Big Lots 2009 Annual Report Download

Download and view the complete annual report

Please find the complete 2009 Big Lots annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 206

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80
  • 81
  • 82
  • 83
  • 84
  • 85
  • 86
  • 87
  • 88
  • 89
  • 90
  • 91
  • 92
  • 93
  • 94
  • 95
  • 96
  • 97
  • 98
  • 99
  • 100
  • 101
  • 102
  • 103
  • 104
  • 105
  • 106
  • 107
  • 108
  • 109
  • 110
  • 111
  • 112
  • 113
  • 114
  • 115
  • 116
  • 117
  • 118
  • 119
  • 120
  • 121
  • 122
  • 123
  • 124
  • 125
  • 126
  • 127
  • 128
  • 129
  • 130
  • 131
  • 132
  • 133
  • 134
  • 135
  • 136
  • 137
  • 138
  • 139
  • 140
  • 141
  • 142
  • 143
  • 144
  • 145
  • 146
  • 147
  • 148
  • 149
  • 150
  • 151
  • 152
  • 153
  • 154
  • 155
  • 156
  • 157
  • 158
  • 159
  • 160
  • 161
  • 162
  • 163
  • 164
  • 165
  • 166
  • 167
  • 168
  • 169
  • 170
  • 171
  • 172
  • 173
  • 174
  • 175
  • 176
  • 177
  • 178
  • 179
  • 180
  • 181
  • 182
  • 183
  • 184
  • 185
  • 186
  • 187
  • 188
  • 189
  • 190
  • 191
  • 192
  • 193
  • 194
  • 195
  • 196
  • 197
  • 198
  • 199
  • 200
  • 201
  • 202
  • 203
  • 204
  • 205
  • 206

THE NEXT CHAPTER
2009 ANNUAL REPORT

Table of contents

  • Page 1
    THE NEXT CHAPTER 2009 ANNUAL REPORT

  • Page 2
    ... open at end of the fiscal year OTHER SALES DATA OTHER OTHER SALES SALES DATA DATA OTHER SALES DATA Comparable store sales growth Comparable Comparable store store sales sales growth growth Comparable store sales growth Average sales per store Average Average sales sales per per store store Average...

  • Page 3
    ... for gain on sale of real estate, as described and reconciled below ($ in thousands): Gain on Sale of Real Estate In fiscal 2009, we recognized a $12,964 gain on the sale of real estate ($8,163 net of tax) related to the sale of a Company-owned and operated store in California which resulted in...

  • Page 4
    ... customers with a vibrant mix of exciting brands, unique products and closeout prices. Big Lots offers new merchandise every week at substantial savings over traditional discount retailers. Shoppers love our unexpected deals. We also carry attractive, affordable furniture, home furnishings, seasonal...

  • Page 5
    ..., today there are fewer retailers vying for locations and, in our estimation, real estate prices are becoming more appropriately valued in the marketplace. The combination of our improved performance and a softer real estate market enabled us to move into a store BIG LOTS, INC. 2009 ANNUAL REPORT

  • Page 6
    growth mode again in 2009. And the good news is we see that rate of growth accelerating in 2010 and future years. The soft real estate market also enabled us to make progress in lease renegotiations as stores came up for renewal with landlords who saw their retail vacancies soar during the recession...

  • Page 7
    ... transactions. In 2010, we will invest further in technology to provide us with the tools necessary to begin to directly market to our Rewards members based on their specific buying patterns and history. We see the Rewards program, along with our focus on improving the in-store shopping experience...

  • Page 8
    ...Store Operations Robert C. Claxton Marketing Todd A. Noethen Distribution Support Services Russell Solt former Executive Vice President & Chief Financial Officer West Marine, Inc. Norman J. Rankin Big Lots Capital & Wholesale Jared A. Poff Treasurer Robert S. Segal General Merchandise Manager...

  • Page 9
    ... be held at our corporate offices located at 300 Phillipi Road, Columbus, Ohio, on May 27, 2010, beginning at 9:00 a.m. EDT. The following pages contain the Notice of Annual Meeting of Shareholders and the Proxy Statement. You should review this material for information concerning the business to be...

  • Page 10
    ... the close of business on the record date, March 29, 2010, are entitled to notice of and to vote at the Annual Meeting and any postponement or adjournment thereof. By Order of the Board of Directors, CHARLES W. HAUBIEL II Executive Vice President, Legal and Real Estate, General Counsel and Corporate...

  • Page 11
    ...Board Meetings in Fiscal 2009 ...Role of the Board's Committees ...Audit Committee ...Compensation Committee ...Nominating / Corporate Governance Committee ...Strategic Planning Committee ...Selection of Nominees by the Board ...Majority Vote Policy...Determination of Director Independence...Related...

  • Page 12
    ... of In-Service Executive Compensation ...Employment Agreements ...Post-Termination and Change in Control Arrangements ...Indemnification Agreements ...Retirement Plans ...Our Executive Compensation Program for Fiscal 2009 ...Salary for Fiscal 2009 ...Bonus for Fiscal 2009 ...Equity for Fiscal 2009...

  • Page 13
    ...Event Occurred at 2009 Fiscal Year-End ...Steven S. Fishman ...Joe R. Cooper ...Brad A. Waite ...John C. Martin ...Lisa M. Bachmann ...PROPOSAL TWO: APPROVAL OF THE AMENDED AND RESTATED BIG LOTS 2005 LONG-TERM INCENTIVE PLAN ...Background ...Section 162(m) Approval Requirement ...Proposed Amendments...

  • Page 14
    ...Stock Options ...Stock Appreciation Rights ...Other Awards ...Section 162(m) ...Sections 280G and 4999 ...Section 83(b) ...Section 409A ...Market Value ...Equity Compensation Plan Information ...PROPOSAL THREE: APPROVAL OF THE AMENDED AND RESTATED BIG LOTS 2006 BONUS PLAN...Background ...Section 162...

  • Page 15
    ... REGISTERED PUBLIC ACCOUNTING FIRM FOR FISCAL 2010 ...SHAREHOLDER PROPOSALS ...ANNUAL REPORT ON FORM 10-K...PROXY SOLICITATION COSTS ...OTHER MATTERS ...Executive Compensation Peer Groups for Fiscal 2009 Executive Compensation ...Big Lots 2005 Long-Term Incentive Plan ...Big Lots 2006 Bonus Plan...

  • Page 16
    ... public accounting firm for the fiscal year ending January 29, 2011 ("fiscal 2010"); and (vii) transact such other business as may properly come before the Annual Meeting. Shareholder Voting Rights Only those shareholders of record at the close of business on March 29, 2010, the record date...

  • Page 17
    ... 2010 at 11:59 p.m. EDT, your common shares will be voted as you direct. If you are a registered shareholder and attend the Annual Meeting, you may deliver your completed proxy card in person. A registered shareholder may revoke a proxy at any time before it is exercised by filing with our Corporate...

  • Page 18
    ... Deloitte & Touche LLP as our independent registered public accounting firm for fiscal 2010 (see Proposal Six). If any other matter properly comes before the Annual Meeting, or if a director nominee named in this Proxy Statement is unable to serve or for good cause will not serve, the proxy holders...

