Dollar Tree 2006 Annual Report Download - page 45

DOLLAR TREE STORES, INC. • 2006 ANNUAL REPORT 43
stock during the same calculation period as defined in
the “uncollared” agreement. The weighted average
market price through February 3, 2007 as defined in
the “collared” agreement was $30.80. Therefore, if
the transaction had settled on February 3, 2007, the
Company would have received an additional 122,742
shares under the “collared” agreement. Based on the
applicable accounting literature, these additional
shares were not included in the weighted average
diluted earnings per share calculation because their
effect would be anti-dilutive. Based on the weighted
average price as of February 3, 2007 of $30.80, there
is approximately $3.8 million of the $50.0 million
related to the “collared” agreement that is recorded
as a reduction to stockholders’ equity pending final
settlement of the agreement. The weighted average
stock price of the Company’s common stock as
defined in the “collared” agreement as of March 8,
2007 (termination date) was $31.97. The Company
received an additional 63,525 shares on March 8,
2007 under this agreement.
NOTE 8 – EMPLOYEE BENEFIT PLANS
Profit Sharing and 401(k) Retirement Plan
The Company maintains a defined contribution profit
sharing and 401(k) plan which is available to all
employees over 21 years of age who have completed
one year of service in which they have worked at least
1,000 hours. Eligible employees may make elective
salary deferrals. The Company may make contribu-
tions at its discretion.
Contributions to and reimbursements by the
Company of expenses of the plan included in the
accompanying consolidated statements of operations
were as follows:
Year Ended February 3, 2007 $16.8 million
Year Ended January 28, 2006 6.9 million
Year Ended January 29, 2005 8.5 million
Eligible employees hired prior to January 1, 2007
are immediately vested in the Company’s profit shar-
ing contributions. Eligible employees hired subsequent
to January 1, 2007 vest in the Company’s profit shar-
ing contributions based on the following schedule:
• 25% after three years of service
• 50% after four years of service
• 100% after five years of service
All eligible employees are immediately vested in
any Company match contributions under the 401(k)
portion of the plan.
Deferred Compensation Plan
The Company has a deferred compensation plan
which provides certain officers and executives the
ability to defer a portion of their base compensation
and bonuses and invest their deferred amounts. The
plan is a nonqualified plan and the Company may
make discretionary contributions. The deferred
amounts and earnings thereon are payable to partici-
pants, or designated beneficiaries, at specified future
dates, or upon retirement or death. Total cumulative
participant deferrals were approximately $2.3 million
and $2.0 million, respectively, at February 3, 2007
and January 28, 2006 and are included in “other lia-
bilities” on the accompanying consolidated balance
sheets. The related assets are included in “other
assets, net” on the accompanying consolidated bal-
ance sheets. The Company made no discretionary
contributions in the years ended February 3, 2007,
January 28, 2006 and January 29, 2005.
NOTE 9 – STOCK-BASED COMPENSATION PLANS
At February 3, 2007, the Company has eight stock-
based compensation plans. Each plan and the
accounting method are described below.
Fixed Stock Option Compensation Plans
Under the Non-Qualified Stock Option Plan (SOP),
the Company granted options to its employees for
1,047,264 shares of Common Stock in 1993 and
1,048,289 shares in 1994. Options granted under
the SOP have an exercise price of $0.86 and are fully
vested at the date of grant.
Under the 1995 Stock Incentive Plan (SIP), the
Company granted options to its employees for the
purchase of up to 12.6 million shares of Common
Stock. The exercise price of each option equaled the
market price of the Company’s stock at the date of