Lumber Liquidators 2008 Annual Report Download - page 25

Environmental, health and safety laws and regulations could increase the cost of doing business or restrict
our ability to conduct our business.
We are subject to a wide range of general and industry-specific environmental, health and safety and other
laws and regulations imposed by federal, state and local authorities, including those governing the use, storage,
handling, generation, treatment, emission, release, discharge and disposal of certain hazardous materials and
wastes, the remediation of contaminated soil and groundwater and the health and safety of employees. If we are
unable to extend or renew a material approval, license or permit required by such laws, or if there is a delay in
renewing any material approval, license or permit, that may cause our sales and operating results to deteriorate or
otherwise harm our business. Likewise, with regard to our products, we may spend significant time and resources
to ensure compliance with applicable environmental, health and safety laws and regulations. If we fail to comply
with these laws and regulations, we could be subject to legal risk, our operation could be impacted negatively and
our reputation could be damaged.
We have incurred and will continue to incur increased costs and risks associated with complying with
corporate governance and disclosure standards.
We completed our initial public offering in November 2007. We have spent and continue to spend a
significant amount of management time and external resources to comply with laws, regulations and standards
relating to corporate governance and public disclosure, including under the Sarbanes-Oxley Act of 2002 and
related rules of the SEC and New York Stock Exchange. Complying with these requirements has increased our
costs and made some activities more time-consuming. A number of the requirements necessitated that we carry
out activities we had not previously undertaken. In the event we identify any issues in complying with those
requirements (for example, if a material weakness was identified in our internal control over financial reporting),
we could incur additional costs rectifying those issues, and their existence could impact our reputation or investor
perceptions of us or otherwise harm our business. We are currently not aware of any material weaknesses in our
internal controls or disclosure controls. Advocacy efforts by stockholders and third parties may also prompt even
more changes in governance and reporting requirements. We cannot predict or estimate the amount of additional
costs we may incur or the timing of such costs.
We may incur costs resulting from security risks we face in connection with our electronic processing and
transmission of confidential customer information.
We accept electronic payment cards for payment in our stores and through our call center. In addition, our
on-line operations depend upon the secure transmission of confidential information over public networks,
including information permitting cashless payments. As a result, we may become subject to claims for
purportedly fraudulent transactions arising out of the actual or alleged theft of credit or debit card information,
and we may also be subject to lawsuits or other proceedings relating to these types of incidents. Further, a
compromise of our security systems that results in our customers’ personal information being obtained by
unauthorized persons could adversely affect our reputation with our customers and others, as well as our
operations, results of operations and financial condition, and could result in litigation against us or the imposition
of penalties. A security breach could also require that we expend significant additional resources related to the
security of information systems and could result in a disruption of our operations, particularly our on-line sales
operations.
Additionally, privacy and information security laws and regulations change, and compliance with them may
result in cost increases due to necessary systems changes and the development of new administrative processes.
If we fail to comply with these laws and regulations or experience a data security breach, our reputation could be
damaged, possibly resulting in lost future business, and we could be subjected to additional legal risk as a result
of non-compliance.
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