Dollar General 2006 Annual Report Download - page 35
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$587 million for repurchases of our common stock and paid dividends of approximately $171
million.
Our inventory balance represented approximately 47% of our total assets as of February
2, 2007. Our proficiency in managing our inventory balances can have a significant impact on
our cash flows from operations during a given fiscal year. We have made more efficient
inventory management a strategic priority, as more fully discussed in the “Executive Overview”
above.
As described in Note 8 to the Consolidated Financial Statements, we are involved in a
number of legal actions and claims, some of which could potentially result in material cash
payments. Adverse developments in those actions could materially and adversely affect our
liquidity. We also have certain income tax-related contingencies as more fully described below
under “Critical Accounting Policies and Estimates.” Estimates of these contingent liabilities are
included in our Consolidated Financial Statements. However, future negative developments
could have a material adverse effect on our liquidity. See Notes 5 and 8 to the Consolidated
Financial Statements.
On November 29, 2006, September 30, 2005, and November 30, 2004, the Board of
Directors authorized the repurchase of up to $500 million, 10 million shares and 10 million
shares, respectively, of our outstanding common stock. These authorizations allow or allowed, as
applicable, purchases in the open market or in privately negotiated transactions from time to
time, subject to market conditions. The objective of our share repurchase initiative is to enhance
shareholder value by purchasing shares at a price that produces a return on investment that is
greater than our cost of capital. Additionally, share repurchases generally are undertaken only if
such purchases result in an accretive impact on our fully diluted earnings per share calculation.
The 2006 authorization expires December 31, 2008. The 2005 and 2004 authorizations were
completed prior to their expiration dates. During 2006, we purchased approximately 4.5 million
shares pursuant to the 2005 authorization at a total cost of $79.9 million. During 2005, we
purchased approximately 15.0 million shares pursuant to the 2005 and 2004 authorizations at a
total cost of $297.6 million. During 2004, we purchased approximately 11.0 million shares
pursuant to the 2004 and a 2003 authorization at a total cost of $209.3 million. Share repurchases
affected diluted earnings per share by less than $0.01 in 2006.
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