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 File Number) (I.R.S. Employer
of Incorporation) Identification No.)
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ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS
(a) Financial Statements. None.
(b) Pro Forma Financial Information. None.
(c) Exhibits. See Exhibit Index immediately following the signature
page hereto.
ITEM 9. REGULATION FD DISCLOSURE
On May 27, 2004, Dollar General Corporation (the "Company") issued a news release regarding results of operations and financial condition for the first quarter ended April 30, 2004, and the conference call to be held to discuss such results. The news release is attached hereto as Exhibit 99 and incorporated by reference as if fully set forth herein.
ITEM 12. RESULTS OF OPERATIONS AND FINANCIAL CONDITION
The information set forth in Item 9 above is incorporated by reference as if fully set forth herein.
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 thereunto duly authorized.
By: /s/ Susan S. Lanigan
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Susan S. Lanigan
Senior Vice President, General Counsel
and Corporate Secretary
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EXHIBIT INDEX
Exhibit No. Description ----------- ----------- 99 News release dated May 27, 2004. |
Exhibit 99
Financial and Media Contact:
Emma Jo Kauffman
(615) 855-5525
Dollar General Reports Increased Earnings for the First Quarter of 2004
GOODLETTSVILLE, Tenn.--May 27, 2004--Dollar General Corporation (NYSE:DG) today reported that net income for the first quarter of fiscal 2004 increased 12.5 percent to $67.8 million, or $0.20 per diluted share, compared with $60.3 million, or $0.18 per diluted share, in the first quarter of fiscal 2003.
Net sales during the first quarter of 2004 increased 11.4 percent to $1.75 billion from $1.57 billion in the first quarter of 2003. The increase resulted primarily from 601 net new stores and a same-store sales increase of 3.0 percent.
Gross profit during the current year period was $512.3 million, or 29.3 percent of sales, versus $451.9 million, or 28.8 percent of sales, during the comparable period in the prior year. The improvement in gross margin is primarily the result of a higher average markup on beginning inventories and inventories purchased during the quarter, partially offset by increased markdowns.
Selling, general and administrative expenses ("SG&A") during the current year period were $397.7 million, or 22.8 percent of sales, versus $349.0 million, or 22.2 percent of sales, during the comparable period in the prior year. The increase in SG&A as a percent to sales is primarily the result of expenses related to the Company's 2004 store work-flow project, increases in the cost of workers' compensation and other insurance programs, and increases in store occupancy costs primarily due to increased rental expense on the Company's leased facilities.
Net interest expense during the current year period was $6.4 million versus $9.4 million in the prior year. The Company's effective tax rate was 37.2 percent in the current year period versus 35.5 percent in the comparable prior year period. The increase in the Company's tax rate in the current year period is due in part to the expiration of certain federal jobs tax credits. The tax rate in the first quarter of 2003 was lower than normal due to a $0.8 million adjustment to state income tax valuation reserves resulting from a tax law change.
Merchandise inventories at April 30, 2004 increased 6.4 percent over the prior year quarter end, while inventory turns increased to 4.0 times in 2004 versus 3.9 times in 2003.
As of April 30, 2004, the Company had cash and cash equivalents of $256.9 million and total debt, including current portions, of $278.5 million, resulting in a net debt position of $21.6 million at the end of the current year quarter compared to a net debt position of $266.6 million as of May 2, 2003 and a net cash position of $116.3 million as of January 30, 2004. The change from January 30, 2004 to April 30, 2004 is primarily due to repurchases of the Company's common stock during the quarter.
During the current year quarter, the Company repurchased approximately 8.1 million shares of its common stock at a total cost of $152.6 million. The Company has repurchased a total of approximately 10.5 million shares to date, including 0.9 million shares purchased after April 30, 2004 with respect to its 12 million share repurchase authorization which expires on March 13, 2005.
The tables accompanying this release include certain financial information not derived in accordance with generally accepted accounting principles ("GAAP"), including return on invested capital and return on assets, each of which is calculated using certain financial results that exclude restatement-related items. In addition, return on invested capital may be considered a non-GAAP financial measure. None of this information should be considered a substitute for any measures derived in accordance with GAAP. The Company has included its calculation of return on invested capital and reconciliations of these non-GAAP financial measures to the most comparable GAAP financial measures in the accompanying schedules. The reasons why management believes this information is useful to investors, and the additional purposes for which management uses this information are disclosed in the Company's Form 10-K filed with the SEC on March 16, 2004.
The Company will host a conference call today at 10 a.m. EDT to discuss the quarter's results. The security code for the conference call is "Dollar General." If you wish to participate, please call (334) 260-2280 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 conference call will be available until 5 p.m. EDT on Thursday, June 10, online or by calling (334) 323-7226. The access code for the replay is 40954 and the pass code is 86362.
