Virginia
|
26-2018846
|
(State
or other jurisdiction of
|
(I.R.S.
Employer
|
incorporation
or organization)
|
Identification
No.)
|
Securities
Registered Pursuant to Section 12(b) of the Act:
|
|
Title
of Each Class
|
Name
of Each Exchange on Which Registered
|
None
|
None
|
Yes
(X)
|
No ( )
|
Yes
( )
|
No (X)
|
Yes
(X)
|
No ( )
|
Large accelerated filer (X)
|
Accelerated
filer ( )
|
Non-accelerated filer ( )
|
Smaller
reporting company ( )
|
Yes
( )
|
No (X)
|
DOLLAR TREE,
INC.
|
Page
|
||
PART
I
|
||
Item
1.
|
BUSINESS
|
6
|
Item
1A.
|
RISK
FACTORS
|
10
|
Item
1B.
|
UNRESOLVED
STAFF COMMENTS
|
12
|
Item
2.
|
PROPERTIES
|
13
|
Item
3.
|
LEGAL
PROCEEDINGS
|
14
|
Item
4.
|
SUBMISSION
OF MATTERS TO A VOTE OF SECURITY HOLDERS
|
15
|
PART
II
|
||
Item
5.
|
MARKET
FOR REGISTRANT'S COMMON EQUITY, RELATED
|
|
STOCKHOLDER
MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES
|
16
|
|
Item
6.
|
SELECTED
FINANCIAL DATA
|
17
|
Item
7.
|
MANAGEMENT'S
DISCUSSION AND ANALYSIS OF FINANCIAL
|
|
CONDITION
AND RESULTS OF OPERATIONS
|
19
|
|
Item
7A.
|
QUANTITATIVE
AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
|
29
|
Item
8.
|
FINANCIAL
STATEMENTS AND SUPPLEMENTARY DATA
|
31
|
Item
9.
|
CHANGES
IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
|
|
ACCOUNTING
AND FINANCIAL DISCLOSURE
|
57
|
|
Item
9A.
|
CONTROLS
AND PROCEDURES
|
57
|
Item
9B.
|
OTHER
INFORMATION
|
58
|
PART
III
|
||
Item
10.
|
DIRECTORS,
EXECUTIVE OFFICERS, AND CORPORATE GOVERNANCE
|
58
|
Item
11.
|
EXECUTIVE
COMPENSATION
|
58
|
Item
12.
|
SECURITY
OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
|
|
AND
MANAGEMENT AND RELATED STOCKHOLDER MATTERS
|
58
|
|
Item
13.
|
CERTAIN
RELATIONSHIPS, RELATED TRANSACTIONS AND DIRECTOR
INDEPENDENCE
|
59
|
Item
14.
|
PRINCIPAL
ACCOUNTING FEES AND SERVICES
|
59
|
PART
IV
|
||
Item
15.
|
EXHIBITS,
FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
|
59
|
SIGNATURES
|
60
|
·
|
our
anticipated sales, including comparable store net sales, net sales growth
and earnings growth;
|
·
|
our
growth plans, including our plans to add, expand or relocate stores, our
anticipated square footage increase, and our ability to renew leases at
existing store locations;
|
·
|
the
average size of our stores to be added in 2008 and
beyond;
|
·
|
the
effect of a slight shift in merchandise mix to consumables and the
increase in freezers and coolers on gross profit margin and
sales;
|
·
|
the
effect that expanding tender types accepted by our stores will have on
sales;
|
·
|
the
net sales per square foot, net sales and operating income attributable to
smaller and larger stores and store-level cash payback
metrics;
|
·
|
the
possible effect of inflation and other economic changes on our costs and
profitability, including the possible effect of future changes in minimum
wage rates, shipping rates, domestic and foreign freight costs, fuel costs
and wage and benefit costs;
|
·
|
our
cash needs, including our ability to fund our future capital expenditures
and working capital requirements;
|
·
|
our
gross profit margin, earnings, inventory levels and ability to leverage
selling, general and administrative and other fixed
costs;
|
·
|
our
seasonal sales patterns including those relating to the length of the
holiday selling seasons and the effect of an earlier Easter in
2008;
|
·
|
the
capabilities of our inventory supply chain technology and other new
systems;
|
·
|
the
future reliability of, and cost associated with, our sources of supply,
particularly imported goods such as those sourced from
China;
|
·
|
the
capacity, performance and cost of our distribution centers, including
opening and expansion schedules;
|
·
|
our
expectations regarding competition and growth in our retail
sector;
|
·
|
costs
of pending and possible future legal claims;
|
·
|
management's
estimates associated with our critical accounting policies, including
inventory valuation, accrued expenses, and income
taxes;
|
·
|
consumable
merchandise, which includes candy and food, basic health and beauty care,
and household consumables such as paper, plastics and household chemicals
and in select stores, frozen and refrigerated food;
|
·
|
variety
merchandise, which includes toys, durable housewares, gifts, fashion
health and beauty care, party goods, greeting cards, apparel, and other
items; and
|
·
|
seasonal
goods, which include Easter, Halloween and Christmas merchandise, along
with summer toys and lawn and garden
merchandise.
