##### 



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 WASHINGTON, D.C. 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 November 3, 2007ORo
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934.For the transition period from  to
 000-26207
 BELK, INC.
 
  Delaware
    
    56-2058574(State or Other Jurisdiction of Incorporation or Organization)
    
    (I.R.S. Employer Identification No.)2801 West Tyvola Road, Charlotte, NC
    
    28217-4500(Address of Principal Executive Offices)
    
    (Zip Code)
 (704) 357-1000
  
  þ o
  o 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
November 3, 2007 and
October 28, 2006
    
    
    4Consolidated Balance Sheets as of November 3, 2007 and February 3, 2007
    
    
    5Consolidated Statement of Changes in Stockholders Equity and Comprehensive Income for the
Nine Months Ended November 3, 2007
    
    
    6Consolidated Statements of Cash Flows for the Nine Months Ended November 3, 2007 and
October 28, 2006
    
    
    7Notes to Unaudited Consolidated Financial Statements
    
    
    8Item 2.     Managements Discussion and Analysis of Financial Condition and Results of
Operations
    
    
    14Item 3.     Quantitative and Qualitative Disclosures about Market Risk
    
    
    20Item 4.     Controls and Procedures
    
    
    20PART II.     OTHER INFORMATIONItem 1.     Legal Proceedings
    
    
    21Item 1A.     Risk Factors
    
    
    21Item 2.     Unregistered Sales of Equity Securities and Use of Proceeds
    
    
    21Item 3.     Defaults upon Senior Securities
    
    
    21Item 4.     Submission of Matters to a Vote of Security Holders
    
    
    21Item 5.     Other Information
    
    
    21Item 6.     Exhibits
    
    
    21




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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 the acquired stores and businesses, including our fiscal year 2006
acquisition of Proffitts and McRaes stores, our fiscal year 2007 acquisition of Parisian
stores and our fiscal year 2007 acquisition of the assets of Migerobe and commencement of our
new fine jewelry business;
 
    
    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
(unaudited)
(dollars in thousands, except share and per share amounts)
 Three Months Ended
    
    
    Nine Months EndedNovember 3,
    
    
    October 28,
    
    
    November 3,
    
    
    October 28,2007
    
    
    2006
    
    
    2007
    
    
    2006Revenues
    
    $
    808,338
    
    
    $
    794,277
    
    
    $
    2,592,427
    
    
    $
    2,278,774Cost of goods sold (including occupancy and buying expenses)
    
    
    571,559
    
    
    
    535,305
    
    
    
    1,801,976
    
    
    
    1,527,697Selling, general and administrative expenses
    
    
    233,661
    
    
    
    223,086
    
    
    
    724,450
    
    
    
    623,366Asset impairment and store closing costs
    
    
    2,480
    
    
    
    706
    
    
    
    11,211
    
    
    
    2,357Gain on sale of property and equipment
    
    
    2,159
    
    
    
    8,759
    
    
    
    3,644
    
    
    
    9,686Operating income
    
    
    2,797
    
    
    
    43,939
    
    
    
    58,434
    
    
    
    135,040Interest expense, net
    
    
    (14,975
    )
    
    
    (11,826
    )
    
    
    (43,855
    )
    
    
    (33,065
    )Gain (loss) on sale of investments
    
    
    (299
    )
    
    
    3,343
    
    
    
    (360
    )
    
    
    4,959Income (loss) before income taxes
    
    
    (12,477
    )
    
    
    35,456
    
    
    
    14,219
    
    
    
    106,934Income tax expense (benefit)
    
    
    (5,552
    )
    
    
    12,400
    
    
    
    4,148
    
    
    
    38,100Net income (loss)
    
    $
    (6,925
    )
    
    $
    23,056
    
    
    $
    10,071
    
    
    $
    68,834Basic and diluted net income (loss) per share
    
    $
    (0.14
    )
    
    $
    0.46
    
    
    $
    0.20
    
    
    $
    1.36Weighted
average shares outstanding:Basic
    
    
    49,569,155
    
    
    
    50,028,415
    
    
    
    49,809,867
    
    
    
    50,756,338Diluted
    
    
    49,569,155
    
    
    
    50,028,415
    
    
    
    49,841,563
    
    
    
