Belk, Inc.

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 August 4, 2007


o		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 o No

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

Large accelerated filer o Accelerated filer þ Non-accelerated filer o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

o Yes þ No

At September 4, 2007, the registrant had issued and outstanding 47,853,035 shares of class A common stock and 1,716,120 shares of class B common stock.

This Report Contains Forward-Looking Statements

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

Forward-looking statements include information concerning possible or assumed future results from merchandising, marketing and advertising in our stores and through the Internet, our ability to be competitive in the retail industry, our ability to execute profitability and efficiency strategies, our ability to execute our growth strategies, anticipated benefits from the opening of new distribution facilities, the expected benefit of our new systems and technology, and the anticipated benefits from our acquisitions and the sale of our proprietary credit card portfolio. These forward-looking statements are subject to certain risks and uncertainties that may cause our actual results to differ significantly from the results we discuss in such forward-looking statements. We believe that these forward-looking statements are reasonable. However, you should not place undue reliance on such statements.

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

•		General economic, political and business conditions, nationally and in our market areas, including rates of economic growth, interest rates, inflation or deflation, consumer credit availability, levels of consumer debt and bankruptcies, tax rates and policy, unemployment trends, potential acts of terrorism and threats of such acts and other matters that influence consumer confidence and spending;

•		Our ability to anticipate the demands of our customers for a wide variety of merchandise and services, including our predictions about the merchandise mix, quality, style, service, convenience and credit availability of our customers;

•		Unseasonable and extreme weather conditions in our market areas;

•		Seasonal fluctuations in quarterly net income due to the significant portion of our revenues generated during the holiday season in the fourth fiscal quarter and the significant amount of inventory we carry during that time;

•		Competition from other department and specialty stores and other retailers, including luxury goods retailers, general merchandise stores, Internet retailers, mail order retailers and off-price and discount stores, in the areas of price, merchandise mix, quality, style, service, convenience, credit availability and advertising;

•		Our ability to effectively use advertising, marketing and promotional campaigns to generate high customer traffic in our stores;

•		Our ability to find qualified vendors from which to source our merchandise and our ability to access products in a timely and efficient manner from a wide variety of domestic and international vendors;

•		The income we receive from, and the timing of receipt of, payments from GE Money Bank, an affiliate of GE Consumer Finance, the operator of our private label credit card business, which depends upon the amount of purchases made through the proprietary credit cards, the level of finance charge income generated from the credit card portfolio, the number of new accounts generated, changes in customers’ credit card use, and GE’s ability to extend credit to our customers;

•		Our ability to correctly anticipate the appropriate levels of inventories during the year;

•		Our ability to manage our expense structure;

•		Our ability to realize the planned efficiencies from our acquisitions and effectively integrate and operate the acquired stores and businesses, including our fiscal year 2006 acquisition of Proffitt’s and McRae’s stores, our fiscal year 2007 acquisition of Parisian stores and our fiscal year 2007 acquisition of the assets of Migerobe and commencement of our new fine jewelry business;

•		Our ability to continue to increase our number of stores, including the availability of existing retail stores or store sites on acceptable terms and our ability to successfully execute the Company’s retailing concept in new markets and geographic regions; and

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

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 3, 2007 that we filed with the SEC on April 12, 2007. Our other filings with the SEC may contain additional information concerning the risks and uncertainties listed above, and other factors you may wish to consider. Upon request, we will provide copies of these filings to you free of charge.

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

BELK, INC. AND SUBSIDIARIES

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


	Three Months Ended						Six Months Ended
	August 4,			July 29,			August 4,			July 29,
	2007			2006			2007			2006
Revenues	$	879,604		$	731,972		$	1,784,089		$	1,484,497
Cost of goods sold (including occupancy and buying expenses)		617,828			487,562			1,230,417			992,392
Selling, general and administrative expenses		236,510			192,385			490,790			400,280
Asset impairment and store closing costs		114			(116	)		8,731			1,651
Gain on sale of property and equipment		763			478			1,485			928

Operating income		25,915			52,619			55,636			91,102
Interest expense, net		(14,259	)		(11,350	)		(28,880	)		(21,239	)
Gain (loss) on sale of investments		(61	)		(61	)		(61	)		1,616

Income before income taxes		11,595			41,208			26,695			71,479
Income tax expense		4,100			14,900			9,700			25,700

Net income	$	7,495		$	26,308		$	16,995		$	45,779


Basic and diluted income per share	$	0.15		$	0.52		$	0.34		$	0.90


Weighted average shares outstanding:
Basic		49,616,895			50,359,923			49,930,223			51,118,879
Diluted		49,711,982			50,359,923			49,977,767			51,118,879

See accompanying notes to unaudited consolidated financial statements.

BELK, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS
(unaudited)
(dollars in thousands)


	August 4,			February 3,
	2007			2007
Assets
Current assets:
Cash and cash equivalents	$	110,641		$	171,239
Accounts receivable, net		61,080			61,434
Merchandise inventory		914,171			931,870
Prepaid income taxes, expenses and other current assets		39,020			32,926

Total current assets		1,124,912			1,197,469
Investment securities		4,754			5,317
Property and equipment, net of accumulated depreciation and amortization of $1,002,357 and $931,573 as of August 4, 2007 and February 3, 2007, respectively		1,260,810			1,280,426
Goodwill		318,417			310,126
Deferred income taxes		1,426			—
Other assets		57,779			55,277

Total assets	$	2,768,098		$	2,848,615


Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable	$	270,983		$	309,722
Accrued liabilities		168,236			166,625
Accrued income taxes		2,074			22,686
Deferred income taxes		7,392			14,020
Current installments of long-term debt and capital lease obligations		5,113			4,594

Total current liabilities		453,798			517,647
Deferred income taxes		—			13,835
Long-term debt and capital lease obligations, excluding current installments		723,091			729,748
Interest rate swap liability		1,556			1,435
Deferred compensation and other noncurrent liabilities		283,277			259,928

Total liabilities		1,461,722			1,522,593


Stockholders’ equity:
Preferred stock		—			—
Common stock, 49.5 and 50.0 million shares issued and outstanding as of August 4, 2007 and February 3, 2007, respectively		495			500
Paid-in capital		486,766			507,127
Retained earnings		898,461			901,378
Accumulated other comprehensive loss		(79,346	)		(82,983	)

Total stockholders’ equity		1,306,376			1,326,022

Total liabilities and stockholders’ equity	$	2,768,098		$	2,848,615

See accompanying notes to unaudited consolidated financial statements.

