Table of Contents


UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549


FORM 10-Q
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
☒QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended November 3, 20182, 2019
or
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
☐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
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DOLLAR TREE, INC.
(Exact name of registrant as specified in its charter)


Virginia 26-2018846
(State or other jurisdiction of incorporation or organization) (I.R.S. Employer Identification No.)
500 Volvo Parkway
Chesapeake,Virginia 23320
(Address of principal executive offices) (Zip Code)


(757) (757) 321-5000
(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading symbol(s)Name of each exchange on which registered
Common Stock, par value $.01 per shareDLTRNASDAQ Global Select Market
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.
Yesý
☒
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).
Yesý
☒
No¨☐

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.        
Large accelerated filerý
☒
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 ¨
☐
Noý☒

As of November 26, 2018,22, 2019, there were 237,969,961236,662,306 shares of the registrant’s common stock outstanding.





DOLLAR TREE, INC.
FORM 10-Q
FOR THE QUARTERLY PERIOD ENDED NOVEMBER 3, 20182, 2019
TABLE OF CONTENTS
  Page
 PART I - FINANCIAL INFORMATION 
   
Item 1.
Financial Statements (Unaudited):
 
 
Condensed Consolidated Income Statements
4
 
Condensed Consolidated Statements of Comprehensive Income
5
 
Condensed Consolidated Balance Sheets
6
 
Condensed Consolidated Statements of Cash FlowsShareholders’ Equity
7
 
Condensed Consolidated Statements of Cash Flows
9
Notes to Unaudited Condensed Consolidated Financial Statements
810
Item 2.
Management’s Discussion and Analysis of Financial Condition and Results of Operations
18
Item 3.
Quantitative and Qualitative Disclosures About Market Risk
2829
Item 4.
Controls and Procedures
2829
   
 PART II - OTHER INFORMATION 
   
Item 1.
Legal Proceedings
2930
Item 1A.
Risk Factors
2930
Item 2.
Unregistered Sales of Equity Securities and Use of Proceeds
2930
Item 3.
Defaults Upon Senior Securities
2930
Item 4.
Mine Safety Disclosures
2930
Item 5.
Other Information
2931
Item 6.
Exhibits
3132
Signatures
 
3233

PartPART I - FINANCIAL INFORMATION


Item 1. FINANCIAL STATEMENTS.Financial Statements.


DOLLAR TREE, INC.
CONDENSED CONSOLIDATED INCOME STATEMENTS
(Unaudited)
 13 Weeks Ended 39 Weeks Ended 13 Weeks Ended 39 Weeks Ended
 November 3, October 28, November 3, October 28, November 2, November 3, November 2, November 3,
(in millions, except per share data) 2018 2017 2018 2017 2019 2018 2019 2018
Net sales $5,538.8
 $5,316.6
 $16,618.1
 $15,884.9
 $5,746.2
 $5,538.8
 $17,295.5
 $16,618.1
Cost of sales 3,866.9
 3,650.6
 11,582.7
 10,964.0
 4,041.7
 3,866.9
 12,215.3
 11,582.7
Gross profit 1,671.9
 1,666.0
 5,035.4
 4,920.9
 1,704.5
 1,671.9
 5,080.2
 5,035.4
Selling, general and administrative expenses,
excluding Receivable impairment
 1,284.1
 1,240.8
 3,827.5
 3,633.9
Receivable impairment —
 —
 —
 53.5
Selling, general and administrative expenses 1,284.1
 1,240.8
 3,827.5
 3,687.4
 1,346.1
 1,284.1
 4,067.4
 3,827.5
Operating income 387.8
 425.2
 1,207.9
 1,233.5
 358.4
 387.8
 1,012.8
 1,207.9
Interest expense, net 47.6
 69.7
 323.7
 220.2
 41.4
 47.6
 122.9
 323.7
Other (income) expense, net 0.2
 0.4
 (0.9) 0.8
Other expense (income), net 0.1
 0.2
 0.7
 (0.9)
Income before income taxes 340.0
 355.1
 885.1
 1,012.5
 316.9
 340.0
 889.2
 885.1
Income tax expense 58.2
 115.2
 168.9
 338.3
Provision for income taxes 61.1
 58.2
 185.2
 168.9
Net income $281.8
 $239.9
 $716.2
 $674.2
 $255.8
 $281.8
 $704.0
 $716.2
Basic net income per share $1.18
 $1.01
 $3.01
 $2.85
 $1.08
 $1.18
 $2.97
 $3.01
Diluted net income per share $1.18
 $1.01
 $3.00
 $2.84
 $1.08
 $1.18
 $2.95
 $3.00
See accompanying Notes to Unaudited Condensed Consolidated Financial Statements.



DOLLAR TREE, INC.
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(Unaudited)
 13 Weeks Ended 39 Weeks Ended 13 Weeks Ended 39 Weeks Ended
 November 3, October 28, November 3, October 28, November 2, November 3, November 2, November 3,
(in millions) 2018 2017 2018 2017 2019 2018 2019 2018
Net income $281.8
 $239.9
 $716.2
 $674.2
 $255.8
 $281.8
 $704.0
 $716.2
                
Foreign currency translation adjustments (0.7) (2.7) (5.9) 2.3
 0.4
 (0.7) (0.9) (5.9)
                
Total comprehensive income $281.1
 $237.2
 $710.3
 $676.5
 $256.2
 $281.1
 $703.1
 $710.3
See accompanying Notes to Unaudited Condensed Consolidated Financial Statements.





DOLLAR TREE, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
(in millions) November 3, 2018 February 3, 2018 October 28, 2017 November 2, 2019 February 2, 2019 November 3, 2018
ASSETS            
Current assets:            
Cash and cash equivalents $708.3
 $1,097.8
 $400.1
 $433.7
 $422.1
 $708.3
Merchandise inventories, net 3,715.6
 3,169.3
 3,397.8
Merchandise inventories 3,882.9
 3,536.0
 3,715.6
Other current assets 325.6
 309.2
 174.7
 255.7
 335.2
 325.6
Total current assets 4,749.5
 4,576.3
 3,972.6
 4,572.3
 4,293.3
 4,749.5
Property, plant and equipment, net of accumulated depreciation
of $3,571.8, $3,192.1 and $3,060.1, respectively
 3,406.2
 3,200.7
 3,178.9
Assets available for sale 5.9
 8.0
 8.6
Property, plant and equipment, net of accumulated depreciation
of $4,056.6, $3,690.6 and $3,571.8, respectively
 3,810.7
 3,445.3
 3,406.2
Restricted cash 46.6
 24.6
 —
Operating lease right-of-use assets 5,864.6
 —
 —
Goodwill 5,023.6
 5,025.2
 5,024.3
 2,296.5
 2,296.6
 5,023.6
Favorable lease rights, net of accumulated amortization of
$290.6, $230.9 and $224.7, respectively
 314.6
 375.3
 398.0
Tradename intangible asset 3,100.0
 3,100.0
 3,100.0
Other intangible assets, net 4.6
 4.8
 4.9
Favorable lease rights, net of accumulated amortization of $287.8
and $290.6 at February 2, 2019 and November 3, 2018,
respectively
 —
 288.7
 314.6
Trade name intangible asset 3,100.0
 3,100.0
 3,100.0
Other assets 44.9
 42.5
 42.9
 51.4
 52.7
 55.4
Total assets $16,649.3
 $16,332.8
 $15,730.2
 $19,742.1
 $13,501.2
 $16,649.3
LIABILITIES AND SHAREHOLDERS’ EQUITY  
  
  
  
  
  
Current liabilities:  
  
  
  
  
  
Current portion of long-term debt $—
 $915.9
 $165.9
 $750.0
 $—
 $—
Current portion of operating lease liabilities 1,202.6
 —
 —
Accounts payable 1,365.1
 1,174.8
 1,181.3
 1,473.1
 1,416.4
 1,365.1
Income taxes payable 0.7
 31.5
 —
 —
 60.0
 0.7
Other current liabilities 769.9
 736.9
 692.7
 754.0
 619.3
 769.9
Total current liabilities 2,135.7
 2,859.1
 2,039.9
 4,179.7
 2,095.7
 2,135.7
Long-term debt, net, excluding current portion 5,043.8
 4,762.1
 5,557.0
 3,520.2
 4,265.3
 5,043.8
Unfavorable lease rights, net of accumulated amortization of
$77.0, $61.1 and $57.0, respectively
 84.0
 100.0
 105.7
Deferred tax liabilities, net 999.2
 985.2
 1,472.4
Operating lease liabilities, long-term 4,636.0
 —
 —
Unfavorable lease rights, net of accumulated amortization of
$76.9 and $77.0 at February 2, 2019 and November 3, 2018,
respectively
 —
 78.8
 84.0
Deferred income taxes, net 1,001.5
 973.2
 999.2
Income taxes payable, long-term 33.0
 43.8
 45.1
 29.7
 35.4
 33.0
Other liabilities 410.5
 400.3
 393.6
 253.7
 409.9
 410.5
Total liabilities 8,706.2
 9,150.5
 9,613.7
 13,620.8
 7,858.3
 8,706.2
Commitments and contingencies       


 


 


Shareholders’ equity 7,943.1
 7,182.3
 6,116.5
 6,121.3
 5,642.9
 7,943.1
Total liabilities and shareholders’ equity $16,649.3
 $16,332.8
 $15,730.2
 $19,742.1
 $13,501.2
 $16,649.3
            
Common shares outstanding 238.0
 237.3
 237.1
 236.7
 238.1
 238.0
See accompanying Notes to Unaudited Condensed Consolidated Financial Statements.



DOLLAR TREE, INC.
CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY
(Unaudited)
  13 Weeks Ended November 2, 2019
(in millions) 
Common
Stock
Shares
 
Common
Stock
 
Additional
Paid-in
Capital
 
Accumulated
Other
Comprehensive
Loss
 
Retained
Earnings
 
Share-
holders'
Equity
Balance at August 3, 2019 236.8
 $2.4
 $2,443.9
 $(39.6) $3,459.0
 $5,865.7
Net income —
 —
 —
 —
 255.8
 255.8
Total other comprehensive income —
 —
 —
 0.4
 —
 0.4
Issuance of stock under Employee Stock
    Purchase Plan
 —
 —
 2.3
 —
 —
 2.3
Exercise of stock options —
 —
 0.8
 —
 —
 0.8
Stock-based compensation, net —
 —
 7.9
 —
 —
 7.9
Repurchase of stock (0.1) —
 (11.6) —
 —
 (11.6)
Balance at November 2, 2019 236.7
 $2.4
 $2,443.3
 $(39.2) $3,714.8
 $6,121.3
  39 Weeks Ended November 2, 2019
(in millions) 
Common
Stock
Shares
 
Common
Stock
 
Additional
Paid-in
Capital
 
Accumulated
Other
Comprehensive
Loss
 
Retained
Earnings
 
Share-
holders'
Equity
Balance at February 2, 2019 238.1
 $2.4
 $2,602.7
 $(38.3) $3,076.1
 $5,642.9
Cumulative effect of adopted accounting
    standards, net
 —
 —
 —
 —
 (65.3) (65.3)
Net income —
 —
 —
 —
 704.0
 704.0
Total other comprehensive loss —
 —
 —
 (0.9) —
 (0.9)
Issuance of stock under Employee Stock
    Purchase Plan
 0.1
 —
 7.5
 —
 —
 7.5
Exercise of stock options —
 —
 4.9
 —
 —
 4.9
Stock-based compensation, net 0.4
 —
 28.2
 —
 —
 28.2
Repurchase of stock (1.9) —
 (200.0) —
 —
 (200.0)
Balance at November 2, 2019 236.7
 $2.4
 $2,443.3
 $(39.2) $3,714.8
 $6,121.3
See accompanying Notes to Unaudited Condensed Consolidated Financial Statements.


DOLLAR TREE, INC.
CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY (cont.)
(Unaudited)
  13 Weeks Ended November 3, 2018
(in millions) 
Common
Stock
Shares
 
Common
Stock
 
Additional
Paid-in
Capital
 
Accumulated
Other
Comprehensive
Loss
 
Retained
Earnings
 
Share-
holders'
Equity
Balance at August 4, 2018 237.9
 $2.4
 $2,581.3
 $(37.5) $5,101.3
 $7,647.5
Net income —
 —
 —
 —
 281.8
 281.8
Total other comprehensive loss —
 —
 —
 (0.7) —
 (0.7)
Issuance of stock under Employee Stock
    Purchase Plan
 0.1
 —
 2.1
 —
 —
 2.1
Exercise of stock options —
 —
 1.9
 —
 —
 1.9
Stock-based compensation, net —
 —
 10.5
 —
 —
 10.5
Balance at November 3, 2018 238.0
 $2.4
 $2,595.8
 $(38.2) $5,383.1
 $7,943.1
  39 Weeks Ended November 3, 2018
(in millions) 
Common
Stock
Shares
 
Common
Stock
 
Additional
Paid-in
Capital
 
Accumulated
Other
Comprehensive
Loss
 
Retained
Earnings
 
Share-
holders'
Equity
Balance at February 3, 2018 237.3
 $2.4
 $2,545.3
 $(32.3) $4,666.9
 $7,182.3
Net income —
 —
 —
 —
 716.2
 716.2
Total other comprehensive loss —
 —
 —
 (5.9) —
 (5.9)
Issuance of stock under Employee Stock
    Purchase Plan
 0.2
 —
 8.0
 —
 —
 8.0
Exercise of stock options 0.1
 —
 6.2
 —
 —
 6.2
Stock-based compensation, net 0.4
 —
 36.3
 —
 —
 36.3
Balance at November 3, 2018 238.0
 $2.4
 $2,595.8
 $(38.2) $5,383.1
 $7,943.1
See accompanying Notes to Unaudited Condensed Consolidated Financial Statements.


