SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the fiscal year ended January 31, 1995
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
Number)
104 Woodmont Boulevard
Suite 500
Nashville, Tennessee 37205
(Address of principal executive offices, zip code)
Registrant's telephone number, including area code: (615) 783-
2000
Securities registered pursuant to Section 12(b) of the Act:
Name of Exchange on
Title of Class which Registered
Common Stock New York Stock Exchange
Securities registered pursuant to Section 12(g) of the Act:
None
Indicate by check mark whether the Registrant (1) has filed
all reports required 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
Indicate by check mark if the disclosure of delinquent filers
pursuant to Item 405 of Regulation S-K is not contained herein, and
will not be contained, to the best of the Registrant's knowledge,
in definitive proxy or information statements incorporated by
reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [ ]
Aggregate market value of the voting stock held by non-
affiliates of the Registrant as of April 14, 1995 is $1,730,024,868
based upon the last reported sale price on such date by the New
York Stock Exchange.
The number of shares of common stock outstanding on April 14,
1995, was 67,365,900.
Documents Incorporated by Reference
Document Where Incorporated in Form of 10-K
Portions of the Registrant's Page III
Proxy Statement Relating to
the Annual Meeting of
Stockholders to be Held
on June 5, 1995.
<PAGE>2
PART I
Item 1. Business
General
The following text contains references to years 1996, 1995, 1994
and 1993 which represent fiscal years ended January 31, 1996,
January 31, 1995, January 31, 1994 and January 31, 1993, respectively.
Dollar General Corporation (the "Company") was organized in 1939 as
J. L. Turner and Son, Inc. under the laws of the Commonwealth of
Kentucky. In 1968, the Company changed its name to Dollar General
Corporation. Today, the Company seeks profitable growth by
providing value in hardlines and softlines merchandise to low-,
middle- and fixed-income families. The Company sells this general
merchandise at retail through a chain of 2,059 small Company-owned
stores(as of January 31, 1995) in 24 states. The Company-owned
stores, located predominantly in small towns in the midwestern and
southeastern United States, operate under the name "Dollar General
Stores."
The Company's mission is "SERVING OTHERS! Serving Our
Customers...with greatest everyday value. Serving Our
Shareholders...with superior return on investment. Serving Our
Employees...as partners in total development." In order to carry
out its mission, the Company has developed a strategy which
includes the following principal elements:
LOW-, MIDDLE- AND FIXED-INCOME CUSTOMERS. The
Company seeks to serve the basic merchandise needs of
low-, middle- and fixed-income consumers.
EVERYDAY LOW PRICES. The Company's strategy is to
offer quality merchandise at everyday low prices. The
Company emphasizes even-dollar price points and believes
its prices are generally below those of its competitors.
The majority of products in Dollar General Stores are
priced at $10 or less, with the most expensive item
generally priced at $35.
FOCUSED ASSORTMENT OF MERCHANDISE. The Company is
committed to offering a focused assortment of quality,
basic merchandise in a number of core categories. The
Company offers hardlines, including health and beauty
aids, cleaning supplies, housewares, stationery and
seasonal goods. The Company also markets the basics in
softlines, including apparel for the family, shoes and
domestics. The Company strives at all times to be "in
stock" in basic merchandise in its core categories.
LOW OPERATING COSTS. The Company maintains strict
overhead cost controls and seeks to locate stores in
neighborhoods where store rental and operating costs are
low.
The Company's business is seasonal in nature. Due to the holiday
season, the fourth quarter usually reflects significantly higher
net sales and net income than other quarters. The first quarter is
usually the least profitable due largely to the traditionally slow
after-Christmas sales period.
<PAGE>3
Merchandise
The merchandise sales mix of the Company has shifted incrementally
to hardlines sales by 2% over the past three years. The increase
in hardlines' sales has occurred in part because of a determined
commitment to keep hardlines in stock, an increased emphasis on
private label ("DG Signature") products, and an expanded selection
of brand-name merchandise. The following table shows an
approximate percentage of 1995, 1994, and 1993 Dollar General Store
sales by product category.
<TABLE>
<CAPTION>
PERCENTAGE OF SALES
1995 1994 1993
<S> <C> <C> <C>
HARDLINES 66% 65% 64%
SOFTLINES 34% 35% 36%
</TABLE>
Dollar General Stores offer quality, basic merchandise at everyday
low prices. The Company believes that its merchandising strategy
generates frequent repeat customer traffic. The Company is able to
offer everyday low prices to its customers in large part because
its buying staff negotiates low purchase prices. The Company
purchases its merchandise from a wide variety of suppliers, with no
supplier accounting for more than 2.0% of the Company's purchases
during 1995.
The Company buys principally quality first-run hardlines and
softlines and supplements its inventory with manufacturers'
overruns, closeouts and irregulars which sell at a discount from
regular retail prices. These three types of merchandise are
purchased by the Company from manufacturers on a regular basis.
During 1995, approximately 5% of the Company's purchases of
softlines were manufacturers' overruns, closeouts or irregular
merchandise. In addition, approximately 8% of the Company's
hardlines purchases were closeout merchandise. Approximately 20%
of the Company's softlines merchandise and 40% of the hardlines
merchandise in 1995 versus 25% and 45% in 1994, respectively
consisted of brand-name merchandise. Although the total percentage
of brand-name merchandise is down from 1994, the Company has
expanded the selection of such merchandise in order to offer the
customer a broader assortment of brand-named goods. Because the
Company offers quality, basic merchandise, it believes its risk of
inventory obsolescence is low. The Company reviews its inventory
to identify aged merchandise and sells it at marked-down prices to
remove it from inventory.
The Company's policy is to provide everyday low prices. The
Company emphasizes even-dollar pricing of its merchandise, most of
which is priced at $1 and in increments of $1, with the most
expensive item generally priced at $35. The Company believes even-
dollar pricing more easily demonstrates value to the customer. In
addition, the Company believes even-dollar pricing disciplines its
buyers to continually negotiate purchase prices that conform to a
limited number of retail price points.
The Company's stores regularly receive merchandise shipments from
Company distribution centers in Scottsville, Kentucky; Homerville,
Georgia; and Ardmore, Oklahoma and limited shipments directly from
suppliers.
The Dollar General Store
The typical Dollar General Store has approximately 6,200 square
feet of selling space and is operated by a manager, an assistant
manager and two or more sales clerks. In 1995, the Company
benefited from average fixed rental costs of $3.03 per average
square foot of selling space. Approximately 78% of the Dollar
General Stores are situated in communities with populations of
25,000 or less. As of January 31, 1995, 1,341 stores were located
in strip shopping centers, 399 were in downtown store buildings,
and 319 were freestanding. Store sites have
<PAGE>4
been relatively easy to find, and the Company does not anticipate
difficulty in finding suitable locations in the future. The
Company's policy is to negotiate low-cost, short-term leases,
usually three years, with multiple renewal options when available.
These leases allow closing of unsatisfactory locations at minimal
cost to the Company.
The Company opened 259 net new stores in 1995, and expects to open
a net of 280 to 300 stores in 1996. The Company's store growth is
summarized by the following table:
<TABLE>
<CAPTION>
BEGINNING STORES STORES NET STORES STORES AT
FISCAL YEAR OF YEAR OPENED CLOSED OPENED YEAR END
<S> <C> <C> <C> <C> <C>
1995 1,800 302 43 259 2,059
1994 1,617 251 68 183 1,800
1993 1,522 146 51 95 1,617
</TABLE>
In addition to opening new Dollar General Stores, the Company's
management is continually working to improve the performance of the
existing stores. The Company continually reviews and modifies when
necessary its internal accounting and auditing measures to control
inventory levels and to reduce inventory shrinkage. The retail
shrinkage-to-sales ratio for 1995 was 2.6%, compared with 2.7% for
1994 and 2.4% in 1993. The Company's management continues to seek
methods to reduce inventory shrink further. As a part of this
effort, the Company expanded in 1995 its incentive compensation
program to included all store personnel. The payment of incentive
compensation is based, in part, on inventory shrinkage results.
Same-store sales (i.e., those stores that were opened before the
beginning of the prior fiscal year and that have remained opened
throughout both the prior and current fiscal years) showed a 13.5%
increase in 1995, a 12.7% increase in 1994, and a 15.5% increase in
1993. The average Dollar General "same-store" generated annual
sales of $754,000 in 1995, as compared to $663,000 in 1994. In
addition, at January 31, 1995, the Company served as wholesaler for
11 retail stores operating under the Dollar General name but owned
by others. Revenues from sales to these retail stores amounted to
less than 0.25% of the Company's gross revenue in 1995.
Employees
At January 31, 1995, the Company and its subsidiaries employed
approximately 18,000 full and part time employees including
regional managers, district managers, store managers, clerks, and
distribution center and office personnel compared to approximately
17,300 at January 31, 1994. None of the Company's employees are
represented by a union.
Competition
The business in which the Company is engaged is highly competitive.
The Company competes with discount stores which also sell
popularly-priced merchandise and with all types of retailers,
including department stores, variety stores, mail order chains and
specialty stores. Some of the largest retail merchandising
companies in the nation have stores in some of the areas where the
Company operates. Management believes that it competes primarily
by offering quality, basic merchandise at a consistently low
everyday cash price. Dollar General Stores operate on a cash basis
and do not accept credit sales.
<PAGE>5
Executive Officers of the Company
The names, ages and positions with the Company of its executive
officers as of April 1, 1995, are as follows:
<TABLE>
<CAPTION> EXECUTIVE
NAME AGE POSITION OFFICER SINCE:
<S> <C> <C> <C>
Cal Turner, Jr. 55 Chairman of the Board, 1966
President and Chief
Executive Officer
Bob Carpenter 47 Vice President and Chief 1981
Administrative Officer
Walter Carter 47 Vice President 1994
Development
Michael Ennis 41 Vice President 1988
Merchandising Operations
Troy Fellers 53 Vice President 1991
Distribution
C. Kent Garner 48 Vice President, Treasurer 1992
and Chief Financial Officer
Tom Hartshorn 44 Vice President 1992
Merchandising Operations
Ron Humphrys 45 Vice President 1992
Operations Support
J. Holger Jensen 48 Vice President
Information Services 1994
Scott Northcutt 33 Vice President
Merchandising Operations 1992
Leigh Stelmach 55 Executive Vice President 1989
Operations
</TABLE>
All executive officers of the Company serve at the pleasure of the
Board of Directors. Messrs. Turner, Carpenter, Ennis, and Stelmach
have been employed by the Company as executive officers for more
than the past five years. The following is a brief summary of the
business experience of the executive officers:
Mr. Turner joined the Company in 1965 and was elected President and
Chief Executive Officer in 1977. Mr. Turner has served as Chairman
of the Board since January, 1989.
Mr. Carpenter joined the Company in 1981 as Vice President--
Administration and General Counsel. From 1987 to 1993, Mr.
Carpenter served as Vice President--Administration, Chief Counsel
and Corporate Secretary. Mr. Carpenter was named Chief
Administrative Officer in 1993.
Mr. Carter joined the company as Vice President--Development in
October 1994. Prior to that he held several senior management
positions at Fred's Inc. including Executive Vice President from
1993 to 1994, Senior Vice President of Operations from 1989 to
1992, and Senior Vice President of Administration and Distribution
from 1987 to 1989.
<PAGE>6
Mr. Ennis joined the Company as Vice President--Merchandising in
February 1988 and was named Vice President Merchandising Operations
in 1993. From April 1986 to February 1988, Mr. Ennis served as
Regional Merchandise Manager for McCrory/T. G. & Y. and as Regional
Vice President, from June 1985 to April 1986.
