UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | |
For the quarterly period ended August 1, 2020
or
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | |
For the transition period from to
Commission File Number: 0-25464
(Exact name of registrant as specified in its charter)
(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) | |
(Address of principal executive offices) | (Zip Code) | ||
(757 ) 321-5000
(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
Title of each class | Trading symbol(s) | Name of each exchange on which registered |
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
☒ | No | ☐ | |
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
☒ | No | ☐ | |
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Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
☒ | Accelerated filer | ☐ | |
Non-accelerated filer | ☐ | Smaller reporting company | |
Emerging growth company | |||
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
☐ |
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
Yes | No | ☒ | |
As of August 25, 2020, there were 237,307,698 shares of the registrant’s common stock outstanding.
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DOLLAR TREE, INC.
FORM 10-Q
FOR THE QUARTERLY PERIOD ENDED AUGUST 1, 2020
TABLE OF CONTENTS
Page | ||
PART I - FINANCIAL INFORMATION | ||
Item 1. | ||
Item 2. | ||
Item 3. | ||
Item 4. | ||
PART II - OTHER INFORMATION | ||
Item 1. | ||
Item 1A. | ||
Item 2. | ||
Item 3. | ||
Item 4. | ||
Item 5. | ||
Item 6. | ||
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PART I - FINANCIAL INFORMATION
Item 1. Financial Statements.
DOLLAR TREE, INC.
CONDENSED CONSOLIDATED INCOME STATEMENTS
(Unaudited)
13 Weeks Ended | 26 Weeks Ended | |||||||||||||||
August 1, | August 3, | August 1, | August 3, | |||||||||||||
(in millions, except per share data) | 2020 | 2019 | 2020 | 2019 | ||||||||||||
Net sales | $ | $ | $ | $ | ||||||||||||
Cost of sales | ||||||||||||||||
Gross profit | ||||||||||||||||
Selling, general and administrative expenses | ||||||||||||||||
Operating income | ||||||||||||||||
Interest expense, net | ||||||||||||||||
Other expense, net | ||||||||||||||||
Income before income taxes | ||||||||||||||||
Provision for income taxes | ||||||||||||||||
Net income | $ | $ | $ | $ | ||||||||||||
Basic net income per share | $ | $ | $ | $ | ||||||||||||
Diluted net income per share | $ | $ | $ | $ | ||||||||||||
See accompanying Notes to Unaudited Condensed Consolidated Financial Statements.
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DOLLAR TREE, INC.
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(Unaudited)
13 Weeks Ended | 26 Weeks Ended | |||||||||||||||
August 1, | August 3, | August 1, | August 3, | |||||||||||||
(in millions) | 2020 | 2019 | 2020 | 2019 | ||||||||||||
Net income | $ | $ | $ | $ | ||||||||||||
Foreign currency translation adjustments | ( | ) | ( | ) | ||||||||||||
Total comprehensive income | $ | $ | $ | $ | ||||||||||||
See accompanying Notes to Unaudited Condensed Consolidated Financial Statements.
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DOLLAR TREE, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
(in millions) | August 1, 2020 | February 1, 2020 | August 3, 2019 | |||||||||
ASSETS | ||||||||||||
Current assets: | ||||||||||||
Cash and cash equivalents | $ | $ | $ | |||||||||
Merchandise inventories | ||||||||||||
Other current assets | ||||||||||||
Total current assets | ||||||||||||
Property, plant and equipment, net of accumulated depreciation of $4,480.6, $4,194.1 and $3,928.0, respectively | ||||||||||||
Restricted cash | ||||||||||||
Operating lease right-of-use assets | ||||||||||||
Goodwill | ||||||||||||
Trade name intangible asset | ||||||||||||
Deferred tax asset | ||||||||||||
Other assets | ||||||||||||
Total assets | $ | $ | $ | |||||||||
LIABILITIES AND SHAREHOLDERS’ EQUITY | ||||||||||||
Current liabilities: | ||||||||||||
Current portion of long-term debt | $ | $ | $ | |||||||||
Current portion of operating lease liabilities | ||||||||||||
Accounts payable | ||||||||||||
Income taxes payable | ||||||||||||
Other current liabilities | ||||||||||||
Total current liabilities | ||||||||||||
Long-term debt, net, excluding current portion | ||||||||||||
Operating lease liabilities, long-term | ||||||||||||
Deferred income taxes, net | ||||||||||||
Income taxes payable, long-term | ||||||||||||
Other liabilities | ||||||||||||
Total liabilities | ||||||||||||
Commitments and contingencies | ||||||||||||
Shareholders’ equity | ||||||||||||
Total liabilities and shareholders’ equity | $ | $ | $ | |||||||||
Common shares outstanding | ||||||||||||
See accompanying Notes to Unaudited Condensed Consolidated Financial Statements.
