Big Lots 2013 Annual Report Download

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ANNUALREPORT
2 013
SURPRISES
IN EVERY AISLE, EVERY DAY

Table of contents

  • Page 1
    ANNUALREPORT 201 3 SURPRISES IN EVERY AISLE, EVERY DAY

  • Page 2
    ... JENNIFER is one of the most popular names in our Big Lots Buzz Club Rewards program. So it's ® ¡ Shops to save and enjoys it ¡ One of the first to check out new stores ¡ Values friends' opinions on shopping ¡ Likes options and choice in shopping THE SAVVY BARGAINISTA ¡ Everything about...

  • Page 3
    ...intend to work together at Big Lots each and every day Developing our Mission, Vision, and Values statements was the first step to our Strategic Planning Process (or SPP). Our SPP represents a 3-year view with specific strategies designed to position our business for the long term while delivering...

  • Page 4
    ...have customer engagement and sales opportunity. We also know Jennifer wants to buy online from existing or expanded assortments and pickup product in our stores. Right now, we believe ecommerce is likely to go live some time in 2015. It is critical to focus our resources on merchandising categories...

  • Page 5
    ...a good financial return, or where we did not see an opportunity to win longer-term. In 2013, we closed our wholesale business and announced the decision to exit the unprofitable Canadian market. These decisions were not taken lightly, as it affected a number of dedicated associates who worked very...

  • Page 6
    ...2012 2011 U.S. store count (a) The results of Big Lots Canada are included from the date of acquisition ( July 18, 2011) and forward. The results of our wholesale business have been reclassified as discontinued operations and therefore are excluded. (b) The results for fiscal year 2013 and 2011...

  • Page 7
    ... of fiscal 2012, we recorded a $5,574 charge ($3,388 net of tax) to cost of goods sold as a result of our successful implementation of new inventory management systems. FISCAL YEAR 2013 (a) Adjustment U.S. tax to loss Gain on benefit of contingency sale of Canadian accrual real estate wind down...

  • Page 8
    ... Michael A. Schlonsky Human Resources Dennis B. Tishkoff Chairman & Chief Executive Officer Drew Shoe Corporation Andrew D. Stein Chief Customer Officer Stewart W. Wenerstrom Chief Information Officer Martha A. Withers - Hall General Merchandise Manager BIG LOTS, INC. ANNUAL REPORT 2013

  • Page 9
    ... 2014 Annual Meeting of Shareholders of Big Lots, Inc. The Annual Meeting will be held at our corporate offices located at 300 Phillipi Road, Columbus, Ohio, on May 29, 2014, beginning at 9:00 a.m. EDT. The following pages contain the Notice of Annual Meeting of Shareholders and the Proxy Statement...

  • Page 10
    - ii -

  • Page 11
    ... 2014 Annual Meeting of Shareholders of Big Lots, Inc. will be held at our corporate offices located at 300 Phillipi Road, Columbus, Ohio, on May 29, 2014, beginning at 9:00 a.m. EDT, for the following purposes: 1. 2. 3. 4. To elect as directors of Big Lots, Inc. the nine nominees named in our 2014...

  • Page 12
    ......PROPOSAL FOUR ...AUDIT COMMITTEE DISCLOSURE ...PROPOSAL FIVE ...PROPOSAL SIX ...SHAREHOLDER PROPOSALS ...ANNUAL REPORT ON FORM 10-K ...PROXY SOLICITATION COSTS ...OTHER MATTERS ...BIG LOTS 2012 LONG-TERM INCENTIVE PLAN ...BIG LOTS 2006 BONUS PLAN ...1 5 7 11 13 15 27 33 72 73 75 76 79 80...

  • Page 13
    ... of proxies by the Board of Directors ("Board") of Big Lots, Inc., an Ohio corporation ("we," "us," "our" and "Big Lots"), for use at the 2014 Annual Meeting of Shareholders to be held on May 29, 2014 ("Annual Meeting"), at our corporate offices located at 300 Phillipi Road, Columbus, Ohio at 9:00...

  • Page 14
    ...receiving the Notice of Internet Availability, you request (via toll-free telephone number, e-mail or online) that we send you paper or electronic copies of our proxy materials, you may vote your common shares by completing, dating and signing the proxy card included with the materials and returning...

  • Page 15
    ... at any time by contacting Broadridge Financial Solutions, Inc. ("Broadridge"), either by calling 1-800-542-1061, or by writing to: Broadridge, Householding Department, 51 Mercedes Way, Edgewood, New York 11717. You will be added to or removed from the householding program within 30 days of receipt...

  • Page 16
    ... in the calculation of the number of common shares considered to be represented at the Annual Meeting for purposes of establishing a quorum. Vote Required to Approve a Proposal Proposal One Our Corporate Governance Guidelines contain a majority vote policy and our Amended Articles of Incorporation...

  • Page 17
    ...years of experience as a chief executive of a multibillion dollar company, his service on another public company board and his qualification as an "audit committee financial expert," as defined by applicable SEC rules. David J. Campisi is the Chief Executive Officer ("CEO") and President of Big Lots...

  • Page 18
    ...audit committee financial expert," as defined by applicable SEC Rules, makes him well-suited to continue serving on the Board. James R. Tener is the former President and Chief Operating Officer of Brook Mays Music Company (music retailer and wholesaler that filed for bankruptcy on July 11, 2006). Mr...

  • Page 19
    ... compensation program for our management leadership team ("Leadership Team"). Our Leadership Team is comprised of the current 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 20
    ... / 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 21
    ... 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 22
    ...our compensation programs. The Nominating / Corporate Governance Committee manages risks associated with corporate governance, related person transactions, succession planning, and business conduct and ethics. The Public Policy and Environmental Affairs Committee, a management committee that reports...

  • Page 23
    ... the Board or members of senior management will be referred to the Nominating / Corporate Governance Committee. Parties submitting communications to the Board may choose to do so anonymously or confidentially. DIRECTOR COMPENSATION Under the Big Lots, Inc. Non-Employee Director Compensation Package...

  • Page 24
    ... as an employee and consultant are shown in the Summary Compensation Table included in this Proxy Statement. Restricted Stock In fiscal 2013, the outside directors also received a restricted stock award having a grant date fair value equal to approximately $100,000 (2,972 common shares). The fiscal...

  • Page 25
    ... the opening price and the closing price of our common shares on the NYSE on the grant date. As of February 1, 2014, each individual included in the table held 2,972 shares of restricted stock. Prior to fiscal 2008, the outside directors received an annual stock option award under the Big Lots, Inc...

  • Page 26
    ... power over any of the shares. In its Schedule 13G filed on February 10, 2014, 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, 2013, had sole voting power over...

  • Page 27
    ...Board believes that the 2012 LTIP needs to include these additional performance measures to address all of the financial measures that management now focuses on in its corporate operating plan. See "Types of Awards - Performance-Based Awards" for a complete list of the performance measures available...

