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Filed pursuant to Rule 424(b)(1)
Registration No: 333-42704
PROSPECTUS
(DOLLAR GENERAL CORPORATION LOGO)
Offer to Exchange
up to $200,000,000 of
8 5/8% Exchange Notes due June 15, 2010
for any and all of the outstanding
8 5/8% Notes Due June 15, 2010
of
DOLLAR GENERAL CORPORATION
The Exchange Offer will expire at 5:00 p.m., New York City time,
On September 11, 2000, unless extended
------------------
We are offering to exchange up to $200,000,000 of our new 8 5/8% Exchange
Notes due June 15, 2010 for up to $200,000,000 of our existing 8 5/8% Notes due
June 15, 2010. The terms of the new Notes are identical in all material respects
to the terms of the old Notes, except that the new Notes have been registered
under the Securities Act, and that transfer restrictions, registration rights
and provisions regarding additional interest relating to the old Notes do not
apply to the new Notes. Dollar General will not receive any proceeds from the
exchange offer.
To exchange your old Notes for new Notes:
- you are required to make the representations described on pages 22 and 23
to us,
- you must complete and send the letter of transmittal that accompanies
this prospectus to the exchange agent, First Union National Bank, by 5:00
p.m., New York time, on September 11, 2000 and
- you should read the section called "The Exchange Offer" that begins on
page 18 for further information on how to exchange your old Notes for new
Notes.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED
UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
THE DATE OF THIS PROSPECTUS IS AUGUST 9, 2000.
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AVAILABLE INFORMATION
Dollar General files annual, quarterly and special reports, proxy
statements and other information with the U.S. Securities and Exchange
Commission. Our SEC filings are available on the Internet at the SEC's web site
at http://www.sec.gov. You may also read and copy any document we file with the
SEC at its public reference facilities:
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Public Reference Room New York Regional Office Chicago Regional Office
450 Fifth Street, N.W. 7 World Trade Center Citicorp Center
Room 1024 Suite 1300 500 West Madison Street
Washington, D.C. 20549 New York, New York 10048 Suite 1400
Chicago, Illinois
60661-2511
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You may also obtain copies of the documents at prescribed rates by writing
to the Public Reference Section of the SEC at 450 Fifth Street, N.W., Room 1024,
Washington, D.C. 20549. Please call 1-800-SEC-0330 for further information on
the operations of the public reference facilities. Our SEC filings are also
available at the offices of the New York Stock Exchange, 20 Broad Street, New
York, New York 10005.
This prospectus is part of a registration statement filed by us with the
SEC under the Securities Act. As allowed by SEC rules, this prospectus does not
contain all of the information that you can find in the registration statement
or the exhibits to the registration statement.
The SEC allows us to "incorporate by reference" the information we file
with them, which means:
- incorporated documents are considered part of this prospectus;
- we can disclose important information to you by referring you to those
documents; and
- information that we file with the SEC will automatically update and
supersede the information in this prospectus and any information that was
previously incorporated in this prospectus.
We incorporate by reference the documents listed below, which were filed
with the SEC under the Securities Exchange Act of 1934, as amended:
(1) our Annual Report on Form 10-K for the year ended January 28,
2000, filed on April 27, 2000;
(2) our Quarterly Report on Form 10-Q for the quarter ended April 28,
2000, filed on June 7, 2000; and
(3) our Current Reports on Form 8-K filed on February 29, 2000, June
8, 2000, June 22, 2000 and August 8, 2000.
We also incorporate by reference each of the following documents that we
file with the SEC after the date of this prospectus and prior to the termination
of the offering:
- reports filed under Section 13(a) and (c) of the Exchange Act;
- definitive proxy or information statements filed under Section 14 of the
Exchange Act in connection with any subsequent shareholders' meeting; and
- reports filed under Section 15(d) of the Exchange Act.
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You can obtain any of the filings incorporated by reference in this
prospectus from us or from the SEC on the SEC's web site or at the addresses
listed above. Documents incorporated by reference are available from us without
charge, including any exhibits to those documents that are not specifically
incorporated by reference in those documents. You may request a copy of the
documents incorporated by reference in this prospectus and a copy of the
indenture, registration rights agreement and other documents referred to in this
prospectus by writing or telephoning us at the following address:
Dollar General Corporation
100 Mission Ridge
Goodlettsville, Tennessee 37072
Attention: Barbara Springer, Assistant Treasurer
(615) 855-4825
IF YOU WOULD LIKE TO REQUEST DOCUMENTS, PLEASE DO SO BY SEPTEMBER 1, 2000
IN ORDER TO RECEIVE THEM BEFORE THE EXCHANGE OFFER EXPIRES ON SEPTEMBER 11,
2000.
The exchange offer is not being made to, nor will Dollar General accept
surrenders for exchange from, holders of old Notes in any jurisdiction in which
the exchange offer or the acceptance of the exchange offer would not be in
compliance with the securities or blue sky laws of that jurisdiction.
TABLE OF CONTENTS
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PAGE
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AVAILABLE INFORMATION................. 1
SUMMARY............................... 3
DOLLAR GENERAL CORPORATION............ 7
USE OF PROCEEDS....................... 9
CAPITALIZATION........................ 9
SELECTED CONSOLIDATED FINANCIAL AND
OPERATING DATA...................... 10
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS....................... 12
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PAGE
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CAUTIONARY STATEMENT CONCERNING
FORWARD-LOOKING STATEMENTS.......... 17
THE EXCHANGE OFFER.................... 18
DESCRIPTION OF NOTES.................. 27
MATERIAL UNITED STATES TAX
CONSEQUENCES OF THE EXCHANGE
OFFER............................... 46
PLAN OF DISTRIBUTION.................. 47
LEGAL MATTERS......................... 47
EXPERTS............................... 47
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SUMMARY
The following summary information is qualified in its entirety by the
information contained elsewhere in this prospectus.
OUR COMPANY
Dollar General Corporation ("we" or "Dollar General") is a leading discount
retailer of quality general merchandise at everyday low prices. Our mission
statement is "A Better Life For Everyone!" Through conveniently located stores,
we offer a focused assortment of consumable basic merchandise including health
and beauty aids, packaged food products, cleaning supplies, housewares,
stationery, seasonal goods, basic apparel and domestics. Dollar General stores
serve primarily low-, middle- and fixed-income families. On April 28, 2000, we
operated 4,510 stores located in 24 states, primarily in the midwestern and
southeastern United States. For fiscal years 1995 through 1999, our net sales
increased at a compound annual growth rate of 21.8%, our operating income
increased at a compound annual growth rate of 23.6% and our net income increased
at a compound annual growth rate of 24.4%. In the fiscal quarter ended April 28,
2000, as compared to the same period in 1999, our net sales increased 18.1%, our
operating income increased 22.3% and our net income increased 22.0%.
SUMMARY OF THE TERMS OF THE EXCHANGE OFFER
GENERAL....................... On June 21, 2000, Dollar General completed a
private offering of $200 million in aggregate
principal amount of its 8 5/8% Notes due June
15, 2010 (the "old Notes"). In connection with
the private offering, Dollar General entered
into a registration rights agreement in which
it agreed, among other things, to deliver this
prospectus to you and to complete an exchange
offer for the old Notes.
THE EXCHANGE OFFER............ We are offering to exchange $1,000 principal
amount of our registered 8 5/8% Exchange Notes
due June 15, 2010, which we refer to as the
"new Notes," for each $1,000 principal amount
of the old Notes.
We sometimes will refer to the new Notes and
the old Notes together as the "Notes."
Currently, $200 million in principal amount of
old Notes are outstanding.
The terms of the new Notes are identical in all
material respects to the terms of the old
Notes, except that the registration rights and
related additional interest provisions and the
transfer restrictions applicable to the old
Notes are not applicable to the new Notes.
Old Notes may be tendered only in $1,000
increments. Subject to the satisfaction or
waiver of specified conditions, Dollar General
will exchange the new Notes for all old Notes
that are validly tendered and not withdrawn
prior to the expiration of the exchange offer.
Dollar General will cause the exchange to be
effected promptly after the expiration of the
exchange offer. See "The Exchange
Offer -- Terms of the Exchange Offer."
EXPIRATION DATE............... The exchange offer will expire at 5:00 p.m.,
New York City time, on September 11, 2000
unless we extend it. In that case, the phrase
"expiration date" will mean the latest date and
time to which we extend the exchange offer.
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PROCEDURES FOR PARTICIPATING
IN THE EXCHANGE OFFER......... If you wish to participate in the exchange
offer, you must complete, sign and date an
original or faxed letter of transmittal in
accordance with the instructions in the letter
of transmittal accompanying this prospectus.
Then you must mail, fax or deliver the
completed letter of transmittal together with
the old Notes you wish to exchange and any
other required documentation to First Union
National Bank, which is acting as exchange
agent. Its address appears on the letter of
transmittal. By signing the letter of
transmittal you will represent to and agree
with Dollar General that: you are acquiring the
new Notes in the ordinary course of your
business; you have no arrangement or
understanding with any person to participate in
a distribution of the new Notes; you are not an
"affiliate," as defined in Rule 405 under the
Securities Act, of Dollar General or, if you
are an affiliate, you will comply with the
registration and prospectus delivery
requirements of the Securities Act to the
extent applicable; and if you are not a
broker-dealer, you are not engaged in, and you
do not intend to be engaged in, the
distribution of the new Notes. See "The
Exchange Offer -- Procedures for Tendering."
If you are a broker-dealer that will receive
new Notes for your own account in exchange for
old Notes that you acquired as a result of your
market-making or other trading activities, you
will be required to acknowledge in the letter
of transmittal that you will deliver a
prospectus in connection with any resale of
these new Notes.
RESALE OF NEW NOTES........... We believe that you can resell and transfer
your new Notes without registering them under
the Securities Act and delivering a prospectus,
if you can make the same three representations
that appear above under the heading "Procedures
for Participating in the Exchange Offer." Our
belief is based on interpretations of the SEC
for other exchange offers that the SEC has
expressed in some of its no-action letters to
other issuers in exchange offers like ours.
We cannot guarantee that the SEC would make a
similar decision about this exchange offer. If
our belief is wrong, or if you cannot
truthfully make the representations appearing
above, and you transfer any new Note issued to
you in the exchange offer without meeting the
registration and prospectus delivery
requirements of the Securities Act, or without
an exemption from these requirements, you could
incur liability under the Securities Act. We
are not indemnifying you for any liability
under the Securities Act. A broker-dealer can
only resell or transfer new Notes if it will
deliver a prospectus.
SPECIAL PROCEDURES FOR
BENEFICIAL OWNERS............. If your old Notes are held through a broker,
dealer, commercial bank, trust company or other
nominee and you wish to surrender your old
Notes, you should contact your intermediary
promptly and instruct it to surrender the old
Notes on your behalf.
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GUARANTEED DELIVERY
PROCEDURES.................... If you cannot meet the expiration date
deadline, or you cannot deliver your old Notes,
the letter of transmittal or any other
documentation on time, then you must surrender
your old Notes according to the guaranteed
delivery procedures appearing below under "The
Exchange Offer -- Guaranteed Delivery
Procedures."
ACCEPTANCE OF YOUR OLD NOTES
AND DELIVERY OF THE NEW
NOTES......................... We will accept for exchange any and all old
Notes that are surrendered in the exchange
offer prior to the expiration date if you
comply with the procedures of the offer. The
new Notes will be delivered on the earliest
practicable date after the expiration date.
WITHDRAWAL RIGHTS............. You may withdraw the surrender of your old
Notes at any time prior to the expiration date.
APPRAISAL RIGHTS.............. You will not be entitled to any appraisal or
dissenters' rights in connection with the
exchange offer. See "The Exchange Offer --
Terms of the Exchange Offer."
U.S. FEDERAL INCOME TAX
CONSEQUENCES.................. You will not have to pay federal income tax as
a result of your participation in the exchange
offer.
EXCHANGE AGENT................ First Union National Bank is serving as the
exchange agent in connection with the exchange
offer. First Union National Bank also serves as
trustee under the indenture that governs the
Notes.
SUMMARY OF THE TERMS OF THE NEW NOTES
The terms of the new Notes are identical in all material respects to the
terms of the old Notes, except that the registration rights and related
additional interest provisions and the transfer restrictions applicable to the
old Notes are not applicable to the new Notes. The new Notes will evidence the
same debt as the old Notes. The new Notes and the old Notes will be governed by
the same indenture.
ISSUER........................ Dollar General Corporation.
SECURITIES OFFERED............ $200,000,000 in aggregate principal amount of
8 5/8% Exchange Notes due June 15, 2010.
MATURITY...................... The new Notes will bear interest at the rate of
8 5/8% per year, payable semi-annually in
arrears on June 15 and December 15 of each
year, commencing on December 15, 2000.
RANKING....................... The new Notes will be general unsecured
obligations of Dollar General. As such, the new
Notes will rank equally in right of payment
with all other unsecured and unsubordinated
debt of Dollar General. See "Description of
Notes -- General."
SUBSIDIARY GUARANTORS......... All of Dollar General's present and future
Restricted Subsidiaries (as defined herein)
will guarantee the new Notes. Each guarantee
will rank equally in right of payment with all
other unsecured and unsubordinated debt of that
Restricted Subsidiary. The guarantee of a
Restricted Subsidiary will be automatically
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released upon certain events. See "Description
of Notes -- Subsidiary Guarantees."
OPTIONAL REPAYMENT............ The holders of the Notes may require Dollar
General to repay the Notes on June 15, 2005 at
100% of the principal amount of the Notes, plus
accrued and unpaid interest. The Notes are not
redeemable prior to maturity at our option. See
"Description of Notes -- Optional Repayment."
COVENANTS..................... The indenture pursuant to which the new Notes
will be issued contains covenants that, among
other things, limit the ability of Dollar
General and its Restricted Subsidiaries to
secure indebtedness with security interests on
certain property or stock or engage in certain
sale and leaseback transactions with respect to
certain properties. See "Description of
Notes -- Restrictive Covenants."
EXCHANGE OFFER, REGISTRATION
RIGHTS........................ Pursuant to a registration rights agreement
among Dollar General, the Restricted
Subsidiaries that are guarantors and the
initial purchasers, Dollar General and the
guarantors agreed (1) to file a registration
statement, within 90 days after the original
issue date of the old Notes with respect to an
offer to exchange the old Notes for new Notes
that are registered under the Securities Act
and (2) to use their reasonable best efforts to
cause such registration statement to be
declared effective by the SEC within 180 days
after the original issue date of the old Notes.
In addition, under certain circumstances Dollar
General and the guarantors may be required to
file a shelf registration statement to cover
resales of the old Notes by the holders
thereof. Dollar General intends that the
exchange offer will satisfy most of its
obligations under the registration rights
agreement.
USE OF PROCEEDS............... We will not receive any proceeds from the
exchange offer. The net proceeds from the
offering of the old Notes was approximately
$198,168,000, after deducting the discount to
the initial purchasers and estimated offering
expenses, and those proceeds were used to repay
our outstanding short-term debt and for general
corporate purposes. See "Use of Proceeds."
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DOLLAR GENERAL CORPORATION
GENERAL
Dollar General is a leading discount retailer of quality general
merchandise at everyday low prices. Through conveniently located stores, we
offer a focused assortment of consumable basic merchandise including health and
beauty aids, packaged food products, cleaning supplies, housewares, stationery,
seasonal goods, basic apparel and domestics. Dollar General stores serve
primarily low-, middle- and fixed-income families. On April 28, 2000, we
operated 4,510 stores located in 24 states, primarily in the midwestern and
southeastern United States.
Dollar General opened its first store in 1955. In the last five years, we
have experienced a rapid rate of expansion, increasing our number of stores from
2,059 stores at January 31, 1995 to 4,510 stores at April 28, 2000. In addition
to growth from new store openings, we recorded same-store sales increases of
8.4%, 8.3% and 6.4% in fiscal 1997, 1998 and 1999, respectively. In the fiscal
quarter ended April 28, 2000, we recorded same-store sales increases of 4.0%, as
compared to 5.7% over the same period in 1999. For fiscal years 1995 through
1999, our net sales increased at a compound annual growth rate of 21.8%, our
operating income increased at a compound annual growth rate of 23.6% and our net
income increased at a compound annual growth rate of 24.4%. In the fiscal
quarter ended April 28, 2000, as compared to the same period in 1999, our net
sales increased 18.1%, our operating income increased 22.3% and our net income
increased 22.0%. Our business is somewhat seasonal in nature. Because of the
holiday season, our sales and net income are slightly higher in the fourth
quarter than in other quarters.
BUSINESS STRATEGY
Our mission statement is "A Better Life for Everyone!" To carry out this
mission, we have developed a business strategy that focuses on providing our
customers with a focused assortment of consumable basic merchandise in a
convenient, small-store format.