  • Page 19
    ... below is certain information relating to the director nominees, including each nominee's age (as of the end of fiscal 2009), tenure as a director on the Board, current Board committee memberships, business experience and principal occupation for the past five or more years, the specific experience...

  • Page 20
    ... of West Marine, Inc. (specialty retailer and catalog company), where he also previously served as the Executive Vice President and Chief Financial Officer. Additionally, Mr. Solt previously served as the Chief Financial Officer of Venture Stores, Inc. (discount retailer) and Williams-Sonoma, Inc...

  • Page 21
    ... 11, 2006). Mr. Tener also previously served as the Chief Operating Officer of The Sports Authority (sporting goods retailer). Mr. Tener's extensive experience in senior leadership roles of other publicly-traded retailers and prior service on the board of a privately-held company make him a solid...

  • Page 22
    ... as required by NYSE rules. The functions of the Audit Committee are further described in its charter, which is available in the Investor Relations section of our website (www.biglots.com) under the "Corporate Governance" caption. The Audit Committee met eight times during fiscal 2009. Compensation...

  • Page 23
    ... / Corporate Governance Committee, Big Lots, Inc., 300 Phillipi Road, Columbus, Ohio 43228. The written notice must include the prospective nominee's name, age, business address, principal occupation, ownership of our common shares, information that would be required under the rules of the SEC in...

  • Page 24
    ... Guidelines, Code of Business Conduct and Ethics, Code of Ethics for Financial Professionals, and human resources policies address governance matters and prohibit, without the consent of the Board or the Nominating / Corporate Governance Committee, directors, officers and employees from engaging in...

  • Page 25
    ... that reports to the Nominating / Corporate Governance Committee, oversees management of risks associated with public policy, environmental and social matters that may affect our operations, performance or public image. Code of Business Conduct and Ethics & Code of Ethics for Financial Professionals...

  • Page 26
    ... restricted stock awarded to the outside directors in fiscal 2009 will vest on the earlier of (i) the trading day immediately preceding the Annual Meeting or (ii) the outside director's death or disability (as that term is defined in the 2005 Incentive Plan). However, the restricted stock will not...

  • Page 27
    ... the opening price and the closing price of our common shares on the NYSE on the grant date. As of January 30, 2010, each individual included in the table held 3,186 shares of restricted stock. Prior to fiscal 2008, the outside directors received an annual stock option award under the Big Lots, Inc...

  • Page 28
    ...Tishkoff: 0; Mr. Waite: 9,375; and all directors and executive officers as a group: 1,333,237. In its Schedule 13G filed on January 8, 2010, BlackRock, Inc., 40 East 52nd Street, New York, NY 10022, stated that it beneficially owned the number of common shares reported in the table as of December 31...

  • Page 29
    ... and reports of changes in ownership of our common shares. Executive officers, directors and greater than 10% shareholders are required by the regulations of the SEC to furnish us with copies of all Section 16(a) reports they file. Based solely upon a review of the Section 16(a) reports filed on...

  • Page 30
    ... retaining executives. Salary serves as a short-term retention tool. Bonus under the 2006 Bonus Plan is based on annual corporate financial performance and is designed primarily to retain executives on a year-to-year basis. Stock options issued under the 2005 Incentive Plan vest over four years in...

  • Page 31
    ... incentive-based executive compensation. We pay bonuses to executives under the 2006 Bonus Plan only if we meet or exceed corporate performance goals. Stock options awarded under the 2005 Incentive Plan are valuable only if the market price of our common shares exceeds the exercise price during the...

  • Page 32
    ... of financial goals that accelerate restricted stock vesting. The Committee and the other outside directors also have discretion, subject to the limitations contained in our bonus and equity plans and the executives' employment agreements, in setting named executive officers' salary, bonus...

  • Page 33
    ... its annual review of the named executive officers' total compensation. We offer all full-time employees medical and dental benefits under the Big Lots Associate Benefit Plan ("Benefit Plan"). We also offer employees at or above the vice president level, including the named executive officers, the...

  • Page 34
    ... earlier. We also pay the premiums for this long-term disability coverage and the amount necessary to hold the named executive officer harmless from the income taxes resulting from such premium payments. All employees at or above the vice president level have the option of the use of an automobile...

  • Page 35
    ... the "Salary for Fiscal 2009" and "Bonus for Fiscal 2009" sections of this CD&A for a further discussion of the salaries and payout percentages for the named executive officers for fiscal 2009. Each employment agreement requires the named executive officer to devote his or her full business time to...

  • Page 36
    ...disclosure accompanying the Pension Benefits and Nonqualified Deferred Compensation tables following this CD&A for a discussion of our retirement plans. Our Executive Compensation Program for Fiscal 2009 The Committee takes the lead in establishing executive compensation annually, but seeks approval...

  • Page 37
    ... two fiscal years; analyzed the potential payments to each EMC member upon termination of employment and change in control events; considered the parameters on executive compensation awards established by the terms of the shareholder-approved plans under which bonus and equity compensation may...

  • Page 38
    ... named executive officers under the 2006 Bonus Plan for fiscal 2009 are shown in the "Non-Equity Incentive Plan Compensation" column of the Summary Compensation Table. At its annual review in March 2009, the Committee and other outside directors approved the financial measure, corporate performance...

  • Page 39
    ... to the named executive officers in fiscal 2009 were made under the 2005 Incentive Plan and are reflected in the Grants of Plan-Based Awards in Fiscal 2009 table. The equity compensation awarded to the named executive officers for fiscal 2009 consisted of non-qualified stock options and restricted...

  • Page 40
    ... operations and financial condition increases. Specifically, the items of corporate and individual performance described in the "Performance Evaluation" section of this CD&A were the most significant factors in awarding equity to the named executive officers in fiscal 2009. The stock options awarded...

  • Page 41
    ... Accordingly, the restricted stock vested on the first trading day after we filed with the SEC our Annual Report on Form 10-K for fiscal 2009. When the Committee and the other outside directors approved the financial measures and corporate performance amount applicable to the second trigger in March...

  • Page 42
    ... named executive officers for fiscal 2009. • Mr. Fishman: (i) Fiscal 2008 earnings per common share from continuing operations-diluted was $1.89 - approximately 7.4% above our fiscal 2008 corporate operating plan and approximately 28.6% above our fiscal 2007 results; Fiscal 2008 operating profit...

  • Page 43
    ... revenues, market capitalization, net income, earnings per share, price-to-earnings ratio and shareholder return. Our human resources department provided the Committee with comparative executive compensation data it obtained from the proxy statements and other reports made public by the companies in...

  • Page 44
    ... from year to year based on the Committee's assessment of which companies we believe compete with us for talent and are similar to us in terms of operations or revenues and the continued availability of compensation information from companies previously included in either peer group. For a list of...

  • Page 45
    ... of Retainer or Salary Director Chief Executive Officer Executive Vice President Senior Vice President 4x 4x 2x 1x Shares counted toward these requirements include common shares held directly or through a broker, common shares held under the Savings Plan or Supplemental Savings Plan, unvested...

  • Page 46
    ... Executive Compensation Program for Fiscal 2010 At its meeting in March 2010, the Committee: (i) certified that a bonus was payable for fiscal 2009 under the 2006 Bonus Plan; (ii) reviewed the tally sheets and compensation history for all EMC members; (iii) reviewed internal pay equity information...

