What changed in this filing

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Item 1. Financial Statements

2023-12-07 compared with 2023-08-31 · 75 added, 55 removed, 275 unchanged (32% of the section changed)

15 unchanged sentences

Current liabilities:

Current portion of long-term obligations

Current portion of operating lease liabilities

25 unchanged sentences

Interest expense

Other (income) expense

Income before income taxes

17 unchanged sentences

Income (Loss)

Balances, May 5, 2023

Balances, August 4, 2023

Dividends paid, $ 0.59 per common share

2 unchanged sentences

Other equity and related transactions

Balances, August 4, 2023

Balances, April 29, 2022

Balances, November 3, 2023

Balances, July 29, 2022

Dividends paid, $ 0.55 per common share

3 unchanged sentences

Other equity and related transactions

Balances, July 29, 2022

Balances, October 28, 2022

Balances, February 3, 2023

3 unchanged sentences

Other equity and related transactions

Balances, August 4, 2023

Balances, November 3, 2023

Balances, January 28, 2022

6 unchanged sentences

Other equity and related transactions

Balances, July 29, 2022

Balances, October 28, 2022

See notes to condensed consolidated financial statements.

18 unchanged sentences

Purchases of property and equipment

( 1,240,507 )

( 1,078,208 )

Proceeds from sales of property and equipment

Net cash provided by (used in) investing activities

( 1,235,544 )

( 1,075,820 )

Cash flows from financing activities:

30 unchanged sentences

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 August 4, 2023 and results of operations for the 13-week and 26-week accounting periods ended August 4, 2023 and July 29, 2022 have been made.

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 November 3, 2023 and results of operations for the 13-week and 39-week accounting periods ended November 3, 2023 and October 28, 2022 have been made.

The preparation of financial statements and related disclosures in conformity with U.S.

6 unchanged sentences

The interim LIFO calculations are subject to adjustment in the final year-end LIFO inventory valuation.

The Company recorded a LIFO provision of $ 20.2 million and $ 144.4 million in the respective 13-week periods, and $ 48.4 million and $ 205.8 million in the respective 26-week periods, ended August 4, 2023 and July 29, 2022.

The Company recorded a LIFO provision of $ 11.3 million and $ 147.8 million in the respective 13-week periods, and $ 59.7 million and $ 353.6 million in the respective 39-week periods, ended November 3, 2023 and October 28, 2022.

In addition, ongoing estimates of inventory shrinkage and initial markups and markdowns are included in the interim cost of goods sold calculation.

2 unchanged sentences

The Company’s obligations to its suppliers in accounts payable, including amounts due and scheduled payment dates, are not impacted by suppliers’ decisions to finance amounts under these arrangements.

As of August 4, 2023 and February 3, 2023, the obligations outstanding at the end of the reporting period were $ 270.7 million and $ 343.6 million, respectively.

As of November 3, 2023 and February 3, 2023, the obligations outstanding at the end of the reporting period were $ 299.9 million and $ 343.6 million, respectively.

In November 2023, the FASB issued an update to the required disclosures for segment reporting.

The update is intended to improve reportable segment disclosures, primarily through enhanced disclosures about significant segment expenses.

The update is effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024.

The Company does not expect the adoption of this update to have a material impact on its consolidated results of operations, financial position, or cash flows.

In September 2022, the FASB issued new required disclosures for supplier finance programs.

This is intended to enhance the transparency about the use of supplier finance programs for investors.

These disclosures are intended to enhance the transparency about the use of supplier finance programs for investors.

The amendments are effective for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years, with the exception of the disclosure of rollforward information, which is effective for fiscal years beginning after December 15, 2023.

8 unchanged sentences

Earnings per share is computed as follows (in thousands, except per share data):

13 Weeks Ended August 4, 2023

13 Weeks Ended July 29, 2022

13 Weeks Ended November 3, 2023

13 Weeks Ended October 28, 2022

Basic earnings per share

1 unchanged sentence

Diluted earnings per share

26 Weeks Ended August 4, 2023

26 Weeks Ended July 29, 2022

39 Weeks Ended November 3, 2023

39 Weeks Ended October 28, 2022

Basic earnings per share

3 unchanged sentences

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 approximately 0.1 million in each of the respective 13-week periods and 26-week periods, ended August 4, 2023 and July 29, 2022.

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 approximately 0.1 million in each of the respective 13-week periods and 39-week periods ended November 3, 2023 and October 28, 2022.

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.

1 unchanged sentence

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.

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 2019 and earlier tax years are not open for further examination by the Internal Revenue Service (“IRS”).

