FAMILY DOLLAR STORES INC - 10-K Annual Report

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FORM 10-K
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Annual Report Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
For the fiscal year ended August 26, 2000
Commission File No. 1-6807

FAMILY DOLLAR STORES, INC.
(Exact name of registrant as specified in its charter)

Delaware 56-0942963
(State of incorporation) (I.R.S. Employer Identification Number)

10401 Old Monroe Road, Matthews, North Carolina 28105
(Address of principal executive offices) (Zip Code)

P. O. Box 1017, Charlotte, North Carolina 28201-1017
(Mailing address)

Registrant's telephone number, including area code (704) 847-6961

Securities registered pursuant to Section 12(b) of the Act:

Name of each exchange
Title of each class on which registered
Common Stock, $.10 Par Value New York Stock Exchange

Securities registered pursuant to Section 12(g) of the Act: None

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. Yes x No _____

Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained,
to the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. x

The aggregate market value of the voting stock of the registrant held by
non-affiliates of the registrant based on the closing price of these shares
on the New York Stock Exchange on November 10, 2000, was approximately
$2,764,000,000.

The number of shares of the registrant's Common Stock outstanding as of
November 10, 2000, was 171,221,197.

DOCUMENTS INCORPORATED BY REFERENCE
Incorporated Documents
(To the extent indicated herein) Location in Form 10-K
Annual Report to Stockholders for the Part II (Items 5, 6, 7 and 8)
fiscal year ended August 26, 2000 Part IV (Item 14)

Proxy Statement dated November 22, 2000 Part III (Items 10, 11, 12 and 13)
for the Annual Meeting of Stockholders

PART I

ITEM 1. BUSINESS

The original predecessor of Family Dollar Stores, Inc., was
organized in 1959 to operate a self-service retail store in Charlotte,
North Carolina. In subsequent years, additional stores were opened, and
separate corporations generally were organized to operate these stores.
Family Dollar Stores, Inc. (together with its direct and indirect
subsidiaries and related entities referred to herein as the "Company"), was
incorporated in Delaware in 1969, and all existing corporate entities
became wholly-owned subsidiaries. Additional stores continued to be opened
and operated in direct and indirect subsidiaries and related entities.
Four indirect subsidiaries organized as North Carolina corporations provide
distribution, trucking, operations, marketing and other services to the
Company.

The Company operates a chain of self-service retail discount stores.
As of November 1, 2000, there were 3,777 stores in 39 states and the
District of Columbia as follows:

Texas 404 Indiana 125 Colorado 31
North Carolina 244 Louisiana 122 Connecticut 28
Ohio 238 Illinois 108 Arizona 24
Georgia 215 Arkansas 93 Kansas 22
Florida 211 West Virginia 92 Delaware 19
Tennessee 170 Mississippi 90 Iowa 18
Virginia 169 Oklahoma 77 Maine 16
Pennsylvania 168 Missouri 72 New Hampshire 14
New York 154 Massachusetts 61 Rhode Island 13
Michigan 145 Wisconsin 61 Minnesota 12
Kentucky 143 Maryland 55 Nebraska 10
Alabama 135 New Jersey 37 Vermont 7
South Carolina 135 New Mexico 35 South Dakota 3
District of Columbia 1

The number of stores operated by the Company at the end of each of its
last five fiscal years is as follows: 2,581 stores on August 31, 1996;
2,767 stores on August 31, 1997; 3,017 stores on August 29, 1998; 3,324
stores on August 28, 1999; and 3,689 stores on August 26, 2000.

During the fiscal year ended August 26, 2000, 41 stores were
closed, 72 stores were relocated within the same shopping center or market
area, 81 stores were expanded in size and 122 stores were renovated. All
of the stores are occupied under leases, except 167 stores owned by the
Company. (See "Properties" herein.) The Company has announced plans to
open approximately 500 stores and close approximately 50 stores during the
current fiscal year. Such plans are continually reviewed and subject to
change. From August 26, 2000, through November 1, 2000, the Company opened
91 new stores, closed 3 stores, relocated 13 stores, expanded 23 stores and
renovated 36 stores.

As of November 1, 2000, the Company had in the aggregate
approximately 30,500,000 square feet of total store space (including
receiving rooms and other non-selling areas). The typical store has
approximately 7,000 to 9,000 square feet of total area. The stores are in
both rural and urban areas, and they are typically freestanding or located
in shopping centers with adequate parking available. There also are
storefront locations in urban markets. All stores are similar in
appearance and display highly visible red and white "Family Dollar Stores"
or "Family Dollar" signs.

