Big Lots 2011 Annual Report Download - page 128

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This proposed new guidance could significantly change the presentation of financial information and results
of operations. Additionally, the new guidance may require us to make systems and other changes that could
increase our operating costs. Specifically, implementing future accounting guidance related to leases and other
areas impacted by the current convergence project between the FASB and IASB could require us to make
significant changes to our lease management system or other accounting systems.
If we are unable to secure customer, employee, and company data, our reputation could be damaged and we
could be subject to penalties or lawsuits.
The protection of our customer, employee, and company data is critical to us. The regulatory environment
surrounding information security and privacy is increasingly demanding, with frequent imposition of new and
constantly changing requirements across our business. In addition, our customers have a high expectation that
we will adequately protect their personal information. A significant breach of customer, employee, or company
data could damage our reputation and result in lost sales, fines, and/or lawsuits.
The price of our common shares as traded on the New York Stock Exchange may be volatile.
Our stock price may fluctuate substantially as a result of factors beyond our control, including but not limited
to, general economic and stock market conditions, risks relating to our business and industry as discussed
above, strategic actions by us or our competitors, variations in our quarterly operating performance, our future
sales or purchases of our common shares, and investor perceptions of the investment opportunity associated
with our common shares relative to other investment alternatives.
The bankruptcy of our formerly owned KB Toys business may adversely affect our financial performance.
In December 2000, we sold the KB Toys business to KB Acquisition Corporation. On January 14, 2004, KB
Acquisition Corporation and certain affiliated entities (collectively “KB-I”) filed for bankruptcy protection
pursuant to Chapter 11 of title 11 of the United States Code. On August 30, 2005, in connection with the
acquisition by an affiliate of Prentice Capital Management of majority ownership of KB-I, KB-I emerged from
their January 14, 2004 bankruptcy (the KB Toys business that emerged from bankruptcy is hereinafter referred
to as “KB-II”). On December 11, 2008, KB-II filed for bankruptcy protection pursuant to Chapter 11 of title
11 of the United States Code. Based on information we have received subsequent to the December 11, 2008
bankruptcy filing, we believe we still may have indemnification and guarantee obligations (“KB-II Bankruptcy
Lease Obligations”) with respect to 29 KB Toys store leases and a lease for a former KB corporate office.
Because of uncertainty inherent in the assumptions used to estimate this liability, our estimated liability could
ultimately prove to be understated and could result in a material adverse impact on our financial condition,
results of operations, and liquidity. For additional information regarding the KB Toys bankruptcies, see note 13
to the accompanying consolidated financial statements.
We also may be subject to a number of other factors which may, individually or in the aggregate, materially
or adversely affect our business. These factors include, but are not limited to:
• Changes in governmental laws and regulations;
• Events or circumstances could occur which could create bad publicity for us or for types of
merchandise offered in our stores which may negatively impact our business results including sales;
• Infringement of our intellectual property, including the Big Lots trademarks, could dilute our value;
• Our ability to establish effective advertising, marketing, and promotional programs; and
• Other risks described from time to time in our filings with the SEC.
ITEM 1B. UNRESOLVED STAFF COMMENTS
None.