Dollar General is a US department store chain headquartered in Goodlettsville, Tennessee. The company employed around 143,000 people in 16,278 stores in early 2020. The company was founded in 1939 by Cal Turner in Scottsville, Kentucky.
UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended May 3, 2002 Commission file number 1-11421 DOLLAR GENERAL CORPORATION (Exact name of registrant as specified in its charter) Tennessee 61-0502302 - ----------------------------------------------- ------------------------ (State or other jurisdiction of incorporation (I.R.S. Employer or organization) Identification Number) 100 Mission Ridge Goodlettsville, Tennessee 37072 -------------------------------------------------- (Address of principal executive offices, zip code) (615) 855-4000 --------------------------------------------------- (Registrant's telephone number, including area code) Indicate by check mark whether the registrant (1) has filed all reports required to be filed 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 [ ]. The number of shares of common stock outstanding as of May 10, 2002 was 332,856,617.
Dollar General Corporation Form 10-Q For the Quarter Ended May 3, 2002 Index Part I. Financial Information Page No. Item 1. Financial Statements: 3 Condensed Consolidated Balance Sheets as of May 3, 2002 and February 1, 2002 3 Condensed Consolidated Statements of Income for the 13 weeks ended May 3, 2002 and May 4, 2001 4 Condensed Consolidated Statements of Cash Flows for the 13 weeks ended May 3, 2002 and May 4, 2001 5 Notes to Condensed Consolidated Financial Statements 6 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 15 Item 3. Quantitative and Qualitative Disclosures About Market Risk 20 Part II. Other Information 20 Item 1. Legal Proceedings 20 Item 4. Submission of Matters to a Vote of Security Holders 23 Item 6. Exhibits and Reports on Form 8-K 24 Signatures 25 2
Part I - Financial Information Item 1. Financial Statements <TABLE> <CAPTION> DOLLAR GENERAL CORPORATION AND SUBSIDIARIES Condensed Consolidated Balance Sheets (In thousands) May 3, 2002 February 1, 2002 (Unaudited) ----------- ----------- <S> <C> <C> ASSETS Current assets: Cash and cash equivalents ....................... $ 287,424 $ 261,525 Merchandise inventories ......................... 1,134,449 1,131,023 Deferred income taxes ........................... 80,974 105,091 Other current assets ............................ 85,419 58,408 ----------- ----------- Total current assets ..................... 1,588,266 1,556,047 ----------- ----------- Property and equipment, at cost ................. 1,507,414 1,473,693 Less accumulated depreciation and amortization .. 515,937 484,778 ----------- ----------- Net property and equipment ............... 991,477 988,915 ----------- ----------- Other assets .................................... 8,989 7,423 ----------- ----------- Total assets ............................. $ 2,588,732 $ 2,552,385 =========== =========== LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities: Current portion of long-term obligations ........ $ 395,877 $ 395,675 Accounts payable ................................ 341,134 322,463 Accrued expenses and other ...................... 212,590 253,413 Litigation settlement payable ................... 161,000 162,000 ----------- ----------- Total current liabilities ................ 1,110,601 1,133,551 ----------- ----------- Long-term obligations ............................... 336,083 339,470 Deferred income taxes ............................... 53,388 37,646 Shareholders' equity: Preferred stock ................................. -- -- Common stock .................................... 166,462 166,359 Additional paid-in capital ...................... 302,200 301,848 Retained earnings ............................... 625,193 579,265 Accumulated other comprehensive loss ............ (2,677) (3,228) ----------- ----------- 1,091,178 1,044,244 Less other shareholders' equity ................. 2,518 2,526 ----------- ----------- Total shareholders' equity ............... 1,088,660 1,041,718 ----------- ----------- Total liabilities and shareholders' equity $ 2,588,732 $ 2,552,385 =========== =========== </TABLE> See notes to condensed consolidated financial statements. 3
<TABLE> <CAPTION> DOLLAR GENERAL CORPORATION AND SUBSIDIARIES Condensed Consolidated Statements of Income (Unaudited) (Amounts in thousands except per share amounts) 13 Weeks Ended ----------------------------------------------------- May 3, % of Net May 4, % of Net 2002 Sales 2001 Sales ---------- ---------- ---------- ---------- <S> <C> <C> <C> <C> Net sales ................................ $1,389,412 100.0% $1,202,504 100.0% Cost of goods sold ....................... 1,009,120 72.6 881,079 73.3 ---------- ----- ---------- ----- Gross profit ....................... 380,292 27.4 321,425 26.7 Selling, general and administrative expense ............... 297,304 21.4 251,990 20.9 ---------- ----- ---------- ----- Operating profit ................... 82,988 6.0 69,435 5.8 Interest expense ......................... 10,432 0.8 11,600 1.0 ---------- ----- ---------- ----- Income before income taxes.......... 72,556 5.2 57,835 4.8 Provision for taxes on income ............ 26,628 1.9 21,602 1.8 ---------- ----- ---------- ----- Net income ......................... $ 45,928 3.3% $ 36,233 3.0% ========== ===== ========== ===== Earnings per share: Basic .............................. $ 0.14 $ 0.11 ========== ========== Diluted ............................ $ 0.14 $ 0.11 ========== ========== Weighted average shares: Basic .............................. 332,665 331,588 ========== ========== Diluted ............................ 334,834 335,184 ========== ========== Dividends per share ...................... $ .032 $ .032 ========== ========== </TABLE> See notes to condensed consolidated financial statements 4
<TABLE> <CAPTION> DOLLAR GENERAL CORPORATION AND SUBSIDIARIES Condensed Consolidated Statements of Cash Flows (Unaudited) (In thousands) 13 Weeks Ended -------------------------- May 3, 2002 May 4, 2001 ----------- ----------- <S> <C> <C> Cash flows from operating activities: Net income $ 45,928 $ 36,233 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 32,004 29,890 Deferred income taxes 39,859 264 Tax benefit from stock option exercises 689 3,258 Change in operating assets and liabilities: Merchandise inventories (3,426) (9,299) Other current assets 1,500 6,972 Accounts payable 18,671 (14,702) Accrued expenses and other (19,775) (15,252) Income taxes (39,464) 2,676 Other (1,166) (2) --------- --------- Net cash provided by operating activities 74,820 40,038 --------- --------- Cash flows from investing activities: Purchase of property and equipment (34,812) (35,726) Proceeds from sale of property and equipment 58 114 --------- --------- Net cash used in investing activities (34,754) (35,612) --------- --------- Cash flows from financing activities: Repayments of long-term obligations (3,196) (3,048) Payment of cash dividends (10,646) (10,631) Proceeds from exercise of stock options 1,374 7,996 Other financing activities (1,699) (159) --------- --------- Net cash used in financing activities (14,167) (5,842) --------- --------- Net increase (decrease) in cash and cash equivalents 25,899 (1,416) Cash and cash equivalents, beginning of period 261,525 162,310 --------- --------- Cash and cash equivalents, end of period $ 287,424 $ 160,894 ========= ========= Supplemental schedule of noncash investing and financing activities: Purchase of property and equipment under capital lease obligations $ -- $ 12,088 ========= ========= </TABLE> See notes to condensed consolidated financial statements. 5
