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Item 1. Financial Statements

2023-05-25 compared with 2022-11-22 · 87 added, 191 removed, 226 unchanged (55% of the section changed)

2 unchanged sentences

CONDENSED CONSOLIDATED INCOME STATEMENTS

13 Weeks Ended 39 Weeks Ended

October 29, October 30, October 29, October 30,

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

13 Weeks Ended

(in millions, except per share data) April 29, 2023 April 30, 2022

Net sales $ 7,319.5 $ 6,900.1

14 unchanged sentences

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

13 Weeks Ended 39 Weeks Ended

October 29, October 30, October 29, October 30,

(in millions) 2022 2021 2022 2021

13 Weeks Ended

(in millions) April 29, 2023 April 30, 2022

Net income $ 299.0 $ 536.4

4 unchanged sentences

CONDENSED CONSOLIDATED BALANCE SHEETS

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

(in millions) April 29, 2023 January 28, 2023 April 30, 2022

Current assets:

15 unchanged sentences

Current liabilities:

Current portion of long-term debt $ 350.0 $ — $ —

Current portion of operating lease liabilities $ 1,456.9 $ 1,449.6 $ 1,406.7

3 unchanged sentences

Total current liabilities 4,141.5 4,225.2 4,289.9

Long-term debt, net, excluding current portion 3,420.4 3,417.0 3,231.1

Long-term debt, net 3,422.7 3,421.6 3,418.1

Operating lease liabilities, long-term 5,269.0 5,255.3 5,087.9

5 unchanged sentences

Shareholders’ equity:

Common stock, par value $ 0.01 ;

600,000,000 shares authorized,

220,648,374 , 221,222,984 and 225,568,429 shares issued and

outstanding, respectively

Additional paid-in capital 519.5 667.5 1,230.6

Accumulated other comprehensive loss ( 44.0 ) ( 41.2 ) ( 35.3 )

Retained earnings 8,422.0 8,123.0 7,044.0

Total shareholders’ equity 8,899.7 8,751.5 8,241.5

Total liabilities and shareholders’ equity $ 23,108.6 $ 23,022.1 $ 22,372.3

Common shares outstanding 221.2 225.1 224.9

See accompanying Notes to Unaudited Condensed Consolidated Financial Statements.

1 unchanged sentence

CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY

13 Weeks Ended October 29, 2022

(in millions) Common

Shares Common

Stock Additional

Capital Accumulated

Comprehensive

Loss Retained

Earnings Shareholders'

Balance at July 30, 2022 223.9 $ 2.2 $ 1,026.7 $ ( 36.3 ) $ 7,403.9 $ 8,396.5

Net income — — — — 266.9 266.9

Total other comprehensive loss — — — ( 8.3 ) — ( 8.3 )

Issuance of stock under Employee Stock

Purchase Plan 0.1 — 2.3 — — 2.3

Stock-based compensation, net — — 15.4 — — 15.4

Repurchase of stock ( 2.8 ) — ( 397.5 ) — — ( 397.5 )

Balance at October 29, 2022 221.2 $ 2.2 $ 646.9 $ ( 44.6 ) $ 7,670.8 $ 8,275.3

39 Weeks Ended October 29, 2022

13 Weeks Ended April 29, 2023

(in millions) Common

6 unchanged sentences

Balance at January 28, 2023

221.2 $ 2.2 $ 667.5 $ ( 41.2 ) $ 8,123.0 $ 8,751.5

Net income — — — — 299.0 299.0

2 unchanged sentences

Purchase Plan — — 2.9 — — 2.9

Exercise of stock options — — 0.1 — — 0.1

Stock-based compensation, net 0.4 — 1.1 — — 1.1

Repurchase of stock ( 1.0 ) — ( 152.1 ) — — ( 152.1 )

Balance at October 29, 2022 221.2 $ 2.2 $ 646.9 $ ( 44.6 ) $ 7,670.8 $ 8,275.3

See accompanying Notes to Unaudited Condensed Consolidated Financial Statements.

DOLLAR TREE, INC.

CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY (cont.)

