Family Dollar 2006 Annual Report Download - page 10

NYSE Certification
In accordance with New York Stock Exchange (the “NYSE”) rules, on February 1, 2006, the Company filed the annual
certification by the Chief Executive Officer that, as of the date of the certification, the Company was in compliance with the NYSE
listing standards. For the fiscal year ended August 26, 2006, each of the Company’s Chief Executive Officer and Chief Financial
Officer executed the certifications required by Section 302 of the Sarbanes−Oxley Act of 2002, which certifications are filed as
exhibits to this Report.
ITEM 1A. RISK FACTORS
The risks described below could materially and adversely affect the Company’s business, financial condition and results of
operations. The Company may also be adversely affected by risks not currently known to management, or that management does not
currently consider to be material.
Competitive factors in the retail industry could limit the Company’s growth opportunities and reduce profitability.
The Company is in a highly competitive sector of the discount retail merchandise sector with numerous competitors, some of
whom may have greater resources than the Company. The Company competes for customers, merchandise, real estate locations and
employees. This competitive environment subjects the Company to various risks, including the ability to continue its store and sales
growth and provide attractive merchandise to its customers at competitive prices that allow the Company to maintain its profitability.
See Item 1 — “Competition” for further discussion of the Company’s competitive position.
Pricing pressures, including inflation and energy prices, could affect the Company’s profitability.
Increases in the cost of goods and services, including changes resulting from inflationary pressures, may reduce the
Company’s profitability and/or sales. The Company’s ability to pass on incremental pricing changes may be limited due to
operational and/or competitive factors. Increases in prices, including changes in energy prices, may impact the Company’s customer
base by limiting the amount of discretionary spending of its customers and may impact the Company through increased costs of goods
and/or increased operating expenses.
Changes in consumer demand and product mix and changes in overall economic conditions could adversely affect the Company’s
results of operations.
A general slowdown in the U.S. economy may adversely affect the spending of the Company’s customers, which may result
in lower net sales than expected on a quarterly or annual basis. In addition, changes in the types of products made available for sale
and the selection of the products by customers affect sales, product mix and margins. Future economic conditions affecting disposable
consumer income, such as employment levels, business conditions, fuel and energy costs, interest rates, and tax rates, could also
adversely affect the Company’s business by reducing spending or causing customers to shift their spending to other products.
The impact of acts of war or terrorism and transportation and distribution delays or interruptions could adversely affect the
Company’s results of operations.
Significant acts of terrorism, existing U.S. military efforts, as well as the involvement of the U.S. in other military
engagements, could have an adverse impact on the Company by, among other things, disrupting its distribution or information
systems, causing dramatic increases in fuel prices which increase the cost of doing business, or impeding the flow of imports or
domestic products to the Company. Delays or interruptions in the transportation and distribution of products could have an adverse
impact on the Company.
Unusual weather, natural disasters or pandemic outbreaks could adversely affect the Company’s net sales and operations.
Extreme changes in weather patterns or other natural disasters as well as pandemic outbreaks influence customer trends and
purchases and may negatively impact net sales, properties and/or operations of the Company. Such events could result in physical
damage to one or more of the Company’s properties; the temporary closure of one or more stores or distribution centers; the
temporary lack of an adequate work force in a market; the temporary or long−term disruption in the transport of goods from overseas;
delay in the delivery of goods to the Company’s distribution centers or stores; or the temporary reduction in the availability of
products in the Company’s stores. These factors could adversely affect the Company’s operations.
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Source: FAMILY DOLLAR STORES, 10−K, March 28, 2007