GNC 2012 Annual Report Download - page 27

Table of Contents
entering into transactions with our affiliates; and
incurring capital expenditures in excess of limitations set within the agreement.
The Revolving Credit Facility also requires that, to the extent borrowings thereunder exceed $25 million, we meet a senior secured debt ratio of
consolidated senior secured debt to consolidated earnings before interest, taxes, depreciation and amortization, or EBITDA. If we fail to satisfy such ratio,
then we will be restricted from drawing the remaining $55 million of available borrowings under the Revolving Credit Facility, which may impair our
liquidity.
Our ability to comply with these covenants and other provisions of the Senior Credit Facility may be affected by changes in our operating and financial
performance, changes in general business and economic conditions, adverse regulatory developments or other events beyond our control. The breach of any of
these covenants could result in a default under our debt, which could cause those and other obligations to become immediately due and payable. In addition,
these restrictions may prevent us from taking actions that we believe would be in the best interest of our business and may make it difficult for us to
successfully execute our business strategy or effectively compete with companies that are not similarly restricted.
We depend on the services of key executives and changes in our management team could affect our business strategy and adversely impact our
performance and results of operations.
Our senior executives are important to our success because they have been instrumental in setting our strategic direction, operating our business,
identifying, recruiting and training key personnel, identifying opportunities and arranging necessary financing. Losing the services of any of these individuals
could adversely affect our business until a suitable replacement is hired. We believe that our senior executives could not be replaced quickly with executives
of equal experience and capabilities. We do not maintain key person life insurance policies on any of our executives.
If our risk management methods are not effective, our business, reputation and financial results may be adversely affected.
We have methods to identify, monitor and manage our risks; however, these methods may not be fully effective. Some of our risk management methods
may depend upon evaluation of information regarding markets, customers or other matters that are publicly available or otherwise accessible by us. That
information may not in all cases be accurate, complete, up-to-date or properly evaluated. If our methods are not fully effective or we are not successful in
monitoring or evaluating the risks to which we are or may be exposed, our business, reputation, financial condition and operating results could be materially
and adversely affected. In addition, our insurance policies may not provide adequate coverage.
Compliance with new and existing governmental regulations could increase our costs significantly and adversely affect our results of operations.
The processing, formulation, safety, manufacturing, packaging, labeling, advertising and distribution of our products are subject to federal laws and
regulation by one or more federal agencies, including the FDA, the FTC, the CPSC, the USDA, and the EPA. These activities are also regulated by various
state, local and international laws and agencies of the states and localities in which our products are sold. Government regulations may prevent or delay the
introduction, or require the reformulation, of our products, which could result in lost revenues and increased costs to us. For instance, the FDA regulates,
among other things, the composition, safety, manufacture, labeling and marketing of dietary supplements (including vitamins, minerals, herbs, and other
dietary ingredients for human use). The FDA may not accept the evidence of safety for any new dietary ingredient that we may wish to market, may
determine that a particular dietary supplement or ingredient presents an unacceptable health risk based on the required submission of serious adverse events or
other information, and may determine that a particular claim or statement of nutritional value that we use to support the marketing of a dietary supplement is
an
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