About Dollar General Corporation
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 Reports Financial Results for Fiscal 2000 And Restated Results for 1999 and 1998
January 14, 2002
Company Also Reaches Settlement Agreements in Restatement Litigation
GOODLETTSVILLE, Tenn., Jan. 14 /PRNewswire-FirstCall/ -- Dollar General Corporation (NYSE: DG) announced today its audited restated financial statements for its fiscal years ended February 2, 2001 ("2000"), January 28, 2000 ("1999"), and January 29, 1999 ("1998"), and is filing today with the Securities and Exchange Commission its Annual Report on Form 10-K and the proxy statement for its annual meeting to be held on February 20, 2002.
The Company also announced today that it has reached a settlement agreement with the lead plaintiffs in the putative class action and derivative lawsuits that had been filed against the Company following the Company's announcement that it would restate its audited financial statements for 1998 and 1999 and its previously released unaudited financial information for fiscal 2000. As a result of the execution of the settlement agreement relating to the putative class action litigation, the Company has recognized an expense of $162.0 million in the fourth quarter of 2000, which reduced the Company's after tax net income in fiscal 2000 by $99.0 million, or $0.30 per diluted share.
The Company's restated net income and diluted earnings per share for 2000 were $70.6 million and $0.21, respectively, as compared to the $206.0 million and $0.62 previously reported. Excluding the litigation settlement expense, restated net income and diluted earnings per share would have been $169.6 million and $0.51, respectively. In 1999, restated net income and diluted earnings per share were $186.7 million and $0.55, respectively, as compared with the $219.4 million and $0.65 previously reported. In 1998, restated net income and diluted earnings per share were $150.9 million and $0.45, respectively, as compared with the $182.0 million and $0.54 previously reported.
Restatement of Financial Statements
In its April 30, 2001, announcement, based on a preliminary assessment of the accounting issues involved, the Company estimated that the reduction in aggregate earnings as a result of the restatement would be approximately $0.07 per share over the three-year period of 2000, 1999 and 1998. The review completed by the Company of its financial statements ultimately identified a number of accounting issues for restatement in addition to those that formed the basis for the preliminary estimate provided on April 30, 2001. As a result of these additional issues, and following the completion of the Company's review of the issues that had been identified originally, the restatement has resulted in an aggregate effect on diluted earnings per share, excluding the litigation settlement expense, of $0.30 (on a rounded basis) over the three-year period. Over the three-year period, the Company has reduced its diluted earnings per share:
* by approximately $0.05 to correctly record items impacting cost of goods
sold that were recorded incorrectly and/or that reflect more accurate
estimates;
* by approximately $0.11 to correctly record selling, general and
administrative ("SG&A") expenses that were either incurred but not
accrued, or recorded incorrectly;
* by approximately $0.11 to correctly record additional interest expense
required as a result of restating certain operating leases as capital
leases and financing obligations, and the addition of capital lease and
financing obligation liabilities to the Company' s balance sheets; and
by approximately $0.02 to correct errors in the Company's tax provision.
Class Action Settlement AgreementFollowing the Company's announcement on April 30, 2001, that it would restate its audited financial statements for fiscal 1999 and 1998 and its previously released unaudited financial information for fiscal 2000, more than 20 purported class action lawsuits were filed against the Company and certain current and former officers and directors of the Company, asserting claims under the federal securities laws. These cases were consolidated in federal court in Tennessee, and the court appointed the Florida State Board of Administration and the Teachers' Retirement System of Louisiana as lead plaintiffs under the Private Securities Litigation Reform Act of 1995 (the "Class Action").
The Company has reached a settlement agreement with the lead plaintiffs in the Class Action, pursuant to which the Company has agreed to make a cash payment to the class and to implement certain enhancements to its corporate governance and internal control procedures. The settlement agreement resolves all outstanding shareholder claims brought in the Class Action and is subject to confirmatory discovery by the plaintiffs and to court approval. As a result of the execution of the settlement agreement, the Company has recognized an expense of $162.0 million in the fourth quarter of 2000. The Company expects to receive from its insurers approximately $4.5 million in respect of the class action settlement, which amount has not been accrued in the Company's financial statements.
A number of purported shareholder derivative lawsuits have also been filed in Tennessee state and U.S. federal courts against certain current and former Company directors and officers and Deloitte & Touche LLP, the Company's former independent accountant.
