Dollar General 2012 Annual Report Download - page 86

10-K
as our new store growth. We continually analyze and rebalance the network to ensure that it remains
efficient and provides the service our stores require. See ‘‘—Properties’’ for additional information
pertaining to our distribution centers.
Most of our merchandise flows through our distribution centers and is delivered to our stores by
third-party trucking firms, utilizing our trailers. Our agreements with these trucking firms are based on
estimated costs of diesel fuel, with the difference in estimated and current market fuel costs passed
through to us. The costs of diesel fuel are significantly influenced by international, political and
economic circumstances. Our average cost per gallon of diesel fuel increased slightly in 2012 and more
significantly in 2011. If further price increases were to arise for any reason, including fuel supply
shortages or unusual price volatility, the resulting higher fuel prices could materially increase our
transportation costs.
Seasonality
Our business is seasonal to a certain extent. Generally, our highest sales volume occurs in the
fourth quarter, which includes the Christmas selling season, and the lowest occurs in the first quarter.
In addition, our quarterly results can be affected by the timing of certain holidays, the timing of new
store openings and store closings, the amount of sales contributed by new and existing stores, as well as
financial transactions such as debt repurchases, common stock offerings and stock repurchases. We
purchase substantial amounts of inventory in the third quarter and incur higher shipping costs and
higher payroll costs in anticipation of the increased sales activity during the fourth quarter. In addition,
we carry merchandise during our fourth quarter that we do not carry during the rest of the year, such
as gift sets, holiday decorations, certain baking items, and a broader assortment of toys and candy.
The following table reflects the seasonality of net sales, gross profit, and net income by quarter for
each of the quarters of our three most recent fiscal years. The fourth quarter of the year ended
February 3, 2012 was comprised of 14 weeks, and each of the other quarters reflected below were
comprised of 13 weeks.
(in millions) 1st Quarter 2nd Quarter 3rd Quarter 4th Quarter
Year Ended February 1, 2013
Net sales .................... $3,901.2 $3,948.7 $3,964.6 $4,207.6
Gross profit ................. 1,228.3 1,263.2 1,226.1 1,367.8
Net income(a) ................ 213.4 214.1 207.7 317.4
Year Ended February 3, 2012
Net sales .................... $3,451.7 $3,575.2 $3,595.2 $4,185.1
Gross profit ................. 1,087.4 1,148.3 1,115.8 1,346.4
Net income(b) ................ 157.0 146.0 171.2 292.5
Year Ended January 28, 2011
Net sales .................... $3,111.3 $3,214.2 $3,223.4 $3,486.1
Gross profit ................. 999.8 1,036.0 1,010.7 1,130.2
Net income .................. 136.0 141.2 128.1 222.5
(a) Includes expenses, net of income taxes, of $17.7 million related to the redemption of
long-term obligations in second quarter of 2012.
(b) Includes expenses, net of income taxes, of $35.4 million related to the redemption of
long-term obligations in second quarter of 2011.
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