  • Page 47
    ...Chief Financial Officer; and each of our three other most highly compensated executive officers in fiscal 2009) for each of the last three fiscal years. Change in Pension Value and Nonqualified Non-Equity Deferred All Other Option Incentive Plan Compensation Earnings Compensation Awards Compensation...

  • Page 48
    ... of December 31. The change was applied prospectively, so the first plan year reflecting this change (fiscal 2008) consisted of 13 months. See Note 8 (Employee Benefit Plans) to the consolidated financial statements and the Critical Accounting Policies and Estimates - Pension section of MD&A in our...

  • Page 49
    ... Executive Compensation Program - Elements of In-Service Compensation - Bonus," "Overview of our Executive Compensation Program - Employment Agreements" and "Our Executive Compensation Program for Fiscal 2009 - Bonus for Fiscal 2009" sections of the CD&A for more information regarding the 2006 Bonus...

  • Page 50
    ... To date, we have granted only stock options and restricted stock under the 2005 Incentive Plan. Awards under the 2005 Incentive Plan may be granted to any salaried employee, consultant or advisor of Big Lots or its affiliates. The number of common shares available for grant under the 2005 Incentive...

  • Page 51
    ... the "Our Executive Compensation Program for Fiscal 2009 - Equity for Fiscal 2009" section of the CD&A. Pursuant to the terms of the 2005 Incentive Plan, the exercise price of the fiscal 2009 NQSOs is equal to an average trading price of our common shares on the grant date. We believe this method is...

  • Page 52
    ... Equity Awards at 2009 Fiscal Year-End The following table sets forth, as of the end of fiscal 2009, all equity awards outstanding under our equity compensation plans for each named executive officer. Option Awards Stock Awards Equity Incentive Plan Equity Awards: Incentive Market Plan Equity...

  • Page 53
    ... benefit payable upon retirement under the Pension Plan and the Supplemental Pension Plan was, and continues to be, equal to 1% of the average annual compensation during the participant's highest compensated five consecutive year period of employment with Big Lots multiplied by the years of service...

  • Page 54
    ... for services rendered during a plan year prior to salary reductions pursuant to Sections 401(k) or 125 of the IRC, including bonuses, incentive compensation, severance pay, disability payments and other forms of irregular payments. The table below illustrates the amount of annual benefits payable...

  • Page 55
    ..." section of the MD&A in our Form 10-K regarding the interest rate, mortality rate and other assumptions underlying the calculations in this table. Number of Years Credited Service (#) (c) Present Value of Accumulated Benefit ($) (d) Payments During Last Fiscal Year ($) (e) Name (a) Plan Name...

  • Page 56
    ...Summary Compensation Table for the prior years reported. (2) (3) (4) Potential Payments Upon Termination or Change in Control The "Rights Under Post-Termination and Change in Control Arrangements" section below addresses the rights of the named executive officers under their employment agreements...

  • Page 57
    ... and unvested) under the Supplemental Savings Plan. (See the "Nonqualified Deferred Compensation" section above for more information regarding the Supplemental Savings Plan and the named executive officers' aggregate balances under such plans at the end of fiscal 2009.) Additionally, if terminated...

  • Page 58
    ... the named executive officers' employment agreements, the 1996 Incentive Plan, the 2005 Incentive Plan and the 2006 Bonus Plan, a change in control does not include any transaction, merger, consolidation or reorganization in which we exchange, or offer to exchange, newly issued or treasury shares in...

  • Page 59
    ...below are the related Tax Gross-Up Amounts. The Tax GrossUp Amount would be paid under the terms of the named executive officer's employment agreement. The amounts shown in the "Long-Term Disability Benefit" row in the tables below represent 67% of the named executive officer's monthly salary, up to...

  • Page 60
    ... Disability Death in Control termination) Salary/Salary Continuation ($) Non-Equity Incentive Plan Compensation ($) Healthcare Coverage ($) Long-Term Disability Benefit ($) Use of Automobile/Automobile Allowance ($) Accelerated Equity Awards ($) Excise Tax Benefit ($) Total ($) 440,000 528,000...

  • Page 61
    ... Disability Death in Control termination) Salary/Salary Continuation ($) Non-Equity Incentive Plan Compensation ($) Healthcare Coverage ($) Long-Term Disability Benefit ($) Use of Automobile/Automobile Allowance ($) Accelerated Equity Awards ($) Excise Tax Benefit ($) Total ($) 520,000 624,000...

  • Page 62
    ... any fiscal year to our covered employees (i.e., our CEO and our three other highest compensated executives (excluding the principal financial officer) employed at the end of the fiscal year). However, this limit does not apply to "qualified performance-based compensation" as defined by Section 162...

  • Page 63
    ... shares that remained available for use under the predecessor 1996 Incentive Plan on December 30, 2005; plus (iii) an annual increase equal to 0.75% of the total number of issued common shares (including treasury shares) as of the start of each of our fiscal years in which the 2005 Incentive Plan...

  • Page 64
    ... performance-based compensation under Section 162(m). In order to meet Section 162(m) requirements, the 2005 Incentive Plan imposes limits on the number and type of common shares that any one participant may receive. Awards granted to a covered employee (as that term is used within Section 162...

  • Page 65
    ... to the terms of the 2005 Incentive Plan, the Committee may accelerate the vesting of stock options. A stock option shall expire no later than 10 years after the grant date. In general, a stock option expires upon the earlier of (i) its stated expiration date or (ii) one year after the participant...

  • Page 66
    ... required to make equitable adjustments that reflect equitably the effects of such changes to the participants. Such adjustments may relate to the number of our common shares available for grant, as well as to other maximum limitations under the 2005 Incentive Plan (e.g., exercise prices and number...

  • Page 67
    ... such options All employees, including all current officers who are not executive officers, as a group (5) (1) 226,000 0 226,000 1,110,000 0 0 0 0 166,500 0 0 0 159,000 2,743,400 0 0 0 2,300,500 For additional information regarding Awards made to the named executive officers during fiscal 2009 and...

  • Page 68
    ...-term or short-term gain (or loss), depending upon the holding period of the common shares. If a participant tenders previously owned common shares in payment of the NQSO exercise price, then, instead of the treatment described above, the following generally will apply: (i) a number of new common...

  • Page 69
    ...Plan also states that other means of dealing with these penalties will be applied if required by the terms of another written agreement (whether currently in effect or adopted in future) with us or any of our subsidiaries (such as an employment or a change in control agreement). Each named executive...

  • Page 70
    ... Revenue Service). Market Value On March 29, 2010, the closing price of our common shares traded on the NYSE was $37.32 per share. Equity Compensation Plan Information The following table summarizes information as of January 30, 2010, the end of fiscal 2009, relating to our equity compensation plans...

  • Page 71
    ... on May 30, 2008. The number of common shares available for issuance under the 2005 Incentive Plan is adjusted annually by adding 0.75% of the total number of issued common shares (including treasury shares) as of the start of each of our fiscal years that the 2005 Incentive Plan is in effect...

  • Page 72
    ...the payout percentages at the time that the financial measures and corporate performance amounts are established. The minimum payout percentages for target and stretch bonus opportunities for the named executive officers have been established in their respective employment agreements, and the payout...

