What changed in this filing

/stocks — the workspaceLOADING

Item 1. Financial Statements

2021-05-27 compared with 2020-11-24 · 99 added, 157 removed, 215 unchanged (54% of the section changed)

3 unchanged sentences

13 Weeks Ended

39 Weeks Ended

May 1, May 2,

(in millions, except per share data) 2021 2020

Net sales $ 6,476.8 $ 6,286.8

Other revenue 2.9 —

Total revenue 6,479.7 6,286.8

Cost of sales 4,512.7 4,491.9

5 unchanged sentences

Provision for income taxes 112.4 77.6

Net income $ 374.5 $ 247.6

Basic net income per share $ 1.61 $ 1.05

4 unchanged sentences

13 Weeks Ended

39 Weeks Ended

May 1, May 2,

(in millions) 2021 2020

Net income $ 374.5 $ 247.6

Foreign currency translation adjustments 5.0 ( 8.0 )

3 unchanged sentences

CONDENSED CONSOLIDATED BALANCE SHEETS

(in millions)

October 31, 2020

February 1, 2020

November 2, 2019

(in millions) May 1, 2021 January 30, 2021 May 2, 2020

Current assets:

5 unchanged sentences

of $ 4,917.2 , $ 4,765.0 and $ 4,333.0 , respectively

4,182.4 4,116.3 3,964.8

Restricted cash 46.9 46.9 46.9

Operating lease right-of-use assets 6,356.5 6,324.1 6,147.0

Goodwill 1,985.6 1,984.4 1,981.4

Trade name intangible asset 3,100.0 3,100.0 3,100.0

Deferred tax asset 24.4 23.2 23.3

Other assets 50.0 50.3 43.0

Total assets $ 21,050.7 $ 20,696.0 $ 20,471.8

LIABILITIES AND SHAREHOLDERS’ EQUITY

12 unchanged sentences

Total liabilities 13,639.4 13,410.7 13,951.2

Commitments and contingencies

Commitments and contingencies (Note 2)

Shareholders’ equity 7,411.3 7,285.3 6,520.6

4 unchanged sentences

CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY

13 Weeks Ended October 31, 2020

(in millions)

Comprehensive

Shareholders'

Balance at August 1, 2020

Total other comprehensive income

Issuance of stock under Employee Stock

Purchase Plan

Stock-based compensation, net

Repurchase of stock

Balance at October 31, 2020

39 Weeks Ended October 31, 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

Repurchase of stock

Balance at October 31, 2020

See accompanying Notes to Unaudited Condensed Consolidated Financial Statements.

DOLLAR TREE, INC.

CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY (cont.)

13 Weeks Ended November 2, 2019

(in millions)

13 Weeks Ended May 1, 2021

(in millions) Common

Shares Common

Stock Additional

Capital Accumulated

Comprehensive

Shareholders'

Balance at August 3, 2019

Loss Retained

Earnings Shareholders'

Balance at January 30, 2021 233.4 $ 2.3 $ 2,138.5 $ ( 35.2 ) $ 5,179.7 $ 7,285.3

Net income — — — — 374.5 374.5

Total other comprehensive income — — — 5.0 — 5.0

4 unchanged sentences

Repurchase of stock ( 2.2 ) — ( 250.0 ) — — ( 250.0 )

Balance at November 2, 2019

39 Weeks Ended November 2, 2019

(in millions)

Balance at May 1, 2021 231.8 $ 2.3 $ 1,885.0 $ ( 30.2 ) $ 5,554.2 $ 7,411.3

13 Weeks Ended May 2, 2020

(in millions) Common

Shares Common

Stock Additional

Capital Accumulated

Comprehensive

Shareholders'

Loss Retained

Earnings Shareholders'

Balance at February 1, 2020 236.7 $ 2.4 $ 2,454.4 $ ( 39.8 ) $ 3,837.8 $ 6,254.8

Cumulative effect of adopted accounting

standards, net

Net income — — — — 247.6 247.6

Total other comprehensive loss — — — ( 8.0 ) — ( 8.0 )

3 unchanged sentences

Stock-based compensation, net 0.4 — 16.5 — — 16.5

Repurchase of stock

Balance at November 2, 2019

Balance at May 2, 2020 237.2 $ 2.4 $ 2,480.6 $ ( 47.8 ) $ 4,085.4 $ 6,520.6

See accompanying Notes to Unaudited Condensed Consolidated Financial Statements.

2 unchanged sentences

13 Weeks Ended

May 1, May 2,

(in millions) 2021 2020

Cash flows from operating activities:

Net income $ 374.5 $ 247.6

Adjustments to reconcile net income to net cash provided by operating activities:

14 unchanged sentences

Proceeds from revolving credit facility — 750.0

Repayments of revolving credit facility

Proceeds from stock issued pursuant to stock-based compensation plans 4.0 9.7

1 unchanged sentence

Payments for repurchase of stock ( 241.3 ) —

Net cash used in financing activities

Net cash provided by (used in) financing activities ( 276.6 ) 493.6

Effect of exchange rate changes on cash, cash equivalents and restricted cash 0.4 ( 0.7 )

5 unchanged sentences

Interest, net of amounts capitalized $ 0.3 $ 3.2

Income taxes $ 6.3 $ 2.9

Non-cash transactions:

Right-of-use assets obtained in exchange for new operating lease liabilities $ 368.3 $ 261.0

Accrued capital expenditures $ 51.1 $ 54.2

8 unchanged sentences

Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete consolidated financial statements.

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 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.

The results of operations for the 13 weeks ended May 1, 2021 are not necessarily indicative of the results to be expected for the entire fiscal year ending January 29, 2022.

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 1, 2021 and May 2, 2020 and the results of our operations and cash flows for the periods presented.

The January 30, 2021 balance sheet information was derived from the audited consolidated financial statements as of that date.

Certain prior year amounts have been reclassified for consistency with the current year presentation.

14 unchanged sentences

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

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 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.

These cases may allege violations such as failure to provide employees with compliant rest and meal breaks, suitable seating and 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.

2 unchanged sentences

Dollar Tree Resolved Matters

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 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 have received the court’s approval.

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.

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

In December 2020, a former store manager brought a class action in California state court alleging we failed to reimburse employees for business expenses and in so failing, engaged in unfair competition.

The case has been resolved on a single plaintiff basis.

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, 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.

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

In late 2019 and early 2020, personal injury and consumer class actions were filed alleging that we sold Zantac containing N- Nitrosodimethylamine, which is classified by the FDA as a probable carcinogen.

Although all the suits were dismissed in December 2020, on February 8, 2021, an Amended Master Personal Injury Complaint was filed against us and other retailers, manufacturers, and distributors alleging unjust enrichment, physical harm, loss of consortium, and death.

In January and April 2021, state-wide consumer class actions were filed against us by the same law firm in Georgia and Alabama, respectively, for breach of warranty based on the allegation that the coffee we sold was mislabeled because the canisters did not contain enough coffee to make the number of cups of coffee stated on the label.

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

Family Dollar Resolved Matters

In January 2017, a customer filed a class action in federal court in Illinois alleging we violated various state consumer fraud laws as well as express and implied warranties by selling a product that purported to contain aloe when it did not.

The requested class is limited to the state of Illinois.

The court has dismissed the lawsuit.

Note 3 - Long-Term Debt

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 $ 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 3 - 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 39 weeks ended October 31, 2020 and November 2, 2019 .

We did not record any significant impairment charges during the 13 weeks ended May 1, 2021 and May 2, 2020.

Fair Value of Financial Instruments

1 unchanged sentence

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

October 31, 2020

February 1, 2020

November 2, 2019

(in millions)

Carrying Value

May 1, 2021 January 30, 2021 May 2, 2020

(in millions) Fair Value Carrying Value Fair Value Carrying Value Fair Value Carrying Value

Senior Notes $ 3,581.9 $ 3,232.5 $ 3,654.4 $ 3,231.5 $ 3,764.9 $ 3,530.5

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.

3 unchanged sentences

13 Weeks Ended

39 Weeks Ended

May 1, May 2,

(in millions, except per share data) 2021 2020

Basic net income per share:

Net income $ 374.5 $ 247.6

Weighted average number of shares outstanding 233.2 236.9

1 unchanged sentence

Diluted net income per share:

Net income $ 374.5 $ 247.6

Weighted average number of shares outstanding 233.2 236.9

4 unchanged sentences

Diluted net income per share $ 1.60 $ 1.04

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.

For the 13 weeks ended May 1, 2021 and May 2, 2020, 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 5 - 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 $ 70.5 million and $ 52.5 million during the 39 weeks ended October 31, 2020 and November 2, 2019 , respectively.

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 January 30, 2021.

Stock-based compensation expense was $ 31.8 million and $ 32.6 million during the 13 weeks ended May 1, 2021 and May 2, 2020, respectively.

