Amended Current Report
TENNESSEE 001-11421 61-0502302
(State or other jurisdiction (Commission File (IRS Employer
of incorporation) Number) Identification No.)
The undersigned registrant hereby amends Item 4 and Item 7 of its Current Report on Form 8-K filed with the Securities and Exchange Commission on September 21, 2001 as follows:
Change in Independent Accountant
On September 14, 2001, Dollar General Corporation (the "Company")
dismissed Deloitte & Touche LLP ("Deloitte") as its independent accountant. The
Company's decision was approved by both the Audit Committee of the Board of
Directors and by the Company's Board of Directors. Deloitte's reports on the
Company's financial statements for fiscal years 1998 and 1999 contained no
adverse opinion or disclaimer of opinion, and were not qualified or modified as
to uncertainty, audit scope, or accounting principles. Deloitte has not issued
an audit report on any of the Company's financial statements since January 28,
2000, the Company's 1999 fiscal year end.
Also on September 14, the Company retained the services of
PricewaterhouseCoopers LLP ("PricewaterhouseCoopers") as its new independent
accountant to audit the Company's financial statements. The retention of
PricewaterhouseCoopers was recommended by the Audit Committee and approved, by
resolution, by the Board. PricewaterhouseCoopers orally consented to serve as
the Company's independent accountant.
On September 20, 2001, prior to the Company's announcement of its
retention of PricewaterhouseCoopers in a Form 8-K, PricewaterhouseCoopers
resigned as the Company's independent accountant because of an irreconcilable
conflict of interest that was previously unknown to the PricewaterhouseCoopers
representatives associated with the Dollar General engagement.
Neither the Audit Committee nor the Company's Board of Directors
have been provided information relating to the nature of PricewaterhouseCoopers'
conflict. As a result, the Audit Committee and the Board are not in a position
to recommend or to approve or disapprove of PricewaterhouseCoopers' resignation.
PricewaterhouseCoopers has never issued any opinion on the
Company's financial statements.
Disagreement with Prior Independent Accountant -- Deloitte
During the Company's two most recent fiscal years and through the
date of this report, there were no disagreements with Deloitte on any matter of
accounting principles or practices, financial statement disclosure, or auditing
scope or procedure, which disagreements if not resolved to the satisfaction of
Deloitte would have caused it to make reference to the subject matter of the
disagreement in its report on the Company's financial statements, provided
however:
In the course of preparing to restate its financial statements
for fiscal years 1998 and 1999, as well as revising the previously released
unaudited financial information for fiscal year 2000 (collectively, the
"Restatements"), the Company has more closely examined its previous accounting
practices with regard to certain synthetic lease facilities entered into in 1997
and 1999 with respect to its use and occupancy of certain real property,
including approximately 400 stores, two of the Company's distribution centers
and the Company's corporate headquarters in Goodlettsville, Tennessee (the
"Synthetic Leases"). After review and consultations with outside accountants
from KPMG LLP, the Company has determined that its previous treatment of the
Synthetic Leases as operating leases for accounting purposes was in error. The
Company intends to restate its financial statements to treat these leases as
capital leases. The Company and representatives from KPMG LLP, as well as the
Audit Committee of the Board of Directors, through its representatives, have
discussed the subject of the accounting treatment for Synthetic Leases with
Deloitte. At the time of its termination, Deloitte had expressed the view that
it had not been provided sufficient information by the Company to conclude that
the Company's previous treatment of Synthetic Leases as operating leases was in
error.
Disagreement with Prior Independent Accountant -- PricewaterhouseCoopers
During the Company's two most recent fiscal years and through the
date of this report, there were no disagreements with PricewaterhouseCoopers on
any matter of accounting principles or practices, financial statement
disclosure, or auditing scope or procedure, which disagreements if not resolved
to the satisfaction of PricewaterhouseCoopers would have caused it to make
reference to the subject matter of the disagreement in its report on the
Company's financial statements.
