What changed in this filing

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Item 1. Financial Statements

2022-05-26 compared with 2021-12-02 · 43 added, 95 removed, 225 unchanged (38% of the section changed)

15 unchanged sentences

Current liabilities:

Current portion of long-term obligations

Current portion of operating lease liabilities

20 unchanged sentences

For the 13 weeks ended

For the 39 weeks ended

Cost of goods sold

12 unchanged sentences

For the 13 weeks ended

For the 39 weeks ended

Unrealized net gain (loss) on hedged transactions, net of related income tax expense (benefit) of $ 87 , $ 87 , $ 260 , and $ 260 , respectively

Unrealized net gain (loss) on hedged transactions and currency translation, net of related income tax expense (benefit) of $ 87 and $ 87 , respectively

Comprehensive income

4 unchanged sentences

Comprehensive

Balances, July 30, 2021

Dividends paid, $ 0.42 per common share

Unrealized net gain (loss) on hedged transactions

Share-based compensation expense

Repurchases of common stock

Other equity and related transactions

Balances, October 29, 2021

Balances, July 31, 2020

Dividends paid, $ 0.36 per common share

Unrealized net gain (loss) on hedged transactions

Share-based compensation expense

Repurchases of common stock

Other equity and related transactions

Balances, October 30, 2020

Balances, January 28, 2022

Dividends paid, $ 0.55 per common share

Unrealized net gain (loss) on hedged transactions

Unrealized net gain (loss) on hedged transactions and currency translation

Share-based compensation expense

Repurchases of common stock

( 2,051,244 )

( 2,059,907 )

Other equity and related transactions

Balances, October 29, 2021

Balances, April 29, 2022

Balances, January 29, 2021

4 unchanged sentences

( 1,000,352 )

( 1,566,546 )

Other equity and related transactions

Balances, October 30, 2020

Balances, April 30, 2021

See notes to condensed consolidated financial statements.

20 unchanged sentences

Cash flows from financing activities:

Issuance of long-term obligations

Repayments of long-term obligations

Net increase (decrease) in commercial paper outstanding

Borrowings under revolving credit facilities

Repayments of borrowings under revolving credit facilities

Costs associated with issuance of debt

Repurchases of common stock

( 1,000,352 )

( 1,566,546 )

Payments of cash dividends

19 unchanged sentences

Unless the context requires otherwise, references to years contained herein pertain to the Company’s fiscal year.

The Company’s 2021 fiscal year is scheduled to be a 52 -week accounting period ending on January 28, 2022, and the 2020 fiscal year was a 52 -week accounting period that ended on January 29, 2021.

The Company’s 2022 fiscal year is scheduled to be a 53 -week accounting period ending on February 3, 2023, and the 2021 fiscal year was a 52 -week accounting period that ended on January 28, 2022.

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 October 29, 2021 and results of operations for the 13-week and 39-week accounting periods ended October 29, 2021 and October 30, 2020 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 April 29, 2022 and results of operations for the 13-week accounting periods ended April 29, 2022 and April 30, 2021 have been made.

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

7 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 $ 60.5 million and $ 1.6 million in the respective 13-week periods, and $ 108.7 million and $ 3.3 million in the respective 39-week periods, ended October 29, 2021 and October 30, 2020.

The Company recorded a LIFO provision of $ 61.4 million and $ 12.3 million in the respective 13-week periods ended April 29, 2022 and April 30, 2021.

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

3 unchanged sentences

GAAP to contracts, hedging relationships, and other transactions affected by reference rate reform if certain criteria are met.

The adoption of this guidance is effective for all entities as of March 12, 2020 through December 31, 2022.

The Company does not expect the adoption of this guidance to have a material impact on its consolidated financial statements.

This guidance is effective for all entities as of March 12, 2020 and must be adopted by December 31, 2022.

The Company does not expect the adoption of this guidance to have a material impact on its consolidated results of operations, financial position or cash flows.