  • Page 73
    ... therefore cannot be determined at this time. The annual bonuses paid under the 2006 Bonus Plan to the named executive officers for fiscal 2007, fiscal 2008 and fiscal 2009 are set forth in the "Non-Equity Incentive Plan Compensation" column of the Summary Compensation Table in this Proxy Statement...

  • Page 74
    ... "Governance - Majority Vote Policy" section of this Proxy Statement for more information regarding the Policy). Prior to 2008, Ohio law required Ohio corporations to use a plurality voting standard for director elections. Under a plurality voting standard, the nominees receiving the greatest number...

  • Page 75
    ... as a director at a meeting of shareholders by delivering a written notice of nomination to our principal executive offices not later than the 90th day nor earlier than the 130th day prior to the first anniversary of our previous year's annual meeting. If the date of the annual meeting is more...

  • Page 76
    ... full text of the Audit Committee's charter is available in the Investor Relations section of our website (www.biglots.com) under the "Corporate Governance" caption. The Audit Committee regularly reviews its responsibilities as outlined in its charter, prepares an annual agenda to include all of its...

  • Page 77
    ... meeting. Fees Paid to Independent Registered Public Accounting Firm The fees billed to us for the professional services rendered by Deloitte & Touche LLP during the two most recently completed fiscal years were as follows: ($ in thousands) Fiscal 2009 ($) Fiscal 2008 ($) Audit Fees Audit-Related...

  • Page 78
    ... may also receive a copy of our Form 10-K without charge by writing to: Investor Relations, Big Lots, Inc., 300 Phillipi Road, Columbus, Ohio 43228-5311. Our Form 10-K may also be accessed in the Investor Relations section of our website (www.biglots.com) under the "SEC Filings" caption. - 63 -

  • Page 79
    ... shares represented by proxies returned to us will be voted on such matter in accordance with the recommendations of the Board. By order of the Board of Directors, CHARLES W. HAUBIEL II Executive Vice President, Legal and Real Estate, General Counsel and Corporate Secretary April 13, 2010 Columbus...

  • Page 80
    ... Fiscal 2009 Executive Compensation The retailer-only peer group was comprised of the following companies: 99 Cents Only Stores Abercrombie & Fitch Bed Bath & Beyond BJ's Wholesale Club Dick's Sporting Goods Dollar Tree DSW Family Dollar Fred's Jo-Ann Stores Limited Brands Pier 1 Imports RadioShack...

  • Page 81
    ...athletica usa Luxottica Retail US Macy's Marathon Oil Corporation Mary Kay Mattel maurices McDonald's Corporation Meijer Mervyns Michaels Stores Miles Kimball Company Nash-Finch National Vision Navy Exchange Service Command Neiman Marcus Group New York & Company Nike Nordstrom Office Depot OfficeMax...

  • Page 82
    ... of Section 13(d) of the Exchange Act) becomes the beneficial owner of, or has the right to acquire (by contract, option, warrant, conversion of convertible securities or otherwise), 20 percent or more of the outstanding equity securities of the Company entitled to vote for the election of directors...

  • Page 83
    ... purpose of the Plan. 2.10 "Company" means Big Lots, Inc., an Ohio corporation. 2.11 "Covered Employee" means a Participant whose compensation in the year of the expected payment of an Award will be subject to Code §162(m). 2.12 "Disability" means: (1) With respect to ISOs, as that term is defined...

  • Page 84
    ...the Big Lots 2005 Long-Term Incentive Plan, as herein amended and restated and as may be further amended from time to time. 2.27 "Restatement Date" means May 27, 2010 May 29, 2008, the date of the Company's 2010 2008 Annual Meeting of Shareholders. 2.28 "Restricted Stock" means Common Shares granted...

  • Page 85
    ...) as of the start of each of the Company's fiscal years (currently comprised of a 52/53-week period which ends on the Saturday nearest to January 31) that the Plan is in effect (including Common Shares exchanged when exercising Options), plus (4) effective on the Restatement Date, 2,100,000 newly...

  • Page 86
    ... below in this Section 4.7. The adjustments or substitutions may relate to the number of Common Shares available for Awards under the Plan, the number of Common Shares covered by outstanding Awards, the exercise price per share of outstanding Awards and any other characteristics or terms of the...

  • Page 87
    ... in Section 4.5, the Committee may grant Options to Participants at any time during the term of the Plan. However: (1) No Option intended to be an ISO may be granted more than seven years after the Effective Date. (2) Only a person who is a common-law employee of the Company or an Affiliate on...

  • Page 88
    ...year after Termination of Employment or the expiration date specified in the Award Agreement. ARTICLE VIII RESTRICTED STOCK/RESTRICTED STOCK UNITS 8.1 Restricted Stock. Except as provided in Section 4.4, the Committee may grant Restricted Stock to Participants at any time during the term of the Plan...

  • Page 89
    ...The Committee may require a Participant to pay a stipulated purchase price for each share of Restricted Stock. 8.2 Restricted Stock Units. Except as provided in Section 4.4, the Committee may grant Restricted Stock Units to Participants at any time during the term of the Plan. Restricted Stock Units...

  • Page 90
    ... to be applied and the Performance Period (which may not be shorter than 12 fiscal periods (which may consist of a four or five week period) of the Company except for the inaugural Performance Period in the case of an employee who first becomes a Participant after the beginning of a fiscal year of...

  • Page 91
    ... "EBITDA"); or (14) Any other objective and specific income (loss) category or non-GAAP financial measure that appears as a line item in the Company's filings with the Securities and Exchange Commission or the annual report to shareholders; or (15) Either of items (1) or (2) on a basic basis and any...

  • Page 92
    ... to the period of service to which the performance goal relates whether or not such information is included in the Company's filings, annual report to shareholders, proxy statement or notice of annual meetings of shareholders; or (25) Total shareholder return ranking position meaning the relative...

  • Page 93
    ... continues to be counted against the maximum number of shares for which Options may be granted to the Covered Employee under the Plan. (3) For Performance Unit Awards that are intended to be "qualified performance-based compensation" (as that term is used in Code §162(m)) no more than $6,000,000...

  • Page 94
    ... the Company's policy for determining specified employees, on the date of his or her "separation from service" (as that phrase is used for purposes of Code §409A), all Awards subject to Code §409A shall be paid, distributed or settled, as applicable, on the first business day of the seventh month...

  • Page 95
    ... approval to the extent required by the rules of the New York Stock Exchange or other national securities exchange or market that regulates the securities of the Company. 13.2 Unfunded Status of Plan. It is intended that the Plan be an "unfunded" plan for incentive compensation. The Committee may...

  • Page 96
    ... for Awards Granted by Other Corporations. Awards may be granted under the Plan from time to time in substitution for awards held by employees, directors or service providers of other corporations who are about to become officers or employees of the Company or an Affiliate (and will be eligible to...

  • Page 97
    ... accelerate the time or schedule of distribution, exercise or settlement of an Award to a Participant to pay an amount the Participant includes in income as a result of the Plan failing to meet the requirements of Code §409A and the Treasury Regulations promulgated thereunder. Such payment may not...

