-----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, WHFsDP1lEh41OGAZ2Ue8ItH0MJuBeROfqJf7uQDc6C/NfscggKGgYwbscn17laCg vQVb1jNu8ZJ6Rv8NmENsyg== 0000029534-96-000024.txt : 19960614 0000029534-96-000024.hdr.sgml : 19960614 ACCESSION NUMBER: 0000029534-96-000024 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19960503 FILED AS OF DATE: 19960613 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: 96580303 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 May 3, 1996 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 May 3, 1996 was 72,380,519. 2 Dollar General Corporation Form 10-Q For the Quarter Ended May 3, 1996 Index
Part I. Financial Information Page No. Item 1. Financial Statements (unaudited): Consolidated Statements of Income for the three months ended May 3, 1996 and May 5, 1995 restated from April 30, 1995. See Note 1 to the consolidated financial statements. 3 Consolidated Balance Sheets as of May 3, 1996, January 31, 1996 and May 5, 1995 restated from April 30, 1995. See Note 1 to the consolidated financial statements 4 Consolidated Statements of Cash Flows for the three months ended May 3, 1996 and May 5, 1995 restated from April 30, 1995. See Note 1 to the consolidated financial statements. 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 9 Signatures 10
3 PART I - FINANCIAL INFORMATION ITEM 1. Financial Statements DOLLAR GENERAL CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME For the three months ended May 3, 1996 and May 5, 1995* (in thousands except per share amounts) (unaudited)
May 3, 1996 May 5, 1995* Net Sales $455,856 $374,520 Cost of goods sold 332,482 269,762 Gross Profit 123,374 104,758 Selling, general and administrative expense 97,945 83,490 Operating profit 25,429 21,268 Interest expense 1,197 1,245 Income before taxes on income 24,232 20,023 Provision for taxes on income 9,208 7,709 Net income 15,024 12,314 Net income per common and common equivalent share $ .17 $ .14 Weighted average number of common and common equivalent shares outstanding 88,676 87,384 Cash dividends per common share, as declared $ .05 $ .05 Adjusted to give retroactive effect to the five-for-four common stock split distributed on April 26, 1996 $ .05 $ .04 *Restated as explained in Note 1. The accompanying notes are an integral part of this statement.
4 DOLLAR GENERAL CORPORATION AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS As of May 3, 1996, January 31, 1996 and May 5, 1995* (in thousands) (unaudited)
ASSETS May 3, January 31, May 5, 1996 1996 1995* Current Assets: Cash and cash equivalents $ 19,425 $ 4,344 $ 37,588 Merchandise inventories 526,120 488,362 426,244 Deferred income taxes 11,468 11,989 12,277 Other current assets 13,497 11,548 11,305 Total current assets 570,510 516,243 487,414 Property & Equipment, at cost 247,865 242,628 197,979 Less: Accumulated depreciation 90,831 84,041 67,579 157,034 158,587 130,400 Other Assets 5,130 5,166 5,534 $732,674 $679,996 $623,348 LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities: Current portion of long-term debt $ 1,545 $ 1,536 $ 1,442 Short-term borrowings 105,000 72,146 89,939 Accounts payable 120,387 103,176 126,489 Accrued expenses 56,021 62,099 55,533 Income Taxes 8,406 14,757 6,463 Total current liabilities 291,359 253,714 279,866 Long-term debt 2,305 3,278 3,857 Deferred income taxes 3,573 2,993 3,382 Shareholders' equity: Preferred stock 858 858 858 Common stock 42,893 42,762 33,971 Additional paid-in capital 308,155 303,609 286,047 Retained earnings 284,058 273,309 216,818 635,964 620,538 537,694 Less treasury stock 200,527 200,527 201,451 435,437 420,011 336,243 $732,674 $679,996 $623,348 *Restated as explained in Note 1. The accompanying notes are an integral part of this statement. /TABLE> 5 DOLLAR GENERAL CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS for the three months ended May 3, 1996, and May 5, 1995* (in thousands) (unaudited)
