Cash Equivalents for Drugstore.com (DSCM)

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Drugstore.com (DSCM)

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DSCM » Topics » Cash Equivalents

These excerpts taken from the DSCM 10-K filed Mar 13, 2009.

Cash Equivalents

We consider all highly liquid investments with a maturity of three months or less from the date of purchase to be cash equivalents. Cash equivalents include money market funds and commercial paper.

Cash Equivalents

We consider all highly liquid investments with a maturity of three months or less from the date of purchase to be cash equivalents. Cash equivalents include money market funds and commercial paper.

Cash Equivalents

FACE="Times New Roman" SIZE="2">We consider all highly liquid investments with a maturity of three months or less from the date of purchase to be cash equivalents. Cash equivalents include money market funds and commercial paper.

STYLE="margin-top:18px;margin-bottom:0px; margin-left:2%">Marketable Securities

SIZE="2">Management determines the appropriate classification of marketable securities at the time of purchase and reevaluates such designation as of each balance sheet date. The evaluation includes our view that our investments in debt securities
are available to support current operations and therefore classified as a current asset. At December 28, 2008 and December 30, 2007, marketable securities, which are considered available-for-sale,

DRUGSTORE.COM, INC.

ALIGN="center">NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

consisted primarily of government bonds, corporate notes, and commercial paper. Marketable securities are carried at fair value. Net unrealized holding gains
were $133,000 at December 28, 2008 and $34,000 at December 30, 2007. Cost of securities sold is determined using the specific identification method.

FACE="Times New Roman" SIZE="2">We regularly monitor and evaluate the realizable value of our marketable securities. When assessing marketable securities for other-than-temporary declines in value, we consider such factors as, among other things,
how significant the decline in value is as a percentage of the original cost, how long the market value of the investment has been less than its original cost, the performance of the issuer’s stock price in relation to the stock price of its
competitors within the industry and the market in general, analyst recommendations, any news that has been released specific to the issuer, and the outlook for the overall industry in which the issuer operates. If events and circumstances indicate
that a decline in the value of these assets has occurred and is other than temporary, we record a charge against net earnings. No such charges have been recorded in fiscal years 2008, 2007, and 2006.

STYLE="margin-top:18px;margin-bottom:0px; margin-left:2%">Fair Value of Financial Instruments

SIZE="2">We adopted Statement of Financial Position No. 157, Fair Value Measurements (SFAS 157) on December 31, 2007, the first day of our fiscal year 2008. SFAS 157 defines fair value as the price that would be received to sell an
asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (exit price). The standard outlines a valuation framework and creates a fair value hierarchy in order to increase consistency and
comparability of fair value measurements and the related disclosures. Under GAAP, certain assets and liabilities must be measured at fair value, and SFAS 157 details the disclosures that are required for measured fair value (see note 4). We have
certain financial assets including money market funds and marketable securities that are measured at the new fair value standard. We currently do not have non-financial assets and non-financial liabilities that are required to be measured at fair
value on a recurring basis. Our financial assets and liabilities, subject to SFAS 157, are measured using inputs from the three levels of the fair value hierarchy. The three levels are as follows:

STYLE="font-size:12px;margin-top:0px;margin-bottom:0px">


Level 1		Inputs are unadjusted quoted prices in active markets for identical assets or liabilities that we have the ability to access at the measurement date.

Level 2		Inputs include unadjusted quoted prices in active markets for similar assets or liabilities, or unadjusted quoted prices for identical or similar assets or liabilities in markets that are not active, or inputs other than quoted prices that are observable for the asset or liability.

Level 3		Unobservable inputs for the asset or liability that reflect our assumptions that market participants would use in pricing the asset or liability.

The carrying value approximates the fair value for all financial instruments that are not measured
at fair value on the balance sheet, including accounts receivable and debt, due to the short-maturities of the instruments.

SIZE="2">Concentration of Credit Risk

Financial instruments, which potentially subject us to concentrations of credit risk,
consist principally of our holdings of cash, cash equivalents, marketable securities, and accounts receivable. Our credit risk is managed by investing our cash equivalents and marketable securities in high-quality money market instruments and
securities of the U.S. government agencies, and high-quality corporate issuers. Our credit risk is managed through monitoring the stability of the United States-based financial institutions we use and the diversification of our financial resources
by limiting the investment in any one issuer of not more than 10% of the total portfolio at the time of purchase, except for investments in U.S. treasuries and agencies and investment advisors’ money market funds.

STYLE="margin-top:0px;margin-bottom:0px">

DRUGSTORE.COM, INC.

ALIGN="center">NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Sales subject to reimbursements collected from insurance companies, pharmacy benefit managers (PBMs),
and managed care organizations through our relationship with Rite Aid currently represent 26% of our mail-order pharmacy sales.

SIZE="2">Accounts Receivable

Accounts receivable consists primarily of the net amounts to be collected from third parties,
including amounts collectible related to credit card purchases, vendor volume purchase and rebate allowances, amounts collectible from advertising agreements, amounts due from Rite Aid for co-payment and insurance reimbursement payments collected on
our behalf, OTC fulfillment fees related to our agreement with Weil, and product revenue generated through our merchant agreement with Amazon.com, Inc. (Amazon.com). Accounts receivable are recorded net of allowances for doubtful accounts, which
were $16,000 as of December 28, 2008 and $41,000 as of December 30, 2007. We determine our allowance for doubtful accounts by considering a number of factors, including the length of time receivables are past due, previous loss history,
our ability to offset our obligations, and the customer’s ability to pay its obligation. We write off accounts receivable when they become uncollectible, and any payments subsequently received are applied to the allowance for doubtful accounts.

These excerpts taken from the DSCM 10-K filed Mar 14, 2008.

Cash Equivalents

We consider all highly liquid investments with a maturity of three months or less from the date of purchase to be cash equivalents. Cash equivalents include money market funds and commercial paper.

Cash
Equivalents

We consider all highly liquid investments with a maturity of three months or less from the date of purchase to be cash
equivalents. Cash equivalents include money market funds and commercial paper.

This excerpt taken from the DSCM 10-K filed Mar 16, 2007.

Cash Equivalents

We consider all highly liquid investments with a maturity of three months or less from the date of purchase to be cash equivalents. Cash equivalents include money market funds and commercial paper. Cash held as collateral is included in other current assets based on the expected release of the underlying obligation.

This excerpt taken from the DSCM 10-K filed Mar 17, 2006.

Cash Equivalents

This excerpt taken from the DSCM 10-K filed Mar 18, 2005.

Cash Equivalents

EXCERPTS ON THIS PAGE:

10-K (3 sections)	Mar 13, 2009

10-K (2 sections)	Mar 14, 2008

10-K	Mar 16, 2007

10-K	Mar 17, 2006

10-K	Mar 18, 2005

Drugstore.com (DSCM)

DSCM » Topics » Cash Equivalents

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