Dollar General Reports Record Fourth Quarter and Full Year 2012 Financial Results

  Dollar General Reports Record Fourth Quarter and Full Year 2012 Financial
  Results

  *Fourth Quarter Same-Store Sales Increased 3.0%; Full Year Same-Store Sales
    Increased 4.7%
  *Fourth Quarter EPS of $0.97, including $0.02 per share impact of
    retroactive income tax credits
  *Full Year Adjusted EPS of $2.91; Full Year Reported EPS of $2.85
  *Company Increases Share Repurchase Authorization by $500 Million
  *Company Provides Strong 2013 Financial Outlook

Business Wire

GOODLETTSVILLE, Tenn. -- March 25, 2013

Dollar General Corporation (NYSE: DG) today reported record sales, operating
profit and net income for its fiscal 2012 fourth quarter (13 weeks) and full
year (52 weeks) ended February 1, 2013.

“Dollar General had yet another outstanding year in 2012 including
exceptionally strong fourth quarter results. We grew our market share and
invested strategically to continue to win with our customers. These results
demonstrate the strength of our business strategy, and we believe we are very
well-positioned for future growth,” said Rick Dreiling, chairman and chief
executive officer.

“For 2013, we are forecasting another year of strong growth including a total
sales increase of 10 to 12 percent, same-store sales growth of 4 to 6 percent
and adjusted EPS of $3.15 to $3.30,” Mr. Dreiling continued. “We remain
committed to delivering long-term value for our shareholders through increased
earnings and return of cash through ongoing share repurchases.”

Fiscal Fourth Quarter 2012 Highlights

Net sales increased 0.5 percent to $4.21 billion in the 2012 fourth quarter
compared to $4.19 billion in the 2011 fourth quarter. Excluding sales for the
week ending February 3, 2012 (“the 2011 53^rd week”) of $289 million, net
sales increased 8.0 percent. Same-store sales, based on the comparable 13-week
periods ended February 1, 2013 and February 3, 2012, increased 3.0 percent,
resulting from increases in both customer traffic and average transaction
amount. Same-store sales increases were primarily driven by consumables.

The Company’s gross profit, as a percentage of sales, was 32.5 percent in the
2012 fourth quarter compared to 32.2 percent in the 2011 quarter, an increase
of 34 basis points. Factors contributing to the improvement included a
significant reduction in the adjustment to the Company’s LIFO reserve in
addition to improved transportation efficiencies and higher markups, partially
offset by an increase in the mix of consumables, which generally have lower
markups than non-consumables, and higher markdowns. Cost of goods sold
included charges to increase the Company’s LIFO reserve of $0.2 million in the
2012 fourth quarter compared to $22.3 million in the 2011 fourth quarter.

Selling, general and administrative expenses (“SG&A”) were $845 million, or
20.1 percent of sales, in the 2012 13-week fourth quarter, compared to $838
million, or 20.0 percent of sales, in the 2011 14-week quarter. Excluding the
acceleration of equity-based compensation and other expenses resulting from
secondary offerings of the Company’s common stock of $10.3 million in the 2011
quarter, SG&A, as a percentage of sales, increased by 31 basis points. Costs
that increased at a rate higher than the increase in sales include rent
expense, depreciation expense, primarily related to store fixtures and
equipment, and fees associated with the increased use of debit cards. Retail
labor expense, as a percentage of sales, decreased due to efficiencies driven
by the Company’s workforce management system and work simplification efforts.
In the 2011 fourth quarter, SG&A was favorably impacted by increased sales,
including the 2011 53^rd week, among other factors.

Operating profit was $522 million, or 12.4 percent of sales, in the 2012
fourth quarter, compared to $508 million, or 12.1 percent of sales, in the
2011 fourth quarter. Excluding the acceleration of equity-based compensation
and other secondary offering expenses, 2011 fourth quarter operating profit
was $519 million, or 12.4 percent of sales.

Interest expense was $27 million in the 2012 fourth quarter compared to $40
million in the 2011 fourth quarter, with the decrease attributable to lower
all-in interest rates.

The effective income tax rate in the 2012 fourth quarter was 35.9 percent
compared to 37.5 percent in the 2011 fourth quarter. The 2012 fourth quarter
benefited by approximately $6.5 million, or $0.02 per share, from the
retroactive (for employees hired on or after January 1, 2012) reenactment of
the Work Opportunity Tax Credit (“WOTC”). Had WOTC been effective for these
employees from the beginning of the fiscal year, income tax expense in prior
quarters would have been reduced by the following estimated amounts: $2.6
million in the first quarter, $2.3 million in the second quarter and $1.6
million in the third quarter.

