Company Quick10K Filing
Big Lots
Price24.25 EPS7
Shares39 P/E4
MCap955 P/FCF12
Net Debt453 EBIT317
TEV1,409 TEV/EBIT4
TTM 2019-11-02, in MM, except price, ratios
10-Q 2020-10-31 Filed 2020-12-09
10-Q 2020-08-01 Filed 2020-09-09
10-Q 2020-05-02 Filed 2020-06-10
10-K 2020-02-01 Filed 2020-03-31
10-Q 2019-11-02 Filed 2019-12-11
10-Q 2019-08-03 Filed 2019-09-11
10-Q 2019-05-04 Filed 2019-06-12
10-K 2019-02-02 Filed 2019-04-02
10-Q 2018-11-03 Filed 2018-12-12
10-Q 2018-08-04 Filed 2018-09-12
10-Q 2018-05-05 Filed 2018-06-13
10-K 2018-02-03 Filed 2018-04-03
10-Q 2017-10-28 Filed 2017-12-06
10-Q 2017-07-29 Filed 2017-09-06
10-Q 2017-04-29 Filed 2017-06-07
10-K 2017-01-28 Filed 2017-03-28
10-Q 2016-10-29 Filed 2016-12-07
10-Q 2016-07-30 Filed 2016-09-07
10-Q 2016-04-30 Filed 2016-06-08
10-K 2016-01-30 Filed 2016-03-29
10-Q 2015-10-31 Filed 2015-12-09
10-Q 2015-08-01 Filed 2015-09-09
10-Q 2015-05-02 Filed 2015-06-10
10-K 2015-01-31 Filed 2015-03-31
10-Q 2014-11-01 Filed 2014-12-10
10-Q 2014-08-02 Filed 2014-09-10
10-Q 2014-05-03 Filed 2014-06-11
10-K 2014-02-01 Filed 2014-04-01
10-Q 2013-08-03 Filed 2013-09-10
10-Q 2013-05-04 Filed 2013-06-12
10-K 2013-02-02 Filed 2013-04-02
10-Q 2012-10-27 Filed 2012-12-05
10-Q 2012-07-28 Filed 2012-09-05
10-Q 2012-04-28 Filed 2012-06-06
10-K 2012-01-28 Filed 2012-03-26
10-Q 2011-10-29 Filed 2011-12-07
10-Q 2011-07-30 Filed 2011-09-07
10-Q 2011-04-30 Filed 2011-06-07
10-K 2011-01-29 Filed 2011-03-30
10-Q 2010-10-30 Filed 2010-12-08
10-Q 2010-07-31 Filed 2010-09-08
10-Q 2010-05-01 Filed 2010-06-10
10-K 2010-01-30 Filed 2010-03-30
8-K 2020-10-01
8-K 2020-09-29
8-K 2020-08-27
8-K 2020-06-26
8-K 2020-06-12
8-K 2020-06-10
8-K 2020-05-28
8-K 2020-04-30
8-K 2020-04-22
8-K 2020-04-06
8-K 2020-04-03
8-K 2020-02-26
8-K 2019-12-04
8-K 2019-08-28
8-K 2019-06-28
8-K 2019-06-21
8-K 2019-05-29
8-K 2019-03-05
8-K 2018-12-07
8-K 2018-12-04
8-K 2018-08-29
8-K 2018-08-21
8-K 2018-06-29
8-K 2018-06-27
8-K 2018-05-31
8-K 2018-04-16
8-K 2018-04-12
8-K 2018-03-07

BIG 10Q Quarterly Report

Part I. Financial Information
Item 1. Financial Statements
Note 1 - Basis of Presentation and Summary of Significant Accounting Policies
Note 2 - Debt
Note 3 - Fair Value Measurements
Note 4 - Shareholders' Equity
Note 5 - Share - Based Plans
Note 6 - Income Taxes
Note 7 - Contingencies
Note 8 - Business Segment Data
Note 9 - Gain on Sale of Distribution Centers
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations
Item 3. Quantitative and Qualitative Disclosures About Market Risk
Item 4. Controls and Procedures
Part II. Other Information
Item 1. Legal Proceedings
Item 1A. Risk Factors
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
Item 3. Defaults Upon Senior Securities
Item 4. Mine Safety Disclosures
Item 5. Other Information
Item 6. Exhibits
EX-10.1 big-20201031xex101.htm
EX-31.1 big-20201031xex311.htm
EX-31.2 big-20201031xex312.htm
EX-32.1 big-20201031xex321.htm
EX-32.2 big-20201031xex322.htm

