Richard Dreiling
Chairman and Chief
Executive Officer
To Our Shareholders, Customers and Associates,
2022 represented a year of significant change for the Dollar Tree organization. Our Board of Directors
was reconstituted in March 2022, with seven new Directors joining the Board. Since that time, we have
been focused on the transformational change needed to drive growth and unlock long-term shareholder
value. As part of this process, we have hired a new team of diverse executive leaders with the knowledge,
experience and dedication to implement change aggressively. I am excited about the exceptional
leadership team that is now in place, and we are moving as quickly as possible to capture the full potential
of each of our business segments, Dollar Tree and Family Dollar. With the current
economic climate driving higher income consumers into value retail, we believe we
are in an excellent position to deliver the quality, value and convenience that shoppers
want and expect today.
Delivering Strong Results in a
Year of Dynamic Change
Accomplishments for the Dollar Tree and Family Dollar teams in 2022 included:
• A net sales increase of 7.6% to a company-record $28.3 billion;
• Same-store sales growth of 9.0% in the Dollar Tree segment, its strongest annual
increase in nearly three decades;
• Family Dollar’s 2.4% same-store sales increase, comprised of accelerating comps
by quarter, and a return to positive comparable transaction count growth in the
back half of the year;
• A 210-basis point improvement in gross margin, to 31.5%; and
• Net income of $1.6 billion, leading to earnings per diluted share of $7.21, a
24.3% increase compared to the prior year.
The cornerstone of
our business is our
people, and a key
focus continues to
be on supporting
and enabling our
associates to be
successful.
Ongoing Commitment to Our Associates
The cornerstone of our business is our people, and a key focus continues to be on supporting and
enabling our associates to be successful. Under our new leadership team, we are increasing average
hourly wages for store associates and making investments in field personnel. Importantly, we expect these
2022 A N N U A L R E P O R T
labor and wage investments will drive improved execution in our stores and overall greater productivity
and efficiency. Our associates and field personnel are critical to our transformational journey, and we
are committed to these investments in our talent. We are looking to invigorate the culture of our business
and not only give our associates the tools they need to perform their roles, but provide them with the
opportunities they deserve to grow within the Company.
Driving Productive Sales Growth
To be successful, we must run well-maintained, efficient and productive stores, which drives our intense
focus on store standards. When we maintain clean, fully-stocked stores, our customers respond with
bigger baskets and repeat visits. In addition to improving sales and the customer experience, improved
efficiencies and productivity positively impact the work experience of our associates. Our certified GOLD
(Grand Opening Look Daily) stores will serve as a clear example of what our most successful and well-run
stores look like for our district and store leadership teams across all regions.
The Dollar Tree and Family Dollar segments are intensely focused on how to be the best retail destination
for their unique customer bases. At Dollar Tree, our merchant team successfully managed through the
transition to the $1.25 primary price point, an initiative that significantly enhances our
ability to provide a meaningful assortment at extreme value to our Dollar Tree shoppers.
We also added $3 and $5 Dollar Tree Plus merchandise into more than 1,800 Dollar
Tree stores in 2022, and we plan to add this multiple price point product to many more
stores in 2023. Separately, we have been aggressively expanding our $3, $4, and $5
frozen and refrigerated product across the Dollar Tree store base, installing additional
cooler doors with an attractive selection of protein, pizza, ice cream and more that our
customers are responding to positively.
In addition to the opportunities in the Dollar Tree segment, we have a tremendous long-
term opportunity to improve the operating performance at Family Dollar. In 2022, we
brought Family Dollar pricing into parity with key competitors, and we continue to be
pleased with our price positioning. We have a number of sales and margin-driving
initiatives underway, albeit in the early stages, to grow our SKU base supported by an
increased shelf profile to 78 inches and expand the number of frozen and refrigerated
cooler doors, providing shoppers in our communities with consumable products they
rely on to feed their families. We are also expanding our private brand offering.
These products will include new labels and redefined labels, many of which are being
developed in our new test kitchen in Chesapeake, Virginia.
To be successful,
we must run
well-maintained,
efficient and
productive stores,
which drives our
intense focus on
store standards.
Improving Operating Efficiencies
Through Technology
We are also working on new initiatives to improve our technology and supply chain that are incredibly
important to our future success. To unlock the full value creation opportunity ahead of us, we must have
the right tools and technology in place to support our accelerated growth, and we are prioritizing projects
that will have the greatest impact on improving our performance. We are working to enhance our supply
2022 A N N U A L R E P O R T
chain efficiencies and ensure that our stores have the merchandise they need in a timely manner and can
stock it easily and efficiently. This will be a massive step forward for our organization and especially for
our hard-working store associates.
Doing the Right Things for
All Stakeholders
We recognize that stakeholders within our communities expect the Company to be a
responsible corporate citizen and to respond to issues of concern, including diversity,
equity and inclusion for all people, the potential impact of climate change, and other
sustainability risks. The Board of Directors is committed to addressing these challenges
and opportunities, and in 2022 we hired a Chief Diversity Officer and a Chief
Sustainability Officer to lead management’s efforts in these important areas. These
executives will work with the Board’s Sustainability and Corporate Social Responsibility
Committee to focus on key sustainability issues that affect the Company, such as
environmental change, human capital management and workplace environment
and culture matters. In addition, we continue to update our corporate sustainability
reporting in 2023 to share our efforts across a range of topics, including environmental
stewardship, DEI (diversity, equity and inclusion) in our workforce, product safety and
more. I am confident the Company is well-positioned from a governance perspective
to address and manage current and future risks to our business.
We are also
working on new
initiatives to improve
our technology
and supply chain
that are incredibly
important to our
future success.
Importantly, I want to sincerely thank each of our more than 207,000 associates at
Dollar Tree and Family Dollar who are embracing change designed to improve the shopper experience
in our stores and to develop their retail careers. Finally, I want to thank all of you for your support and
confidence in the Board as we move forward to execute our strategy for long-term value creation. We
are eager to share our multi-year vision of the opportunity ahead of us, and the path to get there, at our
Investor Conference in June. This long-term opportunity ahead of us is bigger than I imagined before I
joined the Dollar Tree team just over one year ago, and I look forward to engaging with you in the months
and years ahead.
Sincerely yours,
Richard Dreiling
Chairman and Chief Executive Officer
2022 A N N U A L R E P O R T
Table of Contents
(Mark One)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
For the fiscal year ended January 28, 2023
or
☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934
For the transition period from to
Commission file number: 0-25464
DOLLAR TREE, INC.
(Exact name of registrant as specified in its charter)
Virginia
(State or other jurisdiction of incorporation or organization)
26-2018846
(I.R.S. Employer Identification No.)
500 Volvo Parkway
Chesapeake, Virginia
(Address of principal executive offices)
23320
(Zip Code)
Registrant’s telephone number, including area code: (757) 321-5000
Securities registered pursuant to Section 12(b) of the Act:
Title of each class
Common Stock, par value $.01 per share
Trading symbol(s)
DLTR
Name of each exchange on which registered
NASDAQ Global Select Market
Securities registered pursuant to section 12(g) of the Act:
None
(Title of Class)
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.
Yes ☒
No ☐
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.
Yes ☐
No ☒
Table of Contents
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.
Yes ☒
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).
Yes ☒
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 filer
Non-accelerated filer
☒
☐
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 has filed a report on and attestation to its management’s assessment of the
effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by
the registered public accounting firm that prepared or issued its audit report.
☒
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act).
Yes ☐
No ☒
The aggregate market value of common stock held by non-affiliates of the registrant on July 29, 2022, the last business day of the
registrant’s most recently completed second fiscal quarter, was $35,108,117,366, based upon the closing sale price for the registrant’s
common stock on such date. For purposes of this computation, all executive officers and directors have been deemed to be affiliates.
Such determination should not be deemed to be an admission that such executive officers and directors are, in fact, affiliates of the
registrant.
On March 3, 2023, there were 221,227,564 shares of the registrant’s common stock outstanding.
DOCUMENTS INCORPORATED BY REFERENCE
The information called for in Items 10, 11, 12, 13 and 14 of Part III, to the extent not set forth herein, is incorporated by reference
to the definitive Proxy Statement for the 2023 Annual Meeting of Stockholders, which will be filed with the Securities and Exchange
Commission within 120 days of the registrant’s fiscal year ended January 28, 2023.
2
DOLLAR TREE, INC.
FORM 10-K
FOR THE FISCAL YEAR ENDED JANUARY 28, 2023
TABLE OF CONTENTS
PART I
PART II
Item 1.
Business
Item 1A.
Risk Factors
Item 1B.
Unresolved Staff Comments
Properties
Legal Proceedings
Mine Safety Disclosures
Item 2.
Item 3.
Item 4.
Item 5.
Item 6.
Item 7.
Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of
Equity Securities
Reserved
Management’s Discussion and Analysis of Financial Condition and Results of Operations
Item 7A.
Quantitative and Qualitative Disclosures About Market Risk
Item 8.
Item 9.
Financial Statements and Supplementary Data
Changes in and Disagreements With Accountants on Accounting and Financial Disclosure
Item 9A.
Controls and Procedures
Item 9B.
Other Information
Item 9C.
Disclosure Regarding Foreign Jurisdictions that Prevent Inspections
PART III
Item 10.
Item 11.
Item 12.
Directors, Executive Officers and Corporate Governance
Executive Compensation
Security Ownership of Certain Beneficial Owners and Management and Related Stockholder
Matters
Item 13.
Certain Relationships and Related Transactions, and Director Independence
Item 14.
Principal Accountant Fees and Services
PART IV
Item 15.
Item 16.
Signatures
Exhibit and Financial Statement Schedules
Form 10-K Summary
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6
10
21
21
22
22
23
24
25
35
36
63
63
65
65
65
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65
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Table of Contents
Cautionary Note Regarding Forward-Looking Statements
This Annual Report on Form 10-K 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 do not relate strictly to historical facts. Any statements contained herein that are not statements of historical facts 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 general business or economic conditions on our business, including the direct and indirect effects of
inflation, labor shortages, consumer spending levels, and unemployment in our markets;
The uncertainty of the impact of the COVID-19 pandemic on our business and results of operations, including uncertainties
surrounding disruptions in our supply chain or sources of supply;
Our expectations regarding import and domestic freight costs and fuel costs in 2023;
Our expectations regarding increased expenses for higher wages and bonuses paid to associates, including increases in the
minimum wage by States and localities, potential federal legislation increasing the minimum wage, and a potential increase
in the minimum salary for exempt store managers;
Our growth plans, including our plans to add, renovate, re-banner, expand, remodel, relocate or close stores and any related
costs or charges, our leasing strategy for future expansion, and our ability to renew leases at existing store locations;
Our anticipated sales, comparable store net sales, net sales growth, gross profit margin, costs of goods sold (including
product mix), shrink rates, 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, other legal
proceedings or governmental investigations, including (a) U.S. Food and Drug Administration (“FDA”) proceedings
arising out of or relating to the inspection of our West Memphis, Arkansas Family Dollar distribution center (“Arkansas
FDA Matter”) and the retail product recall we initiated in February 2022 in connection with the Arkansas FDA Matter, (b)
a proposed consolidated class action complaint filed against Family Dollar pertaining to the circumstances underlying the
Arkansas FDA Matter, and (c) the federal grand jury subpoena and related U.S. Department of Justice investigation relating
to issues associated with our West Memphis, Arkansas Family Dollar distribution center;
Our plans to renovate existing Family Dollar stores and build new stores in the H2 store format, and the performance of
that format on our results of operations;
Our plans relating to new store openings and new store concepts such as Dollar Tree Plus and our Combo Store format;
Our plans and expectations regarding our current initiatives and future strategic investments and the uncertainty with
respect to the amount, timing and impact of those initiatives and investments on our business and results of operations;
The impact of trade relations between the United States and China, including the effect of Section 301 tariffs on Chinese
goods imposed by the United States, and other potential impediments to imports;
The reliability of, and cost associated with, our sources of supply, particularly imported goods such as those sourced from
China;
The average size and suitability of our retail stores to be added in 2023;
Our cash needs, including our ability to fund our future capital expenditures, working capital requirements and repurchases
of common stock under our repurchase program, and our expectations regarding potential increases in interest rates and the
effect on our revolving credit facility;
Our expectations regarding the construction of new distribution centers, the expansion of existing distribution centers, and
the capabilities of our distribution center network;
Our expectations regarding higher commodity and other costs associated with the build-out of new stores and the
renovation of existing stores, limitations on the availability of certain fixtures and equipment, and construction, permitting
and inspection delays related to new store openings;
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•
Our expectations regarding competition and our potential for long-term growth;
• Management’s estimates and expectations as they relate to income tax liabilities, deferred income taxes, uncertain tax
positions, and recognition of stock-based compensation; and
• Management’s estimates associated with our critical accounting estimates, including inventory valuation, self-insurance
liabilities and valuations for our goodwill and indefinite-lived intangible assets impairment analyses.
A forward-looking statement is neither a prediction nor a guarantee of future results, events or circumstances. You should not
place undue reliance on forward-looking statements, which speak only as of the date of this Annual Report on Form 10-K. 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 a variety of factors, including, but not limited to, the risks and
uncertainties discussed under “Item 1A. Risk Factors,” “Item 7. Management’s Discussion and Analysis of Financial Condition and
Results of Operations” and elsewhere in this Form 10-K.
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 Form 10-K, 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.
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. Unless specifically indicated otherwise, any references to “2023” or “fiscal 2023,” “2022” or
“fiscal 2022,” “2021” or “fiscal 2021,” and “2020” or “fiscal 2020,” relate to as of or for the years ended February 3, 2024,
January 28, 2023, January 29, 2022 and January 30, 2021, respectively.
5
Table of Contents
Item 1. Business
Overview
PART I
We are a leading operator of discount variety stores with a solid history of growth and performance. Our stores operate under the
brand names of Dollar Tree, Family Dollar and Dollar Tree Canada. At January 28, 2023, we operated 16,340 discount variety retail
stores across 48 states and five Canadian provinces and over the long-term, we believe that the market can support more than 10,000
Dollar Tree stores and 15,000 Family Dollar stores across the United States, and approximately 1,000 Dollar Tree stores in Canada.
We believe the convenience and value we offer are key factors in serving and growing our base of loyal customers.
We operate in two reporting business segments: Dollar Tree and Family Dollar. For discussion of the operating results of our
reporting business segments, refer to “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of
Operations” under the caption “Segment Information” and Note 11 to our consolidated financial statements.
We execute a dual-banner strategy that aims to offer the best of our brands in various store formats to serve customers in all types
of geographic markets. Dollar Tree is the leading operator of discount variety stores offering merchandise predominantly at the fixed
price point of $1.25. Dollar Tree stores serve customers with a broad range of income levels in suburban locations, striving
continuously to “Wow” the customer with a compelling, fun and fresh merchandise assortment comprised of a variety of the things the
customer wants and needs, all at incredible values in bright, clean and friendly stores. Family Dollar operates general merchandise
retail discount stores providing customers with a selection of competitively-priced merchandise in convenient neighborhood stores.
Family Dollar primarily serves a lower than average income customer in urban and rural locations, offering great values on everyday
items.
We are committed to growing our combined business through new store openings and through our store relocation, expansion and
remodel program. We plan to open new stores in underserved markets and to strategically increase our presence in our existing
markets. We are executing our strategic initiatives including Dollar Tree Plus and the Family Dollar H2 and Combination Store (or
Combo Store) format initiatives. We are focused on refining our assortment in every store by leveraging the complementary
merchandise expertise of each segment, including Dollar Tree’s sourcing and product development expertise and Family Dollar’s
consumer package goods and national brands sourcing expertise. These initiatives are discussed further in the overview of each
segment below.
Corporate Culture
We believe that honesty and integrity, and treating people fairly and with respect are core values within our corporate culture. We
believe that running a business, and certainly a public company, carries with it a responsibility to be above reproach when making
operational and financial decisions. Our executive management team visits and shops at our stores like every customer, and ideas and
individual creativity on the part of our associates are encouraged, particularly from our store managers who best know their stores and
their customers. We have standards for store displays, merchandise presentation, and store operations. We maintain an open-door
policy for all associates. Our distribution centers are operated based on objective measures of performance and our store support center
associates are available to assist associates in our stores and distribution centers. For more information, see Human Capital Resources
below.
Dollar Tree
The Dollar Tree segment includes 8,134 stores operating under the Dollar Tree and Dollar Tree Canada brands, 15 distribution
centers in the United States and two in Canada. Our stores predominantly range from 8,000 - 10,000 selling square feet. During the
third quarter of 2021, we announced our new $1.25 price point initiative and we completed the rollout of this initiative to all Dollar
Tree stores in the United States during the first quarter of fiscal 2022, increasing the price point on a majority of our $1.00
merchandise to $1.25. During fiscal 2022, we began investing in new products and modifying existing products to provide greater
value for our customers and increase customer traffic and store productivity. We continue to expand our Dollar Tree Plus initiative
which provides our customers with extraordinary value in discretionary and consumable categories priced at the $3, $4 and $5 price
points. During 2021, we entered into a partnership with Instacart and as of January 28, 2023, our customers can shop online and
receive same-day delivery from more than 7,800 Dollar Tree stores without having to visit a store. We are the owners of several
trademarks including “Dollar Tree” and the “Dollar Tree” logo.
In our Dollar Tree Canada stores, we sell items principally for $1.50(CAD) or less. Our revenue and assets in Canada are not
material.
We strive to exceed our customers’ expectations of the variety and quality of products they can purchase by offering items we
believe typically sell for higher prices elsewhere. Merchandise imported directly typically accounts for approximately 41%-43% of
our total retail value purchases, with the remaining merchandise purchased domestically. Our domestic purchases include basic, home,
6
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closeouts and promotional merchandise. We believe our mix of imported and domestic merchandise affords our buyers flexibility that
enables them to consistently exceed our customers’ expectations. In addition, direct relationships with manufacturers permit us to
select from a broad range of products and customize packaging, product sizes and package quantities that best meet our customers’
needs.
We carry approximately 8,000 items in our Dollar Tree stores and as of the end of fiscal 2022 approximately 25% of our items
were automatically replenished. The remaining items are pushed to the stores and a portion can be reordered by our store managers on
a weekly basis. Through automatic replenishment and our store managers’ ability to order product, each store manager is able to
satisfy the demands of their particular customer base.
We maintain a balanced selection of products within traditional variety store categories. We offer a wide selection of everyday
basic products and we supplement these basic, everyday items with seasonal, closeout and promotional merchandise. We attempt to
keep certain basic consumable merchandise in our stores continuously to establish our stores as a destination and increase traffic in our
stores. Closeout and promotional merchandise is purchased opportunistically and represents less than 10% of our purchases.
The merchandise mix in our Dollar Tree stores consists of:
•
•
•
consumable merchandise, which includes everyday consumables such as household paper and chemicals, food, candy,
health and personal care products, and in most stores, frozen and refrigerated food;
variety merchandise, which includes toys, durable housewares, gifts, stationery, party goods, greeting cards, softlines, arts
and crafts supplies and other items; and
seasonal goods, which include, among others, Christmas, Easter, Halloween and Valentine’s Day merchandise.
For information regarding the amounts and percentages of our net sales contributed by the above merchandise categories for the
last three fiscal years, please refer to Note 11 to our consolidated financial statements.
Family Dollar
In our 8,206 Family Dollar stores, we sell merchandise at prices that generally range from $1.00 to $10.00. Our stores
predominantly range from 6,000 - 8,000 selling square feet. The Family Dollar segment consists of our store operations under the
Family Dollar brand and ten distribution centers. We have two primary initiatives for our Family Dollar stores, the H2 format and our
Combo Store format, both of which incorporate elements of our Dollar Tree stores into Family Dollar stores. The H2 model stores
include Dollar Tree $1.25 merchandise items and establish a minimum number of freezer and cooler doors throughout the store. As of
January 28, 2023, we operated approximately 4,360 H2 stores. The Combo Store format, which was designed specifically for small
towns and rural communities with populations of 3,000 to 4,000 residents, blends Family Dollar’s great value and assortment with
select Dollar Tree merchandise categories under one roof. As of January 28, 2023, we operated approximately 810 Combo Stores. Our
new and renovated H2 and Combo Stores have higher sales and operating income margins compared with legacy Family Dollar stores.
During 2021, we entered into a partnership with Instacart and as of January 28, 2023, our customers can shop online and receive same-
day delivery from more than 7,500 Family Dollar stores without having to visit a store. We are the owners of the trademarks “Family
Dollar,” “Family Dollar Stores” and other names and designs of certain merchandise sold in Family Dollar stores.
Our Family Dollar stores provide customers with a quality, high-value assortment of basic necessities and seasonal merchandise.
We offer competitively-priced national brands from leading manufacturers alongside name brand equivalent-value, lower-priced
private labels. We purchase merchandise from a wide base of suppliers and generally have not experienced difficulty in obtaining
adequate quantities of merchandise. In fiscal 2022, we purchased approximately 15% of our merchandise through our relationship
with McLane Company, Inc., which distributes consumable merchandise from multiple manufacturers. In addition, merchandise
imported directly typically accounts for approximately 15%-17% of our total retail value purchases.
While the number of items in a given store can vary based on the store’s size, geographic location, merchandising initiatives and
other factors, our typical Family Dollar store generally carries approximately 7,600 basic items alongside items that are ever-changing
and seasonally-relevant throughout the year.
The merchandise mix in our Family Dollar stores consists of:
•
•
•
consumable merchandise, which includes food and beverages, tobacco, health and personal care products, household
chemicals, paper products, hardware and automotive supplies, diapers, batteries, and pet food and supplies;
home products, which include housewares, home décor, giftware, and domestics, including comforters, sheets and towels;
apparel and accessories merchandise, which includes clothing, fashion accessories and shoes; and
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•
seasonal and electronics merchandise, which includes Christmas, Easter, Halloween and Valentine’s Day merchandise,
personal electronics, including pre-paid cellular phones and services, stationery and school supplies, and toys.
For information regarding the amounts and percentages of our net sales contributed by the above merchandise categories for the
last three fiscal years, please refer to Note 11 to our consolidated financial statements.
Purchasing
We believe our substantial buying power and our flexibility in making sourcing decisions contributes to our successful purchasing
strategy, which includes targeted merchandise margin goals by category. We leverage our merchandising team to source products that
can be sold in both Dollar Tree and Family Dollar stores. We also believe our ability to negotiate with our vendor partners enables us
to manage the margin impact of economic pressures. We buy products on an order-by-order basis and have no material long-term
purchase contracts or other assurances of continued product supply or guaranteed product cost. Historically, no vendor has accounted
for more than 10% of total merchandise purchased by us.
Our merchandise systems provide us with valuable sales information to assist our buyers and improve product allocation to our
stores. We use this information to target our inventory levels in our distribution centers and stores in order to plan for capacity and
labor needs.
Distribution
A strong and efficient distribution network is critical to our ability to grow and to maintain a low-cost operating structure. We
currently operate 25 distribution centers in the United States, 15 of which are primarily dedicated to serving our Dollar Tree stores and
ten distribution centers primarily serve our Family Dollar stores. We expect future distribution centers to be built with the capability to
service both Dollar Tree and Family Dollar stores. New distribution sites are strategically located to reduce the distance between the
distribution centers and stores, maintain flexibility and improve efficiency in our store service areas. We expect to complete a
significant expansion of our Ocala, Florida distribution center in 2024 which will include enhanced automation.
Our Dollar Tree stores receive approximately 92% of their inventory from our distribution centers via contract carriers and our
Family Dollar stores receive approximately 70% of their inventory from our distribution centers. The remaining store inventory,
primarily perishable consumable items and other vendor-maintained display items, are delivered directly to our stores from vendors or
third party distributors. Our Family Dollar stores receive approximately 15% of their merchandise from McLane Company, Inc. For
more information on our distribution center network, see “Item 2. Properties.”
Seasonality
For information on the impact of seasonality, see “Item 1A. Risk Factors” and “Item 7. Management’s Discussion and Analysis of
Financial Condition and Results of Operations.”
Competition
Our segment of the retail industry is fragmented and highly competitive and we expect competition to increase in the future. We
operate in the discount retail sector, which is currently and is expected to continue to be highly competitive with respect to price, store
location, merchandise quality, assortment and presentation, and customer service, including merchandise delivery and checkout
options. Our competitors include single-price dollar stores, multi-price dollar stores, mass merchandisers, online retailers, discount
retailers, drug stores, convenience stores, independently-operated discount stores, grocery stores and a wide variety of other retailers.
In addition, several competitors have sections within their stores devoted to “one dollar” price point merchandise, which further
increases competition. We believe we differentiate ourselves from other retailers by providing high-value, high-quality, low-cost
merchandise in attractively-designed stores that are conveniently located. Our sales and profits could be reduced by increases in
competition. There are no significant economic barriers for others to enter our retail sector.
Government Regulation
We are subject to a wide variety of local, state and federal laws and regulations within the United States and Canada. Compliance
with these laws and regulations often requires the dedication of our associates’ time and attention, as well as financial resources.
Historically, compliance with these laws and regulations did not have a material effect on our capital expenditures, earnings or
competitive position; however, in fiscal 2022, we closed our West Memphis, Arkansas distribution center (“DC 202”) following
observations of rodent infestation at the facility as well as other items that required remediation. During the first quarter of fiscal 2022,
approximately 400 stores serviced by DC 202 were temporarily closed in connection with a retail-level product recall. We incurred
costs related to the product recall, remediation efforts and asset impairment during fiscal 2022. Remediation-related costs included
merchandise disposal costs, payroll and legal costs as well as incremental freight costs resulting from stores being serviced by
distribution centers which are farther away.
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Human Capital Resources
Our business success is built upon our dedicated, passionate and diverse associates who work and live in the communities we
serve. Our goal is to provide a working environment that is welcoming and inclusive, offers competitive pay and benefits, supports the
growth and development of our associates, and affirms our corporate values and mission. We recruit and hire in the communities we
serve using local job fairs, social media as well as local community service partners to provide part-time and full-time jobs that can
become lasting careers. Our Human Resources team, with oversight from our Board of Directors and its committees, develops and
executes programs for compensation and benefits, onboarding and training, professional development, performance management,
retention and succession planning.
We greatly value our people and invest in their personal well-being and professional growth through various human capital
programs and initiatives, including the following:
•
•
•
Compensation, benefits and well-being. We are committed to providing market-competitive pay for all positions and we are
a pay-for-performance organization, offering performance-based compensation opportunities at nearly all levels of the
organization, including certain hourly-paid positions. We strive to ensure gender and racial pay equity for employees
performing equal or substantially similar work. Eligible associates can participate in our Retirement Savings Plan, which
provides a dollar for dollar match on the first 5% of employee contributions and all associates can participate in our
Employee Stock Purchase Plan. All full-time and part-time associates are eligible for competitive health and welfare
benefits, including medical, dental and vision. Associates may be eligible for other benefits including disability and life
insurance as well as primary caregiver and parental leave. We have a program that provides financial support to associates
recovering from natural disasters and personal hardships as well as a scholarship program for associates with children
pursuing higher education. We also offer a voluntary benefit called “pay any day,” which allows associates to advance their
payday earnings for flexibility in meeting their bills and expenses.
Talent development and retention. We believe in the growth and development of our associates and are committed to
building a culture of learning in which associates are given the opportunity to enhance their skills at every stage of their
career. To support this objective, we provide a multitude of professional and leadership development experiences,
including online and instructor-led trainings, tuition reimbursement for graduate, undergraduate, GED and English as a
Second Language classes, and discounted tuition at over 200 colleges and universities for our associates and their families.
Retention of our associates is a focus for all leaders and we continue to strive to improve our turnover rate. To identify
high-potential talent, leadership assesses talent at the store manager level and above on a regular basis through structured
talent reviews and succession planning paired with customized development plans. This focus on talent resulted in more
than 52,600 promotions in fiscal 2022.
Diversity, equity and inclusion. We believe our associates should mirror our diverse customer base and the communities we
serve. Our goal is to create and support a culture of inclusion within a diverse workforce where the unique skills and
perspectives of our associates and customers are understood, respected and appreciated. To further this goal, we established
a Diversity, Equity and Inclusion (DEI) Executive Council comprised of senior leaders from every department. The DEI
Executive Council provides strategic and tactical leadership support to our Chief Diversity Officer (CDO) on all matters
related to DEI. The CDO is charged with creating and implementing DEI-focused strategies consistent with our business
goals, catalyzing cultural change throughout the organization and driving accountability at the senior management level for
progress on key DEI objectives. In addition, we provide associate training on DEI topics and have formed a number of
associate resource groups. Our objective is to build a platform to encourage professional development, support community
outreach, cultivate mentoring, attract diverse talent and promote cross-functional teamwork for all employees. Each
associate resource group will be supported by an executive sponsor who is a member of the DEI Executive Council or
senior leadership team.
• Workplace safety. We strive to maintain a safe working environment for our associates with a safety program designed to
promote accident prevention. Among other things, our environmental health and safety department establishes standard
safety protocols and operating procedures across the company, and our field managers are responsible for overseeing
associate safety training and conducting store safety audits. In response to the COVID-19 pandemic, we implemented
several changes to protect our associates and our customers and to ensure adherence to Centers for Disease Control and
Prevention recommendations.
•
Communication and Engagement. We believe that our associates are the most critical part of our business, and supporting
an engaging culture where people can do their best work is a top priority for our leaders. Over the last year we have added
new channels to foster two-way dialogue and ensure we are listening to our associates and taking action on their feedback.
A recent culture assessment helped identify areas of focus and prepare the organization for a robust employee engagement
survey process to close the gap between our current culture and the culture we aspire to have.
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As of January 28, 2023, we employed more than 207,500 associates, as follows:
Store and Distribution Center Associates
Dollar Tree
Family Dollar
Store Support Center
Associates
Total
Full-time Associates
Part-time Associates
Total
29,669
95,473
125,142
32,602
47,043
79,645
2,754
65,025
7
142,523
2,761
207,548
Part-time associates work an average of less than 30 hours per week and the number of part-time associates fluctuates depending
on seasonal needs.
We consider our relationship with our associates to be good, and have not experienced significant interruptions of operations due
to labor disagreements.
Available Information
Our annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and amendments to those reports
filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934 are available free of charge on our website
at www.dollartree.com as soon as reasonably practicable after electronic filing of such reports with the Securities and Exchange
Commission (“SEC”).
Item 1A. Risk Factors
An investment in our common stock involves a high degree of risk. Any failure to meet market expectations, including our
comparable store sales growth rate, earnings and earnings per share or new store openings, could cause the market price of our stock to
decline. You should carefully consider the specific risk factors listed below together with all other information included or
incorporated in this report and other filings that we make from time to time with the SEC, including our consolidated financial
statements and accompanying notes. However, the risks and uncertainties that we face are not limited to those described below and
those set forth in our SEC filings. Additional risks and uncertainties not presently known to us or that we currently believe to be
immaterial may also arise. In such event, our business, financial condition, results of operations or prospects could be materially
adversely affected.
Profitability and Operational Risks
Our profitability is vulnerable to increases in merchandise, shipping, freight and fuel costs, wage and benefit costs and other
operating costs.
Future increases in costs such as the cost of merchandise (including the substitution of higher cost domestic goods), wage and
benefit costs, ocean shipping rates, domestic freight costs, fuel and energy costs, duties and tariffs, merchandise loss (due to theft,
damage, or errors) and store occupancy costs would reduce our profitability. We experienced material increases in wage rates and
labor costs as well as in shipping rates, freight and fuel costs in 2022, and we expect further increases in certain cost categories in
2023. We have incurred additional costs as a result of recent minimum wage increases by certain states and localities and we expect
additional minimum wage increases by states and localities in 2023. In addition, the federal minimum wage may increase depending
on the outcome of legislation proposed in Congress, and the current administration may consider raising the minimum salary for store
managers who have exempt status under the Fair Labor Standards Act. Separately, government or industry actions addressing the
impact of climate change, or shifts in customer preferences for more sustainable, energy-efficient products, may result in increases in
our merchandise or operating costs.
In our Dollar Tree segment, we raised our primary price point on merchandise to $1.25 in fiscal 2021. In addition, we continue to
implement our Dollar Tree Plus initiative which provides our customers with discretionary categories priced at the $3 and $5 price
points and beginning in fiscal 2022, we added $3, $4 and $5 frozen and refrigerated product in 3,500 stores. Although we have
increased our price points at our Dollar Tree stores, our ability to adjust our product assortment, to operate more efficiently or to
increase our comparable store net sales in order to offset cost increases is critical to maintaining our profitability levels. Supply chain
constraints and higher commodity costs could make it more difficult for us to obtain sufficient quantities of certain products and could
negatively affect our product assortment and merchandise costs. We can give no assurance that we will be able to adjust our product
assortment, operate more efficiently or increase our comparable store net sales in the future. Although Family Dollar, unlike Dollar
Tree, can more easily raise the price of merchandise, customers may buy fewer products if prices were to increase. Please see “Item 7.
Management’s Discussion and Analysis of Financial Condition and Results of Operations” for further discussion of the effect of
economic factors on our operations.
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We are experiencing higher costs and disruptions in our distribution network, which have had and could have an adverse impact
on our sales, margins and profitability.
Our success is dependent on our ability to import or transport merchandise to our distribution centers and store, pick and ship
merchandise to our stores in a timely and cost-effective manner. We rely heavily on third parties including ocean carriers and truckers
in these processes. We may not anticipate, respond to or control all of the challenges of operating our distribution network.
Additionally, when our distribution centers fail to operate effectively, we could experience increased freight or operational costs or
merchandise shortages that could lead to lost sales. We have also experienced trucking shortages, and increased trucking and fuel
costs. Some of the factors that have had and could have an adverse effect on our distribution network or costs in 2023 are:
•
•
•
•
•
•
•
•
Shipping costs. We have experienced significantly higher international and domestic freight costs. Domestically, diesel fuel
prices have been and are expected to remain higher and may increase further because of international tensions. A
significant increase in our freight costs could have a material adverse impact on our business and results of operations.
Changes in import duties, import quotas and other trade sanctions could also increase our costs.
Shipping disruptions. We have experienced disruptions in the global supply chain, including issues with shipping capacity,
port congestion and pandemic-related port closings and ship diversions. Our receipt of imported merchandise has been and
may be further disrupted or delayed as a result of these or other factors. Delays could potentially have a material adverse
impact on future product availability, product mix, sales and merchandise margin, especially at Dollar Tree. In addition,
our supply chain may be disrupted as a result of other international events such as armed conflict, war, economic sanctions
or acts of terrorism.
Efficient operations and management. Distribution centers and other aspects of our distribution network are complex and
difficult to operate efficiently, and we have experienced and could continue to experience a reduction in operating
efficiency resulting in delayed shipments of merchandise to our stores as a result of challenges in attracting and retaining
an adequate and reliable workforce. Although we have offered sign-on bonuses, enhanced wages and other inducements in
certain markets to address the shortage of labor at our distribution centers, such measures have increased our costs and are
expected to continue to increase our costs, which could have an adverse effect on our margins and profitability. There can
be no assurances that such measures will be adequate to attract and retain the workforce necessary for the efficient
operation of our distribution centers.
Trucking costs. We have experienced significant increases in trucking costs in recent years due to a truck driver shortage
and other factors. The truck driver shortage also required us to increase our use of more expensive surge carriers to
transport our merchandise.
Diesel fuel costs. We have experienced volatility in diesel fuel costs and are expecting increases to continue in fiscal 2023
and may worsen, for example, because of the impact of international events such as trade restrictions on Russia on oil
prices.
Vulnerability to natural or man-made disasters, including climate change. A fire, explosion or natural disaster at a port or
any of our distribution or store support facilities could result in a loss of merchandise and impair our ability to adequately
stock our stores. Some facilities are vulnerable to earthquakes, hurricanes, tornadoes or floods, and an increase in the
severity and frequency of extreme weather events and patterns may increase our operating costs, disrupt manufacturing or
our supply chain, change customer buying patterns, result in closures of our stores or distribution and store support centers
and impede physical access to our stores.
Labor disagreement. Labor disagreements, disruptions or strikes, including at ports, rail networks or transportation
companies, may result in lost sales due to shipping delays or disruptions in the delivery of merchandise to our distribution
centers or stores and increase our costs.
Direct-to-store deliveries. We rely on a limited number of suppliers for certain consumable merchandise, including frozen
and refrigerated products. In fiscal 2022, we purchased and delivered approximately 15% of our merchandise for our
Family Dollar segment, and to a lesser extent for our Dollar Tree segment, through our relationship with McLane
Company, Inc., which distributes consumable merchandise from multiple manufacturers. We also rely on third parties to
deliver frozen and refrigerated product, as well as chocolate in the summer, to our Dollar Tree stores. To the extent that
supply chain disruptions and higher costs affect our suppliers, we may be subject to delays or reductions in deliveries and
higher costs for merchandise. A substantial disruption in our relationship with or in service levels from these suppliers
could have a material adverse impact on our business and results of operations.
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We may stop selling or recall certain products for safety-related or other issues.
We may stop selling or recall certain products, including our private label brands, for safety-related or other issues, including
product contamination, product content, improper manufacturing processes, improper testing, product mislabeling or product
tampering. We may also stop selling or recall products if the products, the operations of our suppliers, or our operations violate
applicable laws or regulations, including food, drug and cosmetic safety laws, or raise potential health and safety-related issues,
including improper storage, product mishandling, contamination or other adulteration, or when products could cause injury, illness or
death. Any recall may require significant management attention, and we could experience significant costs, lost sales, compliance or
enforcement actions by governmental authorities which could result in fines or other penalties, and/or product liability legal claims
and consumer lawsuits. Recalls may also subject us to public claims of false or deceptive advertising and other criticism. A significant
product liability or other legal judgment against us, a regulatory enforcement action or a product recall could materially and adversely
affect our reputation, financial condition and/or results of operations. Moreover, the negative publicity surrounding assertions against
the products we sell or the standards we uphold could materially and adversely affect our business, reputation and/or profitability.
Additionally, any product recall may lead to increased scrutiny of our operations by regulatory agencies, requiring further
management attention and potential legal fees and other expenses.
We have experienced the foregoing risks in connection with a retail-level recall that was initiated on February 18, 2022 in relation
to our Family Dollar Distribution Center 202 in Arkansas (“DC 202”). For more information, see “Litigation, arbitration and
government proceedings may adversely affect our business, financial condition and/or results of operations” on page 17 which
includes, among other things, a description of legal proceedings relating to issues associated with DC 202.
Our business and results of operations could be materially harmed if we experience a decline in consumer confidence and
spending as a result of consumer concerns about the quality and safety of our products or our brand standards.
We could experience a decline in consumer confidence and spending if our customers become concerned about the quality and
safety of the products we sell. To date, other than with respect to the stores temporarily closed to permit the removal and destruction of
relevant inventory, we have not experienced significant lost sales in connection with the Recall, but there can be no assurances that
consumer confidence in the quality and safety of our products resulting from the Recall will not decline in the future. If there is a
decline in consumer confidence in our products or brands, our reputation may be adversely affected and we may experience additional
lost sales which could have a material adverse impact on our business and results of operations.
Inflation or other adverse change or downturn in economic conditions could impact our sales or profitability.
A deterioration in economic conditions could reduce consumer spending or cause customers to shift their spending to products we
either do not sell or do not sell as profitably. Adverse economic conditions such as a recession could disrupt consumer spending and
significantly reduce our sales, decrease our inventory turnover, cause greater markdowns or reduce our profitability due to lower
margins. Other factors that could result in or exacerbate adverse economic conditions include inflation, higher unemployment,
consumer debt levels, trade disputes, as well as adverse climate or weather conditions, worsening or new epidemics, terrorism or
international tensions, including armed conflict and economic sanctions.
Furthermore, factors that could adversely affect consumer disposable income could decrease our customers’ spending on products
we sell most profitably. In fiscal 2022, we experienced a material shift in consumer purchasing from higher-margin discretionary
merchandise to lower-margin consumable goods which has negatively impacted our product mix and margins. Factors that could
reduce our customers’ disposable income and over which we exercise no influence include but are not limited to, inflation in food,
housing, fuel or other energy costs, increased unemployment, increases in interest rates, lack of available credit, higher tax rates and
other changes in tax laws, increasing healthcare costs, and changes in, decreases in, or elimination of, government subsidies such as
unemployment and food assistance programs.
Although governmental authorities adopted substantial measures, including fiscal and monetary stimulus, to provide economic
assistance to individual households and businesses and support economic stability during the COVID-19 pandemic, certain of the
government assistance payments to households were temporary and were permitted to expire. There can be no assurance that current
or future governmental efforts to support the economy during the pandemic or a recession will be sufficient to support future
consumer spending at levels experienced previously or mitigate the negative effect of the pandemic on the economy. If consumer
spending on the goods we sell declines as a result, there could be a material adverse impact on our business and results of operations.
Many of the factors identified above that affect disposable income, as well as merchandise costs, commodity rates, transportation
costs (including the costs of diesel fuel), costs of labor, insurance and healthcare, foreign exchange rate fluctuations, lease costs,
barriers or increased costs associated with international trade and other economic factors also affect our ability to implement our
corporate strategy effectively, our cost of goods sold and our selling, general and administrative expenses, and may have other adverse
consequences which we are unable to fully anticipate or control, all of which may adversely affect our sales or profitability. We have
limited or no ability to control many of these factors.
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If the COVID-19 pandemic and associated disruptions worsen or continue longer than expected, there could be a material adverse
impact on our business and results of operations.
The continuing COVID-19 pandemic arising from a novel strain of coronavirus and its variants has caused on-going direct and
indirect economic disruptions that have adversely affected, and are expected to continue to adversely affect, elements of our business.
The COVID-19 pandemic, related public health measures and associated economic and social impacts have already contributed to,
among other things, significant increases in the cost of operating our stores and distribution centers, disruptions in the patterns of
consumer demand and traffic, and an increase in demand for online sales (which is an insignificant part of our business), home
deliveries (which we began providing in 2021 through our partnership with Instacart) or curbside deliveries (which we do not offer),
and changes in the labor markets.
There continues to be uncertainty and unpredictability about the lingering impact of COVID-19-related issues on our financial and
operating results in future periods. If the pandemic worsens or continues longer than expected (as new variants emerge), governments
may reinstate or extend business or personal restrictions, and we could be forced to curtail or restrict operations or incur additional
costs. If major new variants emerge, we might also experience new disruptions in our supply chain and sources of supply, suffer
facility closures or encounter additional difficulties in hiring or retaining the workforce required for our business. These
circumstances, if applicable for an extended duration or across significant parts of our operating footprint, or if they fall during
particularly meaningful holiday seasons, could have a material adverse effect on our business and results of operations.
We are unable to predict the full extent to which COVID-19-related issues will affect the economy and our customers, associates,
suppliers, vendors, other business partners or our business, results of operations and financial condition. If the economic consequences
of the pandemic linger and/or worsen, it could amplify many of the other risks described in this report.
Risks associated with our domestic and foreign suppliers could adversely affect our financial performance.
We are dependent on our vendors, including direct ship vendors, to supply merchandise in a timely and efficient manner. If a
vendor fails to deliver on its commitments due to financial or other difficulties, we could experience merchandise shortages which
could lead to lost sales or increased merchandise costs if alternative sources must be used.
We rely on the timely availability of imported goods at favorable wholesale prices. Merchandise imported directly typically
accounts for approximately 41%-43% of our Dollar Tree segment’s total retail value purchases and approximately 15%-17% of our
Family Dollar segment’s total retail value purchases. In addition, we believe that a significant portion of our goods purchased from
domestic vendors is imported. Imported goods are generally less expensive than domestic goods and result in higher profit margins. A
disruption in the flow of our imported merchandise or an increase in the cost of those goods may significantly decrease our profits.
Risks associated with our reliance on imported goods may include disruptions in the flow of or increases in the cost of imported goods
because of factors such as:
•
•
•
•
•
•
•
duties, tariffs or other restrictions on trade, including Section 301 tariffs that have already been imposed on imported
Chinese goods;
raw material shortages, work stoppages, government restrictions, strikes and political unrest, including any impact on
vendors or shipping arising from epidemics, such as the COVID-19 pandemic;
economic crises in the United States or abroad and international disputes or conflicts, including war and economic
sanctions;
changes in currency exchange rates or government policies and local economic conditions, including inflation (including
energy prices and raw material costs) in the country of origin;
potential changes to international trade agreements or the failure of the United States to maintain normal trade relations
with China and other countries;
changes in leadership and the political climate in countries from which we import products and their relations with the
United States; and
failure of manufacturers outside the United States to meet food, drug and cosmetic safety and labeling requirements or
environmental standards set by government regulators or consumer expectations.
Our supply chain may be disrupted by changes in United States trade policy with China.
We rely on domestic and foreign suppliers to provide us with merchandise in a timely manner and at favorable prices. Among our
foreign suppliers, China is the source of a substantial majority of our imports. A disruption in the flow of our imported merchandise
from China or an increase in the cost of those goods may significantly decrease our profits.
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While the United States scaled back punitive Section 301 tariffs on certain Chinese imports based on an agreement reached with
China in 2020, the imposition of any new U.S. tariffs on Chinese imports or the taking of other actions against China in the future, and
any responses by China, could impair our ability to meet customer demand and could result in lost sales or an increase in our cost of
merchandise, which would have a material adverse impact on our business and results of operations.
Our growth is dependent on our ability to increase sales in existing stores and to expand our square footage profitably.
Existing store sales growth is critical to good operating results and is dependent on a variety of factors, including merchandise
quality, relevance and availability, store operations and customer satisfaction. In addition, increased competition could adversely
affect our sales. Failure to meet our sales targets could result in our needing to record material non-cash impairment charges related to
our intangible assets. We believe increasing sales at Family Dollar depends in significant part on several initiatives, including price
reductions, some of which remain in the early stages.
Our highest sales periods are during the Christmas and Easter seasons, and we generally realize a disproportionate amount of our
net sales and our operating and net income during the fourth quarter. In anticipation, we stock extra inventory and hire many
temporary employees to prepare our stores and help ship product from our distribution centers. A reduction in sales during these
periods could adversely affect our operating results, particularly operating and net income, to a greater extent than if a reduction
occurred at other times of the year. Untimely merchandise delays due to receiving or distribution problems could have a similar effect.