Mr. Fellers became Vice President--Distribution in March 1991. He
joined the Company in September 1989 as Director of Distribution.
From 1986 to September 1989, Mr. Fellers was Facility Manager of a
major distribution complex of McCrory Stores in Clinton, South
Carolina.
Mr. Garner joined the Company in his current capacity--Chief
Financial Officer--in December, 1992. Prior to joining the
Company, he served as Treasurer of Vulcan Materials Company from
August, 1982 to November, 1992.
Mr. Hartshorn joined the Company as Vice President--Operations in
January 1992 and was named Vice President Merchandising Operations
in 1993. Prior to that he was Director--Store Operations for
McCrory Stores/T. G. & Y. During his career with McCrory/T. G. &
Y., he held positions in store management, as well as district and
regional field management. He served with McCrory/T. G. & Y. from
1967 until joining the Company in 1992.
Mr. Humphrys became Vice President--Operations Support effective
March 1993. Prior to that he was Vice President--Merchandise
Development from March 1992. He has worked for the Company since
1971 and has held a variety of positions in
merchandising.
Mr. Jensen joined the Company in his current capacity--Vice
President Management Information Services--in April, 1994. Prior
to joining the Company, he served as Vice President of Management
Information Systems for OW Office Warehouse, Inc., from 1991 until
1994. Prior to that he was Director of MIS for K's Merchandise
Mart from 1990 to 1991, a Management Consultant for Retail
Management Consulting from 1987 to 1990, and Consultant and Vice
President of MIS for Wickes Companies, Inc. from 1985 to 1987.
Mr. Northcutt was named Vice President--Merchandising Operations in
1994. From February 1992 to 1994 he served as Vice President--
Human Resources. He joined the Company in May, 1988 as Director of
Training and was subsequently promoted to Director of Human
Resources.
Mr. Stelmach joined the Company in June 1989 as Vice President
Merchandising/Operations and was named Executive Vice President,
Operations in 1993. Prior to that he was President and Chief
Operating Officer of Fred's Stores/Baddour, Inc. where he held
various senior management positions since 1986.
<PAGE>7
Item 2. Properties
As of January 31, 1995, the Company operated 2,059 retail stores
located in states as follows:
<TABLE>
<CAPTION>
STATE NUMBER OF STORES STATE NUMBER OF STORES
<S> <C> <C> <C>
Alabama 75 Mississippi 61
Arkansas 68 Missouri 138
Delaware 10 Nebraska 12
Florida 152 North Carolina 70
Georgia 91 Ohio 100
Illinois 120 Oklahoma 67
Indiana 120 Pennsylvania 77
Iowa 51 South Carolina 45
Kansas 44 Tennessee 167
Kentucky 150 Texas 160
Louisiana 78 Virginia 109
Maryland 31 West Virginia 63
</TABLE>
Virtually all of the Company's stores are on leased premises. The
individual store leases vary as to their respective terms, rental
provisions and expiration dates. In 1995, the Company's store
rental expense was $43,709,000, or $3.75 per average square foot of
selling space. Leases for 1,482 locations contain options to renew
for additional terms ranging from one to five years. It is the
Company's policy to negotiate short-term leases so that it can
adjust quickly to shifts in population and business centers.
The Company owns a distribution complex and administrative offices
in Scottsville, Kentucky. The Company's total warehouse area in
Scottsville, Kentucky is approximately 590,000 square feet. The
Company owns distribution centers in Homerville, Georgia and
Ardmore, Oklahoma. The Ardmore facility began operation in January
1995. The Homerville and Ardmore facilities measure approximately
500,000 and 510,000 square feet, respectively.
The Company also maintains executive offices of approximately
21,000 square feet of leased space in Nashville, Tennessee. The
Company's five-year lease runs to September 1996, and has a five-
year renewal option.
Item 3. Legal Proceedings
There are no material pending legal proceedings to which the
Company or any of its subsidiaries is a party, or to which any of
its property is subject.
Item 4. Submission of Matters to a Vote of Security Holders
No matters were submitted to shareholders during the fourth quarter
ended January 31, 1995.
<PAGE>8
PART II
Item 5. Market for the Registrant's Common Stock and Related
Security Holder Matters
The range of the high and low closing prices of the Company's
common stock for each quarter during the two most recent fiscal
years, as reported on the Nasdaq National Market System, is shown
in the table below. Prices have been restated to reflect a five-
for-four common stock split distributed March 6, 1995, rounded to
the nearest one-eighth. On February 1, 1995, the Company's common
stock was listed and began trading on the New York Stock Exchange
under the symbol "DG."
<TABLE>
<CAPTION>
FISCAL YEAR FIRST SECOND THIRD FOURTH
1995 QUARTER QUARTER QUARTER QUARTER
<S> <C> <C> <C> <C>
HIGH $21 1/8 $22 $24 $26
LOW 15 7/8 16 5/8 16 1/4 21 5/8
DIVIDEND AS
DECLARED .05 .05 .05 .05
DIVIDEND AS
ADJUSTED .04 .04 .04 .04
FISCAL YEAR FIRST SECOND THIRD FOURTH
1994 QUARTER QUARTER QUARTER QUARTER
<S> <C> <C> <C> <C>
HIGH $14 3/4 $17 3/8 $21 1/4 $19 1/4
LOW 10 7/8 12 5/8 15 14 7/8
DIVIDEND AS
DECLARED .05 .05 .05 .05
DIVIDEND AS
ADJUSTED .03 .03 .03 .03
</TABLE>
The approximate number of stockholders of record of the Company's
common stock as of April 14, 1995 was 3,200. Under the Company's
credit facilities, the Company is limited from paying dividends per
annum in excess of 50% of its reported net income.
<PAGE>9
Item 6. Selected Financial Data
FIVE-YEAR SUMMARY (Dollars in thousands except per
share amounts and operating data)
<TABLE>
<CAPTION>
January January January January January
SUMMARY OF OPERATIONS: 31, 1995 31, 1994 31, 1993 31, 1992 31, 1991
<S> <C> <C> <C> <C> <C>
Net Sales $1,448,609 $1,132,995 $920,698 $754,426 $653,151
Gross Profit $ 420,679 $ 325,998 $267,109 $215,481 $187,388
Income before Taxes on Income $ 118,288 $ 78,004 $ 58,222 $ 34,680 $ 23,087
Net Income $ 73,634 $ 48,557 $ 35,574 $ 21,502 $ 14,616
Net Income as a % of Sales 5.1 4.3 3.9 2.9 2.2
PER SHARE RESULTS:
Net Income(a) $ 1.33 $0.90 $ 0.67 $ 0.42 $ 0.30
Net Income as Adjusted (b) $ 1.07 $0.72 $ 0.54 $ 0.33 $ 0.24
Cash Dividends per Common Share
As declared $ 0.20 $0.20 $ 0.20 $ 0.20 $ 0.20
As adjusted(c) $ 0.16 $0.12 $ 0.08 $ 0.06 $ 0.06
Weighted Average Shares (000)(a) 55,207 53,825 53,045 51,389 49,172
Weighted Average Shares (000)(b) 69,009 67,281 66,306 64,236 61,465
FINANCIAL POSITION:
Assets $ 540,868 $ 397,237 $316,394 $237,346 $207,737
Long-term Obligations $ 4,767 $ 5,711 $ 7,013 $ 8,314 $ 11,834
Shareholders' Equity $ 323,756 $ 240,717 $189,765 $150,986 $131,717
Inventory Turn 3.0 3.1 2.7 2.6 2.5
Return on Avg. Assets (%) 15.7 13.6 12.9 9.7 7.3
Return on Avg. Equity (%) 26.1 22.6 20.9 15.2 11.6
OPERATING DATA:
Company Owned Stores at End of
Period 2,059 1,800 1,617 1,522 1,461
Franchise Stores at End of
Period 11 13 14 14 15
Year-end Selling Sq. Feet(000) 12,726 10,724 9,341 8,522 8,085
Average Selling Sq. Feet(000) 11,643 9,974 8,975 8,290 7,857
Sales per Average Sq. Foot $ 124 $ 114 $ 103 $ 91 $ 83
Hardlines Sales % 66 65 64 60 55
Softlines Sales % 34 35 36 40 45
</TABLE>
(a) Based on common and common equivalent shares before adjustment
for March 6, 1995 five-for-four common stock split.
(b) Based on common and common equivalent shares as adjusted to
give retroactive effect to the March 6, 1995 five-for-four common
stock split.
(c) As adjusted to give retroactive effect to the March 6, 1995
five-for-four common stock split.
<PAGE>10
Item 7. Management's Discussion and Analysis of Financial
Condition and Results of Operations
The following text contains references to years 1996, 1995, 1994
and 1993 which represent fiscal years ending or ended January 31,
1996, 1995, 1994 and 1993, respectively.
General
During 1995, Dollar General achieved its fourth consecutive year of
double digit same-store sales growth, record sales and record net
income. This record performance is principally the result of
customers' favorable response to better merchandise selection and
to the Company's commitment to everyday low pricing; accelerated
new-store development; aggressive overhead cost control; and
increased use of cost-effective information technology. In 1995,
the Company reinforced its accelerated growth plan by increasing
the rate of store expansion, constructing a third distribution
center and continuing to introduce appropriate information
technology, all without a significant increase in the Company's
debt position.
The Company increased in 1995 the rate of its store expansion to
its highest level ever, ending the year with 2,059 stores. The
Company opened 302 new stores in 1995 compared with 251 new stores
in 1994. The 1995 new stores added 2,051,000 square feet to the
Company's total sales space, an increase of 19% over 1994's year-
end total sales space. Average annual square footage increased
18.7% to 12,726,000 square feet. In 1995, new and closed stores
averaged 6,600 and 5,800 square feet per store, respectively,
compared with 1994's total chain average of 6,000 square feet per
store. The five states in which the greatest number of new Dollar
General Stores were opened in 1995 were Texas (86) North Carolina
(21), Ohio (21), South Carolina (17) and Alabama (15). In 1996,
the Company expects to open approximately 330-350 stores and close
approximately 50 stores with Texas again anticipated to be the
state with the most new store openings. In 1995, the Company also
remodeled or relocated 297 stores compared with 277 in 1994.
During the last three years, the Company has opened, remodeled or
relocated 1,489 stores.
In the first quarter of 1995, the Company began building its third
distribution center. The initial size of this facility, which is
located in Ardmore, Oklahoma, totals 510,000 square feet. The
existing site work, however, will support the expansion of the
facility to a total of 1,050,000 square feet. The distribution
center includes radio frequency merchandise locating equipment to
accelerate inventory storage and retrieval. The distribution
center's carton sortation system is capable of sorting 12,000
cartons per hour. The initial configuration of the Ardmore
distribution center can serve approximately 1,000 stores. Based on
current average-store sales volume and relevant distribution
parameters, this new distribution center, when expanded to
1,050,000 square feet, could serve approximately 1,900 stores. The
first phase of the distribution center was nearing completion at
the end of the fourth quarter of 1995 at a cost of $23.3 million
including $1.6 million for a new warehouse management system. The
Ardmore distribution center is expected to be in full operation
serving 750 stores by the middle of the second quarter of 1996.
The addition of this third distribution center should substantially
eliminate the distribution inefficiencies encountered during the
fourth quarter of 1995 when the Company utilized three warehouses
operated by third parties. The complexities associated with
coordinating the third-party warehouses with the Company's
distribution centers during the Company's highest-volume quarter
resulted in inefficient merchandise distribution, higher than
expected distribution labor and freight costs and, in management's
opinion, lost sales.
