Dollar General Corporation (NYSE: DG) is proud to serve as America’s neighborhood general store. Founded in 1939, Dollar General lives its mission of Serving Others every day by providing access to affordable products and services for its customers, career opportunities for its employees, and literacy and education support for its hometown communities. As of August 4, 2023, the company’s 19,488 Dollar General, DG Market, DGX and pOpshelf stores across the United States and Mi Súper Dollar General stores in Mexico provide everyday essentials including food, health and wellness products, cleaning and laundry supplies, self-care and beauty items, and seasonal décor from our high-quality private brands alongside many of the world’s most trusted brands such as Coca Cola, PepsiCo/Frito-Lay, General Mills, Hershey, J.M. Smucker, Kraft, Mars, Nestlé, Procter & Gamble and Unilever. Learn more at DollarGeneral.com.
Dollar General Corporation Reports Fourth Quarter and Fiscal Year 2007 Financial Results
March 27, 2008
New CEO Announces Operating Priorities for Dollar General
Corporation
GOODLETTSVILLE, Tenn., Mar 27, 2008 (BUSINESS WIRE) -- Dollar General Corporation today reported financial results for its fourth quarter (13 weeks) and fiscal year ended February 1, 2008. Additionally, Rick Dreiling, the Company's recently appointed Chief Executive Officer, discussed the Company's Operating Priorities, which include a series of initiatives meant to leverage the Company's strong history but also to effect positive change in order to deliver profitable growth over the long-term.
Overview of 2007 Financial Results
"Dollar General has implemented several proactive initiatives over the past few years which are gaining traction and contributed to improving financial results in fiscal 2007," stated Mr. Dreiling. "During the year we achieved solid annual same store sales growth of 2.1 percent as well as an improvement in our gross margin. Importantly, through a stronger infrastructure and the introduction of process improvement initiatives, the Company reduced inventory levels by 10 percent on a total and per store basis and generated cash flow from operating activities of over $441 million, an 8.9 percent increase. Overall, we are pleased with the Company's operating and financial performance in fiscal 2007 and believe that Dollar General is well-positioned for positive momentum moving forward."
Full Year Results
Net sales in fiscal 2007 increased $325.4 million, or 3.5 percent, to $9.50 billion compared to $9.17 billion in 2006. Same-store sales in fiscal 2007, which included stores open for 13 full fiscal months and remained open at the end of the period, increased 2.1 percent and accounted for $186 million of the total sales increase for the year.
Fiscal 2007 gross profit increased by $275.3 million and, as a percentage of sales, increased to 27.8 percent from 25.8 percent in fiscal 2006. The increase primarily reflects pressure on gross profit in fiscal 2006 due to accelerated inventory markdowns resulting from the Company's elimination of its packaway inventory model and the closure of underperforming stores under "Project Alpha," a strategic initiative designed to improve merchandising and real estate practices. The improvement in 2007 gross profit also reflects an increase in purchase markups, resulting primarily from a shift in product mix and higher vendor rebates, as well as improved leverage on distribution and transportation costs, partially offset by inventory markdowns that were not part of Project Alpha, increased shrink and a LIFO charge. At the end of fiscal 2007, all of the Company's packaway inventory had been cleared, and end of season markdowns had been fully integrated into the business model.
Fiscal 2007 selling, general and administrative expense ("SG&A") increased $165.5 million from the prior year, and increased as a percentage of sales to 24.1 percent in 2007 from 23.1 percent in 2006. SG&A as a percentage of sales in fiscal 2007 was essentially even with fiscal 2006 after excluding expenses in 2007 totaling $116.6 million, comprised of amortization of leasehold intangibles capitalized in connection with the revaluation, accrued administrative employee incentive compensation expense resulting from meeting certain financial targets, an accrued loss relating to the probable restructuring of certain distribution center leases and Project Alpha-related expenses, and excluding net expenses of $29.7 million in 2006 comprised of Project Alpha-related expenses and a discretionary administrative employee bonus, net of insurance proceeds received in relation to losses incurred due to Hurricane Katrina.