Our Customers. We serve the consumable basics needs of customers primarily
in the low-, middle-and fixed-income brackets. Specifically, two-thirds of our
customers live in households earning less than $30,000 a year, and nearly half
earn less than $20,000 a year. We believe that we are well positioned to meet
the consumable basics needs of the increasing number of consumers in this group.
Our Stores. Our stores average 6,700 selling square feet and usually are
located within three to five miles of our customers' homes. In addition, most of
our stores are in small towns with populations of less than 25,000. This appeals
to our target customers, many of whom prefer the convenience of a small,
neighborhood store. As the discount store industry continues to move toward
larger, "super-center" type stores which are often built outside of towns,
Dollar General's convenience discount store format has become even more
appealing to a wider range of consumers.
Our Merchandise. We are committed to offering a focused assortment of
quality, consumable basic merchandise in a number of core categories such as
health and beauty aids, packaged food products, cleaning supplies, housewares,
stationery, seasonal goods, basic apparel and domestics. By consistently
offering a focused assortment of consumable basic merchandise, we encourage
customers to shop our stores for their everyday household needs, leading to
frequent customer visits. In 1999, the average customer transaction was $8.14.
Our Prices. We distribute quality, consumable basic merchandise at
everyday low prices. Our low-cost operating structure and focused assortment of
merchandise allow us to offer quality merchandise with compelling value. As part
of this strategy, we emphasize even-dollar price points. The majority of our
products are priced at $10 or less, with nearly 50% of our products priced at $1
or less. Our most expensive items are generally priced at $35.
Our Cost Controls. We maintain strict overhead cost controls and seek to
locate stores in neighborhoods where store rental and operating costs are low.
We continue to utilize new technology where it is cost effective to improve our
operating efficiencies.
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GROWTH STRATEGY
We believe that our future growth will come from a combination of
merchandising initiatives, new store growth and infrastructure investments.
Merchandising Initiatives. In response to our customer research findings,
we introduced several new national brand items in key consumable categories in
1999. In 2000, we plan to expand the selection of store brands in housecleaning
products and food and take advantage of opportunity purchases that reflect our
consumable basics strategy. We also intend to utilize new plan-o-gram technology
to improve inventory productivity and retrofit approximately 700 small stores to
a more productive prototype. We will continue to evaluate the performance of our
consumable product categories and make changes where appropriate. We believe
these merchandising initiatives have contributed and will continue to contribute
to same-store net sales increases.
New Store Growth. We believe that our convenient, small-store format is
adaptable to towns and neighborhoods throughout the country. We currently serve
more than 2,800 communities with populations of fewer than 25,000. According to
the Census Bureau, there are approximately 18,000 such communities in the United
States. We will continue to focus on towns and neighborhoods within our current
24-state market area where we believe that we have the potential to
significantly expand our store base. By opening new stores in our existing
market area, we take advantage of brand awareness and maximize our operating
efficiencies. In addition, we expect to explore the potential for geographic
expansion as opportunities present themselves. We currently target an annual new
store sales growth rate of at least 14% per year. In 2000, Dollar General plans
to open 675-700 new stores and relocate an additional 200-250 stores. In the
fiscal quarter ended April 28, 2000, we opened 239 new stores, remodeled or
relocated 87 stores and closed 23 stores. On April 28, 2000, we operated 4,510
stores.
Infrastructure Investments. Dollar General continues to make significant
investments in infrastructure. We believe that these investments will enable
Dollar General to continue to aggressively grow its store base and continually
improve its operating margin. We realize significant cost efficiencies by
locating our stores in close proximity to our distribution centers. In 1999, we
completed construction of a new 1.2 million square foot distribution center in
Fulton, Missouri and completed expansions to existing distribution centers in
South Boston, Virginia and Ardmore, Oklahoma. We plan to complete a 1.0 million
square foot distribution center in Alachua, Florida, in the second half of 2000
and a 1.2 million square foot distribution center in Zanesville, Ohio in the
first half of 2001.
MERCHANDISE
Dollar General stores offer a focused assortment of quality, consumable
basic merchandise in a number of core categories. In fiscal 1999, national brand
merchandise represented more than 50% of our net sales, up from 35% in 1998.
We believe that our merchandising strategy generates frequent repeat
customer traffic. We can offer everyday low prices to our customers in large
part because our buying staff negotiates low purchase prices from our suppliers.
We purchase our merchandise from a wide variety of suppliers -- no supplier
accounted for more than 6% of our purchases in fiscal 1999.
In order to fulfill Dollar General's commitment to maintain high in-stock
levels of core merchandise, we generally limit our stock keeping units, or SKUs,
per store to approximately 3,500 items. We believe our risk of inventory
obsolescence is low because we offer quality, consumable basic merchandise. Our
stores receive merchandise shipments weekly from our distribution centers.
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USE OF PROCEEDS
The exchange offer is intended to satisfy most of our obligations under the
registration rights agreement that we entered into relating to the old Notes. We
will not receive any proceeds from the exchange offer. You will receive, in
exchange for old Notes tendered by you in the exchange offer, new Notes in like
principal amount. The old Notes surrendered in exchange for the new Notes will
be retired and canceled and cannot be reissued. Accordingly, the issuance of the
new Notes will not result in any increase of our outstanding debt. The net
proceeds from the offering of the old Notes was approximately $198,168,000,
after deducting the discount to the initial purchasers and estimated offering
expenses, and those proceeds were used to repay our outstanding short-term debt
and for general corporate purposes.
CAPITALIZATION
The following table sets forth our consolidated capitalization at April 28,
2000 (unaudited) and as adjusted to give effect to the sale of the old Notes and
the use of the proceeds therefrom. The table should be read in conjunction with
our consolidated financial statements and the notes to those consolidated
financial statements incorporated by reference herein and "Management's
Discussion and Analysis of Financial Condition and Results of Operations"
included elsewhere in this prospectus.
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APRIL 28, 2000
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ACTUAL AS ADJUSTED
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(IN THOUSANDS)
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Cash and cash equivalents................................... $ 28,397 $ 45,165
========== ==========
Short-term debt:
Short-term borrowings(1).................................. $ 181,400 $ 0
Current portion of long-term debt......................... 1,554 1,554
Other short-term debt..................................... 0 0
---------- ----------
Total short-term debt............................. $ 182,954 $ 1,554
---------- ----------
Long-term debt:
Senior unsecured notes.................................... $ 0 $ 200,000
Other long-term debt...................................... 2,240 2,240
---------- ----------
Total long-term debt.............................. $ 2,240 $ 202,240
---------- ----------
Shareholders' equity:
Preferred stock(2)........................................ $ 0 $ 0
Common stock(3)........................................... 164,155 164,155
Additional paid-in capital................................ 235,619 235,619
Retained earnings......................................... 507,732 507,732
---------- ----------
Total shareholders' equity........................ $ 907,506 $ 907,506
---------- ----------
Total capitalization.............................. $1,092,700 $1,111,300
========== ==========
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(1) Consists primarily of borrowings under our $175 million revolving credit
facility. At June 20, 2000, we had $140 million of cash borrowings under
this revolving credit facility and $108.5 million of cash borrowings under
other short-term bank lines of credit. The net proceeds from the sale of the
Notes were used to repay a substantial portion of these short-term
borrowings.
(2) 10,000,000 shares authorized, $.50 stated value, of which no shares were
issued and outstanding at April 28, 2000.
(3) 500,000,000 shares authorized, $.50 par value, of which 328,310,000 shares
were issued and outstanding at April 28, 2000 (as adjusted to reflect the 5
for 4 stock split effective May 22, 2000).
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SELECTED CONSOLIDATED FINANCIAL AND OPERATING DATA
The selected consolidated financial data of Dollar General for the five
years ended January 31, 1996, January 31, 1997, January 30, 1998, January 29,
1999 and January 28, 2000 are derived from the audited consolidated financial
statements of Dollar General. The audited consolidated financial statements were
audited by PricewaterhouseCoopers LLP for the fiscal years ended January 31,
1996 and 1997 and were audited by Deloitte & Touche LLP for each of the three
most recent fiscal years. The consolidated financial statements as of January
29, 1999 and January 28, 2000, and for each of the years in the three year
period ended January 28, 2000, and the report therein, are incorporated by
reference in this prospectus. The selected financial data for each of the
three-month periods ended April 30, 1999 and April 28, 2000 are derived from
unaudited consolidated financial statements. The unaudited consolidated
financial statements include all adjustments, consisting of normal recurring
items, which Dollar General's management considers necessary for a fair
presentation of the financial position and the results of operations for these
periods. The results for the interim periods may not be indicative of the
results for a full year. The unaudited interim financial statements as of April
28, 2000 and April 30, 1999, and each of the three-month periods ending on these
dates, are incorporated by reference in this prospectus. The following data
should be read in conjunction with "Management's Discussion and Analysis of
Financial Condition and Results of Operations" and the consolidated financial
statements, including the notes thereto, included or incorporated by reference
in this prospectus.
<TABLE>
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THREE MONTHS
FISCAL YEAR ENDED JANUARY, ENDED APRIL,
-------------------------------------------------------------- -----------------------
1996 1997 1998 1999 2000 1999 2000
---------- ---------- ---------- ---------- ---------- ---------- ----------
(AMOUNTS IN THOUSANDS, EXCEPT NUMBER OF STORES, PER SHARE DATA AND OPERATING DATA)
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INCOME STATEMENT DATA:
Net sales.................... $1,764,188 $2,134,398 $2,627,325 $3,220,989 $3,887,964 $ 844,593 $ 997,079
Gross profit................. 503,619 604,795 742,135 905,877 1,097,791 225,947 272,709
Operating profit............. 148,907 189,676 235,543 289,264 349,302 57,896 70,831
Interest expense............. 7,361 4,659 3,764 8,349 5,157 879 1,278
Net income................... 87,818 115,100 144,628 182,033 219,427 36,348 44,340
Earnings per common share(1):
Basic...................... $ 0.39 $ 0.41 $ 0.51 $ 0.65 $ 0.71 $ 0.13 $ 0.13
Diluted.................... 0.26 0.34 0.43 0.54 0.65 0.11 0.13
Cash dividends per common
share(1):.................. 0.04 0.05 0.07 0.08 0.10 0.03 0.03
Weighted average shares
outstanding(1):
Basic...................... 272,842 275,186 275,781 276,321 305,024 278,511 329,476
Diluted.................... 334,546 336,353 334,941 335,498 336,963 336,376 334,399
BALANCE SHEET DATA:
Total assets................. $ 679,996 $ 718,147 $ 914,838 $1,211,784 $1,450,941 $1,325,426 $1,518,270
Long-term debt............... 3,278 2,582 1,294 786 1,200 647 2,240
Shareholders' equity......... 420,011 485,529 583,896 725,761 925,921 787,447 907,506
SELECTED OPERATING DATA:
Gross margin................. 28.5% 28.3% 28.3% 28.1% 28.2% 26.8% 27.4%
Operating margin............. 8.4 8.9 9.0 9.0 9.0 6.9 7.1
Net income margin............ 5.0 5.4 5.5 5.7 5.6 4.3 4.4
Ratio of earnings to fixed
charges(2)................. 5.7x 6.5x 8.2x 7.0x 7.2x 6.8x 7.1x
EBITDA(3).................... $ 138,350 $ 174,152 $ 274,277 $ 342,376 $ 413,246 $ 72,722 $ 89,438
</TABLE>
---------------
(1) As adjusted to give retroactive effect to all common stock splits.
(2) For purposes of computing the ratio of earnings to fixed charges, earnings
consists of income before taxes on income and fixed charges, and fixed
charges consists of interest expense, amortization of debt discount and
expense and one-third of rental expense, deemed representative of an
estimate of the interest portion of rental expense.
(3) EBITDA means operating profit plus depreciation and amortization. While
EBITDA is not intended to represent cash flow from operations as defined by
generally accepted accounting principles ("GAAP") and should not be
considered as an indicator of operating performance or alternatives to cash
flow (as measured by GAAP) as a measure of liquidity, the calculations of
EBITDA contained herein are included to provide additional information with
respect to Dollar General's ability to meet its future debt service, capital
expenditure, rental and working capital requirements.
10
<PAGE> 12
<TABLE>
<CAPTION>
FISCAL YEAR ENDED JANUARY,
----------------------------------------------------
1996 1997 1998 1999 2000
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
Net cash provided by (used in) operating
activities...................................... (17,769) $170,091 $139,119 $218,610 $140,357
Net cash used in investing activities............. (60,521) (84,411) (73,889) (140,110) (85,517)
Net cash (used in) provided by financing
activities...................................... 49,589 (83,461) (64,665) (63,334) (18,345)
Return on average assets.......................... 14.4% 16.5% 17.7% 17.1% 16.5%
Return on average equity.......................... 23.6% 25.4% 27.0% 27.8% 26.6%
Number of retail stores at end of period.......... 2,416 2,734 3,169 3,687 4,294
Net sales per selling square foot for
same-stores..................................... $ 129 $ 135 $ 141 $ 148 $ 151
Change in same-store net sales.................... 5.1% 8.2% 8.4% 8.3% 6.4%
</TABLE>
11
<PAGE> 13
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following section is substantially similar to the "Management's
Discussion and Analysis of Financial Condition and Results of Operations"
sections in our most recent Annual Report on Form 10-K and our most recent
Quarterly Report on Form 10-Q, which have been filed with the SEC. You should
read this section together with the consolidated financial statements included
in those reports. To obtain a copy of our most recent Annual Report and
Quarterly Report, see "Available Information."
The following text contains references to years 2001, 2000, 1999, 1998 and
1997 which represent fiscal years ending February 1, 2002, February 2, 2001,
January 28, 2000, January 29, 1999, and January 30, 1998, respectively.
References to the first quarter of 2000 and the first quarter of 1999 represent
the fiscal quarters ending April 28, 2000 and April 30, 1999, respectively. This
discussion and analysis should be read with, and is qualified in its entirety
by, the consolidated financial statements and the notes thereto.
GENERAL
During 1999, Dollar General achieved record sales and earnings and
continued its rapid pace of new store openings. From 1995 through 1999, we had a
compound annual growth rate of 21.8% in net sales and 24.4% in net income. For
the first quarter of 2000, net sales increased 18.1% as compared to the same
period in 1999 and net income increased 22.0% over the comparable 1999 period.
For the twelfth consecutive year, we increased our total number of store
units. We opened 646 new stores in 1999, compared with 551 in 1998 and 468 in
1997. In 1999, we remodeled or relocated 409 stores, compared with 351 in 1998
and 195 in 1997. During the last three years, we opened, remodeled or relocated
2,620 stores, accounting for approximately 60% of the total stores as of January
28, 2000. At April 28, 2000, we operated 4,510 stores as a result of opening 239
new stores, remodeling or relocating 87 stores and closing 23 stores in the
first quarter of 2000. In 2000, we anticipate opening an aggregate 675 to 700
new stores and relocating approximately 200 to 250 existing stores. We will
continue to focus on opening stores within 200 miles of our distribution
centers.
The new store additions and relocations in 1999 and through the first
quarter of 2000, net of 62 closed stores, added an aggregate of approximately
6.9 million selling square feet to our total sales space, providing us with an
aggregate of approximately 30.6 million selling square feet at April 28, 2000.
Our average store measured approximately 6,800 selling square feet at April 28,
2000, 6,700 selling square feet at fiscal year end 1999 and 6,400 selling square
feet at fiscal year end 1998 and 1997.
In 1998, we introduced a preferred development program to support continued
new store growth. This program enables us to partner with established
development firms to build stores in markets where existing, acceptable retail
space is unavailable. We opened 141 new stores through this program in 1999 and
50 new stores in 1998. In 2000, we plan to open approximately 200 preferred
development stores. In 1999, the average size of a new preferred development
store increased to approximately 7,700 selling square feet from 6,500 in 1998.
In the second quarter of 1999, we completed a 450,000 square foot expansion
of our Ardmore, Oklahoma distribution center. In the third quarter of 1999, we
opened our seventh distribution center, a 1.2 million square foot facility
located in Fulton, Missouri. This opening was achieved with minimal disruption
to the flow of merchandise to stores. We plan to open an eighth distribution
center in Alachua, Florida in the second half of 2000. Continuing to support our
rapidly growing store base and improving distribution efficiencies, we intend to
open our ninth distribution center in Zanesville, Ohio in the first half of
2001. On April 19, 2000, we announced the closing of our Homerville, Georgia
distribution center. This 500,000 square foot facility is being closed because
the physical constraints of the facility prevent it from adequately serving the
needs of the Dollar General stores it supplies.
During 1999, we developed a new distribution center merchandise
replenishment system, expanded electronic data interchange capabilities and
installed a new transportation management system to improve routing and loading
efficiencies. In 2000, we began the two-year implementation of a new store
technology
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<PAGE> 14
platform. In the first half of 2000, we installed faster, more reliable flatbed
scanners in all stores. In the second quarter of 2000, we have initiated a
register replacement program for existing stores. We plan to install new
registers in approximately 1,700 stores in 2000 and in all remaining stores in
2001. We also plan to establish a perpetual inventory system in approximately
75% of our stores by year-end. These upgrades will enable us to gather more
accurate sales and inventory information and to expand the utilization of
automatic inventory replenishment. In addition to replacing several
administrative legacy systems, we will also upgrade our financial and human
resources systems to improve processes and enhance reporting capabilities.
