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Dollar General Restatements Worse Than Thought

The company will also record a $162 million charge to settle suits.

Dollar General

(DG) - Get Dollar General Corporation Report

said a restatement of prior financial statements was much larger than previously forecast, and also said it would record a $162 million charge to settle shareholder lawsuits that arose from accounting irregularities.

The company's shares were recently down $2.09, or 13%, to $14 each on Instinet.

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The discount chain-store operator fired its auditor, Deloitte & Touche, in September and announced it would restate results for 1998, 1999 and 2000, saying it had incorrectly accounted for leases and tax liabilities.

The company said it restated its unaudited 2000 net income to $70.6 million, or 21 cents a share, down from a previously reported $206 million, or 62 cents per share -- in part reflecting the litigation charge of $99 million, or 30 cents a share. It also restated its 1999 net income to $186.7 million, or 55 cents a share, compared with the previously reported $219.4 million, or 65 cents a share. For 1998, net income was restated to $150.9 million, or 45 cents per share, from $182 million, or 54 cents per share. It had previously estimated the total impact of the restatements at 7 cents a share.

The company claimed it is taking steps to enhance its compliance and internal controls and said despite the restatements, business remains sound.

For the first three quarters of 2001, Dollar General said net income rose 7.1% to $110.1 million, or 33 cents per diluted share, compared with $102.8 million, or 31 cents per diluted share, in the year-earlier period. Sales rose 20.2% to $3.74 billion from $3.11 billion one year ago, while same-store sales rose 7.6%.