GNC 2011 Annual Report Download - page 66

Table of Contents
our interest rate swap agreements which also use the three month LIBOR index and the six month LIBOR index.
These balances consist of the following operating leases: (a) $414.6 million for company-owned retail stores; (b) $66.9 million for
franchise retail stores, which is offset by $66.9 million of sublease income from franchisees; and (c) $16.2 million relating to various
leases for tractors/trailers, warehouses, automobiles, and various equipment at our facilities. Operating lease obligations exclude
insurance, taxes, maintenance, percentage rent and other costs. These amounts are subject to fluctuation from year to year. For each of
the years ended December 31, 2008, 2009 and 2010, respectively, these amounts collectively represented approximately 36% of the
aggregate costs associated with our company-owned retail store operating leases.
These balances consist of $10.6 million of advertising and $9.2 million related to a management services agreement. In connection
with the Merger, we entered into a management services agreement with Holdings, pursuant to which we agreed to pay an annual fee
of $1.5 million in consideration for certain management and advisory services. See Item 13, "Certain Relationships and Related
Transactions — Management Services Agreement".
We are unable to make a reasonably reliable estimate as to when cash settlement with taxing authorities may occur for our
unrecognized tax benefits. Also, certain other long term liabilities, included in our consolidated balance sheet relate principally to the
fair value of our interest rate swap agreement, and rent escalation liabilities, and we are unable to estimate the timing of these
payments. Therefore, these long term liabilities are not included in the table above. See Note 5, "Income Taxes", and Note 13, "Other
Long Term Liabilities", to the Consolidated Financial Statements for additional information.
(3)
(4)
(5)
On February 7, 2011, we announced that we intend to enter into, subject to market and other conditions, the Refinancing. We currently expect to use the
proceeds from the transaction, 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. See
"Liquidity and Capital Resources — Cash Used in Financing Activities — Proposed Refinancing".
In addition to the obligations set forth in the table above, we have entered into employment agreements with certain executives that provide for
compensation and certain other benefits. Under certain circumstances, including a change in control, some of these agreements provide for severance or other
payments, if those circumstances would ever occur during the term of the employment agreement.
Off Balance Sheet Arrangements
As of December 31, 2010 and 2009, we had no relationships with unconsolidated entities or financial partnerships, such as entities often referred to as
structured finance or special purpose entities, which would have been established for the purpose of facilitating off balance sheet arrangements, or other
contractually narrow or limited purposes. We are, therefore, not materially exposed to any financing, liquidity, market, or credit risk that could arise if we had
engaged in such relationships.
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