Big Lots Earnings 2020-10-31

Balance SheetIncome StatementCash Flow
3.52.82.11.40.70.02012201420172020
Assets, Equity
1.81.41.00.70.3-0.12012201420172020
Rev, G Profit, Net Income
0.40.30.1-0.0-0.2-0.32012201420172020
Ops, Inv, Fin

big-20201031
October 31, 202000007688351/312020Q3falseLarge Accelerated 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Table of Contents
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-Q

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended October 31, 2020
or

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from __________ to __________

Commission File Number 001-08897
BIG LOTS INC
(Exact name of registrant as specified in its charter)

             Ohio                              06-1119097
(State or Other Jurisdiction of Incorporation or Organization)         (I.R.S. Employer Identification No.)

4900 E. Dublin-Granville Road, Columbus, Ohio                  43081
     (Address of Principal Executive Offices)                 (Zip Code)

(614) 278-6800
(Registrants telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading Symbol(s)Name of each exchange on which registered
Common sharesBIGNew York Stock Exchange

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. Yesþ     Noo

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). Yesþ     Noo

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 þ
Accelerated filer o
Non-accelerated filer o
Smaller reporting company o
Emerging growth company o

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes      No þ

The number of the registrant’s common shares, $0.01 par value, outstanding as of December 4, 2020, was 37,110,016.


Table of Contents
BIG LOTS, INC. 
FORM 10-Q 
FOR THE FISCAL QUARTER ENDED OCTOBER 31, 2020

TABLE OF CONTENTS
 
  Page
   
Item 1.
   
a)
   
b)
   
c)
d)
   
e)
   
Item 2. 
   
Item 3.
   
Item 4. 
   
   
Item 1.  
   
Item 1A.
   
Item 2.  
   
Item 3.  
   
Item 4.  
   
Item 5.  
   
Item 6.  
   
 
1

Table of Contents
Part I. Financial Information


Item 1. Financial Statements


BIG LOTS, INC. AND SUBSIDIARIES
Consolidated Statements of Operations and Comprehensive Income (Unaudited)
(In thousands, except per share amounts)
 Thirteen Weeks EndedThirty-Nine Weeks Ended
 October 31, 2020November 2, 2019October 31, 2020November 2, 2019
Net sales$1,377,925 $1,167,988 $4,461,271 $3,716,198 
Cost of sales (exclusive of depreciation expense shown separately below)820,032 704,602 2,649,058 2,235,535 
Gross margin557,893 463,386 1,812,213 1,480,663 
Selling and administrative expenses482,307 436,714 1,444,938 1,352,345 
Depreciation expense33,086 34,752 104,750 97,572 
Gain on sale of distribution centers (178,534)(463,053)(178,534)
Operating profit42,500 170,454 725,578 209,280 
Interest expense(2,586)(5,359)(8,456)(13,657)
Other income (expense)(484)(322)(2,444)(201)
Income before income taxes39,430 164,773 714,678 195,422 
Income tax expense9,520 37,791 183,473 46,722 
Net income and comprehensive income$29,910 $126,982 $531,205 $148,700 
Earnings per common share  
Basic$0.79 $3.25 $13.69 $3.78 
Diluted$0.76 $3.25 $13.46 $3.77 
Weighted-average common shares outstanding  
Basic38,054 39,017 38,807 39,313 
Dilutive effect of share-based awards1,137 77 659 85 
Diluted39,191 39,094 39,466 39,398 
Cash dividends declared per common share$0.30 $0.30 $0.90 $0.90 
 
The accompanying notes are an integral part of these consolidated financial statements.

