##### Table of Contents



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 May 1, 2010
 OR
 o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934.
 For the transition period from  to
 Commission file number 000-26207
 BELK, INC.
 
  Delaware
    
    56-2058574(State or Other Jurisdiction of Incorporation or Organization)
    
    (I.R.S. Employer Identification No.)
 2801 West Tyvola Road, Charlotte, NC
    
    28217-4500(Address of Principal Executive Offices)
    
    (Zip Code)
 (704) 357-1000
  
  þ o
 o o
  Large accelerated filer o
    
    Accelerated filer þ
    
    Non-accelerated filer o
    
    Smaller reporting company o(Do not check if a smaller reporting company)
 o þ




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##### 



BELK, INC.
Index to Form 10-Q
 PageNumberPART I. FINANCIAL INFORMATIONItem 1. Condensed Consolidated Financial Statements (unaudited)Condensed Consolidated Statements of Income for the Three Months Ended May 1, 2010 and
May 2, 2009
    
    
    4Condensed Consolidated Balance Sheets as of May 1, 2010 and January 30, 2010
    
    
    5Condensed Consolidated Statement of Changes in Stockholders Equity and Comprehensive Income
for the Three Months Ended May 1, 2010
    
    
    6Condensed Consolidated Statements of Cash Flows for the Three Months Ended May 1, 2010 and
May 2, 2009
    
    
    7Notes to Unaudited Condensed Consolidated Financial Statements
    
    
    8Item 2. Managements Discussion and Analysis of Financial Condition and Results of
Operations
    
    
    12Item 3. Quantitative and Qualitative Disclosures about Market Risk
    
    
    15Item 4. Controls and Procedures
    
    
    16PART II. OTHER INFORMATIONItem 1. Legal Proceedings
    
    
    17Item 1A. Risk Factors
    
    
    17Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
    
    
    17Item 3. Defaults upon Senior Securities
    
    
    17Item 4. Reserved
    
    
    17Item 5. Other Information
    
    
    17Item 6. Exhibits
    
    
    17EX-31.1EX-31.2EX-32.1EX-32.2




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This Report Contains Forward-Looking Statements
     
    
    General economic, political and business conditions, nationally and in our market areas,
including rates of economic growth, interest rates, inflation or deflation, consumer credit
availability, levels of consumer debt and bankruptcies, tax rates and policy, unemployment
trends, potential acts of terrorism and threats of such acts and other matters that influence
consumer confidence and spending;
    
    Our ability to comply with debt covenants which could adversely affect our capital
resources, financial condition and liquidity;
    
    Our ability to anticipate the demands of our customers for a wide variety of merchandise
and services, including our predictions about the merchandise mix, quality, style, service,
convenience and credit availability of our customers;
    
    Unseasonable and extreme weather conditions in our market areas;
    
    Seasonal fluctuations in quarterly net income due to the significant portion of our
revenues generated during the holiday season in the fourth fiscal quarter and the significant
amount of inventory we carry during that time;
    
    Competition from other department and specialty stores and other retailers, including
luxury goods retailers, general merchandise stores, Internet retailers, mail order retailers
and off-price and discount stores, in the areas of price, merchandise mix, quality, style,
service, convenience, credit availability and advertising;
    
    Our ability to effectively use advertising, marketing and promotional campaigns to generate
high customer traffic in our stores;
    
    Our ability to find qualified vendors from which to source our merchandise and our ability
to access products in a timely and efficient manner from a wide variety of domestic and
international vendors;
    
    The income we receive from, and the timing of receipt of, payments from GE, the operator of
our private label credit card business, which depends upon the amount of purchases made
through the proprietary credit cards, the level of finance charge income generated from the
credit card portfolio, the number of new accounts generated, changes in customers credit card
use, and GEs ability to extend credit to our customers;
    
    Our ability to correctly anticipate the appropriate levels of inventories during the year;
    
    Our ability to manage our expense structure;
    
