Family Dollar 2004 Annual Report Download

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Taking the Initiative

Table of contents

  • Page 1
    2004 Annual Report 2004 Taking the Initiative

  • Page 2
    ... plans to open 500 to 560 new stores and close 60 to 70 stores during the current fiscal year ending August 27, 2005. Family Dollar's headquarters are located in Matthews, North Carolina, just outside of Charlotte. The Company operates automated full-service distribution centers in Matthews; West...

  • Page 3
    5,282 4,750 4,163 3,665 3,133 2,751 2,362 1,995 1,547 1,715 58 61 75 103 140 190 172 217 247 263 '95 '96 '97 '98 '99 '00 '01 '02 '03 '04 '95 '96 '97 '98 '99 '00 '01 '02 '03 '04 ( m i l l i ons of dol l a rs ) Net S a les ( m i l l i ons of dol l a rs ) Net I n co me 1.53 1.43 1.25 6000 1,...

  • Page 4
    Family Dollar Stores, Inc. and Subsidiaries Financial Highlights August 28, August 30, 2003 Percentage Change Years Ended (In thousands, except per share amounts) Net sales Cost of sales Gross margin Selling, general and administrative expenses Income before income taxes Income taxes Net income...

  • Page 5
    ..., a Store Manager of a typical urban store in Brooklyn, New York, is confident that she and her team are successfully executing the Company's initiatives to provide great value to their customers through a combination of convenience and everyday low prices. Customers: Family Dollar customers know...

  • Page 6
    .... The average transaction increased about 0.9% to $8.95, and the customer count, as measured by the number of register transactions in existing stores, increased about 0.7%. During fiscal 2004, sales in existing stores of food, household chemicals, paper products and health and beauty aids, the...

  • Page 7
    ... plan is to aggressively roll out coolers to a majority of our stores in future years. The fourth initiative-opening 500 to 560 new stores-continues Family Dollar's aggressive store expansion program that produced 500 new store openings in fiscal 2004 and added more than 2,000 stores to the chain...

  • Page 8
    ..., paper products and health and beauty aids has 33% been expanded to better meet our customers' needs for first quality, low-priced basic goods. 31% As another key initiative that adds 29%to their convenience, this fiscal year our Company plans to 27% install coolers for the sale of perishable food...

  • Page 9
    Value Initiative By focusing on convenience and everyday low prices, we provide value to our customers.

  • Page 10
    ... investments have produced some of the best returns in retail. In the last year, our Company's low and low-middle income customer base has been challenged by a difficult economy marked by rising energy costs and sluggish growth in jobs and real income, and Family Dollar's sales growth has slowed...

  • Page 11
    Sales Initiative Investments in our sales initiatives provide the foundation for long-term profitable growth.

  • Page 12
    ... of human resources to improve staffing and training, loss prevention to control shrinkage, and logistics to flow large quantities of merchandise to stores in a manner that maintains high in-stock positions without creating cluttered aisles; • targeted store-specific increases in payroll hours to...

  • Page 13
    Urban Initiative Family Dollar brings great values to urban consumers, including shoppers at this store in Brooklyn, New York.

  • Page 14
    ... Center in Marianna, Florida under construction Initiatives to enhance supply chain efficiencies support Family Dollar's value initiative, sales initiative and urban initiative. Moving goods efficiently from our supply partners through our distribution centers to our stores and then into shoppers...

  • Page 15
    ... Center Duncan Distribution Center West Memphis Distribution Center • • Front Royal Distribution Center Matthews Corporate Offices and Distribution Center • • Marianna Distribution Center Marianna, Florida: 907,000 Square Feet Opening January 2005 Odessa, Texas: 907,000 Square Feet Opened...

  • Page 16
    ... ten fiscal years, 3,251 new store locations have been added to the chain, representing nearly 60% of the stores in operation. The 500 stores added in fiscal 2004 include 76 in Texas, 36 in Michigan, 26 in Florida, 25 in both Ohio and Illinois and 23 in Georgia. More than 5,500 Family Dollar stores...

  • Page 17
    ... 1, 2004 Indiana 167 Vermont 8 Maine 33 New Hampshire 19 Massachusetts 81 Rhode Island 18 Connecticut 45 New Jersey 58 Delaware 22 Maryland 74 Washington, D.C. 3 Idaho 3 Nevada 10 New West York Virginia South Dakota 233 Michigan 108 8 Wyoming 281 7 Pennsylvania Iowa 207 Nebraska 35 Ohio 25 Illinois...

  • Page 18
    ... chemical and paper products, health and beauty aids, candy, snack and other food, electronics, housewares and giftware, toys, school supplies, hardware and automotive supplies. Softlines merchandise includes men's, women's, boy's, girl's and infant's clothing and accessories, shoes, and domestic...

  • Page 19
    ... taxes Net income Earnings per common share: Net income(1) Dividends declared Dividends declared per common share Total assets Working capital Shareholders' equity Stores opened Stores closed Number of stores-end of year (1) Figures represent diluted earnings per common share. During fiscal 2004...

