Family Dollar 2006 Annual Report Download - page 25

On September 27, 2005, the Company obtained $250 million in aggregate proceeds through the private placement of the
Notes to a group of institutional accredited investors. On October 4, 2005, the Company executed an overnight share repurchase
transaction with a bank for the acquisition of 10 million shares of the Company’s outstanding common stock. The transaction was
financed with the proceeds of the Notes. The total cost of the overnight share repurchase transaction was $234.2 million. See Note 4
and Note 11 to the Consolidated Financial Statements included in this Report for more information on the Company’s outstanding
debt and the overnight share repurchase transaction.
Upon completion of the overnight share repurchase transaction the Company continued to purchase shares of its common
stock pursuant to Rule 10b5−1 of the Exchange Act. During the third quarter of fiscal 2006, the Company purchased 3.9 million
shares of its common stock at a cost of $100.0 million. During the fourth quarter of fiscal 2006, the Company purchased in the open
market 1.5 million shares of its common stock at a cost of $33.1 million.
On December 19, 2006, the Company entered into separate agreements in connection with the Notes and its unsecured
revolving credit facility. The agreements extended the delivery date for the fiscal 2006 audited financial statements, the unaudited
financial statements for the first quarter of fiscal 2007 and the corresponding compliance certificates to March 31, 2007, and waived
any Defaults or Events of Default that would have occurred due to the failure of the Company to deliver such information in
connection with the Notes and credit facility. As discussed in Note 10 to the Consolidated Financial Statements included in this
Report, the Company formed a Special Committee of the Board of Directors to investigate the Company’s stock option granting
practices. As a result, the Company was unable to file its Annual Report on Form 10−K for fiscal 2006 and its Quarterly Report on
Form 10−Q for the first quarter of fiscal 2007 by the required deadlines. As of the date of the filing of this Report, the Company has
delivered the appropriate financial statements and compliance certificates and is in compliance with all covenants under both the
Notes and credit facility.
As of August 26, 2006, the Company had outstanding authorizations to purchase a total of approximately 6.1 million shares,
consisting of 1.1 million shares remaining under an authorization approved by the Board of Directors on April 13, 2005, and 5.0
million shares remaining under an authorization approved by the Board of Directors on August 18, 2006.
The following table shows the Company’s obligations and commitments to make future payments under contractual
obligations at the end of fiscal 2006:
Payments Due During the Period Ending
(in thousands) August August August August August
Contractual Obligations Total 2007 2008 2009 2010 2011 Thereafter
Long−term debt $ 250,000 $ — $ — $ — $ — $ — $ 250,000
Interest 118,691 13,387 13,387 13,387 13,387 13,387 51,756
Merchandise letters of credit 152,189 152,189 — — — — —
Operating leases 1,211,611 271,811 241,484 203,066 159,912 114,104 221,234
Construction obligations 5,393 5,393 — — — — —
Total $ 1,737,884 $ 442,780 $ 254,871 $ 216,453 $ 173,299 $ 127,491 $ 522,990
At the end of fiscal 2006, approximately $81.8 million of the merchandise letters of credit were included in accounts payable
and accrued liabilities on the Company’s Consolidated Balance Sheet. Most of the Company’s operating leases provide the Company
with an option to extend the term of the lease at designated rates. See Item 2 — “ Properties” in this Report.
The following table shows the Company’s other commercial commitments at the end of fiscal 2006:
Other Commercial Commitments (in thousands) Total Amounts Committed
Standby letters of credit $ 122,082
Surety bonds 44,934
Total $ 167,016
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Source: FAMILY DOLLAR STORES, 10−K, March 28, 2007