DOLLAR TREE, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
 39 Weeks Ended 39 Weeks Ended
 November 3, October 28, November 2, November 3,
(in millions) 2018 2017 2019 2018
Cash flows from operating activities:        
Net income $716.2
 $674.2
 $704.0
 $716.2
Adjustments to reconcile net income to net cash provided by operating activities:  
  
  
  
Depreciation and amortization 454.4
 454.6
 466.3
 454.4
Provision for deferred taxes 13.8
 15.8
Provision for deferred income taxes 50.3
 13.8
Amortization of debt discount and debt-issuance costs 53.7
 12.0
 4.9
 53.7
Receivable impairment —
 53.5
Other non-cash adjustments to net income 63.3
 61.6
 76.7
 63.3
Loss on debt extinguishment 114.7
 —
 —
 114.7
Changes in operating assets and liabilities (365.2) (679.1) (287.7) (365.2)
Net cash provided by operating activities 1,050.9
 592.6
 1,014.5
 1,050.9
Cash flows from investing activities:  
  
  
  
Capital expenditures (622.7) (449.4) (782.3) (622.7)
Proceeds from sale of restricted and unrestricted investments —
 4.0
Proceeds from governmental grant 16.5
 —
Proceeds from (payments for) fixed asset disposition 3.3
 (0.1) (2.9) 3.3
Net cash used in investing activities (619.4) (445.5) (768.7) (619.4)
Cash flows from financing activities:  
  
  
  
Proceeds from long-term debt, net of discount 4,775.8
 —
 —
 4,775.8
Principal payments for long-term debt (5,432.7) (610.8) —
 (5,432.7)
Debt-issuance and debt extinguishment costs (155.3) —
 —
 (155.3)
Proceeds from revolving credit facility 50.0
 —
 —
 50.0
Repayments of revolving credit facility (50.0) —
 —
 (50.0)
Proceeds from stock issued pursuant to stock-based compensation plans 14.2
 24.4
 12.3
 14.2
Cash paid for taxes on exercises/vesting of stock-based compensation (22.6) (27.2) (24.3) (22.6)
Payments for repurchase of stock (200.0) —
Net cash used in financing activities (820.6) (613.6) (212.0) (820.6)
Effect of exchange rate changes on cash and cash equivalents (0.4) 0.2
Net decrease in cash and cash equivalents (389.5) (466.3)
Cash and cash equivalents at beginning of period 1,097.8
 866.4
Cash and cash equivalents at end of period $708.3
 $400.1
Effect of exchange rate changes on cash, cash equivalents and restricted cash (0.2) (0.4)
Net increase (decrease) in cash, cash equivalents and restricted cash 33.6
 (389.5)
Cash, cash equivalents and restricted cash at beginning of period 446.7
 1,097.8
Cash, cash equivalents and restricted cash at end of period $480.3
 $708.3
Supplemental disclosure of cash flow information:  
  
  
  
Cash paid for:  
  
  
  
Interest, net of amounts capitalized $289.3
 $261.3
 $89.7
 $289.3
Income taxes $197.9
 $454.6
 $248.9
 $197.9
Non-cash transactions:        
Accrued capital expenditures $51.2
 $53.5
 $73.8
 $51.2
 See accompanying Notes to Unaudited Condensed Consolidated Financial Statements.



DOLLAR TREE, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
NOTENote 1 - BASIS OF PRESENTATIONBasis of Presentation
The accompanying unaudited condensed consolidated financial statements of Dollar Tree, Inc. and its wholly-owned subsidiaries (the “Company”) have been prepared in accordance with U.S. generally accepted accounting principles for interim financial information and are presented in accordance with 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 the Company’s Annual Report on Form 10-K for the year ended February 3, 2018.2, 2019.The results of operations for the 13 and 39 weeks ended November 3, 20182, 2019 are not necessarily indicative of the results to be expected for the entire fiscal year ending February 2, 2019.1, 2020.
In the Company’s 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 its financial position as of November 2, 2019 and November 3, 2018 and October 28, 2017 and the results of its operations and cash flows for the periods presented. The February 3, 20182, 2019 balance sheet information was derived from the audited consolidated financial statements as of that date.
Recent Accounting Pronouncements
In May 2014,February 2016, the Financial Accounting Standards Board (“FASB”) issued ASUAccounting Standards Update (“ASU”) No. 2014-09, 2016-02, “Revenue from Contracts with CustomersLeases (Topic 606).842)” This updateand subsequent amendments, which replaced existing revenue recognitionlease accounting guidance in GAAP and requires an entity to recognize the amount of revenue to which it expects to be entitled for the transfer of promised goods or services to customers. The Company adopted the standard in the first quarter of fiscal 2018 and the adoption of the standard did not have an impact on the Company’s condensed consolidated financial statements or its internal control over financial reporting.
In August 2016, the FASB issued ASU No. 2016-15, “Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments,” which provides guidance on eight specific cash flow issues in an effort to reduce diversity in practice in how certain cash receipts and cash payments are presented and classified within the statement of cash flows. This standard is effective retrospectively for fiscal years and interim periods within those years beginning after December 15, 2017. The Company adopted the standard in the first quarter of fiscal 2018, resulting in the classification of $124.5 million of cash paid for debt extinguishment as a financing activity in the accompanying unaudited condensed consolidated statement of cash flows for the 39 weeks ended November 3, 2018.
In February 2016, the FASB issued ASU No. 2016-02, “Leases (Topic 842),” which will replace existing lease accounting guidance. The new standard will require lessees to recognize right-of-use assets and corresponding lease liabilities on the balance sheet for all in-scope leases with a term of greater than 12 months and discloserequires disclosure of certain quantitative and qualitative information aboutpertaining to an entity’s leasing arrangements. ASU 2016-02 is effective for interim and annual reporting periods beginning after December 15, 2018. The Company will adoptadopted the standard in the first quarteras of fiscalFebruary 3, 2019, using the optional effective date transition method provided by accounting pronouncement, ASU No. 2018-11, “Leases (Topic 842): Targeted Improvements.” ASU 2018-11 allows entities to initially apply ASU 2016-02 at the adoption dateImprovements” and recognizerecorded a cumulative-effectcumulative effect adjustment to the opening balance ofbeginning retained earnings in the period of adoption. Consequently, theearnings. The Company’s reporting for the comparative prior periods presented in the year of adoption will continuecondensed consolidated financial statements continues to be in accordance with ASCAccounting Standards Codification (“ASC”) 840, “Leases (Topic 840).” The Company has engagedelected the package of practical expedients permitted under the transition guidance within the new standard which, among other things, permitted the Company to carry forward the historical lease classification for leases that commenced before the effective date of the new standard. The Company did not elect the hindsight practical expedient, which permits the use of hindsight when determining lease term and impairment of right-of-use assets. Adoption of the standard resulted in the recognition of Operating lease right-of-use assets and Operating lease liabilities of $6.2 billion and $6.1 billion, respectively, and a third partyreduction to assist in its preparation for implementation and its evaluationRetained earnings of $65.3 million, net of tax, as of February 3, 2019. The Operating lease right-of-use assets recorded at transition include the impact of net favorable lease rights of approximately $210.0 million, accrued rent, net of prepaid rent of approximately $108.0 million, lease incentives of approximately $67.0 million and the new pronouncement on its consolidated financial statements. Additionally, the Company is implementing lease accounting software to assistimpairment of right-of-use assets recognized in the quantificationretained earnings as of February 3, 2019 of approximately $96.0 million. The adoption of the expectedstandard did not have a material impact on the consolidated balance sheets and to facilitate the calculations of the related accounting entries and disclosures. The Company continues to assess the effect the implementation will have on its existing accounting policies and the consolidated financial statements and expects the adoption of this pronouncement to result in a discounted increase of $5.5 billion to $6.5 billion in the assets and liabilities on its consolidated balance sheets, with an immaterial impact on itsCompany’s condensed consolidated income statements andor condensed consolidated statements of cash flows. The estimate could change as the Company continuesRefer to progress with implementation and will also fluctuate based on the lease portfolio and discount rates as of the adoption date. The Company is also evaluatingNote 7 for additional changes to its processes and internal controls to ensure it is compliant with the reporting and disclosure requirements of the standard.

NOTE 2 - LONG-TERM DEBT
Long-term debt at November 3, 2018, February 3, 2018 and October 28, 2017 consisted of the following:
  As of November 3, 2018 As of February 3, 2018 As of October 28, 2017
(in millions) Principal Unamortized Debt Discount, Premium and Issuance Costs Principal Unamortized Debt Discount, Premium and Issuance Costs Principal Unamortized Debt Discount, Premium and Issuance Costs
Forgivable Promissory Note $—
 $—
 $—
 $—
 $7.0
 $—
5.25% Acquisition Notes, due 2020 —
 —
 750.0
 6.1
 750.0
 6.8
5.75% Acquisition Notes, due 2023 —
 —
 2,500.0
 30.8
 2,500.0
 32.1
Term Loan A-1 —
 —
 1,532.7
 3.4
 1,574.2
 3.7
Term Loan B-2 —
 —
 650.0
 8.6
 650.0
 9.0
$1.25 billion Tranche A Revolving
    Credit Facility
 —
 —
 —
 12.6
 —
 13.9
5.00% Senior Notes, due 2021 300.0
 (5.2) 300.0
 (6.8) 300.0
 (7.2)
$1.25 billion Revolving Credit Facility,
    interest payable at LIBOR, reset
    periodically, plus 1.125%, which was
    3.44% at November 3, 2018
 —
 10.8
 —
 —
 —
 —
Term Loan Facility, due 2020, interest
    payable at LIBOR, reset periodically,
    plus 0.95%, which was 3.27% at
    November 3, 2018
 782.0
 1.8
 —
 —
 —
 —
Senior Floating Rate Notes, due 2020,
    interest payable at LIBOR, reset
    quarterly, plus 0.70%, which was
    3.29% at November 3, 2018
 750.0
 3.8
 —
 —
 —
 —
3.70% Senior Notes, due 2023 1,000.0
 8.0
 —
 —
 —
 —
4.00% Senior Notes, due 2025 1,000.0
 7.5
 —
 —
 —
 —
4.20% Senior Notes, due 2028 1,250.0
 11.5
 —
 —
 —
 —
Total $5,082.0
 $38.2
 $5,732.7
 $54.7
 $5,781.2
 $58.3
Senior Credit Facilities
On April 19, 2018, the Company entered into a credit agreement (the “Credit Agreement”) with JPMorgan Chase Bank, N.A., as administrative agent, providing for $2.03 billion in senior credit facilities (the “Senior Credit Facilities”), consisting of a $1.25 billion revolving credit facility (the “Revolving Credit Facility”), of which up to $350.0 million is available for letters of credit, and a $782.0 million term loan facility (the “Term Loan Facility”).
The Company borrowed the entire $782.0 million Term Loan Facility on April 19, 2018. The Revolving Credit Facility matures on April 19, 2023, subject to extensions permitted under the Credit Agreement. The Term Loan Facility matures on April 19, 2020.
The loans under the Revolving Credit Facility bore interest at an initial interest rate of LIBOR, reset periodically, plus 1.25% and the loans under the Term Loan Facility bore interest at an initial interest rate of LIBOR, reset periodically, plus 1.00%, subject to adjustment based on (i) the Company’s credit ratings and (ii) the Company’s leverage ratio. Based on these factors, interest on the loans under the Revolving Credit Facility may range from LIBOR plus 1.00% to 1.50% and interest on the loans under the Term Loan Facility may range from LIBOR plus 0.875% to 1.25%. At November 3, 2018, the Revolving Credit Facility bore interest at LIBOR plus 1.125% and the Term Loan Facility bore interest at LIBOR plus 0.95%. The Company pays certain commitment fees in connection with the Revolving Credit Facility. The Senior Credit Facilities allow voluntary repayment of outstanding loans at any time without premium or penalty, other than customary breakage costs with respect to LIBOR loans. There is no required amortization under the Senior Credit Facilities.
The Senior Credit Facilities contain a number of affirmative and negative covenants that, among other things, and subject to certain significant baskets and exceptions, restrict the Company’s ability to incur subsidiary indebtedness, incur liens, sell all or

substantially all of the Company’s (including the Company’s subsidiaries’) assets and consummate certain fundamental changes. The Senior Credit Facilities also contain a maximum rent-adjusted leverage ratio covenant and a minimum fixed charge coverage ratio covenant. The Credit Agreement provides for certain events of default which, if any of them occurs, would permit or require the loans under the Senior Credit Facilities to be declared due and payable and the commitments thereunder to be terminated.
Senior Notes
On April 19, 2018, the Company completed the registered offering of $750.0 million aggregate principal amount of Senior Floating Rate Notes due 2020 (the “Floating Rate Notes”), $1.0 billion aggregate principal amount of 3.70% Senior Notes due 2023 (the “2023 Notes”), $1.0 billion aggregate principal amount of 4.00% Senior Notes due 2025 (the “2025 Notes”) and $1.25 billion aggregate principal amount of 4.20% Senior Notes due 2028 (the “2028 Notes” and together with the 2023 Notes and the 2025 Notes, the “Fixed Rate Notes”; and the Fixed Rate Notes together with the Floating Rate Notes, the “Notes”).
The Notes were issued pursuant to an indenture, dated as of April 2, 2018, between the Company and U.S. Bank National Association, as trustee, as supplemented by the First Supplemental Indenture dated as of April 19, 2018 (the “First Supplemental Indenture”).
The Notes are unsecured, unsubordinated obligations of the Company and rank equal in right of payment to all of the Company’s existing and future debt and other obligations that are not, by their terms, expressly subordinated in right of payment to the Notes.
The 2023 Notes mature on May 15, 2023 and bear interest at the rate of 3.70% annually. The 2025 Notes mature on May 15, 2025 and bear interest at the rate of 4.00% annually. The 2028 Notes mature on May 15, 2028 and bear interest at the rate of 4.20% annually. The Company is required to pay interest on the Fixed Rate Notes semiannually, in arrears, on May 15 and November 15 of each year, beginning on November 15, 2018, to holders of record on the preceding May 1 and November 1, respectively. The Floating Rate Notes mature on April 17, 2020 and bear interest at a floating rate, reset quarterly, equal to LIBOR plus 70 basis points. The Company is required to pay interest on the Floating Rate Notes quarterly, in arrears, on January 17, April 17, July 17 and October 17 of each year, beginning on July 17, 2018, to holders of record on the preceding January 3, April 3, July 3 and October 3, respectively.
The Company may redeem the Floating Rate Notes in whole or in part at any time beginning on April 22, 2019 at a price equal to 100% of the principal amount of Floating Rate Notes being redeemed plus accrued but unpaid interest to, but excluding, the redemption date. The Company may redeem the Fixed Rate Notes of each series in whole or in part, at its option, at any time and from time to time prior to (i) in the case of the 2023 Notes, April 15, 2023, (ii) in the case of the 2025 Notes, March 15, 2025 and (iii) in the case of the 2028 Notes, February 15, 2028 (each such date with respect to the applicable series, the “Applicable Par Call Date”), in each case, at a “make-whole” price described in the First Supplemental Indenture plus accrued and unpaid interest to, but excluding, the date of redemption. In addition, on or after the Applicable Par Call Date, the Company may redeem the Fixed Rate Notes of the applicable series, at any time in whole or from time to time in part, at a redemption price equal to 100% of the principal amount thereof.
In the event of a Change of Control Triggering Event, as defined in the indenture, with respect to any series, the holders of the Notes of such series may require the Company to purchase for cash all or a portion of their Notes of such series at a purchase price equal to 101% of the principal amount of such Notes, plus accrued and unpaid interest, if any, to, but excluding, the date of repurchase. The indenture limits the ability of the Company and its subsidiaries, subject to significant baskets and exceptions, to incur certain secured debt. The First Supplemental Indenture also provides for events of default which, if any of them occurs, would permit or require the principal of and accrued interest on the Notes to become or to be declared due and payable, as applicable.
Repayments of Long-term debt in the first quarter of 2018
The Company redeemed its $750.0 million aggregate principal amount of 5.25% Acquisition Notes due 2020 (the “2020 Notes”) and accelerated the amortization of debt-issuance costs associated with the 2020 Notes of $6.1 million to the first quarter ended May 5, 2018.
In connection with entry into the Credit Agreement and the offering of the Notes discussed above, the Company used the proceeds of borrowings under the Senior Credit Facilities, together with the net proceeds from the offering of the Notes and cash on hand to repay all of the outstanding loans under its existing senior secured credit facilities, including its Term Loan A-1 and Term Loan B-2, and redeem all of its outstanding 5.75% Acquisition Notes due 2023.
The credit agreement governing the existing senior secured credit facilities, dated as of March 9, 2015 (as amended, restated, supplemented or otherwise modified from time to time, the “Existing Credit Agreement”) was terminated and all of the guarantees of the obligations under the Existing Credit Agreement were terminated and all liens granted under the Existing Credit Agreement, including those equally and ratably securing the $300.0 million 5.00% Senior Notes due 2021 issued by the Company’s subsidiary,

