Dollar Tree 2011 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 fixed price of $1.00 or less with 4,351 discount
variety retail stores in the United States and Canada at
January 28, 2012. Below are those accounting policies
considered by the Company to be significant.
Principles of Consolidation
e consolidated financial statements include the
financial statements of Dollar Tree, Inc., and its wholly
owned subsidiaries. All significant intercompany balances
and transactions have been eliminated in consolidation.
Foreign Currency
e functional currencies of the Company’s international
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 flows are translated using the average exchange
rates throughout the period. e effect of exchange
rate fluctuations on translation of assets and liabilities
is included as a component of shareholders’ equity in
accumulated other comprehensive income (loss). Gains
and losses from foreign currency transactions, which are
included in non-operating income (expense), have not
been significant.
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 financial statements and
accompanying notes have been retroactively adjusted to
reflect these dividends, each having the effect of a 3-for-2
stock split.
Segment Information
e Company’s retail stores represent a single operating
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. e 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. e amounts of long-
lived assets and net sales outside of the U.S. were not
significant for any of the periods presented.
Fiscal Year
e Company’s fiscal year ends on the Saturday closest
to January 31. Any reference herein to “2011” or “Fiscal
2011,” “2010” or “Fiscal 2010,” and “2009” or “Fiscal
2009,” relates to as of or for the years ended January
28, 2012, January 29, 2011, and January 30, 2010,
respectively.
Use of Estimates
e preparation of financial statements in conformity
with U.S. generally accepted accounting principles
requires management to make estimates and assumptions
that affect the reported amounts of assets and liabilities
and disclosures of contingent assets and liabilities at the
date of the consolidated financial 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 28, 2012 and
January 29, 2011 includes $249.3 million and $271.4
million, respectively, of investments primarily in money
market securities which are valued at cost, which
approximates fair value. For purposes of the consolidated
statements of cash flows, the Company considers all
highly liquid debt instruments with original maturities of
three months or less to be cash equivalents. e majority
of payments due from financial institutions for the settle-
ment of debit card and credit card transactions process
within three business days, and therefore are classified as
cash and cash equivalents.
Short-Term Investments
At January 28, 2012 the Company held no short-term
investments. e Company’s short-term investments at
January 29, 2011 were $174.8 million. ese investments
consisted primarily of government-sponsored municipal
bonds which were convertible into cash on the dates that
the interest rates for these bonds reset, which was typi-
cally weekly or monthly, depending on the terms of the
underlying agreement. ese investments were classified
as available for sale and were recorded at fair value, which
approximated cost.
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32 Dollar Tree, Inc.