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 May 29, 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 June 30, 1999
Common Stock, $.10 par value 172,729,066 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 -
May 29, 1999 and August 29, 1998 2
Consolidated Condensed Statements of Income -
Quarter Ended May 29, 1999 and May 31, 1998 3
Consolidated Condensed Statements of Income -
Three Quarters Ended May 29, 1999
and May 31, 1998 4
Consolidated Condensed Statements of Cash Flows -
Three Quarters Ended May 29, 1999
and May 31, 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 6 - Exhibits and Reports on Form 8-K 14
Signatures 14
<PAGE>
<TABLE>
FAMILY DOLLAR STORES, INC., AND SUBSIDIARIES
CONSOLIDATED CONDENSED BALANCE SHEETS
(Unaudited)
<CAPTION>
May 29, August 29,
1999 1998
Assets
<S> <C> <C>
Current assets:
Cash and cash equivalents (Note 2) $ 120,530,892 $134,220,673
Merchandise inventories 520,669,477 465,556,559
Deferred income taxes 43,050,920 40,695,920
Prepayments and other current assets 7,881,041 6,156,514
Total current assets 692,132,330 646,629,666
Property and equipment, net 348,578,932 291,759,866
Other assets 5,870,311 3,790,538
$1,046,581,573 $942,180,070
<PAGE>
<CAPTION>
Liabilities and Shareholders' Equity
<S> <C> <C>
Current liabilities:
Accounts payable and accrued
liabilities $ 332,179,088 $331,586,182
Income taxes payable 19,026,222 11,689,065
Total current liabilities 351,205,310 343,275,247
Deferred income taxes 23,659,116 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 183,070,620 shares at
May 29, 1999 and 182,562,368 shares
at August 29, 1998 18,307 062 18,256,237
Capital in excess of par 22,271,311 16,785,409
Retained earnings 642,488,042 554,458,329
683,066,415 589,499,975
Less common stock held in treasury,
at cost 10,358,466 shares at
May 29, 1999 and
August 29, 1998 (Note 5) 11,349,268 11,349,268
Total shareholders' equity 671,717,147 578,150,707
$1,046,581,573 $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
May 29, May 31,
1999 1998
<S> <C> <C>
Net sales $678,857,739 $585,807,252
Costs and expenses:
Cost of sales 440,632,092 385,691,171
Selling, general and
administrative expenses 172,458,261 149,972,791
613,090,353 535,663,962
Income before provision
for taxes on income 65,767,386 50,143,290
Provision for taxes on income 24,000,000 18,800,000
Net income $ 41,767,386 $ 31,343,290
Net income per common share - Basic
(Note 5) $ 0.24 $ 0.18
Average shares - Basic (Note 5) 172,651,802 172,167,573
Net income per common share - Diluted
(Note 5) $ 0.24 $ 0.18
Average shares - Diluted (Note 5) 174,041,232 173,453,740
Dividends per common share $ 0.05 $ 0.04-1/2
See notes to consolidated condensed financial statements.
</TABLE>
<PAGE>
<TABLE>
FAMILY DOLLAR STORES, INC., AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF INCOME
(Unaudited)
<CAPTION>
Three Quarters Ended
May 29, May 31,
1999 1998
<S> <C> <C>
Net sales $2,059,090,433 $1,764,431,725
Costs and expenses
Cost of sales 1,362,652,594 1,178,809,392
Selling, general and
administrative expenses 516,328,967 451,775,511
1,878,981,561 1,630,584,903
Income before provision for
taxes on income 180,108,872 133,846,822
Provision for taxes on income 67,060,000 50,580,000
Net income $113,048,872 $ 83,266,822
Net income per common share - Basic
(Note 5) $0.65 $0.48
Average shares - Basic (Note 5) 172,437 432 171,947,548
Net income per common share - Diluted
(Note 5) $0.65 $0.48
Average shares - Diluted (Note 5) 173,759,059 173,148,589
Dividends per common share $0.14-1/2 $0.13
See notes to consolidated condensed financial statements.
