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 April 30, 1994
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
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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 16, 1994 was 53,014,870.
XXXBEGIN PAGE 2 HEREXXX
Dollar General Corporation
Form 10-Q
For the Quarter Ended April 30, 1994
Index
Part I. Financial Information Page No.
Item 1. Financial Statements (unaudited):
Consolidated Statements of
Income for the three months ended
April 30, 1994 and 1993 3
Consolidated Balance Sheets as of
April 30, 1994, January 31, 1994 and
April 30, 1993 4
Consolidated Statements of Cash Flows for
the three months ended April 30, 1994
and April 30, 1993 5
Notes to Consolidated Financial
Statements 6-7
Item 2. Management's Discussion and Analysis
of Financial Condition and Results of
Operations 8-10
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Part II. Other Information
Item 6. Exhibits and Reports on Form 8-K 11
Signatures 12
XXXBEGIN PAGE 3 HEREXXX
PART I - FINANCIAL INFORMATION
ITEM 1. Financial Statements
DOLLAR GENERAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
For the three months ended April 30, 1994 and 1993
(amounts in thousands except per share amounts)
(unaudited)
April 30, April 30,
1994 1993
Net Sales $287,086 $221,799
Cost of goods sold 207,106 159,310
________ ________
Gross profit 79,980 62,489
Selling, general and
administrative expense 64,304 52,354
________ ________
Operating profit 15,676 10,135
Interest expense 392 506
________ ________
Income before taxes
on income 15,284 9,629
Provision for taxes on income 5,770 3,707
________ ________
Net income 9,514 5,922
________ ________
Net income per share $ .17 $ .11
________ ________
Weighted average number of
shares outstanding 54,755 53,570
________ ________
Cash dividends per share
As declared $ .05 $ .05
________ ________
Adjusted to give appropriate retro-
active effect to the five-for-four
stock splits distributed on April 15,
1994 and September 17, 1993 $ .05 $ .03
________ ________
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The accompanying notes are an integral part of this statement.
XXXBEGIN PAGE 4 HEREXXX
DOLLAR GENERAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
As of April 30, 1994, January 31, 1994 and April 30, 1993
(amounts in thousands)
ASSETS April 30, January 31, April 30,
1994 1994 1993
(unaudited) (unaudited)
Current Assets:
Cash and cash equivalents $ 30,282 $ 35,365 $ 17,427
Merchandise inventories 304,242 260,042 276,938
Deferred income taxes 9,893 9,664 8,335
Other current assets 8,465 8,397 7,000
Income Taxes 679 1,563 0
________ ________ ________
Total current assets 353,561 315,031 309,700
________ ________ ________
Property & equipment, at cost 132,492 124,827 98,350
Less: Accumulated depreciation 50,935 47,322 39,814
________ ________ ________
81,557 77,505 58,536
Other Assets 4,684 4,701 5,770
________ ________ ________
$439,802 $397,237 $374,006
________ ________ ________
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Current portion of long-term debt $ 1,303 $ 1,302 $ 1,301
Short-term borrowings 27,000 18,000 25,000
Accounts payable 101,060 81,038 101,347
Accrued expenses 46,547 47,906 36,799
Income taxes 0 0 6,249
________ ________ ________
Total current liabilities 175,910 148,246 170,696
Long-term debt 4,801 5,711 6,104
Deferred income taxes 2,563 2,563 2,606
Shareholders' equity:
Common stock 27,248 27,248 17,820
Additional paid-in capital 73,861 65,857 57,684
Retained earnings 158,031 151,165 123,833
________ ________ ________
259,140 244,270 199,337
Less treasury stock 2,612 3,553 4,737
________ ________ ________
256,528 240,717 194,600
________ ________ ________
$439,802 $397,237 $374,006
________ ________ ________
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The accompanying notes are an integral part of this statement.