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DOLLAR TREE, INC.
CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY
(Unaudited)
13 Weeks Ended August 1, 2020 | |||||||||||||||||||||||
(in millions) | Common Stock Shares | Common Stock | Additional Paid-in Capital | Accumulated Other Comprehensive Loss | Retained Earnings | Shareholders' Equity | |||||||||||||||||
Balance at May 2, 2020 | $ | $ | $ | ( | ) | $ | $ | ||||||||||||||||
Net income | — | — | — | — | |||||||||||||||||||
Total other comprehensive income | — | — | — | — | |||||||||||||||||||
Issuance of stock under Employee Stock Purchase Plan | — | — | — | ||||||||||||||||||||
Stock-based compensation, net | — | — | — | ||||||||||||||||||||
Balance at August 1, 2020 | $ | $ | $ | ( | ) | $ | $ | ||||||||||||||||
26 Weeks Ended August 1, 2020 | |||||||||||||||||||||||
(in millions) | Common Stock Shares | Common Stock | Additional Paid-in Capital | Accumulated Other Comprehensive Loss | Retained Earnings | Shareholders' Equity | |||||||||||||||||
Balance at February 1, 2020 | $ | $ | $ | ( | ) | $ | $ | ||||||||||||||||
Net income | — | — | — | — | |||||||||||||||||||
Total other comprehensive loss | — | — | — | ( | ) | — | ( | ) | |||||||||||||||
Issuance of stock under Employee Stock Purchase Plan | — | — | — | ||||||||||||||||||||
Exercise of stock options | — | — | — | ||||||||||||||||||||
Stock-based compensation, net | — | — | — | ||||||||||||||||||||
Balance at August 1, 2020 | $ | $ | $ | ( | ) | $ | $ | ||||||||||||||||
See accompanying Notes to Unaudited Condensed Consolidated Financial Statements.
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DOLLAR TREE, INC.
CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY (cont.)
(Unaudited)
13 Weeks Ended August 3, 2019 | |||||||||||||||||||||||
(in millions) | Common Stock Shares | Common Stock | Additional Paid-in Capital | Accumulated Other Comprehensive Loss | Retained Earnings | Shareholders' Equity | |||||||||||||||||
Balance at May 4, 2019 | $ | $ | $ | ( | ) | $ | $ | ||||||||||||||||
Net income | — | — | — | — | |||||||||||||||||||
Total other comprehensive income | — | — | — | — | |||||||||||||||||||
Issuance of stock under Employee Stock Purchase Plan | — | — | — | ||||||||||||||||||||
Exercise of stock options | — | — | — | ||||||||||||||||||||
Stock-based compensation, net | — | — | — | ||||||||||||||||||||
Repurchase of stock | ( | ) | — | ( | ) | — | — | ( | ) | ||||||||||||||
Balance at August 3, 2019 | $ | $ | $ | ( | ) | $ | $ | ||||||||||||||||
26 Weeks Ended August 3, 2019 | |||||||||||||||||||||||
(in millions) | Common Stock Shares | Common Stock | Additional Paid-in Capital | Accumulated Other Comprehensive Loss | Retained Earnings | Shareholders' Equity | |||||||||||||||||
Balance at February 2, 2019 | $ | $ | $ | ( | ) | $ | $ | ||||||||||||||||
Cumulative effect of adopted accounting standards, net | — | — | — | — | ( | ) | ( | ) | |||||||||||||||
Net income | — | — | — | — | |||||||||||||||||||
Total other comprehensive loss | — | — | — | ( | ) | — | ( | ) | |||||||||||||||
Issuance of stock under Employee Stock Purchase Plan | — | — | — | ||||||||||||||||||||
Exercise of stock options | — | — | — | ||||||||||||||||||||
Stock-based compensation, net | — | — | — | ||||||||||||||||||||
Repurchase of stock | ( | ) | — | ( | ) | — | — | ( | ) | ||||||||||||||
Balance at August 3, 2019 | $ | $ | $ | ( | ) | $ | $ | ||||||||||||||||
See accompanying Notes to Unaudited Condensed Consolidated Financial Statements.
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DOLLAR TREE, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
26 Weeks Ended | ||||||||
August 1, | August 3, | |||||||
(in millions) | 2020 | 2019 | ||||||
Cash flows from operating activities: | ||||||||
Net income | $ | $ | ||||||
Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||
Depreciation and amortization | ||||||||
Provision for deferred income taxes | ||||||||
Stock-based compensation expense | ||||||||
Amortization of debt discount and debt-issuance costs | ||||||||
Other non-cash adjustments to net income | ||||||||
Changes in operating assets and liabilities | ||||||||
Net cash provided by operating activities | ||||||||
Cash flows from investing activities: | ||||||||
Capital expenditures | ( | ) | ( | ) | ||||
Proceeds from governmental grant | ||||||||
Payments for fixed asset disposition | ( | ) | ( | ) | ||||
Net cash used in investing activities | ( | ) | ( | ) | ||||
Cash flows from financing activities: | ||||||||
Principal payments for long-term debt | ( | ) | ||||||
Proceeds from revolving credit facility | ||||||||
Repayments of revolving credit facility | ( | ) | ||||||
Proceeds from stock issued pursuant to stock-based compensation plans | ||||||||
Cash paid for taxes on exercises/vesting of stock-based compensation | ( | ) | ( | ) | ||||
Payments for repurchase of stock | ( | ) | ||||||
Net cash provided by (used in) financing activities | ( | ) | ||||||
Effect of exchange rate changes on cash, cash equivalents and restricted cash | ( | ) | ||||||
Net increase in cash, cash equivalents and restricted cash | ||||||||
Cash, cash equivalents and restricted cash at beginning of period | ||||||||
Cash, cash equivalents and restricted cash at end of period | $ | $ | ||||||
Supplemental disclosure of cash flow information: | ||||||||
Cash paid for: | ||||||||
Interest, net of amounts capitalized | $ | $ | ||||||
Income taxes | $ | $ | ||||||
Non-cash transactions: | ||||||||
Accrued capital expenditures | $ | $ | ||||||
See accompanying Notes to Unaudited Condensed Consolidated Financial Statements.
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DOLLAR TREE, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Note 1 - Basis of Presentation
Unless otherwise stated, references to “we,” “us,” and “our” in this quarterly report on Form 10-Q refer to Dollar Tree, Inc. and its direct and indirect subsidiaries on a consolidated basis. We have prepared the accompanying unaudited condensed consolidated financial statements in accordance with U.S. generally accepted accounting principles for interim financial information and pursuant to the requirements of Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete consolidated financial statements. The unaudited condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” contained in our Annual Report on Form 10-K for the year ended February 1, 2020. The results of operations for the 13 and 26 weeks ended August 1, 2020 are not necessarily indicative of the results to be expected for the entire fiscal year ending January 30, 2021.
In our opinion, the unaudited condensed consolidated financial statements included herein contain all adjustments (including those of a normal recurring nature) considered necessary for a fair presentation of our financial position as of August 1, 2020 and August 3, 2019 and the results of our operations and cash flows for the periods presented. The February 1, 2020 balance sheet information was derived from the audited consolidated financial statements as of that date.
Certain prior year amounts have been reclassified for consistency with the current year presentation.
