What changed in this filing

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Item 8. Financial Statements and Supplementary Data

2022-03-15 compared with 2021-03-16 · 234 added, 277 removed, 641 unchanged (44% of the section changed)

Financial Statements and Supplementary Data

Report of Independent Registered Public Accounting Firm

Consolidated Statements of Operations

Consolidated Statements of Comprehensive Income (Loss)

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

Report of Independent Registered Public Accounting Firm (PCAOB ID:

Consolidated Income Statements

Consolidated Statements of Comprehensive Income

Consolidated Balance Sheets

4 unchanged sentences

Note 2 - Supplemental Balance Sheet Information

Note 3 - Goodwill and Nonamortizing Intangible Assets

Note 3 - Income Taxes

7 unchanged sentences

Note 11 - Segments and Disaggregated Revenue

Note 13 - Quarterly Financial Information (Unaudited)

Report of Independent Registered Public Accounting Firm

3 unchanged sentences

We have audited the accompanying consolidated balance sheets of Dollar Tree, Inc.

and subsidiaries (the Company) as of January 30, 2021 and February 1, 2020, the related consolidated statements of operations, comprehensive income (loss), shareholders’ equity, and cash flows for each of the years in the three‑year period ended January 30, 2021, and the related notes (collectively, the consolidated financial statements).

In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of January 30, 2021 and February 1, 2020, and the results of its operations and its cash flows for each of the years in the three‑year period ended January 30, 2021, in conformity with U.S.

and subsidiaries (the Company) as of January 29, 2022 and January 30, 2021, the related consolidated income statements, and statements of comprehensive income, shareholders’ equity, and cash flows for each of the years in the three‑year period ended January 29, 2022, and the related notes (collectively, the consolidated financial statements).

In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of January 29, 2022 and January 30, 2021, and the results of its operations and its cash flows for each of the years in the three‑year period ended January 29, 2022, in conformity with U.S.

generally accepted accounting principles.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company’s internal control over financial reporting as of January 29, 2022, based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission, and our report dated March 15, 2022 expressed an unqualified opinion on the effectiveness of the Company’s internal control over financial reporting.

Change in Accounting Principle

As discussed in Note 1 to the consolidated financial statements, the Company has changed its method of accounting for leases as of February 3, 2019, due to the adoption of Accounting Standards Codification (ASC) Topic 842, Leases .

Basis for Opinion

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We believe that our audits provide a reasonable basis for our opinion.

Critical Audit Matters

The critical audit matters communicated below are matters arising from the current period audit of the consolidated financial statements that were communicated or required to be communicated to the audit committee and that:

(1) relate to accounts or disclosures that are material to the consolidated financial statements and (2) involved our especially challenging, subjective, or complex judgments.

The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.

Valuation of goodwill and trade name intangible asset in the Family Dollar operating segment

As discussed in Notes 1 and 3 to the consolidated financial statements, the Company performs goodwill and trade name intangible asset impairment testing on an annual basis and when events and changes in circumstances indicate possible impairment of these assets.

Total recorded goodwill as of January 30, 2021 was $2.0 billion.

Of this amount, the goodwill balance for the Family Dollar reporting unit, which is also the Family Dollar operating segment, was $1.6 billion.

The Family Dollar trade name intangible asset was $3.1 billion as of January 30, 2021.

We identified the assessment of the valuation of goodwill and trade name intangible asset in the Family Dollar operating segment as a critical audit matter.

The assumptions utilized to calculate the fair value of the operating segment, which included revenue growth rates and discount rate, as well as the assumptions used to calculate the fair value of the trade name intangible asset, which included revenue growth rates, discount rate, and royalty rate, required subjective auditor judgment.

Minor changes to these assumptions could have a significant effect on the assessment of the carrying value of the goodwill and trade name, which resulted

in a high degree of subjectivity in performing the associated audit procedures.

The following are the primary procedures we performed to address this critical audit matter.

We evaluated the design and tested the operating effectiveness of certain internal controls over the Company’s goodwill and trade name impairment assessment process, including controls related to the determination of the fair value of the assets, the development of the revenue growth rates, discount rates, and royalty rate.

We performed a sensitivity analysis over the revenue growth rate assumptions to assess their impact on the Company’s determination of the fair values of the Family Dollar reporting unit and the trade name intangible asset.

To assess the Company’s ability to accurately forecast, we compared the Company’s historical forecasts to actual results.

We evaluated the Company’s revenue growth rates reflected in the forecasted revenues for the Family Dollar operating segment by comparing the store sales growth assumptions to historical results.

We also evaluated assumptions related to new store openings and renovations through comparison to the Company’s forecasted capital expenditures and its known store openings and renovations.

We involved valuation professionals with specialized skills and knowledge who assisted in:

• evaluating the Company’s revenue growth rates based on publicly available market data for comparable entities;

• assessing the Company’s discount rates and royalty rate by comparing the Company’s inputs to the discount and royalty rates to publicly available market data for comparable companies and assessing the resulting rates;

• evaluating (1) the Family Dollar operating segment’s fair value using the related cash flow forecast and discount rate, as well as (2) the trade name’s fair value using the related discount rate and royalty rate, and comparing the results to the Company’s fair value estimate.

Critical Audit Matter

The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements that was communicated or required to be communicated to the audit committee and that:

(1) relates to accounts or disclosures that are material to the consolidated financial statements and (2) involved our especially challenging, subjective, or complex judgments.

The communication of a critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

Estimated self‑insurance liability

As discussed in Note 1 to the consolidated financial statements, the Company employs an actuary to estimate its self-insurance liability.

As discussed in Note 1 to the consolidated financial statements, the Company considers actuarial assumptions to estimate its self‑insurance liability.

As of January 29, 2022, the Company recorded an estimated liability of $317 million.

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DOLLAR TREE, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

January 30, February 1, February 2,

CONSOLIDATED INCOME STATEMENTS

January 29, January 30, February 1,

(in millions, except per share data) 2022 2021 2020

Net sales $ 26,309.8 $ 25,508.4 $ 23,610.8

Other revenue 11.4 0.9 —

Total revenue 26,321.2 25,509.3 23,610.8

Cost of sales 18,583.9 17,721.0 16,570.1

Gross profit 7,788.3 7,040.7 6,947.5

Selling, general and administrative expenses, excluding Goodwill

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Selling, general and administrative expenses 5,925.9 5,900.4 5,778.5

Operating income (loss) 1,887.9 1,262.2 ( 939.5 )

Operating income 1,811.4 1,887.9 1,262.2

Interest expense, net 178.9 147.3 162.1

Other expense (income), net 0.8 1.4 ( 0.5 )

Income (loss) before income taxes 1,739.8 1,098.7 ( 1,309.0 )

Other expense, net 0.3 0.8 1.4

Income before income taxes 1,632.2 1,739.8 1,098.7

Provision for income taxes 304.3 397.9 271.7

Net income (loss) $ 1,341.9 $ 827.0 $ ( 1,590.8 )

Basic net income (loss) per share $ 5.68 $ 3.49 $ ( 6.69 )

Diluted net income (loss) per share $ 5.65 $ 3.47 $ ( 6.69 )

Net income $ 1,327.9 $ 1,341.9 $ 827.0

Basic net income per share $ 5.83 $ 5.68 $ 3.49

Diluted net income per share $ 5.80 $ 5.65 $ 3.47

See accompanying Notes to Consolidated Financial Statements

DOLLAR TREE, INC.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

January 30, February 1, February 2,

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

January 29, January 30, February 1,

(in millions) 2022 2021 2020

Net income (loss) $ 1,341.9 $ 827.0 $ ( 1,590.8 )

Net income $ 1,327.9 $ 1,341.9 $ 827.0

Foreign currency translation adjustments — 4.6 ( 1.5 )

Total comprehensive income (loss) $ 1,346.5 $ 825.5 $ ( 1,596.8 )

Total comprehensive income $ 1,327.9 $ 1,346.5 $ 825.5

See accompanying Notes to Consolidated Financial Statements

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CONSOLIDATED BALANCE SHEETS

(in millions, except share and per share data) January 30, 2021 February 1, 2020

(in millions, except share and per share data) January 29, 2022 January 30, 2021

Current assets:

