Dollar General Corporation Third Quarter 2000 Earnings Release and Financial Statements

Summary

Dollar General Corporation has released its financial results for the third quarter ending October 27, 2000. The company reported net income of $51.0 million and earnings per diluted share of $0.15, with total sales increasing by 15.1% compared to the previous year. The report includes detailed income statements and balance sheets, as well as management's outlook for the remainder of the fiscal year. The document also contains forward-looking statements regarding expected sales, expenses, and risks affecting future performance.

View More
EX-1.1 2 0002.txt EXHIBIT 1.1 GOODLETTSVILLE, Tennessee - November 6, 2000 - Dollar General Corporation (NYSE: DG) today reported earnings per diluted share of $0.15 for the third quarter ended October 27, 2000, essentially unchanged from the same period a year ago. Net income for the quarter was $51.0 million, compared to $50.9 million last year. Total sales in the period increased 15.1% to $1,094.4 million from $950.4 million last year. Same-store sales for the 13-week period increased 0.8%. "Earlier this year, we completed a significant reset of all stores, and our interviews with customers reflect a strong sense of approval and delight in the changes we have made. In the third quarter, the success of our new layout was masked by out-of-stocks at the store level, and we are working quickly to correct this issue as we head into the busy holiday season," said Cal Turner, Jr., Chairman and CEO. "We are excited about our expanded assortment of seasonal merchandise this year. Key categories are already performing well, and with improvements in our store in-stocks on core merchandise, we will be well positioned for the fourth quarter." For the quarter, gross margin equaled $321.4 million compared with $277.9 in 1999. Gross margin as a percentage of sales increased 13 basis points in the third quarter, to 29.37% compared with 29.24% last year, benefiting from higher purchase markup. As a percentage of sales, lower shrink and transportation expense offset higher distribution center expense and higher markdowns in the period. For the year-to-date, transportation expense is slightly lower as a percentage of sales, despite higher fuel costs. This improvement is a result of better fleet utilization, continued benefits from our transportation management system and lower average stem miles. Operating expenses for the quarter equaled $236.5 million, compared with $195.8 million, in the same period a year ago. Although expenses were below plan, lower-than-expected sales prevented the Company from achieving operating expense leverage. As a percentage of sales, total operating expense increased to 21.61% from 20.60% last year, primarily as a result of higher health insurance, rent and payroll expense. Year-to-date, capital expenditures equaled $209.4 million, compared with $112.4 million in the same period last year. Capital expenditures for the year-to-date included investments in new, remodeled and relocated stores and various distribution center projects. The Company opened 184 new stores, remodeled or relocated 53 stores, and closed 14 stores during the quarter. At quarter end, the Company operated 4,889 stores. Despite operating 724 additional stores, total LIFO inventories increased only 6.1% to $1,173.3 million compared with $1,105.5 million last year. While average LIFO inventory per store increased 3.7% to $193,000 compared with $186,000 last year, average LIFO DC inventory per store decreased 41% to $47,000 compared with $80,000 last year. For the quarter, interest expense increased to $4.9 million compared with $2.3 million last year. Outlook: - --------- The following comments contain references to years 2001, 2000 and 1999, which represent fiscal years ending February 1, 2002, February 2, 2001, and January 28, 2000, respectively. Because the Company has adopted the Retail Federation Reporting Calendar, the Company's fiscal year ending February 2, 2001, will include 53 weeks of sales and expenses compared with a 52-week period in 1999. To avoid confusion as to comparable periods, the following earnings guidance reflects only the comparable 52-week period. For the 52-week period, total company revenues and same-store sales are expected to increase 15-16% and 1-2%, respectively as compared with the same period in 1999. Gross profit as a percentage of net sales is expected to increase 0.20%-0.25% compared with gross profit in 1999, as a result of lower transportation expense, as a percentage of sales and better purchase markup. Based on current sales expectations, management anticipates operating expense, as a percentage of net sales, will increase 0.90%-1.10% compared to operating expense as a percentage of net sales in 1999. Interest expense as a percentage of net sales is expected to increase 0.10%-0.15%, reflecting higher interest rates than the same period a year ago. The tax rate is expected to be approximately 36.25%. Dollar General operates more than 4,889 neighborhood stores in 25 states with distribution centers in Florida, Georgia, Kentucky, Mississippi, Missouri, Oklahoma and Virginia. This press release contains historical and forward-looking information. 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 as a result of certain risks and uncertainties, including, but not limited to, general transportation and distribution delays or interruptions, inventory risks due to shifts in market demand, changes in product mix, interruptions in suppliers' business, fuel price and interest rate fluctuations, and costs and delays associated with building, opening and operating new distribution centers ("DCs") and stores. The Company undertakes no obligation to publicly release any revisions to any forward-looking statements contained herein to reflect events or circumstances occurring after the date of this report or to reflect the occurrence of unanticipated events. DOLLAR GENERAL CORPORATION INCOME STATEMENTS (000's) (Unaudited)