|
February
2,
|
February
3,
|
|
Merchandise Type
|
2008
|
2007
|
Variety
categories
|
48.1%
|
48.9%
|
Consumable
|
46.0%
|
45.3%
|
Seasonal
|
5.9%
|
5.8%
|
Year
|
Number
of Stores
|
Average
Selling Square Footage Per Store
|
Average
Selling Square Footage Per New Store Opened
|
2003
|
2,513
|
6,716
|
9,948
|
2004
|
2,735
|
7,475
|
10,947
|
2005
|
2,914
|
7,900
|
9,756
|
2006
|
3,219
|
8,160
|
8,780
|
2007
|
3,411
|
8,300
|
8,480
|
§ Shipping. Our
oceanic shipping schedules may be disrupted or delayed from time to
time. We also have experienced shipping rate increases over the
last several years imposed by the trans-Pacific ocean
carriers.
|
§ Diesel fuel
costs. We have experienced increases in diesel fuel
costs over the past few years and expect increases in
2008.
|
§ Vulnerability to natural or
man-made disasters. A fire, explosion or natural
disaster at any of our distribution facilities could result in a loss of
merchandise and impair our ability to adequately stock our
stores. Some of our facilities are especially vulnerable to
earthquakes, hurricanes or tornadoes.
|
§ Labor
disagreement. Labor disagreements or disruptions may
result in delays in the delivery of merchandise to our stores and increase
costs.
|
§ War, terrorism and other
events. War and acts of terrorism in the United States,
or in China or other parts of Asia where we buy a significant amount of
our imported merchandise, could disrupt our supply
chain.
|
§ disruptions
in the flow of imported goods because of factors such
as:
|
o raw
material shortages, work stoppages, strikes and political
unrest;
|
o problems
with oceanic shipping, including shipping container shortages;
and
|
o economic
crises and international disputes.
|
§ increases
in the cost of purchasing or shipping foreign merchandise, resulting
from:
|
o increases
in shipping rates imposed by the trans-Pacific ocean
carriers;
|
o changes
in currency exchange rates and local economic conditions, including
inflation in the country of origin;
|
o failure
of the United States to maintain normal trade relations with China;
and
|
o import
duties, import quotas and other trade
sanctions.
|
· classify
our board of directors into three classes, each of which serves for
different three-year periods;
|
· provide
that only the board of directors, chairman or president may call special
meetings of the shareholders;
|
· establish
certain advance notice procedures for nominations of candidates for
election as directors and for shareholder proposals to be considered at
shareholders' meetings;
|
· require
a vote of the holders of more than two-thirds of the shares entitled to
vote in order to remove a director, change the number of directors, or
amend the foregoing and certain other provisions of the articles of
incorporation and bylaws; and
|
· permit
the board of directors, without further action of the shareholders, to
issue and fix the terms of preferred stock, which may have rights senior
to those of the common stock.