The IRS, at its discretion, may choose to examine the Company’s 2019 through 2021 fiscal year income tax

The IRS, at its discretion, may choose to examine the Company’s 2020 through 2022 fiscal year income tax filings.

The Company has various state income tax examinations that are currently in progress.

Generally, with few exceptions, the Company’s 2020 and later tax years remain open for examination by the various state taxing authorities.

As of August 4, 2023, the total reserves for uncertain tax benefits, interest expense related to income taxes and potential income tax penalties were $ 11.7 million, $ 0.8 million and $ 0.0 million, respectively, for a total of $ 12.5 million.

As of November 3, 2023, the total reserves for uncertain tax benefits, interest expense related to income taxes and potential income tax penalties were $ 14.8 million, $ 1.0 million and $ 0.0 million, respectively, for a total of $ 15.8 million.

The uncertain tax liability is reflected in noncurrent other liabilities in the condensed consolidated balance sheet.

The Company’s reserve for uncertain tax positions is expected to be reduced by $ 1.9 million in the coming twelve months as a result of expiring statutes of limitations or settlements.

As of August 4, 2023, approximately $ 9.6 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 rates for the 13-week and 26-week periods ended August 4, 2023 were 22.9 % and 22.3 % respectively, compared to a rates of 22.1 % and 22.0 % for the 13-week and 26-week periods ended July 29, 2022.

The effective income tax rate was higher for the 13-week period in 2023 than the comparable 13-week period in 2022 primarily due to a higher state effective tax rate and an increase in the valuation allowance against foreign net operating losses while the higher rate for the 26-week period in 2023 was primarily due to less benefit from stock-based compensation than the comparable 26-week period in 2022.

As of August 4, 2023, the Company’s primary leasing activities were real estate leases for most of its retail store locations and certain of its distribution facilities.

As of November 3, 2023, approximately $ 12.6 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 rates for the 13-week and 39-week periods ended November 3, 2023 were 21.3 % and 22.1 % respectively, compared to rates of 22.8 % and 22.2 % for the 13-week and 39-week periods ended October 28, 2022.

The effective income tax rate was lower for the 13-week period in 2023 than the comparable 13-week period in 2022 primarily due to increased benefits from federal employment tax credits and an increased benefit to the effective tax rate from rate-impacting items caused by lower earnings before taxes in the 13-week period in 2023 offset by a higher state effective tax rate.

The effective income tax rate was lower for the 39-week period in 2023 than the comparable 39-week period in 2022 primarily due to a reduced benefit from stock-based compensation and a higher state effective income tax rate offset by an increased benefit to the effective tax rate from rate-impacting items caused by lower earnings before taxes in the 39-week period in 2023.

As of November 3, 2023, the Company’s primary leasing activities were real estate leases for most of its retail store locations and certain of its distribution facilities.

Substantially all of the Company’s leases are classified as operating leases and the associated assets and liabilities are presented as separate captions in the condensed consolidated balance sheets.

Finance lease assets are included in net property and equipment, and finance lease liabilities are included in long-term obligations, in the condensed consolidated balance sheets.

At August 4, 2023, the weighted-average remaining lease term for the Company’s operating leases was 9.5 years, and the weighted average discount rate for such leases was 4.0 %.

At November 3, 2023, the weighted-average remaining lease term for the Company’s operating leases was 9.3 years, and the weighted average discount rate for such leases was 4.1 %.

Operating lease costs are reflected as selling, general and administrative costs in the condensed consolidated statements of income.

For the 26-week periods ended August 4, 2023 and July 29, 2022, such costs were $ 855.3 million and $ 787.0 million, respectively.

Cash paid for amounts included in the measurement of operating lease liabilities of $ 861.5 million and $ 794.7 million, respectively, were reflected in cash flows from operating activities in the condensed consolidated statements of cash flows for the 26-week periods ended August 4, 2023 and July 29, 2022.

For the 39-week periods ended November 3, 2023 and October 28, 2022, such costs were $ 1.30 billion and $ 1.19 billion, respectively.

Cash paid for amounts included in the measurement of operating lease liabilities of $ 1.30 billion and $ 1.20 billion, respectively, were reflected in cash flows from operating activities in the condensed consolidated statements of cash flows for the 39-week periods ended November 3, 2023 and October 28, 2022.

Current and long-term obligations

16 unchanged sentences

Debt issuance costs, net

current portion

Long-term obligations

The Company has a $ 2.0 billion senior unsecured revolving credit facility (the “Revolving Facility”) of which up to $ 100.0 million is available for letters of credit and is scheduled to mature on December 2, 2026.