Note 2 - Legal Proceedings
We are defendants in legal proceedings including a Food and Drug Administration (“FDA”) proceeding and the class, collective, representative and large cases described below as well as individual claims in arbitration. We will vigorously defend ourselves in all matters referred to in this Note 2. We 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 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 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. 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. 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. Management’s assessment of legal proceedings could change because of future determinations or the discovery of facts which are not presently known. Accordingly, the ultimate costs of resolving these proceedings may be substantially higher or lower than currently estimated.
Dollar Tree Active Matters
The FDA has alleged that we improperly sold certain topically applied, over the counter (“OTC”) products manufactured by certain Chinese factories that were on an import “alert” restriction issued by the FDA. We responded to the FDA by proposing enhanced procedures and processes for any OTC products we import from China.
In December 2018, two former employees brought a Private Attorney General Act (“PAGA”) suit in California state court alleging that Dollar Tree Stores, Inc. and Dollar Tree Distribution, Inc. failed to provide non-exempt California store and distribution center employees with rest and meal breaks, suitable seating, overtime pay, minimum wage for all time worked, reporting time pay, accurate wage statements, timely payment of wages during and upon termination of employment, failed to reimburse business expenses, and made unlawful deductions from wage payments.
In January 2020, a consumer class action was filed against us in New York alleging Almond Milk sold by us with “Vanilla” featured prominently on its packaging is mislabeled because it does not contain the expected amount, type, and proportion of vanilla relative to non-vanilla flavor components. The legal claims include New York consumer protection laws, negligent misrepresentations, breach of warranties, fraud and unjust enrichment.
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In June 2020, a current employee filed a class action in California state court on behalf of herself and other non-exempt store employees in California alleging we failed to provide an effective illness and injury prevention program in our California stores and failed to provide personal protective equipment to our store employees thereby engaging in unfair business practices and creating a public nuisance.
Several lawsuits have been filed against Dollar Tree, Family Dollar and our vendors alleging that personal talc powder products caused cancer. 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.
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 preliminary approval from the court.
In August 2018, a former employee brought suit in California state court as a class action and as a PAGA representative suit alleging we failed to provide all non-exempt California store employees with compliant rest and meal breaks, accrued vacation, accurate wage statements and final pay upon termination of employment. We have reached an agreement to settle the matter and are waiting for the court’s approval.
Family Dollar Active Matters
Beginning in 2019, a law firm has filed lawsuits around the country, including purported nationwide and state class actions, alleging we violated the public accommodation requirements of the Americans with Disabilities Act or its state law equivalent, by systemically blocking the aisles with merchandise.
In October 2019, a state and federal class action was filed in New York alleging that we sold Zantac containing N-Nitrosodimethylamine, which is classified by the FDA as a probable carcinogen. The suit alleges breach of warranty, fraud, unjust enrichment, and violation of New York’s General Business Law. We believe we are fully indemnified by our supplier.
In January 2020, a former employee brought a PAGA action in state court in California alleging we failed to provide compliant rest and meal periods, pay all required overtime, pay minimum wages for all time worked, provide compliant wage statements and reimburse business expenses.
In May 2020, a former employee filed a class action complaint in state court in California on behalf of all non-exempt California store employees alleging we failed to provide compliant rest and meal breaks, suitable seating, accurate wage statements, pay during security checks and to pay all wages due upon termination of employment.
In July 2020, a former employee brought a class action in state court in California on behalf of all non-exempt California store employees alleging we failed to provide compliant rest breaks, pay timely wages, reimburse business expenses and provide accurate wage statements.
Family Dollar Resolved Matters
In January 2017, a customer filed a class action in federal court in Illinois alleging we violated various state consumer fraud laws as well as express and implied warranties by selling a product that purported to contain aloe when it did not. The requested class is limited to the state of Illinois. The court has dismissed the lawsuit.
Note 3 - Long-Term Debt
In the first quarter of fiscal 2020, we paid the remaining $250.0 million outstanding under our Senior Floating Rate Notes due 2020.