During the first half of 1995, the Company equipped every store
with Symbol hand-held bar code scanners to enable store personnel
to more quickly and accurately receive and order merchandise and to
report store payroll data. This technological improvement in store
operations together with the introduction in 1994 of Omron
electronic cash registers has enhanced productivity. This enhanced
productivity during the last half of 1995 contributed in part to
the reduction of the Company's overhead-to-sales ratio to 20.7% in
1995 from 21.7% in 1994. The scanners' electronic transmission of
merchandise orders will permit more frequent deliveries in the
future.
<PAGE>11
Consistent with its everyday low pricing strategy, the Company
eliminated its newspaper, radio and television advertising in 1995.
As in 1994, the Company distributed four solo direct-mail circulars
on or about the first of April, August, November and December.
Three circulars will be distributed in 1996 on or about the first
of May, August and December. Management believes that the
elimination of an advertising circular results in only a temporary
reduction in same-store sales growth. The savings from not
printing and distributing the fourth circular will be partially
offset by higher postage rates and higher newsprint costs.
On August 22, 1994, the Company exchanged 1,715,742 shares of
Series A Convertible Junior Preferred Stock for the 8,578,710
shares of Dollar General common stock owned by CTS, Inc., a
personal holding company controlled by members of the Turner
family, the founders of Dollar General. The Series A Convertible
Junior Preferred Stock was authorized by the Board of Directors out
of the authorized but unissued preferred stock approved by the
Company's stockholders in 1992. The exchange, negotiated and
recommended by a special committee of the Company's Board of
Directors, came in response to a request from CTS, Inc. to consider
a transaction to meet estate planning needs of the Turner family.
The Series A convertible Junior Preferred Stock is (i)convertible
into common stock pursuant to the terms and conditions set forth in
the Restated Articles of Incorporation and (ii) is voted with the
common stock on all matters presented to the holders of common
stock. The Series A Convertible Junior Preferred Stock is not
convertible at the option of the holder until August 22, 1996;
however, under certain circumstances the preferred stock may be
converted into common stock prior to such date. In the three years
following August 22, 1996, the conversion ratio increases from 90%
of the initial exchange ratio of five (5) shares of common stock
for each share of Series A Convertible Junior Preferred Stock
converted (adjusted for all intervening stock splits or
adjustments) to 100% of the initial exchange ratio (as adjusted).
Additionally, the Series A Convertible Junior Preferred Stock is
not transferrable by the holders thereof. Management believes that
the stockholders benefit from the resulting stabilization of this
large block of common shares and from the reduced cash dividend,
which is non-cumulative, paid to the preferred stockholders.
On February 1, 1995, the Company's common stock was listed and
began trading on the New York Stock Exchange under the symbol "DG."
Previously, the Company's common stock was traded on the Nasdaq
National Market System. Management believes that the New York
Stock Exchange will offer the Company's shareholders greater
trading liquidity, potentially lower price volatility and reduced
transaction costs.
Results of Operations
The following table sets forth certain items in the consolidated
statements of operations expressed as a percentage of net sales for
the periods indicated.
<TABLE>
<CAPTION>
1995 1994 1993
Net sales 100.0% 100.0% 100.0%
<S> <C> <C> <C>
Gross profit 29.0 28.8 29.0
Selling, general
and administrative expense 20.7 21.7 22.4
Interest expense 0.2 0.2 0.3
Income before taxes on income 8.1 6.9 6.3
Provision for taxes on income 3.0 2.6 2.4
Net income 5.1% 4.3% 3.9%
</TABLE>
<PAGE>12
Net Sales - Net sales for 1995 totaled $1,448.6 million, an
increase of 27.9%, or $315.6 million more than the 1994 level of
$1,133.0 million. The increase was the result of sales from 259
net new stores opened during the year and same-store sales
increasing 13.5%. The Company defines same stores as those stores
that were opened before the beginning of the prior fiscal year and
that have remained open throughout both the prior and current
fiscal years. Management believes the same-store sales increase is
primarily the result of improved store operation and merchandise
presentation, better basic merchandise in-stock positions in the
stores, a program of price point consolidation that involved
selective markdowns and key product price reductions. These
product price reductions were made primarily in apparel goods.
The sales mix during 1995 again shifted slightly in favor of
hardlines which comprised 65.6% of sales compared with 64.7% in
1994. Despite hardlines percentage of sales increasing in 1995,
the Company has no target sales mix. However, the softlines price
reductions, planned new store layout changes, improved item
selection and continued focus on basic apparel may maintain or
possibly increase the proportion of softlines sold. Reversing the
trend of the last three years, the realized gross margin of
softlines exceeded that of hardlines by 0.8%. During 1996, the
Company plans to continue store layout changes in a number of
stores which are intended to provide better sales-floor space
allocation and merchandise presentation.
Net sales for 1994 equaled $1,133.0 million, up $212.3 million, or
23.1%, from 1993 sales of $920.7 million. The increase resulted
from the net addition of 183 stores during 1994 and 12.7% increase
in same-store sales.
Gross profit - Gross profit for 1995 was $420.7 million, compared
with $326.0 million and $267.1 million for 1994 and 1993,
respectively. Gross profit as a percentage of sales was 29.0% in
1995 compared with 28.8% in 1994. This 0.2% increase was
principally the result of lower markdowns, an increased LIFO credit
and higher markups on purchases which more than offset the effect
of lower markups on beginning inventories and reduced purchase
discounts.
Gross profit as a percentage of sales was 28.8% in 1994 compared
with 29.0% in 1993. This decrease of 0.2% resulted principally
from higher distribution expenses, increased markdowns, and higher
inventory shrinkage.
Selling, general, and administrative expenses - Selling, general
and administrative expenses for 1995 were $299.6 million or 20.7%
of sales, compared with $245.8 million, or 21.7% of sales in 1994.
Total expenses increased 21.9% principally as a result of opening
and operating 259 net new stores. The 1995 operating expense-to-
sales ratio is the lowest in the last ten years. This lower
operating expense ratio resulted primarily from improved self-
insurance reserves, supplies, advertising, health insurance, and
utility expense ratios. These improvements were partially offset
by higher depreciation caused mainly by the increased number of
stores in operation, higher than expected distribution labor and
freight costs due to the operation of third-party warehouses and
higher incentive compensation expense as a result of the expansion
of the incentive compensation program to include all store
personnel.
Selling, general and administrative expenses were $245.8 million in
1994, or 21.7% of sales, compared with $206.2 million in 1993, or
22.4% of sales. Salary, rent, and advertising expenses in 1994 all
declined as a percentage of sales as a result of tight control of
overhead and significant sales increases for the year. These
decreases more than offset increases in depreciation and supplies.
Interest expense - In 1995, interest expense increased 27.7% to
$2.8 million from $2.2 million in the prior year. This increase
was attributable to higher interest rates and higher average short-
term borrowings during the year. Daily average total debt
outstanding equaled $57.6 million in 1995 versus $41.4 million in
1994. Interest expense declined 17.4% to $2.2 million in 1994 from
$2.7 million in 1993. The 1994 decrease resulted from lower
interest rates and the resolution of a state income tax issue for
which the Company had been accruing interest.
Provision for taxes on income - The effective income tax rates for
1995, 1994 and 1993 were 37.8%, 37.8%, and 38.9%, respectively.
The decrease in the 1994 rate resulted primarily from the
resolution of certain income tax issues and changes
<PAGE>13
in state income tax apportionment rates. As a result of the
December 31, 1994 expiration of Targeted Jobs Tax Credits program,
the Company anticipates an increase in its effective tax rate to
38.5% for 1996.
Return on equity and assets - The ratio of net earnings to average
shareholders' equity was 26.1% in 1995 as compared with 22.6% and
20.9% in 1994 and 1993, respectively. Return on average assets
increased to 15.7% in 1995 from 13.6% in 1994 and 12.8% in 1993.
These improvements resulted from higher earnings.
Liquidity and Capital Resources
Working capital - Working capital increased to $201.2 from $166.8
million in 1994, an increase of 20.6%. The year-end current ratio
for 1995 equaled 2.0 compared with 2.1 for 1994 as a result of
proportionately larger increases in short-term borrowings and
accrued expenses, and a decrease in cash.
<TABLE>
<CAPTION>
1995 1994 1993
<S> <C> <C> <C>
Cash & cash
equivalents (000) $33,045 $35,365 $25,046
Working capital
(000) $201,190 $166,785 $138,711
Current ratio 2.0 2.1 2.2
Inventory turn at
retail 3.0 3.1 2.7
</TABLE>
Cash flows from operating activities - Net cash provided by
operations increased $7.1 million, or 19.5%, to $43.3 million in
1995. The $96.1 million increase in cash used to purchase
merchandise inventories during 1995 was partially offset by the
trade accounts payable increase of $30.6 million and the accrued
expenses increase of $13.1 million. The higher level of inventory
was the result of adding 259 net new stores, inventory held in the
Ardmore, Oklahoma distribution center which had just commenced
operation at year end, increased import merchandise in transit and
better in stock positions at all stores. Trade accounts payable
increased as a result of greater inventory purchases. Accrued
expenses increased primarily because of larger accruals for both
self-insurance reserves and incentive compensation.
Net cash provided by operations equaled $36.2 million in 1994.
Inventories rose by $43.2 million in 1994 principally as a result
of opening 183 net new stores, increasing the level of in-transit
import merchandise and improving the stores' in-stock position.
The 1994 increase in accrued expenses resulted principally from
higher self-insurance reserves and incentive compensation accruals.
Cash flows from investing activities - Capital expenditures in 1995
totaled $65.8 million compared with $35.0 million in 1994.
Distribution-related expenditures totaled $28.4 million in 1995
primarily as a result of the construction of the Ardmore, Oklahoma
distribution center which equaled $23.3 million. Also during 1995,
the Company opened 302 new stores and remodeled or relocated 297
stores at a cost of $25.9 million compared with $20.8 million in
1994.
Capital expenditures during 1994 totaled $35.0 million compared
with $24.7 million in 1993. Expenditures for new, relocated and
remodeled stores increased to $20.8 million from $12.4 million in
1993. In addition, the Company spent $4.8 million to install Omron
electronic cash registers in all stores, $2.5 million for store
fixtures, $1.8 million for delivery trailers and $1.4 million for
office expansion and remodeling.
Capital expenditures during 1996 are estimated to be $55 to $65
million. This will include approximately $31 million for new,
relocated and remodeled stores, with the balance to be spent on
information technology and distribution and transportation needs.
The Company expects that its capital expenditure requirements will
be met through internally generated funds supplemented by
<PAGE>14
short-term borrowings. Capital expenditures in the last three
years are summarized in the following table (amounts in thousands
except number of stores):
<TABLE>
<CAPTION>
1995 1994 1993
<S> <C> <C> <C>
New stores $17,664 $12,478 $ 6,146
Number of stores 302 251 146
Remodels/relocations $ 8,374 $ 8,331 $ 6,265
Number of stores 297 277 216
Distribution Facilities
and Equipment $28,448 $ 2,162 $10,941
Retail information
systems $ 1,916 $ 4,843 $ 0
Other $ 9,375 $ 7,156 $ 1,312
Total $65,777 $34,970 $24,664
</TABLE>
Cash flows from financing activities - Total debt (including
current maturities and short-term borrowings) was $35.8 million in
1995, $25.0 million in 1994, and $18.3 million in 1993. Long-term
debt at January 31, 1995 was $4.8 million, a decrease of $0.9
million from 1994. The ratio of total debt (including current
maturities and short-term borrowings) to equity increased slightly
to 11.1% in 1995 from 10.4% in 1994.