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Current liabilities:

Current portion of long-term debt $ — $ 250.0

Current portion of operating lease liabilities $ 1,407.8 $ 1,348.2

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Total current liabilities 4,176.6 3,730.3

Long-term debt, net, excluding current portion 3,226.2 3,522.2

Long-term debt, net 3,417.0 3,226.2

Operating lease liabilities, long-term 5,145.5 5,065.5

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Total liabilities 14,003.3 13,410.7

Commitments and contingencies

Commitments and contingencies (Note 4)

Shareholders’ equity:

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600,000,000 shares authorized, 225,100,198 and

236,726,563 shares issued and outstanding at January 30, 2021 and February 1, 2020,

233,383,199 shares issued and outstanding at January 29, 2022 and January 30, 2021,

Additional paid-in capital 1,243.9 2,138.5

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CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY

YEARS ENDED JANUARY 30, 2021, FEBRUARY 1, 2020, AND FEBRUARY 2, 2019

YEARS ENDED JANUARY 29, 2022, JANUARY 30, 2021, AND FEBRUARY 1, 2020

(in millions) Common

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Balance at February 2, 2019 238.1 $ 2.4 $ 2,602.7 $ ( 38.3 ) $ 3,076.1 $ 5,642.9

Net loss — — — — ( 1,590.8 ) ( 1,590.8 )

Cumulative effect of adopted accounting

standards, net — — — — ( 65.3 ) ( 65.3 )

Net income — — — — 827.0 827.0

Total other comprehensive loss — — — ( 1.5 ) — ( 1.5 )

3 unchanged sentences

Stock-based compensation, net 0.4 — 36.5 — — 36.5

Repurchase of stock ( 1.9 ) — ( 200.0 ) — — ( 200.0 )

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 — — — — ( 65.3 ) ( 65.3 )

Net income — — — — 1,341.9 1,341.9

Total other comprehensive loss — — — ( 1.5 ) — ( 1.5 )

Total other comprehensive income — — — 4.6 — 4.6

Issuance of stock under Employee Stock

3 unchanged sentences

Repurchase of stock ( 4.0 ) ( 0.1 ) ( 399.9 ) — — ( 400.0 )

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

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

Net income — — — — 1,327.9 1,327.9

Total other comprehensive income — — — 4.6 — 4.6

Issuance of stock under Employee Stock

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CONSOLIDATED STATEMENTS OF CASH FLOWS

January 30, February 1, February 2,

January 29, January 30, February 1,

(in millions) 2022 2021 2020

Cash flows from operating activities:

Net income (loss) $ 1,341.9 $ 827.0 $ ( 1,590.8 )

Adjustments to reconcile net income (loss) to net cash provided by operating activities:

Net income $ 1,327.9 $ 1,341.9 $ 827.0

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

Goodwill impairment — — 313.0

3 unchanged sentences

Amortization of debt discount and debt-issuance costs 8.9 4.0 6.9

Other non-cash adjustments to net income (loss) 19.0 24.5 7.8

Other non-cash adjustments to net income 11.2 19.0 24.5

Loss on debt extinguishment 43.8 — —

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Non-cash transactions:

Right-of-use assets obtained in exchange for new operating lease liabilities $ 1,495.3 $ 1,440.2 $ 1,286.1

Accrued capital expenditures $ 68.3 $ 44.9 $ 51.1

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Below are those accounting policies that we consider to be significant.

Principles of Consolidation

Principles of Consolidation and Basis of Presentation

The consolidated financial statements include the financial statements of Dollar Tree, Inc., and its wholly-owned subsidiaries.

All significant intercompany balances and transactions have been eliminated in consolidation.

Certain prior year amounts have been reclassified to conform to the current year presentation.

Segment Information

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The effect of exchange rate fluctuations on translation of assets and liabilities is included as a component of shareholders’ equity in accumulated other comprehensive loss.

Gains and losses from foreign currency transactions, which are included in “Other expense (income), net” have not been significant.

Gains and losses from foreign currency transactions, which are included in “Other expense, net” have not been significant.

Our fiscal year is a 52-week or 53-week period ending on the Saturday closest to January 31.

References to “2020” or “fiscal 2020,” “2019” or “fiscal 2019,” and “2018” or “fiscal 2018” relate to the 52-week fiscal years ended January 30, 2021, February 1, 2020, and February 2, 2019, respectively.

References to “2021” or “fiscal 2021,” “2020” or “fiscal 2020,” and “2019” or “fiscal 2019” relate to the 52-week fiscal years ended January 29, 2022, January 30, 2021, and February 1, 2020, respectively.

Use of Estimates

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Cash and Cash Equivalents

Cash and cash equivalents at January 30, 2021 and February 1, 2020 includes $ 1,135.0 million and $ 287.6 million, respectively, of investments primarily in money market securities which are valued at cost, which approximates fair value.

Cash and cash equivalents at January 29, 2022 and January 30, 2021 includes $ 680.6 million and $ 1,135.0 million, respectively, of investments primarily in money market securities which are valued at cost, which approximates fair value.

We consider all highly-liquid debt instruments with original maturities of three months or less to be cash equivalents.

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Costs directly associated with warehousing and distribution are capitalized as merchandise inventories.

Total warehousing and distribution costs capitalized into inventory amounted to $ 172.7 million and $ 169.7 million at January 30, 2021 and February 1, 2020, respectively.

Total warehousing and distribution costs capitalized into inventory amounted to $ 203.2 million and $ 172.7 million at January 29, 2022 and January 30, 2021, respectively.

Property, Plant and Equipment

3 unchanged sentences

Leasehold improvements are amortized over the shorter of the estimated useful lives of the respective assets or the related lease terms.

Amortization is included in “Selling, general and administrative expenses” in the accompanying consolidated statements of operations.

Amortization is included in “Selling, general and administrative expenses” in the accompanying consolidated income statements.

Costs incurred related to software developed for internal use are capitalized and amortized, generally over three years .

1 unchanged sentence

We capitalize interest on borrowed funds during the construction of certain property and equipment.

We capitalized $ 3.2 million, $ 2.4 million and $ 4.2 million of interest costs in the years ended January 30, 2021, February 1, 2020 and February 2, 2019, respectively.

We capitalized $ 1.1 million, $ 3.2 million and $ 2.4 million of interest costs in the years ended January 29, 2022, January 30, 2021 and February 1, 2020, respectively.

Insurance Reserves and Restricted Cash

5 unchanged sentences

We also maintain certain cash balances related to our insurance programs, which are held in trust and restricted as to withdrawal or use.

These amounts are reflected in “Restricted cash” in the accompanying consolidated balance sheets.

Lease Accounting

3 unchanged sentences

Targeted Improvements” and recorded a cumulative effect adjustment to beginning retained earnings.

Our reporting for the fiscal 2018 comparative period presented in the consolidated financial statements continues to be in accordance with Accounting Standards Codification (“ASC”) Topic 840, “ Leases.

Adoption of the standard resulted in the recognition of Operating lease right-of-use assets and Operating lease liabilities of $ 6.2 billion and $ 6.1 billion, respectively, and a reduction to Retained earnings of $ 65.3 million, net of tax, as of February 3, 2019.

For fiscal 2019, the adoption of the standard did not have a material impact on our consolidated statements of operations or consolidated statements of cash flows.

For fiscal 2019, the adoption of the standard did not have a material impact on our consolidated income statements or consolidated statements of cash flows.

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.

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We recognize expense for these leases on a straight-line basis over the lease term.

For leases with an initial term in excess of 12 months, operating lease right-of-use assets and operating lease liabilities are recognized based on the present value of the future lease payments

over the committed lease term at the lease commencement date.

For leases with an initial term in excess of 12 months, operating lease right-of-use assets and operating lease liabilities are recognized based on the present value of the future lease payments over the committed lease term at the lease commencement date.

As most of our leases do not provide an implicit rate, we use our incremental borrowing rate in determining the present value of future lease payments.