The Company and the individual defendants have reached a settlement agreement with counsel to Michael Dixon, Jr., Carolinas Electrical Workers Retirement Fund and Thomas Dewey, the lead plaintiffs in the lead Tennessee state shareholder derivative action. The agreement includes a payment to the Company from a portion of the proceeds of the Company's director and officer liability insurance policies as well as certain corporate governance and internal control enhancements. Pursuant to the terms of such agreement, the Company anticipates that all other shareholder derivative lawsuits, which are currently stayed, will be dismissed with prejudice by the courts in which they are pending. Such agreement is subject to confirmatory discovery and to court approval. If the settlement agreement is approved, the Company expects that it will result in a net payment to the Company, after attorneys' fees payable to the plaintiffs' counsel, of approximately $24.8 million, which amount has not been accrued in the Company's financial statements.
2000 Results of Operations
Net sales totaled $4.55 billion for 2000 compared with $3.89 billion for 1999, an increase of 17.0 percent. The increase resulted primarily from 706 net new stores and a same-store sales increase of 0.9 percent. During the year, the Company opened 758 new stores, relocated or remodeled 237 stores and closed 52 stores.
Gross profit for 2000 was $1.25 billion, or 27.5 percent of sales, compared with $1.09 billion, or 28.1 percent of sales in 1999.
SG&A expense for 2000 was $934.9 million compared with $772.9 million in 1999, an increase of 21.0 percent. As a percentage of sales, SG&A expense was 20.5 percent in 2000 compared with 19.9 percent in 1999.
In 2000, interest expense was $45.4 million compared with $25.9 million in 1999. The increase in interest expense in 2000 resulted from the net addition of $213.6 million in various long-term obligations during 2000, including $200 million of 8 5/8 percent notes, issued in June 2000 to repay outstanding short-term borrowings and for general corporate purposes. The Company's total debt as of February 2, 2001, was $729.8 million compared with $516.2 million as of January 28, 2000, which includes synthetic lease balances of $383.2 million and $413.3 million, respectively.
The effective income tax rates for 2000 and 1999 were 35.0 percent and 36.7 percent, respectively. The reduction in the effective tax rate in 2000 was due to the 38.9 percent marginal tax rate applied against the litigation settlement expense. Excluding the tax impact of the litigation settlement expense, the effective tax rate in 2000 was 37.3 percent.
Net LIFO merchandise inventories increased 6.3 percent to $1.01 billion at February 2, 2001, from $0.95 billion at January 28, 2000.
Capital expenditures for 2000 totaled $216.6 million, compared with $142.1 million for 1999. The Company opened 758 new stores and relocated or remodeled 237 stores at a cost of $112.7 million in 2000, compared with opening 646 new stores and relocating or remodeling 409 stores at a cost of $72.7 million in 1999. The increase in 2000 in store-related capital expenditures was due principally to the construction of approximately 72 Company-owned stores. Distribution-related capital expenditures totaled $49.3 million in 2000, resulting primarily from costs associated with the new distribution centers in Alachua, Florida and Zanesville, Ohio. Capital expenditures during 2001 are projected to be approximately $135 million, and the Company anticipates funding its 2001 capital requirements with cash flows from operations.
Dollar General operates more than 5,550 neighborhood stores in 27 states and operates distribution centers in Florida, Kentucky, Mississippi, Missouri, Ohio, Oklahoma and Virginia.
This press release contains historical and forward-looking information. The words "believe," "anticipate," "project," "plan," "expect," "estimate," "objective," "forecast," "goal," "intend," "will likely result," or " will continue" and similar expressions identify forward looking statements. The forward-looking statements are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. 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 in the forward-looking statements. The factors that may result in actual results differing from such forward-looking information include, but are not limited to: the Company's ability to maintain adequate liquidity through its cash resources and credit facilities, including its ability to refinance or replace such facilities on favorable terms at the maturity thereof; the Company's ability to comply with the terms of the Company's credit facilities (or obtain waivers for non- compliance); general transportation and distribution delays or interruptions; inventory risks due to shifts in market demand; changes in product mix; interruptions in suppliers' businesses; 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 results of the Company's restatement and audit process; and the impact of the litigation and regulatory proceedings related to the restatement of the Company's financial statements, including the funding of the settlement of such litigation and the risk that the conditions to the effectiveness of such settlements, including the results of the plaintiffs' confirmatory discovery and the approval by the courts, may not be realized.
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 undertakes no 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
AUDITED INCOME STATEMENTS & KEY OPERATIONAL DATA
(000's)
Income Statements For the Year Ended
(restated) (restated)
February 2 January 28 January 29
2001 2000 1999
Sales $4,550,571 $3,887,964 $3,220,989
Cost of Sales 3,299,668 2,794,466 2,328,470
Gross Margin 1,250,903 1,093,498 892,519
SG&A Expense 934,899 772,928 639,534
Litigation Settlement Expense 162,000 0 0
Operating Income 154,004 320,570 252,985
Interest Expense 45,357 25,873 13,976
Pre-Tax Income 108,647 294,697 239,009
Taxes 38,005 108,024 88,075
Net Income $70,642 $186,673 $150,934
Diluted earnings per share $0.21 $0.55 $0.45
Weighted average diluted shares 333,858 337,904 335,763
KEY OPERATIONAL DATA
February 2 January 28 January 29
2001 2000 1999
Sales by Category:
Highly Consumable $2,518,052 $1,996,454 $1,364,032
Hardware and Seasonal $706,140 $640,791 $604,485
Basic Clothing $554,117 $482,390 $391,609
Home Products $772,262 $768,329 $860,863
TOTAL SALES $4,550,571 $3,887,964 $3,220,989
DOLLAR GENERAL CORPORATION
BALANCE SHEETS
($000's)
(Unaudited)
(restated) (restated)
February 2 January 28 January 29
2001 2000 1999
Assets
Current Assets:
Cash and cash equivalents $162,310 $54,742 $27,643
Merchandise inventories 896,235 952,432 793,596
Deferred income taxes 21,514 20,486 15,576
Other current assets 44,868 46,455 31,104
TOTAL CURRENT ASSETS 1,124,927 1,074,115 867,919
Property & equipment, at cost 1,339,554 1,109,376 706,790
Less: Accumulated depreciation and
amoritization 366,460 271,987 207,042
Net property and equipment 973,094 837,389 499,748
Merchandise inventories 116,000 0 0
Deferred income taxes 52,708 0 0
Other assets, net 15,733 12,124 8,345
TOTAL ASSETS $2,282,462 $1,923,628 $1,376,012
Liabilities & Shareholders' Equity
Current Liabilities
Current portion of long-term
obligations $9,035 $1,828 $725
Accounts payable 297,262 344,598 266,596
Accrued expenses 214,192 166,290 168,168
Income taxes 17,446 26,991 22,866
TOTAL CURRENT LIABILITIES 537,935 539,707 458,355
Long-Term obligations 720,764 514,362 221,694
Deferred income taxes 0 24,206 21,557
Litigation settlement payable 162,000 0 0
TOTAL LIABILITIES 1,420,699 1,078,275 701,606
Stockholders' Equity:
Preferred stock 0 0 858
Common stock 165,646 165,411 164,073
Additional paid-in capital 283,925 229,906 363,212
Retained earnings 414,318 450,036 346,790
Less: Treasury stock 0 0 200,527
Common stock purchased by
employee deferred compensation
trust 2,126 0 0
TOTAL STOCKHOLDERS' EQUITY 861,763 845,353 674,406
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $2,282,462 $1,923,628 $1,376,012
DOLLAR GENERAL CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(000's)
(Unaudited)
For the Year Ended
(restated) (restated)
February 2 January 28 January 29
2001 2000 1999
Cash flows from operating
activities:
Net income $70,642 $186,673 $150,934
Adjustments to reconcile net income
to net cash
provided by (used in) operating
activities
Depreciation and amortization 111,399 79,707 57,414
Deferred income taxes (77,942) (2,261) (3,889)
Tax benefit from stock option
exercises 19,018 30,287 32,252
Litigation settlement 162,000 -- --
Change in operating assets and
liabilities:
Merchandise inventories (59,803) (158,836) (171,239)
Other Current Assets 4,650 (15,351) (11,230)
Accounts payable (47,336) 78,002 86,623
Accrued expenses and other 39,391 (2,144) 14,931
Income taxes (9,545) 4,125 20,640
Other 3,031 (3,480) (2,745)
Net cash provided by (used
in) operating activities 215,505 196,722 173,691
Cash flows provided by (used in)
investing activities:
Purchase of property and equipment (216,584) (142,070) (143,382)
Proceeds from sale of property and
equipment 97,612 3,051 222
Net cash provided by (used
