Penalty puts a crimp in DG's numbers

Nicked by a $10 million civil penalty paid to settle a federal investigation into earlier accounting practices, Dollar General Stores Inc.'s fourth-quarter profits dipped 4.9 percent, to $102.8 million from $108.1 million last year.

Absent the one-time penalty, after-tax earnings actually rose by 3.4 percent, to $113 million from $109.3 million the previous year.

Sales in the closing quarter climbed 11.8 percent, to $2 billion from $1.8 billion, driven mostly by new store openings. Same-store sales increased by 3.3 percent.

Pending approval by the federal Securities and Exchange Commission, the $10 million civil penalty puts an end to an investigation into prior accounting practices at the company which resulted in a restatement of 1998 and 1999 financial statements. David Perdue, chairman and CEO, said he is "very pleased that the uncertainty relating to the SEC investigation of the company's restatement seems to be coming to a close."

Taking some of the steam out of the double-digit sales gain and putting pressure on the bottom line, in addition to the $10 million penalty, average gross margin thinned by 70 basis points, or seven-tenths of a percentage point, to 29.3 percent from 30 percent a year ago, while operating costs remained virtually unchanged, when measured as a percentage of sales.

Dollar General Corp.

Qtr. 1/30 (x000) 2003 2002 % chg
a-Fourth-quarter results include a $10 million non-tax-deductible civil penalty paid to the Securities and Exchange Commission to settle an investigation into Dollar General's restatement of its 1998 and 1999 financial statements and information in its fiscal 2000 financial statement.
b-12-month results include the $10 million civil penalty, compared with a year-before one-time gain of $29.5 million stemming from insurance proceeds relating to the restatement.
Sales $1,966,488 $1,759,563 11.8
Oper. income (EBIT) 185,123 177,545 4.3
Net income 102,829a 108,086a -4.9
Per share (diluted) 0.30 0.32
Average gross margin 29.3% 30.0%
SG&A expenses 19.9% 19.9%
12 months 2003 2002 % chg
Sales 6,871,992 6,100,404 12.6
Oper. income (EBIT) 521,263 427,724 21.9
Net income 301,000b 264,946b 13.6
Per share (diluted) 0.89 0.79 12.7
Average gross margin 29.4% 28.3%
SG&A expenses 21.8% 21.3%

Home & Textiles Today Staff | News & Commentary

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