Dollar General Reports Record Fourth Quarter and Full Year Sales and Operating Profit

March 31, 2010

  • Fourth Quarter Same-Store Sales Increased 7.4%; Full Year Same-Store Sales Increased 9.5%
  • Fourth Quarter Adjusted EPS of $0.51; Reported EPS of $0.26
  • Full Year Adjusted EPS of $1.31; Reported EPS of $1.04
  • Full Year Net Income Increased 214% to $339.4 Million
  • Full Year Adjusted EBITDA Increased 41% to $1.29 Billion
  • Strong 2010 Financial Outlook

GOODLETTSVILLE, Tenn. (BUSINESS WIRE), March 31, 2010 - Dollar General Corporation (NYSE: DG) today reported financial results for its fiscal 2009 fourth quarter (13 weeks) and full year (52 weeks) ended January 29, 2010. Fourth quarter 2009 net income was $87.2 million, or diluted earnings per share (“EPS”) of $0.26, compared to net income of $81.9 million, or diluted EPS of $0.26, in the fourth quarter (13 weeks) of fiscal 2008. The Company incurred charges totaling $123.5 million ($85.7 million, or $0.25 per diluted share, net of income taxes) during the fourth quarter 2009 relating to the termination of a sponsor advisory agreement with Kohlberg, Kravis, Roberts & Co. (“KKR”) and Goldman, Sachs & Co., the acceleration of certain equity-based compensation and the early retirement of long-term obligations. Excluding these charges, adjusted net income for the fourth quarter 2009 increased 121 percent to $172.9 million, or adjusted diluted EPS of $0.51, over adjusted net income in the 2008 fourth quarter of $78.1 million, or adjusted diluted EPS of $0.25, which adjusted 2008 amounts exclude the impact of a $2.5 million credit ($1.5 million credit, net of income taxes) related to the settlement of a shareholder lawsuit and a $3.8 million gain ($2.3 million gain, net of income taxes) related to the early retirement of long-term obligations.

“Dollar General had another outstanding year in 2009. We are continuing to execute on our operating priorities with precision and discipline,” said Rick Dreiling, chairman and chief executive officer. “We delivered strong same-store sales growth of 9.5 percent for the year on top of 9.0 percent same-store sales growth in 2008. We completed our second decade of consecutive annual same-store sales growth by providing our customers with value and convenience as we continue to improve our merchandise assortment and upgrade our in-store experience.”

“We accomplished these objectives while investing for future growth, a balance that positions us well for the long-term,” said Mr. Dreiling. “We are confident that we have the right strategy in place to continue building on our track record of profitable growth as we enter 2010.”

Fourth Quarter 2009 Financial Results

Sales increased 11.9 percent to $3.19 billion in the 2009 fourth quarter compared to $2.85 billion in the 2008 fourth quarter. Same-store sales increased 7.4 percent in the 2009 quarter and 9.4 percent in the 2008 quarter, with customer traffic and average transaction amount contributing to the same-store sales increases in both periods. Sales were strongest in the consumables and seasonal categories.

The fourth quarter 2009 gross profit rate increased by 275 basis points to 32.2 percent of sales from 29.4 percent of sales in the 2008 period. The impact of LIFO increased gross profit in the 2009 fourth quarter by $2.0 million and reduced gross profit in the 2008 fourth quarter by $12.1 million. In addition, gross profit in the 2008 quarter was impacted by the write-off of $8.6 million of inventory as the result of a change in the interpretation of the phthalates provision of the Consumer Product Safety Improvement Act of 2009. Excluding the impact of LIFO and the phthalates write-off, the fourth quarter gross profit rate increased by 196 basis points primarily due to higher net markups resulting from the Company’s focused category management efforts and increased volumes which have contributed to the ability to reduce purchase costs from vendors. In addition, inventory shrinkage, as a percentage of sales, declined.

Selling, general and administrative expenses (“SG&A”) in the 2009 fourth quarter were $746.5 million, or 23.4 percent of sales, including charges of $58.8 million to terminate the sponsor advisory agreement and $9.4 million resulting from the acceleration of certain equity-based compensation. Excluding these charges, SG&A, as a percentage of sales, decreased by 40 basis points compared to the 2008 fourth quarter, primarily due to higher net sales. In addition, the Company’s energy management program, cardboard recycling efforts and continuing workers’ compensation expense reduction initiatives contributed to improved expense leverage in the fourth quarter.