2

Table of Contents
BIG LOTS, INC. AND SUBSIDIARIES
Consolidated Balance Sheets (Unaudited)
(In thousands, except par value)
 October 31, 2020February 1, 2020
ASSETS  
Current assets:  
Cash and cash equivalents$547,831 $52,721 
Inventories1,089,068 921,266 
Other current assets84,814 89,962 
Total current assets1,721,713 1,063,949 
Operating lease right-of-use assets1,679,054 1,202,252 
Property and equipment - net721,668 849,147 
Deferred income taxes15,428 4,762 
Other assets66,533 69,171 
Total assets$4,204,396 $3,189,281 
LIABILITIES AND SHAREHOLDERS’ EQUITY  
Current liabilities:  
Accounts payable$569,434 $378,241 
Current operating lease liabilities215,027 212,144 
Property, payroll, and other taxes99,399 82,109 
Accrued operating expenses142,162 118,973 
Insurance reserves34,094 36,131 
Accrued salaries and wages40,049 39,292 
Income taxes payable52,813 3,930 
Total current liabilities1,152,978 870,820 
Long-term debt39,434 279,464 
Noncurrent operating lease liabilities1,491,571 1,035,377 
Deferred income taxes9,303 48,610 
Insurance reserves55,089 57,567 
Unrecognized tax benefits10,073 10,722 
Other liabilities189,646 41,257 
Shareholders’ equity:  
Preferred shares - authorized 2,000 shares; $0.01 par value; none issued
  
Common shares - authorized 298,000 shares; $0.01 par value; issued 117,495 shares; outstanding 37,088 shares and 39,037 shares, respectively
1,175 1,175 
Treasury shares - 80,407 shares and 78,458 shares, respectively, at cost
(2,636,939)(2,546,232)
Additional paid-in capital627,301 620,728 
Retained earnings3,264,765 2,769,793 
Total shareholders’ equity
1,256,302 845,464 
Total liabilities and shareholders’ equity
$4,204,396 $3,189,281 
 
The accompanying notes are an integral part of these consolidated financial statements.

3

Table of Contents
BIG LOTS, INC. AND SUBSIDIARIES
Consolidated Statements of Shareholders’ Equity (Unaudited)
(In thousands)
 CommonTreasuryAdditional
Paid-In
Capital
Retained Earnings 
 SharesAmountSharesAmountTotal
Thirteen Weeks Ended November 2, 2019
Balance - August 3, 201939,001 $1,175 78,494 $(2,547,556)$617,993 $2,572,931 $644,543 
Comprehensive income—  —   126,982 126,982 
Dividends declared ($0.30 per share)
—  —   (11,954)(11,954)
Purchases of common shares(18) 18 (423)  (423)
Exercise of stock options       
Restricted shares vested47  (47)1,526 (1,526)  
Performance shares vested6  (6)204 (204)  
Other   (2)  (2)
Share-based employee compensation expense—  —  3,178  3,178 
Balance - November 2, 201939,036 $1,175 78,459 $(2,546,251)$619,441 $2,687,959 $762,324 
Thirty-Nine Weeks Ended November 2, 2019
Balance - February 2, 201940,042 $1,175 77,453 $(2,506,086)$622,685 $2,575,267 $693,041 
Comprehensive income—  —   148,700 148,700 
Dividends declared ($0.90 per share)
—  —   (36,356)(36,356)
Adjustment for ASU 2016-02— — — — — 348 348 
Purchases of common shares(1,474) 1,474 (55,342)  (55,342)
Exercise of stock options6  (6)202 (2) 200 
Restricted shares vested201  (201)6,521 (6,521)  
Performance shares vested261  (261)8,459 (8,459)  
Other   (5)  (5)
Share-based employee compensation expense—  —  11,738  11,738 
Balance - November 2, 201939,036 $1,175 78,459 $(2,546,251)$619,441 $2,687,959 $762,324 
Thirteen Weeks Ended October 31, 2020
Balance - August 1, 202039,251 $1,175 78,244 $(2,537,359)$617,496 $3,246,848 $1,328,160 
Comprehensive income—  —   29,910 29,910 
Dividends declared ($0.30 per share)
—  —   (11,993)(11,993)
Purchases of common shares(2,197) 2,197 (100,690)  (100,690)
Exercise of stock options   10   10 
Restricted shares vested34  (34)1,102 (1,102)  
Performance shares vested       
Other   (2)1  (1)
Share-based employee compensation expense—  —  10,906  10,906 
Balance - October 31, 202037,088 $1,175 80,407 $(2,636,939)$627,301 $3,264,765 $1,256,302 
Thirty-Nine Weeks Ended October 31, 2020
Balance - February 1, 202039,037 $1,175 78,458 $(2,546,232)$620,728 $2,769,793 $845,464 
Comprehensive income—  —   531,205 531,205 
Dividends declared ($0.90 per share)
—  —   (36,233)(36,233)
Purchases of common shares(2,316) 2,316 (102,641)  (102,641)
Exercise of stock options3  (3)101 7  108 
Restricted shares vested298  (298)9,679 (9,679)  
Performance shares vested65  (65)2,107 (2,107)  
Other1  (1)47 8  55 
Share-based employee compensation expense—  —  18,344  18,344 
Balance - October 31, 202037,088 $1,175 80,407 $(2,636,939)$627,301 $3,264,765 $1,256,302 
 