|
Alabama
|
82
|
Maine
|
17
|
Ohio
|
157
|
||
Arizona
|
58
|
Maryland
|
79
|
Oklahoma
|
51
|
||
Arkansas
|
45
|
Massachusetts
|
47
|
Oregon
|
70
|
||
California
|
241
|
Michigan
|
123
|
Pennsylvania
|
186
|
||
Colorado
|
46
|
Minnesota
|
51
|
Rhode
Island
|
12
|
||
Connecticut
|
29
|
Mississippi
|
47
|
South
Carolina
|
70
|
||
Delaware
|
20
|
Missouri
|
79
|
South
Dakota
|
6
|
||
Florida
|
206
|
Montana
|
8
|
Tennessee
|
86
|
||
Georgia
|
135
|
Nebraska
|
14
|
Texas
|
212
|
||
Idaho
|
23
|
Nevada
|
28
|
Utah
|
33
|
||
Illinois
|
145
|
New
Hampshire
|
16
|
Vermont
|
6
|
||
Indiana
|
97
|
New
Jersey
|
79
|
Virginia
|
131
|
||
Iowa
|
26
|
New
Mexico
|
25
|
Washington
|
61
|
||
Kansas
|
30
|
New
York
|
154
|
West
Virginia
|
31
|
||
Kentucky
|
65
|
North
Carolina
|
149
|
Wisconsin
|
66
|
||
Louisiana
|
56
|
North
Dakota
|
5
|
Wyoming
|
8
|
Location
|
Own/Lease
|
Lease
Expires
|
Size
in
Square
Feet
|
Chesapeake,
Virginia
|
Own
|
N/A
|
400,000
|
Olive
Branch, Mississippi
|
Own
|
N/A
|
425,000
|
Joliet,
Illinois
|
Own
|
N/A
|
1,200,000
|
Stockton,
California
|
Own
|
N/A
|
525,000
|
Briar
Creek, Pennsylvania
|
Own
|
N/A
|
1,003,000
|
Savannah,
Georgia
|
Own
|
N/A
|
603,000
|
Marietta,
Oklahoma
|
Own
|
N/A
|
603,000
|
Salt
Lake City, Utah
|
Lease
|
April
2010
|
252,000
|
Ridgefield,
Washington
|
Own
|
N/A
|
665,000
|
·
|
employment
related matters;
|
·
|
infringement
of intellectual property rights;
|
·
|
product
safety matters, which may include product recalls in cooperation with the
Consumer Products Safety Commission or other
jurisdictions;
|
·
|
personal
injury/wrongful death claims; and
|
·
|
real
estate matters related to store
leases.
|
High
|
Low
|
|||||||
Fiscal
year ended February 3, 2007:
|
||||||||
First
Quarter
|
$ | 28.68 | $ | 24.34 | ||||
Second
Quarter
|
27.89 | 23.90 | ||||||
Third
Quarter
|
32.00 | 25.62 | ||||||
Fourth
Quarter
|
32.78 | 29.34 | ||||||
Fiscal
year ended February 2, 2008:
|
||||||||
First
Quarter
|
$ | 40.31 | $ | 31.24 | ||||
Second
Quarter
|
45.98 | 37.93 | ||||||
Third
Quarter
|
44.13 | 33.69 | ||||||
Fourth
Quarter
|
36.17 | 20.72 |
Approximate
|
||||||||||||||||
dollar
value
|
||||||||||||||||
Total
number
|
of
shares that
|
|||||||||||||||
of
shares
|
may
yet be
|
|||||||||||||||
purchased
as
|
purchased
under
|
|||||||||||||||
Total
number
|
Average
|
part
of publicly
|
the
plans or
|
|||||||||||||
of
shares
|
price
paid
|
announced
plans
|
programs
|
|||||||||||||
Period
|
purchased
|
per
share
|
or
programs
|
(in
millions)
|
||||||||||||
November
4, 2007 to December 1, 2007
|
358,953 | $ | 28.50 | 358,953 | $ | 538.2 | ||||||||||
December
2, 2007 to January 5, 2008
|
3,018,093 | 27.98 | 3,018,093 | 453.7 | ||||||||||||
January
6, 2008 to February 2, 2008
|
- | - | - | 453.7 | ||||||||||||
Total
|
3,377,046 | $ | 28.03 | 3,377,046 | $ | 453.7 |
Years
Ended
|
||||||||||||||||||||
February
2,
|
February
3,
|
January
28,
|
January
29,
|
January
31,
|
||||||||||||||||
2008
|
2007
|
2006
|
2005
|
2004
|
||||||||||||||||
Income
Statement Data:
|
||||||||||||||||||||
Net
sales
|
$ | 4,242.6 | $ | 3,969.4 | $ | 3,393.9 | $ | 3,126.0 | $ | 2,799.9 | ||||||||||
Gross
profit
|
1,461.1 | 1,357.2 | 1,172.4 | 1,112.5 | 1,018.4 | |||||||||||||||
Selling,
general and administrative expenses
|
1,130.8 | 1,046.4 | 888.5 | 819.0 | 724.8 | |||||||||||||||
Operating
income
|
330.3 | 310.8 | 283.9 | 293.5 | 293.6 | |||||||||||||||
Net
income
|
201.3 | 192.0 | 173.9 | 180.3 | 177.6 | |||||||||||||||
Margin
Data (as a percentage of net sales):
|
||||||||||||||||||||
Gross
profit
|
34.4 | % | 34.2 | % | 34.5 | % | 35.6 | % | 36.4 | % | ||||||||||
Selling,
general and administrative expenses
|
26.6 | % | 26.4 | % | 26.2 | % | 26.2 | % | 25.9 | % | ||||||||||
