Family Dollar 2009 Annual Report Download - page 20

In addition, we are currently implementing global sourcing programs and vendor and product quality
requirements that could negatively impact our ability to find qualified suppliers or their ability to provide
merchandise at attractive prices. These and other factors affecting our suppliers and our access to products could
affect our financial performance adversely.
We are exposed to the risk of natural disasters, unusual weather, pandemic outbreaks, war and terrorism that
could disrupt business and result in increased operating costs and capital expenditures.
Our headquarters, store locations and distribution centers, as well as certain of our vendors and customers,
are located in areas which could be subject to natural disasters such as floods, hurricanes, tornadoes or
earthquakes. Adverse weather conditions or other extreme changes in the weather, including resulting electrical
and technological failures, may disrupt our business and may adversely affect our ability to sell and distribute
products. In addition, we operate in markets that may be susceptible to pandemic outbreaks, war or terrorism.
Our business may be harmed if our ability to sell and distribute products is impacted by any such events, any of
which could influence customer trends and purchases and may negatively impact our net sales, properties or
operations. Such events could result in: physical damage to one or more of our properties; the temporary closure
of some or all of our stores or distribution centers; the temporary lack of an adequate work force in a market;
temporary or long-term disruption in the transport of goods; delay in the delivery of goods to our distribution
centers or stores; disruption of our technology support or information systems; or fuel shortages or dramatic
increases in fuel prices which increase the cost of doing business. Any of these factors, or combination thereof,
could affect our operations adversely.
Operational difficulties, including those associated with our ability to develop and operate our stores and
distribution facilities, could impact our business adversely.
Our stores are decentralized and are managed through a network of geographically dispersed management
personnel. Our inability to operate our stores effectively and efficiently, including the ability to control losses
resulting from inventory shrinkage, may negatively impact our sales or profitability.
In addition, we rely upon our distribution and logistics network to provide goods to stores in a timely and cost-
effective manner. Any disruption, unanticipated expense or operational failure related to this process could impact
our store operations negatively. We maintain a network of distribution facilities throughout our geographic territory
and build new facilities to support our growth objectives. Delays in opening distribution facilities or stores could
adversely affect our future operations by slowing the unit growth, which may in turn reduce revenue growth.
Adverse changes in the cost to operate distribution facilities and stores, such as changes in labor, utility and other
operating costs, could have an adverse impact on our financial performance. Adverse changes in our inventory
shrinkage at the store level or in distribution facilities could also impact our results negatively.
We rely on third-party shippers and carriers whose operations are outside our control, and any failure by them
to deliver products in a timely manner may damage our reputation and could cause us to lose customers.
We rely on arrangements with third-party shippers and carriers such as independent shipping companies for
timely delivery of products to stores and distribution operations throughout the country. As a result, we are
subject to carrier disruptions and increased costs due to factors that are beyond our control, including labor
strikes, inclement weather and increased fuel costs. If the services of any of these third parties become
unsatisfactory, we may experience delays in meeting our customers’ product demands and we may not be able to
find a suitable replacement on a timely basis or on commercially reasonable terms. Any failure to deliver
products in a timely manner may damage our reputation and could cause us to lose customers.
Adverse impacts associated with legal proceedings and claims could affect our business negatively.
We are a party to a variety of legal proceedings and claims incidental to our business, such as alleged
personal and property damage, and labor claims. In particular several employees have alleged the company
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