The Company's stores are operated on a self-service, cash-and-
carry basis, and low overhead permits the sale of merchandise at a
relatively moderate markup. During the fiscal year ended August 31, 1994,
in the face of increasing competition, the Company began to change its
merchandising strategy from promotional pricing to everyday low prices.
Prices were reduced on many items and everyday low pricing was implemented
in all stores in the fiscal year ended August 31, 1995. No single store
accounted for more than one-tenth of one percent of sales during the fiscal
year ended August 26, 2000. Most of the stores are open six evenings a
week, and many are open on Sunday afternoons.

The stores offer a variety of hardlines and softlines merchandise.
Hardlines merchandise includes primarily household 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, boys', girls' and
infants' clothing, shoes, and domestic items such as blankets, sheets and
towels. During the fiscal year ended August 26, 2000, hardlines accounted
for approximately 71.4 percent of the Company's sales. Softlines accounted
for approximately 28.6% of sales (with hanging apparel and shoes
representing 15.6%, basic apparel 5.3% and domestics 7.7%).

During the fiscal year ended August 26, 2000, nationally advertised
brand merchandise accounted for approximately 29 percent of sales, Family
Dollar label merchandise accounted for approximately 5 percent of sales and
merchandise sold under other labels, or which was unlabeled, accounted for
the balance of sales. Irregular merchandise accounted for less than 1
percent of sales during such period. The Company does not accept credit
cards or extend credit.

During the fiscal year ended August 26, 2000, the Company continued
to adjust the merchandise selection in the stores. More hardline
consumables, including brand names, were added, along with a broader
assortment of giftware and seasonal goods. To make room for the additional
hardlines, beginning in May 2000, space allocated to hanging apparel was
reduced by about 15% to 20%. New fixtures were installed in departments
such as giftware, artificial flowers and 2 for $1 greeting cards and
aisles were widened. The space reallocation program was completed in
October 2000.

The Company has a policy of uniform pricing of most items in its
stores. A limited amount of merchandise in stores in the most competitive
markets carries lower prices and in stores in the least competitive markets
with higher operating costs carries higher prices. Most items of
merchandise are priced under $10.00. The Company advertises through
circulars which are inserted in newspapers or mailed directly to consumers'
residences, and also advertises to a limited degree in newspapers. As part
of the Company's plan to reduce expenses to support the program of price
reductions on merchandise in its stores, in the fiscal year ended
August 31, 1995, the number of advertising circulars distributed to consumers'
homes or inserted in newspapers was cut from 22 to 15. In the fiscal year
ended August 31, 1996, the number of advertising circulars distributed was
reduced from 15 to 14. In the fiscal years ended August 31, 1997, August
29, 1998, August 28, 1999, and August 26, 2000, 14, 9, 5 and 5 advertising
circulars, respectively, were distributed. Circulars that are passed out
in the stores also continue to be utilized. Most items in the circulars
are being advertised at the regular everyday low price. In the fiscal year
ending September 1, 2001, the Company has eliminated the circular that was
distributed in the prior fiscal year in the last week of September.

The Company purchases its merchandise from approximately 1,800
suppliers and generally has not experienced difficulty in obtaining
adequate quantities of merchandise. Approximately 55 percent of the
merchandise is manufactured in the United States and substantially all such
merchandise is purchased directly from the manufacturer. Purchases of
imported merchandise are made directly from the manufacturer or from
importers. No single supplier accounted for more than 4.5 percent of the
merchandise sold by the Company in the fiscal year ended August 26, 2000.
Each of the Company's 19 buyers specializes in the purchase of specific
categories of goods.

