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 26, 2000
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, 2000
Common Stock, $.10 par value 171,096,317 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 26, 2000 and August 28, 1999 2
Consolidated Condensed Statements of Income -
Quarter Ended February 26, 2000 and
February 27, 1999 3
Consolidated Condensed Statements of Income -
First Half Ended February 26, 2000 and
February 27, 1999 4
Consolidated Condensed Statements of Cash Flows -
First Half Ended February 26, 2000 and
February 27, 1999 5
Notes to Consolidated Condensed Financial
Statements 6-8
Item 2 - Management's Discussion and Analysis of
Financial Condition and Results of
Operations 9-12
Part II - Other Information and Signatures
Item 4 - Submission of Matters to a Vote of 13
Security Holders
Item 6 - Exhibits and Reports on Form 8-K 13
Signatures 14
<PAGE>
<TABLE>
FAMILY DOLLAR STORES, INC., AND SUBSIDIARIES
CONSOLIDATED CONDENSED BALANCE SHEETS
(Unaudited)
<CAPTION>
February 26, August 28,
2000 1999
Assets
<S> <C> <C>
Current assets:
Cash and cash equivalents (Note 2) $ 122,031,697 $ 95,301,411
Merchandise inventories 521,498,559 568,780,481
Deferred income taxes 47,212,998 47,066,920
Prepayments and other current assets 8,103,338 8,806,072
Total current assets 698,846,592 719,954,884
Property and equipment, net 423,290,161 371,141,298
Other assets 5,281,918 4,155,454
$1,127,418,671 $1,095,251,636
<PAGE>
<CAPTION>
Liabilities and Shareholders' Equity
<S> <C> <C>
Current liabilities:
Accounts payable and accrued
liabilities $ 341,544 739 $ 369,088,891
Income taxes payable 19,073,935 9,457,571
Total current liabilities 360,618,674 378,546,462
Deferred income taxes 28,488,747 26,054,116
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 183,511,678 shares at
February 26, 2000 and 183,109,328
shares at August 28, 1999 18,351,168 18,310,933
Capital in excess of par 26,828,465 22,808,499
Retained earnings 734,413,486 660,880,894
779,593,119 702,000,326
Less common stock held in treasury,
at cost (12,274,386 shares at
February 26, 2000 and 10,358,466 shares
at August 28, 1999(Note 5)) 41,281,869 11,349,268
Total shareholders' equity 738,311,250 690,651,058
$1,127,418,671 $1,095,251,636
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 26, February 27,
2000 1999
<S> <C> <C>
Net sales $858,500,258 $752,216,740
Costs and expenses:
Cost of sales 574,365,339 509,721,271
Selling, general and
administrative expenses 197,554,307 175,622,914
771,919,646 685,344,185
Income before provision
for taxes on income 86,580,612 66,872,555
Provision for taxes on income 31,600,000 25,200,000
Net income $ 54,980,612 $ 41,672,555
Net income per common share - Basic
(Note 5) $0.32 $ 0.24
Average shares - Basic (Note 5) 171,682,611 172,428,853
Net income per common share - Diluted
(Note 5) $0.32 $ 0.24
Average shares - Diluted (Note 5) 172,552,907 173,767,340
Dividends per common share $ .05-1/2 $ .05
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 26, February 27,
2000 1999
<S> <C> <C>
Net sales $1,572,020,886 $1,380,232,694
Costs and expenses:
Cost of sales 1,040,545,162 922,020,502
Selling, general and
administrative expenses 387,311,591 343,870,706
1,427,856,753 1,265,891,208
Income before provision for
taxes on income 144,164,133 114,341,486
Provision for taxes on income 52,600,000 43,060,000
Net income $ 91,564,133 $ 71,281,486
Net income per common share - Basic
(Note 5) $0.53 $ 0.41
Average shares - Basic (Note 5) 172,243,469 172,330,246
Net income per common share - Diluted
(Note 5) $0.53 $0.41
Average shares - Diluted (Note 5) 173,266,669 173,616,672
Dividends per common share $ .10-1/2 $ .09-1/2
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 26, February 27,
2000 1999
<S> <C> <C>
Cash flows from operating activities:
Net income $ 91,564,133 $71,281,486
Adjustments to reconcile net income to
net cash provided by operating activities:
Depreciation and amortization 26,190,882 21,077,554
Deferred income taxes 2,288,553 365,000
(Gain) Loss on disposition of property
and equipment 9,012 (770,683)
Changes in operating assets and liabilities:
Inventories 47,281,922 (66,618,762)
Prepayments and other current assets 702,734 (50,862)
Other assets (1,126,464) 1,544,608
Accounts payable and accrued
liabilities (28,315,357) 1,541,208
Income taxes payable 9,616,364 6,450,154
148,211,779 34,819,703
Cash flows from investing activities:
Capital expenditures (78,791,824) (56,874,137)
Proceeds from dispositions of
property and equipment 443,067 1,398,514
(78,348,757) (55,475,623)
Cash flows from financing activities:
Purchases of common stock for treasury (29,932,601) -
Exercise of employee stock options 4,060,201 3,844,244
Payment of dividends (17,260,336) (15,503,350)
(43,132,736) (11,659,106)
Net change in cash and cash equivalents 26,730,286 (32,315,026)
Cash and cash equivalents at beginning
of period 95,301,411 134,220,673
Cash and cash equivalents at end of period $122,031,697 $101,905,647
Supplemental disclosure of cash flow information:
Cash paid during the period for:
Interest $ - $ -
Income taxes 38,626,124 34,256,448
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 26, 2000, and the results of operations for the
quarter and first half ended February 26, 2000, and
February 27, 1999, and the cash flows for the first half
ended February 26, 2000, and February 27, 1999.
The results of operations for the first half ended
February 26, 2000, 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." The carrying amount of the Company's cash
equivalents approximates fair value due to the short
maturities of these investments.
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, 2002 and March 27, 2001, 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, 2002, 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 26, 2000 and February 27, 1999.
<TABLE>
<CAPTION>
First Half Ended
February 26, 2000 February 27, 1999
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 3,910,750 $ 3.83-$24.75 3,739,335 $ 3.50-$20.75
Granted 783,300 $14.75-$21.75 721,200 $12.75-$21.50
Exercised (402,350) $ 3.83-$11.38 (383,119) $ 3.50-$ 6.25
Cancelled (60,160) (55,825)
Outstanding-ending 4,231,540 $ 3.83-$24.75 4,021,591 $ 3.83-$21.50
Exercisable options 1,347,048 $ 3.83-$17.50 937,598 $ 3.83-$ 7.17
</TABLE>
5. 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.
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. As of March 15,2000, the Company had purchased in the
open market, 2,088,000 shares at a cost of $32,673,739.
The following table sets forth the computation of basic and diluted
net income per common share:
<PAGE>
<TABLE>
<CAPTION>
Quarter Ended
February 26, February 27,
2000 1999
<S> <C> <C>
Basic Net Income Per Share:
Net Income $54,980,612 $41,672,555
Weighted Average Number of Shares
Outstanding 171,682,611 172,428,853
Net Income Per Common Share - Basic $ .32 $ .24
Diluted Net Income Per Share:
Net Income $54,980,612 $41,672,555
Weighted Average Number of Share
Outstanding 171,682,611 172,428,853
Effect of Dilutive Securities -
Stock Options 870,296 1,338,487
Average Shares - Diluted 172,552,907 173,767,340
Net Income Per Common Share - Diluted $ .32 $ .24
First Half Ended
February 26, February 27,
2000 1999
Basic Net Income Per Share:
Net Income $91,564,133 $71,281,486
Weighted Average Number of Shares
Outstanding 172,243,469 172,330,246
Net Income Per Common Share - Basic $ .53 $ .41
Diluted Net Income Per Share:
Net Income $91,564,133 $71,281,486
Weighted Average Number of Shares
Outstanding 172,243,469 172,330,246
Effect of Dilutive Securities -
Stock Options 1,023,200 1,286,426
Average Shares - Diluted 173,266,669 173,616,672
Net Income Per Common Share - Diluted $ .53 $ .41
</TABLE>
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
FINANCIAL CONDITION
At February 26, 2000, the Company had working capital of $338.2
million with cash and cash equivalents of approximately $122.0 million
and no outstanding borrowings. Operating activities generated cash of
approximately $148.2 million during the first half of fiscal 2000 versus
approximately $34.8 million during the first half of fiscal 1999.
