UNITED STATESSECURITIES AND EXCHANGE COMMISSIONWashington D.C. 20549FORM 10KANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THESECURITIES EXCHANGE ACT OF 1934For the Fiscal Year Ended January 31 2015Commission File No.025464 DOLLAR TREE INC.(Exact name of registrant as specified in its charter)Virginia(State or other jurisdiction ofincorporation or organization)262018846(I.R.S. EmployerIdentification No.)500 Volvo Parkway Chesapeake VA 23320(Address of principal executive offices)Registrants telephone number including area code: (757) 3215000Securities Registered Pursuant to Section 12(b) of the Act:Title of Each ClassName of Each Exchange on Which RegisteredCommon Stock (par value $.01 per share)NASDAQSecurities Registered Pursuant to Section 12(g) of the Act:None(Title of Class)Indicate by check mark if the registrant is a wellknown seasoned issuer as defined in Rule 405 of theSecurities Act.Yes (X) No ( )Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) ofthe Exchange Act.Yes ( ) No (X)Indicate by check mark whether Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) ofthe Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrantwas required to file such reports) and (2) has been subject to such filing requirements for the past 90 days.Yes (X) No ( )Indicate by check mark whether the registrant has submitted electronically and posted on its corporate website if any every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation STduring the preceding 12 months (or for such shorter period that the registrant was required to submit and post suchfiles).Yes (X) No ( ) Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation SK is not containedherein and will not be contained to the best of Registrants knowledge in definitive proxy or informationstatements incorporated by reference in Part III of this Form 10K or any amendment to this Form 10K. ( )Indicate by check mark whether the registrant is a large accelerated filer an accelerated filer a nonacceleratedfiler or a smaller reporting company. See definition of large accelerated filer accelerated filer and smallerreporting company in Rule 12b2 of the Exchange Act.Large accelerated filer (X)Nonaccelerated filer ( )Accelerated filer ( )Smaller reporting company ( )Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b2 of the ExchangeAct).Yes ( ) No (X)The aggregate market value of Common Stock held by nonaffiliates of the Registrant on August 1 2014 was$10 784 848 842 based on a $54.61 average of the high and low sales prices for the Common Stock on suchdate. For purposes of this computation all executive officers and directors have been deemed to be affiliates. Suchdetermination should not be deemed to be an admission that such executive officers and directors are in fact affiliates of the Registrant.On March 4 2015 there were 205 759 864 shares of the Registrants Common Stock outstanding.DOCUMENTS INCORPORATED BY REFERENCEThe information regarding securities authorized for issuance under equity compensation plans called for in Item 5 ofPart II and the information called for in Items 10 11 12 13 and 14 of Part III are incorporated by reference to thedefinitive Proxy Statement for the Annual Meeting of Stockholders of the Company to be held June 18 2015 whichwill be filed with the Securities and Exchange Commission not later than May 29 2015 .2DOLLAR TREE INC.TABLE OF CONTENTSItem 1.Item 1A.Item 1B.Item 2.PagePART IBUSINESSRISK FACTORSUNRESOLVED STAFF COMMENTSPROPERTIES6101819 Item 3.Item 4.Item 5.Item 6.Item 7.Item 7A.Item 8.Item 9.Item 9A.Item 9B.Item 10.Item 11.Item 12.Item 13.Item 14.Item 15.LEGAL PROCEEDINGSMINE SAFETY DISCLOSURESPART IIMARKET FOR REGISTRANT’S COMMON EQUITY RELATEDSTOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITYSECURITIESSELECTED FINANCIAL DATAMANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIALCONDITION AND RESULTS OF OPERATIONSQUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISKFINANCIAL STATEMENTS AND SUPPLEMENTARY DATACHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ONACCOUNTING AND FINANCIAL DISCLOSURECONTROLS AND PROCEDURESOTHER INFORMATIONPART IIIDIRECTORS EXECUTIVE OFFICERS AND CORPORATE GOVERNANCEEXECUTIVE COMPENSATIONSECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERSAND MANAGEMENT AND RELATED STOCKHOLDER MATTERSCERTAIN RELATIONSHIPS RELATED TRANSACTIONS AND DIRECTORINDEPENDENCEPRINCIPAL ACCOUNTING FEES AND SERVICESPART IVEXHIBITS FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM8KSIGNATURES32021222425363763646565656565666672 A WARNING ABOUT FORWARDLOOKING STATEMENTS: This document contains “forwardlookingstatements” as that term is used in the Private Securities Litigation Reform Act of 1995. Forwardlookingstatements address future events developments and results. They include statements preceded by followed by orincluding words such as “believe ” “anticipate ” “expect ” “intend ” “plan ” “view ” target or “estimate.” Forexample our forwardlooking statements include statements regarding:the timing of the regulatory approvals and closing of the proposed acquisition of Family Dollar Stores Inc. (“Family Dollar”);the consideration to be paid to the Family Dollar shareholders in the proposed acquisition and thenumber of outstanding Family Dollar shares of common stock at closing;acquisitionrelated expenses and financingcosts;the benefits results and effects of the proposed Family Dollar acquisition and the combined companysplans objectives expectations (financial or otherwise) including synergies the cost to achievesynergies and the effect on earnings per share;the outcome and costs of pending or potential litigation or governmental investigations against either usor Family Dollar;regulatory