Market Price and Dividend Information

Family Dollar's Common Stock is traded on the New York Stock Exchange under
the ticker symbol FDO.  At November 1, 1999, there were approximately 2,210
holders of record of the Common Stock.  The accompanying tables give the high
and low sales prices of the Common Stock and the dividends declared per share
for each quarter of fiscal 1999 and 1998.

<TABLE>

Market Prices and Dividends

<CAPTION>

1999                           High        Low        Dividend
<S>                           <C>        <C>          <C>
First Quarter..............   $20.50     $11.50       $  .04 1/2
Second Quarter.............    22.44      17.94          .05
Third Quarter..............    26.75      19.00          .05
Fourth Quarter.............    25.94      19.50          .05

<CAPTION>

1998                            High       Low        Dividend
<S>                           <C>        <C>          <C>
First Quarter..............   $15.00     $10.34       $  .04
Second Quarter.............    18.31      13.06          .04 1/2
Third Quarter..............    19.56      15.31          .04 1/2
Fourth Quarter.............    21.88      13.38          .04 1/2

</TABLE>


<PAGE>

<TABLE>

SUMMARY OF SELECTED FINANCIAL DATA

<CAPTION>


                                            August 28,       August 29,       August 31,       August 31,
Years Ended                                    1999             1998             1997             1996

<S>                                     <C>              <C>              <C>              <C>
Net sales.............................  $2,751,181,355   $2,361,930,395   $1,994,973,237   $1,714,627,092
Cost of sales and operating expenses..   2,528,502,088    2,195,942,470    1,873,496,500    1,615,861,346
Income before income taxes and
  cumulative effect of accounting
  change..............................     222,679,267      165,987,925      121,476,737       98,765,746
Income taxes..........................      82,600,000       62,700,000       46,800,000       38,178,000
Income before cumulative effect
  of accounting change................     140,079,267      103,287,925       74,676,737       60,587,746
Cumulative effect of change in
  method of accounting for income
  taxes...............................           -                -                -                -
Net income............................     140,079,267      103,287,925       74,676,737       60,587,746
Earnings per common share:
  Income before cumulative effect of
  accounting change...................            $.81            $ .60            $ .44            $ .35
  Net income(1).......................            $.81            $ .60            $ .44            $ .35
Dividends declared.................... $    33,656,702    $  30,116,216     $ 26,848,520     $ 24,435,102
Dividends declared per common share           $.19.1/2         $.17 1/2         $.15 2/3         $.14 1/3
Total assets.......................... $ 1,095,251,636    $ 942,180,070     $780,293,852     $696,808,291
Working capital....................... $   341,408,422    $ 303,354,419     $283,476,028     $273,694,125
Shareholders' equity.................. $   690,651,058    $ 578,150,707     $500,198,473     $444,957,119
Stores opened.........................             366              315              236              223
Stores closed.........................             (59)             (65)             (50)             (58)
Number of stores - end of year........           3,324            3,017            2,767            2,581



<PAGE>

SUMMARY OF SELECTED FINANCIAL DATA
<CAPTION>



              August 31,       August 31,       August 31,      August 31,     August 31,     August 31,
                  1995           1994             1993            1992           1991           1990

           <C>               <C>             <C>             <C>              <C>           <C>
           $1,546,894,565    $1,428,440,427  $1,297,430,787  $1,158,703,861   $989,345,265  $874,395,095
            1,452,519,040     1,328,323,366   1,194,510,816   1,069,764,555    925,619,376   826,764,773


               94,375,525       100,117,061     102,919,971      88,939,306     63,725,889    47,630,322
               36,266,000        38,157,175      38,491,288      33,267,370     23,484,031    18,897,177

               58,109,525        61,959,886      64,428,683      55,671,936     40,241,858    28,733,145


                   -              1,139,153           -                -              -            -
               58,109,525        63,099,039      64,428,683      55,671,936     40,241,858    28,733,145


                    $ .34             $ .36           $ .39           $ .34          $ .24         $ .18
                    $ .34             $ .37           $ .39           $ .34          $ .24         $ .18
             $ 21,837,249      $ 18,656,163    $ 16,325,918    $ 13,988,516   $ 11,960,851   $10,819,248
                 $.12 2/3             $ .11        $.09 2/3       $ .08 1/3          $ .07      $.06 1/2
             $636,233,767      $592,821,871    $537,445,610    $478,027,178   $399,271,302  $355,096,527
             $264,671,854      $230,234,774    $205,863,199    $170,288,208   $136,207,278  $107,879,235
             $407,750,588      $370,172,275    $323,281,504    $271,772,441   $227,319,970  $197,076,663
                      213               202             174             160            122           122
                      (12)              (22)            (24)            (34)           (43)          (22)
                    2,416             2,215           2,035           1,885          1,759         1,680

(1) Figures represent both basic and diluted earnings per common share.
</TABLE>

<PAGE>


Management's Discussion and Analysis of Financial
Condition and Results of Operations


