##### 



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 October 28, 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.
 (Exact Name of Registrant as Specified In Its Charter)
 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 þ o
  o þ




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##### 



BELK, INC.
Index to Form 10-Q
 PageNumberPART I. FINANCIAL INFORMATIONItem 1. Consolidated Financial Statements (unaudited)Condensed Consolidated Statements of Income for the Three and Nine Months Ended October 28, 2006
and October 29, 2005
    
    
    4Consolidated Balance Sheets as of October 28, 2006 and January 28, 2006
    
    
    5Consolidated Statement of Changes in Stockholders Equity and Comprehensive Income for the
Nine Months Ended October 28, 2006
    
    
    6Consolidated Statements of Cash Flows for the Nine Months Ended October 28, 2006 and
October 29, 2005
    
    
    7Notes to Consolidated Financial Statements
    
    
    8Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    15Item 3. Quantitative and Qualitative Disclosures About Market Risk
    
    
    20Item 4. Controls and Procedures
    
    
    21PART II. OTHER INFORMATIONItem 1. Legal Proceedings
    
    
    22Item 1A. Risk Factors
    
    
    22Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
    
    
    22Item 3. Defaults Upon Senior Securities
    
    
    22Item 4. Submission of Matters to a Vote of Security Holders
    
    
    22Item 5. Other Information
    
    
    22Item 6. Exhibits
    
    
    22




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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 and our fiscal year 2007
acquisition of the Parisian department store business;
 
    
    Our ability to manage and integrate our in-house fine jewelry business, including our ability to integrate the
acquisition of the Migerobe business and our plan to take over the fine jewelry business in our stores currently
conducted by Finlay Fine Jewelry;
 
    
    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 Ended
    
    
    Nine Months EndedOctober 28,
    
    
    October 29,
    
    
    October 28,
    
    
    October 29,2006
    
    
    2005
    
    
    2006
    
    
    2005Revenues
    
    $
    794,277
    
    
    $
    701,298
    
    
    $
    2,278,774
    
    
    $
    1,872,145Cost of goods sold (including
occupancy and buying expenses)
    
    
    535,305
    
    
    
    490,583
    
    
    
    1,527,697
    
    
    
    1,274,019Selling, general and
administrative expenses
    
    
    223,086
    
    
    
    203,053
    
    
    
    623,366
    
    
    
    506,327Asset impairment and store closing
costs
    
    
    706
    
    
    
    
    
    
    
    2,357
    
    
    
    1,681Gain
(loss) on sale of property and
equipment
    
    
    8,759
    
    
    
    (4
    )
    
    
    9,686
    
    
    
    70Hurricane losses
    
    
    
    
    
    
    905
    
    
    
    
    
    
    
    905Operating income
    
    
    43,939
    
    
    
    6,753
    
    
    
    135,040
    
    
    
    89,283Interest expense, net
    
    
    (11,826
    )
    
    
    (14,164
    )
    
    
    (33,065
    )
    
    
    (31,684
    )Gain on sale
of investments, net
    
    
    3,343
    
    
    
    
    
    
    
    4,959
    
    
    
    Income (loss) before income taxes
    
    
    35,456
    
    
    
    (7,411
    )
    
    
    106,934
    
    
    
    57,599Income tax expense (benefit)
    
    
    12,400
    
    
    
    (2,900
    )
    
    
    38,100
    
    
    
    20,600Net income (loss)
    
    $
    23,056
    
    
    $
    (4,511
    )
    
    $
    68,834
    
    
    $
    36,999Basic and diluted income (loss)
per share
    
    $
    0.46
    
    
    $
    (0.09
    )
    
    $
    1.36
    
    
    $
    0.72Weighted average shares outstanding
    
    
    50,028,415
    
    
    
    51,831,691
    
    
    
    50,756,338
    
    
    
    51,685,657
  4




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##### 



BELK, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(dollars in thousands)
 October 28,
    
    
    January 28,2006
    
    
    2006AssetsCurrent assets:Cash and cash equivalents
    
    $
    34,840
    
    
    $
    322,266Accounts receivable, net
    
    
    39,697
    
    
    
    43,867Merchandise inventory
    
    
    1,257,259
    
    
    
    703,609Prepaid income taxes, expenses and other current assets
    
    
    29,765
    
    
    
    34,521Total current assets
    
    
    1,361,561
    
    
    
    1,104,263Investment securities
    
    
    6,266
    
    
    
    6,196Property and equipment, net
    
    
    1,294,719
    
    
    
    1,042,464Goodwill
    
    
    324,827
    
    
    
