What changed in this filing

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Item 1. Financial Statements

2023-11-29 compared with 2023-08-24 · 110 added, 58 removed, 299 unchanged (36% of the section changed)

3 unchanged sentences

13 Weeks Ended 39 Weeks Ended

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

(in millions, except per share data) October 28, 2023 October 29, 2022 October 28, 2023 October 29, 2022

Net sales $ 7,309.1 $ 6,936.6 $ 21,948.7 $ 20,602.0

5 unchanged sentences

Interest expense, net 30.4 32.7 80.5 97.3

Other (income) expense, net ( 0.1 ) 0.1 — 0.1

Other expense, net

0.2 0.2 0.2 0.3

Income before income taxes 271.1 348.4 928.5 1,520.6

1 unchanged sentence

Net income $ 212.0 $ 266.9 $ 711.4 $ 1,163.2

Basic net income per share $ 0.91 $ 1.61 $ 2.26 $ 3.99

Diluted net income per share $ 0.91 $ 1.60 $ 2.26 $ 3.97

Basic net income per share of common stock

$ 0.97 $ 1.20 $ 3.23 $ 5.20

Diluted net income per share of common stock

$ 0.97 $ 1.20 $ 3.23 $ 5.17

Weighted average common shares outstanding:

218.9 222.2 220.0 223.9

219.2 223.0 220.5 224.8

See accompanying Notes to Unaudited Condensed Consolidated Financial Statements.

2 unchanged sentences

13 Weeks Ended 39 Weeks Ended

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

(in millions) October 28, 2023 October 29, 2022 October 28, 2023 October 29, 2022

Net income $ 212.0 $ 266.9 $ 711.4 $ 1,163.2

4 unchanged sentences

CONDENSED CONSOLIDATED BALANCE SHEETS

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

(in millions) October 28, 2023 January 28, 2023 October 29, 2022

Current assets:

3 unchanged sentences

Total current assets 6,302.1 6,367.1 6,446.6

Restricted cash 71.0 68.5 67.9

Property, plant and equipment, net of accumulated depreciation

1 unchanged sentence

5,714.6 4,972.2 4,823.9

Restricted cash 70.1 68.5 53.5

Operating lease right-of-use assets 6,767.9 6,458.0 6,413.3

6 unchanged sentences

Current liabilities:

Short-term borrowings $ 229.6 $ — $ 350.0

Current portion of operating lease liabilities 1,493.7 1,449.6 1,426.7

9 unchanged sentences

Total liabilities 15,033.0 14,270.6 14,634.2

Commitments and contingencies (Note 2)

Contingencies (Note 3)

Shareholders’ equity:

11 unchanged sentences

CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY

13 Weeks Ended July 29, 2023

13 Weeks Ended October 28, 2023

(in millions) Common

5 unchanged sentences

Earnings Shareholders'

Balance at April 29, 2023

Balance at July 29, 2023

219.9 $ 2.2 $ 446.5 $ ( 40.1 ) $ 8,622.4 $ 9,031.0

Net income — — — — 212.0 212.0

Total other comprehensive income — — — 3.9 — 3.9

Total other comprehensive loss — — — ( 6.9 ) — ( 6.9 )

Issuance of stock under Employee Stock

2 unchanged sentences

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

Balance at July 29, 2023

Excise tax on repurchases of stock

— — ( 2.3 ) — — ( 2.3 )

26 Weeks Ended July 29, 2023

Balance at October 28, 2023

217.9 $ 2.2 $ 208.6 $ ( 47.0 ) $ 8,834.4 $ 8,998.2

39 Weeks Ended October 28, 2023

(in millions) Common

8 unchanged sentences

Net income — — — — 711.4 711.4

Total other comprehensive income — — — 1.1 — 1.1

Total other comprehensive loss — — — ( 5.8 ) — ( 5.8 )

Issuance of stock under Employee Stock

3 unchanged sentences

Repurchase of stock ( 3.9 ) — ( 500.0 ) — — ( 500.0 )

Balance at July 29, 2023

Excise tax on repurchases of stock

— — ( 4.3 ) — — ( 4.3 )

Balance at October 28, 2023

217.9 $ 2.2 $ 208.6 $ ( 47.0 ) $ 8,834.4 $ 8,998.2

See accompanying Notes to Unaudited Condensed Consolidated Financial Statements.

