EX-99.1 CHARTER 2 ex99_1.htm EX 99.1, DOLLAR TREE STORES, INC. 3Q-05 EARNINGS RELEASE Ex 99.1, Dollar Tree Stores, Inc. 3Q-05 Earnings Release


DOLLAR TREE STORES, INC.
REPORTS THIRD QUARTER NET EARNINGS PER DILUTED SHARE OF $0.29

CHESAPEAKE, Va. - November 22, 2005 - Dollar Tree Stores, Inc. (NASDAQ: DLTR), the nation's leading operator of single-price point dollar stores, reported net earnings per diluted share of $0.29, for the fiscal third quarter ended October 29, 2005. As previously reported, sales for the quarter were $796.8 million, a 10.1% increase compared to $724.0 million, for the same period, one year ago. Comparable store sales declined 1.0% for the quarter.

“We continued to demonstrate good expense control and inventory management in the third quarter,”President and CEO Bob Sasser said. “The productivity of our new, 2005 stores is improved over last year’s class and, while comparable store sales growth continues to be our challenge, we believe our initiatives to expand tender types have contributed to an increased average ticket, offsetting much of the impact of lower traffic. Further, our stores are well positioned for the Holiday season.”

For the third quarter, gross margin was 34.7%, compared to 35.7% in last year’s third quarter. The decline was driven primarily by a higher mix of lower margin consumer products and the loss of leverage on occupancy costs associated with negative comparable store sales.

Selling, general and administrative expenses, as a percentage of sales, were 28.1% in the third quarter of 2005, compared to 28.3% in the same quarter last year. The improvement in rate reflects the Company’s continued focus on expense control, which succeeded in offsetting increased utility costs and charges for the hurricane damages sustained in the third quarter 2005.

Operating margin in this year’s third quarter was 6.5%, versus 7.4% for the same period in 2004.

During the third quarter of 2005, the Company repurchased 2.2 million shares of its common stock, for approximately $50 million, which brings the year-to-date total to $180.4 million of funds used to repurchase common stock. On March 18, 2005, the Company’s Board of Directors authorized a new $300 million share repurchase program. The Company has approximately $173 million authorization remaining under this program.

The Company also reported that as of today, nine of its locations remain closed because of the Hurricanes Katrina and Rita. The Company expects to reopen three of the nine stores in the near future, permanently close five, and relocate one store.

The Company estimates sales for the fourth quarter of 2005 to be in the range of $1.035 billion - $1.065 billion. Based upon this sales forecast, diluted earnings per share are estimated to be in the range of $0.74 to $0.80.

Full year sales are now forecasted to be in the range of $3.350 billion - $3.380 billion. Full year diluted earnings per share are expected to be in the range of $1.53 - $1.59.
 
On Tuesday, November 22, 2005, the Company will host a conference call to discuss its earnings results at 9:00 a.m EST. The telephone number for the call is 703-639-1307. A recorded version of the call will be available until midnight Thursday, December 1, and may be accessed by dialing 703-925-2533, and the access code is 799890. The call will be webcast via Dollar Tree's website, www.DollarTree.com/medialist.cfm, as well as at Vcall’s website, www.Vcall.com, and will remain on-line until midnight Thursday, December 1. Any financial and statistical information related to the call can be accessed through the “Investor Relations / SEC Filings / Non-GAAP Measures” section of Dollar Tree’s website.
 
The Company’s regular, pre-recorded business update will be available Thursday, January 5, 2006, by 5:00 p.m. EST, and will remain on-line through Monday, January 9, 2006. Interested parties can access the Company’s update by dialing (757) 321-5873. 
 
As of October 29, 2005, Dollar Tree operated 2,899 stores in 48 states. During the third quarter, Dollar Tree opened 64 stores, closed 21 stores, and expanded or relocated 21 stores. The Company’s retail selling square footage totaled approximately 22.7 million at October 29, 2005, a 16.0% 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, forecast, or estimate. For example, our forward-looking statements include statements regarding our expectations for stock repurchases, hurricane recovery, sales initiatives, fourth -quarter sales and earnings per share, as well as full year sales and earnings per share. 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 April 14, 2005 and the “Management’s Discussion and Analysis of Financial Condition and Results of Operations” section of our Quarterly Report on Form 10-Q filed September 8, 2005. 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
 
Timothy J. Reid, 757-321-5284
 
www.DollarTree.com
 
 
DOLLAR TREE STORES, INC.
Condensed Consolidated Income Statements
(Dollars in thousands, except per share data)
                   
                   
   
Third Quarter ended
  
Year-to-Date
  
   
Oct. 29,
  
Oct 30,
  
Oct. 29,
  
Oct 30,
  
   
2005
  
2004
  
2005
  
2004
  
                   
Net sales
  
$
796,787
  
$
723,967
  
$
2,314,907
  
$
2,138,531
  
                           
Cost of sales
   
520,523
   
465,568
   
1,522,913
   
1,376,723
 
                           
Gross profit
    
276,264
   
258,399
   
791,994
   
761,808
 
     
34.7
%
  
35.7
%
  
34.2
%
  
35.6
%
                           
Selling, general & administrative expenses
    
224,144
   
204,810
   
645,216
   
600,476
 
     
28.1
%
  
28.3
%
  
27.9
%
  
28.1
%
                           
Operating income
    
52,120
   
53,589
   
146,778
   
161,332
 
     
6.5
%
  
7.4
%
  
6.3
%
  
7.5
%
                           
Interest expense, net
    
(2,336
)
  