During the fiscal year ended August 26, 2000, approximately 2 percent
of the merchandise purchased by the Company was shipped directly to its
stores by the manufacturer or importer. Most of the balance of the
merchandise was received at the Company's Distribution Centers in Matthews,
North Carolina, West Memphis, Arkansas, Warren County, Virginia, Duncan,
Oklahoma, and Rowan County, Kentucky. Merchandise is delivered to the
stores from the Company's Distribution Centers by Company-owned trucks and
by common and contract carriers. During the fiscal year ended August 26,
2000, approximately 79 percent of the merchandise delivered was by common
or contract carriers. As of August 26, 2000, the approximate average
distance between the Distribution Centers and the stores served by each
facility was as follows:

Number of Average
Distribution Center Stores Served Distance

Matthews, NC 882 281
West Memphis, AR 892 360
Warren County, VA 806 285
Duncan, OK 714 392
Morehead, KY 395 264
Totals 3,689 321

During a portion of the fiscal year ended August 26, 2000, the
Company also operated satellite distribution buildings in Memphis,
Tennessee, and Salisbury, North Carolina. High volume, bulk items of
merchandise were shipped by vendors directly to these facilities and then
delivered to the stores by contract carriers.

The business in which the Company is engaged is highly competitive.
The principal competitive factors include location of stores, price and
quality of merchandise, in-stock consistency, merchandise assortment and
presentation, and customer service. The Company competes for sales and
store locations in varying degrees with national, regional and local
retailing establishments, including department stores, discount stores,
variety stores, dollar stores, discount clothing stores, drug stores,
grocery stores, convenience stores, outlet stores, warehouse stores and
other stores. Many of the largest retail merchandising companies in the
nation have stores in areas in which the Company operates. The relatively
small size of the Company's stores permits the Company to open new units in
rural areas and small towns, as well as in large urban centers, in
locations convenient to the Company's low and middle income customer base.
As the Company's sales are focused on low priced, basic merchandise, the
stores offer customers a reasonable selection of competitively priced
merchandise within a relatively narrow range of price points.

Generally, in a typical store the highest monthly volume of sales
occurs in December, and the lowest monthly volume of sales occurs in
January and February.

The Company maintains a substantial variety and depth of basic and
seasonal merchandise inventory in stock in its stores (and in distribution
centers for weekly store replenishment) to attract customers and meet their
shopping needs. Vendors' trade payment terms are negotiated to help
finance the cost of carrying this inventory. The Company must balance the
value of maintaining high inventory levels to meet customers' demands with
the potential cost of having inventories at levels that exceed such demands
and that may be marked down in price in order to sell.

The Company has registered with the U. S. Patent and Trademark Office
the name "Family Dollar Stores" as a service mark.

On August 26, 2000, the Company had approximately 16,200 full-time
employees and approximately 15,000 part-time employees. None of the
Company's employees are covered by collective bargaining agreements. The
Company considers its employee relations to be good.

ITEM 2. PROPERTIES

As of November 1, 2000, the Company operated 3,777 stores in 39
states and the District of Columbia. See "Business" herein. With the
exception of 167 stores owned by the Company, all of the Company's stores
were occupied under lease. Most of the leases are for fixed rentals. A
large majority of the leases contain provisions which may require

additional payments based upon a percentage of sales or property taxes,
insurance premiums or common area maintenance charges.

Of the Company's 3,610 leased stores at November 1, 2000, all but 228
leases contain options to renew for additional terms; in most cases for a
number of successive five-year periods. The following table sets forth
certain data, as of November 1, 2000, concerning the expiration dates of
all leases with renewal options:

Approximate Number of Approximate Number of
Leases Expiring Leases Expiring
Assuming No Exercise Assuming Full Exercise
Fiscal Years of Renewal Options of Renewal Options

2001 536 0

2002-2004 1,946 4

2005-2007 642 300

2008-2010 252 144

2011 and thereafter 6 2,934

Of the 167 Company-owned stores, 29 are located in Texas, 17 in North
Carolina, 15 each in Georgia and Indiana, 11 each in Illinois and Virginia,
9 in Oklahoma, 7 in Tennessee, 6 each in Florida and Ohio, 5 each in
Arkansas and Michigan, 4 each in Alabama, Kentucky, Louisiana, South
Carolina and West Virginia, 3 in Arizona, 2 each in Iowa and Missouri, and
one each in Kansas, Mississippi, New Jersey and New Mexico. In these owned
stores, there are approximately 1,330,000 total square feet of space.

The Company also owns its Executive Offices and Distribution Center
located on a 64.5 acre tract of land in Matthews, North Carolina, just
outside of Charlotte, in a building containing approximately 810,000
square feet. Approximately 740,000 square feet are used for the
Distribution Center which includes receiving, warehousing and shipping
facilities, and approximately 70,000 square feet are used for Executive
Offices.