Operating cash was used in fiscal 1999 to increase merchandise
inventory, primarily as a result of new stores, additional inventory in
existing stores, and a new distribution center. During fiscal 2000, the
increase in earnings, as well as improved system-wide inventory flows,
offset merchandise inventory increases for new stores and a new
distribution center and contributed to the increase in operating cash
flow. Approximately $60 million of the improved cash flow in fiscal
2000 resulted from the early receipt of certain seasonal merchandise in
the fourth quarter of fiscal 1999.
Capital expenditures for the first half ended February 26, 2000,
were approximately $78.8 million, and are currently expected to be
approximately $160 million for fiscal 2000. The majority of planned
capital expenditures for fiscal 2000 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 Rowan County, Kentucky, currently scheduled for completion in
the summer of 2000. The new store expansion and the additional
distribution center will require additional investment in merchandise
inventories. In fiscal 2000, the Company currently expects to open
approximately 400 stores and close approximately 50 stores for a net
addition of approximately 350 stores, compared with the opening of 366
stores and closing of 59 stores for a net addition of 307 stores in
fiscal 1999. The Company also currently plans to expand or relocate
approximately 150 stores and renovate approximately 300 stores in fiscal
2000, compared with the expansion or relocation of 107 stores and
renovations of 350 stores in fiscal 1999. In the first half of fiscal
2000, the Company opened 148 stores, closed 25 stores, expanded or
relocated 45 stores and renovated 82 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.
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.
As of March 15,2000, the Company had purchased in the open market,
2,088,000 shares at a cost of $32,673,739.
<PAGE>
RESULTS OF OPERATIONS
NET SALES
Net sales increased 14.1% in the quarter ended February 26, 2000,
as compared with the quarter ended February 27, 1999, and increased
13.9% in the first half ended February 26, 2000, as compared with the
first half ended February 27, 1999. 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. Sales in existing stores
increased 5.6% in the quarter ended February 26, 2000, as compared with
the same period ended February 27, 1999, with sales of hardlines
merchandise increasing approximately 8.3% and sales of softlines
merchandise decreasing approximately 1.7%. Sales in existing stores
increased 5.2% in the first half ended February 26, 2000, as compared to
the first half ended February 27, 1999, with sales of hardline
merchandise increasing approximately 7.3% and sales of softlines
merchandise remaining flat. Hardlines as a percentage of total sales
increased to approximately 73% in the second quarter of fiscal 2000
compared to approximately 71% in the second quarter of fiscal 1999, and
increased to approximately 72% in the first half of fiscal 2000 compared
to approximately 71% in the first half of fiscal 1999. The Company
continues to broaden its assortment of hardlines merchandise and
dedicate more selling space in its stores to hardlines. The Company
expects the shift in the merchandise mix to hardlines to continue for
the remainder of fiscal 2000. 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 average number of stores open during the first half of fiscal
2000 was 9.7% more than during the first half of fiscal 1999. The
Company had 3,447 stores in operation at February 26, 2000, as compared
with 3,159 stores in operation at February 27, 1999, representing an
increase of approximately 9.1%.
