ex99_c2.htm

Exhibit (c)(2)

Project Number

PRELIMINARY MATERIALS PREPARED FOR DISCUSSION

JULY 2011

CONFIDENTIAL

Disclaimer

PROJECT NUMBER

CONFIDENTIAL

The information herein has been prepared by Lazard based upon information supplied by Number (the “Company”) or publicly available
information, and portions of the information herein may be based upon certain statements, estimates and forecasts provided by the
Company with respect to the anticipated future performance of the Company. We have relied upon the accuracy and completeness of the
foregoing information, and have not assumed any responsibility for any independent verification of such information or any independent
valuation or appraisal of any of the assets or liabilities of the Company, or any other entity, or concerning solvency or fair value of the
Company or any other entity. With respect to financial forecasts, we have assumed that they have been reasonably prepared in good faith
on bases reflecting the best currently available estimates and judgments as to the future financial performance of the Company. We assume
no responsibility for and express no view as to such forecasts or the assumptions on which they are based. The information set forth
herein is based upon economic, monetary, market and other conditions as in effect on, and the information made available to us as of, the
date hereof, unless indicated otherwise. These materials and the information contained herein are confidential and may not be disclosed
publicly or made available to third parties without the prior written consent of Lazard; provided, however, that you may disclose to any and
all persons the U.S. federal income tax treatment and tax structure of the transaction described herein and the portions of these materials
that relate to such tax treatment or structure. Lazard is acting as investment banker to the Special Committee of the Board of Directors of
the Company, and will not be responsible for and will not be deemed to have provided any tax, accounting, actuarial, legal or other
specialist advice.

Table of Contents

PROJECT NUMBER

CONFIDENTIAL

I EXECUTIVE SUMMARY	2
II FINANCIAL SUMMARY	4
III SUMMARY OF PRELIMINARY VALUATION ANALYSES	9
A Preliminary Public Trading Analysis	10
B Preliminary Selected Precedent Transactions Analysis	11
C Preliminary Discounted Cash Flow Analysis	12
IV PRELIMINARY RECAPITALIZATION ANALYSIS	14
APPENDIX

I Executive Summary

PROJECT NUMBER

Executive Summary

I EXECUTIVE SUMMARY

PROJECT NUMBER

n On March 10/11, 2011, members of the Schiffer/Gold family (the “Family”) and Leonard Green & Partners, L.P. (“LGP”)
sent to the Company’s Board of Directors (“Board”) and publicly disclosed a proposal to acquire Number in a “going-
private” transaction for $19.09 per share in cash

n The letter also stated that members of the Family are prepared to contribute a substantial portion of their existing Number stock
ownership and expect to increase their pro forma percentage ownership of Number as part of the proposed transaction and that it
has not made any commitment of exclusivity with LGP relating to a transaction

n In response, the Board formed a special committee of independent directors (the “Special Committee”) to consider the
proposal by the Family and LGP and to consider other proposals and strategic alternatives which might be available to
Number

n The Special Committee hired Morrison & Foerster LLP (“MoFo”) and Lazard Frères & Co. LLC (“Lazard”) to act as its
legal counsel and financial advisor, respectively

n On April 11, 2011, Number publicly disclosed the composition of the Special Committee and the names of its legal counsel
and financial advisor

n Beginning in May 2011, at the instruction of the Special Committee, Lazard commenced a targeted marketing process to
gauge potential interest in Number

n In total, Lazard contacted over 50 counterparties (33 strategics and 18 financial sponsors)

n By mid June 2011, six parties had executed the NDA and received a confidential information memorandum

n Three of these parties have not proceeded

Executive Summary (cont’d)

I EXECUTIVE SUMMARY

PROJECT NUMBER

n On June 17, 2011, process letters were sent to the remaining three potential bidders requesting non-binding proposals by
June 29

n Each of these three parties attended a chaperoned management presentation

n These parties also received access to the online data room, participated in chaperoned meetings with members of the Family and
took a store tour

n Two of the three parties submitted non-binding proposals

n On June 29, Bidder B submitted a proposal to acquire the Company for $20.09 per share; though the proposal did not require the
Family’s ongoing participation, Bidder B has subsequently communicated a preference to have the Family involved in some fashion

n On June 30, Bidder C submitted a proposal to acquire the Company for $21.50 per share; the proposal is conditioned upon the
Family’s ongoing participation

n On July 13, 2011, LGP signed a revised NDA and subsequently was supplied with a confidential information memorandum
and online data room access

n LGP publicly disclosed the revised NDA on July 14, 2011

n LGP also attended a chaperoned management presentation

n On July 20, 2011, Bidder D signed a NDA

n Bidder D was given a copy of the confidential information memorandum, but was not given access to the online data room

n Bidder D also attended a chaperoned management presentation, was given a store tour and attended a chaperoned meeting with the
Family

II Financial Summary

PROJECT NUMBER

Summary of Projections
($ in millions, except per share data)

PROJECT NUMBER

Source: Company provided projections and filings.

Note: Income statement figures exclude proposed buyout expenses.

(1) Adjusted EBITDA is defined as EBITDA excluding stock compensation expense.