Net income for the 2012 fourth quarter was $317 million, or diluted earnings
per share (“EPS”) of $0.97, compared to net income of $293 million, or diluted
EPS of $0.85, in the fourth quarter of fiscal 2011. Adjusted net income, as
defined below, in the 2011 fourth quarter was $299 million, or adjusted
diluted EPS of $0.87. The Company estimates that the 2011 53^rd week
contributed approximately $0.06 per share.

Adjusted net income is defined as net income excluding specifically identified
expenses. For the 2012 and 2011 full years, the adjustments relate to the
acceleration of equity-based compensation and expenses relating to secondary
offerings of the Company’s common stock and net losses on debt repurchases in
each year, $13.1 million relating to two settled legal matters in 2011 and
certain items resulting from debt refinancing and interest rate swaps in 2012.
In the 2011 fourth quarter, the acceleration of equity-based compensation and
other expenses relating to a secondary offering of the Company’s stock were
excluded. The income tax effect of adjustments is also excluded from all
periods presented. A reconciliation of adjusted net income to net income is
presented in the accompanying schedules.

Full Year 2012 Financial Results

Full year 2012 net sales increased 8.2 percent to $16.02 billion compared to
net sales of $14.81 billion in 2011. Excluding the impact of the 2011 53^rd
week, net sales increased 10.4 percent. Same-store sales, based on the
comparable 52-week periods ended February 1, 2013 and February 3, 2012,
increased 4.7 percent, including increases in both customer traffic and
average transaction amount, resulting from the refinement of the Company’s
merchandise offerings, improvements in category management processes and store
standards, and increased utilization of store square footage. The increase in
sales of consumables outpaced non-consumables, with sales of snacks, candy,
beverages and perishables contributing the majority of the increase throughout
the year.

The Company’s gross profit rate was 31.7 percent of sales in 2012 and 2011.
Factors favorably impacting the gross profit rate included a significantly
lower LIFO provision, higher inventory markups, and improved transportation
efficiencies due in part to a decrease in average miles per delivery enabled
by the Company's new distribution centers and other logistics initiatives.
These positive factors were offset by higher markdowns, a reduction in price
increases and a modest increase in the inventory shrinkage rate compared to
2011. In addition, consumables, which generally have lower markups than
non-consumables, represented a greater percentage of sales in 2012 than in
2011. Primarily as the result of lower inflation on commodities in 2012, the
LIFO provision decreased to $1.4 million in 2012 compared to $47.7 million in
2011.

Full year SG&A expense was 21.4 percent of sales in 2012 compared to 21.7
percent in 2011, an improvement of 25 basis points. Retail labor expense
increased at a lower rate than the increase in sales, partially due to ongoing
benefits of the Company’s workforce management system coupled with savings due
to various store work simplification initiatives. Also positively impacting
SG&A were lower legal settlement expenses in 2012 due to two legal matters
settled in 2011 for a combined cost of $13.1 million and the impact of
decreased expenses ($2.9 million in 2012 compared to $11.1 million in 2011)
relating to secondary offerings of the Company’s common stock. Costs that
increased at a rate higher than the increase in sales included rent expense,
fees associated with the increased use of debit cards and depreciation
expense, primarily related to additions of certain store equipment and
fixtures. SG&A in 2011 was favorably impacted by increased sales, including
the 2011 53^rd week, among other factors.

Full year operating profit increased by 11 percent to $1.66 billion, or 10.3
percent of sales, in 2012 compared to $1.49 billion, or 10.1 percent of sales,
in 2011. Excluding the acceleration of equity-based compensation and other
secondary offering expenses from both years and expenses related to certain
legal settlements in 2011, operating profit increased 9 percent to $1.66
billion, or 10.4 percent of sales, in 2012 compared to $1.52 billion, or 10.2
percent of sales, in 2011.

Interest expense in 2012 was $128 million, a decrease of $77 million from
2011, due to lower average outstanding long-term obligations, resulting from
repurchases and refinancing of indebtedness in 2012 and 2011 and lower all-in
interest rates on long-term obligations.

Other (income) expense in 2012 included pretax losses totaling $29.0 million
resulting from the repurchase of the Company’s 11.875%/12.125% senior
subordinated notes. Other (income) expense in 2011 includes pretax losses
totaling $60.3 million resulting from the repurchase of the Company’s 10.625%
senior notes.

The effective income tax rate for 2012 was 36.4 percent compared to a rate of
37.4 percent for 2011. The 2012 income tax rate was lower than the 2011 rate
primarily due to an adjustment of $14.5 million, or $0.04 per diluted share,
associated with an adjustment of accruals due to the favorable resolution of
income tax audits, which was recorded in the fiscal 2012 second quarter.