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Assets to be disposed of are reported at the lower of the carrying amount or fair value less costs to sell.

In fiscal 2020, 2019 and 2018, we recorded charges of $ 4.6 million, $ 9.1 million and $ 13.0 million, respectively, to write down certain assets, including $ 3.8 million and $ 8.5 million in fiscal 2020 and fiscal 2019, respectively, to write down Operating lease right-of-use assets.

These charges are recorded as a component of “Selling, general and administrative expenses” in the accompanying consolidated statements of operations.

In fiscal 2021, 2020 and 2019, we recorded charges of $ 4.4 million, $ 4.6 million and $ 9.1 million, respectively, to write down certain assets, including $ 3.9 million, $ 3.8 million and $ 8.5 million in fiscal 2021, 2020 and 2019, respectively, to write down Operating lease right-of-use assets.

These charges are recorded as a component of “Selling, general and administrative expenses” in the accompanying consolidated income statements.

Goodwill and Nonamortizing Intangible Assets

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Our reporting units are determined in accordance with the provisions of ASC Topic 350, “Intangibles - Goodwill and Other.” We perform our annual impairment testing of goodwill and nonamortizing intangible assets during the fourth quarter of each year.

Refer to Note 3 for additional information on the results of the impairment tests.

The annual goodwill impairment evaluations in 2021 and 2020 did not result in impairment.

The 2019 goodwill impairment evaluation indicated that the fair value of the Family Dollar reporting unit was lower than its carrying value resulting in a $ 313.0 million non-cash pre-tax and after-tax goodwill impairment charge in the fourth quarter of fiscal 2019, which was recorded as a

component of “Selling, general and administrative expenses” in the accompanying consolidated income statements.

We have recorded cumulative goodwill impairment charges totaling $ 3,040.0 million, all of which relate to the Family Dollar reporting unit.

Our annual impairment evaluation of the Family Dollar trade name did no t result in impairment charges during fiscal 2021, 2020 or 2019.

Revenue Recognition

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Advertising Costs

We expense advertising costs as they are incurred and they are included in “Selling, general and administrative expenses” within the accompanying consolidated statements of operations.

We expense advertising costs as they are incurred and they are included in “Selling, general and administrative expenses” within the accompanying consolidated income statements.

Advertising costs, net of co-op recoveries from vendors, were $ 93.9 million, $ 80.8 million and $ 102.9 million in fiscal 2021, 2020 and 2019, respectively.

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We account for forfeitures when they occur.

Net Income (Loss) Per Share

Basic net income (loss) per share has been computed by dividing net income (loss) by the weighted average number of shares outstanding.

Diluted net income (loss) per share reflects the potential dilution that could occur assuming the inclusion of dilutive potential shares and has been computed by dividing net income (loss) by the weighted average number of shares and dilutive potential shares outstanding.

Net Income Per Share

Basic net income per share has been computed by dividing net income by the weighted average number of shares outstanding.

Diluted net income per share reflects the potential dilution that could occur assuming the inclusion of dilutive potential shares and has been computed by dividing net income by the weighted average number of shares and dilutive potential shares outstanding.

Dilutive potential shares include all outstanding stock options and unvested RSUs after applying the treasury stock method.

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Property, Plant and Equipment, Net

Property, plant and equipment, net, as of January 30, 2021 and February 1, 2020 consists of the following:

January 30, February 1,

Property, plant and equipment, net, as of January 29, 2022 and January 30, 2021 consists of the following:

January 29, January 30,

(in millions) 2022 2021

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Total property, plant and equipment, net $ 4,477.3 $ 4,116.3

Depreciation expense was $ 631.1 million, $ 581.9 million, and $ 555.7 million for the years ended January 30, 2021, February 1, 2020, and February 2, 2019, respectively.

Depreciation expense was $ 672.0 million, $ 631.1 million, and $ 581.9 million for the years ended January 29, 2022, January 30, 2021, and February 1, 2020, respectively.

Other Current Liabilities

Other current liabilities as of January 30, 2021 and February 1, 2020 consist of the following:

January 30, February 1,

Other current liabilities as of January 29, 2022 and January 30, 2021 consist of the following:

January 29, January 30,

(in millions) 2022 2021

3 unchanged sentences

Accrued construction costs 68.3 44.9

Accrued utilities 27.8 22.0

Accrued supplies 27.4 25.2

Other 147.5 162.0

Total other current liabilities $ 802.0 $ 815.3

Note 3 - Goodwill and Nonamortizing Intangible Assets

Goodwill allocated to our reportable segments and changes in the net carrying amount of goodwill for the years ended January 30, 2021 and February 1, 2020 are as follows:

(in millions) Dollar Tree Family Dollar Total

Balance at February 2, 2019 $ 376.5 $ 1,920.1 $ 2,296.6

Foreign currency translation adjustments ( 0.3 ) — ( 0.3 )

Goodwill reassignment for re-bannered stores 47.6 ( 47.6 ) —

Goodwill impairment — ( 313.0 ) ( 313.0 )

Balance at February 1, 2020 423.8 1,559.5 1,983.3

Foreign currency translation adjustments 1.1 — 1.1

Balance at January 30, 2021 $ 424.9 $ 1,559.5 $ 1,984.4

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

The goodwill related to previously acquired re-bannered stores in 2020 was no t material.

In 2019, we reassigned $ 47.6 million of goodwill from Family Dollar to Dollar Tree as a result of re-bannering.

Re-bannered stores are treated as new stores.

Goodwill and other indefinite-lived intangible assets must be evaluated for impairment annually and may also be tested on an interim basis upon the occurrence of a triggering event or a change in circumstances that would more likely than not reduce the fair value of a reporting unit below its carrying amount.

The annual goodwill impairment evaluation in 2020 did not result in impairment.

The 2019 and 2018 goodwill impairment evaluations indicated that the fair value of the Family Dollar reporting unit was lower than

its carrying value resulting in $ 313.0 million and $ 2.73 billion non-cash pre-tax and after-tax goodwill impairment charges in the fourth quarters of fiscal 2019 and 2018, respectively, which were recorded as a component of “Selling, general and administrative expenses” in the accompanying consolidated statements of operations.

Our annual impairment evaluation of the Family Dollar trade name did no t result in impairment charges during fiscal 2020, 2019 or 2018.

Note 3 - Income Taxes

The provision for income taxes consists of the following:

January 30, February 1, February 2,

January 29, January 30, February 1,

(in millions) 2022 2021 2020

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A reconciliation of the statutory U.S.

federal income tax (benefit) rate and the effective tax rate follows:

January 30, 2021 February 1, 2020 February 2, 2019

federal income tax rate and the effective tax rate follows:

January 29, 2022 January 30, 2021 February 1, 2020

Statutory U.S.

federal income tax (benefit) rate 21.0 % 21.0 % ( 21.0 ) %

federal income tax rate 21.0 % 21.0 % 21.0 %

State and local income taxes, net of federal income tax benefit 3.7 3.2 3.7

Non-deductible executive compensation 0.4 0.4 —

State tax reserve release ( 0.4 ) ( 0.5 ) —

Incremental tax expense (benefit) of exercises/vesting of equity-based

compensation ( 0.5 ) 0.2 ( 0.4 )

State tax reserve release ( 0.5 ) — —

Work Opportunity Tax Credit ( 1.8 ) ( 1.6 ) ( 2.7 )

Goodwill impairment — 6.0 43.7

Deferred tax rate change ( 3.8 ) — 0.1

Goodwill impairment — — 6.0

Change in valuation allowance — — ( 2.2 )

Tax Cuts and Jobs Act — — ( 1.3 )

Other, net — 0.2 ( 0.8 )

1 unchanged sentence

Goodwill Impairment

In the fourth quarters of 2019 and 2018, we recorded goodwill impairment charges of $ 313.0 million and $ 2.73 billion, respectively, related to the Family Dollar goodwill, as further discussed in Note 3 .

As the purchase of Family Dollar was a stock acquisition, carryover basis applied for tax purposes.

The impairment charges are not deductible for federal or state tax purposes and therefore there is no tax benefit related to the impairments.

In the fourth quarter of 2019, we recorded a goodwill impairment charge of $ 313.0 million related to the Family Dollar goodwill, as further discussed in Note 1 under the caption “Goodwill and Nonamortizing Intangible Assets.” As the purchase of Family Dollar was a stock acquisition, carryover basis applied for tax purposes.

The impairment charge is not deductible for federal or state tax purposes and therefore there is no tax benefit related to the impairment.

Foreign Taxes

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(in millions) January 29,

2021 February 1,

2022 January 30,

Deferred tax assets:

Operating lease liabilities $ 1,647.3 $ 1,658.4

Accrued expenses 72.9 26.0

Net operating losses, interest expense and credit carryforwards 91.5 95.5

Accrued expenses 50.7 72.9

Accrued compensation expense 34.9 47.2

Inventory 24.4 —

State tax election 15.8 17.4

4 unchanged sentences

Deferred tax liabilities:

Property and equipment ( 410.5 ) ( 304.3 )

Operating lease right-of-use assets ( 1,578.4 ) ( 1,587.2 )

Other intangibles ( 780.9 ) ( 840.4 )

Inventory ( 4.8 ) ( 14.4 )

Property and equipment ( 435.6 ) ( 410.5 )

Prepaids ( 26.0 ) ( 25.2 )

Inventory — ( 4.8 )

Total deferred tax liabilities ( 2,820.9 ) ( 2,868.1 )

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A valuation allowance of $ 13.0 million, net of federal tax benefits, has been provided principally for certain state credit carryforwards and net operating loss carryforwards.

Since February 1, 2020, the valuation allowance has been decreased to reflect capital loss carryforwards, state credits and net operating losses expected to be utilized over the carryforward period.

Since January 30, 2021, the valuation allowance has been decreased to reflect state credits and net operating losses expected to be utilized over the carryforward period.

In assessing the realizability of deferred tax assets, we consider whether it is more likely than not that some portion or all of the deferred taxes will not be realized.

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The statute of limitations is still open prior to fiscal 2018 for some states.

For fiscal 2020, we are participating in the CAP under the IRS’s bridge year program and as a result, the IRS will not be completing an audit on the 2020 tax return.

In fiscal 2020, we participated in the CAP under the IRS’s bridge year program and as a result, the IRS will not be completing an audit on the 2020 tax return.

The balance for unrecognized tax benefits at January 29, 2022 was $ 20.9 million.

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The following is a reconciliation of our total gross unrecognized tax benefits:

(in millions) January 30, 2021 February 1, 2020

(in millions) January 29, 2022 January 30, 2021

Beginning Balance $ 22.6 $ 28.9

Additions, based on tax positions related to current year 1.2 0.9

Additions for tax positions of prior years 4.6 3.4

Additions, based on tax positions related to current year 2.7 1.2

Lapses in statutes of limitation ( 9.0 ) ( 10.9 )

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Purchase Obligations

We have commitments totaling $ 189.8 million related to agreements for software licenses and support, telecommunication services and store technology assets and maintenance for its stores.

At January 29, 2022, we have commitments totaling $ 229.6 million related to ocean shipping contracts and commitments of $ 266.0 million related to agreements for software licenses and support, telecommunication services and store technology assets and maintenance for our stores.

Letters of Credit

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Dollar Tree Active Matters

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 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.

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 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.

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

We believe these lawsuits are insured and we are being indemnified by our third party vendors.

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 believe we have made significant improvements in our processes, and the FDA believes we have certain additional improvements to make, which we are addressing.

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

Three personal injury lawsuits are pending against us and our vendors alleging that certain talc products that were sold by the company in the past caused cancer.

Although we have been able to resolve previous talc lawsuits against us without material loss to the company, given the inherent uncertainties of litigation there can be no assurances regarding the outcome of pending or future cases.

Future costs to litigate these cases are not known but may be significant, and it is uncertain whether our costs will be covered by insurance.

In addition, although we have indemnification rights against our vendors in several of these cases, it is uncertain whether the vendors will have the financial ability to carry out their obligations.

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.

The consumer dismissed the January 2020 class action that was filed against us in New York relating to Almond Milk sold by us.

The case has been resolved.

Family Dollar Active Matters

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.

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 2021, a consumer class action was filed against us in Georgia for breach of warranty based on the allegation that the coffee we sold was mislabeled because the canister did not contain enough coffee to make the number of cups of coffee stated on the label.

On February 11, 2022, the FDA issued Form 483 observations primarily regarding rodent infestation at our West Memphis, Arkansas distribution center (“DC 202”), as well as other items that require remediation.

In connection therewith, we initiated a voluntary retail-level product recall of FDA and U.S.

Department of Agriculture-regulated products stored and shipped from DC 202 from January 1, 2021 through February 18, 2022 (the “Recall”), temporarily closed DC 202 for extensive cleaning, temporarily closed the affected stores to permit the removal and destruction of inventory subject to the Recall, ceased sales of relevant inventory subject to the Recall, committed to the FDA to continue to cease the shipment of FDA-regulated products from DC 202 until FDA approval is received, and initiated corrective actions at DC 202 intended to ensure that these issues will not recur when shipment of FDA-regulated products recommences.

We are taking this matter extremely seriously, and are responding to all observations made in the Form 483.

We are cooperating fully with the FDA, and intend to cooperate fully with any other applicable regulatory body.

We recorded total charges of approximately $ 34.1 million in the fourth quarter of our 2021 fiscal year in connection with the Recall, primarily attributable to inventory markdowns and related costs.

The circumstances leading to the Recall (and/or the Recall itself) may have other negative impacts, which could include reputational damage, lost sales, further or additional governmental investigations and/or enforcement actions, and/or private litigation (see below), which could have a material adverse effect, individually or collectively, on our business, results of operations and/or financial condition.

We have received the following class action complaints related to issues associated with DC 202 (and anticipate additional lawsuits of a similar nature):

On February 22, 2022, a proposed class action complaint was filed in the Circuit Court of Pope County, Arkansas, alleging various causes of action on behalf of the citizens of Arkansas who purchased “contaminated products” covered by the Recall from January 1, 2021 through the date of such Recall.

Plaintiffs seek restitution, disgorgement, damages, attorney fees, costs and expenses, punitive damages and such further relief (in each case in unspecified amounts), as the Court deems just and proper.

On February 23, 2022, a proposed class action complaint was filed in the U.S.

District Court for the Southern District of Mississippi, Northern Division, alleging various causes of action related to the sale of products that may be contaminated by virtue of a rodent infestation and other unsanitary conditions in stores throughout Mississippi, Arkansas, Louisiana, Alabama, Missouri and Tennessee.

Plaintiffs seek damages, attorney fees and costs, punitive damages and the replacement of, or refund of money paid to purchase the relevant products, and any other legal relief available for their claims (in each case in unspecified amounts), including equitable and injunctive relief.

On February 25, 2022, a proposed class action complaint was filed in the U.S.

District Court for the Eastern District of Virginia, on behalf of all persons who purchased products subject to the Recall (with a subclass for all persons residing in the State of Tennessee who purchased products subject to the Recall), alleging breach of the implied warranty of merchantability and unjust enrichment.

Plaintiffs seek restitution, damages, interest, punitive damages, attorney fees, costs and expenses, and such further relief (in each case in unspecified amounts), as the Court deems just and equitable.

On March 2, 2022, a proposed class action complaint was filed in the U.S.

District Court for the Western District of Louisiana, alleging various causes of action related to the sale of products that may be contaminated by virtue of rodent infestation and other unsanitary conditions in stores throughout Louisiana, Mississippi, Arkansas, Alabama, Missouri and Tennessee.

On March 4, 2022, a proposed class action complaint was filed in the U.S.

District Court for the Western District of Tennessee, alleging various causes of action related to the sale of products that may be contaminated by virtue of rodent infestation and other unsanitary conditions in stores throughout Tennessee, Louisiana, Mississippi, Arkansas, Alabama, and Missouri.

On March 7, 2022, a proposed class action complaint was filed in the U.S.

District Court for the Southern District of Alabama, alleging various causes of action related to the sale of products that may be contaminated by virtue of rodent infestation and other unsanitary conditions in stores throughout Alabama, Louisiana, Mississippi, Arkansas, Tennessee, and Missouri.

On March 8, 2022, a proposed class action complaint was filed in the U.S.

District Court for the Western District of Missouri, alleging various causes of action related to the sale of products that may be contaminated by virtue of rodent infestation and other unsanitary conditions in stores throughout Missouri, Arkansas, Louisiana, Mississippi, Alabama and Tennessee.

On March 10, 2022, a proposed class action complaint was filed in the U.S.

District Court for the Eastern District of Arkansas, Delta Division, alleging various causes of action related to the sale of products that may be contaminated by virtue of rodent infestation and other unsanitary conditions in stores throughout Arkansas, Louisiana, Mississippi, Alabama, Tennessee and Missouri.

On March 10, 2022, a proposed class action complaint was filed in the U.S.

District Court for the Western District of Tennessee, Memphis Division, on behalf of all persons who purchased products subject to the Recall (with a subclass for all persons residing in the State of Tennessee who purchased products subject to the Recall), alleging breach of the implied warranty of merchantability, violation of the Tennessee Consumer Protection Act, and unjust enrichment.

Plaintiffs seek refunds of unjust benefits, damages, interest, punitive damages, attorney fees, costs and expenses, and such further relief (in each case in unspecified amounts), as the Court deems just and equitable.

On March 1, 2022, a federal grand jury subpoena was issued to us by the Eastern District of Arkansas requesting the production of information, documents and records pertaining to pests, sanitation and compliance with law regarding certain of our procedures and products.

We intend to cooperate fully with the subpoena and any related investigation, however, no assurance can be given as to the timing or outcome of this matter.

In August 2020 and July 2021, consumer class actions were filed against us in New York and Illinois, respectively, 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 consumer protection laws, negligent misrepresentations, breach of warranties, fraud and unjust enrichment.

In January, April, and September 2021, state-wide consumer class actions were filed against us by the same law firm in Georgia, Alabama and Florida, 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

The court dismissed a January 2017 lawsuit filed as 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.

We have reached a tentative settlement, which will have to be approved by the court, of multiple class actions that were brought under the Americans with Disabilities Act.

In late 2019 and early 2020, personal injury and consumer class actions were filed alleging that we sold Zantac containing a probable carcinogen.

After the lawsuits were dismissed in June 2021, plaintiffs filed an appeal.

Note 5 - Long-Term Debt

Long-term debt at January 30, 2021 and February 1, 2020 consists of the following:

January 30, 2021 February 1, 2020

(in millions) Principal Unamortized Debt Discount and Issuance Costs Principal Unamortized Debt Discount, Premium and Issuance Costs

Long-term debt at January 29, 2022 and January 30, 2021 consists of the following:

January 29, 2022 January 30, 2021

(in millions) Principal Unamortized Debt Discount and Issuance Costs Principal Unamortized Debt Discount and Issuance Costs

$ 1.5 billion Revolving Credit Facility, interest

payable at 1.28 % at January 29, 2022

$ — $ 6.4 $ — $ —

$ 1.25 billion Revolving Credit Facility

3.70 % Senior Notes, due 2023

— — 1,000.0 4.2

$ 1.25 billion Revolving Credit Facility, interest

payable at LIBOR, reset periodically, plus

1.125 %, which was 1.24 % at January 30, 2021

Senior Floating Rate Notes, due 2020 — — 250.0 0.2

4.00 % Senior Notes, due 2025

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800.0 9.5 — —

3.375 % Senior Notes, due 2051

400.0 5.0 — —

Total $ 3,450.0 $ 33.0 $ 3,250.0 $ 23.8

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$ — $ — $ — $ 1,000.0 $ — $ 2,450.0

Senior Credit Facilities

On April 19, 2018, we entered into a credit agreement (the “Credit Agreement”) with JPMorgan Chase Bank, N.A., as administrative agent, providing for $ 2.03 billion in senior credit facilities (the “Senior Credit Facilities”), consisting of a $ 1.25 billion revolving credit facility (the “Revolving Credit Facility”), of which up to $ 350.0 million is available for letters of credit, and a $ 782.0 million term loan facility (the “Term Loan Facility”), which was scheduled to mature on April 19, 2020.

The loans under the Term Loan Facility bore interest at an initial interest rate of LIBOR, reset periodically, plus 1.00 %, subject to adjustment based on (i) our credit ratings and (ii) our leverage ratio.

We borrowed the entire $ 782.0 million Term Loan Facility on April 19, 2018 and repaid the entire amount in January 2019.

The Revolving Credit Facility matures on April 19, 2023, subject to extensions permitted under the Credit Agreement.

The loans under the Revolving Credit Facility bore interest at an initial interest rate of LIBOR, reset periodically, plus 1.25 %, subject to adjustment based on (i) our credit ratings and (ii) our leverage ratio.

Based on these factors, interest on the loans under the Revolving Credit Facility may range from LIBOR plus 1.00 % to 1.50 %.

At January 30, 2021, the Revolving Credit Facility bore interest at LIBOR plus 1.125 %.

Revolving Credit Facility

On December 8, 2021, we entered into a credit agreement (the “Credit Agreement”), with JPMorgan Chase Bank, N.A., as agent, and the financial institutions from time to time party thereto, providing for a $ 1.5 billion revolving credit facility (the “Revolving Credit Facility”), of which up to $ 350.0 million is available for letters of credit.

The Revolving Credit Facility matures on December 8, 2026, subject to extensions permitted under the Credit Agreement.

Loans under the Revolving Credit Facility bear interest at the Adjusted Term SOFR Rate (as defined in the Credit Agreement) plus 1.125 %, subject to adjustment based on (i) our public debt rating and (ii) our leverage ratio.

At January 29, 2022, the Revolving Credit Facility bore interest at 1.28 %.

We pay certain commitment fees in connection with the Revolving Credit Facility.

The Senior Credit Facilities allow voluntary repayment of outstanding loans at any time without premium or penalty, other than customary breakage costs with respect to LIBOR loans.

The Senior Credit Facilities contain a number of affirmative and negative covenants that, among other things, and subject to certain significant baskets and exceptions, restrict our ability to incur subsidiary indebtedness, incur liens, sell all or substantially all of our (including our subsidiaries’) assets and consummate certain fundamental changes.

The Senior Credit Facilities also contain a maximum rent-adjusted leverage ratio covenant and a minimum fixed charge coverage ratio covenant.

The Credit Agreement provides for certain events of default which, if any of them occurs, would permit or require the loans under the Senior Credit Facilities to be declared due and payable and the commitments thereunder to be terminated.

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 by the end of the third quarter of fiscal 2020.

The Revolving Credit Facility allows voluntary repayment of outstanding loans at any time without premium or penalty, other than customary “breakage” costs with respect to Secured Overnight Financing Rate (“SOFR”) loans.

There is no required amortization under the Revolving Credit Facility.

The Revolving Credit Facility contains a number of affirmative and negative covenants that, among other things, and subject to certain significant baskets and exceptions, restrict our ability to incur subsidiary indebtedness, incur liens, sell all or substantially all of our (including our subsidiaries’) assets and consummate certain fundamental changes.

The Revolving Credit Facility also contains a maximum leverage ratio covenant and a minimum fixed charge coverage ratio covenant.

The Credit Agreement provides for certain events of default which, if any of them occurs, would permit or require the loans under the Revolving Credit Facility to be declared due and payable and the commitments thereunder to be terminated.

In connection with entry into the Credit Agreement, we terminated all commitments and fulfilled all obligations under our existing credit agreement dated April 19, 2018.

Under the previous credit agreement, in the first quarter of fiscal 2020, we preemptively drew $ 750.0 million on our $ 1.25 billion 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 by the end of the third quarter of fiscal 2020.

