Document and Entity Information
Document and Entity Information - shares | 3 Months Ended | |
Apr. 29, 2016 | May. 20, 2016 | |
Document and Entity Information | ||
Entity Registrant Name | DOLLAR GENERAL CORP | |
Entity Central Index Key | 29,534 | |
Document Type | 10-Q | |
Document Period End Date | Apr. 29, 2016 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --02-03 | |
Entity Current Reporting Status | Yes | |
Entity Filer Category | Large Accelerated Filer | |
Entity Common Stock, Shares Outstanding | 283,778,285 | |
Document Fiscal Year Focus | 2,016 | |
Document Fiscal Period Focus | Q1 |
CONDENSED CONSOLIDATED BALANCE
CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands | Apr. 29, 2016 | Jan. 29, 2016 |
Current assets: | ||
Cash and cash equivalents | $ 187,687 | $ 157,947 |
Merchandise inventories | 3,072,063 | 3,074,153 |
Income taxes receivable | 6,827 | 6,843 |
Prepaid expenses and other current assets | 210,769 | 193,467 |
Total current assets | 3,477,346 | 3,432,410 |
Net property and equipment | 2,278,081 | 2,264,062 |
Goodwill | 4,338,589 | 4,338,589 |
Other intangible assets, net | 1,200,904 | 1,200,994 |
Other assets, net | 21,464 | 21,830 |
Total assets | 11,316,384 | 11,257,885 |
Current liabilities: | ||
Current portion of long-term obligations | 1,526 | 1,379 |
Accounts payable | 1,447,223 | 1,494,225 |
Accrued expenses and other | 440,697 | 467,122 |
Income taxes payable | 122,148 | 32,870 |
Total current liabilities | 2,011,594 | 1,995,596 |
Long-term obligations | 2,989,663 | 2,969,175 |
Deferred income taxes | 647,626 | 639,955 |
Other liabilities | $ 279,118 | $ 275,283 |
Commitments and contingencies | ||
Shareholders' equity: | ||
Preferred stock | ||
Common stock | $ 249,096 | $ 250,855 |
Additional paid-in capital | 3,124,110 | 3,107,283 |
Retained earnings | 2,020,784 | 2,025,545 |
Accumulated other comprehensive loss | (5,607) | (5,807) |
Total shareholders' equity | 5,388,383 | 5,377,876 |
Total liabilities and shareholders' equity | $ 11,316,384 | $ 11,257,885 |
CONDENSED CONSOLIDATED STATEMEN
CONDENSED CONSOLIDATED STATEMENTS OF INCOME - USD ($) shares in Thousands, $ in Thousands | 3 Months Ended | |
Apr. 29, 2016 | May. 01, 2015 | |
CONDENSED CONSOLIDATED STATEMENTS OF INCOME | ||
Net sales | $ 5,265,432 | $ 4,918,672 |
Cost of goods sold | 3,652,818 | 3,419,967 |
Gross profit | 1,612,614 | 1,498,705 |
Selling, general and administrative expenses | 1,131,871 | 1,070,511 |
Operating profit | 480,743 | 428,194 |
Interest expense | 24,081 | 21,576 |
Income before income taxes | 456,662 | 406,618 |
Income tax expense | 161,538 | 153,383 |
Net income | $ 295,124 | $ 253,235 |
Earnings per share: | ||
Basic (in dollars per share) | $ 1.03 | $ 0.84 |
Diluted (in dollars per share) | $ 1.03 | $ 0.84 |
Weighted average shares outstanding: | ||
Basic (in shares) | 285,886 | 301,202 |
Diluted (in shares) | 286,978 | 302,089 |
Dividends per share (in dollars per share) | $ 0.25 | $ 0.22 |
CONDENSED CONSOLIDATED STATEME4
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME - USD ($) $ in Thousands | 3 Months Ended | |
Apr. 29, 2016 | May. 01, 2015 | |
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME | ||
Net income | $ 295,124 | $ 253,235 |
Unrealized net gain (loss) on hedged transactions, net of related income tax expense (benefit) of $130 and $481, respectively | 200 | 758 |
Comprehensive income | $ 295,324 | $ 253,993 |
CONDENSED CONSOLIDATED STATEME5
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (Parenthetical) - USD ($) $ in Thousands | 3 Months Ended | |
Apr. 29, 2016 | May. 01, 2015 | |
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME | ||
Unrealized net gain (loss) on hedged transactions, income tax expense (benefit) | $ 130 | $ 481 |
CONDENSED CONSOLIDATED STATEME6
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands | 3 Months Ended | |
Apr. 29, 2016 | May. 01, 2015 | |
Cash flows from operating activities: | ||
Net income | $ 295,124 | $ 253,235 |
Adjustments to reconcile net income to net cash from operating activities: | ||
Depreciation and amortization | 92,324 | 87,152 |
Deferred income taxes | 7,541 | (10,095) |
Noncash share-based compensation | 10,253 | 10,125 |
Other noncash (gains) and losses | (440) | 1,407 |
Change in operating assets and liabilities: | ||
Merchandise inventories | 3,476 | (57,103) |
Prepaid expenses and other current assets | (16,676) | (12,241) |
Accounts payable | (55,267) | 40,123 |
Accrued expenses and other liabilities | (21,416) | (17,976) |
Income taxes | 89,294 | 75,865 |
Other | (260) | (282) |
Net cash provided by (used in) operating activities | 403,953 | 370,210 |
Cash flows from investing activities: | ||
Purchases of property and equipment | (98,968) | (99,929) |
Proceeds from sales of property and equipment | 323 | 163 |
Net cash provided by (used in) investing activities | (98,645) | (99,766) |
Cash flows from financing activities: | ||
Repayments of long-term obligations | (497) | (25,346) |
Borrowings under revolving credit facilities | 751,000 | 13,000 |
Repayments of borrowings under revolving credit facilities | (731,000) | (13,000) |
Repurchases of common stock | (230,961) | (534,654) |
Payments of cash dividends | (71,308) | (66,037) |
Other equity and related transactions | 7,198 | 886 |
Net cash provided by (used in) financing activities | (275,568) | (625,151) |
Net increase (decrease) in cash and cash equivalents | 29,740 | (354,707) |
Cash and cash equivalents, beginning of period | 157,947 | 579,823 |
Cash and cash equivalents, end of period | 187,687 | 225,116 |
Supplemental schedule of non-cash investing and financing activities: | ||