During the Company's two most recent fiscal years and through the
date of this report, there were no "reportable events," by Deloitte, as that
term is defined in Item 304(a)(1)(v) of Regulation S-K, provided however:
As previously disclosed, the Company and the Audit Committee of
the Board of Directors are reviewing certain accounting issues that will cause
the Company to restate its financial statements. Following a report from the
Company to Deloitte in April 2001 on its discovery of these issues, Deloitte
gave the Company notice as provided under Section 10A of the Securities Exchange
Act of 1934 (the "Exchange Act") that such issues may have included "illegal
acts" as that term is defined in the Exchange Act. The Audit Committee of the
Board of Directors is continuing its investigation of these matters, assisted by
its outside counsel, Dechert Price & Rhoads, and the independent accounting firm
Arthur Andersen LLP, in order to assure that the Audit Committee is adequately
informed with respect to the issues raised by the Restatements. On the Audit
Committee's recommendation and with the Board of Directors' approval, the
Company has implemented certain appropriate interim remedial actions in response
to the matters included in the Audit Committee's review.
In connection with these events, Deloitte has informed the
Company that information has come to its attention that, if further
investigated, (i) may materially impact the fairness or reliability of its
previously issued audit reports and the underlying financial statements as well
as the financial statements to be issued for the Company's 2000 fiscal year;
Other Reportable Events - PricewaterhouseCoopers
During the Company's two most recent fiscal years and through the
date of this report, there were no "reportable events," by
PricewaterhouseCoopers, as that term is defined in Item 304(a)(1)(v) of
Regulation S-K.
Authorization to Respond to Successor Independent Accountant
The Company has authorized Deloitte and PricewaterhouseCoopers to
respond fully to the inquiries of Ernst & Young concerning these issues.
Consultations with Independent Accountant -- PricewaterhouseCoopers
Prior to its retention as the Company's independent accountant,
PricewaterhouseCoopers was engaged as accounting consultants by counsel for the
Company advising a special committee of the Board of Directors with respect to
certain shareholder derivative lawsuits currently pending against the Company
and several current and former members of its Board of Directors and management.
In connection
In addition, in connection with its work relating to the
shareholder derivative litigation, counsel directed PricewaterhouseCoopers to
consult with Company personnel on the application of the accounting standards to
the valuation of certain deferred state income tax liabilities.
Other than with respect to the two preceding matters, the Company
has not consulted with PricewaterhouseCoopers regarding either (i) the
application of accounting principles to a specified transaction, either
completed or proposed; or the type of audit opinion that might be rendered on
the Company's financial statements, and either a written report was provided to
the Company or oral advice was provided that PricewaterhouseCoopers concluded
was an important factor considered by the Company in reaching a decision as to
the accounting, auditing or financial reporting issue, or (ii) any matter that
was either the subject of a disagreement, as that term is defined in Item
PricewaterhouseCoopers was not requested to and did not perform
an engagement under Statement on Auditing Standards No. 50 with respect to
either consultation.
Consultations with Independent Accountant - Ernst & Young
During the two most recent fiscal years the Company consulted
with Ernst & Young on various tax related matters which, the Company has been
advised by Ernst & Young, did not involve matters that are the subject of Item
The Company has provided Deloitte and PricewaterhouseCoopers, as
the Company's former independent accountants, with a copy of the disclosures set
forth above regarding Deloitte and PricewaterhouseCoopers, which disclosures
were originally reported by the Company on Form 8-K on September 21, 2001. On
October 4, 2001, the Company received from Deloitte a letter, addressed to the
Securities and Exchange Commission and dated October 3, 2001, which letter is
filed as Exhibit 16.1 to this Form 8-K. On October 5, 2001, the Company received
from PricewaterhouseCoopers a letter, addressed to the Securities and Exchange
Commission and dated October 5, 2001, which letter is filed as Exhibit 16.2 to
this Form 8-K.