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS 1. Basis of presentation and accounting policies Basis of presentation The accompanying unaudited condensed consolidated financial statements of the Dollar General Corporation (the "Company") have been prepared in accordance with generally accepted accounting principles for interim financial information and are presented in accordance with the requirements of Form 10-Q and Rule 10-01 of Regulation S-X. Such financial statements consequently do not include all of the disclosures normally required by generally accepted accounting principles or those normally made in the Company's Annual Report on Form 10-K. Accordingly, the reader of this quarterly report on Form 10-Q should refer to the Company's Annual Report on Form 10-K for the year ended February 1, 2002 for additional information. The accompanying condensed consolidated financial statements have been prepared in accordance with the Company's customary accounting practices and have not been audited. In management's opinion, all adjustments (which are of a normal recurring nature) necessary for a fair presentation of the consolidated results of operations for the 13-week periods ended May 3, 2002 and May 4, 2001 have been made. Interim cost of goods sold is determined using ongoing estimates of inventory shrinkage, inflation, and markdowns. Because the Company's business is moderately seasonal, the results for interim periods are not necessarily indicative of the results to be expected for the entire year. Accounting pronouncements In June 2001, the Financial Accounting Standards Board (the "FASB") issued Statement of Financial Accounting Standards ("SFAS") No. 141, "Business Combinations," and SFAS No. 142, "Goodwill and Other Intangible Assets." Under the new rules, goodwill and indefinite lived intangible assets are no longer amortized but are reviewed annually for impairment. Separable intangible assets that are not deemed to have an indefinite life will continue to be amortized over their useful lives. The Company began to apply the new accounting rules on February 2, 2002. The adoption of SFAS No. 141 and No. 142 has not had a material impact on the Company's financial position or results of operations. The FASB issued SFAS No. 143, "Accounting for Asset Retirement Obligations" in June 2001. SFAS No. 143 applies to legal obligations associated with the retirement of certain tangible long-lived assets. This statement is effective for fiscal years beginning after June 15, 2002. Accordingly, the Company will adopt this statement on February 1, 2003. The Company believes the 6
adoption of SFAS No. 143 will not have a material impact on the Company's financial position or results of operations. In August 2001, the FASB issued SFAS No. 144, "Accounting for the Impairment or Disposal of Long-Lived Assets." SFAS No. 144 is effective for fiscal years beginning after December 15, 2001, and interim periods within those fiscal years. The Company adopted this statement on February 2, 2002. This statement addresses financial accounting and reporting for the impairment or disposal of long-lived assets. It supersedes SFAS No. 121, "Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed Of." The adoption of SFAS No. 144 has not had a material impact on the Company's financial position or results of operations. 2. Comprehensive income Comprehensive income consists of the following (in thousands): 13 Weeks Ended ------------------------- May 3, 2002 May 4, 2001 ----------- ----------- Net income $ 45,928 $ 36,233 Net change in derivative financial instruments 551 (2,839) -------- -------- $ 46,479 $ 33,394 ======== ======== 3. Segment reporting The Company manages its business on the basis of one reportable segment. As of May 3, 2002 and May 4, 2001, all of the Company's operations were located within the United States. The following data is presented in accordance with SFAS No. 131, "Disclosures about Segments of an Enterprise and Related Information." The following amounts are in thousands: 13 Weeks Ended ------------------------- May 3, 2002 May 4, 2001 ----------- ----------- Sales by category: Highly consumable ...... $ 851,236 $ 721,292 Hardware and seasonal... 204,763 168,804 Basic clothing ......... 142,301 130,632 Home products .......... 191,112 181,776 ---------- ---------- $1,389,412 $1,202,504 ========== ========== 7
4. Guarantor subsidiaries All of the Company's subsidiaries (the "Guarantors") have fully and unconditionally guaranteed on a joint and several basis the Company's obligations under certain outstanding notes payable. Each of the Guarantors is a wholly-owned subsidiary of the Company. The Guarantors comprise all of the direct and indirect subsidiaries of the Company. In order to participate as a subsidiary guarantor on certain of the Company's financing arrangements, a subsidiary of the Company has entered into a letter agreement with certain state regulatory agencies to maintain stockholders' equity of at least $250 million. Condensed combined financial information for the Guarantors is set forth below. Dollar amounts are in thousands. 8
<TABLE> <CAPTION> May 3, 2002 ------------------------------------------------------------------- DOLLAR GENERAL GUARANTOR CONSOLIDATED CORPORATION SUBSIDIARIES ELIMINATIONS TOTAL ----------- ------------ ------------ ------------ <S> <C> <C> <C> <C> BALANCE SHEET DATA: ASSETS Current assets Cash and cash equivalents $ 243,961 $ 43,463 $ -- $ 287,424 Merchandise inventories -- 1,134,449 -- 1,134,449 Deferred income taxes 71,501 9,473 -- 80,974 Other current assets 18,938 1,013,312 (946,831) 85,419 ----------- ----------- ----------- ----------- Total current assets 334,400 2,200,697 (946,831) 1,588,266 ----------- ----------- ----------- ----------- Property and equipment, at cost 161,358 1,346,056 -- 1,507,414 Less accumulated depreciation and amortization 55,862 460,075 -- 515,937 ----------- ----------- ----------- ----------- Net property and equipment 105,496 885,981 -- 991,477 ----------- ----------- ----------- ----------- Other assets 2,171,663 3,337 (2,166,011) 8,989 ----------- ----------- ----------- ----------- Total assets $ 2,611,559 $ 3,090,015 $(3,112,842) $ 2,588,732 =========== =========== =========== =========== LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities: Current portion of long-term obligations $ 65,622 $ 330,255 $ -- $ 395,877 Accounts payable 1,032,607 255,358 (946,831) 341,134 Accrued expenses and other 55,962 156,628 -- 