Big Lots 2012 Annual Report Download

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2012 Annual Report

Table of contents

  • Page 1
    2012 Annual Report

  • Page 2
    ...2010 $4.5B 2012 2011 2010 1,300 2012 2011 2010 Earnings from continuing operations per share - diluted (a) (b) (c) Net sales (a) (b) Store count (a) (a) The results of Big Lots Canada are included from the date of acquisition ( July 18, 2011) and forward. (b) The results for fiscal year...

  • Page 3
    ... 2010 2.5% 3,556 166 1,398 U.S. Segment Sales and Store Data (b) Comparable store sales (decrease) increase Average sales per store Sales per selling square foot Stores open at end of the fiscal year $ $ $ $ $ $ Canada Segment Sales and Store Data (b) 2012 Annual Report Big Lots, Inc. Average...

  • Page 4
    ... NAMES. EXTREME VALUE. It's the magic combination that consistently delights our customers and turns a brief shopping trip into a treasure hunt. It's the excitement of finding great merchandise at an incredible price, the thrill of saving money, and the pleasure of shopping in a clean, bright store...

  • Page 5
    ... to drive store productivity from $146 per selling square foot in 2005 to $163 in 2012. Relentless Expense Control: In my first letter to our shareholders, I noted our cost of operations, in relation to sales, was just too high and it was critical for the future success of the business to reduce...

  • Page 6
    ... higher quality merchandise, and Extreme Value. In 2013, we'll start to introduce the Big Lots® brand to Canada by opening a couple of new stores and rebranding a handful of existing Liquidation World locations. We expect Big Lots Canada to be an important part of our long-term growth strategy, and...

  • Page 7
    .... As I look to the future, I remain confident in the direction of the Company and believe Big Lots is well positioned to build on our past success and generate profitable growth for many years to come. Sincerely, Steven S. Fishman Chairman, CEO and President Big Lots, Inc. 2012 Annual Report

  • Page 8
    ... Heinz North America Foodservice; former Executive Vice President, Global Foodservice H. J. Heinz Company Company Executives Chairman, Chief Executive Officer & President Steven S. Fishman Vice Presidents (Continued ) Mollie M. Hall Store Operations 2012 Annual Report Craig A. Hart Real Estate...

  • Page 9
    ... be held at our corporate offices located at 300 Phillipi Road, Columbus, Ohio, on May 30, 2013, 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

  • Page 11
    ...be held at our corporate offices located at 300 Phillipi Road, Columbus, Ohio, on May 30, 2013, beginning at 9:00 a.m. EDT, for the following purposes: 1. 2. To elect nine directors of Big Lots, Inc.; To approve, on an advisory basis, the compensation of our named executive officers, as disclosed in...

  • Page 12

  • Page 13
    BIG LOTS, INC. PROXY STATEMENT TABLE OF CONTENTS ABOUT THE ANNUAL MEETING ...PROPOSAL ONE ...GOVERNANCE ...DIRECTOR COMPENSATION ...STOCK OWNERSHIP...EXECUTIVE COMPENSATION...PROPOSAL TWO ...AUDIT COMMITTEE DISCLOSURE ...PROPOSAL THREE ...SHAREHOLDER PROPOSALS ...ANNUAL REPORT ON FORM 10-K ...PROXY ...

  • Page 14

  • Page 15
    ... "Big Lots"), for use at the 2013 Annual Meeting of Shareholders to be held on May 30, 2013 ("Annual Meeting"), at our corporate offices located at 300 Phillipi Road, Columbus, Ohio at 9:00 a.m. EDT. On or about April 16, 2013, we began mailing to our shareholders of record at the close of business...

  • Page 16
    ... May 29, 2013, 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 Secretary...

  • Page 17
    ...Deloitte & Touche LLP as our independent registered public accounting firm for fiscal 2013 (see Proposal Three). 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 18
    ... be voted at the Annual Meeting for more than nine persons. Set forth below is certain information relating to the director nominees, including each nominee's age (as of the end of fiscal 2012), tenure as a director on our Board, current Board committee memberships, business experience and principal...

  • Page 19
    ... is the former Executive Vice President, Global Foodservice of H.J. Heinz Company (food manufacturer and marketer), and President and Chief Executive Officer of Heinz North America Foodservice (food manufacturer and marketer). Mr. Berger is also currently a director of GNC Holdings, Inc. (health and...

  • Page 20
    ... the Compensation Committee. Mr. Chambers' extensive cross-functional packaged goods industry experience and 15 year track record in general management make him an excellent candidate to serve on the Board. Steven S. Fishman is the Chairman, Chief Executive Officer and President of Big Lots. Before...

  • Page 21
    ... (as defined by the applicable NYSE and SEC rules), non-employee directors ("outside directors"). Mr. Fishman is our Chief Executive Officer ("CEO") and serves as Chairman of the Board. The Board also has a presiding director whose primary responsibility is to lead executive sessions of the Board at...

  • Page 22
    ... compensation program for the members of our executive management committee ("EMC"). The EMC is currently comprised of the five executives named in the Summary Compensation Table ("named executive officers") and other executives holding the office of executive vice president or senior vice president...

  • Page 23
    ... a prospective director nominee to the Board must send written notice to: Chair of the Nominating / 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...

  • Page 24
    ... for director, officers and employees. The Board and the Nominating / Corporate Governance Committee have enlisted the assistance of our General Counsel's office and human resources management to fulfill this responsibility. Our written Corporate Governance Guidelines, Code of Business Conduct...