(2) Excludes long-term investments in marketable securities. As of April 2, 2011 and July 2, 2011, Number had $11.2 million and $10.0 million of long-term investments in marketable securities,
respectively.

(3) In FY2011A, “other” includes cash flow items from operating, investing and financing activities that do not relate to taxes, capital expenditures, working capital or interest income; excludes change in
short-term investments. In projection years, “other” represents changes in deposits and other long-term assets.

(4) Excludes products sold greater than 99.99¢.

(5) Represents fiscal year YTD data.

II FINANCIAL SUMMARY

Summary of Recent Performance
($ in millions)

PROJECT NUMBER

Source: Company provided projections and data and public filings.

Note: Figures exclude proposed buyout expenses.

Note: Data for 7/2/11A is sourced from the Company’s preliminary June report. Data for 7/2/11P is sourced from the Company’s 4-year strategic model. Data for 6/26/10A is sourced from Company
reports and public filings.

II FINANCIAL SUMMARY

PROJECT NUMBER

Source: Capital IQ.

II FINANCIAL SUMMARY

Analysis At Various Prices
($ in millions, except per share data)

PROJECT NUMBER

II FINANCIAL SUMMARY

Source: Based on Company projections and data and public filings.

Note: Fully diluted shares based upon the treasury stock method.

Note: Income statement figures exclude proposed buyout expenses.

(1) Includes $10.0 million of long-term investments in marketable securities.

(2) Preliminary book equity value provided by Company.

(3) The long-term EPS growth rate used is 14% per Bloomberg.

Summary of Key Assumptions

II FINANCIAL SUMMARY

PROJECT NUMBER

Management’s four year projections, which were approved by the Special Committee on May 16th, 2011, are driven by the
following key assumptions.

Source: Company Management.

III Summary of Preliminary Valuation Analyses

PROJECT NUMBER

		n 7.0x - 8.5x LTM (7/2/11) EBITDA of $148.5 million
		n 6.5x - 8.0x CY2011P EBITDA of $150.9 million
		n 6.0x - 7.5x CY2012P EBITDA of $172.1 million
		n 14.0x - 17.0x CY2011P EPS of $1.09
		n 12.0x - 15.0x CY2012P EPS of $1.27
		n 8.0x - 10.0x LTM (7/2/11) EBITDA of $148.5 million
		n Terminal multiple of 7.0x - 8.5x LTM EBITDA of $239.1M as of 3/31/15 n WACC of 9.0% - 11.0%
		n 52-week trading range as of 7/22/11

Summary Of Preliminary Valuation Analyses

PROJECT NUMBER

III SUMMARY OF PRELIMINARY VALUATION ANALYSES

Note: Assumes $221.8 million of net cash, including 10.0 million of long-term investments in marketable securities, as of 7/2/11. Assumes 70.9 million basic shares including PSUs and RSUs outstanding
plus the dilutive effect of options.

(1) Not a valuation methodology - illustrative only.

LGP
offer
price: $19.09

Pre-
announcement
price: $16.68

Current
price:
$20.30

METHODOLOGY

IMPLIED EQUITY VALUE PER SHARE AS OF [DATE]

KEY ASSUMPTIONS

A Preliminary Public Trading Analysis

PROJECT NUMBER

Preliminary Public Trading Analysis
($ in millions, except per share data)

PROJECT NUMBER

A PRELIMINARY PUBLIC TRADING ANALYSIS

Source: Company filings, Factset, Capital IQ, Bloomberg and publicly available information.

(1) Represents Family Dollar’s current share price. On 2/15/11 (after market close), Nelson Peltz made an unsolicited offer to acquire the company for $55 to $60 per share. This offer was

subsequently rejected by the Board on March 3rd, 2011. Family Dollar’s unaffected EV/EBITDA multiples for LTM, CY11P, and CY12P were 7.2x, 6.6x, and 6.1x, respectively, as of 2/15/11.

Enterprise value includes $107 million of long-term investment securities.

(2) According to news reports, after several months of exploring strategic options Big Lots abandoned plans to sell itself on May 19th, 2011.

(3) Data uses publicly available information and IBES estimates as of that date.

B Preliminary Selected Precedent Transactions Analysis

PROJECT NUMBER

Preliminary Selected Precedent Transactions
($ in millions)

PROJECT NUMBER

Source: Company filings, Wall Street research, SDC, Capital IQ and Factset.

Note: Transactions since January 1st, 2009 represent selected control acquisitions of U.S. based retail corporations with transaction values greater than $500 million; excludes distressed and e-commerce
transactions.

(1) Only includes selected transactions since January 1st, 2009. Excludes the proposed Peltz/Family Dollar transaction.

(2) Represents the midpoint of the $55 to $60 unsolicited offer price per share range by Nelson Peltz on February 15th, 2011. This offer was subsequently rejected by the Board on March 3rd, 2011.