The accompanying notes are an integral part of these consolidated financial statements.
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BIG LOTS, INC. AND SUBSIDIARIES
Consolidated Statements of Cash Flows (Unaudited)
(In thousands)
 Thirty-Nine Weeks Ended
 October 31, 2020November 2, 2019
Operating activities:  
Net income$531,205 $148,700 
Adjustments to reconcile net income to net cash provided by operating activities: 
Depreciation and amortization expense105,136 98,153 
Non-cash lease amortization expense175,174 171,564 
Deferred income taxes(49,973)16,842 
Non-cash impairment charge920 3,292 
Gain on disposition of property and equipment(463,191)(178,431)
Non-cash share-based compensation expense18,344 11,738 
Unrealized loss on fuel derivatives1,635 126 
Change in assets and liabilities:  
Inventories(167,801)(147,702)
Accounts payable191,193 79,092 
Operating lease liabilities(193,818)(163,970)
Current income taxes62,204 2,000 
Other current assets(7,738)(4,880)
Other current liabilities36,823 48,538 
Other assets2,420 (2,066)
Other liabilities24,877 (2,448)
Net cash provided by operating activities267,410 80,548 
Investing activities:  
Capital expenditures(103,000)(231,889)
Cash proceeds from sale of property and equipment588,231 190,679 
Other(22)(21)
Net cash provided by (used in) investing activities485,209 (41,231)
Financing activities:  
Net (repayments of) proceeds from long-term debt(239,677)140,926 
Net financing proceeds from sale and leaseback123,435  
Payment of finance lease obligations(2,962)(72,479)
Dividends paid(35,825)(36,707)
Proceeds from the exercise of stock options108 200 
Payment for treasury shares acquired(102,641)(55,342)
Payments for debt issuance costs (150)
Other53 (5)
Net cash used in financing activities(257,509)(23,557)
Increase in cash and cash equivalents495,110 15,760 
Cash and cash equivalents:  
Beginning of period52,721 46,034 
End of period$547,831 $61,794 

The accompanying notes are an integral part of these consolidated financial statements.
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BIG LOTS, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Unaudited)

NOTE 1 – BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

All references in this report to “we,” “us,” or “our” are to Big Lots, Inc. and its subsidiaries.  We are a neighborhood discount retailer operating in the United States (“U.S.”).  At October 31, 2020, we operated 1,411 stores in 47 states and an e-commerce platform.  We make available, free of charge, through the “Investor Relations” section of our website (www.biglots.com) under the “SEC Filings” caption, 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 or 15(d) of the Securities Exchange Act of 1934, as amended (“Exchange Act”), as soon as reasonably practicable after we file such material with, or furnish it to, the Securities and Exchange Commission (“SEC”).  The contents of our website are not incorporated into or otherwise part of this report.

The accompanying consolidated financial statements and these notes have been prepared in accordance with the rules and regulations of the SEC for interim financial information. The consolidated financial statements reflect all normal recurring adjustments which management believes are necessary to present fairly our financial condition, results of operations, and cash flows for all periods presented. The consolidated financial statements, however, do not include all information necessary for a complete presentation of financial condition, results of operations, and cash flows in conformity with accounting principles generally accepted in the United States of America (“GAAP”). Interim results may not necessarily be indicative of results that may be expected for, or actually result during, any other interim period or for the year as a whole, including as a result of the COVID-19 coronavirus pandemic, which has disrupted and may continue to disrupt our business. We have historically experienced seasonal fluctuations, with a larger percentage of our net sales and operating profit realized in our fourth fiscal quarter. However, due to demand volatility we have experienced during the COVID-19 coronavirus pandemic, the seasonality of our 2020 results may differ from our historical experience. The accompanying consolidated financial statements and these notes should be read in conjunction with the audited consolidated financial statements and notes included in our Annual Report on Form 10-K for the fiscal year ended February 1, 2020 (“2019 Form 10-K”).