Operating
income
|
7.8 | % | 7.8 | % | 8.3 | % | 9.4 | % | 10.5 | % | ||||||||||
Net
income
|
4.7 | % | 4.8 | % | 5.1 | % | 5.8 | % | 6.3 | % | ||||||||||
Per
Share Data:
|
||||||||||||||||||||
Diluted
net income per share
|
$ | 2.09 | $ | 1.85 | $ | 1.60 | $ | 1.58 | $ | 1.54 | ||||||||||
Diluted
net income per share increase
|
13.0 | % | 15.6 | % | 1.3 | % | 2.6 | % | 14.1 | % |
As
of
|
||||||||||||||||||||
February
2,
|
February
3,
|
January
28,
|
January
29,
|
January
31,
|
||||||||||||||||
2008
|
2007
|
2006
|
2005
|
2004
|
||||||||||||||||
Balance
Sheet Data:
|
||||||||||||||||||||
Cash
and cash equivalents
|
||||||||||||||||||||
and
short-term investments
|
$ | 81.1 | $ | 306.8 | $ | 339.8 | $ | 317.8 | $ | 168.7 | ||||||||||
Working
capital
|
382.9 | 575.7 | 648.2 | 675.5 | 450.3 | |||||||||||||||
Total
assets
|
1,787.7 | 1,882.2 | 1,798.4 | 1,792.7 | 1,501.5 | |||||||||||||||
Total
debt, including capital lease obligations
|
269.4 | 269.5 | 269.9 | 281.7 | 185.1 | |||||||||||||||
Shareholders'
equity
|
988.4 | 1,167.7 | 1,172.3 | 1,164.2 | 1,014.5 | |||||||||||||||
Years
Ended
|
||||||||||||||||||||
February
2,
|
February
3,
|
January
28,
|
January
29,
|
January
31,
|
||||||||||||||||
2008
|
2007
|
2006
|
2005
|
2004
|
||||||||||||||||
Selected
Operating Data:
|
||||||||||||||||||||
Number
of stores open at end of period
|
3,411 | 3,219 | 2,914 | 2,735 | 2,513 | |||||||||||||||
Gross
square footage at end of period
|
36.1 | 33.3 | 29.2 | 25.9 | 21.4 | |||||||||||||||
Selling
square footage at end of period
|
28.4 | 26.3 | 23.0 | 20.4 | 16.9 | |||||||||||||||
Selling
square footage annual growth
|
8.0 | % | 14.3 | % | 12.6 | % | 21.1 | % | 27.5 | % | ||||||||||
Net
sales annual growth
|
6.9 | % | 16.9 | % | 8.6 | % | 11.6 | % | 18.7 | % | ||||||||||
Comparable
store net sales increase (decrease)
|
2.7 | % | 4.6 | % | (0.8 | %) | 0.5 | % | 2.9 | % | ||||||||||
Net
sales per selling square foot
|
$ | 155 | $ | 161 | $ | 156 | $ | 168 | $ | 187 | ||||||||||
Net
sales per store
|
$ | 1.3 | $ | 1.3 | $ | 1.2 | $ | 1.2 | $ | 1.2 | ||||||||||
Selected
Financial Ratios:
|
||||||||||||||||||||
Return
on assets
|
11.0 | % | 10.4 | % | 9.7 | % | 10.9 | % | 13.7 | % | ||||||||||
Return
on equity
|
18.7 | % | 16.4 | % | 14.9 | % | 16.5 | % | 19.0 | % | ||||||||||
Inventory
turns
|
3.7 | 3.5 | 3.1 | 2.9 | 2.9 |
·
|
what
factors affect our business;
|
·
|
what
our net sales, earnings, gross margins and costs were in 2007, 2006 and
2005;
|
·
|
why
those net sales, earnings, gross margins and costs were different from the
year before;
|
·
|
how
all of this affects our overall financial condition;
|
·
|
what
our expenditures for capital projects were in 2007 and what we expect them
to be in 2008; and
|
·
|
where
funds will come from to pay for future
expenditures.
|
·
|
On
March 2, 2008, we reorganized by creating a new holding company structure.
The new parent company is Dollar Tree, Inc., replacing Dollar Tree Stores,
Inc., which is now an operating subsidiary. Outstanding shares of the
capital stock of Dollar Tree Stores, Inc., were automatically converted,
on a share for share basis, into identical shares of common stock of the
new holding company. The articles of incorporation, the bylaws, the
executive officers and the board of directors of our new holding company
are the same as those of the former Dollar Tree Stores, Inc. in effect
immediately prior to the reorganization. The common stock of
our new holding company will continue to be listed on the NASDAQ Global
Select Market under the symbol “DLTR”. The rights, privileges
and interests of our stockholders will remain the same with respect to our
new holding company.
