##### Table of Contents



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 May 2, 2009
 OR
 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
 
 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 May 2, 2009
and May 3, 2008
    
    
    4Condensed Consolidated Balance Sheets as of May 2, 2009 and January 31, 2009
    
    
    5Condensed Consolidated Statement of Changes in Stockholders Equity and Comprehensive Income
for the Three Months Ended May 2, 2009
    
    
    6Condensed Consolidated Statements of Cash Flows for the Three Months Ended May 2, 2009 and
May 3, 2008
    
    
    7Notes to Unaudited Condensed Consolidated Financial Statements
    
    
    8Item 2. Managements Discussion and Analysis of Financial Condition and Results of
Operations
    
    
    12Item 3. Quantitative and Qualitative Disclosures about Market Risk
    
    
    16Item 4. Controls and Procedures
    
    
    16PART II. OTHER INFORMATIONItem 1. Legal Proceedings
    
    
    17Item 1A. Risk Factors
    
    
    17Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
    
    
    17Item 3. Defaults upon Senior Securities
    
    
    17Item 4. Submission of Matters to a Vote of Security Holders
    
    
    17Item 5. Other Information
    
    
    17Item 6. Exhibits
    
    
    17EX-31.1EX-31.2EX-32.1EX-32.2




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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 comply with debt covenants which could adversely affect our capital
resources, financial condition and liquidity;
    
    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, 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 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;
    
    The efficient and effective operation of our distribution network and information systems
to manage sales, distribution, merchandise planning and allocation functions;
    
    Our ability to expand our eCommerce business through our updated and redesigned belk.com
website, including our ability to meet the systems challenges of expanding and operating the
website and our ability to efficiently operate our eCommerce fulfillment facility; 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.




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BELK, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(unaudited)
(dollars in thousands, except share and per share amounts)
 Three Months EndedMay 2,
    
    
    May 3,2009
    
    
    2008Revenues
    
    $
    760,894
    
    
    $
    817,312Cost of goods sold (including occupancy, distribution and buying expenses)
    
    
    532,093
    
    
    
    558,249Selling, general and administrative expenses
    
    
    215,276
    
    
    
    239,235Gain on sale of property and equipment
    
    
    277
    
    
    
    969Asset impairment and exit costs
    
    
    411
    
    
    
    559Operating income
    
    
    13,391
    
    
    
    20,238Interest expense, net
    
    
    (12,559
    )
    
    
    (13,272
    )Gain on investments
    
    
    
    
    
    
    863Income before income taxes
    
    
    832
    
    
    
    7,829Income tax expense
    
    
    288
    
    
    
    2,700Net income
    
    $
    544
    
    
    $
    5,129Basic and diluted net income per share
    
    $
    0.01
    
    
    $
    0.10Weighted average shares outstanding  basic and diluted
    
    
    48,758,349
    
    
    
    49,613,850
  4




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BELK, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(unaudited)
(dollars in thousands)
 May 2,
    
    
    January 31,2009
    
    
    2009AssetsCurrent assets:Cash and cash equivalents
    
    $
    253,953
    
    
    $
    260,134Short-term investments
    
    
    10,250
    
    
    
    10,250Accounts receivable, net
    
    
    47,893
    
    
    
    65,702Merchandise inventory
    
    
    881,993
    
    
    
    828,497Property held for sale
    
    
    750
    
    
    
    750Prepaid income taxes, expenses and other current assets
    
    
    49,551
    
    
    
    30,705Total current assets
    
    
    1,244,390
    
    
    
    1,196,038Investment securities
    
    
    1,336
    
    
    
    1,074Property and equipment, net of accumulated depreciation and amortization of $1,145,825
and $1,109,444 as of May 2, 2009 and January 31, 2009, respectively
    
    
    1,141,331
    
    
    
    1,169,150Deferred income taxes
    
    
    125,846
    
    
    
    128,829Other assets
    
    
    44,212
    
    
    
    40,156Total assets
    
    $
    2,557,115
    
    
    $
    2,535,247Liabilities and Stockholders EquityCurrent liabilities:Accounts payable
    
    $
    254,851
    
    
    $
    236,886Accrued liabilities
    
    
    131,326
    
    
    
