Pottery Barn 2005 Annual Report Download - page 25

applications and websites available and to protect our data from damage or interruption from human error, computer
viruses, intentional acts of vandalism, labor disputes, natural disasters and similar events. If the cost of IBM hosting
and managing certain aspects of our data center information technology infrastructure is more than expected, or if
IBM or we are unable to adequately protect our data and information is lost or our ability to deliver our services is
interrupted, then our business and results of operations may be negatively impacted.
Our operating and financial performance in any given period might not meet the extensive guidance that we have
provided to the public.
We provide extensive public guidance on our expected operating and financial results for future periods. Although
we believe that this guidance provides investors and analysts with a better understanding of management’s
expectations for the future, and is useful to our shareholders and potential shareholders, such guidance is comprised
of forward-looking statements subject to the risks and uncertainties described in this report and in our other public
filings and public statements. Our guidance may not always be accurate. If in the future our operating or financial
results for a particular period do not meet our guidance or the expectations of investment analysts or if we reduce
our guidance for future periods, the market price of our common stock could significantly decline.
Our quarterly results of operations might fluctuate due to a variety of factors, including seasonality.
Our quarterly results have fluctuated in the past and may fluctuate in the future, depending upon a variety of
factors, including shifts in the timing of holiday selling seasons, including Valentine’s Day, Easter, Halloween,
Thanksgiving and Christmas, and the strategic importance of fourth quarter results. A significant portion of our
revenues and net earnings have been realized during the period from October through December. In anticipation
of increased holiday sales activity, we incur certain significant incremental expenses, including the hiring of a
substantial number of temporary employees to supplement our existing workforce. If, for any reason, we were to
realize significantly lower-than-expected revenues or net earnings during the October through December selling
season, our business and results of operations would be materially adversely affected.
We may require external funding sources for operating funds.
We regularly review and evaluate our liquidity and capital needs. We currently believe that our available cash,
cash equivalents, cash flow from operations and cash available under our existing credit facilities will be
sufficient to finance our operations and expected capital requirements for at least the next twelve months.
However, as we continue to grow, we might experience peak periods for our cash needs during the course of our
fiscal year, and we might need additional external funding to support our operations. Although we believe we
would have access to additional debt and/or capital market funding if needed, such funds may not be available to
us on acceptable terms. If the cost of such funds is greater than expected, it could adversely affect our expenses
and our operating results.
We will require a significant amount of cash to pay quarterly dividends at intended levels and for our stock
repurchase programs.
In March 2006, we declared a quarterly cash dividend of $0.10 per common share. In addition, our Board of
Directors authorized the repurchase of up to 2,000,000 additional shares of our common stock. The dividend and
the share repurchase program may require a significant portion of our cash earnings. As a result, we may not
retain a sufficient amount of cash to finance growth opportunities, new product development initiatives,
unanticipated capital expenditures or to fund our operations. Our Board of Directors may, at its discretion,
decrease the intended level of dividends or entirely discontinue the payment of dividends at any time. The stock
repurchase program does not have an expiration date and may be limited or terminated at any time. Our ability to
pay dividends and repurchase shares will depend on our ability to generate cash flows from operations in the
future. This ability may be subject to certain economic, financial, competitive and other factors that are beyond
our control. Any failure to pay dividends or repurchase shares after we have announced our intention to do so
may negatively impact our reputation and investor confidence in us and negatively impact our stock price. In
addition, we may be subject to lawsuits regarding the use of our cash for dividends or share repurchases.
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Form 10-K