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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.

For the quarterly period ended November 2, 2013

OR

 

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

For the transition period from                      to                     

Commission file number 000-26207

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.    þ  Yes    ¨  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).    þ  Yes    ¨  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		¨		Accelerated filer		þ
Non-accelerated filer		¨  (Do not check if a smaller reporting company)		Smaller reporting company		¨

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

At December 3, 2013, the registrant had issued and outstanding 40,063,026 shares of class A common stock and 927,890 shares of class B common stock.

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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 November 2, 2013 and October 27, 2012		4
Condensed Consolidated Statements of Comprehensive Income for the Three and Nine Months Ended November 2, 2013 and October 27, 2012		5
Condensed Consolidated Balance Sheets as of November 2, 2013 and February 2, 2013		6
Condensed Consolidated Statement of Changes in Stockholders’ Equity for the Nine Months Ended November 2, 2013		7
Condensed Consolidated Statements of Cash Flows for the Nine Months Ended November  2, 2013 and October 27, 2012		8
Notes to Unaudited Condensed Consolidated Financial Statements		9
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		20
Item 1A. Risk Factors		20
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds		20
Item 3. Defaults upon Senior Securities		20
Item 4. Mine Safety Disclosures		20
Item 5. Other Information		20
Item 6. Exhibits		20

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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. 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. 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, and our ability to be competitive in the retail industry, our ability to execute profitability and efficiency strategies, our ability to execute growth strategies, anticipated benefits from our strategic initiatives to strengthen our merchandising and planning organizations, anticipated benefits from our belk.com website and our eCommerce fulfillment centers, the expected benefits of new systems and technology, and the anticipated benefits under our Program Agreement with GE. 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. Any such forward-looking statements are qualified by the following important risk factors and other risks which may be disclosed from time to time in our filings that could cause actual results to differ materially from those predicted by the forward-looking statements. Forward-looking statements relate to the date initially made.

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:

 

•

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, a health pandemic, catastrophic events, potential acts of terrorism and threats of such acts and other matters that influence consumer confidence and spending;

 

•

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 and through online sales;

 

•

Variations in the amount of vendor allowances;

 

•

Our ability to successfully implement our new information technology platform that will impact our primary merchandising, planning and core financial processes;

 

•

Our ability to successfully operate our website, and our fulfillment facilities and manage our social community engagement by providing a broader range of our information online, including current sales promotions and special events;

 

•

Our ability to manage multiple significant change initiatives simultaneously;

 

•

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; and to deliver in a timely and cost-efficient manner;

 

•

Increases in the price of merchandise, raw materials, fuel and labor or their reduced availability;

 

•

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, changes in customers’ credit card use, and GE’s ability to extend credit to our customers;

 

•

Our ability to manage our expense structure;

 

•

Our ability to continue to open new stores, or to remodel or expand existing stores, including the availability of existing retail stores or store sites on acceptable terms and our ability to successfully execute our retailing concept in new markets and geographic regions;

 

•

Our ability to manage risks associated with owning and leasing real estate;

 

•

The efficient and effective operation of our distribution network, and information systems to manage sales, distribution, merchandise planning and allocation functions;

 

•

Our ability to prevent a security breach that results in the unauthorized disclosure of company, employee or customer information;

 

•

The effectiveness of third parties in managing our outsourced business;

 

•

Loss of key management or qualified employees or an inability to attract, retain and motivate additional highly skilled employees;

 

•

Changes in federal, state or local laws and regulations; and

 

•

Our ability to comply with debt covenants, which could adversely affect our capital resources, financial condition and liquidity.

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 February 2, 2013 that we filed with the SEC on April 17, 2013. 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.

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PART I — FINANCIAL INFORMATION

Item 1. Financial Statements

BELK, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(in thousands, except share and per share amounts)

(unaudited)

 

		Three Months Ended								Nine Months Ended
		November 2, 2013				October 27, 2012				November 2, 2013				October 27, 2012
Revenues		$	860,743			$	837,487			$	2,716,035			$	2,615,229
Cost of goods sold (including occupancy, distribution and buying expenses)			589,722				574,211				1,836,855				1,755,642
Selling, general and administrative expenses			254,766				238,344				748,835				706,029
Gain on sale of property and equipment			559				1,110				1,372				2,825
Asset impairment and exit costs			1,831				(645	)			3,526				(450	)
Operating income			14,983				26,687				128,191				156,833
Interest expense, net			(10,681	)			(11,121	)			(32,562	)			(36,065	)
Income before income taxes			4,302				15,566				95,629				120,768
Income tax expense			742				4,421				33,357				41,961
Net income		$	3,560			$	11,145			$	62,272			$	78,807
Basic net income per share		$	0.09			$	0.26			$	1.49			$	1.80
Diluted net income per share		$	0.09			$	0.26			$	1.48			$	1.80
Weighted average shares outstanding:
Basic			40,990,916				42,717,880				41,724,596				43,692,854
Diluted			41,195,708				42,865,740				41,996,697				43,889,746

See accompanying notes to unaudited condensed consolidated financial statements.

 

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BELK, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(in thousands)

(unaudited)

 

		Three Months Ended								Nine Months Ended
		November 2, 2013				October 27, 2012				November 2, 2013				October 27, 2012
Net income		$	3,560			$	11,145			$	62,272			$	78,807
Other comprehensive income:
Unrealized gain on interest rate swap, net of $740 income taxes for the nine months ended October 27, 2012.			—				—				—				945
Defined benefit plan adjustments, net of $1,224 and $3,672 income taxes for the three and nine months ended November 2, 2013, respectively and $1,160 and $3,484 income taxes for the three and nine months ended October 27, 2012, respectively.			2,062				1,957				6,186				5,868
Total other comprehensive income			2,062				1,957				6,186				6,813
Total comprehensive income		$	5,622			$	13,102			$	68,458			$	85,620

See accompanying notes to unaudited condensed consolidated financial statements.

 

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BELK, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(dollars in thousands)

(unaudited)

 

		November 2, 2013				February 2, 2013
Assets
Current assets:
Cash and cash equivalents		$	23,706			$	269,177
Accounts receivable, net			28,273				32,004
Merchandise inventory			1,294,426				1,009,687
Prepaid income taxes, expenses and other current assets			36,988				28,460
Total current assets			1,383,393				1,339,328
Property and equipment, net of accumulated depreciation and amortization of $1,520,164 and $1,418,877 as of November 2, 2013 and February 2, 2013, respectively.			1,145,259				1,055,944
Deferred income taxes			32,208				43,292
Other assets			49,693				40,062
Total assets		$	2,610,553			$	2,478,626
Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable		$	458,205			$	255,763
Accrued liabilities			242,334				224,367
Accrued income taxes			—				22,334
Deferred income taxes			38,063				36,710
Current installments of long-term debt and capital lease obligations			7,730				9,714
Total current liabilities			746,332				548,888
Long-term debt and capital lease obligations, excluding current installments			386,562				390,110
Retirement obligations and other noncurrent liabilities			241,595				277,007
Total liabilities			1,374,489				1,216,005
Stockholders’ equity:
Preferred stock			—				—
Common stock, 400 million shares authorized and 41.0 and 42.7 million shares issued and outstanding as of November 2, 2013 and February 2, 2013, respectively.			410				427
Paid-in capital			176,915				271,913
Retained earnings			1,219,535				1,157,263
Accumulated other comprehensive loss			(160,796	)			(166,982	)
Total stockholders’ equity			1,236,064				1,262,621
Total liabilities and stockholders’ equity		$	2,610,553			$	2,478,626

See accompanying notes to unaudited condensed consolidated financial statements.

 

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BELK, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS’ EQUITY

(in thousands)

(unaudited)

 

																		Accumulated Other
		Common Stock								Paid-in				Retained				Comprehensive
		Shares				Amount				Capital				Earnings				Income (Loss)				Total
Balance at February 2, 2013			42,718			$	427			$	271,913			$	1,157,263			$	(166,982	)		$	1,262,621
Net income			—				—				—				62,272				—				62,272
Other comprehensive income			—				—				—				—				6,186				6,186
Issuance of stock-based compensation			—				—				(397	)			—				—				(397	)
Stock-based compensation expense			—				—				6,520				—				—				6,520
Common stock issued			311				3				770				—				—				773
Repurchase and retirement of common stock			(2,038	)			(20	)			(101,891	)			—				—				(101,911	)
Balance at November 2, 2013			40,991			$	410			$	176,915			$	1,219,535			$	(160,796	)		$	1,236,064

See accompanying notes to unaudited condensed consolidated financial statements.

 

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BELK, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

(unaudited)

 

		Nine Months Ended
		November 2, 2013				October 27, 2012
Cash flows from operating activities:
Net income		$	62,272			$	78,807
Adjustments to reconcile net income to net cash provided by operating activities:
Asset impairment and exit costs			3,526				(450	)
Deferred income tax expense			10,618				10,412
Depreciation and amortization expense			99,989				90,911
Stock-based compensation expense			9,105				13,254
Loss (gain) on sale of property and equipment			600				(853	)
Amortization of deferred gain on sale and leaseback			(1,972	)			(1,972	)
Amortization of deferred debt issuance costs			623				623
Increase (decrease) in:
Accounts receivable, net			3,731				4,516
Merchandise inventory			(284,739	)			(366,374	)
Prepaid income taxes, expenses and other assets			(20,728	)			(36,967	)
Increase (decrease) in:
Accounts payable and accrued liabilities			210,239				303,697
Accrued income taxes			(22,334	)			(20,684	)
Retirement obligations and other liabilities			(24,677	)			(10,112	)
Net cash provided by operating activities			46,253				64,808
Cash flows from investing activities:
Purchases of property and equipment			(176,215	)			(133,592	)
Proceeds from sales of property and equipment			104				2,269
Net cash used by investing activities			(176,111	)			(131,323	)
Cash flows from financing activities:
Principal payments on long-term debt and capital lease obligations			(6,376	)			(106,069	)
Repurchase and retirement of common stock			(101,911	)			(102,047	)
Dividends paid			—				(33,898	)
Stock compensation tax benefit			1,644				1,858
Cash paid for withholding taxes in lieu of stock-based compensation shares			(8,970	)			(6,210	)
Net cash used by financing activities			(115,613	)			(246,366	)
Net decrease in cash and cash equivalents			(245,471	)			(312,881	)
Cash and cash equivalents at beginning of period			269,177				456,272
Cash and cash equivalents at end of period		$	23,706			$	143,391
Supplemental disclosures of cash flow information:
Income taxes paid		$	48,437			$	59,751
Interest paid, net of capitalized interest			18,527				21,747
Supplemental schedule of noncash investing activities:
Increase in property and equipment through accrued purchases		$	14,502			$	27,975
Increase in property and equipment through assumption of capital leases			844				—

See accompanying notes to unaudited condensed consolidated financial statements.

 

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BELK, INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(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 (“SEC”) and should be read in conjunction with our Annual Report on Form 10-K for the fiscal year ended February 2, 2013. 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 November 2, 2013 may not be indicative of the operating results that may be expected for the full fiscal year.

Certain prior period amounts have been reclassified to conform with current year presentation. Previously, the Company presented amounts due from certain vendors on a gross basis. In the current year, the Company has presented amounts due from those certain vendors on a net basis. Accordingly, the Company has revised amounts presented for the nine months ended October 27, 2012 on the cash flow statement and the twelve months ended February 2, 2013 on the balance sheet for comparability purposes. The revision had no impact on net income, cash flows from operating activities, or stockholders’ equity, and an insignificant impact on working capital for the nine months ended October 27, 2012 and twelve months ended February 2, 2013.

(2) New Accounting Pronouncements

In December 2011, the Financial Accounting Standards Board issued Accounting Standards Update No. 2011-12, “Comprehensive Income (Topic 220): Deferral of the Effective Date for Amendments to the Presentation of Reclassifications of Items Out of Accumulated Other Comprehensive Income in Accounting Standards Update No. 2011-05,” which deferred the requirement to present on the face of the financial statements items that are reclassified from other comprehensive income to net income. In February 2013, the Financial Accounting Standards Board issued Accounting Standard Update No. 2013-02,” which finalized the reporting requirements of reclassifications out of accumulated other comprehensive income. The Company adopted this guidance beginning in the first quarter of fiscal year 2014 when it was required. The adoption of this update did not have a material effect on the Company’s condensed consolidated results of operations, financial position or cash flows.

In December 2011, the Financial Accounting Standards Board issued Accounting Standards Update No. 2011-11, “Balance Sheet (Topic 210): Disclosures about Offsetting Assets and Liabilities,” which requires disclosure of both gross information and net information about both instruments and transactions eligible for offset in the statement of financial position and instruments and transactions subject to agreements similar to a master netting arrangements. In January 2013, the Financial Accounting Standards Board issued Accounting Standards Update No. 2013-01, “Balance Sheet (Topic 210): Clarifying the Scope of Disclosures about Offsetting Assets and Liabilities,” which clarified the scope of Accounting Standards Update No. 2011-11. The Company adopted this guidance beginning in the first quarter of fiscal year 2014 when it was required. The adoption of this update did not have a material effect on the Company’s condensed consolidated results of operations, financial position or cash flows.

(3) Accumulated Other Comprehensive Loss

As of November 2, 2013 and February 2, 2013, the accumulated other comprehensive loss for defined benefit plans was $160.8 million and $167.0 million, respectively. These amounts are net of income taxes of $96.8 million and $100.5 million at November 2, 2013 and February 2, 2013, respectively.

For the three months ended November 2, 2013, the Company reclassified $2.1 million of amortization of defined benefit plan liabilities, net of $1.2 million in income taxes, from accumulated comprehensive income to selling, general and administrative expenses on the condensed consolidated statements of income.

For the nine months ended November 2, 2013, the Company reclassified $6.2 million of amortization of defined benefit plan liabilities, net of $3.7 million in income taxes, from accumulated comprehensive income to selling, general and administrative expenses on the condensed consolidated statements of income.

 

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BELK, INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

 

(4) Fair Value Measurements

Fair value is the price that would be received to sell an asset or paid to transfer a liability (an exit price) in an orderly transaction between market participants on the measurement date. 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.

The Company has equity and fixed income investments related to its company-owned life insurance. The fair value of the investments is the estimated amount that the Company would receive if the policy was terminated, taking into consideration the current creditworthiness of the insurer. The fair value of the company-owned life insurance is considered Level 2, as it is determined by 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 the company-owned life insurance is marked to market through income.