Date Announced	11/04	2/07	3/07	2/10	4/10	5/10	8/10	9/10	10/10	11/10	12/10	2/11	6/11
Enterprise Value	$1,033	$822	$7,021	$1,075	$1,027	$570	$577	$4,027	$1,656	$2,683	$1,577	$7,361	$2,700
EV/LTM Sales	1.6x	0.4x	0.8x	0.6x	0.7x	1.1x	1.0x	1.6x	1.6x	1.6x	0.8x	0.9x	0.2x
LTM EBITDA Margin	16.4%	3.7%	7.0%	3.9%	10.9%	14.2%	12.1%	17.8%	20.7%	18.3%	10.2%	9.5%	3.5%

B PRELIMINARY SELECTED PRECEDENT TRANSACTIONS ANALYSIS

Mean(1): 8.6x

Median(1): 7.7x

(2)

C Preliminary Discounted Cash Flow Analysis

PROJECT NUMBER

Unlevered Free Cash Flow
($ in millions)

C PRELIMINARY DISCOUNTED CASH FLOW ANALYSIS

PROJECT NUMBER

Source: Company provided estimates.

(1) Other includes change in deposits and other long-term assets.

Preliminary Discounted Cash Flow Analysis
($ in millions, except per share data)

C PRELIMINARY DISCOUNTED CASH FLOW ANALYSIS

PROJECT NUMBER

Note: Cash flows discounted using mid-period convention.

(1) Includes expected cash balance of $221.8 million, including $10.0 million of long-term investments in marketable securities, as of July 2nd, 2011.

(2) Assumes 70.9 million basic shares including PSUs and RSUs outstanding plus the dilutive effect of options.

IV Preliminary Recapitalization Analysis

PROJECT NUMBER

Potential Return of Capital
($ in millions, except per share data)

PROJECT NUMBER

Source: Company projections.

(1) Based on 285 stores and projected to increase along with store growth.

(2) Basic shares outstanding excludes RSUs and PSUs.

IV PRELIMINARY RECAPITALIZATION ANALYSIS

PROJECT NUMBER

IV PRELIMINARY RECAPITALIZATION ANALYSIS

Illustrative Pro Forma Dividend Analysis
($ in millions, except per share data)

Source: Company provided data and Factset.

Note: Assumes options exercise prices are reset at the exercise price less the dividend amount.

(1) Fully diluted shares based on current stock price as of $20.30 as of 7/22/11.

(2) At 2.5x leverage, assumes interest expense of L + 450 for term loan; at 3.5x leverage, assumes L + 500 for term loan; at 4.5x leverage, assumes L + 500 for 3.5x of term loan and 10% for 1.0x of senior
debt. LIBOR floor of 1.50% in all cases and tax rate of 37.5%.

(3) Represents status quo CY2012 after-tax interest income as projected in the Company’s 4-year strategic model; assumes a tax rate of 37.5%.

(4) CY2012 EBITDA of $173 million (IBES) as of July 20th, 2011.

Appendix

PROJECT NUMBER

WACC Methodology and Critical Assumptions

APPENDIX

PROJECT NUMBER

VARIABLE	ASSUMPTIONS

Risk Free Rate	n 2.99% n 10-year U.S. Treasury yield as of 7/22/2011
Beta	n Median levered and unlevered beta of 0.84 and 0.80, respectively (as of June 30, 2011) n Based on BARRA predictive betas for identified reference group
Market Risk Premium	n 6.7% n Based on simple difference of historical arithmetic mean returns from 1926 - 2011
Equity Size Premium	n 1.82% n Per 2011 Ibbotson SBBI Valuation Yearbook for companies with a market capitalization between $1.2bn - $1.8bn
Pre-Tax Cost of Debt	n Range from 4.0% to 8.0% n Based on analysis of yields and leverage levels of selected reference companies
Effective Tax Rate	n 37.5% n Based on management projections
Debt/Capitalization	n Reflects median debt/capitalization range for selected reference companies over the past 10 years

Preliminary Weighted Average Cost of Capital Analysis

APPENDIX

PROJECT NUMBER

Source: Public filings, Bloomberg, Ibbotson, Barra, Capital IQ and Factset.

Note: Total Capital = Net Debt + Equity Value.

Note: In situations where net debt is negative, the ratio of Net Debt/Equity Value is assumed to be zero for the purpose of unlevering beta. Therefore the unlevered beta is set to equal the levered beta.

(1) Represents Family Dollar’s current share price. On 2/15/11, Nelson Peltz made an unsolicited offer to acquire the company. This offer was subsequently rejected by the Board on March 3rd, 2011.

(2) Barra Predicted Beta as of 6/30/2011.

(3) Unlevered Beta = Levered Beta / [1 + (1 - Tax Rate) * Debt / Equity Value].

(4) Based on company filings and Wall Street research.

(5) Levered Beta = Unlevered Beta * [1 + (1 - Tax Rate) * Debt / Equity Value].

(6) Cost of Equity = Rr + Levered Beta * Equity Risk Premium + Equity Size Premium.

Premiums Paid Analysis

APPENDIX

PROJECT NUMBER

Source: Capital IQ.

Note: Screening criteria includes only closed transactions greater than $500 million that were announced since January 1, 2009; where target was U.S. based and consideration paid was all cash.

(1) YTD through July 11, 2011.