EX-99.1 CHARTER 2 ex99_1.htm EX. 99.1 PRESS RELEASE 4TH QUARTER EARNINGS RESULTS Ex. 99.1 Press release 4th quarter earnings results
 
 
 
PRESS RELEASE

DOLLAR TREE STORES, INC. REPORTS FOURTH QUARTER EARNINGS PER SHARE OF $0.81

CHESAPEAKE, Va. - February 22, 2006 - Dollar Tree Stores, Inc. (NASDAQ: DLTR), the nation's leading operator of single price point dollar stores, reported earnings per share of $0.81, for the fiscal fourth quarter ended January 28, 2006, an increase of 9.5% from $0.74 per share for the fiscal fourth quarter ended January 29, 2005. As previously reported, sales for the quarter were $1.079 billion, a 9.3% increase compared to $987.5 million, for the same period, one year ago.

Fourth Quarter 2005 Commentary
“We made progress on key initiatives throughout the year that resulted in improved fourth quarter performance,” said President and CEO Bob Sasser. “Our merchandise value was outstanding, the flow of inventory was much better this season and our stores were ready for the holidays. The expansion of payment type was executed seamlessly and we now accept debit cards in over 70% of the chain. Our Real Estate initiatives combined with the effective execution by our store teams resulted in opening more stores earlier in the year and increased productivity in our new stores.”

“We also continued to strengthen our balance sheet, as we reduced inventory levels and increased cash and investments while repurchasing $180 million of shares during the year.”

For the fourth quarter, gross margin was 35.3%, down from 35.5% last year. The decrease primarily reflects the impact of a slight shift to consumables in the merchandise mix and higher freight expense, slightly offset by a lower rate for distribution and occupancy costs.

Selling, general and administrative expenses, as a percentage of sales, were 22.6% in the fourth quarter of 2005, compared to 22.1% in the same quarter last year. The increase in rate reflects an increase in compensation and benefit expense, property taxes, and utilities.
 
Operating margin in this year’s fourth quarter was 12.6%, versus 13.4% for the same period, one year ago.

For the year, sales totaled $3.394 billion, an 8.6% increase year-over-year, on a comparable store sales decline of 0.8%. Operating margin was 8.3%, versus 9.4% one year ago. Diluted earnings per share were $1.60.

Deal$ Stores Acquisition
In a press release issued earlier today, the Company announced the pending acquisition of 138 stores and related assets of the Deal$-Nothing Over a Dollar chain, which is owned by SUPERVALU  INC. (NYSE:SVU).

“I am excited about the opportunity that this acquisition provides to expand our presence in the Midwest and Southeast regions,” said Bob Sasser, President and CEO. “We have existing logistics capacity to service all of these stores efficiently with no additional capital expenditure. Furthermore, the Deals acquisition includes a number of “combo” stores that offer an expanded assortment of merchandise including items selling for more than $1. All Deal$ stores will continue to operate under the Deal$ banner and they will provide an opportunity to leverage the Dollar Tree infrastructure in the development of a multi priced business without disrupting the single price point model in Dollar Tree Stores."


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Guidance for 2006
The Company estimates sales for the first quarter of 2006 to be in the range of $845 - $870 million. Comparable store sales performance is expected to be positive low single digit. Based upon this sales forecast, diluted earnings per share are estimated to be in the range of $0.29 to $0.31.

For the full year, the Company estimates sales will range from $3.845-$3.940 billion. This estimate is predicated on a square footage growth of 12-14%, which includes 138 Deal$ stores, or about 5% of the annual increase. Comparable store sales performance is projected to be nearly flat to positive low single digits.

Fiscal year 2006 diluted earnings per share are forecast to be in the range of $1.68 to $1.80. These estimates exclude any impact of share repurchase in 2006. The Company has $173 million available to repurchase shares under the original $300 million authorization.

Conference Call
On Wednesday, February 22, 2006, 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 703-639-1375. A recorded version of the call will be available until midnight Friday, March 3, and may be accessed by dialing 703-925-2533, and the access code is 844398. 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 Friday, March 3. 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, April 6, 2006, by 5:00 p.m. EDT, and will remain on-line through Monday, April 10, 2006. Interested parties can access the Company’s update by dialing  757-321-5873. 

As of January 28, 2006, Dollar Tree operated 2,914 stores in 48 states. For the year, Dollar Tree opened 232 stores, closed 53 stores, and expanded or relocated 93 stores. The Company’s retail selling square footage totaled approximately 23.0 million at January 28, 2006, a 12.7% increase compared to a year ago. The Company also operates a coast-to-coast logistics network of nine distribution centers.

