Dollar Tree 2006 Annual Report Download - page 42

NOTE 5 – LONG-TERM DEBT
Long-term debt at February 3, 2007 and January 28, 2006 consists of the following:
February 3, January 28,
(in millions) 2007 2006
$450.0 million Unsecured Revolving Credit Facility, interest payable monthly
at LIBOR, plus 0.475%, which was 5.8% at February 3, 2007,
principal payable upon expiration of the facility in March 2009 $250.0 $250.0
Demand Revenue Bonds, interest payable monthly at a variable rate which was
5.4% at February 3, 2007, principal payable on demand, maturing June 2018 18.8 19.0
Total long-term debt 268.8 269.0
Less current portion 18.8 19.0
Long-term debt, excluding current portion $250.0 $250.0
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
40 DOLLAR TREE STORES, INC. • 2006 ANNUAL REPORT
Maturities of long-term debt are as follows:
2007 – $18.8 million and 2009 – $250.0 million.
Unsecured Revolving Credit Facility
In March 2004, the Company entered into a five-year
Unsecured Revolving Credit Facility (the Facility).
The Facility provides for a $450.0 million revolving
line of credit, including up to $50.0 million in avail-
able letters of credit, bearing interest at LIBOR, plus
0.475%. The Facility also bears an annual facilities
fee, calculated as a percentage, as defined, of the
amount available under the line of credit and an
annual administrative fee payable quarterly. The
Facility, among other things, requires the maintenance
of certain specified financial ratios, restricts the pay-
ment of certain distributions and prohibits the incur-
rence of certain new indebtedness. The Company
used availability under the Facility to repay $142.3
million of variable-rate debt and to purchase short-
term, state and local government-sponsored municipal
bonds. The Company’s $150.0 million revolving credit
facility (Old Facility) was terminated concurrent with
entering into the Facility. The net debt issuance costs
related to the Old Facility and the variable-rate debt
totaling $0.7 million, were charged to interest
expense in 2004.
Demand Revenue Bonds
On May 20, 1998, the Company entered into an
unsecured Loan Agreement with the Mississippi
Business Finance Corporation (MBFC) under which
the MBFC issued Taxable Variable Rate Demand
Revenue Bonds (the Bonds) in an aggregate principal
amount of $19.0 million to finance the acquisition,
construction, and installation of land, buildings,
machinery and equipment for the Company’s distri-
bution facility in Olive Branch, Mississippi. The
Bonds do not contain a prepayment penalty as long
as the interest rate remains variable. The Bonds con-
tain a demand provision and, therefore, are classified
as current liabilities.
NOTE 6 – DERIVATIVE FINANCIAL INSTRUMENTS
Non-Hedging Derivatives
At February 3, 2007, the Company was party to a
derivative instrument in the form of an interest rate
swap that does not qualify for hedge accounting
treatment pursuant to the provisions of SFAS No.
133 because it contains a knock-out provision. The
swap creates the economic equivalent of a fixed rate
obligation by converting the variable-interest rate
to a fixed rate. Under this interest rate swap, the
Company pays interest to a financial institution at a
fixed rate, as defined in the agreement. In exchange,
the financial institution pays the Company at a
variable interest rate, which approximates the float-
ing rate on the variable-rate obligation, excluding
the credit spread. The interest rate on the swap is
subject to adjustment monthly. No payments are
made by either party for months in which the