##### 



UNITED STATES SECURITIES AND EXCHANGE COMMISSION
 WASHINGTON, DC 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 29, 2006
 o
    
    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 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
 
  R o
  o R o
  o R




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BELK, INC.
Index to Form 10-Q
 PageNumberPART I. FINANCIAL INFORMATIONItem 1. Financial Statements (unaudited)Condensed Consolidated Statements of Income for the Three Months Ended April 29, 2006 and April 30, 2005
    
    
    4Consolidated Balance Sheets as of April 29, 2006 and January 28, 2006
    
    
    5Consolidated Statement of Changes in Stockholders Equity and Comprehensive
Income for the Three Months Ended April 29, 2006
    
    
    6Condensed Consolidated Statements of Cash Flows for the Three Months Ended
April 29, 2006 and April 30, 2005
    
    
    7Notes to Consolidated Financial Statements
    
    
    8Item 2. Managements Discussion and Analysis of Financial
Condition and Results of Operations
    
    
    11Item 3. Quantitative and Qualitative Disclosures About Market Risk
    
    
    14Item 4. Controls and Procedures
    
    
    14PART II. OTHER INFORMATIONItem 1. Legal Proceedings
    
    
    15Item 1A. Risk Factors
    
    
    15Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
    
    
    15Item 3. Defaults Upon Senior Securities
    
    
    15Item 4. Submission of Matters to a Vote of Security Holders
    
    
    15Item 5. Other Information
    
    
    15Item 6. Exhibits
    
    
    15




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This Report Contains Forward-Looking Statements
    
    
    General 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;
 
    
    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;
 
    
    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;
 
    
    The income we receive from, and the timing of receipt of, payments from GE Money Bank, an affiliate of GE Consumer
Finance, 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 correctly anticipate the appropriate levels of inventories during the year;
 
    
    Our ability to manage our expense structure;
 
    
    Our ability to realize the planned efficiencies from our acquisitions and effectively integrate and operate these
stores, including our fiscal year 2006 acquisition of Proffitts and McRaes stores;
 
    
    Our ability to continue to increase our number of 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; and
 
    
    The efficient and effective operation of our distribution network and information systems to manage sales,
distribution, merchandise planning and allocation functions.




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BELK, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(dollars in thousands, except per share amounts)
 Three Months EndedApril 29,
    
    
    April 30,2006
    
    
    2005Revenues
    
    $
    752,525
    
    
    $
    568,130Cost of goods sold (including occupancy and buying expenses)
    
    
    504,831
    
    
    
    376,411Selling, general and administrative expenses
    
    
    207,895
    
    
    
    146,532Asset impairment and store closing costs
    
    
    1,767
    
    
    
    (328
    )Operating income
    
    
    38,032
    
    
    
    45,515Interest expense, net
    
    
    (9,888
    )
    
    
    (7,796
    )Gain on sale of property, equipment and investments
    
    
    2,127
    
    
    
    204Income before income taxes
    
    
    30,271
    
    
    
    37,923Income taxes
    
    
    10,800
    
    
    
    13,590Net income
    
    $
    19,471
    
    
    $
    24,333Basic and diluted net income per share
    
    $
    0.38
    
    
    $
    0.47Weighted average shares outstanding
    
    
    51,879,318
    
    
    
    51,568,471
  4




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BELK, INC. AND
SUBSIDIARIES CONSOLIDATED BALANCE SHEETS
(dollars in thousands)
 April 29,
    
    
    January 28,2006
    
    
    2006AssetsCurrent assets:Cash and cash equivalents
    
    $
    255,770
    
    
    $
    330,016Accounts receivable, net
    
    
    19,681
    
    
    
    36,117Merchandise inventory
    
    
    784,945
    
    
    
    703,609Prepaid income taxes, expenses and other current assets
    
    
    32,449
    
    
    
    34,122Total current assets
    
    
    1,092,845
    
    
    
    1,103,864Investment securities
    
    
    6,303
    
    
    
    6,196Property and equipment, net
    
    
    1,078,354
    
    
    