  • Page 28
    ... The Board has reserved a number of common shares for issuance under the 2012 LTIP equal to the sum of (1) 7,750,000 newly issued common shares plus (2) any common shares subject to the 4,702,362 outstanding awards as of March 15, 2012 under the Big Lots 2005 Long-Term Incentive Plan ("2005 LTIP...

  • Page 29
    ...awards under the 2012 LTIP. In fiscal 2013, approximately 110 employees, 8 outside directors and no consultants received equity incentive awards, although this may vary from year to year. From time to time, the Committee will determine who will be granted Awards, the number of shares subject to such...

  • Page 30
    ...within three months after a termination of service, other than due to death or disability). Stock Appreciation Rights A SAR entitles the participant, upon settlement, to receive a payment based on the excess of the fair market value of our common shares on the settlement date over the grant price of...

  • Page 31
    ...long-term compensation as permitted by the Committee, and for which the participant will receive a payment based on the value of our common shares. Deferred stock units shall be fully vested and non-forfeitable at all times. Deferred stock units, together with any dividend-equivalent rights credited...

  • Page 32
    ..., invested capital, equity, sales, or revenue); Expense targets; Cash flow (including, but not limited to, operating cash flow, free cash flow, cash flow return on equity, and cash flow return on investment); Productivity ratios; Market share; Customer satisfaction; or Working capital targets and...

  • Page 33
    ... may relate to the number of our common shares available for grant, as well as to other maximum limitations under the 2012 LTIP (e.g., exercise prices and number of Awards), and the number of our common shares or other rights and prices under outstanding Awards. Term, Amendment and Termination The...

  • Page 34
    ..., Executive Vice President, Chief Financial Officer Lisa M. Bachmann, Executive Vice President, Chief Operating Officer Joe R. Cooper, Executive Vice President and President, Big Lots Canada, Inc. Carlos V. Rodriguez, Senior Vice President, Distribution and Transportation Services Steven S. Fishman...

  • Page 35
    ...consecutive trading days, to at least 110%, 120% and 130% of the grant date fair market value before the earlier to occur of the termination of the executives employment and the lapsing of seven years after the grant date. As of February 1, 2014; there were (1) 6,805,740 common shares available for...

  • Page 36
    ... and holding period for such number of new common shares will be equal to the basis and holding period of the previously owned common shares exchanged; (3) the participant will have compensation income equal to the fair market value on the exercise date of the number of new common shares received in...

  • Page 37
    ... our subsidiaries' officers and highly paid employees) that are contingent upon or paid on account of a change in control - but only if such payments, in the aggregate, are equal to or greater than 300% of the participant's taxable compensation averaged over the five calendar years ending before the...

  • Page 38
    ...or be exempt from the requirements of Section 409A of the IRC and the treasury regulations promulgated thereunder (and any subsequent notices or guidance issued by the Internal Revenue Service). Market Value On February 1, 2014, the closing price of the Company's common shares traded on the NYSE was...

  • Page 39
    Equity Compensation Plan Information The following table summarizes information as of February 1, 2014 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 40
    ... the Plan. The Board believes that the 2006 Bonus Plan needs to include these additional performance criteria and equitable adjustments to address all of the financial measures that management now focuses on in its corporate operating plan. See "Description of Bonus Awards" for a complete list of...

  • Page 41
    ... The 2006 Bonus Plan is, and will be, administered by the Committee. Each member of the Committee will be an "independent director" for purposes of our Corporate Governance Guidelines, the Committee's charter and the NYSE listing requirements; a "non-employee director" within the meaning of Rule 16b...

  • Page 42
    ... to, operating cash flow, free cash flow, cash flow return on equity, and cash flow return on investment); Productivity ratios; Market share; Customer satisfaction; or Working capital targets and change in working capital. • The Committee, in its sole discretion, in setting the corporate...

  • Page 43
    ... payout percentages approved by the Committee are set by position level. Subject to the terms of the employment agreements, the Committee has the right to adjust the payout percentages. The 2006 Bonus Plan provides for cash compensation to be paid annually when the performance goals are achieved. No...

  • Page 44
    ... at this time. The annual bonuses paid under the 2006 Bonus Plan to the named executive officers for fiscal 2011, fiscal 2012 and fiscal 2013 are set forth in the "Non-Equity Incentive Plan Compensation" column of the Summary Compensation Table in this Proxy Statement. THE BOARD RECOMMENDS THAT...

  • Page 45
    ... to our named executive officers for fiscal 2013. For example, we did not achieve the operating profit required for our named executive officers to earn annual incentive awards for fiscal 2013 under the 2006 Bonus Plan and, as a result, our named executive officers did not receive annual incentive...

  • Page 46
    ...Statement (the "2013 sayon-pay vote"). Of the shares voted on our 2013 say-on-pay vote, a majority voted not to approve the fiscal 2012 compensation. This outcome was extremely disappointing to us, our Board and the Committee. In response to this outcome, the Committee directed our senior management...

  • Page 47
    ... practices and policies of the Company include: • Performance-Linked Pay. In accordance with the Company's pay-for-performance philosophy, performance-linked compensation comprised 31% to 63% of the compensation awarded to our named executive officers for fiscal 2013. Elimination of Excise...

  • Page 48
    ... return ("TSR") indexed to our fiscal 2010 year end stock price of $31.82; (2) our earnings per common share - diluted from continuing operations; (3) our operating profit; (4) the total compensation of our CEO as reported in our Summary Compensation Table (for Mr. Fishman in fiscal 2011 and 2012...

  • Page 49
    Company Performance and CEO Total Compensation in Fiscal 2011 - 2013 Indexed Total Shareholder Return (1) Earnings Per Common Share - Diluted from Continuing Operations Operating Profit (in thousands) CEO Total Compensation (as reported in the Summary Compensation Table) CEO Realized Compensation $...

  • Page 50
    ... be reflected in our fiscal 2014 executive compensation program: • Implemented performance share units ("PSUs") as 60% of the long-term incentive program for our named executive officers and other Leadership Team members. PSUs are not earned unless 3-year performance targets established by the...

  • Page 51
    Also at its meeting in March 2014, the Committee: (1) determined that a bonus was not payable for fiscal 2013 under the 2006 Bonus Plan; (2) reviewed the tally sheets and compensation history for all Leadership Team members; (3) reviewed internal pay equity information; (4) discussed the executive ...

  • Page 52
    ... goals and financial measures are set annually at the discretion of the Committee and the other outside directors in connection with the Board's approval of our annual corporate operating plan, subject to the terms of the 2006 Bonus Plan and our named executive officers' employment agreements. The...

  • Page 53
    ..." in the Summary Compensation Table. See the "Bonus and Equity Plans" disclosure that follows the Summary Compensation Table for more information regarding the 2006 Bonus Plan. • Equity / Long-Term Incentives All equity awards granted to our named executive officers since May 23, 2012 have been...

  • Page 54
    ... Team members; our perception of our bargaining power and the executive's bargaining power; and to the extent applicable, the elements and amounts of compensation being offered or paid to the executive by another employer. Under the terms of their employment agreements, our named executive officers...

  • Page 55
    ...lump-sum payment equal to 200% of the executive's then current annual salary and maximum annual incentive award; 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...

  • Page 56
    ...our named executive officers with important protections that we believe are necessary to attract and retain executive talent. While the Committee considers the potential payments upon termination or change in control annually when it establishes compensation for the applicable year, this information...

  • Page 57
    ... on the compensation of each Leadership Team member for fiscal 2013; determined that a bonus was not payable under the 2006 Bonus Plan as a result of corporate performance in fiscal 2012; determined that Mr. Fishman's fiscal 2012 restricted stock award would not vest because the required corporate...

  • Page 58
    ... fiscal 2013 annual incentive awards because they believe it is a strong indicator of our operating results and financial condition. The Committee and other outside directors selected the corporate performance goals based on the annual corporate operating plan established by the Board. The corporate...

  • Page 59
    ... performance amounts for fiscal 2013 were to reward 2006 Bonus Plan participants while encouraging strong corporate earnings growth. As a result of not making fiscal 2013 annual incentive award payments, total cash compensation paid to our named executive officers for fiscal 2013 was generally at or...

  • Page 60
    ... of our long-term incentive program from fiscal 2012 to fiscal 2013 in order to allow the new CEO to provide input into the program, thereby avoiding the possibility of modifying the program in consecutive years. Therefore, the equity compensation awarded to our named executive officers for fiscal...

  • Page 61
    ...market price of our common shares appreciates, for a period of 20 consecutive trading days, to at least 110%, 120% and 130% of the grant date fair market value of $37.13 (i.e., appreciate to $40.84, $44.56, and $48.27) before Mr. Campisi's employment terminates or seven years lapse. On April 1, 2013...

  • Page 62
    ...equity awards to our named executive officers and former executives for fiscal 2013. • Mr. Johnson: (1) (2) (3) (4) • Fiscal 2012 SG&A expenses were $1.8 billion - approximately $90.2 million below our fiscal 2012 corporate operating plan; Development and implementation of our annual corporate...

  • Page 63
    ... point), market capitalization, net income, earnings per share, price-to-earnings ratio and shareholder return. Exequity provided the Committee with comparative executive compensation data it obtained from the proxy statements and other reports made public by the companies in the retailer-only...

  • Page 64
    ... are similar to us in terms of operations or revenues and the continued availability of compensation information from companies previously included in either comparator group. The Committee and our human resources department reviewed each Leadership Team member's responsibilities and compared, where...

  • Page 65
    ... second trading day following our release of fiscal 2012 results. This future date was established to allow the market to absorb and react to our release of material non-public information, and to avoid any suggestion that the Board, the Committee or any employee manipulated the terms of the equity...

  • Page 66
    ...Executive Vice President, Chief Operating Officer Joe R. Cooper, Executive Vice President, President, Big Lots Canada Carlos V. Rodriguez, Senior Vice President, Distribution and Transportation Services (9) Steven S. Fishman, Former Chairman, Chief Executive Officer and President (11) Year (b) 2013...

  • Page 67
    ... to all full-time employees; Big Lots paid premiums for long-term disability insurance, which is described in the "Overview of our Executive Compensation Program - Elements of In-Service Compensation - Personal Benefits/Perquisites" section of the CD&A; The cost to Big Lots associated with the use...

  • Page 68
    ... of In-Service Compensation - Personal Benefits/Perquisites" section of the CD&A. Name Reimbursement of Taxes ($) Big Lots Contributions to Defined Contribution Plans ($) Big Lots Paid Health Care under Executive Benefits Plans ($) Big Lots Paid Life Insurance Premiums ($) Big Lots Paid Long-Term...

  • Page 69
    ... Vice President, Chief Merchandising Officer until November 25, 2013. Bonus and Equity Plans The amounts reported in the Summary Compensation Table above include amounts earned under the 2006 Bonus Plan, the 2005 LTIP and the 2012 LTIP. Below is a description of the material terms of each plan...

  • Page 70
    ... the CD&A for more information regarding the 2006 Bonus Plan and the awards made under that plan for fiscal 2013. Big Lots 2005 Long-Term Incentive Plan From January 1, 2006 through May 23, 2012, all employee equity awards, including those made to our named executive officers, were granted under the...

  • Page 71
    ... four years of the seven year option term. Pursuant to the terms of the 2012 LTIP, the exercise price of a stock option may not be less than the average trading price of our common shares on the grant date or, if the grant date occurs on a day other than a trading day, on the next trading day. Under...

  • Page 72
    ... second trading day following our release of results from our last completed fiscal year. This future date was established to allow the market to absorb and react to our release of material non-public information, and to avoid any suggestion that the Board, the Compensation Committee or any employee...

  • Page 73
    ... table and the "Our Executive Compensation Program for Fiscal 2013 - Equity for Fiscal 2013" section of the CD&A. Pursuant to the terms of the 2012 LTIP, the exercise price of the NQSOs awarded in fiscal 2013 is equal to the fair market value of our common shares on the grant date. The fair market...

  • Page 74
    ... Year-End The following table sets forth, as of the end of fiscal 2013, 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 or Payout Awards: Market Value of Number...

  • Page 75
    ... stock awards, performance share units award and the Retention Awards, including the vesting terms, see the narrative discussion preceding the Grants of Plan-Based Awards in Fiscal 2013 table and the "Our Executive Compensation Program for Fiscal 2013 - Equity for Fiscal 2013" section of the...

  • Page 76
    ... 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 2013 The following table reflects the contributions to, earnings in and balance of each named executive officer...

  • Page 77
    ..." column of the Summary Compensation Table for fiscal 2013. The amounts in this column are not included in the Summary Compensation Table as these amounts reflect only the earnings on the investments designated by the named executive officer in his or her Supplemental Savings Plan account in fiscal...

  • Page 78
    ... participating named executive officer will receive a lump sum payment of all amounts (vested and unvested) under the Supplemental Savings Plan. (See the "Nonqualified Deferred Compensation" section above for more information regarding the Supplemental Savings Plan and our named executive officers...

  • Page 79
    ...(s). • • • Notwithstanding the foregoing definitions, pursuant to our named executive officers' employment agreements, senior executive severance agreements, the 1996 LTIP, the 2005 LTIP, the 2012 LTIP, and the 2006 Bonus Plan, a change in control does not include any transaction, merger...

  • Page 80
    ...-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 annual incentive award actually earned by the applicable named executive officer for fiscal 2013 performance...

  • Page 81
    ... 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 ($) Total ($) 235,000 0 21,223 - - 254,505...

  • Page 82
    ... 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 ($) Total ($) 580,000 0 82,213 - 13,200...

  • Page 83
    ... 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 ($) Total ($) 550,000 - 30,064 - 13,200...

  • Page 84
    ... 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, and when used year-over-year, it has the effect of promoting our long-term financial...

