Market Overview

Dollar General Corporation Reports Fourth Quarter and Fiscal Year 2017 Financial Results; Company Provides Financial Guidance for Fiscal Year 2018

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Dollar General Corporation (NYSE:DG) today reported financial results
for its fiscal year 2017 fourth quarter (13 weeks) and fiscal year (52
weeks) ended February 2, 2018. 1

  • Fourth Quarter Same-Store Sales Increased 3.3%; Fiscal Year Same-Store
    Sales Increased 2.7%
  • Fourth Quarter Diluted Earnings Per Share ("EPS") Increased 76.5% to
    $2.63; Fiscal Year Diluted EPS Increased 27.1% to $5.63
  • Delivered Fourth Quarter Adjusted Diluted EPS of $1.48; Fiscal Year
    Adjusted Diluted EPS of $4.492
  • Cash Flows From Operations for the Fiscal Year Increased 12.3% to $1.8
    Billion
  • $863 Million of Capital Returned to Shareholders in the Fiscal Year
    through Share Repurchases and the Payment of Cash Dividends
  • Opened a Company Record 1,315 New Stores, Executed 2,079 Total Real
    Estate Projects in the Fiscal Year
  • Company Provides Fiscal Year 2018 Financial Guidance, Including
    Diluted EPS Outlook of $5.95 to $6.15
  • Board of Directors Declares Increased Quarterly Cash Dividend of $0.29
    Per Share; Increases Share Repurchase Program Authorization by $1.0
    Billion

1 As previously disclosed, Dollar General's fiscal
year 2016 and 2016 fourth quarter results contained an additional,
non-comparable week, or the "2016 53rd week", when compared to fiscal
year 2017 and 2017 fourth quarter results, which included 52 weeks and
13 weeks, respectively, and fiscal year 2018 guidance which includes 52
weeks.
By definition, the Company's same-store sales growth
calculations do not include the non-comparable 53
rd
week in the 2016 periods.

2 See Reconciliation of Non-GAAP Financial Measures
for reconciliation of Adjusted Diluted EPS to Diluted EPS; see also
"Non-GAAP Disclosure" herein.

"I am pleased with our overall fourth quarter performance, as we
delivered strong same-store sales growth of 3.3%, while achieving a
healthy rate of gross margin expansion. For the year, we opened a record
1,315 new stores and delivered a same-store sales increase of 2.7%,
marking our 28th consecutive year of positive same-store sales growth.
At the same time, we proactively made significant investments in the
business that we expect will contribute to sustainable sales and profit
growth in the years ahead. As we move into 2018, we continue to build
momentum behind initiatives that we believe will further enhance our
strong value and convenience proposition with consumers and drive
long-term success," said Todd Vasos, Dollar General's chief executive
officer.

Fourth Quarter 2017 Highlights

Net sales increased 2.0% to $6.1 billion in the 2017 fourth quarter
compared to $6.0 billion in the 2016 fourth quarter, which included net
sales of $398.7 million for the 2016 53rd week. The 2016 53rd
week net sales negatively impacted the 2017 fourth quarter growth rate
by approximately seven percentage points. The net sales increase in the
2017 fourth quarter was positively affected by sales from new stores,
modestly offset by sales from closed stores. Same-store sales increased
3.3% from the 2016 fourth quarter due to an increase in average
transaction amount, partially offset by a slight decline in customer
traffic. Same-store sales were driven by positive results in the
consumables and seasonal categories, partially offset by negative
results in the apparel and home categories.

The Company's gross profit as a percentage of net sales was 32.1% in the
2017 fourth quarter compared to 31.6% in the 2016 fourth quarter, an
increase of 43 basis points. The 2017 fourth quarter gross profit rate
increase was primarily attributable to higher initial inventory markups,
an improved rate of inventory shrink, and a reduction in markdowns;
partially offset by a greater proportion of sales of consumables, which
generally have a lower gross profit rate than other product categories,
sales of lower-margin products comprising a higher proportion of
consumables sales, and increased transportation costs.

