SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K/A
(AMENDMENT NO. 1)
(X) ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the fiscal year ended January 28, 2000
Commission file number 0-4769
DOLLAR GENERAL CORPORATION
(Exact name of Registrant as Specified in its Charter)
TENNESSEE 61-0502302
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
|
100 MISSION RIDGE
GOODLETTSVILLE, TN 37072
(Address of principal executive offices, zip code)
Registrant's telephone number, including area code: (615) 855-4000
Securities registered pursuant to Section 12(b) of the Act:
Name of the Exchange on
Title of Class which Registered
-------------- -----------------------
Common Stock New York Stock Exchange
Series B Junior Participating New York Stock Exchange
Preferred Stock Purchase Rights
|
Securities registered pursuant to Section 12(g) of the Act: None
Indicate by check mark whether the Registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of Registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. (X)
Aggregate market value of the voting stock held by non-affiliates of the Registrant as of April 6, 2000 was $5,656,428,068 based upon the last reported sale price on such date by the New York Stock Exchange.
The number of shares of common stock outstanding on April 6, 2000 was 263,274,082.
Documents Incorporated by Reference
Document Where Incorporated in Form 10-K -------- ------------------------------- Portions of the Registrant's Proxy Part III Statement Relating to the Annual Meeting of Shareholders to be held on June 5, 2000 |
Pursuant to Rule 12b-15 of the Securities Exchange Act of 1934, as amended, the undersigned Registrant hereby amends its annual report on Form 10-K filed on April 27, 2000, for the fiscal year ended January 28, 2000 (the "Annual Report"), to include the unqualified auditors' opinion of Deloitte & Touche LLP, which was inadvertently omitted from the original filing of the Annual Report. Set forth below in its entirety is Item 8 with the only modification being the inclusion of the unqualified opinion of Deloitte & Touche LLP.
CONSOLIDATED BALANCE SHEETS
(Dollars in thousands except per share amounts)
January 28, 2000 January 29, 1999
---------------- ----------------
ASSETS
Current assets:
Cash and cash equivalents $ 58,789 $ 22,294
Merchandise inventories 985,715 811,722
Deferred income taxes 5,995 2,523
Other current assets 45,036 42,378
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Total current assets 1,095,535 878,917
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Property and equipment, at cost:
Land 5,907 5,983
Buildings 32,807 47,687
Furniture, fixtures and equipment 558,823 474,568
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597,537 528,238
Less accumulated depreciation 251,064 201,830
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Net property and equipment 346,473 326,408
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Other assets 8,933 6,459
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Total assets $1,450,941 $1,211,784
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LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Current portion of long-term debt $ 1,233 725
Accounts payable 334,554 257,759
Accrued expenses 121,375 172,825
Income taxes 15,135 23,825
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Total current liabilities 472,297 455,134
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Long-term debt 1,200 786
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Deferred income taxes 51,523 30,103
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Commitments and contingencies
Shareholders' equity:
Preferred stock, stated value $.50 per share:
Shares authorized: 1999 and 1998-10,000,000;
Issued: 1999-0; 1998-1,716,000; 0 858
Common stock, par value $.50 per share:
Shares authorized: 1999 and 1998-500,000,000;
Issued: 1999-264,692,000; 1998-210,242,000 132,346 105,121
Additional paid-in capital 255,581 418,039
Retained earnings 537,994 402,270
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925,921 926,288
Less treasury stock, at cost:
Shares: 1999-0; 1998-32,725,000 0 200,527
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Total shareholders' equity 925,921 725,761
-------------------------------------------------------------------------------------------------
Total liabilities and shareholders' equity $1,450,941 $1,211,784
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The accompanying notes are an integral part of the consolidated financial statements.
