Dollar General 2013 Annual Report Download - page 113

The 2011 effective tax rate of 37.4% was greater than the statutory tax rate of 35% due primarily
to the inclusion of state income taxes in the total effective tax rate.
Off Balance Sheet Arrangements
The entities involved in the ownership structure underlying the leases for three of our distribution
centers meet the accounting definition of a Variable Interest Entity (‘‘VIE’’). One of these distribution
centers has been recorded as a financing obligation whereby its property and equipment are reflected
in our consolidated balance sheets. The land and buildings of the other two distribution centers have
been recorded as operating leases. We are not the primary beneficiary of these VIEs and, accordingly,
have not included these entities in our consolidated financial statements. Other than the foregoing, we
are not party to any material off balance sheet arrangements.
Effects of Inflation
We experienced little or no overall product cost inflation in 2013 and 2012. In 2011, we
experienced increased commodity cost pressures mainly related to food, housewares and apparel
products which were driven by increases in cotton, sugar, coffee, groundnut, resin, petroleum and other
commodity costs.
Liquidity and Capital Resources
Current Financial Condition and Recent Developments
During the past three years, we have generated an aggregate of approximately $3.39 billion in cash
flows from operating activities and incurred approximately $1.62 billion in capital expenditures. During
that period, we expanded the number of stores we operate by 1,760, representing growth of
approximately 19%, and we remodeled or relocated 1,749 stores, or approximately 16% of the stores
we operated as of January 31, 2014. We intend to continue our current strategy of pursuing store
growth, remodels and relocations in 2014.
In April 2013, we consummated a refinancing pursuant to which we terminated our existing senior
secured credit agreements, entered into a five-year $1.85 billion unsecured credit agreement (the
‘‘Facilities’’), and issued senior notes with a face value of $1.3 billion, net of discount totaling
$2.8 million. At January 31, 2014, we had total outstanding debt (including the current portion of
long-term obligations) of $2.82 billion, which includes balances under the Facilities, and senior notes,
all of which are described in greater detail below. We had $822.8 million available for borrowing under
the Facilities at January 31, 2014.
We believe our cash flow from operations and existing cash balances, combined with availability
under the Facilities, and access to the debt markets will provide sufficient liquidity to fund our current
obligations, projected working capital requirements and capital spending for a period that includes the
next twelve months as well as the next several years. However, our ability to maintain sufficient
liquidity may be affected by numerous factors, many of which are outside of our control. Depending on
our liquidity levels, conditions in the capital markets and other factors, we may from time to time
consider the issuance of debt, equity or other securities, the proceeds of which could provide additional
liquidity for our operations.
Facilities
The Facilities consist of a $1.0 billion senior unsecured term loan facility (the ‘‘Term Facility’’) and
an $850.0 million senior unsecured revolving credit facility (the ‘‘Revolving Facility’’) which provides for
the issuance of letters of credit up to $250.0 million. We may request, subject to agreement by one or
more lenders, increased revolving commitments and/or incremental term loan facilities in an aggregate
amount of up to $150.0 million. The Facilities mature on April 11, 2018.
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10-K