Selling, general and administrative expenses ("SG&A") as a percentage of
net sales was 21.9% in the 2017 fourth quarter, compared to 20.3% in the
2016 fourth quarter, an increase of 159 basis points. The 2017 fourth
quarter SG&A increase as a percentage of net sales was primarily
attributable to increased occupancy costs, increased retail labor
expenses, including the Company's investment in store manager
compensation, and increased incentive compensation, each of which
increased at a rate greater than the increase in net sales. Partially
offsetting these increased expenses was a reduction in advertising
costs. The 2016 fourth quarter SG&A as a percentage of net sales was
favorably impacted by net sales of $398.7 million from the 2016 53rd
week.

Additionally, as a result of a strategic review of its real estate
portfolio, the Company closed an incremental 35 stores during the 2017
fourth quarter (the "Incremental Store Closures") resulting in
approximately $28.3 million of related pre-tax costs during the 2017
fourth quarter, most of which were in the form of SG&A expenses
associated with the remaining lease liability on these stores.

The effective income tax rate in the 2017 fourth quarter was a benefit
of 18.9% compared to expense of 36.8% in the 2016 fourth quarter. The
effective income tax rate for the 2017 fourth quarter was lower than the
2016 quarter due primarily to the effect of the U.S. Tax Cuts and Jobs
Act ("TCJA"), which was signed into law on December 22, 2017. Under
accounting standards for income taxes, the impact of new tax legislation
must be taken into account in the period in which the new legislation is
enacted, including the remeasurement of deferred tax assets and
liabilities at the tax rates at which such items are expected to reverse
in future periods. Subsequent to the signing of the TCJA, the Securities
and Exchange Commission staff issued Staff Accounting Bulletin No. 118,
which allows companies to record provisional amounts during a
measurement period not to extend beyond one year of the enactment date
while the accounting impact is still under analysis. As a result, the
Company has recorded provisional impacts for the 2017 fourth quarter and
fiscal year. Among other things, the TCJA lowered the federal corporate
tax rate to 21% from 35%, effective January 1, 2018. The TCJA had the
effect of reducing the Company's effective tax rate in the 2017 fourth
quarter primarily as a result of the remeasurement of deferred tax
assets and liabilities at the 21% rate, accompanied by benefits
associated with a reduced federal corporate tax rate for fiscal year
2017 of 33.7%, as a result of the Company's 2017 fiscal year straddling
the effective date of the TCJA.

The Company reported net income of $712 million, or diluted EPS of
$2.63, for the 2017 fourth quarter, compared to net income of $414
million, or diluted EPS of $1.49, in the 2016 fourth quarter, an
increase in diluted EPS of 76.5%. Excluding the provisional benefit of
$311 million, or $1.15 per diluted share, for the remeasurement of
deferred tax assets and liabilities discussed above, adjusted net income
and adjusted diluted EPS for the 2017 fourth quarter were $401 million
and $1.48, respectively.

Diluted EPS and Adjusted EPS for the 2017 fourth quarter also include an
approximate $0.09 provisional benefit primarily due to the reduced
federal corporate tax rate for fiscal year 2017. These provisional
benefits were partially offset by a $0.07 charge from the Incremental
Store Closures in the 2017 fourth quarter, as discussed above.

Fiscal Year 2017 Financial Results

Fiscal year 2017 net sales increased 6.8% to $23.5 billion compared to
net sales of $22.0 billion in 2016, which included net sales of $398.7
million for the 2016 53rd week. The 2016 53rd week
negatively impacted the fiscal year 2017 growth rate by approximately
two percentage points. The net sales increase was positively affected by
sales from new stores, modestly offset by sales from closed stores.
Same-store sales increased 2.7% from fiscal year 2016, due to increases
in average transaction amount and customer traffic. Same-store sales
were driven by positive results in the consumables and seasonal
categories, partially offset by negative results in the home and apparel
categories.

