##### 



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION WASHINGTON, DC 20549
   FORM 10-Q (Mark One) þ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE
ACT OF 1934.
 For the quarterly period ended     April 30, 2005 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)
 Registrants Telephone Number, including Area Code     (704) 357-1000    Indicate by check þ 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
Yes þ No o Indicate by check þ whether the registrant is an accelerated filer (as defined in
Rule 12b-2 of the Exchange Act).
Yes þ No o At June 1, 2005, the registrant had issued and outstanding 50,187,528 shares of class A common
stock and 1,471,994 shares of class B common stock.   1




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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 30, 2005 and May 1, 2004
    
    
    4Consolidated Balance Sheets as of April 30, 2005 and January 29, 2005
    
    
    5Consolidated Statement of Changes in Stockholders Equity and Comprehensive
Income for the Three Months Ended April 30, 2005
    
    
    6Condensed Consolidated Statements of Cash Flows for the Three Months Ended
April 30, 2005 and May 1, 2004
    
    
    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 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
 2




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##### 



This Report Contains Forward-Looking Statements Certain statements made in this report, and other written or oral statements made by or on
behalf of the Company, may constitute forward-looking statements within the meaning of the
federal securities laws. Statements regarding future events and developments and the Companys
future performance, as well as our expectations, beliefs, plans, estimates or projections relating
to the future, are forward-looking statements within the meaning of these laws. You can identify
these forward-looking statements through our use of words such as may, will, intend,
project, expect, anticipate, believe, estimate, continue or other similar words.
Forward-looking statements include information concerning possible or assumed future results from
merchandising, marketing and advertising in our stores and through the internet, our ability to be
competitive in the retail industry, our ability to execute profitability and efficiency strategies,
our ability to execute our growth strategies and achieve anticipated results in our new and
expanded stores, including the consummation and implementation of our proposed acquisition of 47
Proffitts and McRaes department stores, the expected benefit of our new systems and technology,
the expected increase in our sales and revenues generated through our proprietary charge card
program and anticipated benefits from the consolidation of our merchandising, marketing and
merchandise planning and allocation function. These forward-looking statements are subject to
certain risks and uncertainties that may cause our actual results to differ significantly from the
results we discuss in such forward-looking statements. We believe that these forward-looking
statements are reasonable. However, you should not place undue reliance on such statements. For a detailed description of the risks and uncertainties that might cause our results to
differ from those we project in our forward-looking statements, we refer you to the section
captioned This Report Contains Forward-Looking Statements in our Annual Report on Form 10-K for
the fiscal year ended January 29, 2005 that we filed with the Securities and Exchange Commission
(SEC) on April 14, 2005. Our other filings with the SEC may contain additional information
concerning the risks and uncertainties listed above, and other factors you may wish to consider.
Upon request, we will provide copies of these filings to you free of charge. Our forward-looking statements are based on current expectations and speak only as of the date
of such statements. We undertake no obligation to publicly update or revise any forward-looking
statement, even if future events or new information may impact the validity of such statements. 3




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##### 



BELK, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(dollars in thousands, except per share amounts) Three Months EndedApril 30,
    
    
    May 1,2005
    
    
    2004Revenues
    
    $
    568,130
    
    
    $
    550,115Cost of goods sold (including occupancy and buying expenses)
    
    
    376,411
    
    
    
    363,223Selling, general and administrative expenses
    
    
    146,612
    
    
    
    139,661Store closing costs
    
    
    (328
    )
    
    
    373Operating income
    
    
    45,435
    
    
    
    46,858Interest expense, net
    
    
    (7,796
    )
    
    
    (9,068
    )Gain (loss) on property, equipment and investments
    
    
    204
    
    
    
    (160
    )Other income, net
    
    
    80
    
    
    
    297Income before income taxes
    
    
    37,923
    
    
    
    37,927Income taxes
    
    
    13,590
    
    
    
    13,810Net Income
    
    $
    24,333
    
    
    $
    24,117Basic and diluted net income per share
    
    $
    0.47
    
    
    $
    0.46Weighted average shares outstanding
    
    
    51,568,471
    
    
    
    51,953,864
 See accompanying notes to consolidated financial statements. 4




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##### 



BELK, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(dollars in thousands) April 30,
    