Family Dollar Stores, Inc., were released. Upon the termination of the Existing Credit Agreement, the Company paid certain lenders thereunder a prepayment premium of $6.5 million, which was equal to 1.00% of the outstanding principal amount of the Term Loan B-2 loans under the Existing Credit Agreement and is included in “Interest expense, net” on the accompanying unaudited condensed consolidated income statements for the 39 weeks ended November 3, 2018.
The Company redeemed all of its outstanding $2.5 billion aggregate principal amount of 5.75% Acquisition Notes due 2023 and the indenture governing the notes was satisfied and discharged. The Company paid a redemption premium of $107.8 million, which was equal to 4.313% of the outstanding principal amount of the Acquisition Notes due 2023 and is included in “Interest expense, net” on the accompanying unaudited condensed consolidated income statements for the 39 weeks ended November 3, 2018.
Related to the redemption of the 5.75% Acquisition Notes due 2023 and the repayment of the Company’s Existing Credit Agreement, the Company accelerated the expensing of approximately $41.2 million of amortizable non-cash deferred financing costs and expensed approximately $0.4 million in transaction-related costs to the first quarter ended May 5, 2018. Additionally, the Company capitalized approximately $36.9 million of deferred financing costs and recorded an original issue discount in connection with entry into the Credit Agreement and the offering of the Notes, which are being amortized over the terms of the Senior Credit Facilities and Notes.
Debt Covenants
As of November 3, 2018, the Company was in compliance with its debt covenants.
NOTE 3 - INCOME TAXES
The Company’s effective tax rate was 17.1% for the 13 weeks ended November 3, 2018 compared with 32.4% for the 13 weeks ended October 28, 2017 and 19.1% for the 39 weeks ended November 3, 2018 compared with 33.4% for the 39 weeks ended October 28, 2017. The 2017 Tax Cuts and Jobs Act (“TCJA”) reduced the federal corporate tax rate from 35% to 21% for tax years beginning after December 31, 2017. As a result, the 2018 federal statutory tax rate is 21%. In addition, in the third quarter of 2018, the Company recorded a tax benefit of $15.7 million based on the substantial completion of its analysis on the net deferred tax liability valuation and the acceleration of depreciation. This benefit resulted in a 4.6% decrease in the quarterly tax rate for the 13 weeks ended November 3, 2018.
In the fourth quarter of 2017, the Company recorded a tax benefit based on currently available information and interpretations related to the TCJA, which are continuing to evolve, and as a result, the benefit is considered provisional. The Company will continue its analysis related to the TCJA as supplemental legislation, regulatory guidance, or evolving technical interpretations become available and will continue to refine such provisional amounts within the measurement period as provided by Staff Accounting Bulletin 118, Income Tax Accounting Implications of the Tax Cuts and Jobs Act. The Company expects to complete its analysis regarding the impact of executive compensation, the effect of state taxes and provisions of the TCJA associated with Global Intangible Low-Taxed Income (“GILTI”) no later than December 2018.Company’s accounting for leases.
NOTE 4Note 2 - LEGAL PROCEEDINGSLegal Proceedings
The Company is a defendant in legal proceedings including thosea Food and Drug Administration (“FDA”) proceeding and the class, collective, representative and large cases described below as well as several thousand allegedly individual claims in arbitration. The arbitrations include more than 2,100 wage and hour claims recently filed by 1 law firm. The law firm also alleges they have more than 4,200 additional claims to be filed in the future. The Company will vigorously defend itself in these matters.all matters referred to in this Note 2. The Company does not believe that any of these matters will, individually or in the aggregate, have a material effect on its business or financial condition. The Company cannot give assurance, however, that one or more of these matters will not have a material effect on its results of operations for the quarter or year in which they are resolved.
The Company assesses its legal proceedings and reserves are established if a loss is probable and the amount of such loss can be reasonably estimated. Many, if not substantially all, of the contingencies described below 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 the Company has determined that a loss is reasonably possible but not probable, the Company is 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. The Company’s 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 the Company 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 recently alleged that the Company 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. The Company is in the process of responding to the FDA and proposing enhanced procedures and processes for any OTC products it imports from China.
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. The employee filed an amended complaint in which he abandoned his attempt to certify a nation-wide class of non-exempt distribution center employees for alleged improper calculation of overtime compensation. The Company removed this lawsuit to federal court. The court certified the case as a state-wide class action.
In April 2015, a former store manager filed a class action in California federal court alleging, among other things, thatas to those employees who began working for the Company failedprior to make wage statements readily available to employees who did not receive paper checks. On November 7, 2017, the jury found in favor of the Company. The plaintiff has filed an appeal from the verdict.
In April 2016, the Company was served with a putative class action in Florida state court brought by a former store employee asserting the Company violated the Fair Credit Reporting Act in the way it handled background checks. The parties have reached a tentative settlement which is not material.
In July 2017, two former employees filed suit in federal court in California, seeking to represent a class of current and former non-exempt employees alleging that the Company’s dress code required them to purchase such distinctive clothing that it constituted a uniform and the Company’s failure to reimburse them for the clothing violated California law. The former employees seek restitution, damages, penalties and injunctive relief. The Company entered into a settlement agreement which was rejected by the court. The parties have revised the terms of the settlement and have resubmitted it for court approval. The Company has accrued the amount in the revised agreement.
In August 2017, a former employee brought suit in California state court on a Private Attorney General Act ("PAGA") representative basis alleging the Company failed to provide him and all other California store associates with suitable seating when they were performing cashier functions. The parties settled the case, subject to court approval and the Company has accrued the amount of the settlement.    October 6, 2014.
In August 2018, a former employee brought suit in California state court as a class action and as a PAGAPrivate Attorney General Act (“PAGA”) representative suit alleging the Company 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.
In December 2018, 2 former employees brought a 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.
Several lawsuits have been filed against Dollar Tree, Family Dollar and their vendors alleging that personal powder products caused cancer. The Company does not believe the products it sold caused the illnesses. The Company believes these lawsuits are insured and is being indemnified by its third party vendors.
Dollar Tree Resolved Matters
In August 2017, 43 current and2015, a former employeesstore manager filed suit against the Company in state courta class action in California federal court alleging, improper classification as exempt employees which they allege resulted in, among other things, their failure to receive overtime compensation, rest and meal periods, accurate wage statements, and final pay upon termination of employment. The Company removed the case to federal court. As required by that court’s order, each plaintiff refiled his or her case individually so that the cases would be tried individually and not as a class. In June 2018, the Company mediated the 43 cases together. All of the cases have been dismissed with prejudice and the settlements were paid in the third quarter of 2018.
In November 2017, a current employee filed a PAGA representative action in California state court alleging the Company failed to make wage statements readily available to California store employees who dodid not receive paper checks. The lawsuit has been dismissed with prejudice.
In February 2018,2017, a current store managerjury found in favor of the Company. In 2019, the 9th Circuit Court of Appeals affirmed the jury verdict. In July 2019, the plaintiff filed a statewide class action in Missouri state court allegingpetition with the Company’s store managers are improperly classified as exempt employees thereby entitling them to overtime pay, liquidated damages and damages for unjust enrichment.Supreme Court of the United States seeking a review of the decision. The case was dismissed with prejudice.Supreme Court denied the petition.
Family Dollar Active Matters
In January 2017, a customer filed a class action in federal court in Illinois alleging the Company 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 Company believes that it is fully indemnified by the entities that supplied it with the product.
In April 2017,July 2019, a former store employeecustomer filed a lawsuitnationwide class action in California statefederal court alleging off the clock work primarily for bag checks, failure to provide rest and meal breaks, and related claims. The court granted the Company’s motion to compel arbitration

and stayed the case pending the outcome of the arbitration proceedings. Subsequently, the court allowed the plaintiff to amend her complaint to include PAGA claims which are not subject to arbitration. The parties settled the case, subject to court approval and the Company has accrued the amount of the settlement.
In December 2017, a former assistant store manager filed suit in California state court asserting PAGA claimsPennsylvania on behalf of herself and other store managers and assistant store managers seeking wages for alleged off the clock work, noncompliant rest and meal breaks and related claims. The parties settled the case, subject to court approval andall customers with mobility disabilities alleging the Company has accruedviolated the amountpublic accommodation requirements of the settlement.Americans with Disabilities Act by systemically blocking the aisles with merchandise. The customer seeks a permanent injunction requiring the Company to remove all access barriers and giving the customer authority to monitor the Company’s compliance.
Family Dollar Resolved Matters
In January 2018, a former store manager and a former assistant store manager filed suit in California state court asserting class claims on behalf of themselves and their respective classes seeking to recover for working off the clock, noncompliant rest and meal periods and related claims. The plaintiffs have since amended their complaint, to add aabandoned their class and PAGA claim but have also agreed to stay the PAGAclaims and class claims pending the arbitration ofare instead proceeding with their individual claims.claims only.
In June 2018, a former store manager filed suit in California state court asserting class and PAGA claims on behalf of himself and a class of current and former employees for alleged off the clock work, alleged failure to receive compliant rest and meal breaks and related claims. In May 2019, the case was resolved.
In AugustDecember 2018, a former assistant store manager filed a nationwide collective action in federal court in Texas asserting that she and other similarly situated store managers were improperly classified as exempt employees and are therefore owed overtime pay and other related compensation. The collective claims have been dismissed and the plaintiff has agreed to pursue her claims on an individual basis in arbitration.
In October 2018, a former store manager filed a class and collective action in federal court in Arkansas alleging she and other similarly situated current and former store managers were improperly classified as exempt employees in violation of the Fair Labor Standards Act and the Arkansas Minimum Wage Act and are therefore owed minimum wages for all time worked, overtime compensation and penalties.
Family Dollar Resolved Matters
In June 2017, a former store employee filedPAGA suit in California state court asserting PAGA claims on behalf of herself and other allegedly aggrieved employees alleging the Company willfully caused their work time to go under reported so they failed to receiveprovide rest and meal breaks, failed to pay minimum, regular and overtime wages, failed to maintain accurate records and

provide accurate wage statements, failed to timely pay wages due upon termination of employment and failed to reimburse employees for time worked and related claims. The lawsuit has beenbusiness expenses. In April 2019, the case was dismissed without prejudice.
NOTE 5Note 3 - FAIR VALUE MEASUREMENTSFair 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. The Company’s 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.
The carrying amounts of Cash and cash equivalents and Accounts payable as reported in the Company’s unaudited condensed consolidated balance sheets approximate fair value due to their short-term maturities.
Assets and Liabilities Measured at Fair Value on a Recurring Basis
The following table sets forth the Company’s financial assets and liabilities that are measured at fair value on a recurring basis:
(in millions) November 2,
2019		 February 2,
2019		 November 3,
2018
Level 1      
Deferred compensation plan assets $21.8
 $21.8
 $21.8
(in millions) November 3,
2018		 February 3,
2018		 October 28,
2017
Level 1      
Deferred compensation plan assets 21.8
 20.7
 19.8

Deferred compensation plan assets are held pursuant to deferred compensation plans for certain officers and executives. The deferred compensation plan assets are recorded in "Other assets" onwithin the accompanying unaudited condensed consolidated balance sheets and a corresponding liability is recorded in "Other liabilities" onwithin the accompanying unaudited condensed consolidated balance sheets.

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). The Company did not record any significant impairment charges during the 13 or 39 weeks ended November 2, 2019 and November 3, 2018.
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 the Company’s long-term borrowings were as follows:
  November 2, 2019 February 2, 2019 November 3, 2018
(in millions) Fair Value Carrying Value Fair Value Carrying Value Fair Value Carrying Value
Level 1            
Senior Notes $4,530.3
 $4,278.6
 $4,198.6
 $4,275.5
 $4,158.7
 $4,274.4
Level 2            
Term Loan Facility —
 —
 —
 —
 774.2
 780.2
  November 3, 2018 February 3, 2018 October 28, 2017
(in millions) Fair Value Carrying Value Fair Value Carrying Value Fair Value Carrying Value
Level 1            
Senior Notes and Acquisition Notes $4,158.7
 $4,274.4
 $3,684.6
 $3,519.9
 $3,713.4
 $3,518.3
Level 2            
Term loans 774.2
 780.2
 2,187.6
 2,170.7
 2,230.7
 2,211.5

The fair values of the Company’s 5.00% Senior Notes due 2021 and the Notes (collectively, the “Senior Notes”), and the fair values of the 5.25% Acquisition Notes due 2020 and 5.75% Acquisition Notes due 2023 (together, “the Acquisition Notes”) that were redeemed during the first quarter of 2018, were determined using Level 1 inputs as quoted prices in active markets for identical assets or liabilities are available. The fair value of the Company’s Term Loan Facility, and the fair values of the Term Loan A-1 and Term Loan B-2, which the Company prepaid in full during the firstfourth quarter of fiscal 2018, werewas determined using Level 2 inputs as quoted prices are readily available from pricing services, but the prices are not published. The carrying valuesvalue of the Company’s Revolving Credit Facility at November 3, 2018 and the Company’s Tranche A Revolving Credit Facility at February 3, 2018 and October 28, 2017, approximated theirits fair valuesvalue because the interest rates vary with market interest rates.

NOTE 6Note 4 - NET INCOME PER SHARENet Income Per Share
The following table sets forth the calculations of basic and diluted net income per share:
  13 Weeks Ended 39 Weeks Ended
  November 2, November 3, November 2, November 3,
(in millions, except per share data) 2019 2018 2019 2018
Basic net income per share:        
Net income $255.8
 $281.8
 $704.0
 $716.2
Weighted average number of shares outstanding 236.7
 237.9
 237.4
 237.8
Basic net income per share $1.08
 $1.18
 $2.97
 $3.01
Diluted net income per share:        
Net income $255.8
 $281.8
 $704.0
 $716.2
Weighted average number of shares outstanding 236.7
 237.9
 237.4
 237.8
Dilutive effect of stock options and restricted stock (as
determined by applying the treasury stock method)		 0.8
 0.8
 0.9
 0.8
Weighted average number of shares and dilutive potential
shares outstanding		 237.5
 238.7
 238.3
 238.6
Diluted net income per share $1.08
 $1.18
 $2.95
 $3.00
  13 Weeks Ended 39 Weeks Ended
  November 3, October 28, November 3, October 28,
(in millions, except per share data) 2018 2017 2018 2017
Basic net income per share:        
Net income $281.8
 $239.9
 $716.2
 $674.2
Weighted average number of shares outstanding 237.9
 236.9
 237.8
 236.7
Basic net income per share $1.18
 $1.01
 $3.01
 $2.85
Diluted net income per share:        
Net income $281.8
 $239.9
 $716.2
 $674.2
Weighted average number of shares outstanding 237.9
 236.9
 237.8
 236.7
Dilutive effect of stock options and restricted stock (as
determined by applying the treasury stock method)		 0.8
 0.9
 0.8
 0.8
Weighted average number of shares and dilutive potential
shares outstanding		 238.7
 237.8
 238.6
 237.5
Diluted net income per share $1.18
 $1.01
 $3.00
 $2.84

For the 13 and 39 weeks ended November 2, 2019 and November 3, 2018, and October 28, 2017, substantially all of the stock options outstanding were included in the calculation of the weighted average number of shares and dilutive potential shares outstanding.

