Dollar Tree 2004 Annual Report Download - page 40

36 DOLLAR TREE STORES, INC. • 2004 ANNUAL REPORT
Other Current Liabilities
Other current liabilities as of January 29, 2005
and January 31, 2004 consist of accrued expenses for
the following:
January 29, January 31,
2005 2004
Compensation and benefits $ 23,384 $25,435
Taxes (other than income taxes) 11,992 10,450
Insurance 29,112 25,398
Other 40,791 28,676
Total other current liabilities $105,279 $89,959
Capital Leases
The present value of future minimum capital lease
payments as of January 29, 2005 is as follows:
2005 $13,081
2006 279
2007 183
2008 115
2009 51
Total minimum lease payments 13,709
Less: amount representing interest
(at an average rate of approximately 10.9%) 963
Present value of net minimum capital lease payments 12,746
Less current installments of obligations under
capital leases 12,212
Obligations under capital leases,
excluding current installments $ 534
Included in property, plant and equipment at January
29, 2005 and January 31, 2004 are leased furniture and
fixtures and transportation vehicles, excluding sale-
leaseback assets, with a cost of $4,465 and $5,641,
respectively. Accumulated depreciation on these assets
totaled $2,964 and $3,370 at January 29, 2005 and
January 31, 2004, respectively.
Sale-Leaseback Transaction
On September 30, 1999, the Company sold certain retail
store leasehold improvements to an unrelated third party
and leased them back for a period of seven years. This
transaction is being accounted for as a financing
arrangement. In 2004, the Company exercised the right
to purchase the leasehold improvements at September 30,
2005. In order to exercise this right, the Company’s lease
obligation increased by $200. The total amount of the
lease obligation, including this $200, at January 29, 2005
was $11,735. The lease agreement includes financial
covenants that are not more restrictive than those of
existing loan agreements. As part of the transaction, the
Company received proceeds of $20,880, net of financing
costs, and an $8,120 11% note receivable, which matures
in September 2005 and is included in “other assets, net.”
The future minimum lease payments related to the capital
lease obligation are included in the schedule above.
Fair Value of Financial Instruments
The carrying values of cash and cash equivalents,
short-term investments, prepaid expenses, other current
assets, accounts payable and other current liabilities
approximate fair value because of the short maturity of
these instruments. The carrying values of other liabilities,
excluding interest rate swaps, approximate fair value
because they are recorded using discounted future cash
flows or quoted market rates.
The carrying value of the Company’s variable-rate
and fixed-rate long-term debt approximates its fair value.
The fair value is estimated by discounting the future cash
flows of each instrument at rates offered for similar debt
instruments of comparable maturities.
It is not practicable to estimate the fair value of our
outstanding commitments for letters of credit and surety
bonds without unreasonable cost.
The fair value of the interest rate swaps (see Note 6)
are the estimated amounts the Company would pay to
terminate the agreements as of the reporting date. The fair
value of the liabilities associated with interest rate swaps at
January 29, 2005 and January 31, 2004, are as follows:
January 29, January 31,
2005 2004
$25,000 interest rate swap $ 655 $1,767
$19,000 interest rate swap 893 1,687
$10,000 interest rate swap —183
$5,000 interest rate swap —81
$1,548 $3,718
The fair values of the interest rate swaps are included
in “other liabilities”in the accompanying consolidated
balance sheets. The $10,000 and $5,000 interest rate
swaps expired during fiscal 2004.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)