Dollar Tree 2009 Annual Report Download - page 40

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Notes to Consolidated Financial Statements
The฀Company฀is฀participating฀in฀the฀Internal฀
Revenue฀Service฀(“IRS”)฀Compliance฀Assurance฀
Program฀(“CAP”)฀for฀the฀2009฀tax฀year฀and฀will฀
participate฀for฀2010.฀This฀program฀accelerates฀the฀
examination of key transactions with the goal of
resolving฀any฀issues฀before฀the฀tax฀return฀is฀led.฀Our฀
federal tax returns have been examined and all issues
have฀been฀settled฀through฀2007.฀IRS฀is฀currently฀
examining฀the฀2008฀tax฀return.฀In฀addition,฀several฀
states฀completed฀their฀examination฀of฀scal฀years฀prior฀
to฀2005.฀In฀general,฀scal฀years฀2006฀and฀forward฀are฀
within the statute of limitations for state tax purposes.
The฀statute฀of฀limitations฀is฀still฀open฀prior฀to฀2005฀for฀
some states.
The฀balance฀for฀unrecognized฀tax฀benets฀at฀
January฀30,฀2010,฀was฀$14.4฀million.฀The฀total฀amount฀
of฀unrecognized฀tax฀benets฀at฀January฀30,฀2010,฀that,฀if฀
recognized,฀would฀affect฀the฀effective฀tax฀rate฀was฀$9.6฀
million฀(net฀of฀the฀federal฀tax฀benet).฀The฀following฀is฀
a฀reconciliation฀of฀the฀Company’s฀total฀gross฀unrecog-
nized฀tax฀benets฀for฀the฀year฀ended฀January฀30,฀2010:
(in millions)
Balance฀at฀January฀31,฀2009 ฀฀ $฀ 14.7฀
Additions, based on tax positions
related to current year ฀฀ ฀ 0.2฀
Additions for tax positions of
prior years ฀฀ ฀ 1.4฀
Reductions for tax positions of
prior years ฀฀ ฀ (1.0)
Settlements ฀฀ ฀ (0.4)
Lapses in statute of limitations ฀฀ ฀ (0.5)
Balance฀at฀January฀30,฀2010 ฀ ฀$฀ 14.4฀
During฀scal฀2009,฀the฀Company฀accrued฀potential฀
interest฀of฀$0.8฀million,฀related฀to฀these฀unrecognized฀
tax฀benets.฀No฀potential฀penalties฀were฀accrued฀during฀
2009฀related฀to฀the฀unrecognized฀tax฀benets.฀As฀of฀
January฀30,฀2010,฀the฀Company฀has฀recorded฀a฀liability฀
for฀potential฀penalties฀and฀interest฀of฀$0.1฀million฀and฀
$3.0฀million,฀respectively.฀
It฀is฀possible฀that฀state฀tax฀reserves฀will฀be฀reduced฀
for audit settlements and statute expirations within
the฀next฀12฀months.฀At฀this฀point฀it฀is฀not฀possible฀to฀
estimate a range associated with these audits.
NOTE 4—COMMITMENTS AND
CONTINGENCIES
Operating Lease Commitments
Future minimum lease payments under noncancelable
stores and distribution center operating leases are as
follows:
(in millions)
2010 ฀฀ $฀ 372.8฀
2 011 ฀฀ ฀ 326.9฀
2012 ฀฀ ฀ 269.3฀
2013 ฀฀ ฀ 202.7
2014 ฀฀ ฀ 140.2
Thereafter ฀฀ ฀ 206.8
Total minimum lease payments ฀ ฀$฀1,518.7฀
The above future minimum lease payments include
amounts฀for฀leases฀that฀were฀signed฀prior฀to฀January฀
30,฀2010฀for฀stores฀that฀were฀not฀open฀as฀of฀January฀30,฀
2010.
Minimum rental payments for operating leases
do not include contingent rentals that may be paid
under certain store leases based on a percentage of
sales in excess of stipulated amounts. Future minimum
lease payments have not been reduced by expected
future฀minimum฀sublease฀rentals฀of฀$2.8฀million฀under฀
operating leases.
38฀฀฀DOLLAR฀TREE,฀INC.฀•฀2009฀Annual฀Report