Big Lots 2014 Annual Report Download - page 89

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We may be subject to periodic litigation and regulatory proceedings, including Fair Labor Standards Act, state wage and
hour, and shareholder class action lawsuits, which may adversely affect our business and financial performance.
From time to time, we are involved in lawsuits and regulatory actions, including various collective or class action lawsuits that
are brought against us for alleged violations of the Fair Labor Standards Act, state wage and hour laws, sales tax and consumer
protection laws, False Claims Act, and federal securities laws. We also are involved in shareholder derivative lawsuits and
investigations concerning our compliance with environmental and hazardous waste regulations. Due to the inherent
uncertainties of litigation, we may not be able to accurately determine the impact on us of any future adverse outcome of such
proceedings. The ultimate resolution of these matters could have a material adverse impact on our financial condition, results
of operations, and liquidity. In addition, regardless of the outcome, these proceedings could result in substantial cost to us and
may require us to devote substantial attention and resources to defend ourselves. For a description of certain current legal
proceedings, see note 10 to the accompanying consolidated financial statements.
Our current insurance program may expose us to unexpected costs and negatively affect our financial performance.
Our insurance coverage is subject to deductibles, self-insured retentions, limits of liability and similar provisions that we
believe are prudent based on the dispersion of our operations. However, we may incur certain types of losses that we cannot
insure or which we believe are not economically reasonable to insure, such as losses due to acts of war, employee and certain
other crime, and some natural disasters. If we incur these losses and they are material, our business could suffer. Certain
material events may result in sizable losses for the insurance industry and adversely impact the availability of adequate
insurance coverage or result in excessive premium increases. To offset negative cost trends in the insurance market, we may
elect to self-insure, accept higher deductibles or reduce the amount of coverage in response to these market changes. In
addition, we self-insure a significant portion of expected losses under our workers’ compensation, general liability, including
automobile, and group health insurance programs. Unanticipated changes in any applicable actuarial assumptions and
management estimates underlying our recorded liabilities for these losses, including potential increases in medical and
indemnity costs, could result in materially different amounts of expense than expected under these programs, which could have
a material adverse effect on our financial condition and results of operations. Although we continue to maintain property
insurance for catastrophic events, we are self-insured for losses up to the amount of our deductibles. If we experience a greater
number of self-insured losses than we anticipate, our financial performance could be adversely affected.
If we are unable to attract, train, and retain highly qualified associates while also controlling our labor costs, our financial
performance may be negatively affected.
Our customers expect a positive shopping experience, which is driven by a high level of customer service from our associates
and a quality presentation of 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 part-time positions. These positions have
historically had high turnover rates, which can lead to increased training and retention costs. In addition, our ability to control
labor costs is subject to numerous external factors, including prevailing wage rates, the impact of legislation or regulations
governing labor relations or benefits, and health insurance costs.
The loss of key personnel may have a material impact on our future results of operations.
We believe that we benefit substantially from the leadership and experience of our senior executives. The loss of services of
these individuals could have a material adverse impact on our business. Competition for key personnel in the retail industry is
intense and our future success will depend on our ability to recruit, train, and retain our senior executives and other qualified
personnel.