EX-99.1 3 exhibit99-1.txt Exhibit 99.1 Investor Contact: Media Contact: Emma Jo Kauffman Andrea Ewin Turner 615-855-5525 615-855-5209 DOLLAR GENERAL REPORTS EARNINGS FOR THE THIRD QUARTER OF 2002 GOODLETTSVILLE, Tennessee - November 26, 2002 - Dollar General Corporation (NYSE: DG) today reported net income for the third quarter of fiscal 2002 of $68.6 million, or $0.20 per diluted share, an increase of 46.7 percent compared to net income of $46.7 million, or $0.14 per diluted share, in the third quarter of fiscal 2001. In the third quarter of 2002, the Company recorded approximately $24.3 million of net restatement-related pre-tax income, primarily from insurance proceeds. In the third quarter of 2001, the Company incurred restatement-related expenses of $9.3 million. Excluding the restatement-related items from both years, net income during the current year third quarter was $53.2 million, or $0.16 per diluted share, compared to net income of $52.5 million, or $0.16 per diluted share, in the comparable prior year quarter. Net sales during the third quarter increased 14.4 percent to $1.50 billion compared to $1.31 billion in the third quarter of 2001. The increase resulted primarily from 591 net new stores and a same-store sales increase of 5.2 percent. Gross profit during the quarter was $428.6 million, or 28.6 percent of sales versus $381.2 million, or 29.1 percent of sales during the comparable period in the prior year. Excluding the restatement-related items noted above, selling, general and administrative expenses for the quarter were $334.4 million, or 22.3 percent of sales, in the current year, versus $285.8 million, or 21.8 percent of sales, in the prior year. Net income for the 39-week year-to-date period was $156.9 million in fiscal 2002, or $0.47 per diluted share, compared to $110.1 million, or $0.33 per diluted share, as of the third quarter of fiscal 2001. Excluding net restatement-related items from both years, year-to-date net income increased 16.5 percent to $141.6 million, or $0.42 per diluted share, in fiscal 2002 compared to net income of $121.5 million, or $0.36 per diluted share, in the comparable prior year period. Year-to-date net sales increased 16.2 percent, including a same-store sales increase of 7.2 percent. "We have made progress in implementing our operational initiatives to improve store level execution and customer service," said Don Shaffer, Acting CEO, President and COO. " We are particularly pleased with the success of our inventory management initiatives resulting in improved inventory turns to 3.4 times compared to 3.1 times a year ago. These initiatives have also had a significant impact on our improved operating cash flows. However, in the quarter we were unable to achieve the desired leverage on operating expenses and our physical inventory results continue to be unacceptable. Despite the somewhat disappointing results of the third quarter, we are still hopeful that we can achieve the low end of our net income guidance for the year, which was an increase in net income excluding restatement-related items of 13 to 15 percent. To do so, we must have a strong profit performance in December. Given the uncertain retail environment, that strong performance is not assured." As of November 23, Dollar General had completed its fiscal 2002 store openings with a total of 620 new stores. The Company plans to open 650 stores in fiscal 2003. As of November 1, 2002, Dollar General operated 6,076 neighborhood stores in 27 states with distribution centers in Florida, Kentucky, Mississippi, Missouri, Ohio, Oklahoma and Virginia. Dollar General will host a conference call today at 5 p.m. EST to discuss the quarter's results. The passcode for the conference call is "Dollar General." If you wish to participate, please call (484) 630-6177 at least 10 minutes before the conference call is scheduled to begin. The call will also be broadcast live online at www.dollargeneral.com. A replay of the call will be available online ---------------------- or by dialing 402-998-1172 until midnight EST Friday, December 6. This press release contains forward-looking information, including but not limited to information regarding annual earnings guidance. The words "believe," "anticipate," "project," "plan," "expect," "estimate," "objective," "forecast," "goal," "intend," "will likely result," or "will continue" and similar expressions generally identify forward-looking statements. 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 by, or implied in, the forward-looking statements. A number of factors may result in actual results differing from such forward-looking information including, but not limited to: the Company's ability to maintain adequate liquidity through its cash resources and credit facilities; the Company's ability to comply with the terms of the Company's credit facilities (or obtain waivers for non-compliance); transportation and distribution delays or interruptions, including, but not limited to, the impact of the recent management lockout of the west coast dockworkers and any ongoing work slowdown on the economy and on the Company's ability to receive inventory; inventory risks due to shifts in market demand; changes in product mix; interruptions in suppliers' businesses; costs and potential problems and interruptions associated with implementation of new or upgraded systems and technology; fuel price and interest rate fluctuations; a deterioration in general economic conditions caused by acts of war or terrorism; temporary changes in demand due to weather patterns; delays associated with building, opening and operating new stores; and the impact of the SEC inquiry related to the restatement of certain of the Company's financial statements. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this release. The Company disclaims any obligation to publicly update or revise any forward-looking statements contained herein to reflect events or circumstances occurring after the date of this release or to reflect the occurrence of unanticipated events. # # #
