Dollar Tree 2015 Annual Report Download - page 31

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The outcome of litigation is difficult to assess or quantify. Plaintiffs in these types of lawsuits or proceedings may seek
recovery of very large or indeterminate amounts, and the magnitude of the potential loss may remain unknown for substantial
periods of time. In addition, certain of these matters, if decided adversely to us or settled by us, may result in an expense that
may be material to our financial statements as a whole or may negatively affect our operating results if changes to our business
operation are required. The cost to defend current and future litigation or proceedings may be significant. There also may be
adverse publicity associated with litigation, including litigation related to product or food safety, customer information and
environmental or safety requirements, which could negatively affect customer perception of our business, regardless of whether
the allegations are valid or whether we are ultimately found liable.
For a discussion of current legal matters, please see "Item 3. Legal Proceedings" beginning on page 21 of this Form 10-K
and "Note 5 - Commitments and Contingencies" under the caption "Contingencies" in "Item 8. Financial Statements and
Supplementary Data" beginning on page 59 of this Form 10-K. Resolution of these matters, if decided against the Company,
could have a material adverse effect on our results of operations, accrued liabilities or cash flows.
Changes in federal, state or local law, or our failure to comply with such laws, could increase our expenses and expose
us to legal risks.
Our business is subject to a wide array of laws and regulations. The Department of Labor is expected to issue regulations
this year that may result in fewer of our associates being exempt from overtime pay requirements. The minimum wage has
increased or is scheduled to increase in multiple states and local jurisdictions and there is a possibility that Congress will
increase the federal minimum wage. Significant legislative changes, such as the health-care legislation, that impact our
relationship with our workforce could increase our expenses and adversely affect our operations. Changes in other regulatory
areas, such as consumer credit, privacy and information security, product and food safety, worker safety or environmental
protection, among others, could cause our expenses to increase or product recalls. In addition, if we fail to comply with
applicable laws and regulations, particularly wage and hour laws, we could be subject to legal risk, including government
enforcement action and class action civil litigation, which could adversely affect our results of operations. Changes in tax laws,
the interpretation of existing laws, or our failure to sustain our reporting positions on examination could adversely affect our
effective tax rate.
Our business could be adversely affected if we fail to attract and retain qualified associates and key personnel.
Our growth and performance is dependent on the skills, experience and contributions of our associates, executives and key
personnel. Various factors, including our recent merger, overall labor availability, wage rates, regulatory or legislative impacts,
and benefit costs could impact our ability to attract and retain qualified associates at our stores, distribution centers and
corporate offices.
Certain provisions in our Articles of Incorporation and Bylaws could delay or discourage a change of control
transaction that may be in a shareholder’s best interest.
Our Articles of Incorporation and Bylaws currently contain provisions that may delay or discourage a takeover attempt that
a shareholder might consider in his best interest. These provisions, among other things:
• provide that only the Board of Directors, chairman or president may call special meetings of the shareholders;
• establish certain advance notice procedures for nominations of candidates for election as directors and for shareholder
proposals to be considered at shareholders’ meetings; and
• permit the Board of Directors, without further action of the shareholders, to issue and fix the terms of preferred stock,
which may have rights senior to those of the common stock.
However, we believe that these provisions allow our Board of Directors to negotiate a higher price in the event of a
takeover attempt which would be in the best interest of our shareholders.
Our substantial indebtedness could adversely affect our financial condition, limit our ability to obtain additional
financing, restrict our operations and make us more vulnerable to economic downturns and competitive pressures.
In connection with the Acquisition, we substantially increased our indebtedness, which could adversely affect our ability to
fulfill our obligations and have a negative impact on our financing options and liquidity position. As of January 30, 2016, our
total indebtedness is $7,465.5 million. In addition, we have $1,250.0 million of additional borrowing availability under our
new revolving credit facility, less amounts outstanding for letters of credit totaling $123.0 million.
Our high level of debt could have significant consequences, including the following:
• limiting our ability to obtain additional financing in the future for working capital, capital expenditures, acquisitions or