The Company's gross profit rate as a percentage of net sales was 30.8%
in fiscal year 2017 compared to 30.8% in fiscal year 2016, a decrease of
eight basis points. The gross profit rate decrease was primarily due to
a greater proportion of sales of consumables, which generally have a
lower gross profit rate than other product categories, sales of lower
margin products comprising a higher proportion of consumables sales,
higher markdowns, which were primarily for promotional activities, and
increased transportation costs. These factors were partially offset by
higher initial inventory markups and an improved rate of inventory
shrink.

SG&A as a percentage of sales was 22.2% in fiscal year 2017 compared to
21.5% in fiscal year 2016, an increase of 75 basis points. The 2017
fiscal year SG&A increase as a percentage of sales was primarily
attributable to increased retail labor expenses, including the Company's
investment in store manager compensation, increased occupancy costs, and
higher incentive compensation, each of which increased at a rate greater
than the increase in net sales. Partially offsetting these increased
expenses were reduced advertising costs, and costs that increased at a
rate less than the increase in net sales, including utilities and waste
management costs primarily resulting from the Company's recycling
efforts. Fiscal year 2017 SG&A also include approximately $24.0 million
of costs related to the Incremental Store Closures in the 2017 fourth
quarter, as well as an increase in hurricane and other disaster-related
expenses of approximately $18.0 million over fiscal year 2016. SG&A as a
percentage of net sales in fiscal year 2016 was favorably impacted by
net sales of $398.7 million from the 2016 53rd week.

The effective income tax rate was an expense of 19.3% for fiscal year
2017 compared to an expense of 36.3% for fiscal year 2016. The effective
income tax rate was lower in fiscal year 2017 primarily due to the
effect of the TCJA, as detailed above. The TCJA had the effect of
reducing the Company's fiscal year 2017 effective tax rate primarily as
a result of the remeasurement of deferred tax assets and liabilities at
the new lower federal corporate rate, accompanied by benefits associated
with a reduced federal corporate tax rate for fiscal year 2017 of 33.7%,
as a result of the Company's 2017 fiscal year straddling the effective
date of the TCJA.

The Company reported net income of $1.54 billion, or diluted EPS of
$5.63, for fiscal year 2017 compared to net income of $1.25 billion, or
diluted EPS of $4.43, for fiscal year 2016, an increase in diluted EPS
of 27.1%. Excluding the provisional benefit of $311 million, or $1.14
per diluted share, for the remeasurement of the deferred tax assets and
liabilities discussed above, adjusted net income and adjusted diluted
EPS for the 2017 fiscal year were $1.23 billion and $4.49, respectively.

Merchandise Inventories

As of February 2, 2018, total merchandise inventories, at cost, were
$3.61 billion compared to $3.26 billion as of February 3, 2017, an
increase of approximately 1.5% on a per store basis.

Capital Expenditures

Total additions to property and equipment during fiscal year 2017 were
$646 million, including approximately: $231 million for improvements,
upgrades, remodels and relocations of existing stores; $203 million for
new leased stores, primarily for leasehold improvements, fixtures and
equipment; $176 million for distribution and transportation related
projects; and $30 million for information systems upgrades and
technology-related projects. During fiscal year 2017, the Company opened
1,315 new stores and remodeled or relocated 764 stores.

Share Repurchases

The Company repurchased $580 million, or 7.1 million shares, under its
share repurchase program in fiscal year 2017, at an average price of
$82.11 per share. From the inception of the share repurchase program in
December 2011 through the end of fiscal year 2017, the Company has
repurchased 81.4 million shares of its common stock at an average price
of $63.21 per share, for a total cost of $5.1 billion. The total
remaining authorization for future repurchases was approximately $354
million at the end of fiscal year 2017. On March 14, 2018, the Company's
Board of Directors increased the authorization under the share
repurchase program by $1.0 billion. Under the authorization, purchases
may be made in the open market or in privately negotiated transactions
from time to time subject to market and other conditions. The
authorization has no expiration date.