BELK, INC. AND SUBSIDIARIES

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


										Accumulated
										Other
	Common			Paid-in			Retained			Comprehensive
	Stock			Capital			Earnings			Income (Loss)			Total
Balance at February 3, 2007	$	500		$	507,127		$	901,378		$	(82,983	)	$	1,326,022
Comprehensive income:
Net income		—			—			16,995			—			16,995
Unrealized loss on investments, net of $210 income tax benefit		—			—			—			(353	)		(353	)
Unrealized gain on interest rate swaps, net of $11 income tax expense		—			—			—			18			18
Reclassification adjustment for interest rate swap dedesignation included in net income, net of $7 income tax benefit		—			—			—			(51	)		(51	)
Defined benefit expense, net of $2,389 income taxes		—			—			—			4,023			4,023

Total comprehensive income														20,632

Adoption of FIN 48 adjustment		—			—			185			—			185
Cash dividends		—			—			(20,097	)		—			(20,097	)
Issuance of stock-based compensation		—			(1,296	)		—			—			(1,296	)
Stock-based compensation expense		—			4,781			—			—			4,781
Common stock issued		3			372			—			—			375
Repurchase and retirement of common stock		(8	)		(24,218	)		—			—			(24,226	)

Balance at August 4, 2007	$	495		$	486,766		$	898,461		$	(79,346	)	$	1,306,376

See accompanying notes to unaudited consolidated financial statements.

BELK, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited)
(dollars in thousands)


	Six Months Ended
	August 4,			July 29,
	2007			2006
Cash flows from operating activities:
Net income	$	16,995		$	45,779
Adjustments to reconcile net income to net cash provided by operating activities:
Asset impairment and store closing costs		8,731			1,651
Deferred income taxes		2,912			1,511
Depreciation and amortization expense		80,936			66,036
Stock-based compensation expense		4,781			3,999
(Gain) loss on sale of property and equipment		(437	)		120
Amortization of deferred gain on sale and leaseback		(1,048	)		(1,048	)
(Gain) loss on sale of investments		61			(1,616	)
(Increase) decrease in:
Accounts receivable, net		348			(2,132	)
Merchandise inventory		17,699			(14,548	)
Prepaid expenses and other assets		(11,513	)		(7,675	)
Increase (decrease) in:
Accounts payable and accrued liabilities		(68,164	)		8,328
Accrued income taxes		(20,612	)		(36,092	)
Deferred compensation and other liabilities		9,846			7,203

Net cash provided by operating activities		40,535			71,516

Cash flows from investing activities:
Proceeds from sales of investments		—			2,225
Purchases of property and equipment		(102,835	)		(113,328	)
Proceeds from sales of property and equipment		45,444			3,416

Net cash used by investing activities		(57,391	)		(107,687	)

Cash flows from financing activities:
Proceeds from issuance of long-term debt		355			8,522
Principal payments on long-term debt and capital lease obligations		(2,156	)		(15,195	)
Stock compensation tax benefit		2,382			1,102
Dividends paid		(20,097	)		(18,202	)
Repurchase of common stock		(24,226	)		(39,097	)

Net cash used by financing activities		(43,742	)		(62,870	)

Net decrease in cash and cash equivalents		(60,598	)		(99,041	)
Cash and cash equivalents at beginning of period		171,239			308,817

Cash and cash equivalents at end of period	$	110,641		$	209,776


Supplemental schedule of noncash investing and financing activities:
Increase in property and equipment through accrued purchases	$	35,501		$	28,124
Decrease in property and equipment through adjustment of Parisian goodwill		8,704			—
Decrease in property and equipment through adjustment of Parisian capital lease obligation		4,315			—

See accompanying notes to unaudited consolidated financial statements.

BELK, INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

(1) Basis of Presentation

The accompanying unaudited consolidated financial statements of Belk, Inc. and subsidiaries (the “Company”) have been prepared in accordance with the instructions to Form 10-Q promulgated by the United States Securities and Exchange Commission and should be read in conjunction with our Annual Report on Form 10-K for the fiscal year ended February 3, 2007. 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 six months ended August 4, 2007 and July 29, 2006 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.

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 as reflected in the table below.


	Three Months Ended						Six Months Ended
	August 4,			July 29,			August 4,			July 29,
Merchandise Areas	2007			2006			2007			2006
Women’s		40	%		41	%		40	%		40	%
Cosmetics, Shoes and Accessories		28			26			29			28
Men’s		17			17			16			16
Home		9			11			9			10
Children’s		6			5			6			6

Total		100	%		100	%		100	%		100	%

(2) Implementation of New Accounting Standards

In September 2006, the Financial Accounting Standards Board (“FASB”) issued Statement of Financial Accounting Standards (“SFAS”) No. 157, “Fair Value Measurements.” SFAS No. 157 defines fair value, establishes a framework for measuring fair value in generally accepted accounting principles, and expands disclosures about fair value measurements. SFAS No. 157 does not require any new fair value measurements. SFAS No. 157 is effective for financial statements issued for fiscal years beginning after November 15, 2007 and interim periods within those fiscal years. The Company believes that the adoption of SFAS No. 157 will not have a material impact on its consolidated financial statements.

