##### 



SECURITIES AND EXCHANGE COMMISSION WASHINGTON, DC 20549
 FORM 10-Q (Mark One)x
    
    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934.
 For the quarterly period ended May 1, 2004 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 ü 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 ü whether the registrant is an accelerated filer (as defined
in Rule 12b-2 of the Exchange Act).
Yes þ No o At June 1, 2004, the registrant had issued and outstanding 50,942,382 shares of
class A common stock and 1,111,264 shares of class B common stock.




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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 May 1, 2004 and May 3, 2003
    
    
    4Consolidated Balance Sheets as of May 1, 2004 and January 31, 2004
    
    
    5Consolidated Statement of Changes in Stockholders Equity and Comprehensive Income for the Three Months Ended May 1, 2004
    
    
    6Condensed Consolidated Statements of Cash Flows for the Three Months Ended May 1, 2004 and May 3, 2003
    
    
    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
    
    
    13Item 4. Controls and Procedures
    
    
    13PART II. OTHER INFORMATIONItem 1. Legal Proceedings
    
    
    14Item 2. Changes in Securities, Use of Proceeds and Issuer Repurchases of Equity Securities
    
    
    14Item 3. Defaults upon Senior Securities
    
    
    14Item 4. Submission of Matters to a Vote of Security Holders
    
    
    14Item 5. Other Information
    
    
    14Item 6. Exhibits and Reports on Form 8-K
    
    
    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, anticipated benefits from the consolidation of our operating
divisions and distribution facilities, 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
31, 2004 that we filed with the Securities and Exchange Commission (SEC) on
April 15, 2004. 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 EndedMay 1,
    
    May 3,2004
    
    2003Revenues
    
    $
    550,115
    
    
    $
    502,715Cost of goods sold (including occupancy and buying
expenses)
    
    
    363,223
    
    
    
    338,203Selling, general and administrative expenses
    
    
    140,330
    
    
    
    132,950Store closing costs
    
    
    373
    
    
    
    Operating income
    
    
    46,189
    
    
    
    31,562Interest expense, net
    
    
    (9,068
    )
    
    
    (9,304
    )Gain (loss) on property, equipment and investments
    
    
    (160
    )
    
    
    33Other income, net
    
    
    297
    
    
    
    140Income before income taxes
    
    
    37,258
    
    
    
    22,431Income taxes
    
    
    13,560
    
    
    
    8,350Net Income
    
    $
    23,698
    
    
    $
    14,081Basic and diluted income per share:Net income
    
    $
    0.46
    
    
    $
    0.26Weighted average shares outstanding
    
    
    51,953,864
    
    
    
    54,618,021
 See accompanying notes to consolidated financial statements. 4




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##### 



BELK, INC. AND SUBSIDIARIES 
 CONSOLIDATED BALANCE SHEETS
 (dollars in thousands)
 May 1,
    
    January 31,2004
    
    2004AssetsCurrent assets:Cash and cash equivalents
    
    $
    116,484
    
    
    $
    166,071Accounts receivable, net
    
    
    290,546
    
    
    
    311,141Merchandise inventory
    
    
    565,581
    
    
    
    496,242Prepaid income taxes
    
    
    75
    
    
    
    98Prepaid expenses and other current assets
    
    
    20,235
    
    
    
    17,188Total current assets
    
    
    992,921
    
    
    
    990,740Investment securities
    
    
    6,879
    
    
    
    6,975Property and equipment, net
    
    
    711,082
    
    
    
    702,682Pension assets
    
    
    4,418
    
    
    
    4,487Other assets
    
    
    26,256
    
    
    
    25,379Total assets
    
    $
    1,741,556
    
    
    $
    1,730,263Liabilities and Stockholders EquityCurrent liabilities:Accounts payable
    
    $
    200,386
    
    
    $
    160,013Accrued liabilities
    
    
    94,933
    
    
    
    100,801Accrued income taxes
    
    
    9,301
    
    
    
    36,499Deferred income taxes
    
    
    1,071
    
    
    
    785Note payable
    
    
    125,011
    
    
    
    Current installments of long-term debt and capital lease obligations
    
    
    7,896
    
    
    
    7,848Total current liabilities
    
    
    438,598
    
    
    
    305,946Deferred income taxes
    
    
    25,308
    
    
    
    18,540Long-term debt and capital lease obligations, excluding current installments
    
    
    173,738
    
    
    
    300,640Interest rate swap liability
    
    
    22,526
    
    
    
    35,367Deferred compensation and other noncurrent liabilities
    
    
    104,800
    
    
    
    100,271Total liabilities
    
    
    764,970
    
    
    
    760,764Stockholders equity:Preferred stock
    
    
    
    
    
    
    Common stock, 52.0 and 51.9 million shares issued and outstanding
as of May 1, 2004 and January 31, 2004, respectively
    
    
    520
    
    
    
    519Paid-in capital
    
    
    531,925
    
    
    
    530,612Retained earnings
    
    
    516,741
    
    
    
    517,721Accumulated other comprehensive loss
    
    
    (72,600
    )
    
    
    (79,353
    )Total stockholders equity
    
    
    976,586
    
    
    
    969,499Total liabilities and stockholders equity
    
    $
    1,741,556
    
    
    $
    1,730,263
 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 31, 2004
    
    $
    519
    
    
    $
    530,612
    
    
    $
    517,721
    
    
    $
    (79,353
    )
    
    $
    969,499Comprehensive income:Net income
    
    
    
    
    
    
    
    
    
    
    23,698
    
    
    
    
    
    
    
    23,698Unrealized loss on investments,
net of $67 income tax benefit
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (115
    )
    
    
    (115
    )Unrealized gain on interest rate swaps,
net of $2,605 income tax expense
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    4,588
    
    
    
    4,588Amortization of pension asset adjustment,
net of $1,339 income tax expense
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,280
    
    
    
    2,280Total comprehensive income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    30,451Cash dividends
    
    
    
    
    
    
    
    
    
    
    (24,678
    )
    
    
    
    
    
    
    (24,678
    )Common stock issued
    
    
    1
    
    
    
    1,313
    
    
    
    
    
    
    
    
    
    
    
    1,314Balance at May 1, 2004
    
    $
    520
    
    
    $
    531,925
    
    
    $
    516,741
    
    
    $
    (72,600
    )
    
    $
    976,586
 See accompanying notes to consolidated financial statements. 6




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##### 



BELK, INC. AND SUBSIDIARIES 
 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
 (dollars in thousands)
 Three Months EndedMay 1,
    
    May 3,2004
    
    2003Cash flows from operating activities:Net income
    
    $
    23,698
    
    
    $
    14,081Adjustments to reconcile net income to net cash provided by operating activities:Asset impairment and store closing costs
    
    
    373
    
    
    
    Deferred income taxes
    
    
    8,477
    
    
    
    1,055Depreciation and amortization
    
    
    22,521
    
    
    
    22,989(Gain) loss on sale of property, equipment & investments
    
    
    160
    
    
    
    (33
    )(Increase) decrease in:Accounts receivable, net
    
    
    20,596
    
    
    
    31,433Merchandise inventory
    
    
    (69,340
    )
    
    
    (40,257
    )Prepaid expenses and other assets
    
    
    (4,187
    )
    
    
    (4,304
    )Increase (decrease) in:Accounts payable and accrued liabilities
    
    
    34,131
    
    
    
    47,280Accrued income taxes
    
    
    (27,199
    )
    
    
    (15,531
    )Deferred compensation and other liabilities
    
    
    (1,539
    )
    
    
    1,888Net cash provided by operating activities
    
    
    7,691
    
    
    
    58,601Cash flows from investing activities:Purchases of investments
    
    
    (167
    )
    
    
    Proceeds from sales of investments
    
    
    80
    
    
    
    Purchases of property and equipment
    
    
    (30,671
    )
    
    
    (20,429
    )Proceeds from sales of property and equipment
    
    
    
    
    
    
    144Net cash used by investing activities
    
    
    (30,758
    )
    
    
    (20,285
    )Cash flows from financing activities:Principal payments on notes payable and capital lease obligations
    
    
    (1,842
    )
    
    
    (3,268
    )Net proceeds from lines of credit
    
    
    
    
    
    
    605Dividends paid
    
    
    (24,678
    )
    
    
    (15,029
    )Net cash used by financing activities
    
    
    (26,520
    )
    
    
    (17,692
    )Net (decrease) increase in cash and cash equivalents
    
    
    (49,587
    )
    
    
    20,624Cash and cash equivalents at beginning of period
    
    
    166,071
    
    
    
    91,286Cash and cash equivalents at end of period
    
    $
    116,484
    
    
    $
    111,910
 See accompanying notes to consolidated financial statements. 7




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BELK, INC. AND SUBSIDIARIES 
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 (dollars in thousands)
 (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 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 31, 2004. 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 EndedMay 1,
    
    May 3,2004
    
    2003Net income
    
    $
    23,698
    
    
    $
    14,081Other comprehensive income (loss):Net change in fair value of interest rate swaps, net of $2,650
income tax expense and $1,016
income tax benefit for the three
months ended May 1, 2004 and May 3, 2003, respectively
    