<PAGE>
COST OF SALES
Cost of sales increased 12.7% in the quarter ended February 26,
2000, as compared with the quarter ended February 27, 1999, and increased
12.9% in the first half ended February 26, 2000, as compared to the first
half ended February 27, 1999. These increases primarily reflected the
additional sales volume between years. Cost of sales, as a percentage of
net sales, was 66.9% in the quarter ended February 26, 2000, compared
with 67.8% in the quarter ended February 27, 1999, and was 66.2% in the
first half ended February 26, 2000, compared with 66.8% in the first half
ended February 27, 1999. The decreases in the cost of sales percentages
for the quarter and the first half of fiscal 2000 were due primarily to a
decrease in clearance markdowns on lower inventory levels of apparel and
to increased sales of higher margin seasonal merchandise. 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.
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES
Selling, general and administrative expenses increased 12.5% in the
quarter ended February 26, 2000, as compared with the quarter ended
February 27, 1999, and increased 12.6% in the first half ended February
26, 2000, as compared with the first half ended February 27, 1999. The
increases in these expenses were due primarily to additional costs
arising from the continued growth in the number of stores and
distribution operations. Selling, general and administrative expenses,
as a percentage of net sales, were 23.0% in the quarter ended February
26 2000, as compared with 23.3% in the quarter ended February 27, 1999,
and were 24.6% in the first half ended February 26,2000, as compared
with 24.9% in the first half ended February 27, 1999. The decreases in
the percentages for the quarter and first half ended February 26, 2000
reflects the leverage provided by the increases in existing store sales
and effective expense control, which offset modest increases in store
labor costs and rent as a percentage of net sales.
PROVISION FOR TAXES ON INCOME
The effective tax rate was 36.5% for the quarter and first half
ended February 26, 2000, as compared to 37.7% for the quarter and first
half ended February 27, 1999. The decreases in the effective tax rate
for the quarter and first half ended February 26, 2000, resulted
primarily from changes in effective state income tax rates.
<PAGE>
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. A number of important factors could cause actual results to
differ materially from those expressed in any forward-looking
statements. 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, dependence on imports, changes
in currency exchange rates, tariffs, quotas, and freight rates,
availability of real estate, 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 others
factors, risks and uncertainties. The Company does not undertake to
publicly update or revise its forward-looking statements even if
experience or future changes made it clear that projected results
expressed or implied in such statements will not be realized.
<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 20, 2000, stockholders voted to:
(a) Elect to the Board of Directors of the Company the eight
nominees named in the Proxy Statement for the Annual Meeting
as follows:
<TABLE>
<CAPTION>
Shares Shares Witholding
Nominee Voting For Authority to Vote
<S> <C> <C>
Leon Levine 156,829,154 2,069,388
Howard R. Levine 156,830,434 2,068,108
R. James Kelly 156,838,422 2,060,120
George R. Mahoney, Jr. 156,809,309 2,089,233
Mark R. Bernstein 155,951,529 2,947,013
Sharon Allred Decker 156,205,149 2,693,393
James H. Hance, Jr. 155,969,112 2,929,430
James G. Martin 156,837,634 2,060,908
</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 26, 2000,
with 158,199,768 shares voted for, 620,211 shares against
and 78,563 shares abstaining.
Item 6.Exhibits and Reports on Form 8-K
(a) Exhibits filed herewith:
10 (i) Letter Agreement dated March 10, 2000, 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.
