Modern performance management - larmokymai.lt · Sprendimų priėmimas, planavimas ir kontrolės hierarchija Nustatyti tikslus Ieškoti alternatyvių veikimo būdų Rinkti duomenis

Modern performance management

Šiuolaikinis veiklos valdymas

Course objectives

• To refresh basic knowledge

• To introduce “more modern” approaches

© Emile Woolf International 3www.LARmokymai.lt

Kurso tikslas

• Atnaujinti pagrindines žinias

• Pristatyti „labiau šiuolaikiškesnes“ strategijas


Management accounting


Decision making, planning and control hierarchy

Identify objectives

Search for alternative courses of action

Gather data about alternatives

Select alternative courses of action

Implement decisions

Compare actual and planned outcomes

Respond to divergences from the plan

Planning

Control

Vadovybės apskaita


Sprendimų priėmimas, planavimas ir kontrolės hierarchija

Nustatyti tikslus

Ieškoti alternatyvių veikimo būdų

Rinkti duomenis apie alternatyvius sprendimus

Ieškoti alternatyvių veikimo būdų

Įgyvendinti sprendimus

Palyginti faktinius ir planuotus rezultatus

Atitinkamai reaguoti į nukrypimus nuo plano

Planavimas

Kontrolė

Sources of information

• Information must be relevant, reliable and timely information

• Information comes from both inside and outside the organisation

• Traditional management accounting systems use internal information derived from costing systems

• Modern systems can be very sophisticated using:

– data from external and internal sources; and

– financial and non-financial data; and

– advanced analysis techniques (eg ABC)


Informacijos šaltiniai

• Informacija turi būti aktuali, patikima ir laiku pateikta

• Informacija gaunama pačioje organizacijoje, ir iš jos aplinkos

• Tradicinės vadovybės apskaitos sistemos naudoja vidaus informaciją, gautą iš sąnaudų apskaitos sistemų

• Šiuolaikinės sistemos gali būti labai sudėtingos, naudojančios:

– išorės ir vidaus šaltinių duomenis, ir

– finansinius ir nefinansinius duomenis, ir

– pažangiausias analizės technikas (pvz., ABC).


Dodgy predictions


We don't like their sound, and guitar

music is on the way out

Decca Recording Co.

rejecting the Beatles, 1962

Apgaulingas pranašavimas


Mums nepatinka, kaip jie skamba, o

gitaros muzika iš viso išnyksta

Decca Recording Co., kuri

1962 m. atmetė Beatles

Quotation


The future depends on what we do in

the presentMahatma Ghandhi

Citata


Ateitis priklauso nuo to, ką darome

dabarMahatma Ghandhi

Planning

• A key management role

• Planning reflects the hierarchical nature of management:

– Strategic planning

• focuses on how to achieve long-term objectives

– Tactical planning

– Operational plans

• focuses on day-to-day and week-to-week plans


Planavimas

• Pagrindinis vadovybės vaidmuo

• Planavimas atspindi hierarchinį vadovavimo pobūdį

– Strateginis planavimas

• - kaip pasiekti ilgalaikius tikslus

– Taktinis planavimas

– Veiklos planai

• - pagrindinis dėmesys kasdieniam ir savaitės trukmės planams


Planning and budgeting

• A budget is a plan of action expressed in quantitative (usually financial) terms

– A typical budget is prepared annually and is divided:

• into shorter periods; and

• across areas of responsibility

• A budget is a commitment to a plan of action

– more than a forecast;

– a statement that an entity will try to make something happen

• Large companies need a well-defined budget process in order to co-ordinate efforts to prepare budgets


Planavimas ir biudžetas

• Biudžetas yra kiekybiniais rodikliais (dažniausiai finansiniais) išreikštas planas.

– Dažniausiai biudžetas sudaromas metams ir skirstomas

• į trumpesnius laikotarpius, ir

• pagal atsakomybės sritis

• Biudžetas yra įsipareigojimas įgyvendinti veiksmų planą

– tai yra daugiau, nei prognozė.

– pareiškimas, kad įmonė sieks, kad kažkas įvyktų.

• Didelės bendrovės turi įdiegti gerai apibrėžtus biudžeto įgyvendinimo procesus, ir jais vadovaujantis koordinuoti biudžeto sudarymo procesus


Budgeting

• Purposes of budgeting


P lanning

R esponsibility

I ntegration and coordination

M otivation

E valuation and control

Biudžeto sudarymas

• Biudžeto sudarymo tikslas


P lanning (planavimas)

R esponsibility (atsakomybė)

I ntegration and coordination (integravimas ir koordinavimas)

M otivation (motyvacija)

E valuation and control (vertinimas ir kontrolė)

Budgeting

• Purposes of budgeting– Planning

• to ensure that planning is linked to the long-term objectives• to convert long-term plans into more detailed shorter-term plans

– Responsibility• to communicate the plans to individuals who must implement them• to identify areas of responsibility • to authorise expenditure

– Integration and coordination• to co-ordinate actions of different parts of the entity so that they work

towards the same goals („goal congruence‟)

– Motivation• to motivate managers and employees by setting targets

– Evaluation and control• to provide a benchmark against which actual performance can be measured• to provide the basis of an information system for management control


Our plans miscarry because they have

no aim. When a man does not know

what harbour he is making for, no wind

is the right windSeneca

Biudžeto sudarymas

• Biudžeto sudarymo tikslas– Planavimas

• užtikrinti, kad planavimas būtų susijęs su ilgalaikiais planais • konvertuoti ilgalaikius planus į detalesnius trumpalaikius planus

– Atsakomybė• komunikuoti planus asmenims, kurie turi tokius planus įgyvendinti• apibrėžti atsakomybės sritis • patvirtinti išlaidas

– integravimas ir koordinavimas• koordinuoti įvairių įmonėje veikiančių asmenų veiklą, kad jie visi siektų vieno

tikslo (tikslo vienybė)

– Motyvacija • motyvuoti vadovus ir darbuotojus apibrėžiant tikslus

– Vertinimas ir kontrolė• nustatyti standartą, pagal kurį būtų vertinami faktiniai veiklos rezultatai • sukurti vadovybės kontrolei reikalingos informacinės sistemos pagrindą


Mūsų planai neįgyvendinami, kadangi

juose nėra nustatytų aiškių planų. Kai

žmogus nežino, į kokį uostą jis plaukia,

joks vėjas jam nebus tinkamas Seneca

Budgeting


Budgetary control process

Preparation

Approval

Communication

Evaluation

complex process

by senior management

tell people what they are responsible for

Compare actual performance to the

budget and take corrective action

Biudžeto sudarymas


Biudžeto kontrolės procesas

Rengimas

Patvirtinimas

Informavimas

Vertinimas

sudėtingas procesas

rengiamas vyresniosios

vadovybės

pasakyti žmonėms, už ką jie yra

atsakingi

Lyginti faktinius rezultatus su biudžetu

ir imtis koreguojančių veiksmų

Budgeting

• A system of budgetary control involves:

– establishing areas of responsibility;

– preparing a budget;

– continuous comparison;

– remedial action:

• adjust performance; or

• adjust budget


Biudžeto sudarymas

• Biudžeto kontrolės sistema reikalauja atlikti tokius veiksmus:

– nustatyti atsakomybės sritis

– parengti biudžetą

– nuolat lyginti

– imtis koreguojančių veiksmų

• koreguoti veiksmus, arba

• koreguoti biudžetą


Behavioural aspects of budgeting

• Very important

– this is what budgets are all about;

– they try to make individuals behave in a way that will help the company achieve its objectives

• Management accounting systems serve to assign responsibility:

– individuals must be informed of and understand their responsibilities;

– individuals must accept the budget


Elgesio aspektai sudarant biudžetą

• Labai svarbu

– būtent tokia yra biudžeto esmė;

– užtikrinama, kad asmenys elgtųsi taip, kad padėtų bendrovei pasiekti jos tikslus

• Vadovybės apskaitos sistema padeda paskirstyti atsakomybę;

– atskiri asmenys turi būti tinkamai informuoti ir suprasti savo pareigas;

– darbuotojai privalo priimti biudžetą



• Budgets work by influencing behaviour of individuals– budgets provide performance targets (perhaps reinforced by

reward structure);

– budgets can motivate individuals if they participate in the planning process

• Problem areas:– misunderstanding and worries about cost-cutting

– sub-optimisation

– budget slack or budget bias

– targets being perceived as unfair

– budget acceptance



• Biudžetai įgyvendinami darydami įtaką atskirų asmenų elgesiui– biudžetuose apibrėžiami veiklos tikslai (dažnai numatant

skatinimo priemones)

– biudžetai gali motyvuoti atskirus asmenis, jeigu jie dalyvauja planavimo procese

• Probleminės sritys– nesusipratimai ir nuogąstavimai dėl sąnaudų sumažinimo

– sub-optimizavimas

– biudžeto netikslumas ir neobjektyvumas

– tikslai suvokiami kaip neteisingi

– biudžeto priėmimas



• Misunderstanding and worries about cost-cutting

– Budgeting is often interpreted as an excuse for cost reduction

– Can lead to resentment and hostile attitude to the budget

• Sub-optimisation

– Where action of individual managers is not in the best interests of the organisation as a whole due to ineffective co-ordination

– Planning process must be co-ordinated in order to avoid sub-optimal planning



• nesusipratimai ir nuogąstavimai dėl sąnaudų sumažinimo

– Biudžeto sudarymas dažnai yra suprantamas kaip pasiteisinimas mažinti sąnaudas

– Gali sukelti pasipriešinimą ir priešišką požiūrį į biudžetą

• sub-optimizavimas

– Kai dėl neefektyvaus koordinavimo atskirų vadovų veiksmai nėra atliekami geriausiais organizacijos kaip visumos interesais

– Norint išvengti neefektyvaus planavimo, pats procesas turi būti tinkamai koordinuojamas



• Budget slack

– „The intentional overestimation of expenses and/or underestimation of revenue in the budgeting process‟ (CIMA Official Terminology).

– Managers build slack into a budget to ensure that they will be able to achieve it

– More likely when managers are rewarded for achieving their budget

– Particularly associated with expenses in incremental budgeting systems (Combated by zero based budgeting)

• Budget bias

– overly optimistic budgets



• Biudžeto netikslumas

– "Tyčinis išlaidų padidinimas ir (arba) pajamų sumažinimas sudarant biudžetą“ (CIMA Official Terminology)

– Vadovai specialiai palieka klaidas biudžete, norėdami užtikrinti, kad jie sugebės biudžetus įvykdyti.

– Didesnė tikimybė, kai už biudžeto įvykdymą vadovams yra skiriamos premijos.

– Ypač dažnai susiję su išlaidomis pagal augančių biudžetų sistemas (priešingai, nei 0 grindžiamas biudžeto sudarymas)

• Biudžeto neobjektyvumas

– perdėtai optimistiniai biudžetai



• Budgets as targets

– Target must be set at an appropriate level:

• target too hard – individuals give up on it;

• target to soft – individuals take it easy

– Research shows that best performance is achieved when targets are set at a level that individuals believe to be tough but attainable



• Biudžetas kaip siekiami rodikliai

– Tikslai turi būti nustatyti tinkamo lygio

• tikslai pernelyg ambicingi - nuleidžiamos rankos;

• tikslai pernelyg lengvai pasiekiami - į juos rimtai nežiūrima

– Tyrimai rodo, kad geriausi rezultatai pasiekiami tada, kai tikslai nustatomi tokio lygio, kuris atskirų asmenų laikomas pakankamai aukštu, tačiau pasiekiamu.



• Acceptance of budgets– It is vital that the budget is accepted as fair by those

individuals that must put it into action:

– Aided by:• good communication;

• participation

– Poor communication can lead to:• suspicion and fear;

• poor motivation;

• conflict; and

• manipulation of results



• Biudžeto priėmimas – Labai svarbu, kad asmenys, kurių pareiga biudžetą

įgyvendinti, patys biudžetą laikytų teisingu

– Tam padeda: • gera komunikacija

• dalyvavimas

– Nepakankamai gerai organizuota komunikacija gali sukelti:

• įtarimus ir baimę;

• mažesnę motyvaciją;

• konfliktus ir

• manipuliavimą rezultatais. :



• Advantages of participation:– Good for morale ;

– Enhances acceptance of the budget;

– Improved motivation;

– Better communication of goals and budget targets;

– Involvement in budgeting provides experience for personal development

– Might lead to better quality decisions;

• Disadvantages of participation:– Junior management might

not understand the corporate objectives;

– Participants might not have the requisite skills to participate effectively

– Can lead to budget padding;

– Pseudo-participation is demotivating



• Dalyvavimo privalumai– Daro gerą įtaką moralinei

atmosferai

– Sudaro galimybę geriau priimti biudžetą

– Padidina motyvaciją

– Geresnis tikslų ir biudžeto siekinių komunikavimas

– Dalyvavimas sudarant biudžetą suteikia progą tobulėti asmeniškai

– Gali sudaryti sąlygas priimti geresnės kokybės sprendimus;

• Dalyvavimo trūkumai– Jaunesnieji vadovai gali

nesuprasti įmonės valdymo tikslų.

– Dalyviai gali neturėti reikiamų įgūdžių, reikalingų veiksmingai dalyvauti procese

– Dirbtinas biudžeto sumažinimas

– Pseudo dalyvavimas demotyvuoja



• Appraisal must be fair:– individuals must have been told about and accept their

responsibilities;

– only controllable elements should be included in the performance appraisal;

– budgets should be flexed;

– care must be taken to understand the cause of variance and link it to the correct person



• Įvertinimas turi būti teisingas – Darbuotojams turi būti išaiškintos jų pareigos, jie turi jas

patvirtinti

– veikla turi būti vertinama tik pagal kontroliuojamus elementus

– biudžetai turi būti lankstus

– būtina suprasti nukrypimų priežastis, ir jas susieti su atitinkamu asmeniu


Problems with budgeting

• Alternative budget models

– Developed to deal with perceived weaknesses in traditional budgeting methods:


Activity based budgetingIneffective analysis of overhead

costs

Zero based budgetingBudget slack

Rolling (continuous budgets)Unexpected changes

Flexible budgetsUncertainty about activity levels

SolutionProblem

Problemos sudarant biudžetą

• Alternatyvūs biudžeto modeliai

Sukurt kaip priemonė kovoti su tradicinių biudžeto sudarymo metodų trūkumais


Veikla biudžeto sudarymasNeveiksminga papildomų

sąnaudų analizė

0 grindžiamas biudžeto

sudarymasBiudžeto netikslumas

Atsinaujinantis (tęstinis)

biudžetas Netikėti pokyčiai

Lankstūs biudžetai Sprendimas

SprendimasProblema

Problems with budgeting

• The usefulness of standard costing and variances

– Kaplan and Johnson (and others) – standard costing and standard cost variances are inappropriate in modern manufacturing environments for both:

• cost control; and

• performance measurement.

– Use of variance analysis to control costs and measure performance is inconsistent with a focus on objectives of quality, time and innovation


Problemos sudarant biudžetą

• Standartinio sąnaudų sudarymo metodo naudingumas ir nuokrypiai

– Kaplan ir Johnson (et al) – standartinė sąnaudų apskaita ir standartiniai sąnaudų nuokrypių vertinimai netinka šiuolaikinėse gamybos aplinkose, nei

• sąnaudų kontrolei, nei

• veiklos vertinimui.

– Nuokrypių analizė kontroliuoti sąnaudoms ir vertinti veiklą neatitinka kokybės, laiko ir inovatyvumo tikslų.


Periodic budgets

• A periodic budget is a budget for a particular time period (usually the financial year)

– fixed budget for the period

– not changed or revised during the year

• Not very useful when events change rapidly and plans must be continually revised

– advisable for the organisation to prepare budgets more frequently


Periodiniai biudžetai

• Periodinis biudžetas yra tam tikram laikotarpiui sudaromas biudžetas (dažniausiai finansiniams metams)

– fiksuotas biudžetas tam tikram laikotarpiui

– per metus nekeičiamas ir neperžiūrimas

• Nėra labai naudingas, jeigu situacija sparčiai keičiasi, ir planai turėtų būti nuolat peržiūrimi

– Organizacijoms rekomenduojama peržiūrėti biudžetus dažniau


Fixed and flexible budgets

• Prepared before the start of the budget period– Fixed budget

• A budget for the planned volume of output and sales (the planned level of activity)

– Flexible budget• A series of budgets prepared at other levels of activity on

“what if basis”

• Prepared after the end of the budget period– Flexed budget

• A budget redrafted to the actual levels of activity

• Allows comparison of actual revenues and costs to expected revenues and costs at that level of activity


Fiksuoti ir lankstūs biudžetai

• Rengiamas prieš biudžeto laikotarpio pradžią – Fiksuotas biudžetas

• Planuojamos produkcijos ir pardavimų biudžetas (planuojamas veiklos lygis)

– Lankstus biudžetas• Keli biudžetai, sudaromi atsižvelgiant į kitus veiklos lygius („o

kas, jeigu“)

• Rengiamas pasibaigus biudžeto laikotarpiui– Lankstus biudžetas

• Biudžetas peržiūrimas, atsižvelgus į veiklos lygį

• Leidžia palyginti faktines pajamas ir sąnaudas su numatytu veiklos pajamų ir sąnaudų lygiu


Illustration – Flexible


Unit sales 2,000 2,100 1,900

FixedFlexible

Unit production 2,000 2,100 2,000

$ $ $

Sales 50,000 52,500 47,500

Cost of sales:

Materials 25,000 26,250 25,000

Labour 8,000 8,400 8,000

Variable o’head 4,000 4,200 4,000

Fixed o’head 6,000 6,300 6,000

43,000 45,150 43,000

Closing inventory − − (2,150)

Cost of sales (43,000) (45,150) (40,850)

Profit 7,000 7,350 6,650

25

12.5

4

2

3

(21.5)

3.5

Iliustracijos - lankstus


Pardavimas vnt. 2 000 2.100 1.900

Fiksuotas Lankstus

Gamyba vnt. 2.000 2.100 2.000

$ $ $

Pardavimai 50 000 52.500 47 500

Pardavimo sąnaudos

Medžiagos 25.000 26.250 25.000

Darbas 8.000 8.400 8.000

Kintamosios papildomos

sąnaudos 4 000 4 200 4 000

Fiksuotos papildomos

sąnaudos6 000 6 300 6.000

43.000 45.150 43.000

Laikotarpio pabaigos

atsargos − − (2.150):

Pardavimo

sąnaudos(43.000): (45.150): (40.850):

Pelnas 7.000 7.350 6.650

25

12,5

4

2

3

(21,5):

3,5

Illustration – Flexed


Unit sales 2,000 1,600 1,600

Fixed Flexed Actual


$ $ $

Sales 50,000 40,000 46,200

Cost of sales:

Materials 25,000 22,500 24,300

Labour 8,000 7,200 7,630

Variable o’head 4,000 3,600 3,440

Fixed o’head 6,000 5,400 6,325

43,000 38,700 41,695

Closing inventory − (4,300) (4,300)

Cost of sales (43,000) (34,400) (37,395)

Profit 7,000 5,600 8,805

25

12.5

4

2

3

(21.5)

3.5



Pardavimas vnt. 2.000 1.600 1.600

Fiksuotas Lankstus Faktinis

Gamyba vnt. 2.000 1.800 1.800

$ $ $

Pardavimai 50.000 40.000 46.200

Pardavimo sąnaudos

Medžiagos 25.000 22.500 24.300

Darbas 8.000 7.200 7.630

Kintamosios papildomos

sąnaudos4.000 3.600 3.440


sąnaudos6.000 5.400 6.325

43.000 38.700 41.695


atsargos− (4.300): (4.300):

Pardavimo

sąnaudos(43.000): (34.400): (37.395):

Pelnas 7.000 5.600 8.805

25

12,5

4

2

3

(21,5)

:3,5

Illustration – Flexed


Unit sales 2,000 1,600 1,600

Fixed Flexed Actual


$ $ $

Sales 50,000 40,000 46,200

Cost of sales:

Materials 25,000 22,500 24,300

Labour 8,000 7,200 7,630

Variable o’head 4,000 3,600 3,440

Fixed o’head 6,000 5,400 6,325

43,000 38,700 41,695

Closing inventory − (4,300) (4,300)

Cost of sales (43,000) (34,400) (37,395)

Profit 7,000 5,600 8,805

25

12.5

4

2

3

(21.5)

3.5

400

units

$6.3k

$1.8k

$430

$160



Pardavimas vnt. 2.000 1.600 1.600

Fiksuota

s

Lankstus Faktinis

Gamyba vnt. 2.000 1.800 1.800

$ $ $

Pardavimai 50.000 40.000 46.200

Pardavimo sąnaudos

Medžiagos 25.000 22.500 24.300

Darbas 8.000 7.200 7.630

Kintamosios

papildomos sąnaudos4.000 3.600 3.440


sąnaudos

6.000 5.400 6.325

43.000 38.700 41.695


atsargos− (4.300): (4.300):

Pardavimo

sąnaudos(43.000): (34.400): (37.395):

Pelnas 7.000 5.600 8.805

25

12,5

4

2

3

(21,5)

:3,5

400

vnt.