When Easter is observed earlier in the year, the selling season is shorter and, as a result, our sales could be adversely affected.
Easter was observed on April 17, 2022 and will be observed on April 9, 2023.
Expanding our square footage profitably depends on a number of uncertainties, including our ability to locate, lease, build out and
open or expand stores in suitable locations on a timely basis under favorable economic terms. We also open or expand stores within
our established geographic markets, where new or expanded stores may draw sales away from our existing stores. Obtaining an
increasing number of profitable stores is an ever-increasing challenge.
In addition, our expansion is dependent upon third-party developers’ abilities to acquire land, obtain financing, and secure
necessary permits and approvals. We have experienced higher commodity and other costs associated with the build-out of new stores
and the renovation of existing stores. We have also experienced delays in new store openings and the renovation of existing stores due
to inspection, permitting and contractor delays. In addition, we have experienced delays in new store openings due to limitations on
the availability of certain fixtures and equipment. We anticipate these increased costs and delays may continue for the foreseeable
future, which could adversely affect our sales and profitability. Further, we may not manage our expansion effectively, and our failure
to achieve our expansion plans could materially and adversely affect our business, financial condition and results of operations.
Our profitability is affected by the mix of products we sell.
Our gross profit margin decreases when we increase the proportion of higher cost goods we sell. For example, some of our
consumable products carry higher costs than other goods, so our gross profit margin will be negatively impacted as the percentage of
our sales from higher cost consumable products increases. Imported merchandise and private label goods generally carry lower costs
than domestic goods. Our product mix is affected by the supply of goods, including imported goods, and could be negatively impacted
by various factors, including those described under “We are experiencing higher costs and disruptions in our distribution network,
which have had and could have an adverse impact on our sales, margins and profitability” on page 11.
In our Family Dollar segment, our success also depends on our ability to select and obtain sufficient quantities of relevant
merchandise at prices that allow us to sell such merchandise at profitable and appropriate prices. A sales price that is too high causes
products to be less attractive to our customers and our sales at Family Dollar could suffer. We are continuing to refine our pricing
strategy at Family Dollar to drive customer loyalty and have a strategic pricing team to improve our value and to increase profitability.
Our inability to successfully implement our pricing strategies at Family Dollar could have a negative effect on our business.
In addition, our Family Dollar segment has a substantial number of private brand items and the number of such items has been
increasing. We believe our success in maintaining broad market acceptance of our private brands depends on many factors, including
our pricing, costs, quality and customer perception. We may not achieve or maintain our expected sales for our private brands and, as a
result, our business and results of operations could be adversely impacted. Additionally, the increased number of private brands could
negatively impact our existing relationships with our non-private brand suppliers.
Pressure from competitors may reduce our sales and profits.
The retail industry is highly competitive. The marketplace is highly fragmented as many different retailers compete for market
share by utilizing a variety of store formats and merchandising strategies, including mobile and online shopping. We expect
competition to increase in the future. There are no significant economic barriers for others to enter our retail sector. Some of our
current or potential competitors have greater financial resources than we do. We cannot guarantee that we will continue to be able to
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compete successfully against existing or future competitors, and we believe that doing so may require substantial capital expenditures.
Please see “Item 1. Business” for further discussion of the effect of competition on our operations.
Our business could be adversely affected if we fail to attract and retain qualified associates and key personnel.
Our growth and performance are dependent on the skills, experience and contributions of our associates, executives and key
personnel for both Dollar Tree and Family Dollar. Various factors, including the pandemic, constraints on overall labor availability,
wage rates, regulatory or legislative impacts, and benefit costs could impact our ability to attract and retain qualified associates at our
stores, distribution centers and corporate offices.
We are experiencing a shortage of associates and applicants to fill staffing requirements at our distribution centers, stores and
corporate offices due to the current labor shortage affecting businesses. This has adversely affected the operating efficiency of our
distribution centers and stores and our ability to transport merchandise from our distribution centers to our stores. If we are unable to
attract and retain qualified associates for our distribution centers and stores in the future, our business and results of operations may be
adversely affected.
Risks Relating to Strategic Initiatives
We may not be successful in implementing or in anticipating the impact of important strategic initiatives, and our plans for
implementing such initiatives may be altered or delayed due to various factors, which may have an adverse impact on our business
and financial results.
We completed the conversion of our predominant product price from $1.00 to $1.25 for the vast majority of merchandise in all
Dollar Tree stores during the first quarter of fiscal 2022. Although to date the increase in the price point has more than offset the
decline in the number of units sold, there can be no assurances that the price increase will not have an adverse effect on our business in
the future. In addition, we are continuing to implement our important strategic initiatives that are designed to create growth, improve
our results of operations and drive long-term shareholder value, including:
•
•
•
•
•
•
the expansion of a multi-price initiative in Dollar Tree stores;
the introduction of selected Dollar Tree merchandise into Family Dollar stores;
the roll-out of the Combo Store format that combines a Dollar Tree store and Family Dollar store in a single location;
the renovation of Family Dollar stores to the H2 and other formats;
our partnership with Instacart to provide home delivery of merchandise purchased online; and
our plans relating to new store openings for Dollar Tree and Family Dollar generally.
The implementation, timing and results of these strategic initiatives are subject to various risks and uncertainties, including the
acceptance of multi-priced merchandise by Dollar Tree customers; customer acceptance of new store concepts and merchandise
offerings; construction and permitting delays relating to new and renovated stores; the availability of desirable real estate locations for
lease at reasonable rates; the lingering impact of the COVID-19 pandemic and associated economic issues; the success of our
strategies; and other factors beyond our control. In addition, several of these initiatives depend on the timeliness, cost and availability
of adequate levels of the appropriate domestic and imported merchandise, our ability to execute on our plans and expectations with
respect to those initiatives and our ability to implement those initiatives within budget and with the expected return. To the extent that
shipping delays, supply chain disruptions and other distribution logistics adversely affect the availability of merchandise necessary to
implement our strategic initiatives, we may delay or reduce our planned rate of implementation of one or more of those initiatives.
In addition, building on our current initiatives, we are currently developing plans to make additional multi-year strategic
investments across the Dollar Tree and Family Dollar banners to further position the company for long-term sustained growth. We
anticipate that these investments will relate to four key areas of our business: our associates, our distribution center network and
supply chain, our product pricing and value proposition, and our technology infrastructure. Within these areas, the focus of these
investments is expected to be on associate wages, improved store execution, enhanced safety and working conditions, increased supply
chain efficiencies, competitive pricing at Family Dollar, and enhancements to our systems infrastructure. There is a risk that our
investments in these initiatives may increase our costs and reduce our margins and profitability if the initiatives do not achieve their
intended purposes.
There can be no assurance that we will be able to implement important strategic initiatives in accordance with our expectations or
that they will generate expected returns, which may result in an adverse impact on our business and financial results.
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We could incur losses due to impairment of long-lived assets, goodwill and intangible assets.
Under U.S. generally accepted accounting principles, we review our long-lived assets for impairment whenever economic events
or changes in circumstances indicate that the carrying value of an asset may not be recoverable. Identifiable intangible assets with an
indefinite useful life, including goodwill, are not amortized but are evaluated annually for impairment. A more frequent evaluation is
performed if events or circumstances indicate that impairment could have occurred.
Should we experience business challenges or significant negative industry or general economic trends, we could recognize
impairments to our goodwill, intangible assets and other long-lived assets. We monitor key assumptions and other factors utilized in
our goodwill impairment analysis, and if business or other market conditions develop that are materially different than we currently
anticipate, we will conduct an additional impairment evaluation. Any reduction in or impairment of the value of goodwill or intangible
assets will result in a charge against earnings, which could have a material adverse impact on our reported results of operations and
financial condition. For additional information on goodwill impairments, please refer to Note 1 to our consolidated financial
statements under the caption “Goodwill and Nonamortizing Intangible Assets.”
Cybersecurity and Technology Risks
We rely on computer and technology systems in our operations, and any material failure, inadequacy, interruption or security
failure of those systems, including because of a cyber-attack, could harm our ability to effectively operate and grow our business
and could adversely affect our financial results.
We rely extensively on our computer and technology systems and, in certain cases, those of third-party service providers to
support nearly all key functions in our business, including managing inventory, operating our stores, processing credit card and
customer transactions and summarizing results. Our ability to effectively manage our business and coordinate the distribution and sale
of our merchandise depends significantly on the capabilities, confidentiality, integrity and availability of these systems and on our
ability to successfully acquire and integrate upgraded or replacement systems as needed to support our business requirements and
strategic initiatives. We also rely on third-party providers and platforms for many of these computer and technology systems and
support.
Although we have operational safeguards in place, they may not be effective in preventing the failure of these systems or
platforms to operate effectively and be available to us. This may be as the result of deliberate breach in the security of these systems or
platforms by bad actors, including through malicious software, ransomware and other cyber-attacks, which may originate from state
actors and may increase during times of international tensions. Failures may also be caused by various other factors, including power
outages, catastrophic events, physical theft, computer and network failures, inadequate or ineffective redundancy, obsolescence or
failure of vendor support, problems with transitioning to upgraded or replacement systems or platforms and related business process
changes, flaws in third-party software or services, errors or improper use by our employees or third-party service providers.
We plan to make investments in our information technology systems in fiscal 2023 to support the growth of our business. If our
information technology systems are not adequate to support our strategic initiatives, our growth and the success of our initiatives may
be adversely affected. If these systems are damaged or fail to function adequately, we may incur substantial costs to repair or replace
them, may experience loss of critical data and interruptions or delays in our ability to manage inventories or process customer
transactions and may receive negative publicity, which could adversely affect our results of operations and business. In addition,
remediation of any problems with our systems could take an extensive amount of time and could result in significant, unplanned
expenses.
The potential unauthorized access to customer information may violate privacy laws and could damage our business reputation,
subject us to negative publicity, litigation and costs, and adversely affect our results of operations or business.
Many of our information technology systems, such as those we use for our point-of-sale, web and mobile platforms, including
online and mobile payment systems, and for administrative functions, including human resources, payroll, accounting, and internal
and external communications, contain personal, financial or other confidential information that is entrusted to us by our customers and
associates as well as proprietary and other confidential information related to our business and suppliers.
The security measures that we and/or our third-party suppliers put in place cannot provide absolute security to safeguard our
customers’ personal information (including debit and credit card information), our associates’ private data, suppliers’ data, and our
business records and intellectual property and other sensitive information.
Cybercriminals, who may include well-funded state actors or organized criminal groups, are rapidly evolving their cyberattack
techniques and tactics, which are becoming increasingly more sophisticated and challenging to detect. We and/or our third-party
suppliers may be vulnerable to and unable to anticipate, detect, and appropriately respond to cyber-security attacks, including data
security breaches and data loss.
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We are also subject to laws and regulations in various jurisdictions in which we operate regarding privacy, data protection and
data security, including those related to the collection, storage, handling, use, disclosure, transfer and security of personal data. These
laws permit regulators to assess potentially significant fines for data privacy violations and may create a right for individuals to bring
class action suits seeking damages for violations. Our efforts to comply with consumer privacy laws and other similar privacy and data
protection laws may impose significant costs and challenges that are likely to increase over time, and we could incur substantial
penalties or be subject to litigation related to violation of existing or future data privacy laws and regulations.
Likewise, we are subject to the Payment Card Industry Data Security Standards (“PCI-DSS”) which is mandated by the card
brands and administered through the Payment Card Industry Security Standards Council. As a Level 1 Merchant, we are subject to
assessment and attestation for PCI-DSS compliance on an annual basis. A failure to meet and maintain compliance with PCI-DSS
requirements could result in our inability to continue to accept credit cards as a form of payment, which would materially impact our
ability to sell our products. In addition, our credibility and reputation within the business community and with our customers may be
affected, which could result in our customers discontinuing the use of debit or credit cards in our stores or not shopping in our stores
altogether. Non-compliance with PCI-DSS requirements also may subject us to recurring and accumulating fines until compliance is
achieved. Considerable investments to strengthen our information security could also be required should we ever be deemed to be non-
compliant.
Moreover, significant additional capital investments and other expenditures could also be required to continue to strengthen our
overall cyber-security posture and prevent future security breaches, including costs associated with additional security technologies,
personnel, experts and services (e.g., credit-monitoring services) for those whose data has been breached. These costs, which could be
material, could adversely impact our results of operations in the period in which they are incurred and may not meaningfully limit the
success of future attempts to breach our information technology systems.
The unavailability of our information technology systems or the failure of those systems or software to perform as required to
support our business needs for any reason and any inability to respond to, or recover from, such events, could disrupt our business,
decrease performance and increase overhead costs. 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. If our information technology systems and processes are insufficiently
provisioned or improperly designed and implemented to support our business, our strategic initiatives may not deliver anticipated
results. Any of these factors could have a material adverse effect on our results of operations or business.
Legal and Regulatory Risks
Litigation, arbitration and government proceedings may adversely affect our business, financial condition and/or results of
operations.
Our business is subject to the risk of litigation and arbitration involving employees, consumers, suppliers, competitors,
shareholders, government agencies, or others through private actions, class actions, derivative actions, governmental investigations,
administrative proceedings, regulatory actions, mass arbitration or other similar actions.
In addition, due to the types of products that we sell, our operations are subject to regulatory oversight by the FDA, the USDA,
the Occupational Health and Safety Administration, and other federal, state, local and applicable foreign governmental authorities. If
such authorities believe that we have failed to comply with applicable regulations and/or procedures, they may require prompt
corrective action, and/or proceed directly to other forms of enforcement action, including the imposition of operating restrictions,
including a ceasing of operations in one or more facilities, enjoining and restraining certain violations of applicable law pertaining to
products, seizure of products, and assessing civil or criminal sanctions or penalties. Any adverse regulatory action, depending on its
magnitude, may restrict us from effectively selling our products and could have a material adverse effect on our business, financial
condition and/or results of operations.
From January 11, 2022 through February 11, 2022, DC 202 was inspected by the FDA and USDA. On February 11, 2022, the
FDA issued Form 483 observations primarily regarding rodent infestation at DC 202, as well as other items that require remediation.
In connection therewith, on February 18, 2022, we initiated a retail-level product recall of FDA and USDA-regulated products stored
and shipped to approximately 400 stores from DC 202 from January 1, 2021 through such date (the “Recall”). We temporarily closed
DC 202 for extensive cleaning, temporarily closed the affected stores to permit the removal and destruction of inventory subject to the
Recall, ceased sales of relevant inventory subject to the Recall, committed to the FDA to continue to cease the shipment of FDA-
regulated products from DC 202 until FDA approval is received, and initiated corrective actions at DC 202. In June 2022, we stopped
shipping to stores from DC 202 and have since closed the facility and disposed of all of the inventory that was in the facility. On
November 9, 2022 we received an FDA warning letter in connection with the DC 202 inspection. The conditions and issues detailed in
the warning letter are generally the same as those described in the Form 483 observations or were otherwise observed during the
inspection. The warning letter acknowledged certain remedial actions we have taken in response to the Form 483 observations,
including conducting the recall and closing the facility. We are taking this matter extremely seriously and continue to cooperate with
the FDA. If the FDA and/or other governmental authorities are not satisfied with these corrective actions or observe issues in our other
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distribution centers or stores, they may initiate other enforcement or administrative actions, which may have a material adverse effect
on our business, financial condition and/or results of operations. Also see “We may stop selling or recall certain products for safety-
related or other issues” on page 12.
Since February 22, 2022, we have received 14 putative class action complaints related to issues noted above associated with DC
202. The lawsuits are proceeding in federal court in Tennessee using the federal court’s multi-district litigation (“MDL”) process. An
amended consolidated complaint seeking class action status was filed October 17, 2022 alleging violations of the Mississippi,
Arkansas, Louisiana, Tennessee, Alabama and Missouri consumer protection laws, breach of warranty, negligence, misrepresentation,
deception and unjust enrichment related to the sale of products that may be contaminated by virtue of rodent infestation and other
unsanitary conditions. Plaintiffs seek damages, attorney fees and costs, punitive damages and the replacement of, or refund of, money
paid to purchase the relevant products, and any other legal relief available for their claims (in each case in unspecified amounts),
including equitable and injunctive relief. On April 28, 2022, the State of Arkansas filed a complaint in state court alleging violations of
the Arkansas Deceptive Trade Practices Act, gross negligence and negligence, strict liability in tort, unjust enrichment and civil
conspiracy related to the same underlying matters as the putative class actions above. The State of Arkansas is seeking injunctive
relief, restitution, disgorgement, damages, civil penalties, punitive damages and suspension or revocation of our authorization to do
business in Arkansas.
We have defended and intend to continue defending ourselves vigorously in the foregoing litigations. We filed a motion to
dismiss the amended consolidated complaint and a ruling on the motion by the court is expected in early 2023. If our motion is denied
in whole or in part (including on appeal), the case would move to class certification, which we intend to oppose. We are unable to
determine at this time whether our motion to dismiss will be granted or whether a class can be certified. We do not believe that the
cases will, individually or in the aggregate, have a material adverse effect on our business or financial condition. However, we cannot
assure that these litigations, individually or in the aggregate, will not have a material adverse effect on our results of operations for the
period or year in which they are reserved or resolved.
On March 1, 2022, a federal grand jury subpoena was issued to us by the Eastern District of Arkansas requesting the production
of information, documents and records pertaining to pests, sanitation and compliance with law regarding certain of our procedures and
products. In connection with this matter, we have been investigating the condition of FDA-regulated product shipped from DC 202.
We are cooperating fully with the U.S. Department of Justice investigation, including having produced documents and provided
additional information. As part of this cooperation, we may engage in discussions with the government in an effort to reach a
negotiated resolution. Due to the inherent uncertainties associated with this matter, no assurance can be given as to the timing or
outcome of this matter, which could include penalties and company undertakings.
Our products could also cause illness or injury, harm our reputation, and subject us to litigation. We are dependent on our vendors
to ensure that the products we buy comply with all applicable safety standards. However, product liability, personal injury or other
claims may be asserted against us relating to product adulteration, product tampering, mislabeling, recall and other safety issues with
respect to the products that we sell, or with respect to our handling or storage of such products, including as a result of the issues
raised by the pending Arkansas FDA Matter (which has led to increased scrutiny of our operations by regulatory agencies, requiring
further management attention and potential legal fees and other expenses). A significant product liability, consumer fraud, or other
legal judgment against us, a related regulatory compliance or enforcement action or a product recall could materially and adversely
affect our reputation, financial condition and/or results of operations. Moreover, even if a product liability, consumer fraud or other
claim is unsuccessful, has no merit or is not pursued, the negative publicity surrounding assertions against the products we sell could
materially and adversely affect our reputation. We seek but may not be successful in obtaining contractual indemnification from our
vendors, where appropriate, or insurance coverage, and if we do not have adequate contractual indemnification or insurance available,
such claims could adversely affect our business, financial condition and/or results of operations. Our ability to obtain the benefit of
contractual indemnification from vendors may be hindered by our ability to enforce contractual indemnification obligations against
such vendors, for example because the vendors are overseas or lack financial resources. Our litigation-related expenses could increase
as well, which also could have a materially negative impact on our financial condition and/or results of operations even if a claim is
unsuccessful or is not fully pursued.
The outcome of such matters is difficult to assess or quantify. Plaintiffs in these types of lawsuits or proceedings may seek
recovery of very large or indeterminate amounts, and the magnitude of the potential loss may remain unknown for substantial periods
of time. In addition, certain of these matters, if decided adversely to us or settled by us, may result in an expense that may be material
to our financial statements as a whole or may negatively affect our operating results if changes to our business operations are required.
If we experienced a material loss arising from these matters, we could also become subject to shareholder derivative suits and
securities litigation. The cost to defend current and future litigation or proceedings, including arbitrations, may be significant. There
also may be adverse publicity associated with litigation, including litigation related to product or food safety, customer information
and environmental or safety requirements, which could negatively affect customer perception of our business, regardless of whether
the allegations are valid or whether we are ultimately found liable.
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For a discussion of current legal matters, please see “Item 3. Legal Proceedings” and Note 4 to our consolidated financial
statements under the caption “Contingencies.” Resolution of these matters, if decided against us, could have a material adverse effect
on our results of operations, accrued liabilities or cash flows.
Changes in laws and government regulations or in other stakeholder expectations concerning business conduct, or our failure to
adequately estimate the impact of such changes or expectations, could increase our expenses, expose us to legal risks or otherwise
adversely affect us.
Our business is subject to a wide array of laws and regulations, and changes to those laws and regulations could have an adverse
effect on our business. For example, various municipalities regulate the placement or proximity of our stores or may place
requirements on the types of products we sell. In addition, the adoption of new environmental laws and regulations in connection with
climate change and the proposed transition to a low carbon economy, including any federal or state laws enacted to regulate or tax
greenhouse gas emissions, could significantly increase our operating or merchandise costs or reduce the demand for our products.
These laws and regulations may include, but are not limited to, requirements relating to hazardous waste materials, recycling, single-
use plastics, extended producer responsibility, use of refrigerants, carbon pricing or carbon taxes, product energy efficiency standards
and product labeling. If carbon pricing or carbon taxes are adopted, there is a significant risk that the cost of merchandise from our
suppliers will increase and adversely affect our business and results of operations.
In addition, significant changes in laws or regulations that impact our relationship with our workforce, such as minimum wage
increases, health care, labor laws or workplace safety, could increase our expenses and adversely affect our operations. An increase in
federal corporate tax rates also could adversely affect our profitability. Changes in other regulatory areas, such as consumer credit,
privacy and information security, product and food safety, energy or environmental protection, and tariff and other trade restrictions,
among others, could cause our expenses to increase or result in product recalls. Further, if we fail to comply with applicable laws and
regulations, including wage and hour laws, we could be subject to legal risk, including government enforcement action and class
action civil litigation, which could adversely affect our results of operations.
We operate in an increasingly regulated environment across a large and diverse geographic footprint, and we devote substantial
resources to ensure effective compliance. If our programs do not adequately anticipate emerging regulatory expectations or
requirements, or if we fail to appropriately design and maintain an effective enterprise compliance program and system of controls to
prevent and detect non-compliance, including implementing and communicating a strong culture of compliance, there is a possibility
any failure to comply with applicable laws and regulations would subject us to enhanced legal risks and adverse outcomes.
In addition to the legal requirements above, we are subject to the influence of a wide range of non-governmental stakeholders
whose expectations on topics related to those described above may impact our business. We may be pressured by our shareholders,
associates or customers, or others in the communities where we operate to adopt practices or policies that are more prescriptive than
those required by law. Similar influences may impact our merchandise and other vendors which would indirectly affect our business.
To the extent that these influences result in changes to our operations, we could experience higher costs, and there can be no assurance
we will experience offsetting positive effects on our results of operations. If our stakeholders perceive that we have not adequately
addressed their expectations, our reputation could be negatively affected which could have an adverse impact on our business and
results of operations.
Risks Relating to Indebtedness
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.
Our substantial level of indebtedness could adversely affect our ability to fulfill our obligations and have a negative impact on our
financing options and liquidity position. As of January 28, 2023, our total indebtedness is $3.45 billion. We may in the future incur
substantial additional indebtedness. In addition, we have $1.5 billion of additional borrowing availability under our revolving credit
facility, less amounts outstanding for letters of credit totaling $4.4 million.
In addition, our credit ratings impact the cost and availability of future borrowings and, accordingly, our cost of capital. Our
ratings reflect the opinions of the ratings agencies of our financial strength, operating performance and ability to meet our debt
obligations. There can be no assurance that we will achieve a particular rating or maintain a particular rating in the future.
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.
The agreements that govern our indebtedness contain a number of restrictive covenants that impose significant operating and
financial restrictions on us and may limit our ability to engage in acts that may be in our long-term best interests, including, among
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other things, restrictions on our ability to incur liens; make changes in lines of business, subject to certain exceptions; and consolidate
or merge with or into, or sell all or substantially all of our assets to, another person.
In addition, certain of these agreements require us to comply with certain financial maintenance covenants. Our ability to satisfy
these financial maintenance covenants can be affected by events beyond our control, and we cannot assure you that we will meet them.
A breach of the covenants under these agreements could result in an event of default under the applicable indebtedness, which, if
not cured or waived, could result in us having to repay our borrowings before their due dates. Such default may allow the debt holders
to accelerate the related debt and may result in the acceleration of any other debt to which a cross-acceleration or cross-default
provision applies. If we are forced to refinance these borrowings on less favorable terms or if we were to experience difficulty in
refinancing the debt prior to maturity, our results of operations or financial condition could be materially affected. In addition, an
event of default under our credit facilities may permit the lenders to terminate all commitments to extend further credit. In the event
our lenders or holders of notes accelerate the repayment of such borrowings, we cannot assure you that we will have sufficient assets
to repay such indebtedness.
As a result of these restrictions, we may be limited in how we conduct our business; unable to raise additional debt financing to
operate during general economic or business downturns; or unable to compete effectively, take advantage of new business
opportunities or grow in accordance with our plans.
Our variable-rate indebtedness subjects us to interest rate risk, which could cause our annual debt service obligations to increase
significantly.
Our revolving credit facility is subject to variable rates that expose us to interest rate risk. We may also incur additional
indebtedness subject to variable rates in the future. Interest rates have increased in fiscal 2022 and further increases are anticipated.
When interest rates increase, our debt service obligations on the variable rate indebtedness increase even though the amount borrowed
remains the same, and our net income decreases. Although we may enter into interest rate swaps involving the exchange of floating for
fixed-rate interest payments, to reduce interest rate volatility, we cannot assure you we will choose to or be able to do so.
Borrowings under our revolving credit facility bear interest at a rate derived from the Secured Overnight Financing Rate
(“SOFR”). As a result of the discontinuation of LIBOR as a reference rate in June 2023, there is uncertainty as to whether the
transition from LIBOR to SOFR or another reference rate will result in financial market disruptions or higher interest costs to
borrowers, which could increase our interest expense and have an adverse effect on our business and results of operations.
Additionally, any successor rate to SOFR under our revolving credit facility may not have the same characteristics as SOFR or
LIBOR. As a result, the amount of interest we may pay on our revolving credit facility is difficult to predict.
Risks Relating to Our Common Stock
Our business or the value of our common stock could be negatively affected as a result of actions by shareholders.
We value constructive input from investors and regularly engage in dialogue with our shareholders regarding strategy and
performance. The Board of Directors and management team are committed to acting in the best interests of all of our shareholders.
There is no assurance that the actions taken by the Board of Directors and management in seeking to maintain constructive
engagement with our shareholders will be successful. Shareholders who disagree with our strategy or the way we are managed may
seek to effect change in the future, through various strategies that could include private engagement, publicity campaigns, proxy
contests, and litigation. Responding to these actions may be costly and time-consuming, disrupt our operations, divert the attention of
our Board of Directors, management and employees, and impact our relationship with investors, vendors, and other third parties.
Shareholder engagement also may result in changes to our business plans, operations, strategies, initiatives, governance, management
and risk factors. The perceived uncertainty as to our future direction resulting from these actions of shareholders could also affect the
market price and volatility of our common stock.
The price of our common stock is subject to market and other conditions and may be volatile.
The market price of our common stock may fluctuate significantly in response to a number of factors. These factors, some of
which may be beyond our control, include the perceived prospects and actual results of operations of our business; changes in
estimates of our results of operations by analysts, investors or us; trading activity by our large shareholders; trading activity by
sophisticated algorithms (high-frequency trading); our actual results of operations relative to estimates or expectations; actions or
announcements by us or our competitors; litigation and judicial decisions; legislative or regulatory actions or changes; and changes in
general economic or market conditions. In addition, the stock market in general has from time to time experienced extreme price and
volume fluctuations. These market fluctuations could reduce the market price of our common stock for reasons unrelated to our
operating performance.
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Certain provisions in our Articles of Incorporation and By-Laws could delay or discourage a change of control transaction that
may be in a shareholder’s best interest.
Our Articles of Incorporation and By-Laws contain provisions that may delay or discourage a takeover attempt that a shareholder
might consider in his/her best interest. These provisions, among other things:
•
•
•
provide that only the Board of Directors, the chairman or vice chairman of the Board, the chief executive officer or
shareholders who own 15% or more of the outstanding shares of our common stock may call special meetings of the
shareholders;
establish certain advance notice procedures for nominations of candidates for election as directors and for shareholder
proposals to be considered at shareholders’ meetings; and
permit the Board of Directors, without further action of the shareholders, to issue and fix the terms of preferred stock,
which may have rights senior to those of the common stock.
However, we believe that these provisions allow our Board of Directors to negotiate a higher price in the event of a takeover
attempt which would be in the best interest of our shareholders.
Item 1B. Unresolved Staff Comments
None.
Item 2. Properties
As of January 28, 2023, we operated 16,096 stores across the contiguous United States and the District of Columbia and operated
244 stores within five Canadian provinces.
The Dollar Tree segment includes 8,134 stores operating under the Dollar Tree and Dollar Tree Canada brands with stores
predominantly ranging from 8,000 - 10,000 selling square feet. The Family Dollar segment includes 8,206 stores operating under the
Family Dollar brand with stores predominantly ranging from 6,000 - 8,000 selling square feet. For additional information on store
counts and square footage by segment for the years ended January 28, 2023 and January 29, 2022, see “Item 7. Management’s
Discussion and Analysis of Financial Condition and Results of Operations” under the caption “Overview.”
We lease the vast majority of our stores and expect to lease the majority of our new stores as we expand. Our leases typically
provide for a short initial lease term, generally between five and ten years, with options to extend; in some cases we have initial lease
terms of up to fifteen years. We believe this leasing strategy enhances our flexibility to pursue various expansion opportunities
resulting from changing market conditions. As current leases expire, we believe that we will be able to obtain lease renewals, if
desired, for present store locations, or to obtain leases for equivalent or better locations in the same general area.
Our network of distribution centers is strategically located throughout the United States to support our stores. As of January 28,
2023, we operated 25 distribution centers occupying a total of 23.2 million square feet, 15 of which are primarily dedicated to serving
our Dollar Tree stores and ten distribution centers primarily serve our Family Dollar stores. We expect future distribution centers to be
built with the capability to service both Dollar Tree and Family Dollar stores. Our distribution network supports multiple store formats
including H2, Combo Stores and Dollar Tree Plus. We ship to our H2 format stores from our Family Dollar distribution centers and
we ship to our Dollar Tree Plus format stores from our Dollar Tree distribution centers. Our Combo Stores receive shipments from
both Dollar Tree and Family Dollar distribution centers. Except for 0.4 million square feet of our distribution center in San
Bernardino, California and short-term leases for offsite facilities, all of our distribution center capacity is owned.
Each of our distribution centers contains advanced materials handling technologies, including radio-frequency inventory tracking
equipment and specialized information systems. With the exception of three of our facilities, each of our distribution centers in the
United States also contains automated conveyor and sorting systems.
Distribution services in Canada are provided by a third party from facilities in British Columbia and Ontario.
Our store support center in Chesapeake, Virginia is located in an approximately 0.5 million square foot office tower that we own.
For more information on financing of our new, expanded and renovated stores, and distribution centers, see “Item 7.
Management’s Discussion and Analysis of Financial Condition and Results of Operations” under the caption “Funding
Requirements.”
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Item 3. Legal Proceedings
For information regarding legal proceedings in which we are involved, please see Note 4 to the consolidated financial statements
included elsewhere in this Annual Report on Form 10-K, under the caption “Contingencies.” For a further description of certain of
these matters and their impact, see “Item 1A. Risk Factors”: “We may stop selling or recall certain products for safety-related or other
issues” on page 12 and “Litigation, arbitration and government proceedings may adversely affect our business, financial condition
and/or results of operations” on page 17.
Item 4. Mine Safety Disclosures
None.
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PART II
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities
Our common stock is traded on The Nasdaq Global Select Market® under the symbol “DLTR.” As of March 3, 2023, we had
2,125 shareholders of record.
Issuer Purchases of Equity Securities
During fiscal 2022, fiscal 2021 and fiscal 2020, we repurchased 4,613,696, 9,156,898 and 3,982,478 shares of common stock,
respectively, on the open market at a total cost of $647.5 million, $950.0 million and $400.0 million, respectively. The fiscal 2022
share repurchases occurred prior to the fourth quarter. As of January 28, 2023, we had $1.85 billion remaining under our Board
repurchase authorization. The repurchase authorization does not have an expiration date.
Stockholder Matters
We anticipate that substantially all of our cash flow from operations in the foreseeable future will be retained for the development
and expansion of our business, the repayment of indebtedness and, as authorized by our Board of Directors, the repurchase of stock.
We do not anticipate paying cash dividends on our common stock in the foreseeable future.
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Stock Performance Graph
The following graph sets forth the yearly percentage change in the cumulative total shareholder return on our common stock
during the five fiscal years ended January 28, 2023, compared with the cumulative total returns of the S&P 500 Index and the S&P
500 Retailing Index. The comparison assumes that $100 was invested in our common stock on February 3, 2018, and, in each of the
foregoing indices on February 3, 2018, and that dividends were reinvested. The stock price performance shown in the graph is not
necessarily indicative of future price performance.
February 3,
2018
February 2,
2019
February 1,
2020
January 30,
2021
January 29,
2022
January 28,
2023
Dollar Tree, Inc.
S&P 500 Index
S&P 500 Retailing Index
$
100.00 $
100.00
100.00
88.84 $
97.69
108.42
80.01 $
118.87
127.45
93.41 $
139.37
180.19
118.06 $
171.83
195.77
138.17
157.71
160.10
Year Ended
Item 6. Reserved
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Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations
This section of Form 10-K generally discusses 2022 and 2021 events and results and year-to-year comparisons between 2022 and
2021. Discussions of 2020 items and year-to-year comparisons between 2021 and 2020 that are not included in this Form 10-K can be
found in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Part II, Item 7 of our Annual
Report on Form 10-K for the fiscal year ended January 29, 2022.
In Management’s Discussion and Analysis, we explain the general financial condition and the results of operations for our
company, including, factors that affect our business, analysis of annual changes in certain line items in the consolidated financial
statements, performance of each of our operating segments, expenditures incurred for capital projects and sources of funding for future
expenditures. As you read Management’s Discussion and Analysis, please refer to our consolidated financial statements and related
notes, included in “Item 8. Financial Statements and Supplementary Data” of this Form 10-K.
Initiatives and Recent Developments
Our initiatives, as well as other recent developments that have had or are expected to have an impact on our business or results of
operations are listed below:
•
Dollar Tree
◦
In September 2021, we announced our new $1.25 price point initiative and we completed the rollout of this
initiative to all Dollar Tree stores during the first quarter of fiscal 2022, increasing the price point on a majority
of our $1 merchandise to $1.25. To date, the increase in the price point has more than offset the decline in the
number of units sold. During fiscal 2022, we began investing in new products and modifying existing products
to provide greater value for our customers and increase customer traffic and store productivity. While our gross
margin was higher in the fourth quarter of fiscal 2022 compared with the fourth quarter of fiscal 2021, because
of the investments in new products, the increase was not as high as it was in the first three quarters of fiscal
2022 and we expect Dollar Tree’s gross margin to be lower in the first half of fiscal 2023.
◦ We began testing the Instacart online delivery service at Dollar Tree stores in the third quarter of fiscal 2021
and began rolling it out in the fourth quarter of fiscal 2021. As of January 28, 2023, the Instacart platform
covers more than 7,800 Dollar Tree stores. This enables our customers to shop online and receive same-day
delivery without having to visit a store.
◦
◦
In fiscal 2022, we continued to implement our Dollar Tree Plus initiative which introduces products priced at
the $3 and $5 price points and provides our customers with extraordinary value in discretionary categories. As
of January 28, 2023, we have approximately 2,500 Dollar Tree Plus stores. We plan to accelerate the
implementation of the Dollar Tree Plus initiative in fiscal 2023 by adding the concept to an additional 1,800, or
more, stores. In addition, beginning in fiscal 2022, we added $3, $4 and $5 frozen and refrigerated product to
3,500 stores.
The rollout of our Crafter’s Square initiative to all of our Dollar Tree stores was completed during fiscal 2020.
The Crafter’s Square assortment carries mark-ups which are higher than our average mark-up.
•
Family Dollar
◦
◦
◦
In fiscal 2022, we continued to implement our H2 initiative. Our H2 stores have significantly improved
merchandise offerings throughout the store, including the addition of Dollar Tree $1.25 merchandise items and
establishing a minimum number of freezer and cooler doors. These stores have higher customer traffic and
provide a higher average comparable store net sales lift, when compared to non-renovated stores, in the first
year following renovation. H2 stores perform well in a variety of locations and especially in locations where our
Family Dollar stores have been most challenged in the past. As of January 28, 2023, we have approximately
4,360 H2 stores.
Building on the success of the H2 format, in March 2021, we announced the development of a new combination
store format. Combo Stores leverage the strengths of the Dollar Tree and Family Dollar brands under one roof
to serve small towns across the country. We are taking Family Dollar’s great value and assortment and blending
in select Dollar Tree merchandise categories, creating a new store format targeted for small towns and rural
communities with populations of 3,000 to 4,000 residents. As of January 28, 2023, we operated approximately
810 Combo Stores.
After a successful pilot program in 2020, we entered into a partnership with Instacart in February 2021, which
covers more than 7,500 Family Dollar stores across the United States as of January 28, 2023.
◦ We added adult beverage to approximately 570 stores in fiscal 2022. We believe the addition of adult beverage
to our assortment drives traffic to our stores. As of January 28, 2023, there were more than 3,300 stores selling
adult beverage products.
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◦
On February 11, 2022, the Food and Drug Administration issued Form 483 observations primarily regarding
rodent infestation at our West Memphis, Arkansas distribution center (“DC 202”), as well as other items that
require remediation. During the first quarter of fiscal 2022, approximately 400 stores serviced by DC 202 were
temporarily closed in connection with a retail-level product recall. We incurred approximately $65.0 million in
costs related to the product recall, remediation efforts and asset impairment during fiscal 2022. Remediation-
related costs included merchandise disposal costs, payroll and legal costs.
•
Strategic Investments
Building on our current initiatives, we are currently developing plans to make additional multi-year strategic
investments across both banners to further position the company for long-term sustained growth. We anticipate that these
investments will relate to four key areas of our business: our associates, our distribution center network and supply chain,
our product pricing and value proposition, and our technology infrastructure. Within these areas, the focus of these
investments is expected to be on associate wages, improved store execution, enhanced safety and working conditions,
increased supply chain efficiencies, competitive pricing at Family Dollar, and enhancements to our systems
infrastructure.
•
Supply Chain
◦
◦
Inventory: During fiscal 2021, we experienced significant disruptions in our supply chain which impacted our
ability to ship products from overseas on a timely basis. During the second and third quarters of fiscal 2022
these challenges subsided; however, as a result of receiving inventory more timely, our inventory levels
exceeded the storage capacity of some of our distribution centers. As a result, we arranged for temporary offsite
warehouse storage facilities and incurred detention costs and incremental drayage costs that increased our cost
of goods sold.
Freight Costs: We experienced significantly higher international and domestic freight costs as a result of
disruptions in the global supply chain during the second half of fiscal 2021 and into the first half of fiscal 2022.
Domestically, diesel fuel prices were higher in fiscal 2022 than in the prior year and may increase further in
fiscal 2023 because of international tensions. We are a large importer of merchandise from Asia and rely
heavily on domestic freight to transport goods to our distribution centers and stores, which makes us particularly
sensitive to freight costs. Due to these trends, in fiscal 2022, import and domestic freight costs were higher
compared to fiscal 2021; however, we expect freight costs to be lower in fiscal 2023 compared with fiscal 2022.
•
Long-term Debt
◦
◦
During the fourth quarter of 2021, we completed the registered offering of $800.0 million of 2.65% Senior
Notes due 2031 and $400.0 million of 3.375% Senior Notes due 2051 and used the proceeds of the offering to
redeem the $1.0 billion 2023 Notes, which resulted in our incurring a $43.8 million prepayment penalty and we
accelerated the expensing of $2.7 million of deferred financing and original issue discount costs associated with
the 2023 Notes;
During the fourth quarter of 2021, we entered into a credit agreement for a $1.5 billion revolving credit facility,
which replaced our then-existing $1.25 billion revolving credit facility.
For additional information regarding the risks related to our business and operations, including risks relating to the
implementation of our initiatives, see “Item 1A. Risk Factors.”
Overview
We are a leading operator of more than 16,300 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 predominantly at the fixed price of
$1.25. 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. Second is the performance of stores once they are open which can be impacted by a number of factors including
operational performance, competition, inflation and changes in the product assortment, pricing, or quality. 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 year 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 brand.
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At January 28, 2023, 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 years ended January 28, 2023 and January 29, 2022 is as follows:
Store Count:
Beginning
New stores
Re-bannered stores
Closings
Ending
Relocations
Selling Square Feet (in millions):
Beginning
New stores
Re-bannered stores
Closings
Relocations
Ending
Dollar Tree
January 28, 2023
Family Dollar
Total
Dollar Tree
January 29, 2022
Family Dollar
Total
Year Ended
8,061
131
(5)
(53)
8,134
28
69.7
1.1
—
(0.4)
0.1
70.5
8,016
333
9
(152)
8,206
92
16,077
464
4
(205)
16,340
120
59.2
3.1
0.1
(1.1)
0.3
61.6
128.9
4.2
0.1
(1.5)
0.4
132.1
7,805
311
1
(56)
8,061
56
67.4
2.7
—
(0.5)
0.1
69.7
7,880
225
(1)
(88)
8,016
68
15,685
536
—
(144)
16,077
124
57.7
2.0
—
(0.6)
0.1
59.2
125.1
4.7
—
(1.1)
0.2
128.9
Stores are included as re-banners when they close or open, respectively.
The average size of stores opened in 2022 was approximately 8,660 selling square feet (or about 10,710 gross square feet) for the
Dollar Tree segment and 9,160 selling square feet (or about 11,210 gross square feet) for the Family Dollar segment. For 2023, we
continue to plan to open stores that are 8,000 - 10,000 selling square feet (or about 10,000 - 12,000 gross square feet) for both the
Dollar Tree segment and 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.
Fiscal 2022, fiscal 2021 and fiscal 2020 each included 52 weeks.
The percentage change in comparable store net sales for the fiscal year ended January 28, 2023, as compared with the preceding
year, is as follows:
Year Ended January 28, 2023
Sales Growth
Change in Customer Traffic Change in Average Ticket
Consolidated
Dollar Tree Segment
Family Dollar Segment
5.9 %
9.0 %
2.4 %
(2.7) %
(3.9) %
(1.0) %
8.9 %
13.4 %
3.4 %
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, re-banner stores or expand stores near existing stores.
Results of Operations
Our results of operations and year-over-year changes are discussed in the following section. Note that gross profit margin is
calculated as gross profit (i.e., net sales less cost of sales) divided by net sales. The selling, general and administrative expense rate
and operating income margin are calculated by dividing the applicable amount by total revenue.
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Table of Contents
Net Sales
(dollars in millions)
2023
2022
2021
January 28,
January 29,
January 30,
Fiscal 2022 vs.
Fiscal 2021
Net sales
Comparable store net sales change
$ 28,318.2
$ 26,309.8
$ 25,508.4
7.6 %
5.9 %
1.1 %
6.0 %
Year Ended
Percentage Change
The increase in net sales from 2021 to 2022 was a result of comparable store net sales increases in the Dollar Tree and Family
Dollar segments and sales of $758.6 million at new stores.
Enterprise comparable store net sales increased 5.9% in 2022, as a result of an 8.9% increase in average ticket, partially offset by
a 2.7% decrease in customer traffic. Comparable store net sales increased 9.0% in the Dollar Tree segment and increased 2.4% in the
Family Dollar segment.
Gross Profit
(dollars in millions)
Gross profit
Gross profit margin
Year Ended
Percentage Change
January 28,
January 29,
January 30,
2023
2022
2021
Fiscal 2022 vs.
Fiscal 2021
$
8,921.9
$
7,725.9
$
7,787.4
31.5 %
29.4 %
30.5 %
15.5 %
2.1 %
The increase in gross profit margin from 2021 to 2022 was a result of the net of the following:
• Merchandise cost, which includes freight, decreased 255 basis points resulting primarily from higher initial mark-on,
partially offset by higher freight costs and increased sales of lower margin consumable merchandise on the Family Dollar
segment.
•
•
•
Occupancy costs decreased 30 basis points due to leverage from the comparable store net sales increase.
Distribution costs decreased 5 basis points due to leverage from the comparable store net sales increase and higher
capitalized amounts resulting from increases in inventory levels, partially offset by higher maintenance and compliance
costs and higher hourly wages in our distribution centers.
Shrink costs increased 30 basis points resulting from unfavorable inventory results in relation to accruals.
• Markdown costs increased 45 basis points primarily due to higher promotional and clearance markdowns on the Family
Dollar segment and higher clearance markdowns resulting from a move to a higher value assortment at the $1.25 price
point on the Dollar Tree segment.
Selling, General and Administrative Expenses
(dollars in millions)
Selling, general and administrative
expenses
Selling, general and administrative
expense rate
Year Ended
Percentage Change
January 28,
January 29,
January 30,
2023
2022
2021
Fiscal 2022 vs.
Fiscal 2021
$
6,699.1
$
5,925.9
$
5,900.4
23.6 %
22.5 %
23.1 %
13.0 %
1.1 %
The increase in the selling, general and administrative expense rate from 2021 to 2022 was the result of the following:
•
Other selling, general and administrative expenses increased 70 basis points primarily due to long-lived asset impairments
related to certain Family Dollar stores and the Family Dollar West Memphis, Arkansas distribution center, higher legal
fees, including costs related to the reconstitution of the Board of Directors, unfavorable development of general liability
claims and inflationary pressure across several expense categories.
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•
•
•
Store facility costs increased 35 basis points primarily due to an increase in repairs and maintenance expenses as we focus
on store conditions for our customers and associates, higher utility costs and costs associated with the removal of product
from certain Family Dollar stores in connection with the retail-level product recall.
