What changed in this filing

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Item 1. Financial Statements

2020-08-27 compared with 2020-05-28 · 95 added, 39 removed, 274 unchanged (33% of the section changed)

3 unchanged sentences

13 Weeks Ended

26 Weeks Ended

(in millions, except per share data)

12 unchanged sentences

13 Weeks Ended

26 Weeks Ended

(in millions)

5 unchanged sentences

(in millions)

August 1, 2020

February 1, 2020

August 3, 2019

Current assets:

30 unchanged sentences

CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY

13 Weeks Ended May 2, 2020

13 Weeks Ended August 1, 2020

(in millions)

Comprehensive

Balance at February 1, 2020

Shareholders'

Balance at May 2, 2020

Total other comprehensive income

1 unchanged sentence

Purchase Plan

Stock-based compensation, net

Balance at August 1, 2020

26 Weeks Ended August 1, 2020

(in millions)

Comprehensive

Shareholders'

Balance at February 1, 2020

Total other comprehensive loss

Issuance of stock under Employee Stock

Purchase Plan

Exercise of stock options

Stock-based compensation, net

Balance at August 1, 2020

See accompanying Notes to Unaudited Condensed Consolidated Financial Statements.

DOLLAR TREE, INC.

CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY (cont.)

13 Weeks Ended August 3, 2019

(in millions)

Comprehensive

Shareholders'

Balance at May 4, 2019

13 Weeks Ended May 4, 2019

Total other comprehensive income

Issuance of stock under Employee Stock

Purchase Plan

Exercise of stock options

Stock-based compensation, net

Repurchase of stock

Balance at August 3, 2019

26 Weeks Ended August 3, 2019

(in millions)

Comprehensive

Shareholders'

Balance at February 2, 2019

7 unchanged sentences

Repurchase of stock

Balance at May 4, 2019

Balance at August 3, 2019

See accompanying Notes to Unaudited Condensed Consolidated Financial Statements.

15 unchanged sentences

Proceeds from governmental grant

Proceeds from (payments for) fixed asset disposition

Payments for fixed asset disposition

Net cash used in investing activities

2 unchanged sentences

Proceeds from revolving credit facility

Repayments of revolving credit facility

Proceeds from stock issued pursuant to stock-based compensation plans

21 unchanged sentences

The unaudited condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” contained in our Annual Report on Form 10-K for the year ended February 1, 2020 .

The results of operations for the 13 weeks ended May 2, 2020 are not necessarily indicative of the results to be expected for the entire fiscal year ending January 30, 2021 .

In our opinion, the unaudited condensed consolidated financial statements included herein contain all adjustments (including those of a normal recurring nature) considered necessary for a fair presentation of our financial position as of May 2, 2020 and May 4, 2019 and the results of our operations and cash flows for the periods presented.

The results of operations for the 13 and 26 weeks ended August 1, 2020 are not necessarily indicative of the results to be expected for the entire fiscal year ending January 30, 2021 .

In our opinion, the unaudited condensed consolidated financial statements included herein contain all adjustments (including those of a normal recurring nature) considered necessary for a fair presentation of our financial position as of August 1, 2020 and August 3, 2019 and the results of our operations and cash flows for the periods presented.

The February 1, 2020 balance sheet information was derived from the audited consolidated financial statements as of that date.

15 unchanged sentences

We responded to the FDA by proposing enhanced procedures and processes for any OTC products we import from China.

In August 2018, a former employee brought suit in California state court as a class action and as a Private Attorney General Act (“PAGA”) representative suit alleging we failed to provide all non-exempt California store employees with compliant rest and meal breaks, accrued vacation, accurate wage statements and final pay upon termination of employment.

We have reached an agreement in principle to settle the matter which will be submitted to the court for approval.

In December 2018, two former employees brought a PAGA suit in California state court alleging that Dollar Tree Stores, Inc.

