UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549

FORM 10-Q

(Mark One)

        (X) Quarterly report pursuant to Section 13 or 15 (d) of the Securities Exchange Act
               of 1934

OR

        ( ) Transition report pursuant to Section 13 or 15 (d) of the Securities Exchange Act of 1934

Commission File Number: 0-25464

DOLLAR TREE STORES, INC.
(Exact name of registrant as specified in its charter)

500 Volvo Parkway
Chesapeake, Virginia 23320
(Address of principal executive offices)

Telephone Number (757)321-5000
(Registrant’s telephone number, including area code)

        Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

        Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act).

As of December 8, 2003, there were 115,239,531 shares of the Registrant’s Common Stock outstanding.

DOLLAR TREE STORES, INC.
AND SUBSIDIARIES

INDEX

PART I-FINANCIAL INFORMATION

DOLLAR TREE STORES, INC.
AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except share data)
(Unaudited)

        See accompanying Notes to Condensed Consolidated Financial Statements.

DOLLAR TREE STORES, INC.
AND SUBSIDIARIES
CONDENSED CONSOLIDATED INCOME STATEMENTS
(In thousands, except per share data)
(Unaudited)

        See accompanying Notes to Condensed Consolidated Financial Statements.

DOLLAR TREE STORES, INC.
AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)

        See accompanying Notes to Condensed Consolidated Financial Statements.

DOLLAR TREE STORES, INC.
AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

1. BASIS OF PRESENTATION

        The condensed consolidated financial statements at November 1, 2003 and for the three- and nine-month periods ended November 1, 2003 and October 31, 2002 are unaudited and reflect all adjustments (consisting only of normal recurring adjustments) which are, in the opinion of management, necessary for a fair presentation of the financial position at November 1, 2003 and operating results for the interim periods. The February 1, 2003 and December 31, 2002 balance sheet information was derived from the audited consolidated financial statements as of those dates.

        The condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto, together with management’s discussion and analysis of financial condition and results of operations for the year ended December 31, 2002 contained in the Company’s Annual Report on Form 10-K filed March 28, 2003. The results of operations for the three- and nine-month periods ended November 1, 2003 are not necessarily indicative of the results to be expected for the entire fiscal year ending January 31, 2004.

        Certain 2002 amounts have been reclassified for comparability with the 2003 financial statement presentation.

2. ACQUISITION

        On June 29, 2003, the Company acquired 100% of the outstanding capital stock of Greenbacks, Inc. (Greenbacks). The results of Greenbacks’ operations are included in the condensed consolidated financial statements since that date. Greenbacks was a privately-held company operating 100 stores in 10 western states and one expandable 252,000 square foot distribution center in Salt Lake City. As a result of this acquisition, the Company has extended its geographical reach to include 47 states compared with 41 states prior to the acquisition. In addition, this acquisition has provided the Company with an expandable distribution infrastructure in the Rocky Mountain area of the country. The aggregate purchase price was approximately $100 million and was paid in cash. In addition, the Company incurred approximately $0.8 million in direct costs associated with the acquisition.

        The following table summarizes the fair value of the assets acquired and liabilities assumed at the date of acquisition.

        In accordance with SFAS No. 142, goodwill will not be amortized, but rather tested annually for impairment.

        Included in the intangible assets acquired were non-compete agreements of $2.0 million and favorable lease rights for operating leases for retail locations of $1.0 million. The non-compete agreements are with former key executives of Greenbacks.

They are being amortized over five years, the weighted average term of the agreements. The favorable lease rights are being amortized on a straight-line basis to rent expense over the remaining initial lease terms, which expire at various dates through 2012.

3. INVESTMENT

        On August 7, 2003, the Company paid $4.0 million to acquire a 10.5% fully diluted interest in Ollie’s Holdings, Inc. (Ollie’s), a multi-price point discount retailer located in the mid-Atlantic region. In addition, the SKM Equity Fund III, L.P. (SKM Equity) and SKM Investment Fund (SKM Investment), acquired a combined fully diluted interest in Ollie’s of 53.1%. Two of the Company’s directors, Thomas Saunders and John Megrue, are principal members of Saunders Karp & Megrue Partners, L.L.C., which serves as the general partner of SKM Equity and SKM Investment. In conjunction with the acquisition of its interest in Ollie’s, the Company also entered into a call option agreement. The option agreement provides the Company with the right to purchase all of SKM Equity’s and SKM Investment’s equity in Ollie’s, for a fixed price as set forth in the agreement, subject to adjustments dependent on the occurrence of certain future events. The Company has no obligation to exercise the option or make any additional investment in Ollie’s.