(c) Exhibits
16.1 Letter of Deloitte & Touche LLP, dated October 3, 2001.
16.2 Letter of PricewaterhouseCoopers LLP, dated October 5, 2001.
Pursuant to the requirements of the Securities Exchange Act of
1934, the Registrant has duly caused this report to be signed on its behalf by
the undersigned hereunto duly authorized.
Dated: October 9, 2001 DOLLAR GENERAL CORPORATION
PricewaterhouseCoopers has advised the Company that its resignation was not
related in any respect to the matters on which the Company consulted with
PricewaterhouseCoopers prior to its engagement to serve as the Company's
independent accountant, or any matter respecting the Company that came to its
attention subsequent to its retention.
On September 21, 2001, Ernst & Young LLP ("Ernst & Young")
advised the Company that it was prepared to serve as the Company's independent
accountant, subject to the completion of certain acceptance procedures which it
expected to successfully conclude. On October 5, 2001, the Company retained
Ernst & Young as the Company's independent accountants. The retention of Ernst &
Young was recommended by the Audit Committee and approved by the Board of
Directors of the Company.
Other Reportable Events -- Deloitte
(ii) may cause it to be unwilling to rely on the representations of certain
members of management; and (iii) due to Deloitte's dismissal, it will be unable
to conduct such further investigation or resolve these issues to its
satisfaction.
with this engagement, counsel directed PricewaterhouseCoopers to consult with
Company personnel regarding the appropriate accounting treatment for the
Synthetic Leases. PricewaterhouseCoopers has in oral communications provided the
special committee a preliminary view, based on information made available to it
by the Company, that the Synthetic Leases should be treated as capital leases
for accounting purposes. The Company's consultation with Deloitte on the subject
of the accounting treatment for Synthetic Leases and Deloitte's views thereon
are discussed above under the caption "Disagreement with Prior Independent
Accountant."
PricewaterhouseCoopers, in oral communications, gave the special committee its
preliminary views that the applicable accounting standards require the Company
to determine deferred income tax liabilities using differentiated rates as
opposed to a consolidated tax rate. After review and consultations with KPMG LLP
and taking into account the oral observations received from
PricewaterhouseCoopers, the Company intends to restate its financial statements
accordingly. The Company did not consult with Deloitte on this subject.
304(a)(1)(iv) of Regulation S-K and the related instructions to Item 304 of
Regulation S-K, or a reportable event, as that term is defined in Item
304(a)(1)(v) of Regulation S-K.
304(a)(2)(i) or (ii) of Regulation S-K.
Review of Disclosure by Former Accountants
By: /s/ James J. Hagan
--------------------
Name: James J. Hagan
Title: Chief Financial Officer
EXHIBIT NUMBER DESCRIPTION
-------------- -----------
16.1 Letter of Deloitte & Touche LLP, dated October 4, 2001.
16.2 Letter of PricewaterhouseCoopers LLP, dated October 5, 2001.
October 3, 2001
Securities and Exchange Commission
Mail Stop 11-3
450 Fifth Street, N.W.
Washington, D.C. 20549
Dear Sirs/Madam
We have read the statements in Item 4 of Form 8-K of Dollar General Corporation (the "Company") dated September 21, 2001 and have the following comments:
"Change in Independent Accountant"
o We agree with the statements made in the first, third, and fourth sentences
of the first paragraph of this section. We have no basis on which to agree
or disagree with the statements made in the second sentence of the first
paragraph of this section.
o We have no basis on which to agree or disagree with the statements made in
the second, third, fourth, fifth and sixth paragraphs of this section.