NOTE 7Note 5 - STOCK-BASED COMPENSATIONStock-Based Compensation
For a discussion of the Company’s stock-based compensation plans, refer to “Note 910 - Stock-Based Compensation Plans” of the Company’s Annual Report on Form 10-K for the year ended February 3, 2018.
The Company’s stock-based compensation expense primarily includes the fair value of restricted stock units (RSUs) and employees’ purchase rights under the Company’s Employee Stock Purchase Plan.2, 2019. Stock-based compensation expense was $60.2$52.5 million and $51.8$60.2 million during the 39 weeks ended November 2, 2019 and November 3, 2018, and October 28, 2017, respectively.
Restricted Stock
The Company issues service-based RSUs to employees and officers and issues performance-based RSUs to certain officers of the Company. The Company recognizes expense based on the estimated fair value of the RSUs 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 is determined using the Company’s closing stock price on the date of grant.
The following table summarizes the status of RSUs as of November 3, 20182, 2019 and changes during the 39 weeks then ended:
  Number of Shares 
Weighted Average
Grant Date
Fair Value
Nonvested at February 2, 2019 1,446,100
 $86.96
Granted 768,014
 103.69
Vested (653,251) 84.79
Forfeited (117,445) 94.77
Nonvested at November 2, 2019 1,443,418
 $96.04
  Number of Shares 
Weighted Average
Grant Date
Fair Value
Nonvested at February 3, 2018 1,525,252
 $79.37
Granted 788,162
 94.82
Vested (660,485) 79.84
Forfeited (88,124) 84.66
Nonvested at November 3, 2018 1,564,805
 $86.65

NOTE 8Note 6 - SEGMENTSSegments
The Company operates a chain of more than 15,10015,200 retail discount stores in 48 states and five5 Canadian provinces. The Company’s operations are conducted in two2 reporting business segments: Dollar Tree and Family Dollar. The Company defines its segments as those operations whose results its chief operating decision maker (“CODM”) regularly reviews to analyze performance and allocate resources.

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 the Company’s operations under the “Dollar Tree” and “Dollar Tree Canada” brands, 1213 distribution centers in the United States twoand 2 distribution centers in Canada and a Store Support Center in Chesapeake, Virginia.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 the Company’s operations under the “Family Dollar” brand and 11 distribution centers and a Store Support Center in Matthews, North Carolina.centers.
The Company measures the results of its segments using, among other measures, each segment’s net sales, gross profit and operating income. The CODM reviews these metrics for each of the Company’s reporting segments. The Company may revise the measurement of each segment’s operating income, including the allocation of distribution center and Store Support Center costs, as determined by the information regularly reviewed by the CODM. If the measurement of a segment changes, prior period amounts and balances would beare reclassified to be comparable to the current period’s presentation. In the current year, the Company identified Corporate and support costs, mainly store support center costs that are considered shared services, and excluded these selling, general and administrative costs from its two reporting business segments. These costs include operating expenses for the Company’s store support centers in Chesapeake, Virginia and Matthews, North Carolina. During fiscal 2019 the Company consolidated its Matthews, North Carolina store support center with its store support center in Chesapeake, Virginia. The Company continues to own its facility in Matthews, North Carolina. Amounts for the 13 and 39 weeks ended November 3, 2018 have been reclassified to be comparable to the current year presentation.
Net sales by segment areInformation for the Company’s segments, as follows:
  13 Weeks Ended 39 Weeks Ended
  November 3, October 28, November 3, October 28,
(in millions) 2018 2017 2018 2017
Net sales:        
     Dollar Tree $2,853.8
 $2,685.0
 $8,407.0
 $7,843.6
Family Dollar 2,685.0
 2,631.6
 8,211.1
 8,041.3
Total net sales $5,538.8
 $5,316.6
 $16,618.1
 $15,884.9

Gross profit by segmentwell as for Corporate and support, including the reconciliation to Income before income taxes, is as follows:
  13 Weeks Ended 39 Weeks Ended
  November 3, October 28, November 3, October 28,
(in millions) 2018 2017 2018 2017
Gross profit:        
     Dollar Tree $993.7
 $942.6
 $2,909.8
 $2,735.0
Family Dollar 678.2
 723.4
 2,125.6
 2,185.9
Total gross profit $1,671.9
 $1,666.0
 $5,035.4
 $4,920.9
Depreciation and amortization expense by segment is as follows:
  13 Weeks Ended 39 Weeks Ended
  November 3, October 28, November 3, October 28,
(in millions) 2018 2017 2018 2017
Depreciation and amortization expense:        
     Dollar Tree $68.2
 $62.5
 $197.9
 $186.8
Family Dollar 82.3
 86.9
 256.7
 268.0
Total depreciation and amortization expense $150.5
 $149.4
 $454.6
 $454.8
Operating income by segment is as follows:
  13 Weeks Ended 39 Weeks Ended
  November 3, October 28, November 3, October 28,
(in millions) 2018 2017 2018 2017
Operating income:        
     Dollar Tree $331.9
 $317.3
 $959.8
 $921.9
Family Dollar 55.9
 107.9
 248.1
 311.6
Total operating income $387.8
 $425.2
 $1,207.9
 $1,233.5
Capital expenditures by segment are as follows:
 13 Weeks Ended 39 Weeks Ended 13 Weeks Ended 39 Weeks Ended
 November 3, October 28, November 3, October 28, November 2, November 3, November 2, November 3,
(in millions) 2018 2017 2018 2017 2019 2018 2019 2018
Capital expenditures:        
Condensed Consolidated Income Statement Data:        
Net sales:        
Dollar Tree $145.1
 $114.3
 $412.2
 $267.7
 $3,074.3
 $2,853.8
 $8,991.4
 $8,407.0
Family Dollar 83.3
 63.4
 210.5
 181.7
 2,671.9
 2,685.0
 8,304.1
 8,211.1
Total capital expenditures $228.4
 $177.7
 $622.7
 $449.4
Consolidated Net sales $5,746.2
 $5,538.8
 $17,295.5
 $16,618.1
        
Gross profit:        
Dollar Tree $1,050.5
 $993.7
 $3,070.8
 $2,909.8
Family Dollar 654.0
 678.2
 2,009.4
 2,125.6
Consolidated Gross profit $1,704.5
 $1,671.9
 $5,080.2
 $5,035.4
        
Operating income (loss):        
Dollar Tree $371.7
 $366.4
 $1,096.7
 $1,069.9
Family Dollar 53.8
 83.7
 159.5
 341.2
Corporate and support (67.1) (62.3) (243.4) (203.2)
Consolidated Operating income 358.4
 387.8
 1,012.8
 1,207.9
Interest expense, net 41.4
 47.6
 122.9
 323.7
Other expense (income), net 0.1
 0.2
 0.7
 (0.9)
Income before income taxes $316.9
 $340.0
 $889.2
 $885.1

Total assets by segment are as follows:
  As of
  November 2, February 2, November 3,
(in millions) 2019 2019 2018
Condensed Consolidated Balance Sheet Data:      
Goodwill:      
Dollar Tree $421.6
 $376.5
 $373.5
Family Dollar 1,874.9
 1,920.1
 4,650.1
Consolidated Goodwill $2,296.5
 $2,296.6
 $5,023.6
       
Total assets:      
Dollar Tree $7,531.0
 $3,992.6
 $4,320.9
Family Dollar 11,858.3
 9,144.7
 11,955.3
Corporate and support 352.8
 363.9
 373.1
Consolidated Total assets $19,742.1
 $13,501.2
 $16,649.3
       

  As of
  November 3, February 3, October 28,
(in millions) 2018 2018 2017
Total assets:      
     Dollar Tree $4,613.0
 $4,113.4
 $3,665.8
Family Dollar 12,036.3
 12,219.4
 12,064.4
Total assets $16,649.3
 $16,332.8
 $15,730.2
Total goodwill by segment is as follows:
  As of
  November 3, February 3, October 28,
(in millions) 2018 2018 2017
Total goodwill:      
     Dollar Tree $373.5
 $347.1
 $346.2
Family Dollar 4,650.1
 4,678.1
 4,678.1
Total goodwill $5,023.6
 $5,025.2
 $5,024.3
*Goodwill is reassigned between segments when stores are rebanneredre-bannered between segments. In the 39 weeks ended November 2, 2019 and November 3, 2018, the Company reassigned $45.2 million and $28.0 million, respectively, of goodwill from Family Dollar to Dollar Tree as a result of rebannering. Therere-bannering.
Note 7 - Leases
The Company’s lease portfolio primarily consists of leases for its retail store locations and it also leases vehicles and trailers, as well as distribution center space and equipment. The Company determines if an arrangement is a lease at inception by evaluating whether the arrangement conveys the right to use an identified asset and whether the Company obtains substantially all of the economic benefits from and has the ability to direct the use of the asset. Leases with an initial term of 12 months or less are not recorded on the condensed consolidated balance sheets; the Company recognizes expense for these leases on a straight-line basis over the lease term. For leases with an initial term in excess of 12 months, operating lease right-of-use assets and operating lease liabilities are recognized based on the present value of the future minimum lease payments over the committed lease term at the lease commencement date. As most of the Company’s leases do not provide an implicit rate, the Company uses its incremental borrowing rate in determining the present value of future lease payments. Inputs to the calculation of the Company’s incremental borrowing rate include the valuations and yields of its outstanding senior notes and their credit spread over comparable U.S. Treasury rates, adjusted to a collateralized basis by estimating the credit spread improvement that would result from an upgrade of one ratings classification. Most leases include one or more options to renew and the exercise of renewal options is at the Company’s sole discretion. The Company does not include renewal options in its determination of the lease term unless the renewals are deemed to be reasonably assured at lease commencement. Operating lease expense for minimum lease payments is recognized on a straight-line basis over the lease term. The operating lease right-of-use asset is reduced by lease incentives, which has the effect of lowering the operating lease expense. Operating lease right-of-use assets are periodically reviewed for impairment losses. The Company uses the long-lived assets impairment guidance in ASC Subtopic 360-10, “Property, Plant, and Equipment - Overall,” to determine whether a right-of-use asset is impaired, and if so, the amount of the impairment loss to recognize.
Certain of the Company’s lease agreements include rental payments based on a percentage of retail sales over contractual levels and others include rental payments adjusted periodically for inflation. In addition, the Company’s real estate leases generally require payment of real estate taxes, common area maintenance and insurance, which are generally variable and based on actual costs incurred by the lessor. These variable payments are expensed as incurred as variable lease costs. The Company’s lease agreements do not contain any material residual value guarantees or material restrictive financial covenants.
The Company has lease agreements with lease and non-lease components, which are generally accounted for separately. For certain equipment leases, such as trailers, the Company accounts for the lease and non-lease components as a single lease component.

The lease cost for operating leases that was recognized in the accompanying unaudited condensed consolidated income statements was as follows:
  13 Weeks Ended 39 Weeks Ended
(in millions) November 2, 2019 November 2, 2019
Operating lease cost $378.2
 $1,139.8
Variable lease cost 94.7
 272.2
Total lease cost* $472.9
 $1,412.0
     
*Excludes short-term lease cost and sublease income, which are immaterial

As of November 2, 2019, maturities of lease liabilities were no stores rebannered between segments inas follows:
  (in millions)
Remainder of 2019 $249.0
2020 1,376.2
2021 1,190.9
2022 990.6
2023 771.9
Thereafter 2,215.4
Total undiscounted lease payments 6,794.0
Less interest 955.4
Present value of lease liabilities $5,838.6

The future minimum lease payments above exclude $260.9 million of legally binding minimum lease payments for leases signed but not yet commenced as of November 2, 2019.
Information regarding the weighted-average remaining lease term and the weighted-average discount rate for operating leases as of November 2, 2019 is as follows:
Weighted-average remaining lease term (years)6.5
Weighted-average discount rate4.4%

The following represents supplemental information pertaining to the Company’s operating lease arrangements for the 13 and 39 weeks ended October 28, 2017.November 2, 2019:
  13 Weeks Ended 39 Weeks Ended
(in millions) November 2, 2019 November 2, 2019
Cash paid for amounts included in the measurement of lease liabilities:    
Operating cash flows from operating leases $367.5
 $1,099.1
Right-of-use assets obtained in exchange for new operating lease liabilities 163.9
 593.2


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.
Note 8 - Shareholders’ Equity
The Company repurchased 125,048 and 1,967,355 shares of common stock on the open market for approximately $11.6 million and $200.0 million during the 13 and 39 weeks ended November 2, 2019, respectively. As of November 2, 2019, the Company has $800.0 million remaining under Board repurchase authorization.

