UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

 

FORM 10-Q

(Mark One)

þ		QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934.

o		TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934.

BELK, INC.

 

(Exact Name of Registrant as Specified In Its Charter)

Delaware		56-2058574
(State or Other Jurisdiction of Incorporation or Organization)		(I.R.S. Employer Identification No.)
2801 West Tyvola Road, Charlotte, NC		28217-4500
(Address of Principal Executive Offices)		(Zip Code)

Registrant’s Telephone Number, including Area Code (704) 357-1000

N/A
Former Name, Former Address and Former Fiscal Year, if Changed Since Last Report.

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. þYes   o No

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). oYes   o No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer o		Accelerated filer þ		Non-accelerated filer o		Smaller reporting company o
				(Do not check if a smaller reporting company)

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). o Yes þ No

At November 30, 2009, the registrant had issued and outstanding 46,907,578 shares of class A common stock and 1,378,135 shares of class B common stock.

 

 

BELK, INC.
Index to Form 10-Q

		Page
		Number
PART I. FINANCIAL INFORMATION
Item 1. Condensed Consolidated Financial Statements (unaudited)
Condensed Consolidated Statements of Income for the Three and Nine Months Ended October 31, 2009 and November 1, 2008			4
Condensed Consolidated Balance Sheets as of October 31, 2009 and January 31, 2009			5
Condensed Consolidated Statement of Changes in Stockholders’ Equity and Comprehensive Income for the Nine Months Ended October 31, 2009			6
Condensed Consolidated Statements of Cash Flows for the Nine Months Ended October 31, 2009 and November 1, 2008			7
Notes to Unaudited Condensed Consolidated Financial Statements			8
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations			14
Item 3. Quantitative and Qualitative Disclosures about Market Risk			19
Item 4. Controls and Procedures			19
PART II. OTHER INFORMATION
Item 1. Legal Proceedings			21
Item 1A. Risk Factors			21
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds			21
Item 3. Defaults upon Senior Securities			21
Item 4. Submission of Matters to a Vote of Security Holders			21
Item 5. Other Information			21
Item 6. Exhibits			21
EX-31.1
EX-31.2
EX-32.1
EX-32.2

This Report Contains Forward-Looking Statements

     Certain statements made in this report, and other written or oral statements made by or on behalf of the Company, may constitute “forward-looking statements” within the meaning of the federal securities laws. Statements regarding future events and developments and the Company’s future performance, as well as our expectations, beliefs, plans, estimates or projections relating to the future, are forward-looking statements within the meaning of these laws. You can identify these forward-looking statements through our use of words such as “may,” “will,” “intend,” “project,” “expect,” “anticipate,” “believe,” “estimate,” “continue” or other similar words.

     Forward-looking statements include information concerning possible or assumed future results from merchandising, marketing and advertising in our stores and through the Internet, general economic conditions, our ability to be competitive in the retail industry, our ability to execute profitability and efficiency strategies, our ability to execute our growth strategies, anticipated benefits from the opening of our eCommerce fulfillment center, the expected benefit of new systems and technology, the anticipated benefits from our acquisitions and the anticipated benefit under our agreement with GE Money Bank. These forward-looking statements are subject to certain risks and uncertainties that may cause our actual results to differ significantly from the results we discuss in such forward-looking statements. We believe that these forward-looking statements are reasonable. However, you should not place undue reliance on such statements.

     Risks and uncertainties that might cause our results to differ from those we project in our forward-looking statements include, but are not limited to:

•		General economic, political and business conditions, nationally and in our market areas, including rates of economic growth, interest rates, inflation or deflation, consumer credit availability, levels of consumer debt and bankruptcies, tax rates and policy, unemployment trends, potential acts of terrorism and threats of such acts and other matters that influence consumer confidence and spending;
•		Our ability to comply with debt covenants which could adversely affect our capital resources, financial condition and liquidity;
•		Our ability to anticipate the demands of our customers for a wide variety of merchandise and services, including our predictions about the merchandise mix, quality, style, service, convenience and credit availability of our customers;
•		Unseasonable and extreme weather conditions in our market areas;
•		Seasonal fluctuations in quarterly net income due to the significant portion of our revenues generated during the holiday season in the fourth fiscal quarter and the significant amount of inventory we carry during that time;
•		Competition from other department and specialty stores and other retailers, including luxury goods retailers, general merchandise stores, Internet retailers, mail order retailers and off-price and discount stores, in the areas of price, merchandise mix, quality, style, service, convenience, credit availability and advertising;
•		Our ability to effectively use advertising, marketing and promotional campaigns to generate high customer traffic in our stores;
•		Our ability to find qualified vendors from which to source our merchandise and our ability to access products in a timely and efficient manner from a wide variety of domestic and international vendors;
•		The income we receive from, and the timing of receipt of, payments from GE, the operator of our private label credit card business, which depends upon the amount of purchases made through the proprietary credit cards, the level of finance charge income generated from the credit card portfolio, the number of new accounts generated, changes in customers’ credit card use, and GE’s ability to extend credit to our customers;
•		Our ability to correctly anticipate the appropriate levels of inventories during the year;
•		Our ability to manage our expense structure;
•		Our ability to continue to increase our number of stores, including the availability of existing retail stores or store sites on acceptable terms and our ability to successfully execute the Company’s retailing concept in new markets and geographic regions;
•		The efficient and effective operation of our distribution network and information systems to manage sales, distribution, merchandise planning and allocation functions;
•		Our ability to expand our eCommerce business through our updated and redesigned belk.com website, including our ability to meet the systems challenges of expanding and operating the website and our ability to efficiently operate our eCommerce fulfillment facility; and
•		Our ability to realize the planned efficiencies from our acquisitions and effectively integrate and operate the acquired stores and businesses, including our fiscal year 2007 acquisition of Parisian stores and our fiscal year 2007 acquisition of the assets of Migerobe and commencement of our owned fine jewelry business.

     For a detailed description of the risks and uncertainties that might cause our results to differ from those we project in our forward-looking statements, we refer you to the section captioned “Risk Factors” in our annual report on Form 10-K for the fiscal year ended January 31, 2009 that we filed with the SEC on April 15, 2009. Our other filings with the SEC may contain additional information concerning the risks and uncertainties listed above, and other factors you may wish to consider. Upon request, we will provide copies of these filings to you free of charge.

     Our forward-looking statements are based on current expectations and speak only as of the date of such statements. We undertake no obligation to publicly update or revise any forward-looking statement, even if future events or new information may impact the validity of such statements.

