Dollar Tree 2004 Annual Report Download - page 39

DOLLAR TREE STORES, INC. • 2004 ANNUAL REPORT 35
computed by dividing net income by the weighted
average number of shares and dilutive potential shares
outstanding. Dilutive potential shares include all
outstanding stock options and unvested restricted stock
after applying the treasury stock method.
NOTE 2 – BALANCE SHEET
COMPONENTS
Intangibles, Net
Intangibles, net, as of January 29, 2005 and January 31,
2004 consist of the following:
January 29, January 31,
2005 2004
Non-competition agreements $ 6,398 $ 6,398
Accumulated amortization (3,475) (2,685)
Non-competition agreements, net 2,923 3,713
Favorable lease rights 9,034 2,189
Accumulated amortization (1,567) (806)
Favorable lease rights, net 7,467 1,383
Goodwill 130,271 130,271
Accumulated amortization (11,629) (11,629)
Goodwill, net 118,642 118,642
Total intangibles, net $ 129,032 $123,738
Non-Competition Agreements
The Company issued stock options to certain former
shareholders of an acquired entity in exchange for non-
competition agreements and a consulting agreement.
These assets are being amortized over the legal term of
the individual agreements. A portion of these agreements
was amortized over five years and as of January 29, 2005,
these are fully amortized. One remaining agreement is
being amortized over a 10-year period. In addition, in
2003, the Company entered into non-competition
agreements with former executives of Greenbacks, Inc.
which are being amortized over five years (see Note 10).
Favorable Lease Rights
In 2004 and 2002, the Company acquired favorable lease
rights for operating leases for retail locations from third
parties. In addition, in 2003, the Company acquired
favorable lease rights in its acquisition of Greenbacks,
Inc. (see Note 10). The Company’s favorable lease rights
are amortized on a straight-line basis to rent expense over
the remaining initial lease terms, which expire at various
dates through 2016.
Amortization expense related to the non-competition
agreements and favorable lease rights was $1,551, $1,300,
$40 and $746 for the years ended January 29, 2005 and
January 31, 2004, the one-month period ended February
1, 2003 and the year ended December 31, 2002,
respectively. Estimated annual amortization expense for
the next five years follows: 2005 - $2,617; 2006 - $2,508;
2007 - $2,470; 2008 - $1,253; and 2009 - $477.
Goodwill
In accordance with SFAS No. 142, goodwill is no longer
being amortized, but is tested at least annually for
impairment. In addition, goodwill will be tested on an
interim basis if an event or circumstance indicates that it
is more likely than not that an impairment loss has been
incurred. The Company performed its annual impairment
testing in November 2004 and determined that no
impairment loss existed.
Property, Plant and Equipment, Net
Property, plant and equipment, net, as of January 29,
2005 and January 31, 2004 consists of the following:
January 29, January 31,
2005 2004
Land $ 28,867 $ 16,807
Buildings 171,980 105,558
Improvements 348,561 288,189
Furniture, fixtures and equipment 549,051 441,259
Transportation vehicles 1,868 3,492
Construction in progress 20,352 107,703
Total property, plant and
equipment 1,120,679 963,008
Less: accumulated depreciation
and amortization 435,293 328,581
Total property, plant and
equipment, net $ 685,386 $634,427
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)