in) investing activities (118,972) (139,019) (143,160)
Cash flows provided by (used in)
financing activities:
Issuance of short-term borrowings 220,000 295,324 165,000
Repayments of short-term borrowings (220,000) (295,324) (186,933)
Issuance of long-term debt 199,595 22,848 72,257
Repayments of long-term debt (112,276) (7,705) (2,667)
Payment of cash dividend (42,237) (33,791) (26,661)
Proceeds from exercise of stock
options 34,130 38,797 30,727
Repurchase of common stock (62,988) (50,753) (73,236)
Purchase of common stock for
deferred compensation plan (2,126) 0 0
Settlement of derivative financial
instruments (3,063) 0 0
Transfer to ESOP 0 0 755
Net cash provided by (used
in) financing activities 11,035 (30,604) (20,758)
Net increase (decrease) in cash and
cash equivalents 107,568 27,099 9,773
Cash and cash equivalents beginning
of period 54,742 27,643 17,870
Cash and cash equivalents end of
period $162,310 $54,742 $27,643
Purchase of property and equipment
under capital lease obligation $126,290 $272,233 $120,863
Conversion of preferred stock to
common stock $ -- $200,527 $ --
DOLLAR GENERAL CORPORATION
EFFECTS OF RESTATEMENT
Year Ended February 2, 2001
As Restated
Excluding
As Restatement Litigation
Previously Related Settlement
Reported Adjustments As Restated Expense
Net Sales $4,551,511 $(940) $4,550,571
Cost of goods sold 3,293,126 6,542 3,299,668 3,299,668
Gross profit 1,258,385 (7,482) 1,250,903 1,250,903
SG&A Expense 923,760 11,139 934,899 934,899
Litigation settlement
expense -- 162,000 162,000 --
Operating profit 334,625 (180,621) 154,004 316,004
Interest Expense 11,508 33,849 45,357 45,357
Income before taxes on
income 323,117 (214,470) 108,647 270,647
Provisions for taxes on
income 117,098 (79,093) 38,005 100,951
Net income $206,019 $(135,377) $70,642 $169,696
Diluted earnings per share $0.62 ($0.41) $0.21 $0.51
Weighted average diluted
shares (000) 333,858 -- 333,858 333,858
Year Ended January 28, 2000
Restatement
As
Previously Related
Reported Adjustments As Restated
Net Sales $3,887,964 $ -- $3,887,964
Cost of goods sold 2,790,173 4,293 2,794,466
Gross profit 1,097,791 (4,293) 1,093,498
SG&A Expense 748,489 24,439 772,928
Operating profit 349,302 (28,732) 320,570
Interest Expense 5,157 20,716 25,873
Income before taxes on
income 344,145 (49,448) 294,697
Provisions for taxes on
income 124,718 (16,694) 108,024
Net income $219,427 $(32,754) $186,673
Diluted earnings per share $0.65 ($0.10) $0.55
Weighted average diluted
shares (000) 336,963 941 337,904
Year Ended January 29, 1999
As Restatement
Previously Related
Reported Adjustments As Restated
Net Sales $3,220,989 $ -- $3,220,989
Cost of goods sold 2,315,112 13,358 2,328,470
Gross profit 905,877 (13,358) 892,519
SG&A Expense 616,613 22,921 639,534
Operating profit 289,264 (36,279) 252,985
Interest Expense 8,349 5,627 13,976
Income before taxes on
income 280,915 (41,906) 239,009
Provisions for taxes on
income 98,882 (10,807) 88,075
Net income $182,033 $(31,099) $150,934
Diluted earnings per share $0.54 ($0.09) $0.45
Weighted average diluted
shares (000) 335,498 265 335,763
DOLLAR GENERAL CORPORATION
EFFECTS OF RESTATEMENT
REDUCTIONS OF DILUTED EARNINGS PER SHARE
Three-Year Feb. 2 Jan. 28 Jan. 29
Cumulative 2001 2000 1999
Cost of Goods Sold ($0.05) ($0.01) ($0.01) ($0.03)
SG&A Expense ($0.11) ($0.02) ($0.05) ($0.04)
Interest Expense ($0.11) ($0.06) ($0.04) ($0.01)
Tax Provision ($0.02) ($0.01) ($0.00) ($0.01)
Total Restatement Accounting
Adjustments* ($0.30) ($0.11) ($0.10) ($0.09)
EPS Impact of Litigation Settlement ($0.30) ($0.30) 0 0
TOTAL ($0.60) ($0.41) ($0.10) ($0.09)
* Totals may not foot due to rounding
SOURCE Dollar General CorporationCONTACT: investors, Kiley Fleming, CFA, +1-615-855-5525, or media, Andrea Turner, +1-615-855-5209, both of Dollar General Corporation
URL: http://www.dollargeneral.com