CONSOLIDATED STATEMENTS OF INCOME
(Dollars in thousands except per share amounts)
For the years ended
January 28, 2000 January 29, 1999 January 30, 1998
% of % of % of
Net Net Net
Amount Sales Amount Sales Amount Sales
------------------------------------------------------------------------------------------------------------------------------
Net sales $3,887,964 100.0% $3,220,989 100.0% $2,627,325 100.0%
Cost of goods sold 2,790,173 71.8 2,315,112 71.9 1,885,190 71.8
------------------------------------------------------------------------------------------------------------------------------
Gross profit 1,097,791 28.2 905,877 28.1 742,135 28.3
Selling, general and
administrative 748,489 19.3 616,613 19.1 506,592 19.3
------------------------------------------------------------------------------------------------------------------------------
Operating profit 349,302 9.0 289,264 9.0 235,543 9.0
Interest expense 5,157 0.1 8,349 0.3 3,764 0.1
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Income before taxes on
income 344,145 8.9 280,915 8.7 231,779 8.8
Provisions for taxes
on income 124,718 3.2 98,882 3.0 87,151 3.3
------------------------------------------------------------------------------------------------------------------------------
Net income $ 219,427 5.6% $ 182,033 5.7% $ 144,628 5.5%
==============================================================================================================================
Diluted earnings
per share $0.81 $0.68 $0.54
Weighted average diluted
shares (000) 269,570 268,399 267,954
Basic earnings per share $0.89 $0.81 $0.64
==============================================================================================================================
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The accompanying notes are an integral part of the consolidated financial statements.
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
For the years ended January 28, 2000, January 29,
1999, and January 30, 1998
(Dollars in thousands, except per share amounts)
-----------------------------------------------------------------------------------------------------------------------
Preferred Common Additional Retained Treasury
Stock Stock Paid-in Capital Earnings Stock Total
------------------------------------------------------------------------------------------------------------------------
Balances, January 31, 1997 $ 858 $ 53,105 $ 329,948 $ 302,145 $(200,527) $485,529
Net income 144,628 144,628
5-for-4 stock split,
September 22, 1997 13,416 (13,416) 0
5-for-4 stock split,
March 23, 1998 16,705 (16,705) 0
Cash dividends,
$0.17 per common share (19,170) (19,170)
Cash dividends, $1.90 per
preferred share (3,269) (3,269)
Issuance of common stock
under stock
incentive plans
(2,560,000 shares) 1,280 29,566 30,846
Tax benefit from exercise 19,855 19,855
of options
Repurchase of common
stock (1,991,000 shares) (995) (74,128) (75,123)
Transfer to employee
stock ownership plan
(30,000 common shares) 15 585 600
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Balances, January 30, 1998 $ 858 $ 83,526 $ 379,954 $ 320,085 $(200,527) $583,896
Net income 182,033 182,033
5-for-4 stock split,
September 21, 1998 21,090 (21,090) 0
Cash dividends,
$0.14 per common share (24,114) (24,114)
Cash dividends,
$2.04 per preferred share (3,497) (3,497)
Issuance of common stock
under stock
incentive plans
(2,976,000 shares) 1,488 27,523 29,011
Tax benefit from exercise
of options 30,913 30,913
Repurchase of common
stock (1,997,000 shares) (999) (72,237) (73,236)
Transfer to 401(k) Plan
(32,000 common shares) 16 739 755
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Balances, January 29, 1999 $ 858 $105,121 $ 418,039 $ 402,270 $(200,527) $725,761
Net income 219,427 219,427
5-for-4 stock split,
May 24, 1999 26,573 (26,573) 0
Cash dividends,
$0.13 per common share (32,879) (32,879)
Cash dividends,
$0.69 per preferred share (1,178) (1,178)
Issuance of common stock
under stock
incentive plans
(3,518,000 shares) 1,759 34,027 35,786
Tax benefit from exercise
of options 29,757 29,757
Convert preferred to common
(40,906,000 common shares) (858) (199,669) 200,527 0
Repurchase of common
stock (2,213,000 shares) (1,107) (49,646) (50,753)
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Balances, January 28, 2000 $ 0 $132,346 $ 255,581 $ 537,994 $ 0 $925,921
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The accompanying notes are an integral part of the consolidated financial statements.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollars in thousands)
For the years ended
--------------------------------------------------
January 28, January 29, January 30,
2000 1999 1998
--------------------------------------------------------------------------------------------------------------------------
Cash flows from operating activities:
Net income $219,427 $182,033 $144,628
Adjustments to reconcile net income to
net cash provided by
operating activities:
Depreciation and amortization 63,944 53,112 38,734