DOLLAR GENERAL CORPORATION AND SUBSIDIARIES
Consolidated Balance Sheets
(Dollars in thousands)
April 30, May 2, January 30,
2004 2003 2004
---------- ---------- ----------
(Unaudited) (Unaudited)
ASSETS
Current assets:
Cash and cash equivalents $ 256,883 $ 75,946 $ 398,278
Merchandise inventories 1,277,185 1,200,701 1,157,141
Deferred income taxes 21,852 26,664 30,413
Other current assets 73,738 52,080 66,383
----------------------------------------------------------------------
Total current assets 1,629,658 1,355,391 1,652,215
----------------------------------------------------------------------
Property and equipment, at cost 1,775,496 1,606,447 1,709,722
Less: accumulated depreciation 757,849 618,336 720,498
----------------------------------------------------------------------
Net property and equipment 1,017,647 988,111 989,224
----------------------------------------------------------------------
Other assets, net 26,464 12,465 11,270
----------------------------------------------------------------------
Total assets $2,673,769 $2,355,967 $2,652,709
======================================================================
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Current portion of long-term
obligations $ 16,880 $ 16,560 $ 16,670
Accounts payable 510,187 357,224 383,791
Accrued expenses and other 288,028 230,288 297,616
Income taxes payable 38,322 36,536 45,725
----------------------------------------------------------------------
Total current liabilities 853,417 640,608 743,802
----------------------------------------------------------------------
Long-term obligations 261,621 326,028 265,337
Deferred income taxes 70,648 51,584 66,650
Shareholders' equity:
Preferred stock - - -
Common stock 164,354 166,762 168,095
Additional paid-in capital 386,158 314,973 376,930
Retained earnings 943,404 860,879 1,037,409
Accumulated other comprehensive
income (1,108) (1,311) (1,161)
----------------------------------------------------------------------
1,492,808 1,341,303 1,581,273
Other shareholders' equity (4,725) (3,556) (4,353)
----------------------------------------------------------------------
Total shareholders' equity 1,488,083 1,337,747 1,576,920
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Total liabilities and
shareholders' equity $2,673,769 $2,355,967 $2,652,709
======================================================================
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DOLLAR GENERAL CORPORATION AND SUBSIDIARIES
Consolidated Statements of Income
(Dollars in thousands, except per share amounts)
(Unaudited)
For the Quarter (13 Weeks) Ended
---------------------------------------
% of % of
April 30, Net May 2, Net
2004 Sales 2003 Sales
----------- ------- ----------- -------
Net Sales $1,747,959 100.00% $1,569,064 100.00%
Cost of goods sold 1,235,709 70.69 1,117,158 71.20
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Gross profit 512,250 29.31 451,906 28.80
Selling, general and
administrative 397,700 22.75 348,955 22.24
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Operating profit 114,550 6.55 102,951 6.56
Interest expense, net 6,442 0.37 9,411 0.60
----------------------------------------------------------------------
Income before taxes on income 108,108 6.18 93,540 5.96
Provisions for taxes on income 40,259 2.30 33,208 2.12
----------------------------------------------------------------------
Net income $ 67,849 3.88% $ 60,332 3.85%
======================================================================
Diluted earnings per share $ 0.20 $ 0.18
========================================== ===========
Weighted average diluted shares
(000s) 337,257 334,597
========================================== ===========
Basic earnings per share $ 0.20 $ 0.18
========================================== ===========
Weighted average basic shares
(000s) 334,109 333,243
========================================== ===========
Dividends per share $ 0.040 $ 0.035
========================================== ===========
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DOLLAR GENERAL CORPORATION AND SUBSIDIARIES
Consolidated Statements of Cash Flows
(Dollars in thousands)
(Unaudited)
For the Quarter
(13 Weeks) Ended
---------------------
April 30, May 2,
2004 2003
---------- ----------
Cash flows from operating activities:
Net income $ 67,849 $ 60,332
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 39,636 36,756
Deferred income taxes 12,559 8,500
Tax benefit from stock option exercises 2,172 224
Change in operating assets and liabilities:
Merchandise inventories (120,044) (77,670)
Other current assets (7,355) (6,381)
Accounts payable 90,906 15,921
Accrued expenses and other (9,175) (9,198)
Income taxes (7,422) (30,555)
Other (15,512) 1,763
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Net cash provided by (used in) operating
activities 53,614 (308)
----------------------------------------------------------------------
Cash flows from investing activities:
Purchase of property and equipment (51,060) (30,129)
Proceeds from sale of property and equipment 29 66
----------------------------------------------------------------------
Net cash used in investing activities (51,031) (30,063)
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Cash flows from financing activities:
Repayments of long-term obligations (4,063) (4,086)
Payment of cash dividends (13,319) (11,673)
Proceeds from exercise of stock options 6,546 694
