SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): August 28, 2002
Dollar General Corporation
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(Exact Name of Registrant as Specified in Charter)
Tennessee 001-11421 61-0502302
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(State or Other Jurisdiction (Commission File Number) (I.R.S. Employer
of Incorporation) Identification No.)
100 Mission Ridge
Goodlettsville, Tennessee 37072
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(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code: (615) 855-4000
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(Former name or former address, if changed since last report)
ITEM 9. REGULATION FD DISCLOSURE
On August 28, 2002, Dollar General Corporation (the "Company") issued a news
release with respect to its earnings for the second quarter of fiscal year 2002,
ending August 2, 2002. The Company is filing this 8-K pursuant to the Securities
and Exchange Commission's Regulation FD. A copy of the news release is attached
hereto and is incorporated by reference as Exhibit 99.1.
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)
August 28, 2002 By: /s/ Susan S. Lanigan
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Susan S. Lanigan
Vice President, General Counsel and
Corporate Secretary
Exhibit Index
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Exhibit No. Item
99.1 News release of August 28, 2002
Exhibit 99.1
Investor Contact: Media Contact:
Emma Jo Kauffman Andrea Turner
615-855-5525 615-855-5209
DOLLAR GENERAL REPORTS INCREASED SALES AND EARNINGS FOR THE SECOND QUARTER OF
2002
GOODLETTSVILLE, Tennessee - August 28, 2002 - Dollar General Corporation (NYSE:
DG) today reported net income for the second quarter of fiscal 2002 of $42.4
million, or $0.13 per diluted share, an increase of 56.3 percent compared to
$27.1 million, or $0.08 per diluted share, in the second quarter of fiscal 2001.
In the second quarter of 2002, the Company recorded approximately $5.2 million
of restatement-related pre-tax income, primarily from insurance proceeds. In the
second quarter of 2001, the Company incurred restatement-related expenses of
$8.7 million. Excluding the restatement-related items from both years, net
income during the current year second quarter increased 20.0 percent to $39.1
million, or $0.12 per diluted share, compared to net income of $32.6 million, or
$0.10 per diluted share, in the comparable prior year quarter.
Net sales during the second quarter increased 18.6 percent to $1.45 billion
compared to $1.23 billion in the second quarter of 2001. The increase resulted
primarily from 563 net new stores and a same-store sales increase of 9.6
percent. Gross profit during the quarter was $387.4 million, or 26.7 percent of
sales versus $331.3 million, or 27.0 percent of sales during the comparable
period in the prior year. Excluding the restatement-related items noted above,
S,G&A expenses for the quarter were $314.4 million, or 21.6 percent of sales, in
the current year, versus $267.4 million, or 21.8 percent of sales, in the prior
year.
Net income for the 26-week year-to-date period was $88.3 million in fiscal 2002,
or $0.26 per diluted share, compared to $63.3 million, or $0.19 per diluted
share, in the second quarter of fiscal 2001. Excluding net restatement-related
items from both years, year-to-date net income increased 28.1 percent to $88.4
million, or $0.26 per diluted share, in fiscal 2002 compared to net income of
$69.0 million, or $0.21 per diluted share, in the comparable prior year period.
Year-to-date net sales increased 17.1 percent, including a same-store sales
increase of 8.1 percent.
"Dollar General's strong same-store sales clearly reflect our management team's
progress in improved store readiness for our customers," said Cal Turner,
Chairman and CEO. "Of special pride to me is our improvement in inventory
management and cash flow."
In July and August of 2002, Mr. Turner made voluntary payments to the Company
totaling approximately $6.8 million in cash. Of such amount, approximately $6.0
million represented the value on April 10, 2002, of stock Mr. Turner acquired on
April 7, 1999 and April 20, 2000 upon the exercise of stock options (net of the
strike price of such options), which stock Mr. Turner continues to own, and
approximately $800,000 represented the value of performance-based bonuses
received by Mr. Turner in April 1999 and April 2000. Mr. Turner voluntarily paid
such amounts to the Company because the options vested and the performance
bonuses were paid based on performance measures that were attained under the
Company's originally reported financial results for the period covered by the
Company's restatement. Those measures would not have been attained under the
restated results. Mr. Turner said, "I am making these payments voluntarily with
the complete conviction that it is the right thing to do."
