EX-99.1 2 0002.txt THIRD QUARTER EARNINGS RELEASE PRESS RELEASE DOLLAR TREE STORES, INC. REPORTS 37% INCREASE IN THIRD QUARTER NET EARNINGS CHESAPEAKE, Va. - October 24, 2000 -- Dollar Tree Stores, Inc. (Nasdaq: DLTR), the nation's leading $1.00 price point retailer, reported that third quarter net earnings increased 36.6% to $21.9 million in 2000 compared to $16.0 million in 1999. Earnings per share increased to $0.19 for the third quarter of 2000 compared to $0.11 for the third quarter of 1999. Sales for the quarter increased 26.2% to $377.3 million compared to sales of $298.9 million for the third quarter of 1999. As previously reported, net sales were beneficially impacted by a 5.3% increase in comparable store net sales. For the quarter, gross margin was 36.8% compared to 35.9% for the third quarter of 1999. As a percentage of net sales, merchandise costs decreased because of improved pricing from vendors and a higher than planned mix of import merchandise during third quarter 2000 compared to the same period in the prior year. Gross margin was also impacted by an increase in freight costs and a slight increase in shrink. These factors were partially offset by slight leverage of occupancy and distribution costs resulting from increased comparable store net sales. For the quarter, operating expenses, as a percentage of net sales, were 24.4% compared to 23.9% in the third quarter of 1999. The increase in operating expenses was primarily due to expenses related to the integration of Dollar Express. Year-to-date net sales, pro forma net earnings available to common shareholders and pro forma net earnings per common share were $1,088.9 million, $55.5 million, and $0.50 for 2000 compared to $845.1 million, $40.1 million and $0.37 for 1999. Excluding merger related costs and expenses, year-to-date net earnings per common share were $0.53 in 2000 compared to $0.38 in 1999. Macon Brock, President and CEO, stated "We had a busy third quarter, transitioning to new operating procedures at Dollar Express and training their personnel to the Dollar Tree philosophy. The success of our broader merchandise mix shows in the quarter's sales trends. Our seasonal merchandise is in place and we are looking forward to the upcoming holiday selling season." On Tuesday, October 24, 2000, Dollar Tree will host a conference call at 4:45 p.m. EDT to discuss its quarterly earnings results. The telephone number for the call is (312) 470-7151 (password: DLTR). A recorded version of the call will be available for 48 hours after the call by dialing (402) 998-1227. Dollar Tree Stores, Inc. is the nation's leading $1.00 discount variety store chain. As of September 30, 2000, Dollar Tree operates 1,677 stores in 36 states, opening 49 new stores, expanding 31 stores and closing 6 stores in the third quarter. This news release contains "forward-looking statements", as that term is used in the Private Securities Litigation Reform Act of 1995, regarding results of operations and plans for future periods. Such forward-looking statements are subject to certain risks and uncertainties that may cause the Company's actual results to differ materially from anticipated results or other expectations described in such statements. Additionally, forward-looking statements are subject to, but not limited to, the risks indicated in the Company's filings with the Securities and Exchange Commission. CONTACT: Dollar Tree Stores, Inc., Chesapeake, VA Eric Coble or Erica Robb, 757/321-5000 http://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 2000 1999 2000 1999 ---- ---- ---- ---- Net sales $377,318 $298,868 $1,088,932 $845,107 Cost of sales 238,328 191,546 698,324 544,326 Merger-related costs - - 1,100 443 Gross profit 138,990 107,322 389,508 300,338 36.8% 35.9% 35.8% 35.5% Operating expenses 92,023 71,523 261,381 202,894 24.4% 23.9% 24.0% 24.0% Merger-related expenses - - 3,266 607 Depreciation/amortization 10,638 7,879 28,887 22,233 Operating income 36,329 27,920 95,974 74,604 9.6% 9.3% 8.8% 8.8% Interest expense, net 799 1,767 1,917 3,956 Earnings before income taxes 35,529 26,153 94,056 70,648 9.4% 8.8% 8.6% 8.4% Income tax expense* 13,680 10,168 36,720 25,454 Pro forma net earnings before extraordinary item* 21,850 15,985 57,337 45,194 Loss on