$6,300

$1,800

$ 430

$ 160

Rolling budgets

• A rolling budget (continuous budget)– a budget that is continuously being updated adding a

further period (say a quarter) and deducting the earliest period

– budget always looks at the next 12m (say)

• Useful where:– future costs or activities cannot be forecast reliably

– for cash budgeting

• Disadvantage– time and cost


Atsinaujinantys biudžetai

• Atsinaujinantis (tęstinis) biudžetas – biudžetas, kuris yra nuolat atnaujinamas pridedant

naują laikotarpį (pvz., ketvirtį) ir atimant ankstesnį laikotarpį

– sudarant biudžetą visuomet žiūrima į ateinantį (pvz.) 12 mėn. laikotarpį

• Naudinga, kai:– ateities sąnaudų arba veiklos negalima prognozuoti

patikimai

– grynųjų pinigų biudžeto sudarymui

• Trūkumas – laikas ir sąnaudos


Incremental budgets

• Budgeted expenditure for the next financial period is estimated by adding an increment to current period expenditure

• The increment might be for:– inflation; and

– cost of additional activities to be carried out next year

• Can perpetuate inefficiency as this year‟s expenditure is not justified


Augantys biudžetai

• Kito finansinio laikotarpio biudžetas apskaičiuojamas prie esamo laikotarpio išlaidų pridedant naujas išlaidas

• Biudžetas gali išaugti dėl: – infliacijos; ir

– papildomų, kitais metais numatytų vykdyti veiklų sąnaudų

• Gali būti neveiksmingos veiklos požymis (jeigu šių metų išlaidos negali būti pateisintos)


Zero based budgeting

• An alternative to incremental budgeting:– where budgeted expenditure for the next financial

period is estimated by adding an increment to current period expenditure

• Zero-based budgeting

– expenditure budget is built up from zero (all budgeted expenditure must be justified not simply included because it was there last year);

– particularly appropriate for overhead budgets


0 grindžiamas biudžeto sudarymas

• Alternatyva augančio biudžeto sudarymui – Kito finansinio laikotarpio biudžetas apskaičiuojamas

prie esamo laikotarpio išlaidų pridedant naujas išlaidas

• Nuliu grindžiamas biudžeto sudarymas

– išlaidų biudžetas sudaromas nuo nulio (visos į biudžetą įtrauktos išlaidos turi būti pateisintos, o ne paprasčiausiai įtrauktos vien dėl to, kad tokios išlaidos buvo patirtos praėjusiais metais);

– ypač tinka sudarant papildomų išlaidų biudžetus


Zero based budgets

• Department identifies essential things that must be done

• A budget is prepared for this minimum essential level

• All other activities are optional activities (decision packages) and must be justified by an analysis which looks at:– purpose of the activity;

– likely results and benefits from the activity;

– resources required for the activity and their cost;

– alternative ways of achieving the same purpose perhaps at a lower cost;

– comparison of costs and benefits



• Departamentas nustato pagrindinius dalykus, kuriuos būtina atlikti

• Biudžetas sudaromas pagal minimalias esminio lygio išlaidas

• Visos kitos veiklos rūšys yra pasirenkamojo pobūdžio (sprendimų paketai), ir turi būti pateisintos, atliekant analizę, kurios metu vertinama: – veiklos tikslas;

– tikėtini veiklos rezultatai ir nauda;

– veiklai vykdyti įsigyti ištekliai ir jų savikaina;

– alternatyvūs būdai pasiekti tą patį tikslą mažesnėmis sąnaudomis;

– sąnaudų ir naudos palyginimas


Zero based budgets

• Advantages– makes managers

question reason for doing things rather than accepting the current position;

– eliminates inefficiency

– provides a priority list for activities when expenditure needs to be reduced

• Disadvantages– time consuming;

– cost;

– requires excellent MIS;

– estimates often based on value judgements;

– can be seen as a threat;

– can lead to disputes



• Privalumai– priverčia vadovus

užduoti sau klausimą, kodėl jie turėtų imtis papildomų veiksmų vietoje to, kad susitaikytų su esama padėtimi

– pašalina neveiksmingumus

– jeigu reikia mažinti išlaidas, padeda sudaryti prioritetinių veiklų sąrašą

• Trūkumai – užima daug laiko;

– sąnaudos

– būtina puiki vadovybės IS;

– apskaitiniai įvertinimai dažnai daromi remiantis sprendimu apie vertę

– gali būti traktuojama kaip grėsmė;

– gali sukelti ginčų


‘Beyond budgeting’

• Traditional budgeting is inadequate for the needs of modern businesses

• Makes businesses too rigid in their thinking and slow to react to business developments

• Establishes „last year‟s reality‟ as the framework for the current year‟s activities

• Traditional budgeting systems act as a restraint on innovation and initiative


„Daugiau nei biudžetas" strategija

• Tradicinis biudžeto sudarymo būdas netenkina šiuolaikinių verslo įmonių poreikių

• Verslo įmonės galvoja pernelyg standartiškai ir lėtai reaguoja į įvykius ir pokyčius

• Nustato „praėjusių metų“ lygį kaip standartą einamiesiems metams

• Tradicinės biudžetų sudarymo sistemos veikia kaip inovacijas ir iniciatyvumą ribojantys veiksniai



• Weaknesses of traditional budgeting:

– adds little value and uses up valuable management time;

– may not be best for the organisation when circumstances change;

– seen as a method of imposing financial control but should be a system for communicating corporate goals;

– does not encourage continuous improvement;

– too much focus on internal matters and not enough on external factors;

– shows costs of departments but not the costs of activities;

– does not identify costs that add little or no value


„Daugiau nei biudžetas" strategija

• Tradicinio biudžeto sudarymo metodų silpnosios pusės:

– sukuria mažai vertės ir sunaudoja vertingą vadovybės laiką;

– gali būti ne pats geriausias sprendimas įmonei, jeigu pasikeičia aplinkybės;

– suprantamas kaip būdas užtikrinti finansinę kontrolę, tačiau turėtų veikti kaip komunikacijos apie įmonės tikslus sistema;

– neskatina nuolatinio tobulėjimo;

– pernelyg didelis dėmesys skiriamas vidaus reikalams, ir nepakankamas dėmesys išorės veiksniams;

– parodo atskirų departamentų sąnaudas, o ne su atskiromis veiklos rūšimis susijusias sąnaudas

– iš tikrųjų neparodo sąnaudų, kurios sukuria mažai vertės, arba visai jos nesukuria



• Features of the „beyond budgeting model‟ include:

– continuous rolling forecasts

– delegation of responsibility to managers empowered to take decisions in response to changing circumstances;

– goals agreed by reference to external benchmarks;

– managers working within agreed parameters without being restricted by detailed budgets;

– transparent and open communication systems


„Daugiau nei biudžetas" modelis

• Modelio „Daugiau nei modelis“ savybės yra tokios:

– nuolatinės atnaujinamos prognozės

– atsakomybė deleguojama vadovams, kurie turi įgaliojimus priimti sprendimus, atsižvelgdami į besikeičiančias aplinkybes;

– tikslai bendrai patvirtinami atsižvelgiant į išorinius lyginamuosius rodiklius;

– vadovai remiasi sutartais parametrais, jų neriboja detalūs biudžetai;

– skaidrios ir atviros komunikacijos sistemos


Weaknesses of traditional management accounting

- Relevance lost

Tradicinės vadovybės apskaitos silpnosios pusės -

Prarastas aktualumas

Relevance lost

• Organisations tend to use the same management accounting techniques because they are generally established and widely accepted (not because they are useful and relevant)

• Three factors that make organisations copy practices and processes of others:

– pressures imposed by government, regulations and supplier relationships

– attitudes when facing uncertainty – tend to copy another organisation believed to be more successful

– attitudes of professionalism – need to conform to a set of norms developed by a professional body



• Dažnai įmonės naudoja tas pačias vadovybės apskaitos technikas todėl, kad jos yra bendrai taikomos ir plačiai priimtos (o ne todėl, kad jos yra naudingos ir labiausiai tinkančios)

• trys veiksniai, į kuriuos atsižvelgdamos organizacijos kopijuoja kitų praktiką ir procesus:

– patiria vyriausybės institucijų, taisyklių ir santykių su tiekėjais sukurtą spaudimą

– požiūriai susidūrus su netikrumu – linkusios kopijuoti kitas organizacijas, kurios jų manymu yra sėkmingesnės.

– profesionalumo požiūris – privalo laikytis įvairių profesionalių organizacijų sukurtų normų.


Relevance lost

• Traditional management accounting systems were developed to meet management needs

• Contingency theory explains why traditional management accounting systems can become irrelevant as managements‟ needs change

• Accounting systems must change to meet the needs of management change



• Tradicinės vadovybės apskaitos sistemos buvo sukurtos patenkinti vadovybės poreikius

• Nenumatytų atvejų (contingency) teorija paaiškina, kodėl tradicinės apskaitos sistemos gali tapti neaktualiomis, pasikeitus vadovybės poreikiams

• Apskaitos sistemos privalo keistis, kad būtų tinkamai atsižvelgta į vadovybės pokyčius


Relevance lost

• Management information systems should provide information useful for decision making

• Traditional management accounting techniques:

– do not provide all information needed for TQM or JIT manufacturing companies;

– of limited value in highly automated manufacturing environments;

– focuses on manufacturing costs – not useful for service industries

– focuses on cost control (cost reduction) ignoring other factors (quality, reliability, speed of service)

– tend to have a short-term focus (not useful for strategic decisions)



• Vadovybės informacinės sistemos turi suteikti informaciją, kuri yra naudinga priimant sprendimus.

• Tradicinės vadovybės apskaitos technikos:

– nesuteikia TQM ir JIT principais veikiančioms gamybos įmonėms reikalingos informacijos;

– riboto vertingumo labai automatizuotose gamybos aplinkose;

– didžiausias dėmesys skiriamas gamybos sąnaudoms – nėra aktualu paslaugų sektoriui;

– dėmesys sąnaudų kontrolei (sumažinimui), tuo tarpu kiti veiksniai (kokybę, patikimumas, aptarnavimo greitis) -ignoruojami.

– dažniausiai vertinami trumpalaikiai tikslai (nėra naudinga starteginiams sprendimams).


Relevance lost


Customers expect

adaptation of products to

their requirements

Long production runsManufacturing

May adopt JIT or similarHeld large inventoriesCustomers

Part time and temporary

staff usedFull timeEmployees

Outsourcing commonCarried out by own staffActivities

DecentralisedHighly centralisedManagement structure

ModernTraditional



Klientai tikisi, kad produkcija bus

pritaikyta jų reikalavimams Ilgas gamybos ciklas Gamyba

Gali pritaikyti JIT ar panašią

sistemą Laiko didelius atsargų kiekius Klientai

Naudojami laikini ir ne visą

darbo dieną dirbantys

darbuotojai

Visu etatu dirbantys Darbuotojai

Dažnai naudojamos

užsakomosios paslaugos Vykdoma pačių darbuotojų Veikla

Decentralizuota Labai centralizuota Vadovybės struktūra

Šiuolaikinis Tradicinis

Relevance lost

• Robert Kaplan

– „traditional cost accounting systems based on an assumption of long production runs of a standard product, with unchanging characteristics and specifications, are not relevant in a modern environment‟

– Focus of traditional management accounting systems is wrong:

• assumes standard products with direct labour-intensive manufacture but in modern production systems, products are often bespoke and the production process is overhead-intensive

• assumes that standard tasks require particular types of machine but machinery used in production is often flexible and can be switched between different uses



• Robert Kaplan

– "tradicinės sąnaudų apskaitos sistemos, grindžiamos prielaida, kad įmonė vykdys standartinių produktų gamybą ilgą laiką, kurių nesikeis nei charakteristikos nei specifikacijos – neaktualios šiuolaikinėje aplinkoje".

– Tradicinėms apskaitos sistemoms neturėtų būti skiriamas toks dėmesys, kadangi:

• jos daro prielaidą, kad bus gaminama daug darbo jėgos reikalaujanti produkcija, tačiau moderniose gamybos sistemose produktai dažnai gaminami pagal specialų užsakymą, ir produkcijos procese atsiranda daug papildomų sąnaudų.

• daro prielaidą, kad standartinės užduotys reikalauja specialaus pobūdžio įrenginių, tačiau gamyboje naudojami įrenginiai dažnai yra lankstūs, ir gali būti pritaikyti įvairiems vartotojams.


Relevance lost

• Many modern businesses compete with each other on the basis of:

– product or service quality and price;

– customer satisfaction:

• delivery;

• reliability; and

• after-sales service

• Traditional management accounting systems do not provide information about these critical variables



• Daugelis šiuolaikinių verslo įmonių konkuruoja tarpusavyje pagal tokius rodiklius:

– produkto ar paslaugos kokybė ir kaina;

– klientų pasitenkinimas;

• pristatymas;

• patikimumas;ir

• aptarnavimas po pardavimo.

• Tradicinės vadovybės apskaitos sistemos nepateikia informacijos apie šiuos labai svarbius rodiklius


Relevance regained?

• Making management accounting relevant

– Management accounting systems provide information about critical success factors

– These factors may be:

• non-financial as well as financial;

• longer-term (strategic) as well as short-term;

• strategic as well as tactical;

• related to external factors as well as internal factors


Atgautas aktualumas?

• Užtikrinti, kad vadovybės apskaitos sistemos būtų aktualios

– Vadovybės apskaitos sistemos suteikia informacijos apie tokius svarbiausius sėkmės veiksnius

– Tokie veiksniai gali būti tokie:

• finansiniai ir ne finansiniai

• ilgalaikiai (strateginiai) ir trumpalaikiai

• strateginiai ir taktiniai;

• susiję su išorės ir su vidaus veiksniais.


Modern approaches

• New techniques have been developed in response to changes in the business environment and to changes in manufacturing methods and systems:

• Advanced cost accounting

– JIT based systems

– activity based management and activity based costing;

– backflush accounting;

– throughput accounting;

• Strategic management accounting

– life cycle costing;

– target costing;

– environmental management accounting; and

– the balanced scorecard


Šiuolaikiškos taktikos

• Atsižvelgiant į verslo aplinkos pokyčius, naujus gamybos metodus ir sistemas,kuriamos naujos technikos.

• Pažangi sąnaudų apskaita – „Pačiu laiku“ principu grindžiamos sistemos – veikla grindžiamas valdymas ir veikla grindžiama sąnaudų

apskaita – Atgalinė apskaita (backflush) – Pralaidumo apskaita (throughput)

• Strateginė vadovybės apskaita – gyvenimo ciklo apskaita – tikslinė apskaita – aplinkos vadybos apskaita – subalansuota rodiklių sistema


Modern costing techniques

Moderniosios sąnaudų apskaičiavimo sistemos

Just-in-Time (JIT)

• Just-in-time production

– „a production system which is driven by demand for finished products, whereby each component on a production line is produced only when needed for the next stage‟

• Just-in-time purchasing

– „a purchasing system in which material purchases are contracted so that the receipt and usage of the materials, to the maximum extent, coincide‟

(CIMA Official Terminology)


"Pačiu laiku" - Just-in-Time (JIT)

• JIT gamyba

– gamybos sistema, kurios pagrindinis variklis yra gatavų produktų paklausa, kai gamybos linijoje kiekvienas komponentas yra pagaminamas tada, kai jis reikalingas kitame etape.

• JIT pirkimas

– "pirkimo sistema, pagal kurią pirkimai vykdomi taip, kad kiek įmanoma, medžiagų gavimas ir jų panaudojimas sutaptų"

(CIMA Official Terminology)


Just-in-Time (JIT)

• JIT systems depend on highly efficient and high-quality production, and efficient and reliable arrangements with key suppliers

• Typical features include:

– Fast production

– Reliable production (no hold-ups, stoppages or bottlenecks)

– Flexible production (requires a skilled and flexible work force)

– Excellent relationships with suppliers



• JIT sistemos priklauso nuo labai efektyvios ir labai aukštos kokybės gamybos, veiksmingų ir patikimų sutarčių su tiekėjais

• Tipinės savybės:

– greita gamyba

– patikima gamyba (be sulaikymų, sustojimų ar kitokių kliūčių).

– Lanksti gamyba (reikalauja kvalifikuotos ir lanksčios daro jėgos)

– Puikūs santykiai su tiekėjais


Just-in-Time (JIT)

• Toyota (where JIT originated) identified 7 causes of waste:

– Over-production;

– Waiting time;

– Transport (movement of materials);

– Waste in the process;

– Inventory;

– Motion (of individuals);

– Defective goods



• Toyota (kur gimė JIT) - nustatė 7 atliekų priežastis:

– perprodukcija;

– laukimo laikas;

– transportavimas (medžiagų pervežimas);

– atliekos gamybos procese;

– atsargos;

– Judėjimas (atskirų asmenų)

– brokuotos prekės


OPT, MRP I and MRP II

• OPT (Optimised production technology)

– System based on “Theory of Constraints” (Goldratt) which says:

• Capacity of a production system is limited (constrained) by bottlenecks in the system;

• Must identify key constraint and remove it in order to increase throughput and optimise production

– Close connection to throughput accounting


OPT, MRP I ir MRP II

• OPT Optimizuota gamybos technologija (Optimised production technology)

– sistema grindžiama „Apribojimų teorija“ (Goldratt),kuri teigia:

• Gamybos sistemos pajėgumus riboja (varžo) sistemos "užsikišimai"

• Norint padidinti pralaidumą ir optimizuoti gamybą būtina nustatyti pagrindinius apribojimus ir juos pašalinti

– Artima pralaidumo apskaitai



• MRP I (Materials requirements planning)

– A computer system for scheduling production in a complex manufacturing environment

– The MRP I system produces a detailed schedule of external purchases and internal production activities so that:

• raw materials and components are purchased and available in time to manufacture the sub-assemblies or finished products; and

• the finished products are manufactured on time to a planned production schedule



• MRP I Medžiagų poreikio planavimas (Materials requirements planning)

– Kompiuterinė sistema, skirta planuoti gamybą sudėtingoje gamybos aplinkoje

– MRP I sistema sudaro išsamų pirkimų išorėje ir gamybos grafiką taip,

• žaliavos ir komponentai yra perkami ir jais galima pasinaudoti būtent tuo metu, kai reikalinga gamybai ir gataviems produktams; ir

• gatavi produktai pagaminami kaip tik laiku pagal suplanuotą gamybos grafiką.



• Benefits of MRPI

– quick reaction to change in sales estimates change

– gives early warning of possible production problems due to capacity limitations or purchasing problems due to delays in supply times

– can be used with JIT

• Limitations of MRPI

– not appropriate when future sales cannot be estimated accurately



• MRPI nauda

– greitas reagavimas į numatomų pardavimo apimčių pokyčius

– ankstyvas įspėjimas apie galimas gamybos problemas dėl galimų pajėgumų apribojimų, ar tiekimo problemų vėluojant tiekimui

– gali būti naudojamas su JIT

• MRPI ribotumas

– netinka tais atvejais,kai neįmanoma tiksliai apskaičiuoti pardavimų ateityje



• MRP II (Manufacturing resource systems)

– An extension of MRP I (MRP II systems include MRP I production scheduling)

– MRP II systems extend MRP I systems by adding other planning processes, such as:

• financial requirements planning;

• labour scheduling;

• equipment utilisation scheduling

• Co-ordinates planning throughout the organisation



• MRP II gamybos išteklių sistema (Manufacturing resource systems)

– MRPI sistemos tęsinys (MRP II sistema apima MRP + gamybos grafiko sudarymas)

– MRP II sistemos yra MRP I sistemų praplėtimas, jas papildant kitais planavimo procesais, tokiais kaip:

• finansavimo poreikių planavimas;

• finansinių poreikių planavimas;

• darbo jėgos planavimas;

• koordinuojamas planavimas visoje organizacijoje


Quality management

• Must satisfy needs of customers so must provide quality that customers require

• Poor quality production results in losses due to:

– rejected items;

– cost of warranty repairs;

– sales returns by customers; and

– adverse sales impact due to loss of reputation


Kokybės valdymas

• Privalo patenkinti klientų poreikius, todėl turi užtikrinti klientų reikalaujamą kokybę

• Dėl prastos kokybės patiriami nuostoliai, kadangi:

– prekės atmetamos;

– garantinio remonto kaina;

– klientų grąžinamos prekės;ir

– neigiamas poveikis dėl prarastos reputacijos


Quality management

• Quality-related costs

– Expenditure incurred in defect prevention and appraisal activities and the losses due to internal and external failure of a product or service, through failure to meet agreed specification‟ – (CIMA Official Terminology)

• Quality costs can be classified as:

– prevention costs;

– appraisal costs;

– internal failure costs; and

– external failure costs


Kokybės valdymas

• Su kokybe susijusios sąnaudos

– Išlaidos, patiriamos užkertant kelią defektams ir vykdant vertinimo veiklą,ir nuostoliai, patirti dėl produkto ar paslaugos broko, kai jie neatitinka susitarimu nustatytos specifikacijos (CIMA Official Terminology)

• Kokybės sąnaudos gali būti skirstomos į tokias grupes:

– prevencijos sąnaudos;

– vertinimo sąnaudos;

– vidaus defekto kaina;ir

– išorės sukelto defekto kaina.


Quality management

• Total Quality Management (TQM)

– “The continuous improvement in quality, productivity and effectiveness obtained by establishing management responsibility for processes as well as outputs. In this, every process has an identified process owner and every person in an entity operates within a process and contributes to its improvement‟ (CIMA Official Terminology )

• TQM features:

– statistical quality control systems;

– „zero defects‟ policy;

– continuous improvement;

– quality circles


Kokybės valdymas

• Visuotinė kokybės vadyba (total quality management, TQM)

– „Nuolatinis kokybės, produktyvumo ir veiksmingumo didinimas, apibrėžus vadovybės atsakomybę už procesus ir galutinį rezultatą. Tokiu atveju kiekvienas procesas turi aiškiai nustatytą proceso savininką, ir kiekvienas įmonės darbuotojas yra įtraukiamas į procesą ir prisideda prie jo tobulinimo (CIMA Official Terminology).

• TQM bruožai:

– statistinės kokybės kontrolės sistemos

– "nulinio broko" politika

– nuolatinis tobulėjimas

– kokybės ciklai


Benchmarking

• Compares performance to that of an entity believed to be the best

• Types of benchmarking– Internal benchmarking – compares performance to

that of another part of the same entity

– Competitive benchmarking – compares performance to that of a competitor

– Process benchmarking (activity benchmarking) –compares performance in one particular area to that of another entity with a reputation for excellence in the area


Lyginimas

• Veiklos rezultatai lyginami su įmone, kuri laikoma geriausia

• Lyginimo tipai:– Vidinis palyginimas - veiklos rezultatai lyginami su tos

pačios įmonės kitu padaliniu

– Konkurencinis palyginimas - veiklos rezultatai lyginami su konkurentų rezultatais

– Procesų lyginimas (veiklos lyginimas) - lygina vienos konkrečios srities rezultatus su tokios pačios srities kitos labai geros reputacijos įmonės rezultatais


Business Process Re-engineering

• “the fundamental re-thinking and rational re-design of the business processes to achieve dramatic improvements in critical contemporary measures of performance such as cost, quality, speed and service”

• A radical approach to improvement resulting in extensive and fundamental changes

• Main principles of BPR– Total re-think of business processes

– Work should be organised around:

• natural flow of information or materials or customers;

• process output not tasks


Verslo procesų pertvarka (business process re-engineering, BPR)

• „Fundamentalus verslo procesų pergalvojimas ir pertvarka, siekiant iš esmės patobulint tokius esminius veiklos rodiklius kaip sąnaudos, kokybę, greitis ir aptarnavimas".

• Radikalus požiūris ir patobulinimus, dėl kurių pasiekiami plataus masto ir fundamentalūs pokyčiai

• Pagrindiniai BPR principai – Bendras verslo procesų pergalvojimas

– Pagrindiniai darbo organizavimo aspektai:

• natūralus informacijos, medžiagų ar klientų srautas

• procesų rezultatas, o ne uždaviniai


Activity-based management (ABM)

• The process of:

– focusing on the management of activities to improve the value received by the customer and the profit achieved by providing this value;

– taking action based on Activity Based Costing (ABC)

• ABM analyses management of activities to improve the value added (should be a recurring process)

• Uses of ABM

– Cost reduction;

– Process redesign (as an alternative to Business Process Re-engineering)


Veikla grindžiamas vadovavimas (Activity-based management, ABM)

• Procesai, kuriais:

– didžiausias dėmesys skiriamas veiklos valdymui, siekiant pagerinti klientų gaunamą vertę,ir padidinti tokią vertę sukuriant gaunamą pelną'

– imamasi veiksmų, vadovaujantis sąnaudų nustatymo pagal veiklą principu (Activity Based Costing (ABC);

• ABM analizuoja veiklos valdymą, siekiant padidinti priėtinę vertę (turi būti pasikartojantis procesas)

• ABM naudojimas

– Sąnaudų sumažinimas

– Procesų reorganizavimas (kaip alternatyva verslo procesų pergalvojimui)


Activity based costing

• Based on the following assumptions.