    118,045Accrued income taxes
    
    
    
    
    
    
    593Deferred income taxes
    
    
    26,300
    
    
    
    27,997Current installments of long-term debt and capital lease obligations
    
    
    4,226
    
    
    
    4,486Total current liabilities
    
    
    416,703
    
    
    
    388,007Long-term debt and capital lease obligations, excluding current installments
    
    
    687,827
    
    
    
    688,704Interest rate swap liability
    
    
    7,952
    
    
    
    8,182Retirement obligations and other noncurrent liabilities
    
    
    419,431
    
    
    
    418,327Total liabilities
    
    
    1,531,913
    
    
    
    1,503,220Stockholders equity:Preferred stock
    
    
    
    
    
    
    Common
stock, 400 million shares authorized and 48.8 million shares issued and
outstanding as of May 2, 2009 and January 31, 2009
    
    
    488
    
    
    
    488Paid-in capital
    
    
    456,788
    
    
    
    456,858Retained earnings
    
    
    732,371
    
    
    
    741,579Accumulated other comprehensive loss
    
    
    (164,445
    )
    
    
    (166,898
    )Total stockholders equity
    
    
    1,025,202
    
    
    
    1,032,027Total liabilities and stockholders equity
    
    $
    2,557,115
    
    
    $
    2,535,247
  5




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BELK, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS EQUITY AND COMPREHENSIVE INCOME
(unaudited)
(in thousands)
 AccumulatedOtherCommon Stock
    
    
    Paid-in
    
    
    Retained
    
    
    ComprehensiveShares
    
    
    Amount
    
    
    Capital
    
    
    Earnings
    
    
    Income (Loss)
    
    
    TotalBalance at January 31, 2009
    
    
    48,753
    
    
    $
    488
    
    
    $
    456,858
    
    
    $
    741,579
    
    
    $
    (166,898
    )
    
    $
    1,032,027Comprehensive income:Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    544
    
    
    
    
    
    
    
    544Unrealized gain on investments,
net of $92 income taxes
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    154
    
    
    
    154Unrealized gain on interest rate swaps,
net of $86 income taxes
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    145
    
    
    
    145Defined benefit expense, net of $1,279
income taxes
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,154
    
    
    
    2,154Total comprehensive income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,997Cash dividends
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (9,752
    )
    
    
    
    
    
    
    (9,752
    )Issuance of stock-based compensation
    
    
    
    
    
    
    
    
    
    
    (115
    )
    
    
    
    
    
    
    
    
    
    
    (115
    )Stock-based compensation expense
    
    
    
    
    
    
    
    
    
    
    45
    
    
    
    
    
    
    
    
    
    
    
    45Common stock issued
    
    
    8
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Balance at May 2, 2009
    
    
    48,761
    
    
    $
    488
    
    
    $
    456,788
    
    
    $
    732,371
    
    
    $
    (164,445
    )
    
    $
    1,025,202
  6




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BELK, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited)
(dollars in thousands)
 Three Months EndedMay 2,
    
    
    May 3,2009
    
    
    2008Cash flows from operating activities:Net income
    
    $
    544
    
    
    $
    5,129Adjustments to reconcile net income to net cash provided by operating activities:Asset impairment and exit costs
    
    
    411
    
    
    
    559Deferred income tax benefit
    
    
    (248
    )
    
    
    (899
    )Depreciation and amortization expense
    
    
    41,060
    
    
    
    40,972Stock-based compensation expense
    
    
    45
    
    
    
    751(Gain) loss on sale of property and equipment
    
    
    380
    
    
    
    (312
    )Amortization of deferred gain on sale and leaseback
    
    
    (657
    )
    
    
    (657
    )Gain on investments
    
    
    
    
    
    
    (863
    )(Increase) decrease in:Accounts receivable, net
    
    
    17,809
    
    
    
    15,148Merchandise inventory
    
    
    (53,496
    )
    
    
    (56,243
    )Prepaid income taxes, expenses and other current assets
    
    
    (23,998
    )
    
    
    (14,662
    )Increase (decrease) in:Accounts payable and accrued liabilities
    
    
    38,127
    
    
    
    36,767Accrued income taxes
    
    
    (593
    )
    