    
    4,512
    
    
    
    (1,730
    )Interest rate swap losses reclassified into interest expense from
other comprehensive income, net
of $45 and $56 income tax
benefit for the three months
ended May 1, 2004 and May 3, 2003, respectively
    
    
    76
    
    
    
    96Unrealized (loss) gain on investments, net of $67 income tax
benefit and $140 income tax
expense for the three months
ended May 1, 2004 and May 3, 2003, respectively
    
    
    (115
    )
    
    
    239Amortization of pension asset adjustment, net of $1,339
income tax expense
    
    
    2,280
    
    
    
    Other comprehensive income (loss)
    
    
    6,753
    
    
    
    (1,395
    )Total comprehensive income
    
    $
    30,451
    
    
    $
    12,686
 8




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BELK, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(dollars in thousands) (3) Accumulated Other Comprehensive Loss The following table sets forth the components of accumulated other
comprehensive loss: May 1,
    
    January 31,2004
    
    2004Unrealized loss on interest rate swaps, net of $6,603
and $9,926 income tax
benefit as of May 1, 2004
and January 31, 2004, respectively
    
    $
    (11,243
    )
    
    $
    (15,831
    )Unrealized gains on investments, net of $882 and $948
income tax expense as of
May 1, 2004 and January
31, 2004, respectively
    
    
    1,525
    
    
    
    1,640Pension asset adjustment, net of $36,931 and $38,269
income tax expense as of
May 1, 2004 and January
31, 2004, respectively
    
    
    (62,882
    )
    
    
    (65,162
    )Accumulated other comprehensive loss
    
    $
    (72,600
    )
    
    $
    (79,353
    )
 (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: May 1,
    
    January 31,2004
    
    2004Customer receivables
    
    $
    294,013
    
    
    $
    309,058Other receivables
    
    
    6,690
    
    
    
    15,119Less allowance for doubtful accounts
    
    
    (10,157
    )
    
    
    (13,036
    )Accounts receivable, net
    
    $
    290,546
    
    
    $
    311,141
 (5) Note Payable The Companys note purchase agreement among the Company, The Belk Center,
Inc., Enterprise Funding Corporation and Bank of America, as amended, (the
Note Payable) expires on April 5, 2005 and, accordingly, the outstanding
balance as of May 1, 2004 of $125 million has been included in current
liabilities. However, the Note Payable may be renewed by mutual consent of the
parties, and it is the Companys intent to renew the facility and utilize it as
long-term financing. (6) Implementation of New Accounting Standards In December 2003, the Financial Accounting Standards Board (FASB)
revised Statement of Financial Accounting Standards No. 132, Employers
Disclosures about Pensions and Other Postretirement Benefits (Revised
Statement 132). Revised Statement 132 revises employers required disclosures
about pension plans and other postretirement benefit plans. It does not change
the measurement or recognition of those plans required by FASB Statements No.
87, Employers Accounting for Pensions, No. 88, Employers Accounting for
Settlements and Curtailments of Defined Benefit Pension Plans and for
Termination Benefits and No. 106, Employers Accounting for Postretirement
Benefits Other Than Pensions (Statement 106). Revised Statement 132 requires
disclosures in addition to those in the original FASB Statement No. 132. The
interim-period disclosures required by Revised Statement 132 are effective for
interim periods beginning after December 15, 2003. The Company adopted the
interim disclosure requirements set forth in Revised Statement 132 for the
first quarter of fiscal year 2005. 9




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BELK, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(dollars in thousands) (7) 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 PlanMay 1,
    
    May 3,
    
    May 1,
    
    May 3,2004
    
    2003
    
    2004
    
    2003Service cost
    
    $
    2,763
    
    
    $
    2,880
    
    
    $
    53
    
    
    $
    73Interest cost
    
    
    5,319
    
    
    
    5,157
    
    
    
    384
    
    
    
    483Expected return on plan assets
    
    
    (6,558
    )
    
    
    (6,634
    )
    
    
    
    
    
    
    Amortization of transition obligation
    
    
    
    
    
    
    
    
    
    
    65
    
    
    
    65Amortization of prior service cost
    
    
    69
    
    
    
    69
    
    
    
    
    
    
    
    Amortization of the net (gain) loss
    
    
    2,095
    
    
    
    919
    
    
    
    (124
    )
    