Additionally, in the first quarter of fiscal 2020, we preemptively drew on our Revolving Credit Facility to reduce our exposure to potential short-term liquidity risk in the banking system as a result of the COVID-19 pandemic. At August 1, 2020, we had $500.0 million outstanding and $614.3 million available for borrowing under our Revolving Credit Facility.
Note 4 - 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. 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.
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Assets and Liabilities Measured at Fair Value on a Nonrecurring Basis
Certain assets and liabilities are measured at fair value on a nonrecurring basis; that is, the assets and liabilities are not measured at fair value on an ongoing basis but are subject to fair value adjustments in certain circumstances (e.g., when there is evidence of impairment). We did not record any significant impairment charges during the 13 or 26 weeks ended August 1, 2020 and August 3, 2019.
Fair Value of Financial Instruments
The carrying amounts of Cash and cash equivalents, Restricted cash and Accounts payable as reported in the accompanying unaudited condensed consolidated balance sheets approximate fair value due to their short-term maturities.
The aggregate fair values and carrying values of our long-term borrowings were as follows:
August 1, 2020 | February 1, 2020 | August 3, 2019 | ||||||||||||||||||||||
(in millions) | Fair Value | Carrying Value | Fair Value | Carrying Value | Fair Value | Carrying Value | ||||||||||||||||||
Level 1 | ||||||||||||||||||||||||
Senior Notes | $ | $ | $ | $ | $ | $ | ||||||||||||||||||
The fair values of our Senior Notes were determined using Level 1 inputs as quoted prices in active markets for identical assets or liabilities are available. The table above excludes amounts related to our Revolving Credit Facility, as the carrying value approximates fair value because the interest rates vary with market interest rates.
Note 5 - Net Income Per Share
The following table sets forth the calculations of basic and diluted net income per share:
13 Weeks Ended | 26 Weeks Ended | |||||||||||||||
August 1, | August 3, | August 1, | August 3, | |||||||||||||
(in millions, except per share data) | 2020 | 2019 | 2020 | 2019 | ||||||||||||
Basic net income per share: | ||||||||||||||||
Net income | $ | $ | $ | $ | ||||||||||||
Weighted average number of shares outstanding | ||||||||||||||||
Basic net income per share | $ | $ | $ | $ | ||||||||||||
Diluted net income per share: | ||||||||||||||||
Net income | $ | $ | $ | $ | ||||||||||||
Weighted average number of shares outstanding | ||||||||||||||||
Dilutive effect of stock options and restricted stock (as determined by applying the treasury stock method) | ||||||||||||||||
Weighted average number of shares and dilutive potential shares outstanding | ||||||||||||||||
Diluted net income per share | $ | $ | $ | $ | ||||||||||||
Note 6 - Stock-Based Compensation
For a discussion of our stock-based compensation plans, refer to “Note 11 - Stock-Based Compensation Plans” of our Annual Report on Form 10-K for the year ended February 1, 2020. Stock-based compensation expense was $55.7 million and $44.1 million during the 26 weeks ended August 1, 2020 and August 3, 2019, respectively.
Restricted Stock
We issue service-based RSUs to employees and officers and issue PSUs to certain officers. We recognize expense based on the estimated fair value of the RSUs or PSUs granted over the requisite service period, which is generally three years , on a straight-line basis
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or a shorter period based on the retirement eligibility of the grantee. The fair value of RSUs and PSUs is determined using our closing stock price on the date of grant.
Service-Based RSUs
The following table summarizes the status of service-based RSUs as of August 1, 2020 and changes during the 26 weeks then ended:
Number of Shares | Weighted Average Grant Date Fair Value | ||||||
Nonvested at February 1, 2020 | $ | ||||||
Granted | |||||||
Vested | ( | ) | |||||
Forfeited | ( | ) | |||||
Nonvested at August 1, 2020 | $ | ||||||
PSUs
The following table summarizes the status of PSUs as of August 1, 2020 and changes during the 26 weeks then ended:
Number of Shares | Weighted Average Grant Date Fair Value | ||||||
Nonvested at February 1, 2020 | $ | ||||||
Granted | |||||||
Vested | ( | ) | |||||
Forfeited | ( | ) | |||||
Nonvested at August 1, 2020 | $ | ||||||
Note 7 - Leases
Our lease portfolio primarily consists of leases for our retail store locations and we also lease vehicles and trailers, as well as distribution center space and equipment.
