GameStop 2014 Annual Report Download - page 39

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be higher than other companies or higher than our tax rates have been in the past. We base ourestimate of an annual effective tax
rate at any given point in time on acalculated mix of the tax rates applicable to our business and to estimates of the amount of
income to be derived in any given jurisdiction. Achangeinthe mixofour 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 amaterial 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 alternative sites or additional sites for new store
expansion in atimely manner.Our revenues and earnings may decline if we fail to maintain existing store locations, enter into
new leases, locatealternative sites or find additional sites for new store expansion.
Restrictions on ourability to take trade-ins of and sell pre-owned video game products or pre-owned mobile devices could
negatively affect our financial condition and results of operations.
Our financial results depend on our ability to take trade-ins of, and sell, pre-owned video game products and pre-owned mobile
devices within our stores. Actions by manufacturers or publishers of video game products or mobile devices, wireless carriers or
governmental authorities to prohibit or limit our ability to take trade-ins or sell pre-owned video game products or mobile devices,
or to limit the ability of consumers to play pre-owned video games or use pre-owned mobile devices, could have anegative impact
on our sales and earnings.
Sales of video games containing graphic violence may decrease as aresult of actual violent events or other reasons, andour
financial results may be adversely affected as aresult.
Many popular video games contain material with graphic violence. These games receive an “M” or “T” rating from the
Entertainment Software Ratings Board. As actual violent events occur and are publicized, or for other reasons, public acceptance
of graphic violence in video games may decline. Consumer advocacy groups may increase their efforts to oppose sales of
graphically-violent video games and may seek legislation prohibiting their sales.As aresult, our sales of those games may decrease,
which could adversely affect our financial results.
An adverse trend insales during the holiday selling season could impact our financial results.
Our business, like that of many retailers, is seasonal, with the major portion of our sales and operating profit realized during
the fourth fiscal quarter,which includes the holiday selling season. During fiscal 2014, we generated approximately 37% of our
sales during the fourth quarter.Any adversetrend in sales during the holiday selling season could lower our results of operations
for the fourth quarter andthe entire fiscal year.
Our results of operations may fluctuate from quarter to quarter.
Our results of operations may fluctuate from quarter to quarter depending upon several factors, some of which are beyond
our control. These factors include, but are not limited to:
•the timing and allocations of new product releases including new console launches;
•the timing of new store openings or closings;
•shifts in the timing or content of certain promotions or service offerings;
•the effect of changesintax rates inthe jurisdictions in which we operate;
•acquisition costs and the integration of companies we acquire or invest in;
•the mix of earnings in the countries in which we operate;
•the costs associated with the exit of unprofitable markets or stores; and
•changes in foreign currency exchange rates.
These and other factors could affect our business, financial condition and results of operations, and this makes the prediction
of our financial results on aquarterly basis difficult. Also, it is possible that our quarterly financial results may be below the
expectations of public market analysts.
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