-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: keymaster@town.hall.org Originator-Key-Asymmetric: MFkwCgYEVQgBAQICAgADSwAwSAJBALeWW4xDV4i7+b6+UyPn5RtObb1cJ7VkACDq pKb9/DClgTKIm08lCfoilvi9Wl4SODbR1+1waHhiGmeZO8OdgLUCAwEAAQ== MIC-Info: RSA-MD5,RSA, J4ev+lMErZLvD/uXizAjPRe2hXgc0PM8UhUJ/PWCu9lWWE4FT4+FYxKkgOnepQbF CL1sFP/EpHlyPCw19JnHCw== 0000029534-94-000025.txt : 19940922 0000029534-94-000025.hdr.sgml : 19940922 ACCESSION NUMBER: 0000029534-94-000025 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19940731 FILED AS OF DATE: 19940914 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: DOLLAR GENERAL CORP CENTRAL INDEX KEY: 0000029534 STANDARD INDUSTRIAL CLASSIFICATION: 5331 IRS NUMBER: 610502302 STATE OF INCORPORATION: KY FISCAL YEAR END: 0131 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-04769 FILM NUMBER: 94548946 BUSINESS ADDRESS: STREET 1: 104 WOODMONT BLVD STE 500 CITY: NASHVILLE STATE: TN ZIP: 37205 BUSINESS PHONE: 6157832000 FORMER COMPANY: FORMER CONFORMED NAME: TURNER CAL DATE OF NAME CHANGE: 19710401 FORMER COMPANY: FORMER CONFORMED NAME: TURNER J L & SON INC DATE OF NAME CHANGE: 19710401 10-Q 1 2ND QTR. 10-Q UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period July 31, 1994 Commission file number 0-4769 DOLLAR GENERAL CORPORATION (Exact name of registrant as specified in its charter) KENTUCKY 61-0502302 (State or other jurisdiction of (I.R.S. employer incorporation or organization) identification no.) 104 Woodmont Blvd. Suite 500 Nashville, Tennessee 37205 (Address of principal executive offices, zip code) Registrant's telephone number, including area code:(615) 783-2000 Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2)has been subject to such filing requirements for the past 90 days. Yes X No____. The number of shares of common stock outstanding at August 26, 1994 was 53,129,372. 2 Dollar General Corporation Form 10-Q For the Quarter Ended July 31, 1994 Index Part I. Financial Information Page No. Item 1. Financial Statements (unaudited): Consolidated Statements of Income for the three months and six months ended July 31, 1994 and 1993 3 Consolidated Balance Sheets as of July 31, 1994, January 31, 1994 and July 31, 1993 4 Consolidated Statements of Cash Flows for the six months ended July 31, 1994 and July 31, 1993 5 Notes to Consolidated Financial Statements 6-7 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 8-10 Part II. Other Information Item 2. Changes in Securities 11 Item 4. Submission of Matters to a Vote of Security Holders 11 Item 6. Exhibits and Reports on Form 8-K 11 Signatures 12 3 PART I - FINANCIAL INFORMATION ITEM 1. Financial Statements
DOLLAR GENERAL CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME For the three months and six months ended July 31, 1994 and 1993 (amounts in thousands except per share amounts) (unaudited) Three Months Six Months 1994 1993 1994 1993 Net Sales $317,323 $255,564 $604,409 $477,363 Cost of goods sold 229,615 182,558 436,721 341,868 Gross profit 87,708 73,006 167,688 135,495 Selling, general and administrative expense 64,636 56,668 128,940 109,022 Operating profit 23,072 16,338 38,748 26,473 Interest expense 647 698 1,039 1,204 Income before taxes on income 22,425 15,640 37,709 25,269 Provision for taxes on income 8,465 6,021 14,235 9,728 Net income 13,960 9,619 23,474 15,541 Net income per common share $ .25 $ .18 $ .43 $ .29 Weighted average number of common shares outstanding 55,071 53,472 54,914 53,716 Cash dividends per common share as declared $ .05 $ .05 $ .10 $ .10 Adjusted to give appropriate retroactive effect to the five-for-four stock splits distributed on April 15, 1994 and September 17, 1993$ .05 $ .03 $ .10 $ .06
The accompanying notes are an integral part of this statement. 4