– Overhead costs represent a large proportion of total costs (direct labour costs are relatively small)

• Overhead costs should be traced as accurately as possible to the products that create the cost

• absorption based on direct labour hours is not appropriate

– Most overhead costs are attributable to activities (not necessarily confined to single department)

• Activities (and parts thereof) that cause cost are called cost drivers


Veikla grindžiamas sąnaudų apskaičiavimas

• Remiamasi tokiomis prielaidomis

– Papildomos sąnaudos sudaro didelę bendrųjų sąnaudų dalį (tiesioginės darbo sąnaudos yra santykinai nedidelės)

• Papildomos sąnaudos turėtų būti kaip galima tiksliau priskirtos tiems produktams, dėl kurių tokios sąnaudos atsiranda

• tiesiogiai darbo valandomis grindžiamas įsisavinimas nepriimtinas

– Dauguma papildomų sąnaudų priskiriamos veiklai (nebūtinai apsiriboja vienu skyriumi)

• Veikla (ar jų dalis), dėl kurios atsiranda sąnaudos, vadinama sąnaudų centrais.



• Activity-based costing is a form of absorption costing where overheads are absorbed at a rate for each activity rather than a rate per direct labour hour

• Requires:– Identification of activities that create overhead costs;

– Identification of cost drivers;

– Charging overheads to products on the basis of the activities that are required to provide the product


Although ABC is a form of absorption costing its use can

lead to product cost and profitability that is very different

from traditional absorption costing


• Pagal veiklą apskaičiuojamų sąnaudų principas yra absorbavimo sąnaudų apskaitos forma, kur papildomos sąnaudos absorbuojamos pagal kiekvieną veiklos rūšį, o ne pagal tiesioginių darbo valandų skaičių

• Tam būtina: – nustatyti veiklos sritis, kurios sukuria papildomas sąnaudas;

– nustatyti sąnaudų veiksnius;

– Papildomos sąnaudos priskiriamos produktams, remiantis veikla, kuri reikalinga atitinkamam produktui pagaminti


Nors ABC yra absorbuojamosios apskaitos forma, šią

sistemą taikant gali būti gaunamos sąnaudos ir

pelningumas, kuris gali labai skirtis nuo tradicinės

absorbuojamosios apskaitos


• ABC is likely to be suitable in the following circumstances:

– Where overhead is a large proportion of total production cost and direct labour costs are relatively small

– Where products are complex

– Where products are provided to customer specifications

– Where order sizes differ substantially, and order handling and despatch activity costs are significant



• Manoma, kad ABC yra tinkama tokiomis situacijomis:

– Kai papildomos sąnaudos sudaro didelę bendrųjų sąnaudų dalį (tiesioginės darbo sąnaudos yra santykinai nedidelės)

– Gaminami sudėtingi produktai

– Kai gaminami produktai pagal kliento specifikaciją

– Kai užsakymų dydžiai yra labai skirtingi, o užsakymų tvarkymo ir išsiuntimo sąnaudos yra reikšmingos



• ABC process– Identify the activities that create overhead costs

– Allocate overhead expenditure to each of these activities (cost pools)

– Identify cost drivers for each activity

– Calculate an absorption rate for each cost pool/activity

– Absorb overhead costs into the costs of production by absorbing an overhead cost for each activity

• Total production cost– direct production costs plus absorbed overheads for each activity



• ABC procesas– nustatyti veiklos sritis, kurios sukuria papildomas sąnaudas;

– priskirti papildomas išlaidas kiekvienai tokiai veiklos sričiai (jungtinės sąnaudos)

– nustatyti kiekvienos veiklos rūšies sąnaudų veiksnius

– apskaičiuoti kiekvienų jungtinų sąnaudų / veiklos absorbavimo rodiklį;

– absorbuoti papildomas sąnaudas į gamybos sąnaudas, absorbuojant kiekvienos veiklos rūšies sąnaudas

• Bendros gamybos sąnaudos – teisioginės gamybos sąnaudos plius absorbuotos papildomos

sąnaudos pagal kiekvieną veiklos rūšį



• Advantages

– Provides useful information about the activities that drive overhead costs

– Provides information that could be relevant to long-term cost control and long-term product selection or product pricing

– Provide basis for system to manage and control overheads

• Disadvantages

– Difficult to implement

– Costly system to design and use (costs might not justify the benefits)

– Full product costing is of little relevance for decision making



• Privalumai

– Suteikia vertingos informacijos apie kiekvieną veiklos rūšį, kuri sukelia papildomas sąnaudas

– Suteikia informacijos, kuri gali būti vertinga ilgalaikei sąnaudų kontrolei, ilgalaikiam produktų pasirinkimui ir produktų kainodarai

– Suteikia pagrindą sistemai valdyti ir kontroliuoti papildomas sąnaudas

• Trūkumai

– Sunkiai įgyvendinamas

– Brangus sistemos sukūrimas ir naudojimas (sąnaudos gali nepateisinti naudos)

– Išsamus produktų gamybos sąnaudų nustatymas neturi didelės reikšmės sprendimų priėmimo procesui


Throughput accounting

• Assumptions– Cost of materials etc is the only variable cost of manufacture

• in practice direct labour costs are fixed as employees are paid a fixed weekly or monthly

– A business makes profit by adding value• Value is added by selling goods (services) at a price greater than

cost of materials;• Value is only added when the sale is complete

– Value added is measured as sale value minus variable cost (cost of the materials)

• Comments– Throughput accounting is associated with the “Theory of

Constraints”;– Traditional marginal costing assumes direct labour cost to be

variable


Pralaidumo apskaita (throughput)

• Prielaidos– Medžiagų kaina, ir kt, yra vienintelė kintama sąnaudų rūšis

gamybos procese • praktiškai – tiesioginės darbo sąnaudos yra fiksuotos, kadangi

darbuotojams mokamas fiksuotas savaitinis ar mėnesio atlyginimas

– Verslo įmonė uždirba pelną sukurdama papildomą vertę• Vertė sukuriama parduodant prekes (paslaugas) už kainą, kuri yra

didesnė, nei savikaina • Vertė sukuriama tik tada, kai prekė parduota

– Pridėtinė vertė matuojama kaip pardavimo vertė atėmus kintamasis sąnaudas (medžiagų sąnaudas)

• Komentarai – Pralaidumo apskaita yra susijusi su „Apribojimų teorija“– Pagal tradicinį sąnaudų apskaičiavimo metodą – tiesioginės

darbo sąnaudos yra kintamos


Backflush accounting

• Accounting method that focuses on output and works backwards to allocate costs between cost of goods sold and inventories:

– complete opposite to traditional cost accounting

– ideally suited to a JIT philosophy (low inventory levels – not important to track costs into inventory)

– transfers between processes are at standard cost ( total variance taken directly to P&L)

– A backflush accounting system has one or two trigger points (when costs are recorded):

• the purchase of raw materials; and

• the manufacture of completed products


Atgalinė apskaita (backflush)

• Apskaitos metodas, pagal kurį parduotų prekių savikaina ir atsargų kaina yra paskirstoma pagal produkcijos kainą ir darbo sąnaudas

– visiškai priešinga tradicinei apskaitai

– idealiai tinka JIT filosofijai (atsargų mažai – sąnaudas priskirti atsargoms nėra svarbu)

– perkėlimai tarp atskirų procesų – standartinio lygio (visi nukrypimai apskaitomi pelno (nuostolio) ataskaitoje)

– Pagal atgalinę apskaitos sistemą yra vienas arba du momentai, kai registruojamos sąnaudos:

• žaliavų pirkimas, ir

• gatavų prekių pagaminimas


Value chain analysis

• A way of 'seeing things' that may or may not yield helpful insights into how the firm works

• Porter

– Activities of a business can be represented as a value chain

– A value chain is a series of activities each of which adds value

– Total value added is the sum of value created at each stage of the chain

– Structure:

• primary value chain (activities that produce the product or service);

• a secondary value chain (support activities)

– Nature of activities in value chain varies with the industry


Vertės grandinės analizė

• Būdas vertinti situaciją, kuris gali arba negali suteikti naudingų įžvalgų į tai, kaip įmonė veikia

• Porter

– Verslo įmonės veikla gali būti parodyta kaip vertės grandinė

– Vertės grandinė yra veiklos epizodai, kurių kiekvienas įneša indėlį į vertės didinimą

– Bendra sukurta vertė yra kiekviename grandinės etape sukurtų verčių suma

– Struktūra:

• pirminė vertės grandinė (veikla, gaminanti produktus ar paslaugą)

• antrinė vertės grandinė (pagalbinė veikla)

– Veiklos vertės grandinėje pobūdis skiriasi priklausomai nuo sektoriaus



• A systematic way of examining all the activities a firm performs and how they interact– looks at activities and processes rather than conventional

departments;– disaggregates a firm into its strategically relevant activities to

understand cost behaviour and sources of differentiation (existing and potential);

– examines potential for reducing overheads by identifying the primary activities that cause them

– requires reconfiguring of cost information

• Views firm as a sequence of value-creating activities as opposed to functions



• Sisteminis visų įmonės vykdomų veiklų ir jų tarpusavio sąveikos vertinimo būdas

– vertinama veikla ir procesai, o ne tradiciniai skyriai;

– norint suprasti sąnaudų dinamiką, ir skirtumų (esamų ar potencialių) šaltinius, visa įmonės veikla yra suskaidoma į strategiškai svarbias veiklas;

– įvertina galimybę sumažinti papildomas sąnaudas, nustačius svarbiausias veiklas, dėl kurių tokios papildomos sąnaudos atsiranda;

– būtina rekonfiguruoti sąnaudų informaciją

• Įmonė suvokiama kaip vertę kuriančių veiklų seka - o ne funkcijų visuma.




Primary value chain

Inbound

logisticsOperations

Outbound

logistics

Marketing

and salesService

Support activities



Pirminė vertės grandinė

Vidaus

logistika Veikla

Išorės

logistika

Rinkodara ir

pardavimai Paslauga

Pagalbinė veikla



Firm infrastructure

Human resource development

Technology development

Procurement

Inbound

logisticsOperations

Outbound

logistics

Marketing

& sales

Service

M

A

R

G

I

N



Įmonės infrastruktūra

Žmogiškųjų išteklių plėtra

Technologijų plėtra

Pirkimas

Vidaus

logistikaVeikla

Išorės

logistika

Rinkodara ir

pardavimaiPaslauga

M

A

* R

G

I

N


• Most value is created in the primary value chain

– Inbound logistics – activities concerned with receiving, handling and storage of purchased materials and components;

– Operations – activities concerned with conversion of purchased materials etc into a product;

– Outbound logistics – activities concerned with storage of finished goods and distribution and delivery of goods (or services);

– Marketing and sales;

– Service – activities after the point of sale (installation, repairs and maintenance etc)



• Didžiausia vertė sukuriama pirminėje vertės grandinėje

– Vidaus logistika – veikla, susijusi su pirktų medžiagų ir komponentų priėmimu, tvarkymu ir sandėliavimu

– Veikla – veiksmai, kuriais nupirktos medžiagos paverčiamos produktais;

– Išorės logistika – veikla, susijusi su gatavos produkcijos sandėliavimu ir prekių pristatymu (ar paslaugų teikimu);

– Rinkodara ir pardavimai

– Paslauga – veikla po pardavimo (įrengimas, remontas ir techninė priežiūra ir kt.)



• Secondary value chain activities (support activities):

– Procurement;

– Technology development;

– Human resources management;

– Corporate infrastructure

• Support activities support the primary value chain but can also create value directly (eg procurement – could identify cheaper source of materials)



• Antrinės vertės grandinės veiklos (pagalbinės veiklos_:

– pirkimas

– technologijų plėtra

– žmogiškųjų išteklių valdymas

– įmonės infrastruktūra

• Pagalbinės veiklos palaiko ir padeda pirminei vertės grandinei, bet taip pat gali sukurti vertę tiesiogiai (pvz., pirkimas – gali rasti pigesnius medžiagų šaltinius).



• Focus enables management to see how each activity creates value

• Management can then decide to improve the activity in one of two ways:

– Enhance the capacity of the activity to differentiate the firm's output in the eyes of customers as part of a differentiation strategy.

– Reduce the costs involved in conducting the activity without harming the competitive position of the final output as part of a cost leadership strategy.



• Tokia analizė suteikia galimybes vadovybei galimybes įžvelgti kaip kiekviena veiklos sritis sukuria naują vertę

• Vadovybė gali nuspręsti patobulinti veiklą vienu iš dviejų būdų:

– Padidinti veiklos gebėjimus diferencijuoti produkciją klientų akyse, įgyvendinant diferencijavimo strategiją.

– Sumažinti su veikla susijusias sąnaudas nesumažinant galutinio produkto konkurencingumo, įgyvendinant sąnaudų pirmavimo strategiją.



• Value chain analysis has had a profound impact on management thinking:

• Principal uses include:– analysis of the firm in terms of the processes it uses

to serve its customer;

– analysis of rivals;

– terminology for management to use in discussing operations;

– generating superior competitive performance

– developing performance measures



• Vertės grandinės analizė daro labai didelę įtaką vadovybės mąstymui:

• Dažniausiai taikoma: – analizuojant įmonę pagal jos procesus, kuriuos ji

naudoja teikti paslaugas savo klientams;

– analizuojant konkurentus;

– nustatant terminologiją, kurią vadovybė naudoja aptardama veiklos procesus;

– užtikrinant aukščiausios klasės konkurencingą veiklą;

– sudarant veiklos vertinimo rodiklius.



• Management may be exasperated by the complexity of the model

• It cannot be easily applied to services– conventionally illustrated by reference to firms with physical

flows of product

– However, some applications present the customer as the element being passed through the primary activities (e.g. management of queues)



• Toks modelio sudėtingumas gali erzinti vadovybę

• Modelis sunkiai pritaikomas paslaugoms – Dažnai iliustruojamas darant nuorodas į įmones su fiziniu

produktų srautu

– Tačiau tam tikrais atvejais klientas pristatomas kaip elementas, tiesiogiai susijęs su pagrindine vekla (pvz., eilių valdymas)



• Organisational implications of the value chain

– Business process re-engineering

– Supply chain partnerships



• Vertės grandinės poveikis organizacijai

– Verslo procesų pertvarka (business process re-engineering, BPR)

– Tiekimo grandinės partnerystės



• The value system

– Several business might be involved in a supply chain for a given good

• Grower → Food processor → Retailer

– Each business has a value chain

– Value is created by the entire value system

– A value system is the sum of the value chains of all firms in a supply chain

• Collaboration between businesses can help add value across the supply chain



• Vertės sistema

– Su atskiros prekės tiekimo grandine gali būti susijusios kelios įmonės

• Augintojas → Maisto produktų perdirbėjas → Mažmenininkas

– Vertės grandinę turi kiekviena įmonė

– Vertę kuria visa vertės sistema

– Vertės sistema yra visų tiekimo grandinėje dalyvaujančių įmonių verčių grandinių suma

• Įmonių bendradarbiavimas gali padėti padidinti visos tiekimo grandinės vertę



• Company can take steps to ensure it gains as much of this value as possible:– by inhabiting the highest value segments of the system through

backward or forward integration;

– by striking good deals with suppliers (low prices) and customers (high prices) to take as much of the available value for itself.

• Company can collaborate with others in the system to increase the total value available in the chain:– by increasing the ability of the final product to generate

satisfaction (reflected in the price);

– by working together to reduce the total costs in the value system.



• Įmonė gali imtis priemonių iš tokios vertės gauti kiek įmanoma daugiau vertės: – išnaudodama didžiausią vertę sukuriančius sistemos segmentus

atlikdama atgalinę arba perspektyvinę integraciją;

– sudarydama naudingus sandorius su tiekėjais (žemos kainos) ir klientais (aukštos kainos), ir taip pasiimti kiek galima didesnę vertės dalį.

• Bendrovė gali bendradarbiauti su kitomis įmonėmis sistemoje, ir taip padidinti visos grandinės vertę: – padidinti galutinio produkto gebėjimus užtikrinti pasitenkinimą

(kuris atsispindi kainoje);

– dirbdamos kartu, siekdamos sumažinti bendras vertės sistemos sąnaudas.


Life cycle costing

• Traditional costing

– focuses on cost accumulation in the manufacturing stage

– pre-manufacturing costs (R&D) and post manufacturing costs treated as period costs

• Life cycle costing

– estimates (accumulates) costs over entire life cycle in order to see whether revenues earned cover all costs

– helps management understand cost consequences of product development and to identify areas in which cost reduction is likely to be effective


Gyvenimo ciklo sąnaudų apskaita

• Tradicinis sąnaudų skaičiavimas

– didžiausias dėmesys skiriamas sąnaudų susikaupimui gamybos etape

– ikigamybinės sąnaudos (R&D) ir sąnaudos po gamybos etapo laikomos laikotarpio sąnaudomis

• gyvenimo ciklo sąnaudų apskaita

– apskaičiuoja (sukaupia) sąnaudas per visą gyvenimo ciklą - taip pamato, ar uždirbtos pajamos padengia visas sąnaudas

– padeda vadovybei suprasti kokią įtaką sąnaudoms turi naujų produktų kūrimas, ir nustatyti sritis, kuriose galima būtų veiksmingai sumažinti sąnaudas.


Life cycle costing


Plan/ design M’f and sell

Committed

Incurred

100%

% total costs

Life cycle of product



Planas /

projektasGaminti ir

parduoti

Įsipareigota

Patirtas

100%

% visų

sąnaudų

Produktų gyvenimo ciklas

Life cycle costing

• Committed costs are those that have not been incurred but will be in the future on the basis of decisions already made

– product design specifications determine future material and labour inputs

• Implication is that cost management is more effective in the design stage

• Led to target costing



• Įsipareigotos išlaidos yra išlaidos, kurios dar nebuvo patirtos, tačiau kurios bus patirtos ateityje remiantis jau priimtais sprendimais

– produkto dizaino specifikacija lemia ateities medžiagų ir darbo poreikį

• poveikis – sąnaudų valdymas yra veiksmingesnis projektavimo etape

• Tolesnis etapas – tikslinių sąnaudų apskaita


Target costing

• Target costing

– Used mainly for new product development

– Company identifies a target price and a target profit

– Company can then establishes its target cost

• cost at which the product must be manufactured in order to achieve the target profit


Tikslinių sąnaudų apskaita

• Tikslinių sąnaudų apskaita

– Dažniausiai naudojama kuriant naujus produktus

– Bendrovė nustato tikslinę kainą ir tikslinį pelną

– Tada bendrovė nustato tikslines sąnaudas

• Sąnaudos, kuriomis produktas turi būti pagamintas, norint pasiekti tikslinį pelną.


Customer profitability analysis

• Assesses profitability of:

– particular channels of marketing; or

– particular types of customer

• Activity based relevant cost analysis to identify whether it is profitable to sell to particular types of customer


Klientų pelningumo analizė

• Įvertinti pelningumą:

– konkrečių rinkodaros kanalų, arba

– konkrečių klientų tipų

• Atliekama veikla grindžiamų sąnaudų analizė, siekiant nustatyti, ar pelninga parduoti konkrečios rūšies klientams


Environmental management accounting

Aplinkosaugos valdymo apskaita

EMA

• Importance of environmental issues

– Need to avoid costs or losses – eg: fines, loss of land values, cost of law suits, etc.

– Environmental behaviour can affect customer attitude towards a company

• Traditional management accounting techniques:

– underestimate or ignore costs of poor environmental behaviour; and

– overestimate costs and underestimate benefits of improving environmental practices

• Environmental management accounting

– Provides information to support environmental management decision-making.

– EMA complements other „conventional‟ management accounting methods (not replaces them)


EMA

• Aplinkosauginių klausimų svarba

– Privalo vengti sąnaudų ar nuostolių – pvz., baudų, žemės vertės praradimo, bylinėjimosi išlaidų, ir kt.

– Bendrovės elgesys aplinkos atžvilgiu gali daryti įtakos klientų požiūriui į bendrovę

• Tradicinės vadovybės apskaitos technikos:

– nepakankamai įvertina arba ignoruoja netinkamo aplinkosauginio elgesio kainą; ir

– padidina aplinkosauginės praktikos pagerinimo sąnaudas ir nepagrįstai neįvertina tokios praktikos pagerinimo naudą.

• Aplinkosaugos valdymo apskaita

– Suteikia informacijos, kuri padeda priimti su aplinkosauga susijusius sprendimus

– EMA papildo kitus „tradicinius vadovybės apskaitos“ metodus (bet jų nepakeičia)


EMA

• EMA techniques include:

– re-defining costs

– input-output analysis

– environmental activity-based accounting

– environmental life cycle costing


EMA

• EMA technikos gali būti tokios:

– sąnaudų apibrėžimas iš naujo

– sąnaudų - rezultatų analizė

– aplinkosauginės veiklos apskaita

– aplinkosaugos gyvenimo ciklo apskaita


EMA

• Re-defining costs (terminology suggested by US Environmental Protection Agency):

– conventional costs: environmental costs that have environmental relevance and can be „captured‟ in costing systems

– potentially hidden costs: environmental costs that might get lost within general costs;

– contingent costs: costs that might be incurred in the future (eg, clean-up costs)

– image and relationship costs: costs associated with promoting an environmental image (include costs of behaving in an environmentally irresponsible way, eg, cost of lost sales as a result of causing a major environmental disaster)


EMA

• Sąnaudų apibrėžimas iš naujo (terminas, pasiūlytas JAV aplinkos apsaugos agentūros):

– tradicinės sąnaudos: su aplinkosauga susijusios sąnaudos, kurios svarbios aplinkosaugos požiūriu ir kurios gali būti „registruotos“ sąnaudos apskaitos sistemose

– potencialiai paslėptos sąnaudos: aplinkosauginės sąnaudos, kurios gali pasimesti tarp bendrųjų sąnaudų

– neapibrėžtos sąnaudos : sąnaudos, kurios gali būti patirtos ateityje (pvz., išvalymo sąnaudos);

– įvaizdžio ir ryšių palaikymo sąnaudos: sąnaudos, susijusios su aplinkosauginio įvaizdžio pristatymu (aplinkosauginiu požiūriu atsakingo elgesio sąnaudos, pvz., prarastų pardavimų sukėlus aplinkosauginę nelaimę, kaina).


EMA

• Input-output analysis

– method of analysing what goes into a process and what comes out

– difference between input and output is waste

– focuses attention on minimising waste


EMA

• Sąnaudų - rezultatų analizė

– tai yra analizės, kas skiriama procesui, ir kas iš jo gaunama, būdas

– skirtumas tarp sąnaudų ir produkcijos - atliekos

– didžiausias dėmesys – pastangoms sumažinti atliekas


EMA

• Environmental activity-based accounting

– Application of environmental costs to activity-based accounting

– Cost drivers for environment-related costs may be:

• volume of emissions or waste;

• toxicity of emissions or waste;

• „environmental impact added‟ (units × environmental impact per

unit); and

• volume of emissions or waste treated

• Environmental life cycle costing

– Inclusion of environmental costs in product life cycle costing


EMA

• Aplinkosaugine veikla grindžiama apskaita

– Aplinkosaugine veikla grindžiamos apskaitos taikymas

– Su aplinkosauga susijusių sąnaudų pagrindiniai punktai yra tokie:

• emisijų ar atliekų apimtys;

• emisijų ar atliekų toksiškumas;

• papildomas poveikis aplinkai (vienetai × vieno vieneto poveikis

aplinkai); ir

• apdorotų emisijų ar atliekų apimtys;

• aplinkosaugos gyvenimo ciklo apskaita

– aplinkosauginės veiklos sąnaudų įtraukimas į produkto gyvenimo ciklo apskaitą


Financial performance

• Primary management objective is to maximise shareholders‟ wealth:– implies maximising the market value of the company;

– taken as maximising long term profits


Finansinės veiklos rodikliai

• Pirmiausias vadovybės tikslas yra padidinti akcininkų turtą: – tai taip pat reiškia, kad didinama bendrovės rinkos

vertė;

– kitaip sakant- didinamas ilgalaikis pelnas;



• Financial measures used to measure historical performance (and assess whether a company is achieving its corporate objectives) include:

– return on capital employed

– earnings per share and growth in earnings per share

– earnings before interest, tax, depreciation and amortisation (EBITDA)

– for investment centres, return on investment or residual income.



