Dollar General 2012 Annual Report Download - page 121

10-K
Share Repurchase Program
On August 29, 2012, our Board of Directors authorized a $500 million common stock repurchase
program, of which $143.6 million remained available for repurchase as of February 1, 2013. On
March 19, 2013, our Board of Directors increased this authorization by an additional $500 million. As a
result, as of March 25, 2013, the Company had $643.6 million available for the repurchase of common
stock.
The repurchase authorization has no expiration date and allows repurchases from time to time in
the open market or in privately negotiated transactions, which could include repurchases from Buck
Holdings, L.P., an existing shareholder of the Company, or other related parties if appropriate. The
timing and number of shares purchased will depend on a variety of factors, such as price, market
conditions, compliance with the covenants and restrictions under our senior secured credit facilities and
other factors. Repurchases under the program may be funded from available cash or borrowings under
our ABL Facility. During 2012, we repurchased approximately 7.3 million shares under this
authorization at a total cost of $356.4 million.
On November 30, 2011, our Board of Directors authorized a $500 million common stock
repurchase program on terms similar to the August 2012 authorization. During 2012, we repurchased
approximately 7.1 million shares under this authorization at a total cost of $315.0 million, completing
that authorization.
In summary, we repurchased approximately 14.4 million shares of common stock at a total cost of
$671.4 million in 2012, including approximately 11.7 million shares repurchased from Buck
Holdings, L.P. at an aggregate cost of $550.0 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 and common stock repurchases. 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 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 50% of our total assets exclusive of goodwill and
other intangible assets as of February 1, 2013. 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 April 2012, Standard & Poor’s upgraded our corporate rating to BBBǁ from BB+ with a stable
outlook, and in February 2013, Moody’s placed our corporate rating of Ba1 on review for upgrade. Our
current credit ratings, as well as future rating agency actions, could (i) impact our ability to fund 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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