4. NET INCOME PER SHARE

        The following table sets forth the calculation of basic and diluted net income per share:

        At November 1, 2003 and October 31, 2002, 172,788 and 2,196,756 stock options, respectively, are not included in the calculation of the weighted average number of common shares and dilutive potential common shares outstanding because their effect would be anti-dilutive.

5. VARIABLE INTEREST ENTITY

        Effective January 1, 2003, the Company implemented the Financial Accounting Standards Board’s Interpretation No. 46, “Consolidation of Variable Interest Entities” (FIN 46). Under the terms of this standard, certain variable interest entities, such as the entity in which the Company’s synthetic lease facility is held, are required to be consolidated in the Company’s financial statements. As a result of the implementation, the assets of four distribution centers and the debt formerly incurred by the variable interest entity

to purchase and construct the assets were included in the Company’s balance sheets for periods after January 1, 2003. These distribution centers were previously accounted for as operating leases.

        The following table reconciles reported net income and net income per share to net income and net income per share that would have been recorded if FIN 46 were effective for each of the periods presented prior to January 1, 2003:

6. STOCK-BASED COMPENSATION

        In December 2002, the Financial Accounting Standards Board issued SFAS No. 148, “Accounting for Stock-Based Compensation – Transition and Disclosure, an amendment of SFAS No. 123.” This statement amends SFAS No. 123 to provide alternative methods of transition for a voluntary change to the fair value method of accounting for stock-based employee compensation. In addition, this statement amends the disclosure requirements of SFAS No. 123 to require prominent disclosures in both annual and interim financial statements. Certain of the disclosure modifications are required for fiscal years ending after December 15, 2002 and are included in the table below.

        The Company currently applies the intrinsic value-based method of accounting prescribed by Accounting Principles Board Opinion No. 25, “Accounting for Stock Issued to Employees,” and related Interpretations in accounting for its fixed stock option plans. As such, compensation expense would be recorded on the date of grant only if the current market price of the underlying stock exceeded the exercise price. SFAS No. 123, “Accounting for Stock-Based Compensation,” established accounting and disclosure requirements using a fair value-based method of accounting for stock-based employee compensation plans. As allowed by SFAS No. 123, the Company has elected to continue to apply the intrinsic value-based method of accounting described above, and has adopted the disclosure only requirements of SFAS No. 148.

        If the accounting provisions of SFAS No. 123 had been adopted, the Company’s net income and net income per share would have been reduced to the pro forma amounts indicated in the following table:

        These pro forma amounts for SFAS No. 123 may not be representative of future disclosures because compensation cost is reflected over the options’ vesting periods and because additional options may be granted in future periods.

        On March 24, 2003, the Board of Directors granted options to employees under the Company’s Stock Incentive Plan to purchase 1,812,150 shares of the Company’s common stock at an exercise price of $20.02 per share. The exercise price represents the fair market value of the Company’s stock at the date of the grant.

        On June 19, 2003, options to purchase 36,000 shares of common stock, at an exercise price of $32.02, were granted to continuing non-employee directors.

        For pro forma disclosure purposes the fair value of the newly granted options was calculated using the Black-Scholes option-pricing model with the following assumptions, resulting in the weighted average fair market value shown:

7. COMPREHENSIVE INCOME

        The Company’s comprehensive income reflects the effect of recording derivative financial instruments pursuant to SFAS No. 133. The following table provides a reconciliation of net income to total comprehensive income:

        The cumulative effect recorded in “accumulated other comprehensive loss” is being amortized over the remaining lives of the related interest rate swaps.

8. REVOLVING CREDIT FACILITY

        Effective May 30, 2003, the Company entered into a Revolving Credit Facility (the Revolver Agreement). The Revolver Agreement provides for, among other things: (1) a $150.0 million revolving line of credit, bearing interest at LIBOR, plus a spread; and (2) an annual facilities fee, calculated as a percentage, as defined, of the amount available under the line of credit and an annual administrative fee payable quarterly.

