Pottery Barn 2007 Annual Report Download - page 23

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of software-related assets. We are also subject to the risks associated with the ability of our vendors to provide
information technology solutions to meet our needs. Any disruptions could negatively impact our business and
operating results.
We outsource certain aspects of our business to third party vendors that subject us to risks, including disruptions
in our business and increased costs.
We outsource certain aspects of our business to third party vendors that subject us to risks of disruptions in our
business as well as increased costs. For example, we have engaged IBM to host and manage certain aspects of
our data center information technology infrastructure. Accordingly, we are subject to the risks associated with
IBM’s ability to provide information technology services to meet our needs. Our operations will depend
significantly upon our ability to make our servers, software 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
operating results 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 operating results 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. A significant portion of our revenues and net earnings has been realized during the
period from October through December. In anticipation of increased holiday sales activity, we incur certain
significant incremental expenses, including fixed catalog production and mailing costs and the costs associated
with hiring 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 operating results would be harmed.
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 12 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.
13
Form 10-K