Lumber Liquidators 2011 Annual Report Download - page 63

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Lumber Liquidators Holdings, Inc.
Notes to Consolidated Financial Statements—(Continued)
(amounts in thousands, except share data and per share amounts)
The following have been excluded from the computation of Weighted Average Common Shares Outstanding—Diluted
because the effect would be anti-dilutive:
As of December 31,
2011 2010 2009
Stock Options ............................................. 845,414 287,857 10,436
Restricted Stock Awards ..................................... 9,414 — —
NOTE 11. RELATED PARTY TRANSACTIONS
The Company is party to an agreement dated June 1, 2010 with Designers’ Surplus, LLC t/a Cabinets to Go (“CTG”).
The Company’s founder is the sole member of an entity that owns a significant interest in CTG. Pursuant to the terms of the
agreement, the Company provides certain advertising, marketing and other services. The Company charges CTG for its
services at rates believed to be at fair market value. The revenue recognized by the Company from this agreement was not
significant in 2011 or 2010.
As described in Note 6, the Company leases a number of its store locations and Corporate Headquarters from ANO and
Related Companies.
NOTE 12. COMMITMENTS AND CONTINGENCIES
The Company is, from time to time, subject to claims and disputes arising in the normal course of business. In the
opinion of management, while the outcome of any such claims and disputes cannot be predicted with certainty, the ultimate
liability of the Company in connection with these matters is not expected to have a material adverse effect on the Company’s
results of operations, financial position or cash flows.
On September 3, 2009, a former store manager and an assistant store manager at that time (together, the “Plaintiffs”)
filed a putative class action suit against LLI in the Superior Court of California in and for the County of Alameda. The
Plaintiffs allege that with regard to certain groups of current and former employees in LLI’s California stores, LLI violated
California law by failing to calculate and pay overtime wages properly, provide meal breaks, compensate for unused vacation
time, reimburse for certain expenses and maintain required employment records. The Plaintiffs also claim that LLI did not
calculate and pay overtime wages properly for certain of LLI’s non-exempt employees, both in and out of California, in
violation of federal law. In their suit, the Plaintiffs seek compensatory damages, certain statutory penalties, costs, attorney’s
fees and injunctive relief.
LLI removed the case to the United States District Court for the Northern District of California. In an order dated
March 2, 2011, the court denied without prejudice the Plaintiffs’ motion for conditional class certification of non-exempt
employees throughout the country. On December 30, 2011, the Plaintiffs filed a motion for class certification of the proposed
California employee classes. The Court has not yet ruled on that motion. LLI intends to continue to defend the claims in this
suit vigorously. While there is a reasonable possibility that a material loss may be incurred, the Company cannot estimate the
loss or range of loss, if any, to the Company at this time.
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