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Dollar General Corporation Reports Record Third Quarter 2012 Sales And Earnings

Stocks in this article: DG

Interest expense was $100 million in the 2012 39-week period, a decrease of $64 million from the 2011 period. This decrease was due to lower average outstanding long-term obligations, resulting from repurchases of debt in 2012 and 2011 and lower all-in interest rates.

Other (income) expense in the 2012 period included pretax losses totaling $29.0 million resulting from the repurchase of the Company’s 11.875%/12.125% senior subordinated notes, a $2.5 million pretax gain resulting from the settlement of interest rate swaps, the $1.7 million debt amendment fees which were reimbursed by Buck Holdings, L.P. and a pretax loss of $1.6 million resulting from the amendment of the Company’s senior secured revolving credit facility. Other (income) expense in the 2011 period 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 the 2012 period was 36.6 percent compared to a rate of 37.4 percent for the 2011 period. Increases in the effective tax rate associated with the expiration of various federal jobs credits for workers hired after December 31, 2011 (primarily the Work Opportunity Tax Credit), the expiration of the Hire Act’s Retention Credit and an increase in the state income tax rate (the 2011 period benefited from decreases in state income tax reserves while the 2012 period included expense associated with an increase in reserves) were more than offset by decreases associated with the adjustment of accruals due to the favorable resolution of income tax examinations.

The Company reported net income of $635 million, or diluted EPS of $1.89, for the 2012 39-week period, compared to net income of $474 million, or diluted EPS of $1.37 for the 2011 period. Adjusted net income, as defined in the accompanying table, for the 2012 39-week period increased by 26 percent to $656 million compared to adjusted net income of $520 million in the 2011 39-week period. Adjusted EPS increased by 30 percent to $1.95 per diluted share in the 2012 39-week period compared to adjusted EPS of $1.50 in the 2011 39-week period.

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