Earnings per share

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

13 Weeks Ended October 29, 2021

13 Weeks Ended October 30, 2020

Basic earnings per share

Effect of dilutive share-based awards

Diluted earnings per share

39 Weeks Ended October 29, 2021

39 Weeks Ended October 30, 2020

13 Weeks Ended April 29, 2022

13 Weeks Ended April 30, 2021

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 less than 0.1 million in each of the respective 13-week periods, and less than 0.1 million and 0.2 million in the respective 39-week periods, ended October 29, 2021 and October 30, 2020.

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 approximately 0.1 million in each of the respective 13-week periods ended April 29, 2022 and April 30, 2021.

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 2018 and later tax years remain open for examination by the various state taxing authorities.

As of October 29, 2021, the total reserves for uncertain tax benefits, interest expense related to income taxes and potential income tax penalties were $ 8.3 million, $ 0.7 million and $ 0.0 million, respectively, for a total of $ 9.0 million.

As of April 29, 2022, the total reserves for uncertain tax benefits, interest expense related to income taxes and potential income tax penalties were $ 6.2 million, $ 0.3 million and $ 0.0 million, respectively, for a total of $ 6.5 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 expected to be reduced by $ 1.7 million in the coming twelve months as a result of expiring statutes of limitations.

As of October 29, 2021, approximately $ 8.3 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 29, 2021 were 22.2 % and 21.8 % respectively compared to rates of 21.6 % and 21.8 % for the 13-week and 39-week periods ended October 30,

The primary factors affecting the income tax rates for the 13-week and 39-week periods in 2021 compared to the 13-week and 39-week periods in 2020 were changes in the state effective tax rate, a reduced benefit associated with share-based compensation, an increase in uncertain tax positions and greater benefit associated with federal tax credits.

As of October 29, 2021, 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.

As of April 29, 2022, approximately $ 6.2 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 rate for the 13-week period ended April 29, 2022 was 21.8 % compared to a rate of 22.0 % for the 13-week period ended April 30, 2021.

The income tax rate for the 13-week period in 2022 was lower than the comparable 13-week period in 2021 primarily due to a decrease in pre-tax earnings in the 2022 period compared to the 2021 period while rate impacting items, such as the benefits from stock-based compensation and federal tax credits, remained materially the same in amount in both the 2022 and 2021 periods.

As of April 29, 2022, 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

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 sheets.

At October 29, 2021, the weighted-average remaining lease term for the Company’s operating leases was 9.8 years, and the weighted average discount rate for such leases was 3.7 %.

At April 29, 2022, the weighted-average remaining lease term for the Company’s operating leases was 9.7 years, and the weighted average discount rate for such leases was 3.7 %.

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

For the 39-week periods ended October 29, 2021 and October 30, 2020, such costs were $ 1.11 billion and $ 1.03 billion, respectively.

Cash paid for amounts included in the measurement of operating lease liabilities of $ 1.11 billion and $ 1.03 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 29, 2021 and October 30, 2020.

For the 13-week periods ended April 29, 2022 and April 30, 2021, such costs were $ 389.7 million and $ 361.9 million, respectively.

Cash paid for amounts included in the measurement of operating lease liabilities of $ 396.6 million and $ 364.2 million, respectively, were reflected in cash flows from operating activities in the condensed consolidated statements of cash flows for the 13-week periods ended April 29, 2022 and April 30, 2021.

Current and long-term obligations

10 unchanged sentences

Debt issuance costs, net

On September 10, 2019, the Company entered into an amended and restated credit agreement, providing for a $ 1.25 billion unsecured five-year revolving credit facility (the “Revolving Facility”) of which up to $ 175.0 million is available for letters of credit.

current portion

Long-term portion

The Company’s credit agreement provides for a $ 2.0 billion senior unsecured revolving credit facility (the “Revolving Facility”) of which up to $ 100.0 million is available for letters of credit and is scheduled to mature on December 2, 2026.

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 October 29, 2021 was 1.015 % for LIBOR borrowings and 0.015 % for base-rate borrowings.

The applicable interest rate margin for borrowings as of April 29, 2022 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 October 29, 2021, the facility fee rate was 0.11 %.

As of April 29, 2022, 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 October 29, 2021, the Company was in compliance with all such covenants.

As of April 29, 2022, the Company was in compliance with all such covenants.

