What changed in this filing

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Item 1. Financial Statements

2020-11-24 compared with 2020-08-27 · 72 added, 69 removed, 300 unchanged (32% of the section changed)

26 unchanged sentences

(in millions)

August 1, 2020

October 31, 2020

February 1, 2020

August 3, 2019

November 2, 2019

Current assets:

30 unchanged sentences

CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY

13 Weeks Ended August 1, 2020

13 Weeks Ended October 31, 2020

(in millions)

1 unchanged sentence

Shareholders'

Balance at May 2, 2020

Balance at August 1, 2020

Total other comprehensive income

2 unchanged sentences

Stock-based compensation, net

Balance at August 1, 2020

26 Weeks Ended August 1, 2020

Repurchase of stock

Balance at October 31, 2020

39 Weeks Ended October 31, 2020

(in millions)

7 unchanged sentences

Stock-based compensation, net

Balance at August 1, 2020

Repurchase of stock

Balance at October 31, 2020

See accompanying Notes to Unaudited Condensed Consolidated Financial Statements.

1 unchanged sentence

CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY (cont.)

13 Weeks Ended August 3, 2019

13 Weeks Ended November 2, 2019

(in millions)

1 unchanged sentence

Shareholders'

Balance at May 4, 2019

Balance at August 3, 2019

Total other comprehensive income

4 unchanged sentences

Repurchase of stock

Balance at August 3, 2019

26 Weeks Ended August 3, 2019

Balance at November 2, 2019

39 Weeks Ended November 2, 2019

(in millions)

10 unchanged sentences

Repurchase of stock

Balance at August 3, 2019

Balance at November 2, 2019

See accompanying Notes to Unaudited Condensed Consolidated Financial Statements.

24 unchanged sentences

Payments for repurchase of stock

Net cash provided by (used in) financing activities

Net cash used in financing activities

Effect of exchange rate changes on cash, cash equivalents and restricted cash

17 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 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 results of operations for the 13 and 39 weeks ended October 31, 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 October 31, 2020 and November 2, 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.

1 unchanged sentence

Note 2 - Legal Proceedings

We are defendants in legal proceedings including a Food and Drug Administration (“FDA”) proceeding and the class, collective, representative and large cases described below as well as individual claims in arbitration.

We will vigorously defend ourselves in all matters referred to in this Note 2.

We are defendants in legal proceedings including the class, collective, representative and large cases described below as well as individual claims in arbitration.

We will vigorously defend ourselves in these matters.

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

8 unchanged sentences

Dollar Tree Active Matters

The FDA has alleged that we improperly sold certain topically applied, over the counter (“OTC”) products manufactured by certain Chinese factories that were on an import “alert” restriction issued by the FDA.

The Food and Drug Administration (“FDA”) has alleged that we improperly sold certain topically applied, over the counter (“OTC”) products manufactured by certain Chinese factories that were on an import “alert” restriction issued by the FDA.

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

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.

In August 2020, a consumer class action was filed against us in New York alleging Smoked Almonds sold by us are mislabeled because the almonds do not go through a smoking process but rather acquire their smoky taste through the use of smoked flavoring.

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

Actual or threatened California state court lawsuits have been filed against Dollar Tree and Family Dollar for similar employment-related claims brought under Private Attorney General Act (“PAGA”).

These cases may allege violations such as failure to provide employees with compliant rest and meal breaks, suitable seating, overtime pay, reimburse business expenses, pay minimum wages for all time worked, provide accurate wage statements, and timely pay wages as well as other potential labor code violations.

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

We do not believe the products we sold caused the illnesses.

2 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 received preliminary approval from the court.

We have reached an agreement and received final 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.

We have reached an agreement to settle the matter and have received the court’s approval.

The court granted our request to compel arbitration which resolves the class action matter.

Family Dollar Active Matters

3 unchanged sentences

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.

Please see the description above for talc and PAGA lawsuits against Family Dollar.

Family Dollar Resolved Matters

4 unchanged sentences

In the first quarter of fiscal 2020, we paid the remaining $ 250.0 million outstanding under our Senior Floating Rate Notes due 2020.

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 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.

Additionally, in the first quarter of fiscal 2020, we preemptively drew $ 750.0 million 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, all of which was repaid as of October 31, 2020 .

As of October 31, 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 or 26 weeks ended August 1, 2020 and August 3, 2019 .

We did not record any significant impairment charges during the 13 or 39 weeks ended October 31, 2020 and November 2, 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

October 31, 2020

February 1, 2020

August 3, 2019

November 2, 2019

(in millions)

3 unchanged sentences

The fair values of our Senior Notes were determined using Level 1 inputs as quoted prices in active markets for identical assets or liabilities are available.

The table above excludes amounts related to our Revolving Credit Facility, as the carrying value approximates fair value because the interest rates vary with market interest rates.