As of November 2, 2013 and February 2, 2013, the Company held company-owned life insurance measured at fair value on a recurring basis of $37.0 million and $24.5 million, respectively. These amounts are presented net of loans that are secured by some of these policies of $144.4 million and $147.4 million at November 2, 2013 and February 2, 2013, respectively. Total gross company-owned life insurance assets were $181.4 million and $171.9 million at November 2, 2013 and February 2, 2013, respectively.

The Company has in the past entered into interest rate swap agreements with financial institutions to manage the exposure to changes in interest rates. When doing so, the fair value of the interest rate swap agreement is the estimated amount that the Company would pay or receive to terminate the swap agreement, taking into account the current creditworthiness of the swap counterparty. 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. The Company has consistently applied these valuation techniques in all periods presented.

Certain long-lived assets are measured at fair value on a nonrecurring basis; that is, the instruments are not measured at fair value on an ongoing basis but are subject to fair value adjustments only in certain circumstances (for example, when there is evidence of impairment). The fair value measurements related to long-lived assets are determined using expected future cash flow analyses. The Company estimates future cash flows based on historical experience and its expectation of future performance. The analyses use discounted cash flows and take into consideration any anticipated salvage value or sales price for the store. The analyses also assume available option periods through 20 years unless there is a real estate related event which would increase or decrease the time period. The Company classifies these measurements as Level 3. During the nine months ended November 2, 2013, the Company recorded $2.4 million in impairment charges to adjust a retail location’s net book value to fair market value.

As of November 2, 2013 and February 2, 2013, the fair value of fixed rate long-term debt including the current portion and excluding capitalized leases, was $394.6 million and $397.9 million, respectively. The Company classifies these measurements as Level 2. 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 and credit ratings. The total carrying value of long-term debt, including the current portion and excluding capitalized leases, was $375.0 million as of November 2, 2013 and February 2, 2013.

(5) Asset Impairment and Exit Costs

During the three months ended November 2, 2013, the Company recorded $1.5 million in impairment charges to adjust a retail location’s net book value to fair market value. The Company determines fair value of its retail locations primarily based on the present value of future cash flows. In addition, the Company recorded a $0.3 million charge for real estate holding costs during the three months ended November 2, 2013.

During the nine months ended November 2, 2013, the Company recorded $2.4 million in impairment charges to adjust a retail location’s net book value to fair market value, a $0.9 million charge for real estate holding costs, and $0.2 million in exit costs comprised of severance costs associated with the planned closing of four stores.

 

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BELK, INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

 

During the three months ended October 27, 2012, the Company recorded a $0.7 million rent adjustment due to space reductions at two stores which were previously dual-box locations. In addition, during the nine months ended October 27, 2012, the Company recorded a $0.2 million charge for exit costs primarily associated with the closing of two stores.

(6) Gain on Property and Equipment

During the three months ended October 27, 2012, the Company sold a former store location it was holding for sale, which resulted in a gain of $0.4 million. In addition, during the nine months ended October 27, 2012, the Company recognized a total gain of $1.0 million for insurance proceeds in excess of the net book value of property damaged by floods.

(7) Borrowings

On July 12, 2012, the Company paid, upon maturity, $80.0 million of its floating rate senior note and $20.0 million of its 5.05% fixed rate senior note. The $80.0 million floating rate senior note had an associated interest rate swap, with a fixed interest rate of 5.2%, designated as a cash flow hedge of variable interest payments.

(8) Income Taxes

Income tax expense for the three months ended November 2, 2013 was $0.7 million, or 17.2% of pre-tax income, compared to $4.4 million, or 28.4% of pre-tax income, for the three months ended October 27, 2012. The decrease in income tax expense was due primarily to the decrease in income before income taxes for the three months ended November 2, 2013 of $11.3 million. The decrease in the rate was due primarily to a $0.6 million reduction in the accrual for uncertain tax reserves during fiscal year 2014, which was the result of expired state related statutes of limitations.

Income tax expense for the nine months ended November 2, 2013 was $33.4 million, or 34.9% of pre-tax income, compared to $42.0 million, or 34.7% of pre-tax income, for the nine months ended October 27, 2012. The decrease in income tax expense was due primarily to the decrease in income before income taxes for the nine months ended November 2, 2013 of $25.1 million.

Due to a change in an IRS audit policy regarding capitalization of costs relating to tangible property, the Company, during the first quarter of fiscal year 2013, reduced the overall reserve for uncertain tax positions by $6.5 million, which resulted in a reduction in deferred tax assets with no effect on income tax expense for the first quarter of fiscal year 2013. The total reserve of uncertain tax positions was $17.2 million and $16.9 million as of November 2, 2013 and October 27, 2012, respectively.

(9) Pension, SERP and Postretirement Benefits

The Company has a defined benefit pension plan, the Belk Pension Plan, which prior to fiscal year 2010 had been partially frozen and closed to new participants. Pension benefits were suspended for fiscal year 2010, and effective December 31, 2009, the Pension Plan was frozen for those remaining participants whose benefits were not previously frozen.

