Dollar General Corporation Form 8-K filed June 18, 2007
UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
FORM
8-K
CURRENT
REPORT
Pursuant
to Section 13 or 15(d) of the Securities Exchange Act of
1934
Date
of
Report (Date of earliest event reported): June
15, 2007
Dollar
General Corporation
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(Exact
name of registrant as specified in its charter)
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Tennessee
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001-11421
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61-0502302
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(State
or other jurisdiction
of
incorporation)
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(Commission
File Number)
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(I.R.S.
Employer
Identification
No.)
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100
Mission Ridge
Goodlettsville,
Tennessee
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37072
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(Address
of principal executive offices)
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(Zip
Code)
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Registrant’s
telephone number, including area code: (615)
855-4000
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(Former
name or former address, if changed since last
report)
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Check
the
appropriate box below if the Form 8-K filing is intended to simultaneously
satisfy the filing obligation of the registrant under any of the following
provisions:
[
] Written communications pursuant to Rule 425 under the Securities Act (17
CFR
230.425)
[X] Soliciting
material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12)
[
]
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Pre-commencement
communications pursuant to Rule 14d-2(b) under the Exchange Act (17
CFR
240.14d-2(b))
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[
]
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Pre-commencement
communications pursuant to Rule 13e-4(c) under the Exchange Act (17
CFR
240.13e-4(c))
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ITEM
7.01 REGULATION
FD DISCLOSURE.
Unless
the context otherwise requires, references to "Dollar General," "we," "our,"
"us" and "the Company" refer to Dollar General Corporation and its consolidated
subsidiaries, both before and after the Transactions, and the Merger (as defined
below). Financial information identified as "pro forma" gives effect to
the consummation of the Transactions (as defined below). References to years
2007, 2006, 2005, 2004, 2003 and 2002 represent fiscal years ending or ended
February 1, 2008, February 2, 2007, February 3, 2006,
January 28, 2005, January 30, 2004 and January 31, 2003,
respectively, unless the context otherwise requires. Buck Acquisition
Corp., to which the Company will succeed in the Merger, has commenced an
offering to sell $1,900 million of notes, including $625 million of Senior
Notes, due 2015, (the “cash-pay notes”), $725 million of Senior Toggle Notes,
due 2015 (the “senior toggle notes”) and $550 million of Senior Subordinated
Notes (the “senior subordinated notes”). Collectively these are referred to
herein as “the notes.”
Cautionary
Statement Regarding “Forward Looking” Statements
This
Current Report on Form 8-K contains “forward-looking statements” within the
meaning of the federal securities laws, which involve risks and uncertainties.
Forward-looking statements include all statements that do not relate solely
to
historical or current facts, and you can identify forward-looking statements
because they contain words such as “believes,” “expects,” “may,” “will,”
“should,” “seeks,” “approximately,” “intends,” “plans,” “estimates,” “projects”
or “anticipates” or similar expressions that concern our strategy, plans or
intentions. All statements made relating to the closing of the merger described
in this Current Report or to our estimated and projected earnings, margins,
costs, expenditures, cash flows, growth rates and financial results are
forward-looking statements. These forward-looking statements are subject to
risks and uncertainties that may change at any time, and, therefore, our actual
results may differ materially from those that we expected. We derive many of
our
forward-looking statements from operating budgets and forecasts, which are
based
upon many detailed assumptions. While we believe that these assumptions are
reasonable, we caution that it is very difficult to predict the impact of known
factors, and, of course, it is impossible for us to anticipate all factors
that
could affect our actual results.
Some
of
the important factors that could cause actual results to differ materially
from
our expectations are more fully disclosed below in this Current Report, as
well
as in Dollar General’s most recent Annual Report on Form 10-K and subsequent
Quarterly Report on Form 10-Q. All subsequent written and oral forward-looking
statements attributable to us, or persons acting on our behalf, are expressly
qualified in their entirety by these and other cautionary statements. We assume
no obligation to publicly update or revise any forward-looking statement as
a
result of new information, future events or otherwise required by law.
As
provided in General Instruction B.2 of Form 8-K, the information contained
in
this Item 7.01 of this Current Report on Form 8-K shall not be deemed to be
“filed” for purposes of Section 18 of the Securities Exchange Act of 1934,
as amended, nor shall it be deemed to be incorporated by reference in any filing
under the Securities Act of 1933, as amended, except as shall be expressly
set
forth by specific reference in such a filing. By furnishing this information,
we
make
no admission as to the materiality of any information in this report that
is
being disclosed solely pursuant to Regulation FD.
The
Company hereby furnishes the following information regarding its business that
was prepared in connection with the financing activities related to the Merger
and the Transactions (as those terms are hereafter defined):
The
Transactions
On
March 11, 2007, Buck Holdings, L.P., a Delaware limited partnership
("Parent") and Buck Acquisition Corp., a Tennessee corporation ("Merger Sub"),
a
wholly owned subsidiary of Parent, entered into an agreement and plan of merger
(the "Merger Agreement") with us pursuant to which Merger Sub will merge with
and into us (the "Merger"). Following the consummation of the Merger, we will
continue as the surviving corporation and as a subsidiary of Parent. Parent
is
managed by its general partner, Buck Holdings, LLC, a Delaware limited liability
company, which is currently controlled by private investment funds affiliated
with Kohlberg Kravis Roberts & Co. L.P. ("KKR" or the "Sponsor"). As a
result of the Merger, funds associated with or designated by the Sponsor will
directly or indirectly control Dollar General Corporation through their
investment in Parent and its general partner, Buck Holdings, LLC.
Certain
senior employees will be offered the opportunity prior to closing of the Merger
to rollover their equity and/or options and to purchase additional equity of
Dollar General in connection with the Merger. Such employees who elect to
participate in this opportunity are referred to herein as the "Senior Management
Participants." In connection with such investment and the Merger, we will adopt
a new option plan pursuant to which these individuals will be granted new
options with respect to additional shares of common stock of Dollar General.
In
addition, following the Merger, we expect to offer other employees a similar
opportunity to participate in our common equity. Such employees who elect to
participate in such opportunity, along with the Senior Management Participants,
are referred to in herein as "Management Participants."
The
acquisition of Dollar General by the Investors will be financed by borrowings
under our new senior secured credit facilities, the issuance of the notes and
the equity investment described herein and cash on hand. The offering of the
notes, the initial borrowings under our new senior secured credit facilities,
the equity investment by the Investors in Parent, the equity investment in
Dollar General by the Management Participants, the Merger, the Tender Offer,
the
replacement of certain letters of credit, the payment of related fees and
expenses and other related transactions are collectively referred to in this
document as the "Transactions."