Purchases of property and equipment awaiting processing for payment, included in Accounts payable | $ 40,285 | $ 38,676 |
Basis of presentation
Basis of presentation | 3 Months Ended |
Apr. 29, 2016 | |
Basis of presentation | |
Basis of presentation | 1. Basis of presentation The accompanying unaudited condensed consolidated financial statements of Dollar General Corporation and its subsidiaries (the “Company”) have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) 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 U.S. GAAP for annual financial statements or those normally made in the Company’s Annual Report on Form 10-K, including the condensed consolidated balance sheet as of January 29, 2016 which has been derived from the audited consolidated financial statements at that date. Accordingly, readers of this Quarterly Report on Form 10-Q should refer to the Company’s Annual Report on Form 10-K for the fiscal year ended January 29, 2016 for additional information. The Company’s fiscal year ends on the Friday closest to January 31. Unless the context requires otherwise, references to years contained herein pertain to the Company’s fiscal year. The Company’s 2016 fiscal year is scheduled to be a 53-week accounting period ending on February 3, 2017, and the 2015 fiscal year was a 52-week accounting period that ended on January 29, 2016. The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with the Company’s customary accounting practices. In management’s opinion, all adjustments (which are of a normal recurring nature) necessary for a fair presentation of the consolidated financial position as of April 29, 2016 and results of operations for the 13-week accounting periods ended April 29, 2016 and May 1, 2015 have been made. The preparation of financial statements and related disclosures in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the condensed consolidated financial statements and the reported amounts of revenues and expenses during the reporting periods. Actual results could differ from those estimates. The Company uses the last-in, first-out (“LIFO”) method of valuing inventory. An actual valuation of inventory under the LIFO method is made at the end of each year based on the inventory levels and costs at that time. Accordingly, interim LIFO calculations are based on management’s estimates of expected year-end inventory levels, sales for the year and the expected rate of inflation or deflation for the year. The interim LIFO calculations are subject to adjustment in the final year-end LIFO inventory valuation. The Company recorded a LIFO provision (benefit) of $(1.4) million and $0.4 million in the respective 13-week periods ended April 29, 2016 and May 1, 2015. In addition, ongoing estimates of inventory shrinkage and initial markups and markdowns are included in the interim cost of goods sold calculation. 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. In May 2014, the Financial Accounting Standards Board (“FASB”) issued comprehensive new accounting standards related to the recognition of revenue, which specified an effective date for annual reporting periods beginning after December 15, 2016, with early adoption not permitted. In August 2015, the FASB deferred the effective date to annual reporting periods beginning after December 15, 2017, with earlier adoption permitted only for annual reporting periods beginning after December 15, 2016. The new guidance allows for companies to use either a full retrospective or a modified retrospective approach in the adoption of this guidance. The Company is currently evaluating these transition approaches, as well as the potential timing of adoption and the effect of adoption on its consolidated financial statements. In February 2016, the FASB issued new guidance related to lease accounting, which when effective will require a dual approach for lessee accounting under which a lessee will account for leases as finance leases or operating leases. Both finance leases and operating leases will result in the lessee recognizing a right-of-use asset and a corresponding lease liability on its balance sheet, with differing methodology for income statement recognition. This guidance is effective for public business entities for fiscal years, and interim periods within those years, beginning after December 15, 2018, and early adoption is permitted. A modified retrospective approach is required for all leases existing or entered into after the beginning of the earliest comparative period in the consolidated financial statements. The Company is currently assessing the impact that adoption of this guidance will have on its consolidated financial statements and is anticipating a material impact because the Company is party to a significant number of lease contracts. In March 2016, the FASB issued amendments to existing guidance related to accounting for employee share-based payment affecting the income tax consequences of awards, classification of awards as equity or liabilities, and classification on the statement of cash flows. This guidance is effective for public business entities for fiscal years, and interim periods within those years, beginning after December 15, 2016, and early adoption is permitted. The Company adopted this guidance in the first quarter of 2016. The Company has elected to continue estimating forfeitures of share-based awards. The amendments requiring recognition of excess tax benefits and tax deficiencies in the income statement have been applied prospectively resulting in a benefit in the current period of approximately $9.0 million, or $0.03 per diluted share. The Company has elected to apply the amendments related to the presentation of excess tax benefits on the statement of cash flows using a retrospective transition method, and as a result, $26.3 million of excess tax benefits related to share-based awards which were previously classified as cash flows from financing activities in the first quarter of 2015 have been reclassified as cash flows from operating activities. |
