GNC 2011 Annual Report Download - page 63

Table of Contents
anticipate funding our 2011 capital requirements with cash flows from operations and, if necessary, borrowings under our Senior Credit Facility.
Cash Used in Financing Activities
We used cash of $1.7 million in 2010 for payments on long-term debt. A $28.4 million dividend was declared by our board of directors and paid in
March 2010 to GNC Corporation.
We used cash of $39.3 million in 2009 for payments on long-term debt, including $3.8 million for an excess cash payment in March 2009 under the
requirements of the Senior Credit Facility. In addition, we repaid the outstanding $5.4 million balance on the Revolving Credit Facility in May 2009 and made
$14.0 million in optional repayments on the Senior Credit facility ($9.0 million in June 2009 and $5.0 million in December 2009). A $13.6 million dividend
was declared in July 2009 by our board of directors and paid in August 2009 to GNC Corporation.
We used cash from financing activities of $8.0 million in 2008 for required payments on long term debt and received $5.4 million from borrowings
under the Revolving Credit Facility.
$735.0 Million Senior Credit Facility. The Senior Credit Facility consists of the Term Loan Facility and the Revolving Credit Facility. As of
December 31, 2010 and 2009, $8.8 million and $7.9 million were pledged to secure letters of credit, respectively. The Term Loan Facility will mature in
September 2013. The Revolving Credit Facility will mature in March 2012. The Senior Credit Facility permits us to prepay a portion or all of the outstanding
balance without incurring penalties (except LIBOR breakage costs). Subject to certain exceptions, the Senior Credit Facility requires that 100% of the net cash
proceeds from certain asset sales, casualty insurance, condemnations and debt issuances, and a specified percentage (ranging from 50% to 0% based on a
defined leverage ratio) of excess cash flow (as defined in the agreement) for each fiscal year must be used to pay down outstanding borrowings. GNC
Corporation and our existing and future direct and indirect domestic subsidiaries have guaranteed our obligations under the Senior Credit Facility. In addition,
the Senior Credit Facility is collateralized by first priority pledges (subject to permitted liens) of our equity interests and the equity interests of our domestic
subsidiaries.
All borrowings under the Senior Credit Facility bear interest, at our option, at a rate per annum equal to (i) the higher of (x) the prime rate (as publicly
announced by JPMorgan Chase Bank, N.A. as its prime rate in effect) and (y) the federal funds effective rate, plus 0.50% per annum plus, at December 31,
2010, in each case, applicable margins of 1.25% per annum for the Term Loan Facility and 1.0% per annum for the Revolving Credit Facility or (ii) adjusted
LIBOR plus 2.25% per annum for the Term Loan Facility and 2.0% per annum for the Revolving Credit Facility. In addition to paying interest on outstanding
principal under the Senior Credit Facility, we are required to pay a commitment fee to the lenders under the Revolving Credit Facility in respect of unutilized
revolving loan commitments at a rate of 0.50% per annum.
The Senior Credit Facility contains customary covenants, including incurrence covenants and certain other limitations on the ability of GNC
Corporation, us, and our subsidiaries to incur additional debt, guarantee other obligations, grant liens on assets, make investments or acquisitions, dispose of
assets, make optional payments or modifications of other debt instruments, pay dividends or other payments on capital stock, engage in mergers or
consolidations, enter into sale and leaseback transactions, enter into arrangements that restrict our and our subsidiaries' ability to pay dividends or grant liens,
engage in transactions with affiliates and change the passive holding company status of GNC Corporation.
The Senior Credit Facility contains events of default, including (subject to customary cure periods and materiality thresholds) defaults based on (1) the
failure to make payments under the Senior Credit Facility when due, (2) breaches of covenants, (3) inaccuracies of representations and
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