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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, 2000
OR
[ ] Transition report pursuant to Section 15(d) of the Securities
Exchange Act of 1934 (No fee required)
Commission File Number 0-12497
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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
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DAIRY MART CONVENIENCE STORES, INC.
401(k) SAVINGS AND PROFIT SHARING PLAN
Financial Statements
As of December 31, 2000 and 1999
Together With of Independent Public Accountants
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DAIRY MART CONVENIENCE STORES, INC.
401(k) SAVINGS AND PROFIT SHARING PLAN
Index to Financial Statements
December 31, 2000 and 1999
Report of Independent Public Accountants
Financial Statements:
Statements of Net Assets Available for Benefits as of December 31, 2000 and
1999
Statement of Changes in Net Assets Available for Benefits for the Year
Ended December 31, 2000
Notes to Financial Statements and Schedule
Schedule:
Schedule I--Item 4i - Schedule of Assets Held for Investment Purposes as of
December 31, 2000
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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, 2000 and 1999, and the related statement of
changes in net assets available for benefits for the year ended December 31,
2000. These financial statements and supplemental schedule, 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
supplemental schedule 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, 2000 and 1999, and the changes in its net assets available for
benefits for the year ended December 31, 2000, in conformity with accounting
principles generally accepted in the United States.
Our audits were made for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplemental schedule of assets held
for investment purposes is presented for purposes of additional analysis and is
not a required part of the basic 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 has been subjected to the auditing procedures
applied in the audits of the basic financial statements and, in our opinion, is
fairly stated in all material respects in relation to the basic financial
statements taken as a whole.
/s/ Arthur Andersen LLP
Cleveland, Ohio,
June 8, 2001.
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DAIRY MART CONVENIENCE STORES, INC.
401(k) SAVINGS AND PROFIT SHARING PLAN
Statements of Net Assets Available for Benefits
As of December 31, 2000 and 1999
2000 1999
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ASSETS:
Cash $ 7,432 $ 20,128
Investments, at market value 6,850,644 7,025,083
Receivables:
Employee contributions 30,179 36,854
Employer contributions 11,363 13,894
Dividend income receivable 40,079 3,967
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Total receivables 81,621 54,715
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Total assets 6,939,697 7,099,926
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LIABILITIES:
Accrued expenses 3,268 76,682
Other liabilities -- 74,714
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Total liabilities 3,268 151,396
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NET ASSETS AVAILABLE FOR BENEFITS $6,936,429 $6,948,530
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The accompanying notes to financial statements are an integral part of these
statements.
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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, 2000
ADDITIONS:
Employee contributions $ 769,158
Employer contributions 274,562
Income on investments 296,655
Other 70,212
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Total additions 1,410,587
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DEDUCTIONS:
Net depreciation in fair value of investments 276,095
Benefits paid directly to participants 1,135,179
Administrative expenses 11,414
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Total deductions 1,422,688
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DECREASE IN NET ASSETS AVAILABLE FOR BENEFITS (12,101)
NET ASSETS AVAILABLE FOR BENEFITS, beginning of year 6,948,530
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NET ASSETS AVAILABLE FOR BENEFITS, end of year $ 6,936,429
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The accompanying notes to financial statements are an integral part of this
statement.
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DAIRY MART CONVENIENCE STORES, INC.
401(k) SAVINGS AND PROFIT SHARING PLAN
Notes to Financial Statements and Schedule
December 31, 2000 and 1999
1. PLAN DESCRIPTION:
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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
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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, 1999, 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
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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 2000 or 1999.
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DAIRY MART CONVENIENCE STORES, INC.
401(k) SAVINGS AND PROFIT SHARING PLAN
Notes to Financial Statements and Schedule
December 31, 2000 and 1999
Page 2
Vesting
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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
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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
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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 2000, interest rates
ranged from 7.75% to 9.5%.
Administrative Expenses
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In plan years 2000 and 1999, administrative expenses were paid by the Plan
except for certain legal and audit professional fees, which were paid by the
Company.
Forfeitures
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DAIRY MART CONVENIENCE STORES, INC.
401(k) SAVINGS AND PROFIT SHARING PLAN
Notes to Financial Statements and Schedule
December 31, 2000 and 1999
Page 3
Forfeitures occur 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. Such forfeitures amounted
to approximately $5,000 in 2000. The amount of unutilized forfeitures as of
December 31, 2000 was approximately $52,000.