    1,038,250Goodwill
    
    
    247,756
    
    
    
    246,113Other assets
    
    
    46,494
    
    
    
    46,493Total assets
    
    $
    2,471,752
    
    
    $
    2,440,916Liabilities and Stockholders EquityCurrent liabilities:Accounts payable
    
    $
    294,931
    
    
    $
    249,553Accrued liabilities
    
    
    129,126
    
    
    
    117,345Accrued income taxes
    
    
    3,726
    
    
    
    36,092Deferred income taxes
    
    
    23,101
    
    
    
    18,855Current installments of long-term debt and capital lease obligations
    
    
    15,394
    
    
    
    16,807Total current liabilities
    
    
    466,278
    
    
    
    438,652Deferred income taxes
    
    
    13,049
    
    
    
    15,717Long-term debt and capital lease obligations, excluding current installments
    
    
    573,386
    
    
    
    574,094Interest rate swap liability
    
    
    2,184
    
    
    
    4,641Deferred compensation and other noncurrent liabilities
    
    
    216,069
    
    
    
    212,985Total liabilities
    
    
    1,270,966
    
    
    
    1,246,089Stockholders equity:Preferred stock
    
    
    
    
    
    
    Common stock, 52.0 and 51.7 million shares issued and outstanding
as of April 29, 2006 and January 28, 2006, respectively
    
    
    520
    
    
    
    517Paid-in capital
    
    
    538,931
    
    
    
    537,676Retained earnings
    
    
    738,999
    
    
    
    737,730Accumulated other comprehensive loss
    
    
    (77,664
    )
    
    
    (81,096
    )Total stockholders equity
    
    
    1,200,786
    
    
    
    1,194,827Total liabilities and stockholders equity
    
    $
    2,471,752
    
    
    $
    2,440,916
  5




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BELK, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS EQUITY
AND COMPREHENSIVE INCOME
(dollars in thousands)
 AccumulatedOtherCommon
    
    
    Paid-in
    
    
    Retained
    
    
    ComprehensiveStock
    
    
    Capital
    
    
    Earnings
    
    
    Loss
    
    
    TotalBalance at January 28, 2006
    
    $
    517
    
    
    $
    537,676
    
    
    $
    737,730
    
    
    $
    (81,096
    )
    
    $
    1,194,827Comprehensive income:Net income
    
    
    
    
    
    
    
    
    
    
    19,471
    
    
    
    
    
    
    
    19,471Unrealized gain on investments,
net of $217 income tax expense
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    364
    
    
    
    364Unrealized gain on interest rate
swaps,
net of $589 income tax expense
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    994
    
    
    
    994Amortization of pension asset
adjustment,
net of $1,231 income tax expense
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,074
    
    
    
    2,074Total comprehensive income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    22,903Cash dividends
    
    
    
    
    
    
    
    
    
    
    (18,202
    )
    
    
    
    
    
    
    (18,202
    )Stock compensation granted, net
    
    
    
    
    
    
    (1,308
    )
    
    
    
    
    
    
    
    
    
    
    (1,308
    )Common stock issued
    
    
    3
    
    
    
    2,563
    
    
    
    
    
    
    
    
    
    
    
    2,566Balance at April 29, 2006
    
    $
    520
    
    
    $
    538,931
    
    
    $
    738,999
    
    
    $
    (77,664
    )
    
    $
    1,200,786
  6




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BELK, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(dollars in thousands)
 Three Months EndedApril 29,
    
    
    April 30,2006
    
    
    2005Cash flows from operating activities:Net income
    
    $
    19,471
    
    
    $
    24,333Adjustments to reconcile net income to net cash provided (used) by operating activities:Asset
impairment and store closing costs
    
    
    1,767
    
    
    
    (328
    )Deferred income taxes
    
    
    641
    
    
    
    2,200Depreciation and amortization
    
    
    31,465
    
    
    
    25,114Gain on sale of property, equipment and investments
    
    
    (2,127
    )
    