SOURCES
AND USES OF FUNDS
The
following table illustrates the estimated sources and uses of funds for the
Transactions as if the closing had occurred on May 4, 2007. Actual amounts
will vary from estimated amounts depending on several factors, including
final
determination of the aggregate value of the equity participation by management
participants, differences
between the balances of our outstanding indebtedness that we are repaying as
of
May 4, 2007 and balances at the closing of the Transactions, differences
from our estimate of Transaction fees, expenses and other costs, differences
between our available cash at May 4, 2007 and at the closing of the
Transactions and any changes made to the sources of the contemplated debt
financing.
For
more
information, see “Unaudited Pro Forma Condensed Consolidated Financial
Information” and the related notes thereto.
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Amount
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Amount
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(Dollars
in
millions)
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(Dollars
in
millions)
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Sources
of Funds:
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Uses
of Funds:
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Senior
secured credit facilities:
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Purchase
price
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$ 7,003.6
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Revolving
asset-based
credit facility(1)
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$
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302.3
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Rollover
equity(5
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)
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8.0
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Term
loan facility(2)
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2,430.0
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Refinance
existing indebtedness(7
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)
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219.4
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Senior
notes
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1,350.0
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Other
retained indebtedness(3
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)
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67.7
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Senior
subordinated notes
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550.0
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Estimated
fees and expenses(8
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)
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280.0
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Other
retained indebtedness(3)
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67.7
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Equity
contribution(4)
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2,767.0
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Rollover
equity(5)
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8.0
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Excess
cash on hand(6)
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103.7
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Total
Sources
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$
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7,578.7
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Total
Uses
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$
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7,578.7
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(1) Upon
the closing of the
Merger, we will enter into a $1.0 billion senior secured asset-based
revolving credit facility with a six-year maturity, of which a portion will
be
available for letters of credit subject to borrowing base limitations. As of
May 4, 2007, on a pro forma basis giving effect to the Transactions, we
would have had $302.3 million in borrowings outstanding under our new
senior secured asset-based revolving credit facility.
In
connection with the Merger, we also intend to replace $23.8 million of
letters of credit under our existing credit facility with letters of credit
under our new senior secured asset-based revolving credit facility. In addition,
our availability under the new senior secured asset-based revolving credit
facility will be reduced by $128.1 million of existing trade letters of
credit and $14.5 million of existing letters of credit required under the
terms of our tax increment financing relating to our Marion, Indiana DC, which
we expect to issue under our new senior secured asset-based revolving credit
facility in connection with the Transactions.
(2) Upon
the closing of the
Merger, we will enter into a new $2.430 billion senior secured term loan
facility with a seven-year maturity, the full amount of which is expected to
be
borrowed on the closing date.
(3) Consists
of certain
financing and capital lease obligations and other debt instruments.
(4) Represents
the cash
equity investment of approximately $2.767 billion to be made in Parent and
Parent's general partner by the Investors.
(5) Represents
approximately
$8.0 million expected to be invested directly in Dollar General by the
Senior Management Participants, either in the form of a rollover of their
existing equity interests in Dollar General to equity interests in Dollar
General following the Merger or through cash investments in Dollar General.
To
the extent that the amount invested in Dollar General by the Senior Management
Participants is greater or less than $8.0 million, the amount of the cash
equity to be contributed to Parent by the Investors will be adjusted by a
corresponding amount. In addition, following the Merger we will offer other
employees a similar opportunity to participate in our common
equity.
(6) We
intend to renegotiate
or refinance the leases relating to certain of our DCs in connection with or
immediately following consummation of the Transactions and have received
financial commitments to cover a portion of the potential costs of refinancing.
However, a possibility exists that the Merger and certain of the related
financing transactions may be interpreted as giving rise to certain trigger
events (which may include events of default) under such leases. In such event,
our cost of refinancing or renegotiating such obligations could exceed the
amount of such commitments, resulting in a negative effect on our cash balances.
The impact of this potential cost of refinancing these obligations has been
included in the Unaudited Pro Forma Condensed Consolidated Balance
Sheet.
(7) We
intend to repurchase
$200.0 million in aggregate principal amount of the Old Notes at the
closing of the Tender Offer substantially concurrently with the closing of
the
Merger. Any Old Notes not repurchased pursuant to the Tender Offer will remain
outstanding. Includes expenses and a premium (a portion of which includes a
consent payment) of $19.6 million.
(8) Reflects
our estimate of
fees, expenses and other costs associated with the Transactions. Such fees
and
expenses include placement and other financing fees, advisory fees, transaction
fees paid to affiliates of the Sponsor, and other transaction costs and
professional fees.
UNAUDITED
PRO FORMA CONDENSED CONSOLIDATED FINANCIAL INFORMATION
The
following unaudited pro forma condensed consolidated financial statements have
been developed by applying pro forma adjustments to the historical audited
and
unaudited consolidated financial statements of Dollar General Corporation.
The
unaudited pro forma condensed consolidated statements of operations for the
year
ended February 2, 2007, the thirteen weeks ended May 5, 2006, the
thirteen weeks ended May 4, 2007 and the trailing fifty-two week period
ended May 4, 2007 give effect to the Transactions as if they had occurred
on February 4, 2006. The unaudited pro forma condensed consolidated balance
sheet gives effect to the Transactions as if they had occurred on May 4,
2007. Assumptions underlying the pro forma adjustments are described in the
accompanying notes, which should be read in conjunction with these unaudited
pro
forma condensed consolidated financial statements.
The
unaudited pro forma adjustments are based upon available information and certain
assumptions that we believe are reasonable under the circumstances. The
unaudited pro forma condensed consolidated financial information is presented
for informational purposes only. The unaudited pro forma condensed consolidated
financial information does not purport to represent what our results of
operations or financial condition would have been had the Transactions actually
occurred on the dates indicated, and they do not purport to project our results
of operations or financial condition for any future period or as of any future
date. The unaudited pro forma condensed consolidated financial statements should
be read in conjunction with the other information contained herein as well
as
"Selected Historical Consolidated Financial and Other Data," "Management's
Discussion and Analysis of Results of Operations and Financial Condition" and
the consolidated financial statements and related notes thereto appearing in
our
Annual Report on Form 10-K for the year ended February 2, 2007 and our Quarterly
Report on Form 10-Q for the thirteen weeks ended May 4, 2007. All pro forma
adjustments and their underlying assumptions are described more fully in the
notes to our unaudited pro forma condensed consolidated financial
statements.
