GNC 2012 Annual Report Download - page 17

Table of Contents
LuckyVitamin.com. None of our employees belongs to a union or is a party to any collective bargaining or similar agreement. We consider our relationship
with our employees to be good.
Competition
The U.S. nutritional supplements retail industry is a large, highly fragmented and growing industry, with no single industry participant accounting for a
majority of total industry retail sales. Competition is based on price, quality and assortment of products, customer service, marketing support and availability
of new products. In addition, the market is highly sensitive to the introduction of new products.
We compete with both publicly and privately owned companies, which are highly fragmented in terms of geographical market coverage and product
categories. We also compete with other specialty retailers, supermarkets, drugstores, mass merchants, multi-level marketing organizations, mail-order
companies, other internet sites and a variety of other smaller participants. We believe that the market is highly sensitive to the introduction of new products. In
the United States, many of our competitors have national brands that are heavily advertised and are manufactured by large pharmaceutical and food
companies and other retailers. Most supermarkets, drugstores and mass merchants have narrow product offerings limited primarily to simple vitamins, herbs
and popular third-party diet products. Our international competitors also include large international pharmacy chains and major international supermarket
chains, as well as other large U.S.-based companies with international operations. Our wholesale and manufacturing operations compete with other
wholesalers and manufacturers of third-party nutritional supplements.
Trademarks and Other Intellectual Property
We believe trademark protection is particularly important to the maintenance of the recognized brand names under which we market our products. We
own or have rights to material trademarks or trade names that we use in conjunction with the sale of our products, including the GNC brand name. We also
rely upon trade secrets, know-how, continuing technological innovations and licensing opportunities to develop and maintain our competitive position. We
protect our intellectual property rights through a variety of methods, including trademark, patent and trade secret laws, as well as confidentiality agreements
and proprietary information agreements with vendors, employees, consultants and others who have access to our proprietary information. Protection of our
intellectual property often affords us the opportunity to enhance our position in the marketplace by precluding our competitors from using or otherwise
exploiting our technology and brands. We are also a party to several intellectual property license agreements relating to certain of our products. The duration
of our trademark registrations is generally 10, 15 or 20 years, depending on the country in which the marks are registered, and the registrations can be
renewed by us. The scope and duration of our intellectual property protection varies throughout the world by jurisdiction and by individual product.
Insurance and Risk Management
We purchase insurance to cover standard risks in the nutritional supplements industry, including policies to cover general products liability, workers'
compensation, auto liability and other casualty and property risks. Our insurance rates are dependent upon our safety record as well as trends in the insurance
industry. We also maintain workers' compensation insurance and auto insurance policies that are retrospective in that the cost per year will vary depending on
the frequency and severity of claims in the policy year.
We face an inherent risk of exposure to product liability claims in the event that, among other things, the use of products sold by us results in injury.
With respect to product liability coverage, we carry insurance coverage typical of our industry and product lines. Our coverage involves self-insured
retentions with primary and excess liability coverage above the retention amount. We have the ability to refer claims to most of our vendors and their insurers
to pay the costs associated with any claims arising from such
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