UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 11-K
ANNUAL REPORT PURSUANT TO SECTION 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 2003
Commission File No.: 001-11421
A. Full title of the plan:
Dollar General Corporation
401(k) Savings and Retirement Plan
B. Name of issuer of securities held pursuant to the plan and the address of
principal executive office:
Dollar General Corporation
100 Mission Ridge
Goodlettsville, Tennessee 37072
AUDITED FINANCIAL STATEMENTS AND SUPPLEMENTAL SCHEDULE
Dollar General Corporation 401(k) Savings and Retirement Plan
As of December 31, 2003 and 2002 and for the year ended December 31, 2003 with
Report of Independent Registered Public Accounting Firm
Dollar General Corporation
401(k) Savings and Retirement Plan
Audited Financial Statements and Supplemental Schedule
As of December 31, 2003 and 2002 and for the year ended December 31, 2003
Contents
Audited Financial Statements
Report of Independent Registered Public Accounting Firm........................1
Statements of Net Assets Available for Benefits................................2
Statement of Changes in Net Assets Available for Benefits......................3
Notes to Financial Statements...............................................4-10
Supplemental Schedule
Schedule of Assets (Held at End of Year)......................................11
Report of Independent Registered Public Accounting Firm
To the Participants and Plan Administrator of
Dollar General Corporation 401(k) Savings and Retirement Plan
We have audited the accompanying statements of net assets available for benefits
of Dollar General Corporation 401(k) Savings and Retirement Plan as of December
31, 2003 and 2002, and the related statement of changes in net assets available
for benefits for the year ended December 31, 2003. These financial statements
are the responsibility of the Plan's management. Our responsibility is to
express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with the standards of the Public Company
Accounting Oversight Board (United States). 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, the financial statements referred to above present fairly, in
all material respects, the net assets available for benefits of the Plan at
December 31, 2003 and 2002, and the changes in its net assets available for
benefits for the year ended December 31, 2003, in conformity with U.S. generally
accepted accounting principles.
Our audits were performed for the purpose of forming an opinion on the financial
statements taken as a whole. The accompanying supplemental schedule of assets
(held at end of year) as of December 31, 2003, is presented for the purpose of
additional analysis and is not a required part of the financial statements but
is supplementary information required by the Department of Labor's Rules and
Regulations for Reporting and Disclosure under the Employee Retirement Income
Security Act of 1974. The supplemental schedule is the responsibility of the
Plan's management. The supplemental schedule has been subjected to the auditing
procedures applied in our audits of the financial statements and, in our
opinion, is fairly stated in all material respects in relation to the financial
statements taken as a whole.
Nashville, Tennessee
June 4, 2004 /s/ Ernst & Young LLP
1
Dollar General Corporation
401(k) Savings and Retirement Plan
Statements of Net Assets Available for Benefits
December 31,
2003 2002
---------------------------------
Assets
Investments, at fair value:
Dollar General Corporation common stock $35,793,491 $22,456,612
Registered investment companies 51,327,673 36,344,226
Participant notes receivable 2,966,526 2,173,613
Real estate limited partnerships 167,185 275,348
---------------------------------
Total investments 90,254,875 61,249,799
---------------------------------
Receivables:
Employer contributions - 5,469,478
Participants' contributions 268,044 421,060
---------------------------------
Total receivables 268,044 5,890,538
Cash - 56,029
---------------------------------
Net assets available for benefits $90,522,919 $67,196,366
=================================
See accompanying notes to the financial statements.
2
Dollar General Corporation
401(k) Savings and Retirement Plan
Statement of Changes in Net Assets Available for Benefits
Year ended December 31, 2003
Additions:
Additions to net assets attributed to:
Investment income:
Interest and Dividends $ 683,001
Net appreciation in fair value of
investments 25,230,716
----------------
25,913,717
Contributions:
Employer 2,484,086
Participant 6,152,712
Rollover 1,760,028
----------------
10,396,826
----------------
Total additions 36,310,543
Deductions:
Deductions from net assets attributed to:
Benefits paid to participants 12,745,556
Administrative expenses 238,434
----------------
Total deductions 12,983,990
----------------
Net increase 23,326,553
Net assets available for benefits:
Beginning of year 67,196,366
----------------
End of year $90,522,919
================
See accompanying notes to the financial statements.