• Finansiniai rodikliai, naudojami vertinti ankstesnę veiklą (ir vertinti, ar bendrovė pasiekia savo korporatyvinius tikslus), pvz.:

– kapitalo grąža;

– pelnas vienai akcijai, ir pelno vienai akcijai augimas;

– pelnas prieš palūkanas, mokesčius, nusidėvėjimą ir amortizaciją (EBITDA);

– investiciniams centrams – investicijų grąža arba likusios pajamos.



• Measures of financial risk include:

– liquidity ratios (current ratio or quick ratio);

– cash flow analysis; and

– gearing or debt/equity ratios

• Other financial measures of performance include:

– gross profit margin;

– net profit margin;

– cost/sales ratios;

– growth in sales



• Finansinės rizikos rodikliai yra tokia:

– likvidumo rodikliai (bendrasis likvidumo rodiklis arba skubaus padengimo rodiklis

– pinigų srautų analizė; ir

– skolos ir nuosavybės santykio rodiklis;

• Kiti finansiniai rodikliai:

– bendrasis pelningumas

– grynasis pelningumas

– sąnaudų / pardavimo santykis

– pardavimo apimčių augimas



• Measures of cost performance:

– cost variances;

– cost ratios including:

• production costs as a percentage of sales;

• distribution and marketing costs as a percentage of sales;

• administrative costs as a percentage of sales;

• material costs as a percentage of total cost;

• labour costs as a percentage of total costs



• Sąnaudų efektyvumo vertinimo rodikliai:

– sąnaudų pokyčiai

– sąnaudų rodikliai:

• gamybos sąnaudos kaip pardavimo procentinė dalis;

• platinimo ir rinkodaros sąnaudos kaip pardavimo procentinė dalis;

• administracinės sąnaudos kaip pardavimo procentinė dalis;

• medžiagų sąnaudos kaip bendrų sąnaudų procentinė dalis

• darbo sąnaudos kaip bendrų sąnaudų procentinė dalis



• Costs can also be monitored in terms of:

– cost per unit;

– cost per machine hour;

– cost per activity;

– comparison with a target cost



• Sąnaudos taip pat gali būti stebimos pagal:

– Sąnaudos vienam vienetui;

– Sąnaudos vienai mašinos darbo valandai

– Sąnaudos pagal veiklas;

– Palyginimas su tikslinėmis sąnaudomis


Non-financial performance

• Non-financial information for measuring performance

– Used in addition to financial measures

– Might focus on customer satisfaction – whether products meet customer needs in terms of:

• product quality;

• reliability of service;

• speed of service or delivery;

• selling price

• „Balanced scorecard‟ approach – Main target is financial but also recognises importance of non-financial performance


Ne finansinės veiklos rodikliai

• Ne finansinė veiklos vertinimo informacija

– Naudojama kartu su finansiniais rodikliais

– Galima svarbiausiu rodikliu laikyti klientų pasitenkinimą – ar produktai tenkina klientų poreikius pagal:

• produktų kokybę;

• paslaugos patikimumą;

• paslaugos ar pristatymo greitį;

• pardavimo kainą

• „Subalansuotų rodiklių“ sistema – pagrindinis tikslas -vertinti finansinę veiklą, tačiau pripažįstama ir ne finansinės veiklos rezultatai



• Non-financial performance indicators (NFPIs):– can be both quantitative and qualitative;

– should focus on non-financial critical success factors

• Typically NFPIs relate to a CSF in one of the following areas:– quality;

– speed;

– reliability;

– efficiency;

– achieving a specific non-financial target;

– meeting customer needs/customer satisfaction



• Ne finansinės veiklos rodikliai – gali būti kiekybiniai ir kokybiniai

– didžiausias dėmesys turėtų būti skiriamas pagrindiniams nefinansiniams sėkmės veiksniams

• Dažniausiai ne finansinės veiklos rezultatai yra susiję su CSF vienu iš šių aspektų: – kokybė;

– greitis;

– patikimumas;

– veiksmingumas;

– noras pasiekti konkrečius ne finansinius tikslus;

– patenkinti klientų poreikius / užtikrinti jų pasitenkinimą;



• Quantitative strategic NFPIs include:

– market share;

– number of new products developed; and

– quality measures



• Kiekybiniai nefinansiniai veiklos rodikliai:

– rinkos dalis;

– naujai sukurtų produktų skaičius;

– kokybės matai;



• Operational NFPIs:– to measure success in meeting customer needs

include:• customer service measures:

– average time to respond to customer calls; and

– average time to meet customer orders

• customer satisfaction reports

• measures of repeat business (customer loyalty)

– to measure performance in managing employees include:

• staff turnover rates

• absenteeism and sickness rates

• productivity ratios or similar productivity measurements



• Veiklos nefinansiniai rodikliai: – siekiant įvertinti, kaip tenkinami klientų poreikiai,

taikomi rodikliai: • klientų aptarnavimo rodikliai:

– vidutinis atsakymo į klientų skambučius laikas; ir

– vidutinis klientų užsakymų vykdymo laikas

• ataskaitos apie klientų pasitenkinimą

• pakartotinų veiklų rodiklis (klientų lojalumas)

– siekiant įvertinti, kaip valdomi darbuotojai, taikomi rodikliai:

• darbuotojų kaitos rodikliai;

• neatvykimas į darbą, nebuvimo darbe dėl ligos rodikliai

• produktyvumo rodikliai ir panašūs produktyvumo matai



• Quality targets – may be a major element in strategic planning

• Quality is associated with meeting customer needs and expectations

• Quality performance can be measured and evaluated in relation to the key performance objectives of quality:

– speed;

– dependability (reliability);

– flexibility; and

– cost



• Kokybės tikslai – gali būti vienas svarbiausių strateginio planavimo elementų

• Kokybė yra susijusi su gebėjimu patenkinti klientų poreikius ir lūkesčius

• Kokybė gali būti vertinama ir matuojama atsižvelgiant į pagrindinius kokybės tikslus:

– greitis;

– priklausomybė (patikimumas)

– lankstumas; ir

– sąnaudos



• Cost and quality are inter-connected

• Aim should be:

– to improve quality for a given cost per unit; or

– to provide products of a given quality for a lower cost



• Sąnaudos ir kokybė yra tarpusavyje susijusios

• Tikslas turėtų būti toks:

– pagerinti kokybę pagal atskiro vieneto sąnaudas; arba

– gaminti tokios pat kokybės produktus mažesnėmis sąnaudomis;


Other aspects of performance measurement

Kiti veiklos vertinimo aspektai

Balanced scorecard

• Developed by Kaplan and Norton

– Measures performance in relation to long-term objectives

– Financial and non- financial measures

• Critical success factors are identified for four perspectives:

– customer perspective

– internal (process) perspective

– innovation/ learning perspective

– financial perspective

• Managerial performance is assessed under all four headings (main performance report is a balanced scorecard report, not budgetary control reports and variance reports)


Subalansuota rodiklių sistema

• Sukurta Kaplan ir Norton

– Vertina veiklą atsižvelgiant į ilgalaikius tikslus

– Finansinia ir ne finansiniai rodikliai

• Pagrindiniai sėkmės veiksniai nustatomi keturiais požiūriais:

– kliento požiūris

– vidaus (procesų) požiūris

– inovacijų / mokymosi požiūris

– finansinė perspektyva

• Vadovybės veiklos efektyvumas vertinamas pagal keturias pagrindines antraštes (pagrindinė veiklos ataskaita yra subalansuota rodiklių sistema, ne biudžeto kontrolės ataskaitos ar nuokrypių ataskaitos).


Balanced scorecard


How can the organisation continue to

improve and create value?

Innovation and

learning

What processes must the organisation

perform with excellence?Internal

What do customers value?Customer

How does the organisation create value

for its owners?Financial

Key questionPerspective



Kaip įmonė toliau gerina ir sukūria vertę? Inovacijos ir

mokymasis

Kokius procesus įmonė privalo įgyvendinti tobulai? Vidaus

Ką klientai vertina?Klientas

Kaip įmonė sukuria vertę savo savininkams?Finansinis

Pagrindiniai klausimaiPerspektyva

Balanced scorecard


InitiativesMeasures TargetsObjectives

Innovation and

learning

Internal

Customer

Financial



IniciatyvosTikslaiSiekiami

rodikliaiTikslai

Inovacijos ir

mokymasis

Vidaus

Klientas

Finansinis

Illustration – SW Airlines

• Financial

– Q What will drive operating efficiency?

– A More customers / fewer planes

• Customer

– Q How will we get more customers on fewer planes?

– A Attract targeted segments who value price and on time arrivals

• Internal

– Q What must our internal focus be?

– A Fast turnaround times

• Innovation and learning

– Q How will this be accomplished?

– A Educate and compensate ground crew


Iliustracija – SW oro linijos

• Finansinis

– Kl.: kas bus veiklos efektyvumo varomoji jėga?

– Ats.: daugiau klientų / mažiau orlaivių

• Klientas

– Kl: kaip mes galime pritraukti daugiau klientų turėdami mažiau orlaivių?

– Ats.: pritraukti tikslinius segmentus, kurie vertina kainą ir punktualumą.

• Vidaus

– Kl.: į ką turime atkreipti dėmesį viduje?

– Ats.: greitos apyvartos laikas

• Inovacijos ir mokymasis

– Kl.: kaip tai bus pasiekta?

– Ats. mokant ant žemės dirbančią brigadą ir pakankamai jai atlyginant.



O M T I

Financial

Customer

Internal

Innovation and learning


ProfitabilityFewer planes

More customers

Fast turnaround

Ground crew

alignment

On timeLowest

prices


O M T I

Finansinis

Klientas

Vidaus

Inovacijos ir mokymasis


PelningumasMažiau orlaivių

Daugiau klientų

Greitesnė apyvarta

Komandos ant

žemės veiklos

suderinimas

Laiku Mažesnės

kainos



Cycle time

optimisation

Training

ESOP

% trained

% sh’holders

As %

On ground

time

On time

departure

30 mins

90%

Quality management

Customer loyalty

programme

FAA rating

Customer

ranking

% changes

Market value

Seat revenue

Lease cost

% changes

InitiativesMeasures Targets

Ground crew

alignment

Fast turnaround

Flight is on time

Lowest prices

Profitability

More customers

Fewer planes

Objectives

Learning

Internal

Customer

Financial



Ciklo laiko

optimizavimas

Mokymas

ESOP

% tinkamai

parengtų

% akcininkų

% dalis

Laikas

žemėje

Išvykimas

laiku

30 min.

90%

Kokybės valdymas

Klientų lojalumo

programos

FAA reitingas

Klientų

reitingas

% pokytis

Rinkos vertė

Pajamos iš sėdimų

vietų

Nuomos sąnaudos

% pokytis

Iniciatyvos Tikslai Siekiami

rodikliai

Komandos ant

žemės veiklos

suderinimas

Greitesnė

apyvarta

Skrydžiai laiku

Mažesnės kainos

Pelningumas

Daugiau klientų

Mažiau orlaivių

Tikslai

Mokymasis

Vidaus

Klientas

Finansinis

Service industries

• Differ from performance measurement in manufacturing in several ways:

– Simultaneity – production and consumption happen at the same time.

– Perishability – service cannot be stored

– Heterogeneity – there is variability in the standard of performance of a service

– Intangibility

• Should performance measurement be different in service companies to reflect these differences?


Paslaugų sektoriai

• Skiriasi nuo veiklos vertinimo gamybos sektoriuje keliais aspektais:

– Vienalaikiškumas – gamyba ir vartojimas vyksta vienu metu

– Gedimas – paslaugų negalima sandėliuoti;

– Nevienalytiškumas – paslaugų standartai gali būti labai skirtingi.

– Nematerialumas

• Ar atsižvelgus į tokius skirtumus paslaugų bendrovei taikomi veiklos vertinimo rodikliai turėtų būti kitokie?


Service industries

• Controllable performance in service industries can be measured in six different dimensions: – financial performance; and

– competitiveness;

– quality;

– flexibility;

– resource utilisation;

– innovation


Results

Measures success of past decisions

Determinants

Measures performance of current

management

Paslaugų sektoriai

• Kontroliuojamų paslaugų sektorių veiklos rodikliai gali būti vertinami šešiais skirtingais aspektais: – finansinės veiklos rodikliai, ir

– konkurencingumas;

– kokybė;

– lankstumas;

– išteklių panaudojimas;

– inovacijos.


Rezultatai?

Vertina praeityje priimtų sprendimų

sėkmę

Lemiami rodikliai

Vertina esamos vadovybės veiklos

efektyvumą

Valuation of equity and debt instruments

Nuosavybės ir skolos priemonių vertės nustatymas

IFRS 13 Fair Value Measurement

Unquoted equity instruments within scope of IFRS 13

13-asis TFAS - tikrosios vertės nustatymas Nekotiruojamų

nuosavybės priemonių vertinimas pagal 13-ąjį TFAS

Contents

• Background

• Summary

• Terminology

• Objective

• Scope

• Fair value measurements process

• Valuation approaches

• Common oversights


Turinys

• Pagrindinė informacija

• SANTRAUKA

• Terminologija

• Tikslas

• Darbo apimtis

• Terminologija

• Vertės nustatymo būdai

• Bendros nuostatos


Contents

• Background

• Summary

• Terminology

• Objective

• Scope





Turinys


• SANTRAUKA

• Terminologija

• Tikslas

• Darbo apimtis

• Tikrosios vertės nustatymo procesas




Background

• Concerns have been expressed about the application of FV measurement principles

– by emerging and transition economies, but all economies face similar difficulties

• Lack of market data or other key information

– IASB decided to develop material for all audiences

• Material developed by IASB staff, FASB staff and valuation specialists

• This first chapter deals with unquoted equities, and is non-authoritative


Pagrindinė informacija

• Buvo išreikšta nemažai susirūpinimo dėl tikrosios vertės principo taikymo

– Labiausiai - besivystančios ir kylančios ekonomikos, tačiau su panašiais sunkumais susiduria visos ekonomikos

• Trūksta rinkos duomenų ir kitos pagrindinės informacijos

– IASB (Tarptautinė apskaitos standartų valdyba) nusprendė parengti medžiagą visoms auditorijoms.

• IASB ir FASV, bei vertinimo specialistų parengta medžiaga.

• Pirmoje dalyje kalbama apie nekotiruojamas akcijas, ir ji nėra privaloma.


Contents

• Background

• Summary

• Terminology

• Objective

• Scope





Turinys


• SANTRAUKA

• Terminologija

• Tikslas

• Taikymo sritis

• Terminologija




Summary

• Presents a high level thought process for fair valuing unquoted equities in compliance with the principles of IFRS 13

– Non-controlling interests only

– Within scope of IAS 39/IFRS 9

• Presents a range of valuation techniques

– Not prescriptive

– Encourages professional judgement

• The measurement objectives of IFRS 13 can be met even when limited information is available

– Examples illustrate the solution to this problem


SANTRAUKA

• Labai gerai apgalvota nekotiruojamų akcijų vertinimo tvarka pagal 13-ajame TFAS išdėstytus principus.

– Tik kontrolės nesuteikiančios turto dalys

– Pagal 39-ąjį TAS /9-ąjį TFAS

• Pateikiamos įvairiausios vertinimo metodikos

– Nėra privalomas

– Skatina vadovautis profesiniu sprendimu

• Pagal 13-ąjį TFAS nustatytus vertinimo tikslus galima pasiekti netgi turint ribotą informaciją

– Pavyzdžiai parodo šios problemos sprendimą


Contents

• Background

• Summary

• Terminology

• Objective

• Scope





Turinys


• SANTRAUKA

• Terminologija

• Tikslas

• Taikymo sritis

• Terminologija




Terminology

• All IFRS terms are used with the same meanings as found in the standards

• 31 additional terms are defined

• Definitions will be introduced as necessary in this presentation

17www.LARmokymai.lt © Emile Woolf International

Terminologija

• Visi TFAS terminai vartojami ta pačia prasme kaip apibrėžta standartuose.

• Pateiktas 31 papildomas terminas

• Šio užsiėmimo metu, pagal poreikį bus pristatyti nauji terminai.


Contents

• Background

• Summary

• Terminology

• Objective

• Scope





Turinys


• SANTRAUKA

• Terminologija

• Tikslas

• Taikymo sritis





Objective

• To illustrate, at a high level, valuation techniques for use within the context of financial reporting

– Not a comprehensive valuations manual that would describe all the substantial work of a valuations exercises in practice

– Extensive use of examples, but no stipulation of specific techniques for particular circumstances

• The material supports personnel responsible for measuring fair value who bring a degree of expertise to the measurement circumstance:

– as preparers

– as auditors

• May not be sufficient for the most complex of valuations, or for the guidance of non-valuations specialists


Tikslas

• Supažindinti su finansinės atskaitomybės kontekste taikomais vertės nustatymo būdais

– Tai nėra išsamus vertinimo vadovas, kuris apibūdintų visą su vertinimu susijusį darbą.

– Pateikiami pavyzdžiai, tačiau neteigiama, kad konkrečiu atveju turėtų būti taikomas konkretus vertės nustatymo būdas

• Šia medžiaga siekiama padėti darbuotojams, atsakingiems už tikrosios vertės nustatymą, kurie turi remtis savo patirtimi, kai veikia:

– kaip rengėjai

– kaip auditoriai

• Gali būti nepakankama labai sudėtingų vertinimų atvejais, ar ne specialistams vertinimo srityje.


Contents

• Background

• Summary

• Terminology

• Objective

• Scope





Turinys


• SANTRAUKA

• Terminologija

• Tikslas

• Taikymo sritis

• Tikrosios vertės nustatymo būdai




Scope

• IFRS 9 requires all investments in equity instruments to be measured at fair value

– Even if not quoted in an active market

• This educational guidance is appropriate for the measurement of material non-controlling interests of individual unquoted equities:

– at initial recognition; and

– at subsequent reporting dates


Taikymo sritis

• Pagal 9-ąjį TFAS visos investicijos į nuosavybės priemones turi būti vertinamos tikrąja verte

– Netgi jeigu tai yra nekotiruojamos akcijos, kuriomis prekiaujama aktyvioje rinkoje.

• Ši medžiaga yra rekomendacija dėl atskirų kontrolės nesuteikiančių ir nekotiruojamų akcijų vertės nustatymo:

– pirminio pripažinimo atveju; ir

– vėlesnėmis ataskaitų teikimo dienomis.


Contents

• Background

• Summary

• Terminology

• Objective

• Scope





Turinys


• SANTRAUKA

• Terminologija

• Tikslas

• Taikymo sritis

• Terminologija

• Vertės nustatymo metodai

• Bendros įžvalgos


Fair value measurement process

• IFRS 13 requirements

• Similar requirements in other standards

• Unquoted equity instruments

– A range of techniques are available

– Judgement required

• Selection of technique

• No one answer is “correct”

• Selection of the value that is most representative of fair value


Tikrosios vertės vertinimo procesas

• 13-ojo TFAS reikalavimai

• Panašūs į reikalavimus pagal kitus standartus

• Nekotiruojamos nuosavybės priemonės

– Gali būti taikomos įvairūs vertės nustatymo būdai

– Reikalingas profesinis sprendimas

• Metodikos pasirinkimas

• Nėra nei vieno visiškai „teisingo“ atsakymo

• Pasirinkti vertę, kuri geriausiai reprezentuoja tikrąją vertę.


FV measurement process – IFRS 13 requirements

• IFRS 13 clearly states the objective

– To estimate the price at which an orderly transaction to sell an asset or transfer a liability would take place between marketparticipants at the measurement date under current market conditions

• Orderly transaction

– AG lists indications of transactions that may not be orderly

• Market participants

– Knowledgeable, willing, able and independent

• Current market conditions

– An exit price at the measurement date, whether observable or estimated, from the appropriate perspective (asset vs liability)


Tikrosios vertės nustatymo procesas – 13-ojo TFAS reikalavimai

• 13-asis TFAS aiškiai apibrėžia tikslą:

– Nustatyti kainą, už kurią vertinimo dieną būtų parduotas turtas arba perleistas įsipareigojimas pagal tvarkingą sandorį tarp rinkos dalyvių.

• Tvarkingas sandoris

– Pateikiami sandorio, kuris gali nebūti laikomas tvarkingu, požymiai:

• Rinkos dalyviai

– Informuoti, norintys, pajėgūs ir nepriklausomi

• Esamos rinkos sąlygos

– Galutinė kaina vertinimo dieną – stebima arba apskaičiuota -priklausomai nuo požiūrio (turtas - įsipareigojimai)


FV measurement process – IFRS 13 requirements

• IFRS 13 specifically requires:

– the use of a published price when available; otherwise

– the use of a valuation technique:

• maximising the use of relevant observable inputs; and

• minimising the use of unobservable inputs


Tikrosios vertės nustatymo procesas – 13-ojo TFAS reikalavimai

• Pagal 13-ąjį TFAS privaloma:

– jeigu yra, naudoti paskelbtą kainą, kitais atvejais

– naudoti vertės nustatymo metodiką:

• naudoti kuo daugiau svarbių stebimų duomenų; ir

• naudoti kuo mažiau nestebimų duomenų; ir


FV measurement process – similar requirements in other standards

• The fair value exercise might be similar to those situations when an entity has to make other estimates for financial reporting

– IAS 37 when measuring a provision

• A “fair value” type approach, where the standard does not actually describe it as such

– Under other standards where the standard specifies fair value

• IFRS 3 contingent consideration

• IAS 32 split accounting for compound instruments

• IFRS 2 grant date fair value


Tikrosios vertės vertinimo procesas –panašūs reikalavimai kituose standartuose

• Tikrosios vertės nustatymo procesas gali būti panašus į tokias situacijas, kai įmonė privalo atlikti panašius apskaičiavimus rengdama finansines ataskaitas

– 37-asis TAS kalbant apie atidėjinio vertinimą

• Taikomas "tikrosios vertės" vertinimo metodas, nors faktiškai standartas jo taip neapibūdina

– Pagal kitus standartus, kuriuose aprašoma tikroji vertė

• 3-ajame TFAS – neapibrėžtasis atlygis

• 32-ajame TAS – suskirstyta sudėtinių priemonių apskaita

• 2-asis TFAS – tikroji vertė suteikimo dieną


FV measurement process – unquoted equity instruments

• The methodology involves

• Application of the valuation technique

– Selection of a valuation technique

• Consideration of the information available to an investor

– Understanding the reasons why different techniques give different results

• Consideration of which valuation, from within a range, is most representative of fair value

• Determining how much weight to give to the different valuation results


JUDGEMENTS

Tikrosios vertės nustatymo procesas –nekotiruojamos nuosavybės priemonės

• Metodologija

• Vertės nustatymo būdo taikymas

– Vertinimo metodikos pasirinkimas

• Kokia informacija pateikiama investuotojui

– Suprasti, kodėl taikant skirtingas metodikas gaunami skirtingi rezultatai

• Nustatyti, kuris iš kelių vertinimų, geriausiai reprezentuoja tikrąją vertę

• Nustatyti, kokią reikšmę teikti skirtingiems vertinimo rezultatams


SPRENDIMAI

FV measurement process – unquoted equity instruments

• Which price to select as most representative of fair value?