The Revolving Facility also contains customary events of default.

As of October 29, 2021, the Company had no outstanding borrowings, outstanding letters of credit of $ 1.9 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 $ 1.07 billion.

In addition, as of October 29, 2021, the Company had outstanding letters of credit of $ 49.8 million which were issued pursuant to separate agreements.

As of October 29, 2021, 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 April 29, 2022, the Company had no outstanding borrowings, outstanding letters of credit of $ 1.3 million, and borrowing availability of approximately $ 2.0 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 $ 1.0 billion.

In addition, as of April 29, 2022, the Company had outstanding letters of credit of $ 46.8 million which were issued pursuant to separate agreements.

As of April 29, 2022, 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 $ 2.0 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 October 29, 2021, the Company’s condensed consolidated balance sheet reflected no outstanding unsecured CP Notes.

As of April 29, 2022, the Company’s condensed consolidated balance sheet reflected outstanding unsecured CP Notes of $ 759.6 million, which had a weighted average borrowing rate of 0.65 %.

CP Notes totaling $ 242.0 million were held by a wholly-owned subsidiary of the Company and are therefore not reflected on the condensed consolidated balance sheets.

On April 3, 2020, the Company issued $ 1.0 billion aggregate principal amount of 3.5 % senior notes due 2030 (the “2030 Senior Notes”), net of discount of $ 0.7 million, and $ 500.0 million aggregate principal amount of 4.125 % senior notes due 2050 (the “2050 Senior Notes”), net of discount of $ 5.0 million.

The 2030 Senior Notes are scheduled to mature on April 3, 2030 and the 2050 Senior Notes are scheduled to mature on April 3, 2050.

Interest on the 2030 Senior Notes and the 2050 Senior Notes is payable in cash on April 3 and October 3 of each year.

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

During the second quarter of 2021, the Company entered into interest rate swaps on a portion of the 2030 Senior Notes.

These interest rate swaps are being accounted for as fair value hedges, with the derivative asset or liability offset by a corresponding adjustment to the carrying value of the 2030 Senior Notes.

Such arrangements are not material to the Company’s condensed consolidated financial statements.

Assets and liabilities measured at fair value

2 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 October 29, 2021.

The following table presents the Company’s liabilities required to be measured at fair value as of October 29, 2021, 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 April 29, 2022.

The following table presents the Company’s liabilities required to be measured at fair value as of April 29, 2022, aggregated by the level in the fair value hierarchy within which those measurements are classified.

Quoted Prices

3 unchanged sentences

Deferred compensation (b)

(a) Included in the condensed consolidated balance sheet at book value as long-term obligations of $ 4,127,426 .

(a) Included in the condensed consolidated balance sheet at book value as current portion of long-term obligations of $ 900,635 and long-term obligations of $ 3,947,462 .

(b) Reflected at fair value in the condensed consolidated balance sheet as Accrued expenses and other current liabilities of $ 2,267 and noncurrent Other liabilities of $ 42,820 .

4 unchanged sentences

For some matters, a liability is not probable or the amount cannot be reasonably estimated and therefore an accrual has not been made.

In 2019, the Company recorded an accrual of $ 31.0 million for losses the Company believes are both probable and reasonably estimable relating to certified class actions and associated matters including the matters discussed below under Consumer/Product Litigation.

Except as described below and based on information currently available, the Company believes that its pending legal matters, both individually and in the aggregate, will be resolved without a material adverse effect on the Company’s consolidated financial statements as a whole.

Based on information currently available, the Company believes that its pending legal matters, both individually and in the aggregate, will be resolved without a material adverse effect on the Company’s consolidated financial statements as a whole.

However, litigation and other legal matters involve an element of uncertainty.

Adverse decisions and settlements, including any required changes to the Company’s business, or other developments in such matters could affect the consolidated operating results in future periods or result in liability or other amounts material to the Company’s annual consolidated financial statements.

Consumer/Product Litigation

In December 2015 the Company was first notified of several lawsuits in which plaintiffs allege violation of state law, including state consumer protection laws, relating to the labeling, marketing and sale of certain Dollar General private-label motor oil.

