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Family Dollar Reports Record Sales And Earnings 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, October 9, 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 fiscal 2014. 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 (800) 890-0881 for domestic US calls and (719) 325-2295 for international calls at least 10 minutes before the call is scheduled to begin. The passcode for the conference call is 3827795 or “FAMILY DOLLAR.”

A live webcast of the conference call with accompanying slides can be accessed at the following link.

http://investor.familydollar.com/investors-relations/default.aspx

A replay of the webcast will be available at the address noted above after 11:00 a.m. ET, October 9, 2013.

About Family Dollar

For more than 53 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 7,900 stores in rural and urban settings across 46 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 Fourth Quarter Ended*
(in thousands, except per share amounts)

August 31, 2013
 

% of Net Sales

August 25, 2012
 

% of Net Sales
 
Net sales $ 2,502,266 100.00 % $ 2,364,125 100.00 %
 
Cost of sales   1,633,823   65.29 %   1,564,422   66.17 %
 
Gross profit 868,443 34.71 % 799,703 33.83 %
 
Selling, general and administrative expenses 712,852 28.49 % 662,583 28.03 %
 
Litigation charge   -   0.00 %   11,500   0.49 %
 
Operating profit 155,591 6.22 % 125,620 5.31 %
 
Investment income 147 0.01 % 211 0.01 %

 
Interest expense 5,920 0.24 % 6,318 0.27 %
 
Other income   7,222   0.29 %   7,037   0.30 %
 
Income before income taxes 157,040 6.28 % 126,550 5.35 %
 
Income taxes   54,827   2.19 %   45,619   1.93 %
 
Net income $ 102,213 4.08 % $ 80,931 3.42 %
 
Net income per common share - basic $ 0.89 $ 0.70
Weighted average shares - basic 115,040 116,396
 
Net income per common share - diluted $ 0.88 $ 0.69
Weighted average shares - diluted 115,610 117,267
 
Dividends declared per common share $ 0.26
 
*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 STATEMENTS OF INCOME
(Unaudited)
       
 
For the Year Ended*
(in thousands, except per share amounts)

August 31, 2013 (53 Weeks)
 

% of Net Sales

August 25, 2012 (52 Weeks)
 

% of Net Sales
 
Net sales $ 10,391,457 100.00 % $ 9,331,005 100.00 %
 
Cost of sales   6,836,712   65.79 %   6,071,058   65.06 %
 
Gross profit 3,554,745 34.21 % 3,259,947 34.94 %
 
Selling, general and administrative expenses 2,866,788 27.59 % 2,584,234 27.70 %
 
Litigation charge   -   0.00 %   11,500   0.12 %
 
Operating profit 687,957 6.62 % 664,213 7.12 %
 
Investment income 422 0.00 % 927 0.01 %
 
Interest expense 25,888 0.25 % 25,090 0.27 %
 
Other income   28,206   0.27 %   23,888   0.26 %
 
Income before income taxes 690,697 6.65 % 663,938 7.12 %
 
Income taxes   247,122   2.38 %   241,698   2.59 %
 
Net income $ 443,575 4.27 % $ 422,240 4.53 %
 
Net income per common share - basic $ 3.85 $ 3.61
Weighted average shares - basic 115,252 117,097
 
Net income per common share - diluted $ 3.83 $ 3.58
Weighted average shares - diluted 115,805 118,058
 
Dividends declared per common share $ 0.94 $ 0.60
 
*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
(in thousands, except per share and share amounts) August 31, 2013 August 25, 2012

Assets
Current assets:
Cash and cash equivalents $ 140,999 $ 92,333
Short-term investment securities 4,000 6,271
Restricted cash and investments 35,443 126,281
Merchandise inventories 1,467,016 1,426,163
Deferred income taxes 34,510 69,518
Income tax refund receivable 13,485
Prepayments and other current assets   161,552     47,604  
Total current assets 1,857,005 1,768,170
 
Property and equipment, net 1,732,544 1,496,360
Investment securities 22,977 23,720
Other assets   97,335     84,815  
 
