Dollar Tree 2007 Annual Report Download - page 50

48 DOLLAR TREE, INC. • 2007 ANNUAL REPORT
Notes to Consolidated Financial Statements continued
(in millions)
Inventory $22.1
Other current assets 0.1
Property and equipment 15.1
Goodwill 14.6
Other intangibles 2.2
$54.1
The goodwill resulting from this acquisition will
not be amortized but will be tested annually for
impairment. Included in other intangibles is approxi-
mately $2.1 million related to net favorable lease
rights for operating leases for retail locations. This
amount is being amortized on a straight-line basis to
rent expense over 35 months, the weighted average
remaining initial lease term of the locations purchased.
NOTE 11 – INVESTMENT
The Company has a $4.0 million investment which
represents a 10.5% fully diluted interest in Ollie’s
Holdings, Inc. (Ollie’s), a multi-price point discount
retailer located in the mid-Atlantic region. In addition,
the SKM Equity Fund III, L.P. (SKM Equity) and
SKM Investment Fund (SKM Investment) acquired a
combined fully diluted interest in Ollie’s of 53.1%.
One of the Company’s current directors, Thomas
Saunders and one former director, John Megrue, are
principal members of SKM Partners, L.L.C., which
serves as the general partner of SKM Equity. John
Megrue is also a principal member of Apax Partners,
L.P., which serves as the general partner for SKM
Investment. John Megrue did not stand for re-election
to the Company’s Board of Directors in June 2007.
The $4.0 million investment in Ollie’s is accounted
for under the cost method and is included in “other
assets” in the accompanying consolidated balance
sheets.
NOTE 12 – QUARTERLY FINANCIAL INFORMATION
(Unaudited)
The following table sets forth certain items from the
Company’s unaudited consolidated statements of
operations for each quarter of fiscal year 2007 and
2006. The unaudited information has been prepared
on the same basis as the audited consolidated financial
statements appearing elsewhere in this report and
includes all adjustments, consisting only of normal
recurring adjustments, which management considers
necessary for a fair presentation of the financial data
shown. The operating results for any quarter are not
necessarily indicative of results for a full year or for
any future period.
First Second Third Fourth
Quarter(1) Quarter Quarter Quarter(2)
Fiscal 2007:
Net sales $ 975.0 $ 971.2 $ 997.8 $ 1,298.6
Gross profit $ 325.3 $ 326.6 $ 343.9 $ 465.3
Operating income $ 62.3 $ 53.4 $ 60.2 $ 154.4
Net income $ 38.1 $ 32.6 $ 35.9 $ 94.7
Diluted net income per share $ 0.38 $ 0.33 $ 0.38 $ 1.04
Stores open at end of quarter 3,280 3,334 3,401 3,411
Comparable store net sales change 5.8% 4.4% 1.9% (0.8%)
Fiscal 2006:
Net sales $856.5 $883.6 $910.4 $1,318.9
Gross profit $286.1 $293.3 $307.5 $ 470.3
Operating income $ 53.5 $ 48.2 $ 53.5 $ 155.6
Net income $ 32.9 $ 29.0 $ 32.5 $ 97.6
Diluted net income per share $ 0.31 $ 0.28 $ 0.32 $ 0.96
Stores open at end of quarter 3,119 3,156 3,192 3,219
Comparable store net sales change 4.0% 4.2% 4.0% 5.5%
(1) Easter was observed on April 8, 2007 and April 16, 2006.
(2) Fiscal 2007 contains 13 weeks ended February 2, 2008 while Fiscal 2006 contains 14 weeks ended February 3, 2007.