Earnings per share
Earnings per share | 3 Months Ended |
Apr. 29, 2016 | |
Earnings per share | |
Earnings per share | 2. Earnings per share Earnings per share is computed as follows (in thousands, except per share data): 13 Weeks Ended April 29, 2016 13 Weeks Ended May 1, 2015 Net Income Weighted Average Shares Per Share Amount Net Income Weighted Average Shares Per Share Amount Basic earnings per share $ $ $ $ Effect of dilutive share-based awards Diluted earnings per share $ $ $ $ Basic earnings per share is computed by dividing net income by the weighted average number of shares of common stock outstanding during the period. Diluted earnings per share is determined based on the dilutive effect of share-based awards using the treasury stock method. Share-based awards that were outstanding at the end of the respective periods, but were not included in the computation of diluted earnings per share because the effect of exercising such awards would be antidilutive, were 1.6 million and 1.1 million in the 2016 and 2015 13-week periods, respectively. |
Income taxes
Income taxes | 3 Months Ended |
Apr. 29, 2016 | |
Income taxes | |
Income taxes | 3. Income taxes Under the accounting standards for income taxes, the asset and liability method is used for computing the future income tax consequences of events that have been recognized in the Company’s consolidated financial statements or income tax returns. Income tax reserves are determined using the methodology established by accounting standards for income taxes which require companies to assess each income tax position taken using the following two-step approach. A determination is first made as to whether it is more likely than not that the position will be sustained, based upon the technical merits, upon examination by the taxing authorities. If the tax position is expected to meet the more likely than not criteria, the benefit recorded for the tax position equals the largest amount that is greater than 50% likely to be realized upon ultimate settlement of the respective tax position. The Company’s 2010 and earlier tax years are not open for further examination by the Internal Revenue Service (“IRS”). Due to the filing of an amended federal income tax return for the 2011 tax year, the IRS may, to a limited extent, examine the Company’s 2011 income tax filings. The IRS, at its discretion, may also choose to examine the Company’s 2012 through 2014 fiscal year income tax filings. The Company has various state income tax examinations that are currently in progress. Generally, the Company’s 2011 and later tax years remain open for examination by the various state taxing authorities. As of April 29, 2016, the total reserves for uncertain tax benefits, interest expense related to income taxes and potential income tax penalties were $7.0 million, $1.0 million and $0.8 million, respectively, for a total of $8.8 million. This total amount is reflected in noncurrent Other liabilities in the condensed consolidated balance sheet. The Company believes it is reasonably possible that the reserve for uncertain tax positions may be reduced by approximately $2.6 million in the coming twelve months principally as a result of the effective settlement of uncertain tax positions. As of April 29, 2016, approximately $7.0 million of the reserve for uncertain tax positions would impact the Company’s effective income tax rate if the Company were to recognize the tax benefit for these positions. The effective income tax rate for the 13-week period ended April 29, 2016 was 35.4% compared to an effective income tax rate of 37.7% for the 13-week period ended May 1, 2015. The tax rate for the 2016 period was lower than for the 2015 period primarily due to the 2016 adoption of amendments to accounting guidance for share-based payment discussed in Note 1, as well as the retroactive enactment of federal jobs tax credits (principally the Work Opportunity Tax Credit or “WOTC”) for employees hired after December 31, 2014. While the Company eventually did benefit from the WOTC associated with employees hired in the 13-week period ended May 1, 2015, the benefit could not be recognized until the federal laws authorizing the credits were retroactively reenacted in December 2015. |
Current and long-term obligatio
Current and long-term obligations | 3 Months Ended |
Apr. 29, 2016 | |
Current and long-term obligations | |
Current and long-term obligations | 4. Current and long-term obligations The Company’s senior unsecured credit facilities (the “Facilities”) consist of a $425.0 million senior unsecured term loan facility (the “Term Facility”) and a $1.0 billion senior unsecured revolving credit facility (the “Revolving Facility”) which provides for the issuance of letters of credit up to $175.0 million. The Facilities are scheduled to mature on October 20, 2020. As of April 29, 2016, under the Revolving Facility, the Company had outstanding borrowings of $271.0 million, outstanding standby letters of credit of $32.8 million, and borrowing availability of $696.2 million. In addition, as of April 29, 2016 the Company had outstanding commercial letters of credit of $15.9 million which were pursuant to a separate agreement. |
Assets and liabilities measured
Assets and liabilities measured at fair value | 3 Months Ended |
Apr. 29, 2016 | |
Assets and liabilities measured at fair value | |
