Dollar Tree, Inc. Annual report pursuant to Section 13 and 15(d)

Annual report pursuant to Section 13 and 15(d)

Leases

Leases

12 Months Ended

Feb. 01, 2020

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



	Year Ended
(in millions)	February 1, 2020
Operating lease cost	$	1,520.5
Variable lease cost	375.9
Short-term lease cost	14.8
Total lease cost*	$	1,911.2

*Excludes sublease income, which is immaterial

As of February 1, 2020, maturities of lease liabilities were as follows:



	(in millions)
2020	$	1,421.4
2021	1,325.4
2022	1,124.8
2023	902.2
2024	685.8
Thereafter	1,760.3
Total undiscounted lease payments	7,219.9
Less interest	961.1
Present value of lease liabilities	$	6,258.8

The future minimum lease payments above exclude $238.4 million of legally binding minimum lease payments for leases signed but not yet commenced as of February 1, 2020.

Information regarding the weighted-average remaining lease term and the weighted-average discount rate for operating leases as of February 1, 2020 is as follows:



Weighted-average remaining lease term (years)	6.4
Weighted-average discount rate	4.3	%

The following represents supplemental information pertaining to the Company’s operating lease arrangements:



	Year Ended
(in millions)	February 1, 2020
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	$	1,433.4
Right-of-use assets obtained in exchange for new operating lease liabilities	1,286.1

As previously disclosed in the Company’s Annual Report on Form 10-K for the year ended February 2, 2019 and in accordance with ASC 840, future minimum lease payments under non-cancellable operating leases were as follows as of February 2, 2019:



	(in millions)
2019	$	1,435.9
2020	1,176.7
2021	1,100.0
2022	899.6
2023	729.1
Thereafter	1,966.3
Total minimum lease payments	$	7,307.6

The above future minimum lease payments include amounts for leases that were signed prior to February 2, 2019 for stores that were not open as of February 2, 2019 and exclude contingent rentals that may be paid under certain store leases based on a percentage of sales in excess of stipulated amounts. As of February 2, 2019, future minimum lease payments have not been reduced by expected future minimum sublease rentals of $1.2 million under operating leases.

Distribution Center Lease and Related Bonds

In May 2017, the Company entered into a long-term property lease (“Missouri Lease”) which includes land and the construction of a 1.2 million square foot distribution center in Warrensburg, Missouri (“Distribution Center Project”). The Distribution Center Project was completed in 2018 and the Company’s investment in the project of $102.6 million as of February 1, 2020 is reflected in “Property, plant and equipment, net.” The Missouri Lease commenced upon its execution in May 2017 and expires on December 1, 2032. The Company has two options to extend the Missouri Lease term for up to a combined additional ten years. Following the expiration of the lease, the property reverts back to the Company.

In addition to being a party to the Missouri Lease, the Company is also the owner of bonds which were issued in May 2017, are secured by the Missouri Lease and expire December 1, 2032 (“Missouri Bonds”). The Missouri Bonds are debt issued by the lessor in the Missouri Lease. Therefore, the Company holds the debt instrument pertaining to its Missouri Lease obligation. Because a legal right of offset exists, the Company is accounting for the Missouri Bonds as a reduction of its Missouri Lease obligation in the accompanying consolidated balance sheets.