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 Third Quarter EPS OF $0.23
December 04, 2003
GOODLETTSVILLE, Tenn., Dec. 4 /PRNewswire-FirstCall/ -- Dollar General Corporation (NYSE: DG) today reported net income for the third quarter of fiscal 2003 of $77.9 million, or $0.23 per diluted share, compared to $68.6 million, or $0.20 per diluted share, in the third quarter of fiscal 2002, an increase of 13.6 percent. Excluding restatement-related items from the prior year's results, net income in the quarter increased 46.3 percent when compared against net income of $53.2 million, or $0.16 per diluted share, in 2002. In the third quarter of 2002, the Company recorded approximately $24.3 million of net restatement-related pre-tax income, primarily from insurance proceeds.
Net sales during the third quarter of 2003 increased 12.5 percent to $1.69 billion compared to $1.50 billion in the third quarter of 2002. The increase resulted primarily from 577 net new stores and a same-store sales increase of 3.8 percent.
Gross profit during the quarter was $516.9 million, or 30.7 percent of sales, versus $428.6 million, or 28.6 percent of sales, in the prior year. The increase in the gross margin rate as a percent to sales is attributable to higher average markup on inventories, a decrease in distribution and transportation expenses as a percentage of sales, a decrease in the Company's provision for inventory shrinkage, strong sales of high margin seasonal inventories and a $7.8 million favorable non-recurring inventory adjustment primarily representing a change in the Company's estimated provision for inventory shrinkage. The non-recurring adjustment resulted from using an improved inventory ownership estimate due to the implementation, for financial reporting purposes, of an item level perpetual inventory system. The Company reiterated that it anticipates a challenging gross margin rate comparison versus last year's performance in its fourth quarter, which ends on January 30, 2004.
Selling, general and administrative expenses ("SG&A") for the quarter were $385.6 million, or 22.9 percent of sales, in the current year, versus $335.2 million, or 22.4 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, store training expenses, and the accrual for bonuses.
Net interest expense during the current year period decreased by 30.9 percent to $8.0 million in the current year quarter compared to $11.5 million in the prior year. The decrease is primarily attributable to lower average debt outstanding in the current year quarter. The Company had $285.7 million in debt outstanding at October 31, 2003, compared to $518.3 million at November 1, 2002.
For the 39-week year-to-date period, net income was $198.2 million in fiscal 2003, or $0.59 per diluted share, compared to $156.9 million, or $0.47 per diluted share, in the comparable prior year period, an increase of 26.3 percent. Excluding net restatement-related items from both years, year-to-date net income increased 40.1 percent to $198.4 million, or $0.59 per diluted share, in fiscal 2003 compared to net income of $141.6 million, or $0.42 per diluted share, in the comparable prior year period. Year-to-date net sales increased 13.0 percent, including a same-store sales increase of 4.3 percent.
Return on invested capital for the trailing year increased to 13.8 percent from 12.6 percent in the previous year. Excluding restatement-related items, return on invested capital for the trailing year increased to 13.9 percent from 12.4 percent in the previous year. Return on assets for the trailing year increased to 12.7 percent from 10.3 percent in the previous year. Excluding restatement-related items, return on assets for the trailing year increased to 12.8 percent from 10.0 percent in the previous year.
Conference Call
The Company will host a conference call on Thursday, December 4, 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, December 18, online or by calling 334-323-7226. The access code for the replay is 40954 and the pass code is 86362.
About Dollar General
Dollar General is a Fortune 500® discount retailer with 6,709 neighborhood stores in 27 states as of November 28, 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.
Non-GAAP Disclosures
This release includes certain financial information not derived in accordance with generally accepted accounting principles ("GAAP"), including net income, diluted earnings per share, SG&A expenses, operating profit margin, return on assets and return on invested capital, excluding restatement-related items. The Company includes these non-GAAP financial measures in order to indicate more clearly for investors 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. In addition, the return on invested capital, included in this release, may be considered a non-GAAP financial measure. Management believes that return on invested capital provides investors with additional useful information for evaluating the efficiency of the Company's capital deployed in its operations. None of this information should be considered a substitute for any measures derived in accordance with GAAP. The Company has included its calculation of return on invested capital and reconciliations of these non-GAAP financial measures to the most comparable GAAP financial measures in the accompanying schedules.