  • Page 85
    ...to our named executive officers for fiscal 2013. For example, we did not achieve the operating profit required for our named executive officers to earn annual incentive awards for fiscal 2013 under the 2006 Bonus Plan. Accordingly, the named executive officers did not receive annual incentive awards...

  • Page 86
    ... specific engagement authorization. The Audit Committee requires the independent registered public accounting firm and management to report on the actual fees incurred for each category of service at Audit Committee meetings throughout the year. During the year, it may become necessary to engage the...

  • Page 87
    ... present at the Annual Meeting to respond to appropriate questions and to make a statement if so desired. THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE FOR THE PROPOSAL TO RATIFY THE APPOINTMENT OF DELOITTE & TOUCHE LLP AS OUR INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM FOR FISCAL 2014. - 75 -

  • Page 88
    ... be elected the name, Disclosure and Statement (as defined herein) of any person nominated for election to the board by a shareholder or group (the "Nominator") that meets the criteria established below. Big Lots shall allow shareholders to vote on such nominee on Big Lots' proxy card. The number of...

  • Page 89
    ..., chair of the compensation committee; the board subsequently rejected Mr. Holt's resignation. The average tenure of Big Lot's eight non-executive directors will reach 11 years in 2014. • We urge shareholders to vote FOR this proposal. BOARD OF DIRECTORS' STATEMENT IN OPPOSITION TO SHAREHOLDER...

  • Page 90
    ... could produce an inexperienced Board that lacks the sufficient knowledge and understanding of our current and past business necessary to provide meaningful and effective oversight of our operations and long-term strategies. Similarly, our management and directors would be required to divert their...

  • Page 91
    ... presented at our 2015 annual meeting of shareholders must be received by our Corporate Secretary at our corporate offices on or before December 16, 2014 to be eligible for inclusion in our 2015 proxy statement and form of proxy. Such proposals must be submitted in accordance with Rule 14a-8 of the...

  • Page 92
    ...the "SEC Filings" caption. PROXY SOLICITATION COSTS This solicitation of proxies is made by and on behalf of the Board. In addition to mailing the Notice of Internet Availability (or, if applicable, paper copies of this Proxy Statement, the Notice of Annual Meeting of Shareholders and the proxy card...

  • Page 93
    APPENDIX A BIG LOTS 2012 LONG-TERM INCENTIVE PLAN AMENDED AND RESTATED EFFECTIVE MAY 293, 20142

  • Page 94
    (This page intentionally left blank.)

  • Page 95
    ...Article 14. Transferability of Awards Article 15. Impact of Termination of Employment or Service on Awards Article 16. Substitution Awards Article 17. Dividend-Equivalent Rights Article 18. Beneficiary Designation Article 19. Rights of Participants Article 20. Change in Control Article 21. Amendment...

  • Page 96
    Big Lots 2012 Long-Term Incentive Plan ARTICLE 1. ESTABLISHMENT, PURPOSE, AND DURATION 1.1 Establishment. Big Lots, Inc., an Ohio corporation (hereinafter referred to as the "Company"), establishes an incentive compensation plan to be known as the Big Lots 2012 Long-Term Incentive Plan (hereinafter ...

  • Page 97
    ...reason, the members of the Board that each satisfy the requirements of an "outside director" for purposes of Code Section 162(m) may take any action under the Plan that would otherwise be the responsibility of the Committee. 2.11 "Company" means Big Lots, Inc., an Ohio corporation, and any successor...

  • Page 98
    ...25 "Fair Market Value" or "FMV" means a price that is equal to the opening, closing, actual, high, low, or average selling prices of a Share reported on the New York Stock Exchange ("NYSE") or other established stock exchange (or exchanges) on the applicable date, the preceding trading day, the next...

  • Page 99
    ... otherwise, Fair Market Value shall be deemed to be equal to the average of the reported opening and closing prices of a Share on the most recent date on which Shares were publicly traded. In the event Shares are not publicly traded at the time a determination of their value is required to be made...

  • Page 100
    ... the applicable Performance Period. 2.41 "Performance Share Unit" means a Participant's contractual right to receive a stated number of Shares or, if provided by the Committee on or after the Grant Date, cash equal to the Fair Market Value of such Shares, under the Plan at a specified time that...

  • Page 101
    ...this Article 3 (Administration) and the other provisions of this Plan. The Committee may employ attorneys, consultants, accountants, agents, and other individuals, any of whom may be an Employee, and the Committee, the Company, and its officers and Directors shall be entitled to rely upon the advice...

  • Page 102
    ... the Grant Price of a Stock Appreciation Right under the Plan, or (iv) repurchased on the open market with the proceeds of an Option exercise will no longer be eligible to be again available for grant under this Plan. To the extent permitted by applicable law or stock exchange rule, Shares issued in...

  • Page 103
    ...number of outstanding Shares or distribution (other than normal cash dividends) to shareholders of the Company, or any similar corporate event or transaction, the Committee, in order to prevent dilution or enlargement of Participants' rights under this Plan, shall substitute or adjust, as applicable...

  • Page 104
    ... at least six (6) months (or such other longer period, if any, as the Committee may permit) prior to their tender to satisfy the Exercise Price if acquired under this Plan or any other compensation plan maintained by the Company or have been purchased on the open market); (c) by a cashless (broker...

  • Page 105
    Subject to any governing rules or regulations, as soon as practicable after receipt of written notification of exercise and full payment (including satisfaction of any applicable tax withholding), the Company shall deliver to the Participant evidence of book entry Shares or Share certificates in an ...

  • Page 106
    ..., or by operation of law, is subject to certain restrictions on transfer as set forth in the Big Lots 2012 Long-Term Incentive Plan, and in the associated Award Agreement. A copy of this Plan and such Award Agreement may be obtained from Big Lots, Inc." 8.5 Rights. Unless otherwise determined...

  • Page 107
    ..., the Company shall issue the Shares underlying any of a Participant's Deferred Stock Units (and any related Dividend-Equivalent Rights) credited to such Participant's account under this Plan within ninety (90) days following the date of such Participant's Termination of Employment or Service (or...

  • Page 108
    ... Units. Subject to the terms of this Plan, after the applicable Performance Period has ended, the holder of Performance Shares, Performance Share Units, and/or Performance Units shall be entitled to receive payout on the value and number of Performance Shares, Performance Share Units, and/or...

  • Page 109
    ...with the terms of the Award, in cash or Shares as the Committee determines. The Company may pay earned Cash-Based Awards and Other StockBased Awards in the form of cash or in Shares (or in a combination thereof) equal to the value of the earned Award at the close of the applicable Performance Period...

  • Page 110
    ... the accounting principles generally accepted in the United States of America, to the extent applicable, and will be reported or appear in the Company's filings with the Securities and Exchange Commission (including, but not limited to, Forms 8-K, 10-Q and 10-K) or the Company's annual report to...

