-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, RrpPBzNtmpjuSOM4kE352M20n5kzpP0GLlrFy7AVVJkpeBETuyVYG+0ztJPz7xG7 oqEC/ph7q7Zd+D+cd4miag== 0000935703-01-000004.txt : 20010129 0000935703-01-000004.hdr.sgml : 20010129 ACCESSION NUMBER: 0000935703-01-000004 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20010123 ITEM INFORMATION: ITEM INFORMATION: FILED AS OF DATE: 20010126 FILER: COMPANY DATA: COMPANY CONFORMED NAME: DOLLAR TREE STORES INC CENTRAL INDEX KEY: 0000935703 STANDARD INDUSTRIAL CLASSIFICATION: RETAIL-VARIETY STORES [5331] IRS NUMBER: 541387365 STATE OF INCORPORATION: VA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: SEC FILE NUMBER: 000-25464 FILM NUMBER: 1516409 BUSINESS ADDRESS: STREET 1: 500 VOLVO PARKWAY STREET 2: NORFOLK COMMERCE PARK CITY: CHESAPEAKE STATE: VA ZIP: 23320 BUSINESS PHONE: 7573215000 MAIL ADDRESS: STREET 1: P.O. BOX 2500 CITY: NORFOLK STATE: VA ZIP: 23501-2500 8-K 1 0001.txt PRESS RELEASE AND CONFERENCE CALL - 2000 EARNINGS FORM 8-K SECURITIES AND EXCHANGE COMMISSION WASHINGTON D.C. 20549 CURRENT REPORT Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 Date of Report: January 26, 2001 Date of Earliest Event Reported: January 23, 2001 DOLLAR TREE STORES, INC. (Exact name of registrant as specified in its charter) COMMISSION FILE NUMBER: 0-25464 VIRGINIA 54-1387365 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 500 Volvo Parkway Chesapeake, VA 23320 (Address of principal executive offices) Registrant's telephone number, including area code: (757) 321-5000 Item 5. OTHER EVENTS. The following summarizes information distributed in a press release on January 23, 2001 and in a publicly available telephone conference call the same day. In addition, the condensed consolidated financial statement information included in the press release is attached as Exhibit 99.1. DOLLAR TREE STORES, INC. REPORTS 2000 EARNINGS PER COMMON SHARE OF $1.11, EXCLUDING MERGER-RELATED AND EXTRAORDINARY ITEMS Earnings Pro forma net earnings increased to $121.6 million in 2000 compared to $106.1 million in 1999. Earnings per common share increased to $1.08 for 2000 compared to $0.92 for 1999. Excluding merger-related and extraordinary items, pro forma net earnings increased to $125.1 million in 2000 from $106.9 million in 1999. Earnings per common share, excluding merger-related and extraordinary items, increased to $1.11 in 2000 compared to $0.92 in 1999. For the fourth quarter of 2000, net income increased to $64.7 million and earnings per common share increased to $0.57 compared to $0.54 in the fourth quarter of 1999. Sales Sales for the year increased 24.9% to $1,688.1 million in 2000 compared to $1,351.8 million in 1999. Net sales were beneficially impacted by a 5.7% increase in comparable store net sales, which includes sales at expanded or relocated stores. Sales for the fourth quarter of 2000 increased 18.3% to $599.2 million from $506.7 million for the same period in 1999. Comparable store net sales increased 2.0% for the fourth quarter. Not including the Dollar Express stores, our average ticket for all units for the year was $6.67 vs. $6.30 for 1999. Customer traffic counts decreased in the fourth quarter of 2000 as compared to the same period in 1999; however, they increased for the full year 2000. Gross Margin For the year, gross margin was 36.9% compared to 36.8% for 1999. Excluding merger-related costs, gross margin for the year was 37.0% compared to 36.8% for 1999, due primarily to lower merchandise costs partially offset by higher freight costs. 2 Gross margin for the fourth quarter increased as a percentage of net sales to 39.1% compared to 38.9% in 1999 because of a decrease in merchandise costs partially offset by increased freight costs. In addition, we had better than expected physical inventory results in the acquired Philadelphia distribution center. Operating Expenses and Other Items For the year, operating expenses, as a percentage of net sales, were 22.4% compared to 21.5% in 1999. Excluding merger-related expenses, operating expenses were 22.2% in 2000 compared to 21.5% in 1999. Operating expenses in the fourth quarter increased as a percentage of net sales to 19.0% from 17.2% for