3
Dollar General Corporation
401(k) Savings and Retirement Plan
Notes to Financial Statements
December 31, 2003
1. Description of Plan
The following brief description of the Dollar General Corporation 401(k) Savings
and Retirement Plan (the "Plan") provides only general information. Participants
should refer to the Plan document for a more complete description of the Plan's
provisions.
General
The Plan is a defined contribution plan for all employees of Dollar General
Corporation (the "Employer" or the "Company"). The Plan is subject to the
provisions of the Employee Retirement Income Security Act of 1974, as amended
("ERISA").
Contributions
The Plan allows the participants to make contributions of the participants'
earnings in the form of deferred compensation to a retirement plan before income
taxes are deducted. The contributions are invested, and income earned is not
taxed to the participant until withdrawn from the Plan.
Participants may elect to contribute from 1% to 25% of pre-tax annual eligible
compensation as defined in the Plan, subject to certain limitations under
applicable federal law. Participants may also make rollover contributions to the
Plan. The Employer has the option of matching up to 100% of the first 5% of
eligible compensation contributed by the participants ("Employer Matching
Contribution"). The participant contribution and Employer Matching Contribution
are invested as directed by the participant.
In addition to the Employer Matching Contribution described above, the Employer
may contribute discretionary amounts from time to time ("Profit Sharing
Contribution") as Profit Sharing Contributions. The Profit Sharing Contribution
is invested as directed by the participant. Participants must be employed on the
last day of the Plan year to receive a Profit Sharing Contribution. There was no
Profit Sharing Contribution for the 2003 Plan year. Prior to January 1, 2003,
the Employer also had the option to make contributions to the Plan on behalf of
all participants which shall be treated as Qualified Nonelective Employer
Contributions ("QNEC"). Effective January 1, 2003, the Company elected to
discontinue QNEC contributions to the Plan.
4
Dollar General Corporation
401(k) Savings and Retirement Plan
Notes to Financial Statements (continued)
1. Description of Plan (continued)
Participant Accounts
Each participant's account is credited with the participant's contributions and
withdrawals, as applicable, and allocations of the Employer contributions and
Plan earnings, and is charged with an allocation of administrative expenses.
Allocations are based on participant earnings or account balances, as defined.
The benefit to which a participant is entitled is the benefit that can be
provided from the participant's vested account.
Vesting
Participants who have one hour of service on or after January 1, 2003 are
immediately vested in their contributions and the Employer Matching and Profit
Sharing Contributions plus actual earnings thereon. Participants who do not have
one hour of service on or after January 1, 2003 are subject to the prior vesting
schedule under the Plan. Participants are 100% vested without regard to credited
service in the event of death, disability, or attainment of retirement age.
Participant Loans
Participants in the Plan may borrow from their fund accounts a minimum of $1,000
up to a maximum equal to the lesser of $50,000 or 50% of their vested account
balance. Only one loan may be outstanding at a time. Loans are secured by the
balance in the participant's account and bear interest at a rate commensurate
with local prevailing rates as determined by the Plan Administrator. Loans must
be repaid within 5 years from the date of the loan unless proceeds are used to
acquire the principal residence of the participant borrower. Principal and
interest are paid ratably through weekly or semi-monthly payroll deductions.
Payment of Benefits
On termination of service, a participant may elect to receive a lump-sum amount
equal to the value of the participant's vested interest in his or her account
or, under certain circumstances, may purchase an annuity.
5
Dollar General Corporation
401(k) Savings and Retirement Plan
Notes to Financial Statements (continued)
1. Description of Plan (continued)
Forfeited Accounts
Forfeited balances of terminated participants' nonvested accounts are used to
reduce future contributions of the Company or to pay reasonable Plan expenses.
In 2003, employer contributions were reduced by $1,382,471 and Plan expenses of
$186,483 were paid from forfeited nonvested accounts. The balance of forfeited
nonvested accounts was $364,902 and $571,039 at December 31, 2003 and 2002,
respectively.
