Dollar General 2010 Annual Report Download - page 167

10-K
DOLLAR GENERAL CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
11. Share-based payments (Continued)
The Company currently believes that the performance targets related to the unvested Performance
Options will be achieved. If such goals are not met, and there is no change in control or certain public
offerings of the Company’s common stock which would result in the acceleration of vesting of the
Performance Options, future compensation cost relating to unvested Performance Options will not be
recognized.
Through January 28, 2011, all Time Options and Performance Options have been granted to
employees. During the fourth quarter of 2009, the Company granted 33,051 non-qualified stock options
to members of its Board of Directors. These options vest ratably on an annual basis over a four year
period from the date of grant.
In January 2008, the Company granted 508,572 nonvested restricted shares to its Chief Executive
Officer. As a result of the Company’s initial public offering these shares vested, at a total fair value
equal to $11.5 million. Subsequent to the offering, the Company granted a total of 9,084 restricted
stock unit awards to members of its Board of Directors. For 2010, 2009 and 2008, the share-based
compensation expense related to nonvested shares before income taxes was less than $0.1 million,
$3.3 million ($2.0 million net of tax) and $1.1 million ($0.7 million net of tax), respectively. At
January 28, 2011, the total compensation cost related to nonvested restricted stock awards not yet
recognized was approximately $0.1 million.
All nonvested restricted stock and restricted stock unit awards granted in the periods presented
had a purchase price of zero. The Company records compensation expense on a straight-line basis over
the restriction period based on the market price of the underlying stock on the date of grant. The
nonvested restricted stock unit awards granted under the plan to non-employee directors during 2009
vested or are scheduled to vest in one-third increments at each of the Company’s three subsequent
annual shareholder meetings.
12. Related party transactions
Affiliates of certain of the Investors participated as (i) lenders in the Company’s Credit Facilities
discussed in Note 7; (ii) initial purchasers of the Company’s Notes discussed in Note 7;
(iii) counterparties to certain interest rate swaps discussed in Note 8 and (iv) as advisors in the Merger.
The Company believes affiliates of KKR and Goldman, Sachs & Co. (among other entities) are
lenders under the Term Loan Facility. The amount of principal outstanding under the Term Loan
Facility from the date of the Merger to September 30, 2009, was $2.3 billion. The Company paid
principal of $336.5 million during the remainder of 2009 and approximately $53.4 million, $74.8 million
and $133.4 million of interest on the Term Loan Facility during 2010, 2009 and 2008, respectively.
Goldman, Sachs & Co. is a counterparty to an amortizing interest rate swap with a notional
amount of $323.3 million and $396.7 million as of January 28, 2011 and January 29, 2010, respectively,
entered into in connection with the Term Loan Facility. The Company paid Goldman, Sachs & Co.
approximately $12.9 million, $17.9 million and $9.5 million in 2010, 2009 and 2008, respectively,
pursuant to the interest rate swap as further discussed in Note 8.
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