Fiscal Periods
Our fiscal year ends on the Saturday nearest to January 31, which results in fiscal years consisting of 52 or 53 weeks.  Unless otherwise stated, references to years in this report relate to fiscal years rather than calendar years.  Fiscal year 2020 (“2020”) is comprised of the 52 weeks that began on February 2, 2020 and will end on January 30, 2021.  Fiscal year 2019 (“2019”) was comprised of the 52 weeks that began on February 3, 2019 and ended on February 1, 2020.  The fiscal quarters ended October 31, 2020 (“third quarter of 2020”) and November 2, 2019 (“third quarter of 2019”) were both comprised of 13 weeks. The year-to-date periods ended October 31, 2020 (“year-to-date 2020") and November 2, 2019 (“year-to-date 2019”) were both comprised of 39 weeks.

Cash and Cash Equivalents
Cash and cash equivalents primarily consist of amounts on deposit with financial institutions, outstanding checks, credit and debit card receivables, and highly liquid investments, including money market funds, treasury bills and commercial paper, which are unrestricted to withdrawal or use and which have an original maturity of three months or less. We review cash and cash equivalent balances on a bank by bank basis in order to identify book overdrafts. Book overdrafts occur when the aggregate amount of outstanding checks and electronic fund transfers exceed the cash deposited at a given bank. We reclassify book overdrafts, if any, to accounts payable on our consolidated balance sheets.

Selling and Administrative Expenses
Selling and administrative expenses include store expenses (such as payroll and occupancy costs) and costs related to warehousing, distribution, outbound transportation to our stores, advertising, purchasing, insurance, non-income taxes, accepting credit/debit cards, and overhead.  Our selling and administrative expense rates may not be comparable to those of other retailers that include warehousing, distribution, and outbound transportation costs in cost of sales.  Warehousing, distribution, and outbound transportation costs included in selling and administrative expenses were $66.3 million and $48.8 million for the third quarter of 2020 and the third quarter of 2019, respectively, and $178.3 million and $137.1 million for the year-to-date 2020 and the year-to-date 2019, respectively.


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Advertising Expense
Advertising costs, which are expensed as incurred, consist primarily of television and print advertising, digital, social media, internet and e-mail marketing and advertising, and in-store point-of-purchase signage and presentations.  Advertising expenses are included in selling and administrative expenses.  Advertising expenses were $24.4 million and $18.2 million for the third quarter of 2020 and the third quarter of 2019, respectively, and $69.2 million and $57.9 million for the year-to-date 2020 and the year-to-date 2019, respectively.

Derivative Instruments
We use derivative instruments to mitigate the risk of market fluctuations in the price of diesel fuel that we expect to consume to support our outbound transportation of inventory to our stores. We do not enter into derivative instruments for speculative purposes. Our derivative instruments may consist of collar or swap contracts. Our current derivative instruments do not meet the requirements for cash flow hedge accounting. Instead, our derivative instruments are marked-to-market to determine their fair value and any gains or losses are recognized currently in other income (expense) on our consolidated statements of operations and comprehensive income.

Supplemental Cash Flow Disclosures
The following table provides supplemental cash flow information for the year-to-date 2020 and the year-to-date 2019:
Thirty-Nine Weeks Ended
(In thousands)October 31, 2020November 2, 2019
Supplemental disclosure of cash flow information:  
Cash paid for interest$5,864 $13,828 
Cash paid for income taxes, excluding impact of refunds171,155 28,379 
Gross proceeds from long-term debt514,500 1,425,400 
Gross payments of long-term debt754,177 1,284,474 
Gross financing proceeds from sale and leaseback133,999  
Gross repayments of financing from sale and leaseback10,564  
Cash paid for operating lease liabilities264,676 217,935 
Non-cash activity:  
Assets acquired under finance leases 70,831 
Accrued property and equipment19,608 23,906 
Operating lease right-of-use assets obtained in exchange for operating lease liabilities$661,182 $1,489,449 

Reclassification of Merchandise Categories
We periodically assess, and make minor adjustments to, our product hierarchy, which can impact the roll-up of our merchandise categories. Our financial reporting process utilizes the most current product hierarchy in reporting net sales by merchandise category for all periods presented. Therefore, there may be minor reclassifications of net sales by merchandise category compared to previously reported amounts.