The lease cost for operating leases that was recognized in the accompanying unaudited condensed consolidated income statements for the 13 and 26 weeks ended August 1, 2020 and August 3, 2019 was as follows:
13 Weeks Ended | 26 Weeks Ended | |||||||||||||||
(in millions) | August 1, 2020 | August 3, 2019 | August 1, 2020 | August 3, 2019 | ||||||||||||
Operating lease cost | $ | $ | $ | $ | ||||||||||||
Variable lease cost | ||||||||||||||||
Total lease cost* | $ | $ | $ | $ | ||||||||||||
*Excludes short-term lease cost and sublease income, which are immaterial | ||||||||||||||||
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As of August 1, 2020, maturities of lease liabilities were as follows:
(in millions) | ||||
Remainder of 2020 | $ | |||
2021 | ||||
2022 | ||||
2023 | ||||
2024 | ||||
Thereafter | ||||
Total undiscounted lease payments | ||||
Less interest | ||||
Present value of lease liabilities | $ | |||
The future minimum lease payments above exclude $216.0 million of legally binding minimum lease payments for leases signed but not yet commenced as of August 1, 2020.
Information regarding the weighted-average remaining lease term and the weighted-average discount rate for operating leases as of August 1, 2020 and August 3, 2019 is as follows:
August 1, 2020 | August 3, 2019 | |||||
Weighted-average remaining lease term (years) | ||||||
Weighted-average discount rate | % | % | ||||
The following represents supplemental information pertaining to our operating lease arrangements for the 13 and 26 weeks ended August 1, 2020 and August 3, 2019:
13 Weeks Ended | 26 Weeks Ended | |||||||||||||||
(in millions) | August 1, 2020 | August 3, 2019 | August 1, 2020 | August 3, 2019 | ||||||||||||
Cash paid for amounts included in the measurement of lease liabilities: | ||||||||||||||||
Operating cash flows from operating leases | $ | $ | $ | $ | ||||||||||||
Right-of-use assets obtained in exchange for new operating lease liabilities | ||||||||||||||||
Note 8 - Shareholders’ Equity
We did not repurchase any shares of common stock in the 13 and 26 weeks ended August 1, 2020. We repurchased 881,624 and 1,842,307 shares of common stock on the open market for approximately $88.4 million and $188.4 million during the 13 and 26 weeks ended August 3, 2019, respectively. Approximately $49.2 million in share repurchases had not settled as of August 3, 2019 and this amount was accrued in the accompanying unaudited condensed consolidated balance sheet as of August 3, 2019. As of August 1, 2020, we have $800.0 million remaining under Board repurchase authorization.
Note 9 - Income Taxes
On March 27, 2020, the Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”) was signed into law. The CARES Act retroactively changed the recovery period for Qualified Improvement Property to 15 years for eligible property placed in service subsequent to December 31, 2017. In the first quarter of 2020, we reclassified $67.0 million to the Deferred income taxes, net liability from Income taxes payable to reflect the additional currently deductible depreciation associated with the change in recovery period for Qualified Improvement Property.
Note 10 - Segments
We operate a chain of more than 15,400 retail discount stores in 48 states and five Canadian provinces. Our operations are conducted in two reporting business segments: Dollar Tree and Family Dollar. We define our segments as those operations whose results our chief operating decision maker (“CODM”) regularly reviews to analyze performance and allocate resources.
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The Dollar Tree segment is the leading operator of discount variety stores offering merchandise at the fixed price of $1.00 . The Dollar Tree segment includes our operations under the “Dollar Tree” and “Dollar Tree Canada” brands, 13 distribution centers in the United States and two distribution centers in Canada.
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 11 distribution centers.
