Dollar Tree 2007 Annual Report Download - page 17

DOLLAR TREE, INC. • 2007 ANNUAL REPORT 15
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 $14.9 million over a period of four
years during which the options would have vest-
ed, as a result of the option acceleration program.
Overview
Our net sales are derived from the sale of merchan-
dise. Two major factors tend to affect our net sales
trends. First is our success at opening new stores or
adding new stores through acquisitions. Second, sales
vary at our existing stores from one year to the next.
We refer to this change as a change in comparable
store net sales, because we compare only those stores
that are open throughout both of the periods being
compared. We include sales from stores expanded dur-
ing the year in the calculation of comparable store net
sales, which has the effect of increasing our compara-
ble store net sales. The term ‘expanded’ also includes
stores that are relocated.
At February 2, 2008, we operated 3,411 stores in
48 states, with 28.4 million selling square feet com-
pared to 3,219 stores with 26.3 million selling square
feet at February 3, 2007. During fiscal 2007, we
opened 240 stores, expanded 102 stores and closed 48
stores, compared to 211 new stores opened, 85 stores
expanded and 44 stores closed during fiscal 2006. In
addition to the new stores opened in 2006, we
acquired 138 Deal$ stores on March 25, 2006. In the
current year we achieved 8% selling square footage
growth. Of the 2.1 million selling square foot increase
in 2007, 0.4 million was added by expanding existing
stores. The average size of our stores opened in 2007
was approximately 8,500 selling square feet (or about
10,800 gross square feet). The average new store size
decreased slightly in 2007 from approximately 9,000
selling square feet (or about 11,000 gross square feet)
for new stores in 2006. For 2008, we continue to plan
to open stores that are approximately 8,500 - 9,000
selling square feet (or about 10,000 - 12,500 gross
square feet). We believe that this store size is our opti-
mal size operationally and that this size also gives our
customers 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.
Outstanding shares of the capital stock of Dollar
Tree Stores, Inc., were automatically converted, on
a share for share basis, into identical shares of
common stock of the new holding company. The
articles of incorporation, the bylaws, the executive
officers and the board of directors of our new
holding company are the same as those of the for-
mer Dollar Tree Stores, Inc. in effect immediately
prior to the reorganization. The common stock of
our new holding company will continue to be list-
ed on the NASDAQ Global Select Market under
the symbol “DLTR”. The rights, privileges and
interests of our stockholders will remain the same
with respect to our new holding company.
• On February 20, 2008, we entered into a five-year
$550.0 million Credit Agreement (the Agreement).
The Agreement provides for a $300.0 million
revolving line of credit, including up to $150.0
million in available letters of credit, and a $250.0
million term loan. The interest rate on the facility
will be based, at our option, on a LIBOR rate, plus
a margin, or an alternate base rate, plus a margin.
Our March 2004, $450.0 million unsecured
revolving credit facility was terminated concurrent
with entering into the Agreement.
• In November 2007, we completed the 400,000
square foot expansion of our Briar Creek distribu-
tion center. Including this expansion, we believe
that our nine distribution centers will support
approximately $6.7 billion in sales annually.
• In October 2007, our Board of Directors author-
ized the repurchase of an additional $500.0 mil-
lion of our common stock. This authorization was
in addition to the November 2006 authorization
which had approximately $98.4 million remaining.
At February 2, 2008, we had approximately $453.7
million remaining under Board authorization.
• In March 2006, we completed our acquisition of
138 Deal$ 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