The
Merger will be accounted for using purchase accounting. The pro forma
information presented, including allocations of purchase price, is based on
preliminary estimates of the fair values of assets acquired and liabilities
assumed, available information and assumptions and will be revised as additional
information becomes available. The actual adjustments to our consolidated
financial statements upon the closing of the Transactions will depend on a
number of factors, including additional information available and our net assets
on the closing date of the Transactions. Therefore, the actual adjustments
will
differ from the pro forma adjustments, and the differences may be
material.
The
final
purchase price allocation is dependent on, among other things, the finalization
of asset and liability valuations. As of the date of this document, we have
not
completed the valuation studies necessary to estimate the fair values of the
assets we have acquired and liabilities we have assumed and the related
allocation of purchase price. We have allocated the total estimated purchase
price, calculated as described in Note (b) under "—Notes to Unaudited Pro
Forma Condensed Consolidated Balance Sheet," to the assets acquired and
liabilities assumed based on preliminary estimates of their fair values. A
final
determination of these fair values will reflect our consideration of a final
valuation prepared by third-party appraisers. This final valuation will be
based
on the actual net tangible and intangible assets that existed as of the closing
date of the Transactions. Any final adjustment will change the allocations
of
purchase price, which could affect the fair value assigned to the assets and
liabilities and could result in a change to the unaudited pro forma condensed
consolidated financial statements, including a change to goodwill.
UNAUDITED
PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
(Dollars
in Thousands)
|
|
May 4,
2007
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Historical
|
|
Adjustments
|
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Pro
Forma
|
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Assets
|
|
|
|
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|
Current
assets:
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|
|
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Cash
and cash equivalents
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$
|
204,417
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$
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(103,667)
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(a) |
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$
|
100,750
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Short-term
investments
|
|
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27,371
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—
|
|
|
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27,371
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Merchandise
inventories
|
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1,444,313
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|
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4,286
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(b) |
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1,448,599
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Income
taxes receivable
|
|
|
14,624
|
|
|
34,357
(c)
|
|
|
|
48,981
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Deferred
income taxes
|
|
|
37,860
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(4,862)(c)
|
|
|
|
32,998
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Prepaid
expenses and other current assets
|
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57,572
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|
|
—
|
|
|
|
57,572
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|
Total
current assets
|
|
|
1,786,157
|
|
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(69,886
|
) |
|
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1,716,271
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Net
property and equipment
|
|
|
1,212,198
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246,666
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(b) |
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1,458,864
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Deferred
income taxes
|
|
|
12,418
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(12,418)
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(c) |
|
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—
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Trade
names and trademarks
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|
|
—
|
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1,265,000
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(b) |
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1,265,000
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Leasehold
interests
|
|
|
—
|
|
|
183,910
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(b) |
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|
183,910
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Goodwill
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|
|
—
|
|
|
4,289,827
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(b) |
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4,289,827
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Other
assets, net
|
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63,536
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|
160,672
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(d) |
|
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224,208
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Total
assets
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$
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3,074,309
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$
|
6,063,771
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|
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$
|
9,138,080
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Liabilities
and Shareholders' Equity
|
|
|
|
|
|
|
|
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Current
liabilities:
|
|
|
|
|
|
|
|
|
|
|
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Current
portion of long-term obligations
|
|
$
|
7,186
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|
$
|
—
|
|
|
$
|
7,186
|
|
Accounts
payable
|
|
|
484,949
|
|
|
—
|
|
|
|
484,949
|
|
Accrued
expenses and other
|
|
|
258,090
|
|
|
106,412
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(b) |
|
|
364,502
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Income
taxes payable
|
|
|
48
|
|
|
—
|
|
|
|
48
|
|
Total
current liabilities
|
|
|
750,273
|
|
|
106,412
|
|
|
|
856,685
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|
Long-term
obligations
|
|
|
260,373
|
|
|
4,432,498
|
(a) |
|
|
4,692,871
|
|
Deferred
income taxes
|
|
|
—
|
|
|
574,174
|
(c) |
|
|
574,174
|
|
Other
liabilities
|
|
|
266,886
|
|
|
(24,536)
|
(b) |
|
|
242,350
|
|
Shareholders'
equity
|
|
|
1,796,777
|
|
|
975,223
|
(e) |
|
|
2,772,000
|
|
Total
liabilities and shareholders' equity
|
|
$
|
3,074,309
|
|
$
|
6,063,771
|
|
|
$
|
9,138,080
|
|
See
notes
to unaudited pro forma condensed consolidated balance sheet.
NOTES
TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE
SHEET
(a) Reflects
the estimated
sources and uses of cash for the Transactions as follows (dollars in
millions):
Sources
|
|
|
|
Revolving
credit facility(1)
|
|
$
|
302.3
|
|
Term
loan facility(2)
|
|
|
2,430.0
|
|
Senior
cash pay notes
|
|
|
625.0
|
|
Senior
toggle notes
|
|
|
725.0
|
|
Senior
subordinated notes
|
|
|
550.0
|
|
Retained
indebtedness(3)
|
|
|
67.7
|
|
Equity
contribution(4)
|
|
|
2,767.0
|
|
Rollover
equity(5)
|
|
|
8.0
|
|
Total
Sources
|
|
|
7,475.0
|
|
Uses
|
|
|
|
|
Purchase
price(6)
|
|
|
7,003.6
|
|
Retained
indebtedness(3)
|
|
|
67.7
|
|
Retirement
of existing debt(7)
|
|
|
219.4
|
|
Estimated
fees and expenses(8)
|
|
|
280.0
|
|
Rollover
equity(5)
|
|
|
8.0
|
|
Total
Uses
|
|
|
7,578.7
|
|
Pro
forma net adjustment to cash
|
|
$
|
(103.7
|
)
|
(1) Upon
the closing of the
Merger, we will enter into a new asset-based revolving credit facility which
provides for borrowing up to $1,000.0 million, subject to availability, of
which $302.3 million is assumed to be outstanding upon the closing of the
Transactions. Such levels of borrowings will fluctuate in future periods
dependent upon short term cash needs. Changes in the levels of borrowings would
impact interest expense.
(2) Upon
the closing of the
Merger, we will enter into a $2,430.0 million senior secured term loan
facility, with a seven-year maturity.
(3) Represents
existing
financing and capital lease obligations and other indebtedness.
(4) Represents
approximately
$2.767 billion to be invested in equity securities of Parent by the
Investors.
(5) Represents
approximately
$8.0 million to be invested directly in Dollar General by the Senior
Management Participants either in the form of a rollover of their existing
equity interests in Dollar General to equity interests in Dollar General
following the Merger or through cash investments in Dollar General. To the
extent that the amount invested in Dollar General by the Senior Management
Participants is greater or less than $8.0 million, the amount of the cash
equity to be contributed to Parent by the Investors will be adjusted by a
corresponding amount.
