Virginia
|
54-1387365
|
(State
or other jurisdiction of
|
(I.R.S.
Employer
|
incorporation
or organization)
|
Identification
No.)
|
Securities
Registered Pursuant to Section 12(b) of the
Act:
|
|
Title
of Each Class
|
Name
of Each Exchange on Which Registered
|
None
|
None
|
Yes
(X)
|
No ( ) |
Yes
( )
|
No ( X ) |
Yes
(X)
|
No ( ) |
Large
accelerated filer (X)
|
Accelerated filer ( ) | Non-accelerated filer ( ) |
Yes ( ) | No (X) |
·
|
our
anticipated sales, including comparable store net sales, net sales
growth
and earnings growth;
|
·
|
our
growth plans, including our plans to add, expand or relocate stores,
our
anticipated square footage increase, and our ability to renew leases
at
existing store locations;
|
·
|
the
average size of our stores to be added in 2007 and
beyond;
|
·
|
the
effect of a slight shift in merchandise mix to consumables and
the
increase of freezers and coolers on gross profit margin and
sales;
|
·
|
the
effect that expanding tender types accepted by our stores will
have on
sales;
|
·
|
the
net sales per square foot, net sales and operating income attributable
to
smaller and larger stores and store-level cash payback
metrics;
|
·
|
the
possible effect of inflation and other economic changes on our
costs and
profitability, including the possible effect of future changes
in minimum
wage rates, shipping rates, domestic and foreign freight costs,
fuel costs
and wage and benefit costs;
|
·
|
our
cash needs, including our ability to fund our future capital expenditures
and working capital requirements;
|
·
|
our
gross profit margin, earnings, inventory levels and ability to
leverage
selling, general and administrative and other fixed
costs;
|
·
|
our
seasonal sales patterns including those relating to the length
of the
holiday selling seasons;
|
·
|
the
capabilities of our inventory supply chain technology and other
new
systems;
|
·
|
the
future reliability of, and cost associated with, our sources of
supply,
particularly imported goods such as those sourced from
China;
|
·
|
the
capacity, performance and cost of our distribution centers, including
opening and expansion schedules;
|
·
|
our
expectations regarding competition and growth in our retail
sector;
|
·
|
costs
of pending and possible future legal claims;
|
·
|
management's
estimates associated with our critical accounting policies, including
inventory valuation, accrued expenses, and income
taxes;
|
·
|
the
possible effect on our financial results of changes in generally
accepted
accounting principles relating to accounting for income tax
uncertainties.
|
INTRODUCTORY NOTE: Unless otherwise stated, references to "we," "our" and "Dollar Tree" generally refer to Dollar Tree Stores, Inc. and its direct and indirect subsidiaries on a consolidated basis. Unless specifically indicated otherwise, any references to “2007” or “fiscal 2007”, “2006” or “fiscal 2006,” “2005” or “fiscal 2005,” and "2004" or "fiscal 2004," relate to as of or for the years ended February 2, 2008, February 3, 2007, January 28, 2006 and January 29, 2005, respectively. |
·
|
consumable
merchandise, which includes candy and food, basic health and beauty
care,
and household consumables such as paper, plastics and household chemicals
and in select stores, frozen and refrigerated food;
|
·
|
variety
merchandise, which includes toys, durable housewares, gifts, fashion
health and beauty care, party goods, greeting cards, apparel, and
other
items; and
|
·
|
seasonal
goods, which include Easter, Halloween and Christmas merchandise,
along
with summer toys and lawn and garden
merchandise.
|
February
3,
|
January
28,
|
||||||
Merchandise
Type
|
2007
|
2006
|
|||||
Variety
categories
|
48.9%
|
|
|
47.2%
|
|
||
Consumable
|
45.3%
|
|
|
44.9%
|
|
||
Seasonal
|
5.8%
|
|
|
7.9%
|
|
Year
|
Number
of Stores
|
Average
Selling Square Footage Per Store
|
Average
Selling Square Footage Per New Store Opened
|
2002
|
2,263
|
5,763
|
7,783
|
2003
|
2,513
|
6,716
|
9,948
|
2004
|
2,735
|
7,475
|
10,947
|
2005
|
2,914
|
7,900
|
9,756
|
2006
|
3,219
|
8,160
|
8,780
|
§ |
disruptions
in the flow of imported goods because of factors such
as:
|
o |
raw
material shortages, work stoppages, strikes and political
unrest;
|
o |
problems
with oceanic shipping, including shipping container shortages;
and
|
o |
economic
crises and international disputes.
|
§ |
increases
in the cost of purchasing or shipping foreign merchandise, resulting
from:
|
o |
increases
in shipping rates imposed by the trans-Pacific ocean carriers;
|
o |
changes
in currency exchange rates and local economic conditions, including
inflation in the country of origin;
|
o |
failure
of the United States to maintain normal trade relations with China;
and
|
o |
import
duties, import quotas and other trade
sanctions.
|
§ |
Shipping.
Our
oceanic shipping schedules may be disrupted or delayed from time
to time.
We also have experienced shipping rate increases over the last several
years imposed by the trans-Pacific ocean
carriers.
|
§ | Diesel fuel costs. We have experienced increases in diesel fuel costs over the past few years. |
§ |
Vulnerability
to natural or man-made disasters.
A
fire, explosion or natural disaster at any of our distribution
facilities
could result in a loss of merchandise and impair our ability to
adequately
stock our stores. Some of our facilities are especially vulnerable
to
earthquakes, hurricanes or
tornadoes.
|
§ |
Labor
disagreement.
Labor disagreements or disruptions may result in delays in the delivery
of
merchandise to our stores and increase
costs.
|
§ |
War,
terrorism and other events.
War and acts of terrorism in the United States, or in China or other
parts
of Asia where we buy a significant amount of our imported merchandise,
could disrupt our supply chain.
|
· |
classify
our board of directors into three classes, each of which serves for
different three-year periods;
|
· |
provide
that only the board of directors, chairman or president may call
special
meetings of the shareholders;
|
· |
establish
certain advance notice procedures for nominations of candidates for
election as directors and for shareholder proposals to be considered
at
shareholders' meetings;
|
· |
require
a vote of the holders of more than two-thirds of the shares entitled
to
vote in order to remove a director, change the number of directors,
or
amend the foregoing and certain other provisions of the articles
of
incorporation and bylaws; and
|
· |
permit
the board of directors, without further action of the shareholders,
to
issue and fix the terms of preferred stock, which may have rights
senior
to those of the common stock.
|
Alabama
|
81
|
Maine
|
16
|
Ohio
|
148
|
||
Arizona
|
50
|
Maryland
|
74
|
Oklahoma
|
50
|
||
Arkansas
|
48
|
Massachusetts
|
41
|
Oregon
|
65
|
||
California
|
222
|
Michigan
|
118
|
Pennsylvania
|
178
|
||
Colorado
|
37
|
Minnesota
|
39
|
Rhode
Island
|
11
|
||
Connecticut
|
25
|
Mississippi
|
49
|
South
Carolina
|
68
|
||
Delaware
|
16
|
Missouri
|
80
|
South
Dakota
|
4
|
||
Florida
|
200
|
Montana
|
8
|
Tennessee
|
83
|
||
Georgia
|
129
|
Nebraska
|
11
|
Texas
|
200
|
||
Idaho
|
20
|
Nevada
|
24
|
Utah
|
31
|
||
Illinois
|
134
|
New
Hampshire
|
13
|
Vermont
|
6
|
||
Indiana
|
94
|
New
Jersey
|
69
|
Virginia
|
125
|
||
Iowa
|
27
|
New
Mexico
|
22
|
Washington
|
58
|
||
Kansas
|
31
|
New
York
|
148
|
West
Virginia
|
32
|
||
Kentucky
|
68
|
North
Carolina
|
145
|
Wisconsin
|
59
|
||
Louisiana
|
55
|
North
Dakota
|
3
|
Wyoming
|
4
|
Location
|
Own/Lease
|
Lease
Expires
|
Size
in
Square
Feet
|
Chesapeake,
Virginia
|
Own
|
N/A
|
400,000
|
Olive
Branch, Mississippi
|
Own
|
N/A
|
425,000
|
Joliet,
Illinois
|
Own
|
N/A
|
1,200,000
|
Stockton,
California
|
Own
|
N/A
|
525,000
|
Briar
Creek, Pennsylvania
|
Own
|
N/A
|
603,000
|
Savannah,
Georgia
|
Own
|
N/A
|
603,000
|
Marietta,
Oklahoma
|
Own
|
N/A
|
603,000
|
Salt
Lake City, Utah
|
Lease
|
April
2010
|
252,000
|
Ridgefield,
Washington
|
Own
|
N/A
|
665,000
|
·
|
employment
related matters;
|
·
|
infringement
of intellectual property rights;
|
·
|
product
safety matters, which may include product recalls in cooperation
with the
Consumer Products Safety Commission;
|
·
|
personal
injury/wrongful death claims; and
|
·
|
real
estate matters related to store
leases.