Fourth quarter 2009 operating profit increased by 25.2 percent to $278.9 million, or 8.8 percent of sales, compared to $222.8 million, or 7.8 percent of sales, in the 2008 fourth quarter. Excluding charges in the 2009 period related to the sponsor advisory agreement termination and the acceleration of certain equity-based compensation, and a credit in the 2008 period resulting from the shareholder litigation settlement, fourth quarter 2009 operating profit grew 58 percent to $347.1 million, or 10.9 percent of sales. Adjusted EBITDA (earnings before interest, income taxes, depreciation and amortization), as defined in the Company’s credit agreements and calculated in the attached schedule, increased 47.9 percent to $409.6 million in the 2009 fourth quarter from $276.9 million in the 2008 fourth quarter.

Interest expense decreased 15.3 percent to $79.0 million in the 2009 fourth quarter from $93.2 million in the 2008 fourth quarter, due to lower average outstanding borrowings as discussed below under “Long-term Obligations.”

Full Year 2009 Financial Results

The Company reported net income of $339.4 million, or diluted EPS of $1.04, for fiscal year 2009 compared to net income of $108.2 million, or diluted EPS of $0.34, in 2008. Excluding the charges incurred in the fourth quarter as discussed above, totaling $123.5 million ($85.7 million, net of income taxes, or $0.26 per diluted share), 2009 adjusted net income increased 200 percent to $425.1 million, or $1.31 per diluted share, over 2008 adjusted net income of $141.8 million, or $0.45 per diluted share, which 2008 amount excludes the impact of the shareholder litigation settlement and related costs of $32.0 million ($35.9 million, net of income taxes) and the gain on early retirement of long-term obligations of $3.8 million ($2.3 million gain, net of income taxes).

Full year 2009 net sales were $11.80 billion, an increase of $1.34 billion, or 12.8 percent, compared to net sales of $10.46 billion in 2008. Same-store sales increased 9.5 percent in 2009 and 9.0 percent in 2008 with customer traffic and average transaction amount contributing to the sales increases in both years. The Company’s focused merchandising efforts resulted in a 15.3 percent increase in consumables sales, followed by a 12.5 percent increase in seasonal sales.

The Company’s gross profit rate increased 201 basis points to 31.3 percent of sales in 2009 from 29.3 percent of sales in 2008. In 2008, gross profit was reduced by a LIFO charge (expense) of $43.9 million. In 2009, gross profit was increased by a LIFO credit of $2.5 million reflecting a flattening of merchandise cost increases for comparable items for the fiscal year. Excluding the impact of LIFO and the 2008 fourth quarter phthalates adjustment, the gross profit rate increased 149 basis points. Higher sales volumes have contributed to the Company’s ability to reduce average purchase costs from vendors. In addition, the impact of more comprehensive category management processes, including the expansion of private brands, which generally have higher gross profit rates, and improved pricing and markdown management have successfully resulted in increased net markups, partially offset by increased markdowns. Lower average fuel costs and improved distribution efficiencies, coupled with the impact of higher sales volumes, contributed to improved leverage of distribution costs. In addition, inventory shrinkage decreased as a percentage of sales.

Full year SG&A in 2009 was $2.74 billion, or 23.2 percent of sales, compared to full year 2008 SG&A of $2.45 billion, or 23.4 percent of sales. Excluding the charges of $58.8 million to terminate the sponsor advisory agreement and $9.4 million resulting from the acceleration of equity-based compensation, SG&A in 2009, as a percentage of sales, decreased by 79 basis points compared to 2008, primarily due to higher net sales, with the most significant impact on store occupancy costs, including rent and utilities. Utilities costs, as a percentage of sales, were further reduced by savings from preventive maintenance and greater usage of energy management systems. Workers’ compensation expense was further reduced through safety initiatives implemented over the last several years, and legal expenses were lower in 2009 than in 2008, which included expenses related to the shareholder litigation settlement.

Full year operating profit increased by 64.2 percent to $953.3 million, or 8.1 percent of sales, in 2009 compared to $580.5 million, or 5.6 percent of sales, in 2008. Adjusted to exclude the charges related to the sponsor advisory agreement termination and the acceleration of equity-based compensation discussed earlier, 2009 operating profit was $1.02 billion, or 8.7 percent of sales, a 280 basis point improvement over adjusted operating profit in 2008 of $612.5 million, or 5.9 percent of sales, which 2008 amount excludes $32 million of shareholder litigation settlement charges. Adjusted EBITDA, as defined in the Company’s credit agreements and calculated in the attached schedule, increased by $373.3 million, or 40.8 percent, to $1.29 billion in 2009 from $913.9 million in 2008.

Interest expense in 2009 was $345.7 million, a decrease of $46.2 million, or 11.8 percent, from 2008, primarily due to lower average outstanding borrowings, resulting from the early repurchase of various outstanding long-term obligations, as discussed below, and lower interest rates on the Company’s variable rate debt, primarily on the senior secured term loan.