  • Page 98
    ... shareholders, hereby amended and restated a second time, effective May 27, 2010 (the "Restatement Effective Date"). 2. PURPOSE 2.01. The Plan is designed to: (a) assist the Company and its Affiliates in attracting, retaining and motivating employees; (b) align Participants' interests with those of...

  • Page 99
    ... means prepaying a Bonus before the date of current payment in Section 6.02 and subjects the prepayment (or a portion thereof) to possible return to the Company. 3.12. "Covered Associate" means any Participant who is expected to be a "covered employee" (in the Fiscal Year the Bonus is expected to be...

  • Page 100
    ... in writing of this determination, prior to the end of the Performance Period, the The Participant shall forfeit all rights to a Bonus unless the Participant is employed by the Company or an Affiliate on the day on which payments determined under Section 6.02 are in fact made (or would have...

  • Page 101
    ... Fiscal Year or some portion thereof) or, if earlier, 90 days after the beginning of the applicable Performance Period or such earlier date as required under IRC section...Covered Associates. Such pre-established performance measures must state, in terms of an objective formula or standard, the method ...

  • Page 102
    ...meaning of IRC section 409A) or (b) the 15th day of the third month following the end of the first taxable year of the service recipient (within the meaning of IRC section 409A) in which such Bonus is no longer subject to a substantial risk of forfeiture. 6.03. Conditional Payment. The Committee may...

  • Page 103
    6.04 Deferred Payment. (a) Highly Compensated Employees. If a Participant in this Plan is a highly compensated employee who participates in the Big Lots, Inc. Amended and Restated Supplemental Savings Plan (the "Top Hat Plan"), as it may be amended and restated from time to time, elections to defer ...

  • Page 104
    ...each succeeding Fiscal Year following the year during which the first anniversary of the date of Termination of employment occurs. (vi) Six-Month Distribution Delay. Notwithstanding any other provision of the Plan, if the Participant is a "specified employee" (within the meaning of IRC section 409A...

  • Page 105
    ... under the Plan in accordance with Treasury Regulation §1.409A-3(j)(4)(ix)(B); provided that all agreements, methods, programs and other arrangements sponsored by the Company and all Affiliates immediately after the time of a Change of Control with respect to which deferrals of compensation are...

  • Page 106
    ... the circumstances specified in Section 6.04(b)(x) above. 11. TAX WITHHOLDING 11.01. The Company or the employing Affiliate shall have the right to deduct from all cash payments any federal, state, or local taxes or other withholding amounts required by law or valid court order to be withheld with...

  • Page 107
    ...and the time limits applicable to such procedure and a statement of the claimant's right to bring a civil action under §502(a) of the Employee Retirement Income Security Act of 1974, as amended ("ERISA"), following an adverse determination upon review. If special circumstances require the extension...

  • Page 108
    ... (loss) category or non-GAAP financial measure that appears as a line item in the Company's periodic filings with the Securities and Exchange Commission or the annual report to shareholders; Any of items (c) through (n) on a weighted average common shares outstanding basis; Any of items (a) through...

  • Page 109
    ...respect to the period of service to which the performance goal relates whether or not such information is included in the Company's SEC periodic filings, annual report to shareholders, proxy statement or notice of annual meetings of shareholders; Total shareholder return ranking position meaning the...

  • Page 110
    ... as described in ASC 718 - Compensation - Stock Compensation and ASC 505-50 Equity-Based Payments to Non-Employees (formerly SFAS No. 123R), as amended, revised or superseded; (qq) Any gain or loss as reported as a component of other comprehensive income as described in ASC 220 - Comprehensive...

  • Page 111
    ...the number of directors to be elected and with respect to which no shareholder has submitted to the corporation notice of an intent to nominate a candidate for election as a director at such meeting in accordance with the corporation's Code of Regulations, as it may be amended from time to time (the...

  • Page 112
    ...business days after the record date for such meeting of the class and number of shares of the corporation beneficially owned by such shareholder and such beneficial owner on such record date, (IV) any other information relating to such shareholder and beneficial owner, if any, that would be required...

  • Page 113
    ... Section 1.07, "public announcement" shall mean disclosure in a press release reported by a national news service or in a document publicly filed by the corporation with the U. S. Securities and Exchange Commission pursuant to Section 13, 14 or 15(d) of the Exchange Act and the rules and regulations...

  • Page 114
    ... of proposals in the corporation's proxy statement pursuant to Rule 14a-8 under the Exchange Act by satisfying the notice and other requirements of Rule 14a-8 in lieu of satisfying the requirements of this Section 1.07. II. Section 1.07 of the Code of Regulations would be renumbered Section 1.08 and...

  • Page 115
    ... STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-K ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended January 30, 2010 Commission file number 1-8897 (Exact name of registrant as specified in its charter) BIG LOTS...

  • Page 116
    ... Accountants on Accounting and Financial Disclosure ...Controls and Procedures...Other Information ...PART III Directors, Executive Officers and Corporate Governance ...Executive Compensation ...Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters ...Certain...

  • Page 117
    ...broadline closeout retailing by providing our customers with great savings on brand-name closeouts and other value-priced merchandise. You can locate us on the Internet at www.biglots.com. The contents of our websites are not part of this report. Similar to many other retailers, our fiscal year ends...

  • Page 118
    ...Real Estate The following table compares the number of our stores in operation at the beginning and end of each of the last five fiscal years: 2009 2008 2007 2006 2005 Stores open at the beginning of the year ...Stores opened during the year ...Stores closed during the year...Stores open at the end...

  • Page 119
    ... retail locations from our five regional distribution centers located in Pennsylvania, Ohio, Alabama, Oklahoma and California. Some of our vendors deliver merchandise directly to our stores. We previously operated two furniture distribution centers located in Redlands, California and Columbus, Ohio...

  • Page 120
    ... addition to Buzz Club, in August of 2009, we started our Buzz Club Rewards program ("Rewards"), which has grown to 1.2 million members at the end of fiscal 2009. Members of the Rewards program use a membership card when making purchases and earn discounts on future purchases when they meet certain...

  • Page 121
    ...MD&A, in this Form 10-K. Available Information We make available, free of charge, through the "Investor Relations" section of our website (www.biglots.com) under the "SEC Filings" caption, our Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, and amendments to...

  • Page 122
    ... of new information, future events, or otherwise. You are advised, however, to consult any further disclosures we make on related subjects in our Quarterly Reports on Form 10-Q and Current Reports on Form 8-K filed with the SEC. Also note that we provide the following cautionary discussion of risks...

  • Page 123
    .... The economies of four states (Ohio, Texas, California, and Florida) are particularly important as approximately 36% of our current stores operate in these states and 38% of our 2009 net sales occurred in these states. Changes by vendors related to the management of their inventories may reduce...

  • Page 124
    ...usually requires us to order merchandise and enter into purchase order contracts for the purchase and manufacture of such merchandise well in advance of the time these products are offered for sale. As a result, we may experience difficulty in responding to a changing retail environment, which makes...

  • Page 125
    ... States Code. Based on information we have received subsequent to the December 11, 2008 bankruptcy filing, we believe we may have indemnification and guarantee obligations ("KB-II Bankruptcy Lease Obligations") with respect to 31 KB Toys store leases and a lease for a former KB corporate office...