In June 2006, the FASB issued FASB Interpretation No. 48 (“FIN 48”), “Accounting for Uncertainty in Income Taxes,” an interpretation of SFAS No. 109, “Accounting for Income Taxes.” The Company adopted FIN 48 on February 4, 2007. Refer to Note 7 for information regarding the adoption of FIN 48.

In February 2007, the FASB issued SFAS No. 159 “The Fair Value Option for Financial Assets and Financial Liabilities — Including an Amendment of SFAS No. 115,” which permits an entity to measure many financial assets and financial liabilities at fair value that are not currently required to be measured at fair value. Entities that elect the fair value option will report unrealized gains and losses in earnings at each subsequent reporting date. The fair value option may be elected on an instrument-by-instrument basis, with a few exceptions. SFAS No. 159 amends previous guidance to extend the use of the fair value option to available-for-sale and held-to-maturity securities. The Statement also establishes presentation and disclosure requirements to help financial statement users understand the effect of the election. SFAS No. 159 is effective for the first fiscal year beginning after November 15, 2007. The Company is currently in the process of evaluating the impact of SFAS No. 159.

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

(3) Comprehensive Income

The following table sets forth the computation of comprehensive income:


	Three Months Ended						Six Months Ended
	August 4,			July 29,			August 4,			July 29,
	2007			2006			2007			2006
	(dollars in thousands)						(dollars in thousands)
Net income	$	7,495		$	26,308		$	16,995		$	45,779

Other comprehensive income (loss):
Unrealized (loss) gain on investments, net of $187 and $210 income tax benefit for the three and six months ended August 4, 2007, respectively and $87 income tax benefit and $130 income tax expense for the three and six months ended July 29, 2006, respectively.		(316	)		(146	)		(353	)		219

Net change in fair value of interest rate swaps, net of $290 income tax expense and $30 income tax benefit for the three and six months ended August 4, 2007, respectively and $180 and $749 income tax expense for the three and six months ended July 29, 2006, respectively.		487			303			(51	)		1,262

Interest rate swap losses reclassified into interest expense from other comprehensive income, net of $20 and $41 income tax expense for the three and six months ended August 4, 2007, respectively and $20 and $41 income tax expense for the three and six months ended July 29, 2006, respectively.		34			34			69			69

Reclassification adjustment for interest rate swap dedesignation gain included in gain (loss) on investments, net of $7 income tax benefit for the three and six months ended August 4, 2007, respectively.		(51	)		—			(51	)		—

Defined benefit expense, net of $1,200 and $2,389 income taxes for the three and six months ended August 4, 2007, respectively and $1,231 and $2,462 income taxes for the three and six months ended July 29, 2006, respectively.		2,020			2,074			4,023			4,148

Other comprehensive income		2,174			2,265			3,637			5,698


Total comprehensive income	$	9,669		$	28,573		$	20,632		$	51,477

(4) Accumulated Other Comprehensive Loss

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


	August 4,			February 3,
	2007			2007
	(dollars in thousands)
Unrealized gains on investments, net of $853 and $1,063 income tax expense as of August 4, 2007 and February 3, 2007, respectively.	$	1,439		$	1,792
Unrealized loss on interest rate swaps, net of $121 and $125 income tax benefit as of August 4, 2007 and February 3, 2007, respectively.		(204	)		(171	)
Defined benefit plans, net of $47,834 and $50,223 income tax benefit as of August 4, 2007 and February 3, 2007, respectively.		(80,581	)		(84,604	)


Accumulated other comprehensive loss	$	(79,346	)	$	(82,983	)

(5) Parisian Acquisition

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

Saks Incorporated at a purchase price of $314.7 million. The purchase price allocation has been prepared on a preliminary basis, and reasonable changes are expected as additional information becomes available. During the second quarter of fiscal year 2008, adjustments were made to the fair value of property, plant and equipment, accrued severance and retention costs, as well as deferred taxes based on information obtained during the quarter.

Goodwill of $66.2 million resulted from excess purchase price over the fair market value of the acquired assets, net of assumed liabilities. These assumed liabilities included $28.4 million in unfavorable lease obligations that have a weighted average amortization period of 16.7 years from the date of acquisition.

The following is a summary as of August 4, 2007 of the estimated fair values of the assets acquired and liabilities assumed, which includes transaction costs:


dollars in thousands

Accounts receivable, net	$	1,176
Inventory		207,012
Other current assets		4,627
Property, plant and equipment		185,587
Goodwill		66,230
Deferred income taxes		27,353
Other assets		6,545

Total assets acquired		498,530


Current liabilities		156,431
Long-term liabilities		27,395

Total liabilities assumed		183,826

Net assets acquired	$	314,704

As of August 4, 2007, the Company has recorded $0.6 million in accrued severance and retention costs, $0.6 million in relocation costs for employees eligible for transfers and $8.2 million for lease buyout costs related to the Parisian Acquisition.

(6) Borrowings

On July 26, 2007, the Company signed a commitment letter to enter into an agreement in which the counterparty agreed to purchase $125.0 million in senior notes. The Company’s intent is to use the proceeds to refinance the existing $125.0 million ten-year variable rate bond facility scheduled to mature in July 2008. The Company received the proceeds under the senior notes on August 31, 2007. The Company expects the early payoff of the variable rate bond facility to occur in fiscal year 2008.

The $125.0 million notional swap for fiscal years 2004 through 2009 had previously been designated as a cash flow hedge against variability in future interest payments on the $125.0 million ten-year variable rate bond facility. However, on July 26, 2007 the $125.0 million notional swap was de-designated in accordance with SFAS No. 133 “Accounting for Derivative Instruments and Hedging Activities” due to the Company’s intent to refinance the underlying debt.