Administrative Expenses
Participants pay for the costs charged for originating loans. Fees and expenses
associated with the administrative and recordkeeping services provided by an
external provider are paid by the Plan. The Employer pays all other expenses.
Change in Trustees and Plan Recordkeepers
On November 1, 2003, State Street Bank and Trust Company ("State Street")
replaced Matrix Capital Bank as Trustee of the Plan and CitiStreet LLP replaced
BISYS Retirement Services, L.P. as Plan recordkeeper. As of November 17, 2003,
all assets and records were transferred to State Street and CitiStreet.
Plan Termination
Although it has not expressed any intent to do so, the Employer has the right
under the Plan to discontinue its contributions at any time and to terminate the
Plan subject to the provisions of ERISA. In the event of Plan termination, all
participant accounts will become fully vested and the assets will be distributed
to participants or their beneficiaries.
6
Dollar General Corporation
401(k) Savings and Retirement Plan
Notes to Financial Statements (continued)
2. Summary of Significant Accounting Policies
Basis of Accounting
The financial statements of the Plan are prepared under the accrual method of
accounting.
Use of Estimates
The preparation of financial statements in conformity with U.S. generally
accepted accounting principles requires management to make estimates that affect
the reported amounts in the financial statements and accompanying notes. Actual
results could differ from those estimates.
Investment Valuation and Income Recognition
The Plan's investments are stated at fair value, which generally equals the
quoted market price on the last business day of the Plan year. The shares of
registered investment companies are valued at quoted market prices that
represent the net asset value of shares held by the Plan at year-end. The Dollar
General Corporation common stock is valued at the last reported sales price on
the last business day of the Plan year. Real Estate limited partnership
investments are valued at the appraised values as of the last business day of
the Plan year. The participant loans receivable are valued at their outstanding
balances, which approximate fair value.
Purchases and sales of securities are recorded on a trade date basis. Dividend
income is recorded on the dividend payable date. Interest income is recorded on
the accrual basis.
Payment of Benefits
Benefits are recorded when paid.
7
Dollar General Corporation
401(k) Savings and Retirement Plan
Notes to Financial Statements (continued)
3. Income Tax Status
The Plan has received a determination letter from the Internal Revenue Service
dated March 5, 2002, stating that the Plan is qualified under Section 401(a) of
the Code and therefore, the related trust is exempt from taxation. Subsequent to
this issuance of the determination letter, the Plan was amended. Once qualified,
the Plan is required to operate in conformity with the Code to maintain its
qualification. The Company has indicated that it will take the necessary steps,
if any, to maintain the Plan's qualified status.
4. Investments
During 2003, the Plan's investments (including gains and losses on investments
purchased and sold, as well as held during the year) appreciated (declined) in
fair value as follows:
Year ended
December 31, 2003
-----------------------
Registered investment companies $ 8,310,072
Dollar General Corporation common stock 16,931,835
Real estate limited partnerships (11,191)
-----------------------
$25,230,716
=======================
8
Dollar General Corporation
401(k) Savings and Retirement Plan
Notes to Financial Statements (continued)
4. Investments (continued)
Investments which represent 5% or more of the Plan's net assets available for
benefits are as follows:
December 31,
-------------------------------------------------------------------------------------------------------------------
Identity of Party Involved Description of Assets 2003 2002
-------------------------------------------------------------------------------------------------------------------
Dollar General Corporation Dollar General Corporation common stock $35,793,491 $22,456,612
The American Funds Group Washington Mutual Investors Fund 10,144,177 7,037,951
INVESCO Institutional Invesco Stable Value Trust 12,484,808 -
PIMCO Funds PIMCO Total Return Fund 4,754,651 -
Dodge & Cox Funds Dodge & Cox Balanced Fund 18,056,186 -
The American Funds Group The Income Fund of America - 14,275,848
The American Funds Group The Cash Management Trust of America - 4,351,489
5. Transactions with Parties-in-Interest
Transactions with parties-in-interest include purchases and sales of assets
through Matrix Capital Bank from January 1 through October 31, 2003 and through
State Street Bank and Trust from November 1 through December 31, 2003. For the
periods indicated, Matrix Capital Bank and State Street Bank and Trust also
served as the depositor for the Plan's assets.
