Big Lots 2008 Annual Report Download - page 137

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BIG LOTS, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Continued)
We have purchase obligations for outstanding purchase orders for merchandise issued in the ordinary course of
our business that are valued at $410.2 million, the entirety of which represents obligations due within one year
of January 31, 2009. In addition, we have a purchase commitment for future inventory purchases totaling $167.4
million at January 31, 2009. We paid $31.5 million, $28.3 million, and $36.1 million related to this commitment
during 2008, 2007, and 2006, respectively. We are not required to meet any periodic minimum purchase
requirements under this commitment. The term of the commitment extends until the purchase requirement
is satisfied. We have additional purchase obligations in the amount of $138.8 million primarily related to
distribution and transportation, information technology, print advertising, energy procurement, and other store
security, supply, and maintenance commitments.
Litigated Matters Included in 2006 Selling and Administrative Expenses
In 2004, a civil putative collective action complaint was filed against us in United States District Court for the
Eastern District of Texas, Texarkana Division, wherein it was alleged that we had violated the Fair Labor Standards
Act regulations by misclassifying as exempt employees certain of our managers (“Texas matter”). In 2006, we
settled the Texas Matter and recorded a pretax charge of $3.2 million included in selling and administrative
expenses for the estimated settlement liability. In 2007, we paid the $3.2 million settlement amount.
In 2005, a class action complaint was served upon us for adjudication in the Superior Court of California,
Ventura County, alleging that we violated certain California wage and hour laws (“Espinosa matter”). In 2006,
we reached a court-approved tentative settlement agreement with the plaintiff concerning the Espinosa matter
and recorded a pretax charge of $6.5 million included in selling and administrative expenses. We paid the
settlement amount in 2008 and administration of the settlement concluded in the fourth quarter of 2008.
In 2006, we recorded pretax income of $2.6 million in selling and administrative expenses upon receipt of
settlement funds from the In re Visa Check/Mastermoney Antitrust Litigation matter in the United States
District Court for the Eastern District of New York. These settlement funds were intended to compensate
merchants for excessive fees paid for certain Visa and MasterCard transactions.
Note 11 — Discontinued Operations
Our discontinued operations for 2008, 2007, and 2006, were comprised of the following:
2008 2007 2006
(In thousands)
Closed stores .................................................. $ (439) $ (905) $ (2,659)
KB Toys matters ............................................... (4,928) 12,912 18,531
Total income (loss) from discontinued operations, pretax ............. $(5,367) $12,007 $15,872
Closed Stores
In 2005, we determined that the results of 130 stores closed in 2005 should be reported as discontinued
operations for all periods presented. For 2008, 2007, and 2006, the closed stores’ operating loss is comprised of
exit-related costs, utilities, and security expenses on leased properties with remaining terms and accretion on
the lease termination obligations of $0.1 million, $0.2 million and $0.4 million, respectively. The 2006 loss from
discontinued operations includes a pretax $0.7 million pension settlement charge as discussed in more detail in
note 8 to our consolidated financial statements. Additionally, in 2006, as a result of achieving a higher level of
savings on our lease termination obligation than was previously estimated, we recognized a pretax $1.3 million
reduction in the liability resulting in a partial reversal of charges incurred in 2005.
Note 10 — Commitments, Contingencies and Legal Proceedings (Continued)