approvals and expected store divestitures in connection with the proposed Family Dollaracquisition;the inability to retain key personnel at FamilyDollar;our anticipated sales including comparable store net sales net sales growth and earningsgrowth;costs of pending and possible future legalclaims;our growth plans including our plans to add expand or relocate stores our anticipated square footageincrease and our ability to renew leases at existing store locations;the average size of our stores to be added in 2015 and beyond;the effect on merchandise mix of consumables and the increase in the number of our stores with freezers and coolers on gross profit margin and sales;the net sales per square foot net sales and operating income of ourstores;the potential effect of inflation and other economic changes on our costs and profitability including thepotential effect of future changes in minimum wage rates shipping rates domestic and import freightcosts fuel costs and wage and benefit costs;our gross profit margin earnings inventory levels and ability to leverage selling general andadministrative and other fixed costs;our seasonal sales patterns including those relating to the length of the holiday sellingseasons;the capabilities of our inventory supply chain technology and othersystems;the reliability of and cost associated with our sources of supply particularly imported goods such asthose sourced from China;the capacity performance and cost of our distributioncenters;our cash needs including our ability to fund our future capital expenditures and working capitalrequirements;our expectations regarding competition and growth in our retail sector;andmanagement’s estimates associated with our critical accounting policies including inventory valuation accrued expenses and income taxes.For a discussion of the risks uncertainties and assumptions that could affect our future events developments orresults you should carefully review the risk factors described in Item 1A Risk Factors beginning on page 10 aswell as Item 7 “Managements Discussion and Analysis of Financial Condition and Results of Operations”beginning on page 25 of this Form 10K.Our forwardlooking statements could be wrong in light of these risks uncertainties and assumptions. Thefuture events developments or results described in this report could turn out to be materially different. We have noobligation to publicly update or revise our forwardlooking statements after the date of this annual report and youshould not expect us to do so. Investors should also be aware that while we do from time to time communicate with securities analysts andothers it is against our policy to selectively disclose to them any material nonpublic information or otherconfidential commercial information. Accordingly shareholders should not assume that we agree with anystatement or report issued by any securities analyst regardless of the content of the statement or report as we have apolicy against confirming information issued by others. Thus to the extent that reports issued by securities analystscontain any projections forecasts or opinions such reports are not our responsibility.INTRODUCTORY NOTE: Unless otherwise stated references to “we ” “our” and “Dollar Tree” generally refer toDollar Tree Inc. and its direct and indirect subsidiaries on a consolidated basis. Unless specifically indicatedotherwise any references to42015 or fiscal 2015 2014 or fiscal 2014 2013 or fiscal 2013 and 2012 or fiscal 2012 relateto as of or for the years ended January 30 2016 January 31 2015 February 1 2014 and February 2 2013 respectively.AVAILABLE INFORMATIONOur annual reports on Form 10K quarterly reports on Form 10Q current reports on Form 8K andamendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act areavailable free of charge on our website at www.dollartree.com as soon as reasonably practicable after electronicfiling of such reports with the SEC.5PART IItem 1. BUSINESSOverviewWe are the leading operator of discount variety stores offering merchandise at the fixed price of $1.00. Webelieve the variety and value of products we sell for $1.00 sets us apart from our competitors. At January 31 2015 we operated 5 367 discount variety retail stores. Our stores operate under the names of Dollar Tree Deals DollarTree Deals Dollar Tree Canada Dollar Giant and Dollar Bills. In 5 148 of these stores we sell substantially allitems for $1.00 or less in the United States and $1.25(CAD) or less in Canada. In substantially all of the remainingstores operating as Deals or Dollar Tree Deals we sell items for $1.00 or less but also sell items for more than$1.00.We believe our optimal store size is between 8 000 and 10 000 selling square feet. This store size provides theappropriate amount of space for our broad merchandise offerings while allowing us to provide ease of shopping toour customers. As we have been expanding our merchandise offerings we have added freezers and coolers toapproximately 3 620 stores to increase sales and shopping frequency. At January 29 2011 we operated 4 101 storesin the United States and Canada. At January 31 2015 we operated 5 157 stores in 48 states and the District ofColumbia as well as 210 stores in Canada. Our revenue and assets in Canada are not material. Our selling square footage increased from approximately 35.1 million square feet in January 2011 to 46.5 million square feet in January2015 . Our store growth has resulted primarily from opening new stores.Business StrategyValue Merchandise Offering . We strive to exceed our customers’ expectations of the variety and quality ofproducts that they can purchase for $1.00 by offering items that we believe typically sell for higher