the prior year period due to the loss of leverage from lower sales, an increase in insurance accruals and non-recurring Dollar Express expenses. During the year, we recorded approximately $3.3 million of non-recurring Dollar Express expenses not otherwise included in merger-related expenses. In addition, operating expenses were impacted by loss of leverage from lower sales during the fourth quarter. Selling, general and administrative expenses of $113.9 million exceeded our previous estimate of $108 million to $110 million due primarily to a change in the estimate of our outstanding workers compensation and general liability insurance liabilities. This change resulted in an additional accrual of approximately $3.0 million in the fourth quarter. For the full year 2000, depreciation and amortization increased 0.2% as a percentage of net sales primarily as a result of accelerated depreciation related to Dollar Express's store equipment and warehouse management system. For the fourth quarter, depreciation and amortization increased 0.5% as a percentage of net sales primarily as a result of $600,000 in accelerated depreciation related to Dollar Express's warehouse management system, loss of leverage and other Dollar Express related items. Our income tax rate for the fourth quarter was 38.7% due to a higher tax rate for Dollar Express related items. We expect our tax rate to be approximately 38.5% in 2001. Capital expenditures for the year totaled approximately $95 million as follows: o $38 million for opening new stores; o $26 million for expansion or improvement of existing stores; o $7 million for our supply chain project; and o $24 million for additional infrastructure needs. Larger Stores We opened 233 new stores in 2000. Approximately one-half of the stores opened in 2000 were greater than 7,000 square feet. By comparison, in 1999, we opened 57 stores greater than 7,000 square feet. Of the 1,729 stores open at December 31, 2000, 378 are our larger stores and the remaining 1,351 are our core stores. 3 We plan to continue opening larger stores as well as our core stores. Our new core stores will generally range from 5,000 to 6,000 square feet. Our larger stores generate sales of approximately $140 to $150 per square foot. The cash return on investment for the larger stores is approximately 100% in the first year, which is only slightly below our core stores. Our core stores continue to show a cash return on investment of approximately 110%. We believe the larger stores will continue to experience a smaller percentage of their annual sales in the fourth quarter as compared to our core stores. This difference in seasonal sales patterns between the core and larger stores is due to the merchandise mix in the larger stores, which includes a larger base of basic consumer products. Dollar Express We estimate that Dollar Express was approximately $0.04 dilutive to our earnings per share in 2000, excluding merger-related items. In 2001, we will focus on merchandising the Dollar Express stores with our import mix and a continuing commitment to basic consumer products. In addition, we plan to remodel many of the Dollar Express stores and relay most of the stores to conform to the Dollar Tree floor plan. We plan to continue operating Dollar Express's Philadelphia warehouse until our new Pennsylvania distribution center begins operations in early 2002. We believe the implementation of our warehouse management system will improve merchandise flow as well as the store ordering system. Real Estate In 2001, we expect to increase our square footage by 27%-29%. For the current year, we are planning to: o open about 260 to 275 stores, with roughly 60% of those in the larger format generally ranging from 9,000 to 12,000 square feet; o expand or relocate about 100 stores; and o close 10 to 15 stores. Stores targeted for expansion or relocation are primarily our core stores in the 2,500 to 3,000 square feet range. Supply Chain / Distributions Centers In 2000, we installed a new system to track replenishment items in our distribution centers. During the first half of 2001, we will begin to test a point-of-sale system in a small number of our stores. We