Dollar General 2015 Annual Report Download - page 136
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10-K
DOLLAR GENERAL CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
6. Assets and liabilities measured at fair value
The following table presents the Company’s assets and liabilities measured at fair value on a
recurring basis as of January 29, 2016, aggregated by the level in the fair value hierarchy within which
those measurements are classified.
Quoted Prices
in Active
Markets Significant
for Identical Other Significant
Assets and Observable Unobservable Balance at
Liabilities Inputs Inputs January 29,
(In thousands) (Level 1) (Level 2) (Level 3) 2016
Liabilities:
Long-term obligations(a) .................. $2,305,470 $675,459 $— $2,980,929
Deferred compensation(b) ................. 21,064 — — 21,064
(a) Reflected at book value in the consolidated balance sheet as Current portion of long-term
obligations of $1,379 and Long-term obligations of $2,969,175.
(b) Reflected at fair value in the consolidated balance sheet as a component of Accrued expenses and
other current liabilities of $8,307 and a component of noncurrent Other liabilities of $12,757.
The carrying amounts reflected in the consolidated balance sheets for cash, cash equivalents,
short-term investments, receivables and payables approximate their respective fair values. The Company
does not have any recurring fair value measurements using significant unobservable inputs (Level 3) as
of January 29, 2016.
7. Derivatives and hedging activities
From time to time, the Company enters into certain financial instrument positions, all of which are
intended to reduce risk by hedging an underlying economic exposure.
Risk management objective of using derivatives
The Company is exposed to certain risks arising from both its business operations and economic
conditions. The Company principally manages its exposures to a wide variety of business and
operational risks through management of its core business activities. The Company manages economic
risks, including interest rate, liquidity, and credit risk, primarily by managing the amount, sources, and
duration of its debt funding and, from time to time, through the use of derivative financial instruments.
Specifically, the Company may enter into derivative financial instruments to manage exposures that
arise from business activities that result in the receipt or payment of future known and uncertain cash
amounts, the value of which are determined primarily by interest rates.
In addition, the Company is exposed to certain risks arising from uncertainties of future market
values caused by the fluctuation in the prices of commodities. From time to time the Company may
enter into derivative financial instruments to protect against future price changes related to these
commodity prices.
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