Dollar Tree 2007 Annual Report Download - page 15

Management’s Discussion & Analysis of Financial Condition and Results of Operations
DOLLAR TREE, INC. • 2007 ANNUAL REPORT 13
A WARNING ABOUT FORWARD-LOOKING STATEMENTS:
This Annual Report contains “forward-looking state-
ments” as that term is used in the Private Securities
Litigation Reform Act of 1995. Forward-looking
statements address future events, developments and
results. They include statements preceded by, followed
by or including words such as “believe,” “anticipate,”
“expect,” “intend,” “plan,” “view,” “target” or “estimate.”
For example, our forward-looking statements include
statements regarding:
• our anticipated sales, including comparable store
net sales, net sales growth and earnings growth;
• our growth plans, including our plans to add,
expand or relocate stores, our anticipated square
footage increase, and our ability to renew leases at
existing store locations;
• the average size of our stores to be added in 2008
and beyond;
• the effect of a slight shift in merchandise mix to
consumables and the increase in freezers and cool-
ers on gross profit margin and sales;
• the effect that expanding tender types accepted
by our stores will have on sales;
• the net sales per square foot, net sales and operat-
ing income attributable to smaller and larger
stores and store-level cash payback metrics;
• the possible effect of inflation and other economic
changes on our costs and profitability, including
the possible effect of future changes in minimum
wage rates, shipping rates, domestic and foreign
freight costs, fuel costs and wage and benefit costs;
• our cash needs, including our ability to fund our
future capital expenditures and working capital
requirements;
• our gross profit margin, earnings, inventory levels
and ability to leverage selling, general and admin-
istrative and other fixed costs;
• our seasonal sales patterns including those relating
to the length of the holiday selling seasons and
the effect of an earlier Easter in 2008;
• the capabilities of our inventory supply chain
technology and other new systems;
• the future reliability of, and cost associated with,
our sources of supply, particularly imported goods
such as those sourced from China;
• the capacity, performance and cost of our distri-
bution centers, including opening and expansion
schedules;
• our expectations regarding competition and
growth in our retail sector;
• costs of pending and possible future legal claims;
and
• management’s estimates associated with our
critical accounting policies, including inventory
valuation, accrued expenses, and income taxes.
You should assume that the information appear-
ing in this annual report is accurate only as of the date
it was issued. Our business, financial condition, results
of operations and prospects may have changed since
that date.
For a discussion of the risks, uncertainties and
assumptions that could affect our future events, devel-
opments or results, you should carefully review the
risk factors summarized below and the more detailed
discussion in the “Risk Factors” and “Business” sections
in our Annual Report on Form 10-K filed on April 1,
2008. Also see our “Management’s Discussion and
Analysis of Financial Condition and Results of
Operations” which begins on the next page.
• Our profitability is especially vulnerable to cost
increases.
• We could encounter disruptions or additional
costs in receiving and distributing merchandise.
• A downturn in economic conditions could
adversely affect our sales.
• Sales below our expectations during peak seasons
may cause our operating results to suffer materially.
• Our sales and profits rely on imported merchan-
dise, which may increase in cost or become
unavailable.
• We may be unable to expand our square footage
as profitably as planned.
• Our profitability is affected by the mix of prod-
ucts we sell.
• Pressure from competitors may reduce our sales
and profits.
• The resolution of certain legal matters could have
a material adverse effect on our results of opera-
tions, accrued liabilities and cash.
• Certain provision in our articles of incorporation
and bylaws could delay or discourage a takeover
attempt that may be in the shareholder’s best
interest.