GameStop 2012 Annual Report Download - page 35

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Our international operations expose us to numerous risks.
We have international retail operations in Australia, Canada and Europe. Because release schedules for
hardware and software introduction in these markets often differ from release schedules in the United States, the
timing of increases and decreases in foreign sales may differ from the timing of increases and decreases in
domestic sales. We are also subject to a number of other factors that may affect our current or future international
operations. These include:
• economic downturns, specifically in the regions in which we operate;
• currency exchange rate fluctuations;
• international incidents;
• natural disasters;
• government instability; and
• competitors entering our current and potential markets.
Our operations in Europe are also subject to risks associated with the current economic conditions and
uncertainties in the European Union (“EU”). European and global economic conditions have already been
negatively impacted by the ability of certain EU member states to service their sovereign debt
obligations. Additionally, there continues to be uncertainty over the possibility that other EU member states may
experience similar financial troubles, the ultimate outcome of the EU governments’ financial support programs,
the possible breakup or restructuring of the EU and the possible elimination or restructuring of the EU monetary
system. These continued uncertainties could further disrupt European and global economic conditions.
Unfavorable economic conditions could negatively impact consumer demand for our products. These factors
could have an adverse effect on our business, results of operations and financial condition.
We are also subject to risks that our operations outside the United States could be conducted by our
employees, contractors, representatives or agents in ways that violate the Foreign Corrupt Practices Act or other
similar anti-bribery laws. While we have policies and procedures intended to ensure compliance with these laws,
our employees, contractors, representatives and agents may take actions that violate our policies. Moreover, it
may be more difficult to oversee the conduct of any such persons who are not our employees, potentially
exposing us to greater risk from their actions. Any violations of those laws by any of those persons could have a
negative impact on our business.
There may be possible changes in our global tax rate.
As a result of our operations in many foreign countries, our global tax rate is derived from a combination of
applicable tax rates in the various jurisdictions in which we operate. Depending upon the sources of our income,
any agreements we may have with taxing authorities in various jurisdictions and the tax filing positions we take
in various jurisdictions, our overall tax rate may be higher than other companies or higher than our tax rates have
been in the past. We base our estimate of an annual effective tax rate at any given point in time on a calculated
mix of the tax rates applicable to our Company and to estimates of the amount of income to be derived in any
given jurisdiction. A change in the mix of our business from year to year and from country to country, changes in
rules related to accounting for income taxes, changes in tax laws in any of the multiple jurisdictions in which we
operate or adverse outcomes from the tax audits that regularly are in process in any jurisdiction in which we
operate could result in an unfavorable change in our overall tax rate, which could have a material adverse effect
on our business and results of our operations.
If we are unable to renew or enter into new leases on favorable terms, our revenue growth may decline.
All of our retail stores are located in leased premises. If the cost of leasing existing stores increases, we
cannot assure you that we will be able to maintain our existing store locations as leases expire. In addition, we
may not be able to enter into new leases on favorable terms or at all, or we may not be able to locate suitable
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