The effective income tax rate for 2009 was 38.5 percent compared to a rate of 44.4 percent for 2008. The 2009 income tax rate is greater than the expected U.S. statutory tax rate of 35% due primarily to the inclusion of state income taxes in the total effective tax rate. The 2009 effective tax rate is less than the 2008 rate due principally to the unfavorable impact that the non-deductible, merger-related shareholder litigation settlement had on the 2008 rate. This reduction in the effective tax rate was partially offset by a decrease in the tax rate benefit related to federal jobs credits. While the total amount of jobs credits earned in 2009 was similar to the amount earned in 2008, the impact of this benefit on the effective tax rate was reduced due to the 2009 increase in income before income taxes.

Merchandise Inventories and Accounts Payable

As of January 29, 2010, total merchandise inventories, at cost, were $1.52 billion compared to $1.41 billion as of January 30, 2009, an increase of 7.4 percent, or 1.7 percent on a per-store basis. Increases in the consumables and seasonal inventories are partially offset by decreases in apparel and home products inventories. Annual inventory turns improved to 5.3 times in 2009 compared to 5.2 times in 2008. As a percentage of inventories, accounts payable, excluding the portion in each year related to capital expenditures, increased to 52.7 percent in 2009 from 47.4 percent in 2008.

Long-Term Obligations

As of January 29, 2010, outstanding long-term obligations, including the current portion, were $3.40 billion, a decrease of $733.7 million from the end of fiscal 2008. During the 2009 fourth quarter, the Company used proceeds from its initial public offering to redeem $195.7 million aggregate principal amount of its 10.625 percent senior notes due 2015 and $205.2 million aggregate principal amount of its 11.875 percent/12.625 percent senior subordinated notes due 2017. In addition, during 2009, the Company made two scheduled payments, totaling $11.5 million, on its senior term loan facility, and in January 2010, the Company used excess cash to prepay an additional $325 million principal amount of the facility. Other (income) expense for the 2009 fourth quarter and full year reflects charges of $50.6 million relating to repurchases of the notes and $4.7 million to write off deferred costs relating to the term loan prepayment.

During the 2008 fourth quarter, the Company repurchased $44.1 million of its outstanding senior subordinated notes, recording a gain on the purchase of $3.8 million.

Capital Expenditures

Total additions to property and equipment in 2009 were $274 million, including amounts in accounts payable. Additions included $75 million relating to new store openings, $129 million for improvements, upgrades, remodels and relocations of existing stores, $29 million for distribution and transportation improvements, and $41 million for various administrative capital costs, information systems upgrades and technology-related projects. For the year, the Company opened 500 new stores, relocated 159 stores and remodeled 291 stores. The Company closed 34 stores, ending the year with 8,828 stores.

2010 Financial Outlook

The Company remains committed to continuing its focus on productive sales growth, increasing gross margins, leveraging process improvements and information technology to reduce costs and strengthening and expanding Dollar General's culture of serving others.

For 2010, the Company expects total sales to increase eight to ten percent, including an increase in same-store sales of four to six percent. Operating profit is expected to increase 15 to 20 percent over full year 2009 adjusted operating profit, driven by sales, gross profit rate improvements related to increased penetration of the Company’s private brands, development of additional direct sourcing opportunities, additional shrink improvement and distribution and transportation efficiencies, and further transformation of the Company’s seasonal, home and apparel categories, in addition to improved expense management. Diluted earnings per share for the year is expected to be approximately $1.55 to $1.63, based on weighted average diluted shares of 345 million, and a full year 2010 tax rate in the range of 38 to 39 percent.

The Company plans to open approximately 600 new stores and to remodel or relocate a total of approximately 500 stores in 2010. Capital expenditures are expected to be in the range of $325 million to $350 million, with approximately 50 percent relating to new stores, remodels and relocations, 25 percent for maintenance capital and 25 percent for special projects, including the expansion of the 78-inch store profile and point-of-sale upgrades.

Conference Call Information and Supporting Slides

The Company will hold a conference call on Wednesday, March 31, 2010 at 9:00 a.m. CDT/10:00 a.m. EDT, hosted by Rick Dreiling, chairman and chief executive officer, and David Tehle, chief financial officer. If you wish to participate, please call (866) 710-0179 at least 10 minutes before the conference call is scheduled to begin. The pass code for the conference call is “Dollar General.” Supporting slides will be available online along with the live web cast of the call at www.dollargeneral.com under “Investor Information, Conference Calls and Investor Events.” A replay of the conference call will be available through Wednesday, April 14, 2010, and will be accessible online or by calling (334) 323-7226. The pass code for the replay is 17426220. The supporting slides will be available through April 14, 2010.

