Dollar General 2004 Annual Report Download - page 52

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Notes to Consolidated Financial Statements (continued)
Notice was sent to prospective class members and the
deadline for individuals to opt in to the lawsuit was May 31,
2004. Approximately 5,000 individuals opted in. The Court
has entered a scheduling order that governs the discovery
and remaining phases of the case.
Three additional lawsuits, Tina Depasquales v. Dollar
General Corp. (Southern District of Georgia, Savannah
Division, CV 404-096, filed May 12, 2004), Karen
Buckley v. Dollar General Corp. (Southern District of
Ohio, C-2-04-484, filed June 8, 2004), and Sheila Ann
Hunsucker v. Dollar General Corp. et al. (Western
District of Oklahoma, Civ-04-165-R, filed February 19,
2004), were filed asserting essentially the same claims
as the Brown case, all of which have since been consoli-
dated in the Northern District of Alabama where the
Brown litigation is pending. The Company believes that
the consolidation will not affect the scheduling order or
extend any of the deadlines in the Brown case.
The Company believes that its store managers are and
have been properly classified as exempt employees
under the FLSA and that the action is not appropriate
for collective action treatment. The Company intends to
vigorously defend the action. However, no assurances
can be given that the Company will be successful in
defending this action on the merits or otherwise; and, if
not, the resolution could have a material adverse effect
on the Company’s financial statements as a whole.
The Company is involved in other legal actions and claims
arising in the ordinary course of business. The Company
currently believes 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.
9. Benefit Plans
Effective January 1, 1998, the Company established a
401(k) savings and retirement plan. Balances in two
earlier plans were transferred into this plan. All employees
who had completed 12 months of service, worked 1,000
hours per year, and were at least 21 years of age were
eligible to participate in the plan. Employee contributions,
up to 6% of annual compensation, were matched by the
Company at the rate of $0.50 on the dollar. The Company
also contributed a discretionary amount annually to the
plan equal to 2% of each employee’s annual compensation.
Effective January 1, 2003, the plan was amended to
allow all eligible employees to participate in the plan and
to contribute up to 25% of annual compensation from
their date of hire up to a maximum of $12,000 in calendar
year 2003 and a maximum of $13,000 in calendar year
2004; the Company match of employee contributions
was changed to a rate of $1.00 for each $1.00 contrib-
uted up to 5% of annual salary (upon completion of 12
months and a minimum of 1,000 hours of service); and
the Company’s discretionary annual contribution to the
plan of 2% of annual compensation was eliminated.
Effective January 1, 2005, the plan was amended to
allow for catch-up employee contributions and to clarify
certain provisions. All active employees are fully vested
in all contributions to the plan. Expense for the plan was
approximately $4.9 million in 2004, $2.7 million in 2003
and $5.9 million in 2002.
Effective January 1, 1998, the Company also established
a supplemental retirement plan and a compensation
deferral plan for a select group of management and highly
compensated employees. The supplemental retirement
plan is a non-contributory defined contribution plan with
annual Company contributions ranging from 2% to 12%
of base pay plus bonus depending upon age plus years
of service and job grade. Under the compensation defer-
ral plan, participants may defer up to 65% of base pay
(reduced by any deferrals to the 401(k) Plan) 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, offset by the amount of match in the
401(k) Plan. Effective January 1, 2000, both the supple-
mental retirement plan and compensation deferral plan
were amended and restated so that such plans were
combined into one master plan document. Effective
January 1, 2003, the plan document was amended to
clarify certain provisions and to mirror the 401(k) plan
employer contribution provisions that became effective
on January 1, 2003, as described above. Effective
November 1, 2004, the plan document was amended to
modify eligibility, comply with pending federal legislation,
and enhance investment offerings. 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 generally vest at the earlier of the participant’s
attainment of age 50 or the participant’s being credited