|
High
|
Low
|
||||||
Fiscal
year ended January 28, 2006:
|
|||||||
First
Quarter
|
$
|
29.04
|
$
|
23.95
|
|||
Second
Quarter
|
26.01
|
22.77
|
|||||
Third
Quarter
|
25.65
|
20.56
|
|||||
Fourth
Quarter
|
25.48
|
20.66
|
|||||
Fiscal
year ended February 3, 2007:
|
|||||||
First
Quarter
|
$
|
28.68
|
$
|
24.34
|
|||
Second
Quarter
|
27.89
|
23.90
|
|||||
Third
Quarter
|
32.00
|
25.62
|
|||||
Fourth
Quarter
|
32.78
|
29.34
|
|
|
|
|
|
|
|
|
Approximate
|
|
||||
|
|
|
|
|
|
|
|
dollar
value
|
|
||||
|
|
|
|
|
|
Total
number
|
|
of
shares that
|
|
||||
|
|
|
|
|
|
of
shares
|
|
may
yet be
|
|
||||
|
|
|
|
|
|
purchased
as
|
|
purchased
under
|
|
||||
|
|
Total
number
|
|
Average
|
|
part
of publicly
|
|
the
plans or
|
|
||||
|
|
of
shares
|
|
price
paid
|
|
announced
plans
|
|
programs
|
|
||||
Period
|
|
purchased
|
|
per
share
|
|
or
programs
|
|
(in
millions)
|
|
||||
October
29, 2006 to November 25, 2006
|
-
|
$
|
-
|
-
|
$
|
26.7
|
|||||||
November
26, 2006 to December 30, 2006
|
3,156,881
|
30.80
|
3,156,881
|
426.7
|
|||||||||
December
31, 2006 to February 3, 2007
|
-
|
-
|
-
|
426.7
|
|||||||||
Total
|
3,156,881
|
$
|
30.80
|
3,156,881
|
$
|
426.7
|
Years
Ended
|
|
|||||||||||||||
|
|
February
3,
|
|
January
28,
|
|
January
29,
|
|
January
31
|
|
December
31,
|
|
|||||
|
|
2007
|
|
2006
|
|
2005
|
|
2004
|
|
2002
|
|
|||||
Income
Statement Data:
|
||||||||||||||||
Net
sales
|
$
|
3,969.4
|
$
|
3,393.9
|
$
|
3,126.0
|
$
|
2,799.9
|
$
|
2,329.2
|
||||||
Gross
profit
|
1,357.2
|
1,172.4
|
1,112.5
|
1,018.4
|
852.0
|
|||||||||||
Selling,
general and administrative expenses
|
1,046.4
|
888.5
|
819.0
|
724.8
|
598.1
|
|||||||||||
Operating
income
|
310.8
|
283.9
|
293.5
|
293.6
|
253.9
|
|||||||||||
Net
income
|
192.0
|
173.9
|
180.3
|
177.6
|
154.6
|
|||||||||||
Margin
Data (as a percentage of net sales):
|
||||||||||||||||
Gross
profit
|
34.2
|
%
|
34.5
|
%
|
35.6
|
%
|
36.4
|
%
|
36.6
|
%
|
||||||
Selling,
general and administrative expenses
|
26.4
|
%
|
26.2
|
%
|
26.2
|
%
|
25.9
|
%
|
25.7
|
%
|
||||||
Operating
income
|
7.8
|
%
|
8.4
|
%
|
9.4
|
%
|
10.5
|
%
|
10.9
|
%
|
||||||
Net
income
|
4.8
|
%
|
5.1
|
%
|
5.8
|
%
|
6.3
|
%
|
6.6
|
%
|
||||||
Per
Share Data:
|
||||||||||||||||
Diluted
net income per share
|
$
|
1.85
|
$
|
1.60
|
$
|
1.58
|
$
|
1.54
|
$
|
1.35
|
||||||
Diluted
net income per share increase
|
15.6
|
%
|
1.3
|
%
|
2.6
|
%
|
14.1
|
%
|
23.9
|
%
|
As
of
|
|
|||||||||||||||
|
|
February
3,
|
|
January
28,
|
|
January
29,
|
|
January
31
|
|
December
31,
|
|
|||||
|
|
2007
|
|
2006
|
|
2005
|
|
2004
|
|
2002
|
||||||
Balance
Sheet Data:
|
||||||||||||||||
Cash
and cash equivalents
|
||||||||||||||||
and
short-term investments
|
$
|
306.8
|
$
|
339.8
|
$
|
317.8
|
$
|
168.7
|
$
|
336.0
|
||||||
Working
capital
|
575.7
|
648.2
|
675.5
|
450.3
|
509.6
|
|||||||||||
Total
assets
|
1,873.3
|
1,798.4
|
1,792.7
|
1,501.5
|
1,116.4
|
|||||||||||
Total
debt, including capital lease obligations
|
269.5
|
269.9
|
281.7
|
185.1
|
54.4
|
|||||||||||
Shareholders'
equity
|
1,167.7
|
1,172.3
|
1,164.2
|
1,014.5
|
855.4
|
|||||||||||
|
Years
Ended
|
|
||||||||||||||
|
|
|
February
3,
|
|
|
January
28,
|
|
|
January
29,
|
|
|
January
31
|
|
|
December
31,
|
|
|
|
|
2007
|
|
|
2006
|
|
|
2005
|
|
|
2004
|
|
|
2002
|
|
Selected
Operating Data:
|
||||||||||||||||
Number
of stores open at end of period
|
3,219
|
2,914
|
2,735
|
2,513
|
2,263
|
|||||||||||
Gross
square footage at end of period
|
33.3
|
29.2
|
25.9
|
21.4
|
16.5
|
|||||||||||
Selling
square footage at end of period
|
26.3
|
23.0
|
20.4
|
16.9
|
13.0
|
|||||||||||
Selling
square footage annual growth
|
14.3
|
%
|
12.6
|
%
|
21.1
|
%
|
27.5
|
%
|
28.8
|
%
|
||||||
Net
sales annual growth
|
16.9
|
%
|
8.6
|
%
|
11.6
|
%
|
18.7
|
%
|
17.2
|
%
|
||||||
Comparable
store net sales increase (decrease)
|
4.6
|
%
|
(0.8
|
%)
|
0.5
|
%
|
2.9
|
%
|
1.0
|
%
|
||||||
Net
sales per selling square foot
|
$
|
161
|
$
|
156
|
$
|
168
|
$
|
187
|
$
|
201
|
||||||
Net
sales per store
|
$
|
1.3
|
$
|
1.2
|
$
|
1.2
|
$
|
1.2
|
$
|
1.1
|
||||||
Selected
Financial Ratios:
|
||||||||||||||||
Return
on assets
|
10.2
|
%
|
9.7
|
%
|
10.9
|
%
|
13.7
|
%
|
15.3
|
%
|
||||||
Return
on equity
|
16.4
|
%
|
14.9
|
%
|
16.5
|
%
|
19.0
|
%
|
20.5
|
%
|
||||||
Inventory
turns
|
4.4
|
3.7
|
3.5
|
3.7
|
4.5
|
·
|
what
factors affect our business;
|
·
|
what
our earnings, gross margins and costs were in 2006 and
2005;
|
·
|
why
those earnings, gross margins and costs were different from the
year
before;
|
·
|
how
all of this affects our overall financial condition;
|
·
|
what
our expenditures for capital projects were in 2006 and what we
expect them
to be in 2007; and
|
·
|
where
funds will come from to pay for future
expenditures.
|
·
|
In
November 2006, our Board of Directors authorized the repurchase
of up to
$500 million of our common stock. This amount was in addition
to the $26.7
million remaining on the $300.0 million March 2005 authorization.
As of
February 3, 2007, we had approximately $427.0 million remaining
under this
authorization.
|
·
|
In
March 2006, we completed our acquisition of 138 Deal$ stores
and related
assets. We paid approximately $32.0 million for store related
assets and
$22.1 million for inventory.
|
·
|
On
December 15, 2005, the Compensation Committee of our Board of
Directors
approved the acceleration of the vesting date of all previously
issued,
outstanding and unvested options under all current stock option
plans,
effective as of December 15, 2005. This decision eliminated non-cash
compensation expense that would have been recorded in future
periods
following our adoption of Statement of Financial Accounting Standards
No.
123,
Share-Based
Payment (revised 2004)
(FAS
123R), on January 29, 2006. Compensation expense has been reduced
by
approximately $14.9 million over a period of four years during
which the
options would have vested, as a result of the option acceleration
program.
|
·
|
In
2004, we completed construction and began operations in two new
distribution centers. In June 2004, we began operations in our
new
distribution center in Joliet, Illinois. The Joliet distribution
center is
a 1.2 million square foot, fully automated facility. In February
2004, we
began operations in our Ridgefield, Washington distribution center.
The
Ridgefield distribution center is a 665,000 square foot facility
that can
be expanded to accommodate future growth needs. In 2007, we are
planning
to expand our Briar Creek distribution center by 400,000 square
feet. Upon
completion of this expansion, our nine distribution centers will
support
approximately $5.0 billion in sales annually.
|
·
|
In
March 2004, we entered into a five-year $450.0 million Unsecured
Revolving
Credit Facility (Facility). We used availability under this Facility
to
repay variable rate debt. This Facility also replaced our previous
$150.0
million revolving credit facility.
|
Year
Ended
|
|
Year
Ended
|
|
Year
Ended
|
|
|||||
|
|
February
3,
|
|
January
28,
|
|
January
29,
|
|
|||
|
|
2007
|
|
2006
|
|
2005
|
||||
Net
sales
|
100.0
|
%
|
100.0
|
%
|
100.0
|
%
|
||||
Cost
of sales
|
65.8
|
%
|
65.5
|
%
|
64.4
|
%
|
||||
Gross
profit
|
34.2
|
%
|
34.5
|
%
|
35.6
|
%
|
||||
Selling,
general and administrative
|
||||||||||
expenses
|
26.4
|
%
|
26.2
|
%
|
26.2
|
%
|
||||
Operating
income
|
7.8
|
%
|
8.3
|
%
|
9.4
|
%
|
||||
Interest
income
|
0.2
|
%
|
0.2
|
%
|
0.1
|
%
|
||||
Interest
expense
|
(0.4
|
%)
|
(0.4
|
%)
|
(0.3
|
%)
|
||||
Income
before income taxes
|
7.6
|
%
|
8.1
|
%
|
9.2
|
%
|
||||
Provision
for income taxes
|
(2.8
|
%)
|
(3.0
|
%)
|
(3.4
|
%)
|
||||
Net
income
|
4.8
|
%
|
5.1
|
%
|
5.8
|
%
|
February
3, 2007
|
|
January
28, 2006
|
|||||
New
stores
|
190
|
|
|
197
|
|||
Deal$
acquisition
|
138
|
|
|
--
|
|||
Acquired
leases
|
21
|
|
|
35
|
|||
Expanded
or relocated stores
|
85
|
|
|
93
|
|||
Closed
stores
|
(44)
|
|
|
(53)
|
|
·
|
Payroll
and benefit related costs increased 35 basis points due to
increased
incentive compensation costs resulting from better overall
company
performance in the current year as compared to the prior year
and
increased stock compensation expense, partially offset by lower
workers'
compensation costs in the current year.
|
·
|
Operating
and corporate expenses decreased 10 basis points primarily
as the result
of payments received for early lease terminations in the current
year.
|
January
28, 2006
|
|
January
29, 2005
|
|||||
New
stores
|
197
|
|
|
209
|
|||
Acquired
leases
|
35
|
|
|
42
|
|||
Expanded
or relocated stores
|
93
|
|
|
129
|
|||
Closed
stores
|
(53)
|
|
|
(29)
|
|
·
|
Merchandise
cost, including inbound freight, increased approximately 55
basis points,
due to a slight shift in mix to more consumables, which have
a lower
margin and increased inbound freight costs due to higher fuel
costs.
|
·
|
Occupancy
costs increased approximately 45 basis points due primarily
to
deleveraging associated with the negative comparable store
net sales for
the year.
|
·
|
Operating
and corporate expenses decreased approximately 25 basis points
primarily
due to decreased store supplies expense as a result of better
pricing,
decreased professional fees and the receipt of insurance proceeds
resulting from a fire at one of our locations, partially offset
by
increased interchange fees resulting from the rollout of debit
card
acceptance in 2005.
|
·
|
Payroll
related costs decreased approximately 10 basis points due to
a reduction
in incentive compensation accruals that are based on lower
than budgeted
2005 earnings and lower workers’ compensation and health care claims in
the current year.
|
·
|
These
decreases were partially offset by an approximate 25 basis
point increase
in store operating costs primarily due to higher utility costs
due to
higher rates and consumption in the current year.