Dividend

On March 14, 2018, the Company's Board of Directors approved a quarterly
cash dividend of $0.29 per share, which is a 12% increase over the prior
quarterly dividend, payable on or before April 24, 2018 to shareholders
of record of the Company's common stock on April 10, 2018. While the
Board of Directors intends to continue regular cash dividends, the
declaration and amount of future dividends are subject to the sole
discretion of the Board and will depend upon, among other things, the
Company's results of operations, cash requirements, financial condition,
contractual restrictions, and other factors the Board may deem relevant
in its sole discretion.

Fiscal Year 2018 Financial Guidance and Store
Growth Outlook

For the 52-week fiscal year ending February 1, 2019 ("fiscal year
2018"), the Company expects net sales to increase approximately nine
percent, with same-store sales growth estimated to be in the mid-two
percent range. The Company expects the fiscal year 2018 operating margin
rate to be relatively unchanged as compared to the fiscal year 2017
operating margin rate.

The Company expects fiscal year 2018 diluted EPS to be in the range of
$5.95 to $6.15. This diluted EPS guidance assumes an estimated effective
tax rate of 22% to 23%.

The Company currently anticipates a cash benefit of approximately $300
million in fiscal 2018 as a result of the TCJA.

Share repurchases for fiscal year 2018 are expected to be approximately
$850 million. Capital expenditures for fiscal year 2018 are expected to
be in the range of $725 million to $800 million.

The Company plans to open approximately 900 new stores, remodel 1,000
stores and relocate 100 stores in fiscal year 2018.

Long-Term Growth Model

The Company expects to continue to use the long-term growth model, which
was announced on March 10, 2016, internally to assess and benchmark its
results and strategic plans; however, the Company does not intend to
discuss externally any guidance or results in the context of the
long-term growth model. Over the longer term, the Company's goal is to
grow adjusted diluted EPS at a rate of 10% or higher. Diluted EPS
derived in accordance with U.S. generally accepted accounting principles
("GAAP") may include the impact of certain discrete items of which we
are currently unaware, which may be excluded in calculating Adjusted
diluted EPS. In the past, discrete items for which the Company has made
adjustments to GAAP diluted EPS have primarily included restructuring
costs, legal settlements, and income-tax related remeasurements. The
Company is not currently aware of any such discrete items in the future.

Conference Call Information

The Company will hold a conference call on Thursday, March 15, 2018 at
9:00 a.m. CT/10:00 a.m. ET, hosted by Todd Vasos, chief executive
officer, and John Garratt, chief financial officer. If you wish to
participate, please call (877) 868-1301 at least 10 minutes before the
conference call is scheduled to begin. The conference ID is 5996418. The
call will also be broadcast live online at www.dollargeneral.com under
"Investor Information, News & Events, Events & Presentations." A replay
of the conference call will be available through Thursday, March 29,
2018, and will be accessible online or by calling (855) 859-2056. The
conference ID for the replay is 5996418.

Non-GAAP Disclosure

Adjusted net income and adjusted diluted EPS for the 2017 fourth quarter
and fiscal year 2017 have not been derived in accordance with U.S. GAAP,
but rather exclude an income tax benefit of $311 million, or $1.15 per
diluted share, and $311 million, or $1.14 per diluted share,
respectively, as a result of the remeasurement of deferred tax assets
and liabilities discussed above. The Company believes these non-GAAP
financial measures provide useful information to investors in assessing
the Company's operating performance as these measures provide an
additional relevant comparison of the Company's operating performance
across periods. Reconciliations of these non-GAAP measures to the most
directly comparable measures calculated in accordance with GAAP are
provided in the accompanying schedules.

The non-GAAP measures discussed above are not measures of financial
performance or condition, liquidity or profitability in accordance with
GAAP, and should not be considered as alternatives to net income,
diluted EPS or any other measure derived in accordance with GAAP. These
non-GAAP measures have limitations as analytical tools and should not be
considered in isolation or as substitutes for analysis of the Company's
financial results as reported in accordance with GAAP. Because not all
companies use identical calculations, these presentations may not be
comparable to other similarly titled measures of other companies.