The Company owns a second full-service distribution center located on
a 75-acre tract of land in West Memphis, Arkansas, in a building containing
approximately 850,000 square feet. This facility became operational in the
spring of 1994 with 550,000 square feet of space, and a 300,000 square foot
addition was substantially completed by the end of the Company's fiscal year
on August 31, 1996.

The Company owns a third full-service distribution center located on
a 75-acre tract of land in Warren County, Virginia, in a building
containing approximately 907,000 square feet. This facility became
operational in January 1998.

The Company owns a fourth full-service distribution center located on
a 85-acre tract of land in Duncan, Oklahoma, in a building containing
approximately 907,000 square feet. This facility became operational in
July 1999.

Construction began in August 1999 on a fifth full-service
distribution center on a 93.5 acre tract of land owned by the Company in
Rowan County, Kentucky. This facility containing approximately 907,000
square feet became operational in June 2000.

The Company currently plans to begin construction of a sixth
full-service distribution center in the spring of 2001. This facility is
expected to be in the Mid-west. The building is expected to contain
approximately 907,000 square feet and to be operational in 2002.

During a portion of the fiscal year ended August 26, 2000, the
Company leased buildings in Memphis, Tennessee (approximately 270,000
square feet) and Salisbury, North Carolina (approximately 300,000 square
feet) to serve as satellite distribution facilities. The leases for these
buildings expired during the fiscal year. The Company also leased another
building in Charlotte (approximately 78,000 square feet) for storage. The
lease for this space expires in April 2001.

In November 1999, the Company purchased a 43.5 acre tract of land and
the improvements thereon in Matthews, North Carolina, adjacent to the
Company's existing Executive Offices and Distribution Center. The
improvements include a building with approximately 95,000 square feet of
office space and approximately 190,000 square feet of distribution space.
The majority of the office space and the entire distribution space were
leased back to the seller for approximately one year from the date of
purchase. The lease has expired and the Company currently is using
approximately one-half of the office space. All of the distribution space
is being used by the Company for storage.

The Company owns and operates a fleet of tractor-trailers and trucks
to distribute merchandise to some of its stores.

ITEM 3. LEGAL PROCEEDINGS

The Company knows of no material pending legal proceedings, other
than ordinary routine litigation incidental to the business, to which the
Company is a party or of which any of its property is subject.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

There were no matters submitted during the fourth quarter of the
fiscal year ended August 26, 2000, to a vote of security holders through
the solicitation of proxies or otherwise.

ITEM 4A. EXECUTIVE OFFICERS OF THE REGISTRANT

The following information is furnished with respect to each of the
executive officers of the Company as of November 1, 2000:

Name Position and Office Age

Leon Levine (1) Chairman of the Board 63

Howard R. Levine (2) President and 41
Chief Executive Officer

R. James Kelly (3) Vice Chairman and 53
Chief Financial and
Administrative Officer

R. David Alexander, Jr. (4) Executive Vice President and 43
Chief Operating Officer

George R. Mahoney, Jr. (5) Executive Vice President- 58
General Counsel and Secretary

Bruce E. Barkus (6) Senior Vice President- 47
Store Operations

Charles S. Gibson, Jr. (7) Senior Vice President- 39
Distribution and Logistics

Gilbert A. LaFare (8) Senior Vice President- 54
Real Estate

Samuel N. McPherson (9) Senior Vice President- 55
Human Resources

Irving Neger (10) Senior Vice President- 49
Softlines

Albert S. Rorie (11) Senior Vice President- 50
Information Technology

John J. Scanlon (12) Senior Vice President- 51
Merchandising and Advertising

C. Martin Sowers (13) Senior Vice President- 42
Finance

(1) Mr. Leon Levine founded the Company's business in 1959 and
was its President, Chief Executive Officer and Treasurer
from 1959 until September 1977 when he was elected
Chairman of the Board, Chief Executive Officer and

Treasurer. He served in these positions until August 1998
when he resigned as Chief Executive Officer and Treasurer.
Leon Levine retains the position of Chairman of the Board.
He is the father of Howard R. Levine.

(2) Mr. Howard R. Levine was employed by the Company in
various capacities in the Merchandising Department from 1981
to 1987, including employment as Senior Vice President-
Merchandising and Advertising. From 1988 to 1992, Mr.
Levine was President of Best Price Clothing Stores, Inc., a
chain of ladies' apparel stores. From 1992 to April 1996,
he was self-employed as an investment manager. He rejoined
the Company in April 1996, and was elected Vice President-
General Merchandise Manager: Softlines in April 1996, Senior
Vice President-Merchandising and Advertising in September
1996, President and Chief Operating Officer in April 1997,
and Chief Executive Officer in August 1998. He is the son
of Leon Levine.

