Restoration Hardware 2015 Annual Report Download - page 27

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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 results of operations 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 our 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.
Anti-takeover provisions in our charter documents and Delaware law might discourage or delay acquisition attempts for us that
you might consider favorable.
Our certificate of incorporation and bylaws contain provisions that may make the acquisition of our Company more difficult
without the approval of our board of directors. These provisions:
• establish a classified board of directors so that not all members of our board of directors are elected at one time;
• authorize the issuance of undesignated preferred stock, the terms of which may be established and the shares of which
may be issued without stockholder approval, and which may include super voting, special approval, dividend or other
rights or preferences superior to the rights of the holders of common stock;