  • Page 25
    ..., to the extent applicable to our principal executive officer, principal financial officer, principal accounting officer, controller or persons performing similar functions), if any, in the Investor Relations section of our website (www.biglots.com) under the "Corporate Governance" caption. - 11...

  • Page 26
    ... 834-7325 Big Lots Board of Directors, 300 Phillipi Road, Columbus, Ohio 43228-5311 http://biglots.safe2say.info Under a process approved by the Nominating / Corporate Governance Committee for handling correspondence received by us and addressed to outside directors, our General Counsel reviews all...

  • Page 27
    ... the closing price of our common shares on the NYSE on the grant date. As of February 2, 2013, each individual included in the table (excluding Mr. Kollat) held 2,598 shares of restricted stock. Prior to fiscal 2008, the outside directors received an annual stock option award under the Big Lots, Inc...

  • Page 28
    ... Group, Inc. (3) Scopia Capital Management, LLC (4) Lazard Asset Management LLC (5) LSV Asset Management (6) Capital Research Global Investors (7) All directors and executive officers as a group (20 persons) * (1) Represents less than 1.0% of the outstanding common shares. 280,313 15,790 2,598...

  • Page 29
    ... no shared voting power or shared dispositive over the shares. In its Schedule 13G filed on February 13, 2013, LSV Asset Management, 155 North Wacker Drive, Suite 4600, Chicago, IL 60606, stated that it beneficially owned the number of common shares reported in the table as of December 31, 2012, had...

  • Page 30
    ... 23, 2012, Ms. Bachmann was promoted from Executive Vice President, Supply Chain Management and Chief Information Officer to Executive Vice President, Chief Operating Officer, and Mr. Haubiel was promoted from Executive Vice President, Legal and Real Estate, General Counsel and Corporate Secretary...

  • Page 31
    ...his successor. Accordingly, Mr. Fishman will continue to receive his salary and bonus opportunity until his retirement, without an increase for fiscal 2013, and he was not granted any new equity compensation during our annual review of executive compensation in March 2013. Pay for Performance One of...

  • Page 32
    ... Return" represents the value of a hypothetical $100 investment in our common shares at January 30, 2010 through the end of each fiscal year shown. Summary of Significant Compensation Events in Fiscal 2012 and Fiscal 2013 x x None of our named executive officers earned bonuses for fiscal 2012...

  • Page 33
    ..., Mr. Fishman did not receive a base salary increase or bonus opportunity increase for fiscal 2013, and he was not granted any new equity awards as part of our review of executive compensation in March 2013. Committee Consideration of the Company's 2012 Shareholder Vote on Executive Compensation At...

  • Page 34
    ...retaining executives. x x x 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 LTIP and its successor, the 2012...

  • Page 35
    ... in the form of restricted stock and, except for Mr. Fishman, stock options, as each is reflected in the Summary Compensation Table. As discussed above in the "Executive Summary" section of this CD&A, our named executive officers did not receive bonuses for fiscal 2012 under the 2006 Bonus Plan and...

  • Page 36
    ... of In-Service Executive Compensation The primary compensation elements we provide to our named executive officers are salary, bonus opportunities under the 2006 Bonus Plan, equity awards made under the 2005 LTIP or its successor, the 2012 LTIP. In addition, our named executive officers are entitled...

  • Page 37
    ... schedule of salary increases and makes adjustments to our named executive officers' respective salaries without regard to adjustments in the salaries of other executives. Bonus Each named executive officer has the opportunity to earn an annual cash bonus under the 2006 Bonus Plan. Bonus payouts...

  • Page 38
    ... received by named executive officers during its annual review of our 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...

  • Page 39
    ...when evaluating each named executive officer's salary and payout percentages change, the Committee annually reviews and, if warranted, adjusts the actual salaries and payout percentages for our named executive officers. See the "Salary for Fiscal 2012" and "Bonus for Fiscal 2012" sections of this CD...

  • Page 40
    ...of our common shares over a one-year, three-year and five-year period, ending in fiscal 2009. Annualized TSR as of the end of fiscal 2009 (January 30, 2010) 1-Year TSR 111% 3-Year TSR 3% 5-Year TSR 20% Due to our record growth and shareholder return during Mr. Fishman's tenure with Big Lots and his...

  • Page 41
    ...lumpsum payment equal to 200% of the executive's then current annual salary and stretch bonus and (ii) for a period of one year, the executive is entitled to participate in any group life, hospitalization or disability insurance plan, health program, or other executive benefit plan that is generally...

  • Page 42
    ... of Savings Plan and Supplemental Savings Plan. Participation in the Pension Plan and Supplemental Pension Plan, which we do not believe are material elements of our executive compensation program, is limited to certain employees whose hire date precedes April 1, 1994. Our named executive officers...

  • Page 43
    ... our executives begins at our Board meeting in the second quarter of the fiscal year before the fiscal year in which compensation adjustments will be made (e.g., in May 2011 for adjustments made in fiscal 2012) and continues quarterly through updates that our CEO delivers to the outside directors to...

  • Page 44
    ... on store growth in the United States and expansion into Canada was a direct result of our named executive officers' individual performances, as discussed in the "Performance Evaluation" section of this CD&A. The Committee and other outside directors evaluated Mr. Fishman's fiscal 2011 salary and...

  • Page 45
    ... Plan participants while encouraging strong corporate earnings growth. As a result of not making fiscal 2012 bonus payments, total cash compensation paid to our named executive officers for fiscal 2012 was generally at or below the median for our peer groups. We believe lower than market average...

