Dollar Tree 2015 Annual Report Download - page 81

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65
On January 26, 2016, the Company prepaid $1.0 billion of its $3.3 billion Term Loan B-1 Loan. The prepayment resulted
in an acceleration of the amortization of debt issuance costs of $19.0 million.
The New Senior Secured Credit Facilities contain representations and warranties, events of default and affirmative and
negative covenants. These include, among other things and subject to certain significant exceptions, restrictions on the
Company's ability to declare or pay dividends, repay the Acquisition Notes, create liens, incur additional indebtedness, make
investments, dispose of assets and merge or consolidate with any other person. In addition, a financial maintenance covenant
based on the Company’s consolidated first lien secured net leverage ratio applies to the New Revolving Credit Facility and the
Term Loan A tranche of the New Term Loan Facilities.
Secured Senior Notes
As a result of the Acquisition, the Company assumed the liability for $300.0 million of 5.0% unsecured senior notes due
February 1, 2021 which were issued by Family Dollar on January 28, 2011 through a public offering. These notes became
equally and ratably secured on the Acquisition Date.
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.
Senior Notes
On the Acquisition Date, the Company prepaid in full $750.0 million in Senior Notes comprised of (i) $300.0 million in
aggregate principal amount of 4.03% Series A Senior Notes due September 16, 2020, (ii) $350.0 million in aggregate principal
amount of 4.63% Series B Senior Notes due September 16, 2023 and (iii) $100.0 million in aggregate principal amount of
4.78% Series C Senior Notes due September 16, 2025, issued pursuant to that certain Note Purchase Agreement, dated as of
September 16, 2013 (as amended on January 20, 2015, the “Dollar Tree NPA”) among the Company, Dollar Tree Stores, Inc.,
and the Purchasers party thereto, plus accrued and unpaid interest thereon and a make-whole premium of approximately $89.5
million determined in accordance with the provisions of the Dollar Tree NPA plus additional interest in accordance with the
provisions of the first amendment to the Dollar Tree NPA.
Unsecured Credit Agreement
On the Acquisition Date, the Company paid in full all amounts under the Unsecured Credit Agreement, dated as of June 6,
2012, and terminated all commitments to extend further credit.
Debt Covenants
As of January 30, 2016, the Company was in compliance with its debt covenants.
NOTE 7 – 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 6.6 million, 1.6 million and 2.8 million gallons of diesel fuel in
2015, 2014 and 2013, respectively. These hedges represented approximately 36%, 10% and 20% of the Dollar Tree segment's
total domestic truckload fuel needs in 2015, 2014 and 2013, respectively. 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 in "Other expense, net" on the
accompanying consolidated income statements. The fair value of these contracts at January 30, 2016 was a liability of $0.8
million.
NOTE 8 - 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 30, 2016 and January 31, 2015.