Pottery Barn 2009 Annual Report Download - page 28

existing credit facility on less acceptable terms. In addition, we may not be able to renew our letters of credit that
we use to help pay our suppliers on terms that are acceptable to us, or at all, as the availability of letter of credit
facilities may continue to be limited. Further, the providers of such credit may reallocate the available credit to
other borrowers. If we are unable to access credit at the levels we require, or the cost of credit is greater than
expected, it could adversely affect our operating results.
Disruptions in the financial markets may adversely affect our liquidity and capital resources and our business.
Disruptions in the global financial markets and banking systems have made credit and capital markets more
difficult for companies to access, even for some companies with established revolving or other credit facilities.
We have access to capital through our revolving line of credit facility. Each financial institution, which is part of
the syndicate for our revolving line of credit facility, is responsible for providing a portion of the loans to be
made under the facility. If any participant, or group of participants, with a significant portion of the commitments
in our revolving line of credit facility fails to satisfy its obligations to extend credit under the facility and we are
unable to find a replacement for such participant or group of participants on a timely basis (if at all), our liquidity
and our business may be materially adversely affected.
If we are unable to pay quarterly dividends at intended levels, our reputation and stock price may be harmed.
During fiscal 2009, our quarterly cash dividend was $0.12 per common share. Subsequent to year end, in March,
2010, our Board of Directors authorized an increase in our quarterly cash dividend from $0.12 to $0.13 per
common share. The dividend program may require the use of a significant portion of our cash earnings. As a
result, we may not retain a sufficient amount of cash to fund our operations or finance future growth
opportunities, new product development initiatives and unanticipated capital expenditures. Further, our Board of
Directors may, at its discretion, decrease the intended level of dividends or entirely discontinue the payment of
dividends at any time. Our ability to pay dividends will depend on our ability to generate sufficient 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 after we have announced our intention to do so
may negatively impact our reputation and investor confidence in us and may negatively impact our stock price.
If we fail to maintain proper and effective internal controls, our ability to produce accurate and timely financial
statements could be impaired and investors’ views of us could be harmed.
We have evaluated and tested our internal controls in order to allow management to report on, and our registered
independent public accounting firm to attest to, our internal controls, as required by Section 404 of the Sarbanes-
Oxley Act of 2002. If we are not able to continue to meet the requirements of Section 404 in a timely manner, or
with adequate compliance, we would be required to disclose material weaknesses if they develop or are uncovered
and we may be subject to sanctions or investigation by regulatory authorities, such as the Securities and Exchange
Commission or the New York Stock Exchange. In addition, our internal controls may not prevent or detect all errors
and fraud. A control system, no matter how well designed and operated, is based upon certain assumptions and can
provide only reasonable assurance that the objectives of the control system will be met. If any of the above were to
occur, our business and the perception of us in the financial markets could be negatively impacted.
Changes to accounting rules or regulations may adversely affect our operating results.
Changes to existing accounting rules or regulations may impact our future operating results. A change in
accounting rules or regulations may even affect our reporting of transactions completed before the change is
effective. The introduction of new accounting rules or regulations and varying interpretations of existing
accounting rules or regulations have occurred and may occur in the future. Future changes to accounting rules or
regulations, or the questioning of current accounting practices, may adversely affect our operating results.
Changes to estimates related to our property and equipment, including information technology systems, or
operating results that are lower than our current estimates at certain store locations, may cause us to incur
impairment charges.
We make certain estimates and projections in connection with impairment analyses for certain of our store locations
and other property and equipment, including information technology systems. These impairment analyses require
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