  • Page 46
    ... 2012. See the "Bonus and Equity Plans" disclosure that follows the Summary Compensation Table for more information concerning the common shares available for issuance under the 2012 LTIP. x This process was employed to ensure that executive equity compensation is commensurate with corporate...

  • Page 47
    ... operations financial measure), the second trigger was not met in fiscal 2012. Having met the first trigger, if the named executive officer remains employed by us, the restricted stock will vest upon the earliest of: (1) the first trading day after we file with the SEC our Form 10-K for the year...

  • Page 48
    ...items of corporate and individual performance were most significant in awarding compensation to our named executive officers for fiscal 2012. x Mr. Fishman: (1) (2) Fiscal 2011 earnings per common share from continuing operations-diluted were $2.99 - approximately 5.7% above our fiscal 2010 results...

  • Page 49
    ... of our annual corporate operating plan. x Mr. Haubiel: (1) (2) (3) Opened 92 new stores and closed 39 stores in fiscal 2011, as compared to opening 80 stores and closing 43 stores in fiscal 2010; Executive leadership support for the effective and efficient management of legal affairs...

  • Page 50
    ... of accounting rules, laws and regulations on existing and proposed compensation programs. Management from our human resources, finance and legal departments may also act pursuant to delegated authority to fulfill various functions in administering our employee benefit and compensation plans. Such...

  • Page 51
    ... and our human resources department reviewed each EMC member's responsibilities and compared, where possible, the compensation of each executive to the compensation awarded to similarly-situated executives at peer group companies. The Committee compared the total direct compensation levels for...

  • Page 52
    ... 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 53
    ... that a bonus was not payable for fiscal 2012 under the 2006 Bonus Plan; (2) reviewed the tally sheets and compensation history for all EMC members; (3) reviewed internal pay equity information; (4) discussed the executive compensation review prepared by Exequity and approved a new retailer-only...

  • Page 54
    ... Officer (13) Joe R. Cooper, Executive Vice President, President, Big Lots Canada (14) Charles W. Haubiel II, Executive Vice President, Chief Administrative Officer and Corporate Secretary (15) Doug M. Wurl, Former Executive Vice President, Merchandising (10)(16) Year (b) Salary ($)(2) (c) Bonus...

  • Page 55
    ...following compensation for our named executive officers, as more fully described in the table included with this footnote: i. ii. The reimbursement of taxes related to our payment of healthcare costs covered by the Executive Benefit Plan and long-term disability insurance premiums; Big Lots matching...

  • Page 56
    ... as our Executive Vice President, Supply Chain Management and Chief Information Officer until assuming her current position on August 23, 2012. (14) Mr. Cooper served as our Executive Vice President, Chief Financial Officer and President, Big Lots Canada, Inc. until assuming his current position on...

  • Page 57
    ... President, Legal and Real Estate, General Counsel and Corporate Secretary until assuming his current position on August 23, 2012. (16) Mr. Wurl resigned as our Executive Vice President, Merchandising on August 22, 2012. Bonus and Equity Plans The amounts reported in the Summary Compensation Table...

  • Page 58
    ... 2005 LTIP, see the "Potential Payments Upon Termination or Change in Control - Rights Under Post-Termination and Change in Control Arrangements" section below. Big Lots 2012 Long-Term Incentive Plan Since May 23, 2012, all employee equity awards, including those made to our named executive officers...

  • Page 59
    ...date. If we meet the second trigger for any fiscal year ending prior to the fifth anniversary of the grant date and the recipient remains employed by us, the restricted stock will vest on the first trading day after we file with the SEC our Annual Report on Form 10-K for the year in which the second...

  • Page 60
    ... further described in the "Our Executive Compensation Program for Fiscal 2012 - Bonus for Fiscal 2012" section of the CD&A. For fiscal 2012, our named executive officers did not earn a bonus under the 2006 Bonus Plan, as reflected in column (g) of the Summary Compensation Table. Mr. Wurl resigned on...

  • Page 61
    ... preceding this table and the "Our Executive Compensation Program for Fiscal 2012 - Equity for Fiscal 2012" section of the CD&A. Pursuant to the terms of the 2005 LTIP and 2012 LTIP, the exercise price of the NQSOs awarded in fiscal 2012 is equal to the fair market value of our common shares on the...

  • Page 62
    ... Awards at 2012 Fiscal Year-End The following table sets forth, as of the end of fiscal 2012, all equity awards outstanding under our equity compensation plans for each named executive officer. Option Awards Stock Awards Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units...

  • Page 63
    ... first four years of the seven year option term. The restricted stock awards reported in column (i) were made in fiscal 2012 for Mr. Fishman and in fiscal 2012 and fiscal 2011 for the other named executive officers, pursuant to the 2005 LTIP or 2012 LTIP. Mr. Fishman's fiscal 2012 restricted stock...

  • Page 64
    ... of Big Lots, the participant will receive a lump sum payment of all amounts (vested and unvested) under the Supplemental Savings Plan. Nonqualified Deferred Compensation Table for Fiscal 2012 The following table reflects the contributions to, earnings in and balance of each named executive officer...

  • Page 65
    ... to pay any unearned compensation or to provide any future benefits to the executive. Generally, under the terms of each named executive officer's employment agreement, cause for termination would exist upon the executive's: x x x x x x x x failure to comply with our policies and procedures...