212,590 Litigation settlement payable 161,000 -- -- 161,000 ----------- ----------- ----------- ----------- Total current liabilities 1,315,191 742,241 (946,831) 1,110,601 ----------- ----------- ----------- ----------- Long-term obligations 200,569 873,837 (738,323) 336,083 ----------- ----------- ----------- ----------- Deferred income taxes 7,139 46,249 -- 53,388 ----------- ----------- ----------- ----------- Shareholders' equity: Preferred stock -- -- -- -- Common stock 166,462 23,853 (23,853) 166,462 Additional paid-in capital 302,200 929,679 (929,679) 302,200 Retained earnings 625,193 474,156 (474,156) 625,193 Accumulated other comprehensive loss (2,677) -- -- (2,677) ----------- ----------- ----------- ----------- 1,091,178 1,427,688 (1,427,688) 1,091,178 Less other shareholders' equity 2,518 -- -- 2,518 ----------- ----------- ----------- ----------- Total shareholders' equity 1,088,660 1,427,688 (1,427,688) 1,088,660 ----------- ----------- ----------- ----------- Total liabilities and shareholders' equity $ 2,611,559 $ 3,090,015 $(3,112,842) $ 2,588,732 =========== =========== =========== =========== </TABLE> 9
<TABLE> <CAPTION> February 1, 2002 ------------------------------------------------------------------- DOLLAR GENERAL GUARANTOR CONSOLIDATED CORPORATION SUBSIDIARIES ELIMINATIONS TOTAL ----------- ------------ ------------ ------------ <S> <C> <C> <C> <C> BALANCE SHEET DATA: ASSETS Current assets Cash and cash equivalents $ 217,539 $ 43,986 $ -- $ 261,525 Merchandise inventories -- 1,131,023 -- 1,131,023 Deferred income taxes 79,203 25,888 -- 105,091 Other current assets 15,406 913,082 (870,080) 58,408 ----------- ----------- ----------- ----------- Total current assets 312,148 2,113,979 (870,080) 1,556,047 ----------- ----------- ----------- ----------- Property and equipment, at cost 158,347 1,315,346 -- 1,473,693 Less accumulated depreciation and amortization 51,832 432,946 -- 484,778 ----------- ----------- ----------- ----------- Net property and equipment 106,515 882,400 -- 988,915 ----------- ----------- ----------- ----------- Other assets 2,079,572 2,022 (2,074,171) 7,423 ----------- ----------- ----------- ----------- Total assets $ 2,498,235 $ 2,998,401 $(2,944,251) $ 2,552,385 =========== =========== =========== =========== LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities: Current portion of long-term obligations $ 65,682 $ 329,993 $ -- $ 395,675 Accounts payable 944,830 247,713 (870,080) 322,463 Accrued expenses and other 76,526 176,887 -- 253,413 Litigation settlement payable 162,000 -- -- 162,000 ----------- ----------- ----------- ----------- Total current liabilities 1,249,038 754,593 (870,080) 1,133,551 ----------- ----------- ----------- ----------- Long-term obligations 200,460 830,881 (691,871) 339,470 ----------- ----------- ----------- ----------- Deferred income taxes 7,019 30,627 -- 37,646 ----------- ----------- ----------- ----------- Shareholders' equity: Preferred stock -- -- -- -- Common stock 166,359 23,853 (23,853) 166,359 Additional paid-in capital 301,848 929,680 (929,680) 301,848 Retained earnings 579,265 428,767 (428,767) 579,265 Accumulated other comprehensive loss (3,228) -- -- (3,228) ----------- ----------- ----------- ----------- 1,044,244 1,382,300 (1,382,300) 1,044,244 Less other shareholders' equity 2,526 -- -- 2,526 ----------- ----------- ----------- ----------- Total shareholders' equity 1,041,718 1,382,300 (1,382,300) 1,041,718 ----------- ----------- ----------- ----------- Total liabilities and shareholders' equity $ 2,498,235 $ 2,998,401 $(2,944,251) $ 2,552,385 =========== =========== =========== =========== </TABLE> 10
<TABLE> <CAPTION> Quarter to Date and Year to Date ------------------------------------------------------------------- May 3, 2002 ------------------------------------------------------------------- DOLLAR GENERAL GUARANTOR CONSOLIDATED CORPORATION SUBSIDIARIES ELIMINATIONS TOTAL ----------- ------------ ------------ ------------ <S> <C> <C> <C> <C> STATEMENTS OF INCOME DATA: Net sales $ 46,452 $1,389,412 $ (46,452) $1,389,412 Cost of goods sold -- 1,009,120 -- 1,009,120 ---------- ---------- ---------- ---------- Gross profit 46,452 380,292 (46,452) 380,292 Selling, general and administrative 41,561 302,195 (46,452) 297,304 ---------- ---------- ---------- ---------- Operating profit 4,891 78,097 -- 82,988 Interest expense 4,004 6,428 -- 10,432 ---------- ---------- ---------- ---------- Income before income taxes 887 71,669 -- 72,556 Less provision for taxes on income 348 26,280 -- 26,628 Equity in subsidiaries' earnings, net 45,389 -- (45,389) -- ---------- ---------- ---------- ---------- Net income $ 45,928 $ 45,389 $ (45,389) $ 45,928 ========== ========== ========== ========== </TABLE> <TABLE> <CAPTION> Quarter to Date and Year to Date ------------------------------------------------------------------- May 4, 2001 ------------------------------------------------------------------- DOLLAR GENERAL GUARANTOR CONSOLIDATED CORPORATION SUBSIDIARIES ELIMINATIONS TOTAL ----------- ------------ ------------ ------------ <S> <C> <C> <C> <C> STATEMENTS OF INCOME DATA: Net sales $ 35,843 $1,202,504 $ (35,843) $1,202,504 Cost of goods sold -- 881,079 -- 881,079 ---------- ---------- ---------- ---------- Gross profit 35,843 321,425 (35,843) 321,425 Selling, general and administrative 30,079 257,754 (35,843) 251,990 ---------- ---------- ---------- ---------- Operating profit 5,764 63,671 -- 69,435 Interest expense 4,623 6,977 -- 11,600 ---------- ---------- ---------- ---------- Income before income taxes 1,141 56,694 -- 57,835 Less provision for taxes on income 426 21,176 -- 21,602 Equity in subsidiaries' earnings, net 35,518 -- (35,518) -- ---------- ---------- ---------- ---------- Net income $ 36,233 $ 35,518 $ (35,518) $ 36,233 ========== ========== ========== ========== </TABLE> 11
<TABLE> <CAPTION> For the 13 weeks ended ------------------------------------------------------------------- May 3, 2002 ------------------------------------------------------------------- DOLLAR GENERAL GUARANTOR CONSOLIDATED CORPORATION SUBSIDIARIES ELIMINATIONS TOTAL ----------- ------------ ------------ ------------ <S> <C> <C> <C> <C> STATEMENTS OF CASH FLOWS DATA: Cash flows from operating activities: Net income $ 45,928 $ 45,389 $ (45,389) $ 45,928 Adjustments to reconcile net income to net cash provided by / (used in) operating activities: Depreciation and amortization 4,270 27,734 -- 32,004 Deferred income taxes 7,822 32,037 -- 39,859 Tax benefit from stock options exercises 689 -- -- 689 Change in operating assets and liabilities: Merchandise inventories -- (3,426) -- (3,426) Other current assets (7,567) (72,003) 81,070 1,500 Accounts payable 87,778 11,963 (81,070) 18,671 Accrued expenses and other (1,082) (18,693) -- (19,775) Income taxes (9,388) (30,076) -- (39,464) Other (41,703) (4,852) 45,389 (1,166) --------- --------- --------- --------- Net cash provided by/ (used in) operating activities 86,747 (11,927) -- 74,820 --------- --------- --------- --------- Cash flows from investing activities: Purchases of property and equipment (2,941) (31,871) -- (34,812) Proceeds from sale of property and equipment 1 57 -- 58 Issuance of long-term notes receivable (46,452) -- 46,452 -- --------- --------- --------- --------- Net cash used in investing activities (49,392) (31,814) 46,452 (34,754) --------- --------- --------- --------- Cash flows from financing activities: Repayments of long-term obligations 38 (3,234) -- (3,196) Payment of cash dividends (10,646) -- -- (10,646) Proceeds from exercise of stock options 1,374 -- -- 1,374 Other financing activities (1,699) 46,452 (46,452) (1,699) --------- --------- --------- --------- Net cash provided by (used in) financing activities (10,933) 43,218 (46,452) (14,167) --------- --------- --------- --------- Net increase (decrease) in cash and cash equivalents 26,422 (523) -- 25,899 Cash and cash equivalents, beginning of period 217,539 43,986 -- 261,525 --------- --------- --------- --------- Cash and cash equivalents, end of period $ 243,961 $ 43,463 $ -- $ 287,424 ========= ========= ========= ========= </TABLE> 12