Deferred income taxes 17,948 11,386 14,312
Change in operating assets and liabilities:
Merchandise inventories (173,993) (179,768) (155,851)
Other current assets (2,658) (20,494) (3,640)
Accounts payable 76,795 77,801 76,435
Accrued expenses (51,450) 80,798 21,586
Income taxes (8,690) 11,482 2,341
Other (966) 2,260 574
--------------------------------------------------------------------------------------------------------------------------
Net cash provided by
operating activities 140,357 218,610 139,119
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Cash flows from investing activities:
Purchase of property and equipment (152,738) (140,332) (107,700)
Proceeds from sale of property and
equipment 67,221 222 33,811
--------------------------------------------------------------------------------------------------------------------------
Net cash used in investing activities (85,517) (140,110) (73,889)
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Cash flows from financing activities:
Issuance of short-term borrowings 218,865 290,647 157,592
Repayments of short-term borrowings (218,865) (312,580) (174,128)
Issuance of long-term debt 3,104 1,240 190
Repayments of long-term debt (2,182) (2,473) (2,058)
Payment of cash dividends (34,057) (27,611) (22,440)
Proceeds from exercise of stock
options 35,786 29,011 30,847
Repurchase of common stock (50,753) (73,236) (75,123)
Tax benefit from stock option
exercises 29,757 30,913 19,855
Other 0 755 600
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Net cash used in financing activities (18,345) (63,334) (64,665)
--------------------------------------------------------------------------------------------------------------------------
Net increase in cash and
cash equivalents 36,495 15,166 565
Cash and cash equivalents, beginning of year 22,294 7,128 6,563
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Cash and cash equivalents, end of year $ 58,789 $ 22,294 $ 7,128
==========================================================================================================================
Supplemental cash flow information Cash paid during year for:
Interest $ 7,452 $ 9,275 $ 4,608
Income taxes $ 84,759 $ 46,439 $ 50,831
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The accompanying notes are an integral part of the consolidated financial statements.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. Accounting Policies:
The Company sells general merchandise on a retail basis through 4,294 stores (as of January 28, 2000), located predominantly in small towns in the midwestern and southeastern United States. The Company has DCs in Scottsville, Kentucky; Homerville, Georgia; Ardmore, Oklahoma; South Boston, Virginia; Indianola, Mississippi; Villa Rica, Georgia; Fulton, Missouri; Alachua, Florida (under development) and Zanesville, Ohio (under development).
Basis of presentation
The Company's fiscal year ends on the Friday closest to January 31. The consolidated financial statements include all subsidiaries. Inter-company transactions have been eliminated. Certain reclassifications have been made to the 1998 and 1997 financial statements to agree to the 1999 presentation.
Cash and cash equivalents
Cash and cash equivalents include highly liquid investments with original maturities of three months or less when purchased.
Inventories
Inventories are stated at cost using the retail last-in, first-out ("LIFO") method which is not in excess of market. The excess of current cost over LIFO cost was $15.2 million, $15.0 million and $16.4 million at January 28, 2000, January 29, 1999 and January 30, 1998, respectively. LIFO reserves increased by $0.2 million in 1999 but decreased $1.4 million in 1998 and $2.0 million in 1997.
Pre-opening costs
Pre-opening costs for new stores are expensed as incurred.
Property and equipment
Property and equipment are recorded at cost. The Company provides for depreciation of buildings and equipment on a straight-line basis over the following estimated useful lives: 40 years for buildings; 3 to 10 years for furniture, fixtures and equipment. Depreciation expense was $63.4 million, $52.9 million and $38.5 million in 1999, 1998 and 1997, respectively.
Insurance claims provisions
In 1996, the Company established The Greater Cumberland Insurance Company, a Vermont-based, wholly-owned subsidiary captive insurance company. This insurance company charges Dollar General's subsidiary companies competitive premium rates to insure workers' compensation and non-property general liability claims risk. The insurance company currently insures no unrelated third-party risk.
The Company retains a significant portion of the risk for its workers' compensation, employee health insurance, general liability, property, and automobile coverages. Accordingly, provisions are made for the Company's actuarially determined estimates of discounted future claim costs for such risks. To the extent that subsequent claim costs vary from those estimates, current earnings are charged or credited.