  • Page 66
    ...Nonqualified Deferred Compensation" section above for more information regarding the Supplemental Savings Plan and our named executive officers' aggregate balances under such plans at the end of fiscal 2012.) Additionally, if terminated without cause, Mr. Fishman is entitled to continue receiving an...

  • Page 67
    ... last day of fiscal 2012. As noted in the "Non-Equity Incentive Plan Compensation" row in the tables below, the amounts payable under the 2006 Bonus Plan upon termination: (1) without cause or due to death or disability are based on the bonus actually earned by the applicable named executive officer...

  • Page 68
    ..." columns in the tables below represent the value (as of the final trading day on the NYSE during fiscal 2012) of (1) 20% of the unvested restricted stock awarded to each named executive officer in March of 2011 (other than Mr. Fishman, whose fiscal 2011 restricted stock award previously vested) and...

  • Page 69
    ... upon with a Change termination) Cause Cause Termination Disability Death in Control Salary/Salary Continuation ($) Non-Equity Incentive Plan Compensation ($) Healthcare Coverage ($) Long-Term Disability Benefit ($) Use of Automobile/Automobile Allowance ($) Accelerated Equity Awards ($) Excise Tax...

  • Page 70
    ... upon with a Change termination) Cause Cause Termination Disability Death in Control Salary/Salary Continuation ($) Non-Equity Incentive Plan Compensation ($) Healthcare Coverage ($) Long-Term Disability Benefit ($) Use of Automobile/Automobile Allowance ($) Accelerated Equity Awards ($) Excise Tax...

  • Page 71
    ... value. These compensation elements provide executives with meaningful incentives to meet or exceed the corporate financial goals set by our Board each year. We believe that our operating profit is an important financial measure, as it is a reflection of both top line sales and expense control...

  • Page 72
    ... the named executive officers did not receive bonuses for fiscal 2012. x Align the interests of executives and shareholders through incentive-based executive compensation. The realization and value of bonus opportunities under the 2006 Bonus Plan and equity awarded under the 2005 LTIP and 2012 LTIP...

  • Page 73
    ... received periodic updates provided by management and the independent registered public accounting firm at each regularly scheduled Audit Committee meeting. The Audit Committee also reviewed the report of management contained in our Form 10-K, as well as the independent registered public accounting...

  • Page 74
    ... fiscal 2011 and fiscal 2012, the other fees principally related to online subscription fees for technical accounting support. Audit Committee Report The Audit Committee has reviewed and discussed the audited financial statements for fiscal 2012 with management and the independent registered public...

  • Page 75
    ... Annual Report to Shareholders. Shareholders 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...

  • Page 76
    ... by proxies returned to us and not revoked 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, Chief Administrative Officer and Corporate Secretary April 16, 2013 Columbus, Ohio - 62...

  • Page 77
    ... the fiscal year ended February 2, 2013 or † TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from _____ to _____ Commission File Number 1-8897 (Exact name of registrant as specified in its charter) BIG LOTS, INC. Ohio (State or...

  • Page 78
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  • Page 79
    ... About Market Risk ...Financial Statements and Supplementary Data...Changes in and Disagreements With Accountants on Accounting and Financial Disclosure ...Controls and Procedures ...Other Information ...PART III Directors, Executive Officers and Corporate Governance ...Executive Compensation...

  • Page 80
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  • Page 81
    ... Stores Corporation. In 2010, all of our operations were located within the U.S. In July 2011, we expanded our operations internationally into Canada with the acquisition of 100% of the outstanding shares of Liquidation World Inc. (now known as Big Lots Canada, Inc.). Our principal executive offices...

  • Page 82
    ... of this Form 10-K. Real Estate The following table compares the number of our stores in operation, by segment, at the beginning and end of each of the last five fiscal years: 2012 2011 2010 2009 2008 U.S. Stores open at the beginning of the year ...Stores opened during the year ...Stores acquired...

  • Page 83
    ... four states: California, Texas, Ohio, and Florida, and net sales from stores in these states represented 35% of our 2012 net sales. Associates At February 2, 2013, we had approximately 37,300 active associates comprised of 13,100 full-time and 24,200 part-time associates. Temporary associates hired...

  • Page 84
    ... the caption "Operating Strategy - Cost Structure" in the accompanying MD&A in this Form 10-K. Advertising and Promotion Our brand image is an important part of our marketing program. Our principal trademarks, including the Big Lots® family of trademarks, have been registered with the U.S. Patent...

  • Page 85
    ...Capital Resources and Liquidity" in the accompanying 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...

  • Page 86
    ..."Investor Relations" section of our website (www.biglots.com) under the "Corporate Governance" and "SEC Filings" captions, the following information relating to our corporate governance may be found: Corporate Governance Guidelines; charters of our Board of Directors' Audit, Compensation, Nominating...

  • Page 87
    ...focus on merchandising, real estate, and cost structure. During 2012, our senior management performed a review and provided our Board of Directors with an updated view of our strategic plan for 2013 and beyond. In December 2012, we announced the intention of our Chairman, Chief Executive Officer and...

  • Page 88
    .... As discussed in Item 1 of this Form 10-K, we compete for customers, products, employees, real estate, and other aspects of our business with a number of other companies. Certain of our competitors have greater financial, distribution, marketing, and other resources than us. It is possible that...

  • Page 89
    ...conditions and weather patterns of four states (Ohio, Texas, California, and Florida) are important as approximately 32% of our current stores operate in these states and 35% of our 2012 net sales occurred in these states. Changes in federal or state/provincial legislation and regulations, including...