DOLLAR GENERAL CORPORATION AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS As of July 31, 1994, January 31, 1994 and July 31, 1993 (amounts in thousands) ASSETS July 31, January 31, July 31, 1994 1994 1993 Current Assets: (unaudited) (unaudited) Cash and cash equivalents $ 26,764 $ 35,365 $ 22,611 Merchandise inventories 332,551 260,042 263,670 Deferred income taxes 10,808 9,664 9,001 Other current assets 10,757 8,397 9,849 Income Taxes 2,215 1,563 0 Total current assets 383,095 315,031 305,131 Property & equipment, at cost 147,779 124,827 108,381 Less: Accumulated depreciation 54,580 47,322 41,932 93,199 77,505 66,449 Other Assets 4,719 4,701 4,641 $481,013 $397,237 $376,221 LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities: Current portion of long-term debt $ 1,303 $ 1,302 $ 1,301 Short-term borrowings 62,000 18,000 34,000 Accounts payable 91,515 81,038 83,256 Accrued expenses 49,418 47,906 40,215 Income taxes 0 0 2,404 Total current liabilities 204,236 148,246 161,176 Long-term debt 4,669 5,711 5,974 Deferred income taxes 2,563 2,563 2,606 Shareholders' equity: Common stock 27,248 27,248 21,963 Additional paid-in capital 75,372 65,857 61,111 Retained earnings 169,308 151,165 127,650 271,928 244,270 210,724 Less treasury stock 2,383 3,553 4,259 269,545 240,717 206,465 $481,013 $397,237 $376,221
The accompanying notes are an integral part of this statement. 5
DOLLAR GENERAL CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS for the three months ended July 31, 1994 and 1993 (amounts in thousands) (unaudited) July 31, July 31, 1994 1993 Cash flows from operating activities: Net income $ 23,474 $ 15,541 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 7,805 5,200 Deferred income taxes ( 1,144) ( 1,366) Change in operating assets and liabilities: Merchandise inventories ( 72,509) (46,827) Accounts payable 10,475 19,231 Accrued expenses 1,512 2,545 Income taxes ( 652) ( 1,611) Other ( 2,023) ( 2,856) Net cash used by operating activities ( 33,062) (10,143) Cash flows used in investing activities: Purchase of property & equipment ( 23,852) (16,413) Cash flows provided by financing activities: Issuance of short-term borrowings 44,000 37,000 Repayments of short-term borrowings 0 (13,001) Repayments of long-term debt ( 1,041) ( 1,038) Payments of cash dividends ( 5,331) ( 3,328) Proceeds from exercise of stock options 5,899 2,328 Tax benefits from exercise of stock options 4,786 2,718 Other 0 ( 558) Net cash provided by financing activities 48,313 24,121 Net decrease in cash and equivalents ( 8,601) ( 2,435) Cash and cash equivalents at beginning of year 35,365 25,056 Cash and cash equivalents at end of period $ 26,764 $ 22,611
The accompanying notes are an integral part of this statement. 6 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) 1. Basis of Presentation The accompanying financial statements are presented in accordance with the requirements of Form 10-Q and consequently do not include all of the disclosures normally required by generally accepted accounting principles or those normally made in the Company's Annual Report on Form 10-K. Accordingly, the reader of the quarterly report on Form 10-Q should refer to the Company's annual report on Form 10-K for the year ended January 31, 1994 for additional information. The accompanying financial statements have been prepared in accordance with the Company's customary accounting practices and have not been audited. All subsidiaries are included. In management's opinion, all adjustments (which are of a normal recurring nature) necessary for a fair presentation of the results of operations for the three month and six month periods ended July 31, 1994 and 1993, respectively have been made. Because of the seasonal nature of the Company's business, the results for interim periods are not necessarily indicative of the results to be expected for the year. 2. Net Income Per Common Share Net income per common share is based upon the actual weighted average number of common shares outstanding during each period plus the assumed exercise of dilutive stock options as follows:
