Dollar General 2011 Annual Report Download - page 119

10-K
• allow payments to us by our restricted subsidiaries;
• merge, consolidate, sell or otherwise dispose of all or substantially all of our assets; and
• designate our subsidiaries as unrestricted subsidiaries.
A breach of any of these covenants could result in a default under the agreement governing such
indebtedness. Upon our failure to maintain compliance with these covenants, the lenders could elect to
declare all amounts outstanding thereunder to be immediately due and payable and terminate all
commitments to extend further credit thereunder. If the lenders under such indebtedness accelerate the
repayment of borrowings, we cannot assure you that we will have sufficient assets to repay those
borrowings, as well as our other indebtedness, including our outstanding notes. We have pledged a
significant portion of our assets as collateral under our credit facilities. If we were unable to repay
those amounts, the lenders under our credit facilities could proceed against the collateral granted to
them to secure that indebtedness. Additional borrowings under the senior secured asset-based revolving
credit facility will, if excess availability under that facility is less than a certain amount, be subject to the
satisfaction of a specified financial ratio. Accordingly, our ability to access the full availability under our
senior secured asset-based revolving credit facility may be constrained. Our ability to meet this financial
ratio can be affected by events beyond our control, and we cannot assure you that we will meet this
ratio, if applicable, and other covenants.
New accounting guidance or changes in the interpretation or application of existing accounting guidance
could adversely affect our financial performance.
The implementation of proposed new accounting standards may require extensive systems, internal
process and other changes that could increase our operating costs, and may also result in changes to
our financial statements. In particular, the implementation of expected future accounting standards
related to leases, as currently being contemplated by the convergence project between the Financial
Accounting Standards Board (‘‘FASB’’) and the International Accounting Standards Board (‘‘IASB’’), as
well as the possible adoption of international financial reporting standards by U.S. registrants, could
require us to make significant changes to our lease management, fixed asset, and other accounting
systems, and in all likelihood would result in changes to our financial statements.
U.S. generally accepted accounting principles and related accounting pronouncements,
implementation guidelines and interpretations with regard to a wide range of matters that are relevant
to our business involve many subjective assumptions, estimates and judgments by our management.
Changes in these rules or their interpretation or changes in underlying assumptions, estimates or
judgments by our management could significantly change our reported or expected financial
performance. The outcome of such changes could include litigation or regulatory actions which could
have an adverse effect on our financial condition and results of operations.
Kohlberg Kravis Roberts & Co. L.P. (‘‘KKR’’), certain affiliates of Goldman, Sachs & Co. (the ‘‘GS
Investors’’), and other equity co-investors (collectively, the ‘‘Investors’’) have significant influence over us,
including in connection with decisions that require the approval of shareholders, which could limit your
ability to influence the outcome of key transactions, including a change of control.
Through their investment in Buck Holdings, L.P., the Investors hold a significant interest in our
outstanding common stock. As a result, the Investors potentially have the ability to influence the
outcome of matters that require a vote of our shareholders, including election of our Board of
Directors and other corporate transactions, regardless of whether others believe that the transaction is
in our best interests. In addition, pursuant to a shareholders’ agreement that we entered into with Buck
Holdings, L.P., KKR and the GS Investors, KKR has a consent right over certain significant corporate
actions and KKR and the GS Investors have certain rights to appoint directors to our Board and its
committees for so long as Buck Holdings, L.P. continues to hold a specified amount of our common
stock.
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