    Our ability to identify opportunities to open new stores, or to remodel or expand existing
stores, including the availability of existing retail stores or store sites on acceptable
terms and our ability to successfully execute the Companys retailing concept in new markets
and geographic regions;
    
    The efficient and effective operation of our distribution network and information systems
to manage sales, distribution, merchandise planning and allocation functions;
    
    Our ability to expand our eCommerce business through our updated and redesigned belk.com
website, including our ability to meet the systems challenges of expanding and operating the
website and our ability to efficiently operate our eCommerce fulfillment facility;
    
    Our ability to realize the planned efficiencies from our acquisitions and effectively
integrate and operate the acquired stores and businesses; and
    
    The effectiveness of third parties in managing our outsourced business processes.




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PART I  FINANCIAL INFORMATION
 
 Item 1. Financial Statements
 BELK, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(dollars in thousands, except share and per share amounts)
(unaudited)
 Three Months EndedMay 1,
    
    
    May 2,2010
    
    
    2009Revenues
    
    
    803,913
    
    
    
    760,894Cost of goods sold (including occupancy, distribution
and buying expenses)
    
    
    536,551
    
    
    
    532,093Selling, general and administrative expenses
    
    
    218,018
    
    
    
    215,276Gain on sale of property and equipment
    
    
    808
    
    
    
    277Asset impairment and exit costs
    
    
    219
    
    
    
    411Operating income
    
    
    49,933
    
    
    
    13,391Interest expense, net
    
    
    (12,934
    )
    
    
    (12,559
    )Income before income taxes
    
    
    36,999
    
    
    
    832Income tax expense
    
    
    12,656
    
    
    
    288Net income
    
    $
    24,343
    
    
    $
    544Basic and diluted net income per share
    
    $
    0.50
    
    
    $
    0.01Weighted average shares outstanding  basic and diluted
    
    
    48,295,137
    
    
    
    48,758,349
  4




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BELK, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS
(dollars in thousands)
(unaudited)
 May 1,
    
    
    January 30,2010
    
    
    2010AssetsCurrent assets:Cash and cash equivalents
    
    $
    437,293
    
    
    $
    585,930Short-term investments
    
    
    
    
    
    
    2,500Accounts receivable, net
    
    
    43,196
    
    
    
    22,427Merchandise inventory
    
    
    874,855
    
    
    
    775,342Prepaid income taxes, expenses and other current assets
    
    
    28,421
    
    
    
    24,902Total current assets
    
    
    1,383,765
    
    
    
    1,411,101Investment securities
    
    
    6,850
    
    
    
    6,850Property and equipment, net of accumulated depreciation and amortization of $1,271,620
and $1,245,816 as of May 1, 2010 and January 30, 2010, respectively
    
    
    987,553
    
    
    
    1,009,250Deferred income taxes
    
    
    116,592
    
    
    
    117,827Other assets
    
    
    38,743
    
    
    
    37,547Total assets
    
    $
    2,533,503
    
    
    $
    2,582,575Liabilities and Stockholders EquityCurrent liabilities:Accounts payable
    
    $
    292,640
    
    
    $
    243,995Accrued liabilities
    
    
    151,380
    
    
    
    125,599Accrued income taxes
    
    
    11,454
    
    
    
    35,775Deferred income taxes
    
    
    16,470
    
    
    
    16,079Current installments of long-term debt and capital lease obligations
    
    
    4,468
    
    
    
    3,419Total current liabilities
    
    
    476,412
    
    
    
    424,867Long-term debt and capital lease obligations, excluding current installments
    
    
    612,276
    
    
    
    685,437Interest rate swap liability
    
    
    6,859
    
    
    
    7,403Retirement obligations and other noncurrent liabilities
    
    
    355,765
    
    
    
    370,573Total liabilities
    
    
    1,451,312
    
    
    
    1,488,280Stockholders equity:Preferred stock
    
    
    
    
    
    
    Common stock, 400 million shares authorized and 48.3 million shares issued and
outstanding as of May 1, 2010 and January 30, 2010.
    