Assets and liabilities measured at fair value | 5. Assets and liabilities measured at fair value Fair value is a market-based measurement, not an entity-specific measurement. Therefore, a fair value measurement should be determined based on the assumptions that market participants would use in pricing the asset or liability. As a basis for considering market participant assumptions in fair value measurements, fair value accounting standards establish a fair value hierarchy that distinguishes between market participant assumptions based on market data obtained from sources independent of the reporting entity (observable inputs that are classified within Levels 1 and 2 of the hierarchy) and the reporting entity’s own assumptions about market participant assumptions (unobservable inputs classified within Level 3 of the hierarchy). The Company does not have any fair value measurements categorized within Level 3 as of April 29, 2016. The following table presents the Company’s assets and liabilities disclosed at fair value as of April 29, 2016, aggregated by the level in the fair value hierarchy within which those measurements are classified. (in thousands) Quoted Prices in Active Markets for Identical Assets and Liabilities (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) Fair Value at April 29, 2016 Liabilities: Long-term obligations (a) $ $ $ — $ Deferred compensation (b) — — (a) Included in the condensed consolidated balance sheet at book value as Current portion of long-term obligations of $1,526 and Long-term obligations of $2,989,663. (b) Reflected at fair value in the condensed consolidated balance sheet as Accrued expenses and other current liabilities of $7,581 and noncurrent Other liabilities of $16,321. |
Commitments and contingencies
Commitments and contingencies | 3 Months Ended |
Apr. 29, 2016 | |
Commitments and contingencies | |
Commitments and contingencies | 6. Commitments and contingencies Legal proceedings In September 2011, the Chicago Regional Office of the United States Equal Employment Opportunity Commission (“EEOC” or “Commission”) notified the Company of a cause finding related to the Company’s criminal background check policy. The cause finding alleges that the Company’s criminal background check policy, which excludes from employment individuals with certain criminal convictions for specified periods, has a disparate impact on African-American candidates and employees in violation of Title VII of the Civil Rights Act of 1964, as amended (“Title VII”). The Company and the EEOC engaged in the statutorily required conciliation process, and despite the Company’s good faith efforts to resolve the matter, the Commission notified the Company on July 26, 2012 of its view that conciliation had failed. On June 11, 2013, the EEOC filed a lawsuit in the United States District Court for the Northern District of Illinois entitled Equal Opportunity Commission v. Dolgencorp, LLC d/b/a Dollar General in which the Commission alleges that the Company’s criminal background check policy has a disparate impact on “Black Applicants” in violation of Title VII and seeks to recover monetary damages and injunctive relief on behalf of a class of “Black Applicants.” The Company filed its answer to the complaint on August 9, 2013. The Court has bifurcated the issues of liability and damages for purposes of discovery and trial. Fact discovery related to liability is to be completed on or before November 16, 2016. In response to various discovery motions, the court has entered orders requiring the Company’s production of documents, information and electronic data for the period 2004 to present. Currently pending is the EEOC’s Motion for Partial Summary Judgment relating to two of the Company’s defenses challenging the sufficiency of the Commission’s conciliation efforts and the scope of its investigation. The Company has opposed this motion as prematurely-filed in light of the status of various discovery issues. The Company believes that its criminal background check process is both lawful and necessary to a safe environment for its employees and customers and the protection of its assets and shareholders’ investments. The Company also does not believe that this matter is amenable to class or similar treatment. However, at this time, it is not possible to predict whether the action will ultimately be permitted to proceed as a class or in a similar fashion or the size of any putative class. Likewise, at this time, it is not possible to estimate the value of the claims asserted, and no assurances can be given that the Company will be successful in its defense of this action on the merits or otherwise. For these reasons, the Company cannot estimate the potential exposure or range of potential loss. If the matter were to proceed successfully as a class or similar action or the Company is unsuccessful in its defense efforts as to the merits of the action, the resolution of this matter could have a material adverse effect on the Company’s consolidated financial statements as a whole. On May 23, 2013, a lawsuit entitled Juan Varela v. Dolgen California and Does 1 through 50 (“Varela”) was filed in the Superior Court of the State of California for the County of Riverside. In the original complaint, the Varela plaintiff alleges that he and other “key carriers” were not provided with meal and rest periods in violation of California law and seeks to recover alleged unpaid wages, injunctive relief, consequential damages, pre-judgment interest, statutory penalties and attorneys’ fees and costs and seeks to represent a putative class of California “key carriers” as to these claims. The Varela plaintiff also asserts a claim for unfair business practices and seeks to proceed