        The Revolver Agreement, among other things, requires the maintenance of certain specified financial ratios, restricts the payment of certain distributions and prohibits the incurrence of certain new indebtedness. The Revolver Agreement matures on May 29, 2004. The Company’s existing $50.0 million revolving credit facility was terminated concurrent with entering into the new $150.0 million revolving credit facility.

        As of November 1, 2003, the outstanding amount on the revolving line of credit is $39.7 million. As of December 2, 2003, there was no outstanding balance on the revolving line of credit.

9. SUBSEQUENT EVENT        

          Pursuant to an existing program, the Company repurchased 60,100 shares of its common stock on the open market in December 2003.  Following their repurchase, the shares were retired.

Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL             CONDITION AND RESULTS OF OPERATIONS.

INTRODUCTORY NOTE: Unless otherwise stated, references to “we,” “our” and “us” generally refer to Dollar Tree Stores, Inc. and its direct and indirect subsidiaries on a consolidated basis.

A WARNING ABOUT FORWARD-LOOKING STATEMENTS: This document 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:

        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 described below, “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 28, 2003, and review “Risk Factors” in our most recent prospectus:

        Our forward-looking statements could be wrong in light of these and other risks, uncertainties and assumptions. The future events, developments or results described in this report or our most recent prospectus could turn out to be materially different. We have no obligation to publicly update or revise our forward-looking statements after the date of this quarterly report and you should not expect us to do so.

        Investors should also be aware that while we do, from time to time, communicate with securities analysts and others, it is against our policy to selectively disclose to them any material nonpublic information or other confidential commercial information. Accordingly, shareholders should not assume that we agree with any statement or report issued by any analyst regardless of the content of the statement or report. We generally do not issue financial forecasts or projections and we have a policy against confirming those issued by others. Thus, to the extent that reports issued by securities analysts contain any projections, forecasts or opinions, such reports are not our responsibility.

Recent Developments

        Several key events have had or are expected to have a significant effect on our results of operations. You should keep the following in mind:

Results of Operations

The Quarter Ended November 1, 2003 Compared to the Quarter Ended October 31, 2002

        Net Sales. Net sales increased 19.4% in the third quarter of 2003 compared to the prior year third quarter. This $108.3 million increase in net sales resulted primarily from increased sales at our new and expanded stores and from a 1.7% increase in comparable store net sales. Net sales in our larger, newer stores, particularly our 10,000-15,000 square foot stores, have been stronger than those in our smaller, older stores. Our comparable store net sales increase was primarily due to our expanded and relocated stores. Comparable store net sales are positively affected by our expanded and relocated stores, which we include in the calculation, and, to a lesser extent, are negatively affected when we open new stores or expand stores near existing stores.

        At November 1, 2003, we operated 2,511 stores, in 47 states, with 16.6 million selling square feet compared to 2,272 stores with 13.2 million selling square feet at February 1, 2003 and 2,211 stores with 12.5 million selling square feet at October 31, 2002. We opened 50 stores, expanded or relocated 45 stores and closed 7 stores in the third quarter of 2003, compared to 101 stores opened, 36 stores expanded, and 4 stores closed in the third quarter of 2002. In the third quarter of 2003, we added approximately 0.9 million selling square feet, of which approximately 0.4 million selling square feet was added through expanding existing stores.

        Gross  Profit. Our gross profit as a percentage of net sales is called our gross profit margin. Gross profit margin decreased to 36.6% in the quarter ended November 1, 2003 compared to 36.8% in the quarter ended October 31, 2002. This decline was primarily attributable to the following:

These factors were partially offset by improved merchandise margin as a result of better buying and timing and improved markdown costs.

        Selling, General and Administrative Expenses. Selling, general, and administrative expenses for the third quarter of 2003 decreased to 27.5%, as a percentage of net sales, compared to last year’s third quarter of 27.6%. This decline was primarily attributed to improvements in payroll-related costs, store operating costs and corporate expenses. These improvements were partially offset by increased depreciation expense associated with our investments in new and expanded stores and technology assets. Management believes our investments in technology will continue to benefit labor productivity and store operating costs.