|
·
|
Depreciation
expense for stores also increased 10 basis points primarily
due to the
deleveraging associated with negative comparable store net
sales for the
current year.
|
Year
Ended
|
|
Year
Ended
|
|
Year
Ended
|
|
|||||
|
|
February
3,
|
|
January
28,
|
|
January
29,
|
|
|||
(in
millions)
|
|
2007
|
|
2006
|
|
2005
|
||||
Net
cash provided by (used in):
|
||||||||||
Operating
activities
|
$
|
412.8
|
$
|
365.1
|
$
|
276.5
|
||||
Investing
activities
|
(190.7
|
)
|
(235.5
|
)
|
(315.4
|
)
|
||||
Financing
activities
|
(202.9
|
)
|
(170.3
|
)
|
61.2
|
Contractual
Obligations
|
Total
|
2007
|
2008
|
2009
|
2010
|
2011
|
Thereafter
|
|||||||||||||||
Lease
Financing
|
||||||||||||||||||||||
Operating
lease obligations
|
$
|
1,177.0
|
$
|
284.2
|
$
|
246.0
|
$
|
207.2
|
$
|
161.5
|
$
|
110.6
|
$
|
167.5
|
||||||||
Capital
lease obligations
|
0.8
|
0.4
|
0.3
|
0.1
|
--
|
--
|
--
|
|||||||||||||||
Long-term
Borrowings
|
||||||||||||||||||||||
Revolving
credit facility
|
250.0
|
--
|
--
|
250.0
|
--
|
--
|
--
|
|||||||||||||||
Revenue
bond financing
|
18.8
|
18.8
|
--
|
--
|
--
|
--
|
--
|
|||||||||||||||
Total
obligations
|
$
|
1,446.6
|
$
|
303.4
|
$
|
246.3
|
$
|
457.3
|
$
|
161.5
|
$
|
110.6
|
$
|
167.5
|
Commitments
|
Total
|
Expiring
in 2007
|
Expiring
in 2008
|
Expiring
in 2009
|
Expiring
in 2010
|
Expiring
in 2011
|
Thereafter
|
|||||||||||||||
Letters
of credit and surety bonds
|
$
|
116.3
|
$
|
115.6
|
$
|
0.7
|
$
|
--
|
$
|
--
|
$
|
--
|
$
|
--
|
||||||||
Freight
contracts
|
57.1
|
38.6
|
9.9
|
8.6
|
--
|
--
|
--
|
|||||||||||||||
Technology
assets
|
3.8
|
3.8
|
--
|
--
|
--
|
--
|
--
|
|||||||||||||||
Total
commitments
|
$
|
177.2
|
$
|
158.0
|
$
|
10.6
|
$
|
8.6
|
$
|
--
|
$
|
--
|
$
|
--
|
·
|
shifts
in the timing of certain holidays, especially
Easter;
|
·
|
the
timing of new store openings;
|
·
|
the
net sales contributed by new stores;
|
·
|
changes
in our merchandise mix; and
|
·
|
competition.
|
Hedging
Instrument
|
Receive
Variable
|
Pay
Fixed
|
Knock-out
Rate
|
Expiration
|
Fair
Value
|
$18.8
million
interest
rate swap
|
LIBOR
|
4.88%
|
7.75%
|
4/1/09
|
--
|
Index
to Consolidated Financial Statements
|
Page
|
30
|
|
Consolidated
Statements of Operations
for the
years ended
|
|
February
3, 2007, January 28, 2006 and January 29, 2005
|
31
|
Consolidated
Balance Sheets
as of February 3,
2007 and
|
|
January
28, 2006
|
32
|
for
the years ended February 3, 2007, January 28, 2006 and
|
|
January
29, 2005
|
33
|
Consolidated
Statements of Cash Flows
for the years
ended
|
|
February
3, 2007, January 28, 2006 and January 29, 2005
|
34
|
35
|
Year
Ended
|
|
Year
Ended
|
|
Year
Ended
|
|
|||||
|
|
February
3,
|
|
January
28,
|
|
January
29,
|
||||
(In
millions, except per share data)
|
2007
|
|
2006
|
|
2005
|
|||||
Net
sales
|
$
|
3,969.4
|
$
|
3,393.9
|
$
|
3,126.0
|
||||
Cost
of sales (Note 4)
|
2,612.2
|
2,221.5
|
2,013.5
|
|||||||
Gross
profit
|
1,357.2
|
1,172.4
|
1,112.5
|
|||||||
Selling,
general and administrative
|
||||||||||
expenses
(Notes 8 and 9)
|
1,046.4
|
888.5
|
819.0
|
|||||||
Operating
income
|
310.8
|
283.9
|
293.5
|
|||||||
Interest
income
|
8.6
|
6.8
|
3.9
|
|||||||
Interest
expense (Notes 5 and 6)
|
(16.5
|
)
|
(15.5
|
)
|
(9.2
|
)
|
||||
Income
before income taxes
|
302.9
|
275.2
|
288.2
|
|||||||
Provision
for income taxes (Note 3)
|
110.9
|
101.3
|
107.9
|
|||||||
Net
income
|
$
|
192.0
|
$
|
173.9
|
$
|
180.3
|
||||
Basic
net income per share (Note 7)
|
$
|
1.86
|
$
|
1.61
|
$
|
1.59
|
||||
Diluted
net income per share (Note 7)
|
$
|
1.85
|
$
|
1.60
|
$
|
1.58
|
(In
millions, except share data)
|
February
3, 2007
|
|
January
28, 2006
|
||||
ASSETS
|
|||||||
Current
assets:
|
|||||||
Cash
and cash equivalents
|
$
|
85.0
|
$
|
65.8
|
|||
Short-term
investments
|
221.8
|
274.0
|
|||||
Merchandise
inventories
|
605.0
|
576.6
|
|||||
Deferred
tax assets (Note 3)
|
10.7
|
10.8
|
|||||
Prepaid
expenses and other current assets
|
36.5
|
16.5
|
|||||
Total
current assets
|
959.0
|
943.7
|
|||||
Property,
plant and equipment, net (Note 2)
|
715.3
|
681.8
|
|||||
Intangibles,
net (Notes 2 and 10)
|
146.6
|
129.3
|
|||||
Other
assets, net (Notes 2, 8 and 11)
|
52.4
|
43.6
|
|||||
TOTAL
ASSETS
|
$
|
1,873.3
|
$
|
1,798.4
|
|||
LIABILITIES
AND SHAREHOLDERS' EQUITY
|
|||||||
Current
liabilities:
|
|||||||
Current
portion of long-term debt (Note 5)
|
$
|
18.8
|
$
|
19.0
|
|||
Accounts
payable
|
189.2
|
135.6
|
|||||
Other
current liabilities (Note 2)
|
132.0
|
99.2
|
|||||
Income
taxes payable
|
43.3
|
41.7
|
|||||
Total
current liabilities
|
383.3
|
295.5
|
|||||
Long-term
debt, excluding current portion (Note 5)
|
250.0
|
250.0
|
|||||
Deferred
tax liabilities (Note 3)
|
1.5
|
23.5
|
|||||
Other
liabilities (Notes 6 and 8)
|
70.8
|
57.1
|
|||||
Total
liabilities
|
705.6
|
626.1
|
|||||
Shareholders'
equity (Notes 6, 7 and 9):
|
|||||||
Common
stock, par value $0.01. 300,000,000 shares
|
|||||||
authorized,
99,663,580 and 106,552,054 shares
|
|||||||
issued
and outstanding at February 3, 2007
|
|||||||
and
January 28, 2006, respectively
|
1.0
|
1.1
|
|||||
Additional
paid-in capital
|
-
|
11.4
|
|||||
Accumulated
other comprehensive income (loss)
|
0.1
|
0.1
|
|||||
Retained
earnings
|
1,166.6
|
1,159.7
|
|||||
Total
shareholders' equity
|
1,167.7
|
1,172.3
|
|||||
Commitments,
contingencies snd subsequent event (Notes 4 and 12)
|
-
|
-
|
|||||
TOTAL
LIABILITIES AND SHAREHOLDERS' EQUITY
|
$
|
1,873.3
|
$
|
1,798.4
|
|
|
|
Accumulated
|
|
|
|
||||||||||||||||
|
Common
|
|
Additional
|
Other
|
|
|
Share-
|
|||||||||||||||
|
Stock
|
Common
|
Paid-in
|
Comprehensive
|
Unearned
|
Retained
|
holders'
|
|||||||||||||||
(in
millions)
|
Shares
|
Stock
|
Capital
|
Income
(Loss)
|
Compensation
|
Earnings
|
Equity
|
|||||||||||||||
Balance
at January 31, 2004
|
114.1
|
$
|
1.1
|
$
|
208.9
|
$
|
(0.9
|
)
|
$
|
(0.1
|
)
|
$
|
805.5
|
$
|
1,014.5
|
|||||||
Net
income for the year ended
|
||||||||||||||||||||||
January
29, 2005
|
-
|
-
|
-
|
-
|
-
|
180.3
|
180.3
|
|||||||||||||||
Other
comprehensive income (Note 7)
|
-
|
-
|
-
|
0.6
|
-
|
-
|
0.6
|
|||||||||||||||
Total
comprehensive income
|
180.9
|
|||||||||||||||||||||
Issuance
of stock under Employee Stock
|
||||||||||||||||||||||
Purchase
Plan (Note 9)
|
0.1
|
-
|
3.3
|
-
|
-
|
-
|
3.3
|
|||||||||||||||
Exercise
of stock options, including
|
||||||||||||||||||||||
income
tax benefit of $2.1 (Note 9)
|
0.6
|
-
|
14.0
|
-
|
-
|
-
|
14.0
|
|||||||||||||||
Repurchase
and retirement of shares (Note 7)
|
(1.8
|
)
|
-
|
(48.6
|
)
|
-
|
-
|
-
|
(48.6
|
)
|
||||||||||||
Restricted
stock amortization (Note 9)
|
-
|
-
|
0.1
|
-
|
-
|
-
|
0.1
|
|||||||||||||||
Balance
at January 29, 2005
|
113.0
|
1.1
|
177.7
|
(0.3
|
)
|
(0.1
|
)
|
985.8
|
1,164.2
|
|||||||||||||
Net
income for the year ended
|
||||||||||||||||||||||
January
28, 2006
|
-
|
-
|
-
|
-
|
-
|
173.9
|
173.9
|
|||||||||||||||
Other
comprehensive income (Note 7)
|
-
|
-
|
-
|
0.4
|
-
|
-
|
0.4
|
|||||||||||||||
Total
comprehensive income
|
174.3
|
|||||||||||||||||||||
Issuance
of stock under Employee Stock
|
||||||||||||||||||||||
Purchase
Plan (Note 9)
|
0.1
|
-
|
3.0
|
-
|
-
|
-
|
3.0
|
|||||||||||||||
Exercise
of stock options, including
|
||||||||||||||||||||||
income
tax benefit of $1.2 (Note 9)
|
0.4
|
-
|
8.8
|
-
|
-
|
-
|
8.8
|
|||||||||||||||
Repurchase
and retirement of shares (Note 7)
|
(7.0
|
)
|
-
|
(180.3
|
)
|
-
|
-
|
-
|
(180.3
|
)
|
||||||||||||
Stock-based
compensation (Notes 1 and 9)
|
-
|
-
|
2.2
|
-
|
0.1
|
-
|
2.3
|
|||||||||||||||
Balance
at January 28, 2006
|
106.5
|
1.1
|
11.4
|
0.1
|
-
|
1,159.7
|
1,172.3
|
|||||||||||||||
Net
income for the year ended
|
||||||||||||||||||||||
February
3, 2007
|
-
|
-
|
-
|
-
|
-
|
192.0
|
192.0
|
|||||||||||||||
Other
comprehensive income (Note 7)
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
|||||||||||||||
Total
comprehensive income
|
192.0
|
|||||||||||||||||||||
Issuance
of stock under Employee Stock
|
||||||||||||||||||||||
Purchase
Plan (Note 9)
|
0.1
|
-
|
2.8
|
-
|
-
|
-
|
2.8
|
|||||||||||||||
Exercise
of stock options, including
|
||||||||||||||||||||||
income
tax benefit of $5.6 (Note 9)
|
1.7
|
-
|
43.1
|
-
|
-
|
-
|
43.1
|
|||||||||||||||
Repurchase
and retirement of shares (Note 7)
|
(8.8
|
)
|
(0.1
|
)
|
(63.0
|
)
|
-
|
(185.1
|
)
|
(248.2
|
)
|
|||||||||||
Stock-based
compensation, net (Notes 1 and 9)
|
0.1
|
-
|
5.7
|
-
|
-
|
-
|
5.7
|
|||||||||||||||
Balance at February 3, 2007 |
99.6
|
$
|
1.0
|
$
|
-
|
$
|
0.1
|
$
|
-
|
$
|
1,166.6
|
$
|
1,167.7
|
Year
Ended
|
|
Year
Ended
|
|
Year
Ended
|
|
|||||
|
|
February
3,
|
|
January
28,
|
|
January
29,
|
|
|||
(In
millions)
|
|
2007
|
|
2006
|
|
2005
|
||||
Cash
flows from operating activities:
|
||||||||||
Net
income
|
$
|
192.0
|
$
|
173.9
|
$
|
180.3
|
||||
Adjustments
to reconcile net income to net cash
|
||||||||||
provided
by operating activities:
|
||||||||||
Depreciation
and amortization
|
159.0
|
140.7
|
129.3
|
|||||||
Provision
for deferred income taxes
|
(21.9
|
)
|
(21.5
|
)
|
15.6
|
|||||
Tax
benefit of stock option exercises
|
-
|
1.2
|
2.1
|
|||||||
Stock
based compensation expense
|
6.7
|
2.4
|
-
|
|||||||
Other
non-cash adjustments to net income
|
5.1
|
5.6
|
3.9
|
|||||||
Changes
in assets and liabilities increasing
|
||||||||||
(decreasing)
cash and cash equivalents:
|
||||||||||
Merchandise
inventories
|
(6.2
|
)
|
38.9
|
(89.8
|
)
|
|||||
Other
assets
|
(19.8
|
)
|
(5.5
|
)
|
0.5
|
|||||
Accounts
payable
|
53.7
|
11.4
|
9.2
|
|||||||
Income
taxes payable
|
1.6
|
8.0
|
(3.4
|
)
|
||||||
Other
current liabilities
|
31.8
|
(6.4
|
)
|
15.3
|
||||||
Other
liabilities
|
10.8
|
16.4
|
13.5
|
|||||||
Net
cash provided by operating activities
|
412.8
|
365.1
|
276.5
|
|||||||
Cash
flows from investing activities:
|
||||||||||
Capital
expenditures
|
(175.3
|
)
|
(139.2
|
)
|
(181.8
|
)
|
||||
Purchase
of short-term investments
|
(1,044.4
|
)
|
(885.5
|
)
|
(465.8
|
)
|
||||
Proceeds
from sales of short-term investments
|
1,096.6
|
822.8
|
339.0
|
|||||||
Purchase
of Deal$ assets, net of cash acquired of $0.3
|
(54.1
|
)
|
-
|
-
|
||||||
Acquisition
of favorable lease rights
|
(4.2
|
)
|
(3.7
|
)
|
(6.8
|
)
|
||||
Purchase
of restricted investments
|
(9.3
|
)
|
(29.9
|
)
|
-
|
|||||
Net
cash used in investing activities
|
(190.7
|
)
|
(235.5
|
)
|
(315.4
|
)
|
||||
Cash
flows from financing activities:
|
||||||||||
Proceeds
from long-term debt, net of
|
||||||||||
facility
fees of $1.1
|
-
|
-
|
248.9
|
|||||||
Principal
payments under long-term debt and capital lease
obligations
|
(0.6
|
)
|
(0.6
|
)
|
(154.2
|
)
|
||||
Payments
for share repurchases
|
(248.2
|
)
|
(180.4
|
)
|
(48.6
|
)
|
||||
Proceeds
from stock issued pursuant to stock-based
|
||||||||||
compensation
plans
|
40.3
|
10.7
|
15.1
|
|||||||
Tax
benefit of stock options exercised
|
5.6
|
-
|
-
|
|||||||
Net
cash provided by (used in) financing activities
|
(202.9
|
)
|
(170.3
|
)
|
61.2
|
|||||
Net
increase (decrease) in cash and cash equivalents
|
19.2
|
(40.7
|
)
|
22.3
|
||||||
Cash
and cash equivalents at beginning of year
|
65.8
|
106.5
|
84.2
|
|||||||
Cash
and cash equivalents at end of year
|
$
|
85.0
|
$
|
65.8
|
$
|
106.5
|
||||
Supplemental
disclosure of cash flow information:
|
||||||||||
Cash
paid for:
|
||||||||||
Interest,
net of amount capitalized
|
$
|
14.9
|
$
|
11.8
|
$
|
8.1
|
||||
Income
taxes
|
$
|
125.5
|
$
|
113.9
|
$
|
93.4
|
Buildings
|
40
years
|
Furniture,
fixtures and equipment
|
3
to 15 years
|
Transportation
vehicles
|
4
to 6 years
|
Year
Ended
|
|
Year
Ended
|
|
||||
|
|
January
28,
|
|
January
29,
|
|||
(in
millions, except per share data)
|
2006
|
|
2005
|
||||
Net
income as reported
|
$
|
173.9
|
$
|
180.3
|
|||
Add:
Total stock-based employee
|
|||||||
compensation
expense included in net
|
|||||||
income,
net of related tax effects
|
1.5
|
-
|
|||||
Deduct:
Total stock-based employee
|
|||||||
compensation
expense determined under
|
|||||||
fair
value based method,
|
|||||||
net
of related tax effects
|
(18.2
|
)
|
(13.0
|
)
|
|||
$
|
157.2
|
$
|
167.3
|
||||
Net
income per share:
|
|||||||
Basic,
as reported
|
$
|
1.61
|
$
|
1.59
|
|||
Basic,
pro forma under FAS 123
|
1.45
|
1.48
|
|||||
Diluted,
as reported
|
$
|
1.60
|
$
|
1.58
|
|||
Diluted,
pro forma under FAS 123
|
1.44
|
1.47
|
February
3,
|
|
January
28,
|
|||||
(in
millions)
|
2007
|
|
2006
|
||||
Non-competition
agreements
|
$
|
6.4
|
$
|
6.4
|
|||
Accumulated
amortization
|
(5.1
|
)
|
(4.3
|
)
|
|||
Non-competition
agreements, net
|
1.3
|
2.1
|
|||||
Favorable
lease rights
|
19.0
|
12.6
|
|||||
Accumulated
amortization
|
(7.0
|
)
|
(4.1
|
)
|
|||
Favorable
lease rights, net
|
12.0
|
8.5
|
|||||
Goodwill
|
144.9
|
130.3
|
|||||
Accumulated
amortization
|
(11.6
|
)
|
(11.6
|
)
|
|||
Goodwill,
net
|
133.3
|
118.7
|
|||||
Total
intangibles, net
|
$
|
146.6
|
$
|
129.3
|
February
3,
|
|
January
28,
|
|||||
(in
millions)
|
2007
|
|
2006
|
||||
Land
|
$
|
29.4
|
$
|
29.4
|
|||
Buildings
|
154.7
|
154.7
|
|||||
Improvements
|
482.3
|
418.1
|
|||||
Furniture,
fixtures and equipment
|
708.6
|
608.4
|
|||||
Construction
in progress
|
38.3
|
29.3
|
|||||
Total
property, plant and equipment
|
1,413.3
|
1,239.9
|
|||||
Less:
accumulated depreciation and amortization
|
698.0
|
558.1
|
|||||
Total
property, plant and equipment, net
|
$
|
715.3
|
$
|
681.8
|
February
3,
|
|
January
28,
|
|||||
(in
millions)
|
2007
|
|
2006
|
||||
Compensation
and benefits
|
$
|
43.5
|
$
|
22.2
|
|||
Taxes
(other than income taxes)
|
19.5
|
15.8
|
|||||
Insurance
|
26.8
|
28.1
|
|||||
Other
|
42.2
|
33.1
|
|||||
Total
other current liabilities
|
$
|
132.0
|
$
|
99.2
|
Year
Ended
|
|
Year
