"Despite the challenges resulting from a rapidly changing economic environment, our team has delivered a strong performance this year, driving improvements across most key metrics, including increased customer traffic, operating margin expansion, earnings-per-share growth, greater inventory productivity and higher employee retention," said Howard R. Levine, Chairman and Chief Executive Officer.

"As I reflect on these results, I am especially proud of how quickly our team worked to position Family Dollar to serve an expanding customer base. Understanding the increased pressures facing consumers, we accelerated key investments to enhance the convenience and shopability of our stores," continued Levine. "I am pleased with the progress we have made and believe that we are well-positioned to continue to meet our customers' evolving needs as economic conditions stabilize and improve."

Fiscal 2009 Results

As previously reported, sales for fiscal 2009 were $7.401 billion, or 6.0% above sales of $6.984 billion for fiscal 2008. Sales in comparable stores increased 4.0%. The increase in comparable store sales was the result of higher customer traffic, as measured by the number of register transactions, and an increase in the value of the average customer transaction. Sales in fiscal 2009 were strongest in the Consumables category. During fiscal 2009, the Company opened 180 new stores and closed 96 stores.

Gross profit, as a percentage of sales, was 34.8% in fiscal 2009 compared to 33.6% in fiscal 2008. The improvement in gross profit, as a percentage of sales, was a result of lower freight expense, lower inventory shrinkage, lower markdowns and higher purchase mark-ups which more than offset stronger sales of lower-margin consumable merchandise.

Selling, general and administrative ("SG&A") expenses, as a percentage of sales, were 28.7% in fiscal 2009 compared with 28.4% in fiscal 2008. Most expenses, including payroll and occupancy costs, were leveraged during the year as a result of a strong comparable store sales increase and continued expense management. These improvements were offset by higher incentive compensation expense and higher insurance expense.

Operating profit, as a percentage of sales, was 6.1% in fiscal 2009 compared with 5.2% in fiscal 2008. Higher gross profit, as a percentage of sales, more than offset higher SG&A expense, as a percentage of sales.

At the end of fiscal 2009, the Company had approximately $438.9 million in cash and cash equivalents compared with $158.5 million at the end of fiscal 2008. During fiscal 2009, the Company generated $529.9 million in operating cash flow compared with $515.7 million in fiscal 2008.

The Company's inventories at the end of fiscal 2009 were $993.8 million, or 3.8% below inventories of $1,032.7 million at the end of fiscal 2008. Average inventory per store at the end of fiscal 2009 was approximately 5% lower than the average inventory per store at the end of the fiscal 2008.

Capital expenditures were $155.4 million in fiscal 2009 compared with $167.9 million in fiscal 2008. During fiscal 2009, the Company paid $72.7 million, or $0.53 per share, in dividends compared to $67.4 million, or $0.49 per share, in fiscal 2008. During fiscal 2009, the Company repurchased approximately 2.3 million shares of its common stock for a total cost of $71.1 million. The Company has authorization to purchase up to an additional $62.0 million of its common stock.

Fourth Quarter Results

"The fourth quarter was our most challenging quarter this year. Not only did we anniversary the effect of last year's stimulus package, but we also re-merchandised the sales floor in approximately half our chain during the quarter," said Levine. "I am pleased with how well our teams executed these changes, and customers are responding favorably to the improved store layout. While our ambitious pace did pressure SG&A expenses in the quarter, I believe that these investments support our continued efforts to expand our assortment of key traffic-driving consumables and improve the in-store shopping experience."

As previously reported, net sales for the fourth quarter of fiscal 2009 were $1.811 billion, or 2.6% above sales of $1.766 billion for the fourth quarter of fiscal 2008. Sales in comparable stores increased 1.0%. The increase in comparable store sales was a result of an increase in customer traffic, as measured by the number of register transactions. Sales in the fourth quarter of fiscal 2009 were strongest in the Consumables category. During the fourth quarter of fiscal 2009, the Company opened 32 stores and closed 31 stores.

Gross profit, as a percentage of sales, was 34.5% in the fourth quarter of fiscal 2009 compared to 32.9% in the fourth quarter of fiscal 2008. The improvement in gross profit, as a percentage of sales, was a result of lower freight expense, lower inventory shrinkage and higher purchase mark-ups which more than offset stronger sales of lower-margin consumable merchandise.

SG&A expenses in the fourth quarter of fiscal 2009 increased 6.9% to $533.5 million compared to $499.2 million in the fourth quarter of fiscal 2008. As a percentage of sales, SG&A expenses were 29.5% in the fourth quarter of fiscal 2009 compared with 28.3% in the fourth quarter of fiscal 2008. The increase in SG&A, as a percentage of sales, was primarily a result of additional expenses related to the Company's space realignment efforts and Store of the Future rollout and the effect of a 1.0% increase in comparable store sales.

In the fourth quarter of fiscal 2009, the Company's effective tax rate was approximately 32.6% compared with 34.8% in the fourth quarter of fiscal 2008. The decrease in the tax rate was primarily the result of greater federal jobs tax credits.

Net income per diluted share in the fourth quarter of fiscal 2009 increased 13.2% to $0.43 compared with $0.38 per diluted share in the fourth quarter of fiscal 2008. Net income for the fourth quarter of fiscal 2009 increased 13.0% to $60.1 million, compared with $53.2 million for the fourth quarter of fiscal 2008.

Outlook

Commenting on the Company's outlook for fiscal 2010, Levine said, "While predicting near-term economic conditions remains difficult, we believe that the current consumer focus on saving money will remain strong in 2010. Our strategy of providing value and convenience positions us well to deliver sustainable growth for our shareholders as the economy stabilizes and improves."

For fiscal 2010, the Company expects net sales will increase 5% to 7% as compared with fiscal 2009.