Dollar General 2010 Annual Report Download - page 156

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10-K
DOLLAR GENERAL CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
8. Derivative financial instruments (Continued)
The tables below present the pre-tax effect of the Company’s derivative financial instruments on
the consolidated statement of operations (including OCI) for the years ended January 28, 2011 and
January 29, 2010:
Tabular Disclosure of the Effect of Derivative Instruments on the Consolidated Statement of
Operations For the year ended January 28, 2011
Location of Gain or Amount of (Gain)
Amount of Loss Recognized in or Loss Recognized
Amount of (Gain) or Loss Income on in Income on
(Gain) or Loss Reclassified from Derivative Derivative
Recognized in Location of Gain or Accumulated (Ineffective Portion (Ineffective Portion
Derivatives in OCI on Loss Reclassified OCI into and Amount and Amount
Cash Flow Derivative from Accumulated Income Excluded from Excluded from
Hedging (Effective OCI into Income (Effective Effectiveness Effectiveness
Relationships Portion) (Effective Portion) Portion) Testing) Testing)
Interest rate swaps $19,717 Interest expense $42,994 Other (income) expense $526
Tabular Disclosure of the Effect of Derivative Instruments on the Consolidated Statement of
Operations For the year ended January 29, 2010
Location of Gain or Amount of (Gain)
Amount of Loss Recognized in or Loss Recognized
Amount of (Gain) or Loss Income on in Income on
(Gain) or Loss Reclassified from Derivative Derivative
Recognized in Location of Gain or Accumulated (Ineffective Portion (Ineffective Portion
Derivatives in OCI on Loss Reclassified OCI into and Amount and Amount
Cash Flow Derivative from Accumulated Income Excluded from Excluded from
Hedging (Effective OCI into Income (Effective Effectiveness Effectiveness
Relationships Portion) (Effective Portion) Portion) Testing) Testing)
Interest rate swaps $42,324 Interest expense $50,140 Other (income) expense $618
Amount of
Location of Gain or (Gain) or Loss
Loss Recognized in Recognized in
Income on Income on
Derivatives Not Designated as Hedging Instruments Derivative Derivative
Commodity hedges ................................ Other (income) expense $(341)
Credit-risk-related contingent features
The Company has agreements with all of its interest rate swap counterparties that contain a
provision providing that the Company could be declared in default on its derivative obligations if
repayment of the underlying indebtedness is accelerated by the lender due to the Company’s default on
such indebtedness.
As of January 28, 2011, the fair value of interest rate swaps in a net liability position, which
includes accrued interest but excludes any adjustment for nonperformance risk related to these
agreements, was $44.0 million. If the Company had breached any of these provisions at January 28,
2011, it could have been required to post full collateral or settle its obligations under the agreements at
an estimated termination value equal to the fair value of $44.0 million. As of January 28, 2011, the
Company had not breached any of these provisions or posted any collateral related to these
agreements.
78