Ended
|
|
Year
Ended
|
|
|||||
|
|
February
3,
|
|
January
28,
|
|
January
29,
|
|
|||
|
|
2007
|
|
2006
|
|
2005
|
||||
Income
from continuing operations
|
$
|
110.9
|
$
|
101.3
|
$
|
107.9
|
||||
Accumulated
other comprehensive income,
|
||||||||||
marking
derivative financial
|
||||||||||
instruments
to fair value
|
-
|
0.2
|
0.4
|
|||||||
Stockholders'
equity, tax benefit on
|
||||||||||
exercise
of stock options
|
(5.6
|
)
|
(1.2
|
)
|
(2.1
|
)
|
||||
$
|
105.3
|
$
|
100.3
|
$
|
106.2
|
Year
Ended
|
|
Year
Ended
|
|
Year
Ended
|
|
|||||
|
|
February
3,
|
|
January
28,
|
|
January
29,
|
|
|||
|
|
2007
|
|
2006
|
|
2005
|
||||
Federal
- current
|
$
|
116.2
|
$
|
108.1
|
$
|
75.8
|
||||
State
- current
|
16.6
|
14.7
|
16.5
|
|||||||
Total
current
|
132.8
|
122.8
|
92.3
|
|||||||
Federal
- deferred
|
(19.1
|
)
|
(20.6
|
)
|
15.9
|
|||||
State
- deferred
|
(2.8
|
)
|
(0.9
|
)
|
(0.3
|
)
|
||||
Total
deferred
|
(21.9
|
)
|
(21.5
|
)
|
15.6
|
|||||
Provision
for income taxes
|
$
|
110.9
|
$
|
101.3
|
$
|
107.9
|
Year
Ended
|
Year
Ended
|
Year
Ended
|
||||||||
February
3,
|
January
28,
|
January
29,
|
||||||||
2007
|
|
2006
|
|
2005
|
|
|||||
Statutory
tax rate
|
35.0
|
%
|
35.0
|
%
|
35.0
|
%
|
||||
Effect
of:
|
||||||||||
State
and local income taxes,
|
||||||||||
net
of federal income tax
|
||||||||||
benefit
|
3.3
|
3.4
|
3.6
|
|||||||
Other,
net
|
(1.7
|
)
|
(1.6
|
)
|
(1.1
|
)
|
||||
Effective
tax rate
|
36.6
|
%
|
36.8
|
%
|
37.5
|
%
|
February
3,
|
|
January
28,
|
|
||||
|
|
2007
|
|
2006
|
|||
Deferred
tax assets:
|
|||||||
Accrued
expenses
|
$
|
33.5
|
$
|
30.6
|
|||
State
tax net operating losses and credit
|
|||||||
carryforwards,
net
of federal tax benefit
|
|
|
1.3
|
-
|
|||
Accrued
compensation expense
|
9.3 | 1.0 | |||||
Valuation
allowance
|
(1.3
|
) |
-
|
||||
Total
deferred tax assets
|
42.8
|
31.6
|
|||||
Deferred
tax liabilities:
|
|||||||
Intangible
assets
|
(9.2
|
)
|
(8.0
|
)
|
|||
Property
and equipment
|
(14.3
|
)
|
(34.9
|
)
|
|||
Prepaids
|
(9.0
|
)
|
(1.2
|
)
|
|||
Other
|
(1.1
|
)
|
(0.2
|
)
|
|||
Total
deferred tax liabilities
|
(33.6
|
)
|
(44.3
|
)
|
|||
Net
deferred tax asset (liability)
|
$
|
9.2
|
$
|
(12.7
|
)
|
2007
|
$
|
284.2
|
||
2008
|
246.0
|
|||
2009
|
207.2
|
|||
2010
|
161.5
|
|||
2011
|
110.6
|
|||
Thereafter
|
167.5
|
|||
Total
minimum lease payments
|
$
|
1,177.0
|
Year
Ended
|
|
Year
Ended
|
|
Year
Ended
|
|
|||||
|
|
February
3,
|
|
January
28,
|
|
January
29,
|
|
|||
|
|
2007
|
|
2006
|
|
2005
|
||||
Minimum
rentals
|
$
|
261.8
|
$
|
225.8
|
$
|
200.7
|
||||
Contingent
rentals
|
0.9
|
0.7
|
0.9
|
February
3,
|
|
January
28,
|
|||||
(in
millions)
|
2007
|
|
2006
|
||||
$450.0
million Unsecured Revolving Credit Facility,
|
|||||||
interest
payable monthly at LIBOR,
|
|||||||
plus
0.475%, which was 5.8% at
|
|||||||
February
3, 2007, principal payable upon
|
|||||||
expiration
of the facility in March 2009
|
$
|
250.0
|
$
|
250.0
|
|||
Demand
Revenue Bonds, interest payable monthly
|
|||||||
at
a variable rate which was 5.4% at
|
|||||||
February
3, 2007, principal payable on
|
|||||||
demand,
maturing June 2018
|
18.8
|
19.0
|
|||||
Total
long-term debt
|
268.8
|
269.0
|
|||||
Less
current portion
|
18.8
|
19.0
|
|||||
Long-term
debt, excluding current portion
|
$
|
250.0
|
$
|
250.0
|
Derivative
|
Origination
|
Expiration
|
Pay
Fixed
|
Knock-out
|
Instrument
|
Date
|
Date
|
Rate
|
Rate
|
$18.8
million swap
|
4/1/99
|
4/1/09
|
4.88%
|
7.75%
|
Year
Ended
|
|
Year
Ended
|
|
Year
Ended
|
|
|||||
|
|
February
3,
|
|
January
28,
|
|
January
29,
|
|
|||
(in
million, except per share data)
|
|
2007
|
|
2006
|
|
2005
|
||||
Basic
net income per share:
|
||||||||||
Net
income
|
$
|
192.0
|
$
|
173.9
|
$
|
180.3
|
||||
Weighted
average number of shares
|
||||||||||
outstanding
|
103.2
|
108.3
|
113.3
|
|||||||
Basic
net income per share
|
$
|
1.86
|
$
|
1.61
|
$
|
1.59
|
||||
Diluted
net income per share:
|
||||||||||
Net
income
|
$
|
192.0
|
$
|
173.9
|
$
|
180.3
|
||||
Weighted
average number of shares
|
||||||||||
outstanding
|
103.2
|
108.3
|
113.3
|
|||||||
Dilutive
effect of stock options and
|
||||||||||
restricted
stock (as determined by
|
||||||||||
applying
the treasury stock method)
|
0.6
|
0.4
|
0.7
|
|||||||
Weighted
average number of shares and
|
||||||||||
dilutive
potential shares outstanding
|
103.8
|
108.7
|
114.0
|
|||||||
Diluted
net income per share
|
$
|
1.85
|
$
|
1.60
|
$
|
1.58
|
Year
Ended
|
|
Year
Ended
|
|
Year
Ended
|
|
|||||
|
|
February
3,
|
|
January
28,
|
|
January
29,
|
|
|||
(in
millions)
|
|
2007
|
|
2006
|
|
2005
|
||||
Net
income
|
$
|
192.0
|
$
|
173.9
|
$
|
180.3
|
||||
Fair
value adjustment-derivative
|
||||||||||
cash
flow hedging instrument
|
-
|
0.6
|
1.0
|
|||||||
Income
tax expense
|
-
|
0.2
|
0.4
|
|||||||
Fair
value adjustment, net of tax
|
-
|
0.4
|
0.6
|
|||||||
Amortization
of SFAS No. 133
|
||||||||||
cumulative
effect
|
-
|
-
|
-
|
|||||||
Income
tax benefit
|
-
|
-
|
-
|
|||||||
Amortization
of SFAS No. 133
|
||||||||||
cumulative
effect, net of tax
|
-
|
-
|
-
|
|||||||
Total
comprehensive income
|
$
|
192.0
|
$
|
174.3
|
$
|
180.9
|
Year
Ended February 3, 2007
|
$
|
16.8
million
|
||
Year
Ended January 28, 2006
|
6.9
million
|
|||
Year
Ended January 29, 2005
|
8.5
million
|
· | 25% after three years of service |
· | 50% after four years of service |
· | 100% after five years of service |
Fiscal
2006
|
|
Fiscal
2005
|
|
Fiscal
2004
|
||||||
Expected
term in years
|
6.0
|
4.7
|
5.3
|
|||||||
Expected
volatility
|
30.2
|
%
|
48.7
|
%
|
59.8
|
%
|
||||
Annual
dividend yield
|
-
|
-
|
-
|
|||||||
Risk
free interest rate
|
4.8
|
%
|
3.7
|
%
|
3.7
|
%
|
||||
Weighted
average fair value of options
|
||||||||||
granted
during the period
|
$
|
10.93
|
$
|
11.27
|
$
|
14.27
|
||||
Options
granted
|
342,216
|
320,220
|
1,682,572
|
Stock
Option Activity
|
|||||||||||||
February
3, 2007
|
|||||||||||||
|
|
Weighted
|
|
|
|
|
|
||||||
|
|
|
|
Average
|
|
Weighted
|
|
Aggregate
|
|
||||
|
|
|
|
Per
Share
|
|
Average
|
|
Intrinsic
|
|
||||
|
|
|
|
Exercise
|
|
Remaining
|
|
Value
(in
|
|
||||
|
|
Shares
|
|
Price
|
|
Term
|
|
millions)
|
|||||
Outstanding,
beginning of period
|
5,990,757
|
$
|
5.60
|
||||||||||
Granted
|
342,216
|
27.67
|
|||||||||||
Exercised
|
(1,725,593
|
)
|
21.70
|
||||||||||
Forfeited
|
(141,339
|
)
|
29.23
|
||||||||||
Outstanding,
end of period
|
4,466,041
|
$
|
25.96
|
5.6
|
$
|
25.8
|
|||||||
Options
vested and expected to vest
|
|||||||||||||
at
February 3, 2007
|
4,431,978
|
$
|
25.95
|
5.6
|
$
|
25.7
|
|||||||
Options
exercisable at end of period
|
4,126,874
|
$
|
25.83
|
5.3
|
$
|
24.4
|
Options
Outstanding
|
Options
Exercisable
|
|||||||||||||||
|
|
Options
|
|
|
|
|
|
Options
|
|
|
|
|||||
Range
of
|
|
Outstanding
|
|
Weighted
Avg.
|
|
Weighted
Avg.
|
|
Exercisable
|
|
Weighted
Avg.
