Dick's Sporting Goods 2010 Annual Report Download - page 41

The Company is subject to various types of litigation and other claims, some of which may adversely affect the Company’s business
and financial performance.
From time to time the Company or its subsidiaries may be involved in lawsuits or other claims arising in the course of business,
including those related to federal or state wage and hour laws, product liability, consumer protection, advertising, employment,
intellectual property, tort and other matters. Due to the inherent uncertainties of litigation and other claims, we cannot accurately
predict the ultimate outcome of any such matters. These suits or claims could cause us to incur significant expenses and devote
substantial resources to defend against them and, in some cases, we could incur significant losses in the form of settlements,
judgements or other orders, as a result of which our business or financial performance may be adversely affected. For a
description of our current material legal proceedings refer to Item 3. “Legal Proceedings”.
We may pursue strategic acquisitions, which could have an adverse impact on our business, as could assimilation of companies
following acquisition.
We may from time to time acquire complementary companies or businesses. Acquisitions may result in difficulties in assimilating
acquired companies, and may result in the diversion of our capital and our management’s attention from other business issues
and opportunities. We may not be able to successfully integrate operations that we acquire, including their personnel, financial
systems, distribution, operations and general store operating procedures. If we fail to successfully integrate acquisitions, our
business could suffer. In addition, the integration of any acquired business and their financial results may adversely affect our
operating results.
Our business is significantly dependent on our ability to meet our labor needs.
The success of our stores depends significantly on our ability to hire and retain quality associates, including store managers and
sales associates. We plan to expand our associate base to manage our anticipated growth. Competition for non-entry level
personnel, particularly for associates with retail expertise, is highly competitive. Additionally, our ability to maintain consistency in
the quality of customer service in our stores is critical to our success. Also, many of our store-level associates are in entry-level
or part-time positions that historically have high rates of turnover. We are also dependent on the associates who staff our
distribution centers, many of whom are skilled. We may be unable to meet our labor needs and control our costs due to external
factors such as unemployment levels, minimum wage legislation and wage inflation. If we are unable to hire and retain store-
level associates capable of providing a high level of customer service, our business could be materially adversely affected.
Although none of our associates are currently covered under collective bargaining agreements, we cannot guarantee that our
associates will not elect to be represented by labor unions in the future. If some or all of our workforce were to become unionized
and collective bargaining agreement terms were significantly different from our current compensation arrangements or work
practices, it could have a material adverse effect on our business, financial condition and results of operations.
We are controlled by our Chief Executive Officer and his relatives, whose interests may differ from other stockholders.
We have two classes of common stock. The common stock has one vote per share and the Class B common stock has 10 votes
per share. As of January 29, 2011, Mr. Edward W. Stack, our Chairman and Chief Executive Officer, and his relatives controlled a
majority of the combined voting power of our common stock and Class B common stock and would control the outcome of any
corporate transaction or other matter submitted to the stockholders for approval, including mergers, consolidations and the sale
of all or substantially all of our assets. Mr. Stack may also acquire additional shares of common stock upon the exercise of stock
options. The interests of Mr. Stack and his relatives may differ from the interests of our other stockholders and they may take
actions with which our other stockholders disagree.
Terrorist attacks, acts of war and foreign instability may seriously harm our business.
Among the chief uncertainties facing our nation and the world, which may impact our business, is instability and conflict outside
of the U.S., including political instability, terrorist attacks, acts of war or other events. No one can predict the timing or overall
economic impact that would result from these events and they could have a very serious adverse impact on our business.
Terrorist attacks may cause damage or disruption to our Company, our employees, our facilities, our suppliers or our customers,
which could significantly impact our operating results. The potential for future terrorist attacks or other acts of war or hostility,
and the national and international responses to these events, may cause greater uncertainty and cause our business to suffer in
ways that we currently cannot predict. Our geographic focus in the eastern United States may make us more vulnerable to such
uncertainties than other comparable retailers who may not have a similar geographic focus.
Dick’s Sporting Goods, Inc. ¬2010 Annual Report 21