  • Page 90
    ...&A in this Form 10-K for additional information regarding our accounting policies for long-lived assets, goodwill, and income taxes). Our inability, if any, to comply with the terms of the 2011 Credit Agreement may have a material adverse effect on our capital resources, financial condition, results...

  • Page 91
    ... while managing the occupancy cost of each of our stores. A significant component of our sales growth strategy is to open new store locations. If the commercial real estate market tightens and we are not able to negotiate favorable new store leases and lease renewals, our financial position, results...

  • Page 92
    ...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. ITEM 2. PROPERTIES Retail Operations All of our stores are located in North America, predominantly in strip shopping centers...

  • Page 93
    ... purchase price of $8.3 million. Additionally, we closed one owned site in 2012 for which we have not yet completed the sale transaction. Since this owned site is no longer operating as an active store, it has been excluded from our store counts at February 2, 2013. The 56 owned stores are located...

  • Page 94
    ... Vice President, Marketing Senior Vice President, Chief Financial Officer Senior Vice President, Distribution and Transportation Services Senior Vice President, Human Resources Senior Vice President, General Merchandise Manager Senior Vice President, Store Operations Vice President, Controller 2005...

  • Page 95
    ... us in 2005, Mr. Claxton served as General Manager and Executive Vice President of Initiative Media, an advertising and communications company, and Chief Marketing Officer and Senior Vice President of Montgomery Ward, a retailer. Timothy A. Johnson is responsible for financial reporting and controls...

  • Page 96
    ... Vice President, Human Resources in August 2012. Mr. Schlonsky was promoted to Vice President, Associate Relations and Benefits in 2010 and assumed responsibility for compensation in 2011. Prior to that, Mr. Schlonsky was promoted to Vice President, Associate Relations and Risk Management in 2005...

  • Page 97
    ... quarter of 2012: (In thousands, except price per share data) (c) Total Number of (d) Approximate Dollar Shares Purchased as Value of Shares that (a) Total Number (b) Average Part of Publicly May Yet Be Purchased of Shares Price Paid Announced Plans or Under the Plans or Purchased per Share Programs...

  • Page 98
    ... $50 $0 Jan08 Jan09 Jan10 Jan11 Jan12 Jan13 Big Lots, Inc. S&P 500 Index S&P 500 Retailing Index Indexed Returns Years Ended Base Period January 2008 Company / Index January 2009 January 2010 January 2011 January 2012 January 2013 Big Lots, Inc...S&P 500 Index ...S&P 500 Retailing Index...

  • Page 99
    ... with MD&A and the consolidated financial statements and related notes included herein. Fiscal Year (In thousands, except per share amounts and store counts) 2012 (a) (c) 2011 (b) (c) 2010 (b) 2009 (b) 2008 (b) (d) Net sales ...$5,400,119 $5,202,269 Cost of sales (exclusive of depreciation expense...

  • Page 100
    ... Benefit Plans-Pension (Statement of Financial Accounting Standard ("SFAS") No. 158, Employers' Accounting for Defined Benefit Pension and Other Postretirement Plans) in 2008, which resulted in an adjustment to accumulated other comprehensive loss of $66 ($40 net of tax). For 2008, working capital...

  • Page 101
    ... in accounting principle. Seasonality As discussed in "Item 1. Business - Seasonality" of this Form 10-K, our financial results fluctuate from quarter to quarter depending on various factors such as timing of new or closed stores, timing and extent of advertisements and promotions, and timing of...

  • Page 102
    ... Company intends to announce the hiring of a new Chief Executive Officer, who we expect to assess the current WIN strategy initiatives and finalize our strategic plan for future years. In 2013, we anticipate: x x Earnings per diluted share from continuing operations to be $3.05 to $3.25. Net sales...

  • Page 103
    ... by our distribution centers and stores, which has benefited our cost structure. While executing our WIN Strategy, we have made measurable progress towards our goals of growing sales per selling square foot (which increased from $146 per square foot in 2005 to $163 per square foot in 2012, for our...

  • Page 104
    ... first true customer loyalty program, which we use to provide benefits to our customers. After making the required number of qualifying purchases, the Rewards member earns a coupon on their account for a future discount in our stores. Additionally, members may receive marketing information and other...

  • Page 105
    ... decided to moderate our store growth efforts in 2013 by opening approximately 50 new stores, while closing an estimated 45 stores. In 2012, we tested a store remodel program in 16 stores in two geographic markets: Miami, Florida and Modesto, California. Based on the positive results of the initial...

  • Page 106
    ... introducing the Big Lots brand to Canada by opening two to three new stores while also rebranding a small number of existing Liquidation World or LW stores under the Big Lots name. Discontinued Operations We continue to incur an insignificant amount of costs on the 130 stores we closed in 2005 that...

  • Page 107
    ...stores compared to the end of 2011. The increase in health benefits expense was primarily driven by costs associated with certain large claims that were expensed during 2012 as compared to 2011, a year in which we experienced few costs associated with large claims. Our corporate office payroll costs...

  • Page 108
    ... matters and consulting fees related to various on-going information systems projects. The decrease in share-based compensation expense was primarily driven by the nonvested restricted stock award granted to Mr. Fishman in 2012. In 2011, the corporate financial goal associated with the award granted...

  • Page 109
    ...all stores that were open for at least two fiscal years as of the beginning of 2011. The primary drivers of the sales increase in the Furniture category were the upholstery and mattresses departments, partially offset by a decrease in case goods as 2010 benefited from a few large closeout deals. The...