Payroll expenses increased 10 basis points primarily due to minimum wage increases and other investments in store payroll
and higher stock compensation expenses, partially offset by leverage from the comparable store net sales increase.
Depreciation and amortization expense was unchanged as a percentage of total revenue, as capital expenditures related to
store renovations and improvements were offset by leverage from the comparable store net sales increase.
Operating Income
(dollars in millions)
Operating income
Year Ended
Percentage Change
January 28,
January 29,
January 30,
2023
2022
2021
Fiscal 2022 vs.
Fiscal 2021
$
2,236.3
$
1,811.4
$
1,887.9
23.5 %
1.0 %
Operating income margin
7.9 %
6.9 %
7.4 %
Operating income margin increased to 7.9% in fiscal 2022 compared to 6.9% in fiscal 2021, resulting from the increase in gross
profit margin, partially offset by the increase in the selling, general and administrative expense rate, as described above.
Interest Expense, Net
(dollars in millions)
Interest expense, net
Year Ended
Percentage Change
January 28,
January 29,
January 30,
2023
2022
2021
Fiscal 2022 vs.
Fiscal 2021
$
125.3 $
178.9 $
147.3
(30.0) %
Interest expense, net decreased $53.6 million in fiscal 2022 compared to the prior year, resulting from the refinancing of our debt
in the fourth quarter of 2021, which resulted in prepayment penalties of $43.8 million and the acceleration of the expensing of $2.7
million of amortizable non-cash deferred financing costs. Higher interest income on investments more than offset interest expense on
credit facility borrowings in the current year.
Provision for Income taxes
(dollars in millions)
Provision for income taxes
Effective tax rate
Year Ended
Percentage Change
January 28,
January 29,
January 30,
2023
2022
2021
Fiscal 2022 vs.
Fiscal 2021
$
$
495.2
23.5 %
$
304.3
18.6 %
397.9
22.9 %
62.7 %
4.9 %
The effective tax rate for 2022 was 23.5% compared to 18.6% for 2021. The 2022 effective rate increased compared to the prior
year rate primarily due to a deferred tax benefit in the prior year related to state entity restructuring as well as higher non-deductible
executive compensation and lower Work Opportunity Tax credits as a percentage of pre-tax income in the current year.
Segment Information
We operate more than 16,300 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.
We measure the results of our segments using, among other measures, each segment’s net sales, gross profit and operating
income. The CODM reviews these metrics for each of our reporting segments. We may revise the measurement of each segment’s
operating income, as determined by the information regularly reviewed by the CODM. If the measurement of a segment changes, prior
period amounts and balances are reclassified to be comparable to the current period’s presentation. Corporate, support and Other
consists primarily of store support center costs that are considered shared services and therefore these selling, general and
administrative costs are excluded from our two reporting business segments. These costs include operating expenses for our store
support center and the results of operations for our Summit Pointe property in Chesapeake, Virginia. The Family Dollar segment
“Operating income” includes advertising revenue, which is a component of “Other revenue” in the accompanying consolidated income
statements.
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Dollar Tree
The following table summarizes the operating results of the Dollar Tree segment:
Year Ended
Percentage Change
(dollars in millions)
2023
2022
2021
January 28,
January 29,
January 30,
Fiscal 2022 vs.
Fiscal 2021
Net sales
Gross profit
Gross profit margin
Operating income
$ 15,405.7
$ 13,922.1
$ 13,265.0
5,775.5
4,603.6
4,543.8
37.5 %
33.1 %
34.3 %
$
2,536.0
$
1,607.0
$
1,598.0
Operating income margin
16.5 %
11.5 %
12.0 %
10.7 %
25.5 %
4.4 %
57.8 %
5.0 %
Net sales for the Dollar Tree segment increased $1,483.6 million, or 10.7%, in 2022 compared to 2021 due to an increase in
comparable store net sales of 9.0% and $372.8 million of new store sales. Average ticket increased 13.4% and customer traffic
declined 3.9% in 2022. Net sales were positively impacted by our $1.25 price point initiative which increased the selling price of the
majority of our $1 merchandise to $1.25. The rollout of this initiative was completed during the first quarter of fiscal 2022. The
increase in price point more than offset the decline in the number of units sold during the year.
Gross profit margin for the Dollar Tree segment increased to 37.5% in 2022 from 33.1% in 2021. The increase is due to the net of
the following:
• Merchandise cost, which includes freight, decreased 410 basis points primarily due to higher initial mark-on, partially
offset by higher freight costs.
•
•
•
Occupancy costs decreased 60 basis points primarily due to leverage from the comparable store net sales increase.
Distribution costs decreased 10 basis points due to leverage from the comparable store net sales increase and higher
capitalized balances resulting from increases in inventory levels partially offset by higher hourly wages in our distribution
centers.
Shrink costs increased 20 basis points resulting from unfavorable inventory results in relation to accruals.
• Markdown costs increased 20 basis points resulting primarily from markdowns for clearance items as we move to a higher
value assortment at the $1.25 price point.
Operating income margin for the Dollar Tree segment increased to 16.5% in 2022 from 11.5% in 2021 as a result of the gross
profit margin increase noted above and a decrease in the selling, general and administrative expense rate. The selling, general and
administrative expense rate decreased to 21.0% in 2022 compared to 21.5% in 2021 as a result of the net of the following:
•
•
•
•
Payroll expenses decreased 85 basis points primarily due to leverage from the comparable store net sales increase, partially
offset by minimum wage increases and other investments in store payroll.
Depreciation and amortization expense decreased 5 basis points primarily due to leverage from the comparable store net
sales increase, partially offset by capital expenditures related to store renovations and improvements.
Store facility costs increased 15 basis points primarily due to an increase in repairs and maintenance expenses as we focus
on store conditions for our customers and associates and higher utility costs, partially offset by leverage from the
comparable store net sales increase.
Other selling, general and administrative expenses increased 25 basis points primarily due to unfavorable development of
general liability claims, the benefit in the prior year associated with the realization of certain tax credits and inflationary
pressure across several expense categories in the current year.
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Family Dollar
The following table summarizes the operating results of the Family Dollar segment:
Year Ended
Percentage Change
(dollars in millions)
2023
2022
2021
January 28,
January 29,
January 30,
Net sales
Gross profit
Gross profit margin
Operating income
$ 12,912.5
$ 12,387.7
$ 12,243.4
3,146.4
3,122.3
3,243.6
24.4 %
25.2 %
26.5 %
$
127.5
$
543.1
$
655.6
Operating income margin
1.0 %
4.4 %
5.4 %
Fiscal 2022 vs.
Fiscal 2021
4.2 %
0.8 %
(0.8) %
(76.5) %
(3.4) %
Net sales for the Family Dollar segment increased $524.8 million, or 4.2%, in 2022 compared to 2021 due to $385.8 million of
new store sales and a comparable store net sales increase of 2.4%. Average ticket increased 3.4% and customer traffic declined 1.0%
in 2022. During the first quarter of 2022, approximately 400 stores serviced by the West Memphis, Arkansas distribution center were
temporarily closed in connection with a retail-level product recall. The Family Dollar comparable store net sales increased 2.8% when
excluding the effect of the store closures. Net sales in the prior year were positively impacted by significant government stimulus
dollars provided to our customers.
Gross profit margin for the Family Dollar segment decreased to 24.4% in 2022 compared to 25.2% in 2021. The decrease is due
to the net of the following:
• Markdown costs increased 80 basis points primarily due to higher promotional and clearance markdowns.
•
•
Shrink costs increased 45 basis points resulting from unfavorable inventory results in relation to accruals.
Distribution costs were unchanged as a percentage of sales compared to the prior year as higher capitalized balances
resulting from increases in inventory levels in the current year were offset by higher maintenance and compliance costs and
higher hourly wages in our distribution centers.
• Merchandise cost, which includes freight, decreased 40 basis points primarily due to higher initial mark-on, partially offset
by higher sales of lower margin consumable merchandise and higher freight costs.
Operating income margin for the Family Dollar segment decreased to 1.0% in 2022 from 4.4% in 2021, resulting from the gross
profit margin decrease noted above and an increase in the selling, general and administrative expense rate. The selling, general and
administrative expense rate increased to 23.4% in 2022 from 20.9% in 2021 as a result of the following:
•
•
•
•
Other selling, general and administrative expenses increased 95 basis points primarily due to long-lived asset impairments
related to certain stores and the West Memphis, Arkansas distribution center, higher legal fees and inflationary pressure
across several expense categories.
Payroll expenses increased 85 basis points primarily due to minimum wage increases and other investments in store
payroll.
Store facility costs increased 60 basis points primarily due to an increase in repairs and maintenance expenses as we focus
on store conditions for our customers and associates, higher utility costs and costs associated with the removal of product
from certain stores in connection with a voluntary retail-level product recall.
Depreciation and amortization expense increased 15 basis points primarily due to capital expenditures related to store
renovations and improvements.
Liquidity and Capital Resources
We invest capital to build and open new stores, expand and renovate existing stores, expand our distribution network and operate
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.
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The following table compares cash flow-related information for the years ended January 28, 2023, January 29, 2022 and
January 30, 2021:
(in millions)
Net cash provided by (used in):
Operating activities
Investing activities
Financing activities
Operating Activities
Year Ended
January 28,
January 29,
January 30,
2023
2022
2021
$
1,614.8 $
1,431.5 $
2,716.3
(1,253.8)
(1,019.9)
(686.8)
(836.5)
(889.7)
(949.9)
Net cash provided by operating activities increased $183.3 million in 2022 compared to 2021 primarily as a result of higher
current year earnings, net of non-cash items, and smaller decreases in liability balances, partially offset by higher inventory levels and
a smaller increase in accounts payable.
Investing Activities
Net cash used in investing activities increased $233.9 million in 2022 compared with 2021 primarily due to higher capital
expenditures in the current year.
Financing Activities
Net cash used in financing activities decreased $149.7 million in 2022 compared to 2021 primarily due to the following:
•
•
In 2022, we paid $647.5 million in cash for stock repurchases compared to $950.0 million in the prior year.
In 2021, we completed the registered offering of $800.0 million aggregate principal amount of Senior Notes due 2031 and
$400.0 million aggregate principal amount of Senior Notes due 2051 and used the proceeds of the offering to redeem the
$1.0 billion 2023 Notes, which resulted in our incurring a $43.8 million prepayment penalty. In addition, in connection
with the registering of these senior notes and the refinancing of our revolving line of credit, we paid $15.5 million in
deferred financing costs.
At January 28, 2023, our long-term borrowings were $3.45 billion and we had $1.5 billion available under our revolving credit
facility, less amounts outstanding for standby letters of credit totaling $4.4 million. For additional detail on our long-term borrowings
and other commitments, refer to the discussion of Funding Requirements below, as well as Note 4 and Note 5 to our consolidated
financial statements.
Share Repurchases
We repurchased 4,613,696, 9,156,898 and 3,982,478 shares of common stock on the open market in fiscal 2022, fiscal 2021 and
fiscal 2020, respectively, for $647.5 million, $950.0 million and $400.0 million, respectively. At January 28, 2023, we had $1.85
billion remaining under our Board repurchase authorization.
Funding Requirements
Overview
We expect our cash needs for opening new stores and expanding existing stores in fiscal 2023 to total approximately $690.0
million, which includes capital expenditures, initial inventory and pre-opening costs. Our total estimated capital expenditures for fiscal
2023 are approximately $2.0 billion, including planned expenditures for our new and expanded stores, store renovations, supply chain
and information technology investments, and other property improvements. We believe that we can adequately fund our working
capital requirements and planned capital expenditures for the foreseeable future from net cash provided by operations and potential
borrowings under our revolving credit facility.
Our material contractual obligations consist of long-term debt and related interest payments and operating lease obligations.
Additionally, we have commitments related to ocean shipping contracts, software license and support agreements, telecommunication
services and store technology assets and maintenance for our stores. Other commitments include letters of credit for imported
merchandise, standby letters of credit that serve as collateral for our large-deductible insurance programs and surety bonds that serve
as collateral for utility payments at our stores and self-insured insurance programs. For additional information regarding these
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obligations, including amounts outstanding at January 28, 2023, refer to Note 4, Note 5 and Note 6 to our consolidated financial
statements.
Critical Accounting Estimates
The preparation of financial statements requires the use of estimates. Certain of our estimates require a high level of judgment and
have the potential to have a material effect on the financial statements if actual results vary significantly from those estimates.
Following is a discussion of the estimates that we consider critical.
Inventory Valuation
As discussed in Note 1 to our consolidated financial statements under the caption “Merchandise Inventories,” inventories at the
distribution centers are stated at the lower of cost or net realizable value with cost determined on a weighted-average basis. Cost is
assigned to store inventories using the retail inventory method on a weighted-average basis. Under the retail inventory method, the
valuation of inventories at cost and the resulting gross margins are computed by applying a calculated cost-to-retail ratio to the retail
value of inventories. The retail inventory method is an averaging method that is widely used in the retail industry and results in
valuing inventories at lower of cost or market when markdowns are taken as a reduction of the retail value of inventories on a timely
basis.
Inventory valuation methods require certain management estimates and judgments, including estimates of future merchandise
markdowns and shrink, which significantly affect the ending inventory valuation at cost as well as the resulting gross margins. The
averaging required in applying the retail inventory method and the estimates of shrink and markdowns could, under certain
circumstances, result in costs not being recorded in the proper period.
We estimate our markdown reserve based on the consideration of a variety of factors, including, but not limited to, quantities of
slow moving or seasonal carryover merchandise on hand, historical markdown statistics and future merchandising plans. The accuracy
of our estimates can be affected by many factors, some of which are outside of our control, including changes in economic conditions
and consumer buying trends. Historically, we have not experienced significant differences in our estimated reserve for markdowns
compared with actual results.
Our accrual for shrink is based on the actual, historical shrink results of our most recent physical inventories adjusted, if
necessary, for current economic conditions and business trends. These estimates are compared to actual results as physical inventory
counts are taken and reconciled to the general ledger. Our physical inventory counts are generally taken between January and October
of each year; therefore, the shrink accrual recorded at January 28, 2023 is based on estimated shrink for most of 2022, including the
fourth quarter. The amounts recorded in the current year reflect the Dollar Tree and Family Dollar segments’ historical results. We
periodically adjust our shrink estimates to reflect our best estimates based on the factors described and, historically, these adjustments
have not been material.
Our management believes that our application of the retail inventory method results in an inventory valuation that reasonably
approximates cost and results in carrying inventory at the lower of cost or market each year on a consistent basis.
Self-Insurance Liabilities
The liabilities related to our self-insurance programs for workers’ compensation and general liability are estimates that require
judgment and the use of assumptions. Semiannually, we obtain third-party actuarial valuations to aid in valuing the liabilities and in
determining the amount to accrue during the year. These actuarial valuations are estimates based on our historical loss development
factors and the related accruals are adjusted as management’s estimates change.
Management’s estimate for self-insurance liabilities could vary from the ultimate loss sustained given the difficulty in predicting
future events; however, historically, the net total of these differences has not had a material effect on our financial condition or results
of operations.
Goodwill and Indefinite-Lived Intangible Assets
Goodwill and indefinite-lived intangible assets are initially recorded at their fair values. These assets are not amortized but are
evaluated annually for impairment. A more frequent evaluation is performed if events or circumstances indicate that impairment could
have occurred. Such events or circumstances could include, but are not limited to, significant negative industry or economic trends,
unanticipated changes in the competitive environment and a significant sustained decline in the market price of our stock.
For purposes of our goodwill impairment evaluation, the reporting units are Family Dollar, Dollar Tree and Dollar Tree Canada.
Goodwill has been assigned to the reporting units based on prior business combinations related to the brands. We have the option to
initially perform a qualitative assessment to determine whether it is more likely than not that the fair value is less than the carrying
amount. Alternatively, we may bypass the qualitative assessment and proceed directly to performing the quantitative impairment test.
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In connection with the fiscal 2022 annual impairment evaluation, management’s qualitative assessment did not indicate that it was
more likely than not that the fair value of the reporting units were less than their carrying values. However, due to recent executive
level management changes and investments being made with respect to the Family Dollar reporting unit, management elected to
perform a quantitative assessment of both the Family Dollar goodwill and trade name.
We estimate the fair value using a combination of a market multiple method and a discounted cash flow method. Under the
market multiple approach, we estimate a fair value based on comparable companies’ market multiples of revenues and earnings before
interest, taxes, depreciation and amortization (“EBITDA”) and adjusted for a control premium. Under the discounted cash flow
approach, we project future cash flows which are discounted using a weighted-average cost of capital analysis that reflects current
market conditions, adjusted for specific reporting unit risks (primarily the uncertainty of achieving projected operating cash flows). If
the carrying amount of a reporting unit exceeds its estimated fair value, an impairment loss is recognized in an amount equal to that
excess.
The Family Dollar goodwill and trade name comprise a substantial portion of our goodwill and indefinite-lived intangible assets
and management’s judgment utilized in the Family Dollar goodwill and trade name impairment evaluations is critical. The
computations require management to make estimates and assumptions and actual results may differ significantly, particularly if there
are significant adverse changes in the operating environment. Critical assumptions that are used as part of a quantitative Family Dollar
goodwill evaluation include:
•
•
The potential future revenue, EBITDA and cash flows of the reporting unit. The projections use management’s assumptions
about economic and market conditions over the projected period as well as our estimates of future performance and
reporting unit revenue, gross margin, expenses and other factors. The resulting revenue, EBITDA and cash flow estimates
are based on our most recent business operating plans, and various growth rates are assumed for years beyond the current
business plan period. These operating plans include anticipated investments in associate wages, improved store execution,
enhanced safety and working conditions, increased supply chain efficiencies, competitive pricing, and enhancements to our
technology infrastructure. We believe that the assumptions, estimates and rates used in our fiscal 2022 impairment
evaluations are reasonable; however, variations in the assumptions, estimates and rates could result in significantly
different estimates of fair value.
Selection of an appropriate discount rate. Calculating the present value of future cash flows requires the selection of an
appropriate discount rate, which is based on a weighted-average cost of capital analysis. The discount rate is affected by
changes in short-term interest rates and long-term yield as well as variances in the typical capital structure of marketplace
participants. Given current economic conditions, it is possible that the discount rate will fluctuate in the near term. We
engaged third party experts to assist in the determination of the weighted-average cost of capital used to discount the cash
flows for our Family Dollar reporting unit. The weighted-average cost of capital used to discount the cash flows for our
evaluation was 9.5% for our fiscal 2022 analysis.
Our evaluation of goodwill did not result in impairment charges being recorded in fiscal 2022, 2021 or 2020.
Indefinite-lived intangible assets, such as the Family Dollar trade name, are not subject to amortization but are reviewed at least
annually for impairment. The indefinite-lived intangible asset impairment evaluations are performed by comparing the fair value of the
indefinite-lived intangible assets to their carrying values. We estimate the fair value of our trade name intangible asset based on an
income approach using the relief-from-royalty method. This approach is dependent upon a number of factors, including estimates of
future growth and trends, royalty rates, discount rates and other variables. We base our fair value estimates on assumptions we believe
to be reasonable, but which are inherently uncertain. The discount rate includes a premium compared to the discount rate used for the
Family Dollar goodwill impairment evaluation due to the inherently higher risk profile of intangible assets compared to the overall
reporting unit.
Our evaluation of the Family Dollar trade name did not result in impairment charges during fiscal 2022, 2021 or 2020.
For additional information related to goodwill and indefinite-lived intangible assets, including the related impairment evaluations,
refer to Note 1 to our consolidated financial statements under the caption “Goodwill and Nonamortizing Intangible Assets.” For
additional information related to uncertainties associated with the key assumptions and any potential events and/or circumstances that
could have a negative effect on the key assumptions, please refer to “Item 1A. Risk Factors” and elsewhere within this “Item 7.
Management’s Discussion and Analysis of Financial Condition and Results of Operations.” If our assumptions and related estimates
change in the future, we may be required to record impairment charges against earnings in future periods. Any impairment charges
that we may take in the future could be material to our results of operations and financial condition.
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Item 7A. 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
Our exposure to interest rate risk relates to our revolving credit facility, as borrowings under the revolving credit facility bear
interest at SOFR, reset periodically, plus 0.10%, plus 0.875% to 1.50% as determined by our credit ratings and leverage ratio. At
January 28, 2023, there were no borrowings outstanding under the revolving credit facility.
Inflation Risk
The primary inflationary factors impacting our business include changes to the costs of merchandise, transportation (including the
cost of diesel fuel), and labor. If these inflationary pressures become significant, we may not be able to fully offset such higher costs
through price increases on the Family Dollar banner or through adjustments to our product assortment, improvements in operational
efficiencies or increases in our comparable store net sales on the Dollar Tree banner. Our inability or failure to do so could harm our
business, financial condition and results of operations.
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Item 8. Financial Statements and Supplementary Data
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
Report of Independent Registered Public Accounting Firm (PCAOB ID: 185)
Consolidated Income Statements
Consolidated Statements of Comprehensive Income
Consolidated Balance Sheets
Consolidated Statements of Shareholders’ Equity
Consolidated Statements of Cash Flows
Notes to Consolidated Financial Statements
Note 1 - Summary of Significant Accounting Policies
Note 2 - Supplemental Balance Sheet Information
Note 3 - Income Taxes
Note 4 - Commitments and Contingencies
Note 5 - Long-Term Debt
Note 6 - Leases
Note 7 - Fair Value Measurements
Note 8 - Shareholders’ Equity
Note 9 - Employee Benefit Plans
Note 10 - Stock-Based Compensation Plans
Note 11 - Segments and Disaggregated Revenue
Page
37
39
40
41
42
43
44
44
48
49
51
53
55
56
57
57
58
60
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Report of Independent Registered Public Accounting Firm
To the Shareholders and Board of Directors
Dollar Tree, Inc.:
Opinion on the Consolidated Financial Statements
We have audited the accompanying consolidated balance sheets of Dollar Tree, Inc. and subsidiaries (the Company) as of January 28,
2023 and January 29, 2022, the related consolidated income statements, statements of comprehensive income, shareholders’ equity,
and cash flows for each of the years in the three-year period ended January 28, 2023, and the related notes (collectively, the
consolidated financial statements). In our opinion, the consolidated financial statements present fairly, in all material respects, the
financial position of the Company as of January 28, 2023 and January 29, 2022, and the results of its operations and its cash flows for
each of the years in the three-year period ended January 28, 2023, in conformity with U.S. generally accepted accounting principles.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States)
(PCAOB), the Company’s internal control over financial reporting as of January 28, 2023, based on criteria established in Internal
Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission, and our
report dated March 10, 2023 expressed an unqualified opinion on the effectiveness of the Company’s internal control over financial
reporting.
Basis for Opinion
These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an
opinion on these consolidated financial statements based on our audits. We are a public accounting firm registered with the PCAOB
and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable
rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to
error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial
statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining,
on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included
evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall
presentation of the consolidated financial statements. We believe that our audits provide a reasonable basis for our opinion.
Critical Audit Matter
The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements
that was communicated or required to be communicated to the audit committee and that: (1) relates to accounts or disclosures that are
material to the consolidated financial statements and (2) involved our especially challenging, subjective, or complex judgments. The
communication of a critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken as a
whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or
on the accounts or disclosures to which it relates.
Estimated self-insurance liability
As discussed in Note 1 to the consolidated financial statements, the Company considers actuarial assumptions to estimate its
self-insurance liability. As of January 28, 2023, the Company recorded an estimated liability of $318 million.
We identified the evaluation of the estimated self-insurance liability as a critical audit matter. The estimation process involves
auditor judgment and actuarial expertise to evaluate the actuarial methods and assumptions that are used to estimate future claim
payments. Specifically, the evaluation includes the assumptions related to the loss development factors and expected loss rates
which are primarily driven by historical claims paid and incurred data.
The following are the primary procedures we performed to address this critical audit matter. We evaluated the design and tested the
operating effectiveness of certain internal controls over the Company’s self-insurance liability estimation process. This included
controls related to (1) the selection of the actuarial methods, and the development of the loss development factors and expected loss
rates used to calculate the liability, and (2) the completeness and accuracy of historical claims paid and incurred data. We assessed
the Company’s estimate of the liability by testing a selection of certain data, including claims data, utilized by the Company’s
actuary by comparing it to relevant documentation. We involved actuarial professionals with specialized skills and knowledge,
who assisted in:
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• assessing the Company’s actuarial methods by comparing them to generally accepted actuarial methodologies; and
• evaluating the Company’s actuarial estimates and assumptions related to the loss development factors and expected loss rates,
by comparing them to generally accepted actuarial methodologies and the Company’s historical data and trends.
/s/ KPMG LLP
We have served as the Company’s auditor since 1987.
Norfolk, Virginia
March 10, 2023
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Table of Contents
DOLLAR TREE, INC.
CONSOLIDATED INCOME STATEMENTS
(in millions, except per share data)
Net sales
Other revenue
Total revenue
Cost of sales
Selling, general and administrative expenses
Operating income
Interest expense, net
Other expense, net
Income before income taxes
Provision for income taxes
Net income
Basic net income per share
Diluted net income per share
Year Ended
January 28,
January 29,
January 30,
2023
2022
2021
$ 28,318.2 $ 26,309.8 $ 25,508.4
13.5
28,331.7
19,396.3
6,699.1
2,236.3
125.3
0.4
2,110.6
495.2
11.4
26,321.2
18,583.9
5,925.9
1,811.4
178.9
0.3
1,632.2
304.3
0.9
25,509.3
17,721.0
5,900.4
1,887.9
147.3
0.8
1,739.8
397.9
$
$
$
1,615.4 $
1,327.9 $
1,341.9
7.24 $
7.21 $
5.83 $
5.80 $
5.68
5.65
See accompanying Notes to Consolidated Financial Statements
39
Table of Contents
(in millions)
Net income
DOLLAR TREE, INC.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
Year Ended
January 28,
January 29,
January 30,
2023
2022
2021
$
1,615.4 $
1,327.9 $
1,341.9
Foreign currency translation adjustments
(6.0)
—
4.6
Total comprehensive income
$
1,609.4 $
1,327.9 $
1,346.5
See accompanying Notes to Consolidated Financial Statements
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Table of Contents
DOLLAR TREE, INC.
CONSOLIDATED BALANCE SHEETS
(in millions, except share and per share data)
ASSETS
Current assets:
Cash and cash equivalents
Merchandise inventories
Other current assets
Total current assets
Property, plant and equipment, net of accumulated depreciation of $6,025.4 and $5,363.8,
respectively
Restricted cash
Operating lease right-of-use assets
Goodwill
Trade name intangible asset
Deferred tax asset
Other assets
Total assets
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Current portion of operating lease liabilities
Accounts payable
Income taxes payable
Other current liabilities
Total current liabilities
Long-term debt, net
Operating lease liabilities, long-term
Deferred income taxes, net
Income taxes payable, long-term
Other liabilities
Total liabilities
Commitments and contingencies (Note 4)
Shareholders’ equity:
Common stock, par value $0.01; 600,000,000 shares authorized, 221,222,984 and
225,100,198 shares issued and outstanding at January 28, 2023 and January 29, 2022,
respectively
Additional paid-in capital
Accumulated other comprehensive loss
Retained earnings
Total shareholders’ equity
January 28,
2023
January 29,
2022
$
642.8 $
984.9
5,449.3
275.0
6,367.1
4,972.2
68.5
6,458.0
1,983.1
3,100.0
15.0
58.2
4,367.3
257.0
5,609.2
4,477.3
53.4
6,425.3
1,984.4
3,100.0
20.3
51.9
$ 23,022.1 $ 21,721.8
$
1,449.6 $
1,407.8
1,899.8
1,884.2
58.1
817.7
4,225.2
3,421.6
5,255.3
1,105.7
17.4
245.4
82.6
802.0
4,176.6
3,417.0
5,145.5
987.2
20.9
256.1
14,270.6
14,003.3
2.2
667.5
2.2
1,243.9
(41.2)
(35.2)
8,123.0
8,751.5
6,507.6
7,718.5
Total liabilities and shareholders’ equity
$ 23,022.1 $ 21,721.8
See accompanying Notes to Consolidated Financial Statements
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DOLLAR TREE, INC.
CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY
YEARS ENDED JANUARY 28, 2023, JANUARY 29, 2022, AND JANUARY 30, 2021
(in millions)
Common
Stock
Shares
Common
Stock
Additional
Paid-in
Capital
Accumulated
Other
Comprehensive
Loss
Retained
Earnings
Shareholders’
Equity
Balance at February 1, 2020
236.7 $
2.4 $ 2,454.4 $
(39.8) $ 3,837.8 $
Net income
Total other comprehensive income
Issuance of stock under Employee Stock
Purchase Plan
Exercise of stock options
Stock-based compensation, net
Repurchase of stock
Balance at January 30, 2021
Net income
Issuance of stock under Employee Stock
Purchase Plan
Exercise of stock options
Stock-based compensation, net
Repurchase of stock
Balance at January 29, 2022
Net income
Total other comprehensive loss
Issuance of stock under Employee Stock
Purchase Plan
Stock-based compensation, net
Repurchase of stock
Balance at January 28, 2023
—
—
0.2
0.1
0.4
—
—
—
—
—
—
—
10.0
7.0
67.0
(4.0)
(0.1)
(399.9)
233.4
—
0.1
0.1
0.7
2.3
—
—
—
—
2,138.5
—
10.4
7.4
37.5
(9.2)
(0.1)
(949.9)
225.1
—
—
0.1
0.6
(4.6)
2.2
—
—
—
—
—
1,243.9
—
—
9.3
61.8
(647.5)
—
4.6
—
—
—
—
1,341.9
—
—
—
—
—
(35.2)
5,179.7
—
—
—
—
—
1,327.9
—
—
—
—
(35.2)
6,507.6
—
1,615.4
(6.0)
—
—
—
—
—
—
—
221.2 $
2.2 $
667.5 $
(41.2) $ 8,123.0 $
8,751.5
6,254.8
1,341.9
4.6
10.0
7.0
67.0
(400.0)
7,285.3
1,327.9
10.4
7.4
37.5
(950.0)
7,718.5
1,615.4
(6.0)
9.3
61.8
(647.5)
See accompanying Notes to Consolidated Financial Statements
42
DOLLAR TREE, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in millions)
Cash flows from operating activities:
Net income
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization
Provision for deferred income taxes
Stock-based compensation expense
Amortization of debt discount and debt-issuance costs
Other non-cash adjustments to net income
Loss on debt extinguishment
Changes in operating assets and liabilities:
Merchandise inventories
Other current assets
Other assets
Accounts payable
Income taxes payable
Other current liabilities
Other liabilities
Operating lease right-of-use assets and liabilities, net
Net cash provided by operating activities
Cash flows from investing activities:
Capital expenditures
Proceeds from governmental grant
Proceeds from (payments for) fixed asset disposition
Net cash used in investing activities
Cash flows from financing activities:
Proceeds from long-term debt, net of discount
Principal payments for long-term debt
Debt-issuance and debt extinguishment costs
Proceeds from revolving credit facility
Repayments of revolving credit facility
Proceeds from stock issued pursuant to stock-based compensation plans
Cash paid for taxes on exercises/vesting of stock-based compensation
Payments for repurchase of stock
Net cash used in financing activities
Effect of exchange rate changes on cash, cash equivalents and restricted cash
Net increase (decrease) in cash, cash equivalents and restricted cash
Cash, cash equivalents and restricted cash at beginning of year
Cash, cash equivalents and restricted cash at end of year
Supplemental disclosure of cash flow information:
Cash paid for:
Interest, net of amounts capitalized
Income taxes
Non-cash transactions:
Right-of-use assets obtained in exchange for new operating lease liabilities
Accrued capital expenditures
January 28,
2023
Year Ended
January 29,
2022
January 30,
2021
$
1,615.4 $
1,327.9 $
1,341.9
767.9
123.0
110.4
4.6
59.1
—
(1,085.4)
(17.9)
(6.8)
16.8
(24.5)
(2.2)
(14.4)
68.8
1,614.8
(1,248.8)
—
(5.0)
(1,253.8)
—
—
—
555.0
(555.0)
9.3
(48.6)
(647.5)
(686.8)
(1.2)
(327.0)
1,038.3
$
711.3 $
716.0
(23.2)
79.9
8.9
11.2
43.8
(940.4)
(49.9)
(2.6)
403.8
(3.7)
(36.5)
(98.2)
(5.5)
1,431.5
(1,021.2)
2.9
(1.6)
(1,019.9)
1,197.4
(1,000.0)
(59.3)
—
—
17.8
(42.4)
(950.0)
(836.5)
(0.4)
(425.3)
1,463.6
1,038.3 $
686.6
30.7
83.9
4.0
19.0
—
97.1
1.7
(7.0)
142.6
23.6
203.4
88.2
0.6
2,716.3
(898.8)
—
9.1
(889.7)
—
(550.0)
—
750.0
(750.0)
17.0
(16.9)
(400.0)
(949.9)
0.9
877.6
586.0
1,463.6
$
$
$
$
132.2 $
401.3 $
176.1 $
363.4 $
152.9
357.7
1,538.3 $
86.6 $
1,495.3 $
68.3 $
1,440.2
44.9
See accompanying Notes to Consolidated Financial Statements
43
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DOLLAR TREE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 1 - Summary of Significant Accounting Policies
Description of Business
Unless otherwise stated, references to “we,” “us,” and “our” in this annual report on Form 10-K refer to Dollar Tree, Inc. and its
direct and indirect subsidiaries on a consolidated basis.
We are a leading operator of discount retail stores in the United States and Canada. Below are those accounting policies that we
consider to be significant.
Principles of Consolidation and Basis of Presentation
The consolidated financial statements include the financial statements of Dollar Tree, Inc., and its wholly-owned subsidiaries. All
significant intercompany balances and transactions have been eliminated in consolidation.
Segment Information
At January 28, 2023, we operate more than 16,300 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 predominantly at the fixed price
point of $1.25. The Dollar Tree segment includes our operations under the “Dollar Tree” and “Dollar Tree Canada” brands, 15
distribution centers in the United States and two distribution centers in Canada.
The Family Dollar segment operates a chain of general merchandise retail discount stores providing consumers with a selection of
competitively-priced merchandise in convenient neighborhood stores. The Family Dollar segment consists of our operations under the
“Family Dollar” brand and ten distribution centers.
Refer to Note 11 for additional information regarding our operating segments.
Foreign Currency
The functional currencies of certain of our international subsidiaries are the local currencies of the countries in which the
subsidiaries are located. Foreign currency denominated assets and liabilities are translated into U.S. dollars using the exchange rates in
effect at the consolidated balance sheet date. Results of operations and cash flows are translated using the average exchange rates
throughout the period. The effect of exchange rate fluctuations on translation of assets and liabilities is included as a component of
shareholders’ equity in accumulated other comprehensive loss. Gains and losses from foreign currency transactions, which are
included in “Other expense, net” have not been significant.
Fiscal Year
Our fiscal year is a 52-week or 53-week period ending on the Saturday closest to January 31. References to “2022” or “fiscal
2022,” “2021” or “fiscal 2021,” and “2020” or “fiscal 2020” relate to the 52-week fiscal years ended January 28, 2023, January 29,
2022, and January 30, 2021, respectively. “2023” or “fiscal 2023” refers to the 53-week fiscal year ending February 3, 2024.
Use of Estimates
The preparation of financial statements in conformity with U.S. generally accepted accounting principles (“GAAP”) requires
management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent
assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
Cash and Cash Equivalents
Cash and cash equivalents at January 28, 2023 and January 29, 2022 includes $317.2 million and $680.6 million, respectively, of
investments primarily in money market securities which are valued at cost, which approximates fair value. We consider all highly-
liquid debt instruments with original maturities of three months or less to be cash equivalents. The majority of payments due from
financial institutions for the settlement of debit card and credit card transactions process within three business days, and therefore are
classified as cash and cash equivalents.
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Merchandise Inventories
Merchandise inventories at our distribution centers are stated at the lower of cost or net realizable value, determined on a
weighted-average cost basis. Cost is assigned to store inventories using the retail inventory method on a weighted-average basis.
Under the retail inventory method, the valuation of inventories at cost and the resulting gross margins are computed by applying a
calculated cost-to-retail ratio to the retail value of inventories.
Costs directly associated with warehousing and distribution are capitalized as merchandise inventories. Total warehousing and
distribution costs capitalized into inventory amounted to $298.6 million and $203.2 million at January 28, 2023 and January 29, 2022,
respectively.
Property, Plant and Equipment
Property, plant and equipment are stated at cost and depreciated using the straight-line method over the estimated useful lives of
the respective assets as follows:
Buildings
Furniture, fixtures and equipment
39 to 40 years
3 to 15 years
Leasehold improvements are amortized over the shorter of the estimated useful lives of the respective assets or the related lease
terms. Amortization is included in “Selling, general and administrative expenses” in the accompanying consolidated income
statements.
Costs incurred related to software developed for internal use are capitalized and amortized, generally over three years.
Capitalized Interest
We capitalize interest on borrowed funds during the construction of certain property and equipment. We capitalized $3.8 million,
$1.1 million and $3.2 million of interest costs in the years ended January 28, 2023, January 29, 2022 and January 30, 2021,
respectively.
Insurance Reserves and Restricted Cash
We utilize a combination of insurance and self-insurance programs, including a wholly-owned captive insurance entity, to provide
for the potential liabilities for certain risks, including workers’ compensation, general liability and automobile liability. Liabilities
associated with the risks that are retained by us are not discounted and are estimated, in part, by considering claims experience,
exposure and severity factors and other actuarial assumptions.
Dollar Tree Insurance, Inc., a South Carolina-based wholly-owned captive insurance subsidiary of ours, charges the operating
subsidiary companies premiums to insure the retained workers’ compensation, general liability and automobile liability exposures.
Pursuant to South Carolina insurance regulations, Dollar Tree Insurance, Inc. maintains certain levels of cash and cash equivalents
related to its self-insured exposures.
We also maintain certain cash balances related to our insurance programs which are held in trust and restricted as to withdrawal or
use. These amounts are reflected in “Restricted cash” in the accompanying consolidated balance sheets.
Lease Accounting
Our lease portfolio primarily consists of leases for our retail store locations and we also lease vehicles and trailers, as well as
distribution center space and equipment. We determine if an arrangement is a lease at inception by evaluating whether the arrangement
conveys the right to use an identified asset and whether we obtain substantially all of the economic benefits from and have the ability
to direct the use of the asset. Leases with an initial term of 12 months or less are not recorded on the consolidated balance sheets. We
recognize 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 lease payments
over the committed lease term at the lease commencement date.
As most of our leases do not provide an implicit rate, we use our incremental borrowing rate in determining the present value of
future lease payments. Inputs to the calculation of our incremental borrowing rate include the valuations and yields of our outstanding
senior notes and their credit spreads 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 our sole discretion. We do not include renewal options in our determination of the lease term
unless the renewals are deemed to be reasonably certain. Operating lease expense for lease payments not yet paid 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
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lowering the operating lease expense. Operating lease right-of-use assets are periodically reviewed for impairment losses. We use 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.
We have real estate leases that typically include payments related to non-lease components, such as common area maintenance, as
well as payments for real estate taxes and insurance which are not considered components of the lease. These payments are generally
variable and based on actual costs incurred by the lessor. These costs are expensed as incurred as variable lease costs and excluded for
the purpose of calculating the right-of-use asset and lease liability. A smaller number of real estate leases contain fixed payments for
common area maintenance, real estate taxes and insurance. These fixed payments are considered part of the lease payment and
included in the right-of-use asset and lease liability. In addition, certain of our lease agreements include rental payments based on a
percentage of retail sales over contractual levels and others include rental payments adjusted periodically for inflation. These payments
are expensed as incurred as variable lease costs. Our lease agreements do not contain any material residual value guarantees or
material restrictive financial covenants.
Purchased leases with terms which were either favorable or unfavorable as compared to prevailing market rates at the date of
acquisition are amortized over the remaining lease terms, including, in some cases, an assumed renewal. Amortization expense, net of
$29.9 million, $38.5 million and $48.1 million was recognized in “Selling, general and administrative expenses” in 2022, 2021 and
2020, respectively, related to these lease rights.
Impairment of Long-Lived Assets and Long-Lived Assets to be Disposed of
We review our long-lived assets and certain identifiable intangible assets for impairment whenever events or changes in
circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of assets to be held and used is
measured by comparing the carrying amount of an asset to future net undiscounted cash flows expected to be generated by the asset. If
such assets are considered to be impaired, the impairment to be recognized is measured as the amount by which the carrying amount
of the assets exceeds the fair value of the assets based on discounted cash flows or other readily available evidence of fair value, if
any. Assets to be disposed of are reported at the lower of the carrying amount or fair value less costs to sell. In fiscal 2022, 2021 and
2020, we recorded charges of $39.9 million, $4.4 million and $4.6 million, respectively, to write down certain assets, including $20.1
million, $3.9 million and $3.8 million in fiscal 2022, 2021 and 2020, respectively, to write down Operating lease right-of-use assets.
Included in 2022 is $14.0 million for West Memphis distribution center asset impairments. These charges are recorded as a component
of “Selling, general and administrative expenses” in the accompanying consolidated income statements.
Goodwill and Nonamortizing Intangible Assets
Goodwill and nonamortizing intangible assets, including the Family Dollar trade name, are not amortized, but rather tested for
impairment at least annually. In addition, goodwill and nonamortizing intangible assets will be tested on an interim basis if an event or
circumstance indicates that it is more likely than not that an impairment loss has been incurred. For both goodwill and nonamortizing
intangible assets, we have the option to initially perform a qualitative assessment to determine whether it is more likely than not that
an impairment exists. Alternatively, we may bypass the qualitative assessment in any given year and proceed directly to performing
the quantitative impairment test. We perform our annual impairment testing of goodwill and nonamortizing intangible assets during
the fourth quarter of each year. Our reporting units are determined in accordance with the provisions of ASC Topic 350, “Intangibles -
Goodwill and Other.”
When a quantitative impairment test is performed for the Family Dollar trade name, we compare the fair value, based on an
income approach using the relief-from-royalty method, to its carrying value. If the carrying value of the asset exceeds its estimated fair
value, an impairment loss is recognized in an amount equal to that excess. Our annual impairment evaluation of the Family Dollar
trade name did not result in impairment charges during fiscal 2022, 2021 or 2020.
Subsequent to the evaluation of the Family Dollar trade name for impairment, we evaluate goodwill for impairment. When a
quantitative test is performed, we estimate the fair value of the reporting unit using a combination of a market multiple method and a
discounted cash flow method. We recognize goodwill impairment for the amount by which the reporting unit’s carrying amount
exceeds its estimated fair value, not to exceed the total carrying amount of goodwill allocated to the reporting unit.
The annual goodwill impairment evaluations in 2022, 2021 and 2020 did not result in impairment. We have recorded cumulative
goodwill impairment charges totaling $3,040.0 million, all of which relate to the Family Dollar reporting unit.
Revenue Recognition
We recognize sales revenue, net of estimated returns and sales tax, at the time the customer tenders payment for and takes control
of the merchandise.
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Taxes Collected
We report taxes assessed by a governmental authority that are directly imposed on revenue-producing transactions (i.e., sales tax)
on a net (excluded from revenue) basis.
Cost of Sales
We include the cost of merchandise, warehousing and distribution costs, and certain occupancy costs in cost of sales.
Vendor Allowances
We receive vendor support in the form of cash payments or allowances through a variety of reimbursements such as purchase
discounts, cooperative advertising, markdowns, scandowns and volume rebates. We have agreements with vendors setting forth the
specific conditions for each allowance or payment. We either recognize the allowance as a reduction of current costs or defer the
payment over the period the related merchandise is sold. If the payment is a reimbursement for costs incurred, it is offset against those
related costs; otherwise, it is treated as a reduction to the cost of merchandise.
Pre-Opening Costs
We expense pre-opening costs for new, expanded, relocated and re-bannered stores and for distribution centers, as incurred.
Advertising Costs
We expense advertising costs as they are incurred and they are included in “Selling, general and administrative expenses” within
the accompanying consolidated income statements. Advertising costs, net of co-op recoveries from vendors, were $99.5 million, $93.9
million and $80.8 million in fiscal 2022, 2021 and 2020, respectively.
Income Taxes
Income taxes are accounted for under the asset and liability method. Deferred tax assets and liabilities are recognized for the
future tax consequences attributable to differences between financial statement carrying amounts of existing assets and liabilities and
their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income
in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and
liabilities of a change in tax rates is recognized in income in the period that includes the enactment date of such change.
We recognize a financial statement benefit for a tax position if we determine that it is more likely than not that the position will be
sustained upon examination.
We include interest and penalties in the provision for income tax expense and income taxes payable. We do not provide for any
penalties associated with tax contingencies unless they are considered probable of assessment.
Stock-Based Compensation
We recognize expense for all share-based payments to employees and non-employee directors based on their fair values. Total
stock-based compensation expense for 2022, 2021 and 2020 was $110.4 million, $79.9 million and $83.9 million, respectively.
We recognize expense related to the fair value of restricted stock units (RSUs) and stock options over the requisite service period
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 closing price of our common stock on the date of grant. The fair value of stock option grants is estimated on the date of grant using
the Black-Scholes option pricing model. We account for forfeitures when they occur.
Net Income Per Share
Basic net income per share has been computed by dividing net income by the weighted average number of shares outstanding.
Diluted net income per share reflects the potential dilution that could occur assuming the inclusion of dilutive potential shares and has
been computed by dividing net income by the weighted average number of shares and dilutive potential shares outstanding. Dilutive
potential shares include all outstanding stock options and unvested RSUs after applying the treasury stock method.
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Note 2 - Supplemental Balance Sheet Information
Property, Plant and Equipment, Net
Property, plant and equipment, net, as of January 28, 2023 and January 29, 2022 consists of the following:
(in millions)
Land
Buildings
Leasehold improvements
Furniture, fixtures and equipment
Construction in progress
Total property, plant and equipment
Less: accumulated depreciation
Total property, plant and equipment, net
January 28,
2023
January 29,
2022
$
242.6 $
1,631.6
3,227.9
5,261.7
633.8
10,997.6
6,025.4
4,972.2 $
$
239.7
1,568.2
2,840.1
4,704.1
489.0
9,841.1
5,363.8
4,477.3
Depreciation expense was $737.4 million, $672.0 million, and $631.1 million for the years ended January 28, 2023, January 29,
2022, and January 30, 2021, respectively.
