UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 WASHINGTON, D.C. 20549
 
 FORM 10-Q
  þ
    
    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934.
 For the quarterly period ended April 30, 2011
 OR
 o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934.
 For the transition period fromto
 Commission file number 000-26207
 BELK, INC.
 
 Delaware
    
    56-2058574(State or Other Jurisdiction of Incorporation or Organization)
    
    (I.R.S. Employer Identification No.)2801 West Tyvola Road, Charlotte, NC
    
    28217-4500(Address of Principal Executive Offices)
    
    (Zip Code)
 (704) 357-1000
  
 þ o
 o o
  Large accelerated filer o
Accelerated filer þ
Non-accelerated filer o(Do not check if a smaller reporting company)
Smaller reporting company o o þ




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BELK, INC.
Index to Form 10-Q
 PageNumberPART I. FINANCIAL INFORMATIONItem 1. Condensed Consolidated Financial Statements (unaudited)Condensed Consolidated Statements of Income for the Three Months Ended April 30, 2011 and
May 1, 2010
    
    
    5Condensed Consolidated Balance Sheets as of April 30, 2011 and January 29, 2011
    
    
    6Condensed Consolidated Statement of Changes in Stockholders Equity and Comprehensive Income
for the Three Months Ended April 30, 2011
    
    
    7Condensed Consolidated Statements of Cash Flows for the Three Months Ended April 30, 2011 and
May 1, 2010
    
    
    8Notes to Unaudited Condensed Consolidated Financial Statements
    
    
    9Item 2. Managements Discussion and Analysis of Financial Condition and Results of
Operations
    
    
    13Item 3. Quantitative and Qualitative Disclosures about Market Risk
    
    
    17Item 4. Controls and Procedures
    
    
    17PART II. OTHER INFORMATIONItem 1. Legal Proceedings
    
    
    19Item 1A. Risk Factors
    
    
    19Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
    
    
    19Item 3. Defaults upon Senior Securities
    
    
    19Item 4. Reserved
    
    
    19Item 5. Other Information
    
    
    19Item 6. Exhibits
    
    
    19
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This Report Contains Forward-Looking Statements
     
    
    Economic, political and business conditions, nationally and in our market areas,
including rates of economic growth, interest rates, inflation or deflation, consumer credit
availability, levels of consumer debt and bankruptcies, tax rates and policy, unemployment
trends, potential acts of terrorism and threats of such acts and other matters that
influence consumer confidence and spending;
    
    The customer response to our re-branding initiative;
    
    Our ability to anticipate the demands of our customers for a wide variety of
merchandise and services, including our predictions about the merchandise mix, quality,
style, service, convenience and credit availability of our customers;
    
    Unseasonable and extreme weather conditions in our market areas;
    
    Seasonal fluctuations in quarterly net income due to the significant portion of our
revenues generated during the holiday season in the fourth fiscal quarter and the
significant amount of inventory we carry during that time;
    
    Competition from other department and specialty stores and other retailers, including
luxury goods retailers, general merchandise stores, Internet retailers, mail order
retailers and off-price and discount stores, in the areas of price, merchandise mix,
quality, style, service, convenience, credit availability and advertising;
    
    Our ability to effectively use advertising, marketing and promotional campaigns to
generate high customer traffic in our stores and, to a lesser degree, through on-line
sales;
    
    Variations in the amount of vendor allowances;
    
    Our ability to expand our eCommerce business through our updated and redesigned
belk.com website, including our ability to meet the systems challenges of operating the
website consistently and our ability to efficiently operate our eCommerce fulfillment
facility;
    
    Our ability to find qualified vendors from which to source our merchandise and our
ability to access products in a timely and efficient manner from a wide variety of domestic
and international vendors;
    
    Increases in the price of merchandise, raw materials, fuel and labor or their reduced
availability;
    
    The income we receive from, and the timing of receipt of, payments from GE, the
operator of our private label credit card business, which depends upon the amount of
purchases made through the proprietary credit cards, the level of finance charge income
generated from the credit card portfolio, the number of new accounts generated, changes in
customers credit card use, and GEs ability to extend credit to our customers;
    
    Our ability to manage our expense structure;
    
    Our ability to continue to open new stores, or to remodel or expand existing stores,
including the availability of existing retail stores or store sites on acceptable terms and
our ability to successfully execute the Companys retailing concept in new markets and
geographic regions;
    
