Exhibit 99.1
PRESS RELEASE
DOLLAR TREE STORES, INC.
REPORTS RECORD FOURTH-QUARTER AND ANNUAL EARNINGS PER SHARE
CHESAPEAKE, Va. - January 23, 2003 - Dollar Tree Stores, Inc. (Nasdaq: DLTR),
the nation's leading retailer of variety merchandise at the $1.00 price point,
reported 2002 earnings per share of $1.35, a 24% increase compared to 2001.
Fourth-quarter 2002 earnings per share were $0.76.
"Dollar Tree produced record sales and earnings in 2002, despite a challenging
retail environment," said CEO Macon Brock, Jr. "Management's focus on the supply
chain, inventory control, and efficiency served us well throughout the year. We
improved our margins. We also exceeded our square footage growth target for the
year, while growing our available cash by nearly $100 million. This provides us
with the flexibility to continue our growth plans, and we foresee another year
of continued profitable growth in 2003. Our management team's cost-conscious
philosophy and conservative planning positions us well in these uncertain
times."
For the year, gross margin increased to 36.4% compared to 36.0% in 2001,
primarily due to improved shrink. Higher merchandise costs were partially offset
by improvements in freight costs. Operating expenses, as a percentage of sales,
were 25.6% compared to 25.9% in 2001, primarily due to improvements in payroll
and related costs, which were somewhat offset by higher depreciation expense.
Pursuant to the requirements of SFAS 142, the Company ceased amortizing goodwill
effective January 1, 2002; prior year's operating expenses included $2.0 million
of goodwill amortization. Operating margin increased to 10.9% in 2002, compared
to 10.3% in 2001.
For the fourth quarter, gross margin was 37.7% compared to 38.2% in last year's
fourth quarter, primarily due to higher merchandise costs, including freight,
and loss of leverage on occupancy costs. Operating expenses, as a percentage of
sales, improved 14 basis points to 20.6%, primarily due to improvements in
payroll and related costs, which were somewhat offset by higher depreciation
expense.
During the quarter, the Company opened its first stores in Maine and South
Dakota, bringing to 40 the number of states it serves. The Company also
completed construction of its Marietta, Oklahoma distribution center, which it
expects to begin operating in February, 2003.
As previously reported, the Company has adopted a fiscal calendar, and its new
fiscal year begins February 2, 2003. For fiscal 2003, the Company's projected
22% selling square footage growth will be supported by a $160-170 million
capital expenditure budget, excluding any new distribution centers. The Company
expects the average new store it opens in 2003 to be nearly 9,000 selling square
feet. Based on these plans, and assuming comparable-store sales remain subdued,
the Company is targeting sales and earnings growth to exceed 15% in fiscal 2003.
Beginning this year, the Company will provide a pre-recorded interim sales
update each quarter. Investors can access this information by dialing (757)
321-5TRE. The first interim update will be available the evening of Monday,
April 7, 2003, and will remain on-line until Friday, April 11, 2003.
On Thursday, January 23, 2003, Dollar Tree will host a conference call at 4:45
p.m. EST to discuss its calendar year 2002 results. The telephone number for the
call is (610) 769-8817, passcode DLTR. A recorded version of the call will be
available through midnight Tuesday, January 28 and may be accessed by dialing
(402) 220-0194, 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, January 28.
Dollar Tree Stores, Inc. operates 2,263 stores in 40 states as of December 31,
2002. In 2002, the Company opened 318 stores, closed 30, and expanded or
relocated 111. At year-end 2002, the Company's retail selling square footage
totaled approximately 13.0 million, up 2.9 million from December 31, 2001.
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 capital expenditures, square footage, average store
size, comparable-store sales assumptions, sales and earnings growth for 2003, as
well as the date the Company expects its Oklahoma distribution center to
commence operations.