Repurchase of common stock (133,589) -
Other financing activities 447 64
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Net cash used in financing activities (143,978) (15,001)
----------------------------------------------------------------------
Net decrease in cash and cash equivalents (141,395) (45,372)
Cash and cash equivalents, beginning of period 398,278 121,318
----------------------------------------------------------------------
Cash and cash equivalents, end of period $256,883 $ 75,946
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Supplemental schedule of noncash investing and
financing activities:
Repurchases of common stock included in accounts
payable $ 18,996 $ -
Purchases of property and equipment awaiting
processing for payment, included in accounts
payable $ 16,494 $ -
Purchases of property and equipment under
capital lease obligations $ 550 $ 117
======================================================================
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DOLLAR GENERAL CORPORATION AND SUBSIDIARIES
Selected Additional Information
(Unaudited)
13 Weeks Ended
--------------------------------------------
April 30, May 2, %
2004 2003 Change
-------------- -------------- --------------
Highly consumable $1,114,394 $990,030 12.6%
Seasonal 260,438 237,119 9.8%
Home products 214,773 199,469 7.7%
Basic clothing 158,354 142,446 11.2%
-------------- -------------- --------------
Total sales $1,747,959 $1,569,064 11.4%
============== ============== ==============
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New Store Activity
------------------
13 Weeks Ended
---------------- ---------------
April 30, 2004 May 2, 2003
---------------- ---------------
Beginning store count 6,700 6,113
New store openings 244 223
Store closings 14 7
Net new stores 230 216
Ending store count 6,930 6,329
Total selling square footage (000's) 47,004 42,761
Customer Transaction Data
-------------------------
13 Weeks Ended
-----------------------------
April 30, 2004 May 2, 2003
-------------- --------------
Same-store customer transactions +3.6% +3.5%
Average customer purchase
(total stores) $ 8.41 $ 8.42
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DOLLAR GENERAL CORPORATION AND SUBSIDIARIES
Non-GAAP Disclosures
Return on Invested Capital (a)
(Unaudited)
For the four quarters ended
---------------------------
April 30, May 2,
($ in thousands) 2004 2003
------------- -------------
Net income $ 308,517 $ 279,350
Add:
Interest expense, net 28,534 41,618
Rent expense 256,930 224,214
Tax effect of interest and rent (107,302) (95,359)
------------- -------------
Interest and rent, net of tax 178,162 170,473
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Return, net of tax $ 486,679 $ 449,823
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Restatement-related items:
Penalty and litigation settlement
proceeds 10,000 (29,541)
Restatement-related items in SG&A 628 1,405
Tax effect (255) 10,905
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Restatement-related items, net of tax 10,373 (17,231)
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Return excluding restatement-related items $ 497,052 $ 432,592
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Average Invested Capital:
Average long-term obligations (b) $ 295,625 $ 492,253
Shareholders' equity (c) 1,461,311 1,207,236
Average rent x 8 (d) 1,924,571 1,655,648
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Invested capital $3,681,507 $3,355,137
------------- -------------
Return on invested capital 13.2% 13.4%
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Return on invested capital, excluding
restatement-related items 13.5% 12.9%
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(a) The Company believes that the most directly comparable ratio calculated solely using GAAP measures is the ratio of net income to the sum of average long-term obligations, including current portion, and average shareholders' equity. This ratio was 17.6% and 17.5% for rolling four quarters ended April 30, 2004 and May 2, 2003, respectively.
(b) Average long-term obligations is equal to the average long-term obligations, including current portion, measured at the end of each of the last five fiscal quarters.
(c) Average shareholders' equity is equal to the average shareholders' equity measured at the end of each of the last five fiscal quarters.
(d) Average rent expense is computed using a rolling two-year period. Average rent expense is multiplied by a factor of eight to capitalize operating leases in the determination of pretax invested capital. This is a conventional methodology utilized by credit rating agencies and investment bankers.
DOLLAR GENERAL CORPORATION AND SUBSIDIARIES
Non-GAAP Disclosures
Return on Assets
(Unaudited)
For the four quarters ended
---------------------------
April 30, May 2,
($ in thousands) 2004 2003
------------- -------------
Net income $ 308,517 $ 279,350
Restatement-related items, net of tax 10,373 (17,231)
------------- -------------
Net income, excluding restatement-related
items $ 318,890 $ 262,119
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Average assets (a) $2,527,404 $2,390,849
------------- -------------
Return on assets 12.2% 11.7%
============= =============
Return on assets, excluding restatement-
related items 12.6% 11.0%
============= =============
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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.