Dollar Tree 2014 Annual Report Download - page 49

33
Commitments Total
Expiring
in 2015
Expiring
in 2016
Expiring
in 2017
Expiring
in 2018
Expiring
in 2019 Thereafter
Letters of credit and surety bonds $ 179.0 $ 178.8 $ 0.2 $ — $ — $ — $ —
Technology assets 13.5 13.5———— —
Telecommunication contracts 16.8 7.1 7.1 2.6 — — —
Total commitments $ 209.3 $ 199.4 $ 7.3 $ 2.6 $ — $ — $ —
Lease Financing
Operating lease obligations. Our operating lease obligations are primarily for payments under noncancelable store
leases. The commitment includes amounts for leases that were signed prior to January 31, 2015 for stores that were not yet
open on January 31, 2015.
Long-term Borrowings
Senior notes. In September 2013, we entered into a Note Purchase Agreement with institutional accredited investors in
which we issued and sold $750.0 million of senior notes (the "Notes") in an offering exempt from the registration requirements
of the Securities Act of 1933. The Notes consist of three tranches: $300.0 million of 4.03% Senior Notes due September 16,
2020; $350.0 million of 4.63% Senior Notes due September 16, 2023; and $100.0 million of 4.78% Senior Notes due
September 16, 2025. Interest on the Notes is payable semi-annually on January 15 and July 15 of each year. For complete terms
of the Notes please see Item 8. Financial Statements and Supplementary Data, "Note 5 - Long-Term Debt" beginning on page
54 of this Form 10-K.
Demand revenue bonds. In May 1998, we entered into an agreement with the Mississippi Business Finance Corporation
under which it issued $19.0 million of variable-rate demand revenue bonds. We used the proceeds from the bonds to finance
the acquisition, construction and installation of land, buildings, machinery and equipment for our distribution facility in Olive
Branch, Mississippi. The bonds did not have a prepayment penalty as long as the interest rate remained variable. The bonds
contained a demand provision and, therefore, outstanding amounts were classified as current liabilities. In 2014, we repaid the
$12.8 million outstanding under the Demand Revenue Bonds and the debt was retired.
Forgivable promissory note. In 2012, we entered into a promissory note with the state of Connecticut under which the
state loaned us $7.0 million in connection with our acquisition, construction and installation of land, building, machinery and
equipment for our distribution facility in Windsor, Connecticut. If certain performance targets are met, the loan and any
accrued interest will be forgiven in fiscal 2017. If the performance targets are not met, the loan and accrued interest must be
repaid over a five-year period beginning in fiscal 2017.
Interest on long-term borrowings. These amounts represent interest payments on the Notes, and Forgivable Promissory
Note using the interest rates for each at January 31, 2015.
Commitments
Letters of credit and surety bonds. We are a party to three Letter of Credit Reimbursement and Security Agreements
providing $110.0 million, $100.0 million and $20.0 million, respectively for letters of credit. Letters of credit are generally
issued for the routine purchase of imported merchandise and we had approximately $162.9 million of purchases committed
under these letters of credit at January 31, 2015.
We also have approximately $11.9 million of letters of credit outstanding for our self-insurance programs and $4.2 million
of surety bonds outstanding primarily for certain utility payment obligations at some of our stores.
Technology assets. We have commitments totaling approximately $13.4 million to primarily purchase store technology
assets and maintenance for our stores during 2015.
Telecommunication contracts. We have contracted for telecommunication services with contracts expiring in 2017. The
total amount of these commitments is approximately $16.8 million.
Derivative Financial Instruments
In 2014 and 2013, we were party to fuel derivative contracts with third parties which included approximately 1.6 million
and 2.8 million gallons of diesel fuel, or approximately 10% and 20% of our domestic truckload fuel needs, respectively. These
derivative contracts did not qualify for hedge accounting and therefore all changes in fair value for these derivatives are
included in earnings. We currently have fuel derivate contracts to hedge 6.6 million gallons of diesel fuel, or approximately
40% of our domestic truckload fuel needs from February 2015 through January 2016.