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DOLLAR GENERAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
for the three months ended April 30, 1994 and 1993
(amounts in thousands)
(unaudited)
April 30, April 30,
1994 1993
Cash flows from operating activities:
Net income $ 9,514 $ 5,922
Adjustments to reconcile net income
to net cash provided by operating
activities:
Depreciation and amortization 3,684 2,496
Deferred income taxes ( 229) ( 700)
Change in operating assets and liabilities:
Merchandise inventories ( 44,200) (60,095)
Accounts payable, trade 20,022 37,322
Accrued expenses ( 1,359) ( 871)
Income taxes 884 2,234
Other 138 ( 1,930)
_________ ________
Net cash provided (used) by
operating activities ( 11,546) (15,622)
_________ ________
Cash flows used in investing activities:
Purchase of property & equipment ( 7,922) ( 5,002)
_________ ________
Cash flows provided by financing activities:
Issuance of short-term borrowings 17,000 30,000
Repayments of short-term borrowings ( 8,000) (15,000)
Repayments of long-term debt ( 909) ( 908)
Payments of cash dividend ( 2,648) ( 1,664)
Proceeds from exercise of stock options 4,780 550
Tax benefits from exercise of stock options 4,162 590
Other 0 ( 563)
_________ ________
Net cash provided by financing activities 14,385 13,005
_________ ________
Net increase (decrease) in cash and equivalents ( 5,083) ( 7,619)
Cash and cash equivalents at beginning of year 35,365 25,046
_________ ________
Cash and cash equivalents at end of period $ 30,282 $ 17,427
_________ ________
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The accompanying notes are an integral part of this statement.
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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 Form 10-Q may wish to refer to the Company's Form 10-K for the year ended January 31, 1994 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 (all of which are normal recurring accruals) necessary for a fair presentation of the results of operations for the three month periods ended April 30, 1994 and 1993, respectively have been made.
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
Ended April 30
Shares (000's)
1994 1993
Actual weighted average number
of shares outstanding during
the period 52,612 50,747
Equivalent number of shares
representing the dilutive effect
of stock options using the
"treasury stock method" 2,143 2,823
______ ______
Weighted Average Shares 54,755 53,570
______ ______
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3. Changes in shareholder's equity for the three months ended April 30, 1994 and 1993 were as follows (dollars in thousands except per share amounts):
Additional Retained Treasury
Common Stock Paid-In Capital Earnings Stock
<C
Balances, January 31, 1993 $17,820 $57,246 $119,580 $4,881
Net Income $ 5,922
Cash dividend, $.05 per
share, as declared ( 1,669)
Reissuance of treasury stock
under stock incentive plans ( 152) ( 144)
Tax benefit from
exercise of options 590
_______ _______ ________ ______
Balances, April 30, 1993 $17,820 $57,684 $123,833 $4,737
_______ _______ ________ ______
Balances, January 31, 1994 $27,248 $65,857 $151,165 $3,553
Net Income 9,514
Cash dividend, $.05 per
share, as declared ( 2,648)
Reissuance of treasury stock
under stock incentive plans 3,842 ( 941)
Tax benefit from
exercise of options 4,162
_______ _______ ________ ______
Balances, April 30, 1994 $27,248 $73,861 $158,031 $2,612
_______ _______ ________ ______
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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 highly seasonal. Historically, sales in the fourth quarter have been substantially 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 greatly by quarter. Caution, therefore, is advised when evaluating results of a period shorter than a full year or when comparing any period other than to the same period of the previous year.
NET SALES. Net sales for the first three months of fiscal 1995 increased $65.3 million, or 29.4%, to $287.1 million from $221.8 million for the comparable period of fiscal 1994. The increase resulted from 199 net additional stores being open during the first nine months of fiscal 1995 as compared to the same prior year period and an increased of 15.8% in same store sales. 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 is a continued reflection of the success of its everyday low price strategy and merchandise selection and generally improved economic conditions.