Restricted Stock

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

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

1 unchanged sentence

Service-Based RSUs

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

Weighted Average

Nonvested at February 1, 2020

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

Weighted Average

Nonvested at February 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 39 weeks ended October 31, 2020 and November 2, 2019 was as follows:

13 Weeks Ended

39 Weeks Ended

(in millions)

October 31, 2020

November 2, 2019

October 31, 2020

November 2, 2019

Operating lease cost

Variable lease cost

Total lease cost*

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

As of October 31, 2020 , maturities of lease liabilities were as follows:

(in millions)

Remainder of 2020

Total undiscounted lease payments

Less interest

Present value of lease liabilities

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 39 weeks ended October 31, 2020 and November 2, 2019 :

13 Weeks Ended

39 Weeks Ended

(in millions)

October 31, 2020

November 2, 2019

October 31, 2020

November 2, 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

The following table summarizes the status of service-based RSUs as of May 1, 2021 and changes during the 13 weeks then ended:

Number of Shares Weighted Average

Nonvested at January 30, 2021 1,265,216 $ 83.16

Granted 625,097 109.04

Vested ( 574,719 ) 87.08

Forfeited ( 31,160 ) 90.20

Nonvested at May 1, 2021 1,284,434 $ 93.83

The following table summarizes the status of PSUs as of May 1, 2021 and changes during the 13 weeks then ended:

Number of Shares Weighted Average

Nonvested at January 30, 2021 423,272 $ 82.67

Granted 422,524 95.04

Vested ( 182,812 ) 77.40

Forfeited ( 40,300 ) 94.90

Nonvested at May 1, 2021 622,684 $ 91.82

Note 6 - Shareholders’ Equity

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

On March 27, 2020, the Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”) was signed into law.

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 $ 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

We repurchased 2,150,572 shares of common stock on the open market for approximately $ 250.0 million during the 13 weeks ended May 1, 2021.

Approximately $ 8.7 million in share repurchases had not settled as of May 1, 2021.

This amount was accrued and is reflected in “Other current liabilities” within the accompanying unaudited condensed consolidated balance sheet as of May 1, 2021.

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

As of May 1, 2021, we have $ 2.15 billion remaining under Board repurchase authorization.

Note 7 - Segments and Disaggregated Revenue

We operate a chain of more than 15,700 retail discount stores in 48 states and five Canadian provinces.

2 unchanged sentences

We define our segments as those operations whose results our chief operating decision maker (“CODM”) regularly reviews to analyze performance and allocate resources.

The Dollar Tree segment is the leading operator of discount variety stores offering merchandise at the fixed price of $ 1.00 .

The Dollar Tree segment is the leading operator of discount variety stores offering merchandise predominantly at the fixed price point of $ 1.00 .

The Dollar Tree segment includes our operations under the “Dollar Tree” and “Dollar Tree Canada” brands, 15 distribution centers in the United States and two distribution centers in Canada.

1 unchanged sentence

The Family Dollar segment consists of our operations under the “Family Dollar” brand and 11 distribution centers.

The Family Dollar segment Operating income includes advertising revenue, which is a component of Other revenue in the accompanying unaudited condensed consolidated income statements.

We measure the results of our segments using, among other measures, each segment’s net sales, gross profit and operating income.

3 unchanged sentences

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.

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

These costs include operating expenses for our store support center and 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

39 Weeks Ended

May 1, May 2,

(in millions) 2021 2020

Condensed Consolidated Income Statement Data:

Dollar Tree $ 3,321.3 $ 3,077.5

Family Dollar 3,155.5 3,209.3

Corporate, support and Other

Consolidated Net sales $ 6,476.8 $ 6,286.8

13 Weeks Ended

May 1, May 2,

(in millions) 2021 2020

Condensed Consolidated Income Statement Data:

Gross profit:

Dollar Tree $ 1,118.3 $ 980.7

Family Dollar 845.8 814.2

Corporate, support and Other

Consolidated Gross profit $ 1,964.1 $ 1,794.9

Operating income (loss):

Dollar Tree $ 400.3 $ 282.0

Family Dollar 211.4 175.5

4 unchanged sentences

Income before income taxes $ 486.9 $ 325.2

May 1, January 30, May 2,

(in millions) 2021 2021 2020

Condensed Consolidated Balance Sheet Data:

Dollar Tree $ 426.1 $ 424.9 $ 421.9

Family Dollar 1,559.5 1,559.5 1,559.5

1 unchanged sentence

Total assets:

Dollar Tree $ 8,963.8 $ 8,669.3 $ 8,504.7

Family Dollar 11,611.0 11,562.2 11,540.7

1 unchanged sentence

Consolidated Total assets $ 21,050.7 $ 20,696.0 $ 20,471.8

*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 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

1 unchanged sentence

13 Weeks Ended

39 Weeks Ended

May 1, May 2,

(in millions) 2021 2020

1 unchanged sentence

merchandise category:

Consumable $ 1,584.3 47.7 % $ 1,686.5 54.8 %

Variety 1,627.4 49.0 % 1,311.0 42.6 %

Seasonal 109.6 3.3 % 80.0 2.6 %

Total Dollar Tree segment net sales $ 3,321.3 100.0 % $ 3,077.5 100.0 %

1 unchanged sentence

merchandise category:

Consumable $ 2,373.5 75.2 % $ 2,532.1 78.9 %

Home products 301.0 9.5 % 272.8 8.5 %

3 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