Forward-Looking Statements

This press release contains forward-looking information within the
meaning of the federal securities laws, including the Private Securities
Litigation Reform Act, including statements regarding the Company's
outlook, plans and intentions including, but not limited to, statements
made within the quotations of Mr. Vasos and in the sections entitled
"Fiscal Year 2018 Financial Guidance and Store Growth Outlook" and
"Long-Term Growth Model". A reader can identify forward-looking
statements because they are not limited to historical fact or they use
words such as "outlook," "may," "will," "should," "could," "would,"
"believe," "anticipate," "plan," "expect," "estimate," "forecast,"
"confident," "opportunities," "goal," "prospect," "positioned,"
"intend," "committed," "continue," "future," "guidance," "years ahead,"
"looking ahead," "going forward," "focused on," or "will likely result,"
and similar expressions that concern the Company's strategy, plans,
intentions or beliefs about future occurrences or results. These matters
involve risks, uncertainties and other factors that may cause the actual
performance of the Company to differ materially from that which the
Company expected. Many of these statements are derived from the
Company's operating budgets and forecasts as of the date of this
release, which are based on many detailed assumptions that the Company
believes are reasonable. However, it is very difficult to predict the
effect of known factors on the Company's future results, and the Company
cannot anticipate all factors that could affect future results that may
be important to an investor. All forward-looking information should be
evaluated in the context of these risks, uncertainties and other
factors. Important factors that could cause actual results to differ
materially from the expectations expressed in or implied by such
forward-looking statements include, but are not limited to:

  • economic conditions and other economic factors, including but not
    limited to employment levels, credit availability and spending
    patterns, inflation, commodity prices, fuel prices, interest rates,
    measures that create barriers to or increase the costs associated with
    international trade (including increased import duties or tariffs),
    and healthcare and housing costs, and their effect on, as applicable,
    consumer demand, customer traffic, customer disposable income, our
    ability to execute our strategic initiatives, our cost of goods sold,
    our SG&A expenses and real estate costs;
  • failure to successfully execute the Company's strategies and
    initiatives, including those relating to merchandising, marketing,
    real estate and new store development, digital, sourcing, shrink,
    private brand, inventory management, distribution and transportation,
    store operations, store formats, budgeting and expense reduction, and
    technology;
  • failure to open, relocate and remodel stores profitably and on
    schedule, as well as failure of the Company's new store base to
    achieve sales and operating levels consistent with the Company's
    expectations;
  • effective response to competitive pressures and changes in the
    competitive environment and the geographic and product markets where
    the Company operates, including, but not limited to, pricing, the
    creation of a more convenient customer online and in-store shopping
    experience, and consolidation;
  • levels of inventory shrinkage;
  • failure to successfully manage inventory balances;
  • failure to maintain the security of information that the Company
    holds, whether as a result of cybersecurity attacks or otherwise;
  • disruptions, unanticipated or unusual expenses or operational failures
    in the Company's supply chain including, without limitation, a
    decrease in transportation capacity for overseas shipments, increases
    in transportation costs (including increased fuel costs and carrier
    rates or driver wages), work stoppages or other labor disruptions that
    could impede the receipt of or delivery of merchandise, or delays in
    constructing or opening new distribution centers;
  • risks and challenges associated with sourcing merchandise from
    suppliers, including, but not limited to, those related to
    international trade;
  • unfavorable publicity or consumer perception of the Company's
    products, including, but not limited to, related product liability;
  • risks and challenges associated with the Company's private brands,
    including, but not limited to, the Company's level of success in
    improving its gross profit rate;
  • the impact of changes in or noncompliance with governmental laws and
    regulations (including, but not limited to, environmental compliance,
    product safety or labeling, food safety, information security and
    privacy, and labor and employment laws, as well as tax laws, the
    interpretation of existing tax laws, or the Company's failure to
    sustain its reporting positions negatively affecting the Company's tax
    rate) and developments in or outcomes of private actions, class
    actions, administrative proceedings, regulatory actions or other
    litigation;
  • incurrence of material uninsured losses, excessive insurance costs or
    accident costs;
  • natural disasters, unusual weather conditions (whether or not caused
    by climate change), pandemic outbreaks, terrorist acts and
    geo-political events;
  • damage or interruption to the Company's information systems or failure
    of technology initiatives to deliver desired or timely results;
  • ability to attract, train and retain qualified employees, while
    controlling labor costs and other labor issues;
  • loss of key personnel, inability to hire additional qualified
    personnel or disruption of executive management as a result of
    retirements or transitions;
  • seasonality of the Company's business;
  • deterioration in market conditions, including market disruptions,
    limited liquidity and interest rate fluctuations, or a lowering of the
    Company's credit ratings;
  • new accounting guidance, or changes in the interpretation or
    application of existing guidance, such as changes to guidance related
    to leases and intra-company transfers;
  • the factors disclosed under "Risk Factors" in the Company's most
    recent Annual Report on Form 10-K; and
  • such other factors as may be discussed or identified in this press
    release.