Average daily use of short-term debt increased 51.1% to $51.5
million in 1995. The primary reason is a 37% increase in inventory
as a result of opening 259 net new stores, the initial stocking of
the new Ardmore, Oklahoma distribution center and the continued
growth in purchasing import merchandise which is financed before
receipt. The construction of the new distribution center in
Ardmore, Oklahoma also impacted daily borrowings, especially during
the last half of the year when construction of the facility was at
its peak.
Because of the large impact of seasonal buying (e.g., Christmas and
back-to-school purchases), the Company's working capital
requirements vary significantly during the year. These working
capital requirements were financed by short-term borrowings under
the Company's $65 million revolving credit/term loan agreement and
$95 million of short-term bank lines of credit at year end 1995.
Seasonal working capital requirements will continue to be met
through cash flow provided by operating activities supplemented by
the revolving credit/term loan facility, which the Company
anticipates will be increased during 1996, and credit lines
mentioned above.
<TABLE>
<CAPTION>
1995 1994 1993
<S> <C> <C> <C>
Total debt/equity 11.1% 10.4% 9.7%
Long-term debt/equity 1.5% 2.4% 3.7%
Average daily use of debt:
Short-term (000) $ 51,528 $34,102 $29,323
Long-term (000) $ 6,035 $ 7,335 $ 8,661
Total (000) $ 57,563 $41,437 $37,984
Maximum outstanding
short-term debt(000) $116,712 $70,909 $57,000
</TABLE>
Stock transactions - Common stock issued during 1995 totaled
13,445,000 shares valued at $6.7 million. In 1994, 18,856,000
shares valued at $9.4 million were issued. All common stock issued
in both years was related to declared stock splits and the exercise
of stock options. Shares of treasury stock were reissued
<PAGE>15
in transactions with the employee stock ownership plan, the
employee stock incentive plan and the outside directors' stock
option plan. In 1995, the Company issued 1,715,742 shares of
Series A Convertible Junior Preferred Stock from the authorized but
unissued preferred stock approved by the stockholders in 1992 to
shareholders of CTS, Inc. in exchange for the 8,578,710 shares of
Dollar General common stock held by CTS, Inc., a personal holding
company controlled by members of the Turner family, the founders of
Dollar General.
Effects of inflation and changing prices - The Company believes
that inflation had a limited impact on its overall operations
during 1995, 1994 and 1993. In particular, the effect of inflation
on cost of goods sold has been minimal as reflected by the small
decline in LIFO reserves in 1995, 1994 and 1993.
<PAGE>16
Item 8. Financial Statements and Supplementary Data
CONSOLIDATED BALANCE SHEETS
January 31, 1995 and 1994
(Dollars in thousands except per share amounts)
<TABLE>
<CAPTION>
1995 1994
<S> <C> <C>
Assets
Current assets:
Cash and cash equivalents $ 33,045 $ 35,365
Merchandise inventories 356,111 260,042
Deferred income taxes 11,785 9,664
Other current assets 9,212 8,397
Income taxes 0 1,563
Total current assets 410,153 315,031
Property and equipment, at cost:
Land 266 266
Buildings 33,693 23,062
Furniture, fixtures and equipment 153,401 101,499
187,360 124,827
Less accumulated depreciation 62,108 47,322
Net property and equipment 125,252 77,505
Other assets 5,463 4,701
$540,868 $397,237
Liabilities and Shareholders' Equity
Current liabilities:
Current portion of long-term debt $ 1,441 $ 1,302
Short-term borrowings 29,600 18,000
Accounts payable 111,675 81,038
Accrued expenses 61,037 47,906
Income taxes 5,210 0
Total current liabilities 208,963 148,246
Long-term debt 4,767 5,711
Deferred income taxes 3,382 2,563
Commitments
Shareholders' equity:
Preferred stock, stated value $.50 per share:
Shares authorized: 5,000,000
Issued: 1995-1,716,000 858 0
Common stock, par value $.50 per share:
Shares authorized: 100,000,000
Issued: 1995-67,942,000; 1994-54,497,000 33,971 27,248
Additional paid-in capital 283,323 65,857
Retained earnings 207,436 151,165
525,588 244,270
Less treasury stock, at cost:
Shares: 1995-11,472,000; 1994-2,098,000 201,832 3,553
Total shareholders' equity 323,756 240,717
$540,868 $397,237
</TABLE>
The accompanying notes are an integral part of the consolidated
financial statements.
<PAGE>17
CONSOLIDATED STATEMENTS OF INCOME
January 31, 1995, 1994 and 1993
(Dollars in thousands except per share amounts)
<TABLE>
<CAPTION>
1995 1994 1993
Amount % of Net Sales Amount % of Net Sales Amount % of Net Sales
<S> <C> <C> <C> <C> <C> <C>
Net sales $1,448,609 100.0% $1,132,995 100.0% $920,698 100.0%
Cost of goods sold 1,027,930 71.0 806,997 71.2 653,589 71.0
Gross profit 420,679 29.0 325,998 28.8 267,109 29.0
Selling, general and
administrative 299,592 20.7 245,802 21.7 206,233 22.4
Operating profit 121,087 8.3 80,196 7.1 60,876 6.6
Interest expense 2,799 0.2 2,192 0.2 2,654 0.3
Income before taxes on 118,288 8.1 78,004 6.9 58,222 6.3
income
Provision for taxes on
income 44,654 3.0 29,447 2.6 22,648 2.4
Net income $ 73,634 5.1 $ 48,557 4.3 $ 35,574 3.9
Net income per common
and common equivalent
share $ 1.33 $ 0.90 $ 0.67
Weighted average number
of common and common
equivalent shares
outstanding (000) 55,207 53,825 53,045
As adjusted to give
retroactive effect to
the five-for-four
common stock split
distributed March 6,
1995:
Net income per common
and common equivalent
share $ 1.07 $ 0.72 $0.54
Weighted average number
of common and common
equivalent shares
outstanding (000) 69,009 67,281 66,306
</TABLE>
The accompanying notes are an integral part of the consolidated
financial statements.
<PAGE>18
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
January 31, 1995, 1994 and 1993
(Dollars in thousands)
<TABLE>
<CAPTION>
Additional
Preferred Common Paid-in Retained Treasury
Stock Stock Capital Earnings Stock
<S> <C> <C> <C> <C> <C>
Balances, January 31,1992 $0 $11,990 $ 49,642 $ 95,366 $ 6,012
Net income 35,574
5-for-4 stock split, April 15, 1992 2,556 -2,556
5-for-4 stock split, Feb. 26, 1993 3,274 -3,274
Cash dividends, $.20 per common share -5,530
Reissuance of treasury stock under
employee stock incentive plans
(634,779 common shares) 3,832 -1,114
Tax benefit from exercise of options 3,672,220 -17
Transfer to employee stock ownership
plan (10,221 common shares) 220
Other -120
Balances, January 31, 1993 $0 $17,820 $ 57,246 $119,580 $ 4,881
Net income 48,557
5-for-4 stock split, September 17,1993 4,150 -4,150
5-for-4 stock split, April 15, 1994 5,278 -5,278
Cash dividends, $.20 per common share -7,544
Reissuance of treasury stock under
employee stock incentive
plans(790,104 common shares) 2,474 -1,306
Tax benefit from exercise of options 5,796
Transfer to employee stock ownership
plan (12,979 common shares) 341 -22
Balances, January 31, 1994 $0 $27,248 $ 65,857 $151,165 $ 3,553
Net income 73,634
5-for-4 stock split, March 6, 1995 6,723 (6,723)
Cash dividends, $.20 per common share (9,868)
Cash dividends, $.45 per preferred
share (772)
Reissuance of treasury stock under
employee stock incentive plans
(1,296,797, common shares) 6,702 -2,205
Tax benefit from exercise of
options 10,581
Transfer to employee stock ownership
plan (25,314 common shares) 514 -43
Issuance of preferred stock
(1,715,742 preferred shares) 858 199,669
Purchase of treasury stock
(8,578,710 common shares) 200,527
Balances,January 31, 1995 $858 $33,971 $ 283,323 $207,436 $201,832
</TABLE>
The accompanying notes are an integral part of the consolidated
financial statements.
<PAGE>19
CONSOLIDATED STATEMENTS OF CASH FLOWS
January 31, 1995, 1994 and 1993
(Dollars in thousands)
<TABLE>
<CAPTION>
1995 1994 1993
<S> <C> <C> <C>
Cash flows from operating activities:
Net income $ 73,634 $48,557 $35,574
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization 17,263 11,729 8,229
Deferred income taxes (1,302) (2,072) (2,343)
Change in operating assets and liabilities:
Merchandise inventories (96,069) (43,199) (44,088)
Accounts payable 30,637 17,013 26,243
Accrued expenses 13,131 10,236 14,637
Income taxes 6,773 (5,578) 3,713
Other (810) (490) 748
Net cash provided by operating activities 43,257 36,196 42,713
Cash flows used in investing activities:
Purchase of property and equipment (65,777) (34,970) (24,664)
Cash flows from financing activities: 100,710 62,009 51,320
Repayments of short-term borrowings (88,971) (54,009) (54,177)
Repayments of long-term debt (944) (1,300) (1,298)
Payment of cash dividends (10,640) (7,544) (5,530)
Proceeds from exercise of stock options 8,907 3,780 4,946
Tax benefit from stock option exercises 10,581 5,796 3,672
Issuance of preferred stock 200,527 0 0
Purchase of treasury stock (200,527) 0 0
Other 557 361 117
Net cash provided by (used in) financing
activities 20,200 9,093 (950)
Net increase (decrease)in cash and
cash equivalents (2,320) 10,319 17,099
Cash and cash equivalents, beginning of
year 35,365 25,046 7,947
Cash and cash equivalents, end of year $ 33,045 $35,365 $25,046
Supplemental cash flow information
Cash paid during year for:
Interest $ 2,760 $ 1,980 $ 2,007
Income taxes $ 28,345 $31,542 $17,524
</TABLE>
The accompanying notes are an integral part of the consolidated
financial statements.
<PAGE>20
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. Accounting Policies:
The Company sells general merchandise on a retail basis through
company-owned stores. Its significant accounting policies follow:
Basis of presentation - The following notes contain references to
years 1995, 1994 and 1993 which represent fiscal years ended
January 31, 1995, January 31, 1994 and January 31, 1993. The
consolidated financial statements include all subsidiaries.
Intercompany transactions have been eliminated.
Cash and cash equivalents - Cash and cash equivalents include
highly liquid investments with an original maturity of three months
or less.
Inventories - Inventories are stated at cost, using the retail
last-in, first- out (LIFO) method which is not in excess of market.
The excess of current cost over LIFO cost was $22.2 million, $27.0
million and $28.3 million at January 31, 1995, 1994 and 1993
respectively. The LIFO reserves decreased by $4.8 million in 1995,
$1.3 million in 1994 and $0.7 million in 1993.
Preopening costs - Preopening costs for new stores are expensed as
incurred.
Property and equipment - Property and equipment are recorded at
cost. The Company provides for depreciation of buildings and
equipment on a straight line basis over the following estimated
useful lives: buildings, 25 to 39 years; furniture, fixtures and
equipment, 5 to 10 years. Depreciation expense was $17.1 million,
$11.6 million, and $8.1 million in 1995, 1994 and 1993,
respectively.