    50,756,338
  4




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##### 



BELK, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(unaudited)
(dollars in thousands)
 November 3,
    
    
    February 3,2007
    
    
    2007AssetsCurrent assets:Cash and cash equivalents
    
    $
    28,851
    
    
    $
    171,239Accounts receivable, net
    
    
    48,456
    
    
    
    61,434Merchandise inventory
    
    
    1,242,311
    
    
    
    931,870Prepaid income taxes, expenses and other current assets
    
    
    31,760
    
    
    
    32,926Total current assets
    
    
    1,351,378
    
    
    
    1,197,469Investment securities
    
    
    4,714
    
    
    
    5,317Property and equipment, net of accumulated depreciation and amortization of
$1,023,272 and $931,573 as of November 3, 2007 and February 3,
2007, respectively
    
    
    1,260,723
    
    
    
    1,280,426Goodwill
    
    
    326,346
    
    
    
    310,126Other assets
    
    
    58,399
    
    
    
    55,277Total assets
    
    $
    3,001,560
    
    
    $
    2,848,615Liabilities and Stockholders EquityCurrent liabilities:Accounts payable
    
    $
    474,416
    
    
    $
    309,722Accrued liabilities
    
    
    186,271
    
    
    
    166,625Accrued income taxes
    
    
    2,601
    
    
    
    22,686Deferred income taxes
    
    
    1,058
    
    
    
    14,020Line of credit
    
    
    33,695
    
    
    
    Current installments of long-term debt and capital lease obligations
    
    
    4,551
    
    
    
    4,594Total current liabilities
    
    
    702,592
    
    
    
    517,647Deferred income taxes
    
    
    171
    
    
    
    13,835Long-term debt and capital lease obligations, excluding current installments
    
    
    718,697
    
    
    
    729,748Interest rate swap liability
    
    
    3,700
    
    
    
    1,435Deferred compensation and other noncurrent liabilities
    
    
    283,783
    
    
    
    259,928Total liabilities
    
    
    1,708,943
    
    
    
    1,522,593Stockholders equity:Preferred stock
    
    
    
    
    
    
    Common stock, 49.6 and 50.0 million shares issued and outstanding
as of November 3, 2007 and February 3, 2007, respectively
    
    
    496
    
    
    
    500Paid-in capital
    
    
    479,101
    
    
    
    507,127Retained earnings
    
    
    891,537
    
    
    
    901,378Accumulated other comprehensive loss
    
    
    (78,517
    )
    
    
    (82,983
    )Total stockholders equity
    
    
    1,292,617
    
    
    
    1,326,022Total liabilities and stockholders equity
    
    $
    3,001,560
    
    
    $
    2,848,615
  5




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##### 



BELK, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS EQUITY
AND COMPREHENSIVE INCOME
(unaudited)
(dollars in thousands)
 AccumulatedOtherCommon
    
    
    Paid-in
    
    
    Retained
    
    
    ComprehensiveStock
    
    
    Capital
    
    
    Earnings
    
    
    Income (Loss)
    
    
    TotalBalance at February 3, 2007
    
    $
    500
    
    
    $
    507,127
    
    
    $
    901,378
    
    
    $
    (82,983
    )
    
    $
    1,326,022Comprehensive income:Net income
    
    
    
    
    
    
    
    
    
    
    10,071
    
    
    
    
    
    
    
    10,071Unrealized loss on investments,
net of $225 income tax benefit
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (378
    )
    
    
    (378
    )Unrealized loss on interest rate swaps,
net of $676 income tax benefit
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,140
    )
    
    
    (1,140
    )Reclassification adjustment for
interest rate
swap dedesignation included in net
income,
net of $7 income tax benefit
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (51
    )
    
    
    (51
    )Defined benefit expense, net of
$3,583 income taxes
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    6,035
    
    
    
    6,035Total comprehensive income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    14,537Adoption of FIN 48 adjustment
    
    
    
    
    
    
    
    
    
    
    185
    
    
    
    
    
    
    
    185Cash dividends
    
    
    
    
    
    
    
    
    
    
    (20,097
    )
    
    
    
    
    
    
    (20,097
    )Issuance of stock-based compensation
    
    
    
    
    
    
    (2,322
    )
    
    
    
    
    
    
    
    
    
    
    (2,322
    )Stock-based compensation expense
    
    
    