Recently Adopted Accounting Standards
In August 2018, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2018-15 Intangibles - Goodwill and Other - Internal-Use Software. This update evaluates the accounting for costs paid by a customer to implement a cloud computing arrangement. The new guidance aligns cloud computing arrangement implementation cost accounting with the capitalization requirements for internal-use software development, while leaving the accounting for service elements unchanged. On February 2, 2020, we adopted ASU 2018-15 on a prospective basis. The impact of the adoption was immaterial to the consolidated financial statements.


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NOTE 2 – DEBT

Bank Credit Facility
On August 31, 2018, we entered into a $700 million five-year unsecured credit facility (“2018 Credit Agreement”). The 2018 Credit Agreement expires on August 31, 2023. In connection with our entry into the 2018 Credit Agreement, we paid bank fees and other expenses in the aggregate amount of $1.5 million, which are being amortized over the term of the 2018 Credit Agreement.

Borrowings under the 2018 Credit Agreement are available for general corporate purposes, working capital, and to repay certain indebtedness.  The 2018 Credit Agreement includes a $30 million swing loan sublimit, a $75 million letter of credit sublimit, a $75 million sublimit for loans to foreign borrowers, and a $200 million optional currency sublimit. The interest rates, pricing and fees under the 2018 Credit Agreement fluctuate based on our debt rating. The 2018 Credit Agreement allows us to select our interest rate for each borrowing from multiple interest rate options. The interest rate options are generally derived from the prime rate or LIBOR. We may prepay revolving loans made under the 2018 Credit Agreement. The 2018 Credit Agreement contains financial and other covenants, including, but not limited to, limitations on indebtedness, liens and investments, as well as the maintenance of two financial ratios – a leverage ratio and a fixed charge coverage ratio. The covenants of the 2018 Credit Agreement do not restrict our ability to pay dividends. Additionally, we are subject to cross-default provisions associated with the synthetic lease for our distribution center in Apple Valley, CA. A violation of any of the covenants could result in a default under the 2018 Credit Agreement that would permit the lenders to restrict our ability to further access the 2018 Credit Agreement for loans and letters of credit and require the immediate repayment of any outstanding loans under the 2018 Credit Agreement.  At October 31, 2020, we had no borrowings outstanding under the 2018 Credit Agreement, while $6.3 million was committed to outstanding letters of credit, leaving $693.7 million available under the 2018 Credit Agreement.

Secured Equipment Term Note
On August 7, 2019, we entered into a $70 million term note agreement (“2019 Term Note”), which is secured by the equipment at our Apple Valley, CA distribution center. The 2019 Term Note will expire on May 7, 2024. We are required to make monthly payments over the term of the 2019 Term Note and are permitted to prepay, subject to penalties, at any time. The interest rate on the 2019 Term Note is 3.3%. In connection with our entry into the 2019 Term Note, we paid debt issuance costs of $0.2 million.

Debt was recorded in our consolidated balance sheets as follows:
Instrument (In thousands)
October 31, 2020February 1, 2020
2019 Term Note$53,815 $64,291 
2018 Credit Agreement 229,200 
Total debt$53,815 $293,491 
Less current portion of long-term debt (included in Accrued operating expenses)$(14,381)$(14,027)
Long-term debt$39,434 $279,464 


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NOTE 3 – FAIR VALUE MEASUREMENTS

In 2020, we invested a portion of the proceeds from the sale of four distribution centers (see note 9 for additional information on the sale and leaseback transactions) in money market fund investments and commercial paper investments. These highly liquid investments were recorded in cash and cash equivalents in our consolidated balance sheets at their fair value. The fair values of the money market fund investments were Level 1 valuations under the fair value hierarchy because each fund’s quoted market value per share was available in an active market. The fair values of the commercial paper investments were Level 2 valuations under the fair value hierarchy because the instruments’ market values were determined based on quoted market prices in active markets.

In connection with our nonqualified deferred compensation plan, we had mutual fund investments, which were classified as trading securities and were recorded at their fair value. The fair values of mutual fund investments were Level 1 valuations under the fair value hierarchy because each fund’s quoted market value per share was available in an active market.