|
·
|
On
February 20, 2008, we entered into a five-year $550.0 million Credit
Agreement (the Agreement). The Agreement provides for a $300.0
million revolving line of credit, including up to $150.0 million in
available letters of credit, and a $250.0 million term
loan. The interest rate on the facility will be based, at our
option, on a LIBOR rate, plus a margin, or an alternate base rate, plus a
margin. Our March 2004, $450.0 million unsecured revolving
credit facility was terminated concurrent with entering into the
Agreement.
|
·
|
In
November 2007, we completed the 400,000 square foot expansion of our Briar
Creek distribution center. Including this expansion, we believe
that our nine distribution centers will support approximately $6.7 billion
in sales annually.
|
·
|
In
October 2007, our Board of Directors authorized the repurchase of an
additional $500.0 million of our common stock. This authorization was in
addition to the November 2006 authorization which had approximately $98.4
million remaining. At February 2, 2008, we had approximately $453.7
million remaining under Board authorization.
|
·
|
In
March 2006, we completed our acquisition of 138 Deal$ stores and related
assets. We paid approximately $32.0 million for store related
assets and $22.1 million for inventory.
|
·
|
On
December 15, 2005, the Compensation Committee of our Board of Directors
approved the acceleration of the vesting date of all previously issued,
outstanding and unvested options under all current stock option plans,
effective as of December 15, 2005. This decision eliminated
non-cash compensation expense that would have been recorded in future
periods following our adoption of Statement of Financial Accounting
Standards No. 123, Share-Based Payment (revised
2004) (FAS 123R), on January 29, 2006. Compensation
expense has been reduced by approximately $14.9 million over a period of
four years during which the options would have vested, as a result of the
option acceleration program.
|
Year
Ended
|
Year
Ended
|
Year
Ended
|
||||||||||
February
2,
|
February
3,
|
January
28,
|
||||||||||
2008
|
2007
|
2006
|
||||||||||
Net
sales
|
100.0 | % | 100.0 | % | 100.0 | % | ||||||
Cost
of sales
|
65.6 | % | 65.8 | % | 65.5 | % | ||||||
Gross
profit
|
34.4 | % | 34.2 | % | 34.5 | % | ||||||
Selling,
general and administrative
|
||||||||||||
expenses
|
26.6 | % | 26.4 | % | 26.2 | % | ||||||
Operating
income
|
7.8 | % | 7.8 | % | 8.3 | % | ||||||
Interest
income
|
0.1 | % | 0.2 | % | 0.2 | % | ||||||
Interest
expense
|
(0.4 | %) | (0.4 | %) | (0.4 | %) | ||||||
Income
before income taxes
|
7.5 | % | 7.6 | % | 8.1 | % | ||||||
Provision
for income taxes
|
(2.8 | %) | (2.8 | %) | (3.0 | %) | ||||||
Net
income
|
4.7 | % | 4.8 | % | 5.1 | % |
February 2, 2008
|
February 3, 2007
|
|
New
stores
|
208
|
190
|
Deal$
acquisition
|
--
|
138
|
Acquired
leases
|
32
|
21
|
Expanded
or relocated stores
|
102
|
85
|
Closed
stores
|
(48)
|
(44)
|
· | Operating and corporate expenses increased approximately 25 basis points due to increased debit and credit fees resulting from increased debit transactions in the current year and the rollout of VISA credit at October 31, 2007. Also, in 2006, we had approximately 10 basis points of income related to early lease terminations. |
·
|
Occupancy
costs increased 15 basis points primarily due to increased repairs and
maintenance costs in the current year.
|
·
|
Partially
offsetting these increases was an approximate 15 basis point decrease in
depreciation expense due to the expiration of the depreciable life on
much of the supply chain hardware and software placed in service in
2002.
|
February 3, 2007
|
January 28, 2006
|
|
New
stores
|
190
|
197
|
Deal$
acquisition
|
138
|
--
|
Acquired
leases
|
21
|
35
|
Expanded
or relocated stores
|
85
|
93
|
Closed
stores
|
(44)
|
(53)
|
·
|
Payroll
and benefit related costs increased 35 basis points due to increased
incentive compensation costs resulting from better overall company
performance in 2006 as compared to 2005 and increased stock compensation
expense, partially offset by lower workers’ compensation costs in
2006.
|
·
|
Operating
and corporate expenses decreased 10 basis points primarily as the result
of payments received for early lease terminations in
2006.