    
    
    
    (1,858
    )
    
    
    
    
    
    
    
    
    
    
    (1,858
    )Common stock issued
    
    
    4
    
    
    
    372
    
    
    
    
    
    
    
    
    
    
    
    376Repurchase and retirement of common stock
    
    
    (8
    )
    
    
    (24,218
    )
    
    
    
    
    
    
    
    
    
    
    (24,226
    )Balance at November 3, 2007
    
    $
    496
    
    
    $
    479,101
    
    
    $
    891,537
    
    
    $
    (78,517
    )
    
    $
    1,292,617
  6




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##### 



BELK, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited)
(dollars in thousands)
 Nine Months EndedNovember 3,
    
    
    October 28,2007
    
    
    2006Cash flows from operating activities:Net income
    
    $
    10,071
    
    
    $
    68,834Adjustments to reconcile net income to net cash (used) provided by operating activities:Asset impairment and store closing costs
    
    
    11,211
    
    
    
    2,357Deferred income tax (benefit) expense
    
    
    (2,161
    )
    
    
    6,052Depreciation and amortization expense
    
    
    119,011
    
    
    
    100,787Stock-based compensation expense
    
    
    (1,858
    )
    
    
    5,569Gain on sale of property and equipment
    
    
    (2,072
    )
    
    
    (8,114
    )Amortization of deferred gain on sale and leaseback
    
    
    (1,572
    )
    
    
    (1,572
    )(Gain) loss on sale of investments
    
    
    360
    
    
    
    (4,959
    )(Increase) decrease in:Accounts receivable, net
    
    
    12,854
    
    
    
    5,353Merchandise inventory
    
    
    (310,441
    )
    
    
    (333,339
    )Prepaid expenses and other assets
    
    
    (9,369
    )
    
    
    (12,582
    )Increase (decrease) in:Accounts payable and accrued liabilities
    
    
    162,999
    
    
    
    240,028Accrued income taxes
    
    
    (20,085
    )
    
    
    (36,092
    )Deferred compensation and other liabilities
    
    
    16,912
    
    
    
    13,566Net cash (used) provided by operating activities
    
    
    (14,140
    )
    
    
    45,888Cash flows from investing activities:Acquisition of Parisian, net of cash acquired
    
    
    
    
    
    
    (313,144
    )Acquisition of Migerobe
    
    
    
    
    
    
    (16,739
    )Proceeds from sales of investments
    
    
    
    
    
    
    6,308Purchases of property and equipment
    
    
    (168,363
    )
    
    
    (157,604
    )Proceeds from sales of property and equipment
    
    
    56,603
    
    
    
    11,812Net cash used by investing activities
    
    
    (111,760
    )
    
    
    (469,367
    )Cash flows from financing activities:Proceeds from issuance of long-term debt
    
    
    125,355
    
    
    
    160,022Principal payments on long-term debt and capital lease obligations
    
    
    (128,893
    )
    
    
    (15,981
    )Proceeds from line of credit
    
    
    33,695
    
    
    
    50,000Cash paid for withholding taxes in lieu of shares issued under stock-based
compensation plans
    
    
    (5,260
    )
    
    
    (2,752
    )Stock compensation tax benefit
    
    
    2,938
    
    
    
    1,182Dividends paid
    
    
    (20,097
    )
    
    
    (18,201
    )Repurchase and retirement of common stock
    
    
    (24,226
    )
    
    
    (39,097
    )Net cash (used) provided by financing activities
    
    
    (16,488
    )
    
    
    135,173Net decrease in cash and cash equivalents
    
    
    (142,388
    )
    
    
    (288,306
    )Cash and cash equivalents at beginning of period
    
    
    171,239
    
    
    
    308,817Cash and cash equivalents at end of period
    
    $
    28,851
    
    
    $
    20,511Supplemental schedule of noncash investing and financing activities:Increase in property and equipment through accrued purchases
    
    $
    13,428
    
    
    $
    1,688Decrease in property and equipment through adjustment of Parisian goodwill
    
    
    14,969
    
    
    
    Decrease in property and equipment through adjustment of Parisian capital lease
obligation
    
    
    4,315
    
    
    
    Decrease in long-term debt through other current assets
    
    
    3,220
    
    
    
