EXHIBIT 99.1
PRESS RELEASE
DOLLAR TREE STORES, INC.
REPORTS RECORD SECOND QUARTER EARNINGS PER SHARE OF $0.22
CHESAPEAKE, Va. - July 25, 2002 - Dollar Tree Stores, Inc. (Nasdaq: DLTR), the
nation's leading retailer of variety merchandise at the $1.00 price point,
reported second quarter earnings per share of $0.22. As previously
reported, sales for the quarter were $498.6 million.
For the quarter, gross margin was 36.1% compared to 35.7% for the second quarter
of 2001. This improvement resulted primarily from better shrink results and
fewer markdowns, somewhat offset by deleveraging of occupancy costs. Operating
expenses, as a percentage of sales, were 24.1% compared to 24.7% in the second
quarter of 2001. The improvement primarily relates to better management of store
payroll and related costs. These improvements, somewhat offset by an increase in
depreciation because of the Company's supply-chain systems implementation,
resulted in an 8.4% operating margin for the quarter.
"We are pleased to report record earnings for the second quarter," Chairman and
CEO Macon Brock Jr., said. "We are particularly proud of our field and store
management, who responded well to the Easter shift. Post-Easter sales trends
have been encouraging. The implementation of our supply-chain management systems
has been seamless, and we look forward to the inventory-management benefits it
will provide. We remain vigilant in our pursuit of profitable growth and expense
control."
First-half 2002 sales were $988.2 million, up 19.4% from the same period last
year. Sales at comparable stores for the first six months of 2002 rose 2% over
the first half of 2001. Earnings per share of $0.42 in the first half of 2002
are 45% higher than the $0.29 reported for the comparable 2001 period.
On Thursday, July 25, 2002, Dollar Tree will host a conference call at 4:45 p.m.
EDT to discuss its quarterly results. The telephone number for the call is (212)
287-1615, passcode DLTR. A recorded version of the call will be available
through midnight Tuesday, July 30 and may be accessed by dialing (402) 220-2168,
passcode DLTR. A webcast of the call is accessible through Dollar Tree's
website, www.DollarTree.com, as well as at Vcall's website, www.Vcall.com, and
will remain on-line until midnight Tuesday, July 30.
Dollar Tree Stores operates 2,105 stores in 37 states as of June 30, 2002.
During the first half of 2002, the Company opened 148 stores, closed 18 stores
and expanded or relocated 51 stores, increasing its retail selling square
footage 25% to approximately 11.4 million square feet at June 30, 2002, from 9.1
million square feet a year ago. The Company's square footage growth has exceeded
25% annually since its founding in 1986.
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 inventory management, growth plans, and expense
control.
For a discussion of the risks, uncertainties and assumptions that could affect
our future events, developments or results, you should carefully review the
"Risk Factors," "Business," and "Management's Discussion and Analysis of
Financial Condition and Results of Operations" sections in our Annual Report on
Form 10-K filed March 14, 2002 and in our Quarterly Report on Form 10-Q filed
May 13, 2002. 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 and you should not expect us to do so.
DOLLAR TREE STORES, INC.
Condensed Consolidated Income Statements
For the Three Months and Six Months Ended June 30
(Dollars in thousands, except per share data)
(Unaudited)
Second Quarter Year-to-Date
2002 2001 2002 2001
--------------- -------------- --------------- --------------
Net sales....................................... $ 498,578 $ 440,361 $ 988,203 $ 827,680
Cost of sales (a)............................... 318,387 283,274 634,847 539,132
Gross profit.................................... 180,191 157,087 353,356 288,548
36.1% 35.7% 35.8% 34.9%
Operating expenses.............................. 120,184 108,854 241,514 210,545
24.1% 24.7% 24.4% 25.4%
Depreciation and amortization (b)............... 17,878 12,988 33,599 24,819
Operating income................................ 42,129 35,245 78,243 53,184
8.4% 8.0% 7.9% 6.4%
Interest income (expense), net.................. (270) (204) (309) 183
Other income (expense) (c)...................... (824) 197 (229) (595)
Earnings before income taxes.................... 41,035 35,238 77,705 52,772
8.2% 8.0% 7.9% 6.4%
Income tax expense.............................. 15,798 13,580 29,916 20,331
Net earnings.................................... 25,237 21,658 47,789 32,441
5.1% 4.9% 4.8% 3.9%
Net earnings per share:
Basic......................................... $0.22 $0.19 $0.42 $0.29
Weighted average number of shares............. 113,552 112,182 113,135 112,140
Diluted....................................... $0.22 $0.19 $0.42 $0.29
Weighted average number of shares............. 114,904 112,852 114,402 112,808
<FN>
(a) In April 2002, the Company changed its method of accounting for inventories
in its distribution centers from the first-in first-out method to the weighted
average cost method. The change did not have a material effect on the Company's
balance sheet or 2002 operating results.
