Pottery Barn 2014 Annual Report Download - page 32

If our operating and financial performance in any given period does not meet the guidance that we have
provided to the public or the expectations of our investors and analysts, our stock price may decline.
We provide 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 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.
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 net revenues and net earnings have
typically been realized during the period from October through January each year, our peak selling season. In
anticipation of increased holiday sales activity, we incur certain significant incremental expenses prior to and during
peak selling seasons, 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 and increase our line of credit facility during
fiscal 2014 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. 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.
Global financial markets can experience extreme volatility, disruption and credit contraction, which adversely
affect global economic conditions. Turmoil in the financial and credit markets or other changes in economic
conditions could adversely affect sources of liquidity available to us or our costs of capital. 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 lender, or group of lenders, 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 lender or group of lenders on a timely basis, if at all, our liquidity and our business may be
materially adversely affected.
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