(7) Income Taxes

Belk adopted FIN 48 on February 4, 2007. FIN 48 clarifies the accounting for uncertainty in income taxes recognized in an enterprise’s financial statements in accordance with SFAS No. 109. FIN 48 prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. This pronouncement also provides guidance on derecognition, classification, interest and penalties, accounting in interim periods, disclosure and transition. As a result of the implementation of FIN 48, the Company recognized a decrease of $0.2 million in the liability for unrecognized tax benefits, which was accounted for as an increase to the February 4, 2007 balance of retained earnings. The implementation also resulted in the recognition of an additional $17.5 million in the liability for unrecognized tax benefits with an offset to deferred tax assets and liabilities.

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

At adoption, the Company had a gross unrecognized tax benefit (including interest and penalties) of $27.3 million. Of this total, $5.9 million represents the amount of unrecognized tax benefits (net of the federal benefit on state issues) that, if recognized, would favorably affect the effective income tax rate in a future period.

As part of its continuing practice, Belk has accrued interest related to unrecognized tax benefits in interest expense while accruing penalties related to unrecognized tax benefits in tax expense. Total accrued interest and penalties for unrecognized tax benefits at adoption were $4.3 million.

Belk and its subsidiaries are subject to U.S. federal income tax as well as income tax of multiple state jurisdictions. The Company has concluded all U.S. federal income tax matters for tax years through 2002. All material state and local income tax matters have been concluded for tax years through 2002. Federal income tax returns for tax years 2003 and 2004 were under examination. In connection with the Internal Revenue Service (“IRS”) examination of the Company’s 2003 and 2004 income tax returns, the IRS proposed adjustments to the Company’s gain on sale of business property and sale leaseback of leasehold improvements tax positions. On June 29, 2007, the Company reached an agreement with the IRS and paid $6.7 million to settle the audited years. Overall, the settlement decreased the Company’s gross unrecognized tax benefit by $7.8 million, of which $0.6 million was recorded as a decrease to interest expense, $0.5 million as a reduction to deferred tax assets and $6.7 million as a reduction to cash. The Company anticipates that an additional payment of $2.4 million, which relates to the effect of the settlement on tax year 2006 for federal and tax years 2003, 2004 and 2006 for state tax purposes, will be made by the end of fiscal year 2008 as a result of the settlement. The Company anticipates that this additional payment will not have any impact on its effective tax rate for fiscal year 2008.

The State of North Carolina is currently examining tax years 2002 through 2004. The Company has extended the statute of limitations through January 15, 2008 for the years ended 2002 and 2003 in conjunction with the North Carolina audit.

(8) Asset Impairment and Store Closing Costs

During the six months ended August 4, 2007, the Company recorded a $6.7 million impairment charge to adjust a store’s net book value to fair market value. This determination was based primarily on the likelihood that the store would be sold and that the cash flows resulting from the store’s operations plus disposition would not be sufficient to recover the store’s carrying value. The Company also recorded a $1.8 million impairment charge for a software development project that was abandoned and a $0.2 million charge related to the closure of a division office and two other store locations.

(9) Sale of Property

Effective April 27, 2007, the Company sold a portion of its headquarters building located in Charlotte, NC for $23.3 million. The Company also entered into a lease arrangement with the purchaser of the property to lease the property for a term of 13 years, 8 months. The fiscal year 2008 sale and leaseback transaction resulted in a gain on the sale of the property of $7.3 million, which has been deferred and will be recognized ratably over the 13.7-year lease term.

During the six months ended August 4, 2007, the Company sold five former Parisian stores for net proceeds of $18.5 million.

(10) Pension and Postretirement Benefits

The Company has a defined benefit pension plan covering a portion of its employees. The benefits are based on years of service and the employee’s compensation. The Company also has a non-qualified defined benefit Supplemental Executive Retirement Plan, (“Old SERP”), which provides retirement and death benefits to certain qualified executives and a defined benefit health care plan that provides postretirement medical and life insurance benefits to certain retired full-time employees.

BELK, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED 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
	August 4,			July 29,			August 4,		July 29,		August 4,		July 29,
	2007			2006			2007		2006		2007		2006
							(dollars in thousands)
Service cost	$	877		$	896		$	46	$	33	$	42	$	40
Interest cost		5,783			5,386			177		164		418		400
Expected return on plan assets		(5,798	)		(5,981	)		—		—		—		—
Amortization of transition obligation		—			—			—		—		65		65
Amortization of prior service cost		124			144			—		—		—		—
Amortization of the net (gain) loss		2,927			3,004			49		10		41		(18	)

Net periodic benefit expense	$	3,913		$	3,449		$	272	$	207	$	566	$	487


	Six Months Ended
	Pension Plan						Old SERP Plan				Postretirement Plan
	August 4,			July 29,			August 4,		July 29,		August 4,		July 29,
	2007			2006			2007		2006		2007		2006
							(dollars in thousands)
Service cost	$	1,754		$	1,792		$	92	$	66	$	84	$	80
Interest cost		11,566			10,772			354		328		836		800
Expected return on plan assets		(11,596	)		(11,962	)		—		—		—		—
Amortization of transition obligation		—			—			—		—		130		130
Amortization of prior service cost		248			288			—		—		—		—
Amortization of the net (gain) loss		5,854			6,008			98		20		82		(36	)

Net periodic benefit expense	$	7,826		$	6,898		$	544	$	414	$	1,132	$	974

There were no additional contributions to the pension plan during the six months ended August 4, 2007 or July 29, 2006. The Company is not required to make a contribution to its defined benefit pension plan during fiscal year 2008, but may elect to make a discretionary contribution in the future. The Company expects to pay benefits of $2.8 million and $1.2 million to its postretirement plan and Old SERP participants, respectively, in fiscal year 2008.

