GNC 2011 Annual Report Download - page 26

Table of Contents
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, 2010, our total consolidated long-term debt (including current portion) was approximately $1,058.5 million, and we had an
additional $44.9 million available under our $60.0 million senior revolving credit facility (the "Revolving Credit Facility") after giving effect to $8.8 million
utilized to secure letters of credit and a $6.3 million commitment from subsidiaries of Lehman Brothers Holdings Inc. (collectively, "Lehman") that we do not
expect Lehman will fund.
All of the debt under our senior credit facility, consisting of a $675.0 million term loan facility (the "Term Loan Facility") and the Revolving Credit
Facility (together with the Term Loan Facility, the "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 Floating Rate Toggle Notes due 2014 (the "Senior Notes") and
the 10.75% Senior Subordinated Notes due 2015 (the "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, capital expenditures, and other business activities;
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 or pay cash dividends.
For additional information regarding the interest rates and maturity dates of our existing debt, see "Management's Discussion and Analysis of Financial
Condition and Results of Operations — Liquidity and Capital Resources".
We and our subsidiaries may be able to incur additional debt in the future, including collateralized debt. Although the Senior Credit Facility and the
indentures governing the Senior Notes and the 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.
On February 7, 2011, we announced that we intend to enter into, subject to market and other conditions, the Refinancing (as defined in this report). We
currently expect to use the proceeds from the Refinancing, if consummated, to, among other things, refinance our existing indebtedness. We currently expect
to consummate the Refinancing in March 2011; however, there can be no assurance that we will complete the Refinancing either on terms acceptable to us or
at all. Our inability to complete the Refinancing or to complete it on terms that we find favorable could increase the risks described above. See "Liquidity and
Capital Resources — Cash Used in Financing Activities — Proposed Refinancing".
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