</TABLE>
<PAGE>
<TABLE>
FAMILY DOLLAR STORES, INC., AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
(Unaudited)
<CAPTION>
Three Quarters Ended
May 29, May 31,
1999 1998
<S> <C> <C>
Cash flows from operating activities:
Net income $113,048,872 $83,266,822
Adjustments to reconcile net income to
net cash provided by operating
activities:
Depreciation and amortization 32,083,854 25,189,032
Deferred income taxes 550,000 (4,813,000)
(Gain) Loss on disposition of property
and equipment (754,106) 25,634
Changes in operating assets and liabilities:
Inventories (55,112,918) 18,940,828
Prepayments and other current assets (1,724,527) 628,380
Other assets (2,079,773) 1,944,883
Accounts payable and accrued
liabilities (293,150) 62,371,176
Income taxes payable 7,337,157 5,676,457
93,055,409 193,230,212
Cash flows from investing activities:
Capital expenditures (89,921,281) (79,170,359)
Proceeds from dispositions of
property and equipment 1,772,467 1,232,806
(88,148,814) (77,937,553)
Cash flows from financing activities:
Exercise of employee stock options 5,536,727 4,327,082
Payment of dividends (24,133,103) (21,486,954)
(18,596,376) (17,159,872)
Net change in cash and cash equivalents (13,689,781) 98,132,787
Cash and cash equivalents at beginning
of period 134,220,673 42,468,300
Cash and cash equivalents at end of period $120,530,892 $140,601,087
Supplemental disclosure of cash flow information:
Cash paid during the period for:
Interest $ - $ 12,564
Income taxes 56,283,664 48,364,022
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
May 29, 1999, and the results of operations for the quarter
and the three quarters ended May 29, 1999, and May 31, 1998,
and the cash flows for the three quarters ended May 29, 1999,
and May 31, 1998.
The results of operations for the three quarters ended
May 29, 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
three quarters ended May 29, 1999, and May 31, 1998.
<TABLE>
<CAPTION>
Three Quarters Ended
May 29, 1999 May 31, 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 774,550 $12.75-$24.75 1,133,800 $10.88-$18.50
Exercised (505,679) $ 3.50-$ 8.17 (476,596) $ 3.50-$ 7.09
Cancelled (125,325) (90,160)
Outstanding-ending 3,882,881 $ 3.83-$24.75 3,709,052 $ 3.50-$18.50
Exercisable options 965,098 $ 3.83-$ 8.50 638,656 $ 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
May 29, May 31,
1999 1998
<S> <C> <C>
Basic Net Income Per Share:
Net Income $41,767,386 $31,343,290
Weighted Average Number of Shares
Outstanding 172,651,802 172,167,573
Net Income Per Common Share - Basic $.24 $ .18
Diluted Net Income Per Share:
Net Income $41,767,386 $31,343,290
Weighted Average Number of Shares
Outstanding 172,651,802 172,167,573
Effect of Dilutive Securities -
Stock Options 1,389,430 1,286,167
Average Shares - Diluted 174,041,232 173,453,740
Net Income Per Common Share - Diluted $ .24 $ .18
Three Quarters Ended
May 29, May 31,
1999 1998
Basic Net Income Per Share:
Net Income $113,048,872 $83,266,822
Weighted Average Number of Shares
Outstanding 172,437,432 171,947,548
Net Income Per Common Share - Basic $ .65 $ .48
Diluted Net Income Per Share:
Net Income $113,048,872 $83,266,822
Weighted Average Number of Shares
Outstanding 172,437,432 171,947,548
Effect of Dilutive Securities -
Stock Options 1,321,627 1,201,041
Average Shares - Diluted 173,759,059 173,148,589
Net Income Per Common Share - Diluted $ .65 $ .48
</TABLE>
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
FINANCIAL CONDITION
At May 29, 1999, the Company had working capital of $340.9
million with cash and cash equivalents of approximately $120.5
million and no outstanding borrowings. Operating activities
generated cash of approximately $93.1 million during the first
three quarters of fiscal 1999 versus approximately $193.2 million
during the first three quarters of fiscal 1998. The timing of
payments for merchandise purchases contributed approximately
$62.4 million of the increase in fiscal 1998, whereas operating
cash was used in fiscal 1999 to increase merchandise inventory by
approximately $55.1 million primarily as a result of new stores,
additional inventory in existing stores and a new distribution
center.