  • Page 110
    ...July 18, 2011) through the end of the fiscal year. Our Canadian segment's net sales were $62.1 million, which exceeded our original expectations, as customers responded to fresh, new merchandise with an improved value proposition, particularly in furniture, electronics, toys, and Christmas trim. The...

  • Page 111
    ...of Big Lots Canada. Working capital was $461.0 million at February 2, 2013. Whenever our liquidity position requires us to borrow funds under the 2011 Credit Agreement, we typically repay and/or borrow on a daily basis. The daily activity is a net result of our liquidity position, which is generally...

  • Page 112
    ...from $82.9 million in 2011. From an operational perspective, our accounts payable leverage ratio (accounts payable divided by inventory) remained relatively consistent at 43% at February 2, 2013 compared to 42% at January 28, 2012. Our inventories increased as a result of our net store growth in the...

  • Page 113
    ... unfunded supplemental defined benefit pension plan ("Supplemental Pension Plan"), $3.0 million for unrecognized tax benefits, and $0.7 million for closed store lease termination costs related to stores closed in 2012. Pension contributions are equal to expected benefit payments for the nonqualified...

  • Page 114
    ...reported financial results. Management has reviewed these critical accounting estimates and related disclosures with the Audit Committee of our Board of Directors. Merchandise Inventories Merchandise inventories are valued at the lower of cost or market using the average cost retail inventory method...

  • Page 115
    ... to cost of sales, and calculated as a percentage of sales for the period from the last physical inventory date to the end of the reporting period. Such estimates are based on both our current year and historical inventory results. Independent physical inventory counts are taken at each store once...

  • Page 116
    ... fiscal quarter of each year. Share-Based Compensation We grant stock options and performance-based non-vested restricted stock to our employees under shareholder approved incentive plans. Share-based compensation expense was $17.9 million, $25.0 million, and $24.6 million in 2012, 2011, and 2010...

  • Page 117
    ... long-term rate of return. Our objective in selecting a discount rate is to identify the best estimate of the rate at which the benefit obligations would be settled on the measurement date. In making this estimate, we review rates of return on high-quality, fixed-income investments available at...

  • Page 118
    ... charges in 2012 and 2010, respectively. Insurance and Insurance-Related Reserves 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 funded by employees. We purchase stoploss...

  • Page 119
    ... 2, 2013. An increase of 1.0% in our variable interest rate on our investments and expected future borrowings would not have a material effect on our financial condition, results of operations, or liquidity. Through the operations of Big Lots Canada, we are subject to market risks associated with...

  • Page 120
    ... SUPPLEMENTARY DATA Report of Independent Registered Public Accounting Firm To the Board of Directors and Shareholders of Big Lots, Inc. Columbus, Ohio We have audited the internal control over financial reporting of Big Lots, Inc. and subsidiaries (the "Company") as of February 2, 2013, based on...

  • Page 121
    ... Registered Public Accounting Firm To the Board of Directors and Shareholders of Big Lots, Inc. Columbus, Ohio We have audited the accompanying consolidated balance sheets of Big Lots, Inc. and subsidiaries (the "Company") as of February 2, 2013, and January 28, 2012, and the related consolidated...

  • Page 122
    BIG LOTS, INC. AND SUBSIDIARIES Consolidated Statements of Operations (In thousands, except per share amounts) 2012 2011 2010 Net sales ...Cost of sales (exclusive of depreciation expense shown separately below) ...Gross margin ...Selling and administrative expenses ...Depreciation expense ......

  • Page 123
    BIG LOTS, INC. AND SUBSIDIARIES Consolidated Statements of Comprehensive Income (In thousands) 2012 2011 2010 Net income ...Other comprehensive income (loss): Foreign currency translation...Amortization of pension, net of tax benefit of $(921), $(703), and $(869), respectively ...Valuation ...

  • Page 124
    BIG LOTS, INC. AND SUBSIDIARIES Consolidated Balance Sheets (In thousands, except par value) February 2, 2013 January 28, 2012 ASSETS Current assets: Cash and cash equivalents ...Inventories ...Deferred income taxes ...Other current assets ...Total current assets ...Property and equipment - net ......

  • Page 125
    ... 29, 2011 ...Comprehensive income...Exercise of stock options ...Restricted shares vested ...Tax benefit from share-based awards ...Share activity related to deferred compensation plan ...Share-based employee compensation expense ...Balance - January 28, 2012 ...Comprehensive income...Purchases of...

  • Page 126
    ...from sale of property and equipment ...Purchase of business, net of cash acquired ...Return from (Deposit in) restricted account ...Other ...Net cash used in investing activities ...Financing activities: Net proceeds from borrowings under bank credit facility...Payment of notes payable ...Payment of...

  • Page 127
    ... 2013, we operated 1,574 stores in two countries: the United States of America ("U.S.") and Canada. Our goal is to strengthen and build upon our leadership position in broadline closeout retailing by providing our customers with great savings on brandname closeouts and other value-priced merchandise...

  • Page 128
    ... fiscal year-to-date purchase activity specific to each merchandise class. Under our previous inventory management system which was used through the end of 2011, we calculated average cost at the department level which constituted 50 inventory cost pools. On January 29, 2012, the first day of 2012...

  • Page 129
    ... quantity of product on hand, and anticipated future sales. Payments Received from Vendors Payments received from vendors relate primarily to rebates and reimbursement for markdowns and are recognized in our consolidated statements of operations as a reduction to cost of inventory purchases in the...