    246,113Other assets
    
    
    62,557
    
    
    
    51,584Total assets
    
    $
    3,049,930
    
    
    $
    2,450,620Liabilities and Stockholders EquityCurrent liabilities:Accounts payable
    
    $
    555,076
    
    
    $
    249,553Accrued liabilities
    
    
    210,413
    
    
    
    117,919Accrued income taxes
    
    
    
    
    
    
    36,092Deferred income taxes
    
    
    19,092
    
    
    
    24,496Line of credit
    
    
    50,000
    
    
    
    Current installments of long-term debt and capital lease obligations
    
    
    3,292
    
    
    
    16,807Total current liabilities
    
    
    837,873
    
    
    
    444,867Deferred income taxes
    
    
    11,003
    
    
    
    10,076Long-term debt and capital lease obligations, excluding current installments
    
    
    727,050
    
    
    
    574,094Interest rate swap liability
    
    
    3,066
    
    
    
    4,641Deferred compensation and other noncurrent liabilities
    
    
    252,332
    
    
    
    222,115Total liabilities
    
    
    1,831,324
    
    
    
    1,255,793Stockholders equity:Preferred stock
    
    
    
    
    
    
    Common stock, 50.0 and 51.7 million shares issued and outstanding
as of October 28, 2006 and January 28, 2006 respectively
    
    
    500
    
    
    
    517Paid-in capital
    
    
    503,294
    
    
    
    537,676Retained earnings
    
    
    788,363
    
    
    
    737,730Accumulated other comprehensive loss
    
    
    (73,551
    )
    
    
    (81,096
    )Total stockholders equity
    
    
    1,218,606
    
    
    
    1,194,827Total liabilities and stockholders equity
    
    $
    3,049,930
    
    
    $
    2,450,620
  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
    
    
    
    
    
    
    
    
    
    
    68,834
    
    
    
    
    
    
    
    68,834Unrealized gain on investments,
net of $203 income tax expense
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    342
    
    
    
    342Unrealized gain on interest rate
swaps,
net of $582 income tax expense
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    981
    
    
    
    981Amortization of pension asset
adjustment,
net of $3,693 income tax expense
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    6,222
    
    
    
    6,222Total comprehensive income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    76,379Cash dividends
    
    
    
    
    
    
    
    
    
    
    (18,201
    )
    
    
    
    
    
    
    (18,201
    )Stock compensation granted, net
    
    
    
    
    
    
    290
    
    
    
    
    
    
    
    
    
    
    
    290Common stock issued
    
    
    3
    
    
    
    4,405
    
    
    
    
    
    
    
    
    
    
    
    4,408Repurchase and retirement of common stock
    
    
    (20
    )
    
    
    (39,077
    )
    
    
    
    
    
    
    
    
    
    
    (39,097
    )Balance at October 28, 2006
    
    $
    500
    
    
    $
    503,294
    
    
    $
    788,363
    
    
    $
    (73,551
    )
    
    $
    1,218,606
  6




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##### 



BELK, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(dollars in thousands)
 Nine Months EndedOctober 28,
    
    
    October 29,2006
    
    
    2005Cash flows from operating activities:Net income
    
    $
    68,834
    
    
    $
    36,999Adjustments to reconcile net income to net cash provided by operating activities:Asset impairment and store closing costs
    
    
    2,357
    
    
    
    1,681Deferred income taxes
    
    
    6,052
    
    
    
    14,473Depreciation and amortization
    
    
    100,787
    
    
    
    81,807Gain on sale of property, equipment and investments
    
    
    (13,073
    )
    
    
    (70
    )Amortization of deferred gain
    
    
    (1,572
    )
    
    
    (Increase) decrease in:Accounts receivable, net
    
    
    5,353
    
    
    
    16,426Merchandise inventory
    
    
    (333,339
    )
    
    
    (264,206
    )Prepaid expenses and other assets
    
    
    (2,799
    )
    
    
    (23,494
    )Increase (decrease) in:Accounts payable and accrued liabilities
    
    
    243,624
    
    
    
    225,243Accrued income taxes
    
    
    (36,092
    )
    
    
    (35,289
    )Deferred compensation and other liabilities
    
    
    13,667
    
    
    
    7,405Net cash provided by operating activities
    
    
    53,799
    
    
    
    60,975Cash flows from investing activities:Acquisition of Parisian, net of cash acquired
    
    
    (313,144
    )
    
    
    Acquisition of Migerobe
    
    
    (16,739
    )
    
    
    Acquisition of Proffitts/McRaes, net of cash acquired
    
    
    
