GNC 2010 Annual Report Download - page 81

Table of Contents
GENERAL NUTRITION CENTERS, INC. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
agreement, $11.3 million of additional consideration was paid as a result of the Company filing its 2008 consolidated federal tax return. The
Merger agreement requires payments to former shareholders and optionholders in lieu of income tax payments made for utilizing net operating
losses ("NOL's") created as a result of the Merger.
In connection with the Merger on March 16, 2007, the Company issued $300.0 million aggregate principal amount of Senior Floating
Rate Toggle Notes due 2014 and $110.0 million aggregate principal amount of 10.75% Senior Subordinated Notes due 2015. In addition, the
Company obtained a senior credit facility comprised of a $675.0 million term loan facility and a $60.0 million revolving credit facility. The
Company borrowed the entire $675.0 million under the term loan facility and $10.5 million under the revolving credit facility to fund a portion of
the acquisition price. The Company utilized proceeds from the new debt to repay its December 2003 senior credit facility, its 8 5/8% senior
notes issued in January 2005, and its 8 1/2% senior subordinated notes issued in December 2003. The Company contributed the remainder of
the debt proceeds, after payment of fees and expenses, to a newly formed, wholly owned subsidiary, which then loaned such net proceeds to
GNC Parent Corporation. GNC Parent Corporation used those proceeds, together with the equity contributions, to repay GNC Parent
Corporation's outstanding floating rate senior PIK notes issued in November 2006, pay the merger consideration, and pay fees and expenses
related to the Merger transactions.
In connection with the Merger, the Company recognized charges of $34.6 million in the period ending March 15, 2007. In addition, the
Company recognized compensation charges associated with the Merger of $15.3 million in the period ending March 15, 2007.
Pursuant to the Merger agreement, as amended, GNC Acquisition Inc. was merged with and into GNC Parent Corporation with GNC
Parent Corporation surviving the Merger. Subsequently on March 16, 2007, GNC Parent was converted into a Delaware limited liability
company and renamed GNC Parent LLC.
In conjunction with the Merger, final fair value adjustments were made to the Company's financial statements as of March 16, 2007. As a
result of the Merger and the final fair values assigned, the financial statements as of December 31, 2007 reflected these adjustments made in
accordance with the standard on business combinations. The following table summarizes the fair values assigned to the Company's assets and
liabilities in connection with the Merger.
March 16, 2007
(in thousands)
Assets:
Current assets $ 480,230
Goodwill 626,259
Other intangible assets 901,661
Property, plant and equipment 181,765
Other assets 16,813
Total assets $ 2,206,728
Liabilities:
Current liabilities 232,943
Long-term debt 10,773
Deferred tax liability 257,732
Other liabilities 52,321
Total liabilities $ 553,769
Fair value of net assets acquired $ 1,652,959
The above table does not include Merger consideration related to payments based on utilization of net operating losses for 2008 and
2009. 75