-----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, P1z8Ll0Bvug1XyunXltRizxzyihOyzqSn0nuzpiSQ+1VD3RfJAEJMmlYkUyIyG3J 0y240JmSuOHsYvCil8Mfxw== 0000029534-95-000022.txt : 19950713 0000029534-95-000022.hdr.sgml : 19950713 ACCESSION NUMBER: 0000029534-95-000022 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19950430 FILED AS OF DATE: 19950614 SROS: NYSE 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: 001-11421 FILM NUMBER: 95546865 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 1ST 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 of April 30, 1995 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 April 30, 1995 was 67,942,306. 2 Dollar General Corporation Form 10-Q For the Quarter Ended April 30, 1995 Index Part I. Financial Information Page No. Item 1. Financial Statements (unaudited): Consolidated Statements of Income for the three months ended April 30, 1995 and 1994 3 Consolidated Balance Sheets as of April 30, 1995, January 31, 1995 and April 30, 1994 4 Consolidated Statements of Cash Flows for the three months ended April 30, 1995 and 1994 5 Notes to Consolidated Financial Statements 6-7 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 8-9 Part II. Other Information Item 6. Exhibits and Reports on Form 8-K 10 Signatures 11 3 PART I - FINANCIAL INFORMATION ITEM 1. Financial Statements DOLLAR GENERAL CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME For the three months ended April 30, 1995 and 1994 (in thousands except per share amounts) (unaudited)
April 30, 1995 April 30, 1994 Net Sales $343,392 $287,086 Cost of goods sold 247,111 207,106 Gross Profit 96,281 79,980 Selling, general and administrative expense 76,325 64,304 Operating profit 19,956 15,676 Interest expense 1,133 392 Income before taxes on income 18,823 15,284 Provision for taxes on income 7,247 5,770 Net income 11,576 9,514 Net income per common and common equivalent share $ .17 $ .14 Weighted average number of common and common equivalent shares outstanding 69,907 68,444 Cash dividends per share As declared $ .05 $ .05 Adjusted to give retroactive effect to the five-for-four common stock split distributed on March 6, 1995 $ .05 $ .04
The accompanying notes are an integral part of this statement. 4 DOLLAR GENERAL CORPORATION AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS As of April 30, 1995, January 31, 1995 and April 30, 1994 (in thousands)
ASSETS April 30, January 31, April 30, 1995 1995 1994 Current Assets: Cash and cash equivalents $ 41,145 $ 33,045 $ 30,282 Merchandise inventories 419,951 356,111 304,242 Deferred income taxes 12,277 11,785 9,893 Other current assets 13,533 9,212 8,465 Income Taxes 0 0 679 Total current assets 486,906 410,153 353,561 Property & Equipment, at cost 196,700 187,360 132,492 Less: Accumulated depreciation 67,129 62,108 50,935 129,571 125,252 81,557 Other Assets 5,535 5,463 4,684 $622,012 $540,868 $439,802 LIABILITIES AND SHAREHOLDER'S EQUITY Current liabilities: Current portion of long-term debt $ 1,442 $ 1,441 $ 1,303 Short-term borrowings 96,487 29,600 27,000 Accounts payable 122,772 111,675 101,060 Accrued expenses 53,486 61,037 46,547 Income Taxes 6,001 5,210 0 Total current liabilities 280,188 208,963 175,910 Long-term debt 3,857 4,767 4,801 Deferred income taxes 3,382 3,382 2,563 Shareholders' equity: Preferred stock 858 858 0 Common stock 33,971 33,971 27,248 Additional paid-in capital 286,047 283,323 73,861 Retained earnings 225,160 207,436 158,031 536,056 525,588 259,140 Less treasury stock 201,451 201,832 2,612 334,585 323,756 256,528 $622,012 $540,868 $439,802
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 April 30, 1995 and 1994 (in thousands) (unaudited)
April 30, 1995 April 30, 1994 Cash flows from operating activities: Net income $ 11,576 $ 9,514 Adjustments to reconcile new income to net cash provided by operating activities: Depreciation and amortization 5,405 3,684 Deferred income taxes ( 492) ( 229) Change in operating assets and liabilities: Merchandise inventories ( 63,840) ( 44,200) Accounts payable, trade 11,097 20,022 Accrued expenses ( 7,551) ( 1,359) Income taxes 791 884 Other ( 3,194) 138 Net cash provided (used) by operating activities ( 46,215) ( 11,546) Cash flows used in investing activities: Purchase of property & equipment ( 10,922) ( 7,922) Cash flows provided by financing activities: Issuance of short-term borrowings 67,117 17,000 Repayments of short-term borrowings ( 230) ( 8,000) Repayments of long-term debt ( 909) ( 909) Payments of cash dividends ( 3,846) ( 2,648) Proceeds from exercise of stock options 1,612 4,780 Tax benefits from exercise of stock options 1,463 4,162 Net cash provided by financing activities 65,237 14,385 Net increase (decrease) in cash and equivalents 8,100 ( 5,083) Cash and cash equivalents at beginning of year 33,045 35,365 Cash and cash equivalents at end of period $ 41,145 $ 30,282
