Dollar Tree 2009 Annual Report Download - page 37

Notes to Consolidated Financial Statements
Pre-Opening Costs
The Company expenses pre-opening costs for new,
expanded and relocated stores, as incurred.
Advertising Costs
The Company expenses advertising costs as they are
incurred and they are included in “selling, general
and administrative expenses” on the accompanying
consolidated statements of operations. Advertising
costs฀approximated฀$8.3฀million,฀$6.6฀million฀and฀$8.4฀
million฀for฀the฀years฀ended฀January฀30,฀2010,฀January฀31,฀
2009,฀and฀February฀2,฀2008,฀respectively.
Income Taxes
Income฀taxes฀are฀accounted฀for฀under฀the฀asset฀and฀
liability฀method.฀Deferred฀tax฀assets฀and฀liabilities฀are฀
recognized฀for฀the฀future฀tax฀consequences฀attributable฀
to฀differences฀between฀nancial฀statement฀carrying฀
amounts of existing assets and liabilities and their
respective฀tax฀bases.฀Deferred฀tax฀assets฀and฀liabilities฀
are measured using enacted tax rates expected to
apply to taxable income in the years in which those
temporary differences are expected to be recovered or
settled. The effect on deferred tax assets and liabilities
of฀a฀change฀in฀tax฀rates฀is฀recognized฀in฀income฀in฀the฀
period that includes the enactment date of such change.
The Company includes interest and penalties in
the provision for income tax expense and income
taxes payable. The Company does not provide for any
penalties associated with tax contingencies unless they
are considered probable of assessment.
Stock-Based Compensation
The฀Company฀recognizes฀all฀share-based฀payments฀to฀
employees, including grants of employee stock options,
in฀the฀nancial฀statements฀based฀on฀their฀fair฀values.฀
Total฀stock-based฀compensation฀expense฀for฀2009,฀2008฀
and฀2007฀was฀$21.7฀million,฀$16.7฀million฀and฀$11.3฀
million, respectively.
The฀Company฀recognizes฀expense฀related฀to฀the฀fair฀
value of stock options and restricted stock units (RSUs)
over the requisite service period on a straight-line basis.
The fair value of stock option grants is estimated on the
date of grant using the Black-Scholes option pricing
model. The fair value of the RSUs is determined using
the฀closing฀price฀of฀the฀Company’s฀common฀stock฀on฀
the date of grant.
Net Income Per Share
Basic net income per share has been computed by
dividing net income by the weighted average number
of฀shares฀outstanding.฀Diluted฀net฀income฀per฀share฀
reflects the potential dilution that could occur assuming
the inclusion of dilutive potential shares and has been
computed by dividing net income by the weighted
average number of shares and dilutive potential shares
outstanding.฀Dilutive฀potential฀shares฀include฀all฀
outstanding stock options and unvested restricted stock
after applying the treasury stock method.
NOTE 2—BALANCE SHEET COMPONENTS
Property, Plant and Equipment, Net
Property,฀plant฀and฀equipment,฀net,฀as฀of฀January฀30,฀
2010฀and฀January฀31,฀2009฀consists฀of฀the฀following:
(in millions)
January 30,
2010
January฀31,
2009
Land $ 29.4 $ 29.4฀
Buildings 180.2 181.9฀
Leasehold improvements 634.2 590.9฀
Furniture,฀xtures฀and฀
equipment 895.5 856.0฀
Construction in progress 55.5 22.4฀
To tal property, plant and
equipment 1,794.8 1,680.6฀
Less: accumulated
depreciation 1,080.5 970.3฀
To tal property, plant and
equipment, net $ 714.3 $ 710.3฀
Depreciation฀expense฀was฀$157.8฀million,฀$161.1฀
million฀and฀$158.5฀million฀for฀the฀years฀ended฀
January฀30,฀2010,฀January฀31,฀2009,฀and฀February฀2,฀
2008,฀respectively.
฀฀฀DOLLAR฀TREE,฀INC.฀•฀2009฀Annual฀Report฀฀฀35