    
    
    
    (622,779
    )Purchases of investments
    
    
    
    
    
    
    (50
    )Proceeds from sales of investments
    
    
    2,230
    
    
    
    Purchases of property and equipment
    
    
    (157,365
    )
    
    
    (145,684
    )Proceeds from sales of property and equipment
    
    
    15,890
    
    
    
    6,218Net cash used by investing activities
    
    
    (469,128
    )
    
    
    (762,295
    )Cash flows from financing activities:Proceeds from issuance of long-term debt
    
    
    150,000
    
    
    
    729,462Principal payments on notes payable and capital lease obligations
    
    
    (15,981
    )
    
    
    (259,719
    )Proceeds from line of credit
    
    
    50,000
    
    
    
    46,794Stock compensation tax benefit
    
    
    1,182
    
    
    
    1,411Dividends paid
    
    
    (18,201
    )
    
    
    (16,271
    )Repurchase of common stock
    
    
    (39,097
    )
    
    
    Net cash provided by financing activities
    
    
    127,903
    
    
    
    501,677Net decrease in cash and cash equivalents
    
    
    (287,426
    )
    
    
    (199,643
    )Cash and cash equivalents at beginning of period
    
    
    322,266
    
    
    
    227,053Cash and cash equivalents at end of period
    
    $
    34,840
    
    
    $
    27,410Supplemental schedule of noncash investing and financing activities:Increase in property and equipment through accrued purchases
    
    $
    19,424
    
    
    $
    23,995Increase in property and equipment through assumption of capital leases
    
    
    5,483
    
    
    
    2,111
  7




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##### 



BELK, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 (1) Basis of Presentation
   Gift Card Revenue Recognition
  Sales Incentives Revenue Recognition
  (2) Implementation of New Accounting Standards
   8




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##### 



BELK, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
      9




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##### 



BELK, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 (3) Comprehensive Income
  Three Months Ended
    
    
    Nine Months EndedOctober 28,
    
    
    October 29,
    
    
    October 28,
    
    
    October 29,2006
    
    
    2005
    
    
    2006
    
    
    2005(dollars in thousands)Net income (loss)
    
    $
    23,056
    
    
    $
    (4,511
    )
    
    $
    68,834
    
    
    $
    36,999Other comprehensive income (loss):Net change in fair value of interest rate swaps, net of $228
income tax benefit and $521
income tax expense for the three
months and nine months ended
October 28, 2006, respectively
and $1,669 and $4,310 income tax
expense for the three and nine
months ended October 29, 2005,
respectively
    
    
    (385
    )
    
    
    2,842
    
    
    
    878
    
    
    
    7,338Interest rate swap losses reclassified into interest expense from
other comprehensive income, net
of $20 and $61 income tax
expense for the three and nine
months ended October 28, 2006
and $45 and $134 income tax
expense for the three and nine
months ended October 29, 2005,
respectively.
    
    
    34
    
    
    
    76
    
    
    
    103
    
    
    
    228Unrealized gain on investments, net of $73 and $203 income tax
expense for the three and nine
months ended October 28, 2006,
respectively and $41 and $32
income tax expense for the three
and nine months ended October
29, 2005, respectively
    
    
    122
    
    
    
    70
    
    
    
    342
    
    
    
    55Amortization of pension asset adjustment, net of $1,231 and
$3,693 income tax expense for
the three and nine months ended
October 28, 2006, respectively
and $1,132 and $3,397 income tax
expense for the three and nine
months ended October 29, 2005,
respectively.
    
    
    2,074
    
    
    
    1,928
    
    
    
    6,222
    
    
    
    5,784Other comprehensive income
    
    
    1,845
    
    
    
    4,916
    
    
    
    7,545
    
    
    
    13,405Total comprehensive income
    
    $
    24,901
    
    
    $
    405
    
    
    $
    76,379
    
    
    $
    50,404
 (4) Accumulated Other Comprehensive Loss
  October 28,
    
    
    January 28,2006
    
    
    2006(dollars in thousands)Unrealized loss on interest rate swaps, net of $409
and $991 income tax benefit
as of October 28, 2006 and
January 28, 2006,
respectively
    
    $
    (649
    )
    
    $
    (1,630
    )Unrealized gains on investments, net of $1,190 and $987
income tax expense as of
October 28, 2006 and
January 28, 2006,
respectively
    
    
    2,047
    
    
    
    1,705Pension asset adjustment, net of $44,173 and $47,866
income tax benefit as of
October 28, 2006 and
January 28, 2006,
respectively
    