Capital expenditures for the three quarters ended May 29,
1999, were approximately $89.9 million, and are currently
expected to be approximately $125 million for fiscal 1999. The
majority of 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,
scheduled for substantial completion in the summer of 1999. The
new store expansion and the additional distribution center will
require additional investment in merchandise inventories. In
fiscal 1999, the Company expects to open approximately 360
stores and close approximately 60 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 approximately 350
stores in fiscal 1999, compared with the expansion or relocation
of 90 stores and renovation of 170 stores in fiscal 1998. In the
first three quarters of fiscal 1999, the Company opened 265
stores, closed 38 stores, expanded or relocated 67 stores and
renovated 257 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 15.9% in the quarter ended May 29, 1999,
as compared with the quarter ended May 31, 1998, and increased
16.7% in the three quarters ended May 29, 1999, as compared with
the three quarters ended May 31, 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 third quarter were adversely
affected by the fact that there was one less day in the third
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" calendar. This change adversely
affected sales in the first quarter and had a positive impact on
sales in the second quarter and will have a positive impact on
sales in the fourth quarter. Sales in existing stores increased
8.2% in the quarter ended May 29, 1999, as compared with the
same period ended May 31, 1998, with the sales of hardlines
merchandise increasing approximately 10.4% and the sales of
softlines merchandise increasing approximately 3.7%. Sales in
existing stores increased 8.4% in the three quarters ended
May 29, 1999, as compared to the three quarters ended
May 31, 1998, with sales of hardlines merchandise increasing
approximately 12.0% and sales of softlines merchandise increasing
approximately 1.0%. Hardlines as a percentage of total sales
increased to approximately 67% in the third quarter of fiscal
1999 compared to approximately 66% in the third quarter of fiscal
1998, and increased to approximately 70% in the first three
quarters of fiscal 1999 compared to approximately 67% in the
first three quarters 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 shift in the merchandise mix to hardlines is expected to
continue. 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 in each of the first three quarters, as customers
continued to respond favorably to the Company's everyday low
price strategy. The Company currently expects to eliminate an
additional circular in the fourth quarter of fiscal 1999.
<PAGE>
The average number of stores open during the first three
quarters of fiscal 1999 was 8.9% more than during the first three
quarters of fiscal 1998. The Company had 3,244 stores in
operation at May 29, 1999, as compared with 2,967 stores in
operation at May 31, 1998, representing an increase of
approximately 9.3%.
COST OF SALES
Cost of sales increased 14.2% in the quarter ended May 29,
1999, as compared with the quarter ended May 31, 1998, and
increased 15.6% in the three quarters ended May 29, 1999, as
compared to the three quarters ended May 31, 1998. These
increases primarily reflected the additional sales volume between
years. Cost of sales, as a percentage of net sales, was 64.9% in
the quarter ended May 29, 1999, compared to 65.8% in the quarter
ended May 31, 1998, and was 66.2% in the three quarters ended
May 29, 1999, compared with 66.8% in the three quarters ended
May 31, 1998. The decreases in the cost of sales percentage for
the quarter and the first three quarters of fiscal 1999 were due
primarily to decreases in both clearance and advertising
markdowns. The Company also realized increased sales of higher
margin softlines merchandise during the third quarter. The cost
of sales percentages also are affected by improvements in the
effectiveness of 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 15.0%
in the quarter ended May 29, 1999, as compared with the quarter
ended May 31, 1998, and increased 14.3% in the three quarters
ended May 29, 1999, as compared with the three quarters ended
May 31, 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 25.4%
in the quarter ended May 29, 1999, as compared with 25.6% in the
quarter ended May 31, 1998, and were 25.1% in the three quarters
ended May 29, 1999, as compared with 25.6% in the three quarters
ended May 31, 1998. The decreases in the percentages for the
quarter and the first three quarters ended May 29,1999 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 36.5% for the quarter ended
May 29, 1999, as compared to 37.5% for the quarter ended May 31,
1998, and was 37.2% for three quarters ended May 29, 1999, as
compared to 37.8% for the three quarters ended May 31, 1998. The
decreases in the effective tax rate for the quarter and the first
three quarters ended May 29, 1999 resulted primarily from changes
in effective state income tax rates.
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.
<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 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.
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 6. Exhibits and Reports on Form 8-K
(a) Exhibits filed herewith:
10 Family Dollar Stores, Inc. 1999 Director Compensation Plan
11 Statements Re: Computations of Per Share Earnings
27 Financial Data Schedule
(b) Reports on Form 8-K - None
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: July 9, 1999 R. JAMES KELLY
R. JAMES KELLY
Vice Chairman
Date: July 9, 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 MAY 29, 1999 MAY 31, 1998
BASIC DILUTED BASIC DILUTED
<S> <C> <C> <C> <C>
AVERAGE SHARES OUTSTANDING 172,651,802 172,651,802 172,167,573 172,167,573
NET INCOME $41,767,386 $41,767,386 $31,343,290 $31,343,290
NET INCOME PER SHARE $ .24 $ .24 $ .18 $ .18
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 3,915,403 3,703,960
WEIGHTED AVERAGE SHARES ASSUMED REPURCHASED FROM
ASSUMED PROCEEDS OF EXERCISES USING TREASURY STOCK
METHOD (AVERAGE MARKET PRICE) (2,525,973) (2,417,793)
NET PRO FORMA COMMON STOCK EQUIVALENT INCREMENTAL SHARES 1,389,430 1,286,167
PERCENTAGE DILUTION FROM PRO FORMA COMMON
STOCK EQUIVALENT INCREMENTAL SHARES .80% .75%
TOTAL COMMON STOCK AND COMMON STOCK EQUIVALENTS 174,041,232 173,453,740
NET INCOME $41,767,386 $31,343,290
PRO FORMA NET INCOME PER SHARE (INCLUDING DILUTIVE
COMMON STOCK EQUIVALENTS) $ .24 $ .18
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT 11
Page 2 of 2
FAMILY DOLLAR STORES, INC.
STATEMENT RE COMPUTATIONS OF PER SHARE EARNINGS
THREE QUARTERS ENDED THREE QUARTERS ENDED
AS PRESENTED MAY 29, 1999 MAY 31, 1998
BASIC DILUTED BASIC DILUTED
<S> <C> <C> <C> <C>
AVERAGE SHARES OUTSTANDING 172,437,432 172,437,432 171,947,548 171,947,548
NET INCOME $113,048,872 $113,048,872 $83,266,822 $83,266,822
NET INCOME PER SHARE $ .65 $ .65 $ .48 $ .48
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 4,033,877 3,742,170
WEIGHTED AVERAGE SHARES ASSUMED REPURCHASED FROM
ASSUMED PROCEEDS OF EXERCISES USING TREASURY STOCK
METHOD (AVERAGE MARKET PRICE) (2,712,250) (2,541,129)
NET PRO FORMA COMMON STOCK EQUIVALENT INCREMENTAL SHARES 1,321,627 1,201,041
PERCENTAGE DILUTION FROM PRO FORMA COMMON
STOCK EQUIVALENT INCREMENTAL SHARES .77% .70%
TOTAL COMMON STOCK AND COMMON STOCK EQUIVALENTS 173,759,059 173,148,589
NET INCOME $113,048,872 $83,266,822
PRO FORMA NET INCOME PER SHARE (INCLUDING DILUTIVE
COMMON STOCK EQUIVALENTS) $ .65 $ .48
</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 MAY 29, 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> 9-MOS
<FISCAL-YEAR-END> AUG-28-1999
<PERIOD-START> AUG-30-1998
<PERIOD-END> MAY-29-1999
<EXCHANGE-RATE> 1
<CASH> 120,530,892
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 520,669,477
<CURRENT-ASSETS> 692,132,330
<PP&E> 530,589,981
<DEPRECIATION> 182,011,049
<TOTAL-ASSETS> 1,046,581,573
<CURRENT-LIABILITIES> 351,205,310
<BONDS> 0
0
0
<COMMON> 18,307,062
<OTHER-SE> 653,410,085
<TOTAL-LIABILITY-AND-EQUITY> 1,046,581,573
<SALES> 2,059,090,433
<TOTAL-REVENUES> 2,059,090,433
<CGS> 1,362,652,594
<TOTAL-COSTS> 1,878,981,561
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 180,108,872
<INCOME-TAX> 67,060,000
<INCOME-CONTINUING> 113,048,872
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 113,048,872
<EPS-BASIC> .65
<EPS-DILUTED> .65
</TABLE>
Exhibit 10
FAMILY DOLLAR STORES, INC.
1999 DIRECTOR COMPENSATION PLAN
ARTICLE I. PURPOSES:
The Family Dollar Stores, Inc., 1999 Director Compensation
Plan (the "Plan") is intended to encourage stock ownership by all
members of the Board of Directors of Family Dollar Stores, Inc.
(the "Corporation") who are not employees of the Corporation
(individually, a "Director") in order to increase each Director's
proprietary interest in the Corporation's success and to
encourage individuals to remain a Director of the Corporation.
ARTICLE II. ADMINISTRATION:
The Plan shall be operated by the Board of Directors of the
Corporation. Subject to the provisions of the Plan, the Board of
Directors may, from time to time, prescribe rules and regulations
for the administration of the Plan and the payment of any
administrative fees associated with the Plan. The Board of
Directors may decide questions which arise with respect to the
interpretation or application of said Plan, and such decisions
shall not be subject to review.
ARTICLE III. RIGHT TO RECEIVE STOCK:
Each Director shall be granted the right to receive his or
her Director's compensation, consisting of all regular meeting
and committee meeting fees in shares of common stock of the
Corporation (the "Stock"), or to receive the compensation in
cash. All regular meeting and committee meeting fees are
referred to collectively as the "Compensation". The right to
receive the Compensation in Stock instead of cash is referred
to as an "Election", and shall be made pursuant to Article IV
hereof. The number of shares which an electing Director
receives for the Compensation shall be calculated as provided
in Article IV hereof.
ARTICLE IV. TERMS AND CONDITIONS:
(a) ELECTION FORM: An Election shall be evidenced by a
form provided to each Director, which form shall (i) incorporate,
by reference, the terms and provisions of this Plan; and (ii) be
executed by each electing Director.
<PAGE>
(b) CONVERTING COMPENSATION TO STOCK: All Compensation for
a Director making an Election shall be converted to a number of
whole and fractional shares of Stock based upon the fair market
value of the Stock on the appropriate Grant Date as described in
subsection (c) of this Article IV. The number of whole and
fractional shares of Stock calculated under this section and an
amount equivalent to all cash dividends payable on such Stock
shall be distributed pursuant to subsection (f) of this
Article IV.
(c) GRANT DATES: A Grant Date hereunder is any date at
which the fair market value of the Stock is determined for
purposes of calculating the number of shares of Stock a Director
will receive for his or her Compensation. The initial Grant Date
shall be the date of the first regular meeting of the Board of
Directors that is not earlier than six months and one day
following the Director's Election. On the initial Grant Date all
Compensation which has been earned by a Director following a
Director's Election shall be converted to the appropriate number
of whole and fractional shares of Stock based upon the fair
market value of the Stock on the initial Grant Date. Following
the initial Grant Date, all subsequent Compensation earned by an
electing Director shall be converted to shares of Stock based
upon the fair market value of the Stock on the date of the
regular meeting or committee meeting for which the Compensation
is earned. Fair market value per share of the Stock is the
average of the highest price and the lowest price at which the
Common Stock is sold regular way on the New York Stock Exchange
on the date for which the calculation is made.
(d) ELECTIONS BY DIRECTORS ON THE EFFECTIVE DATE:
Individuals who are Directors on the Effective Date may make an
Election on the Effective Date for the Compensation for meetings
after the Effective Date. After making an Election, all
Compensation during such Director's term will be converted to a
number of whole and fractional shares of Stock as provided in
subsections (b), (c) and (d) of this Article IV unless the
Election is revoked pursuant to subsection (g) of this
Article IV.