Item 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.Management’s Discussion and Analysis of Financial Condition and Results of Operations.
INTRODUCTORY NOTE: Introductory Note: Unless otherwise stated, references to “we,” “our” and “us” generally refer to Dollar Tree, Inc. and its direct and indirect subsidiaries on a consolidated basis.
A WARNING ABOUT FORWARD-LOOKING STATEMENTS:Warning About Forward-Looking Statements: This document contains “forward-looking statements” as that term is used in the Private Securities Litigation Reform Act of 1995. Forward-looking statements can be identified by the fact that they address future events, developments and results and are based upon current expectations that involve risks and uncertainties.do not relate strictly to historical facts. Any statements contained herein that are not statements of historical factfacts may be deemed to be forward-looking statements. Forward-looking statements include, without limitation, statements preceded by, followed by or including words such as “believe,” “anticipate,” “expect,” “intend,” “plan,” “view,” “target” or “estimate,” “may,” “will,” “should,” “predict,” “possible,” “potential,” “continue,” “strategy,” and similar expressions. For example, our forward-looking statements include, without limitation, statements regarding:
the potential effect of inflation and other general business or economic conditions (including inflation) on our costs and profitability, including the potential effect of future changes in prevailing wage rates and overtime regulations and our plans to address these changes, shipping rates, domesticfreight and import freightother distribution costs (including the effects of potential increases in domesticimport freight costs due to the shortagelow sulphur fuel requirements for ships which become effective in truck drivers)January 2020), fuel costs and wage and benefit costs, consumer spending levels, and population, employment and job growth and/or losses in our markets;
the ability to retain key personnel at Family Dollaractual and Dollar Tree, including in connection withpotential effect of Section 301 tariffs on Chinese goods imposed by the consolidation of the Family Dollar headquarters from North Carolina to Virginia;
our anticipated sales, including comparable store net sales, net sales growth and earnings growth;
the outcome and costs of pending or potential litigation or governmental investigations;United States Trade Representative;
our growth plans, including our plans to add, renovate, rebanner,re-banner, expand, relocate or close stores and any related costs or charges, our anticipated square footage increase, and our ability to renew leases at existing store locations;
the ability to retain key personnel and attract new personnel at Family Dollar and Dollar Tree;
our anticipated sales, comparable store net sales, net sales growth, gross profit margin, costs of goods sold (including product mix), earnings and earnings growth, inventory levels, selling, general and administrative and other fixed costs, and our ability to leverage those costs;
the expected and possible outcome, costs, and impact of pending or potential litigation, arbitrations (including the recent arbitrations involving thousands of claims filed by one law firm), other legal proceedings or governmental investigations (including the recent allegation by the Food and Drug Administration);
the effect of future law changes including taxesin labor laws, and tariffs, including the actual and potential effect of Section 301 tariffs on Chinese goods imposed by the United States Trade Representative, the potential effect of anti-dumping duties imposed by the United States Department of Commerce, the Fair Labor Standards Act as it relates to the qualification of our managers for exempt status, minimum wage and health care law;
the average size of our stores to be added in 20182019 and beyond;
the effect onof our consumable merchandise mix of consumables andinitiatives, including the increase in the number of our stores with freezers and coolers, the increase in the number of freezer and cooler doors in H2 stores and the roll-outs of adult beverage and Snack Zone, on Dollar Tree’s gross profit margin and sales;
the effectour results of the Family Dollar renovation initiative and other initiatives on Family Dollar’s sales;operations;
the net sales per square foot, net sales and operating income of our stores;
the benefits, results and effects of the Family Dollar acquisition and integration and the combined Company’s plans, objectives, expectations (financial or otherwise), including synergies, the cost to achieve synergies, the costs associated with the store support center consolidation and the effect on earnings per share;
our gross profit margin, earnings, inventory levels and ability to leverage selling, general and administrative and other fixed costs;
the effect of recent changes in tax laws and regulatory interpretations of such laws;
our seasonal sales patterns including those relating to the length of the holiday selling seasons;
the capabilities of our inventory supply chain technology and other systems;
the reliability of, and cost associated with, our sources of supply, particularly imported goods such as those sourced from China;
the capacity, performance and cost of our distribution centers;centers, including future automation;

our cash needs, including our ability to fund our future capital expenditures and working capital requirements and our ability to service our debt obligations, including our expected annual interest expense;

our expectations regarding competition and growth in our retail sector;
our assessment of the materiality and impact on our business of recent accounting pronouncements adopted by the Financial Accounting Standards Board;
our assessment of the impact on the Company of certain actions by activist shareholders and the Company’s potential responses to these actions; and
management’s estimates associated with our critical accounting policies, including inventory valuation, accrued expenses,self-insurance liabilities and valuations for impairment analyses and income taxes.analyses.
A forward-looking statement is neither a prediction nor a guarantee of future results, events or circumstances. You should not relyplace undue reliance on forward-looking statements, which speak only as predictions of future events.the date of this Quarterly Report on Form 10-Q. Our forward-looking statements are all based on currently available operating, financial and business information. The outcome of the events described in these forward-looking statements is subject to various risks, uncertainties and othera variety of factors, including, without limitationbut not limited to, the risk factorsrisks and uncertainties summarized below and the more detailed discussions in the “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” sections and elsewhere in our Annual Report on Form 10-K for the year ended February 3, 20182, 2019 and in this Quarterly Report on Form 10-Q.
Our profitability is vulnerable to cost increases.
We could encounter additional disruptionsincreases, including changes in our distribution network and have encountered and expect to encounter additional costs in distributing merchandise,the sales mix of lower margin products. Our cost of goods sold has increased because of a variety of factors such as higher freight cost increasesand distribution costs (including those due to the truck driver shortageinefficiencies or disruptions), higher sales mix of lower margin products and fuel cost increases.
Integrating Family Dollar’s operations with ours may be more difficult, costly or time consuming than expected, including disruptions or the loss of key personnelhigher shrink. Higher costs (including those due to a change in connection with the consolidation of the Family Dollar headquarters from North Carolina to Virginia.
Our business could besales mix) have adversely affected if we failour profitability and could continue to attract and retain qualified associates and key personnel.do so in the future.
Risks associated with our domestic and foreign suppliers, including, among others, the protests in Hong Kong (which is a principal site of our buying trips), increased taxes, duties, tariffs or other restrictions on trade (including Section 301 tariffs imposed by the United States Trade Representative on imported Chinese goods), including our ability to mitigate Section 301 tariffs, could adversely affect our profitability.
Integrating Family Dollar’s operations with ours may be more difficult, costly or time consuming than expected. We did not retain all associates in connection with the consolidation of the Family Dollar store support center to Virginia. It will take our new personnel some time to gain the experience of their predecessors.
Our business could be adversely affected if we fail to attract and retain qualified associates and key personnel. This is more difficult in an economic environment of low unemployment and higher wages.
We rely on computer and technology systems in our operations, and any material failure, inadequacy, interruption or security failure of those systems could harm our ability to effectively operate and grow our business and could adversely affect our financial performance.
A significant disruption in our computer and technology systems could adversely affect our results of operation or business.results.
If we are unable to secure our customers’ credit card and confidential information, or other private data relating to our associates, suppliers or our business, we could be subject to negative publicity, costly government enforcement actions or private litigation and increased costs, which could damage our business reputation and adversely affect our results of operationoperations or business.
Our growth is dependent on our ability to increase sales in existing stores and to expand our square footage profitably.
Our profitability is affected by the mixWe could incur losses due to impairment of products we sell.long-lived assets, goodwill and intangible assets.
Litigation, arbitrations and other legal proceedings may adversely affect our business, financial condition and results of operations. For a discussion of current legal proceedings, see “Note 42 - Legal Proceedings,” included in “Part I. Financial Information, Item 1. Financial Statements” of this Form 10-Q.
Pressure from competitors may reduce our sales and profits.
A downturn or changes in economic conditions could impact our sales or profitability.

Changes in federal, state or local law, including regulations and interpretations or guidance thereunder, or our failure to adequately estimate the impact of such changes or comply with such laws, could increase our expenses, expose us to legal risks or otherwise adversely affect us.
The price of our common stock is subject to market and other conditions and may be volatile.
Our business or the value of our common stock could be negatively affected as a result of actions by activist shareholders or by organizations seeking to limit the growth of dollar stores or change the mix or price of products we sell.
Our substantial indebtedness could adversely affect our financial condition, limit our ability to obtain additional financing, restrict our operations and make us more vulnerable to economic downturns and competitive pressures.
The terms of the agreements governing our indebtedness may restrict our current and future operations, particularly our ability to respond to changes or to pursue our business strategies, and could adversely affect our capital resources, financial condition and liquidity.
Our variable-rate indebtedness subjects us to interest rate risk, which could cause our annual debt service obligations to increase significantly.

Certain provisions in our Articles of Incorporation and Bylaws could delay or discourage a change of control transaction that may be in a shareholder’s best interest.
Moreover, we operate in a very competitive and rapidly changing environment. New risks and uncertainties emerge from time to time and it is not possible for us to predict all risks and uncertainties that could have an impact on the forward-looking statements. We cannot assure you that the results, events and circumstances reflected in the forward-looking statements will be achieved or occur, and actual results, events or circumstances could differ materially from those described in the forward-looking statements. Moreover, new risks and uncertainties emerge from time to time and it is not possible for us to predict all risks and uncertainties that could have an impact on our forward-looking statements.
We do not undertake to publicly update or revise any forward-looking statements after the date of this quarterly report,Form 10-Q, whether as a result of new information, future events, or otherwise.
Investors should also be aware that while we do, from time to time, communicate with securities analysts and others, it is against our policy to disclose to them any material, nonpublic information or other confidential commercial information. Accordingly, shareholders should not assume that we agree with any statement or report issued by any securities analyst regardless of the content of the statement or report. Furthermore, we have a policy against confirming projections, forecasts or opinions issued by others. Thus, to the extent that reports issued by securities analysts contain any projections, forecasts or opinions, such reports are not our responsibility.
Overview
We are a leading operator of more than 15,10015,200 retail discount stores and we conduct our operations in two reporting segments. Our Dollar Tree segment is the leading operator of discount variety stores offering merchandise at the fixed price of $1.00. Our Family Dollar segment operates general merchandise retail discount stores providing consumers with a selection of competitively-priced merchandise in convenient neighborhood stores.
Our net sales are derived from the sale of merchandise. Two major factors tend to affect our net sales trends. First is our success at opening new stores or adding new stores through mergers or acquisitions. Second is the performance of stores once they are open. Sales vary at our existing stores from one year to the next. We refer to this as a change in comparable store net sales, because we include only those stores that are open throughout both of the periods being compared, beginning after the first fifteen months of operation. We include sales from stores expanded or remodeled during the period in the calculation of comparable store net sales, which has the effect of increasing our comparable store net sales. The term ‘expanded’ also includes stores that are relocated. Stores that have been re-bannered are considered to be new stores and are not included in the calculation of the comparable store net sales change until after the first fifteen months of operation under the new banner.brand.

At November 3, 2018,2, 2019, we operated stores in 48 states and the District of Columbia, as well as stores in five Canadian provinces. A breakdown of store counts and square footage by segment for the 39 weeks ended November 2, 2019 and November 3, 2018 and October 28, 2017 is as follows:
39 Weeks Ended39 Weeks Ended
November 3, 2018 October 28, 2017November 2, 2019 November 3, 2018
Dollar Tree Family Dollar Total Dollar Tree Family Dollar TotalDollar Tree Family Dollar Total Dollar Tree Family Dollar Total
Store Count:                      
Beginning6,650
 8,185
 14,835
 6,360
 7,974
 14,334
7,001
 8,236
 15,237
 6,650
 8,185
 14,835
New stores237
 166
 403
 264
 202
 466
286
 120
 406
 237
 166
 403
Rebannered stores47
 (49) (2) —
 —
 —
Re-bannered stores190
 (199) (9) 47
 (49) (2)
Closings(11) (38) (49) (20) (36) (56)(30) (342) (372) (11) (38) (49)
Ending6,923
 8,264
 15,187
 6,604
 8,140
 14,744
7,447
 7,815
 15,262
 6,923
 8,264
 15,187
Relocations44
 9
 53
 78
 27
 105
35
 10
 45
 44
 9
 53
                      
Selling Square Feet (in millions):Selling Square Feet (in millions):          Selling Square Feet (in millions):          
Beginning57.3
 59.3
 116.6
 54.7
 57.7
 112.4
60.3
 59.8
 120.1
 57.3
 59.3
 116.6
New stores2.0
 1.2
 3.2
 2.2
 1.4
 3.6
2.5
 0.9
 3.4
 2.0
 1.2
 3.2
Rebannered stores0.3
 (0.3) —
 —
 —
 —
Re-bannered stores1.4
 (1.4) —
 0.3
 (0.3) —
Closings(0.1) (0.3) (0.4) (0.2) (0.2) (0.4)(0.2) (2.4) (2.6) (0.1) (0.3) (0.4)
Relocations0.1
 —
 0.1
 0.2
 —
 0.2
0.1
 —
 0.1
 0.1
 —
 0.1
Ending59.6
 59.9
 119.5
 56.9
 58.9
 115.8
64.1
 56.9
 121.0
 59.6
 59.9
 119.5
Stores are included as rebannersre-banners when they close or open, respectively. Comparable store net sales for Dollar Tree may be negatively affected when a Family Dollar store is rebanneredre-bannered near an existing Dollar Tree store.
The average size of stores opened during the 39 weeks ended November 3, 20182, 2019 was approximately 8,2808,570 selling square feet for the Dollar Tree segment and 7,3407,710 selling square feet for the Family Dollar segment. We believe that these size stores are in the ranges of our optimal sizes operationally and give our customers a shopping environment which invites them to shop longer, buy more and make return visits.
For the 13 weeks ended November 3, 2018,2, 2019, comparable store net sales increased 1.0%2.5% on a constant currency basis. Constant currency basis refers to the calculation excluding the impact of currency exchange rate fluctuations. We calculated the constant currency basis increase by translating the current year quarter’s comparable store net sales in Canada using the prior year third quarter’s currency exchange rates. We believe that the constant currency basis provides a more accurate measure of comparable store net sales performance. Including the impact of Canadian currency fluctuations, comparable store net sales increased the same 1.0%2.5% due to an increaseincreases in average ticket slightly offset by a decrease inand customer count. On a constant currency basis, comparable store net sales increased 2.3%2.8% in the Dollar Tree segment and decreased 0.4%increased 2.3% in the Family Dollar segment for the 13 weeks ended November 3, 2018. Comparable2, 2019. Including the impact of currency, comparable store net sales in the Dollar Tree segment increased 2.2% when adjusted for the impact of Canadian currency fluctuations.same 2.8%. Comparable store net sales are positively affected by our expanded and relocated stores, which we include in the calculation, and are negatively affected when we open new stores, rebannerre-banner stores or expand stores near existing stores.
We believe comparable store net sales continue to be positively affected by a number of our Dollar Tree initiatives. We continued the roll-out of frozen and refrigerated merchandise to more of our Dollar Tree stores in the third quarter of 20182019 and as of November 3, 2018,2, 2019, the Dollar Tree segment had frozen and refrigerated merchandise in approximately 5,5806,100 stores compared to 5,135approximately 5,580 stores at October 28, 2017.November 3, 2018. Over the past year, Dollar Tree developed and tested an initiative for selectwe rolled out a new layout to a number of our Dollar Tree stores, which we call our Snack Zone. This layout highlights our immediate consumption snack offerings in the front of the store near the checkout areas. As of November 3, 2018,2, 2019, we have this layout in approximately 8202,090 Dollar Tree stores and we plan to end the year with approximately 880 Snack Zone stores. We believe that these initiatives have and will continue to enable us to increase sales and earnings by increasing the number of shopping trips made by our customers.
We
As announced in March 2019, we are currently executing several initiatives ina store optimization program for our Family Dollar bannerstores to increase sales. Duringimprove performance. This program consists of the 13 weeks ended November 3, 2018, we completed more than 150following:
A roll-out of a new model for both new and renovated Family Dollar renovations, which bringsstores internally known as H2. We tested the totalH2 model in fiscal 2018 toon a limited basis with positive results. This H2 model has significantly improved merchandise offerings, including approximately 20 Dollar Tree $1.00 merchandise sections and establishing a minimum number of freezer and cooler doors, throughout the store. H2 has increased traffic and provided an average comparable store net sales lift in excess of 10% over 450. These renovations have focused on creating an excitingcontrol stores. H2 performs well in a variety of locations and more productiveespecially in locations where Family Dollar shopping experience. Renovations bring somehas been most challenged in the past. We started 2019 with approximately 200 H2 stores and as of November 2, 2019, we have approximately 1,460 H2 stores.
We plan to close under-performing stores. The normal cadence of Family Dollar closings on an annual basis is approximately 75 stores. In 2019 we plan to close approximately 420 stores and have closed 342 stores as of November 2, 2019. We expect to incur approximately $25.8 million in store closure costs and through the oldestthird quarter of 2019, we have incurred $21.3 million. In addition to these costs, during 2019 we expect to incur approximately $17.0 million of other store closure costs, primarily in connection with the disposal of fixed assets, of which substantially all has been incurred through November 2, 2019.
We plan to re-banner as many as 200 Family Dollar stores to ourthe Dollar Tree brand standard, including more productive end-caps, highlighting more relevant and prominent seasonal offerings, assortment expansions in beverage and snacks, hair care, and food in coolers and freezers. Category adjacencies and updating our front-end checkout are also part2019. As of the renovation program. We are making a number of improvementsNovember 2, 2019, we have re-bannered 190 stores to the conditionsDollar Tree brand.
Additionally, we plan to install adult beverage product in approximately 500 stores and continue to plan to expand freezers and coolers in approximately 75 stores in 2019. As of ourNovember 2, 2019, we installed adult beverage product in approximately 345 stores and expanded freezers and coolers in approximately 70 stores.
In fiscal 2019, in addition to provide our customers with a consistentthe approximately $42.8 million in store closure costs, we expect to incur approximately $28.0 million of incremental initiative costs based on project count and improved shopping experience. In addition, we have focused on re-branding our private brand labels in our stores. These private brands are being developed to provide national brand-comparable quality and great values for our customers, as partvelocity, of our Compare and Save marketing program. We are adding additional coolers and freezers to facilitate expansion of our product offerings.which substantially all has been incurred through November 2, 2019.
On September 18, 2018 we announced that asAs part of our continuing integration of Family Dollar’s organization and support functions, in 2019 we plan to consolidateconsolidated our store support centers in Matthews, North Carolina and Chesapeake, Virginia to our newly-completed office tower in the Summit Pointe development in Chesapeake, Virginia. Approximately 30 percent of the Matthews associates, including more than 50 percent of the officers and directors, invited to move to Chesapeake have agreed to do so. We will need to hire to replace the associates who are not moving. We expect the consolidation to be completed by the fall ofcomplete in 2019 and we expect to incur total pre-tax expense of approximately $40.0$29.0 million to $49.0 millionin 2019 in connection with these plans. Theplans, of which approximately $24.5 million was incurred through the third quarter of 2018 includes approximately $2.3 million of expense related to the consolidation and we expect to incur an additional $4.0 million to $6.0 million in the fourth quarter of 2018.2019.
Additionally, the following items have already impacted or could impact our business or results of operations during 20182019 or in the future:
We have experienced disruptions and higher than anticipated freight costs primarily due toThe Office of the truck driver shortage in the United States. This will result in higher costs in future periods as merchandise is sold and could result in lower sales if product is not received in our stores on a timely basis.
The United States Trade Representative (USTR) implementedpreviously imposed tariffs under Section 301 tariffs against Chinese goods described on Lists 1, 2, and 3 with an annual trade value of $250 billion in Chinese goods. The tariff rate on $200 billion of those goods is expected to rise from 10 percent to 25 percent in 2019. We do not expect that the tariffs will be material to our business or results of operations in 2018.billion. When the tariffs were implemented, approximately nine percent of our products, measured by sales volume, would have been affected.were on Lists 1, 2, and 3. To mitigate the potential adverse effect of the tariffs, we negotiated price concessions from vendors on certain products, canceled orders, changed product sizes and specifications, changed our product mix and changed vendors. AtAs a result of our mitigation efforts, we believe that we have reduced most of the potential adverse effects of the tariffs under Lists 1, 2, and 3 on the Dollar Tree and Family Dollar segments through January 2020.
Earlier this year, the USTR began a process to impose a tariff on all of the $300 billion in Chinese goods which were not previously subject to a tariff under Section 301, referred to as List 4 goods. The USTR published the final description of products on List 4 and divided the list into two parts. Tariffs at the rate of 15 percent on List 4A goods went into effect September 1, 2019. Tariffs at the rate of 15 percent on List 4B goods are scheduled to go into effect December 15, 2019. We anticipate that more of our products are on List 4 than Lists 1, 2, and 3 combined. However, we have mitigatedalso believe that most of our List 4 products are contained on List 4B and not List 4A.
We estimate that Section 301 tariffs will increase our cost of goods sold by approximately 80 percent and 50 percent, respectively,$19.0 million in the fourth quarter of 2019 if they are fully implemented as now scheduled. Almost all of this potential adverse