Insurance claims provisions - The Company retains a portion of the
risk for its workers' compensation, employee health insurance,
general liability, property, and automobile coverages.
Accordingly, provisions are made for the Company's actuarially
determined estimates of future claim costs for such risks. To the
extent that subsequent claim costs vary from those estimates,
current earnings are charged or credited.
Net income per common and common equivalent share - Net income per
common and common equivalent share is based on the weighted average
number of shares of common stock outstanding during each year,
after giving effect to the assumed exercise of all dilutive stock
options using the treasury stock method and the treatment of
convertible preferred stock shares as common stock equivalents.
Net income per common and common equivalent shares is also
presented in the accompanying consolidated statements of income on
an adjusted basis, which gives retroactive effect to a five-for-
four stock split declared February 6, 1995 for shareholders of
record on February 23, 1995, and paid on March 6, 1995.
2. Cash and Short-Term Borrowings:
The cash management system provides for daily investment of
available balances and the funding of outstanding checks when
presented for payment.
Outstanding but unpresented checks totaling $48.3 million and $36.3
million at January 31, 1995 and 1994, respectively, have been
included in accounts payable. Upon presentation for payment, they
will be funded through available cash balances or the revolving
credit/term loan agreement.
The Company had lines of credit with banks totaling $95.0 million
at January 31, 1995, and $35.0 million at January 31, 1994. The
lines are available for general corporate purposes and are subject
to periodic review by the lending institutions which may increase
or decrease the amounts available. There were no borrowings
outstanding under these lines at January 31, 1995 and 1994.
Additionally, the Company had a $145.0 million facility at January
31, 1995 and a $85.0 million facility at January 31, 1994 available
for the issuance of letters of credit. At January 31, 1995 and
1994, the Company had outstanding letters of credit totaling $111.0
million and $69.9 million, respectively.
The Company also has a $65.0 million revolving credit/term loan
agreement to be used for seasonal working capital requirements
which expires in September 1995. Borrowings under this facility
were $29.6 million and $18.0 million at January
<PAGE>21
31, 1995, and 1994, respectively. Interest rates on amounts
borrowed under this agreement can float with the prime commercial
lending rate or can be fixed not to exceed the New York certificate
of deposit rate plus 0.7%, the Adjusted Eurodollar rate plus 0.45%,
or the Banker's Acceptance rate plus 0.45%, all for periods of up
to six months. The weighted average interest rates were 6.9% and
3.9% at January 31, 1995 and 1994, respectively.
3. Accrued Expenses:
Accrued expenses consist of the following:
<TABLE>
<CAPTION>
(in thousands) 1995 1994
<S> <C> <C>
Compensation and benefits $20,560 $15,011
Taxes (other than taxes on income) 6,512 6,358
Insurance 24,351 19,907
Other 9,614 6,630
Total accrued expenses $61,037 $47,906
</TABLE>
4. Income Taxes:
The provision for taxes consists of the following:
<TABLE>
<CAPTION>
(in thousands) 1995 1994 1993
<S> <C> <C> <C>
Currently payable:
Federal $40,349 $27,680 $20,935
State 5,607 3,839 4,056
Total current payable 45,956 31,519 24,991
Deferred:
Federal (1,103) (1,752) (1,944)
State (199) (320) (399)
Total deferred (1,302) (2,072) (2,343)
Total provision $44,654 $29,447 $22,648
</TABLE>
Deferred tax expense (credit) is recognized for the future tax
consequences of temporary differences between the amounts reported
in the Company's financial statements and the tax basis of its
assets and liabilities. Primary differences giving rise to the
Company's deferred tax assets and liabilities are as follows:
<TABLE>
<CAPTION>
1995 1994
(in thousands) Assets Liabilities Assets Liabilities
<S> <C> <C> <C> <C>
Inventories $ 1,177 $1,134
Property and
equipment $3,382 $2,563
Accrued insurance 10,125 8,129
Other 483 401
Total deferred taxes $11,785 $3,382 $9,664 $2,563
</TABLE>
<PAGE>22
Reconciliation of the federal statutory rate and the effective
income tax rate follows:
<TABLE>
<CAPTION>
1995 1994 1993
<S> <C> <C> <C>
Federal statutory rate 35.0% 35.0% 34.0%
State income taxes, net of federal
income tax benefit 3.0 3.0 4.1
Tax credits (0.7) (0.4) (0.8)
Other 0.5 0.2 1.6
Effective income tax rate 37.8% 37.8% 38.9%
</TABLE>
5.Long-Term Debt:
Long-term debt consists of the following:
<TABLE>
<CAPTION>
(in thousands) 1995 1994
<S> <C> <C>
6.6% in 1995 and 6.7% in 1994 industrial
revenue bonds payable through 1998 $1,500 $2,000
5.8% (LIBOR plus 0.5%) in 1995 and 3.9%
(LIBOR plus 0.5%) in 1994 mortgage note payable
to Kentucky Development Finance Authority
through 1998 3,889 4,666
Other 819 347
6,208 7,013
Less current portion 1,441 1,302
Net long-term debt $4,767 $5,711
</TABLE>
Certain loan agreements contain restrictive covenants which, among
other things, require the Company to maintain minimum amounts of
tangible net worth and working capital and restrict capital
expenditures, repurchases of capital stock and additional
borrowings.
Approximate maturities on long-term obligations in the years ending
January 31, 1996, through 2000 are (in millions): $1.4; $1.5; $1.5;
$0.8 and $0.8.
6.Commitments:
At January 31, 1995, the Company and certain subsidiaries were
committed for retail store space under noncancelable operating
lease agreements, requiring minimum annual rental payments of (in
millions): 1996, $35.0; 1997, $27.4; 1998, $17.6; 1999, $8.8;
2000, $2.8 and $0.1 in later years. Most leases include renewal
options for periods ranging from two to five years, and provisions
for contingent rentals based upon a percentage of defined sales
volume.
Rent expense under all operating store leases was as follows:
<TABLE>
<CAPTION>
(in thousands) 1995 1994 1993
<S> <C> <C> <C>
Minimum rentals $35,318 $28,104 $24,403
Contingent rentals 8,391 6,247 6,063
Total rentals $43,709 $34,351 $30,466
</TABLE>
<PAGE>23
7.Employee Benefits:
The Company has two noncontributory defined contribution retirement
plans covering substantially all employees. Expense for these
plans was approximately $3.5 million, $2.6 million and $1.6 million
in 1995, 1994 and 1993, respectively. The Company funds all
benefit-plan costs as accrued.
8.Capital Stock:
The authorized capital stock of the Company consists of common
stock and preferred stock. On February 6, 1995, the Company's
Board of Directors authorized for distribution on March 6, 1995, a
five-for-four common stock split to shareholders of record on
February 23, 1995.
On August 22, 1994, the Company exchanged 1,715,742 shares of
Series A Convertible Junior Preferred Stock for the 8,578,710
shares of Dollar General common stock owned by CTS, Inc., a
personal holding company controlled by members of the Turner
family, the founders of Dollar General. The Series A Convertible
Junior Preferred Stock was authorized by the Board of Directors out
of the authorized but unissued preferred stock approved by the
Company's stockholders in 1992. The exchange, negotiated and
recommended by a special committee of the Company's Board of
Directors, came in response to a request from CTS, Inc. to consider
a transaction to meet estate planning needs of the Turner family.
The Series A convertible Junior Preferred Stock is (i)convertible
into common stock pursuant to the terms and conditions set forth in
the Restated Articles of Incorporation and (ii) is voted with the
common stock on all matters presented to the holders of common
stock. The Series A Convertible Junior Preferred Stock is not
convertible at the option of the holder until August 22, 1996;
however, under certain circumstances the preferred stock may be
converted into common stock prior to such date. In the three years
following August 22, 1996, the conversion ratio increases from 90%
of the initial exchange ratio of five (5) shares of common stock
for each share of Series A Convertible Junior Preferred Stock
converted (adjusted for all intervening stock splits or
adjustments) to 100% of the initial exchange ratio (as adjusted).
Additionally, the Series A Convertible Junior Preferred Stock is
not transferrable by the holders thereof.
9. Stock Option Plans:
The Company has stock option plans under which options to purchase
common stock may be granted to officers, directors and key
employees. Plan activity (as adjusted for the March 6, 1995 five-
for-four common stock split) is summarized below:
At January 31, 1995 and 1994, options for 1,129,958 and 794,235
shares were exercisable. At January 31, 1995 and 1994, shares
available for granting of stock options under the Company's stock
option plans were 908,749 and 3,077,765 shares, respectively. All
unexercised options expire not later than the year 2005.
<TABLE>
<CAPTION>
Shares Under Plans Option Price Per Share
<S> <C> <C> <C>
Balance, January 31, 1992 5,361,077 $1.26 to $ 6.84
Granted 1,306,316 1.49 to 11.57
Exercised (1,606,570) 1.26 to 6.84
Canceled (526,538) 2.38 to 9.94
Balance, January 31, 1993 4,534,285 1.78 to 11.57
Granted 2,907,980 11.57 to 17.44
Exercised (1,381,694) 2.38 to 10.14
Canceled (239,322) 2.38 to 17.20
Balance, January 31, 1994 5,821,249 1.78 to 17.44
Granted 1,741,605 16.30 to 25.00
Exercised (1,777,471) 2.38 to 17.21
Canceled (349,182) 5.65 to 20.40
Balance, January 31, 1995 5,436,201 1.78 to 25.00
</TABLE>
At January 31, 1995 and 1994, options for 1,129,958 and 794,235
shares were exercisable. At January 31, 1995 and 1994, shares
available for granting of stock options under the Company's stock
option plans were 908,749 and 3,077,765 shares, respectively. All
unexercised options expire not later than the year 2005.
<PAGE>24
10. Quarterly Financial Data (unaudited):
The following is selected unaudited quarterly financial data for
the fiscal years ended January 31, 1995 and 1994. Amounts are in
thousands except per share data.
<TABLE>
<CAPTION>
Quarter First Second Third Fourth Year
<S> <C> <C> <C> <C> <C>
1995:
Net Sales $287,086 $317,323 $359,430 $484,770 $1,448,609
Gross Profit 79,980 87,708 105,579 147,412 420,679
Net Income 9,514 13,960 17,294 32,866 73,634
Net Income Per Share(a) 0.17 0.25 0.31 0.59 1.33
Net Income Per Share(b) 0.14 0.20 0.25 0.47 1.07
1994:
Net Sales $221,799 $255,564 $272,567 $383,065 $1,132,995
Gross Profit 62,489 73,006 79,705 110,798 325,998
Net Income 5,922 9,619 10,974 22,042 48,557
Net Income Per Share(a) 0.11 0.18 0.20 0.41 0.90
Net Income Per Share(b) 0.09 0.14 0.16 0.33 0.72
</TABLE>
(a)Based on common and common equivalent shares before adjustment
for March 6, 1995, five-for-four common stock split.
(b)Based on common and common equivalent shares as adjusted to give
retroactive effect to the March 6, 1995, five-for-four common stock
split.
Cost of goods sold was determined in the first, second and third
quarters utilizing estimates of inventory shrinkage, inflation and
markdowns. Cost of goods sold for the fourth quarter includes an
adjustment of these estimates based upon actual results. Such
adjustments decreased fourth quarter cost of goods sold by $1.4
million in 1995 and $0.8 million in 1994. In addition, selling,
general and administrative expenses in the fourth quarter of 1994
were increased by $1.5 million referable to incentive bonuses and
contingent rentals which were estimated during the first three
quarters.