In addition, Cal Turner, Chairman and CEO, and Jim Hagan, Executive Vice
President and CFO, have today signed and submitted to the U.S. Securities and
Exchange Commission ("SEC") sworn certifications with regard to the Company's
fiscal 2001 annual report, subsequent proxy materials, reports on form 8-K, and
the Company's fiscal 2002 first and second quarter reports filed with the SEC.
As of August 2, 2002, Dollar General operated 5,891 neighborhood stores in 27
states with distribution centers in Florida, Kentucky, Mississippi, Missouri,
Ohio, Oklahoma and Virginia.
This press release contains historical and forward-looking information. The
words "believe," "anticipate," "project," "plan," "expect," "estimate,"
"objective," "forecast," "goal," "intend," "will likely result," or " will
continue" and similar expressions identify forward-looking statements. The
forward-looking statements are made pursuant to the safe harbor provisions of
the Private Securities Litigation Reform Act of 1995. 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. The factors that may result in actual results
differing from such forward-looking information include, but are 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); general
transportation and distribution delays or interruptions; inventory risks due to
shifts in market demand; changes in product mix; interruptions in suppliers'
businesses; 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 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
undertakes no 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 26 Weeks Ended
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August 2, August 3, % August 2, August 3, %
2002 2001 Change 2002 2001 Change
--------------- -------------- --------- --------------- --------------- ----------
Highly consumable $ 892,507 $ 737,778 21.0% $ 1,743,744 $ 1,459,070 19.5%
Hardware and seasonal 226,328 185,082 22.3% 431,091 353,885 21.8%
Basic clothing 146,620 131,200 11.8% 288,921 261,832 10.3%
Home products 188,272 171,194 10.0% 379,383 352,971 7.5%
--------------- -------------- --------- --------------- --------------- ----------
Total sales $1,453,727 $ 1,225,254 18.6% $ 2,843,139 $ 2,427,758 17.1%
New Store Activity for the 26 Weeks Ended
(Unaudited)
26 Weeks Ended 26 Weeks Ended
August 2, 2002 August 3, 2001
--------------------------------- -------------------------------
Beginning store count 5,540 5,000
New store openings 372 354
Store closings 21 26
Net new stores 351 328
Ending store count 5,891 5,328
Total selling square footage 39,760 36,032
Customer Transaction Data
(Unaudited)
Quarter Ended 26 Weeks Ended
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August 2, August 3, August 2, August 3,
2002 2001 2002 2001
-------------- ------------- -------------- ------------
Same-store customer transactions 7.6% 4.5% 6.5% 4.8%
Average customer transaction $8.33 $8.17 $8.33 $8.19
DOLLAR GENERAL CORPORATION AND SUBSIDIARIES
Condensed Consolidated Balance Sheets
(In thousands)
August 2, 2002 February 1,
(Unaudited) 2002
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ASSETS
Current assets:
Cash and cash equivalents...................................... $ 39,517 $ 261,525
Merchandise inventories........................................ 1,058,200 1,131,023
Deferred income taxes.......................................... 25,552 105,091
Income taxes receivable........................................ 55,573 6,820
Other current assets........................................... 65,263 51,588
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Total current assets..................................... 1,244,105 1,556,047
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Property and equipment, at cost................................ 1,547,346 1,473,693
Less accumulated depreciation and amortization................. 548,073 484,778
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Net property and equipment............................... 999,273 988,915
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Other assets................................................... 21,851 7,423
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Total assets............................................. $ 2,265,229 $ 2,552,385
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LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Current portion of long-term obligations....................... $ 15,132 $ 395,675
Accounts payable............................................... 346,786 322,463
Accrued expenses and other..................................... 219,220 253,413
Litigation settlement payable.................................. - 162,000
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Total current liabilities................................ 581,138 1,133,551
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Long-term obligations............................................. 506,707 339,470
Deferred income taxes............................................. 46,030 37,646
Shareholders' equity:
Preferred stock................................................ - -
Common stock................................................... 166,670 166,359
Additional paid-in capital..................................... 312,589 301,848
Retained earnings.............................................. 656,894 579,265
Accumulated other comprehensive loss........................... (2,012) (3,228)
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1,134,141 1,044,244
Less other shareholders' equity................................ 2,787 2,526
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Total shareholders' equity............................... 1,131,354 1,041,718
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Total liabilities and shareholders' equity............... $ 2,265,229 $ 2,552,385
