Family Dollar 2006 Annual Report Download - page 6

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GENERAL INFORMATION
Information is provided herein with respect to the Company’s operations related to the Company’s fiscal years ended on
August 26, 2006 (“fiscal 2006”); on August 27, 2005 (“fiscal 2005”); on August 28, 2004 (“fiscal 2004”); on August 30, 2003 (“fiscal
2003”); on August 31, 2002 (“fiscal 2002”); and the fiscal year ending on September 1, 2007 (“fiscal 2007”). The discussion and
analysis in this Annual Report on Form 10−K (this “Report”) should be read in conjunction with, and is qualified by, the Consolidated
Financial Statements and Notes to Consolidated Financial Statements included in this Report.
Explanatory Note
The Company was named as a nominal defendant in certain litigation filed in September 2006, alleging that the Company
“backdated” certain stock option grants. In connection with that lawsuit, the Board of Directors appointed a Special Committee to
conduct an independent investigation of the Company’s stock option granting practices, evaluate the lawsuit and take such actions
with respect to the lawsuit and related matters as the Committee deemed appropriate. Following the completion of the Special
Committee’s investigation and the Company’s receipt of their factual findings, the Company determined that it did not properly
account for certain stock options issued during fiscal 1995 to fiscal 2006 and therefore incurred a cumulative charge in the fourth
quarter of fiscal 2006 of $10.5 million. As the impact of the resulting accounting adjustments attributable to any prior reporting
periods was not material to any of such periods and as the cumulative impact of the adjustments was not material to the current year,
the Company did not restate previously issued financial statements. However, as a result of such investigation, the Company was
unable to complete and timely file its fiscal 2006 Annual Report on Form 10−K. See Note 10 to the Consolidated Financial
Statements included in this Report for more information regarding the findings of the Special Committee.
Cautionary Statement Regarding Forward−Looking Statements
Certain statements contained in this Report, or in other public filings, press releases, or other written or oral communications
made by the Company or its representatives, which are not historical facts are forward−looking statements made pursuant to the safe
harbor provisions of the Private Securities Litigation Reform Act of 1995. These forward−looking statements address the Company’s
plans, activities or events which the Company expects will or may occur in the future and may include express or implied projections
of revenue or expenditures; statements of plans and objectives for future operations, growth or initiatives; statements of future
economic performance; or statements regarding the outcome or impact of pending or threatened litigation. These forward−looking
statements may be identified by the use of the words “plan,” “estimate,” “expect,” “anticipate,” “probably,” “should,” “project,”
“intend,” “continue,” and other similar terms and expressions. Various risks, uncertainties and other factors may cause the Company’s
actual results to differ materially from those expressed or implied in any forward−looking statements. Factors, uncertainties and risks
that may result in actual results differing from such forward−looking information include, but are not limited to those listed in Part I,
Item 1A below, as well as other factors discussed throughout this Report, including, without limitation, the factors described under
“Critical Accounting Policies” in Part II, Item 7 below, or in other filings or statements made by the Company. All of the
forward−looking statements made by the Company in this Report and other documents or statements are qualified by these and other
factors, risks and uncertainties. Readers are cautioned not to place undue reliance on these forward−looking statements, which speak
only as of the date of this Report. The Company does not intend to publicly update or revise its 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.
2
Source: FAMILY DOLLAR STORES, 10−K, March 28, 2007