What changed in this filing

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Item 1. Financial Statements

2020-12-03 compared with 2020-08-27 · 51 added, 44 removed, 313 unchanged (23% of the section changed)

60 unchanged sentences

Comprehensive

Balances, May 1, 2020

Balances, July 31, 2020

Dividends paid, $ 0.36 per common share

3 unchanged sentences

Other equity and related transactions

Balances, July 31, 2020

Balances, May 3, 2019

Balances, October 30, 2020

Balances, August 2, 2019

Dividends paid, $ 0.32 per common share

3 unchanged sentences

Other equity and related transactions

Balances, August 2, 2019

Balances, November 1, 2019

Balances, January 31, 2020

3 unchanged sentences

Repurchases of common stock

( 1,559,508 )

( 1,566,546 )

Other equity and related transactions

Balances, July 31, 2020

Balances, October 30, 2020

Balances, February 1, 2019

5 unchanged sentences

Other equity and related transactions

Balances, August 2, 2019

Balances, November 1, 2019

See notes to condensed consolidated financial statements.

27 unchanged sentences

Repurchases of common stock

( 1,566,546 )

Payments of cash dividends

1 unchanged sentence

Net cash provided by (used in) financing activities

( 1,104,380 )

Net increase (decrease) in cash and cash equivalents

17 unchanged sentences

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with the Company’s customary accounting practices.

In management’s opinion, all adjustments (which are of a normal recurring nature) necessary for a fair presentation of the consolidated financial position as of July 31, 2020 and results of operations for the 13-week and 26-week accounting periods ended July 31, 2020 and August 2, 2019 have been made.

In management’s opinion, all adjustments (which are of a normal recurring nature) necessary for a fair presentation of the consolidated financial position as of October 30, 2020 and results of operations for the 13-week and 39-week accounting periods ended October 30, 2020 and November 1, 2019 have been made.

The preparation of financial statements and related disclosures in conformity with U.S.

2 unchanged sentences

Because the Company’s business is moderately seasonal, the results for interim periods are not necessarily indicative of the results to be expected for the entire year.

In addition, the effect of the COVID-19 pandemic on consumer behavior in the quarterly and year to date periods ended May 1, 2020 and July 31, 2020 resulted in a departure from seasonal norms experienced in recent years and may continue to disrupt the historical quarterly cadence of the Company’s results of operations for an unknown period of time.

In addition, the effect of the COVID-19 pandemic on consumer behavior in the quarterly and year to date periods ended May 1, 2020, July 31, 2020, and October 30, 2020 resulted in a departure from seasonal norms experienced in recent years and may continue to disrupt the historical quarterly cadence of the Company’s results of operations for an unknown period of time.

The Company uses the last-in, first-out (“LIFO”) method of valuing inventory.

2 unchanged sentences

The interim LIFO calculations are subject to adjustment in the final year-end LIFO inventory valuation.

The Company recorded a LIFO provision of $ 0.1 million and $ 3.2 million in the respective 13-week periods, and $ 1.7 million and $ 6.6 million in the respective 26-week periods, ended July 31, 2020 and August 2, 2019.

The Company recorded a LIFO provision of $ 1.6 million and $ 3.2 million in the respective 13-week periods, and $ 3.3 million and $ 9.7 million in the respective 39-week periods, ended October 30, 2020 and November 1, 2019.

In addition, ongoing estimates of inventory shrinkage and initial markups and markdowns are included in the interim cost of goods sold calculation.

23 unchanged sentences

Earnings per share is computed as follows (in thousands, except per share data):

13 Weeks Ended July 31, 2020

13 Weeks Ended August 2, 2019

13 Weeks Ended October 30, 2020

13 Weeks Ended November 1, 2019

Basic earnings per share

1 unchanged sentence

Diluted earnings per share

26 Weeks Ended July 31, 2020

26 Weeks Ended August 2, 2019

39 Weeks Ended October 30, 2020

39 Weeks Ended November 1, 2019

Basic earnings per share

3 unchanged sentences

Diluted earnings per share is determined based on the dilutive effect of share-based awards using the treasury stock method.