Derivative financial instruments
On July 16, 1999, the Company replaced its existing interest rate swap agreements with $200 million in interest rate swap agreements. These agreements contain provisions to extend the agreements to September 2002, which can be exercised at the option of the counterparties in February 2001. The Company will pay a weighted average fixed rate of 5.14% on the $200 million notional amount. All outstanding interest rate swap agreements have been designated as hedges of the Company's floating rate commitments under operating leases. The Company recognizes floating rate interest differentials as adjustments to expense in the period they occur. Gains and losses on terminations of interest rate swap agreements are deferred and amortized to expense
over the shorter of the original term of the agreements or the remaining life of the associated outstanding commitment. The counterparties to these instruments are major financial institutions. These counterparties expose the Company to credit risk in the event of non-performance; however, the Company does not anticipate non-performance by the other parties. The fair value of the Company's interest rate swap agreements is based on dealer quotes. These values represent the amounts the Company would receive or pay to terminate the agreements taking into consideration current interest rates. The fair value of the interest rate swap agreements was $3.1 million at January 28, 2000. The Company does not hold or issue derivative financial instruments for trading purposes.
Income taxes
The Company reports income taxes in accordance with SFAS No. 109, "Accounting for Income Taxes." Under SFAS No. 109, the asset and liability method is used for computing future income tax consequences of events which have been recognized in the Company's consolidated financial statements or income tax returns. Deferred income tax expense or benefit is the change during the year in the Company's deferred income tax assets and liabilities.
Management estimates
The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.
Accounting pronouncements
The Company will adopt Statement of Financial Accounting Standards (SFAS) No. 133, "Accounting for Derivative Instruments and Hedging Activities," for the fiscal year ending February 1, 2002. The Company is in the process of analyzing the impact of the adoption of this Statement.
2. Cash and Short-term Borrowings:
The cash management system provides for daily investment of available balances and the funding of outstanding checks when presented for payment. Outstanding but unpresented checks totaling $127.5 million and $125.3 million at January 28, 2000, and January 29, 1999, respectively, have been included in accounts payable. Upon presentation for payment, they will be funded through available cash balances or the Company's revolving credit agreement (the "revolver").
The Company had seasonal lines of credit with banks totaling $105.0 million at January 28, 2000, and $165.0 million at January 29, 1999. The lines are subject to periodic review by the lending institutions which may increase or decrease the amounts available. There were no borrowings outstanding under these lines of credit at January 28, 2000 and January 29, 1999. The Company also has a $175.0 million revolver which expires in September 2002. There were no borrowings outstanding under the revolver at January 28, 2000 and January 29, 1999.
The weighted average interest rates for all short-term borrowings were 5.7% and 5.5% for 1999 and 1998, respectively. The revolver contains certain restrictive covenants. At January 28, 2000, the Company was in compliance with all such covenants.
At January 28, 2000, and January 29, 1999, the Company had outstanding letters of credit totaling $53.6 million and $101.1 million, respectively.
3. Accrued Expenses:
Accrued expenses consist of the following:
(In thousands) 1999 1998
----------------------------------------------------------------------------------------------------------------------
Compensation and benefits $ 42,778 $ 34,766
Insurance 32,429 29,069
Taxes (other than taxes on income) 12,473 8,758
Rent 8,046 8,725
Dividends 8,467 6,615
Freight and other 17,182 16,941
Advance on sale/leaseback transactions 0 67,951
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Total accrued expenses $121,375 $172,825
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4. Income Taxes:
The provisions for income taxes consist of the following:
(In thousands) 1999 1998 1997
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Currently payable:
Federal $105,397 $85,333 $68,177
State 1,373 2,163 4,662
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Total currently payable 106,770 87,496 72,839
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Deferred:
Federal 16,752 10,631 13,503
State 1,196 755 809
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Total deferred 17,948 11,386 14,312
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Total provision $124,718 $98,882 $87,151
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Deferred tax expense is recognized for the future tax consequences of temporary differences between the amounts reported in the Company's financial statements and the tax basis of its assets and liabilities. Differences giving rise to the Company's deferred tax assets and liabilities are as follows:
1999 1998
(In thousands) Assets Liabilities Assets Liabilities
-------------------------------------------------------------------------------------------------------------------------
Amortization $ 0 $ 1,569 $ 0 $ 673
Inventories 0 2,398 0 4,334
Accrued insurance 2,476 0 1,957 0
Deferred compensation 2,684 0 0 0
Tax method changes 0 8,202 0 0
Property and equipment 0 39,354 0 24,847
Other 835 0 566 249
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Total deferred taxes $ 5,995 $ 51,523 $2,523 $30,103
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Reconciliation of the federal statutory rate and the effective income tax rate follows:
1999 1998 1997
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Federal statutory rate 35.0% 35.0% 35.0%
State income taxes, net of federal
income tax benefit 1.5 0.8 2.7
Tax credits (0.3) (0.2) (0.1)
Other 0.0 (0.4) 0.0
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Effective income tax rate 36.2% 35.2% 37.6%
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5. Earnings Per Share:
Amounts are in thousands except per share data, and shares have been adjusted to give retroactive effect to all common stock splits.