13 Weeks Ended October 30, 2021

(in millions) Common

Shares Common

Stock Additional

Capital Accumulated

Comprehensive

Loss Retained

Earnings Shareholders'

Balance at July 31, 2021 224.9 $ 2.2 $ 1,204.9 $ ( 32.0 ) $ 5,836.6 $ 7,011.7

Net income — — — — 216.8 216.8

Total other comprehensive income — — — 0.7 — 0.7

Issuance of stock under Employee Stock

Purchase Plan — — 2.4 — — 2.4

Stock-based compensation, net — — 12.8 — — 12.8

Balance at October 30, 2021 224.9 $ 2.2 $ 1,220.1 $ ( 31.3 ) $ 6,053.4 $ 7,244.4

39 Weeks Ended October 30, 2021

Balance at April 29, 2023

220.6 $ 2.2 $ 519.5 $ ( 44.0 ) $ 8,422.0 $ 8,899.7

13 Weeks Ended April 30, 2022

(in millions) Common

6 unchanged sentences

Balance at January 29, 2022

225.1 $ 2.2 $ 1,243.9 $ ( 35.2 ) $ 6,507.6 $ 7,718.5

Net income — — — — 536.4 536.4

Total other comprehensive income — — — 3.9 — 3.9

Total other comprehensive loss — — — ( 0.1 ) — ( 0.1 )

Issuance of stock under Employee Stock

Purchase Plan — — 2.9 — — 2.9

Exercise of stock options — — 0.7 — — 0.7

Stock-based compensation, net 0.5 — ( 2.0 ) — — ( 2.0 )

Repurchase of stock ( 0.1 ) — ( 14.2 ) — — ( 14.2 )

Balance at October 30, 2021 224.9 $ 2.2 $ 1,220.1 $ ( 31.3 ) $ 6,053.4 $ 7,244.4

Balance at April 30, 2022

225.5 $ 2.2 $ 1,230.6 $ ( 35.3 ) $ 7,044.0 $ 8,241.5

See accompanying Notes to Unaudited Condensed Consolidated Financial Statements.

2 unchanged sentences

13 Weeks Ended

October 29, October 30,

(in millions) 2022 2021

(in millions) April 29, 2023 April 30, 2022

Cash flows from operating activities:

7 unchanged sentences

Changes in operating assets and liabilities:

Merchandise inventories 335.9 ( 434.1 )

Other current assets ( 7.9 ) ( 5.7 )

Other assets ( 1.8 ) ( 2.3 )

Accounts payable ( 301.8 ) ( 90.1 )

Income taxes payable 86.0 80.2

Other current liabilities 104.5 147.6

Other liabilities 5.2 ( 2.9 )

Operating lease right-of-use assets and liabilities, net ( 31.1 ) ( 6.4 )

Net cash provided by operating activities 752.0 538.5

1 unchanged sentence

Capital expenditures ( 350.4 ) ( 253.4 )

Proceeds from governmental grant — 2.9

Proceeds from (payments for) fixed asset disposition ( 5.1 ) 0.4

Payments for fixed asset disposition ( 2.3 ) ( 2.9 )

Net cash used in investing activities ( 352.7 ) ( 256.3 )

Cash flows from financing activities:

Proceeds from revolving credit facility 440.0 —

Repayments of revolving credit facility ( 90.0 ) —

Proceeds from stock issued pursuant to stock-based compensation plans 2.9 2.9

3 unchanged sentences

Effect of exchange rate changes on cash, cash equivalents and restricted cash ( 1.0 ) 0.5

Net decrease in cash, cash equivalents and restricted cash ( 531.4 ) ( 708.8 )

Net increase in cash, cash equivalents and restricted cash 230.7 233.6

Cash, cash equivalents and restricted cash at beginning of period 711.3 1,038.3

17 unchanged sentences

The unaudited condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” contained in our Annual Report on Form 10-K for the year ended January 28, 2023.

The results of operations for the 13 and 39 weeks ended October 29, 2022 are not necessarily indicative of the results to be expected for the entire fiscal year ending January 28, 2023.

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 29, 2022 and October 30, 2021 and the results of our operations and cash flows for the periods presented.

The results of operations for the 13 weeks ended April 29, 2023 are not necessarily indicative of the results to be expected for the entire fiscal year ending February 3, 2024.

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 April 29, 2023 and April 30, 2022 and the results of our operations and cash flows for the periods presented.

The January 28, 2023 balance sheet information was derived from the audited consolidated financial statements as of that date.

Note 2 - Contingencies

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

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

We will vigorously defend ourselves in these matters.

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

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

We cannot give assurance, however, that one or more of these matters will not have a material effect on our results of operations for the quarter or year in which they are reserved or resolved.