Net Sales

     Net sales increased approximately 16.5% ($389.3 million) in
fiscal 1999 compared with fiscal 1998, and approximately 18.4%
($367.0 million) in fiscal 1998 compared with fiscal 1997.  The
sales increases in fiscal  1999 and fiscal 1998 were attributable
to increased sales in existing stores and sales from new stores
opened as part of the Company's store expansion program.
     Comparable store sales increased approximately 7.8% in
fiscal 1999 and 9.4% in fiscal 1998, as compared with the
respective prior years, as customers continued to respond
favorably to the Company's everyday low pricing strategy.
Increased sales of hardlines merchandise have been the primary
contributor to the overall sales increases, with hardlines sales
increases in comparable stores of approximately 10.6% in fiscal
1999.  Hardlines as a percentage of total sales increased to
69.2% in fiscal 1999 compared to 67.4% in fiscal 1998.  The
Company has broadened its assortment of basic and seasonal
hardlines merchandise and dedicated more selling space in its
stores to hardlines over the past three fiscal years.  The
Company has correspondingly reduced its assortment and selling
space for softlines merchandise during this time period, and has
also reduced the average price points for this merchandise.
Notwithstanding these changes, softlines sales in comparable
stores increased approximately 2.0% in fiscal 1999.  The Company
expects the shift in merchandise mix to hardlines to continue in
fiscal 2000.
     The Company reduced the number of advertising circulars
distributed in fiscal 1999 to five, which was four fewer
circulars than were distributed in fiscal 1998.  The adverse
sales impact of discontinuing the circulars was more than offset
by the appeal of everyday low prices to our customers.
     The comparable store sales increase of 9.4% in fiscal 1998
was also primarily attributable to the favorable customer
response to everyday low pricing and increased sales of
hardlines.  In fiscal 1998, comparable store hardlines sales
increased approximately 12.5% and softlines sales increased
approximately 3.0%.  The Company distributed nine advertising
circulars in fiscal 1998, which was five fewer circulars than
were distributed in fiscal 1997.
     Hardlines merchandise includes primarily household chemical
and paper products, health and beauty aids, candy, snack and
other food, electronics, housewares and giftware, toys, school
supplies, hardware and automotive supplies.  Softlines
merchandise includes men's, women's, boy's, girl's and infant's
clothing, shoes, and domestic items such as blankets, sheets and
towels.
     During fiscal 1999, the Company opened 366 stores and closed
59 stores for a net addition of 307 stores, compared with the
opening of 315 stores and closing of 65 stores for a net addition


<PAGE>


of 250 stores during fiscal 1998.  The Company also expanded or
relocated 107 stores in fiscal 1999, compared with 90 stores that
were expanded or relocated in fiscal 1998.  In addition,
approximately 350 stores in fiscal 1999 and approximately 170
stores in fiscal 1998 were renovated to the current store layout
design.  The Company currently plans to open approximately 400 to
425 stores and close approximately 50 stores for a net addition
of 350 to 375 stores during fiscal 2000.  The Company also
currently expects to renovate an additional 300 stores and expand
or relocate approximately 150 stores in fiscal 2000.  Store
opening, closing, expansion, relocation, and renovation plans are
continuously reviewed and are subject to change.


Cost of Sales and Margin

Cost of sales increased approximately 15.4% ($244.8 million) in
fiscal 1999 compared with fiscal 1998, and approximately 17.7%
($238.5 million) in fiscal 1998 compared with fiscal 1997.  These
increases primarily reflected the additional sales volume in each
of the years.  Cost of sales, as a percentage of net sales, was
66.6% in fiscal 1999, 67.3% in fiscal 1998, and 67.7% in fiscal
1997.  The decrease in the cost of sales percentage for fiscal
1999 was due in part to decreases in advertising markdowns
related to the elimination of four advertising circulars and to
reduced clearance markdowns.  The decrease in the cost of sales
percentage for fiscal 1999 was mitigated by the increase in sales
of basic consumable merchandise, which typically carries a lower
margin.  The cost of sales percentages also are impacted by the
effectiveness of merchandise purchasing programs and by changes
in merchandise shrinkage losses and freight costs.  A reduction
in advertising markdowns due to the elimination of five
advertising circulars and a decrease in merchandise shrinkage
losses as a percentage of sales were the primary reasons for the
decrease in the cost of sales percentage for fiscal 1998 compared
with fiscal 1997.
     For fiscal 2000, the Company's plan is for the cost of sales
percentage to decrease slightly with continued reductions in
markdowns.


Selling, General and Administrative Expenses

Selling, general and administrative expenses increased
approximately 14.5% ($87.77 million) in fiscal 1999 compared with
fiscal 1998, and approximately 16.0% ($83.95 million) in fiscal
1998 compared with fiscal 1997.  The increases in these expenses
primarily were attributable to additional costs arising from the
continued growth in the number of stores in operation.  As a
percentage of net sales, selling, general and administrative
expenses were 25.3% in fiscal 1999, 25.7% in fiscal 1998, and
26.2% in fiscal 1997.  The percentage decrease in fiscal 1999


<PAGE>

primarily was due to the leverage provided by the 7.8% increase
in sales in comparable stores, continued improved store labor
performance, as well as a reduction in advertising expenses due
to the elimination of four advertising circulars.  These effects
were partially offset by start-up costs of the Company's fourth
full-service distribution center in Duncan, Oklahoma and by
increased technology costs.
     The percentage decrease in expenses in fiscal 1998 primarily
was due to the leverage provided by the 9.4% increase in sales in
comparable stores as well as a reduction in advertising expenses
due to the elimination of five advertising circulars.  These
effects were partially offset by an increase in store labor costs
due to the federal minimum wage increase that was effective
September 1, 1997, and by start-up costs of the Company's third
full-service distribution center in Warren County, Virginia.
     Selling, general and administrative expenses are expected to
increase in fiscal 2000 due to continued store growth and costs
associated with the Company's fifth full-service distribution
center.  However, the Company continues to focus on cost
containment efforts and plans for selling, general, and
administrative expenses in fiscal 2000 to decrease modestly as a
percentage of net sales.


Income Taxes

     The effective tax rate was 37.1% in fiscal 1999, 37.8% in
fiscal 1998 and 38.5% in fiscal 1997.  The decrease in the
effective tax rates compared to the prior years resulted
primarily from changes in effective state income tax rates.