11. Subsequent Event
The Company's Board of Directors authorized on February 6, 1995, a
five-for-four common stock split for shareholders of record on
February 23, 1995, which was paid March 6, 1995.
<PAGE>25
REPORT OF INDEPENDENT ACCOUNTANTS
Dollar General Corporation
Scottsville, Kentucky
We have audited, in accordance with generally accepted auditing
standards, the consolidated balance sheet of Dollar General
Corporation and Subsidiaries as of January 31, 1995, and the
related consolidated statements of income, shareholders' equity and
cash flows for the year then ended, and have issued our report
thereon dated March 6, 1995.
In connection with our audit, nothing came to our attention that
caused us to believe that the Company was not in compliance with
any of the terms, covenants, provisions, or conditions of
paragraphs 8(b), 8(c), 9(e), or 9(j) of the Guaranty Agreement
dated December 1, 1985 with Wachovia Bank and Trust Company, N.A.
insofar as they relate to accounting or auditing matters. However,
it should be noted that our audit was not directed primarily toward
obtaining knowledge of such noncompliance.
This report is intended solely for the information and use of the
Board of Directors and management of Dollar General Corporation and
Wachovia Bank and Trust Company, N.A. and should not be used for
any other purpose.
COOPERS & LYBRAND, L.L.P.
Louisville, Kentucky
March 6, 1995
<PAGE>26
Item 9. Changes in and Disagreements with Accountants on Accounting
and Financial Disclosure
Inapplicable.
PART III
Item 10. Directors and Executive Officers of the Registrant
Information regarding directors is incorporated herein by reference
from the information contained on pages 3 through 7 and page 29,
under the caption, "Compliance with Section 16(a) of the Securities
Exchange Act of 1934," of the Company's Proxy Statement relating to
the Annual Meeting of Stockholders to be held on June 5, 1995.
Information regarding the Company's executive officers is contained
herein at Part I, pursuant to General Instruction G(3).
Item 11. Executive Compensation
Information regarding executive compensation is incorporated herein
by reference from the information under the captions "Executive
Compensation" and "Election of Directors - Compensation of
Directors" in the Company's Proxy Statement relating to the Annual
Meeting of Stockholders to be held on June 5, 1995.
Item 12. Security Ownership of Certain Beneficial Owners and
Management
This information is incorporated herein by reference from the
information under the captions "Security Ownership of Certain
Beneficial Owners" and "Security Ownership by Officers and
Directors" in the Company's Proxy Statement relating to the Annual
Meeting of Stockholders to be held on June 5, 1995.
Item 13. Certain Relationships and Related Transactions
This information is incorporated herein by reference from the
information under the caption "Transactions with Management and
Others" of the Company's Proxy Statement relating to the Annual
Meeting of Stockholders to be held on June 5, 1995.
<PAGE>27
PART IV
Item 14. Exhibits, Financial Statement Schedules and Reports on
Form 8-K
(a) (1)Consolidated Financial Statements:
The following Financial Statements are incorporated herein
by reference from Part II, Item 8 of this report:
Consolidated Balance Sheets, January 31, 1995 and 1994
Consolidated Statements of Income for the years ended
January 31, 1995, 1994 and 1993
Consolidated Statements of Cash Flows for the years ended
January 31, 1995, 1994 and 1993
Consolidated Statements of Shareholders' Equity for the
years ended January 31, 1995, 1994 and 1993
Notes to Consolidated Financial Statements
Report of Independent Accountants
All schedules for which provision is made in the applicable
accounting regulations of the Securities and Exchange Commission
are not required under the related instructions, are inapplicable
or the information is included in the Consolidated Financial
Statements, and therefore, have been omitted.
(3) Exhibits:
3 (a) Restated Articles of Incorporation, as amended
(incorporated by reference to the Registrant's
Annual Report on Form 10-K for the fiscal year ended
January 31, 1993)
3 (b) Bylaws as amended February 1, 1993 (incorporated by
reference to the Annual Report on Form 10-K for the
fiscal year ended January 31, 1993)
4 Articles V, VII and X of the Registrant's Articles
of Incorporation (included in Exhibit 3 (a))
10 (a) Loan Agreement dated August 19, 1992, as amended,
by and among Dollar General Corporation, Dolgencorp,
Inc. and NationsBank of North Carolina, N.A.
(incorporated herein by reference to the Annual
Report on Form 10-K for the fiscal year ended
January 31, 1993
10 (b) Amendments to Loan Agreement dated December 23, 1993
and October 31, 1994
<PAGE>28
10 (c) Exchange Agreement dated August 22, 1994, by and
among Dollar General Corporation, Dolgencorp, Inc.
and stockholders of C.T.S., Inc. (incorporated by
reference to the Registrant's Current Report on Form
8-K dated August 22, 1994, Exhibit 10.1)
10 (d) Registration Rights Agreement dated August 22, 1994
by and among Dollar General Corporation, Turner
Children Trust dated January 21, 1980, Cal Turner,
Jr., James Stephen Turner, Laura Jo Douglas and
Elizabeth Turner Campbell (incorporated by reference
to the Registrant's current Report on Form 8-K dated
August 22, 1994, Exhibit 10.2)
MANAGEMENT CONTRACT OR COMPENSATORY PLANS
10 (e) Dollar General Corporation 1988 Outside Directors'
Stock Option Plan, as amended, (incorporated herein
by reference to the Registrant's definitive Proxy
Statement for the Annual Meeting of Stockholders
held June 13, 1989)
10 (f) Dollar General Corporation 1989 Employee Stock
Incentive Plan, as amended (incorporated herein by
reference to the Registrant's definitive Proxy
Statement for the Annual Meeting of Stockholders
held June 13, 1989)
10 (g) 1993 Employee Stock Incentive Plan (incorporated
herein by reference to the Registrant's definitive
Proxy Statement for the Annual Meeting of
Stockholders held June 7, 1993)
10 (h) 1993 Outside Directors' Stock Option Plan
(incorporated herein by reference to the
Registrant's definitive Proxy Statement for the
Annual Meeting of Stockholders held June 7, 1993)
10 (i) 1995 Employee Stock Incentive Plan (incorporated
herein by reference to the Registrant's definitive
Proxy Statement for the Annual Meeting of
Stockholders to be held June 5, 1995)
10 (j) 1995 Outside Directors'Stock Option Plan
(incorporated herein by reference to the
Registrant's definitive Proxy Statement
for the Annual Meeting of Stockholders to be held
June 5, 1995)
11 Statement re: Computation of Earnings Per Share
13 Annual Report to Stockholders
22 Subsidiaries of the Registrant
23 Consent of Independent Accountants
(b) No report on Form 8-K was filed by the Company during the last
quarter of fiscal 1995.
<PAGE>29<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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
Date: April 28, 1995 By: /s/Cal Turner, Jr
Cal Turner, Jr.,President
Pursuant to the requirements of the Securities Exchange Act of
1934, this report has been signed below by the following persons on
behalf of the registrant and in the capacities and on the dates
indicated.
Name
Title
Date
/s/Cal Turner, Jr.
CAL TURNER, JR.
Chairman of the Board,
President and Chief
Executive Officer (Principal
Executive Officer)
April 28,
1995
/s/C. Kent Garner
C. KENT GARNER
Vice President and Chief
Financial Officer (Principal
Financial and Accounting
Officer)
April 28,
1995
/s/Cal Turner
CAL TURNER
Director
April 28,
1995
/s/Wallace N. Rasmussen
WALLACE N. RASMUSSEN
Director
April 28,
1995
/s/John B. Holland
JOHN B. HOLLAND
Director
April 28,
1995
/s/James D. Cockman
JAMES D. COCKMAN
Director
April 28,
1995
/s/William S. Wire, II
WILLIAM S. WIRE, II
Director
April 28,
1995
/s/James L. Clayton
JAMES L. CLAYTON
Director
April 28,
1995
/S/Reginald D. Dickson
REGINALD D. DICKSON
Director
April 28,
1995
/s/David M. Wilds
DAVID M. WILDS
Director
April 28,
1995
<PAGE>
INDEX TO EXHIBITS
3 (a) Restated Articles of Incorporation, as amended
(incorporated by reference to the Registrant's
Annual Report on Form 10-K for the fiscal year ended
January 31, 1993)
3 (b) Bylaws as amended February 1, 1993 (incorporated by
reference to the Annual Report on Form 10-K for the
fiscal year ended January 31, 1993)
4 Articles V, VII and X of the Registrant's Articles
of Incorporation (included in Exhibit 3 (a))
10 (a) Loan Agreement dated August 19, 1992, as amended,
by and among Dollar General Corporation, Dolgencorp,
Inc. and NationsBank of North Carolina, N.A.
(incorporated herein by reference to the Annual
Report on Form 10-K for the fiscal year ended
January 31, 1993
10 (b) Amendments to Loan Agreement dated December 23, 1993
and October 31, 1994
10 (c) Exchange Agreement dated August 22, 1994, by and
among Dollar General Corporation, Dolgencorp, Inc.
and stockholders of C.T.S., Inc. (incorporated by
reference to the Registrant's Current Report on Form
8-K dated August 22, 1994, Exhibit 10.1)
10 (d) Registration Rights Agreement dated August 22, 1994
by and among Dollar General Corporation, Turner
Children Trust dated January 21, 1980, Cal Turner,
Jr., James Stephen Turner, Laura Jo Douglas and
Elizabeth Turner Campbell (incorporated by reference
to the Registrant's current Report on Form 8-K dated
August 22, 1994, Exhibit 10.2)
MANAGEMENT CONTRACT OR COMPENSATORY PLANS
10 (e) Dollar General Corporation 1988 Outside Directors'
Stock Option Plan, as amended, (incorporated herein
by reference to the Registrant's definitive Proxy
Statement for the Annual Meeting of Stockholders
held June 13, 1989)
10 (f) Dollar General Corporation 1989 Employee Stock
Incentive Plan, as amended (incorporated herein by
reference to the Registrant's definitive Proxy
Statement for the Annual Meeting of Stockholders
held June 13, 1989)
10 (g) 1993 Employee Stock Incentive Plan (incorporated
herein by reference to the Registrant's definitive
Proxy Statement for the Annual Meeting of
Stockholders held June 7, 1993)
10 (h) 1993 Outside Directors' Stock Option Plan
(incorporated herein by reference to the
Registrant's definitive Proxy Statement for the
Annual Meeting of Stockholders held June 7, 1993)
10 (i) 1995 Employee Stock Incentive Plan (incorporated
herein by reference to the Registrant's definitive
Proxy Statement for the Annual Meeting of
Stockholders to be held June 5, 1995)
10 (j) 1995 Outside Directors'Stock Option Plan
(incorporated herein by reference to the
Registrant's definitive Proxy Statement
for the Annual Meeting of Stockholders to be held
June 5, 1995)
11 Statement re: Computation of Earnings Per Share
13 Annual Report to Stockholders
22 Subsidiaries of the Registrant
23 Consent of Independent Accountants
<PAGE>
Exhibit 10(b)
AMENDMENT NO.1 TO LOAN AGREEMENT
THIS AMENDMENT AGREEMENT (this "Amendment"), dated as of
December 23, 1993 among DOLLAR GENERAL CORPORATION, a Kentucky
corporation, DOLGENCORP, INC., a Kentucky corporation (the
"Borrowers"), the various banks and lending institutions parties
hereto (each a "Bank" and collectively, the "Banks"), and
NATIONSBANK OF NORTH CAROLINA , N.A., a national banking
association, as agent for the Banks (in such capacity, the
"Agent");
W I T N E S S E T H:
WHEREAS, pursuant to that certain Loan Agreement, dated as
of August 19, 1992 (the "Existing Loan Agreement"), among the
parties hereto, the Banks have agreed to make loans to the
Borrowers; and
WHEREAS, the Borrowers, the Banks and the Agent desire to
make certain amendments to the Existing Loan Agreement;
NOW, THEREFORE, in consideration of the agreements herein
contained, the parties hereby agree as follows:
PART I
DEFINITIONS
SUBPART 1.1. Certain Definitions. Unless otherwise defined
herein or the context otherwise requires, terms used in this
Amendment, including its preamble and recitals, have the
following meanings (such meanings to be equally applicable to the
singular and plural forms thereof):
"Amended Loan Agreement" means the Existing Loan Agreement
as amended hereby.