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DOLLAR GENERAL CORPORATION AND SUBSIDIARIES
Condensed Consolidated Statements of Income (Unaudited)
(Amounts in thousands except per share amounts)
13 Weeks Ended
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August 2, 2002 % of August 3, 2001 % of
Net Sales Net Sales
Net sales ........................................ $ 1,453,727 100.0% $ 1,225,254 100.0%
Cost of goods sold ............................... 1,066,300 73.3 893,971 73.0
----------- ------------ ----------- ------------
Gross profit ................................ 387,427 26.7 331,283 27.0
Selling, general and administrative .............. 313,667 21.6 276,069 22.5
expenses
Insurance proceeds ............................... (4,500) (0.3) -- --
----------- ------------ ----------- ------------
Operating profit ............................ 78,260 5.4 55,214 4.5
Interest expense ................................. 11,337 0.8 11,957 1.0
----------- ------------ ----------- ------------
Income before income taxes .................. 66,923 4.6 43,257 3.5
Provision for income taxes ....................... 24,561 1.7 16,157 1.3
----------- ------------ ----------- ------------
Net income .................................. $ 42,362 2.9% $ 27,100 2.2%
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Earnings per share:
Basic ....................................... $ 0.13 $ 0.08
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Diluted ..................................... $ 0.13 $ 0.08
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Weighted average shares:
Basic ....................................... 333,067 332,330
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Diluted ..................................... 335,737 335,402
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Dividends per share .............................. $ .032 $ .032
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DOLLAR GENERAL CORPORATION AND SUBSIDIARIES
Condensed Consolidated Statements of Income (Unaudited)
(Amounts in thousands except per share amounts)
26 Weeks Ended
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August 2, 2002 % of Net Sales August 3, 2001 % of Net Sales
----------------- ----------------- ----------------- -----------------
Net sales............................ $ 2,843,139 100.0% $ 2,427,758 100.0%
Cost of goods sold................... 2,075,420 73.0 1,775,050 73.1
----------------- ----------------- ----------------- -----------------
Gross profit.................... 767,719 27.0 652,708 26.9
Selling, general and administrative
expense.............................. 610,971 21.5 528,059 21.8
Insurance proceeds................... (4,500) (0.2) -- --
----------------- ----------------- ----------------- -----------------
Operating profit................ 161,248 5.7 124,649 5.1
Interest expense..................... 21,769 0.8 23,557 0.9
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Income before income taxes...... 139,479 4.9 101,092 4.2
Provision for taxes on income........ 51,189 1.8 37,759 1.6
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Net income...................... $ 88,290 3.1% $ 63,333 2.6%
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Earnings per share:
Basic........................... $ 0.27 $ 0.19
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Diluted......................... $ 0.26 $ 0.19
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Weighted average shares:
Basic........................... 332,866 331,959
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Diluted......................... 335,286 335,293
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Dividends per share.................. $ .064 $ .064
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DOLLAR GENERAL CORPORATION AND SUBSIDIARIES
Condensed Consolidated Statements of Cash Flows (Unaudited)
(In thousands)
26 Weeks Ended
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August 2, 2002 August 3, 2001
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Cash flows from operating activities:
Net income $ 88,290 $ 63,333
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization 66,019 60,980
Deferred income taxes 87,296 (7,135)
Tax benefit from stock option exercises 2,120 4,656
Litigation settlement (162,000) --
Change in operating assets and liabilities:
Merchandise inventories 72,823 (84,621)
Other current assets (13,675) 2,269
Accounts payable 24,323 (2,478)
Accrued expenses and other (11,206) (59)
Income taxes (59,464) (21,995)
Other (13,914) (5,131)
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Net cash provided by operating activities 80,612 9,819
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Cash flows from investing activities:
Purchase of property and equipment (70,445) (73,942)
Proceeds from sale of property and equipment 127 144
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Net cash used in investing activities (70,318) (73,798)
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Cash flows from financing activities:
Net borrowings under revolving credit facilities 170,000 --
Repayments of long-term obligations (389,561) (6,023)
Payments of cash dividends (21,307) (21,268)
Proceeds from exercise of stock options 4,509 10,623
Other financing activities 4,057 (33)
Net cash used in financing activities (232,302) (16,701)
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Net decrease in cash and cash equivalents (222,008) (80,680)
Cash and cash equivalents, beginning of period 261,525 162,310
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Cash and cash equivalents, end of period $ 39,517 $ 81,630
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Supplemental schedule of noncash investing and financing activities -
Purchase of property and equipment under capital lease obligations $ 6,233 $ 17,393
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