Pottery Barn 2012 Annual Report Download - page 32

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 at any time. Our ability to pay
dividends and repurchase stock 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 or repurchase stock 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 our 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, the effectiveness of 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 cash flow projections may cause us to incur impairment charges related to
our retail store locations and other property and equipment, including information technology systems, as well
as goodwill.
We make estimates and projections in connection with impairment analyses for our retail store locations and
other property and equipment, including information technology systems, as well as goodwill. These analyses
require us to make a number of estimates and projections of future results. If these estimates or projections
change or prove incorrect, we may be, and have been, required to record impairment charges on certain store
locations and other property and equipment, including information technology systems. These impairment
charges have been significant in the past and may be significant in the future and, as a result of these charges, our
operating results have been and may, in the future, be adversely affected.
We may be exposed to risks and costs associated with credit card fraud and identity theft that could cause us to
incur unexpected expenses and loss of revenue.
A significant portion of our customer orders are placed through our e-commerce websites or through our customer care
centers. In addition, a significant portion of sales made through our retail channel require the collection of certain
customer data, such as credit card information. In order for our sales channel to function and develop successfully, we
and other parties involved in processing customer transactions must be able to transmit confidential information,
including credit card information, securely over public networks. Third parties may have the technology or knowledge
to breach the security of customer transaction data. Although we take the security of our systems and the privacy of our
customers’ confidential information seriously, we cannot guarantee that our security measures will effectively prevent
others from obtaining unauthorized access to our information and our customers’ information. Any person who
circumvents our security measures could destroy or steal valuable information or disrupt our operations. Any security
breach could cause consumers to lose confidence in the security of our websites or stores and choose not to purchase
from us. Any security breach could also expose us to risks of data loss, litigation and liability and could seriously
disrupt our operations and harm our reputation, any of which could harm our business.
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