1
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
(Mark One)
[X] Annual report pursuant to Section 15(d) of the Securities Exchange
Act of 1934 (No fee required, effective October 7, 1996)
FOR THE FISCAL YEAR ENDED DECEMBER 31, 1999
OR
[ ] Transition report pursuant to Section 15(d) of the Securities
Exchange Act of 1934 (No fee required)
Commission File Number 0-12497
------------------------------
A. Full title of the plan and the address of the plan, if different from
that of the issuer named below:
DAIRY MART CONVENIENCE STORES, INC.
401(K) SAVINGS AND PROFIT SHARING PLAN
B. Name of issuer of the securities held pursuant to the plan and the
address of its principal executive office:
DAIRY MART CONVENIENCE STORES, INC.
ONE DAIRY MART WAY, 300 EXECUTIVE PARKWAY WEST, HUDSON, OHIO 44236
2
DAIRY MART CONVENIENCE STORES, INC.
401(K) SAVINGS AND PROFIT SHARING PLAN
Financial Statements
As of December 31, 1999 and 1998
Together with Report of Independent Public Accountants
3
DAIRY MART CONVENIENCE STORES, INC.
401(K) SAVINGS AND PROFIT SHARING PLAN
Index to Financial Statements
December 31, 1999 and 1998
Report of Independent Public Accountants
Financial Statements:
Statements of Net Assets Available for Benefits as of December 31, 1999 and
1998
Statement of Changes in Net Assets Available for Benefits for the Year
Ended December 31, 1999
Notes to Financial Statements and Schedules
Schedules:
Schedule I--Item 4i - Schedule of Assets Held for Investment Purposes as of
December 31, 1999
Schedule II--Item 4j - Schedule of Reportable Transactions for the Year
Ended December 31, 1999
4
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Plan Administrators of
Dairy Mart Convenience Stores, Inc.
401(k) Savings and Profit Sharing Plan:
We have audited the accompanying statements of net assets available for benefits
of the Dairy Mart Convenience Stores, Inc. 401(k) Savings and Profit Sharing
Plan (the Plan) as of December 31, 1999 and 1998, and the related statement of
changes in net assets available for benefits for the year ended December 31,
1999. These financial statements and schedules, as listed in the accompanying
index, are the responsibility of the Plan's management. Our responsibility is to
express an opinion on these financial statements and schedules based on our
audits.
We conducted our audits in accordance with auditing standards generally accepted
in the 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 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 as of
December 31, 1999 and 1998, and the changes in its net assets available for
benefits for the year ended December 31, 1999, in conformity with accounting
principles generally accepted in the United States.
Our audit was made for the purpose of forming an opinion on the basic financial
statements taken as a whole. The supplemental schedules of assets held for
investment purposes and schedule of reportable transactions are presented for
purposes of additional analysis and are not a required part of the basic
financial statements but are 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 schedules
have been subjected to the auditing procedures applied in the audit of the basic
financial statements and, in our opinion, are fairly stated in all material
respects in relation to the basic financial statements taken as a whole.
/s/ Arthur Andersen LLP
Cleveland, Ohio,
June 27, 2000.
5
DAIRY MART CONVENIENCE STORES, INC.
401(K) SAVINGS AND PROFIT SHARING PLAN
Statements of Net Assets Available for Benefits
as of December 31, 1999 and 1998
1999 1998
--------------- --------------
ASSETS:
Cash $ 20,128 $ 9,603
Investments, at market value:
Participant directed 5,009,658 4,042,869
Non-participant directed 2,015,425 2,069,255
--------------- --------------
Total investments 7,025,083 6,112,124
Receivables:
Employee contributions 40,821 39,657
Employer contributions 13,894 15,217
--------------- --------------
Total receivables 54,715 54,874
--------------- --------------
Total assets 7,099,926 6,176,601
--------------- --------------
LIABILITIES:
Accrued expenses 76,682 3,825
Other liabilities 74,714 48,579
--------------- --------------
Total liabilities 151,396 52,404
--------------- --------------
NET ASSETS AVAILABLE FOR BENEFITS $6,948,530 $6,124,197
=============== ==============
The accompanying notes to financial statements are an integral part of
these statements.
6
DAIRY MART CONVENIENCE STORES, INC.
