GameStop 2008 Annual Report Download - page 34

• 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
• our dependence upon software publishers to develop popular game and entertainment titles for video game
systems and PCs.
If our financial condition or operating results materially deteriorate, our relations with our creditors, including
holders of our senior notes, the lenders under our senior credit facility and our suppliers, may be materially and
adversely impacted.
We have significant debt that could adversely impact cash availability for growth and operations and may
increase our vulnerability to general adverse economic and industry conditions.
As of January 31, 2009, we had approximately $546 million of indebtedness. Our debt service obligations with
respect to this indebtedness could have an adverse impact on our earnings and cash flows for as long as the
indebtedness is outstanding.
Our indebtedness could have important consequences, including the following:
• our ability to obtain additional financing for working capital, capital expenditures, acquisitions or general
corporate purposes may be impaired;
• we may use a portion of our cash flow from operations to make debt service payments on the senior notes and
our senior credit facility, which will reduce the funds available to us for other purposes such as potential
acquisitions and capital expenditures;
• we may have a higher level of indebtedness than some of our competitors, which may put us at a competitive
disadvantage and reduce our flexibility in planning for, or responding to, changing conditions in our
industry, including increased competition; and
• we may be more vulnerable to general economic downturns and adverse developments in our business.
If our cash flows and capital resources are insufficient to fund our debt service obligations, we may be forced to
reduce or delay capital expenditures, sell assets, seek additional capital or restructure or refinance our indebtedness,
including the senior notes. These alternative measures may not be successful and may not permit us to meet our
scheduled debt service obligations. Our senior credit facility and the indenture governing the senior notes restrict
our ability to dispose of assets and use the proceeds from such dispositions. We may not be able to consummate
those dispositions, dispose of our assets at prices that we believe are fair or use the proceeds from asset sales to make
payments on the notes and these proceeds may not be adequate to meet any debt service obligations then due.
Because of our floating rate credit facilities, we may be adversely affected by interest rate changes.
Our financial position may be affected by fluctuations in interest rates, as our senior credit facility is subject to
floating interest rates.
Interest rates are highly sensitive to many factors, including governmental monetary policies, domestic and
international economic and political conditions and other factors beyond our control. If we were to borrow against
our senior credit facility, a significant increase in interest rates could have an adverse effect on our financial position
and results of operations.
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