Share-based awards that were outstanding at the end of the respective periods but were not included in the computation of diluted earnings per share because the effect of exercising such awards would be antidilutive, were zero and 0.6 million in the respective 13-week periods, and 0.3 million and 0.6 million in the respective 26-week periods, ended July 31, 2020 and August 2, 2019.

Share-based awards that were outstanding at the end of the respective periods but were not included in the computation of diluted earnings per share because the effect of exercising such awards would be antidilutive, were less than 0.1 million and 0.1 million in the respective 13-week periods, and 0.2 million and 0.4 million in the respective 39-week periods, ended October 30, 2020 and November 1, 2019.

Under the accounting standards for income taxes, the asset and liability method is used for computing the future income tax consequences of events that have been recognized in the Company’s consolidated financial statements or income tax returns.

6 unchanged sentences

Generally, with few exceptions, the Company’s 2017 and later tax years remain open for examination by the various state taxing authorities.

As of July 31, 2020, the total reserves for uncertain tax benefits, interest expense related to income taxes and potential income tax penalties were $ 5.1 million, $ 0.5 million and $ 0.0 million, respectively, for a total of $ 5.6 million.

As of October 30, 2020, the total reserves for uncertain tax benefits, interest expense related to income taxes and potential income tax penalties were $ 5.6 million, $ 0.3 million and $ 0.0 million, respectively, for a total of $ 5.9 million.

This total amount is reflected in noncurrent other liabilities in the condensed consolidated balance sheet.

The Company’s reserve for uncertain tax positions is not expected to be reduced in the coming twelve months as a result of expiring statutes of limitations.

As of July 31, 2020, approximately $ 5.1 million of the reserve for uncertain tax positions would impact the Company’s effective income tax rate if the Company were to recognize the tax benefit for these positions.

The effective income tax rates for the 13-week and 26-week periods ended July 31, 2020 were 21.5 % and 21.8 %, respectively, compared to rates of 22.9 % and 21.9 % for the 13-week and 26-week periods ended August 2, 2019.

The income tax rates for the 13-week and 26-week periods in 2020 were lower than the comparable 13-week and 26-week periods in 2019 primarily due to increased income tax benefits associated with share-based compensation partially offset by a lower income tax rate benefit from federal income tax credits due to higher pre-tax earnings in the 2020 periods compared to the 2019 periods.

In addition, the effective income tax rate for the 13-week period in 2020 was lower than the comparable period in 2019 due to increased income tax expense associated with prior state law changes that occurred in the 2019 period that did not reoccur in the 2020 period.

As of July 31, 2020, the Company’s primary leasing activities were real estate leases for most of its retail store locations and certain of its distribution facilities.

As of October 30, 2020, approximately $ 5.6 million of the reserve for uncertain tax positions would impact the Company’s effective income tax rate if the Company were to recognize the tax benefit for these positions.

The effective income tax rates for the 13-week and 39-week periods ended October 30, 2020 were 21.6 % and 21.8 % respectively, compared to rates of 21.7 % and 21.9 % for the 13-week and 39-week periods ended November 1, 2019.

The income tax rates for the 13-week and 39-week periods in 2020 were lower than the comparable 13-week and 39-week periods in 2019 primarily due to increased income tax benefits associated with share-based compensation and a greater income tax rate benefit from state taxes, partially offset by a lower income tax rate benefit from federal income tax credits due to higher pre-tax earnings in the 2020 periods compared to the 2019 periods.

As of October 30, 2020, the Company’s primary leasing activities were real estate leases for most of its retail store locations and certain of its distribution facilities.

Substantially all of the Company’s leases are classified as operating leases and the associated assets and liabilities are presented as separate captions in the condensed consolidated balance sheets.

Finance lease assets are included in net property and equipment, and finance lease liabilities are included in long-term obligations, in the condensed consolidated balance sheet.

At July 31, 2020, the weighted-average remaining lease term for the Company’s operating leases is 10.0 years, and the weighted average discount rate for such leases is 4.1 %.

At October 30, 2020, the weighted-average remaining lease term for the Company’s operating leases is 9.9 years, and the weighted average discount rate for such leases is 4.0 %.

Operating lease costs are reflected as selling, general and administrative costs in the condensed consolidated statements of income.