The Company reported net income of $953 million, or diluted EPS of $2.85 for
fiscal year 2012 compared to net income of $767 million, or diluted EPS of
$2.22 for fiscal year 2011. Adjusted net income, as defined above and as
reconciled to net income in the accompanying schedules, increased 19 percent
to $973 million, or $2.91 per diluted share, in fiscal 2012, compared to
adjusted net income of $819 million, or $2.37 per diluted share, in fiscal
2011.

Merchandise Inventories

As of February 1, 2013, total merchandise inventories, at cost, were $2.40
billion compared to $2.01 billion as of February 3, 2012, an increase of 13
percent on a per-store basis. Annual inventory turns were 5.0 times in 2012.
The increase in per-store inventories was due to several factors including new
items introduced in 2012, improved presentation levels of select categories
and early receipt of items related to the Company’s 2013 planogram changes,
including the “Phase Five” initiative to increase productivity in older format
stores.

Capital Expenditures

Total additions to property and equipment in 2012 were $572 million,
including: $155 million for new leased stores; $132 million for stores
purchased or built by the Company; $83 million for distribution centers; $80
million for remodels and relocations of existing stores; $71 million for
improvements and upgrades to existing stores; $27 million for information
systems upgrades and technology-related projects; and $17 million for
transportation-related capital.

During 2012, the Company opened 625 new stores and remodeled or relocated 592
stores.

Share Repurchases

In 2012, the Company repurchased $671 million, or 14.4 million shares, under
its share repurchase program, including $75 million, or 1.7 million shares,
repurchased in the 2012 fourth quarter. Since the inception of the program in
December 2011, the Company has repurchased 19.3 million shares totaling $856
million. Including an additional $500 million authorization by the Company’s
board of directors on March 19, 2013, $644 million remains available for
repurchase under the Company’s share repurchase program.

Fiscal 2013 Financial Outlook

For the 2013 fiscal year, the Company expects total sales to increase 10 to 12
percent over the 2012 fiscal year. Same-store sales are expected to increase 4
to 6 percent. Operating profit for 2013 is expected to be in the range of
$1.780 billion to $1.845 billion. The Company expects sales and EPS growth to
be stronger in the second half of the year as merchandising initiatives are
implemented, including the rollout of tobacco products to substantially all
stores and the completion of “Phase Five.” In particular, the first quarter
sales comparison is very challenging as the Company laps a very strong 6.7
percent same-store sales increase in the 2012 first quarter.

The Company expects full year interest expense to be in the range of $100
million to $110 million. Diluted EPS for the fiscal year, adjusted to exclude
potential charges or expenses relating to amendments to or refinancing of any
notes, loans or revolving credit facilities and any expenses resulting from
potential secondary stock offerings, is expected to be approximately $3.15 to
$3.30, based on approximately 327 million weighted average diluted shares,
assuming share repurchases. The full year 2013 effective tax rate is expected
to be approximately 38 percent.

Capital expenditures are expected to be in the range of $575 million to $625
million in 2013. Approximately 50 percent of planned capital spending is for
investment in store growth and development, including new stores, remodels,
relocations and purchases of existing store locations; approximately 30
percent is planned for transportation, distribution and special projects; and
the remaining 20 percent is expected to be spent on maintenance capital. The
Company plans to open approximately 635 new stores, including approximately 20
Dollar General Market stores and 40 Dollar General Plus stores. In addition,
the Company plans to remodel or relocate a total of approximately 550 stores.
Square footage is again expected to increase by approximately 7 percent. The
Company expects its new Pennsylvania distribution center to be fully
operational in the first quarter of fiscal 2014.

The Company plans to utilize a portion of its cash flows in 2013 to repurchase
common stock under its share repurchase program, while targeting a ratio of
adjusted debt, which includes an adjustment to estimate capitalized rent based
on rent expense times 8, to adjusted EBITDAR (defined as earnings before
interest, income taxes, depreciation, amortization and rent) at or below 3.0
to 1.

The volatility of the macroeconomic environment continues to pressure the
consumer and impact the Company’s cost of purchasing and delivering
merchandise to its stores. Management continues to closely monitor customers’
responses to the economic and competitive climates.

Conference Call Information

The Company will hold a conference call on Monday morning, March 25, 2013 at
9:00 a.m. CT/10:00 a.m. ET, hosted by Rick Dreiling, chairman and chief
executive officer, and David Tehle, chief financial officer. If you wish to
participate, please call (866) 710-0179 at least 10 minutes before the
conference call is scheduled to begin. The pass code for the conference call
is “Dollar General.” The call will also be broadcast live online at
www.dollargeneral.com under “Investor Information, Conference Calls and
Investor Events.” A replay of the conference call will be available through
Monday, April 8, 2013, and will be accessible online or by calling (334)
323-7226. The pass code for the replay is 63588652.

