Dollar Tree 2012 Annual Report Download - page 44

Notes to Consolidated Financial Statements
NOTE 5—LONG-TERM DEBT
Long-termdebtatFebruary2,2013andJanuary28,2012consistsofthefollowing:
(in millions) February 2, 2013 January28,2012
$750.0millionUnsecuredCreditAgreement,interest
payablemonthlyatLIBOR,plus0.90%,whichwas
1.11%atFebruary2,2013,principalpayableupon
expirationofthefacilityinFebruary2017 $ 250.0  $ 250.0
Demand Revenue Bonds, interest payable monthly at a
variableratewhichwas0.23%atFebruary2,2013,
principalpayableondemand,maturingJune2018 14.3 15.5
$7.0millionforgivablepromissorynote,interest
payablebeginninginNovember2017atarateof
1%,principalpayablebeginningNovember2017 7.0 —
Total long-term debt $ 271.3  $ 265.5
Less current portion 14.3 15.5
Long-term debt, excluding current portion $ 257.0  $ 250.0
Maturitiesoflong-termdebtareasfollows:2013–$14.3million,2017–$0.2millionandafter2017–$256.8million
Unsecured Credit Agreement
In2012,theCompanyenteredintotheAgreement
whichprovidesfora$750.0millionrevolvinglineof
credit,includingupto$150.0millioninavailableletters
of credit. e interest rate on the facility is based, at
theCompany’soption,onaLIBORrate,plusamargin,
or an alternate base rate, plus a margin. e revolving
line of credit also bears a facilities fee, calculated as a
percentage,asdened,oftheamountavailableunder
the line of credit, payable quarterly. e Agreement,
among other things, requires the maintenance of certain
speciednancialratios,restrictsthepaymentofcertain
distributions and prohibits the incurrence of certain new
indebtedness.eCompany’sFebruary2008,$500.0
million Credit Agreement was terminated concurrent
withenteringintothisAgreement.AsofFebruary2,
2013,theCompanyhad$250.0millionoutstanding
underthe$750.0millionrevolvinglineofcredit.
Demand Revenue Bonds
In1998,theCompanyenteredintoanunsecuredLoan
AgreementwiththeMississippiBusinessFinance
Corporation(MBFC)underwhichtheMBFCissued
TaxableVariableRateDemandRevenueBonds(the
Bonds)inanaggregateprincipalamountof$19.0
milliontonancetheacquisition,construction,and
installation of land, buildings, machinery and equipment
fortheCompany’sdistributionfacilityinOliveBranch,
Mississippi.eBondsdonotcontainaprepayment
penalty as long as the interest rate remains variable.
e Bonds contain a demand provision and, therefore,
areclassiedascurrentliabilities.
Forgivable Promissory Note
In2012,theCompanyenteredintoapromissorynote
with the state of Connecticut under which the state
loanedtheCompany$7.0millioninconnectionwith
theCompany’sacquisition,constructionandinstallation
of land, building, machinery and equipment for the
Company’sdistributionfacilityinWindsor,Connecticut.
If certain performance targets are met, the loan and any
accruedinterestwillbeforgiveninscal2017.Ifthe
performance targets are not met, the loan and accrued
interestmustberepaidbeginninginscal2017.
NOTE 6—DERIVATIVE FINANCIAL INSTRUMENTS
Hedging Derivatives
In order to manage fluctuations in cash flows resulting
from changes in diesel fuel costs, the Company entered
into fuel derivative contracts with third parties. e
Companyhedged4.8million,3.5millionand5.0million
gallonsofdieselfuelin2012,2011and2010,respectively.
esehedgesrepresentedapproximately35%,31%and
39%ofthetotaldomestictruckloadfuelneedsin2012,
2011and2010,respectively.eCompanycurrently
hasfuelderivativecontractstohedge0.7milliongallons
ofdieselfuel,orapproximately20%oftheCompany’s
domestictruckloadfuelneedsfromFebruary2013
throughApril2013.Underthesecontracts,theCompany
paysthethirdpartyaxedpricefordieselfuelandreceives
variable diesel fuel prices at amounts approximating
current diesel fuel costs, thereby creating the economic
equivalentofaxed-rateobligation.esederivative
contracts do not qualify for hedge accounting and therefore
a
ll changes in fair value for these derivatives are included
42 Dollar Tree, Inc.