Dollar General Corporation has been delivering value to shoppers for over 75 years. Dollar General helps shoppers Save time. Save money. Every day!® by offering products that are frequently used and replenished, such as food, snacks, health and beauty aids, cleaning supplies, basic apparel, housewares and seasonal items at everyday low prices in convenient neighborhood locations. Dollar General operated 14,609 stores in 44 states as of March 2, 2018. In addition to high quality private brands, Dollar General sells products from America’s most-trusted manufacturers such as Clorox, Energizer, Procter & Gamble, Hanes, Coca-Cola, Mars, Unilever, Nestle, Kimberly-Clark, Kellogg’s, General Mills, and PepsiCo.
Dollar General Reports Increased Earnings for 2002; Outlook for 2003
March 17, 2003
GOODLETTSVILLE, Tenn., Mar 17, 2003 /PRNewswire-FirstCall via COMTEX/ -- Dollar General Corporation (NYSE: DG) today reported fiscal 2002 net income of $264.9 million, or $0.79 per diluted share, an increase of 28 percent compared to net income of $207.5 million, or $0.62 per diluted share in 2001. During the year, the Company recorded net restatement-related pre-tax income of approximately $23.1 million compared to net restatement-related pre-tax expenses of approximately $28.4 million in 2001. Excluding the restatement-related items in both years, net income for fiscal 2002 would have been $250.9 million, or $0.75 per share, an increase of 11 percent compared to 2001 net income of $225.5 million, or $0.67 per share.
"Fiscal 2002 was a year of hard work and meaningful progress at Dollar General," said Don Shaffer, acting CEO, president and chief operating officer. "We ended the year with impressive cash flow, 622 new stores, a strong balance sheet and a significant list of operational achievements."
2002 Fiscal Year
Net sales totaled $6.10 billion for fiscal year 2002, an increase of 14.6 percent over fiscal 2001 sales of $5.32 billion. The increase resulted primarily from 573 net new stores and a same-store sales increase of 5.7 percent.
Gross profit for 2002 was $1.72 billion, or 28.3 percent of net sales, compared with $1.51 billion, or 28.4 percent of net sales in 2001. Inventory shrinkage calculated at the retail value of the inventory, as a percentage of net sales, increased to 3.52 percent in 2002 compared to 2.90 percent in 2001. The increase in shrink was partially offset by improved purchase markups, leverage on distribution and transportation costs, and a reduction in the Company's LIFO reserve.
Selling, general and administrative (SG&A) expenses for 2002 were $1.30 billion compared with $1.14 billion in 2001. Excluding restatement-related expenses, SG&A expenses would have been $1.29 billion in 2002 compared to $1.11 billion in 2001, resulting in an increase as a percent of net sales to 21.1 percent in 2002 compared with 20.8 percent in 2001. This increase is primarily the result of increased store labor costs and increased workers' compensation expense. The Company invested additional funds in store labor during the year to improve store execution.
In 2002, interest expense was $42.6 million compared with $45.8 million in 2001. As of January 31, 2003, the Company's total outstanding debt was $346.5 million, a decrease of $388.6 million compared with $735.1 million outstanding as of February 1, 2002.
The Company's effective income tax rates for 2002 and 2001 were 36.1 percent and 36.7 percent, respectively. The lower effective tax rate in 2002 relates to recording higher targeted jobs tax credits and the favorable resolution of certain state tax matters in 2002.
Merchandise inventories decreased to $1.12 billion at January 31, 2003, from $1.13 billion at February 1, 2002 with 573 additional stores, resulting in a 10 percent decrease on a per store basis. Average retail inventory turns increased to 3.6 turns from 3.2 turns in 2001.
Capital expenditures for 2002 totaled $134.3 million compared with $125.4 million for 2001. During the year, the Company opened 622 new stores, relocated or remodeled 73 stores and closed 49 stores. At year-end, the Company operated 6,113 stores with approximately 41.2 million selling square feet.
Additional significant accomplishments during the year included:
- Implementation of item-level inventories in all stores, improving the Company's ability to manage inventories.
- Expansion of the perishable foods/cooler program from 411 stores to 1,367 stores at year-end.
- Utilization of the new Arthur merchandising system in the 2003 merchandise planning process which should lead to improved allocation of inventories to the stores.
- Implementation of automatic replenishment of all core merchandise in approximately 175 stores to improve operational efficiencies and increase store inventory in-stock levels.
- Improvements in the order cycle decreasing the time between store order and receipt of merchandise by 24 to 48 hours.
Net income in the fourth quarter of 2002 was $108.1 million, or $0.32 per diluted share, compared with net income of $97.4 million, or $0.29 per diluted share, during the fourth quarter of 2001. Excluding pre-tax restatement-related expenses of $1.0 million in 2002 and $10.1 million in 2001, net income increased 5.1 percent to $109.3 million, or $0.33 per diluted share compared with $104.0 million, or $0.31 per diluted share last year.