    Increase in property and equipment through assumption of capital leases
    
    
    
    
    
    
    5,483
  7




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##### 



BELK, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
 (1) Basis of Presentation
   Revenues
  Three Months Ended
    
    Nine Months EndedNovember 3,
    
    October 28,
    
    November 3,
    
    October 28,Merchandise Areas
    
    2007
    
    2006
    
    2007
    
    2006Womens
    
    
    38
    %
    
    
    39
    %
    
    
    39
    %
    
    
    40
    %Cosmetics, Shoes and Accessories
    
    
    31
    
    
    
    30
    
    
    
    30
    
    
    
    28Mens
    
    
    15
    
    
    
    15
    
    
    
    15
    
    
    
    16Home
    
    
    9
    
    
    
    9
    
    
    
    9
    
    
    
    10Childrens
    
    
    7
    
    
    
    7
    
    
    
    7
    
    
    
    6Total
    
    
    100
    %
    
    
    100
    %
    
    
    100
    %
    
    
    100
    %
 (2) Implementation of New Accounting Standards
    8




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##### 



BELK, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
 (3) Comprehensive Income (Loss)
  Three Months Ended
    
    
    Nine Months EndedNovember 3,
    
    
    October 28,
    
    
    November 3,
    
    
    October 28,2007
    
    
    2006
    
    
    2007
    
    
    2006(dollars in thousands)
    
    
    (dollars in thousands)Net income (loss)
    
    $
    (6,925
    )
    
    $
    23,056
    
    
    $
    10,071
    
    
    $
    68,834Other comprehensive income (loss):Unrealized (loss) gain on investments, net of $15 and $225 income tax
benefit for the three and nine
months ended November 3, 2007,
respectively and $73 and $203
income tax expense for the three
and nine months ended October 28,
2006, respectively.
    
    
    (25
    )
    
    
    122
    
    
    
    (378
    )
    
    
    342Net change in fair value of interest rate swaps, net of $687 and $717
income tax benefit for the three
and nine months ended November 3,
2007, respectively and $228 income
tax benefit and $521 income tax
expense for the three and nine
months ended October 28, 2006,
respectively.
    
    
    (1,158
    )
    
    
    (385
    )
    
    
    (1,209
    )
    
    
    878Interest rate swap losses reclassified into interest expense from
other comprehensive income, net of
$41 income tax expense for the
nine months ended November 3, 2007
and $20 and $61 income tax expense
for the three and nine months
ended October 28, 2006,
respectively.
    
    
    
    
    
    
    34
    
    
    
    69
    
    
    
    103Reclassification adjustment for interest rate swap dedesignation
gain included in gain (loss) on
investments, net of $7 income tax
benefit for the nine months ended
November 3, 2007.
    
    
    
    
    
    
    
    
    
    
    (51
    )
    
    
    Defined benefit expense, net of $1,194 and $3,583 income taxes
for the three and nine months
ended November 3, 2007,
respectively and $1,231 and $3,693
income taxes for the three and
nine months ended October 28,
2006, respectively.
    
    
    2,012
    
    
    
    2,074
    
    
    
    6,035
    
    
    
    6,222Other comprehensive income
    
    
    829
    
    
    
    1,845
    
    
    
    4,466
    
    
    
    7,545Total comprehensive income (loss)
    
    $
    (6,096
    )
    
    $
    24,901
    
    
    $
    14,537
    
    
    $
    76,379
 (4) Accumulated Other Comprehensive Loss
  November 3,
    
    
    February 3,2007
    
    
    2007(dollars in thousands)Unrealized gains on investments, net of $838 and $1,063
income tax expense as of November 3, 2007 and
February 3, 2007, respectively.
    
    $
    1,414
    
    
    $
    1,792Unrealized loss on interest rate swaps, net of $808
and $125 income tax benefit as of November 3,
2007 and February 3, 2007, respectively.
    
    
    (1,362
    )
    
    
    (171
    )Defined benefit plans, net of $46,640 and $50,223
income tax benefit as of November 3, 2007 and
February 3, 2007, respectively.
    