    The efficient and effective operation of our distribution network and information
systems to manage sales, distribution, merchandise planning and allocation functions;
    
    The effectiveness of third parties in managing our outsourced business;
    
    Loss of qualified employees or an inability to attract, retain and motivate additional
highly skilled employees;
    
    Changes in federal, state or local laws and regulations;
    
    Our ability to comply with debt covenants, which could adversely affect our capital
resources, financial condition and liquidity; and
    
    Our ability to realize the planned efficiencies from our acquisitions and effectively
integrate and operate the acquired stores and businesses, including our fiscal year 2007
acquisition of Parisian stores and our fiscal year 2007 acquisition of the assets of
Migerobe and commencement of our owned fine jewelry business.
  3




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4




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PART I  FINANCIAL INFORMATION
 
 Item 1. Financial Statements
 BELK, INC. AND SUBSIDIARIES
 
 CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(dollars in thousands, except share and per share amounts)
(unaudited)
 Three Months EndedApril 30,
    
    
    May 1,2011
    
    
    2010Revenues
    
    $
    848,587
    
    
    $
    803,913Cost of goods sold (including occupancy, distribution and buying expenses)
    
    
    562,386
    
    
    
    536,551Selling, general and administrative expenses
    
    
    229,560
    
    
    
    218,018Gain on sale of property and equipment
    
    
    663
    
    
    
    808Asset impairment and exit costs
    
    
    116
    
    
    
    219Operating income
    
    
    57,188
    
    
    
    49,933Interest expense, net
    
    
    (12,526
    )
    
    
    (12,934
    )Income before income taxes
    
    
    44,662
    
    
    
    36,999Income tax expense
    
    
    12,794
    
    
    
    12,656Net income
    
    $
    31,868
    
    
    $
    24,343Basic net income per share
    
    $
    0.69
    
    
    $
    0.50Diluted net income per share
    
    $
    0.68
    
    
    $
    0.50Weighted average shares outstanding:Basic
    
    
    46,411,586
    
    
    
    48,295,137Diluted
    
    
    46,683,452
    
    
    
    48,295,137
  5




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BELK, INC. AND SUBSIDIARIES
 
 CONDENSED CONSOLIDATED BALANCE SHEETS
(dollars in thousands)
(unaudited)
 April 30,
    
    
    January 29,2011
    
    
    2011AssetsCurrent assets:Cash and cash equivalents
    
    $
    434,709
    
    
    $
    453,403Short-term investments
    
    
    
    
    
    
    6,150Accounts receivable, net
    
    
    37,372
    
    
    
    31,119Merchandise inventory
    
    
    928,901
    
    
    
    808,503Prepaid income taxes, expenses and other current assets
    
    
    26,609
    
    
    
    18,869Total current assets
    
    
    1,427,591
    
    
    
    1,318,044Property and equipment, net of accumulated depreciation and amortization of $1,384,069
and $1,354,425 as of April 30, 2011 and January 29, 2011, respectively
    
    
    948,726
    
    
    
    951,120Deferred income taxes
    
    
    76,756
    
    
    
    83,698Other assets
    
    
    39,462
    
    
    
    36,769Total assets
    
    $
    2,492,535
    
    
    $
    2,389,631Liabilities and Stockholders EquityCurrent liabilities:Accounts payable
    
    $
    285,802
    
    
    $
    196,622Accrued liabilities
    
    
    186,354
    
    
    
    161,844Accrued income taxes
    
    
    8,889
    
    
    
    10,926Deferred income taxes
    
    
    19,450
    
    
    
    19,776Current installments of long-term debt and capital lease obligations
    
    
    4,741
    
    
    
    4,426Total current liabilities
    
    
    505,236
    
    
    
    393,594Long-term debt and capital lease obligations, excluding current installments
    
    
    535,939
    
    
    
    534,813Interest rate swap liability
    
    
    4,575
    
    
    
    5,388Retirement obligations and other noncurrent liabilities
    
    
    282,140
    
    
    
    299,564Total liabilities
    
    
    1,327,890
    
    
    
    1,233,359Stockholders equity:Preferred stock
    
    
    
    
    
    
    Common stock, 400 million shares authorized and 46.5 and 46.3 million shares
issued and outstanding as of April 30, 2011 and January 29, 2011, respectively
    
    
    465
    
    
    
    463Paid-in capital
    
    
    409,493
    
    
    