(6) The
holders of
outstanding shares of common stock will receive $22.00 in cash per share in
connection with the Transactions. Assumes approximately 314.6 million
shares outstanding as of May 4, 2007, plus 1.4 million shares of
restricted stock and restricted stock units, plus payments of approximately
$52.5 million related to outstanding stock options and excludes
$8.0 million of management participation and rollover equity discussed in
Note (5).
(7) Includes
$199.8 million of Old Notes for which a tender offer has been commenced,
plus a related premium and other costs of approximately $19.6 million.
These amounts assume that all the Old Notes are repurchased in the tender offer.
Any Old Notes that are not tendered and purchased in the tender offer will
remain outstanding after the closing of the Transactions. As of 5:00 p.m. New
York City time on June 15, 2007, approximately $2.0 million of Old
Notes had not been tendered in the Tender Offer.
(8) Consists
of
$165.9 million of estimated financing fees, which will be capitalized and
amortized over the related terms of the financings; $57.8 million of
transaction costs, which will be expensed by the Company prior to or upon
consummation of the Merger and reflected as an adjustment in historical equity;
and $56.3 million of direct acquisition costs including $3.0 million
of costs to raise equity.
(b) The
following table sets
forth the calculation and adjustments made related to the preliminary allocation
of purchase price with respect to the Transactions (dollars in
millions):
Purchase
price(1)
|
|
|
|
$7,011.6
|
|
Transaction
fees and expenses directly related to the Transaction(2)
|
|
|
|
53.3
|
|
Total
|
|
|
|
7,064.9
|
|
Net
assets acquired before adjustment
|
|
$
|
1,796.8
|
|
|
|
|
Transaction
costs(3)
|
|
|
(77.4
|
)
|
|
|
|
Net
assets acquired
|
|
|
|
|
|
1,719.4
|
|
Estimated
purchase price in excess of net assets acquired
|
|
|
|
|
|
5,345.5
|
|
Adjustments
to net assets acquired:
|
|
|
|
|
|
|
|
Trade
names and trademarks(4)
|
|
|
1,265.0
|
|
|
|
|
Leasehold
interests(4)
|
|
|
183.9
|
|
|
|
|
Property
and equipment(4)
|
|
|
246.7
|
|
|
|
|
Inventory(5)
|
|
|
4.3
|
|
|
|
|
Other
assets(6)
|
|
|
(5.2
|
)
|
|
|
|
Accrued
expenses and other(7)
|
|
|
(106.4
|
)
|
|
|
|
Other
liabilities(8)
|
|
|
24.5
|
|
|
|
|
Subtotal
|
|
|
1,612.8
|
|
|
|
|
Income
taxes receivable(9)
|
|
|
34.4
|
|
|
|
|
Deferred
income taxes(9)
|
|
|
(591.5
|
)
|
|
|
|
Preliminary
adjustments to net assets acquired
|
|
|
|
|
|
1,055.7
|
|
Pro
forma adjustment to goodwill
|
|
|
|
|
$
|
4,289.8
|
|
(1) Represents
both the cash
purchase price of $7,003.6 million and the rollover equity of
$8.0 million discussed in note (a)(5) to the Unaudited Pro Forma Condensed
Consolidated Balance Sheet.
(2) Represents
estimated
expenses related primarily to legal, accounting, investment banking and Sponsor
fees.
(3) The
Company will expense
transaction costs prior to or upon the consummation of the Transactions,
including a premium and other costs of approximately $19.6 million to
repurchase the Company's Old Notes, severance and other costs of
$18.8 million, and legal, accounting and advisory fees of
$39.0 million.
(4) These
unaudited pro forma
condensed consolidated financial statements reflect a preliminary allocation
to
tangible assets, liabilities, goodwill and other intangible assets. An appraisal
will be performed to assist management in determining the fair value of acquired
assets and liabilities, including identifiable intangible assets. The final
purchase price allocation may result in a materially different allocation for
tangible and intangible assets than that presented in these unaudited pro forma
condensed consolidated financial statements. An increase or decrease in the
amount of purchase price allocated to amortizable assets would impact the amount
of annual amortization expense. For purposes of these pro forma condensed
consolidated financial statements, preliminary fair values and useful lives
have
been estimated based on a preliminary valuation performed by an outside
consultant. These estimates follow (dollars in millions):
|
|
Estimated
Average
Useful
Lives
|
|
Estimated
Fair
Value
|
|
Historical
Cost
|
|
Purchase
Accounting
Adjustment
|
|
Land
|
|
|
Indefinite
|
|
$
|
122.0
|
|
$
|
84.4
|
|
$
|
37.6
|
|
Buildings
and improvements
|
|
|
30
|
|
|
610.5
|
|
|
410.0
|
|
|
200.5
|
|
Internally
developed software
|
|
|
3
|
|
|
12.3
|
|
|
3.7
|
|
|
8.6
|
|
|
|
|
|
|
$
|
744.8
|
|
$
|
498.1
|
|
$
|
246.7
|
|
Goodwill
is not amortized and will be evaluated for impairment on an annual basis. The
value related to our trade names and trademarks, which we anticipate to be
an
indefinite-lived asset, is based upon a preliminary valuation. The value related
to leasehold interests is based upon a preliminary valuation and is primarily
related to below-market rental rates for certain of our store leases. In
addition, there may be other fair value adjustments that we have not yet
estimated.
(5) Preliminary
estimates of
the inventory valuation approximates the historical book value of inventory.
The
reversal of existing LIFO reserves is $4.3 million. However, at this time
we are evaluating possible modifications of our merchandising philosophies,
including SKU rationalization, which could result in the discontinuation and
liquidation of certain merchandise. This could result in a reduction of the
fair
market value of the inventory being acquired.
(6) Reflects
the elimination
of deferred financing costs of $2.8 million associated with our
$400.0 million existing credit facility which will be terminated, and our
Old Notes which are expected to be repurchased, in conjunction with the
Transactions; and the elimination of our existing goodwill balance of
$2.4 million.
(7) For
purposes of these pro
forma financial statements, certain DC properties are assumed to have been
purchased in connection with the Transactions and are included in the buildings
and improvements amounts in (4) above, with the incremental payments in
excess of the currently recorded lease obligations required to purchase these
DCs reflected as an increase in other current liabilities of
$110.1 million. This adjustment also reflects the reversal of current
deferred rent liabilities on certain DCs and stores of $3.3 million and the
reversal of the current portion of a deferred gain on certain DCs of
$0.4 million.
