-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, C+N7nvERqPoZpte2gSwLBnzyFIJnNOL871L6e1bndaYUzmrYuhZE2ZxL8EOywBro PhpBoHn23ghGXrKdR0PDGQ== 0000029534-95-000030.txt : 19951215 0000029534-95-000030.hdr.sgml : 19951215 ACCESSION NUMBER: 0000029534-95-000030 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19951031 FILED AS OF DATE: 19951214 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: DOLLAR GENERAL CORP CENTRAL INDEX KEY: 0000029534 STANDARD INDUSTRIAL CLASSIFICATION: RETAIL-VARIETY STORES [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: 95601511 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 3ND 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 ended October 31, 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 November 22, 1995 was 57,626,392. 2 Dollar General Corporation Form 10-Q For the Quarter Ended October 31, 1995 Index Part I. Financial Information Page No. Item 1. Financial Statements (unaudited): Consolidated Statements of Income for the three months and nine Months ended October 31, 1995 and 1994. . . . . . 3 Consolidated Balance Sheets as of October 31, 1995, January 31, 1995 and October 31, 1994. . . . . . . . . . . . . . . . . 4 Consolidated Statements of Cash Flows for the nine months ended October 31, 1995 and 1994. . . . . . . . . . . . . . . . . . . . . . . 5 Notes to Consolidated Financial Statements 6 Item 2. Management's Discussion and Analysis Of Financial Condition and Results of Operations . . . . . . . . . . . . . . . . . . . . 8 Part II. Other Information 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 (unaudited) For the three months and nine months ended October 31, 1995 and 1994 in thousands except per share amounts)
Three Months Nine Months 1995 1994 1995 1994 Net Sales $437,218 $359,430 $1,188,814 $963,839 Cost of goods sold 308,853 253,851 850,223 690,572 Gross Profit 128,365 105,579 338,591 273,267 Selling, general and administrative expense 93,270 76,620 253,010 205,560 Operating profit 35,095 28,959 85,581 67,707 Interest expense 2,561 1,177 5,459 2,216 Income before taxes on income 32,534 27,782 80,122 65,491 Provision for taxes on income 12,526 10,488 30,847 24,723 Net income 20,008 17,294 49,275 40,768 Net income per common share $ .28 $ .25 $ .70 $ .59 Weighted average number of common shares outstanding 70,401 69,193 70,206 68,826 Cash dividends per common share as declared $ .05 $ .05 $ .15 $ .15 Adjusted to give retroactive effect to the five-for-four stock split distributed on March 6, 1995. $ .05 $ .04 $ .15 $ .12 The accompanying notes are an integral part of this statement.
4 DOLLAR GENERAL CORPORATION AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS As of October 31, 1995, January 31, 1995 and October 31, 1994 (in thousands) (unaudited)
ASSETS October 31, January 31, October 31, 1995 1995 1994 Current assets: Cash and cash equivalents $ 4,146 $ 33,045 $ 25,582 Merchandise inventories 580,928 356,111 392,605 Deferred income taxes 12,232 11,785 11,221 Other current assets 12,205 9,212 12,913 Total current assets 609,511 410,153 442,321 Property & equipment, at cost 231,500 187,360 165,263 Less: Accumulated depreciation 77,548 62,108 57,477 153,952 125,252 107,786 Other Assets 5,566 5,463 4,818 $769,029 $540,868 $554,925 LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities: Current portion of long-term debt $ 1,308 $ 1,441 $ 1,305 Short-term borrowings 200,304 29,600 112,712 Accounts payable 111,919 111,675 88,836 Accrued expenses 58,755 61,037 53,572 Income taxes 6,876 5,210 5,007 Total current liabilities 379,162 208,963 261,432 Long-term debt 3,422 4,767 4,538 Deferred income taxes 3,382 3,382 2,563 Shareholders' equity: Preferred stock 858 858 858 Common stock 34,149 33,971 27,248 Additional paid-in capital 302,014 283,323 276,975 Retained earnings 246,569 207,436 183,981 583,590 525,588 489,062 Less treasury stock 200,527 201,832 202,670 383,063 323,756 286,392 $769,029 $540,868 $554,925 The accompanying notes are an integral part of this statement.