|
Year
Ended
|
Year
Ended
|
Year
Ended
|
||||||||||
February
2,
|
February
3,
|
January
28,
|
||||||||||
(in
millions)
|
2008
|
2007
|
2006
|
|||||||||
Net
cash provided by (used in):
|
||||||||||||
Operating
activities
|
$ | 367.3 | $ | 412.8 | $ | 365.1 | ||||||
Investing
activities
|
(22.7 | ) | (190.7 | ) | (235.5 | ) | ||||||
Financing
activities
|
(389.0 | ) | (202.9 | ) | (170.3 | ) |
Contractual
Obligations
|
Total
|
2008
|
2009
|
2010
|
2011
|
2012
|
Thereafter
|
|||||||||||||||
Lease
Financing
|
||||||||||||||||||||||
Operating
lease obligations
|
$ | 1,363.2 | $ | 319.0 | $ | 284.3 | $ | 238.4 | $ | 185.8 | $ | 129.9 | $ | 205.8 | ||||||||
Capital
lease obligations
|
0.9 | 0.3 | 0.3 | 0.2 | 0.1 | -- | -- | |||||||||||||||
Long-term
Borrowings
|
||||||||||||||||||||||
Revolving
credit facility
|
250.0 | -- | 250.0 | -- | -- | -- | -- | |||||||||||||||
Revenue
bond financing
|
18.5 | 18.5 | -- | -- | -- | -- | -- | |||||||||||||||
Interest
on long-term borrowings
|
13.7 | 11.8 | 1.9 | -- | -- | -- | -- | |||||||||||||||
Total
obligations
|
$ | 1,646.3 | $ | 349.6 | $ | 536.5 | $ | 238.6 | $ | 185.9 | $ | 129.9 | $ | 205.8 |
Commitments
|
Total
|
Expiring
in 2008
|
Expiring
in 2009
|
Expiring
in 2010
|
Expiring
in 2011
|
Expiring
in 2012
|
Thereafter
|
|||||||||||||||
Letters
of credit and surety bonds
|
$ | 108.7 | $ | 108.1 | $ | 0.6 | $ | -- | $ | -- | $ | -- | $ | -- | ||||||||
Freight
contracts
|
191.2 | 85.0 | 83.7 | 14.5 | 4.5 | 3.5 | -- | |||||||||||||||
Technology
assets
|
5.1 | 5.1 | -- | -- | -- | -- | -- | |||||||||||||||
Total
commitments
|
$ | 305.0 | $ | 198.2 | $ | 84.3 | $ | 14.5 | $ | 4.5 | $ | 3.5 | $ | -- |
·
|
Shifts
in the timing of certain holidays, especially Easter;
|
·
|
The
timing of new store openings;
|
·
|
The
net sales contributed by new stores;
|
·
|
changes
in our merchandise mix; and
|
·
|
competition.
|
Hedging
Instrument
|
Receive
Variable
|
Pay
Fixed
|
Knock-out
Rate
|
Expiration
|
Fair
Value
|
$18.5
million
interest
rate swap
|
LIBOR
|
4.88%
|
7.75%
|
4/1/09
|
$0.5
million
|
Index
to Consolidated Financial Statements
|
Page
|
Report
of Independent Registered Public Accounting Firm
|
32
|
Consolidated
Statements of Operations for the years ended
|
|
February
2, 2008, February 3, 2007 and January 28, 2006
|
33
|
Consolidated
Balance Sheets as of February 2, 2008 and
|
|
February
3, 2007
|
34
|
Consolidated
Statements of Shareholders’ Equity and Comprehensive
Income
|
|
for
the years ended February 2, 2008, February 3, 2007 and
|
|
January
28, 2006
|
35
|
Consolidated
Statements of Cash Flows for the years ended
|
|
February
2, 2008, February 3, 2007 and January 28, 2006
|
36
|
Notes
to Consolidated Financial Statements
|
37
|
Year
Ended
|
Year
Ended
|
Year
Ended
|
||||||||||
February
2,
|
February
3,
|
January
28,
|
||||||||||
(In
millions, except per share data)
|
2008
|
2007
|
2006
|
|||||||||
Net
sales
|
$ | 4,242.6 | $ | 3,969.4 | $ | 3,393.9 | ||||||
Cost
of sales (Note 4)
|
2,781.5 | 2,612.2 | 2,221.5 | |||||||||
Gross
profit
|
1,461.1 | 1,357.2 | 1,172.4 | |||||||||
Selling,
general and administrative
|
||||||||||||
expenses
(Notes 8 and 9)
|
1,130.8 | 1,046.4 | 888.5 | |||||||||
Operating
income
|
330.3 | 310.8 | 283.9 | |||||||||
Interest
income
|