(8) Reflects
the reversal of
deferred rent liabilities on certain DCs and stores of $28.3 million; the
reversal of a deferred gain on certain DCs of $5.4 million; the reversal of
certain pension accruals of $3.2 million; offset by a reserve of
$12.4 million for lease contract termination costs on approximately 93
stores which are expected to close within 30 days after the consummation of
the Transactions.
(9) Reflects
the estimated
impact on current and deferred tax liabilities related to the
$1,612.8 million purchase accounting adjustments as well as
$94.5 million in current deductions related principally to expenses
relating to the tender offer for the Old Notes and deductions related to
employee stock awards.
(c) Reflects
an increase in
income taxes receivable of $34.4 million principally due to deductions
related to employee stock awards, which were reflected as adjustments to
shareholders' equity, and the expenses relating to the tender offer for the
Old
Notes which reduced the assets acquired for purposes of the purchase price
allocation but was not reflected as a reduction in income. The net increase
in
deferred tax liabilities of $591.5 million is principally related to
purchase accounting adjustments.
(d) Reflects
the
capitalization of $165.9 million of estimated financing costs that we will
incur in connection with new debt financing, including the New Credit Facilities
and the notes, offset by $2.8 million of unamortized deferred financing
costs related to debt that is expected to be redeemed or canceled and
$2.4 million of previously existing goodwill that is being
eliminated.
(e) Adjustment
to
shareholders' equity consists of the following (dollars in
millions):
Sponsor
cash equity contribution
|
|
$
|
2,767.0
|
|
Management
rollover equity and/or cash investment
|
|
|
8.0
|
|
Less
costs to raise equity
|
|
|
(3.0
|
)
|
Total
equity contribution
|
|
|
2,772.0
|
|
Less
historical equity
|
|
|
(1,796.8
|
)
|
Net
adjustment to shareholders' equity
|
|
$
|
975.2
|
|
UNAUDITED
PRO FORMA CONDENSED CONSOLIDATED STATEMENTS OF
OPERATIONS
(Dollars
in Thousands)
|
|
Fiscal
Year Ended
February 2,
2007
|
|
|
|
Historical
|
|
Adjustments
|
|
|
Pro
Forma
|
|
Net
sales
|
|
$
|
9,169,822
|
|
$
|
—
|
|
|
$
|
9,169,822
|
|
Cost
of goods sold
|
|
|
6,801,617
|
|
|
(2,500)
|
(a) |
|
|
6,799,117
|
|
Gross
profit
|
|
|
2,368,205
|
|
|
2,500
|
|
|
|
2,370,705
|
|
Selling,
general and administrative
|
|
|
2,119,929
|
|
|
56,759
|
(b) |
|
|
2,176,688
|
|
Operating
profit
|
|
|
248,276
|
|
|
(54,259
|
) |
|
|
194,017
|
|
Interest
income
|
|
|
(7,002
|
)
|
|
—
|
|
|
|
(7,002
|
)
|
Interest
expense
|
|
|
34,915
|
|
|
401,680
|
(c) |
|
|
436,595
|
|
Income
(loss) before income taxes
|
|
|
220,363
|
|
|
(455,939
|
) |
|
|
(235,576
|
)
|
Provision
(benefit) for income taxes
|
|
|
82,420
|
|
|
(170,763)
|
(d) |
|
|
(88,343
|
)
|
Net
income (loss)
|
|
$
|
137,943
|
|
$
|
(285,176)
|
(e) |
|
$
|
(147,233
|
)
|
See
notes
to unaudited pro forma condensed consolidated statements of
operations.
UNAUDITED
PRO FORMA CONDENSED CONSOLIDATED STATEMENTS OF
OPERATIONS
(CONTINUED)
(Dollars
in Thousands)
|
|
Thirteen
Weeks Ended
May 4,
2007
|
|
|
|
Historical
|
|
Adjustments
|
|
Pro
Forma
|
|
Net
sales
|
|
$
|
2,275,267
|
|
$
|
—
|
|
$
|
2,275,267
|
|
Cost
of goods sold
|
|
|
1,642,207
|
|
|
(625)
|
(a)
|
|
1,641,582
|
|
Gross
profit
|
|
|
633,060
|
|
|
625
|
|
|
633,685
|
|
Selling,
general and administrative
|
|
|
577,692
|
|
|
9,190
|
(b)
|
|
586,882
|
|
Operating
profit
|
|
|
55,368
|
|
|
(8,565
|
)
|
|
46,803
|
|
Interest
income
|
|
|
(2,573
|
)
|
|
—
|
|
|
(2,573
|
)
|
Interest
expense
|
|
|
6,167
|
|
|
99,557
|
(c)
|
|
105,724
|
|
Income
(loss) before income taxes
|
|
|
51,774
|
|
|
(108,122
|
)
|
|
(56,348
|
)
|
Provision
(benefit) for income taxes
|
|
|
16,899
|
|
|
(42,467)
|
(d)
|
|
(25,568
|
)
|
Net
income (loss)
|
|
$
|
34,875
|
|
$
|
(65,655)
|
(e)
|
$
|
(30,780
|
)
|
See
notes
to unaudited pro forma condensed consolidated statements of
operations.
UNAUDITED
PRO FORMA CONDENSED CONSOLIDATED STATEMENTS OF
OPERATIONS
(CONTINUED)
(Dollars
in Thousands)
|
|
Thirteen
Weeks Ended
May 5,
2006
|
|
|
|
Historical
|
|
Adjustments
|
|
Pro
Forma
|
|
Net
sales
|
|
$
|
2,151,387
|
|
$
|
—
|
|
$
|
2,151,387
|
|
Cost
of goods sold
|
|
|
1,567,113
|
|
|
(625)
|
(a)
|
|
1,566,488
|
|
Gross
profit
|
|
|
584,274
|
|
|
625
|
|
|
584,899
|
|
Selling,
general and administrative
|
|
|
502,989
|
|
|
14,190
|
(b)
|
|
517,179
|
|
Operating
profit
|
|
|
81,285
|
|
|
(13,565
|
)
|
|
67,720
|
|
Interest
income
|
|
|
(2,450
|
)
|
|
—
|
|
|
(2,450
|
)
|
Interest
expense
|
|
|
7,247
|
|
|
109,965
|
(c)
|
|
117,212
|
|
Income
(loss) before income taxes
|
|
|
76,488
|
|
|
(123,530
|
)
|
|
(47,042
|
)
|
Provision
(benefit) for income taxes
|
|
|
28,818
|
|
|
(46,427)
|
(d)
|
|
(17,609
|
)
|
Net
income (loss)
|
|
$
|
47,670
|
|
$
|
(77,103)
|
(e)
|
$
|
(29,433
|
)
|
See
notes
to unaudited pro forma condensed consolidated statements of
operations.