1 unchanged sentence

CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY (cont.)

13 Weeks Ended July 30, 2022

13 Weeks Ended October 29, 2022

(in millions) Common

5 unchanged sentences

Earnings Shareholders'

Balance at April 30, 2022

Balance at July 30, 2022

223.9 $ 2.2 $ 1,026.7 $ ( 36.3 ) $ 7,403.9 $ 8,396.5

5 unchanged sentences

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

Balance at July 30, 2022

Balance at October 29, 2022

221.2 $ 2.2 $ 646.9 $ ( 44.6 ) $ 7,670.8 $ 8,275.3

26 Weeks Ended July 30, 2022

39 Weeks Ended October 29, 2022

(in millions) Common

13 unchanged sentences

Repurchase of stock ( 4.6 ) — ( 647.5 ) — — ( 647.5 )

Balance at July 30, 2022

Balance at October 29, 2022

221.2 $ 2.2 $ 646.9 $ ( 44.6 ) $ 7,670.8 $ 8,275.3

3 unchanged sentences

39 Weeks Ended

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

(in millions) October 28, 2023 October 29, 2022

Cash flows from operating activities:

22 unchanged sentences

Cash flows from financing activities:

Proceeds from revolving credit facility — 440.0

Repayments of revolving credit facility — ( 90.0 )

Net proceeds from commercial paper notes 229.1 —

Proceeds from stock issued pursuant to stock-based compensation plans 7.6 7.1

22 unchanged sentences

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

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

The results of operations for the 13 and 26 weeks ended July 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 July 29, 2023 and July 30, 2022 and the results of our operations and cash flows for the periods presented.

Securities and Exchange Commission (“SEC”) on March 10, 2023.

The results of operations for the 13 and 39 weeks ended October 28, 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 October 28, 2023 and October 29, 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.

All intercompany balances and transactions have been eliminated in consolidation.

All amounts stated herein are in U.S.

Note 2 - Recent Accounting Pronouncements

In September 2022, the Financial Accounting Standards Board issued Accounting Standards Update (“ASU”) 2022-04 "Liabilities - Supplier Finance Programs (Subtopic 405-50)" ("ASU 2022-04") which requires entities to disclose the key terms of supplier finance programs used in connection with the purchase of goods and services along with information about their obligations under these programs, including a rollforward of those obligations.

We adopted ASU 2022-04 for the fiscal year 2023 on a retrospective basis, except for the amendments relating to the rollforward requirement, which are required to be adopted for the fiscal year 2024 on a prospective basis.

The adoption did not have a material impact on our unaudited condensed consolidated financial statements.

Refer to Note 9 to the unaudited condensed consolidated financial statements for a discussion of our supply chain finance program.

Note 3 - Contingencies

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

We are defendants in ordinary, routine litigation or proceedings incidental to our business, including employment-related matters;

infringement of intellectual property rights;

personal injury/wrongful death claims;

real estate matters;

environmental and safety issues;

and product safety matters.

Legal proceedings may also include class, collective, representative and large cases and arbitrations, including those described below.

We will vigorously defend ourselves in these matters.

2 unchanged sentences

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.

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.

5 unchanged sentences

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 required remediation.

On February 11, 2022, the U.S.

Food and Drug Administration (“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 required remediation.

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.

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, seek class action status, and allege 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 at DC 202.

Since February 22, 2022, we have 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 process, seek class action status, and allege 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 at DC 202.

Plaintiffs sought damages, attorney fees and costs, punitive damages and replacement 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.

As a result of a mediation held in April 2023, the parties reached a claims made settlement whereby one class member per household will receive a $ 25 Family Dollar gift certificate.

A hearing on the plaintiffs’ motion for preliminary approval of the settlement was held on July 21, 2023.

On October 27, 2023, the court granted preliminary approval of the settlement.