under California’s Private Attorney General Act (the “PAGA”). On November 4, 2014, the Varela plaintiff filed an amended complaint to add Victoria Lee Dinger Main as a named plaintiff and to add putative class claims on behalf of “key carriers” for alleged inaccurate wage statements and failure to provide appropriate pay upon termination in violation of California law. The Company filed answers to both the complaint and amended complaint. A court-ordered mediation held in November 2015 was unsuccessful. Plaintiffs’ motion for class certification is due to be filed on or before October 17, 2016. The Company’s response is due to be filed on or before December 9, 2016. Plaintiffs’ reply brief is due to be filed on January 20, 2017. On January 15, 2015, a lawsuit entitled Kendra Pleasant v. Dollar General Corporation, Dolgen California, LLC, and Does 1 through 50 (“Pleasant”) was filed in the Superior Court of the State of California for the County of San Bernardino in which the plaintiff seeks to proceed under the PAGA for various alleged violations of California’s Labor Code. Specifically, the plaintiff alleges that she and other similarly situated non-exempt California store-level employees were not paid for all time worked, provided meal and rest breaks, reimbursed for necessary work related expenses, and provided with accurate wage statements and seeks to recover unpaid wages, civil and statutory penalties, interest, attorneys’ fees and costs. On March 12, 2015, the Company filed a demurrer asking the court to stay all proceedings in the Pleasant matter pending an issuance of a final judgment in the Varela matter. The court granted the Company’s demurrer and stayed proceedings until resolution of the Varela matter. Subsequently, the Pleasant plaintiff moved to transfer this matter to the Superior Court of the State of California for the County of Riverside where the Varela matter is pending, which the Company opposed. The court denied the Pleasant plaintiff’s motion to transfer. On February 20, 2015, a lawsuit entitled Julie Sullivan v. Dolgen California and Does 1 through 100 (“Sullivan”) was filed in the Superior Court of the State of California for the County of Alameda in which the plaintiff alleges that she and other similarly situated Dollar General Market store managers in the State of California were improperly classified as exempt employees and were not provided with meal and rest breaks and accurate wage statements in violation of California law. The Sullivan plaintiff also alleges that she and other California store employees were not provided with printed wage statements, purportedly in violation of California law. The plaintiff seeks to recover unpaid wages, including overtime pay, civil and statutory penalties, interest, injunctive relief, restitution, and attorneys’ fees and costs. On April 8, 2015, the Company removed this matter to the United States District Court for the Northern District of California and filed its answer on the same date. On April 29, 2015, the Sullivan plaintiff amended her complaint to add a claim under the PAGA. The Company’s response to the amended complaint was filed on May 14, 2015. The plaintiff’s motion for class certification was filed on March 12, 2016. Plaintiff has since conceded that her allegation that she and other Dollar General Market store managers in the State of California are improperly classified as exempt employees is not amenable to class certification. Plaintiff continues to pursue her individual misclassification claim and class certification of her wage statement claim. Also currently pending is the Company’s motion for summary judgment as to all of Plaintiff’s claims. No ruling has been issued on either plaintiff’s class certification motion or the Company’s motion for summary judgment. The matter has been set for trial on October 31, 2016. A mediation conducted in early March 2016 was unsuccessful. The Company believes that its policies and practices comply with California law and that the Varela, Pleasant , and Sullivan actions are not appropriate for class or similar treatment. The Company intends to vigorously defend these actions; however, at this time, it is not possible to predict whether the Varela, Pleasant , or Sullivan action ultimately will be permitted to proceed as a class, and no assurances can be given that the Company will be successful in its defense of these actions on the merits or otherwise. Similarly, at this time the Company cannot estimate either the size of any potential class or the value of the claims asserted in the Varela , Pleasant , or Sullivan action. For these reasons, the Company is unable to estimate any potential loss or range of loss in these matters; however, if the Company is not successful in its defense efforts, the resolution of any of these actions could have a material adverse effect on the Company’s consolidated financial statements as a whole. In December 2015, the Company was notified of seven lawsuits in which the plaintiffs allege violation of state consumer protection laws relating to the labeling, marketing and sale of Dollar General private-label motor oil. Six of these lawsuits were filed in various federal district courts of the United States: Bradford Barfoot and Leonard Karpeichik v. Dolgencorp, LLC (filed in the Southern District of Florida on December 18, 2015) (“Barfoot”); Milton M. Cooke, Jr. v. Dollar General Corporation (filed in the Southern District of Texas on December 21, 2015) (“Cooke”); William Flinn v. Dolgencorp, LLC (filed in the District Court for New Jersey on December 17, 2015) (“Flinn”); John J. McCormick, III v. Dolgencorp, LLC (filed in the District Court of Maryland on December 