Dollar Tree 2004 Annual Report Download - page 25

DOLLAR TREE STORES, INC. • 2004 ANNUAL REPORT 21
requirements and planned capital expenditures for the next few years from net cash provided by operations and
borrowings under our existing credit facilities.
The following tables summarize our material contractual obligations, including both on- and off-balance sheet
arrangements, and our commitments (in millions):
Contractual Obligations Total 2005 2006 2007 2008 2009 Thereafter
Lease Financing
Operating lease obligations $ 914.9 $216.9 $188.6 $156.3 $119.2 $ 83.6 $150.3
Capital lease obligations (primarily sale-leaseback) 13.7 13.1 0.3 0.2 0.1 0.0 —
Long-term Borrowings
Revolving credit facility 250.0 — — — — 250.0 —
Revenue bond financing 19.0 19.0 — — — — —
Total obligations $1,197.6 $249.0 $188.9 $156.5 $119.3 $333.6 $150.3
Expiring Expiring Expiring Expiring Expiring
Commitments Total in 2005 in 2006 in 2007 in 2008 in 2009 Thereafter
Letters of credit and surety bonds $ 129.0 $129.0 $ — $ — $ — $ — $ —
Freight contracts 35.5 25.5 10.0 — — — —
Technology assets 5.8 5.8 — — — — —
Total commitments $ 170.3
$160.3 $ 10.0
$— $—
$— $—
Lease Financing
Operating Lease Obligations. Our operating lease
obligations are primarily for payments under noncancel-
able store leases. The commitment includes amounts for
leases that were signed prior to January 29, 2005 for
stores that were not yet open on January 29, 2005.
Capital Lease Obligations (primarily sale-leaseback).
In September 1999, we sold certain retail store leasehold
improvements to an unrelated third party and leased
them back for seven years. As a result of the transaction,
we received net cash of $20.9 million and an $8.1 million
11.0% note receivable, which matures in October 2005.
In 2004, we exercised the right to repurchase the leasehold
improvements at October 31, 2005. In order to exercise
this right, our lease obligation related to these improve-
ments increased by $0.2 million. The total amount of the
lease obligation at January 29, 2005 was $11.7 million.
The obligation and the note receivable will both be
satisfied at the buyout date of October 31, 2005.
Long-Term Borrowings
Revolving Credit Facility. In March 2004, we entered
into a five-year Revolving Credit Facility (the Facility).
The Facility provides for a $450.0 million line of credit,
including up to $50.0 million in available letters of credit,
bearing interest at LIBOR, plus 0.475%. The Facility,
among other things, requires the maintenance of certain
specified financial ratios, restricts the payment of certain
distributions and prohibits the incurrence of certain new
indebtedness. We used availability under this Facility to
repay the $142.6 million of variable-rate debt and to
purchase short-term investments. As of January 29, 2005,
we had $250.0 million outstanding on this Facility.
Revenue Bond Financing. In May 1998, we entered
into an agreement with the Mississippi Business Finance
Corporation under which it issued $19.0 million of
variable-rate demand revenue bonds. We borrowed the
proceeds from the bonds to finance the acquisition,
construction and installation of land, buildings, machinery
and equipment for our distribution facility in Olive
Branch, Mississippi. At January 29, 2005, the balance
outstanding on the bonds was $19.0 million. We begin
repayment of the principal amount of the bonds in June
2006, with a portion maturing each June 1 until the final
portion matures in June 2018. The bonds do not have a
prepayment penalty as long as the interest rate remains
variable. The bonds contain a demand provision and,
therefore, outstanding amounts are classified as current
liabilities. We pay interest monthly based on a variable
interest rate, which was 2.57% at January 29, 2005. The
bonds are secured by a $19.3 million letter of credit
issued by one of our existing lending banks. The letter
MANAGEMENT’S DISCUSSION & ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS