Form 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended February 27, 1999
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Commission File Number 1-6807
FAMILY DOLLAR STORES, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 56-0942963
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
P. O. Box 1017, 10401 Old Monroe Road
Charlotte, North Carolina 28201-1017
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code 704-847-6961
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period
that the registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days.
Yes X No
Indicate the number of shares outstanding of each of the issuer's
classes of common stock, as of the latest practicable date.
Class Outstanding at March 31, 1999
Common Stock, $.10 par value 172,628,016 shares
<PAGE>
FAMILY DOLLAR STORES, INC., AND SUBSIDIARIES
INDEX
Page No.
Part I - Financial Information
Item 1 - Consolidated Condensed Financial Statements:
Consolidated Condensed Balance Sheets -
February 27, 1999 and August 29, 1998 2
Consolidated Condensed Statements of Income -
Quarter Ended February 27, 1999 and
February 28, 1998 3
Consolidated Condensed Statements of Income -
First Half Ended February 27, 1999 and
February 28, 1998 4
Consolidated Condensed Statements of Cash Flows -
First Half Ended February 27, 1999 and
February 28, 1998 5
Notes to Consolidated Condensed Financial
Statements 6-8
Item 2 - Management's Discussion and Analysis of
Financial Condition and Results of
Operations 9-13
Part II - Other Information and Signatures
Item 4 - Submission of Matters to a Vote of 14
Security Holders
Item 6 - Exhibits and Reports on Form 8-K 14
Signatures 15
<PAGE>
<TABLE>
FAMILY DOLLAR STORES, INC., AND SUBSIDIARIES
CONSOLIDATED CONDENSED BALANCE SHEETS
(Unaudited)
<CAPTION>
February 27, August 29,
1999 1998
Assets
<S> <C> <C>
Current assets:
Cash and cash equivalents (Note 2) $101,905,647 $134,220,673
Merchandise inventories 532,175,321 465,556,559
Deferred income taxes 42,280,920 40,695,920
Prepayments and other current assets 6,207,376 6,156,514
Total current assets 682,569,264 646,629,666
Property and equipment, net 326,928,618 291,759,866
Other assets 2,245,930 3,790,538
$1,011,743,812 $942,180,070
<PAGE>
<CAPTION>
Liabilities and Shareholders' Equity
<S> <C> <C>
Current liabilities:
Accounts payable and accrued
liabilities $334,007,698 $331,586,182
Income taxes payable 18,139,219 11,689,065
Total current liabilities 352,146,917 343,275,247
Deferred income taxes 22,704,116 20,754,116
Shareholders' equity (Notes 4 and 5):
Preferred stock, $1 par; authorized
and unissued 500,000 shares
Common stock, $.10 par;
authorized 300,000,000 shares;
issued 182,903,080 shares at
February 27, 1999 and 182,562,368
shares at August 29, 1998 18,290,308 18,256,237
Capital in excess of par 20,595,582 16,785,409
Retained earnings 609,356,157 554,458,329
648,242,047 589,499,975
Less common stock held in treasury,
at cost (10,358,466 shares at
February 27, 1999 and August 29, 1998)
(Note 5) 11,349,268 11,349,268
Total shareholders' equity 636,892,779 578,150,707
$1,011,743,812 $942,180,070
See notes to consolidated condensed financial statements.
</TABLE>
<PAGE>
<TABLE>
FAMILY DOLLAR STORES, INC., AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF INCOME
(Unaudited)
<CAPTION>
Quarter Ended
February 27, February 28,
1999 1998
<S> <C> <C>
Net sales $752,216,740 $635,877,376
Costs and expenses:
Cost of sales 509,721,271 436,698,591
Selling, general and
administrative expenses 175,622,914 154,827,222
685,344,185 591,525,813
Income before provision
for taxes on income 66,872,555 44,351,563
Provision for taxes on income 25,200,000 16,755,000
Net income $ 41,672,555 $ 27,596,563
Net income per common share - Basic
(Note 5) $ 0.24 $ 0.16
Average shares - Basic (Note 5) 172,428,853 171,939,536
Net income per common share - Diluted
(Note 5) $ 0.24 $ 0.16
Average shares - Diluted (Note 5) 173,767,340 173,179,188
Dividends per common share $ .05 $ .04-1/2
See notes to consolidated condensed financial statements.
