Dollar General 2012 Annual Report Download - page 157

10-K
DOLLAR GENERAL CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
9. Commitments and contingencies (Continued)
The land and buildings of the Company’s DCs in Fulton, Missouri and Indianola, Mississippi are
subject to operating lease agreements and the leased Ardmore, Oklahoma DC is subject to a financing
arrangement. The entities involved in the ownership structure underlying these leases meet the
accounting definition of a Variable Interest Entity (‘‘VIE’’). The Company is not the primary
beneficiary of these VIEs and, accordingly, has not included these entities in its consolidated financial
statements. Certain leases contain restrictive covenants. As of February 1, 2013, the Company is not
aware of any material violations of such covenants.
In January 1999, the Company sold its DC located in Ardmore, Oklahoma for cash and concurrent
with the sale transaction, the Company leased the property back for a period of 23 years. The
transaction is accounted for as a financing obligation rather than a sale as a result of, among other
things, the lessor’s ability to put the property back to the Company under certain circumstances. The
property and equipment, along with the related lease obligation associated with this transaction are
recorded in the consolidated balance sheets. In August 2007, the Company purchased a secured
promissory note (the ‘‘Ardmore Note’’) from an unrelated third party with a face value of $34.3 million
at the date of purchase which approximated the remaining financing obligation. The Ardmore Note
represents debt issued by the third party entity from which the Company leases the Ardmore DC and
therefore the Company holds the debt instrument pertaining to its lease financing obligation. Because a
legal right of offset exists, the Company is accounting for the Ardmore Note as a reduction of its
outstanding financing obligation in its consolidated balance sheets.
Future minimum payments as of February 1, 2013 for operating leases are as follows:
(In thousands)
2013 .................................................. $ 611,595
2014 .................................................. 568,029
2015 .................................................. 509,684
2016 .................................................. 452,756
2017 .................................................. 399,708
Thereafter ............................................. 1,993,446
Total minimum payments ................................... $4,535,218
Total minimum payments for capital leases as of February 1, 2013 were $10.1 million, with a
present value of $7.7 million at an effective interest rate of approximately 6.2% at February 1, 2013.
The gross amount of property and equipment recorded under capital leases and financing obligations at
February 1, 2013 and at February 3, 2012, was $29.8 million and $29.0 million, respectively.
Accumulated depreciation on property and equipment under capital leases and financing obligations at
February 1, 2013 and February 3, 2012, was $6.9 million and $7.3 million, respectively.
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