UNAUDITED
PRO FORMA CONDENSED CONSOLIDATED STATEMENTS OF
OPERATIONS
(CONTINUED)
(Dollars
in Thousands)
|
|
Pro
Forma
|
|
|
|
Fiscal
Year Ended
February 2,
2007
|
|
Plus:
Thirteen
Weeks
Ended
May 4,
2007
|
|
Less:
Thirteen
Weeks
Ended
May 5,
2006
|
|
Fifty-two
Weeks Ended May 4, 2007
|
|
Net
sales
|
|
$
|
9,169,822
|
|
$
|
2,275,267
|
|
$
|
2,151,387
|
|
$
|
9,293,702
|
|
Cost
of goods sold
|
|
|
6,799,117
|
|
|
1,641,582
|
|
|
1,566,488
|
|
|
6,874,211
|
|
Gross
profit
|
|
|
2,370,705
|
|
|
633,685
|
|
|
584,899
|
|
|
2,419,491
|
|
Selling,
general and
a
administrative
|
|
|
2,176,688
|
|
|
586,882
|
|
|
517,179
|
|
|
2,246,391
|
|
Operating
profit
|
|
|
194,017
|
|
|
46,803
|
|
|
67,720
|
|
|
173,100
|
|
Interest
income
|
|
|
(7,002
|
)
|
|
(2,573
|
)
|
|
(2,450
|
)
|
|
(7,125
|
)
|
Interest
expense
|
|
|
436,595
|
|
|
105,724
|
|
|
117,212
|
|
|
425,107
|
|
Loss
before income taxes
|
|
|
(235,576
|
)
|
|
(56,348
|
)
|
|
(47,042
|
)
|
|
(244,882
|
)
|
Benefit
for income taxes
|
|
|
(88,343
|
)
|
|
(25,568
|
)
|
|
(17,609
|
)
|
|
(96,302
|
)
|
Net
loss
|
|
$
|
(147,233
|
)
|
$
|
(30,780
|
)
|
$
|
(29,433
|
)
|
$
|
(148,580
|
)
|
See
notes
to unaudited pro forma condensed consolidated statements of
operations.
NOTES
TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATED
STATEMENTS
OF OPERATIONS
(a) Represents
the estimated
impact on cost of goods sold of the assumed acquisition of the DCs discussed
in
(b)(7) under Notes to Unaudited Pro Forma Condensed Consolidated Balance Sheet,
relating to the following DC expense amounts that will be capitalized into
inventory: $3.7 million of pro forma annual depreciation expense resulting
from the adjustment to record the fair market value of the purchased DC's offset
by a reduction of $6.7 million in historical annual rental
expense.
(b) Represents
depreciation
and amortization of the fair value adjustments related to tangible and
intangible long-lived assets. The fair market value adjustments and estimated
lives of tangible assets are described in (b)(4) under Notes to Unaudited Pro
Forma Condensed Consolidated Balance Sheet. Identifiable intangible assets
with
a determinable life have been amortized on a straight-line basis in the
unaudited pro forma consolidated statements of operations. These unaudited
pro
forma condensed consolidated financial statements reflect a preliminary
allocation to tangible assets, liabilities, goodwill and other intangible
assets. The final purchase price allocation may result in a different allocation
for tangible and intangible assets than that presented in these unaudited pro
forma condensed consolidated financial statements. An increase or decrease
in
the amount of purchase price allocated to amortizable assets would impact the
amount of annual depreciation and amortization expense. This adjustment also
includes investment banking fees related to the Transactions of
$5.0 million that we expensed in the first quarter of 2007 and annual
management fees of $5.0 million that will be payable to affiliates of
certain of the Investors subsequent to the closing of the
Transactions.
(c) Reflects
pro forma
interest expense resulting from our new capital structure (using applicable
rates at June 14, 2007) as follows (dollars in millions):
|
|
|
|
Thirteen
Weeks Ended
|
|
|
|
|
|
Year
Ended
February
2,
2007
|
|
May
5,
2006
|
|
May
4,
2007
|
|
Fifty-two
Weeks
Ended
May
4,
2007
|
|
Revolving
credit facility(1)
|
|
$
|
20.7
|
|
$
|
5.2
|
|
$
|
5.2
|
|
$
|
20.7
|
|
Term
loan facilities(2)
|
|
|
182.4
|
|
|
45.6
|
|
|
45.6
|
|
|
182.4
|
|
Notes
(3)
|
|
|
190.1
|
|
|
47.5
|
|
|
47.5
|
|
|
190.1
|
|
Letter
of credit fees(4)
|
|
|
1.6
|
|
|
0.4
|
|
|
0.4
|
|
|
1.6
|
|
Bank
commitment fees(5)
|
|
|
2.0
|
|
|
0.5
|
|
|
0.5
|
|
|
2.0
|
|
Other
existing debt obligations(6)
|
|
|
7.2
|
|
|
2.5
|
|
|
1.3
|
|
|
6.0
|
|
Total
cash interest expense
|
|
|
404.0
|
|
|
101.7
|
|
|
100.5
|
|
|
402.8
|
|
Amortization
of capitalized debt issuance costs(7)
|
|
|
31.1
|
|
|
15.7
|
|
|
5.2
|
|
|
20.6
|
|
Other(8)
|
|
|
1.5
|
|
|
(0.1
|
)
|
|
0.1
|
|
|
1.7
|
|
Total
pro forma interest expense
|
|
|
436.6
|
|
|
117.3
|
|
|
105.8
|
|
|
425.1
|
|
Less
historical interest expense
|
|
|
(34.9
|
)
|
|
(7.3
|
)
|
|
(6.2
|
)
|
|
(33.8
|
)
|
Net
adjustment to interest expense
|
|
$
|
401.7
|
|
$
|
110.0
|
|
$
|
99.6
|
|
$
|
391.3
|
|
(1) The
$1,000.0 million
revolving credit facility is expected to carry an interest rate of 3-month
LIBOR
of 5.35% plus 1.50%. The amount drawn at closing is expected to be
$302.3 million. Such levels of borrowings will fluctuate in future periods
dependent upon short term cash needs. Changes in the levels of borrowings would
impact interest expense.
(2) Reflects
interest on the
$2,430.0 million term loan facility that is expected to be at a rate of
3-month LIBOR plus 2.50%. To hedge against interest rate risk, we have entered
into a swap agreement with respect to a $2,000.0 million notional amount
for 4.93%. This swap agreement becomes effective on July 31, 2007 and will
amortize on a quarterly basis until maturity at July 31, 2012. The unhedged
portion of the facility is expected to carry an interest rate of 3-month LIBOR
of 5.35% plus 2.50%.