GROSS PROFIT. Gross profit for the first three months of fiscal 1995 was $80.0 million, or 27.9% of net sales, compared to $62.4 million, or 28.2% of net sales, for the comparable period in the prior fiscal year. The decline resulted from greater merchandise markdowns and lower purchase discounts, which were partially offset by a smaller LIFO charge. The estimate of shrink was virtually unchanged from the prior year and the LIFO charge was 0.15% of net sales compared to 0.64% a year ago. Cost of goods sold is determined in the first, second and third quarters utilizing estimates of inventory shrinkage, inflation and markdowns. Adjustments of these estimates based upon actual results are included in cost of goods sold in the fourth quarter.
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SELLING, GENERAL AND ADMINISTRATIVE EXPENSE. Selling, general and administrative expense for the current quarter equaled $64.3 million, or 22.4% of sales versus $52.4 million or 23.6% of sales in the same period last year. This decrease was principally due to the 15.8% increase in same store sales exceeding the 14.9% increase in same store expenses. Advertising expense was also lower due to a change in advertising mix from utilizing print and broadcast media last fiscal year to employing almost solely printed advertising this fiscal year.
INTEREST EXPENSE. Interest expense decreased 22.5% to $392 thousand for the first three months of fiscal 1995 from $506 thousand for the comparable prior year period. The decrease resulted from lower interest rates, which more than offset higher average borrowings.
LIQUIDITY AND CAPITAL RESOURCES
Cash flows from operating activities. Cash flows used in operating activities totaled $11.5 million during the first quarter of fiscal 1995 compared to $15.6 million in first quarter of fiscal 1994. This decrease in use of cash resulted from higher income and depreciation offset partially by increase in inventories of $44.2 million ($60.1 million in the prior year period). Trade payables increased by $20.0 million as compared to an increase of $37.3 million in first quarter 1994. This smaller relative increase in trade payables is due principally to a greater proportion of merchandise purchases being imported and financed by letters of credit rather than by trade credit.
Cash flows from investing activities. Cash used for capital expenditures during the first quarter related to increase in stores in fiscal year 1995 was $7.9 million as compared to $5.0 million in the comparable period in 1994. The current year expenditures are primarily referable to opening, remodeling and relocating stores; providing new fixtures to stores; and costs associated with the construction of the new Ardmore, Oklahoma distribution center.
Cash flows from financing activities. The Company's short-term borrowings during the first quarter of fiscal 1995 increased $9.0 million to $27.0 million compared to an increase of $15.0 million to $25.0 million during the same period of the prior fiscal year. The increased short-term borrowings were due to the cash used in operating activities discussed above. The Company's long-term obligations during the first quarter of fiscal 1995 decreased $0.9 million to $4.8 million compared to a decrease of $0.9 million to $6.1 million during the first quarter of fiscal 1994.
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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 $100.0 million at April 30, 1994 ($65 million revolving credit/term loan facility plus $35.0 million seasonal line of credit). The Company had no seasonal line of credit borrowings as of April 30, 1994 or 1993. The Company believes it can continue to meet its seasonal working capital and capital expenditure requirements through cash flows provided by operating activities supplemented by the revolving credit term loan facility and credit lines currently in place.
The Company's liquidity position is set forth in the following table (dollar amounts in thousands):
April 30, January 31, April 30,
1994 1994 1993
Current ratio 2.0x 2.1x 1.8x
Total debt/equity 12.9% 10.4% 16.7%
Long-term debt/equity 1.9% 2.4% 3.1%
Working capital $177,651 $166,785 $139,004
Average daily use of debt:
(fiscal year to date)
Short-term 28,876 34,102 19,562
Long-term 6,488 7,335 7,788
________ ________ ________
Total 35,364 41,437 27,750
________ ________ ________
Maximum outstanding
short-term debt
(fiscal year-to-date) $ 35,000 $ 70,909 $ 40,000
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PART II - OTHER INFORMATION
Item 6. Exhibits and reports on Form 8-K
(b) No reports on Form 8-K have been filed during the quarter ended April 30, 1994.
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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: May 14, 1994 By:/S/ C. Kent Garner
C.Kent Garner, Vice President,
Treasurer and Chief Financial
Officer
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