Dollar General 2007 Annual Report Download - page 63

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“Accounting for Leases.” The Company is not the primary beneficiary of these VIEs and,
accordingly, has not included these entities in its consolidated financial statements.
Business description
The Company sells general merchandise on a retail basis through 8,194 stores (as of
February 1, 2008) located primarily in the southern, southwestern, midwestern and eastern
United States. The Company has DCs in Scottsville, Kentucky; Ardmore, Oklahoma; South
Boston, Virginia; Indianola, Mississippi; Fulton, Missouri; Alachua, Florida; Zanesville, Ohio;
Jonesville, South Carolina and Marion, Indiana.
The Company purchases its merchandise from a wide variety of suppliers. Approximately
12% of the Company’ s purchases in 2007 were made from The Procter & Gamble Company.
The Company’ s next largest supplier accounted for approximately 6% of the Company’ s
purchases in 2007.
Cash and cash equivalents
Cash and cash equivalents include highly liquid investments with insignificant interest
rate risk and original maturities of three months or less when purchased. Such investments
primarily consist of money market funds, certificates of deposit (which may include foreign time
deposits), and commercial paper. The carrying amounts of these items are a reasonable estimate
of their fair value due to the short maturity of these investments. The Company held foreign time
deposits of $5.2 million as of February 1, 2008.
Payments due from banks for third-party credit card, debit card and electronic benefit
transactions classified as cash and cash equivalents totaled approximately $13.9 million and
$11.6 million at February 1, 2008 and February 2, 2007, respectively.
The Company’ s cash management system provides for daily investment of available
balances and the funding of outstanding checks when presented for payment. Outstanding but
unpresented checks totaling approximately $107.9 million and $122.3 million at February 1,
2008 and February 2, 2007, respectively, have been included in Accounts payable in the
consolidated balance sheets. Upon presentation for payment, these checks are funded through
available cash balances or the Company’ s credit facilities.
The Company has certain cash and cash equivalents balances that, along with certain
other assets, are being held as required by certain insurance-related regulatory requirements and
are therefore not available for general corporate purposes, as further described below under
“Investments in debt and equity securities.”
Investments in debt and equity securities
The Company accounts for its investment in debt and marketable equity securities in
accordance with SFAS 115, “Accounting for Certain Investments in Debt and Equity Securities,”
and accordingly, classifies them as held-to-maturity, available-for-sale, or trading. Debt