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, 1995 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 solely of a normal recurring nature) necessary for a fair presentation of the results of operations for the three month periods ended April 30, 1995 and 1994, respectively, have been made. Interim cost of goods sold is determined using estimates of inventory shrinkage, inflation, and markdowns which are adjusted to reflect actual results at year end. 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 entire year. 2. Net Income Per Common Share Net income per common and common equivalent 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 Ended April 30, Shares (000's) 1995 1994 Actual weighted average number of shares outstanding during the period 56,553 65,765 Common Stock Equivalents: Dilutive effect of stock options using the "Treasury Stock Method" 2,631 2,679 1,715,742 shares Convertible Preferred Stock Issued August 22, 1994 10,723 0 Weighted Average Shares 69,907 68,444
7 3. Changes in shareholder's equity for the three months ended April 30, 1995 and 1994 were as follows (dollars in thousands except per share amounts):
Additional Preferred Common Paid-In Retained Treasury Stock Stock Capital Earnings Stock Balances, January 31, 1994 $ 0 $27,248 $ 65,857 $151,165 $ 3,553 Net income 9,514 Cash dividend, $.05 per common share, as declared ( 2,648) Reissuance of treasury stock under employee stock incentive plans 3,842 ( 941) Tax benefit from exercise of options 4,162 Balances, April 30, 1994 $ 0 $27,248 $ 73,861 $158,031 $ 2,612 Balances, January 31, 1995 $858 $33,971 $283,323 $207,436 $201,832 Net Income 11,576 Cash dividend, $.05 per common share, as declared ( 3,370) Cash dividend, $.28 per ( 482) preferred share Reissuance of treasury stock under employee stock incentive plans 1,231 ( 381) Tax benefit form exercise of options 1,493 Balances, April 30, 1995 $858 $ 33,971 $286,047 $215,160 $201,451
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 seasonal. Historically, sales in the fourth quarter have been significantly 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 by quarter. Results of a period shorter than a full year may not be indicative of results expected for the entire year. Furthermore, comparing any period to other than the same period of the previous year will not reflect the seasonal nature of the Company's business. NET SALES. Net sales for the first three months of fiscal 1996 increased $56.3 million, or 19.6%, to $343.4 million from $287.1 million for the comparable period of fiscal 1995. The increase resulted from 321 net additional stores being in operation as of April 30, 1995 as compared with the same prior year period and an increase of 4.8% in same-store sales as compared with the 15.8% increase in the same period last year. The Company regards 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 is a continued reflection of the success of its everyday low price strategy and merchandise selection. The Company's sales mix shifted in favor of hardlines which accounted for 69% of sales compared to softlines' 31% of sales versus 65% and 35%, respectively, in the first quarter of fiscal 1995. In the first quarter of fiscal 1996, the Company opened 111 stores, closed 8 stores and ended the quarter with a total 2,162 stores. GROSS PROFIT. Gross profit for the first three months of fiscal 1996 was $96.3 million, or 28.04% of net sales, compared to $80.0 million, or 27.90% of net sales, for the comparable period in the prior fiscal year. The increase resulted from higher beginning inventory margins, greater purchase discounts and lower markdowns which more than offset increased distribution costs related to the start-up of the Ardmore, Oklahoma distribution center. Allowance for shrinkage of 2.06% was up slightly from 1.94% a year ago and the LIFO charge