Fiscal 2018 Offering

On April 19, 2018, we completed the registered offering of $ 750.0 million aggregate principal amount of Senior Floating Rate Notes due 2020 (the “Floating Rate Notes”), $ 1.0 billion aggregate principal amount of 3.70 % Senior Notes due 2023 (the “2023 Notes”), $ 1.0 billion aggregate principal amount of 4.00 % Senior Notes due 2025 (the “2025 Notes”) and $ 1.25 billion aggregate principal amount of 4.20 % Senior Notes due 2028 (the “2028 Notes” and together with the 2023 Notes and the 2025 Notes, the “Fixed Rate Notes”;

and the Fixed Rate Notes together with the Floating Rate Notes, the “Notes”).

The Notes were issued pursuant to an indenture, dated as of April 2, 2018, between us and U.S.

The Notes were issued pursuant to an indenture, dated as of April 2, 2018 (the “Indenture”), between us and U.S.

Bank National Association, as trustee, as supplemented by the First Supplemental Indenture dated as of April 19, 2018 (the “First Supplemental Indenture”).

The Notes are unsecured, unsubordinated obligations of ours and rank equal in right of payment to all of our existing and future debt and other obligations that are not, by their terms, expressly subordinated in right of payment to the Notes.

The 2023 Notes mature on May 15, 2023 and bear interest at the rate of 3.70 % annually.

The Floating Rate Notes matured on April 17, 2020 and bore interest at a floating rate, reset quarterly, equal to LIBOR plus 70 basis points.

We were required to pay interest on the Floating Rate Notes quarterly, in arrears, on January 17, April 17, July 17 and October 17 of each year to holders of record on the preceding January 3, April 3, July 3 and October 3, respectively.

The 2023 Notes were scheduled to mature on May 15, 2023 and bore interest at the rate of 3.70 % annually.

The 2025 Notes mature on May 15, 2025 and bear interest at the rate of 4.00 % annually.

The 2028 Notes mature on May 15, 2028 and bear interest at the rate of 4.20 % annually.

We are required to pay interest on the Fixed Rate Notes semiannually, in arrears, on May 15 and November 15 of each year, beginning on November 15, 2018, to holders of record on the preceding May 1 and November 1, respectively.

The Floating Rate Notes matured on April 17, 2020 and bore interest at a floating rate, reset quarterly, equal to LIBOR plus 70 basis points.

We were required to pay interest on the Floating Rate Notes quarterly, in arrears, on January 17, April 17, July 17 and October 17 of each year, beginning on July 17, 2018, to holders of record on the preceding January 3, April 3, July 3 and October 3, respectively.

We may redeem the Fixed Rate Notes of each series in whole or in part, at our option, at any time and from time to time prior to (i) in the case of the 2023 Notes, April 15, 2023, (ii) in the case of the 2025 Notes, March 15, 2025 and (iii) in the case of the 2028 Notes, February 15, 2028 (each such date with respect to the applicable series, the “Applicable Par Call Date”), in each case, at a “make-whole” price described in the First Supplemental Indenture plus accrued and unpaid interest to, but excluding, the date of redemption.

We are required to pay interest on the Fixed Rate Notes semiannually, in arrears, on May 15 and November 15 of each year to holders of record on the preceding May 1 and November 1, respectively.

We may redeem (or may have redeemed) the Fixed Rate Notes of each series in whole or in part, at our option, at any time and from time to time prior to (i) in the case of the 2023 Notes, April 15, 2023, (ii) in the case of the 2025 Notes, March 15, 2025 and (iii) in the case of the 2028 Notes, February 15, 2028 (the date with respect to each such series, the “Applicable Par Call Date”), in each case, at a “make-whole” price described in the First Supplemental Indenture plus accrued and unpaid interest to, but excluding, the date of redemption.

In addition, on or after the Applicable Par Call Date, we may redeem the Fixed Rate Notes of the applicable series, at any time in whole or from time to time in part, at a redemption price equal to 100 % of the principal amount thereof.

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The First Supplemental Indenture also provides for events of default which, if any of them occurs, would permit or require the principal of and accrued interest on the Notes to become or to be declared due and payable, as applicable.

Upon the acquisition of Family Dollar in 2015, we assumed the liability for $ 300.0 million of 5.00 % Senior Notes that were due February 1, 2021.

Fiscal 2021 Offering

On December 1, 2021, we completed the registered offering of $ 800.0 million aggregate principal amount of 2.65 % Senior Notes due 2031 (the “2031 Notes”) and $ 400.0 million aggregate principal amount of 3.375 % Senior Notes due 2051 (the “2051 Notes” and, together with the 2031 Notes, the “New Notes”).

The New Notes were issued pursuant to the Indenture, as supplemented by the Second Supplemental Indenture dated as of December 1, 2021 (the “Second Supplemental Indenture”).

The New Notes are unsecured, unsubordinated obligations of ours and rank equally in right of payment to all of our existing and future debt and other obligations that are not, by their terms, expressly subordinated in right of payment to the New Notes.

The 2031 Notes mature on December 1, 2031 and bear interest at the rate of 2.650 % per annum.

The 2051 Notes mature on December 1, 2051 and bear interest at the rate of 3.375 % per annum.

We are required to pay interest on the New Notes semi-annually, in arrears, on June 1 and December 1 of each year, beginning on June 1, 2022, to holders of record on the preceding May 15 and November 15, respectively.

We may redeem the New Notes of each series in whole or in part at any time and from time to time prior to (i) in the case of the 2031 Notes, September 1, 2031, and (ii) in the case of the 2051 Notes, June 1, 2051 (the date with respect to each such series, the “Applicable Par Call Date”), in each case, at a “make-whole” price described in the Second Supplemental Indenture plus accrued and unpaid interest to, but excluding, the date of redemption.

In addition, on or after the Applicable Par Call Date, we may redeem the New Notes of the applicable series, at any time in whole or from time to time in part, at a redemption price equal to 100 % of the principal amount thereof.

In the event of a Change of Control Triggering Event (as defined in the Second Supplemental Indenture) with respect to any series, the holders of the New Notes of such series may require us to purchase for cash all or a portion of their New Notes of such series at a purchase price equal to 101 % of the principal amount of such New Notes, plus accrued and unpaid interest, if any, to, but excluding, the date of repurchase.

The Indenture limits our ability and that of our subsidiaries, subject to significant baskets and exceptions, to incur certain secured debt.

The Indenture also provides for events of default which, if any of them occurs, would permit or require the principal of and accrued interest on the New Notes to become or to be declared due and payable, as applicable.

Repayments of Long-term Debt

During the first quarter of 2018, we redeemed our $ 750.0 million acquisition notes and accelerated the amortization of debt-issuance costs associated with the notes of $ 6.1 million, which is included in “Interest expense, net” within the accompanying consolidated statements of operations for the year ended February 2, 2019.

In connection with entry into the Credit Agreement and the offering of the Notes discussed above, we used the proceeds of borrowings under the Senior Credit Facilities, together with the net proceeds from the offering of the Notes and cash on hand to repay the $ 2.2 billion then outstanding under our existing senior secured credit facilities and to redeem the remaining $ 2.5 billion then outstanding under our acquisition debt.

This resulted in the acceleration of the expensing of $ 41.2 million of amortizable non-cash deferred financing costs and our incurring $ 114.3 million in prepayment penalties, which are reflected in “Interest expense, net” within the accompanying consolidated statements of operations for the year ended February 2, 2019.

In the fourth quarter of 2019, we prepaid $ 500.0 million of our $ 750.0 million Floating Rate Notes and we repaid the remaining $ 250.0 million outstanding in the first quarter of 2020.

In the fourth quarter of 2020, we repaid the $ 300.0 million 5.00 % Senior Notes.

In the fourth quarter of 2020, we repaid the $ 300.0 million 5.00 % Senior Notes that we assumed upon the acquisition of Family Dollar in 2015.

In the fourth quarter of 2021, we used the proceeds from the offering of the New Notes discussed above to redeem the $ 1.0 billion 2023 Notes.

We incurred a redemption premium of $ 43.8 million in connection with the early redemption of the 2023 Notes and accelerated the expensing of $ 2.7 million of amortizable non-cash deferred financing and original issue discount costs, which are reflected in “Interest expense, net” within the accompanying consolidated income statements for the year ended January 29, 2022.