401(K) SAVINGS AND PROFIT SHARING PLAN
Statement of Changes in Net Assets Available for Benefits
for the Year Ended December 31, 1999
ADDITIONS:
Employee contributions $892,863
Employer contributions 292,605
Income on investments 208,582
Net appreciation in fair value of investments 448,378
---------------
Total additions 1,842,428
---------------
DEDUCTIONS:
Benefits paid directly to participants 920,155
Administrative expenses 97,940
---------------
Total deductions 1,018,095
---------------
INCREASE IN NET ASSETS AVAILABLE FOR BENEFITS 824,333
NET ASSETS AVAILABLE FOR BENEFITS, beginning of year 6,124,197
---------------
NET ASSETS AVAILABLE FOR BENEFITS, end of year $6,948,530
===============
The accompanying notes to financial statements are an integral part of
this statement.
7
DAIRY MART CONVENIENCE STORES, INC.
401(K) SAVINGS AND PROFIT SHARING PLAN
Notes to Financial Statements and Schedules
December 31, 1999 and 1998
1. PLAN DESCRIPTION:
The following description of the Dairy Mart Convenience Stores, Inc. 401(k)
Savings and Profit Sharing Plan (the Plan) provides only general information.
Participants should refer to the Plan agreement for a more complete description
of the Plan's provisions.
General
- -------
The Plan, formally known as the Dairy Mart Convenience Stores, Inc. Cash or
Deferred Profit Sharing Plan, is a defined contribution plan covering eligible
employees of Dairy Mart Convenience Stores, Inc. and its wholly-owned
subsidiaries (the Company) and is subject to the provisions of the Employee
Retirement Income Security Act of 1974 (ERISA). Effective July 1, 1998, the
Plan was amended and restated to provide for new investment options and
greater employer matching contributions. The Plan is available to employees
who have completed at least six months of continuous service during which they
are credited with 500 hours of service.
Contributions
- -------------
Eligible employees may make participant directed contributions to the 401(k)
portion of the Plan up to 15% of their annual compensation subject to certain
limitations under the Internal Revenue Code. The Company will match 50% of such
contributions up to 6% of the employee's annual compensation. In addition, the
Plan permits rollover contributions from another qualified plan on behalf of an
eligible employee.
Under the provisions of the Plan, each plan year the Company may contribute an
additional profit sharing amount as determined by the Company's Board of
Directors. Contributions to participants' accounts are based on the percentage
of each participant's eligible compensation to total compensation, as defined.
The Company did not make any discretionary contributions during 1999 or 1998.
8
DAIRY MART CONVENIENCE STORES, INC.
401(K) SAVINGS AND PROFIT SHARING PLAN
Notes to Financial Statements and Schedules
December 31, 1999 and 1998
Vesting
- -------
Participants are immediately vested in their voluntary contributions and
earnings thereon. Participants vest in Company contributions and earnings
thereon as follows:
Number of Years of Service Percentage
----------------------------------------- ----------
Less than 1 year 0%
At least 1, but less than 2 years 20%
At least 2, but less than 3 years 40%
At least 3, but less than 4 years 60%
At least 4, but less than 5 years 80%
At least 5 years 100%
Participants also become fully vested in their share of the Company's
contribution upon retirement at or after age 65 or death.
Benefit Payments
- ----------------
Upon termination of service, a participant may elect to receive either a
lump-sum amount or an installment payment equal to the vested portion of his or
her account, as defined by the Plan.
Prior to termination of employment or age 59-1/2, contributions may only be
withdrawn in the event of financial hardship, as defined by the Internal Revenue
Code.
Participant Loans
- -----------------
Participants may borrow against their vested balances pursuant to the loan
provision of the Plan. The maximum loan amount available to participants is
fifty percent of their vested account balance not to exceed $50,000. The maximum
term of a loan is five years. Participant loans are repaid through payroll
deductions with interest charged at the prime rate. During 1999, interest rates
ranged from 7.75% to 8.50%.
Administration Fees
- -------------------
Administration expenses of the Plan are paid by the Plan.
Forfeitures
- -----------
Forfeitures are created when non-fully vested participants terminate from
employment. Profit sharing forfeitures are used to offset Plan administrative
expenses and forfeitures of matching contributions are used to reduce the
Company's matching contribution on and after the date of such forfeiture.