    
    483
    
    
    
    483Paid-in capital
    
    
    451,969
    
    
    
    451,278Retained earnings
    
    
    784,668
    
    
    
    798,963Accumulated other comprehensive loss
    
    
    (154,929
    )
    
    
    (156,429
    )Total stockholders equity
    
    
    1,082,191
    
    
    
    1,094,295Total liabilities and stockholders equity
    
    $
    2,533,503
    
    
    $
    2,582,575
  5




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BELK, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS EQUITY
AND COMPREHENSIVE INCOME
(in thousands)
(unaudited)
 AccumulatedOtherCommon Stock
    
    
    Paid-in
    
    
    Retained
    
    
    ComprehensiveShares
    
    
    Amount
    
    
    Capital
    
    
    Earnings
    
    
    Income (Loss)
    
    
    TotalBalance at January 30, 2010
    
    
    48,286
    
    
    $
    483
    
    
    $
    451,278
    
    
    $
    798,963
    
    
    $
    (156,429
    )
    
    $
    1,094,295Comprehensive income:Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    24,343
    
    
    
    
    
    
    
    24,343Unrealized gain on interest rate
swaps,
net of $203 income taxes
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    341
    
    
    
    341Defined benefit expense, net of
$688 income taxes
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,159
    
    
    
    1,159Total comprehensive income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    25,843Cash dividends
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (38,638
    )
    
    
    
    
    
    
    (38,638
    )Issuance of stock-based compensation
    
    
    
    
    
    
    
    
    
    
    (1
    )
    
    
    
    
    
    
    
    
    
    
    (1
    )Stock-based compensation expense
    
    
    
    
    
    
    
    
    
    
    692
    
    
    
    
    
    
    
    
    
    
    
    692Common stock issued
    
    
    12
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Balance at May 1, 2010
    
    
    48,298
    
    
    $
    483
    
    
    $
    451,969
    
    
    $
    784,668
    
    
    $
    (154,929
    )
    
    $
    1,082,191
  6




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BELK, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(dollars in thousands)
(unaudited)
 Three Months EndedMay 1,
    
    
    May 2,2010
    
    
    2009Cash flows from operating activities:Net income
    
    $
    24,343
    
    
    
    544Adjustments to reconcile net income to net cash (used) provided by operating activities:Asset impairment and exit costs
    
    
    219
    
    
    
    411Deferred income tax expense (benefit)
    
    
    1,093
    
    
    
    (248
    )Depreciation and amortization expense
    
    
    36,803
    
    
    
    41,060Stock-based compensation expense
    
    
    692
    
    
    
    45(Gain) loss on sale of property and equipment
    
    
    (151
    )
    
    
    380Amortization of deferred gain on sale and leaseback
    
    
    (657
    )
    
    
    (657
    )Increase in:Accounts receivable, net
    
    
    (20,769
    )
    
    
    (13,850
    )Merchandise inventory
    
    
    (99,513
    )
    
    
    (53,496
    )Prepaid income taxes, expenses and other assets
    
    
    (6,308
    )
    
    
    (23,998
    )Increase (decrease) in:Accounts payable and accrued liabilities
    
    
    74,435
    
    
    
    69,786Accrued income taxes
    
    
    (24,321
    )
    
    
    (593
    )Retirement obligations and other liabilities
    
    
    (12,236
    )
    
    
    5,795Net cash (used) provided by operating activities
    
    
    (26,370
    )
    
    
    25,179Cash flows from investing activities:Purchases of property and equipment
    
    
    (9,980
    )
    
    
    (20,361
    )Proceeds from sales of property and equipment
    
    
    8
    
    
    
    5Proceeds from sales of short-term investments
    
    
    2,500
    
    
    
    Net cash used by investing activities
    
    
    (7,472
    )
    
    
    (20,356
    )Cash flows from financing activities:Principal payments on long-term debt and capital lease obligations
    
    
    (76,156
    )
    
    
    (1,137
    )Dividends paid
    
    
    (38,638
    )
    
    
    (9,752
    )Stock compensation tax benefit (expense)
    