23, 2015) (“McCormick”); David Sanchez v. Dolgencorp, LLC (filed in the Central District of California on December 17, 2015 ) (“Sanchez”); and Will Sisemore v. Dolgencorp, LLC (filed in the Northern District of Oklahoma on December 21, 2015) (“Sisemore”). The seventh matter, Chuck Hill v. Dolgencorp, LLC (“Hill”), was filed in Orleans County Superior Court in Vermont on December 22, 2015, and subsequently removed to the United States District Court for the District of Vermont on February 8, 2016. In February, March and May 2016, the Company was notified of fourteen additional lawsuits alleging similar claims concerning Dollar General private-label motor oil. All of these lawsuits were filed in various federal district courts of the United States: Allen Brown v. Dollar General Corporation and DG Retail, LLC (filed in the District of Colorado on February 10, 2016) (“Brown”); Miriam Fruhling v. Dollar General Corporation and Dolgencorp, LLC (filed in the Southern District of Ohio on February 10, 2016) (“Fruhling”); John Foppe v. Dollar General Corporation and Dolgencorp, LLC (filed in the Eastern District of Kentucky on February 10, 2016) (“Foppe”); Kevin Gadson v. Dolgencorp, LLC (filed in the Southern District of New York on February 8, 2016) (“Gadson”); Bruce Gooel v. Dolgencorp, LLC (filed in the Eastern District of Michigan on February 8, 2016) (“Gooel”); Janine Harvey v. Dollar General Corporation and Dolgencorp, LLC (filed in the District Court for Nebraska on February 10, 2016) (“Harvey”); Nicholas Meyer v. Dollar General Corporation and DG Retail, LLC (filed in the District of Kansas on February 9, 2016) (“Meyer”); Robert Oren v. Dollar General Corporation and Dolgencorp, LLC (filed in the Western District of Missouri on February 8, 2016) (“Oren”); Scott Sheehy v. Dollar General Corporation and DG Retail, LLC (filed in the District Court for Minnesota on February 9, 2016) (“Sheehy”); Gerardo Solis v. Dollar General Corporation and DG Retail, LLC (filed in the Northern District of Illinois on February 12, 2016) (“Solis”); Roberto Vega v. Dolgencorp, LLC (filed in the Central District of California on February 8, 2016) (“Vega”); Matthew Wait v. Dollar General Corporation and Dolgencorp, LLC, (filed in the Western District of Arkansas on February 16, 2016) (“Wait”); James Taschner v. Dollar General Corporation and Dolgencorp, LLC (filed in the Eastern District of Missouri on March 15, 2016) (“Taschner”); and Jason Wood and Roger Barrows v. Dollar General Corporation and Dolgencorp, LLC (filed in the Northern District of New York on May 9, 2016) (“Wood”). The plaintiffs in the Taschner , Vega and Sanchez matters seek to proceed on a nationwide and statewide class basis, while the plaintiffs in the other matters seek to proceed only on a statewide class basis. Each plaintiff seeks, for himself or herself and the putative class he or she seeks to represent, some or all of the following relief: compensatory damages, injunctive relief prohibiting the sale of the products at issue and requiring the dissemination of corrective advertising, certain statutory damages (including treble damages), punitive damages and attorneys’ fees. On February 1, 2016, the Sanchez plaintiff voluntarily dismissed his complaint without prejudice. The Company has filed motions to dismiss and motions to strike class allegations in the following matters: Barfoot; Brown; Cooke; Flinn ; Foppe ; Fruhling ; Gooel ; Hill; McCormick ; Meyer ; Oren ; Sheehy ; Sisemore; Solis; Wait; and Vega . The Company’s responsive pleading in the Wood matter is due on July 9, 2016. On March 7, 2016, the Company filed a motion with the United States Judicial Panel on Multidistrict Litigation (“JPML”) requesting that all cases be transferred to the United States District Court for the Eastern District of Michigan, or, in the alternative to the Western District of Missouri or the Southern District of Florida, for consolidated pretrial proceedings (“Motion to Transfer”). The hearing on the Company’s Motion to Transfer is scheduled for May 26, 2016. The following cases have been stayed pending the JPML’s decision on the Motion to Transfer: Barfoot ; Foppe; Fruhling; Gadsen ; Harvey ; Meyer ; and Taschner . The courts in the Sheehy and Solis matters have stayed discovery only pending a transfer decision by the JPML. The Company believes that the labeling, marketing and sale of its private-label motor oil complies with applicable federal and state requirements and is not misleading. The Company further believes that these matters are not appropriate for class or similar treatment. The Company intends to vigorously defend these actions; however, at this time, it is not possible to predict whether any of these cases will be permitted to proceed as a class or the size of any putative class. Likewise, at this time, it is not possible to estimate the value of the claims asserted, and no assurances can be given that the Company will be successful in its defense of these actions on the merits or otherwise. For these reasons, the Company is unable to estimate the potential loss or range of loss in these matters; however if the Company is not successful in its defense efforts, the resolution of any of these actions could have a material adverse effect on the Company’s consolidated financial statements as a whole. From time to time, the Company is a party to various other legal actions involving claims incidental to the conduct of its business, including actions by employees, consumers, suppliers, government agencies, or others through private actions, class actions, administrative proceedings, regulatory actions or other litigation, including without limitation under federal and state employment laws and wage and hour laws. The Company believes, based upon information currently available, that such other litigation and claims, both individually and in the aggregate, will be resolved without a material adverse effect on the Company’s consolidated financial statements as a whole. However, litigation involves an element of uncertainty. Future developments could cause these actions or claims to have a material adverse effect on the Company’s results of operations, cash flows, or financial position. In addition, certain of these lawsuits, if decided adversely to the Company or settled by the Company, may result in liability material to the Company’s financial position or may negatively affect operating results if changes to the Company’s business operation are required. |