DOLLAR GENERAL CORPORATION AND SUBSIDIARIES Selected Additional Information Sales by Category (in thousands) (Unaudited) Quarter Ended 39 Weeks Ended ---------------------------------------------- -------------------------------------------- November 1, November 2, % November 1, November 2, % 2002 2001 Change 2002 2001 Change --------------- -------------- --------- --------------- --------------- ---------- Highly consumable $ 959,873 $ 796,271 21% $ 2,703,617 $ 2,255,342 20% Hardware and seasonal 196,213 185,028 6% 627,303 538,913 16% Basic clothing 154,366 148,617 4% 443,287 410,448 8% Home products 187,250 179,209 5% 566,634 532,180 7% --------------- -------------- --------- --------------- --------------- ---------- Total sales $1,497,702 $ 1,309,125 14% $ 4,340,841 $ 3,736,883 16%
New Store Activity for the 39 Weeks Ended (Unaudited) 39 Weeks Ended 39 Weeks Ended November 1, 2002 November 2, 2001 --------------------------------- ------------------------------- Beginning store count 5,540 5,000 New store openings 575 523 Store closings 39 38 Net new stores 536 485 Ending store count 6,076 5,485 Total selling square footage (000's) 41,011 37,136
Customer Transaction Data (Unaudited) Quarter Ended 39 Weeks Ended ------------------------------------ -------------------------------- November 1, November 2, November 1, November 2, 2002 2001 2002 2001 -------------- ------------- -------------- ------------ Same-store customer transactions 6.5% 7.0% 6.2% 5.5% Average customer transaction $8.31 $8.35 $8.33 $8.25
DOLLAR GENERAL CORPORATION AND SUBSIDIARIES Condensed Consolidated Balance Sheets (In thousands) November 1, February 1, November 2, 2002 2002 2001 (Unaudited) (Unaudited) ------------------------------------------------------ ASSETS Current assets: Cash and cash equivalents...................................... $ 37,101 $ 261,525 $ 74,819 Merchandise inventories........................................ 1,249,120 1,131,023 1,133,215 Deferred income taxes.......................................... 43,095 105,091 90,307 Other current assets........................................... 61,077 58,408 48,600 ----------- ----------- ----------- Total current assets..................................... 1,390,393 1,556,047 1,346,941 ----------- ----------- ----------- Property and equipment, at cost................................ 1,581,427 1,473,693 1,454,268 Less accumulated depreciation and amortization................. 581,162 484,778 456,478 ----------- ----------- ----------- Net property and equipment............................... 1,000,265 988,915 997,790 ----------- ----------- ----------- Merchandise inventories........................................ - - 116,000 Other assets................................................... 20,506 7,423 8,535 ----------- ----------- ----------- Total assets............................................. $ 2,411,164 $ 2,552,385 $ 2,469,266 =========== =========== =========== LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities: Current portion of long-term obligations....................... $ 15,834 $ 395,675 $ 391,089 Accounts payable............................................... 410,426 322,463 381,843 Accrued expenses and other..................................... 246,815 253,413 223,508 Income Taxes................................................... - - 10,492 Litigation settlement payable.................................. 200 162,000 162,000 ----------- ----------- ----------- Total current liabilities................................ 673,275 1,133,551 1,168,932 ----------- ----------- ----------- Long-term obligations............................................. 502,498 339,470 347,174 Deferred income taxes............................................. 45,040 37,646 - Shareholders' equity: Preferred stock................................................ - - - Common stock................................................... 166,691 166,359 166,302 Additional paid-in capital..................................... 313,023 301,848 300,622 Retained earnings.............................................. 714,800 579,265 492,473 Accumulated other comprehensive loss........................... (1,382) (3,228) (3,552) ----------- ----------- ----------- 1,193,132 1,044,244 955,845 Less other shareholders' equity................................ 2,781 2,526 2,685 ----------- ----------- ----------- Total shareholders' equity............................... 1,190,351 1,041,718 953,160 ----------- ----------- ----------- Total liabilities and shareholders' equity............... $ 2,411,164 $ 2,552,385 $ 2,469,266 =========== =========== ===========
