EXHIBIT 99.1
PRESS RELEASE
DOLLAR TREE STORES, INC.
REPORTS THIRD-QUARTER EARNINGS PER SHARE OF $0.17
CHESAPEAKE, Va. - October 24, 2002 - Dollar Tree Stores, Inc. (Nasdaq: DLTR),
the nation's leading retailer of variety merchandise at the $1.00 price point,
reported third-quarter earnings per share of $0.17, a 35% increase from last
year's third quarter. Both quarters' results are inclusive of $1.4 million of
non-cash expense related to changes in the fair value of interest rate swaps. As
previously reported, sales for the quarter were $513.5 million.
"These results reflect our ongoing commitment to productivity improvement and
cost control," President and COO Bob Sasser commented. "As we open larger
stores, we will continue to focus on those two key areas."
For the quarter, gross margin was 35.6% compared to 34.7% for the third quarter
of 2001, primarily due to increased capitalization of distribution costs and
improvements in shrink. Selling, general, and administrative expenses, as a
percentage of sales, were flat at 28.9%. Improvements in payroll and related
costs partially offset higher store operating and depreciation expenses. In
addition, last year's results include $1.7 million of costs related to a
terminated distribution center lease. For the quarter, operating margin was
6.6%, compared to 5.8% in last year's third quarter.
"The plans we put in place last year have enabled us to deliver strong earnings
growth, despite a challenging economy," CEO Macon Brock, Jr., said. "I am proud
of the performance of our management team and the consistency of our results.
Our staffing and inventory are well-positioned for the upcoming holiday season,
and we are pleased to see that sales in October have improved."
Based on an estimate for fourth-quarter sales of $825-$830 million, the Company
plans to achieve an operating margin consistent with last year's fourth quarter.
Sales for the first nine months of 2002 were $1.5 billion, up 18% from the same
period last year. Sales at comparable stores for the first nine months of 2002
rose 1.5% over the comparable 2001 period. Diluted earnings per share of $0.59
in the first nine months of 2002 are 42% higher than the comparable 2001 period.
On Thursday, October 24, 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
(712) 257-2272, passcode DLTR. A recorded version of the call will be available
through midnight Tuesday, October 29 and may be accessed by dialing (402)
220-6503, 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, October 29.
Dollar Tree Stores operates 2,179 stores in 38 states as of September 30, 2002.
During the first nine months of 2002, the Company opened 231 stores, closed 27
stores and expanded or relocated 83 stores, increasing its retail selling square
footage 26% to approximately 12.2 million square feet at September 30, 2002,
from 9.7 million square feet a year ago.
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 productivity improvement; our cost control; and
staffing, inventory, sales, and operating margin for the fourth quarter.
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
August 14, 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.
CONTACT: Dollar Tree Stores, Inc., Chesapeake
Erica Robb or Adam Bergman, 757/321-5000
www.DollarTree.com
DOLLAR TREE STORES, INC.
