8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Date of Report (Date of earliest event reported):August 28, 2007

BIG LOTS, INC.

(Exact name of registrant as specified in its charter)

Ohio	1-8897	06-1119097
(State or other jurisdiction of incorporation)	(Commission File Number)	(I.R.S. Employer Identification No.)

300 Phillipi Road, Columbus, Ohio 43228

(Address of principal executive office) (Zip Code)

(614) 278-6800

(Registrant’s telephone number, including area code)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 1.01 Entry into a Material Definitive Agreement.

Big Lots, Inc. (“Company”) sponsors a nonqualified supplemental defined contribution plan (“Supplemental Savings Plan”) and a nonqualified supplemental defined benefit pension plan (“Supplemental Pension Plan”).  Both plans are subject to the requirements of Section 409A of the Internal Revenue Code (“Section 409A”), which imposes restrictions on certain nonqualified deferred compensation plans, and are required to be amended to comply with Section 409A before January 1, 2008.  On August 28, 2007, the Company amended and restated the Supplemental Pension Plan and the Supplemental Savings Plan to comply with the requirements of Section 409A and to further improve the plan documents.  The amended and restated plans will become effective on January 1, 2008.  This summary is qualified in its entirety by reference to the full text of the Supplemental Savings Plan and the Supplemental Pension Plan, as each has been amended and restated, which are attached to this Form 8-K as Exhibits 10.1 and 10.2, respectively.

Item 2.02 Results of Operations and Financial Condition.

On August 29, 2007, the Company issued a press release and conducted a conference call, both of which reported the Company’s unaudited results for the second quarter of fiscal year 2007, updated its current share repurchase program, provided guidance for the third and fourth quarters of fiscal year 2007, and revised its previously issued guidance for fiscal year 2007.  Attached as exhibits to this Form 8-K are copies of the Company’s August 29, 2007 press release (Exhibit 99.1) and the transcript of the Company’s August 29, 2007 conference call (Exhibit 99.2), including information concerning forward-looking statements and factors that may affect the Company’s future results.  The information in Exhibits 99.1 and 99.2 is being furnished, not filed, pursuant to Item 2.02 of this Form 8-K.  By furnishing the information in this Form 8-K and the attached exhibits, the Company is making no admission as to the materiality of any information in this Form 8-K or the exhibits.

Item 9.01 Financial Statements and Exhibits.

(c)          Exhibits

Exhibits marked with an asterisk (*) are provided herewith.  Exhibits 10.1 and 10.2 are management contracts or compensatory plans or arrangements.

Exhibit No.	Description
10.1*	Big Lots Supplemental Savings Plan, amended and restated effective as of January 1, 2008.
10.2*	Big Lots Supplemental Defined Benefit Pension Plan, amended and restated effective as of January 1, 2008.
99.1*	Big Lots, Inc. press release dated August 29, 2007.
99.2*	Transcript of Big Lots, Inc. conference call dated August 29, 2007.

Signature

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

	BIG LOTS, INC.
Dated:  September 4, 2007	By:	/s/ Charles W. Haubiel II
		Charles W. Haubiel II
		Senior Vice President, General Counsel and Corporate Secretary

EX-10.1

EXHIBIT 10.1

BIG LOTS

SUPPLEMENTAL SAVINGS PLAN

AMENDED AND RESTATED

EFFECTIVE AS OF JANUARY 1, 2008

BIG LOTS

SUPPLEMENTAL SAVINGS PLAN

TABLE OF CONTENTS

		Page
PURPOSE		4
CONCEPT		4
EFFECTIVE DATE		4
ARTICLE I	PARTICIPATION
	Section 1.1 – Eligibility and Participation	5
	Section 1.2 – Conditions of Participation	5
	Section 1.3 – Election to Defer	5
	Section 1.4 – Matching Employer Contributions	6
	Section 1.5 – Deferred Accounts	6
	Section 1.6 – Statement of Accounts	7
ARTICLE II	BENEFIT DISTRIBUTIONS FROM THE PLAN
	Section 2.1 –Time of Distributions	8
	Section 2.2 –Form of Distributions	8
	Section 2.3 – Change in Control	8
	Section 2.4 – Six Month Distribution Delay of Non-Grandfathered Amounts	8
	Section 2.5 – Withholding & Payroll Taxes	8
	Section 2.6 – Beneficiary Designation	8
ARTICLE III	WITHDRAWALS
	Section 3.1 – Hardship Withdrawals	10
	Section 3.2 – Withdrawal Procedures	10
ARTICLE IV	COMMITTEE
	Section 4.1 – Committee	11
	Section 4.2 – Committee Procedures	11
ARTICLE V	ADMINISTRATION
	Section 5.1 – Administrative Powers and Duties	12
	Section 5.2 – Expenses & Taxes	12
	Section 5.3 – Records	12
	Section 5.4 – Determinations	12
	Section 5.5 – Legal Incompetency	13
	Section 5.6 – Action by the Employer	13
	Section 5.7 – Exemption From Liability; Indemnification	13
	Section 5.8 – Nonalienation of Benefits	13
ARTICLE VI	INCLUSION AND WITHDRAWAL OF EMPLOYERS

Section 6.1 – Inclusion of Employers 14

	Section 6.2 – Withdrawal of Employers	14
	Section 6.3 – Sale or Liquidation of Employers	14
	Section 6.4 – Transfer Between Participating Employers	14
ARTICLE VII	MISCELLANEOUS PROVISIONS
	Section 7.1 – Employment and Other Rights	15
	Section 7.2 – Right to Benefits	15
	Section 7.3 – Offsets to Benefits	15
	Section 7.4 – Amendment and Termination	15
	Section 7.5 –Income Inclusion Under Section 409A of the Code	16
	Section 7.6 – Claims Procedure	16
ARTICLE VIII	DEFINITIONS
	Section 8.1 – Affiliate	19
	Section 8.2 – Associate	19
	Section 8.3 – Base Compensation	19
	Section 8.4 – Beneficiary	19
	Section 8.5 – Board	19
	Section 8.6 – Change in Control	19
	Section 8.7 – Code	20
	Section 8.8 – Committee	20
	Section 8.9 – Company	20
	Section 8.10 –Compensation	20
	Section 8.11 – Deferral Agreement	20
	Section 8.12 – Deferred Account	20
	Section 8.13 – Employer	21
	Section 8.14 – ERISA	21
	Section 8.15 – Fiscal Year Compensation	21
	Section 8.16 – Grandfathered Amounts	21
	Section 8.17 – Highly Compensated Employee	21
	Section 8.18 – Matching Employer Contributions	21
	Section 8.19 – Non-Grandfathered Amounts	21
	Section 8.20 – Participant	21
	Section 8.21 – Performance Bonus	22
	Section 8.22 – Plan Year	22
	Section 8.23 – Termination	22
	Section 8.24 – Unforeseeable Emergency	22
ARTICLE IX	GENERAL PROVISIONS
	Section 9.1 – ERISA Status	23
	Section 9.2 – Compliance with Section 409A of the Code	23
	Section 9.3 – Construction	23
	Section 9.4 – Controlling Law	23
	Section 9.5 – Effect of Invalidity of Provision	23
ARTICLE X	JOINDER AGREEMENT & FORMS	24

BIG LOTS

SUPPLEMENTAL SAVINGS PLAN

Purpose

The purpose of this nonqualified deferred compensation plan is to promote the success of the Company and Affiliates who are participating Employers in the Plan (now known as the Big Lots Supplemental Savings Plan), by providing a means for certain Highly Compensated Employees to defer Compensation.

Concept

The Plan is designed to provide Participants with a supplemental vehicle through which to defer Compensation and related Matching Employer Contributions (if applicable) in a manner substantially similar to deferrals made pursuant to elections under the Company’s tax-qualified 401(k) plan.

The Plan is intended and designed to coordinate with the Company’s tax-qualified 401(k) plan in a manner consistent with the intent of the Company, as described below. All contributions deferred under the Plan shall be made without regard to the deferrals made with respect to the 401(k) plan and shall be treated as unfunded contributions. In no event may any Participant in the Plan defer an aggregate amount of Compensation in excess of one hundred percent (100%) of the Participant’s total Compensation.

The Plan is an unfunded, supplemental executive deferred compensation plan structured to benefit Participants in a manner that provides incentive to improve the profitability, competitiveness and growth of the Company and Affiliates who are participating Employers in the Plan.

Effective Date

The Plan as evidenced by this document shall become effective as of January 1, 2008, and is an amendment and restatement of the Plan originally effective as of January 1, 1991, which was subsequently amended and restated on November 16, 1992 and again on January 1, 2003, and as may be amended from time to time.

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ARTICLE I

PARTICIPATION

Section 1.1 – Eligibility and Participation

Associates of an Employer who are considered Highly Compensated Employees shall be eligible to participate in the Plan as of the first date of their employment with the Employer.  The Committee, in its sole and final discretion, may determine which Associates who are eligible to participate in the Plan shall become Participants.  Notwithstanding, all Associates who were Participants in the Plan as of January 1, 2008 shall continue to participate in the Plan on and after said date.

Section 1.2 – Conditions of Participation

An Associate shall not become a Participant until he or she completes and returns a Deferral Agreement to the Committee making such elections as are required by such Deferral Agreement within the time limits imposed by the Plan and set forth in Section 1.3 of the Plan.  By submitting a Deferral Agreement, each Participant shall be deemed conclusively, for all purposes, to have assented to the terms and provisions of the Plan and shall be bound thereby.  Certain restrictions shall apply to those Participants who constitute “Officers” or “Directors” of the Company within the meaning of Section 16 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and attending regulations as adopted and interpreted by the Securities and Exchange Commission as they relate to investments (if any) in shares of the Company.

Section 1.3 – Election to Defer

(a) Each Participant must submit a completed Deferral Agreement to the Committee no later than the applicable election date set forth below.

(i) Base Compensation.  A Deferral Agreement with respect to any Base Compensation for services performed during a Plan Year must be submitted no later than December 31 preceding the Plan Year in which such services will be performed.

(ii) First Year of Eligibility.  In the discretion of the Committee, during a Plan Year in which an Associate first becomes a Participant in the Plan, the Deferral Agreement must be submitted to the Committee no later than thirty (30) days after the date on which the Associate first becomes a Participant in the Plan.  Such Deferral Agreement shall be effective only with respect to Base Compensation relating to services performed after the date of such election.  For purposes of this Section 1.3(a)(ii), an Associate is first eligible to participate in the Plan only if the Associate is not a participant in any other arrangement of any Employer that would be treated as a single nonqualified deferred compensation plan along with the Plan under Treasury Regulation §1.409A-1(c)(2).

(iii) Performance Bonus.  In the discretion of the Committee, a Deferral Agreement with respect to any Performance Bonus must be submitted by the date that is no later than six (6) months before the end of the performance period on which the Performance Bonus is based; provided, that in no event may an election to defer be made after such Performance Bonus has become readily ascertainable.

(iv) Fiscal Year Compensation.  In the discretion of the Committee, a Deferral Agreement with respect to any Fiscal Year Compensation for services performed during an Employer’s fiscal year must be submitted no later than the last day of the previous fiscal year of the Employer.

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(b) For each subsequent Plan Year, a Participant may amend his or her existing elections by submitting a new Deferral Agreement no later than the latest date for which an election to defer may be made, as provided in Section 1.3(a) of the Plan.  An election by a Participant that has not been amended pursuant to this Section 1.3(b) shall be deemed to be a new election for the subsequent Plan Year.

(c) The minimum annual amount that a Participant shall elect to defer under the Plan for any Plan Year shall not be less than $1,000.

Section 1.4 – Matching Employer Contributions

Each Employer shall cause Matching Employer Contributions to be credited to a Participant’s Deferred Account under the Plan, to the extent determined by the Board and in an amount as the Board, in its sole discretion, determines to be appropriate. Matching Employer Contributions shall vest according to the following schedule:

Years of Vesting Service at Termination	Vested Percentage of Matching Employee Contributions
Less than 2	0%
2	25%
3	50%
4	75%
5 or more	100%

Section 1.5 – Deferred Accounts

(a) All Compensation deferred under the Plan and Matching Employer Contributions, if any, shall be credited to the Participant’s Deferred Account in the same manner as though contributed as permissible salary deferrals or matching contributions to the tax-qualified 401(k) plan. Separate Deferred Accounts shall be created and maintained for each Participant to reflect the appropriate allocation of deferred Compensation and Matching Employer Contributions to the accounts and investment funds maintained for the Participant. Such accounts and investment funds shall be established solely for recordkeeping purposes, shall not be required to be informally or formally funded or held in specific investments or as separated assets, and shall meet all of the requirements of Section 7.2 hereof as pertinent to unfunded, nonqualified deferred compensation plans. Credits and charges shall be made to the Deferred Accounts as described in subsections (b) and (c) of this Section 1.5.

(b) The Committee may, for administrative purposes, establish unit values for one or more investment funds (or any portion thereof) and maintain the accounts setting forth each Participant’s interest in such investment fund (or any portion thereof) in terms of such units, all in accordance with such rules and procedures that the Committee shall deem fair, equitable and administratively feasible. A Participant’s interest in an investment fund (or any portion thereof) in the event a unit account is established shall be determined by multiplying the then value of a unit in said investment fund (or any portion thereof) by the number of units then credited to the Participant’s Deferred Account.

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(c) To extent authorized by the Board, a Participant shall have the authority to make investment elections with respect to deferred Compensation and any Matching Employer Contributions in a manner as prescribed by the Committee, including but not limited to electronic and telephonic means. Such investment authority, however, shall not give ownership rights to the Participant of his or her Deferred Account, but said Deferred Account shall continue to be owned and held in the name of the applicable Employer and subject to creditors’ rights as described in Section 7.2 of the Plan.

Section 1.6 – Statement of Accounts

The Committee shall cause to be provided to each Participant (or Beneficiary as applicable), as soon as practical after the close of each calendar quarter, a statement in such form as the Company deems desirable, setting forth the Participant’s current Deferred Account balances.

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ARTICLE II

BENEFIT DISTRIBUTIONS FROM THE PLAN

Section 2.1 –Time of Distributions

A Participant’s Deferred Account shall be distributed within ninety (90) days after a Participant’s Termination.

Section 2.2 –Form of Distributions

Distributions from the Plan shall be paid in a lump sum cash settlement; provided, however, that Participants subject to Section 16 of the Exchange Act shall receive their distributions in a manner that complies with the requirements of the Exchange Act.

Section 2.3 – Change in Control

In the event that a Change in Control of the Company occurs, the Committee shall cause an immediate lump sum distribution of the Deferred Accounts (whether or not vested) under the Plan to be made to all Participants within ninety (90) days following the occurrence of the Change in Control.

Section 2.4 – Six Month Distribution Delay of Non-Grandfathered Amounts

If a Participant is a “specified employee,” within the meaning of Section 409A of the Code and as determined under the Company’s policy for determining specified employees, on the date of his or her Termination, all Non-Grandfathered Amounts shall be paid on the first business day after the date that is six (6) months following the date of Termination (or, if earlier, the Participant’s death).  The payment made on the first business day after the date that is six (6) months following the date of Termination shall include the cumulative amount of any amounts that could not be paid or provided during such six-month period.

Section 2.5 – Withholding & Payroll Taxes

To the extent required by law, the Employer shall withhold from other amounts owed to a Participant or require the Participant to remit to the Employer an amount sufficient to satisfy federal, state and local withholding tax requirements on any distribution from a Participant’s Deferred Account or on the vesting, payment or cancellation of amounts owed to the Participant under the Plan.  Determinations by the Committee as to withholding shall be binding on the Participant and any applicable Beneficiary.

Section 2.6 – Beneficiary Designation

Each Participant may from time to time designate any person or persons (who may be designated contingently or successively and who may be an entity other than a natural person) as their Beneficiary or Beneficiaries to whom Plan benefits are paid if the Participant dies before receipt of all such benefits. Such Beneficiary designation(s) shall not be subject to the surviving spouse limitations/requirements applicable to tax-qualified retirement plans. Each Beneficiary designation shall be filed in the written form prescribed by the Committee and will be effective only when filed with the Committee during the Participant’s lifetime. Each written Beneficiary designation filed shall cancel all Beneficiary designations previously filed with the Committee. A Participant may revoke a Beneficiary designation only by filing with the Committee, during the Participant’s lifetime, either a superseding Beneficiary designation, or such other writing in a form and manner prescribed by the  Committee. The revocation of a Beneficiary designation shall not require the consent of the designated Beneficiary(ies).

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If any Participant is not survived by a Beneficiary as designated above, any death benefit payable hereunder shall be paid to the executor or administrator of the Participant’s estate.

A surviving Beneficiary of a Participant may designate a Beneficiary to whom Plan benefits are to be paid if (a) the Beneficiary’s death occurs before receipt of all benefits otherwise payable, and (b) without survival of a secondary Beneficiary appointed by the Participant. If such a surviving Beneficiary dies before receiving the entire death benefit and has not designated a Beneficiary (or such Beneficiary has died), the remainder of such benefits shall be paid to the executor or administrator of such Beneficiary’s estate.

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ARTICLE III

WITHDRAWALS

Section 3.1 – Hardship Withdrawals

A participant may request a distribution from all or part of his or her Deferred Account upon the occurrence of an Unforeseeable Emergency.  The amount of this distribution, however, may not be greater than the amount reasonably necessary to satisfy the emergency need or, if less, the value of the Participant’s Deferred Account as of the distribution date.  As a condition of receiving a distribution under this Section 3.1, the Participant must file a written application with the Committee specifying the nature of the Unforeseeable Emergency and the amount needed to address that circumstance and supplying any other information the Committee, in its discretion, may need to ensure that the conditions specified in this Section 3.1 are satisfied.  Notwithstanding the foregoing, a distribution on account of an Unforeseeable Emergency may not be made to the extent that such emergency is or may be relieved through reimbursement or compensation from insurance or otherwise, by liquidation of the Participant’s assets, to the extent the liquidation of such assets would not cause severe financial hardship, or by cessation of deferrals under the Plan.

Any deferrals by a Participant who obtains a hardship distribution pursuant to Treasury Regulation §1.401(k)-(d)(3) from a tax-qualified defined contribution plan of any Employer will be cancelled following the date of such distribution.  A Participant whose deferrals have been cancelled pursuant to this Section 3.1 may elect to make later deferrals of his or Compensation only in accordance with Section 1.3 of the Plan.

Section 3.2 – Withdrawal Procedures

The Committee shall from time to time adopt the necessary procedures to be followed in the event a Participant seeks to elect a hardship withdrawal under Section 3.1. All procedures instituted by the Committee shall be binding upon the Participant.

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ARTICLE IV

COMMITTEE

Section 4.1 – Committee

The retirement committee of the Company’s tax-qualified 401(k) plan shall be the Committee of the Plan in accordance with the intention of the Board, as expressed herein.

Section 4.2 – Committee Procedures

A Committee member who at any time hereunder is a Participant shall not have any vote in any decision under the Plan made primarily with respect to such Committee member or such member’s or administrator’s benefits hereunder. In this event, the decision shall be made by a majority of the Committee members or if the Plan is administrated by one individual, then by the Board.

All actions of the Committee shall be by majority vote and may be taken with or without a meeting. If taken without a meeting, the action shall be in writing and signed by a majority of the members.

In the event of any disagreement among the Committee members at any time acting hereunder and authorized to act with respect to any matter, the decision of the majority of said Committee members shall be controlling and shall be binding and conclusive upon the Committee, the Participants, and their Beneficiaries and upon the respective successors, assigns, executors, administrators, heirs, next-of-kin and distributees of all the foregoing.

Subject to the provisions of this Section 4.2, each additional and each successor Committee member at any time acting hereunder shall have all of the rights and powers (including discretionary rights and powers) and all of the privileges and immunities hereby conferred upon the initial Committee members hereunder, and all of the duties and obligations so imposed upon the initial Committee members hereunder.

Except as otherwise may be required by any applicable law, no Committee member at any time acting hereunder shall be required to give any bond or other security for the faithful performance of duties as such Committee member.

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ARTICLE V

ADMINISTRATION

Section 5.1 – Administrative Powers and Duties

The Board shall designate such officer(s) of the Company to be the authorized administrator of the Plan and to have the primary administrative responsibility with respect to the Plan in coordination with and under the direction of the Committee. The administrator shall serve at the pleasure of the Board and the Committee and shall administer the Plan.  All policy and administrative functions shall be the full and total responsibility of the administrator who shall perform said functions under the direction of the Committee. The administrator shall interpret the provisions of the Plan where necessary and may adopt procedures for the administration of the Plan that are consistent with the provisions of the Plan.

The Committee may retain auditors, accountants, recordkeepers, legal counsel, consultants and other counsel, including persons acting in a similar capacity for an Employer and who may be Associates, to assist in the administration of the Plan. The opinion of any such counsel shall be full and complete authority and protection in respect to any action taken, suffered or omitted by the Committee or administrator designated by the Board in good faith and in accordance with such opinion.

Section 5.2 – Expenses & Taxes

The Employer shall pay the reasonable expenses incurred by the Committee and others performing services relative to the administration of the Plan, including the fees and compensation of the persons referred to in Section 5.1.

Any gains or losses attributable to the Deferred Account of the Participants shall be gains or losses attributable to the Employer and shall be income of the Employer.

Section 5.3 – Records

The Employers and the Committee shall each keep such records and shall each give reasonable notice to the other of such information, that shall be proper, necessary or desirable to effectuate the purposes of the Plan, including, without in any manner limiting the generality of the foregoing, records and information with respect to deferral elections, Deferred Accounts, dates of employment and terminations, and determinations made hereunder. In addition, the Employer and the Committee shall be protected in acting upon any notice or other communication purporting to be signed by any person and reasonably believed to be genuine and accurate, including the Participant’s current mailing address.

Section 5.4 – Determinations

All determinations hereunder made by the Company or the Committee shall be made in the sole and absolute final discretion of the Company or of the Committee, as the case may be.

In the event that any dispute shall arise hereunder, including, without in any manner limiting the generality of the foregoing, any matter relating to the eligibility of any person to participate, the participation of any person, the amount payable to any person, and the applicability and the interpretation of the provisions of the Plan, the decision of the Committee upon such matter shall be binding and conclusive upon the Company, the  Committee, the Participant, and Beneficiary(ies) and the successors, assigns, heirs and distributees of all the foregoing.

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Section 5.5 – Legal Incompetency

The Committee may direct payment either directly to an incompetent or disabled person, whether because of minority or mental or physical disability, or to the guardian of such person, or to the person having custody, without further liability on the part of the Employer, Committee, or any person, for the amounts of such payment to the person on whose account such payment is made.

Section 5.6 – Action by the Employer

Any action by an Employer under the Plan may be by resolution of the applicable board of directors (or other managing body), or by a person(s) duly authorized by resolution of said board of directors (or managing body) to take such action(s).

Section 5.7 – Exemption From Liability; Indemnification

The Committee shall be free from all liability, for acts, omissions and conduct, and for the acts, omissions and conduct of duly appointed agents, in the administration of the Plan, except for those acts or omissions and conduct resulting from willful misconduct and gross negligence.

The Company shall indemnify the Committee and any Associate, officer or director of the Company or an applicable Employer against any claims, loss, damage, expense and liability, by insurance or otherwise, reasonably incurred by the individual in connection with any action or failure to act by reason of membership on the Committee or performance of an authorized duty or responsibility for or on behalf of the Company or any applicable Employer pursuant to the Plan unless the same is judicially determined to be the result of the individual’s willful misconduct or gross negligence. Such indemnification by the Company shall be made only to the extent such expense or liability is not payable to or on behalf of such person under any liability insurance coverage. The foregoing right to indemnification shall be in addition to any other rights to which any such person may be entitled as a matter of law.

Section 5.8 – Nonalienation of Benefits

Except as otherwise provided by law, no benefit, payment or distribution under the Plan shall be subject either to the claim of any creditor of a Participant or Beneficiary(ies), or to attachment, garnishment, levy, execution or other legal or equitable process, by any creditor of such person, and no such person shall have any right to alienate, commute, anticipate or assign (either at law or equity) all or any portion of any benefit, payment or distribution under the Plan.

The Plan shall not in any manner be liable for or subject to the debts, contracts, liabilities, engagements or torts of any person entitled to benefits hereunder.

In the event that any Participant’s benefits are garnished or attached by order of any court, the Committee may elect to bring an action for a declaratory judgment in a court of competent jurisdiction to determine the proper recipient of the benefits to be paid by the Plan. During the pendency of said action, any benefits that become payable may be paid into the court as they become payable, to be distributed by the court to the recipient as it deems proper at the close of said action.

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ARTICLE VI

INCLUSION AND WITHDRAWAL OF EMPLOYERS

Section 6.1 – Inclusion of Employers

Any Affiliate that is authorized by the Board to participate in the Plan may elect to become an Employer by action of its own board of directors (or other managing body) and by entering into a Joinder Agreement, a copy of which is attached hereto as Exhibit A.

Section 6.2 – Withdrawal of Employers

The Company may, at any time in its sole discretion, determine to exclude any Employer from the Plan.  Any Employer may similarly elect to discontinue its participation in the Plan at any time by giving sixty (60) days prior written notice of its intent to so withdraw.

The exclusion or withdrawal of an Employer from the Plan shall not adversely affect the administration of amounts already credited to the Deferred Account under the Plan of any Participant employed by such Employer, with respect to which amounts the Plan shall be continued until all such amounts under the Plan have been paid by the Employer or otherwise liquidated under applicable law or judicial judgment.  Notwithstanding the foregoing, any exclusion of or withdrawal by an Employer shall not have any effect on elections made with respect to the Participant’s taxable year and the Company’s taxable year in which the withdrawal or exclusion occurred.

Section 6.3 – Sale or Liquidation of Employers

In the event the Company should sell or otherwise directly or indirectly dispose of sufficient interest in an Employer so that it no longer owns eighty (80) percent of such company, or an Employer is liquidated, the Company shall assume payment of such Employer’s remaining deferred compensation obligations under the Plan.

Section 6.4 – Transfer Between Participating Employers

In the event that a Participant’s employment is transferred from one participating Employer to another, the transfer shall not adversely affect the administration of amounts then credited to the Deferred Account of such Participant on, or as of the date of, transfer and the Participant’s prior participating Employer shall remain obligated to pay such deferred benefits in accordance with the provisions of the Plan in effect prior to the date of such transfer. The Participant’s new participating Employer shall become obligated under the terms of the Plan to pay any deferred compensation amounts credited to the Participant’s Deferred Account upon and after said date of transfer.

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ARTICLE VII

MISCELLANEOUS PROVISIONS

Section 7.1 – Employment and Other Rights

Nothing contained herein shall require an Employer to continue any Participant in its employ, nor does the Plan create any rights of any Participant or Beneficiary or any obligation on the part of an Employer other than those set forth herein. The benefits payable under the Plan shall be independent of, and in addition to, any other employment agreements that may exist from time to time concerning any other compensation or benefits payable by Employers.

Section 7.2 – Right to Benefits

The sole interest of each Participant and each Beneficiary under the Plan shall be to receive the benefits provided herein as and when the same shall become due and distributable in accordance with the terms hereof and applicable elections hereunder, and neither any Participant nor any Beneficiary shall have any right, title or interest (legal or equitable) in or to any of the specific property or assets of an Employer. All benefits hereunder shall be distributed solely from the general assets of the applicable Employer and no Employer shall maintain any separate fund or other separate assets to provide any benefits hereunder. In no manner shall any property or assets of an Employer be deemed or construed through any of the provisions of the Plan to be held in trust for the benefit of any Participant or designated Beneficiary or to be collateral security for the performance of the obligations imposed by the Plan on an Employer. The rights of any Participant hereunder and any Beneficiary of the Participant shall be solely those of an unfunded and unsecured creditor in respect to the promise of an Employer to pay benefits in the future.

Section 7.3 – Offsets to Benefits

Notwithstanding any provisions of the Plan to the contrary, any Employer or the Committee may, in its sole and absolute final discretion determine and offset any amounts to be paid to a Participant under the Plan against any amounts up to $5,000 which such Participant may owe to such Employer to the extent permitted by Treasury Regulation §1.409A-3(j)(4)(xiii).

Section 7.4 – Amendment and Termination

While the Employers intend to continue the Plan indefinitely, the Plan may be amended, suspended or terminated at any time by the Board; provided, that no such amendment, suspension or termination shall adversely affect the administration of amounts already credited to Deferred Accounts under the Plan, with respect to which amounts the Plan shall continue until all deferred Compensation and applicable Matching Employer Contributions (if any) credited to Deferred Accounts under the Plan have been distributed in accordance with Article II. In the event it should be determined for any reason by an applicable agency of the federal government or by any court of competent jurisdiction that the Plan does not satisfy the exclusions of Section 201(2), Section 301(a)(3) and Section 401(a)(1) of ERISA, the Plan shall be deemed terminated as of the date of such determination unless alternative action by the Board is taken.

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Section 7.5 –Income Inclusion Under Section 409A of the Code

The Committee may accelerate the time or schedule of a distribution to a Participant to pay an amount the Participant includes in income as a result of the Plan failing to meet the requirements of Section 409A of the Code and the regulations promulgated thereunder.  Such payment may not exceed the amount required to be included in income as a result of the failure to comply with Section 409A of the Code and the regulations promulgated thereunder.

Section 7.6 – Claims Procedure

(a) Filing Claims.  In general, neither Participants nor their Beneficiaries need to present a formal claim for benefits under the Plan in order to qualify for rights or benefits under the Plan.  If, however, any Participant or Beneficiary (“claimant”) is not granted the rights or benefits to which the person believes him or herself to be entitled, a formal claim for benefits must be filed in accordance with this Section 7.6.  A claim by any person must be presented to the Committee within the maximum time permitted by law or under regulations promulgated by the Secretary of Labor or his or her delegate pertaining to claims procedures.  The claims official will, within a reasonable time, and not later than the maximum period of time specified by law or under regulation, consider the claim and will issue his or her determination thereon in writing.  If the claim is granted, the appropriate distribution or payment will be made.  Before deciding the claim, the claims official will review the provisions of the Plan and other relevant Plan documents, including similar claims, to ensure and verify that the claim is made in accordance with those documents and that the decision is applied consistently with regard to similarly situated claimants.

(b) Notification to Claimant.  If a claim request is wholly or partially denied, the Committee will furnish to the claimant a notice of the decision within 90 days, (or if the claim is a claim on account of disability, no later than 45 days after the receipt of such claim) in writing and in a manner calculated to be understood by the claimant, which notice will contain the following information:

(i) Specific reason or reasons for the denial;

(ii) Specific references to pertinent Plan provisions upon which the denial is based;

(iii) A description of any additional material or infor­mation necessary for the claimant to perfect the claim and an explanation of why such material or information is necessary;

(iv) An explanation of the Plan’s claims review procedure describing the steps to be taken by a claimant who wishes to submit his claims for review and the time limits applicable to such procedures;

(v) A statement of the claimant’s right to bring a civil action under Section 502(a) of ERISA following an adverse determination upon review; and

(vi) In the case of an adverse determination of a claim on account of disability, the information to the claimant shall include, to the extent necessary, the information set forth in Employee Benefits Security Administration Regulation §2560.503-1(g)(1)(v).

If special circumstances require the extension of the 45-day or 90-day period described above, the claimant will be notified before the end of the initial period of the circumstances requiring the extension and the date by which the claims official expects to reach a decision.  Any extension for deciding a claim will not be for more than an additional 90-day period, or, if the claim is a claim on account of disability, for not more than two additional 30-day periods.

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(c) Review Procedure.  The claimant or his authorized representative may, with respect to any denied claim:

(i) Request a review upon a written application filed within 60 days (180 days in the case of a denial of a claim on account of disability) after receipt by the claimant of written notice of the denial of his claim;

(ii) Review and receive copies of all documents relating to the claimant’s claim for benefits, free of charge; and

(iii) Submit documents, records, issues and comments in writing.

Any request or submission will be in writing and will be directed to the Committee (or its designee).  The Committee (or its designee) will have the sole responsibility for the review of any denied claim and will take all steps appropriate in the light of its findings.

(d) Decision on Review. The Committee (or its designee) will render a decision upon review not later than 60 days (45 days in the case of a claim on account of disability) after receipt of the request for review.  If special circumstances (such as the need to hold a hearing on any matter pertaining to the denied claim) warrant additional time, the decision will be rendered as soon as possible, but not later than 60 days after receipt of the request for review.  Written notice of any such extension will be furnished to the claimant prior to the commencement of the extension.  This notice will indicate the special circumstances requiring the extension and the date by which the Committee expects to render a decision and will be provided to the claimant prior to the expiration of the initial 45-day or 60-day period.  The Committee will consider all information submitted by the claimant, regardless of whether the information was part of the original claim.  The decision on review will be in writing and will include:

(i) Specific reason or reasons for the decision;

(ii) Specific references to pertinent Plan provisions upon which the decision is based;

(iii) The claimant’s ability to review and receive copies of all documents relating to the claimant’s claim for benefits, free of charge;

(iv) An explanation of any voluntary review procedures describing the steps to be taken by a claimant who wishes to submit his claims for review and the time limits applicable to such procedures; and

(v) A statement of the claimant’s right to bring a civil action under Section 502(a) of ERISA.

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In the case of a claim on account of disability, the review of the denied claim shall be conducted by a named fiduciary who is neither the individual who made the benefit determination nor a subordinate of such person and no deference shall be given to the initial benefit determination.  For issues involving medical judgment, the named fiduciary must consult with an independent health care professional who may not be the health care professional who decided the initial claim.  To the extent permitted by law, the decision of the claims official (if no review is properly requested) or the decision of the review official on review, as the case may be, will be final and binding on all parties.  No legal action for benefits under the Plan will be brought unless and until the claimant has exhausted his or her remedies under this Section 7.6.

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ARTICLE VIII

DEFINITIONS

For the purposes of the Plan, the following words and phrases shall have the meanings indicated, unless the context clearly indicates otherwise:

Section 8.1 – Affiliate

“Affiliate” means all persons with whom the Company would be considered a single employer under Sections 414(b) and (c) of the Code.

Section 8.2 – Associate

“Associate” means an individual who is currently employed by the Company or any other Employer.

Section 8.3 – Base Compensation

“Base Compensation” means the gross base salary and annual bonus (other than any Performance Bonus or Fiscal Year Compensation) that, absent a deferral election under this Plan or any tax-qualified plan of the Company or an Affiliate, earned by a Participant in any year for services performed for the Company and/or any Affiliate.

Section 8.4 – Beneficiary

“Beneficiary” means the person, persons, or entity designated by the Participant to receive any benefits payable under the Plan pursuant to Article II.

Section 8.5 – Board

“Board” means the Board of Directors of the Company.

Section 8.6 – Change in Control

“Change in Control” means the occurrence of any one of the following actions or events:

(a) With respect to Grandfathered Amounts:

(i) Any person or group (as defined in Section 13 of Exchange Act) other than the Company or an Affiliate becomes the beneficial owner of, or has the right to acquire (by contract, option, warrant, conversion of convertible securities or otherwise), twenty (20) percent or more of the outstanding common shares of the Company entitled to vote for the election of directors; or

(ii) A majority of the Board is replaced within any period of two (2) years or less by directors not approved by the majority of the directors of the Company in office at the beginning of such period, or a majority of the Board at any date consists of persons not so approved; or

(iii) The shareholders of the Company approve an agreement to merge or consolidate the Company with another company other than an Affiliate or an agreement to sell or otherwise dispose of all or substantially all of the assets to an entity other than an Affiliate.

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(b) With respect to Non-Grandfathered Amounts:

(i) The acquisition by any person, or more than one person acting as a group, of shares of the Company that, together with the shares the Company held by such person or group, constitutes more than fifty (50) percent of the total fair market value or total voting power of all of the shares of the Company; or

(ii) A majority of the members of the Board is replaced during any twelve (12) month period by directors whose appointment or election is not endorsed by a majority of the members of the Board prior to the date of the appointment or election; or

(iii) The acquisition by any person, or more than one person acting as a group, within any twelve (12) month period, of ownership of shares possessing thirty (30) percent or more of the total voting power of all of the shares of the Company; or

(iv) The acquisition by any person, or more than one person acting as a group, within any twelve (12) month period, of assets of the Company that have a total gross fair market value equal to or more than forty (40) percent of the total gross fair market value of all of the assets of the Company immediately prior to such acquisition or acquisitions.

The definition of Change in Control contained herein in this subsection (b) shall be interpreted in a manner that is consistent with the definition of “change in control event” under Section 409A of the Code and the Treasury Regulations promulgated thereunder.

Section 8.7 – Code

“Code” means the Internal Revenue Code of 1986, as amended from time to time.

Section 8.8 – Committee

“Committee” means that person or persons appointed by the Company to represent the Company in the administration of the Plan pursuant to the provisions of Article IV.

Section 8.9 – Company

“Company” means Big Lots, Inc. (and prior to May 16, 2001, Consolidated Stores Corporation).

Section 8.10 –Compensation

“Compensation” means the total remuneration paid to an individual, including Base Compensation, Fiscal Year Compensation and any Performance Bonus.

Section 8.11 – Deferral Agreement

“Deferral Agreement” means an agreement filed by a Participant to effect deferrals of Compensation hereunder.

Section 8.12 – Deferred Account

“Deferred Account” means the account or accounts maintained by the Committee for each Participant pursuant to Article I.  A separate Deferred Account shall be maintained for each Participant.  Additionally, separate subaccounts shall be maintained to account for Non-Grandfathered Amounts and Grandfathered Amounts as well as any other subaccount necessary to reflect the nature of the account and various investment fund allocations of the Participant.  A Participant’s Deferred Account shall be utilized solely as a device for the measurement and determination of the amounts to be distributed to or on behalf of a Participant pursuant to the Plan; provided, however, that such Deferred Account shall not constitute or be treated as a trust fund of any kind nor be deemed a funding arrangement under the Code or ERISA.

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Section 8.13 – Employer

“Employer” means the Company and/or an Affiliate that participates in the Plan pursuant to Section 6.1.

Section 8.14 – ERISA

“ERISA” means the Employee Retirement Income Security Act of 1974, as amended.

Section 8.15 – Fiscal Year Compensation

“Fiscal Year Compensation” means “fiscal year compensation” as defined under Section 409A of the Code, relating to a period of service that is coextensive with one or more consecutive taxable years of any Employer of which no amount is paid or payable during the taxable year(s) of the Associate or Participant constituting the period of service.

Section 8.16 – Grandfathered Amounts

“Grandfathered Amounts” means the portion, if any, of a Participant’s Deferred Account that was earned and vested within the meaning of Section 409A of the Code under the Plan before January 1, 2005 and any earnings (whether actual or notional) attributable to such portion of the Participant’s Deferred Account, or to such income.

Section 8.17 – Highly Compensated Employee

“Highly Compensated Employee” means an individual (as defined in Section 414(q) of the Code) who is employed by the Company or any other Employer.

Section 8.18 – Matching Employer Contributions

“Matching Employer Contributions” means contributions, if any, made by the Employer pursuant to Section 1.4 of the Plan. Any Matching Employer Contributions shall be made at the sole and final discretion of the Board.

Section 8.19 – Non-Grandfathered Amounts

“Non-Grandfathered Amounts” means the portion, if any, of a Participant’s Deferred Account that are not Grandfathered Amounts.

Section 8.20 – Participant

“Participant” means any Highly Compensated Employee who becomes a participant pursuant to Section 1.1 of the Plan and who then elects to participate in the Plan as described in Article I.

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Section 8.21 – Performance Bonus

“Performance Bonus” means compensation the amount of which, or the entitlement to which, is contingent on the satisfaction of organizational or individual performance criteria relating to a performance period of at least twelve (12) consecutive months; provided that such criteria have been established in writing by not later than ninety (90) days after the commencement of the period of service to which the criteria relates and the outcome is substantially uncertain at the time the criteria are established, and that constitutes “performance-based compensation” within the meaning of Treasury Regulation §1.409A-1(e).

Section 8.22 – Plan Year

“Plan Year” means the twelve (12) month period beginning each January 1 (i.e., the calendar year).

Section 8.23 – Termination

“Termination” means a termination of the relationship between a Participant and all Affiliates that would be considered a “separation from service” as defined under Section 409A of the Code and Treasury Regulation §1.409A-1(h), except that for purposes of determining whether a Termination has occurred with respect to an Affiliate, Sections 1563(a)(1), (2) and (3) of the Code (for purposes of determining a controlled group of corporations under Section 414(b) of the Code) and Treasury Regulation §1.414(c)-2 (for purposes of determining trades or businesses, whether or not incorporated, that are under common control for purposes of Section 414(c) of the Code) shall be applied without substituting the phrase “at least 50 percent” for “at least 80 percent” in each place it appears in such sections.

Section 8.24 – Unforeseeable Emergency

“Unforeseeable Emergency” means a severe financial hardship to the Participant within the meaning of Treasury Regulation §1.409A-3(i)(3) resulting from: (i) an illness or accident of the Participant or the Participant’s spouse, Beneficiary, or dependent (as defined in Section 152 of the Code, without reference to Sections 152(b)(1), (b)(2) and (d)(1)(B) of the Code); (ii) loss of the Participant’s property due to casualty; or (iii) other similar extraordinary and unforeseeable circumstances arising as a result of events beyond the control of the Participant.

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ARTICLE IX

GENERAL PROVISIONS

Section 9.1 – ERISA Status

The Plan shall constitute an unfunded plan maintained primarily for the purpose of providing deferred compensation benefits for a group of Highly Compensated Employees of any Employer.

Section 9.2 – Compliance with Section 409A of the Code

It is intended that the Plan comply with Section 409A of the Code and the regulations promulgated thereunder (and any subsequent notices or guidance issued by the Internal Revenue Service), and the Plan will be interpreted, administered and operated accordingly.  Nothing herein shall be construed as an entitlement to or guarantee of any particular tax treatment to a Participant.

Section 9.3 – Construction

In the construction of the Plan, the masculine shall include the feminine and the singular shall include the plural in all cases where such meanings would be appropriate.

Section 9.4 – Controlling Law

The law of the state of the Company’s incorporation shall be the controlling state law in all matters relating to the Plan and shall apply to the extent that it is not preempted by the laws of the United States of America.

Section 9.5 – Effect of Invalidity of Provision

If any provision of the Plan is held invalid or unenforceable, such invalidity or unenforceability shall not affect any other provisions hereof, and the Plan shall be construed and enforced as if such provision had not been included.

IN WITNESS WHEREOF, this Plan has been executed on behalf of the Company by its duly appointed officer this 28^th day of August, 2007.

BIG LOTS, INC.
By:	/s/ Charles W. Haubiel II
Title:	Senior Vice President, General
	Counsel and Corporate Secretary

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EX-10.2

EXHIBIT 10.2

BIG LOTS

SUPPLEMENTAL DEFINED BENEFIT PENSION PLAN

As amended and restated

Effective: January 1, 2008

BIG LOTS

SUPPLEMENTAL DEFINED BENEFIT PENSION PLAN

PREAMBLE

Effective January 1, 1996, Consolidated Stores Corporation adopted the Consolidated Stores Corporation Supplemental Defined Benefit Pension Plan, for a select group of highly compensated employees to ensure that the overall retirement pension benefit said group of highly compensated employees would receive would be equal to what the benefit would have been had the Consolidated Stores Corporation Defined Benefit Pension Plan not been amended to freeze said employees’ accrued retirement pension benefits.

Effective May 16, 2001, the name of the Company changed to Big Lots, Inc. and effective as of such date the name of this Plan changed to the Big Lots, Inc. Supplemental Defined Benefit Pension Plan.  This Plan was amended and restated in its entirely effective January 1, 2003 to incorporate certain administrative changes, including the Plan name change.

This Plan is now being amended and restated again to incorporate certain changes required by Code Section 409A and to reflect other administrative changes.

This Plan is an unfunded, supplemental executive deferred compensation plan structured to benefit such employees described above in a manner that provides said employees full pension benefits and that provides the incentive for said employees to improve the profitability, competitiveness and growth of Big Lots, Inc. and its affiliates.

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ARTICLE I

DEFINITIONS

1.1 “Basic Retirement Plan” means the Big Lots Defined Benefit Pension Plan, as amended and restated effective as of January 1, 2005.

1.2 “Basic Retirement Benefit” means the annual benefit to which a Participant is entitled from the Basic Retirement Plan, in the form of a single life annuity commencing on his Retirement Date and ending on the first day of the month during which his death occurs. The Basic Retirement Plan Benefit assumes immediate commencement of benefits with applicable early payment reductions as may be applied under the Basic Retirement Plan.

1.3 “Beneficiary” means the person, persons or entity designated by the Participant to       receive the Death Benefit payable under this Plan.

1.4 “Change in Control” shall mean the occurrence of any one of the following actions or events:

(a) The acquisition by any person, or more than one person acting as a group, of shares of the Company that, together with the shares of the Company held by such person or group, constitutes more than fifty (50) percent of the total fair market value or total voting power of all of the shares of the Company; or

(b) A majority of the members of the board of directors of the Company is replaced during any twelve (12) month period by directors whose appointment or election is not endorsed by a majority of the members of the board of directors of the Company prior to the date of the appointment or election; or

(c) The acquisition by any person, or more than one person acting as a group, within any twelve (12) month period, of ownership of shares possessing thirty (30) percent or more of the total voting power of all of the shares of the Company; or

(d) The acquisition by any person, or more than one person acting as a group, within any twelve (12) month period, of assets of the Company that have a total gross fair market value equal to or more than forty (40) percent of the total gross fair market value of all of the assets of the Company immediately prior to such acquisition or acquisitions.

The definition of Change in Control contained herein in this subsection (b) shall be interpreted in a manner that is consistent with the definition of “change in control event” under Code Section 409A and the Treasury Regulations promulgated thereunder.

1.5 “Code” means the Internal Revenue Code of 1986, as amended from time to time.

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1.6 “Committee” means the Committee is authorized to establish Plan policy and review Plan discretionary decisions pursuant to the terms of this Plan, as described in Section 6.1 of this Plan.

1.7 “Company” means Big Lots, Inc. (and prior to May 16, 2001, Consolidated Stores Corporation, a Delaware corporation).

1.8 “Compensation” means remuneration in the form described in Section 1.10(a) of the Basic Retirement Plan.

1.9 “Credited Service” means service as defined in Section 1.31(b) of the Basic Retirement Plan.

1.10 “Death Benefit” means the benefit provided to the Beneficiary of a deceased Participant pursuant to Section 4.3 of this Plan.

1.11 “Effective Date” means January 1, 2008, the effective date of this second amended and restated Plan.

1.12 “Employer” means the Company and/or an applicable participating Related Company.

1.13 “Entitlement Date” means, with respect to any Participant, the date of such Participant’s Separation from Service that also constitutes “Normal Retirement,” “Early Retirement” or “Late Retirement,” each as defined in the Basic Retirement Plan.

1.14 “Final Average Compensation” means the average monthly Compensation of a Participant as defined in Section 1.10(b) of the Basic Retirement Plan.

1.15 “Participant” means any individual who is eligible to participate in this Plan pursuant to Article II of this Plan.

1.16 “Plan” means the Big Lots Supplemental Defined Benefit Pension Plan, the terms of which are set forth herein and as they may be amended from time to time (and prior to May 16, 2001, the Consolidated Stores Supplemental Defined Benefit Pension Plan).

1.17 “Plan Administrator” means the Company, notwithstanding the fact that certain administrative functions under or with respect to this Plan have been delegated to the Committee pursuant to the provisions of Article VII of this Plan.

1.18 “Related Company” means:

(a) For any calendar year prior to January 1, 2005, any Related Company as determined or designated as such by the Company under any prior version of this Plan, but only with respect to an employee who became a Participant in this Plan prior to January 1, 2005 under such determination or designation; and

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(b) For any calendar year commencing on or after January 1, 2005, and for purposes of determining whether any employee is eligible to become a Participant after January 1, 2005, a Related Company shall mean all persons whom, along with the Company, would be considered a “service recipient” within the meaning of Treasury Regulation §1.409A-1(g).

1.19 “Retirement Date” means that date a Participant is otherwise eligible to retire under the terms of the Basic Retirement Plan

1.20 “Separation from Service” shall mean a “separation from service” of a Participant from all Employers, as that phrase is defined under Code Section 409A and Treasury Regulation §1.409A-1(h).  For purposes of determining whether a “Separation from Service” has occurred with respect to an Affiliate, Code Sections 1563(a)(1), (2) and (3)  (for purposes of determining a controlled group of corporations under Code Section 414(b)) and Treasury Regulation §1.414(c)-2 (for purposes of determining trades or businesses, whether or not incorporated, that are under common control for purposes of Code Section 414(c)) shall be applied by retaining the phrase “at least 80 percent” in each place it appears in such sections.

1.21 “Specified Employee” means a “specified employee” as defined under Code Section 409A and Treasury Regulation  §1.409A-1(i) and as determined under the Company’s policy for determining specified employees.

1.22 “Supplemental Retirement Benefit” means the benefit payable in accordance with the terms of this Plan.

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ARTICLE II

PARTICIPATION

2.1 An employee of an Employer who is a participant in the Basic Retirement Plan shall be eligible to participate in this Plan provided the following conditions have been met:

(a) The employee was an active participant in the Basic Retirement Plan on December 31, 1996; and

(b) The employee was a “highly compensated employee” on December 31, 1996, as that term was defined in Code Section 414(q) as in effect on December 31, 1996.

2.2 An existing employee of an Employer who was not a highly compensated employee on December 31, 1995, who subsequently becomes a highly compensated employee (determined by reference to Code Section 414(q) as in effect for the plan year of the Basic Retirement Plan in which such determination is made) shall become a Participant in this Plan.

2.3 Notwithstanding any other provision of this Plan to the contrary, any other employee of an Employer who is hired after March 31, 1994 or who is rehired after his prior service has been forfeited under Section 3.4(c) of the Basic Retirement Plan, and who, as a result, is not eligible to become a participant in the Basic Retirement Plan, shall not be eligible to participate in this Plan.

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ARTICLE III

ELIGIBILITY FOR AND AMOUNT OF BENEFITS

3.1 Entitlement Date: Each Participant shall be entitled to receive a Supplemental Retirement Benefit at his or her Entitlement Date.

3.2 Calculation of Supplemental Retirement Benefit.  The Supplemental Retirement Benefit of each Participant shall be calculated as follows:

(a) One percent (1%) of a Participant’s Final Average Compensation, multiplied by the Participant’s Credited Service (not to exceed 25 years); minus

(b) The greater of either:

(1) The accrued retirement pension of the Participant as determined under the Basic Retirement Plan in effect as of December 31, 1995, assuming the Participant terminated employment with the Company on March 31, 1996 or such later date that the Participant was determined to be a highly compensated employee under the terms of the Basic Retirement Plan; and

(2) The accrued retirement pension of the Participant as determined under Section 5.1 of the Basic Retirement Plan as in effect on December 31, 1995, without regard to Section 5.1(c) of the Basic Retirement Plan.

3.3 Continued Participation.  An employee who becomes a Participant in this Plan shall remain a Participant until his Separation from Service with the Employer. To the extent a Participant is not entitled to a vested accrued retirement pension under the terms of the Basic Retirement Plan upon Separation from Service with the Employer other than by reason of death, disability, or retirement (as those terms are described and used in the Basic Retirement Plan), neither the Participant nor any Beneficiary nor any other person shall have a right to any benefit from this Plan with respect to such Participant.

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ARTICLE IV

FORM AND COMMENCEMENT OF BENEFITS

4.1 Time and Form of Payment

Supplemental Retirement Benefits shall be paid to Participants in a single-lump sum within ninety (90) days following such Participant’s Entitlement Date; provided, however, that the payment of Supplemental Retirement Benefits to any Specified Employee shall begin on the first business day after the date that is six (6) months following the date of the Specified Employee’s Separation from Service (or, if earlier, the Specified Employee’s death).The payment made on the first business day after the date that is six (6) months following the date of Separation from Service shall include the cumulative amount of any amounts that could not be paid or provided during such six-month period.

4.2 Change in Control.  Notwithstanding the foregoing, all Supplemental Retirement Benefits shall become immediately payable and shall be paid in a lump-sum within ninety (90) days following a Change in Control.

4.3 Death Benefit:  The Beneficiary(ies) of a deceased eligible Participant shall be entitled to a Death Benefit, payable in a lump sum within ninety (90) days after the date of the Participant’s death, calculated as follows:

(a) A lump sum amount equal to the actuarial equivalent (as that term is defined in Section 1.1 of the Basic Retirement Plan as of the date of the Participant’s death) of the Participant’s accrued Supplemental Retirement Benefit, reduced for early payment as described in Section 5.2 of the Basic Retirement Plan, and computed on the assumption that the Participant had Separated from Service on his date of death, survived to the earliest retirement age under this Plan and died on the day after that earliest retirement age; minus

(b) The death benefit determined and payable pursuant to Section 6.1(b) of the Basic Retirement Plan.

4.4 Designation of Beneficiary:  The designation of Beneficiary(ies) shall be as described in Article VI of the Basic Retirement Plan.

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ARTICLE V

AMENDMENT AND TERMINATION

5.1 Amendment and Termination: The Company intends this Plan to be permanent but reserves the right to amend or terminate this Plan when, in its sole discretion, such amendment or termination is advisable.  Any such amendment or termination shall be made pursuant to a resolution of the board of directors of the Company and shall be effective as of the date of resolution.

5.2 Liquidation.  The Company reserves the right to terminate and liquidate this Plan when, in its sole discretion, such termination and liquidation is advisable.  Any such termination and liquidation shall be made pursuant to the resolution of the board of directors of the Company and shall be effective as of the date of resolution, unless an earlier date is specified.  No termination shall directly or indirectly deprive any Participant or Beneficiary of the payment of all or any portion of any Supplemental Retirement Benefit or Death Benefit that had commenced prior to the effective date of the resolution amending this Plan.  Notwithstanding the foregoing. the Company may terminate and liquidate this Plan by distributing all vested Supplemental Retirement Benefits to Participants only under the circumstances, and in accordance with the requirements, described in Treasury Regulation §1.409A-3(ix), including the following conditions:

(a) The termination and distribution does not occur proximate to a downturn in the financial health of the Company and its Related Companies;

(b) The Company and its Related Companies terminate all arrangements that would be aggregated with this Plan under Treasury Regulation §1.409A-1(c)(2);

(c) No distributions are made within twelve (12) months of the date the Company irrevocable takes all necessary action to terminate and distribute amounts under this Plan (for purposes of this Section 5.2(b), the “termination date of this Plan”) other than amounts that would be distributable under the terms of this Plan if the termination and distribution of the Participants’ Supplemental Retirement Benefits under this Plan had not occurred;

(d) All distributions are made within twenty-four (24) months of the termination date of this Plan; and

(e) The Company and its Related Companies do not adopt a new plan that would be aggregated with this Plan under Treasury Regulation §1.409A-1(c)(2) at any time within three (3) years following the termination date of this Plan.

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ARTICLE VI

COMMITTEE

6.1 The Committee shall be the same committee that administers the Basic Retirement Plan and shall administer this Plan in accordance with the intention of the board of directors of the Company as expressed herein.

6.2 No Committee member at any time hereunder who is a Participant shall have any vote in any decision of the Committee made primarily with respect to such Committee member’s benefits hereunder. All actions of the Committee may be taken with or without a meeting and shall be in writing and signed by a majority of the members of the Committee.

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ARTICLE VII

ADMINISTRATION

7.1 The Committee shall have the primary administrative responsibility with respect to this Plan. All policy and discretionary decisions as well as administrative decisions shall be the responsibility of the Committee and they shall be made in conjunction with and not inconsistent with the policy and administrative decisions made by the Committee as they relate to the Basic Retirement Plan. The Committee shall interpret the provisions of this Plan where necessary and follow procedures for the administration of this Plan that are consistent with the provisions of the Basic Retirement Plan.

7.2 Expenses incurred by the Committee and the Plan Administrator in the administration of this Plan, including the fees and compensation of suitors, actuaries, accountants, legal counsel and other counsel retained by the Committee to carry out the intent and purpose of this Plan, shall be paid by the Employer.

7.3 The Committee shall keep such records as are reasonably needed to effectuate the purposes of this Plan. Any forms needed to carry out the provisions of this Plan shall be established and maintained by the Plan Administrator.

7.4 All determinations made by the Committee, including, but not limited to, the purpose and intent of this Plan, the benefits payable under this Plan, and eligibility to participate, shall be made in the sole and absolute discretion of the Committee. Such decisions shall be binding on all Participants, Beneficiaries, successors, assigns, executors, administrators, heirs, next-of-kin, and distributees of all the foregoing.

