Dollar General 2011 Annual Report Download - page 184

10-K
DOLLAR GENERAL CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
9. Commitments and contingencies (Continued)
governing the swap, giving the Company the right to terminate. The Company subsequently settled the
swap in November 2008 for approximately $7.6 million, including interest accrued to the date of
termination. On May 14, 2010, the Company received a demand from the counterparty for an
additional payment of approximately $19 million plus interest, claiming that the valuation used to
calculate the $7.6 million was commercially unreasonable, and seeking to invoke the alternative dispute
resolution procedures established by the bankruptcy court. The Company participated in the alternative
dispute resolution procedures as it believed a reasonable settlement would be in the best interest of the
Company to avoid the substantial risk and costs of litigation. In April of 2011, the Company reached a
settlement with the counterparty under which the Company paid an additional $9.85 million in
exchange for a full release. The Company accrued the settlement amount along with additional
expected fees and costs related thereto in the first quarter of 2011. The settlement was finalized and
the payment was made in May 2011.
From time to time, the Company is a party to various other legal actions involving claims
incidental to the conduct of its business, including actions by employees, consumers, suppliers,
government agencies, or others through private actions, class actions, administrative proceedings,
regulatory actions or other litigation, including without limitation under federal and state employment
laws and wage and hour laws. 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 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.
10. 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’’).
A participant’s right to claim a distribution of his or her account balance is dependent on the plan,
ERISA guidelines and Internal Revenue Service regulations. All active participants are fully vested in
all contributions to the 401(k) plan. During 2011, 2010 and 2009, the Company expensed approximately
$10.9 million, $9.5 million and $8.4 million, respectively, for matching contributions.
The Company also has a nonqualified supplemental retirement plan (‘‘SERP’’) and compensation
deferral plan (‘‘CDP’’), known as the Dollar General Corporation CDP/SERP Plan, for a select group
of management and other key employees. The Company incurred compensation expense for these plans
of approximately $1.7 million, $1.7 million and $1.9 million in 2011, 2010 and 2009, respectively.
The CDP/SERP Plan assets are invested in accounts selected by the Company’s Compensation
Committee or its delegate. These investments are classified as trading securities and the associated
deferred compensation liability is reflected in the consolidated balance sheets as further discussed in
Note 7.
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