All forward-looking statements are qualified in their entirety by these
and other cautionary statements that the Company makes from time to time
in its SEC filings and public communications. The Company cannot assure
the reader that it will realize the results or developments the Company
anticipates or, even if substantially realized, that they will result in
the consequences or affect the Company or its operations in the way the
Company expects. Forward-looking statements speak only as of the date
made. The Company undertakes no obligation, and specifically disclaims
any duty, to update or revise any forward-looking statements to reflect
events or circumstances arising after the date on which they were made,
except as otherwise required by law. As a result of these risks and
uncertainties, readers are cautioned not to place undue reliance on any
forward-looking statements included herein or that may be made elsewhere
from time to time by, or on behalf of, the Company.

About Dollar General Corporation

Dollar General Corporation has been delivering value to shoppers for
over 75 years. Dollar General helps shoppers Save time. Save money.
Every day!® by offering products that are frequently used and
replenished, such as food, snacks, health and beauty aids, cleaning
supplies, basic apparel, housewares and seasonal items at everyday low
prices in convenient neighborhood locations. Dollar General operated
14,534 stores in 44 states as of February 2, 2018. In addition to
high-quality private brands, Dollar General sells products from
America's most-trusted manufacturers such as Clorox, Energizer, Procter
& Gamble, Hanes, Coca-Cola, Mars, Unilever, Nestle, Kimberly-Clark,
Kellogg's, General Mills, and PepsiCo. Learn more about Dollar General
at www.dollargeneral.com.

 
DOLLAR GENERAL CORPORATION AND SUBSIDIARIES
Consolidated Balance Sheets
(In thousands)
   
(Unaudited)  
February 2 February 3
2018   2017
ASSETS
Current assets:
Cash and cash equivalents $ 267,441 $ 187,915
Merchandise inventories 3,609,025 3,258,785
Income taxes receivable 108,265 11,050
Prepaid expenses and other current assets     263,121       220,021  
Total current assets     4,247,852       3,677,771  
Net property and equipment     2,701,282       2,434,456  
Goodwill     4,338,589       4,338,589  
Other intangible assets, net     1,200,428       1,200,659  
Other assets, net     28,760       20,823  
Total assets   $ 12,516,911     $ 11,672,298  
 
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Current portion of long-term obligations $ 401,345 $ 500,950
Accounts payable 2,009,771 1,557,596
Accrued expenses and other 549,658 500,866
Income taxes payable     4,104       63,393  
Total current liabilities     2,964,878       2,622,805  
Long-term obligations     2,604,613       2,710,576  
Deferred income taxes     515,702       652,841  
Other liabilities     305,944       279,782  
Total liabilities     6,391,137       6,266,004  
 