    
    (69
    )Net periodic benefit expense
    
    $
    3,688
    
    
    $
    2,391
    
    
    $
    378
    
    
    $
    552
 The Company previously disclosed in its financial statements for the year
ended January 31, 2004, that it did not expect to contribute to its pension
plan in fiscal year 2005. As of May 1, 2004, there have been no contributions
to the pension plan, and the Company does not anticipate any contributions for
the remainder of the current fiscal year. (8) Curtailment and Settlement of Defined Benefit Supplemental Executive
Retirement Plan On April 1, 2004, certain participants elected to waive their benefits in
the Companys non-qualified defined benefit supplemental executive retirement
plan in exchange for participation in the Companys new non-qualified defined
contribution 2004 Supplemental Executive Retirement Plan. This election
resulted in the curtailment and settlement of their benefits in the defined
benefit plan. The Company recognized a net charge of $1.9 million in selling,
general and administrative expenses in the first quarter of fiscal year 2005
related to the curtailment and settlement. (9) Derivative Financial Instruments During the first quarter of fiscal year 2005, the Company terminated two
interest rate swaps with a total notional value of $50 million. The interest
rate swaps had previously been dedesignated as cash flow hedges during the
third quarter of fiscal year 2004. 10




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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 $2.26 billion for the fiscal year ended January 31, 2004. 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 2005 refer to the fiscal year ending January
29, 2005 and all references to fiscal year 2004 refer to the period ended
January 31, 2004. As of the end of its first quarter of fiscal year 2005, the Company
operated 225 retail department stores in 13 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 dominant 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 five 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. 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 2004,
the Company increased net store selling square footage by 343,700 square feet,
or 2.4%, and plans to expand by an additional 733,800 square feet, or 5.0%, in
fiscal year 2005. 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. 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. 11




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##### 



Three Months EndedMay 1,
    
    May 3,2004
    
    2003SELECTED FINANCIAL DATARevenues
    
    
    100.0
    %
    
    
    100.0
    %Cost of goods sold
    
    
    66.0
    
    
    
    67.3Selling, general and administrative expenses
    
    
    25.5
    
    
    
    26.5Asset impairment and store closing costs
    
    
    0.1
    
    
    
    Operating income
    
    
    8.4
    
    
    
    6.3Interest expense, net
    
    
    1.7
    
    
    
    1.9Income taxes
    
    
    2.5
    
    
    
    1.7Net income
    
    
    4.3
    
    
    
    2.8Comparable store net revenue increase (decrease)
    
    
    5.6
    
    
    
    (6.6
    )
 Comparison of the Three Months Ended May 1, 2004 and May 3, 2003 Revenues. The Companys revenues for the three months ended May 1, 2004
increased 9.4%, or $47.4 million, to $550.1 million from $502.7 million over
the same period in fiscal year 2004. The increase is attributable to a 5.6%
increase in revenues from comparable stores in addition to $19.2 million of
additional sales from new stores. As disclosed in the Companys Form 10-K, which was filed on April 15,
2004, comparable store sales no longer exclude replacement and expansion
stores. Non-comparable stores will include only closing stores and new stores
that have not reached the one-year anniversary of their opening prior to the
beginning of the fiscal year in which they were constructed. The Company
believes this revised measure is a more accurate indicator of existing store
performance and is a common basis used by other retailers in the reporting of
their results. The Company has restated the previous years comparable store
net revenue decrease to conform with this new definition. Cost of goods sold.As a percentage of revenues, cost of goods sold
decreased to 66.0% for the three months ended May 1, 2004, compared to 67.3%
for the same period in fiscal year 2004. The decrease is primarily
attributable to improved margin on inventory purchases and a 0.18% reduction in
both occupancy and buying expenses as a percentage of revenues due to improved
operating efficiencies. Selling, general and administrative expenses.As a percent of revenues,
selling, general and administrative (SG&A) expenses decreased to 25.5% for
the three months ended May 1, 2004 compared to 26.5% for the same period in
fiscal year 2004. The decrease resulted primarily from a decrease in
depreciation expense as a percentage of revenues of approximately 0.47%, a
decrease in payroll as a percentage of revenues of 0.49% and a decrease in bad
debt expense as a percentage of revenues of 0.31%. These decreases were
partially offset by 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 incurred $0.4 million in asset
impairment and 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. Net income.As a percentage of revenues, net income increased to 4.3% for
the three months ended May 1, 2004, compared to 2.8% for the same period in
fiscal year 2004. The increase was primarily due to the changes 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 million variable rate note, a $125 million
ten-year variable rate bond facility, a $200 million revolving line of credit
and a $126.8 million standby letter of credit. The $250 million variable rate note is governed by a note payable
agreement that expires on April 5, 2005 and, accordingly, the outstanding
balance as of May 1, 2004 of $125.0 million has been included in current
liabilities. However, the note payable agreement is renewable by mutual
consent of the parties, and the Company intends to renew the facility and
utilize it as long-term financing. Net cash provided by operating activities decreased $50.9 million to $7.7
million for the three months ended May 1, 2004 from $58.6 million for the three
months ended May 3, 2003. The decrease in cash provided by operating
activities for the first quarter of fiscal year 2005 was principally due to
higher levels of inventory purchases, attributable to the addition of new
stores and higher comparable store sales during the first quarter of fiscal
year 2005, and increased income tax payments, due to higher net income in
fiscal 2004. Expenditures for property and equipment increased $10.2 million, or 50.1%,
to $30.7 million for the three months ended May 1, 2004 from $20.4 million for
the same time period in fiscal year 2004. The increase was principally due to
the addition of four new stores and three replacement stores in the first
quarter of fiscal year 2005, as compared to the addition of one new store
during the same time period in fiscal year 2004. During the three months ended May 1, 2004, the Company opened seven new
stores in Waco, Kerrville, and Sherman, Texas; Beaufort and Myrtle Beach, South
Carolina; Mandeville, Louisiana; and Lenoir, North Carolina. The Texas and
Louisiana stores are in new markets of the Company and the other new stores are
replacements of stores in existing markets. The Company also completed the
expansion of one store in Corinth, Mississippi during the first quarter of
fiscal year 2005. Net cash used by financing activities increased $8.8 million to $26.5
million for the three months ended May 1, 2004 from $17.7 million for the three
months ended May 3, 2003. This increase resulted from a higher dividend per
share amount attributable to a special one-time dividend paid on fiscal 2004
net income. 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. 
 Item 3. Quantitative and Qualitative Disclosures About Market Risk During the first quarter of fiscal year 2005, the Company terminated two
interest rate swaps with a total notional value of $50 million. The interest
rate swaps had previously been dedesignated as cash flow hedges during the
third quarter of fiscal year 2004. There have been no other material changes to the Companys quantitative
and qualitative market risk disclosures during the three months ended May 1,
2004. 13




