Dollar General 2008 Annual Report Download - page 103

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resolved without a material adverse 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 results of operations, cash
flows, or financial position. In addition, certain of these lawsuits, if decided adversely to the
Company or settled by the Company, may result in liability material to the Company’ s financial
position or may negatively affect operating results if changes to the Company’ s business
operation are required.
Other
In August of 2008, the Consumer Product Safety Improvement Act of 2008 was signed
into law. The new law addresses, among other things, the permissible levels of lead and listed
phthalates in certain products. The first tier of new standards for permissible levels of lead and
phthalates became effective in February 2009; the second tier is effective in August 2009. To
ensure compliance, the Company undertook a process during the fourth quarter of 2008 to
identify, mark down and cease the sale of any remaining inventory that would be impacted by
the new law. The effect of these markdowns resulted in a 2008 charge of $8.6 million included in
Cost of goods sold in the consolidated statement of operations. The Company is continuing to
evaluate its inventory for the next implementation phase of the new law, but does not currently
expect the impact of this process to be material to its financial statements. Until the process is
complete, however, the Company cannot definitely rule out that possibility.
9. Benefit plans
The Dollar General Corporation 401(k) Savings and Retirement Plan, which became
effective on January 1, 1998, is a safe harbor defined contribution plan and is subject to the
Employee Retirement and Income Security Act (“ERISA”).
Participants are permitted to contribute between 1% and 25% of their pre-tax annual
eligible compensation as defined in the 401(k) plan document, subject to certain limitations
under the Internal Revenue Code. Employees who are over age 50 are permitted to contribute
additional amounts on a pre-tax basis under the catch-up provision of the 401(k) plan subject to
Internal Revenue Code limitations. The Company currently matches employee contributions,
including catch-up contributions, at a rate of 100% of employee contributions up to 5% of annual
eligible 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 401(k) plan. During 2008, the 2007 Successor and Predecessor
periods, and 2006, the Company expensed approximately $8.0 million, $3.0 million, $4.3
million, and $6.4 million, respectively, for matching contributions. The Merger did not
significantly impact the comparability of such expense amounts between periods.
The Company also has a nonqualified supplemental retirement plan (“SERP”) and
compensation deferral plan (“CDP”), called the Dollar General Corporation CDP/SERP Plan, for