  • Page 111
    ... (including, but not limited to, operating cash flow, free cash flow, cash flow return on equity, and cash flow return on investment); or (z) (aa) (bb) (cc) Productivity ratios; or Market share; or Customer satisfaction; or Working capital targets and change in working capital; or (u)(dd) Any of...

  • Page 112
    ... combination or any other purchase or sale involving the Company and/or its Affiliates (or foreign equivalent of any of the foregoing); or (f) Any profit or loss attributable to the business operations of a specified segment as described in ASC 280, Segment Reporting (formerly SFAS No. 131), as...

  • Page 113
    ...), if Qualified Performance-Based Awards are to be made under Article 13 (Qualified Performance-Based Awards and Performance Measures) after the date of such shareholders meeting and if required by Code Section 162(m). The material terms include the employees eligible to receive Qualified A-19

  • Page 114
    ... (and not as having terminated employment for purposes of this Plan) so long as the period of the leave does not exceed six (6) months, or if longer, so long as the Participant retains a right to reemployment with the Company or an Affiliate under an applicable statute or by contract. 15.4 Change in...

  • Page 115
    ... nor confer upon any Participant any right to continue his employment or service as a Director or Third Party Service Provider for any specified period of time. Neither an Award nor any benefits arising under this Plan shall constitute an employment contract with the Company or any of its Affiliates...

  • Page 116
    ... Stock Unit shall be deemed to have been satisfied in full, and the Common Shares or cash subject to such Award shall be fully distributable; and (f) Any Cash-Based Awards and Other Stock-Based Awards outstanding as of the date of such Change in Control and not then vested shall vest to the full...

  • Page 117
    ... those described in Section 4.4 (Shares Subject to this Plan and Award Limitations/ Adjustments in Authorized Shares) hereof), affecting the Company or the financial statements of the Company or of changes in applicable laws, regulations, or accounting principles, whenever the Committee determines...

  • Page 118
    ... federal or state law, rule, or regulation and may require any Participant to make such representations and furnish such information as it may consider appropriate in connection with the issuance or delivery of Shares in compliance with applicable laws, rules, and regulations. The Company shall not...

  • Page 119
    ... Share). 24.12 No Impact on Benefits. Except as may otherwise be specifically stated under any employee benefit plan, policy or program, no amount payable in respect of any Award shall be treated as compensation for purposes of calculating a Participant's right under any such plan, policy or program...

  • Page 120
    ... as appropriate, on account of a separation from service, shall be postponed for six (6) months following the date of the Participant's separation from service. If a distribution, payment or settlement, as applicable, is delayed pursuant to this paragraph, the distribution, payment or settlement, as...

  • Page 121
    ... shall have no right to be advised of any material information regarding the Company or any Affiliate at any time prior to, upon or in connection with receipt or the exercise or distribution of an Award. The Company makes no representation or warranty as to the future value of the Shares that may be...

  • Page 122
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  • Page 123
    APPENDIX B BIG LOTS 2006 BONUS PLAN AMENDED AND RESTATED EFFECTIVE MAY 27, 201029, 2014

  • Page 124
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  • Page 125
    BIG LOTS 2006 BONUS PLAN 1. NAME 1.01. The Big Lots 2006 Bonus Plan (the "Plan") was originally established by Big Lots, Inc., effective as of January 29, 2006 (the "Effective Date"), subject to approval by the Company's shareholders no later than June 1, 2006. The Plan was firsthas been amended and...

  • Page 126
    ... of this Plan that require action by the Committee, "Committee" means at least a majority of the members of the Compensation Committee of the Board. "Common Shares" means the common shares of the Company, its successors and assigns. "Company" means Big Lots, Inc., an Ohio Corporation, its successors...

  • Page 127
    ... portion of a Fiscal Year. (i) With respect to employees who are not Covered Associates, an employee newly hired or transferred into an Eligible Position shall have his/her participation prorated during the first Fiscal Year provided employment or transfer occurs at least two months prior to the end...

  • Page 128
    ...) An employee (other than a Covered Associate) transferred out of an Eligible Position may receive a prorated Bonus at the discretion of the Committee provided he/she served in the Eligible Position for at least two full months during the Fiscal Year. With respect to Covered Associates approved for...

  • Page 129
    ... and establish in writing the performance measures applicable to the Performance Period for Participants who are not Covered Associates. Such pre-established performance measures must state, in terms of an objective formula or standard, the method for computing the amount of the Bonus payable...

  • Page 130
    ..., at the discretion of the Committee may be discounted to reasonably reflect the time value of money for the prepayment. The amount of the Conditional Payment that will be returned to the Company is equal to the Conditional Payment less the Bonus payment that has vested, if any. For example, if...

  • Page 131
    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 132
    ... be paid or provided) until the first business day of the seventh month following the Participant's date of Termination (or, if earlier, the Participant's death). Distribution in Event of Financial Emergency. If requested by a Participant while in the employ of the Company or an Affiliate and if the...

  • Page 133
    ... thirty days preceding or twelve months following the Change of Control event, irrevocably elect to terminate the Plan and to distribute all Deferred Bonus Accounts under the Plan in accordance with Treasury Regulation §1.409A-3(j)(4)(ix)(B); provided that all agreements, methods, programs and...

  • Page 134
    ..., all such Participants are required to receive all amounts of compensation deferred under the terminated arrangements within twelve months of the date the Company irrevocably takes all necessary action to terminate and distribute amounts under such arrangements. 7. RIGHTS OF PARTICIPANTS 7.01. No...

  • Page 135
    ... 409A. Distributions of Deferred Bonus Accounts on termination of the Plan shall occur only under 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...

  • Page 136
    ... Board or the Committee shall have any liability with respect to any failure to comply with the requirements of IRC section 409A and the Treasury Regulations promulgated thereunder. The Company may accelerate the time or schedule of a distribution to a Participant at any time the Plan fails to meet...

  • Page 137
    ... (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 138
    ..., operating cash flow, free cash flow, cash flow return on equity, and cash flow return on investment): Productivity ratios; Market share; Customer satisfaction; Working capital targets and change in working capital; Any of items (a) through (ucc) with respect to any subsidiary, Affiliate, business...

  • Page 139
    ... combination or any other purchase or sale involving the Company and/or its Affiliates (or foreign equivalent of any of the foregoing); Any profit or loss attributable to the business operations of a reportablespecified segment as described byin ASC 280 - Segment Reporting (formerly SFAS No. 131...

  • Page 140
    ...), as amended, revised or superseded; Shares-based compensation charges 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; Any gain or loss as reported as a component of other...

  • Page 141
    ...075,281,384 on August 3, 2013, the last business day of the Registrant's most recently completed second fiscal quarter (based on the closing price of the Registrant's Common Shares on such date as reported on the New York Stock Exchange). The number of the registrant's common shares, $0.01 par value...

  • Page 142
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  • Page 143
    ... Disclosures 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 Security...

  • Page 144
    ...greeting cards, tools, paint, and home maintenance departments. The Furniture & Home Décor category includes our upholstery, mattress, ready-to-assemble, case goods, home décor, and frames departments. The Seasonal category includes our lawn & garden, summer, Christmas, toys, books, sporting goods...

  • Page 145
    ... traditional discount retailers. We attempt to maximize the amount of closeout merchandise available in our stores. We work closely with our vendors to obtain brand-name closeout merchandise that is easily recognizable by our customers. In addition to closeout merchandise, we stock many products on...

  • Page 146
    ... New Mexico New York North Carolina North Dakota 7 27 20 48 10 14 28 2 3 13 7 25 12 63 74 1 Ohio Oklahoma Oregon Pennsylvania Rhode Island South Carolina South Dakota Tennessee Texas Utah Vermont Virginia Washington West Virginia Wisconsin Wyoming District of Columbia Total stores Number of states...

  • Page 147
    ... from other general merchandise, discount, food, furniture, arts and crafts, and dollar store retailers, which operate in traditional brick and mortar stores and/or online. Additionally, we compete with a number of companies for retail site locations, to attract and retain quality employees, and to...

  • Page 148
    ...Buzz Club® in the U.S., is an important marketing tool that allows us to communicate in a cost effective manner with our customers, including e-mail delivery of our circulars. In addition to the Buzz Club®, we operate the Buzz Club Rewards® program ("Rewards"), which allows us to send specialized...

  • Page 149
    ..., Compensation, and Nominating/Corporate Governance Committees; and our Public Policy and Environmental Affairs Committee; Code of Business Conduct and Ethics; Code of Ethics for Financial Officers; Chief Executive Officer and Chief Financial Officer certifications related to our SEC filings; the...

  • Page 150
    ... discount retail industry, which includes both traditional brick and mortar stores and online marketplaces, is highly competitive. 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...

  • Page 151
    ... for customers and products. It is possible that the increasing competition in the online retail space may reduce our market share, gross margin, and operating margin, and may materially adversely affect our business and results of operations in other ways. Our current strategic planning efforts...

  • Page 152
    ...% of our current stores in our U.S. segment operate in these states and 35% of our 2013 net sales in our U.S. segment occurred in these states. Changes in federal or state legislation and regulations, including the effects of legislation and regulations on product safety, could increase our cost of...

  • Page 153
    ... additional information regarding our accounting policies for long-lived assets, 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 of operations, and liquidity. We...

  • Page 154
    ...our merchandise. To grow our operations and meet the needs and expectations of our customers, we must attract, train, and retain a large number of highly qualified associates, while at the same time control labor costs. We compete with other retail businesses for many of our associates in hourly and...

  • Page 155
    ...from our store counts at February 1, 2014. The 55 owned stores are located in the following states: State Arizona California Colorado Florida Louisiana Michigan New Mexico Ohio Texas Total Stores Owned 2 39 3 3 1 1 2 1 3 55 Store leases generally obligate us for fixed monthly rental payments plus...

  • Page 156
    ... the United States in Ohio, California, Alabama, Oklahoma, and Pennsylvania. In Canada, at February 1, 2014, we leased two regional distribution centers located in British Columbia and one located in Ontario, all of which we closed during the fourth quarter of 2013 as part of the Canadian Wind Down...

  • Page 157
    ... Senior Vice President, Chief Information Officer Senior Vice President, General Merchandise Manager Vice President, Controller Officer Since 2013 2002 2013 2000 2004 2013 2013 2014 2012 2000 2013 2005 2013 2005 David J. Campisi is our Chief Executive Officer and President. Before joining Big Lots...

  • Page 158
    ...divisional merchandise manager at Sears Holdings Corporation, Giant Eagle, Inc., and May Department Stores, Co., which are general merchandise and grocery retailers. Joe R. Cooper is responsible for our Canadian operations. Mr. Cooper was appointed President of Big Lots Canada, Inc. in July 2011. Mr...

  • Page 159
    ... Stage Stores, Inc., a department store retailer and Senior Vice President, General Merchandise Manager with Stein Mart, Inc., a discount clothing, accessories and housewares retailer. Paul A. Schroeder is responsible for internal and external financial reporting and accounting operations including...

  • Page 160
    ...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 common share for our common shares as reported on the NYSE composite tape for the fiscal periods indicated: 2013 First Quarter Second Quarter Third Quarter...

  • Page 161
    ... graph and table is not necessarily indicative of future stock price performance. Indexed Returns Years Ended Base Period January Company / Index Big Lots, Inc. S&P 500 Index S&P 500 Retailing Index $ $ 2009 100.00 $ 100.00 100.00 $ January 2010 211.23 $ 133.14 155.55 $ January 2011 236.58...

  • Page 162
    ... and should be read in conjunction with MD&A and the consolidated financial statements and related notes included herein. Fiscal Year (d) (In thousands, except per share amounts and store counts) 2013 $ (a) (c) 2012 (b) (c) 2011 (a) (c) 5,159,249 $ 3,096,200 2,063,049 1,629,218 90,135 - 343...

  • Page 163
    (c) On July 18, 2011, we completed our acquisition of Liquidation World Inc. (now known as Big Lots Canada, Inc.), whose results are included in the consolidated results since that date. (d) In the fourth quarter of 2013, we ceased the operations of our wholesale business; therefore, the results of ...

  • Page 164
    ... costs associated with the operating leases of our distribution centers. Please see note 13 to the accompanying consolidated financial statements for a more detailed discussion regarding the Canadian Wind Down activities. Additionally, in 2013, we recorded a $23.9 million U.S. deferred tax benefit...

  • Page 165
    ... review, Mr. Campisi and the senior management team introduced our new operating strategy, the Edit to Amplify strategy ("Edit to Amplify"), which applies to all aspects of our business, but has a particular focus on merchandising, marketing, and our customers' shopping experience, all of which we...

  • Page 166
    ... work directly with them to create product offerings specifically for our store, which allows for us to provide a high-quality product at a competitive price. Our Seasonal and Electronics & Accessories categories will focus around our core customers' discretionary purchases, such as patio furniture...

  • Page 167
    ...key metric that will drive long-term company net sales performance. By focusing on growing merchandise categories, which includes managing contraction in certain departments, we believe our merchandise management team can address our customer's changing shopping behaviors and implement more tailored...

  • Page 168
    ... fourth quarter of 2013, we discontinued receiving merchandise and closed our distribution centers. During the first quarter of 2014 and prior to filing this Form10-K, we closed all of our remaining stores. Additionally, we transferred the majority of our administrative functions from our office in...

  • Page 169
    ... greeting card, tools, paint, and home maintenance departments. The Furniture & Home Décor category includes our upholstery, mattress, ready-to-assemble, case goods, home décor, and frames departments. The Seasonal category includes our lawn & garden, summer, Christmas, toys, books, sporting goods...

  • Page 170
    ... and share-based compensation expense of $4.7 million, and a gain on the sale of real estate of $3.6 million. The increase in store occupancy expenses was primarily the result of an increase in the average number of stores operating per month in 2013 as compared to 2012. The increase in distribution...

  • Page 171
    ... 2012. For 2014, we expect capital expenditures of approximately $115 million to $120 million, which includes maintenance capital for our stores, distributions centers, and corporate offices, the construction and opening of 30 new stores and investing in coolers, freezers and e-commerce technologies...

  • Page 172
    ... closeouts in 2012 compared to 2011. The Seasonal category experienced a decrease in comps, which was driven by our toys, fall seasonal, and summer departments, partially offset by strong sales of our Christmas trim, which had positive comps as our customers responded to a new assortment of products...

  • Page 173
    ...44 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. Our corporate office payroll costs increased primarily due to the growth in our merchandising team and...

  • Page 174
    ...consequently, our 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 nine-week Christmas selling season in our fourth fiscal quarter. Generally, our working capital requirements peak late...

  • Page 175
    ...estimated impact of cash needs of Big Lots Canada, but excludes the impact of any potential share repurchase activity under the 2014 Repurchase Program. Working capital was $543.6 million at February 1, 2014. Whenever our liquidity position requires us to borrow funds under the 2011 Credit Agreement...

  • Page 176
    ... for retail store, office, and warehouse space operating leases are $1,003.1 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 taxes...

  • Page 177
    ... 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 178
    ... 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 179
    ... share units to our employees under shareholder approved incentive plans. Share-based compensation expense was $13.2 million, $17.9 million, and $25.0 million in 2013, 2012, and 2011, respectively. Future share-based compensation expense for stock options is dependent upon the number and terms...

  • Page 180
    ... to help determine the discount rate and expected 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...

  • Page 181
    .... Management makes estimates, judgments, and assumptions with respect to the use of these actuarially-based calculations, including but not limited to, estimated health care cost trends, estimated lag time to report and pay claims, average cost per claim, network utilization rates, network discount...

  • Page 182
    ITEM 8. FINANCIAL STATEMENTS AND 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 ...

  • Page 183
    ... 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 1, 2014 and February 2, 2013, and the related consolidated statements of operations, comprehensive income, stockholders' equity, and cash...

  • Page 184
    BIG LOTS, INC. AND SUBSIDIARIES Consolidated Statements of Operations (In thousands, except per share amounts) 2013 5,301,912 $ 3,236,606 2,065,306 1,759,745 115,122 190,439 (3,339) (1,213) 185,887 61,118 124,769 526 125,295 $ 2012 5,367,165 $ 3,254,837 2,112,328 1,708,160 106,137 298,031 (4,192) 51...

  • Page 185
    ... income (loss) Comprehensive income $ 2013 125,295 $ (3,589) 1,005 2,403 (181) 125,114 $ 2012 177,121 $ (383) 1,403 1,169 2,189 179,310 $ 2011 207,064 (1,050) 1,066 (5,065) (5,049) 202,015 $ The accompanying notes are an integral part of these consolidated financial statements. 43

  • Page 186
    ... operating expenses Insurance reserves KB bankruptcy lease obligation Accrued salaries and wages Income taxes payable Total current liabilities Long-term obligations Deferred income taxes Deferred rent Insurance reserves Unrecognized tax benefits Other liabilities Shareholders' equity: Preferred...

  • Page 187
    ... 29, 2011 Comprehensive income Purchases of common shares 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 188
    BIG LOTS, INC. AND SUBSIDIARIES Consolidated Statements of Cash Flows (In thousands) 2013 Operating activities: Net income Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization expense Deferred income taxes Non-cash share-based compensation ...

  • Page 189
    ...broadline closeout retailing by providing our customers with great savings on brand-name closeouts and other value-priced merchandise. During the first quarter of 2014, we ceased all operations in Canada. Please see the Canadian Segment section of note 13 to the consolidated financial statements for...

  • Page 190
    ... represent the average cost-to-retail ratio computed using beginning inventory and all 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...

  • Page 191
    ... equipment Office and computer equipment Computer software costs Company vehicles 15 years 40 years 5 years 5 years 5 - 15 years 5 years 5 - 8 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...

  • Page 192
    ... 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 193
    ... data and historical trends to help determine the discount rate and expected 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...

  • Page 194
    ...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 the final payment and takes...

  • Page 195
    ....5 million for 2013, 2012, and 2011, respectively. Store Pre-opening Costs Pre-opening costs incurred during the construction periods for new store openings are expensed as incurred and included in our selling and administrative expenses. Share-Based Compensation Share-based compensation expense is...

  • Page 196
    ... greeting card, tools, paint, and home maintenance departments. The Furniture & Home Décor category includes our upholstery, mattress, ready-to-assemble, case goods, home décor, and frames departments. The Seasonal category includes our lawn & garden, summer, Christmas, toys, books, sporting goods...

  • Page 197
    ...past two years. For each store with 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...

  • Page 198
    ... of our retail stores, 0.5 million square feet of warehouse space, and certain transportation, information technology and other office equipment. Many of the store leases obligate us to pay for our applicable portion of real estate taxes, CAM, and property insurance. Certain store leases provide for...

  • Page 199
    ...: Fiscal Year 2014 2015 2016 2017 2018 Thereafter Total lease payments Less amount to discount to present value Capital lease obligation per balance sheet NOTE 6 - SHAREHOLDERS' EQUITY (In thousands) $ 930 86 2 - - - 1,018 (8) 1,010 $ $ Earnings per Share There were no adjustments required to...

  • Page 200
    ... the 2012 LTIP. The number of common shares available for issuance under the 2012 LTIP consists of an initial allocation of 7,750,000 common shares plus any common shares subject to the 4,702,362 outstanding awards as of March 15, 2012 under the Big Lots 2005 Long-Term Incentive Plan ("2005 LTIP...

  • Page 201
    ... 2013 Granted Exercised Forfeited Outstanding stock options at February 1, 2014 Vested or expected to vest at February 1, 2014 Exercisable at February 1, 2014 59 Weighted Average Remaining Aggregate Weighted Contractual Intrinsic Average Value Term Number of Exercise Price (000's) (years) Per Share...

  • Page 202
    ... will vest on the opening of our first trading window five years after the grant date of the award. If we 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...

  • Page 203
    ... In 2013, 2012, and 2011, we incurred pretax non-cash settlement charges of $0.1 million, $0.3 million and $0.3 million, respectively. The settlement charges were caused by lump sum benefit payments made to plan participants in excess of combined annual service cost and interest cost for each year...

  • Page 204
    ... Projected benefit obligation at beginning of year Service cost Interest cost Benefits and settlements paid Actuarial (gain) 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...

  • Page 205
    ... the Pension Plan in 2013 or in 2012. Our funding policy of the Pension Plan is to make annual contributions based on advice from our actuaries and the evaluation of our cash position, but not less than the minimum required by applicable regulations. Currently, we expect no required contributions to...