In December 2018, two former employees brought a Private Attorney General Act (“PAGA”) suit in California state court alleging that Dollar Tree Stores, Inc.

and Dollar Tree Distribution, Inc.

failed to provide non-exempt California store and distribution center employees with rest and meal breaks, suitable seating, overtime pay, minimum wage for all time worked, reporting time pay, accurate wage statements, timely payment of wages during and upon termination of employment, failed to reimburse business expenses, and made unlawful deductions from wage payments.

In January 2020, a consumer class action was filed against us in New York alleging Almond Milk sold by us with “Vanilla” featured prominently on its packaging is mislabeled because it does not contain the expected amount, type, and proportion of vanilla relative to

non-vanilla flavor components.

The legal claims include New York consumer protection laws, negligent misrepresentations, breach of warranties, fraud and unjust enrichment.

In June 2020, a current employee filed a class action in California state court on behalf of herself and other non-exempt store employees in California alleging we failed to provide an effective illness and injury prevention program in our California stores and failed to provide personal protective equipment to our store employees thereby engaging in unfair business practices and creating a public nuisance.

Several lawsuits have been filed against Dollar Tree, Family Dollar and our vendors alleging that personal talc powder products caused cancer.

3 unchanged sentences

In April 2015, a distribution center employee filed a class action in California state court with allegations concerning wages, meal and rest breaks, recovery periods, wage statements and timely termination pay.

We have reached an agreement and are awaiting court approval.

We have reached an agreement and received preliminary approval from the court.

In August 2018, a former employee brought suit in California state court as a class action and as a PAGA representative suit alleging we failed to provide all non-exempt California store employees with compliant rest and meal breaks, accrued vacation, accurate wage statements and final pay upon termination of employment.

We have reached an agreement to settle the matter and are waiting for the court’s approval.

Family Dollar Active Matters

Beginning in 2019, a law firm has filed lawsuits around the country, including purported nationwide and state class actions, alleging we violated the public accommodation requirements of the Americans with Disabilities Act or its state law equivalent, by systemically blocking the aisles with merchandise.

In October 2019, a state and federal class action was filed in New York alleging that we sold Zantac containing N-Nitrosodimethylamine (hereafter “NDMA”), which is classified by the FDA as a probable carcinogen.

In October 2019, a state and federal class action was filed in New York alleging that we sold Zantac containing N-Nitrosodimethylamine, which is classified by the FDA as a probable carcinogen.

The suit alleges breach of warranty, fraud, unjust enrichment, and violation of New York’s General Business Law.

We believe we are fully indemnified by our supplier.

In January 2020, a former employee brought a PAGA action in state court in California alleging we failed to provide compliant rest and meal periods, pay all required overtime, pay minimum wages for all time worked, provide compliant wage statements and reimburse business expenses.

In May 2020, a former employee filed a class action complaint in state court in California on behalf of all non-exempt California store employees alleging we failed to provide compliant rest and meal breaks, suitable seating, accurate wage statements, pay during security checks and to pay all wages due upon termination of employment.

In July 2020, a former employee brought a class action in state court in California on behalf of all non-exempt California store employees alleging we failed to provide compliant rest breaks, pay timely wages, reimburse business expenses and provide accurate wage statements.

Family Dollar Resolved Matters

5 unchanged sentences

Additionally, in the first quarter of fiscal 2020, we preemptively drew on our Revolving Credit Facility to reduce our exposure to potential short-term liquidity risk in the banking system as a result of the COVID-19 pandemic.

At May 2, 2020, we had $ 750.0 million outstanding and $ 363.4 million available for borrowing under our Revolving Credit Facility.

As of May 2, 2020, we were in compliance with our debt covenants.

At August 1, 2020 , we had $ 500.0 million outstanding and $ 614.3 million available for borrowing under our Revolving Credit Facility.

As of August 1, 2020 , we were in compliance with our debt covenants.

Note 4 - Fair Value Measurements

4 unchanged sentences

that is, the assets and liabilities are not measured at fair value on an ongoing basis but are subject to fair value adjustments in certain circumstances (e.g., when there is evidence of impairment).