effectcost is due to List 4A because its timing did not allow for significant mitigation. We will continue to assess the future impact of those tariffs. We are not able to accurately predict that impact of mitigation until we can estimate the tariffs in 2019. It is too early tosuccess of our current efforts. We can give any assuranceno assurances as to the final scope, duration, or impact of the proposed tariffs and theany existing or future tariffs. The tariffs could have a material adverse effect if we do not continue to mitigate their impact; however, we have made significant progress on our mitigation efforts to date.business and results of operations next year.

We anticipate higher import freight costs continuing into the fourth quarter of 2019 and beyond based on our April 2019 rate negotiations, and beginning in January 2020 based on the commencement of low sulphur fuel requirements for ships. We expect that this will result in higher costs in future periods as merchandise is sold.
Results of Operations
13 Weeks Endedweeks ended November 2, 2019 compared to the 13 weeks ended November 3, 2018 Compared to the 13 Weeks Ended October 28, 2017
Net Sales. Net sales increased $222.2$207.4 million, or 4.2%3.7%, compared with last year’s third quarter, resulting from sales of $172.1 million in new Dollar Tree and Family Dollar stores and an increaseincreases in comparable store net sales in the Dollar Tree and Family Dollar segments and sales of $217.5 million in new stores, partially offset by lost sales resulting from store closures primarily on the Family Dollar segment. Comparable store net sales increased 1.0%2.5% on a constant currency basis as a result of a 1.3%1.4% increase in average ticket slightly offset byand a 0.3% decrease1.1% increase in customer count. On a constant currency basis, comparable store net sales increased 2.3%2.8% in the Dollar Tree segment and decreased 0.4%increased 2.3% in the Family Dollar segment for the 13 weeks ended November 3, 2018.2, 2019. Comparable store net sales are positively affected by our expanded and relocated stores, which we include in the calculation, and are negatively affected when we open new stores, rebannerre-banner stores or expand stores near existing stores.
Gross Profit. Gross profit increased by $5.9$32.6 million or 0.4%,to $1,704.5 million in the third quarter of 2019 compared to $1,671.9 million in the third quarter of 2018 compared to $1,666.0 million in the third quarter of 2017.2018. Gross profit margin decreased to 30.2%29.7% in the current quarter from 31.3%30.2% in the same quarter last year. Our gross profit margin decrease was the result of the following:
Merchandise cost, including freight, increased approximately 25 basis points resulting primarily from higher freight costs and higher sales of lower margin merchandise primarily in the Family Dollar segment.
Distribution costs increased approximately 10 basis points resulting primarily from higher distribution center payroll costs and higher depreciation.
Shrink costs increased approximately 2510 basis points due to unfavorable inventory results in the current quarter.
Markdown expense increased approximately 25 basis points primarily due to increased promotional markdowns in the Family Dollar segment.
Distribution costs increased approximately 25 basis points resulting primarily from higher distribution center payroll costs.
Merchandise cost, including freight, increased approximately 20 basis points resulting from higher domestic freight costs, partially offset by improved mark-on.
Occupancy costs increased approximately 15 basis points resulting from higher real estate tax costs in 2018.
Selling, General and Administrative Expenses. Selling, general and administrative expenses increased to $1,284.1$1,346.1 million in the third quarter of 20182019 from $1,240.8$1,284.1 million in the same quarter last year, an increase of $43.3$62.0 million or 3.5%4.8%. As a percentage of net sales, selling, general and administrative expenses decreasedincreased to 23.2%23.5% in the third quarter of 20182019 from 23.3%23.2% in the same quarter last year. The decreaseincrease in selling, general and administrative expenses was a result of the net of the following:
Operating and corporate expenses decreasedincreased approximately 2530 basis points resulting from lower advertising costs legal feesrelated to the consolidation of our store support centers and a gain on salecosts related to the disposal of fixed assets in the current year quarter.resulting from store closures.
Depreciation and amortization costs decreasedexpense increased approximately 105 basis points as a result of assets becoming fully depreciatedresulting from the investments made in H2 stores on the Family Dollar segment.
Payroll expenses increaseddecreased approximately 2510 basis points as a result of the net of the following:lower insurance benefit expenses and retirement plan contributions were partially offset by increased store hourly payroll costs due to average hourly rate increases and additional hours, including increased temporary help expenses, to support store-level initiatives.
◦Store hourly payroll costs increased approximately 40 basis points due to the planned reinvestment of income tax savings.
◦Insurance benefits increased approximately 10 basis points resulting from higher health care claims in the current quarter.
◦Incentive compensation costs decreased approximately 15 basis points as a result of lower earnings compared to targets in the current year.
Operating Income. Operating income for the current quarter decreased to $387.8$358.4 million compared with $425.2$387.8 million in the same period last year and operating income margin decreased to 7.0%6.2% in the current quarter from 8.0%7.0% in last year’s third quarter.
Interest expense, net. Interest expense, net was $47.6$41.4 million in the third quarter of 20182019 compared to $69.7$47.6 million in the prior year quarter. The decrease is due to lowerour having less debt outstanding in the current quarter as a result of a $750.0the prepayment of the $782.0 million prepaymentTerm Loan Facility in the firstfourth quarter of 2018, as well as our debt refinancing in the first quarter of 2018 which resulted in lower interest rates. See “Note 2 - Long-Term Debt,” to the unaudited condensed consolidated financial statements included in “Part I. Financial Information, Item 1. Financial Statements” of this Form 10-Q, for additional detail on the refinancing of our long-term debt.2018.

Income Taxes. Our effective tax rate for the 13 weeks ended November 3, 20182, 2019 was 17.1%19.3% compared to 32.4%17.1% for the 13 weeks ended October 28, 2017. The decrease is due to the Tax Cuts and Jobs Act that was signed into law on December 22, 2017, which lowered the federal corporate tax rate from 35% to 21% and made numerous other law changes, effective as of January 1,November 3, 2018. Additionally, inIn the third quarter of 2018, the Company recorded a tax benefit of $15.7 million based on the substantial completion of its analysis of the impact of the Tax Cuts and Jobs Act on the net deferred tax liability valuation. This benefit resulted in a 4.6% decrease in the quarterly tax rate for the 13 weeks ended November 3, 2018. The current year tax rate reflects the benefits of statute expirations and the reconciliation of the tax provision to the tax returns.
39 Weeks Endedweeks ended November 2, 2019 compared to the 39 weeks ended November 3, 2018 Compared to the 39 Weeks Ended October 28, 2017
Net Sales. Net sales in the 39 weeks ended November 3, 20182, 2019 increased $733.2$677.4 million, or 4.6%4.1%, compared with the same period last year, resulting from sales of $507.2 million in new Dollar Tree and Family Dollar stores and an increaseincreases in comparable store net sales in the Dollar Tree segment,and Family Dollar segments and sales of $589.7 million at new stores, partially offset by a decrease in comparablelost sales resulting from store net sales inclosures primarily on the Family Dollar segment.

Comparable store net sales increased 1.4%2.4% on a constant currency basis as a result of a 1.6% increase in average ticket slightly offset byand a 0.2% decrease0.8% increase in customer count. Comparable store net sales increased the same 1.4%2.3% when adjusted forincluding the impact of Canadian currency fluctuations. On a constant currency basis, comparable store net sales increased 3.3%2.6% in the Dollar Tree segment and decreased 0.4%increased 2.1% in the Family Dollar segment for the 39 weeks ended November 3, 2018.2, 2019. Comparable store net sales are positively affected by our expanded and relocated stores, which we include in the calculation, and are negatively affected when we open new stores, rebannerre-banner stores or expand stores near existing stores.
Gross Profit. Gross profit increased by $114.5$44.8 million or 2.3%,to $5,080.2 million in the 39 weeks ended November 2, 2019 compared to $5,035.4 million in the 39 weeks ended November 3, 2018 compared to $4,920.9 million in the 39 weeks ended October 28, 2017.2018. Gross profit margin decreased to 29.4% in the first nine months of 2019 from 30.3% in the first nine months of 2018 from 31.0% in the first nine months of 2017.2018. Our gross profit margin decrease was the result of the following:
Merchandise cost, including freight, increased approximately 45 basis points resulting from higher freight costs and higher sales of lower margin consumable merchandise, primarily in the Family Dollar segment.
Shrink costs increased approximately 2515 basis points due to unfavorable inventory results, primarily in the Family Dollar segment, in the current year.
Markdown expense increased approximately 15 basis points resulting primarily from markdowns related to store closures and higher clearance sales in the Family Dollar segment.
Distribution costs increased approximately 2010 basis points resulting primarily from higher distribution center payroll costs.
Merchandise cost, including freight,Occupancy costs increased approximately 105 basis points resulting from higher domestic freight costs, partially offset by improved mark-on.
Occupancy costs increased approximately 10 basis points resulting from higher real estate tax expense in the current year.accelerated amortization of the right-of-use assets for Family Dollar stores we closed during 2019.
Selling, General and Administrative Expenses. Selling, general and administrative expenses increased to $3,827.5$4,067.4 million in the 39 weeks ended November 3, 20182, 2019 from $3,687.4$3,827.5 million in the same period last year, an increase of $140.1$239.9 million or 3.8%6.3%. As a percentage of net sales, selling, general and administrative expenses decreasedincreased to 23.0%23.5% in the 39 weeks ended November 3, 20182, 2019 from 23.2%23.0% in the same period last year. The prior year period included a $53.5 million receivable impairment. Excluding the receivable impairment, selling, general and administrative expenses as a percentage of sales was 22.9% in the first nine months of 2017. Excluding the 2017 receivable impairment, the increase in selling, general and administrative expenses as a percentage of net sales, was a result of the net of the following:
Payroll costsOperating and corporate expenses increased approximately 40 basis points resulting from increased costs related to the consolidation of our store support centers, costs related to the disposal of fixed assets due to store closures and increased store supplies expense to support the H2 initiative on the Family Dollar segment.
Payroll expenses increased approximately 10 basis points primarily due to average hourly rate increases and additional hours, including higher store hourly payroll costs as a result of the planned reinvestment of income tax savings,temporary help expenses, to support store-level initiatives. These increases were partially offset by decreased incentive compensation costs resulting from lower earnings compared to targets in 2018.
Store operating costs decreased approximately 10 basis points resulting from lower repairs and maintenance costs as a percentage of sales.
Depreciation and amortization costs decreased approximately 10 basis points as a result of assets becoming fully depreciated on the Family Dollar segment and leverage from the comparable store net sales increase for the Dollar Tree segment.retirement plan contributions.
Operating Income. Operating income for the 39 weeks ended November 3, 20182, 2019 decreased to $1,207.9$1,012.8 million compared with $1,233.5$1,207.9 million in the same period last year and operating income margin decreased to 5.9% in the first nine months of 2019 from 7.3% in the first nine months of 2018 from 7.8% in the first nine months of 2017. Operating income for the 39 weeks ended October 28, 2017 includes a $53.5 million receivable impairment. Excluding the receivable impairment, operating income and operating income margin in the 39 weeks ended October 28, 2017 were $1,287.0 million and 8.1%, respectively.2018.
Interest expense, net. Interest expense, net was $323.7$122.9 million in the first nine months of 20182019 compared to $220.2$323.7 million in the first nine months of the prior year. The increase is due to theprior year included prepayment premiums paid during the first quarter of 2018 of $107.8totaling $114.3 million and $6.5 million related to our redemptionthe acceleration of the 5.75% Acquisition Notes due 2023 and Term Loan B-2, respectively. Also, in connection with our debt refinancing, we accelerated the expensing of approximately $41.2 million of amortizable non-

cashnon-cash deferred financing costs related to the debt refinancing in the first quarter of 2018. These increases were partially offset byIn addition, our 2018 debt refinancing resulted in lower interest expenserates and the prepayment of the $782.0 million Term Loan Facility in the second and third quartersfourth quarter of 2018 resulting from theresulted in our having less debt refinancing. See “Note 2 - Long-Term Debt,” to the unaudited condensed consolidated financial statements included in “Part I. Financial Information, Item 1. Financial Statements” of this Form 10-Q, for additional detail on the refinancing of our long-term debt.outstanding.
Income Taxes. Our effective tax rate for the 39 weeks ended November 3, 20182, 2019 was 19.1%20.8% compared to 33.4%19.1% for the 39 weeks ended October 28, 2017. The decrease is due to the Tax Cuts and Jobs Act that was signed into law on December 22, 2017, which lowered the federal corporate tax rate from 35% to 21% and made numerous other law changes, effective as of January 1,November 3, 2018. In the third quarter of 2018, the Company recorded a tax benefit of $15.7 million based on the substantial completion of its analysis of the impact of the Tax Cuts and Jobs Act on the net deferred tax liability valuation. The 2018current year rate reflects the benefits of statute expirations and 2017 rates also reflect reductionsthe reconciliation of $8.6 million and $4.5 million, respectively, in the reserve for uncertain tax positions resulting from statute expirations.provision to the tax returns.