5 DOLLAR GENERAL CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS for the nine months ended October 31, 1995 and 1994 (amounts in thousands) (unaudited)
October 31, October 31, 1995 1994 Cash flows from operating activities: Net income $ 49,275 $ 40,768 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 17,938 12,217 Deferred income taxes ( 447) ( 1,557) Change in operating assets and liabilities: Merchandise inventories (224,817) (132,563) Accounts payable 244 7,800 Accrued expenses ( 2,282) 5,666 Income taxes 1,666 6,570 Other ( 1,160) ( 4,216) Net cash used by operating activities (159,583) ( 65,315) Cash flows used in investing activities: Purchase of property & equipment ( 48,574) ( 42,916) Cash flows provided by financing activities: Issuance of short-term borrowings 184,653 96,212 Repayments of short-term borrowings ( 13,949) ( 1,501) Repayments of long-term debt ( 1,478) ( 1,170) Payments of cash dividends ( 10,142) ( 7,952) Proceeds from exercise of stock options 12,848 6,584 Tax benefits from exercise of stock options 6,997 5,585 Other 329 690 Net cash provided by financing activities 179,258 98,448 Net increase (decrease) in cash and equivalents ( 28,899) ( 9,783) Cash and cash equivalents at beginning of year 33,045 35,365 Cash and cash equivalents at end of period $ 4,146 $ 25,582 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 of a normal recurring nature) necessary for a fair presentation of the results of operations for the three month and nine month periods ended October 31, 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 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 Nine Months Ended October 31, Ended October 31, (in thousands) 1995 1994 1995 1994 Actual weighted average number of common shares outstanding during the period 57,557 64,788 57,081 64,515 Common Stock Equivalents: Dilutive effect of stock options using the "Treasury Stock Method" 2,121 2,736 2,402 2,642 1,715,742 shares of Convertible Preferred Stock issued August 22, 1994 10,723 1,669 10,723 1,669 Weighted Average Number of Common Shares 70,401 69,193 70,206 68,826
7 3. Changes in shareholder's equity for the nine months ended October 31, 1995 and 1994 were as follows (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 40,768 Cash dividend, $.15 per common share, as declared ( 7,952) Reissuance of treasury stock under employee stock incentive plans 5,217 ( 1,367) Tax benefit from exercise of options 5,585 Transfer to employee pension plan (25,134 shares) 647 ( 43) Issuance of preferred stock in exchange for company common stock 858 199,669 200,527 Balances, October 31, 1994 $ 858 $ 27,248 $276,975 $183,981 $202,670 Balances, January 31, 1995 $ 858 $ 33,971 $283,323 $207,436 $201,832 Net income 49,275 Cash dividend, $.15 per common share ( 8,696) Cash dividend, $.84 per preferred share ( 1,446) Issuance of common stock under employee stock incentive plans 172 3,822 Reissuance of treasury stock under employee stock incentive plans 7,549 ( 1,305) Transfer to employee pension plan (12,783 shares) 6 323 Tax benefit from exercise of options 6,997 Balances, October 31, 1995 $ 858 $ 34,149 $302,014 $246,569 $200,527
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 which ends January 31. 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. Due to the seasonal nature of the business, current-year periods are most accurately evaluated by comparison to the same periods in prior years. Nine months ended October 31, 1995 and 1994. NET SALES. Net sales for the first nine months of fiscal 1996 increased $225.0 million, or 23.34% to $1,188.8 million from $963.8 million for the comparable period of fiscal 1995. The increase resulted primarily from 393 net additional stores being in operation as of October 31, 1995 as compared with the same prior-year period and an increase of 6.6% in same-store sales. In the first nine months of fiscal 1996, the Company opened 353 stores, closed 22 stores and ended the period with a total of 2,390 stores. 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 this year through the first nine months (6.6% increase as compared to 14.7% in the comparable period last year) has been hurt by distribution constraints in shipping merchandise to stores related to the Ardmore distribution center start up and by industry-wide soft apparel sales. The Company's sales mix continued to show the shift in favor of hardlines, which accounted for 69% of the sales, compared to softlines' 31% of sales versus 65% and 35%, respectively, in the first nine months of fiscal 1995. GROSS PROFIT. Gross profit for the first nine months of fiscal 1996 was $338.6 million, or 28.48% of net sales, compared to $273.3 million, or 28.35% of net sales, for the comparable period in the prior fiscal year. The increase resulted from higher beginning inventory margins and lower markdowns which more than offset lower margins on current purchases and higher distribution costs related to the Ardmore distribution center start-up. Shrinkage allowances and LIFO charges were essentially unchanged from 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. Adjustment 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 period equaled $253.0 million, or 21.28% of sales, compared with $205.6 million, or 21.33% of sales, in the same period last year. This 23% increase is principally the result of opening and operating 393 net additional stores. Operating expenses as a percentage of sales decreased principally as a result of lower self-insurance reserves, employee benefit and supply costs, and bonus accruals, which more than offset higher depreciation, rent and professional fees. INTEREST EXPENSE. Interest expense increased 146.3% to $5.5 million for the first nine months of fiscal 1996 from $2.2 million for the comparable prior year period. The increase resulted primarily from greater average short-term borrowings related to increases in inventories. Average short-term borrowings were $97.6 million and $52.2 million for the respective nine month periods of fiscal 1996 and 1995. 