        Operating Income. Because of the reasons discussed above, operating income decreased as a percentage of net sales to 9.1% in the third quarter of 2003 compared to 9.2% in the same period of 2002.

        Interest Income/Expense. Interest income decreased to $0.6 million in the third quarter of 2003 from $0.7 million in the third quarter of 2002. This decrease resulted primarily from a decrease in the average cash and cash equivalents invested for the third quarter of 2003 compared to the third quarter of 2002. Interest expense increased to $2.1 million in the third quarter of 2003 compared $1.1 million for the third quarter of 2002. This increase was primarily due to approximately $1.0 million of additional interest expense associated with the implementation of FIN 46.

        Change in Fair Value of Non-hedging Interest Rate Swaps. SFAS No. 133 requires us to reflect our non-hedging interest rate swaps at their fair value, which may fluctuate primarily because of changes in interest rates. The fair value of our swaps changed very little in the third quarter of 2003.  In the third quarter of 2002, in contrast, we incurred $0.6 million in expense because the fair value of the swaps decreased by that amount. Because there are many variables involved in determining fair value of our swaps, our management is not able to predict their fair values for future periods.

The Nine Months Ended November 1, 2003 Compared to the Nine Months Ended October 31, 2002

        Net Sales. Net sales increased 20.8% in the first nine months of 2003 compared to the first nine months of the prior year. This increase was due to sales at our new and expanded stores and a 3.2% increase in comparable store net sales. Net sales in our larger, newer stores, particularly our 10,000-15,000 square foot stores, have been stronger than those in our smaller, older stores. Comparable store net sales are positively affected by our expanded and relocated stores, which we include in the calculation, and, to a lesser extent, are negatively affected when we open new stores or expand stores near existing stores.

        For the nine months ended November 1, 2003, we opened 166 stores, added 100 Greenbacks stores, expanded or relocated 110 stores and closed 27 stores, compared to 241 stores opened, 85 stores expanded or relocated, and 24 stores closed in the first three quarters of 2002. For the fiscal 2003 year-to-date, we added approximately 3.3 million selling square feet, of which approximately 0.8 million selling square feet was added through expanding existing stores.

        Gross Profit. Our gross profit as a percentage of net sales is called our gross profit margin. Gross profit margin decreased to 35.8% for the first nine months of 2003 compared to 36.3% for the same period last year. This decline was primarily attributable to the following:

        Selling, General and Administrative Expenses. Selling, general, and administrative expenses, as a percentage of net sales, for the first nine months of 2003 was 27.3% compared to last year’s comparable period of 27.5%. This decline was primarily attributed to improvements in payroll-related costs. This decrease was partially offset by increased depreciation expense associated with our investments in new and expanded stores and technology assets.

        Operating Income. Due to the reasons discussed above, operating income decreased as a percentage of net sales to 8.5% for the first three quarters of 2003 compared to 8.8% for the same period of 2002.

        Interest Income/Expense. Interest income decreased to $2.1 million in the first nine months of 2003 from $2.5 million in the first nine months of 2002. This decrease resulted from a decrease in the average cash and cash equivalents invested in the first nine months of 2003 compared to the same period in 2002. Interest expense increased to $6.3 million in the first three quarters of 2003 compared to $3.4 million for the first three quarters of 2002.

This increase was primarily due toapproximately $3.0 million of additional interest expense associated with the implementation of FIN 46.

        Change in Fair Value of Non-hedging Interest Rate Swaps. The $0.7 million in income for the nine months ended November 1, 2003 and $1.5 million in expense for the nine months ended October 31, 2002 is the result of reflecting our non-hedging interest rate swaps at their fair values in accordance with SFAS No. 133. The change in the fair values is primarily the result of changes in interest rates. Because there are many variables involved in determining the fair value, our management is not able to predict changes in the fair values of our interest rate swaps.

Fourth Quarter 2003 and Fiscal Year 2004

        We expect our fourth quarter 2003 net sales to be $880-$905 million. In addition, we expect gross margin for the fourth quarter of 2003 to improve slightly compared to the fourth quarter of 2002; we expect store shrink, a component of gross margin, in the fourth quarter to improve compared to the same period in 2002.

        We continue to expect a slight increase in depreciation as a percentage of net sales during the fourth quarter of 2003 due to the continued installation of point-of-sale systems in our stores. We believe this non-cash expense will become more consistent, as a percentage of net sales, by fiscal year 2006.