DOLLAR GENERAL CORPORATION AND SUBSIDIARIES Condensed Consolidated Statements of Income (Unaudited) (Amounts in thousands except per share amounts) 13 Weeks Ended --------------------------------------------------------------------- November 1, % of November 2, % of 2002 Net Sales 2001 Net Sales ------------------ ----------- --------------------- -------------- Net sales................................ $ 1,497,702 100.0% $ 1,309,125 100.0% Cost of goods sold....................... 1,069,119 71.4 927,944 70.9 --------------- ----- ------------- ----- Gross profit........................ 428,583 28.6 381,181 29.1 Selling, general and administrative expenses................................. 335,152 22.4 295,103 22.5 Litigation settlement and related proceeds................................. (25,041) (1.7) - - --------------- ----- ------------- ----- Operating profit.................... 118,472 7.9 86,078 6.6 Interest expense, net.................... 11,537 0.8 11,480 0.9 --------------- ----- ------------- ----- Income before income taxes.......... 106,935 7.1 74,598 5.7 Provision for income taxes............... 38,365 2.6 27,861 2.1 --------------- ----- ------------- ----- Net income.......................... $ 68,570 4.6% $ 46,737 3.6% =============== ===== ============= ===== Earnings per share: Basic............................... $ 0.21 $ 0.14 ============= ============= Diluted............................. $ 0.20 $ 0.14 ============= ============= Weighted average shares: Basic............................... 333,227 332,491 ============= ============= Diluted............................. 334,970 334,857 ============= ============= Dividends per share...................... $ .032 $ .032 ============= =============
DOLLAR GENERAL CORPORATION AND SUBSIDIARIES Condensed Consolidated Statements of Income (Unaudited) (Amounts in thousands except per share amounts) 39 Weeks Ended ------------------------------------------------------------------------- November 1, November 2, 2002 % of Net Sales 2001 % of Net Sales ----------------- ----------------- ----------------- ----------------- Net sales............................ $ 4,340,841 100.0% $ 3,736,883 100.0% Cost of goods sold................... 3,144,539 72.4 2,702,994 72.3 ----------------- ----------------- ----------------- ----------------- Gross profit.................... 1,196,302 27.6 1,033,889 27.7 Selling, general and administrative expense.............................. 946,123 21.8 823,162 22.0 Litigation settlement and related proceeds............................. (29,541) (0.7) - - ----------------- ----------------- ----------------- ----------------- Operating profit................ 279,720 6.4 210,727 5.7 Interest expense, net................ 33,306 0.8 35,037 1.0 ----------------- ----------------- ----------------- ----------------- Income before income taxes...... 246,414 5.7 175,690 4.7 Provision for taxes on income........ 89,554 2.1 65,620 1.8 ----------------- ----------------- ----------------- ----------------- Net income...................... $ 156,860 3.6% $ 110,070 2.9% ================= ================= ================= ================= Earnings per share: Basic........................... $ 0.47 $ 0.33 ================= ================= Diluted......................... $ 0.47 $ 0.33 ================= ================= Weighted average shares: Basic........................... 332,986 332,136 ================= ================= Diluted......................... 335,180 335,148 ================= ================= Dividends per share.................. $ .096 $ .096 ================= =================
DOLLAR GENERAL CORPORATION AND SUBSIDIARIES Condensed Consolidated Statements of Cash Flows (Unaudited) (In thousands) 39 Weeks Ended ------------------------------------- November 1, November 2, 2002 2001 ------------------ ------------------ Cash flows from operating activities: Net income $ 156,860 $ 110,070 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 102,302 92,104 Deferred income taxes 68,424 (5,795) Tax benefit from stock option exercises 2,278 5,243 Litigation settlement (161,800) - Change in operating assets and liabilities: Merchandise inventories (118,097) (236,980) Other current assets (2,774) (3,732) Accounts payable 87,963 84,581 Accrued expenses and other 6,968 (1,195) Other (14,124) (2,549) ------------------ ------------------ Net cash provided by operating activities 128,000 41,747 ------------------ ------------------ Cash flows from investing activities: Purchase of property and equipment (104,727) (100,184) Proceeds from sale of property and equipment 379 230 ------------------ ------------------ Net cash used in investing activities (104,348) (99,954) ------------------ ------------------ Cash flows from financing activities: Net borrowings under revolving credit facilities 168,400 - Repayments of long-term obligations (393,378) (8,925) Payments of cash dividends (31,972) (31,910) Proceeds from exercise of stock options 4,844 11,557 Other financing activities 4,030 (6) ------------------ ------------------ Net cash used in financing activities (248,076) (29,284) ------------------ ------------------ Net decrease in cash and cash equivalents (224,424) (87,491) Cash and cash equivalents, beginning of period 261,525 162,310 ------------------ ------------------ Cash and cash equivalents, end of period $ 37,101 $ 74,819 ================== ================== Supplemental schedule of noncash investing and financing activities - Purchase of property and equipment under capital lease obligations $ 8,134 $ 17,393 ================== ==================