Dollar Tree 2014 Annual Report Download - page 71

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55
On August 15, 2014, the Company entered into an amendment (the "Credit Amendment") to the Agreement. The Credit
Amendment further amends the Agreement to facilitate the issuance and/or borrowings of certain third-party debt financing that
may be used by the Company to finance the Acquisition. The Credit Amendment also facilitates escrow arrangements related to
the Acquisition.
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 finance the acquisition, construction, and installation of land, buildings, machinery and equipment
for the Company's distribution facility in Olive Branch, Mississippi. The Bonds did not contain a prepayment penalty as long
as the interest rate remained variable. The Bonds contained a demand provision and, therefore, were classified as current
liabilities. On March 3, 2014, the Company repaid the $12.8 million outstanding under the Demand Revenue Bonds and the
debt was retired.
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 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.
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. The Company hedged 1.6 million, 2.8 million and 4.8 million gallons of diesel fuel in
2014, 2013 and 2012, respectively. These hedges represented approximately 10%, 20% and 35% of the total domestic
truckload fuel needs in 2014, 2013 and 2012, respectively. The Company currently has fuel derivative contracts to hedge 6.6
million gallons of diesel fuel, or approximately 40% of the Company's domestic truckload fuel needs from February 2015
through January 2016. Under these contracts, the Company pays the third party a fixed price for diesel fuel and receives
variable diesel fuel prices at amounts approximating current diesel fuel costs, thereby creating the economic equivalent of a
fixed-rate obligation. These derivative contracts do not qualify for hedge accounting and therefore all changes in fair value for
these derivatives are included under "Other (income) expense, net" on the accompanying consolidated income statements. The
fair value of these contracts at January 31, 2015 was a liability of $5.7 million.
NOTE 7 - SHAREHOLDERS' EQUITY
Preferred Stock
The Company is authorized to issue 10,000,000 shares of Preferred Stock, $0.01 par value per share. No preferred shares
are issued and outstanding at January 31, 2015 and February 1, 2014.