Sally Beauty Supply 2013 Annual Report Download - page 43

There can be no assurance that the time and resources our management will need to devote to operations
and upgrades, any delays due to the installation of any upgrade (and customer issues therewith), any
resulting service outages, or the impact on the reliability of our data from any upgrade or any legacy
system, will not have a material adverse effect on our business, financial condition or results of operations.
The occurrence of natural disasters or acts of violence or terrorism could adversely affect our operations and
financial performance.
The occurrence of natural disasters or acts of violence or terrorism could result in physical damage to our
properties, the temporary closure of stores or distribution centers, the temporary lack of an adequate work
force, the temporary or long-term disruption in the supply of products (or a substantial increase in the cost
of those products) from domestic or foreign suppliers, the temporary disruption in the delivery of goods to
our distribution centers (or a substantial increase in the cost of those deliveries), the temporary reduction
in the availability of products in our stores, and/or the temporary reduction in visits to stores by customers.
If one or more natural disasters or acts of violence or terrorism were to impact our business, we could,
among other things, incur significantly higher costs and longer lead times associated with distributing
products. Furthermore, insurance costs associated with our business may rise significantly in the event of a
large scale natural disaster or act of violence or terrorism.
Our accounting and other management systems, controls and resources may not be adequately prepared to meet the
financial reporting and other requirements to which we are subject.
As a publicly-traded company, we are subject to reporting and other obligations under the Exchange Act
and other federal securities regulations, such as the Dodd-Frank Wall Street Reform and Consumer
Protection Act. These obligations place significant demands on our management, administrative and
operational resources, including accounting resources. As a public company, we incur significant legal,
accounting and other expenses. We also have significant compliance costs under SEC and New York Stock
Exchange rules and regulations.
In addition, as a public company we are subject to rules adopted by the SEC pursuant to Section 404 of the
Sarbanes-Oxley Act of 2002, which require us to include in our Annual Report on Form 10-K our
management’s report on, and assessment of, the effectiveness of our internal controls over financial
reporting. Furthermore, our independent registered public accounting firm must attest to and report on
the effectiveness of such internal controls. If we fail to properly assess and/or achieve and maintain the
adequacy of our internal controls, there is a risk that we will not comply with Section 404. Moreover,
effective internal controls are necessary to help prevent financial fraud. Any adverse finding could result in
a negative reaction in the financial marketplace due to loss of investor confidence in the reliability of our
financial statements, which ultimately could harm our business and could negatively impact the market
price of our securities.
To comply with these requirements, we are continuously upgrading our systems, including information
technology systems, and implementing additional financial and management controls and disclosure
processes, reporting systems and procedures. These and any other modifications to our financial and
management controls and disclosure processes, reporting systems, information technology systems and
procedures under the financial reporting requirements and other rules that apply to us, now and in the
future, will require that our management and resources be diverted from our core business to assist in
compliance with the requirements. There can be no assurance that the time and resources our
management will need to devote to the requirements, any delays due to the installation of any upgrade, any
resulting service outages, and any impact on the reliability of our data from an upgrade will not have a
material adverse effect on our business, financial condition or results of operations.
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