(1,539
)
  
(6,943
)
  
(4,852
)
Other income (expense)
    
239
   
(223
)
  
710
   
688
 
                           
Income before income taxes
    
50,023
   
51,827
   
140,545
   
157,168
 
     
6.3
%
  
7.2
%
  
6.1
%
  
7.3
%
                           
Income tax expense
    
18,926
   
19,973
   
53,126
   
60,572
 
                           
Net income
    
31,097
   
31,854
   
87,419
   
96,596
 
     
3.9
%
  
4.4
%
  
3.8
%
  
4.5
%
                           
Net earnings per share:
                          
Basic
  
$
0.29
  
$
0.28
  
$
0.80
  
$
0.85
  
Weighted average number of shares
    
107,274
   
112,890
   
108,942
   
113,411
 
                           
Diluted
  
$
0.29
  
$
0.28
  
$
0.80
  
$
0.85
  
Weighted average number of shares
    
107,639
   
113,373
   
109,371
   
114,104
 
 
DOLLAR TREE STORES, INC.
Condensed Consolidated Balance Sheets
(Dollars in thousands)
               
   
Oct. 29,
  
Jan. 29,
  
Oct. 30,
 
   
2005
  
2005
  
2004
  
               
Cash and cash equivalents
  
$
78,512
  
$
106,532
  
$
87,844
  
Short-term investments
    
51,255
   
211,275
   
10,000
 
Merchandise inventories
    
750,346
   
615,483
   
775,292
 
Other current assets
    
36,232
   
36,597
   
45,276
 
Total current assets
    
916,345
   
969,887
   
918,412
 
                     
Property and equipment, net
    
693,992
   
685,386
   
684,607
 
Intangibles, net
    
130,802
   
129,032
   
124,590
 
Other assets, net
    
28,032
   
8,367
   
8,455
 
                     
Total assets
  
$
1,769,171
  
$
1,792,672
  
$
1,736,064
  
                     
                     
Current portion of long-term debt
  
$
19,000
    
19,000
 
$
19,000
  
Accounts payable
    
211,433
   
124,195
   
173,856
 
Other current liabilities
    
107,635
   
117,491
   
115,960
 
Income taxes payable
    
15,964
   
33,669
   
6,029
 
Total current liabilities
    
354,032
   
294,355
   
314,845
 
                     
Long-term debt, excluding current portion
    
250,000
   
250,000
   
250,000
 
Other liabilities
    
84,354
   
84,105
   
94,854
 
                     
Total liabilities
    
688,386
   
628,460
   
659,699
 
                     
Shareholders' equity
    
1,080,785
   
1,164,212
   
1,076,365
 
                     
Total liabilities and shareholders' equity
  
$
1,769,171
  
$
1,792,672
  
$
1,736,064
  
                     
STORE DATA:
                    
Number of stores open at end of period
    
2,899
   
2,735
   
2,674
 
Total selling square footage (in thousands)
    
22,746
   
20,444
   
19,608
 
 

DOLLAR TREE STORES, INC.
Condensed Consolidated Statements of Cash Flows
(Dollars in thousands)
           
   
Year-to-Date
  
   
Oct. 29,
  
Oct. 30,
  
   
2005
  
2004
  
           
Cash flows from operating activities:
              
Net income
  
$
87,419
  
$
96,596
  
Adjustments to reconcile net income to net cash provided by
              
operating activities:
              
Depreciation and amortization
    
104,004
   
96,580
 
Other non-cash adjustments
    
(15,075
)
  
27,694
 
Changes in merchandise inventories
    
(134,863
)
  
(249,649
)
Other changes in working capital
    
82,571
   
48,336
 
Total adjustments 
    
36,637
   
(77,039
)
 Net cash provided by operating activities
    
124,056
   
19,557
 
               
Cash flows from investing activities:
              
Capital expenditures
    
(114,235
)
  
(147,949
)
Purchase of short-term investments
    
(811,720
)
  
(112,500
)
Proceeds from maturities of short-term investments
    
971,740
   
186,995
 
Restricted investments
    
(15,280
)
  
-
 
Acquisition of favorable lease rights
    
(3,977
)
  
(1,925
)
 Net cash provided by (used in) investing activities
    
26,528
   
(75,379
)
               
Cash flows from financing activities:
              
Proceeds from long-term debt, net of facility fees of $1,094
    
-
   
248,906
 
Repayment of long-term debt and facility fees
    
-
   
(148,568
)
Principal payments under capital lease obligations
    
(5,312
)
  
(3,537
)
Proceeds from stock issued pursuant to stock-based
              
compensation plans
    
7,106
   
11,286
 
Payments for share repurchases
    
(180,398
)
  
(48,611
)
 Net cash provided by (used in) financing activities
    
(178,604
)
  
59,476
 
Net increase (decrease) in cash and cash equivalents
    
(28,020
)
  
3,654
 
Cash and cash equivalents at beginning of period
    
106,532
   
84,190
 
Cash and cash equivalents at end of period
  
$
78,512
  
$
87,844