Interest income, which consists primarily of interest on short-term investments, increased $1.8 million to $8.8 million in fiscal 2007 resulting from higher levels of cash and short-term investments on hand, primarily in the first half of the year. Interest expense increased $228.3 million to $263.2 million in fiscal 2007 due to interest on long-term obligations incurred to finance the merger of the Company with KKR (the "Merger.")
The Company's results of operations in fiscal 2007 include fees and expenses related to the Merger and the related financing transactions totaling $102.6 million, principally consisting of investment banking fees, management fees, legal fees and stock compensation expense.
The results of operations for the 2007 year also include a net loss on debt retirement of $1.2 million, consisting of $6.2 million of expenses related to consent fees and other costs associated with a tender offer prior to the Merger for the Company's $200 million of 8 5/8% Notes, due 2010, of which approximately 99 percent were retired as a result of the tender offer. This was partially offset by a gain of approximately $4.9 million resulting from the repurchase of $25.0 million of the Company's 11.875%/12.625% Senior Subordinated Notes, due 2017, in the fourth quarter.
In addition, during 2007 the Company incurred a net loss of $2.4 million, including an unrealized loss of $4.1 million related to the change in the fair value of interest rate swaps prior to designating such swaps as cash flow hedges, offset by earnings of $1.7 million under the contractual provisions of the swap agreements.
For the year ended February 1, 2008 net loss was $12.8 million compared to net income of $137.9 million for the year ended February 2, 2007. Adjusted EBITDA, as defined in the Company's new credit facilities, increased 5.8 percent to $683.5 million in fiscal 2007 compared to $646.2 million in fiscal 2006.
Fourth Quarter Results
Sales in the fourth quarter of fiscal 2007 were $2.56 billion compared to $2.55 billion in the fourth quarter of fiscal 2006. Same store sales increased 0.4 percent on top of a 5.8 percent same store sales increase in the fourth quarter of 2006, which included significant markdown sales resulting from the Company's Project Alpha efforts. Same store sales in the month of December 2007 decreased 1.4 percent followed by an increase of 2.3 percent in January 2008. Same store sales increased 4.6 percent in February, the first month of fiscal 2008.
Fourth quarter gross profit increased by $94.4 million and, as a percentage of sales, increased to 28.9 percent from 25.3 percent in the same period of the prior year. The increase primarily reflects pressure on gross profit in the fourth quarter of 2006 due to Project Alpha inventory clearance activities which have been successfully completed. The increase also reflects higher purchase markups, partially offset by increased distribution and transportation costs, a LIFO charge and inventory shrink.
SG&A expense for the fourth quarter of 2007 decreased $9.0 million from the 2006 fourth quarter, and decreased as a percentage of sales to 21.6 percent in the 2007 quarter from 22.0 percent in the 2006 quarter. After excluding expenses in 2007 totaling $24.0 million, comprised of amortization of leasehold intangibles and accrued administrative employee incentive compensation, and excluding expenses of $34.0 million in 2006 comprised of Project Alpha-related expenses and a discretionary administrative employee bonus, SG&A in the 2007 fourth quarter was essentially even with the 2006 fourth quarter.
Interest income for the quarter decreased by approximately $0.8 million from the prior year, and interest expense increased by $96.5 million, resulting from interest on long-term obligations incurred to finance the Merger.
Net income in the fourth quarter was $55.4 million compared to $50.1 million in the fourth quarter of fiscal 2006. Adjusted EBITDA, as defined in the Company's new credit facilities, increased $0.8 million to $253.3 million from $252.5 million in the fourth quarter of fiscal 2006.
