GNC 2008 Annual Report Download - page 59

Table of Contents
Contractual Obligations
The following table summarizes our future minimum non-cancelable contractual obligations at December 31, 2007:
Payments due by period
Less than
(in millions) Total 1 year 1-3 years 4-5 years After 5 years
Long-term debt obligations(1) $ 1,089.7 $ 8.0 $ 16.3 $ 16.8 $ 1,048.6
Scheduled interest payments(2) 529.7 89.1 174.4 171.4 94.8
Operating lease obligations(3) 363.1 100.6 135.9 73.6 53.0
Purchase commitments(4)(5) 35.8 15.8 10.4 3.3 6.3
$ 2,018.3 $ 213.5 $ 337.0 $ 265.1 $ 1,202.7
(1) These balances consist of the following debt obligations: (a) $675.0 million for the new senior credit facility based on a variable interest
rate; (b) $300.0 million for our New Senior Notes based on a variable interest rate; (c) $110.0 million for our New Senior Subordinated
Notes with a fixed interest rate; and (d) $9.8 million for our mortgage with a fixed interest rate. Repayment of the new senior credit facility
assumes that 1.0% of the original balance is due and payable annually and does not take into account any unscheduled payments that
may occur due to our future cash positions.
(2) The interest that will accrue on the long-term obligations includes variable rate payments, which are estimated using the associated
LIBOR index as of December 31, 2007. The Senior Credit Facility uses the three month LIBOR index while the Senior Toggle Notes uses
the six month LIBOR index. Also included in the scheduled interest payments is the activity associated with our interest rate swap
agreements which also use the three month LIBOR index. Using the three month and six month LIBOR rates as of February 29, 2008
rather than our rates in effect at December 31, 2007 resulted in an $84.0 million decrease in scheduled interest payments. This $84.0
million decrease is made up of a $62.2 million decrease in interest on the Senior Credit Facility and a $29.2 million decrease on the
Senior Toggle Notes offset by a $7.4 million increase in payments related to our swap agreements.
(3) These balances consist of the following operating leases: (a) $340.0 million for company-owned retail stores; (b) $68.0 million for
franchise retail stores, which is offset by $68.0 million of sublease income from franchisees; and (c) $23.1 million relating to various
leases for tractors/trailers, warehouses, automobiles, and various equipment at our facilities.
(4) These balances consist of $3.6 million of advertising, $6.4 million inventory commitments, $12.0 million in anticipated legal settlement
costs, and $13.8 million related to a management services agreement. In connection with the Merger, we entered into a new management
services agreement with our parent, GNC Acquisition Holdings Inc., pursuant to which we agreed to pay an annual fee of $1.5 million in
consideration for certain management and advisory services. See Item 13, "Certain Relationships and Related Transactions — New
Management Services Agreement."
(5) We are unable to make a reasonably reliable estimate as to when cash settlement with taxing authorities may occur for our unrecognized
tax benefits. Also, certain other long term liabilities, included in our consolidated balance sheet relate principally to the fair value of our
interest rate swap agreement, payables to former shareholders, and rent escalation liabilities, and we are unable to estimate the timing of
these payments. Therefore, these long term liabilities are not included in the table above. See Note 5, "Income Taxes," and Note 14,
"Other Long Term Liabilities," to the Consolidated Financial Statements for additional information.
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