– Which technique makes the least subjective adjustments to the inputs used?

– What is the range of values indicated and do they overlap?

– What are the reasons for the differences in value under different techniques?


Tikrosios vertės nustatymo procesas –nekotiruojamos nuosavybės priemonės

• Kokią kainą pasirinkti, kaip geriausiai reprezentuojančią tikrąją vertę?

– Pagal kurią taikomą metodiką daroma mažiausiai subjektyvių naudojamų duomenų koregavimų?

– Koks yra nurodytų verčių diapazonas, ir ar jos sutampa?

– Kodėl pagal skirtingas metodikas gaunamos skirtingos vertės?


Contents

• Background

• Summary

• Terminology

• Objective

• Scope





Turinys


• SANTRAUKA

• Terminologija

• Tikslas

• Taikymo sritis



• Bendros įžvalgos


Valuation approaches

• Introduction

• Calibration

• IFRS 13 approaches to valuation

• Market approach

• Income approach

• Adjusted net asset method


Vertės nustatymo būdai

• Įžanga

• Pritaikymas

• Vertės nustatymo būdai pagal 13-ąjį TFAS

• Rinkos metodas

• Pajamų metodas

• Koreguotas grynojo turto metodas


Valuation approaches – introduction


Select an appropriate technique

Calibrate the technique at the initial recognition date

Apply the technique at the measurement date

Recalibrate the technique at the measurement date

Vertinimo metodai - Įžanga


Pasirinkti tinkamą metodiką

Pritaikyti metodiką pirminę pripažinimo datą

Taikyti metodiką vertinimo datą

Peržiūrėti, iš naujo pritaikyti metodiką vertinimo datą

Select an appropriate technique - considerations

Information availability

Market conditions

Horizon

Life cycle stage reached

Nature of business

The industry


© Emile Woolf International

Pasirinkti tinkamą metodiką – kas vertinama?

Kokia turima informacija

Rinkos sąlygos

Horizontas

Pasiektas gyvybės ciklo

etapas

Verslo pobūdis

Sektorius

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Calibrate the technique at the initial recognition date

• To ensure that the valuation technique reflects current

market conditions at the measurement date

• A good exercise to ensure that the valuation technique is

current and to provide a benchmark against which to re-

calibrate the technique for subsequent measurement dates



Pritaikyti metodiką pirminę pripažinimo datą

• Užtikrinti, kad vertinimo metodika atspindėtų rinkos sąlygas

vertinimo datą

• Geras būdas užtikrinti, kad vertinimo metodika būtų tinkama,

ir rasti lyginamąjį dydį, pagal kurį tokia technika būtų iš naujo

pritaikyta vėlesnėms vertinimo dienoms.

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Recalibrate the technique at the measurement date

• To ensure that the valuation technique reflects new current market

conditions at the measurement date

For example, there might be a change to the

characteristics of the instrument that is not captured by

the original calibrated technique

Or a new fact may have arisen at the measurement date

that was not present in the original calibrated technique



Iš naujo pritaikyti vertinimo metodiką vertinimo datą

• Užtikrinti, kad vertinimo metodika atspindėtų naujas rinkos

sąlygas vertinimo datą

Pavyzdžiui, gali būti pasikeitusios priemonės

charakteristikos, į kurias nebuvo atsižvelgta iš pradžių

naudojant iš pradžių pritaikytą metodiką

Arba vertinimo dieną gali būti atsiradę nauji faktai, kurių

nebuvo naudojant iš pradžių pritaikytą metodiką

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Calibration – illustration

• Basic facts:

– Investor purchases 5% of equity of Penguin Ltd for $49,370 on 31 December 2013

– Investor believes that $49,370 was fair value

– Subsequent measurements will be made using the comparable company multiple (CCM) technique

• EBITDA multiple 9.2x, and then including

• an NCI discount and a lack of liquidity (LoL) discount

– The investor calibrates the valuation technique at this initial recognition date

– EBITDA in the relevant year is $135,000


Pritaikymas – iliustracija

• Pagrindiniai faktai:

– 2013 m. gruodžio 31 d. investuotojas nupirko 5% „Penquin Ltd.“ akcijų už 46 370 USD.

– Investuotojas tiki, kad 46 370 USD yra tikroji vertė.

– Toliau įsigyta turto dalis bus vertinama naudojant palyginamos įmonės kartotinio metodiką

• EBITDA kartotinis 9,2 x, tada įskaitant

• NCI diskontą ir diskontą dėl likvidumo praradimo (LoL).

– Investuotojas pritaiko vertinimo metodiką šią pirminio pripažinimo datą.

– Atitinkamų metų EBITDA yra 135 000 USD.




Calibrated valuation technique at initial recognition

$ %

CCM indicated value of 5% interest using EBITDA multiple of 9.2x: 135,000 x 9.2 x 5% = 62,100

NCI discount (7,763) 12.5

LoL discount (4,968) 8.0

Fair value of 5% non-controlling interest on 31 Dec 2013 49,369 100.0

Pritaikymas – iliustracija


Pritaikyta vertinimo metodika pirminio pripažinimo metu

$ %

Taikant palyginamos įmonės metodą - 5 % palūkanos,

naudojant EBITDA kartotinį 9,2 x: 135 000 x 9,2 x 5% = 62 100

NCI diskontas. (7 763): 12,5

Diskontas dėl likvidumo praradimo (4 968): 8,0

Tikroji 5% kontrolės nesuteikiančios turto dalies vertė

2013 m. gruodžio 31 d. yra

49 369

USD

100,0


• At subsequent measurement dates

– Consider whether a 9.2× EBITDA multiple still applies

– Consider whether the variables that drive the NCI discount or LoL discount have changed

– If they have changed consider whether new facts need to be embedded into the valuation technique, and adjust the technique accordingly

• The result is that the model will reflect new current market conditions and/or new conditions affecting Penguin Ltd


Kalibravimas – iliustracija

• Vėlesnėmis vertinimo datomis

– Nustatyti, ar 9,2 x EBITDA kartotinis vis dar taikomas.

– Nustatyti, ar nepasikeitė kintamieji dydžiai, dėl kurių atsiranda NCI diskontas ir LoL diskontas

– Jeigu jie pasikeitė, būtina įvertinti, ar taikant tokias vertinimo metodikas, būtina atsižvelgti į tokius naujus faktus, ir atitinkamai koreguoti vertinimo metodiką.

• Tada taikant modelį bus tinkamai atsižvelgta į naujas rinkos sąlygas, ir (arba) naujas „Penquin Ltd.“ įmonei įtaką darančias sąlygas.


IFRS 13 valuation approaches

• IFRS 13 describes three acceptable valuation approaches to estimating fair value

– Market approach

– Income approach

– Cost approach

• This educational initiative addresses the market and income approaches, and the adjusted net asset method as a hybrid of these

– The cost approach is not likely to be used in connection with equities

• The resulting valuations will most likely fall within the Level 3 fair value hierarchy, and further disclosures will follow


Vertinimo metodai pagal 13-ąjį TFAS

• 13-asis TFAS aprašo tris priimtinus tikrosios vertės nustatymo būdus

– Rinkos metodas

– Pajamų metodas

– Sąnaudų metodas

• Šiame mūsų kurse kalbėsime apie rinkos metodą, pajamų metodą ir jų hibdridą – koreguoto grynojo turto metodą.

– Sąnaudų metodas tikriausiai nebus naudojamas vertinant akcijas.

• Gautos vertės tikriausiai priskiriamos tikrosios vertės hierarchijos 3 lygiui, be to, turi būti pateikta papildoma informacija.


Market approach

• Introduction

• Transaction price paid for an identical or similar instrument in an investee

• Comparable company valuation multiples


Rinkos metodas

• Įžanga

• Sandorio kaina, sumokėta už tokią pačią ar panašią įmonės, į kurią investuojama, įsigytą priemonę.

• Panašių įmonių vertinimo kartotiniai


Introduction to market approach

• Uses prices and other relevant information generated by market transactions involving

– identical or similar instrument in an investee; or

– comparable company multiples

• There are a number of techniques in this category, characterised by the base data sources utilised by the technique

– transaction price paid by investor or other investors

– price of a similar quoted company; or

– observed price in M&A transactions


Įvadas į rinkos metodą

• Naudoja kainas ir kitą svarbią informaciją, gautą vykdant rinkos sandorius dėl įmonės, į kurią investuojama,

– tokias pačias ar panašias priemones; arba

– panašių įmonių vertinimo kartotinius

• Šioje kategorijoje yra kelios vertinimo metodikos; šią metodikos kategoriją apibūdina jos naudojami duomenų šaltiniai

– investuotojo ar kitų investuotojų sumokėta sandorio kaina

– panašios kotiruojamos bendrovės kaina; arba

– stebima M&A sandorių kaina.


Transaction price paid at initial recognition

• By the preparer (who now needs to FV the instrument) or others, for an identical instrument; or

• By the preparer (or others) for a similar instrument

• In both cases, the price paid may be a reasonable starting point for estimating fair value at the measurement date

– An adjustment is likely to be needed for changed circumstances, internally or externally (original cost is no longer a valid estimate of FV)

– If the comparator instrument is similar, adjustments need to be considered for the lack of precise comparability

• Eg economic or control rights held


Sandorio kaina, mokama pirminio pripažinimo metu

• Nurodo rengėjas (kuris dabar turi žinoti tikrąją priemonės kainą), arba kiti nurodo kitos identiškos priemonės kainą.

• Panašių priemonių kainą nurodo rengėjai

• Abiem atvejais sumokėta kaina gali būti pakankamai priimtinas išeities taškas, kuriuo remiantis galima apskaičiuoti tikrąją vertę vertinimo dieną.

– Pasikeitus išorės ar vidaus aplinkybėms tikriausiai prireiks atlikti tam tikrus koregavimus (pradiniai sąnaudų duomenys negali būti laikomi patikimu pagrindu tikrajai vertei apskaičiuoti)

– Jeigu priemonė, su kuria lyginama, yra tik panaši, kadangi priemonių tiksliai palyginti neįmanoma, gali prireikti padaryti tam tikrus koregavimus.

• Pvz.,turimos ekonominės ir kontrolės teisės.


Illustration – price paid by other investors in a similar instrument

• Basic facts:

– Investor (preparer) Sparrow SA bought ordinary shares in Wren Ltd 3 years ago

– Sparrow‟s year-end is 31 Dec 2013

– Wren is developing new products, and during the year to 31 Dec 2013, it raised further capital by an issue of preferred shares to a VC investor, priced at $15 per share

– The VC investor is considered to have a controlling interest in Wren

– The preferred shares are identical to ordinary shares except:

• they carry a cumulative fixed dividend right for five years; and

• they rank above the ordinary shares in the event of liquidation


Iliustracija – kitų investuotojų į panašias priemones mokėta kaina

• Pagrindiniai faktai:

– Prieš tris metus investuotojas (rengėjas) „Sparrow SA“ nupirko „Wren Ltd. Paprastųjų akcijų.

– „Sparrow“ metai baigiasi 2013 m. gruodžio 31 d.

– „Wren“ kuria naujus produktus, ir per metus iki 2013m. gruodžio 31 d. įmonė pritraukė naujo kapitalo išleidusi privilegijuotas akcijas VC investuotojui, po 15 USD už akciją.

– VC investuotojas laikomas turinčiu kontrolę suteikiančią „Wren“ turto dalį.

– Privilegijuotosios akcijos yra tokios pačios kaip paprastosios akcijos, išskyrus:

• jos suteikia teisę gauti kaupiamąjį fiksuoto dydžio dividendą penkerius metus, ir

• likvidavimo atveju jos turi pirmumo teisę paprastųjų akcijų atžvilgiu.



• Further information:

– It is estimated that the premium for control granted to the VC investor is 15%

– Sparrow is facing a lack of liquidity for its shares relative to a VC investor (who will orchestrate an IPO in 4/5 years time) –estimated discount for LoL is 8%

– The expected value benefit of ranking above ordinary shares in the (unlikely) event of liquidation is estimated as 5%

– The present value of 5 years preferred dividends is $3, whereas the expected present value of possible ordinary dividends is $1.50

• Outline an acceptable approach to the valuation of 1,000 ordinary shares at 31 Dec 2013, and provide that estimate



• Papildoma informacija:

– Apskaičiuota, kad premija už VC investuotojui suteiktą kontrolę yra 15 %.

– VC perleistos „Sparrow“ akcijos netenka dalies likvidumo. VC planuoja per ateinančius 4-5 metus surengti IPO – numatoma nuolaida dėl dalies likvidumo praradimo – 8%.

– Numatoma nauda dėl to, kad (mažai tikėtino) likvidavimo atveju šios akcijos turės pirmumo teisę paprastų akcijų atžvilgiu – 5%.

– Dabartinė 5 metų privilegijuotų dividendų vertė yra 3 USD, o numatoma dabartinė paprastųjų dividendų vertė yra 1,5 USD.

• Pasiūlykite tinkamą 1 000 paprastųjų akcijų įvertinimo būdą 2013 m. gruodžio 31 d. ir pateikite įvertinimą.



• Sparrow must

– Examine the circumstances of the issue of preferred shares to VC

• Any additional involvement? – eg management fees

• Additional commercial benefit? – eg access to know how from failed patent applications, or synergy

– Conclude whether the $15 paid by the VC was a fair value at that date

– Examine whether there are any other factors that have changed since the issue of the preferred shares and 31 Dec 2013

– Prepare calculations that take into account the substantive differences between their investment, and the similar instrument



• „Sparrow“ privalo:

– įvertinti privilegijuotų akcijų išleidimo VC aplinkybes

• Ar buvo kokių nors papildomų išlaidų? - pvz., vadovybės mokesčiai

• Kokia papildoma komercinė nauda? - pvz., galimybė susipažinti ir naudoti "know-how" pagal nepatenkintą paraišką dėl patento, arba dėl sinergijos

– Nuspręsti, ar VC sumokėti 15 USD tą dieną buvo tikroji vertė. i

– Įvertinti, ar buvo kokių nors kitų veiksnių ar aplinkybių, kurios pasikeitė nuo privilegijuotų akcijų išleidimo 2013 m. gruodžio 31 d.

– Parengti skaičiavimus, pagal kuriuos būtų tinkamai atsižvelgta į skirtumus tarp šių investicijų ir panašių priemonių.


Solution – price paid by other investors in a similar instrument

$ per share

Transaction price for preferred share issue 15.00

Adjustment for control premium (15%) (2.25)

Adjustment for LoL (8%) (1.20)

Adjustment for ranking benefit attaching to preferred shares (5%)

(0.75)

Present value of fixed preferred dividend less present value of expected ordinary dividend (3.00-1.50) (1.50)

Estimated fair value of each ordinary share $9.30


Sprendimas – kitų investuotojų į panašias priemones mokėta kaina

USD už

akciją

Sandorio kaina išleidžiant privilegijuotas akcijas 15,00

Koregavimas dėl suteikiamos kontrolės priedo (15%) (2,25):

Koregavimas dėl likvidumo praradimo (8%) (1,20):

Koregavimas dėl privilegijuotoms akcijoms suteikiamų pirmumo

teisių (5%);

(0,75):

Dabartinė fiksuoto privilegijuoto dividendo vertė atėmus

numatomo paprasto dividendo vertę (3,00-1,50) (1,50):

Apskaičiuota kiekvienos paprastosios akcijos tikroji vertė 9,30 USD


Comparable company multiples

• Trading multiples

– Use the published price information (eg FTSE 100 quote) of a comparable company peer

• Transaction multiples

– Use the observed price established for an M&A transaction of a comparable company peer

– This price will include a control (or joint control or significant influence) premium


Panašių įmonių vertinimo kartotinius

• Prekybos kartotiniai

– Remtis skelbiama informacija apie palyginamos įmonės akcijos kaina (pvz., FTSE 100 kaina).

• Sandorio kartotiniai

– Naudoti panašios įmonės M&A sandorio tikslais nustatytą kainą

– Ši kaina nurodoma kartu su kontrolės (arba bendros arba reikšmingos kontrolės) priedu.


CCM valuations – Process


Identify comparable company peer

Select the most relevant performance measure for the

investee, eg earnings, book value or revenue

Apply the appropriate multiple to the relevant performance measure

Select, derive and analyse possible valuation multiples,

and select the most appropriate

Make appropriate adjustments to ensure comparability (eg LoL discount)

CCM vertinimas – procesas


Nustatyti palyginamą kitą bendrovę

Pasirinkite svarbiausią įmonės, į kurią investuota, rodiklį,

pvz., pelnas, buhalterinė vertė ar pajamos.

Taikyti tinkamiausius kartotinius atitinkamiems veiklos rodikliams

Pasirinkti, apskaičiuoti ir išanalizuoti galimus vertinimo kartotinius,

pasirinkti tinkamiausius

Atlikti atitinkamus koregavimus, siekiant užtikrinti tikslesnį palyginamumą

(pvz., nuolaida dėl likvidumo praradimo).

• Similar cash flow risk, growth, timing

• Similar business activities, markets served, size, geographical coverage

• There may be more than one!

– But some compromises are usually necessary

– The closer the match, the fewer adjustments will be needed to the derived valuation


Identify comparable company peer

• Panaši pinigų srautų rizika, rinkos, kuriose veikia, dydis

• Panaši verslo veikla, rinkos, kuriose teikia paslaugas, dydis, veiklos geografija

• Tokių bendrovių gali būti daugiau, nei viena

– Bet dažniausiai reikia daryti tam tikrus kompromisus.

– Kuo panašesnė pasirinkta bendrovė, tuo mažiau reikės koreguoti gautą vertinimo reikšmę.


Nustatyti palyginamą kitą bendrovę

• Depends on the investees business, asset base and capital structure relative to the comparable company peers


Select the most relevant performance measure for the investee, eg

earnings, book value or revenue

• Priklauso nuo įmonės, į kurią investuota, verslo, turto bazės, kapitalo struktūros, kurią galima būtų palyginti su kitomis panašioms bendrovėmis.


Pasirinkite svarbiausią įmonės, į kurią investuota, rodiklį, pvz., pelnas,

buhalterinė vertė ar pajamos.

• Equity value

– The fair value of all equity claims

– Equals enterprise value less the fair value of all non-equity claims

• Enterprise value

– The fair value of all equity and non-equity financial claims attributable to all capital providers


Select, derive and analyse possible valuation multiples,

and select the most appropriate

Multiple =Value (equity or enterprise)

Performance measure

• Nuosavybės vertė

– Tikroji nuosavybės priemonių vertė

– Yra lygi įmonės vertei atėmus visų ne nuosavybės priemonių tikrąją vertę.

• Įmonės vertė

– Tikroji visiems kapitalo teikėjams priskiriamų nuosavybės ir ne nuosavybės finansinių priemonių vertė.


Pasirinkti, apskaičiuoti ir išanalizuoti galimus vertinimo kartotinius,

pasirinkti tinkamiausius

Kartotinis =Vertė (nuosavybės arba įmonės)

Veiklos rodiklis

The multiple

• It is essential that the numerator and denominator in the multiple are consistent

– For example, if the numerator is equity value then the denominator should be a net income performance measure like earnings

– Whereas, if the performance measure is revenue, or EBITDA, then this is a measure of return to all providers of capital, and the numerator should be enterprise value


Kartotinis


• Labai svarbu užtikrinti, kad kartotinio skaitiklis ir vardiklis būtų naudojami nuosekliai

– Pavyzdžiui, jeigu skaitiklis yra nuosavybės vertė, tai vardiklis turėtų būti grynųjų pajamų rodiklis, toks kaip pelnas

– Tuo tarpu, jeigu veiklos rodiklis yra pajamos, arba EBITDA, tai yra grąžos rodiklis visiems kapitalo teikėjams, tokiu atveju skaitiklis turėtų būti įmonės vertė.

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Commonly used multiples

• Enterprise value/EBITDA

• Enterprise value/EBIT

• Enterprise value/EBITA

• Equity value/Earnings (aka P/E ratio)

• Equity value/Book value (aka P/B ratio)

• Equity value/Revenue


Dažniausiai naudojami kartoriniai

• Įmonės vertė /EBITDA

• Įmonės vertė /EBIT

• Įmonės vertė /EBITA

• Nuosavybės vertė / pelnas (kainos/pelno akcijai rodiklis)

• Nuosavybės vertė / balansinė vertė (kainos/balansinės vertės rodiklis)

• Nuosavybės vertė/pajamos


Categories of multiples

• Earnings multiples

– Established business, continuing and stable earnings

• Book value multiples

– Industries (eg financial institutions) that use their equity base to generate earnings

• Revenue multiples

– Business yet to generate positive earnings, but CC peer may have reached profitability, so care needs to be exercised (investee may never reach the same level of profitability)

– Tends to be used as a cross-check to other valuations


Kartotinių kategorijos

• Pelno kartotiniai

– Nusistovėjęs verslas, nuolatinis ir stabilus pelnas

• Buhalterinės vertės kartotiniai

– Atskirų sektorių įmonės (pvz. finansų įstaigos), kurios generuoja pelną remdamosi savo nuosavybės baze

• Pajamų kartotiniai

– Ši įmonė vis dėlto gali generuoti pelną, tačiau palyginamoji įmonė jau gali būti pasiekusi tam tikrą pelningumo laipsnį, todėl reikia elgtis atsargiai (įmonė, į kurią investuojama gali niekada nepasiekti tokio paties pelningumo laipsnio).

– Dažniausiai naudojamas kryžminiam patikrinimui su kitų vertinimų rezultatais.


Multiples and performance measures –other considerations

• Some industries might have industry-specific benchmarks that provide additional insight

– Eg revenue per subscriber for telecoms

• Multiples could be forward-looking or historic

– Judgement needs to be carefully exercised when using forward-looking multiples

• Performance measures and multiples might need to be „normalised‟ and/or adjusted for non-operating items

– In the CC peer, and/or the investee

– Adjust for abnormal/unusual/one-off items that have affected the performance measure

– Adjust for non-operating items eg surplus asset


Kartotiniai ir veiklos rodikliai – kiti aspektai

• Kai kurių sektorių įmonės gali nustatyti sektoriui būdingus lyginamuosius indeksus, kurie leidžia susidaryti papildomas įžvalgas.

– Pvz., pajamos iš vieno Telecom abonento

• Tokie kartotiniai gali būti perspektyviniai arba istoriniai.

– Ypač atsargiai reikia taikyti perspektyvinius kartotinius

• Veiklos rodiklius ir kartotinius gali prireikti „normalizuoti“ ir (arba) koreguoti dėl su veikla nesusijusių veiksnių

– Lyginamosios įmonės ir (arba) įmonės, į kurią investuojama

– Koreguoti atsižvelgus į nenormalius / neįprastus/ vienkartinius straipsnius, kurie turėjo įtakos veiklos rodikliui

– Koreguoti dėl su veikla nesusijusių straipsnių, pvz., perteklinio turto


Single multiple, or average?

