Dollar General 2007 Annual Report Download - page 26

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ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
General
Accounting Periods. The following text contains references to years 2008, 2007, 2006
and 2005, which represent fiscal years ending or ended January 30, 2009, February 1, 2008,
February 2, 2007 and February 3, 2006, respectively. Our fiscal year ends on the Friday closest
to January 31. Each of fiscal years 2007 and 2006 were and fiscal year 2008 will be 52-week
accounting periods, while fiscal 2005 was a 53-week accounting period, which affects the
comparability of certain amounts in the Consolidated Financial Statements and financial ratios
between 2005 and the other fiscal years reflected herein. As discussed below, we completed a
merger transaction on July 6, 2007. The 2007 52-week period presented includes the 22-week
Predecessor period of Dollar General Corporation through July 6, 2007 reflecting the historical
basis of accounting, and a 30-week Successor period, reflecting the impact of the business
combination and associated purchase price allocation of the merger of Dollar General
Corporation and Buck Acquisition Corp. (“Buck”), from July 7, 2007 to February 1, 2008. For
comparison purposes, the discussion of results of operations below is generally based on the
mathematical combination of the Successor and Predecessor periods for the 52-week fiscal year
ended February 1, 2008 compared to the Predecessor 2006 fiscal year ended February 2, 2007,
which we believe provides a meaningful understanding of the underlying business. Transactions
relating to or resulting from the Merger are discussed separately. The combined results do not
reflect the actual results we would have achieved absent the Merger and should not be
considered indicative of future results of operations. This discussion and analysis should be read
with, and is qualified in its entirety by, the Consolidated Financial Statements and the notes
thereto. It also should be read in conjunction with the Forward-Looking Statements/Risk Factors
disclosures set forth in the Introduction and in Item 1A of this report.
Purpose of Discussion. We intend for this discussion to provide the reader with
information that will assist in understanding our company and the critical economic factors that
affect our company. In addition, we hope to help the reader understand our financial statements,
the changes in certain key items in those financial statements from year to year, and the primary
factors that accounted for those changes, as well as how certain accounting principles affect our
financial statements.
Merger with KKR
On July 6, 2007, we completed a merger (the “Merger”) in which our former
shareholders received $22.00 in cash, or approximately $6.9 billion in total, for each share of our
common stock held. As a result of the Merger, we are a subsidiary of Buck Holdings, L.P.
(“Parent”), a Delaware limited partnership controlled by investment funds affiliated with
Kohlberg Kravis Roberts & Co., L.P. (“KKR” or “Sponsor”). KKR, GS Capital Partners VI
Fund, L.P. and affiliated funds (affiliates of Goldman, Sachs & Co.), Citi Private Equity,
Wellington Management Company, LLP, CPP Investment Board (USRE II) Inc., and other
equity co-investors (collectively, the “Investors”) indirectly own a substantial portion of our
capital stock through their investment in Parent.