*10 (ii) Family Dollar 2000 Outside Directors Plan
11 Statements Re: Computations of Per Share Earnings
27 Financial Data Schedule
(b) Reports on Form 8-K - None
*Exhibit represents a compensatory plan
<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 6, 2000 /s/ R. James Kelly
R. JAMES KELLY
Vice Chairman
Date: April 6, 2000 /s/ 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 26, 2000 FEBRUARY 27, 1999
BASIC DILUTED BASIC DILUTED
<S> <C> <C> <C> <C>
AVERAGE SHARES OUTSTANDING 171,682,611 171,682,611 172,428,853 172,428,853
NET INCOME $54,980,612 $54,980,612 $41,672,555 $41,672,555
NET INCOME PER SHARE $ .32 $ .32 $ .24 $ .24
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 3,301,543 4,116,180
WEIGHTED AVERAGE SHARES ASSUMED REPURCHASED FROM
ASSUMED PROCEEDS OF EXERCISES USING TREASURY STOCK
METHOD (AVERAGE MARKET PRICE) (2,431,247) (2,777,693)
NET PRO FORMA COMMON STOCK EQUIVALENT INCREMENTAL SHARES 870,296 1,338,487
PERCENTAGE DILUTION FROM PRO FORMA COMMON
STOCK EQUIVALENT INCREMENTAL SHARES .51% .78%
TOTAL COMMON STOCK AND COMMON STOCK EQUIVALENTS 172,552,907 173,767,340
NET INCOME $54,980,612 $41,672,555
PRO FORMA NET INCOME PER SHARE (INCLUDING DILUTIVE
COMMON STOCK EQUIVALENTS) $ .32 $ .24
</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 26, 2000 FEBRUARY 27, 1999
BASIC DILUTED BASIC DILUTED
<S> <C> <C> <C> <C>
AVERAGE SHARES OUTSTANDING 172,243,469 172,243,469 172,330,246 172,330,246
NET INCOME $91,564,133 $91,564,133 $71,281,486 $71,281,486
NET INCOME PER SHARE $ .53 $ .53 $ .41 $ .41
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 3,435,197 4,150,383
WEIGHTED AVERAGE SHARES ASSUMED REPURCHASED FROM
ASSUMED PROCEEDS OF EXERCISES USING TREASURY STOCK
METHOD (AVERAGE MARKET PRICE) (2,411,997) (2,863,957)
NET PRO FORMA COMMON STOCK EQUIVALENT INCREMENTAL SHARES 1,023,200 1,286,426
PERCENTAGE DILUTION FROM PRO FORMA COMMON
STOCK EQUIVALENT INCREMENTAL SHARES .59% .75%
TOTAL COMMON STOCK AND COMMON STOCK EQUIVALENTS 173,266,669 173,616,672
NET INCOME $91,564,133 $71,281,486
PRO FORMA NET INCOME PER SHARE (INCLUDING DILUTIVE
COMMON STOCK EQUIVALENTS) $ .53 $ .41
</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 26, 2000, 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-26-2000
<PERIOD-START> AUG-29-1999
<PERIOD-END> FEB-26-2000
<EXCHANGE-RATE> 1
<CASH> 122,031,697
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 521,498,559
<CURRENT-ASSETS> 698,846,592
<PP&E> 639,491,378
<DEPRECIATION> 216,201,217
<TOTAL-ASSETS> 1,127,418,671
<CURRENT-LIABILITIES> 360,618,674
<BONDS> 0
0
0
<COMMON> 18,351,168
<OTHER-SE> 719,960,082
<TOTAL-LIABILITY-AND-EQUITY> 1,127,418,671
<SALES> 1,572,020,886
<TOTAL-REVENUES> 1,572,020,886
<CGS> 1,040,545,162
<TOTAL-COSTS> 1,427,856,753
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EXHIBIT 10(i)
March 10, 2000
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
Bank of America, N.A. (formerly known as NationsBank, N.A.)
("Bank of America"), 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.
Bank of America agrees to such extension and hereby agrees to extend
the "Tranche A Termination Date" from March 31, 2001 to March 31,
2002. 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. Bank of America agrees to such extension and hereby
agrees to extend the "Tranche B Termination Date" from March 27,
2000 to March 21, 2001. 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,
BANK OF AMERICA, N.A.