1999
Per-Share
Income Shares Amount
-----------------------------------------------------------------------------------------------------------------------
Net income $219,427
Less: preferred stock dividends 1,178
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Basic earnings per share
Income available to common shareholders 218,249 244,019 $0.89
=====
Stock options outstanding 5,098
Convertible preferred stock 1,178 20,453
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Diluted earnings per share
Income available to common shareholders
plus assumed conversions $219,427 269,570 $0.81
=====
=======================================================================================================
1998
Per-Share
Income Shares Amount
------------------------------------------------------------------------------------------------------------------------
Net income $182,033
Less: preferred stock dividends 3,497
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Basic earnings per share
Income available to common shareholders 178,536 221,057 $0.81
=====
Stock options outstanding 6,436
Convertible preferred stock 3,497 40,906
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Diluted earnings per share
Income available to common shareholders
plus assumed conversions $182,033 268,399 $0.68
=====
=======================================================================================================
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1997
Per-Share
Income Shares Amount
---------------------------------------------------------------------------------------------------------------------------
Net income $144,628
Less: preferred stock dividends 3,269
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Basic earnings per share
Income available to common shareholders 141,359 220,625 $0.64
=====
Stock options outstanding 6,423
Convertible preferred stock 3,269 40,906
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Diluted earnings per share
Income available to common shareholders
plus assumed conversions $144,628 267,954 $0.54
=====
=======================================================================================================
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Basic earnings per share was computed by dividing income available to common shareholders by the weighted average number of shares of common stock outstanding during the year. Diluted earnings per share was determined based on the assumption that the convertible preferred stock was converted upon issuance on August 22, 1994.
6. Commitments and Contingencies:
At January 28, 2000, the Company and certain subsidiaries were committed for retail store, DC and administrative office space in the following fiscal years under non-cancelable operating lease agreements requiring minimum annual rental payments of (in millions): $149.5 in 2000; $129.1 in 2001; $111.1 in 2002; $64.0 in 2003; $50.1 in 2004 and $181.8 in later fiscal years. Most of these leases include renewal options for periods ranging from two to five years and provisions for contingent rentals based upon a percentage of defined sales volume. Certain leases contain restrictive covenants. At January 28, 2000, the Company was in compliance with such covenants.
Rent expense under all operating leases was as follows:
(In thousands) 1999 1998 1997 ----------------------------------------------------------------------- Minimum rentals $135,703 $101,235 $71,694 Contingent rentals 13,646 13,658 12,342 ----------------------------------------------------------------------- Total rentals $149,349 $114,893 $84,036 ======================================================================= |
Included in the leases above, the Company leases its corporate headquarters, certain DCs and a number of store locations under operating leases which contain a residual value guarantees of $351.4 million. Lease payments are based on variable interest rates. The Company had $285.0 million in facilities at January 28, 2000, and January 29, 1999, available for the issuance of trade letters of credit.
The Company was involved in litigation, investigations of a routine nature and various legal matters during 1999, which are being defended and handled in the ordinary course of business. While the ultimate results of these matters cannot be determined or predicted, management believes that they will not have a material adverse affect on the Company's results of operations or financial position.
7. Employee Benefits:
Through December 31, 1997, the Company had two noncontributory defined contribution retirement plans covering substantially all full-time employees. Expense for these plans was approximately $4.9 million in 1997.