The carrying value of our Revolving Credit Facility approximates its fair value because the interest rates vary with market interest rates.

Note 5 - Net Income Per Share

13 unchanged sentences

Diluted net income per share

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.

For the 13 and 39 weeks ended October 31, 2020 and November 2, 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 $ 55.7 million and $ 44.1 million during the 26 weeks ended August 1, 2020 and August 3, 2019 , respectively.

Stock-based compensation expense was $ 70.5 million and $ 52.5 million during the 39 weeks ended October 31, 2020 and November 2, 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 August 1, 2020 and changes during the 26 weeks then ended:

The following table summarizes the status of service-based RSUs as of October 31, 2020 and changes during the 39 weeks then ended:

Number of Shares

1 unchanged sentence

Nonvested at February 1, 2020

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:

Nonvested at October 31, 2020

The following table summarizes the status of PSUs as of October 31, 2020 and changes during the 39 weeks then ended:

Number of Shares

1 unchanged sentence

Nonvested at February 1, 2020

Nonvested at August 1, 2020

Nonvested at October 31, 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 and 26 weeks ended August 1, 2020 and August 3, 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 39 weeks ended October 31, 2020 and November 2, 2019 was as follows:

13 Weeks Ended

1 unchanged sentence

(in millions)

August 1, 2020

August 3, 2019

August 1, 2020

August 3, 2019

October 31, 2020

November 2, 2019

October 31, 2020

November 2, 2019

Operating lease cost

2 unchanged sentences

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

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

As of October 31, 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 $ 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

The future minimum lease payments above exclude $ 243.7 million of legally binding minimum lease payments for leases signed but not yet commenced as of October 31, 2020 .

Information regarding the weighted-average remaining lease term and the weighted-average discount rate for operating leases as of October 31, 2020 and November 2, 2019 is as follows:

October 31, 2020

November 2, 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 and 26 weeks ended August 1, 2020 and August 3, 2019 :

The following represents supplemental information pertaining to our operating lease arrangements for the 13 and 39 weeks ended October 31, 2020 and November 2, 2019 :

13 Weeks Ended

1 unchanged sentence

(in millions)

August 1, 2020

August 3, 2019

August 1, 2020

August 3, 2019

October 31, 2020

November 2, 2019

October 31, 2020

November 2, 2019

Cash paid for amounts included in the measurement

4 unchanged sentences

Note 8 - Shareholders’ Equity

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.

We repurchased 2,154,304 shares of common stock on the open market for approximately $ 200.0 million during the 13 and 39 weeks ended October 31, 2020 .

Approximately $ 5.8 million in share repurchases had not settled as of October 31, 2020.

This amount was accrued and is reflected in “Other current liabilities” within the accompanying unaudited condensed consolidated balance sheet as of October 31, 2020.

We repurchased 125,048 and 1,967,355 shares of common stock on the open market for approximately $ 11.6 million and $ 200.0 million during the 13 and 39 weeks ended November 2, 2019 , respectively.

As of October 31, 2020 , we have $ 600.0 million remaining under Board repurchase authorization.

Note 9 - Income Taxes

15 unchanged sentences

If the measurement of a segment changes, prior period amounts and balances are reclassified to be comparable to the current period’s presentation.

Corporate and support costs consist primarily of store support center costs that are considered shared services and therefore these selling, general and administrative costs are excluded from our two reporting business segments.

Corporate, support and Other consists primarily of store support center costs that are considered shared services and therefore these selling, general and administrative costs are excluded from our two reporting business segments.

These costs include operating expenses for our store support centers in Chesapeake, Virginia and Matthews, North Carolina.

During fiscal 2019, we consolidated our Matthews, North Carolina store support center with our store support center in Chesapeake, Virginia.

We continue to own our facility in Matthews, North Carolina.

Information for our segments, as well as for Corporate and support, including the reconciliation to Income before income taxes, is as follows:

Corporate, support and Other also includes the results of operations for our Summit Pointe property in Chesapeake, Virginia.

Information for our segments, as well as for Corporate, support and Other, including the reconciliation to Income before income taxes, is as follows:

13 Weeks Ended

3 unchanged sentences

Family Dollar

Corporate, support and Other

Consolidated Net sales

1 unchanged sentence

Family Dollar

Corporate, support and Other

Consolidated Gross profit

1 unchanged sentence

Family Dollar

Corporate and support

Corporate, support and Other

Consolidated Operating income

8 unchanged sentences

Family Dollar

Corporate and support

Corporate, support and Other

Consolidated Total assets

*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.

The goodwill related to previously acquired re-bannered stores in the 39 weeks ended October 31, 2020 was no t material.

In the 39 weeks ended November 2, 2019 , we reassigned $ 45.2 million of goodwill from Family Dollar to Dollar Tree as a result of re-bannering.

Disaggregated Revenue

13 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