GameStop 2009 Annual Report Download - page 34

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, the retail industry and the banking and financial
services industry;
• 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 30, 2010, we had approximately $447 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.
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