Merchandise Inventories
As of February 1, 2008, total merchandise inventories, at cost, were $1.29 billion compared to $1.43 billion as of February 2, 2007, a decrease of $0.14 billion, or approximately 10 percent in total and on an average per-store basis. The decrease in inventories was primarily driven by the Company's elimination of packaway inventories and improved merchandise allocation practices.
Long-Term Obligations
As of February 1, 2008, outstanding long-term obligations, including the current portion, were $4.28 billion, including $2.3 billion outstanding under a senior secured term loan facility and $102.5 million outstanding under an asset-based revolver facility. As of March 27, 2008, the Company has no outstanding borrowings under its asset-based revolver facility, with excess availability of $853 million. The ratio of long-term obligations to Adjusted EBITDA decreased to 6.3 times from 7.1 times since the closing of the Merger transaction in July.
Cash Flow
For the full fiscal year, the Company generated $441.6 million of cash from operating activities versus $405.4 million in fiscal 2006. Excluding interest payments in both years, cash flow from operating activities increased to $679.5 million in 2007 from $429.5 million in 2006 due primarily to improved inventory and payables management.
Total capital expenditures in fiscal 2007, including amounts in accounts payable, were $142.1 million for remodels and relocations of existing stores and new stores as well as supply chain and information technology investments. In addition, the Company repurchased a promissory note for $37 million relating to the lease on its Ardmore distribution center.
Operating Priorities for Dollar General
The Company's new Chief Executive Officer, Rick Dreiling, today discussed Dollar General's Operating Priorities, including a series of initiatives intended to leverage the Company's strong history but also to effect positive change that will help deliver sustainable and profitable growth over the long-term.
Mr. Dreiling stated, "Dollar General is a leader in its channel and has consistently delivered same store sales growth throughout changing and diverse economic times. That said, there are areas within the business that require attention. Our team has identified specific actions that are needed to accelerate improvement in performance and help us achieve our vision for the Dollar General of the future. Our intention is to build on the Company's recent successes while also introducing greater operating discipline and a more strategic approach to growth. Specifically, we have established a plan based on four basic but critical operating priorities that will drive all of our actions going forward."
1. Drive productive sales growth. The Company will focus on maximizing sales productivity in its existing stores and generating improved same store sales growth. Specifically, management will work to increase shopper frequency, expand basket size, and maximize square foot productivity.
2. Increase gross margins. Management will work aggressively to increase margins and overall profitability by reducing shrink, refining the Company's pricing strategy, continuing to grow Dollar General's private label offering, and overhauling its sourcing efforts.
3. Leverage process improvements and information technology to reduce costs. The Company will identify and work to remove expenses that are not critical to operations, taking advantage of opportunities to reduce expenses in the distribution and transportation network as well as at the store and corporate levels.
4. Strengthen and expand Dollar General's culture of "serving others." Dollar General will work to offer a consistent experience across our store base, elevating customer service standards and defining a brand proposition that resonates with our customers and drives customer loyalty. In addition, management will also focus on making Dollar General an employer of choice and a contributing member of each of the communities in which the Company operates.
Company Outlook
In 2008, the Company plans to open approximately 200 new Dollar General stores and to relocate or remodel approximately 400 stores. Dollar General expects capital expenditures of approximately $200 million to $220 million, primarily related to the opening of new stores as well as the remodel and relocation of existing stores and other special initiatives. Further, based on the above outlined operating priorities, the Company is committed to productive sales growth, expense management, and gross margin expansion in 2008.
"As we enter fiscal 2008, we are cautiously optimistic about the prospects for Dollar General," concluded Mr. Dreiling. "We recognize that this is a challenging time for retailers and we are also aware that as we roll out our operating plan we may uncover other business challenges that need to be addressed. Nevertheless, our team is very excited about the current year and beyond. We have a resilient and proven business model, a focused management team, and a detailed list of operating priorities. We are confident that we have the right plan in place and expect that our efforts will enhance Dollar General's position as a leading national discount retailer and generate positive long-term benefits for the Company and its stakeholders."
Summary of Change in Ownership
On July 6, 2007 Dollar General completed a merger in which its former shareholders received $22.00 in cash for each share of the Company's common stock held, or approximately $6.9 billion in total. As a result of the Merger, Dollar General is a subsidiary of Buck Holdings, L.P., a Delaware limited partnership controlled by investment funds affiliated with Kohlberg Kravis Roberts & Co., L.P. ("KKR").
The change in ownership resulted in the application of purchase accounting which requires that various balance sheet accounts be adjusted to fair value as of the transaction date. The discussion of 2007 financial results in this press release is based on the combined results of the "Predecessor" Company from February 3, 2007 through July 6, 2007, and the "Successor" Company from July 7, 2007 through February 1, 2008, but the breakdown can be viewed in the tables attached to this press release. The combination of these periods is not in accordance with generally accepted accounting principles ("GAAP") and should not be considered a substitute for GAAP. In addition, these combined results should not be used as an indicator of future performance.
Conference Call Information
The Company will hold a conference call on Friday, March 28, 2008 at 8:30 a.m. CDT/9:30 a.m. EDT, hosted by Rick Dreiling, 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." The call will also be broadcast live online at www.dollargeneral.com under "Investing, Conference Calls and Investor Events." A replay of the conference call will be available through Friday, April 11, 2008 and will be accessible online or by calling (334) 323-7226. The pass code for the replay is 19269282.
About Dollar General Corporation
Dollar General is the largest discount retailer in the United States by number of stores with more than 8,200 neighborhood stores located in 35 states. Dollar General helps shoppers Save Time. Save Money. Every Day.(R) by offering national branded items that are frequently used and replenished such as food, snacks, health and beauty aids, cleaning supplies, basic apparel, house wares and seasonal items at everyday low prices in convenient neighborhood stores. Dollar General is among the largest retailers of top-quality products made by America's most trusted manufacturers such as Procter & Gamble, Kimberly Clark, Unilever, Kellogg's, General Mills, Nabisco, and Fruit of the Loom. The Company store support center is located in Goodlettsville, Tennessee. Dollar General's Web site can be reached at www.dollargeneral.com.
Forward-Looking Statements
This press release contains forward-looking information, such as the information in the sections entitled "Operating Priorities for Dollar General" and "Company Outlook." The words "believe," "anticipate," "project," "plan," "schedule," "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. 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. Factors that may result in actual results differing from such forward-looking information include, but are not limited to those set forth in the Company's Amendment No. 1 to Registration Statement on Form S-4, filed with the SEC on January 25, 2008.
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 or to be discussed during the March 28th conference call has not been derived in accordance with GAAP, including EBITDA and Adjusted EBITDA. Reconciliations to net income of EBITDA and Adjusted EBITDA used in this press release are provided in the accompanying table.
EBITDA and Adjusted EBITDA are not measures of financial performance or condition, liquidity or profitability, and should not be considered as an alternative to (1) net income, operating income or any other performance measures determined in accordance with GAAP or (2) operating cash flows 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 and debt service requirements and replacement of fixed assets. EBITDA and Adjusted EBITDA have limitations as analytical tools and should not be considered in isolation or as a substitute for analysis of the Company's results as reported under GAAP. Because not all companies use identical calculations, these presentations may not be comparable to other similarly titled measures of other companies. The Company believes that the presentation of EBITDA and Adjusted EBITDA is appropriate to provide additional information about the calculation of a material financial ratio in the Company's new credit facilities. Adjusted EBITDA is a material component of that ratio. For more discussion regarding the financial ratio in the Company's new credit facilities, the reasons management believes these non-GAAP measures are useful to investors, and the limitations of these non-GAAP measures, please see the Company's Amendment No. 1 to Registration Statement on Form S-4 filed with the SEC on January 25, 2008.
