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Press release from Business Wire

Dollar General Corporation Reports Record Third Quarter Sales and Earnings

<ul> <li class='bwlistitemmargb'> <b>Third Quarter Sales Increased 10.1%, Same-Store Sales Increased 4.2%</b> </li> <li class='bwlistitemmargb'> <b>Gross Margin Expanded 51 Basis Points to 31.4%</b> </li> <li class='bwlistitemmargb'> <b>SG&A Decreased 61 Basis Points to 22.8 %</b> </li> <li class='bwlistitemmargb'> <b>Operating Profit Increased 27% to $274 million, or 8.5% of sales</b> </li> <li class='bwlistitemmargb'> <b>Adjusted EBITDA Increased 21% to $340 million</b> </li> <li class='bwlistitemmargb'> <b>Adjusted Net Income Increased 76% to $133 million, or $0.39 per diluted share</b> </li> <li class='bwlistitemmargb'> <b>Net Income Increased 69% to $128 million, or $0.37 per diluted share</b> </li> <li class='bwlistitemmargb'> <b>Company Raises 2010 Financial Outlook</b> </li> </ul>

Monday, December 06, 2010

Dollar General Corporation Reports Record Third Quarter Sales and Earnings07:00 EST Monday, December 06, 2010 GOODLETTSVILLE, Tenn. (Business Wire) -- Dollar General Corporation (NYSE: DG) today reported financial results for its fiscal 2010 third quarter (13 weeks) ended October 29, 2010. Net income was $128 million, or diluted earnings per share (“EPS”) of $0.37. Excluding a net loss of $8 million ($5 million after income taxes) relating to the early repayment of certain long-term obligations, net income for the 2010 third quarter was $133 million, or diluted EPS of $0.39, a 76 percent increase over net income of $76 million, or $0.24 per diluted share, in the third quarter (13 weeks) of fiscal 2009. “Dollar General is having a great year. We are executing our plans and delivering excellent performance for our shareholders. Even as the macroeconomic environment continues to be volatile for our customers, our strong results are top-tier among retailers. As a result, we are raising our full year adjusted earnings per share guidance to the range of $1.78 to $1.81,” said Rick Dreiling, chairman and chief executive officer. “I am pleased with our Thanksgiving week sales and our outlook for the fourth quarter,” said Dreiling. “Our operating priorities for the balance of 2010 and beyond will allow us to capture sustainable growth opportunities as we continue to focus on driving productive sales growth, increasing gross margin, leveraging process improvements to reduce costs and strengthening and expanding Dollar General's culture of serving others.” Third Quarter 2010 Financial Results Net sales increased 10.1 percent to $3.22 billion in the 2010 third quarter compared to $2.93 billion in the 2009 third quarter. Same-store sales increased 4.2 percent in the 2010 quarter and 9.2 percent in the 2009 quarter, with customer traffic and average transaction amounts contributing to the same-store sales increases in both periods. The 2010 gross profit rate increased by 51 basis points to 31.4 percent of sales from 30.8 percent of sales in the 2009 period. The gross profit rate increase was driven by the Company's efforts to reduce merchandise purchase costs while maintaining everyday low prices. These efforts resulted primarily in higher purchase markups, partially offset by increased markdowns. Increased sales volumes, as well as increased sales of higher margin private brands and more effective category management processes, contributed to the ability to increase overall markups. Selling, general and administrative expenses (SG&A) were $736 million, or 22.8 percent of sales in the 2010 third quarter compared to $687 million, or 23.5 percent in the 2009 third quarter, a decrease of 61 basis points, due primarily to decreases in estimated incentive compensation, healthcare expense and external consulting fees, as well as other cost reduction and productivity initiatives which resulted in certain costs, including store and administrative payroll, increasing less than the overall 10.1% increase in sales for the period. Increased debit card usage caused processing fees to increase at a higher rate than the increase in sales. Third quarter 2010 operating profit increased by 26.9 percent to $274 million, or 8.5 percent of sales, compared to $216 million, or 7.4 percent