    409,201Retained earnings
    
    
    894,229
    
    
    
    887,953Accumulated other comprehensive loss
    
    
    (139,542
    )
    
    
    (141,345
    )Total stockholders equity
    
    
    1,164,645
    
    
    
    1,156,272Total liabilities and stockholders equity
    
    $
    2,492,535
    
    
    $
    2,389,631
  6




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BELK, INC. AND SUBSIDIARIES
 
 CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS EQUITY
AND COMPREHENSIVE INCOME
(in thousands)
(unaudited)
 AccumulatedOtherCommon Stock
    
    
    Paid-in
    
    
    Retained
    
    
    ComprehensiveShares
    
    
    Amount
    
    
    Capital
    
    
    Earnings
    
    
    Income (Loss)
    
    
    TotalBalance at January 29, 2011
    
    
    46,344
    
    
    $
    463
    
    
    $
    409,201
    
    
    $
    887,953
    
    
    $
    (141,345
    )
    
    $
    1,156,272Comprehensive income:Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    31,868
    
    
    
    
    
    
    
    31,868Unrealized gain on interest rate swaps,
net of $303 income taxes
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    510
    
    
    
    510Defined benefit plan adjustments, net of
$768 income taxes
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,293
    
    
    
    1,293Total comprehensive income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    33,671Cash dividends
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (25,592
    )
    
    
    
    
    
    
    (25,592
    )Issuance of stock-based compensation
    
    
    
    
    
    
    
    
    
    
    (2,212
    )
    
    
    
    
    
    
    
    
    
    
    (2,212
    )Stock-based compensation expense
    
    
    
    
    
    
    
    
    
    
    2,504
    
    
    
    
    
    
    
    
    
    
    
    2,504Common stock issued
    
    
    187
    
    
    
    2
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2Balance at April 30, 2011
    
    
    46,531
    
    
    $
    465
    
    
    $
    409,493
    
    
    $
    894,229
    
    
    $
    (139,542
    )
    
    $
    1,164,645
  7




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BELK, INC. AND SUBSIDIARIES
 
 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(dollars in thousands)
(unaudited)
 Three Months EndedApril 30,
    
    
    May 1,2011
    
    
    2010Cash flows from operating activities:Net income
    
    $
    31,868
    
    
    $
    24,343Adjustments to reconcile net income to net cash provided (used) by operating activities:Asset impairment and exit costs
    
    
    116
    
    
    
    219Deferred income tax expense
    
    
    5,560
    
    
    
    1,093Depreciation and amortization expense
    
    
    30,133
    
    
    
    36,803Stock-based compensation expense
    
    
    3,585
    
    
    
    692Gain on sale of property and equipment
    
    
    (6
    )
    
    
    (151
    )Amortization of deferred gain on sale and leaseback
    
    
    (657
    )
    
    
    (657
    )Amortization of deferred debt issuance costs
    
    
    256
    
    
    
    Increase in:Accounts receivable, net
    
    
    (6,253
    )
    
    
    (20,769
    )Merchandise inventory
    
    
    (120,398
    )
    
    
    (99,513
    )Prepaid income taxes, expenses and other assets
    
    
    (11,303
    )
    
    
    (6,308
    )Increase (decrease) in:Accounts payable and accrued liabilities
    
    
    107,343
    
    
    
    74,435Accrued income taxes
    
    
    (2,037
    )
    
    
    (24,321
    )Retirement obligations and other liabilities
    
    
    (15,315
    )
    
    
    (12,236
    )Net cash provided (used) by operating activities
    
    
    22,892
    
    
    
    (26,370
    )Cash flows from investing activities:Purchases of property and equipment
    
    
    (19,518
    )
    
    
    (9,980
    )Proceeds from sales of property and equipment
    
    
    991
    
    
    
    8Proceeds from sales of short-term investments
    
    
    6,150
    
    
    
    2,500Net cash used by investing activities
    
    
    (12,377
    )
    
    
    (7,472
    )Cash flows from financing activities:Principal payments on long-term debt and capital lease obligations
    
    
    (1,132
    )
    
    
    (76,156
    )Dividends paid
    
    
    (25,592
    )
    
    
    (38,638
    )Stock compensation tax benefit
    
    
    816
    
    
    
    41Cash paid for withholding taxes in lieu of stock-based compensation shares
    
    
    (3,301
    )
    