  • Page 126
    ... of our sales growth strategy is to open new store locations. If we are not able to negotiate favorable new store leases and lease renewals, our financial position, results of operations, and liquidity may be negatively affected. If we are unable to secure customer, employee, and company data, our...

  • Page 127
    ... we were previously leasing. The 54 owned stores are located in the following states: State Stores Owned Arizona ...California ...Colorado...Florida ...Louisiana ...New Mexico...Ohio ...Texas ...Total ... 3 39 3 2 1 2 1 3 54 Store leases generally obligate us for fixed monthly rental payments plus...

  • Page 128
    ... option. The information includes stores with more than one lease and leases for stores not yet open. It excludes 16 month-tomonth leases and 54 owned locations. Expiring Leases Leases Without Options Fiscal Year: 2010 ...2011 ...2012 ...2013 ...2014 ...Thereafter ...Warehouse and Distribution...

  • Page 129
    ... Risk Management Senior Vice President, Merchandise Planning/Allocation and Chief Information Officer Senior Vice President, Store Operations Senior Vice President, Marketing Senior Vice President and Chief Financial Officer Senior Vice President, Legal and Real Estate, General Counsel and Corporate...

  • Page 130
    ..., Inc. (retailer). PART II ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES Our common shares are listed on the New York Stock Exchange ("NYSE") under the symbol "BIG." The following table reflects the high and low sales prices per...

  • Page 131
    ... are used for general corporate purposes including the issuance of shares related to employee benefit plans. The following table sets forth information regarding our repurchase of our common shares during the fourth fiscal quarter of 2009: (In thousands, except price per share data) (c) Total Number...

  • Page 132
    ...Jan06 Jan07 Jan08 Jan09 Jan10 Big Lots, Inc. S&P 500 Index S&P 500 Retailing Index Indexed Returns Years Ended Base Period January 2005 Company / Index January 2006 January 2007 January 2008 January 2009 January 2010 Big Lots, Inc...S&P 500 Index ...S&P 500 Retailing Index ... $100.00 100...

  • Page 133
    ... financial statements and related notes included herein. 2009 (In thousands, except per share amounts and store counts) 2008 (b) Fiscal Year (a) 2007 (c) 2006 (b)(d) 2005 Net sales...$4,726,772 Cost of sales (exclusive of depreciation expense shown separately below) ...2,807,466 Gross margin...

  • Page 134
    ... and certain risk factors that may have a material effect on our business, financial condition, results of operations, and/or liquidity. Our fiscal year ends on the Saturday nearest to January 31, which results in some fiscal years with 52 weeks and some with 53 weeks. Fiscal years 2009, 2008 and...

  • Page 135
    ... (see note 10 to the accompanying consolidated financial statements for additional information on this matter). Gain on sale of real estate in 2009 was $13.0 million (30 basis points), pretax, for a company-owned and operated store in California sold at a gain. Selling and administrative expenses...

  • Page 136
    ... more real estate available for us at prices that are more appropriate for our financial model and return on capital requirements. Given the strength of our financial performance we are in a better position to open new stores and take advantage of the current real estate market conditions. In 2010...

  • Page 137
    ... approximately half of the merchandise available for sale to our customers. Manufacturers and vendors have excess merchandise for a number of different reasons including retailers canceling orders, retailers going out of business, marketing or packaging changes, a new product launch that has failed...

  • Page 138
    .... We continue to market to our Buzz Club members, by offering a free online membership and alerting them to new merchandise and offerings in our stores. Additionally, in 2009, we launched our Rewards program which is the first true loyalty card program in the Company's history. After enrolling in...

  • Page 139
    ... grow our store base in 2009 for the first time in the last five years. We opened 52 new stores and closed 30 stores in 2009. The majority of our new store openings (41) were what we refer to as traditional stores, which are secondary or tertiary real estate normally located in retail strip centers...

  • Page 140
    ...the open market and/or in privately negotiated transactions at our discretion, subject to market conditions and other factors. Common shares acquired through the 2010 Repurchase Program will be available to meet obligations under equity compensation plans and for general corporate purposes. The 2010...

  • Page 141
    ... stores that were open for at least two fiscal years as of the beginning of the current fiscal year. This calculation may not be comparable to other retailers who calculate comparable store sales based on other methods or criteria. The average number of stores in operation throughout 2009 and 2008...

  • Page 142
    ...in distribution and outbound transportation costs and a $6.1 million decrease in advertising expenses. The increase in store occupancy expenses is primarily due to higher rents and real estate taxes related to the leases of the 73 new stores opened in 2009 and 2008. The increase in employee benefits...

  • Page 143
    ... acquisition of our common shares under our publicly announced share repurchase programs which were completed in 2008. In 2009, cash flow provided by operations was sufficient to repay the borrowings under the 2009 Credit Agreement in the fourth fiscal quarter. Our average effective interest rate of...

  • Page 144
    ... as the Labor Day mattress promotion. The Home category net sales consistently underperformed throughout the year continuing a trend which began in the first half of 2007. We believe our customers elected to defer purchases of this type of merchandise. The Other category sales decline is primarily...

  • Page 145
    ...2008, the integration of our Ohio furniture distribution operation into four of our regional distribution centers. Partially offsetting these favorable distribution and outbound transportation costs was the impact of higher diesel fuel prices. Store payroll is lower due to fewer stores and employees...

  • Page 146
    ... 130 closed stores of $0.6 million, net of tax, related to expenses on the portion of the 130 stores where the leases have not been terminated. Capital Resources and Liquidity On April 28, 2009, we entered into the 2009 Credit Agreement, a new $500 million three-year unsecured credit facility that...

  • Page 147
    ... 2009 Credit Agreement. Our net income and cash provided by operations are impacted by net sales volume, seasonal sales patterns, and operating profit margins. Our net sales are typically highest during the Christmas selling season (during our fourth fiscal quarter). Generally, our working capital...

  • Page 148
    ...the open market and/or in privately negotiated transactions at our discretion, subject to market conditions and other factors. Common shares acquired through the 2010 Repurchase Program will be available to meet obligations under equity compensation plans and for general corporate purposes. The 2010...

  • Page 149
    ... for retail store, data center, office, and warehouse space operating leases are $687.6 million. For a further discussion of leases, see note 5 to the accompanying consolidated financial statements. Many of the store lease obligations require us to pay for our applicable portion of CAM, real estate...

  • Page 150
    ... only make the minimum required contributions (see note 8 to the accompanying consolidated financial statements for additional information about our employee benefit plans). We have estimated the payments due by period for the nonqualified deferred compensation plan based on an average of historical...

  • Page 151
    ... method. Market is determined based on the estimated net realizable value, which generally is the merchandise selling price at or near the end of the reporting period. The average cost retail inventory method requires management to make judgments and contains estimates, such as the amount and timing...

  • Page 152
    ... number and terms of future stock option awards and many estimates, judgments and assumptions used in arriving at the fair value of stock options. Future share-based compensation expense related to performance-based non-vested restricted stock and stock options may vary materially from the currently...

  • Page 153
    ... mix. While the studies give appropriate consideration to recent plan performance and historical returns, the assumption is primarily a long-term, prospective rate of return. The weighted average discount rate used to determine the net periodic pension cost for 2009 was 7.3%. A 1.0% decrease in the...