    
    January 29,2005
    
    
    2005AssetsCurrent assets:Cash and cash equivalents
    
    $
    164,690
    
    
    $
    232,264Accounts receivable, net
    
    
    291,912
    
    
    
    319,706Merchandise inventory
    
    
    612,535
    
    
    
    527,860Prepaid income taxes, expenses and other current assets
    
    
    18,714
    
    
    
    17,302Total current assets
    
    
    1,087,851
    
    
    
    1,097,132Investment securities
    
    
    6,772
    
    
    
    6,914Property and equipment, net
    
    
    760,072
    
    
    
    734,866Pension assets
    
    
    13,951
    
    
    
    4,213Other assets
    
    
    30,058
    
    
    
    23,781Total assets
    
    $
    1,898,704
    
    
    $
    1,866,906Liabilities and Stockholders EquityCurrent liabilities:Accounts payable
    
    $
    221,627
    
    
    $
    177,793Accrued liabilities
    
    
    83,651
    
    
    
    85,767Accrued income taxes
    
    
    9,492
    
    
    
    35,289Deferred income taxes
    
    
    3,103
    
    
    
    2,695Current installments of long-term debt and capital lease obligations
    
    
    8,012
    
    
    
    8,199Total current liabilities
    
    
    325,885
    
    
    
    309,743Deferred income taxes
    
    
    24,798
    
    
    
    21,537Long-term debt and capital lease obligations, excluding current installments
    
    
    289,328
    
    
    
    293,220Interest rate swap liability
    
    
    17,361
    
    
    
    21,305Deferred compensation and other noncurrent liabilities
    
    
    161,280
    
    
    
    154,485Total liabilities
    
    
    818,652
    
    
    
    800,290Stockholders equity:Preferred stock
    
    
    
    
    
    
    Common stock, 51.7 and 51.5 million shares issued and outstanding
as of April 30, 2005 and January 29, 2005, respectively
    
    
    517
    
    
    
    515Paid-in capital
    
    
    534,867
    
    
    
    533,923Retained earnings
    
    
    625,159
    
    
    
    617,097Accumulated other comprehensive loss
    
    
    (80,491
    )
    
    
    (84,919
    )Total stockholders equity
    
    
    1,080,052
    
    
    
    1,066,616Total liabilities and stockholders equity
    
    $
    1,898,704
    
    
    $
    1,866,906
 See accompanying notes to consolidated financial statements. 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 29, 2005
    
    $
    515
    
    
    $
    533,923
    
    
    $
    617,097
    
    
    $
    (84,919
    )
    
    $
    1,066,616Comprehensive income:Net income
    
    
    
    
    
    
    
    
    
    
    24,333
    
    
    
    
    
    
    
    24,333Unrealized loss on investments,
net of $53 income tax benefit
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (90
    )
    
    
    (90
    )Unrealized gain on interest rate swaps,
net of $1,521 income tax expense
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,590
    
    
    
    2,590Amortization of pension asset adjustment,
net of $1,132 income tax expense
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,928
    
    
    
    1,928Total comprehensive income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    28,761Cash dividends
    
    
    
    
    
    
    
    
    
    
    (16,271
    )
    
    
    
    
    
    
    (16,271
    )Stock compensation granted, net
    
    
    
    
    
    
    (894
    )
    
    
    
    
    
    
    
    
    
    
    (894
    )Common stock issued
    
    
    2
    
    
    
    1,838
    
    
    
    
    
    
    
    
    
    
    
    1,840Balance at April 30, 2005
    
    $
    517
    
    
    $
    534,867
    
    
    $
    625,159
    
    
    $
    (80,491
    )
    
    $
    1,080,052
 See accompanying notes to consolidated financial statements. 6




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BELK, INC. AND
SUBSIDIARIESCONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS(dollars in thousands) Three Months EndedApril 30,
    
    
    May 1,2005
    
    
    2004Cash flows from operating activities:Net income
    
    $
    24,333
    
    
    $
    24,117Adjustments to reconcile net income to net cash provided by operating activities:Store closing costs
    
    
    (328
    )
    
    
    373Deferred income taxes
    
    
    2,200
    
    
    
    8,727Depreciation and amortization
    
    
    25,114
    
    
    
    22,521(Gain) loss on sale of property, equipment & investments
    
    
    (204
    )
    
    
    160(Increase) decrease in:Accounts receivable, net
    
    
    27,795
    
    
    
    20,596Merchandise inventory
    
    
    (84,674
    )
    
    
    (69,340
    )Prepaid expenses and other assets
    
    
    (7,635
    )
    
    
    (4,187
    )Increase (decrease) in:Accounts payable and accrued liabilities
    
    
    43,889
    
    
    
    44,379Accrued income taxes
    
    
    (25,797
    )
    
    
    (27,199
    )Deferred compensation and other liabilities
    
    
    (3,411
    )
    
    
    (1,835
    )Net cash provided by operating activities
    
    
    1,282
    
    
    
    18,312Cash flows from investing activities:Purchases of investments
    
    
    
    
    
    
    (167
    )Proceeds from sales of investments
    
    
    
    
    
    
    80Purchases of property and equipment
    
    
    (51,117
    )
    
    
    (30,671
    )Net cash used by investing activities
    
    
    (51,117
    )
    
    
    (30,758
    )Cash flows from financing activities:Principal payments on notes payable and capital lease obligations
    
    
    (1,968
    )
    
    
    (1,842
    )Stock compensation tax benefit
    
    
    500
    
    
    
    82Dividends paid
    
    
    (16,271
    )
    
    
    (24,678
    )Net cash used by financing activities
    
    
    (17,739
    )
    
    
    (26,438
    )Net decrease in cash and cash equivalents
    
    
    (67,574
    )
    
    
    (38,884
    )Cash and cash equivalents at beginning of period
    
    
    232,264
    
    
    
    166,071Cash and cash equivalents at end of period
    
    $
    164,690
    
    
    $
    127,187Supplemental schedule of noncash investing and financing activities:Increase in property and equipment through capitalization of construction period rent
    
    
    796
    
    
    
    Decrease in property and equipment through disposal of capital leases
    
    
    1,766
    
    
    
    
 See accompanying notes to consolidated financial statements. 7




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BELK, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (1) Basis of Presentation The accompanying unaudited consolidated financial statements of Belk, Inc. and subsidiaries
(the Company) have been prepared in accordance with the instructions to Form 10-Q promulgated by
the United States Securities and Exchange Commission and should be read in conjunction with the
Notes to Consolidated Financial Statements (pages 28-44) in our Annual Report on Form 10-K for the
fiscal year ended January 29, 2005. In the opinion of management, this information is fairly
presented and all adjustments (consisting only of normal recurring adjustments) necessary for a
fair presentation of the results for the interim periods have been included; however, certain items
are included in these statements based on estimates for the entire year. Also, operating results
in periods which exclude the Christmas season may not be indicative of the operating results that
may be expected for the full fiscal year. Certain prior period amounts have been reclassified to conform with current year presentation. (2) Comprehensive Income (Loss) The following table sets forth the computation of comprehensive income: Three Months EndedApril 30,
    
    
    May 1,2005
    
    
    2004(dollars in thousands)Net income
    
    $
    24,333
    
    
    $
    24,117Other comprehensive income (loss):Net change in fair value of interest rate swaps, net of $1,476 and
$2,650 income tax expense for the three months ended April 30,
2005 and May 1, 2004, respectively
    
    
    2,514
    
    
    
    4,512Interest rate swap losses reclassified into interest expense from
other comprehensive income, net of $45 income tax benefit for
the three months ended April 30, 2005 and May 1, 2004,
respectively
    
    
    76
    
    
    
    76Unrealized loss on investments, net of $53 and $67 income tax
benefit for the three months ended April 30, 2005 and May 1,
2004, respectively
    
    
    (90
    )
    
    
    (115
    )Amortization of pension asset adjustment, net of $1,132 and $1,339
income tax expense for the three months ended April 30, 2005
and May 1, 2004, respectively
    
    
    1,928
    
    
    
    2,280Other comprehensive income
    
    
    4,428
    
    
    
    6,753Total comprehensive income
    
    $
    28,761
    
    
    $
    30,870
 8




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BELK, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (3) Accumulated Other Comprehensive Loss The following table sets forth the components of accumulated other comprehensive loss: April 30,
    
    
    January 29,2005
    
    
    2005(dollars in thousands)Unrealized loss on interest rate swaps, net of $4,748
and $6,269 income tax benefit as of April 30, 2005 and
January 29, 2005, respectively
    
    $
    (8,084
    )
    
    $
    (10,674
    )Unrealized gains on investments, net of $1,086 and $1,139
income tax expense as of April 30, 2005 and January 29, 2005,
respectively
    
