PRESS RELEASE
DOLLAR TREE STORES, INC.
REPORTS THIRD QUARTER EARNINGS PER COMMON SHARE OF $0.14,
EXCLUDING SFAS NO. 133 CHARGE
CHESAPEAKE, Va. - October 23, 2001 -- Dollar Tree Stores, Inc. (Nasdaq: DLTR),
the nation's leading $1.00 price point retailer, reported third quarter earnings
per common share of $0.13. These results include a $1.4 million non-cash charge,
related to recording interest rate swaps to fair value in accordance with SFAS
No. 133, which decreased reported EPS by $0.01.
Sales for the quarter increased 17.9% to $444.7 million compared to
sales of $377.3 million for the third quarter of 2000. As previously reported,
comparable store net sales decreased 0.1% for the third quarter.
For the quarter, gross margin was 34.7% compared to 36.8% for the third
quarter of 2000. This decrease in gross margin resulted primarily from an
increase in merchandise costs, including freight, primarily due to a higher mix
of domestic merchandise compared to last year. In addition, we experienced loss
of leverage on occupancy and distribution costs and an increase in shrink. The
increase in shrink was related to the Philadelphia distribution network, which
was replaced by the new Briar Creek distribution facility in August.
For the quarter, operating expenses, as a percentage of net sales, were
25.7% compared to 24.4% in the third quarter of 2000. The increase in operating
expense margin was primarily caused by loss of leverage resulting from decreased
comparable store net sales; increases in payroll-related costs, including
insurance; and charges recorded in connection with the closing of the
Philadelphia distribution facilities.
Year-to-date net sales were $1,272.4 million in 2001 compared to
$1,088.9 million in 2000. Net earnings available to common shareholders were
$47.0 million through September 2001 compared to $55.5 million through September
2000. Year-to-date earnings per common share were $0.42 in 2001 compared to
$0.50 in 2000.
Macon Brock, Chairman and CEO, stated, "As we previously noted, we were
able to respond to customer demand for more basic consumer goods throughout the
quarter, which put added pressure on gross margin. During the quarter, we also
successfully transitioned into our Briar Creek distribution center, which
improves our logistical operations in the Northeast and increases our capacity
to accommodate future growth. While recognizing that this is a challenging and
unpredictable retail environment, we believe that we are well positioned with
our product mix as we proceed into the fourth quarter. We are well set for a
balance between holiday seasonal items and daily basics."
On Tuesday, October 23, 2001, Dollar Tree will host a conference call
at 4:45 p.m. EDT to discuss the third quarter 2001 results. The telephone number
for the call is (773) 756-4600, pass code DLTR. A recorded version of the call
will be available through midnight Friday, October 26 and may be accessed by
dialing (402) 998-1528, pass code DLTR. In addition, the webcast of the call is
accessible through Dollar Tree's website, www.DollarTree.com, as well as at
StreetEvents' website, www.StreetEvents.com, and will remain on-line until
midnight Friday, October 26.
Dollar Tree Stores, Inc. is the nation's leading $1.00 discount variety
store chain. Dollar Tree Stores operates 1,935 stores in 36 states as of
September 30, 2001, with distribution centers in Virginia, Mississippi,
Illinois, California, Georgia and Pennsylvania. During 2001, Dollar Tree opened
228 stores, closed 22 stores and expanded or relocated 94 stores through
September 30, 2001, expanding gross retail square footage by 2.5 million square
feet to approximately 12.3 million gross retail square feet at the end of the
period.
A WARNING ABOUT FORWARD-LOOKING STATEMENTS: This press release contains
"forward-looking statements" as that term is used in the Private Securities
Litigation Reform Act of 1995. Forward-looking statements address future events,
developments or results and typically use words such as believe, anticipate,
expect, intend, plan or estimate. For example, our forward-looking statements
include statements regarding our future merchandise mix and the effect of our
Briar Creek distribution center on our current and future operations in the
Northeast.
For a discussion of the risks, uncertainties and assumptions that could affect
our future events, developments or results, you should carefully review the
"Business" section in our Annual Report on Form 10-K filed March 30, 2001, and
the "Management's Discussion and Analysis of Financial Condition and Results of
Operations" section in that Annual Report and in our Quarterly Report on Form
10-Q filed August 14, 2001. Also, carefully review "Risk Factors" in our most
recent prospectuses filed November 15, 2000 and August 3, 2000. In light of
these risks and uncertainties, the future events, developments or results
described by our forward-looking statements in this document could turn out to
be materially and adversely different from those we discuss or imply.
We are not obligated to release publicly any revisions to any forward-looking
statements contained in this press release to reflect events or circumstances
occurring after the date of this report or to reflect the occurrence of future
events and you should not expect us to do so.
CONTACT: Dollar Tree Stores, Inc., Chesapeake
Eric Coble or Erica Robb, 757/321-5000
www.DollarTree.com
DOLLAR TREE STORES, INC.