PART I — FINANCIAL INFORMATION

Item 1.		Financial Statements

BELK, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(dollars in thousands, except share and per share amounts)
(unaudited)

		Three Months Ended								Nine Months Ended
		October 31,				November 1,				October 31,				November 1,
		2009				2008				2009				2008
Revenues		$	727,988			$	741,403			$	2,249,142			$	2,388,017
Cost of goods sold (including occupancy, distribution and buying expenses)			496,473				532,592				1,550,933				1,664,486
Selling, general and administrative expenses			215,771				235,397				642,178				706,526
Gain on sale of property and equipment			639				2,194				1,552				4,161
Asset impairment and exit costs			(117	)			748				973				2,659
Pension curtailment charge			2,719				—				2,719				—
Operating income (loss)			13,781				(25,140	)			53,891				18,507
Interest expense, net			(12,931	)			(11,912	)			(38,256	)			(38,360	)
Gain (loss) on investments			14				(239	)			14				1,648
Income (loss) before income taxes			864				(37,291	)			15,649				(18,205	)
Income tax expense (benefit)			418				(13,803	)			5,249				(8,053	)
Net income (loss)		$	446			$	(23,488	)		$	10,400			$	(10,152	)
Basic and diluted net income (loss) per share		$	0.01			$	(0.48	)		$	0.21			$	(0.21	)
Weighted average shares outstanding — basic and diluted			48,285,713				48,752,892				48,505,297				49,096,381

See accompanying notes to unaudited condensed consolidated financial statements.

BELK, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS
(dollars in thousands)
(unaudited)

		October 31,				January 31,
		2009				2009
Assets
Current assets:
Cash and cash equivalents		$	359,268			$	260,134
Short-term investments			9,350				10,250
Accounts receivable, net			24,906				65,702
Merchandise inventory			1,016,143				828,497
Property held for sale			750				750
Prepaid income taxes, expenses and other current assets			40,995				30,705
Total current assets			1,451,412				1,196,038
Investment securities			1,687				1,074
Property and equipment, net of accumulated depreciation and amortization of $1,224,435 and $1,109,444 as of October 31, 2009 and January 31, 2009, respectively			1,076,874				1,169,150
Deferred income taxes			104,956				128,829
Other assets			47,690				40,156
Total assets		$	2,682,619			$	2,535,247
Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable		$	406,732			$	236,886
Accrued liabilities			142,953				118,045
Accrued income taxes			—				593
Deferred income taxes			26,467				27,997
Current installments of long-term debt and capital lease obligations			3,660				4,486
Total current liabilities			579,812				388,007
Long-term debt and capital lease obligations, excluding current installments			686,049				688,704
Interest rate swap liability			7,557				8,182
Retirement obligations and other noncurrent liabilities			373,218				418,327
Total liabilities			1,646,636				1,503,220
Stockholders’ equity:
Preferred stock			—				—
Common stock, 400 million shares authorized and 48.3 and 48.8 million shares issued and outstanding as of October 31, 2009 and January 31, 2009, respectively			483				488
Paid-in capital			451,237				456,858
Retained earnings			742,227				741,579
Accumulated other comprehensive loss			(157,964	)			(166,898	)
Total stockholders’ equity			1,035,983				1,032,027
Total liabilities and stockholders’ equity		$	2,682,619			$	2,535,247

See accompanying notes to unaudited condensed consolidated financial statements.

BELK, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS’ EQUITY
AND COMPREHENSIVE INCOME
(in thousands)
(unaudited)

																		Accumulated
																		Other
		Common Stock								Paid-in				Retained				Comprehensive
		Shares				Amount				Capital				Earnings				Income (Loss)				Total
Balance at January 31, 2009			48,753			$	488			$	456,858			$	741,579			$	(166,898	)		$	1,032,027
Comprehensive income:
Net income			—				—				—				10,400				—				10,400
Unrealized gain on investments, net of $222 income taxes			—				—				—				—				374				374
Unrealized gain on interest rate swaps, net of $233 income taxes			—				—				—				—				392				392
Defined benefit expense, net of $3,836 income taxes			—				—				—				—				6,462				6,462
Pension curtailment charge, net of $1,013 income taxes			—				—				—				—				1,706				1,706
Total comprehensive income			—				—				—				—				—				19,334
Cash dividends			—				—				—				(9,752	)			—				(9,752	)
Issuance of stock-based compensation			—				—				(115	)			—				—				(115	)
Stock-based compensation expense			—				—				139				—				—				139
Common stock issued			33				—				300				—				—				300
Repurchase and retirement of common stock			(500	)			(5	)			(5,945	)			—				—				(5,950	)
Balance at October 31, 2009			48,286			$	483			$	451,237			$	742,227			$	(157,964	)		$	1,035,983

See accompanying notes to unaudited condensed consolidated financial statements.

BELK, INC. AND SUBSIDIARIES

(dollars in thousands)

(unaudited)

		Nine Months Ended
		October 31,				November 1,
		2009				2008
Cash flows from operating activities:
Net income (loss)		$	10,400				(10,152	)
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Asset impairment and exit costs			973				2,659
Deferred income tax expense			16,051				9,564
Depreciation and amortization expense			121,558				124,026
Stock-based compensation expense			139				2,015
Pension curtailment charge			2,719				—
Loss (gain) on sale of property and equipment			420				(2,189	)
Amortization of deferred gain on sale and leaseback			(1,972	)			(1,972	)
Gain on investments			(14	)			(1,648	)
(Increase) decrease in:
Accounts receivable, net			40,796				34,749
Merchandise inventory			(187,646	)			(227,583	)
Prepaid income taxes, expenses and other assets			(22,305	)			(33,931	)
Increase (decrease) in:
Accounts payable and accrued liabilities			202,661				208,019
Accrued income taxes			(681	)			(25,980	)
Retirement obligations and other liabilities			(29,050	)			(5,047	)
Net cash provided by operating activities			154,049				72,530
Cash flows from investing activities:
Purchases of short-term investments			—				(17,750	)
Sales of short-term investments			900				7,500
Purchases of property and equipment			(36,587	)			(112,764	)
Proceeds from sales of property and equipment			70				18,998
Net cash used by investing activities			(35,617	)			(104,016	)
Cash flows from financing activities:
Principal payments on long-term debt and capital lease obligations			(3,481	)			(3,559	)
Cash paid for withholding taxes in lieu of stock-based compensation shares			(51	)			(598	)
Stock compensation tax (expense) benefit			(64	)			154
Dividends paid			(9,752	)			(19,846	)
Repurchase and retirement of common stock			(5,950	)			(22,348	)
Net cash used by financing activities			(19,298	)			(46,197	)
Net increase (decrease) in cash and cash equivalents			99,134				(77,683	)
Cash and cash equivalents at beginning of period			260,134				186,973
Cash and cash equivalents at end of period		$	359,268			$	109,290
Supplemental schedule of noncash investing activities:
Decrease in property and equipment through accrued purchases		$	(8,232	)		$	(8,810	)

See accompanying notes to unaudited condensed consolidated financial statements.

