GameStop 2010 Annual Report Download - page 37

Table of Contents
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 outlook of the credit markets toward the video game business;
• 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 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 29, 2011, we had approximately $249.0 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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