Three Months Six Months Ended July 31 Ended July 31 Shares (000's) 1994 1993 1994 1993 Actual weighted average number of common shares outstanding during the period 53,063 50,726 52,838 52,342 Equivalent number of common shares representing the dilutive effect of stock options using the "treasury stock method" 2,008 2,746 2,076 1,374 Weighted Average Number of Common Shares 55,071 53,472 54,914 53,716
7 3. Changes in shareholder's equity for the six months ended July 31, 1994 and 1993 were as follows (dollars in thousands except per share amounts):
Additional Retained Treasury Common Stock Paid-In Capital Earnings Stock Balances, January 31, 1993 $17,820 $57,246 $119,580 $4,881 Net Income 15,541 Cash dividend, $.10 per common share, as declared ( 3,328) Five for four stock split 4,143 ( 4,143) Reissuance of treasury stock under stock incentive plans 1,147 ( 622) Tax benefit from exercise of options 2,718 ______ ______ ______ _____ Balances, July 31, 1993 $21,963 $61,111 $127,650 4,259 Balances, January 31, 1994 $27,248 $65,857 $151,165 $3,553 Net Income 23,474 Cash dividend, $.10 per common share, as declared ( 5,331) Reissuance of treasury stock under stock incentive plans 4,729 (1,170) Tax benefit from exercise of options 4,786 ______ ______ _______ _____ Balances, July 31, 1994 $27,248 $75,372 $169,308 $2,383
8 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS RESULTS OF OPERATIONS The nature of the Company's business is highly seasonal. Historically, sales in the fourth quarter have been substantially higher than sales achieved in each of the first three quarters of the fiscal year. Thus expenses, and to a greater extent operating income, vary greatly by quarter. Caution, therefore, is advised when evaluation results for a period shorter than a full year or when comparing any period to other than the same period of the previous year. Six months ended July 31, 1994 and 1993. NET SALES. Net sales for the first six months of fiscal 1995 increased $127.0 million, or 26.6%, to $604.4 million from $477.4 million for the comparable period of fiscal 1994. The increase resulted from 212 net additional stores being open during the first six months of fiscal 1995 as compared to the same prior year period and an increase of 13.4% in same-store sales. The Company defines same-stores as those opened prior to the beginning of the previous fiscal year which have remained open throughout the previous fiscal year and the period reported. Management believes that the same- store sales increase was primarily due to higher in-stock levels in the stores, improved merchandising, and continued aggressive every day low pricing. The mix of merchandise sales for the period was 64.9% hardlines and 35.1% softlines, unchanged from the same period a year ago. GROSS PROFIT. Gross profit for the first six months of fiscal 1995 was $167.7 million, or 27.7% of net sales, compared to $135.5 million, or 28.4% of net sales, for the comparable period in the prior fiscal year. This decrease in gross profit percentage is the result of the effect of markdowns taken in prior periods and planned price reductions providing lower initial markup on current merchandise purchases. Interim cost of goods sold is determined using estimates of shrinkage, inflation and markdowns which are adjusted to reflect actual results at year end. SELLING, GENERAL AND ADMINISTRATIVE EXPENSE. Selling, general and administrative expense as a percentage of net sales decreased to 21.3% for the first six months of fiscal 1995 from 22.8% for the comparable period if fiscal 1994 primarily because of higher sales volume and lower advertising, supply, and health benefit costs. Selling, general and administrative expense of $128.9 million for the first six months of fiscal 1995 represents an increase of 18.3% from $109.0 million for the comparable prior year period. This increase resulted from operating 212 net additional stores during the first six months of fiscal 1995 as compared to the same prior year period and an 11.6% increase in same-store expenses. INTEREST EXPENSE. Interest expense decreased 13.7% to $1.0 million for the first six months of fiscal 1995 from $1.2 million for the comparable prior year period. The decrease resulted primarily from lower interest rates partially offset by higher average borrowings. Three months ended July 31, 1994 and 1993. NET SALES. Net sales in the second quarter of fiscal 1995 increased $61.7 million or 24.2%, to $317.3 million from $255.6 million for the same period in fiscal 1994. The increase resulted from a same-store sales increase of 11.3% and the operation of 52 net additional stores. 