Notice of the settlement and how to submit a claim was given beginning November 10, 2023.

A hearing on final approval of the settlement has been scheduled for April 5, 2024.

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.

1 unchanged sentence

We are cooperating fully with the U.S.

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

Department of Justice (“DOJ”) 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.

2 unchanged sentences

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 parties have engaged in discussions regarding 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 accrued $ 30.0 million in the first quarter of fiscal 2023 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.

We filed a motion to dismiss the State's claims, and it is too early to determine a likely outcome in the matter.

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

At the present time, we are unable to estimate the amount of additional incremental loss, if any, which may result when all of 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

Eight 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.

Multiple 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.

7 unchanged sentences

These cases, which originated in Alabama, California, Florida, Georgia, Louisiana, Minnesota, Missouri, North Carolina, Kentucky, Tennessee 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.

Note 3 - Debt

Note 4 - Short-Term Borrowings and Long-Term Debt

Commercial Paper Program

2 unchanged sentences

Our Revolving Credit Facility will serve as a liquidity backstop for the repayment of notes outstanding under the program.

The notes will rank pari passu with all of our other unsecured and unsubordinated indebtedness.

As of July 29, 2023, no notes have been issued under the program.

The notes rank pari passu with all of our other unsecured and unsubordinated indebtedness.

As of October 28, 2023, $ 230.0 million principal amount of notes were outstanding under the program, with a weighted-average interest rate of 5.6 %.

Revolving Credit Facility

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

(in millions) October 28, 2023 January 28, 2023 October 29, 2022

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

Loans Outstanding — — 350.0

Standby Letters of Credit Outstanding 4.1 4.4 44.3

Available Capacity 1,495.9 1,495.6 1,105.7

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

Note 5 - Fair Value Measurements

As required, financial assets and liabilities are classified in the fair value hierarchy in their entirety based on the lowest level of input that is significant to the fair value measurement.

Financial assets and liabilities are classified in the fair value hierarchy in their entirety based on the lowest level of input that is significant to the fair value measurement.

Our assessment of the significance of a particular input to the fair value measurement requires judgment and may affect the valuation of fair value assets and liabilities and their placement within the fair value hierarchy levels.

2 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 26 weeks ended July 29, 2023 or July 30, 2022.

We did not record any material impairment charges during the 13 or 39 weeks ended October 28, 2023 or October 29, 2022.

Fair Value of Financial Instruments

2 unchanged sentences

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

July 29, 2023 January 28, 2023 July 30, 2022

October 28, 2023 January 28, 2023 October 29, 2022

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

4 unchanged sentences

13 Weeks Ended 39 Weeks Ended

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

(in millions, except per share data) October 28, 2023 October 29, 2022 October 28, 2023 October 29, 2022

Basic net income per share:

5 unchanged sentences

Weighted average number of shares outstanding 218.9 222.2 220.0 223.9

Dilutive effect of stock options and restricted stock (as

determined by applying the treasury stock method) 0.4 0.8 0.5 1.0

Dilutive impact of share-based awards (as determined by

applying the treasury stock method)

0.3 0.8 0.5 0.9

Weighted average number of shares and dilutive potential

1 unchanged sentence

Diluted net income per share $ 0.97 $ 1.20 $ 3.23 $ 5.17

Stock options and other stock-based awards of 2.4 million shares and 3.0 million shares were excluded from the calculation of diluted net income per share for the 13 and 26 weeks ended July 29, 2023, respectively, because their inclusion would be anti-dilutive.

Stock options and other stock-based awards of 2.3 million shares and 2.8 million shares were excluded from the calculation of diluted net income per share for the 13 and 26 weeks ended July 30, 2022, respectively, because their inclusion would be anti-dilutive.

Share-based awards of 3.0 million shares and 3.2 million shares were excluded from the calculation of diluted net income per share for the 13 and 39 weeks ended October 28, 2023, respectively, because their inclusion would be anti-dilutive.

Share-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.

Note 7 - Shareholders’ Equity

We repurchased 703,713 and 1,728,713 shares of common stock on the open market at a cost of $ 99.9 million and $ 252.0 million, including applicable excise tax, during the 13 and 26 weeks ended July 29, 2023, respectively.