RESULTS OF OPERATIONS
The nature of our business is seasonal. Historically, our sales in the
fourth quarter have been higher than our sales in each of the first three
quarters of the fiscal year. Thus, our expenses, and to a greater extent our
operating income, vary by quarter. Results of a period shorter than a full year
may not be indicative of results expected for the entire year. Furthermore,
comparing any period to a period other than the same period of a previous year
may reflect the seasonal nature of our business.
Three Months Ended April 28, 2000 and April 30, 1999
Net Sales. Net sales for the first three months of 2000 increased $152.5
million, or 18.1%, to $997.1 million from $844.6 million for the comparable
period in 1999. The increase resulted from 658 net additional stores being in
operation as of April 28, 2000, as compared with April 30, 1999, and an increase
of 4.0% in same-store sales. The increase in same-store sales for the three
months ended April 28, 2000 was primarily driven by continued improvements in
our consumable basic merchandise mix. Same-store sales growth resulted in a 5.7%
increase for the same period last year, which was driven by improved in-stock
levels and improvements in our consumable basic merchandise mix. We define
same-stores as those stores which were opened before the beginning of the prior
fiscal year and which have remained open throughout both the prior and current
fiscal years.
During the second quarter of 2000, we are planning to convert all stores to
a new merchandise layout. Approximately 500 new items will be added to the new
store layout and approximately 700 items will be deleted. While we are excited
about the prospects of the new merchandising program, management anticipates
sales will be negatively impacted while the stores move fixtures and set the new
layout. For the second quarter of 2000, management anticipates net sales to
increase 12-14% and same-store sales to be approximately flat.
Gross Profit. Gross profit for the first three months of 2000 was $272.7
million, or 27.4% of net sales, compared with $225.9 million, or 26.8% of net
sales, in the same period last year. Higher markup, lower shrinkage accrual and
lower distribution and transportation expense are the primary reasons for this
increase. Management anticipates gross profit as a percentage of net sales to
increase slightly for the second quarter of 2000 primarily as a result of higher
initial markup on purchases.
Selling, General and Administrative Expense. Selling, general and
administrative ("SG&A") expense for the first three months of 2000 totaled
$201.9 million, or 20.3% of net sales, compared with $168.1 million, or 19.9% of
net sales, during the comparable period last year. Total SG&A expense increased
primarily as a result of 658 net additional stores being in operation as
compared to the comparable three-month period last year. Lower than expected
sales also negatively impacted SG&A expense as a percentage of net sales in the
first quarter of 2000. For the second quarter of 2000, management anticipates
SG&A as a percentage of net sales to increase compared to the second quarter of
1999 as a result of flat same-store sales.
Interest Expense. Interest expense increased to $1.3 million in the first
quarter of 2000, as compared to $0.9 million during the comparable period last
year. This increase is the result of higher short-term borrowings primarily due
to the repurchase of $65.5 million of common stock in the first quarter.
Management anticipates interest expense to be slightly higher as a percentage of
net sales for the second quarter of 2000 compared with the second quarter of
1999.
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<PAGE> 15
Provision for Taxes on Income. The effective income tax rate was 36.25%
for the three-month periods ended April 28, 2000 and April 30, 1999. Management
anticipates the rate to be approximately 36.25% for the second quarter of 2000.
Fiscal Years Ended January 28, 2000, January 29, 1999 and January 30, 1998
Net Sales. Net sales totaled $3.89 billion for 1999, $3.22 billion for
1998 and $2.63 billion for 1997. These totals represent annual increases of
20.7% in 1999, 22.6% in 1998 and 23.1% in 1997. These increases resulted from
607 net new stores and a same-store net sales increase of 6.4% in 1999, 518 net
new stores and a same-store net sales increase of 8.3% in 1998, and 435 net new
stores and a same-store net sales increase of 8.4% in 1997. The increase in
same-store sales for 1999 resulted from continued improvements in our consumable
basic merchandise mix and improved in-stock levels. The same-store sales
increase for 1998 was primarily driven by the addition of 700 faster-turning
consumable items to the merchandise mix and refurbishing more than 2,400 stores
to a new prototype reflecting a 65% hardlines/35% softlines space allocation
versus the previous 50%/50% allocation. In 2000, management anticipates total
sales will increase at least 20% and same-store sales will increase 5 to 7%.
Gross Profit. Gross profit for 1999 was $1.10 billion compared with $905.9
million in 1998 and $742.1 million in 1997. Gross profit as a percentage of net
sales was 28.2% for 1999 compared with 28.1% for 1998 and 28.3% for 1997. The
1999 result includes an increase in distribution expense as a percentage of net
sales, reflecting higher occupancy costs due to operating one additional
distribution center. This increase was partially offset by lower markdowns and
inventory shrinkage, both as a percentage of net sales. The 1998 result reflects
an increase in inventory shrinkage as a percentage of net sales offset slightly
by reduced distribution expense as a percentage of net sales and higher initial
mark-up. In 1999, inventory shrinkage was 2.2% of net sales compared with 2.5%
in 1998 and 2.2% in 1997. In 2000, management anticipates gross margin will
decrease slightly, reflecting higher distribution center expense associated with
operating an additional distribution center and lower initial markup on
purchases.
Selling, General and Administrative Expense. Total SG&A expense as a
percentage of net sales was 19.3% in 1999, compared with 19.1% in 1998 and 19.3%
in 1997. SG&A expense for 1999 was $748.5 million, compared with $616.6 million
in 1998 and $506.6 million in 1997. In 1999, the higher SG&A expense as a
percentage of net sales resulted primarily from higher store labor and rent
expense. In 1998, the lower SG&A as a percentage of net sales resulted primarily
from (a) lower advertising costs through the elimination of the December
direct-mail circular and (b) lower employee incentive compensation offset
slightly by an increase in workers' compensation expense. All other SG&A expense
categories as a percentage of net sales remained relatively flat. In 2000,
management anticipates leveraging SG&A expense as a percentage of net sales
resulting in a modest improvement in operating margin.
Interest Expense. In 1999, interest expense was $5.2 million compared with
$8.3 million in 1998 and $3.8 million in 1997. The decreased interest expense in
1999 resulted primarily from lower average short-term borrowings as a result of
cash received from sale/leasebacks. The increased interest expense in 1998
resulted primarily from increased short-term borrowings used to finance the
additional inventory required to supply two new distribution centers and 518 net
new stores and from the timing of our repurchase of common stock. Daily average
total debt outstanding equaled $132.9 million during 1999 compared with $153.2
million in 1998 and $74.8 million in 1997. Management expects that interest
expense as a percentage of net sales for 2000 will be higher, reflecting
increased costs associated with financing greater capital expenditures.
Provision for Taxes on Income. The effective income tax rates for 1999,
1998 and 1997 were 36.2%, 35.2% and 37.6%, respectively. The effective tax rate
decreased between 1997 and 1999 primarily as a result of effective tax planning
strategies. The 1998 effective tax rate also reflects a one-time tax benefit
resulting from the change of state of incorporation to Tennessee from Kentucky.
Management anticipates the effective tax rate for 2000 to be approximately
36.2%.
Net Income. For the fourth consecutive year, we increased net income by
more than 20%. In 1999, net income totaled $219.4 million (a 20.5% increase),
compared with $182.0 million (a 25.9% increase) in
14
<PAGE> 16
1998 and $144.6 million (a 25.6% increase) in 1997. In 2000, management
anticipates earnings to increase at least 20%.
Return on Equity and Assets. The ratio of net income to average
shareholders' equity was 26.6% in 1999, compared with 27.8% in 1998 and 27.0% in
1997. Return on average assets was 16.5% in 1999 compared with 17.1% in 1998 and
17.7% in 1997.
LIQUIDITY AND CAPITAL RESOURCES
Working Capital. Working capital was $584.0 million at April 28, 2000,
compared with $486.4 million at April 30, 1999. Working capital increased to
$623.2 million in 1999, compared with $423.8 million in 1998 and $359.0 million
in 1997. The ratio of current assets to current liabilities (current ratio) was
2.1 at April 28, 2000 and 2.3 at January 28, 2000, compared with 1.9 at April
30, 1999 and January 28, 2000 and 2.2 at January 30, 1998.
Cash Flows from Operating Activities. Net cash used by operating
activities totaled $105.0 million during the first three months of 2000,
compared to $126.4 million for the comparable period last year. The decrease in
use of cash was primarily the result of a smaller increase in inventories this
year as compared to last year. A decrease in existing store inventories and
lower distribution center inventories partially offset the increased inventory
required to support operating 658 additional stores and one additional
distribution center.
Net cash provided by operating activities was $140.4 million in 1999,
compared with $218.6 million in 1998 and $139.1 million in 1997. This decrease
in net cash was primarily driven by decreased accrued expenses as a result of
the advances received in 1998 from the sale/leasebacks of the South Boston,
Virginia distribution center expansion and the Ardmore, Oklahoma distribution
center. In 1998, the increased cash generated from net income before
depreciation and deferred taxes was offset partially by the increased inventory
levels required to stock the Indianola, Mississippi and Villa Rica, Georgia
distribution centers, the 518 net new stores and the new basic apparel program.
Cash Flows from Investing Activities. Net cash used by investing
activities totaled $45.4 million during the first three months of 2000, compared
to $9.0 million in the comparable period last year. The increase in cash used by
investing activities was primarily the result of proceeds received in 1999 from
the sale/leaseback of the South Boston, Virginia distribution center expansion.
Current period cash used resulted from $45.5 million in capital expenditures,
primarily in connection with opening 239 new stores during the first three
months of 2000.
Capital expenditures in 1999 totaled $152.7 million, compared with $140.3
million in 1998 and $107.7 million in 1997. We opened 646 new stores and
relocated or remodeled 409 stores at a cost of $74.4 million in 1999. Capital
expenditures for new, relocated and remodeled stores totaled $61.6 million and
$39.4 million during 1998 and 1997, respectively.
Distribution-related capital expenditures totaled $43.2 million in 1999,
resulting primarily from costs associated with the 450,000 square foot expansion
of the Ardmore, Oklahoma distribution center and the purchase of new delivery
trailers. In 1998, we spent $45.9 million, primarily on costs associated with
the 484,000 square foot expansion of the South Boston, Virginia distribution
center and the purchase of new delivery trailers. In 1997, we spent $26.2
million, primarily on costs associated with the expansion of the Scottsville,
Kentucky distribution center and the purchase of new delivery trailers.
During 1998, we entered into agreements to sell and leaseback the Ardmore,
Oklahoma distribution center (including the expansion) and the expansion of the
South Boston, Virginia distribution center. We received cash advances on these
sales which were included in accrued expenses as of January 29, 1999. During
1999, the construction of these expansions was completed and we recorded the
sales of these properties.
Capital expenditures during 2000 are projected to be approximately $270-280
million. This includes approximately $202 million for new stores, remodels and
relocations, including $122 million for the construction of company-owned
stores; approximately $18 million for upgrading existing stores to the new
15
<PAGE> 17
technology platform; and approximately $17 million for transportation equipment
and logistics technology. We anticipate funding 2000 capital expenditures with
cash flow from operations, borrowings under existing credit facilities and the
proceeds of this offering.
Cash Flows from Financing Activities. Total debt at April 28, 2000
(including current maturities and short-term borrowings) was $185.2 million,
compared with $114.9 million at April 30, 1999. Total debt at January 28, 2000
was $2.4 million, compared with $1.5 million in 1998 and $24.7 million in 1997.
Long-term debt at April 28, 2000 and January 28, 2000 was $2.2 million and $1.2
million, respectively, compared with $0.6 million, $0.8 million and $1.3
million, respectively, at April 30, 1999, January 29, 1999 and January 30, 1998.
The average daily short-term debt was $132.9 million in 1999, compared with
$153.2 million in 1998 and $74.8 million in 1997. We paid off all short-term
borrowings at fiscal year end 1999 with internally generated funds.
Because of the significant impact of seasonal buying, for example, spring
and December holiday purchases, our working capital requirements vary
significantly during the year. In 1999, these working capital requirements were
financed by short-term borrowings under our $175 million revolving credit
agreement (the "revolver") and seasonal bank lines of credit totaling $105
million at January 28, 2000. We had short-term borrowings of $181.4 million
outstanding as of April 28, 2000 and $113.6 million as of April 30, 1999. Our
maximum outstanding short-term indebtedness in 1999 was $218.8 million in
November 1999, compared with $312.6 million in October 1998. Seasonal bank lines
of credit are subject to renewal on various dates throughout 2000, and we
currently anticipate that these agreements will be renewed. Management believes
the existing revolver and seasonal bank lines will be sufficient to fund its
working capital requirements in 2000. Seasonal working capital expenditure
requirements will continue to be met through cash flow provided by operations
supplemented by the revolving credit/term loan facility and short-term bank
lines of credit.
In the first quarter of 2000, we repurchased approximately 3.6 million
shares of common stock for an aggregate purchase price of $65.5 million. In
1999, we repurchased approximately 2.8 million shares of common stock for an
aggregate purchase price of $50.7 million. Under the current authorization from
the Board of Directors, we can repurchase approximately 1.4 million additional
shares.
MARKET RISK
We are subject to market risk from exposure to changes in interest rates
based on our financing, investing and cash management activities. We utilize a
credit facility to fund seasonal working capital requirements which is comprised
of variable rate debt.
With certain instruments entered into for other than trading purposes, we
have exposure to market risk for changes in interest rates primarily related to
our revolving and seasonal lines of credit and certain lease obligations. Under
these obligations, we have cash flow exposure due to our variable interest
rates.
We seek to manage this interest rate risk through the use of interest rate
swaps. In 1999, we entered into interest rate swap agreements totaling $200
million which are scheduled to be in place through February 2001, at which time
the counterparties have the option to extend the agreements through 2002. These
swap agreements exchange our floating interest rate exposure to a fixed interest
rate. We will pay a weighted average fixed rate of 5.14% on the $200 million
notional amount. The fair value of the interest rate swap agreements was $2.9
million at April 28, 2000. These swap agreements replaced four interest rate
swap agreements totaling $200 million and exchanging floating rate exposure to a
fixed interest rate.
A 1% change in interest rates would have resulted in a pre-tax expense
fluctuation of approximately $3.6 million and $1.5 million in 1999 and 1998,
respectively. In 2000, we do not anticipate this expense fluctuation to vary
materially from the estimated impact on 1999.
EFFECTS OF INFLATION AND CHANGING PRICES
We believe that inflation and/or deflation had a minimal impact on our
overall operations during 1999, 1998 and 1997. In particular, the effect of
deflation on cost of goods sold has been minimal as reflected by the small
fluctuations in LIFO reserves in 1999, 1998 and 1997.
16
<PAGE> 18
ACCOUNTING PRONOUNCEMENTS
We will adopt Statement of Financial Accounting Standards (SFAS) No. 133,
"Accounting for Derivative Instruments and Hedging Activities," for the fiscal
year ending February 1, 2002. We are in the process of analyzing the impact of
the adoption of this Statement. We will adopt SEC Staff Accounting Bulletin No.
101, "Revenue Recognition in Financial Statements," during the quarter ended
February 2, 2001. We do not expect this Bulletin to have a material impact on
our financial statements.
YEAR 2000
To date, we have not experienced any major computer system problems or
interruptions of our business related to Year 2000 issues. Our Year 2000
remedial efforts cost approximately $510,000. This expense excludes the costs of
previously planned software implementations and the salaries of existing
employees involved in the Year 2000 remedial efforts. Costs were expensed when
incurred. Although we do not anticipate any material future problems related to
Year 2000 issues, there is no guarantee that such problems will not arise in the
future. We do, however, maintain a comprehensive business continuity plan that
addresses potential business interruptions such as the occurrence of
unidentified Year 2000 issues.
CAUTIONARY STATEMENT CONCERNING FORWARD-LOOKING STATEMENTS
We have incorporated by reference or made forward-looking statements in
this prospectus, and may make other written or oral statements with the approval
of an authorized executive officer of Dollar General, that are subject to risks
and uncertainties. Forward-looking statements include those statements preceded
by, followed by or that otherwise include the words or phrases: "believes,"
"expects," "anticipates," "projects," "intends," "should result," "estimates" or
other similar expressions. For those statements, we claim the protection of the
safe harbor for forward-looking statements contained in the Private Securities
Litigation Reform Act of 1995.
You should understand that the following important factors, in addition to
those discussed elsewhere in this prospectus and the documents which are
incorporated herein by reference, could affect the future results of Dollar
General and could cause those results to differ materially from those expressed
in our forward-looking statements:
- general transportation and distribution delays or interruptions;
- inventory risks due to shifts in market demand;
- changes in our product mix;
- interruptions in the business of our suppliers;
- fuel price and interest rate fluctuations;
- costs and delays associated with building, opening and operating new
distribution centers and stores;
- increased competition;
- ability to continue to purchase inventory on favorable terms and to
accomplish new merchandising initiatives; and
- conditions affecting the availability, acquisition and development of
real estate and our ability to obtain leases on favorable terms.