For the 26-week periods ended July 31, 2020 and August 2, 2019, such costs were $ 678.6 million and $ 622.4 million, respectively.

Cash paid for amounts included in the measurement of operating lease liabilities of $ 680.4 million and $ 626.3 million, respectively, were reflected in cash flows from operating activities in the condensed consolidated statements of cash flows for the 26-week periods ended July 31, 2020 and August 2, 2019.

For the 39-week periods ended October 30, 2020 and November 1, 2019, such costs were $ 1.03 billion and $ 0.94 billion, respectively.

Cash paid for amounts included in the measurement of operating lease liabilities of $ 1.03 billion and $ 0.95 billion, respectively, were reflected in cash flows from operating activities in the condensed consolidated statements of cash flows for the 39-week periods ended October 30, 2020 and November 1, 2019.

Current and long-term obligations

12 unchanged sentences

Borrowings under the Revolving Facility bear interest at a rate equal to an applicable interest rate margin plus, at the Company’s option, either (a) LIBOR or (b) a base rate (which is usually equal to the prime rate).

The applicable interest rate margin for borrowings as of July 31, 2020 was 1.015 % for LIBOR borrowings and 0.015 % for base-rate borrowings.

The applicable interest rate margin for borrowings as of October 30, 2020 was 1.015 % for LIBOR borrowings and 0.015 % for base-rate borrowings.

The Company is also required to pay a facility fee, payable on any used and unused commitment amounts of the Revolving Facility, and customary fees on letters of credit issued under the Revolving Facility.

As of July 31, 2020, the facility fee rate was 0.11 %.

As of October 30, 2020, the facility fee rate was 0.11 %.

The applicable interest rate margins for borrowings, the facility fees and the letter of credit fees under the Revolving Facility are subject to adjustment from time to time based on the Company’s long-term senior unsecured debt ratings.

5 unchanged sentences

The Revolving Facility also contains financial covenants which require the maintenance of a minimum fixed charge coverage ratio and a maximum leverage ratio.

As of July 31, 2020, the Company was in compliance with all such covenants.

As of October 30, 2020, the Company was in compliance with all such covenants.

The Revolving Facility also contains customary events of default.

As of July 31, 2020, the Company had no outstanding borrowings, outstanding letters of credit of $ 4.8 million, and borrowing availability of approximately $ 1.25 billion under the Revolving Facility that, due to its intention to maintain borrowing availability related to the commercial paper program described below, could contribute incremental liquidity of $ 1.06 billion.

In addition, as of July 31, 2020, the Company had outstanding letters of credit of $ 53.9 million which were issued pursuant to separate agreements.

As of July 31, 2020, the Company had a commercial paper program under which the Company may issue unsecured commercial paper notes (the “CP Notes”) from time to time in an aggregate amount not to exceed $ 1.0 billion outstanding at any time.

As of October 30, 2020, the Company had no outstanding borrowings, outstanding letters of credit of $ 4.8 million, and borrowing availability of approximately $ 1.25 billion under the Revolving Facility that, due to its intention to maintain borrowing availability related to the commercial paper program described below, could contribute incremental liquidity of $ 1.06 billion.

In addition, as of October 30, 2020, the Company had outstanding letters of credit of $ 75.5 million which were issued pursuant to separate agreements.

As of October 30, 2020, the Company had a commercial paper program under which the Company may issue unsecured commercial paper notes (the “CP Notes”) from time to time in an aggregate amount not to exceed $ 1.0 billion outstanding at any time.

The CP Notes may have maturities of up to 364 days from the date of issue and rank equal in right of payment with all of the Company’s other unsecured and unsubordinated indebtedness.

The Company intends to maintain available commitments under the Revolving Facility in an amount at least equal to the amount of CP Notes outstanding at any time.

As of July 31, 2020, the Company’s condensed consolidated balance sheet reflected no outstanding unsecured CP Notes.

As of October 30, 2020, the Company’s condensed consolidated balance sheet reflected no outstanding unsecured CP Notes.

CP Notes totaling $ 181.0 million were held by a wholly-owned subsidiary of the Company and are therefore not reflected on the condensed consolidated balance sheet.