<TABLE> <CAPTION> For the 13 weeks ended ------------------------------------------------------------------- May 4, 2001 ------------------------------------------------------------------- DOLLAR GENERAL GUARANTOR CONSOLIDATED CORPORATION SUBSIDIARIES ELIMINATIONS TOTAL ----------- ------------ ------------ ------------ <S> <C> <C> <C> <C> STATEMENTS OF CASH FLOWS DATA: Cash flows from operating activities: Net income $ 36,233 $ 35,518 $ (35,518) $ 36,233 Adjustments to reconcile net income to net cash provided by / (used in) operating activities: Depreciation and amortization 3,338 26,552 -- 29,890 Deferred income taxes (15) 279 -- 264 Tax benefit from stock options exercises 3,258 -- -- 3,258 Change in operating assets and liabilities: Merchandise inventories -- (9,299) -- (9,299) Other current assets 843 49,045 (42,916) 6,972 Accounts payable 23,079 (80,697) 42,916 (14,702) Accrued expenses and other 3,157 (18,409) -- (15,252) Income taxes 723 1,953 -- 2,676 Other (29,126) (6,394) 35,518 (2) --------- --------- --------- --------- Net cash provided by (used in) operating activities 41,490 (1,452) -- 40,038 --------- --------- --------- --------- Cash flows from investing activities: Purchases of property and equipment (3,706) (32,020) -- (35,726) Proceeds from sale of property and equipment 15 99 -- 114 Issuance of long-term notes receivable (35,843) -- 35,843 -- Other 2,047 -- (2,047) -- --------- --------- --------- --------- Net cash used in investing activities (37,487) (31,921) 33,796 (35,612) --------- --------- --------- --------- Cash flows from financing activities: Repayments of long-term obligations (438) (2,610) -- (3,048) Payment of cash dividends (10,631) -- -- (10,631) Proceeds from exercise of stock options 7,996 -- -- 7,996 Other financing activities (159) 33,796 (33,796) (159) --------- --------- --------- --------- Net cash provided by (used in) financing activities (3,232) 31,186 (33,796) (5,842) --------- --------- --------- --------- Net increase (decrease) in cash and cash equivalents 771 (2,187) -- (1,416) Cash and cash equivalents, beginning of period 120,643 41,667 -- 162,310 --------- --------- --------- --------- Cash and cash equivalents, end of period $ 121,414 $ 39,480 $ -- $ 160,894 ========= ========= ========= ========= </TABLE> 5. Commitments and Contingencies As disclosed in further detail in the Company's Form 10-K for the 2001 fiscal year, on April 30, 2001, the Company announced that it had become aware of certain accounting issues that would cause it to restate its audited financial statements for fiscal years 1999 and 1998, and to restate the unaudited financial information for fiscal year 2000 that had been previously released by the Company. The Company subsequently restated such financial statements and financial information by means of its Form 10-K for the fiscal year ended February 2, 2001, which was filed on January 14, 2002. Following the April 30, 2001 announcement, more than 20 purported class action lawsuits were filed against the Company and certain current and former officers and directors of the Company, asserting claims under the federal securities laws relating to the restatement of the Company's financial 13
statements. The Company has reached a settlement agreement with the purported class action plaintiffs, which agreement was amended following the completion of confirmatory discovery and was approved by the court on May 24, 2002. Pursuant to such agreement, the Company has agreed to pay $162 million to such plaintiffs in settlement for their claims and to implement certain enhancements to its corporate governance and internal control procedures. The Company recognized an expense of $162 million in the fourth quarter of 2000 in respect of the class action settlement agreement. Pursuant to the terms of such agreement, the Company disbursed $1 million of such funds in April, 2002. The Company expects to disburse the remaining amount of $161 million in June or July, 2002, provided that all rights to appeal such agreement have expired and that no appeals have been filed as of such date. The Company expects to receive from its insurers approximately $4.5 million in respect of such settlement, which amount has not been accrued in the Company's financial statements. In addition, six purported shareholder derivative lawsuits have been filed in Tennessee state court against certain current and former Company directors and officers and Deloitte & Touche LLP, the Company's former independent accountant, and two purported shareholder derivative lawsuits have been filed in the United States District Court for the Middle District of Tennessee, which lawsuits seek damages and other relief. The Company and the individual defendants have reached a settlement agreement with counsel to the lead plaintiffs in the lead Tennessee state shareholder derivative action, and the Company anticipates that pursuant to such agreement the other shareholder derivative actions, which have been stayed, will be dismissed with prejudice. Such settlement agreement was approved by the court on June 4, 2002. Provided that all rights to appeal such settlement agreement have expired and that no appeals have been filed, the Company expects that this agreement will result in a net payment to the Company by July 17, 2002, after attorneys' fees payable to the plaintiffs' counsel, of approximately $24.8 million, which has not been accrued in the Company's financial statements. These cases were at an early stage prior to the parties' execution of the settlement agreements, and the amount of potential loss, if any, should the settlement agreements not become effective cannot be reasonably estimated. An unfavorable outcome for the Company in these actions could have a material adverse impact on the Company's financial position and results of operations. In addition, plaintiffs representing fewer than 1% of the shares traded during the class period chose to opt out of the class settlement and may elect to pursue recovery against the Company individually. Because no separate litigation has yet been filed by parties who opted out, the Company cannot estimate the potential liabilities associated with such litigation, but it does not believe that the resolution of any such litigation will have a material effect on the Company's financial position. 14
