GNC 2010 Annual Report Download - page 31

Table of Contents
The controlling stockholders of our Parent may take actions that conflict with the interests of other stockholders and investors. This
control may have the effect of delaying or preventing changes of control or changes in management.
An affiliate of Ares and OTPP, and certain of our directors and members of our management indirectly beneficially own substantially all of
the outstanding equity of our Parent and, as a result, have the indirect power to elect our directors, to appoint members of management, and to
approve all actions requiring the approval of the holders of our common stock, including adopting amendments to our certificate of incorporation
and approving mergers, acquisitions, or sales of all or substantially all of our assets. The interests of our ultimate controlling stockholders might
conflict with the interests of other stockholders or the holders of our debt. Our ultimate controlling stockholders also may have an interest in
pursuing acquisitions, divestitures, financings or other transactions that, in their judgment, could enhance their equity investment, even though
such transactions might involve risks to the holders of our debt.
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, 2009, our total consolidated long-term debt (including current portion) was approximately $1,059.8 million, and we
had an additional $52.1 million available for borrowing on a collateralized basis under our $60.0 million senior revolving credit facility after giving
effect to the use of $7.9 million of the Revolving Credit Facility to secure letters of credit. In September 2008, Lehman Brothers Holdings Inc.
("Lehman"), whose subsidiaries have a $6.3 million credit commitment under our Revolving Credit Facility, filed for bankruptcy. We do not
expect that Lehman will fund its pro rata share of the borrowing as required under the facility. If other financial institutions that have extended
credit commitments to us are adversely affected by the condition 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. The borrowing
proceeds were paid back in May 2009.
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. Our unhedged debt is 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;
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