Dollar General 2007 Annual Report Download - page 79
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77
Exit and disposal activities
In November 2006, the Company decided to close, in addition to those stores that might
be closed in the ordinary course of business, approximately 400 stores by the end of fiscal 2007,
all of which have been closed as of February 1, 2008. Additionally, in connection with the
Merger, management approved and completed a plan to close an additional 60 stores prior to
February 1, 2008. The Company has recorded the following pre-tax costs associated with the
closing of these approximately 460 stores (in millions):
Total (a)
Incurred in
2006
Incurred in
2007
Merger
Additions (b) Remaining
Lease contract termination
costs (c) $ 34.3 $ 5.7 $ 16.3 $ 12.3 $ -
One-time employee
termination benefits 1.0 0.3 0.5 0.2 -
Other associated store
closing costs 8.6 0.2 7.2 1.2 -
Inventory liquidation fees 4.4 1.6 2.8 - -
Asset impairment &
accelerated depreciation 12.8 8.3 3.6 0.9 -
Inventory markdowns
below cost 8.3 6.7 0.9 0.7 -
Total $ 69.4 $ 22.8 $ 31.3 $ 15.3 $ -
(a) Reflects totals as of February 1, 2008, which, in total, are $1.5 million less than estimates as of November 2,
2007.
(b) These amounts were recorded as assumed liabilities in connection with the Merger.
(c) Including reversals of deferred rent accruals totaling $0.5 million, of which $0.1 million is reflected in 2006,
and $0.4 million is reflected in 2007. Excludes accretion expense to be incurred in future periods.
Other associated store closing costs as listed in the table above primarily include the
removal of any usable assets as well as real estate consulting and other services.
Liability balances related to exit activities discussed above are as follows (in millions):
Balance,
February 2,
2007
2007
Expenses (a)
2007 Payments
and Other
Merger
Additions (b)
Balance,
February 1,
2008
Lease contract termination
costs $ 5.0 $ 16.9 $ 14.1 $ 12.3 $ 20.1
One-time employee
termination benefits 0.3 0.5 1.0 0.2 -
Other associated store
closing costs (c) 0.2 7.2 7.6 1.2 1.0
Inventory liquidation fees 0.3 2.8 3.1 - -
Total $ 5.8 $ 27.4 $ 25.8 $ 13.7 $ 21.1
(a) 2007 expenses associated with exit and disposal activities are included in selling, general and administrative
(“SG&A”) expenses in the consolidated statement of operations.
(b) These amounts were recorded as assumed liabilities in connection with the Merger.
(c) Primarily represents store closing costs including removal of store fixtures.