Timothy H. Spanos
Managing Director
(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
EXHIBIT 10(ii)
FAMILY DOLLAR 2000
OUTSIDE DIRECTORS PLAN
SECTION 1
GENERAL
1.1 PURPOSE. The Family Dollar 2000 Outside Directors
Plan (the "Plan") has been established by Family Dollar Stores,
Inc. (the "Company") to promote the interests of the Company and
its shareholders by enhancing the Company's ability to attract
and retain the services of experienced and knowledgeable
directors and by encouraging such directors to acquire an
increased proprietary interest in the Company.
1.2 OPERATION AND ADMINISTRATION. The operation and
administration of the Plan shall be subject to the provisions of
Section 3. Capitalized terms in the Plan shall be defined as
set forth in Section 5 or elsewhere in the Plan.
SECTION 2
AWARDS
2.1 GENERAL.
(a) For each Plan Year, each Director who is an Eligible
Director on the first day of that Plan Year shall be
granted a "Retainer Award" for the year, which shall
be in the form of shares of Stock having a Fair Market
Value of $7,500. Except as otherwise provided in this
subsection 2.1, the Retainer Award for any Plan Year
shall be made as of the first business day of that
Plan Year (the "Award Date" for that Retainer Award),
and the Fair Market Value of the Stock so awarded
shall be determined as of that date.
(b) If a Director becomes an Eligible Director during a
Plan Year, on a date other than the first day of the
Plan Year, he or she shall be granted a Retainer Award
for the year, which shall be in the form of shares of
Stock having a Fair Market Value equal to $7,500,
subject to a pro-rata reduction to reflect the portion
of the Plan Year prior to the date on which he or she
becomes an Eligible Director. A Director's Retainer
Award under this paragraph (b) shall be made on the
first business day on which he or she is an Eligible
Director (the "Award Date" for that Retainer Award),
and the Fair Market Value of the Stock so awarded
shall be determined as of that date.
2.2 FRACTIONAL SHARES. If the Retainer Award that would
otherwise be made to a Participant as of any Award Date under
paragraph 2.1 is not a whole number, then the number of shares
otherwise awardable shall be increased to the next highest
whole number.
<PAGE>
SECTION 3
OPERATION AND ADMINISTRATION
3.1 EFFECTIVE DATE. The Plan shall be effective as of the
Effective Date and shall be unlimited in duration; provided,
however, that no new Awards shall be made under the Plan after
the fifteenth anniversary of the Effective Date.
3.2 SHARES SUBJECT TO PLAN. The shares of Stock with
respect to which Awards may be made under the Plan shall be
shares currently authorized but not outstanding shares which are
held in the treasury stock account of the Company. The number
of shares of Stock available for Awards under the Plan during
any fiscal year of the Company shall equal:
(a) 0.2% of the adjusted average of the outstanding Stock, as
that number is determined by the Company to calculate fully
diluted earnings per share for the preceding fiscal year;
REDUCED BY
(b) any shares of Stock granted pursuant to Awards under the
Plan.
3.3 ADJUSTMENTS TO SHARES.
(a) The existence of the Plan and the Awards granted hereunder
shall not affect in any way the right or power of the
Company or its shareholders to make or authorize any or all
adjustments, recapitalizations, reorganizations or other
changes in the Company's capital structure or its business,
any merger or consolidation of the Company, any issue of
bonds, debentures, preferred or prior preference stocks
ahead of or affecting the Company's Stock or the rights
thereof, the dissolution or liquidation of the Company, any
sale or transfer of all or any part of its assets or
business, or any other corporate act or proceeding, whether
of a similar character of otherwise.
3.4 LIMIT ON DISTRIBUTION. Distribution of shares of
Stock or other amounts under the Plan shall be subject to the
following:
(a) Notwithstanding any other provision of the Plan, the
Company shall have no liability to issue any shares of
Stock under the Plan or make any other distribution of
benefits under the Plan unless such delivery or
distribution would comply with all applicable laws and the
applicable requirements of any securities exchange or
similar entity.
<PAGE>
(b) The Board shall add such conditions and limitations to any
Award to any Participant who is subject to Section 16(a)
and 16(b) of the Securities Exchange Act of 1934, as is
necessary to comply with Section 16(a) or 16(b) and the
rules and regulations thereunder or to obtain any exemption
therefrom.