BELK, INC. AND SUBSIDIARIES

(1) Basis of Presentation

     The accompanying unaudited condensed consolidated financial statements of Belk, Inc. and subsidiaries (the “Company”) have been prepared in accordance with the instructions to Form 10-Q promulgated by the United States Securities and Exchange Commission and should be read in conjunction with our Annual Report on Form 10-K for the fiscal year ended January 31, 2009. In the opinion of management, this information is fairly presented and all adjustments (consisting only of normal recurring adjustments) necessary for a fair presentation of the results for the interim periods have been included; however, certain items are included in these statements based on estimates for the entire year. Also, operating results for the three and nine months ended October 31, 2009 may not be indicative of the operating results that may be expected for the full fiscal year.

(2) Recently Issued Accounting Standards

     In June 2009, the Financial Accounting Standards Board (“FASB”) issued Statement of Financial Accounting Standards (“SFAS”) No. 168, “The FASB Accounting Standards Codification and the Hierarchy of Generally Accepted Accounting Principles — a replacement of SFAS No. 162” (“ASC 105-10”). ASC 105-10 modifies the Generally Accepted Accounting Principles (“GAAP”) hierarchy by establishing only two levels of GAAP, authoritative and nonauthoritative accounting literature. Effective July 2009, the FASB Accounting Standards Codification (“ASC”), also known collectively as the “Codification,” is considered the single source of authoritative U.S. accounting and reporting standards, except for additional authoritative rules and interpretive releases issued by the SEC. The Codification was developed to organize GAAP pronouncements by topic so that users can more easily access authoritative accounting guidance. ASC 105-10 became effective for the third quarter of fiscal year 2010. All other accounting standard references have been updated in this report with ASC references.

     In August 2009, the FASB issued Accounting Standards Update (“ASU”) 2009-05, “Measuring Liabilities at Fair Value,” which updates ASC 820-10, “Fair Value Measurements and Disclosures.” The updated guidance clarifies that the fair value of a liability can be measured in relation to the counterparty’s asset when traded in an active market, without adjusting the price for restrictions that prevent the sale of the liability. ASU 2009-05 will be effective for the fourth quarter of fiscal year 2010. The Company does not expect that the adoption of ASU 2009-05 will change its valuation techniques for measuring liabilities at fair value.

     For fiscal years ending after December 15, 2009, the “Compensation-Retirement Benefits Topic,” ASC 715-20 will require more detailed disclosures regarding the assets of a defined benefit pension or other postretirement plan. The Company will adopt the additional disclosure requirements of ASC 715-20 as of January 30, 2010.

     Effective for the second quarter of fiscal year 2010, the “Subsequent Events Topic,” ASC 855-10-50-1, required disclosure of the date through which an entity has evaluated subsequent events and the basis for that date. Refer to the notes to the unaudited condensed consolidated financial statements for the disclosure required under ASC 855-10-50-1.

     Effective for the second quarter of fiscal year 2010, the “Financial Instruments Topic,” ASC 825-10 required disclosure regarding the fair value of financial instruments of publicly traded companies for interim reporting periods as well as annual reporting periods. Refer to the notes to the unaudited condensed consolidated financial statements for the disclosures required under ASC 825-10.

     Effective for the second quarter of fiscal year 2010, the “Investments-Debt and Equity Securities Topic,” ASC 320-10 amended the presentation and disclosure requirements for other-than-temporary impairment on debt and equity securities in the financial statements. Refer to the notes to the unaudited condensed consolidated financial statements for the disclosures required under ASC 320-10.

     Effective for the second quarter of fiscal year 2010, the “Fair Value Measurements and Disclosures Topic,” ASC 820-10-65-4, provided additional guidance for estimating fair value when the volume and level of activity for the asset or liability have significantly decreased and identifying circumstances that indicate a transaction is not orderly. Refer to the notes to the unaudited condensed consolidated financial statements for the disclosures required under ASC 820-10-65-4.

BELK, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

     Effective for the first quarter of fiscal year 2010, the “Fair Value Measurements and Disclosures Topic,” ASC 820-10-65-1, established a single definition of fair value and a framework for measuring fair value in GAAP for nonfinancial assets and liabilities to increase consistency and comparability in fair value measurements. The Company’s adoption of the requirements under ASC 820-10-65-1 did not require other additional disclosure during the first quarter of fiscal year 2010.

(3) Comprehensive Income (Loss)

     The following table sets forth the computation of comprehensive income:

		Three Months Ended								Nine Months Ended
		October 31,				November 1,				October 31,				November 1,
		2009				2008				2009				2008
		(dollars in thousands)								(dollars in thousands)
Net income (loss)		$	446			$	(23,488	)		$	10,400			$	(10,152	)
Other comprehensive income (loss):
Unrealized gain (loss) on investments, net of $17 and $222 income taxes for the three and nine months ended October 31, 2009, respectively and $147 and $213 income taxes for the three three and nine months ended November 1, 2008, respectively.			29				247				374				(360	)
Recognized other-than-temporary impairment of investments reclassified to gain (loss) on investments, net of $231 income taxes for the three and nine months ended November 1, 2008.			—				(388	)			—				(388	)
Unrealized gain (loss) on interest rate swaps, net of $83 and $233 income taxes for the three and nine months ended October 31, 2009, respectively and $352 and $516 income taxes for the three and nine months ended November 1, 2008, respectively.			(141	)			(593	)			392				869
Defined benefit expense, net of $1,279 and $3,836 income taxes for the three and nine months ended October 31, 2009, respectively and $1,008 and $3,025 income taxes for the three and nine months ended November 1, 2008, respectively.			2,154				1,698				6,462				5,096
Pension curtailment charge, net of $1,013 income taxes for the three and nine months ended October 31, 2009.			1,706				—				1,706				—
Other comprehensive income			3,748				964				8,934				5,217
Total comprehensive income (loss)		$	4,194			$	(22,524	)		$	19,334			$	(4,935	)

(4) Accumulated Other Comprehensive Loss

     The following table sets forth the components of accumulated other comprehensive loss:

		October 31,				January 31,
		2009				2009
		(dollars in thousands)
Unrealized loss on investments, net of $65 and $287 income taxes as of October 31, 2009 and January 31, 2009, respectively.		$	(108	)		$	(482	)
Unrealized loss on interest rate swap, net of $2,815 and $3,048 income taxes as of October 31, 2009 and January 31, 2009, respectively.			(4,743	)			(5,135	)
Defined benefit plans, net of $90,891 and $95,740 income taxes as of October 31, 2009 and January 31, 2009, respectively.			(153,113	)			(161,281	)
Accumulated other comprehensive loss		$	(157,964	)		$	(166,898	)

(5) Fair Value Measurements

     The Company uses a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value. These tiers include: Level 1, defined as observable inputs such as quoted prices in active markets for identical assets and liabilities; Level 2, defined as inputs other than quoted prices in active markets that are either directly or indirectly observable; and Level 3, defined as unobservable inputs in which little or no market data exists, therefore requiring an entity to develop its own assumptions.

