Dollar Tree 2010 Annual Report Download - page 34

NOTE 1—SUMMARY OF SIGNIFICANT
ACCOUNTING POLICIES
Description of Business
Dollar Tree, Inc. (the Company) is the leading operator
of discount variety retail stores offering merchandise at
the fi xed price of $1.00 or less and operated 4,101
discount variety retail stores in the United States and
Canada at January 29, 2011. Below are those accounting
policies considered by the Company to be signifi cant.
Principles of Consolidation
The consolidated fi nancial statements include the
fi nancial statements of Dollar Tree, Inc., and its wholly
owned subsidiaries. All signifi cant intercompany
balances and transactions have been eliminated in
consolidation.
Foreign Currency
The functional currencies of the Company’s interna-
tional subsidiaries are primarily the local currencies
of the countries in which the subsidiaries are located.
Foreign currency denominated assets and liabilities are
translated into U.S. dollars using the exchange rates in
effect at the consolidated balance sheet date. Results
of operations and cash fl ows are translated using the
average exchange rates throughout the period. The
effect of exchange rate fl uctuations on translation of
assets and liabilities is included as a component of
shareholders’ equity in accumulated other compre-
hensive income (loss). Gains and losses from foreign
currency transactions, which are included in non-
operating income (expense), have not been signifi cant.
Stock Dividend
On May 26, 2010, the Company’s Board of Directors
approved a 3-for-2 stock split in the form of a 50%
common stock dividend. New shares were distributed
on June 24, 2010 to shareholders of record as of the
close of business on June 10, 2010. As a result, all share
and per share data in these consolidated fi nancial state-
ments and accompanying notes have been retroactively
adjusted to refl ect these dividends, each having the
effect of a 3-for-2 stock split.
Segment Information
The Company’s retail stores represent a single oper-
ating segment based on the way the Company
manages its business. Operating decisions are made at
the Company level in order to maintain a consistent
retail store presentation. The Company’s retail stores
sell similar products and services, use similar processes
to sell those products and services, and sell their products
and services to similar classes of customers. The amounts
of long-lived assets and net sales outside of the U.S.
were not signifi cant for any of the periods presented.
Fiscal Year
The Company’s fi scal year ends on the Saturday closest
to January 31. Any reference herein to “2010” or
“Fiscal 2010,” “2009” or “Fiscal 2009,” and “2008” or
“Fiscal 2008,” relates to as of or for the years ended
January 29, 2011, January 30, 2010, and January 31,
2009, respectively.
Use of Estimates
The preparation of fi nancial statements in conformity
with U.S. generally accepted accounting principles
requires management to make estimates and assump-
tions that affect the reported amounts of assets and
liabilities and disclosures of contingent assets and
liabilities at the date of the consolidated fi nancial
statements and the reported amounts of revenues and
expenses during the reporting period. Actual results
could differ from those estimates.
Cash and Cash Equivalents
Cash and cash equivalents at January 29, 2011 and
January 30, 2010 includes $271.4 million and $506.8
million, respectively, of investments primarily in money
market securities which are valued at cost, which
approximates fair value. For purposes of the consoli-
dated statements of cash fl ows, the Company considers
all highly liquid debt instruments with original matur-
ities of three months or less to be cash equivalents. The
majority of payments due from fi nancial institutions
for the settlement of debit card and credit card transac-
tions process within three business days, and therefore
are classifi ed as cash and cash equivalents.
Short-Term Investments
The Company’s short-term investments at January 29,
2011 and January 30, 2010 were $174.8 million and $27.8
million, respectively. These investments consisted
primarily of government-sponsored municipal bonds.
These investments were classifi ed as available for sale and
were recorded at fair value, which approximates cost. The
government-sponsored municipal bonds can be converted
into cash on the dates that the interest rates for these
bonds reset, which is typically weekly or monthly,
depending on terms of the underlying agreement.
Notes to Consolidated Financial Statements
32 DOLLAR TREE, INC. ♦ 2010 Annual Report