Dollar Tree 2015 Annual Report Download - page 76

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Telecommunication Contracts
The Company has contracted for telecommunication services with agreements expiring in 2020. The total amount of these
commitments is approximately $142.7 million.
Letters of Credit
The Company is a party to three Letter of Credit Reimbursement and Security Agreements providing $120.0 million,
$110.0 million, and $100.0 million, respectively for letters of credit. Letters of credit under these agreements are generally
issued for the routine purchase of imported merchandise and approximately $210.1 million was committed to these letters of
credit at January 30, 2016.
At January 30, 2016, the Company also had approximately $123.0 million in stand-by letters of credit that serve as
collateral for its large-deductible insurance programs and expire in fiscal 2016. Subsequent to January 30, 2016, amounts
outstanding for stand-by letters of credit increased to $183.3 million as of February 10, 2016.
Surety Bonds
The Company has issued various surety bonds that primarily serve as collateral for utility payments at the Company's
stores and self-insured insurance programs. These bonds total approximately $47.9 million and are committed through various
dates through fiscal 2018.
Contingencies
The Company is a defendant in legal proceedings including those described below and will vigorously defend itself in
these matters. The Company does not believe that any of these matters will, individually or in the aggregate, have a material
effect on its business or financial condition. The Company cannot give assurance, however, that one or more of these matters
will not have a material effect on its results of operations for the periods in which they are resolved.
The Company assesses its legal proceedings and reserves are established if a loss is probable and the amount of such loss
can be reasonably estimated. Many if not substantially all of the contingencies described below are subject to significant
uncertainties and, therefore, determining the likelihood of a loss and the measurement of any loss can be complex and subject
to judgment. With respect to legal proceedings where the Company has determined that a loss is reasonably possible but not
probable, the Company is unable to estimate the amount or range of reasonably possible loss due to the inherent difficulty of
predicting the outcome of and uncertainties regarding legal proceedings. The Company’s assessments are based on estimates
and assumptions that have been deemed reasonable by management, but that may prove to be incomplete or inaccurate, and
unanticipated events and circumstances may occur that might cause the Company to change those estimates and assumptions.
Management’s assessment of legal proceedings could change because of future determinations or the discovery of facts which
are not presently known. Accordingly, the ultimate costs of resolving these proceedings may be substantially higher or lower
than currently estimated.
Dollar Tree Active Matters
In 2011, an assistant store manager and an hourly associate filed a collective action against the Company alleging they
were forced to work off the clock in violation of the Fair Labor Standards Act (“FLSA”) and state law. A federal judge in
Virginia ruled that all claims made on behalf of assistant store managers under both the FLSA and state law should be
dismissed. The court, however, certified an opt-in collective action under the FLSA on behalf of hourly sales associates.
Approximately 4,300 plaintiffs remain in the case. The court is currently reviewing and considering a revised settlement
agreement. The proposed settlement amount has been accrued.
In 2013, a former assistant store manager on behalf of himself and others alleged to be similarly aggrieved filed a
representative Private Attorney General Act ("PAGA") claim under California law currently pending in federal court in
California. The suit alleges that the Company failed to provide uninterrupted meal periods and rest breaks; failed to pay
minimum, regular and overtime wages; failed to maintain accurate time records and wage statements; and failed to pay wages
due upon termination of employment. In May 2014, the same assistant store manager filed a putative class action in a
California state court for essentially the same conduct alleged in the federal court PAGA case. The parties have reached an
agreement to settle the two cases and the proposed settlement amount has been accrued. The two courts must approve the
terms of the settlement for it to be binding and final.
In May 2014, the US Consumer Product Safety Commission ("CPSC") began a staff investigation of circumstances related
to Letters of Advice that the Company received from the CPSC from 2009 to 2013. The CPSC is now investigating Letters of
Advice the Company received in 2014 and 2015. It is possible for a penalty and an injunction to be issued against the
Company. The outcome of this matter cannot be determined at this time.
In April 2015, a distribution center employee filed a class action in California state court with allegations concerning
wages, meal and rest breaks, recovery periods, wage statements and timely termination pay. Additionally, the employee seeks