Other Current Liabilities
Other current liabilities as of January 28, 2023 and January 29, 2022 consist of the following:
(in millions)
Taxes (other than income taxes)
Compensation and benefits
Insurance
Other
Total other current liabilities
January 28,
2023
January 29,
2022
$
$
253.7 $
143.9
131.1
289.0
817.7 $
313.5
123.8
121.5
243.2
802.0
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Note 3 - Income Taxes
The provision for income taxes consists of the following:
(in millions)
Current taxes:
Federal
State
Foreign
Total current taxes
Deferred taxes:
Federal
State
Foreign
Total deferred taxes
Provision for income taxes
Year Ended
January 28,
January 29,
January 30,
2023
2022
2021
$
322.0 $
271.1 $
279.5
50.2
0.1
372.3
88.1
30.3
4.5
122.9
56.3
0.1
327.5
50.3
(76.5)
3.0
(23.2)
87.4
0.2
367.1
32.6
(3.8)
2.0
30.8
$
495.2 $
304.3 $
397.9
A reconciliation of the statutory U.S. federal income tax rate and the effective tax rate follows:
Statutory U.S. federal income tax rate
Effect of:
State and local income taxes, net of federal income tax benefit
Non-deductible executive compensation
State tax reserve release
Incremental tax expense (benefit) of exercises/vesting of equity-based
compensation
Work Opportunity Tax Credit
Deferred tax rate change
Change in valuation allowance
Other, net
Effective tax rate
Foreign Taxes
January 28,
2023
Year Ended
January 29,
2022
January 30,
2021
21.0 %
21.0 %
21.0 %
3.7
0.7
(0.3)
(0.6)
(1.4)
0.7
(0.3)
3.7
0.4
(0.4)
(0.5)
(1.8)
(3.8)
—
3.2
0.4
(0.5)
0.2
(1.6)
—
—
—
23.5 %
—
18.6 %
0.2
22.9 %
United States income taxes have not been provided on accumulated but undistributed earnings of our foreign subsidiaries as we
intend to permanently reinvest earnings. We do not consider the tax on the mandatory deemed repatriation of undistributed foreign
earnings and profits to be material.
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Deferred Income Taxes
Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities
for financial reporting purposes and the amounts used for income tax purposes.
Significant components of our net deferred tax assets (liabilities) follow:
(in millions)
Deferred tax assets:
Operating lease liabilities
Net operating losses, interest expense and credit carryforwards
Accrued expenses
Accrued compensation expense
Inventory
State tax election
Other
Total deferred tax assets
Valuation allowance
Deferred tax assets, net
Deferred tax liabilities:
Operating lease right-of-use assets
Other intangibles
Property and equipment
Prepaids
Inventory
Total deferred tax liabilities
Deferred income taxes, net
January 28,
2023
January 29,
2022
$
1,703.5 $
1,647.3
69.3
31.0
33.9
—
14.3
2.5
91.5
50.7
34.9
24.4
15.8
2.4
1,854.5
1,867.0
(4.0)
(13.0)
1,850.5
1,854.0
(1,630.9)
(1,578.4)
(760.4)
(509.2)
(25.9)
(14.8)
(780.9)
(435.6)
(26.0)
—
(2,941.2)
(2,820.9)
$
(1,090.7) $
(966.9)
At January 28, 2023, we had certain state tax credit carryforwards, net operating loss carryforwards and capital loss carryforwards
totaling $69.3 million. Some of these carryforwards will expire, if not utilized, beginning in 2023 through 2042.
A valuation allowance of $4.0 million, net of federal tax benefits, has been provided principally for certain state credit
carryforwards and net operating loss carryforwards. Since January 29, 2022, the valuation allowance has been decreased to reflect
state credits and net operating losses expected to be utilized over the carryforward period. In assessing the realizability of deferred tax
assets, we consider whether it is more likely than not that some portion or all of the deferred taxes will not be realized. Based upon the
availability of carrybacks of future deductible amounts and our projections for future taxable income over the periods in which the
deferred tax assets are deductible, we believe it is more likely than not the remaining existing deductible temporary differences will
reverse during periods in which carrybacks are available or in which we generate net taxable income.
Uncertain Tax Positions
We are participating in the IRS Compliance Assurance Program (“CAP”) for fiscal 2022 and we have been accepted into the
program for fiscal 2023. This program accelerates the examination of key transactions with the goal of resolving any issues before the
tax return is filed. Our federal tax returns have been examined and all issues have been settled through the fiscal 2019 tax year, as well
as the fiscal 2021 tax year. In fiscal 2020, we participated in the CAP under the IRS’s bridge year program and as a result, the IRS will
not be completing an audit on the 2020 tax return at this time. Several states completed their examinations during fiscal 2022. In
general, fiscal 2019 and forward are within the statute of limitations for state tax purposes. The statute of limitations is still open prior
to fiscal 2019 for some states.
The balance for unrecognized tax benefits at January 28, 2023 was $17.4 million. The total amount of unrecognized tax benefits at
January 28, 2023 that, if recognized, would affect the effective tax rate was $13.8 million (net of the federal tax benefit).
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The following is a reconciliation of our total gross unrecognized tax benefits:
(in millions)
Beginning Balance
Additions for tax positions of prior years
Additions, based on tax positions related to current year
Settlements
Lapses in statutes of limitation
Ending balance
January 28,
2023
January 29,
2022
$
20.9 $
2.3
4.0
(0.1)
(9.7)
$
17.4 $
22.6
4.6
2.7
—
(9.0)
20.9
We believe it is reasonably possible that $2.5 million to $3.5 million of the reserve for uncertain tax positions may be reduced
during the next 12 months principally as a result of the effective settlement of outstanding issues. It is also possible that state tax
reserves will be reduced for audit settlements and statute expirations within the next 12 months. At this point it is not possible to
estimate a range associated with the resolution of these audits. We do not expect any change to have a material impact to our
consolidated financial statements.
As of January 28, 2023, we have recorded a liability for potential interest and penalties of $1.5 million.
Note 4 – Commitments and Contingencies
Purchase Obligations
At January 28, 2023, we have commitments totaling $300.5 million related to ocean shipping contracts and commitments of
$243.5 million related to agreements for software licenses and support, telecommunication services and store technology assets and
maintenance for our stores. We also have commitments totaling $105.4 million related to software agreements that we entered into
subsequent to January 28, 2023.
Letters of Credit
We have $425.0 million in trade letters of credit with various financial institutions, under which $150.6 million was committed to
these letters of credit issued for routine purchases of imported merchandise at January 28, 2023.
Surety Bonds
We have issued various surety bonds that primarily serve as collateral for utility payments at our stores and self-insured insurance
programs. These bonds total $160.5 million and are committed through various dates through fiscal 2027.
Contingencies
We are defendants in legal proceedings including the class, collective, representative and large cases as well as individual claims
in arbitration. We will vigorously defend ourselves in these matters. We do not believe that any of these matters will, individually or in
the aggregate, have a material effect on our business or financial condition. We cannot give assurance, however, that one or more of
these matters will not have a material effect on our results of operations for the quarter or year in which they are reserved or resolved.
We assess our legal proceedings monthly and reserves are established if a loss is probable and the amount of such loss can be
reasonably estimated. For matters that have settled, we reserve the estimated settlement amount. Many, if not substantially all, of our
legal proceedings are subject to significant uncertainties and, therefore, determining the likelihood of a loss and the measurement of
any loss can be complex and subject to judgment. With respect to the matters noted below where we have determined that a loss is
reasonably possible but not probable, we are unable to reasonably estimate the amount or range of the possible loss at this time due to
the inherent difficulty of predicting the outcome of and uncertainties regarding legal proceedings. Our assessments are based on
estimates and assumptions that have been deemed reasonable by management, but that may prove to be incomplete or inaccurate, and
unanticipated events and circumstances may occur that might cause us to change those estimates and assumptions. 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.
Active Matters
On February 11, 2022, the FDA issued Form 483 observations primarily regarding rodent infestation at Family Dollar’s West
Memphis, Arkansas distribution center (“DC 202”) and the related sale and distribution of adulterated product, as well as other
processes and procedures that require remediation. In connection therewith, we initiated a retail-level product recall of FDA and U.S.
Department of Agriculture-regulated products stored and shipped from DC 202 from January 1, 2021 through February 18, 2022 (the
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“Recall”), temporarily closed DC 202 for extensive cleaning, temporarily closed the affected stores to permit the removal and
destruction of inventory subject to the Recall, ceased sales of relevant inventory subject to the Recall, ceased the direct shipment of
FDA-regulated products from DC 202, and initiated corrective actions. In June 2022, we stopped shipping to stores from DC 202 and
have since disposed of all of the inventory that was in the facility. On November 9, 2022 we received an FDA Warning Letter
(“Warning Letter”) in connection with the DC 202 inspection. The conditions and issues detailed in the Warning Letter are generally
the same as those described in the Form 483 observations or were otherwise observed during the inspection. The Warning Letter
acknowledged certain remedial actions we have taken in response to the Form 483 observations, including conducting the recall and
decommissioning the facility. We continue to cooperate with the FDA.
Since February 22, 2022, Family Dollar has been named in 14 putative class action complaints primarily related to issues
associated with DC 202 described above. The lawsuits are proceeding in federal court in Tennessee using the federal court’s multi-
district litigation process. An amended consolidated complaint seeking class action status was filed October 17, 2022 alleging
violations of the Mississippi, Arkansas, Louisiana, Tennessee, Alabama and Missouri consumer protection laws, breach of warranty,
negligence, misrepresentation, deception and unjust enrichment related to the sale of products that may be contaminated by virtue of
rodent infestation and other unsanitary conditions. Plaintiffs seek damages, attorney fees and costs, punitive damages and the
replacement of, or refund of, money paid to purchase the relevant products, and any other legal relief available for their claims (in
each case in unspecified amounts), including equitable and injunctive relief. We have filed a motion to dismiss the amended
consolidated complaint.
On March 1, 2022, a federal grand jury subpoena was issued to us by the Eastern District of Arkansas requesting the production
of information, documents and records pertaining to pests, sanitation and compliance with law regarding certain of our procedures and
products. In connection with this matter, we have been investigating the condition of FDA-regulated product shipped from DC 202.
We are cooperating fully with the U.S. Department of Justice investigation, including having produced documents and provided
additional information. As part of this cooperation, we may engage in discussions with the government in an effort to reach a
negotiated resolution. Due to the inherent uncertainties associated with this matter, no assurance can be given as to the timing or
outcome of this matter, which could include penalties and company undertakings.
On April 28, 2022, the State of Arkansas filed a complaint in state court alleging violations of the Arkansas Deceptive Trade
Practices Act, gross negligence and negligence, strict liability in tort, unjust enrichment and civil conspiracy related to the sale of
products that may have been contaminated by virtue of rodent infestation and other unsanitary conditions. The State of Arkansas is
seeking injunctive relief, restitution, disgorgement, damages, civil penalties, punitive damages and suspension or revocation of our
authorization to do business in Arkansas.
Seven personal injury lawsuits are pending in state court in Illinois, New York, Massachusetts, Texas, and New Jersey against
Dollar Tree, Family Dollar or both alleging that certain talc products that we sold caused cancer. The plaintiffs seek compensatory,
punitive and exemplary damages, damages for loss of consortium, and attorneys’ fees and costs. Although we have been able to
resolve previous talc lawsuits against us without material loss, given the inherent uncertainties of litigation there can be no assurances
regarding the outcome of pending or future cases. Future costs to litigate these cases are not known but may be material, and it is
uncertain whether our costs will be covered by insurance. In addition, although we have indemnification rights against our vendors in
several of these cases, it is uncertain whether the vendors will have the financial ability to fulfill their obligations to us.
Since August 2022, six personal injury cases have been filed in federal court in California, Missouri, North Carolina and
Minnesota against Dollar Tree, Family Dollar, or both, on behalf of minors alleging that their mothers took acetaminophen while
pregnant, that the acetaminophen interfered with fetal development such that plaintiffs were born with autism and/or ADHD, and that
we knew or should have known of the danger, had a duty to warn and failed to include appropriate warnings on the product labels. The
plaintiffs seek compensatory, punitive and/or exemplary damages, restitution and disgorgement, economic damages, and attorneys’
fees and costs. These cases, along with other cases against many other defendants, have been consolidated in multi-district court
litigation in the Southern District of New York.
Resolved Matters
All personal injury cases that were filed in state court in Pennsylvania against both Dollar Tree and Family Dollar alleging that
both sold Zantac and generic ranitidine products containing N-Nitrosodimethylamine, which is classified by the FDA as a probable
carcinogen, have been dismissed.
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Note 5 - Long-Term Debt
Long-term debt at January 28, 2023 and January 29, 2022 consists of the following:
(in millions)
$1.5 billion Revolving Credit Facility, interest
payable at 5.79% at January 28, 2023
4.00% Senior Notes, due 2025
4.20% Senior Notes, due 2028
2.65% Senior Notes, due 2031
3.375% Senior Notes, due 2051
Total
Maturities of long-term debt are as follows (in millions):
January 28, 2023
January 29, 2022
Unamortized
Debt Discount
and Issuance
Costs
Principal
Unamortized
Debt Discount
and Issuance
Costs
Principal
$
— $
5.1 $
— $
1,000.0
1,250.0
800.0
400.0
2.8
6.9
8.6
5.0
1,000.0
1,250.0
800.0
400.0
6.4
4.0
8.1
9.5
5.0
$ 3,450.0 $
28.4 $ 3,450.0 $
33.0
2023
2024
2025
2026
2027
Thereafter
$
— $
— $
1,000.0 $
— $
— $
2,450.0
Revolving Credit Facility
On December 8, 2021, we entered into a credit agreement (the “Credit Agreement”), with JPMorgan Chase Bank, N.A., as agent,
and the financial institutions from time to time party thereto, providing for a $1.5 billion revolving credit facility (the “Revolving
Credit Facility”), of which up to $350.0 million is available for letters of credit. The Revolving Credit Facility matures on December
8, 2026, subject to extensions permitted under the Credit Agreement.
Loans under the Revolving Credit Facility bear interest at the Adjusted Term SOFR Rate (as defined in the Credit Agreement)
plus 1.125%, subject to adjustment based on (i) our public debt rating and (ii) our leverage ratio. At January 28, 2023, the Revolving
Credit Facility bore interest at 5.79%. We pay certain commitment fees in connection with the Revolving Credit Facility. The
Revolving Credit Facility allows voluntary repayment of outstanding loans at any time without premium or penalty, other than
customary “breakage” costs with respect to Secured Overnight Financing Rate (“SOFR”) loans. There is no required amortization
under the Revolving Credit Facility.
The Revolving Credit Facility contains a number of affirmative and negative covenants that, among other things, and subject to
certain significant baskets and exceptions, restrict our ability to incur subsidiary indebtedness, incur liens, sell all or substantially all of
our (including our subsidiaries’) assets and consummate certain fundamental changes. The Revolving Credit Facility also contains a
maximum 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 Revolving Credit Facility to be declared
due and payable and the commitments thereunder to be terminated.
In connection with entry into the Credit Agreement, we terminated all commitments and fulfilled all obligations under our
existing credit agreement dated April 19, 2018.
Senior Notes
Fiscal 2018 Offering
On April 19, 2018, we 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 (the “Indenture”), between us 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”).
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The Notes are unsecured, unsubordinated obligations of ours and rank equal in right of payment to all of our existing and future
debt and other obligations that are not, by their terms, expressly subordinated in right of payment to the Notes.
The Floating Rate Notes matured on April 17, 2020 and bore interest at a floating rate, reset quarterly, equal to LIBOR plus 70
basis points. The 2023 Notes were scheduled to mature on May 15, 2023 and bore 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. We are required to pay interest on the Fixed Rate Notes semiannually, in arrears, on May 15 and
November 15 of each year to holders of record on the preceding May 1 and November 1, respectively.
We may redeem (or may have redeemed) the Fixed Rate Notes of each series in whole or in part, at our 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 (the date with respect to each such 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, we 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 us 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 our ability and that of our 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.
Fiscal 2021 Offering
On December 1, 2021, we completed the registered offering of $800.0 million aggregate principal amount of 2.65% Senior Notes
due 2031 (the “2031 Notes”) and $400.0 million aggregate principal amount of 3.375% Senior Notes due 2051 (the “2051 Notes” and,
together with the 2031 Notes, the “New Notes”).
The New Notes were issued pursuant to the Indenture, as supplemented by the Second Supplemental Indenture dated as of
December 1, 2021 (the “Second Supplemental Indenture”).
The New Notes are unsecured, unsubordinated obligations of ours and rank equally in right of payment to all of our existing and
future debt and other obligations that are not, by their terms, expressly subordinated in right of payment to the New Notes.
The 2031 Notes mature on December 1, 2031 and bear interest at the rate of 2.650% per annum. The 2051 Notes mature on
December 1, 2051 and bear interest at the rate of 3.375% per annum. We are required to pay interest on the New Notes semi-annually,
in arrears, on June 1 and December 1 of each year to holders of record on the preceding May 15 and November 15, respectively.
We may redeem the New Notes of each series in whole or in part at any time and from time to time prior to (i) in the case of the
2031 Notes, September 1, 2031, and (ii) in the case of the 2051 Notes, June 1, 2051 (the date with respect to each such series, the
“Applicable Par Call Date”), in each case, at a “make-whole” price described in the Second Supplemental Indenture plus accrued and
unpaid interest to, but excluding, the date of redemption. In addition, on or after the Applicable Par Call Date, we may redeem the
New 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 Second Supplemental Indenture) with respect to any
series, the holders of the New Notes of such series may require us to purchase for cash all or a portion of their New Notes of such
series at a purchase price equal to 101% of the principal amount of such New Notes, plus accrued and unpaid interest, if any, to, but
excluding, the date of repurchase. The Indenture limits our ability and that of our subsidiaries, subject to significant baskets and
exceptions, to incur certain secured debt. The 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 New Notes to become or to be declared due and payable, as applicable.
Repayments of Long-term Debt
In the first quarter of 2020, we repaid the remaining $250.0 million outstanding under our $750.0 million Floating Rate Notes.
In the fourth quarter of 2020, we repaid the $300.0 million 5.00% Senior Notes that we assumed upon the acquisition of Family
Dollar in 2015.
In the fourth quarter of 2021, we used the proceeds from the offering of the New Notes discussed above to redeem the $1.0 billion
2023 Notes. We incurred a redemption premium of $43.8 million in connection with the early redemption of the 2023 Notes and
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accelerated the expensing of $2.7 million of amortizable non-cash deferred financing and original issue discount costs, which are
reflected in “Interest expense, net” within the accompanying consolidated income statements for the year ended January 29, 2022.
Debt Covenants
As of January 28, 2023, we were in compliance with our debt covenants.
Note 6 - Leases
The lease cost for operating leases that was recognized in the accompanying consolidated income statements was as follows:
(in millions)
Operating lease cost
Variable lease cost
Short-term lease cost
Total lease cost*
Year Ended
January 28, 2023
January 29, 2022
January 30, 2021
$
$
1,652.8 $
1,602.8 $
428.8
10.8
417.8
5.6
2,092.4 $
2,026.2 $
1,551.2
391.4
9.7
1,952.3
*Excludes sublease income, which is immaterial
As of January 28, 2023, maturities of lease liabilities were as follows:
$
2023
2024
2025
2026
2027
Thereafter
Total undiscounted lease payments
Less interest
Present value of lease liabilities
$
(in millions)
1,657.7
1,462.8
1,232.0
994.0
733.0
1,358.6
7,438.1
733.2
6,704.9
The future lease payments above exclude $502.3 million of legally binding minimum lease payments for leases signed but not yet
commenced as of January 28, 2023.
Information regarding the weighted-average remaining lease term and the weighted-average discount rate for operating leases is
as follows:
Weighted-average remaining lease term (years)
January 28, 2023
5.7
January 29, 2022
5.9
January 30, 2021
6.1
Weighted-average discount rate
3.6 %
3.4 %
3.9 %
The following represents supplemental information pertaining to our operating lease arrangements:
(in millions)
January 28, 2023
January 29, 2022
January 30, 2021
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases
$
1,559.7 $
1,579.8 $
1,519.4
Year Ended
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Distribution Center Lease and Related Bonds
In May 2017, we entered into a long-term property lease (“Missouri Lease”) which includes land and the construction of a 1.2
million square foot distribution center in Warrensburg, Missouri (“Distribution Center Project”). The Distribution Center Project was
completed in 2018 and our investment in the project of $88.4 million as of January 28, 2023 is reflected in “Property, plant and
equipment, net.” The Missouri Lease commenced upon its execution in May 2017 and expires on December 1, 2032. We have two
options to extend the Missouri Lease term for up to a combined additional ten years. Following the expiration of the lease, the property
reverts back to us.
In addition to being a party to the Missouri Lease, we are also the owner of bonds which were issued in May 2017, are secured by
the Missouri Lease and expire December 1, 2032 (“Missouri Bonds”). The Missouri Bonds are debt issued by the lessor in the
Missouri Lease. Therefore, we hold the debt instrument pertaining to our Missouri Lease obligation. Because a legal right of offset
exists, we are accounting for the Missouri Bonds as a reduction of our Missouri Lease obligation in the accompanying consolidated
balance sheets.
Note 7 - Fair Value Measurements
Fair value is defined as an exit price, representing the amount that would be received to sell an asset or paid to transfer a liability
in an orderly transaction between market participants. As such, fair value is a market-based measurement that should be determined
based on assumptions that market participants would use in pricing an asset or liability. As a basis for considering such assumptions, a
fair value hierarchy has been established that prioritizes the inputs used to measure fair value. The hierarchy gives the highest priority
to unadjusted quoted prices in active markets for identical assets or liabilities (level 1 measurement) and the lowest priority to
unobservable inputs (level 3 measurements). The three levels of the fair value hierarchy are as follows:
Level 1 - Quoted prices in active markets for identical assets or liabilities;
Level 2 - Quoted prices for similar instruments in active markets; quoted prices for identical or similar instruments in markets
that are not active; and
Level 3 - Unobservable inputs in which there is little or no market data which require the reporting entity to develop its own
assumptions.
As required, financial assets and liabilities are classified in the fair value hierarchy in their entirety based on the lowest level of
input that is significant to the fair value measurement. Our assessment of the significance of a particular input to the fair value
measurement requires judgment and may affect the valuation of fair value assets and liabilities and their placement within the fair
value hierarchy levels.
Assets and Liabilities Measured at Fair Value on a Nonrecurring Basis
Certain assets and liabilities are measured at fair value on a nonrecurring basis; that is, the assets and liabilities are not
measured at fair value on an ongoing basis but are subject to fair value adjustments in certain circumstances (e.g., when there is
evidence of impairment). We review certain store assets for evidence of impairment. The fair values are determined based on the
income approach, in which we utilize internal cash flow projections over the life of the underlying lease agreements discounted based
on our risk-adjusted rate. These measures of fair value, and related inputs, are considered a Level 3 approach under the fair value
hierarchy. Refer to Note 1 under the caption “Impairment of Long-Lived Assets and Long-Lived Assets to be Disposed of” for
information regarding the impairment charges recorded in fiscal 2022, 2021 and 2020.
Our indefinite-lived intangible assets are recorded at carrying value, and, if impaired, are adjusted to fair value using Level 3
inputs. Refer to Note 1 under the caption “Goodwill and Nonamortizing Intangible Assets” for further information regarding the
process of determining the fair value of these assets.
Fair Value of Financial Instruments
The carrying amounts of Cash and cash equivalents, Restricted cash and Accounts payable as reported in the accompanying
consolidated balance sheets approximate fair value due to their short-term maturities. The carrying value of our Revolving Credit
Facility approximates its fair value.
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The aggregate fair values and carrying values of our long-term borrowings were as follows:
(in millions)
Level 1
Senior Notes
January 28, 2023
Fair
Value
Carrying
Value
January 29, 2022
Fair
Value
Carrying
Value
$ 3,162.8 $ 3,426.7 $ 3,558.5 $ 3,423.4
The fair values of our Senior Notes were determined using Level 1 inputs as quoted prices in active markets for identical assets or
liabilities are available.
Note 8 - Shareholders’ Equity
Preferred Stock
We are authorized to issue 10,000,000 shares of Preferred Stock, $0.01 par value per share. No preferred shares are issued and
outstanding at January 28, 2023 and January 29, 2022.
Net Income Per Share
The following table sets forth the calculations of basic and diluted net income per share:
(in millions, except per share data)
Basic net income per share:
Net income
Weighted average number of shares outstanding
Basic net income per share
Diluted net income per share:
Net income
Weighted average number of shares outstanding
Dilutive effect of stock options and restricted stock (as determined by
applying the treasury stock method)
Weighted average number of shares and dilutive potential shares
outstanding
Diluted net income per share
January 28,
2023
Year Ended
January 29,
2022
January 30,
2021
$
$
$
$
1,615.4 $
223.2
7.24 $
1,327.9 $
227.9
5.83 $
1,341.9
236.4
5.68
1,615.4 $
223.2
1,327.9 $
227.9
1,341.9
236.4
0.9
1.1
0.9
224.1
7.21 $
229.0
5.80 $
237.3
5.65
For the year ended January 28, 2023, stock options and other stock-based awards of 3.0 million shares were excluded from the
calculation of diluted net income per share because their inclusion would be anti-dilutive. For the years ended January 29, 2022 and
January 30, 2021, substantially all of the stock options outstanding were included in the calculation of the weighted average number of
shares and dilutive potential shares outstanding.
Share Repurchase Programs
We repurchased 4,613,696, 9,156,898 and 3,982,478 shares of common stock on the open market in fiscal 2022, fiscal 2021 and
fiscal 2020, respectively, for $647.5 million, $950.0 million and $400.0 million, respectively. At January 28, 2023, we had $1.85
billion remaining under our Board repurchase authorization.
Note 9 – Employee Benefit Plans
Dollar Tree Retirement Savings Plan
We maintain a 401(k) plan which is available to all full-time, United States-based employees who are at least 18 years of age.
Eligible employees may make elective salary deferrals. We may make contributions, at our discretion, to eligible employees who have
completed one year of service in which they have worked at least 1,000 hours.
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Contributions to and reimbursements by us of expenses of the plan were recorded in the accompanying consolidated income
statements as follows:
(in millions)
Cost of sales
Selling, general and administrative expenses
Total
Year Ended
January 28,
January 29,
January 30,
2023
2022
2021
$
$
8.6 $
8.2 $
23.1
20.6
31.7 $
28.8 $
7.4
19.0
26.4
All eligible employees are immediately vested in any company match contributions under the 401(k) plan.
Note 10 - Stock-Based Compensation Plans
Fixed Stock-Based Compensation Plans
The 2011 Omnibus Incentive Plan permitted us to grant to our employees, consultants and directors up to 4.0 million shares of our
Common Stock plus any shares available under former plans which were previously approved by the shareholders. The plan permitted
us to grant equity awards in the form of incentive stock options, non-qualified stock options, stock appreciation rights, restricted stock
awards, restricted stock units (“RSUs”), performance bonuses, performance share units (“PSUs”), non-employee director stock options
and other equity-related awards. As of March 17, 2021, the plan was no longer available for new grants of awards, but all outstanding
awards that were granted under the plan prior to March 17, 2021 continue to be governed by the terms and conditions of the plan and
applicable award agreements. Effective June 10, 2021, the 2011 Omnibus Incentive Plan was replaced and superseded by the 2021
Omnibus Incentive Plan (“Omnibus Plan”). The Omnibus Plan permits us to grant up to 6.5 million shares of our Common Stock to
our employees, consultants and directors. The form of equity awards authorized for grant under the Omnibus Plan are substantially the
same as those permitted by the predecessor plan.
Any restricted stock, RSUs or PSUs awarded are subject to certain general restrictions. The restricted stock shares or units may
not be sold, transferred, pledged or disposed of until the restrictions on the shares or units have lapsed or have been removed under the
provisions of the Omnibus Plan. In addition, if a holder of restricted shares or units ceases to be employed by us, any shares or units in
which the restrictions have not lapsed will be forfeited.
The 2013 Director Deferred Compensation Plan permits any of our directors who receive a retainer or other fees for Board or
Board committee service to defer all or a portion of such fees until a future date, at which time they may be paid in cash or shares of
our common stock, or receive all or a portion of such fees in non-statutory stock options. Deferred fees that are paid out in cash will
earn interest at the 30-year Treasury Bond Rate. If a director elects to be paid in common stock, the number of shares will be
determined by dividing the deferred fee amount by the closing market price of a share of our common stock on the date of deferral.
The number of options issued to a director will equal the deferred fee amount divided by 33% of the price of a share of our common
stock. The exercise price will equal the fair market value of our common stock at the date the option is issued. The options are fully
vested when issued and have a term of 10 years.
In conjunction with the acquisition of Family Dollar in 2015, we assumed the Family Dollar Stores, Inc. 2006 Incentive Plan (the
“2006 Plan”). The 2006 Plan permitted the granting of a variety of compensatory award types, including stock options and
performance share rights.
Total stock-based compensation expense was recorded in the accompanying consolidated income statements as follows:
(in millions)
Cost of sales
Selling, general and administrative expenses
Total stock-based compensation expense
Excess tax benefit (deficit) on stock-based compensation
recognized in the Provision for income taxes
January 28,
2023
Year Ended
January 29,
2022
January 30,
2021
$
$
$
19.7 $
18.3 $
90.7
61.6
110.4 $
79.9 $
15.4
68.5
83.9
9.8 $
8.5 $
(2.8)
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Restricted Stock
We issue service-based RSUs to employees and officers and issue PSUs to certain of our officers. We recognize expense based on
the estimated fair value of the RSUs or PSUs granted over the requisite service period, which is generally three years, on a straight-
line basis or a shorter period based on the retirement eligibility of the grantee. The fair value of RSUs and PSUs is determined based
on our closing stock price on the grant date.
Service-Based RSUs
The following table summarizes the status of service-based RSUs as of January 28, 2023 and changes during the year then ended:
Nonvested at January 29, 2022
Granted
Vested
Forfeited
Nonvested at January 28, 2023
Number of Shares
Weighted Average
Grant Date Fair
Value
1,096,066 $
468,929
(546,036)
(150,239)
868,720 $
94.16
158.05
94.24
120.72
123.99
The total fair value of the service-based restricted shares vested during the years ended January 28, 2023, January 29, 2022 and
January 30, 2021 was $51.5 million, $56.8 million and $48.5 million, respectively. The weighted average grant date fair value of the
RSUs granted in 2022, 2021 and 2020 was $158.05, $109.01 and $73.24, respectively. As of January 28, 2023, there was $58.0
million of total unrecognized compensation expense related to these RSUs which is expected to be recognized over a weighted-
average period of 1.2 years.
PSUs
The following table summarizes the status of PSUs as of January 28, 2023 and changes during the year then ended:
Nonvested at January 29, 2022
Granted
Vested
Forfeited
Nonvested at January 28, 2023
Number of Shares
Weighted Average
Grant Date Fair
Value
584,972 $
206,044
(445,912)
(190,281)
154,823 $
91.86
159.57
99.87
116.61
125.84
The total fair value of the PSUs vested during the years ended January 28, 2023, January 29, 2022 and January 30, 2021 was
$44.5 million, $17.3 million and $19.6 million, respectively. The weighted average grant date fair value of the PSUs granted in 2022,
2021 and 2020 was $159.57, $95.04 and $74.46, respectively. As of January 28, 2023, there was $9.9 million of total unrecognized
compensation expense related to these PSUs which is expected to be recognized over a weighted-average period of 0.9 years.
Stock Options
Stock options are valued using the Black-Scholes option pricing model and compensation expense is recognized on a straight-line
basis over the requisite service period.
Options granted in 2021 and 2020 are immaterial. On March 19, 2022, we granted a one-time award of options to purchase
2,252,587 shares of our common stock with a fair value of $135.6 million to the Executive Chairman of the Board, who was also
appointed Chief Executive Officer of the company effective January 29, 2023. The grant of options was subject to the terms and
conditions of a five-year Executive Agreement. The option award has a ten-year term and is scheduled to vest in equal installments on
each of the first five anniversaries of the grant date, subject to the Executive Chairman’s continued employment with the company
through each vesting date. The assumptions used in the Black-Scholes option pricing model for this award are as follows:
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Expected term (in years)
Expected stock price volatility
Dividend yield
Risk-free interest rate
6.5
34.1 %
— %
2.15 %
The simplified method was used to estimate the expected term of the options due to our lack of historical option exercise
experience and the “plain vanilla” characteristics of the option award. The simplified method results in an expected term equal to the
average of the weighted average time-to-vesting and the contractual life of the options. The expected stock price volatility is based on
the historical volatility of our common stock over a period matching the expected term of the options granted. The dividend yield
reflects that we have never paid cash dividends. The risk-free interest rate represents the yield curve in effect at the time of grant for
U.S. Treasury zero-coupon securities with maturities that approximate the expected term of the options.
Certain of our directors elected to defer their compensation into stock options under the 2013 Director Deferred Compensation
Plan. These options vest immediately and are expensed on the grant date.
The following tables summarize information about options outstanding at January 28, 2023 and changes during the year then
ended:
Number of
Shares
Weighted
Average Per
Share Exercise
Price
Weighted
Average
Remaining
Term (Years)
Aggregate
Intrinsic Value
(in millions)
Outstanding at January 29, 2022
Granted
Exercised
Outstanding at January 28, 2023
Exercisable at January 28, 2023
24,541 $
2,252,979
(583)
2,276,937 $
24,350 $
90.38
157.17
76.95
156.46
90.92
9.1 $
3.8 $
1.4
1.4
The intrinsic value of options exercised during 2022, 2021 and 2020 was less than $0.1 million, $5.6 million and $0.9 million,
respectively. As of January 28, 2023, there was $112.1 million of total unrecognized compensation expense related to these options
which is expected to be recognized over a weighted-average period of 4.1 years.
Note 11 – Segments and Disaggregated Revenue
We operate more than 16,300 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 CODM
regularly reviews to analyze performance and allocate resources.
We measure the results of our segments using, among other measures, each segment’s net sales, gross profit and operating
income. The CODM reviews these metrics for each of our reporting segments. We may revise the measurement of each segment’s
operating income, as determined by the information regularly reviewed by the CODM. If the measurement of a segment changes, prior
period amounts and balances are reclassified to be comparable to the current period’s presentation. Corporate, support and Other
consists primarily of store support center costs that are considered shared services and therefore these selling, general and
administrative costs are excluded from our two reporting business segments. These costs include operating expenses for our store
support center and the results of operations for our Summit Pointe property in Chesapeake, Virginia. The Family Dollar segment
Operating income includes advertising revenue, which is a component of Other revenue in the accompanying consolidated income
statements.
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Information for our segments, as well as for Corporate, support and Other, including the reconciliation to Income before income
taxes, is as follows:
(in millions)
Consolidated Income Statement Data:
Net sales:
Dollar Tree
Family Dollar
Consolidated Net sales
Gross profit:
Dollar Tree
Family Dollar
Consolidated Gross profit
Operating income (loss):
Dollar Tree
Family Dollar
Corporate, support and Other
Consolidated Operating income
Interest expense, net
Other expense, net
Year Ended
January 28,
January 29,
January 30,
2023
2022
2021
$ 15,405.7 $ 13,922.1 $ 13,265.0
12,912.5
12,387.7
12,243.4
$ 28,318.2 $ 26,309.8 $ 25,508.4
$
5,775.5 $
4,603.6 $
4,543.8
3,146.4
3,122.3
3,243.6
$
8,921.9 $
7,725.9 $
7,787.4
$
2,536.0 $
1,607.0 $
1,598.0
127.5
543.1
(427.2)
(338.7)
655.6
(365.7)
2,236.3
1,811.4
1,887.9
125.3
0.4
178.9
0.3
147.3
0.8
Income before income taxes
$
2,110.6 $
1,632.2 $
1,739.8
Depreciation and amortization expense:
Dollar Tree
Family Dollar
Corporate, support and Other
$
338.8 $
316.0 $
402.4
26.8
369.8
30.2
Consolidated depreciation and amortization expense
$
768.0 $
716.0 $
302.3
352.6
31.8
686.7
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(in millions)
Consolidated Balance Sheet Data:
Goodwill:
Dollar Tree
Family Dollar
Consolidated Goodwill
Total assets:
Dollar Tree
Family Dollar
Corporate, support and Other
Consolidated Total assets
Additions to property, plant and equipment:
Dollar Tree
Family Dollar
Corporate, support and Other
As of
January 28,
January 29,
2023
2022
$
423.6 $
424.9
1,559.5
1,559.5
$
1,983.1 $
1,984.4
$
9,914.6 $
9,358.4
12,562.2
11,871.8
545.3
491.6
$ 23,022.1 $ 21,721.8
$
548.7 $
605.2
94.9
477.1
498.9
45.2
Consolidated additions to property, plant and equipment
$
1,248.8 $
1,021.2
Disaggregated Revenue
The following table summarizes net sales by merchandise category for our segments:
(in millions)
Dollar Tree segment net sales by
merchandise category:
Consumable
Variety
Seasonal
Total Dollar Tree segment net sales
Family Dollar segment net sales by
merchandise category:
Consumable
Home products
Apparel and accessories
Seasonal and electronics
January 28,
2023
Year Ended
January 29,
2022
January 30,
2021
$ 6,978.8
45.3 % $ 6,334.5
45.5 % $ 6,407.0
7,456.3
48.4 %
6,794.0
48.8 %
6,194.8
970.6
$ 15,405.7
6.3 %
793.6
100.0 % $ 13,922.1
5.7 %
663.2
100.0 % $ 13,265.0
48.3 %
46.7 %
5.0 %
100.0 %
$ 10,036.2
77.7 % $ 9,446.5
76.3 % $ 9,367.8
76.5 %
982.5
732.2
7.6 %
1,033.9
8.3 %
1,078.1
5.7 %
781.5
6.3 %
690.1
1,161.6
9.0 %
1,125.8
9.1 %
1,107.4
8.8 %
5.6 %
9.1 %
Total Family Dollar segment net sales
$ 12,912.5
100.0 % $ 12,387.7
100.0 % $ 12,243.4
100.0 %
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Item 9. Changes in and Disagreements With Accountants on Accounting and Financial Disclosure
None.
Item 9A. Controls and Procedures
Evaluation of Disclosure Controls and Procedures
We maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed in our
reports under the Securities Exchange Act of 1934 (Exchange Act) is recorded, processed, summarized and reported within the time
periods specified in the rules and forms of the Securities and Exchange Commission, and that such information is accumulated and
communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely
decisions regarding required disclosure. In designing and evaluating the disclosure controls and procedures, we recognize that any
controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired
control objectives, and management necessarily is required to apply our judgment in evaluating the cost-benefit relationship of
possible controls and procedures.
Our management has carried out, with the participation of our Chief Executive Officer and Chief Financial Officer, an evaluation
of the effectiveness of our 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 January 28, 2023, our 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.
Management’s Report on Internal Control over Financial Reporting
Our management is responsible for establishing and maintaining adequate internal control over financial reporting, as defined in
Exchange Act Rule 13a-15(f). Our management conducted an assessment of our internal control over financial reporting based on the
framework established by the Committee of Sponsoring Organizations of the Treadway Commission in Internal Control - Integrated
Framework (2013). Based on this assessment, our management has concluded that, as of January 28, 2023, our internal control over
financial reporting is effective.
Our independent registered public accounting firm, KPMG LLP, has audited our consolidated financial statements and has issued
an attestation report on the effectiveness of our internal control over financial reporting. Their report appears below.
Changes in Internal Controls
There were no changes in our internal control over financial reporting that occurred during our most recently completed fiscal
quarter that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
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Report of Independent Registered Public Accounting Firm
To the Shareholders and Board of Directors
Dollar Tree, Inc.:
Opinion on Internal Control Over Financial Reporting
We have audited Dollar Tree, Inc. and subsidiaries’ (the Company) internal control over financial reporting as of January 28, 2023,
based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring
Organizations of the Treadway Commission. In our opinion, the Company maintained, in all material respects, effective internal
control over financial reporting as of January 28, 2023, based on criteria established in Internal Control – Integrated Framework
(2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States)
(PCAOB), the consolidated balance sheets of the Company as of January 28, 2023 and January 29, 2022, the related consolidated
income statements, statements of comprehensive income, shareholders’ equity, and cash flows for each of the years in the three-year
period ended January 28, 2023, and the related notes (collectively, the consolidated financial statements), and our report dated March
10, 2023 expressed an unqualified opinion on those consolidated financial statements.
Basis for Opinion
The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of
the effectiveness of internal control over financial reporting, included in the accompanying Management’s Report on Internal Control
over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based
on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the
Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange
Commission and the PCAOB.
We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects.
Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting,
assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control
based on the assessed risk. Our audit also included performing such other procedures as we considered necessary in the circumstances.
We believe that our audit provides a reasonable basis for our opinion.
Definition and Limitations of Internal Control Over Financial Reporting
A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of
financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting
principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the
maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the
company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in
accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in
accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding
prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect
on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections
of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in
conditions, or that the degree of compliance with the policies or procedures may deteriorate.
/s/ KPMG LLP
Norfolk, Virginia
March 10, 2023
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Item 9B. Other Information
On March 8, 2023, the Board of Directors of the Company approved an amendment to Article III, Section 2 of the Company’s
Amended and Restated By-Laws to reduce the size of the Board from twelve directors to ten directors, effective immediately prior to
the convening of the 2023 annual meeting of shareholders on June 13, 2023.
The above summary does not purport to be complete and is qualified in its entirety by reference to the Amended and Restated By-
Laws, effective June 13, 2023, a copy of which is filed as Exhibit 3.3 to this Annual Report on Form 10-K and is incorporated herein
by reference.
Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections.
Not Applicable.
Item 10. Directors, Executive Officers and Corporate Governance
PART III
The information concerning our Directors and Executive Officers required by this Item is incorporated by reference to Dollar
Tree, Inc.’s Proxy Statement relating to our 2023 Annual Meeting (“Proxy Statement”), under the captions “Director Biographies” and
“Executive Officers.”
To the extent disclosure of any delinquent report under Section 16(a) of the Securities Exchange Act of 1934 is made by us, such
disclosure will be set forth under the caption “Delinquent Section 16(a) Reports” in our Proxy Statement, which is incorporated herein
by reference.
The information concerning our audit committee and audit committee financial experts required by this Item is incorporated
herein by reference to the Proxy Statement, under the caption “The Board and Its Committees.”
The information concerning our code of ethics required by this Item is incorporated by reference to the Proxy Statement, under
the caption “Board Governance - Code of Ethics.”
Item 11. Executive Compensation
Information set forth in the Proxy Statement under the captions “Compensation Committee Report on Executive Compensation,”
“Compensation Discussion and Analysis,” “Annual Compensation of Executive Officers,” “Pay Ratio Disclosure,” and “Director
Compensation” is incorporated herein by reference.
Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
Equity Compensation Plans
The following table summarizes information regarding shares issuable as of January 28, 2023, under our equity compensation
plans, including the number of shares of common stock subject to options, restricted stock units, deferred shares and other rights
granted to employees and members of our Board of Directors; the weighted-average exercise price of outstanding options; and the
number of shares remaining available for future award grants under these plans. Additional information regarding our equity
compensation plans can be found in Note 10 to our consolidated financial statements.
(a)
Number of securities
to be issued upon
exercise of
outstanding options,
warrants and rights
(b)
Weighted-average
exercise price of
outstanding
options, warrants
and rights
(c)
Number of securities remaining
available for future issuance
under equity compensation plans
(excluding securities reflected in
column (a))
1,240,339 $
2,252,587 $
108.38
157.17
8,696,011
—
Equity compensation plan category
Plans approved by security holders1
Plans not approved by security holders2
______________
(a) Amounts represent outstanding options, restricted stock units and deferred (“phantom”) shares as of January 28, 2023.
(b) Not included in the calculation of weighted-average exercise price are (i) 1,192,291 restricted stock units and (ii) 37,273 director
deferred shares.
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(c) The 8,696,011 shares remaining available for future issuance under our equity-based plans approved by security holders includes
5,799,159 shares remaining under our 2021 Omnibus Incentive Plan, 2,507,678 shares remaining under our 2015 Employee Stock
Purchase Plan and 389,174 shares remaining under our 2013 Director Deferred Compensation Plan.
1
2
Equity-based plans approved by our shareholders include: the 2013 Director Deferred Compensation Plan, the 2015 Employee
Stock Purchase Plan (which replaced a predecessor plan), and the 2021 Omnibus Incentive Plan (which replaced the 2011
Omnibus Incentive Plan). As of March 17, 2021, the 2011 Omnibus Incentive Plan was no longer available for new grants of
awards, but all outstanding awards that were granted under the plan prior to March 17, 2021 continue to be governed by the terms
and conditions of the plan and applicable award agreements.
In connection with our employment of Richard W. Dreiling as Executive Chairman of the Board in March 2022, Mr. Dreiling was
granted a one-time award of options to purchase 2,252,587 shares of Company common stock as an employment inducement
grant within the meaning of Rule 5635(c)(4) of the NASDAQ Listing Rules. The amount shown in the table does not include
13,575 shares to be issued upon the exercise of options with a weighted-average exercise price of $77.06 that were granted under
the Family Dollar 2006 Incentive Plan and assumed by us in connection with our merger with Family Dollar.
Information set forth in the Proxy Statement under the caption “Ownership of Common Stock,” with respect to security ownership
of certain beneficial owners and management, is incorporated herein by reference.
Item 13. Certain Relationships and Related Transactions, and Director Independence
Information set forth in the Proxy Statement under the caption “Certain Relationships and Related Transactions,” is incorporated
herein by reference.
The information concerning the independence of our directors required by this Item is incorporated by reference to the Proxy
Statement under the caption “Board Governance - Independence.”