The Company has been notified that the Securities and Exchange Commission ("SEC") is conducting an investigation into the circumstances that gave rise to the Company's April 30, 2001 announcement. The Company is cooperating with this investigation by providing documents and other information to the SEC. At this time, the Company is unable to predict the outcome of this investigation and the ultimate effects on the Company. Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations The following text contains references to years 2002, 2001, 2000 and 1999, which represent fiscal years of the Dollar General Corporation (the "Company") ending or ended January 31, 2003, February 1, 2002, February 2, 2001 and January 28, 2000, respectively. This discussion and analysis should be read in conjunction with, and is qualified in its entirety by, the consolidated financial statements and the notes thereto. Results of Operations -- 13 Weeks Ended May 3, 2002 and May 4, 2001 The nature of the Company's business is modestly seasonal. Historically, sales in the fourth quarter have been higher than sales achieved in each of the first three quarters of the fiscal year. Expenses, and to a greater extent operating income, vary by quarter. Results of a period shorter than a full year may therefore not be indicative of results expected for the entire year. Furthermore, comparing any period with a period other than the same period of the previous year may reflect the seasonal nature of the Company's business. Net Sales. Net sales for the first 13 weeks of 2002 were $1.39 billion as compared against $1.20 billion during the first 13 weeks of 2001, an increase of 15.5%. The increase resulted primarily from 535 net new stores and a same store sales increase of 6.7%. Same store sales increases are calculated based on the comparable calendar weeks in the prior year. Same-store sales calculations include only those stores that were open both at the end of a fiscal period and at the beginning of the preceding fiscal period. Net sales increases by category during the period were as follows: highly consumable 18.0%, hardware and seasonal 21.3%, basic clothing 8.9%, and home products 5.1%. The Company's strong performance in the hardware and seasonal category was due in part to increased sales generated by new outdoor items added to the product mix including, but not limited to, lawn statues, stepping stones, and inspirational garden stones. The Company also generated additional seasonal sales by shipping warm weather products to its stores earlier than in prior years, which resulted in greater sales due to the fact that these products were in the stores for a longer period of time. Gross Profit. Gross profit during the current year period was $380.3 million, or 27.4% of sales, versus $321.4 million, or 26.7% of sales during the 15
comparable period in the prior year, an increase of 18.3%. The approximately 70 basis point increase in the gross margin rate as a percentage of sales was due principally to a 67 basis point reduction in distribution and transportation costs as a percentage of sales and a higher mark-up percentage on the Company's total inventory balance than that experienced during the comparable period in the prior year. The reduction in distribution and transportation costs as a percentage of net sales during the first quarter is due to a relatively modest increase in these expenses during a period of increased sales. Factors contributing to this result included a reduction in the Company's average delivery miles per store due in part to the opening of the Zanesville, Ohio distribution center, and lower fuel costs relative to the first quarter of the prior year. The higher mark-up percentage on the Company's inventories is primarily a result of a lower than normal mark-up on the Company's inventory balance in the first quarter of 2001 due to the ongoing impact of the markdown on certain excess inventories taken during the fourth quarter of 2000. As noted in Item 7 of the Company's Annual Report on Form 10-K for the 2001 fiscal year, the Company utilizes the retail method of accounting for inventories. Because the retail method is an averaging process, the mathematical impact of this markdown on the Company's blended inventory mark-up will diminish with the passage of time. Selling, General & Administrative Expenses ("SG&A"). SG&A expenses during the current year period were $297.3 million, or 21.4% of sales, versus $252.0 million, or 20.9% of sales during the comparable period in the prior year, an increase of 18.0%. The increase can be attributed to a 10.3% increase in store count as compared to the prior year, $5.3 million in expenses incurred during the current year period related to the Company's restatement of certain of its financial statements (see Part II, Item 1) versus $0.3 million in such expenses incurred during the prior year period, and an increase in store labor costs that was greater than the Company's sales increase. The increase in store labor costs reflects various actions taken to improve store conditions, including increasing labor hours and improving employee wages. Excluding the restatement-related expenses, SG&A would have been $292.0 million, or 21.0% of sales, in the current year period versus $251.7 million, or 20.9% of sales, in the prior year period, an increase of 16.0%. Interest Expense. Interest expense during the current year period was $10.4 million, or 0.8% of sales, versus $11.6 million, or 1.0% of sales during the comparable period in the prior year, a decrease of 10.1%. The decrease in interest expense was due primarily to lower interest rates in the current year period on the Company's variable rate debt. Provision for Taxes on Income. The Company's effective tax rate was 36.7% in the current year period versus 37.4% during the comparable period in the prior year. The reduction in the Company's effective tax rate was due principally to the implementation of a tax planning strategy in the fourth quarter of 2001. 16