(3) Reflects
interest on the
senior notes and senior subordinated notes at assumed rates. Assumes the cash
interest payment option has been elected with respect to all of the senior
toggle notes.
(4) Represents
fees on
assumed balances of trade letters of credit of $128.1 million at 0.75% and
standby letters of credit of $41.0 million at 1.50%.
(5) Represents
commitment
fees of 0.375% on the assumed $528.7 million unutilized balance of the
revolving credit facility. Outstanding letters of credit noted in (4)above
reduce the availability under the revolving credit facility.
(6) Represents
historical
interest expense on other existing indebtedness.
(7) Represents
debt issuance
costs associated with the new bank facilities amortized over 6 years for
the revolving facility, 7 years for the term loan facility, 8 years
for the new senior notes, 10 years for the new senior subordinated notes
and 8 years for other capitalized debt issuance costs. Also includes
$10.5 million of bridge debt fee expensed in the year ended
February 2, 2007.
(8) Represents
historical
interest expense on income tax contingencies, offset by capitalized interest
expense.
Interest
rate sensitivity
A
0.125%
change in the weighted average interest rate on our total pro forma indebtedness
would change our pro forma annual cash interest expense by approximately
$5.8 million.
These
pro
forma financial statements assume that all of our Old Notes will be tendered
and
repurchased in the tender offer. Any Old Notes that are not tendered and
purchased in the tender offer will remain outstanding after the closing of
the
Transactions. For each $1.0 million of Old Notes that is not tendered and
repurchased in the tender offer, pro forma annual interest expense will increase
by approximately $0.1 million. As of 5:00 p.m. New York City time on
June 15, 2007, approximately $2.0 million of Old Notes had not been
tendered in the Tender Offer.
(d) Represents
the tax effect
of the pro forma adjustments, calculated at effective rates of 39.3% and 37.6%
for the thirteen-week periods ended May 4, 2007 and May 5, 2006,
respectively,
and
37.5%
for the fiscal year ended February 2, 2007. Note that the pro forma
statement of operations data for the trailing fifty-two week period ended
May 4, 2007 includes income taxes accounted for under SFAS 109 for
39 weeks and under FIN 48 for 13 weeks.
(e) Adjustments
to net income
(loss) do not include the effects of the following non-recurring items:
$42.1 million of stock compensation expense from the acceleration of
unvested stock options, restricted stock and restricted stock units resulting
from the Transactions and $77.4 million of transaction costs incurred by
the Company expensed as one-time charges upon the close of the Transactions.
Net
income (loss) also does not include any adjustments to reflect the effects
of
the new stock based compensation plan, which is still being
finalized.
Certain
Non-GAAP Financial Measures
EBITDA
is
defined as net income plus provision for income taxes, interest expense, net,
and depreciation and amortization. Adjusted EBITDA is defined as EBITDA further
adjusted to give effect to adjustments required in calculating covenant ratios
under the indentures governing the notes and our New Credit Facilities, which
adjustments can generally be described as (i) certain non-recurring
non-cash items, (ii) certain unusual or infrequently occurring items, or
(iii) transaction fees. EBITDA and Adjusted EBITDA are not presentations
made in accordance with GAAP, are not measures of financial performance or
condition, liquidity or profitability, and should not be considered as an
alternative to (1) net income, operating income or any other performance
measures determined in accordance with GAAP or (2) operating cash flows
determined in accordance with GAAP. Additionally, EBITDA and Adjusted EBITDA
are
not intended to be measures of free cash flow for management's discretionary
use, as they do not consider certain cash requirements such as interest
payments, tax payments and debt service requirements.
Our
presentation of EBITDA has limitations as an analytical tool, and you should
not
consider it in isolation or as a substitute for analysis of our results as
reported under GAAP. We believe that the inclusion of EBITDA and Adjusted EBITDA
is appropriate to provide additional information to investors about the
calculation of certain financial ratios in the indentures governing the notes
and our New Credit Facilities. Adjusted EBITDA is a material component of these
ratios. For instance, both the indentures governing the notes and our New Credit
Facilities contain debt incurrence ratios that are calculated by reference
to
Adjusted EBITDA. Non-compliance with the debt incurrence ratios contained in
our
New Credit Facilities and the indentures governing the notes would prohibit
us
from being able to incur additional indebtedness other than pursuant to
specified exceptions.
While
management believes that these measures provide useful information to investors,
the SEC may require that EBITDA and Adjusted EBITDA be presented differently
or
not at all in filings made with the SEC. Furthermore, because not all companies
use identical calculations, these presentations of EBITDA and Adjusted EBITDA
may not be comparable to other similarly titled measures of other
companies.
The
following table sets forth a reconciliation of net income to EBITDA and EBITDA
to Adjusted EBITDA for the periods indicated:
|
|
Fiscal
Year Ended
|
|
Thirteen
Weeks Ended
|
|
Pro
Forma
Trailing
Fifty-
two
Week
Period
Ended
|
|
|
|
January
28,
2005
|
|
February
3,
2006
|
|
February
2,
2007
|
|
May
5,
2006
|
|
May
4,
2007
|
|
May
4,
2007
|
|
|
|
(in
millions)
|
|
Net
income (loss)
|
|
$
|
344.2
|
|
$
|
350.2
|
|
$
|
137.9
|
|
$
|
47.7
|
|
$
|
34.9
|
|
$
|
(148.6
|
)
|
Interest
expense, net
|
|
|
22.2
|
|
|
17.2
|
|
|
27.9
|
|
|
4.8
|
|
|
3.6
|
|
|
418.0
|
|
Income
taxes (benefit)
|
|
|
190.6
|
|
|
194.5
|
|
|
82.4
|
|
|
28.8
|
|
|
16.9
|
|
|
(96.3
|
)
|
Depreciation
and amortization
|
|
|
164.5
|
|
|
186.8
|
|
|
200.6
|
|
|
48.8
|
|
|
50.5
|
|
|
257.8
|
|
EBITDA
|
|
$
|
721.5
|
|
$
|
748.7
|
|
$
|
448.9
|
|
$
|
130.1
|
|
$
|
105.9
|
|
$
|
430.9
|
|
Adjustments:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Impact
of Project Alpha markdowns (a)
|
|
160.0
|
|
|
2.2
|
|
|
(3.9
|
)
|
|
153.9
|
|
Selling,
general and administrative costs
related to store closing and inventory
clearance activities of Project Alpha (b)
|
|
33.1
|
|
|
—
|
|
|
29.3
|
|
|
62.4
|
|
Operating
losses of stores to be closed (c)
|
|
14.9
|
|
|
3.0
|
|
|
5.3
|
|
|
17.2
|
|
Hurricane
Katrina insurance proceeds
|
|
(13.0
|
)
|
|
(5.1
|
)
|
|
—
|
|
|
(7.9
|
)
|
Hurricane
Katrina expense and write-offs
|
|
0.5
|
|
|
0.4
|
|
|
—
|
|
|
0.1
|
|
Asset
impairments (d)
|
|
0.8
|
|
|
—
|
|
|
—
|
|
|
0.8
|
|
Management
fees (e)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
5.0
|
|
Project
Alpha and merger-related professional
fees (f)
|
|
1.0
|
|
|
—
|
|
|
6.3
|
|
|
2.3
|
|
Distribution
center lease adjustment (g)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(6.2
|
)
|
Adjusted
EBITDA
|
$
|
646.2
|
|
$
|
130.6
|
|
$
|
142.9
|
|
$
|
658.5
|
|
(a) Amounts
relate to the
impact on cost of goods sold and operating profit of incremental markdowns,
substantially all of which were taken in connection with the decision to
eliminate the historical packaway strategy and to close approximately 400
underperforming stores, including a $71.2 million charge in the thirteen
weeks ended November 3, 2006 to record a reserve for management's estimate
of anticipated future markdowns that were expected to reduce inventory below
cost. The amount of such markdowns was estimated by aggregating markdowns taken
on the Project Alpha inventory, reduced by any markdowns that were determined
to
be normal in-season clearance and therefore not incremental, net of the change
in the below-cost reserve for such markdowns.
