Dollar Tree 2008 Annual Report Download - page 34

32 DOLLAR TREE, INC. • 2008 ANNUAL REPORT
Notes to Consolidated Financial Statements
Fiscal Year
The Company’s fiscal year ends on the Saturday clos-
est to January 31. Any reference herein to “2008” or
“Fiscal 2008”, “2007” or “Fiscal 2007”, and “2006” or
“Fiscal 2006”, relates to as of or for the years ended
January 31, 2009, February 2, 2008, and February 3,
2007, respectively. Fiscal year 2006 consisted of 53
weeks, while 2008 and 2007 both consisted of 52
weeks.
Use of Estimates
The preparation of financial statements in conformity
with U.S. generally accepted accounting principles
requires management to make estimates and assump-
tions that affect the reported amounts of assets and
liabilities and disclosures of contingent assets and lia-
bilities at the date of the consolidated financial state-
ments and the reported amounts of revenues and
expenses during the reporting period. Actual results
could differ from those estimates.
Cash and Cash Equivalents
Cash and cash equivalents at January 31, 2009 and
February 2, 2008 includes $336.1 million and $12.8
million, respectively, of investments primarily in
money market securities which are valued at cost,
which approximates fair value. For purposes of the
consolidated statements of cash flows, the Company
considers all highly liquid debt instruments with origi-
nal maturities of three months or less to be cash
equivalents. The majority of payments due from finan-
cial institutions for the settlement of debit card and
credit card transactions process within three business
days, and therefore are classified as cash and cash
equivalents.
Short-Term Investments
The Company has no short-term investments at
January 31, 2009. The amounts at February 2, 2008,
consisted primarily of government-sponsored munici-
pal bonds. These investments were classified as avail-
able for sale and were recorded at fair value, which
approximates cost. The government-sponsored munic-
ipal bonds could be converted into cash depending on
terms of the underlying agreement. The securities
underlying the government-sponsored municipal
bonds had longer legal maturity dates.
Merchandise Inventories
Merchandise inventories at the distribution centers are
stated at the lower of cost or market, determined on a
weighted average cost basis. Cost is assigned to store
inventories using the retail inventory method, deter-
mined on a weighted average cost basis.
NOTE 1 - SUMMARY OF SIGNIFICANT
ACCOUNTING POLICIES
Description of Business
At January 31, 2009, Dollar Tree, Inc. (the Company)
owned and operated 3,591 discount variety retail
stores. Approximately 3,450 of these stores sell sub-
stantially all items for $1.00 or less. The remaining
stores are Deal$ stores, most of which were acquired
in the Deal$ acquisition and these stores sell most
items for $1.00 or less but also sell items at prices
greater than $1.00. The Company's stores operate
under the names of Dollar Tree, Deal$ and Dollar
Bills. The Company’s stores average approximately
8,400 selling square feet.
The Company's headquarters and one of its distri-
bution centers are located in Chesapeake, Virginia.
The Company also operates distribution centers in
Mississippi, Illinois, California, Pennsylvania, Georgia,
Oklahoma, Utah and Washington. The Company's
stores are located in all 48 contiguous states. The
Company's merchandise includes food, household
consumables and products, party goods, health and
beauty care, candy, toys, seasonal goods, stationery and
other consumer items. Approximately 40% to 45% of
the Company's merchandise is imported, primarily
from China.
On March 2, 2008, the Company reorganized by
creating a new holding company structure. The pri-
mary purpose of the reorganization was to create a
more efficient corporate structure. The business opera-
tions of the Company and its subsidiaries did not
change as a result of this reorganization. As a part of
the holding company reorganization, a new parent
company, Dollar Tree, Inc., was formed. Outstanding
shares of the capital stock of Dollar Tree Stores, Inc.,
were automatically converted, on a share for share
basis, into identical shares of common stock of the
new holding company. The articles of incorporation,
the bylaws, the executive officers and the board of
directors of the new holding company are the same as
those of the former Dollar Tree Stores, Inc. in effect
immediately prior to the reorganization. The common
stock of the new holding company continues to be
listed on the NASDAQ Global Select Market under
the symbol “DLTR”. The rights, privileges and interests
of the Company’s stockholders remain the same with
respect to the new holding company.
Principles of Consolidation
The consolidated financial statements include the
financial statements of Dollar Tree, Inc., and its wholly
owned subsidiaries. All significant intercompany
balances and transactions have been eliminated in
consolidation.