Net Income. Net income during the current year period was $45.9 million, or 3.3% of sales, compared to $36.2 million, or 3.0% of sales, during the comparable period in the prior year, an increase of 26.8%. Diluted earnings per share were $0.14 in the current year period versus $0.11 in the prior year. Liquidity and Capital Resources Current Financial Condition / Recent Developments. At May 3, 2002, the Company's total debt (including current maturities and short-term borrowings) was $732.0 million, and the Company had $287.4 million of cash and equivalents and $1.1 billion of shareholders' equity, compared to $735.1 million of total debt, $261.5 million of cash and equivalents and $1.0 billion of shareholders' equity at February 1, 2002. As of May 3, 2002, the Company had $383 million outstanding under two synthetic lease facilities (the "Synthetic Lease Facilities"), one with $212 million in outstanding capital leases and the other with $171 million in outstanding capital leases. As of such date, the Company also had a $175 million revolving credit agreement (the "Current Credit Facility"), under which no amounts were outstanding. The Synthetic Lease Facilities will mature and the Current Credit Facility will expire in September 2002. On March 18, 2002, the Company entered into a commitment letter (the "Commitment Letter") with SunTrust Bank and SunTrust Capital Markets, pursuant to which SunTrust Bank has agreed to serve as the sole agent and SunTrust Capital Markets has agreed to serve as the lead arranger and book manager for $450 million in new revolving credit facilities (the "New Credit Facilities"). The Company intends to use the New Credit Facilities (i) to replace the Current Credit Facility, (ii) to refinance the Synthetic Lease Facilities and (iii) for working capital and other general corporate purposes. The New Credit Facilities are split between a $300 million three-year revolving credit facility, and a $150 million 364-day revolving credit facility. The Company will pay interest on funds borrowed under the New Credit Facilities at rates that are subject to change based upon the rating of the Company's senior debt by independent agencies. At the Company's current ratings, the facility fees would be 37.5 basis points and 32.5 basis points on the two facilities, respectively, with an all-in drawn margin of LIBOR plus 237.5 basis points. The New Credit Facilities will be secured by the same real estate assets that currently serve as collateral for the Synthetic Lease Facilities. The availability of funding under the New Credit Facilities is subject to the negotiation of final documents and other conditions set forth in the Commitment Letter, which is filed as an exhibit hereto. The Company expects the New Credit Facilities to be finalized by the end of June, 2002, and in any event before the Synthetic Lease Facilities mature and the Current Credit Facility expires, although there can be no assurance that this will be the case. 17
On April 10, 2002, Moody's Investors Service announced that it had lowered its ratings on the Company's outstanding public debt to Ba2. On April 12, 2002, Standard and Poor's announced that it had lowered its ratings on the Company's outstanding public debt to BB+. These ratings downgrades increased the pricing spread over LIBOR paid by the Company under the synthetic lease facility with $212 million in outstanding capital leases. At the Company's current ratings, borrowings under such facility are priced at LIBOR plus 140 basis points, with an all-in drawn margin (including facility fees) of LIBOR plus 180 basis points. The Company has $200 million (principal amount) of 8 5/8% unsecured notes due June 15, 2010. Interest on the notes is payable semi-annually on June 15 and December 15 of each year. The holders of the notes may elect to have their notes repaid on June 15, 2005, at 100% of the principal amount plus accrued and unpaid interest. The Company is currently in discussions with the debt and equity parties with respect to the Company's leases of its distribution centers at Indianola, Mississippi and Fulton, Missouri, relating to an alleged default arising under those leases from the restatement of certain of the Company's financial statements as further described in Part II, Item 1 of this Form 10-Q. The Company reached agreement with the debt parties on those leases to incorporate certain amendments in the debt instruments relating to such properties, but the equity parties objected to such proposed amendments. The Company is now exploring other possible changes to address the concerns of the debt and equity parties, and expects that this matter will be resolved without any material adverse effect to the Company. As further described in Part II, Item 1 of this Form 10-Q, and subject to the contingencies set forth therein, the Company expects to disburse in June or July of the current year approximately $161 million in final settlement of the class action lawsuits filed against the Company as a result of the restatement of the Company's financial statements. The Company expects to fund this amount from existing cash balances. The Company believes that its existing cash balances, cash flow from operations, insurance proceeds expected in connection with the settlement of the class action and derivative lawsuits filed against the Company as a result of the restatement of the Company's financial statements, and its ongoing access to the capital markets (including the New Credit Facilities) will provide sufficient financing to meet the Company's currently foreseeable liquidity and capital resource needs. Cash flows provided by operating activities. Net cash provided by operating activities totaled $74.8 million during the first 13 weeks of 2002, as compared to a $40.0 million source of cash during the comparable period in the prior year. The primary source of this cash in 2002 was the Company's net income plus depreciation and amortization expense, which together totaled $77.9 million. Another significant source of cash in the current year period was an 18
increase in accounts payable of $18.7 million due primarily to increased trade payables of $8.7 million and an increase in checks outstanding that have not yet been presented for payment of $13.4 million. The payment of the Company's management and store bonuses for the 2001 fiscal year, which was the principal factor resulting in a decrease in accrued expenses of $19.8 million was a significant use of cash during the period. The primary source of net cash from operating activities during the prior year period was the Company's net income plus depreciation and amortization expense, which together totaled $66.1 million during the prior year period. Decreases in accounts payable and accrued expenses and an increase in merchandise inventories were uses of cash during the prior year period of $14.7 million, $15.3 million and $9.3 million, respectively. The decrease in accounts payable during the prior year period was attributable primarily to a decrease in checks outstanding that had not yet been presented for payment of $16.6 million. The primary component of the decrease in accrued expenses was a decrease in accrued bonuses of $15.8 million reflecting the payment of store bonuses for the 2000 fiscal year. The increase in inventories reflected primarily the net addition of 196 stores during the period. Cash flows used in investing activities. Net cash used in investing activities during the first 13 weeks of 2002 totaled $34.8 million, as compared to a $35.6 million use of cash during the comparable period in the prior year. The $34.8 million spent in the current year period consisted primarily of $8.8 million for new stores, $9.9 million for various store-related technology projects and $9.5 million for distribution and transportation expenditures. The $35.6 million spent in the prior year period consisted primarily of $15.4 million for new stores and relocations and $16.0 million for various store-related fixtures. Cash flows used in financing activities. Net cash used in financing activities during the first 13 weeks of 2002 was $14.2 million, which consisted principally of $10.6 million in dividends and $3.2 million of debt repayments. Net cash used in financing activities during the comparable period in the prior year was $5.8 million, which consisted principally of $10.6 million in dividends and $3.0 million in debt repayments offset by $8.0 million in proceeds from stock options exercised. Forward-Looking Statements This discussion and analysis 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. These risks include, 19