Caution should be taken not to place undue reliance on forward-looking
statements, since the statements speak only as of the date they are made. We
undertake no obligation to publicly update or revise any forward-looking
statement, whether as a result of future events, new information or otherwise.
Additional information concerning the risks and uncertainties listed above and
other factors you may wish to consider are set forth in our Annual Report on
Form 10-K for the year ended January 28, 2000 and other reports we file from
time to time with the SEC. See "Available Information."
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<PAGE> 19
THE EXCHANGE OFFER
PURPOSE AND EFFECT OF THE EXCHANGE OFFER
We sold the old Notes on June 21, 2000 to Credit Suisse First Boston
Corporation, Merrill Lynch, Pierce, Fenner & Smith Incorporated, Banc of America
Securities LLC and Wachovia Securities, Inc. pursuant to a purchase agreement.
These initial purchasers subsequently sold the old Notes to "qualified
institutional buyers," as defined in Rule 144A under the Securities Act, in
reliance on Rule 144A.
As a condition to the initial sale of the old Notes, Dollar General, its
subsidiaries that guaranteed the Notes and the initial purchasers entered into a
registration rights agreement. Pursuant to the registration rights agreement, we
agreed to:
- file an exchange offer registration statement with the SEC on or prior to
90 days after the original issue date of the old Notes,
- use our reasonable best efforts to have the exchange offer registration
statement declared effective by the SEC within 180 days after the
original issue date of the old Notes,
- unless the exchange offer would not be permitted by applicable law or SEC
policy, commence the exchange offer and use our reasonable best efforts
to issue on or prior to 40 days after the date on which the exchange
offer registration statement has been declared effective by the SEC,
exchange new Notes in exchange for all old Notes tendered prior thereto
in the exchange offer, and
- if obligated to file a shelf registration statement, use our reasonable
best efforts to file the shelf registration statement with the SEC as
promptly as practicable but in no event more than 90 days after such
filing obligation arises and to thereafter cause the shelf registration
statement to be declared effective by the SEC as promptly as practicable
thereafter.
The registration rights agreement provides that we will be required to pay
additional interest on the old Notes over and above the regular interest of the
old Notes:
- if on or prior to 90 days following the original issue date of the old
Notes or the date on which we become obligated to file a shelf
registration statement, neither the exchange offer registration statement
nor a shelf registration statement has been filed with the SEC;
- if on or prior to 180 days following the original issue date of the old
Notes or the date on which we become obligated to file a shelf
registration statement, neither the exchange offer registration statement
nor a shelf registration statement has been declared effective by the
SEC;
- if on or prior to 40 days after the date on which the exchange offer
registration statement has been declared effective, the exchange offer
has not been consummated; or
- if after either the exchange offer registration statement or the shelf
registration statement is declared effective, (a) such registration
statement thereafter ceases to be effective, or (b) such registration
statement or the related prospectus ceases to be unable (except as
permitted in the registration rights agreement) in connection with
exchanges of the Notes or resales of transfer restricted securities, as
applicable during the periods specified therein because either (x) any
event occurs as a result of which the related prospectus forming part of
such registration statement would include an untrue statement of a
material fact or omit to state a material fact necessary to make the
statements therein in the light of the circumstances under which they
were made not misleading, or (y) it shall be necessary to amend such
registration statement or supplement the related prospectus to comply
with the Securities Act or the Exchange Act or the respective rules
thereunder.
Once we complete this exchange offer, we will no longer be required to pay
additional interest on the old Notes.
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<PAGE> 20
We agreed to issue and exchange the new Notes for all old Notes validly
tendered and not validly withdrawn prior to the expiration of the exchange
offer. A copy of the registration rights agreement has been filed as an exhibit
to the registration statement which includes this prospectus. The filing of the
registration statement is intended to satisfy most of our obligations under the
registration rights agreement and the purchase agreement.
The term "holder" with respect to the exchange offer means any person in
whose name old Notes are registered on the trustee's books or any other person
who has obtained a properly completed bond power from the registered holder, or
any person whose old Notes are held of record by The Depository Trust Company
(the "Depositary" or "DTC") who desires to deliver the old Notes by book-entry
transfer at DTC.
TERMS OF THE EXCHANGE OFFER
Based on the terms and conditions in this prospectus and in the letter of
transmittal, we will issue $1,000 principal amount of new Notes in exchange for
each $1,000 principal amount of outstanding old Notes properly surrendered
pursuant to the exchange offer and not withdrawn prior to the expiration date.
Old Notes may be surrendered only in integral multiples of $1,000. The form and
terms of the new Notes are the same as the form and terms of the old Notes,
except that
- the new Notes will be registered under the Securities Act and, therefore,
the new Notes will not bear legends restricting the transfer of the new
Notes and
- holders of the new Notes will not be entitled to any of the registration
rights and additional interest of holders of old Notes under the
registration rights agreement, which will terminate upon the consummation
of the exchange offer.
The new Notes will evidence the same indebtedness as the old Notes, which
they replace, and will be issued under, and be entitled to the benefits of, the
same indenture that authorized the issuance of the old Notes. As a result, both
series of Notes will be treated as a single class of debt securities under the
indenture.
As of the date of this prospectus, $200 million in aggregate principal
amount of the old Notes is outstanding. Solely for reasons of administration, we
have fixed the close of business on August 4, 2000 as the record date for the
exchange offer for purposes of determining the persons to whom this prospectus
and the letter of transmittal will be mailed initially. There will be no fixed
record date for determining holders of the old Notes entitled to participate in
this exchange offer.
In connection with the exchange offer, the indenture governing the Notes
does not give you any appraisal or dissenters' rights. We intend to conduct the
exchange offer in accordance with the provisions of the registration rights
agreement and the applicable requirements of the Securities Exchange Act of
1934, as amended (the "Exchange Act") and the related SEC rules and regulations.
For all relevant purposes we will be regarded as having accepted properly
surrendered old Notes if and when we give oral or written notice of our
acceptance to the exchange agent. The exchange agent will act as agent for the
surrendering holders of old Notes for the purposes of receiving the new Notes
from us.
If you surrender old Notes in the exchange offer, you will not be required
to pay brokerage commissions or fees. In addition, subject to the instructions
in the letter of transmittal, you will not have to pay transfer taxes for the
exchange of old Notes. We will pay all charges and expenses, other than certain
applicable taxes described under "--Fees and Expenses."
EXPIRATION DATE; EXTENSIONS; AMENDMENTS
We will keep the exchange offer open for not less than 30 days, or longer
if required by applicable law, after the date that we first mail notice of the
exchange offer to the holders of the old Notes. The "expiration date" is 5:00
p.m., New York City time on September 11, 2000 unless we extend the exchange
offer, in which case the expiration date is the latest date and time to which we
extend the exchange offer.
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In order to extend the exchange offer, we will
- notify the exchange agent of any extension by oral or written notice and
- issue a press release or other public announcement which would include
disclosure of the approximate number of old Notes deposited and which
would be issued prior to 9:00 a.m., New York City time, on the next
business day after the previously scheduled expiration date.
We reserve the right
- to delay accepting any old Notes,
- to extend the exchange offer,
- to terminate or amend the exchange offer, and not accept for exchange any
old Notes not previously accepted for exchange, upon the occurrence of
any of the events set forth in "-- Conditions of the Exchange Offer" by
giving oral or written notice to the exchange agent or
- to waive any conditions or otherwise amend the exchange offer in any
respect, by giving oral or written notice to the exchange agent.
Any delay in acceptance, extension, termination or amendment will be
followed as soon as practicable by a press release or other public announcement
or post-effective amendment.
If the exchange offer is amended in a manner determined by us to constitute
a material change, we will promptly disclose that amendment by means of a
prospectus supplement or post-effective amendment that will be distributed to
the holders. We will also extend the exchange offer for a period of five to ten
business days, depending upon the significance of the amendment and the manner
of disclosure to the holders, if the exchange offer would otherwise expire
during the five to ten business day period.
We will have no obligation to publish, advertise or otherwise communicate
any public announcement of any delay, extension, amendment or termination that
we may choose to make, other than by making a timely release to an appropriate
news agency.
INTEREST ON THE NEW NOTES
The new Notes will accrue cash interest on the same terms as the old Notes
at the rate of 8 5/8% per year from June 21, 2000, payable semi-annually in
arrears on June 15 and December 15 of each year, commencing December 15, 2000.
Old Notes accepted for exchange will not receive accrued interest thereon at the
time of exchange. However, each new Note will bear interest from the most recent
date to which interest has been paid on the old Notes, or if no interest has
been paid on the old Notes or the new Notes, from June 21, 2000.
RESALE OF THE NEW NOTES
We believe that you will be allowed to resell the new Notes to the public
without registration under the Securities Act, and without delivering a
prospectus that satisfies the requirements of Section 10 of the Securities Act,
if you can make the representations set forth above under "Summary -- Summary of
the Terms of the Exchange Offer -- Procedures for Participating in the Exchange
Offer" on page 4. However, if you intend to participate in a distribution of the
new Notes, you must comply with the registration requirements of the Securities
Act and deliver a prospectus, unless an exemption from registration is otherwise
available. In addition, you will be subject to additional restrictions if you
are an "affiliate" of Dollar General as defined under Rule 405 of the Securities
Act. You will be required to represent to Dollar General in the letter of
transmittal accompanying this prospectus that you meet these conditions
exempting you from the registration requirements.
Our belief is based on interpretations of the SEC for other exchange offers
that the SEC expressed in some of its no-action letters to other issuers in
exchange offers like ours. However, we have not asked the
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<PAGE> 22
SEC to consider this particular exchange offer in the context of a no-action
letter. Therefore, you cannot be certain that the SEC will treat it in the same
way it has treated other exchange offers in the past.
A broker-dealer that has bought old Notes for market-making or other
trading activities must deliver a prospectus in order to resell any new Notes it
has received for its own account in the exchange. This prospectus may be used by
a broker-dealer to resell any of its new Notes. We have agreed in the
registration rights agreement to send this prospectus to any broker-dealer that
requests copies in the letter of transmittal for a period of up to 180 days
after the registration statement relating to this exchange offer is declared
effective. See "Plan of Distribution" for more information regarding
broker-dealers.
PROCEDURES FOR TENDERING
General Procedures
If you wish to surrender old Notes, you must
- complete, sign and date the letter of transmittal, or a facsimile
thereof,
- have the signatures guaranteed if required by the letter of transmittal
and
- mail or deliver the letter of transmittal or the facsimile to the
exchange agent at the address appearing below under "-- Exchange Agent"
for receipt prior to the expiration date.
In addition, either
- certificates for your old Notes must be received by the exchange agent
along with the letter of transmittal,
- a timely confirmation of a book-entry transfer of the old Notes into the
exchange agent's account at DTC, pursuant to the procedure for book-entry
transfer described below, must be received by the exchange agent prior to
the expiration date or
- you must comply with the procedures described below under "-- Guaranteed
Delivery Procedures."
THE METHOD OF DELIVERY TO THE EXCHANGE AGENT OF OLD NOTES, THE LETTER OF
TRANSMITTAL AND ALL OTHER REQUIRED DOCUMENTS IS AT YOUR ELECTION AND RISK.
INSTEAD OF DELIVERY BY MAIL, IT IS RECOMMENDED THAT YOU USE AN OVERNIGHT OR HAND
DELIVERY SERVICE, PROPERLY INSURED. IN ALL CASES, YOU SHOULD ALLOW SUFFICIENT
TIME TO ASSURE DELIVERY TO THE EXCHANGE AGENT BEFORE THE EXPIRATION DATE. DO NOT
SEND THE LETTER OF TRANSMITTAL OR ANY OLD NOTES TO US. YOU MAY REQUEST THAT YOUR
BROKER, DEALER, COMMERCIAL BANK, TRUST COMPANY OR NOMINEE PERFORM THESE
TRANSACTIONS FOR YOU.
If you do not withdraw your surrender of old Notes prior to the expiration
date, you will be regarded as agreeing to surrender the old Notes in accordance
with the terms and conditions in this offer.
If you are a beneficial owner of the old Notes and your old Notes are held
through a broker, dealer, commercial bank, trust company or other nominee and
you want to surrender your old Notes, you should contact your intermediary
promptly and instruct it to surrender the old Notes on your behalf.
Signatures and guarantee of signatures
Signatures on a letter of transmittal or a notice of withdrawal described
below under "-- Withdrawal of Tenders," as the case may be, generally must be
guaranteed by an eligible institution. You can submit a letter of transmittal
without guarantee if you surrender your old Notes (1) as a registered holder and
you have not completed the box titled "Special Delivery Instruction" on the
letter of transmittal or (2) for the account of an eligible institution. In the
event that signatures on a letter of transmittal or a notice of withdrawal are
required to be guaranteed, the guarantee must be made by
- a member firm of a registered national securities exchange or of the
National Association of Securities Dealers,
- a commercial bank or trust company having an office or correspondent in
the United States or
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- an "eligible guarantor institution" within the meaning of Rule 17Ad-15
under the Exchange Act which is a member of one of the recognized
signature guarantee programs identified in the letter of transmittal.
If you sign the letter of transmittal even though you are not the
registered holder of any old Notes listed in the letter of transmittal, your old
Notes must be endorsed or accompanied by a properly completed bond power, signed
by the registered holder exactly as the registered holder's name appears on the
old Notes.
In connection with any surrender of old Notes in definitive certificated
form, if you sign the letter of transmittal or any old Notes or bond powers in
your capacity as trustee, executor, administrator, guardian, attorney-in-fact,
officer of a corporation or if you are otherwise acting in a fiduciary or
representative capacity, you should indicate this when signing. Unless waived by
us, you must submit with the letter of transmittal evidence satisfactory to us
of your authority to act in the particular capacity.
The exchange agent and DTC have confirmed that any financial institution
that is a participant in DTC's system may utilize DTC's automated tender offer
program to surrender old Notes.
Acceptance of tenders
All questions as to the validity, form, eligibility (including time of
receipt), acceptance and withdrawal of surrendered old Notes will be determined
by us in our sole discretion, which will be final and binding.
We reserve the absolute right to reject any and all old Notes not properly
surrendered, nor will we accept any old Notes if our acceptance of them would,
in the opinion of our counsel, be unlawful. We also reserve the right to waive
any defects, irregularities or conditions of surrender as to particular old
Notes.
Unless waived, you must cure any defects or irregularities in connection
with surrenders of old Notes within the time period we determine. Although we
intend to notify holders of defects or irregularities in connection with
surrenders of old Notes, neither we, the exchange agent nor anyone else will be
liable for failure to give this notice. Surrenders of old Notes will not be
deemed to have been made until any defects or irregularities have been cured or
waived.
We do not currently intend to acquire any old Notes that are not
surrendered in the exchange offer or to file a registration statement to permit
resales of any old Notes that are not surrendered pursuant to the exchange
offer. We reserve the right in our sole discretion to purchase or make offers
for any old Notes that remain outstanding after the expiration date. To the
extent permitted by law, we also reserve the right to purchase old Notes in the
open market, in privately negotiated transactions or otherwise. The terms of any
future purchases or offers could differ from the terms of the exchange offer.
Effect of surrendering old Notes
By surrendering old Notes pursuant to the exchange offer, you will be
telling us that, among other things,
- you have full power and authority to surrender, sell, assign and transfer
the old Notes surrendered,
- we will acquire good title to the old Notes being surrendered, free and
clear of all security interests, liens, restrictions, charges,
encumbrances, conditional sale agreements or other obligations relating
to their sale or transfer, and not subject to any adverse claim when the
old Notes are accepted by us,
- you are acquiring the new Notes in the ordinary course of your business,
- you have no arrangement or understanding with any person to participate
in the distribution of the new Notes,
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<PAGE> 24
- you are not an "affiliate," as defined in Rule 405 under the Securities
Act, of Dollar General or, if you are an affiliate, you will comply with
the registration and prospectus delivery requirements of the Securities
Act to the extent applicable,
- you acknowledge and agree that if you are not a broker-dealer, you are
not engaged in, and you do not intend to be engaged in, the distribution
of new Notes,
- you acknowledge and agree that if you are a broker-dealer registered
under the Exchange Act or you are participating in the exchange offer for
the purpose of distributing the new Notes, you must comply with the
registration and prospectus delivery requirements of the Securities Act
in connection with a secondary resale of the new Notes, and you
understand that you cannot rely on the position of the SEC's staff in
their no-action letters, and
- you understand that a secondary resale transaction described above and
any resales of new Notes obtained by you in exchange for old Notes
acquired by you directly from us should be covered by an effective
registration statement containing the selling security holder information
required by Item 507 or Item 508 of Regulation S-K of the SEC.
