Dollar General 2008 Annual Report Download - page 70

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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 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, “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 8,362 stores (as of
January 30, 2009) in 35 states covering most of 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
10% of the Company’ s purchases in 2008 were made from The Procter & Gamble Company.
The Company’ s next largest supplier accounted for approximately 6% of the Company’ s
purchases in 2008.
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 $0 and $5.2 million as of January 30, 2009 and February 1, 2008, respectively.
Payments due from banks for third-party credit card, debit card and electronic benefit
transactions classified as cash and cash equivalents totaled approximately $16.2 million and
$13.9 million at January 30, 2009 and February 1, 2008, 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 $127.6 million and $107.9 million at January 30,
2009 and February 1, 2008, 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 are being held in
accordance with certain insurance-related regulatory requirements which could limit the
Company’ s ability to use these assets for general corporate purposes, as further described below
under “Investments in debt and equity securities.”