of sales, in the 2009 third quarter. Interest expense decreased significantly to $67 million in the 2010 third quarter from $88 million in the 2009 third quarter due to lower average outstanding borrowings resulting from the Company's repurchases of long-term obligations. During the 2010 third quarter, the Company repurchased an additional $65 million of its long-term obligations, resulting in a charge, which is included in Other (income) expense of $8 million ($5 million, net of income taxes). The effective income tax rate for the 2010 quarter was 35.6 percent compared to a rate of 41.0 percent for the 2009 quarter. The decrease in the income tax rate was primarily associated with income tax examination related activity. In the 2009 period, income tax expense was increased due to unfavorable income tax examination results while the 2010 period reflected decreases due to the elimination of selected income tax reserves upon the effective resolution of the respective uncertain tax positions. 39-Week Period Results For the 39-week year-to-date period, total sales increased 10.9 percent, including a 5.3 percent increase in same-store sales. Same-store sales increased 10.3 percent in the comparable 2009 period. The gross profit rate increased 96 basis points to 31.9 percent of sales, primarily due to higher purchase markups, partially offset by higher markdowns. Higher sales volumes, an increase in the mix of private brands and more effective category management processes have contributed to higher purchase markups. These factors were partially offset by increased transportation costs in the 2010 period primarily due to higher fuel costs. SG&A, as a percentage of sales, for the 39-week period were 22.8 percent compared to 23.1 percent in the comparable 2009 period. Excluding expenses totaling $15 million relating to a secondary offering of the Company's common stock in the 2010 first quarter by certain existing shareholders (the “secondary offering”), SG&A, as a percentage of sales, for the period decreased by 43 basis points. Decreases in estimated incentive compensation, healthcare expense and consulting contributed to the overall decrease in SG&A as a percentage of sales. In addition, the impact of increased sales and other cost reduction efforts resulted in certain costs increasing at a rate lower than the 10.9 percent increase in sales, including lower waste management costs reflecting our recycling efforts. As a result of increased usage, debit card processing fees increased at a higher rate than the increase in sales. For the 39-week 2010 period, the Company's operating profit rate was 9.1 percent of sales, or 9.2 percent excluding expenses relating to the secondary offering, compared to 7.8 percent for the comparable 2009 period. The effective income tax rate for the 2010 period was 36.9% compared to a rate of 38.2% for the 2009 period. The decrease in the income tax rate was primarily associated with income tax examination related activity. In the 2009 period, income tax expense was increased due to unfavorable income tax examination results while the 2010 period reflected decreases due to the elimination of selected income tax reserves upon the effective resolution of the respective uncertain tax positions. The Company reported net income of $405 million in the 2010 39-week period, an increase of $153 million, or 61 percent, over the 2009 period. Diluted earnings per share were $1.18 in the 2010 period compared to $0.79 in the 2009 period. Excluding expenses as discussed above totaling $15 million ($9 million, net of income taxes) relating to the secondary offering and the net loss on debt retirements of $15 million ($9 million, net of income taxes), net income for the 2010 39-week period was $424 million, or $1.23 per share. Merchandise Inventories As of October 29, 2010, total merchandise inventories, at cost, were $1.89 billion compared to $1.68 billion as of October 30, 2009, an increase of twelve percent, or six percent on a per-store basis. Inventory turns, based on the most recent four quarters, were 5.1 times in 2010. Long-Term Obligations As of October 29, 2010, outstanding long-term obligations, including the current portion, were $3.29 billion, a decrease of $844 million, or 20 percent, from the prior