    
    1,849
    
    
    
    1,939Pension asset adjustment, net of $43,611 and $44,743
income tax benefit as of April 30, 2005 and January 29, 2005,
respectively
    
    
    (74,256
    )
    
    
    (76,184
    )Accumulated other comprehensive loss
    
    $
    (80,491
    )
    
    $
    (84,919
    )
 (4) Accounts Receivable, Net Customer receivables arise primarily under open-end revolving credit accounts used to finance
purchases of merchandise from the Company. These accounts have various billing and payment
structures, including varying minimum payment levels. Installments of deferred payment accounts
receivable maturing after one year are included in current assets in accordance with industry
practice. Accounts receivable, net consists of: April 30,
    
    
    January 29,2005
    
    
    2005(dollars in thousands)Customer receivables
    
    $
    288,610
    
    
    $
    313,361Other receivables
    
    
    10,590
    
    
    
    16,331Less allowance for doubtful accounts
    
    
    (7,288
    )
    
    
    (9,986
    )Accounts receivable, net
    
    $
    291,912
    
    
    $
    319,706
 9




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BELK, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (5) Pension and Postretirement Benefits The Company has a defined benefit pension plan covering substantially all of its employees.
The benefits are based on years of service and the employees compensation. The Company also has a
defined benefit health care plan that provides postretirement medical and life insurance benefits
to certain retired full-time employees. The components of net periodic benefit expense are as follows: Three Months EndedPension Plan
    
    
    Postretirement PlanApril 30,
    
    
    May 1,
    
    
    April 30,
    
    
    May 1,2005
    
    
    2004
    
    
    2005
    
    
    2004(dollars in thousands)Service cost
    
    $
    1,269
    
    
    $
    2,763
    
    
    $
    39
    
    
    $
    53Interest cost
    
    
    5,356
    
    
    
    5,319
    
    
    
    376
    
    
    
    384Expected return on plan assets
    
    
    (6,299
    )
    
    
    (6,558
    )
    
    
    
    
    
    
    Amortization of transition obligation
    
    
    
    
    
    
    
    
    
    
    65
    
    
    
    65Amortization of prior service cost
    
    
    340
    
    
    
    69
    
    
    
    
    
    
    
    Amortization of the net (gain) loss
    
    
    2,735
    
    
    
    2,095
    
    
    
    (106
    )
    
    
    (124
    )Net periodic benefit expense
    
    $
    3,401
    
    
    $
    3,688
    
    
    $
    374
    
    
    $
    378
 The Company previously disclosed in its financial statements for the fiscal year ended
January 29, 2005 included in its Form 10-K, that the Company contributed $6.0 million to its
pension fund during the first quarter of fiscal year 2006. The Company does not anticipate making
any further contributions in fiscal year 2006. (6) Purchase Agreement On April 29, 2005, the Company announced that it had entered into an agreement with Saks
Incorporated to purchase 22 Proffitts stores and 25 McRaes stores for a purchase price of $622.0
million. The transaction is scheduled to be completed in the second quarter of fiscal year 2006,
subject to regulatory approval and other closing conditions. 10




