DLTR » Topics » Contingencies

This excerpt taken from the DLTR 10-K filed Apr 14, 2005.



The Company was sued in California in 2003 by a former employee who alleged that employees did not properly receive sufficient meal period breaks and paid rest periods. He also alleged other wage and hourly violations. The suit requests that the California state court certify the case as a class action. In 2005, the Company was threatened with a suit by former employees in Oregon who allege that they did not properly receive sufficient meal period breaks and paid rest periods. They also allege other wage and hour violations. The Company anticipates that they will request the Oregon state court to certify the case as a class action.


The Company was sued by Mag Instrument (Mag) for damages, including treble damages, for the sale of 850,000 to 1,000,000 flashlights. The United States District Court in California has ruled that the flashlights infringe Mag’s patent. The Company intends to



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appeal this ruling. Mag also claims that the flashlights infringe its trademark. Mag Instrument’s damage expert claims that Mag is owed at least $4.16 for each unit the Company sold, plus enhanced or treble damages as well as its attorney’s fees. The Company believes that Mag has significantly overstated its damage estimate and that it is not entitled to an award of treble damages or attorney’s fees.


The Company will vigorously defend itself in these lawsuits. The Company does not believe that any of these matters will, individually or in the aggregate, have a material adverse effect on its business or financial condition. The Company cannot give assurance, however, that one or more of these lawsuits will not have a material adverse effect on its results of operations for the period in which they are resolved.


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