then plan to install POS in 300 to 500 stores within approximately twelve months after we complete our test phase. Outlook Traffic has improved in January 2001; however, it has not fully recovered to the levels that we experienced prior to the slow down in November 2000. We expect sales in calendar year 2001 to increase approximately 22%. In addition, 4 we expect our comparable store net sales increases, if any, to range from 0% to 2% in the first half of 2001, especially given the strong comparable store net sales increases in the first half of 2000. We expect comparable store net sales increases, if any, to range from 3% to 4% in the second half of the year. For the full year 2001, we expect our reported comparable store net sales increases, if any, to range from 2% to 3%. It should be noted that our expanded and relocated stores are included in our comparable store net sales calculation. Gross margins in the future will be under some pressure as we refine our mix, open more of the larger stores and absorb higher fuel costs. We do not expect to leverage our operating expenses during the first half of 2001 due to our expectation of comparable store net sales increases, if any, of 0% to 2%. A WARNING ABOUT FORWARD-LOOKING STATEMENTS: This filing 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: o our 2001 tax rate, o our store-opening, store-expansion and store-closing plans, o the return on investment and seasonality of our store formats, o the planned conversion of Dollar Express stores and the effect of warehouse management systems at the Philadelphia warehouse, o planned increases in square footage, o enhancements to our supply chain, including distribution centers, o future gross margins and leverage of operating expenses, and o our overall sales growth in 2001 and expected traffic and comparable store sales results in 2001. These forward-looking statements are subject to numerous risks and uncertainties which may affect us including: o the difficulties and uncertainties in adding and operating larger stores, with which we have less experience; o adverse weather and economic conditions, such as consumer confidence; o the seasonality of our sales and the importance of our fourth quarter operating results; o the difficulties in managing our aggressive growth plans, including opening stores on a timely basis; o possible difficulties in meeting our sales and other expansion goals and anticipated comparable store net sales increases; o possible delays, costs and other difficulties in integrating Dollar Express with our business; 5 o possible increases in merchandise costs, shipping rates, freight costs, wage levels, inflation, competition and other adverse economic factors; and o the capacity and performance of our distribution system and our ability to expand its capacity in time to support our sales growth. 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," "Management's Discussion and Analysis of Financial Condition and Results of Operations" and "Business" sections in our prospectus filed August 3, 2000 and our Annual Report on Form 10-K filed March 17, 2000 and the "Management's Discussion and Analysis of Financial Condition and Results of Operations" in our Quarterly Report on Form 10-Q filed November 14, 2000. Also, carefully review "Risk Factors" in our most recent prospectus filed November 15, 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 filing to reflect events or circumstances occurring after the date of this report or to reflect the occurrence of future events and you should not expect us to do so. Item 7. FINANCIAL STATEMENTS AND EXHIBITS (c) Exhibits Exhibit # Description 99.1 Condensed consolidated financial statement information for Dollar Tree Stores, Inc. and subsidiaries as of December 31, 2000 and 1999 and for the three months and year ended December 31, 2000 and 1999. 6 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, hereunto duly authorized. DATE: January 26, 2001 DOLLAR TREE STORES, INC. By: /s/ Frederick C. Coble -------------------------------- Frederick C. Coble Senior Vice President, Chief Financial Officer 7 EX-99.1 2 0002.txt CONDENSED CONSOLIDATED FINANCIAL STATEMENT INFO.