    
    (78,569
    )
    
    
    (84,604
    )Accumulated other comprehensive loss
    
    $
    (78,517
    )
    
    $
    (82,983
    )
 (5) Parisian Acquisition
  9




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##### 



BELK, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
   dollars in thousandsAccounts receivable, net
    
    $
    1,058Inventory
    
    
    207,012Other current assets
    
    
    4,499Property and equipment
    
    
    179,322Goodwill
    
    
    74,159Deferred income taxes
    
    
    26,144Other assets
    
    
    6,545Total assets acquired
    
    
    498,739Current liabilities
    
    
    160,506Long-term liabilities
    
    
    23,529Total liabilities assumed
    
    
    184,035Net assets acquired
    
    $
    314,704
  (6) Borrowings
  November 3,
    
    
    February 3,2007
    
    
    2007(dollars in thousands)Bond facility
    
    $
    
    
    
    $
    125,000Credit facility term loan
    
    
    350,000
    
    
    
    350,000Senior notes
    
    
    325,000
    
    
    
    200,000Capital lease agreements through August
2020
    
    
    30,468
    
    
    
    38,342State bond facility
    
    
    17,780
    
    
    
    21,000723,248
    
    
    
    734,342Less current installments
    
    
    (4,551
    )
    
    
    (4,594
    )Long-term debt and capital lease
obligations, excluding
current installments
    
    $
    718,697
    
    
    $
    729,748
   10




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##### 



BELK, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
    (7) Income Taxes
     11




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##### 



BELK, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
  (8) Asset Impairment and Store Closing Costs
   (9) Sale of Property
   (10) Pension and Postretirement Benefits
   Three Months EndedPension Plan
    
    
    Old SERP Plan
    
    
    Postretirement PlanNovember 3,
    
    
    October 28,
    
    
    November 3,
    
    
    October 28,
    
    
    November 3,
    
    
    October 28,2007
    
    
    2006
    
    
    2007
    
    
    2006
    
    
    2007
    
    
    2006(dollars in thousands)Service cost
    
    $
    877
    
    
    $
    896
    
    
    $
    46
    
    
    $
    33
    
    
    $
    42
    
    
    $
    40Interest cost
    
    
    5,783
    
    
    
    5,386
    
    
    
    177
    
    
    
    164
    
    
    
    418
    
    
    
    400Expected return on plan assets
    
    
    (5,798
    )
    
    
    (5,981
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Amortization of transition
obligation
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    65
    
    
    
    65Amortization of prior service cost
    
    
    124
    
    
    
    144
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Amortization of the net (gain) loss
    
    
    2,927
    
    
    
    3,004
    
    
    
    49
    
    
    
    10
    
    
    
    41
    
    
    
    (18
    )Net periodic benefit expense
    
    $
    3,913
    
    
    $
    3,449
    
    
    $
    272
    
    
    $
    207
    
    
    $
    566
    
    
    $
    487
 12




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##### 



BELK, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
 Nine Months EndedPension Plan
    
    
    Old SERP Plan
    
    
    Postretirement PlanNovember 3,
    
    
    October 28,
    
    
    November 3,
    
    
    October 28,
    
    
    November 3,
    
    
    October 28,2007
    
    
    2006
    
    
    2007
    
    
    2006
    
    
    2007
    
    
    2006(dollars in thousands)Service cost
    
    $
    2,631
    
    
    $
    2,688
    
    
    $
    138
    
    
    $
    99
    
    
    $
    126
    
    
    $
    120Interest cost
    
    
    17,349
    
    
    
    16,158
    
    
    
    531
    
    
    
    492
    
    
    
    1,254
    
    
    
    1,200Expected return on plan assets
    
    
    (17,394
    )
    
    
    (17,943
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Amortization of transition
obligation
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    195
    
    
    
    195Amortization of prior service cost
    
    
    372
    
    
    
    432
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Amortization of the net (gain) loss
    
    
    8,781
    
    
    
    9,012
    
    
    
    147
    
    
    
    30
    
    
    
    123
    
    
    
    (54
    )Net periodic benefit expense
    
    $
    11,739
    
    
    $
    10,347
    
    
    $
    816
    
    
    $
    621
    
    
    $
    1,698
    
    
    $
    1,461
  (11) Earnings per Share
  Nine Months EndedNovember 3,2007Basic Shares
    
    
    49,809,867Dilutive contingently-issuable non-vested share awards
    
    
    31,696Diluted Shares
    
    
    49,841,563
 (12) Repurchase of Common Stock
  13




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##### 



Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
 Overview
          14




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##### 



Parisian Acquisition
   Migerobe, Inc. Acquisition
  Results of Operations
  Three Months Ended
    
    
    Nine Months EndedNovember 3,
    
    
    October 28,
    
    
    November 3,
    
    
    October 28,2007
    
    
    2006
    
    
    2007
    
    
    2006SELECTED FINANCIAL DATARevenues
    
    
    100.0
    %
    
    
    100.0
    %
    
    
    100.0
    %
    
    
    100.0
    %Cost of goods sold (including occupancy and buying expenses)
    
    
    70.7
    
    
    
    67.4
    
    
    
    69.5
    
    
    
    67.0Selling, general and administrative expenses
    
    
    28.9
    
    
    
    28.1
    
    
    
    27.9
    
    
    
    27.4Asset impairment and store closing costs
    
    
    0.3
    
    
    
    0.1
    
    
    
    0.4
    
    
    
    0.1Gain on sale of property and equipment
    
    
    0.3
    
    
    
    1.1
    
    
    
    0.1
    
    
    
    0.4Operating income
    
    
    0.3
    
    
    
    5.5
    
    
    
    2.3
    
    
    
    5.9Interest expense, net
    
    
    1.9
    
    
    
    1.5
    
    
    
    1.7
    
    
    
    1.5Gain (loss) on sale of investments
    
    
    
    
    
    
    0.4
    
    
    
    
    
    
    
    0.2Income (loss) before income taxes
    
    
    (1.5
    )
    
    
    4.5
    
    
    
    0.5
    
    
    
    4.7Income tax expense (benefit)
    
    
    (0.7
    )
    
    
    1.6
    
    
    
    0.2
    
    
    
    1.7Net income (loss)
    
    
    (0.9
    )
    
    
    2.9
    
    
    
    0.4
    
    
    
    3.0Comparable store net revenue increase (decrease)
    
    
    (4.4
    )
    
    
    7.4
    
    
    
    0.2
    
    
    
    4.9
 15




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##### 



Revenues
  Three Months Ended
    
    Nine Months EndedNovember 3,
    
    October 28,
    
    November 3,
    
    October 28,Merchandise Areas
    
    2007
    
    2006
    
    2007
    
    2006Womens
    
    
    38
    %
    
    
    39
    %
    
    
    39
    %
    
    
    40
    %Cosmetics, Shoes and Accessories
    
    
    31
    
    
    
    30
    
    
    
    30
    
    
    
    28Mens
    
    
    15
    
    
    
    15
    
    
    
    15
    
    
    
    16Home
    
    
    9
    
    
    
    9
    
    
    
    9
    
    
    
    10Childrens
    
    
    7
    
    
    
    7
    
    
    
    7
    
    
    
    6Total
    
    
    100
    %
    
    
    100
    %
    
    
    100
    %
    
    
    100
    %
 Comparison of the Three and Nine Months Ended November 3, 2007 and October 28, 2006
 Revenues.
  Cost of goods sold.
  Selling, general and administrative expenses
 
    
    Selling-related expenses (primarily consisting of payroll and advertising expenses)
increased as a percentage of revenues by 2.94%, or $26.3 million, primarily due to
increased costs associated with the Parisian Acquisition coupled with an overall decrease
in comparable store sales.
    
    Acquisition-related expenses decreased as a percentage of revenues by 0.57%, or $4.5
million, due to the fiscal year 2007 Parisian Acquisition integration being substantially
completed as of November 3, 2007.
 16




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##### 




    
    Performance based compensation decreased as a percentage of revenues by 1.87%, or $15.0
million, due to lower than expected operating performance.
  
    
    Selling-related expenses (primarily consisting of payroll and advertising expenses)
increased as a percentage of revenues by 1.06%, or $84.8 million, primarily due to
increased costs associated with the Parisian Acquisition coupled with relatively flat
overall comparable store sales.
    
    Acquisition-related expenses increased as a percentage of revenues by 0.27%, or $7.9
million, due to the fiscal year 2007 Parisian Acquisition integration.
    