9
DAIRY MART CONVENIENCE STORES, INC.
401(K) SAVINGS AND PROFIT SHARING PLAN
Notes to Financial Statements and Schedules
December 31, 1999 and 1998
Plan termination
- ----------------
Although it has not expressed any intent to do so, the Company 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 termination of the
Plan, participants become 100% vested in all contributions and earnings thereon.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
The financial statements of the Plan are prepared on the accrual basis of
accounting in accordance with accounting principles generally accepted in the
United States. Investments are reported at market value.
Use of Estimates in the Preparation of Financial Statements
- -----------------------------------------------------------
The preparation of financial statements in conformity with accounting principles
generally accepted in the United States and the Department of Labor Rules and
Regulations for Reporting and Disclosure under ERISA requires management of
the Plan to make estimates and assumptions that affect the reported amounts of
assets and liabilities at the date of the financial statements and the reported
amounts of income and expense during the reporting period. Actual results could
differ from those estimates.
3. INVESTMENTS:
Contributions made to the Plan by participants and the Company matching
contributions are invested as directed by the participants. Participants may
direct their contributions to the following investment options: Chicago Trust
Safety of Principle Fund, Bond Fund of America, Putnam Voyager Fund, GAM
International Fund, Oppenheimer Quest Opportunity Value Fund, MFS Massachusetts
Investors Fund, Montag and Caldwell Growth Fund and Dairy Mart Stock Fund.
10
DAIRY MART CONVENIENCE STORES, INC.
401(K) SAVINGS AND PROFIT SHARING PLAN
Notes to Financial Statements and Schedules
December 31, 1999 and 1998
Certain non-participant directed contributions are invested in the Chicago Trust
Balanced Fund and Dairy Mart Convenience Stores, Inc. Common Stock. Information
about the net assets and the significant components of the changes in net assets
relating to the non-participant directed investments are as follows:
December 31,
-------------------------------
1999 1998
--------------- --------------
NET ASSETS:
Mutual funds $1,775,188 $1,896,702
Corporate stock 95,006 119,262
Participant Loans 123,212 56,987
--------------- --------------
$1,993,406 $2,072,951
=============== ==============
Year Ended
December 31,
1999
------------------
CHANGES IN NET ASSETS:
Net appreciation in fair value of investments $195,302
Forfeitures of employer contributions (22,194)
Benefits paid directly to participants (243,688)
Administrative expenses (92)
Transfers to participant directed accounts (8,873)
---------------
$(79,545)
===============
Investment holdings comprising five percent or more of plan assets at fair value
as determined by quoted market price are as follows:
1999 1998
-------------- --------------
Bond Fund of America $ 662,232 $ 704,397
Chicago Trust Balanced Fund 1,795,103 1,892,176
Chicago Trust Safety of Principle Fund 1,029,738 820,171
MFS Massachusetts Investors Fund 1,906,630 2,151,741
Montag and Caldwell Growth Fund 566,745 -
Putnam Voyager Fund 481,117 -
11
DAIRY MART CONVENIENCE STORES, INC.
401(K) SAVINGS AND PROFIT SHARING PLAN
Notes to Financial Statements and Schedules
December 31, 1999 and 1998
During 1999, the Plan's investments (including investments bought, sold, and
held during the year) appreciated in fair value by $448,378 as follows:
NET APPRECIATION:
Mutual funds $403,280
Collective trust funds 55,510
Corporate stock (10,412)
--------------
NET APPRECIATION IN FAIR VALUE $448,378
==============
4. TAX STATUS:
In October of 1995, the Plan received a favorable determination letter from the
Internal Revenue Service (IRS) indicating that the Plan and related trust are
designed in accordance with applicable sections of the Internal Revenue Code
(IRC). During 1998, the Company amended and restated the Plan to provide for new
investment options and greater employer matching contributions. Although a
determination letter has not yet been received for the amended and restated
plan, the Plan administrator believes that the Plan is designed and is currently
being operated in compliance with the applicable requirements of the IRC.
5. INFORMATION FURNISHED BY THE TRUSTEE:
Information with respect to (1) investments held in the statements of net assets
available for plan benefits, (2) all items of income and expense related to such
trustee assets included in the statement of changes in net assets available for
plan benefits and (3) the information in Schedule I and II, have been certified
by The Chicago Trust Company as being complete and accurate.