Debt Covenants

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Note 6 - Leases

The lease cost for operating leases that was recognized in the accompanying consolidated statements of operations was as follows:

(in millions) January 30, 2021 February 1, 2020

The lease cost for operating leases that was recognized in the accompanying consolidated income statements was as follows:

(in millions) January 29, 2022 January 30, 2021 February 1, 2020

Operating lease cost $ 1,602.8 $ 1,551.2 $ 1,520.5

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*Excludes sublease income, which is immaterial

As previously disclosed in our Annual Report on Form 10-K for the year ended February 2, 2019 and in accordance with ASC 840, rental expense for the year ended February 2, 2019 was $ 1,411.3 million.

As of January 29, 2022, maturities of lease liabilities were as follows:

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Information regarding the weighted-average remaining lease term and the weighted-average discount rate for operating leases is as follows:

January 30, 2021 February 1, 2020

January 29, 2022 January 30, 2021 February 1, 2020

Weighted-average remaining lease term (years) 5.9 6.1 6.4

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The following represents supplemental information pertaining to our operating lease arrangements:

(in millions) January 30, 2021 February 1, 2020

(in millions) January 29, 2022 January 30, 2021 February 1, 2020

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

Operating cash flows from operating leases $ 1,579.8 $ 1,519.4 $ 1,433.4

Right-of-use assets obtained in exchange for new operating lease liabilities 1,440.2 1,286.1

Distribution Center Lease and Related Bonds

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Our indefinite-lived intangible assets are recorded at carrying value, and, if impaired, are adjusted to fair value using Level 3 inputs.

See Note 3 for further information regarding the process of determining the fair value of these assets.

Refer to Note 1 under the caption “Goodwill and Nonamortizing Intangible Assets” for further information regarding the process of determining the fair value of these assets.

Fair Value of Financial Instruments

1 unchanged sentence

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

January 30, 2021 February 1, 2020

January 29, 2022 January 30, 2021

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

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We are authorized to issue 10,000,000 shares of Preferred Stock, $ 0.01 par value per share.

No preferred shares are issued and outstanding at January 30, 2021 and February 1, 2020.

Net Income (Loss) Per Share

The following table sets forth the calculations of basic and diluted net income (loss) per share:

January 30, February 1, February 2,

No preferred shares are issued and outstanding at January 29, 2022 and January 30, 2021.

Net Income Per Share

The following table sets forth the calculations of basic and diluted net income per share:

January 29, January 30, February 1,

(in millions, except per share data) 2022 2021 2020

Basic net income (loss) per share:

Net income (loss) $ 1,341.9 $ 827.0 $ ( 1,590.8 )

Basic net income per share:

Net income $ 1,327.9 $ 1,341.9 $ 827.0

Weighted average number of shares outstanding 227.9 236.4 237.2

Basic net income (loss) per share $ 5.68 $ 3.49 $ ( 6.69 )

Diluted net income (loss) per share:

Net income (loss) $ 1,341.9 $ 827.0 $ ( 1,590.8 )

Basic net income per share $ 5.83 $ 5.68 $ 3.49

Diluted net income per share:

Net income $ 1,327.9 $ 1,341.9 $ 827.0

Weighted average number of shares outstanding 227.9 236.4 237.2

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outstanding 229.0 237.3 238.3

Diluted net income (loss) per share $ 5.65 $ 3.47 $ ( 6.69 )

At January 30, 2021 and February 1, 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.

As a result of the net loss for the year ended February 2, 2019, diluted net income (loss) per share excludes the impact of stock options and restricted stock (as determined by applying the treasury stock method) because the effect would be anti-dilutive.

Diluted net income per share $ 5.80 $ 5.65 $ 3.47

At January 29, 2022, January 30, 2021 and February 1, 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.

Share Repurchase Programs

We repurchased 3,982,478 shares of common stock on the open market for $ 400.0 million in fiscal 2020 and we repurchased 1,967,355 shares of common stock on the open market for $ 200.0 million in fiscal 2019.

We did not repurchase any shares of common stock in fiscal 2018.

At January 30, 2021, we had $ 400.0 million remaining under Board repurchase authorization.

Subsequently, on March 2, 2021, the Board increased the share repurchase authorization by $ 2.0 billion resulting in a total share repurchase authorization of $ 2.4 billion.

We repurchased 9,156,898 , 3,982,478 and 1,967,355 shares of common stock on the open market in fiscal 2021, fiscal 2020 and fiscal 2019, respectively, for $ 950.0 million, $ 400.0 million and $ 200.0 million, respectively.

At January 29, 2022, we had $ 2.5 billion remaining under Board repurchase authorization.

Note 9 – Employee Benefit Plans

Dollar Tree Retirement Savings Plan

We maintain a defined contribution profit sharing and 401(k) plan which is available to all full-time, United States-based employees over 21 years of age.

We maintain a 401(k) plan which is available to all full-time, United States-based employees over 21 years of age.

Eligible employees may make elective salary deferrals.

We may make contributions, at our discretion, to eligible employees who have completed one year of service in which they have worked at least 1,000 hours.

Contributions to and reimbursements by us of expenses of the plan were recorded in the accompanying consolidated statements of operations as follows:

January 30, February 1, February 2,

Contributions to and reimbursements by us of expenses of the plan were recorded in the accompanying consolidated income statements as follows:

January 29, January 30, February 1,

(in millions) 2022 2021 2020

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Total $ 28.8 $ 26.4 $ 25.1

Eligible employees vest in our profit sharing contributions based on the following schedule:

• 20 % after two years of service

• 40 % after three years of service

• 60 % after four years of service

• 100 % after five years of service

All eligible employees are immediately vested in any company match contributions under the 401(k) portion of the plan.

All eligible employees are immediately vested in any company match contributions under the 401(k) plan.

Note 10 - Stock-Based Compensation Plans

Fixed Stock-Based Compensation Plans

Under our 2011 Omnibus Incentive Plan (“Omnibus Plan”), we may grant to our employees, including executive officers and independent contractors, up to 4.0 million shares of our Common Stock plus any shares available under former plans which were previously approved by the shareholders.

The Omnibus Plan permits us to grant equity awards in the form of incentive stock options, non-qualified stock options, stock appreciation rights, restricted stock awards, restricted stock units (“RSUs”), performance bonuses, performance share units (“PSUs”), non-employee director stock options and other equity-related awards.

These awards generally vest over a three-year period with a maximum term of 10 years.

No awards may be granted under the Omnibus Plan after March 16, 2021.

The 2011 Omnibus Incentive Plan permitted us to grant to our employees, consultants and directors up to 4.0 million shares of our Common Stock plus any shares available under former plans which were previously approved by the shareholders.

The plan permitted us to grant equity awards in the form of incentive stock options, non-qualified stock options, stock appreciation rights, restricted stock awards, restricted stock units (“RSUs”), performance bonuses, performance share units (“PSUs”), non-employee director stock options and other equity-related awards.

As of March 17, 2021, the plan was no longer available for new grants of awards, but all outstanding awards that were granted under the plan prior to March 17, 2021 continue to be governed by the terms and conditions of the plan and applicable award agreements.

Effective June 10, 2021, the 2011 Omnibus Incentive Plan was replaced and superseded by the 2021 Omnibus Incentive Plan (“Omnibus Plan”).

The Omnibus Plan permits us to grant up to 6.5 million shares of our Common Stock to our employees, consultants and directors.

The form of equity awards authorized for grant under the Omnibus Plan are substantially the same as those permitted by the predecessor plan.

Stock appreciation rights may be awarded alone or in tandem with stock options.

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The 2006 Plan permitted the granting of a variety of compensatory award types, including stock options and performance share rights.

Total stock-based compensation expense was recorded in the accompanying consolidated statements of operations as follows:

January 30, February 1, February 2,

Total stock-based compensation expense was recorded in the accompanying consolidated income statements as follows:

January 29, January 30, February 1,

(in millions) 2022 2021 2020

11 unchanged sentences

Number of Shares Weighted Average Grant Date Fair Value

Nonvested at February 1, 2020 1,049,081 $ 95.17

Nonvested at January 30, 2021

1,265,216 $ 83.16

Granted 634,118 109.01

2 unchanged sentences

Nonvested at January 29, 2022

The total fair value of the service-based restricted shares vested during the years ended January 30, 2021, February 1, 2020 and February 2, 2019 was $ 48.5 million, $ 55.5 million and $ 50.2 million, respectively.