  • Page 130
    ... employees from employment are recognized ratably from the communication date through the estimated future service period, unless the estimated future service period is less than 60 days, in which case we recognize the impact at the communication date. Generally all other store closing costs...

  • Page 131
    ... Statements (Continued) Note 1 - Basis of Presentation and Summary of Significant Accounting Policies (Continued) 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...

  • Page 132
    .... For 2012, 2011, and 2010, we recognized in net sales on our consolidated statements of operations breakage of $0.5 million, $0.6 million, and $0.7 million, respectively, related to unredeemed gift card and merchandise credit balances that had aged at least four years beyond the end of their...

  • Page 133
    BIG LOTS, INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements (Continued) Note 1 - Basis of Presentation and Summary of Significant Accounting Policies (Continued) We offer price hold contracts on merchandise. Revenue for price hold contracts is recognized when the customer makes the ...

  • Page 134
    BIG LOTS, INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements (Continued) Note 1 - Basis of Presentation and Summary of Significant Accounting Policies (Continued) Store Pre-opening Costs Pre-opening costs incurred during the construction periods for new store openings are expensed as ...

  • Page 135
    ... with the realignment of our merchandising team and changes to our management reporting. Prior to the fourth quarter of 2012, we reported sales of our toys, books and sporting goods departments in the Play n' Wear category. We moved the toys, books and sporting goods departments out of the Play...

  • Page 136
    ...in 2012, 2011, and 2010, respectively. The charges in 2012 principally related to the write-down of long-lived assets at one U.S. store and four Canadian stores identified as part of our annual store impairment review. The charges in 2011 relate to asset impairments from the valuation of the Company...

  • Page 137
    ...$261,197 587 $261,784 Future minimum rental commitments for leases, excluding closed store leases, real estate taxes, CAM, and property insurance, at February 2, 2013, were as follows: Fiscal Year (In thousands) 2013 ...2014 ...2015 ...2016 ...2017 ...Thereafter...Total leases ...57 $ 254,510 214...

  • Page 138
    ... Year (In thousands) 2013...2014...2015...2016...2017...Thereafter ...Total lease payments...Less amount to discount to present value...Capital lease obligation per balance sheet ...Note 6 - Shareholders' Equity Earnings per Share $1,266 930 29 2 - - $2,227 (158) $2,069 There were no adjustments...

  • Page 139
    ...options generally vest ratably over a four-year period; however, upon a change in control, all awards outstanding automatically vest. In addition to the 2012 LTIP, we previously maintained the Big Lots Director Stock Option Plan ("Director Stock Option Plan") for non-employee directors. The Director...

  • Page 140
    ... of the annual stock option activity for fiscal years 2010, 2011, and 2012 is as follows: Weighted Average Exercise Price Per Share Weighted Average Remaining Contractual Term (years) Number of Options Aggregate Intrinsic Value (000's) Outstanding stock options at January 30, 2010 ...Granted...

  • Page 141
    ... meet a higher financial performance objective and the grantee remains employed by us, the restricted stock will vest on the first trading day after we file our Annual Report on Form 10-K with the SEC for the fiscal year in which the higher objective is met. On the grant date of the 2011 restricted...

  • Page 142
    ... benefit payments made to plan participants in excess of combined annual service cost and interest cost for each year. The weighted-average assumptions used to determine net periodic pension expense were: 2012 2011 2010 Discount rate ...Rate of increase in compensation levels ...Expected long-term...

  • Page 143
    ... at beginning of year ...Service cost ...Interest cost ...Benefits and settlements paid...Actuarial loss ...Projected benefit obligation at end of year...Change in plan assets: Fair market value at beginning of year...Actual return on plan assets ...Employer contributions ...Benefits and settlements...

  • Page 144
    BIG LOTS, INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements (Continued) Note 8 - Employee Benefit Plans (Continued) The following table sets forth certain information for the Pension Plan and the Supplemental Pension Plan at February 2, 2013 and January 28, 2012: Pension Plan February...

  • Page 145
    BIG LOTS, INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements (Continued) Note 8 - Employee Benefit Plans (Continued) liabilities themselves. Asset class returns are also judged relative to common benchmark indices such as the Russell 3000 and Barclay's Capital Long Credit Bond. ...

  • Page 146
    ... continuing operations was as follows: 2012 2011 2010 Statutory federal income tax rate ...Effect of: State and local income taxes, net of federal tax benefit ...Non-U.S. income tax rate differential ...Work opportunity tax and other employment tax credits ...Net benefit recognized for prior year...

  • Page 147
    ...Compensation related...Uniform inventory capitalization ...Depreciation and fixed asset basis differences...Accrued state taxes...Pension plans ...State tax credits, net of federal tax benefit ...Accrued operating liabilities ...State tax net operating losses, net of federal tax benefit ...KB store...

  • Page 148
    ... stock. Tax benefits of $8.1 million, $2.7 million, and $13.8 million in 2012, 2011, and 2010, respectively, were credited directly to shareholders' equity related to sharebased compensation deductions in excess of expense recognized for these awards. The Company's Canadian subsidiary has an...

  • Page 149
    ... generated prior to 2007 may still be adjusted upon examination. We have various state returns in the process of examination or administrative appeal. Generally, the time limit for reassessing returns for Canadian and provincial income taxes for periods prior to the year ending October 2, 2005...

  • Page 150
    ... relating to Mr. Fishman's trades in our common shares. On December 7, 2012, we received a voluntary document request from the SEC relating to our guidance for the first quarter of fiscal 2012, internal policies, trading in our common shares by our directors and officers, and the terms of employment...