    
    (25,980
    )Retirement obligations and other liabilities
    
    
    5,795
    
    
    
    9,778Net cash provided by operating activities
    
    
    25,179
    
    
    
    9,488Cash flows from investing activities:Purchases of short-term investments
    
    
    
    
    
    
    (17,750
    )Purchases of property and equipment
    
    
    (20,361
    )
    
    
    (40,340
    )Proceeds from sales of property and equipment
    
    
    5
    
    
    
    14,094Net cash used by investing activities
    
    
    (20,356
    )
    
    
    (43,996
    )Cash flows from financing activities:Principal payments on long-term debt and capital lease obligations
    
    
    (1,137
    )
    
    
    (1,131
    )Cash paid for withholding taxes in lieu of stock-based compensation shares
    
    
    (51
    )
    
    
    (598
    )Stock compensation tax benefit (expense)
    
    
    (64
    )
    
    
    154Dividends paid
    
    
    (9,752
    )
    
    
    (19,845
    )Net cash used by financing activities
    
    
    (11,004
    )
    
    
    (21,420
    )Net decrease in cash and cash equivalents
    
    
    (6,181
    )
    
    
    (55,928
    )Cash and cash equivalents at beginning of period
    
    
    260,134
    
    
    
    186,973Cash and cash equivalents at end of period
    
    $
    253,953
    
    
    $
    131,045Supplemental schedule of noncash investing activities:Decrease in property and equipment through accrued purchases
    
    $
    (7,087
    )
    
    $
    (1,546
    )
  
 7




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BELK, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
 (1) Basis of Presentation
  (2) Recently Issued Accounting Standards
      8




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BELK, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
  (3) Comprehensive Income
  Three Months EndedMay 2,
    
    
    May 3,2009
    
    
    2008(dollars in thousands)Net income
    
    $
    544
    
    
    $
    5,129Other comprehensive income:Unrealized gain (loss) on investments, net of $92 and $240 income taxes for the three
months ended May 2, 2009 and May 3, 2008, respectively.
    
    
    154
    
    
    
    (404
    )Unrealized gain on interest rate swaps, net of $86 and $528 income taxes for the three
months ended May 2, 2009 and May 3, 2008, respectively.
    
    
    145
    
    
    
    889Defined benefit expense, net of $1,279 and $1,008 income taxes for the three months
ended May 2, 2009 and May 3, 2008, respectively.
    
    
    2,154
    
    
    
    1,698Other comprehensive income
    
    
    2,453
    
    
    
    2,183Total comprehensive income
    
    $
    2,997
    
    
    $
    7,312
 (4) Accumulated Other Comprehensive Loss
  May 2,
    
    
    January 31,2009
    
    
    2009(dollars in thousands)Unrealized loss on investments, net of $195 and $287
income taxes as of May 2,
2009 and January 31,
2009, respectively.
    
    $
    (328
    )
    
    $
    (482
    )Unrealized loss on interest rate swap, net of $2,962
and $3,048 income taxes
as of May 2, 2009 and
January 31, 2009,
respectively.
    
    
    (4,990
    )
    
    
    (5,135
    )Defined benefit plans, net of $94,461 and $95,740
income taxes as of May 2,
2009 and January 31,
2009,
respectively.
    
    
    (159,127
    )
    
    
    (161,281
    )Accumulated other comprehensive loss
    
    $
    (164,445
    )
    
    $
    (166,898
    )
 (5) Fair Value Measurements
    9




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BELK, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
     Fair Value Measurements at Reporting Date UsingQuoted Prices in
    
    
    
    
    
    
    SignificantActive Markets for
    
    
    Significant Other
    
    
    UnobservableMay 2,
    
    
    Identical Assets
    
    
    Observable Inputs
    
    
    InputsDescription
    
    2009
    
    
    (Level 1)
    
    
    (Level 2)
    
    
    (Level 3)(dollars in thousands)Auction rate security
    
    $
    10,250
    
    
    $
    
    
    
    $
    
    
    
    $
    10,250Investment securities
    
    
    1,336
    
    
    
    1,336
    
    
    
    
    
    
    
    Total assets measured at fair value
    
    $
    11,586
    
    
    $
    1,336
    
    
    $
    
    
    