BELK, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

     As of October 31, 2009, the Company held certain assets and liabilities that are required to be measured at fair value on a recurring basis. These included the Company’s auction rate security (“ARS”), available-for-sale investment securities and an interest rate swap.

     The Company’s ARS of $9.4 million has been classified as a Level 3 asset as the Company used unobservable inputs to determine fair value. The type of ARS owned by the Company is backed by student loans, which are 97% guaranteed under the Federal Family Education Loan Program, and carries the highest credit ratings of AAA. Historically, the fair value of the Company’s ARS holdings approximated par value due to the frequent auction periods, which provided liquidity to these investments. During the second quarter of fiscal year 2010, the Company redeemed $0.9 million of its ARS investment at par. The Level 3 determination was used as a result of the lack of frequent trading in these securities. The ARS fair value determination used an income-approach considering factors that reflect assumptions market participants would use in pricing, including: the collateralization underlying the investment; the creditworthiness of the counterparty; expected future cash flows, including the next time the security is expected to have a successful auction; and risks associated with the uncertainties in the current market. The Company has no reason to believe that the underlying issuer of the ARS is presently at risk or that the underlying credit quality of the assets backing the ARS investment has been impacted by the reduced liquidity of this investment.

     The Company’s available-for-sale investment securities’ unrealized holding gains and losses are included in other comprehensive income. The fair value of available-for-sale securities is based on quoted market prices. On October 31, 2009, the Company’s available-for-sale investment securities with an unrealized loss position were, in the Company’s belief, primarily due to current economic conditions and the Company does not believe that these securities are other-than-temporarily impaired.

     The Company has entered into interest rate swap agreements with financial institutions to manage the exposure to changes in interest rates. The fair value of interest rate swap agreements is the estimated amount that the Company would pay or receive to terminate the swap agreement, taking into account the current credit worthiness of the swap counterparties. The fair values of swap contracts are determined based on inputs that are readily available in public markets or can be derived from information available in publicly quoted markets. Additionally, the change in the fair value of a swap designated as a cash flow hedge is marked to market through accumulated other comprehensive income (loss). Any swap that is not designated as a hedging instrument is marked to market through gain (loss) on investments.

     The Company’s assets and liabilities measured at fair value at October 31, 2009, were as follows:

						Fair Value Measurements at Reporting Date Using
						Quoted Prices in								Significant
						Active Markets for				Significant Other				Unobservable
		October 31,				Identical Assets				Observable Inputs				Inputs
Description		2009				(Level 1)				(Level 2)				(Level 3)
		(dollars in thousands)
Auction rate security		$	9,350			$	—			$	—			$	9,350
Investment securities			1,687				1,687				—				—
Total assets measured at fair value		$	11,037			$	1,687			$	—			$	9,350
Interest rate swap liability		$	7,557			$	—			$	7,557			$	—
Total liabilities measured at fair value		$	7,557			$	—			$	7,557			$	—

BELK, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

     The following table provides a reconciliation of the beginning and ending balances of the Company’s investment in ARS (Level 3):

Balance as of January 31, 2009		$	10,250
Purchases of auction rate securities			—
Total losses realized/unrealized included in earnings			—
Sale of auction rate securities			(900	)
Balance as of October 31, 2009		$	9,350

     Carrying values approximate fair values for financial instruments that are short-term in nature, such as cash and cash equivalents, short-term investments, accounts receivable, accounts payable, accrued expenses, notes payable and lines of credit. The fair value of the Company’s long-term debt is as follows:

		October 31, 2009
		Carrying				Fair
		Value				Value
		(dollars in thousands)
Long-term debt (excluding capitalized leases)		$	667,780			$	649,685

     The fair value of the Company’s fixed rate long-term debt is estimated based on the current rates offered to the Company for debt of the same remaining maturities. The carrying value of the Company’s variable rate long-term debt approximates its fair value.

(6) Asset Impairment and Exit Costs

     During the three months ended October 31, 2009, the Company recorded a $0.2 million reduction to previously estimated severance costs associated with the closing of two stores, partially offset by $0.1 million in severance costs associated with the outsourcing of certain information technology and support functions. During the nine months ended October 31, 2009, the Company recorded $1.0 million in exit costs comprised primarily of severance costs associated with the outsourcing of certain information technology and support functions, as well as the closing of two stores.

     During the three months ended November 1, 2008, the Company recorded $0.7 million in exit costs comprised primarily of severance costs associated with the outsourcing of certain information technology and support functions. During the nine months ended November 1, 2008, the Company recorded $2.1 million in exit costs comprised primarily of severance costs associated with the outsourcing of certain information technology and support functions. In addition, the Company recorded $0.6 million in impairment charges to adjust a retail location’s net book value to fair market value.

(7) Sale of Properties

     Effective September 24, 2008, the Company sold for $4.0 million an acquired distribution facility, which was classified as held for sale at August 2, 2008. This transaction resulted in a gain on the sale of property of $0.7 million.

     During the first quarter of fiscal year 2009, the Company sold an acquired corporate headquarters facility, which was classified as held for sale at February 2, 2008, for $11.6 million. This transaction resulted in a gain on the sale of property of $0.5 million. In addition, the Company sold two stores for net proceeds of $2.6 million, which resulted in no gain or loss.

(8) Income Taxes

     During the three months ended October 31, 2009, the effective income tax rate was 48.4% compared to 37.0% for the three months ended November 1, 2008. The rate was higher for the three months ended October 31, 2009 due to a $0.1 million adjustment relating to work opportunity tax credits, which had a large impact on the effective tax rate due to the relatively small amount of pre-tax income for the period.

BELK, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

     During the nine months ended October 31, 2009, the effective income tax rate was 33.5% compared to 44.2% for the nine months ended November 1, 2008. The rate was higher for the nine months ended November 1, 2008 due to the settlement of certain state tax matters included in unrecognized tax benefits, which resulted in a $3.2 million increase to income tax benefit for the nine months ended November 1, 2008.

(9) Pension and Postretirement Benefits

     The Company has a defined benefit pension plan (“Pension Plan”) covering a portion of its employees. The benefits are based on years of service and the employee’s compensation. Effective December 31, 2009, the Pension Plan will be frozen for those remaining participants whose benefits were not previously frozen in fiscal year 2006. This Pension Plan freeze resulted in a one-time curtailment charge of $2.7 million in the third quarter of fiscal year 2010.

     The Company also has a non-qualified defined benefit Supplemental Executive Retirement Plan (“Old SERP”), which provides retirement and death benefits to certain qualified executives and a defined benefit health care plan that provides postretirement medical and life insurance benefits to certain retired full-time employees (“Postretirement Plan”).