but are not limited to, those set forth under Item 7 in the Company's Annual Report on Form 10-K for the fiscal year ended February 1, 2002. Item 3. Quantitative and Qualitative Disclosures About Market Risk We have no material changes to the disclosures relating to this item that are set forth in our report on Form 10-K for the fiscal year ended February 1, 2002. Part II - Other Information Item 1. Legal Proceedings Restatement-Related Proceedings On April 30, 2001, the Company announced that it had become aware of certain accounting issues that would cause it to restate its audited financial statements for fiscal years 1999 and 1998, and to restate the unaudited financial information for fiscal year 2000 that had been previously released by the Company. The Company subsequently restated such financial statements and financial information by means of its Form 10-K for the fiscal year ended February 2, 2001, which was filed on January 14, 2002. Following the April 30, 2001, announcement more than 20 purported class action lawsuits were filed against the Company and certain current and former officers and directors of the Company, asserting claims under the federal securities laws. These lawsuits have been consolidated into a single action pending in the United States District Court for the Middle District of Tennessee. On July 17, 2001, the court entered an order appointing the Florida State Board of Administration and the Teachers' Retirement System of Louisiana as lead plaintiffs and the law firms of Entwistle & Cappucci LLP, Milberg Weiss Bershad Hynes & Lerach LLP and Grant & Eisenhofer, P.A. as co-lead counsel. On January 3, 2002, the lead plaintiffs filed an amended consolidated class action complaint. Among other things, plaintiffs have alleged that the Company and certain of its current and former officers and directors made misrepresentations concerning the Company's financial results in the Company's filings with the Securities and Exchange Commission and in various press releases and other public statements. The plaintiffs seek damages with interest, costs and such other relief as the court deems proper. On January 3, 2002, the Company reached a settlement agreement with the putative class action plaintiffs, pursuant to which the Company agreed to pay at least $140 million to such plaintiffs in settlement for their claims and to implement certain enhancements to its corporate governance and internal control procedures. Such agreement was subject to confirmatory discovery, to the final approval of the Company's Board of Directors, and to court approval. Under such settlement agreement, the plaintiffs had the right, following the completion of confirmatory discovery, to amend their complaint and to negotiate 20
with the Company for additional damages, the aggregate amount of all damages to be paid in settlement of plaintiffs' claims not to exceed $162 million. On April 1, 2002, following the completion of such confirmatory discovery, the Company and the putative class action plaintiffs amended their settlement agreement and the plaintiffs filed a second amended complaint, purporting to name as plaintiffs a class of persons who purchased or otherwise made an investment decision regarding the Company's securities and related derivative securities between March 5, 1997 and January 14, 2002. Pursuant to the amended settlement agreement, the Company has agreed to pay $162 million to such plaintiffs in settlement for their claims and to implement certain enhancements to its corporate governance and internal control procedures. Such amended agreement was approved by the court on May 24, 2002. The Company recognized an expense of $162 million in the fourth quarter of 2000 in respect of the class action settlement agreement. Pursuant to the terms of such agreement, the Company disbursed $1 million of such funds in April, 2002. The Company expects to disburse the remaining amount of $161 million in June or July, 2002, provided that all rights to appeal such agreement have expired and that no appeals have been filed as of such date. The Company expects to receive from its insurers approximately $4.5 million in respect of such settlement, which amount has not been accrued in the Company's financial statements. In addition, six purported shareholder derivative lawsuits have been filed in Tennessee State Court against certain current and former Company directors and officers and Deloitte & Touche LLP, the Company's former independent accountant. The Company is named as a nominal defendant in the actions, which seek restitution and/or compensatory and punitive damages with interest, equitable and/or injunctive relief, costs and such further relief as the court deems proper. By order entered October 31, 2001, the court appointed Michael Dixon, Jr., Carolinas Electrical Workers Retirement Fund and Thomas Dewey, plaintiffs in one of the six filed cases, as lead plaintiffs and the law firms of Branstetter, Kilgore Stranch & Jennings and Stanley, Mandel & Iola as lead counsel. In the same order, the court stayed the remaining cases pending completion of the lead case. Among other things, the plaintiffs allege that certain current and former Company directors and officers breached their fiduciary duties to the Company and that Deloitte & Touche aided and abetted those breaches and was negligent in its service as the Company's independent accountant. During August and September 2001, the Company moved to dismiss all six cases for failure to make a pre-suit demand on the Board of Directors and, in the alternative, requested that the court stay the actions pending the completion of an investigation into the allegations in the complaints by the Shareholder Derivative Claim Review Committee of the Company's Board of Directors. The lead plaintiffs filed an opposition to this motion on October 2, 2001. 21