7.5 Except as provided by law, no benefit, payment or distribution under this Plan shall be subject either to the claim of any creditor of a Participant or Beneficiary, or to attachment, garnishment, levy, execution or other legal or equitable process, by any creditor of such Participant. No such Participant shall have any right to alienate, commute, anticipate or assign all or any portion of any benefit, payment or distribution under this Plan.

7.6 Claims Procedure.

(a) Filing Claims.  In general, neither Participants nor their Beneficiaries need to present a formal claim for benefits under this Plan in order to qualify for rights or benefits under this Plan.  If, however, any Participant or Beneficiary (“claimant”) is not granted the rights or benefits to which the person believes him or herself to be entitled, a formal claim for benefits must be filed in accordance with this Section 7.6.  A claim by any person must be presented to the Committee within the maximum time permitted by law or under regulations promulgated by the Secretary of Labor or his or her delegate pertaining to claims procedures.  The claims official will, within a reasonable time, and not later than the maximum period of time specified by law or under regulation, consider the claim and will issue his or her determination thereon in writing.  If the claim is granted, the appropriate distribution or payment will be made.  Before deciding the claim, the claims official will review the provisions of this Plan and other relevant Plan documents, including similar claims, to ensure and verify that the claim is made in accordance with those documents and that the decision is applied consistently with regard to similarly situated claimants.

11

(b) Notification to Claimant.  If a claim request is wholly or partially denied, the Committee will furnish to the claimant a notice of the decision within 90 days, (or if the claim is a claim on account of disability, no later than 45 days after the receipt of such claim) in writing and in a manner calculated to be understood by the claimant, which notice will contain the following information:

(i) Specific reason or reasons for the denial;

(ii) Specific references to pertinent Plan provisions upon which the denial is based;

(iii) A description of any additional material or infor­mation necessary for the claimant to perfect the claim and an explanation of why such material or information is necessary;

(iv) An explanation of this Plan’s claims review procedure describing the steps to be taken by a claimant who wishes to submit his claims for review and the time limits applicable to such procedures;

(v) A statement of the claimant’s right to bring a civil action under Section 502(a) of the Employee Retirement Income Security Act of 1974, as amended (“ERISA”), following an adverse determination upon review; and

(vi) In the case of an adverse determination of a claim on account of disability, the information to the claimant shall include, to the extent necessary, the information set forth in Employee Benefits Security Administration Regulation §2560.503-1(g)(1)(v).

If special circumstances require the extension of the 45-day or 90-day period described above, the claimant will be notified before the end of the initial period of the circumstances requiring the extension and the date by which the claims official expects to reach a decision.  Any extension for deciding a claim will not be for more than an additional 90-day period, or, if the claim is a claim on account of disability, for not more than two additional 30-day periods.

12

(c) Review Procedure.  The claimant or his authorized representative may, with respect to any denied claim:

(i) Request a review upon a written application filed within 60 days (180 days in the case of a denial of a claim on account of disability) after receipt by the claimant of written notice of the denial of his claim;

(ii) Review and receive copies of all documents relating to the claimant’s claim for benefits, free of charge; and

(iii) Submit documents, records, issues and comments in writing.

Any request or submission will be in writing and will be directed to the Committee (or its designee).  The Committee (or its designee) will have the sole responsibility for the review of any denied claim and will take all steps appropriate in the light of its findings.

(d) Decision on Review.  The Committee (or its designee) will render a decision upon review not later than 60 days (45 days in the case of a claim on account of disability) after receipt of the request for review.  If special circumstances (such as the need to hold a hearing on any matter pertaining to the denied claim) warrant additional time, the decision will be rendered as soon as possible, but not later than 60 days after receipt of the request for review.  Written notice of any such extension will be furnished to the claimant prior to the commencement of the extension.  This notice will indicate the special circumstances requiring the extension and the date by which the Committee expects to render a decision and will be provided to the claimant prior to the expiration of the initial 45-day or 60-day period.  The Committee will consider all information submitted by the claimant, regardless of whether the information was part of the original claim.  The decision on review will be in writing and will include:

(i) Specific reason or reasons for the decision;

(ii) Specific references to pertinent Plan provisions upon which the decision is based;

(iii) The claimant’s ability to review and receive copies of all documents relating to the claimant’s claim for benefits, free of charge;

(iv) An explanation of any voluntary review procedures describing the steps to be taken by a claimant who wishes to submit his claims for review and the time limits applicable to such procedures; and

(v) A statement of the claimant’s right to bring a civil action under Section 502(a) of ERISA.

13

In the case of a claim on account of disability, the review of the denied claim shall be conducted by a named fiduciary who is neither the individual who made the benefit determination nor a subordinate of such person and no deference shall be given to the initial benefit determination.  For issues involving medical judgment, the named fiduciary must consult with an independent health care professional who may not be the health care professional who decided the initial claim.  To the extent permitted by law, the decision of the claims official (if no review is properly requested) or the decision of the review official on review, as the case may be, will be final and binding on all parties.  No legal action for benefits under this Plan will be brought unless and until the claimant has exhausted his or her remedies under this Section 7.6.

14

ARTICLE VIII

PARTICIPATING RELATED COMPANIES

8.1 Any Employer that is a Related Company and that is authorized by the board of directors of the Company to participate in this Plan may elect to participate by action of its own board of directors (or other managing body) and by entering into an agreement, a copy of which shall be attached hereto and made a part of this Plan.

8.2 The Company may, at any time and in its sole discretion, determine to exclude any Employer from this Plan. Any Employer may similarly elect to withdraw its participation by giving sixty (60) days prior written notice of its intent to withdraw.

8.3 A sale or liquidation of an Employer by the Company such that the Company no longer owns eighty (80) percent of such Employer, or the Employer is liquidated, the Company shall assume payment of such Employer’s remaining obligations and liabilities under this Plan.

15

ARTICLE IX

MISCELLANEOUS PROVISIONS

9.1 Nothing contained herein shall require the Company or any other Employer to continue any Participant in its employ, or require any Participant to continue in the employ of the Company or any other Employer, nor does this Plan create any rights of any Participant or Beneficiary or any obligations on the part of the Company or any other Employer other than those set forth herein. The benefits payable under this Plan shall be independent of, and in addition to, any other employment agreements that may exist from time to time concerning any other compensation of benefits payable by any Employer.

9.2 The sole interest of each Participant and each Beneficiary under this Plan shall be to receive the deferred compensation benefits provided herein as and when the same shall become due and payable in accordance with the terms hereof; and, neither any Participant nor any Beneficiary shall have any right, title or interest (legal or equitable) in or to any of the specific property or assets of the Company or any other Employer. All benefits hereunder shall be paid solely from the general assets of the Employers and no Employer shall maintain any separate fund or other separated assets to provide any benefits hereunder. In no manner shall any property of any Participant or Beneficiary be used as collateral security for the performance of the obligations imposed by this Plan on the Employers. The rights of a Participant or Beneficiary hereunder shall be solely those of an unfunded and unsecured creditor in respect to the promise of the Employers to make contributions to this Plan or to pay benefits to the Participant or Beneficiary in the future.

9.3 Notwithstanding any provisions of this Plan to the contrary, an Employer may in its sole and absolute discretion determine and offset any amount to be paid to a Participant under this Plan against any amount up to $5,000 that such Participant may owe to such Employer to the extent permitted by Treasury Regulation §1.409A-3(j)(4)(xiii).

9.4 To the extent required by law, the Employer shall withhold from other amounts owed to a Participant or require the Participant to remit to the Employer an amount sufficient to satisfy federal, state and local withholding tax requirements on any distribution from a Participant’s Supplemental Retirement Benefit or on the vesting, payment or cancellation of amounts owed to the Participant under this Plan.  Determinations by the Committee as to withholding shall be binding on the Participant and applicable Beneficiary(ies).

16

ARTICLE X

GENERAL PROVISIONS

10.1 This Plan shall constitute a plan that is unfunded and that is maintained primarily for the purpose of providing deferred compensation in the form of a retirement benefit for a select group of highly compensated employees, as determined by the board of directors of the Company in its sole and absolute discretion.

10.2 The laws of the State of Ohio shall be the controlling state law in all matters relating to this Plan and shall apply to the extent that this Plan is not preempted by any law of the United States of America.

10.3 If any provision of this Plan is held invalid or unenforceable, such invalidity or unenforceability shall not affect any other provisions hereof and this Plan shall be construed and enforced as if such provision had not been included.

10.4 This Plan is intended to comply with the requirements imposed by Code Section 409A and the Treasury Regulations promulgated thereunder (and any subsequent notices or guidance issued by the Internal Revenue Service), and this Plan will be interpreted, administered and operated accordingly.  Nothing herein shall be construed as an entitlement to or guarantee of any particular tax treatment to a Participant.

10.5 The Company may accelerate the time or schedule of a distribution to a Participant to pay an amount the Participant includes in income as a result of this Plan failing to meet the requirements of Code Section 409A and the Treasury Regulations promulgated thereunder.  Such payment may not exceed the amount required to be included in income as a result of the failure to comply with Code Section 409A and the Treasury Regulations promulgated thereunder.

IN WITNESS WHEREOF, the Company has caused this Plan to be signed, adopted and dated this 28^th day of August, 2007.

Big Lots, Inc.
By:	/s/ Charles W. Haubiel II
Title:	Senior Vice President, General
	Counsel and Corporate Secretary

17

EX-99.1

Exhibit 99.1

PRESS RELEASE

FOR IMMEDIATE RELEASE	Contact:  Timothy A. Johnson
	Vice President, Strategic
	Planning and Investor Relations
	614-278-6622

BIG LOTS REPORTS RECORD SECOND QUARTER RESULTS

COMPANY RAISES ANNUAL EARNINGS AND CASH FLOW GUIDANCE

Columbus, Ohio – August 29, 2007 – Big Lots, Inc. (NYSE: BIG) today reported second quarter fiscal 2007 income from continuing operations of $22.1 million, or $0.21 per diluted share, compared to income from continuing operations of $4.7 million, or $0.04 per diluted share, in the second quarter of fiscal 2006.  Including the impact of discontinued operations, second quarter fiscal 2007 net income totaled $23.4 million, or $0.22 per diluted share, compared to $4.3 million, or $0.04 per diluted share, in the prior year.

For the year to date period ended August 4, 2007, income from continuing operations totaled $51.2 million, or $0.47 per diluted share, compared to income from continuing operations of $19.2 million, or $0.17 per diluted share, for the same period in fiscal 2006.  Including the impact of discontinued operations, year to date fiscal 2007 net income totaled $52.1 million, or $0.48 per diluted share, compared to $18.0 million, or $0.16 per diluted share, in the prior year.

SECOND QUARTER HIGHLIGHTS

· Record second quarter income from continuing operations of $0.21 per diluted share versus income from continuing operations of $0.04 per diluted share last year

· Comparable store sales increase of 5.2%

· Operating profit rate of 3.1% versus 0.7% last year

· Repurchased $215 million of stock under the Company’s $600 million share repurchase program

· Record second quarter inventory turnover

Second Quarter Results

Net sales for the second quarter ended August 4, 2007, increased 2.7% to $1,084.9 million, compared to $1,056.5 million for the same period in fiscal 2006.  Comparable store sales for stores open at least two years at the beginning of the fiscal year increased 5.2% for the quarter on top of a 5.2% comparable store sales increase in the second quarter of fiscal 2006.

Shareholder Relations Department 300 Phillipi Road Columbus, Ohio 43228-5311 Phone: (614) 278-6622      Fax: (614) 278-6666 E-mail: aschmidt@biglots.com

Operating profit for the second quarter of fiscal 2007 was $33.4 million, or 3.1% of sales, compared to last year’s operating profit of $7.3 million, or 0.7% of sales.  The operating profit dollar improvement to last year was the result of significant expense leverage along with the incremental gross margin dollars driven by the Company’s 5.2% comparable store sales increase.  Operating expenses as a percent of sales improved by 260 basis points due to store and distribution center efficiencies, lower insurance-related costs, efficiencies in advertising spending, and the leveraging impact of a 5.2% comp.  As anticipated, this expense leverage was partially offset by a slight decline of 20 basis points in the gross margin rate due to certain lower margin promotions and a slight shift in merchandise mix towards lower margin categories.

Inventory and Cash Management

Inventory ended the quarter at $714 million, down 13% or $105 million compared to last year.  Lower inventory value resulted from a lower store count along with an 11% decline in average store inventory levels year over year.  For the sixth consecutive quarter, the Company achieved record inventory turnover results (on a comparable quarter basis) driven by improving inventory management and timely flow of merchandise along with strength in comparable store sales.  The Company ended the second quarter of fiscal 2007 with total cash and cash equivalents of $109 million (with no long-term obligations) compared to cash and cash equivalents of $1 million and long-term obligations of $31 million in the prior year.

Share Repurchase Update

As announced in March of 2007, the Company’s Board of Directors authorized the repurchase of up to $600.0 million of its common shares commencing upon authorization and continuing until exhausted (“2007 Repurchase Program”).

During the second quarter of fiscal 2007, the Company purchased 7.5 million shares in open market transactions for a total investment of $215.0 million or a weighted average price of $28.74 per share.  Year to date, the Company has purchased 7.9 million shares in open market transactions for a total investment of $228.7 million, or a weighted average price of $28.91 per share.

Additionally, during the first quarter of fiscal 2007 as part of the 2007 Repurchase Program, the Company received 2.8 million of its outstanding common shares representing the minimum number of shares purchased under a $100.0 million guaranteed share repurchase (“GSR”) transaction.  The GSR includes a forward contract indexed to the average price of our common stock that subjects the GSR to a future share settlement based on the average share price between the contractually specified price inception date of the GSR and the final settlement date.  The Company may receive up to 0.4 million additional shares of common stock from the counterparty in settlement of the GSR.  If the GSR had settled on August 4, 2007, the Company would have received approximately 0.4 million additional common shares from the counterparty based on the average price of its common stock since the contractually specified price inception date of the GSR. The GSR is expected to settle during the fourth quarter of fiscal year 2007.

Year to date, the Company has invested a total of $328.7 million as part of the 2007 Repurchase Program, leaving $271.3 million authorized and available for future use.  If the GSR had settled on August 4, 2007, the Company would have purchased 11.1 million shares, or approximately 10% of the actual shares outstanding at the beginning of the program, at a weighted average price of $29.54.