     The components of net periodic benefit expense for these plans are as follows:

		Three Months Ended
		Pension Plan								Old SERP Plan								Postretirement Plan
		October 31,				November 1,				October 31,				November 1,				October 31,				November 1,
		2009				2008				2009				2008				2009				2008
										(dollars in thousands)
Service cost		$	—			$	688			$	17			$	47			$	33			$	33
Interest cost			6,649				6,139				86				182				406				407
Expected return on plan assets			(5,527	)			(5,896	)			—				—				—				—
Amortization of transition obligation			—				—				—				—				65				65
Amortization of prior service cost			124				124				—				—				—				—
Amortization of net loss			3,234				2,459				—				54				10				4
Net periodic benefit expense		$	4,480			$	3,514			$	103			$	283			$	514			$	509

		Nine Months Ended
		Pension Plan								Old SERP Plan								Postretirement Plan
		October 31,				November 1,				October 31,				November 1,				October 31,				November 1,
		2009				2008				2009				2008				2009				2008
										(dollars in thousands)
Service cost		$	—			$	2,407			$	95			$	142			$	99			$	100
Interest cost			19,947				18,438				472				546				1,218				1,222
Expected return on plan assets			(16,582	)			(17,688	)			—				—				—				—
Amortization of transition obligation			—				—				—				—				196				196
Amortization of prior service cost			372				371				—				—				—				—
Amortization of net loss			9,701				7,379				—				163				29				12
Net periodic benefit expense		$	13,438			$	10,907			$	567			$	851			$	1,542			$	1,530

     The Company made a $44.0 million and $20.0 million discretionary contribution to its Pension Plan on September 15, 2009 and September 10, 2008, respectively.

(10) Earnings per Share

     Basic earnings per share (“EPS”) is computed by dividing net income by the weighted-average number of shares of common stock outstanding for the period. The diluted EPS calculation includes the effect of contingently issuable stock-based compensation awards with performance vesting conditions as being outstanding at the beginning of the period in which all vesting conditions are met. The Company had no dilutive securities for the three and nine months ended October 31, 2009 and November 1, 2008, therefore basic and diluted EPS are the same.

BELK, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(11) Repurchase of Common Stock

     On April 1, 2009, the Company’s Board of Directors approved a self-tender offer to purchase up to 500,000 shares of common stock at a price of $11.90 per share. The tender offer was initiated on April 22, 2009, and on May 20, 2009, the Company accepted for purchase 102,128 shares of Class A and 139,536 shares of Class B common stock for $2.9 million.

     Subsequently, in a separate transaction, the Company accepted for purchase 258,336 shares of Class A common stock for $3.1 million on June 24, 2009 from Mr. H.W. McKay Belk, President and Chief Merchandising Officer. The number of shares purchased from Mr. Belk represents the difference between the number of shares of common stock which the Company offered to purchase in the tender offer that was initiated on April 22, 2009 and the number of shares that were tendered by stockholders and purchased by the Company. The purchase price was the same as the purchase price offered by the Company in the initial tender offer.

(12) Subsequent Events

     The Company has assessed subsequent events through December 7, 2009, the date of issuance of the financial statements.

Item 2.		Management’s Discussion and Analysis of Financial Condition and Results of Operations

Overview

     Belk, Inc., together with its subsidiaries (collectively, the “Company” or “Belk”), is the largest privately owned mainline department store business in the United States. As of October 31, 2009, the Company had 306 stores in 16 states, located primarily in the southern United States. The Company generated revenues of $3.5 billion for the fiscal year ended January 31, 2009, and together with its predecessors, has been successfully operating department stores since 1888 by seeking to provide superior service and merchandise that meets customers’ needs for fashion, value and quality.

     The following discussion, which presents the results of the Company, should be read in conjunction with the Company’s consolidated financial statements as of January 31, 2009, and for the year then ended, and related Notes and Management’s Discussion and Analysis of Financial Condition and Results of Operations, all contained in the Company’s Annual Report on Form 10-K for the year ended January 31, 2009.

     The Company’s fiscal year ends on the Saturday closest to each January 31. All references to “fiscal year 2010” refer to the fiscal year that will end January 30, 2010 and all references to “fiscal year 2009” refer to the fiscal year ended January 31, 2009.

     The Company’s revenues decreased 1.8% in the third quarter of fiscal year 2010 to $728.0 million and comparable store revenues decreased 2.1%. Comparable store revenue includes stores that have reached the one-year anniversary of their opening as of the beginning of the fiscal year and eCommerce revenues, but excludes closed stores. Operating income increased to $13.8 million in the third quarter of fiscal year 2010 compared to an operating loss of $25.1 million during the same period in fiscal year 2009. Net income increased to $0.4 million or $0.01 per basic and diluted share in the third quarter of fiscal year 2010 compared to a net loss of $23.5 million or $0.48 per basic and diluted share during the same period in fiscal year 2009. The increase in net income was due primarily to an improvement in gross margin as a percent of sales and lower expenses during the third quarter of fiscal year 2010.

     The Company’s revenues decreased 5.8% in the first nine months of fiscal year 2010 to $2,249.1 million. Comparable store sales decreased 6.5%. Operating income increased to $53.9 million in the first nine months of fiscal year 2010 compared to $18.5 million during the same period in fiscal year 2009. Net income increased to $10.4 million or $0.21 per basic and diluted share compared to a net loss of $10.2 million or $0.21 per basic and diluted share during the same period in fiscal year 2009. The increase in net income was due primarily to an improvement in gross margin as a percent of sales and lower expenses for the nine months ended October 31, 2009.

     Belk stores seek to provide customers the convenience of one-stop shopping, with an appealing merchandise mix and extensive offerings of brands, styles, assortments and sizes. Belk stores sell top national brands of fashion apparel, shoes and accessories for women, men and children, as well as cosmetics, home furnishings, housewares, fine jewelry, gifts and other types of quality merchandise. The Company also sells exclusive private label brands, which offer customers differentiated merchandise selections. Larger Belk stores may include hair salons, spas, restaurants, optical centers and other amenities.

     The Company seeks to be the leading department store in its markets by selling merchandise to customers that meets their needs for fashion, selection, value, quality and service. To achieve this goal, Belk’s business strategy focuses on quality merchandise assortments, effective marketing and sales promotional strategies, attracting and retaining talented, well-qualified associates to deliver superior customer service, and operating efficiently with investments in information technology and process improvement.

     The Company operates department stores in the highly competitive retail apparel industry. Management believes that the principal competitive factors for retail department store operations include merchandise selection, quality, value, customer service and convenience. The Company believes its stores are strong competitors in all of these areas. The Company’s primary competitors are traditional department stores, mass merchandisers, national apparel chains, individual specialty apparel stores and direct merchant firms, including J.C. Penney Company, Inc., Dillard’s, Inc., Kohl’s Corporation, Macy’s, Inc., Sears Holding Corporation, Target Corporation and Wal-Mart Stores, Inc.