  • Page 206
    ... a nonqualified deferred compensation plan with a similar deferral feature for eligible employees. We contribute a matching percentage of employee contributions. Our matching contributions are subject to Internal Revenue Service ("IRS") regulations. For 2013, 2012, and 2011, we expensed $5.7 million...

  • Page 207
    ... in the common shares of Big Lots Canada as it has become more likely than not during the fourth quarter of 2013 that such excess will be recovered as a worthless stock deduction in the foreseeable future. In 2013, 2012, and 2011, the valuation allowance was associated with the non-U.S. deferred...

  • Page 208
    ...-U.S. net operating losses Compensation related Impaired investment in foreign subsidiary Uniform inventory capitalization Depreciation and fixed asset basis differences Accrued state taxes State tax credits, net of federal tax benefit Pension plans Accrued operating liabilities KB store lease and...

  • Page 209
    ... share units. Tax benefits of $0.2 million, $8.1 million, and $2.7 million in 2013, 2012, and 2011, respectively, were credited directly to shareholders' equity related to share-based compensation deductions in excess of expense recognized for these awards. The Company's Canadian subsidiary...

  • Page 210
    ... returns for Canadian and provincial income taxes for periods prior to the year ending October 1, 2006 have lapsed. We have estimated the reasonably possible expected net change in unrecognized tax benefits through January 31, 2015, based on expected cash and noncash settlements or payments...

  • Page 211
    ... our financial statements. 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. We provided information in response to the subpoena in late 2012 and early 2013...

  • Page 212
    ... quarter of fiscal 2012, internal policies, trading in our common shares by our directors and officers, and the terms of employment with Mr. Fishman. We provided information in response to the SEC request in late 2012 and early 2013. On May 20, 2013, our counsel received a letter dated May 9, 2013...

  • Page 213
    ... our acquisition of Big Lots Canada in the second quarter of 2011, and primarily related to fair value adjustments on our intangible assets and liabilities associated with the acquired operating leases. Our entire balance of goodwill related to our Canadian segment. In the second quarter of 2013, we...

  • Page 214
    ... financial statements for further discussion. The wind down of our Canadian operations has been separated into two phases: our distribution centers and our stores. During the fourth quarter of 2013, we ceased the operations in our distribution centers, as receiving, processing, and distributing...

  • Page 215
    ... presented. For 2013, 2012, and 2011, the closed stores' operating income (loss) is comprised of exit-related costs, utilities, and security expenses on leased properties with remaining terms. KB Toys Matters We acquired the KB Toys business from Melville Corporation (now known as CVS New York, Inc...

  • Page 216
    ...discontinued operations of $18.1 million in years prior to 2007. We based this amount on the number of demand notices that we had received from landlords and used information received from KB-I, the bankruptcy trust, and our own lease records which date back to when we owned the KB Toys business. In...

  • Page 217
    ... financial statements for further information on our pension plans. NOTE 16 - SALE OF REAL ESTATE In October 2013, we sold company-owned real property in California, on a component of which we operate a store, for $5.1 million. Concurrently with the sale, we entered into a lease agreement...

  • Page 218
    ... greeting card, tools, paint, and home maintenance departments. The Furniture & Home Décor category includes our upholstery, mattress, ready-to-assemble, case goods, home décor, and frames departments. The Seasonal category includes our lawn & garden, summer, Christmas, toys, books, sporting goods...

  • Page 219
    ...quarterly financial data does not agree to our previously issued quarterly reports as a result of the reclassification of our wholesale business to discontinued operations during the fourth quarter of 2013. Please see the Wholesale Business section of note 14 to the consolidated financial statements...

  • Page 220
    ...table presents net sales data by segment and merchandise category by quarter in 2013, as reclassified: Fiscal Year 2013 (In thousands) First Second Third Fourth Year U.S Furniture & Home Décor Seasonal Consumables Food Hard Home Electronics & Accessories Soft Home Total U.S. Canada Net sales...

  • Page 221
    ... over financial reporting. Item 9B. Other Information Not applicable. Part III Item 10. Directors, Executive Officers and Corporate Governance The information contained under the captions "Proposal One: Election of Directors," "Governance," and "Stock Ownership" in the 2014 Proxy Statement, with...

  • Page 222
    ... effective May 27, 2010 (incorporated herein by reference to Exhibit 4.4 to our Form S-8 dated March 3, 2011). Form of Big Lots 2005 Long-Term Incentive Plan Non-Qualified Stock Option Award Agreement (incorporated herein by reference to Exhibit 10.4 to our Form 8-K dated February 21, 2006). 80

  • Page 223
    ... the year ended February 2, 2013). Form of Big Lots 2012 Long-Term Incentive Plan Restricted Stock Award Agreement for Nonemployee Directors (incorporated herein by reference to Exhibit 10.4 to our Form 8-K dated May 23, 2012). Form of Big Lots 2012 Long-Term Incentive Plan Performance Share Units...

  • Page 224
    ...the quarter ended October 28, 2000). Acquisition Agreement between Big Lots, Inc. 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. Subsidiaries...

  • Page 225
    ..., thereunto duly authorized, on this 1st day of April 2014. BIG LOTS, INC. By: /s/ David J. Campisi David J. Campisi 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 persons on behalf...

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    ... Board. Equity awards are granted pursuant to the Big Lots 2012 Long-Term Incentive Plan or its successor. For vested but unexercised in-the-money stock options, only the difference in value between the then-current fair market value of the common shares and the exercise price will be counted toward...

  • Page 228
    .... Fashion Bonanza, Inc. Midwestern Home Products Company, Ltd. Rogers Fashion Industries, Inc. SS Investments Corporation BLC 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 229
    ... of our reports dated April 1, 2014, relating to the consolidated financial statements of Big Lots, Inc. and subsidiaries (the "Company"), and the effectiveness of the Company's internal control over financial reporting, appearing in this Annual Report on Form 10-K of the Company for the year ended...

  • Page 230
    ... sign, in the undersigned's name and behalf 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 1, 2014...

  • Page 231
    ... information; and b) 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. Dated: April 1, 2014 By: /s/ David J. Campisi David J. Campisi Chief Executive Officer and President

  • Page 232
    ...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 or omit to state...

  • Page 233
    ...2002, and accompanies the annual report on Form 10-K (the "Report") for the year ended February 1, 2014, of Big Lots, Inc. (the "Company"). I, David J. Campisi, Chief Executive Officer and President of the Company, certify that: (i) the Report fully complies with the requirements of Section 13(a) or...

  • Page 234
    ... accompanies the annual report on Form 10-K (the "Report") for the year ended February 1, 2014, of Big Lots, Inc. (the "Company"). I, Timothy A. Johnson, Executive Vice President and Chief Financial Officer of the Company, certify that: (i) the Report fully complies with the requirements of Section...

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    ... in Columbus, Ohio, Big Lots (NYSE: BIG) is a Fortune 500 retailer operating nearly 1,500 Big Lots® stores in 48 states. 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...

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