Dollar Tree 2006 Annual Report Download - page 17

February 3, 2007, we had approximately $427.0
million remaining under this authorization.
• In March 2006, we completed our acquisition
of 138 Deal$ stores and related assets. We paid
approximately $32.0 million for store related
assets and $22.1 million for inventory.
• On December 15, 2005, the Compensation
Committee of our Board of Directors approved
the acceleration of the vesting date of all previ-
ously issued, outstanding and unvested options
under all current stock option plans, effective as
of December 15, 2005. This decision eliminated
non-cash compensation expense that would have
been recorded in future periods following our
adoption of Statement of Financial Accounting
Standards No. 123, Share-Based Payment
(revised 2004) (FAS 123R), on January 29, 2006.
Compensation expense has been reduced by
approximately $14.9 million over a period of four
years during which the options would have vested,
as a result of the option acceleration program.
• In 2004, we completed construction and began
operations in two new distribution centers. In
June 2004, we began operations in our new dis-
tribution center in Joliet, Illinois. The Joliet distri-
bution center is a 1.2 million square foot, fully
automated facility. In February 2004, we began
operations in our Ridgefield, Washington distri-
bution center. The Ridgefield distribution center
is a 665,000 square foot facility that can be
expanded to accommodate future growth needs.
In 2007, we are planning to expand our Briar
Creek distribution center by 400,000 square feet.
Upon completion of this expansion, our nine dis-
tribution centers will support approximately $5.0
billion in sales annually.
• In March 2004, we entered into a five-year
$450.0 million Unsecured Revolving Credit
Facility (Facility). We used availability under this
Facility to repay variable rate debt. This Facility
also replaced our previous $150.0 million revolv-
ing credit facility.
Overview
Our net sales are derived from the sale of merchandise.
Two major factors tend to affect our net sales trends.
DOLLAR TREE STORES, INC. • 2006 ANNUAL REPORT 15
First is our success at opening new stores or adding
new stores through acquisitions. Second, sales vary at
our existing stores from one year to the next. We refer
to this change as a change in comparable store net
sales, because we compare only those stores that are
open throughout both of the periods being compared.
We include sales from stores expanded during the
year in the calculation of comparable store net sales,
which has the effect of increasing our comparable
store net sales. The term ‘expanded’ also includes
stores that are relocated.
At February 3, 2007, we operated 3,219 stores in
48 states, with 26.3 million selling square feet com-
pared to 2,914 stores with 23.0 million selling square
feet at January 28, 2006. During fiscal 2006, we
opened 211 stores, expanded 85 stores and closed 44
stores, compared to 232 new stores opened, 93 stores
expanded and 53 stores closed during fiscal 2005. In
addition, we acquired 138 Deal$ stores on March 25,
2006. Including the Deal$ acquisition, we achieved
the high end of our square footage growth target of
12%–14% for the fiscal year. In fiscal 2006, we
increased our selling square footage by approximately
3.3 million square feet, or approximately 14%. Of
the 3.3 million selling square foot increase in 2006,
approximately 1.2 million resulted from the acquisi-
tion of the Deal$ stores and 0.4 million was added
by expanding existing stores. The average size of our
stores opened in 2006 was approximately 9,000 sell-
ing square feet (or about 11,000 gross square feet).
The average new store size decreased in 2006 from
approximately 10,000 selling square feet (or about
12,400 gross square feet) for new stores in 2005.
For 2007, we continue to plan to open stores around
9,000 selling square feet (or about 11,000 gross
square feet). We believe that the 11,000–12,500 gross
square foot store size is our optimal size operationally
and that this size also gives the customer an improved
shopping environment that invites them to shop
longer and buy more. We expect the substantial
majority of our future net sales growth to come from
the square footage growth resulting from new store
openings and expansion of existing stores.
Fiscal 2006 ended on February 3, 2007 and
included 53 weeks, commensurate with the retail cal-
endar. The 53rd week in 2006 added approximately