Forward-Looking Statements

This press release contains forward-looking information, such as the information in the section entitled “2010 Financial Outlook.” The words “believe,” “anticipate,” “project,” “plan,” “schedule,” “on track,” “expect,” “estimate,” “objective,” “forecast,” “goal,” “intend,” “committed,” “will likely result,” or “will continue” and similar expressions generally identify forward-looking statements. These matters involve risks, uncertainties and other factors that may cause the actual performance of the Company to differ materially from that expressed or implied by these forward-looking statements. All forward-looking information should be evaluated in the context of these risks, uncertainties and other factors. Factors that may result in actual results differing materially from such forward-looking information include, but are not limited to:

  • failure to successfully execute the Company’s growth strategy, including delays in store growth, difficulties executing sales and operating profit margin initiatives and inventory shrinkage reduction;
  • the failure of the Company’s new store base to achieve sales and operating levels consistent with the Company’s expectations;
  • risks and challenges in connection with sourcing merchandise from domestic and foreign vendors;
  • the Company’s level of success in gaining and maintaining broad market acceptance of its private brands;
  • unfavorable publicity or consumer perception of the Company’s products;
  • the Company’s debt levels and restrictions in its debt agreements;
  • economic conditions, including their effect on the financial and capital markets, the Company’s suppliers and business partners, employment levels, consumer demand, spending patterns, inflation and the cost of goods;
  • levels of inventory shrinkage;
  • seasonality of the Company’s business;
  • increases in costs of fuel or other energy, transportation or utilities costs and in the costs of labor, employment and health care;
  • the impact of governmental laws and regulations and the outcomes of legal proceedings;
  • disruptions in the Company’s supply chain;
  • damage or interruption to the Company’s information systems;
  • changes in the competitive environment in the Company’s industry and the markets where the Company operates;
  • natural disasters, unusually adverse weather conditions, pandemic outbreaks, boycotts and geo-political events;
  • the incurrence of material uninsured losses or excessive insurance costs;
  • the Company’s failure to protect its brand name;
  • the Company’s loss of key personnel or the Company’s inability to hire additional qualified personnel;
  • the Company’s failure to maintain effective internal controls;
  • the factors disclosed under “Risk Factors” in the Company’s Registration Statement on Form S-1 (File No. 333-161464) and in the Company’s latest Annual Report on Form 10-K; and
  • such other factors as may be discussed or identified in this press release.

Forward-looking statements speak only as of the date made. The Company undertakes no obligation to update any forward-looking statements to reflect events or circumstances arising after the date on which they were made. As a result of these risks and uncertainties, readers are cautioned not to place undue reliance on any forward-looking statements included herein or that may be made elsewhere from time to time by, or on behalf of, the Company.

Non-GAAP Disclosure

Certain information provided in this press release and the accompanying tables has not been derived in accordance with generally accepted accounting principles (“GAAP”). Reconciliations of these non-GAAP measures to measures calculated in accordance with GAAP are provided in the accompanying schedules. Non-GAAP information should not be considered a substitute for any information derived or calculated in accordance with GAAP.

The Company believes that providing comparisons to operating profit, net income, diluted earnings per share and SG&A, adjusted for the items shown in the accompanying reconciliations, provides useful information to the reader in assessing the Company’s operating performance. The Company believes that the presentation of EBITDA and Adjusted EBITDA is appropriate to provide additional information about the calculation of the senior secured incurrence test, a material financial ratio in the Company’s credit agreements. Adjusted EBITDA is a material component of that ratio.

The non-GAAP measures discussed above are not measures of financial performance or condition, liquidity or profitability in accordance with GAAP, and should not be considered as alternatives to net income, operating income, cash flows from operations or any other performance measures determined in accordance with GAAP. Additionally, EBITDA and Adjusted EBITDA are not intended to be measures of free cash flow for management’s discretionary use, as they do not consider certain cash requirements such as interest payments, tax payments, debt service requirements and replacement of fixed assets. These non-GAAP measures have limitations as analytical tools and should not be considered in isolation or as substitutes for analysis of the Company’s financial results as reported under GAAP.

About Dollar General Corporation

Dollar General Corporation has been delivering value to shoppers for more than 70 years. Dollar General helps shoppers Save time. Save money. Every day!(R) by offering products that are frequently used and replenished, such as food, snacks, health and beauty aids, cleaning supplies, basic apparel, house wares and seasonal items at low everyday prices in convenient neighborhood locations. With more than 8,800 stores in 35 states, Dollar General has more retail locations than any retailer in America. In addition to high quality private brands, Dollar General sells products from America's most-trusted manufacturers such as Procter & Gamble, Kimberly-Clark, Unilever, Kellogg's, General Mills, Nabisco, Hanes, PepsiCo and Coca-Cola. Learn more about Dollar General at www.dollargeneral.com.