(c) To the extent that the Plan provides for issuance of
certificates to reflect the transfer of shares of Stock,
the transfer of such shares may, at the direction of the
Board, be effected on a non-certificated basis, to the
extent not prohibited by the provisions of Rule 16b-3,
applicable local law, the applicable rules of any stock
exchange, or any other applicable rules.
3.5 TAXES. All Awards and other payments under the Plan
are subject to all applicable taxes.
3.6 ADMINISTRATION. The authority to control and manage
the operation and administration of the Plan shall be vested in
the Board.
3.7 EVIDENCE. Evidence required of anyone under the Plan
may be by certificate, affidavit, document or other information
which the person acting on it considers pertinent and reliable,
and signed, made or presented by the proper party or parties.
3.8 ACTION BY COMPANY. Any action required or permitted
to be taken by the Company shall be by resolution of the Board,
or by action of one or more members of the Board (including a
committee of the Board) who are duly authorized to act for the
Board, by a duly authorized officer of the Board, or (except to
the extent prohibited by the provisions of SEC Rule 16b-3,
applicable local law, the applicable rules of any stock
exchange, or any other applicable rules) by a duly authorized
officer of the Company.
SECTION 4
AMENDMENT AND TERMINATION
The Board may, at any time, amend or terminate the Plan,
provided that, subject to subsection 3.3 (relating to certain
adjustments to shares), no amendment or termination may
adversely affect the rights of any Participant or beneficiary
under any Award made under the Plan prior to the date such
amendment is adopted by the Board. Notwithstanding the
provisions of this Section 4, in no event shall the provisions
of the Plan relating to Awards under the Plan be amended more
than once every six months, other than to comport with changes
in the Internal Revenue Code, the Employment Retirement Income
Security Act, or the rules thereunder; provided, however, that
the limitation set forth in this sentence shall be applied only
to the extent required under SEC Rule 16b-3(d) or any successor
provision thereof.
<PAGE>
SECTION 5
DEFINED TERMS
For purposes of the Plan, the terms listed below shall be
defined as follows:
(a) AWARD. The term "Award" shall mean the Retainer Award
granted to any person under the Plan.
(b) BOARD. The term "Board" shall mean the Board of Directors
of the Company.
(c) DIRECTOR. The term "Director" means a member of the Board.
(d) DOLLARS. As used in the Plan, the term "dollars" or
numbers preceded by the symbol "$" shall mean amounts in
United States Dollars.
(e) EFFECTIVE DATE. The "Effective Date" means the date on
which Directors begin their yearly term of office on the
Board following their election at the Company's 2000 annual
shareholders meeting.
(f) ELIGIBLE DIRECTOR. Each Director who is not an employee of
the Company or any Related Company shall be an "Eligible
Director".
(g) FAIR MARKET VALUE. The "Fair Market Value" of a share of
Stock of the Company as of any date shall be the closing
market composite price for such Stock as reported for the
New York Stock Exchange - Composite Transactions on that
date or, if Stock is not traded on that date, on the next
preceding date on which Stock was traded.
(h) PARTICIPANT. A "Participant" is any person who has
received an Award under the Plan.
(i) PLAN YEAR. The term "Plan Year" means the period
(i)beginning on the date on which members of the Board
begin their yearly term as Board members following the
election of Directors at the Company's annual shareholders
meeting and (ii)ending on the day immediately prior to the
first day of the following Plan Year. The first Plan Year
shall begin on the Effective Date.
(j) RELATED COMPANY. The term "Related Company" means any
company during any period in which it is a "subsidiary
corporation" (as that term is defined in Code section
424(f) with respect to the Company).
(k) SEC. "SEC" shall mean the Securities and Exchange
Commission.
(l) STOCK. The term "Stock" shall mean shares of common stock
of the Company.
