UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
Current Report
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Tennessee 001-11421 61-0502302
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(State or Other Jurisdiction (Commission (I.R.S. Employer
of Incorporation) File Number) Identification No.)
100 Mission Ridge
Goodlettsville, Tennessee 37072
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(Address of Principal Executive Offices) (Zip Code)
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Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
[ ] Written communications pursuant to Rule 425 under the Securities Act (17 CFR
230.425)
[ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12)
[ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange
Act (17 CFR 240.14d-2(b))
[ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange
Act (17 CFR 240.13e-4(c))
ITEM 2.02. RESULTS OF OPERATIONS AND FINANCIAL CONDITION
On March 21, 2006, Dollar General Corporation (the "Company") issued a news release regarding results of operations and financial condition for the fourth quarter and year ended February 3, 2006. The news release is attached hereto as Exhibit 99 and incorporated by reference as if fully set forth herein.
ITEM 7.01. REGULATION FD DISCLOSURE
The information set forth in Item 2.02 above is incorporated herein by reference. The press release also sets forth information regarding the planned conference call and webcast to discuss results for the fourth quarter and year ended February 3, 2006, the financial outlook for the first quarter and full year fiscal 2006, and other matters.
ITEM 9.01. FINANCIAL STATEMENTS AND EXHIBITS
(a) Financial statements of businesses acquired. N/A
(b) Pro forma financial information. N/A
(c) Shell company transactions. N/A
(d) Exhibits. See Exhibit Index immediately following the signature
page hereto.
SIGNATURE
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 hereunto duly authorized.
By: /s/ Susan S. Lanigan
-----------------------------------
Susan S. Lanigan
Executive Vice President and
General Counsel
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EXHIBIT INDEX
Exhibit No. Description
----------- -----------
99 News release dated March 21, 2006.
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Exhibit 99
Dollar General Announces 2005 Fourth Quarter and Fiscal Year Results and 2006 Outlook
GOODLETTSVILLE, Tenn.--(BUSINESS WIRE)--March 21, 2006--Dollar
General Corporation (NYSE: DG) today reported sales and earnings for
the quarter and fiscal year ended February 3, 2006 ("fiscal 2005").
Fiscal 2005 was a 53-week year, including 14 weeks in the fourth
quarter. Except for the calculation of same-store sales, all
comparisons are based on a 53-week year or 14-week quarter in 2005
compared to a 52-week year or 13-week quarter in fiscal 2004, which
ended January 28, 2005. Calculations of quarterly and annual
same-store sales are based on comparable weeks and therefore exclude
the extra week in fiscal 2005.
Net sales in fiscal 2005 were $8.58 billion, an increase of 12.0
percent over fiscal 2004. The net sales increase for the year was due
to the opening of additional net new stores, a 2.0 percent increase in
same-store sales, and the impact of the additional week. Net income
for fiscal 2005 increased to $350.2 million, or $1.08 per share, from
$344.2 million, or $1.04 per share, in fiscal 2004.
During 2005, the Company incurred significant losses caused by
Hurricane Katrina, which occurred in late August. These losses
included damaged inventory, store fixtures and leasehold improvements,
as well as business interruption resulting from store closings. The
Company's current claim for losses from the hurricane is approximately
$23 million (net of a $2 million deductible). Proceeds of $8 million
relating to this claim were received and recorded by the Company in
fiscal 2005, including $6 million recorded in the third quarter and $2
million recorded in the fourth quarter. Until recently, the Company
anticipated that it would be able to substantially close out the
remainder of this claim in fourth quarter 2005. However, the Company
was not able to complete a settlement with the insurance carrier in
the fourth quarter and currently anticipates recording additional
proceeds in the first half of 2006.
