Big Lots 2012 Annual Report Download - page 150

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BIG LOTS, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Continued)
Note 10 — Commitments, Contingencies and Legal Proceedings (Continued)
On November 29, 2012, we received a grand jury subpoena from the U.S. Attorney for the Southern District
of New York requesting documents 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 with Mr. Fishman. On December 21, 2012, we received a letter from NYSE Regulation requesting
information relating to Mr. Fishman’s trades in our common shares, internal policies, and the inquiries being
conducted by other bodies. We are fully cooperating with the U.S. Attorney in connection with the subpoena
and the SEC and NYSE in connection with their respective requests.
We have received a letter dated January 28, 2013, sent on behalf of a shareholder demanding that our Board of
Directors investigate and take action in connection with the allegations made in the derivative and securities
lawsuits described above. The shareholder indicated that he will commence a derivative lawsuit if our Board of
Directors fails to take the demanded action. On March 6, 2013, our Board of Directors referred the shareholder’s
letter to a committee to investigate the matter.
We are involved in other legal actions and claims arising in the ordinary course of business. We currently
believe that each such action and claim will be resolved without a material 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 effect on our financial condition, results of operations,
and liquidity.
For a discussion of discontinued operations, including KB Toys matters, see note 13.
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 use letters
of credit, which amounted to $50.8 million at February 2, 2013, as collateral to back certain of our self-insured
losses with our claims administrators.
We have purchase obligations for outstanding purchase orders for merchandise issued in the ordinary course
of our business that are valued at $489.9 million, the entirety of which represents obligations due within one
year of February 2, 2013. In addition, we have a purchase commitment for future inventory purchases totaling
$60.9 million at February 2, 2013. We paid $19.9 million, $28.0 million, and $29.7 million related to this
commitment during 2012, 2011, and 2010, 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 $117.8 million primarily
related to distribution and transportation, information technology, print advertising, energy procurement, and
other store security, supply, and maintenance commitments.