8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON D.C. 20549

FORM 8-K

CURRENT REPORT PURSUANT

TO SECTION 13 OR 15(D) OF THE

SECURITIES EXCHANGE ACT OF 1934

Date of Report (Date of earliest event reported): August 25, 2004

DOLLAR TREE STORES, INC.

(Exact name of registrant as specified in its charter)

VIRGINIA

(State or Other Jurisdiction of Incorporation)

0-25464	54-1387365
(Commission File Number)	(I.R.S. Employer Identification No.)

500 Volvo Parkway

Chesapeake, VA 23320

(Address of Principal Executive Offices and Zip Code)

(757) 321-5000

(Registrant’s Telephone Number, Including Area Code)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

¨ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

¨ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

¨ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

¨ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 2.02. Results of Operations and Financial Condition.

Today, August 25, 2004, Dollar Tree Stores, Inc. issued a press release reporting its fiscal second quarter earnings results and announcing that it will hold a publicly available telephone conference call to discuss these results. A copy of the press release is attached to this Form 8-K as Exhibit 99.1 and is incorporated herein by this reference.

The information contained in this item is being furnished to the Securities and Exchange Commission. Such information shall not be deemed “filed” for purposes of Section 18 of the Securities and Exchange Act of 1934 or otherwise subject to the liabilities of that Section. The information shall not be deemed incorporated by reference into any registration statement or other document filed pursuant to the Securities Act of 1933, except as expressly set forth by specific reference in such filing.

Item 7.01. Regulation FD Disclosure.

The information (including disclaimer) presented under Item 2.02 is incorporated by reference into this Item 7.01.

Item 9.01. Financial Statements and Exhibits.

(c) Exhibits.

99.1 Press release dated August 25, 2004 issued by Dollar Tree Stores, Inc.

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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: August 25, 2004

DOLLAR TREE STORES, INC.
By:	/s/ Kent A. Kleeberger
	Kent A. Kleeberger
	Chief Financial Officer

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EXHIBITS

Exhibit 99.1- Press release dated August 25, 2004 issued by Dollar Tree Stores, Inc.

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EX-99.1

Exhibit 99.1

PRESS RELEASE

DOLLAR TREE STORES, INC.

REPORTS SECOND QUARTER EARNINGS PER DILUTED SHARE OF $0.26

CHESAPEAKE, Va. – August 25, 2004 – Dollar Tree Stores, Inc. (NASDAQ: DLTR), the nation’s leading operator of single-price point dollar stores, reported second-quarter earnings per diluted share of $0.26 for the period ended July 31, 2004. As previously reported, sales for the quarter were $704.2 million, a 12.5% year-over-year increase.

“I am pleased with our gross margin performance and our ability to manage store expenses,” President and CEO Bob Sasser said. “Against our toughest quarterly sales comparison, and in a challenging economic environment for our middle-income customers, our store and merchandise teams have positioned us well for the all-important second-half of the year.”

Gross margin for the second quarter was 35.3%, equal to last year’s second quarter. Improvement in net merchandise margin was offset by the deleveraging of occupancy costs. Selling, general and administrative expenses, as a percentage of sales, were 28.3%, compared to 27.7% in the same quarter last year. As previously announced, SG&A expenses include a $1.1 million lease loss charge associated with the closure and replacement of the Company’s Woodridge, Illinois distribution center. Depreciation expense, as a percentage of sales, increased 0.37% compared to last year’s second quarter, due to investments in stores, supply-chain technology and continued point-of-sale conversions.

Sales for the first half of fiscal 2004 total $1,414.6 million, a 13.9% increase compared to $1,241.6 million in the comparable year-ago period. Earnings per diluted share for the first half of fiscal 2004 are $0.57, which compares to $0.54 in last year’s first half.

As previously announced, the Company estimates sales for the third quarter to be in the range of $730-$750 million, based on square footage growth of approximately 20% and comparable-store sales growth of flat to slightly positive. For the full year, the Company estimates sales to be in the range of $3.15-$3.2 billion, based on square footage growth of approximately 20% and comparable-store sales growth of flat to slightly positive. The Company now expects fiscal year 2004 earnings per diluted share to be in the range of $1.65-$1.73.

Dollar Tree celebrated several significant milestones during the second quarter. In June, the Company completed the build-out of its national distribution network, with the opening of its state-of-the-art distribution center in Joliet, Illinois. In July, the Company opened its first store in North Dakota, becoming the first and only dollar store chain with a true national presence in all 48 contiguous states.

During the second quarter of 2004, the Company repurchased approximately 417,000 shares of its common stock under a $200 million authorization granted by its Board of Directors in November 2002. Through July 31, 2004, cumulative repurchases under this authorization total approximately $70 million.

On Wednesday, August 25, 2004, the Company will host a conference call to discuss its earnings results at 4:45 p.m. EDT. The telephone number for the call is 703-464-5614. A recorded version of the call will be available until midnight Monday, August 30, and may be accessed by dialing 703-925-2533; access code: 531705. 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 Monday, August 30. Any financial and statistical information related to the call can be found on Dollar Tree’s website in the “Investor Relations / SEC Filings / Non-GAAP Measures” section.