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BELK, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Item 2. Managements Discussion and Analysis of Financial Condition and Results of
Operations Overview Belk, together with its subsidiaries, is the largest privately owned department store business
in the United States, with total revenues of approximately $2.45 billion for the fiscal year ended
January 29, 2005. The Company and its predecessors have been successfully operating department
stores since 1888 by seeking to provide superior service and merchandise that meets customers
needs for fashion, value and quality. The Companys fiscal year ends on the Saturday closest to each January 31. All
references to fiscal year 2006 refer to the fiscal year ending January 28, 2006 and all
references to fiscal year 2005 refer to the period ended January 29, 2005. As of the end of its first quarter of fiscal year 2006, the Company operated 228 retail
department stores in 14 states primarily in the southeastern United States. Belk stores seek to
provide customers the convenience of one-stop shopping, with an appealing merchandise mix and
extensive offerings of brands, styles, assortments and sizes. Belk stores sell top national brands
of fashion apparel, shoes and accessories for women, men and children, as well as cosmetics, home
furnishings, housewares, gifts and other types of quality merchandise. The Company also sells
exclusive private label brands, which offer customers differentiated merchandise selections at
better values. Larger Belk stores may include hair salons, spas, restaurants, optical centers and
other amenities. Belks mission is to be the leading department store in its markets by selling merchandise to
customers that meets their needs for fashion, selection, value, quality and service. To achieve
this mission, Belks business strategy includes six key elements: (1) a target customer focus; (2)
focused merchandise assortments; (3) compelling sales promotions; (4) distinctive customer service;
and (5) a winning store and market strategy; and (6) an emphasis on productivity and efficiency. The Company operates retail department stores in the highly competitive retail apparel
industry. The Companys primary competitors are traditional department stores, mass merchandisers,
national apparel chains, individual specialty apparel stores and direct merchant firms. In
addition to intense competition, the retail industry has experienced downward sales pressure in
recent years due primarily to national, regional and local economic conditions. Management believes that significant opportunities for growth exist in Belk markets where the
Belk name and reputation are well known and in contiguous markets where Belk can distinguish its
stores from the competition. Although the Company will continue to take advantage of prudent
opportunities to expand into large markets, the Company will focus its expansion in medium-sized
markets with store units in the 50,000 to 80,000 square-foot size range. One of the more
significant challenges currently facing the Companys management is to continue to identify new
Belk markets and to effectively increase the Companys net store selling square footage. In fiscal
year 2005, the Company increased net store selling square footage by 590,400 square feet, or 4%,
and plans to expand by an additional 803,300 selling square feet, or 5.3%, in fiscal year 2006 by
opening additional stores. In addition on April 29, 2005, Belk entered into an agreement with Saks
Incorporated to purchase 22 Proffitts and 25 McRaes stores, subject to regulatory approval and
other closing conditions. The transaction is scheduled to be completed in the second quarter of
fiscal year 2006. The Company focuses on four key indicators to assess performance and growth. These key
indicators are: (1) comparable store sales, (2) gross profit rate, (3) expense rate, and (4) net
square footage growth. 11




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##### 



Results of Operations The following table sets forth, for the periods indicated, the percentage relationship to
revenues of certain items in the Companys condensed consolidated statements of income, as well as
a period comparison of changes in comparable store net revenue. Three Months EndedApril 30,
    
    
    May 1,2005
    
    
    2004SELECTED FINANCIAL DATARevenues
    
    
    100.0
    %
    
    
    100.0
    %Cost of goods sold
    
    
    66.3
    
    
    
    66.0Selling, general and administrative expenses
    
    
    25.8
    
    
    
    25.5Store closing costs
    
    
    (0.1
    )
    
    
    0.1Operating income
    
    
    8.0
    
    
    
    8.4Interest expense, net
    
    
    1.4
    
    
    
    1.7Income taxes
    
    
    2.4
    
    
    
    2.5Net income
    
    
    4.3
    
    
    
    4.3Comparable store net revenue increase
    
    
    0.4
    
    
    
    5.6
 Comparison of the Three Months Ended April 30, 2005 and May 1, 2004 Revenues. The Companys revenues for the three months ended April 30, 2005 increased 3.27%,
or $18.0 million, to $568.1 million from $550.1 million over the same period in fiscal year 2005.
The increase is attributable to a 0.4% increase in revenues from comparable stores and $21.3
million of additional sales from new stores. Cost of goods sold.As a percentage of revenues, cost of goods sold increased to 66.3% for
the three months ended April 30, 2005, compared to 66.0% for the same period in fiscal year 2005.
The increase is primarily attributable to a 0.16% increase in buying expenses as a percentage of
revenues over the same time period in fiscal year 2005 due to payroll and recruiting costs
associated with additional merchandising associates and a 0.11% increase in occupancy expenses as a
percentage of revenues over the same time period in fiscal year 2005 due to occupancy expenses in
new stores. Selling, general and administrative expenses.As a percentage of revenues, selling, general
and administrative expenses increased to 25.8% for the three months ended April 30, 2005 compared
to 25.5% for the same period in fiscal year 2005. The increase resulted primarily from an increase
in depreciation expense as a percentage of revenues of 0.42%, primarily due to depreciation expense
in new stores, and a decrease in credit income as a percentage of revenues of 0.22%. The increases
were partially offset by a decrease in bad debt expense as a percentage of revenues of 0.15% and a
$1.9 million charge recognized in the first quarter of fiscal year 2005 for the curtailment and
settlement of the Companys defined benefit supplemental executive retirement plan. Store closing costs.The Company reduced store closing cost reserves by $0.3 million in the
first quarter of fiscal year 2006 for a store located in Greenville, North Carolina. The Company
incurred $0.4 million in store closing costs in the first quarter of fiscal year 2005 related to
the post-closing real estate holding costs for three stores located in Lenoir, North Carolina and
Beaufort and Myrtle Beach, South Carolina. Interest Expense, net.As a percentage of revenues, interest expense, net decreased to 1.4%
for the three months ended April 30, 2005 compared to 1.7% for the same period in fiscal year 2005.
The decrease is primarily attributable to increased interest income generated from the Companys
short term investments and lower effective interest rates due to the termination of two interest
rate swaps with a $50 million notional value in the first quarter of fiscal year 2005. Net income.Net income increased 0.9%, or $0.2 million to $24.3 million from $24.1 million
over the same period in fiscal year 2005. The increase was attributable to the factors discussed
above. 12