  • Page 154
    ...financial statements. ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK We are subject to market risk from exposure to changes in interest rates on investments and on borrowings under the 2009 Credit Agreement that we make from time to time. We had no borrowings at January 30, 2010...

  • Page 155
    ... with the standards of the Public Company Accounting Oversight Board (United States), the consolidated financial statements and financial statement schedule as of and for the year ended January 30, 2010, of the Company, and our report dated March 30, 2010, expressed an unqualified opinion on...

  • Page 156
    ... Inc. Columbus, Ohio We have audited the accompanying consolidated balance sheets of Big Lots, Inc. and subsidiaries (the "Company") as of January 30, 2010 and January 31, 2009, and the related consolidated statements of operations, shareholders' equity, and cash flows for each of the three years in...

  • Page 157
    BIG LOTS, INC. AND SUBSIDIARIES Consolidated Statements of Operations (In thousands, except per share amounts) 2009 2008 2007 Net sales ...Cost of sales (exclusive of depreciation expense shown separately below) ...Gross margin ...Selling and administrative expenses ...Depreciation expense...Gain ...

  • Page 158
    ......Accrued operating expenses...Insurance reserves ...KB bankruptcy lease obligation ...Accrued salaries and wages ...Income taxes payable ...Total current liabilities ...Deferred rent ...Insurance reserves ...Unrecognized tax benefits...Other liabilities ...Shareholders' equity: Preferred shares...

  • Page 159
    ...of stock options...788 - (788) 17,530 (6,670) - - 10,860 Restricted shares awarded...2 - (2) 40 (40) - - - Net tax benefit from share-based awards ...- - - 4,590 - - 4,590 Sale of treasury shares used for deferred compensation plan...13 - (13) 95 257 - - 352 Share-based employee compensation expense...

  • Page 160
    ... facility ...Payment of capital lease obligations ...Proceeds from the exercise of stock options ...Excess tax benefit from share-based awards ...Payment for treasury shares acquired ...Deferred bank credit facility fees paid ...Treasury shares sold for deferred compensation plan ...Net cash used in...

  • Page 161
    ... by providing our customers with great savings on brand-name closeouts and other value-priced merchandise. You can locate us on the Internet at www.biglots.com. The contents of our websites are not part of this report. Basis of Presentation The consolidated financial statements include Big Lots, Inc...

  • Page 162
    ... and all fiscal year-to-date purchase activity specific to each merchandise department. Under the average cost retail inventory method, permanent sales price markdowns result in cost reductions in inventory. Our permanent sales price markdowns are typically related to end of season clearance events...

  • Page 163
    ... 40 years 5 years 5 years 5 - 15 years 5 years 3 - 7 years 3 years Leasehold improvements are amortized on a straight-line basis using the shorter of their estimated service lives or the lease term. Because the majority of our leasehold improvements are placed in service at the time we open a store...

  • Page 164
    ...based on historical estimates of our sales migration upon opening or closing a store in a similar market. For purposes of reporting closed stores as discontinued operations, we report net sales, gross margin, and related operating costs that are directly related to and specifically identifiable with...

  • Page 165
    ...to measure defined benefit plan assets and obligations as of the date of our year-end consolidated balance sheet. Previously, our Pension Plan and Supplemental Pension Plan each had a measurement date of December 31. Switching to the new measurement date required one-time adjustments of $0.1 million...

  • Page 166
    BIG LOTS, INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements (Continued) Note 1 - Summary of Significant Accounting Policies (Continued) date and expected to be available during the period to maturity of the benefits. This process includes a review of the bonds available on the ...

  • Page 167
    ... at the time the customer takes possession of the merchandise. Sales are recorded net of discounts and estimated returns and exclude any sales tax. The reserve for merchandise returns is estimated based on our prior return experience. We sell gift cards in our stores and issue merchandise credits...

  • Page 168
    ... years beyond the end of their original issuance month. The liability for the unredeemed cash value of gift cards and merchandise credits is recorded in accrued operating expenses. We offer price hold contracts on merchandise. Revenue for price hold contracts is recognized when the customer makes...

  • Page 169
    ...-average number of shares outstanding during each period and the additional dilutive effect of stock options and non-vested restricted stock awards, calculated using the treasury stock method. Store Pre-opening Costs Pre-opening costs incurred during the construction periods for new store openings...

  • Page 170
    ... of operations, or liquidity. Employee Benefit Plans Effective January 30, 2010, we adopted guidance under ASC 715, Compensation-Retirement Benefits (FSP SFAS 132(R)-1, Employers' Disclosures about Postretirement Benefit Plan Assets). This guidance requires the disclosure of additional information...

  • Page 171
    ...each store with two years of negative cash flows, we obtain future cash flow estimates based on operating performance estimates specific to each store's operations that are based on assumptions currently being used to develop our company level operating plans. If the net book value of a store's long...

  • Page 172
    ... balance sheet as of January 31, 2009. In the third fiscal quarter of 2009, after attempts to further extend the lease term were unsuccessful, we closed the store, ending our continuing involvement with this property, and recognized a pretax gain on sale of real estate of $13.0 million. 56

  • Page 173
    ... $235,300 Future minimum rental commitments for leases, excluding closed store leases, real estate taxes, CAM, and property insurance, at January 30, 2010, were as follows: Fiscal Year (In thousands) 2010 ...2011 ...2012 ...2013 ...2014 ...Thereafter ...Total leases ... $195,739 163,908 128,004 96...

  • Page 174
    ... on the average share price between the contractually specified price inception date of the GSR and the final settlement date. The forward contract effectively placed a collar around the minimum and maximum number of our common shares that we purchased under the GSR. We were not required to make any...

  • Page 175
    ... programs are held in treasury, at cost and are available to meet obligations under equity compensation plans and for general corporate purposes. Note 7 - Share-Based Plans Our shareholders initially approved our existing equity compensation plan, the Big Lots 2005 Long-Term Incentive Plan ("2005...

  • Page 176
    BIG LOTS, INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements (Continued) Note 7 - Share-Based Plans (Continued) The weighted-average fair value of options granted and assumptions used in the option pricing model for each of the respective periods were as follows: 2009 2008 2007 ...

  • Page 177
    BIG LOTS, INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements (Continued) Note 7 - Share-Based Plans (Continued) The number of stock options expected to vest was based on our annual forfeiture rate assumption. A summary of the non-vested restricted stock activity for fiscal years 2007, ...

  • Page 178
    ... employment as our Chairman, Chief Executive Officer and President in 2005 vested in one-third increments upon the attainment of mutually agreed common share price targets. In 2006, the first common share price target was achieved and one-third of this award vested. During the first fiscal quarter...

  • Page 179
    ... of combined annual service cost and interest cost for each year. Weighted-average assumptions used to determine net periodic pension expense were: 2009 2008 2007 Discount rate ...Rate of increase in compensation levels...Expected long-term rate of return ...Measurement date for plan assets and...

  • Page 180
    ... of year ...Service cost ...Interest cost ...Service and interest cost during gap period ...Benefits and settlements paid...Actuarial loss (gain) ...Projected benefit obligation at end of year...Change in plan assets: Fair market value at beginning of year...Actual return on plan assets ...Employer...

