Dollar General 2013 Annual Report Download - page 132

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DOLLAR GENERAL CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. Basis of presentation and accounting policies
Basis of presentation
These notes contain references to the years 2013, 2012, and 2011, which represent fiscal years
ended January 31, 2014, February 1, 2013, and February 3, 2012, respectively. The Company’s fiscal
year ends on the Friday closest to January 31. The 2013 and 2012 years were 52-week accounting
periods, while 2011 was a 53-week accounting period. The consolidated financial statements include all
subsidiaries of the Company, except for its not-for-profit subsidiary which the Company does not
control. Intercompany transactions have been eliminated.
The Company sells general merchandise on a retail basis through 11,132 stores (as of January 31,
2014) in 40 states covering most of the southern, southwestern, midwestern and eastern United States.
The Company owns distribution centers (‘‘DCs’’) in Scottsville, Kentucky; South Boston, Virginia;
Alachua, Florida; Zanesville, Ohio; Jonesville, South Carolina; Marion, Indiana; Bessemer, Alabama;
and Bethel, Pennsylvania, and leases DCs in Ardmore, Oklahoma; Fulton, Missouri; Indianola,
Mississippi; and Lebec, California.
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, bank deposits, 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.
Payments due from processors for electronic tender transactions classified as cash and cash
equivalents totaled approximately $44.0 million and $45.2 million at January 31, 2014 and February 1,
2013, respectively.
At January 31, 2014, the Company maintained cash balances to meet a $20 million minimum
threshold set by insurance regulators, as further described below under ‘‘Insurance liabilities.’’
Investments in debt and equity securities
The Company accounts for investments in debt and marketable equity securities as
held-to-maturity, available-for-sale, or trading, depending on their classification. Debt securities
categorized as held-to-maturity are stated at amortized cost. Debt and equity securities categorized as
available-for-sale are stated at fair value, with any unrealized gains and losses, net of deferred income
taxes, reported as a component of Accumulated other comprehensive loss. Trading securities (primarily
mutual funds held pursuant to deferred compensation and supplemental retirement plans, as further
discussed below in Notes 6 and 9) are stated at fair value, with changes in fair value recorded as a
component of Selling, general and administrative (‘‘SG&A’’) expense.
For the years ended January 31, 2014, February 1, 2013, and February 3, 2012, gross realized gains
and losses on the sales of available-for-sale securities were not material. The cost of securities sold is
based upon the specific identification method.
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10-K