  • Page 151
    ...In 2005, we determined that the results of 130 stores closed in 2005 should be reported as discontinued operations for all periods presented. For 2012, 2011, and 2010, the closed stores' operating income (loss) is comprised of exit-related costs, utilities, and security expenses on leased properties...

  • Page 152
    ... KB corporate office at which time 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. In 2012, the KB corporate office lease obligation expired; therefore, at fiscal year end 2012...

  • Page 153
    ... includes the electronics, jewelry, infant accessories, and apparel departments, as well as the results of certain large closeout deals that we typically acquire through our alternate product sourcing operations. In the fourth quarter of 2012, we realigned the merchandise categories reported in our...

  • Page 154
    BIG LOTS, INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements (Continued) Note 15 - Business Segment Data (Continued) The following table presents net sales data by segment and category: (In thousands) 2012 2011 2010 U.S. Furniture ...$ 936,463 Consumables...870,098 Home ...810,133 ...

  • Page 155
    BIG LOTS, INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements (Continued) Note 16 - Selected Quarterly Financial Data (Unaudited) Summarized fiscal quarterly financial data for 2012 and 2011 is as follows: Fiscal Year 2012 (In thousands, except per share amounts) (a) First Second ...

  • Page 156
    ... over financial reporting as of February 2, 2013. Our independent registered public accounting firm, Deloitte & Touche LLP, has issued an attestation report on our internal control over financial reporting. The report appears in the Financial Statements and Supplementary Data section of this Form 10...

  • Page 157
    ... Equity Compensation Plan Information The following table summarizes information as of February 2, 2013, relating to our equity compensation plans pursuant to which our common shares may be issued. Number of securities remaining available for Number of securities to Weighted-average future issuance...

  • Page 158
    ... 2005. The Director Stock Option Plan terminated on May 30, 2008. The 2005 LTIP expired on May 16, 2012. The 2012 LTIP was approved in May 2012. See note 7 to the accompanying consolidated financial statements. The information contained under the caption "Stock Ownership" in the 2013 Proxy Statement...

  • Page 159
    ... May 27, 2010). Code of Regulations (incorporated herein by reference to Exhibit 3(b) to our Form 10-Q for the quarter ended May 5, 2001). Specimen Common Share Certificate (incorporated herein by reference to Exhibit 4(a) to our Form 10-K for the year ended February 2, 2002). Big Lots, Inc. 1996...

  • Page 160
    ...by reference to Exhibit 10.10 to our Form 10-Q for the quarter ended November 1, 2008). Big Lots Savings Plan (incorporated herein by reference to Exhibit 10.8 to our Form 10-K for the year ended January 29, 2005). Big Lots Supplemental Savings Plan, as amended and restated effective January 1, 2008...

  • Page 161
    ... to Exhibit 10(m) to our Form 10-K for the year ended January 31, 2004). First Amendment to Big Lots Executive Benefit Plan (incorporated herein by reference to Exhibit 10.11 to our Form 10-Q for the quarter ended November 1, 2008). Amended and Restated Employment Agreement with Lisa M. Bachmann...

  • Page 162
    ...and Liquidation World Inc. (incorporated herein by reference to Exhibit 10.1 to our Form 8-K dated May 26, 2011). Big Lots, Inc. Non-Employee Director Compensation Package and Share Ownership Requirements (incorporated by reference to Exhibit 10.1 to our Form 10-Q for the quarter ended July 31, 2010...

  • Page 163
    ...the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized, on this 2nd day of April 2013. 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...

  • Page 164
    ..., Inc. Midwestern Home Products Company, Ltd. Rogers Fashion Industries, Inc. SS Investments Corporation BLFL Property LLC Big Lots Canada, Inc. Liquidation Services, Inc. Liquidation World U.S.A. Holding Corp. Liquidation World U.S.A. Inc. LQW Traders Inc. North American Solutions, Inc. Talon...

  • Page 165
    ... control over financial reporting, appearing in this Annual Report on Form 10-K of the Company for the year ended February 2, 2013. 1) 2) 3) 4) 5) 6) 7) 8) 9) Post-Effective Amendment No. 1 to Registration Statement No. 33-42502 on Form S-8 pertaining to Big Lots, Inc. Director Stock Option Plan...

  • Page 166
    ... of each such director and in any and all capacities stated below, and to cause to be filed with the Securities and Exchange Commission (the "Commission"), the Company's Annual Report on Form 10-K (the "Form 10-K") for the fiscal year ended February 2, 2013, and likewise to sign and file with the...

  • Page 167
    ... CERTIFICATION OF 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...

  • Page 168
    ...CERTIFICATION OF CHIEF FINANCIAL OFFICER PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002 I, Timothy A. Johnson, 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...

  • Page 169
    ... States Code, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, and accompanies the annual report on Form 10-K (the "Report") for the year ended February 2, 2013, of Big Lots, Inc. (the "Company"). I, Steven S. Fishman, Chairman of the Board, Chief Executive Officer and President...

  • Page 170
    ... United States Code, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, and accompanies the annual report on Form 10-K (the "Report") for the year ended February 2, 2013, of Big Lots, Inc. (the "Company"). I, Timothy A. Johnson, Senior Vice President and Chief Financial Officer of...

  • Page 171
    ... in 48 states and over 75 Liquidation World® and LW® stores in Canada. For more than three decades, we've delighted our 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...

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    300 Phillipi Rd., Columbus, OH 43228 | 614.278.6800 | www.biglots.com