Dollar General 2004 Annual Report Download - page 23

Dollar General Corporation 21
An increase in accrued liabilities resulted in a $45.3
million increase in 2003 cash flows compared to 2002
due in part to the accrued SEC penalty and increased
2003 bonuses described above, increased deferred com-
pensation liabilities and increases in certain tax reserves.
Contributing to the increase in cash flows provided by
operating activities in 2003 was an increase in net
income of $36.7 million driven by the improved operating
results discussed above (see “Results of Operations”).
Cash Flows Used in Investing Activities. Significant
components of the Company’s purchases of property
and equipment in 2004 included the following approxi-
mate amounts: $101 million for distribution and transpor-
tation-related capital expenditures; $82 million for new
stores; $26 million for certain fixtures in existing stores;
$26 million for various systems-related capital projects;
and $23 million for coolers in existing stores, which allow
the stores to carry refrigerated products. During 2004,
the Company opened 722 new stores and relocated or
remodeled 80 stores. Distribution and transportation
expenditures in 2004 included costs associated with the
construction of the Company’s new DC in South Carolina
as well as costs associated with the expansion of the
Ardmore, Oklahoma and South Boston, Virginia DCs.
Net sales of short-term investments in 2004 of $25.8 mil-
lion primarily reflect the Company’s investment activities
in tax-exempt auction market securities.
The Company’s purchases of property and equipment in
2003 included the following approximate amounts: $63
million for new, relocated and remodeled stores; $22 mil-
lion for systems-related capital projects; and $25 million
for distribution and transportation-related capital expendi-
tures. During 2003, the Company opened 673 new
stores and relocated or remodeled 76 stores. Systems-
related projects in 2003 included approximately $6 million
for point-of-sale and satellite technology and $3 million
related to debit/credit/EBT technology. Distribution and
transportation expenditures in 2003 included approxi-
mately $19 million at the Ardmore, Oklahoma and South
Boston, Virginia DCs primarily related to the ongoing
expansion of those facilities.
Net purchases of short-term investments in 2003 of
$67.2 million primarily reflect the Company’s investment
activities in tax-exempt auction market securities.
During 2003, the Company purchased two secured
promissory notes totaling $49.6 million which represent
debt issued by a third party entity from which the
Company leases its DC in South Boston, Virginia.
See Note 8 to the Company’s Consolidated Financial
Statements.
The Company’s purchases of property and equipment
in 2002 included the following approximate amounts:
$51 million for new, relocated and remodeled stores; $30
million for systems-related capital projects; and $21 million
for distribution and transportation-related capital expendi-
tures. The Company opened 622 new stores and relocated
or remodeled 73 stores in 2002. Systems-related capital
projects in 2002 included approximately $15 million for
satellite technology and $3 million for point-of-sale cash
registers. Expenditures for distribution and transportation
consisted in part of $8 million for the purchase of new
trailers and $5 million related to the installation of a dual
sortation system in the Fulton, Missouri DC.
Capital expenditures during 2005 are projected to be
approximately $350 million. The Company anticipates
funding its 2005 capital requirements with cash flows
from operations and the Credit Facility, if necessary.
Significant components of the 2005 capital plan include
the completion of construction of the new DC in South
Carolina and the expected commencement of construction
of the Company’s ninth DC at an as-yet undetermined
location; leasehold improvements and fixtures and equip-
ment for 730 new stores, which includes 30 new Dollar
General Market stores; the continued rollout of the
Company’s EZstore project; and additional investments in
technology and systems. The Company plans to undertake
these expenditures in order to improve its infrastructure
and provide support for its anticipated growth.
Cash Flows Used in Financing Activities. During
2004, the Company repurchased approximately 11.0
million shares of its common stock at a total cost of
$209.3 million and paid cash dividends of $52.7 million,
or $0.16 per share, on its outstanding common stock.
The Company paid cash dividends of $46.9 million, or
$0.14 per share, on its outstanding common stock during
2003. The Company repurchased approximately 1.5 million
shares of its common stock during 2003 at a total cost of
$29.7 million. The Company expended $15.9 million during
2003 to reduce its outstanding capital lease and financing
obligations. These uses of cash were partially offset by