</TABLE>
<PAGE>
<TABLE>
FAMILY DOLLAR STORES, INC., AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF INCOME
(Unaudited)
<CAPTION>
First Half Ended
February 27, February 28,
1999 1998
<S> <C> <C>
Net sales $1,380,232,694 $1,178,624,473
Costs and expenses:
Cost of sales 922,020,502 793,118,221
Selling, general and
administrative expenses 343,870,706 301,802,720
1,265,891,208 1,094,920,941
Income before provision for
taxes on income 114,341,486 83,703,532
Provision for taxes on income 43,060,000 31,780,000
Net income $ 71,281,486 $ 51,923,532
Net income per common share - Basic
(Note 5) $ 0.41 $ 0.30
Average shares - Basic (Note 5) 172,330,246 171,835,712
Net income per common share - Diluted
(Note 5) $ 0.41 $ 0.30
Average shares - Diluted (Note 5) 173,616,672 172,975,912
Dividends per common share $ .09-1/2 $ .08-1/2
See notes to consolidated condensed financial statements.
</TABLE>
<PAGE>
<TABLE>
FAMILY DOLLAR STORES, INC., AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
(Unaudited)
<CAPTION>
First Half Ended
February 27, February 28,
1999 1998
<S> <C> <C>
Cash flows from operating activities:
Net income $ 71,281,486 $51,923,532
Adjustments to reconcile net income to
net cash provided by operating
activities:
Depreciation and amortization 21,077,554 16,084,513
Deferred income taxes 365,000 (3,215,000)
(Gain) Loss on disposition of property
and equipment (770,683) 84,380
Changes in operating assets and liabilities:
Inventories (66,618,762) 7,139,713
Prepayments and other current assets (50,862) (946,063)
Other assets 1,544,608 1,538,893
Accounts payable and accrued
liabilities 1,541,208 55,494,631
Income taxes payable 6,450,154 3,035,894
34,819,703 131,140,493
Cash flows from investing activities:
Capital expenditures (56,874,137) (56,310,144)
Proceeds from dispositions of
property and equipment 1,398,514 373,264
(55,475,623) (55,936,880)
Cash flows from financing activities:
Exercise of employee stock options 3,844,244 4,149,873
Payment of dividends (15,503,350) (13,739,807)
(11,659,106) (9,589,934)
Net change in cash and cash equivalents (32,315,026) 65,613,679
Cash and cash equivalents at beginning
of period 134,220,673 42,468,300
Cash and cash equivalents at end of period $101,905,647 $108,081,979
Supplemental disclosure of cash flow information:
Cash paid during the period for:
Interest $ $ 12,564
Income taxes 34,256,448 30,683,188
See notes to consolidated condensed financial statements.
</TABLE>
<PAGE>
FAMILY DOLLAR STORES, INC., AND SUBSIDIARIES
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
1. In the opinion of the Company, the accompanying unaudited
consolidated condensed financial statements contain all
adjustments (consisting of only normal recurring accruals)
necessary to present fairly the financial position as of
February 27, 1999, and the results of operations for the
quarter and first half ended February 27, 1999, and
February 28, 1998, and the cash flows for the first half
ended February 27, 1999, and February 28, 1998.
The results of operations for the first half ended
February 27, 1999, are not necessarily indicative of the
results to be expected for the full year.
2. The Company considers all highly liquid investments with an
original maturity of three months or less to be "cash
equivalents."
3. 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.
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 March 31, 2001, into either a five or seven year term
loan, at the bank's variable prime rate.