  • Page 181
    ... Pension Plan and the Supplemental Pension Plan benefits expected to be paid in each of the following fiscal years are as follows: Fiscal Year (In thousands) 2010 ...2011 ...2012 ...2013 ...2014 ...2015 - 2019 ... $ 4,647 4,911 5,117 5,179 5,475 $28,420 The company's overall investment strategy is...

  • Page 182
    ...expected market conditions. They additionally have the authority to invest in financial futures contracts and financial options contracts for the purposes of implementing hedging strategies. There were no futures contracts owned by the Pension Plan at January 30, 2010 or January 31, 2009. The return...

  • Page 183
    ... tax rate was as follows: 2009 2008 2007 Statutory federal income tax rate ...Effect of: State and local income taxes, net of federal tax benefit ...Work opportunity tax and other employment tax credits ...Net benefit recognized for prior year tax uncertainties ...Valuation allowance ...Municipal...

  • Page 184
    ...: State net operating loss carryforwards ...California enterprise zone credits...Texas business loss credits ...New Jersey alternative minimum tax credits ...Total income tax loss and credit carryforwards ... $1,704 485 292 35 $2,516 Expires fiscal years 2014 through 2025 No expiration date Expires...

  • Page 185
    ... upon the exercise of nonqualified stock options and the vesting of restricted stock. Tax benefits of $0.6 million in 2009, $4.6 million in 2008, and $19.8 million in 2007 were credited directly to shareholders' equity related to share-based compensation deductions in excess of expense recognized...

  • Page 186
    ...costs. On January 21, 2010, a stipulation was filed and Order rendered limiting this action to current and former assistant store managers working in our New York stores. We intend to vigorously defend ourselves against the allegations levied in this lawsuit. We cannot make a determination as to the...

  • Page 187
    ... by the plaintiff until February 2009, when we were served with a writ of execution of judgment. We have filed a petition for a bill of review with the State Court. Since that time, the Federal Court issued an order reflecting that the January 2000 order was a summary judgment with prejudice in our...

  • Page 188
    ... 2007, 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, $0.1 million, and $0.2 million, respectively. At fiscal year end 2009, 2008, and...

  • Page 189
    ... this location is remote. We recorded a charge of $1.2 million, pretax in income (loss) from discontinued operations primarily related to our remaining liability for the former KB corporate office. At fiscal year end 2009 and 2008, we had accrued in total for the KB-II Bankruptcy Lease Obligations...

  • Page 190
    ..., mattresses, ready-to-assemble, and case goods departments. Case goods consist of bedroom, dining room, and occasional furniture. The Hardlines category includes the electronics, appliances, tools, and home maintenance departments. The Seasonal category includes the lawn & garden, Christmas, summer...

  • Page 191
    ... 13 - Selected Quarterly Financial Data (Unaudited) Summarized fiscal quarterly financial data for 2009 and 2008 is as follows: Fiscal Year 2009 (In thousands, except per share amounts) (a) First Second Third Fourth Year Net sales ...Gross margin ...Income from continuing operations ...Income (loss...

  • Page 192
    ..., subject to market conditions and other factors. Common shares acquired through the 2010 Repurchase Program will be available to meet obligations under equity compensation plans and for general corporate purposes. The 2010 Repurchase Program will continue until exhausted. ITEM 9. CHANGES IN AND...

  • Page 193
    ... MATTERS Equity Compensation Plan Information The following table summarizes information as of January 30, 2010, relating to our equity compensation plans pursuant to which our common shares may be issued. Number of securities remaining available for future issuance under equity compensation plans...

  • Page 194
    ..., 2005. The Director Stock Option Plan terminated on May 30, 2008. The number of common shares available for issuance under the 2005 Incentive Plan is adjusted annually by adding 0.75% of the total number of issued common shares (including treasury shares) as of the start of each of our fiscal years...

  • Page 195
    ...Form 10-Q for the quarter ended May 3, 2008). Form of Non-Qualified Stock Option Grant Agreement under the Big Lots, Inc. 1996 Performance Incentive Plan (incorporated herein by reference to Exhibit 10.2 to our Form 8-K dated September 9, 2004). Big Lots 2005 Long-Term Incentive Plan, as amended and...

  • Page 196
    ... 10.10 Form of Big Lots 2005 Long-Term Incentive Plan Restricted Stock Award Agreement for Outside Directors (incorporated herein by reference to Exhibit 10.3 to our Form 8-K dated May 29, 2008). Big Lots, Inc. Amended and Restated Director Stock Option Plan (incorporated herein by reference...

  • Page 197
    ...quarter ended November 1, 2008). Credit Agreement among Big Lots Stores, Inc., as borrower, the Guarantors named therein, and the Banks named therein (incorporated herein by reference to Exhibit 10.1 to our Form 8-K dated April 30, 2009). Security Agreement between Big Lots Stores, Inc. and Big Lots...

  • Page 198
    ... thereunto duly authorized, on this 30th day of March 2010. BIG LOTS, INC. By: /s/ Steven S. Fishman Steven S. Fishman Chairman of the Board, Chief Executive Officer and President Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following...

  • Page 199
    .... Big Lots Online LLC Big Lots Stores, Inc. BLSI Property, LLC Capital Retail Systems, Inc. Closeout Distribution, Inc. Consolidated Property Holdings, Inc. CSC Distribution, Inc. C.S. Ross Company Durant DC, LLC Great Basin LLC Industrial Products of New England, Inc. Mac Frugal's Bargains · Close...

  • Page 200
    ... control over financial reporting, appearing in this Annual Report on Form 10-K of the Company for the year ended January 30, 2010. 1) 2) 3) 4) 5) 6) Post-Effective Amendment No. 1 to Registration Statement No. 33-42502 on Form S-8 pertaining to Big Lots, Inc. Director Stock Option Plan; Post...

  • Page 201
    ... CHIEF EXECUTIVE OFFICER PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002 I, Steven S. Fishman, certify that: 1. 2. I have reviewed this annual report on Form 10-K of Big Lots, Inc.; Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state...

  • Page 202
    ... financial information; and any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. By: /s/ Joe R. Cooper Joe R. Cooper Executive Vice President and Chief Financial Officer b) Dated...

  • Page 203
    ... the year ended January 30, 2010, of Big Lots, Inc. (the "Company"). I, Steven S. Fishman, Chairman of the Board, Chief Executive Officer and President of the Company, certify that: (i) (ii) the Report fully complies with the requirements of Section 13(a) or Section 15(d) of the Securities Exchange...

  • Page 204
    ..."Report") for the year ended January 30, 2010, of Big Lots, Inc. (the "Company"). I, Joe R. Cooper, Executive Vice President and Chief Financial Officer of the Company, certify that: (i) (ii) the Report fully complies with the requirements of Section 13(a) or Section 15(d) of the Securities Exchange...

  • Page 205
    ... & Puerto Rico) www.computershare.com/investor or [email protected] Notice of Annual Meeting The Annual Meeting of Shareholders will be held at 9:00 a.m. EDT on Thursday, May 27, 2010, at our corporate office, 300 Phillipi Road, Columbus, Ohio. Whether or not you plan to attend, you are...

  • Page 206
    Visit us at www.biglots.com