Two purported shareholder derivative lawsuits also have been filed in the United States District Court for the Middle District of Tennessee against certain current and former Company directors and officers alleging that they breached their fiduciary duties to the Company. The Company is named as a nominal defendant in these actions, which seek declaratory relief, compensatory and punitive damages, costs and such further relief as the court deems proper. By motion filed on September 28, 2001, the Company requested that the federal court abstain from exercising jurisdiction over the purported shareholder derivative actions in deference to the pending state court actions. By agreement of the parties and court order dated December 3, 2001, the case has been stayed until June 3, 2002. The Company and the individual defendants have reached a settlement agreement with lead counsel to the plaintiffs in the lead Tennessee state shareholder derivative action. The agreement includes a payment to the Company from a portion of the proceeds of the Company's director and officer liability insurance policies as well as certain corporate governance and internal control enhancements. Pursuant to the terms of such agreement, the Company anticipates that all of the stayed cases, including the federal derivative cases described above, will be dismissed with prejudice by the courts in which they are pending. Following confirmatory discovery, the settlement agreement was preliminarily approved by the Tennessee state court on April 19, 2002, and received final approval, subject to any appeal that may be filed, on June 4, 2002. Provided that all rights to appeal such settlement agreement have expired and that no appeals have been filed, the Company expects that this agreement will result in a net payment to the Company by July 17, 2002, after attorneys' fees payable to the plaintiffs' counsel, of approximately $24.8 million, which has not been accrued in the Company's financial statements. The Company believes that it has substantial defenses to the purported class action and the derivative lawsuits and intends to assert these defenses in the courts in which the actions are pending in the event the settlement agreements referred to above do not successfully resolve these matters. These cases were at an early stage prior to the parties' execution of the settlement agreements, and the amount of potential loss, if any, should the settlement agreements not become effective cannot be reasonably estimated. An unfavorable outcome for the Company in these actions could have a material adverse impact on the Company's financial position and results of operations. In addition, plaintiffs representing fewer than 1% of the shares traded during the class period chose to opt out of the class settlement and may elect to pursue recovery against the Company individually. Because no separate litigation has yet been filed by parties who opted out, the Company cannot estimate the potential liabilities associated with such litigation, but it does not believe that the resolution of any such litigation will have a material effect on the Company's financial position. 22
The Company has been notified that the SEC is conducting an investigation into the circumstances that gave rise to the Company's April 30, 2001, announcement. The Company is cooperating with this investigation by providing documents and other information to the SEC. At this time, the Company is unable to predict the outcome of this investigation and the ultimate effects on the Company. Other Litigation The Company was involved in other litigation, investigations of a routine nature and various legal matters during the reporting period, which were and are being defended and otherwise handled in the ordinary course of business. While the ultimate results of these matters cannot be determined or predicted, management believes that they have not had and will not have a material adverse effect on the Company's results of operations or financial position. Item 4. Submission of Matters to a Vote of Security Holders An Annual Meeting of Shareholders of the Company was held on February 20, 2002. Following is a brief description of the matters voted upon at the meeting and the tabulation of the voting therefor: Proposal 1 - Election of Directors. Number of Votes ------------------------------------------------ Nominee For Withheld Broker Non-Votes - ------- --- -------- ---------------- Dennis C. Bottorff 295,306,431 2,087,055 0 Barbara L. Bowles 295,287,851 2,105,635 0 James L. Clayton 295,302,104 2,091,382 0 Reginald D. Dickson 295,337,415 2,056,071 0 E. Gordon Gee 295,239,153 2,154,333 0 John B. Holland 295,276,458 2,117,028 0 Barbara M. Knuckles 295,251,300 2,142,186 0 Cal Turner 295,267,681 2,125,805 0 David M. Wilds 295,322,340 2,071,146 0 William S. Wire, II 295,300,680 2,092,806 0 Proposal 2 - Shareholder Proposal Regarding Equal Employment Opportunity Information. A shareholder proposal recommending that the Company adopt certain measures regarding equal employment opportunity information was rejected, with 201,041,839 votes cast against, 11,424,922 votes cast for, 8,680,476 votes abstained and 76,246,249 broker non-votes. 23
Proposal 3 - Ratification of the Appointment of Independent Public Accountants. A proposal to ratify the selection of Ernst & Young LLP as independent public accountants for the fiscal year ending February 1, 2002 was adopted, with 295,419,977 votes cast for, 606,032 votes cast against, 1,367,471 votes abstained and no broker non-votes. Item 6. Exhibits and Reports on Form 8-K (a) Exhibits. The exhibit listed on the accompanying Exhibit Index is filed as a part of this report and such Exhibit Index is incorporated herein by reference. (b) Reports on Form 8-K. (1) A Current Report on Form 8-K, dated April 18, 2002, was filed with the SEC in connection with an announcement regarding the signing of a $450 million fully underwritten bank commitment. (2) A Current Report on Form 8-K, dated April 18, 2002, was filed with the SEC in connection with an announcement regarding March 2002 sales results and April 2002 sales expectations. (3) A Current Report on Form 8-K, dated April 4, 2002, was filed with the SEC in connection with an announcement regarding the appointment of James D. Robbins to the Company's Board of Directors and to the Audit Committee of the Company's Board of Directors. (4) A Current Report on Form 8-K, dated March 26, 2002, was filed with the SEC in connection with a conference call held to discuss the Company's business plans and strategy. (5) A Current Report on Form 8-K, dated March 20, 2002, was filed with the SEC in connection with a conference call held to discuss the Company's unaudited financial results for its 2001 fiscal year. (6) A Current Report on Form 8-K, dated February 8, 2002, was filed with the SEC in connection with an announcement regarding January 2002 sales results, sales results for the fourth quarter of fiscal 2001, 2001 annual sales results and February sales expectations. 24
SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. DOLLAR GENERAL CORPORATION By: /s/ James J. Hagan --------------------------------------------- James J. Hagan Executive Vice President and Chief Financial Officer (Principal Financial and Accounting Officer) June 10, 2002 25
EXHIBIT INDEX Pursuant to Item 601 of Regulation S-K Exhibit No. Description of Exhibit - ----------- ---------------------- 10.1 Commitment Letter, dated March 11, 2002, from SunTrust Bank and SunTrust Capital Markets, Inc. to Dollar General Corporation. 26