(e) ELECTIONS BY DIRECTORS AFTER THE EFFECTIVE DATE:
Individuals who become a Director after the Effective Date and
Directors who did not make an Election for the fiscal year ending
August 28, 1999, may make an Election prior to the beginning of a
fiscal year for Compensation earned during any subsequent fiscal
year. After making an Election for any fiscal year, all
Compensation paid or made available to a Director during such
Director's term will be converted to a number of whole and
fractional shares of Stock as provided in subsection (b), (c) and
(d) of this Article IV unless the Election is revoked pursuant to
subsection (g) of this Article IV.
<PAGE>
(f) DISTRIBUTION OF STOCK: The Corporation will issue all
Stock to which a Director who has made an Election is entitled
for a fiscal year in one certificate issued within seventy-five
(75) days of the last day of the Corporation's fiscal year for
which the Election is effective. In issuing the Stock, the
Corporation may round up any fractional shares of Stock to which
a Director is entitled during a fiscal year to the next whole
share of Stock. An amount equivalent to the cash dividends which
would have been payable on such Stock if the Director would have
been a shareholder of record for the Stock on the date of the
meeting shall be distributed in cash along with the certificate.
(g) DURATION OF THE ELECTION: Following an Election, all
Compensation will be paid in Stock for the remainder of the
Director's term as a Director unless the Director revokes the
Election in writing. The revocation of an Election shall only be
effective for any Compensation for meetings six months and one
day after the revocation is filed with the Committee, and all
Compensation to a revoking Director for meetings before the
revocation is effective shall be calculated and distributed
pursuant to subsections (b) through (f) hereof.
(h) ASSIGNABILITY: The right to receive Stock hereunder
shall not be assignable or transferable except by will or by the
laws of descent and distribution.
(i) RIGHTS AS A SHAREHOLDER: No Director shall have any
rights as a shareholder with respect to Stock transferred
pursuant to this Plan until a certificate for such Stock has been
actually issued to said Director. No adjustment will be made for
dividends or other rights for which the record date is prior to
the date of such issuance.
(j) RESTRICTIONS ON SALE OF STOCK: The Stock has not been
registered and is subject to the resale restrictions of Rule 144
under the Securities Act of 1933. No Stock received by a
Director under this Plan may be sold by the Director for a period
of one (1) year after the Stock is issued to the Director.
(k) IRREVOCABLE ELECTION: Notwithstanding subsection (g)
of this Article IV, a Director's Election to receive Compensation
in Stock for any fiscal year may not be revoked during that
fiscal year.
ARTICLE V. TERM OF PLAN:
The term of this Plan shall be for a period commencing on
the Effective Date and ending on the date the Plan is terminated
by the Board of Directors.
<PAGE>
ARTICLE VI. AMENDMENTS:
The Board of Directors may, from time to time, alter,
amend, suspend or terminate the Plan at any time without notice,
provided that no Director's existing rights are adversely
affected thereby and provided further that no amendment or
modification may become effective without approval by the
shareholders of the Corporation if shareholder approval is
required to enable the Plan to satisfy any state or federal
statutory or regulatory requirements.
ARTICLE VII. NOTICES:
Any notice which the Corporation or any Director may be
required or permitted to give to each other shall be in writing
and shall be deemed given when delivered personally or deposited
in the U.S. Mail, first class postage prepaid, addressed to
Corporate Secretary, Family Dollar Stores, Inc., P.O. Box 1017,
Charlotte, NC 28201, or to such other group or individual that
the Corporation, by notice to the Director, may designate in
writing from time to time; and to the Director, at the address
shown on the records of the Corporation, or at such other address
as the Director, by notice to the Corporation, may designate in
writing from time to time.
ARTICLE VIII. THE RIGHT OF THE CORPORATION TO
TERMINATE DIRECTOR'S RELATIONSHIP:
Nothing contained in the Plan shall confer upon any Director
any right to continue as a Director of the Corporation unless
such Director is duly re-elected by the Corporation's
shareholders.
ARTICLE IX. GOVERNING LAW:
The Plan will be governed and construed pursuant to the laws
of the United States of America and the State of North Carolina.
ARTICLE X. EFFECTIVE DATE OF THE PLAN:
The Plan shall be become effective on the date the Plan is
adopted by the Board of Directors.