9 GROSS PROFIT. Gross profit as a percentage of sales was 27.6% in the second quarter of fiscal 1995 as compared to 28.6% for the comparable period in fiscal 1994. This decrease was due to the same factors affecting gross profit for the six month period. SELLING, GENERAL AND ADMINISTRATIVE EXPENSE. Selling, general and administrative expense expressed as a percentage of sales decreased to 20.4% for the second quarter of fiscal 1995 from 22.2% for the same period in the previous year. This decrease was due to the same factors affecting selling, general, and administrative expenses for the six month period. Selling, general and administrative expense increased $7.9 million or 14.0% in the second quarter of fiscal 1995 as compared to fiscal 1994 due to 52 net new stores and same-store expenses increasing 8.5%. INTEREST EXPENSE. Interest expense for the second quarter of fiscal 1995 decreased 7.3%, to $0.6 million from $0.7 million, from the comparable period in fiscal 1994 due to lower interest rates which more than offset higher average borrowings. LIQUIDITY AND CAPITAL RESOURCES Cash flows from operating activities. Cash flow used in operating activities totaled $33.0 million during the first six months of fiscal 1995 compared to $10.1 million in the same period last year. This increased use of cash is primarily due to inventories increasing by $72.5 million, $25.7 million more than in the same period last year, and a $10.5 million increase in trade payables, $8.8 million less than in the same period last year. This smaller increase in trade payables is due partly to a greater proportion of merchandise purchases being imported and financed by letters of credit rather than by trade credit. Also the receipt of merchandise purchases occurred earlier this year to support anticipated Fall and Christmas sales and to avoid distribution capacity limitations while the Company's third distribution center is being constructed. Cash flows from investing activities. Cash used for capital expenditures during the first six months of fiscal 1995 was $23.9 million compared to $16.4 million during the same period of fiscal 1994. This increase is primarily due to the investment in stores including, new, relocated and remodeled stores of $13.2 million this year versus $9.5 million in the prior year and $4.5 million related to the construction of the Ardmore, OK distribution center. Cash flows from financing activities. The Company's net borrowings during the first six months of fiscal 1995 increased $44.0 million compared to an increase of $24.0 million during the same period in the prior fiscal year. This higher level of borrowings is referable to the increased merchandise imports that are financed by letters of credit, rather than trade credit. The increase in borrowings is also due to a shifting of purchases to earlier in the year to support anticipated Fall and Christmas sales and to avoid distribution capacity limitation while the Company's third distribution center is being constructed. Because the Company emphasizes seasonal events, such as Christmas and back-to-school, its working capital requirements vary significantly during the year. Bank credit facilities equaled $120 million at July 31, 1994 ($65 million revolving credit/term loan facility plus $55.0 million seasonal lines of credit). The Company had no seasonal line of credit borrowings as of July 31, 1994 or 1993. Seasonal working capital and capital expenditure requirements will continue to be met through cash flow provided by operating activities supplemented by the revolving credit/term loan facility and seasonal credit lines. 10 The Company's liquidity position is set forth in the following table (dollar amounts in thousands):
