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 Second Quarter EPS of $0.18; Updates Fiscal 2003 Outlook

August 28, 2003

GOODLETTSVILLE, Tenn., Aug 28, 2003 /PRNewswire-FirstCall via COMTEX/ -- Dollar General Corporation (NYSE: DG) today reported net income for the second quarter of fiscal 2003 of $59.9 million, or $0.18 per diluted share, compared to $42.4 million, or $0.13 per diluted share, in the second quarter of fiscal 2002, an increase of 41.5 percent. Excluding restatement-related items from the prior year's results, net income in the quarter increased 53.4 percent when compared against net income of $39.1 million, or $0.12 per diluted share, in 2002. In the second quarter of 2002, the Company recorded approximately $5.2 million of restatement-related pre-tax income, primarily from insurance proceeds.

Net sales during the second quarter increased 13.6 percent to $1.65 billion compared to $1.45 billion in the second quarter of 2002. The increase resulted primarily from 588 net new stores and a same-store sales increase of 4.7 percent.

Gross profit during the quarter was $472.8 million, or 28.6 percent of sales, versus $387.4 million, or 26.7 percent of sales, in the prior year. The increase in the gross margin rate as a percent to sales is primarily attributable to a higher average markup on inventory purchases in all four of the Company's merchandise categories. The Company's provision for inventory shrinkage, calculated at the retail value of the inventory, as a percentage of net sales, decreased to 3.05 percent in the second quarter of 2003 from 3.61 percent in 2002. In addition, damaged product markdowns decreased from the prior year quarter.

Selling, general and administrative expenses ("SG&A") for the quarter were $371.0 million, or 22.5 percent of sales, in the current year, versus $313.7 million, or 21.6 percent of sales, in the prior year. The increase in SG&A as a percent to sales is primarily due to increases in workers' compensation and general liability costs, costs related to the departure of two officers of the Company, increases in store occupancy and utilities costs, and an increase in the accrual for bonuses resulting from the Company's strong financial performance in the first half of the year.

Net interest expense during the current year period decreased by 30.3 percent to $7.9 million in the current year quarter compared to $11.3 million in the prior year. The decrease is primarily attributable to lower average debt outstanding in the current year quarter. The Company had $289.4 million in debt outstanding at August 1, 2003, compared to $521.8 million at August 2, 2002.

For the 26-week year-to-date period, net income was $120.3 million in fiscal 2003, or $0.36 per diluted share, compared to $88.3 million, or $0.26 per diluted share, in the comparable prior year period, an increase of 36.2 percent. Excluding net restatement-related items from both years, year-to-date net income increased 36.4 percent to $120.5 million, or $0.36 per diluted share, in fiscal 2003 compared to net income of $88.4 million, or $0.26 per diluted share, in the comparable prior year period. Year-to-date net sales increased 13.3 percent, including a same-store sales increase of 4.5 percent.

Updated 2003 Outlook

The Company projects net income, excluding restatement-related items, to increase 15 to 20 percent for the year. The Company had previously indicated that it expected net income, excluding restatement-related items, to increase by 11 to 15 percent in 2003. Total revenues in 2003 are expected to increase 13 to 15 percent, including a same store sales increase of four to six percent. While the Company expects gross margin for the full year to be higher than in the prior year, gross margin for the fourth quarter of 2003 will likely be lower than the 30.01% gross margin reported in the fourth quarter of 2002. The annual SG&A rate to sales for 2003 is expected to be higher than in the prior year. The Company expects to open a total of approximately 650 new stores, close 50 to 70 stores, and relocate or remodel 60 to 80 stores. Capital expenditures for the year are expected to be approximately $165 million.

Conference Call

The Company will host a conference call on Thursday, August 28, 2003, at 10 a.m. ET to discuss the quarter's results. The security code for the conference call is "Dollar General." If you wish to participate, please call 334-260-2280 at least 10 minutes before the conference call is scheduled to begin. A webcast of the call can also be accessed live on Dollar General's Web site at www.dollargeneral.com by clicking on the home page spotlight item. A replay of the conference call will be available until 5 p.m. ET on Thursday, September 4, online or by calling 334-323-7226. The access code for the replay is 40954 and the pass code is 86362.