    
    (74,949
    )
    
    
    (81,171
    )Accumulated other comprehensive loss
    
    $
    (73,551
    )
    
    $
    (81,096
    )
 10




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##### 



BELK, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 (5) Acquisitions
 Parisian
     dollars in thousandsAccounts receivable, net
    
    $
    1,182Inventory
    
    
    206,587Other current assets
    
    
    5,415Property, plant and equipment
    
    
    194,715Goodwill
    
    
    72,021Income taxes
    
    
    11,362Other assets
    
    
    6,114Total assets acquired
    
    
    497,396Current liabilities
    
    
    151,828Long-term liabilities
    
    
    31,368Total liabilities assumed
    
    
    183,196Net Assets Acquired
    
    $
    314,200
 11




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##### 



BELK, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
  Three months ended
    
    Nine months endedOctober 28, 2006
    
    October 29, 2005
    
    October 28, 2006
    
    October 29, 2005($s In thousands except per share amounts)Net sales
    
    $
    906,190
    
    
    $
    867,549
    
    
    $
    2,721,644
    
    
    $
    2,355,442Net income (loss)
    
    $
    16,870
    
    
    $
    (14,508
    )
    
    $
    48,107
    
    
    $
    18,650Earnings per share, basic and diluted
    
    $
    0.34
    
    
    $
    (0.28
    )
    
    $
    0.95
    
    
    $
    0.36
  Migerobe, Inc.
  (6) Pension and Postretirement Benefits
   Three Months EndedPension Plan
    
    
    Postretirement PlanOctober 28,
    
    
    October 29,
    
    
    October 28,
    
    
    October 29,2006
    
    
    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
 Nine Months EndedPension Plan
    
    
    Postretirement PlanOctober 28,
    
    
    October 29,
    
    
    October 28,
    
    
    October 29,2006
    
    
    2005
    
    
    2006
    
    
    2005(dollars in thousands)Service cost
    
    $
    2,688
    
    
    $
    3,807
    
    
    $
    120
    
    
    $
    117Interest cost
    
    
    16,158
    
    
    
    16,068
    
    
    
    1,200
    
    
    
    1,128Expected return on plan assets
    
    
    (17,943
    )
    
    
    (18,897
    )
    
    
    
    
    
    
    Amortization of transition obligation
    
    
    
    
    
    
    
    
    
    
    195
    
    
    
    195Amortization of prior service cost
    
    
    432
    
    
    
    1,020
    
    
    
    
    
    
    
    Amortization of the net (gain) loss
    
    
    9,012
    
    
    
    8,205
    
    
    
    (54
    )
    
    
    (318
    )Net periodic benefit expense
    
    $
    10,347
    
    
    $
    10,203
    
    
    $
    1,461
    
    
    $
    1,122
 12




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##### 



BELK, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
  (7) Borrowings
  October 28, 2006
    
    
    January 28, 2006(dollars in thousands)Bond facility
    
    $
    125,000
    
    
    $
    125,000Credit facility term loan
    
    
    350,000
    
    
    
    200,000Senior notes
    
    
    200,000
    
    
    
    200,000Sale/leaseback financing
    
    
    
    
    
    
    13,681Capital lease agreements through July 2021
    
    
    34,275
    
    
    
    31,153State bond facility
    
    
    21,000
    
    
    
    21,000Unsecured notes payable
    
    
    67
    
    
    
    67730,342
    
    
    
    590,901Less current installments
    
    
    (3,292
    )
    
    
    (16,807
    )Long-term debt and capital lease obligations, excluding current installments
    
    $
    727,050
    
    
    $
    574,094
   (8) Hurricane Katrina Recoveries
   13




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BELK, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 (9) Sale of Lancaster, South Carolina Land
  (10) Earnings per Share
  (11) Subsequent Event
  14




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Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
 Overview
        Migerobe, Inc. Acquisition
  15




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Parisian Acquisition
   Proffitts and McRaes Acquisition
  Hurricane Katrina
   VISA Settlement
  16




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Results of Operations
  Three Months Ended
    
    Nine Months EndedOctober 28,
    
    October 29,
    
    October 28,
    
    October 29,2006
    
    2005
    
    2006
    
    2005SELECTED FINANCIAL DATARevenues
    
    
    100.0
    %
    
    
    100.0
    %
    
    
    100.0
    %
    
    
    100.0
    %Cost of goods sold
    
    
    67.4
    
    
    
    70.0
    
    
    
    67.0
    
    
    
    68.0Selling, general and administrative expenses
    
    
    28.1
    
    
    
