Ulta 2008 Annual Report Download - page 29

Failure to maintain adequate financial and management processes and controls could lead to errors in our
financial reporting and could harm our ability to manage our expenses.
Reporting obligations as a public company and our anticipated growth are likely to place a considerable strain
on our financial and management systems, processes and controls, as well as on our personnel. In addition, as
a public company we are required to document and test our internal controls over financial reporting pursuant
to Section 404 of the Sarbanes-Oxley Act of 2002 so that our management can periodically certify as to the
effectiveness of our internal controls over financial reporting. As a result, we have been required to improve
our financial and managerial controls, reporting systems and procedures and have incurred and will continue
to incur expenses to test our systems and to make such improvements. If our management is unable to certify
the effectiveness of our internal controls or if our independent registered public accounting firm cannot render
an opinion on the effectiveness of our internal control over financial reporting, or if material weaknesses in
our internal controls are identified, we could be subject to regulatory scrutiny and a loss of public confidence,
which could have a material adverse effect on our business and our stock price. In addition, if we do not
maintain adequate financial and management personnel, processes and controls, we may not be able to
accurately report our financial performance on a timely basis, which could cause a decline in our stock price
and adversely affect our ability to raise capital.
We are currently subject to a consolidated securities class action lawsuit, the outcome of which is uncertain.
We and certain of our current and former executive officers are defendants in a consolidated securities class
action lawsuit in federal court. See Item 3, “Legal Proceedings” for a more detailed description of these
proceedings. This putative class action remains in its preliminary stages and it is not yet possible to determine
the ultimate outcome. The plaintiffs in the class action lawsuit seek substantial damages. The legal and other
costs associated with the defense of this action, the amount of time required to be spent by management and
the board of directors on this matter and the ultimate outcome of the litigation could have a material adverse
effect on our business, financial condition and results of operations.
The market price for our common stock may be volatile, and an investor may not be able to sell our stock
at a favorable price or at all.
The market price of our common stock is likely to fluctuate significantly from time to time in response to
factors including:
• differences between our actual financial and operating results and those expected by investors;
• fluctuations in quarterly operating results;
• our performance during peak retail seasons such as the holiday season;
• market conditions in our industry and the economy as a whole;
• changes in the estimates of our operating performance or changes in recommendations by any research
analysts that follow our stock or any failure to meet the estimates made by research analysts;
• investors’ perceptions of our prospects and the prospects of the beauty products and salon services
industries;
• the performance of our key vendors;
• announcements by us, our vendors or our competitors of significant acquisitions, divestitures, strategic
partnerships, joint ventures or capital commitments;
• introductions of new products or new pricing policies by us or by our competitors;
• recruitment or departure of key personnel; and
• the level and quality of securities research analyst coverage for our common stock.
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