DOLLAR GENERAL CORPORATION AND SUBSIDIARIES
Consolidated Balance Sheets
(In thousands)
           
      January 29,   January 30,
        2010       2009  
ASSETS        
Current assets:        
  Cash and cash equivalents   $ 222,076     $ 377,995  
  Merchandise inventories     1,519,578       1,414,955  
  Income taxes receivable     7,543       6,392  
  Deferred income taxes     -       4,600  
  Prepaid expenses and other current assets     96,252       66,183  
  Total current assets     1,845,449       1,870,125  
Net property and equipment     1,328,386       1,268,960  
Goodwill     4,338,589       4,338,589  
Intangible assets, net     1,284,283       1,325,558  
Other assets, net     66,812       85,967  
Total assets   $ 8,863,519     $ 8,889,199  
           
LIABILITIES AND SHAREHOLDERS' EQUITY        
Current liabilities:        
  Current portion of long-term obligations   $ 3,671     $ 14,158  
  Accounts payable     830,953       678,421  
  Accrued expenses and other     342,290       375,045  
  Income taxes payable     4,525       7,611  
  Deferred income taxes payable     25,061       -  
  Total current liabilities     1,206,500       1,075,235  
Long-term obligations     3,399,715       4,122,956  
Deferred income taxes     546,172       556,101  
Other liabilities     302,348       289,288  
Total liabilities     5,454,735       6,043,580  
           
Commitments and contingencies        
           
Redeemable common stock     18,486       13,924  
           
Shareholders' equity:        
  Preferred stock     -       -  
  Common stock     298,013       278,114  
  Additional paid-in capital     2,923,377       2,489,647  
  Retained earnings     203,075       103,364  
  Accumulated other comprehensive loss     (34,167 )     (39,430 )
  Total shareholders' equity     3,390,298       2,831,695  
Total liabilities and shareholders' equity   $ 8,863,519     $ 8,889,199  
           

 

         

 

DOLLAR GENERAL CORPORATION AND SUBSIDIARIES
Consolidated Statements of Income
(In thousands, except per share amounts)
                     
                     
      For the Quarter (13 Weeks) Ended
      January 29,   % of Net     January 30,   % of Net
        2010     Sales       2009     Sales
Net sales   $ 3,185,785     100.00 %     $ 2,845,848     100.00 %
Cost of goods sold     2,160,396     67.81 %       2,008,150     70.56 %
Gross profit     1,025,389     32.19 %       837,698     29.44 %
Selling, general and administrative expenses     746,456     23.43 %       617,370     21.69 %
Litigation settlement and related costs, net     -     -         (2,500 )  

(0.09

%)

Operating profit     278,933     8.76 %       222,828     7.83 %
Interest income     (9 )  

(0.00

%)

      (268 )  

(0.01

%)

Interest expense     78,952     2.48 %       93,234     3.28 %
Other (income) expense     55,757     1.75 %       (3,644 )  

(0.13

%)

Income before income taxes     144,233     4.53 %

 

    133,506     4.69 %
Income tax expense     57,036     1.79 %       51,652     1.81 %
Net income   $ 87,197     2.74 %     $ 81,854     2.88 %
                     
Earnings per share:                  
  Basic   $ 0.26           $ 0.26      
  Diluted   $ 0.26           $ 0.26      
Weighted average shares:                  
  Basic     337,355             317,739      
  Diluted     340,983             318,081      
                     
      For the Year (52 Weeks) Ended
      January 29,   % of Net     January 30,   % of Net
        2010     Sales       2009     Sales
Net sales   $ 11,796,380     100.00 %     $ 10,457,668     100.00 %
Cost of goods sold     8,106,509     68.72 %       7,396,571     70.73 %
Gross profit     3,689,871     31.28 %       3,061,097     29.27 %
Selling, general and administrative expenses     2,736,613     23.20 %       2,448,611     23.41 %
Litigation settlement and related costs, net     -     -         32,000     0.31 %
Operating profit     953,258     8.08 %       580,486     5.55 %
Interest income     (144 )  

(0.00

%)

      (3,061 )  

(0.03

%)

Interest expense     345,744     2.93 %       391,932     3.75 %
Other (income) expense     55,542     0.47 %       (2,788 )  

(0.03

%)

Income before income taxes     552,116     4.68 %       194,403     1.86 %
Income tax expense     212,674     1.80 %       86,221     0.82 %
Net income   $ 339,442     2.88 %     $ 108,182     1.03 %
                     
Earnings per share:                  
  Basic   $ 1.05           $ 0.34      
  Diluted   $ 1.04           $ 0.34      
Weighted average shares:                  
  Basic     322,778             317,024      
  Diluted     324,836             317,503      
                     

 

DOLLAR GENERAL CORPORATION AND SUBSIDIARIES
Consolidated Statements of Cash Flows
(In thousands)
         
    For the Year (52 Weeks) Ended
    January 29,   January 30,
      2010       2009  
Cash flows from operating activities:        
Net income   $ 339,442     $ 108,182  
Adjustments to reconcile net income to net cash provided by operating activities:        
       
Depreciation and amortization     256,771       247,899  
Deferred income taxes     14,860       73,434  
Tax benefit of stock options     (5,390 )     (950 )
Loss (gain) on debt retirement     55,265       (3,818 )

Non-cash share-based compensation

    17,295       9,958  

Non-cash inventory adjustments and asset impairments

    647       50,671  

Other non-cash gains and losses

    7,920       6,252  
Change in operating assets and liabilities:        
Merchandise inventories     (100,248 )     (173,014 )
Prepaid expenses and other current assets     (7,298 )     (598 )
Accounts payable     106,049       140,356  
Accrued expenses and other liabilities     (16,823 )     68,736  
Income taxes     1,153       33,986  
Other     (1,000 )     14,084  
Net cash provided by operating activities     668,643       575,178  
         
Cash flows from investing activities:        
Purchases of property and equipment     (250,747 )     (205,546 )
Purchases of short-term investments     -       (9,903 )
Sales of short-term investments     -       61,547  
Sale and insurance proceeds related to property and equipment     2,701       1,266  
Net cash used in investing activities     (248,046 )     (152,636 )
         
Cash flows from financing activities:        
Issuance of common stock     443,753       4,228  
Repayments of borrowings under revolving credit facility     -       (102,500 )
Issuance of long-term obligations     1,080       -  
Repayments of long-term obligations     (785,260 )     (44,425 )
Payment of cash dividends and related amounts     (239,731 )     -  
Repurchases of equity     (1,748 )     (3,009 )
Tax benefit of stock options     5,390       950  
Net cash used in financing activities     (576,516 )     (144,756 )
         
Net increase (decrease) in cash and cash equivalents     (155,919 )     277,786  
Cash and cash equivalents, beginning of period     377,995       100,209  
Cash and cash equivalents, end of period   $ 222,076     $ 377,995  
         
Supplemental cash flow information:        
Cash paid for:        
Interest   $ 328,433     $ 377,022  
Income taxes   $ 187,983     $ 7,091  

Supplemental schedule of non-cash investing and financing activities:

       
Purchases of property and equipment awaiting processing for payment, included in Accounts payable    
  $ 30,393     $ 7,474  
Purchases of property and equipment under capital lease obligations   $ 50     $ 3,806  
Expiration of equity repurchase rights   $ -     $ 2,548  

 

DOLLAR GENERAL CORPORATION AND SUBSIDIARIES
Selected Additional Information
           
           
Sales by Category
(In thousands)
           
  For the Quarter (13 Weeks) Ended  
  January 29, 2010   January 30, 2009   % Change  
Consumables $ 2,169,872   $ 1,907,493     13.8 %
Seasonal   561,696     494,098     13.7 %
Home products   232,897     231,411     0.6 %
Apparel   221,320     212,846     4.0 %
Net sales $ 3,185,785   $ 2,845,848     11.9 %
           
           
           
  For the Year (52 Weeks) Ended    
  January 29, 2010   January 30, 2009   % Change  
Consumables $ 8,356,381   $ 7,248,418     15.3 %
Seasonal   1,711,471     1,521,450     12.5 %
Home products   869,772     862,226     0.9 %
Apparel   858,756     825,574     4.0 %
Net sales $ 11,796,380   $ 10,457,668     12.8 %
           
           
Store Activity
           
      52 Weeks Ended
      January 29, 2010   January 30, 2009
           
Beginning store count       8,362     8,194  
New store openings       500     207  
Store closings       (34 )   (39 )
Net new stores       466     168  
Ending store count       8,828     8,362  
Total selling square footage (000's)       62,494     58,803  

 

DOLLAR GENERAL CORPORATION AND SUBSIDIARIES
Reconciliation of Non-GAAP Financial Measures
(In millions, except per share amounts)
                               
      For the Quarter (13 Weeks) Ended      
      January 29,   % of Net   January 30,   % of Net   Increase
        2010     Sales       2009     Sales      

$

  %  
                               
Net sales   $ 3,185.8           $ 2,845.8           $ 340.0   11.9 %
                               
Selling, general and administrative ("SG&A")   $ 746.5     23.43 %     $ 617.4     21.69 %     $ 129.1   20.9 %
  Sponsor advisory fee termination     (58.8 )           -                
  Acceleration of equity-based compensation     (9.4 )           -                
  Adjusted SG&A   $ 678.3     21.29 %     $ 617.4     21.69 %     $ 60.9   9.9 %
                               
