Dollar General 2014 Annual Report Download - page 110

10-K
Effects of Inflation
We experienced little or no overall product cost inflation in 2014, 2013 and 2012.
Liquidity and Capital Resources
Current Financial Condition and Recent Developments
During the past three years, we have generated an aggregate of approximately $3.66 billion in cash
flows from operating activities and incurred approximately $1.48 billion in capital expenditures. During
that period, we expanded the number of stores we operate by 1,852, representing growth of
approximately 19%, and we remodeled or relocated 2,089 stores, or approximately 18% of the stores
we operated as of January 30, 2015. We intend to continue our current strategy of pursuing store
growth, remodels and relocations in 2015.
We have a five-year $1.85 billion unsecured credit agreement (the ‘‘Facilities’’), and we have
outstanding $1.8 billion aggregate principal amount of senior notes. At January 30, 2015, we had total
outstanding debt (including the current portion of long-term obligations) of $2.74 billion, which
includes balances under the Facilities, and senior notes, all of which are described in greater detail
below. We had $821.5 million available for borrowing under the Facilities at January 30, 2015.
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, capital spending and planned dividend payments
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 senior unsecured term loan facility (the ‘‘Term Facility’’) with an initial
balance of $1.0 billion 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.
Borrowings under the Facilities bear interest at a rate equal to an applicable margin plus, at our
option, either (a) LIBOR or (b) a base rate (which is usually equal to the prime rate). The applicable
margin for borrowings as of January 30, 2015 was 1.275% for LIBOR borrowings and 0.275% for
base-rate borrowings. We must also pay a facility fee, payable on any used and unused amounts of the
Facilities, and letter of credit fees. The applicable margins for borrowings, the facility fees and the
letter of credit fees under the Facilities are subject to adjustment each quarter based on our long-term
senior unsecured debt ratings.
The Term Facility amortizes in quarterly installments of $25.0 million, which commenced on
August 1, 2014. The final quarterly payment of the then-remaining balance will be due at maturity on
April 11, 2018. As of January 30, 2015, the balance on the Term Facility was $925.0 million. The
Facilities can be prepaid in whole or in part at any time. The Facilities contain certain covenants that
place limitations on the incurrence of liens; change of business; mergers or sales of all or substantially
all assets; and subsidiary indebtedness, among other limitations. The Facilities also contain financial
covenants that require the maintenance of a minimum fixed charge coverage ratio and a maximum
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