If you are a broker-dealer and you will receive new Notes for your own
account in exchange for old Notes that were acquired as a result of
market-making activities or other trading activities, you must acknowledge in
the letter of transmittal that you will deliver a prospectus in connection with
any resale of your new Notes. See "Plan of Distribution."
RETURN OF OLD NOTES
If any surrendered old Notes are not accepted for any reason described in
this prospectus or if old Notes are withdrawn or are submitted for a greater
principal amount than you desire to exchange, those old Notes will be returned
without expense to (1) the person who surrendered them or (2) in the case of old
Notes surrendered by book-entry transfer, into the exchange agent's account at
DTC. The old Notes will be credited to an account maintained with DTC as
promptly as practicable.
BOOK-ENTRY TRANSFER
The exchange agent will make a request to establish an account with respect
to the old Notes at DTC for purposes of the exchange offer within two business
days after the date of this prospectus. Any financial institution that is a
participant in DTC's systems may make book-entry delivery of old Notes by
causing DTC to transfer the old Notes into the exchange agent's account at DTC
in accordance with DTC's procedures for transfer. However, although delivery of
old Notes may be effected through book-entry transfer at DTC, you have to
transmit the letter of transmittal with any required signature guarantees and
any other required documents to the exchange agent at the address appearing
below under "-- Exchange Agent" for its receipt on or prior to the expiration
date or pursuant to the guaranteed delivery procedures described below.
GUARANTEED DELIVERY PROCEDURES
If you wish to surrender your old Notes and (1) your old Notes are not
readily available so you can meet the expiration date deadline or (2) you cannot
deliver your old Notes, the letter of transmittal or any other required
documents to the exchange agent prior to the expiration date, you may still
participate in the exchange offer if
- the surrender is made through an eligible institution,
- prior to the expiration date, the exchange agent receives from the
eligible institution a properly completed and duly executed notice of
guaranteed delivery substantially in the form provided by us, by
facsimile transmission, mail or hand delivery, containing the name and
address of the holder, the certificate number(s) of the old Notes, if
applicable, and the principal amount of old Notes surrendered. The notice
of guaranteed delivery must also state that the surrender is being made
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thereby and guarantee that, within five New York Stock Exchange trading
days after the expiration date, the letter of transmittal, together with
the certificate(s) representing the old Notes in proper form for transfer
or a book-entry confirmation, and any other required documents, will be
deposited by the eligible institution with the exchange agent and
- the properly executed letter of transmittal, as well as the
certificate(s) representing all surrendered old Notes in proper form for
transfer or a book-entry confirmation, and all other documents required
by the letter of transmittal are received by the exchange agent within
five New York Stock Exchange trading days after the expiration date.
The exchange agent will send you a notice of guaranteed delivery upon your
request if you wish to surrender your old Notes according to the guaranteed
delivery procedures set forth above.
WITHDRAWAL OF TENDERS
Except as otherwise provided in this prospectus, you may withdraw your
surrender of old Notes at any time prior to the expiration date.
To withdraw a surrender of old Notes in the exchange offer, the exchange
agent must receive a written or facsimile transmission notice of withdrawal at
its address set forth herein prior to the expiration date. Any notice of
withdrawal must
- specify the name of the person having deposited the old Notes to be
withdrawn,
- identify the old Notes to be withdrawn, including the certificate number
or numbers, if applicable, and principal amount of the old Notes and
- be signed by the holder in the same manner as the original signature on
the letter of transmittal by which the old Notes were tendered.
All questions as to the validity, form, eligibility and time of receipt of
notices will be determined by us, in our sole discretion, and our determination
shall be final and binding on all parties. Any old Notes so withdrawn will be
deemed not to have been validly surrendered for purposes of the exchange offer,
and no new Notes will be issued unless the old Notes so withdrawn are validly
retendered. Properly withdrawn old Notes may be resurrendered by following one
of the procedures described above under "-- Procedures for Tendering" at any
time prior to the expiration date.
CONDITIONS OF THE EXCHANGE OFFER
Notwithstanding any other term of the exchange offer, or any extension of
the exchange offer, we do not have to accept for exchange, or exchange new Notes
for, any old Notes, and we may terminate the exchange offer before acceptance of
the old Notes, if
- any statute, rule or regulation has been enacted, or any action has been
taken by any court or governmental authority that, in our reasonable
judgement, seeks to or would prohibit, restrict or otherwise render
consummation of the exchange offer illegal, or
- any change, or any development that would cause a change, in our business
or financial affairs has occurred that, in our sole judgment, might
materially impair our ability to proceed with the exchange offer or a
change that would materially impair the contemplated benefits to us of
the exchange offer or
- a change occurs in the current interpretations by the staff of the SEC
that, in our reasonable judgment, might materially impair our ability to
proceed with the exchange offer.
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If we, in our sole discretion, determine that any of the above conditions
is not satisfied, we may
- refuse to accept any old Notes and return all surrendered old Notes to
the surrendering holders,
- extend the exchange offer and retain all old Notes surrendered prior to
the expiration date, subject to the holders' right to withdraw the
surrender of the old Notes or
- waive any unsatisfied conditions regarding the exchange offer and accept
all properly surrendered old Notes that have not been withdrawn. If this
waiver constitutes a material change to the exchange offer, we will
promptly disclose the waiver by means of a prospectus supplement or post-
effective amendment that will be distributed to the holders. We will also
extend the exchange offer for a period of five to ten business days,
depending upon the significance of the waiver and the manner of
disclosure to the holders, if the exchange offer would otherwise expire
during the five to ten business day period.
EXCHANGE AGENT
First Union National Bank is the exchange agent for the exchange offer. You
should direct any questions and requests for assistance, requests for additional
copies of this prospectus or of the letter of transmittal and requests for
notice of guaranteed delivery to the exchange agent, addressed as follows:
BY REGISTERED OR CERTIFIED MAIL:
<TABLE>
<S> <C> <C>
First Union National Bank First Union National Bank
150 Fourth Avenue North 40 Broad Street
2(nd) Floor or Suite 550
Nashville, TN 37219 New York, NY 10004
Attention: Susan K. Baker Attention: Susan K. Baker
</TABLE>
TO CONFIRM BY TELEPHONE:
(615) 251-9286
FACSIMILE TRANSMISSIONS (ELIGIBLE INSTITUTIONS ONLY):
(615) 251-9364
BY HAND OR OVERNIGHT DELIVERY:
<TABLE>
<S> <C> <C>
First Union National Bank First Union National Bank
150 Fourth Avenue North 40 Broad Street
2(nd) Floor or Suite 550
Nashville, TN 37219 New York, NY 10004
Attention: Susan K. Baker Attention: Susan K. Baker
</TABLE>
First Union National Bank also serves as trustee under the indenture.
FEES AND EXPENSES
We will pay for the expenses of the exchange offer. The principal
solicitation is being made by mail. However, additional solicitations may be
made by telegraph, facsimile transmission, e-mail, telephone or in person by our
officers and regular employees.
We have not retained a dealer-manager for the exchange offer, and will not
make any payments to brokers, dealers or others soliciting acceptances of the
exchange offer. We will, however, pay the exchange agent reasonable and
customary fees and out-of-pocket expenses.
We will pay any transfer taxes applicable to the exchange of old Notes. If,
however, a transfer tax is imposed for any reason other than the exchange, then
the amount of any transfer taxes will be payable by the person surrendering the
old Notes. If you do not submit satisfactory evidence of payment of taxes or of
an exemption with the letter of transmittal, the amount of those transfer taxes
will be billed directly to you.
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<PAGE> 27
CONSEQUENCE OF FAILURE TO EXCHANGE
Participation in the exchange offer is voluntary. You are urged to consult
your financial and tax advisors in making your decisions on what action to take.
Old Notes that are not exchanged will remain "restricted securities" within
the meaning of Rule 144(a)(3)(iv) of the Securities Act. Accordingly, they may
not be offered, sold, pledged or otherwise transferred except
- to Dollar General,
- in the United States to a person whom the seller reasonably believes is a
qualified institutional buyer (as defined in Rule 144A under the
Securities Act) in a transaction meeting the requirements of Rule 144A,
- outside the United States in an offshore transaction complying with Rule
904 under the Securities Act,
- pursuant to an exemption from registration under the Securities Act
provided by Rule 144 thereunder (if available) or
- pursuant to an effective registration statement under the Securities Act,
in each case in accordance with any applicable securities laws of any State of
the United States.
ACCOUNTING TREATMENT
For accounting purposes, we will recognize no gain or loss as a result of
the exchange offer. The expenses of the exchange offer will be amortized over
the remaining term of the Notes.
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DESCRIPTION OF NOTES
The old Notes were, and the new Notes will be, issued under an indenture
dated as of June 21, 2000 among Dollar General, as issuer, its Restricted
Subsidiaries, as guarantors, and First Union National Bank, as trustee. The
following summary highlights material terms of the indenture. Because this is a
summary, it does not contain all of the information that is included in the
indenture. You should read the entire indenture, including the definitions of
the terms used below. We define some of the capitalized terms used below in the
section called "Defined Terms." The indenture is subject to and governed by the
Trust Indenture Act of 1939. Copies of the indenture will be available at the
corporate trust offices of the trustee.
GENERAL
The Notes:
- are senior unsecured obligations of Dollar General;
- mature on June 15, 2010;
- bear interest at the rate of 8 5/8% per year from June 21, 2000, or from
the most recent interest payment date to which interest has been paid or
provided for, commencing on December 15, 2000;
- are not redeemable prior to maturity at our option;
- may be repaid on June 15, 2005 at the option of the holders at 100% of
the principal amount, plus accrued and unpaid interest; and
- will not be listed on a national securities exchange.
Because neither the Notes nor the guarantees are secured, your claim
against the assets of our company and our Subsidiaries will be junior to the
extent we have granted liens on our assets or our Subsidiaries' assets to the
holders of other indebtedness. At June 30, 2000, we had $7.7 million of Secured
Debt and our Subsidiaries had no Secured Debt, in each case including
capitalized leases.
The Notes and the indenture are guaranteed by each of our Restricted
Subsidiaries. Our future Restricted Subsidiaries, if any, will be required to
guarantee the Notes and the indenture under the circumstances described below in
the section called "Restrictive Covenants -- Detailed explanation of additional
Subsidiary guarantees." Our Unrestricted Subsidiaries (as defined herein) will
not be required to provide guarantees of the Notes. Your claim against the
assets of any Unrestricted Subsidiary will be effectively junior to the claims
of that Subsidiary's own creditors, whether or not those creditors' claims are
secured by liens on the assets of that Subsidiary.
The guarantees:
- are senior unsecured obligations of each of our Restricted Subsidiaries;
- rank equally in right of payment with all other unsecured and
unsubordinated debt of each of our Restricted Subsidiaries;
- rank senior in right of payment to all subordinated debt of each of our
Restricted Subsidiaries;
- are effectively junior to the secured obligations of each of our
Restricted Subsidiaries, to the extent of the collateral securing those
obligations; and
- will be automatically released upon the occurrence of specified events,
as discussed below in the section called "Subsidiary Guarantees."
The Notes were initially offered in the principal amount of $200,000,000.
We may, without the consent of the holders, increase such principal amount in
the future on the same terms and conditions and with the same CUSIP number(s) as
the Notes being offered hereby. The Notes and any additional notes would be
treated as a single class for all purposes under the indenture and will vote
together as one class on all matters with respect to the Notes.
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<PAGE> 29
The old Notes were issued in book-entry form in minimum denominations of
$1,000 and integral multiples thereof.
PAYMENT OF PRINCIPAL AND INTEREST
We will pay interest on June 15 and December 15 every year, beginning on
December 15, 2000, to the person in whose name each Note, or any predecessor
Note, is registered at the close of business on the June 1 or December 1
preceding the relevant interest payment date.
Interest on the Notes will be computed on the basis of a 360-day year
consisting of twelve 30-day months.
We will pay principal and interest on the Notes at the offices we maintain
in New York City and Nashville, Tennessee for those purposes, which are
currently the corporate trust offices of the trustee. The corporate trust
offices of the trustee are located at 40 Broad Street, New York, New York and
150 4th Avenue North, Nashville, Tennessee. You may exchange your Notes or
register any transfer of Notes at either office as well.
OPTIONAL REPAYMENT
The Notes may be repaid on June 15, 2005, at the option of the registered
holders of the Notes, at 100% of their principal amount, plus accrued and unpaid
interest to June 15, 2005. In order for a holder to exercise this option, we
must receive at the offices we maintain in New York City or Nashville, Tennessee
for those purposes, which are currently the corporate trust offices of the
trustee, during the period beginning on April 15, 2005 and ending at 5:00 p.m.,
New York City time, on May 15, 2005 (or, if May 15, 2005 is not a business day,
the next succeeding business day), the Note being repaid with the form on the
reverse side of the Note duly completed. Any notice we receive during the period
beginning on April 15, 2005 and ending at 5:00 p.m., New York City time, on May
15, 2005, or the next succeeding business day, if applicable, will be
irrevocable. You may exercise this repayment option for less than the entire
principal amount of the Notes you hold, so long as the principal amount to be
repaid is equal to $1,000 or an integral multiple of $1,000. We will determine
all questions as to the validity, form and eligibility, including time of
receipt, and acceptance of any Note for repayment. Our determination will be
final and binding.
Our failure to repay the Notes when required as described in the preceding
paragraph will result in an event of default under the indenture.
The Notes are not redeemable prior to maturity at our option. However, we
may at any time and from time to time purchase Notes in the open market or
otherwise.
As long as the Notes are represented by a global note, the nominee of the
Depositary (as defined herein) will be the registered holder of the Notes and
therefore will be the only entity that can exercise a right of repayment. See
"Book-Entry; Delivery and Form."
SUBSIDIARY GUARANTEES
Each of our current and future Restricted Subsidiaries will jointly and
severally guarantee our obligations under the Notes and the indenture, subject
to release as described in the following paragraph. Each guarantee will rank
equally in right of payment with all other unsecured and unsubordinated debt of
that Restricted Subsidiary, including obligations under our Existing Credit
Facility. Each guarantee will also be senior in right of payment to any future
subordinated Indebtedness of that Restricted Subsidiary. The obligations of each
Restricted Subsidiary under its guarantee will be limited as necessary to
prevent that guarantee from constituting a fraudulent conveyance under
applicable law.
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<PAGE> 30
The guarantee of a Restricted Subsidiary of the Notes and the indenture
will be released automatically upon:
- the release of all payment obligations of that Restricted Subsidiary
relating to any existing or future Indebtedness under one or more Credit
Facilities of Dollar General, that Subsidiary or any of our other
Restricted Subsidiaries; provided, that in the event that any
Indebtedness under one or more Credit Facilities is subsequently incurred
or guaranteed by that released Restricted Subsidiary, we will cause that
Subsidiary to unconditionally guarantee all of our obligations under the
Notes and the indenture on the terms set forth in the indenture and
execute and deliver further documents as described below in the section
called "Restrictive Covenants -- Detailed explanation of additional
Subsidiary guarantees;" or
- the sale or disposition, whether by consolidation, merger, stock
purchase, asset sale or otherwise, of that Restricted Subsidiary, or
substantially all of its assets, to a person other than Dollar General or
a Subsidiary; provided that Dollar General shall have delivered to the
trustee an officers' certificate to the effect that immediately after,
and taking into account, that sale or disposition, no default or event of
default shall have occurred and be continuing under the indenture; and
provided further that a termination will occur only to the extent that
all obligations of that Restricted Subsidiary in respect of any
Indebtedness under all Credit Facilities of Dollar General or any of our
Restricted Subsidiaries, and under all of its pledges of assets or other
security interests which secure Indebtedness under all Credit Facilities
of Dollar General and any of our Restricted Subsidiaries, shall also
terminate upon such sale or disposition; or
- upon legal or covenant defeasance of our obligations under the indenture;
or
- if we properly designate that Restricted Subsidiary as an Unrestricted
Subsidiary.
RESTRICTIVE COVENANTS
Summary of the principal restrictive covenants
The indenture governing the Notes limits the ability of Dollar General and
our Restricted Subsidiaries to
- secure any Indebtedness with security interests on our Principal Property
or Properties, inventory, or shares of capital stock or Indebtedness of
our Restricted Subsidiaries unless the Notes are equally and ratably
secured; or
- engage in Sale and Leaseback Transactions with respect to our Principal
Property or Properties.
In addition, under specified circumstances, our Subsidiaries may be
required to give guarantees of the Notes and the indenture. You should read the
following sections called "Detailed explanation of restrictions on Secured
Debt," "Detailed explanation of limitation on Sale and Leaseback Transactions"
and "Detailed explanation of additional Subsidiary guarantees" for a more
detailed explanation of these covenants and the exceptions to them.
