Big Lots 2014 Annual Report Download - page 147

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We believe that the shareholder derivative and putative class action lawsuits are without merit, and we intend to defend
ourselves vigorously against the allegations levied in these lawsuits. While a loss from these lawsuits is reasonably possible, at
this time, we cannot reasonably estimate the amount of any loss that may result or whether the lawsuits will have a material
impact on our financial statements.
On June 13, 2013, we received a voluntary document request from the Division of Enforcement of the SEC relating principally
to our participation in investor and analyst meetings in the first fiscal quarter of 2012. We have produced documents and are
cooperating with the SEC’s investigation, which is ongoing.
On October 1, 2013, we received a subpoena from the District Attorney for the County of Alameda, State of California, seeking
information concerning our handling of hazardous materials and hazardous waste in the State of California. We have provided
information and are cooperating with the authorities from multiple counties and cities in California in connection with this
ongoing matter. While a loss related to this matter is reasonably possible, at this time, we cannot reasonably estimate the
possible loss or range of loss that may arise from this matter or whether this matter will have a material impact on our financial
statements. In October 2014, Big Lots received a notice of a second violation from the California Air Resources Board alleging
that it sold certain products that contained volatile organic compounds in excess of regulated limits (windshield washer fluid).
This matter is in its early stages and settlement discussions are continuing. We anticipate that any resolution of this matter is
likely to exceed $100,000.
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.
We are self-insured for certain losses relating to property, general liability, workers' compensation, and employee medical,
dental, and prescription drug 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 $55.1 million at
January 31, 2015, 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 $470.4 million, the entirety of which represents obligations due within one year of January 31, 2015. In
addition, we have a purchase commitment for future inventory purchases totaling $32.2 million at January 31, 2015. We paid
$16.8 million, $21.7 million, and $19.9 million related to this commitment during 2014, 2013, and 2012, 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 $199.7 million
primarily related to distribution and transportation, information technology, print advertising, energy procurement, and other
store security, supply, and maintenance commitments.