Condensed Consolidated Balance Sheets
(Dollars in thousands)
(Unaudited)
September 30, December 31, September 30,
2002 2001 2001
----------- ----------- -----------
Cash and cash equivalents $ 81,433 $ 236,653 $ 44,844
Short-term investments 5,500 - -
Merchandise inventories (a) 533,871 296,473 438,383
Other current assets 23,288 27,653 32,525
------------ ---------- ----------
Total current assets 644,092 560,779 515,752
------------ ---------- ----------
Property and equipment, net 330,742 279,011 271,603
Goodwill, net 38,358 38,358 38,862
Other assets, net 26,372 23,900 18,693
------------ ---------- ----------
Total assets $ 1,039,564 $ 902,048 $ 844,910
============ ========== ==========
Current portion of long-term debt $ 25,000 $ 25,000 $ 25,000
Accounts payable 133,751 68,653 135,720
Income taxes payable 7,595 38,848 18,822
Other current liabilities 53,659 67,521 43,274
------------ ---------- ----------
Total current liabilities 220,005 200,022 222,816
------------ ---------- ----------
Long-term debt, excluding current portion 6,000 12,000 12,000
Other liabilities 46,431 38,290 42,178
------------ ---------- ----------
Total liabilities 272,436 250,312 276,994
------------ ---------- ----------
Shareholders' equity 767,128 651,736 567,916
------------ ---------- ----------
Total liabilities and shareholders' equity $ 1,039,564 $ 902,048 $ 844,910
============ ========== ==========
STORE DATA:
Number of stores open at end of period 2,179 1,975 1,935
Total selling square footage (in thousands) 12,230 10,129 9,704
<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 Income Statements
For the Three Months and Nine Months Ended September 30
(Dollars in thousands, except per share data)
(Unaudited)
Third Quarter Year-to-Date
2002 2001 2002 2001
-------- -------- -------- --------
Net sales $ 513,504 $ 444,745 $ 1,501,707 $ 1,272,425
Cost of sales (a) 330,921 290,450 965,768 829,582
Gross profit 182,583 154,295 535,939 442,843
35.6% 34.7% 35.7% 34.8%
Selling, general & administrative expenses (b) 148,487 128,475 423,600 363,839
28.9% 28.9% 28.2% 28.6%
Operating income 34,096 25,820 112,339 79,004
6.6% 5.8% 7.5% 6.2%
Interest expense, net (392) (763) (701) (580)
Other expense (c) (1,382) (1,379) (1,611) (1,974)
Earnings before income taxes 32,322 23,678 110,027 76,450
6.3% 5.3% 7.3% 6.0%
Income tax expense 12,444 9,126 42,360 29,457
Net earnings 19,878 14,552 67,667 46,993
3.9% 3.3% 4.5% 3.7%
Net earnings per share:
Basic $ 0.17 $ 0.13 $ 0.60 $ 0.42
Weighted average number of shares 114,108 112,363 113,459 112,214
Diluted $ 0.17 $ 0.13 $ 0.59 $ 0.42
Weighted average number of shares 114,748 113,237 114,517 112,951
<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.
Third quarter and year-to-date 2001 includes $0.5 million and $1.5 million of
goodwill amortization, respectively. For the nine months ended September 30,
2001, basic earnings per share would have been $0.43 without the after-tax
effect of goodwill amortization.
(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 Statements of Cash Flows
(Dollars in thousands)
(Unaudited)
Nine-months Nine-months
ended Year ended ended
September 30, December 31, September 30,
2002 2001 2001
--------- --------- ---------
Cash flows from operating activities:
Net income $ 67,667 $ 123,081 $ 46,993
----------- ----------- -----------
Adjustments to reconcile net income to net cash provided
by (used in) operating activities:
Depreciation and amortization 51,779 53,763 38,781
Other non-cash adjustments 11,436 893 1,078
Changes in working capital (204,132) 989 (118,247)
----------- ----------- -----------
Total adjustments (140,917) 55,645 (78,388)
----------- ----------- -----------
Net cash provided by (used in) operating activities (73,250) 178,726 (31,395)
----------- ----------- -----------
Cash flows from investing activities:
Capital expenditures (104,780) (121,566) (98,064)
Purchase of short-term investments
(16,500) - -
Proceeds from maturities of short-term investments
11,000 - -
Settlement of merger-related contingencies
6,688 - -
Acquisition of favorable lease rights
(813) - -
Proceeds from sale of property and equipment 14 98 48
----------- ----------- -----------
Net cash used in investing activities (104,391) (121,468) (98,016)
----------- ----------- -----------
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 (2,853) (3,562) (2,661)
Proceeds from stock issued pursuant to stock-based
compensation plans 31,299 11,805 5,764
Repurchase of common stock - (3,775) (3,775)
----------- ----------- -----------
Net cash provided by (used in) financing activities 22,421 (1,771) (6,911)
----------- ----------- -----------
Net increase (decrease) in cash and cash equivalents (155,220) 55,487 (136,322)
Cash and cash equivalents at beginning of period 236,653 181,166 181,166
----------- ----------- -----------
Cash and cash equivalents at end of period $ 81,433 $ 236,653 $ 44,844
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