    29.0
    
    
    
    27.4
    
    
    
    27.1Gain on property and equipment
    
    
    1.1
    
    
    
    
    
    
    
    0.4
    
    
    
    Operating income
    
    
    5.5
    
    
    
    0.9
    
    
    
    5.9
    
    
    
    4.7Interest expense, net
    
    
    1.5
    
    
    
    2.0
    
    
    
    1.5
    
    
    
    1.7Income tax expense (benefit)
    
    
    1.6
    
    
    
    (0.4
    )
    
    
    1.7
    
    
    
    1.1Net income (loss)
    
    
    2.9
    
    
    
    (0.6
    )
    
    
    3.0
    
    
    
    2.0Comparable store net revenue increase (decrease)
    
    
    7.4
    
    
    
    (1.5
    )
    
    
    4.9
    
    
    
    0.4
 Comparison of the Three and Nine Months Ended October 28, 2006 and October 29, 2005
 Revenues
  Cost of goods sold.
 Selling, general and administrative expenses
 17




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##### 



Gain
(loss) on sale of property and equipment.
  Interest Expense, net.
  Gain on sale of investments, net.
  Seasonality and Quarterly Fluctuations
  Liquidity and Capital Resources
  18




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19




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##### 



Contractual Obligations and Commercial Commitments
  Payments Due by PeriodWithin 1
    
    
    
    
    
    
    
    
    
    AfterTotal
    
    Year
    
    2 - 3 Years
    
    4 - 5 Years
    
    5 Years(dollars in thousands)Contractual ObligationsLong-Term Debt
    
    $
    696,000
    
    
    $
    
    
    
    $
    125,000
    
    
    $
    350,000
    
    
    $
    221,000Estimated Interest Payments on Debt (a)
    
    
    275,156
    
    
    
    45,202
    
    
    
    83,929
    
    
    
    76,065
    
    
    
    69,960Capital Lease Obligations
    
    
    50,067
    
    
    
    5,357
    
    
    
    10,548
    
    
    
    9,978
    
    
    
    24,184Operating Leases (b)
    
    
    479,285
    
    
    
    59,735
    
    
    
    104,310
    
    
    
    88,588
    
    
    
    226,652Line of Credit
    
    
    50,000
    
    
    
    50,000
    
    
    
    
    
    
    
    
    
    
    
    
 Amount of Commitment Expiration per PeriodTotalAmounts
    
    
    Within 1
    
    
    
    
    
    
    
    
    
    
    AfterCommitted
    
    
    Year
    
    
    2 - 3 Years
    
    
    4 - 5 Years
    
    
    5 Years(dollars in thousands)Other Commercial CommitmentsStandby Letters of Credit (c)
    
    $
    175,617
    
    
    $
    148,520
    
    
    $
    27,097
    
    
    $
    
    
    
    $
    Import Letters of Credit
    
    
    40,467
    
    
    
    40,467
    
    
    
    
    
    
    
    
    
    
    
    Total Commercial Commitments
    
    $
    216,084
    
    
    $
    188,987
    
    
    $
    27,097
    
    
    $
    
    
    
    $
    
 
 (a)
    
    Interest rates used to compute estimated interest payments utilize the stated rate for
fixed rate debt and projected interest rates for variable rate debt. Projected rates range
from 5% to 6% over the term of the variable rate debt agreements.(b)
    
    Operating lease payments consist of base rent only and do not include amounts for percentage
rents, real estate taxes, insurance and other expenses related to those locations.(c)
    
    Standby letters of credit include a $126.8 million facility that supports the ten-year bond
facility (accrued principal and interest) due July 2007. Item 3. Quantitative and Qualitative Disclosures About Market Risk
   20




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Item 4. Controls and Procedures
   21




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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
 (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/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.
    
    Stock Purchase Agreement by and between Saks Incorporated and Belk, Inc., dated
as of August 1, 2006 (incorporated by reference to Exhibit 10.1 of the Companys
Quarterly Report on Form 10-Q, filed on September 7, 2006).
 22




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##### 



10.2
    
    Second Amended and Restated Credit Agreement, dated as of October 2, 2006, by and
among Belk, Inc. and the subsidiaries of Belk, Inc., as borrowers, and Wachovia Bank,
National Association, Bank of America, NA. and the other lenders referred to therein
(incorporated by reference to the Companys Current Report on Form 8-K filed on
October 6, 2006).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.
 23




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SIGNATURES
  BELK, INC.Dated:  December 7, 2006
    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, Finance and

Chief Financial Officer 24