July 31, January 31, July 31, 1994 1994 1993 Current ratio 1.9x 2.1x 1.9x Total debt/equity 25.2% 10.4% 20.0% Long-term debt/equity 1.7% 2.4% 2.9% Working capital (000) $178,859 $166,785 $143,955 Average daily use of debt: (fiscal year to date) Short-term (000) 38,315 34,102 28,867 Long-term (000) 6,250 7,335 7,550 Total (000) 44,565 41,437 36,417 Maximum outstanding short-term debt (fiscal year-to-date) $ 62,000 $ 70,909 $ 47,000
11 PART II - OTHER INFORMATION Item 1. Not applicable. Item 2. Changes in Securities - Subsequent to end of the fiscal quarter ended July 31, 1994 On August 22, 1994, Dollar General Corporation issued of 1,715,742 shares of a newly authorized series of convertible junior preferred stock, as approved by the Board of Directors. The shares of Series A Convertible Junior Preferred Stock ("Preferred Stock") were issued in exchange for the 8,578,710 shares of Dollar General Common Stock, $.50 par value per shares, owned by C.T.S., Inc. a personal holding company of the Turner family (founders of Dollar General). The transaction was effected through an Exchange Agreement dated August 22, 1994, by the Company, Dolgencorp, Inc., a wholly-owned subsidiary, C.T.S., Inc. and the C.T.S., Inc. shareholders. In the event of a voluntary or involuntary liquidation, dissolution, or winding up of the Company, after payment of all amounts due creditors, if any, the holders of the Preferred Stock shall be entitled, before any distribution is made upon any shares of the Company's common stock, to receive a preferential payment from the assets of the Company of cash or property (to the extent funds are legally available therefor) equal to $.50 per share. The terms of the transaction have been previously reported to the Securities and Exchange Commission pursuant to current Report on Form 8-K dated August 23, 1994. Item 3. Not applicable. Item 4. Submission of Matters to a Vote of Security Holders At the Annual Meeting of Stockholders of the Corporation held June 6, 1994, the Stockholders voted upon two proposals. The results of the Stockholders' vote on each of the proposals are as follows: Proposal No. 1. Election of Directors. The following nominees were elected to serve as Directors of the Corporation until the next Annual Shareholder's Meeting:
Nominee Votes For Votes Withheld James L. Clayton 36,537,122 34,569 James D. Cockman 36,538,344 33,347 Reginald D. Dickson 36,531,235 40,456 John B. Holland 36,536,799 34,892 Wallace N. Rasmussen 36,536,082 35,609 Cal Turner 36,533,991 37,700 Cal Turner, Jr. 36,533,562 38,129 David M. Wilds 36,537,831 33,860 William S. Wire, II 36,538,538 33,153
Proposal No. 2. Ratification of Coopers & Lybrand as the Corporation's Independent Public Accounts.
Broker Vote For Votes Against Abstentions No-votes 36,459,880 12,966 98,845 ---
Item 5. Not applicable. Item 6. Exhibits and reports on Form 8-K (b) No reports on Form 8-K have been filed during the quarter ended July 31, 1994. 12 SIGNATURES Pursuant to the requirements of the Securities Exchange act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. DOLLAR GENERAL CORPORATION (Registrant) Date: September 14, 1994 By:________________________________ C. Kent Garner, Vice President, Treasurer and Chief Financial Officer (2ndqtr95.pub) EX-27 2 FINANCIAL DATA SCHEDULE
5 The accompanying notes are an integral part of this Schedule. 0000029534 SALLEE WISE 6-MOS JAN-31-1995 JUL-31-1994 26,764 0 0 0 332,551 383,095 147,779 54,580 481,013 204,236 0 27,248 0 0 242,297 481,013 604,409 604,409 436,721 128,940 0 0 1,039 37,709 14,235 23,474 0 0 0 23,474 .43 .43
-----END PRIVACY-ENHANCED MESSAGE-----