• In practice there may be sufficient CC peers to derive an average multiple (or median)

– Especially appropriate if the target entity for valuation has characteristics in keeping with the average CC peer

• However, a particularly high performing target may justify the use of a multiple from the higher range (eg the average of the top quartile) or, conversely, the lower range


Vienas kartotinis, ar vidurkis?

• Praktiškai gali būti pakankamai lyginamųjų įmonių, kad galima būtų apskaičiuoti vidutinį kartotinį (arba medianą)

– Ypač tinka, jeigu vertinamosios įmonės charakteristikos atitinka vidutinės lyginamosios įmonės charakteristikas

• Tačiau, jeigu įmonės, į kurią investuojama, rezultatai yra labai aukšti, gali būti naudojamas aukštesnio laipsnio (pvz., geriausio ketvirtuko vidurkis), arba, atvirkščiai, žemesnio laipsnio, kartotinis.


Apply the appropriate multiple to

the relevant performance measure

Value = Multiple × Target performance measure

• Finally, adjustments may need to be made to this indicative fair

value for:

• lack of liquidity; and/or

• NCI discount



Pritaikyti atitinkamą kartotinį

atitinkamiems veiklos rodikliams

Vertė = Kartotinis x Tikslinis veiklos rodiklis

• Galiausiai, ši apskaičiuota (indikatyvi) tikroji vertė gali būti

koreguojama dėl tokių veiksnių:

• nepakankamas likvidumas; ir (arba)

• NCI diskontas.

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Illustration

• C Ltd has – The most recent profit after tax is $120,000

– The company has suffered a non-recurring expense of $30,000 (after tax)

– A comparable company peer has a P/E ratio of 17

• What is the value of C Ltd?


Iliustracija

• „C Ltd.“ – Naujausias pelnas po mokesčių yra 120 000 USD.

– Įmonė patyrė vienkartines 30 000 USD išlaidas (po mokesčių).

– Lyginamos įmonės pelno vienai akcijai rodiklis (P/E) yra 17.

• Kokia yra „C Ltd.“ vertė?


Illustration

• Future maintainable earnings after tax– 120,000 + 30,000 = $150,000

• Suitable P/E ratio for target– Proxy ratio × LoL adjustment– 17 × 0.9(say) = 15.3– 17 × 0.8(say) = 13.6– 17 × 0.7(say) = 11.9

• Value of C Ltd– 15.3 × $150,000 = $2,295,000– 13.6 × $150,000 = $2,040,000– 11.9 × $150,000 = $1,785,000


Iliustracija

• Būsimas išlaikomas pelnas po mokesčių – 120 000 + 30 000 = 150 000 USD.

• Tinkamas įmonės, į kurią investuojama, P/E– Tariamas rodiklis x koregavimas dėl LoL (likvidumo praradimo) – 17 × 0,9 (tarkime) = 15,3– 17 × 0,8 (tarkime) = 13,6– 17 × 0,7 (tarkime) = 11,9

• „C. Ltd. vertė – 15,3 × $150 000 = $2 295 000– 13,6 × $150 000 = $2 040 000– 11,9 × $150 000 = $1 785 000


CCM valuation with limited information

• Limited financial information about investee

– For example, only historic, annual and quarterly, but with some delay

– Use a relevant market valuation multiple for the same historical period for which you have investee data and market/economic outlooks as at that same period


CCM vertinimas turint ribotą informaciją

• Ribota finansinė informacija apie įmonę, į kurią investuota

– Pavyzdžiui, turima tik istorinė, metinė, ketvirtinė informacija, tačiau pavėluota.

– Atitinkamas rinkos vertinimo kartotinis taikomas tam istoriniam laikotarpiui, už kurį turimi įmonės, į kurią investuojama, duomenys, ir turimi rinkos / ekonominių perspektyvų duomenys



• Limited financial information about investee

– Historic annual FS only, made up to a date much earlier than the investors desired measurement date, and from discussions with investee management, indicative current sales volumes and profit margins

– Investor will discuss and analyse performance and prospects with investees management, and will produce proforma (indicative) financial statements for a more up-to-date relevant period, and find CC peers to match, to apply a CCM valuation



• Ribota finansinė informacija apie įmonę, į kurią investuota

– Turimos tik istorinės finansinės ataskaitos, kurių data yra daug ankstesnė, nei investuotojo pageidaujama vertinimo data, taip pat iš pokalbių su įmonės, į kurią investuojama, vadovybe, žinomi apytikriai duomenys apie pardavimo apimtis ir pelningumą

– Investuotojas aptaria su įmonės, į kurią investuojama, vadovybe veiklos rezultatus, perspektyvas, parengia naujesnio laikotarpio finansines ataskaitas (indikatyvias) ir randa įmonę, su kuria tokius rezultatus galima palyginti, kad galėtų taikyti CCM vertinimo metodą.



• Limited comparable company peers available

– Insufficient data exists about investee to use an income approach, so a CCM valuation is required

– The investee operates in such a highly specialised sector, the search for domestic CC peers was unsuccessful

– The search could be extended to cross-border CC peers

– The search could be extended to the sector that the investee serves, to find CC peers with similar prospects, profitability and capital structures



• Nėra daug įmonių, su kuriomis galima būtų palyginti.

– Nėra pakankamai duomenų apie įmonę, į kurią investuota, kada galima būtų taikyti pajamų metodą, todėl reikia naudoti CCM vertinimo būdą.

– Įmonė, į kurią investuota veikia tokiame specializuotame sektoriuje, vietinių panašių kompanijų nerasta.

– Panašių įmonių paieškos ratas gali būti praplėstas, apimant ir kitų valstybių įmones.

– Paieškos ratas taip pat gali būti praplėstas, apimant sektorius, kuriuose įmonė, į kurią investuojama, teikia paslaugas – taip būtų randamos panašių perspektyvų, panašaus pelningumo ir kapitalo struktūros palyginamos įmonės.


Income approach

• Introduction

• Discounted cash flow (DCF) method

• Other income approach methods


Pajamų metodas

• Įžanga

• Diskontuotų pinigų srautų metodas

• Kiti pajamų metodikos metodai


Income approach – introduction

• These methods convert future amounts (CFs, dividends, income and expense) into a single current (ie discounted) amount

• Methods include:

– Enterprise DCF (or equity DCF)

– Dividend discount model (DDM, aka DVM)

• With or without growth

– Capitalisation model


Pajamų metodas - Įžanga

• Pagal šiuos metodus visos būsimosios sumos (pinigų srautų, dividendai, pajamos ir išlaidos) yra konvertuojamos į vieną einamojo laikotarpio (t.y. diskontuotą) sumą.

• Taikant šį metodą, naudojami duomenys:

– Įmonės DCF (arba nuosavybės DCF)

– Dividendų diskonto modelis (DDM, DVM)

• Su augimu arba be jo

– Kapitalizavimo modelis


DCF method

• Estimate future cash flows

– Discrete modelling for a period

– Cash flows for thereafter

• Constant or constant growth model; or

• Estimate a terminal value using an exit multiple

• Model CF risk by estimating probabilities and computing expected CFs

• Estimate a suitable discount rate to apply to the expected CFs (IFRS 13 illustrates these steps)


Diskontuotų pinigų srautų metodas

• Apskaičiuoti būsimuosius pinigų srautus

– Atskiras modelis konkrečiam laikotarpiui

– Pinigų srautai po tokio laikotarpio

• Pastovus, arba pastovaus augimo modelis, arba

• Apskaičiuoti galutinę vertę naudojant galutinės vertės kartotinį

• Modeliuoti pinigų srautų riziką įvertinant tikimybes ir apskaičiujant numatomus pinigų srautus

• Apskaičiuoti tinkamą diskonto normą, kuri turėtų būti taikoma numatomiems pinigų srautams (šiuos žingsnius iliustruoja 13-asis TFAS).


DCF method – equity or enterprise value?

• Equity value can be obtained directly from free cash flow to equity (FCFE)

• Enterprise value can be obtained from free cash flow to firm (FCFF)

• The chosen approach will determine what is the appropriate discount rate to apply


DCF metodas- nuosavybės ar įmonės vertė?

• Nuosavybės vertę galima apskaičiuoti tiesiogiai pagal FCFE (free cash flow to equity) – laisvų pinigų srautų santykį su nuosavybe.

• Įmonės vertę galima apskaičiuoti tiesiogiai pagal FCFF (free cash flow to firm) – įmonei tenkančius laisvus pinigų srautus. .

• Tinkama taikytina diskonto norma priklauso nuo pasirinkto būdo.


Discount rate, cash flows and value

Inputs Equity value Enterprise value

Cash flows FCFEThe cash flows available to all equity capital providers.Cash flows from assets, after debt payments, and after necessary reinvestments to secure future growth

FCFFThe cash flows available to all capital providers.Cash flows from assets, before any debt payments, and after necessary reinvestments to secure future growth

Discount rate Reflects only the cost of raising equity financing (iethe cost of equity)

Reflects the cost of raising both debt and equity in proportion to their use (ie the weighted average cost of capital or WACC)


Diskonto norma, pinigų srautai ir vertė

Turimi

duomenys

Nuosavybės vertė Įmonės vertė

Pinigų srautai FCFE (laisvų pinigų srautų

įmonei)

Visiems kapitalo teikėjams

tenkantys pinigų srautai

Pinigų srautai iš turto

sumokėjus skolas ir atlikus

reikalingas reinvesticijas,

būtinas augimui ateityje

užtikrinti.

FCFF

Visų kapitalo teikėjų pinigų

srautai

Pinigų srautai iš turto prie

sumokant skolas, ir po

reinvesticijų, būtinų augimui

ateityje užtikrinti.

Diskonto norma Parodo tik nuosvybės

finansavimo sąnaudas (t.y.

nuosavybės sąnaudas)

Parodo skolos ir nuosavybės

priemonių finansavimo

sąnaudas proporcingai jų

naudojimui (t.y. vidutinės

svertinės kapitalo ir WACC

sąnaudos).


Discount rate and cash flows

• Must be consistent

– Both pre-tax or both post-tax

– Both measured for the same currency

• The educational material illustrates how to bring about currency consistency using forward rate information or PPP models

• As with CCM valuation, be prepared to adjust for non-operating items


Diskonto norma ir pinigų srautai

• Būtina užtikrinti nuoseklumą

– Tiek prieš mokesčius, tiek po mokesčių

– Abu dydžiai vertinami ta pačia valiuta

• Šioje medžiagoje parodoma, kaip užtikrinti valiutos naudojimą nuoseklumą naudojant būsimų normų informaciją arba PPP modelius.

• Kaip ir vertinant pagal lyginamos įmonės metodą, būtina numatyti koregavimą dėl su veikla nesusijusių straipsnių.


DCF method with limited information

• Limited cash flow information

– For example, an investee with long-term prospects (indefinite?), but an investor with only the next year or two of cash flow budgets

– Investor could utilise commentary from the investee‟s management and industry forecasts, and project the two years‟ budgets until a stable constant growth period is reached (to compute a terminal value)

– Investor should cross-check implied multiple with CC peers to support the reasonableness of the DCF valuation


DCF metodo taikymas turint ribotą informaciją

• Labai ribota informacija apie pinigų srautus

– Pavyzdžiui, įmonė, į kurią ketinama investuoti, turi numačiusi labai ilgo laikotarpio perspektyvas (neribotas?), tačiau investuotojas yra sudaręs tik kitų metų (ar dar vienų) pinigų srautų biudžetą

– Investuotojas galėtų pasinaudoti įmonės, į kurią ketinama investuoti, vadovybės informacija, sektoriaus prognozėmis, ir sudaryti dviejų ateinančių metų biudžetų projekcijas, kol bus pasiektas stabilaus augimo laikotarpis (apskaičiuoti galutinę vertę).

– Investuotojas turėtų kryžmiškai patikrinti taikomą kartotinį su kitų lyginamų įmonių kartotiniais, ir pagrįsti DCF skaičiavimus.


DCF method with limited information

• Limited cash flow information

– For example, an investee with long-term prospects (indefinite?), but an investor with access only to published financial statements

– The investor could use published analysts/commentators forecasts (sales volumes, prices, margins…) to build estimates of future cash flows, perhaps starting from FCFE or FCFF as shown in the most recent financial statements

– Investor would cross-check the implied profit margins and multiple to CC peers for reasonableness


DCF metodo taikymas turint ribotą informaciją

• Labai ribota informacija apie pinigų srautus

– Pavyzdžiui, įmonė, į kurią ketinama investuoti, turi numačiusi labai ilgo laikotarpio perspektyvas, tačiau investuotojas turi galimybę susipažinti tik su skelbiamomis finansinėmis ataskaitomis.

– Ateities pinigų srautus investuotojas galėtų prognozuoti remdamasis paskelbta analize / komentatorių prognozėmis (pardavimo apimtimis, kainomis, pelningumu); galėtų pradėti nuo naujausiose finansinėse ataskaitose pateiktų FCFE arba FCFF duomenų.

– Savo apskaičiavimams pagrįsti investuotojas galėtų kryžminiu būdu palyginti numatomą pelningumą ir kartotinius su kitomis lyginamomis bendrovėmis.


Other income approaches

• DDM (aka DVM)

– Estimates equity value as a present value of future dividends in perpetuity

– Growth rate may be zero, or estimated from, say the historic growth or the “rb” model

– Can be used to estimate the terminal value in a DCF valuation


MV =d1

ke − g

Kiti pajamų metodai

• DDM (diskontuotų dividendų) (taip pat žinomas kaip DVM)

– Nuosavybės vertė nustatoma kaip būsimų dividendų vertė neribotą laiką

– Augimo rodiklis gali būti lygus nuliui, arba gali būti apskaičiuotas remiantis istoriniais augimo duomenimis, arba „rb“ modeliu.

– Gali būti naudojamas apskaičiuoti galutinę vertę taikant DCF vertinimo metodiką


MV =d1

ke − g

Illustration

• Dividend is $10,000 at t1 growing at 10% for two years (t2 and t3)

• Dividend will then grow at 5% to infinity

• Assume cost of capital = 8%


Iliustracija

• t1 dividendas yra 10 000 USD, auga 10 % du metus (t2 ir t3).

• Reiškia, dividendas išaugs iki 5% iki begalybės

• Tarkime, kapitalo sąnaudos yra 8%.


Illustration


PV

10,000Dividend 11,000 12,100 12,705

0.926DF (8%) 0.857 0.794

9,259Present values 9,431 345,793

364,483

Year 1 2 3 4 – ∞

Discount factor: 0.08 – 0.05

1

423,500

435,600

Iliustracija


Dabartinė

vertė

10.000Dividendas 11.000 12.100 12.705

0,926Diskonto veiksnys

(8 %).

0,857 0,794

9.259Dabartinės vertės 9 431 345.793

64.483

Metai 1 2 3 4 – ∞

Diskonto veiksnys: 0,08 – 0,05

1

423.500

435.600

Capitalisation model

• A process applied to an amount representing some measure of economic income in order to convert that to an estimate of present value

• “c” is the capitalisation rate and may be k-g, where k is the discount rate and g is the annual compound growth rate in perpetuity

PV =FCFF

c


Kapitalizavimo modelis

• Tai yra procesas, taikomas tam tikras ekonomines pajamas reprezentuojančiai sumai, siekiant apskaičiuoti dabartinės vertės įvertį.

• „c“ yra kapitalizacijos norma, kuri gali būti lygi k-g, kur k yra diskonto norma, o g yra metinis sudėtinis augimo rodiklis neribotą laiką.


Dabartinė

vertė

=FCFF

c

Adjusted net asset method

• Involves the derivation of the fair value of equity instruments by reference to the fair value of underlying assets and liabilities

– Recognised and unrecognised

– Particularly relevant to property groups, investment entities and very early development stage companies

• Clearly the assets and liabilities that are most likely to need adjustment from carrying amounts to get to fair value are:

– P,P and E and intangible assets;

– receivables, intercompany items and other financial assets not already at fair value; and

– contingent liabilities


Koreguotas grynojo turto metodas

• Nuosavybės priemonių tikroji vertė nustatoma pagal pagrindinio turto ir įsipareigojimų tikrąją vertę.

– Pripažintas ir nepripažintas

– Ypač svarbus tam tikroms turto grupėms, investicinėms įmonėms ir kai kurioms įmonėms jų labai ankstyvajame raidos etape.

• Tikrajai vertei gauti daugiausia teks koreguoti turto ir įsipareigojimų buhalterinę vertę, t.y tokie straipsniai, kaip:

– ilgalaikis materialusis turtas, nematerialusis turtas;

– gautinos lėšos, sandorių tarp įmonių straipsniai ir kitas finansinis turtas, dar neįvertintas tikrąja verte; ir

– neapibrėžti įsipareigojimai.


Contents

• Background

• Summary

• Terminology

• Objective

• Scope





Turinys


• SANTRAUKA

• Terminologija

• Tikslas

• Taikymo sritis





Common oversights

• Market approach (comparable company valuation multiples)

• Income approach (DCF method)

• Adjusted net asset method


Bendros nuostatos

• Rinkos metodas (palyginamieji įmonių vertinimo kartotiniai)

• Pajamų metodas (DFC)

• Koreguoto grynojo turto metodas


Market approach – common oversights

• Inappropriate selection of CC peers

• Multiples spread over a long period during which time market conditions have changed

• Use of an average when there is a wide dispersion

• Deriving equity value by using an enterprise value basis (eg EBITDA)

• Lack of normalisation of performance measures

• Mismatch between CC peer and investee performance measures

• Post-tax multiples applied to pre-tax performance

• Failure to adjust for differences between accounting policies

• Omission of other adjustments (LoL, control premium..)


Rinkos metodas – bendros įžvalgos

• Netinkamas lyginamų įmonių pasirinkimas

• Kartotiniai, apimantys ilgą laikotarpį, per kurį rinkos sąlygos gali pasikeisti

• Vidurkių naudojimas tais atvejais, kai yra didelis pasiskirstymas

• Nuosavybės vertės nustatymas remiantis įmonės verte (pvz., EBITDA).

• Nepakankamas veiklos rodiklių normalizavimas

• Lyginamosios bendrovės ir įmonės, į kurią investuojama, veiklos rodiklių neatitikimas

• Kartotiniai po mokesčių taikomi veiklos rodikliams prieš mokesčius

• Neatliekamas koregavimas dėl apskaitos politikos skirtumų.

• Neatliekami kiti koregavimai (dėl likvidumo praradimo, kontrolės priedo, kt.)


Income approach – common oversights

• Double-counting or omission of cash flows

• Inadequate modelling of uncertainty

• Mismatching cash flows and discount rates

• Inconsistent modelling of risks in CFs and discount rate

• Inappropriately high growth rates in the terminal value calculation

• Perpetuity approach to businesses with a limited life (eg contract revenue)

• Inappropriate risk-free rate (eg long rate applied to short-term cash flows)

• Cross-jurisdictional differences not allowed for, including currencies

• Errors in WACC calculation or CAPM risk premiums


Pajamų metodas – bendros įžvalgos

• Įvertinimas du kartus, arba neįvertinta

• Nepakankamai įvertinamas neapibrėžtumas

• Pinigų srautų ir diskonto normų neatitikimas

• Nenuoseklus su pinigų srautais ir diskonto norma susijusių rizikų įvertinimas

• Apskaičiuojant galutinę vertę taikomos nepagrįstai didelės augimo normos

• Neriboto laiko prielaidos taikymas riboto veiklos laiko įmonėms (pvz., pajamos iš sutarties)

• Taikomos netinkamos normos, neįvertinus rizikos (pvz., ilgalaikės normos taikomos ilgalaikiams pinigų srautams).

• Neatsižvelgiama į skirtumus dėl skirtingų jurisdikcijų, įskaitant skirtingas valiutas

• Klaidos apskaičiuojant WACC - vidutinę svertinę kapitalo kainą, arba rizikos priedus pagal CAPM (kapitalo įkainojimo modelį)


Adjusted net asset approach – common oversights

• Using book values thinking they are fair values

• Intangible assets omitted

• Inadequate allowance for collectability of receivables

• Contingent liabilities not being fair valued

• Omitting deferred tax implications of fair valuing assets from carrying amount


Koreguoto grynojo turto metodas –bendros įžvalgos

• Naudojama balansinė vertė, ją laikant tikrąja verte

• Neatsižvelgiama į nematerialųjį turtą

• Nepakankamai įvertinama galimybė išieškoti gautinas lėšas

• Neapibrėžti įsipareigojimai neįvertinti tikrąja verte

• Neatsižvelgiama į atidėto mokesčio poveikį turto balansinę vertę perskaičiuojant į tikrąją vertę.


Valuation of debt instruments

Skolos priemonių vertinimas

Drivers of value for debt instruments

• Debt instruments carry an obligation to

– Pay interest periodically

– Repay capital

• Once the cash flows have been identified, the two primary value drivers are

– Prevailing market interest rates

– The credit risk associated with the instrument


Pagrindiniai skolos priemonių vertės veiksniai

• Skolos priemonės reiškia įsipareigojimą

– periodiškai mokėti palūkanas

– grąžinti pagrindinę sumą

• Nustačius pinigų srautus, pagrindiniai vertę lemiantys veiksniai yra

– rinkoje vyraujančios palūkanų normos

– su priemonėmis susijusi kredito rizika


Illustration

• A debt instrument has the following cash flow characteristics:

– Interest (coupon) annually €500 (a payment of interest has just been made), being 10% of the principal

– Capital repayment in 5 years time of €5,000 (par)

• If the prevailing interest rate for similar duration instruments is 8%pa, and the premium for credit risk is 2%pa, at what value should the instrument be trading?


Iliustracija

• Skolos priemonės turi tokias pinigų srautų charakteristikas:

– palūkanos (atkarpa) - 500 EUR mokamų kiekvienais metais (palūkanos buvo ką tik sumokėtos), - tai sudaro 10 % pagrindinės sumos.

– Grąžinamas kapitalas - 5 000 EUR (nominali vertė) per 5 metus

• Jeigu panašioms priemonėms taikoma palūkanų norma yra 8%, o priedas už kredito riziką yra 2%, už kokią kainą turėtų būti tokia priemonė parduodama?


Illustration – solution

• The discount rate for the instrument is 8+2 = 10%

• The coupon is 10%pa

• The valuation should be €5,000


Year Cash flow Discount factor (10%)

Present value

1 500 0.90909 454.54

2 500 0.82645 413.23

3 500 0.75131 375.66

4 500 0.68301 341.51

5 5,500 0.62092 3,415.06

5,000.00

Iliustracija - sprendimas

• Priemonei taikoma diskonto norma yra 8+2 = 10%.

• Atkarpa yra 10%

• Turėtų būti vertinama – 5000 EUR.


Metai Pinigų

srautai

Diskonto veiksnys (10

%)

Dabartinė vertė

1 500 0,90909 454,54

2 500 0,82645 413,23

3 500 0,75131 375,66

4 500 0,68301 341,51

5 5.500 0,62092 3 415,06

5 000,00

Illustration continued

• Explore in your groups

a) How would the valuation be expected to change if the current level of interest rates increased today by 1%?

b) How would the valuation be expected to change if the market expects interest rates to increase sometime over the next couple of years?

c) How would the valuation be expected to change if the entity concerned published financial statements showing a much improved liquidity and solvency position?

d) How would the valuation be expected to change if the entity concerned had a published credit rating that was downgraded by the relevant ratings agency?