priceselsewhere. We buy approximately 59% to 61% of our merchandise domestically and import the remaining 39% to41% . Our domestic purchases include basic seasonal closeouts and promotional merchandise. We believe our mixof imported and domestic merchandise affords our buyers flexibility that allows them to consistently exceed thecustomer’s expectations. In addition direct relationships with manufacturers permit us to select from a broad rangeof products and customize packaging product sizes and package quantities that meet our customers’ needs.Mix of Basic Variety and Seasonal Merchandise. We maintain a balanced selection of products withintraditional variety store categories. We offer a wide selection of everyday basic products and we supplement thesebasic everyday items with seasonal closeout and promotional merchandise. We attempt to keep certain basicconsumable merchandise in our stores continuously to establish our stores as a destination and increase the traffic inour stores. Closeout and promotional merchandise is purchased opportunistically and represents less than 10% ofour purchases.Our merchandise mix consists of:consumable merchandise which includes candy and food health and beauty care and everydayconsumables such as paper and chemicals and in select stores frozen and refrigerated food;variety merchandise which includes toys durable housewares gifts party goods greeting cards softlines and other items; andseasonal goods which include among others Valentine’s Day Easter Halloween and Christmasmerchandise.We added freezers and coolers to certain stores and increased the amount of consumable merchandise carriedby those stores. We believe this initiative helps drive additional transactions and allows us to appeal to a broaderdemographic mix. We added freezers and coolers to 460 additional stores in 2014 . Therefore as of January 31 2015 we have freezers and coolers in 3 620 of our stores. We plan to install them in 320 additional stores by theend of fiscal 2015 .The following table shows the percentage of net sales of each major product group for the years endedJanuary 31 2015 and February 1 2014 :Merchandise TypeConsumableVariety categoriesSeasonalJanuary 31 February 1 2015201449.3 I.4 F.4 F.3 %4.3 %4.3 % 6At any point in time we carry approximately 6 800 items in our stores and as of the end of 2014 approximately35% of our items are automatically replenished. The remaining items are pushed to the stores and a portion can bereordered by our store managers on a weekly basis. Through automatic replenishment and our store managersability to order product each store manager is able to satisfy the demands of his or her particular customer base.Customer Payment Methods. All of our stores in the United States accept cash checks debit cards and creditcards . Along with the rollout of freezers and coolers we have increased the number of stores accepting ElectronicBenefits Transfer (EBT) cards and food stamps (under the Supplemental Nutrition Assistance Program (SNAP))to approximately 5 000 stores as of January 31 2015 .Convenient Locations and Store Size. We primarily focus on opening new stores in strip shopping centersanchored by large retailers who draw target customers we believe to be similar to ours. Our stores are successful inmetropolitan areas midsized cities and small towns. The range of our store sizes allows us to target a particularlocation with a store that best suits that market and takes advantage of available real estate opportunities. Our storesare attractively designed and create an inviting atmosphere for shoppers by using bright lighting vibrant colors anddecorative signs. We enhance the store design with attractive merchandise displays. We believe this design attractsnew and repeat customers and enhances our image as both a destination and impulse purchase store.For more information on retail locations and retail store leases see Item 2 “Properties beginning on page 19 ofthis Form 10K.Profitable Stores with Strong Cash Flow. We maintain a disciplined costsensitive approach to store siteselection in order to minimize the initial capital investment required and maximize our potential to generate highoperating margins and strong cash flows. We believe that our stores have a relatively small shopping radius whichallows us to profitably concentrate multiple stores within a single market. Our ability to open new stores isdependent upon among other factors locating suitable sites and negotiating favorable lease terms.The strong cash flows generated by our stores allow us to selffund infrastructure investment and newstores. Over the past five years cash flows from operating activities have exceeded capital expenditures.For more information on our results of operations see Item 7 “Management’s Discussion and Analysis ofFinancial Condition and Results of Operations beginning on page 25 of this Form 10K.Cost Control . We believe that our substantial buying power and our flexibility in making sourcing decisionscontributes to our successful purchasing strategy which includes targeted merchandise margin goals bycategory. We also believe our ability to select quality merchandise helps to minimize markdowns. We buy productson an orderbyorder basis and have no material longterm purchase contracts or other assurances of continuedproduct supply or guaranteed product cost. No vendor accounted for more than 10% of total merchandise purchasedin any of the past five years.Our supply chain systems continue to provide us with valuable sales information to assist our buyers andimprove merchandise allocation to our stores. Controlling our inventory levels has resulted in more efficientdistribution and store operations.Information Systems. We believe that investments in technology help us to increase sales and controlcosts. Our inventory management system has allowed us to improve the efficiency of our supply chain improvemerchandise flow increase inventory turnover and control distribution and store operating costs. It is also used toprovide information to calculate our estimate of inventory cost under the retail inventory method which is widely used in the retail industry. Our automatic replenishment system replenishes key items based on actual store levelsales and inventory. At the end of 2014 approximately 35% of our items are on automatic replenishment.Pointofsale data allows us to track sales and inventory by merchandise category at the store level and assistsus in planning for future purchases of inventory. We believe that this information allows us to ship the appropriateproduct to stores at the quantities commensurate with selling patterns. Using this pointofsale data to planpurchases of inventory has helped us manage our inventory levels.Corporate Culture and Values. We believe that honesty and integrity doing the right things for the rightreasons and treating people fairly and with respect are core values within our corporate culture. We believe thatrunning a business and certainly a public company carries with it a responsibility to be above reproach whenmaking operational and financial decisions. Our executive management team visits and shops our stores like everycustomer and ideas and individual creativity on the part of our associates are encouraged particularly from ourstore managers who know their stores and their customers. We have standards for store displays merchandisepresentation and store operations. We maintain an open door7policy for all associates. Our distribution centers are operated based on objective measures of performance andvirtually everyone in our store support center is available to assist associates in the stores and distribution centers.Our disclosure committee meets at least quarterly and monitors our internal controls over financial reporting toensure that our public filings contain discussions about the risks our business faces. We believe that we have thecontrols in place to be able to certify our financial statements. Additionally we have complied with the listingrequirements for the Nasdaq Stock Market.Seasonality. For information on the impact of seasonality see Item 1A. “Risk Factors” beginning on page 10 ofthis Form 10K and Item 7. “Management’s Discussion and Analysis of Financial Condition and Results ofOperations” beginning on page 25 of this Form 10K.Growth StrategyStore Openings and Square Footage Growth. The primary factors contributing to our net sales growth havebeen new store openings an active store expansion and remodel program and selective mergers and acquisitions. Inthe last five years net sales increased at a compound annual growth rate of 10.0% . We expect that the majority ofour future sales growth will come primarily from new store openings and from our store expansion and relocationprogram.The following table shows the average selling square footage of our stores and the selling square footage pernew store opened over the last five years. Our growth and productivity statistics are reported based on sellingsquare footage because our management believes the use of selling square footage yields a more accurate measureof store productivity.Year201020112012Number of Stores4 1014 3514 671Average Selling SquareFootage Per Store8 5708 6408 660Average Selling SquareFootage Per New StoreOpened8 4008 3608 060 201320144 9925 3678 6608 6608 0208 060We expect to increase the selling square footage in our Dollar Tree stores in the future by opening new stores inunderserved markets and strategically increasing our presence in our existing markets via new store openings andstore expansions (expansions include store relocations). In fiscal 2015 and beyond we plan to predominantly openDollar Tree stores that are approximately 8 000 10 000 selling square feet and we believe this size allows us toachieve our objectives in the markets in which we plan to expand. At January 31 2015 approximately 2 974 of ourstores totaling 65% of our selling square footage were 8 000 selling square feet or larger .Our Deals stores which offer an expanded assortment of merchandise including items that sell for more than$1.00 provide us an opportunity to leverage our Dollar Tree infrastructure in different merchandise concepts including higher price points without disrupting the singleprice point model in our Dollar Tree stores. Weoperated 219 Deals stores as of January 31 2015 .In addition to new store openings we plan to continue our store expansion program to increase our net sales perstore and take advantage of market opportunities. We target stores for expansion based on the current sales perselling square foot and changes in market opportunities. Stores targeted for expansion are generally less than 6 000selling square feet in size. Store expansions generally increase the existing store size by approximately 2 750 sellingsquare feet.Since 1995 we have added a total of 695 stores through several mergers and acquisitions. Our acquisitionstrategy has been to target companies that have a similar singleprice point concept that have shown success inoperations or companies that provide a strategic advantage. We evaluate potential acquisition opportunities as theybecome available. On July 27 2014 we executed an Agreement and Plan of Merger to acquire Family Dollar Stores Inc. For more information regarding the pending acquisition see “Family Dollar Acquisition” below and Item 8.”Financial Statements and Supplementary Data…