Commitments and contingencies
 
Shareholders' equity:
Preferred stock - -
Common stock 235,141 240,811
Additional paid-in capital 3,196,462 3,154,606
Retained earnings 2,698,352 2,015,867
Accumulated other comprehensive loss     (4,181 )     (4,990 )
Total shareholders' equity     6,125,774       5,406,294  
Total liabilities and shareholders' equity   $ 12,516,911     $ 11,672,298  
 

 
DOLLAR GENERAL CORPORATION AND SUBSIDIARIES
Consolidated Statements of Income
(In thousands, except per share amounts)
(Unaudited)
       
For the Quarter Ended
(13 Weeks)   (14 Weeks)
February 2 % of Net February 3 % of Net
2018   Sales   2017 Sales
Net sales $ 6,129,431 100.00 % $ 6,009,246 100.00 %
Cost of goods sold     4,164,033     67.94       4,108,499   68.37  
Gross profit 1,965,398 32.06 1,900,747 31.63
Selling, general and administrative expenses     1,341,952     21.89       1,220,129   20.30  
Operating profit 623,446 10.17 680,618 11.33
Interest expense     24,289     0.40       25,511   0.42  
Income before income taxes 599,157 9.78 655,107 10.90
Income tax expense (benefit)     (112,998 )   (1.84 )     240,931   4.01  
Net income   $ 712,155     11.62 %   $ 414,176   6.89 %
 
Earnings per share:
Basic $ 2.63 $ 1.50
Diluted $ 2.63 $ 1.49
Weighted average shares outstanding:
Basic 270,305 276,204
Diluted 271,218 277,059
 
 
For the Year Ended
(52 Weeks)   (53 Weeks)
February 2 % of Net February 3 % of Net
2018   Sales   2017   Sales
Net sales $ 23,470,967 100.00 % $ 21,986,598 100.00 %
Cost of goods sold     16,249,608     69.23       15,203,960   69.15  
Gross profit 7,221,359 30.77 6,782,638 30.85
Selling, general and administrative expenses     5,213,541     22.21       4,719,189   21.46  
Operating profit 2,007,818 8.55 2,063,449 9.39
Interest expense 97,036 0.41 97,821 0.44
Other (income) expense     3,502     0.01       -   0.00  
Income before income taxes 1,907,280 8.13 1,965,628 8.94
Income tax expense     368,320     1.57       714,495   3.25  
Net income   $ 1,538,960     6.56 %   $ 1,251,133   5.69 %
 
Earnings per share:
Basic $ 5.64 $ 4.45
Diluted $ 5.63 $ 4.43
Weighted average shares outstanding:
Basic 272,751 281,317
Diluted 273,362 282,261
 

 
DOLLAR GENERAL CORPORATION AND SUBSIDIARIES
Consolidated Statements of Cash Flows
(In thousands)
(Unaudited)
   
For the Year Ended
(52 Weeks)   (53 Weeks)
February 2 February 3
2018   2017
Cash flows from operating activities:
Net income $ 1,538,960 $ 1,251,133

Adjustments to reconcile net income to net cash from operating
activities:

Depreciation and amortization 404,231 379,931
Deferred income taxes (137,648 ) 12,359
Loss on debt retirement 3,502 -
Noncash share-based compensation 34,323 36,967
Other noncash (gains) and losses 11,088 (3,625 )
Change in operating assets and liabilities:
Merchandise inventories (348,363 ) (171,908 )
Prepaid expenses and other current assets (49,406 ) (25,046 )
Accounts payable 427,911 56,477
Accrued expenses and other liabilities 75,647 42,937
Income taxes (156,504 ) 26,316
Other     (1,633 )     (500 )
Net cash provided by (used in) operating activities     1,802,108       1,605,041  
 
Cash flows from investing activities:
Purchases of property and equipment (646,456 ) (560,296 )
Proceeds from sales of property and equipment     1,428       9,360  
Net cash provided by (used in) investing activities     (645,028 )     (550,936 )
 