    
    (42
    )Net cash used by financing activities
    
    
    (29,209
    )
    
    
    (114,795
    )Net decrease in cash and cash equivalents
    
    
    (18,694
    )
    
    
    (148,637
    )Cash and cash equivalents at beginning of period
    
    
    453,403
    
    
    
    585,930Cash and cash equivalents at end of period
    
    $
    434,709
    
    
    $
    437,293Supplemental schedule of noncash investing activities:Increase in property and equipment through accrued purchases
    
    $
    7,466
    
    
    $
    51Increase in property and equipment through assumption of capital leases
    
    
    1,637
    
    
    
    4,045
  8




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BELK, INC. AND SUBSIDIARIES
 NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
 (1) Basis of Presentation
   (2) Comprehensive Income
  Three Months EndedApril 30,
    
    
    May 1,2011
    
    
    2010(dollars in thousands)Net income
    
    $
    31,868
    
    
    $
    24,343Other comprehensive income:Unrealized gain on interest rate swaps, net of $303 and $203 income taxes for the three
months ended April 30, 2011 and May 1, 2010, respectively.
    
    
    510
    
    
    
    341Defined benefit plan adjustments, net of $768 and $688 income taxes for the three months
ended April 30, 2011 and May 1, 2010, respectively.
    
    
    1,293
    
    
    
    1,159Other comprehensive income
    
    
    1,803
    
    
    
    1,500Total comprehensive income
    
    $
    33,671
    
    
    $
    25,843
 (3) Accumulated Other Comprehensive Loss
  April 30,
    
    
    January 29,2011
    
    
    2011(dollars in thousands)Unrealized loss on interest rate swap, net of $1,816
and $2,119 income taxes as of April 30, 2011 and
January 29, 2011, respectively.
    
    $
    (2,758
    )
    
    $
    (3,268
    )Defined benefit plans, net of $82,580 and $83,348
income taxes as of April 30, 2011 and January 29, 2011,
respectively.
    
    
    (136,784
    )
    
    
    (138,077
    )Accumulated other comprehensive loss
    
    $
    (139,542
    )
    
    $
    (141,345
    )
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BELK, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
 (4) Fair Value Measurements
      April 30, 2011
    

    January 29, 2011Carrying
    
    Fair

    
    Carrying
    
    FairValue


    Value

 
    Value
    

    Value(dollars in thousands)Financial assetsAuction rate security
    
    $
    
    
    
    $
    
    
    
    $
    6,150
    
    
    $
    6,150Financial liabilitiesLong-term debt (excluding capitalized leases)
    
    $
    517,780
    
    
    $
    526,912
    
    
    $
    517,780
    
    
    $
    520,036
  (5) Income Taxes
  10




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BELK, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
 (6) Pension and Postretirement Benefits
     Three Months EndedPension Plan
    
    
    Old SERP Plan
    
    
    Postretirement PlanApril 30,
    
    
    May 1,
    
    
    April 30,
    
    
    May 1,
    
    
    April 30,
    
    
    May 1,2011
    
    
    2010
    
    
    2011
    
    
    2010
    
    
    2011
    
    
    2010(dollars in thousands)Service cost
    
    $
    
    
    
    $
    
    
    
    $
    26
    
    
    $
    18
    
    
    $
    27
    
    
    $
    37Interest cost
    
    
    6,373
    
    
    
    6,517
    
    
    
    155
    
    
    
    155
    
    
    
    300
    
    
    
    340Expected return on plan assets
    
    
    (7,017
    )
    
    
    (6,550
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Amortization of transition obligation
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    65
    
    
    
    66Amortization of prior service cost
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Amortization of net loss (gain)
    
    
    1,967
    
    
    
    1,753
    
    
    
    63
    
    
    
    36
    
    
    
    (34
    )
    
    
    (8
    )Net periodic benefit expense
    
    $
    1,323
    
    
    $
    1,720
    
    
    $
    244
    
    
    $
    209
    
    
    $
    358
    
    
    $
    435
  (7) Earnings per Share
    Three Months Ended
    
    Three Months EndedApril 30,
    
    May 1,2011
    
    2010Basic Shares
    
    
    46,411,586
    
    
    
    48,295,137Dilutive contingently-issuable non-vested share awards
    
    
    266,963
    
    
    
    Dilutive contingently-issuable vested share awards
    
    
    4,903
    
    
    
    Diluted Shares
    
    
    46,683,452
    
    
    