"Amendment No. 1 Effective Date" is defined in Subpart 3.1.
SUBPART 1.2. Other Definitions. Unless otherwise defined
herein or the context requires, terms used in this Amendment,
including its preamble and recitals, have the meanings provided
in the Amended Loan Agreement.
PART II
AMENDMENTS TO EXISTING LOAN AGREEMENT
Effective on (and subject to the occurance of) the Amendment
No. 1 Effective Date, the Existing Loan Agreement is hereby
amended in accordance with this Part II. Except as so amended,
the Existing Loan Agreement, the Notes and the other Loan
Documents shall continue in full force and effect.
SUBPART 2.1 Amendments to the Introduction. The first
paragraph of the Existing Loan Agreement is amended to read in
its entirety as follows:
THIS AGREEMENT, dated as of August 19, 1992 and amended as
of December 23, 1993, by and among DOLLAR GENERAL
CORPORATION, a Kentucky corporation, DOLGENCORP, INC., a
Kentucky corporation (the "Borrowers"), the various banks
and lending institutions on the signature pages hereto (each
a "Bank" and collectively the "Banks") and NATIONSBANK OF
NORTH CAROLINA, N.A., a national banking association, as
Agent for the Banks hereunder (hereinafter in such capacity
referred to as the "Agent").
SUBPART 2.2 Amendments to Article I. Article I of the
Existing Loan Agreement is hereby amended by inserting, in the
alphabetically appropriate place, the following definition:
"Amendment No. 1" means Amendment No. 1 to Loan Agreement,
dated as of December 23, 1993, among the Borrowers, the
Agent and the Banks, amending this Loan Agreement as then in
effect.
"Funded Debt" means all Indebtedness of the Borrowers and
their Subsidiaries.
"Total Capital" means all Indebtedness of the Borrowers and
their Subsidiaries plus consolidated net shareholders'
equity of the Borrowers and their Subsidiaries, determined
in accordance with Generally Accepted Accounting Principles
applied on a Consistent Basis.
Article I of the Existing Loan Agreement is further amended
by deleting the reference to "letters of credit issued or" in
subparagraph (d) of the definition of "Indebtedness".
Article I of the Existing Loan Agreement is further amended
by amending the definition of "Termination Date" in its entirety
so that such definition now reads as follows:
"Termination Date" means September 30, 1995; provided,
however, such a date may be extended for periods of one (1)
year as may be requested of the Banks by written notice from
the Borrowers to the Agent and Agreed to in writing by the
Agent (with the approval of all of the Banks in their sole
discretion). such request by the Borrower shall be made in
writing at least thirteen (13) months prior to the next
scheduled Termination Date. Upon receipt of such request,
the Banks agree to approve or disapprove such request at
least twelve (12) months prior to the next scheduled
Termination Date.
Article I of the Existing Loan Agreement is further amended
by amending the definition of "Leverage Ratio" in its entirety so
that such definition now reads as follows:
"Leverage Ratio" means the ratio of (I) Funded Debt to (ii)
Total Capital.
SUBPART 2.3 Amendments to Section 2.01. Section 2.01 is
amended by replacing the reference to "five (5) Loans" in line 21
thereof with a reference to "Eight (8) Loans (other than Bid Rate
Loans)".
SUBPART 2.4 Amendments to Section 2.02(a). Section 2.02 (a)
is amended by replacing the reference to "11:30 am" in line 5
thereof with a reference to "12:00 noon".
SUBPART 2.5 Amendments to Section 2.02(b). Section 2.02(b)
is amended by replacing each reference to "$2,000,000.00" therein
to "$1,000,000.00".
SUBPART 2.6 Amendments to Section 2.07(a). Section 2.07(a)
is amended by replacing the reference to "11:30 a.m." in line 2
thereof with a reference to "12:00 noon" and by replacing the
reference to "two" in line 21 thereof with a reference to "four".
SUBPART 2.7 Amendments to Section 2.07(b). Section 2.07(b)
is amended by replacing the reference to "10:00 a.m." in line 5
thereof with a reference to "10:30 a.m.".
SUBPART 2.8 Amendments to Section 2,07(c). Section 2.07 is
amended in its entirety so that such section now reads as
follows:
(c)Acceptance of Bid Rate Offers. The Agent shall promptly
notify the Borrowers of all Bid Rate Offers received within
the required time and the contents thereof. The Borrowers
may then, but shall not be obligated to, accept one or more
of the Bid Rate Offers in whole or in part by written notice
or telephonic notice (confirmed immediately thereafter in
writing) thereof to the Agent by 12:00 noon (Charlotte,
North Carolina time) on the Business Day of the requested
Bid Rate Loan; provided, that is the Borrowers elect to
accept one or more Bid Rate Offers, such acceptance shall be
made on the basis of ascending Offered Rates. In the event
two or more Bid Rate Offers offer the same interest rate,
the Banks making such Bid Rate Offers shall share equally in
the Bid Rate Loan advance. Acceptance of any Bid Rate
Offers shall be a minimum aggregate principal amount of
$1,000,000 and shall be irrevocable. Failure by the
Borrowers to accept any such Bid Rate Offers on a timely
basis shall be deemed to be a rejection of such Bid Rate
Offers. The Agent shall then promptly notify all of the
Banks (including particularly the Banks which had had all or
a portion of their Bid Rate Offer accepted) of the
Borrowers' acceptance or rejection of Bid Rate Offers, and
the terms of any Bid Rate Loans to be made.
SUBPART 2.9 Amendments to Section 5.17. Section 5.17 is
amended by deleting the words "working capital needs" in the
first sentence of such Section and replacing it with the words
"general corporate purposes".
SUBPART 2.10 Amendments to Section 6.13. Section 6.13 is
amended in its entirety so that such Section now reads as
follows:
6.13 Current Ratio. The Borrowers will maintain a ratio of
Current Assets to Current Liabilities of at least 2.0 to 1.0
as of the last day of each fiscal quarter commencing with
the fiscal quarter ending October 31, 1993.
SUBPART 2.11 Amendments to Section 6.14. Section 6.14 is
amended in its entirety so that such Section now reads as
follows:
6.14 Leverage Ratio. The Borrowers shall maintain a
Leverage Ratio of no greater than .36 to 1.0 as the last day
of each fiscal quarter commencing with the fiscal quarter
ending October 31, 1993.
SUBPART 2.12 Amendments to Section 7.01(e). Section 7.01(e)
is amended by deleting the word "uncommitted" in line 2 thereof.
SUBPART 2.13 Amendments to Section 7.14. Section 7.14 is
amended in its entirety so that such Section now reads as
follows:
7.14 Capital Expenditures. The Borrowers and their
Subsidiaries shall not make Capital Expenditures in excess
of $30,000,000.00 during the fiscal year ending January 31,
1994 or any fiscal year thereafter. If Capital Expenditures
in any such fiscal year are less than $30,000,000.00, then
an amount equal to the lesser of (I) $30,000,000.00 less the
actual Capital Expenditures or (ii) $5,000,000.00 may be
carried forward and used in the next fiscal year only.
SUBPART 2.14 Additional Amendments to Article VII. Article
VII is further amended by adding the following sentence at the
end of such Article:
Notwithstanding anything to the contrary contained in
this Article VII, the Borrowers shall be permitted to
repurchase their capital stock.
PART III
CONDITIONS TO EFFECTIVENESS
SUBPART 3.1. Amendment No. 1 Effective Date. This
Amendment shall be and become effective on such date (the
"Amendment No. 1 Effective Date") on or prior to December 23,
1993, when all of the conditions set forth in this Subpart 3.1
shall have been satisfied, and thereafter, this Amendment shall
be known, and may be referred to , as 'Amendment No. 1."
SUBPART 3.1.1. Execution of Counterparts. The Agent shall
have received counterparts of this Amendment, each of which shall
have been duly executed on behalf of the Borrowers, the Agent and
each Bank.
SUBPART 3.1.2. Legal Details, Etc. All documents executed
or submitted pursuant hereto shall be satisfactory in form and
substance to the Agent and its counsel. The Agent and its
counsel shall have received all information, and such counterpart
originals or such certified or other copies of such originals, as
the Agent or its counsel may reasonably request, and all legal
matters incident to the transactions contemplated by this
Amendment shall be satisfactory to the Agent and its counsel.
PART IV
MISCELLANEOUS
SUBPART 4.1 Cross-References. References in this Amendment
to any Part or Subpart are, unless otherwise specified, to such
Part or Subpart of this Amendment.
SUBPART 4.2 Instrument Pursuant to Existing Loan Agreement.
This Amendment is a document executed pursuant to the Existing
Loan Agreement and shall (unless otherwise expressly indicated
therein) be construed, administered and applied in accordance
with the terms and provisions of the Existing Loan Agreement.
SUBPART 4.3 Notes and Loan Documents. The Borrowers hereby
confirm and agree that the Notes and the other Loan Documents
are, and shall continue to be, in full force and effect, and
hereby ratify and confirm in all respects their obligations
thereunder, except that, upon the effectiveness of, and on and
after the date of , this Amendment, all references in each Note
and each Loan Document to the "Loan Agreement", "thereunder",
"thereof" or words of like import referring to the Existing Loan
Agreement shall mean the Amended Loan Agreement.
SUBPART 4.4 Counterparts, Effectiveness, Etc. This Amendment may
be executed by the parties hereto in several counterparts, each
of which shall be deemed to be an original and all of which shall
constitute together but one and the same agreement.
SUBPART 4.5 Governing Law; Entire Agreement THIS AMENDMENT SHALL
BE DEEMED TO BE A CONTRACT MADE UNDER AND GOVERNED BY THE
INTERNAL LAWS OF THE STATE OF NORTH CAROLINA WITHOUT GIVING
EFFECT TO THE CONFLICT OF LAW PRINCIPLES THEREOF.
SUBPART 4.6 Successors and Assigns This Amendment shall be
binding upon and inure to the benefit of the parties hereto and
their respective successors and assigns.
SUBPART 4.7 Representations and Warranties The Borrowers
represent and warrant to the Agent and the Banks that (I) the
representations and warranties made in Article V of the Existing
Loan Agreement are true and correct on and as of the Amendment
No. 1 Effective Date as though made on such date, (ii) no Default
or Event of Default has occurred and remains uncured as of the
Amendment No. 1 Effective Date, (iii) the Borrowers are in full
compliance with the terms and provisions of the Amended Loan
Agreement, and (iv) all financial reports and information
submitted to the Agent or the Banks since the date of the
Existing Loan Agreement accurately state and reflect the
financial condition of the Borrowers.<PAGE>
IN WITNESS WHEREOF, the
parties hereto have caused this Amendment to be executed by
their respective duly authorized officers as of
the day and year first above written.