Effective January 1, 1998, the Company established a 401(k) savings and retirement plan that replaced the previous defined contribution plans. The assets of the defined contribution plans were merged into the new 401(k) plan. All employees who have completed 12 months of service and reached age 21 are eligible to participate in the plan. Under the plan, employees can make contributions up to 15% of their annual compensation. Employee contributions, up to 6% of annual compensation, are matched by the Company at the rate of $0.50 on the dollar. The Company also contributes annually to the plan an amount equal to 2% of each employee's annual compensation. Expense for this plan was approximately $6.3 million in 1999 and $4.8 million in 1998.
Effective January 1, 1998, the Company also established a supplemental retirement plan and a compensation deferral plan for highly compensated employees. The supplemental retirement plan is a noncontributory 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 salary level. Under the compensation deferral plan participants may defer up to 50% of base pay and 100% of bonus pay, reduced by any deferral to the 401(k) plan. Expense for these plans was approximately $1.0 million in 1999 and $0.4 million in 1998.
8. Capital Stock:
The authorized capital stock of the Company consists of common stock and preferred stock. In June 1998, the Company increased the authorized shares of common stock to 500,000,000 shares and the authorized shares of preferred stock to 10,000,000 shares.
In 1994, the Company exchanged 1,715,742 shares of Series A Convertible Junior Preferred Stock for the 8,578,710 shares of Dollar General common stock owned by C.T.S., Inc., a personal holding Company controlled by members of the Turner family, the founders of Dollar General. The Series A Convertible Junior Preferred Stock was authorized by the Board of Directors out of the authorized but unissued preferred stock approved by the Company's shareholders in 1992. On August 23, 1999, the holders of all of the Company's 1.7 million shares of Series A Convertible Junior Preferred Stock converted their shares to 40.9 million shares of Dollar General Common Stock in accordance with the relevant provisions of the Company's charter. Consequently, preferred stock and treasury stock balances were reduced to zero. This was a non-cash transaction.
The Company has a Shareholder Rights Plan (the "Plan") under which Series B Junior Participating Preferred Stock Purchase Rights (the "Rights") were issued for each outstanding share of common stock. The Rights were attached to all common stock outstanding as of March 10, 2000, and will be attached to all additional shares of common stock issued prior to the Plan's expiration on February 28, 2010, or such earlier termination, if applicable. The Rights entitle the holders to purchase from the Company one one-hundredth of a share (a "Unit") of Series B Junior Participating Preferred Stock (the "Preferred Stock"), no par value, at a purchase price of $100 per Unit, subject to adjustment. Initially, the Rights will attach to all certificates representing shares of outstanding Common Stock, and no separate Rights Certificates will be distributed. The Rights will become exercisable upon the occurrence of a triggering event as defined in the Plan.
9. Stock Incentive Plans:
The Company has established stock incentive plans under which options to purchase common stock may be granted to executive officers, directors and key employees.
All options granted in 1999, 1998 and 1997, under the 1998 Stock Incentive Plan, the 1995 Employee Stock Incentive Plan, the 1993 Employee Stock Incentive Plan and the 1995 Outside Directors Stock Option Plan, were non-qualified stock options issued at a price equal to the fair market value of the Company's common stock on the date of grant. Non-qualified options granted under these plans have an expiration date of no later than ten years following the date of grant and have a vesting period of no less than one year.
Under the plans, grants are made to key management employees ranging from executive officers to store managers and assistant store managers, as well as other employees as prescribed by the Company's Corporate Governance and Compensation Committee of the Board of Directors. The number of options granted and vesting schedules are directly linked to the employee's performance and position within the Company.
The plans also provide for annual grants to non-employee directors according to a non-discretionary formula. The number of shares granted is dependent upon current director compensation levels and the market price of the stock.
The Company applies APB Opinion No. 25, "Accounting for Stock Issued to Employees," and related interpretations in accounting for its plans. The exercise price of options awarded under these plans has been equal to the fair market value of the underlying common stock on the date of grant. Accordingly, no compensation expense has been recognized for its stock-based compensation plans. Had compensation cost for the Company's stock-based compensation plans been determined based on the fair value at the grant date for awards under these plans consistent with the methodology prescribed under SFAS No. 123, "Accounting for Stock-Based Compensation," net income and earnings per share would have been reduced to the pro forma amounts indicated in the following table.
