Dollar Tree 2006 Annual Report Download - page 44

Comprehensive Income
The Company’s comprehensive income reflects the effect of recording derivative financial instruments pursuant
to SFAS No. 133. The following table provides a reconciliation of net income to total comprehensive income:
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
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
42 DOLLAR TREE STORES, INC. • 2006 ANNUAL REPORT
The cumulative effect recorded in “accumulated
other comprehensive income (loss)” is being amor-
tized over the remaining lives of the related interest
rate swaps.
Share Repurchase Programs
In March 2005, the Company’s Board of Directors
authorized the repurchase of up to $300.0 million of
the Company’s common stock through March 2008.
During fiscal 2006, the Company repurchased
5,650,871 shares for approximately $148.2 million
under the March 2005 authorization.
In November 2006, the Company’s Board of
Directors authorized the repurchase of up to $500.0
million of the Company’s common stock. This
amount was in addition to the $27.0 million remain-
ing on the March 2005 authorization. In December
2006, the Company entered into two agreements with
a third party to repurchase approximately $100.0
million of the Company’s common shares under an
Accelerated Share Repurchase Agreement (ASR).
The first $50.0 million was executed in an
“uncollared” agreement. In this transaction the
Company initially received 1,656,178 shares based on
the market price of the Company’s stock of $30.19
as of the trade date (December 8, 2006). A weighted
average price is calculated using stock prices from
December 16, 2006 – March 8, 2007. This represents
the calculation period for the weighted average price.
If the weighted average market price, as defined in the
agreement, during the calculation period is greater
than the $30.19 price per share, the Company will
deliver to the third party cash or shares of Common
Stock (at the Company’s option) equal to the price
difference. If the weighted average market price is less
than $30.19 then the third party will deliver to Dollar
Tree cash equal to the price difference. The weighted
average market price of the Company’s common
stock through February 3, 2007 was $31.00. There-
fore, if the transaction had settled on February 3,
2007, the Company would have had to return 43,207
shares to the third party which were included in the
Company’s weighted average dilutive potential com-
mon shares outstanding calculation. The weighted
average stock price of the Company’s common stock as
defined in the “uncollared” agreement as of March 8,
2007 (termination date) was $32.17. The Company
paid the third party an additional $3.3 million on
March 8, 2007 for the 1,656,178 shares delivered
under this agreement.
The remaining $50.0 million relates to a “col-
lared” agreement in which the Company initially
received 1,500,703 shares on December 8, 2006, rep-
resenting the minimum number of shares under the
agreement. The maximum number of shares that can
be received under the agreement is 1,693,101. The
number of shares is determined based on the weighted
average market price of the Company’s common