    48,295,137
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BELK, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
 (8) Repurchase of Common Stock
  12




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Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
 Overview
         13




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Results of Operations
  Three Months EndedApril 30,
    
    May 1,2011
    
    2010SELECTED FINANCIAL DATARevenues
    
    
    100.0
    %
    
    
    100.0
    %Cost of goods sold (including occupancy,
distribution and buying expenses)
    
    
    66.3
    
    
    
    66.7Selling, general and administrative expenses
    
    
    27.1
    
    
    
    27.1Gain on sale of property and equipment
    
    
    0.1
    
    
    
    0.1Asset impairment and exit costs
    
    
    
    
    
    
    Operating income
    
    
    6.7
    
    
    
    6.2Interest expense, net
    
    
    1.5
    
    
    
    1.6Income before income taxes
    
    
    5.3
    
    
    
    4.6Income tax expense
    
    
    1.5
    
    
    
    1.6Net income
    
    
    3.8
    
    
    
    3.0Comparable store net revenue increase
    
    
    5.7
    
    
    
    6.4
 Revenues
  Three Months EndedApril 30,
    
    May 1,Merchandise Areas
    
    2011
    
    2010Womens
    
    
    37
    %
    
    
    38
    %Cosmetics, Shoes and Accessories
    
    
    34
    
    
    
    33Mens
    
    
    15
    
    
    
    15Home
    
    
    7
    
    
    
    7Childrens
    
    
    7
    
    
    
    7Total
    
    
    100
    %
    
    
    100
    %
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Comparison of the Three Months Ended April 30, 2011 and May 1, 2010
 Revenues.
 Cost of goods sold.
  Selling, general and administrative expenses
 Income tax expense.
 Seasonality and Quarterly Fluctuations
  Liquidity and Capital Resources
   15




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16




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Contractual Obligations and Commercial Commitments
  Off-Balance Sheet Arrangements
  New Accounting Pronouncements
  Impact of Inflation or Deflation
   
 Item 3. Quantitative and Qualitative Disclosures About Market Risk
  
 Item 4. Controls and Procedures
  17




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18




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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. Reserved
 
 Item 5. Other Information
  
 Item 6. Exhibits
  3.1
    
    Form of Amended and Restated Certificate of Incorporation of the Company
(incorporated by reference to pages B-24 to B-33 of the Companys Registration Statement
on Form S-4/A, filed on March 5, 1998 (File No. 333-42935)).3.2
    
    Form of Second Amended and Restated Bylaws of the Company (incorporated by reference
to Exhibit 3.2 of the Companys Annual Report on Form 10-K for the fiscal year ended
January 31, 2004).4.1
    
    Articles Fourth, Fifth and Seventh of the Amended and Restated Certificate of
Incorporation of the Company (incorporated by reference to pages B-24 to B-33 of the
Companys Registration Statement on Form S-4/A, filed on March 5, 1998 (File No.
333-42935)).4.2
    
    Articles I and IV of the Second Amended and Restated Bylaws of the Company
(incorporated by reference to Exhibit 3.2 of the Companys Annual Report on Form 10-K for
the fiscal year ended January 31, 2004).10.1
    
    Belk, Inc. Amended and Restated Annual Incentive Plan.31.1
    
    Certification of the Chief Executive Officer pursuant to Rule 13a-14(a) or Rule
15d-14(a) of the Securities Exchange Act of 1934, as amended, as adopted under Section
302 of the Sarbanes-Oxley Act of 2002.31.2
    
    Certification of the Chief Financial Officer pursuant to Rule 13a-14(a) or Rule
15d-14(a) of the Securities Exchange Act of 1934, as amended, as adopted under Section
302 of the Sarbanes-Oxley Act of 2002.32.1
    
    Certification of the Chief Executive Officer Pursuant to 18 U.S.C. Section 1350, as
Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
 19




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32.2
    
    Certification of the Chief Financial Officer Pursuant to 18 U.S.C. Section 1350, as
Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
 20




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SIGNATURES
  BELK, INC.Dated:  June 7, 2011
    By:
    /s/ Ralph A. PittsRalph A. PittsExecutive Vice President, General Counsel and
Corporate Secretary
(Authorized Officer of the Registrant)By:
    /s/ Brian T. MarleyBrian T. MarleyExecutive Vice President and Chief Financial Officer
(Principal Financial Officer) 21