year. Capital Expenditures Total additions to property and equipment in the 2010 year-to-date period were $259 million. Additions included $95 million relating to new leased stores and store purchases, $85 million for improvements and upgrades to existing stores, $44 million for remodels and relocations of existing stores, $18 million for distribution and transportation improvements and $17 million for systems-related capital projects. Year-to-date, the Company opened 491 new stores and relocated or remodeled 458 stores. Company Outlook The Company remains committed to continuing its focus on driving productive sales growth, increasing gross margin, leveraging process improvements and information technology to reduce costs and strengthening and expanding Dollar General's culture of serving others. Dollar General is closely monitoring how consumers respond to both the economic and the competitive climate during the current holiday season. The Company has increased its expectations for fiscal 2010 adjusted diluted earnings per share to a range of $1.78 to $1.81, with full year total sales expected to increase 10.5 to 11.0 percent, including a same-store sales increase of 5.0 to 5.5 percent. Same-store sales for the 2010 fourth quarter are expected to increase approximately five percent. Full year 2010 adjusted operating profit is expected to increase 23 to 25 percent over fiscal 2009. Previous guidance was for adjusted diluted earnings per share in the range of $1.68 to $1.74, total sales growth of 8.5 to 10.5 percent, same-store sales growth of four to six percent, and adjusted operating profit expansion of 20 to 23 percent over 2009. Updated and previous guidance were based on a 38 percent income tax rate and 345 million weighted average diluted shares. The calculations of adjusted operating profit and adjusted diluted earnings per share exclude costs related to common stock offerings and the net loss on early retirement of long-term obligations, as applicable. The Company plans to open approximately 600 new stores and to remodel or relocate a total of approximately 500 stores in 2010. Capital expenditures for the fiscal year are currently expected to be approximately $410 to $430 million. The Company's previous guidance was for capital expenditures of approximately $350 million. The revised estimate includes the anticipated purchase of certain of the Company's store real estate locations and initial costs relating to the construction of a new distribution center in the Southeast. In 2011, the Company plans to open approximately 625 new stores, including expansion into Connecticut, New Hampshire and Nevada. In addition, the Company plans to remodel or relocate approximately 550 stores. Selling square footage is expected to increase approximately seven percent in 2011. Earnings Conference Call Information The Company will hold a conference call on Monday, December 6, 2010, at 9:00 a.m. CST/10:00 a.m. EST, 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.” In addition, the call will be available online at www.dollargeneral.com under “Investor Information, Conference Calls and Investor Events.” For legal reasons, a replay of the conference call will not be immediately available. The replay of the conference call is expected to be available commencing Wednesday, December 8, and to remain available through Monday, December 20, 2010. The replay will be accessible online or by calling (334) 323-7226. The pass code for the replay is 56137100. December 15 Investor and Analyst Meeting The Company plans to hold a meeting for investors and analysts on Wednesday, December 15, 2010, from noon until 2:00 p.m. EST. The meeting will be webcast live and will be accessible at www.dollargeneral.com under “Investor Information, Conference Calls and Investor Events.” A replay of the meeting will remain available online through Wednesday, December 29, 2010. Forward-Looking Statements This press release contains forward-looking information, such as the information in the section entitled “Company Outlook.” The words “believe,” “anticipate,” “project,” “plan,” “schedule,” “expect,” “estimate,” “objective,” “forecast,” “intend,” “on track,” “committed,” “will likely result,” or “will continue” and similar expressions generally identify forward-looking