34115--4/13/2010--CLAIRES_STORES

related topics

{debt, indebtedness, cash}

{customer, product, revenue}

{system, service, information}

{financial, litigation, operation}

{operation, natural, condition}

{stock, price, operating}

{cost, regulation, environmental}

{tax, income, asset}

{property, intellectual, protect}

{product, liability, claim}

{cost, operation, labor}

{operation, international, foreign}

{investment, property, distribution}

{acquisition, growth, future}

{personnel, key, retain}

{competitive, industry, competition}

{gas, price, oil}

{product, market, service}

Advance purchases of our merchandise make us vulnerable to changes in consumer preferences and pricing shifts and may negatively affect our results of operations. A disruption of imports from our foreign suppliers may increase our costs and reduce our supply of merchandise. Fluctuations in foreign currency exchange rates could negatively impact our results of operations. Our business depends on the willingness of vendors and service providers to supply us with goods and services pursuant to customary credit arrangements which may not be available to us in the future. The failure to grow our store base in Europe or expand our international franchising may adversely affect our business. Our cost of doing business could increase as a result of changes in federal, state, local and international regulations regarding the content of our merchandise. Recalls, product liability claims, and government, customer or consumer concerns about product safety could harm our reputation, increase costs or reduce sales. If we are unable to renew or replace our store leases or enter into leases for new stores on favorable terms, or if any of our current leases are terminated prior to the expiration of their stated term and we cannot find suitable alternate locations, our growth and profitability could be adversely harmed. Natural disasters or unusually adverse weather conditions or potential emergence of disease or pandemic could adversely affect our net sales or supply of inventory. Information technology systems changes may disrupt our supply of merchandise. If we experience a data security breach and confidential customer information is disclosed, we may be subject to penalties and experience negative publicity, which could affect our customer relationships and have a material adverse effect on our business. Changes in the anticipated seasonal business pattern could adversely affect our sales and profits and our quarterly results may fluctuate due to a variety of factors. A decline in number of people who go to shopping malls, particularly in North America, could reduce the number of our customers and reduce our net sales. Our industry is highly competitive. If the Employee Free Choice Act is adopted, it would be easier for our employees to obtain union representation and our business could be adversely impacted. Higher health care costs and labor costs could adversely affect our business. Our profitability could be adversely affected by high petroleum prices. The possibility of war and acts of terrorism could disrupt our information or distribution systems and increase our costs of doing business. We depend on our key personnel. Litigation matters incidental to our business could be adversely determined against us. Goodwill and indefinite-lived intangible assets comprise a significant portion of our total assets. We must test goodwill and indefinite-lived intangible assets for impairment at least annually or whenever events or changes in circumstances indicate that their carrying amounts may not be recoverable; which could result in a material, non-cash write-down of goodwill or indefinite-lived intangible assets and could have a material adverse impact on our results of operations. There are factors that can affect our provision for income taxes. If our independent manufacturers or franchisees or joint venture partners do not use ethical business practices or comply with applicable laws and regulations, our brand name could be harmed due to negative publicity and our results of operations could be adversely affected. We rely on third parties to deliver our merchandise and if these third parties do not adequately perform this function, our business would be disrupted. We depend on single North American and single European distribution facilities. We may be unable to protect our tradenames and other intellectual property rights. Our success depends on our ability to maintain the value of our brands. We may be unable to rely on liability indemnities given by foreign vendors which could adversely affect our financial results. We are indirectly owned and controlled by Apollo, a private equity firm, and its interests as an equity holder may conflict with the interest of our creditors. Risks Relating to Our Indebtedness Our substantial leverage could adversely affect our ability to raise additional capital to fund our operations, limit our ability to react to changes in the economy or our industry and prevent us from meeting our obligations under the Notes and Credit Facility. Despite our high indebtedness level, we and our subsidiaries are still able to incur significant additional amounts of debt, which could further exacerbate the risks associated with our substantial indebtedness. Our debt agreements contain restrictions that limit our flexibility in operating our business. We may not be able to generate sufficient cash to service all of our indebtedness, and may be forced to take other actions to satisfy our obligations under our indebtedness, which may not be successful. Repayment of our debt is dependent on cash flow generated by our subsidiaries.

Full 10-K form ▸

34115--4/13/2010--CLAIRES_STORES_INC