Condensed Consolidated Income Statements
For the Three Months and Nine Months Ended September 30
(Amounts in thousands, except per share data)
(Unaudited)
Third Quarter Year-to-Date
------------- ------------
2001 2000 2001 2000
---------------- ----------------- ---------------- -----------------
Net sales $444,745 $377,318 $1,272,425 $1,088,932
Cost of sales 290,450 238,328 829,582 698,324
Merger-related costs (a) - - - 1,100
Gross profit 154,295 138,990 442,843 389,508
34.7% 36.8% 34.8% 35.8
Operating expenses 114,513 92,023 325,058 261,381
25.7% 24.4% 25.5% 24.0%
Merger-related expenses (a) - - - 3,266
Depreciation/amortization 13,962 10,638 38,781 28,887
Operating income 25,820 36,329 79,004 95,974
5.8% 9.6% 6.2% 8.8%
Interest expense, net 763 799 580 1,917
Other expense (b) 1,379 - 1,974 -
Earnings before income taxes 23,678 35,530 76,450 94,057
5.3% 9.4% 6.0% 8.6%
Income tax expense 9,126 13,680 29,457 36,720
Net earnings before extraordinary item 14,552 21,850 46,993 57,337
Loss on debt extinguishment,
net of tax benefit of $242 - - - 387
Net earnings 14,552 21,850 46,993 56,950
3.3% 5.8% 3.7% 5.2%
Net earnings available to common shareholders (c) 14,552 21,850 46,993 55,537
3.3% 5.8% 3.7% 5.1%
Net earnings per common share:
Basic $0.13 $0.21 $0.42 $0.54
Weighted average number of shares 112,363 106,115 112,214 102,254
Diluted $0.13 $0.19 $0.42 $0.50
Weighted average number of shares 113,237 113,499 112,951 111,298
<FN>
(a) Merger related costs and expenses, net of taxes, were $3,134 for the nine
months ended September 30, 2000.
(b) Amount represents the earnings impact of recording non-hedging interest rate
swaps to market value in accordance with Statement of Financial Accounting
Standards No. 133, which was effective January 1, 2001.
(c) Amounts include accretion of the cumulative preferred stock to redemption
value, accrued preferred stock dividends and amortization of the discount on
preferred stock. The amount deducted from net earnings available to common
shareholders is $1,413 for the nine months ended September 30, 2000.
</FN>
DOLLAR TREE STORES, INC.
Condensed Consolidated Balance Sheets
(Dollars in thousands)
Sept. 30, Dec. 31, Sept. 30,
2001 2000 2000
--------------- --------------- -----------------
(Unaudited) (Unaudited)
Cash and cash equivalents $ 44,844 $ 181,166 $ 23,954
Merchandise inventories 438,383 258,687 350,055
Other current assets 32,525 37,661 33,410
--------- --------- ---------
Total current assets 515,752 477,514 407,419
--------- --------- ---------
Property and equipment, net 271,603 211,632 201,100
Goodwill, net 38,862 40,376 40,881
Other assets, net 18,693 17,337 16,786
--------- --------- ---------
Total assets $ 844,910 $ 746,859 $ 666,186
========= ========= =========
Accounts payable $ 135,720 $ 75,404 $ 89,463
Income taxes payable 18,822 23,448 201
Other current liabilities 43,274 50,453 30,464
Current portion of long-term debt 25,000 25,000 41,900
--------- --------- ---------
Total current liabilities 222,816 174,305 162,028
--------- --------- ---------
Long-term debt, excluding current portion 12,000 18,000 18,000
Other liabilities 42,178 35,896 34,256
--------- --------- ---------
Total liabilities 276,994 228,201 214,284
--------- --------- ---------
Shareholders' equity 567,916 518,658 451,902
--------- --------- ---------
Total liabilities and
shareholders' equity $ 844,910 $ 746,859 $ 666,186
========= ========= =========
STORE DATA:
Number of stores open at
end of period 1,935 1,729 1,677
Total gross square footage
(in thousands) 12,283 9,832 9,295
DOLLAR TREE STORES, INC.
Condensed Consolidated Statements of Cash Flows
(Dollars in thousands)
Nine-months ended Year ended Nine-months ended
Sept. 30, Dec. 31, Sept. 30,
2001 2000 2000
------------ ------------ -------------
(Unaudited) (Unaudited)
Cash flows from operating activities:
Net income $ 46,993 $ 121,622 $ 56,950
-------- --------- --------
Adjustments to reconcile net income to net cash
provided by (used in)operating activities:
Depreciation and amortization 38,781 41,971 28,887
Other non-cash adjustments 3,259 14,813 13,727
Changes in working capital (120,428) (71,141) (189,347)
-------- --------- --------
Total adjustments (78,388) (14,357) (146,733)
-------- --------- --------
Net cash provided by (used in) operating (31,395) 107,265 (89,783)
activities -------- --------- --------
Cash flows from investing activities:
Capital expenditures (98,064) (95,038) (71,618)
Proceeds from sale of property and equipment 48 271 199
-------- --------- --------
Net cash used in investing activities (98,016) (94,767) (71,419)
-------- --------- --------
Cash flows from financing activities:
Net change in revolving credit facilities - (6,500) 10,400
Repayment of long-term debt and facility fees (6,239) (27,708) (27,708)
Principal payments under capital lease obligations (2,661) (3,274) (2,371)
Proceeds from stock issued pursuant to stock-based
compensation plans 5,761 24,563 23,248
Repurchase of common stock (a) (3,772) - -
-------- --------- --------
Net cash provided by (used in) financing activities (6,911) (12,919) 3,569
-------- --------- --------
Net decrease in cash and cash equivalents (136,322) (421) (157,633)
-------- --------- --------
Cash and cash equivalents at beginning of period 181,166 181,587 181,587
-------- --------- --------
Cash and cash equivalents at end of period $ 44,844 $ 181,166 $ 23,954
======== ========= ========
<FN>
(a) Represents the repurchase of 225,000 shares of outstanding common
stock pursuant to the Securities and Exchange Commission's Emergency Relief
Order, which has since expired.
</FN>