GameStop 2007 Annual Report Download - page 33

distribution centers with which we work. The third-party distribution centers pick up products from our suppliers,
repackage the products for each of our stores and ship those products to our stores by package carriers. We use
inventory replenishment systems to track sales and inventory. Our ability to rapidly process incoming shipments of
new release titles and deliver them to all of our stores, either that day or by the next morning, enables us to meet peak
demand and replenish stores at least twice a week, to keep our stores in stock at optimum levels and to move
inventory efficiently. If our inventory or management information systems fail to adequately perform these
functions, our business could be adversely affected. In addition, if operations in any of our distribution centers were
to shut down for a prolonged period of time or if these centers were unable to accommodate the continued store
growth in a particular region, our business could suffer.
We may engage in acquisitions which could negatively impact our business if we fail to successfully com-
plete and integrate them.
To enhance our efforts to grow and compete, we may engage in acquisitions. Our plans to pursue future
acquisitions are subject to our ability to negotiate favorable terms for these acquisitions. Accordingly, we cannot
assure you that future acquisitions will be completed. In addition, to facilitate future acquisitions, we may take
actions that could dilute the equity interests of our stockholders, increase our debt or cause us to assume contingent
liabilities, all of which may have a detrimental effect on the price of our common stock. Finally, if any acquisitions
are not successfully integrated with our business, our ongoing operations could be adversely affected.
Litigation and litigation results could negatively impact our future financial condition and results of
operations.
In the ordinary course of our business, the Company is, from time to time, subject to various litigation and legal
proceedings. In the future, the costs or results of such legal proceedings, individually or in the aggregate, could have
a negative impact on the Company’s operations or financial condition.
Legislative actions and potential new accounting pronouncements are likely to cause our general and
administrative expenses to increase and impact our future financial condition and results of operations.
In order to comply with the New York Stock Exchange listing standards and rules adopted by the SEC or other
regulatory bodies, we may be required to increase our expenditures and hire additional personnel and additional
outside legal, accounting and advisory services, all of which may cause our general and administrative costs to
increase. Changes in the accounting rules could materially increase the expenses that we report under U.S. generally
accepted accounting principles (“GAAP”) and adversely affect our operating results.
Risks Relating to Our Indebtedness
To service our indebtedness, we will require a significant amount of cash, the availability of which
depends on many factors beyond our control.
Our ability to make scheduled payments or to refinance our debt obligations depends on our financial and
operating performance, which is subject to prevailing economic and competitive conditions and to certain financial,
business and other factors beyond our control. These factors include:
• our reliance on suppliers and vendors for sufficient quantities of their products and new product releases and
our ability to obtain favorable terms from these suppliers and vendors;
• economic conditions affecting the electronic game industry as a whole;
• the highly competitive environment in the electronic game industry and the resulting pressure from our
competitors potentially forcing us to reduce our prices or increase spending;
• our ability to open and operate new stores;
• our ability to attract and retain qualified personnel; and
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