The Company has a $ 2.0 billion senior unsecured revolving credit facility (the “Revolving Facility”) scheduled to mature on December 2, 2026, up to $ 100.0 million of which is available for letters of credit.

Borrowings under the Revolving Facility bear interest at a rate equal to an applicable interest rate margin plus, at the Company’s option, either (a) Adjusted Term SOFR (which is Term SOFR, as published by CME Group Benchmark Administration Limited, plus a credit spread adjustment of 0.10 %) or (b) a base rate (which is usually equal to the prime rate).

The applicable interest rate margin for borrowings as of August 4, 2023 was 1.015 % for Adjusted Term SOFR borrowings and 0.015 % for base-rate borrowings.

The applicable interest rate margin for borrowings as of November 3, 2023 was 1.015 % for Adjusted Term SOFR borrowings and 0.015 % for base-rate borrowings.

The Company is also required to pay a facility fee, payable on any used and unused commitment amounts of the Revolving Facility, and customary fees on letters of credit issued under the Revolving Facility.

As of August 4, 2023, the facility fee rate was 0.11 %.

As of November 3, 2023, the facility fee rate was 0.11 %.

The applicable interest rate margins for borrowings, the facility fees and the letter of credit fees under the Revolving Facility are subject to adjustment from time to time based on the Company’s long-term senior unsecured debt ratings.

2 unchanged sentences

The Company is also required to pay a facility fee to the lenders under the 364-Day Revolving Facility for any used and unused commitments.

As of August 4, 2023, the applicable interest rate margin for Adjusted Term SOFR loans was 1.035 % and the facility fee rate was 0.09 %.

As of November 3, 2023, the applicable interest rate margin for Adjusted Term SOFR loans was 1.035 % and the facility fee rate was 0.09 %.

The applicable interest rate margins for borrowings and the facility fees under the 364-Day Revolving Facility are subject to adjustment from time to time based on the Company’s long-term senior unsecured debt ratings.

5 unchanged sentences

The credit agreements governing the Facilities also contain financial covenants which require the maintenance of a minimum fixed charge coverage ratio and a maximum leverage ratio.

As of August 4, 2023, the Company was in compliance with all such covenants.

As of November 3, 2023, the Company was in compliance with all such covenants.

The credit agreements governing each of the Facilities also contain customary events of default.

As of August 4, 2023, the Company had no outstanding borrowings, no outstanding letters of credit, and approximately $ 2.0 billion of borrowing availability under the Revolving Facility that, due to the Company’s intention to maintain borrowing availability related to the commercial paper program described below, could contribute incremental liquidity of $ 1.5 billion.

As of August 4, 2023, under the 364-Day Revolving Facility, the Company had no outstanding borrowings and borrowing availability of $ 750.0 million.

As of August 4, 2023, the Company had combined availability under the Facilities of $ 2.3 billion.

In addition, as of August 4, 2023, the Company had outstanding letters of credit of $ 43.2 million which were issued pursuant to separate agreements.

As of August 4, 2023, the Company had a commercial paper program under which the Company may issue unsecured commercial paper notes (the “CP Notes”) from time to time in an aggregate amount not to exceed $ 2.0 billion outstanding at any time.

As of November 3, 2023, the Company had no outstanding borrowings, no outstanding letters of credit, and approximately $ 2.0 billion of borrowing availability under the Revolving Facility that, due to the Company’s intention to maintain borrowing availability related to the commercial paper program described below, could contribute incremental liquidity of $ 1.6 billion.

As of November 3, 2023, under the 364-Day Revolving Facility, the Company had no outstanding borrowings and borrowing availability of $ 750.0 million.

As of November 3, 2023, the Company had combined availability under the Facilities of $ 2.4 billion.

In addition, as of November 3, 2023, the Company had outstanding letters of credit of $ 43.2 million which were issued pursuant to separate agreements.

As of November 3, 2023, the Company had a commercial paper program under which the Company may issue unsecured commercial paper notes (the “CP Notes”) from time to time in an aggregate amount not to exceed $ 2.0 billion outstanding at any time.

The CP Notes may have maturities of up to 364 days from the date of issue and rank equal in right of payment with all of the Company’s other unsecured and unsubordinated indebtedness.

The Company intends to maintain available commitments under the Revolving Facility in an amount at least equal to the amount of CP Notes outstanding at any time.

As of August 4, 2023, the Company’s condensed consolidated balance sheet reflected outstanding unsecured CP Notes of $ 0.3 billion, which had a weighted average borrowing rate of 5.4 %.

CP Notes totaling $ 201.5 million and $ 230.8 million at August 4, 2023 and February 3, 2023, respectively, were held by a wholly-owned subsidiary of the Company and are therefore not reflected in the condensed consolidated balance sheets.

As of November 3, 2023, the Company’s condensed consolidated balance sheet reflected outstanding unsecured CP Notes of $ 198.1 million, which had a weighted average borrowing rate of 5.4 %.

CP Notes totaling $ 197.7 million and $ 230.8 million at November 3, 2023 and February 3, 2023, respectively, were held by a wholly-owned subsidiary of the Company and are therefore not reflected in the condensed consolidated balance sheets.

On June 7, 2023, the Company issued $ 500.0 million aggregate principal amount of 5.20 % senior notes due 2028 (the “July 2028 Senior Notes”), net of discount of $ 0.1 million, and $ 1.0 billion aggregate principal amount of 5.45 % senior notes due 2033 (the “2033 Senior Notes”), net of discount of $ 1.6 million.

The July 2028 Senior Notes are scheduled to mature on July 5, 2028, and the 2033 Senior Notes are scheduled to mature on July 5, 2033.

Interest on the July 2028 Senior Notes and 2033 Senior Notes is payable in cash on January 5 and July 5 of each year, commencing

on January 5, 2024.

The Company incurred $ 12.4 million of debt issuance costs associated with the issuance of the July 2028 Senior Notes and 2033 Senior Notes.

Interest on the July 2028 Senior Notes and the 2033 Senior Notes is payable in cash on January 5 and July 5 of each year, commencing on January 5, 2024.

The Company incurred $ 12.4 million of debt issuance costs associated with the issuance of the July 2028 Senior Notes and the 2033 Senior Notes.

Assets and liabilities measured at fair value

2 unchanged sentences

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 August 4, 2023.

The following table presents the Company’s liabilities required to be measured at fair value as of August 4, 2023, aggregated by the level in the fair value hierarchy within which those measurements are classified.

The Company does not have any fair value measurements categorized within Level 3 as of November 3, 2023.

The following table presents the Company’s liabilities required to be measured at fair value as of November 3, 2023, aggregated by the level in the fair value hierarchy within which those measurements are classified.

Quoted Prices

3 unchanged sentences

Deferred compensation (b)

(a) Included in the condensed consolidated balance sheet at book value as long-term obligations of $ 7,295,215 .

(a) Included in the condensed consolidated balance sheet at book value as current portion of long-term obligations of $ 750,000 and long-term obligations of $ 6,440,845 .

(b) Reflected at fair value in the condensed consolidated balance sheet as accrued expenses and other current liabilities of $ 10,164 and noncurrent other liabilities of $ 35,951 .

5 unchanged sentences

On January 20, 2023, a lawsuit entitled Brent Conforti, et al.

Owen, et al .

was filed in the United States District Court for the Middle District of Tennessee (Case No.

3:23-CV-00059) (“Conforti”) in which the plaintiff shareholder, purportedly on behalf and for the benefit of the Company, alleges that each of the Company’s directors violated their fiduciary duties by failing to implement and maintain a system of controls regarding the Company’s workplace safety practices.

The plaintiff also alleges corporate waste and, as to the Company’s former CEO, Mr.

The plaintiff also alleges corporate waste and, as to the Company’s then former CEO, Mr.

Vasos, unjust enrichment.

On February 13, 2023, the plaintiff amended the complaint to add breach of fiduciary duty allegations against certain officers of the Company, including Messrs.

On February 13, 2023, the plaintiff amended the complaint to add breach of fiduciary duty allegations against certain then officers of the Company, including Messrs.

Owen, Vasos, Garratt, Sunderland and Wenkoff and Mss.

1 unchanged sentence

The plaintiff seeks both non-monetary and monetary relief for the benefit of the Company.

On April 1, 2023, the Company and the Individual Defendants moved to dismiss the Conforti action, and that motion remains pending.

On October 12, 2023, the court granted in its entirety the motion to dismiss filed by the Company and the Individual Defendants.

On November 27, 2023, and November 30, 2023, respectively, the following putative shareholder class action lawsuits were filed in the United States District Court for the Middle District of Tennessee in which the plaintiffs allege that during the putative class periods noted below, the Company and certain of its current and former officers violated the federal securities laws by misrepresenting the impact of alleged store labor, inventory, pricing and other practices on the Company’s financial results and prospects:

Washtenaw County Employees’ Retirement System v.