Cash flows from financing activities:
Issuance of long-term obligations 599,556 -
Repayments of long-term obligations (752,676 ) (3,138 )
Net increase (decrease) in commercial paper outstanding (60,300 ) 490,500
Borrowings under revolving credit facilities - 1,584,000
Repayments of borrowings under revolving credit facilities - (1,835,000 )
Costs associated with issuance and retirement of debt (9,524 ) -
Repurchases of common stock (579,712 ) (990,474 )
Payments of cash dividends (282,931 ) (281,135 )
Other equity and related transactions     8,033       11,110  
Net cash provided by (used in) financing activities     (1,077,554 )     (1,024,137 )
 
Net increase (decrease) in cash and cash equivalents 79,526 29,968
Cash and cash equivalents, beginning of period     187,915       157,947  
Cash and cash equivalents, end of period   $ 267,441     $ 187,915  
 
Supplemental cash flow information:
Cash paid for:
Interest $ 88,749 $ 92,952
Income taxes $ 660,510 $ 679,633
Supplemental schedule of non-cash investing and financing
activities:

Purchases of property and equipment awaiting processing for
payment, included in Accounts payable

$ 63,178 $ 38,914
 

 
DOLLAR GENERAL CORPORATION AND SUBSIDIARIES
Selected Additional Information
(Unaudited)
   
 
Sales by Category (in thousands)
 
For the Quarter Ended
(13 Weeks)   (14 Weeks)
February 2 February 3
2018   2017 % Change
Consumables $ 4,629,512 $ 4,505,486 2.8 %
Seasonal 820,160 800,604 2.4 %
Home products 393,481 405,236 -2.9 %
Apparel   286,278     297,920   -3.9 %
Net sales $ 6,129,431   $ 6,009,246   2.0 %
 
 
For the Year Ended
(52 Weeks)   (53 Weeks)
February 2 February 3
2018   2017 % Change
Consumables $ 18,054,785 $ 16,798,881 7.5 %
Seasonal 2,837,310 2,674,319 6.1 %
Home products 1,400,618 1,373,397 2.0 %
Apparel   1,178,254     1,140,001   3.4 %
Net sales $ 23,470,967   $ 21,986,598   6.8 %
 
 
Store Activity
 
For the Year Ended
(52 Weeks)   (53 Weeks)
February 2 February 3
2018   2017
 
Beginning store count 13,320 12,483
New store openings 1,315 900
Store closings   (101 )   (63 )
Net new stores   1,214     837  
Ending store count   14,534     13,320  
Total selling square footage (000's)   107,821     98,943  
Growth rate (square footage)   9.0 %   7.0 %
 

 
DOLLAR GENERAL CORPORATION AND SUBSIDIARIES
Reconciliation of Non-GAAP Financial Measures
Adjusted Net Income and Adjusted Diluted Earnings Per Share
(Unaudited)
   
(in millions, except per share amounts)
 
For the Quarter Ended
(13 Weeks)   (14 Weeks)
February 2 February 3
2018 2017
 
Net income $ 712.2 $ 414.2
U.S. Tax Cut and Jobs Act Remeasurement of Deferred Tax Assets and
Liabilities
(310.8 ) -
         
Net adjustments     (310.8 )     -
Adjusted net income   $ 401.4     $ 414.2
 
Diluted earnings per share:
As reported $ 2.63 $ 1.49
Adjusted $ 1.48 $ 1.49
 
Weighted average diluted shares outstanding: 271.2 277.1
 
For the Year Ended
(52 Weeks)   (53 Weeks)
February 2 February 3
2018 2017
 
Net income $ 1,539.0 $ 1,251.1
U.S. Tax Cut and Jobs Act Remeasurement of Deferred Tax Assets and
Liabilities
(310.8 ) -
         
Net adjustments     (310.8 )     -
Adjusted net income   $ 1,228.2     $ 1,251.1
 
Diluted earnings per share:
As reported $ 5.63 $ 4.43
Adjusted $ 4.49 $ 4.43
 
Weighted average diluted shares outstanding: 273.4 282.3
 

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