9 Three months ended October 31, 1995 and 1994. NET SALES. Net sales in the third quarter of fiscal 1996 increased $77.8 million or 21.6%, to $437.2 million from $359.4 million for the same period in fiscal 1995. The increase resulted from a same-store sales increase of 4.6% (as compared to 17.2% in the third quarter of 1994) and the operation of 393 additional stores at October 31, 1995 as compared to October 31, 1994. Continued soft apparel sales and some inventory imbalances in the first month of the quarter hurt the same-store performance relative to last year. GROSS PROFIT. Gross profit as a percentage of sales was 29.36% in the third quarter of fiscal 1996 as compared to 29.37% for the comparable period in fiscal 1995. This performance resulted from higher beginning inventory margins and lower distribution costs which offset higher damage markdown reserves and lower margins on current purchases. Although distribution costs were up year-to-date, for the quarter they were down reflecting more efficient operation of the company's distribution centers. SELLING, GENERAL AND ADMINISTRATIVE EXPENSE. Selling, general and administrative expense increased $16.7 million or 21.7% in the third quarter of fiscal 1996 as compared to fiscal 1995, primarily as a result of more stores in operation. As a percentage of sales, selling, general and administrative expense was constant at 21.33% for the third quarter of fiscal 1996 compared to 21.32% for the same period in the previous year. Expenses increasing as a percent of sales for the quarter were depreciation, rent and professional and bank fees; these were offset by decreases in supplies and employee benefit costs. INTEREST EXPENSE. Interest expense for the third quarter of fiscal 1996 increased 117.6%, to $2.6 million from $1.2 million, from the comparable period in fiscal 1995 as a result of greater average borrowings related to increases in inventories. Average short-term borrowings were $145.8 million and $62.0 million for the respective three-month periods of fiscal 1996 and 1995. LIQUIDITY AND CAPITAL RESOURCES Cash flows from operating activities. Cash used in operating activities totaled $159.6 million during the first nine months of fiscal 1996 compared to $65.3 million in the same period last year. This increased use of cash is primarily the result of a $224.8 million increase in inventories since fiscal year end 1995, $92.2 million more than in the same period last year. The increase in merchandise inventories is the result of operating 393 more stores, stocking the new Ardmore distribution center, and inventory build up in existing stores for the Christmas season. Cash flows from investing activities. Cash used for capital expenditures during the first nine months of fiscal 1996 increased $5.7 million to $48.6 million as compared to $42.9 million in the comparable period in 1995. The current year expenditures result principally from opening 353 new stores this year versus 226 last year, remodeling and relocating 267 stores this year versus 264 last year, and purchasing additional distribution trailers versus constructing the Ardmore distribution center last year. Cash flows from financing activities. The Company's short-term borrowings during the first nine months of fiscal 1996 increased $170.7 million to $200.3 million compared with an increase of $94.7 million to $112.7 million during the same period of the prior fiscal year. The increase in short-term borrowings was required to fund the cash used in operating activities and for the capital expenditures discussed above. 10 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 $305.0 million at October 31, 1995 ($170.0 million revolving credit/term loan facility plus $135 million seasonal lines of credit). In June 1995, the Company renegotiated an increase in its revolving credit/term loan facility to $170.0 million from $65.0 million. The Company had seasonal lines of credit borrowings of $35.1 million and 50.7 million as of October 31, 1995 and 1994, respectively. 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. The Company's liquidity position is set forth in the following table (amounts in thousands):
October 31, January 31, October 31, 1995 1995 1994 Current ratio 1.6x 2.0x 1.7x Total borrowings/equity 53.5% 11.1% 41.4% Long-term debt/equity 0.9% 1.5% 1.6% Working capital (000) $230,349 $201,190 $180,889 Average daily use of debt: (fiscal year to date) Short-term(000) $ 97,604 $ 51,528 $ 52,240 Long-term (000) 4,812 6,035 6,128 Total (000) 102,416 57,563 58,368 Maximum outstanding Short-term debt (fiscal year-to-date) $211,227 $116,712 $112,712
11 PART II - OTHER INFORMATION Item 1. Not applicable. Item 2. Not applicable. Item 3. Not applicable. Item 4. Not applicable. Item 5. Not applicable. Item 6. Exhibits and reports on Form 8-K. (a) No reports on Form 8-K were filed during the quarter ended October 31, 1995. 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: December 14, 1995 By: SS/: Bob Carpenter Bob Carpenter, Chief Administrative Officer, Vice President and Corporate Secretary EX-27 2 FINANCIAL DATA SCHEDULE
5 The accompanying notes are an integral part of this statement. 1,000 9-MOS JAN-31-1996 OCT-31-1995 4,146 0 0 0 580,928 609,511 231,500 77,548 769,029 379,162 0 34,149 0 858 348,056 769,029 1,188,814 1,188,814 850223 253010 0 0 5,459 80,122 30,847 49,275 0 0 0 49,275 .70 .70
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