(Amounts in thousands except per share data) 1999 1998 1997
--------------------------------------------------------------------------------
Net income - as reported $219,427 $182,033 $144,628
Net income - pro forma $196,869 $166,553 $138,262
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Earnings per share - as reported
Basic $.89 $.81 $.64
Diluted $.81 $.68 $.54
Earnings per share - pro forma
Basic $.80 $.74 $.62
Diluted $.73 $.62 $.52
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Earnings per share have been adjusted to give retroactive effect to all common stock splits.
The pro forma effects on net income for 1999, 1998 and 1997 are not representative of the pro forma effect on net income in future years because they do not take into consideration pro forma compensation expense related to grants made prior to 1996. The fair value of options granted during 1999, 1998, and 1997 is $11.55, $9.69, and $6.04, respectively.
The fair value of each option grant is estimated on the date of grant using the Black-Scholes option-pricing model with the following assumptions:
1999 1998 1997
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Expected dividend yield 0.7% 0.7% 0.7%
Expected stock price volatility 48.0% 48.0% 40.0%
Weighted average risk-free interest rate 5.3% 5.5% 6.2%
Expected life of options (years) 4.5 3.0 3.0
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A summary of the balances and activity for all the Company's stock incentive plans for the last three fiscal years is presented below:
Shares Weighted Average
Under Plans Exercise Price
-----------------------------------------------------------------------
Balance, January 31, 1997 22,391,079 $ 5.63
Granted 5,014,404 14.71
Exercised (6,017,063) 5.10
Canceled (1,324,374) 8.02
-----------------------------------------------------------------------
Balance, January 30, 1998 20,064,046 8.31
Granted 4,940,669 19.70
Exercised (4,573,573) 6.62
Canceled (1,508,614) 13.27
-----------------------------------------------------------------------
Balance, January 29, 1999 18,922,528 11.36
Granted 4,627,834 26.52
Exercised (4,297,405) 8.03
Canceled (1,046,328) 15.47
-----------------------------------------------------------------------
Balance, January 28, 2000 18,206,629 $15.73
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The following table summarizes information about stock options outstanding at January 28, 2000:
Options Outstanding Options Exercisable
------------------------------------------------------- ----------------------------
Weighted Average Weighted
Range of Number Remaining Weighted Average Number Exercise
Exercise Prices Outstanding Contractual Life Exercise Price Exercisable Price
-----------------------------------------------------------------------------------------------------------------
$ 0.62 - $10.00 6,190,984 4.5 $ 5.83 4,689,872 $ 6.46
$10.01 - $20.00 6,684,916 7.7 16.69 4,876,150 16.10
$20.01 - $29.88 5,330,729 9.1 26.03 249,579 23.58
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$ 0.62 - $29.88 18,206,629 7.0 $15.73 9,815,601 $11.68
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At January 28, 2000, there were 10,514,504 shares available for granting of stock options under the Company's stock option plans.
10. SEGMENT REPORTING
The Company manages its business on the basis of one reportable segment. See Note 1 for a brief description of the Company's business. As of January 28, 2000, all of the Company's operations were located within the United States. The following data is presented in accordance with SFAS No. 131, "Disclosures about Segments of an Enterprise and
Related Information."
(In thousands) 1999 1998 1997
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Classes of similar products:
Net Sales:
Hardlines $3,193,626 $2,627,304 $2,149,528
Softlines 694,338 593,685 477,797
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Total net sales $3,887,964 $3,220,989 $2,627,325
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11. QUARTERLY FINANCIAL DATA (UNAUDITED):
The following is selected unaudited quarterly financial data for the fiscal years ended January 28, 2000, and January 29, 1999. Amounts are in thousands except per share data. Per share data has been adjusted for all common stock splits.