(3) Mr. R. James Kelly was employed by the Company as Vice
Chairman-Chief Financial and Administrative Officer in
January 1997. For more than five years prior to his
employment by the Company, he was a partner with
PricewaterhouseCoopers LLP.

(4) Mr. R. David Alexander, Jr. was employed by the Company as
Senior Vice President-Distribution and Transportation in
August 1995, and was promoted to Senior Vice President-
Distribution and Logistics in September 1997, to Executive
Vice President-Supply Chain and Real Estate in October
1999, and to Executive Vice President and Chief Operating
Officer in August 2000. Prior to his employment by the
Company, he was employed by Northern Automotive Co., Inc.,
a chain of discount automotive supply stores, from June
1993 to August 1995, where he was Senior Vice President-
Distribution and Transportation.

(5) Mr. George R. Mahoney, Jr. was employed by the Company as
General Counsel in October 1976. He was elected Vice
President-General Counsel and Secretary in April 1977,
Senior Vice President-General Counsel and Secretary in
January 1984 and Executive Vice President-General Counsel
and Secretary in October 1991.

(6) Mr. Bruce E. Barkus was employed by the Company in August
1999 as Vice President-Store Operations, and was promoted
to Senior Vice President-Store Operations in June 2000.
Prior to his employment by the Company, he was employed by
Eckerd Corporation, a chain of drug stores, from 1978 to
August 1999, where his last position was Regional Vice
President.

(7) Mr. Charles S. Gibson, Jr. was employed by the Company as
Vice President-Logistics in September 1997, and was

promoted to Senior Vice President-Distribution and
Logistics in October 1999. Prior to his employment by the
Company, he was employed by Campo Electronics, Appliances
and Computers, Inc. ("Campo"), a regional chain of
electronics stores, from November 1994 to August 1997,
where his last position was Chief Operating Officer and
his previous position was Vice President-Logistics and
Operations. Campo filed a petition under Chapter 11 of
the Federal bankruptcy laws in June 1997. Prior to his
employment by Campo, he was employed by Big B, Inc., a
drug store chain, from August 1991 to November 1994 where
he was Vice President-Logistics.

(8) Mr. Gilbert A. LaFare was employed by the Company as Vice
President-Real Estate in August 1992 and was promoted to
Senior Vice President-Real Estate in September 2000.

(9) Mr. Samuel N. McPherson was employed by the Company as
Senior Vice President-Human Resources in August 1999.
Prior to his employment by the Company, he was employed by
Raley's, a supermarket and pharmacy retailer, from 1990 to
August 1999, where his last position was Executive Vice
President and Chief Human Resources Officer.

(10) Mr. Irving Neger was employed by the Company in September
2000 as Senior Vice President-Softlines. Prior to his
employment by the Company, he was employed by Pennsylvania
Fashions, a chain of retail apparel stores, from 1995 to
August 2000, where his last position was Senior Vice
President-Merchandising.

(11) Mr. Albert S. Rorie was employed by the Company in various
capacities in the Data Processing area from March 1973
through January 1981, including employment as Director of
Data Processing. Mr. Rorie was self-employed as a data
processing consultant from January 1981 through May 1982,
when he rejoined the Company and was elected Vice
President-Data Processing. He was elected Senior Vice
President-Data Processing in January 1988 and Senior Vice
President-Information Technology in September 1997.

(12) Mr. John J. Scanlon was employed by the Company as
Divisional Vice President in March 1992. Mr. Scanlon was
elected Vice President-General Merchandise Manager:
Hardlines in April 1996, and was elected Senior Vice
President-Merchandising and Advertising in June 1998.

(13) Mr. C. Martin Sowers was employed by the Company as an
Accountant in October 1984 and was promoted to Assistant
Controller in January 1985. He was elected Controller in
January 1986, Vice President-Controller in July 1989 and
Senior Vice President-Finance in December 1991.

All executive officers of the Company are elected by and serve at the
pleasure of the Board of Directors.

PART II

ITEM 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY
AND RELATED STOCKHOLDER MATTERS

The information required by this item is included in the Company's
Annual Report to Stockholders for the fiscal year ended August 26, 2000, on
page 16 under the captions "Market Price and Dividend Information" and
"Market Prices and Dividends" and is incorporated herein by reference.

