In the Company’sour opinion, the unaudited condensed consolidated financial statements included herein contain all adjustments (including those of a normal recurring nature) considered necessary for a fair presentation of itsour financial position as of NovemberMay 2, 20192020 and November 3, 2018May 4, 2019 and the results of itsour operations and cash flows for the periods presented. The February 2, 20191, 2020 balance sheet information was derived from the audited consolidated financial statements as of that date.

The Company is a defendantWe are defendants in legal proceedings including a Food and Drug Administration (“FDA”) proceeding and the class, collective, representative and large cases described below as well as several thousand allegedly individual claims in arbitration. The arbitrations include more than 2,100 wage and hour claims recently filed by 1 law firm. The law firm also alleges they have more than 4,200 additional claims to be filed in the future. The CompanyWe will vigorously defend itselfourselves in all matters referred to in this Note 2. The Company doesWe do not believe that any of these matters will, individually or in the aggregate, have a material effect on itsour business or financial condition. The CompanyWe cannot give assurance, however, that one or more of these matters will not have a material effect on itsour results of operations for the quarter or year in which they are resolved.

The Company assesses itsWe assess our legal proceedings monthly and reserves are established if a loss is probable and the amount of such loss can be reasonably estimated. For matters that have settled, we reserve the estimated settlement amount even if the settlement has not been approved by the court. Many, if not substantially all, of the contingencies described belowour legal proceedings are subject to significant uncertainties and, therefore, determining the likelihood of a loss and the measurement of any loss can be complex and subject to judgment. With respect to legal proceedings where the Company haswe have determined that a loss is reasonably possible but not probable, the Company iswe are unable to estimate the amount or range of the reasonably possible loss due to the inherent difficulty of predicting the outcome of and uncertainties regarding legal proceedings. The Company’sOur assessments are based on estimates and assumptions that have been deemed reasonable by management, but that may prove to be incomplete or inaccurate, and unanticipated events and circumstances may occur that might cause the Companyus to change those estimates and assumptions. Management’s assessment

The FDA has recently alleged that the Companywe improperly sold certain topically applied, over the counter (“OTC”) products manufactured by certain Chinese factories that were on an import “alert” restriction issued by the FDA. The Company is in the process of respondingWe responded to the FDA andby proposing enhanced procedures and processes for any OTC products it importswe import from China.

In August 2018, a former employee brought suit in California state court as a class action and as a Private Attorney General Act (“PAGA”) representative suit alleging the Companywe failed to provide all non-exempt California store employees with compliant rest and meal breaks, accrued vacation, accurate wage statements and final pay upon termination of employment. We have reached an agreement in principle to settle the matter which will be submitted to the court for approval.

In December 2018, 2 former employees brought a PAGA suit in California state court alleging that Dollar Tree Stores, Inc. and Dollar Tree Distribution, Inc. failed to provide non-exempt California store and distribution center employees with rest and meal breaks, suitable seating, overtime pay, minimum wage for all time worked, reporting time pay, accurate wage statements, timely payment of wages during and upon termination of employment, failed to reimburse business expenses, and made unlawful deductions from wage payments.

Several lawsuits have been filed against Dollar Tree, Family Dollar and theirour vendors alleging that personal talc powder products caused cancer. The Company doesWe do not believe the products itwe sold caused the illnesses. The Company believesWe believe these lawsuits are insured and iswe are being indemnified by itsour third party vendors.

In April 2015, a former store managerdistribution center employee filed a class action in California federalstate court alleging, among other things, that the Company failed to makewith allegations concerning wages, meal and rest breaks, recovery periods, wage statements readily available to employees who did not receive paper checks. In 2017, a jury found in favor of the Company. In 2019, the 9th Circuit Court of Appeals affirmed the jury verdict. In July 2019, the plaintiff filed a petition with the Supreme Court of the United States seeking a review of the decision. The Supreme Court denied the petition.and timely termination pay. We have reached an agreement and are awaiting court approval.