     In recent years, the Company has taken advantage of prudent opportunities to expand its store base by opening and expanding stores in new and existing markets in order to increase sales, market share and customer loyalty. In response to recent economic conditions, the Company has scaled back its store growth plans but will continue to explore strategic opportunities to open and expand stores where the Belk name and reputation are well known and in contiguous markets where Belk can distinguish its stores from the competition. During fiscal year 2009, the Company launched a redesigned and expanded Belk.com website and began operating a 142,000 square foot eCommerce fulfillment center in Pineville, NC to process handling and shipping of online orders. The new website features a wide assortment of fashion apparel, accessories and shoes, plus a large selection of cosmetics, home and gift merchandise. Many leading national brands are offered at Belk.com along with the Company’s exclusive private brands.

Results of Operations

     The following table sets forth, for the periods indicated, the percentage relationship to revenues of certain items in the Company’s unaudited condensed consolidated statements of income, as well as a period comparison of changes in comparable store net revenue.

		Three Months Ended								Nine Months Ended
		October 31,				November 1,				October 31,				November 1,
		2009				2008				2009				2008
SELECTED FINANCIAL DATA
Revenues			100.0	%			100.0	%			100.0	%			100.0	%
Cost of goods sold (including occupancy, distribution and buying expenses)			68.2				71.8				69.0				69.7
Selling, general and administrative expenses			29.6				31.8				28.6				29.6
Gain on sale of property and equipment			0.1				0.3				0.1				0.2
Asset impairment and exit costs			—				0.1				—				0.1
Pension curtailment charge			0.4				—				0.1				—
Operating income (loss)			1.9				(3.4	)			2.4				0.8
Interest expense, net			1.8				1.6				1.7				1.6
Gain (loss) on investments			—				—				—				0.1
Income (loss) before income taxes			0.1				(5.0	)			0.7				(0.8	)
Income tax expense (benefit)			0.1				(1.9	)			0.2				(0.3	)
Net income (loss)			0.1				(3.2	)			0.5				(0.4	)
Comparable store net revenue decrease			(2.1	)			(9.8	)			(6.5	)			(7.5	)

Revenues

     The following table gives information regarding the percentage of revenues contributed by each merchandise area for each of the respective periods. There were no material changes for the periods as reflected in the table below.

		Three Months Ended								Nine Months Ended
		October 31,				November 1,				October 31,				November 1
Merchandise Areas		2009				2008				2009				2008
Women’s			37	%			38	%			39	%			40	%
Cosmetics, Shoes and Accessories			33				31				32				31
Men’s			15				15				15				15
Home			8				9				8				8
Children’s			7				7				6				6
Total			100	%			100	%			100	%			100	%

Comparison of the Three and Nine Months Ended October 31, 2009 and November 1, 2008

     Revenues. The Company’s revenues for the three months ended October 31, 2009 decreased 1.8%, or $13.4 million, to $728.0 million from $741.4 million during the same period in fiscal year 2009. The decrease is primarily attributable to a 2.1% decrease in revenues from comparable stores as a result of a continued weak sales environment and a $2.8 million decrease in revenues due to closed stores, partially offset by an increase in revenues from new stores of $4.8 million.

     The Company’s revenues for the nine months ended October 31, 2009 decreased 5.8%, or $138.9 million, to $2,249.1 million from $2,388.0 million over the same period in fiscal year 2009. The decrease is primarily attributable to a 6.5% decrease in revenues from comparable stores as a result of a continued weak sales environment and an $8.1 million decrease in revenues due to closed stores, partially offset by an increase in revenues from new stores of $21.6 million.

     Cost of goods sold. Cost of goods sold was $496.5 million, or 68.2% of revenues, for the three months ended October 31, 2009 compared to $532.6 million, or 71.8% of revenues, for the same period in fiscal year 2009. The decrease in cost of goods sold for the three months ended October 31, 2009 was due primarily to reduced markdown activity as well as the decline in revenues.

     Cost of goods sold was $1,550.9 million, or 69.0% of revenues, for the nine months ended October 31, 2009 compared to $1,664.5 million, or 69.7% of revenues, for the same period in fiscal year 2009. The decrease in cost of goods sold for the nine months ended October 31, 2009 is primarily due to the revenue decline. The decrease as a percentage of revenues is primarily attributable to reduced markdown activity, offset by a 0.23% increase due to occupancy costs, which are largely fixed costs, coupled with declining revenues.

     Selling, general and administrative expenses. Selling, general and administrative (“SG&A”) expenses were $215.8 million, or 29.6% of revenues for the three months ended October 31, 2009, compared to $235.4 million, or 31.8% of revenues for the same period in fiscal year 2009. The decrease in SG&A expenses was primarily due to reductions in selling payroll, benefits and advertising expenses totaling $14.2 million in response to the declining sales environment.

     SG&A expenses were $642.2 million, or 28.6% of revenues for the nine months ended October 31, 2009, compared to $706.5 million, or 29.6% of revenues, for the same period in fiscal year 2009. The decrease in SG&A expenses was primarily due to reductions in selling and support related payroll, benefits and advertising expenses totaling $53.2 million in response to the declining sales environment. The effect of the decrease in payroll and benefits as a percentage of revenues was partially offset by the decrease in revenues for fiscal year 2010.

     Asset impairment and exit costs. During the three months ended October 31, 2009, the Company recorded a $0.2 million reduction to previously estimated severance costs associated with the closing of two stores, partially offset by $0.1 million in severance costs associated with the outsourcing of certain information technology and support functions. During the nine months ended October 31, 2009, the Company recorded $1.0 million in exit costs comprised primarily of severance costs associated with the outsourcing of certain information technology and support functions, as well as the closing of two stores.

     During the three months ended November 1, 2008, the Company recorded $0.7 million in exit costs comprised primarily of severance costs associated with the outsourcing of certain information technology and support functions. During the nine months ended November 1, 2008, the Company recorded $2.1 million in exit costs comprised primarily of severance costs associated with the outsourcing of certain information technology and support functions. In addition, the Company recorded $0.6 million in impairment charges to adjust a retail location’s net book value to fair market value.

     Pension curtailment charge. A one-time pension curtailment charge of $2.7 million for the three and nine months ended October 31, 2009 resulted from the decision to freeze the Company’s defined benefit plan, effective December 31, 2009, for those remaining participants whose benefits were not previously frozen in fiscal year 2006.

     Gain on investments. The gain on investments of $1.6 million for the nine months ended November 1, 2008 was primarily due to a gain on the Company’s undesignated interest rate swap, offset by an other-than-temporary impairment of an available-for-sale equity security of $0.6 million.

     Income tax expense. During the three months ended October 31, 2009, the effective income tax rate was 48.4% compared to 37.0% for the three months ended November 1, 2008. The rate was higher for the three months ended October 31, 2009 due to a $0.1 million adjustment relating to work opportunity tax credits, which had a large impact on the effective tax rate due to the relatively small amount of pre-tax income for the period.

