GameStop 2010 Annual Report Download - page 38
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Table of Contents
Because of our floating rate credit facility, 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.
Our operations are substantially restricted by the indenture governing the senior notes and the terms of our senior credit facility.
The indenture for the senior notes imposes, and the terms of any future debt may impose, significant operating and financial restrictions on us.
These restrictions, among other things, limit the ability of the issuers of the senior notes and of GameStop's restricted subsidiaries to:
• incur, assume or permit to exist additional indebtedness or guaranty obligations;
• incur liens or agree to negative pledges in other agreements;
• engage in sale and leaseback transactions;
• make loans and investments;
• declare dividends, make payments or redeem or repurchase capital stock;
• engage in mergers, acquisitions and other business combinations;
• prepay, redeem or purchase certain indebtedness;
• amend or otherwise alter the terms of our organizational documents and our indebtedness, including the senior notes;
• sell assets; and
• engage in transactions with affiliates.
We cannot assure you that these covenants will not adversely affect our ability to finance our future operations or capital needs or to pursue
available business opportunities.
The senior credit facility contains various restrictive covenants prohibiting us, in certain circumstances, from, among other things, prepaying,
redeeming or purchasing certain indebtedness.
Despite current anticipated indebtedness levels and restrictive covenants, we may incur additional indebtedness in the future.
Despite our current level of indebtedness, we may be able to incur substantial additional indebtedness in the future, including additional
secured indebtedness. Although the terms of the indenture governing the senior notes and our senior credit facility restrict the issuers of the senior
notes and GameStop's restricted subsidiaries from incurring additional indebtedness, these restrictions are subject to important exceptions and
qualifications. If we incur additional indebtedness, the risks that we now face as a result of our leverage could intensify.
Item 1B. Unresolved Staff Comments
None. 22