DOLLAR GENERAL CORPORATION
ATTEST:
By:/s/:Bob Carpenter By:/s/:Kent Garner________
V.P., Corporate Secretary Title: Vice President, Chief
(Corporate Seal) Financial Officer & Treasurer
DOLGENCORP, INC.
ATTEST:
By:/s/:Bob Carpenter By:/s/:Kent Garner
V.P., Corporate Secretary Title: Vice President, Chief
(Corporate Seal) (Financial Officer
NATIONSBANK OF NORTH CAROLINA,
N.A.,Individually and as Agent
By__________________________
Title:Vice President
BARNETT BANK OF BROWARD
COUNTY, N.A.
By_________________
Title: Sr. Vice President
FIRST AMERICAN NATIONAL BANK
By: /s/:Karla L. Allan
Title: Vice President
THIRD NATIONAL BANK IN
NASHVILLE
By: Robert W. Meyer____
Title: First Vice President
WACHOVIA BANK OF GEORGIA, N.A.
By:
Title: Vice President
AMENDMENT NO. 3 TO LOAN AGREEMENT
THIS AMENDMENT AGREEMENT (this Amendment ), dated as of
October 31, 1994 among DOLLAR GENERAL CORPORATION, a Kentucky
corporation, DOLGENCORP, INC., a Kentucky corporation (the
Borrowers ), the various banks and lending institutions parties
hereto (each a Bank and collectively, the Banks ), and
NATIONSBANK OF NORTH CAROLINA, N.A., a national banking
association, as agent for the Banks (in such capacity, the
Agent );
W I T N E S S E T H:
WHEREAS, pursuant to that certain Loan Agreement, dated as of
August 19, 1992, as amended as of December 23, 1993 and January 31,
1994 (the Existing Loan Agreement ), among the parties hereto, the
Banks have agreed to make loans to the Borrowers; and
WHEREAS, the Borrowers, the Banks and the Agent desire to make
certain amendments to the Existing Loan Agreement;
NOW THEREFORE, in consideration of the agreements herein
contained, the parties hereby agree as follows;
PART I
DEFINITIONS
SUBPART 1.1. Certain Definitions. Unless otherwise defined
herein or the context otherwise requires, terms used in this
Amendment, including its preamble and recitals, have the following
meanings (such meanings to be equally applicable to the singular
and plural forms thereof):
Amended Loan Agreement means the Existing Loan Agreement as
amended hereby.
Amendment No. 3 Effective Date is defined in Subpart 4.1.
SUBPART 1.2. Other Definitions. Unless otherwise defined
herein or the context otherwise requires, terms used in this
Amendment, including its preamble and recitals, have the meanings
provided in the Amended Loan Agreement.
PART II
AMENDMENTS TO EXISTING LOAN AGREEMENT
Effective on (and subject to the occurance of)the Amendment
No. 3 Effective Date, the Existing Loan Agreement is hereby amended
in accordance with this Part II. Except as so amended, the
Existing Loan Agreement, the Notes and the other Loan Documents
shall continue in full force and effect.
SUBPART 2.1 Amendments to the Introduction. The first
paragraph of Existing Loan Agreement is amended to read in its
entirety as follows:
THIS AGREEMENT, dated as of August 19, 1992 and amended as of
December 23, 1993 and as of January 31, 1994 and October 31, 1994,
by and among DOLLAR GENERAL CORPORATION, a Kentucky corporation,
DOLGENCORP, INC., a Kentucky corporation (the Borrowers ), the
various banks and lending institutions on the signature pages
hereto (each a Bank and collectively, the Banks ) and NATIONSBANK
OF NORTH CAROLINA, N.A., a national banking association, as Agent
for the Banks hereunder (hereinafter in such capacity referred to
as the Agent ).
SUBPART 2.2 Amendments to Article I. Article I of the
Existing Loan Agreement is hereby amended by inserting, in the
alphabetically appropriate place, the following definition:
Amendment No. 3" means Amendment No. 3 to Loan
Agreement, dated as of October 31, 1994, among the Borrowers,
the Agent and the Banks, amending this Loan Agreement as then in
effect.
SUBPART 2.3 Amendments to Section 7.14. Section 7.14 is amended in
its entirety so that such Section now reads as follows:
7.14 Capital Expenditures. The Borrowers and their
Subsidiaries shall not make Capital Expenditures in
excess of $45,000,000.00 during the fiscal year ending
January 31, 1995 or any fiscal year thereafter. If
Capital Expenditures in any such fiscal year are less
than $45,000,000.00, then an amount equal to the lesser
of (I) $45,000,000.00 less the actual Capital
Expenditures or (ii) $5,000,000.00 may be carried
forward and used in the next fiscal year only. Capital
Expenditures made prior to January 31, 1996 in connection
with the distribution center in Ardmore, Oklahoma shall
be excluded from the foregoing computations.
PART III
CONDITIONS TO EFFECTIVENESS
SUBPART 3.1. Amendment No. 3 Effective Date. This Amendment
shall be and become effective on such date (the "Amendment No. 3
Effective Date") when all of the conditions set forth in this
Subpart 3.1 shall have been satisfied, and thereafter, this
Amendment shall be known, and may be referred to, as "Amendment
No. 3".
SUBPART 3.1.1. Execution of Counterparts. The Agent shall
have received counterparts of this Amendment, each of which shall
have been duly executed on behalf of the Borrowers, the Agent and
each Bank.
SUBPART 3.1.2. Legal Details, Etc. All documents executed or
submitted pursuant hereto shall be satisfactory in form and
substance to the Agent and its counsel. The Agent and its counsel
shall have received all information, and such counterpart originals
or such certified or other copies of such originals, as the Agent
or its counsel may reasonably request, and all legal matters
incident to the transactions contemplated by this Amendment shall
be satisfactory to the Agent and its counsel.
PART IV
MISCELLANEOUS
SUBPART 4.1 Cross-References. References in this Amendment to
any Part or Subpart are, unless otherwise specified, to such Part
or Subpart of this Amendment.
SUBPART 4.2 Instrument Pursuant to Existing Loan Agreement.
This Amendment is a document executed pursuant to eh Existing Loan
Agreement and shall (unless otherwise expressly indicated therein)
be construed, administered and applied in accordance with the
terms and provisions of the Existing Loan Agreement.
SUBPART 4.3 Noted and Loan Documents The Borrowers hereby
confirm and agree that the Notes and other Loan Documents are, and
shall continue to be, in full force and effect, and hereby ratify
and confirm in all respects their obligations thereby, except that,
upon the effectiveness or, and on and after the date of, this
Amendment, all references in each Note and each Loan Document to
the "Loan Agreement", "thereunder", "thereof" or words of like
import referring to the Existing Loan Agreement shall mean the
Amended Loan Agreement.
SUBPART 4.4 Counterparts, Effectiveness, Etc. This Amendment
may be executed by the parties hereto in several counterparts, each
of which shall be deemed to be an original and all of which shall
constitute together but one and the same agreement.
SUBPART 4.5 Governing Law; Entire Agreement. THIS AMENDMENT
SHALL BE DEEMED TO BE A CONTRACT MADE UNDER GOVERNED BY THE
INTERNAL LAWS OF THE STATE OF NORTH CAROLINA WITHOUT GIVING EFFECT
TO THE CONFLICT OF LAW PRINCIPLES THEREOF.
SUBPART 4.6 Successors and Assigns. This Amendment is binding
upon and inure to the benefit of the parties hereto and their
respective successors and assigns.
SUBPART 4.7 Representations and Warranties. The Borrowers
represent and warrant the Agent and the Banks that (I) the
representations and warranties made in Article V of the Existing
Loan Agreement are true and correct on and as of the Amendment No.
3 Effective Date as though made on such date, (ii) not Default or
Event of Default has occurred and remains uncured as of the
Amendment No. 3 Effective Date, (iii) the Borrowers are in full
compliance with the terms and provisions of the Amended Loan
Agreement, and (iv) all financial reports and information submitted
to the Agent or the Banks since the date of the Existing Loan
Agreement accurately state and reflect the financial condition of
the Borrowers.<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this
Amendment to be executed by their respective duly authorized
officers as of the day and year first above written.
DOLLAR GENERAL CORPORATION
ATTEST: By:/s/: C. Kent Garner
By:/s/:Bob Carpenter Title: V.P.-Finance and
Title:V.P., Corporate Treasurer
Secretary
(Corporate Seal)
DOLGENCORP, INC.
ATTEST: By:/s/:C. Kent Garner
By:/s/:Bob Carpenter Title: V.P.-Finance and
Title: V.P., Corporate Treasurer
Secretary
(Corporate Seal)
NATIONSBANK OF NORTH CAROLINA, N.A.
Individually and as Agent
By ________________________________
Title______________________________
BARNETT BANK OF BROWARD COUNTY, N.A.
By ________________________________
Title______________________________
FIRST AMERICAN NATIONAL BANK
By ________________________________
Title______________________________
THIRD NATIONAL BANK IN NASHVILLE
By ________________________________
Title______________________________
WACHOVIA BANK OF GEORGIA, N.A.
By ________________________________
Title______________________________
<TABLE>
<CAPTION>
Years ended January 31
1995 1994 1993
<S> <C> <C> <C>
Actual weighted average number of
shares outstanding during the period 63,094 64,670 62,999
Common Stock Equivalents:
Dilutive effect of stock options
using the "Treasury Stock Method" 2,094 2,611 3,309
1,715,742 shares Convertible
Preerred Stock Issued August 22,
1994 3,831 0 0
Weighted Average Shares 69,009 67,281 66,306
</TABLE>
Exhibit 21
DOLLAR GENERAL CORPORATION
List of Subsidiaries
Name of Subsidiary
State of Organization
Dolgencorp, Inc.
Kentucky
Dolgencorp, Inc. of Texas
Kentucky
Dade Lease Management, Inc.
Delaware
Dollar General Indiana Partners
Kentucky
Exhibit 23
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference in the registration
statements of Dollar General Corporation on Form S-8 (Nos. 33-
23796, 33-31827, 33-51589 and 33-51591) of our report dated March
8, 1994, on our audits of the consolidated financial statements and
financial statement schedules of Dollar General Corporation as of
January 31, 1995 and 1994 and for the years ended January 31, 1995,
1994 and 1993, which report is included in this Annual Report on
Form 10K.
COOPERS & LYBRAND
Louisville, Kentucky
April 27, 1995
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
The accompanying notes are an integral part of this schedule.
</LEGEND>
<CIK> 0000029534
<NAME> DOLLAR GENERAL
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> JAN-31-1995
<PERIOD-END> JAN-31-1995
<CASH> 33045
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 356,111
<CURRENT-ASSETS> 410,153
<PP&E> 187,360
<DEPRECIATION> 62,108
<TOTAL-ASSETS> 540,868
<CURRENT-LIABILITIES> 208,963
<BONDS> 0
<COMMON> 33,971
0
858
<OTHER-SE> 288,927
<TOTAL-LIABILITY-AND-EQUITY> 540,868
<SALES> 1,448,609
<TOTAL-REVENUES> 1,448,609
<CGS> 1,027,930
<TOTAL-COSTS> 1,027,930
<OTHER-EXPENSES> 299,592
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 2,799
<INCOME-PRETAX> 118,288
<INCOME-TAX> 44,654
<INCOME-CONTINUING> 73,634
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 73634
<EPS-PRIMARY> 1.07
<EPS-DILUTED> 1.07
</TABLE>