Quarter First Second Third Fourth Year
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1999:
Net sales $844,593 $915,210 $950,419 $1,177,742 $3,887,964
Gross profit 225,947 249,582 277,857 344,405 1,097,791
Net income 36,348 41,615 50,859 90,605 219,427
Diluted earnings
per share $ 0.14 $ 0.15 $ 0.19 $ 0.34 $ 0.81
Basic earnings
per share $ 0.16 $ 0.19 $ 0.19 $ 0.34 $ 0.89
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1998:
Net sales $705,260 $741,355 $781,389 $992,985 $3,220,989
Gross profit 190,332 205,481 224,734 285,330 905,877
Net income 30,404 33,288 40,338 78,003 182,033
Diluted earnings
per share $ 0.11 $ 0.12 $ 0.15 $ 0.29 $ 0.68
Basic earnings
per share $ 0.13 $ 0.15 $ 0.18 $ 0.35 $ 0.81
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INDEPENDENT AUDITORS' REPORT
To the Board of Directors and Shareholders of Dollar General Corporation Goodlettsville, Tennessee
We have audited the accompanying consolidated balance sheets of Dollar General Corporation and subsidiaries as of January 28, 2000 and January 29, 1999, and the related consolidated statements of income, shareholders' equity, and cash flows for each of the three years in the period ended January 28, 2000. These consolidated financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, such consolidated financial statements present fairly, in all material respects, the financial position of Dollar General Corporation and subsidiaries as of January 28, 2000 and January 29, 1999, and the results of their operations and their cash flows for each of the three years in the period ended January 28, 2000, in conformity with generally accepted accounting principles.
/s/ DELOITTE & TOUCHE LLP Nashville, Tennessee February 22, 2000 |
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this amended report to be signed on its behalf by the undersigned, thereunto duly authorized.
DOLLAR GENERAL CORPORATION
Date: July 28, 2000 By: /s/ Brian M. Burr
---------------------------------
Brian M. Burr,
Executive Vice President and
Chief Financial Officer
|
23 Consent of Deloitte & Touche LLP
27 Financial Data Schedule
EXHIBIT 23
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in Registration Statement Nos. 333-51589, 333-51591, 333-00141, 333-09448, 333-65789 and 333-93309 of Dollar General Corporation on Form S-8 and Registration Statement Nos. 333-50541 and 333-80655 of Dollar General Corporation on Form S-3 of our report dated February 22, 2000, appearing in this Annual Report on Form 10-K/A of Dollar General Corporation for the year ended January 28, 2000.
/s/ DELOITTE & TOUCHE LLP Nashville, Tennessee July 28, 2000 |
| ARTICLE 5 |
| MULTIPLIER: 1,000 |
| PERIOD TYPE | 12 MOS | 12 MOS |
| FISCAL YEAR END | JAN 28 2000 | JAN 29 1999 |
| PERIOD END | JAN 28 2000 | JAN 29 1999 |
| CASH | 58,789 | 22,294 |
| SECURITIES | 0 | 0 |
| RECEIVABLES | 0 | 0 |
| ALLOWANCES | 0 | 0 |
| INVENTORY | 985,715 | 811,722 |
| CURRENT ASSETS | 1,095,535 | 878,917 |
| PP&E | 597,537 | 528,238 |
| DEPRECIATION | 251,064 | 201,830 |
| TOTAL ASSETS | 1,450,941 | 1,211,784 |
| CURRENT LIABILITIES | 472,297 | 455,134 |
| BONDS | 0 | 0 |
| COMMON | 132,346 | 105,121 |
| PREFERRED MANDATORY | 0 | 0 |
| PREFERRED | 0 | 858 |
| OTHER SE | 793,575 | 619,782 |
| TOTAL LIABILITY AND EQUITY | 1,450,941 | 1,211,784 |
| SALES | 3,887,964 | 3,220,989 |
| TOTAL REVENUES | 3,887,964 | 3,220,989 |
| CGS | 2,790,173 | 2,315,112 |
| TOTAL COSTS | 748,489 | 616,613 |
| OTHER EXPENSES | 0 | 0 |
| LOSS PROVISION | 0 | 0 |
| INTEREST EXPENSE | 5,157 | 8,349 |
| INCOME PRETAX | 344,145 | 280,915 |
| INCOME TAX | 124,718 | 98,882 |
| INCOME CONTINUING | 219,427 | 182,033 |
| DISCONTINUED | 0 | 0 |
| EXTRAORDINARY | 0 | 0 |
| CHANGES | 0 | 0 |
| NET INCOME | 219,427 | 182,033 |
| EPS BASIC | 0.89 | 0.81 |
| EPS DILUTED | 0.81 | 0.68 |