2 unchanged sentences

Interest on the 2030

Senior Notes and the 2050 Senior Notes is payable in cash on April 3 and October 3 of each year, commencing on October 3, 2020.

Senior Notes and the 2050 Senior Notes is payable in cash on April 3 and October 3 of each year, and commenced on October 3, 2020.

The Company incurred $ 13.6 million of debt issuance costs associated with the issuance of the 2030 Senior Notes and the 2050 Senior Notes.

3 unchanged sentences

As a basis for considering market participant assumptions in fair value measurements, fair value accounting standards establish a fair value hierarchy that distinguishes between market participant assumptions based on market data obtained from sources independent of the reporting entity (observable inputs that are classified within Levels 1 and 2 of the hierarchy) and the reporting entity’s own assumptions about market participant assumptions (unobservable inputs classified within Level 3 of the hierarchy).

The Company does not have any fair value measurements categorized within Level 3 as of July 31, 2020.

The following table presents the Company’s liabilities required to be measured at fair value as of July 31, 2020, aggregated by the level in the fair value hierarchy within which those measurements are classified.

The Company does not have any fair value measurements categorized within Level 3 as of October 30, 2020.

The following table presents the Company’s liabilities required to be measured at fair value as of October 30, 2020, aggregated by the level in the fair value hierarchy within which those measurements are classified.

Quoted Prices

30 unchanged sentences

On May 4, 2020, the Company’s motion to dismiss the action was denied.

Trial is scheduled for March 8, 2021.

On September 1, 2017, the Mississippi Attorney General (the “Mississippi AG”), who also is represented by the counsel for plaintiffs in the Motor Oil MDL, filed an action in the Chancery Court of the First Judicial District of Hinds County, Mississippi alleging that the Company’s labeling, marketing and sale of certain Dollar General private-label motor oil violated Mississippi law.

15 unchanged sentences

On February 7, 2020, the Company reached an agreement with the Louisiana AG to resolve this matter for an amount that is immaterial to the Company’s consolidated financial statements as a whole.

On August 20, 2018, plaintiffs moved to certify two nationwide classes relating to their claims of alleged unjust enrichment and breach of implied warranties.

On August 20, 2018, plaintiffs in the MDL moved to certify two nationwide classes relating to their claims of alleged unjust enrichment and breach of implied warranties.

In addition, plaintiffs moved to certify a multi-state class relating to their claims of breach of implied warranties and multiple statewide classes relating to alleged unfair trade practices/consumer fraud, unjust enrichment and breach of implied warranty claims.

5 unchanged sentences

The Company’s appeal remains pending.

The parties have reached an agreement in principle to resolve the Motor Oil MDL for an amount that is immaterial to the Company’s consolidated financial statements as a whole.

The parties’ agreement must be formalized and submitted to the court for consideration and approval.

The Company is vigorously defending these matters and believes that the labeling, marketing and sale of its private-label motor oil comply with applicable federal and state requirements and are not misleading.

1 unchanged sentence

At this time, however, except as to the Louisiana Motor Oil Matter, it is not possible to predict whether these matters ultimately will be permitted to proceed as a class or in a similar fashion or the size of any putative class or classes.

Likewise, except as to the Louisiana Motor Oil Matter, no assurances can be given that the Company will be successful in its defense of these matters on the merits or otherwise.

Likewise, except as to the Louisiana Motor Oil Matter, no assurances can be given that the Company will be successful in its defense of these matters on the merits

or otherwise.

Based on its belief that a loss in these matters is both probable and reasonably estimable, as noted above, during 2019, the Company recorded an accrual for an amount that is immaterial to the Company’s consolidated financial statements as a whole.

1 unchanged sentence

The Company manages its business on the basis of one reportable operating segment.

As of July 31, 2020, all of the Company’s operations were located within the United States with the exception of certain product sourcing operations in Hong Kong and China, which collectively are not material with regard to assets, results of operations or otherwise to the condensed consolidated financial statements.

As of October 30, 2020, all of the Company’s operations were located within the United States with the exception of certain product sourcing operations, which collectively are not material with regard to assets, results of operations or otherwise to the condensed consolidated financial statements.