Iliustracija

• Išnagrinėkite savo grupėse

a) Kaip turėtų pasikeisti vertinimas, jeigu rinkoje vyraujančios palūkanų normos šiandien išaugtų 1%?

b) Kaip turėtų pasikeisti vertinimas, jeigu rinkoje vyrauja lūkesčiai, kad kažkuriuo metu per artimiausius du metus palūkanų norma išaugs?

c) Kaip galėtų pasikeisti vertinimas, jeigu atitinkama įmonė paskelbė savo finansines ataskaitas, rodančias žymiai geresnius likvidumo ir mokumo rodiklius?

d) Kaip galėtų pasikeisti vertinimas, jeigu reitingų agentūra sumažintų atitinkamos įmonės kredito reitingą?


Interpreting financial statements 1

Supporting material: “Family Dollar”

Finansinių ataskaitų aiškinimas

Pagalbinė medžiaga: “Family Dollar”

Financial statement analysis

• Start with the audit report

• Then go to the back! What’s missing? What’s planned?

• Primary performance ratio – ROCE

• Break it down into

– Operating margin

– Asset turnover

• Then further, if information allows


Finansinių ataskaitų analizė

• Pradedame nuo audito išvados

• Grįžtame atgal! Ką praleidome? Kas buvo planuota?

• Pagrindinis veiklos rodiklis - ROCE (kapitalo grąža)

• Skaidomas į:

– Veiklos pelnas

– Turto apyvarta

• Tada - jeigu galima pagal turimą informaciją


Financial statement key performance indicators (KPIs)

• Overall performance – linking the profit with the level of investment in the business

– Return on capital employed (ROCE)


= Profit before interest and tax x 100%

Equity capital + debt capital

Pagrindiniai finansinių ataskaitų veiklos rodikliai

• Bendras veiklos rodiklis – susieti pelną su investicijų į verslą lygiu

– Kapitalo grąža (ROCE)


= Pelnas prieš palūkanas ir

mokesčius

x 100%

Nuosavas kapitalas + skolintas

kapitalas

Note on “capital employed”

• Ideally, use average debt + equity

– May have insufficient data, so use year-end figures

• Ensure that “debt” captures both non-current debt, and any current portion of l/t debt


Pastabos dėl „kapitalo“

• Idealiu atveju - skolos ir nuosavybės sumos vidurkis

– Gali trūkti duomenų, tokiu atveju naudojami metų pabaigos duomenys

• Užtikrinti, kad vertinant „skolą“ būtų atsižvelgta tiek į ilgalaikę skolą, tiek į ilgalaikės skolos einamojo laikotarpio dalį.


ROCE for Family Dollar

ROCE for 2011


= Profit before interest and tax x 100%


= 638,072 x 100%

1,653,599

=38.59%

„Family Dollar“ ROCE

ROCE 2011 m.


= Pelnas prieš palūkanas ir mokesčius x 100%

Nuosavas kapitalas + skolintas kapitalas

= 638 072 x 100%

1 653 599

=38,59%

Group exercise – ROCE for 2010 and 2009

• Calculations to 2 decimal places please!


Pratimas grupei – ROCE 2010 ir 2011 m.

• Skačiuoti iki dviejų dešimtųjų



• Profit performance – linking the profit with the level of activity (measured by revenue) in the business

– Profit margin


= Profit before interest and tax

x 100%

Revenue


• Bendras veiklos rodiklis – susieti pelną veikla (vertinama pagal pajamas)

– Pelningumas



mokesčius

x 100%

Pajamos

A note about “profit”

• Has it been affected by any changes in accounting policies?

• Has it been “massaged” by classifying certain items (of expense!) as exceptional/unusual/abnormal?

• Test it against Cash Flow from Operations


Pastaba apie "pelną"

• Ar pelnui kokios nors įtakos padarė apskaitos politikos pasikeitimas?

• Ar į tai buvo atkreiptas dėmesys kai kuriuos straipsnius (išlaidų) klasifikuojant kaip išskirtinius/neįprastus/ nenormalius?

• Tai patikrinti palyginus su veiklos pinigų srautais


Profit margin for Family Dollar

Profit margin for 2011


= 638,072 x 100%

8,547,835

=7.46%

= Profit before interest and tax

x 100%

Revenue

„Family Dollar“ pelningumas

Pelningumas 2011m.

= 638 072 x 100%

8 547 835

=7,46%


mokesčius

x 100%

Pajamos


Group exercise – Profit margin for 2010 and 2009

• Again, calculations to 2 d.p. please


Pratimas grupei – Pelningumas 2010 ir 2011 m.

• Vėlgi -apskaičiuoti iki dviejų skaičių po kablelio



• Capital utilisation– linking the revenue with the level of investment in the business

– “Asset turnover”

– Usually expressed as a “times” mutiplier


= Revenue



• Kapitalo panaudojimas – susieti pajamas su investicijų į verslą lygiu

– „Turto apyvarta“

– Dažniausiai išreiškiamas kaip n kartų kartotinis


= Pajamos

Nuosavas kapitalas +

skolintas kapitalas

Asset turnover for Family Dollar

Asset turnover for 2011


= 8,547,835

1,653,599

=5.17x

= Revenue


„Family Dollar“ turto apyvarta

Turto apyvarta 2011 m.


= 8 547 835

1 653 599

=5,17 x

= Pajamos

Nuosavas kapitalas +

skolintas kapitalas

Group exercise – Asset turnover for 2010 and 2009


Pratimas grupei – Turto apyvarta 2010 ir 2011 m.


Performance linked together


ROCE = Profit margin x asset turnover

• For 2011:

• 7.46% x 5.17 = 38.6%

Susiejami veiklos rodikliai


ROCE = Pelningumas x turto

apyvartos

• 2011 m.:

• 7,46% x 5,17 = 38,6%

Performance linked together


ROCE = Profit margin x asset turnover

• To increase ROCE

• Increase profit margin

• Improve asset turnover

• Both addressed, but check that one hasn’t

destroyed the other

• Fails to consider risk (shareholder value

concerns)

Susiejami veiklos rodikliai


ROCE = Pelningumas x turto

apyvartos

• Padidinti ROCE

• Padidinti pelningumą

• Pagerinti turto apyvartą

• Abu uždaviniai sprendžiami, tačiau svarbu užtikrinti, kad

gerinant vieną rodiklį nenukentėtų kitas

• Neatsižvelgiama į riziką (kokia vertė akcininkams)

Further ratios

• Gross profit %


= Gross profit x 100%

Revenue

= 3,032,295 x 100%

8,547,835

=35.47%

Kiti rodikliai

• Bendrasis pelnas, %


= Bendrasis pelnas x 100%

Pajamos

= 3 032 295 x 100%

8 547 835

=35,47%

Further ratios

• Interest cover


= Operating profit

Interest expense

= 638,072

22,446

=28x

Kiti rodikliai

• Palūkanų padengimas


= Veiklos pelnas

Palūkanų išlaidos

= 638 072

22 446

=28x

Further ratios

• Inventory days


= Inventory x 365

Cost of sales

= 1,154,600 x 365

5,515,540

=76 days

Kiti rodikliai

• Atsargų dienos


= Atsargų dienos x 365

Pardavimo sąnaudos

= 1 154 600 x 365

5 515 540

=76 dienų

Creating & Destroying Shareholder Value

Risk

Return

Creating Value

Destroying Value


Vertės akcininkams sukūrimas ir praradimas

Rizika

Grąža

Vertės sukūrimas

Vertės praradimas


Shareholder value drivers

• Revenue

• Operating Margin

• Cash Tax Rate

• Incremental Capital Expenditure

• Investment in Working Capital

• Cost of Capital

• Competitive Advantage Period


Pagrindiniai vertės akcininkams kūrimo veiksniai

• Pajamos

• Veiklos pelnas

• Mokesčių grynais norma

• Didėjančios kapitalo išlaidos

• Investicijos į apyvartinį kapitalą

• Kapitalo savikaina

• Konkurencinio pranašumo veiksnys


Industry and context appraisal

• PEST, SLEPT, or PESTEL

• Porters’ Five forces


Vertinimas pagal sektorių ir kontekstą

• PEST, SLEPT, ar PESTEL

• Penki Porter veiksniai


Table of Contents

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

FAMILY DOLLAR STORES, INC.

Page No.

Report of Independent Registered Public Accounting Firm 36 Consolidated Statements of Income for fiscal 2011, fiscal 2010, and fiscal 2009 37 Consolidated Balance Sheets as of August 27, 2011, and August 28, 2010 38 Consolidated Statements of Shareholders' Equity for fiscal 2011, fiscal 2010, and fiscal 2009 39 Consolidated Statements of Cash Flows for fiscal 2011, fiscal 2010, and fiscal 2009 40 Notes to Consolidated Financial Statements 41

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Table of Contents

Report of Independent Registered Public Accounting Firm

To the Board of Directors and Shareholders of Family Dollar Stores, Inc.:

In our opinion, the accompanying consolidated financial statements listed in the accompanying index present fairly, in all material respects, the financial

position of Family Dollar Stores, Inc., and its subsidiaries at August 27, 2011 and August 28, 2010, and the results of their operations and their cash flows for

each of the three fiscal years in the period ended August 27, 2011, in conformity with accounting principles generally accepted in the United States of

America. Also in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of August 27, 2011,

based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission

(COSO). The Company's management is responsible for these financial statements, for maintaining effective internal control over financial reporting and for

its assessment of the effectiveness of internal control over financial reporting, included in Management's Report on Internal Control over Financial Reporting

appearing in Item 9A elsewhere in this Report. Our responsibility is to express opinions on these financial statements and on the Company's internal control

over financial reporting based on our integrated audits. We conducted our audits in accordance with the standards of the Public Company Accounting

Oversight Board (United States). Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial

statements are free of material misstatement and whether effective internal control over financial reporting was maintained in all material respects. Our audits

of the financial statements included examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the

accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. Our audit of internal

control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness

exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audits also included performing

such other procedures as we considered necessary in the circumstances. We believe that our audits provide a reasonable basis for our opinions.

A company's internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and

the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company's internal control over

financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect

the transactions and dispositions of the assets of the company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit

preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being

made only in accordance with authorizations of management and directors of the company; and (iii) provide reasonable assurance regarding prevention or

timely detection of unauthorized acquisition, use, or disposition of the company's assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of

effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance

with the policies or procedures may deteriorate.

/s/ PricewaterhouseCoopers LLP

Charlotte, North Carolina

October 25, 2011

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FAMILY DOLLAR STORES, INC., AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME

Years Ended

(in thousands, except per share amounts) August 27, 2011 August 28, 2010 August 29, 2009

Net sales

Cost and expenses: $ 8,547,835 $ 7,866,971 $ 7,400,606

Cost of sales 5,515,540 5,058,971 4,822,401 Selling, general and administrative 2,394,223 2,232,402 2,120,936

Cost of sales and operating expenses 7,909,763 7,291,373 6,943,337

Operating profit 638,072 575,598 457,269 Investment income 1,532 1,597 6,595 Interest expense 22,446 13,337 12,939

Income before income taxes 617,158 563,858 450,925 Income taxes 228,713 205,723 159,659

Net income $ 388,445 $ 358,135 $ 291,266

Net income per common share—basic $ 3.15 $ 2.64 $ 2.08

Weighted average shares—basic 123,360 135,745 139,894

Net income per common share—diluted $ 3.12 $ 2.62 $ 2.07

Weighted average shares—diluted 124,486 136,596 140,522

The accompanying notes are an integral part of the consolidated financial statements.

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CONSOLIDATED BALANCE SHEETS

August 27, August 28,

(in thousands, except per share and share amounts)

Assets

Current assets:

2011 2010

Cash and cash equivalents $ 141,405 $ 382,754 Short-term investment securities 96,006 120,325 Merchandise inventories 1,154,660 1,028,022 Deferred income taxes 60,011 52,190 Income tax refund receivable 10,326 — Prepayments and other current assets 71,436 63,005

Total current assets 1,533,844 1,646,296 Property and equipment, net 1,280,589 1,111,966 Investment securities 107,458 147,108 Other assets 74,314 62,775

Total assets $ 2,996,205 $ 2,968,145

Liabilities and Shareholders' Equity

Current liabilities:

Current portion of long-term debt $ 16,200 $ — Accounts payable 685,063 676,975

Accrued liabilities 310,818 309,347 Income taxes 4,974 18,447

Total current liabilities 1,017,055 1,004,769 Long-term debt 532,370 250,000 Other liabilities 270,466 253,576 Deferred income taxes 89,240 38,246 Commitments and contingencies (Note 10) Shareholders' equity:

Preferred stock, $1 par; authorized 500,000 shares; no shares issued and outstanding — — Common stock, $.10 par; authorized 600,000,000 shares; issued 147,316,232 shares at August 27, 2011, and 146,496,237

shares at August 28, 2010, and outstanding 117,353,341 shares at August 27, 2011, and 130,452,959 shares at August 28, 2010 14,732 14,650

Capital in excess of par 274,445 243,831 Retained earnings 1,969,749 1,665,646 Accumulated other comprehensive loss (6,403) (7,046) Common stock held in treasury, at cost (29,962,891 shares at August 27, 2011, and 16,043,278 shares at August 28,

2010) (1,165,449) (495,527) Total shareholders' equity 1,087,074 1,421,554

Total liabilities and shareholders' equity $ 2,996,205 $ 2,968,145


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CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY

Years Ended August 27, 2011, August 28, 2010, and August 29, 2009

(in thousands, except per share and share amounts) Balance, August 30, 2008

(139,704,542 shares common stock;

Common

Stock

Capital in

excess of par

Retained

earnings

Accumulated

other

comprehensive

loss

Treasury

stock Total

4,427,779 shares treasury stock) $ 14,413 $ 166,669 $ 1,170,652 $ (4,862) $ (92,789) $ 1,254,083 Net income for the year 291,266 291,266

Unrealized gains (losses) on investment securities (net of $2.5 million of taxes) (4,626) (4,626)

Reclassification adjustment for (gains) losses realized in net income (net of $0.3 million of taxes) 528 528

Comprehensive income 287,168

Issuance of 1,353,413 common shares under incentive plans, including tax benefits 136 31,450 31,586

Purchase of 2,271,528 common shares for treasury (71,067) (71,067)

Issuance of 9,405 shares of treasury stock under incentive plans (Director compensation) 197 73 270

Stock-based compensation 12,033 12,033

Dividends on common stock, $.53 per share (74,013) (74,013)

Balance, August 29, 2009


6,689,902 shares treasury stock) 14,549 210,349 1,387,905 (8,960) (163,783) 1,440,060 Net income for the year 358,135 358,135

Unrealized gains (losses) on investment securities (net of $1.2 million of taxes) 1,914 1,914


Issuance of 1,010,503 common shares under incentive plans, including tax benefits 101 21,045 21,146





Balance, August 28, 2010


16,043,278 shares treasury stock) 14,650 243,831 1,665,646 (7,046) (495,527) 1,421,554 Net income for the year 388,445 388,445

Unrealized gains (losses) on investment securities (net of $0.6 million of taxes) 904 904 Other (261) (261)


Issuance of 819,995 common shares under incentive plans, including tax benefits 82 16,430 16,512





Balance, August 27, 2011 (117,353,341 shares common stock;

29,962,891 shares treasury stock) $ 14,732 $ 274,445 $ 1,969,749 $ (6,403) $ (1,165,449) $ 1,087,074


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CONSOLIDATED STATEMENTS OF CASH FLOWS

Years Ended

(in thousands)

Cash flows from operating activities:

August 27,

2011

August 28,

2010

August 29,

2009

Net income $ 388,445 $ 358,135 $ 291,266 Adjustments to reconcile net income to net cash provided by operating activities:

Depreciation and amortization 182,455 172,037 159,808 Deferred income taxes 46,805 8,123 4,426 Excess tax benefits from stock-based compensation (4,745) (1,676) (704) Stock-based compensation 14,728 13,163 11,538 Loss on disposition of property and equipment, including impairment 9,461 7,244 9,924 Other gains and losses — — 1,228 Changes in operating assets and liabilities:

Merchandise inventories (126,638) (34,225) 38,888 Prepayments and other current assets (8,409) 200 238 Other assets (4,888) 2,666 6,027 Accounts payable and accrued liabilities 37,057 61,646 12,373 Income taxes (23,799) 25,389 (1,401) Other liabilities 17,592 (21,163) (4,412)

528,064 591,539 529,199

Cash flows from investing activities:

Purchases of investment securities (352,082) (142,730) — Sales of investment securities 415,877 46,888 44,943 Capital expenditures (345,268) (212,435) (155,401) Proceeds from dispositions of property and equipment 1,055 1,329 1,103

(280,418) (306,948) (109,355)

Cash flows from financing activities:

Revolving credit facility borrowings 46,000 — — Repayment of revolving credit facility borrowings (46,000) — — Issuance of long-term debt 298,482 — — Payment of debt issuance costs (7,811) (651) (624) Repurchases of common stock (670,466) (332,189) (71,067) Change in cash overdrafts (47,722) 49,687 (27,256) Proceeds from exercise of employee stock options 17,216 19,663 31,525

Excess tax benefits from stock-based compensation 4,745 1,676 704 Payment of dividends (83,439) (78,913) (72,738)

(488,995) (340,727) (139,456)

Net change in cash and cash equivalents (241,349) (56,136) 280,388

Cash and cash equivalents at beginning of year 382,754 438,890 158,502

Cash and cash equivalents at end of year $ 141,405 $ 382,754 $ 438,890

Supplemental disclosures of cash flow information:

Purchases of property and equipment awaiting processing for payment, included in accounts payable $ 36,220 $ 22,848 $ 4,575 Cash paid during the period for:

Interest, net of amounts capitalized 20,395 12,568 12,192 Income taxes, net of refunds 201,843 175,915 158,486


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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1. of Business and Summary of Significant Accounting Policies:

D

escri

ption

Description of business

The Company operates a chain of more than 7,000 general merchandise retail discount stores in 44 contiguous states, providing low- and middle-income

consumers with a selection of competitively priced merchandise in convenient neighborhood stores. The Company's products include health and beauty aids,

packaged food and refrigerated products, home cleaning supplies, housewares, stationery, seasonal goods, apparel and domestics. In the typical Family Dollar

store, the majority of the products are priced at $10 or less, with many of the products priced at $1 or less. The Company manages its business on the basis of

one operating segment.

Principles of consolidation

The consolidated financial statements include the accounts of the Company and its subsidiaries, all of which are wholly owned. All significant intercompany

balances and transactions have been eliminated.

Fiscal year

The Company's fiscal year generally ends on the Saturday closest to August 31 of each year, which generally results in an extra week every six years. Fiscal

2011, fiscal 2010 and fiscal 2009 were 52-week years.

Use of estimates

The preparation of the Company's consolidated financial statements, in conformity with accounting principles generally accepted in the United States of

America, requires management to make estimates and assumptions. These estimates and assumptions affect the reported amounts of assets and liabilities, the

disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting

period. Actual results could differ from these estimates.

Cash equivalents

The Company considers all highly liquid investments with an original maturity of three months or less to be cash equivalents. The carrying amount of the

Company's cash equivalents approximates fair value due to the short maturities of these investments and consists primarily of money market funds and other

overnight investments. The Company maintains cash deposits with major banks, which from time to time may exceed federally insured limits. The Company

periodically assesses the financial condition of the institutions and believes that the risk of any loss is remote. Payments due from banks for third-party credit

card, debit card and electronic benefit transactions are generally processed within 24-72 hours and are classified as cash equivalents.

The Company maintains zero balance cash disbursement accounts with certain banks. Outstanding checks in excess of funds on deposit with respect to these

banks, referred to as cash overdrafts, are classified as accounts payable on the Consolidated Balance Sheets, and totaled $2.0 million at the end of fiscal 2011.

Cash overdrafts totaled $49.7 million at the end of fiscal 2010. Changes in these overdraft amounts are recorded as financing activities on the Consolidated

Statements of Cash Flows.

The Company's wholly-owned captive insurance subsidiary maintains balances in cash and cash equivalents that are used in connection with the Company's

retained workers' compensation, general liability and automobile liability risks and are not designated for general corporate purposes. These cash and cash

equivalents balances totaled $53.2 million as of the end of fiscal 2011 and $42.1 million as of the end of fiscal 2010.

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Investment securities

The Company classifies all investment securities as available-for-sale. Securities accounted for as available-for-sale are required to be reported at fair value

with unrealized gains and losses, net of taxes, excluded from net income and shown separately as a component of accumulated other comprehensive income

within shareholders' equity. The Company's short-term investment securities currently consist primarily of debt securities such as municipal bonds, and

variable-rate demand notes. The Company's long-term investment securities currently consist of auction rate securities. See Notes 2 and 3 for more

information on the Company's investment securities.

In addition to the cash and cash equivalents balances discussed above, the Company's wholly-owned captive insurance subsidiary also maintains balances in

investment securities that are not designated for general corporate purposes. These investment securities balances totaled $93.0 million as of the end of fiscal

2011 and $104.1 million as of the end of fiscal 2010.

Merchandise inventories

Inventories are valued using the retail method, based on retail prices less mark-on percentages, which approximates the lower of first-in, first-out (FIFO) cost

or market. The Company records adjustments to inventory through cost of goods sold when retail price reductions, or markdowns, are taken against on-hand

inventory. In addition, the Company makes estimates and judgments regarding, among other things, initial markups, markdowns, future demand for specific

product categories and market conditions, all of which can significantly impact inventory valuation. These estimates and judgments are based on the

application of a consistent methodology each period. The Company estimates inventory losses for damaged, lost or stolen inventory (inventory shrinkage) for

the period from the most recent physical inventory to the financial statement date. The accrual for estimated inventory shrinkage is based on the trailing

twelve-month actual inventory shrinkage rate and can fluctuate from period to period based on the timing of the physical inventory counts. Stores conduct a

physical inventory at least annually.

Property and equipment

Property and equipment is stated at cost. Depreciation for financial reporting purposes is calculated using the straight-line method over the estimated useful

lives of the related assets. For leasehold improvements, this depreciation is over the shorter of the term of the related lease (generally five or ten years) or the

asset's useful economic life.

Estimated useful lives are as follows:

Buildings and building improvements 10-40 years Furniture, fixtures and equipment 3-10 years Transportation equipment 3-10 years Leasehold improvements 5-10 years

The Company capitalizes certain costs incurred in connection with developing, obtaining and implementing software for internal use. Capitalized costs are

amortized over the expected economic life of the assets, generally ranging from three to eight years.

Property and equipment is reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be

recoverable. Historically, impairment losses on fixed assets, which typically relate to normal store closings, have not been material to the Company's financial

position or results of operations.

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Revenues

The Company recognizes revenue, net of returns and sales tax, at the time the customer tenders payment for and takes possession of the merchandise.

Cost of sales

Cost of sales includes the purchase cost of merchandise and transportation costs to the Company's distribution centers and stores. Buying, distribution center

and occupancy costs, including depreciation, are not included in cost of sales. As a result, cost of sales may not be comparable to those of other retailers that

may include these costs in their cost of sales.

Selling, general and administrative expenses

All operating costs, except transportation costs to the Company's distribution centers and stores, are included in selling, general, and administrative expenses

("SG&A"). Buying, distribution center and occupancy costs, including depreciation, are included in SG&A rather than cost of sales.