DOLLAR GENERAL CORPORATION AND SUBSIDIARIES
Consolidated Balance Sheets
(In thousands, except per share amount)
Successor Predecessor
----------- -----------
February 1, February 2,
2008 2007
----------- -----------
ASSETS
Current assets:
Cash and cash equivalents $ 100,209 $ 189,288
Short-term investments 19,611 29,950
Merchandise inventories 1,288,661 1,432,336
Income taxes receivable 32,501 9,833
Deferred income taxes 17,297 24,321
Prepaid expenses and other current assets 59,465 57,020
----------------------------------------------------------------------
Total current assets 1,517,744 1,742,748
----------------------------------------------------------------------
Net property and equipment 1,274,245 1,236,874
----------------------------------------------------------------------
Goodwill 4,344,930 2,337
----------------------------------------------------------------------
Intangible assets, net 1,370,557 86
----------------------------------------------------------------------
Other assets, net 148,955 58,469
----------------------------------------------------------------------
Total assets $8,656,431 $3,040,514
======================================================================
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Current portion of long-term obligations $ 3,246 $ 8,080
Accounts payable 551,040 555,274
Accrued expenses and other 300,956 253,558
Income taxes payable 2,999 15,959
----------------------------------------------------------------------
Total current liabilities 858,241 832,871
----------------------------------------------------------------------
Long-term obligations 4,278,756 261,958
----------------------------------------------------------------------
Deferred income taxes 486,725 41,597
----------------------------------------------------------------------
Other liabilities 319,714 158,341
----------------------------------------------------------------------
Commitments and contingencies
Redeemable common stock 9,122 -
----------------------------------------------------------------------
Shareholders' equity:
Preferred stock, Shares authorized 1,000,000 -
Series B junior participating preferred
stock, stated value $0.50 per share; Shares
authorized: 10,000; Issued: None -
Common stock; $0.50 par value, 1,000,000
shares authorized, 555,482 shares issued and
outstanding at February 1, 2008 and 500,000
shares authorized, 312,436 shares issued and
outstanding at February 2, 2007,
respectively 277,741 156,218
Additional paid-in capital 2,480,062 486,145
Retained earnings (accumulated deficit) (4,818) 1,103,951
Accumulated other comprehensive loss (49,112) (987)
Other shareholders' equity - 420
----------------------------------------------------------------------
Total shareholders' equity 2,703,873 1,745,747
----------------------------------------------------------------------
Total liabilities and shareholders' equity $8,656,431 $3,040,514
======================================================================
DOLLAR GENERAL CORPORATION AND SUBSIDIARIES
Consolidated Statements of Operations
(Dollars in thousands)
Successor Predecessor
----------------------------------
13 Weeks Ended 13 Weeks Ended
February 1, 2008 February 2, 2007
----------------------------------------------------------------------
Net sales $ 2,559,573 $ 2,553,986
Cost of goods sold 1,819,202 1,908,036
----------------------------------------------------------------------
Gross profit 740,371 645,950
Selling, general and administrative 553,905 562,875
----------------------------------------------------------------------
Operating profit 186,466 83,075
Interest income (1,378) (2,210)
Interest expense 104,420 7,891
Loss on interest rate swaps 345 -
Gain on debt retirement, net (4,938) -
----------------------------------------------------------------------
Income before income taxes 88,017 77,394
Income tax expense 32,628 27,304
----------------------------------------------------------------------
Net income $ 55,389 $ 50,090
======================================================================
DOLLAR GENERAL CORPORATION AND SUBSIDIARIES
Consolidated Statements of Operations
(Dollars in thousands)
Successor(a) Predecessor
July 7, February 3,
