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 3, 2008ORo
    
    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
  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.     Consolidated Financial Statements (unaudited)Condensed Consolidated Statements of Income for the Three Months Ended
May 3, 2008 and May 5, 2007
    
    
    4Consolidated Balance Sheets as of May 3, 2008 and February 2, 2008
    
    
    5Consolidated Statement of Changes in Stockholders Equity and
Comprehensive Income for the Three Months Ended May 3, 2008
    
    
    6Consolidated Statements of Cash Flows for the Three Months
Ended May 3, 2008 and May 5, 2007
    
    
    7Notes to Unaudited 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
    
    
    15PART 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.     Submission of Matters to a Vote of Security Holders
    
    
    17Item 5.     Other Information
    
    
    17Item 6.     Exhibits
    
    
    17




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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, 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;
    
    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 the development and launch of an
updated and redesigned belk.com website, including our ability to meet the systems challenges
of expanding and redesigning the website and our ability to efficiently operate a new
eCommerce fulfillment facility; and
    
    Our ability to comply with debt covenants which could adversely affect our capital
resources, financial condition and liquidity.




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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 EndedMay 3,
    
    
    May 5,2008
    
    
    2007Revenues
    
    $
    817,312
    
    
    $
    904,484Cost of goods sold (including occupancy, distribution
and buying expenses)
    
    
    558,249
    
    
    
    612,589Selling, general and administrative expenses
    
    
    239,235
    
    
    
    254,279Gain on sale of property and equipment
    
    
    969
    
    
    
    722Asset impairment and store closing costs
    
    
    559
    
    
    
    8,617Operating income
    
    
    20,238
    
    
    
    29,721Interest expense, net
    
    
    (13,272
    )
    
    
    (14,620
    )Gain on investments
    
    
    863
    
    
    
    Income before income taxes
    
    
    7,829
    
    
    
    15,101Income tax expense
    
    
    2,700
    
    
    
    5,600Net income
    
    $
    5,129
    
    
    $
    9,501Basic and diluted net income per share
    
    $
    0.10
    
    
    $
    0.19Weighted average shares outstanding  basic and diluted
    
    
    49,613,850
    
    
    
    50,243,552
  4




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BELK, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(unaudited)
(dollars in thousands, except share amounts)
 May 3,
    
    
    February 2,2008
    
    
    2008AssetsCurrent assets:Cash and cash equivalents
    
    $
    131,045
    
    
    $
    186,973Short-term investments
    
    
    17,750
    
    
    
    Accounts receivable, net
    
    
    50,589
    
    
    
    65,987Merchandise inventory
    
    
    989,020
    
    
    
    932,777Property held for sale
    
    
    
    
    
    
    11,036Prepaid income taxes, expenses and other current assets
    
    
    31,608
    
    
    
    21,594Total current assets
    
    
    1,220,012
    
    
    
    1,218,367Investment securities
    
    
    3,655
    
    
    
    4,299Property and equipment, net of accumulated depreciation and amortization
of $1,067,443 and $1,027,397 as of May 3, 2008 and February 2, 2008, respectively
    
    
    1,243,589
    
    
    
    1,248,030Goodwill
    
    
    326,930
    
    
    
    326,930Deferred income taxes
    
    
    6,232
    
    
    
    5,196Other assets
    
    
    51,344
    
    
    
    48,493Total assets
    
    $
    2,851,762
    
    
    $
    2,851,315Liabilities and Stockholders EquityCurrent liabilities:Accounts payable
    
    $
    286,891
    
    
    $
    274,092Accrued liabilities
    
    
    158,364
    
    
    
    135,974Accrued income taxes
    
    
    
    
    
    
    25,980Deferred income taxes
    
    
    28,632
    
    
    
    27,293Current installments of long-term debt and capital lease obligations
    
    
    4,528
    
    
    
    4,481Total current liabilities
    
    
    478,415
    
    
    
    467,820Long-term debt and capital lease obligations, excluding current installments
    
    
    716,805
    
    
    
    717,660Interest rate swap liability
    
    
    6,003
    
    
    
    8,282Deferred compensation and other noncurrent liabilities
    
    
    274,039
    
    
    
    268,827Total liabilities
    
    
    1,475,262
    
    
    
    1,462,589Stockholders equity:Preferred stock
    
    
    
    
    
    
    Common stock, 400 million shares authorized and 49.6 and 49.6 million shares issued
and outstanding as of May 3, 2008 and February 2, 2008, respectively
    
    
    496
    
    
    
    496Paid-in capital
    
    
    479,327
    
    
    
    479,020Retained earnings
    
    
    962,490
    
    
    
    977,206Accumulated other comprehensive loss
    
    
    (65,813
    )
    
    
    (67,996
    )Total stockholders equity
    
    
    1,376,500
    
    
    
    1,388,726Total liabilities and stockholders equity
    
    $
    2,851,762
    
    
    $
    2,851,315
  5




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BELK, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS EQUITY
AND COMPREHENSIVE INCOME
(unaudited)
(in thousands)
 AccumulatedCommon
    
    
    Common
    
    
    
    
    
    
    
    
    
    
    OtherStock
    
    
    Stock
    
    
    Paid-in
    
    
    Retained
    
    
    ComprehensiveShares
    
    
    Amount
    
    
    Capital
    
    
    Earnings
    
    
    Income (Loss)
    
    
    TotalBalance at February 2, 2008
    
    
    49,569
    
    
    $
    496
    
    
    $
    479,020
    
    
    $
    977,206
    
    
    $
    (67,996
    )
    
    $
    1,388,726Comprehensive income:Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    5,129
    
    
    
    
    
    
    
    5,129Unrealized loss on investments,
net of $240 income taxes
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (404
    )
    
    
    (404
    )Unrealized gain on interest rate swaps,
net of $528 income taxes
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    889
    
    
    
    889Amortization of defined benefit
obligations,
net of $1,008 income taxes
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,698
    
    
    
    1,698Total comprehensive income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    7,312Cash dividends
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (19,845
    )
    
    
    
    
    
    
    (19,845
    )Issuance of stock-based compensation
    
    
    
    
    
    
    
    
    
    
    (444
    )
    
    
    
    
    
    
    
    
    
    
    (444
    )Stock-based compensation expense
    
    
    
    
    
    
    
    
    
    
    751
    
    
    
    
    
    
    
    
    
    
    
    751Common stock issued
    
    
    45
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Balance at May 3, 2008
    
    
    49,614
    
    
    $
    496
    
    
    $
    479,327
    
    
    $
    962,490
    
    
    $
    (65,813
    )
    
    $
    1,376,500
  6




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BELK, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited)
(dollars in thousands)
 Three Months EndedMay 3,
    
    
    May 5,2008
    
    
    2007Cash flows from operating activities:Net income
    
    $
    5,129
    
    
    $
    9,501Adjustments to reconcile net income to net cash provided by operating activities:Asset impairment and store closing costs
    
    
    559
    
    
    
    8,617Deferred income tax (benefit) expense
    
    
    (899
    )
    
    
    1,426Depreciation and amortization expense
    
    
    40,972
    
    
    
    40,666Stock-based compensation expense
    
    
    751
    
    
    
    1,819Gain on sale of property and equipment
    
    
    (312
    )
    
    
    (198
    )Amortization of deferred gain on sale and leaseback
    
    
    (657
    )
    
    
    (524
    )Gain on investments
    
    
    (863
    )
    
    
    (Increase) decrease in:Accounts receivable, net
    
    
    15,148
    
    
    
    12,673Merchandise inventory
    
    
    (56,243
    )
    
    
    (84,147
    )Prepaid expenses and other assets
    
    
    (14,662
    )
    
    
    (12,237
    )Increase (decrease) in:Accounts payable and accrued liabilities
    
    
    36,767
    
    
    
    38,640Accrued income taxes
    
    
    (25,980
    )
    
    
    (22,686
    )Deferred compensation and other liabilities
    
    
    9,778
    
    
    
    13,283Net cash provided by operating activities
    
    
    9,488
    
    
    
    6,833Cash flows from investing activities:Purchases of short-term investments
    
    
    (17,750
    )
    
    
    (214,590
    )Sales of short-term investments
    
    
    
    
    
    
    121,445Purchases of property and equipment
    
    
    (40,340
    )
    
    
    (51,887
    )Proceeds from sales of property and equipment
    
    
    14,094
    
    
    
    42,532Net cash used by investing activities
    
    
    (43,996
    )
    
    
    (102,500
    )Cash flows from financing activities:Proceeds from issuance of long-term debt
    
    
    
    
    
    
    355Principal payments on long-term debt and capital lease obligations
    
    
    (1,131
    )
    
    
    (1,028
    )Cash paid for withholding taxes in lieu of stock-based compensation shares
    
    
    (598
    )
    
    
    (3,678
    )Stock compensation tax benefit
    
    
    154
    
    
    
    2,382Dividends paid
    
    
    (19,845
    )
    
    
    (20,097
    )Net cash used by financing activities
    
    
    (21,420
    )
    
    
    (22,066
    )Net decrease in cash and cash equivalents
    
    
    (55,928
    )
    
    
    (117,733
    )Cash and cash equivalents at beginning of period
    
    
    186,973
    
    
    
    171,239Cash and cash equivalents at end of period
    
    $
    131,045
    
    
    $
    53,506Supplemental schedule of noncash investing and financing activities:Increase (decrease) in property and equipment through accrued purchases
    
    $
    (1,546
    )
    
    $
    6,049Decrease in property and equipment through adjustment of Parisian goodwill
    
    
    
    
    
    
    5,674Decrease in property and equipment through adjustment of Parisian capital lease
obligation
    
    
    
    
    
    
    4,315
  7




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BELK, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
 (1) Basis of Presentation
   (2) Implementation of New Accounting Standards
  (3) Comprehensive Income
  Three Months EndedMay 3,
    
    
    May 5,2008
    
    
    2007(dollars in thousands)Net income
    
    $
    5,129
    
    
    $
    9,501Other comprehensive income (loss):Unrealized loss on investments, net of $240 and $22 income taxes
for the three months ended May 3,
2008 and May 5, 2007, respectively.
    
    
    (404
    )
    
    
    (37
    )Net change in fair value of interest rate swaps, net of $528 and $319
income taxes for the three months
ended May 3, 2008 and May 5, 2007,
respectively.
    
    
    889
    
    
    
    (537
    )Interest rate swap losses reclassified into interest expense from other
comprehensive income, net of $20
income taxes for the three months
ended May 5, 2007.
    
    
    
    
    
    
    34Amortization of defined benefit obligations, net of $1,008 and $1,189
income taxes for the three months
ended May 3, 2008 and May 5, 2007,
respectively.
    
    
    1,698
    
    
    
    2,003Other comprehensive income
    
    
    2,183
    
    
    
    1,463Total comprehensive income
    
    $
    7,312
    
    
    $
    10,964
 8




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BELK, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
 (4) Accumulated Other Comprehensive Loss
  May 3,
    
    
    February 2,2008
    
    
    2008(dollars in thousands)Unrealized gains on investments, net of $444 and $684
income taxes as of May 3, 2008 and February 2,
2008, respectively.
    
    $
    748
    
    
    $
    1,153Unrealized loss on interest rate swaps, net of $1,713
and $2,241 income taxes as of May 3, 2008 and
February 2, 2008, respectively.
    
    
    (2,886
    )
    
    
    (3,775
    )Defined benefit obligations, net of $37,799 and $38,807
income taxes as of May 3, 2008 and February 2, 2008,
respectively.
    