The Company’s regular, pre-recorded business update will be available Tuesday, October 5, 2004, by 5:00 p.m. EDT, and will remain on-line through Friday, October 9, 2004. Interested parties can access the Company’s update by dialing (757) 321-5TRE.

Dollar Tree operated 2,612 stores in 48 states as of July 31, 2004. During the second fiscal quarter of 2004, the Company opened 37 stores, closed 4 stores, and expanded or relocated 29 stores. The Company’s retail selling square footage totaled approximately 18.7 million at July 31, 2004, a 19% increase compared to a year ago. The Company also operates a coast-to-coast logistics network of nine distribution centers. Dollar Tree is a member of the NASDAQ 100 index.

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 third-quarter and full-year sales, square footage growth and comparable store sales, and full-year earnings per diluted 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 13, 2004 and our Quarterly Report on Form 10-Q filed June 10, 2004. 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
	Adam Bergman, 757-321-5000
	www.DollarTree.com

DOLLAR TREE STORES, INC.

Condensed Consolidated Balance Sheets

(Dollars in thousands)

	July 31, 2004		Jan. 31, 2004		August 2, 2003
Cash and cash equivalents	$	84,513	$	168,685	$	100,348
Short-term investments		97,305		—		—
Merchandise inventories		648,680		525,643		513,277
Other current assets		32,136		28,241		35,508
Total current assets		862,634		722,569		649,133
Property and equipment, net		641,608		613,214		540,134
Intangibles, net		123,265		123,738		125,384
Other assets, net		21,763		20,785		16,347
Total assets	$	1,649,270	$	1,480,306	$	1,330,998
Current portion of long-term debt	$	19,000	$	25,000	$	25,975
Accounts payable		158,065		114,972		108,324
Other current liabilities		90,307		88,095		76,832
Income taxes payable		5,450		37,035		—
Total current liabilities		272,822		265,102		211,131
Long-term debt, excluding current portion		250,000		142,568		142,422
Other liabilities		67,916		58,114		57,553
Total liabilities		590,738		465,784		411,106
Shareholders’ equity		1,058,532		1,014,522		919,892
Total liabilities and shareholders’ equity	$	1,649,270	$	1,480,306	$	1,330,998
STORE DATA:
Number of stores open at end of period		2,612		2,513		2,468
Total selling square footage (in thousands)		18,665		16,878		15,657

DOLLAR TREE STORES, INC.

Condensed Consolidated Income Statements

(Dollars in thousands, except per share data)

	Second Quarter ended						Year-to-Date
	July 31, 2004			August 2, 2003			July 31, 2004			August 2, 2003
Net sales	$	704,234		$	626,028		$	1,414,564		$	1,241,596
Cost of sales		455,756			404,921			914,945			802,701
Gross profit		248,478			221,107			499,619			438,895
		35.3	%		35.3	%		35.3	%		35.3	%
Selling, general & administrative expenses		199,394			173,507			391,876			336,804
		28.3	%		27.7	%		27.7	%		27.1	%
Operating income		49,084			47,600			107,743			102,091
		7.0	%		7.6	%		7.6	%		8.2	%
Interest expense, net		(1,235	)		(1,439	)		(3,313	)		(2,687	)
Other income (expense)		301			665			911			748
Income before income taxes		48,150			46,826			105,341			100,152
		6.8	%		7.5	%		7.4	%		8.1	%
Income tax expense		18,558			18,027			40,599			38,558
Net income		29,592			28,799			64,742			61,594
		4.2	%		4.6	%		4.6	%		5.0	%
Net earnings per share:
Basic	$	0.26		$	0.25		$	0.57		$	0.54
Weighted average number of shares		113,527			114,500			113,671			114,379
Diluted	$	0.26		$	0.25		$	0.57		$	0.54
Weighted average number of shares		114,149			115,599			114,442			115,065

DOLLAR TREE STORES, INC.

Condensed Consolidated Statements of Cash Flows

(Dollars in thousands)

	Year-to-Date
	July 31, 2004			August 2, 2003
Cash flows from operating activities:
Net income	$	64,742		$	61,594
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		59,028			47,938
Other non-cash adjustments		11,774			14,601
Changes in working capital		(111,085	)		(121,029	)
Total adjustments		(40,283	)		(58,490	)
Net cash provided by operating activities		24,459			3,104
Cash flows from investing activities:
Capital expenditures		(87,955	)		(99,170	)
Purchase of Greenbacks, Inc., net of cash acquired of 1,248		—			(99,560	)
Purchase of short-term investments		(97,305	)		(30,360	)
Proceeds from maturities of short-term investments		—			93,885
Acquisition of favorable lease rights		(251	)		—
Proceeds from sale of property and equipment		—			1
Net cash used in investing activities		(185,511	)		(135,204	)
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	)		(10,838	)
Principal payments under capital lease obligations		(2,313	)		(3,927	)
Proceeds from stock issued pursuant to stock-based compensation plans		9,184			9,911
Payments for share repurchases		(30,329	)		—
Net cash provided by (used in) financing activities		76,880			(4,854	)
Net decrease in cash and cash equivalents		(84,172	)		(136,954	)
Cash and cash equivalents at beginning of period		168,685			237,302
Cash and cash equivalents at end of period	$	84,513		$	100,348