2007 2007 Combined Predecessor
through through Year ended Year ended
February 1, July 6, February 1, February 2,
2008 2007 2008 2007
---------------------------------- ----------- ----------- -----------
Net sales $5,571,493 $3,923,753 $9,495,246 $9,169,822
Cost of goods sold 3,999,599 2,852,178 6,851,777 6,801,617
---------------------------------- ----------- ----------- -----------
Gross profit 1,571,894 1,071,575 2,643,469 2,368,205
Selling, general and
administrative 1,324,508 960,930 2,285,438 2,119,929
Transaction and
related costs 1,242 101,397 102,639 -
---------------------------------- ----------- ----------- -----------
Operating profit 246,144 9,248 255,392 248,276
Interest income (3,799) (5,046) (8,845) (7,002)
Interest expense 252,897 10,299 263,196 34,915
Loss on interest rate
swaps 2,390 - 2,390 -
Loss on debt
retirement, net 1,249 - 1,249 -
---------------------------------- ----------- ----------- -----------
Income (loss) before
income taxes (6,593) 3,995 (2,598) 220,363
Income tax expense
(benefit) (1,775) 11,993 10,218 82,420
---------------------------------- ----------- ----------- -----------
Net income (loss) $ (4,818) $ (7,998) $ (12,816) $ 137,943
================================== =========== =========== ===========
(a) Includes the results of operations of Buck Acquisition Corp. for
the period prior to its merger with and into Dollar General
Corporation from March 6, 2007 (its formation) through July 6, 2007
(reflecting the change in fair value of interest rate swaps), and the
post-merger results of Dollar General Corporation for the period from
July 7, 2007 through February 1, 2008.
DOLLAR GENERAL CORPORATION AND SUBSIDIARIES
Consolidated Statements of Cash Flows
(In thousands)
Successor(a) Predecessor
--------------------------------------------
July 7, February 3,
2007 2007 Combined Predecessor
-------------------------
through through Year ended Year ended
February 1, July 6, February 1, February 2,
2008 2007 2008 2007
----------------------------------------------------------------------
(30 weeks) (22 Weeks) (52 Weeks) (52 Weeks)
Cash flows from
operating
activities:
Net income (loss) $ (4,818) $ (7,998) $ (12,816) $ 137,943
Adjustments to
reconcile net
income (loss) to
net cash provided
by operating
activities:
Depreciation and
amortization 150,213 83,917 234,130 200,608
Deferred income
taxes 19,551 (20,874) (1,323) (38,218)
Tax benefit from
stock option
exercises - (3,927) (3,927) (2,513)
Loss on debt
retirement, net 1,249 - 1,249 -
Noncash share-
based
compensation 3,827 45,433 49,260 7,578
Noncash
unrealized loss
on interest rate
swaps 3,705 - 3,705 -
Noncash inventory
adjustments and
asset
impairments - - - 78,115
Change in
operating assets
and liabilities:
Merchandise
inventories 79,469 16,424 95,893 (28,057)
Prepaid expenses
and other
current assets 3,739 (6,184) (2,445) (5,411)
Accounts payable (41,395) 34,794 (6,601) 53,544
Accrued expenses
and other
liabilities 16,061 52,995 69,056 38,353
Income taxes 7,348 2,809 10,157 (35,165)
Other 655 4,557 5,212 (1,420)
----------------------------------------------------------------------
Net cash provided
by operating
activities 239,604 201,946 441,550 405,357
----------------------------------------------------------------------
Cash flows from
investing
activities:
Merger, net of
cash acquired (6,738,391) - (6,738,391) -
Purchases of
property and
equipment (83,641) (56,153) (139,794) (261,515)
Purchases of
short-term
investments (3,800) (5,100) (8,900) (49,675)
Sales of short-
term investments 21,445 9,505 30,950 51,525
Purchases of long-
term investments (7,473) (15,754) (23,227) (25,756)
Purchases of
promissory notes (37,047) - (37,047) -
Insurance proceeds
related to
property and
equipment - - - 1,807
Proceeds from
sales of property
and equipment 533 620 1,153 1,650
----------------------------------------------------------------------
Net cash used in
investing
activities (6,848,374) (66,882) (6,915,256) (281,964)
----------------------------------------------------------------------
Cash flows from
financing
activities:
Issuance of common
stock 2,759,540 - 2,759,540 -
Borrowings under
revolving credit
facility 1,522,100 - 1,522,100 2,012,700
Repayments of
borrowings under