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
November 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)
December 31, December 31,
2002 2001
---- ----
Cash and cash equivalents $ 292,192 $ 236,653
Short-term investments 43,780 -
Merchandise inventories (a) 357,665 296,473
Other current assets 22,503 27,653
---------- ----------
Total current assets 716,140 560,779
---------- ----------
Property and equipment, net 344,322 279,011
Goodwill, net 38,358 38,358
Other assets, net 17,557 23,900
---------- ----------
Total assets $ 1,116,377 $ 902,048
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Current portion of long-term debt $ 25,000 $ 25,000
Accounts payable 59,451 58,091
Income taxes payable 28,041 38,848
Other current liabilities 94,019 79,083
---------- ----------
Total current liabilities 206,511 201,022
---------- ----------
Long-term debt, excluding current portion 6,000 12,000
Other liabilities 48,462 37,290
---------- ----------
Total liabilities 260,973 250,312
---------- ----------
Shareholders' equity 855,404 651,736
---------- ----------
Total liabilities and shareholders' equity $ 1,116,377 $ 902,048
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STORE DATA:
Number of stores open at end of period 2,263 1,975
Total selling square footage (in thousands) 13,042 10,127
<FN>
Certain 2001 amounts have been reclassified for comparability with the 2002
financial statement presentation.
(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 Twelve Months Ended December 31
(Dollars in thousands, except per share data)
(Unaudited)
Fourth Quarter Year-to-Date
-------------- ------------
2002 2001 2002 2001
---- ---- ---- ----
Net sales $ 827,481 $ 714,846 $ 2,329,188 $ 1,987,271
Cost of sales (a) 515,464 441,732 1,481,232 1,271,314
Gross profit 312,017 273,114 847,956 715,957
37.7% 38.2% 36.4% 36.0%
Selling, general & administrative expenses (b) 170,435 148,253 594,035 512,092
20.6% 20.7% 25.5% 25.8%
Operating income 141,582 124,861 253,921 203,865
17.1% 17.5% 10.9% 10.3%
Interest expense, net (292) (1,311) (993) (1,891)
Other income (expense) (c) 142 251 (1,469) (1,723)
Earnings before income taxes 141,432 123,801 251,459 200,251
17.1% 17.3% 10.8% 10.1%
Income tax expense 54,452 47,713 96,812 77,170
Net earnings 86,980 76,088 154,647 123,081
10.5% 10.6% 6.6% 6.2%
Net earnings per share:
Basic $ 0.76 $ 0.68 $ 1.36 $ 1.10
Weighted average number of shares 114,152 112,309 113,632 112,238
Diluted $ 0.76 $ 0.67 $ 1.35 $ 1.09
Weighted average number of shares 114,621 113,108 114,543 112,990
<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.
Fourth quarter and year-to-date 2001 includes $0.5 million and $2.0 million of
goodwill amortization, respectively. For the three months ended December 31,
2001, diluted earnings per share would have been $0.68 and for the twelve months
ended December 31, 2001, basic and diluted earnings per share would have been
$1.11 and $1.10, respectively, 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)
Year ended Year ended
December 31, December 31,
2002 2001
---- ----
Cash flows from operating activities:
Net income $ 154,647 $ 123,081
---------- ----------
Adjustments to reconcile net income to net cash provided
by operating activities:
Depreciation and amortization 71,615 53,763
Other non-cash adjustments 30,517 893
Changes in working capital (49,902) 989
---------- ----------
Total adjustments 52,230 55,645
---------- ----------
Net cash provided by operating activities 206,877 178,726
---------- ----------
Cash flows from investing activities
Capital expenditures (136,129) (121,566)
Purchase of short-term investments (60,280) -
Proceeds from maturities of short-term investments 16,500 -
Settlement of merger-related contingencies 6,688 -
Acquisition of favorable lease rights (813) -
Proceeds from sale of property and equipment 216 98
---------- ----------
Net cash used in investing activities (173,818) (121,468)
---------- ----------
Cash flows from financing activities:
Repayment of long-term debt and facility fees (6,025) (6,239)
Principal payments under capital lease obligations (3,971) (3,562)
Proceeds from stock issued pursuant to stock-based
compensation plans 32,476 11,805
Repurchase of common stock - (3,775)
Net cash provided by (used in) financing activities ---------- ----------
22,480 (1,771)
---------- ----------
Net increase in cash and cash equivalents 55,539 55,487
Cash and cash equivalents at beginning of year 236,653 181,166
---------- ----------
Cash and cash equivalents at end of year $ 292,192 $ 236,653
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