4. 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 the fair market value on
the date of grant. Options expire five years from the date of
grant and are exercisable to the extent of 40% after the
second anniversary of the grant and an additional 30% at each
of the following two anniversary dates on a cumulative basis.
<PAGE>
The following is a summary of transactions under the plan during
the first half ended February 27, 1999 and February 28, 1998.
<TABLE>
<CAPTION>
First Half Ended
February 27, 1999 February 28, 1998
Number of Number of
shares Option price shares Option price
under option per share under option per share
<S> <C> <C> <C> <C>
Outstanding-beginning 3,739,335 $ 3.50-$20.75 3,142,008 $ 3.50-$10.88
Granted 721,200 $12.75-$21.50 1,097,100 $10.88-$17.50
Exercised (383,119) $ 3.50-$ 6.25 (453,672) $ 3.84 $ 7.09
Cancelled (55,825) (72,870)
Outstanding-ending 4,021,591 $ 3.83-$21.50 3,712,566 $ 3.50-$17.50
Exercisable options 937,598 $ 3.83-$ 7.17 589,206 $ 3.50-$ 6.25
</TABLE>
5. 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.
The following table sets forth the computation of basic and diluted net
income per common share:
<PAGE>
<TABLE>
<CAPTION>
Quarter Ended
February 27, February 28,
1999 1998
<S> <C> <C>
Basic Net Income Per Share:
Net Income $41,672,555 $27,596,563
Weighted Average Number of Shares
Outstanding 172,428,853 171,939,536
Net Income Per Common Share - Basic $ .24 $ .16
Diluted Net Income Per Share:
Net Income $41,672,555 $27,596,563
Weighted Average Number of Shares
Outstanding 172,428,853 171,939,536
Effect of Dilutive Securities -
Stock Options 1,338,487 1,239,652
Average Shares - Diluted 173,767,340 173,179,188
Net Income Per Common Share - Diluted $ .24 $ .16
First Half Ended
February 27, February 28,
1999 1998
Basic Net Income Per Share:
Net Income $71,281,486 $51,923,532
Weighted Average Number of Shares
Outstanding 172,330,246 171,835,712
Net Income Per Common Share - Basic $ .41 $ .30
Diluted Net Income Per Share:
Net Income $71,281,486 $51,923,532
Weighted Average Number of Shares
Outstanding 172,330,246 171,835,712
Effect of Dilutive Securities -
Stock Options 1,286,426 1,140,200
Average Shares - Diluted 173,616,672 172,975,912
Net Income Per Common Share - Diluted $ .41 $ .30
</TABLE>
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
FINANCIAL CONDITION
At February 27, 1999, the Company had working capital of
$330.4 million with cash and cash equivalents of approximately
$101.9 million and no outstanding borrowings. Operating
activities generated cash of approximately $34.8 million during
the first half of fiscal 1999 versus approximately $131.1 million
during the first half of fiscal 1998. The timing of payments for
merchandise purchases contributed approximately $55.5 million of
the increase in fiscal 1998 whereas operating cash was used in
fiscal 1999 to increase merchandise inventory by approximately
$66.6 million primarily as a result of new stores, additional
inventory in existing stores and a new distribution center.
Capital expenditures for the first half ended February 27,
1999, were approximately $56.9 million, and are currently
expected to be approximately $125 million for fiscal 1999. The
majority of planned capital expenditures for fiscal 1999 is
related to the Company's new store expansion, existing store
expansion, relocation and renovation and to the construction and
equipping of a new full-service distribution center in Duncan,
Oklahoma, currently scheduled for completion in fall 1999. The
new store expansion and the additional distribution center will
require additional investment in merchandise inventories. In
fiscal 1999, the Company currently expects to open approximately
350 stores and close approximately 50 stores for a net addition
of approximately 300 stores, compared with the opening of 315
stores and closing of 65 stores for a net addition of 250 stores
in fiscal 1998. The Company also currently plans to expand or
relocate approximately 100 stores and renovate an additional 300
to 400 stores in fiscal 1999, compared with the expansion or
relocation of 90 stores and renovation of 170 stores in fiscal
1998. In the first half of fiscal 1999, the Company opened 171
stores, closed 29 stores, expanded or relocated 40 stores and
renovated 168 stores. The Company occupies most of its stores
under operating leases. Store opening, closing, expansion,
relocation, and renovation plans, as well as overall capital
expenditure plans, are continuously reviewed and are subject
to change.
<PAGE>
RESULTS OF OPERATIONS
NET SALES
Net sales increased 18.3% in the quarter ended February 27,
1999, as compared with the quarter ended February 28, 1998, and
increased 17.1% in the first half ended February 27, 1999, as
compared with the first half ended February 28, 1998. The
increases were attributable to increased sales in existing stores
and sales from new stores opened as part of the Company's store
expansion program. Total sales in the second quarter also were
aided by the fact that there was one more day in the second
quarter this year than last year as a result of the previously
announced change in the Company's fiscal reporting calendar
to a more commonly used "retail" calender. This change adversely
affected sales in the first quarter and will adversely affect
sales in the third quarter and have a positive impact on sales in
the fourth quarter. Sales in existing stores increased 8.8% in
the quarter ended February 27, 1999, as compared with the same
period ended February 28, 1998, with sales of hardlines
merchandise increasing approximately 12.0% and sales of softlines
merchandise increasing approximately 1.0%. Sales in existing
stores increased 8.5% in the first half ended February 27, 1999,
as compared to the first half ended February 28, 1998, with sales
of hardlines merchandise increasing approximately 12.7% and sales
of softlines merchandise decreasing approximately .6%. Hardlines
as a percentage of total sales increased to approximately 71% in
the second quarter of fiscal 1999 compared to approximately 69%
in the second quarter of fiscal 1998, and increased to
approximately 71% in the first half of fiscal 1999 compared to
approximately 68% in the first half of fiscal 1998. The Company
has broadened its assortment of hardlines merchandise and
dedicated more selling space in its stores to hardlines over the
past two fiscal years. The Company has correspondingly reduced
its assortment and selling space for softlines merchandise during
this period. The Company expects the shift in the merchandise
mix to hardlines to continue for the remainder of fiscal 1999.
Hardlines merchandise includes primarily household chemical and
paper products, health and beauty aids, candy, snack and other
food, electronics, housewares and giftware, toys, 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. The sales increases
were achieved despite the elimination of advertising circulars
that were distributed last year in the first quarter and at the
end of the second quarter, as customers continued to respond
favorably to the Company's everyday low price strategy. The
Company currently expects to eliminate two additional circulars
during the remainder of fiscal 1999.
<PAGE>
The average number of stores open during the first half of
fiscal 1999 was 8.8% more than during the first half of fiscal
1998. The Company had 3,159 stores in operation at February 27,
1999, as compared with 2,898 stores in operation at February 28,
1998, representing an increase of approximately 9.0%.
COST OF SALES
Cost of sales increased 16.7% in the quarter ended
February 27, 1999, as compared with the quarter ended
February 28, 1998, and increased 16.3% in the first half ended
February 27, 1999, as compared to the first half ended
February 28, 1998. These increases primarily reflected the
additional sales volume between years. Cost of sales, as a
percentage of net sales, was 67.8% in the quarter ended
February 27, 1999, compared with 68.7% in the quarter ended
February 28, 1998, and was 66.8% in the first half ended
February 27, 1999, compared with 67.3% in the first half ended
February 28, 1998. The decreases in the cost of sales
percentages for the quarter and the first half of fiscal 1999
were due primarily to decreases in both advertising and clearance
markdowns. The Company also realized increased sales of higher
margin seasonal hardlines merchandise during the second quarter.
The cost of sales percentages also are affected by changes in the
effectiveness of the merchandise purchasing programs and by
changes in merchandise shrinkage losses and freight costs.
<PAGE>
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES
Selling, general and administrative expenses increased 13.4%
in the quarter ended February 27, 1999, as compared with the
quarter ended February 28, 1998, and increased 13.9% in the first
half ended February 27, 1999, as compared with the first half
ended February 28, 1998. The increases in these expenses were
due primarily to additional costs arising from the continued
growth in the number of stores, costs associated with added
distribution capacity, and increased technology costs. Selling,
general and administrative expenses, as a percentage of net
sales, were 23.3% in the quarter ended February 27 1999, as
compared with 24.3% in the quarter ended February 28, 1998, and
were 24.9% in the first half ended February 27, 1999, as compared
with 25.6% in the first half ended February 28, 1998. The
decreases in the percentages for the quarter and first half ended
February 27, 1999 reflects the leveraging of fixed costs such as
rent, a reduction of advertising costs, and continued improved
store labor performance.
PROVISION FOR TAXES ON INCOME
The effective tax rate was 37.7% for the quarter ended
February 27, 1999, as compared to 37.8% for the quarter ended
February 28, 1998, and was 37.7% for the first half ended
February 27, 1999, as compared to 38.0% for the first half ended
February 28, 1998. The decreases in the effective tax rate for
the quarter and first half ended February 27, 1999, resulted
primarily from changes in effective state income tax rates.
YEAR 2000
The Company is currently addressing 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.
<PAGE>
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 also 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 estimates that it will
expend approximately $1 million for Year 2000 assessment and
remediation, the majority of which was incurred in and prior to
fiscal 1998. The Company's 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.
<PAGE>
Transportation of merchandise and utility service are two
particular concerns. Approximately 39% of the Company's
merchandise was imported in fiscal 1998, and 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 will continue to
evaluate these risks and develop appropriate contingency plans
the majority of which are expected to be in place by June 1999.
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 affect these concerns and failures will have on
consumer spending patterns and the related impact on the Company
and its vendors.
FORWARD-LOOKING STATEMENTS
Certain statements contained herein and elsewhere in this
Form 10-Q 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 on
information systems and the Company's operations, 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>
PART II - OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders
At the Annual Meeting of Stockholders of the Company held
January 21, 1999, stockholders voted to:
(a) Elect to the Board of Directors of the Company the seven
nominees named in the Proxy Statement for the Annual
Meeting as follows:
<TABLE>
<CAPTION>
Shares Shares Withholding
Nominee Voting For Authority to Vote
<S> <C> <C>
Leon Levine 146,595,663 2,836,688
Howard R. Levine 146,598,114 2,834,237
R. James Kelly 146,596,500 2,835,851
George R. Mahoney, Jr. 146,603,098 2,829,253
Mark R. Bernstein 146,594,367 2,837,984
James H. Hance, Jr. 146,862 818 2,569,533
James G. Martin 146,843,538 2,588,813
</TABLE>
(b) Ratify the action of the Board of Directors in selecting
PricewaterhouseCoopers LLP as independent accountants to
audit the consolidated financial statements of the Company
and its subsidiaries for the year ending August 28, 1999,
with 149,322,108 shares voted for 74,104 shares against and
36,139 shares abstaining.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits filed herewith:
10 (i) Letter Agreement dated March 25, 1999, among NationsBank,
N.A., the Company and Family Dollar, Inc., amending
Credit Agreement dated as of March 31, 1996, as
amended, among NationsBank, N.A., the Company and
Family Dollar, Inc.
11 Statements Re: Computations of Per Share Earnings
27 Financial Data Schedule
(b) Reports on Form 8-K - None
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
FAMILY DOLLAR STORES, INC.
(Registrant)
Date: April 8, 1999 R. JAMES KELLY
R. JAMES KELLY
Vice Chairman
Date: April 8, 1999 C. MARTIN SOWERS
C. MARTIN SOWERS
Senior Vice President-Finance
<TABLE>
<CAPTION>
EXHIBIT 11
Page 1 of 2
FAMILY DOLLAR STORES, INC.
STATEMENT RE COMPUTATIONS OF PER SHARE EARNINGS
QUARTER ENDED QUARTER ENDED
AS PRESENTED FEBRUARY 27, 1999 FEBRUARY 28, 1998
BASIC DILUTED BASIC DILUTED
<S> <C> <C> <C> <C>
AVERAGE SHARES OUTSTANDING 172,428,853 172,428,853 171,939,536 171,939,536
NET INCOME $41,672,555 $41,672,555 $27,596,563 $27,596,563
NET INCOME PER SHARE $ .24 $ .24 $ .16 $ .16
PRO FORMA DILUTION IMPACT OF COMMON STOCK EQUIVALENTS
ADDITIONAL WEIGHTED AVERAGE SHARES FROM
ASSUMED EXERCISE AT THE BEGINNING
OF THE YEAR OF DILUTIVE STOCK OPTIONS 4,116,180 3,756,804
WEIGHTED AVERAGE SHARES ASSUMED REPURCHASED FROM
ASSUMED PROCEEDS OF EXERCISES USING TREASURY STOCK
METHOD (AVERAGE MARKET PRICE) (2,777,693) (2,517,152)
NET PRO FORMA COMMON STOCK EQUIVALENT INCREMENTAL SHARES 1,338,487 1,239,652
PERCENTAGE DILUTION FROM PRO FORMA COMMON
STOCK EQUIVALENT INCREMENTAL SHARES .78% .72%
TOTAL COMMON STOCK AND COMMON STOCK EQUIVALENTS 173,767,340 173,179,188
NET INCOME $41,672,555 $27,596,563
PRO FORMA NET INCOME PER SHARE (INCLUDING DILUTIVE
COMMON STOCK EQUIVALENTS) $ .24 $ .16
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT 11
Page 2 of 2
FAMILY DOLLAR STORES, INC.
STATEMENT RE COMPUTATIONS OF PER SHARE EARNINGS
FIRST HALF ENDED FIRST HALF ENDED
AS PRESENTED FEBRUARY 27, 1999 FEBRUARY 28, 1998
BASIC DILUTED BASIC DILUTED
<S> <C> <C> <C> <C>
AVERAGE SHARES OUTSTANDING 172,330,246 172,330,246 171,835,712 171,835,712
NET INCOME $71,281,486 $71,281,486 $51,923,532 $51,923,532
NET INCOME PER SHARE $ .41 $ .41 $ .30 $ .30
PRO FORMA DILUTION IMPACT OF COMMON STOCK EQUIVALENTS
ADDITIONAL WEIGHTED AVERAGE SHARES FROM
ASSUMED EXERCISE AT THE BEGINNING
OF THE YEAR OF DILUTIVE STOCK OPTIONS 4,150,383 3,775,230
WEIGHTED AVERAGE SHARES ASSUMED REPURCHASED FROM
ASSUMED PROCEEDS OF EXERCISES USING TREASURY STOCK
METHOD (AVERAGE MARKET PRICE) (2,863,957) (2,635,030)
NET PRO FORMA COMMON STOCK EQUIVALENT INCREMENTAL SHARES 1,286,426 1,140,200
PERCENTAGE DILUTION FROM PRO FORMA COMMON
STOCK EQUIVALENT INCREMENTAL SHARES .75% .66%
TOTAL COMMON STOCK AND COMMON STOCK EQUIVALENTS 173,616,672 172,975,912
NET INCOME $71,281,486 $51,923,532
PRO FORMA NET INCOME PER SHARE (INCLUDING DILUTIVE
COMMON STOCK EQUIVALENTS) $ .41 $ .30
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THE SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONSOLIDATED CONDENSED FINANCIAL STATEMENTS OF FAMILY DOLLAR STORES, INC.
AND SUBSIDIARIES FOR THE PERIOD ENDED FEBRUARY 27, 1999, AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<CIK> 0000034408
<NAME> FAMILY DOLLAR STORES, INC.