6.7 | 8.6 | 6.8 | |||||||||
Interest
expense (Notes 5 and 6)
|
(17.2 | ) | (16.5 | ) | (15.5 | ) | ||||||
Income
before income taxes
|
319.8 | 302.9 | 275.2 | |||||||||
Provision
for income taxes (Note 3)
|
118.5 | 110.9 | 101.3 | |||||||||
Net
income
|
$ | 201.3 | $ | 192.0 | $ | 173.9 | ||||||
Basic
net income per share (Note 7)
|
$ | 2.10 | $ | 1.86 | $ | 1.61 | ||||||
Diluted
net income per share (Note 7)
|
$ | 2.09 | $ | 1.85 | $ | 1.60 |
(In
millions, except share data)
|
February
2, 2008
|
February
3, 2007
|
||||||
ASSETS
|
||||||||
Current
assets:
|
||||||||
Cash
and cash equivalents
|
$ | 40.6 | $ | 85.0 | ||||
Short-term
investments
|
40.5 | 221.8 | ||||||
Merchandise
inventories
|
641.2 | 605.0 | ||||||
Deferred
tax assets (Note 3)
|
17.3 | 10.7 | ||||||
Prepaid
expenses and other current assets
|
49.2 | 45.4 | ||||||
Total
current assets
|
788.8 | 967.9 | ||||||
Property,
plant and equipment, net (Note 2)
|
743.6 | 715.3 | ||||||
Goodwill
(Note 10)
|
133.3 | 133.3 | ||||||
Other
intangibles, net (Notes 2 and 10)
|
14.5 | 13.3 | ||||||
Deferred
tax assets (Note 3)
|
38.7 | - | ||||||
Other
assets, net (Notes 2, 8 and 11)
|
68.8 | 52.4 | ||||||
TOTAL
ASSETS
|
$ | 1,787.7 | $ | 1,882.2 | ||||
LIABILITIES
AND SHAREHOLDERS' EQUITY
|
||||||||
Current
liabilities:
|
||||||||
Current
portion of long-term debt (Note 5)
|
$ | 18.5 | $ | 18.8 | ||||
Accounts
payable
|
200.4 | 198.1 | ||||||
Other
current liabilities (Note 2)
|
143.6 | 132.0 | ||||||
Income
taxes payable
|
43.4 | 43.3 | ||||||
Total
current liabilities
|
405.9 | 392.2 | ||||||
Long-term
debt, excluding current portion (Note 5)
|
250.0 | 250.0 | ||||||
Income
taxes payable, long-term (Note 3)
|
55.0 | - | ||||||
Deferred
tax liabilities (Note 3)
|
- | 1.5 | ||||||
Other
liabilities (Notes 6 and 8)
|
88.4 | 70.8 | ||||||
Total
liabilities
|
799.3 | 714.5 | ||||||
Commitments,
contingencies and
|
||||||||
subsequent
events (Notes 1,4,5 and 6)
|
||||||||
Shareholders'
equity (Notes 6, 7 and 9):
|
||||||||
Common
stock, par value $0.01. 300,000,000 shares
|
||||||||
authorized,
89,784,776 and 99,663,580 shares
|
||||||||
issued
and outstanding at February 2, 2008
|
||||||||
and
February 3, 2007, respectively
|
0.9 | 1.0 | ||||||
Additional
paid-in capital
|
- | - | ||||||
Accumulated
other comprehensive income (loss)
|
0.1 | 0.1 | ||||||
Retained
earnings
|
987.4 | 1,166.6 | ||||||
Total
shareholders' equity
|
988.4 | 1,167.7 | ||||||
TOTAL
LIABILITIES AND SHAREHOLDERS' EQUITY
|
$ | 1,787.7 | $ | 1,882.2 |
Accumulated
|
||||||||||||||||||||||
Common
|
Additional
|
Other
|
Share-
|
|||||||||||||||||||
Stock
|
Common
|
Paid-in
|
Comprehensive
|
Unearned
|
Retained
|
holders'
|
||||||||||||||||
(in
millions)
|
Shares
|
Stock
|
Capital
|
Income
(Loss)
|
Compensation
|
Earnings
|
Equity
|
|||||||||||||||
Balance
at January 29, 2005
|
113.0 | $ | 1.1 | $ | 177.7 | $ | (0.3 | ) | $ | (0.1 | ) | $ | 985.8 | $ | 1,164.2 | |||||||
Net
income for the year ended
|
||||||||||||||||||||||
January
28, 2006
|
- | - | - | - | - | 173.9 | 173.9 | |||||||||||||||
Other
comprehensive income (Note 7)
|
- | - | - | 0.4 | - | - | 0.4 | |||||||||||||||
Total
comprehensive income
|
174.3 | |||||||||||||||||||||
Issuance
of stock under Employee
|
||||||||||||||||||||||
Stock
Purchase Plan (Note 9)