(b) Amounts
relate to
expenses associated with Project Alpha inventory and real estate initiatives,
including lease contract termination and other store closing costs, advertising,
inventory liquidation fees, incremental store labor and other
costs.
(c) Amounts
represent the
operating losses (excluding depreciation) of the 403 stores identified in
Project Alpha to be closed, but for which closure has not yet
occurred.
(d) Amounts
represent
non-cash asset impairments, other than those in the 403 stores identified
in Project Alpha to be closed.
(e) Represents
the annual
management fee payable to affiliates of certain of the Investors pursuant to
a
Management Agreement.
(f) Amounts
represent
professional fees (investment banking, consulting, legal, etc.) and other costs
incurred in connection with Project Alpha and the proposed Merger.
(g) Represents
the reversal
of the increase to pro forma EBITDA resulting from the pro forma acquisition
of
certain DCs contained in our Unaudited Pro Forma Condensed Consolidated
Financial Statements as we do not expect these transactions to occur. We intend
to renegotiate or refinance the leases relating to those DCs in connection
with
or immediately following consummation of the Transactions. However, our
Unaudited Pro Forma Condensed Consolidated Statement of Operations reflects
the
estimated impact of the assumed acquisition of such DC's, which resulted in
a
$6.2 million increase in pro forma EBITDA ($2.5 million reduction in
our pro forma net loss and a $3.7 million increase in our pro forma
depreciation expense) for the 52 week period ended May 4,
2007.
For
the
52 week period ended May 4, 2007, (i) pro forma cash interest expense was $402.8
million and the ratio of pro forma Adjusted EBITDA to cash interest expense
was
1.6x and (ii) total debt was $4.7 billion and the ratio of pro forma total
debt
to Adjusted EBITDA was 7.1x. Cash interest expense includes the interest portion
of our capital lease obligations but excludes the amortization of debt issuance
costs and non-cash interest related to our indebtedness. To the extent we elect
to pay PIK Interest on the senior toggle notes after the initial interest
period, our pro forma cash interest expense would decrease accordingly but
our
long-term obligations to pay principal would be increased.
Individual
Supplemental Executive Retirement Plan with David A.
Perdue
We
maintain an individual supplemental executive retirement plan for
Mr. Perdue that provides that, in the event of his termination by us
without cause at any time or his voluntary resignation for good reason within
two years after a change in control of Dollar General, Mr. Perdue will be
deemed to have five additional years of credited service and his compensation
will be deemed to continue for purposes of calculating his vesting and benefit.
The SERP provides that the full amount of benefits due will be funded into
the
existing grantor trust within 30 days following a change in control of
Dollar General and upon Mr. Perdue's termination by us without cause or his
voluntary resignation for good reason and payable in accordance with the terms
of the plan. The completion of the Merger will constitute a change in control
for purposes of the plan and trust. The amount that would be funded into the
grantor trust upon completion of the Merger assuming an estimated closing date
of July 6, 2007, is approximately $6,630,934.
ITEM
8.01 OTHER
EVENTS.
On
June
15, 2007, Dollar General Corporation (NYSE: DG), a Tennessee corporation, issued
the press release attached hereto as Exhibit 99.1, in which it announced
that its Board of Directors
had
unanimously confirmed the decision to express no opinion and remain neutral
toward the tender offer made by Buck Acquisition Corp. on June 4, 2007 to
purchase any and all of Dollar General’s outstanding 8 5/8% Notes due 2010 and
the related consent solicitation. The tender offer and related consent
solicitation are contemplated by Dollar General’s previously announced agreement
and plan of merger, dated March 11, 2007, with Buck Holdings, L.P., a Delaware
limited partnership (“Parent”), and Buck Acquisition Corp., a Tennessee
corporation and wholly owned subsidiary of Parent, pursuant to which Buck
Acquisition Corp. will merge with and into Dollar General. Parent and Buck
Acquisition Corp. are indirectly controlled by investment funds affiliated
with
Kohlberg Kravis Roberts & Co. L.P. Dollar General’s shareholders are
scheduled to vote on the proposed merger on June 21, 2007.
ITEM
9.01 FINANCIAL
STATEMENTS AND EXHIBITS.
(a) Financial
statements of businesses acquired. N/A
(b) Pro
forma
financial information. N/A
(c) Shell
company transactions. N/A
(d) Exhibits.
See Exhibit Index immediately following the signature page
hereto.
SIGNATURE
Pursuant
to the requirements of the Securities Exchange Act of 1934, the Registrant
has
duly caused this report to be signed on its behalf by the undersigned hereunto
duly authorized.
Date:
June
18, 2007
|
DOLLAR
GENERAL CORPORATION
|
|
|
|
|
|
|
|
|
|
|
By:
|
/s/
Susan S. Lanigan |
|
|
Susan
S. Lanigan
|
|
|
Executive
Vice President and General Counsel
|
EXHIBIT
INDEX
Exhibit
No.
|
Description
|
|
|
99.1
|
News
release dated June 15, 2007.
|