Forward-looking Information
This press release may contain forward-looking information, such as information regarding gross margin rate expectations. 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. 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; 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 interruptions; the impact on transportation costs from the "driver hours of service" regulations adopted by the Federal Motor Carriers Safety Administration, which are scheduled to become effective on January 4, 2004; 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; delays associated with building, opening, expanding and converting new or existing distribution centers; 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. Except as may be required by law, 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. Readers are advised, however, to consult any further disclosures the Company may make on related subjects in its public disclosures or documents filed with the SEC.
DOLLAR GENERAL CORPORATION AND SUBSIDIARIES
Consolidated Balance Sheets
(In thousands)
October 31, November 1, January 31,
2003 2002 2003
(Unaudited) (Unaudited)
ASSETS
Current assets:
Cash and cash equivalents $138,470 $ 37,101 $121,318
Merchandise inventories 1,373,200 1,249,120 1,123,031
Deferred income taxes 21,729 43,095 33,860
Other current assets 65,301 61,077 45,699
Total current assets 1,598,700 1,390,393 1,323,908
Property and equipment,
at cost 1,667,438 1,581,427 1,577,823
Less accumulated depreciation
and amortization 687,951 581,162 584,001
Net property and equipment 979,487 1,000,265 993,822
Other assets, net 11,007 20,506 15,423
Total assets $2,589,194 $2,411,164 $2,333,153
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Current portion of long-term
obligations $17,295 $ 15,834 $16,209
Accounts payable 440,505 410,426 341,303
Accrued expenses and other 287,724 247,015 239,898
Income taxes payable 14,553 -- 67,091
Total current liabilities 760,077 673,275 664,501
Long-term obligations 268,357 502,498 330,337
Deferred income taxes 59,100 45,040 50,247
Total liabilities 1,087,534 1,220,813 1,045,085
Shareholders' equity:
Preferred stock -- -- --
Common stock 168,415 166,691 166,670
Additional paid-in capital 363,767 313,023 313,269
Retained earnings 975,255 714,800 812,220
Accumulated other
comprehensive loss (1,206) (1,382) (1,349)
1,506,231 1,193,132 1,290,810
Less other shareholders' equity 4,571 2,781 2,742
Total shareholders' equity 1,501,660 1,190,351 1,288,068
Total liabilities and
shareholders' equity $2,589,194 $2,411,164 $2,333,153
DOLLAR GENERAL CORPORATION AND SUBSIDIARIES
Consolidated Statements of Income
(In thousands, except per share amounts)
(Unaudited)
13 Weeks Ended
October 31, % of Net November 1, % of Net
2003 Sales 2002 Sales
Net sales $1,685,346 100.00% $1,497,702 100.00%
Cost of goods sold 1,168,449 69.33 1,069,119 71.38
Gross profit 516,897 30.67 428,583 28.62
Selling, general and
administrative 385,551 22.88 335,152 22.38
Insurance proceeds -- -- (25,041) (1.67)
Operating profit 131,346 7.79 118,472 7.91
Interest expense, net 7,976 0.47 11,537 0.77
Income before income
taxes 123,370 7.32 106,935 7.14
Provision for taxes on
income 45,467 2.70 38,365 2.56
Net income $77,903 4.62% $68,570 4.58%
Earnings per share:
Basic $0.23 $0.21
Diluted $0.23 $0.20
Weighted average shares:
Basic 335,411 333,227
Diluted 339,238 334,970
Dividends per share $0.035 $0.032
DOLLAR GENERAL CORPORATION AND SUBSIDIARIES
Consolidated Statements of Income
(In thousands, except per share amounts)
(Unaudited)
39 Weeks Ended
October 31, % of Net November 1, % of Net
2003 Sales 2002 Sales
Net sales $4,905,504 100.00% $4,340,841 100.00%
Cost of goods sold 3,463,871 70.61 3,144,539 72.44
Gross profit 1,441,633 29.39 1,196,302 27.56
Selling, general
and administrative 1,105,493 22.54 946,123 21.80
Insurance proceeds -- -- (29,541) (0.68)
Operating profit 336,140 6.85 279,720 6.44
Interest expense, net 25,286 0.51 33,306 0.77
Income before income
taxes 310,854 6.34 246,414 5.67
Provision for taxes
