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.
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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
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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.
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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
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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:
<S> <C> <C> <C>
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
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