Family Dollar Reports First Quarter Results

Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this press release. The Company does not undertake to update or revise these forward-looking statements even if experience or future changes make it clear that projected results expressed or implied in such statements will not be realized, except as may be required by law.

Earnings Conference Call Information

The Company plans to host a conference call with investors today, January 3, 2013, at 10:00 a.m. ET to discuss the results. The Company will also provide an update on various business initiatives and discuss plans and expectations for the rest of fiscal 2013. After some prepared remarks by management, participants will have an opportunity to ask questions. The Company’s responses to questions, as well as other matters discussed during the conference call, may include information that has not been disclosed previously.

If you wish to participate, please call [phone] for domestic US calls and [phone] for international calls at least 10 minutes before the call is scheduled to begin. The passcode for the conference call is 7056645 or “FAMILY DOLLAR.”

A live webcast of the conference call can be accessed at the following link:

http://www.familydollar.com/investors.aspx?p=irhome .

A replay of the webcast will be available at the address noted above after 11:00 a.m. ET, January 3, 2012.

About Family Dollar

For more than 50 years, Family Dollar has been providing value and convenience to customers in easy-to-shop neighborhood locations. Family Dollar’s mix of name brands and quality, private brand merchandise appeals to shoppers in more than 7,500 stores in rural and urban settings across 45 states. Helping families save on the items they need with everyday low prices creates a strong bond with customers, who often refer to their neighborhood store as “my Family Dollar.” Headquartered in Matthews, North Carolina, just outside of Charlotte, Family Dollar is a Fortune 300, publicly held company with common stock traded on the New York Stock Exchange under the symbol FDO. For more information, please visit www.familydollar.com.

FAMILY DOLLAR STORES, INC., AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
			For the First Quarter Ended*
(in thousands, except per share amounts)			November 24, 2012			% of Net Sales				November 26, 2011			% of Net Sales
Net sales			$	2,421,688		100.00	%			$	2,148,287		100.00	%
Cost of sales				1,594,894		65.86	%				1,390,715		64.74	%
Gross profit				826,794		34.14	%				757,572		35.26	%
Selling, general and administrative expenses				699,825		28.90	%				627,585		29.21	%
Operating profit				126,969		5.24	%				129,987		6.05	%
Investment income				75		0.00	%				234		0.01	%
Interest expense				7,122		0.29	%				6,712		0.31	%
Other income				6,362		0.26	%				4,923		0.23	%
Income before income taxes				126,284		5.21	%				128,432		5.98	%
Income taxes				46,005		1.90	%				48,082		2.24	%
Net income			$	80,279		3.32	%			$	80,350		3.74	%
Net income per common share - basic			$	0.69						$	0.68
Weighted average shares - basic				115,521							117,649
Net income per common share - diluted			$	0.69						$	0.68
Weighted average shares - diluted				116,197							118,591
Dividends declared per common share			$	0.21						$	0.18
*Certain reclassifications of the amounts for fiscal 2012 have been made to conform to the presentation for fiscal 2013.

FAMILY DOLLAR STORES, INC., AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Unaudited)
				As of
				November 24,			November 26,
(in thousands, except per share and share amounts)				2012			2011
Assets
Current assets:
	Cash and cash equivalents			$	112,267		$	103,706
	Short-term investment securities				9,560			51,630
	Restricted cash and investments				80,884			—
	Merchandise inventories				1,592,068			1,301,577
	Deferred income taxes				71,557			56,477
	Income tax refund receivable				—			7,181
	Prepayments and other current assets				75,082			77,397
		Total current assets			1,941,418			1,597,968
Property and equipment, net					1,636,189			1,355,287
Investment securities					23,489			94,543
Other assets					86,350			73,353
Total assets				$	3,687,446		$	3,121,151
Liabilities and Shareholders' Equity
Current liabilities:
	Short-term borrowings			$	209,000		$	75,000
	Current portion of long-term debt				16,200			16,200
	Accounts payable				752,231			719,175
	Accrued liabilities				316,347			271,262
	Income taxes				32,618			7,753
		Total current liabilities			1,326,396			1,089,390
Long-term debt					500,158			516,207
Other liabilities					277,738			263,245
Deferred gain					154,611			—
Deferred income taxes					75,950			104,608
Commitments and contingencies
Shareholders' equity:
	Preferred stock, $1 par; authorized and unissued 500,000 shares				—			—
	Common stock, $.10 par; authorized 600,000,000 shares				11,993			11,897
	Capital in excess of par				282,957			243,414
	Retained earnings				1,290,436			941,572
	Accumulated other comprehensive loss				(1,795)			(6,697)
	Common stock held in treasury, at cost				(230,998)			(42,485)
		Total shareholders' equity			1,352,593			1,147,701
Total liabilities and shareholders' equity				$	3,687,446		$	3,121,151

FAMILY DOLLAR STORES, INC., AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
					For the First Quarter Ended
(in thousands)					November 24, 2012				November 26, 2011
Cash flows from operating activities:
	Net income				$	80,279			$	80,350
	Adjustments to reconcile net income to net cash provided by operating activities:
		Depreciation and amortization				57,175				49,135
		Amortization of deferred gain				(2,857	)			—
		Deferred income taxes				17,919				28,595
		Excess tax benefits from stock-based compensation				(12,654	)			(10,572	)
		Stock-based compensation				4,413				5,423
		Loss on disposition of property and equipment,				2,860				7,173
		including impairment
		Changes in operating assets and liabilities:
			Merchandise inventories			(165,906	)			(146,917	)
			Prepayments and other current assets			(27,472	)			(5,953	)
			Other assets			(2,073	)			616
			Accounts payable and accrued liabilities			10,003				(54,325	)
			Income taxes			761				5,924
			Other liabilities			9,784				(6,172	)
						(27,768	)			(46,723	)
Cash flows from investing activities:
	Purchases of investment securities					(10,720	)			(12,182	)
	Sales of investment securities					7,542				68,592
	Net change in restricted cash					46,009				—
	Capital expenditures					(196,386	)			(130,862	)
	Net proceeds from sale-leaseback					1,132				—
	Proceeds from dispositions of property and equipment					162				96
						(152,261	)			(74,356	)
Cash flows from financing activities:
	Revolving credit facility borrowings					598,000				173,000
	Repayment of revolving credit facility borrowings					(404,000	)			(98,000	)
	Repayment of long-term debt					(16,200	)			(16,200	)
	Repurchases of common stock					(24,980	)			(27,435	)
	Change in cash overdrafts					43,138				41,819
	Proceeds from exercise of employee stock options					15,578				20,752
	Excess tax benefits from stock-based compensation					12,654				10,572
	Payment of dividends					(24,227	)			(21,128	)
						199,963				83,380
Net change in cash and cash equivalents						19,934				(37,699	)
Cash and cash equivalents at beginning of period						92,333				141,405
Cash and cash equivalents at end of period					$	112,267			$	103,706

FAMILY DOLLAR STORES, INC., AND SUBSIDIARIES
Selected Additional Information
NET SALES BY CATEGORY:
		For the First Quarter Ended
		November 24,				November 26,
(in thousands)		2012				2011				% Change
Consumables		$	1,789,285			$	1,509,536			18.5	%
Home products			242,335				246,000			-1.5	%
Apparel and accessories			178,026				186,214			-4.4	%
Seasonal and electronics			212,042				206,537			2.7	%
TOTAL		$	2,421,688			$	2,148,287			12.7	%
STORES IN OPERATION:
		For the First Quarter Ended
		November 24,				November 26,
		2012				2011
Beginning Store Count			7,442				7,023
New Store Openings			125				101
Store Closings			(1	)			(4	)
Ending Store Count			7,566				7,120
Total Square Footage (000s)			64,927				60,846
Total Selling Square Footage (000s)			54,245				50,760

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