Dollar Tree 2011 Annual Report Download - page 28

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Diesel Fuel Cost Risk
In order to manage fluctuations in cash flows resulting
from changes in diesel fuel costs, we entered into fuel
derivative contracts with third parties. We hedged 3.5
million and 5.0 million gallons of diesel fuel in 2011 and
2010, respectively. ese hedges represented approxi-
mately 31% and 39% of our total domestic truckload
fuel needs in 2011 and 2010, respectively. We currently
have fuel derivative contracts to hedge 2.8 million gallons
of diesel fuel, or approximately 41% of our domestic
truckload fuel needs from February 2012 through
July 2012 and 0.5 million gallons of diesel fuel, or
approximately 16% of our domestic truckload fuel needs
from August 2012 through October 2012. Under these
contracts, we pay the third party a fixed price for diesel
fuel and receive variable diesel fuel prices at amounts
approximating current diesel fuel costs, thereby creating
the economic equivalent of a fixed-rate obligation. ese
derivative contracts do not qualify for hedge accounting
and therefore all changes in fair value for these derivatives
are included in earnings. e fair value of these contracts
at January 28, 2012 was an asset of $0.6 million.
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26 Dollar Tree, Inc.