on income 112,683 2.30 89,554 2.06
Net income $198,171 4.04% $156,860 3.61%
Earnings per share:
Basic $0.59 $0.47
Diluted $0.59 $0.47
Weighted average shares:
Basic 334,175 332,986
Diluted 336,892 335,180
Dividends per share $0.105 $0.096
DOLLAR GENERAL CORPORATION AND SUBSIDIARIES
Consolidated Statements of Cash Flows
(In thousands)
(Unaudited)
39 Weeks Ended
October 31, November 1,
2003 2002
Cash flows from operating activities:
Net income $198,171 $156,860
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization 113,114 102,302
Deferred income taxes 20,912 68,424
Tax benefit from stock option exercises 10,780 2,278
Litigation settlement -- (161,800)
Change in operating assets and liabilities:
Merchandise inventories (250,169) (118,097)
Other current assets (19,602) (2,774)
Accounts payable 99,202 87,963
Accrued expenses and other 49,039 10,105
Income taxes (52,538) (3,137)
Other 1,974 (14,124)
Net cash provided by operating activities 170,883 128,000
Cash flows from investing activities:
Purchase of property and equipment (96,923) (104,727)
Purchase of promissory notes (49,582) --
Proceeds from sale of property and equipment 195 379
Net cash used in investing activities (146,310) (104,348)
Cash flows from financing activities:
Net borrowings under revolving credit facilities -- 168,400
Repayments of long-term obligations (11,808) (393,378)
Payment of cash dividends (35,136) (31,972)
Proceeds from exercise of stock options 39,660 4,844
Other financing activities (137) 4,030
Net cash used in financing activities (7,421) (248,076)
Net increase (decrease) in cash
and cash equivalents 17,152 (224,424)
Cash and cash equivalents, beginning of period 121,318 261,525
Cash and cash equivalents, end of period $138,470 $37,101
Supplemental schedule of noncash investing and
financing activities:
Purchase of property and equipment under capital
lease obligations $551 $8,134
DOLLAR GENERAL CORPORATION AND SUBSIDIARIES
Selected Additional Information
Sales by Category (in thousands)
(Unaudited)
13 Weeks Ended 39 Weeks Ended
October 31, November 1, % October 31, November 1, %
2003 2002 Change 2003 2002 Change
Highly
consumable $1,076,913 $959,873 12.2% $3,094,797 $2,703,617 14.5%
Seasonal 237,365 196,213 21.0% 737,952 627,303 17.6%
Home products 207,570 187,250 10.9% 614,746 566,634 8.5%
Basic clothing 163,498 154,366 5.9% 458,009 443,287 3.3%
Total sales $1,685,346 $1,497,702 12.5% $4,905,504 $4,340,841 13.0%
New Store Activity
(Unaudited)
39 Weeks Ended
October 31, 2003 November 1, 2002
Beginning store count 6,113 5,540
New store openings 601 575
Store closings 61 39
Net new stores 540 536
Ending store count 6,653 6,076
Total selling square footage (000's) 44,998 41,011
Customer Transaction Data
(Unaudited)
13 Weeks Ended 39 Weeks Ended
October 31, November 1, October 31, November 1,
2003 2002 2003 2002
Same-store customer
transactions +3.4% +6.5% +3.9% +6.2%
Average customer
purchase $8.38 $8.31 $8.37 $8.33
DOLLAR GENERAL CORPORATION AND SUBSIDIARIES
Reconciliation of Non-GAAP Disclosures
(In thousands, except per share amounts)
(Unaudited)
13 Weeks Ended 39 Weeks Ended
October 31, November 1, October 31, November 1,
2003 2002 2003 2002
Net Income and
Earnings Per Share
Net income in accordance
with GAAP $77,903 $68,570 $198,171 $156,860
Restatement-related
items in SG&A 2 783 371 5,406
Restatement-related
insurance proceeds -- (25,041) -- (29,541)
Total restatement-related
items 2 (24,258) 371 (24,135)
Tax effect (13) 8,924 (146) 8,879
Total restatement-related
items, net of tax (11) (15,334) 225 (15,256)
Net income, excluding
restatement-related
items $77,892 $53,236 $198,396 $141,604
Weighted average diluted
shares outstanding 339,238 334,970 336,892 335,180
Diluted earnings per
share, excluding
restatement-related items $0.23 $0.16 $0.59 $0.42
Selling, General and
Administrative Expenses
SG&A in accordance with
GAAP $385,551 $335,152 $1,105,493 $946,123
Less restatement-related
items 2 783 371 5,406
SG&A, excluding
restatement-related
items $385,549 $334,369 $1,105,122 $940,717
SG&A, excluding
restatement-related
items,% to sales 22.9% 22.3% 22.5% 21.7%
Operating Profit Margin
Operating profit in
accordance with GAAP $131,346 $118,472 $336,140 $279,720
Restatement-related items 2 (24,258) 371 (24,135)
Operating profit,
excluding
restatement-related
items $131,348 $94,214 $336,511 $255,585
Operating profit,
excluding
restatement-related
items, % to sales 7.8% 6.3% 6.9% 5.9%
DOLLAR GENERAL CORPORATION AND SUBSIDIARIES
Non-GAAP Disclosures
Return on Invested Capital (Unaudited) (a)
($ in thousands, except per share amounts)
52 Weeks Ended 52 Weeks Ended
October 31, 2003 November 1, 2002
Net income:
39 weeks ended third
quarter 2003 and 2002 $198,171 $156,860
13 weeks ended fourth
quarter 2002 and 2001 108,086 97,443
52 weeks ended third
quarter 2003 and 2002 306,257 254,303
Interest expense, net:
39 weeks ended third
quarter 2003 and 2002 $25,286 $33,306
13 weeks ended fourth
quarter 2002 and 2001 9,333 10,752
52 weeks ended third
quarter 2003 and 2002 34,619 44,058
Interest expense, net of tax 22,131 28,112
Rent expense:
39 weeks ended third
quarter 2003 and 2002 182,192 158,444
13 weeks ended fourth
quarter 2002 and 2001 57,900 46,961
52 weeks ended third
quarter 2003 and 2002 240,092 205,405
Rent expense, net of tax
(52 weeks) 153,486 131,064
Return, net of tax
(52 weeks) $481,874 $413,479
Restatement-related items,
net of tax:
39 weeks ended third
quarter 2003 and 2002 225 (15,256)
13 weeks ended fourth
quarter 2002 and 2001 1,183 6,526
52 weeks ended third
quarter 2003 and 2002 1,408 1,408 (8,730) (8,730)
Return, net of tax,
excluding restatement-related
items (52 weeks) $483,282 $404,749
Invested Capital:
Average long-term
obligations (b) $356,499 $649,108
Average shareholders'
equity (c) 1,343,994 1,081,049
Average rent expense multiplied
by eight (d) 1,781,988 1,539,496
Invested capital $3,482,481 $3,269,653
Return on invested capital 13.8% 12.6%
Return on invested capital,
excluding restatement-related items 13.9% 12.4%
(a) The Company believes that the most directly comparable ratio
calculated solely using GAAP measures is the ratio of net income to
the sum of average long-term obligations, including current portion,
and average shareholders' equity. This ratio was 18.0% and 14.7% for
the 52 weeks ended October 31, 2003, and November 1, 2002,
respectively.
(b) Average long-term obligations is equal to the average long-term
obligations, including current portion, measured at the end of each of
the last five fiscal quarters.
(c) Average shareholders' equity is equal to the average shareholders'
equity measured at the end of each of the last five fiscal quarters.
(d) Average rent expense is computed using a rolling 2-year period.
Average rent expense is multiplied by a factor of eight to capitalize
operating leases in the determination of pretax invested capital.
This is a conventional methodology utilized by credit rating agencies
and investment bankers.
DOLLAR GENERAL CORPORATION AND SUBSIDIARIES
Non-GAAP Disclosures
Return on Assets (Unaudited)
($ in thousands, except per share amounts)
52 Weeks Ended 52 Weeks Ended
October 31, 2003 November 1, 2002
Net income:
39 weeks ended third
quarter 2003 and 2002 $198,171 $156,860
13 weeks ended fourth
quarter 2002 and 2001 108,086 97,443
52 weeks ended third
quarter 2003 and 2002 306,257 254,303
Restatement-related items,
net of tax:
39 weeks ended third
quarter 2003 and 2002 225 (15,256)
13 weeks ended fourth
quarter 2002 and 2001 1,183 6,526
52 weeks ended third
quarter 2003 and 2002 1,408 1,408 (8,730) (8,730)
Net Income, excluding
restatement-related
items (52 weeks) $307,665 $245,573
Average Assets (a) $2,410,972 $2,457,355
Return on Assets 12.7% 10.3%
Return on Assets, excluding
restatement-related items 12.8% 10.0%
(a) Average assets is equal to the average total assets measured at the
end of each of the last five fiscal quarters.
SOURCE Dollar General Corporation CONTACT: Investor - Emma Jo Kauffman, +1-615-855-5525, or Media - Andrea Turner, +1-615-855-5209, both of Dollar General Corporation