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Seasonality and Quarterly Fluctuations The retail business is highly seasonal with approximately one-third of annual revenues being
generated in the fourth quarter, which includes the Christmas selling season. As a result, a
disproportionate amount of the Companys operating and net income is realized during the fourth
quarter and significant variations can occur when comparing the Companys financial condition
between quarters. Liquidity and Capital Resources The Companys primary sources of liquidity are cash on hand, cash flow from operations and
borrowings under debt facilities. The Companys debt facilities consist of a $250.0 million
variable rate note, a $125.0 million ten-year variable rate bond facility and a $330.0 million
credit facility. The debt facilities place certain restrictions on mergers, consolidations, acquisitions, sales
of assets, indebtedness, transactions with affiliates, leases, liens, investments, dividends and
distributions, exchange and issuance of capital stock and guarantees, and require maintenance of
minimum financial ratios. As of April 30, 2005, the Company was in compliance with all covenants
and does not anticipate that compliance with the covenants will impact the Companys liquidity in
fiscal year 2006. The $250.0 million variable rate note expires in March 2008, is collateralized
by the Companys customer accounts receivable and limits borrowings under the facility to
approximately 85% of the Companys eligible customer accounts receivable. The ten-year variable
rate bond facility matures in July 2008. During fiscal year 2005, the Company replaced its combined $200.0 million revolving line of
credit and $127.0 million standby letter of credit facility with a $330.0 million credit facility
that expires in October 2009. Up until October 2007, under certain circumstances the facility may
be increased to $380.0 million at the Companys request. The credit facility allows for up to
$225.0 million of outstanding letters of credit. The current interest rate payable under the
credit facility is based on LIBOR plus approximately 63 basis points or prime. The credit facility
contains restrictive covenants consistent with the Companys existing debt agreements and financial
covenants including leverage and fixed charge coverage ratios. The Company has $136.1 million of
standby letters of credit and no borrowings under the revolving credit agreements at April 30,
2005. Because the interest rates on most of the Companys debt agreements vary with LIBOR or
commercial paper rates, the Company has entered into interest rate swap agreements with a financial
institution to manage the exposure to changes in interest rates. The notional amount of the
interest rate swaps is $250.0 million for fiscal years 2004 through 2009, $125.0 million for fiscal
years 2010 through 2012, and $50.0 million for fiscal year 2013. During the first quarter of
fiscal year 2005, the Company terminated two interest rate swaps with a combined notional value of
$50.0 million. The interest rate swaps had previously been dedesignated as cash flow hedges during
the third quarter of fiscal year 2004. On April 29, 2005, the Company announced that it entered into an agreement with Saks
Incorporated to purchase 22 Proffitts stores and 25 McRaes stores, subject to regulatory approval
and other closing conditions. The transaction is scheduled to be completed in the second quarter
of fiscal year 2006. The Company plans to finance the $622 million purchase price initially
utilizing cash on hand and a Bridge Credit Facility (the Bridge Loan) for up to $400 million that
will become effective upon closing. The expected interest rate payable under the Bridge Loan, once
funded, is based on LIBOR plus approximately 75 basis points or prime. The Bridge Loan is a 364
day facility and contains restrictive and financial covenants consistent with the Companys
existing debt agreements . Net cash provided by operating activities was $1.3 million for the three months ended
April 30, 2005 compared to $18.3 million for the three months ended May 1, 2004. The decrease in
cash provided by operating activities for the first three months of fiscal year 2006 was
principally due to increased inventory levels. 13