Operating profit   $ 278.9     8.76 %     $ 222.8     7.83 %     $ 56.1   25.2 %
  Sponsor advisory fee termination     58.8             -                
  Acceleration of equity-based compensation     9.4             -                
  Litigation settlement and related costs     -             (2.5 )              
  Adjusted operating profit   $ 347.1     10.90 %     $ 220.3     7.74 %     $ 126.8   57.6 %
                               
Net income   $ 87.2     2.74 %     $ 81.9     2.88 %     $ 5.3   6.5 %
  Sponsor advisory fee termination     58.8             -                
  Acceleration of equity-based compensation     9.4             -                
  Repurchase of long-term obligations     55.3             (3.8 )              
  Litigation settlement and related costs     -             (2.5 )              
 

Total adjustments

    123.5             (6.3 )              
  Income tax effect of adjustments (1)     (37.8 )           2.5                
  Net adjustments     85.7     2.69 %       (3.8 )  

(0.13

%)

         
  Adjusted net income   $ 172.9     5.43 %     $ 78.1     2.74 %     $ 94.8   121.4 %
                               
Diluted earnings per share:                            
  As reported   $ 0.26           $ 0.26                
  Adjusted   $ 0.51           $ 0.25                
  Impact of net adjustments   $ 0.25           $ (0.01 )              
                               
Weighted average diluted shares     341.0             318.1                
                               
      For the Year (52 Weeks) Ended        
      January 29,   % of Net   January 30,   % of Net   Increase
        2010     Sales       2009     Sales      

$

  %  
                               
Net sales   $ 11,796.4           $ 10,457.7           $ 1,338.7   12.8 %
                               
Selling, general and administrative ("SG&A")   $ 2,736.6     23.20 %     $ 2,448.6     23.41 %     $ 288.0   11.8 %
  Sponsor advisory fee termination     (58.8 )           -                
  Acceleration of equity-based compensation     (9.4 )           -                
  Adjusted SG&A   $ 2,668.4     22.62 %     $ 2,448.6     23.41 %     $ 219.8   9.0 %
                               
Operating profit   $ 953.3     8.08 %     $ 580.5     5.55 %     $ 372.8   64.2 %
  Sponsor advisory fee termination     58.8             -                
  Acceleration of equity-based compensation     9.4             -                
  Litigation settlement and related costs     -             32.0                
  Adjusted operating profit   $ 1,021.5     8.66 %     $ 612.5     5.86 %     $ 409.0   66.8 %
                               
Net income   $ 339.4     2.88 %     $ 108.2     1.03 %     $ 231.3   213.8 %
  Sponsor advisory fee termination     58.8             -                
  Acceleration of equity-based compensation     9.4      

 

    -                
  Repurchase of long-term obligations     55.3             (3.8 )              
  Litigation settlement and related costs     -             32.0                
  Total adjustments     123.5             28.2                
  Income tax effect of adjustments (1)     (37.8 )           5.4                
  Net adjustments     85.7     0.73 %       33.6     0.32 %          
  Adjusted net income   $ 425.1     3.60 %     $ 141.8     1.36 %     $ 283.3   199.8 %
                               
Diluted earnings per share:                            
  As reported   $ 1.04           $ 0.34                
  Adjusted   $ 1.31           $ 0.45                
  Impact of net adjustments   $ 0.26           $ 0.11                
                               
Weighted average diluted shares     324.8             317.5                
                               
(1 ) Includes $12.6 million, $3.7 million and $21.5 million relating to the sponsor advisory fee termination, acceleration of equity-based compensation and repurchase of long-term obligations, respectively.

 

DOLLAR GENERAL CORPORATION AND SUBSIDIARIES
Reconciliation of Non-GAAP Financial Measures
                         
RECONCILIATION OF NET INCOME TO EBITDA AND ADJUSTED EBITDA
(In millions)
                         
      Quarter (13 Weeks) Ended     Year (52 Weeks) Ended
      January 29,   January 30,   January 29,   January 30,
        2010         2009         2010         2009  
                         
Net income   $ 87.2       $ 81.9       $ 339.4       $ 108.2  
Add (subtract):                      
  Interest income     -         (0.3 )       (0.1 )       (3.1 )
  Interest expense     78.9         93.2         345.6         391.9  
  Depreciation and amortization     59.3         60.5         241.7         235.1  
  Income taxes     57.0         51.7         212.7         86.2  
EBITDA     282.4         287.0  

 

    1,139.3         818.3  
             

 