Dollar General is a Fortune 500® discount retailer with 6,479 neighborhood stores in 27 states as of August 1, 2003. Dollar General stores offer convenience and value to customers, by providing consumable basics, items that are frequently used and replenished, such as food, snacks, health and beauty aids and cleaning supplies, as well as an appealing selection of basic apparel, housewares and seasonal items at everyday low prices. The typical Dollar General store has 6,750 square feet of selling space and is located within five miles of its target customers.

Non-GAAP Disclosures

This release includes certain historical and future financial information not derived in accordance with generally accepted accounting principles ("GAAP"). This information should not be considered a substitute for any measures derived in accordance with GAAP. The Company believes that this information is useful to investors as it indicates more clearly the Company's comparative year-to-year operating results. The Compensation Committee of the Company's Board of Directors may use portions of this information for compensation purposes to ensure that employees are not inappropriately penalized or rewarded as a result of unusual items affecting the Company's financial statements. Management may also use this information to better understand the Company's underlying operating results. We have included a reconciliation of this information, to the most comparable GAAP measures, either in this release or in the accompanying reconciliation tables.

This press release contains forward-looking information, including information regarding the Company's updated 2003 outlook. The words "believe," "anticipate," "project," "plan," "expect," "estimate," "objective," "forecast," "goal," "intend," "will likely result," or "will continue" and similar expressions generally identify forward-looking statements. The Company believes the assumptions underlying these forward-looking statements are reasonable; however, any of the assumptions could be inaccurate, and, therefore, actual results may differ materially from those projected by, or implied in, the forward-looking statements. A number of factors may result in actual results differing from such forward-looking information, including, but not limited to: the Company's ability to maintain adequate liquidity through its cash resources and credit facilities; the Company's ability to comply with the terms of the Company's credit facilities (or obtain waivers for non-compliance); transportation and distribution delays or interruption; the Company's ability to negotiate effectively the cost and purchase of merchandise; inventory risks due to shifts in market demand; changes in product mix; interruptions in suppliers' businesses; costs and potential problems and interruptions associated with implementation of new or upgraded systems and technology; fuel price and interest rate fluctuations; a deterioration in general economic conditions caused by acts of war or terrorism; temporary changes in demand due to weather patterns; seasonality of the Company's business; delays associated with building, opening and operating new stores; the impact of the SEC inquiry related to the restatement of certain of the Company's financial statements; and other risk factors discussed in our SEC filings, including in our most recent Annual Report on Form 10-K.

Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this release. The Company disclaims any obligation to publicly update or revise any forward-looking statements contained herein to reflect events or circumstances occurring after the date of this release or to reflect the occurrence of unanticipated events.

                 DOLLAR GENERAL CORPORATION AND SUBSIDIARIES
                         Consolidated Balance Sheets
                                (In thousands)

                                   August 1,       August 2,    January 31,
                                     2003            2002           2003
                                  (Unaudited)     (Unaudited)
    ASSETS
    Current assets:
     Cash and cash equivalents     $102,276        $ 39,517      $121,318
     Merchandise inventories      1,184,709       1,058,200     1,123,031
     Deferred income taxes           22,829          25,552        33,860
     Income taxes receivable             --          55,573            --
     Other current assets            57,494          65,263        45,699
         Total current assets     1,367,308       1,244,105     1,323,908

    Property and equipment,
     at cost                      1,639,164       1,547,346     1,577,823
      Less accumulated depreciation
       and amortization             652,701         548,073       584,001

         Net property and equipment 986,463         999,273       993,822

    Other assets, net                11,610          21,851        15,423

         Total assets            $2,365,381      $2,265,229    $2,333,153

    LIABILITIES AND
     SHAREHOLDERS' EQUITY
    Current liabilities:
     Current portion of
      long-term obligations         $16,957        $ 15,132       $16,209
     Accounts payable               352,717         346,786       341,303
     Accrued expenses and other     255,027         219,220       239,898
     Income taxes payable             9,182              --        67,091

         Total current liabilities  633,883         581,138       664,501

    Long-term obligations           272,420         506,707       330,337
    Deferred income taxes            56,933          46,030        50,247
         Total liabilities          963,236       1,133,875     1,045,085

    Shareholders' equity:
     Preferred stock                     --              --            --
     Common stock                   167,345         166,670       166,670
     Additional paid-in capital     331,185         312,589       313,269
     Retained earnings              909,114         656,894       812,220
     Accumulated other
      comprehensive loss             (1,266)         (2,012)       (1,349)
                                  1,406,378       1,134,141     1,290,810

