Dollar General 2007 Annual Report Download - page 62

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60
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. Basis of presentation and accounting policies
Basis of presentation
These notes contain references to the 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. Fiscal 2008 will be, and each of fiscal years 2007 and 2006 were, a 52-
week accounting period while fiscal 2005 was a 53-week accounting period. The Company’ s
fiscal year ends on the Friday closest to January 31. The consolidated financial statements
include all subsidiaries of the Company, except for its not-for-profit subsidiary the assets and
revenues of which are not material. Intercompany transactions have been eliminated.
Dollar General Corporation (the “Company”) was acquired on July 6, 2007 through a
Merger (as defined and discussed in greater detail in Note 2 below) accounted for as a reverse
acquisition. Although the Company continued as the same legal entity after the Merger, the
accompanying consolidated financial statements are presented for the “Predecessor” and
“Successor” relating to the periods preceding and succeeding the Merger, respectively. As a
result of the Company applying purchase accounting and a new basis of accounting beginning on
July 7, 2007, the financial reporting periods presented are as follows:
• The 2007 periods presented include the 22-week Predecessor period of the Company
from February 3, 2007 to July 6, 2007 and the 30-week Successor period, reflecting
the merger of the Company and Buck Acquisition Corp. (“Buck”) from July 7, 2007
to February 1, 2008.
• Buck’ s results of operations for the period from March 6, 2007 to July 6, 2007 (prior
to the Merger on July 6, 2007) are also included in the consolidated financial
statements for the Successor period described above as a result of certain derivative
financial instruments entered into by Buck prior to the Merger, as further described
below. Other than these financial instruments, Buck had no assets, liabilities, or
operations prior to the Merger.
• The 2006 and 2005 periods presented reflect the Predecessor. The consolidated
financial statements for the Predecessor periods have been prepared using the
Company’ s historical basis of accounting. As a result of purchase accounting, the
pre-Merger and post-Merger consolidated financial statements are not comparable.
The Company leases three of its distribution centers (“DCs”) from lessors, which meet
the definition of a Variable Interest Entity (“VIE”) as described by Financial Accounting
Standards Board (“FASB”) Interpretation 46, “Consolidation of Variable Interest Entities” (“FIN
46”), as revised. One of these DCs has been recorded as a financing obligation whereby the
property and equipment, along with the related lease obligations, are reflected in the consolidated
balance sheets. The land and buildings of the other two DCs have been recorded as operating
leases in accordance with Statement of Financial Accounting Standards (“SFAS”) 13,