|
|
|||||
Exercise
|
|
at
February 3,
|
|
Remaining
|
|
Exercise
|
|
at
February 3,
|
|
Exercise
|
|
|||||
Prices
|
|
2007
|
|
Contractual
Life
|
|
Price
|
|
2007
|
|
Price
|
||||||
$0.86
|
7,264
|
N/A
|
0.86
|
7,264
|
0.86
|
|||||||||||
$2.95
to $10.98
|
7,174
|
0.1
|
9.93
|
7,174
|
9.93
|
|||||||||||
$10.99
to $21.28
|
777,807
|
5.1
|
19.18
|
777,807
|
19.18
|
|||||||||||
$21.29
to $29.79
|
2,511,244
|
5.8
|
25.26
|
2,172,077
|
24.90
|
|||||||||||
$29.80
to $42.56
|
1,162,552
|
5.0
|
32.26
|
1,162,552
|
32.26
|
|||||||||||
$0.86
to $42.56
|
4,466,041
|
4,126,874
|
Weighted
|
|
||||||
|
|
|
|
Average
|
|
||
|
|
|
|
Grant
|
|
||
|
|
|
|
Date
Fair
|
|
||
|
|
Shares
|
|
Value
|
|||
Nonvested
at January 28, 2006
|
295,507
|
$
|
25.00
|
||||
Granted
|
292,697
|
27.69
|
|||||
Vested
|
(107,097
|
)
|
25.02
|
||||
Forfeited
|
(24,330
|
)
|
26.63
|
||||
Nonvested
at February 3, 2007
|
456,777
|
$
|
26.57
|
Fiscal
2006
|
|
Fiscal
2005
|
|
Fiscal
2004
|
||||||
Expected
term
|
3
months
|
3
months
|
3
months
|
|||||||
Expected
volatility
|
13.1
|
%
|
12.0
|
%
|
15.6
|
%
|
||||
Annual
dividend yield
|
-
|
-
|
-
|
|||||||
Risk
free interest rate
|
4.8
|
%
|
3.9
|
%
|
2.1
|
%
|
(In
millions)
|
||||
Inventory
|
$
|
22.1
|
||
Other
current assets
|
0.1
|
|||
Property
and equipment
|
15.1
|
|||
Goodwill
|
14.6
|
|||
Other
intangibles
|
2.2
|
|||
$
|
54.1
|
First
|
|
Second
|
|
Third
|
|
Fourth
|
|
||||||
|
|
Quarter
(1)
|
|
Quarter
|
|
Quarter
|
|
Quarter
(2)
|
|||||
Fiscal
2006:
|
|||||||||||||
Net
sales
|
$
|
856.5
|
$
|
883.6
|
$
|
910.4
|
$
|
1,318.9
|
|||||
Gross
profit
|
286.1
|
293.3
|
307.5
|
470.3
|
|||||||||
Operating
income
|
53.5
|
48.2
|
53.5
|
155.6
|
|||||||||
Net
income
|
32.9
|
29.0
|
32.5
|
97.6
|
|||||||||
Diluted
net income per share
|
0.31
|
0.28
|
0.32
|
0.96
|
|||||||||
Stores
open at end of quarter
|
3,119
|
3,156
|
3,192
|
3,219
|
|||||||||
Comparable
store net sales change
|
4.0
|
%
|
4.2
|
%
|
4.0
|
%
|
5.5
|
%
|
|||||
Fiscal
2005:
|
|||||||||||||
Net
sales
|
$
|
749.1
|
$
|
769.0
|
$
|
796.8
|
$
|
1,079.0
|
|||||
Gross
profit
|
254.2
|
261.5
|
276.3
|
380.4
|
|||||||||
Operating
income
|
48.2
|
46.8
|
52.3
|
136.6
|
|||||||||
Net
income
|
29.0
|
27.3
|
31.1
|
86.5
|
|||||||||
Diluted
net income per share
|
0.26
|
0.25
|
0.29
|
0.81
|
|||||||||
Stores
open at end of quarter
|
2,791
|
2,856
|
2,899
|
2,914
|
|||||||||
Comparable
store net sales change
|
(3.7
|
%)
|
(1.5
|
%)
|
(1.0
|
%)
|
1.0
|
%
|
|||||
(1)
Easter was observed on April 16, 2006 and March 27, 2005
|
|||||||||||||
(2)
Fiscal 2006 contains 14 weeks ended February 3, 2007 while
|
|||||||||||||
Fiscal
2005 contains 13 weeks ended January 28, 2006
|
1.
|
Financial
Statements. Reference is made to the Index to the Consolidated
Financial
Statements set forth under Part II, Item 8, on Page 29 of this
Form
10-K.
|
2.
|
Financial
Statement Schedules. All schedules for which provision is made
in the
applicable accounting regulations of the Securities and Exchange
Commission are not required under the related instructions, are
not
applicable, or the information is included in the Consolidated
Financial
Statements, and therefore have been omitted.
|
3.
|
Exhibits.
The exhibits listed on the accompanying Index to Exhibits, on
page 58 of
this Form 10-K, are filed as part of, or incorporated by reference
into,
this report.
|
DOLLAR
TREE STORES, INC.
|
|
DATE:
April 4, 2007
|
By:
/s/
Bob Sasser
|
Bob
Sasser
|
|
President, Chief Executive Officer
|
Signature
|
Title
|
Date
|
/s/
Macon F. Brock, Jr.
|
||
Macon
F. Brock, Jr.
|
Chairman;
Director
|
April
4, 2007
|
/s/
Bob Sasser
|
||
Bob
Sasser
|
Director,
President and
|
April
4, 2007
|
Chief
Executive Officer
|
||
(principal
executive officer)
|
||
/s/
J. Douglas Perry
|
||
J.
Douglas Perry
|
Chairman
Emeritus; Director
|
April
4, 2007
|
/s/
Mary Anne Citrino
|
||
Mary
Anne Citrino
|
Director
|
April
4, 2007
|
/s/
H. Ray Compton
|
||
H.
Ray Compton
|
Director
|
April
4, 2007
|
/s/
Kent A. Kleeberger
|
||
Kent
A. Kleeberger
|
Chief
Financial Officer
|
April
4, 2007
|
(principal
financial and
|
||
accounting
officer)
|
||
/s/
Richard G. Lesser
|
||
Richard
G. Lesser
|
Director
|
April
4, 2007
|
/s/
John F. Megrue
|
||
John
F. Megrue
|
Director
|
April
4, 2007
|
/s/
Thomas A. Saunders, III
|
||
Thomas
A. Saunders, III
|
Director
|
April
4, 2007
|
/s/
Eileen R. Scott
|
||
Eileen
R. Scott
|
Director
|
April
4, 2007
|
/s/
Thomas E. Whiddon
|
||
Thomas
E. Whiddon
|
Director
|
April
4, 2007
|
/s/
Alan L. Wurtzel
|
||
Alan
L. Wurtzel
|
Director
|
April
4, 2007
|
3.1
|
Third
Restated Articles of Incorporation of Dollar Tree Stores, Inc.
(the
Company), as amended (Exhibit 3.1 to the Company’s Quarterly Report on
Form 10-Q for the fiscal quarter ended September 30, 1996, incorporated
herein by this reference)
|
3.2
|
Third
Restated Bylaws of the Company (Exhibit 99.1 to the Company’s December 15,
2005 Current Report on Form 8-K, incorporated herein by this
reference)
|
10.2 | |
10.5
|
Salary
and bonus arrangements for the Company’s executive officers for fiscal
2006 (as described in Item 1.01 of the Company’s March 21, 2006 Current
Report on
Form
8-K, incorporated herein by this reference)
|
To:
|
500
Volvo Parkway
Chesapeake,
VA 23320
|
A/C:
|
[Insert
Account Number]
|
From:
|
|
Re:
|
Collared
Accelerated Stock Buyback
|
Ref.
No:
|
As
provided in the Supplemental Confirmation
|
Date:
|
|
Physical
Settlement:
|
Applicable;
provided
that GS&Co. does not, and shall not, make the
agreement or the representations set forth in Section 9.11 of the
Equity
Definitions related to the restrictions imposed by applicable securities
laws with respect to any Shares delivered by GS&Co. to Counterparty
under any Transaction.
|
Number
of Shares to be Delivered:
|
A
number of Shares equal to (a) the Prepayment Amount
divided by
(b) the Forward Price
minus
the Forward Price Adjustment Amount;
provided
that the Number of Shares to be Delivered shall not
be
less than the Minimum Shares and not greater than the Maximum Shares.
The
Number of Shares to be Delivered on the Settlement Date shall be
reduced,
but not below zero, by (i) any Shares delivered pursuant to the
Initial
Share Delivery described below and (ii) any Shares delivered pursuant
to
the Minimum Share Delivery described below.
|
Excess
Dividend Amount:
|
For
the avoidance of doubt, all references to the Excess Dividend Amount
shall
be deleted from Section 9.2(a)(iii) of the Equity
Definitions.
|
Settlement
Date:
|
Three
(3) Exchange Business Days following the Termination
Date.
|
Settlement
Currency:
|
USD
|
Initial
Share Delivery:
|
GS&Co.
shall deliver a number of Shares equal to the Initial Shares to
Counterparty on the Initial Share Delivery Date in accordance with
Section
9.4 of the Equity Definitions, with the Initial Share Delivery
Date deemed
to be a “Settlement Date” for purposes of such Section
9.4.
|
Initial
Share Delivery Date:
|
Three
(3) Exchange Business Days following the Trade Date.
|
Initial
Shares:
|
For
each Transaction, as set forth in the Supplemental
Confirmation.
|
Minimum
Share Delivery:
|
GS&Co.
shall deliver a number of Shares equal to the excess, if any, of
the
Minimum Shares over the Initial Shares on the Minimum Share Delivery
Date
in accordance with Section 9.4 of the Equity Definitions, with
the Minimum
Share Delivery Date deemed to be a “Settlement Date” for purposes of such
Section 9.4.
|
Minimum
Share Delivery Date:
|
Three
(3) Exchange Business Days following the Hedge Completion
Date.
|
Minimum
Shares:
|
For
each Transaction, as set forth in the Supplemental
Confirmation.
|
Maximum
Shares:
|
For
each Transaction, as set forth in the Supplemental
Confirmation.
|
Potential
Adjustment Event:
|
Notwithstanding
anything to the contrary in Section 11.2(e) of the Equity Definitions,
an
Extraordinary Dividend shall not constitute a Potential Adjustment
Event.
|
Extraordinary
Dividend:
|
For
any calendar quarter occurring (in whole or in part) during the
period
from and including the first day of the Calculation Period to and
including the Termination Date, any dividend or distribution on
the Shares
with an ex-dividend date occurring during such calendar quarter
(other
than any dividend or distribution of the type described in Section
11.2(e)(i) or Section 11.2(e)(ii)(A) or (B) of the Equity
Definitions).
|
Method
of Adjustment:
|
Calculation
Agent Adjustment
|
|
(a)
|
Share
for Share:
|
Modified
Calculation Agent Adjustment
|
(b)
|
Share-for-Other:
|
Cancellation
and Payment
|
(c)
|
Share-for-Combined:
|
Component
Adjustment
|
Determining
Party:
|
GS&Co.
|
|
Tender
Offer:
|
Applicable
|
|
Nationalization,
Insolvency or Delisting:
|
Cancellation
and Payment;
provided
that in addition to the provisions of
Section 12.6(a)(iii) of the Equity Definitions, it shall also constitute
a
Delisting if the Exchange is located in the United States and the
Shares
are not immediately re-listed, re-traded or re-quoted on any of
the New
York Stock Exchange, the American Stock Exchange, The NASDAQ Global
Select
Market or The NASDAQ Global Market (or their respective successors);
if
the Shares are immediately re-listed, re-traded or re-quoted on
any such
exchange or quotation system, such exchange or quotation system
shall be
deemed to be the Exchange.
|
|
(a)
|
Change
in Law:
|
Applicable
|
(b)
|
Failure
to Deliver:
|
Applicable
|
(c)
|
Insolvency
Filing:
|
Applicable
|
(d)
|
Loss
of Stock Borrow:
|
Applicable;
provided
that Sections 12.9(a)(vii) and 12.9(b)(iv) of the Equity
Definitions shall be amended by deleting the words “at a rate equal to or
less than the Maximum Stock Loan Rate” and replacing them with “at a rate
of return equal to or greater than zero”.
|
Hedging
Party:
|
GS&Co.
|
|
Determining
Party:
|
GS&Co.
|
Transfer:
|
Notwithstanding
anything to the contrary in the Agreement, GS&Co. may assign, transfer
and set over all rights, title and interest, powers, privileges
and
remedies of GS&Co. under any Transaction, in whole or in part, to an
affiliate of GS&Co. whose obligations are guaranteed by The Goldman
Sachs Group, Inc. without the consent of Counterparty.
|
Counterparty’s
Contact Details
|
|
for
Purpose of Giving Notice:
|
To
be provided by Counterparty
|
GS&Co.’s
Contact Details for
|
|
Purpose
of Giving Notice:
|
Telephone
No.: (212) 902-8996
|
Facsimile
No.: (212) 902-0112
|
|
Attention:
Equity Operations: Options and Derivatives
|
|
With
a copy to:
|
|
Tracey
McCabe
|
|
Equity
Capital Markets
|
|
One
New York Plaza
|
|
New
York, NY 10004
|
|
Telephone
No.: (212) 357-0428
|
|
Facsimile
No.: (212) 902-3000
|
11. |
Acknowledgments
.
