Banana Republic 2006 Annual Report Download - page 18

Download and view the complete annual report

Please find page 18 of the 2006 Banana Republic annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 92

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80
  • 81
  • 82
  • 83
  • 84
  • 85
  • 86
  • 87
  • 88
  • 89
  • 90
  • 91
  • 92

SPECIAL NOTE ON FORWARD-LOOKING STATEMENTS
This Annual Report on Form 10-K contains forward-looking statements within the “safe harbor” provisions
of the Private Securities Litigation Reform Act of 1995. All statements other than those that are purely historical
are forward-looking statements. Words such as “expect,” “anticipate,” “believe,” “estimate,” “intend,” “plan,”
“project,” and similar expressions also identify forward-looking statements. Forward-looking statements include,
but are not limited to, statements regarding: (i) our plan to continue our investments in advertising and
marketing; (ii) our plans to expand internationally through franchising and similar arrangements; (iii) the
expected payments and the expected benefits, including cost savings, resulting from our services agreement with
IBM; (iv) our commitment to returning excess cash to our stockholders and maintaining sufficient cash to
support the needs of our business and withstand business volatility; (v) the timing and expenses related to the
conversion of Old Navy Outlet stores into Old Navy stores, the Forth & Towne closure, and the closure of a
distribution facility in Kentucky; (vi) interest expense for fiscal 2007; (vii) effective tax rate for fiscal 2007;
(viii) year-over-year change in inventory per square foot at the end of the first and second quarters of fiscal year
2007; (ix) capital expenditures (net purchases of property and equipment) in fiscal 2007; (x) number of new store
openings and store closings in fiscal 2007; (xi) net square footage change in fiscal 2007; (xii) net cash provided
by operating activities in fiscal 2007; (xiii) free cash flow in fiscal 2007; (xiv) the amount of cash and
investments available in the future; (xv) dividend policy for future periods; (xvi) the impact of changes in our
rating by credit rating agencies; (xvii) maximum exposure and cash collateralized balance for reinsurance pool in
future periods; (xviii) the impact of new accounting pronouncements; (xix) future lease payments and sublease
income; (xx) the assumptions used to value share-based compensation expense; and (xxi) the impact of
proceedings, lawsuits, disputes and claims.
Because these forward-looking statements involve risks and uncertainties, there are important factors that
could cause our actual results to differ materially from those in the forward-looking statements. These factors
include, without limitation, the following: the risk that the adoption of new accounting pronouncements will
impact future results; the risk that we will be unsuccessful in gauging fashion trends and changing consumer
preferences; the highly competitive nature of our business in the U.S. and internationally and our dependence on
consumer spending patterns, which are influenced by numerous other factors; the risk that we will be
unsuccessful in identifying and negotiating new store locations effectively; the risk that comparable store sales
and margins will experience fluctuations; the risk that we will be unsuccessful in implementing our strategic,
operating and people initiatives; the risk that adverse changes in our credit ratings may have a negative impact on
our financing costs and structure in future periods; the risk that trade matters, events causing disruptions in
product shipments from China and other foreign countries, or IT systems changes may disrupt our supply chain
or operations; and the risk that we will not be successful in defending various proceedings, lawsuits, disputes,
claims, and audits; any of which could impact net sales, costs and expenses, and/or planned strategies. Additional
information regarding factors that could cause results to differ can be found in this Annual Report on Form 10-K
and our other filings with the Securities and Exchange Commission.
Future economic and industry trends that could potentially impact net sales and profitability are difficult to
predict. These forward-looking statements are based on information as of March 30, 2007 and we assume no
obligation to publicly update or revise our forward-looking statements even if experience or future changes make
it clear that any projected results expressed or implied therein will not be realized.
2