All of our Subsidiaries existing on the issue date of the new Notes will be
Restricted Subsidiaries. Except as set forth in the following sentence, all of
our future Subsidiaries will be Restricted Subsidiaries for purposes of the
indenture. However, our board of directors may designate any of our Subsidiaries
as an "Unrestricted Subsidiary" and therefore not subject to the covenants of
the indenture. However, our board may not
(1) designate, or continue the designation, as an Unrestricted
Subsidiary any Subsidiary that owns any Principal Property or any
Subsidiary that owns any shares of capital stock of a Restricted
Subsidiary;
(2) designate, or continue the designation, as an Unrestricted
Subsidiary any Subsidiary that owns more than 5.0% of our Consolidated Net
Tangible Assets;
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(3) cause or permit any Restricted Subsidiary to transfer or otherwise
dispose of any Principal Property or any shares of capital stock of a
Restricted Subsidiary to any Unrestricted Subsidiary, unless
(a) that Unrestricted Subsidiary will be redesignated as a
Restricted Subsidiary, and
(b) any Lien securing any Indebtedness of that Unrestricted
Subsidiary does not extend to any Principal Property or any shares of
capital stock of a Restricted Subsidiary, except if the existence of the
Indebtedness secured by that Lien would otherwise be permitted under the
indenture; or
(4) designate, or continue the designation, as an Unrestricted
Subsidiary, any Subsidiary that is or becomes obligated with respect to any
Indebtedness of Dollar General or any of our Restricted Subsidiaries
through the incurrence of a Contingent Obligation or otherwise or pledges
assets or provides other security interests to secure the payment or
performance of any Indebtedness of Dollar General or any of our Restricted
Subsidiaries.
Dollar General may also designate an Unrestricted Subsidiary to be a
Restricted Subsidiary in accordance with the provisions of the indenture if
this designation would not cause a breach of the covenant(s) described
under "Detailed explanation of the restrictions on Secured Debt" and
"Detailed explanation of limitation on Sale and Leaseback Transactions."
There are many transactions not restricted by the indenture.
The indenture does not contain any provisions that would:
- limit our ability to incur unsecured Indebtedness,
- require the maintenance of financial ratios or specified levels of net
worth or liquidity,
- afford holders of the Notes protection in the event of a highly leveraged
transaction, change in credit rating or other similar occurrence
involving us,
- require us to repurchase or redeem or otherwise modify the terms of any
of the Notes upon a change in control or other event involving us which
may adversely affect the creditworthiness of the Notes, or
- limit our ability to pay dividends to our shareholders.
Detailed explanation of the restrictions on Secured Debt
We will not, and we will not permit any of our Restricted Subsidiaries to,
incur, issue, assume, guarantee or create any Secured Debt, unless we provide
that the Notes, together with, if we so choose, any other Indebtedness of Dollar
General or the applicable Restricted Subsidiary which is not subordinated to the
Notes, whether then existing or thereafter created, will be secured equally and
ratably with, or prior to, that Secured Debt,
unless, taking account of the proposed Secured Debt, the sum of
- the aggregate amount of all outstanding Secured Debt of Dollar General
and our Restricted Subsidiaries plus
- all Attributable Debt relating to any Principal Property, with the
exception of Attributable Debt which is excluded as provided by clauses
(1) to (8) described under "Detailed explanation of limitations on Sale
and Leaseback Transactions" below,
would not exceed 15% of Consolidated Net Tangible Assets.
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This restriction will not apply to, and there will be excluded from Secured
Debt in any computation under this restriction and under "Detailed explanation
of limitation on Sale and Leaseback Transactions" below, Indebtedness secured
by:
(1) Liens on property, shares of capital stock or Indebtedness of any
person existing at the time that person becomes a Subsidiary;
(2) Liens on property, shares of capital stock or Indebtedness if
those Liens existed at the time of acquisition, including, without
limitation, by way of merger or consolidation, of that property, shares of
capital stock or Indebtedness;
(3) Liens on property, shares of capital stock or Indebtedness
acquired or constructed by Dollar General or any Restricted Subsidiary and
created
(a) prior to, at the time of, or within 360 days after,
- that acquisition, including, without limitation, acquisition
through merger or consolidation or
- the completion of construction or commencement of commercial
operation of that property, whichever is later; or
(b) thereafter, if the Lien is provided for by a binding commitment
entered into prior to, at the time of or within 360 days after the
acquisition, completion of construction or commencement of commercial
operation referred to in clause (a),
to secure or provide for the payment of all or any part of the purchase
price or the construction price of that property, capital stock or
Indebtedness;
(4) Liens in favor of Dollar General or any Restricted Subsidiary;
(5) Liens in favor of the United States of America, any State or the
District of Columbia or any foreign government, or any agency, department
or other instrumentality of the United States of America, any State or the
District of Columbia, to secure partial, progress, advance or other
payments as provided by any contract or provisions of any statute;
(6) Liens incurred or assumed in connection with the issuance of
industrial revenue or pollution control bonds;
(7) Liens securing the performance of any contract or undertaking not
directly or indirectly in connection with the borrowing of money, the
obtaining of advances or credit or the securing of Indebtedness, if made
and continuing in the ordinary course of business and, in each case, which
are not incurred in connection with the borrowing of money, the obtaining
of advances or credit or the payment of the deferred purchase price of
property;
(8) Liens in favor of a governmental agency to qualify Dollar General
or any Restricted Subsidiary to do business, maintain self insurance or
obtain other benefits, or Liens under workers' compensation laws,
unemployment insurance laws or similar legislation;
(9) good faith deposits in connection with bids, tenders, contracts or
deposits to secure public or statutory obligations of Dollar General or any
Restricted Subsidiary, or deposits of cash or obligations of the United
States of America to secure surety and appeal bonds to which Dollar General
or any Restricted Subsidiary is a party or in lieu of those bonds, or
pledges or deposits for similar purposes in the ordinary course of
business;
(10) Liens imposed by law, including laborers' or other employees',
carriers', warehousemen's, mechanics', materialmen's and vendors' Liens
arising in the ordinary course of business;
(11) Liens arising out of judgments or awards against Dollar General
or any Restricted Subsidiary with respect to which Dollar General or that
Restricted Subsidiary at the time shall be
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prosecuting an appeal or proceedings for review or Liens arising out of
individual final judgments or awards;
(12) Liens for taxes, assessments, governmental charges or levies not
yet subject to penalties for nonpayment or the amount or validity of which
is being in good faith contested by appropriate proceedings by Dollar
General or any Restricted Subsidiary, as the case may be;
(13) minor survey exceptions, minor encumbrances, easements or
reservations of, or rights of others for, rights of way, sewers, electric
lines, telegraph and telephone lines and other similar purposes, or zoning
or other restrictions or Liens as to the use of real properties, which
Liens, exceptions, encumbrances, easements, reservations, rights and
restrictions do not, in the opinion of Dollar General, in the aggregate
materially detract from the value of said properties or materially impair
their use in the operation of the business of Dollar General and our
Restricted Subsidiaries;
(14) Liens incurred to finance all or any portion of the cost of
construction, alteration or repair of any Principal Property or
improvements thereto created
(a) prior to or within 360 days after completion of that
construction, alteration or repair or
(b) thereafter, if that Lien is created as provided by a binding
commitment to lend entered into prior to, at the time of, or within 360
days after completion of that construction, alteration or repair;
(15) Liens existing on the date of the indenture;
(16) Liens created in connection with a project financed with, and
created to secure, a Nonrecourse Obligation; or
(17) any extension, renewal, refunding or replacement of the
foregoing, provided that;
(a) the extension, renewal, refunding or replacement Lien shall be
limited to all or a part of the same property that secured the Lien
extended, renewed, refunded or replaced, plus improvements on that
property, and
(b) the Indebtedness secured by that Lien is not increased.
Detailed explanation of limitation on Sale and Leaseback Transactions
We will not, and we will not permit any Restricted Subsidiary to, enter
into any Sale and Leaseback Transaction unless, taking account of the proposed
Sale and Leaseback Transaction, the aggregate amount of (1) all Attributable
Debt with respect to all Sale and Leaseback Transactions plus (2) all Secured
Debt, other than Secured Debt which is excluded as provided by clauses (1) to
(17) described under "Detailed explanation of the restrictions on Secured Debt"
above, would not exceed 15% of Consolidated Net Tangible Assets.
This covenant will not apply to, and there will be excluded from
Attributable Debt in any computation under this restriction or under "Detailed
explanation of the restrictions on Secured Debt" above, Attributable Debt with
respect to any Sale and Leaseback Transaction if:
(1) Dollar General or a Restricted Subsidiary is permitted to create
Funded Debt secured by a Lien as provided by clauses (1) to (17) inclusive
described under "Detailed explanation of the restrictions on Secured Debt"
above on the Principal Property to be leased, in an amount equal to the
Attributable Debt with respect to that Sale and Leaseback Transaction,
without equally and ratably securing the Notes;
(2) the property leased as provided by that arrangement
(a) is sold for a price at least equal to that property's fair
market value, as determined by the chief executive officer, the
president, the chief financial officer, the treasurer or the controller
of Dollar General, and
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(b) within 360 days after the sale, Dollar General or a Restricted
Subsidiary, shall apply the proceeds to the retirement of Indebtedness
or Funded Debt of Dollar General or any Restricted Subsidiary, other
than Indebtedness or Funded Debt owed to Dollar General or any
Restricted Subsidiary.
However, no retirement referred to in this clause (2)(b) may be effected
by payment at maturity or by any mandatory sinking fund payment
provision of Indebtedness or Funded Debt;
(3) Dollar General or a Restricted Subsidiary applies the net proceeds
of the sale or transfer of the leased Principal Property to the purchase of
assets and the cost of construction of assets within 360 days prior or
subsequent to that sale or transfer;
(4) the effective date of the arrangement or the purchaser's
commitment therefor is within 360 days prior or subsequent to
(a) the acquisition of the Principal Property, including, without
limitation, acquisition by merger or consolidation, or
(b) the completion of construction and commencement of operation of
the Principal Property, which, in the case of a retail store, is the
date of opening to the public,
whichever is later;
(5) the lease in the Sale and Leaseback Transaction is for a term,
including renewals, of not more than three years;
(6) the Sale and Leaseback Transaction is entered into between Dollar
General and a Restricted Subsidiary or between Restricted Subsidiaries;
(7) the lease secures or relates to industrial revenue or pollution
control bonds; or
(8) the lease payment is created in connection with a project financed
with, and the obligation constitutes, a Nonrecourse Obligation.
Detailed explanation of additional Subsidiary guarantees
The Notes and the indenture are guaranteed by each of our current and
future Restricted Subsidiaries, subject to release as described under
"Subsidiary Guarantees." Except as otherwise described under "Subsidiary
Guarantees," if at any time when there are Notes outstanding
- Dollar General or any Restricted Subsidiary transfers or causes to be
transferred, in one transaction or a series of related transactions, any
property to any Subsidiary that is not a guarantor of the Notes and the
indenture;
- Dollar General or any Restricted Subsidiary organizes, acquires or
otherwise invests in another person that becomes a Restricted Subsidiary
or becomes obligated with respect to any Indebtedness under one or more
Credit Facilities of Dollar General or any of our Restricted Subsidiaries
through the incurrence of a Contingent Obligation or otherwise; or
- any Unrestricted Subsidiary becomes obligated with respect to any
Indebtedness under one or more Credit Facilities of Dollar General or any
of our Restricted Subsidiaries through the incurrence of a Contingent
Obligation or otherwise or pledges assets or provides other security
interests to secure any Indebtedness under one or more Credit Facilities
of Dollar General or any of our Restricted Subsidiaries;
then, unless that Subsidiary has already provided a guarantee of the Notes and
the indenture in accordance with the terms of the indenture or has been properly
designated (and continues to be so properly designated) as an Unrestricted
Subsidiary, we will cause that Subsidiary to
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<PAGE> 35
- execute and deliver to the trustee a supplemental indenture in form
reasonably satisfactory to the trustee pursuant to which that Subsidiary
will unconditionally guarantee all of our obligations under the Notes and
the indenture on the terms of the guarantee set forth in the indenture;
and
- deliver to the trustee an opinion of counsel that the supplemental
indenture and the guarantee provided by that Subsidiary pursuant to the
indenture as so supplemented has been duly authorized, executed and
delivered by that Subsidiary and constitutes the legal, valid and binding
obligation of that Subsidiary, enforceable against that Subsidiary in
accordance with its terms, subject to customary exceptions.
Thereafter, that Subsidiary will be a guarantor for all purposes of the
indenture as it relates to the Notes and the indenture. Each guarantee will
provide that it will be released automatically under the circumstances described
above in the section called "Subsidiary Guarantees."
MERGER, CONSOLIDATION AND DISPOSITION OF ASSETS
Dollar General will not:
- consolidate with any person, or merge with or into any person, other than
a Restricted Subsidiary;
- sell, convey, transfer, lease or otherwise dispose of all or
substantially all of its property and assets as an entirety or
substantially as an entirety in one transaction or a series of related
transactions to, any person other than to a Restricted Subsidiary; or
- permit any person to merge with or into Dollar General
unless:
(a) either
(1) Dollar General shall be the continuing person or
(2) the person, if other than Dollar General, formed by that
consolidation or into which Dollar General is merged or that acquired or
leased the property and assets of Dollar General shall
- be a corporation organized and validly existing under the laws of
the United States of America or any jurisdiction inside the United
States of America; and
- expressly assume, by a supplemental indenture, executed and
delivered to the trustee, all of the obligations of Dollar General
under the Notes and the indenture; and
Dollar General shall have delivered to the trustee an opinion of counsel
stating that:
- the consolidation, merger or transfer and the supplemental
indenture complies with this provision;
- all conditions precedent provided for in the indenture relating to
that transaction have been complied with;
- the supplemental indenture has been duly authorized, executed and
delivered by Dollar General or its successor and constitutes the
legal, valid and binding obligation of Dollar General or its
successor, enforceable against that entity in accordance with its
terms, subject to customary exceptions; and
(b) Dollar General shall have delivered to the trustee an officers'
certificate to the effect that immediately after, and taking into account,
that transaction, no default or event of default shall have occurred and be
continuing under the indenture.
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The indenture does not restrict, or require us to redeem or permit holders
to cause a redemption of Notes in the event of,
- a consolidation, merger, sale of assets or other similar transaction that
may adversely affect the creditworthiness of Dollar General or its
successor or combined entity;
- a change in control of Dollar General; or
- a highly leveraged transaction involving Dollar General, whether or not
involving a change in control.
Accordingly, you will not have protection in the event of a highly leveraged
transaction, reorganization, restructuring, merger or similar transaction
involving Dollar General that may adversely affect you. The existing protective
covenants applicable to the Notes would continue to apply to Dollar General, or
its successor, in the event of such a transaction but may not prevent that
transaction from taking place.
EVENTS OF DEFAULT, WAIVER AND NOTICE
The following events are considered events of default:
(1) Dollar General or any Restricted Subsidiary defaults in the
payment of all or any part of the principal of the Notes or all or any
amount due under any guarantee of the Notes when the same becomes due and
payable;
(2) Dollar General or any Restricted Subsidiary defaults in the
payment of any interest on, or additional interest with respect to, the
Notes when the same becomes due and payable, and that default continues for
a period of 30 days;
(3) Dollar General or any Restricted Subsidiary defaults in the
performance of or breaches any other covenant or agreement of Dollar
General or any Restricted Subsidiary in the indenture and that default or
breach continues for a period of 60 consecutive days after written notice
of that default or breach has been given
(a) to Dollar General by the trustee or
(b) to Dollar General and the trustee by the holders of 25% or more
in aggregate principal amount of the Notes;
(4) events of bankruptcy or insolvency with respect to Dollar General
or any Restricted Subsidiary;
(5) (a) an event of default as defined in any one or more Credit
Facilities, indentures or instruments evidencing or under which Dollar
General or any Restricted Subsidiary has outstanding an aggregate of at
least $20,000,000 principal amount of Indebtedness, shall happen and be
continuing;
(b) that Indebtedness shall have been accelerated so that it shall
be or become due and payable prior to the date on which the same would
otherwise have become due and payable; and
(c) that acceleration shall not be rescinded or annulled within ten
days after notice of that acceleration shall have been given
- to Dollar General by the trustee or
- to Dollar General and the trustee by the holders of at least 25% in
aggregate principal amount of the Notes at the time outstanding; or
(6) (a) failure by Dollar General or any Restricted Subsidiary to make
any payment at maturity, including any applicable grace period, in
respect of at least $20,000,000 aggregate principal amount of
Indebtedness; and
(b) that failure shall have continued for a period of ten days
after notice of that failure shall have been given
- to Dollar General by the trustee or
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<PAGE> 37
- to Dollar General and the trustee by the holders of at least 25% in
aggregate principal amount of the Notes at the time outstanding; and
(7) if any guarantee of the Notes and the indenture shall be held in
any judicial proceeding to be unenforceable or invalid or shall cease for
any reason, other than in accordance with the terms of the indenture, to be
in full force and effect or any Restricted Subsidiary of Dollar General
that is a guarantor, or any person acting on behalf of any guarantor, shall
deny or disaffirm the obligation of the guarantor under its guarantee.