Segment reporting
Segment reporting | 3 Months Ended |
Apr. 29, 2016 | |
Segment reporting | |
Segment reporting | 7. Segment reporting The Company manages its business on the basis of one reportable operating segment. As of April 29, 2016, all of the Company’s operations were located within the United States with the exception of certain subsidiaries in Hong Kong and China and a liaison office in India, which collectively are not material with regard to assets, results of operations or otherwise, to the condensed consolidated financial statements. The following net sales data is presented in accordance with accounting standards related to disclosures about segments of an enterprise. 13 Weeks Ended (in thousands) April 29, 2016 May 1, 2015 Classes of similar products: Consumables $ $ Seasonal Home products Apparel Net sales $ $ |
Common stock transactions
Common stock transactions | 3 Months Ended |
Apr. 29, 2016 | |
Common stock transactions | |
Common stock transactions | 8. Common stock transactions On August 29, 2012, the Company’s Board of Directors authorized a common stock repurchase program, which the Board has increased on several occasions. As of April 29, 2016, a cumulative total of $4.0 billion had been authorized under the program since its inception and $692.8 million remained available for repurchase. The repurchase authorization has no expiration date and allows repurchases from time to time in the open market or in privately negotiated transactions. The timing and number of shares purchased depends on a variety of factors, such as price, market conditions, compliance with the covenants and restrictions under the Company’s debt agreements and other factors. Repurchases under the program may be funded from available cash or borrowings including under the Facilities. Pursuant to its common stock repurchase program, during the 13-week periods ended April 29, 2016, and May 1, 2015, the Company repurchased in the open market approximately 2.7 million shares of its common stock at a total cost of $231.0 million, and approximately 7.1 million shares of its common stock at a total cost of $534.7 million, respectively. The Company paid a quarterly cash dividend of $0.25 per share on April 12, 2016 to shareholders of record as of March 29, 2016 as approved by the Company’s Board of Directors on March 8, 2016, and on May 24, 2016, the Company’s Board of Directors approved a quarterly cash dividend of $0.25 per share payable on June 29, 2016 to shareholders of record as of June 15, 2016. The declaration of future cash dividends is subject to the discretion of the Company’s Board of Directors and will depend upon, among other things, the Company’s results of operations, cash requirements, financial condition, contractual restrictions and other factors that the Board may deem relevant in its sole discretion. |
Earnings per share (Tables)
Earnings per share (Tables) | 3 Months Ended |
Apr. 29, 2016 | |
Earnings per share | |
Schedule of computation of earnings per share | Earnings per share is computed as follows (in thousands, except per share data): 13 Weeks Ended April 29, 2016 13 Weeks Ended May 1, 2015 Net Income Weighted Average Shares Per Share Amount Net Income Weighted Average Shares Per Share Amount Basic earnings per share $ $ $ $ Effect of dilutive share-based awards Diluted earnings per share $ $ $ $ |
Assets and liabilities measur16
Assets and liabilities measured at fair value (Tables) | 3 Months Ended |
Apr. 29, 2016 | |
Assets and liabilities measured at fair value | |
Schedule of assets and liabilities measured at fair value | (in thousands) Quoted Prices in Active Markets for Identical Assets and Liabilities (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) Fair Value at April 29, 2016 Liabilities: Long-term obligations (a) $ $ $ — $ Deferred compensation (b) — — (a) Included in the condensed consolidated balance sheet at book value as Current portion of long-term obligations of $1,526 and Long-term obligations of $2,989,663. (b) Reflected at fair value in the condensed consolidated balance sheet as Accrued expenses and other current liabilities of $7,581 and noncurrent Other liabilities of $16,321. |
Segment reporting (Tables)
Segment reporting (Tables) | 3 Months Ended |
Apr. 29, 2016 | |
Segment reporting | |
Schedule of net sales grouped by classes of similar products | 13 Weeks Ended (in thousands) April 29, 2016 May 1, 2015 Classes of similar products: Consumables $ $ Seasonal Home products Apparel Net sales $ $ |
Basis of presentation (Details)
Basis of presentation (Details) $ / shares in Units, $ in Thousands | 3 Months Ended | 12 Months Ended | ||
Apr. 29, 2016USD ($)$ / shares | May. 01, 2015USD ($)$ / shares | Feb. 03, 2017period | Jan. 29, 2016period | |
Fiscal year, number of weeks | period | 53 | 52 | ||
Income tax benefit | $ (161,538) | $ (153,383) | ||
Earnings Per Share, Diluted | $ / shares | $ 1.03 | $ 0.84 | ||
