Dollar General 2005 Annual Report Download - page 58

54
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
At February 3, 2006, there were approximately 7.7 mil-
lion shares available for grant under the Company’s stock
incentive plan. At January 28, 2005 and January 30, 2004,
respectively, there were approximately 13.8 million and
15.0 million exercisable options outstanding.
10. Capital stock
The Company has a Shareholder Rights Plan (the
“Plan”), filed with the Securities and Exchange
Commission, 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 expira-
tion 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 out-
standing 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.The triggering events generally
include any unsolicited attempt to acquire more than 15
percent of the Company's outstanding common stock.The
practical operation of the Plan, if triggered, allows a holder
of rights: (a) to acquire $200 of the Company's common
stock in exchange for the $100 purchase price in the event
of an acquisition of the Company in which the Company is
the surviving entity; and (b) in the event of an acquisition
of the Company in which the Company is not the surviving
entity, to acquire $200 of the surviving entity's securities in
exchange for the $100 purchase price.
On September 30, 2005, November 30, 2004 and
March 13, 2003, the Board of Directors authorized the
Company to repurchase up to 10 million, 10 million and
12 million shares, respectively, of its outstanding common
stock.These authorizations allow or allowed, as applicable,
for purchases in the open market or in privately negotiated
transactions from time to time, subject to market conditions.
The objective of the Company’s share repurchase initiative
is to enhance shareholder value by purchasing shares at a
price that produces a return on investment that is greater
than the Company's cost of capital. Additionally, share
repurchases generally are undertaken only if such purchas-
es result in an accretive impact on the Company's fully
diluted earnings per share calculation. The 2005 authori-
zation expires September 30, 2006. The 2004 and 2003
authorizations were completed prior to their expiration
dates. During 2005, the Company purchased approximately
5.5 million shares pursuant to the 2005 authorization at a
total cost of $104.7 million, and approximately 9.5 million
shares pursuant to the 2004 authorization at a total cost of
$192.9 million. During 2004, the Company purchased
approximately 0.5 million shares pursuant to the 2004
authorization at a total cost of $10.9 million and approxi-
mately 10.5 million shares pursuant to the 2003 authoriza-
tion at a total cost of $198.4 million. During 2003, the
Company purchased approximately 1.5 million shares pur-
suant to the 2003 authorization at a total cost of $29.7 million.
11. 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 February 3, 2006, all of
the Company’s operations were located within the United
States with the exception of an immaterial Hong Kong
subsidiary formed to assist in the process of importing
certain merchandise that began operations in early 2004.
The following data is presented in accordance with SFAS
No. 131,“Disclosures about Segments of an Enterprise and
Related Information.”
(In thousands) 2005 2004 2003
Classes of similar products:
Highly consumable $5,606,466 $4,825,051 $4,206,878
Seasonal 1,348,769 1,263,991 1,156,114
Home products 907,826 879,476 860,867
Basic clothing 719,176 692,409 648,133
Net sales $8,582,237 $7,660,927 $6,871,992