The parties hereto intend for:
|
19. |
Offices
.
|
To:
|
Dollar
Tree Stores, Inc.
500
Volvo Parkway
Chesapeake,
VA 23320
|
From:
|
Goldman,
Sachs & Co.
|
Subject:
|
Collared
Accelerated Stock Buyback
|
Ref.
No:
|
[Insert
Reference No.]
|
Date:
|
[
Insert
Date]
|
Trade
Date:
|
[
], 2006
|
Hedge
Completion Date:
|
As
set forth in the Trade Notification, but in no event later than
[
].
|
Scheduled
Termination Date:
|
[
], subject to GS&Co.’s right to accelerate the Termination Date to any
date on or after the First Acceleration Date.
|
First
Acceleration Date:
|
As
set forth in the Trade Notification to be the date that follows
the Hedge
Completion Date by [__] month[s].
|
Initial
Shares:
|
[
]
|
Prepayment
Amount:
|
USD[
]
|
Minimum
Shares:
|
As
set forth in the Trade Notification, to be a number of shares equal
to (a)
the Prepayment Amount
divided
by
(b) [ ]% of the
Hedge Period Reference Price.
|
Maximum
Shares:
|
As
set forth in the Trade Notification, to be a number of shares equal
to (a)
the Prepayment Amount
divided
by
(b) [ ]% of the
Hedge Period Reference Price.
|
Forward
Price Adjustment Amount:
|
As
set forth in the Trade Notification, to be a number equal to [
]% times
the Hedge Period Reference Price.
|
To:
|
Dollar
Tree Stores, Inc.
500
Volvo Parkway
Chesapeake,
VA 23320
|
From:
|
Goldman,
Sachs & Co.
|
Subject:
|
Collared
Accelerated Stock Buyback
|
Ref.
No:
|
[Insert
Reference No.]
|
Date:
|
[Insert
Date]
|
Trade
Date:
|
[
], 2006
|
Hedge
Completion Date:
|
[
]
|
Scheduled
Termination Date:
|
[
]
|
First
Acceleration Date:
|
[
]
(or, if such date is not a Scheduled Trading Day, the next following
Scheduled Trading Day).
|
Hedge
Period Reference Price:
|
USD[
]
|
Forward
Price Adjustment Amount:
|
USD[
]
|
Minimum
Shares:
|
[
]
|
Maximum
Shares:
|
[
]
|
To:
|
Dollar
Tree Stores, Inc.
500
Volvo Parkway
Chesapeake,
VA 23320
|
From:
|
Goldman,
Sachs & Co.
|
Subject:
|
Accelerated
Stock Buyback
|
Ref.
No:
|
As
provided in the Supplemental Confirmation
|
Date:
|
December
8, 2006
|
Trade
Date:
|
For
each Transaction, as set forth in the Supplemental
Confirmation.
|
Seller:
|
Counterparty
|
Buyer:
|
GS&Co.
|
Shares:
|
Shares
of common stock, $1.00 par value, of Counterparty (Ticker:
DLTR)
|
Initial
Share
Price:
|
For
each Transaction, as set forth in the Supplemental
Confirmation.
|
Forward
Price:
|
For
each Transaction, the Initial Share Price for such
Transaction.
|
Prepayment:
|
Not
Applicable
|
Variable
Obligation:
|
Not
Applicable
|
Exchange:
|
NASDAQ
Global Select Market
|
Related
Exchange(s):
|
All
Exchanges
|
Market
Disruption
Event:
|
The
definition of “Market Disruption Event” in Section 6.3(a) of the Equity
Definitions is hereby amended by replacing the words “at any time during
the one-hour period that ends at the relevant Valuation Time” in the third
line thereof with the words “at any time on any Scheduled Trading Day
during the Valuation Period or” after the word
“material”.
|
Valuation
Period:
|
Each
Scheduled Trading Day during the period commencing on and including
the
First Valuation Date, to and including the Valuation Date (but
excluding
any day(s) on which the Valuation Period is suspended in accordance
with
Section 5 herein).
|
Notwithstanding
anything to the contrary in the Equity Definitions, to the extent
that a
Disrupted Day occurs in the Valuation Period, the Calculation Agent
may
postpone the Valuation Date. In such event, the Calculation Agent
must
determine whether (i) such Disrupted Day is a Disrupted Day in
full, in
which case such Disrupted Day shall not be included for purposes
of
determining the Settlement Price, or (ii) such Disrupted Day is
a
Disrupted Day only in part, in which case the VWAP Price for such
Disrupted Day shall be determined by the Calculation Agent based
on Rule
10b-18 eligible transactions in the Shares on such Disrupted Day
effected
before the relevant Market Disruption Event occurred and/or after
the
relevant Market Disruption Event ended, and the weighting of the
VWAP
Prices for the relevant Scheduled Trading Days during the Valuation
Period
shall be adjusted by the Calculation Agent for purposes of determining
the
Settlement Price, with such adjustments based on, among other factors,
the
duration of any Market Disruption Event and the volume, historical
trading
patterns and price of the Shares.
|
|
If
a Disrupted Day occurs during the Valuation Period, and each of
the nine
immediately following Scheduled Trading Days is a Disrupted Day,
then the
Calculation Agent, in its discretion, may either (i) deem such
ninth
Scheduled Trading Day to be an Exchange Business Day and determine
the
VWAP Price for such ninth Scheduled Trading Day and adjust the
weighting
of the VWAP Prices for the relevant Scheduled Trading Days during
the
Valuation Period as it deems appropriate for purposes of determining
the
Settlement Price based on, among other factors, the duration of
any Market
Disruption Event and the volume, historical trading patterns and
price of
the Shares or (ii) disregard such day for purposes of determining
the
Settlement Price and further postpone the Valuation Date as it
deems
appropriate to determine the VWAP Price.
|
|
First
Valuation
Date:
|
For
each Transaction, as set forth in the Supplemental
Confirmation.
|
Valuation
Date:
|
For
each Transaction, the Scheduled Valuation Date set forth in the
Supplemental Confirmation (as the same may be postponed in accordance
with
the provisions hereof);
provided
that GS&Co. shall have the right to designate any date (the
“
Accelerated
Valuation Date
”) on or after the First Acceleration Date
to be the Valuation Date by providing notice to Counterparty of
any such
designation on such date.
|
First
Acceleration
Date:
|
For
each Transaction, as set forth in the Supplemental
Confirmation.
|
Settlement
Currency:
|
USD
|
Settlement
Method Election:
|
Applicable;
provided
that (a) Section 7.1 of the Equity Definitions is hereby amended by
deleting the word “
Physical
”
in the sixth line thereof and replacing it with the words “
Net
Share
”
and (b) in the event that GS&Co. would be obligated to deliver to
Counterparty any Shares under Net Share Settlement, Cash Settlement
shall
be applicable in lieu of Net Share Settlement.
|
Electing
Party:
|
Counterparty
|
Settlement
Method Election Date:
|
The
earlier of (i) the fifth Scheduled Trading Day immediately prior
to the
originally scheduled Valuation Date and (ii) the Accelerated Valuation
Date, as the case may be.
|
Default
Settlement Method:
|
Cash
Settlement
|
Forward
Cash Settlement Amount:
|
An
amount in the Settlement Currency equal to the Number of Shares
multiplied
by
an
amount equal to (i) the Settlement Price
minus
(ii) the Forward Price.
|
Settlement
Price:
|
The
arithmetic mean of the VWAP Prices of the Shares for each Scheduled
Trading Day in the Valuation Period
minus
the Settlement Price Adjustment Amount.
|
Settlement
Price Adjustment Amount:
|
For
each Transaction, as set forth in the Supplemental
Confirmation.
|
VWAP
Price:
|
For
any Exchange Business Day, as determined by the Calculation Agent
based on
the NASDAQ 10b-18 Volume Weighted Average Price per Share for the
regular
trading session (including any extensions thereof)
of
the Exchange on such Exchange Business Day (without regard to pre-open
or
after hours trading outside of such regular trading session for such
Exchange Business Day), as published by Bloomberg at 4:15 p.m. New
York
time (or 15 minutes following the end of any extension of the regular
trading session) on such Exchange Business Day,
on
Bloomberg page “DLTR.Q <Equity> AQR_SEC” (or any successor
thereto)
.
For purposes of calculating the VWAP Price, the Calculation Agent
will
include only those trades that are reported during the period of
time
during which Counterparty could purchase its own shares under Rule
10b-18(b)(2) and pursuant to the conditions of Rule 10b-18(b)(3),
each
under the Securities Exchange Act of 1934, as amended (the “
Exchange
Act
”)
(such trades, “
Rule
10b-18 eligible transactions
”).
|
Counterparty’s
Contact Details
|
|
for
Purpose of Giving Notice:
|
Kent
Kleeberger
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500
Volvo Parkway
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Chesapeake,
VA 23320
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GS&Co.’s
Contact Details for
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Purpose
of Giving Notice:
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Telephone
No.:
(212)
902-8996
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Facsimile
No.:
(212)
902-0112
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Attention:
Equity Operations: Options and Derivatives
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With
a copy to:
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Tracey
McCabe
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Equity
Capital Markets
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One
New York Plaza
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New
York, NY 10004
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Telephone
No.:
(212)
357-0428
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Facsimile
No.:
(212)
902-3000
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Net
Share Settlement Procedures:
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Net
Share Settlement shall be made in accordance with the procedures
attached
hereto as Annex B.
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Net
Share Settlement Price:
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The
Relevant Price on the Net Share Valuation Date, as reduced by the
per
Share amount of the underwriting discount and/or commissions agreed
to
pursuant to the equity underwriting agreement contemplated by the
Net
Share Settlement Procedures.