Total assets $ 3,709,861   $ 3,373,065  
 

Liabilities and Shareholders' Equity
Current liabilities:
Short-term borrowings $ $ 15,000
Current portion of long-term debt 16,200 16,200
Accounts payable 723,200 674,202
Accrued liabilities 335,854 328,398
Income taxes   4,968     31,857  

Total current liabilities
1,080,222 1,065,657
 
Long-term debt 500,275 516,320
Other liabilities 289,195 268,341
Deferred gain 218,088 156,866
Deferred income taxes 23,027 68,254
Commitments and contingencies
 
Shareholders' Equity:

Preferred stock, $1 par; authorized and unissued 500,000 shares

Common stock, $.10 par; authorized 600,000,000 shares
12,009 11,913
Capital in excess of par 299,865 259,189
Retained earnings 1,569,624 1,234,384
Accumulated other comprehensive loss (2,195 ) (1,841 )
Common stock held in treasury, at cost   (280,249 )   (206,018 )
Total shareholders' equity   1,599,054     1,297,627  
 
Total liabilities and shareholders' equity $ 3,709,861   $ 3,373,065  
 

 
FAMILY DOLLAR STORES, INC., AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
   
For the Year Ended*
(in thousands)

August 31, 2013 (53 Weeks)

August 25, 2012 (52 Weeks)
Cash flows from operating activities:
Net income $ 443,575 $ 422,240
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization 239,485 213,835
Amortization of deferred gain (15,123 ) (3,087 )
Deferred income taxes 3,693 (24,321 )
Excess tax benefits from stock-based compensation (13,231 ) (12,345 )
Stock-based compensation 16,258 15,902

Loss on disposition of property and equipment, including impairment
5,826 11,429
Changes in operating assets and liabilities:
Merchandise inventories (40,853 ) (271,503 )
Prepayments and other current assets (113,920 ) 23,838
Other assets (449 ) (2,506 )
Accounts payable and accrued liabilities (32,656 ) (36,497 )
Income taxes (40,374 ) 37,209
Other liabilities 19,742 (4,823 )
   
Net cash provided by (used in) operating activities   471,973     369,371  
 
Cash flows from investing activities:
Purchases of investment securities (44,278 ) (211,142 )
Sales of investment securities 45,728 334,915
Net change in restricted cash 79,924 (80,389 )
Capital expenditures (744,428 ) (603,313 )
Net proceeds from sale-leaseback 345,249 359,663
Proceeds from dispositions of property and equipment 3,214 1,955
   
Net cash provided by (used in) investing activities   (314,591 )   (198,311 )
 
Cash flows from financing activities:
Short-term borrowings 2,060,000 362,300
Repayment of short-term borrowings (2,075,000 ) (347,300 )
Repayment of long-term debt (16,200 ) (16,200 )
Repurchases of common stock (74,954 ) (191,573 )
Change in cash overdrafts 71,745 26,786
Proceeds from exercise of employee stock options 20,796 24,900
Excess tax benefits from stock-based compensation 13,231 12,345
Payment of dividends (108,334 ) (91,390 )
     
Net cash provided by (used in) financing activities   (108,716 )     (220,132 )
 
Net change in cash and cash equivalents 48,666 (49,072 )
Cash and cash equivalents at beginning of period   92,333     141,405  
Cash and cash equivalents at end of period $ 140,999   $ 92,333  
 
Supplemental disclosure of cash flow information:

Purchases of property and equipment awaiting processing for payment, included in accounts payable
$ 57,379 $ 54,609
Cash paid during the period for:
Interest, net of amounts capitalized 21,895 24,001
Income taxes, net of refunds 272,748 234,740
 
*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
Selected Additional Information
         
 
RECONCILIATION OF NON-GAAP DISCLOSURES
(in thousands, except per share amounts)
 