         
Adjustments:                      
  (Gain) loss on debt retirements     55.3         (3.8 )       55.3         (3.8 )
  Loss on hedging instruments     1.5         0.2         0.5         1.1  
  Contingent gain on distribution center leases     -         (5.0 )       -         (5.0 )
  Impact of markdowns related to inventory clearance activities, net of purchase accounting adjustments                      
      (0.7 )       (24.9 )       (7.3 )       (24.9 )
  Hurricane-related expenses and write-offs     -         0.2         -         2.2  
  Advisory and consulting fees to affiliates     59.1         2.1         63.5         8.6  
  Non-cash share-based awards     9.3         2.8         18.7         10.0  
  Indirect merger-related costs     4.9         1.6         10.6         20.7  
  Litigation settlement and related costs, net     -         (2.5 )       -         32.0  
  Other non-cash charges (including LIFO)     (2.2 )       19.2         6.6         54.7  
Total Adjustments     127.2         (10.1 )       147.9         95.6  
Adjusted EBITDA   $ 409.6       $ 276.9       $ 1,287.2       $ 913.9  

 

         
DOLLAR GENERAL CORPORATION AND SUBSIDIARIES
Reconciliation of Non-GAAP Financial Measures
(Dollars in millions)
           
           
Senior Secured Incurrence Test
           
      January 29,   January 30,
        2010     2009
Senior secured debt   $ 1,986.3   $ 2,324.4
Less: cash     222.1     378.0
Senior secured debt, net of cash   $ 1,764.2   $ 1,946.4
Adjusted EBITDA   $ 1,287.2   $ 913.9
Ratio of senior secured debt, net of cash, to Adjusted EBITDA        
  1.4x   2.1x
           
           
           
Calculation of Ratio of Long-Term Obligations to Adjusted EBITDA
           
      January 29,   January 30,
        2010     2009
Total long-term obligations   $ 3,403.4   $ 4,137.1
Adjusted EBITDA   $ 1,287.2   $ 913.9
Ratio of long-term obligations to Adjusted EBITDA   2.6x   4.5x
           
           
           
Calculation of Ratio of Long-Term Obligations, net of Cash, to Adjusted EBITDA
           
      January 29,   January 30,
        2010     2009
Total long-term obligations   $ 3,403.4   $ 4,137.1
Less: cash  

 

222.1  

 

378.0
Total long-term obligations, net of cash   $ 3,181.3   $ 3,759.1
Adjusted EBITDA   $ 1,287.2   $ 913.9

Ratio of long-term obligations, net of cash, to Adjusted EBITDA

       
  2.5x   4.1x

 

DOLLAR GENERAL CORPORATION AND SUBSIDIARIES
Reconciliation of Non-GAAP Financial Measures
(Dollars in millions)
           
Return on Invested Capital
           
      For the Year (52 Weeks) Ended
      January 29,   January 30,
        2010       2009  
Total return:        
  Operating profit   $ 953.3     $ 580.5  
  Sponsor advisory fee termination     58.8       -  
  Acceleration of equity-based compensation     9.4       -  
  Litigation settlement and related costs     -       32.0  
  Adjusted operating profit     1,021.5       612.5  
  Depreciation and amortization     241.7       235.1  
  Minimum rents     407.4       370.8  
  Income taxes (1)     (229.0 )     (82.3 )
Total return (A)   $ 1,441.6     $ 1,136.1  
           
Invested capital (2):        
  Total assets     9,000.8       8,811.7  
  Accumulated depreciation and amortization     379.7       206.4  
  Cash     (377.4 )     (201.3 )
  Goodwill     (4,338.6 )     (4,342.1 )
  Accounts payable     (772.6 )     (672.0 )
  Income taxes payable     (12.6 )     (3.4 )
  Accrued liabilities     (347.2 )     (362.8 )
  Minimum rents *8     3,092.5       2,876.3  
Total invested capital (B)   $

6,624.6

    $ 6,312.8  
Return on Invested Capital (A/B)     21.8 %     18.0 %
           
(1 ) Excluding the impact of the sponsor advisory fee termination and acceleration of equity-based compensation.
           
           
(2 ) Average of balances at the end of each of the five most recent fiscal quarters. Minimum rents used in the invested capital calculation are based on the most recent 5-quarter average of rolling 12 months rent.

 

Contact(s):

Dollar General Corporation
Investor Contact:
Mary Winn Gordon, 615-855-5536
or
Emma Jo Kauffman, 615-855-5525
or
Media Contact:
Tawn Miller, 615-855-5209


About Dollar General Corporation
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, clothing for the family, housewares and seasonal items at low everyday prices in convenient neighborhood locations. Dollar General operated 13,601 stores in 44 states as of May 5, 2017. In addition to high quality private brands, Dollar General sells products from America's most-trusted brands such as Procter & Gamble, Kimberly-Clark, Unilever, Kellogg's, General Mills, Nabisco, Hanes, PepsiCo and Coca-Cola. Learn more about Dollar General at www.dollargeneral.com.

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