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
<PAGE>
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.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
---------------------------------------------------
CONSOLIDATED BALANCE SHEETS
(Dollars in thousands except per share amounts)
<TABLE>
<CAPTION>
January 28, 2000 January 29, 1999
---------------- ----------------
<S> <C> <C>
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
-------------------------------------------------------------------------------------------------
Total current assets 1,095,535 878,917
-------------------------------------------------------------------------------------------------
Property and equipment, at cost:
Land 5,907 5,983
Buildings 32,807 47,687
Furniture, fixtures and equipment 558,823 474,568
-------------------------------------------------------------------------------------------------
597,537 528,238
Less accumulated depreciation 251,064 201,830
-------------------------------------------------------------------------------------------------
Net property and equipment 346,473 326,408
-------------------------------------------------------------------------------------------------
Other assets 8,933 6,459
-------------------------------------------------------------------------------------------------
Total assets $1,450,941 $1,211,784
=================================================================================================
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
-------------------------------------------------------------------------------------------------
Total current liabilities 472,297 455,134
-------------------------------------------------------------------------------------------------
Long-term debt 1,200 786
-------------------------------------------------------------------------------------------------
Deferred income taxes 51,523 30,103
-------------------------------------------------------------------------------------------------
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
-------------------------------------------------------------------------------------------------
925,921 926,288
Less treasury stock, at cost:
Shares: 1999-0; 1998-32,725,000 0 200,527
-------------------------------------------------------------------------------------------------
Total shareholders' equity 925,921 725,761
-------------------------------------------------------------------------------------------------
Total liabilities and shareholders' equity $1,450,941 $1,211,784
=================================================================================================
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
<PAGE>
<TABLE>
<CAPTION>
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
------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
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
------------------------------------------------------------------------------------------------------------------------------
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
==============================================================================================================================
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
<PAGE>
<TABLE>
<CAPTION>
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
------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
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
-----------------------------------------------------------------------------------------------------------------------
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
-----------------------------------------------------------------------------------------------------------------------
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)
-----------------------------------------------------------------------------------------------------------------------
Balances, January 28, 2000 $ 0 $132,346 $ 255,581 $ 537,994 $ 0 $925,921
=======================================================================================================================
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
<PAGE>
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollars in thousands)
<TABLE>
<CAPTION>
For the years ended
--------------------------------------------------
January 28, January 29, January 30,
2000 1999 1998
--------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
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
--------------------------------------------------------------------------------------------------------------------------
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)
--------------------------------------------------------------------------------------------------------------------------
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
--------------------------------------------------------------------------------------------------------------------------
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
--------------------------------------------------------------------------------------------------------------------------
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
==========================================================================================================================
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
<PAGE>
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
<PAGE>
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.
<PAGE>
3. Accrued Expenses:
Accrued expenses consist of the following:
<TABLE>
<CAPTION>
(In thousands) 1999 1998
----------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
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
----------------------------------------------------------------------------------------------------------------------
Total accrued expenses $121,375 $172,825
======================================================================================================================
</TABLE>
<TABLE>
<CAPTION>
4. Income Taxes:
The provisions for income taxes consist of the following:
(In thousands) 1999 1998 1997
-------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Currently payable:
Federal $105,397 $85,333 $68,177
State 1,373 2,163 4,662
-------------------------------------------------------------------------------------------------------------------------
Total currently payable 106,770 87,496 72,839
-------------------------------------------------------------------------------------------------------------------------
Deferred:
Federal 16,752 10,631 13,503
State 1,196 755 809
-------------------------------------------------------------------------------------------------------------------------
Total deferred 17,948 11,386 14,312
-------------------------------------------------------------------------------------------------------------------------
Total provision $124,718 $98,882 $87,151
=========================================================================================================================
</TABLE>
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:
<TABLE>
<CAPTION>
1999 1998
(In thousands) Assets Liabilities Assets Liabilities
-------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
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
------------------------------------------------------------------------------------------------------------------------
Total deferred taxes $ 5,995 $ 51,523 $2,523 $30,103
========================================================================================================================
</TABLE>
<PAGE>
Reconciliation of the federal statutory rate and the effective income tax rate
follows:
<TABLE>
<CAPTION>
1999 1998 1997
-----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
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
-----------------------------------------------------------------------------------------------------------------------
Effective income tax rate 36.2% 35.2% 37.6%
=======================================================================================================================
</TABLE>
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.
<TABLE>
<CAPTION>
1999
Per-Share
Income Shares Amount
-----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Net income $219,427
Less: preferred stock dividends 1,178
-------------------------------------------------------------------------------------------------------
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
-------------------------------------------------------------------------------------------------------
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
-------------------------------------------------------------------------------------------------------
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
-------------------------------------------------------------------------------------------------------
Diluted earnings per share
Income available to common shareholders
plus assumed conversions $182,033 268,399 $0.68
=====
=======================================================================================================
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
1997
Per-Share
Income Shares Amount
---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Net income $144,628
Less: preferred stock dividends 3,269
-------------------------------------------------------------------------------------------------------
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
-------------------------------------------------------------------------------------------------------
Diluted earnings per share
Income available to common shareholders
plus assumed conversions $144,628 267,954 $0.54
=====
=======================================================================================================
</TABLE>
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.
<PAGE>
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.
<PAGE>
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.
<PAGE>
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
--------------------------------------------------------------------------------
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
--------------------------------------------------------------------------------
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
--------------------------------------------------------------------------------
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
--------------------------------------------------------------------------------
<PAGE>
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
=======================================================================
The following table summarizes information about stock options
outstanding at January 28, 2000:
<TABLE>
<CAPTION>
Options Outstanding Options Exercisable
------------------------------------------------------- ----------------------------
Weighted Average Weighted
Range of Number Remaining Weighted Average Number Exercise
Exercise Prices Outstanding Contractual Life Exercise Price Exercisable Price
-----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
$ 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
-----------------------------------------------------------------------------------------------------------------
$ 0.62 - $29.88 18,206,629 7.0 $15.73 9,815,601 $11.68
=================================================================================================================
</TABLE>
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
--------------------------------------------------------------------------------
Classes of similar products:
Net Sales:
Hardlines $3,193,626 $2,627,304 $2,149,528
Softlines 694,338 593,685 477,797
--------------------------------------------------------------------------------
Total net sales $3,887,964 $3,220,989 $2,627,325
--------------------------------------------------------------------------------
<PAGE>
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.
<TABLE>
<CAPTION>
Quarter First Second Third Fourth Year
-------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
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
-------------------------------------------------------------------------------------------------------------------------
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
-------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
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
<PAGE>
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
<PAGE>
INDEX TO EXHIBITS
-----------------
23 Consent of Deloitte & Touche LLP
27 Financial Data Schedule