(b) The Company adopted the provisions of Statement of Financial Accounting
Standards No. 142, which requires that goodwill amortization cease effective
January 1, 2002. As a result, no goodwill amortization was recorded in 2002.
Second quarter and year-to-date 2001 includes $0.5 million and $1.0 million of
goodwill amortization, respectively.
(c) 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.
</FN>
DOLLAR TREE STORES, INC.
Condensed Consolidated Balance Sheets
(Dollars in thousands)
(Unaudited)
June 30, December 31, June 30,
2002 2001 2001
------------------- ------------------- ------------------
Cash and cash equivalents............................. $ 159,075 $ 236,653 $ 90,672
Short-term investments................................ 16,500 -- --
Merchandise inventories (a)........................... 381,337 296,473 334,614
Income taxes receivable............................... 5,113 -- --
Other current assets.................................. 28,707 27,653 39,113
--------- --------- --------
Total current assets.................................. 590,732 560,779 464,399
--------- --------- --------
Property and equipment, net........................... 312,145 279,011 250,001
Goodwill, net......................................... 38,358 38,358 39,367
Other assets, net..................................... 25,259 23,900 18,456
--------- --------- --------
Total assets.......................................... $ 966,494 $ 902,048 $ 772,223
========= ========= ========
Current portion of long-term debt..................... $ 25,000 $ 25,000 $ 25,000
Accounts payable...................................... 95,044 68,653 94,692
Income taxes payable.................................. -- 38,848 10,661
Other current liabilities............................. 51,603 67,521 38,391
--------- --------- --------
Total current liabilities............................. 171,647 200,022 168,744
--------- --------- --------
Long-term debt, excluding current portion............. 6,000 12,000 12,000
Other liabilities..................................... 42,261 38,290 37,257
--------- --------- --------
Total liabilities..................................... 219,908 250,312 218,001
--------- --------- --------
Shareholders' equity.................................. 746,586 651,736 554,222
--------- --------- --------
Total liabilities and shareholders' equity............ $ 966,494 $ 902,048 $ 772,223
========= ========= ========
STORE DATA:
Number of stores open at end of period................ 2,105 1,975 1,863
Total selling square footage (in thousands)........... 11,411 10,129 9,056
<FN>
(a) In April 2002, the Company changed its method of accounting for inventories
in its distribution centers from the first-in first-out method to the weighted
average cost method. The change did not have a material effect on the Company's
balance sheet or 2002 operating results.
</FN>
DOLLAR TREE STORES, INC.
Condensed Consolidated Statements of Cash Flows
(Dollars in thousands)
(Unaudited)
Six-months ended Year ended Six-months ended
June 30, December 31, June 30,
2002 2001 2001
--------------------- ---------------------- --------------------
Cash flows from operating activities:
Net income............................................ $ 47,789 $ 123,081 $ 32,441
-------- --------- --------
Adjustments to reconcile net income to net cash
provided by (used in) operating activities:
Depreciation and amortization..................... 33,599 53,763 24,819
Other non-cash adjustments........................ 10,499 893 (240)
Changes in working capital........................ (113,696) 989 (79,109)
-------- --------- --------
Total adjustments............................. (69,598) 55,645 (54,530)
-------- --------- --------
Net cash provided by (used in)
operating activities.......................... (21,809) 178,726 (22,089)
-------- --------- --------
Cash flows from investing activities:
Capital expenditures.............................. (67,693) (121,566) (62,833)
Purchase of short-term investments................ (16,500) -- --
Acquisition of favorable lease rights............. (813) -- --
Proceeds from sale of property and equipment...... 251 98 34
-------- --------- --------
Net cash used in investing activities......... (84,755) (121,468) (62,799)
-------- --------- --------
Cash flows from financing activities:
Repayment of long-term debt and facility fees..... (6,025) (6,239) (6,239)
Principal payments under capital lease
obligations....................................... (1,885) (3,562) (1,755)
Proceeds from stock issued pursuant to stock-based
compensation plans................................ 30,242 11,805 2,388
Repurchase of common stock........................ -- (3,775) --
Settlement of merger-related contingencies........ 6,654 -- --
-------- --------- --------
Net cash provided by (used in)
financing activities.......................... 28,986 (1,771) (5,606)
-------- --------- --------
Net increase (decrease) in cash and
cash equivalents.................................... (77,578) 55,487 (90,494)
Cash and cash equivalents at beginning of period...... 236,653 181,166 181,166
-------- --------- --------
Cash and cash equivalents at end of period............ $ 159,075 $ 236,653 $ 90,672
======== ========= ========