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, will, anticipate, expect, intend, plan, forecast, or estimate. For example, our forward looking statements include statements regarding our plans for the proposed Deals acquisition, total and comparable-store sales and earnings for future periods, as well as our plans for square footage growth and share repurchase.  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 our Quarterly Report on Form 10-Q filed December 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
 
2
DOLLAR TREE STORES, INC.
  
Condensed Consolidated Income Statements
  
(Dollars in thousands, except per share data)
  
                   
                   
   
Fourth Quarter ended
  
Year ended
  
   
Jan. 28,
  
Jan. 29,
  
Jan. 28,
  
Jan. 29,
  
   
2006
  
2005
  
2006
  
2005
  
                   
Net sales
  
$
1,079,017
  
$
987,478
  
$
3,393,924
  
$
3,126,009
  
                           
Cost of sales
   
698,648
   
636,747
   
2,221,561
   
2,013,470
 
                           
Gross profit
    
380,369
   
350,731
   
1,172,363
   
1,112,539
 
     
35.3
%
  
35.5
%
  
34.5
%
  
35.6
%
                           
Selling, general & administrative expenses
    
243,907
   
218,512
   
889,124
   
818,988
 
     
22.6
%
  
22.1
%
  
26.2
%
  
26.2
%
                           
Operating income
    
136,462
   
132,219
   
283,239
   
293,551
 
     
12.6
%
  
13.4
%
  
8.3
%
  
9.4
%
                           
Interest expense, net
    
(1,789
)
  
(1,217
)
  
(8,021
)
  
(5,381
)
                           
Income before income taxes
    
134,673
   
131,002
   
275,218
   
288,170
 
     
12.5
%
  
13.3
%
  
8.1
%
  
9.2
%
                           
Income tax expense
    
48,174
   
47,348
   
101,300
   
107,920
 
                           
Net income
    
86,499
   
83,654
   
173,918
   
180,250
 
     
8.0
%
  
8.5
%
  
5.1
%
  
5.8
%
                           
Net earnings per share:
                          
Basic
  
$
0.81
  
$
0.74
  
$
1.61
  
$
1.59
  
Weighted average number of shares
    
106,420
   
112,951
   
108,335
   
113,295
 
                           
Diluted
  
$
0.81
  
$
0.74
  
$
1.60
  
$
1.58
  
Weighted average number of shares
    
106,831
   
113,656
   
108,759
   
113,986
 
 
3

DOLLAR TREE STORES, INC.
Condensed Consolidated Balance Sheets
(Dollars in thousands)
           
           
   
Jan. 28,
  
Jan. 29,
  
   
2006
  
2005
  
           
Cash and cash equivalents
  
$
65,834
  
$
106,532
  
Short-term investments
    
273,950
   
211,275
 
Merchandise inventories
    
576,545
   
615,483
 
Other current assets
    
27,347
   
36,597
 
Total current assets
    
943,676
   
969,887
 
               
Property and equipment, net
    
681,801
   
685,386
 
Intangibles, net
    
129,348
   
129,032
 
Other assets, net
    
43,575
   
8,367
 
               
Total assets
  
$
1,798,400
  
$
1,792,672
  
               
               
Current portion of long-term debt
    
19,000
   
19,000
 
Accounts payable
    
135,555
   
124,195
 
Other current liabilities
    
99,203
   
117,491
 
Income taxes payable
    
41,698
   
33,669
 
Total current liabilities
    
295,456
   
294,355
 
               
Long-term debt, excluding current portion
    
250,000
   
250,000
 
Other liabilities
    
80,669
   
84,105
 
               
Total liabilities
    
626,125
   
628,460
 
               
Shareholders' equity
    
1,172,275
   
1,164,212
 
               
Total liabilities and shareholders' equity
  
$
1,798,400
  
$
1,792,672
  
               
STORE DATA:
              
Number of stores open at end of period
    
2,914
   
2,735
 
Total selling square footage (in thousands)
    
23,022
   
20,444
 
 
4

DOLLAR TREE STORES, INC.
Condensed Consolidated Statements of Cash Flows
(Dollars in thousands)
           
   
Year ended
  
   
January 28,
  
January 29,
  
   
2006
  
2005
  
           
Cash flows from operating activities:
          
Net income
  
$
173,918
  
$
180,250
  
Adjustments to reconcile net income to net cash provided by
              
operating activities:
              
Depreciation and amortization
    
140,717
   
129,291
 
Other non-cash adjustments
    
(12,238
)
  
21,575
 
Changes in merchandise inventories
    
38,938
   
(89,840
)
Other changes in working capital
    
35,415
   
35,213
 
Total adjustments 
    
202,832
   
96,239
 
 Net cash provided by operating activities
    
376,750
   
276,489
 
               
Cash flows from investing activities:
              
Capital expenditures
    
(139,247
)
  
(181,782
)
Purchase of short-term investments
    
(885,480
)
  
(465,815
)
Proceeds from maturities of short-term investments
    
822,805
   
339,035
 
Purchase of restricted investments
    
(29,944
)
  
-
 
Acquisition of favorable lease rights
    
(3,646
)
  
(6,845
)
 Net cash used in investing activities
    
(235,512
)
  
(315,407
)
               
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
    
(12,206
)
  
(5,572
)
Proceeds from stock issued pursuant to stock-based
              
compensation plans
    
10,668
   
15,105
 
Payments for share repurchases
    
(180,398
)
  
(48,611
)
 Net cash provided by (used in) financing activities
    
(181,936
)
  
61,260
 
Net increase (decrease) in cash and cash equivalents
    
(40,698
)
  
22,342
 
Cash and cash equivalents at beginning of period
    
106,532
   
84,190
 
Cash and cash equivalents at end of period
  
$
65,834
  
$
106,532