ITEM 6. SELECTED FINANCIAL DATA

The information required by this item is included in the Company's
Annual Report to Stockholders for the fiscal year ended August 26, 2000, on
pages 14 and 15 under the caption "Summary of Selected Financial Data" and is
incorporated herein by reference. The Company did not have any long-term
debt at the end of each of its last five fiscal years.

ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The information required by this item is included in the Company's
Annual Report to Stockholders for the fiscal year ended August 26, 2000, on
pages 14 through 16 under the caption "Management's Discussion and Analysis
of Financial Condition and Results of Operations" and is incorporated herein
by reference.

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES
ABOUT MARKET RISK

The Company is subject to market risk from exposure to changes in
interest rates based on its financing, investing and cash management
activities. The Company maintains unsecured bank lines of credit at variable
interest rates to meet the short-term needs of its expansion program and
seasonal inventory increases. These bank lines were not utilized in
fiscal 2000.

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

The information required by this item is included in the Company's
Annual Report to Stockholders for the fiscal year ended August 26, 2000, on
pages 17 through 24 and is incorporated herein by reference.

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS
ON ACCOUNTING AND FINANCIAL DISCLOSURES

None.

PART III

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

The information required by this item as to the Company's directors
and compliance by the Company's directors, executive officers and certain
beneficial owners of the Company's Common Stock with Section 16(a) of the
Securities Exchange Act of 1934 is included in the Company's proxy statement
dated November 22, 2000, on pages 5 through 7 under the caption "Election of
Directors" and on page 18 under the caption "Section 16(a) Beneficial
Ownership Reporting Compliance" and is incorporated herein by reference. The
information required by this item as to executive officers is included in
Item 4A in Part I of this report.

ITEM 11. EXECUTIVE COMPENSATION

The information required by this item is included in the Company's
proxy statement dated November 22, 2000, on pages 9 through 17 under the
caption "Executive Compensation" and is incorporated herein by reference,
except that the "Report of the Audit Committee of the Board of Directors" on
page 16 is not incorporated herein by reference.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The information required by this item is included in the Company's
proxy statement dated November 22, 2000, on pages 3 through 5 under the
caption "Ownership of the Company's Securities" and is incorporated herein by
reference.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

The information required by this item is included in the Company's
proxy statement dated November 22, 2000, on page 17 under the caption
"Related Transactions" and is incorporated herein by reference.

PART IV

ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K

(a) Documents filed as part of this report:
1 and 2. Financial Statements and Financial Statement Schedules:

The consolidated financial statements of Family Dollar Stores,
Inc., and subsidiaries which are incorporated by reference to the
Annual Report to Stockholders for the fiscal year ended
August 26, 2000, are set forth in the index on page 18 of
this report.

All schedules for which provision is made in the applicable
accounting regulations of the Securities and Exchange Commission
are not required under the related instructions, are inapplicable
or the information is included in the consolidated financial
statements, and therefore, have been omitted.

The financial statements of Family Dollar Stores, Inc. (Parent
Company) are omitted because the registrant is primarily a
holding company and all subsidiaries included in the consoli-
dated financial statements being filed, in the aggregate, do not
have minority equity and/or indebtedness to any person other than
the registrant or its consolidated subsidiaries in amounts which
together exceed 5 percent of the total assets as shown by the
most recent year-end consolidated balance sheet.

3. Exhibits:

Exhibits incorporated by reference:

3(a)(i) Certificate of Incorporation, dated November 24, 1969,
(filed as Exhibit 3(a) to the Company's Registration
Statement on Form S-1, No. 2-35468).

(ii) Certificate of Amendment, dated February 2, 1972, of
Certificate of Incorporation (filed as Exhibit 3(a)(ii)
to the Company's Form 10-K (File No. 1-6807) for the year
ended August 31, 1980).

(iii) Certificate of Amendment, dated January 23, 1979, of
Certificate of Incorporation (filed as Exhibit 2 to the
Company's Form 10-Q (File No. 1-6807) for the quarter
ended February 28, 1979).

(iv) Certificate of Amendment, dated January 20, 1983, of
Certificate of Incorporation (filed as Exhibit 4(iv) to
the Company's Registration Statement on Form S-3,
No. 2-85343).