In January 2017, a customer filed a class action in federal court in Illinois alleging the Companywe violated various state consumer fraud laws as well as express and implied warranties by selling a product that purported to contain aloe when it did not. The requested class is limited to the state of Illinois. The Company believes that it is fully indemnified bycourt has dismissed the entities that supplied it with the product.

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

Certain assets and liabilities are measured at fair value on a nonrecurring basis; that is, the assets and liabilities are not measured at fair value on an ongoing basis but are subject to fair value adjustments in certain circumstances (e.g., when there is evidence of impairment). The CompanyWe did not record any significant impairment charges during the 13 or 39 weeks ended NovemberMay 2, 20192020 and November 3, 2018.May 4, 2019.

The carrying amounts of Cash and cash equivalents, Restricted cash and Accounts payable as reported in the accompanying unaudited condensed consolidated balance sheets approximate fair value due to their short-term maturities.

The aggregate fair values and carrying values of the Company’sour long-term borrowings were as follows:

The fair values of the Company’sour Senior Notes were determined using Level 1 inputs as quoted prices in active markets for identical assets or liabilities are available. The fair value of the Company’s Term Loan Facility, which the Company prepaid in full during the fourth quarter of fiscal 2018, was determined using Level 2 inputs as quoted prices are readily available from pricing services, but the prices are not published. The carrying value of the Company’stable above excludes amounts related to our Revolving Credit Facility, approximated itsas the carrying value approximates fair value because the interest rates vary with market interest rates.

The following table sets forth the calculations of basic and diluted net income per share:

For the 13 and 39 weeks ended NovemberMay 2, 20192020 and November 3, 2018,May 4, 2019, substantially all of the stock options outstanding were included in the calculation of the weighted average number of shares and dilutive potential shares outstanding.

For a discussion of the Company’sour stock-based compensation plans, refer to “Note 1011 - Stock-Based Compensation Plans” of the Company’sour Annual Report on Form 10-K for the year ended February 2, 2019.1, 2020. Stock-based compensation expense was $52.5$32.6 million and $60.2$30.5 million during the 3913 weeks ended NovemberMay 2, 20192020 and November 3, 2018,May 4, 2019, respectively.

The Company issuesWe issue service-based RSUs to employees and officers and issues performance-based RSUsissue PSUs to certain officers of the Company. The Company recognizesofficers. 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 using the Company’sour closing stock price on the date of grant.

The following table summarizes the status of service-based RSUs as of NovemberMay 2, 20192020 and changes during the 3913 weeks then ended:

The Company operates a chainfollowing table summarizes the status of more than 15,200 retail discount stores in 48 statesPSUs as of May 2, 2020 and 5 Canadian provinces. The Company’s operations are conducted in 2 reporting business segments: Dollar Tree and Family Dollar. The Company defines its segments as those operations whose results its chief operating decision maker (“CODM”) regularly reviews to analyze performance and allocate resources.

The Company’sOur lease portfolio primarily consists of leases for itsour retail store locations and itwe also leaseslease vehicles and trailers, as well as distribution center space and equipment. The Company determines if an arrangement is a lease at inception by evaluating whether the arrangement conveys the right to use an identified asset and whether the Company obtains substantially all of the economic benefits from and has the ability to direct the use of the asset. Leases with an initial term of 12 months or less are not recorded on the condensed consolidated balance sheets; the Company recognizes expense for these leases on a straight-line basis over the lease term. For leases with an initial term in excess of 12 months, operating lease right-of-use assets and operating lease liabilities are recognized based on the present value of the future minimum lease payments over the committed lease term at the lease commencement date. As most of the Company’s leases do not provide an implicit rate, the Company uses its incremental borrowing rate in determining the present value of future lease payments. Inputs to the calculation of the Company’s incremental borrowing rate include the valuations and yields of its outstanding senior notes and their credit spread over comparable U.S. Treasury rates, adjusted to a collateralized basis by estimating the credit spread improvement that would result from an upgrade of one ratings classification. Most leases include one or more options to renew and the exercise of renewal options is at the Company’s sole discretion. The Company does not include renewal options in its determination of the lease term unless the renewals are deemed to be reasonably assured at lease commencement. Operating lease expense for minimum lease payments is recognized on a straight-line basis over the lease term. The operating lease right-of-use asset is reduced by lease incentives, which has the effect of lowering the operating lease expense. Operating lease right-of-use assets are periodically reviewed for impairment losses. The Company uses the long-lived assets impairment guidance in ASC Subtopic 360-10, “Property, Plant, and Equipment - Overall,” to determine whether a right-of-use asset is impaired, and if so, the amount of the impairment loss to recognize.

The lease cost for operating leases that was recognized in the accompanying unaudited condensed consolidated income statements for the 13 weeks ended May 2, 2020 and May 4, 2019 was as follows:

As of NovemberMay 2, 2019,2020, maturities of lease liabilities were as follows:

Information regarding the weighted-average remaining lease term and the weighted-average discount rate for operating leases as of NovemberMay 2, 2020 and May 4, 2019 is as follows:

The following represents supplemental information pertaining to the Company’sour operating lease arrangements for the 13 and 39 weeks ended NovemberMay 2, 2020 and May 4, 2019:

The CompanyWe did not repurchase any shares of common stock in the 13 weeks ended May 2, 2020. We repurchased 125,048 and 1,967,355960,683 shares of common stock on the open market for approximately $11.6 million and $200.0$100.0 million during the 13 and 39 weeks ended November 2, 2019, respectively.May 4, 2019. As of NovemberMay 2, 2019, the Company has2020, we have $800.0 million remaining under Board repurchase authorization.

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 Quarterly Report on Form 10-Q. Our forward-looking statements are all based on currently available operating, financial and business information. The outcome of the events described in these forward-looking statements is subject to a variety of factors, including, but not limited to, the risks and uncertainties summarized below and the more detailed discussions in the “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” sections and elsewhere in our Annual Report on Form 10-K for the fiscal year ended February 2, 20191, 2020 and in this Quarterly Report on Form 10-Q.

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-Q, whether as a result of new information, future events, or otherwise.

Investors should also be aware that while we do, from time to time, communicate with securities analysts and others, it is against our policy to disclose to them any material, nonpublic information or other confidential commercial information. Accordingly, shareholders should not assume that we agree with any statement or report issued by any securities analyst regardless of the content of the statement or report. Furthermore, we have a policy against confirming projections, forecasts or opinions issued by others. Thus, to the extent that reports issued by securities analysts contain any projections, forecasts or opinions, such reports are not our responsibility.

We are a leading operator of more than 15,20015,300 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 at the fixed price of $1.00. Our Family Dollar segment operates general merchandise retail discount stores providing consumers with a selection of competitively-priced merchandise in convenient neighborhood stores.

Our net sales are derived from the sale of merchandise. Two major factors tend to affect our net sales trends. First is our success at opening new stores or adding new stores through mergers or acquisitions. Second is the performance of stores once they are open. Sales vary at our existing stores from one year to the next. We refer to this as a change in comparable store net sales, because we include only those stores that are open throughout both of the periods being compared, beginning after the first fifteen months of operation. We include sales from stores expanded or remodeled during the period in the calculation of comparable store net sales, which has the effect of increasing our comparable store net sales. The term ‘expanded’ also includes stores that are relocated. Stores that have been re-bannered are considered to be new stores and are not included in the calculation of the comparable store net sales change until after the first fifteen months of operation under the new brand.

At NovemberMay 2, 2019,2020, 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 3913 weeks ended NovemberMay 2, 20192020 and November 3, 2018May 4, 2019 is as follows: