Dollar General 2008 Annual Report Download - page 26

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We entered into the following debt financings in conjunction with the Merger:
• A credit agreement and related security and other agreements consisting of a
$2.3 billion senior secured term loan facility, which matures on July 6, 2014 (the
“Term Loan Facility”).
• A credit agreement and related security and other agreements consisting of a senior
secured asset-based revolving credit facility of up to $1.125 billion subject to
borrowing base availability, which matures July 6, 2013 (the “ABL Facility” and,
with the Term Loan Facility, the “Credit Facilities”).
• $1.175 billion aggregate principal amount of 10.625% senior notes due 2015, which
mature on July 15, 2015, and $725 million aggregate principal amount of
11.875%/12.625% senior subordinated toggle notes due 2017, which mature on
July 15, 2017. We have repurchased $69.1 million of the senior subordinated toggle
notes since the Merger.
Executive Overview
We are the largest discount retailer in the United States by number of stores, with
approximately 8,400 stores located in 35 states, primarily in the southern, southwestern,
midwestern and eastern United States. We serve a broad customer base and offer a focused
assortment of everyday items, including basic consumable merchandise and other home, apparel
and seasonal products. A majority of our products are priced at $10 or less, and approximately
25% of our products are priced at $1 or less. We seek to offer a compelling value proposition for
our customers based on convenient store locations, easy in and out shopping and quality
merchandise in a friendly shopping environment at highly competitive prices. We believe our
combination of value and convenience distinguishes us from other discount, convenience and
drugstore retailers, who typically focus on either value or convenience.
The nature of our business is seasonal to a certain extent. Primarily because of sales of
holiday-related merchandise, sales in our fourth quarter (November, December and January)
have historically been higher than sales achieved in each of the first three quarters of the fiscal
year. Expenses and, to a greater extent, operating income vary by quarter. Results of a period
shorter than a full year may not be indicative of results expected for the entire year. Furthermore,
the seasonal nature of our business may affect comparisons between periods. It is important for
you to read our more detailed discussion of financial and operating results below under “Results
of Operations.” Basis points or “bps” amounts referred to below are equal to 0.01 percent as a
percentage of sales.
The customers we serve are value-conscious, and Dollar General has always been
intently focused on helping our customers make the most of their spending dollars. In 2008,
consumers faced severe economic challenges, including high gasoline and fuel costs, rising food
costs, increased unemployment, and the downturn in the housing and credit markets. We believe
that we benefited to some extent from the impact of consumers searching for good values on
their basic purchases.