(11) 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 impact of contingently issuable stock-based compensation awards with performance vesting conditions as being outstanding at the beginning of the period in which all vesting conditions are met. The reconciliations of basic and diluted shares for the three and six months ended August 4, 2007 were:


	Three Months Ended		Six Months Ended
	August 4,		August 4,
	2007		2007
Basic Shares		49,616,895		49,930,223
Dilutive contingently-issuable non-vested share awards		95,087		47,544

Diluted Shares		49,711,982		49,977,767

(12) Repurchase of Common Stock

On May 23, 2007, the Company accepted for purchase in its self-tender offer 472,843 shares of outstanding Class A and 308,641 shares of outstanding Class B common stock for $24.2 million. The self-tender offer was authorized by the Board of Directors on April 4, 2007 and was initiated on April 25, 2007.

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

Overview

Belk, Inc., together with its subsidiaries (collectively, the “Company” or “Belk”), is the largest privately owned department store business in the United States, with total revenues of $3.68 billion for the fiscal year ended February 3, 2007. The Company and its predecessors have been successfully operating 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 3, 2007, 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 3, 2007.

The Company’s total revenues increased 20.2% in the second quarter of fiscal year 2008 to $879.6 million. Comparable store sales increased 2.2%. Operating income decreased 50.7% to $25.9 million in the second quarter of fiscal year 2008. Net income decreased 71.5% to $7.5 million or $0.15 per basic and diluted share. The decrease in net income was due primarily to increased markdowns related to higher levels of clearance merchandise principally related to the Parisian transition, acquisition integration costs and higher interest expense resulting from the Company’s fiscal year 2007 acquisitions, as well as a downturn in customer spending.

The Company’s total revenues increased 20.2% in the first six months of fiscal year 2008 to $1,784.1 million. Comparable store sales increased 2.5%. Operating income decreased 38.9% to $55.6 million in the first six months of fiscal year 2008. Net income decreased 62.9% to $17.0 million or $0.34 per basic and diluted share. The decrease in net income was due primarily to increased markdowns related to higher levels of clearance merchandise principally related to the Parisian transition, acquisition integration costs and higher interest expense resulting from the Company’s fiscal year 2007 acquisitions, as well as asset impairment and store closing costs and a downturn in customer spending.

The Company’s fiscal year ends on the Saturday closest to each January 31. All references to “fiscal year 2008” refer to the fiscal year that will end February 2, 2008 and all references to “fiscal year 2007” refer to the fiscal year ended February 3, 2007.

As of August 4, 2007, the Company operated 304 retail department stores in 16 states primarily in the southeastern United States. Belk stores seek to provide customers the convenience of one-stop shopping, with an appealing merchandise mix and extensive offerings of brands, styles, assortments and sizes. Belk stores sell top national brands of fashion apparel, shoes and accessories for women, men and children, as well as cosmetics, home furnishings, housewares, gifts and other types of quality merchandise. The Company also sells exclusive private label brands, which offer customers differentiated merchandise selections at better values. Larger Belk stores may include hair salons, spas, restaurants, optical centers and other amenities.

Belk’s mission is to be the leading department store in its markets by selling merchandise to customers that meets their needs for fashion, selection, value, quality and service. To achieve this mission, Belk’s business strategy includes six key elements: (1) a target customer focus; (2) focused merchandise assortments; (3) compelling sales promotions; (4) distinctive customer service; (5) a winning store and market strategy; and (6) an emphasis on productivity and efficiency.

The Company operates retail department stores in the highly competitive retail apparel industry. The Company’s primary competitors are traditional department stores, mass merchandisers, national apparel chains, individual specialty apparel stores and direct merchant firms.

Management believes that significant opportunities for growth exist in Belk markets where the Belk name and reputation are well known and in contiguous markets where Belk can distinguish its stores from the competition. Although the Company will continue to take advantage of prudent opportunities to expand into large markets, the Company will focus its expansion on medium-sized markets and suburban communities surrounding larger metropolitan markets with store units in the 60,000 to 120,000 square-foot size range.

Parisian Acquisition

Effective October 2, 2006, the Company completed the acquisition of all of the capital stock of the corporations that operated 38 Parisian stores, the Parisian corporate headquarters, and a distribution center (“Parisian Acquisition”) from Saks Incorporated for a purchase price of $314.7 million. The primary reason for the purchase was to support the Company’s strategic expansion objectives and to better position the Company in strategic markets, including Alabama and Georgia. The results of the acquired operations have been included in the unaudited consolidated financial statements from the date of acquisition. Parisian department stores are located in nine states throughout the Southeast and Midwest.

Effective October 30, 2006, Belk sold certain assets and lease rights related to four of the Parisian stores for $25.7 million. A fifth store, which is a new Parisian store scheduled to open in Clinton Township, Michigan in fall 2007, was also included in the sale agreement.

Migerobe, Inc. Acquisition

Effective July 30, 2006, the Company completed the acquisition of the assets of Migerobe, Inc. (“Migerobe”), a company that leased fine jewelry departments in 35 Belk stores, for a purchase price of $19.1 million. The results of the Migerobe operations have been included in the unaudited consolidated financial statements from the date of acquisition.