DOLLAR TREE STORES, INC. Condensed Consolidated Income Statements For the Three Months and Year Ended December 31 (Amounts in thousands, except per share data) Fourth Quarter Year-to-Date 2000 1999 2000 1999 ------------ ------------ ------------ ------------ (unaudited) (unaudited) (unaudited) Net sales $ 599,173 $ 506,713 $ 1,688,105 $ 1,351,820 Cost of sales 365,092 309,798 1,063,416 854,124 Merger-related costs(a) - - 1,100 443 Gross profit 234,081 196,915 623,589 497,253 39.1% 38.9% 36.9% 36.8% Operating expenses 113,935 87,347 375,316 290,241 19.0% 17.2% 22.2% 21.5% Merger-related expenses(a) - - 3,266 607 Depreciation/amortization 13,084 8,576 41,971 30,809 Operating income 107,062 100,992 203,036 175,596 17.9% 19.9% 12.0% 13.0% Interest expense, net 1,634 1,730 3,551 5,686 Earnings before income taxes 105,428 99,262 199,485 169,910 17.6% 19.6% 11.8% 12.6% Income tax expense(b) 40,756 38,384 77,476 63,838 Pro forma net earnings before extraordinary item(b) 64,672 60,878 122,009 106,072 Loss on debt extinguishment, net of tax benefit of $242 - - 387 - Pro forma net earnings(b) 64,672 60,878 121,622 106,072 10.8% 12.0% 7.2% 7.8% Pro forma net earnings available to common shareholders(c) 64,672 58,935 120,209 99,045 10.8% 11.6% 7.1% 7.3% Pro forma net earnings per common share:(b) Basic $ 0.59 $ 0.60 $ 1.16 $ 1.01 Weighted average number of shares 109,128 98,748 103,972 98,435 Diluted $ 0.57 $ 0.54 $ 1.08 $ 0.92 Weighted average number of shares 113,344 108,338 111,809 107,960 (a) Merger related costs and expenses, net of taxes, were $3,134 for the full year 2000 and $792 for the full year 1999. (b) Amounts include a pro forma adjustment for C-corporation income taxes relating to ONLY $ONE of $505 for year-to-date 1999. (c) Amounts include accretion of the 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 $1,943 for the quarter ended December 31 1999, and $1,413 and $7,027 for the years ended December 31, 2000 and 1999, respectively.
DOLLAR TREE STORES, INC. Condensed Consolidated Balance Sheets (Dollars in thousands) December 31, December 31, 2000 1999 ------------ ------------ (unaudited) Cash and cash equivalents $ 181,553 $ 181,587 Merchandise inventories 258,687 192,838 Other current assets 37,661 20,681 ------- ------- Total current assets 477,901 395,106 ------- ------- Property and equipment, net 211,632 157,368 Goodwill, net 40,376 42,394 Other assets, net 16,950 16,365 ------- ------- Total assets $ 746,859 $ 611,233 ======= ======= Accounts payable $ 75,404 $ 71,750 Income taxes payable 23,448 29,193 Other current liabilities 50,453 39,386 Current portion of long-term debt 25,000 28,070 ------- ------- Total current liabilities 174,305 168,399 ------- ------- Long-term debt, excluding current portion 18,000 49,138 Other liabilities 35,896 42,287 ------- ------- Total liabilities 228,201 259,824 ------- ------- Cumulative convertible preferred stock - 35,171 ------- ------- Shareholders' equity 518,658 316,238 ------- ------- Total liabilities and shareholders' equity $ 746,859 $ 611,233 ======= ======= STORE DATA: Number of stores open at end of period 1,729 1,507 Total gross square footage (in thousands) 9,832 7,638
DOLLAR TREE STORES, INC. Condensed Consolidated Statements of Cash Flows (Amounts in thousands) Year ended Year ended December 31, December 31, 2000 1999 ------------ ------------ (unaudited) Cash flows from operating activities: Net income $ 121,622 $ 106,577 ------- ------- Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 41,971 30,809 Other non-cash adjustments (1,856) 3,943 Changes in working capital (54,085) (12,774) ------- ------- Total adjustments (13,970) 21,978 ------- ------- Net cash provided by operating activities 107,652 128,555 ------- ------- Cash flows from investing activities: Acquisition, net of cash acquired - (320) Capital expenditures (95,038) (55,013) Proceeds from sale of property and equipment 271 172 ------- ------- Net cash used in investing activities (94,767) (55,161) ------- ------- Cash flows from financing activities: Distributions paid - (60,934) Net change in long-term debt (34,208) 23,034 Net change in capital lease obligations (3,274) 20,454 Proceeds from issuance of preferred stock and common stock put warrants - 32,156 Proceeds from stock issued pursuant to stock-based compensation plans 24,563 8,769 ------- ------- Net cash provided by (used in) financing activities (12,919) 23,479 ------- ------- Net increase (decrease) in cash and cash equivalents (34) 96,873 Cash and cash equivalents at beginning of period 181,587 84,714 ------- ------- Cash and cash equivalents at end of period $ 181,553 $ 181,587 ======= =======
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