We repurchased 1,664,717 and 1,754,496 shares of common stock on the open market at a cost of $ 235.8 million and $ 250.0 million during the 13 and 26 weeks ended July 30, 2022, respectively.

At July 29, 2023, we had $ 1.6 billion remaining under our Board repurchase authorization.

We repurchased 2,176,886 and 3,905,599 shares of common stock on the open market at a cost of $ 252.3 million and $ 504.3 million, including applicable excise tax, during the 13 and 39 weeks ended October 28, 2023, respectively.

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

At October 28, 2023, we had $ 1.35 billion remaining under our Board repurchase authorization.

Note 8 - Segments and Disaggregated Revenue

7 unchanged sentences

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.

The Family Dollar segment operating income (loss) includes advertising revenue, which is a component of other revenue in the accompanying unaudited condensed consolidated income statements.

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

2 unchanged sentences

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

Corporate, 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 center and the results of operations for our Summit Pointe property in Chesapeake, Virginia.

Corporate, support and other consists primarily of store support center costs and the results of operations for our Summit Pointe property in Chesapeake, Virginia that are considered shared services and therefore these selling, general and administrative costs are excluded from our two reporting business segments.

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

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

Condensed Consolidated Income Statement Data:

(in millions) October 28, 2023 October 29, 2022 October 28, 2023 October 29, 2022

Condensed Consolidated Income Statement Data (Unaudited):

Dollar Tree $ 4,003.8 $ 3,756.1 $ 11,808.9 $ 11,109.0

1 unchanged sentence

Consolidated net sales

$ 7,309.1 $ 6,936.6 $ 21,948.7 $ 20,602.0

Gross profit:

2 unchanged sentences

Consolidated gross profit

$ 2,173.0 $ 2,071.5 $ 6,538.1 $ 6,536.4

Operating income (loss):

2 unchanged sentences

Corporate, support and other

( 114.7 ) ( 100.0 ) ( 361.3 ) ( 322.6 )

Consolidated operating income

301.7 381.3 1,009.2 1,618.2

Interest expense, net 30.4 32.7 80.5 97.3

1 unchanged sentence

Income before income taxes $ 271.1 $ 348.4 $ 928.5 $ 1,520.6

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

Condensed Consolidated Balance Sheet Data:

(in millions) October 28, 2023 January 28, 2023 October 29, 2022

Condensed Consolidated Balance Sheet Data (Unaudited):

Dollar Tree $ 422.4 $ 423.6 $ 422.9

1 unchanged sentence

Consolidated goodwill

$ 1,981.9 $ 1,983.1 $ 1,982.4

Total assets:

2 unchanged sentences

Corporate, support and other

632.5 545.3 493.2

Consolidated total assets

$ 24,031.2 $ 23,022.1 $ 22,909.5

Disaggregated Revenue

1 unchanged sentence

13 Weeks Ended 39 Weeks Ended

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

(in millions) October 28, 2023 October 29, 2022 October 28, 2023 October 29, 2022

Dollar Tree segment net sales by

11 unchanged sentences

Total Family Dollar segment net sales $ 3,305.3 100.0 % $ 3,180.5 100.0 % $ 10,139.8 100.0 % $ 9,493.0 100.0 %

Note 9 - Supply Chain Finance Program

During the third quarter of fiscal 2023, we implemented a supply chain finance program, administered through a financial institution, which provides participating suppliers with the opportunity to finance payments due from us.

Participating suppliers may, at their sole discretion, elect to finance one or more invoices of ours prior to their scheduled due dates at a discounted price with the financial institution.

Our obligations to our suppliers, including amounts due and scheduled payment dates, are not impacted by the supplier’s decision to finance amounts under these arrangements.

As such, the outstanding payment obligations under our supply chain financing program are included within accounts payable in the accompanying unaudited condensed consolidated balance sheets and within cash flows from operating activities in the accompanying unaudited condensed consolidated statements of cash flows.

As of October 28, 2023, we had no outstanding payment obligations under this program.

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