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Expenditures for property and equipment increased $20.4 million to $51.1 million for the three
months ended April 30, 2005 from $30.7 million for the same time period in fiscal year 2005. The
increase was principally due to the opening of three new stores in Conyers, Georgia, Land O Lakes,
Florida and Spanish Fort, Alabama, during the three months ended April 30, 2005 and capital
expenditures for stores that are scheduled to open in fall of fiscal year 2006. The three new
stores are in new markets for the Company. There were no expansions or major remodels of existing
stores during the first three months of fiscal year 2006. Net cash used by financing activities decreased $8.7 million to $17.7 million for the three
months ended April 30, 2005 from $26.4 million for the three months ended May 1, 2004. This
decrease was due to a special one-time dividend of $10.4 million paid in the first quarter of
fiscal year 2005, partially offset by an increase in the regular dividend paid over the prior
fiscal year. Management of the Company believes that cash flows from operations and the existing credit
facilities will be sufficient to cover working capital needs, capital expenditures and debt service
requirements for at least the next twelve months. Contractual Obligations and Commercial Commitments A table representing the scheduled maturities of the Companys contractual obligations and
commercial commitments as of January 29, 2005 was included under the heading Contractual
Obligations and Commercial Commitments of the Companys Annual Report on Form 10-K for the fiscal
year ended January 29, 2005. Except for the purchase agreement with Saks Incorporated there have
been no material changes from the information included in the Form 10-K. Item 3. Quantitative and Qualitative Disclosures About Market Risk There have been no material changes to the Companys quantitative and qualitative market risk
disclosures during the three months ended April 30, 2005 from the disclosures contained in the
Companys Annual Report on Form 10-K for the fiscal year ended January 29, 2005. Item 4. Controls and Procedures Disclosure controls and procedures are the Companys controls and other procedures that are
designed to ensure that information required to be disclosed in the reports that the Company files
or submits under the Securities Exchange Act of 1934 as amended (the Exchange Act) is recorded,
processed, summarized and reported, within the time periods specified in SEC rules and forms.
Disclosure controls and procedures include, without limitation, controls and procedures designed to
ensure that information required to be disclosed in the reports that the Company files under the
Exchange Act is accumulated and communicated to management, including the Chief Executive Officer
and Chief Financial Officer, as appropriate, to allow timely decisions regarding required
disclosure. As of the end of the period covered by this report, the Company has evaluated under the
supervision and with the participation of the Companys management, including the Chief Executive
Officer (CEO) and Chief Financial Officer (CFO), the effectiveness of the design and operation
of the Companys disclosure controls and procedures (as defined in Rule 13a-15(e) and 15d-15(e)
under the Exchange Act). Based on the evaluation, the CEO and CFO have concluded that the
Companys disclosure controls and procedures are effective to ensure that information required to
be disclosed by the Company in reports that it files or submits under the Exchange Act is recorded,
processed, summarized and reported within the time periods specified in SEC rules and forms. During the period covered by this report, there were no changes or corrective actions in the
Companys internal control over financial reporting that materially affected, or are reasonably
likely to materially affect, the Companys internal control over financial reporting. 14




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PART II  OTHER INFORMATION Item 1.Legal Proceedings In the ordinary course of business, the Company is subject to various legal proceedings and
claims. The Company believes that the ultimate outcome of these matters will not have a material
adverse effect on its consolidated financial position or results of operations. Item 2.Unregistered Sales of Equity Securities and Use of Proceeds Not applicable Item 3.Defaults Upon Senior Securities Not applicable Item 4.Submission of Matters to a Vote of Security Holders Not applicable Item 5.Other Information Not applicable Item 6.Exhibits (a) 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, 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, 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
    Amended and Restated Guaranty and Security Agreement, dated as of March 31, 2005
between Belk, Inc., certain Belk, Inc. subsidiaries and Bank of America N.A., as Agent
and as a Bank Investor and as Depository.10.2
    Asset Purchase Agreement between Belk, Inc. and Saks Incorporated dated April 29,
2005 (incorporated by reference to the Companys Current Report on Form 8-K filed on
May 4, 2005)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 Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has caused
this report to be signed on its behalf by the undersigned, thereunto duly authorized. BELK, INC.Dated:  June 9, 2005
    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 17