The Company has a non-qualified defined benefit Supplemental Executive Retirement Plan, (“Old SERP”), which provides retirement and death benefits to certain qualified executives. Old SERP has been closed to new executives and has been replaced by the 2004 Supplemental Executive Retirement Plan (“2004 SERP”), a non-qualified defined contribution plan.

The Company also provides postretirement medical and life insurance benefits to certain employees, and was closed to new participants in 2002. The Company accounts for postretirement benefits by recognizing the cost of these benefits over an employee’s estimated term of service with the Company, in accordance with ASC 715, “Compensation — Retirement Benefits.”

 

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BELK, INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

 

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

 

		Three Months Ended
		Pension Plan								Old SERP Plan								Postretirement Plan
		November 2,				October 27,				November 2,				October 27,				November 2,				October 27,
		2013				2012				2013				2012				2013				2012
										(in thousands)
Service cost		$	—			$	—			$	41			$	38			$	30			$	29
Interest cost			5,691				5,854				129				140				228				266
Expected return on plan assets			(7,138	)			(7,240	)			—				—				—				—
Amortization of transition obligation			—				—				—				—				—				49
Amortization of net loss			3,123				2,842				132				119				31				107
Net periodic benefit expense		$	1,676			$	1,456			$	302			$	297			$	289			$	451
		Nine Months Ended
		Pension Plan								Old SERP Plan								Postretirement Plan
		November 2,				October 27,				November 2,				October 27,				November 2,				October 27,
		2013				2012				2013				2012				2013				2012
										(in thousands)
Service cost		$	—			$	—			$	123			$	114			$	90			$	87
Interest cost			17,073				17,562				387				420				684				798
Expected return on plan assets			(21,414	)			(21,720	)			—				—				—				—
Amortization of transition obligation			—				—				—				—				—				147
Amortization of net loss			9,369				8,526				396				357				93				321
Net periodic benefit expense		$	5,028			$	4,368			$	906			$	891			$	867			$	1,353

During the nine months ended November 2, 2013, the Company made a discretionary contribution to its Pension Plan of $25.0 million. The Company does not expect to make additional contributions to the Pension Plan before fiscal year end. During the three and nine months ended October 27, 2012, the Company made contributions to its Pension Plan of $9.0 million and $18.0 million, 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 remaining service vesting conditions as being outstanding at the beginning of the period in which all other vesting conditions are met.

If all necessary conditions have not been satisfied by the end of the period, the contingently issuable shares included in diluted EPS are based on the number of dilutive shares that would be issuable at the end of the contingency period. Contingently-issuable non-vested share awards are included in the diluted EPS calculation as of the beginning of the period (or as of the date of the contingent share agreement, if later).

The reconciliation of basic and diluted shares for the three and nine months ended November 2, 2013 and October 27, 2012, are as follows:

 

		Three Months Ended								Nine Months Ended
		November 2,				October 27,				November 2,				October 27,
		2013				2012				2013				2012
Basic Shares			40,990,916				42,717,880				41,724,596				43,692,854
Dilutive contingently-issuable non-vested share awards			204,461				146,139				271,770				192,941
Dilutive contingently-issuable vested share awards			331				1,721				331				3,951
Diluted Shares			41,195,708				42,865,740				41,996,697				43,889,746

 

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BELK, INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

 

(11) Repurchase of Common Stock

On March 27, 2013, the Company’s Board of Directors approved a self-tender offer to purchase up to 1,500,000 shares of Class A and 500,000 shares of Class B common stock at a price of $50.00 per share. The tender offer was initiated on April 25, 2013 and completed on May 22, 2013 when the Company accepted for purchase 1,741,669 shares of Class A and 296,560 shares of Class B common stock for $101.9 million. In accordance with the offer to purchase and SEC rules, the Company accepted for purchase 241,669 additional shares of Class A common stock that were tendered by stockholders, which is less than 2.0% of the outstanding shares of Class A stock that were subject to the offer.

 

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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 nation’s largest family owned and operated department store. As of November 2, 2013, the Company had 301 Belk stores located in 16 Southern states and a growing digital presence. The Company generated revenues of $4.0 billion for the fiscal year ended February 2, 2013, 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 February 2, 2013 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 February 2, 2013.

The Company’s fiscal year is a 52- or 53-week period ending on the Saturday closest to each January 31. All references to “fiscal year 2013” refer to the 53-week fiscal year ended February 2, 2013, all references to “fiscal year 2014” refer to the 52-week fiscal year that will end February 1, 2014, and all references to “fiscal year 2015” refer to the 52-week fiscal year that will end January 31, 2015.

The Company’s revenues increased 2.8% in the third quarter of fiscal year 2014 to $860.7 million. Comparable store revenues increased 3.5% as a result of continued strong eCommerce sales and execution of the Company’s key initiatives. Our eCommerce revenues increased by $12.6 million, or 44.8%, and contributed 1.5% of the 3.5% comparable store revenues for the period. The Company calculates comparable store revenue as sales from 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. Stores undergoing remodeling, expansion or relocation remain in the comparable store revenue calculation. Definitions and calculations of comparable store revenue differ among companies in the retail industry.

Operating income decreased to $15.0 million in the third quarter of fiscal year 2014 compared to $26.7 million during the same period in fiscal year 2013. Net income decreased to $3.6 million or $0.09 per basic and diluted share in the third quarter of fiscal year 2014 compared to $11.1 million or $0.26 per basic and diluted share during the same period in fiscal year 2013. The decrease in net income was due primarily to higher expense associated with the Company’s investments in strategic initiatives.

The Company’s revenues increased 3.9% for the first nine months of fiscal year 2014 to $2,716.0 million. Comparable store revenues increased 4.0%. eCommerce revenues increased by $39.8 million, or 52.8%, and contributed 1.5% of the 4.0% comparable store revenues for the period. Operating income decreased to $128.2 million in the first nine months of fiscal year 2014 from $156.8 million during the same period in fiscal year 2013. Net income decreased to $62.3 million or $1.49 per basic share and $1.48 per diluted share from $78.8 million or $1.80 per basic and diluted share during the same period in fiscal year 2013. The decrease in net income was due primarily to higher expense associated with the Company’s investments in strategic initiatives.

Belk seeks to provide customers with a convenient and enjoyable shopping experience both in stores and online at belk.com, by offering an appealing merchandise mix that includes extensive assortments of brands, styles, and sizes. Belk stores and belk.com 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 meet 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.

 

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The Company operates retail department stores in the highly competitive retail 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 it faces 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, direct merchant firms and online retailers, including Macy’s, Inc., Dillard’s, Inc., Nordstrom, Inc., Kohl’s Corporation, Target Corporation, Sears Holding Corporation, TJX Companies, Inc., Wal-Mart Stores, Inc., J.C. Penney Company, Inc., and Amazon.com, Inc.

The Company has focused its growth strategy in the last several years on remodeling and expanding existing stores, developing new merchandising concepts in targeted demand centers, and expanding its online capabilities. In addition, in April 2013 the Company announced a strategy to expand the number of Belk flagship locations. Belk currently operates 17 flagship stores that meet certain standards based on size, sales volume, location, premium brand assortments and Belk brand image. Under this strategy, the Company plans to nearly double the number of flagship stores over the next five years through expansions and remodels of existing stores, enhancement of premium brand offerings in existing stores, and opening new stores that meet the flagship store criteria. The Company will continue to explore new store opportunities within its existing 16-state footprint and in contiguous markets where Belk can leverage its name and reputation to distinguish its stores from the competition.

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
		November 2,				October 27,				November 2,				October 27,
		2013				2012				2013				2012
SELECTED FINANCIAL DATA
Revenues			100.0	%			100.0	%			100.0	%			100.0	%
Cost of goods sold (including occupancy, distribution and buying expenses)			68.5				68.6				67.6				67.1
Selling, general and administrative expenses			29.6				28.5				27.6				27.0
Gain on sale of property and equipment			0.1				0.1				0.1				0.1
Asset impairment and exit costs			0.2				(0.1	)			0.1				—
Operating income			1.7				3.2				4.7				6.0
Interest expense, net			1.2				1.3				1.2				1.4
Income before income taxes			0.5				1.9				3.5				4.6
Income tax expense			0.1				0.5				1.2				1.6
Net income			0.4				1.3				2.3				3.0
Comparable store net revenue increase			3.5				5.8				4.0				6.1

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
		November 2,				October 27,				November 2,				October 27,
Merchandise Areas		2013				2012				2013				2012
Women’s			33	%			33	%			35	%			36	%
Cosmetics, Shoes and Accessories			34				34				33				33
Men’s			16				16				17				16
Home			9				9				8				8
Children’s			8				8				7				7
Total			100	%			100	%			100	%			100	%

 

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Comparison of the Three and Nine Months Ended November 2, 2013 and October 27, 2012

Revenues. The Company’s revenues for the three months ended November 2, 2013 increased 2.8%, or $23.3 million, to $860.7 million from $837.5 million during the same period in fiscal year 2013. The increase is primarily attributable to a 3.5% increase in revenues from comparable stores, partially offset by a $4.3 million decrease in revenues from closed stores.

The Company’s revenues for the nine months ended November 2, 2013 increased 3.9%, or $100.8 million, to $2,716.0 million from $2,615.2 million during the same period in fiscal year 2013. The increase is primarily attributable to a 4.0% increase in revenues from comparable stores.

Cost of goods sold. Cost of goods sold was $589.7 million, or 68.5% of revenues, for the three months ended November 2, 2013 compared to $574.2 million, or 68.6% of revenues, for the same period in fiscal year 2013. The increase in cost of goods sold was attributable to an increase in revenues for the three months ended November 2, 2013.

