Supercuts 2011 Annual Report Download - page 28
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Table of Contents
Certain of the terms and provisions of the convertible notes we issued in July 2009 may adversely affect our financial condition and
operating results and impose other risks.
In July 2009, we issued $172.5 million aggregate principal amount of our 5.0 percent convertible senior notes due 2014 in a public offering.
Certain terms of the notes we issued may adversely affect our financial condition and operating results or impose other risks, such as the
following:
•
Holders of notes may convert their notes into shares of our common stock, which may dilute the ownership interest of our
shareholders,
• If we elect to settle all or a portion of the conversion obligation exercised by holders of the notes through the payment of cash, it
could adversely affect our liquidity,
• Holders of notes may require us to purchase their notes upon certain fundamental changes, and any failure by us to purchase the
notes in such event would result in an event of default with respect to the notes,
•
The fundamental change provisions contained in the notes may delay or prevent a takeover attempt of the Company that might
otherwise be beneficial to our investors,
• Recent changes in the accounting method for convertible debt securities that may be settled in cash require us to include both the
current period's amortization of the debt discount and the instrument's coupon interest as interest expense, which will decrease our
financial results,
• Our ability to pay principal and interest on the notes depends on our future operating performance and any failure by us to make
scheduled payments could allow the note holders to declare all outstanding principal and interest to be due and payable, result in
termination of other debt commitments and foreclosure proceedings by other lenders, or force us into bankruptcy or liquidation,
and
•
The debt obligations represented by the notes may limit our ability to obtain additional financing, require us to dedicate a
substantial portion of our cash flow from operations to pay our debt, limit our ability to adjust rapidly to changing market
conditions and increase our vulnerability to downtowns in general economic conditions in our business.
Item 1B. Unresolved Staff Comments
None.
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