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						Six Months Ended
	August 4,			July 29,			August 4,			July 29,
	2007			2006			2007			2006
SELECTED FINANCIAL DATA
Revenues		100.0	%		100.0	%		100.0	%		100.0	%
Cost of goods sold (including occupancy and buying expenses)		70.2			66.6			69.0			66.9
Selling, general and administrative expenses		26.9			26.3			27.5			27.0
Asset impairment and store closing costs		—			—			0.5			0.1
Gain on sale of property and equipment		0.1			0.1			0.1			0.1
Operating income		2.9			7.2			3.1			6.1
Interest expense, net		1.6			1.6			1.6			1.4
Gain (loss) on sale of investments		—			—			—			0.1
Income before income taxes		1.3			5.6			1.5			4.8
Income tax expense		0.5			2.0			0.5			1.7
Net income		0.9			3.6			1.0			3.1

Comparable store net revenue increase		2.2			4.0			2.5			3.7

Revenues


	Three Months Ended						Six Months Ended
	August 4,			July 29,			August 4,			July 29,
Merchandise Areas	2007			2006			2007			2006
Women’s		40	%		41	%		40	%		40	%
Cosmetics, Shoes and Accessories		28			26			29			28
Men’s		17			17			16			16
Home		9			11			9			10
Children’s		6			5			6			6

Total		100	%		100	%		100	%		100	%

Comparison of the Three and Six Months Ended August 4, 2007 and July 29, 2006

Revenues. The Company’s revenues for the three months ended August 4, 2007 increased 20.2%, or $147.6 million, to $879.6 million from $732.0 million over the same period in fiscal year 2007. The increase is primarily attributable to an increase in revenues due to the Parisian Acquisition of $117.6 million, revenues from other new stores of $18.0 million and a $15.2 million, or 2.2%, increase in revenues from comparable stores. Top performing merchandise areas during the period included shoes, women’s apparel, children’s and accessories.

The Company’s revenues for the six months ended August 4, 2007 increased 20.2%, or $299.6 million, to $1,784.1 million from $1,484.5 million over the same period in fiscal year 2007. The increase is primarily attributable to an increase in revenues due to the Parisian Acquisition of $241.1 million, revenues from other new stores of $35.4 million and a $35.2 million, or 2.5%, increase in revenues from comparable stores. Top performing merchandise areas during the period included shoes, women’s apparel, children’s and accessories.

Cost of goods sold. Cost of goods sold was $617.8 million, or 70.2% of revenues, for the three months ended August 4, 2007 compared to $487.6 million, or 66.6% of revenues, for the same period in fiscal year 2007. The increase in cost of goods sold as a percentage of revenues for the three months ended August 4, 2007 is primarily attributable to increased markdowns due to higher levels of clearance merchandise principally related to the Parisian transition and to manage inventories in line with our comparable store sales trend reflecting a downturn in customer spending. In addition, there was an increase in occupancy costs as a percentage of revenues due to higher occupancy costs in the acquired store locations.

Cost of goods sold was $1,230.4 million, or 69.0% of revenues, for the six months ended August 4, 2007 compared to $992.4 million, or 66.9% of revenues, for the same period in fiscal year 2007. The increase in cost of goods sold as a percentage of revenues for the six months ended August 4, 2007 is primarily attributable to increased markdowns due to higher levels of clearance merchandise principally related to the Parisian transition and to manage inventories in line with our comparable store sales trend reflecting a downturn in customer spending. In addition, there was an increase in occupancy costs as a percentage of revenues due to higher occupancy costs in the acquired store locations and an increase in distribution center expense as a percentage of revenues due to start-up costs associated with the new distribution center opened during fiscal year 2007.

Selling, general and administrative expenses. Selling, general and administrative (“SG&A”) expenses were $236.5 million, or 26.9% of revenues for the three months ended August 4, 2007, compared to $192.4 million, or 26.3% of revenues, for the same period in fiscal year 2007. The increase in SG&A expenses of $44.1 million was primarily due to the increase in selling costs as a result of the increase in revenues as described above. The increase in SG&A expenses as a percentage of revenues was primarily due to the following:

	•		The Company’s integration of the acquired fine jewelry business has resulted in an incremental increase in SG&A expenses as a percentage of revenues of 0.22%.

	•		Acquisition-related expenses increased as a percentage of revenues by 0.20%, or $1.8 million, due to the fiscal year 2007 Parisian Acquisition integration.

	•		Net advertising expense increased as a percentage of revenues by 0.31%, or $6.7 million, primarily due to increased costs associated with Parisian separate advertising, advertising for private brands and owned fine jewelry business.

	•		Net credit income increased as a percentage of revenues by 0.11%, or $3.5 million, due to a 30.3% overall increase in Belk charge card sales volume, driven by the Parisian Acquisition along with 3.4% increased credit penetration.

SG&A expenses were $490.8 million, or 27.5% of revenues for the six months ended August 4, 2007, compared to $400.3 million, or 27.0% of revenues, for the same period in fiscal year 2007. The increase in SG&A expenses of $90.5 million was primarily due to the increase in selling costs as a result of the increase in revenues as described above. The increase in SG&A expenses as a percentage of revenues was primarily due to the following:

•

The Company’s integration of the acquired fine jewelry business has resulted in an incremental increase in SG&A expenses as a percentage of revenues of 0.21%.

	•		Acquisition-related expenses increased as a percentage of revenues by 0.64%, or $11.5 million, due to the fiscal year 2007 Parisian Acquisition integration.

	•		Employee benefits decreased as a percentage of revenues by 0.25%, or $4.6 million, primarily driven by favorable medical claims experience.

	•		Net credit income increased as a percentage of revenues by 0.12%, or $7.2 million, due to a 30.7% overall increase in Belk charge card sales volume, driven by the Parisian Acquisition along with 3.0% increased credit penetration.

Asset Impairment and Store Closing Costs. During the six months ended August 4, 2007, the Company recorded a $6.7 million impairment charge to adjust a retail location’s net book value to fair market value, a $1.8 million asset impairment charge for assets related to a software development project that was abandoned and a $0.2 million charge related to the closure of a division office and two other store locations. During the six months ended July 29, 2006, the Company recorded a $0.4 million charge for costs associated with the demolition of a portion of its corporate office building and a $1.3 million charge for real estate holding costs.

Interest Expense, net. Interest expense, net increased $2.9 million, or 25.6%, from $11.4 million during the three months ended July 29, 2006 to $14.3 million for the three months ended August 4, 2007. The increase was primarily due to higher debt levels associated with the Parisian Acquisition in October 2006.