If an event of default occurs and is continuing, then, either the trustee
or the holders of not less than 25% in aggregate principal amount of the Notes
then outstanding by notice in writing to Dollar General, and to the trustee if
given by holders, may declare the entire principal amount of all Notes, and
accrued and unpaid interest, to be due and payable immediately. Upon this
declaration, the principal of and interest on the Notes shall become immediately
due and payable.
If an event of default described in clause (4) occurs and is continuing,
then the principal amount of all the Notes then outstanding and accrued and
unpaid interest shall be and become immediately due and payable, without any
notice or other action by any holder or the trustee to the full extent permitted
by applicable law.
If an event of default described in clause (5) or (6) occurs and is
continuing and if the acceleration of other Indebtedness or failure to pay other
Indebtedness shall be
- remedied or cured by Dollar General or any Restricted Subsidiary or
- waived by the holders of that Indebtedness,
then the event of default under that clause shall automatically be remedied,
cured or waived without further action upon the part of either the trustee or
any of the holders.
Holders of a majority in principal amount of the Notes may control remedies
upon an event of default and waivers of an event of default.
Subject to provisions in the indenture for the indemnification of the
trustee and other limitations described in the indenture, the holders of at
least a majority in aggregate principal amount of the outstanding Notes may
direct the time, method and place of conducting any proceeding for any remedy
available to the trustee or exercising any trust or power conferred on the
trustee by the indenture.
However, the trustee may refuse to follow any direction that:
- conflicts with law or the indenture,
- may involve the trustee in personal liability, or
- the trustee determines in good faith may be unduly prejudicial to the
rights of holders not joining in the giving of that direction.
In addition, the trustee may take any other action it believes is proper that is
not inconsistent with any directions received from holders of Notes as provided
by this paragraph.
Subject to various provisions in the indenture, the holders of at least a
majority in principal amount of the outstanding Notes, by notice to the trustee,
may waive an existing default or event of default and its consequences, except
- a default in the payment of principal of or interest on any Note or
default in the payment of any amount due under any guarantee of the Notes
and the indenture as specified in clauses (1) or (2) described above in
this section entitled "Events of Default, Waiver and Notice" or
- in respect of a covenant or provision of the indenture which cannot be
modified or amended without the consent of the holder of each outstanding
Note affected.
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<PAGE> 38
Upon any waiver, the default shall cease to exist, and any event of default
arising therefrom shall automatically be cured, for every purpose of the
indenture; but no waiver shall extend to any subsequent or other default or
event of default or impair any right consequent thereto.
No holder of any Notes may institute any proceeding, judicial or otherwise,
with respect to the indenture or the Notes, or for the appointment of a receiver
or trustee, or for any other remedy under the indenture, unless:
(1) that holder has previously given to the trustee written notice of
a continuing event of default;
(2) the holders of at least 25% in aggregate principal amount of
outstanding Notes shall have made written request to the trustee to
institute proceedings in respect of that event of default in its own name
as trustee under the indenture;
(3) that holder or holders have offered to the trustee indemnity
reasonably satisfactory to the trustee against any costs, liabilities or
expenses to be incurred in compliance with that request;
(4) the trustee for 60 days after its receipt of the notice, request
and offer of indemnity has failed to institute that proceeding; and
(5) during that 60-day period, the holders of a majority in aggregate
principal amount of the outstanding Notes have not given the trustee a
direction that is inconsistent with that written request.
A holder may not use the indenture to prejudice the rights of another holder or
to obtain a preference or priority over any other holder.
However, notwithstanding any of the provisions described above, the right
of any holder of a Note to receive payment of principal and interest on or after
their respective due dates or to bring suit for the enforcement of any of those
payments on or after those dates, may not be impaired or affected without the
consent of that holder.
DISCHARGE OF THE NOTES
We may terminate our obligations under the Notes and the indenture if:
(1) all Notes previously authenticated and delivered, other than Notes
that were mutilated or lost, have been delivered to the trustee for
cancellation and we have paid all sums payable by us under the indenture;
or
(2) (a) the Notes mature within one year; and
(b) we irrevocably deposit in trust with the trustee, as trust
funds solely for the benefit of the holders of the Notes for that
purpose, money or U.S. government obligations or a combination
sufficient, without consideration of any reinvestment, to pay the
principal of and interest on the Notes to maturity and to pay all other
sums payable by us under the indenture; and
(3) we deliver to the trustee an officers' certificate and an opinion
of counsel, in each case stating that all conditions precedent provided for
in the indenture relating to the satisfaction and discharge of the
indenture have been complied with.
If all Notes previously authenticated and delivered have been cancelled as
provided in clause (1), the only obligations we will continue to have under the
indenture will be to compensate and indemnify the trustee.
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If we have complied with the requirements of clause (2), the only
obligations we will continue to have under the indenture until the Notes are no
longer outstanding, will be to:
- maintain an office or agency in respect of the Notes,
- have moneys held for payment in trust, although the indenture permits us
to recover from the trustee moneys held in trust if those moneys have
been unclaimed for two years,
- register the transfer or exchange of the Notes or deliver Notes for
replacement or to be canceled, and
- compensate and indemnify the trustee or appoint a successor trustee.
DEFEASANCE
We:
(1) will be considered to have paid and will be discharged from all
obligations in respect of the Notes, and the provisions of the indenture
will, except as noted below, no longer be in effect with respect to the
Notes; or
(2) need not comply with any specific covenant which may be defeased
under the indenture, and our non-compliance will not be an event of default
under clause (3) described above in the section entitled "Events of
Default, Waiver and Notice"
if we satisfy the following conditions:
(a) we irrevocably deposit in trust with the trustee as trust funds
solely for the benefit of the holders of the Notes, for payment of the
principal of and interest on the Notes, money or U.S. government
obligations or a combination sufficient, without consideration of any
reinvestment, to pay and discharge the principal of and accrued interest on
the outstanding Notes to maturity;
(b) the deposit will not result in a breach or violation of, or
constitute a default under, the indenture or any other material agreement
or instrument to which we are a party or by which we are bound;
(c) no default with respect to the Notes has occurred and is
continuing on the date of that deposit;
(d) we deliver to the trustee an opinion of counsel that
- the holders of the Notes will not recognize income, gain or loss for
federal income tax purposes as a result of our election to defease the
Notes and will be subject to federal income tax on the same amount, in
the same manner and at the same times as would have been the case if
that deposit and defeasance had not occurred; and
- the holders of the Notes have a valid security interest in the trust
funds; and
(e) we deliver to the trustee an officers' certificate and an opinion
of counsel, in each case stating that all conditions precedent have been
complied with.
In the case of legal defeasance under clause (1) above, the opinion of
counsel referred to in the first paragraph of clause (d) above must be based on
a ruling from the Internal Revenue Service published or directed to Dollar
General or other change in applicable federal income tax law. If we select the
covenant defeasance option under clause (2) above, we will continue to be bound
by all of the other terms of the indenture other than the specified covenant(s)
that is defeased. After the Notes are no longer outstanding, the only
obligations we will have under the indenture will be to compensate and indemnify
the trustee, and we will have the right to recover excess money held by the
trustee.
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MODIFICATION AND WAIVER
Amendments without the consent of any holder
Dollar General, the Restricted Subsidiaries that are guarantors and the
trustee may amend or supplement the indenture or the Notes without notice to or
the consent of any holder:
(1) to cure any ambiguity, defect or inconsistency in the indenture;
provided that those amendments or supplements do not materially and
adversely affect the interests of the holders;
(2) to comply with the provisions of the indenture in connection with
a consolidation or merger of Dollar General or the sale, conveyance,
transfer, lease or other disposal of all or substantially all of the
property and assets of Dollar General and provide for the succession of
another corporation to the covenants, agreements and obligations of Dollar
General under the indenture;
(3) to comply with any requirements of the SEC in connection with the
qualification of the indenture under the Trust Indenture Act;
(4) to evidence and provide for the acceptance of appointment under
the indenture by a successor trustee;
(5) to add to the covenants, restrictions or obligations of Dollar
General and the Restricted Subsidiaries for the protection of the holders;
(6) to add or remove a Restricted Subsidiary guarantee in accordance
with the terms of the indenture;
(7) to secure the Notes;
(8) to provide for the issuance of additional Notes in accordance with
the terms of the indenture; or
(9) to make any change that does not materially and adversely affect
the rights of any holder.
Amendments with the consent of the holders
Majority consent is usually sufficient
Dollar General, the Restricted Subsidiaries that are guarantors and the
trustee may amend the indenture and the outstanding Notes with the written
consent of the holders of a majority in principal amount of the Notes then
outstanding, and the holders of a majority in principal amount of the
outstanding Notes by written notice to the trustee may waive future compliance
by Dollar General with any provision of the indenture or the Notes.
Some provisions require the consent of all holders affected thereby
Notwithstanding the preceding paragraphs, without the consent of each
holder affected thereby, an amendment or waiver may not:
(1) extend the stated maturity of the principal of, or any installment
of interest or additional interest on, that holder's Notes, or reduce the
principal of or the rate of interest or additional interest on the Notes;
(2) change any place or currency of payment where any Note or interest
is payable;
(3) impair the right to institute suit for the enforcement of any
payment on or after the due date therefor;
(4) reduce the percentage in principal amount of outstanding Notes the
consent of whose holders is required for any supplemental indenture, for
any waiver of
(a) compliance with the provisions of the indenture or
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(b) defaults and the consequences of those defaults established in
the indenture;
(5) waive a default in the payment of principal of or interest on any
Note of a holder;
(6) make any change in the ranking or priority of any Note;
(7) make any change in any guarantee of the Notes and the indenture
that would adversely affect the holders of the Notes or release any
Restricted Subsidiary guarantor from its obligations under its guarantee or
the indenture, except in accordance with the terms of the indenture; or
(8) modify this provision of the indenture, except to increase any
percentage or to provide that other provisions of the indenture cannot be
modified or waived without the consent of the holder of each outstanding
Note thereunder affected thereby.
The consent of any holder need not approve the particular form of any
proposed amendment, supplement or waiver, so long as the consent approves the
substance of the amendment. After an amendment, supplement or waiver becomes
effective, we will give to the holders affected thereby a notice briefly
describing the amendment, supplement or waiver. We will mail supplemental
indentures to holders upon request. Any failure by Dollar General to mail that
notice, or any defect therein, shall not, however, in any way impair or affect
the validity of any supplemental indenture or waiver.
SAME-DAY PAYMENT
The indenture requires us to make payments in respect of Notes (including
principal and interest) by wire transfer of immediately available funds to the
accounts specified by the holders or, if such account is so specified, by
mailing a check to each holder's registered address.
INFORMATION
Whether or not required by the rules and regulations of the SEC, we have
agreed that, so long as any Notes are outstanding, we will furnish to the
trustee, within 15 days after we are or would have been required to file with
the SEC, and to furnish to the holders of the Notes thereafter:
(1) all quarterly and annual financial information that would be
required to be contained in a filing with the SEC on Forms 10-Q and 10-K if
we were required to file those Forms, including a "Management's Discussion
and Analysis of Financial Condition and Results of Operations" and, with
respect to the annual information only, a report thereon by our certified
independent accountants; and
(2) all current reports that would be required to be filed with the
SEC on Form 8-K if we were required to file those reports.
In addition, whether or not required by the rules and regulations of the
SEC, at any time after we file a registration statement with respect to an
exchange offer or a registration statement permitting resales of the Notes, we
will file a copy of all that information and reports with the SEC for public
availability and make that information available to securities analysts and
prospective investors upon request.
In addition, we have agreed that, for so long as any Notes remain
outstanding, we will furnish to the holders and to securities analysts and
prospective investors, upon their request, the information required to be
delivered by Rule 144A(d)(4) under the Securities Act. Requests should be
directed to the address referred to under "Available Information." Under Rule
144A(d)(4), we are not required to deliver any information so long as we
continue to be a reporting company under the Exchange Act.
We will be required to file with the trustee annually, within four months
of the end of each fiscal year, a certificate as to the compliance with all
conditions and covenants of the indenture.
GOVERNING LAW
The indenture and the Notes will be governed by the laws of the State of
New York.
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THE TRUSTEE
We and our Subsidiaries maintain ordinary banking and trust relationships
with First Union National Bank, which is the trustee for the Notes, and its
affiliates.
BOOK ENTRY; DELIVERY AND FORM
The certificates representing the old Notes were, and the certificates
representing the new Notes will be, in the form of one or more global notes (the
"Global Note"). The Global Note will be deposited with, or on behalf of, The
Depository Trust Company (the "Depositary") and registered in the name of the
Depositary or its nominee. Except as set forth below, the Global Note may be
transferred, in whole and not in part, only to the Depositary or another nominee
of the Depositary. You may hold your beneficial interests in the Global Note
directly through the Depositary if you have an account with the Depositary or
indirectly through organizations which have accounts with the Depositary.
The Depositary has advised us as follows: the Depositary is a
limited-purpose trust company organized under the laws of the State of New York,
a member of the Federal Reserve System, a "clearing corporation" within the
meaning of the New York Uniform Commercial Code, and "a clearing agency"
registered pursuant to the provisions of Section 17A of the Exchange Act. The
Depositary was created to hold securities of participants, which are
institutions that have accounts with the Depositary, and to facilitate the
clearance and settlement of securities transactions among its participants in
such securities through electronic book-entry changes in accounts of the
participants, thereby eliminating the need for physical movement of securities
certificates. The Depositary's participants include securities brokers and
dealers, banks, trust companies, clearing corporations and certain other
organizations. Access to the Depositary's book-entry system is also available to
indirect participants such as banks, brokers, dealers and trust companies that
clear through or maintain a custodial relationship with a participant, whether
directly or indirectly.
Dollar General expects that pursuant to procedures established by the
Depositary, upon the deposit of the Global Note with the Depositary, the
Depositary will credit, on its book-entry registrations and transfer system, the
principal amount of Notes represented by such Global Note to the accounts of
participants. Ownership of beneficial interests in the Global Note will be
limited to participants or persons that may hold interests through, records
maintained by the Depositary (with respect to participants' interests), the
participants and the indirect participants (with respect to the owners of
beneficial interests in the Global Note other than participants). Transfers of
beneficial ownership interests in the Global Note are to be accomplished by
entries made on the books of participants and indirect participants. The laws of
some jurisdictions may require that certain purchasers of securities take
physical delivery of such securities in definitive form. Such limits and laws
may impair the ability to transfer or pledge beneficial interests in the Global
Note.
So long as the Depositary, or its nominee, is the registered holder and
owner of the Global Note, the Depositary or such nominee, as the case may be,
will be considered the sole legal owner and holder of any related Notes
evidenced by the Global Note for all purposes of such Notes and the indenture,
including for purposes of exercising an owner's right to optional repayment of
the Notes. Except as set forth below, as an owner of a beneficial interest in
the Global Note, you will not be entitled to have the Notes represented by the
Global Note registered in your name, will not receive or be entitled to receive
physical delivery of certificated Notes and will not be considered to be the
owner or holder of any Notes under the Global Note. We understand that under
existing industry practice, in the event an owner of a beneficial interest in
the Global Note desires to take any action, including exercising an owner's
right to optional repayment, that the Depositary, as the holder of the Global
Note, is entitled to take, the Depositary would authorize the participants to
take such action, and the participants would authorize beneficial owners owning
through such participants to take such action or would otherwise act upon the
instructions of beneficial owners owning through them.
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Notice by participants (or by owners of beneficial interests in a Global
Note held through those participants) of the exercise of the option to elect
repayment of beneficial interests in Global Notes must be transmitted to the
Depositary in accordance with its procedures on a form required by the
Depositary and provided to participants. In order to ensure that the
Depositary's nominee will timely exercise a right to optional repayment with
respect to a particular Note, a beneficial owner of a Note must instruct the
broker or other participant through which it holds an interest in such Note to
notify the Depositary of its desire to exercise the right of repayment.
Different firms have different cut off times for accepting instructions from
their customers and, therefore, each beneficial owner should consult their
broker or other participant in order to ascertain the cut off time by which an
instruction must be given in order for timely notice to be delivered to the
Depositary. We will not be liable for any delay in delivery of such notice to
the Depositary.
We will make payments of principal and interest on Notes represented by the
Global Note registered in the name of and held by the Depositary or its nominee
to the Depositary or its nominee, as the case may be, as the registered owner
and holder of the Global Note.
We expect that the Depositary or its nominee, upon receipt of any payment
of principal of, premium, if any, or interest on the Global Note will credit
participants' accounts with payments in amounts proportionate to their
respective beneficial interests in the principal amount of the Global Note as
shown on the records of the Depositary or its nominee. We also expect that
payments by participants or indirect participants to owners of beneficial
interests in the Global Note held through such participants or indirect
participants will be governed by standing instructions and customary practices
and will be the responsibility of such participants or indirect participants. We
will not have responsibility or liability for any aspect of the records relating
to, or payments made on account of, beneficial ownership interests in the Global
Note for any Note or for maintaining, supervising or reviewing any records
relating to such beneficial ownership interests or for any other aspect of the
relationship between the Depositary and its participants or indirect
participants or the relationship between such participants or indirect
participants and the owners of beneficial interests in the Global Note owning
through such participants.