(v) Certificate of Amendment, dated January 16, 1986, of
Certificate of Incorporation (filed as Exhibit 3(a)(v) to
the Company's Form 10-K (File No. 1-6807) for the year
ended August 31, 1986).

(vi) Certificate of Amendment, dated January 15, 1987, of
Certificate of Incorporation (filed as Exhibit 3(a)(vi)
to the Company's Form 10-K (File No. 1-6807) for the year
ended August 31, 1987).

(vii) Certificate of Amendment, dated January 15, 1998, of
Certificate of Incorporation (filed as Exhibit 3.1 to the
Company's Registration Statement on Form S-8, No. 333-48751).

(b) By-Laws, as amended on August 19, 1998 (filed as Exhibit
3(b) to the Company's Form 10-K (File No. 1-6807) for the
year ended August 29, 1998).

* 10 (i) Incentive Profit Sharing Plan amended as of January 16, 1997
(filed as Exhibit 10(ii) to the Company's Form 10-Q (File
No. 1-6807) for the quarter ended February 28, 1997).

* 10 (ii) 1989 Non-Qualified Stock Option Plan, amended as of
January 15, 1998 (filed as Exhibit 99.1 to the Company's
Registration Statement on Form S-8, No. 333-48751).

* 10 (iii) Family Dollar Employee Savings and Retirement Plan and Trust
amended and restated as of January 1, 1987 (filed as Exhibit
10 (viii) to the Company's Form 10-K (File No. 1-6807) for
the year ended August 31, 1995).

* 10 (iv) Amendment No. One dated January 15, 1996, to Family Dollar
Employee Savings and Retirement Plan and Trust (filed as
Exhibit 10(v) to the Company's Form 10-K (File No. 1-6807)
for the year ended August 31, 1996).

* 10 (v) Amendment No. 2, dated January 15, 1998, to Family Dollar
Employee Savings and Retirement Plan and Trust (filed as
Exhibit 10(ii) to the Company's Form 10-Q (File No. 1-6807)
for the quarter ended February 28, 1998).

* 10 (vi) Amendment No. 3, dated March 19, 1998, to Family Dollar
Employee Savings and Retirement Plan and Trust (filed as
Exhibit 10(iii) to the Company's Form 10-Q (File No. 1-6807)
for the quarter ended February 28, 1998).

* 10 (vii) Trust Agreement between Merrill Lynch Trust Company of North
Carolina, as Trustee, and the Company and Family Dollar,
Inc., as Employer, with respect to Family Dollar Employee
Savings and Retirement Plan and Trust (filed as Exhibit 10
to the Company's Form 10-Q (File No. 1-6807) for the quarter
ended May 31, 1998.)

* 10 (viii) Family Dollar 2000 Outside Directors Plan (filed as Exhibit
10(ii) to the Company's Form 10-Q (File No. 1-6807) for the
quarter ended February 26, 2000).

10 (ix) Credit Agreement, dated as of March 31, 1996, between the
Company and NationsBank, N.A.,(filed as Exhibit 10 to the
Company's Form 10-Q (File No. 1-6807) for the quarter ended
May 31, 1996)

10 (x) Amendment No. 1, dated as of March 26, 1997, to the Credit
Agreement, dated as of March 31, 1996, between the Company
and NationsBank, N.A. (filed as Exhibit 10(i) to the
Company's Form 10-Q (File No. 1-6807) for the quarter ended
November 30, 1997).

10 (xi) Amendment No. 2, dated as of December 31, 1997, to the
Credit Agreement, dated as of March 31, 1996, between the
Company and NationsBank, N.A. (filed as Exhibit 10(ii) to
the Company's Form 10-Q (File No. 1-6807) for the quarter
ended November 30, 1997).

10 (xii) Amendment, dated as of November 19, 1998, to the Credit
Agreement, dated as of March 31, 1996, between the Company,
Family Dollar, Inc. and NationsBank, N.A. (filed as Exhibit
10(i) to the Company's Form 10-K (File No. 1-6807) for the
year ended August 29, 1998).

10 (xiii) Letter Agreement dated March 10, 2000, among NationsBank,
N.A., the Company and Family Dollar, Inc., amending Credit
Agreement, dated as of March 31, 1996, as amended, among
NationsBank, N.A., the Company and Family Dollar, Inc.
(filed as Exhibit 10(i) to the Company's Form 10-Q (File
No. 1-6807) for the quarter ended February 26, 2000).