We did not record any significant impairment charges during the 13 weeks ended May 2, 2020 and May 4, 2019 .

We did not record any significant impairment charges during the 13 or 26 weeks ended August 1, 2020 and August 3, 2019 .

Fair Value of Financial Instruments

1 unchanged sentence

The aggregate fair values and carrying values of our long-term borrowings were as follows:

August 1, 2020

February 1, 2020

August 3, 2019

(in millions)

7 unchanged sentences

13 Weeks Ended

26 Weeks Ended

(in millions, except per share data)

9 unchanged sentences

Diluted net income per share

For the 13 weeks ended May 2, 2020 and May 4, 2019 , substantially all of the stock options outstanding were included in the calculation of the weighted average number of shares and dilutive potential shares outstanding.

For the 13 and 26 weeks ended August 1, 2020 and August 3, 2019 , substantially all of the stock options outstanding were included in the calculation of the weighted average number of shares and dilutive potential shares outstanding.

Note 6 - Stock-Based Compensation

For a discussion of our stock-based compensation plans, refer to “Note 11 - Stock-Based Compensation Plans” of our Annual Report on Form 10-K for the year ended February 1, 2020 .

Stock-based compensation expense was $ 32.6 million and $ 30.5 million during the 13 weeks ended May 2, 2020 and May 4, 2019 , respectively.

Stock-based compensation expense was $ 55.7 million and $ 44.1 million during the 26 weeks ended August 1, 2020 and August 3, 2019 , respectively.

Restricted Stock

We issue service-based RSUs to employees and officers and issue PSUs to certain officers.

We recognize expense based on the estimated fair value of the RSUs or PSUs granted over the requisite service period, which is generally three years , on a straight-line basis or a shorter period based on the retirement eligibility of the grantee.

We recognize expense based on the estimated fair value of the RSUs or PSUs granted over the requisite service period, which is generally three years , on a straight-line basis

or a shorter period based on the retirement eligibility of the grantee.

The fair value of RSUs and PSUs is determined using our closing stock price on the date of grant.

Service-Based RSUs

The following table summarizes the status of service-based RSUs as of May 2, 2020 and changes during the 13 weeks then ended:

The following table summarizes the status of service-based RSUs as of August 1, 2020 and changes during the 26 weeks then ended:

Number of Shares

1 unchanged sentence

Nonvested at February 1, 2020

Nonvested at May 2, 2020

The following table summarizes the status of PSUs as of May 2, 2020 and changes during the 13 weeks then ended:

Nonvested at August 1, 2020

The following table summarizes the status of PSUs as of August 1, 2020 and changes during the 26 weeks then ended:

Number of Shares

1 unchanged sentence

Nonvested at February 1, 2020

Nonvested at May 2, 2020

Nonvested at August 1, 2020

Note 7 - Leases

Our lease portfolio primarily consists of leases for our retail store locations and we also lease vehicles and trailers, as well as distribution center space and equipment.

The lease cost for operating leases that was recognized in the accompanying unaudited condensed consolidated income statements for the 13 weeks ended May 2, 2020 and May 4, 2019 was as follows:

The lease cost for operating leases that was recognized in the accompanying unaudited condensed consolidated income statements for the 13 and 26 weeks ended August 1, 2020 and August 3, 2019 was as follows:

13 Weeks Ended

26 Weeks Ended

(in millions)

August 1, 2020

August 3, 2019

August 1, 2020

August 3, 2019

Operating lease cost

2 unchanged sentences

*Excludes short-term lease cost and sublease income, which are immaterial

As of May 2, 2020 , maturities of lease liabilities were as follows:

As of August 1, 2020 , maturities of lease liabilities were as follows:

(in millions)

3 unchanged sentences

Present value of lease liabilities

The future minimum lease payments above exclude $ 264.5 million of legally binding minimum lease payments for leases signed but not yet commenced as of May 2, 2020 .

Information regarding the weighted-average remaining lease term and the weighted-average discount rate for operating leases as of May 2, 2020 and May 4, 2019 is as follows:

The future minimum lease payments above exclude $ 216.0 million of legally binding minimum lease payments for leases signed but not yet commenced as of August 1, 2020 .

Information regarding the weighted-average remaining lease term and the weighted-average discount rate for operating leases as of August 1, 2020 and August 3, 2019 is as follows:

August 1, 2020

August 3, 2019

Weighted-average remaining lease term (years)

Weighted-average discount rate

The following represents supplemental information pertaining to our operating lease arrangements for the 13 weeks ended May 2, 2020 and May 4, 2019 :

The following represents supplemental information pertaining to our operating lease arrangements for the 13 and 26 weeks ended August 1, 2020 and August 3, 2019 :

13 Weeks Ended

26 Weeks Ended

(in millions)

Cash paid for amounts included in the measurement of lease liabilities:

August 1, 2020

August 3, 2019

August 1, 2020

August 3, 2019

Cash paid for amounts included in the measurement

of lease liabilities:

Operating cash flows from operating leases

Right-of-use assets obtained in exchange for new operating lease liabilities

Right-of-use assets obtained in exchange for new

operating lease liabilities

Note 8 - Shareholders’ Equity

We did not repurchase any shares of common stock in the 13 weeks ended May 2, 2020 .

We repurchased 960,683 shares of common stock on the open market for approximately $ 100.0 million during the 13 weeks ended May 4, 2019 .

As of May 2, 2020 , we have $ 800.0 million remaining under Board repurchase authorization.

We did not repurchase any shares of common stock in the 13 and 26 weeks ended August 1, 2020 .

We repurchased 881,624 and 1,842,307 shares of common stock on the open market for approximately $ 88.4 million and $ 188.4 million during the 13 and 26 weeks ended August 3, 2019 , respectively.

Approximately $ 49.2 million in share repurchases had not settled as of August 3, 2019 and this amount was accrued in the accompanying unaudited condensed consolidated balance sheet as of August 3, 2019.

As of August 1, 2020 , we have $ 800.0 million remaining under Board repurchase authorization.

Note 9 - Income Taxes

1 unchanged sentence

The CARES Act retroactively changed the recovery period for Qualified Improvement Property to 15 years for eligible property placed in service subsequent to December 31, 2017.

In the first quarter of 2020, we reclassified an estimated $ 67.0 million to the Deferred income taxes, net liability from Income taxes payable to reflect the additional currently deductible depreciation associated with the change in recovery period for Qualified Improvement Property.

In the first quarter of 2020, we reclassified $ 67.0 million to the Deferred income taxes, net liability from Income taxes payable to reflect the additional currently deductible depreciation associated with the change in recovery period for Qualified Improvement Property.

Note 10 - Segments

17 unchanged sentences

13 Weeks Ended

26 Weeks Ended

(in millions)

10 unchanged sentences

Interest expense, net

Other expense (income), net

Other expense, net

Income before income taxes

7 unchanged sentences

Consolidated Total assets

*Goodwill is reassigned between segments when stores are re-bannered between segments.

There were no stores re-bannered between segments in the 13 weeks ended May 2, 2020 .

In the 13 weeks ended May 4, 2019 , we reassigned $ 11.1 million of goodwill from Family Dollar to Dollar Tree as a result of re-bannering.

*Goodwill is reassigned between segments when previously acquired stores are re-bannered between segments.

The goodwill related to previously acquired re-bannered stores in the 26 weeks ended August 1, 2020 was no t material.

In the 26 weeks ended August 3, 2019 , we reassigned $ 36.1 million of goodwill from Family Dollar to Dollar Tree as a result of re-bannering.

Disaggregated Revenue

1 unchanged sentence

13 Weeks Ended

26 Weeks Ended

(in millions)

9 unchanged sentences

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