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: March 18, 2003
Date of Earliest Event Reported: March 18, 2003
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
FISCAL YEAR 2002 RESULTS
As previously reported on Form 8-K on January 7, 2003, our Board of Directors
approved a change in our fiscal year from a calendar year to a retail fiscal
year ending on the Saturday closest to January 31. Fiscal 2002 is the period
beginning February 1, 2002 and ending February 1, 2003, and Fiscal 2003 is the
period beginning February 2, 2003 and ending January 31, 2004. Audited
information with respect to the transition period, January 1, 2003 through
February 1, 2003, will be included in our Annual Report on Form 10-K for the
year ended December 31, 2002.
Attached as Exhibit 99.1 are financial statements reflecting our results for the
quarter and fiscal year ended February 1, 2003. Financial data for the fourth
quarter of Fiscal 2002 includes results for the transition period of January 1,
2003 through February 1, 2003. Historical financial data for the first three
quarters of Fiscal 2002 was reported on Form 8-K on January 7, 2003.
SYNTHETIC LEASE FACILITY
In January 2003, the Financial Accounting Standards Board issued FASB
Interpretation No. 46, "Consolidation of Variable Interest Entities." Several of
our distribution centers are leased under the terms of a $165.0 million
synthetic lease facility, which is owned by a variable interest entity and
affected by the new standard. After evaluating the new standard, our Board of
Directors and management decided to maintain the favorable terms of the existing
facility and include the variable interest entity in our consolidated financial
statements. We adopted the requirements of the Interpretation early, effective
January 1, 2003.
As a result of our consolidation of the synthetic lease, our financial
statements were affected as follows:
o net property and equipment increased $128.8 million reflecting the
distribution center assets;
o other assets, net increased $1.0 million for the deferred financing costs
of the variable interest entity;
o long-term debt increased $140.6 million for the debt incurred by the
variable interest entity to purchase and construct the assets;
o current liabilities decreased $0.7 million for the write-off of the
current portion of the straight-lined rent liability for these
distribution centers;
o deferred tax liability decreased $3.3 million for the tax effect of the
accounting change noted below; and
o long-term liabilities decreased $1.6 million for the write-off of the
long-term portion of the straight-lined rent liability for these
distribution centers.
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The $5.3 million cumulative effect of a change in accounting principle
represents, net of the tax effect, the catch up of depreciation related to the
distribution center assets and catch up of the amortization of the deferred
financing costs offset by the write-off of the straight-lined rent liability.
As a result of the consolidation, we expect the following changes in our annual
financial results:
o a $7.6 million increase in depreciation expense;
o a $4.5 million increase in interest expense due to amounts previously
classified as rent expense, and amortization of the deferred financing
costs; and
o a $3.5 million decrease in rent expense for the net of the monthly rent
payments now classified as interest expense and the effect of the
write-off of the straight-lined rent liability.
PRESS RELEASE
On March 18, 2003, we issued a press release regarding the consolidation of its
synthetic lease and its participation in the upcoming Merrill Lynch Retailing
Leaders Conference. The press release also includes brief comments regarding
first quarter sales estimates. A copy of the press release is attached to this
Form 8-K as Exhibit 99.2.
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 financial results affected by our implementation of FASB Interpretation
No. 46;
o future cash flow levels; and
o fiscal first quarter sales.
These forward-looking statements are subject to numerous risks and uncertainties
that may affect us including:
o the outbreak of war and other national and international events, such as
terrorism, leading to disruptions in the economy;
o adverse economic conditions, such as declining consumer confidence or
spending, or bad weather;
o possible difficulties in meeting our net sales and other expansion goals
and anticipated comparable store net sales results, which may result in
loss of leverage of operating expenses;
o increase in the cost of or disruption of the flow of our imported goods;
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o the difficulties in managing our aggressive growth plans, including
opening stores on a timely basis;
o competition and possible increases in merchandise costs, shipping rates,
freight costs, or other operating costs such as wage levels;
o the capacity and performance of our distribution network and our ability
to expand its capacity in time to support our net sales growth; and
o changes in accounting standards.
For a discussion of the risks, uncertainties and assumptions that could affect
our future events, developments or results, you should carefully review the
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" and "Business" sections in our Annual Report on Form 10-K filed
March 14, 2002. 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 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 Dollar Tree Stores, Inc.'s unaudited historical financial
data for the quarter and fiscal year ended February 1, 2003.
99.2 Dollar Tree Stores, Inc.'s press release regarding the
consolidation of its synthetic lease and its participation in
the upcoming Merrill Lynch conference.
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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: March 18, 2003
DOLLAR TREE STORES, INC.
By: /s/ Frederick C. Coble
--------------------------------
Frederick C. Coble
Chief Financial Officer
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