* 10 (xiv) Employment Agreement dated December 17, 1996, between the
Company and R. James Kelly (filed as Exhibit 10(i) to the
Company's Form 10-Q (File No. 1-6807) for the quarter ended
February 28, 1997).

* 10 (xv) Amendment dated June 21, 1999, to the Employment Agreement
dated December 17, 1996, between the Company and
R. James Kelly (filed as Exhibit 10(ii) to the Company's
Form 10-K (File No. 1-6807) for the year ended August 28,
1999).

* 10 (xvi) Employment Agreement dated April 29, 1997, between the
Company and Howard R. Levine (filed as Exhibit 10(i) to the
Company's Form 10-Q (File No. 1-6807) for the quarter ended
May 31, 1997).

* 10 (xvii) Amendment dated August 28, 1997, to the Employment
Agreement dated April 29, 1997, between the Company
and Howard R. Levine (filed as Exhibit 10(i) to the
Company's Form 10-K (File No. 1-6807) for the year ended
August 31, 1997).

* 10 (xviii) Amendment dated August 29, 1999, to the Employment Agreement
dated April 29, 1997, as amended, between the Company and
Howard R. Levine (filed as Exhibit 10(i) to the Company's
Form 10-K (File No. 1-6807) for the year ended August 28,
1999).

Exhibits filed herewith:

* 10 (i) Amendment dated August 27, 2000, to the Employment Agreement
dated April 29, 1997, as amended, between the Company and
Howard R. Levine.

* 10 (ii) Employment Agreement dated August 25, 2000, between the
Company and R. David Alexander, Jr.

10 (iii) Amendment, dated as of August 25, 2000, to the Credit
Agreement, dated as of March 31, 1996, as amended, between
the Company, Family Dollar, Inc. and Bank of America, N.A.

11 Statement Re: Computations of Per Share Earnings.

13 Annual Report to Stockholders for the fiscal year ended
August 26, 2000 (only those portions specifically
incorporated by reference herein shall be deemed filed).

21 Subsidiaries of the Company.

27 Financial Data Schedule

* Exhibit represents a management contract or compensatory plan.

(b) No reports on Form 8-K have been filed by the Company during
the last quarter of the period covered by this report.

FAMILY DOLLAR STORES, INC., AND SUBSIDIARIES

Index

The consolidated financial statements of Family Dollar Stores, Inc., and
subsidiaries together with the report of PricewaterhouseCoopers LLP
incorporated in this report appear on the following pages of the Annual
Report to Stockholders for the fiscal year ended August 26, 2000.

Page of the
Annual Report

Report of Independent Accountants 17

Consolidated Statements of Income 17

Consolidated Balance Sheets 18

Consolidated Statements of Shareholders'
Equity 19

Consolidated Statements of Cash Flows 20

Notes to Consolidated Financial Statements 21-24

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized.

FAMILY DOLLAR STORES, INC.
(Registrant)

Date November 17, 2000 By HOWARD R. LEVINE
HOWARD R. LEVINE
President (Chief Executive Officer)

Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed by the following persons on behalf of the registrant
and in the capacities and on the date indicated.

Signature Title Date

LEON LEVINE Chairman of the Board and November 17, 2000
LEON LEVINE Director

HOWARD R. LEVINE President and Director November 17, 2000
HOWARD R. LEVINE (Chief Executive Officer)

R. JAMES KELLY Vice Chairman-Chief November 17, 2000
R. JAMES KELLY Financial and Administrative
Officer and Director
(Principal Financial Officer)

R. DAVID ALEXANDER, JR. Executive Vice President November 17, 2000
R. DAVID ALEXANDER, JR. and Director (Chief
Operating Officer

GEORGE R. MAHONEY, JR. Executive Vice President November 17, 2000
GEORGE R. MAHONEY, JR. and Director

C. MARTIN SOWERS Senior Vice President- November 17, 2000
C. MARTIN SOWERS Finance (Principal
Accounting Officer)

MARK R. BERNSTEIN Director November 17, 2000
MARK R. BERNSTEIN

SHARON ALLRED DECKER Director November 17, 2000
SHARON ALLRED DECKER

JAMES H. HANCE, JR. Director November 17, 2000
JAMES H. HANCE, JR.

JAMES G. MARTIN Director November 17, 2000
JAMES G. MARTIN