May 3, May 5, 1996 1995* Cash flows from operating activities: Net income $ 15,024 $ 12,314 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 7,318 5,855 Deferred income taxes 1,101 ( 492) Change in operating assets and liabilities: Merchandise inventories ( 37,758) ( 70,133) Accounts payable 17,211 14,814 Accrued expenses ( 6,078) ( 5,504) Income taxes ( 6,351) 1,253 Other ( 576) ( 965) Net cash used for operating activities ( 10,109) ( 42,858) Cash flows used in investing activities: Purchase of property & equipment ( 7,102) ( 12,202) Cash flows provided by financing activities: Issuance of short-term borrowings 50,276 67,117 Repayments of short-term borrowings ( 17,422) ( 6,778) Repayments of long-term debt ( 964) ( 909) Payments of cash dividends ( 4,275) ( 2,932) Proceeds from exercise of stock options 3,307 1,612 Tax benefits from exercise of stock options 1,370 1,493 Net cash provided by financing activities 32,292 59,603 Net increase (decrease) in cash and equivalents 15,081 4,543 Cash and cash equivalents at beginning of year 4,344 33,045 Cash and cash equivalents at end of period $ 19,425 $ 37,588 *Restated as explained in Note 1. 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, 1996 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 May 3, 1996 and May 5, 1995, 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. The comparative financial statements presented for the period ended May 5, 1995, have been restated from the 10-Q report for the first quarter ended April 30, 1995 to reflect the adoption of a retail 52/53 week reporting calendar effective February 1, 1996. For the period ended April 30, 1995, the Company reported net income of $11,576,000 or $0.13 per common and common equivalent share, as restated for the April 26, 1996 stock split. 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 Shares (000's) May 3,1996 May 5, 1995 Actual weighted average number of shares shares outstanding during the period 72,232 70,691 Common Stock Equivalents: Dilutive effect of stock options using the "Treasury Stock Method" 3,040 3,289 1,715,742 shares Convertible Preferred Stock Issued August 22, 1994 13,404 13,404 Weighted Average Shares 88,676 87,384
7 3. Changes in shareholder's equity for the three months ended May 3, 1996 and May 5, 1995 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, 1995 $ 858 $ 33,971 $283,323 $207,436 $201,832 Net income 12,314 Cash dividend, $.05 per common share, as declared ( 2,450) Cash dividend, $.28 per preferred share ( 482) Reissuance of treasury stock under employee stock incentive plans 1,231 ( 381) Tax benefit from exercise of options 1,493 Balances, May 5, 1995 $ 858 $ 33,971 $286,047 $216,818 $201,451 Balances, January 31, 1996 $ 858 $ 42,762 $303,609 $273,309 $200,527 Net Income 15,024 Cash dividend, $.05 per common share, as declared ( 3,672) Cash dividend, $.28 per preferred share ( 603) Issuance of Common Stock under employee stock incentive plans 131 3,176 Tax benefit from exercise of options 1,370 Balances, May 3, 1996 $ 858 $ 42,893 $308,155 $284,058 $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. 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 1997 increased $81.4 million, or 21.7%, to $455.9 million from $374.5 million for the comparable period of fiscal 1996. The increase resulted from 300 net additional stores being in operation as of May 3, 1996 as compared with May 5, 1995 and an increase of 7.3% in same-store sales as compared with the 6.2% 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 gains are a reflection of better in stock positions compared to the prior year and improved focus on its strategy as a distributor of consumable basics. The Company's sales mix shifted in favor of hardlines which accounted for 73% of sales compared to softlines' 27% of sales versus 69% and 31%, respectively, in the first quarter of fiscal 1996. In the first quarter of fiscal 1997, the Company opened 78 stores, closed 27 stores and ended the quarter with a total 2,467 stores. GROSS PROFIT. Gross profit for the first three months of fiscal 1997 was $123.3 million, or 27.06% of net sales, compared to $104.8 million, or 27.97% of net sales, for the comparable period in the prior fiscal year. The decrease was primarily driven by lower margin on sales of current purchases representing the shift of sales toward hardlines, lower