of 0.17% was essentially unchanged from 0.15% in the same period last year. Cost of goods sold is determined in the first, second and third quarters utilizing estimates of inventory markdowns, shrinkage and inflation. Adjustments of these estimates based upon actual results are included in cost of goods sold in the fourth quarter. SELLING, GENERAL AND ADMINISTRATIVE EXPENSE. Operating expenses for the quarter equaled $76.3 million, or 22.2% of sales, compared with $64.3 million, or 22.4% of sales, in the same period last year. Operating expenses as a percentage of sales decreased principally as a result of lower advertising and self-insurance reserve costs which more than offset higher labor, rent and depreciation costs. INTEREST EXPENSE. Interest expense increased 189.0% to $1.1 million for the first three months of fiscal 1996 from $0.4 million for the comparable prior year period. The increase resulted from both greater average short-term borrowings and higher interest rates. LIQUIDITY AND CAPITAL RESOURCES Cash flows from operating activities - Cash flows used in operating activities totaled $46.2 million during the first quarter of fiscal 1996 compared with $11.5 million in the first quarter of fiscal 1995. This increased use of 9 cash is primarily the result of the build up in inventories by $63.8 million ($44.2 million in the prior year), being only partially offset by an $11.1 million increase in accounts payable $20.0 million in prior year). Inventories increased sharply as a result of operating 321 more stores, stocking the new Ardmore distribution center, increased imported merchandise in transit, and inventory to support the May, 1995 circular. Cash flows from investing activities - Cash used for capital expenditures during the first quarter increased $3.0 million to $10.9 million as compared to $7.9 million in the comparable period in 1995. The current year expenditures result principally from opening 111 new stores, remodeling and relocating 161 stores, and purchasing additional distribution trailers. Cash flows from financing activities - The Company's short-term borrowings during the first quarter of fiscal 1996 increased $67.1 million to $96.5 million compared with an increase of $9.0 million to $27.0 million during the same period of the prior fiscal year. The increased short-term borrowings were due to the cash used in operating activities and capital expenditures discussed above. 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 $150.0 million at April 30, 1995 ($65 million revolving credit/term loan facility plus $85.0 million in seasonal lines of credit). The Company had seasonal line of credit borrowings of $31.5 million and $0.0 million as of April 30, 1995 and 1994, respectively. The Company believes it can continue to meet its seasonal working capital and capital expenditure requirements through cash flows provided by operating activities supplemented by the revolving credit/term loan facility and credit lines. The Company is currently renegotiating to increase its revolving credit/term loan facility from $65.0 million to $170.0 million. The new agreement is expected to be executed by June 30, 1995. The Company's liquidity position is set forth in the following table (dollar amounts in thousands):
April 30, 1995 January 31, 1995 April 30, 1994 Current ratio 1.7x 2.0x 2.0x Total debt/equity 30.3% 11.1% 12.9% Long-term debt/equity 1.1% 1.5% 1.9% Working capital $207,638 $201,190 $177,651 Average daily use of debt: (fiscal year-to-date) Short-term $ 66,301 $ 51,528 $ 28,876 Long-term 5,163 6,035 6,488 Total $ 71,464 $ 57,563 $ 35,364 Maximum outstanding Short-term debt (fiscal year-to-date) $ 99,119 $116,712 $ 35,000
PART II - OTHER INFORMATION Item 6. Exhibits and reports on Form 8-K (b) No reports on Form 8-K have been filed during the quarter ended April 30, 1995. 10 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: June 13, 1995 By:/s/: C. Kent Garner C. Kent Garner, Vice President,Treasurer and Chief Financial Officer EX-27 2 FINANCIAL DATA SCHEDULE
5 The accompanying noters are an integral part of this statement. 3-MOS JAN-31-1996 APR-30-1995 41,145 0 0 0 419,951 486,906 196,700 67,129 622,012 280,188 0 33,971 0 858 299,756 622,012 343,392 343,392 247,111 247,111 76,325 0 1,133 18,823 7,247 11,576 0 0 0 11,576 .17 .17
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