Segment Information
We operate a chain of more than 15,10015,200 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.
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, 1213 distribution centers in the United States and two distribution centers in Canada and a Store Support Center in Chesapeake, Virginia. As a result,Canada. Because of our Canadian operations, we report comparable store net sales on a constant currency basis.
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 and a Store Support Center in Matthews, North Carolina.centers.
We measure the results of our segments using, among other measures, each segment’s net sales, gross profit and operating income. WeThe CODM reviews these metrics for each of our reporting segments.We may revise the measurement of each segment’s operating income, including the allocation of distribution center and Store Support Center costs, as determined by the information regularly reviewed by the CODM. If the measurement of a segment changes, prior period amounts and balances would beare reclassified to be comparable to the current period’s presentation. In the current year, we identified Corporate and support costs, mainly store support center costs that are considered shared services, and excluded these selling, general and administrative costs 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. Amounts for the 13 and 39 weeks ended November 3, 2018 have been reclassified to be comparable to the current year presentation.
Dollar Tree
The following table summarizes the operating results of the Dollar Tree segment:
 13 Weeks Ended 39 Weeks Ended 13 Weeks Ended 39 Weeks Ended
 November 3, 2018 October 28, 2017 November 3, 2018 October 28, 2017 November 2, 2019 November 3, 2018 November 2, 2019 November 3, 2018
(in millions) $ % of Sales $ % of Sales $ % of Sales $ % of Sales $ 
% of
Net Sales
 $ 
% of
Net Sales
 $ 
% of
Net Sales
 $ 
% of
Net Sales
Net sales $2,853.8
   $2,685.0
   $8,407.0
   $7,843.6
   $3,074.3
   $2,853.8
   $8,991.4
   $8,407.0
  
Gross profit 993.7
 34.8% 942.6
 35.1% 2,909.8
 34.6% 2,735.0
 34.9% 1,050.5
 34.2% 993.7
 34.8% 3,070.8
 34.2% 2,909.8
 34.6%
Operating income 331.9
 11.6% 317.3
 11.8% 959.8
 11.4% 921.9
 11.8% 371.7
 12.1% 366.4
 12.8% 1,096.7
 12.2% 1,069.9
 12.7%
Net sales for the Dollar Tree segment increased 6.3%7.7% and 7.2%7.0% for the 13 and 39 weeks ended November 3, 2018,2, 2019, respectively, compared to the same periods last year. These increases were due to sales from new stores of $109.7$165.5 million and $303.4$416.4 million for the 13 and 39 weeks ended November 3, 2018,2, 2019, respectively, and comparable store net sales increases of 2.3%2.8% and 3.3%, respectively,2.6% on a constant currency basis.basis for the 13 and 39 weeks ended November 2, 2019, respectively. For the 13 weeks ended November 3, 2018,2, 2019, customer count increased 1.6% and average ticket increased 1.1% and customer count increased 1.2%. For the 39 weeks ended November 3, 2018,2, 2019, customer count increased 1.5% and average ticket increased 1.9% and customer count increased 1.4%1.1%.
Gross profit margin for the Dollar Tree segment decreased to 34.8%34.2% for the 13 weeks ended November 3, 20182, 2019 compared to 35.1%34.8% for the same period last year as a result of the following:
ShrinkMerchandise cost, including freight, increased approximately 1555 basis points resulting from unfavorable inventory results in the current quarter.primarily due to higher freight costs.
Distribution costs increased approximately 1510 basis points resulting primarily from higher distribution depreciationcenter payroll and payroll costs.

Merchandise cost, including freight, was consistent with the prior year quarter as higher initial mark-on was offset by increased domestic freightdepreciation costs.
Gross profit margin for the Dollar Tree segment decreased to 34.6%34.2% for the 39 weeks ended November 3, 20182, 2019 compared to 34.9%34.6% for the same period last year as a result of the net of the following:
Shrink costsMerchandise cost, including freight, increased approximately 2035 basis points resulting from unfavorable inventory results in the first nine months of the year.primarily due to higher freight costs.
Distribution costs increased approximately 10 basis points primarily resulting fromdue to higher distribution center payroll and depreciation costs.
Merchandise cost, including freight, increased approximately 5 basis points primarily due to higher domestic freight costs, partially offset by higher initial mark-on.
Occupancy costs decreased approximately 10 basis points resulting from the leverage from the comparable store net sales increase in the first nine months of the year.
Operating income margin for the Dollar Tree segment decreased to 11.6%12.1% for the 13 weeks ended November 3, 20182, 2019 as compared to 11.8%12.8% for the same period last year. The decrease in operating income margin in the 13 weeks ended November 3, 20182, 2019 was the result of lowerthe gross profit margin partially offset by lowerdecrease noted above and increased selling, general and administrative expenses as a percentage of net sales. Selling, general and administrative expenses decreasedincreased to 23.2%22.1% as a percentage of net sales in the 13 weeks ended November 3, 2018,2, 2019 compared to 23.3%22.0% for the same period last year as a result of the net of the following:
Operating expenses increased approximately 15 basis points resulting from increased debit and credit fees due to leverage from thehigher debit and credit card penetration and an increase in comparable store net salesloss on disposal of assets resulting from an early lease termination in the quartercurrent quarter.
Payroll expenses decreased approximately 5 basis points due to lower retirement plan and lower incentive compensation costs,insurance benefits expenses, partially offset by an increase of approximately 20 basis points inhigher store hourly payroll expensescosts resulting from the planned tax reinvestment in the current year.average hourly rate increases and additional hours to support store-level initiatives.
Operating income margin for the Dollar Tree segment decreased to 11.4%12.2% for the 39 weeks ended November 3, 20182, 2019 as compared to 11.8%12.7% for the same period last year. The decrease in operating income margin in the 39 weeks ended November 3, 20182, 2019 was the result of lowerthe gross profit margin decrease noted above and higherincreased selling, general and administrative expenses as a percentage of sales.expenses. Selling, general and administrative expenses increased to 23.2%22.0% as a percentage of net sales infor the 39 weeks ended November 2, 2019 compared to 21.9% for the 39 weeks ended November 3, 2018 compared to 23.1% foras a result of the same period last yearnet of the following:
Payroll expenses increased approximately 10 basis points due to a 30 basis point increase inhigher store hourly payroll costs resulting from the planned tax reinvestmentaverage hourly rate increases and additional hours to support store-level initiatives, partially offset by lower retirement plan expense.
Operating expenses increased approximately 5 basis points primarily due to increased debit and credit fees resulting from higher debit and credit card penetration in the current year, partially offset by leverageyear.
Store operating costs decreased approximately 5 basis points resulting from the increase in comparable storelower utility costs as a percentage of net sales in the first nine months of 2018 and lower incentive compensation costs.current year.
Family Dollar
The following table summarizes the operating results of the Family Dollar segment:
 13 Weeks Ended 39 Weeks Ended 13 Weeks Ended 39 Weeks Ended
 November 3, 2018 October 28, 2017 November 3, 2018 October 28, 2017 November 2, 2019 November 3, 2018 November 2, 2019 November 3, 2018
(in millions) $ % of Sales $ % of Sales $ % of Sales $ % of Sales $ 
% of
Net Sales
 $ 
% of
Net Sales
 $ 
% of
Net Sales
 $ 
% of
Net Sales
Net sales $2,685.0
   $2,631.6
   $8,211.1
   $8,041.3
   $2,671.9
   $2,685.0
   $8,304.1
   $8,211.1
  
Gross profit 678.2
 25.3% 723.4
 27.5% 2,125.6
 25.9% 2,185.9
 27.2% 654.0
 24.5% 678.2
 25.3% 2,009.4
 24.2% 2,125.6
 25.9%
Operating income 55.9
 2.1% 107.9
 4.1% 248.1
 3.0% 311.6
 3.9% 53.8
 2.0% 83.7
 3.1% 159.5
 1.9% 341.2
 4.2%
Net sales for the Family Dollar increased $53.4segment decreased $13.1 million or 2.0%0.5% and $169.8increased $93.0 million or 2.1%1.1% for the 13 and 39 weeks ended November 3, 2018,2, 2019, respectively, compared to the same periods last year. The increaseThese increases were due to comparable store net sales increases of 2.3% and 2.1%, respectively and $52.0 million and $173.4 million, respectively, of new store sales, partially offset by lost sales resulting from store closures that exceed historical closure rates as a result of the store optimization program. For the 13 weeks ended November 2, 2019, average ticket increased 1.8% and customer count increased 0.5%. For the 39 weeks ended November 2, 2019, average ticket increased 2.3% and customer count decreased 0.2%.
Gross profit for the Family Dollar segment decreased $24.2 million or 3.6% for the 13 weeks ended November 3, 2018 was due to new store sales of $62.5 million partially offset by a 0.4% decrease in comparable store net sales for the quarter with a 1.9% increase in average ticket being offset by a 2.3% decrease in customer count. The increase for the 39 weeks ended November 3, 2018 was due to sales from new stores of $203.8 million, partially offset by a comparable store net sales decrease of 0.4%. The decrease in comparable store net sales was the result of a decrease in customer count of 2.2%, partially offset by a 1.8% increase in average ticket.
Gross profit for Family Dollar decreased $45.2 million or 6.2% for the 13 weeks ended November 3, 20182, 2019 compared to the same period last year. The gross profit margin for Family Dollar decreased to 25.3%24.5% for the 13 weeks ended November 3, 20182, 2019 compared to 27.5%25.3% for the same period in the prior year. The decrease is due to the following:
Merchandise cost, including freight, increased approximately 6030 basis points, primarily due to higher domestic freight costs.

Markdown expense increased approximately 50 basis points in the current quarter primarily from increased promotional markdowns.
Distribution costs increased approximately 40 basis points resulting primarily fromand higher merchandising and distribution payroll-related costs.sales of lower margin consumable merchandise partially offset by improved initial mark-on.
Shrink costs increased approximately 4015 basis points resulting from unfavorable physical inventory results in the current year.quarter.

Distribution costs increased approximately 15 basis points resulting primarily from higher distribution center payroll costs and higher distribution center asset disposals.
Occupancy costs increased approximately 3510 basis points due to higher store real estate tax expense.
Markdown expense increased approximately 5 basis points resulting from the deleveraging effect of the decrease in comparable store net sales and higher real estate taxesclearance activity in the current year.quarter.
Gross profit for the Family Dollar segment decreased $60.3$116.2 million or 2.8%5.5% for the 39 weeks ended November 3, 20182, 2019 compared to the same period last year. The gross profit margin for Family Dollar decreased to 25.9%24.2% for the 39 weeks ended November 3, 20182, 2019 compared to 27.2%25.9% for the same period in the prior year. The decrease is due to the following:
Merchandise cost, including freight, increased approximately 4070 basis points, primarily due to higher domestic freight costs, partially offset by increased initial mark-on.
Occupancy costs increased approximately 30 basis points resulting from the deleveraging effectsales of the decrease in comparable store net saleslower margin consumable merchandise and higher real estate taxes in the current year.freight costs.
Shrink costs increased approximately 3035 basis points resulting from unfavorable physical inventory results in the current year.year and an increase in the shrink accrual rate.
Markdown expense increased approximately 35 basis points resulting from store closure markdowns and higher clearance activity.
Distribution costs increased approximately 2515 basis points resulting primarily from higher merchandising and distribution payroll-related costs.
Occupancy costs increased approximately 10 basis points resulting primarily from the accelerated amortization of the right-of-use assets for stores which were closed during 2019 in connection with the store optimization program.
Operating income margin for the Family Dollar segment decreased to 2.1%2.0% for the 13 weeks ended November 3, 20182, 2019 as compared to 4.1%3.1% for the same period last year resulting from the gross margin decrease noted above partially offset by a decreaseand an increase in selling, general and administrative expenses as a percentage of net sales. Selling, general and administrative expenses were 23.2%22.5% as a percentage of net sales in the 13 weeks ended November 3, 20182, 2019 compared to 23.4%22.2% for the same period last year. The current quarter decreaseincrease in selling, general and administrative expenses as a percentage of net sales was due to the following:
Operating expenses increased approximately 25 basis points resulting primarily from higher costs related to the disposal of fixed assets in connection with the store optimization program.
Depreciation and amortization expense increased approximately 10 basis points as a result of depreciation on investments made in H2 stores.
Operating income margin for the Family Dollar segment decreased to 1.9% for the 39 weeks ended November 2, 2019 as compared to 4.2% for the same period last year resulting from the gross margin decrease noted above and an increase in selling, general and administrative expenses as a percentage of net sales. Selling, general and administrative expenses were 22.3% as a percentage of net sales in the 39 weeks ended November 2, 2019 compared to 21.7% for the same period last year. The current year increase in selling, general and administrative expenses as a percentage of net sales was due to the net of the following:
Operating and corporate expenses decreasedincreased approximately 40 basis points resulting primarily from lower advertising expenses, legal fees and a gain onhigher costs related to the saledisposal of fixed assets.assets in connection with the store optimization program and higher store supplies expense to support the H2 initiative.
Payroll expenses increased approximately 20 basis points primarily due to average hourly rate increases and additional hours, including increased temporary help expenses, to support store-level initiatives.
Store operating costs increased approximately 5 basis points due primarily to higher repairs and maintenance costs in the current year.
Depreciation and amortization expense decreased approximately 2010 basis points as a result of certain assets that were revalued upon the 2015 acquisition becoming fully depreciated and/or amortized.
Payroll expenses increased approximately 35 basis points primarily due to increased store hourly payroll expenses as a result of the planned reinvestment of income tax savings and higher health care claims,amortized, partially offset by lower incentive compensation expenses.increased depreciation on investments made in H2 stores.
Operating income margin for Family Dollar decreased to 3.0% for the 39 weeks ended November 3, 2018 as compared to 3.9% for the same period last year resulting from the gross margin decrease above and an increase in selling, general and administrative expenses. Operating income for the 39 weeks ended October 28, 2017 included a $53.5 million receivable impairment. Operating income margin excluding the receivable impairment was 4.5% for the 39 weeks ended October 28, 2017. Selling, general and administrative expenses were 22.9% as a percentage of sales in the 39 weeks ended November 3, 2018 compared to 23.3% for the same period last year. Excluding the receivable impairment, selling general and administrative expenses were 22.7% for the 39 weeks ended October 28, 2017. The current year increase in selling, general and administrative expenses as a percentage of sales was due to the net of the following:
Payroll expenses increased approximately 50 basis points primarily due to increased store hourly payroll expenses as a result of the planned reinvestment of income tax savings, partially offset by decreased incentive compensation costs.
Depreciation and amortization expense decreased approximately 20 basis points as a result of certain assets that were revalued upon the 2015 acquisition becoming fully depreciated and/or amortized.

Liquidity and Capital Resources
Our business requires capital to build and open new stores, expand our distribution network and operate, expand and expandrenovate our existing stores. Our working capital requirements for existing stores are seasonal in nature and typically reach their peak in the months of September and October. Historically, we have satisfied our seasonal working capital requirements for existing stores

and have funded our store opening and distribution network expansion programs from internally generated funds and borrowings under our credit facilities.
The following table compares cash-flow related information for the 39 weeks ended November 2, 2019 and November 3, 2018 and October 28, 2017:2018:
 39 Weeks Ended 39 Weeks Ended
 November 3, October 28, November 2, November 3,
(in millions) 2018 2017 2019 2018
Net cash provided by (used in):        
Operating activities $1,050.9
 $592.6
 $1,014.5
 $1,050.9
Investing activities (619.4) (445.5) (768.7) (619.4)
Financing activities (820.6) (613.6) (212.0) (820.6)
Net cash provided by operating activities increased $458.3decreased $36.4 million primarily due to increasedas a result of lower current year earnings, excluding thenet of non-cash loss on debt extinguishmentitems, a smaller increase in 2018 and increasedaccounts payable and accrued liability balances.higher estimated tax payments in the current year, partially offset by lower cash payments for inventory.
Net cash used in investing activities increased $173.9$149.3 million primarily due to increased capital expenditures. The increase in capital expenditures primarily relatesrelated to a newthe Family Dollar Tree distribution center that opened in the second quarter of 2018segment store optimization program, including H2 renovations and the expansion of the Dollar Tree Store Support Center.re-banners, partially offset by grant money received from state and local governments for our Summit Pointe development.
Net cash used in financing activities increased $207.0decreased $608.6 million compared with the prior year, primarily due to our debt refinancing in 2018, which resulted in debt payments exceeding the proceeds from long-term debt by $656.9 million and the payment of $155.3 million of debt-issuance and extinguishment costs.costs, partially offset by $200.0 million of cash paid in 2019 for stock repurchases.
At November 3, 2018,2, 2019, our long-term borrowings were $5.1$4.3 billion and we had $1.1 billion available under our revolving credit facility. We also have $355.0$330.0 million in Letter of Credit Reimbursement and Security Agreements with various financial institutions, under which approximately $186.7$165.5 million was committed to letters of credit issued for routine purchases of imported merchandise as of November 3, 2018.2, 2019.
In the first quarterWe repurchased 1,967,355 shares of 2018, we redeemed our $750.0 million aggregate principal amount of 5.25% Acquisition Notes due 2020. We accelerated the amortization of debt-issuance costs associated with the notes of $6.1 million to the first quarter of 2018.
Additionally, in the first quarter of 2018, we completed the registered offering of $750.0 million aggregate principal amount of Senior Floating Rate Notes due 2020, $1.0 billion aggregate principal amount of 3.70% Senior Notes due 2023, $1.0 billion aggregate principal amount of 4.00% Senior Notes due 2025 and $1.25 billion aggregate principal amount of 4.20% Senior Notes due 2028. We also entered into a credit agreement with JPMorgan Chase Bank, N.A., as administrative agent, providing for $2.03 billion in senior credit facilities, consisting of a $1.25 billion revolving credit facility and a $782.0 million term loan facility. We used the proceeds of these borrowings and cash on hand to repay all of the outstanding loans under our existing senior secured credit facilities, including our Term Loan A-1 and Term Loan B-2, and redeemed all of our outstanding 5.75% Acquisition Notes due 2023. In connection with the foregoing transactions, we accelerated the expensing of approximately $41.2 million of amortizable non-cash deferred financing costs, expensed approximately $0.4 million in transaction-related costs and capitalized approximately $36.9 million of deferred financing costs and original issue discount, which are being amortized over the terms of the new borrowings. We also paid prepayment premiums of $6.5 million and $107.8 million related to our redemption of the Term Loan B-2 and 5.75% Acquisition Notes due 2023, respectively. We expect the annual cash interest savings resulting from this refinancing of our long-term debt will be approximately $48.0 million. See “Note 2 - Long-Term Debt,” to the unaudited condensed consolidated financial statements included in “Part I. Financial Information, Item 1. Financial Statements” of this Form 10-Q, for additional detailcommon stock on the refinancing of our long-term debt.
open market for $200.0 million during the 39 weeks ended November 2, 2019. There were no shares repurchased on the open market during the 39 weeks ended November 3, 2018 and October 28, 2017.2018. As of November 3, 2018,2, 2019, we had $1.0 billion$800.0 million remaining under Board repurchase authorization.
Recent Accounting Pronouncements
See “Note 1 - Basis of Presentation,” to the unaudited condensed consolidated financial statements included in “Part I. Financial Information, Item 1. Financial Statements” of this Form 10-Q, for a detailed description of recent accounting pronouncements.

Item 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.Quantitative and Qualitative Disclosures About Market Risk.
We are exposed to various types of market risk in the normal course of our business, including the impact of interest rate changes and diesel fuel cost changes. We may enter into interest rate or diesel fuel swaps to manage exposure to interest rate and diesel fuel price changes. We do not enter into derivative instruments for any purpose other than cash flow hedging and we do not hold derivative instruments for trading purposes.
Interest Rate Risk
At November 3, 2018, we had $1.5 billion in borrowings subject to interest2, 2019, our variable rate fluctuations, representingdebt consists of our $750.0 million Senior Floating Rate Notes due 2020 (the “Floating Rate Notes”), which represents approximately 30%17% of our total debt. Borrowings under the Term Loan Facility bore interest at an initial interest rate of LIBOR, reset periodically, plus 1.00%, subject to adjustment based on (i) our credit ratings and (ii) our leverage ratio. Based on these factors, interest on the loans under the Term Loan Facility may range from LIBOR plus 0.875% to 1.25%. As of November 3, 2018, the Term Loan Facility bore interest at LIBOR plus 0.95%. Borrowings under the Floating Rate Notes bear interest at a floating rate, reset quarterly, equal to LIBOR plus 70 basis points. A 1.0% increase in LIBOR would result in an annual increase in interest expense related to our variable rate debtFloating Rate Notes of $15.3 million.$3.5 million through the April 2020 maturity date.
Item 4. CONTROLS AND PROCEDURES.Controls and Procedures.
Our management has carried out, with the participation of the Company’s Chief Executive Officer and Chief Financial Officer, an evaluation of the effectiveness of the Company’s disclosure controls and procedures, as defined in Rule 13a-15(e) under the Exchange Act as of the end of the period covered by this report. Based upon this evaluation, our Chief Executive Officer and our Chief Financial Officer concluded that, as of November 3, 2018,2, 2019, the Company’s disclosure controls and procedures were designed and functioning effectively to provide reasonable assurance that information required to be disclosed by us in reports that we file or submit under the Exchange Act is (i) recorded, processed, summarized and reported within the time periods specified in Securities and Exchange Commission rules and forms and (ii) accumulated and communicated to our management, including the Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding disclosure.
There have been no changes in our internal control over financial reporting during the fiscal quarter ended November 3, 20182, 2019 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART II - OTHER INFORMATION
Item 1. LEGAL PROCEEDINGS.Legal Proceedings.
From time to time, we are defendants in ordinary, routine litigation or proceedings incidental to our business, including allegations regarding:
•employment-related matters;
•infringement of intellectual property rights;
•personal injury/wrongful death claims;
•real estate matters related to store leases;
•environmental and safety issues; and
product safety matters, which may include regulatory matters such as product recalls in cooperation with the Consumer Products Safety Commission or other jurisdictions;
•real estate matters related to store leases; and
•environmental and safety issues.jurisdictions.
In addition, we are currently defendants in national and state employment-related class and collective actions, several thousand employment-related arbitrations and litigation concerning injury from products. For a discussion of these proceedings, please refer to “Note 42 - Legal Proceedings,” included in “Part I. Financial Information, Item 1. Financial Statements” of this Form 10-Q.
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 cannot give assurance, however, that one or more of these lawsuits will not have a material effect on our results of operations for the period in which they are resolved. Based on the information available, including the amount of time remaining before trial, the results of discovery and the judgment of internal and external counsel, we are unable to express an opinion as to the outcome of those matters which are not settled and cannot estimate a potential range of loss except as specified in Note 4.2. When a range is expressed, we are currently unable to determine the probability of loss within that range.
Item 1A. RISK FACTORS.Risk Factors.
There have been no material changes to the risk factors described in “Item 1A. Risk Factors” in the Company’s Annual Report on Form 10-K for the year ended February 3, 2018,2, 2019, other than as set forth in the discussion of risk factors in the “A Warning About Forward-Looking Statements” section and in the discussion of tariffs in the “Overview” section within “Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations” of this Form 10-Q.
Item 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS.Unregistered Sales of Equity Securities and Use of Proceeds.
DuringThe following table presents our share repurchase activity during the 13 weeks ended November 3, 2018 the Company did not repurchase any sharesthird quarter of common stock on the open market. 2019:
Fiscal Period Total number of shares purchased Average price paid per share Total number of shares purchased as part of publicly announced plans or programs Approximate dollar value of shares that may yet be purchased under the plans or programs (in millions)
August 4 - August 31, 2019 125,048
 $93.13
 125,048
 $800.0
September 1 - October 5, 2019 —
 —
 —
 800.0
October 6 - November 2, 2019 —
 —
 —
 800.0
Total 125,048
 $93.13
 125,048
 $800.0
As of November 3, 2018,2, 2019, we had $1.0 billionapproximately $800.0 million remaining under Board repurchase authorization.
Item 3. DEFAULTS UPON SENIOR SECURITIES.Defaults Upon Senior Securities.
None.
Item 4. MINE SAFETY DISCLOSURES.Mine Safety Disclosures.
None.

Item 5. OTHER INFORMATION.Other Information.
As previously reported, the Compensation Committee of the Board of Directors of the Company:None.
Adopted a revised form of the Company’s previous change in control Retention Agreement that is offered to Company officers with the position of Chief, President or Executive Chairman, including the named executive officers. The revised Retention Agreement provides for a severance payment to the executive officer under certain circumstances in the event of a termination of employment following a change in control of the Company. The revisions to the original form of change in control Retention Agreement update the tax provisions applicable to severance payments under the agreement and make certain other non-material clarifying and technical changes.


Approved the Company’s entry into an Executive Agreement that is offered to Company officers with the position of Vice President and above, including the named executive officers. The Executive Agreement contains certain restrictive and protective covenants, including non-competition, non-solicitation, non-disparagement and confidentiality, and provides for a salary continuation benefit in the event the executive’s employment is terminated without “cause” (as defined in the agreement). The salary continuation benefit is not conditioned upon a prior change in control of the Company but is offset where an executive may also be entitled to a payout under the Retention Agreement described above.
The foregoing summary of the change in control Retention Agreement and the Executive Agreement does not purport to be complete and is subject to, and qualified in its entirety by, the form of change in control Retention Agreement and form of Executive Agreement that are filed herewith as Exhibit 10.1 and Exhibit 10.2, respectively, and are incorporated herein by reference.

Item 6. EXHIBITS.Exhibits.
    Incorporated by Reference  
Exhibit Exhibit Description Form Exhibit Filing Date Filed Herewith
3.1 
Amended Articles of Incorporation of Dollar Tree, Inc., effective June 20, 2013
 8-K 3.1 6/21/2013  
3.2 
Amended Bylaws of Dollar Tree, Inc., effective June 14, 2018
 8-K 3.1 6/18/2018  
10.1*
Form of Change in Control Retention Agreement for Executive Officers (portions of the exhibit have been omitted pursuant to a request for confidential treatment)
       X
10.2*
Form of Executive Agreement (portions of the exhibit have been omitted pursuant to a request for confidential treatment)
       X
31.1 
Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
       X
31.2 
Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
       X
32.1 
Certification of Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
       X
32.2 
Certification of Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
       X
101 The following financial statements from the Company’s 10-Q for the fiscal quarter ended November 3, 2018, formatted in XBRL: (i) Condensed Consolidated Income Statements, (ii) Condensed Consolidated Statements of Comprehensive Income, (iii) Condensed Consolidated Balance Sheets, (iv) Condensed Consolidated Statements of Cash Flows and (v) Notes to Condensed Consolidated Financial Statements       X
           
*Management contract or compensatory plan or arrangement
    Incorporated by Reference  
Exhibit Exhibit Description Form Exhibit Filing Date Filed Herewith
3.1 
Amended Articles of Incorporation of Dollar Tree, Inc., effective June 20, 2013
 8-K 3.1 6/21/2013  
3.2 
Amended Bylaws of Dollar Tree, Inc., effective March 5, 2019
 8-K 3.1 3/6/2019  
31.1 
Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
       X
31.2 
Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
       X
32.1 
Certification of Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
       X
32.2 
Certification of Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
       X
101 The following financial statements from the Company’s 10-Q for the fiscal quarter ended November 2, 2019, formatted in Inline XBRL: (i) Condensed Consolidated Income Statements, (ii) Condensed Consolidated Statements of Comprehensive Income, (iii) Condensed Consolidated Balance Sheets, (iv) Condensed Consolidated Statements of Shareholders’ Equity, (v) Condensed Consolidated Statements of Cash Flows and (vi) Notes to Condensed Consolidated Financial Statements       X
104 The cover page from the Company’s 10-Q for the fiscal quarter ended November 2, 2019, formatted in Inline XBRL and contained in Exhibit 101       X



SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
   DOLLAR TREE, INC.
    
Date:November 29, 201826, 2019By:/s/ Kevin S. Wampler
  Kevin S. Wampler
  Chief Financial Officer
  (principal financial officer)




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