     Less other shareholders'
      equity                          4,233           2,787         2,742

         Total shareholders'
          equity                  1,402,145       1,131,354     1,288,068

         Total liabilities and
          shareholders' equity   $2,365,381      $2,265,229    $2,333,153


                 DOLLAR GENERAL CORPORATION AND SUBSIDIARIES
                      Consolidated Statements of Income
                   (In thousands, except per share amounts)
                                 (Unaudited)

                                           13 Weeks Ended

                          August 1,     % of Net   August 2,     % of Net
                            2003          Sales      2002          Sales

    Net sales           $1,651,094       100.00%  $1,453,727      100.00%
    Cost of goods sold   1,178,264        71.36    1,066,300        73.35
        Gross profit       472,830        28.64      387,427        26.65

    Selling, general
     and administrative    370,987        22.47      313,667        21.58
    Insurance proceeds          --           --       (4,500)       (0.31)

        Operating profit   101,843         6.17       78,260         5.38
    Interest expense, net    7,899         0.48       11,337         0.78

        Income before
         income taxes       93,944         5.69       66,923         4.60
    Provision for taxes
     on income              34,008         2.06       24,561         1.69

        Net income         $59,936         3.63%     $42,362         2.91%

    Earnings per share:
        Basic                $0.18                     $0.13

        Diluted              $0.18                     $0.13

    Weighted average shares:
        Basic              333,871                   333,067

        Diluted            336,841                   335,737

    Dividends per share     $0.035                    $0.032


                 DOLLAR GENERAL CORPORATION AND SUBSIDIARIES
                      Consolidated Statements of Income
                   (In thousands, except per share amounts)
                                 (Unaudited)

                                            26 Weeks Ended

                         August 1,      % of Net   August 2,     % of Net
                           2003           Sales      2002          Sales

    Net sales           $3,220,158       100.00%  $2,843,139      100.00%
    Cost of goods sold   2,295,422        71.28    2,075,420       73.00
        Gross profit       924,736        28.72      767,719       27.00

    Selling, general
     and administrative    719,942        22.36      610,971       21.49
    Insurance proceeds          --           --       (4,500)      (0.16)

        Operating profit   204,794         6.36      161,248        5.67
    Interest expense, net   17,310         0.54       21,769        0.77

        Income before
         income taxes      187,484         5.82      139,479        4.90
    Provision for taxes
     on income              67,216         2.09       51,189        1.80

        Net income        $120,268         3.73%     $88,290        3.10%

    Earnings per share:
        Basic                $0.36                     $0.27

        Diluted              $0.36                     $0.26

    Weighted average shares:
        Basic              333,557                   332,866

        Diluted            335,719                   335,286

    Dividends per share     $0.070                    $0.064


                 DOLLAR GENERAL CORPORATION AND SUBSIDIARIES
                    Consolidated Statements of Cash Flows
                                (In thousands)
                                 (Unaudited)

                                                         26 Weeks Ended
                                                    August 1,      August 2
                                                      2003           2002
    Cash flows from operating activities:
      Net income                                    $120,268        $88,290
      Adjustments to reconcile net income to
       net cash provided by operating activities:
         Depreciation and amortization                74,883         66,019
         Deferred income taxes                        17,657         87,296
         Tax benefit from stock option exercises       3,139          2,120
         Litigation settlement                            --       (162,000)
         Change in operating assets and liabilities:
           Merchandise inventories                   (61,678)        72,823
           Other current assets                      (11,795)       (13,675)
           Accounts payable                           11,414         24,323
           Accrued expenses and other                 15,930        (11,206)
           Income taxes                              (57,909)       (59,464)
           Other                                       1,756        (13,914)
             Net cash provided by
              operating activities                   113,665         80,612

    Cash flows from investing activities:
      Purchase of property and equipment             (65,874)       (70,445)
      Purchase of promissory notes                   (49,582)            --
      Proceeds from sale of property and equipment       141            127
             Net cash used in investing activities  (115,315)       (70,318)

    Cash flows from financing activities:
      Net borrowings under revolving credit facilities    --        170,000
      Repayments of long-term obligations             (7,979)      (389,561)
      Payment of cash dividends                      (23,374)       (21,307)
      Proceeds from exercise of stock options         14,214          4,509
      Other financing activities                        (253)         4,057
             Net cash used in financing activities   (17,392)      (232,302)