Non-GAAP Disclosure

Certain financial information provided in this press release and the
accompanying tables has not been derived in accordance with generally accepted
accounting principles (“GAAP”), including adjusted net income and adjusted
diluted EPS. The Company has also provided calculations of EBITDA (defined as
earnings before interest, income taxes, depreciation and amortization),
adjusted EBITDA, adjusted EBITDAR and adjusted debt, which are non-GAAP
measures.

Reconciliations of all of these non-GAAP measures to the most directly
comparable measures calculated in accordance with GAAP are provided in the
accompanying schedules. In addition, for reference, the schedules also include
calculations of SG&A and operating profit, excluding certain expenses. In
addition to historical results, guidance for fiscal 2013 is based on
comparable adjustments.

The Company believes that providing comparisons to net income and diluted
earnings per share, adjusted for the items shown in the accompanying
reconciliations, provides useful information to the reader in assessing the
Company’s operating performance. The Company believes that the presentation of
EBITDA and adjusted EBITDA is appropriate to provide additional information
about the calculation of the senior secured incurrence test, a material
financial ratio in the Company’s credit agreements. Adjusted EBITDA is a
material component of that ratio. Adjusted debt and adjusted EBITDAR are used
in the Company’s calculation of adjusted debt to adjusted EBITDAR, which is
considered by the Company to be an important measure of financial leverage.

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 earnings
per share, operating income, cash flows from operations or any other
performance measures determined in accordance with GAAP. Additionally, EBITDA,
adjusted EBITDA and adjusted EBITDAR are not intended to be measures of free
cash flow for management’s discretionary use, as they do not consider certain
cash requirements such as interest payments, tax payments, debt service
requirements and replacement of fixed assets. 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
under GAAP.

Forward-Looking Statements

This press release contains forward-looking information, such as the
information in the sections entitled “Fiscal 2013 Financial Outlook” as well
as other statements regarding the Company's outlook, plans and intentions. A
reader can identify forward-looking statements because they are not limited to
historical fact or they use words such as “may,” “should,” “could,” “believe,”
“anticipate,” “project,” “plan,” “schedule,” “on track,” “expect,” “estimate,”
“objective,” “forecast,” “goal,” “focus,” “intend,” “committed,” “continue,”
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 was
expected. The Company derives many of these statements from its operating
budgets and forecasts, 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, and the Company cannot anticipate all factors that
could affect its actual 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:

  *failure to successfully execute the Company’s growth strategy, including
    delays in store growth or in effecting relocations or remodels,
    difficulties executing sales and operating profit margin initiatives and
    inventory shrinkage reduction;
  *the failure of the Company’s new store base to achieve sales and operating
    levels consistent with the Company’s expectations;
  *risks and challenges in connection with sourcing merchandise from domestic
    and foreign vendors, as well as trade restrictions;
  *the Company’s level of success in gaining and maintaining broad market
    acceptance of its private brands and in achieving its other initiatives;
  *unfavorable publicity or consumer perception of the Company’s products;
  *the Company’s debt levels and restrictions in its debt agreements;
  *economic conditions, including their effect on the financial and capital
    markets, the Company’s suppliers and business partners, employment levels,
    consumer demand, disposable income, credit availability and spending
    patterns, inflation and the cost of goods;
  *increases in commodity prices (including, without limitation, cotton,
    wheat, corn, sugar, oil, paper, nuts and resin);
  *levels of inventory shrinkage;
  *seasonality of the Company’s business;
  *increases in costs of fuel or other energy, transportation or utilities
    costs and in the costs of labor, employment and healthcare;
  *the impact of changes in or noncompliance with governmental laws and
    regulations (including, but not limited to, product safety, healthcare and
    unionization) and developments in and outcomes of legal proceedings,
    investigations or audits;
  *disruptions, unanticipated expenses or operational failures in the
    Company’s supply chain including, without limitation, a decrease in
    transportation capacity for overseas shipments or work stoppages or other
    labor disruptions that could impede the receipt of merchandise or increase
    the cost of such receipt;
  *delays or unanticipated expenses in constructing or opening new
    distribution centers;
  *damage to or interruption of the Company’s information systems;
  *a data security breach;
  *changes in the competitive environment in the Company’s industry and the
    markets where the Company operates;
  *natural disasters, unusual weather conditions, pandemic outbreaks,
    boycotts, war and geo-political events;
  *the incurrence of material uninsured losses, excessive insurance costs or
    accident costs;
  *the Company’s failure to protect its brand name;
  *the Company’s loss of key personnel or the Company’s inability to hire
    additional qualified personnel;
  *interest rate and currency exchange fluctuations;
  *the Company’s failure to maintain effective internal controls;
  *changes to income tax expense due to changes in or interpretation of tax
    laws, or as a result of federal or state income tax examinations;
  *changes to or new accounting guidance, such as changes to lease accounting
    guidance or a requirement to convert to international financial reporting
    standards;
  *the factors disclosed under “Risk Factors” in the Company’s most recent
    Annual Report on Form 10-K filed with the Securities and Exchange
    Commission; 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
other 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 to update or revise any forward-looking
statement 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 70
years. Dollar General helps shoppers Save time. Save money. Every day!(R) by
offering products that are frequently used and replenished, such as food,
snacks, health and beauty aids, cleaning supplies, basic apparel, house wares
and seasonal items at low everyday prices in convenient neighborhood
locations. With 10,506 stores in 40 states as of February 1, 2013, Dollar
General has more retail locations in the U.S. than any other retailer. In
addition to high quality private brands, Dollar General sells products from
America’s most-trusted manufacturers such as Procter & Gamble, Kimberly-Clark,
Unilever, Kellogg’s, General Mills, Nabisco, Hanes, PepsiCo and Coca-Cola.
Learn more about Dollar General at www.dollargeneral.com.