    
    41
    
    
    
    (64
    )Cash paid for withholding taxes in lieu of stock-based compensation shares
    
    
    (42
    )
    
    
    (51
    )Net cash used by financing activities
    
    
    (114,795
    )
    
    
    (11,004
    )Net decrease in cash and cash equivalents
    
    
    (148,637
    )
    
    
    (6,181
    )Cash and cash equivalents at beginning of period
    
    
    585,930
    
    
    
    260,134Cash and cash equivalents at end of period
    
    $
    437,293
    
    
    $
    253,953Supplemental schedule of noncash investing activities:Increase (decrease) in property and equipment through accrued purchases
    
    $
    51
    
    
    $
    (7,087
    )Increase in property and equipment through assumption of capital leases
    
    
    4,045
    
    
    
    
  7




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BELK, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
 (1) Basis of Presentation
   (2) Comprehensive Income
  Three Months EndedMay 1,
    
    
    May 2,2010
    
    
    2009(dollars in thousands)Net income
    
    $
    24,343
    
    
    $
    544Other comprehensive income:Unrealized gain on investments, net of $92 income taxes for the three months ended
May 2, 2009.
    
    
    
    
    
    
    154Unrealized gain on interest rate swaps, net of $203 and $86 income taxes for the three
months ended May 1, 2010 and May 2, 2009, respectively.
    
    
    341
    
    
    
    145Defined benefit expense, net of $688 and $1,279 income taxes for the three months
ended May 1, 2010 and May 2, 2009, respectively.
    
    
    1,159
    
    
    
    2,154Other comprehensive income
    
    
    1,500
    
    
    
    2,453Total comprehensive income
    
    $
    25,843
    
    
    $
    2,997
 (3) Accumulated Other Comprehensive Loss
  May 1,
    
    
    January 30,2010
    
    
    2010(dollars in thousands)Unrealized loss on interest rate swap, net of $2,586
and $2,789 income taxes as of May 1, 2010 and January 30, 2010, respectively.
    
    
    (4,273
    )
    
    
    (4,614
    )Defined benefit plans, net of $90,033 and $90,721
income taxes as of May 1, 2010 and January 30, 2010,
respectively.
    
    
    (150,656
    )
    
    
    (151,815
    )Accumulated other comprehensive loss
    
    $
    (154,929
    )
    
    $
    (156,429
    )
 8




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BELK, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
 (4) Fair Value Measurements
      May 1, 2010
    
    January 30, 2010Carrying
    
    Fair
    
    Carrying
    
    FairValue
    
    Value
    
    Value
    
    Value(dollars in thousands)Financial assetsAuction rate security (a)
    
    $
    6,850
    
    
    $
    6,850
    
    
    $
    9,350
    
    
    $
    9,350Financial liabilitiesLong-term debt (excluding capitalized leases) (b)
    
    $
    592,780
    
    
    $
    581,327
    
    
    $
    667,780
    
    
    $
    647,287
 
 (a)
    
    Amounts represent held-to-maturity ARS backed by student loans, which are 97% guaranteed
under the Federal Family Education Loan Program, and carries the highest credit ratings of AAA.(b)
    
    Represents the sum of fixed rate and variable rate long-term debt excluding
capitalized leases.  9




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BELK, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
  (5) Asset Impairment and Exit Costs
  (6) Borrowings
  (7) Pension and Postretirement Benefits
     Three Months EndedPension Plan
    
    
    Old SERP Plan
    
    
    Postretirement PlanMay 1,
    
    
    May 2,
    
    
    May 1,
    
    
    May 2,
    
    
    May 1,
    
    
    May 2,2010
    
    
    2009
    
    
    2010
    
    
    2009
    
    
    2010
    
    
    2009(dollars in thousands)Service cost
    
    $
    
    
    
    $
    
    
    
    $
    18
    
    
    $
    32
    
    
    $
    37
    
    
    $
    33Interest cost
    
    
    6,517
    
    
    
    6,649
    
    
    
