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:
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 $8.43