EXHIBIT 1.1
GOODLETTSVILLE, Tennessee - November 6, 2000 - Dollar General Corporation (NYSE:
DG) today reported earnings per diluted share of $0.15 for the third quarter
ended October 27, 2000, essentially unchanged from the same period a year ago.
Net income for the quarter was $51.0 million, compared to $50.9 million last
year. Total sales in the period increased 15.1% to $1,094.4 million from $950.4
million last year. Same-store sales for the 13-week period increased 0.8%.
"Earlier this year, we completed a significant reset of all stores, and our
interviews with customers reflect a strong sense of approval and delight in the
changes we have made. In the third quarter, the success of our new layout was
masked by out-of-stocks at the store level, and we are working quickly to
correct this issue as we head into the busy holiday season," said Cal Turner,
Jr., Chairman and CEO. "We are excited about our expanded assortment of seasonal
merchandise this year. Key categories are already performing well, and with
improvements in our store in-stocks on core merchandise, we will be well
positioned for the fourth quarter."
For the quarter, gross margin equaled $321.4 million compared with $277.9 in
1999. Gross margin as a percentage of sales increased 13 basis points in the
third quarter, to 29.37% compared with 29.24% last year, benefiting from higher
purchase markup. As a percentage of sales, lower shrink and transportation
expense offset higher distribution center expense and higher markdowns in the
period. For the year-to-date, transportation expense is slightly lower as a
percentage of sales, despite higher fuel costs. This improvement is a result of
better fleet utilization, continued benefits from our transportation management
system and lower average stem miles.
Operating expenses for the quarter equaled $236.5 million, compared with $195.8
million, in the same period a year ago. Although expenses were below plan,
lower-than-expected sales prevented the Company from achieving operating expense
leverage. As a percentage of sales, total operating expense increased to 21.61%
from 20.60% last year, primarily as a result of higher health insurance, rent
and payroll expense.
Year-to-date, capital expenditures equaled $209.4 million, compared with $112.4
million in the same period last year. Capital expenditures for the year-to-date
included investments in new, remodeled and relocated stores and various
distribution center projects. The Company opened 184 new stores, remodeled or
relocated 53 stores, and closed 14 stores during the quarter. At quarter end,
the Company operated 4,889 stores.
Despite operating 724 additional stores, total LIFO inventories increased only
6.1% to $1,173.3 million compared with $1,105.5 million last year. While average
LIFO inventory per store increased 3.7% to $193,000 compared with $186,000 last
year, average LIFO DC inventory per store decreased 41% to $47,000 compared with
$80,000 last year. For the quarter, interest expense increased to $4.9 million
compared with $2.3 million last year.
Outlook:
---------
The following comments contain references to years 2001, 2000 and 1999, which
represent fiscal years ending February 1, 2002, February 2, 2001, and January
28, 2000, respectively.
<PAGE>
Because the Company has adopted the Retail Federation Reporting Calendar, the
Company's fiscal year ending February 2, 2001, will include 53 weeks of sales
and expenses compared with a 52-week period in 1999. To avoid confusion as to
comparable periods, the following earnings guidance reflects only the comparable
52-week period.
For the 52-week period, total company revenues and same-store sales are expected
to increase 15-16% and 1-2%, respectively as compared with the same period in
1999. Gross profit as a percentage of net sales is expected to increase
0.20%-0.25% compared with gross profit in 1999, as a result of lower
transportation expense, as a percentage of sales and better purchase markup.
Based on current sales expectations, management anticipates operating expense,
as a percentage of net sales, will increase 0.90%-1.10% compared to operating
expense as a percentage of net sales in 1999. Interest expense as a percentage
of net sales is expected to increase 0.10%-0.15%, reflecting higher interest
rates than the same period a year ago. The tax rate is expected to be
approximately 36.25%.
Dollar General operates more than 4,889 neighborhood stores in 25 states with
distribution centers in Florida, Georgia, Kentucky, Mississippi, Missouri,
Oklahoma and Virginia.
This press release contains historical and forward-looking information. The
forward-looking statements are made pursuant to the safe harbor provisions of
the Private Securities Litigation Reform Act of 1995. The Company believes the
assumptions underlying these forward-looking statements are reasonable; however,
any of the assumptions could be inaccurate, and therefore, actual results may
differ materially from those projected in the forward-looking statements as a
result of certain risks and uncertainties, including, but not limited to,
general transportation and distribution delays or interruptions, inventory risks
due to shifts in market demand, changes in product mix, interruptions in
suppliers' business, fuel price and interest rate fluctuations, and costs and
delays associated with building, opening and operating new distribution centers
("DCs") and stores. The Company undertakes no obligation to publicly release any
revisions to any forward-looking statements contained herein to reflect events
or circumstances occurring after the date of this report or to reflect the
occurrence of unanticipated events.