        We expect operating margin in the fourth quarter of 2003 to be approximately 14.5%-15.0%. We believe that the expected improvement over the prior year fourth quarter will be primarily attributed to our expected gross margin improvement partially offset by an expected slight increase in depreciation expense, both discussed above, in addition to the following:

        We expect to end the fiscal year 2003 with square footage growth of approximately 28.0%.

        In fiscal year 2004, we expect our net sales to be $3.2-$3.3 billion and our sales and earnings growth to be in the 15%-20% range compared to fiscal 2003. We expect freight rates to increase; however, we believe the increase will be offset by improvements in other areas of gross margin and, therefore, we do not expect a significant impact on our overall gross margin. We expect a slight increase in depreciation, as a percentage of net sales during 2004 because of the continued installation of point-of-sale systems in our stores. We expect modest improvement, in the range of 0.1% to 0.2% of sales, in operating margin.

         In 2004, our square footage growth is expected to be approximately 20%. This growth plan includes more than 200 net new stores and more than 100 relocated and expanded stores. We plan capital expenditures in fiscal 2004 to be $230-$250 million, similar to 2003, and our focus will be on our new and expanded stores, distribution center infrastructure, and continued technology investments. We have approximately 1,645 point-of-sale stores as of November 1, 2003 and expect to convert virtually all remaining stores that will benefit from this technology by the end of 2004.

Liquidity and Capital Resources

        Our business requires capital to open new stores, expand our distribution network and operate existing stores. Our working capital requirements for existing stores are seasonal in nature and typically reach their peak in the months of September and October.

Historically, we have satisfied our seasonal working capital requirements for existing stores and funded our store opening and expansion programs from internally generated funds and borrowings under our credit facilities.

        The following table compares cash-related information for the nine months ended November 1, 2003 and October 31, 2002:

        The $30.8 million increase in cash provided by operating activities was primarily the result of increased net income net of non-cash expense adjustments partially offset by changes in net working capital.

        The $103.6 million increase in cash used in investing activities was primarily due to the following:

These increases in cash used in investing activities were offset by proceeds received from the sale of our short-term investments.

         The $21.6 million increase in cash provided by financing activities was primarily attributed to $39.7 million in proceeds received from borrowing against our revolving credit facility to cover our seasonal inventory purchases and our distribution center construction. This increase was partially offset by repayment of our long-term debt and $9.5 million less cash received pursuant to stock-based compensation plans in the first nine months of 2003 compared to the first nine months of 2002 due to decreased stock option exercises. We believe the decrease in stock option exercises was primarily attributable to generally lower stock prices in the first nine months of 2003 compared to the prior year period.

         Effective May 30, 2003, we entered into a revolving credit facility. The facility provides for, among other things: (1) a $150 million revolving line of credit, bearing interest at LIBOR, plus a spread; and (2) an annual facilities fee, calculated as a percentage, as defined, of the amount available under the line of credit and an annual administrative fee payable quarterly.

        The facility, among other things, requires the maintenance of certain specified financial ratios, restricts the payment of certain distributions and prohibits the incurrence of certain new indebtedness. The facility matures on May 29, 2004.

        At November 1, 2003, our long-term borrowings were $167.4 million. We had $110.3 million available through our revolving credit facility and $39.7 million was outstanding under this facility. As of December 2, 2003, there was no outstanding balance on the revolving line of credit. We also have a $125.0 million Letter of Credit Reimbursement and Security Agreement, of which approximately $44.7 million was committed to letters of credit issued for routine purchases of imported merchandise.

        On August 7, 2003, we paid $4.0 million to acquire a 10.5% fully diluted interest in Ollie’s Holdings, Inc., a multi-price point discount retailer located in the mid-Atlantic

region.    In addition, the SKM Equity Fund III, L.P. and SKM Investment Fund acquired a combined fully diluted interest in Ollie’s of 53.1%. Two of our directors, Thomas Saunders and John Megrue, are principal members of Saunders Karp & Megrue Partners, L.L.C., which serves as the general partner of SKM Equity and SKM Investment. We also entered into a call option agreement giving us the right to purchase all of SKM Equity’s and SKM Investment’s equity in Ollie’s for a fixed price as set forth in the agreement, subject to adjustments dependent on the occurrence of certain future events. We have no obligation to exercise the option or make any additional investment in Ollie’s.