    
    (63,675
    )
    
    
    (65,374
    )Accumulated other comprehensive loss
    
    $
    (65,813
    )
    
    $
    (67,996
    )
 (5) Fair Value Measurements
     9




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BELK, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
  Fair Value Measurements at Reporting Date UsingQuoted Prices in
    
    
    
    
    
    
    SignificantActive Markets for
    
    
    Significant Other
    
    
    Unobservable(in thousands)
    
    May 3,
    
    
    Identical Assets
    
    
    Observable Inputs
    
    
    InputsDescription
    
    2008
    
    
    (Level 1)
    
    
    (Level 2)
    
    
    (Level 3)Available-for-sale securities
    
    $
    3,655
    
    
    $
    3,655
    
    
    $
    
    
    
    $
    Total assets measured at fair value
    
    $
    3,655
    
    
    $
    3,655
    
    
    $
    
    
    
    $
    Interest rate swap liability
    
    $
    6,003
    
    
    $
    
    
    
    $
    6,003
    
    
    $
    Total liabilities measured at fair
value
    
    $
    6,003
    
    
    $
    
    
    
    $
    6,003
    
    
    $
    
  (6) Asset Impairment and Store Closing Costs
  (7) Sale of Properties
    (8) Pension and Postretirement Benefits
  10




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BELK, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
  Three Months EndedPension Plan
    
    
    Old SERP Plan
    
    
    Postretirement PlanMay 3,
    
    
    May 5,
    
    
    May 3,
    
    
    May 5,
    
    
    May 3,
    
    
    May 5,2008
    
    
    2007
    
    
    2008
    
    
    2007
    
    
    2008
    
    
    2007(dollars in thousands)Service cost
    
    $
    859
    
    
    $
    877
    
    
    $
    47
    
    
    $
    46
    
    
    $
    33
    
    
    $
    42Interest cost
    
    
    6,149
    
    
    
    5,783
    
    
    
    182
    
    
    
    177
    
    
    
    407
    
    
    
    418Expected return on plan assets
    
    
    (5,896
    )
    
    
    (5,798
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Amortization of transition
obligation
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    65
    
    
    
    65Amortization of prior service cost
    
    
    124
    
    
    
    124
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Amortization of net loss
    
    
    2,459
    
    
    
    2,927
    
    
    
    54
    
    
    
    49
    
    
    
    4
    
    
    
    41Net periodic benefit expense
    
    $
    3,695
    
    
    $
    3,913
    
    
    $
    283
    
    
    $
    272
    
    
    $
    509
    
    
    $
    566
  (9) Earnings per Share
  (10) Stock-Based Compensation
  (11) Subsequent Event
  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 3,
    
    
    May 5,2008
    
    
    2007SELECTED FINANCIAL DATARevenues
    
    
    100.0
    %
    
    
    100.0
    %Cost of goods sold (including occupancy,
distribution and buying expenses)
    
    
    68.3
    
    
    
    67.7Selling, general and administrative expenses
    
    
    29.3
    
    
    
    28.1Gain on sale of property and equipment
    
    
    0.1
    
    
    
    0.1Asset impairment and store closing costs
    
    
    0.1
    
    
    
    1.0Operating income
    
    
    2.5
    
    
    
    3.3Interest expense, net
    
    
    1.6
    
    
    
    1.6Gain on investments
    
    
    0.1
    
    
    
    Income before income taxes
    
    
    1.0
    
    
    
    1.7Income tax expense
    
    
    0.3
    
    
    
    0.6Net income
    
    
    0.6
    
    
    
    1.1Comparable store net revenue increase (decrease)
    
    
    (8.7
    )
    
    
    2.7
 Revenues
  Three Months EndedMay 3,
    
    
    May 5,Merchandise Areas
    
    2008
    
    
    2007Womens
    
    
    40
    %
    
    
    40
    %Cosmetics, Shoes and Accessories
    
    
    31
    
    
    
    30Mens
    
    
    14
    
    
    
    15Home
    
    
    8
    
    
    
    8Childrens
    
    
    7
    
    
    
    7Total
    
    
    100
    %
    
    
    100
    %
 Comparison of the Three months Ended May 3, 2008 and May 5, 2007
 Revenues.
 Cost of goods sold.
 13




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Selling, general and administrative expenses
 Asset impairment and store closing costs.
 Income tax expense.
 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
  Item 4. Controls and Procedures
  15




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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. 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
    
    Belk, Inc. Revised Executive Long Term Incentive Plan.
 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.
 17




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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.
 18




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SIGNATURES
  BELK, INC.Dated: June 12, 2008
    
    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)
 19