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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 controls that materially affected,
or are reasonably likely to materially affect, the Companys internal controls
over financial reporting. 
 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 effect on its financial statements. 
 Item 2.Changes in Securities, Use of Proceeds and Issuer Purchases of Equity Securities Not applicable 
 Item 3.Defaults Upon Senior Securities Not applicable 
 Item 4.Submission of Matters to a Vote of Security Holders The Companys annual meeting of stockholders was held on May 26, 2004. The
only matter submitted to a vote of the stockholders was the election of
directors. At the meeting, in person or by proxy, there were stockholders
holding an aggregate of 50,703,070 shares of common stock. There were no
broker-non votes with respect to any proposal. The voting results were as
follows: Election of Directors Term Expiring 2007
    
    For
    
    WithheldJohn R. Belk
    
    
    499,534,512
    
    
    
    6,528John A. Kuhne
    
    
    499,497,648
    
    
    
    43,392Elizabeth Valk Long
    
    
    497,634,738
    
    
    
    1,906,302
 Accordingly, John R. Belk, John A. Kuhne and Elizabeth Valk Long were elected
as directors for terms expiring in 2007. Thomas M. Belk, Jr., Sarah Belk
Gambrell and J. Kirk Glenn, Jr. continue to serve as directors for terms
expiring in 2005, and H.W. McKay Belk, B. Frank Matthews, II and Thomas C.
Nelson continue to serve as directors for terms expiring in 2006. 14




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Item 5.Other Information Not applicable 
 Item 6.Exhibits and Reports on Form 8-K (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
    
    Amendment Number 7 to Note Purchase Agreement, dated as of April
6, 2004, among Belk, Inc., The Belk Center, Inc., Enterprise Funding
Corporation, and Bank of America, N.A., amending that certain Note
Purchase Agreement dated as of May 3, 1999.10.2
    
    Consulting Services Agreement dated as of May 26, 2004 by and
between Belk, Inc. and John M. Belk.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. (b) Reports on Form 8-K A current report on form 8-K furnished on March 10, 2004, contained
disclosure under Item 7, Financial Statements, Pro Forma Financial
Information and Exhibits, and Item 9, Regulation FD Disclosure. A current report on form 8-K filed on March 11, 2004, contained
disclosure under Item 9, Regulation FD Disclosure. 15




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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 10, 2004
    
    By:
    
    /s/ Ralph A. PittsRalph A. PittsExecutive Vice President, General Counsel andCorporate Secretary(Authorized Officer of the Registrant)By:
    
    /s/ Brian T. MarleyBrian T. MarleyExecutive Vice President andChief Financial Officer
 16