Dollar General 2005 Annual Report Download - page 54

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
because of her sex, in violation of the Equal Pay Act ("EPA")
and Title VII of the Civil Rights Act of 1964, as amended
("Title VII"). On March 9, 2006, the Calvert complaint was
amended to include seven additional plaintiffs, who also
allege to have been paid less than males because of their
sex, and to add allegations of sex discrimination in promo-
tional opportunities and undefined terms and conditions
of employment. In addition to allegations of intentional
sex discrimination, the amended Calvert complaint also
alleges that the Company's employment policies and prac-
tices have a disparate impact on females. The amended
Calvert complaint seeks to proceed collectively under the
EPA and as a class under Title VII.
As of March 16, 2006, the Company had not yet been
served with either the original or amended Calvert com-
plaint. At this time, it is not possible to predict whether
the Court will permit this action to proceed collectively or
as a class. However, the Company believes that this case is
not appropriate for either collective or class treatment,
and believes that its policies and practices comply with
the EPA and Title VII. Although the Company intends to
vigorously defend this action if it is served, no assurances
can be given that the Company will be successful in its
defense on the merits or otherwise,and if it is not, the
resolution of this action could have a material adverse
effect on the Company's financial statements as a whole.
In addition to the matters described above, the
Company is involved in other legal actions and claims
arising in the ordinary course of business. The Company
believes, based upon information currently available, that
such other litigation and claims, both individually and in
the aggregate, will be resolved without a material effect
on the Company’s financial statements as a whole.
However, litigation involves an element of uncertainty.
Future developments could cause these actions or claims
to have a material adverse effect on the Company’s
financial statements as a whole.
8. Benefit plans
The Dollar General Corporation 401(k) Savings and
Retirement Plan became effective on January 1, 1998.
Balances in two earlier plans were transferred into this
plan.The plan covers all employees subject to certain
eligibility requirements. The plan is subject to the
Employee Retirement and Income Security Act (“ERISA”).
Participants were or are currently permitted, as appli-
cable, to contribute between 1% and 25% of their annual
salary, up to a maximum of $12,000 in calendar year 2003,
a maximum of $13,000 in calendar year 2004 and a maxi-
mum of $14,000 in calendar year 2005. Employees who are
over age 50 were permitted to contribute an additional
$4,000 in catch-up contributions during calendar year
2005.The Company currently matches employee contribu-
tions, including catch-up contributions, at a rate of 100%
of employee contributions, up to 5% of annual salary, after
an employee has been employed for one year and has
completed a minimum of 1,000 hours of service.
A participant’s right to claim a distribution of his or
her account balance is dependent on ERISA guidelines
and Internal Revenue Service regulations. All active
employees are fully vested in all contributions to the plan.
During 2005, 2004 and 2003, the Company expensed
approximately $5.8 million, $4.9 million and $2.7 million,
respectively, for matching contributions.
The Company also has a supplemental retirement
plan and compensation deferral plan for a select group of
management and highly compensated employees. The
supplemental retirement plan is a noncontributory
defined contribution plan with annual Company contribu-
tions ranging from 2% to 12% of base pay plus bonus
depending upon age plus years of service and job grade.
Under the compensation deferral plan, participants may
defer up to 65% of base pay and up to 100% of bonus pay
and the Company matches base pay deferrals at a rate of
100% of base pay deferral, up to 5% of annual salary, with
annual salary offset by the amount of match-eligible salary
in the 401(k) plan. Effective January 1, 2003, the Company
amended the plan to clarify certain provisions and to
mirror certain 401(k) plan employer contribution provi-
sions that became effective on January 1, 2003. Effective
November 1, 2004, the plan document was amended to
modify eligibility, comply with pending federal legislation,
and enhance investment offerings. Effective January 1,
2005, the plan was amended to clarify certain provisions,
to further comply with federal legislation and to permit
former employees the ability to transfer stock accounts for
a limited period of time. An employee may be designated
for participation in one or both of the plans, according to
the eligibility requirements of the plans. All participants
are 100% vested in their compensation deferral plan
accounts. Supplemental retirement plan accounts gener-
ally vest at the earlier of the participant’s attainment of
age 50 or the participant’s being credited with 10 or more
“years of service” or upon termination of employment due
to death or “total and permanent disability” or upon a
“change in control,” all as defined in the plan. The
Company incurred compensation expense for these plans
of approximately $0.6 million in both 2005 and 2004 and
$0.5 million in 2003.