statements. These matters involve risks, uncertainties and other factors that may cause the actual performance of the Company to differ materially from that expressed or implied by these forward-looking statements. All forward-looking information should be evaluated in the context of these risks, uncertainties and other factors. Factors that may result in actual results differing materially from such forward-looking information include, but are not limited to: failure to successfully execute the Company's growth strategy, including delays in store growth, 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, resin, oil and paper); 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 health care; 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 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; damage or interruption to the Company's information systems; changes in the competitive environment in the Company's industry and the markets where the Company operates; natural disasters, unusually adverse 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 Annual Report on Form 10-K filed with the Securities and Exchange Commission on March 31, 2010; and any quarterly reports on Form 10-Q filed subsequently to the Form 10-K; and such other factors as may be discussed or identified in this press release. Forward-looking statements speak only as of the date made. The Company undertakes no obligation to update any forward-looking statements to reflect events or circumstances arising after the date on which they were made. 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. 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”). Reconciliations of these non-GAAP measures to the most directly comparable measures calculated in accordance with GAAP are provided in the accompanying schedules. Non-GAAP information should not be considered a substitute for any information derived or calculated in accordance with GAAP. The Company believes that providing comparisons to operating profit, net income, diluted earnings per share and SG&A, 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. 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, operating income, cash flows from operations or any other performance measures determined in accordance with GAAP. Additionally, EBITDA and Adjusted EBITDA 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. About Dollar General Corporation Dollar General Corporation has been delivering value to shoppers for more than 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 9,273 stores in 35 states as of October 29, 2010, Dollar General has more retail locations than any retailer in America. 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 SUBSIDIARIESCondensed Consolidated Balance Sheets(In thousands)     (Unaudited)October 29,October 30,January 29,   2010       2009       2010   ASSETS Current assets: Cash and cash equivalents $ 237,906 $ 337,019 $ 222,076 Merchandise inventories 1,885,753 1,680,273 1,519,578 Income taxes receivable 27,677 31,268 7,543 Prepaid expenses and other current assets     121,422       68,754       96,252   Total current assets     2,272,758       2,117,314       1,845,449   Net property and equipment     1,414,700       1,305,858       1,328,386   Goodwill     4,338,589       4,338,589       4,338,589   Intangible assets, net     1,262,834       1,293,280       1,284,283   Other assets, net     60,693       77,491       66,812   Total assets   $ 9,349,574     $ 9,132,532     $ 8,863,519     LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities: Current portion of long-term obligations $ 1,358 $ 26,762 $ 3,671 Accounts payable 971,538 852,988 830,953 Accrued expenses and other 378,750 381,346 342,290 Income taxes payable 14,068 3,659 4,525 Deferred income taxes     44,601       46,178       25,061   Total current liabilities     1,410,315       1,310,933       1,206,500   Long-term obligations     3,286,907       4,105,252       3,399,715   Deferred income taxes     565,510       547,180       546,172   Other liabilities     254,669       298,622       302,348   Total liabilities     5,517,401       6,261,987       5,454,735     Commitments and contingencies   Redeemable common stock     14,783       15,131       18,486     Shareholders' equity: Preferred stock - - - Common stock 298,459 278,202 298,013 Additional paid-in capital 2,937,300 2,497,939 2,923,377 Retained earnings 608,386 115,878 203,075 Accumulated other comprehensive loss     (26,755 )     (36,605 )     (34,167 ) Total shareholders' equity     3,817,390       2,855,414       3,390,298   Total liabilities and shareholders' equity   $ 9,349,574     $ 9,132,532     $ 8,863,519   DOLLAR GENERAL CORPORATION AND SUBSIDIARIESConsolidated Statements of Income(In thousands, except per share amounts)(Unaudited)           For the Quarter (13 Weeks) EndedOctober 29,% of NetOctober 30,% of Net   2010     Sales       2009     Sales Net sales $ 3,223,427 100.00 % $ 2,928,751 100.00 % Cost of goods sold   2,212,759     68.65 %       2,025,669     69.16 % Gross profit 1,010,668 31.35 % 903,082 30.84 % Selling, general and administrative expenses   736,334     22.84 %       686,843     23.45 % Operating profit 274,334 8.51 % 216,239 7.38 % Interest income (90 ) 0.00 % (26 ) 0.00 % Interest expense 67,235 2.09 % 87,612 2.99 % Other (income) expense   8,312     0.26 %       513     0.02 % Income before income taxes 198,877 6.17 % 128,140 4.38 % Income taxes   70,757     2.20 %       52,491     1.79 % Net income $ 128,120     3.97 %     $ 75,649     2.58 %   Earnings per share: Basic $ 0.38 $ 0.24 Diluted $ 0.37 $ 0.24 Weighted average shares outstanding: Basic 341,062 317,945 Diluted 344,739 320,558 DOLLAR GENERAL CORPORATION AND SUBSIDIARIESConsolidated Statements of Income(In thousands, except per share amounts)(Unaudited)             For the 39 Weeks EndedOctober 29,% of NetOctober 30,% of Net   2010     Sales       2009     Sales Net sales $ 9,548,896 100.00 % $ 8,610,595 100.00 % Cost of goods sold     6,502,493     68.10 %       5,946,113     69.06 % Gross profit 3,046,403 31.90 % 2,664,482 30.94 % Selling, general and administrative expenses     2,180,589     22.84 %       1,990,157     23.11 % Operating profit 865,814 9.07 % 674,325 7.83 % Interest income (128 ) 0.00 % (135 ) 0.00 % Interest expense 208,583 2.18 % 266,792 3.10 % Other (income) expense     14,983     0.16 %       (215 )   0.00 % Income before income taxes 642,376 6.73 % 407,883 4.74 % Income taxes     237,065     2.48 %       155,638     1.81 % Net income   $ 405,311     4.24 %     $ 252,245     2.93 %   Earnings per share: Basic $ 1.19 $ 0.79 Diluted $ 1.18 $ 0.79 Weighted average shares outstanding: Basic 340,961 317,919 Diluted 344,628 319,454 DOLLAR GENERAL CORPORATION AND SUBSIDIARIESCondensed Consolidated Statements of Cash Flows(In thousands)(Unaudited)   For the 39 Weeks EndedOctober 29, 2010   October 30, 2009Cash flows from operating activities:   Net income $ 405,311 $ 252,245 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 189,739 194,045 Deferred income taxes 31,620 40,298 Tax benefit of stock options (6,413 ) (308 ) Non-cash share-based compensation 11,620 9,249 Loss on debt retirement, net 14,576 - Other non-cash gains and losses 7,920 9,211 Change in operating assets and liabilities: Merchandise inventories (366,903 ) (262,993 ) Prepaid expenses and other current assets (26,412 ) (3,048 ) Accounts payable 146,933 162,867 Accrued expenses and other (4,083 ) 19,427 Income taxes (4,178 ) (28,828 ) Other     (1,108 )       (1,038 ) Net cash provided by operating activities     398,622         391,127     Cash flows from investing activities: Purchases of property and equipment (259,243 ) (186,859 ) Proceeds from sale of property and equipment     868         682   Net cash used in investing activities     (258,375 )       (186,177 )   Cash flows from financing activities: Issuance of common stock 599 2,018 Issuance of long-term obligations - 1,080 Repayments of long-term obligations (130,654 ) (7,921 ) Repurchases of equity (825 ) (1,680 ) Proceeds from exercise of stock options 50 - Payment of cash dividends and related amounts - (239,731 ) Tax benefit of stock options     6,413         308   Net cash used in financing activities     (124,417 )       (245,926 )   Net increase (decrease) in cash and cash equivalents 15,830 (40,976 ) Cash and cash equivalents, beginning of period     222,076         377,995   Cash and cash equivalents, end of period   $ 237,906       $ 337,019     Supplemental cash flow information:Cash paid