We measure the results of our segments using, among other measures, each segment’s net sales, gross profit and operating income. The CODM reviews these metrics for each of our reporting segments. We may revise the measurement of each segment’s operating income, as determined by the information regularly reviewed by the CODM. If the measurement of a segment changes, prior period amounts and balances are reclassified to be comparable to the current period’s presentation. Corporate and support costs consist primarily of store support center costs that are considered shared services and therefore these selling, general and administrative costs are excluded from our two reporting business segments. These costs include operating expenses for our store support centers in Chesapeake, Virginia and Matthews, North Carolina. During fiscal 2019, we consolidated our Matthews, North Carolina store support center with our store support center in Chesapeake, Virginia. We continue to own our facility in Matthews, North Carolina.
Information for our segments, as well as for Corporate and support, including the reconciliation to Income before income taxes, is as follows:
13 Weeks Ended | 26 Weeks Ended | |||||||||||||||
August 1, | August 3, | August 1, | August 3, | |||||||||||||
(in millions) | 2020 | 2019 | 2020 | 2019 | ||||||||||||
Condensed Consolidated Income Statement Data: | ||||||||||||||||
Net sales: | ||||||||||||||||
Dollar Tree | $ | $ | $ | $ | ||||||||||||
Family Dollar | ||||||||||||||||
Consolidated Net sales | $ | $ | $ | $ | ||||||||||||
Gross profit: | ||||||||||||||||
Dollar Tree | $ | $ | $ | $ | ||||||||||||
Family Dollar | ||||||||||||||||
Consolidated Gross profit | $ | $ | $ | $ | ||||||||||||
Operating income (loss): | ||||||||||||||||
Dollar Tree | $ | $ | $ | $ | ||||||||||||
Family Dollar | ||||||||||||||||
Corporate and support | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
Consolidated Operating income | ||||||||||||||||
Interest expense, net | ||||||||||||||||
Other expense, net | ||||||||||||||||
Income before income taxes | $ | $ | $ | $ | ||||||||||||
15
As of | ||||||||||||
August 1, | February 1, | August 3, | ||||||||||
(in millions) | 2020 | 2020 | 2019 | |||||||||
Condensed Consolidated Balance Sheet Data: | ||||||||||||
Goodwill: | ||||||||||||
Dollar Tree | $ | $ | $ | |||||||||
Family Dollar | ||||||||||||
Consolidated Goodwill | $ | $ | $ | |||||||||
Total assets: | ||||||||||||
Dollar Tree | $ | $ | $ | |||||||||
Family Dollar | ||||||||||||
Corporate and support | ||||||||||||
Consolidated Total assets | $ | $ | $ | |||||||||
*Goodwill is reassigned between segments when previously acquired stores are re-bannered between segments. The goodwill related to previously acquired re-bannered stores in the 26 weeks ended August 1, 2020 was no t material. In the 26 weeks ended August 3, 2019, we reassigned $36.1 million of goodwill from Family Dollar to Dollar Tree as a result of re-bannering.
Disaggregated Revenue
The following table summarizes net sales by merchandise category for our segments:
13 Weeks Ended | 26 Weeks Ended | |||||||||||||||||||||||||||
August 1, | August 3, | August 1, | August 3, | |||||||||||||||||||||||||
(in millions) | 2020 | 2019 | 2020 | 2019 | ||||||||||||||||||||||||
Dollar Tree segment net sales by merchandise category: | ||||||||||||||||||||||||||||
Consumable | $ | % | $ | % | $ | % | $ | % | ||||||||||||||||||||
Variety | % | % | % | % | ||||||||||||||||||||||||
Seasonal | % | % | % | % | ||||||||||||||||||||||||
Total Dollar Tree segment net sales | $ | % | $ | % | $ | % | $ | % | ||||||||||||||||||||
Family Dollar segment net sales by merchandise category: | ||||||||||||||||||||||||||||
Consumable | $ | % | $ | % | $ | % | $ | % | ||||||||||||||||||||
Home products | % | % | % | % | ||||||||||||||||||||||||
Apparel and accessories | % | % | % | % | ||||||||||||||||||||||||
Seasonal and electronics | % | % | % | % | ||||||||||||||||||||||||
Total Family Dollar segment net sales | $ | |||||||||||||||||||||||||||