Dollar Tree 2014 Annual Report Download - page 77

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The fair value of the employees' purchase rights is estimated on the date of grant using the Black-Scholes option-pricing
model with the following weighted average assumptions:
Fiscal 2013 Fiscal 2012 Fiscal 2011
Expected term 3 months 3 months 3 months
Expected volatility 8.8% 11.6% 11.9%
Annual dividend yield —% —% —%
Risk free interest rate —% —% 0.1%
The weighted average per share fair value of purchase rights granted in 2014, 2013 and 2012 was $8.17, $8.26 and $6.97,
respectively. Total expense recognized for these purchase rights was $0.8 million in 2014,$1.0 million in 2013 and $0.9 million
in 2012.
NOTE 10 – SALE OF INVESTMENT
On September 28, 2012, the Company sold its ownership interest in Ollie's Holdings, Inc., which it originally acquired in
2003. As a result of the sale, the Company recorded a pre-tax gain of $60.8 million in 2012 which is included in “Other
(income) expense, net” on the accompanying consolidated income statements. The gain, net of tax, was $38.1 million and
increased earnings per diluted share for 2012 by $0.16.
NOTE 11 – PENDING ACQUISITION AND RELATED DEBT
Pending Acquisition
On July 27, 2014, the Company executed an Agreement and Plan of Merger to acquire Family Dollar in a cash and stock
transaction (the "Acquisition"). Under the Acquisition, which has been unanimously approved by the Boards of Directors of
both companies, the Family Dollar shareholders will receive $59.60 in cash plus no more than 0.3036 and no less than 0.2484
shares of the Company's common stock for each share of Family Dollar common stock they own. The Acquisition was
approved by Family Dollar shareholders on January 22, 2015 and is subject to the expiration or termination of the applicable
waiting period under the Hart-Scott-Rodino Antitrust Improvements Act and satisfaction or waiver of the other customary
closing conditions.
On or before closing, the Company expects to incur approximately $210.0 million in acquisition-related expenses, of
which $75.2 million were incurred in 2014 including $33.5 million that was paid in 2014. During 2014, $28.5 million of
acquisition-related expenses were recorded in "selling, general and administrative expenses" and $46.7 million related to
commitment fees were recorded in "interest expense, net." The Company expects to incur an additional $22.6 million in
commitment fees in the first quarter of fiscal 2015. The Company also expects to expend approximately $174.0 million in
capitalizable debt issuance costs related to the financing of the Acquisition. Of this amount, $70.2 million was included in
"other assets, net" at January 31, 2015. In addition, $112.0 million of acquisition-related expenses, capitalizable debt issuance
costs and interest expense have been accrued in "other current liabilities" at January 31, 2015.
For additional discussion of the Acquisition, please see the "Pending Acquisition" section included in "Part I. Financial
Information, Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations." of this Form
10-K.
Related Debt
Acquisition Notes
On February 23, 2015, a wholly owned subsidiary of the Company completed the offering of $750,000,000 aggregate
principal amount of 5.250% senior notes due 2020 (the “2020 notes”) and $2,500,000,000 aggregate principal amount of
5.750% senior notes due 2023 (the “2023 notes”, and together with the 2020 notes, the “acquisition notes”). The acquisition
notes were offered only to qualified institutional buyers in reliance on Rule 144A under the Securities Act of 1933, as amended
(the “Securities Act”), and outside the United States, only to non-U.S. investors pursuant to Regulation S under the Securities
Act. The acquisition notes have not been registered under the Securities Act or any state securities laws and may not be offered
or sold in the United States absent an effective registration statement or an applicable exemption from registration requirements
or a transaction not subject to the registration requirements of the Securities Act or any state securities laws.
The Company expects to use the proceeds of the acquisition notes to finance in part the Acquisition. The proceeds of the
2020 notes and the 2023 notes will be held in, and secured by liens on, separate escrow accounts with U.S. Bank National
Association, as escrow agent (the “Escrow Agent”), pending consummation of the Acquisition. The Company expects that, in