Dollar General 2013 Annual Report Download - page 91

Product liability and food safety claims could adversely affect our business, reputation and financial
performance.
Despite our best efforts to ensure the quality and safety of the products we sell, we may be subject
to product liability claims from customers or actions required or penalties assessed by government
agencies relating to products, including but not limited to food products that are recalled, defective or
otherwise alleged to be harmful. Such claims may result from tampering by unauthorized third parties,
product contamination or spoilage, including the presence of foreign objects, substances, chemicals,
other agents, or residues introduced during the growing, storage, handling and transportation phases.
All of our vendors and their products must comply with applicable product and food safety laws, and
we are dependent on them to ensure that the products we buy comply with all safety standards. We
generally seek contractual indemnification and insurance coverage from our suppliers. However, if we
do not have adequate contractual indemnification or insurance available, such claims could have a
material adverse effect on our business, financial condition and results of operations. Our ability to
obtain indemnification from foreign suppliers may be hindered by the manufacturers’ lack of
understanding of U.S. product liability or other laws, which may result in our having to respond to
claims or complaints from customers as if we were the manufacturer. Even with adequate insurance
and indemnification, such claims could significantly damage our reputation and consumer confidence in
our products. Our litigation expenses could increase as well, which also could have a materially negative
impact on our results of operations even if a product liability claim is unsuccessful or is not fully
pursued.
We are subject to governmental regulations, procedures and requirements. A significant change in, or
noncompliance with, these regulations could have a material adverse effect on our financial performance.
Our business is subject to numerous and increasing federal, state and local laws and regulations.
We routinely incur significant costs in complying with these regulations. The complexity of the
regulatory environment in which we operate and the related cost of compliance are increasing due to
expanding and additional legal and regulatory requirements and increased enforcement efforts. New
laws or regulations, particularly those dealing with healthcare reform, product safety, and labor and
employment, among others, or changes in existing laws and regulations, particularly those governing the
sale of products, may result in significant added expenses or may require extensive system and
operating changes that may be difficult to implement and/or could materially increase our cost of doing
business. Untimely compliance or noncompliance with applicable regulations or untimely or incomplete
execution of a required product recall can result in the imposition of penalties, including loss of
licenses or significant fines or monetary penalties, class action litigation or other litigation, in addition
to reputational damage. Additionally, changes in tax laws, the interpretation of existing laws, or our
failure to sustain our reporting positions on examination could adversely affect our effective tax rate.
Litigation may adversely affect our business, results of operations and financial condition.
Our business is subject to the risk of litigation by employees, consumers, suppliers, competitors,
shareholders, government agencies and others through private actions, class actions, administrative
proceedings, regulatory actions or other litigation. The number of employment-related class actions
filed each year has continued to increase, and recent changes and proposed changes in Federal and
state laws, regulations and agency guidance may cause claims to rise even more. The outcome of
litigation, particularly class action lawsuits, regulatory actions and intellectual property claims, is
difficult to assess or quantify. Plaintiffs in these types of lawsuits may seek recovery of very large or
indeterminate amounts, and the magnitude of the potential loss relating to these lawsuits may remain
unknown for substantial periods of time. In addition, certain of these lawsuits, if decided adversely to
us or settled by us, may result in liability material to our financial statements as a whole or may
negatively affect our operating results if changes to our business operations are required. The cost to
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