"Disagreement with Prior Independent Accountant - Deloitte"
o We agree with the statements made in the first paragraph of this section
that there were no disagreements, except for the matter discussed in the
second paragraph of this section.
o We have no basis on which to agree or disagree with the statements made in
the first, second and third sentences of the second paragraph of this
section.
o We agree with the statement made in the fourth sentence of the second
paragraph of this section that the Company and representatives from KPMG
LLP discussed the subject of the accounting treatment for synthetic leases
with Deloitte & Touche. Deloitte & Touche did not discuss the subject of
the accounting treatment for synthetic leases with the Audit Committee of
the Board of Directors ("The Audit Committee").
o We disagree with the statement made in the fifth sentence of the second paragraph that at the time of its termination Deloitte & Touche had expressed the view that it had not been provided sufficient information by the Company to conclude that the "Company's" previous treatment of Synthetic Leases as operating leases was in error. Prior to its
dismissal as independent auditors, Deloitte & Touche had advised the Company that it disagreed with the Company's tentative conclusion that the accounting treatment for the leases should be revised; and, at the time that the Company notified Deloitte & Touche that it was being dismissed as independent auditors was advised that the reason it was being dismissed was because it disagreed with the Company's conclusion concerning the accounting for the leases.
Prior to its termination as independent auditors, management or the Company advised Deloitte & Touche that the Company and its accounting consultants, KPMG LLP, were reviewing the accounting treatment that had been historically afforded to synthetic leases entered into in 1997 and 1999. Deloitte & Touche advised management of the Company that it believed that under applicable professional standards, KPMG, LLP was required to discuss the underlying facts with Deloitte & Touche before reaching a conclusion concerning the accounting treatment, and suggested a meeting among Deloitte & Touche, KPMG LLP and the Company to discuss any questions or concerns that had been identified with respect to the accounting treatment. On August 24, 2001 Deloitte & Touche, met with representatives of KPMG LLP and the Company and discussed the accounting for these leases. The accounting for these leases was discussed further among representatives of KPMG LLP and Deloitte & Touche's respective national office consultation groups and a representative of the Company on September 12 and 13, 2001. During these discussions, the Company and KPMG LLP made Deloitte & Touche aware of the questions and concerns that had been identified during the course of their review of the accounting for the leases and advised Deloitte & Touche that the Company had tentatively concluded that the accounting treatment that had been afforded to the leases should be revised. Deloitte & Touche informed the Company and KPMG LLP about its understanding of the underlying facts and assumptions on which the original accounting treatment had been based. Deloitte & Touche also described the representations that had been provided to Deloitte & Touche by management at the time the transactions had been entered into and the factors that Deloitte & Touche considered in its assessment of the Company's accounting for the leases. The questions and concerns that the Company and KPMG LLP discussed with Deloitte & Touche about the accounting for the leases related to questions about the available evidence as to the assumptions and judgments made by management at the time the transactions had been entered into, taking into consideration subsequent changes in the Company's plans and activities using the benefit of hindsight, as opposed to any oversight or misuse of facts that existed at the inception of the leases. Neither during those discussions, nor at any other time, was Deloitte & Touche provided with any information that caused it to believe that the original accounting treatment was inappropriate based on the assumptions and judgments made by management at the inception of the leases. Deloitte & Touche advised the Company that it did not believe that using subsequent changes in the Company's plans or activities, or applying hindsight, was appropriate, and that it disagreed with the Company's tentative conclusion that the accounting treatment for the leases should be revised. On September 14, 2001, the Company notified Deloitte & Touche that it had concluded that the synthetic leases entered into by the Company during fiscal years 1997 and 1999, which had been originally recorded by management as operating leases, should have been recorded as capital leases. The Company also advised
Deloitte & Touche that it intended to restate its financial statements to reflect the revised accounting treatment.
"Disagreement with Prior Independent Accountant - PricewaterhouseCoopers"
o We have no basis on which to agree or disagree with the statements made in this section.
"Other Reportable Events - Deloitte"
o We agree with the statement made in the first paragraph of this section
that there were no "reportable events" except for the matter discussed
in the second and third paragraphs of this section.
o We agree with the statements made in the second sentence of the second
paragraph of this section. We have no basis on which to agree or
disagree with the statements made in the first, third and fourth
sentences of the second paragraph of this section.
o We agree with the statements made in section (i) and (ii) of the third paragraph of this section We disagree with the statement made in section (iii) of the third paragraph of this section that we specifically informed the Company that due to Deloitte & Touche's dismissal, it will be unable to conduct such further investigation or resolve these issues to its satisfaction; however, as stated below, we agree that as of the date of our dismissal we had not been able to resolve these issues to our satisfaction.