Each of these lawsuits, as well as additional, similar lawsuits filed after December 2015, was filed in, or removed to, various federal district courts of the United States (collectively “Motor Oil Lawsuits”).

On June 2, 2016, the Motor Oil Lawsuits were centralized in a matter styled In re Dollar General Corp.

Motor Oil Litigation , Case MDL No.

2709, before the United States District Court for the Western District of Missouri (“Motor Oil MDL”).

In their consolidated amended complaint, the plaintiffs in the Motor Oil MDL sought to certify two nationwide classes and multiple statewide sub-classes and for each putative class member some or all of the following relief:

compensatory damages, injunctive relief, statutory damages, punitive damages and attorneys’ fees.

The parties reached an agreement, which was granted final approval by the court on June 22, 2021, to resolve the Motor Oil MDL for an amount that is immaterial to the Company’s consolidated financial statements as a whole.

The Company previously reached agreements with the Offices of the New Mexico Attorney General and the Louisiana Attorney General to resolve, for amounts immaterial to the Company’s consolidated financial statements as a whole, allegations that the Company’s labeling, marketing and sale of certain Dollar General private-label motor oil violated New Mexico and Louisiana law (the “New Mexico and Louisiana Motor Oil Matters”).

On September 1, 2017, the Mississippi Attorney General, 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.

The Company removed this matter to Mississippi federal court on October 5, 2017, and it was transferred to the Motor Oil MDL.

On July 7, 2021, the matter was remanded to Mississippi federal court where it remains pending.

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.

The Company further believes that these matters are not appropriate for class or similar treatment.

At this time, however, except as to the Motor Oil MDL and the New Mexico and Louisiana Motor Oil Matters, 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 Motor Oil MDL and the New Mexico and Louisiana Motor Oil Matters, 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.

Segment reporting

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

As of October 29, 2021, substantially all of the Company’s operations were located within the United States with the exception of certain product sourcing and other operations, which collectively are not material with regard to assets, results of operations or otherwise to the condensed consolidated financial statements.

As of April 29, 2022, all of the Company’s retail store operations were located within the United States.

Certain product sourcing and other operations are located outside the United States, which collectively are not material with regard to assets, results of operations or otherwise to the consolidated financial statements.

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

13 Weeks Ended

39 Weeks Ended

(in thousands)

7 unchanged sentences

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

Pursuant to its common stock repurchase program, during the 39-week periods ended October 29, 2021 and October 30, 2020, the Company repurchased in the open market approximately 9.9 million shares of its common stock at a total cost of $ 2.1 billion and approximately 8.0 million shares of its common stock at a total cost of $ 1.6 billion, respectively.

The Company paid a cash dividend of $ 0.42 per share during each of the first three quarters of 2021.

On November 30, 2021, the Board declared a quarterly cash dividend of $ 0.42 per share, which is payable on or before January 18, 2022 to shareholders of record on January 4, 2022.

Pursuant to its common stock repurchase program, during the 13-week periods ended April 29, 2022 and April 30, 2021, the Company repurchased in the open market approximately 3.4 million shares of its common stock at a total cost of $ 0.7 billion and approximately 5.0 million shares of its common stock at a total cost of $ 1.0 billion, respectively.

The Company paid a cash dividend of $ 0.55 per share during the first quarter of 2022.

On May 25, 2022, the Board declared a quarterly cash dividend of $ 0.55 per share, which is payable on or before July 19, 2022 to shareholders of record on July 5, 2022.

The amount and declaration of future cash dividends is subject to the sole discretion of the Board 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 October 29, 2021, the related condensed consolidated statements of income, comprehensive income, and shareholders’ equity for the thirteen and thirty-nine week periods ended October 29, 2021 and October 30, 2020, the condensed consolidated statement of cash flows for the thirty-nine week periods ended October 29, 2021 and October 30, 2020, 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 April 29, 2022, and the related condensed consolidated statements of income, comprehensive income, shareholders’ equity, and cash flows for the thirteen week periods ended April 29, 2022 and April 30, 2021, 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.

13 unchanged sentences

Nashville, Tennessee

December 2, 2021

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