<MULTIPLIER> 1
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> AUG-28-1999
<PERIOD-START> AUG-30-1998
<PERIOD-END> FEB-27-1999
<EXCHANGE-RATE> 1
<CASH> 101,905,647
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 532,175,321
<CURRENT-ASSETS> 682,569,264
<PP&E> 498,126,876
<DEPRECIATION> 171,198,258
<TOTAL-ASSETS> 1,011,743,812
<CURRENT-LIABILITIES> 352,146,917
<BONDS> 0
0
0
<COMMON> 18,290,308
<OTHER-SE> 618,602,471
<TOTAL-LIABILITY-AND-EQUITY> 1,011,743,812
<SALES> 1,380,232,694
<TOTAL-REVENUES> 1,380,232,694
<CGS> 922,020,502
<TOTAL-COSTS> 1,265,891,208
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 114,341,486
<INCOME-TAX> 43,060,000
<INCOME-CONTINUING> 71,281,486
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 71,281,486
<EPS-PRIMARY> .41
<EPS-DILUTED> .41
</TABLE>
March 25, 1999
C. Martin Sowers
Family Dollar Stores, Inc.
P.O. Box 1017
Charlotte, NC 28201-1017
Re: Credit Agreement dated as of March 31, 1996 among
NationsBank, N.A. ("NationsBank"), Family Dollar Stores,
Inc. ("FDSI") and Family Dollar, Inc. ("FDI") (as amended or
modified prior to the date hereof, the "Credit Agreement")
Dear Marty:
You have requested, on behalf of FDSI and FDI, an extension of
the Tranche A Termination Date for an additional period of one
year in accordance with Section 2.14 of the Credit Agreement.
NationsBank agrees to such extension and hereby agrees to extend
the "Tranche A Termination Date" from March 31, 2000 to March 31,
2001. Further, you have requested, on behalf of FDSI and FDI, an
extension of the Tranche B Termination Date for an additional
period of 364 days in accordance with Section 2.15 of the Credit
Agreement. NationsBank agrees to such extension and hereby
agrees to extend the "Tranche B Termination Date" from March 28,
1999 to March 26, 2000. Capitalized terms not otherwise defined
herein have the same meaning given to such terms in the Credit
Agreement.
Except as expressly amended by this letter, the Credit Agreement
and all of the other Loan Documents are confirmed and ratified in
all respects and shall remain in full force and effect in
accordance with their respective terms. FDSI and FDI hereby
affirm that all representations and warranties in the Credit
Agreement remain true and accurate as of the date hereof and that
no Default or Event of Default has occurred and is continuing as
of the date hereof.
This amendment shall be effective upon signing by each of the
parties to the Credit Agreement and the Guarantors. Please
acknowledge your agreement by signing and returning to me the
enclosed copy of this letter.
Very truly yours,
NATIONSBANK, N.A.
Timothy H. Spanos
Senior Vice President
(704) 386-4507
<PAGE>
ACKNOWLEDGED AND AGREED:
FAMILY DOLLAR STORES, INC. FAMILY DOLLAR, INC.
By: C. MARTIN SOWERS By: C. MARTIN SOWERS
Name: C. MARTIN SOWERS Name: C. MARTIN SOWERS
Title: Senior Vice President- Title: Senior Vice President-
Finance Finance
Each of the Guarantors below acknowledges and consents to this
Amendment and ratifies its Guaranty:
Family Dollar Services, Inc. Family Dollar Operations, Inc.
By: C. MARTIN SOWERS By: C. MARTIN SOWERS
Name: C. MARTIN SOWERS Name: C. MARTIN SOWERS
Title: Senior Vice President- Title: Senior Vice President-
Finance Finance
Family Dollar Trucking, Inc.
By: C. MARTIN SOWERS
Name: C. MARTIN SOWERS
Title: Senior Vice President-
Finance
