Dollar General 2007 Annual Report Download - page 103

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Agreement, each outstanding share of the Company’ s common stock evidenced the right to
receive eight-tenths of a Right. Such Rights attached to all additional shares of common stock
issued prior to the Plan’ s termination immediately prior to the effective date of the Merger. The
Rights entitled the holders to purchase from the Company one one-hundredth of a share (a
“Unit”) of Series B Junior Participating Preferred Stock, no par value, at a purchase price of
$100 per Unit, subject to adjustment, upon certain triggering events defined in the Plan. The
Rights Plan terminated by its terms immediately prior to the effective date of the Merger. No
Rights were exercised prior to that date.
On November 29, 2006, the Board of Directors authorized the Company to repurchase up
to $500 million of its outstanding common stock. On September 30, 2005, the Board of
Directors authorized the Company to repurchase up to 10 million shares of its outstanding
common stock. These authorizations allowed 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 was to enhance shareholder value by purchasing shares at
a price that produced a return on investment that was greater than the Company’ s cost of capital.
Additionally, share repurchases generally were undertaken only if such purchases resulted in an
accretive impact on the Company’ s fully diluted earnings per share calculation. As a result of
the Merger, the 2006 authorization is no longer outstanding. No purchases were made pursuant
to this authorization. The 2005 authorization was completed prior to its expiration date. During
2006, the Company purchased approximately 4.5 million shares pursuant to the 2005
authorization at a total cost of $79.9 million. 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 an earlier authorization at a total cost of
$192.9 million.
12. Insurance settlement
During 2006 and 2005, the Company received proceeds of $13.0 million and $8.0
million, respectively, representing insurance recoveries for destroyed and damaged assets, costs
incurred and business interruption coverage related to Hurricane Katrina, which are reflected in
results of operations for these years as a reduction of SG&A expenses. The claim was settled in
2006. The business interruption portion of the proceeds was approximately $5.8 million and was
received in 2006. Insurance recoveries related to fixed assets losses are included in cash flows
from investing activities and recoveries related to inventory losses and business interruption are
included in cash flows from operating activities.
13. 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 1, 2008, 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 2004. The following net sales data is presented in accordance with SFAS 131, “Disclosures
about Segments of an Enterprise and Related Information.”