Shareholder Relations Department 300 Phillipi Road Columbus, Ohio 43228-5311 Phone: (614) 278-6622      Fax: (614) 278-6666 E-mail: aschmidt@biglots.com

2007 OUTLOOK

· Provides initial Q3 and Q4 guidance for sales and EPS from continuing operations

· Increases annual guidance for EPS from continuing operations to $1.43 to $1.48 per diluted share, an increase of 42% to 47% compared to the prior year

· Expects $240 million of annual cash flow (defined as operating activities less investing activities)

· Increases annual inventory turnover guidance to 3.6

For the third quarter of fiscal 2007, the Company’s guidance calls for a 1% to 3% comparable store sales increase compared to a 5.8% comparable store sales increase for the third quarter of fiscal 2006.  Based on this level of sales performance, the Company’s earnings are estimated to be in the range of $0.09 to $0.13 per diluted share, compared to income from continuing operations for the third quarter of fiscal 2006 of $0.02 per diluted share.  As a reminder, the third quarter of fiscal 2006 included litigation charges totaling $0.05 per diluted share.

For the fourth quarter of fiscal 2007, the Company’s guidance calls for a 1% to 3% comparable store sales increase compared to a 4.9% comparable store sales increase recorded last year.  Based on this level of sales performance, the Company’s earnings are estimated to be in the range of $0.87 to $0.92 per diluted share, compared to income from continuing operations for the fourth quarter of fiscal 2006 of $0.83 per diluted share.  As a reminder, the fourth quarter of fiscal 2006 included incremental earnings of approximately $0.05 per diluted share related to the extra week included in the retail calendar during fiscal 2006 (fourth quarter of 14 weeks versus a normal 13 week quarter, full year of 53 weeks versus a normal 52 week year).

Given the strength of the second quarter operating results and current trends in the business, the Company raised its fiscal 2007 guidance for earnings and cash flow.  The Company now anticipates fiscal 2007 income from continuing operations of $1.43 to $1.48 per diluted share, an increase of 42% to 47% compared to income from continuing operations of $1.01 per diluted share for fiscal 2006.  This EPS guidance is based on an expected increase in comparable store sales in the range of 3% to 4%.  Given this level of EPS performance and an inventory turnover assumption of approximately 3.6 times, the Company now expects approximately $240 million of cash flow for fiscal 2007.

Conference Call/Webcast

The Company will host a conference call today at 8:00 a.m. Eastern Time to discuss the Company's financial results for the second quarter of fiscal 2007.  The Company invites you to listen to the webcast of the conference call through the Investors section of our website (www.biglots.com).

If you are unable to join the live webcast, an archive of the call will be available at http://www.biglots.com in the Investor Relations section of our website two hours after the call ends and will remain available through midnight on Wednesday, September 12. A replay of the call will be available beginning August 29 at 12:00 noon (Eastern Time) through September 12 at midnight by dialing: 1.866.452.0550 (United States and Canada) or 1.206.428.2805 (International or metro-Seattle). The recording ID number is 5678 and the PIN number is 7893.

Shareholder Relations Department 300 Phillipi Road Columbus, Ohio 43228-5311 Phone: (614) 278-6622      Fax: (614) 278-6666 E-mail: aschmidt@biglots.com

Big Lots is the nation’s largest broadline closeout retailer.  As of the end of the second quarter of fiscal 2007 (August 4, 2007), the Company operated 1,369 BIG LOTS stores in 47 states. Wholesale operations are conducted through BIG LOTS WHOLESALE, CONSOLIDATED INTERNATIONAL, WISCONSIN TOY and with online sales at www.biglotswholesale.com. The Company’s website is located at www.biglots.com.

Cautionary Statement Concerning Forward-Looking Statements

Certain statements in this release are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, and such statements are intended to qualify for the protection of the safe harbor provided by the Act. The words “anticipate,” “estimate,” “expect,” “objective,” “goal,” “project,” “intend,” “plan,” “believe,” “will,” “target,” “forecast” and similar expressions generally identify forward-looking statements. Similarly, descriptions of our objectives, strategies, plans, goals or targets are also forward-looking statements. Forward-looking statements relate to the expectations of management as to future occurrences and trends, including statements expressing optimism or pessimism about future operating results or events and projected sales, earnings, capital expenditures and business strategy. Forward-looking statements are based upon a number of assumptions concerning future conditions that may ultimately prove to be inaccurate. Forward-looking statements are and will be based upon management’s then-current views and assumptions regarding future events and operating performance, and are applicable only as of the dates of such statements. Although we believe the expectations expressed in forward-looking statements are based on reasonable assumptions within the bounds of our knowledge, forward-looking statements, by their nature, involve risks, uncertainties and other factors, any one or a combination of which could materially affect our business, financial condition, results of operations or liquidity.

Forward-looking statements that we make herein and in other reports and releases are not guarantees of future performance and actual results may differ materially from those discussed in such forward-looking statements as a result of various factors, including, but not limited to, the cost of goods, our inability to successfully execute strategic initiatives, competitive pressures, economic pressures on our customers and us, the availability of brand name closeout merchandise, trade restrictions, freight costs, the risks discussed in the Risk Factors section of our most recent Annual Report on Form 10-K, and other factors discussed from time to time in our other filings with the SEC, including Quarterly Reports on Form 10-Q and Current Reports on Form 8-K. This release should be read in conjunction with such filings, and you should consider all of these risks, uncertainties and other factors carefully in evaluating forward-looking statements.

You are cautioned not to place undue reliance on forward-looking statements, which speak only as of the date thereof. We undertake no obligation to publicly update forward-looking statements, whether as a result of new information, future events or otherwise. You are advised, however, to consult any further disclosures we make on related subjects in our public announcements and SEC filings.

Shareholder Relations Department 300 Phillipi Road Columbus, Ohio 43228-5311 Phone: (614) 278-6622      Fax: (614) 278-6666 E-mail: aschmidt@biglots.com

BIG LOTS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands)

	AUGUST 4		JULY 29
	2007		2006
	(Unaudited)		(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents	$	108,639	$	757
Inventories		713,838		819,021
Deferred income taxes		58,793		74,006
Other current assets		61,110		81,381
Total current assets		942,380		975,165
Property and equipment - net		491,626		549,701
Deferred income taxes		52,679		26,012
Other assets		21,302		28,734
	$	1,507,987	$	1,579,612
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable	$	209,389	$	208,617
Property, payroll and other taxes		69,246		106,791
Accrued operating expenses		97,607		49,384
Insurance reserves		40,816		46,029
KB bankruptcy lease obligation		8,811		27,205
Accrued salaries and wages		29,893		27,763
Income taxes payable		2,087		1,281
Total current liabilities		457,849		467,070
Long-term obligations		0		31,300
Deferred rent		34,441		39,657
Insurance reserves		43,591		45,118
Unrecognized tax benefits		30,274		0
Other liabilities		34,778		18,342
Shareholders' equity		907,054		978,125
	$	1,507,987	$	1,579,612

BIG LOTS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except per share data)

	13 WEEKS ENDED						13 WEEKS ENDED
	August 4						July 29
	2007			%			2006			%
	(Unaudited)						(Unaudited)
Net sales	$	1,084,891			100.0		$	1,056,535			100.0
Gross margin		421,074			38.8			412,293			39.0
Selling and administrative expenses		365,823			33.7			380,116			36.0
Depreciation expense		21,828			2.0			24,927			2.3
Operating profit		33,423			3.1			7,250			0.7
Interest expense		(105	)		(0.0	)		(115	)		(0.0	)
Interest and investment income		1,592			0.1			754			0.0
Income from continuing operations before income taxes		34,910			3.2			7,889			0.7
Income tax expense		12,775			1.2			3,185			0.3
Income from continuing operations		22,135			2.0			4,704			0.4
Income (loss) from discontinued operations, net of tax expense (benefit) of $795 and ($170), respectively		1,249			0.1			(405	)		(0.0	)
Net income	$	23,384			2.2		$	4,299			0.4
Income (loss) per common share - basic
Continuing operations	$	0.21					$	0.04
Discontinued operations		0.01						0.00
Net income	$	0.22					$	0.04
Income (loss) per common share - diluted
Continuing operations	$	0.21					$	0.04
Discontinued operations		0.01						0.00
Net income	$	0.22					$	0.04
Weighted average common shares outstanding
Basic		106,490						111,094
Dilutive effect of share-based awards		1,262						1,139
Diluted		107,752						112,233

BIG LOTS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except per share data)

	26 WEEKS ENDED						26 WEEKS ENDED
	August 4						July 29
	2007			%			2006			%
	(Unaudited)						(Unaudited)
Net sales	$	2,213,290			100.0		$	2,148,157			100.0
Gross margin		867,987			39.2			850,615			39.6
Selling and administrative expenses		748,509			33.8			772,505			36.0
Depreciation expense		43,592			2.0			49,580			2.3
Operating profit		75,886			3.4			28,530			1.3
Interest expense		(197	)		(0.0	)		(205	)		(0.0	)
Interest and investment income		4,602			0.2			1,148			0.1
Income from continuing operations before income taxes		80,291			3.6			29,473			1.4
Income tax expense		29,132			1.3			10,265			0.5
Income from continuing operations		51,159			2.3			19,208			0.9
Income (loss) from discontinued operations, net of tax expense (benefit) of $629 and ($676), respectively		989			0.0			(1,196	)		(0.1	)
Net income	$	52,148			2.4		$	18,012			0.8
Income (loss) per common share - basic
Continuing operations	$	0.47					$	0.17
Discontinued operations		0.01						(0.01	)
Net income	$	0.48					$	0.16
Income (loss) per common share - diluted
Continuing operations	$	0.47					$	0.17
Discontinued operations		0.01						(0.01	)
Net income	$	0.48					$	0.16
Weighted average common shares outstanding
Basic		108,204						112,029
Dilutive effect of share-based awards		1,497						1,008
Diluted		109,701						113,037

BIG LOTS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

	13 WEEKS ENDED			13 WEEKS ENDED
	August 4, 2007			July 29, 2006
	(Unaudited)			(Unaudited)
Net cash provided by operating activities	$	98,353		$	3,141
Net cash used in investing activities		(11,519	)		(8,615	)
Net cash used in financing activities		(188,317	)		(68,310	)
Decrease in cash and cash equivalents		(101,483	)		(73,784	)
Cash and cash equivalents:
Beginning of period		210,122			74,541
End of period	$	108,639		$	757

BIG LOTS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

	26 WEEKS ENDED			26 WEEKS ENDED
	August 4, 2007			July 29, 2006
	(Unaudited)			(Unaudited)
Net cash provided by operating activities	$	97,680		$	113,075
Net cash used in investing activities		(19,411	)		(14,531	)
Net cash used in financing activities		(251,287	)		(99,497	)
Decrease in cash and cash equivalents		(173,018	)		(953	)
Cash and cash equivalents:
Beginning of period		281,657			1,710
End of period	$	108,639		$	757

EX-99.2

Exhibit 99.2

FINAL TRANSCRIPT

Thomson StreetEvents ^SM

Conference Call Transcript

BIG - Q2 2007 Big Lots, Inc. Earnings Conference Call

Event Date/Time: Aug. 29. 2007 / 8:00AM ET

Thomson StreetEvents www.streetevents.com Contact Us

© 2007 Thomson Financial. Republished with permission. No part of this publication may be reproduced or transmitted in any form or by any means without the prior written consent of Thomson Financial.

1

FINAL TRANSCRIPT

Aug. 29. 2007 / 8:00AM ET, BIG - Q2 2007 Big Lots, Inc. Earnings Conference Call

CORPORATE PARTICIPANTS

 Tim Johnson

 Big Lots, Inc. - VP, Strategic Planning, IR

 Steve Fishman

 Big Lots, Inc. - Chairman, CEO

 Joe Cooper

 Big Lots, Inc. - SVP, CFO

CONFERENCE CALL PARTICIPANTS

 David Mann

 Johnson Rice - Analyst

 Matt Boss

 JPMorgan - Analyst

 Mitch Kaiser

 Piper Jaffray - Analyst

PRESENTATION

Operator

Ladies and gentlemen, welcome to the Big Lots second quarter 2007 teleconference. During this session, all lines will be muted until the question-and-answer portion of the call. (OPERATOR INSTRUCTIONS)

At this time I would like to introduce today's first speaker, Vice President of Strategic Planning and Investor Relations, Tim Johnson.

 Tim Johnson - Big Lots, Inc. - VP, Strategic Planning, IR

Thanks for joining us for our second quarter conference call. With me here in Columbus today are Steve Fishman, our Chairman and CEO; Joe Cooper, Senior Vice President and Chief Financial Officer; and Chuck Haubiel, Senior Vice President and General Counsel. We appreciate you joining us this morning a little earlier than normal. Before we get started I'd like to remind you that any forward-looking statements we make on today's call involve risks and uncertainties and are subject to our Safe Harbor provisions as stated in our press releases and our SEC filings and that actual results can differ materially from those described in our forward-looking statements.

As you can see from our earnings release this morning, our results include both continuing and discontinued operations. The discontinued operations activity in the second quarter of fiscal 2007 reflects the 130 stores closed in January, 2006, and KB Toys related matters as described in our Form 10-K. Given the amount is immaterial and we do not view discontinued operations as relevant to the ongoing operations of the business, the balance of our prepared comments will be based on results related to continuing operations. With that I'll now turn it over to Steve.

Steve Fishman - Big Lots, Inc. - Chairman, CEO

Thanks, T.J., and good morning, everybody. Across the organization during the second quarter, I'm proud of how we continued to execute the Big Lots WIN strategy, a strategy focused on operating profit growth, and for the quarter we drove significant operating profit growth with $33 million this year versus $7 million last year. We stayed focus on what was within our control and drove record second quarter performance for this company... $0.21 per share on a 5% comp, 5% increase in gross margin dollars per store on SG&A that was down 2% per store compared to a year ago. Overall, a very well-executed quarter.

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Aug. 29. 2007 / 8:00AM ET, BIG - Q2 2007 Big Lots, Inc. Earnings Conference Call

It all starts with merchandising. Of course, over the last two years, we've thrown a number of challenges at our merchant team. From "raise the ring", to delivering more floor-ready merchandise, to generating faster inventory turnover and decreasing our cash conversion cycle. Our merchants continue to execute and drive not only comps, but the overall efficiency and cash flow of the business.