     During the nine months ended October 31, 2009, the effective income tax rate was 33.5% compared to 44.2% for the nine months ended November 1, 2008. The rate was higher for the nine months ended November 1, 2008 due to the settlement of certain state tax matters included in unrecognized tax benefits, which resulted in a $3.2 million increase to income tax benefit for the nine months ended November 1, 2008.

Seasonality and Quarterly Fluctuations

     The Company has historically experienced and expects to continue to experience seasonal fluctuations in its revenues, operating income and net income due to the seasonal nature of the retail business. The highest revenue period for the Company is the fourth quarter, which includes the holiday selling season. A disproportionate amount of the Company’s revenues and a substantial amount of the Company’s operating and net income are realized during the fourth quarter. If for any reason the Company’s revenues were below seasonal norms during the fourth quarter, the Company’s annual results of operations could be adversely affected. The Company’s inventory levels generally reach their highest levels in anticipation of increased revenues during these months. The Company’s quarterly results of operations could also fluctuate significantly as a result of a variety of factors, including the timing of new store openings.

Liquidity and Capital Resources

     The Company’s primary sources of liquidity are cash on hand, cash flows from operations, and borrowings under debt facilities, which consist of a $675.0 million credit facility that matures in October 2011 and $325.0 million in senior notes. The credit facility is comprised of an outstanding $325.0 million term loan and a $350.0 million revolving line of credit. The senior notes are comprised of an $80.0 million floating rate senior note that matures in July 2012, a $20.0 million fixed rate senior note that matures in July 2012, a $100.0 million fixed rate senior note that matures in July 2015, and a $125.0 million fixed rate senior note that matures in August 2017. Additionally, the Company has a $17.8 million, 20-year variable rate, state bond facility which matures in October 2025.

     The credit facility allows for up to $200.0 million of outstanding letters of credit. The credit facility charges interest based upon certain Company financial ratios and the interest spread was calculated at October 31, 2009 using LIBOR plus 200 basis points. The credit facility contains restrictive financial covenants including leverage and fixed charge coverage ratios. The Company’s calculated leverage ratio dictates the LIBOR spread that will be charged on outstanding borrowings in the subsequent quarter. The leverage ratio is calculated by dividing adjusted debt, which is the sum of the Company’s outstanding debt and rent expense multiplied by a factor of eight, divided by pre-tax income plus net interest expense and non-cash charges, such as depreciation, amortization, and impairment charges. At October 31, 2009, the maximum leverage allowed under the credit facility was 4.25, and the calculated leverage ratio was 3.26. The Company was in compliance with all covenants as of October 31, 2009 and expects to remain in compliance with all debt covenants for the next twelve months. As of October 31, 2009, the Company had $36.2 million of standby letters of credit and a $325.0 million term loan outstanding under the credit facility.

     The debt facilities place certain restrictions on mergers, consolidations, acquisitions, sales of assets, indebtedness, transactions with affiliates, leases, liens, investments, dividends and distributions, exchange and issuance of capital stock and guarantees, and require maintenance of minimum financial ratios, which include a leverage ratio, consolidated debt to consolidated capitalization ratio and a fixed charge coverage ratio. These ratios are calculated exclusive of non-cash charges, such as fixed asset, goodwill and other intangible asset impairments.

     The Company utilizes derivative financial instruments (interest rate swap agreements) to manage the interest rate risk associated with its borrowings. The Company has not historically traded, and does not anticipate prospectively trading, in derivatives. Interest rate swap agreements are used to reduce the potential impact of increases in interest rates on variable rate debt. The difference between the fixed rate leg and the variable rate leg of the swap, to be paid or received, is accrued and recognized as an adjustment to interest expense. Additionally, the change in the fair value of a swap designated as a cash flow hedge is marked to market through accumulated other comprehensive income (loss). Any swap that is not designated as a hedging instrument is marked to market through gain (loss) on investments.

     The Company’s exposure to derivative instruments is limited to one interest rate swap for an $80.0 million notional amount, which has a fixed interest rate of 5.2% and expires in fiscal year 2013. It has been designated as a cash flow hedge against variability in future interest rate payments on the $80.0 million floating rate senior note. The Company

had a $125.0 million notional amount swap, which expired in September 2008, that had previously been designated as a cash flow hedge against variability in future interest payments on a $125.0 million variable rate bond facility. On July 26, 2007, the $125.0 million notional amount swap was de-designated due to the Company’s decision to prepay the underlying debt. This swap was marked to market in gain (loss) on investments through its expiration date.

     Net cash provided by operating activities was $154.0 million for the nine months ended October 31, 2009 compared to $72.5 million for the same period in fiscal year 2009. The increase in cash flows from operating activities for the nine months ended October 31, 2009 was principally due to an increase in net income for the current fiscal year, a reduction in inventory in response to the declining sales environment, and a decrease in income taxes paid in fiscal year 2010 primarily as a result of the fiscal year 2009 net loss, partially offset by a $24.0 million increase in the Company’s defined benefit plan contribution.

     Net cash used by investing activities was $35.6 million for the nine months ended October 31, 2009 compared to $104.0 million for the same period in fiscal year 2009. The decrease in cash used by investing activities primarily resulted from reduced purchases of property and equipment of $76.2 million.

     Net cash used by financing activities was $19.3 million for the nine months ended October 31, 2009 compared to $46.2 million for the same period in fiscal year 2009. The decrease in cash used by financing activities primarily relates to dividends paid in the first quarter of fiscal year 2010 of $9.8 million compared to $19.8 million in the same period in fiscal year 2009, and repurchase and retirement of common stock of $6.0 million in the second quarter of fiscal year 2010 compared to $22.3 million in the same period in fiscal year 2009.

     Management believes that cash flows from operations and existing availability under the current credit facilities will be sufficient to cover working capital needs, stock repurchases, dividends, capital expenditures, pension funding and debt service requirements for the next twelve months and the foreseeable future. The Company was focused on managing inventories, capital expenditures and expenses in the third quarter of fiscal year 2010, which resulted in an increase in cash and cash equivalents of $250.0 million compared to the third quarter of fiscal year 2009.

Contractual Obligations and Commercial Commitments

     A table representing the scheduled maturities of the Company’s contractual obligations and commercial commitments as of January 31, 2009 was included under the heading “Contractual Obligations and Commercial Commitments” of the Company’s Annual Report on Form 10-K for the fiscal year ended January 31, 2009. There have been no material changes from the information included in the Form 10-K.

Off-Balance Sheet Arrangements

     The Company has not created, and is not party to, any special-purpose or off-balance sheet entities for the purpose of raising capital, incurring debt or operating the Company’s business. The Company does not have any arrangements or relationships with entities that are not consolidated into the financial statements that are reasonably likely to materially affect the Company’s liquidity or the availability of capital resources.