Gross profit for fiscal 2005 was $2.46 billion, or 28.7 percent of
net sales, compared with $2.26 billion, or 29.5 percent of net sales,
in 2004. The decline in gross profit as a percent of sales was due to
a number of factors, including lower sales, as a percentage of total
sales, in the Company's seasonal, home products and basic clothing
categories; increased markdowns primarily as a result of the Company's
initiative to reduce older inventory levels; higher transportation
expenses primarily resulting from higher fuel costs; an increase in
the Company's inventory shrink rate; and an unfavorable impact
resulting from the change in the number of departments the Company
uses to account for inventories under the retail inventory method
("RIM"). The net impact for the year of the RIM change was greater
than expected. These factors were partially offset by higher average
mark-ups on beginning inventory in the 2005 period.
Selling, general and administrative ("SG&A") expenses for fiscal
2005 were $1.90 billion, or 22.2 percent of sales, compared with $1.71
billion, or 22.3 percent of sales, in 2004. Decreases, as a percentage
of sales, in employee incentive compensation expense based upon the
Company's fiscal 2005 financial performance; lower health benefits
expense resulting from decreased claims costs and a downward revision
in claim lag assumptions; and a reduction in professional fees,
primarily due to the reduction from the 2004 period of consulting fees
associated with the EZstore project and Sarbanes-Oxley compliance
efforts, were partially offset by higher rental costs and utilities
expenses as a percent to sales. Store labor expense, as a percent of
sales, decreased slightly for the year even after experiencing lower
same-store sales in the fourth quarter.
Interest expense, net of interest income, in 2005 was $17.2
million compared to $22.2 million in fiscal 2004.
For the 2005 fiscal year, the Company's income tax rate was 35.7
percent compared to 35.6 percent in fiscal 2004. The tax rate in each
of these years was lower than the Company's expected ongoing tax rate
due primarily to various tax credits and necessary adjustments to the
Company's tax liability reserves.
Fourth Quarter
Net income for the 2005 fourth quarter was $145.3 million, or
$0.46 per share, compared to $133.9 million, or $0.41 per share, in
the fourth quarter of fiscal 2004.
Net sales were $2.48 billion, an increase of 12.9 percent over the
fourth quarter of fiscal 2004. The net sales increase for the quarter
was due to the opening of additional net new stores and the additional
week, partially offset by a 1.6 percent decrease in same-store sales,
calculated excluding the fourteenth week of the fiscal 2005 period. In
addition to the continued economic pressures on the Company's core
lower and fixed income customers and aggressive marketing and
promotional activities of other retailers, particularly in the fourth
quarter, the Company believes that, to some extent, fourth quarter
sales were negatively impacted by initiatives to lower levels of older
inventory, particularly in the Company's seasonal, home and apparel
categories.
Gross profit during the quarter was $730.9 million or 29.5 percent
of sales, versus $660.0 million, or 30.0 percent of sales, in the
prior year quarter. The decrease in the gross profit rate is primarily
attributable to: increased markdowns as a result of the Company's
initiative to reduce older inventory levels; lower mark-ups on
receipts in the quarter; higher transportation expenses primarily
attributable to increased fuel costs; and increased inventory shrink.
These factors were partially offset by a favorable impact of the RIM
change and higher average mark-ups on beginning inventory in the 2005
period as compared with the 2004 period. The favorable impact of the
RIM change in the quarter was approximately $3 million less than the
Company had previously anticipated due to a less favorable sales mix.
SG&A expenses for the quarter were $498.7 million, or 20.1 percent
of sales, in fiscal 2005, versus $439.6 million, or 20.0 percent of
sales, in the fiscal 2004 quarter. Higher utilities expenses and store
labor, as a percent to sales, were offset by lower employee incentive
compensation expense based upon the Company's fiscal 2005 financial
performance, and lower health benefits expense resulting in part from
decreased claims costs as a percent of sales.
Balance Sheet and Cash Flow
Total merchandise inventories at the end of the 2005 fiscal year
were $1.47 billion compared to $1.38 billion at the end of fiscal
2004, a seven percent increase in overall inventories, but a one
percent decrease on a per-store basis. Annual inventory turns improved
to 4.2 times in 2005, including the 53rd week, from 4.0 times in 2004.