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DAIRY MART CONVENIENCE STORES, INC.
401(k) SAVINGS AND PROFIT SHARING PLAN
Notes to Financial Statements and Schedule
December 31, 2000 and 1999
Page 5
Plan Termination
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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:
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Basis of Accounting
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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 as determined by the
trustee.
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 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
additions and deductions during the reporting period. Actual results could
differ from those estimates.
Reclassification
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Certain amounts in the 1999 financial statements have been reclassified to
conform to the current year presentation.
3. INVESTMENTS:
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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.
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DAIRY MART CONVENIENCE STORES, INC.
401(k) SAVINGS AND PROFIT SHARING PLAN
Notes to Financial Statements and Schedule
December 31, 2000 and 1999
Page 5
Investment holdings comprising five percent or more of plan assets at fair value
as determined by quoted market price are as follows:
2000 1999
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Bond Fund of America $ 621,682 $ 662,232
Chicago Trust Balanced Fund 1,597,625 1,795,103
Chicago Trust Safety of Principle Fund 1,252,410 1,029,738
MFS Massachusetts Investors Fund 1,564,295 1,906,630
Montag and Caldwell Growth Fund 435,490 566,745
Putnam Voyager Fund 614,754 481,117
Oppenheimer Quest Opportunity Value Fund 349,409 -
During 2000, the Plan's investments (including investments bought, sold, and
held during the year) depreciated in fair value by $276,095 as follows:
NET APPRECIATION (DEPRECIATION):
Mutual funds $ (333,864)
Collective trust funds 71,723
Corporate stock (13,954)
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NET DEPRECIATION IN FAIR VALUE $ 276,095
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4. TAX STATUS:
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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). The Plan has been amended since receiving the determination letter.
However, the Plan administrator believes that the Plan, as amended, is designed
and is currently being operated in compliance with the applicable requirements
of the IRC.
5. RELATED PARTY TRANSACTIONS:
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The Plan's investments include 48,660 and 37,160 shares of the Company's common
stock as of December 31, 2000 and 1999, respectively. These investments were
purchased at the then prevailing 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.
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DAIRY MART CONVENIENCE STORES, INC.
401(k) SAVINGS AND PROFIT SHARING PLAN
Notes to Financial Statements and Schedule
December 31, 2000 and 1999
Page 6
There were no prohibited party-in-interest transactions in 2000 or 1999, as
defined by ERISA.
6. SUBSEQUENT EVENT:
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Effective April 1, 2001, plan provisions regarding employer matching
contributions were amended. The new amendment provides that the employer will
match 25% of employee deferrals up to 3% of the employee's annual compensation.
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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, 2000
Employer Identification Number: 04-2497894
Plan Number: 001
Market Value
Identity of Issuer Description of Investment
- ------------------------------------------------- ---------------------------------------- --------------
MUTUAL FUNDS:
American Funds Distributors, Inc. Bond Fund of America $ 621,682
*The Chicago Trust Company Balanced Fund 1,597,625
GAM Services, Inc. GAM International Fund 67,841
MFS Fund Distributors, Inc. MFS Massachusetts Investors Fund 1,564,295
First Data Distributors, Inc. Montag and Caldwell Growth Fund 435,490
Oppenheimer Quest Opportunity Value
Oppenheimer Funds Distributors, Inc. Fund 349,409
Putnam Investor Services Putnam Voyager Fund 614,754
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5,251,096
COLLECTIVE TRUST FUNDS:
*The Chicago Trust Company Safety of Principle Fund 1,252,410
CORPORATE STOCK:
*Dairy Mart Convenience Stores, Inc. Common Stock 170,310
PARTICIPANT LOANS:
*Participant loans, interest rates
ranging from 7.75% to 9.5% 176,828
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$ 6,850,644
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* Indicates a party-in-interest
The accompanying notes to financial statements are an integral part of this
schedule.
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DAIRY MART CONVENIENCE STORES, INC.
401(k) SAVINGS AND PROFIT SHARING PLAN
Notes to Financial Statements and Schedule
December 31, 2000 and 1999
Page 8
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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 29, 2001 /s/ Gregory G. Landry
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Gregory G. Landry
Vice Chairman and
Chief Financial Officer