  • Page 20
    ... of supply chain initiatives, including the opening of the seventh full-service distribution center, and the implementation of a transportation management system. For fiscal 2005, the Company's plan is for the cost of sales percentage to increase as compared to the percentage in fiscal 2004 due...

  • Page 21
    ... a cooler program for perishable goods in selected stores. The new store expansion and eighth distribution center will also require additional investment in merchandise inventories. Capital spending plans, including store expansion, are continuously reviewed and are subject to change. Cash flow from...

  • Page 22
    ... financial statements. Merchandise Inventories: Inventories are valued using the retail method, based on retail prices less markon percentages, which approximates the lower of first-in, first-out (FIFO) cost or market. The Company records adjustment to inventory through cost of goods sold...

  • Page 23
    ...realized. Market Price and Dividend Information Family Dollar's Common Stock is traded on the New York Stock Exchange under the ticker symbol FDO. At November 1, 2004, there were approximately 2,305 holders of record of the Common Stock. The accompanying tables give the high and low sales prices of...

  • Page 24
    ..., the financial position of Family Dollar Stores, Inc. and its subsidiaries at August 28, 2004 and August 30, 2003, and the results of their operations and their cash flows for each of the three years in the period ended August 28, 2004 in conformity with accounting principles generally accepted in...

  • Page 25
    ... taxes Income taxes (Note 5) Net income Net income per common share-basic (Note 9) Average shares-basic (Note 9) Net income per common share-diluted (Note 9) Average shares-diluted (Note 9) The accompanying notes are an integral part of the consolidated financial statements. Family Dollar Stores...

  • Page 26
    Family Dollar Stores, Inc. and Subsidiaries Consolidated Balance Sheets (In thousands, except share amounts) August 28, 2004 August 30, 2003 Assets Current assets: Cash and cash equivalents Merchandise inventories Deferred income taxes (Note 5) Income tax refund receivable (Note 5) Prepayments ...

  • Page 27
    ...common shares under employee stock option plan, including tax benefits (Note 8) Purchase of 5,576,100 common shares for treasury Issuance of 3,063 shares of treasury stock under the Family Dollar 2000 outside directors plan Less dividends on common stock, $.33 per share Balance, August 28, 2004 (187...

  • Page 28
    ... at end of year Supplemental disclosures of cash flow information: Purchases of property and equipment awaiting processing for payment, included in accounts payable Interest paid Income taxes paid The accompanying notes are an integral part of the consolidated financial statements. August 28, 2004...

  • Page 29
    Family Dollar Stores, Inc. and Subsidiaries Notes to Consolidated Financial Statements Years Ended August 28, 2004, August 30, 2003 and August 31, 2002 1. Description of Business and Summary of Significant Accounting Policies: Description of business: The Company operates a chain of neighborhood ...

  • Page 30
    Family Dollar Stores, Inc. and Subsidiaries Notes to Consolidated Financial Statements (continued) Years Ended August 28, 2004, August 30, 2003 and August 31, 2002 Stock options: The Company accounts for stock-based compensation using the intrinsic value method prescribed in Accounting Principles ...

  • Page 31
    ... as follows (In thousands): August 28, 2004 Deferred income tax liabilities: Excess of book over tax basis of property and equipment Deferred income tax assets: Excess of tax over book basis of inventories Currently nondeductible accruals for: Self-insurance Compensation Other Total deferred income...

  • Page 32
    ... to this plan or guarantee earnings. 7. Commitments and Contingencies: Operating leases: Except for its executive offices and primary distribution centers, the Company generally conducts its operations from leased facilities. Normally, store real estate leases are for initial terms of from...

  • Page 33
    ...annual basis) are used as surety for future premium and deductible payments to the Company's workers' compensation and general liability insurance carrier. The Company accrues for these future payment liabilities based on the total estimated costs of claims filed and claims incurred but not reported...

  • Page 34
    ... Financial Statements (continued) Years Ended August 28, 2004, August 30, 2003 and August 31, 2002 8. Employee Stock Option Plan: The Company's nonqualified stock option plan provides for the granting of options to key employees to purchase shares of Common Stock at prices not less than fair market...

  • Page 35
    ...of Directors authorized the purchase of up to 5 million shares of its outstanding Common Stock from time to time as market conditions warrant. During the year ended August 30, 2003, the Company purchased in the open market 2.2 million shares at a cost of $65.9 million. On April 22, 2004, the Company...

  • Page 36
    ... of business from entities owned or represented by nonemployee family members of the Company's former Chairman of the Board and the current Chairman of the Board and Chief Executive Officer. These transactions totaled approximately $1.2 million, $17.8 million and $11.3 million in fiscal 2004, 2003...

  • Page 37
    ...www.familydollar.com Shares Listed New York Stock Exchange Ticker Symbol: FDO Independent Registered Public Accounting Firm PricewaterhouseCoopers LLP Charlotte, North Carolina 28202 Transfer Agent and Registrar Mellon Investor Services LLC 85 Challenger Road Ridgefield Park, New Jersey 07660 1-800...

  • Page 38
    10401 Monroe Road Post Office Box 1017 Charlotte, North Carolina 28201-1017 www.familydollar.com