Dollar Tree 2008 Annual Report Download - page 49

DOLLAR TREE, INC. • 2008 ANNUAL REPORT 47
future service of the these officers through fiscal 2006.
The Company met these performance targets in fiscal
2006; therefore, the Company recognized the fair
value of these RSUs of $0.2 million during fiscal 2006.
The fair value of these RSUs was determined using the
Company’s closing stock price on the grant date in
accordance with SFAS 123R.
In 2005, the Company granted less than 0.1 mil-
lion RSUs from the EOEP to certain officers of the
Company, contingent on the Company meeting cer-
tain performance targets in 2005 and future service of
these officers through various points through July
2007. The Company met these performance targets in
fiscal 2005; therefore, the fair value of these RSUs of
$1.0 million was expensed over the service period.
The fair value of these RSUs was determined using the
Company’s closing stock price January 28, 2006 (the
last day of fiscal 2005), when the performance targets
were satisfied. The Company recognized $0.3 million
and $0.7 million, of expense related to these RSUs in
2006 and 2005, respectively. The amount recognized
in 2007 was less than $0.1 million.
The following table summarizes the status of
RSUs as of January 31, 2009, and changes during the
year then ended:
Weighted
Average
Grant
Date Fair
Shares Value
Nonvested at February 2, 2008 555,935 $26.57
Granted 469,645 27.05
Vested (256,870) 31.20
Forfeited (21,217) 31.57
Nonvested at January 31, 2009 747,493 $30.13
In connection with the vesting of RSUs in 2008
and 2007, certain employees elected to receive shares
net of minimum statutory tax withholding amounts
which totaled $2.6 million and $2.9 million, respec-
tively. The total fair value of the restricted shares vest-
ed during the years ended January 31, 2009 and
February 2, 2008 was $8.0 million and $8.2 million,
respectively.
Employee Stock Purchase Plan
Under the Dollar Tree, Inc. Employee Stock Purchase
Plan (ESPP), the Company is authorized to issue up to
1,759,375 shares of common stock to eligible employ-
ees. Under the terms of the ESPP, employees can
choose to have up to 10% of their annual base earn-
ings withheld to purchase the Company's common
stock. The purchase price of the stock is 85% of the
lower of the price at the beginning or the end of the
quarterly offering period. Under the ESPP, the
Company has sold 1,213,640 shares as of January 31,
2009.
The fair value of the employees' purchase rights is
estimated on the date of grant using the Black-Scholes
option-pricing model with the following weighted
average assumptions:
Fiscal Fiscal Fiscal
2008 2007 2006
Expected term 3 months 3 months 3 months
Expected volatility 14.4% 16.3% 13.1%
Annual dividend yield ———
Risk free interest rate 3.8% 4.4% 4.8%
The weighted average per share fair value of those
purchase rights granted in 2008, 2007 and 2006 was
$5.64, $5.74 and $4.59, respectively. Total expense
recognized for these purchase rights was $0.8 million,
$0.9 million and $0.4 million in 2008, 2007 and
2006, respectively.
On March 2, 2008, the ESPP was adopted by
Dollar Tree, Inc. as a part of the holding company
reorganization. Refer to Note 1 for discussion of the
holding company reorganization.
NOTE 10 – ACQUISITION
On March 25, 2006, the Company completed its
acquisition of 138 Deal$ stores. These stores are located
primarily in the Midwest part of the United States and
the Company has existing logistics capacity to service
these stores. This acquisition included stores that offer
an expanded assortment of merchandise including
items that sell for more than $1. Substantially all
Deal$ stores acquired continue to operate under the
Deal$ banner while providing the Company an oppor-
tunity to leverage its Dollar Tree infrastructure in the
testing of new merchandise concepts, including higher
price points, without disrupting the single-price point
model in its Dollar Tree stores.
The Company paid approximately $32.0 million
for store-related and other assets and $22.1 million for
inventory. This amount includes approximately $0.6
million of direct costs associated with the acquisition.
The results of Deal$ store operations are included in
the Company’s financial statements since the acquisi-
tion date and did not have a significant impact on the