On April 23, 2001, the Audit Committee notified Deloitte & Touche that the Company had engaged counsel to conduct an investigation into possible fraudulent activities and accounting irregularities by Company personnel. Beginning on April 23, 2001, Deloitte & Touche participated in several meetings with Company management in which management informed Deloitte & Touche that they had identified potential accounting irregularities in a number of different areas and that they believed that there were significant efforts on the part of Company personnel to withhold information and mislead Deloitte & Touche during the performance of past audits. Deloitte & Touche met with management and the Audit Committee to discuss the alleged fraud and accounting irregularities and requested that the Audit Committee conduct an independent investigation, using outside counsel, and informed the Audit Committee that, upon completion of the investigation, Deloitte & Touche would assess the sufficiency of the scope and procedures of the investigation; the findings and conclusions, including the identification and quantification of the misstatements; any remedial actions taken or to be taken by the Company; and determine whether Deloitte & Touche would be willing or able to continue as the Company's independent auditors and whether the implications of the findings would negatively affect its ability to rely on the representations of management. Deloitte & Touche also informed the Audit Committee that Deloitte & Touche would not issue a report on the Company's financial statements for the fiscal year ended February 2, 2001 or be associated with the release of any financial results until the Company completed its investigation and Deloitte & Touche was satisfied with the resolution of the matter.
As of the date of its dismissal on September 14, 2001 Deloitte & Touche had not been apprised of the results of the investigation, and was therefore unable to conclude
whether the findings could materially impact the fairness or reliability of its previously issued audit reports; whether the Company's previously issued financial statements require revision; or whether the findings would cause it to be unwilling to rely on management's representations or to be associated with the financial statements prepared by management.
"Other Reportable Events - PricewaterhouseCoopers"
o We have no basis on which to agree or disagree with the statements made in this section.
"Authorization to Respond to Successor Independent Accountants"
o We agree with the statements made in this section insofar as they relate to Deloitte & Touche
"Consultations with Independent Accountant - PricewaterhouseCoopers"
o We have no basis on which to agree or disagree with the statements made
in the first paragraph of this section.
o We agree with the statement made in the last sentence of the second
paragraph of this section. We have no basis on which to agree or
disagree with the statements made in the first, second, and third
sentences of the second paragraph of this section.
o We have no basis on which to agree or disagree with the statements made
in the third paragraph of this section.
o We have no basis on which to agree or disagree with the statements made
in the fourth paragraph of this section. The Company did not advise
Deloitte & Touche of the Company's consultation with
PricewaterhouseCoopers and PricewaterhouseCoopers did not discuss
either of the matters described in the first and second paragraphs of
this section with Deloitte & Touche.
"Consultations with Independent Accountant - Ernst & Young"
o We have no basis on which to agree or disagree with the statements made in this section.
"Review of Disclosure by Former and Newly Engaged Accountants"
o We agree with the statements made in the first paragraph of this
section insofar as they relate to Deloitte & Touche.
o We have no basis on which to agree or disagree with the statements made
in the second paragraph of this section.
Yours truly,
/s/ Deloitte & Touche LLP ------------------------- Deloitte & Touche LLP |
October 5, 2001
Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, D.C. 20549
Commissioners:
We have read the statements made by Dollar General Corporation filed with the Commission, pursuant to Item 4 of Form 8-K, as part of the Company's Form 8-K report dated September 21, 2001. We agree with the statements concerning our Firm in such Form 8-K.
Very truly yours,
/s/ PricewaterhouseCoopers LLP ------------------------------ PricewaterhouseCoopers LLP |
End of Filing
