan. We reimburse the insurance company for the workers' compensation and auto liability
claims, subject to a $250,000 and $100,000 loss limit per claim, respectively.
As part of the medical benefits program, we contract with national service providers to provide benefits to our employees for all medical, dental, vision
and prescription drug services. We then reimburse these service providers as claims are processed from our employees. We maintain a specific stop loss
provision of $250,000 per incident with a maximum limit up to $2.0 million per participant, per benefit year, respectively. We have no additional liability
once a participant exceeds the $2.0 million ceiling. We utilize a review of historical claims, including the timing of claims reported versus payment of claims,
to estimate future liabilities related to our medical benefit program. While we make these estimates based on historical experience, current expectations and
assumptions that we believe are reasonable, actual results could differ from our estimates. Our liability for medical claims is included as a component of
accrued benefits as described in Note 10, "Accrued Payroll and Related Liabilities", to our consolidated financial statements included in this report, and was
$1.9 million and $2.0 million as of December 31, 2010 and 2009, respectively.
Goodwill and Indefinite-Lived Intangible Assets
On an annual basis, we perform a valuation of the goodwill and indefinite lived intangible assets associated with our operating segments. To the extent
that the fair value associated with the goodwill and indefinite lived intangible assets is less than the recorded value, we write down the value of the asset. The
valuation of the goodwill and indefinite lived intangible assets is affected by, among other things, our business plan for the future, and estimated results of
future operations. Changes in the business plan or operating results that are different than the estimates used to develop the valuation of the assets may result
in an impact on their valuation. While we make these estimates based on historical experience, current expectations and assumptions that we believe are
reasonable, if actual results, including future operating results, differ from our estimates, our estimates may differ from actual impairment recognized.
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