    $
    10,250Interest rate swap liability
    
    $
    7,952
    
    
    $
    
    
    
    $
    7,952
    
    
    $
    Total liabilities measured at fair
value
    
    $
    7,952
    
    
    $
    
    
    
    $
    7,952
    
    
    $
    
  (6) Asset Impairment and Exit Costs
  (7) Sale of Properties
  (8) Pension and Postretirement Benefits
  10




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BELK, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
   Three Months EndedPension Plan
    
    
    Old SERP Plan
    
    
    Postretirement PlanMay 2,
    
    
    May 3,
    
    
    May 2,
    
    
    May 3,
    
    
    May 2,
    
    
    May 3,2009
    
    
    2008
    
    
    2009
    
    
    2008
    
    
    2009
    
    
    2008(dollars in thousands)Service cost
    
    $
    
    
    
    $
    859
    
    
    $
    32
    
    
    $
    47
    
    
    $
    33
    
    
    $
    33Interest cost
    
    
    6,649
    
    
    
    6,149
    
    
    
    157
    
    
    
    182
    
    
    
    406
    
    
    
    407Expected return on plan assets
    
    
    (5,527
    )
    
    
    (5,896
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Amortization of transition
obligation
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    65
    
    
    
    65Amortization of prior service cost
    
    
    124
    
    
    
    124
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Amortization of net loss
    
    
    3,234
    
    
    
    2,459
    
    
    
    
    
    
    
    54
    
    
    
    10
    
    
    
    4Net periodic benefit expense
    
    $
    4,480
    
    
    $
    3,695
    
    
    $
    189
    
    
    $
    283
    
    
    $
    514
    
    
    $
    509
 (9) Earnings per Share
  (10) Repurchase of Common Stock
  11




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Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
 Overview
         12




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Results of Operations
  Three Months EndedMay 2,
    
    May 3,2009
    
    2008SELECTED FINANCIAL DATARevenues
    
    
    100.0
    %
    
    
    100.0
    %Cost of goods sold (including occupancy,
distribution and buying expenses)
    
    
    69.9
    
    
    
    68.3Selling, general and administrative expenses
    
    
    28.3
    
    
    
    29.3Gain on sale of property and equipment
    
    
    
    
    
    
    0.1Asset impairment and exit costs
    
    
    0.1
    
    
    
    0.1Operating income
    
    
    1.8
    
    
    
    2.5Interest expense, net
    
    
    1.7
    
    
    
    1.6Gain on investments
    
    
    
    
    
    
    0.1Income before income taxes
    
    
    0.1
    
    
    
    1.0Income tax expense
    
    
    
    
    
    
    0.3Net income
    
    
    0.1
    
    
    
    0.6Comparable store net revenue decrease
    
    
    (7.7
    )
    
    
    (8.7
    )
 Revenues
  Three Months EndedMay 2,
    
    May 3,Merchandise Areas
    
    2009
    
    2008Womens
    
    
    39
    %
    
    
    40
    %Cosmetics, Shoes and Accessories
    
    
    33
    
    
    
    31Mens
    
    
    14
    
    
    
    14Home
    
    
    8
    
    
    
    8Childrens
    
    
    6
    
    
    
    7Total
    
    
    100
    %
    
    
    100
    %
 Comparison of the Three Months Ended May 2, 2009 and May 3, 2008
 Revenues.
 Cost of goods sold.
 13




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Selling, general and administrative expenses
 Asset impairment and exit costs.
 Gain on investments.
 Seasonality and Quarterly Fluctuations
  Liquidity and Capital Resources
   14




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Contractual Obligations and Commercial Commitments
  15




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Off-Balance Sheet Arrangements
  
 Item 3. Quantitative and Qualitative Disclosures About Market Risk
  
 Item 4. Controls and Procedures
   16




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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/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
    
    Form of First Amendment to the Second Amended and Restated Credit Agreement, dated
March 30, 2009 (incorporated by reference to Exhibit 10.1 of the Companys Current Report
on Form 8-K, filed on April 3, 2009).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 2002.32.2
    
    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.
 17




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##### Table of Contents



SIGNATURES
  BELK, INC.Dated:  June 11, 2009
    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) 18