Pottery Barn 2013 Annual Report Download - page 32

expectations for the future and is useful to our stockholders and potential stockholders, 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 actual results may not always be in line with or exceed the
guidance we have provided or the expectations of our investors and analysts, especially in times of economic
uncertainty. In the past, when we have reduced our previously provided guidance, the market price of our
common stock has declined. If, in the future, our operating or financial results for a particular period do not meet
our guidance or the expectations of our investors and analysts or if we reduce our guidance for future periods, the
market price of our common stock may decline as well.
A variety of factors, including seasonality and the economic environment, may cause our quarterly operating
results to fluctuate, leading to volatility in our stock price.
Our quarterly results have fluctuated in the past and may fluctuate in the future, depending upon a variety of
factors, including changes in economic conditions, shifts in the timing of holiday selling seasons, including
Valentine’s Day, Easter, Halloween, Thanksgiving and Christmas, as well as timing shifts due to 53-week fiscal
years, which occur approximately every five years. Historically, a significant portion of our revenues and net
earnings have typically been realized during the period from October through January each year. In anticipation
of increased holiday sales activity, we incur certain significant incremental expenses prior to and during peak
selling seasons, particularly October through January, including fixed catalog production and mailing costs and
the costs associated with hiring a substantial number of temporary employees to supplement our existing
workforce.
We may require funding from external sources, which may cost more than we expect, or not be available at the
levels we require and, as a consequence, our expenses and operating results could be negatively affected.
We regularly review and evaluate our liquidity and capital needs. Although we have a growing balance of cash
that is held offshore, we currently believe that our available cash, cash equivalents and cash flow from operations
will be sufficient to finance our operations and expected capital requirements for at least the next 12 months.
However, we might experience periods during which we encounter additional cash needs and we might need
additional external funding to support our operations. Although we were able to amend our line of credit facility
during fiscal 2012 on acceptable terms, in the event we require additional liquidity from our lenders, such funds
may not be available to us or may not be available to us on acceptable terms in the future. For example, in the
event we were to breach any of our financial covenants, our banks would not be required to provide us with
additional funding, or they may require us to renegotiate our existing credit facility on less favorable 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 become 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.
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