DOLLAR GENERAL CORPORATION AND SUBSIDIARIES
Consolidated Balance Sheets
(In thousands)
                                                          
                                            February 1,        February 3,
                                            2013             2012
ASSETS
Current assets:
Cash and cash equivalents                   $ 140,809          $ 126,126
Merchandise inventories                       2,397,175          2,009,206
Prepaid expenses and other current         139,129        139,742    
assets
Total current assets                       2,677,113      2,275,074  
Net property and equipment                 2,088,665      1,794,960  
Goodwill                                   4,338,589      4,338,589  
Other intangible assets, net               1,219,543      1,235,954  
Other assets, net                          43,772         43,943     
Total assets                              $ 10,367,682    $ 9,688,520  
                                                                             
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Current portion of long-term                $ 892              $ 590
obligations
Accounts payable                              1,261,607          1,064,087
Accrued expenses and other                    357,438            397,075
Income taxes payable                          95,387             44,428
Deferred income taxes                      23,223         3,722      
Total current liabilities                  1,738,547      1,509,902  
Long-term obligations                      2,771,336      2,617,891  
Deferred income taxes                      647,070        656,996    
Other liabilities                          225,399        229,149    
Total liabilities                          5,382,352      5,013,938  
                                                                             
Commitments and contingencies
                                                                             
Shareholders’ equity:
Preferred stock                               -                  -
Common stock                                  286,185            295,828
Additional paid-in capital                    2,991,351          2,967,027
Retained earnings                             1,710,732          1,416,918
Accumulated other comprehensive loss       (2,938     )    (5,191    ) 
Total shareholders’ equity                 4,985,330      4,674,582  
Total liabilities and shareholders’       $ 10,367,682    $ 9,688,520  
equity
                                                                             


DOLLAR GENERAL CORPORATION AND SUBSIDIARIES
Consolidated Statements of Income
(In thousands, except per share amounts)
(Unaudited)

                   For the Quarter Ended
                     February 1,               February 3,   
                     2013             % of Net     2012             % of Net
                     (13 Weeks)     Sales      (14 Weeks)     Sales
Net sales            $ 4,207,621      100.00 %     $ 4,185,073      100.00 %
Cost of goods       2,839,822    67.49      2,838,704    67.83   
sold
Gross profit           1,367,799      32.51          1,346,369      32.17
Selling, general
and                 845,450      20.09      838,129      20.03   
administrative
expenses
Operating profit       522,349        12.41          508,240        12.14
Interest expense       27,460         0.65           40,069         0.96
Other (income)      -            -          51           -       
expense
Income before          494,889        11.76          468,120        11.19
income taxes
Income tax          177,467      4.22       175,610      4.20    
expense
Net income         $ 317,422      7.54   %   $ 292,510      6.99   % 
                                                                             
Earnings per
share:
Basic                $ 0.97                        $ 0.86
Diluted              $ 0.97                        $ 0.85
Weighted average
shares
outstanding:
Basic                  327,596                       340,021
Diluted                328,857                       343,794
                                                                             