Item 14. Principal Accountant Fees and Services
Information set forth in the Proxy Statement under the caption “Ratification of Appointment of Independent Auditors,” is
incorporated herein by reference.
Item 15. Exhibit and Financial Statement Schedules
1. Documents filed as part of this report:
PART IV
1. Financial Statements. Reference is made to the Index to the Consolidated Financial Statements set forth under Part II,
Item 8 of this Form 10-K.
2. Financial Statement Schedules. All schedules for which provision is made in the applicable accounting regulations of the
Securities and Exchange Commission are not required under the related instructions, are not applicable, or the
information is included in the Consolidated Financial Statements, and therefore have been omitted.
3. Exhibits. The following exhibits are filed as part of, or incorporated by reference into, this report.
Exhibit
3.1
3.2
3.3
4.1
4.2.1
4.2.2
Exhibit Description
Incorporated by Reference
Filing
Date
Form Exhibit
Filed
Herewith
Amended and Restated Articles of Incorporation of Dollar Tree,
Inc., effective October 14, 2022
Amended and Restated By-Laws of Dollar Tree, Inc., effective
January 30, 2023
Amended and Restated By-Laws of Dollar Tree, Inc., effective June
13, 2023
Form of Common Stock Certificate
Indenture, dated as of April 2, 2018, between Dollar Tree, Inc., as
issuer, and U.S. Bank National Association, as trustee
First Supplemental Indenture, dated as of April 19, 2018, between
Dollar Tree, Inc. and U.S. Bank National Association, as trustee
10-Q
8-K
8-K
S-3
ASR
8-K
3.1
3.1
4.1
4.1
4.1
11/22/2022
1/31/2023
3/13/2008
4/2/2018
4/20/2018
X
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Exhibit
4.2.3
4.3
Exhibit Description
Second Supplemental Indenture, dated as of December 1, 2021,
between Dollar Tree, Inc. and U.S. Bank National Association, as
trustee
Description of Securities Registered under Section 12 of the
Securities Exchange Act of 1934
10.1
* Terms of director compensation (as described under the caption
“Director Compensation”)
10.2.1 * Change in Control Retention Agreement between Dollar Tree, Inc.
and Kevin Wampler, Chief Financial Officer
10.2.2 * Amendment to Change in Control Retention Agreement between
Dollar Tree, Inc. and Kevin Wampler, Chief Financial Officer
10.3
* Description of Dollar Tree, Inc. Management Incentive
Compensation Plan, effective for the fiscal year ending January 29,
2022 and thereafter
10.4.1 * 2011 Omnibus Incentive Plan effective as of March 17, 2011
10.4.2 * First Amendment to the 2011 Omnibus Incentive Plan dated June
16, 2016
10.4.3 * 2011 Omnibus Incentive Plan, as amended and restated effective
June 12, 2019
10.5
* Form of Non-employee Director Option Agreement under the 2011
Omnibus Incentive Plan
10.6.1 * Form of Restricted Stock Unit Agreement under the 2011 Omnibus
Incentive Plan
10.6.2 * Form of Restricted Stock Unit Agreement under the 2011 Omnibus
Incentive Plan
Incorporated by Reference
Filing
Date
Form Exhibit
Filed
Herewith
8-K
4.1
12/1/2021
DEF
14A
N/A
5/18/2022
8-K
10.1
12/5/2008
8-K
10.1
10/11/2011
10-Q
10.1
5/27/2021
8-K
10-Q
10.1
10.1
6/22/2011
9/2/2016
10-Q
10.1
8/29/2019
8-K
10.4
6/22/2011
8-K
10.2
3/21/2012
10-K
10.34
3/27/2019
10.7
* Form of Executive Officer Nonstatutory Stock Option Agreement
under the 2011 Omnibus Incentive Plan
10-K
10.54
3/28/2017
10.8
* Form of Long-Term Performance Plan Award Agreement under the
2011 Omnibus Incentive Plan
10.9
* Form of Performance Stock Unit Agreement under the 2011
Omnibus Incentive Plan
10.10
* Dollar Tree, Inc. 2015 Employee Stock Purchase Plan, effective
September 1, 2015
10.11 * Dollar Tree and Family Dollar Supplemental Deferred
Compensation Plan
10.12.1 * 2013 Director Deferred Compensation Plan, as amended and
restated effective December 31, 2016
10.12.2 * 2013 Director Deferred Compensation Plan, as amended and
restated effective June 10, 2021
10.12.3 * Amendment to the Dollar Tree, Inc. 2013 Director Deferred
Compensation Plan, effective March 8, 2023
10.13 * Form of Change in Control Retention Agreement for Executive
Officers (portions of the exhibit have been omitted pursuant to a
request for confidential treatment)
10-Q
10.1
5/28/2020
10-K
10.33
3/27/2019
S-8
4.0
10/28/2015
10-Q
10.1
8/24/2017
10-K
10.35
3/16/2018
8-K
10.6
6/11/2021
10-Q
10.1
11/29/2018
10.14.1 * Form of Executive Agreement (portions of the exhibit have been
omitted pursuant to a request for confidential treatment)
10-Q
10.2
11/29/2018
10.14.2 * Form of letter agreement amending Executive Agreements for
Executive Officers at the level of Chiefs (EVP)
10.14.3 * Revised Form of Executive Agreement for Executive Officers at the
level of Chiefs (EVP) (portions of the exhibit have been omitted
pursuant to Item 601(b)(10)(iv) of Regulation S-K)
10.15.1 * Dollar Tree, Inc. 2021 Omnibus Incentive Plan
10.15.2 * First Amendment to the Dollar Tree, Inc. 2021 Omnibus Incentive
Plan, effective November 29, 2022
10.16 * Form of Performance-Based Restricted Stock Unit Agreement under
the 2021 Omnibus Incentive Plan
8-K
10.1
3/7/2022
10-Q
10.1
8/25/2022
8-K
10.1
6/11/2021
8-K
10.2
6/11/2021
67
X
X
X
Table of Contents
Exhibit
Exhibit Description
10.17 * Form of Long-Term Performance Plan Award Agreement under the
2021 Omnibus Incentive Plan
10.18 * Form of Restricted Stock Unit Agreement (Standard) under the
2021 Omnibus Incentive Plan
10.19 * Form of Non-Employee Director Nonstatutory Stock Option
Agreement under the 2021 Omnibus Incentive Plan
Credit Agreement, dated as of December 8, 2021, among Dollar
Tree, Inc., JPMorgan Chase Bank, N.A., as agent and the lenders
and other parties thereto
10.20
10.21 * Addendum to Executive Agreement, by and between Dollar Tree,
Inc. and Michael Witynski, dated March 1, 2022
10.22 * Post-Retirement Benefits Agreement, by and between Dollar Tree,
Inc. and Bob Sasser, dated March 2, 2022
10.23 * Form of Indemnification Agreement for Directors and Executive
10.24
Officers
Stewardship Framework Agreement, by and between Dollar Tree,
Inc. and MR Cobalt Advisor LLC, on behalf of itself and its
affiliates and associates, dated March 8, 2022
10.25.1 * Executive Agreement, effective March 19, 2022, by Richard W.
Dreiling and Dollar Tree, Inc. (portions of the exhibit have been
omitted pursuant to Item 601(b)(10)(iv) of Regulation S-K)
10.25.2 * Amendment to Executive Agreement, dated January 25, 2023, by
the Company and Richard W. Dreiling
10.26 * Nonstatutory Stock Option Agreement, effective March 19, 2022,
by Richard W. Dreiling and Dollar Tree, Inc.
10.27 * Employment Agreement between Dollar Tree Distribution, Inc. and
John Flanigan, effective May 9, 2022 (portions of the exhibit have
been omitted pursuant to Item 601(b)(10)(iv) of Regulation S-K)
10.28 * Letter Agreement amending the Executive Agreement between
Dollar Tree, Inc. and Kevin Wampler
10.29 * Form of Performance-Based Restricted Stock Unit Agreement under
the 2021 Omnibus Incentive Plan
10.30 * Form of Restricted Stock Unit Agreement (Standard) under the
2021 Omnibus Incentive Plan
10.31 * Form of Nonstatutory Stock Option Agreement under the 2021
21.1
23.1
31.1
31.2
32.1
32.2
101
104
Omnibus Incentive Plan
Subsidiaries of the Registrant
Consent of Independent Registered Public Accounting Firm
Certification of Chief Executive Officer pursuant to Section 302 of
the Sarbanes-Oxley Act of 2002
Certification of Chief Financial Officer pursuant to Section 302 of
the Sarbanes-Oxley Act of 2002
Certification of Chief Executive Officer pursuant to Section 906 of
the Sarbanes-Oxley Act of 2002
Certification of Chief Financial Officer pursuant to Section 906 of
the Sarbanes-Oxley Act of 2002
The following financial statements from our Form 10-K for the
fiscal year ended January 28, 2023, formatted in Inline XBRL: (i)
Consolidated Income Statements, (ii) Consolidated Statements of
Comprehensive Income, (iii) Consolidated Balance Sheets, (iv)
Consolidated Statements of Shareholders’ Equity, (v) Consolidated
Statements of Cash Flows and (vi) Notes to Consolidated Financial
Statements
The cover page from our Form 10-K for the fiscal year ended
January 28, 2023, formatted in Inline XBRL and contained in
Exhibit 101
*Management contract or compensatory plan or arrangement
68
Incorporated by Reference
Filing
Date
Form Exhibit
Filed
Herewith
8-K
8-K
8-K
10.3
6/11/2021
10.4
6/11/2021
10.5
6/11/2021
8-K
10.1
12/9/2021
8-K
10.2
3/7/2022
8-K
8-K
10.3
3/7/2022
10.1
3/7/2022
8-K
10.1
3/8/2022
8-K
10.1
3/21/2022
8-K/
A
8-K
10.1
1/27/2023
10.2
3/21/2022
10-Q
10.2
8/25/2022
10-Q
10.1
11/22/2022
X
X
X
X
X
X
X
X
X
X
X
Table of Contents
Item 16. Form 10-K Summary
None.
69
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SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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.
March 10, 2023
Date
March 10, 2023
Date
March 10, 2023
Date
DOLLAR TREE, INC.
(Registrant)
By: /s/ Richard W. Dreiling
Richard W. Dreiling
Chairman and Chief Executive Officer
(Principal Executive Officer)
By: /s/ Jeffrey A. Davis
Jeffrey A. Davis
Chief Financial Officer
(Principal Financial Officer)
By: /s/ Kathleen E. Mallas
Kathleen E. Mallas
Senior Vice President - Chief Accounting Officer and Treasurer
(Principal Accounting Officer)
70
Table of Contents
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons
on behalf of the registrant and in the capacities and on the dates indicated. Each of the directors of the registrant whose signature
appears below hereby appoints Jeffrey A. Davis, Kathleen E. Mallas, and John S. Mitchell, and each of them severally, as his or her
attorney-in-fact to sign in his or her name and behalf, in any and all capacities stated below, and to file with the Securities and
Exchange Commission any and all amendments to this report, making such changes in this report as appropriate, and generally to do
all such things on their behalf in their capacities as directors and/or officers to enable the registrant to comply with the provisions of
the Securities Exchange Act of 1934, and all requirements of the Securities and Exchange Commission.
/s/ Richard W. Dreiling
Richard W. Dreiling
/s/ Paul C. Hilal
Paul C. Hilal
/s/ Edward J. Kelly, III
Edward J. Kelly, III
/s/ Thomas W. Dickson
Thomas W. Dickson
/s/ Cheryl W. Grisé
Cheryl W. Grisé
/s/ Daniel J. Heinrich
Daniel J. Heinrich
/s/ Mary A. Laschinger
Mary A. Laschinger
/s/ Jeffrey G. Naylor
Jeffrey G. Naylor
/s/ Winnie Y. Park
Winnie Y. Park
/s/ Bertram L. Scott
Bertram L. Scott
/s/ Stephanie P. Stahl
Stephanie P. Stahl
Chairman and Chief Executive Officer
March 10, 2023
(Principal Executive Officer)
Date
March 10, 2023
Date
March 10, 2023
Date
March 10, 2023
Date
March 10, 2023
Date
March 10, 2023
Date
March 10, 2023
Date
March 10, 2023
Date
March 10, 2023
Date
March 10, 2023
Date
March 10, 2023
Date
Vice Chairman
Lead Independent Director
Director
Director
Director
Director
Director
Director
Director
Director
71
Exhibit 3.3
DOLLAR TREE, INC.
AMENDED AND RESTATED BY-LAWS
(Effective June 13, 2023)
ARTICLE I.
OFFICES
The principal office of the Corporation shall be in the City of Chesapeake,
Commonwealth of Virginia.
ARTICLE II.
STOCKHOLDERS
1.
PLACE OF MEETING: Meetings of stockholders may be held at such
place, if any, either within or without the Commonwealth of Virginia, as shall be approved by the
Board of Directors and designated in the notice of the meeting. The Board of Directors may, in
its sole discretion, determine that meetings of the stockholders shall not be held at any place, but
may instead be held solely by means of remote communication in accordance with the Virginia
Stock Corporation Act.
2.
ANNUAL MEETING: The annual meeting of the stockholders for the
election of directors and for the transaction of such other business as may properly come before
the meeting shall be held on such date and at such time as the Board of Directors in its discretion
determines.
3.
SPECIAL MEETINGS:
(a)
Right to Call Special Meeting. Except as otherwise required by law,
special meetings of the stockholders of the Corporation for any purpose or purposes: (i) may be
called at any time by or at the direction of the Board of Directors acting pursuant to a resolution
adopted by a majority of the entire Board of Directors, or by the chairman or vice chairman of
the Board of Directors or the chief executive officer of the Corporation; and (ii) shall be called
by the chairman of the Board or the secretary of the Corporation upon the written request of one
or more stockholders that own, or who are acting on behalf of persons who own, shares
representing fifteen percent (15%) or more of the voting power of the then outstanding shares of
Common Stock entitled to vote on the matter or matters to be brought before the proposed
special meeting (a “Stockholder Requested Special Meeting”), which written request shall state
the purpose or purposes for which the special meeting is to be called. Such written request shall
be delivered to the chairman of the Board of Directors or to the secretary of the Corporation at
the principal executive offices of the Corporation by registered mail. Except as provided for in
this paragraph or in the terms of any series of Preferred Stock, special meetings of the
stockholders of the Corporation may not be called by any other person or persons.
(b)
Purpose of Special Meeting; Nomination of Directors. Any business that
could be considered at an annual meeting of the stockholders may be considered at a special
meeting of the stockholders, including the election and/or removal of any director or directors of
the Corporation. Nominations of persons for election to the Board of Directors may be made at a
special meeting of stockholders at which directors are to be elected (i) by or at the direction of
the Board of Directors or (ii) by any stockholder of record of the Corporation who is a
stockholder of record at the time such stockholder’s notice of nomination is delivered to the
secretary of the Corporation as provided for in this Article II, Section 3, who shall be entitled to
vote at the meeting and who delivers a written notice to the secretary of the Corporation setting
forth the information, representations, agreements and consents required in connection with
nominations for annual meetings pursuant to Article III, Section 3. In the event a special
meeting is called for the purpose of electing one or more directors to the Board of Directors, any
stockholder entitled to vote in the election of directors may nominate a person or persons (as the
case may be) for election to such position(s) if the stockholder’s notice required by the preceding
sentence shall be received by the secretary of the Corporation at the principal executive offices of
the Corporation not later than the close of business on the seventh (7th) day following the date on
which notice of such meeting is first given to stockholders.
(c)
Record Date; Date and Notice of Special Meeting. A special meeting
requested by stockholders shall be held at such date, time and place as may be fixed by the Board
of Directors; provided, however, that the date of any such special meeting shall be not more than
ninety (90) days after the date on which the special meeting request is delivered to the chairman
of the Board of Directors or to the secretary of the Corporation. The Board of Directors shall
specify the record date for the determination of stockholders entitled to vote at the special
meeting; provided, however, that the record date shall not be more than seventy (70) days prior
to the date of the special meeting. Following receipt of a special meeting request, it shall be the
duty of the secretary of the Corporation to cause notice to be given to the stockholders entitled to
vote at such meeting, within the time periods and in the manner set forth in Article II, Section 4
hereof. In the case of a Stockholder Requested Special Meeting pursuant to this Article II,
Section 3 for which the secretary of the Corporation has refused to give notice, the stockholders
entitled to call such meeting may provide the notice. All business transacted at any special
meeting shall be confined to the purpose or purposes stated in the Corporation’s notice of special
meeting; provided, however, that nothing herein shall prohibit the Board of Directors from
submitting additional matters to stockholders at any such special meeting pursuant to the
Corporation’s notice of meeting.
(d)
Adjournment or Postponement; Quorum. Notwithstanding the provisions
of Article II, Section 8, if a quorum is not present at any Stockholder Requested Special Meeting,
the chairman of the Board of Directors, the Board of Directors and the Corporation shall have no
obligation to postpone or adjourn such Stockholder Requested Special Meeting and may cancel
such Stockholder Requested Special Meeting, and each of the same shall be deemed to have
fulfilled their respective obligations under this Article II, Section 3 with respect to such
Stockholder Requested Special Meeting.
4.
NOTICES: Written notice by mail shall be given in accordance with
Article VIII, Section 1, stating the place, if any, date and hour of a meeting of stockholders, the
means of remote communication, if any, by which stockholders may be deemed to be present in
person and vote at such meeting, the record date for determining the stockholders entitled to vote
at the meeting and, in case of a special meeting, the purpose or purposes for which the meeting is
called, to each stockholder of record entitled to vote at the meeting not less than ten (10) nor
more than sixty (60) days before the date of the meeting, by or at the direction of the chief
executive officer, the secretary, or the officer or persons calling the meeting. The notice shall be
deemed to be given when it is deposited with postage prepaid in the United States mail addressed
to the stockholder at the address as it appears on the stock transfer books of the Corporation.
-2-
Notice of a meeting to act on an amendment of the Articles of Incorporation, a plan of merger,
consolidation or share exchange, a proposed sale of all, or substantially all, of the Corporation’s
assets, otherwise than in the usual and regular course of business, or the dissolution of the
Corporation shall be given in the manner provided above not less than twenty-five (25) nor more
than sixty (60) days before the date of the meeting. Such notice shall be accompanied, as
appropriate, by a copy of the proposed amendment, plan of merger, consolidation, or exchange,
or sale agreement.
Notwithstanding the foregoing, a written waiver of notice signed by the person or
persons entitled to such notice, either before or after the time stated therein, shall be equivalent to
the giving of such notice. A stockholder who attends a meeting shall be deemed to have waived
objection to lack of notice or defective notice of the meeting, unless at the beginning of the
meeting he objects to holding the meeting or transacting business at the meeting.
5.
ORGANIZATION AND ORDER OF BUSINESS:
(a)
At all meetings of the stockholders, the chairman of the Board of
Directors, or in the absence of or at the election of the chairman of the Board, the vice chairman
of the Board, or in the absence of or at the election of the vice chairman of the Board, the lead
independent director, or in the absence of such directors, another independent director elected by
the directors present at such meeting, shall act as chairman of the meeting. In the absence of all
of the foregoing directors (or, if present, with their consent), a majority of the shares entitled to
vote at such meeting may appoint any person to act as chairman of the meeting. The secretary of
the Corporation or, in the secretary’s absence, an assistant secretary, shall act as secretary at all
meetings of the stockholders. In the event that neither the secretary nor any assistant secretary is
present, the chairman may appoint any person to act as secretary of the meeting.
(b)
The chairman of the meeting shall have the right and authority to prescribe
such rules, regulations and procedures and to do all such acts and things as are necessary or
desirable for the proper conduct of the meeting, including, without limitation, the determination
of the order of business, the establishment of procedures for the dismissal of business not
properly presented, the maintenance of order and safety, limitations on the time allotted to
questions or comments on the affairs of the Corporation, restrictions on entry to such meeting
after the time prescribed for the commencement thereof and the opening and closing of the
voting polls.
(c)
At each annual meeting of the stockholders, only such business shall be
conducted as shall have been properly brought before the meeting. Business may only be
properly brought before the meeting (1) by or at the direction of the Board of Directors or (2) by
a stockholder of record of the Corporation who is entitled to vote at such meeting and who
complies with the notice procedures set forth in this Article II, Section 5. Notwithstanding the
foregoing, this Article II, Section 5 does not apply to the procedures for the nomination and
election of directors, which are exclusively governed by Article III, Section 3 hereof.
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(d)
For business to be properly brought before an annual meeting by a
stockholder, the stockholder must have given timely written notice thereof to the secretary of the
Corporation containing the information set forth in this Article II, Section 5. To be timely, a
stockholder’s notice must be given, either by personal delivery or by United States certified mail,
postage prepaid, and received at the principal executive offices of the Corporation:
(1)
not less than ninety (90) days nor more than one hundred twenty
(120) days before the first anniversary of the date of the Corporation’s last annual
meeting of stockholders; or
(2)
if no annual meeting was held in the previous year or the date of
the applicable annual meeting has been changed by more than thirty (30) days from the
date contemplated at the time of the previous year’s proxy statement, not later than the
close of business on the later of the ninetieth (90th) day prior to the date of the applicable
annual meeting and the tenth (10th) day following the day on which public
announcement is first made of the date of the applicable annual meeting.
In no event shall any adjournment or postponement of a meeting or the
announcement thereof commence a new time period for the giving of a stockholder’s notice as
described above.
(e)
Each such stockholder’s notice shall set forth:
(1)
as to each matter the stockholder proposes to bring before the
annual meeting, a brief description of the business desired to be brought before the annual
meeting, including the complete text of any resolutions to be presented at the annual
meeting, and the reasons for conducting such business at the annual meeting;
(2)
as to the stockholder giving the notice and the beneficial owner, if
any, on whose behalf the proposal is made:
(A)
the name and address, as they appear on the Corporation’s stock
transfer books, of such stockholder;
(B)
the name and address of such beneficial owner, if any;
(C)
a representation that such stockholder is a stockholder of record
and intends to appear in person at such meeting to bring the business before the
meeting specified in the notice;
(D)
the class and number of shares of stock of the Corporation
beneficially owned, directly or indirectly, by the stockholder and by such
beneficial owner, if any;
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(E)
any option, warrant, convertible security, stock appreciation right,
or similar right with an exercise or conversion privilege or a settlement payment
or mechanism at a price related to any class or series of shares of the Corporation
or with a value derived in whole or in part from the value of any class or series of
shares of the Corporation, whether or not such instrument or right shall be subject
to settlement in the underlying class or series of capital stock of the Corporation
or otherwise (a “Derivative Instrument”) directly or indirectly owned beneficially
by the stockholder or the beneficial owner, if any, and any other direct or indirect
opportunity to profit or share in any profit derived from any increase or decrease
in the value of shares of the Corporation;
(F)
any proxy, contract, arrangement, understanding, or relationship
pursuant to which the stockholder has a right to vote any shares of any security of
the Corporation;
(G)
any short interest in any security of the Corporation (for purposes
of this Article II, Section 5, a person shall be deemed to have a short interest in a
security if such person directly or indirectly, through any contract, arrangement,
understanding, relationship or otherwise, has the opportunity to profit or share in
any profit derived from any decrease in the value of the subject security);
(H)
any rights to dividends on the shares of the Corporation owned
beneficially by the stockholder or the beneficial owner, if any, that are separated
or separable from the underlying shares of the Corporation;
(I)
any proportionate interest in shares of the Corporation or
Derivative Instruments held, directly or indirectly, by a general or limited
partnership in which the stockholder or the beneficial owner, if any, is a general
partner or, directly or indirectly, beneficially owns an interest in a general partner;
(J)
any performance-related fees (other than an asset-based fee) that
the stockholder or the beneficial owner, if any, is entitled to based on any increase
or decrease in the value of shares of the Corporation or Derivative Instruments, if
any, as of the date of such notice;
(3)
a description of all agreements, arrangements and understandings
between the stockholder and beneficial owner, if any, and any other person or persons
(including their names) in connection with the proposal of such business by the
stockholder;
(4)
any other information relating to the stockholder and beneficial
owner, if any, that would be required to be disclosed in a proxy statement or other filings
required to be made in connection with solicitations of proxies for the proposal pursuant
to Section 14 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”),
and the rules and regulations promulgated thereunder; and
(5)
any material interest of the stockholder or the beneficial owner, if
any, in such business.
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(f)
In addition, to be timely, the stockholder notice shall be supplemented or
updated if necessary by the stockholder and beneficial owner, if any, so that the information shall
be true and correct as of the record date of the applicable meeting and as of the date that is ten
(10) business days prior to the meeting, including any adjournment thereof, and such supplement
or update shall be delivered to the secretary of the Corporation not later than two (2) business
days after each respective date. For the avoidance of doubt, the obligation to update and
supplement as set forth in this Article II, Section 5(f) or any other Section of these By-Laws shall
not be deemed to extend any applicable deadlines under these By-Laws, cure deficiencies in any
notice of proposed business or permit a change in the business proposed to be considered at a
meeting of stockholders.
(g)
The secretary of the Corporation shall deliver each properly delivered
stockholder’s notice that has been timely received to the Board of Directors or a committee
designated by the Board of Directors for review.
(h)
Notwithstanding anything in these By-Laws to the contrary, with the
exception of Article III, Section 3 hereof which shall govern nominations, no business shall be
conducted at a meeting except in accordance with the procedures set forth in this Article II,
Section 5. The chairman of a meeting shall, if the facts warrant, determine that the business was
not brought before the meeting in accordance with the procedures prescribed by this Article II,
Section 5, declare such determination to the meeting and the business not properly brought
before the meeting shall not be transacted.
(i)
Subject to Rule 14a-8 under the Exchange Act, nothing in these By-Laws
shall be construed to grant any stockholder the right to include or have disseminated or described
in the Corporation’s proxy statement any such proposals. Nothing in these By-Laws or in this
Article II, Section 5 shall be deemed to affect any rights of stockholders to request inclusion of
proposals in the Corporation’s proxy statement pursuant to Rule 14a-8 under the Exchange Act
or any rights of the holders of any series of Preferred Stock if and to the extent provided for
under law, the Articles of Incorporation or these By-Laws.
6.
VOTING: A stockholder may vote either in person or by proxy executed
in writing by the stockholder or by his duly authorized attorney-in-fact. No stockholder may
authorize more than four (4) persons to act for him, and any proxy shall be delivered to the
secretary of the meeting at or prior to the time designated by the chairman or in the order of
business for so delivering such proxies. No proxy shall be valid after eleven (11) months from
its date, unless otherwise provided in the proxy. Each holder of record of stock of any class
shall, as to all matters in respect of which stock of such class has voting power, be entitled to
such vote as is provided in the Articles of Incorporation for each share of stock of such class
standing in his name on the books of the Corporation. Unless required by statute or determined
by the chairman to be advisable, the vote on any questions need not be by ballot. On a vote by
ballot, each ballot shall be signed by the stockholder voting or by such stockholder’s proxy, if
there be such proxy.
7.
INSPECTORS OF ELECTION: At every meeting of the stockholders for
election of directors, the proxies shall be received and taken in charge, all ballots and votes cast
at the meeting shall be received and counted, and all questions touching the qualifications of
voters, the validity of proxies, and the acceptance or rejection of votes shall be decided by one or
more inspectors. Each inspector shall be appointed by the chairman of the meeting, shall be
sworn faithfully to perform his or her duties and shall certify in writing to the returns. No
candidate for election as director shall be appointed or act as inspector.
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8.
QUORUM: At all meetings of the stockholders, unless a greater number
of voting by classes is required by law, a majority of the shares entitled to vote, represented in
person or by proxy, shall constitute a quorum. Treasury shares and shares held by a corporation
of which the Corporation owns a majority of the shares entitled to vote for the directors thereof
shall not be entitled to vote or to be counted in determining the total number of outstanding
shares entitled to vote. Less than a quorum may adjourn. If a meeting is adjourned for lack of a
quorum, any matter which might have properly come before the original meeting may come
before the adjourned meeting when reconvened.
9.
POSTPONEMENTS; ADJOURNMENTS; CANCELLATIONS: The
postponement or adjournment of any meeting of the stockholders shall be held on such date and
at such time as the Board of Directors in its discretion determines. The Board of Directors shall
also have the power to cancel any special meeting of the stockholders that was called by the
Board of Directors, the chairman of the Board, the vice chairman of the Board or the chief
executive officer of the Corporation, in each case, pursuant to Article II, Section 3(a)(i).
10.
REMOTE COMMUNICATION: If authorized by the Board of Directors
in its sole discretion, and subject to any guidelines and procedures as the Board of Directors may
adopt, stockholders not physically present at a meeting of stockholders may, by means of remote
communication:
(a)
participate in a meeting of stockholders; and
(b)
be deemed present in person and vote at a meeting of stockholders
whether such meeting is to be held at a designated place or solely by means of remote
communication,
provided that the Corporation shall implement reasonable measures to (i) verify that each person
deemed present and permitted to vote at the meeting by means of remote communication is a
stockholder or proxyholder, and (ii) provide such stockholders and proxyholders a reasonable
opportunity to participate in the meeting and to vote on matters submitted to the stockholders,
including an opportunity to read or hear the proceedings of the meeting substantially
concurrently with such proceedings.
ARTICLE III.
DIRECTORS
1.
RESPONSIBILITY OF DIRECTORS: The affairs and business of the
Corporation shall be under the management of its Board of Directors and such officers and
agents as the Board of Directors may elect and employ.
2.
NUMBER OF DIRECTORS: The Board of Directors shall consist of ten
(10) directors. The Board of Directors shall have the power to amend this by-law to the extent
permitted by law.
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3.
NOMINATION AND ELECTION OF DIRECTORS:
(a)
At each annual meeting of stockholders, the stockholders entitled to vote
shall elect the directors. Except as provided in Article III, Section 4 hereof, each director shall
be elected by a vote of the majority of the votes cast with respect to the director nominee at a
meeting of stockholders for the election of directors at which a quorum is present; provided, that
if the number of director nominees exceeds the number of directors to be elected, the directors
shall be elected by a plurality of the votes cast in such election. For purposes of this Article III,
Section 3, a majority of the votes cast means that the number of shares voted “for” a director
must exceed the number of shares voted “against” that director.
(b)
Nominations of persons for election to the Board of Directors may be
made at a special meeting of stockholders at which directors are to be elected (1) by or at the
direction of the Board of Directors or (2) by any stockholder of the Corporation who (A) is a
stockholder of record at the time of giving of notice of such special meeting and at the time of
the special meeting, (B) is entitled to vote at the meeting, and (C) complies with the procedures
set forth in Article II, Section 3(b) and this Article III, Section 3 as to such nomination.
(c)
No person shall be eligible for election as a director unless nominated in
accordance with the procedures set forth in this Article III, Section 3. Nominations of persons
for election to the Board of Directors may be made (1) by the Board of Directors or (2) by any
stockholder of record entitled to vote for the election of directors at the applicable meeting of
stockholders who complies with the notice procedures set forth in this Article III, Section 3. The
chairman of the applicable meeting of stockholders shall have the sole authority to determine
whether a nomination was made in accordance with this Article III, Section 3 and, if any
proposed nomination is not in compliance with this Article III, Section 3, declare that such
defective nomination be disregarded.
(d)
For stockholder nominations to be properly brought before a stockholder
meeting, the stockholder must have given timely written notice thereof to the secretary of the
Corporation containing the information set forth in this Article III, Section 3. To be timely, a
stockholder’s notice must be given, either by personal delivery or by United States certified mail,
postage prepaid, and received at the principal executive offices of the Corporation:
(1)
if in connection with an annual meeting of stockholders, not less
than ninety (90) days nor more than one hundred twenty (120) days before the first
anniversary of the date of the Corporation’s last annual meeting of stockholders;
(2)
if no annual meeting was held in the previous year or the date of
the applicable annual meeting has been changed by more than thirty (30) days from the
date contemplated at the time of the previous year’s proxy statement, not later than the
close of business on the later of the ninetieth (90th) day prior to the date of the applicable
annual meeting and the tenth (10th) day following the day on which public
announcement is first made of the date of the applicable annual meeting; or
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(3)
with respect to any special meeting of stockholders called for the
election of directors, not later than the close of business on the seventh (7th) day
following the date on which notice of such meeting is first given to stockholders.
In no event shall any adjournment or postponement of a meeting or the
announcement thereof commence a new time period for the giving of a stockholder’s notice as
described above.
(e)
Each such stockholder’s notice shall set forth:
(1)
as to the stockholder giving the notice and the beneficial owner, if
any, on whose behalf the nomination is made:
(A)
the name and address, as they appear on the Corporation’s stock
transfer books, of such stockholder;
(B)
the name and address of such beneficial owner, if any;
(C)
a representation that such stockholder is a stockholder of record
and intends to appear in person at such meeting to nominate the person or persons
specified in the notice;
(D)
the class and number of shares of stock of the Corporation
beneficially owned, directly or indirectly, by the stockholder and by such
beneficial owner, if any;
(E)
any Derivative Instrument directly or indirectly owned beneficially
by the stockholder or the beneficial owner, if any, and any other direct or indirect
opportunity to profit or share in any profit derived from any increase or decrease
in the value of shares of the Corporation;
(F)
any proxy, contract, arrangement, understanding, or relationship
pursuant to which the stockholder has a right to vote any shares of any security of
the Corporation;
(G)
any short interest in any security of the Corporation (for purposes
of this Article III, Section 3 a person shall be deemed to have a short interest in a
security if such person directly or indirectly, through any contract, arrangement,
understanding, relationship or otherwise, has the opportunity to profit or share in
any profit derived from any decrease in the value of the subject security);
(H)
any rights to dividends on the shares of the Corporation owned
beneficially by the stockholder or the beneficial owner, if any, that are separated
or separable from the underlying shares of the Corporation;
(I)
any proportionate interest in shares of the Corporation or
Derivative Instruments held, directly or indirectly, by a general or limited
partnership in which the stockholder or the beneficial owner, if any, is a general
partner or, directly or indirectly, beneficially owns an interest in a general partner;
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(J)
any performance-related fees (other than an asset-based fee) that
the stockholder or the beneficial owner, if any, is entitled to based on any increase
or decrease in the value of shares of the Corporation or Derivative Instruments, if
any, as of the date of such notice;
(K)
the information required pursuant to Rule 14a-19(b) promulgated
under the Exchange Act if the stockholder, such beneficial owner, if any, or any
of their respective affiliates, associates or others acting in concert intends to
engage in a solicitation in support of director nominees other than the
Corporation’s nominees;
(2)
as to each person, if any, whom the stockholder proposes to
nominate for election or reelection to the Board of Directors:
(A)
the name, age, business address and, if known, residence address
of such person;
(B)
the principal occupation or employment of such person;
(C)
the class and number of shares of stock of the Corporation which
are beneficially owned by such person;
(D)
all information relating to such person that would be required to be
disclosed in a proxy statement or other filings required to be made in connection
with solicitations of proxies for election of directors in a contested election
pursuant to Section 14 of the Exchange Act and the rules and regulations
promulgated thereunder (including such person’s written consent to being named
in the proxy statement as a nominee and to serving as a director if elected); and
(E)
a description of all direct and indirect compensation and other
material monetary agreements, arrangements and understandings during the past
three (3) years, and any other material relationships, between or among such
stockholder and beneficial owner, if any, and their respective affiliates and
associates, or others acting in concert therewith, on the one hand, and each
proposed nominee, and his or her respective affiliates and associates, or others
acting in concert therewith, on the other hand, including, without limitation all
information that would be required to be disclosed pursuant to Rule 404
promulgated under Regulation S-K if the stockholder making the nomination and
any beneficial owner on whose behalf the nomination is made, if any, or any
affiliate or associate thereof or person acting in concert therewith, were the
“registrant” for purposes of such rule and the nominee were a director or
executive officer of such registrant;
(3)
a description of all agreements, arrangements and understandings
between the stockholder and beneficial owner, if any, and any other person or persons
(including their names) in connection with the nomination by the stockholder;
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(4)
any other information relating to the stockholder and beneficial
owner, if any, that would be required to be disclosed in a proxy statement or other filings
required to be made in connection with solicitations of proxies for the election of
directors in a contested election pursuant to Section 14 of the Exchange Act and the rules
and regulations promulgated thereunder; and
(5)
any material interest of the stockholder or the beneficial owner, if
any, in such nomination.
(f)
In addition, to be timely, the stockholder notice shall be supplemented or
updated if necessary by the stockholder and beneficial owner, if any, so that the information shall
be true and correct as of the record date of the applicable meeting and as of the date that is ten
(10) business days prior to the meeting, including any adjournment thereof, and such supplement
or update shall be delivered to the secretary of the Corporation not later than two (2) business
days after each respective date. For the avoidance of doubt, the obligation to update and
supplement as set forth in this Article III, Section 3(f) or any other Section of these By-Laws
shall not be deemed to extend any applicable deadlines under these By-Laws, cure deficiencies in
any notice of nominations or permit a change in the nominees or nominations proposed to be
made at a meeting of stockholders.
(g)
The Corporation may require any proposed nominee to furnish such other
information as may reasonably be required by the Corporation to determine the eligibility of such
proposed nominee to serve as an independent director of the Corporation or that could be
material to a reasonable stockholder’s understanding of the independence, or lack thereof, of
such nominee.
(h)
Any person nominated for election as director by the Board of Directors or
any committee designated by the Board of Directors shall, upon the request of the Board of
Directors or such committee, furnish to the secretary of the Corporation all such information
pertaining to such person that is required to be set forth in a stockholder’s notice of nomination.
(i)
In addition to the other requirements of this Article III, Section 3(b)
through (h) with respect to any stockholder nomination proposed to be made at a meeting, (i)
each stockholder shall also comply with all applicable requirements of state and federal law,
including the Exchange Act, with respect to any such nomination or the solicitation of proxies
with respect thereto, (ii) no stockholder, beneficial owner, if any, or any of their respective
affiliates, associates and other persons acting in concert therewith shall solicit proxies in support
of any nominees other than the nominees of the Board of Directors unless such person has
complied with Rule 14a-19 promulgated under the Exchange Act in connection with the
solicitation of such proxies, including the provision to the Corporation of notices required
thereunder in a timely manner, and (iii) if such stockholder, beneficial owner, if any, or any of
their respective affiliates, representatives or others acting in concert therewith (1) provides notice
pursuant to Rule 14a-19(b) promulgated under the Exchange Act as required by Article III,
Section 3(e)(1)(K) and (2) subsequently fails to comply with any of the requirements of Rule
14a-19 promulgated under the Exchange Act, then the Corporation shall disregard any proxies or
votes solicited for such stockholder’s nominees. Upon request by the Corporation, if any
stockholder, beneficial owner, if any, or any of their respective affiliates, associates and other
persons acting in concert therewith provides notice pursuant to Rule 14a-19(b) promulgated
under the Exchange Act, such stockholder shall deliver to the Corporation, no later than five (5)
business days prior to the applicable meeting, reasonable evidence that such stockholder,
beneficial owner, if any, and any of their respective affiliates, associates or other persons acting
in concert therewith have met the requirements of Rule 14a-19 promulgated under the Exchange
Act. Any stockholder directly or indirectly soliciting proxies from other stockholders must use a
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proxy card color other than white, which shall be reserved for the exclusive use by the Board of
Directors.
(j)
To be eligible to be a director of the Corporation, a person must deliver,
prior to the time such person is to begin service as a director to the Secretary at the principal
executive offices of the Corporation a written questionnaire with respect to the background and
qualification of such person and the background of any other person or entity on whose behalf
the nomination is being made (which questionnaire shall be provided by the secretary of the
Corporation upon written request), and a written representation and agreement (in the form
provided by the secretary of the Corporation upon written request) that such person (1) is not and
will not become a party to (A) any agreement, arrangement or understanding with, and has not
given any commitment or assurance to, any person or entity as to how such person, if elected as a
director of the Corporation, will act or vote on any issue or question (a “Voting Commitment”)
that has not been disclosed to the Corporation or (B) any Voting Commitment that could limit or
interfere with such person’s ability to comply, if elected as a director of the Corporation, with
such person’s fiduciary duties under applicable law, (2) is not and will not become a party to any
agreement, arrangement or understanding with any person or entity other than the Corporation
with respect to any direct or indirect compensation, reimbursement or indemnification in
connection with service or action as a director that has not been disclosed therein, and (3) will
abide by the requirements of the Corporate Governance Guidelines and any other policies
applicable to the Corporation’s directors, including any resignation policy adopted by the Board
of Directors in connection with majority voting, if applicable.
(k)
Subject to the terms and conditions set forth in these By-Laws, the
Corporation shall include in its proxy statement for annual meetings of stockholders the name,
together with the Required Information (as required below), of each qualifying person nominated
for election (each, a “Stockholder Nominee”) to the Board of Directors by a stockholder or group
of stockholders that satisfy the requirements of this Article III, Section 3(k), including without
limitation qualifying as an Eligible Stockholder (as defined below) and that expressly elects at
the time of providing the written notice required by this Article III, Section 3(k) (a “Proxy
Access Notice”) to have its nominee included in the Corporation’s proxy statement pursuant to
this Article III, Section 3(k).
(1)
For the purposes of this Article III, Section 3(k):
(A)
“Voting Stock” shall mean outstanding shares of stock of the
Corporation entitled to vote generally for the election of directors as required by
the Articles of Incorporation.
(B)
“Constituent Holder” shall mean any (i) stockholder, (ii) fund
included within two (2) or more funds that are part of the same family of funds by
virtue of being under common management and investment control, under
common management and sponsored primarily by the same employer or a “group
of investment companies” (as such term is defined in Section 12(d)(1)(G)(ii) of
the Investment Company Act of 1940, as amended) (a “Qualifying Fund”) or (iii)
beneficial holder whose stock ownership is counted for the purposes of qualifying
as holding the Proxy Access Required Shares (as defined below) or qualifying as
an Eligible Stockholder (as defined below);
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(C)
“affiliate” and “associate” shall have the meanings ascribed thereto
in Rule 405 under the Securities Act of 1933, as amended (the “Securities Act”),
provided, however, the term “partner” as used in the definition of “associate” shall
not include any limited partner that is not involved in the management of the
relevant partnership; and
(D)
a stockholder (including any Constituent Holder) shall be deemed
to own only those outstanding shares of Voting Stock as to which the stockholder
itself (or such Constituent Holder itself) possesses both (a) the full voting and
investment rights and (b) the full economic interest in (including the opportunity
for profit and risk of loss on) such shares. The number of shares calculated in
accordance with the foregoing clauses (a) and (b) shall be deemed not to include
(and to the extent any of the following arrangements have been entered into by
affiliates of the stockholder (or of any Constituent Holder), shall be reduced by)
any shares (x) sold by such stockholder or Constituent Holder (or any of either’s
affiliates) in any transaction that has not been settled or closed, including any
short sale, (y) borrowed by such stockholder or Constituent Holder (or any of
either’s affiliates) for any purposes or purchased by such stockholder or
Constituent Holder (or any of either’s affiliates) pursuant to an agreement to
resell, or (z) subject to any option, warrant, forward contract, swap, contract of
sale, other derivative or similar agreement entered into by such stockholder or
Constituent Holder (or any of either’s affiliates), whether any such instrument or
agreement is to be settled with shares, cash or other consideration, in any such
case which instrument or agreement has, or is intended to have, or if exercised by
either party thereto would have, the purpose or effect of (i) reducing in any
manner, to any extent or at any time in the future, such stockholder’s or
Constituent Holder’s (or either’s affiliate’s) full right to vote or direct the voting
of any such shares, and/or (ii) hedging, offsetting or altering to any degree gain or
loss arising from the full economic ownership of such shares by such stockholder
or Constituent Holder (or either’s affiliate). A stockholder (including any
Constituent Holder) shall be deemed to own shares held in the name of a nominee
or other intermediary so long as the stockholder itself (or such Constituent Holder
itself) retains the right to instruct how the shares are voted with respect to the
election of directors and the right to direct the disposition thereof and possesses
the full economic interest in the shares. For purposes of this Article III, Section
3(k), a stockholder’s (including any Constituent Holder’s) ownership of shares
shall be deemed to continue during any period in which the stockholder has
loaned such shares so long as such stockholder retains the power to recall such
shares on no greater than five (5) business days’ notice and has recalled such
loaned shares as of the record date of the annual meeting of stockholders (and
holds any voting power over such shares) or has delegated any voting power over
such shares by means of a proxy, power of attorney or other instrument or
arrangement, so long as such delegation is revocable at any time by the
stockholder.
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(2)
For purposes of this Article III, Section 3(k), the “Required
Information” that the Corporation will include in its proxy statement is (A) the
information concerning the Stockholder Nominee and the Eligible Stockholder that the
Corporation determines is required to be disclosed in the Corporation’s proxy statement
by the regulations promulgated under the Exchange Act; and (B) if the Eligible
Stockholder so elects, a Statement (as defined below). The Corporation shall also include
the name of the Stockholder Nominee in its proxy card. Any other provision of these By-
Laws notwithstanding, the Corporation may in its sole discretion solicit against, and
include in the proxy statement its own statement(s) or other information relating to, any
Eligible Stockholder and/or Stockholder Nominee, including any information provided to
the Corporation with respect to the foregoing.
(3)
To be timely, a stockholder’s Proxy Access Notice must be
received by the secretary of the Corporation at the principal executive offices of the
Corporation within the time periods applicable to stockholder nominations pursuant to
Article III, Section 3(d). Neither an adjournment nor a postponement of an annual
meeting (or an announcement thereof) shall begin a new time period for delivering a
Proxy Access Notice.
(4)
The maximum number of Stockholder Nominees (including
Stockholder Nominees that were submitted by an Eligible Stockholder for inclusion in
the Corporation’s proxy statement pursuant to this Article III, Section 3(k) but are either
subsequently withdrawn or that the Board of Directors decides to nominate as Board of
Directors’ nominees or otherwise appoint to the Board of Directors) appearing in the
Corporation’s proxy statement pursuant to this Article III, Section 3(k) with respect to an
annual meeting of stockholders shall not exceed the greater of (x) two (2) directors or
(y) the largest whole number that does not exceed twenty-five per cent (25%) of the
number of directors in office as of the last day on which a Proxy Access Notice may be
delivered in accordance with the procedures set forth in this Article III, Section 3(k) (such
greater number, the “Permitted Number”); provided, however, that the Permitted Number
shall be reduced by:
(A)
the number of directors in office or director candidates for whom
access to the Corporation’s proxy statement was previously provided pursuant to
this Article III, Section 3(k), other than (x) any such director referred to in this
clause (A) whose term of office will expire at such annual meeting and who is not
seeking (or agreeing) to be nominated at such meeting for another term of office
and (y) any such director who at the time of such annual meeting will have served
as a director continuously as a nominee of the Board of Directors for at least two
(2) successive annual terms;
(B)
the number of such director candidates for which the Corporation
shall have received one or more stockholder notices nominating director
candidates pursuant to Article III, Section 3(d), provided, however, the reduction
provided for in this subsection (B) shall not apply if its application would reduce
the Permitted Number below one (1); and
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(C)
the number of directors in office or director candidates that in
either case were elected or appointed to the Board of Directors or will be included
in the Corporation’s proxy statement with respect to such annual meeting as an
unopposed (by the Corporation) nominee, pursuant to an agreement, arrangement
or other understanding with a stockholder or group of stockholders (other than
any such agreement, arrangement or understanding entered into in connection
with an acquisition of Voting Stock, by such stockholder or group of
stockholders, from the Corporation), other than (x) any such director referred to in
this clause (C) whose term of office will expire at such annual meeting and who is
not seeking (or agreeing) to be nominated at such meeting for another term of
office and (y) any such director who at the time of such annual meeting will have
served as a director continuously as a nominee of the Board of Directors for at
least two (2) successive annual terms; provided, further, in the event the Board of
Directors resolves to reduce the size of the Board of Directors effective on or
prior to the date of the annual meeting, the Permitted Number shall be calculated
based on the number of directors in office as so reduced. An Eligible Stockholder
submitting more than one Stockholder Nominee for inclusion in the Corporation’s
proxy statement pursuant to this Article III, Section 3(k) shall rank such
Stockholder Nominees based on the order that the Eligible Stockholder desires
such Stockholder Nominees to be selected for inclusion in the Corporation’s
proxy statement and include such specified rank in its Proxy Access Notice. If the
number of Stockholder Nominees pursuant to this Article III, Section 3(k) for an
annual meeting of stockholders exceeds the Permitted Number, then the highest
ranking qualifying Stockholder Nominee from each Eligible Stockholder will be
selected by the Corporation for inclusion in the proxy statement until the
Permitted Number is reached, going in order of the amount (largest to smallest) of
the ownership position as disclosed in each Eligible Stockholder’s Proxy Access
Notice. If the Permitted Number is not reached after the highest ranking
Stockholder Nominee from each Eligible Stockholder has been selected, this
selection process will continue as many times as necessary, following the same
order each time, until the Permitted Number is reached.
(5)
An “Eligible Stockholder” is one or more stockholders of record
who own and have owned, or are acting on behalf of one or more beneficial owners who
own and have owned (in each case as defined above), in each case continuously for at
least three (3) years as of both the date that the Proxy Access Notice is received by the
Corporation pursuant to this Article III, Section 3(k), and as of the record date for the
determination of stockholders entitled to notice and to vote at the annual meeting, at least
three per cent (3%) of the aggregate voting power of the Voting Stock (the “Proxy Access
Request Required Shares”), and who continue to own the Proxy Access Request Required
Shares at all times between the date such Proxy Access Notice is received by the
Corporation and the date of the applicable annual meeting. No shares may be attributed
to more than one group constituting an Eligible Stockholder under this Article III, Section
3(k) and no stockholder may be a member of more than one group constituting an
Eligible Stockholder. Proxy Access Request Required Shares will qualify as such if and
only if the beneficial owner of such shares as of the date of the Proxy Access Notice has
itself individually beneficially owned such shares continuously for the three (3)-year
period ending on that date and through the other applicable dates referred to above (in
addition to the other applicable requirements being met).
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(6)
No later than the final date when a Proxy Access Notice pursuant
to this Article III, Section 3(k) may be timely delivered to the secretary, an Eligible
Stockholder (including each Constituent Holder) must provide the information required
by Article III, Section 3(e) to the secretary of the Corporation and also provide the
following information in writing to the secretary:
(A) with respect to each Constituent Holder, the name and address of,
and number of shares of Voting Stock owned by, such person;
(B)
one or more written statements from the record holder of the shares
(and from each intermediary through which the shares are or have been held
during the requisite three (3)-year holding period) verifying that, as of a date
within seven (7) calendar days prior to the date the Proxy Access Notice is
delivered to the Corporation, such person owns, and has owned continuously for
the preceding three (3) years, the Proxy Access Request Required Shares, and
such person’s agreement to provide:
a.
within ten (10) days after the record date of the annual
meeting, written statements from the record holder and intermediaries
verifying such person’s continuous ownership of the Proxy Access
Request Required Shares through the record date, together with any
additional information reasonably requested to verify such person’s
ownership of the Proxy Access Request Required Shares; and
b.
immediate notice if the Eligible Stockholder ceases to own
any of the Proxy Access Request Required Shares prior to the date of the
applicable annual meeting of stockholders;
(C)
a representation that such person:
a.
acquired the Proxy Access Request Required Shares in the
ordinary course of business and not with the intent to change or influence
control of the Corporation, and does not presently have any such intent;
b.
has not nominated and will not nominate for election to the
Board of Directors at the annual meeting any person other than the
Stockholder Nominee(s) being nominated pursuant to this Article III,
Section 3(k);
c.
has not engaged and will not engage in, and has not been
and will not be a “participant” in another person’s, “solicitation” within
the meaning of Rule 14a-1(l) under the Exchange Act with respect to the
Corporation in support of the election of any individual as a director at the
annual meeting other than in support of its Stockholder Nominee(s) or a
nominee of the Board of Directors;
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d.
will not distribute to any stockholder of the Corporation
any form of proxy for the annual meeting other than the form distributed
by the Corporation; and
e.
will provide facts, statements and other information in all
communications with the Corporation and its stockholders that are and
will be true and correct in all material respects and do not and will not
omit to state a material fact necessary in order to make the statements
made, in light of the circumstances under which they were made, not
misleading, and will otherwise comply with all applicable laws, rules and
regulations in connection with any actions taken pursuant to this Article
III, Section 3(k);
(D)
in the case of a nomination by a group of stockholders that together
is such an Eligible Stockholder, the designation by all group members of one
group member that is authorized to act on behalf of all members of the
nominating stockholder group with respect to the nomination and matters related
thereto, including withdrawal of the nomination; and
(E)
an undertaking that such person agrees to:
a.
assume all liability stemming from, and indemnify and hold
harmless the Corporation and its affiliates and each of its and their
directors, officers, and employees individually against any liability, loss or
damages in connection with any threatened or pending action, suit or
proceeding, whether legal, administrative or investigative, against the
Corporation or its affiliates or any of its or their directors, officers or
employees arising out of any legal or regulatory violation arising out of
the Eligible Stockholder’s communications with the stockholders of the
Corporation or out of the information that the Eligible Stockholder
provided to the Corporation, in each case in connection with or relating to
the nomination of, or efforts to elect, the Stockholder Nominee;
b.
promptly provide to the Corporation such other information
as the Corporation may reasonably request; and
c.
file with the Securities and Exchange Commission any
solicitation by the Eligible Stockholder of stockholders of the Corporation
relating to the annual meeting at which the Stockholder Nominee will be
nominated.
In addition, no later than the final date when a Proxy Access Notice pursuant to this
Article III, Section 3(k) may be timely delivered to the secretary, a Qualifying Fund
whose stock ownership is counted for purposes of qualifying as an Eligible Stockholder
must provide to the secretary of the Corporation documentation reasonably satisfactory to
the Board of Directors that demonstrates that the funds included within the Qualifying
Fund satisfy the definition thereof. In order to be considered timely, any information
required by this Article III, Section 3(k) to be provided to the Corporation must be further
updated and supplemented (through receipt by the secretary) if necessary so that the
information shall be true and correct as of the record date for the meeting and as of the
date that is ten (10) business days prior to the meeting or any adjournment or
postponement thereof, and the secretary must receive, at the principal executive offices of
the Corporation, such update and supplement not later than five (5) business days after
the record date for the meeting in the case of the update and supplement required to be
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made as of the record date, and not later than eight (8) business days prior to the date for
the meeting or any adjournment or postponement thereof in the case of the update and
supplement required to be made as of ten (10) business days prior to the meeting or any
adjournment or postponement thereof.
(7)
The Eligible Stockholder may provide to the secretary, at the time
the information required by this Article III, Section 3(k) is originally provided, a single
written statement for inclusion in the Corporation’s proxy statement for the annual
meeting, not to exceed five hundred (500) words per Stockholder Nominee, in support of
the candidacy of such Eligible Stockholder’s Stockholder Nominee(s) (the “Statement”).
Notwithstanding anything to the contrary contained in this Article III, Section 3(k), the
Corporation may omit from its proxy statement any information or Statement that it, in
good faith, believes is materially false or misleading, omits to state any material fact,
directly or indirectly without factual foundation impugns the character, integrity or
personal reputation of or makes charges concerning improper, illegal or immoral conduct
or associations with respect to any person or would violate any applicable law or
regulation.
(8)
No later than the final date when a Proxy Access Notice pursuant
to this Article III, Section 3(k) may be timely delivered to the secretary, each Stockholder
Nominee must provide to the secretary the information required in Article III, Section
3(e), a completed and executed questionnaire, representation and agreement as required
by Article III, Section 3(i), and also:
(A)
provide an executed agreement, in a form deemed satisfactory by
the Board of Directors or its designee (which form shall be provided by the
Corporation reasonably promptly upon written request of a stockholder), that such
Stockholder Nominee consents to being named in the Corporation’s proxy
statement and form of proxy card (and will not agree to be named in any other
person’s proxy statement or form of proxy card with respect to the Corporation)
as a nominee and to serving as a director of the Corporation if elected and that
such Stockholder Nominee will promptly provide to the Corporation such other
information as the Corporation may reasonably request; and
(B)
provide such additional information as necessary to permit the
Board of Directors to determine if any of the matters referred to in subsection (10)
below apply and to determine if such Stockholder Nominee has any direct or
indirect relationship with the Corporation other than those relationships that have
been deemed categorically immaterial pursuant to the Corporation’s Corporate
Governance Guidelines or is or has been subject to any event specified in Item
401(f) of Regulation S-K (or successor rule) of the Securities and Exchange
Commission.
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In the event that any information or communications provided by the Eligible
Stockholder (or any Constituent Holder) or the Stockholder Nominee to the Corporation
or its stockholders ceases to be true and correct in all material respects or omits a material
fact necessary to make the statements made, in light of the circumstances under which
they were made, not misleading, each Eligible Stockholder or Stockholder Nominee, as
the case may be, shall promptly notify the secretary of any defect in such previously
provided information and of the information that is required to correct any such defect; it
being understood for the avoidance of doubt that providing any such notification shall not
be deemed to cure any such defect or limit the remedies (including without limitation
under these By-Laws) available to the Corporation relating to any such defect.
Any proposed Stockholder Nominee shall also furnish any information, in addition to that
required above, to the Corporation as it may reasonably require to determine the
eligibility of the proposed nominee to serve as an independent director or that could be
material to a reasonable stockholder’s understanding of the independence, or lack thereof,
of such nominee or as otherwise requested pursuant to Article III, Section 3(g).
(9)
Any Stockholder Nominee who is included in the Corporation’s
proxy statement for a particular annual meeting of stockholders, but subsequently is
determined not to satisfy the eligibility requirements of this Article III, Section 3(k) or
any other provision of these By-Laws, the Articles of Incorporation or other applicable
regulation any time before the annual meeting of stockholders, will not be eligible for
election at the relevant annual meeting of stockholders.
(10) The Corporation shall not be required to include, pursuant to this
Article III, Section 3(k), a Stockholder Nominee in its proxy statement for any annual
meeting of stockholders, or if the proxy statement already has been filed, to allow the
nomination (or vote with respect to) a Stockholder Nominee (and may declare such
nomination ineligible), notwithstanding that proxies in respect of such vote may have
been received by the Corporation:
(A) who is not independent under the listing standards of the principal
United States exchange upon which the common stock of the Corporation is
listed, any applicable rules of the Securities and Exchange Commission and any
publicly disclosed standards used by the Board of Directors in determining and
disclosing independence of the Corporation’s directors or who is not a “non-
employee director” for the purposes of Rule 16b-3 under the Exchange Act (or
any successor rule) or who is not an “outside director” for the purposes of Section
162(m) of the Internal Revenue Code of 1986, as amended (or any successor
provision), in each case as determined by the Board of Directors;
(B) whose service as a member of the Board of Directors would violate
or cause the Corporation to be in violation of these By-Laws, the Articles of
Incorporation, the rules and listing standards of the principal United States
exchange upon which the common stock of the Corporation is traded, or any
applicable law, rule or regulation;
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(C) who is or has been, within the past three (3) years, an officer or
director of a competitor, as defined in Section 8 of the Clayton Antitrust Act of
1914, as amended, or who is a subject of a pending criminal proceeding (other
than in connection with traffic violations and other similar minor offenses), has
been convicted in a criminal proceeding within the past ten (10) years or is subject
to an order of the type specified in Rule 506(d) of Regulation D promulgated
under the Securities Act;
(D)
if the Eligible Stockholder (or any Constituent Holder) or
applicable Stockholder Nominee otherwise breaches or fails to comply in any
material respect with its obligations pursuant to this Article III, Section 3(k) or
any agreement, representation or undertaking required by this Article III, Section
3(k); or
(E)
if the Eligible Stockholder ceases to be an Eligible Stockholder for
any reason, including but not limited to not owning the Proxy Access Request
Required Shares through the date of the applicable annual meeting.
(l)
Except as provided in Article III, Section 3(k), or to the extent provided by
Rule 14a-19 promulgated under the Exchange Act with respect to a nomination made by a
stockholder pursuant to Article III, Section 3(c) and that otherwise complies with the applicable
provisions of these By-Laws, nothing in these By-Laws shall be construed to grant any
stockholder the right to include or have disseminated or described in the Corporation’s proxy
statement any such nomination of director or directors. Nothing in these By-Laws shall be
deemed to affect any rights of the holders of any series of Preferred Stock if and to the extent
provided for under law, the Articles of Incorporation or these By-Laws.
4.
DIRECTORS’ TERMS: No decrease in the number of directors shall
have the effect of changing the term of any incumbent director. Unless a director resigns or is
removed by no less than a majority of the votes of all shares entitled to be cast at an election of
directors as required by the Articles of Incorporation, every director shall hold office for the term
elected or until a successor shall have been elected. Any vacancy occurring in the Board of
Directors may be filled by the affirmative vote of a majority of the remaining directors though
less than a quorum of the Board of Directors.
5.
DIRECTORS’ MEETINGS: The annual meeting of the directors shall be
held immediately after the annual meeting of the stockholders. The Board of Directors, as soon
as may be convenient after the annual meeting of the stockholders at which such directors are
elected, shall elect the officers of the Corporation as provided in Article V, Section 2 hereof.
Special meetings may be called by any director by giving notice of the time and place in
accordance with Article III, Section 7. Meetings of the Board of Directors (or any committee of
the Board) may be held by telephone or similar communication equipment whereby all persons
participating in the meeting can hear each other, at such time as may be prescribed, upon call of
any director.
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6.
QUORUM AND MANNER OF ACTING: Except where otherwise
provided by law, a quorum shall be a majority of the directors, and the act of a majority of the
directors present at any such meeting at which a quorum is present shall be the act of the Board
of Directors. In the absence of a quorum, a majority of those present may adjourn the meeting
from time to time until a quorum be had. Notice of any such adjourned meeting need not be
given. Action may be taken by the directors or a committee of the Board of Directors without a
meeting if a written consent setting forth the action, shall be signed by all of the directors or
committee members either before or after such action. Such consent shall have the same force
and effect as a unanimous vote.
7.
NOTICE OF MEETING: At the annual meeting of the Board of Directors
each year and at any meeting thereafter, the Board shall designate the dates, times and places of
regular meetings of the Board for the ensuing calendar year, and no notice of any kind need be
given thereafter with respect to such regular meetings. Notice of any special meeting of the
Board shall be by oral (in person or by telephone), electronic or written notice duly given to each
director not less than twenty-four (24) hours before the date of the proposed meeting.
8.
WAIVER OF NOTICE: Whenever any notice is required to be given to a
director of any meeting for any purpose under the provisions of law, the Articles of Incorporation
or these By-Laws, a waiver thereof in writing signed by the person or persons entitled to such
notice, either before or after the time stated therein, shall be equivalent to the giving of such
notice. A director’s attendance at or participation in a meeting waives any required notice to him
of the meeting unless he at the beginning of the meeting or promptly upon his arrival objects to
holding the meeting or transacting business at the meeting and does not thereafter vote for or
assent to action taken at the meeting.
9.
COMPENSATION: Directors shall not receive a stated salary for their
services, but directors may be paid a fixed sum and expenses for attendance at any regular or
special meeting of the Board of Directors or any meeting of any committee and such other
compensation as the Board of Directors shall determine. A director may serve or be employed
by the Corporation in any other capacity and receive compensation therefor.
10.
DIRECTOR EMERITUS: The Board may appoint to the position of
Director Emeritus any retiring director who has served not less than three (3) years as a director
of the Corporation. Such person so appointed shall have the title of “Director Emeritus” and
shall be entitled to receive notice of, and to attend all meetings of the Board, but shall not in fact
be a director, shall not be entitled to vote, shall not be counted in determining a quorum of the
Board and shall not have any of the duties or liabilities of a director under law.
11.
COMMITTEES: In addition to the executive committee authorized by
Article IV of these By-Laws, other committees, consisting of two (2) or more directors, may be
designated by the Board of Directors by a resolution adopted by the greater number of a majority
of all directors in office at the time the action is being taken or the number of directors required
to take action under Article III, Section 6 hereof. Any such committee, to the extent provided in
the resolution of the Board of Directors designating the committee, shall have and may exercise
the powers and authority of the Board of Directors in the management of the business and affairs
of the Corporation, except as limited by law.
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ARTICLE IV.
EXECUTIVE COMMITTEE
1.
HOW CONSTITUTED AND POWERS: The Board of Directors, by
resolution adopted pursuant to Article III, Section 11 hereof, may designate, in addition to the
chairman of the Board of Directors, one or more directors to constitute an executive committee,
who shall serve during the pleasure of the Board of Directors. The executive committee, to the
extent provided in such resolution and permitted by law, shall have and may exercise all of the
authority of the Board of Directors.
2.
ORGANIZATION, ETC.: The executive committee may choose a
chairman and secretary. The executive committee shall keep a record of its acts and proceedings
and report the same from time to time to the Board of Directors.
3.
MEETINGS: Meetings of the executive committee may be called by any
member of the committee. Notice of each such meeting, which need not specify the business to
be transacted thereat, shall be mailed to each member of the committee, addressed to his
residence or usual place of business, at least two (2) days before the day on which the meeting is
to be held or shall be sent to such place by telegraph, telex or telecopy or be delivered personally
or by telephone, not later than the day before the day on which the meeting is to be held.
4.
QUORUM AND MANNER OF ACTING: A majority of the executive
committee shall constitute a quorum for transaction of business, and the act of a majority of those
present at a meeting at which a quorum is present shall be the act of the executive committee.
The members of the executive committee shall act only as a committee, and the individual
members shall have no powers as such.
5.
REMOVAL: Any member of the executive committee may be removed,
with or without cause, at any time, by the Board of Directors.
6.
VACANCIES: Any vacancy in the executive committee shall be filled by
the Board of Directors.
ARTICLE V.
OFFICERS
1.
NUMBER: The officers of the Corporation shall be a chairman of the
Board of Directors, a president and chief executive officer, a vice chairman of the Board of
Directors, one or more vice presidents (one or more of whom may be designated executive vice
president or senior vice president), a chief financial officer, a treasurer, a controller, a secretary,
one or more assistant treasurers, assistant controllers and assistant secretaries and such other
officers as may from time to time be chosen by the Board of Directors. Any two or more offices
may be held by the same person. The Board of Directors, in its discretion, may also designate
“chief officers” of certain functions in addition to chief executive officer and chief financial
officer, and such officers shall be deemed to be vice presidents for purposes of these By-Laws.
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2.
ELECTION, TERM OF OFFICE AND QUALIFICATIONS: All officers
of the Corporation shall be chosen annually by the Board of Directors, and each officer shall hold
office until his successor shall have been duly chosen and qualified or until he shall resign or
shall have been removed in the manner hereinafter provided. The chairman of the Board of
Directors, the chief executive officer, and the vice chairman of the Board of Directors shall be
chosen from among the directors.
3.
VACANCIES: If any vacancy shall occur among the officers of the
Corporation, such vacancy shall be filled by the Board of Directors.
4.
OTHER OFFICERS, AGENTS AND EMPLOYEES – THEIR POWERS
AND DUTIES: The Board of Directors may from time to time appoint such other officers as the
Board of Directors may deem necessary, to hold office for such time as may be designated by it
or during its pleasure, and the Board of Directors or the chairman of the Board of Directors may
appoint, from time to time, such agents and employees of the Corporation as may be deemed
proper, and may authorize any officers to appoint and remove agents and employees. The Board
of Directors or the chairman of the Board of Directors may from time to time prescribe the
powers and duties of such other officers, agents and employees of the Corporation.
5.
REMOVAL: Any officer, agent or employee of the Corporation may be
removed, either with or without cause, by a vote of a majority of the Board of Directors or, in the
case of any agent or employee not appointed by the Board of Directors, by a superior officer
upon whom such power of removal may be conferred by the Board of Directors or the chairman
of the Board of Directors.
6.
CHAIRMAN OF THE BOARD OF DIRECTORS: The chairman of the
Board of Directors shall preside at meetings of the stockholders and of the Board of Directors
and shall be a member of the executive committee. If the Corporation designates the chairman as
an executive chairman, the executive chairman shall be the senior-most executive of the
Corporation and the chief executive officer shall report to the executive chairman. The executive
chairman shall be responsible for such management and control of the business and affairs of the
Corporation as shall be determined by the Board of Directors. The chairman of the Board shall,
in consultation with the vice chairman of the Board and, if one exists, the lead independent
director, determine the agenda, schedule and meeting materials for meeting of the Board of
Directors and guide Board discussions and facilitate discussions between the Board of Directors
and management, and interact with analysts, investors, employees and other key constituents. He
shall see that all orders and resolutions of the Board of Directors are carried into effect. He shall
from time to time report to the Board of Directors on matters within his knowledge which the
interests of the Corporation may require be brought to its notice. The chairman of the Board
shall keep the vice chairman and, if one exists, the lead independent director, of the Board
informed, and shall consult with the vice chairman and, if one exists, the lead independent
director, as to material internal and external discussions the chairman has, and material
developments the chairman learns, about the Corporation and the Board of Directors. He shall
do and perform such other duties from time to time as may be assigned to him by the Board of
Directors.
7.
CHIEF EXECUTIVE OFFICER: In the absence of the chairman, the vice
chairman of the Board of Directors and the lead independent director, the chief executive officer
shall preside at meetings of the Board of Directors. The chief executive officer shall be
responsible to the chairman of the Board of Directors and, subject to the chairman, shall be
responsible for the general management and control of the business and affairs of the
Corporation and shall devote himself to the Corporation’s operations under the basic policies set
by the Board of Directors. He shall from time to time report to the chairman on matters within
his knowledge which the interests of the Corporation may require be brought to the chairman’s
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notice. In the absence of the chairman and the vice chairman of the Board of Directors, he shall
have all of the powers and the duties of the chairman of the Board of Directors. He shall do and
perform such other duties from time to time as may be assigned to him by chairman.
8.
PRESIDENT: The president shall perform such duties and have such
powers relative to the business and affairs of the Corporation as may be assigned to him by the
Board of Directors. The offices of president and chief executive officer may be held by the same
or separate persons, each having the powers and duties hereunder as determined by the Board of
Directors. In the event that such offices are held by separate persons, the chief executive officer
shall be the more senior ranked officer with respect to exercising the powers and duties under
these By-Laws.
9.
VICE CHAIRMAN OF THE BOARD OF DIRECTORS: The Board of
Directors shall designate a vice chairman of the Board of Directors. In the absence or inability to
act of the chairman of the Board of Directors, the vice chairman of the Board of Directors shall
preside at meetings of the stockholders and of the Board of Directors and shall have the powers
and discharge the duties of the chairman of the Board of Directors; provided, that the vice
chairman may, at his election, designate the lead independent director to preside at such meetings
and discharge such duties. The vice chairman of the Board of Directors shall be responsible to
the chairman of the Board of Directors. The vice chairman of the Board of Directors shall from
time to time report to the chairman of the Board of Directors on matters within his knowledge
which the interests of the Corporation may require be brought to his notice. The vice chairman
shall keep the chairman informed, and shall consult with the chairman as to material internal and
external discussions the vice chairman has, and material developments the vice chairman learns,
about the Corporation and the Board of Directors. The vice chairman shall consult with, advise
and assist the chairman in the performance of the duties of the chairman. The vice chairman
shall provide input on the agenda, schedules and meeting materials for meetings with the Board
of Directors; assist in guiding board discussions and in consultation with the chairman, facilitate
communication between the Board of Directors and management; and in consultation with the
chairman, interact with analysts, investors, employees and other key constituents.
10.
VICE PRESIDENTS: The vice presidents of the Corporation shall assist
the chairman of the Board of Directors, chief executive officer, the president and the vice
chairman of the Board of Directors in carrying out their respective duties and shall perform those
duties which may from time to time be assigned to them.
11.
TREASURER: The treasurer shall have charge of the funds, securities,
receipts and disbursements of the Corporation. He shall deposit all moneys and other valuable
effects in the name and to the credit of the Corporation in such banks or trust companies or with
such bankers or other depositaries as the Board of Directors may from time to time designate.
He shall render to the Board of Directors, the chairman of the Board of Directors, the chief
executive officer, the president, the vice chairman of the Board of Directors, and the chief
financial officer, whenever required by any of them, an account of all of his transactions as
treasurer. If required, he shall give a bond in such sum as the Board of Directors may designate,
conditioned upon the faithful performance of the duties of his office and the restoration to the
Corporation at the expiration of his term of office or in case of his death, resignation or removal
from office, of all books, papers, vouchers, money or other property of whatever kind in his
possession or under his control belonging to the Corporation. He shall perform such other duties
as from time to time may be assigned to him.
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12.
ASSISTANT TREASURERS: In the absence or disability of the
treasurer, one or more assistant treasurers shall perform all the duties of the treasurer and, when
so acting, shall have all the powers of, and be subject to all restrictions upon, the treasurer. Each
assistant treasurer shall also perform such other duties as from time to time may be assigned to
him.
13.
SECRETARY: The secretary shall keep the minutes of all meetings of the
stockholders and of the Board of Directors in a book or books kept for that purpose and shall be
responsible for authenticating records of the Corporation. He shall keep in safe custody the seal
of the Corporation, and shall affix such seal to any instrument requiring it. The secretary shall
have charge of such books and papers as the Board of Directors may direct. He shall attend to
the giving and serving of all notices of the Corporation and shall also have such other powers and
perform such other duties as pertain to his office, or as the Board of Directors, the chairman of
the Board of Directors, the chief executive officer, the president or the vice chairman of the
Board of Directors may from time to time prescribe.
14.
ASSISTANT SECRETARIES: In the absence or disability of the
secretary, one or more assistant secretaries shall perform all of the duties of the secretary and,
when so acting, shall have all of the powers of, and be subject to all the restrictions upon, the
secretary. Each assistant secretary shall also perform such other duties as from time to time may
be assigned to him.
15.
CONTROLLER: The controller shall be administrative head of the
controller’s department. He shall be in charge of all functions relating to accounting and the
preparation and analysis of budgets and statistical reports and shall establish, through appropriate
channels, recording and reporting procedures and standards pertaining to such matters. He shall
report to the chief financial officer and shall aid in developing internal corporate policies
whereby the business of the Corporation shall be conducted with the maximum safety, efficiency
and economy, and he shall be available to all departments of the Corporation for advice and
guidance in the interpretation and application of policies which are within the scope of his
authority. He shall perform such other duties as from time to time may be assigned to him.
16.
ASSISTANT CONTROLLERS: In the absence or disability of the
controller, one or more assistant controllers shall perform all of the duties of the controller and,
when so acting, shall have all of the powers of, and be subject to all the restrictions upon, the
controller. Each assistant controller shall also perform such other duties as from time to time
may be assigned to him
-25-
17.
LEAD INDEPENDENT DIRECTOR: In the event that the chairman of
the Board of Directors is not an independent director, the Board of Directors may designate a
lead independent director. The lead independent director shall have the powers and duties
hereunder as determined by the Board of Directors from time to time, including any such
authorities as may be established under the Corporate Governance Guidelines. In the absence or
inability to act of the chairman and vice chairman of the Board of Directors or if designated by
the vice chairman in accordance with these By-Laws, the lead independent director shall preside
at meetings of the stockholders and of the Board of Directors and shall have the powers and
discharge the duties of the chairman of the Board of Directors. The lead independent director
shall confer regularly with the chairman of the Board of Directors, the vice chairman of the
Board of Directors and the chief executive officer as to material internal and external discussions
the lead independent director has, and material developments the lead independent director
learns, about the Corporation and the Board of Directors. The lead independent director shall set
the agenda for and preside over executive sessions of solely independent directors, and shall have
the power to call meetings of the independent directors.
ARTICLE VI.
CONTRACTS, CHECKS, DRAFTS, BANK ACCOUNTS, ETC.
1.
CONTRACTS: The chairman of the Board of Directors, the chief
executive officer, the president, the vice chairman of the Board of Directors, any vice president,
the treasurer and such other persons as the chairman of the Board of Directors may authorize
shall have the power to execute any contract or other instrument on behalf of the Corporation; no
other officer, agent or employee shall, unless otherwise provided in these By-Laws, have any
power or authority to bind the Corporation by any contract or acknowledgement, or pledge its
credit or render it liable pecuniarily for any purpose or to any amount.
2.
LOANS: The chairman of the Board of Directors, the chief executive
officer, the president, the vice chairman of the Board of Directors, the executive vice president,
the treasurer and such other persons as the Board of Directors may authorize shall have the
power to effect loans and advances at any time for the Corporation from any bank, trust company
or other institution, or from any corporation, firm or individual, and for such loans and advances
may make, execute and deliver promissory notes or other evidences of indebtedness of the
Corporation, and, as security for the payment of any and all loans, advances, indebtedness and
liability of the Corporation, may pledge, hypothecate or transfer any and all stock, securities and
other personal property at any time held by the Corporation, and to that end endorse, assign and
deliver the same.
3.
VOTING OF STOCK HELD: The chairman of the Board of Directors,
the chief executive officer, the president, the vice chairman of the Board of Directors, any vice
president or the secretary may from time to time appoint an attorney or attorneys or agent or
agents of the Corporation to cast the votes that the Corporation may be entitled to cast as a
stockholder or otherwise in any other corporation, any of whose stock or securities may be held
by the Corporation, at meetings of the holders of the stock or other securities of such other
corporation, or to consent in writing to any action by any other such corporation, and may
instruct the person or persons so appointed as to the manner of casting such votes or giving such
consent, and may execute or cause to be executed on behalf of the Corporation such written
proxies, consents, waivers or other instruments as such officer may deem necessary or proper in
the premises; or the chairman of the Board of Directors, the chief executive officer, the president,
the vice chairman of the Board of Directors, any vice president or the secretary may himself
attend any meeting of the holders of stock or other securities of such other corporation and
thereat vote or exercise any and all powers of the Corporation as the holder of such stock or other
securities of such other corporation.
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4.
COMPENSATION: The compensation of all officers of the Corporation
shall be fixed by the Board of Directors.
ARTICLE VII.
EVIDENCE OF SHARES
1.
FORM: Shares of the Corporation’s stock shall, when fully paid, be
evidenced by certificates containing such information as is required by law and approved by the
Board of Directors. Alternatively, the Board of Directors may authorize the issuance of some or
all shares of stock without certificates. In such event, within a reasonable time after issuance, the
Corporation shall mail to the stockholder a written confirmation of its records with respect to
such shares containing the information required by law. When issued, the certificates of stock of
the Corporation shall be numbered and entered in the books of the Corporation as they are
issued; they shall be signed manually or by the use of a facsimile signature, (i) by the chairman
of the Board of Directors, by the chief executive officer, by the president, or by a vice president
designated by the Board of Directors and (ii) countersigned by the secretary or an assistant
secretary; and they shall bear the corporate seal or a facsimile thereof. The Board of Directors of
the Corporation may issue scrip in registered or bearer form, which shall entitle the holder to
receive a certificate for a full share. Scrip shall not entitle the holder to exercise voting rights or
to receive dividends thereon or to participate in any of the assets of the Corporation in the event
of liquidation. The Board may cause scrip to be issued subject to the condition that it shall
become void if not exchanged for certificates representing full shares before a specified date or
subject to any other conditions that it may deem advisable. Fractional may also be issued.
2.
LOST CERTIFICATES: The chief executive officer, president or
secretary may direct a new certificate or certificates to be issued in place of any lost or destroyed
certificate or certificates previously issued by the Corporation if the person or persons who claim
the certificate or certificates make an affidavit stating the certificates of stock have been lost or
destroyed. When authorizing the issuance of a new certificate or certificates, the Corporation
may, in its discretion and as a condition precedent to the issuance thereof, require the owner of
such lost or destroyed certificate or certificates, or the legal representative, to advertise the same
in such manner as the Corporation shall require and/or to give the Corporation a bond, in such
sum as the Corporation may direct, to indemnify the Corporation with respect to the certificate or
certificates alleged to have been lost or destroyed.
3.
TRANSFER OF STOCK: Upon surrender to the Corporation, or to the
transfer agent of the Corporation, if any, of a certificate for shares duly endorsed or accompanied
by proper evidence of succession, assignment or authority to transfer, the Corporation shall issue
a new certificate to the person entitled thereto, cancel the old certificate, and record the
transaction upon its books.
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4.
REGISTERED STOCKHOLDERS: The Corporation shall be entitled to
treat the holder of record of any share or shares of stock as the owner thereof and, accordingly,
shall not be bound to recognize any equitable or other claim to or interest in such share or shares
on the part of any other person. The Corporation shall not be liable for registering any transfer of
shares which are registered in the name of a fiduciary unless done with actual knowledge of facts
which would cause the Corporation’s action in registering the transfer to amount to bad faith.
ARTICLE VIII.
MISCELLANEOUS
1.
NOTICES: Each stockholder, director and officer shall furnish in writing
to the secretary of the Corporation the address to which notices of every kind may be delivered
or mailed. If such person fails to furnish an address, and the Post Office advises the Corporation
that the address furnished is no longer the correct address, the Corporation shall not be required
to deliver or mail any notice to such person. Whenever notice is required by applicable law, the
Articles of Incorporation or these By-Laws, a written waiver of such notice signed before or after
the time stated in the waiver or, in the case of a meeting, the attendance, of a stockholder or
director (except for the sole purpose of objecting) or, in the case of a unanimous consent, the
signing of the consent, shall be deemed a waiver of notice.
2.
REGISTERED OFFICE AND AGENT: The Corporation shall at all
times have a registered office and a registered agent.
3.
CORPORATE RECORDS: The Corporation shall keep correct and
complete books and records of accounts and minutes of the stockholders’ and directors’
meetings, and shall keep at its registered office or principal place of business, or at the office of
its transfer agent, if any, a record of its stockholders, including the names and addresses of all
stockholders and the number, class, and series of the shares held by each. Any person who shall
have been a stockholder of record for at least six months immediately preceding demand, or who
shall be the holder of record of a least five per cent (5%) of all the outstanding shares of the
Corporation, upon written request stating the purpose therefor, shall have the right to examine, in
person or by agent or attorney, at any reasonable time or times, for any proper purpose, the books
and records of account of the Corporation, minutes and record of stockholders, and to make
copies or extracts therefrom.
4.
REQUIREMENT FOR FINANCIAL STATEMENT: Upon the written
request of any stockholder, the Corporation shall mail to the stockholder its most recent
published financial statement.
5.
SEAL: The seal of the Corporation shall be a flat faced circular die
containing the word “SEAL” in the center and the name of the Corporation around the
circumference.
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6.
AMENDMENT OF BY-LAWS: The power to alter, amend or repeal the
By-Laws or adopt new By-Laws shall be vested in the Board of Directors, but By-Laws made by
the Board of Directors may be repealed or changed or new By-Laws adopted by the stockholders
and the stockholders may prescribe that any By-Law adopted by them may not be altered,
amended or repealed by the Board of Directors.
7.
FISCAL YEAR: The fiscal year of the Corporation shall be established
by resolution of the Board of Directors and may be changed from time to time.
8.
GENERAL: Any matters not specifically covered by these By-Laws shall
be governed by the applicable provisions of the Code of Virginia in force at the time.
ARTICLE IX.
EMERGENCY BY-LAWS
If a quorum of the Board of Directors cannot readily be assembled because of a
catastrophic event, and only in such event, these By-Laws shall, without further action by the
Board of Directors, be deemed to have been amended for the duration of such emergency, as
follows:
1.
The third sentence of Section 5, Article III shall read as follows:
Special meetings of the Board of Directors (or any committee of the Board) shall
be held whenever called by order of any director or of any person having the powers and
duties of the chairman of the Board of Directors, the chief executive officer, the president
or the vice chairman of the Board of Directors.
2.
Section 6, Article III shall read as follows:
The directors present at any regular or special meeting called in accordance with
these By-Laws shall constitute a quorum for the transaction of business at such meeting,
and the action of a majority of such directors shall be the act of the Board of Directors,
provided, however, that in the event that only one director is present at any such meeting
no action except the election of directors shall be taken until at least two additional
directors have been elected and are in attendance.
ARTICLE X.
EXCLUSIVE FORUM
Unless the Corporation consents in writing to the selection of an alternative forum
(an “Alternative Forum Consent”), the federal and state courts in the Commonwealth of Virginia
shall be the sole and exclusive forum for (i) any derivative action or proceeding brought on
behalf of the Corporation, (ii) any action asserting a claim of breach of duty owed by any current
or former director, officer, employee, stockholder or agent of the Corporation to the Corporation
or the Corporation’s stockholders, including a claim alleging the aiding and abetting of such a
breach of duty, (iii) any action asserting a claim arising pursuant to any provision of the Virginia
Stock Corporation Act, the Articles of Incorporation or these By-Laws (in each case, as may be
amended from time to time), (iv) any action or proceeding to interpret, apply, enforce or
determine the validity of the Articles of Incorporation or these By-Laws (in each case, as may be
amended from time to time), including any right, obligation, or remedy thereunder, (v) any
action or proceeding regarding indemnification or advancement or reimbursement of expenses
arising out of the Articles of Incorporation, these By-Laws or otherwise, unless the Corporation
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and the party bringing such action or proceeding have entered into a written agreement providing
for any other forum or dispute resolution process, in which case such action or proceeding shall
be subject to such written agreement, (vi) any action asserting a claim governed by the internal
affairs doctrine or (vii) any action asserting one or more “internal corporate claims,” as that term
is defined in subsection C of Section 13.1-624 of the Virginia Stock Corporation Act, in all cases
to the fullest extent permitted by law and subject to one of the courts having personal jurisdiction
over the indispensable parties named as defendants. To the extent that the federal or state courts
in the Commonwealth of Virginia do not have personal jurisdiction over the indispensable parties
named as defendants, such parties must be given a reasonable opportunity to consent to such
jurisdiction before any action or proceeding may be brought or maintained in any other court.
Unless the Corporation gives an Alternative Forum Consent, the federal district courts of the
United States of America shall be the exclusive forum for the resolution of any complaint
asserting a cause of action arising under the Securities Act of 1933 (a “Securities Act
Complaint”).
If any action the subject matter of which is within the scope of this Article X is
filed in a court other than a federal or state court located within the Commonwealth of Virginia
or, in the case of a Securities Act Complaint, a federal district court of the United States of
America (a “Foreign Action”) by or in the name of any stockholder (including any beneficial
owner), such stockholder shall be deemed to have consented to (i) the personal jurisdiction of the
federal and state courts located within the Commonwealth of Virginia in connection with any
action brought in any such court to enforce the provisions of this Article X and (ii) having
service of process made upon such stockholder in any such action by service upon such
stockholder’s counsel in the Foreign Action as agent for such stockholder.
Any person or entity purchasing or otherwise acquiring or holding any interest in
shares of capital stock of the Corporation shall be deemed to have notice of and consented to the
provisions of this Article X. If any provision of this Article X shall be held to be invalid, illegal
or unenforceable as applied to any person or entity or circumstance for any reason whatsoever,
then, to the fullest extent permitted by law, the validity, legality and enforceability of such
provision in any other circumstance and of the remaining provisions of Article X (including,
without limitation, each portion of any sentence of this Article X containing any such provision
held to be invalid, illegal or unenforceable that is not itself held to be invalid, illegal or
unenforceable) and the application of such provision to other persons or entities or circumstances
shall not in any way be affected or impaired thereby. Failure to enforce the provisions of this
Article X would cause the Corporation irreparable harm, and the Corporation shall be entitled to
equitable relief, including injunctive relief and specific performance, to enforce the provisions of
this Article X. The existence of any prior Alternative Forum Consent shall not act as a waiver of
the Corporation’s ongoing consent right as set forth in this Article X with respect to any current
or future actions or proceedings.
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Exhibit 4.3
DOLLAR TREE, INC.
DESCRIPTION OF SECURITIES REGISTERED UNDER
SECTION 12 OF THE SECURITIES EXCHANGE ACT OF 1934
The following summary of the capital stock of Dollar Tree, Inc. (the “Company”) is not complete
and is subject to, and qualified in its entirety by reference to, applicable provisions of Virginia law and the
articles of incorporation and bylaws of the Company. The Company’s articles of incorporation and
bylaws, each as amended and restated, are filed as exhibits to the Annual Report on Form 10-K of which
this Exhibit 4.3 is a part. We encourage you to read our articles of incorporation and bylaws, and the
applicable provisions of Virginia law, for additional information.
The Company’s common stock is the only class of securities registered under Section 12 of the
Securities Exchange Act of 1934, as amended.
Authorized Capital Stock
The Company’s authorized capital stock consists of 600,000,000 shares of common stock, par
value $.01 per share, and 10,000,000 shares of preferred stock, par value $.01 per share.
Common Stock
Each share of our common stock entitles its holder to one vote in the election of each director and
on all other matters voted on generally by our shareholders, other than any matter that solely relates to the
terms of any outstanding series of preferred stock or the number of shares of that series. The holders of
shares of our common stock do not have any cumulative voting rights. Our board of directors may grant
holders of preferred stock, in the resolutions creating the series of preferred stock, the right to vote on the
election of directors or any questions affecting our Company.
Each director is elected by a vote of the majority of the votes cast with respect to the director
nominee at a meeting of stockholders for the election of directors at which a quorum is present; provided,
that if the number of director nominees exceeds the number of directors to be elected, the directors are
elected by a plurality of the votes cast in such election. For purposes of director elections, a majority of
the votes cast means that the number of shares voted “for” a director must exceed the number of shares
voted “against” that director.
Holders of our common stock are entitled to dividends in such amounts and at such times as our
board of directors in its discretion may declare out of funds legally available for the payment of
dividends, subject to any preferential dividend rights of outstanding preferred stock.
If we liquidate or dissolve our business, the holders of our common stock are entitled to share
ratably in all our assets that are available for distribution to our shareholders after our creditors are paid in
full and the holders of all series of our outstanding preferred stock, if any, receive their liquidation
preferences in full.
Our common stock has no preemptive rights and is not convertible or redeemable or entitled to
the benefits of any sinking or repurchase fund. All of our outstanding shares of common stock are fully
paid and non-assessable.
The rights, preferences and privileges of holders of common stock are subject to, and may be
adversely affected by, the rights of the holders of shares of any series of preferred stock which we may
designate and issue in the future.
Our common stock is listed for trading on the NASDAQ Global Select Market under the symbol
“DLTR.” The registrar and transfer agent for our common stock is Computershare Trust Company, N.A.
Preferred Stock
Our board of directors has the authority, without any action by the holders of our common stock,
to issue up to an aggregate of 10,000,000 shares of preferred stock in one or more series. The board’s
authority includes the power to determine the designations, preferences and rights and any qualifications,
limitations or restrictions of the shares of each series of preferred stock, including:
•
•
•
•
•
•
voting rights;
dividend rights and rates;
liquidation preferences;
conversion rights;
terms of redemption (including sinking fund provisions), redemption price or prices; and
the number of shares constituting any series of preferred stock (up to the maximum of 10,000,000
shares in the aggregate).
The issuance of shares of preferred stock may adversely affect the rights of our common
shareholders. For example, any preferred stock issued may rank senior to the common stock as to
dividend rights, liquidation preference or both, may have full or limited voting rights and may be
convertible into shares of common stock. The issuance of shares of preferred stock also could decrease
the amount of earnings and assets available for distribution to holders of shares of common stock.
The issuance of preferred stock, while providing desirable flexibility in connection with possible
acquisitions and other corporate purposes, may have the effect of discouraging, delaying, or preventing a
change in control of our Company. For example, if in the due exercise of its fiduciary obligations, the
board of directors were to determine that a takeover proposal is not in the best interests of the Company,
the board of directors could cause shares of preferred stock to be issued without shareholder approval in
one or more private offerings or other transactions that might dilute the voting or other rights of the
proposed acquiror or insurgent shareholder or shareholder group.
Voting Requirements for Certain Actions
The articles of incorporation provide that approval of the following actions require the affirmative
vote of a majority of the shares entitled to be cast by each voting group entitled to vote on the matter:
•
•
•
•
•
shareholder approval of a plan of merger or share exchange;
shareholder approval of a sale, lease, exchange or other disposition of the Company’s assets,
other than certain dispositions that would leave the Company without a “significant continuing
business activity;”
shareholder approval of a plan of domestication;
shareholder approval of a plan of entity conversion; or
shareholder approval of a proposal for dissolution of the corporation.