debt extinguishment, net of tax benefit of $242 - - 387 - Pro forma net earnings* 21,850 15,985 56,950 45,194 5.8% 5.3% 5.2% 5.3% Pro forma net earnings available to common shareholders** 21,850 12,083 55,537 40,110 5.8% 4.0% 5.1% 4.7% Pro forma net earnings per common share:* Basic $ 0.21 $ 0.12 $ 0.54 $ 0.41 Weighted average number of shares 106,115 98,604 102,254 98,330 Diluted $ 0.19 $ 0.11 $ 0.50 $ 0.37 Weighted average number of shares 113,499 108,078 111,298 107,834 * Amounts include a pro forma adjustment for C-corporation income taxes relating to ONLY $ONE of $505 for year-to-date 1999. ** Amounts include accretion of the Dollar Express cumulative preferred stock to redemption value, accrued preferred stock dividends and amortization of the discount on preferred stock. The amounts deducted from pro forma net earnings available to common shareholders are $3,902 for the quarter ended September 30, 1999, and $1,413 and $5,084 for the nine-months ended September 30, 2000 and 1999, respectively. DOLLAR TREE STORES, INC. Condensed Consolidated Balance Sheets (Dollars in thousands) Sept. 30, Dec. 31, Sept. 30, 2000 1999 1999 ---- ---- ---- (Unaudited) (Unaudited) Cash and cash equivalents $ 23,954 $181,587 $ 22,080 Merchandise inventories 350,055 192,838 276,240 Other current assets 33,682 20,681 13,993 ------- ------- ------- Total current assets 407,691 395,106 312,313 ------- ------- ------- Property and equipment, net 201,100 157,368 151,607 Goodwill, net 40,881 42,394 41,106 Other assets, net 16,514 16,365 20,184 ------- ------- ------- Total assets $666,186 $611,233 $525,210 ======= ======= ======= Accounts payable $ 89,463 $ 73,878 $ 82,821 Income taxes payable 201 29,193 -- Other current liabilities 30,464 38,132 27,292 Current portion of long-term debt 25,000 28,070 25,350 ------- ------- ------- Total current liabilities 145,128 169,273 135,463 ------- ------- ------- Long-term debt, excluding current portion 34,900 49,138 61,022 Other liabilities 34,256 41,413 41,364 ------- ------- ------- Total liabilities 214,284 259,824 237,849 ------- ------- ------- Preferred stock of Dollar Express -- 35,171 33,228 Shareholders' equity 451,902 316,238 254,133 ------- ------- ------- Total liabilities and shareholders' equity $666,186 $611,233 $525,210 ======= ======= ======= STORE DATA: Number of stores open at end of period 1,677 1,507 1,461 Total gross square footage (in thousands) 9,295 7,638 7,274
DOLLAR TREE STORES, INC. Condensed Consolidated Statements of Cash Flows (Amounts in thousands) Nine-months Nine-months ended Year ended ended Sept. 30, Dec. 31, Sept. 30, 2000 1999 1999 ---- ---- ---- (Unaudited) (Unaudited) Cash flows from operating activities: Net income $ 56,950 $ 106,577 $ 45,699 -------- -------- -------- Adjustments to reconcile net income to net cash used in operating activities: Depreciation and amortization 28,887 30,809 22,233 Other non-cash adjustments 13,727 3,943 7,455 Changes in working capital (189,347) (12,774) (128,640) -------- -------- -------- Total adjustments (146,733) 21,978 (98,952) -------- -------- -------- Net cash provided by (used in) operating activities (89,783) 128,555 (53,253) -------- -------- -------- Cash flows from investing activities: Acquisition, net of cash acquired -- (320) -- Capital expenditures (71,618) (55,013) (41,148) Proceeds from sale of property and equipment 199 172 99 -------- -------- -------- Net cash used in investing activities (71,419) (55,161) (41,049) -------- -------- -------- Cash flows from financing activities: Distributions paid -- (60,934) (60,934) Net change in long-term debt (17,308) 23,034 32,639 Net change in capital leases (2,371) 20,454 21,223 Proceeds from issuance of preferred stock and common stock put warrants of Dollar Express -- 32,156 32,156 Proceeds from stock issued pursuant to stock-based compensation plans 23,248 8,769 6,584 -------- -------- -------- Net cash provided by financing activities 3,569 23,479 31,668 -------- -------- -------- Net increase (decrease) in cash and cash equivalent (157,633) 96,873 (62,634) Cash and cash equivalents at beginning of period 181,587 84,714 84,714 -------- -------- -------- Cash and cash equivalents at end of period $ 23,954 $ 181,587 $ 22,080 ======== ======== ========