                                                                             
                     For the Year Ended
                     February 1,                   February 3,
                     2013             % of Net     2012             % of Net
                     (52 Weeks)     Sales      (53 Weeks)     Sales
Net sales            $ 16,022,128     100.00 %     $ 14,807,188     100.00 %
Cost of goods       10,936,727   68.26      10,109,278   68.27   
sold
Gross profit           5,085,401      31.74          4,697,910      31.73
Selling, general
and                 3,430,125    21.41      3,207,106    21.66   
administrative
expenses
Operating profit       1,655,276      10.33          1,490,804      10.07
Interest expense       127,926        0.80           204,900        1.38
Other (income)      29,956       0.19       60,615       0.41    
expense
Income before          1,497,394      9.35           1,225,289      8.27
income taxes
Income tax          544,732      3.40       458,604      3.10    
expense
Net income         $ 952,662      5.95   %   $ 766,685      5.18   % 
                                                                             
Earnings per
share:
Basic                $ 2.87                        $ 2.25
Diluted              $ 2.85                        $ 2.22
Weighted average
shares
outstanding:
Basic                  332,254                       341,234
Diluted                334,469                       345,117
                                                                             


DOLLAR GENERAL CORPORATION AND SUBSIDIARIES
Consolidated Statements of Cash Flows
(In thousands)
(Unaudited)

                                          For the Year Ended
                                            February 1,      February 3,
                                            2013               2012
                                            (52 Weeks)       (53 Weeks)
Cash flows from operating activities:
Net income                                  $ 952,662          $ 766,685
Adjustments to reconcile net income to
net cash from operating activities:
Depreciation and amortization                 302,911            275,408
Deferred income taxes                         (2,605     )       10,232
Tax benefit of stock options                  (87,752    )       (33,102   )
Loss on debt retirement, net                  30,620             60,303
Non-cash share-based compensation             21,664             15,250
Other non-cash gains and losses               6,774              54,190
Change in operating assets and
liabilities:
Merchandise inventories                       (391,409   )       (291,492  )
Prepaid expenses and other current            5,553              (34,554   )
assets
Accounts payable                              194,035            104,442
Accrued expenses and other liabilities        (36,741    )       71,763
Income taxes                                  138,711            51,550
Other                                      (3,071     )    (195      ) 
Net cash provided by (used in)             1,131,352      1,050,480  
operating activities
                                                                             
Cash flows from investing activities:
Purchases of property and equipment           (571,596   )       (514,861  )
Proceeds from sales of property and        1,760          1,026      
equipment
Net cash provided by (used in)             (569,836   )    (513,835  ) 
investing activities
                                                                             
Cash flows from financing activities:
Issuance of long-term obligations             500,000            -
Repayments of long-term obligations           (478,255   )       (911,951  )
Borrowings under revolving credit             2,286,700          1,157,800
facility
Repayments of borrowings under                (2,184,900 )       (973,100  )
revolving credit facility
Debt issue costs                              (15,278    )       -
Repurchases of common stock                   (671,459   )       (186,597  )
Other equity transactions, net of             (71,393    )       (27,219   )
employee taxes paid
Tax benefit of stock options               87,752         33,102     
Net cash provided by (used in)             (546,833   )    (907,965  ) 
financing activities
                                                                             
Net increase (decrease) in cash and           14,683             (371,320  )
cash equivalents
Cash and cash equivalents, beginning of    126,126        497,446    
period
Cash and cash equivalents, end of         $ 140,809       $ 126,126    
period
                                                                             
Supplemental cash flow information:
Cash paid for:
Interest                                    $ 121,712          $ 209,351
Income taxes                                $ 422,333          $ 382,294
Supplemental schedule of non-cash
investing and financing activities:
Purchases of property and equipment
awaiting processing for payment,            $ 39,147           $ 35,662
included in Accounts payable
Purchases of property and equipment         $ 3,440            $ -
under capital lease obligations
                                                                             


DOLLAR GENERAL CORPORATION AND SUBSIDIARIES
Selected Additional Information
(Unaudited)

Sales by Category (in thousands)

                  For the Quarter Ended                  
                    February 1, 2013   February 3, 2012
                    (13 Weeks)           (14 Weeks)           % Change
Consumables         $   3,042,496        $  2,987,830         1.8      %
Seasonal                639,627             657,541           -2.7     %
Home products           288,742             298,257           -3.2     %
Apparel                236,756          241,445          -1.9     %   
Net sales           $   4,207,621      $  4,185,073        0.5      %   
                                                                           
                    For the Year Ended
                    February 1, 2013     February 3, 2012
                    (52 Weeks)           (53 Weeks)           % Change
Consumables         $   11,844,846       $  10,833,735        9.3      %
Seasonal                2,172,399           2,051,098         5.9      %
Home products           1,061,573           1,005,219         5.6      %
Apparel                943,310          917,136          2.9      %   
Net sales           $   16,022,128     $  14,807,188       8.2      %   



