VideoDollar General Corp. warned that it will restate its financial results for the past three years due to accounting irregularities.
The discount retailer also said it will delay reporting first quarter fiscal 2001 earnings from the previously announced release date of Monday, May 14, 2001. It also expects to reschedule its annual meeting from June 4 to a date yet to be determined and delay filing its 10-K.
In a press release, the company said that it "has become aware of certain accounting irregularities, and the audit committee of the Company's board of directors is conducting an investigation of these irregularities. The audit committee has engaged the law firm of Dechert Price & Rhoads to assist with its investigation, and Dechert Price & Rhoads, on behalf of the audit committee, has retained the independent accounting firm Arthur Andersen, LLP."
Dollar General said that the company and the audit committee are reviewing allegations of fraudulent behavior in connection with certain of the accounting irregularities and are reviewing the company's internal accounting controls and financial reporting processes.
Due to this investigation, management expects to reduce earnings of approximately 7 cents per share over the three-year period.
The company had reported that it earned 62 cents for share for the fiscal year ended Feb. 2, 2001. In the two prior years combined, it netted $1.19 per share.
"Specifically, management's preliminary investigation reflects the possibility of a material adverse effect on the previously announced earnings for fiscal 1998 and 1999 and a minor positive effect on the previously reported results for fiscal 2000," according to the press release. "Management further cautions that the final restatements as audited could result in an increase or decrease in the aggregate earnings effect and a further shifting of results among the specified years within the three-year period."
In the release, Dollar General Chairman and CEO Cal Turner, Jr., said, ``This action is unprecedented in the history of our Company and is certainly regrettable. I am confident that our investigation of these matters will result in a thorough review of our previously released financial statements for each period and will also establish the leadership and processes that will prevent these accounting irregularities from recurring.
``The anticipated restatements are not expected to have a material effect on the future earnings of the Company," he continued. "In fact, our performance during the first quarter of the year reinforces our belief that our strategy has exceptional potential for growth. We remain confident about our prospects and we continue to have an expectation that earnings, excluding non-recurring costs that may be incurred with any restatement, will be between $0.71 and $0.73 per share for the full year.''
IPO News
- Let's not get too excited. But, Reliant Resources Inc., which is being spun off from Reliant Energy Inc., raised the estimated price for its planned offering of 52 million shares, to $28 to $30 a share from $26 to $28 a share. Goldman Sachs & Co., CS First Boston Inc., ABN AMRO, Rothschild LLC, Banc of America Securities LLC, Deutsche Banc Alex. Brown, Merrill Lynch & Co. and UBS Warburg LLC were listed as underwriters for the offering.
- But, back to reality. Tellium Inc., which makes and sells optical switching solutions to network service providers, increased its expected offering price from $8-$10 to $13-$15. However, it halved the number of shares it plans to offer from 15 million to 7.5 million. So, the net result is that it will wind up raising less money than it had planned.
In fact, on March 7, the company decreased its price from $13-$15 to $8- $10 and cut its number of shares from 17.5 million to 15 million. That day, it also removed JP Morgan Securities Inc. as an underwriter and added UBS Warburg LLC. Back in November, it had hoped to offer 17.5 million shares at between $13 and $15 a pop.
- Wright Medical Group Inc., a global orthopedic device company specializing in the design, manufacture and marketing of reconstructive joint devices and bio-orthopedic materials, filed to go public.
The Running of the Bulls at Merrill's Annual Meeting
A bull seemed to wreak havoc at the Merrill Lynch & Co. annual meeting on Friday.
However, it was actually a number of women who in 1997 filed a class- action lawsuit against the brokerage charging it with discriminatory practices. According to wire service reports, they dominated the meeting, peppering the company with questions and complaints about the firm's efforts to improve the work environment for women.
The suit alleges that Merrill created a hostile work environment through unequal pay and promotion.
Merrill chairman and chief executive David Komansky said that about half the claims have been settled, according to published accounts of the meeting. The company said in a statement that it has made offers to resolve more than 80 percent of the claims.
Stanley O'Neal, head of the firm's U.S. brokerage unit contended Merrill has developed a good working environment for all groups. ``The most important thing today ... is the attitude and culture'' of Merrill's offices and branches, said O'Neal, according to Reuters. But, he added, ``It's a journey, not a destination."
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