Additional parties-in-interest transactions include contributions by the
Employer and the Plan's investment in Company stock including reinvestment of
dividends paid from the Company stock.
6. Commitments and Contingencies
As previously disclosed in the Plan's Form 11-K for the year ended December 31,
2001 filed with the Securities and Exchange Commission on July 3, 2002 (the
"2001 Form 11-K"), the Company restated its audited financial statements for
fiscal years 1999 and 1998, and certain unaudited financial information for
fiscal year 2000 (the "Restatement") by
9
Dollar General Corporation
401(k) Savings and Retirement Plan
Notes to Financial Statements (continued)
6. Commitments and Contingencies (continued)
means of its Form 10-K for the fiscal year ended February 2, 2001, which was
filed on January 14, 2002. Also as described more fully in the 2001 Form 11-K,
the Company settled the consolidated Restatement-related class action lawsuit
filed in the United States District Court for the Middle District of Tennessee
on behalf of a class of persons who purchased or otherwise made an investment
decision regarding the Company's securities and related derivative securities
between March 5, 1997 and January 14, 2002. The $162 million settlement was
approved by the court on May 24, 2002 and was paid by the Company in the first
half of its fiscal year ended January 31, 2003.
As a member of the plaintiff class, the Plan expects that this agreement will
result in a net payment to the Plan after attorneys' fees of approximately $1.4
million, which has not been reflected in the Plan's financial statements.
7. Risks and Uncertainties
The Plan invests in various investment securities including Dollar General
Corporation common stock, which comprises 40% and 37% of total investments at
December 31, 2003 and 2002, respectively. Investment securities are exposed to
various risks such as interest rate, market and credit risks. Due to the level
of risk associated with certain investment securities, it is at least reasonably
possible that changes in the values of investment securities will occur in the
near term and that such changes could materially affect participants' account
balances and the amounts reported in the statements of net assets available for
benefits.
10
Supplemental Schedule
Dollar General Corporation
401(k) Savings and Retirement Plan
EIN: 61-0502302 Plan: 002
Schedule of Assets (Held at End of Year)
Schedule H, Line 4i
Year Ended December 31, 2003
(c) Description of Investment
including Maturity Date, Rate of
(b) Identity of Issue, Borrower, Interest, Collateral, Par
(a) Lessor, or Similar Party or Maturity Value (e) Current Value
-----------------------------------------------------------------------------------------------------------------------
* Dollar General Corporation Dollar General Corporation common stock $35,793,491
* State Street Bank & Trust State Street Short Term Investment Fund 1,580,075
Dodge & Cox Dodge & Cox Balanced Fund 18,056,186
The American Funds Group Washington Mutual Investors Fund 10,144,177
Invesco Invesco Stable Value Trust 12,484,808
PIMCO PIMCO Total Return Fund 4,754,651
Ariel Ariel Appreciation Fund 303,270
T. Rowe Price T. Rowe Price Small-Cap Stock Fund 318,490
Artisan Artisan International Fund 118,956
The American Funds Group The Growth Fund of America 3,567,060
* Participant notes receivable Interest rate ranging from 4% to 9.5% 2,966,526
Real estate limited partnerships:
Interchange City Associates, Ltd. 15.5 units 157,325
Realty FD 85-1 200 units 9,860
------------------------------
$90,254,875
==============================
* Party-in-interest
Column (d) has not been presented as this information
is not applicable.
11
SIGNATURES
The Plan. Pursuant to the requirements of the Securities Exchange Act of
1934, the Administrator of the Dollar General Corporation 401(k) Savings and
Retirement Plan has duly caused this Annual Report to be signed on its behalf by
the undersigned hereunto duly authorized.
Date: June 28, 2004 DOLLAR GENERAL CORPORATION
-------------
By: /s/ Jeffrey R. Rice
-----------------------------------------------
Name: Jeffrey R. Rice
Title: Vice President, Human Resources
EXHIBIT INDEX
Exhibit No. Description
--------------------------------------------------------------------------------
23 Consent of Independent Registered Public Accounting Firm