Store Activity

                                         For the Year Ended
                                         February 1, 2013     February 3, 2012
                                         (52 Weeks)           (53 Weeks)
                                                                           
Beginning store count                       9,937             9,372
New store openings                          625               625
Store closings                             (56         )   (60      )   
Net new stores                             569            565         
Ending store count                         10,506         9,937       
Total selling square footage (000’s)       76,909         71,774      
Growth rate (square footage)               7.2         %   7.0      %   



DOLLAR GENERAL CORPORATION AND SUBSIDIARIES
Reconciliation of Non-GAAP Financial Measures
Adjusted Net Income and Adjusted Diluted Earnings Per Share
Selling, General & Administrative Expenses and Operating Profit, Excluding Certain Items
(in millions, except per share amounts)

                 For the Quarter Ended                                              
                   February 1, 2013           February 3, 2012             Increase
                   (13 Weeks)                   (14 Weeks)                   
                                    % of                         % of
                   $                        $                        $           %
                                    Net                          Net
                                    Sales                        Sales
                                                            
Net sales        $ 4,207.6              $ 4,185.1                $ 22.5        0.5  %
                                                                                           
Selling,
general and        $ 845.5          20.09 %     $ 838.1          20.03 %     $ 7.4         0.9  %
administrative
(“SG&A”)
Secondary
offering             -                            (0.5     )
expenses
Acceleration
of                -                     (9.8     )   
equity-based
compensation
SG&A,
excluding        $ 845.5       20.09 %   $ 827.8       19.78 %     $ 17.7        2.1  %
certain items
                                                                                           
Operating          $ 522.3          12.41 %     $ 508.2          12.14 %     $ 14.1        2.8  %
profit
Secondary
offering             -                            0.5
expenses
Acceleration
of                -                     9.8         
equity-based
compensation
Operating
profit,          $ 522.3       12.41 %   $ 518.5       12.39 %     $ 3.8         0.7  %
excluding
certain items
                                                                                           
Net income         $ 317.4          7.54  %     $ 292.5          6.99  %     $ 24.9        8.5  %
Secondary
offering             -                            0.5
expenses
Acceleration
of                -                     9.8         
equity-based
compensation
Total
adjustments,      -                     10.3        
before income
taxes
Income tax
effect of         -                     (3.8     )   
adjustments
Net               -                     6.5         
adjustments
Adjusted net     $ 317.4       7.54  %   $ 299.0       7.14  %     $ 18.4        6.2  %
income
                                                                                           
Diluted
earnings per
share:
As reported        $ 0.97                       $ 0.85                       $ 0.12        14.1 %
Adjusted           $ 0.97                       $ 0.87                       $ 0.10        11.5 %
                                                                                           
Weighted
average              328.9                        343.8
diluted shares
                                                                                           
                                                                                           
                   For the Year Ended
                   February 1, 2013             February 3, 2012             Increase
                   (52 Weeks)                   (53 Weeks)                   
                                    % of                         % of
                   $                        $                        $           %
                                    Net                          Net
                                    Sales                        Sales
                                                                                           
Net sales        $ 16,022.1             $ 14,807.2               $ 1,214.9     8.2  %
                                                                                           
Selling,
general and        $ 3,430.1        21.41 %     $ 3,207.1        21.66 %     $ 223.0       7.0  %
administrative
(“SG&A”)
Litigation           -                            (13.1    )
settlements
Secondary
offering             (1.4     )                   (0.8     )
expenses
Acceleration
of                (1.5     )             (10.3    )   
equity-based
compensation
SG&A,
excluding        $ 3,427.2     21.39 %   $ 3,182.9     21.50 %     $ 244.3       7.7  %
certain items
                                                                                           
Operating          $ 1,655.3        10.33 %     $ 1,490.8        10.07 %     $ 164.5       11.0 %
profit
Litigation           -                            13.1
settlements
Secondary
offering             1.4                          0.8
expenses
Acceleration
of                1.5                   10.3        
equity-based
compensation
Operating
profit,          $ 1,658.2     10.35 %   $ 1,515.0     10.23 %     $ 143.2       9.4  %
excluding
certain items
                                                                                           
Net income         $ 952.7          5.95  %     $ 766.7          5.18  %     $ 186.0       24.3 %
Litigation           -                            13.1
settlements
Secondary
offering             1.4                          0.8
expenses
Acceleration
of                   1.5                          10.3
equity-based
compensation
Adjustment for
settlement of        (2.5     )                   -
interest rate
swaps
Write-off of
capitalized          1.6                          -
debt costs
Debt amendment       1.7                          -
fees
Repurchase of
long-term         29.0                  60.3        
obligations,
net
Total
adjustments       32.7                  84.5        
before income
taxes
Income tax
effect of         (12.3    )             (32.7    )   
adjustments
Net               20.4                  51.8        
adjustments
Adjusted net     $ 973.1       6.07  %   $ 818.5       5.53  %     $ 154.6       18.9 %
income
                                                                                           