for: Interest $ 161,385 $ 200,766 Income taxes $ 245,451 $ 154,844   Supplemental schedule of non-cash investing and financing activities: Purchases of property and equipment awaiting processing for payment, included in Accounts payable $ 24,046 $ 19,174 DOLLAR GENERAL CORPORATION AND SUBSIDIARIESSelected Additional Information(Unaudited)   Sales by Category (in thousands)   For the Quarter (13 Weeks) EndedOctober 29, 2010   October 30, 2009% Change Consumables $ 2,378,667 $ 2,137,504 11.3 % Seasonal 401,544 370,026 8.5 % Home products 223,026 207,798 7.3 % Apparel   220,190   213,423   3.2 % Net sales $3,223,427$2,928,751   10.1%       For the 39 Weeks EndedOctober 29, 2010   October 30, 2009% Change Consumables $ 6,907,541 $ 6,186,509 11.7 % Seasonal 1,302,780 1,149,775 13.3 % Home products 670,352 636,875 5.3 % Apparel   668,223   637,436   4.8 % Net sales $9,548,896$8,610,595   10.9%     New Store Activity   For the 39 Weeks EndedOctober 29, 2010October 30, 2009   Beginning store count 8,828 8,362 New store openings 491 386 Store closings   (46 ) (28 ) Net new stores   445   358   Ending store count   9,273   8,720   Total selling square footage (000's)   66,270   61,565   DOLLAR GENERAL CORPORATION AND SUBSIDIARIESReconciliation of Non-GAAP Financial Measures(in millions, except per share amounts)             For the Quarter (13 Weeks) EndedOctober 29,% of NetOctober 30,% of NetIncrease   2010     Sales   2009   Sales   $   %   Net sales $ 3,223.4         $ 2,928.8     $ 294.7 10.1 %   Net income $ 128.1 3.97 % $ 75.6 2.58 % $ 52.5 69.4 %   Repurchase of long-term obligations   8.2           -       Total adjustments   8.2           -       Income tax effect of adjustments   (3.2 )         -       Net adjustments   5.0     0.15 %     -   0.00 %   Adjusted net income $ 133.1     4.13 %   $ 75.6   2.58 % $ 57.5 76.0 %   Diluted earnings per share: As reported $ 0.37 $ 0.24 Adjusted $ 0.39 $ 0.24   Weighted average diluted shares outstanding 344.7 320.6   For the 39 Weeks EndedOctober 29,% of NetOctober 30,% of NetIncrease   2010     Sales   2009   Sales   $   %   Net sales $ 9,548.9         $ 8,610.6     $ 938.3 10.9 %   Selling, general and administrative ("SG&A") $ 2,180.6 22.84 % $ 1,990.2 23.11 % $ 190.4 9.6 % Secondary offering expenses (0.7 ) -   Acceleration of equity-based compensation   (14.3 )         -       Adjusted SG&A $ 2,165.6     22.68 %   $ 1,990.2   23.11 % $ 175.4 8.8 %   Operating profit $ 865.8 9.07 % $ 674.3 7.83 % $ 191.5 28.4 % Secondary offering expenses 0.7 -   Acceleration of equity-based compensation   14.3           -       Adjusted operating profit $ 880.8     9.22 %   $ 674.3   7.83 % $ 206.5 30.6 %   Net income $ 405.3 4.24 % $ 252.2 2.93 % $ 153.1 60.7 % Secondary offering expenses 0.7 - Acceleration of equity-based compensation 14.3 -   Repurchase of long-term obligations   14.6           -       Total adjustments   29.6           -       Income tax effect of adjustments   (11.3 )         -       Net adjustments   18.3     0.19 %     -   0.00 %   Adjusted net income $ 423.6     4.44 %   $ 252.2   2.93 % $ 171.4 68.0 %   Diluted earnings per share: As reported $ 1.18 $ 0.79 Adjusted $ 1.23 $ 0.79   Weighted average diluted shares outstanding 344.6 319.5 DOLLAR GENERAL CORPORATION AND SUBSIDIARIESReconciliation of Non-GAAP Financial Measures (Continued)             RECONCILIATION OF NET INCOME TO EBITDA AND ADJUSTED EBITDA     For the QuarterFor theFor the Four Quarters(13 Weeks) Ended39 Weeks Ended(52 Weeks) EndedOctober 29,October 30,October 29,October 30,October 29,October 30,(In millions)   2010         2009       2010         2009       2010         2009     Net income $ 128.1 $ 75.6 $ 405.3 $ 252.2 $ 492.5 $ 334.1 Add (subtract): Interest income (0.1 ) - (0.1 ) (0.1 ) (0.1 ) (0.4 ) Interest expense 67.2 87.6 208.5 266.7 287.4 359.9 Depreciation and amortization 60.4 59.5 180.3 182.4 239.6 242.9 Income taxes   70.8         52.5       237.1         155.7       294.1         207.4   EBITDA   326.4         275.2       1,031.1         856.9       1,313.5         1,143.9     Adjustments: (Gain) loss on debt retirement, net 8.2 - 14.6 - 69.9 (3.8 ) (Gain) loss on hedging instruments 0.1 1.0 0.3 (1.0 ) 1.8 (0.8 ) Contingent (gain) loss on distribution center leases - - - - - (5.0 ) Impact of markdowns related to inventory clearance activities, net of purchase accounting adjustments - (1.0 ) - (6.6 ) (0.7 ) (31.5 ) Hurricane-related expenses and write-offs - - - - - 0.2 Advisory and consulting fees to affiliates - 1.4 0.1 4.4 59.2 6.5 Non-cash expense for share-based awards 3.3 3.3 12.8 9.4 22.1 12.2 Indirect merger-related costs 0.2 0.5 1.0 5.7 5.9 7.3 Litigation settlement and related costs - - - - - (2.5 ) Other non-cash charges (including LIFO)   1.4         -       6.6         8.8       4.4         28.0   Total Adjustments   13.2         5.2       35.4         20.7       162.6         10.6   Adjusted EBITDA $ 339.6       $ 280.4     $ 1,066.5       $ 877.6     $ 1,476.1       $ 1,154.5   DOLLAR GENERAL CORPORATION AND SUBSIDIARIESReconciliation of Non-GAAP Financial Measures (Continued)(Dollars in millions)     Senior Secured Incurrence Test   October 29,October 30,2010   2009 Senior secured debt $ 1,984.9 $ 2,317.6 Less: cash   237.9     337.0 Senior secured debt, net of cash $ 1,747.0 $ 1,980.6 Adjusted EBITDA $ 1,476.1   $ 1,154.5 Ratio of senior secured debt, net of cash, to Adjusted EBITDA 1.2x   1.7x       Calculation of Ratio of Long-Term Obligations to Adjusted EBITDA   October 29,October 30,2010   2009 Total long-term obligations $ 3,288.3 $ 4,132.0 Adjusted EBITDA $ 1,476.1   $ 1,154.5 Ratio of long-term obligations to Adjusted EBITDA 2.2x   3.6x       Calculation of Ratio of Long-Term Obligations, net of Cash, to Adjusted EBITDA   October 29,October 30,2010   2009 Total long-term obligations $ 3,288.3 $ 4,132.0 Less: cash   237.9     337.0 Total long-term obligations, net of cash $ 3,050.4   $ 3,795.0 Adjusted EBITDA $ 1,476.1   $ 1,154.5 Ratio of long-term obligations, net of cash to Adjusted EBITDA 2.1x   3.3x DOLLAR GENERAL CORPORATION AND SUBSIDIARIESReconciliation of Non-GAAP Financial Measures(in millions, except per share amounts)             Earnings Guidance   For the Year (52 Weeks) EndedJanuary 28, 2011January 29, 2010ForecastedForecast of RangePercent IncreaseLow EndHigh EndActualLow EndHigh End   Operating profit $ 1,243.0 $ 1,258.0 $ 953.3 30 % 32 % Sponsor advisory fee termination - - 58.8 Acceleration of equity-based compensation 14.3 14.3 9.4   Secondary offering expenses   0.7       0.7       -     Adjusted operating profit $ 1,258.0     $ 1,273.0     $ 1,021.5   23 % 25 %   Net income $ 595.8 $ 606.2 $ 339.4 76 % 79 % Sponsor advisory fee termination - - 58.8 Acceleration of equity-based compensation 14.3 14.3 9.4 Secondary offering expenses 0.7 0.7 -   Repurchase of long-term obligations, net   14.6       14.6       55.3     Total adjustments   29.6       29.6       123.5     Income tax effect of adjustments   (11.3 )     (11.3 )     (37.8 )   Net adjustments   18.3       18.3       85.7     Adjusted net income $ 614.1     $ 624.5     $ 425.1   44 % 47 %   Diluted earnings per share: As reported $ 1.73 $ 1.76 $ 1.04 66 % 69 % Adjusted $ 1.78 $ 1.81 $ 1.31 36 % 38 %   Weighted average diluted shares outstanding 345.0 345.0 324.8     Previously Issued Earnings Guidance   For the Year (52 Weeks) EndedJanuary 28, 2011January 29, 2010ForecastedForecast of RangePercent IncreaseLow EndHigh EndActualLow EndHigh End   Operating profit $ 1,207.0 $ 1,239.0 $ 953.3 27 % 30 % Sponsor advisory fee termination - - 58.8 Acceleration of equity-based compensation 14.3 14.3 9.4   Secondary offering expenses   0.7       0.7       -     Adjusted operating profit $ 1,222.0     $ 1,254.0     $ 1,021.5   20 % 23 %   Net income $ 566.7 $ 588.7 $ 339.4 67 % 73 % Sponsor advisory fee termination - - 58.8 Acceleration of equity-based compensation 14.3 14.3 9.4 Secondary offering expenses 0.7 0.7 -   Repurchase of long-term obligations, net   6.4       6.4       55.3     Total adjustments   21.4       21.4       123.5     Income tax effect of adjustments   (8.1 )     (8.1 )     (37.8 )   Net adjustments   13.3       13.3       85.7     Adjusted net income $ 580.0     $ 602.0     $ 425.1   36 % 42 %   Diluted earnings per share: As reported $ 1.64 $ 1.71 $ 1.04 58 % 64 % Adjusted $ 1.68 $ 1.74 $ 1.31 28 % 33 %   Weighted average diluted shares outstanding 345.0 345.0 324.8 Dollar General CorporationInvestors:Mary Winn Gordon, 615-855-5536Emma Jo Kauffman, 615-855-5525orMedia:Tawn Earnest, 615-855-5209