GameStop 2010 Annual Report Download - page 36

Table of Contents
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 or
be disrupted 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 have made and may make investments and acquisitions which could negatively impact our business if we fail to successfully complete and
integrate them.
To enhance our efforts to grow and compete, we have made and continue to make investments and acquisitions. These activities include
investments in and acquisitions of digital, browser, social and mobile gaming and technology-based companies as the delivery methods for video
games continues to evolve. Our plans to pursue future transactions are subject to our ability to identify potential candidates and negotiate favorable
terms for these transactions. Accordingly, we cannot assure you that future investments or acquisitions will be completed. In addition, to facilitate
future transactions, 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. Integration of digital, browser, social and mobile gaming and technology-
based companies may be particularly challenging to us as these companies are outside of our historical operating expertise.
We may not compete effectively as browser, mobile and social gaming becomes more popular.
Gaming continues to evolve. Recently, the popularity of browser, mobile and social gaming has increased greatly and this popularity is
expected to continue to grow. Browser, mobile and social gaming is accessed through hardware other than the consoles we sell. If we are unable to
respond to this growth in popularity of browser, mobile and social games and transition our business to take advantage of these new forms of
gaming, our financial position and results of operations could suffer. While the Company has been and is currently pursuing various strategies to
integrate these new forms of gaming into the Company's business model, we can provide no assurances that these strategies will be successful or
profitable.
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 results of operations or
financial condition.
Legislative actions may cause our general and administrative expenses or income tax expense to increase and impact our future financial
condition and results of operations.
In order to comply with laws adopted by the U.S. government 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
or income tax expenses 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.
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