revolving credit
facility (1,419,600) - (1,419,600) (2,012,700)
Issuance of long-
term obligations 4,176,817 - 4,176,817 -
Repayments of
long-term
obligations (241,945) (4,500) (246,445) (14,118)
Debt issuance cost (87,392) - (87,392) -
Payment of cash
dividends - (15,710) (15,710) (62,472)
Proceeds from
exercise of stock
options - 41,546 41,546 19,894
Repurchases of
common stock (541) - (541) (79,947)
Tax benefit of
stock options - 3,927 3,927 2,513
Other financing
activities - - - (584)
----------------------------------------------------------------------
Net cash provided
by (used in)
financing
activities 6,708,979 25,263 6,734,242 (134,714)
----------------------------------------------------------------------
Net increase
(decrease) in cash
and cash
equivalents 100,209 160,327 260,536 (11,321)
Cash and cash
equivalents,
beginning of
period - 189,288 189,288 200,609
Cash balance at
Merger date (349,615)
----------------------------------------------------------------------
Cash and cash
equivalents, end
of period $ 100,209 $ 349,615 $ 100,209 $ 189,288
======================================================================
Supplemental cash
flow information:
Cash paid
(received) for:
Interest $ 226,738 $ 11,246 $ 237,984 $ 24,180
Income taxes (30,574) 26,012 (4,562) 155,825
----------------------------------------------------------------------
Supplemental
schedule of non-
cash investing and
financing
activities:
Purchases of
property and
equipment awaiting
processing for
payment, included
in Accounts
payable $ 20,449 $ 13,544 $ 20,449 $ 18,094
Exchange of shares
and stock options
in business
combination 7,685 - 7,685 -
Purchases of
property and
equipment under
capital lease
obligations 592 1,036 1,628 5,366
Elimination of
financing
obligations - - - 46,608
Elimination of
promissory notes
receivable - - - 46,608
======================================================================
(a) Includes the results of operations of Buck Acquisition Corp. for
the period prior to its merger with and into Dollar General
Corporation from March 6, 2007 (its formation) through July 6, 2007
(reflecting the change in fair value of interest rate swaps), and the
post-merger results of Dollar General Corporation for the period from
July 7, 2007 through February 1, 2008.
DOLLAR GENERAL CORPORATION AND SUBSIDIARIES
Reconciliation of Non-GAAP Financial Measures
RECONCILIATION OF NET INCOME TO EBITDA AND ADJUSTED EBITDA
Combined 13 Weeks 13 Weeks 52 Weeks
Year Ended Year Ended Ended Ended Ended
Feb. 1, Feb. 2, Feb. 1, Feb. 2, May 4,
(In millions) 2008 2007 2008 2007 2007(a)
-----------------------------------------------------
Net income (loss) $ (12.8) $ 137.9 $ 55.4 $ 50.1 $ 123.9
Add (subtract):
Interest income (8.8) (7.0) (1.4) (2.2) (7.1)
Interest expense 263.2 34.9 104.4 7.9 33.8
Depreciation and
amortization 226.4 200.6 56.5 50.6 202.3
Income taxes 10.2 82.4 32.6 27.3 69.7
-----------------------------------------------------
EBITDA 478.2 448.9 247.5 133.7 422.6
-----------------------------------------------------
Adjustments:
Transaction and
related costs 102.6 - - - 5.6
(Gain) loss on
debt retirement 1.2 - (4.9) - -
Loss on interest
rate swaps 2.4 - 0.3 - 2.1
Contingent loss
on distribution
center leases 12.0 - - - -
Impact of
markdowns
related to
inventory
clearance
activities,
including LCM
adjustments,
net of
purchasing
accounting
adjustments 5.7 160.0 1.6 87.3 153.9
SG&A related to
store closing
and inventory
clearance
activities 54.0 33.1 0.2 24.4 62.4
Operating losses
(cash) of
stores to be
closed 10.5 14.9 1.1 6.1 17.2
Hurricane
Katrina
insurance
proceeds - (13.0) - - (7.9)
Hurricane
Katrina
expenses and
write-offs - 1.3 - - 0.9
Monitoring and
consulting fees
to affiliates 4.8 - 2.0 - -
Stock option and
restricted
stock unit
expense 6.5 - 0.7 - -
Indirect merger-
related costs 4.6 - 4.6 - -
Other 1.0 1.0 0.2 1.0 1.7
-----------------------------------------------------
Total Adjustments 205.3 197.3 5.8 118.8 235.9
-----------------------------------------------------
Adjusted EBITDA $ 683.5 $ 646.2 $ 253.3 $ 252.5 $ 658.5
=====================================================
(a) 52 week data used in calculation of ratio of long-term obligations
to Adjusted EBITDA below.