From a merchandising perspective, you'll recall that when we detailed our long-range plan, we anticipated that certain key categories would outperform the store. Categories such as Seasonal, Furniture, and Electronics in particular. I continue to be encouraged by the strength of these categories, as well as our performance across most of the major areas of the store. Specifically, Seasonal which accounts for a little less than 15% of our business annually, led the Company for the second quarter with comps up in the mid-teens. Strategically, we planned to carry heavier inventory levels later through the season in certain classifications in both Summer and Lawn and Garden. I'm speaking particularly of outdoor living, patio, grills, pools, and outdoor fun merchandise. These are classifications that carry a higher ticket and quite frankly we sold through them too early last year, particularly in some of our warmer weather markets.

Next was Furniture, which is also about 15% of our business annually. Furniture continued its strong performance with comps up in the high-single digits on top of a high-single digit comp in Q2 last year. Upholstery and the Serta mattress program were the key drivers with RTA business starting to gain some traction and consistency. Even though the home furnishing sector continues to be challenged, our team is providing extreme value to the customer with a heightened focus on quality and delivering trend-right products. It's not just about low prices.

Within the Hardlines category, which is a little less than 15% of our business annually, Electronics posted another good quarter with comps up in the high-single digits.We also bought deeper into Electrical this year, which is fans, air-conditioners, and outdoor lighting, and that paid off for us in a big way with comps up in the 20s.

Another category that we probably don't talk enough about is Consumables, which is about 30% of our business annually. Sales were above plan for the quarter with comps up in the mid-single digits and increases in all classifications including food, HBC, chemicals, paper, pet, and home organization. This category has the highest penetration of branded closeouts and this team just continues to deliver great value.

Of course, the large home furnishings deal that there was some discussion about three months ago on our last call turned out to be a successful deal for the Company. We estimated that the deal added about 2% to the comps for the quarter and as we sit here today, there is very little of the product remaining in our stores.We get deals all the time. Some are big ones like this and some are small ones and you don't necessarily hear about them, but this is our niche. We're in the closeout business and this is the type of deal that we would like to do more of ,and from an execution standpoint, we have a model that works very well for us. Just to save a little time in the Q&A, this is the extent of the financial information we'll be sharing on this deal.

What we really haven't said much about is that the comps for Q2 were actually driven more by merchandising and store execution than some of you may have thought because our ad spend for the quarter was actually down to last year in TV and in print. Specifically on print, we did run one less ad circular than last year. We were able to execute a 12-page Memorial Day ad which did slightly more volume than two four-page ads that ran around Memorial Day a year ago.

On a regional basis, our performance was strongest in the Northeast and Southern regions with the Western region lagging the Company average, as it had the fewest number of stores benefiting from the large home furnishings closeout deal in the quarter.

Shifting from comps to inventory management, our inventories are very clean and lean to start the third quarter. We ended the second quarter down $105 million or 11% per store compared to a year ago. Now that's a big number, 11% down, and we have a couple of areas that may look a little light in the stores, but I want you to know we have plenty of inventory to drive the comps we are forecasting for the balance of the year. In fact, the in-store inventory which is what customers see is really only down about 3 to 4%, but our DCs are down significantly due to the better flow strategies and record productivity by our DC teams. We believe that given the uncertainties in the macro environment and struggles in certain areas of retail, it made good business sense to challenge our merchants to remain fluid and hold back more open to buy for deals, particularly in certain areas of the businesses like toys, home, and some of our play 'n wear departments, where we're not particularly satisfied with our recent performance. So we're ready to pounce on deals as they become available and we believe they will over the next few weeks.

Moving away from the quarter, I want to update you on a couple of strategic initiatives of interest. First, we continue to make progress on our store retrofit program in Q2. At the beginning of the year I think we identified about 70 stores that were predominantly high volume and small square footage locations, principally in California. The purpose of the retrofit was to get more merchandise out on the selling floor and better allocate square footage to key categories. In approximately half of these stores, we're creating enough space to move to a full-sized furniture department from a partial department of principally RTA. I visited a number of these stores personally in California in the last couple of weeks, and I have to tell you the stores' business was solid. We learned a lot on how to execute the retrofit and I left there feeling that we accomplished what we had set out to do. The program for this year will be completed in the next few days and we'll evaluate the financial impact over the balance of this year, but my gut tells me that this will be a program that will continue into 2008 and potentially further, which is very encouraging.

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Aug. 29. 2007 / 8:00AM ET, BIG - Q2 2007 Big Lots, Inc. Earnings Conference Call

Also from a strategic point of view, the rollout of our new point of sale register system is moving forward very well. By the end of this month, we'll have the new system up and running in about 475 stores. By the end of Q3, we should be up and running in around 700 stores with the balance of the chain to be completed in 2008. You'll remember from our last call that this is a system that was tested during the fall last year and we're looking forward to the capabilities it will provide to the business in 2008 and beyond. Now I'm going to turn it over to Joe to speak to some of the dollars and cents. Joe?

Joe Cooper - Big Lots, Inc. - SVP, CFO

Good morning, everyone. For the second quarter of fiscal 2007, we reported income from continuing operations of $22.1 million or $0.21 per diluted share compared to income from continuing operations of $4.7 million or $0.04 per diluted share a year ago.

Our Q2 result of $0.21 per share was ahead of our guidance of $0.07 to $0.10 per share. If you were looking at the midpoint of our communicated guidance, the favorability was approximately $0.12 and resulted from:

First higher sales contributed an extra $0.04 to $0.05 as comps came in at 5.2% versus our original guidance of 2 to 4%. The remaining $0.07 to $0.08 of favorability was SG&A related and resulted from:

First, continued operating efficiencies in both stores and distribution centers.From a stores perspective, payroll continues to be well managed and our merchant and planning teams are helping to improve our store productivity. Merchandise initiatives like "raise the ring" and "one touch" or delivering more floor-ready merchandise are having a very positive impact in our stores. "Raise the ring" is key and unless you're inside our business, I'm not sure that you can understand the significance. If per store dollar inventories are down year over year and average item retail is up, then the number of units is down even more than the inventory dollars. That's just the math, and the store managers and DC directors deal in units or cartons. It goes a long way in helping them run a more efficient store or building. Additionally, today nearly 50% of our goods come preticketed and ready to go straight to the floor. This is up from about 45% a year ago.

Also, from an operational perspective, our distribution and transportation performance was better than anticipated. Our DC productivity was at record highs for Q2 and we are starting to see benefits from our transportation initiatives a little earlier than originally anticipated.

Next, part of the SG&A favorability stems from health care and insurance-related costs. Again, this is one of our strategic initiatives and our experience in Q2 was better than anticipated. Since changing health care providers at the beginning of the year, we've been encouraged by claim trends and the higher discounts we have achieved. Finally, the business flexed very well and as sales exceeded plan, we needed very little incremental payroll dollars in order to execute.

Sales for the second quarter were $1.085 billion, an increase of 2.7% over the prior year, and as mentioned, comparable store sales increased 5.2%. The strength of the comp continues to be driven through the average basket and our "raise the ring" strategy.

Looking at the P&L, gross margin dollars increased 5% per store. As anticipated, the second quarter rate of 38.8% was slightly lower than last year's rate of 39.0% due to certain promotions as well as a slight shift in mix towards lower margin categories.

SG&A dollars per store were down approximately 2% as the SG&A rate of 35.7% was 260 basis points better than last year.Along with the natural leverage impact of a 5.2% comp, leverage for the quarter was achieved primarily through operational efficiencies in store payroll and distribution and transportation, lower insurance and occupancy-related costs, and a lower advertising spend in both print and TV during the quarter. These efficiencies were partially offset by higher bonus expense based on the overall profitability of the quarter.

Net interest income was $1.5 million for the quarter, a $0.8 million improvement compared to last year due to the company's improved operating performance and inventory management, partially offset by the use of cash to opportunistically repurchase stock during the quarter.

Our tax rate for the second quarter of fiscal 2007 was 36.6%, which was within our annual range of 36 to 39% and benefited from certain settlement-related activity. As we have mentioned on our last two conference calls, the adoption of FIN 48 can result in more quarter to quarter variance in our tax rate going forward.

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Aug. 29. 2007 / 8:00AM ET, BIG - Q2 2007 Big Lots, Inc. Earnings Conference Call

Turning to the balance sheet, our total inventory ended the quarter at $714 million, down $105 million or 13% compared to last year. The decline in inventory is attributed to lower store count and an 11% decrease in inventory on a per store basis. Inventory per store was down to last year in all major merchandising categories, with the exception of Seasonal, where, as Steve mentioned earlier, we plan to carry higher inventory to take advantage of sales opportunities we missed last year through Labor Day.

We ended the second quarter with total cash and investments of $109 million, compared to last year when our cash was minimal and we were in our revolver for about $31 million. Cash flow, which we define as cash provided by operating activities less cash used in investing activities was $87 million for the second quarter compared to $5 million of cash outflows last year. The variance to the prior year is a function of, first, Q2 net income was $19 million above last year. The balance of the variance is from lower inventory levels and higher AP leverage. As Steve mentioned, part of the inventory variance is related to keeping open to buy and part of the variance is timing related as we planned to flow goods differently year over year.

Capital expenditures totaled $11.8 million for the second quarter, up $2.7 million to the second quarter of last year. The increase is primarily due to our new POS rollout and store retrofit activity in approximately 70 stores. Depreciation expense for the quarter was $21.8 million or $3.1 million lower than last year.

During the second quarter, we opened one store and closed eight stores, leaving us with 1369 stores and total selling square footage of 29.2 million at the end of the second quarter. For the year, we continue to estimate a net store count reduction of approximately 35 to 40 stores.

In regards to our 2007 share repurchase program, during the second quarter of fiscal 2007, we purchased 7.5 million shares in open market transactions at a cost of $215 million at a weighted average price of $28.74. Year-to-date, we have repurchased $329 million of the $600 million authorized by our Board. $100 million under a guaranteed share repurchase or GSR program and $229 million through opportunistic repurchases. Although our GSR will not settle until the fourth quarter, if we were to assume it had settled at the end of Q2, our total number of shares repurchased would have been $11.1 million or approximately 10% of our outstanding shares. We have $271 million remaining under our current share repurchase program as of the end of the second quarter and we will continue to closely monitor the market and our share price in an effort to make the best use of our cash.

Moving on to guidance, for the third quarter comp sales are estimated to increase in the range of 1 to 3%. This guidance is on top of our best comp of the year last year when we comped 5.8% and benefited from a large drugstore liquidation deal. Q3 earnings are estimated to be in the range of $0.09 to $0.13 per diluted share compared to $0.02 per diluted share last year. As a reminder, the third quarter of fiscal 2006 included litigation charges totaling $0.05 per diluted share. We expect the gross margin rate to be flattish, with continued SG&A leverage driving the operating profit growth. Leverage drivers that have occurred in the first half of the year are expected to continue in Q3, recognizing that the amount of leverage will vary given our 1 to 3% comp guidance versus the 5% comp experienced in Q1 and Q2.

For the fourth quarter, comps are planned up in the 1 to 3% range. We expect Q4 operating margin improvement from last year from continued SG&A leverage with the gross margin rate up slightly to last year. Given these assumptions along with a lower share count due to second quarter share repurchase activity, we estimate income from continuing operations to be in the range of $0.87 to $0.92 per diluted share compared to $0.83 per diluted share last year. As a reminder, the fourth quarter of fiscal 2006 included incremental earnings of approximately $0.05 per diluted share related to the extra week included in the retail calendar during fiscal 2006.

In our press release today, we increased our guidance for the full year and now expect EPS from continuing operations to be in the range of $1.43 to $1.48 per diluted share. This revised guidance represents a 42 to 47% increase over last year's income from continuing operations of $1.01 per diluted share. The increase in EPS is the result of the strength of Q2 operating results, current favorable expense trends, and a lower share count due to the significant amount of share repurchase activity that occurred in Q2. For the full year, our comparable store sales guidance remains unchanged at 3 to 4%. We are estimating 150 to 170 basis points of operating profit expansion, assuming a flat gross margin rate and leverage in SG&A.

As a result of the share repurchase activity in Q2, we have lowered our net interest income forecast to $6 million for the year.

Based on the first two quarter's activity and what is expected to occur for the balance of the year, we now expect the tax rate for the year to be in the range of 37 to 38%, or right in the middle of our prior guidance of 36 to 39%.

For modeling purposes only, assuming no additional share repurchase activity for the balance of the year, we would estimate the number of weighted average diluted shares to be approximately 106 million for the year, below our prior guidance of 110 million to 111 million. This change, driven by the repurchase activity in the second quarter contributed about $0.05 to the revised EPS guidance for the year that we announced today. However, I want to emphasize we have $271 million of remaining authorization under our current share repurchase program and have the flexibility to invest as little or as much of this as we deem appropriate over the balance of the year.

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Aug. 29. 2007 / 8:00AM ET, BIG - Q2 2007 Big Lots, Inc. Earnings Conference Call

Given record inventory turnover for the first half of 2007 and our current inventory position, we now expect inventory turnover of approximately 3.6 times for the year. Further, we now expect to generate $240 million of cash flow, up from prior guidance of $190 million.

We have lowered our CapEx guidance for the year to $65 million to $70 million, down from $70 million to $75 million. This change is the result of slightly lower than anticipated costs associated with our new POS rollout, along with a revised estimate of approximately seven new stores this year compared to our original plan of 10 to 15. Accordingly, we now estimate depreciation expense of approximately $90 million for the year. Steve?

 Steve Fishman - Big Lots, Inc. - Chairman, CEO

I want to make one more comment before we get into the Q&A. During these calls, investors or analysts typically make comments and ask questions, sometimes supportive and sometimes they are contrary. But there's another audience that's very important that listens to these calls and that's our team of associates. From the executive team and its drafting of the WIN strategy back in the fall of '05 to the team of nearly 40,000 associates who have executed it beyond our expectations, I want to say job well done. We're further along than any of us, including myself, thought that we would have been at this point.