2
Anti-Takeover Effects of Provisions of our Articles of Incorporation and Bylaws
Certain provisions in our articles of incorporation and in our bylaws could make it more difficult
for a third party to acquire, or discourage a third party from acquiring, control of the Company. For
example, the following provisions may make it difficult for existing shareholders to replace our board of
directors as well as for another party to obtain control of the Company by replacing our board of
directors:
• Our bylaws provide that shareholder nominations of persons for election to the board of directors
may be made only upon advance written notice to the board of directors in accordance with
certain procedural requirements.
• A shareholder is not eligible to have its director nominees included in the Company’s proxy
statement for the annual meeting of shareholders unless it meets certain notice and procedural
requirements, including (i) continuous ownership for at least three years of at least three per cent
of the outstanding shares of stock entitled to vote in the election of directors, and (ii) the
maximum number of shareholder nominees may not exceed the greater of two directors or
twenty-five per cent of the number of directors then in office.
•
•
The articles of incorporation provide that a director may be removed only if the number of votes
cast to remove the director constitutes a majority of the votes entitled to be cast at an election of
directors.
The authorization of undesignated preferred stock in our articles of incorporation makes it
possible for our board of directors to issue preferred stock with voting or other rights or
preferences that could impede the success of any attempt to change control of the Company.
• Our articles of incorporation do not give shareholders the right to cumulative voting in the
election of directors. The absence of cumulative voting makes it more difficult for a minority
shareholder to gain a seat on our board of directors or influence our board of directors’ decision
regarding a takeover.
In addition, there are provisions which may make it difficult to call special meetings of the
shareholders or to take other shareholder action:
• Our articles of incorporation and bylaws provide that special meetings of shareholders may be
called only by the board of directors, the chairman or vice chairman of the board of directors, our
chief executive officer, or upon the written request of one or more shareholders who own shares
representing fifteen percent or more of the outstanding shares of common stock entitled to vote
on the matter to be brought before the special meeting, and that all business to be transacted at
any special meeting of shareholders is limited to the purpose or purposes stated in the notice of
the special meeting.
•
The bylaws also provide that the only business that may be brought before an annual meeting of
shareholders is limited to matters (i) brought before the meeting at the direction of the board of
directors or (ii) specified in a written notice given by a shareholder of record who is entitled to
vote at the meeting in accordance with certain procedural requirements specified in the bylaws.
Certain Provisions of Virginia Law
The Virginia Stock Corporation Act contains provisions relating to “affiliated transactions” and
“control share acquisitions,” which in certain circumstances could have anti-takeover effects, but the
Company has elected to opt out of these provisions as permitted by Virginia law. The following is a brief
summary of the provisions of the Virginia statutes.
3
The Virginia provisions relating to “affiliated transactions” prohibit a Virginia corporation having
more than 300 shareholders from engaging in material transactions with the beneficial owner of more
than 10% of any class of its outstanding voting shares (an “interested shareholder”) for a period of three
years following the date that such person became an interested shareholder unless:
•
•
a majority (but not less than two) of the disinterested directors of the corporation and the holders
of two-thirds of the voting shares, other than the shares beneficially owned by the interested
shareholder, approve the affiliated transaction, or
before the date the person became an interested shareholder, a majority of the disinterested
directors of the corporation approved the transaction that resulted in the shareholder becoming an
interested shareholder.
Affiliated transactions subject to this approval requirement include mergers, share exchanges,
material sales or other dispositions of corporate assets not in the ordinary course of business, any
dissolution of the corporation proposed by or on behalf of an interested shareholder or any
reclassification, including reverse stock splits, recapitalizations or mergers of the corporation with its
subsidiaries, which has the effect of increasing the percentage of voting shares owned beneficially by an
interested shareholder by more than 5%.
A Virginia corporation may include in its articles of incorporation a provision opting out of the
affiliated transactions statute. The Company’s articles of incorporation provide that the Company elects
not to be governed by the affiliated transactions statute.
Virginia law also contains provisions relating to “control share acquisitions,” which are
transactions causing the voting strength of any person acquiring beneficial ownership of shares of a
Virginia public corporation to meet or exceed certain threshold percentages (20%, 33 1/3% or 50%) of the
total votes entitled to be cast for the election of directors. Shares acquired in a control share acquisition
have no voting rights unless:
•
•
the voting rights are granted by a majority vote of all outstanding shares other than those held by
the acquiring person or any officer or employee director of the corporation, or
the articles of incorporation or bylaws of the corporation provide that these Virginia law
provisions do not apply to acquisitions of its shares. The acquiring person may require that a
special meeting of the shareholders be held to consider the grant of voting rights to the shares
acquired in the control share acquisition.
A Virginia corporation may include in its articles of incorporation or bylaws a provision opting
out of the control share acquisition statute. The Company’s articles of incorporation provide that the
Company elects not to be governed by the statutory provisions relating to control share acquisitions, and
that such statutory provisions shall not apply to acquisitions of the Company’s shares.
4
Exhibit 10.12.3
AMENDMENT
TO THE
DOLLAR TREE, INC.
2013 DIRECTOR DEFERRED COMPENSATION PLAN
FIRST:
Sections 3.1 and 3.2 of the Dollar Tree, Inc. 2013 Director Deferred Compensation Plan (as
amended and restated effective June 10, 2021) (the “Plan”) are hereby amended and restated in their
entirety as follows:
3.1 DEFERRAL OF FEES. Any Eligible Director may elect to defer in either cash or Shares all or a
portion of the Fees earned during any calendar year by delivering a deferral election to the Company not
later than (a) December 31 of the calendar year immediately preceding the calendar year to which the
deferral election relates, or (b) with respect to the calendar year in which an individual first becomes an
Eligible Director the date stated in a deferral election form provided by the Company, which date shall be
no later than thirty days after the date such individual becomes an Eligible Director; provided that an
election made under Section 3.1(b) of the Plan shall not apply to any Fees earned prior to the date such
election becomes irrevocable. Unless otherwise expressly provided by the Board, all Fees are earned
upon the date payable (absent a deferral election). The election form shall specify the amount or portion
of the Fees to be deferred; whether and to what extent such Fees are to be deferred in cash or in Shares;
the manner of payment with respect to such deferred amounts; the date on which the deferred amounts
shall be paid; and whether the deferred amount shall be paid in a lump sum or in installment payments.
Such election shall remain in force for such calendar year and for Fees earned in each calendar year
thereafter until changed or revoked by the Director by written notice to the Company not later than
December 31 immediately preceding the calendar year to which such change or revocation relates. A
deferral election made under this Section 3.1 may not be changed or revoked after the dates set forth in
Section 3.1(a) or (b) above. The foregoing provisions of this Section 3.1 shall pertain to initial deferral
elections with regard to a deferral of Fees under the Plan. In addition, any Eligible Director may elect to
make one subsequent deferral election with regard to Fees subject to an initial deferral election under this
Section 3.1. Such subsequent deferral election shall be made on a form provided or specified by the
Company for this purpose and shall be irrevocable when made. Further, such subsequent deferral election
(i) may be made only with respect to a distribution date previously specified by an Eligible Director on
his or her applicable initial election form and not with respect to a distribution based on the date the
Eligible Director ceases to serve as a Director of the Company; (ii) may not change the form of
distribution from a lump sum to installments or from installments to a lump sum; (iii) must be made not
less than 12 months before the distribution date previously specified; (iv) shall not take effect until 12
months after the date on which such subsequent deferral election is made; (v) must specify a new
distribution date that is at least five years after the distribution date previously specified; (vi) may not
change an election for payment in cash to an election for payment in Shares (or vice versa); and (vii) must
be approved in advance by the Board or the Compensation Committee of the Board (or a subcommittee
thereof) in accordance with the requirements of Rule 16b-3 under the Exchange Act, if the initial deferral
election was for payment in Shares.
3.2 DEFERRAL OF EQUITY AWARDS. Any Eligible Director may elect to defer all or a portion of
an Equity Award earned during any calendar year by delivering a deferral election to the Company not
later than (a) December 31 of the calendar year immediately preceding the calendar year to which the
deferral election relates; or (b) with respect to the calendar year in which an individual first becomes an
Eligible Director, the date stated in a deferral election form provided by the Company, which date shall be
no later than thirty days after the date such individual becomes an Eligible Director; provided that an
election made under this Section 3.2(b) of the Plan shall not apply to any Equity Award earned prior to
the date such election becomes irrevocable. Unless otherwise expressly provided by the Board, an Equity
Award is earned as of the date it is awarded (absent a deferral election). The election form shall specify
the amount or portion of the Equity Award to be deferred; the date on which the deferred Shares shall be
issued to the Eligible Director; and whether the deferred Shares shall be issued in a lump sum or in
installments. Such election shall remain in force for such calendar year and for Equity Awards earned
during each calendar year thereafter until changed or revoked by the Eligible Director by written notice to
the Company not later than December 31 immediately preceding the calendar year to which such change
or revocation relates. A deferral election made under this Section 3.2 may not be changed or revoked after
the dates set forth in Section 3.2(a) or (b) above. The foregoing provisions of this Section 3.2 shall pertain
to initial deferral elections with regard to an Equity Award deferral under the Plan. In addition, any
Eligible Director may elect to make one subsequent deferral election with regard to an Equity Award
subject to an initial deferral election under this Section 3.2. Such subsequent deferral election shall be
made on a form provided or specified by the Company for this purpose and shall be irrevocable when
made. Further, such subsequent deferral election (i) may be made only with respect to a distribution date
previously specified by an Eligible Director on his or her applicable initial election form and not with
respect to a distribution based on the date the Eligible Director ceases to serve as a Director of the
Company; (ii) may not change the form of distribution from a lump sum to installments or from
installments to a lump sum; (iii) must be made not less than 12 months before the distribution date
previously specified; (iv) shall not take effect until 12 months after the date on which such subsequent
deferral election is made; (v) must specify a new distribution date that is at least five years after the
distribution date previously specified; and (vi) must be approved in advance by the Board or the
Compensation Committee of the Board (or a subcommittee thereof) in accordance with the requirements
of Rule 16b-3 under the Exchange Act.
SECOND:
Section 5.1 of the Plan is hereby amended and restated in its entirety as follows:
5.1 EFFECTIVE DATE OF THIS PLAN. This Plan is effective July 1, 2013, and the shareholders of
Dollar Tree, Inc. originally approved the Plan on June 20, 2013. The effective date of the amended and
restated Plan is March 8, 2023.
Approved by the Board of Directors of Dollar Tree, Inc. on March 8, 2023.
Exhibit 10.15.2
FIRST AMENDMENT
TO THE
DOLLAR TREE, INC.
2021 OMNIBUS INCENTIVE PLAN
The definition of “Retirement” in Section 2.1(hh) of the Dollar Tree, Inc. 2021 Omnibus
Incentive Plan (the “Plan”) is hereby amended in its entirety to read as follows, effective
November 29, 2022:
(hh) “Retirement” means, unless otherwise provided in an Award Agreement, an
Employee’s separation from Service or a Director’s resignation or retirement from the Board
(i) on or after the date such Participant attains the age of fifty-nine and a half (59½) and
(ii) following at least seven (7) years of service; provided, however, that the Retirement of an
Employee shall not include a termination for Cause even if the foregoing requirements for
Retirement are otherwise met.
Approved by the Board of Directors of Dollar Tree, Inc. on November 29, 2022.
Exhibit 10.29
DOLLAR TREE, INC.
2021 OMNIBUS INCENTIVE PLAN
PERFORMANCE-BASED RESTRICTED STOCK UNIT AGREEMENT
(the
This PERFORMANCE-BASED RESTRICTED STOCK UNIT AGREEMENT
“Agreement”), is effective as of the “Date of Grant” specified in the accompanying Notice of Grant (the
“Notice of Grant”), by and between Dollar Tree, Inc., a Virginia corporation, (the “Company”), and the
“Grantee,” as defined in the Notice of Grant.
W I T N E S S E T H:
The Dollar Tree, Inc. 2021 Omnibus Incentive Plan (the “Plan”) provides for the grant of
performance-based Restricted Stock Units (“Performance Stock Units”), sometimes referred to by the
Company as “PSUs,” in accordance with the terms and conditions of the Plan, which are incorporated
herein by reference. The Company has determined that it is in the best interest of the Company and its
shareholders to provide an Award of Performance Stock Units (this “Award”) to the Grantee. Capitalized
terms used in this Agreement and not otherwise defined herein or in the Notice of Grant have the
meanings set forth in the Plan.
1. PERFORMANCE STOCK UNITS. The Company hereby grants an Award of
Performance Stock Units to the Grantee as set forth in the Notice of Grant, subject to the terms,
conditions and restrictions as set forth in the Plan, this Agreement and the Notice of Grant. Each vested
Performance Stock Unit shall represent the right of the Grantee to receive one (1) share of the Company’s
Stock. Except as otherwise provided herein, the Performance Stock Units will be settled by issuance of
shares of Stock as soon as practicable after the certification date described in the Notice of Grant (the
“Certification Date”), but in no event later than the last day of the calendar year that includes the
Certification Date.
2. VESTING AND TRANSFER RESTRICTIONS OF PERFORMANCE STOCK
UNITS. The Grantee shall vest in the percentage of the Target Performance Stock Units, and the
restrictions described in Sections 2.1 and 2.2 shall lapse, when the Vesting Criteria set forth in the Notice
of Grant are satisfied.
2.1. Termination of Employment. In the event of a Termination of Employment (as defined
in this Section 2.1) of the Grantee with all Member Companies for any reason other than (a) death, (b)
Disability (as defined in Section 3.2 of this Agreement) or (c) Retirement (as defined in Section 3.2 of this
Agreement) prior to the satisfaction of the Vesting Criteria set forth in the Notice of Grant, the unvested
Performance Stock Units shall be forfeited as of the date of such Termination of Employment. For
purposes of this Agreement, “Termination of Employment” shall mean a “separation from service” as
defined in Treasury Regulation § 1.409A-1(h) and “Member Company” shall mean a “service recipient”
as defined in Treasury Regulation § 1.409A-1(h)(3).
2.2. Transfer Restrictions. This Award may not be transferred, assigned, pledged or
hypothecated, whether by operation of law or otherwise, other than by will or by the laws of descent or
distribution, and the provisions of this Agreement, the Plan (as applicable) and the Notice of Grant shall
be binding upon the executors, administrators, heirs, and successors of the Grantee. Any levy of any
execution, attachment or similar process upon this Award, shall be null, void and without
effect. Notwithstanding the foregoing, Grantee may designate one or more beneficiaries for receipt of the
shares of Stock subject to vested Performance Stock Units by delivering a beneficiary designation form to
the Company. A beneficiary designation will not become effective unless it is made on the form
approved by the Company and is received by the Company prior to the Grantee’s death.
2.3. Change in Control. In the event of a Change in Control, Section 14 of the Plan shall
apply to the Performance Stock Units and the Committee may take such actions as it deems appropriate
pursuant to the Plan, including accelerating vesting of this Award by waiving all or part of the Vesting
Criteria set forth in the Notice of Grant. If the vesting of Performance Stock Units is accelerated under
this Section 2.3, such vested Performance Stock Units shall be settled within 30 days of the date of the
corporate action that accelerates vesting hereunder. Notwithstanding any provision to the contrary in this
Agreement, in the event accelerated vesting of the Performance Stock Units is required based on the
terms of a retention agreement entered into by and between the Grantee and the Company, the
Performance Stock Units shall vest as required in such agreement and shall be settled or paid within 30
days of the Grantee’s Termination of Employment.
2.4. Dividends. No cash dividends shall be paid on the Performance Stock Units.
2.5. Adjustments for Recapitalizations. In the event of a Transaction (as defined in Section
4.4 of the Plan), the Performance Stock Units shall be adjusted as set forth in Section 4.4 of the Plan and
any additional securities or other consideration received pursuant to such adjustment shall be subject to
the restrictions and risk of forfeiture to the same extent as the Performance Stock Units with respect to
which such securities or other consideration has been distributed.
3. DEATH, DISABILITY, OR RETIREMENT OF GRANTEE.
3.1 Amount of Payment or Settlement; Potential Recoupment. In the event of the
Grantee’s death or Termination of Employment due to Disability prior to the Certification Date, the
Company shall waive the requirement that the Grantee be employed by the Company on the date of
payment or settlement of this Award, and on the Certification Date the Grantee will continue to vest in the
percentage of the Target Performance Stock Units as certified in writing by the Committee based on
performance, and such Award shall be paid or settled as soon as practicable after the Certification Date,
but not later than the last day of the calendar year that includes the Certification Date. In the event of the
Grantee’s Retirement prior to the Certification Date, the Company shall waive the requirement that the
Grantee be employed by the Company on the date of payment or settlement of this Award, and on the
Certification Date the Grantee will continue to vest in the percentage of the Target Performance Stock
Units as certified in writing by the Committee based on performance, and such Award shall be paid or
settled as soon as practicable after the Certification Date, but not later than the last day of the calendar
year that includes the Certification Date; provided, however, that in the event of a failure to comply (as
determined under the last paragraph of Section 3.2.2) with the Covenants (as defined in Exhibit A hereto),
any further vesting or settlement of the Performance Stock Units will cease, all unvested or unsettled
Performance Stock Units will immediately be forfeited, and the Company shall have the right, in its
discretion, to recoup all vested and settled Performance Stock Units, any resulting proceeds, and any other
economic benefit to the Grantee under this Agreement.
3.2 Definitions. For purposes of this Agreement,
3.2.1. “Disability” shall mean the Grantee has been determined to be disabled under the
long-term disability insurance policy of the Company or the Company determines that a qualified medical
professional has opined that the Grantee is unable to engage in any substantial gainful activity by reason
of any medically determinable physical or mental impairment that can be expected to result in death or
can be expected to last for a continuous period of not less than 12 months.
following circumstances and subject to the following conditions:
3.2.2. “Retirement” shall mean the Grantee’s Termination of Employment under the
(a)
The Termination of Employment is on or after the date the Grantee
attains the age of fifty-nine and a half (59 ½) and on or after the last day of the
Company’s fiscal year that includes the Date of Grant.
(b)
The Termination of Employment is on or after the date the Grantee
completes two (2) years of Service.
(c)
The Termination of Employment is on or after the date specified in an
“Adequate Notice,” unless an earlier separation date is requested by the “Appropriate
Party.” Adequate Notice, for this purpose, means communication to the Appropriate
Party on a form prescribed by the Company that the Grantee is giving consideration to
retiring as of a date that is (a) at least 12 months after such communication, for an
Employee serving as Chief Executive Officer (“CEO”) or, for Employees not serving as
CEO, at least six months after such communication. Appropriate Party, for this purpose,
means (a) the Board, for the CEO; and (b) the CEO for other Employees. The Grantee
acknowledges that any Termination of Employment after the Grantee has provided
Adequate Notice will be considered a voluntary termination for purposes of, and thus
shall preclude eligibility for, severance under any “Executive Agreement” or similar
agreement between the Grantee and the Company in effect on the date of Retirement.
(d)
The Grantee supports a transition to the Grantee’s successor in the
manner requested by the Board or the Grantee’s supervisor, as applicable.
(e)
The Grantee complies with the Covenants.
(f)
The Grantee’s execution, and non-revocation, of a separation agreement
containing a release of claims in favor of the Company, its affiliates, and their respective
officers and directors, and other relevant provisions in a form provided by and acceptable
to the Company, which release has become irrevocable not later than 30 days after the
date of the Grantee’s Termination of Employment.
(g)
Retirement of the Grantee shall not include a termination by a Member
Company for Cause or resignation at a time when Cause exists, even if the foregoing
requirements for Retirement are otherwise met.
Whether the circumstances and conditions above are present or have been satisfied for the
Grantee will be determined by (a) the Board, for the CEO; and (b) the CEO, for other Employees.
Whether special circumstances warrant a variation from the above definition will be determined
by (a) the Board, for the CEO; and (b) the Committee, for other Employees.
4. SHAREHOLDER RIGHTS. This Award does not entitle Grantee to any rights as a
shareholder of the Company unless and until the shares of Stock underlying this Award have been issued
to Grantee by registry in book-entry form with the Company.ny unless and until the shares of Stock
underlying this Award have been issued to Grantee by registry in book-entry form with the Company.
5. ISSUANCE OF SHARES. The Company will issue the shares of Stock subject to the
Performance Stock Units as non-certificated shares in book-entry form registered in Grantee’s name. The
purchase price of the shares of Stock is Grantee’s Service to the Company during the vesting periods.
The obligation of the Company to deliver shares of Stock upon the vesting of the Performance Stock
Units shall be subject to all applicable laws, rules, and regulations and such approvals by governmental
agencies as may be deemed appropriate to comply with relevant state and federal securities laws and
regulations and the rules of any applicable stock exchange.
6. CODE SECTION 409A. This Agreement and all amounts payable hereunder are intended
to be exempt from Code Section 409A as short-term deferrals (as defined under Treasury Regulations
Section 1.409A-1(b)(4)), and this Agreement shall be administered and interpreted consistent with that
intent. To the extent this Agreement provides for a deferral of compensation subject to Code Section
409A and the regulations promulgated thereunder, this Agreement is intended to and shall be interpreted
and administered as necessary to comply with Code Section 409A. All payments made under this
Agreement will be treated as separate payments and will not be aggregated with any other payment for
purposes of Code Section 409A and the exemptions therefrom. Notwithstanding any other provision of
this Agreement to the contrary, and solely to the extent required by Code Section 409A, in the event that
Grantee is a “specified employee” under Code Section 409A(a)(2)(i) and the regulations promulgated
thereunder on the date of Grantee’s Termination of Employment, then amounts payable under this Award
due to Grantee’s Termination of Employment (other than for death) shall be accumulated and paid
without interest to the Grantee on the first business day of the seventh month following the date of the
Grantee’s Termination of Employment.
7. TAXES; WITHHOLDING OBLIGATION.
7.1. Generally. Grantee shall be ultimately liable and responsible for all taxes owed in
connection with this Award, regardless of any action a Member Company takes with respect to any tax
withholding obligations that arise in connection with this Award. The Member Companies make no
representation or undertaking regarding the treatment of any tax withholding in connection with the grant
or vesting of this Award or the subsequent sale of shares of Stock issuable pursuant to this Award.
Neither the Company nor any Member Company is committed or under any obligation to structure this
Award to reduce or eliminate Grantee’s tax liability.
7.2. Payment of Withholding Taxes. The Company shall deduct from the shares of Stock
issuable to a Participant upon the settlement of Performance Stock Units granted hereunder a number of
whole shares of Stock having a Fair Market Value, as determined by the Company, equal to the tax
withholding obligations thereon of the Member Companies. Upon the settlement of such Performance
Stock Units, all tax withholding shall be satisfied by deduction of shares of Stock otherwise issuable to a
Participant upon the settlement of this Award. The Fair Market Value of any shares of Stock withheld or
cancelled under this Section 7.2 shall not exceed the amount determined by the minimum statutory
withholding rates for each applicable tax jurisdiction.
8. NO EMPLOYMENT RIGHTS. Nothing in this Agreement shall affect in any manner
whatsoever the right or power of a Member Company to terminate Grantee’s employment for any reason,
with or without Cause.
9. MISCELLANEOUS.
9.1. Governing Law; Jurisdiction and Venue. This Agreement and all acts and
transactions pursuant hereto and the rights and obligations of the parties hereto shall be governed,
construed and interpreted in accordance with the laws of the Commonwealth of Virginia, without giving
effect to choice of law provisions thereof. The Circuit Court of the City of Norfolk, Virginia, and the
United States District Court, Eastern District of Virginia, Norfolk Division shall be the exclusive courts of
jurisdiction and venue for any litigation, special proceedings or other proceedings between the parties that
may be brought, or arise out of, in connection with, or by reason of this Agreement, except to the extent
of proceedings required to be brought in accordance with any arbitration agreement between the parties,
and the parties to this Agreement hereby consent to the jurisdiction of such courts.
9.2. Entire Agreement; Enforcement of Rights.
9.2.1. The Plan and the Notice of Grant are hereby incorporated by reference in this
Agreement. This Agreement (including the Plan and the Notice of Grant) sets forth the entire agreement
and understanding of the parties relating to the subject matter herein. No modification of or amendment
to this Agreement, nor any waiver of any rights under this Agreement, shall be effective unless in a
writing signed by the Company and the Grantee to this Agreement. In the event of a conflict between this
Agreement and the Plan, the terms of the Plan control. A copy of the Plan may be obtained from the
Chief Human Resources Officer of the Company (or such other party as the Company may designate).
This Agreement is subject to all interpretations, amendments, rules and regulations promulgated by the
Committee from time to time pursuant to the Plan.
9.2.2. The failure by either party to enforce any rights under this Agreement shall
not be construed as a waiver of any rights of such party. Any action or proceeding to enforce this
Agreement shall be brought in accordance with the requirements of any arbitration agreement between the
parties, except that the Company may seek temporary or permanent injunctive relief or other forms of
immediate relief related to a breach of any of the covenants in this Agreement in the state or federal courts
located in Norfolk, Virginia.
9.3. Severability. If one or more provisions of this Agreement are held to be unenforceable
under applicable law, the parties agree to renegotiate such provision in good faith. In the event that the
parties cannot reach a mutually agreeable and enforceable replacement for such provision, then (i) such
provision shall be excluded from this Agreement, (ii) the balance of this Agreement shall be interpreted as
if such provision were so excluded and (iii) the balance of this Agreement shall be enforceable in
accordance with its terms.
9.4. Notices. Any notice required or permitted by this Agreement shall be in writing and
shall be deemed sufficient when delivered personally or sent by fax, or twenty-four (24) hours after being
delivered to a reliable overnight courier service for overnight delivery (with delivery costs prepaid), or
forty-eight (48) hours after being deposited in the U.S. mail, as certified or registered mail, with postage
prepaid, and addressed to the party to be notified at such party’s address as set forth below or as
subsequently modified by written notice.
9.5. Successors and Assigns. The rights and benefits of this Agreement shall inure to the
benefit of, and be enforceable by, the Company’s successors and assigns. The rights and obligations of
Grantee under this Agreement may only be assigned with the prior written consent of the Company.
9.6. Claw-back. The Grantee acknowledges and agrees that this Award of Performance
Stock Units is subject to the provisions of Section 19.1 of the Plan, “Forfeiture Events; Recoupment,” and
to the provisions of any claw-back or similar policy adopted, implemented, or amended by the Company,
whether before or after the Date of Grant.
EXHIBIT A
Restrictive Covenants
The covenants set forth in this Exhibit A (the “Covenants”) are several. Compliance with the
Covenants is a condition of Retirement under this Agreement.
a. Confidential Information. The Grantee understands and acknowledges that during the course of the
Grantee’s employment by the Company, the Grantee will have access to and learn about Confidential
Information belonging to the Company.
For purposes of the Covenants, "Confidential Information" is all information not generally known to the
public and developed or maintained by the Company or its agents in spoken, printed, electronic or any
other form or medium, relating directly or indirectly to the Company’s: business processes, practices,
methods, policies, plans, operations, strategies, agreements, contracts, transactions, potential transactions,
know-how, trade secrets, intellectual property, works-in-process, databases, systems, vendor and supplier
information, financial information, accounting information, accounting records, legal information,
marketing
information, design
information, personnel information, market studies, sales information, revenue, costs, customer
information, manufacturing information, transportation and logistics information, and factory lists of the
Company or of any other person or entity that has entrusted information to the Company in confidence.
information, advertising
information, pricing
information, credit
The Grantee understands that the above list is not exhaustive, and that Confidential Information also
includes other information that is marked or otherwise identified or treated as confidential or proprietary,
or that would otherwise appear to a reasonable person to be confidential or proprietary in the context and
circumstances in which the information is known or used.
The Grantee understands and acknowledges that the Company has invested, and continues to invest,
substantial time, money, and specialized knowledge into developing its resources, creating and
developing its vendor base, increasing its customer base, expanding the number of geographic markets in
which it operates, training its executives, developing best operational practices, and negotiating highly
competitive prices in the discount retail sector so as to provide the best value possible to its customers. the
Grantee understands and acknowledges that as a result of these ongoing efforts, the Company has created,
and continues to use and create, Confidential Information. This Confidential Information provides the
Company with a competitive advantage over others in the marketplace, and it is essential to the
Company’s success moving forward.
Confidential Information shall not include information that is generally available to and known by the
public at the time of disclosure to the Grantee, provided that such disclosure is through no direct or
indirect fault of the Grantee or anyone acting on the Grantee’s behalf.
i. Disclosure and Use Restrictions. The Grantee agrees and covenants: (i) to treat all
Confidential Information as strictly confidential; (ii) not to directly or indirectly disclose, publish,
communicate, or make available Confidential Information, or allow it to be disclosed, published,
communicated, or made available, in whole or part, to any entity or person whatsoever (including
other executives and employees of the Company not having a need to know such information);
(iii) not to access or use any Confidential Information, and not to copy any documents, records,
files, media, or other resources containing any Confidential Information, or remove any such
documents, records, files, media, or other resources from the premises or control of the Company,
except as required in the performance of the Grantee’s authorized employment duties to the
Company or with the prior consent of the Grantee’s supervisor; and (iv) to immediately return
and not retain, in any form, any such Confidential Information upon the Separation Date. Nothing
herein shall be construed to prevent disclosure of Confidential Information as may be required by
applicable law or regulation, or pursuant to the valid subpoena or order of a court of competent
jurisdiction or an authorized government agency, provided that the disclosure does not exceed the
extent of disclosure required by such law, regulation, or subpoena/order. The Grantee shall
promptly provide written notice of any such order to the Company’s Chief Legal Officer, if
permitted by law to do so.
The Grantee understands and acknowledges that the Grantee’s obligations under the Covenants
with regard to any particular Confidential Information shall commence immediately upon the
Grantee’s first having access to such Confidential Information and shall continue during and after
the Grantee’s employment by the Company until such time as such Confidential Information has
become public knowledge other than as a result of the Grantee’s breach of the Covenants or
breach by those acting in concert with the Grantee or on the Grantee’s behalf.
ii. Whistleblower Protection and Notice of Immunity under the Economic Espionage Act of
1996, as amended by the Defend Trade Secrets Act of 2016. Notwithstanding any other
provision of the Covenants or any other agreement or Company policy, the Grantee will not be
held liable under this Agreement or any other agreement or Company policy or any federal or
state trade secret law for any disclosure of a trade secret or other Confidential Information that is
made (i) in confidence to a federal, state, or local government official, either directly or indirectly,
or to an attorney; and (ii) solely for the purpose of reporting or investigating a suspected violation
of law; or (iii) is made in a complaint or other document that is filed under seal in a lawsuit or
other proceeding.
b. Covenant Not to Compete.
i. Acknowledgment. The Grantee understands that the senior nature of the Grantee’s position
gives the Grantee access to and knowledge of Confidential Information and places the Grantee in
a position of trust and confidence with the Company and, further, that the improper use or
disclosure by the Grantee of Confidential Information is likely to result in unfair or unlawful
competitive activity that would substantially harm the Company. The Grantee understands and
acknowledges that the Grantee’s experience and expertise relating to the business of a retailer are
unique and specialized, and that the Company’s ability to reserve these talents for the exclusive
knowledge and use of the Company during the Grantee’s employment and for a reasonable period
thereafter is of great competitive importance and commercial value to the Company.
ii. Non-Competition. Because of the Company’s legitimate business interest as described
herein and the good and valuable consideration offered to the Grantee herein, during the
Grantee’s employment and for a 24-month period beginning on the Separation Date, the Grantee
agrees and covenants that the Grantee will not engage in any Prohibited Activity (as defined
below) for a Competitor (as defined below). This restrictive covenant applies whether the
Grantee’s employment is terminated by the Grantee or by the Company for any reason or no
reason.
1. For purposes of this non-compete, "Prohibited Activity" is activity in which the Grantee,
in any competitive capacity (whether for compensation or not) provides services, advises,
consults, or otherwise acts in a role in which Executive (i) would be engaged in the same
or similar type of work or services the Grantee performed for or on behalf of the
Company at any time during the two-year period immediately prior to the Separation
Date and would be competitive with business, products, or services of the Company; or
(ii) would reasonably be expected to require the Grantee’s application of, disclosure of,
reliance on, or use of the Company’s Confidential Information or customer goodwill.
2. A “Competitor” is defined as (i) Dollar General; Walmart; Target; Five Below; or (ii) a
Discount Retail Chain that operates one or more retail stores located within the Restricted
Area.
3. “Discount Retail Chain” is defined as a chain of stores (with at least 200 stores as of
Executive’s Separation Date, including by way of illustration and not limitation, 99 Cents
Only) that predominantly sell good or products retailing for $5 or less.
4. “Restricted Area” is defined as the area that is within ten miles of any Dollar Tree or
Family Dollar store existing as of the Separation Date.
iii. Nothing herein shall prohibit the Grantee from purchasing or owning less than five percent
(5%) of the publicly traded securities of any corporation, provided that such ownership represents
a passive investment and that the Grantee is not a controlling person of, or a member of a group
that controls, such corporation.
c. Non-Piracy of Company Executives. The Grantee agrees and covenants that, for a period of 24
months from the Separation Date, the Grantee shall not directly or indirectly solicit, hire, recruit, or
attempt to hire or recruit, any Company Executive, or induce the termination of employment of any
Company Executive. “Company Executive” means any person who at the time of, or within three months
immediately prior to, the solicitation, hiring, recruitment, or inducement, was employed by the Company
at a Director-level or more senior position. The types of communication prohibited by this provision
explicitly include all forms of oral, written, or electronic communication, including, but not limited to,
communications by email, regular mail, express mail, telephone, fax, instant message, and social media,
where the purpose of or reasonably anticipated impact or consequence of the communication would be to
solicit, hire or recruit such person. For the avoidance of doubt, this restriction applies regardless of
whether the Grantee or the Company Executive initiated the first communication.
d. Non-Disparagement. The Grantee agrees and covenants that, during the Grantee’s employment and
for a period of 24 months after the Separation Date, the Grantee will not make, publish, or communicate
to any person or entity or in any public forum any defamatory or disparaging remarks, comments, or
statements concerning the Company, or any of its executives, directors, and officers. This Section does
not, in any way, restrict or impede the Grantee from exercising protected rights to the extent that such
rights cannot be waived by agreement or otherwise under applicable law, including but not limited to the
Grantee's right to discuss sexual assault and/or sexual harassment claims, make a complaint or charge
with or respond to an inquiry from any government agency, or from complying with any applicable law or
regulation or a valid order of a court of competent jurisdiction or an authorized government agency.
e. Acknowledgment. The Grantee acknowledges and agrees that the services the Grantee will render to
the Company are of a special and unique character; that the Grantee will obtain knowledge and skill
relevant to the Company’s industry, methods of doing business, and logistical, operational, merchandising
and marketing strategies by virtue of the Grantee’s employment; and that the restrictive covenants and
other terms and conditions of the Covenants are reasonable and reasonably necessary to protect the
legitimate business interests of the Company.
The Grantee affirms that the Grantee will not be subject to undue hardship or an unreasonable restraint on
the Grantee’s ability to earn a livelihood by reason of the Grantee’s full compliance with the terms and
conditions of the Covenants or the Company’s enforcement thereof; and that the Covenants and this
Award are not a contract of employment and shall not be construed as a commitment by either of the
parties to continue an employment relationship for any certain period of time.
The Grantee’s obligations under each of Sections (a)(i), (b)(ii), (c), and (d) above are separable and
independently enforceable of each other and of any legal obligations that may exist between the Company
and the Grantee. The real or perceived existence of any claim or cause of action of the Grantee against
the Company, whether predicated on the Covenants or some other basis, will not alleviate the Grantee of
the Grantee’s obligations under the Covenants and will not constitute a defense to the enforcement by the
Company of the restrictions and covenants contained herein.
f. Remedies. In the event of a breach or threatened breach by the Grantee of any of the Covenants, the
Grantee hereby consents and agrees that the Company shall be entitled to seek (notwithstanding the any
agreement to arbitrate claims to which the Company, the Grantee, or a Member Company is subject), in
addition to other available remedies, a temporary or permanent injunction or other equitable relief against
such breach or threatened breach from any court of competent jurisdiction, without the necessity of
showing any actual damages, and without the necessity of posting any bond or other security. The
aforementioned equitable relief shall be in addition to, not in lieu of, legal remedies, monetary damages,
or other available forms of relief including without limitation a claim for recovery or disgorgement of any
amount paid or realized, or shares issued to the Grantee pursuant to the Award.
Exhibit 10.30
DOLLAR TREE, INC.
2021 OMNIBUS INCENTIVE PLAN
RESTRICTED STOCK UNIT AGREEMENT
(STANDARD)
This RESTRICTED STOCK UNIT AGREEMENT (the “Agreement”) is effective as of the
“Date of Grant” specified in the accompanying Notice of Grant (the “Notice of Grant”), by and between
Dollar Tree, Inc., a Virginia corporation, (the “Company”) and the “Grantee” as defined in the Notice of
Grant.
W I T N E S S E T H:
The Dollar Tree, Inc. 2021 Omnibus Incentive Plan (the “Plan”) provides for the grant of
Restricted Stock Units in accordance with the terms and conditions of the Plan, which are incorporated
herein by reference. The Company has determined that it is in the best interest of the Company and its
shareholders to provide an Award of Restricted Stock Units (this “Award”) to the Grantee. Capitalized
terms used in this Agreement and not otherwise defined herein or in the Notice of Grant have the
meanings set forth in the Plan.
1. RESTRICTED STOCK UNITS. The Company hereby grants the Grantee the number of
Restricted Stock Units as set forth in the Notice of Grant subject to the terms, conditions and restrictions
as set forth in the Plan, this Agreement and the Notice of Grant. Each vested Restricted Stock Unit shall
represent the right of the Grantee to receive one share of the Company’s Stock. Except as otherwise
provided herein, the Restricted Stock Units will be settled by issuance of shares of Stock as soon as
practicable after the date the Vesting Criteria set forth in the Notice of Grant are satisfied or deemed
satisfied hereunder, but in no event later than the last day of the calendar year in which such Vesting
Criteria are satisfied or deemed satisfied hereunder.
2. VESTING AND TRANSFER RESTRICTIONS OF RESTRICTED STOCK UNITS.
The Restricted Stock Units shall become vested, if at all, and the restrictions described in Sections 2.1 and
2.2 shall lapse, as the Vesting Criteria set forth in the Notice of Grant are satisfied.
2.1. Termination of Employment. In the event of Termination of Employment (as defined
in this Section 2.1) of the Grantee with all Member Companies for any reason other than (a) death, (b)
Disability (as defined in Section 3.2 of this Agreement) or (c) Retirement (as defined in Section 3.2 of this
Agreement) prior to the satisfaction of the Vesting Criteria, the unvested Restricted Stock Units shall be
forfeited as of the date of such Termination of Employment. For purposes of this Agreement,
“Termination of Employment” shall mean a “separation from service” as defined in Treasury Regulation
§ 1.409A-1(h) and “Member Company” shall mean a “service recipient” as defined in Treasury
Regulation § 1.409A-1(h)(3).
2.2. Transfer Restrictions. The Restricted Stock Units may not be transferred, assigned,
pledged or hypothecated, whether by operation of law or otherwise, other than by will or by the laws of
descent or distribution, and the provisions of this Agreement, the Plan and the Notice of Grant shall be
binding upon the executors, administrators, heirs, and successors of the Grantee. Any levy of any
execution, attachment or similar process upon the Restricted Stock Units, shall be null, void and without
effect. Notwithstanding the foregoing, Grantee may designate one or more beneficiaries for receipt of the
shares of Stock subject to this Award by delivering a beneficiary designation form to the Company. A
beneficiary designation will not become effective unless it is made on the form approved by the Company
and is received by the Company prior to the Grantee’s death.
2.3. Change in Control. In the event of a Change in Control, Section 14 of the Plan shall
apply to the Restricted Stock Units and the Committee may take such actions as it deems appropriate
pursuant to the Plan, including accelerating vesting of this Award by waiving all or part of the Vesting
Criteria set forth in the Notice of Grant. Notwithstanding any provision to the contrary in this
Agreement, in the event accelerated vesting of the Restricted Stock Units is required based on the terms
of a retention agreement entered into by and between the Grantee and the Company, the Restricted Stock
Units shall vest as required in such agreement and shall be settled or paid within 30 days of the Grantee’s
Termination of Employment.
2.4. Dividends. No cash dividends shall be paid on the Restricted Stock Units.
2.5. Adjustments for Recapitalizations. In the event of a Transaction (as defined in Section
4.4 of the Plan), the Restricted Stock Units shall be adjusted as set forth in Section 4.4 of the Plan and any
additional securities or other consideration received pursuant to such adjustment shall be subject to the
restrictions and risk of forfeiture to the same extent as the Restricted Stock Units with respect to which
such securities or other consideration has been distributed.
3. DEATH, DISABILITY, OR RETIREMENT OF GRANTEE.
3.1
Amount of Payment or Settlement; Potential Recoupment. In the event of the
Grantee’s death prior to satisfaction of the Vesting Criteria in the Notice of Grant, the Company shall
waive the requirement that the Grantee be employed by the Company on the date of payment or
settlement of this Award, this Award shall vest in full, and such Award shall be paid or settled as soon as
practicable, but not later than the last day of the calendar year that includes the date of the Grantee’s
death. In the event of the Grantee’s Termination of Employment due to Disability prior to satisfaction of
the Vesting Criteria in the Notice of Grant, the Company shall waive the requirement that the Grantee be
employed by the Company on the date of payment or settlement of this Award, this Award will continue
to be settled in accordance with the vesting dates set forth in the Notice of Grant (“Vesting Dates”) as
though the Grantee had not had a Termination of Employment, and such Award shall be paid or settled as
soon as practicable after the respective Vesting Dates, but not later than the last day of the calendar year
that includes the respective Vesting Dates. In the event of the Grantee’s Retirement prior to satisfaction
of the Vesting Criteria in the Notice of Grant, the Company shall waive the requirement that the Grantee
be employed by the Company on the date of payment or settlement of this Award, this Award will
continue to be settled in accordance with the Vesting Dates as though the Grantee had not had a
Termination of Employment, and such Award shall be paid or settled as soon as practicable after the
respective Vesting Dates, but not later than the last day of the calendar year that includes the respective
Vesting Dates; provided, however, that in the event of a failure to comply (as determined under the last
paragraph of Section 3.2.2) with the Covenants (as defined in Section 3.2.2), any further settlement of the
Restricted Stock Units will cease, all Restricted Stock Units that has not been settled will immediately be
forfeited, and the Company shall have the right, in its discretion, to recoup all vested or settled Restricted
Stock Units, any resulting proceeds, and any other economic benefit to the Grantee under this Agreement.
3.2
Definitions. For purposes of this Agreement,
3.2.1. “Disability” shall mean the Grantee has been determined to be disabled under the
long-term disability insurance policy of the Company or the Company determines that a qualified medical
professional has opined that the Grantee is unable to engage in any substantial gainful activity by reason
of any medically determinable physical or mental impairment that can be expected to result in death or
can be expected to last for a continuous period of not less than 12 months.
following circumstances and subject to the following conditions:
3.2.2. “Retirement” shall mean the Grantee’s Termination of Employment under the
(a)
The Termination of Employment is on or after the date the Grantee
attains the age of fifty-nine and a half (59 ½).
(b)
The Termination of Employment is on or after the date the Grantee
completes two (2) years of Service.
(c)
The Termination of Employment is on or after the date specified in an
“Adequate Notice,” unless an earlier separation date is requested by the “Appropriate
Party.” Adequate Notice, for this purpose, means communication to the Appropriate
Party on a form prescribed by the Company that the Grantee is giving consideration to
retiring as of a date that is at least 12 months after such communication, for an Employee
serving as Chief Executive Officer (“CEO”) or, for Employees not serving as CEO, at
least six months after such communication. Appropriate Party, for this purpose, means
(a) the Board, for the CEO; and (b) the CEO for other Employees. The Grantee
acknowledges that any Termination of Employment after the Grantee has provided
Adequate Notice will be considered a voluntary termination for purposes of, and thus
shall preclude eligibility for, severance under any “Executive Agreement” or similar
agreement between the Grantee and the Company in effect on the date of Retirement.
(d)
The Grantee supports a transition to the Grantee’s successor in the
manner requested by the Board or the Grantee’s supervisor, as applicable.
(e)
The Grantee abides by the Covenants (as defined in Exhibit A hereto).
(f)
The Grantee’s execution, and non-revocation, of a separation agreement
containing a release of claims in favor of the Company, its affiliates, and their respective
officers and directors, and other relevant provisions in a form provided by and acceptable
to the Company, which release has become irrevocable not later than 30 days after the
date of the Grantee’s Termination of Employment.
(g)
include a Termination of
Employment by the Company or a Member Company for Cause or a resignation at a time
when Cause exists, even if the foregoing requirements for Retirement are otherwise met.
the Grantee shall not
Retirement of
Whether the circumstances and conditions above are present or have been satisfied for the
Grantee will be determined by (a) the Board, for the CEO; and (b) the CEO, for other Employees.
Whether special circumstances warrant a variation from the above definition will be determined
by (a) the Board, for the CEO; and (b) the Committee, for other Employees.
4. SHAREHOLDER RIGHTS. This Award does not entitle the Grantee to any rights as a
shareholder of the Company unless and until the shares of Stock underlying this Award have been issued
to the Grantee by registry in book-entry form with the Company.
5. ISSUANCE OF SHARES. The Company will issue the shares of Stock subject to the
Restricted Stock Units as non-certificated shares in book-entry form registered in Grantee’s name. The
purchase price of the shares of Stock is the Grantee’s Service to the Company during the vesting periods.
The obligation of the Company to deliver shares of Stock upon the vesting of the Restricted Stock Units
shall be subject to all applicable laws, rules, and regulations and such approvals by governmental
agencies as may be deemed appropriate to comply with relevant state and federal securities laws and
regulations and the rules of any applicable stock exchange.