For the Fourth Quarter Ended August 31, 2013
  GAAP  

% of Net Sales
Adjustment Adjusted  

% of Net Sales
 
Gross profit $ 868,443 34.71 % 4,953 $ 863,490 34.51 %
Operating profit 155,591 6.22 % 4,953 150,638 6.02 %
Income before income taxes 157,040 6.28 % 4,953 152,087 6.08 %
Income taxes   54,827   2.19 %   1,778     53,049   2.12 %
Net income $ 102,213 4.08 % $ 3,175 $ 99,038 3.96 %
 
Net income per common share - diluted $ 0.88 $ 0.86
Weighted average shares - diluted 115,610 115,610
 
 
For the Year Ended August 31, 2013
  GAAP  

% of Net Sales
Adjustment Adjusted  

% of Net Sales
 
Gross profit $ 3,554,745 34.21 % 4,953 $ 3,549,792 34.16 %
Operating profit 687,957 6.62 % 4,953 683,004 6.57 %
Income before income taxes 690,697 6.65 % 4,953 685,744 6.60 %
Income taxes   247,122   2.38 %   1,778     245,344   2.36 %
Net income $ 443,575 4.27 % $ 3,175 $ 440,400 4.24 %
 
Net income per common share - diluted $ 3.83 $ 3.80
Weighted average shares - diluted 115,805 115,805
 
 
For the Fourth Quarter Ended August 25, 2012
  GAAP  

% of Net Sales
Adjustment Adjusted  

% of Net Sales
 
Litigation charge $ 11,500 0.49 % (11,500 ) $ - 0.00 %
Operating profit 125,620 5.31 % 11,500 137,120 5.80 %
Income before income taxes 126,550 5.35 % 11,500 138,050 5.84 %
Income taxes   45,619   1.93 %   4,360     49,979   2.11 %
Net income $ 80,931 3.42 % $ 7,140 $ 88,071 3.73 %
 
Net income per common share - diluted $ 0.69 $ 0.75
Weighted average shares - diluted 117,267 117,267
 
 
For the Year Ended August 25, 2012
  GAAP  

% of Net Sales
Adjustment Adjusted  

% of Net Sales
 
Litigation charge $ 11,500 0.12 % (11,500 ) $ - 0.00 %
Operating profit 664,213 7.12 % 11,500 675,713 7.24 %
Income before income taxes 663,938 7.12 % 11,500 675,438 7.24 %
Income taxes   241,698   2.59 %   4,360     246,058   2.64 %
Net income $ 422,240 4.53 % $ 7,140 $ 429,380 4.60 %
 
Net income per common share - diluted $ 3.58 $ 3.64
Weighted average shares - diluted 118,058 118,058
 

 
FAMILY DOLLAR STORES, INC., AND SUBSIDIARIES
Selected Additional Information
     
 
NET SALES BY CATEGORY:

For the Fourth Quarter Ended
August 31, August 25,
(in thousands) 2013 2012 % Change
Consumables $ 1,855,789 $ 1,712,936 8.3 %
Home products 224,837 224,642 0.1 %
Apparel and accessories 193,946 203,909 -4.9 %
Seasonal and electronics   227,694     222,638   2.3 %
TOTAL $ 2,502,266 $ 2,364,125 5.8 %
 

For the Year Ended
August 31, August 25,
(in thousands)

2013 (53 Weeks)

2012 (52 Weeks)
% Change
Consumables $ 7,523,289 $ 6,436,719 16.9 %
Home products 1,053,670 1,067,541 -1.3 %
Apparel and accessories 785,384 822,839 -4.6 %
Seasonal and electronics   1,029,114     1,003,906   2.5 %
TOTAL $ 10,391,457 $ 9,331,005 11.4 %
 
 
STORES IN OPERATION:

For the Year Ended
August 31, August 25,

2013 (53 Weeks)

2012 (52 Weeks)
% Change
Beginning Store Count 7,442 7,023 6.0 %
New Store Openings 500 475 5.3 %
Store Closings   (26 )   (56 ) -53.6 %
Ending Store Count 7,916 7,442 6.4 %
Total Square Footage (000s) 68,023 63,779 6.7 %
Total Selling Square Footage (000s) 56,846 53,206 6.8 %
 

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