<PAGE>
DOLLAR GENERAL CORPORATION
INCOME STATEMENTS
(000's)
(Unaudited)
<TABLE>
<CAPTION>
--- For the Third Quarter Ended --- --- For the Year-to-Date ---
October 27, 2000 October 29, 1999 October 27, 2000 October 29, 1999
---------------- ---------------- ---------------- ----------------
<S> <C> <C> <C> <C>
Sales $ 1,094,360 $ 950,419 $ 3,108,857 $ 2,710,222
Cost of Sales 772,996 672,562 2,232,811 1,956,836
------------------------- ----------------------- ---------------------- -----------------------
Gross Margin 321,364 277,857 876,046 753,386
Operating Expenses 236,524 195,753 654,387 546,211
------------------------- ----------------------- ---------------------- -----------------------
Operating Income 84,840 82,104 221,659 207,175
Interest Expense 4,855 2,326 10,459 5,102
------------------------- ----------------------- ---------------------- -----------------------
Pre-Tax Income 79,985 79,778 211,200 202,073
Taxes 28,995 28,919 76,560 73,251
------------------------- ----------------------- ---------------------- -----------------------
Net Income $ 50,990 $ 50,859 $ 134,640 $ 128,822
========================= ======================= ====================== =======================
Diluted earnings per $0.15 $0.15 $0.40 $0.38
share
Weighted average
diluted shares 333,556 337,989 333,652 337,140
</TABLE>
<PAGE>
DOLLAR GENERAL CORPORATION
BALANCE SHEETS
($000's)
(Unaudited)
<TABLE>
<CAPTION>
October 27 October 29
2000 1999
---- ----
<S> <C> <C>
Current Assets:
Cash and cash equivalents $ 13,080 $ 23,840 (A)
Merchandise inventories 1,173,328 1,105,503
Deferred income taxes 7,743 5,373
Other current assets 62,956 79,012 (A)
------- -------
TOTAL CURRENT ASSETS 1,257,107 1,213,728
Property & equipment, at cost 801,837 560,219
Less: Accumulated depreciation 306,894 235,360
-------- -------
494,943 324,859
Other assets 15,959 10,538
------- ------
TOTAL ASSETS $ 1,768,009 $ 1,549,125
=========== ===========
Current Liabilities
Current portion of long-term debt $ 3,622 $ 1,243
Short-term borrowings 61,369 180,099
Accounts payable 309,508 347,563
Accrued expenses 122,451 115,263
Income taxes 3,946 29,290
------- --------
TOTAL CURRENT LIABILITIES 500,896 673,458
Long-Term obligations 210,907 1,526
Deferred income taxes 50,817 12,079
------- -------
TOTAL LIABILITIES 762,620 687,063
Stockholders' Equity:
Common stock 165,281 132,653
Additional paid-in capital 263,233 250,321
Retained earnings 576,875 479,088
-------- -------
TOTAL STOCKHOLDERS' EQUITY 1,005,389 862,062
---------- -------
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $ 1,768,009 $ 1,549,125
============ ===========
</TABLE>
(A) Items have been reclassified to conform to the 2000 presentation
<PAGE>
DOLLAR GENERAL CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(000's)
(Unaudited)
<TABLE>
<CAPTION>
--- For the Nine Months Ended ---
October 27, 2000 October 29, 1999
---------------- ----------------
<S> <C> <C>
Cash flows provided by (used in) operating activities:
Net income $ 134,640 $ 128,822
Adjustments to reconcile net income to net cash
provided by (used in) operating activities
Depreciation and amortization
58,571 46,759
Deferred income taxes
(2,454) (20,874)
Tax effect of stock options
14,715 27,862
Change in operating assets and liabilities:
Merchandise inventories
(187,613) (293,781)
Other Current Assets
(17,920) (36,634) (A)
Accounts payable
(25,046) 89,804
Accrued expenses
1,076 (57,562)
Income taxes
(11,189) 5,465
Other
(4,824) (30)
------------------------------------------
Net cash provided by (used in) operating
activities (40,044) (110,169)
------------------------------------------
Cash flows provided by (used in) investing activities:
Purchase of property and equipment
(209,414) (112,441)
Proceeds from sale of property and equipment
171 63,182
------------------------------------------
Net cash provided by (used in) investing
activities (209,243) (49,259)
------------------------------------------
Cash flows provided by (used in) financing activities:
Cash flows provided by (used in) financing activities:
Issuance of short-term borrowings
315,000 237,914
Repayments of short-term borrowings (253,631) (57,815)
Issuance of long-term debt 214,947 3,104
Repayments of long-term debt
(2,851) (1,846)
Payment of cash dividend
(31,664) (25,619)
Proceeds from exercise of stock options
27,326 32,235
Repurchase of common stock (65,549) (26,999)
Other 0 0
------------------------------------------
Net cash provided by (used in) financing
activities 203,578 160,974
------------------------------------------
Net increase (decrease) in cash and cash equivalents (45,709) 1,546
Cash and cash equivalents beginning of period 58,789 22,294
------------------------------------------
Cash and cash equivalents end of period $ 13,080 $ 23,840
==========================================
</TABLE>
(A) Items have been reclassified to conform to the 2000 presentation
<PAGE>
DOLLAR GENERAL CORPORATION
KEY OPERATIONAL DATA
(000's)
--- For the Three Months Ended ---
October 27 October 29
2000 1999
---- ----
Sales by Category:
Highly Consumable $ 638,372 $ 513,139
Hardware and Seasonal $ 148,415 $ 138,007
Basic Clothing $ 133,818 $ 121,908
Home Products $ 173,755 $ 177,365
---------- ---------
TOTAL SALES $1,094,360 $ 950,419
Same-Store Sales by Category (% Chg):
Highly Consumable 8.9%
Hardware and Seasonal -5.9%
Basic Clothing -3.9%
Home Products -14.3%
New Store Activity:
Beginning Store Count 4,719 3,998
New Store Openings 184 177
Store Closings 14 10
Net New Stores 170 167
Ending Store Count 4,889 4,165
Total Square Footage 33.1 million 27.6 million
<PAGE>
Customer Transaction Information
In the third quarter ended October 27, 2000, the average customer purchased more
than 5 items at a total cost of $8.03. Below is a summary of this year's
customer transaction information.
1Q 2Q 3Q YTD
-- -- -- ---
2000 Same-Store Transactions (% Chg):
Customer Transactions 3.8% 0.1% 1.0% 1.6%
Average Ticket 0.2% -2.7% -0.2% -0.9%
Average Item Price 1.5% 2.4% 5.5% 3.0%
Average Number of Items -1.2% -5.0% -5.4% -3.8%