Merchandise inventories | ||||
LIFO provision (benefit) | $ (1,400) | $ 400 | ||
New accounting guidance effect | ||||
Income tax benefit | $ 9,000 | |||
Earnings Per Share, Diluted | $ / shares | $ 0.03 | |||
Tax benefit of share-based awards | $ 26,300 |
Earnings per share (Details)
Earnings per share (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 3 Months Ended | |
Apr. 29, 2016 | May. 01, 2015 | |
Net Income | ||
Basic Earnings | $ 295,124 | $ 253,235 |
Diluted Earnings | $ 295,124 | $ 253,235 |
Shares | ||
Shares outstanding, basic | 285,886 | 301,202 |
Effect of dilutive share-based awards | 1,092 | 887 |
Shares outstanding, diluted | 286,978 | 302,089 |
Per Share Amount | ||
Basic earnings per share (in dollars per share) | $ 1.03 | $ 0.84 |
Diluted earnings per share (in dollars per share) | $ 1.03 | $ 0.84 |
Share-based awards outstanding excluded from computation of diluted earnings per share | 1,600 | 1,100 |
Income taxes (Details)
Income taxes (Details) - USD ($) $ in Millions | 3 Months Ended | |
Apr. 29, 2016 | May. 01, 2015 | |
Income taxes | ||
Reserves for uncertain tax benefits | $ 7 | |
Interest accrued related to uncertain tax benefits | 1 | |
Potential penalties accrued related to uncertain tax benefits | 0.8 | |
Reserves for uncertain tax benefits included in noncurrent Other liabilities | 8.8 | |
Reserve for uncertain tax positions for which a reduction is reasonably possible in the next twelve months | 2.6 | |
Reserve for uncertain tax positions that would impact effective tax rate if recognized | $ 7 | |
Effective income tax rates (as a percent) | 35.40% | 37.70% |
Current and long-term obligat21
Current and long-term obligations (Details) $ in Millions | Apr. 29, 2016USD ($) |
Senior unsecured credit facility, maturity October 20, 2020, Term Facility | |
Current and long-term obligations | |
Current and long-term obligations | $ 425 |
Senior unsecured credit facility, maturity October 20, 2020, Revolving Facility | |
Current and long-term obligations | |
Current and long-term obligations | 271 |
Maximum financing under credit agreements | 1,000 |
Borrowing availability under credit facility | 696.2 |
Senior unsecured credit facility, maturity October 20, 2020, Revolving Facility | Letters of credit | |
Current and long-term obligations | |
Maximum financing under credit agreements | 175 |
Letters of credit outstanding | 32.8 |
Letter of Credit Outside of Revolving Facility | |
Current and long-term obligations | |
Letters of credit outstanding | $ 15.9 |
Assets and liabilities measur22
Assets and liabilities measured at fair value (Details) $ in Thousands | Apr. 29, 2016USD ($) |
Reported amount | Current portion of long-term debt obligations | |
Liabilities: | |
Long-term obligations | $ 1,526 |
Reported amount | Long-term obligations | |
Liabilities: | |
Long-term obligations | 2,989,663 |
Reported amount | Accrued expenses and other current liabilities | |
Liabilities: | |
Deferred compensation | 7,581 |
Reported amount | Noncurrent Other liabilities | |
Liabilities: | |
Deferred compensation | 16,321 |
Fair value measurements on recurring basis | Balance at the end of the period | |
Liabilities: | |
Long-term obligations | 3,073,459 |
Deferred compensation | 23,902 |
Fair value measurements on recurring basis | Quoted Prices in Active Markets for Identical Assets and Liabilities (Level 1) | |
Liabilities: | |
Long-term obligations | 2,362,560 |
Deferred compensation | 23,902 |
Fair value measurements on recurring basis | Significant Other Observable Inputs (Level 2) | |
Liabilities: | |
Long-term obligations | $ 710,899 |
Commitments and contingencies -
Commitments and contingencies - Legal proceedings (Detail) | 1 Months Ended | 4 Months Ended | |
Jan. 01, 2016lawsuit | May. 27, 2016lawsuit | Apr. 29, 2016item | |
Commission cause finding related to the criminal background check policy | Pending litigation | |||
Legal proceedings | |||
Number Of Defenses | item | 2 | ||
Alleged violation of state consumer protection laws | |||
Legal proceedings | |||
Number of suits filed | 7 | ||
Alleged violation of state consumer protection laws federal district courts | |||
Legal proceedings | |||
Number of suits filed | 6 | 14 |
Segment reporting (Details)
Segment reporting (Details) $ in Thousands | 3 Months Ended | |
Apr. 29, 2016USD ($)segment | May. 01, 2015USD ($)segment | |
Net sales data for classes of similar products | ||
Net sales | $ 5,265,432 | $ 4,918,672 |
Number of reportable segments | ||
Number of reportable operating segments | segment | 1 | 1 |
Consumables | ||
Net sales data for classes of similar products | ||
Net sales | $ 4,039,197 | $ 3,753,978 |
Seasonal | ||
Net sales data for classes of similar products | ||
Net sales | 623,850 | 586,293 |
Home products | ||
Net sales data for classes of similar products | ||
Net sales | 322,848 | 303,024 |
Apparel | ||
Net sales data for classes of similar products | ||
Net sales | $ 279,537 | $ 275,377 |
Common stock transactions (Deta
Common stock transactions (Details) - USD ($) $ / shares in Units, shares in Millions, $ in Millions | May. 24, 2016 | Mar. 08, 2016 | Apr. 29, 2016 | May. 01, 2015 |
Common stock transactions | ||||
Cash dividend paid (in dollars per share) | $ 0.25 | $ 0.22 | ||
Cash dividend declared (in dollars per share) | $ 0.25 | $ 0.25 | ||
Common Stock | Pursuant to Authorized Repurchase Program | ||||
Common stock transactions | ||||
Common stock repurchase authorization | $ 4,000 | |||
Remaining authorization available under the common stock repurchase program | $ 692.8 | |||
Shares acquired under share repurchase program | 2.7 | 7.1 | ||
Aggregate purchase price | $ 231 | $ 534.7 |