Diluted
earnings per
share:
As reported        $ 2.85                       $ 2.22                       $ 0.63        28.4 %
Adjusted           $ 2.91                       $ 2.37                       $ 0.54        22.8 %
                                                                                           
Weighted
average              334.5                        345.1
diluted shares
outstanding
                                                                                           


DOLLAR GENERAL CORPORATION AND SUBSIDIARIES
Reconciliation of Non-GAAP Financial Measures (Continued)

RECONCILIATION OF NET INCOME TO EBITDA, ADJUSTED EBITDA AND ADJUSTED EBITDAR

                  For the Quarter Ended        For the Year Ended
                    February 1,   February       February 1,   February 3,
                                    3,
(In millions)       2013          2012           2013          2012
                    (13 Weeks)    (14 Weeks)     (52 Weeks)    (53 Weeks)
                                                                             
Net income          $  317.5        $   292.5      $ 952.7         $ 766.7
Add (subtract):
Interest               27.4             40.0         127.9           204.9
expense
Depreciation
and                    78.1             68.1         293.5           264.1
amortization
Income taxes          177.4        175.6       544.7       458.6   
EBITDA                600.4        576.2       1,918.8     1,694.3 
                                                                             
Adjustments:
Loss on debt           -                -            30.6            60.3
retirement, net
(Gain) loss on
hedging                -                0.1          (2.4    )       0.4
instruments
Non-cash
expense for            6.3              4.3          21.7            15.3
share-based
awards
Litigation
settlement and         -                -            -               13.1
related costs,
net
Indirect costs
related to             0.1              0.5          1.4             0.9
merger and
stock offering
Other non-cash
charges                (0.3   )         22.6         10.4            53.3
(including
LIFO)
Other                 -            -           2.5         -       
Total                 6.1          27.5        64.2        143.3   
Adjustments
Adjusted EBITDA     $  606.5     $   603.7      $ 1,983.0    $ 1,837.6 
Rent Expense                                        614.3       542.3   
Adjusted                                           $ 2,597.3    $ 2,379.9 
EBITDAR
                                                                             


DOLLAR GENERAL CORPORATION AND SUBSIDIARIES
Reconciliation of Non-GAAP Financial Measures
(Continued)
(Dollars in millions)

Senior Secured Incurrence Test
                                                              
                                                   February 1,     February 3,
                                                   2013            2012
Senior secured debt                                $  2,272.2      $  2,167.8
Less: cash                                           140.8          126.1
Senior secured debt, net of cash                   $  2,131.4      $  2,041.7
Adjusted EBITDA                                    $  1,983.0      $  1,837.6
Ratio of senior secured debt, net of cash, to      1.07x           1.11x
Adjusted EBITDA
                                                                   
Calculation of Ratio of Long-Term Obligations to Adjusted EBITDA
                                                                   
                                                   February 1,     February 3,
                                                   2013            2012
Total long-term obligations                        $  2,772.2      $  2,618.5
Adjusted EBITDA                                    $  1,983.0      $  1,837.6
Ratio of long-term obligations to Adjusted         1.40x           1.42x
EBITDA
                                                                   
Calculation of Ratio of Long-Term Obligations, net of Cash, to Adjusted EBITDA
                                                                   
                                                   February 1,     February 3,
                                                   2013            2012
Total long-term obligations                        $  2,772.2      $  2,618.5
Less: cash                                           140.8          126.1
Total long-term obligations, net of cash           $  2,631.4      $  2,492.4
Adjusted EBITDA                                    $  1,983.0      $  1,837.6
Ratio of long-term obligations, net of cash,       1.33x           1.36x
to Adjusted EBITDA
                                                                   
Calculation of Adjusted Debt to Adjusted EBITDAR
                                                                   
                                                   February 1,     February 3,
                                                   2013            2012
Total long-term obligations                        $  2,772.2      $  2,618.5
Add: Rent x 8                                        4,914.4        4,338.4
Adjusted Debt                                      $  7,686.6      $  6,956.9
Adjusted EBITDAR                                   $  2,597.3      $  2,379.9
Ratio of Adjusted Debt to Adjusted EBITDAR         2.96x           2.92x
                                                                   

Contact:

Dollar General Corporation
Investor Contacts:
Mary Winn Gordon, 615-855-5536
or
Emma Jo Kauffman, 615-855-5525
or
Media Contacts:
Dan MacDonald, 615-855-5209
or
Crystal Ghassemi, 615-855-5210
 
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