6. CODE SECTION 409A. To the extent this Agreement provides for a deferral of
compensation subject to Code Section 409A and the regulations promulgated thereunder, this Agreement
is intended to and shall be interpreted and administered as necessary to comply with Code Section 409A.
All payments made under this Agreement will be treated as separate payments and will not be aggregated
with any other payment for purposes of Code Section 409A and the exemptions therefrom. In the event
the Committee exercises discretion to accelerate satisfaction of the Vesting Criteria in the event of a
Change in Control, then to the extent required for compliance with Code Section 409A, settlement shall
nonetheless be made on the earlier of (i) the respective Vesting Dates for the applicable number of
Restricted Stock Units or (ii) the Grantee’s Termination of Employment. Notwithstanding any other
provision of this Agreement to the contrary, and solely to the extent required by Code Section 409A, in
the event that Grantee is a “specified employee” under Code Section 409A(a)(2)(i) and the regulations
promulgated thereunder on the date of Grantee’s Termination of Employment, then amounts payable
under this Award due to Grantee’s Termination of Employment (other than for death) shall be
accumulated and paid without interest to the Grantee on the first business day of the seventh month
following the date of the Grantee’s Termination of Employment.
7. TAXES; WITHHOLDING OBLIGATION.
7.1. Generally. Grantee shall be ultimately liable and responsible for all taxes owed in
connection with this Award, regardless of any action a Member Company takes with respect to any tax
withholding obligations that arise in connection with this Award. The Member Companies make no
representation or undertaking regarding the treatment of any tax withholding in connection with the grant
or vesting of this Award or the subsequent sale of shares of Stock issuable pursuant to this Award.
Neither the Company nor any Member Company is committed or under any obligation to structure this
Award to reduce or eliminate Grantee’s tax liability.
7.2. Payment of Withholding Taxes. The Company shall deduct from the shares of Stock
issuable to the Grantee upon the settlement of this Award a number of whole shares of Stock having a
Fair Market Value, as determined by the Company, equal to the tax withholding obligations thereon of the
Member Companies. Upon the settlement of this Award, all tax withholding shall be satisfied by
deduction of shares of Stock otherwise issuable to the Grantee upon the settlement of this Award. The
Fair Market Value of any shares of Stock withheld or cancelled under this Section 7.2 shall not exceed the
amount determined by the minimum statutory withholding rates for each applicable tax jurisdiction.
8. NO EMPLOYMENT RIGHTS. Nothing in this Agreement shall affect in any manner
whatsoever the right or power of a Member Company to terminate Grantee’s employment for any reason,
with or without Cause.
9. MISCELLANEOUS.
9.1. Governing Law; Jurisdiction and Venue. This Agreement and all acts and
transactions pursuant hereto and the rights and obligations of the parties hereto shall be governed,
construed and interpreted in accordance with the laws of the Commonwealth of Virginia, without giving
effect to choice of law provisions thereof. The Circuit Court of the City of Norfolk, Virginia, and the
United States District Court, Eastern District of Virginia, Norfolk Division shall be the exclusive courts of
jurisdiction and venue for any litigation, special proceedings or other proceedings between the parties that
may be brought, or arise out of, in connection with, or by reason of this Agreement, except to the extent
of proceedings required to be brought in accordance with any arbitration agreement between the parties,
and the parties to this Agreement hereby consent to the jurisdiction of such courts.
9.2. Entire Agreement; Enforcement of Rights.
9.2.1. The Plan and the Notice of Grant are hereby incorporated by reference in this
Agreement. This Agreement (including the Plan and the Notice of Grant) sets forth the entire agreement
and understanding of the parties relating to the subject matter herein. No modification of or amendment
to this Agreement, nor any waiver of any rights under this Agreement, shall be effective unless in a
writing signed by the Company and the Grantee to this Agreement. In the event of a conflict between this
Agreement and the Plan, the terms of the Plan control. A copy of the Plan may be obtained from the
Chief Human Resources Officer of the Company (or such other party as the Company may designate).
This Agreement is subject to all interpretations, amendments, rules and regulations promulgated by the
Committee from time to time pursuant to the Plan.
9.2.2. The failure by either party to enforce any rights under this Agreement shall not
be construed as a waiver of any rights of such party. Any action or proceeding to enforce this Agreement
shall be brought in accordance with the requirements of any arbitration agreement between the parties,
except that the Company may seek temporary or permanent injunctive relief or other forms of immediate
relief related to a breach of any of the covenants in this Agreement in the state or federal courts located in
Norfolk, Virginia.
9.3. Severability. If one or more provisions of this Agreement are held to be unenforceable
under applicable law, the parties agree to renegotiate such provision in good faith. In the event that the
parties cannot reach a mutually agreeable and enforceable replacement for such provision, then (i) such
provision shall be excluded from this Agreement, (ii) the balance of this Agreement shall be interpreted as
if such provision were so excluded and (iii) the balance of this Agreement shall be enforceable in
accordance with its terms.
9.4. Notices. Any notice required or permitted by this Agreement shall be in writing and
shall be deemed sufficient when delivered personally or sent by fax, or twenty-four (24) hours after being
delivered to a reliable overnight courier service for overnight delivery (with delivery costs prepaid), or
forty-eight (48) hours after being deposited in the U.S. mail, as certified or registered mail, with postage
prepaid, and addressed to the party to be notified at such party’s address as set forth below or as
subsequently modified by written notice.
9.5. Successors and Assigns. The rights and benefits of this Agreement shall inure to the
benefit of, and be enforceable by, the Company’s successors and assigns. The rights and obligations of
Grantee under this Agreement may only be assigned with the prior written consent of the Company.
9.6. Claw-back. The Grantee acknowledges and agrees that this Award of Restricted Stock
Units is subject to the provisions of Section 19.1 of the Plan, “Forfeiture Events; Recoupment,” and to the
provisions of any claw-back or similar policy adopted, implemented, or amended by the Company,
whether before or after the Date of Grant.
EXHIBIT A
Restrictive Covenants
The covenants set forth in this Exhibit A (the “Covenants”) are several. Compliance with the
Covenants is a condition of Retirement under this Agreement.
a. Confidential Information. The Grantee understands and acknowledges that during the course of the
Grantee’s employment by the Company, the Grantee will have access to and learn about Confidential
Information belonging to the Company.
For purposes of the Covenants, "Confidential Information" is all information not generally known to the
public and developed or maintained by the Company or its agents in spoken, printed, electronic or any
other form or medium, relating directly or indirectly to the Company’s: business processes, practices,
methods, policies, plans, operations, strategies, agreements, contracts, transactions, potential transactions,
know-how, trade secrets, intellectual property, works-in-process, databases, systems, vendor and supplier
information, financial information, accounting information, accounting records, legal information,
marketing
information, design
information, personnel information, market studies, sales information, revenue, costs, customer
information, manufacturing information, transportation and logistics information, and factory lists of the
Company or of any other person or entity that has entrusted information to the Company in confidence.
information, advertising
information, pricing
information, credit
The Grantee understands that the above list is not exhaustive, and that Confidential Information also
includes other information that is marked or otherwise identified or treated as confidential or proprietary,
or that would otherwise appear to a reasonable person to be confidential or proprietary in the context and
circumstances in which the information is known or used.
The Grantee understands and acknowledges that the Company has invested, and continues to invest,
substantial time, money, and specialized knowledge into developing its resources, creating and
developing its vendor base, increasing its customer base, expanding the number of geographic markets in
which it operates, training its executives, developing best operational practices, and negotiating highly
competitive prices in the discount retail sector so as to provide the best value possible to its customers. the
Grantee understands and acknowledges that as a result of these ongoing efforts, the Company has created,
and continues to use and create, Confidential Information. This Confidential Information provides the
Company with a competitive advantage over others in the marketplace, and it is essential to the
Company’s success moving forward.
Confidential Information shall not include information that is generally available to and known by the
public at the time of disclosure to the Grantee, provided that such disclosure is through no direct or
indirect fault of the Grantee or anyone acting on the Grantee’s behalf.
i. Disclosure and Use Restrictions. The Grantee agrees and covenants: (i) to treat all
Confidential Information as strictly confidential; (ii) not to directly or indirectly disclose, publish,
communicate, or make available Confidential Information, or allow it to be disclosed, published,
communicated, or made available, in whole or part, to any entity or person whatsoever (including
other executives and employees of the Company not having a need to know such information);
(iii) not to access or use any Confidential Information, and not to copy any documents, records,
files, media, or other resources containing any Confidential Information, or remove any such
documents, records, files, media, or other resources from the premises or control of the Company,
except as required in the performance of the Grantee’s authorized employment duties to the
Company or with the prior consent of the Grantee’s supervisor; and (iv) to immediately return
and not retain, in any form, any such Confidential Information upon the Separation Date. Nothing
herein shall be construed to prevent disclosure of Confidential Information as may be required by
applicable law or regulation, or pursuant to the valid subpoena or order of a court of competent
jurisdiction or an authorized government agency, provided that the disclosure does not exceed the
extent of disclosure required by such law, regulation, or subpoena/order. The Grantee shall
promptly provide written notice of any such order to the Company’s Chief Legal Officer, if
permitted by law to do so.
The Grantee understands and acknowledges that the Grantee’s obligations under the Covenants
with regard to any particular Confidential Information shall commence immediately upon the
Grantee’s first having access to such Confidential Information and shall continue during and after
the Grantee’s employment by the Company until such time as such Confidential Information has
become public knowledge other than as a result of the Grantee’s breach of the Covenants or
breach by those acting in concert with the Grantee or on the Grantee’s behalf.
ii. Whistleblower Protection and Notice of Immunity under the Economic Espionage Act of
1996, as amended by the Defend Trade Secrets Act of 2016. Notwithstanding any other
provision of the Covenants or any other agreement or Company policy, the Grantee will not be
held liable under this Agreement or any other agreement or Company policy or any federal or
state trade secret law for any disclosure of a trade secret or other Confidential Information that is
made (i) in confidence to a federal, state, or local government official, either directly or indirectly,
or to an attorney; and (ii) solely for the purpose of reporting or investigating a suspected violation
of law; or (iii) is made in a complaint or other document that is filed under seal in a lawsuit or
other proceeding.
b. Covenant Not to Compete.
i. Acknowledgment. The Grantee understands that the senior nature of the Grantee’s position
gives the Grantee access to and knowledge of Confidential Information and places the Grantee in
a position of trust and confidence with the Company and, further, that the improper use or
disclosure by the Grantee of Confidential Information is likely to result in unfair or unlawful
competitive activity that would substantially harm the Company. The Grantee understands and
acknowledges that the Grantee’s experience and expertise relating to the business of a retailer are
unique and specialized, and that the Company’s ability to reserve these talents for the exclusive
knowledge and use of the Company during the Grantee’s employment and for a reasonable period
thereafter is of great competitive importance and commercial value to the Company.
ii. Non-Competition. Because of the Company’s legitimate business interest as described
herein and the good and valuable consideration offered to the Grantee herein, during the
Grantee’s employment and for a 24-month period beginning on the Separation Date, the Grantee
agrees and covenants that the Grantee will not engage in any Prohibited Activity (as defined
below) for a Competitor (as defined below). This restrictive covenant applies whether the
Grantee’s employment is terminated by the Grantee or by the Company for any reason or no
reason.
1. For purposes of this non-compete, "Prohibited Activity" is activity in which the Grantee,
in any competitive capacity (whether for compensation or not) provides services, advises,
consults, or otherwise acts in a role in which Executive (i) would be engaged in the same
or similar type of work or services the Grantee performed for or on behalf of the
Company at any time during the two-year period immediately prior to the Separation
Date and would be competitive with business, products, or services of the Company; or
(ii) would reasonably be expected to require the Grantee’s application of, disclosure of,
reliance on, or use of the Company’s Confidential Information or customer goodwill.
2. A “Competitor” is defined as (i) Dollar General; Walmart; Target; Five Below; or (ii) a
Discount Retail Chain that operates one or more retail stores located within the Restricted
Area.
3. “Discount Retail Chain” is defined as a chain of stores (with at least 200 stores as of
Executive’s Separation Date, including by way of illustration and not limitation, 99 Cents
Only) that predominantly sell good or products retailing for $5 or less.
4. “Restricted Area” is defined as the area that is within ten miles of any Dollar Tree or
Family Dollar store existing as of the Separation Date.
iii. Nothing herein shall prohibit the Grantee from purchasing or owning less than five percent
(5%) of the publicly traded securities of any corporation, provided that such ownership represents
a passive investment and that the Grantee is not a controlling person of, or a member of a group
that controls, such corporation.
c. Non-Piracy of Company Executives. The Grantee agrees and covenants that, for a period of 24
months from the Separation Date, the Grantee shall not directly or indirectly solicit, hire, recruit, or
attempt to hire or recruit, any Company Executive, or induce the termination of employment of any
Company Executive. “Company Executive” means any person who at the time of, or within three months
immediately prior to, the solicitation, hiring, recruitment, or inducement, was employed by the Company
at a Director-level or more senior position. The types of communication prohibited by this provision
explicitly include all forms of oral, written, or electronic communication, including, but not limited to,
communications by email, regular mail, express mail, telephone, fax, instant message, and social media,
where the purpose of or reasonably anticipated impact or consequence of the communication would be to
solicit, hire or recruit such person. For the avoidance of doubt, this restriction applies regardless of
whether the Grantee or the Company Executive initiated the first communication.
d. Non-Disparagement. The Grantee agrees and covenants that, during the Grantee’s employment and
for a period of 24 months after the Separation Date, the Grantee will not make, publish, or communicate
to any person or entity or in any public forum any defamatory or disparaging remarks, comments, or
statements concerning the Company, or any of its executives, directors, and officers. This Section does
not, in any way, restrict or impede the Grantee from exercising protected rights to the extent that such
rights cannot be waived by agreement or otherwise under applicable law, including but not limited to the
Grantee's right to discuss sexual assault and/or sexual harassment claims, make a complaint or charge
with or respond to an inquiry from any government agency, or from complying with any applicable law or
regulation or a valid order of a court of competent jurisdiction or an authorized government agency.
e. Acknowledgment. The Grantee acknowledges and agrees that the services the Grantee will render to
the Company are of a special and unique character; that the Grantee will obtain knowledge and skill
relevant to the Company’s industry, methods of doing business, and logistical, operational, merchandising
and marketing strategies by virtue of the Grantee’s employment; and that the restrictive covenants and
other terms and conditions of the Covenants are reasonable and reasonably necessary to protect the
legitimate business interests of the Company.
The Grantee affirms that the Grantee will not be subject to undue hardship or an unreasonable restraint on
the Grantee’s ability to earn a livelihood by reason of the Grantee’s full compliance with the terms and
conditions of the Covenants or the Company’s enforcement thereof; and that the Covenants and this
Award are not a contract of employment and shall not be construed as a commitment by either of the
parties to continue an employment relationship for any certain period of time.
The Grantee’s obligations under each of Sections (a)(i), (b)(ii), (c), and (d) above are separable and
independently enforceable of each other and of any legal obligations that may exist between the Company
and the Grantee. The real or perceived existence of any claim or cause of action of the Grantee against
the Company, whether predicated on the Covenants or some other basis, will not alleviate the Grantee of
the Grantee’s obligations under the Covenants and will not constitute a defense to the enforcement by the
Company of the restrictions and covenants contained herein.
f. Remedies. In the event of a breach or threatened breach by the Grantee of any of the Covenants, the
Grantee hereby consents and agrees that the Company shall be entitled to seek (notwithstanding the any
agreement to arbitrate claims to which the Company, the Grantee, or a Member Company is subject), in
addition to other available remedies, a temporary or permanent injunction or other equitable relief against
such breach or threatened breach from any court of competent jurisdiction, without the necessity of
showing any actual damages, and without the necessity of posting any bond or other security. The
aforementioned equitable relief shall be in addition to, not in lieu of, legal remedies, monetary damages,
or other available forms of relief including without limitation a claim for recovery or disgorgement of any
amount paid or realized, or shares issued to the Grantee pursuant to the Award.
Exhibit 10.31
DOLLAR TREE, INC.
2021 OMNIBUS INCENTIVE PLAN
NONSTATUTORY STOCK OPTION AGREEMENT
THIS NONSTATUTORY STOCK OPTION AGREEMENT (this “Agreement”) is effective as
of the “Date of Grant” specified in the accompanying Notice of Grant (the “Notice of Grant”), by and
between Dollar Tree, Inc., a Virginia corporation, (the “Company”) and the “Grantee” as defined in the
Notice of Grant.
W I T N E S S E T H:
The Dollar Tree, Inc. 2021 Omnibus Incentive Plan (the “Plan”) provides for the grant of
Options in accordance with the terms and conditions of the Plan, which are incorporated herein by
reference. The Company has determined that it is in the best interest of the Company and its shareholders
to issue an Award of Options to the Grantee (this “Award”). Capitalized terms used in this Agreement
and not otherwise defined herein or in the Notice of Grant have the meanings set forth in the Plan.
1. AWARD AND EXERCISE PRICE. The Company hereby grants the Grantee an Option to
purchase the number of shares of Stock set forth in the Notice of Grant (such shares of Stock, the
“Covered Shares”) at the exercise price per Covered Share set forth in the Notice of Grant (the “Exercise
Price”), subject to the terms, conditions and restrictions as set forth in the Plan, this Agreement and the
Notice of Grant. The Option is not an Incentive Stock Option.
2. EXERCISABILITY. The Option shall vest and become exercisable in accordance with the
vesting and exercise schedule set forth in the Notice of Grant, subject to Section 3 and the other terms and
conditions of this Agreement and the Plan. In the event of the Grantee’s Termination of Employment (as
defined in Section 7) due to death, the Option shall become fully vested and exercisable on the date of
death. In the event of the Grantee’s Termination of Employment due to Disability (as defined in Section
9) or Retirement (as defined in Section 8), the Option shall continue to vest and become exercisable in
accordance with the vesting and exercise schedule set forth in the Notice of Grant, as though the Grantee
had not had a Termination of Employment. In the event of the Grantee’s Termination of Employment
other than due to death, Disability or Retirement, the Option shall be exercisable for the number of
Covered Shares for which it was exercisable on such date of termination, and no further vesting or
additional exercisability shall occur. Notwithstanding the foregoing, in the event of a Change in Control,
Section 14 of the Plan shall apply to the Option, and the Committee may take such actions as it deems
appropriate pursuant to the Plan, including accelerating vesting and/or exercisability of this Award by
waiving all or part of the conditions for vesting and/or exercisability set forth in the Notice of Grant.
3. EXPIRATION, POTENTIAL RECOUPMENT. The Option shall not be exercisable
after the Company’s close of business on the last business day that occurs prior to the Expiration Date.
The “Expiration Date” shall be the earliest to occur of:
(a) the ten-year anniversary of the Date of Grant;
(b) if the Grantee’s Termination of Employment occurs due to (i) death, (ii) Disability
or (iii) Retirement, the ten-year anniversary of the Grant Date;
(c) if the Grantee experiences a Termination of Employment by a Member Company
without Cause, the one-year anniversary of the Date of Termination;
(d) if the Grantee’s Termination of Employment occurs to due Grantee’s resignation
(for clarity, other than upon death or due to Disability or Retirement), and other than at a time
when Cause exists, the three-month anniversary of the Date of Termination;
(e) if the Grantee experiences a Termination of Employment by a Member Company
for Cause or resigns at a time when Cause exists, the Date of Termination; or
(f) if the Grantee’s Termination of Employment occurs following the Grantee’s
provision of Adequate Notice (as defined in Section 8), the date of a failure to comply (as
determined under the last paragraph of Section 8) with the Covenants (as defined in Section 8).
The Grantee further acknowledges and agrees that if the Grantee’s Termination of Employment
occurs following the Grantee's provision of Adequate Notice, upon the Grantee’s failure to comply (as
determined under the last paragraph of Section 8) with the Covenants, any Stock acquired under this
Agreement, any resulting proceeds, and any other economic benefit to the Grantee under this Agreement
shall be subject to immediate recoupment by the Company and to the remedies set forth in Exhibit A
hereto.
4. METHOD OF OPTION EXERCISE.
4.1 Notice of Exercise. Subject to the terms of this Agreement and the Plan, the Option may
be exercised in whole or in part by filing a written notice with the Company in a form and by a method
acceptable to the Committee at its corporate headquarters prior to the Company’s close of business on the
last business day that occurs prior to the Expiration Date. Such notice shall specify the number of
Covered Shares which the Grantee elects to purchase and shall be accompanied by payment of the
Exercise Price for such shares of Stock indicated by the Grantee’s election if applicable.
4.2 Payment of Exercise Price. Payment shall be made by cash or by check payable to the
Company. Except as otherwise provided by the Committee before the Option is exercised: (i) all or a
portion of the Exercise Price may be paid by the Grantee by delivery or attestation of shares of Stock that
have been owned by the Grantee and are otherwise acceptable to the Committee having an aggregate Fair
Market Value (valued as of the date of exercise) that is equal to the amount of cash that would otherwise
be required; (ii) the Grantee may pay the Exercise Price by authorizing a securities brokerage firm with
which the Company has established and maintains a cashless exercise program to sell shares of Stock (or
a sufficient portion of the shares) acquired upon exercise of the Option and remit to the Company a
sufficient portion of the sale proceeds to pay the entire Exercise Price; or (iii) the Grantee may pay the
Exercise Price by such other method as is permitted under the Plan and approved, prior to exercise, by the
Committee.
4.3 Compliance with Law. The Option shall not be exercisable if and to the extent the
Company determines that such exercise would violate applicable state or federal securities laws or the
rules and regulations of any securities exchange on which the Stock is traded. If the Company makes
such a determination, it shall use all reasonable efforts to obtain compliance with such laws, rules and
regulations. In making any determination hereunder, the Company may rely on the opinion of counsel for
the Company.
5. WITHHOLDING. All deliveries and distributions under this Agreement are subject to
withholding of all applicable taxes, to the extent such withholding is required by law. The Company shall
deduct from the shares of Stock issuable to a Participant upon the exercise a number of whole shares of
Stock having a Fair Market Value, as determined by the Company, equal to the tax withholding
obligations of the Member Companies. Upon the exercise, all tax withholding shall be satisfied by
deduction of shares of Stock otherwise issuable to Grantee. The Fair Market Value of any shares of Stock
withheld shall not exceed the amount determined by the minimum statutory withholding rates for each
applicable tax jurisdiction.
6. TRANSFERABILITY. During the lifetime of the Grantee, an Option shall be exercisable
only by the Grantee or the Grantee’s guardian or legal representative. Transfers at death are governed by
Section 10 below.
7. DATE OF TERMINATION. For purposes of this Agreement, the Grantee’s “Date of
Termination” shall be the first day occurring on or after the Grant Date on which the Grantee experiences
a Termination of Employment (as defined in this Section 7) with the Member Companies, regardless of
the reason for the termination of such status. For purposes of this Agreement, “Termination of
Employment” shall mean a “separation from service” as defined in Treasury Regulation §
1.409A-1(h) and “Member Company” shall mean a “service recipient” as defined in Treasury
Regulation § 1.409A-1(h)(3).
8. RETIREMENT. For purposes of this Agreement, the Grantee’s “Retirement” means the
Grantee’s Termination of Employment under the following circumstances and subject to the following
conditions:
(a)
The Termination of Employment is on or after the date the Grantee attains the
age of fifty-nine and a half (59 ½).
(b)
two (2) years of Service.
The Termination of Employment is on or after the date the Grantee completes
(c)
The Termination of Employment is on or after the date specified in an
“Adequate Notice,” unless an earlier separation date is requested by the “Appropriate Party.”
Adequate Notice, for this purpose, means communication to the Appropriate Party on a form
prescribed by the Company that the Grantee is giving consideration to retiring as of a date at least
twelve (12) months after such communication for an Employee serving as Chief Executive Officer
(“CEO”), or, for Employees not serving as CEO, at least six (6) months after such communication.
Appropriate Party, for this purpose, means (a) the Board, for the CEO; and (b) the CEO for other
Employees. The Grantee acknowledges that any Termination of Employment after the Grantee has
provided Adequate Notice will be considered a voluntary termination for purposes of, and thus
shall preclude eligibility for, severance under any “Executive Agreement” or similar agreement
between the Grantee and the Company in effect on the date of Retirement.
(d)
The Grantee supports a transition to the Grantee’s successor in the manner
requested by the Board or the Grantee’s supervisor, as applicable.
(e)
The Grantee complies with the Covenants (as defined in Exhibit A hereto).
(f)
The Grantee’s execution, and non-revocation, of a separation agreement
containing a release of claims in favor of the Company, its affiliates, and their respective officers
and directors, and other relevant provisions in a form provided by and acceptable to the Company,
which separation agreement has become irrevocable not later than thirty (30) days after the date of
the Grantee’s Termination of Employment.
(g)
Retirement of the Grantee shall not include a Termination of Employment by
the Company for Cause or a resignation at a time when Cause exists, even if the foregoing
requirements for Retirement are otherwise met.
Whether the circumstances and conditions above are present or have been satisfied for the
Grantee will be determined by (a) the Board, for the CEO; and (b) the CEO, for other Employees.
Whether special circumstances warrant a variation from the above definition will be determined by (a) the
Board, for the CEO; and (b) the Committee, for other Employees.
9.
DISABILITY. For purposes of this Agreement “Disability” shall mean the Grantee
has been determined to be disabled under the long-term disability insurance policy of the Company or the
Company determines that a qualified medical professional has opined that the Grantee is unable to engage
in any substantial gainful activity by reason of any medically determinable physical or mental impairment
that can be expected to result in death or can be expected to last for a continuous period of not less than
12 months.
10. BINDING EFFECT; HEIRS AND SUCCESSORS.
10.1 General. The terms and conditions of this Agreement shall be effective upon delivery to
the Grantee, with or without execution by the Grantee.
10.2 Successors and Assigns. This Agreement shall be binding upon, and inure to the
benefit of, the Company and its successors and assigns, and upon any person acquiring, whether by
merger, consolidation, purchase of assets or otherwise, all or substantially all of the Company’s assets and
business.
10.3 Designated Beneficiary. If any rights exercisable by the Grantee or shares of Stock that
may be issued to the Grantee under this Agreement have not been exercised or issued, respectively, at the
time of the Grantee’s death, such rights shall be exercisable by the Designated Beneficiary, and such
shares of Stock shall be deliverable to the Designated Beneficiary, in accordance with the provisions of
this Agreement and the Plan. The “Designated Beneficiary” shall be the beneficiary or beneficiaries
designated by the Grantee in accordance with Section 19.5 of the Plan. If a deceased Participant fails to
designate a beneficiary, or if the Designated Beneficiary does not survive the Grantee, any rights that
would have been exercisable by the Grantee and any benefits distributable to the Grantee shall be
exercised by or distributed to the legal representative of the estate of the Grantee. If a deceased
Participant designates a beneficiary and the Designated Beneficiary survives the Grantee but dies before
the Designated Beneficiary’s exercise of all rights under this Agreement or before the complete
distribution of benefits to the Designated Beneficiary under this Agreement, then any rights that would
have been exercisable by the Designated Beneficiary shall be exercised by the legal representative of the
estate of the Designated Beneficiary, and any benefits distributable to the Designated Beneficiary shall be
distributed to the legal representative of the estate of the Designated Beneficiary.
11. ENTIRE AGREEMENT; ENFORCEMENT OF RIGHTS.
11.1 Entire Agreement. The Plan and the Notice of Grant are hereby incorporated by
reference in this Agreement. This Agreement (including the Plan and the Notice of Grant) sets forth the
entire agreement and understanding of the parties relating to the subject matter herein. No modification
of or amendment to this Agreement, nor any waiver of any rights under this Agreement, shall be effective
unless in a writing signed by the Company and the Grantee to this Agreement. In the event of a conflict
between this Agreement and the Plan, the terms of the Plan control. A copy of the Plan may be obtained
from the Chief Human Resources Officer of the Company (or such other party as the Company may
designate). This Agreement is subject to all interpretations, amendments, rules and regulations
promulgated by the Committee from time to time pursuant to the Plan.
11.2 Enforcement of Rights. The failure by either party to enforce any rights under this
Agreement shall not be construed as a waiver of any rights of such party. Any action or proceeding to
enforce this Agreement shall be brought in accordance with the requirements of any arbitration agreement
between the parties, except that the Company may seek temporary or permanent injunctive relief or other
forms of immediate relief related to a breach of any of the covenants in this Agreement in the state or
federal courts located in Norfolk, Virginia.
12 NO IMPLIED RIGHTS.
12.1 Service. The Option will not confer on the Grantee any right with respect to
continuance of Service with the Company or any Subsidiary, nor will it interfere in any way with any
right the Company or any Subsidiary would otherwise have to terminate or modify the terms of such
Participant’s Service at any time.
12.2. Shareholder Rights. The Grantee shall not have any rights of a shareholder with
respect to the Covered Shares until a stock certificate has been duly issued following exercise of the
Option as provided herein.
13. NOTICES. Except to the extent otherwise provided in Section 4.1, any notice required or
permitted by this Agreement shall be in writing and shall be deemed sufficient when delivered personally
or sent by fax, or twenty-four (24) hours after being delivered to a reliable overnight courier service for
overnight delivery (with delivery costs prepaid), or forty-eight (48) hours after being deposited in the U.S.
mail, as certified or registered mail, with postage prepaid, and addressed to the party to be notified at such
party’s address as set forth below or as subsequently modified by written notice.
14. FRACTIONAL SHARES. In lieu of issuing a fraction of a share upon any exercise of the
Option, resulting from an adjustment of the Option pursuant to Section 4.4 of the Plan or otherwise, the
Company will be entitled to pay to the Grantee the Fair Market Value of such fractional share.
15. AMENDMENT. This Agreement may be amended by written agreement of the Grantee
and the Company, without the consent of any other person.
16. GOVERNING LAW; JURISDICTION AND VENUE. This Agreement and all acts and
transactions pursuant hereto and the rights and obligations of the parties hereto shall be governed,
construed and interpreted in accordance with the laws of the Commonwealth of Virginia, without giving
effect to choice of law provisions thereof. The Circuit Court of the City of Norfolk, Virginia, and the
United States District Court, Eastern District of Virginia, Norfolk Division shall be the exclusive courts of
jurisdiction and venue for any litigation, special proceedings or other proceedings between the parties that
may be brought, or arise out of, in connection with, or by reason of this Agreement, except to the extent
of proceedings required to be brought in accordance with any arbitration agreement between the parties,
and the parties to this Agreement hereby consent to the jurisdiction of such courts.
17. CLAW-BACK. The Grantee acknowledges and agrees that the Option is subject to the
provisions of Section 19.1 of the Plan, “Forfeiture Events; Recoupment,” and to the provisions of any
claw-back or similar policy adopted, implemented, or amended by the Company, whether before or after
the Date of Grant.
EXHIBIT A
Restrictive Covenants
The covenants set forth in this Exhibit A (the “Covenants”) are several. Compliance with the
Covenants is a condition of Retirement under this Agreement.
a. Confidential Information. The Grantee understands and acknowledges that during the course of the
Grantee’s employment by the Company, the Grantee will have access to and learn about Confidential
Information belonging to the Company.
For purposes of the Covenants, "Confidential Information" is all information not generally known to the
public and developed or maintained by the Company or its agents in spoken, printed, electronic or any
other form or medium, relating directly or indirectly to the Company’s: business processes, practices,
methods, policies, plans, operations, strategies, agreements, contracts, transactions, potential transactions,
know-how, trade secrets, intellectual property, works-in-process, databases, systems, vendor and supplier
information, financial information, accounting information, accounting records, legal information,
marketing
information, design
information, personnel information, market studies, sales information, revenue, costs, customer
information, manufacturing information, transportation and logistics information, and factory lists of the
Company or of any other person or entity that has entrusted information to the Company in confidence.
information, advertising
information, pricing
information, credit
The Grantee understands that the above list is not exhaustive, and that Confidential Information also
includes other information that is marked or otherwise identified or treated as confidential or proprietary,
or that would otherwise appear to a reasonable person to be confidential or proprietary in the context and
circumstances in which the information is known or used.
The Grantee understands and acknowledges that the Company has invested, and continues to invest,
substantial time, money, and specialized knowledge into developing its resources, creating and
developing its vendor base, increasing its customer base, expanding the number of geographic markets in
which it operates, training its executives, developing best operational practices, and negotiating highly
competitive prices in the discount retail sector so as to provide the best value possible to its customers. the
Grantee understands and acknowledges that as a result of these ongoing efforts, the Company has created,
and continues to use and create, Confidential Information. This Confidential Information provides the
Company with a competitive advantage over others in the marketplace, and it is essential to the
Company’s success moving forward.
Confidential Information shall not include information that is generally available to and known by the
public at the time of disclosure to the Grantee, provided that such disclosure is through no direct or
indirect fault of the Grantee or anyone acting on the Grantee’s behalf.
i. Disclosure and Use Restrictions. The Grantee agrees and covenants: (i) to treat all
Confidential Information as strictly confidential; (ii) not to directly or indirectly disclose, publish,
communicate, or make available Confidential Information, or allow it to be disclosed, published,
communicated, or made available, in whole or part, to any entity or person whatsoever (including
other executives and employees of the Company not having a need to know such information);
(iii) not to access or use any Confidential Information, and not to copy any documents, records,
files, media, or other resources containing any Confidential Information, or remove any such
documents, records, files, media, or other resources from the premises or control of the Company,
except as required in the performance of the Grantee’s authorized employment duties to the
Company or with the prior consent of the Grantee’s supervisor; and (iv) to immediately return
and not retain, in any form, any such Confidential Information upon the Separation Date. Nothing
herein shall be construed to prevent disclosure of Confidential Information as may be required by
applicable law or regulation, or pursuant to the valid subpoena or order of a court of competent
jurisdiction or an authorized government agency, provided that the disclosure does not exceed the
extent of disclosure required by such law, regulation, or subpoena/order. The Grantee shall
promptly provide written notice of any such order to the Company’s Chief Legal Officer, if
permitted by law to do so.
The Grantee understands and acknowledges that the Grantee’s obligations under the Covenants
with regard to any particular Confidential Information shall commence immediately upon the
Grantee’s first having access to such Confidential Information and shall continue during and after
the Grantee’s employment by the Company until such time as such Confidential Information has
become public knowledge other than as a result of the Grantee’s breach of the Covenants or
breach by those acting in concert with the Grantee or on the Grantee’s behalf.
ii. Whistleblower Protection and Notice of Immunity under the Economic Espionage Act of
1996, as amended by the Defend Trade Secrets Act of 2016. Notwithstanding any other
provision of the Covenants or any other agreement or Company policy, the Grantee will not be
held liable under this Agreement or any other agreement or Company policy or any federal or
state trade secret law for any disclosure of a trade secret or other Confidential Information that is
made (i) in confidence to a federal, state, or local government official, either directly or indirectly,
or to an attorney; and (ii) solely for the purpose of reporting or investigating a suspected violation
of law; or (iii) is made in a complaint or other document that is filed under seal in a lawsuit or
other proceeding.
b. Covenant Not to Compete.
i. Acknowledgment. The Grantee understands that the senior nature of the Grantee’s position
gives the Grantee access to and knowledge of Confidential Information and places the Grantee in
a position of trust and confidence with the Company and, further, that the improper use or
disclosure by the Grantee of Confidential Information is likely to result in unfair or unlawful
competitive activity that would substantially harm the Company. The Grantee understands and
acknowledges that the Grantee’s experience and expertise relating to the business of a retailer are
unique and specialized, and that the Company’s ability to reserve these talents for the exclusive
knowledge and use of the Company during the Grantee’s employment and for a reasonable period
thereafter is of great competitive importance and commercial value to the Company.
ii. Non-Competition. Because of the Company’s legitimate business interest as described
herein and the good and valuable consideration offered to the Grantee herein, during the
Grantee’s employment and for a 24-month period beginning on the Separation Date, the Grantee
agrees and covenants that the Grantee will not engage in any Prohibited Activity (as defined
below) for a Competitor (as defined below). This restrictive covenant applies whether the
Grantee’s employment is terminated by the Grantee or by the Company for any reason or no
reason.
1. For purposes of this non-compete, "Prohibited Activity" is activity in which the Grantee,
in any competitive capacity (whether for compensation or not) provides services, advises,
consults, or otherwise acts in a role in which Executive (i) would be engaged in the same
or similar type of work or services the Grantee performed for or on behalf of the
Company at any time during the two-year period immediately prior to the Separation
Date and would be competitive with business, products, or services of the Company; or
(ii) would reasonably be expected to require the Grantee’s application of, disclosure of,
reliance on, or use of the Company’s Confidential Information or customer goodwill.
2. A “Competitor” is defined as (i) Dollar General; Walmart; Target; Five Below; or (ii) a
Discount Retail Chain that operates one or more retail stores located within the Restricted
Area.
3. “Discount Retail Chain” is defined as a chain of stores (with at least 200 stores as of
Executive’s Separation Date, including by way of illustration and not limitation, 99 Cents
Only) that predominantly sell good or products retailing for $5 or less.
4. “Restricted Area” is defined as the area that is within ten miles of any Dollar Tree or
Family Dollar store existing as of the Separation Date.
iii. Nothing herein shall prohibit the Grantee from purchasing or owning less than five percent
(5%) of the publicly traded securities of any corporation, provided that such ownership represents
a passive investment and that the Grantee is not a controlling person of, or a member of a group
that controls, such corporation.
c. Non-Piracy of Company Executives. The Grantee agrees and covenants that, for a period of 24
months from the Separation Date, the Grantee shall not directly or indirectly solicit, hire, recruit, or
attempt to hire or recruit, any Company Executive, or induce the termination of employment of any
Company Executive. “Company Executive” means any person who at the time of, or within three months
immediately prior to, the solicitation, hiring, recruitment, or inducement, was employed by the Company
at a Director-level or more senior position. The types of communication prohibited by this provision
explicitly include all forms of oral, written, or electronic communication, including, but not limited to,
communications by email, regular mail, express mail, telephone, fax, instant message, and social media,
where the purpose of or reasonably anticipated impact or consequence of the communication would be to
solicit, hire or recruit such person. For the avoidance of doubt, this restriction applies regardless of
whether the Grantee or the Company Executive initiated the first communication.
d. Non-Disparagement. The Grantee agrees and covenants that, during the Grantee’s employment and
for a period of 24 months after the Separation Date, the Grantee will not make, publish, or communicate
to any person or entity or in any public forum any defamatory or disparaging remarks, comments, or
statements concerning the Company, or any of its executives, directors, and officers. This Section does
not, in any way, restrict or impede the Grantee from exercising protected rights to the extent that such
rights cannot be waived by agreement or otherwise under applicable law, including but not limited to the
Grantee's right to discuss sexual assault and/or sexual harassment claims, make a complaint or charge
with or respond to an inquiry from any government agency, or from complying with any applicable law or
regulation or a valid order of a court of competent jurisdiction or an authorized government agency.
e. Acknowledgment. The Grantee acknowledges and agrees that the services the Grantee will render to
the Company are of a special and unique character; that the Grantee will obtain knowledge and skill
relevant to the Company’s industry, methods of doing business, and logistical, operational, merchandising
and marketing strategies by virtue of the Grantee’s employment; and that the restrictive covenants and
other terms and conditions of the Covenants are reasonable and reasonably necessary to protect the
legitimate business interests of the Company.
The Grantee affirms that the Grantee will not be subject to undue hardship or an unreasonable restraint on
the Grantee’s ability to earn a livelihood by reason of the Grantee’s full compliance with the terms and
conditions of the Covenants or the Company’s enforcement thereof; and that the Covenants and this
Award are not a contract of employment and shall not be construed as a commitment by either of the
parties to continue an employment relationship for any certain period of time.
The Grantee’s obligations under each of Sections (a)(i), (b)(ii), (c), and (d) above are separable and
independently enforceable of each other and of any legal obligations that may exist between the Company
and the Grantee. The real or perceived existence of any claim or cause of action of the Grantee against
the Company, whether predicated on the Covenants or some other basis, will not alleviate the Grantee of
the Grantee’s obligations under the Covenants and will not constitute a defense to the enforcement by the
Company of the restrictions and covenants contained herein.
f. Remedies. In the event of a breach or threatened breach by the Grantee of any of the Covenants, the
Grantee hereby consents and agrees that the Company shall be entitled to seek (notwithstanding the any
agreement to arbitrate claims to which the Company, the Grantee, or a Member Company is subject), in
addition to other available remedies, a temporary or permanent injunction or other equitable relief against
such breach or threatened breach from any court of competent jurisdiction, without the necessity of
showing any actual damages, and without the necessity of posting any bond or other security. The
aforementioned equitable relief shall be in addition to, not in lieu of, legal remedies, monetary damages,
or other available forms of relief including without limitation a claim for recovery or disgorgement of any
amount paid or realized, or shares issued to the Grantee pursuant to the Award.
SUBSIDIARIES OF THE REGISTRANT
Subsidiary Name
Dollar Tree Stores, Inc.
Dollar Tree Management, LLC
Family Dollar Stores, LLC (1)
Family Dollar Services, LLC
Family Dollar Stores Holdings, LLC (1)
Family Dollar Merchandising, LLC
Family Dollar IP Co., LLC
Greenbrier International, Inc.
Dollar Tree Distribution, Inc.
Dollar Tree Insurance, Inc.
Dollar Tree Stores Canada, Inc. (2)
EXHIBIT 21.1
State or Jurisdiction of Incorporation
D/B/A
Virginia
Virginia
Delaware
North Carolina
Virginia
Delaware
North Carolina
Delaware
Virginia
South Carolina
British Columbia
Dollar Tree
N/A
Family Dollar
N/A
N/A
N/A
N/A
N/A
N/A
N/A
Dollar Tree Canada
(1) These corporations have subsidiaries which are retail companies.
(2) The registrant indirectly holds an interest in this foreign entity.
Certain other subsidiaries are not included because, when considered in the aggregate as a single subsidiary, they do not constitute
a significant subsidiary as of January 28, 2023.
EXHIBIT 23.1
Consent of Independent Registered Public Accounting Firm
We consent to the incorporation by reference in the registration statements (Nos. 333-264010, 333-257061, 333-207645,
333-198015, 333-175121, and 333-106886) on Form S-8 and registration statement (No. 333-261307) on Form S-3 of our
reports dated March 10, 2023, with respect to the consolidated financial statements of Dollar Tree, Inc. and the effectiveness of
internal control over financial reporting.
/s/ KPMG LLP
Norfolk, Virginia
March 10, 2023
Exhibit 31.1
Chief Executive Officer Certification
I, Richard W. Dreiling, certify that:
1.
I have reviewed this annual report on Form 10-K of Dollar Tree, Inc.;
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact
necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading
with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all
material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods
presented in this report;
4. The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and
procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as
defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed
under our supervision, to ensure that material information relating to the registrant, including its consolidated
subsidiaries, is made known to us by others within those entities, particularly during the period in which this report
is being prepared;
(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be
designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and
the preparation of financial statements for external purposes in accordance with generally accepted accounting
principles;
(c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our
conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by
this report based on such evaluation; and
(d) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during
the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has
materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial
reporting; and
5. The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over
financial reporting, to the registrant's auditors and the audit committee of the registrant's Board of Directors (or persons
performing the equivalent functions):
(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial
reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and
report financial information; and
(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the
registrant's internal control over financial reporting.
Date: March 10, 2023
/s/ Richard W. Dreiling
Richard W. Dreiling
Chairman and Chief Executive Officer
Exhibit 31.2
Chief Financial Officer Certification
I, Jeffrey A. Davis, certify that:
1.
I have reviewed this annual report on Form 10-K of Dollar Tree, Inc.;
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact
necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading
with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all
material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods
presented in this report;
4. The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and
procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as
defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed
under our supervision, to ensure that material information relating to the registrant, including its consolidated
subsidiaries, is made known to us by others within those entities, particularly during the period in which this report
is being prepared;
(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be
designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and
the preparation of financial statements for external purposes in accordance with generally accepted accounting
principles;
(c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our
conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by
this report based on such evaluation; and
(d) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during
the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has
materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial
reporting; and
5. The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over
financial reporting, to the registrant's auditors and the audit committee of the registrant's Board of Directors (or persons
performing the equivalent functions):
(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial
reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and
report financial information; and
(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the
registrant's internal control over financial reporting.
Date: March 10, 2023
/s/ Jeffrey A. Davis
Jeffrey A. Davis
Chief Financial Officer
Certification Pursuant to 18 U.S.C. Section 1350,
As Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
Exhibit 32.1
In connection with the Annual Report of Dollar Tree, Inc. (the Company) on Form 10-K for the year ending January 28, 2023, as
filed with the Securities and Exchange Commission on the date hereof (the Report), I, Richard W. Dreiling, Chairman and Chief
Executive Officer of the Company, certify, pursuant to 18 U.S.C. ss.1350, as adopted pursuant to ss.906 of the Sarbanes-Oxley Act of
2002, that:
(1) To my knowledge, the Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange
Act of 1934; and
(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of
operations of the Company.
March 10, 2023
Date
/s/ Richard W. Dreiling
Richard W. Dreiling
Chairman and Chief Executive Officer
A signed original of this written statement required by Section 906 has been furnished to Dollar Tree, Inc. and will be retained by
Dollar Tree, Inc. and furnished to the Securities and Exchange Commission or its staff upon request.
Certification Pursuant to 18 U.S.C. Section 1350,
As Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
Exhibit 32.2
In connection with the Annual Report of Dollar Tree, Inc. (the Company) on Form 10-K for the year ending January 28, 2023, as
filed with the Securities and Exchange Commission on the date hereof (the Report), I, Jeffrey A. Davis, Chief Financial Officer of the
Company, certify, pursuant to 18 U.S.C. ss.1350, as adopted pursuant to ss.906 of the Sarbanes-Oxley Act of 2002, that:
(1) To my knowledge, the Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange
Act of 1934; and
(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of
operations of the Company.
March 10, 2023
Date
/s/ Jeffrey A. Davis
Jeffrey A. Davis
Chief Financial Officer
A signed original of this written statement required by Section 906 has been furnished to Dollar Tree, Inc. and will be retained by
Dollar Tree, Inc. and furnished to the Securities and Exchange Commission or its staff upon request.