CALCULATION OF RATIO OF LONG-TERM OBLIGATIONS TO ADJUSTED EBITDA
At Close February 1,
(in millions) July 6, 2007 2008
------------- -----------
Senior secured
term-loan
facility $ 2,300.0 $ 2,300.0
Senior secured
asset-based
revolving credit
facility 432.3 102.5
10 5/8% Senior
Notes due July
15, 2015, net of
discount 1,151.8 1,152.9
11 7/8%/12 5/8%
Senior
Subordinated
Notes due July
15, 2017 725.0 700.0
8 5/8% Notes due
June 15, 2010 1.8 1.8
Financing and
capital lease
obligations 52.2 10.3
Tax increment
financing due
February 1, 2035 14.5 14.5
-------------------------
$ 4,677.6 $ 4,282.0
-------------------------
LTM Adjusted
EBITDA(b) $ 658.5 $ 683.5
-------------------------
Total Debt / 7.1x 6.3x
Adjusted EBITDA
=========================
(b) Ratio as of July 6, 2007 based on Adjusted EBITDA for the 52-week
period ended May 4, 2007, the most recent reported period.
DOLLAR GENERAL CORPORATION AND SUBSIDIARIES
Selected Additional Information
Net Sales by Category (in thousands)
----------------------------------------------------------------------
Year Ended
-------------------------------
February 1, February 2, %
2008 2007 Change
----------- ----------- -------
Highly consumable $6,316,834 $6,022,014 4.9%
Seasonal 1,513,236 1,509,999 0.2%
Home products 869,752 914,357 (4.9)%
Basic clothing 795,424 723,452 9.9%
----------- ----------- -------
Total sales $9,495,246 $9,169,822 3.5%
=========== =========== =======
Quarter Ended
-------------------------------
February 1, February 2,
2008 2007 %
(13 Weeks) (13 Weeks) Change
-------------------------------
Highly consumable $1,615,481 $1,539,327 4.9%
Seasonal 499,836 539,344 (7.3)%
Home products 243,600 275,935 (11.7)%
Basic clothing 200,656 199,380 0.6%
----------- ----------- -------
Total sales $2,559,573 $2,553,986 0.2%
=========== =========== =======
New Store Activity
----------------------------------------------------------------------
Year Ended
-----------------------
February 1, February 2,
2008 2007
----------- -----------
Beginning store count 8,229 7,929
New store openings 365 537
Store closings (400) (237)
----------- -----------
Net new stores (35) 300
----------- -----------
Ending store count 8,194 8,229
Total selling square footage (000's) 57,376 57,299
SOURCE: Dollar General Corporation
Dollar General Corporation Investor Contact: Emma Jo Kauffman, 615-855-5525 or Media Contact: Tawn Earnest, 615-855-5209
Copyright Business Wire 2008
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