Although the Depositary has agreed to the foregoing procedures in order to
facilitate transfers of interests in the Global Note among participants of the
Depositary, it is under no obligation to perform or continue to perform such
procedures, and such procedures may be discontinued at any time. Neither the
trustee nor Dollar General will have any responsibility or liability for the
performance by the Depositary or its participants or indirect participants of
their respective obligations under the rules and procedure governing their
operations.
CERTIFICATED NOTES
Subject to certain conditions, the Notes represented by the Global Note are
exchangeable for certificated Notes in definitive form of like tenor in
denominations of $1,000 and integral multiples thereof if:
(1) the Depositary notifies us that it is unwilling or unable to
continue as Depositary for the Global Note or the Depositary ceases to be a
clearing agency registered under the Exchange Act and, in either case, we
are unable to locate a qualified successor within 90 days;
(2) we in our discretion at any time determine not to have all the
Notes represented by the Global Note; or
(3) a default entitling the holders of the Notes to accelerate the
maturity thereof has occurred and is continuing.
Any Note that is exchangeable as above is exchangeable for certificated
Notes issuable in authorized denominations and registered in such names as the
Depositary shall direct. Subject to the foregoing, the Global Note is not
exchangeable, except for a Global Note of the same aggregate denomination to be
registered in the name of the Depositary or its nominee. In addition, to the
extent such certificates represent old Notes, the certificates will bear
appropriate legends relating to transfer restrictions (unless we
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determine otherwise in accordance with applicable law), subject, with respect to
such certificated Notes, to the provisions of such legends.
DEFINED TERMS
The following terms referred to in this "Description of Notes" are defined
in the indenture as follows:
"Attributable Debt" means, in connection with any Sale and Leaseback
Transaction under which either Dollar General or any of our Restricted
Subsidiaries is at the time liable as lessee for a term of more than 12 months
and at any date as of which the amount thereof is to be determined, the lesser
of
(1) total net obligations of the lessee for rental payments during the
remaining term of the lease discounted from the respective due dates of the
payments to the determination date at a yearly rate equivalent to the
greater of
(a) the weighted average yield to maturity of the Notes, the
average being weighted by the principal amount of the Notes and
(b) the interest rate inherent in the lease, as determined in good
faith by Dollar General, both to be compounded semi-annually or
(2) the sale price for the assets so sold and leased multiplied by a
fraction the numerator of which is the remaining portion of the base term
of the lease included in the transaction and the denominator of which is
the base term of the lease.
"Capital Lease Obligations" means with respect to any person any obligation
which is required to be classified and accounted for as a capital lease (a
"Capital Lease") on the face of a balance sheet of such person prepared in
accordance with GAAP.
"Consolidated Net Tangible Assets" means, at any date, the total assets
appearing on the most recent consolidated balance sheet of Dollar General and
our Restricted Subsidiaries as at the end of the fiscal quarter of Dollar
General ending not more than 135 days prior to the date, prepared in accordance
with GAAP, less
- all current liabilities due within one year as shown on that balance
sheet,
- investments in and advances to Unrestricted Subsidiaries, and
- Intangible Assets and liabilities relating thereto.
"Contingent Obligation" means, as applied to any person, any direct or
indirect liability, contingent or otherwise, of that person with respect to any
Indebtedness of another person, if the purpose or intent thereof by the person
incurring the Contingent Obligation is to provide assurance to the obligee of
such Indebtedness that such Indebtedness will be paid or discharged, or that any
agreements relating thereto will be complied with, or that the holders of such
Indebtedness will be protected (in whole or in part) against loss in respect
thereof. Contingent Obligations include, without limitation, (1) the direct or
indirect guarantee, endorsement (other than for collection or deposit in the
ordinary course of business), co-making, discounting with recourse or sale with
recourse by such person of the obligation of another person, and (2) any
liability of such person for the obligations of another person through any
agreement (contingent or otherwise) (a) to purchase, repurchase or otherwise
acquire such obligation or any security therefor, or to provide funds for the
payment or discharge of such obligation (whether in the form of loans, advances,
stock purchases, capital contributions or otherwise), (b) to maintain the
solvency or any balance sheet item, level of income or financial condition of
another, or (c) to make take-or-pay or similar payments, if required regardless
of nonperformance by any other party or parties to an agreement, if in the case
of any agreement described under subclause (a), (b) or (c) of this sentence, the
primary purpose or intent thereof is as described in the preceding sentence. The
amount of any Contingent Obligation shall be equal to the amount of the
obligation so guaranteed or otherwise supported.
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"Credit Facilities" means one or more debt facilities (including the
Existing Credit Facility), in each case with banks or other institutional
lenders providing for revolving credit loans, providing for revolving credit and
term loans, or providing for the support of one or more revolving commercial
paper programs, in each case as amended, restated, modified, supplemented,
renewed, refunded, refinanced, restructured, replaced, repaid or extended in
whole or in part from time to time.
"Existing Credit Facility" means the facility provided by the Credit
Agreement (including any related notes, collateral documents, letters of credit
and related documentation, and guarantees and any appendices, exhibits or
schedules thereto) between Dollar General and SunTrust Bank, Nashville, N.A.,
dated as of September 2, 1997, and amended as of July 31, 1998, and as further
amended as of April 29, 1999, and as such agreement may be further amended
(including any amendment and restatement), supplemented or modified from time to
time, including any replacement or refinancing thereof in the commercial bank
market (including any such replacement or refinancing that increases the amount
thereof) whether with the original agents and lenders or other agents and
lenders or otherwise and whether provided under the original agreement or one or
more other agreements or otherwise.
"Funded Debt" means, without duplication,
- any Indebtedness of Dollar General or any of our Restricted Subsidiaries
maturing more than 12 months after the time of computation, including all
revolving and term Indebtedness and Indebtedness under all other lines of
credit;
- Funded Debt or dividends of others as to which Dollar General or any of
our Restricted Subsidiaries is or becomes obligated through the
incurrence of a Contingent Obligation or otherwise, except guarantees in
connection with the sale or discount of accounts receivable, trade
acceptances and other paper arising in the ordinary course of business;
- in the case of any of our Restricted Subsidiaries, all of its preferred
stock having mandatory redemption provisions as reflected on its balance
sheet prepared in accordance with GAAP; and
- all Capital Lease Obligations.
"GAAP" means generally accepted accounting principles set forth in the
opinions and pronouncements of the Accounting Principles Board of the American
Institute of Certified Public Accountants and statements and pronouncements of
the Financial Accounting Standards Board or in other statements by any other
entity as have been approved by a significant segment of the accounting
profession, which are in effect on the date the Notes are issued.
"Hedging Obligation" of any person means the obligations of that person
under:
- interest rate swap agreements, interest rate cap agreements and interest
rate collar agreements;
- foreign exchange contracts and currency swap agreements; and
- other agreements or arrangements entered into in the ordinary course of
business and consistent with past practices designed to protect that
person against fluctuations in interest rates or currency exchange rates.
"Indebtedness" of any person means, without duplication:
(1) all obligations of such person for borrowed money or for the
deferred purchase price of property or services, and including, without
limitation, the face amount available to be drawn under all letters of
credit, reimbursement and similar obligations with respect to surety bonds,
letters of credit and banks' acceptances, whether or not matured,
(2) all obligations of such person evidenced by notes, bonds,
debentures or similar instruments,
(3) all obligations of such person created or arising under any
conditional sale or other title retention agreement with respect to
property acquired by such person (even though the rights and
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remedies of the seller or lender under such agreement in the event of
default are limited to repossession or sale of such property),
(4) all Capital Lease Obligations of such person,
(5) all Contingent Obligations of such person,
(6) all Hedging Obligations of such person, and
(7) all Indebtedness referred to in clause (1), (2), (3), (4), or (5)
above secured by (or for which the holder of such Indebtedness has an
existing right, contingent or otherwise, to be secured by) any Lien upon or
in property (including, without limitation, accounts and contracts rights)
owned by such person, even though such person has not assumed or become
liable for the payment of such Indebtedness;
provided, however, that Indebtedness shall not include current accounts payable
arising in the ordinary course of business.
The amount of any Indebtedness outstanding as of any date shall be:
(a) the accreted value thereof, in the case of any Indebtedness issued
with original issue discount and
(b) the principal amount thereof, together with any interest thereon
that is more than 30 days past due, in the case of any other Indebtedness.
"Intangible Assets" means, at any date, the value, as shown on or reflected
in the most recent consolidated balance sheet of Dollar General and our
Restricted Subsidiaries as at the end of the fiscal quarter of Dollar General
ending not more than 135 days prior to the date, prepared in accordance with
GAAP, of:
(1) all trade names, trademarks, licenses, patents, copyrights,
service marks, goodwill and other like intangibles;
(2) organizational and development costs;
(3) deferred charges, other than prepaid items, including insurance,
taxes, interest, commissions, rents, pensions, compensation and similar
items and tangible assets being amortized; and
(4) unamortized debt discount and expense, less unamortized premium.
"Lien" means any pledge, mortgage, lien, security interest, hypothecation,
assignment for security interest or encumbrance of any kind (including any
conditional sale or other title retention agreement, any lease in the nature
thereof, any agreement to give a security interest or any Capital Lease).
"Nonrecourse Obligation" means Indebtedness or lease payment obligations
substantially related to
(1) the acquisition of assets not previously owned by Dollar General
or any Restricted Subsidiary or
(2) the financing of a project involving the development or expansion
of properties of Dollar General or any Restricted Subsidiary, as to which
the obligee with respect to the Indebtedness or lease payment obligations
has no recourse to Dollar General or any Subsidiary or any assets of Dollar
General or any Subsidiary other than the assets which were acquired with
the proceeds of the transaction or the project financed with the proceeds
of the transaction and the proceeds of that asset or project.
"Operating Asset" means all merchandise inventories owned by Dollar General
or any of its Subsidiaries.
"Principal Property" means any real and tangible property owned and
operated, currently or in the future, by Dollar General or any of its
Subsidiaries that constitutes a part of any store, warehouse or
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distribution center located within the United States of America or its
territories or possessions if the net book value of that store, warehouse or
distribution center, including leasehold improvements and store fixtures
constituting a part of that store, warehouse or distribution center, as of the
date on which the determination is being made is more than 0.25% of our
Consolidated Net Tangible Assets. Principal Property excludes:
- motor vehicles,
- mobile materials-handling equipment and other rolling stock,
- cash registers and other point-of-sale recording devices, and
- related equipment and data processing and other office equipment.
As of the date of this offering circular, none of our stores falls within
this definition of Principal Property.
"Restricted Subsidiary" is any Subsidiary other than an Unrestricted
Subsidiary.
"Sale and Leaseback Transaction" means any transaction or a series of
related transactions with any person providing for the leasing by Dollar General
or any Restricted Subsidiary of any Principal Property of Dollar General or any
Restricted Subsidiary (other than pursuant to a Capital Lease), which Principal
Property has been or is to be sold or transferred by Dollar General or any
Restricted Subsidiary to such person.
"Secured Debt" means Funded Debt which is secured by any Lien on any
- Principal Property, whether owned on the date of the indenture or
thereafter acquired or created,
- Operating Asset, whether owned on the date of the indenture or thereafter
acquired or created,
- shares of capital stock owned by Dollar General or a Subsidiary in a
Restricted Subsidiary of Dollar General, or
- Indebtedness of a Restricted Subsidiary of Dollar General.
"Subsidiary" means any corporation or other legal entity, including,
without limitation, a limited liability company, partnership, joint venture and
association, regardless of its jurisdiction of organization or formation, where
- in the case of a corporation, under ordinary circumstances not dependent
upon the happening of a contingency, more than 50% of the issued and
outstanding capital stock having ordinary voting power to elect a
majority of the board of directors of that corporation is owned directly
or indirectly by Dollar General and/or by one or more Subsidiaries of
Dollar General; or
- in the case of any other type of entity, more than 50% of the ordinary
equity capital interests is owned directly or indirectly by Dollar
General and/or by one or more Subsidiaries of Dollar General.
"Unrestricted Subsidiary" is defined in the section called "Restrictive
Covenants -- Summary of the principal restrictive covenants."
MATERIAL UNITED STATES TAX CONSEQUENCES OF
THE EXCHANGE OFFER
In the opinion of Bass, Berry & Sims PLC, the exchange of old Notes for new
Notes in the exchange offer will not result in any United States federal income
tax consequences to holders. When a holder exchanges an old Note for a new Note
in the exchange offer, the holder will have the same adjusted basis and holding
period in the new Note as in the old Note immediately before the exchange.
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PLAN OF DISTRIBUTION
We are not using any underwriters for this exchange offer. We are bearing
the expenses of the exchange.
Each broker-dealer that receives new Notes for its own account in the
exchange offer must acknowledge that it will deliver a prospectus in connection
with any resale of new Notes. This prospectus, as it may be amended or
supplemented from time to time, may be used by a broker-dealer in connection
with resales of new Notes received in exchange for old Notes where old Notes
were acquired as a result of market-making activities or other trading
activities. We have agreed that, for a period of 180 days after the expiration
date, we will make this prospectus, as amended or supplemented, available to any
broker-dealer for use in connection with any resale of new Notes received by it
in exchange for old Notes.
We will not receive any proceeds from any sale of new Notes by
broker-dealers.
New Notes received by broker-dealers for their own account in the exchange
offer may be sold from time to time in one or more transactions
- in the over-the-counter market,
- in negotiated transactions,
- through the writing of options on the new Notes or
- a combination of those methods of resale,
at market prices prevailing at the time of resale, at prices related to
prevailing market prices or negotiated prices.
Any resale may be made
- directly to purchasers or
- to or through brokers or dealers who may receive compensation in the form
of commissions or concessions from any broker-dealer or the purchasers of
any new Notes.
Any broker-dealer that resells new Notes that were received by it for its
own account in the exchange offer and any broker or dealer that participates in
a distribution of those new Notes may be considered to be an "underwriter"
within the meaning of the Securities Act. Any profit on any resale of those new
Notes and any commission or concessions received by any of those persons may be
considered to be underwriting compensation under the Securities Act. The letter
of transmittal states that, by acknowledging that it will deliver and by
delivering a prospectus, a broker-dealer will not be considered to admit that it
is an "underwriter" within the meaning of the Securities Act.
For a period of 180 days after the expiration date, we will promptly send
additional copies of this prospectus and any amendment or supplement to this
prospectus to any broker-dealer that requests those documents in the letter of
transmittal. We have agreed to pay all expenses incident to the exchange offer,
including the expenses of one counsel for the holders of the Notes, other than
commissions or concessions of any brokers or dealers, and will indemnify the
holders of the Notes, including any broker-dealers, against some liabilities,
including liabilities under the Securities Act.
LEGAL MATTERS
The validity of the new Notes will be passed upon for us by Bass, Berry &
Sims PLC, Nashville, Tennessee.
EXPERTS
The consolidated financial statements incorporated in this prospectus by
reference from Dollar General Corporation's Annual Report on Form 10-K for the
year ended January 28, 2000, have been audited by Deloitte & Touche LLP,
independent auditors, as stated in their report, which has been incorporated
herein by reference, and have so been incorporated in reliance upon that report
given upon the authority of that firm as experts in accounting and auditing.
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YOU SHOULD RELY ONLY ON THE INFORMATION CONTAINED IN THIS DOCUMENT OR THAT
WE HAVE REFERRED YOU TO. WE HAVE NOT AUTHORIZED ANYONE TO PROVIDE YOU WITH
INFORMATION THAT IS DIFFERENT. WE ARE NOT MAKING AN OFFER OF THESE SECURITIES IN
ANY STATE WHERE THE OFFER IS NOT PERMITTED. YOU SHOULD NOT ASSUME THAT THE
INFORMATION IN THIS PROSPECTUS OR ANY PROSPECTUS SUPPLEMENT IS ACCURATE AS OF
ANY DATE OTHER THAN THE DATE ON THE FRONT OF THOSE DOCUMENTS.
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UNTIL NOVEMBER 7, 2000 (90 DAYS AFTER THE DATE OF THIS PROSPECTUS), ALL
DEALERS EFFECTING TRANSACTIONS IN THE REGISTERED SECURITIES, WHETHER OR NOT
PARTICIPATING IN THIS DISTRIBUTION, MAY BE REQUIRED TO DELIVER A PROSPECTUS.
------------------------------------------------------
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$200,000,000
DOLLAR GENERAL
CORPORATION
(DOLLAR GENERAL CORPORATION LOGO)
8 5/8% Exchange Notes due
June 15, 2010
------------------------------------
Prospectus
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August 9, 2000
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