Big Lots 2010 Annual Report Download - page 143

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BIG LOTS, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Continued)
Note 10 — Commitments, Contingencies and Legal Proceedings (Continued)
We are involved in other legal actions and claims, including various additional employment-related matters,
arising in the ordinary course of business. We currently believe that such actions and claims, both individually
and in the aggregate, will be resolved without a material adverse effect on our financial condition, results of
operations, or liquidity. However, litigation involves an element of uncertainty. Future developments could
cause these actions or claims to have a material adverse effect on our financial condition, results of operations,
and liquidity.
For a discussion of discontinued operations, including KB Toys matters, see note 11 to our accompanying
consolidated financial statements.
We are self-insured for certain losses relating to property, general liability, workers’ compensation, and
employee medical and dental benefit claims, a portion of which is paid by employees, and we have purchased
stop-loss coverage in order to limit significant exposure in these areas. Accrued insurance liabilities are
actuarially determined based on claims filed and estimates of claims incurred but not reported.
We have purchase obligations for outstanding purchase orders for merchandise issued in the ordinary course
of our business that are valued at $470.3 million, the entirety of which represents obligations due within one
year of January 29, 2011. In addition, we have a purchase commitment for future inventory purchases totaling
$108.8 million at January 29, 2011. We paid $29.7 million, 28.9 million, and $31.5 million related to this
commitment during 2010, 2009, and 2008, 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 $291.6 million primarily
related to distribution and transportation, information technology, print advertising, energy procurement, and
other store security, supply, and maintenance commitments.
Note 11 — Discontinued Operations
Our discontinued operations for 2010, 2009, and 2008, were comprised of the following:
2010 2009 2008
(In thousands)
Closed stores ................................................... $ 81 $ (48) $ (439)
KB Toys matters ................................................ (118) (1,609) (4,928)
Total income (loss) from discontinued operations, pretax .............. $ (37) $(1,657) $ (5,367)
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 2010, 2009, and 2008, the closed stores’ operating income (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 less than $0.1 million, $0.1 million, and $0.1 million,
respectively. At fiscal yearend 2010, we had no accrued exit-related liabilities, as there were no remaining lease
obligations related to the 130 stores. At fiscal yearend 2009 and 2008, we had accrued exit-related liabilities
of $0.5 million and $0.9 million, respectively, as a result of the 130 store closures in 2005. The decrease in
liabilities is due to payments of the exit-related amounts. Included in payments is sublease income of less than
$0.1 million, $0.2 million, and $0.3 million in 2010, 2009, and 2008, respectively.
KB Toys Matters
We acquired the KB Toys business from Melville Corporation (now known as CVS New York, Inc., and
together with its subsidiaries “CVS”) in May 1996. As part of that acquisition, we provided, among other
things, an indemnity to CVS with respect to any losses resulting from KB Toys’ failure to pay all monies due