    155
    
    
    
    157
    
    
    
    340
    
    
    
    406Expected return on plan assets
    
    
    (6,550
    )
    
    
    (5,527
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Amortization of transition
obligation
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    66
    
    
    
    65Amortization of prior service cost
    
    
    
    
    
    
    124
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Amortization of net loss
    
    
    1,753
    
    
    
    3,234
    
    
    
    36
    
    
    
    
    
    
    
    (8
    )
    
    
    10Net periodic benefit expense
    
    $
    1,720
    
    
    $
    4,480
    
    
    $
    209
    
    
    $
    189
    
    
    $
    435
    
    
    $
    514
  (8) Earnings per Share
  10




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BELK, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
 (9) Repurchase of Common Stock
  11




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




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Results of Operations
  Three Months EndedMay 1,
    
    May 2,2010
    
    2009SELECTED FINANCIAL DATARevenues
    
    
    100.0
    %
    
    
    100.0
    %Cost of goods sold (including occupancy,
distribution and buying expenses)
    
    
    66.7
    
    
    
    69.9Selling, general and administrative expenses
    
    
    27.1
    
    
    
    28.3Gain on sale of property and equipment
    
    
    0.1
    
    
    
    Asset impairment and exit costs
    
    
    
    
    
    
    0.1Operating income
    
    
    6.2
    
    
    
    1.8Interest expense, net
    
    
    1.6
    
    
    
    1.7Income before income taxes
    
    
    4.6
    
    
    
    0.1Income tax expense
    
    
    1.6
    
    
    
    Net income
    
    
    3.0
    
    
    
    0.1Comparable store net revenue increase (decrease)
    
    
    6.4
    
    
    
    (7.7
    )
 Revenues
  Three Months EndedMay 1,
    
    May 2,Merchandise Areas
    
    2010
    
    2009Womens
    
    
    38
    %
    
    
    39
    %Cosmetics, Shoes and Accessories
    
    
    33
    
    
    
    33Mens
    
    
    15
    
    
    
    14Home
    
    
    7
    
    
    
    8Childrens
    
    
    7
    
    
    
    6Total
    
    
    100
    %
    
    
    100
    %
 Comparison of the Three Months Ended May 1, 2010 and May 2, 2009
 Revenues.
 Cost of goods sold.
 13




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Selling, general and administrative expenses
 Seasonality and Quarterly Fluctuations
  Liquidity and Capital Resources
     14




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Contractual Obligations and Commercial Commitments
  Off-Balance Sheet Arrangements
  
 Item 3. Quantitative and Qualitative Disclosures About Market Risk
  15




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Item 4. Controls and Procedures
   16




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PART II  OTHER INFORMATION
 
 Item 1. Legal Proceedings
  
 Item 1A. Risk Factors
  
 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
  
 Item 3. Defaults Upon Senior Securities
  
 Item 4. Reserved
 
 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).31.1
    
    Certification of the Chief Executive Officer pursuant to Rule 13a-14(a) or Rule
15d-14(a) of the Securities Exchange Act of 1934, as amended, as adopted under Section
302 of the Sarbanes-Oxley Act of 2002.31.2
    
    Certification of the Chief Financial Officer pursuant to Rule 13a-14(a) or Rule
15d-14(a) of the Securities Exchange Act of 1934, as amended, as adopted under Section
302 of the Sarbanes-Oxley Act of 2002.32.1
    
    Certification of the Chief Executive Officer Pursuant to 18 U.S.C. Section 1350, as
Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.32.2
    
    Certification of the Chief Financial Officer Pursuant to 18 U.S.C. Section 1350, as
Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
 17




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SIGNATURES
  BELK, INC.Dated:  June 8, 2010
    By:
    /s/ Ralph A. PittsRalph A. PittsExecutive Vice President, General Counsel and

Corporate Secretary

(Authorized Officer of the Registrant)By:
    /s/ Brian T. MarleyBrian T. MarleyExecutive Vice President and Chief Financial Officer

(Principal Financial Officer) 18