GNC 2009 Annual Report Download - page 30

Table of Contents
Risks Related to Our Substantial Indebtedness
Our substantial debt could adversely affect our results of operations and financial condition and otherwise adversely impact our
operating income and growth prospects.
As of December 31, 2008, our total consolidated long-term debt (including current portion) was approximately $1,084.7 million, and we had
an additional $48.4 million available for borrowing on a collateralized basis under our $60.0 million senior revolving credit facility after giving
effect to the use of $6.2 million of the revolving credit facility to secure letters of credit and $5.4 million previously drawn. In 2008, Lehman
Brothers Holdings Inc. (Lehman), whose subsidiaries have a $6.3 million credit commitment under our Revolving Credit Facility, filed for
bankruptcy. On October 6, 2008, the Company submitted a borrowing request for $6.0 million under our Revolving Credit Facility and received
$5.4 million in net borrowing proceeds from the administrative agent. The difference between the borrowed amount and the requested amount
reflects Lehman's election to not fund its pro rata share of the borrowing as required under the facility. As a result, we do not expect that
Lehman will fund its pro rata share of any future borrowing requests.
If other financial institutions that have extended credit commitments to us are adversely affected by the conditions of the U.S. and
international capital markets, they may become unable to fund borrowings under the Revolving Credit Facility, which could have a material and
adverse impact on our financial condition and our ability to borrow additional funds, if needed, for working capital, capital expenditures,
acquisitions, and other corporate purposes.
All of the debt under our senior credit facility bears interest at variable rates. We are subject to additional interest expense if these rates
increase significantly, which could also reduce our ability to borrow additional funds.
Our substantial debt could have material consequences on our financial condition. For example, it could:
• make it more difficult for us to satisfy our obligations with respect to the Senior Toggle Notes and the 10.75% Senior Subordinated
Notes;
• increase our vulnerability to general adverse economic and industry conditions;
• require us to use all or a large portion of our cash flow from operations to pay principal and interest on our debt, thereby reducing the
availability of our cash flow to fund working capital, research and development efforts, capital expenditures, and other business
activities;
• increase our vulnerability to general adverse economic and industry conditions;
• limit our flexibility in planning for, or reacting to, changes in our business and the industry in which we operate;
• restrict us from making strategic acquisitions or exploiting business opportunities;
• place us at a competitive disadvantage compared to our competitors that have less debt; and
• limit our ability to borrow additional funds, dispose of assets, or pay cash dividends.
For additional information regarding the interest rates and maturity dates of our existing debt, see Item 7, "Management Discussion and
Analysis of Financial Condition and Results of Operations—Liquidity and Capital Resources."
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