Cost of goods sold was $1,836.9 million, or 67.6% of revenues, for the nine months ended November 2, 2013 compared to $1,755.6 million, or 67.1% of revenues, for the same period in fiscal year 2013. The increase in cost of goods sold was attributable to an increase in revenues for the nine months ended November 2, 2013. The increase in cost of goods sold as a percentage of revenues was primarily attributable to an increase in shipping and handling expenses, as well as distribution costs.

Selling, general and administrative expenses. Selling, general and administrative (“SG&A”) expenses were $254.8 million, or 29.6% of revenues for the three months ended November 2, 2013, compared to $238.3 million, or 28.5% of revenues for the same period in fiscal year 2013. The increase in SG&A expenses was primarily due to the Company’s investment in strategic initiatives.

SG&A expenses were $748.8 million, or 27.6% of revenues for the nine months ended November 2, 2013, compared to $706.0 million, or 27.0% of revenues for the same period in fiscal year 2013. The increase in SG&A expenses was primarily due to an increase in payroll and the Company’s investment in strategic initiatives, as well as amounts related to the Company’s 125^th anniversary celebration, consisting of customer, associate and community related events.

Income tax expense. Income tax expense for the three months ended November 2, 2013 was $0.7 million, or 17.2% of pre-tax income, compared to $4.4 million, or 28.4% of pre-tax income, for the three months ended October 27, 2012. The decrease in income tax expense was due primarily to the decrease in income before income taxes for the three months ended November 2, 2013 of $11.3 million. The decrease in the rate was due primarily to a $0.6 million reduction in the accrual for uncertain tax reserves during fiscal year 2014, which was the result of expired state related statutes of limitations.

Income tax expense for the nine months ended November 2, 2013 was $33.4 million, or 34.9% of pre-tax income, compared to $42.0 million, or 34.7% of pre-tax income, for the nine months ended October 27, 2012. The decrease in income tax expense was due primarily to the decrease in income before income taxes for the nine months ended November 2, 2013 of $25.1 million.

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.

 

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Liquidity and Capital Resources

The Company’s primary sources of liquidity are cash on hand of $23.7 million as of November 2, 2013, cash flows from operations, and borrowings under debt facilities, which consist of a $350.0 million credit facility and $375.0 million in senior notes.

The credit facility, which matures in November 2015, allows for up to $250.0 million of outstanding letters of credit. The credit facility charges interest based upon certain Company financial ratios and the interest spread was calculated at November 2, 2013 using LIBOR plus 125 basis points, or 1.42%. The credit facility contains restrictive 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 last four quarters of rent expense multiplied by a factor of eight, by the last four quarters of pre-tax income plus net interest expense and non-cash items, such as depreciation, amortization, and impairment expense. At November 2, 2013, the maximum leverage ratio allowed under the credit facility was 4.0, and the calculated leverage ratio was 1.85. The Company was in compliance with all covenants as of November 2, 2013 and expects to remain in compliance with all debt covenants for the next twelve months and foreseeable future. As of November 2, 2013, the Company had $16.6 million of standby letters of credit outstanding under the credit facility and availability under the credit facility was $333.4 million.

The senior notes have restrictive covenants that are similar to the Company’s credit facility, and had the following terms as of November 2, 2013:

 

Amount (in millions)				Type of Rate		Rate				Maturity Date
$	100.0			Fixed			5.31	%		July 2015
	125.0			Fixed			6.20	%		August 2017
	50.0			Fixed			5.70	%		November 2020
	100.0			Fixed			5.21	%		January 2022
$	375.0

On January 30, 2013, the Company paid the $17.8 million, 20-year variable rate, which bore interest at 0.20%, state bond facility which would have matured in October 2025. In connection with the debt extinguishment, the Company expensed unamortized fees of $0.1 million related to the state bond facility and recognized this charge as a loss on extinguishment of debt in the consolidated statement of income. Associated with this bond was an $18.0 million standby letter of credit outstanding under the credit facility, which was canceled upon payment of the $17.8 million state bond facility.

On July 12, 2012, the Company paid, upon maturity, $80.0 million of its floating rate senior note and $20.0 million of its 5.05% fixed rate senior note. The $80.0 million floating rate senior note had an associated interest rate swap, with a fixed interest rate of 5.2%, designated as a cash flow hedge of variable interest payments.

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 may utilize derivative financial instruments (interest rate swap agreements) to manage the interest rate risk associated with its borrowings. As of November 2, 2013, the Company does not have any interest rate swaps outstanding. The Company has not historically traded, and does not anticipate prospectively trading, in derivatives. Previous swap agreements were used to reduce the potential impact of increases in interest rates on variable rate debt.

Belk has also planned investments totaling approximately $600 million over a five-year period that began in late fiscal year 2011 for key strategic initiatives including store expansions and remodels, information technology, branding, and customer service enhancements. Through the third quarter of fiscal year 2014, the Company completed several store expansions and remodels and has implemented a new technology platform, which includes the replacement of a portion of our IT infrastructure and a new merchandising system. The Company is still on track to complete the remaining investments in the timeframe stated.

 

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Management believes that cash on hand of $23.7 million as of November 2, 2013, cash flows from operations and existing credit facilities will be sufficient to cover working capital needs, stock repurchases, dividends, capital expenditures, pension contributions and debt service requirements for the next twelve months and foreseeable future.

Net cash provided by operating activities was $46.3 million for the nine months ended November 2, 2013 compared to $64.8 million for the same period in fiscal year 2013. The decrease in cash flows from operating activities was principally due to a $16.5 million decrease in net income, a $7.0 million increase in pension contributions in fiscal year 2014, offset by a $9.1 million increase in depreciation and amortization expense.

Net cash used by investing activities was $176.1 million for the nine months ended November 2, 2013 compared to $131.3 million for the same period in fiscal year 2013. The increase in cash used by investing activities primarily resulted from increased purchases of property and equipment of $42.6 million.

Net cash used by financing activities was $115.6 million for the nine months ended November 2, 2013 compared to $246.4 million for the same period in fiscal year 2013. The decrease in cash used by financing activities primarily relates to the $100.0 million payment of senior notes and $33.9 million decrease in dividends paid in fiscal year 2013.

Contractual Obligations and Commercial Commitments

A table representing the scheduled maturities of the Company’s contractual obligations and commercial commitments as of February 2, 2013 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 February 2, 2013. 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.

New Accounting Pronouncements

In July 2013, the Financial Accounting Standards Board issued Accounting Standards Update No. 2013-11, “Income Taxes (Topic 740): Presentation of an Unrecognized Tax Benefit When a Net Operating Loss Carryforward, a Similar Tax Loss, or a Tax Credit Carryforward Exists (a consensus of the FASB Emerging Issues Task Force),” which requires presentation in the financial statements of an unrecognized tax benefit, or a portion of an unrecognized tax benefit as a reduction to a deferred tax asset for a net operating loss carryforward, a similar tax loss, or a tax credit carryforward. To the extent a net operating loss carryforward, a similar tax loss, or a tax credit carryforward is not available at the reporting date under the tax law of the applicable jurisdiction to settle any additional income taxes that would result from the disallowance of a tax position or the tax law of the applicable jurisdiction does not require the entity to use, and the entity does not intend to use, the deferred tax asset for such purpose, the unrecognized tax benefit should be presented in the financial statements as a liability and should not be combined with deferred tax assets. This guidance will be effective at the beginning of fiscal year 2015. The Company does not expect the adoption to have a material impact on the condensed consolidated financial statements.

In January 2013, the Financial Accounting Standards Board issued Accounting Standards Update No. 2013-04, “Liabilities (Topic 405): Obligations Resulting from Joint and Several Liability Arrangements for Which the Total Amount of the Obligation is Fixed at the Reporting Date (a consensus of the FASB Emerging Issues Task Force),” which requires measurement of obligations within the scope of this guidance to be the sum of the amount agreed to pay on the basis of arrangement among co-obligors and any additional amounts expected to pay on behalf of co-obligors, in addition to disclosure of the nature and amount of the obligation. This guidance will be effective at the beginning of fiscal year 2015. The Company does not expect the adoption to have a material impact on the condensed consolidated financial statements.

 

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Impact of Inflation or Deflation

Although the Company expects that operations will be influenced by general economic conditions, including rising food, fuel and energy prices, management does not believe that inflation has had a material effect on the Company’s results of operations. However, there can be no assurance that our business will not be affected by such factors in the future.

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 three and nine months ended November 2, 2013 from the disclosures contained in the Company’s Annual Report on Form 10-K for the fiscal year ended February 2, 2013.

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.

 

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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, cash flows 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 17, 2013.

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

Not applicable.

Item 3. Defaults Upon Senior Securities

Not applicable.

Item 4. Mine Safety Disclosures

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, filed on March 5, 1998 (File No. 333-42935)), as amended by the Certificate of Amendment to the Amended and Restated Certificate of Incorporation (incorporated by reference to Exhibit 3.1 of the Company’s Form 8-K, filed on June 5, 2012).
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, filed on April 15, 2004), as amended by the First Amendment to the Second Amended and Restated Bylaws (incorporated by reference to Exhibit 3.2 of the Company’s Form 8-K, filed on June 5, 2012).
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, filed on March 5, 1998 (File No. 333-42935)), as amended by the Certificate of Amendment to the Amended and Restated Certificate of Incorporation (incorporated by reference to Exhibit 3.1 of the Company’s Form 8-K, filed on June 5, 2012).
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, filed on April 15, 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.

 

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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.

 

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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.

 

				BELK, INC.
Dated: December 10, 2013				By:		/s/ Ralph A. Pitts
						Ralph A. Pitts
						Executive Vice President, General Counsel and
						Corporate Secretary
						(Authorized Officer of the Registrant)
				By:		/s/ Adam M. Orvos
						Adam M. Orvos
						Executive Vice President and Chief Financial Officer
						(Principal Financial Officer)

 

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