    
    (204
    )(Increase) decrease in:Accounts receivable, net
    
    
    16,436
    
    
    
    27,795Merchandise inventory
    
    
    (81,336
    )
    
    
    (84,674
    )Prepaid expenses and other assets
    
    
    (7
    )
    
    
    (7,635
    )Increase (decrease) in:Accounts payable and accrued liabilities
    
    
    44,531
    
    
    
    39,088Accrued income taxes
    
    
    (32,366
    )
    
    
    (25,797
    )Deferred compensation and other liabilities
    
    
    1,527
    
    
    
    (3,411
    )Net cash provided (used) by operating activities
    
    
    2
    
    
    
    (3,519
    )Cash flows from investing activities:Proceeds from sales of investments
    
    
    2,225
    
    
    
    Purchases of property and equipment
    
    
    (60,989
    )
    
    
    (46,316
    )Proceeds from sales of property and equipment
    
    
    3,737
    
    
    
    Net cash used by investing activities
    
    
    (55,027
    )
    
    
    (46,316
    )Cash flows from financing activities:Principal payments on notes payable and capital lease obligations
    
    
    (2,121
    )
    
    
    (1,968
    )Stock compensation tax benefit
    
    
    1,102
    
    
    
    500Dividends paid
    
    
    (18,202
    )
    
    
    (16,271
    )Net cash used by financing activities
    
    
    (19,221
    )
    
    
    (17,739
    )Net decrease in cash and cash equivalents
    
    
    (74,246
    )
    
    
    (67,574
    )Cash and cash equivalents at beginning of period
    
    
    330,016
    
    
    
    232,264Cash and cash equivalents at end of period
    
    $
    255,770
    
    
    $
    164,690Supplemental schedule of noncash investing and financing activities:Increase in property and equipment through accrued purchases
    
    $
    31,389
    
    
    $
    14,091Increase in property and equipment through capitalization of construction period rent
    
    
    
    
    
    
    796Decrease in property and equipment through disposal of capital leases
    
    
    
    
    
    
    1,766
  7




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BELK, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 (1) Basis of Presentation
   (2) Implementation of New Accounting Standards
  (3) Comprehensive Income (Loss)
  Three Months EndedApril 29,
    
    
    April 30,2006
    
    
    2005(dollars in thousands)Net income
    
    $
    19,471
    
    
    $
    24,333Other comprehensive income (loss):Net change in fair value of interest rate swaps, net of $569 and
$1,476 income tax expense for the three months ended April 29, 2006 and
April 30, 2005, respectively.
    
    
    959
    
    
    
    2,514Interest rate swap losses reclassified into interest expense from
other comprehensive income, net of $20 and $45 income tax expense for the
three months ended April 29, 2006 and April 30, 2005, respectively.
    
    
    35
    
    
    
    76Unrealized gain (loss) on investments, net of $217 tax expense and $53
income tax benefit for the three months ended April 29, 2006 and April 30,
2005, respectively.
    
    
    364
    
    
    
    (90
    )Amortization of pension asset adjustment, net of $1,231 and $1,132
income tax expense for the three months ended April 29, 2006 and April 30,
2005, respectively.
    
    
    2,074
    
    
    
    1,928Other comprehensive income
    
    
    3,432
    
    
    
    4,428Total comprehensive income
    
    $
    22,903
    
    
    $
    28,761
 8




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BELK, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 (4) Accumulated Other Comprehensive Loss
  April 29,
    
    
    January 28,2006
    
    
    2006(dollars in thousands)Unrealized loss on interest rate swaps, net of $402
and $991 income tax benefit as of April 29, 2006 and January
28, 2006, respectively
    
    $
    (636
    )
    
    $
    (1,630
    )Unrealized gains on investments, net of $1,204 and $987
income tax expense as of April 29, 2006 and January 28, 2006,
respectively
    
    
    2,069
    
    
    
    1,705Pension asset adjustment, net of $46,635 and $47,866
income tax benefit as of April 29, 2006 and January 28, 2006,
respectively
    
    
    (79,097
    )
    
