Restoration Hardware 2014 Annual Report Download - page 34

Risks Related to Ownership of Our Common Stock
Our common stock price may be volatile or may decline regardless of our operating performance.
The market price for our common stock may be volatile. As a retailer, our results are significantly affected
by factors outside our control, particularly consumer spending and consumer confidence, which can significantly
affect our stock price. In addition, the market price of our common stock may fluctuate significantly in response
to a number of other factors, including those described elsewhere in this “Risk Factors” section, as well as the
following:
• quarterly variations in our operating results compared to market expectations;
• changes in preferences of our customers;
• announcements of new products or significant price reductions by us or our competitors;
• size of the public float;
• stock price performance of our competitors;
• fluctuations in stock market prices and volumes;
• default on our indebtedness;
• actions by competitors or other shopping center tenants;
• changes in senior management or key personnel;
• changes in financial estimates by securities analysts or failure to meet their expectations;
• actual or anticipated negative earnings or other announcements by us or other retail companies;
• downgrades in our credit ratings or the credit ratings of our competitors;
• natural disasters or other similar events;
• issuances or expected issuances of capital stock; and
• global economic, legal and regulatory changes unrelated to our performance.
In addition, stock markets have experienced extreme price and volume fluctuations that have affected and
continue to affect the market prices of equity securities of many retail companies. In the past, stockholders have
instituted securities class action litigation following periods of market volatility. If we were involved in securities
litigation, we could incur substantial costs and our resources and the attention of management could be diverted
from our business.
Substantial future sales of our common stock, or the perception in the public markets that these sales may
occur, may depress our stock price.
In the future, we may also issue our securities in connection with a capital raise or acquisitions. The amount
of shares of our common stock issued in connection with a capital raise or acquisition could constitute a material
portion of our then-outstanding shares of our common stock, which would result in dilution.
In addition, sales of substantial amounts of our common stock in the public market, or the perception that
these sales could occur, could adversely affect the price of our common stock and could impair our ability to
raise capital through the sale of additional shares. All of our outstanding shares of common stock are freely
tradable, except for (i) 24,772 shares as of January 31, 2015 issued under our 2012 Equity Replacement Plan that
are subject to additional time-based resale restrictions, (ii) 11,112 shares as of January 31, 2015 issued under
either our 2012 Stock Option Plan or our 2012 Stock Incentive Plan that are subject to additional time-based
resale restrictions and (iii) certain other shares of our common stock that are held or acquired by our directors,
executive officers and other affiliates, as that term is defined in the Securities Act of 1933, as amended (the
“Securities Act”), which are restricted securities under the Securities Act.
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