Item 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

        We are exposed to various types of market risk in the normal course of our business, including the impact of interest rate changes and foreign currency rate fluctuations. We may enter into interest rate swaps to manage our exposure to interest rate changes, and we may employ other risk management strategies, including the use of foreign currency forward contracts. We do not enter into derivative instruments for any purpose other than cash flow hedging purposes. Certain of our interest rate swaps do not qualify for hedge accounting treatment under SFAS No. 133, as amended by SFAS No. 138, because they contain provisions that “knockout” the swap when the variable interest rate exceeds a predetermined rate.

Interest Rate Risk

        The following table summarizes the financial terms and fair values of each of our interest rate swap agreements at November 1, 2003:

Due to the many variables involved in determining the fair value, management is not able to predict the changes in fair value of our interest rate swaps. The fair values are the estimated amounts we would pay to terminate the agreements as of the reporting date. These fair values are obtained from an outside financial institution.

        There have been no material changes in our interest rate risk exposure during the first nine months of 2003.

Foreign Currency Risk

        There have been no material changes to our market risk exposures resulting from foreign currency transactions during the first nine months of 2003.

Item 4. CONTROLS AND PROCEDURES.

(a)     Evaluation of disclosure controls and procedures

        Within 90 days prior to the date of this report, our disclosure committee carried out an evaluation, under the supervision and with the participation of our management, including our chief executive officer and our chief financial officer, of the effectiveness of the design and operation of our disclosure controls and procedures pursuant to Rule 13a-14 of the Securities and Exchange Act of 1934 (the “Exchange Act”). Based upon that evaluation, our chief executive officer and our chief financial officer concluded that as of the date of our evaluation, the Company’s disclosure controls and procedures (as defined in Rule 13a-15(e) under the Exchange Act) are effective to ensure that information required to be disclosed by us in reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in Securities and Exchange Commission rules and forms.

(b)     Changes in internal controls

        There were no significant changes in our internal controls or in other factors that could significantly affect these controls subsequent to the date of our most recent evaluation.

PART II. OTHER INFORMATION

Item 1. LEGAL PROCEEDINGS.

        From time to time we are defendants in ordinary, routine litigation and proceedings incidental to our business, including:

        We have been sued in California by several employees and in Alabama by a salaried store manager and a former store manager who allege, among other things, that they should have been classified as non-exempt employees and, therefore, should have received overtime compensation. The suits also request that the California state court certify the case as a class action on behalf of all store managers, assistant managers and merchandise managers in our California stores and request that the Alabama Federal Court certify the case as a collective action under the Fair Labor Standards Act on behalf of all salaried managers in all of our stores. We were also sued in California on November 3, 2003 by a former store manager who alleges that certain employees should have received meal period breaks and paid rest periods.   As in the other California lawsuit, he also alleges that he and other salaried managers should have been classified as non-exempt employees and, therefore, should have received overtime compensation.  The suit also requests that the California state court certify the case as a class action. We will vigorously defend ourselves in all these matters.

        A plaintiff filed suit against us alleging that a stretch cord purchased in one of our stores was responsible for the loss of her eye. Plaintiff alleges, among other things, that we did not warn her of the dangers resulting from the use of stretch cords. We believe that we are not liable for this loss and will defend ourselves vigorously. However, no assurances can be given as to the outcome of this case.

        We do not believe that any of these matters will individually, or in the aggregate, have a material adverse affect on our financial condition or results of operations.

Item 6. EXHIBITS AND REPORTS ON FORM 8-K.

(a)     Exhibits

         31 and 32. Additional Exhibits

             31.1    Certification required under Section 302 of the Sarbanes-Oxley Act of Chief
                        Executive Officer

            31.2     Certification required under Section 302 of the Sarbanes-Oxley Act of Chief
                        Financial Officer

(b)     Reports on Form 8-K:

         The following reports on Form 8-K were filed during the third quarter of 2003:

        Also, in the fourth quarter of 2003, we filed the following reports on Form 8-K:

SIGNATURES

        Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

DOLLAR TREE STORES, INC.