    Performance based compensation decreased as a percentage of revenues by 0.65%, or $14.7
million, due to lower than expected operating performance.
 Asset impairment and store closing costs.
  Gain on sale of property and equipment.
  Interest expense, net.
 Gain (loss) on sale of investments.
 17




---



##### 



Income tax expense (benefit).
  Seasonality and Quarterly Fluctuations
  Liquidity and Capital Resources
      18




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##### 



Contractual Obligations and Commercial Commitments
  Payments Due by PeriodUpdated Contractual Obligations
    
    Total
    
    
    Within 1 Year
    
    
    2 - 3 Years
    
    
    4 - 5 Years
    
    
    After 5 Years(dollars in thousands)Long-Term Debt
    
    $
    692,780
    
    
    $
    
    
    
    $
    
    
    
    $
    350,000
    
    
    $
    342,780Estimated Interest Payments on Debt (a)
    
    
    244,959
    
    
    
    41,711
    
    
    
    81,420
    
    
    
    57,791
    
    
    
    64,037Line of Credit
    
    
    33,695
    
    
    
    33,695
    
    
    
    
    
    
    
    
    
    
    
    Purchase Obligations (b)
    
    
    178,979
    
    
    
    81,901
    
    
    
    46,360
    
    
    
    30,050
    
    
    
    20,668Amount
of Commitment Expiration per PeriodTotal
AmountsCommitted
    
    
    Within 1 Year
    
    
    2 - 3 Years
    
    
    4 - 5 Years
    
    
    After 5 Years(dollars in thousands)Standby Letters of Credit
    
    $
    12,499
    
    
    $
    12,499
    
    
    $
    
    
    
    $
    
    
    
    $
    
 (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 6.5% over the term of the variable rate
debt agreements.(b)
    
    Purchase obligations include agreements to purchase goods or services that
are enforceable and legally binding and that specify all significant terms,
including: fixed or minimum quantities to be purchased; fixed, minimum or
variable price provisions; and the approximate timing of the
transaction. Agreements that are cancelable without penalty
 19




---



##### 



have been excluded. Purchase
obligations relate primarily to purchases of property and equipment,
information technology contracts, maintenance agreements and advertising
contracts.
 Off-Balance Sheet Arrangements
  Item 3. Quantitative and Qualitative Disclosures About Market Risk
   Item 4. Controls and Procedures
   20




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##### 



PART II  OTHER INFORMATION
 Item 1. Legal Proceedings
  Item 1A. Risk Factors
  Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
  Item 3. Defaults Upon Senior Securities
  Item 4. Submission of Matters to a Vote of Security Holders
  Item 5. Other Information
  Item 6. Exhibits
  3.1
    
    Form of Amended and Restated Certificate of Incorporation of the Company
(incorporated by reference to pages B-24 to B-33 of the Companys Registration Statement
on Form S-4/A, filed on March 5, 1998 (File No. 333-42935)).3.2
    
    Form of Second Amended and Restated Bylaws of the Company (incorporated by reference
to Exhibit 3.2 of the Companys Annual Report on Form 10-K for the fiscal year ended
January 31, 2004).4.1
    
    Articles Fourth, Fifth and Seventh of the Amended and Restated Certificate of
Incorporation of the Company (incorporated by reference to pages B-24 to B-33 of the
Companys Registration Statement on Form S-4/A, filed on March 5, 1998 (File No.
333-42935)).4.2
    
    Articles I and IV of the Second Amended and Restated Bylaws of the Company
(incorporated by reference to Exhibit 3.2 of the Companys Annual Report on Form 10-K for
the fiscal year ended January 31, 2004).10.1
    
    Note Purchase Agreement, dated as of August 31, 2007, by and among Belk, Inc. and
certain subsidiaries of Belk, Inc., as obligors, and the purchasers referred to therein
(incorporated by reference to Exhibit 10.1 of the Companys Current Report on Form 8-K,
filed on September 7, 2007).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.
 21




---



##### 



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.
 22




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##### 



SIGNATURES
  BELK, INC.Dated: December 13, 2007
    
    By:
    
    /s/ Ralph A. PittsRalph A. Pitts
Executive Vice President, General Counsel and
Corporate Secretary
(Authorized Officer of the Registrant)By:
    
    /s/ Brian T. MarleyBrian T. Marley
Executive Vice President and Chief Financial Officer
(Principal Financial Officer)
 23