8-KMaterial AgreementsRegulation FDExhibits & Filings

DOLLAR TREE, INC. 8-K Report, Material Agreement (Dec 13, 2006)

Filed December 13, 2006For Securities:DLTR

Summary

Dollar Tree Stores, Inc. (DLTR) announced on December 8, 2006, the initiation of an accelerated share repurchase (ASR) program with Goldman Sachs for $100 million. This ASR is a component of a broader share repurchase authorization of up to $500 million, previously announced on November 21, 2006. The program aims to reduce the number of outstanding shares, potentially enhancing shareholder value through increased earnings per share and returning capital to shareholders. The ASR is structured into two agreements: a $50 million "collared" agreement and a $50 million "non-collared" agreement. The collared agreement involves a fixed initial repurchase with a price range, subject to adjustments, while the non-collared agreement involves an immediate repurchase with a potential price adjustment. The company prepaid $100 million on December 13, 2006, receiving approximately 2.7 million shares initially. Repurchased shares will be retired.

Key Highlights

  • 1Dollar Tree initiated a $100 million accelerated share repurchase (ASR) program with Goldman Sachs.
  • 2The ASR is part of a larger $500 million share repurchase authorization announced previously.
  • 3The program commenced on December 8, 2006, with an initial prepayment of $100 million on December 13, 2006.
  • 4Approximately 2.7 million shares were initially received by Dollar Tree under the ASR.
  • 5The ASR is divided into two agreements: a 'collared' and a 'non-collared' repurchase agreement, each for $50 million.
  • 6Repurchased shares under this program will be retired, reducing the total number of outstanding shares.
  • 7Goldman Sachs is a financial advisor to Dollar Tree, and its asset management arm holds approximately 1.3% of the company's common shares.

Frequently Asked Questions

An accelerated share repurchase program is a transaction where a company buys back its own stock directly from an investment bank, like Goldman Sachs. The company typically pays the investment bank upfront, and the investment bank delivers a large portion of the shares quickly. The final number of shares repurchased and the average price paid are often determined over a specified period, subject to agreed-upon terms and price collars.

The shares repurchased under this program will be retired, meaning they will be taken out of circulation and will no longer be outstanding. This action is intended to reduce the total number of shares available, which can potentially increase earnings per share (EPS) and enhance shareholder value.

The company has authorized a total of up to $500 million for share repurchases. This $100 million accelerated share repurchase program is the first step in executing that authorization.

The ASR is structured with both 'collared' and 'non-collared' agreements. The collared agreement has a minimum and maximum number of shares that can be repurchased, based on a volume-weighted average price, introducing price risk for Dollar Tree. The non-collared agreement allows for a potential price adjustment, also linking the final cost to market performance over a period. These structures mean the final average cost per share may fluctuate.