Liquidity and Capital Resources

The Company has consistently maintained a strong position of
liquidity and financial strength.  Cash provided by operating
activities during fiscal 1999 was $110.9 million as compared to
$211.5 million in fiscal 1998 and $123.2 million in fiscal 1997.
These amounts have enabled the Company to fund its regular
operating needs, capital expenditure program and cash dividend
payments.  In addition, the Company maintains $100 million of
unsecured bank lines of credit for short-term financing and
periodically utilizes short-term borrowings to meet the cash
needs of its expansion program and seasonal inventory increases.
There were no long-term borrowings during fiscal 1999, 1998 or
1997.
     Merchandise inventories at August 28, 1999, increased 22.2%
over the level at August 29, 1998.  This increase was due in part
to additional inventory for 307 new stores and to stock the new
distribution center in Duncan, Oklahoma.  The Company also
accelerated the receipt of certain seasonal import merchandise to
the fourth quarter of fiscal 1999 from the first quarter of
fiscal 2000 to insure the efficient flow of the merchandise to
the stores for the fall and Christmas seasons.


<PAGE>


     The increase in capital expenditures to $125.0 million in
fiscal 1999 from $96.9 million in fiscal 1998 primarily was due
to expenditures incurred in fiscal 1999 to complete construction
of the fourth distribution center in Duncan, Oklahoma, as well as
costs to open an additional 51 new stores.  The Company also
increased its investment in information technology in fiscal
1999.  Capital expenditures for fiscal 2000 are currently
expected to be approximately $160 million, which primarily
represent estimated expenditures for new store expansion,
existing store expansion, relocation, and renovation, and
construction and equipping of the fifth distribution center, as
well as additional information technology investments.  The new
store expansion and the fifth distribution center also will
require additional investment in merchandise inventories.
     On November 5, 1999, the Company announced that the Board of
Directors has authorized the purchase of up to 5,000,000 shares
of its outstanding Common Stock from time to time as market
conditions warrant.
     Capital spending plans, including store expansion, are
continuously reviewed and are subject to change.  Cash flow from
current operations and short-term borrowings under the bank lines
of credit are expected to be sufficient to meet all foreseeable
liquidity and capital resource needs, including store expansion
and other capital spending programs and any Common Stock
purchases.  No long-term borrowings are now expected to be
required during fiscal 2000.


Year 2000

     The Company continues to address a situation believed to
affect virtually all companies and organizations that is commonly
referred to as Year 2000 issues.  Year 2000 issues relate to the
inability of certain computer software programs to properly
recognize and process date-sensitive information relative to the
Year 2000 and beyond.
     The Company has completed the assessment phase of its Year
2000 compliance program, during which the Company evaluated its
exposure to Year 2000 risks in its information technology (IT)
systems, as well as potential risks in other non-IT systems with
embedded technology and risks from the non-compliance of third
parties with which the Company has significant dealings.  The
Company has substantially completed planned remediation and
testing of its software applications and critical non-IT systems
with embedded technology for Year 2000 compliance.  In addition,
the Company implemented new financial and human resource software
as part of its strategic IT plan.  The implementation of this
software was completed in January 1999, and was not accelerated
due to Year 2000 issues.  The Company has spent approximately $1
million for Year 2000 assessment and remediation and no further
substantial expenditures are currently planned.  The Company's


<PAGE>

Year 2000 compliance program has not resulted in the deferral of
other significant planned IT projects.
     The Company presently believes that with the remediation of
existing software and implementation of new software, the Year
2000 issue will not pose significant internal operational
problems.  However, there can be no assurances that this will be
the case, and there are also risks to the Company's operations
from Year 2000 failures by third parties, such as merchandise
vendors, utility companies or government agencies.
     The Company has initiated a formal communication program
with significant vendors to evaluate their Year 2000 compliance,
and is assessing their responses to the Company's Year 2000
readiness questionnaire.  The majority of merchandise vendors
have responded to the effect that their ability to supply the
Company will not be affected by Year 2000 issues.  If a
significant vendor becomes unable to deliver merchandise or
services, the Company believes that substitute merchandise for
many of the goods the Company sells and substitutes for many of
the services it receives can be obtained from other vendors.  No
single merchandise supplier accounts for more than 1.5% of the
Company's merchandise purchases, and the Company does not
currently foresee any significant impairment in its ability to
procure merchandise due to operational failures of vendors.
However, the Company cannot assure timely compliance of vendors
and may be adversely affected by failures of significant vendors
to supply merchandise or services due to Year 2000 compliance
failures.
     Transportation of merchandise and utility service are two
particular concerns.  Approximately 45% of the Company's
merchandise is imported.  The Company has made and will continue
to make certain minor adjustments to historic import merchandise
flow and, where practical, has identified domestic alternatives
to imported goods.  Notwithstanding these contingency plans, any
significant disruptions in the global transportation industry,
including a delay in the processing of merchandise through
Customs, could cause a material adverse impact on the Company's
operations.  Also, any widespread interruptions of utility
service could have material adverse consequences.  The Company
continues to evaluate Year 2000 related risks and to develop
contingency plans.  These activities are expected to continue
into the Year 2000.
     Due to the uncertainty of the effect of Year 2000 concerns
and failures on the Company's customers, the Company is unable to
assess the effect these concerns and failures will have on
consumer spending patterns and the related impact on the Company
and its vendors.


<PAGE>

Forward-Looking Statements

Certain statements contained herein and elsewhere in this Annual
Report which are not historical facts are forward-looking
statements made pursuant to the safe harbor provisions of the
Private Securities Litigation Reform Act of 1995.  These
forward-looking statements address activities or events which the
Company expects will or may occur in the future, such as future
capital expenditures, store openings, closings, renovations,
expansions and relocations, additional distribution facilities,
and other aspects of the Company's future business and
operations.  The Company cautions that a number of important
factors could cause actual results to differ materially from
those expressed in any forward-looking statements, whether
written or oral, made by or on behalf of the Company.  Such
factors include, but are not limited to, competitive factors and
pricing pressures, general economic conditions, changes in
consumer demand, inflation, merchandise supply constraints,
general transportation delays or interruptions, changes in
currency exchange rates, tariffs, quotas and freight rates,
availability of real estate, the impact of the Year 2000, changes
in information systems, costs and delays associated with
building, opening and operating new distribution facilities, and
the effects of legislation on wage levels and entitlement
programs.  Consequently, all of the forward-looking statements
made are qualified by these and other factors, risks and
uncertainties.



<PAGE>

<TABLE>

CONSOLIDATED STATEMENTS OF INCOME
Family Dollar Stores, Inc. and Subsidiaries

<CAPTION>
                                                             August 28,               August 29,              August 31,
Years Ended                                                    1999                      1998                    1997

<S>                                                      <C>                      <C>                     <C>
Net sales..........................................      $ 2,751,181,355          $ 2,361,930,395         $ 1,994,973,237
Costs and expenses:
  Cost of sales....................................        1,833,441,611            1,588,655,757           1,350,157,693
  Selling, general and administrative..............          695,060,477              607,286,713             523,338,807
                                                           2,528,502,088            2,195,942,470           1,873,496,500

Income before income taxes.........................          222,679,267              165,987,925             121,476,737
Income taxes (Note 5)..............................           82,600,000               62,700,000              46,800,000

Net income.........................................      $   140,079,267          $   103,287,925         $    74,676,737

Net income per common share-basic (Note 9):........                 $.81                     $.60                    $.44


   Average shares - basic (Note 9)................           172,511,199              172,008,335             171,187,420

Net income per common share - diluted (Note 9):...                  $.81                     $.60                    $.44

   Average shares - diluted (Note 9)..............           173,834,350              173,223,635             171,717,952


The accompanying notes are an integral part of the consolidated financial statements.

</TABLE>


    <PAGE>


    REPORT OF INDEPENDENT ACCOUNTANTS



    To the Board of Directors and Shareholders
    of Family Dollar Stores, Inc.

    In our opinion, the accompanying consolidated balance sheets and the
    related consolidated statements of income, of shareholders' equity and of
    cash flows present fairly, in all material respects, the financial
    position of Family Dollar Stores, Inc. and its subsidiaries at August 28,
    1999 and August 29, 1998, and the results of their operations and their
    cash flows for each of the three years in the period ended August 28,
    1999, in conformity with generally accepted accounting principles.  These
    financial statements are the responsibility of the Company's management;
    our responsibility is to express an opinion on these financial statements
    based on our audits.  We conducted our audits of these statements in
    accordance with generally accepted auditing standards, which require that
    we plan and perform the audit to obtain reasonable assurance about
    whether the financial statements are free of material misstatement.  An
    audit includes examining, on a test basis, evidence supporting the
    amounts and disclosures in the financial statements, assessing the
    accounting principles used and significant estimates made by management,
    and evaluating the overall financial statement presentation.  We believe
    that our audits provide a reasonable basis for the opinion expressed
    above.



    PRICEWATERHOUSECOOPERS LLP


    September 28, 1999
    Charlotte, North Carolina


<PAGE>

<TABLE>

CONSOLIDATED BALANCE SHEETS
Family Dollar Stores, Inc. and Subsidiaries

<CAPTION>
                                                                August 28,          August 29,
                                                                   1999                1998
<S>                                                         <C>                 <C>
ASSETS
Current assets:
  Cash and cash equivalents................................ $   95,301,411      $ 134,220,673
  Merchandise inventories..................................    568,780,481        465,556,559
  Deferred income taxes (Note 5)...........................     47,066,920         40,695,920
  Prepayments and other current assets.....................      8,806,072          6,156,514
     Total current assets ................................. $  719,954,884      $ 646,629,666

Property and equipment, net (Note 2).......................    371,141,298        291,759,866
Other assets...............................................      4,155,454          3,790,538
                                                            $1,095,251,636      $ 942,180,070

LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
  Accounts payable......................................... $  244,809,886      $ 214,099,581
  Accrued liabilities (Note 4).............................    124,279,005        117,486,601
  Income taxes payable (Note 5)............................      9,457,571         11,689,065
     Total current liabilities.............................    378,546,462        343,275,247
Deferred income taxes (Note 5)............................. $   26,054,116      $  20,754,116

Commitments and contingencies (Note 7)

Shareholders' equity (Notes 8 and 9):
  Preferred stock, $1 par; authorized and
   unissued 500,000 shares
  Common stock, $.10 par; authorized
   300,000,000 shares .....................................     18,310,933         18,256,237
  Capital in excess of par.................................     22,808,499         16,785,409
  Retained earnings........................................    660,880,894        554,458,329
                                                               702,000,326        589,499,975
  Less common stock held in treasury, at cost..............     11,349,268         11,349,268
                                                               690,651,058        578,150,707
                                                            $1,095,251,636      $ 942,180,070

The accompanying notes are an integral part of the consolidated financial statements.

</TABLE>


<PAGE>

<TABLE>

CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
Family Dollar Stores, Inc. and Subsidiaries

<CAPTION>
                                                                               Capital in
Years Ended August 28, 1999, August 29, 1998                  Common             excess        Retained         Treasury
and August 31, 1997                                            stock             of par        earnings          stock

<S>                                                        <C>                <C>              <C>             <C>
Balance, September 1, 1996
    (60,290,684 shares common stock;
     3,452,822 shares treasury stock)..............        $  6,029,068       $ 16,818,916     $433,458,403    $ 11,349,268
Net income for the year............................                                              74,676,737
Issuance of 421,757 common shares under employee
    stock option plan, including tax benefits (Note 8)           42,176          7,370,961
Issuance of 30,319,037 common shares as a result of
    stock split, including 1,726,411 shares of treasury
    stock.............................................        3,031,904         (3,031,904)
Less dividends on common stock, $.15 2/3 per share....                                          (26,848,520)

Balance, August 31, 1997
    (91,031,478 shares common stock;
     5,179,233 shares treasury stock).................        9,103,148         21,157,973       481,286,620     11,349,268
Net income for the year...................                                                       103,287,925
Issuance of 267,236 common shares under employee
    stock option plan, including tax benefits (Note 8)           26,724          4,753,801
Issuance of 91,263,654 common shares as a result of
    stock split, including 5,179,233 shares of treasury
    stock         ....................................        9,126,365         (9,126,365)
Less dividends on common stock, $.17 1/2 per share....                                           (30,116,216)

Balance, August 29, 1998
   (182,562,368 shares common stock;
     10,358,466 shares treasury stock)................       18,256,237         16,785,409       554,458,329     11,349,268
Net income for the year................................                                          140,079,267

Issuance of 546,960 common shares under
     employee stock option plan, including tax
     benefits (Note 8).................................           54,696          6,023,090
Less dividends on common stock, $.19 1/2 per share.....                                          (33,656,702)


Balance, August 28, 1999                                    $18,310,933        $22,808,499      $660,880,894    $11,349,268
     (183,109,328) shares common stock;
     10,358,466 shares treasury stock).................

The accompanying notes are an integral part of the consolidated financial statements.

</TABLE>

<PAGE>

<TABLE>

CONSOLIDATED STATEMENTS OF CASH FLOWS
Family Dollar Stores, Inc. and Subsidiaries

<CAPTION>

                                                    August 28,            August 29,       August 31,
Years Ended                                           1999                   1998             1997


<S>                                                   <C>                  <C>               <C>
Cash flows from operating activities:
  Net income...........................               $140,079,267         $ 103,287,925     $ 74,676,737
  Adjustments to reconcile net income to net cash
    provided by operating activities:
      Depreciation and amortization....                 43,788,467            34,842,830       29,116,624
      Deferred income taxes............                 (1,071,000)          (10,403,000)      (6,812,000)
      (Gain) Loss on disposition of property
        and equipment                                      (58,130)              (37,710)          39,207
      Changes in operating assets and liabilities:
        Merchandise inventories........               (103,223,922)            2,388,924       (5,105,432)
        Prepayments and other current assets            (2,649,558)             (274,994)         (38,567)
        Other assets...................                   (364,916)              565,801          (55,249)
        Accounts payable and accrued liabilities        36,614,611            80,597,237       27,124,270
        Income taxes payable...........                 (2,231,494)              570,262        4,296,612
                                                       110,883,325           211,537,275      123,242,202
Cash flows from investing activities:
  Capital expenditures................                (125,038,135)          (96,853,635)     (77,061,959)
  Proceeds from dispositions of property
    and equipment                                        1,926,366             1,523,405        1,278,601
                                                      (123,111,769)          (95,330,230)     (75,783,358)
Cash flows from financing activities:
  Net change in short-term borrowings                        -                     -           (4,400,000)
  Exercise of employee stock options,
    including tax benefits                               6,077,786             4,780,525        7,413,137
  Payment of dividends...............                  (32,768,604)          (29,235,197)     (26,848,520)
                                                       (26,690,818)          (24,454,672)     (23,835,383)

Net (decrease) increase in cash and cash equivalents   (38,919,262)           91,752,373       23,623,461
Cash and cash equivalents at beginning of year         134,220,673            42,468,300       18,844,839
Cash and cash equivalents at end of year              $ 95,301,411         $ 134,220,673     $ 42,468,300


Supplemental disclosures of cash flow information:
  Cash paid during the year for:
     Interest.....................                    $      -             $      12,594      $   320,830
     Income taxes.................                      82,714,126            70,840,009       48,440,176


The accompanying notes are an integral part of the consolidated financial statements.

</TABLE>


<PAGE>


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Family Dollar Stores, Inc. and Subsidiaries
Years Ended August 28, 1999, August 29, 1998, and August 31, 1997


1.   Description of business and summary of significant accounting policies:

Description of business:
     The Company operates a chain of neighborhood retail discount  stores in
     39 contiguous states in the Northeast, Southeast, Midwest and
     Southwest.  The Company manages its business on the basis of one
     reportable segment.  The Company's products include hardlines
     merchandise such as household products, health and beauty aids and
     snack and other food, and softlines merchandise such as clothing, shoes
     and domestic items.

Principles of consolidation:
     The consolidated financial statements include the accounts of the
     Company and its subsidiaries, all of which are wholly-owned.  All
     significant intercompany balances and transactions have been
     eliminated.

Cash equivalents:
     The Company considers all highly liquid investments with an original
     maturity of three months or less to be cash equivalents.  The carrying
     amount of the Company's cash equivalents approximates fair value due to
     the short maturities of these investments.

Merchandise inventories:
     Inventories are valued using retail prices less markon  percentages,
     and approximate the lower of first-in, first-out (FIFO) cost or market.

Property and equipment and depreciation:
     Property and equipment is stated at cost.  Depreciation for  financial
     reporting purposes is being provided principally by the straight-line
     method over the estimated useful lives  of the related assets, and by
     straight-line and accelerated methods for income tax reporting
     purposes.

     Estimated useful lives are as follows:
     Buildings                                33-40 years
     Furniture, fixtures and equipment         3-10 years
     Transportation equipment                  3- 6 years
     Leasehold improvements                    5- 7 years

     During fiscal 1998, the Company adopted Statement of Position
     (SOP) 98-1, "Accounting for the Costs of Computer Software Developed
     For or Obtained For Internal Use," which requires the capitalization of
     certain costs incurred in connection with developing or obtaining
     software for internal use.  Previously, the Company had expensed
     software development costs when incurred.


<PAGE>


Advertising costs:
     Advertising costs, net of co-op recoveries from vendors, are expensed
     the first time the advertising is run and amounted to $10.6 million,
     $16.0 million, and $23.7 million in fiscal 1999, 1998 and 1997,
     respectively.

Store opening and closing costs:
     During fiscal 1998, the Company adopted Statement of Position
     (SOP) 98-5, "Reporting on the Costs of Start-Up Activities", which
     requires that the costs of start-up activities be expensed as incurred.
     Since the Company charges pre-opening costs against operating results
     when incurred, the adoption of this SOP had no effect on operating
     results.  When a store is identified for closing, the remaining
     investment in fixed assets, net of expected recovery value, is
     expensed.  For properties under operating lease agreements, the present
     value of any remaining liability under the lease, net of expected
     sublease and lease termination recoveries, is expensed when the closing
     is determined.

Selling, general and administrative expenses:
     Buying, warehousing and occupancy costs, including depreciation, are
     included in selling, general and administrative expenses.

Stock Options:
     The Company accounts for stock based compensation using the intrinsic
     value method prescribed in Accounting Principles Board Opinion No. 25,
     "Accounting for Stock Issued to Employees," and related
     Interpretations.  The exercise price of options awarded under the
     Company's non-qualified stock option plan has been equal to the fair
     market value of the underlying common stock on the date of grant.
     Accordingly, no compensation expense has been recognized for options
     granted under the plan.  Income tax benefits attributable to stock
     options exercised are credited to capital in excess of par.

Change in Fiscal Year:
     Effective for fiscal 1998, the Company changed its fiscal reporting
     calendar to a more commonly used "retail" calendar.   The Company's
     fiscal years now generally end on the Saturday closest to August 31,
     but may deviate from this convention during certain years by one week
     in order to coincide with the standard "retail" calendar.  Previously,
     the Company's fiscal year consisted of 12 calendar months ending
     August 31.

Use of Estimates:
     The preparation of the Company's consolidated financial statements, in
     conformity with generally accepted accounting principles, requires
     management to make estimates and assumptions.  These estimates and
     assumptions affect the reported amounts of assets and liabilities, the
     disclosure of contingent assets and liabilities at the date of the
     financial statements, and the reported amounts of revenues and expenses
     during the reporting period.  Actual results could differ from these
     estimates.


<PAGE>

2.  Property and equipment:

<TABLE>
<CAPTION>
                                            August 28,                August 29,
                                              1999                      1998

<S>                                    <C>                       <C>
Buildings............................  $  128,814,803            $  103,092,778
Furniture, fixtures and equipment....     310,275,915               240,087,682
Transportation equipment.............      26,892,567                22,135,664
Leasehold improvements...............      79,010,743                60,964,347
Construction in progress.............       8,313,731                 6,549,739
                                          553,307,759               432,830,210

Less accumulated depreciation
   and amortization.................      192,824,434               151,440,949
                                          360,483,325               281,389,261
Land................................       10,657,973                10,370,605
                                       $  371,141,298            $  291,759,866
</TABLE>


3.  Lines of credit and short-term borrowings:

The Company has two unsecured bank lines of credit for short-term
revolving borrowings of up to $50,000,000 each, or $100,000,000 of total
borrowing capacity.  The lines of credit expire on March 31, 2001 and
March 26, 2000, respectively, and the Company expects that the line
expiring on March 26, 2000, will be extended.  Borrowings under these
lines of credit are at a variable interest rate based on short-term market
interest rates.  The Company may convert up to $50,000,000 of the line of
credit expiring on March 31, 2001, into either a five or seven year term
loan, at the bank's variable prime rate.

<PAGE>


Interest expense, average and maximum borrowings outstanding and interest
rates for each of the three years in the period ended August 28, 1999,
were as follows:

<TABLE>
<CAPTION>
                                 1999          1998           1997

<S>                              <C>     <C>            <C>
Interest expense.............     -      $     12,574   $    312,147

Average borrowings
     outstanding............      -      $    209,000   $  5,222,000
Maximum month-end
     outstanding............      -      $  6,300,000   $ 31,000,000
Interest rates at
     year-end...............     N/A             N/A            N/A
Daily weighted average
     interest rates..........    N/A             5.9%           5.7%


The Company had outstanding letters of credit of $27,130,491 and
$51,710,665 at August 28, 1999 and August 29, 1998, respectively.

</TABLE>


4.   Accrued liabilities:

<TABLE>
<CAPTION>
                                      August 28,           August 29,
                                        1999                 1998
<S>                                <C>                   <C>
Compensation...................... $  30,144,697          $ 27,466,711
Insurance............................ 45,921,369            43,497,526
Taxes other than income taxes........ 23,709,222            21,916,366
Other................................ 24,503,717            24,605,998
                                   $ 124,279,005          $117,486,601

</TABLE>


<PAGE>


5.   Income Taxes:

The tax effects of temporary differences that give rise to significant
portions of the deferred tax assets and deferred tax liabilities as of
August 28, 1999 and August 29, 1998, were as follows:

<TABLE>
<CAPTION>
                                                    August 28,        August 29,
                                                      1999            1998
<S>                                               <C>              <C>
Deferred income tax liabilities:
  Excess of book over tax basis of
    property and equipment..............          $ 26,054,116     $ 20,754,116

Deferred income tax assets:
  Excess of tax over book basis
    of inventories......................          $ 22,123,771     $ 16,549,238
  Currently nondeductible accruals for:
    Insurance...........................            18,102,577       17,273,955
    Vacation pay........................             2,520,977        2,097,021
    Closed store lease liabilities......             1,960,599        1,984,014
  State net operating losses............               250,000          983,000
  Other.................................             2,483,996        3,158,692
    Gross deferred income tax assets....            47,441,920       42,045,920
  Valuation allowance for deferred
    income tax assets...................              (375,000)      (1,350,000)
    Net deferred income tax assets......          $ 47,066,920     $ 40,695,920

</TABLE>

A valuation allowance has been established for a portion of the
benefits of state tax net operating losses and for a portion of
certain other state tax benefits because the Company currently
believes that it is more likely than not that these benefits
will not be realized in future years.



<PAGE>


5.   Income taxes (continued):

The provisions for income taxes in each of the three years in the
period ended August 28, 1999, were as follows:

<TABLE>
<CAPTION>

                   1999                   1998                 1997
<S>             <C>                    <C>                  <C>
Current:
   Federal...   $75,746,000            $67,103,000          $47,142,000
   State.....     7,925,000              6,000,000            6,470,000
                 83,671,000             73,103,000           53,612,000

Deferred:
   Federal...     1,109,000             (9,431,000)          (5,753,000)
   State....     (2,180,000)              (972,000)          (1,059,000)
                 (1,071,000)           (10,403,000)          (6,812,000)
                $82,600,000            $62,700,000          $46,800,000

</TABLE>


<PAGE>

The following table summarizes the components of income tax expense
in each of the three years in the period ended August 28, 1999:

<TABLE>
<CAPTION>
                                                    1999                   1998                     1997
                                                               %                        %                        %
                                           Income tax  of pre-tax   Income Tax  of pre-tax   Income tax  of pre-tax
                                             expense     income      expense      income      expense      income
<S>                                       <C>              <C>      <C>             <C>      <C>            <C>

Computed "expected" federal income tax    $77,937,746      35.0     $58,095,773     35.0     $42,516,858    35.0
State income taxes, net of federal
     income tax benefit...........          3,227,862       1.5       4,943,200      3.0       4,187,150     3.4
Other.............................          1,434,392        .6        (338,973)    (0.2)         95,992     0.1
Actual income tax expense.........        $82,600,000      37.1     $62,700,000     37.8     $46,800,000    38.5

</TABLE>



<PAGE>


6.  Employee benefit plans:


Incentive compensation plan:
     The Company has an incentive profit-sharing plan whereby, at the
     discretion of the Board of Directors, the Company may pay certain
     employees and officers an aggregate amount not to exceed 5% of the
     Company's consolidated income before income taxes.  Expenses under
     the profit-sharing plan were $3,786,933 in fiscal 1999, $3,455,060
     in fiscal 1998, and $2,446,586 in fiscal 1997.

Compensation deferral plan:
     The Company has a voluntary compensation deferral plan, under section
     401(k) of the Internal Revenue Code, available to eligible employees.
     At the discretion of the Board of Directors, the Company makes
     contributions to the plan which are allocated to participants, and in
     which they become vested, in accordance with formulas and schedules
     defined by the plan.  Company expenses for contributions to the plan
     were $1,310,588 in fiscal 1999, $1,124,569 in fiscal 1998, and
     $1,066,966 in fiscal 1997.


<PAGE>


7.  Commitments and contingencies:

Operating leases:
Except for its executive offices and primary distribution centers, the
Company generally conducts its operations from leased facilities.  Normally,
store real estate leases are for initial terms of from five to fifteen years
with multiple renewal options for additional five year periods.  Certain
leases provide for contingent rental payments based upon a percentage of
store sales.

Rental expenses on all operating leases, both cancellable and
non-cancellable, for each of the three years in the period ended August 28,
1999, were as follows:

<TABLE>
<CAPTION>
                                1999              1998          1997
<S>                        <C>                <C>           <C>
Minimum rentals,
  net of minor
  sublease rentals......   $107,620,387       $90,616,520   $78,414,264
Contingent rentals.......     3,963,680         2,619,790     1,707,010
                           $111,584,067       $93,236,310   $80,121,274
</TABLE>

Future minimum rental payments required under operating leases that have
initial or remaining non-cancellable lease terms in excess of one year as of
August 28, 1999, were as follows:

<TABLE>
<CAPTION>
                   Fiscal Year:          Minimum Rental
                     <C>                 <C>
                        2000             $ 98,880,457
                        2001               85,705,372
                        2002               70,204,305
                        2003               51,909,204
                        2004               28,498,776
                     Thereafter            40,099,684
                                         $375,297,798

</TABLE>

Insurance Liabilities:
The Company is primarily self-insured for health care, property loss,
workers' compensation and general liability costs.  Self-insurance
liabilities are based on the total estimated costs of claims filed and
claims incurred but not reported, and are not discounted.


<PAGE>

8.   Employee stock option plan:

The Company's non-qualified stock option plan provides for the
granting of options to key employees to purchase shares of
common stock at prices not less than fair market value on the
date of the grant. Options are exercisable to the extent of 40%
after the second anniversary of the grant, an additional 30%
annually on a cumulative basis, and expire five years from the
date of the grant.
     The Company has adopted the disclosure-only provisions of
Statement of Financial Accounting Standards No. 123, "Accounting
for Stock-Based Compensation."  If compensation cost for the
Company's stock-based compensation plan had been determined
based on the fair value at the grant date for awards under this
plan consistent with the methodology prescribed under this
statement, net income and net income per share would have been
reduced to the pro forma amounts indicated in the table below.

<TABLE>
<CAPTION>
                                  August 28,      August 29,     August 31,
                                    1999            1998           1997
<S>                              <C>             <C>            <C>
Net income - as reported         $140,079,267    $103,287,925   $74,676,737
Net income - pro forma           $138,568,250    $102,367,767   $74,493,973
Net income per share -
   as reported
     basic                               $.81           $.60         $.44
     diluted                             $.81           $.60         $.44
Net income per share -
   pro forma
     basic                               $.80           $.60         $.44
     diluted                             $.80           $.59         $.43

</TABLE>


<PAGE>

     The pro forma effects on net income for fiscal 1999, 1998 and 1997 are
not representative of the pro forma effect on net income in future years
because they do not take into consideration pro forma compensation expense
related to grants made prior to fiscal 1997.  The average fair value of
options granted during fiscal 1999, 1998 and 1997 is $4.84, $3.66 and $1.66
per share, respectively.
     The fair value of each option grant is estimated on the date of grant
using the Black-Scholes option pricing model with the following assumptions:

<TABLE>
<CAPTION>
                                  August 28,     August 29,      August 31,
                                     1999           1998            1997

<S>                                  <C>          <C>             <C>
Expected dividend yield               1.13%        1.36%           2.36%
Expected stock price volatility      33.54%       30.53%          28.75%
Weighted average risk-free
   interest rate                      4.88%        5.73%           6.35%
Expected life of options (years)      3.5          3.5             3.5

</TABLE>


<PAGE>


     The summary of the status of the Company's stock-based compensation
plan as of August 28, 1999, August 29, 1998 and August 31, 1997, and
changes during the years then ended were as follows:

<TABLE>
<CAPTION>
                                  Options      Range of Option        Weighted Average
                                Outstanding    Prices Per Share        Exercise Price

<S>                              <C>          <C>                        <C>
Balance, September 1, 1996        3,006,900   $ 3.42 to $ 7.08           $ 5.29
Granted                           1,705,700     5.59 to  10.88             6.58
Exercised                        (1,191,074)    3.50 to   7.08             5.49
Cancelled                          (379,518)    3.42 to   7.08             4.85

Balance, August 31, 1997          3,142,008   $ 3.50 to $10.88           $ 5.96
Granted                           1,224,800    10.88 to  20.75            13.31
Exercised                          (499,413)    3.50 to   7.08             6.20
Cancelled                          (128,060)    4.08 to  18.00             7.50

Balance, August 29, 1998          3,739,335   $ 3.50 to $20.75           $ 8.28
Granted                             855,600    12.75 to  24.75            16.82
Exercised                          (546,960)    3.50 to   9.67             5.26
Cancelled                          (137,225)    4.33 to  24.00            10.34

Balance, August 28, 1999          3,910,750   $ 3.83 to $24.75           $10.50

</TABLE>

<PAGE>


     At August 28, 1999, August 29, 1998 and August 31,1997, options for
983,507, 660,687 and 709,066 shares were exercisable, respectively.
The following table summarizes information about stock options
outstanding at August 28, 1999:

<TABLE>
<CAPTION>

                       Options Outstanding                  Options Exercisable
                   Number    Weighted Average                      Number
    Range of     Outstanding   Remaining      Weighted Average  Exercisable  Weighted Average
 Exercise Prices  at 8/28/99 Contractual Life  Exercise Price   at 8/28/99    Exercise Price
<S>               <C>           <C>              <C>               <C>          <C>
$ 3.83 to $ 6.25  1,184,700     1.52 Years       $ 5.19            686,307      $ 4.90
  6.26 to  14.50  1,463,400     2.81               9.41            297,200        7.52
 14.51 to  24.75  1,262,650     4.02              16.74               -            -


$ 3.83 to $24.75  3,910,750     2.81 Years       $10.50            983,507      $ 5.69

</TABLE>

     At August 28, 1999, August 29, 1998 and August 31, 1997, shares
available for granting of stock options under the Company's stock
option plan were 6,129,090, 6,846,464 and 1,943,188 shares, respectively.


9.  Common stock:

The Company adopted Statement of Financial Accounting Standards No. 128,
"Earnings per Share" (SFAS 128) during the quarter ended February 28, 1998.
All prior period net income per common share amounts have been restated.  Basic
net income per common share is computed by dividing net income by the weighted
average number of shares outstanding during each period.  Diluted net
income per common share gives effect to all securities representing
potential common shares that were dilutive and outstanding during the
period.  In the calculation of diluted net income per common share, the
denominator includes the number of additional common shares that would
have been outstanding if the Company's outstanding stock options had been
exercised.


<PAGE>


The following table sets forth the computation of basic and diluted net
income per common share:

<TABLE>
<CAPTION>
                                       August 28,      August 29,       August 31,
                                         1999            1998             1997
<S>                                   <C>             <C>             <C>
Basic net income per share:

Net income                            $140,079,267    $103,287,925    $ 74,676,737
Weighted average number of shares
    outstanding                        172,511,199     172,008,335     171,187,420

Net income per common share - basic           $.81            $.60            $.44

Diluted net income per share:

Net income                            $140,079,267    $103,287,925    $ 74,676,737

Weighted average number of shares
    outstanding                        172,511,199     172,008,335     171,187,420

Effect of dilutive securities -
    stock options                        1,323,151       1,215,300         530,532
Average shares - diluted               173,834,350     173,223,635     171,717,952

Net income per common share - diluted         $.81            $.60            $.44

</TABLE>


<PAGE>

10.  Unaudited summaries of quarterly results:

<TABLE>
<CAPTION>

                                         First             Second            Third          Fourth
                                         Quarter           Quarter           Quarter        Quarter
                                                  (In thousands, except per share data)
<S>                                      <C>                <C>              <C>            <C>
1999

Net sales.....................           $628,016           $752,217         $678,858       $692,091
Gross margin..................            215,717            242,495          238,226        221,302
Net income....................             29,609             41,673           41,767         27,030
Net income per
   common share*..............               $.17               $.24             $.24           $.16

1998

Net sales.....................           $542,747           $635,877         $585,807       $597,499
Gross margin..................            186,327            199,179          200,116        187,653
Net income....................             24,327             27,597           31,343         20,021
Net income per
   common share.*.............               $.14               $.16             $.18           $.12

1997

Net sales.....................           $454,883           $530,259         $498,404       $511,427
Gross margin..................            154,581            164,165          167,732        158,338
Net income....................             17,360             20,002           23,088         14,227
Net income per
   common share*..............               $.10               $.12             $.13           $.08


</TABLE>

* Figures represent both basic and diluted earnings per share.  The sum of the
quarterly net income per common share may not equal the annual net income per
common share due to rounding.