Interest expense, net increased $7.6 million, or 36.0%, from $21.2 million during the six months ended July 29, 2006 to $28.9 million for the six months ended August 4, 2007. The increase was primarily due to higher debt levels associated with the Parisian Acquisition in October 2006.

Gain (loss) on sale of investments. Gain on sale of investments was $1.6 million for the six months ended July 29, 2006. The gain was primarily due to $1.1 million of gains on interest rate swaps and a $0.4 million gain on sale of the Company’s interest in a partnership that owns a distribution center facility.

Seasonality and Quarterly Fluctuations

The retail business is highly seasonal with approximately one-third of annual revenues being generated in the fourth quarter, which includes the holiday selling season. As a result, a disproportionate amount of the Company’s operating and net income is realized during the fourth quarter and significant variations can occur when comparing the Company’s financial condition between quarters.

Liquidity and Capital Resources

The Company’s primary sources of liquidity are cash on hand, cash flows from operations and borrowings under debt facilities. The Company’s debt facilities consist of a $750.0 million credit facility that matures in October 2011, $200.0 million in senior notes, a $125.0 million ten-year variable rate bond facility that matures in July 2008, and a $21.0 million variable rate state bond facility that matures in December 2025. The $750.0 million credit facility is composed of an outstanding $350.0 million term loan and a $400.0 million revolving line of credit. The $200.0 million aggregate principal of senior notes are composed of $100.0 million fixed rate senior notes that mature in July 2015, $20.0 million fixed rate senior notes that mature in July 2012 and $80.0 million floating rate senior notes that mature in July 2012.

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. As of August 4, 2007, the Company was in

compliance with all covenants and does not anticipate that complying with the covenants will affect the Company’s liquidity in fiscal year 2008.

During fiscal year 2007, the Company amended its $580.0 million credit facility, increasing total available borrowings to $750.0 million. Up until October 2009, under certain circumstances the credit facility may be increased to $850.0 million at the Company’s request. The credit facility allows for up to $250.0 million of outstanding letters of credit. The credit facility charges interest based on certain Company financial ratios and currently stands at LIBOR plus 62.5 basis points or prime. The credit facility contains restrictive covenants and financial covenants including leverage and fixed charge coverage ratios. The Company had $142.8 million of standby letters of credit and a $350.0 million term loan outstanding under the credit facility at August 4, 2007.

During fiscal year 2006, the Company entered into the $21.0 million, 20-year variable rate state bond facility in connection with construction of a distribution center in Mississippi. The proceeds from the debt issuance are held in a trust account until the Company disburses funds for the construction of the distribution center. At the end of the second quarter of fiscal year 2008, the Company had expended and received from the trust $18.1 million for acquisition and construction costs.

Because interest rates on certain debt agreements have variable interest rates, the Company has entered into interest rate swap agreements with a financial institution to manage the exposure to changes in interest rates. Currently, the Company has two interest rate swaps. The $125.0 million notional swap for fiscal years 2004 through 2009 had previously been designated as a cash flow hedge against variability in future interest payments on the $125.0 million ten-year variable rate bond facility. On July 26, 2007, the $125.0 million notional swap was de-designated in accordance with Statement of Financial Accounting Standards No. 133 “Accounting for Derivative Instruments and Hedging Activities” due to the Company’s intent to refinance the underlying debt. The $80.0 million notional swap for fiscal years 2007 through 2013 has also been designated as a cash flow hedge against variability in future interest rate payments on the $80.0 million Series C senior notes.

Net cash provided by operating activities was $40.5 million for the six months ended August 4, 2007 compared to $71.5 million for the same period in fiscal year 2007. In addition to the decrease in net income, the decrease in cash provided by operating activities for fiscal year 2008 was principally due to cash disbursements required under the transition services agreement and employee severance, bonus and relocation amounts for the Parisian Acquisition.

Net cash used by investing activities decreased $50.3 million to $57.4 million for the six months ended August 4, 2007 from $107.7 million for the same period in fiscal year 2007. The change primarily resulted from a decrease in purchases of property and equipment of $10.5 million and an increase in proceeds from sales of property and equipment of $42.0 million driven by the disposal of certain Parisian stores and the sale-leaseback of a portion of the Company’s headquarters building during the first six months of fiscal year 2008.

Net cash used by financing activities was $43.7 million for the six months ended August 4, 2007 compared to $62.9 million for the same period in fiscal year 2007. The decrease in cash used was primarily driven by a reduction in common stock repurchased from $39.1 million in fiscal year 2007 to $24.2 million in fiscal year 2008. In addition, principal payments on long-term debt and capital lease obligations decreased $13.0 million driven by the May 2006 payoff of the sale/leaseback debt facility. These decreases were offset partially by an $8.2 million decrease in proceeds received from the $21.0 million, 20-year variable rate bond facility in connection with construction of a distribution center in Mississippi.

Management of the Company believes that cash flows from operations, existing credit facilities and additional liquidity resources will be sufficient to cover working capital needs, stock repurchases, capital expenditures, debt service requirements and funding of acquisitions for at least the next twelve months.

Contractual Obligations and Commercial Commitments

A table representing the scheduled maturities of the Company’s contractual obligations and commercial commitments as of February 3, 2007 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 3, 2007. There have been no material changes from the information included in the Form 10-K, however, the Company anticipates that it is

reasonably possible that an additional payment related to income tax reserves of $2.4 million will be made by the end of fiscal year 2008.

Off-Balance Sheet Arrangements

The Company has not provided any financial guarantees as of August 4, 2007. 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.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

The Company is exposed to market risk from changes in interest rates on its variable rate debt. The Company uses interest rate swaps to manage the interest rate risk associated with its borrowings and to manage the Company’s allocation of fixed and variable rate debt. The Company does not use financial instruments for trading or other speculative purposes and is not a party to any leveraged derivative instruments. The Company’s net exposure to interest rate risk is based on the difference between the outstanding variable rate debt and the notional amount of its designated interest rate swaps. At August 4, 2007 the Company had $576.0 million of variable rate debt and $205.0 million of offsetting, receive variable rate, pay fixed rate swaps. The impact on the Company’s annual interest expense of a one-percent change in interest rates would be approximately $5.0 million.

