Dollar General 2015 Annual Report Download - page 107

10-K
(d) Commercial commitments include information technology license and support agreements,
supplies, fixtures, letters of credit for import merchandise, and other inventory purchase
obligations.
(e) Purchase obligations include legally binding agreements for software licenses and support, supplies,
fixtures, and merchandise purchases (excluding such purchases subject to letters of credit).
(f) We have potential payment obligations associated with uncertain tax positions that are not
reflected in these totals. We are currently unable to make reasonably reliable estimates of the
period of cash settlement with the taxing authorities for the $8.7 million of reserves for uncertain
tax positions.
Share Repurchase Program
On December 2, 2015, the Company’s Board of Directors authorized a $1.0 billion increase to our
existing common stock repurchase program. Our common stock repurchase program had a total
remaining authorization of approximately $924 million at January 29, 2016. Under the authorization,
purchases may be made in the open market or in privately negotiated transactions from time to time
subject to market and other conditions, and the authorization has no expiration date. For more detail
about our share repurchase program, see Note 12 to the consolidated financial statements.
Other Considerations
On March 8, 2016, the Board of Directors approved a quarterly cash dividend to shareholders of
$0.25 per share which will be paid on April 12, 2016 to shareholders of record on March 29, 2016, an
increase of $0.03 per share over quarterly dividends paid in 2015. Although the Board currently intends
to continue regular quarterly cash dividends, the payment of future cash dividends are subject to the
Board’s discretion and will depend upon, among other things, our results of operations, cash
requirements, financial condition, contractual restrictions and other factors that our Board may deem
relevant.
Our inventory balance represented approximately 54% of our total assets exclusive of goodwill and
other intangible assets as of January 29, 2016. Our ability to effectively manage our inventory balances
can have a significant impact on our cash flows from operations during a given fiscal year. Inventory
purchases are often somewhat seasonal in nature, such as the purchase of warm-weather or Christmas-
related merchandise. Efficient management of our inventory has been and continues to be an area of
focus for us.
As described in Note 8 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. We also have certain
income tax-related contingencies as disclosed in Note 4 to the consolidated financial statements. Future
negative developments could have a material adverse effect on our liquidity.
Cash Flows
Cash flows from operating activities. Cash flows from operating activities were $1.38 billion in
2015, an increase of $63.2 million compared to 2014. Significant components of the increase in cash
flows from operating activities in 2015 compared to 2014 include increased net income due primarily to
increased sales and operating profit in 2015 as described in more detail above under ‘‘Results of
Operations.’’ Changes in merchandise inventories resulted in a net use of working capital, increasing by
a greater amount in 2015 compared to 2014 as described in greater detail below. Accounts payable
increased by $105.6 million in 2015 compared to a $97.2 million increase in 2014, due primarily to the
timing of merchandise receipts and related payments.
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