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| Dollar Tree Stores, Inc. Reports Record Second Quarter Earnings Per Share Of $0.25
CHESAPEAKE, Va.--(BUSINESS WIRE)--Aug. 26, 2003--Dollar Tree Stores, Inc. (NASDAQ: DLTR), the nation's leading operator of single-price point dollar stores, reported second quarter 2003 earnings per share of $0.25, a 19% increase compared to $0.21 in last year's fiscal second quarter. "Our outstanding merchandise and focus on brand-name products, along with great store-level execution helped us achieve strong sales and earnings growth for the quarter," said CEO Macon Brock, Jr. "Sales exceeded our forecast in part because of the growing base of larger-size stores which carry a wider assortment of high-quality merchandise. In addition, improving consumer confidence and economic conditions helped drive additional foot traffic to our stores." BizVantage – The NOW newsletters, realtime with your content - for business, investment or technology. As previously reported, sales for the fiscal second quarter were $626.0 million, exceeding the Company's original guidance of $575-590 million. Total sales increased 22.2% quarter-over-quarter, and comparable-store sales rose 5.1%. On June 29, 2003, Dollar Tree acquired Greenbacks, a Salt Lake City-based dollar-store chain. Greenbacks contributed $12 million in second-quarter sales. "Our integration of Greenbacks is proceeding on-plan," Brock said, "and we recently began operating these stores on Sundays. We are on-track to achieve our sales plan, and we are excited about the opportunities we see to improve these stores' margin." For the second quarter, gross margin was 35.3% compared to 35.7% in last year's second quarter, reflecting a greater mix of basic merchandise, consolidation of our synthetic leases, and the inclusion of Greenbacks' lower-margin sales for the final five weeks of the quarter. Partially offsetting these effects, strong comparable-store sales provided leverage on occupancy and distribution costs. Selling, general and administrative expenses, as a percentage of sales, were 27.7% in the second quarter of 2003, equal to the same quarter last year. This performance, in-line with previous expectations, was driven primarily by improvements in payroll and related costs, offset by higher depreciation expense, due to investments in stores, infrastructure, and point-of-sale. Effective January 1, 2003, the Company adopted FIN 46 - Consolidation of Variable Interest Entities, which consolidated four distribution centers on the Company's financial statements. These distribution centers previously were accounted for as operating leases. As a result of adopting FIN 46, this quarter's results include approximately $2 million of additional pre-tax expense. Sales for the first half of 2003 totaled $1.24 billion, a 21.5% increase from the first half of 2002. Those results reflect a comparable-store sales increase of 3.9%. First half earnings per share were $0.54, a 17% increase compared to $0.46 in last year's first half. For the third quarter, the Company is planning sales to be in the range of $665-$680 million, with the mid-point of that range equating to slightly positive same-store sales. This year's fiscal third quarter contains 91 days, compared to 92 days in last year's third period. The Company's regular, pre-recorded sales update will be available Tuesday, October 7, 2003, by 5:00 p.m. EDT, and will remain on-line through Friday, October 11, 2003. Interested parties can access the Company's update by dialing (757) 321-5TRE. Entering the year, the Company's guidance was for sales and earnings growth of at least 15%. Based on above-plan first-half results and the addition of Greenbacks, the Company is raising its guidance. The Company now expects sales and earnings growth to be at least 19% for fiscal 2003. This guidance is predicated on slightly positive comparable-store sales increases, and accretion from Greenbacks of 2-3 cents per share in the second half of fiscal 2003. The Company will host a conference call today, August 26, 2003, at 4:45p.m. EDT to discuss its second-quarter results. The telephone number for the call is 610-769-8817, please reference Dollar Tree Stores. A recorded version of the call will be available until midnight Friday, August 29, and may be accessed by dialing 402-998-1125, reference Dollar Tree Stores. A web cast 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 Friday, August 29. Any financial and statistical information related to the call can be accessed through the "About Us / News Releases" section of Dollar Tree's website. The Company operated 2,468 stores in 47 states as of August 2, 2003. During the second fiscal quarter of 2003, the Company opened 61 stores, closed 12 stores, added 100 Greenbacks stores, and expanded or relocated 35 stores. The Company's retail selling square footage totaled approximately 15.7 million at August 2, 2003, a 13% increase from 13.9 million at May 3, 2003 and a 36% increase compared to 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 our expectations for third-quarter total sales and comparable-store sales, full-year sales and earnings growth, second-half comparable-store sales, and earnings accretion from Greenbacks. 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 28, 2003, our Quarterly Report on Form 10-Q filed June 10, 2003, and in our Current Report on Form 8-K filed May 20, 2003. 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
(Dollars in thousands, except per share data)
(Unaudited)
Second Quarter ended Year-to-Date
------------------- -----------------------
August 2, July 31, August 2, July 31,
2003 2002 2003 2002
--------- --------- ----------- -----------
Net sales $626,028 $512,444 $1,241,596 $1,022,112
Cost of sales 404,921 329,321 802,701 654,480
Gross profit 221,107 183,123 438,895 367,632
35.3% 35.7% 35.3% 36.0%
Selling, general &
administrative expenses 173,507 141,883 336,804 280,676
27.7% 27.7% 27.1% 27.5%
Operating income 47,600 41,240 102,091 86,956
7.6% 8.0% 8.2% 8.5%
Interest expense, net (1,439) (269) (2,687) (433)
Other income 665 (929) 748 (819)
Earnings before income
taxes 46,826 40,042 100,152 85,704
7.5% 7.8% 8.1% 8.4%
Income tax expense 18,027 15,416 38,558 32,996
Net earnings 28,799 24,626 61,594 52,708
4.6% 4.8% 5.0% 5.2%
Net earnings per share:
Basic $ 0.25 $ 0.22 $ 0.54 $ 0.46
Weighted average number
of shares 114,500 113,922 114,379 113,361
Diluted $ 0.25 $ 0.21 $ 0.54 $ 0.46
Weighted average number
of shares 115,599 115,139 115,065 114,587
DOLLAR TREE STORES, INC.
Condensed Consolidated Balance Sheets
(Dollars in thousands)
(Unaudited)
August 2, February 1, July 31,
2003 2003 2002
---------- ---------- ----------
Cash and cash equivalents $ 100,348 $ 237,302 $137,408
Short-term investments - 63,525 16,500
Merchandise inventories 513,277 438,439 435,015
Other current assets 36,067 30,116 29,513
---------- ---------- --------
Total current assets 649,692 769,382 618,436
---------- ---------- --------
Property and equipment, net 540,134 477,947 310,781
Intangibles, net 124,825 41,351 41,753
Other assets, net 16,347 15,559 22,258
---------- ---------- --------
Total assets $1,330,998 $1,304,239 $993,228
========== ========== ========
Current portion of long-term debt $ 25,975 $ 25,000 $ 25,000
Accounts payable 108,324 137,668 104,602
Other current liabilities 76,832 80,844 66,634
Income taxes payable - 23,548 -
---------- ---------- --------
Total current liabilities 211,131 267,060 196,236
---------- ---------- --------
Long-term debt, excluding current
portion 142,422 146,628 6,000
Other liabilities 57,553 44,732 39,752
---------- ---------- --------
Total liabilities 411,106 458,420 241,988
---------- ---------- --------
Shareholders' equity 919,892 845,819 751,240
---------- ---------- --------
Total liabilities and shareholders'
equity $1,330,998 $1,304,239 $993,228
========== ========== ========
STORE DATA:
Number of stores open at end of period 2,468 2,272 2,114
Total selling square footage (in
thousands) 15,657 13,237 11,547
DOLLAR TREE STORES, INC.
Condensed Consolidated Statements of Cash Flows
(Dollars in thousands)
(Unaudited)
Year-to-Date
----------------------
August 2, July 31,
2003 2002
-------- --------
Cash flows from operating activities:
Net income $ 61,594 $ 52,708
-------- --------
Adjustments to reconcile net income to
net cash provided by (used in)
operating activities:
Depreciation and amortization 47,938 34,487
Other non-cash adjustments 14,601 11,734
Changes in working capital (121,029) (120,630)
-------- --------
Total adjustments (58,490) (74,409)
-------- --------
Net cash provided by (used in)
operating activities 3,104 (21,701)
-------- --------
Cash flows from investing activities:
Capital expenditures (99,170) (62,191)
Purchase of Greenbacks, Inc., net of
cash acquired of $1,248 (99,560) -
Purchase of short-term investments (30,360) (16,500)
Proceeds from maturities of short-term
investments 93,885 -
Settlement of merger-related
contingencies - 75
Acquisition of favorable lease rights - (813)
Proceeds from sale of property and
equipment 1 223
-------- --------
Net cash used in investing
activities (135,204) (79,206)
-------- --------
Cash flows from financing activities:
Repayment of long-term debt and facility
fees (10,838) (6,025)
Principal payments under capital lease
obligations (3,927) (1,897)
Proceeds from stock issued pursuant to
stock-based compensation plans 9,911 28,160
-------- --------
Net cash provided by (used in)
financing activities (4,854) 20,238
-------- --------
Net decrease in cash and cash equivalents (136,954) (80,669)
Cash and cash equivalents at beginning of year 237,302 218,077
-------- --------
Cash and cash equivalents at end of year $100,348 $137,408
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