Dollar General 2011 Annual Report Download - page 144

10-K
The initial applicable margin for all borrowings under the ABL Facility is 1.75% for LIBOR
borrowings and 0.75% for base-rate borrowings. We are also required to pay a commitment fee to the
lenders under the ABL Facility for any unutilized commitments, initially at a rate of 0.375% per
annum. The applicable margins for borrowings and the commitment fees under the ABL Facility are
subject to adjustment each quarter based on average daily excess availability under the ABL Facility.
We also must pay customary letter of credit fees.
The entire principal amounts (if any) outstanding under the ABL Facility are due and payable in
full at maturity, on July 6, 2014, on which day the commitments thereunder will terminate. All
obligations and related guarantees under the ABL Facility are secured by the Revolving Facility
Collateral, subject to certain exceptions.
In addition, we recently commenced efforts to amend our Term Loan Facility to extend the
maturity of a portion of the Term Loan Facility from 2014 to 2017. There can be no assurance that we
will be able to amend the Term Loan Facility on these terms, or at all.
Share Repurchase Program
On November 30, 2011, our Board of Directors approved a share repurchase program of up to
$500 million of outstanding shares of our common stock. Under the authorization, purchases may be
made in the open market or in privately negotiated transactions from time to time subject to market
conditions. This repurchase authorization has no expiration date. As part of this repurchase program,
pursuant to a Share Repurchase Agreement between Dollar General and Buck Holdings L.P., dated
December 4, 2011, concurrent with the closing of a secondary offering in December 2011, Dollar
General purchased 4,915,637 shares of Common Stock from Buck Holdings, L.P. for an aggregate
purchase price of $185 million.
Other Considerations
We have no current plans to pay any cash dividends on our common stock and instead may retain
earnings, if any, for future operation and expansion, common stock repurchases and debt repayment.
Any decision to declare and pay dividends in the future will be made at the discretion of our Board of
Directors, subject to certain limitations found in covenants in our Credit Facilities and in the indenture
governing the Senior Subordinated Notes as discussed in more detail above, and will depend on, among
other things, our results of operations, cash requirements, financial condition, contractual restrictions
and other factors that our Board of Directors may deem relevant.
Our inventory balance represented approximately 49% of our total assets exclusive of goodwill and
other intangible assets as of February 3, 2012. Our proficiency in managing our inventory balances can
have a significant impact on our cash flows from operations during a given fiscal year. As a result,
efficient inventory management has been and continues to be an area of focus for us.
As described in Note 9 to the Consolidated Financial Statements, we are involved in a number of
legal actions and claims, some of which could potentially result in material cash payments. Adverse
developments in those actions could materially and adversely affect our liquidity. As discussed in
Note 5 to the Consolidated Financial Statements, we also have certain income tax-related
contingencies. Future negative developments could have a material adverse effect on our liquidity.
In July 2011, Standard & Poor’s upgraded our corporate rating to BB+ with a stable outlook, and
Moody’s raised our corporate rating to Ba2 with a stable outlook. Our current credit ratings, as well as
future rating agency actions, could (i) impact our ability to obtain financings to finance our operations
on satisfactory terms; (ii) affect our financing costs; and (iii) affect our insurance premiums and
collateral requirements necessary for our self-insured programs. There can be no assurance that we will
be able to maintain or improve our current credit ratings.
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