8-KMaterial AgreementsRegulation FDExhibits & Filings

DOLLAR TREE, INC. 8-K Report, Material Agreement (Mar 22, 2010)

Filed March 22, 2010For Securities:DLTR

Summary

On March 22, 2010, Dollar Tree, Inc. (DLTR) announced an accelerated share repurchase (ASR) agreement with Bank of America for approximately $200 million. This initiative is part of a larger $500 million share repurchase program authorized in October 2007, indicating a continued focus on returning capital to shareholders. The ASR program is designed to efficiently reduce the number of outstanding shares by utilizing a "collared" transaction structure, which sets a minimum and maximum number of shares to be repurchased based on the volume-weighted average share price over a defined period. The agreement allows Dollar Tree to immediately receive 70% of the projected minimum shares, with the final number of repurchased shares adjusted based on market performance during the repurchase period, subject to the collar limits. The company will pay $200 million on March 23, 2010, and these repurchased shares will be retired. This move suggests management's confidence in the company's financial health and its stock's valuation, aiming to enhance shareholder value through a reduction in share count.

Key Highlights

  • 1Dollar Tree entered into a $200 million accelerated share repurchase (ASR) agreement with Bank of America.
  • 2This ASR is part of a previously authorized $500 million share repurchase program.
  • 3The ASR utilizes a "collared" transaction structure, with a minimum and maximum number of shares to be repurchased.
  • 4The number of repurchased shares will be based on the volume-weighted average share price over a specified period (1.5 to 4 months post-hedge).
  • 5Dollar Tree will pay $200 million on March 23, 2010, and will initially receive 70% of the projected minimum shares.
  • 6Repurchased shares under this agreement will be retired, reducing the total outstanding share count.
  • 7The company issued a press release on March 22, 2010, detailing the ASR program.

Frequently Asked Questions

An accelerated share repurchase (ASR) agreement is a transaction where a company buys back its own stock from a bank or financial institution. The company typically pays a lump sum, and the institution repurchases shares on the open market. The final number of shares repurchased is usually determined by the average trading price of the stock over a specific period, often with a predetermined collar to limit the number of shares exchanged.

Dollar Tree is engaging in this program as part of its strategy to return capital to shareholders and enhance shareholder value. By repurchasing and retiring shares, the company reduces the number of outstanding shares, which can potentially increase earnings per share (EPS) and signal management's confidence in the company's stock valuation.

A 'collared' transaction means that the number of shares Dollar Tree will ultimately repurchase is set within a specific range (a minimum and a maximum). This structure provides some certainty for the company regarding the cost of the buyback and protects both the company and the bank from significant adverse price movements during the repurchase period. For investors, it means the dilution from the outstanding share count will be reduced within predictable limits.

The company will pay Bank of America $200 million on March 23, 2010. While Dollar Tree will initially receive 70% of the projected minimum shares, the full repurchase and retirement process will occur over a period ranging from one and one-half to four months following a two-week hedge completion period. The exact number of shares will be finalized at the end of this repurchase period.