Total sales for the 2002 fourth quarter increased 10.9 percent to $1.76 billion from $1.59 billion in the prior year, including a same store sales increase of 2.1 percent. Gross profit increased to $528.0 million from $475.5 million, or 30.0 percent of net sales in both periods. SG&A expenses were $350.4 million in 2002 compared with $312.6 million during the comparable period in the prior year. Excluding restatement-related expenses, SG&A expenses would have been $349.4 million, or 19.9 percent of net sales in 2002 compared to $302.5 million, or 19.1 percent of net sales in 2001.
2003 Outlook
The Company projects revenues in 2003 to increase 13 to 15 percent and earnings, excluding restatement-related items, to increase 11 to 15 percent. In 2003, the Company expects same-store sales to increase 4 to 6 percent. The Company currently anticipates opening approximately 650 new stores in the current 27-state market area, closing 50 to 70 stores, and remodeling or relocating approximately 145 stores. The Company currently expects to incur capital expenditures during 2003 of approximately $165 million. The Company anticipates that its existing cash balances, cash flow from operations, and borrowings under its existing financing facilities will provide sufficient resources to meet these expenditures.
Significant goals for 2003 include the following:
- Improve store manager training with the completion of 35 training centers. The Company currently has 18 new manager training centers in operation and expects to have the remaining centers open before summer.
- Reduce inventory shrink.
- Increase the number of stores on automatic replenishment to as many as 2,500.
- Expand perishable food program to an additional 1,000 stores.
- Test acceptance of debit, credit and EBT cards.
- Determine site for new distribution center to accommodate future growth.
The Company will host a conference call today at 10 a.m. EST. The passcode for the conference call is "Dollar General." If you wish to participate, please call 816-650-0741 at least 10 minutes before the conference call is scheduled to begin. The call will also be broadcast live online at www.dollargeneral.com. A replay of the conference call will be available through March 24, 2003, online or by calling 402-220-2491. The access number for the replay is 15800271.
In accordance with the interpretations of the staff of the Securities and Exchange Commission and the normal procedures of the Company's auditors, the Company's financial statements for the 2002 fiscal year will not be deemed to have been issued until the Company's Annual Report on Form 10-K is filed and, as a result, the Company's financial statements will necessarily remain subject to adjustment until such filing.
This press release contains forward-looking information, including but not limited to information regarding the 2003 Company outlook, including without limitation, annual sales and earnings guidance, growth targets, capital expenditures and key goals. The words "believe," "anticipate," "project," "plan," "expect," "estimate," "objective," "forecast," "goal," "intend," "will likely result," or "will continue" and similar expressions generally identify forward-looking statements. The Company believes the assumptions underlying these forward-looking statements are reasonable; however, any of the assumptions could be inaccurate and, therefore, actual results may differ materially from those projected by, or implied in, the forward-looking statements. A number of factors may result in actual results differing from such forward-looking information including, but not limited to: the Company's ability to maintain adequate liquidity through its cash resources and credit facilities; the Company's ability to comply with the terms of the Company's credit facilities (or obtain waivers for non-compliance); transportation and distribution delays or interruptions; inventory risks due to shifts in market demand; changes in product mix; interruptions in suppliers' businesses; costs and potential problems and interruptions associated with implementation of new or upgraded systems and technology; fuel price and interest rate fluctuations; a deterioration in general economic conditions caused by acts of war or terrorism; temporary changes in demand due to weather patterns; delays associated with building, opening and operating new stores; the impact of the SEC inquiry related to the restatement of certain of the Company's financial statements; and other factors specified in the Company's SEC filings from time to time.
Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this release. The Company disclaims any obligation to publicly update or revise any forward-looking statements contained herein to reflect events or circumstances occurring after the date of this release or to reflect the occurrence of unanticipated events.