Recently Issued Accounting Standards

     In June 2009, the Financial Accounting Standards Board (“FASB”) issued Statement of Financial Accounting Standards (“SFAS”) No. 168, “The FASB Accounting Standards Codification and the Hierarchy of Generally Accepted Accounting Principles — a replacement of SFAS No. 162” (“ASC 105-10”). ASC 105-10 modifies the Generally Accepted Accounting Principles (“GAAP”) hierarchy by establishing only two levels of GAAP, authoritative and nonauthoritative accounting literature. Effective July 2009, the FASB Accounting Standards Codification (“ASC”), also known collectively as the “Codification,” is considered the single source of authoritative U.S. accounting and reporting standards, except for additional authoritative rules and interpretive releases issued by the SEC. The Codification was developed to organize GAAP pronouncements by topic so that users can more easily access authoritative accounting guidance. ASC 105-10 became effective for the third quarter of fiscal year 2010. All other accounting standard references have been updated in this report with ASC references.

     In August 2009, the FASB issued Accounting Standards Update (“ASU”) 2009-05, “Measuring Liabilities at Fair Value,” which updates ASC 820-10, “Fair Value Measurements and Disclosures.” The updated guidance clarifies that the fair value of a liability can be measured in relation to the counterparty’s asset when traded in an active market, without adjusting the price for restrictions that prevent the sale of the liability. ASU 2009-05 will be effective for the fourth quarter of fiscal year 2010. The Company does not expect that the adoption of ASU 2009-05 will change its valuation techniques for measuring liabilities at fair value.

     For fiscal years ending after December 15, 2009, the “Compensation-Retirement Benefits Topic,” ASC 715-20 will require more detailed disclosures regarding the assets of a defined benefit pension or other postretirement plan. The Company will adopt the additional disclosure requirements of ASC 715-20 as of January 30, 2010.

     Effective for the second quarter of fiscal year 2010, the “Subsequent Events Topic,” ASC 855-10-50-1, required disclosure of the date through which an entity has evaluated subsequent events and the basis for that date. Refer to the notes to the unaudited condensed consolidated financial statements for the disclosure required under ASC 855-10-50-1.

     Effective for the second quarter of fiscal year 2010, the “Financial Instruments Topic,” ASC 825-10 required disclosure regarding the fair value of financial instruments of publicly traded companies for interim reporting periods as well as annual reporting periods. Refer to the notes to the unaudited condensed consolidated financial statements for the disclosures required under ASC 825-10.

     Effective for the second quarter of fiscal year 2010, the “Investments-Debt and Equity Securities Topic,” ASC 320-10 amended the presentation and disclosure requirements for other-than-temporary impairment on debt and equity securities in the financial statements. Refer to the notes to the unaudited condensed consolidated financial statements for the disclosures required under ASC 320-10.

     Effective for the second quarter of fiscal year 2010, the “Fair Value Measurements and Disclosures Topic,” ASC 820-10-65-4, provided additional guidance for estimating fair value when the volume and level of activity for the asset or liability have significantly decreased and identifying circumstances that indicate a transaction is not orderly. Refer to the notes to the unaudited condensed consolidated financial statements for the disclosures required under ASC 820-10-65-4.

     Effective for the first quarter of fiscal year 2010, the “Fair Value Measurements and Disclosures Topic,” ASC 820-10-65-1, established a single definition of fair value and a framework for measuring fair value in GAAP for nonfinancial assets and liabilities to increase consistency and comparability in fair value measurements. The Company’s adoption of the requirements under ASC 820-10-65-1 did not require other additional disclosure during the first quarter of fiscal year 2010.

Item 3.		Quantitative and Qualitative Disclosures About Market Risk

     There have been no material changes to the Company’s quantitative and qualitative market risk disclosures during the nine months ended October 31, 2009 from the disclosures contained in the Company’s Annual Report on Form 10-K for the fiscal year ended January 31, 2009.

Item 4.		Controls and Procedures

     The Company’s management conducted an evaluation pursuant to Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, under the supervision and with the participation of its Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of the Company’s disclosure controls and procedures as of the end of the period covered by this report. The Company’s disclosure controls and procedures are designed to ensure that information required to be disclosed by the Company in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the Securities and Exchange Commission, and that such information is accumulated and communicated to the Company’s management, including its Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure. Based upon that evaluation, the Chief Executive Officer and Chief Financial Officer concluded that the Company’s disclosure controls and procedures were effective.

     During the period covered by this report, there were no changes in the Company’s internal control over financial reporting that materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

PART II — OTHER INFORMATION

Item 1.		Legal Proceedings

     In the ordinary course of business, the Company is subject to various legal proceedings and claims. The Company believes that the ultimate outcome of these matters will not have a material adverse effect on its consolidated financial position or results of operations.

Item 1A.		Risk Factors

     There have been no material changes from the risk factors disclosed in the Company’s Annual Report on Form 10-K filed on April 15, 2009.

Item 2.		Unregistered Sales of Equity Securities and Use of Proceeds

     Not applicable.

Item 3.		Defaults Upon Senior Securities

     Not applicable.

Item 4.		Submission of Matters to a Vote of Security Holders

     Not applicable.

Item 5.		Other Information

     Not applicable.

Item 6.		Exhibits

(a) Exhibits

	3.1		Form of Amended and Restated Certificate of Incorporation of the Company (incorporated by reference to pages B-24 to B-33 of the Company’s Registration Statement on Form S-4/A, filed on March 5, 1998 (File No. 333-42935)).
	3.2		Form of Second Amended and Restated Bylaws of the Company (incorporated by reference to Exhibit 3.2 of the Company’s Annual Report on Form 10-K for the fiscal year ended January 31, 2004).
	4.1		Articles Fourth, Fifth and Seventh of the Amended and Restated Certificate of Incorporation of the Company (incorporated by reference to pages B-24 to B-33 of the Company’s Registration Statement on Form S-4/A, filed on March 5, 1998 (File No. 333-42935)).
	4.2		Articles I and IV of the Second Amended and Restated Bylaws of the Company (incorporated by reference to Exhibit 3.2 of the Company’s Annual Report on Form 10-K for the fiscal year ended January 31, 2004).
	31.1		Certification of the Chief Executive Officer pursuant to Rule 13a-14(a) or Rule 15d-14(a) of the Securities Exchange Act of 1934, as amended, as adopted under Section 302 of the Sarbanes-Oxley Act of 2002.
	31.2		Certification of the Chief Financial Officer pursuant to Rule 13a-14(a) or Rule 15d-14(a) of the Securities Exchange Act of 1934, as amended, as adopted under Section 302 of the Sarbanes-Oxley Act of 2002.
	32.1		Certification of the Chief Executive Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

32.2

Certification of the Chief Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

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.