--- For the Third Quarter Ended --- --- For the Year-to-Date --- October 27, 2000 October 29, 1999 October 27, 2000 October 29, 1999 ---------------- ---------------- ---------------- ---------------- Sales $ 1,094,360 $ 950,419 $ 3,108,857 $ 2,710,222 Cost of Sales 772,996 672,562 2,232,811 1,956,836 ------------------------- ----------------------- ---------------------- ----------------------- Gross Margin 321,364 277,857 876,046 753,386 Operating Expenses 236,524 195,753 654,387 546,211 ------------------------- ----------------------- ---------------------- ----------------------- Operating Income 84,840 82,104 221,659 207,175 Interest Expense 4,855 2,326 10,459 5,102 ------------------------- ----------------------- ---------------------- ----------------------- Pre-Tax Income 79,985 79,778 211,200 202,073 Taxes 28,995 28,919 76,560 73,251 ------------------------- ----------------------- ---------------------- ----------------------- Net Income $ 50,990 $ 50,859 $ 134,640 $ 128,822 ========================= ======================= ====================== ======================= Diluted earnings per $0.15 $0.15 $0.40 $0.38 share Weighted average diluted shares 333,556 337,989 333,652 337,140
DOLLAR GENERAL CORPORATION BALANCE SHEETS ($000's) (Unaudited)
October 27 October 29 2000 1999 ---- ---- Current Assets: Cash and cash equivalents $ 13,080 $ 23,840 (A) Merchandise inventories 1,173,328 1,105,503 Deferred income taxes 7,743 5,373 Other current assets 62,956 79,012 (A) ------- ------- TOTAL CURRENT ASSETS 1,257,107 1,213,728 Property & equipment, at cost 801,837 560,219 Less: Accumulated depreciation 306,894 235,360 -------- ------- 494,943 324,859 Other assets 15,959 10,538 ------- ------ TOTAL ASSETS $ 1,768,009 $ 1,549,125 =========== =========== Current Liabilities Current portion of long-term debt $ 3,622 $ 1,243 Short-term borrowings 61,369 180,099 Accounts payable 309,508 347,563 Accrued expenses 122,451 115,263 Income taxes 3,946 29,290 ------- -------- TOTAL CURRENT LIABILITIES 500,896 673,458 Long-Term obligations 210,907 1,526 Deferred income taxes 50,817 12,079 ------- ------- TOTAL LIABILITIES 762,620 687,063 Stockholders' Equity: Common stock 165,281 132,653 Additional paid-in capital 263,233 250,321 Retained earnings 576,875 479,088 -------- ------- TOTAL STOCKHOLDERS' EQUITY 1,005,389 862,062 ---------- ------- TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 1,768,009 $ 1,549,125 ============ ===========
(A) Items have been reclassified to conform to the 2000 presentation DOLLAR GENERAL CORPORATION CONSOLIDATED STATEMENTS OF CASH FLOWS (000's) (Unaudited)
--- For the Nine Months Ended --- October 27, 2000 October 29, 1999 ---------------- ---------------- Cash flows provided by (used in) operating activities: Net income $ 134,640 $ 128,822 Adjustments to reconcile net income to net cash provided by (used in) operating activities Depreciation and amortization 58,571 46,759 Deferred income taxes (2,454) (20,874) Tax effect of stock options 14,715 27,862 Change in operating assets and liabilities: Merchandise inventories (187,613) (293,781) Other Current Assets (17,920) (36,634) (A) Accounts payable (25,046) 89,804 Accrued expenses 1,076 (57,562) Income taxes (11,189) 5,465 Other (4,824) (30) ------------------------------------------ Net cash provided by (used in) operating activities (40,044) (110,169) ------------------------------------------ Cash flows provided by (used in) investing activities: Purchase of property and equipment (209,414) (112,441) Proceeds from sale of property and equipment 171 63,182 ------------------------------------------ Net cash provided by (used in) investing activities (209,243) (49,259) ------------------------------------------ Cash flows provided by (used in) financing activities: Cash flows provided by (used in) financing activities: Issuance of short-term borrowings 315,000 237,914 Repayments of short-term borrowings (253,631) (57,815) Issuance of long-term debt 214,947 3,104 Repayments of long-term debt (2,851) (1,846) Payment of cash dividend (31,664) (25,619) Proceeds from exercise of stock options 27,326 32,235 Repurchase of common stock (65,549) (26,999) Other 0 0 ------------------------------------------ Net cash provided by (used in) financing activities 203,578 160,974 ------------------------------------------ Net increase (decrease) in cash and cash equivalents (45,709) 1,546 Cash and cash equivalents beginning of period 58,789 22,294 ------------------------------------------ Cash and cash equivalents end of period $ 13,080 $ 23,840 ==========================================
(A) Items have been reclassified to conform to the 2000 presentation DOLLAR GENERAL CORPORATION KEY OPERATIONAL DATA (000's) --- For the Three Months Ended --- October 27 October 29 2000 1999 ---- ---- Sales by Category: Highly Consumable $ 638,372 $ 513,139 Hardware and Seasonal $ 148,415 $ 138,007 Basic Clothing $ 133,818 $ 121,908 Home Products $ 173,755 $ 177,365 ---------- --------- TOTAL SALES $1,094,360 $ 950,419 Same-Store Sales by Category (% Chg): Highly Consumable 8.9% Hardware and Seasonal -5.9% Basic Clothing -3.9% Home Products -14.3% New Store Activity: Beginning Store Count 4,719 3,998 New Store Openings 184 177 Store Closings 14 10 Net New Stores 170 167 Ending Store Count 4,889 4,165 Total Square Footage 33.1 million 27.6 million Customer Transaction Information In the third quarter ended October 27, 2000, the average customer purchased more than 5 items at a total cost of $8.03. Below is a summary of this year's customer transaction information. 1Q 2Q 3Q YTD -- -- -- --- 2000 Same-Store Transactions (% Chg): Customer Transactions 3.8% 0.1% 1.0% 1.6% Average Ticket 0.2% -2.7% -0.2% -0.9% Average Item Price 1.5% 2.4% 5.5% 3.0% Average Number of Items -1.2% -5.0% -5.4% -3.8%