The following net sales data is presented in accordance with accounting standards related to disclosures about segments of an enterprise.

6 unchanged sentences

On August 29, 2012, the Company’s Board of Directors authorized a common stock repurchase program, which the Board has since increased on several occasions.

Most recently, on August 26, 2020, the Company’s Board of Directors authorized a $ 2.0 billion increase to the existing common stock repurchase program and as of that date, a cumulative total of $ 10.0 billion had been authorized under the program since its inception.

The repurchase authorization has no expiration date and allows repurchases from time to time in the open market or in privately negotiated transactions.

The timing and number of shares purchased depends on a variety of factors, such as price, market conditions, compliance with the covenants and restrictions under the Company’s debt agreements and other factors.

Most recently, on August 26, 2020, the Company’s Board of Directors authorized a $ 2.0 billion increase to the existing common stock repurchase program, bringing the cumulative total to $ 10.0 billion authorized under the program since its inception.

The repurchase authorization has no expiration date and allows repurchases from time to time in open market transactions, including pursuant to trading plans adopted in accordance with Rule 10b5-1 of the Securities Exchange Act of 1934, as amended, or in privately negotiated transactions.

The timing, manner and number of shares repurchased will depend on a variety of factors, including price, market conditions, compliance with the covenants and restrictions under the Company’s debt agreements and other factors.

Repurchases under the program may be funded from available cash or borrowings, including under the Company’s Revolving Facility and issuance of CP Notes discussed in further detail in Note 5.

Pursuant to its common stock repurchase program, during the 26-week periods ended July 31, 2020 and August 2, 2019, the Company repurchased in the open market approximately 3.6 million shares of its common stock at a total cost of $ 664.6 million and approximately 3.0 million shares of its common stock at a total cost of $ 385.0 million, respectively.

The Company paid a cash dividend of $ 0.36 per share during each of the first two quarters of 2020.

On August 25, 2020, the Company’s Board of Directors declared a quarterly cash dividend of $ 0.36 per share, which is payable on or before October 20, 2020 to shareholders of record on October 6, 2020.

Pursuant to its common stock repurchase program, during the 39-week periods ended October 30, 2020 and November 1, 2019, the Company repurchased in the open market approximately 8.0 million shares of its common stock at a total cost of $ 1.57 billion and approximately 5.6 million shares of its common stock at a total cost of $ 0.79 billion, respectively.

The Company paid a cash dividend of $ 0.36 per share during each of the first three quarters of 2020.

On December 2, 2020, the Company’s Board of Directors declared a quarterly cash dividend of $ 0.36 per share, which is payable on or before January 19, 2021 to shareholders of record on January 5, 2021.

The amount and declaration of future cash dividends is subject to the sole discretion of the Company’s Board of Directors and will depend upon, among other things, the Company’s results of operations, cash requirements, financial condition, contractual restrictions and other factors that the Board may deem relevant in its sole discretion.

2 unchanged sentences

Results of Review of Interim Financial Statements

We have reviewed the accompanying condensed consolidated balance sheet of Dollar General Corporation and subsidiaries (the Company) as of July 31, 2020, the related condensed consolidated statements of income, comprehensive income, and shareholders’ equity for the thirteen and twenty-six week periods ended July 31, 2020 and August 2, 2019, the condensed consolidated statements of cash flows for the twenty-six week periods ended July 31, 2020 and August 2, 2019, and the related notes (collectively referred to as the “condensed consolidated interim financial statements”).

We have reviewed the accompanying condensed consolidated balance sheet of Dollar General Corporation and subsidiaries (the Company) as of October 30, 2020, the related condensed consolidated statements of income, comprehensive income, and shareholders’ equity for the thirteen and thirty-nine week periods ended October 30, 2020 and November 1, 2019, the condensed consolidated statements of cash flows for the thirty-nine week periods ended October 30, 2020 and November 1, 2019, and the related notes (collectively referred to as the “condensed consolidated interim financial statements”).

Based on our reviews, we are not aware of any material modifications that should be made to the condensed consolidated interim financial statements for them to be in conformity with U.S.

12 unchanged sentences

/s/ Ernst & Young LLP

August 27, 2020

December 3, 2020

Nashville, Tennessee

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements