GameStop 2011 Annual Report Download - page 39

Download and view the complete annual report

Please find page 39 of the 2011 GameStop annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 116

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80
  • 81
  • 82
  • 83
  • 84
  • 85
  • 86
  • 87
  • 88
  • 89
  • 90
  • 91
  • 92
  • 93
  • 94
  • 95
  • 96
  • 97
  • 98
  • 99
  • 100
  • 101
  • 102
  • 103
  • 104
  • 105
  • 106
  • 107
  • 108
  • 109
  • 110
  • 111
  • 112
  • 113
  • 114
  • 115
  • 116

Risks Relating to Our Indebtedness
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.
The terms of our senior credit facility impose significant operating and financial restrictions on us.
The terms of our senior credit facility impose significant operating and financial restrictions on us. These
restrictions, among other things, limit GameStop’s ability 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.
We may incur additional indebtedness in the future, which may adversely impact our financial condition
and results of operations.
We may incur additional indebtedness in the future, including additional secured indebtedness. Our senior
credit facility restricts us from incurring additional indebtedness and is subject to important exceptions and
qualifications. Such future indebtedness may have restrictions similar to or more restrictive than those contained
in our senior credit facility. The incurrence of additional indebtedness could impact our financial condition and
results of operations.
Item 1B. Unresolved Staff Comments
None.
Item 2. Properties
All of our stores are leased. Store leases typically provide for an initial lease term of three to seven years,
plus renewal options. This arrangement gives us the flexibility to pursue extension or relocation opportunities
that arise from changing market conditions. We believe that, as current leases expire, we will be able to obtain
23