    Net decrease in cash and cash equivalents        (19,042)      (222,008)
    Cash and cash equivalents, beginning of period   121,318        261,525

    Cash and cash equivalents, end of period        $102,276        $39,517

    Supplemental schedule of noncash investing
     and financing activities:
    Purchase of property and equipment under
      capital lease obligations                         $427         $6,233


                 DOLLAR GENERAL CORPORATION AND SUBSIDIARIES
                    Reconciliation of Non-GAAP Disclosures
                   (In thousands, except per share amounts)
                                 (Unaudited)

                                 13 Weeks Ended            26 Weeks Ended
                             August 1,    August 2,    August 1,    August 2,
                                2003       2002          2003         2002

    Net Income and Earnings
     Per Share
    Net income in accordance
     with GAAP                $59,936      $42,362     $120,268      $88,290
    Restatement-related items
     in SG&A                       39         (695)         369        4,623
    Restatement-related
     insurance proceeds            --       (4,500)          --       (4,500)
    Total restatement-related
     items                         39       (5,195)         369          123
    Tax effect                    (14)       1,907         (133)         (45)
    Total restatement-related
     items, net of tax             25       (3,288)         236           78
    Net income, excluding
     restatement-related
     items                    $59,961      $39,074     $120,504      $88,368

    Weighted average
     diluted shares
     outstanding              336,841      335,737      335,719      335,286
    Diluted earnings per share,
     excluding
     restatement-related items  $0.18        $0.12        $0.36        $0.26

    Selling, General and
     Administrative Expenses

    SG&A in accordance with
     GAAP                   $370,987      $313,667     $719,942     $610,971
       Less
        restatement-related
        items                     39          (695)         369        4,623
    SG&A, excluding
     restatement-related
     items                  $370,948      $314,362     $719,573     $606,348

    SG&A, excluding
     restatement-related
     items % to sales           22.5%         21.6%        22.3%        21.3%


                                                       Guidance Range
                                        Fiscal      Fiscal        Fiscal
                                         2002        2003          2003
    Annual Outlook
    Net income in accordance with
     GAAP                             $264,946    $286,950      $301,450

    Restatement-related items:
      Litigation settlement and
       related proceeds                (29,541)          --            --

      Restatement-related items in
       SG&A                              6,395          900           900
                                       (23,146)         900           900
      Tax effect                         9,073         (350)         (350)
    Total restatement-related items,
     net of tax                        (14,073)         550           550
    Net income, excluding
     restatement-related items        $250,873     $287,500      $302,000

    % increase over 2002,
     excluding restatement-related
     items                                               15%           20%


                 DOLLAR GENERAL CORPORATION AND SUBSIDIARIES
                       Selected Additional Information

                       Sales by Category (in thousands)
                                 (Unaudited)

                                13 Weeks Ended              26 Weeks Ended
                        August 1,   August 2, %    August 1,  August 2,   %
                          2003        2002  Change   2003       2002    Change

    Highly consumable $1,027,854   $892,507 15.2% $2,017,884 $1,743,744  15.7%
    Seasonal             263,468    226,328 16.4%    500,587    431,091  16.1%
    Home products        207,707    188,272 10.3%    407,176    379,383   7.3%
    Basic clothing       152,065    146,620  3.7%    294,511    288,921   1.9%
    Total sales       $1,651,094 $1,453,727 13.6% $3,220,158 $2,843,139  13.3%


                              New Store Activity
                                 (Unaudited)

                                                    26 Weeks Ended
                                          August 1, 2003     August 2, 2002

    Beginning store count                      6,113              5,540
    New store openings                           400                372
    Store closings                                34                 21
    Net new stores                               366                351
    Ending store count                         6,479              5,891
    Total selling square footage (000's)      43,796             39,760


                          Customer Transaction Data
                                 (Unaudited)

                                         13 Weeks Ended     26 Weeks Ended
                                    August 1,  August 2,  August 1,  August 2,
                                      2003       2002      2003          2002

    Same-store customer transactions  +4.7%      +7.6%      +4.1%      +6.5%
    Average customer purchase        $8.31      $8.28      $8.36      $8.30


SOURCE Dollar General Corporation

Investor - Emma Jo Kauffman, +1-615-855-5525, Media - Andrea
Turner, +1-615-855-5209, both of Dollar General Corporation

http://www.dollargeneral.com


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