We assess our legal proceedings monthly and reserves are established if a loss is probable and the amount of such loss can be reasonably estimated.

For matters that have settled, we reserve the estimated settlement amount even if the settlement has not been approved by the court.

For matters that have settled, we reserve the estimated settlement amount.

Many, if not substantially all, of our legal proceedings are subject to significant uncertainties and, therefore, determining the likelihood of a loss and the measurement of any loss can be complex and subject to judgment.

With respect to legal proceedings where we have determined that a loss is reasonably possible but not probable, we are unable to estimate the amount or range of the reasonably possible loss due to the inherent difficulty of predicting the outcome of and uncertainties regarding legal proceedings.

With respect to the matters noted below where we have determined that a loss is reasonably possible but not probable, we are unable to reasonably estimate the amount or range of the possible loss at this time due to the inherent difficulty of predicting the outcome of and uncertainties regarding legal proceedings.

Our assessments are based on estimates and assumptions that have been deemed reasonable by management, but that may prove to be incomplete or inaccurate, and unanticipated events and circumstances may occur that might cause us to change those estimates and assumptions.

2 unchanged sentences

Active Matters

DC 202-related Matters

On February 11, 2022, the FDA issued Form 483 observations primarily regarding rodent infestation at Family Dollar’s West Memphis, Arkansas distribution center (“DC 202”) and the related sale and distribution of adulterated product, as well as other processes and procedures 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, permanently ceased the shipment of FDA-regulated products from DC 202, and initiated corrective actions.

In June 2022, we stopped shipping to stores from DC 202 and are decommissioning the facility.

On November 9, 2022 we received an FDA Warning Letter (“Warning Letter”) in connection with the DC 202 inspection.

The conditions and issues detailed in the Warning Letter are generally the same as those described in the Form 483 observations or were otherwise observed during the inspection.

The Warning Letter acknowledged certain remedial actions we have taken in response to the Form 483 observations, including conducting the voluntary recall and decommissioning the facility.

We are taking this matter extremely seriously and continue to cooperate with the FDA.

Since February 22, 2022, Family Dollar has received 14 putative class action complaints primarily related to issues associated with DC 202 described above.

The lawsuits are proceeding in federal court in Tennessee using the federal court’s multi-district litigation process.

An amended consolidated complaint seeking class action status was filed October 17, 2022 alleging violations of the Mississippi, Arkansas, Louisiana, Tennessee, Alabama and Missouri consumer protection laws, breach of warranty, negligence, misrepresentation, deception and unjust enrichment related to the sale of products that may be contaminated by virtue of rodent infestation and other unsanitary conditions.

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.

We have filed a motion to dismiss the amended consolidated complaint and a ruling on the motion by the court is expected in early 2023.

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, compliance with law, and the issues described above.

We are cooperating with the subpoena and the related investigation;

however, no assurance can be given as to the timing or outcome of this matter.

On April 28, 2022, the State of Arkansas filed a complaint in state court alleging violations of the Arkansas Deceptive Trade Practices Act, gross negligence and negligence, strict liability in tort, unjust enrichment and civil conspiracy related to the sale of products that may have been contaminated by virtue of rodent infestation and other unsanitary conditions.

In connection therewith, we initiated a 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, ceased the direct shipment of FDA-regulated products from DC 202, and initiated corrective actions.

In June 2022, we stopped shipping to stores from DC 202 and have since disposed of all of the subject inventory that was in the facility.

Since February 22, 2022, Family Dollar has been named in 14 putative class action complaints primarily related to issues associated with DC 202 described above.

The lawsuits are proceeding in federal court in Tennessee using the federal court’s multi-district litigation (“MDL”) process.

As a result of a mediation held in April 2023, the parties have reached a tentative settlement in principle which if finalized will then be subject to court approval.

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.

In connection with this matter, we have been investigating the condition of FDA-regulated product shipped from DC 202.

We are cooperating fully with the U.S.

Department of Justice investigation, including having produced documents and provided additional information.

We are currently engaged in discussions with the government in an effort to reach a negotiated resolution.

Due to the inherent uncertainties associated with this matter, no assurance can be given as to the timing or outcome of this matter, which could include penalties and company undertakings.

The State of Arkansas is seeking injunctive relief, restitution, disgorgement, damages, civil penalties, punitive damages and suspension or revocation of our authorization to do business in Arkansas.

The Food and Drug Administration (“FDA”) has alleged that Dollar Tree improperly sold certain topically applied, over the counter 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 in our supply chain and continue to monitor these for compliance.

From time to time, various federal and state regulators such as the U.S.

Department of Labor’s Occupational Safety and Health Administration and the state equivalents along with state-level hazardous waste and product regulators have found violations of applicable regulations at Dollar Tree stores and Family Dollar stores and assessed penalties relating to the violations.

For those periods in which this occurs, pending resolution of the matters, we record the associated estimated liabilities in the financial statements.

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”).

These cases allege that we failed to provide non-exempt associates with compliant rest and meal breaks, suitable seating, overtime pay, minimum wages, reimbursement of business expenses, and properly calculated sick leave pay, as well as other potential labor code violations.

The plaintiffs generally seek civil penalties and attorneys’ fees and costs.

Five personal injury lawsuits are pending in state court in Illinois, New York, Massachusetts, Texas, and New Jersey against Dollar Tree, Family Dollar or both alleging that certain talc products that were sold in the past caused cancer.

The parties are discussing a potential resolution of this action.

Based on the developments discussed above, we have determined that there is a probable risk of liability for settlement amounts, costs, and potential penalties and have accrued $ 30.0 million for DC 202-related matters.

We are currently unable to estimate the amount of additional incremental loss, if any, which may result when the matters are finally resolved.

Based on the information available to date, we do not believe the resolution of the DOJ investigation, the State of Arkansas complaint, or settlement of any pending or potential civil litigation related to DC 202 will have a material adverse effect on our business, financial condition, or liquidity.

Talc Product Matters

Six personal injury lawsuits are pending in state court in Illinois, New York, Texas, and New Jersey against Dollar Tree, Family Dollar or both alleging that certain talc products that we sold caused cancer.

The plaintiffs seek compensatory, punitive and exemplary damages, damages for loss of consortium, and attorneys’ fees and costs.

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.

Although we have been able to resolve previous talc lawsuits against us without material loss, 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 material, 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.

Since August 2022, four personal injury cases have been filed in federal court in California and Minnesota against Dollar Tree, Family Dollar, or both, on behalf of minors alleging that their mothers took acetaminophen while pregnant, that the acetaminophen interfered with fetal development such that plaintiffs were born with autism and/or ADHD, and that we knew or should have known of the danger, had a duty to warn and failed to include appropriate warnings on the product labels.

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 fulfill their obligations to us.

Acetaminophen Matters

Since August 2022, nine personal injury cases have been filed in federal court against Dollar Tree, Family Dollar, or both, on behalf of minors alleging that their mothers took acetaminophen while pregnant, that the acetaminophen interfered with fetal development such that plaintiffs were born with autism and/or ADHD, and that we knew or should have known of the danger, had a duty to warn and failed to include appropriate warnings on the product labels.

The plaintiffs seek compensatory, punitive and/or exemplary damages, restitution and disgorgement, economic damages, and attorneys’ fees and costs.

These cases, along with other cases against many other defendants, have been consolidated in multi-district court litigation in the Southern District of New York.

Since September 2022, five personal injury cases have been filed in state court in Pennsylvania against both Dollar Tree and Family Dollar alleging that both sold Zantac and generic ranitidine products containing N-Nitrosodimethylamine, which is classified by the FDA as a probable carcinogen.

The plaintiffs seek compensatory, exemplary and punitive damages and costs.

The five cases along with similar cases against other companies filed in the Philadelphia Court of Common Pleas have been consolidated.

Under the court’s rules, one long form master complaint was filed in a process that is similar to multi-district litigation in federal court.

Dollar Tree and Family Dollar have not been named as defendants in the long form master complaint but could still be named in short form complaints that may be filed.

In addition, in February 2021, as part of a multi-district litigation in the Southern District of Florida, master personal injury and consumer protection class complaints were filed against Zantac manufacturers and retailers, including Dollar Tree and Family Dollar.

While Dollar Tree and Family Dollar have been dismissed from both master complaints, those dismissals are currently being appealed.

We believe we will be indemnified by our suppliers with respect to these proceedings.

Since January 2021, four state-wide consumer class actions have been filed against Family Dollar in Georgia, Alabama, Florida, and Tennessee 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.

The plaintiffs seek compensatory damages.

These cases, which originated in California, Louisiana, Minnesota, Missouri, North Carolina, Kentucky and Texas, along with other cases against many other defendants, have been consolidated in multi-district court litigation in the Southern District of New York.

Resolved Matters

In August 2020 and July 2021, consumer class actions were filed against Family Dollar 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.

These actions alleged violation of consumer protection laws, negligent misrepresentation, breach of warranties, fraud and unjust enrichment.

The New York and Illinois cases were dismissed with prejudice on March 21, 2022 and April 28, 2022, respectively.

On November 9, 2022 we received an FDA Warning Letter (“Warning Letter”) with respect to DC 202 that generally identified the same conditions and issues as those described in the Form 483 observations described above or were otherwise observed during the FDA’s inspection.

The Warning Letter also acknowledged certain remedial actions we had taken in response to the Form 483 observations.

By correspondence dated April 20, 2023, the FDA informed us the inspection is closed.

We do not expect any further FDA regulatory enforcement action on this matter.

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 material impairment charges during the 13 or 39 weeks ended October 29, 2022 or October 30, 2021.

We did not record any material impairment charges during the 13 weeks ended April 29, 2023 or April 30, 2022.

Fair Value of Financial Instruments

2 unchanged sentences

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

October 29, 2022 January 29, 2022 October 30, 2021

April 29, 2023 January 28, 2023 April 30, 2022

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

3 unchanged sentences

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

13 Weeks Ended 39 Weeks Ended

October 29, October 30, October 29, October 30,

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

13 Weeks Ended

(in millions, except per share data) April 29, 2023 April 30, 2022

Basic net income per share:

10 unchanged sentences

Diluted net income per share $ 1.35 $ 2.37

Stock options and other stock-based awards of 2.3 million shares and 3.0 million shares were excluded from the calculation of diluted net income per share for the 13 and 39 weeks ended October 29, 2022, respectively, because their inclusion would be anti-dilutive.

Stock options and other stock-based awards of 0.1 million shares and 1.1 million shares were excluded from the calculation of diluted net income per share for the 13 and 39 weeks ended October 30, 2021, respectively, because their inclusion would be anti-dilutive.

Note 5 - Stock-Based Compensation

For a discussion of our stock-based compensation plans, refer to “Note 10 - Stock-Based Compensation Plans” of our Annual Report on Form 10-K for the year ended January 29, 2022.

Stock-based compensation expense was $ 90.8 million and $ 63.1 million during the 39 weeks ended October 29, 2022 and October 30, 2021, respectively.

Restricted Stock

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.

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

Service-Based RSUs

The following table summarizes the status of service-based RSUs as of October 29, 2022 and changes during the 39 weeks then ended:

Number of Shares Weighted Average

Nonvested at January 29, 2022

1,096,066 $ 94.16

Granted 437,874 158.63

Vested ( 531,138 ) 93.63

Forfeited ( 119,350 ) 119.22

Nonvested at October 29, 2022

883,452 $ 123.04

The following table summarizes the status of PSUs as of October 29, 2022 and changes during the 39 weeks then ended:

Number of Shares Weighted Average

Nonvested at January 29, 2022

584,972 $ 91.86

Granted 206,044 159.27

Vested ( 313,318 ) 90.98

Forfeited ( 189,340 ) 116.40

Nonvested at October 29, 2022

288,358 $ 123.66

Stock Options

Stock options are valued using the Black-Scholes option pricing model and compensation expense is recognized on a straight-line basis over the requisite service period.

On March 19, 2022, we granted a one-time award of options to purchase 2,252,587 shares of our common stock with a fair value of $ 135.6 million to the Executive Chairman of the Board.

The grant of options was subject to the terms and conditions of a five-year Executive Agreement with the Executive Chairman.

The option award has a ten-year term and is scheduled to vest in equal installments on each of the first five anniversaries of the grant date, subject to the Executive Chairman’s continued employment with the company through each vesting date.

The assumptions used in the Black-Scholes option pricing model for this award are as follows:

Expected term (in years) 6.5

Expected stock price volatility 34.1 %

Dividend yield — %

Risk-free interest rate 2.15 %

The simplified method was used to estimate the expected term of the options due to our lack of historical option exercise experience and the “plain vanilla” characteristics of the option award.

The simplified method results in an expected term equal to the average of the weighted average time-to-vesting and the contractual life of the options.

The expected stock price volatility is based on the historical volatility of our common stock over a period matching the expected term of the options granted.

The dividend yield reflects that we have never paid cash dividends.

The risk-free interest rate represents the yield curve in effect at the time of grant for U.S.

Treasury zero-coupon securities with maturities that approximate the expected term of the options.

The following table summarizes information about options outstanding at October 29, 2022 and changes during the 39 weeks then ended:

Number of Shares Weighted Average Per Share Exercise Price Weighted Average Remaining Term (Years) Aggregate Intrinsic Value

(in millions)

Outstanding at January 29, 2022

24,541 $ 90.38

Granted 2,252,979 157.16

Exercised ( 370 ) 76.97

Outstanding at October 29, 2022

2,277,150 $ 156.45 9.3 $ 4.8

Exercisable at October 29, 2022

24,563 $ 90.80 4.1 $ 1.7

Stock options and other stock-based awards of 2.9 million shares and 2.9 million shares were excluded from the calculation of diluted net income per share for the 13 weeks ended April 29, 2023 and April 30, 2022, respectively, because their inclusion would be anti-dilutive.

Note 5 - Shareholders’ Equity

We repurchased 2,859,200 and 4,613,696 shares of common stock on the open market for $ 397.5 million and $ 647.5 million during the 13 and 39 weeks ended October 29, 2022, respectively.

We did not repurchase any shares of common stock on the open market during the 13 weeks ended October 30, 2021.

We repurchased 9,156,898 shares of common stock on the open market for $ 950.0 million during the 39 weeks ended October 30, 2021.

At October 29, 2022, we had $ 1.85 billion remaining under our Board repurchase authorization.

We repurchased 1,025,000 and 89,779 shares of common stock on the open market during the 13 weeks ended April 29, 2023 and April 30, 2022, respectively, for $ 151.1 million and $ 14.2 million, respectively.

Of the shares repurchased during the 13 weeks ended April 29, 2023, $ 7.7 million had not settled as of April 29, 2023 and this amount was accrued in the accompanying unaudited condensed consolidated balance sheet as of April 29, 2023.

At April 29, 2023, we had $ 1.7 billion remaining under our Board repurchase authorization.

Note 6 - Segments and Disaggregated Revenue

We operate a chain of more than 16,200 retail discount stores in 48 states and five Canadian provinces.

We operate more than 16,400 retail discount stores in 48 states and five Canadian provinces.

Our operations are conducted in two reporting business segments:

4 unchanged sentences

The Family Dollar segment operates a chain of general merchandise retail discount stores providing consumers with a selection of competitively-priced merchandise in convenient neighborhood stores.

The Family Dollar segment consists of our operations under the “Family Dollar” brand and 10 distribution centers.

The Family Dollar segment consists of our operations under the “Family Dollar” brand and ten 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.

6 unchanged sentences

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

October 29, October 30, October 29, October 30,

(in millions) 2022 2021 2022 2021

13 Weeks Ended

(in millions) April 29, 2023 April 30, 2022

Condensed Consolidated Income Statement Data:

14 unchanged sentences

Income before income taxes $ 393.7 $ 697.5

October 29, January 29, October 30,

(in millions) 2022 2022 2021

(in millions) April 29, 2023 January 28, 2023 April 30, 2022

Condensed Consolidated Balance Sheet Data:

9 unchanged sentences

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

13 Weeks Ended 39 Weeks Ended

October 29, October 30, October 29, October 30,

(in millions) 2022 2021 2022 2021

13 Weeks Ended

(in millions) April 29, 2023 April 30, 2022

Dollar Tree segment net sales by

11 unchanged sentences

Total Family Dollar segment net sales $ 3,387.8 100.0 % $ 3,118.3 100.0 %

Note 8 - Long-Term Debt

Revolving Credit Facility

The following table summarizes information pertaining to our revolving credit facilities:

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

Revolving Credit Facility Capacity $ 1,500.0 $ 1,500.0 $ 1,250.0

Loans Outstanding 350.0 — —

Standby Letters of Credit Outstanding 44.3 46.0 69.8

Available Capacity 1,105.7 1,454.0 1,180.2

The weighted-average interest rate for the $ 350.0 million of loans outstanding at October 29, 2022 was 4.69 %.

Debt Covenants

As of October 29, 2022, we were in compliance with our debt covenants.

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