beginning inventory margins, and higher shrinkage reserves. Allowance for shrinkage of 3.20% was up from 3.06% a year ago and the LIFO charge of 0.13% was slightly lower than the 0.16% 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 $97.9 million, or 21.5% of sales, compared with $83.5 million, or 22.3% of sales, in the same period last year. Driving this decrease in operating expense percentage to sales were reductions in labor and related taxes, travel and training costs stemming from tighter control of operating and administrative areas, lower insurance expenses, and lower advertising costs due to fewer new store openings this year versus last year. Partially offsetting these improvements was an increase in incentive compensation. The total increase in these operating expenses of $14.4 million from last year resulted primarily from an increase of 300 stores in operation during fiscal 1997. 9 INTEREST EXPENSE. Interest expense was flat at $1.2 million for the first three months of fiscal 1997 compared to 1996. As a percentage of sales, interest expense dropped to 0.26% from 0.32% in the comparable prior year period. LIQUIDITY AND CAPITAL RESOURCES Cash flows from operating activities - Cash flows used in operating activities totaled $10.1 million during the first quarter of fiscal 1997 compared with $42.9 million in the first quarter of fiscal 1996. This decrease in use of cash is primarily the result of a smaller increase in inventories this year versus last year (a $32.4 million difference) being only partially offset by an increase in accounts payable ($17.2 million versus $14.8 million in the prior year). Inventories increased as a result of opening new stores, maintaining better in-stock levels, and some carry-over seasonal merchandise from last year. Cash flows from investing activities - Cash used for capital expenditures during the first quarter decreased $6.0 million to $7.1 million as compared to $13.1 million in the comparable period in 1996. The current period expenditures resulted principally from opening 78 new stores, remodeling and relocating 45 stores, and investment in warehouse equipment. The decrease is driven by reduced investment in stores, down $2.8 million and reduced trailer purchases of $1.0 million. Cash flows from financing activities - The Company's short-term borrowings during the first quarter of fiscal 1997 increased by a net of $33.9 million compared to 61.3 million in 1996. The increased short-term borrowings were due to the cash used in operating activities and capital expenditures discussed above. Because of the seasonal nature of the Company's business, its working capital requirements vary significantly during the year. Bank credit facilities equaled $285.0 million at May 3, 1996 ($170.0 million revolving credit/term loan facility plus $115.0 million seasonal lines of credit). The Company had seasonal lines of credit borrowings of $0.0 million and $24.9 million as of May 3, 1996 and 1995, respectively. The Company anticipates that 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 (dollars in thousands):
May 3, January 31, May 5, 1996 1996 1995 Current ratio 2.0% 2.0% 1.7% Total borrowings/equity 25.0% 18.3% 28.3% Long-term debt/equity 0.5% 0.8% 1.1% Working Capital (000) $279,151 $262,529 $207,548 Average daily use of debt: (Fiscal year-to-date) Short-term (000) $ 80,430 $ 99,564 $ 66,301 Long-term (000) 4,264 4,718 5,163 Total (000) $ 84,694 $104,282 $ 71,464 Maximum outstanding short-term $110,077 $227,397 $ 99,119 debt (fiscal year-to-date)
10 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 May 3, 1996. 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) June 13, 1996 By: /s/Bob Carpenter Bob Carpenter, Vice President, Chief Administrative Officer, and Corporate Secretary EX-27 2 FINANCIAL DATA SCHEDULE
5 The accompanying notes are an integral part of this statement. 3-MOS JAN-31-1997 MAY-03-1996 19,425 0 0 0 526,120 570,510 247,865 90,831 732,674 291,359 0 42,893 0 858 391,686 732,674 455,856 455,856 332,482 97,945 0 0 1,197 24,232 7,208 15,024 0 0 0 15,024 .17 .17
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