Dollar General Corporation, et al.

3:23-cv-01250) (putative class period of May 28, 2020 to August 30, 2023);

Dollar General Corporation, et al.

3:23-cv-01259) (putative class period of February 23, 2023 to August 31, 2023) (collectively, the “Shareholder Securities Litigation”).

The plaintiffs seek compensatory damages, equitable/injunctive relief, pre- and post-judgment interest and attorneys’ fees and costs.

The deadline to seek appointment by the Court to serve as the lead plaintiff in the Shareholder Securities Litigation is January 26, 2024.

At this time, it is not possible to estimate the value of the claims asserted in the Shareholder Securities Litigation or the potential range of loss in this matter, and no assurances can be given that the Company will be successful in its defense on the merits or otherwise.

However, if the Company is not successful in its defense efforts, the resolution of the Shareholder Securities Litigation could have a material adverse effect on the Company’s consolidated financial statements as a whole.

Based on information currently available, the Company believes that its pending legal matters, 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 and other legal matters involve an element of uncertainty.

Adverse decisions and settlements, including any required changes to the Company’s business, or other developments in such

matters could affect the consolidated operating results in future periods or result in liability or other amounts material to the Company’s annual consolidated financial statements.

Adverse decisions and settlements, including any required changes to the Company’s business, or other developments in such matters could affect the consolidated operating results in future periods or result in liability or other amounts material to the Company’s annual consolidated financial statements.

Segment reporting

The Company manages its business on the basis of one reportable operating segment.

As of August 4, 2023, the Company’s retail store operations were primarily located within the United States, with one retail store in Mexico.

As of November 3, 2023, the Company’s retail store operations were primarily located within the United States, with two retail stores in Mexico.

Certain product sourcing and other operations are located outside the United States, which collectively are not material with regard to assets, results of operations or otherwise to the consolidated financial statements.

11 unchanged sentences

Repurchases under the program may be funded from available cash or borrowings, including under the Facilities and issuance of CP Notes discussed in further detail in Note 5, or otherwise.

Pursuant to its common stock repurchase program, during the 26-week periods ended August 4, 2023 and July 29, 2022, respectively, the Company repurchased in the open market no shares of its common stock and approximately 4.9 million shares of its common stock at a total cost of $ 1.1 billion.

The Company paid a cash dividend of $ 0.59 per share during the second quarter of 2023.

In August 2023, the Board declared a quarterly cash dividend of $ 0.59 per share, which is payable on or before October 24, 2023 to shareholders of record on October 10, 2023.

Pursuant to its common stock repurchase program, during the 39-week periods ended November 3, 2023 and October 28, 2022, respectively, the Company repurchased in the open market no shares of its common stock and 7.1 million shares of its common stock at a total cost of $ 1.6 billion.

The Company paid a cash dividend of $ 0.59 per share during each of the first three quarters of 2023.

In December 2023, the Board declared a quarterly cash dividend of $ 0.59 per share, which is payable on or before January 23, 2023, to shareholders of record on January 9, 2023.

The amount and declaration of future cash dividends is subject to the sole discretion of the Board and will depend upon, among other things, the Company’s results of operations, cash requirements, financial condition, contractual restrictions, excess debt capacity, and other factors that the Board may deem relevant in its sole discretion.

2 unchanged sentences

Results of Review of Interim Financial Statements

We have reviewed the accompanying condensed consolidated balance sheet of Dollar General Corporation and subsidiaries (the Company) as of August 4, 2023, the related condensed consolidated statements of income, comprehensive income, and shareholders’ equity for the thirteen and twenty-six week periods ended August 4, 2023 and July 29, 2022, the condensed consolidated statements of cash flows for the twenty-six week periods ended August 4, 2023 and July 29, 2022, and the related notes (collectively referred to as the “condensed consolidated interim financial statements”).

We have reviewed the accompanying condensed consolidated balance sheet of Dollar General Corporation and subsidiaries (the Company) as of November 3, 2023, the related condensed consolidated statements of income, comprehensive income, and shareholders’ equity for the thirteen and thirty-nine week periods ended November 3, 2023 and October 28, 2022, the condensed consolidated statements of cash flows for the thirty-nine week periods ended November 3, 2023 and October 28, 2022, and the related notes (collectively referred to as the “condensed consolidated interim financial statements”).

Based on our reviews, we are not aware of any material modifications that should be made to the condensed consolidated interim financial statements for them to be in conformity with U.S.

13 unchanged sentences

Nashville, Tennessee

August 31, 2023

December 7, 2023

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements