GNC 2010 Annual Report Download - page 32

Table of Contents
• 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."
Despite our current significant level of debt, we may still be able to incur additional debt, which could increase the risks described
above, adversely affect our financial health, or prevent us from fulfilling our obligations under the Senior Toggle Notes and the
10.75% Senior Subordinated Notes.
We and our subsidiaries may be able to incur additional debt in the future, including collateralized debt. Although the 2007 Senior Credit
Facility and the indentures governing the Senior Toggle Notes and the 10.75% Senior Subordinated Notes contain restrictions on the
incurrence of additional debt, these restrictions are subject to a number of qualifications and exceptions. If additional debt is added to our
current level of debt, the risks described above would increase.
We require a significant amount of cash to service our debt. Our ability to generate cash depends on many factors beyond our
control and, as a result, we may not be able to make payments on our debt obligations.
We may be unable to generate sufficient cash flow from operations, to realize anticipated cost savings and operating improvements on
schedule or at all, or to obtain future borrowings under our credit facilities or otherwise in an amount sufficient to enable us to pay our debt or to
fund our other liquidity needs. In addition, because we conduct our operations through our operating subsidiaries, we depend on those entities
for dividends and other payments to generate the funds necessary to meet our financial obligations, including payments on our debt. Under
certain circumstances, legal and contractual restrictions, as well as the financial condition and operating requirements of our subsidiaries, may
limit our ability to obtain cash from our subsidiaries. If we do not have sufficient liquidity, we may need to refinance or restructure all or a portion
of our debt on or before maturity, sell assets, or borrow more money. We may not be able to do so on terms satisfactory to us or at all.
If we are unable to meet our obligations with respect to our debt, we could be forced to restructure or refinance our debt, seek equity
financing, or sell assets. If we are unable to restructure, refinance, or sell assets in a timely manner or on terms satisfactory to us, the trading
price of the Senior Toggle Notes and the 10.75% Senior Subordinated Notes could decline and we may default under our obligations. As of
December 31, 2009 substantially all of our debt was subject to acceleration clauses. A default on any of our debt obligations could trigger these
acceleration clauses and cause those and our other obligations to become immediately due and payable. Upon an acceleration of any of our
debt, we may not be able to make payments under our debt.
We may not have the ability to raise the funds necessary to finance the change of control offer required by the indentures, which
could cause us to default on our debt obligations, including the Senior Notes and the Senior Subordinated Notes.
Upon certain "change of control" events, as that term is defined in the indentures governing the Senior Toggle Notes and the 10.75%
Senior Subordinated Notes, we will be required to make an offer to repurchase all or any part of each holder's notes at a price equal to 101% of
the principal thereof, plus accrued interest to the date of repurchase. Because we do not have
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