During the second quarter of fiscal year 2008, the Company de-designated a $125.0 million interest, which was previously accounted for as a cash flow hedge, in connection with the Company’s plan to refinance the $125.0 million underlying variable rate bond.

Item 4. Controls and Procedures

The Company’s management conducted an evaluation, 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 Belk 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 or corrective actions in the Company’s internal control over financial reporting that materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

PART II — OTHER INFORMATION

Item 1. Legal Proceedings

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

Item 1A. Risk Factors

There have been no material changes from the risk factors disclosed in the Company’s Annual Report on Form 10-K filed on April 12, 2007.

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

The following table contains information about purchases of our equity securities during the second quarter of fiscal year 2008.

ISSUER PURCHASES OF EQUITY SECURITIES


						Total Number of		Approximate Dollar
						Shares Purchased		Value of Shares
						as Part of		that May Yet Be
	Total Number of			Average Price Paid		Publicly Announced		Purchased Under the
Period	Shares Purchased			per Share		Plans or Programs		Plans or Programs
May 6 – June 2, 2007		781,484	⁽¹⁾	$	31.00		781,484		—
June 3 – July 7, 2007		—			—		—		—
July 8 – August 4, 2007		—			—		—		—

Total		781,484		$	31.00		781,484		—


⁽¹⁾		On April 4, 2007, the Board of Directors approved the repurchase of up to 800,000 shares of the Company’s Class A common stock and 800,000 shares of the Company’s Class B common stock at a price of $31.00 per share. The Company repurchased 472,843 Class A shares and 308,641 Class B shares pursuant to the self-tender offer which commenced on April 25, 2007 and was completed on May 23, 2007.

Item 3. Defaults Upon Senior Securities

Not applicable

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

The Company’s annual meeting of stockholders was held on May 30, 2007. The only matter submitted to a vote of the stockholders was the election of directors. At the meeting, in person or by proxy, there were stockholders holding an aggregate of 50,243,552 shares of common stock. There were no broker non-votes with respect to any proposal.

John R. Belk, John A. Kuhne and Elizabeth Valk Long were elected as directors for terms expiring in 2010.


Term Expiring 2010	Votes For		Votes Withheld
John R. Belk		471,867,238		2,366
John A. Kuhne		471,828,008		41,596
Elizabeth Valk Long		471,867,238		2,366

Thomas M. Belk, Jr., J. Kirk Glenn, Jr. and John L. Townsend continue to serve as directors for terms expiring in 2008. H.W. McKay Belk, Thomas C. Nelson and John R. Thompson continue to serve as directors for terms expiring in 2009.

Item 5. Other Information

Not applicable.

Item 6. Exhibits

(a)

Exhibits

	3.1		Form of Amended and Restated Certificate of Incorporation of the Company (incorporated by reference to pages B-24 to B-33 of the Company’s Registration Statement on Form S-4/A, filed on March 5, 1998 (File No. 333-42935)).

	3.2		Form of Second Amended and Restated Bylaws of the Company (incorporated by reference to Exhibit 3.2 of the Company’s Annual Report on Form 10-K for the fiscal year ended January 31, 2004).

	4.1		Articles Fourth, Fifth and Seventh of the Amended and Restated Certificate of Incorporation of the Company (incorporated by reference to pages B-24 to B-33 of the Company’s Registration Statement on Form S-4/A, filed on March 5, 1998 (File No. 333-42935)).

	4.2		Articles I and IV of the Second Amended and Restated Bylaws of the Company (incorporated by reference to Exhibit 3.2 of the Company’s Annual Report on Form 10-K for the fiscal year ended January 31, 2004).

	31.1		Certification of the Chief Executive Officer pursuant to Rule 13a-14(a) or Rule 15d-14(a) of the Securities Exchange Act of 1934, as amended, as adopted under Section 302 of the Sarbanes-Oxley Act of 2002.

	31.2		Certification of the Chief Financial Officer pursuant to Rule 13a-14(a) or Rule 15d-14(a) of the Securities Exchange Act of 1934, as amended, as adopted under Section 302 of the Sarbanes-Oxley Act of 2002.

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

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


	Page
	Number
PART I. FINANCIAL INFORMATION

Item 1. Consolidated Financial Statements (unaudited)

Condensed Consolidated Statements of Income for the Three and Six Months Ended August 4, 2007 and July 29, 2006		4

Consolidated Balance Sheets as of August 4, 2007 and February 3, 2007		5

Consolidated Statement of Changes in Stockholders’ Equity and Comprehensive Income for the Six Months Ended August 4, 2007		6

Consolidated Statements of Cash Flows for the Six Months Ended August 4, 2007 and July 29, 2006		7

Notes to Unaudited Consolidated Financial Statements		8

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations		13

Item 3. Quantitative and Qualitative Disclosures about Market Risk		18

Item 4. Controls and Procedures		18

PART II. OTHER INFORMATION

Item 1. Legal Proceedings		19

Item 1A. Risk Factors		19

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds		19

Item 3. Defaults upon Senior Securities		19

Item 4. Submission of Matters to a Vote of Security Holders		19

Item 5. Other Information		20

Item 6. Exhibits		20


	BELK, INC.
Dated: September 13, 2007	By:	/s/ Ralph A. Pitts
		Ralph A. Pitts
		Executive Vice President, General Counsel and Corporate Secretary (Authorized Officer of the Registrant)


	By:	/s/ Brian T. Marley
		Brian T. Marley
		Executive Vice President and Chief Financial Officer (Principal Financial Officer)