12
DAIRY MART CONVENIENCE STORES, INC.
401(K) SAVINGS AND PROFIT SHARING PLAN
Notes to Financial Statements and Schedules
December 31, 1999 and 1998
As elected by the Plan administrator, no audit procedures have been performed on
this information, except to compare such information to the information included
in the accompanying financial statements.
6. RELATED PARTY TRANSACTIONS:
The Plan's investments include 37,160 and 36,160 shares of the Company's common
stock as of December 31, 1999 and 1998, respectively. These investments were
purchased at market value.
Certain Plan investments include shares of publicly traded mutual funds and
common/collective trust funds managed by The Chicago Trust Company. The Chicago
Trust Company serves as trustee of the Plan and, therefore, transactions of
these funds qualify as party-in-interest transactions.
7. SUBSEQUENT EVENT:
Participants may direct their contributions to the Dairy Mart Stock Fund, which
invests in the Company's common stock. On February 8, 2000, the Company's
shareholders approved a reclassification of the Company's then existing Class A
common stock and Class B common stock into a new, single class of common stock.
Under terms of the reclassification, which became effective February 9, 2000,
each share of the Company's former Class A common stock was converted into one
share of the new common stock and each share of the former Class B common stock
was converted into 1.1 shares of the new common stock. Prior to the
reclassification, the Plan allowed participants to invest in the former Class A
common stock.
13
SCHEDULE I
DAIRY MART CONVENIENCE STORES, INC.
401(K) SAVINGS AND PROFIT SHARING PLAN
Item 4i--Schedule of Assets Held for Investment Purposes
as of December 31, 1999
Employer Identification Number: 04-2497894
Plan Number: 001
Identity of Issuer Description of Investment Cost Market Value
- ------------------------------------------------- ---------------------------------------- -------------- ---------------
MUTUAL FUNDS:
American Funds Distributors, Inc. Bond Fund of America $706,143 $662,232
*The Chicago Trust Company Balanced Fund 1,653,612 1,795,103
GAM Services, Inc. GAM International Fund 56,593 66,597
MFS Fund Distributors, Inc. MFS Massachusetts Investors Fund 1,843,482 1,906,630
First Data Distributors, Inc. Montag and Caldwell Growth Fund 502,498 566,745
Oppenheimer Funds Distributors, Inc. Oppenheimer Quest Opportunity Value
Fund 285,301 266,102
Putnam Investor Services Putnam Voyager Fund 370,746 481,117
--------- ---------
5,418,375 5,744,526
COLLECTIVE TRUST FUNDS:
*The Chicago Trust Company Safety of Principle Fund 964,785 1,029,738
CORPORATE STOCK:
*Dairy Mart Convenience Stores, Inc. Common Stock 310,712 125,503
PARTICIPANT LOANS:
*Participant loans, interest rates 125,316 125,316
ranging from 7.75% to 8.50% ---------- ----------
$6,819,188 $7,025,083
========== ==========
* Indicates a party-in-interest
The accompanying notes to financial statements are an integral part of this
schedule.
14
Schedule II
DAIRY MART CONVENIENCE STORES, INC.
401(K) SAVINGS AND PROFIT SHARING PLAN
Item 4j--Schedule of Reportable Transactions
for the Year Ended December 31, 1999
Employer Identification Number: 04-2497894
Plan Number: 001
Total
Purchase Selling Cost of Net Gain
Identity of Party Involved Description of Transactions Price Price Sales or (Loss)
- ---------------------------------------------------------------------------------------------------------------------------------
Chicago Trust Company Balanced Fund 16,945 320,827 281,716 39,111
The accompanying notes to financial statements are an integral part of
this schedule.
15
SIGNATURES
The Plan. Pursuant to the requirements of the Securities Exchange Act of
1934, the trustees (or other persons who administer the employee benefit plan)
have duly caused this annual report to be signed on its behalf by the
undersigned hereunto duly authorized.
DAIRY MART CONVENIENCE STORES, INC.
401(K) SAVINGS AND PROFIT SHARING PLAN
(Name of Plan)
DATE: June 27, 2000 /s/ Gregory G. Landry
-----------------------
Gregory G. Landry
Vice Chairman and
Chief Financial Officer