1,096,066 $ 94.16

The total fair value of the service-based restricted shares vested during the years ended January 29, 2022, January 30, 2021 and February 1, 2020 was $ 56.8 million, $ 48.5 million and $ 55.5 million, respectively.

The weighted average grant date fair value of the RSUs granted in 2021, 2020 and 2019 was $ 109.01 , $ 73.24 and $ 103.55 , respectively.

2 unchanged sentences

Number of Shares Weighted Average Grant Date Fair Value

Nonvested at February 1, 2020 320,500 $ 99.29

Nonvested at January 30, 2021

423,272 $ 82.67

Granted 422,524 95.04

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Nonvested at January 29, 2022

The total fair value of the PSUs vested during the years ended January 30, 2021, February 1, 2020 and February 2, 2019 was $ 19.6 million, $ 3.3 million and $ 4.2 million, respectively.

584,972 $ 91.86

The total fair value of the PSUs vested during the years ended January 29, 2022, January 30, 2021 and February 1, 2020 was $ 17.3 million, $ 19.6 million and $ 3.3 million, respectively.

The weighted average grant date fair value of the PSUs granted in 2021, 2020 and 2019 was $ 95.04 , $ 74.46 and $ 103.71 , respectively.

As of January 30, 2021, there was $ 17.2 million of total unrecognized compensation expense related to these RSUs which is expected to be recognized over a weighted-average period of one year .

As of January 29, 2022, there was $ 20.7 million of total unrecognized compensation expense related to these RSUs which is expected to be recognized over a weighted-average period of 0.7 years.

Stock Options

9 unchanged sentences

Exercised ( 93,594 ) 77.67

Forfeited ( 358 ) 76.97

Outstanding, end of period 24,541 $ 90.38 4.8 $ 0.9

Options vested and exercisable at January 29, 2022

24,541 $ 90.38 4.8 $ 0.9

The intrinsic value of options exercised during 2021, 2020 and 2019 was $ 5.6 million, $ 0.9 million and $ 1.6 million, respectively.

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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.

Amounts for the years ended February 1, 2020 and February 2, 2019 have been reclassified to be comparable to the current year presentation.

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

January 30, February 1, February 2,

These costs include operating expenses for our store support center and the results of operations for our Summit Pointe property in Chesapeake, Virginia.

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

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

January 29, January 30, February 1,

(in millions) 2022 2021 2020

Consolidated Statements of Operations Data:

Consolidated Income Statement Data:

Dollar Tree $ 13,922.1 $ 13,265.0 $ 12,507.9

Family Dollar 12,387.7 12,243.4 11,102.9

Corporate, support and Other 0.9 — —

Consolidated Net sales $ 26,309.8 $ 25,508.4 $ 23,610.8

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Family Dollar 3,122.3 3,243.6 2,697.8

Corporate, support and Other 0.9 — —

Consolidated Gross profit $ 7,725.9 $ 7,787.4 $ 7,040.7

January 29, January 30, February 1,

(in millions) 2022 2021 2020

Operating income (loss):

2 unchanged sentences

Corporate, support and Other ( 338.7 ) ( 365.7 ) ( 333.1 )

Consolidated Operating income (loss) 1,887.9 1,262.2 ( 939.5 )

Consolidated Operating income 1,811.4 1,887.9 1,262.2

Interest expense, net 178.9 147.3 162.1

Other expense (income), net 0.8 1.4 ( 0.5 )

Income (loss) before income taxes $ 1,739.8 $ 1,098.7 $ ( 1,309.0 )

Other expense, net 0.3 0.8 1.4

Income before income taxes $ 1,632.2 $ 1,739.8 $ 1,098.7

Depreciation and amortization expense:

3 unchanged sentences

Consolidated depreciation and amortization expense $ 716.0 $ 686.7 $ 645.7

January 30, February 1,

January 29, January 30,

(in millions) 2022 2021

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Consolidated additions to property, plant and equipment $ 1,021.2 $ 898.8

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

The goodwill related to previously acquired re-bannered stores in 2020 was not material.

In 2019, we reassigned $ 47.6 million of goodwill from Family Dollar to Dollar Tree as a result of re-bannering.

In addition, in the fourth quarters of 2019 and 2018, we recorded goodwill impairment charges of $ 313.0 million and $ 2.73 billion, respectively, to write down the Family Dollar goodwill.

Refer to Note 3 for additional detail regarding impairment of the Family Dollar goodwill.

Disaggregated Revenue

The following table summarizes net sales by merchandise category for our segments:

January 30, February 1, February 2,

January 29, January 30, February 1,

(in millions) 2022 2021 2020

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Total Family Dollar segment net sales $ 12,387.7 100.0 % $ 12,243.4 100.0 % $ 11,102.9 100.0 %

Note 13 - Quarterly Financial Information (Unaudited)

The following table sets forth certain items from our unaudited consolidated statements of operations for each quarter of fiscal year 2020 and 2019.

The unaudited information has been prepared on the same basis as the audited consolidated financial statements appearing elsewhere in this report and includes all adjustments, consisting only of normal recurring adjustments, which management considers necessary for a fair presentation of the financial data shown.

The operating results for any quarter are not necessarily indicative of results for a full year or for any future period.

(dollars in millions, except diluted net income per share data) First

Quarter Third

Quarter Fourth

Net sales $ 6,286.8 $ 6,277.6 $ 6,177.0 $ 6,767.9

Gross profit $ 1,794.9 $ 1,916.2 $ 1,924.4 $ 2,152.8

Operating income $ 365.9 $ 374.9 $ 465.5 $ 681.6

Net income $ 247.6 $ 261.5 $ 330.0 $ 502.8

Diluted net income per share $ 1.04 $ 1.10 $ 1.39 $ 2.13

Stores open at end of quarter 15,370 15,479 15,606 15,685

Comparable store net sales change 2

7.0 % 7.2 % 5.1 % 4.9 %

Net sales $ 5,808.7 $ 5,740.6 $ 5,746.2 $ 6,315.3

Gross profit $ 1,727.2 $ 1,648.5 $ 1,704.5 $ 1,960.5

Operating income 3,4

$ 385.5 $ 268.9 $ 358.4 $ 249.4

Net income 3,4,5

$ 267.9 $ 180.3 $ 255.8 $ 123.0

Diluted net income per share 3,4,5

$ 1.12 $ 0.76 $ 1.08 $ 0.52

Stores open at end of quarter 15,264 15,115 15,262 15,288

Comparable store net sales change 2

2.2 % 2.4 % 2.5 % 0.4 %

______________

1 Easter was observed on April 12, 2020 and April 21, 2019.

2 The comparable store net sales change calculation includes only those stores that are open throughout both of the periods being compared, beginning after the first fifteen months of operation.

3 In 2019, the results of the annual goodwill impairment test showed that the fair value of the Family Dollar reporting unit was lower than its carrying value, resulting in a $ 313.0 million non-cash pre-tax and after-tax goodwill impairment charge in the fourth quarter of fiscal 2019.

This goodwill impairment charge reduced diluted net income per share by $ 1.32 per share in the fourth quarter of 2019.

4 In the fourth quarter of 2019, we recorded an $ 18.0 million charge to our litigation reserve.

The recognition of this liability reduced diluted net income per share in the fourth quarter of 2019 by $ 0.06 .

5 In the fourth quarter of 2019, we evaluated our foreign net operating loss carryforwards and determined that we expect to utilize the carryforwards for which we previously had provided a valuation allowance.

The reduction of the valuation allowance increased net income and diluted net income per share in the fourth quarter of 2019 by $ 24.6 million and $ 0.10 per share, respectively.

Changes in and Disagreements With Accountants on Accounting and Financial Disclosure

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-K

Item 8. Financial Statements and Supplementary Data