|
0.1 | - | 3.0 | - | - | - | 3.0 | |||||||||||||||
Exercise
of stock options, including
|
||||||||||||||||||||||
income
tax benefit of $1.2 (Note 9)
|
0.4 | - | 8.8 | - | - | - | 8.8 | |||||||||||||||
Repurchase
and retirement of shares (Note 7)
|
(7.0 | ) | - | (180.3 | ) | - | - | - | (180.3 | ) | ||||||||||||
Stock-based
compensation (Notes 1 and 9)
|
- | - | 2.2 | - | 0.1 | - | 2.3 | |||||||||||||||
Balance
at January 28, 2006
|
106.5 | 1.1 | 11.4 | 0.1 | - | 1,159.7 | 1,172.3 | |||||||||||||||
Net
income for the year ended
|
||||||||||||||||||||||
February
3, 2007
|
- | - | - | - | - | 192.0 | 192.0 | |||||||||||||||
Other
comprehensive income (Note 7)
|
- | - | - | - | - | - | - | |||||||||||||||
Total
comprehensive income
|
192.0 | |||||||||||||||||||||
Issuance
of stock under Employee Stock
|
||||||||||||||||||||||
Purchase
Plan (Note 9)
|
0.1 | - | 2.8 | - | - | - | 2.8 | |||||||||||||||
Exercise
of stock options, including
|
||||||||||||||||||||||
income
tax benefit of $5.6 (Note 9)
|
1.7 | - | 43.1 | - | - | - | 43.1 | |||||||||||||||
Repurchase
and retirement of shares (Note 7)
|
(8.8 | ) | (0.1 | ) | (63.0 | ) | - | (185.1 | ) | (248.2 | ) | |||||||||||
Stock-based
compensation, net (Notes 1 and 9)
|
0.1 | - | 5.7 | - | - | - | 5.7 | |||||||||||||||
Balance
at February 3, 2007
|
99.6 | 1.0 | - | 0.1 | - | 1,166.6 | 1,167.7 | |||||||||||||||
Net
income for the year ended
|
||||||||||||||||||||||
February
2, 2008
|
- | - | - | - | - | 201.3 | 201.3 | |||||||||||||||
Other
comprehensive income (Note 7)
|
- | - | - | - | - | - | - | |||||||||||||||
Total
comprehensive income
|
201.3 | |||||||||||||||||||||
Adoption
of FIN 48 (Note 3)
|
- | - | - | - | - | (0.6 | ) | (0.6 | ) | |||||||||||||
Issuance
of stock under Employee Stock
|
||||||||||||||||||||||
Purchase
Plan (Note 9)
|
0.1 | - | - | - | - | 3.5 | 3.5 | |||||||||||||||
Exercise
of stock options, including
|
||||||||||||||||||||||
income
tax benefit of $13.0 (Note 9)
|
2.7 | - | - | - | - | 81.1 | 81.1 | |||||||||||||||
Repurchase
and retirement of shares (Note 7)
|
(12.8 | ) | (0.1 | ) | - | - | (472.9 | ) | (473.0 | ) | ||||||||||||
Stock-based
compensation, net (Notes 1 and 9)
|
0.2 | - | - | - | - | 8.4 | 8.4 | |||||||||||||||
Balance
at February 2,2008
|
89.8 | $ | 0.9 | $ | - | $ | 0.1 | $ | - | $ | 987.4 | $ | 988.4 |
Year
Ended
|
Year
Ended
|
Year
Ended
|
||||||||||
February
2,
|
February
3,
|
January
28,
|
||||||||||
(In
millions)
|
2008
|
2007
|
2006
|
|||||||||
Cash
flows from operating activities:
|
||||||||||||
Net
income
|
$ | 201.3 | $ | 192.0 | $ | 173.9 | ||||||
Adjustments
to reconcile net income to net cash
|
||||||||||||
provided
by operating activities:
|
||||||||||||
Depreciation
and amortization
|
159.3 | 159.0 | 140.7 | |||||||||
Provision
for deferred income taxes
|
(46.8 | ) | (21.9 | ) | (21.5 | ) | ||||||
Tax
benefit of stock option exercises
|
- | - | 1.2 | |||||||||
Stock
based compensation expense
|
11.3 | 6.7 | 2.4 | |||||||||
Other
non-cash adjustments to net income
|
8.0 | 5.1 | 5.6 | |||||||||
Changes
in assets and liabilities increasing
|
||||||||||||
(decreasing)
cash and cash equivalents:
|
||||||||||||
Merchandise
inventories
|
(36.2 | ) | (6.2 | ) | 38.9 | |||||||
Other
assets
|
(4.4 | ) | (19.8 | ) |