In 2005, the Company made substantial progress on its initiatives to
minimize seasonal inventory carried forward to the following year and
continues to aggressively identify, evaluate, merchandise and markdown
older inventory.
Capital expenditures, including capital leases, for 2005, totaled
$303.1 million. During the year, the Company opened 734 new stores,
including 29 Dollar General Markets. In addition, in fiscal 2005 the
Company completed the construction of its eighth distribution center
in Jonesville, South Carolina and began construction of its ninth
distribution center in Marion, Indiana.
During the year, the Company repurchased approximately 15.0
million shares of its common stock for $297.6 million including the
remaining 9.5 million shares authorized under its 10 million share
repurchase authorization that expired on November 30, 2005, and 5.5
million shares purchased under its current 10 million share
authorization that expires September 30, 2006. There are now
approximately 4.5 million shares remaining under the current
authorization.
2006 Outlook
The Company expects diluted earnings per share ("EPS") of between
$1.14 and $1.21 for fiscal 2006, including a charge of approximately
$0.01 per share relating to the expensing of stock options as required
by Statement of Financial Accounting Standard No. 123R, "Share-Based
Payments." The Company expects an effective income tax rate for the
year of approximately 37 percent. The Company anticipates the first
half of fiscal 2006 to be more difficult than the latter half due to
the time needed for new merchandising initiatives to have an impact,
in addition to a comparison to higher same-store sales in the first
half of 2005.
For the first quarter of 2006, the Company expects EPS to be
between $0.15 and $0.18, excluding the potential effect of proceeds
from the hurricane-related insurance claim. The Company expects to
incur significant expenses in the quarter related to advertising and
planogram changes, particularly in the housewares, pet supplies,
domestics, hardware, automotive and paper products areas. Markdowns
are also expected to be high in the quarter due to the Company's
promotional efforts and the continued reduction of older seasonal and
apparel inventory.
In 2006, Dollar General plans to spend approximately $375 million
on capital expenditures.
The following are highlights of the Company's more significant
operating initiatives for 2006:
-- Improvement in sales performance of same-stores and new stores through new merchandise additions, improved in-store presentation, and heightened promotional energy aimed at increasing customer traffic and average customer ticket. The Company plans to strengthen its "treasure hunt" offering and to execute a variety of new marketing, promotional and/or advertising strategies. The Company will also implement a new store floor plan in all new stores, emphasizing improved merchandising adjacencies, operational efficiencies and customer service, and will continue efforts referred to as "Project Gold Standard" begun in 2005 to improve the shopability and financial performance of existing stores;
-- Further development of the Dollar General Market concept;
-- Continued investment in EZstore, further reducing store labor and related costs, with the goal of completing the rollout by the end of 2006;
-- Increased efforts to control inventory shrink in the stores, which remains above acceptable levels as a percentage of sales;
-- Opening a minimum of 800 new traditional Dollar General stores, while continuing to pursue further geographical expansion, with increased emphasis on site selection, approval processes, and lowering rent as a percentage of sales in new and existing stores; and
-- Continued investment in the Company's infrastructure, including increasing global sourcing, further developing our information technology capabilities, and opening the Company's ninth distribution center thereby expanding distribution capacity.
Conference Call
The Company will host a conference call on Tuesday, March 21, 2006, at 10 a.m. EST to discuss the year's results and the outlook for 2006. If you wish to participate, please call (334) 260-2280 at least 10 minutes before the conference call is scheduled to begin. The pass code for the conference call is "Dollar General." The call will also be broadcast live online at www.dollargeneral.com. A replay of the conference call will be available until 5 p.m. EDT on Tuesday, April 4, online or by calling (334) 323-7226. The pass code for the replay is 37841616.