As of October 31, 2020, the fair value of our investments were recorded in our consolidated balance sheets as follows:

(In thousands)Balance Sheet LocationOctober 31,
2020
Level 1Level 2
Assets:
Money market fundsCash and cash equivalents$175,070 $175,070 $ 
Commercial paperCash and cash equivalents29,996  29,996 
Mutual funds - deferred compensation planOther Assets$30,777 $30,777 $ 

As of February 1, 2020, the fair value of our investments were recorded in our consolidated balance sheets as follows:

(In thousands)Balance Sheet LocationFebruary 1,
2020
Level 1Level 2
Assets:
Money market fundsCash and cash equivalents$ $ $ 
Commercial paperCash and cash equivalents   
Mutual funds - deferred compensation planOther Assets$33,715 $33,715 $ 

The fair values of our long-term obligations under the 2018 Credit Agreement are estimated based on quoted market prices for the same or similar issues and the current interest rates offered for similar instruments. These fair value measurements are classified as Level 2 within the fair value hierarchy. The carrying value of these instruments was $0 as of October 31, 2020.

The fair value of our long-term obligations under the 2019 Term Note are based on quoted market prices and are classified as Level 2 within the fair value hierarchy. The carrying value of the instrument approximates its fair value.

The carrying value of accounts receivable and accounts payable approximates fair value because of the relatively short maturity of these items.


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NOTE 4 – SHAREHOLDERS’ EQUITY

Earnings per Share
There were no adjustments required to be made to the weighted-average common shares outstanding for purposes of computing basic and diluted earnings per share. At October 31, 2020 and November 2, 2019, we excluded from securities outstanding for the computation of earnings per share, antidilutive stock options, restricted stock units, and performance share units, for which the minimum applicable performance conditions had not been attained as of October 31, 2020 and November 2, 2019, respectively. For the third quarter of 2020, it was determined that an immaterial amount of stock options outstanding were antidilutive and excluded from the computation of diluted earnings per share, and for the third quarter of 2019, there were 0.1 million stock options outstanding that were antidilutive. Antidilutive stock options for the year-to-date 2020 and the year-to-date 2019 were immaterial and 0.1 million, respectively. Antidilutive stock options generally consist of outstanding stock options where the exercise price per share is greater than the weighted-average market price per share for our common shares for each period. Antidilutive stock options, restricted stock units and performance share units are excluded from the calculation because they decrease the number of diluted shares outstanding under the treasury stock method. The restricted stock units and performance share units that were antidilutive, as determined under the treasury stock method, were immaterial and 0.5 million for the third quarter of 2020 and the third quarter of 2019, respectively, and immaterial and 0.4 million for the year-to-date 2020 and the year-to-date 2019, respectively.

Share Repurchase Programs
On August 27, 2020, our Board of Directors authorized the repurchase of up to $500 million of our common shares (“2020 Repurchase Authorization”). Pursuant to the 2020 Repurchase Authorization, we may repurchase shares in the open market and/or in privately negotiated transactions at our discretion, subject to market conditions and other factors. Common shares acquired through the 2020 Repurchase Authorization will be available to meet obligations under our equity compensation plans and for general corporate purposes. The 2020 Repurchase Authorization has no scheduled termination date.

During the third quarter of 2020, we acquired approximately 2.2 million of our outstanding common shares for $100.0 million under the 2020 Repurchase Authorization.

Dividends
The Company declared and paid cash dividends per common share during the quarterly periods presented as follows:
Dividends
Per Share
Amount DeclaredAmount Paid
2020:(In thousands)(In thousands)
First quarter$0.30 $11,905 $12,478 
Second quarter0.30 12,335 11,807 
Third quarter0.30 11,993 11,540 
Total$0.90 $36,233 $35,825 

The amount of dividends declared may vary from the amount of dividends paid in a period due to the vesting of restricted stock units and performance share units, which accrue dividend equivalent rights that are paid when the award vests. The payment of future dividends will be at the discretion of our Board of Directors and will depend on our financial condition, results of operations, capital requirements, compliance with applicable laws and agreements and any other factors deemed relevant by our Board of Directors.


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NOTE 5 – SHARE-BASED PLANS

We have issued nonqualified stock options, restricted stock units, and performance share units under our shareholder-approved equity compensation plans. At October 31, 2020, the number of nonqualified stock options outstanding was immaterial.  Our restricted stock units and performance share units, as described below, are expensed and reported as non-vested shares.  We recognized share-based compensation expense of $10.9 million and $3.2 million in the third quarter of 2020 and the third quarter of 2019, respectively, and $18.3 million and $11.7 million for the year-to-date 2020 and the year-to-date 2019, respectively.

Non-vested Restricted Stock Units
The following table summarizes the non-vested restricted stock units activity for the year-to-date 2020:
Number of SharesWeighted Average Grant-Date Fair Value Per Share
Outstanding non-vested restricted stock units at February 1, 2020648,510 $38.52 
Granted921,309 15.82 
Vested(239,856)43.07 
Forfeited(1,511)38.06 
Outstanding non-vested restricted stock units at May 2, 20201,328,452 $21.95 
Granted74,244 33.20 
Vested(24,498)27.99 
Forfeited(41,074)25.26 
Outstanding non-vested restricted stock units at August 1, 20201,337,124 $22.35 
Granted33,868 49.83 
Vested(33,628)37.45 
Forfeited(108,120)21.93 
Outstanding non-vested restricted stock units at October 31, 20201,229,244 $22.68 

The non-vested restricted stock units granted in the year-to-date 2020 generally vest and are expensed on a ratable basis over three years from the grant date of the award, if a threshold financial performance objective is achieved and the grantee remains employed by us through the vesting dates.

Non-vested Restricted Stock Units Granted to Non-Employee Directors
In the second quarter of 2020, 44,229 common shares underlying the restricted stock units granted in 2019 to the non-employee members of our Board vested on the trading day immediately preceding our 2020 Annual Meeting of Shareholders (“2020 Annual Meeting”). These units were part of the annual compensation of the non-employee directors of the Board. Additionally, in the second quarter of 2020, the chairman of our Board received an annual restricted stock unit grant having a grant date fair value of approximately $210,000. The remaining non-employees elected to our Board at our 2020 Annual Meeting each received an annual restricted stock unit grant having a grant date fair value of approximately $145,000. The 2020 restricted stock units will vest on the earlier of (1) the trading day immediately preceding our 2021 Annual Meeting of Shareholders, or (2) the non-employee director’s death or disability. However, the non-employee directors will forfeit their restricted stock units if their service on the Board terminates before either vesting event occurs.

Performance Share Units
In 2020, we awarded performance share units with a restriction feature to certain members of senior management, which vest based on the achievement of share price performance goals and a minimum service requirement of one year (“RPSUs”). The RPSUs have a contractual term of three years. We use a Monte Carlo simulation to estimate the fair value of the RPSUs on the grant date and recognize expense over the derived service period. If the share price performance goals applicable to the RPSUs are not achieved prior to expiration, the unvested portion of the awards will be forfeited. Shares issued in connection with vested RPSUs are generally restricted from sale, transfer, or other disposition prior to the third anniversary of the grant date except under certain circumstances, including death, disability, or change in control.

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Prior to 2020, we awarded performance share units (“PSUs”) to certain members of management, which will vest if certain financial performance objectives are achieved over a three-year performance period and the grantee remains employed by us during the performance period. Typically, the financial performance objectives for each fiscal year within the three-year performance period will be approved by the Compensation Committee of our Board of Directors during the first quarter of the respective fiscal year. In 2020, due to the lack of business visibility resulting from the COVID-19 pandemic, the Compensation Committee chose to defer the establishment of the 2020 performance objectives until the third quarter of 2020.

As a result of the process used to establish the financial performance objectives, we will only meet the requirements for establishing a grant date for the PSUs when we communicate the financial performance objectives for the third fiscal year of the award to the award recipients, which will then trigger the service inception date, the fair value of the awards, and the associated expense recognition period. If we meet the applicable threshold financial performance objectives over the three-year performance period and the grantee remains employed by us through the end of the performance period, the PSUs will vest on the first trading day after we file our Annual Report on Form 10-K for the last fiscal year in the performance period.

In the third quarter of 2020, the Compensation Committee established the financial performance objectives for the third fiscal year of PSUs issued in 2018; therefore, the 2018 PSUs were deemed granted in August 2020.

We have begun or expect to begin recognizing expense related to PSUs and RPSUs as follows:
Issue YearOutstanding PSUs and RPSUs at October 31, 2020Actual Grant DateExpected Valuation (Grant) DateActual or Expected Expense Period
2018136,199 August 2020Fiscal 2020
2019266,118 March 2021Fiscal 2021
2020339,568 April 2020Fiscal 2020 - 2021
Total741,885 

The number of shares to be distributed upon vesting of the PSUs depends on the average performance attained during the three-year performance period compared to the performance targets established by the Compensation Committee, and may result in the distribution of an amount of shares that is greater or less than the number of PSUs granted, as defined in the related award agreement. We recognized $7.8 million and $