Lumber Liquidators 2009 Annual Report Download - page 23

Federal, state or local laws and regulations, or our failure to comply with such laws and regulations, could increase our
expenses, restrict our ability to conduct our business and expose us to legal risks.
We are subject to a wide range of general and industry-specific laws and regulations imposed by federal, state and local
authorities including those related to customs, employment, wage, truth-in-advertising, consumer protection, privacy, zoning
and occupancy matters as well as the operation of retail stores and warehouse, production and distribution facilities. If we fail
to comply with these laws and regulations, we could be subject to legal risk, our operations could be impacted negatively and
our reputation could be damaged. Likewise, if such laws and regulations should change, our costs of compliance may
increase, thereby impacting our results and hurting our profitability.
Certain portions of our operations are subject to laws and regulations 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.
With regard to our products, we may spend significant time and resources to ensure compliance with applicable
advertising, importation, environmental, health and safety laws and regulations. If we should violate these laws and
regulations, we could experience delays in shipments of our goods, be subject to fines or penalties, or suffer reputational
harm, which could reduce demand for our merchandise and hurt our business and results of operations.
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 online
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 online 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.
Changes in accounting standards and subjective assumptions, estimates and judgments by management related to
complex accounting matters could significantly affect our financial results.
Generally accepted accounting principles and related accounting pronouncements, implementation guidelines and
interpretations with regard to a wide range of matters that are relevant to our business, including but not limited to, revenue
recognition, stock-based compensation, sales returns reserves, inventories, self-insurance, income taxes, unclaimed property
laws and litigation, are highly complex and involve many subjective assumptions, estimates and judgments by our
management. Changes in these rules or their interpretation or changes in underlying assumptions, estimates or judgments by
our management could significantly change our reported or expected financial performance.
Our insurance coverage and self-insurance reserves may not cover future claims.
We maintain various insurance policies for employee health, workers’ compensation, general liability and property
damage. We are self-insured on certain health insurance plans and are responsible for losses up to a certain limit for these
respective plans. We continue to be responsible for losses up to a certain limit for general liability and property damage
insurance.
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