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Valuation
Time:
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As
provided in Section 6.1 of the Equity Definitions;
provided
that Section 6.1 of the Equity Definitions is hereby amended by inserting
the words “Net Share Valuation Date,” before the words “Valuation Date” in
the first and third lines thereof.
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Net
Share Valuation Date:
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The
Exchange Business Day immediately following the Valuation
Date.
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Net
Share Settlement Date:
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The
third Exchange Business Day immediately following the Valuation
Date.
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Reserved
Shares:
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Initially,
700,000 Shares. The Reserved Shares may be increased or decreased
in a
Supplemental Confirmation.
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Relevant
Price:
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As
provided in Section 1.23(b) of the Equity Definitions;
provided
that Section 1.23(b) of the Equity Definitions is hereby amended
by
replacing each occurrence therein of “the Valuation Date or Averaging
Date, as the case may be,” with the term “such
day.”
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Potential
Adjustment Event:
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Notwithstanding
anything to the contrary in Section 11.2(e) of the Equity Definitions,
an
Extraordinary Dividend shall not constitute a Potential Adjustment
Event.
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Extraordinary
Dividend:
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For
any calendar quarter, any dividend or distribution on the Shares
with an
ex-dividend date occurring during such calendar quarter (other than
any
dividend or distribution of the type described in Section 11.2(e)(i)
or
Section 11.2(e)(ii)(A) or (B) of the Equity
Definitions).
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Method
of Adjustment:
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Calculation
Agent Adjustment
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(a)
Share-for-Share:
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Modified
Calculation Agent Adjustment
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(b)
Share-for-Other:
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Cancellation
and Payment
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(c)
Share-for-Combined:
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Component
Adjustment
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Determining
Party:
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GS&Co.
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Tender
Offer:
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Applicable
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Nationalization,
Insolvency or Delisting:
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Cancellation
and Payment;
provided
that in addition to the provisions of Section 12.6(a)(iii) of the
Equity
Definitions, it shall also constitute a Delisting if the Exchange
is
located in the United States and the Shares are not immediately re-listed,
re-traded or re-quoted on any of the New York Stock Exchange, the
American
Stock Exchange, The NASDAQ Global Select Market or The NASDAQ Global
Market (or their respective successors); and if the Shares are immediately
re-listed, re-traded or re-quoted on any such exchange or quotation
system, such exchange or quotation system shall be deemed to be the
Exchange.
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(a)
Change
in Law:
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Applicable
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(b)
Insolvency
Filing:
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Applicable
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(c)
Loss
of Stock Borrow:
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Applicable;
provided
that Sections 12.9(a)(vii) and 12.9(b)(iv) of the Equity Definitions
shall
be amended by deleting the words “at a rate equal to or less than the
Maximum Stock Loan Rate” and replacing them with “at a rate of return
equal to or greater than zero”.
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Hedging
Party:
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GS&Co.
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Determining
Party:
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GS&Co.
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Net
Share Settlement Upon
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Early
Termination:
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Counterparty
shall have the right, in its sole discretion, in lieu of making any
payment required to be made by it (the “
Early
Termination Amount
”)
pursuant to Sections 6(d) and 6(e) of the Agreement following the
occurrence of an Early Termination Date in respect of the Transaction
(other than any Early Termination Date occurring as a result of a
Share-for-Other or Share-for-Combined Merger Event or Tender Offer
in
respect of the portion of the consideration for the Shares consisting
of
cash), elect to settle its obligation to pay the Early Termination
Amount
in Shares in accordance with the terms, and subject to the conditions,
for
Net Share Settlement herein by giving written notice to GS&Co. of such
election on the day that the notice fixing an Early Termination Date
is
effective. If Counterparty elects Net Share Settlement under such
circumstances: (a) the Net Share Valuation Date shall be the Early
Termination Date, which shall be either the Exchange Business Day
that
such notice is effective or the first Exchange Business Day immediately
following the Exchange Business Day that such notice is effective,
(b) the
Net Share Settlement Date shall be deemed to be the Exchange Business
Day
immediately following the Early Termination Date and (c) all references
to
Forward Cash Settlement Amount in Annex B hereto shall be deemed
references to the Early Termination Amount.
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Transfer:
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Notwithstanding
anything to the contrary in the Agreement, GS&Co. may assign, transfer
and set over all rights, title and interest, powers, privileges and
remedies of GS&Co. under any Transaction, in whole or in part, to an
affiliate of GS&Co. whose obligations are guaranteed by The Goldman
Sachs Group, Inc. without the consent of Counterparty.
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Counterparty
Payment Instructions:
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To
be provided by Counterparty
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To:
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Dollar
Tree Stores, Inc.
500
Volvo Parkway
Chesapeake,
VA 23320
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From:
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Goldman,
Sachs & Co.
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Subject:
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Accelerated
Stock Buyback
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Ref.
No:
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[Insert
Reference No.]
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Date:
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[Insert
Date]
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Where
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A
=
the number of authorized but unissued shares of the Issuer that are
not
reserved for future issuance on the date of the determination of
the
Capped Number; and
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B
=
the maximum number of Shares required to be delivered to third parties
if
Counterparty elected Net Share Settlement of all transactions in
the
Shares (other than Transactions in the Shares under this Master
Confirmation) with all third parties that are then currently outstanding
and unexercised.
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To:
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Dollar
Tree Stores, Inc.
500
Volvo Parkway
Chesapeake,
VA 23320
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From:
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Goldman,
Sachs & Co.
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Subject:
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Collared
Accelerated Stock Buyback
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Ref.
No:
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SDB1623287405
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Date:
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December
8, 2006
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Trade
Date:
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December
8, 2006
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Hedge
Completion Date:
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As
set forth in the Trade Notification, but in no event later than December
22, 2006.
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Scheduled
Termination Date:
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March
8, 2007
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First
Acceleration Date:
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As
set forth in the Trade Notification to be the date that follows the
Hedge
Completion Date by one month.
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Initial
Shares:
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1,053,931
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Prepayment
Amount:
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USD50,000,000.00
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Minimum
Shares:
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As
set forth in the Trade Notification, to be a number of shares equal
to (a)
the Prepayment Amount
divided
by
(b) 110.00% of the Hedge Period Reference Price.
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Maximum
Shares:
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As
set forth in the Trade Notification, to be a number of shares equal
to (a)
the Prepayment Amount
divided
by
(b) 97.50% of the Hedge Period Reference Price.
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Forward
Price Adjustment Amount:
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[*]
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To:
|
Dollar
Tree Stores, Inc.
500
Volvo Parkway
Chesapeake,
VA 23320
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From:
|
Goldman,
Sachs & Co.
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Subject:
|
Accelerated
Stock Buyback
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Ref.
No:
|
SDB1623287897
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Date:
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December
8, 2006
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Trade
Date:
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December
8, 2006
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First
Valuation Date:
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The
first day of the Calculation Period with respect to the Collared
ASB
Transaction.
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Initial
Share Price:
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USD30.19
per Share
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Scheduled
Valuation Date:
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March
8, 2007
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First
Acceleration Date:
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The
First Acceleration Date for the Collared ASB
Transaction.
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Number
of Shares:
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1,656,178
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Settlement
Price Adjustment Amount:
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[*]
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Initial
Purchase Price:
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USD50,000,013.82
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Termination
Price:
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USD15.00
per Share
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(a)
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Designed
such disclosure controls and procedures, or caused such disclosure
controls and procedures to be designed under our supervision, to
ensure
that material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within those
entities, particularly during the period in which this report is
being
prepared;
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(b)
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Designed
such internal control over financial reporting, or caused such internal
control over financial reporting to be designed under our supervision,
to
provide reasonable assurance regarding the reliability of financial
reporting and the preparation of financial statements for external
purposes in accordance with generally accepted accounting
principles;
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(c)
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Evaluated
the effectiveness of the registrant's disclosure controls and procedures
and presented in this report our conclusions about the effectiveness
of
the disclosure controls and procedures, as of the end of the period
covered by this report based on such evaluation;
and
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(d)
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Disclosed
in this report any change in the registrant's internal control over
financial reporting that occurred during the registrant's most recent
fiscal quarter (the registrant's fourth fiscal quarter in the case
of an
annual report) that has materially affected, or is reasonably likely
to
materially affect, the registrant's internal control over financial
reporting; and
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(a)
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All
significant deficiencies and material weaknesses in the design or
operation of internal control over financial reporting which are
reasonably likely to adversely affect the registrant's ability to
record,
process, summarize and report financial information;
and
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(b)
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Any
fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant's internal
control
over financial reporting.
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Date:
April 4, 2007
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/s/
Bob Sasser
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Bob
Sasser
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Chief
Executive Officer
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(a)
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Designed
such disclosure controls and procedures, or caused such disclosure
controls and procedures to be designed under our supervision, to
ensure
that material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within those
entities, particularly during the period in which this report is
being
prepared;
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(b)
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Designed
such internal control over financial reporting, or caused such internal
control over financial reporting to be designed under our supervision,
to
provide reasonable assurance regarding the reliability of financial
reporting and the preparation of financial statements for external
purposes in accordance with generally accepted accounting
principles;
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(c)
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Evaluated
the effectiveness of the registrant's disclosure controls and procedures
and presented in this report our conclusions about the effectiveness
of
the disclosure controls and procedures, as of the end of the period
covered by this report based on such evaluation;
and
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(d)
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Disclosed
in this report any change in the registrant's internal control over
financial reporting that occurred during the registrant's most recent
fiscal quarter (the registrant's fourth fiscal quarter in the case
of an
annual report) that has materially affected, or is reasonably likely
to
materially affect, the registrant's internal control over financial
reporting; and
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(a)
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All
significant deficiencies and material weaknesses in the design or
operation of internal control over financial reporting which are
reasonably likely to adversely affect the registrant's ability to
record,
process, summarize and report financial information;
and
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(b)
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Any
fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant's internal
control
over financial reporting.
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Date:
April 4, 2007
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/s/
Kent A. Kleeberger
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Kent
A. Kleeberger
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Chief
Financial Officer
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(1)
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The
Report fully complies with the requirements of section 13(a) or 15(d)
of
the Securities Exchange Act of 1934; and
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(2)
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The
information contained in the Report fairly presents, in all material
respects, the financial condition and results of operations of the
Company.
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April
4, 2007
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/s/
Bob Sasser
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Date
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Bob
Sasser
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President,
Chief Executive Officer
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(1)
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The
Report fully complies with the requirements of section 13(a) or 15(d)
of
the Securities Exchange Act of 1934; and
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(2)
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The
information contained in the Report fairly presents, in all material
respects, the financial condition and results of operations of the
Company.
|
April
4, 2007
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/s/
Kent A. Kleeberger
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Date
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Kent
A. Kleeberger
|
Chief
Financial Officer
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