    
    (81,171
    )Accumulated other comprehensive loss
    
    $
    (77,664
    )
    
    $
    (81,096
    )
 (5) Proffitts and McRaes Acquisition
   Dollars in thousandsInventory
    
    $
    142,057Other current assets
    
    
    2,817Property, plant and equipment
    
    
    282,714Goodwill
    
    
    247,756Intangible assets
    
    
    750Net deferred tax asset
    
    
    9,710Other assets
    
    
    5,691Total assets acquired
    
    
    691,495Current liabilities
    
    
    57,898Long-term liabilities
    
    
    11,276Total liabilities assumed
    
    
    69,174Net Assets Acquired
    
    $
    622,321
  9




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BELK, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
  Three Months EndedApril 30, 2005(dollars in thousands)Net sales
    
    $
    730,685Net income
    
    
    19,074Earnings per share, basic and diluted
    
    
    0.37
  (6) Pension and Postretirement Benefits
   Three Months EndedPension Plan
    
    
    Postretirement PlanApril 29,
    
    
    April 30,
    
    
    April 29,
    
    
    April 30,2006
    
    
    2005
    
    
    2006
    
    
    2005(dollars in thousands)Service cost
    
    $
    896
    
    
    $
    1,269
    
    
    $
    40
    
    
    $
    39Interest cost
    
    
    5,386
    
    
    
    5,356
    
    
    
    400
    
    
    
    376Expected return on plan assets
    
    
    (5,981
    )
    
    
    (6,299
    )
    
    
    
    
    
    
    Amortization of transition obligation
    
    
    
    
    
    
    
    
    
    
    65
    
    
    
    65Amortization of prior service cost
    
    
    144
    
    
    
    340
    
    
    
    
    
    
    
    Amortization of the net (gain) loss
    
    
    3,004
    
    
    
    2,735
    
    
    
    (18
    )
    
    
    (106
    )Net periodic benefit expense
    
    $
    3,449
    
    
    $
    3,401
    
    
    $
    487
    
    
    $
    374
 (7) Subsequent Events
   10




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Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
 Overview
        Results of Operations
  11




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Three Months EndedApril 29,
    
    April 30,2006
    
    2005SELECTED FINANCIAL DATARevenues
    
    
    100.0
    %
    
    
    100.0
    %Cost of goods sold
    
    
    67.1
    
    
    
    66.3Selling, general and administrative expenses
    
    
    27.6
    
    
    
    25.8Asset impairment and store closing costs
    
    
    0.2
    
    
    
    (0.1
    )Operating income
    
    
    5.1
    
    
    
    8.0Interest expense, net
    
    
    1.3
    
    
    
    1.4Income taxes
    
    
    1.4
    
    
    
    2.4Net income
    
    
    2.6
    
    
    
    4.3Comparable store net revenue increase
    
    
    3.4
    
    
    
    0.4
 Comparison of the Three Months Ended April 29, 2006 and April 30, 2005
 Revenues
 Cost of goods sold.
 Selling, general and administrative expenses.
 Asset impairment and store closing costs.
 Interest Expense, net.
 Gain on sale of property, equipment and investments.
 Seasonality and Quarterly Fluctuations
  12




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Liquidity and Capital Resources
          13




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Contractual Obligations and Commercial Commitments
  Item 3. Quantitative and Qualitative Disclosures About Market Risk
  Item 4. Controls and Procedures
    14




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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. Submission of Matters to a Vote of Security Holders
  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, 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, 2005).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, 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, 2005).10.1
    
    Agreement between Belk, Inc and subsidiaries and Mary R. Delk.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.
 15




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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 2002.32.2
    
    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.
 16




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SIGNATURES
  BELK, INC.Dated: June 8, 2006
    
    By:
    
    /s/ Ralph A. PittsRalph A. PittsExecutive Vice President, General Counsel andCorporate Secretary(Authorized Officer of the Registrant)By:
    
    /s/ Brian T. MarleyBrian T. MarleyExecutive Vice President andChief Financial Officer
 17