Dollar General to use cash flow to pay down debt, invest in business

By Aleesia Forni

Columbus, Ohio, Aug. 30 - Dollar General Corp. reported strong cash flow from operating activities during its second quarter 2011 earnings conference call, which it will use in part to pay down debt and further invest in the business.

In July 2012, the company's $450 million of subordinated notes become callable at a price of 105.

"We will take into consideration buying back those notes at that point in time," said chief financial officer David Tehle. "After that, right now I don't see a lot more change in the debt structure."

The company will also use the $113 million of cash it reported as of July 29 to open approximately 625 new stores and remodel or relocate 575 stores in 2011.

These investments in the business continue to be Dollar General's number one priority, Tehle said during the conference call.

The company expects capital expenditures of $550 million to $600 million during 2011.

Dollar General will also focus on opportunities to return cash to shareholders, either through a share buyback or a dividend.

The company reported net income of $146 million during the quarter, a 3% increase from the previous year's second quarter.

Dollar General is a Goodlettsville, Tenn.-based chain of discount retailers.

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