DOLLAR GENERAL CORPORATION AND SUBSIDIARIES
Consolidated Balance Sheets (In thousands)
January 31, February 1,
2003 2002
(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents $121,318 $261,525
Merchandise inventories 1,123,031 1,131,023
Deferred income taxes 33,860 105,091
Other current assets 45,699 58,408
Total current assets 1,323,908 1,556,047
Property and equipment, at cost 1,577,823 1,473,693
Less accumulated depreciation and amortization 584,001 484,778
Net property and equipment 993,822 988,915
Other assets 15,423 7,423
Total assets $2,333,153 $2,552,385
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Current portion of long-term obligations $16,209 $395,675
Accounts payable 341,303 322,463
Accrued expenses and other 239,898 242,780
Income taxes payable 67,091 10,633
Litigation settlement payable -- 162,000
Total current liabilities 664,501 1,133,551
Long-term obligations 330,337 339,470
Deferred income taxes 50,247 37,646
Shareholders' equity:
Preferred stock -- --
Common stock 166,670 166,359
Additional paid-in capital 313,269 301,848
Retained earnings 812,220 579,265
Accumulated other comprehensive loss (1,349) (3,228)
1,290,810 1,044,244
Less other shareholders' equity 2,742 2,526
Total shareholders' equity 1,288,068 1,041,718
Total liabilities and shareholders' equity $2,333,153 $2,552,385
DOLLAR GENERAL CORPORATION AND SUBSIDIARIES
Consolidated Statements of Income
(Amounts in thousands except per share amounts)
Year Ended
January 31, % of Net February 1, % of Net
2003 Sales 2002 Sales
(Unaudited)
Net sales $6,100,404 100.0% $5,322,895 100.0%
Cost of goods sold 4,376,138 71.7 3,813,483 71.6
Gross profit 1,724,266 28.3 1,509,412 28.4
Selling, general and
administrative
expenses 1,296,542 21.3 1,135,801 21.3
Litigation settlement
and related proceeds (29,541) (0.5) -- --
Operating profit 457,265 7.5 373,611 7.0
Interest expense 42,639 0.7 45,789 0.9
Income before income
taxes 414,626 6.8 327,822 6.2
Provision for taxes
on income 149,680 2.5 120,309 2.3
Net income $264,946 4.3% $207,513 3.9%
Diluted earnings
per share $ 0.79 $ 0.62
Diluted shares
outstanding 335,050 335,017
Dividends per share $0.128 $0.128
DOLLAR GENERAL CORPORATION AND SUBSIDIARIES
Consolidated Statements of Income (Unaudited)
(Amounts in thousands except per share amounts)
Quarter (13 Weeks) Ended
January 31, % of February 1, % of
2003 Net Sales 2002 Net Sales
Net sales $ 1,759,563 100.0% $1,586,012 100.0%
Cost of goods sold 1,231,599 70.0 1,110,489 70.0
Gross profit 527,964 30.0 475,523 30.0
Selling, general and
administrative
expenses 350,419 19.9 312,639 19.7
Operating profit 177,545 10.1 162,884 10.3
Interest expense 9,333 0.5 10,752 0.7
Income before income
taxes 168,212 9.6 152,132 9.6
Provision for income
taxes 60,126 3.4 54,689 3.5
Net income $108,086 6.1% $97,443 6.1%
Diluted earnings per
share $0.32 $0.29
Diluted shares
outstanding 334,659 334,625
Dividends per share $.032 $.032
DOLLAR GENERAL CORPORATION AND SUBSIDIARIES
Consolidated Statements of Cash Flows(In thousands)
Year Ended
January 31, February 1,
2003 2002
(Unaudited)
Cash flows from operating
activities:
Net income $ 264,946 $207,513
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization 134,959 122,967
Deferred income taxes 82,867 7,743
Tax benefit from stock option exercises 2,372 5,819
Litigation settlement (162,000) --
Change in operating assets and liabilities:
Merchandise inventories 7,992 (118,788)
Other current assets 12,566 (13,540)
Accounts payable 18,840 25,201
Accrued expenses and other 14,610 25,907
Income taxes 56,458 (5,907)
Other 430 8,713
Net cash provided by operating activities 434,040 265,628
Cash flows from investing activities:
Purchase of property and equipment (134,315) (125,365)
Proceeds from sale of property and equipment 481 1,293
Net cash used in investing activities (133,834) (124,072)
Cash flows from financing activities:
Repayments of long-term obligations (397,094) (11,823)
Payments of cash dividends (42,638) (42,517)
Proceeds from exercise of stock options 5,021 12,268
Other financing activities (5,702) (269)
Net cash used in financing activities (440,413) (42,341)
Net increase (decrease) in cash and cash
equivalents (140,207) 99,215
Cash and cash equivalents, beginning of year 261,525 162,310
Cash and cash equivalents, end of year $121,318 $261,525
DOLLAR GENERAL CORPORATION AND SUBSIDIARIES
Selected Additional Information
Sales by Category (in thousands)
(Unaudited)
Quarter Ended Year Ended
January 31, February 1, % January 31, February 1, %
2003 2002 Change 2003 2002 Change
Consumable $971,311 $829,770 17% $3,674,928 $3,085,112 19%
Seasonal 366,949 349,350 5% 994,252 888,263 12%
Clothing 179,419 171,352 5% 622,706 581,800 7%
Home 241,884 235,540 3% 808,518 767,720 5%
Total
sales $1,759,563 $1,586,012 11% $6,100,404 $5,322,895 15%
New Store Activity
(Unaudited)
Year Ended Year Ended
January 31, 2003 February 1, 2002
Beginning store count 5,540 5,000
New store openings 622 602
Store closings 49 62
Net new stores 573 540
Remodeled or relocated 73 78
Ending store count 6,113 5,540
Total selling square footage (000's) 41,205 37,414
Customer Transaction Data
(Unaudited)
Quarter Ended Year
January 31, February 1, January 31, February 1,
2003 2002 2003 2002
Same-store customer
transactions 1.8% 6.2% 5.2% 5.7%
Average customer
transaction $8.97 $8.91 $8.50 $8.43SOURCE Dollar General Corporation
CONTACT: Investors, Emma Jo Kauffman, +1-615-855-5525, or Media, Andrea Ewin Turner, +1-615-855-5209
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