Non-GAAP Disclosures
The return on invested capital, included in a schedule to this release, may be considered a non-GAAP financial measure. Management believes that return on invested capital is useful because it provides investors with additional useful information for evaluating the efficiency of the Company's capital deployed in its operations. This information should not be considered a substitute for any measures derived in accordance with GAAP. The Company has included its calculation of return on invested capital and reconciliation to the most comparable GAAP financial measures in the schedule.
Forward-Looking Information
This press release contains forward-looking information, such as the information in the section entitled "2006 Outlook" and expectations regarding the Company's pending Hurricane Katrina insurance claim. The words "believe," "anticipate," "project," "plan," "expect," "estimate," "objective," "forecast," "guidance," "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 in the forward-looking statements. Factors and risks that may result in actual results differing from such forward-looking information include, but are not limited to:
-- a deterioration in general economic conditions that may impact consumer spending or the Company's costs of doing business, such as unemployment levels, personal debt levels, business conditions, high fuel and energy costs, inflation, tax rates and interest rates;
-- changes in demand due to unexpected or unusual weather patterns, economic conditions or other factors;
-- unusually adverse weather conditions, natural disasters or similar disruptions;
-- transportation and distribution delays or interruptions both domestically and internationally;
-- interruptions in suppliers' businesses;
-- labor shortages in the trucking industry;
-- customer response to the Company's advertising and promotional efforts that is not in line with the Company's expectations;
-- the Company's ability to negotiate effectively the cost and purchase of merchandise;
-- prolonged or repeated price increases of certain raw materials that could affect vendors' product costs;
-- the Company's inability to pass on incremental pricing changes to its customers;
-- inventory risks due to shifts in market demand;
-- unanticipated markdowns due to inventory imbalances or other reasons;
-- changes in product mix;
-- the inability to execute operating initiatives;
-- costs and potential problems and interruptions associated with implementation of new or upgraded systems and technology or with the maintenance or adequate support of existing systems, or the Company's inability to meet its informational technology staffing needs;
-- higher than expected increases in health, workers' compensation, general liability, property or other insurance costs or unexpected escalations in the Company's loss rates;
-- seasonality of the Company's business such as a sales shortfall during the fourth quarter;
-- unanticipated changes in the federal or state minimum wage or living wage requirements or changes in other wage or workplace regulations, as well as the Company's ability to timely comply with those regulations;
-- changes in federal, state or local regulations governing the sale of the Company's products, particularly "over-the-counter" medications or health products, as well as the Company's ability to timely comply with those regulations or to adequately execute a required recall;
-- excessive costs and delays associated with opening or operating new stores;
-- excessive costs and delays associated with building, opening or achieving functionality of distribution centers;
-- competition in the retail industry;
-- existing or future U.S. military efforts or a significant act of terrorism on U.S. soil or elsewhere;
-- results of legal proceedings and claims;
-- the inability to obtain indemnification from foreign vendors;
-- the loss of key members of the Company's senior management team or certain other key employees, or an inability to attract, retain and motivate qualified employees to keep pace with the Company's expansion schedule;
-- the inability to effectively and efficiently operate its stores, including the inability to control losses resulting from inventory and cash shrinkage; and
-- other risk factors described in the Company's most recent Form 10-K, as well as elsewhere in this press release.
Readers are cautioned not to place undue reliance on forward-looking statements made in this press release, since the statements speak only as of the date of this release. The Company has no obligation, and does not intend, to publicly update or revise any of these forward-looking statements to reflect events or circumstances occurring after the date of this release or to reflect the occurrence of unanticipated events. Readers are advised, however, to consult any further disclosures the Company may make on related subjects in its documents filed with or furnished to the SEC or in its other public disclosures.
About Dollar General
Dollar General is a Fortune 500(R) discount retailer, currently with over 8,000 neighborhood stores. Dollar General stores offer convenience and value to customers by offering consumable basic items that are frequently used and replenished, such as food, snacks, health and beauty aids and cleaning supplies, as well as a selection of basic apparel, housewares and seasonal items at everyday low prices. The Company store support center is located in Goodlettsville, Tennessee. Dollar General's Web site can be reached at www.dollargeneral.com.
DOLLAR GENERAL CORPORATION AND SUBSIDIARIES
Consolidated Balance Sheets
(Dollars in thousands)
February 3, January 28,
2006 2005
----------- -----------
(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents $ 200,609 $ 232,830
Short-term investments 8,850 42,925
Merchandise inventories 1,474,414 1,376,537
Deferred income taxes 11,912 24,908
Prepaid expenses and other current assets 67,140 53,702
----------------------------------------------------------------------
Total current assets 1,762,925 1,730,902
----------------------------------------------------------------------
Property and equipment, at cost 2,221,540 1,940,335
Less: accumulated depreciation and
amortization 1,029,368 859,497
----------------------------------------------------------------------
Net property and equipment 1,192,172 1,080,838
----------------------------------------------------------------------
Other assets, net 37,090 29,264
----------------------------------------------------------------------
Total assets $2,992,187 $2,841,004
======================================================================
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Current portion of long-term obligations $ 8,785 $ 12,860
Accounts payable 508,386 409,327
Accrued expenses and other 372,920 333,889
Income taxes payable 43,706 69,616
----------------------------------------------------------------------
Total current liabilities 933,797 825,692
----------------------------------------------------------------------
Long-term obligations 269,962 258,462
Deferred income taxes 67,633 72,385
Shareholders' equity:
Preferred stock - -
Common stock 157,840 164,086
Additional paid-in capital 462,383 421,600
Retained earnings 1,106,165 1,102,457
Accumulated other comprehensive loss (794) (973)
Other shareholders' equity (4,799) (2,705)
----------------------------------------------------------------------
Total shareholders' equity 1,720,795 1,684,465
----------------------------------------------------------------------
Total liabilities and shareholders' equity $2,992,187 $2,841,004
======================================================================
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DOLLAR GENERAL CORPORATION AND SUBSIDIARIES
Consolidated Statements of Income
(Dollars in thousands, except per share amounts)
(Unaudited)
For the Years Ended
--------------------------------------
% of % of
February 3, Net January 28, Net
2006 Sales 2005 Sales
------------------ ------------------
(53 Weeks) (52 Weeks)
Net sales $8,582,237 100.00% $7,660,927 100.00%
Cost of goods sold 6,117,413 71.28 5,397,735 70.46
----------------------------------------------------------------------
Gross profit 2,464,824 28.72 2,263,192 29.54
Selling, general and
administrative 1,902,957 22.17 1,706,216 22.27
----------------------------------------------------------------------
Operating profit 561,867 6.55 556,976 7.27
Interest income (9,001) (0.10) (6,575) (0.09)
Interest expense 26,226 0.31 28,794 0.38
----------------------------------------------------------------------
Income before income taxes 544,642 6.35 534,757 6.98
Income taxes 194,487 2.27 190,567 2.49
----------------------------------------------------------------------
Net income $ 350,155 4.08% $ 344,190 4.49%
======================================================================
Diluted earnings per share $ 1.08 $ 1.04
=========================================== ===========
Weighted average diluted shares 324,133 332,068
=========================================== ===========
Dividends per share $ 0.175 $ 0.160
=========================================== ===========
For the Quarters Ended
--------------------------------------
% of % of
February 3, Net January 28, Net
2006 Sales 2005 Sales
------------------ ------------------
(14 Weeks) (13 Weeks)
Net sales $2,480,504 100.00% $2,197,538 100.00%
Cost of goods sold 1,749,575 70.53 1,537,561 69.97
----------------------------------------------------------------------
Gross profit 730,929 29.47 659,977 30.03
Selling, general and
administrative 498,665 20.10 439,633 20.01
----------------------------------------------------------------------
Operating profit 232,264 9.36 220,344 10.03
Interest income (2,559) (0.10) (1,845) (0.08)
Interest expense 7,593 0.31 7,217 0.33
----------------------------------------------------------------------
Income before income taxes 227,230 9.16 214,972 9.78
Income taxes 81,958 3.30 81,079 3.69
----------------------------------------------------------------------
Net income $ 145,272 5.86% $ 133,893 6.09%
======================================================================
Diluted earnings per share $ 0.46 $ 0.41
=========================================== ===========
Weighted average diluted shares 317,531 330,402
=========================================== ===========
Dividends per share $ 0.045 $ 0.040
=========================================== ===========
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DOLLAR GENERAL CORPORATION AND SUBSIDIARIES
Consolidated Statements of Cash Flows
(Dollars in thousands)
(Unaudited)
For the Years Ended
-------------------------
February 3, January 28,
2006 2005
------------ ------------
(53 Weeks) (52 Weeks)
Cash flows from operating activities:
Net income $ 350,155 $ 344,190
Adjustments to reconcile net income to
net cash provided by operating
activities:
Depreciation and amortization 186,824 164,478
Deferred income taxes 8,244 25,751
Tax benefit from stock option exercises 6,457 9,657
Change in operating assets and liabilities:
Merchandise inventories (97,877) (219,396)
Prepaid expenses and other current assets (13,438) (3,666)
Accounts payable 87,230 22,258
Accrued expenses and other 40,376 35,048
Income taxes (26,017) 23,793
Other 13,531 (10,598)
----------------------------------------------------------------------
Net cash provided by operating activities 555,485 391,515
----------------------------------------------------------------------
Cash flows from investing activities:
Purchases of property and equipment (284,112) (288,294)
Purchases of short-term investments (132,775) (221,700)
Sales of short-term investments 166,850 247,501
Purchases of long-term investments (16,995) -
Insurance proceeds related to property
and equipment 1,210 -
Proceeds from sale of property and
equipment 1,419 3,324
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Net cash used in investing activities (264,403) (259,169)
----------------------------------------------------------------------
Cash flows from financing activities:
Borrowings under revolving credit facility 232,200 195,000
Repayments of borrowings under revolving
credit facility (232,200) (195,000)
Issuance of long-term obligations 14,495 -
Repayments of long-term obligations (14,310) (16,417)
Payment of cash dividends (56,183) (52,682)
Proceeds from exercise of stock options 29,405 34,128
Repurchases of common stock (297,602) (209,295)
Other financing activities 892 (1,149)
----------------------------------------------------------------------
Net cash used in financing activities (323,303) (245,415)
----------------------------------------------------------------------
Net decrease in cash and cash equivalents (32,221) (113,069)
Cash and cash equivalents, beginning of year 232,830 345,899
----------------------------------------------------------------------
Cash and cash equivalents, end of year $ 200,609 $ 232,830
======================================================================
Supplemental cash flow information:
Cash paid during year for:
Interest $ 25,747 $ 26,748
Income taxes $ 205,802 $ 133,100
----------------------------------------------------------------------
Supplemental schedule of noncash investing
and financing activities:
Purchases of property and equipment awaiting
processing for payment, included in
Accounts payable $ 24,750 $ 12,921
Purchases of property and equipment under
capital lease obligations $ 7,197 $ 5,722
----------------------------------------------------------------------
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DOLLAR GENERAL CORPORATION AND SUBSIDIARIES
Selected Additional Information
(Unaudited)
Net Sales by Category (in thousands)
--------------------------------------------
Quarters Ended
--------------------------------------------
February 3, January 28, %
2006 2005 Change
-------------- -------------- -----------
(14 Weeks) (13 Weeks)
Highly consumable $ 1,527,951 $ 1,292,227 18.2%
Seasonal 486,235 453,825 7.1
Home products 269,333 253,323 6.3
Basic clothing 196,985 198,163 (0.6)
-------------- -------------- -----------
Total sales $ 2,480,504 $ 2,197,538 12.9%
============== ============== ===========
Years Ended
--------------------------------------------
February 3, January 28, %
2006 2005 Change
-------------- -------------- -----------
(53 Weeks) (52 Weeks)
Highly consumable $ 5,606,466 $ 4,825,051 16.2%
Seasonal 1,348,769 1,263,991 6.7
Home products 907,826 879,476 3.2
Basic clothing 719,176 692,409 3.9
-------------- -------------- -----------
Total sales $ 8,582,237 $ 7,660,927 12.0%
============== ============== ===========
New Store Activity
------------------
Years Ended
---------------------------------
February 3, January 28,
2006 2005
------------ -------------
Beginning store count 7,320 6,700
New store openings 734 722
Store closings 125 (1) 102
Net new stores 609 620
Ending store count 7,929 7,320
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Total selling square footage (000's) 54,753 50,015
(1) Includes 41 stores closed for an extended time period due to hurricane damage.
Customer Transaction Data
-------------------------
Quarters Ended Years Ended
----------------------- -----------------------
February 3, January 28, February 3, January 28,
2006 2005 2006 2005
----------- ----------- ----------- -----------
(14 Weeks) (13 Weeks) (53 Weeks) (52 Weeks)
Percentage change in
same-store customer
transactions(1) (3.4%) +2.0% (1.3%) +2.7%
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Average customer purchase
(total stores) $9.53 $9.26 $9.03 $8.64
(1) Same-store transactions based on comparable 14 and 53 weeks.
For the Years Ended
-----------------------
February 3, January 28,
(Dollars in thousands) 2006 2005
----------- -----------
(53 Weeks) (52 Weeks)
Net income $ 350,155 $ 344,190
Add:
Interest expense, net 17,225 22,219
Rent expense 295,062 253,364
Tax effect of interest and rent (111,515) (98,207)
----------- -----------
Interest and rent, net of tax 200,772 177,376
----------- -----------
Return, net of tax $ 550,927 $ 521,566
----------- -----------
Average Invested Capital:
Average long-term obligations (b) $ 287,113 $ 288,539
Shareholders' equity (c) 1,679,066 1,555,070
Average rent x 8 (d) 2,193,704 1,884,268
----------- -----------
Invested capital $4,159,883 $3,727,877
=========== ===========
Return on invested capital 13.2% 14.0%
=========== ===========
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(a) The Company believes that the most directly comparable ratio calculated solely using GAAP measures is the ratio of net income to the sum of average long-term obligations, including current portion, and average shareholders' equity. This ratio was 17.8% and 18.7% for fiscal 2005 and 2004, respectively.
(b) Average long-term obligations is equal to the average long-term obligations, including current portion, measured at the end of each of the last five fiscal quarters.
(c) Average shareholders' equity is equal to the average shareholders' equity measured at the end of each of the last five fiscal quarters.
(d) Average rent expense is computed using a rolling two-year period. Average rent expense is multiplied by a factor of eight to capitalize operating leases in the determination of pretax invested capital. This is a conventional methodology utilized by credit rating agencies and investment bankers.
Return on Assets
----------------
For the Years Ended
-----------------------
February 3, January 28,
(Dollars in thousands) 2006 2005
----------- -----------
(53 Weeks) (52 Weeks)
Net income $ 350,155 $ 344,190
----------- -----------
Average assets(a) $2,901,775 $2,704,827
Return on assets 12.1% 12.7%
=========== ===========
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(a) Average assets is equal to the average total assets measured at the end of each of the last five fiscal quarters.
CONTACT: Dollar General Corporation
Investor Contact:
Emma Jo Kauffman, 615-855-5525
or
Media Contact:
Tawn Earnest, 615-855-5209