Over the last two years, we've made some very difficult and sometimes unpopular decisions, but never waivered or looked back. I wouldn't be surprised if we don't get some questions shortly on some mercurial topics like new stores or why isn't this metric higher or this one lower, but please remember this. In 2007, we now expect EPS to be 5 times what it was in 2004 before we got started. Based on our guidance, sales per square foot will be at the highest level ever at over $160 per foot this year. Gross margin dollars per foot are forecasted to be at a record high for this business.SG&A as a percent of sales is expected to be at a level that this business has not seen in ten years. And inventory turnover for this year of 3.6 times, which is our updated guidance, is nearly 20% higher than before we began our work. We've generated over $575 million in cash flow in the last 24 months and we've repurchased over $475 million worth of company stock and those of us who are running the business know that we're still making our business better. In March we outlined our long-term growth plan. We have a number of initiatives identified to continue to expand the operating profit rate of this business and ultimately drive higher EPS. So to the team that's out there listening to this call, great job. We're far from done and stay focused on the prize.

Tim Johnson - Big Lots, Inc. - VP, Strategic Planning, IR

 Thanks, Steve. At this time we would like to go ahead and open up the lines for Q&A.

QUESTION AND ANSWER

Operator

(OPERATOR INSTRUCTIONS)

Tim Johnson - Big Lots, Inc. - VP, Strategic Planning, IR

Are we seeing any questions at this time?

Operator

 Yes. Hold on just a moment, please. Our first question is from the line of David Mann at Johnson Rice.

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Aug. 29. 2007 / 8:00AM ET, BIG - Q2 2007 Big Lots, Inc. Earnings Conference Call

David Mann - Johnson Rice - Analyst

 Good morning. Nice job, guys.

 Steve Fishman - Big Lots, Inc. - Chairman, CEO

 Thank you.

David Mann - Johnson Rice - Analyst

In terms of the comments you made on gross margin, when we look at the back half of the year, the sequential improvement you're looking for, can you just dive down a little deeper in terms of how you expect, perhaps, your promotional cadence and the mix to affect that or any other factors in terms of that improvement?

Steve Fishman - Big Lots, Inc. - Chairman, CEO

Well, David, from a promotional cadence, I don't think you're going to see anything significantly different from an expense standpoint than last year. Other than I will tell you we have some real surprisingly powerful plans from a marketing standpoint, particularly media. There is going to be a shift and I'll give you two seconds on it. We're going to be spending the same amount of money. Because of the efficiencies we've been able to get from the paper part of the preprints we've been able to take that savings, still run the same amount of pages and preprints that we ran last year and put additional money, that savings into media, television particularly. And I think you'll recall last year, we were real pleased with our performance last year when it came to television and the message we were able to send across to the customer base that we have out there and hopefully to some new customers. We made a change recently in the last 30 days in our advertising agency for the first time in many, many years in the Company because we felt it was rightly the time to move on to something a little bit different. We are really excited about the ideas that we have for media for the fourth quarter in particular, but to say the least I'm not going to share any of it with you right now other than to say that we think it's really different, it's really unique, it will continue to drive home what Big Lots is all about and the great brand names and savings that we offer. So from that perspective.

From a margin perspective, it's really going to be driven by the fact that initial markup continues to really be solid. Particularly because of the Global Sourcing program and we're almost 12 months into that right now. Of course, we have big plans in the second half for our Seasonal business that traditionally is higher margin businesses. We're real excited about the Seasonal business and what's been put together and that's on top of what we consider to be a real solid first Christmas last year and a very solid spring and summer season this year. Initial reaction to fall, particularly Halloween, has been good. We're real excited about it and I'm absolutely elated with the Trim a Tree program that I think you're going to see in the stores shortly and how we're going to be able to drive that. Clearly, if those programs are good, I think the gross margin will be driven by probably a reduction of markdowns versus last year.

Joe Cooper - Big Lots, Inc. - SVP, CFO

Just tagging on, the freight initiative that really kicked in the end of the second quarter will certainly add some benefit to the gross margin in the back. And remember, from the standpoint of the markdown rate, we did exit our old mattress program in the back half of last year when we started delivering Serta. And also there were some markdowns in Home, Toys, and Apparel. So we do expect the markdown rate to benefit to Steve's point.

David Mann - Johnson Rice - Analyst

In terms of the open to buy that you have, can you just give some comment after you've seen such success with the Pier 1 deal and the Osco deal last year, what's the prospect out there in terms of larger deals or the breadth of more medium-sized deals as you're looking right now?

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Aug. 29. 2007 / 8:00AM ET, BIG - Q2 2007 Big Lots, Inc. Earnings Conference Call

Steve Fishman - Big Lots, Inc. - Chairman, CEO

I would tell you a couple of things. First and foremost, you know we don't comment on our deals because that's our business and we would never do that. We held back open to buy dollars probably a little bit more going into the third quarter than last year because of what we continue to hear out there in the way of problems with the economy and at least a lot of other retailers have stated that they're very, very concerned about it.

I would tell you only this and admit to this, deals are vibrant. I would tell you in the last couple or three weeks in particular they are at a higher level than we have seen, and that's a pretty high level. Our anticipation is that as most people get through back to school and get well into the third quarter and start thinking about the fourth quarter, we will be able to see even more deals. Some of them are small, some of them are medium-sized and I'd probably put a handle more on a lot of medium-sized deals. To me that's in the multimillions because that's effectively what's important. They are across all aspects of our business and probably a secret I shouldn't give away, coming from all areas of other retail economics that we didn't see before. What I mean by that is not just certain segments of the business, but maybe even department stores and higher-end retailers that we never saw before.

David Mann - Johnson Rice - Analyst

Very good. Thank you. Congratulations.

 Steve Fishman - Big Lots, Inc. - Chairman, CEO

 Thanks.

Operator

Our next question comes from the line of Charles Grom from JPMorgan.

Matt Boss - JPMorgan - Analyst

Yes, good morning. This is actually Matt Boss filling in for Chuck Grom. Got a couple of questions. First, could you provide us with some additional detail regarding SG&A performance in the quarter? Was hoping maybe you could break down the benefits achieved from lower insurance, DC efficiencies, advertising, fixed cost leverage in terms of the benefits we can expect going forward from each of these. Also, which factors most came in above your expectations?

Joe Cooper - Big Lots, Inc. - SVP, CFO

This is Joe, Matt. We're not going to provide that level of detail. What we will provide are the components of that, but as far as prioritizing or quantifying, we're not going to provide that. We will say that the benefits that you just outlined as we mentioned in the call, we do expect to continue through the back half of the year.

Tim Johnson - Big Lots, Inc. - VP, Strategic Planning, IR

Matt, this is Tim. I would add on there to Joe's point, a couple of the items that we mentioned -- that you mentioned specifically, we do quantify in the Q, like advertising costs, for instance. That will be in the Q. I think it's fair to say now that the number this year was about 20 million versus about 25 million last year. Again, as Steve mentioned, we pulled back a little bit on TV and we did run one less preprint year over year. Now, if you'll remember, we had about the exact same dynamic going the other way in first quarter. It's just how we've planned the business and how we're executing it that really looks at the variance to last year. The distribution and transportation costs we also quantify separately in the Q and you'll see that and that was about in the neighborhood of, say 50 to 60 basis points of the leverage as was advertising.

The balance of the leverage that we continued to see in the business, and I would go on to say that we forecasted for the rest of the year, is coming from areas like store payroll, like our new insurance program. The move to Anthem has been a good thing for the business and those types of things. What we've experienced in the first half, we've done our best job to try to forecast for the back half.

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Aug. 29. 2007 / 8:00AM ET, BIG - Q2 2007 Big Lots, Inc. Earnings Conference Call

Matt Boss - JPMorgan - Analyst

Okay. That's very helpful. Second question. Given the margin assumptions that Joe walked through in terms of the second half guidance, it now appears that gross profit is going to be down on a full-year basis as opposed to flat that you guys had previously forecasted. Could you just list some of the factors driving this revision and what are you guys seeing in terms of a mix perspective now versus what are you looking for going forward?

Joe Cooper - Big Lots, Inc. - SVP, CFO

Actually, we did not revise the gross margin guidance, Matt. What we said, we are about 40 basis points down year-to-date. What we're talking about is flat in the third quarter and up in the fourth and flat for the year. So there was no revision.

Matt Boss - JPMorgan - Analyst

Could you provide us with some of the details in the fourth quarter in terms of the gross profit increase?

Joe Cooper - Big Lots, Inc. - SVP, CFO

Well, we didn't provide by quarter, but that's essentially what we just answered for David Mann.

Matt Boss - JPMorgan - Analyst

Okay.

Joe Cooper - Big Lots, Inc. - SVP, CFO

On the gross margin. The components of that.

Matt Boss - JPMorgan - Analyst

Okay. Thank you.

Joe Cooper - Big Lots, Inc. - SVP, CFO

We can walk you back through that again later, Matt, if you would like. Be glad to.

Operator

All right. Our next question comes from the line of Mitch Kaiser from Piper Jaffray. Go ahead.

Mitch Kaiser - Piper Jaffray - Analyst

Good morning, guys. Nice quarter. Congrats.

Steve Fishman - Big Lots, Inc. - Chairman, CEO

Thank you, Mitch.

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Aug. 29. 2007 / 8:00AM ET, BIG - Q2 2007 Big Lots, Inc. Earnings Conference Call

Joe Cooper - Big Lots, Inc. - SVP, CFO

 Thanks, Mitch.

Mitch Kaiser - Piper Jaffray - Analyst

I was wondering, you talked about some of the categories that showed really strong performance, Seasonal, Furniture, Hardlines, Consumables. Can you talk us through some that underperformed a little bit relative to the 5.2% comp that you posted?

Steve Fishman - Big Lots, Inc. - Chairman, CEO

Yes. I think I mentioned that before. We were less focused and working very hard on the Play 'n Wear division, which to you is predominantly the toy part of the business and I don't know if that's a surprise and we're clearly holding back and being reserved. Kind of expected a lot more questions on the toy issue with what's going on nationally worldwide in the last couple of weeks. We didn't get hurt all that bad and we had some goods that had to get returned but more on an open to buy standpoint, some goods that were on order. But it really won't dramatically effect the business.

The question I have in my mind, is how is the consumer going to respond to toys in general between now and the end of the year with the bad taste they may have in their mouth. We have more branded goods there than we've ever had before and we're getting offered better deals. My assumption is by holding back some of that open to buy, with what's going on, there may be even some better deals coming forward still. Remember, we're only at the end of August here. We've gotten deals as late as October 1 and November and been able to react to them still for the fourth quarter, as we did last year. We're waiting in the wings for some of these big things to happen. We haven't been happy with that business. We think we were slightly unfocused and we think we've got a better plan for the second half of the year there.

The Play 'n Wear division, there's a couple elements of that and we've worked really hard on that. I'm more encouraged about the fact that the performance hasn't been good, but I think we have a good plan for our third and particularly fourth quarter and that revolves mostly in two areas of the business. One's the jewelry and accessory part of the business and we really have revised that part of the business and you're going to be seeing a lot better quality and value prices in our stores. In fact, you may see some of it right now and you're going to see much more vibrancy in that category going into the end of the third quarter and the fourth quarter, so we're excited about that. Something that we call lingerie, which is kind of a misnomer, because it includes a lot of different things. We've been very getting some very high-end department store and mid-line department store things that have positively affected the business in the last 30 days, particularly at back-to-school, that's given me cause to believe that we're on the right track at fixing that part of the business.

The last part of the business that I would agree that none of us have been happy about, because it's a business we've driven pretty successfully is the Home parts of the business. That's broken down into two areas. The domestics, or linens and domestics part of the business has always been relatively strong and it continues to outpace the balance of the Home businesses and there are some fabulous deals that we've got planned for the third and fourth quarter in particular, branded deals, probably better than ever before. Consistent with what I think I've been saying all along. We're getting better and better deals, more branded, higher-end type goods and we like that higher price point.

The part of the business that we struggled in is the home decors and housewares part of the business and we've got a new team in there that is really focused and is committed to executing a plan for the fourth quarter and I feel good about what progress they've made so far and I'm going to feel even better as we get closer as some of the deals continue to come our way. We've seen a lot more deals recently in that part of the business. So we were unfocused. I never make excuses for our businesses that lag. Our folks know it. They're less focused than the guys who are executing the strategy, but we're back on track and I think those businesses will be a lot better.

Tim Johnson - Big Lots, Inc. - VP, Strategic Planning, IR

I would also add on there, I know you follow our ad circulars very closely. The categories that we really identified and went aggressive on the front page were some of the categories that outperformed too. To a certain extent, they got a lot of the really prime real estate and focus of our marketing programs as well, rather than some of these other categories that Steve had mentioned.

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FINAL TRANSCRIPT

Aug. 29. 2007 / 8:00AM ET, BIG - Q2 2007 Big Lots, Inc. Earnings Conference Call

Mitch Kaiser - Piper Jaffray - Analyst

Could you talk a little bit about what you're seeing on the electronics category area, specifically with TV? There's a lot of concern with the price points coming down and the supply issues on the electronic side. Are you seeing nice open to buys there and if so, what types of brands are you getting?

Steve Fishman - Big Lots, Inc. - Chairman, CEO

I absolutely am not going to give you that, Mitch, and you well know that. I would say that you hit the nail on the head though. I think there's a lot of chaos going on in that industry and has been and I think we actually identified that in January when we came out of the electronics show. I think what is happening very recently and I mean within the last seven to ten days, there's a lot of deals popping up that we weren't sure if we were going to be capable of getting. But remember, as I said to you before, a number of deals came to us very late last year. Most of those deals, quite honestly, were electronics and we still anticipate that we're going to have some great value and some brand names as we always deliver in electronics going into the third and particularly the fourth quarter?

Mitch Kaiser - Piper Jaffray - Analyst

Would you be willing to comment on where they're coming from and what type of brands you're getting?

Steve Fishman - Big Lots, Inc. - Chairman, CEO

Of course not.

Mitch Kaiser - Piper Jaffray - Analyst

Please? No, okay. Thanks, guys. Congrats.

 Tim Johnson - Big Lots, Inc. - VP, Strategic Planning, IR

I guess at this time, we're seeing no more hands up in the queue. We'd like to go ahead and end the conference call. We'd like to thank everybody for the participation and we look forward to talking to you at the end of November. Thank you.

Operator

Ladies and gentlemen, a replay of this call will be available to you within the hour. You can access the replay by visiting this link, HTTP://REG.linkconferencecall.com/digitalplaybackregistration.aspx?recid=5678. Ladies and gentlemen, this concludes today's presentation. Thank you for your presentation. You may now disconnect.

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FINAL TRANSCRIPT

Aug. 29. 2007 / 8:00AM ET, BIG - Q2 2007 Big Lots, Inc. Earnings Conference Call

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