Family Dollar 2013 Annual Report Download - page 19

penalties assessed by government agencies relating to products, including 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. Additionally, any changes in
product safety or quality legislation or regulations may lead to product recalls and the disposal or write-off of
merchandise inventories, as well as certain fines or penalties and reputational damage. Our inability to comply on
a timely basis with regulatory requirements or to execute product recalls in a timely manner, could also result in
substantial fines or penalties, which could have an adverse effect on our financial results. In addition, negative
customer perceptions regarding the safety of the products we sell could cause us to lose market share to our
competitors. If this occurs, it may be difficult for us to regain lost sales.
Adverse impacts associated with legal proceedings and claims could negatively affect our business.
We are involved in a number of legal proceedings which include employment, tort, real estate, commercial,
and other litigation. Certain of these lawsuits, if decided adversely to us or settled by us, may result in liability
material to our results of operations, financial condition and liquidity. Nationally, 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 may cause claims to rise even more. We are currently a defendant in numerous
employment cases containing class-action allegations, including those in which the plaintiffs have alleged
violations of federal and state wage and hour laws. The cost to defend these class-action lawsuits may be
significant. Plaintiffs in these types of cases 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. There also may be adverse publicity associated with litigation that could negatively
affect customer perception of our business, regardless of whether the allegations are valid or whether we are
ultimately found liable. As a result, litigation may adversely affect our business, financial condition and results of
operations. See Note 12 to the Consolidated Financial Statements included in this Report for further details
regarding certain of these pending matters.
If we are unable to secure our customers’ confidential and credit card information, or other private data
relating to our employees, suppliers or the Company, we could be subject to negative publicity, costly
government enforcement actions or private litigation, which could damage our business reputation and
adversely affect our profitability.
The protection of our customer, employee and Company data is critical to us. We have procedures and
technology in place to safeguard our customers’ debit and credit card information, our employees’ private data,
suppliers’ data, and the Company’s records and intellectual property. Despite these measures, we may be
vulnerable to, and unable to detect and appropriately respond to, data security breaches and data loss, including
cyber-security attacks. If we experience a data security breach of any kind, we could be exposed to negative
publicity, government enforcement actions, private litigation, or costly response measures. In addition, our
reputation within the business community and with our customers may be affected, which could result in our
customers discontinuing the use of debit or credit cards in our stores or not shopping in our stores altogether.
This could cause us to lose market share to our competitors and could have an adverse effect on our financial
results.
Inability to attract and retain qualified employees, particularly field, store and distribution center managers,
and to control labor costs, could adversely affect our business.
Our growth could be adversely impacted by our inability to attract and retain qualified employees at the
store operations level, in distribution facilities, in sourcing offices, and at the corporate headquarters (the “Store
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