Insurance liabilities

The Company is primarily self-insured for health care, property loss, workers' compensation, general liability, and auto liability costs. These liabilities are

based on the total estimated costs of claims filed and estimates of claims incurred but not reported, less amounts paid against such claims, and are not

discounted.

Advertising costs

Advertising costs, net of co-op recoveries from vendors, are expensed during the period of the advertisement and amounted to $17.1 million, $12.4 million

and $9.8 million in fiscal 2011, fiscal 2010 and fiscal 2009, respectively.

Vendor allowances

Cash consideration received from a vendor is presumed to be a reduction of the purchase cost of merchandise and is reflected as a reduction of cost of sales,

unless it can be demonstrated that it offsets an incremental expense, in which case it is netted against that expense.

Store opening and closing costs

The Company charges pre-opening costs against operating results when incurred. For properties under operating lease agreements, the present value of any

remaining liability under the lease, net of expected sublease and lease termination recoveries, is expensed when the closing occurs.

Operating leases

Except for its corporate headquarters and distribution centers, the Company generally conducts its operations from leased facilities. Generally, store real estate

leases have an initial term of five or ten years with multiple renewal options for additional five-year periods. The Company also has leases for equipment

generally with lease terms of five years to ten years.

All of the Company's store leases are classified as operating leases. The Company recognizes rental expense for its store leases on a straight-line basis over

the base, non-cancelable lease term. For purposes of recognizing incentives, premiums and minimum rental expenses, the Company uses the date of initial

possession to begin

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amortization, which is generally when the Company enters the space and begins to make improvements in preparation for intended use. For tenant

improvement allowances and rent holidays, the Company records a deferred rent liability at the inception of the lease term and amortizes the deferred rent

over the terms of the leases as reductions to rent expense on the Consolidated Statements of Income. See the "Revisions" section below for information about

the revision of the classification of the deferred rent liability in fiscal 2011.

Certain leases provide for contingent rental payments based upon a percentage of store sales. The Company accrues for contingent rental expense as it

becomes probable that specified sales targets will be met.

Income taxes

The Company records deferred income tax assets and liabilities for the expected future tax consequences of temporary differences between the financial

reporting basis and the income tax basis of its assets and liabilities. The Company estimates contingent income tax liabilities based on an assessment of the

probability of the income-tax-related exposures and settlements related to uncertain tax positions. See Note 8 for more information on the Company's income

taxes.

Stock-based compensation

The Company recognizes compensation expense related to its stock-based awards based on the fair value of the awards on the grant date. The Company

utilizes the Black-Scholes option-pricing model to estimate the grant-date fair value of its stock option awards. The grant-date fair value of the Company's

performance share rights awards is based on the stock price on the grant date. Compensation expense for the Company's stock-based awards is recognized on

a straight-line basis, net of estimated forfeitures, over the service period of each award. See Note 11 for more information on the Company's stock-based

compensation plans.

Revisions

Certain prior period amounts have been revised to conform to current classifications. The deferred rent liability of $38.3 million as of August 28, 2010,

previously classified as a current liability within Accrued Liabilities on the Consolidated Balance Sheets, has been moved to Other Liabilities (non-current).

The portion of deferred income taxes related to deferred rent has also been revised and is now classified as non-current in the Consolidated Balance

Sheets. These changes were not material and had no impact on the consolidated statements of earnings, shareholders' equity or cash flows for any of the

periods presented.

New accounting pronouncements

In April 2011, the Financial Accounting Standards Board ("FASB") issued Accounting Standard Update ("ASU") 2011-04 "Fair Value Measurement:

Amendments to Achieve Common Fair Value Measurement and Disclosure Requirements in U.S. GAAP and IFRSs" ("ASU 2011-04"). ASU 2011-04

amends current fair value measurement and disclosure guidance to include increased transparency around valuation inputs and investment categorization. The

new guidance is effective for fiscal year and interim periods beginning after December 15, 2011. The Company will adopt this guidance in the third quarter of

fiscal 2012. The adoption of ASU 2011-04 is not expected to have a material impact on the Company's Consolidated Financial Statements.

In June 2011, FASB issued ASU 2011-05 "Presentation of Comprehensive Income" ("ASU 2011-05"). ASU 2011-05 allows an entity to present components

of net income and other comprehensive income in one continuous statement, referred to as the statement of comprehensive income, or in two separate, but

consecutive statements. The new guidance eliminates the current option to report other comprehensive income and its components in the statement of changes

in equity. While ASU 2011-05 changes the presentation of comprehensive income, there are no changes to the components that are recognized in net income

or other

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comprehensive income under current accounting guidance. The new guidance is effective for fiscal year and interim periods beginning after December 15,

2011. The Company will adopt this guidance in the third quarter of fiscal 2012. The adoption of ASU 2011-05 is not expected to have a material impact on

the Company's Consolidated Financial Statements.

2. Fair Value Measurements:

Fair value accounting standards define fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction

between market participants at the measurement date. The following fair value hierarchy prioritizes the inputs used to measure fair value into three levels,

with Level 1 being of the highest priority.

• Level 1—Quoted prices in active markets for identical assets or liabilities.

• Level 2—Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly, such as quoted prices for similar assets or liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets that are not active, inputs other than quoted prices that are observable for the asset or liability, or inputs that are derived principally from or corroborated by observable market data by correlation or other means.

• Level 3—Inputs that are unobservable for the asset or liability.

The unobservable inputs in Level 3 can only be used to measure fair value to the extent that observable inputs in Level 1 and Level 2 are not available. The

following table represents the Company's fair value hierarchy as of August 27, 2011, and August 28, 2010, for items that are required to be measured at fair

value on a recurring basis:

August 27, 2011

(in thousands) Fair Value Level 1 Level 2 Level 3

Cash equivalents: Money market funds

Investment securities: $ 77,842 $ 77,842 $ — $ —

Auction rate securities 107,608 — 150 107,458 Variable rate demand notes 42,299 42,299 — — Municipal debt securities 51,398 — 51,398 — Corporate debt securities 950 — 950 — Equity securities

Other assets: 1,209 1,209 — —

Mutual funds(1)

15,580 15,580 — —

August 28, 2010

(in thousands) Fair Value Level 1 Level 2 Level 3

Cash equivalents: Money market funds $ 287,003 $ 287,003 $ — $ —

Investment securities: Auction rate securities 154,158 — 7,050 147,108 Variable rate demand notes 27,490 27,490 — — Municipal debt securities 44,224 — 44,224 — Corporate debt securities 14,575 11,996 2,579 — US government agency debt securities 25,017 25,017 — — Equity securities 1,969 1,969 — —

Other assets: Mutual funds

(1) 11,402 11,402 — —

(1) Represents assets held pursuant to a deferred compensation plan for certain key management employees.

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During fiscal 2011, the Company re-evaluated its fair value hierarchy, specifically as it relates to a portion of its municipal and corporate debt securities.

Although the Company believes these investments trade in active markets and prices could be obtained for identical assets, the Company believed that the

classification of these investments as Level 2 was more appropriate because these investments are valued by a third-party pricing service where matrix pricing

is used. Additionally, the classification of Level 2 versus Level 1 does not indicate a change in fair value or deterioration in the market where these

investments are traded; it is a classification change based only on how the fair values were derived for these assets. As a result, the Company has revised the

classification of these investments where matrix pricing is used to Level 2 for all periods presented.

On a non-recurring basis, the Company adjusts certain property and equipment to fair value through impairment charges. Property and equipment is reviewed

for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. The fair value of the

property and equipment is determined based on a discounted cash flow analysis using Level 3 inputs. The Company estimates future cash flows based on

historical experience and its expectations of future cash flows. Impairment charges were not material during fiscal 2011.

Auction Rate Securities

The Company's investment securities include student loan auction rate securities that were measured at fair value using either Level 2 or Level 3 inputs. The

auction rate securities are tax-exempt bonds that are collateralized by federally guaranteed student loans. While the underlying securities generally have long-

term nominal maturities that exceed one year, the interest rates reset periodically in scheduled auctions (generally every 7-35 days). The Company generally

has the opportunity to sell its investments during such periodic auctions subject to the availability of buyers.

Beginning in the second quarter of fiscal 2008, issues in the global credit and capital markets led to failed auctions with respect to substantially all of the

Company's auction rate securities. A failed auction typically occurs when the number of securities submitted for sale in the auction exceeds the number of

purchase bids. As of August 27, 2011, substantially all of the Company's $116.9 million par value investments were subject to failed auctions. As a result of

the failed auctions, the interest rates on the investments reset to the established rates per the applicable investment offering statements. The Company will not

be able to liquidate the investments until a successful auction occurs, a buyer is found outside the auction process, the securities are called or refinanced by the

issuer, the securities are repurchased by the broker dealers, or the securities mature.

The Company does not currently expect to liquidate any auction rate securities going forward through the normal auction process. However, the Company

does expect to be able to liquidate substantially all of its remaining auction rate securities at par through issuer calls or refinancings or upon maturity. During

fiscal 2011, the Company liquidated $48.7 million of auction rate securities at par as a result of issuer calls. Substantially all of the Company's remaining

auction rate securities were classified as long-term assets due to the continued failure of the auction process and the continued uncertainty regarding the

timing of future liquidity, and were measured at fair value using Level 3 inputs, as discussed below.

Due to the liquidity issues noted above, the Company had a temporary gross unrealized loss of $9.3 million ($5.8 million, net of taxes) with respect to these

investments as of August 27, 2011. Changes in the unrealized loss are included in Accumulated Other Comprehensive Loss within Shareholders' Equity on

the Consolidated Balance Sheets. Because there is no active market for the Company's auction rate securities, the fair value of each security was determined

through the use of a discounted cash flow analysis using Level 3 inputs. The terms used in the analysis were based on management's estimate of the timing of

future liquidity, which assumes that the securities will be called or refinanced by the issuer or repurchased by the broker dealers prior to maturity. The

discount rates used in the analysis were based on market rates for similar liquid tax-exempt securities with comparable ratings and maturities. Due to the

uncertainty surrounding the timing of future liquidity, the discount rates were adjusted further to reflect the illiquidity of the investments. The Company's

valuation is sensitive to

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market conditions and management's judgment and can change significantly based on the assumptions used. A 100 basis point increase or decrease in the

discount rate along with a 12-month increase or decrease in the term could result in a gross unrealized loss ranging from $3.9 million to $17.0 million.

The Company evaluated each of its auction rate securities for other-than-temporary impairment. The Company determined that there was no other-than-

temporary impairment as of August 27, 2011. The Company's evaluation was based on an analysis of the credit rating and parity ratio of each security. The

parity ratio is the ratio of trust assets available for distribution to creditors to the trust obligations to those creditors. The credit quality of the Company's

auction rate securities portfolio remains high (95% AAA rated and 5% A rated) and the securities had a weighted average parity ratio of 109.5% as of

August 27, 2011.

The following table summarizes the change in the fair value of the Company's auction rate securities measured using Level 3 inputs during fiscal 2011 and

fiscal 2010:

(in thousands) Fiscal 2011 Fiscal 2010

Beginning Balance $ 147,108 $ 163,545 Net unrealized gains included in other comprehensive income 2,125 3,813 Sales (41,625) (13,200) Transfers out of Level 3 (150) (7,050)

Ending Balance $ 107,458 $ 147,108

The transfers out of Level 3 during fiscal 2011 and fiscal 2010 resulted from issuer call notices (at par). The Company treated the call notices as quoted prices

in an inactive market (Level 2 inputs).

Additional Fair Value Disclosures

The estimated fair value of the Company's current and long-term debt was $566.0 million as of August 27, 2011, and $277.8 million as of August 28, 2010.

The significant increase in the fair value is primarily due to the issuance of $300 million par value of senior unsecured notes on January 28, 2011, as discussed

in Note 5 below. The fair value for these new notes is determined using Level 1 inputs as quoted prices in active markets for identical assets or liabilities are

available. Because a portion of the Company's debt was a private placement and there are no quoted prices in active markets, the fair value of that portion was

determined through the use of a discounted cash flow analysis using Level 3 inputs. The discount rate used in the analysis was based on borrowing rates

available to the Company for debt of the same remaining maturities, issued in the same private placement debt market. The fair value of the Company's

current and long-term debt was greater than the carrying value of the debt by $16.0 million as of August 27, 2011, and $27.8 million as of August 28, 2010.

See Note 5 for more information on the Company's long-term debt.

3. Investment Securities:

All of the Company's investment securities are currently classified as available-for-sale due to the fact that the Company does not intend to hold the securities

to maturity and does not purchase the securities for the purpose of selling them to make a profit on short-term differences in price. Available-for-sale

securities are carried at estimated fair value, with unrealized gains and losses, if any, reported as a component of Shareholders' Equity.

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The Company's investments consisted of the following available-for-sale securities at the end of fiscal 2011 and fiscal 2010 (in thousands):

August 27, 2011 Amortized Cost

Gross

Unrealized

Holding

Gains

Gross

Unrealized

Holding

Losses Fair Value

Auction rate securities $ 116,925 — 9,317(1)

$ 107,608 Variable rate demand notes 42,299 — — 42,299 Municipal debt securities 51,125 273 — 51,398 Corporate debt securities 941 9 — 950 Equity securities 1,979 — 770 1,209

(1) The gross unrealized holding losses for fiscal 2011 were in a continuous unrealized loss position for 12 months or longer.


Gross

Unrealized

Holding

Gains

Gross

Unrealized

Holding

Losses Fair Value


$ 154,158 Variable rate demand notes 27,500 — 10 27,490 Municipal debt securities 44,072 152 — 44,224 Corporate debt securities 14,551 24 — 14,575 US government agency debt securities 25,017 — — 25,017 Equity securities 1,979 — 10 1,969


As noted in Note 2 above, substantially all of the Company's auction rate securities are not currently liquid and have contractual maturities ranging from 15

years to 46 years. The Company's other debt securities include municipal bonds, variable-rate demand notes, agency bonds, discount notes, and commercial

paper, and have weighted average maturities of less than one year. While the variable rate demand notes have underlying contractual maturities beyond one

year, the securities are traded in the short-term as a result of 7-day put options.

Proceeds from sales of investment securities available-for-sale during fiscal 2011 were $415.9 million compared to $46.9 million in fiscal 2010 and $44.9

million in fiscal 2009. No material gains or losses were realized on those sales for fiscal 2011, fiscal 2010 and fiscal 2009.

The Company also holds investments in mutual funds in connection with a deferred compensation plan for certain key management employees. These

investments are classified as trading securities and are included, at fair value, in other assets on the Consolidated Balance Sheet. The Company records an

offsetting deferred compensation liability in Other Liabilities. The fair value of the deferred compensation plan assets was $15.6 million as of the end of fiscal

2011 and $11.4 million as of the end of fiscal 2010. See Note 9 below for more information on the deferred compensation plan.

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4. Property and Equipment:

Property and equipment is recorded at cost and consisted of the following at the end of fiscal 2011 and fiscal 2010:

(in thousands) August 27, 2011 August 28, 2010

Buildings and building improvements $ 572,039 $ 537,647 Furniture, fixtures and equipment 1,460,116 1,291,282 Transportation equipment 87,274 80,161 Leasehold improvements 398,803 357,768 Construction in progress 61,152 19,831

2,579,384 2,286,689 Less: accumulated depreciation and amortization 1,391,806 1,250,881

1,187,578 1,035,808 Land 93,011 76,158

$ 1,280,589 $ 1,111,966

Depreciation expense was $179.5 million, $171.2 million and $159.8 million for fiscal 2011, fiscal 2010 and fiscal 2009, respectively.

5. Current and Long-Term Debt:

Current and long-term debt consisted of the following at the end of fiscal 2011 and fiscal 2010:


5.24% Notes due September 27, 2015 $ 81,000 $ 81,000 5.41% Notes due September 27, 2015 169,000 169,000 5.00% Notes due February 1, 2021 298,570 —

548,570 250,000 Less: current portion 16,200 —

Long-term portion $ 532,370 $ 250,000

On January 28, 2011, the Company issued $300 million of 5.00% unsecured senior notes due February 1, 2021 (the "2021 Notes"), through a public offering.

The Company's proceeds were approximately $298.5 million, net of an issuance discount of $1.5 million. In addition, the Company incurred issuance costs of

approximately $3.3 million. Both the discount and issuance costs are being amortized to interest expense over the term of the 2021 Notes. Interest on the 2021

Notes is payable semi-annually in arrears on the 1st

day of February and August of each year, commencing on August 1, 2011. The 2021 Notes rank pari

passu in right of payment with the Company's other unsecured senior indebtedness and will be senior in right of payment to any subordinated indebtedness.

The Company may redeem the 2021 Notes in whole at any time or in part from time to time, at the option of the Company, subject to a make-whole premium.

In addition, upon the occurrence of certain change of control triggering events, the Company may be required to repurchase the 2021 Notes, at a price equal to

101% of their principal amount, plus accrued and unpaid interest to the date of repurchase.

On September 27, 2005, the Company obtained $250 million through a private placement of unsecured senior notes due September 27, 2015 (the "2015

Notes"), to a group of institutional accredited investors. The 2015 Notes were issued in two tranches at par and rank pari passu in right of payment with the

Company's other unsecured senior indebtedness. The first tranche has an aggregate principal amount of $169 million, is payable in a single installment on

September 27, 2015, and bears interest at a rate of 5.41% per annum from the date of issuance. The second tranche has an aggregate principal amount of $81

million, matures on September 27, 2015, with amortization commencing on September 27, 2011, and bears interest at a rate of 5.24% per annum from the

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(in thousands) August 27, 2011 August 28, 2010 Compensation $ 106,047 $ 110,932 Taxes other than income taxes 95,973 88,672 Self-insurance liabilities 56,964 64,004

(in thousands) August 27, 2011 August 28, 2010 Self-insurance liabilities $ 193,169 $ 185,676

date of issuance. The second tranche has a required principal payment of $16.2 million on September 27, 2011, and on each September 27 thereafter to and

including September 27, 2015. Interest on the 2015 Notes is payable semi-annually in arrears on the 27th

day of March and September of each year. The 2015

Notes contain certain restrictive financial covenants, which include a consolidated debt to consolidated total capitalization ratio, a fixed charge coverage ratio,

and a priority debt to consolidated net worth ratio. As of August 27, 2011, the Company was in compliance with all such covenants.

On November 17, 2010, the Company amended the 2015 Notes to remove the subsidiary co-borrower and all subsidiary guarantors.

Credit Facilities

On November 17, 2010, the Company entered into a new four-year unsecured revolving credit facility with a syndicate of lenders for borrowings of up to

$400 million. The credit facility matures on November 17, 2014, and provides for two, one-year extensions that require lender consent. Any borrowings under

the credit facility accrue interest at a variable rate based on short-term market interest rates. The credit facility replaced the previous 364-day $250 million

unsecured revolving credit facility.

On August 17, 2011, the Company entered into a new five-year unsecured revolving credit facility with a syndicate of lenders for borrowings of up to $300

million. The credit facility matures on August 17, 2016, and provides for two, one-year extensions that require lender consent. Any borrowings under the

credit facility accrue interest at a variable rate based on short-term market interest rates. The credit facility replaced the Company's previous five-year $200

million unsecured credit facility.

During fiscal 2011, the Company borrowed $46.0 million under the credit facilities at a weighted-average interest rate of 1.3%. As of August 27, 2011, and

August 28, 2010, the Company had no outstanding borrowings under the credit facilities. The credit facilities contain certain restrictive financial covenants,

which include a consolidated debt to consolidated total capitalization ratio, a fixed charge coverage ratio, and a priority debt to consolidated net worth ratio.

As of August 27, 2011, the Company was in compliance with all such covenants.

6. Accrued Liabilities:

Accrued liabilities consisted of the following at the end of fiscal 2011 and fiscal 2010:

Other

(1) 51,834 45,739

$ 310,818 $ 309,347

(1) Other accrued liabilities consist primarily of store utility accruals, certain store rental accruals, litigation accruals, and accrued interest.

7. Other Liabilities:

Other liabilities consisted of the following at the end of fiscal 2011 and fiscal 2010:

Other

(1) 77,297 67,900

$ 270,466 $ 253,576

(1) Other liabilities consist primarily of deferred rent, income taxes and deferred compensation.

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State 25,974 23,272 17,633 Other 41 — —

181,908 197,600 155,233

Deferred: Federal 44,964 8,621 4,971 State 1,832 (498) (545) Other 9 — —

46,805 8,123 4,426

8. Income Taxes:

The provisions for income taxes in fiscal 2011, fiscal 2010 and fiscal 2009 were as follows:

(in thousands) Fiscal 2011 Fiscal 2010 Fiscal 2009

Current:

Federal $ 155,893 $ 174,328 $ 137,600

Total $ 228,713 $ 205,723 $ 159,659

The following table summarizes the components of income tax expense in fiscal 2011, fiscal 2010 and fiscal 2009:

Fiscal 2011 Fiscal 2010 Fiscal 2009

(in thousands)

Income tax

expense

% of pre-tax

income

Income tax

expense

% of pre-tax

income

Income tax

expense

% of pre-tax

income

Computed federal income tax $ 216,005 35.0% $ 197,351 35.0% $ 157,823 35.0% State income taxes, net of federal income tax benefit 17,149 2.8 15,885 2.8 11,599 2.6

Valuation allowance 1,566 0.3 (1,286) (0.2) (653) (0.2) Other (6,007) (1.0) (6,227) (1.1) (9,110) (2.0)

Actual income tax expense $ 228,713 37.1% $ 205,723 36.5% $ 159,659 35.4%

The tax effects of temporary differences that give rise to significant portions of the deferred tax assets and deferred tax liabilities as of the end of fiscal 2011

and the end of fiscal 2010, were as follows:


Deferred income tax liabilities: Excess of book over tax basis of property and equipment $ 124,243 $ 73,341

Deferred income tax assets: Excess of tax over book basis of inventories

Nondeductible accruals for: $ 17,372 $ 10,403

Insurance 19,078 20,057 Compensation 29,463 32,426 Deferred rent 14,708 13,913 Litigation charge 151 508

Other 18,241 12,410

Gross deferred income tax assets 99,013 89,717

Less: valuation allowance (3,999) (2,433)

Net deferred tax assets $ 95,014 $ 87,284

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The Company had state net operating loss carryforwards of $112.4 million as of August 27, 2011, and $95.6 million as of August 28, 2010, in various states.

These carryforwards expire at different intervals up to fiscal year 2031. Management considers all available evidence in determining the likelihood that a

deferred tax asset will not be realized. As a result, the Company increased the valuation allowances related to these state loss carryforwards.

The Company classifies accrued interest expense and penalties related to uncertain tax positions as a component of income tax expense. During fiscal 2011

interest and penalties increased income tax expense by $1.0 million and for fiscal 2010 and fiscal 2009 interest and penalties reduced income tax expense by

$1.5 million and $0.2 million, respectively. The increase is related to uncertain tax positions booked during the fiscal year as compared to prior years that

were decreased due to settlements of uncertain tax positions.

As of August 27, 2011, the Company had a liability related to uncertain tax positions of $26.3 million, including a gross unrecognized tax benefit of $20.2

million and accrued interest and penalties of $6.1 million. The related non-current deferred tax asset balance was $9.3 million as of August 27, 2011. If the

Company were to prevail on all unrecognized tax benefits recorded, approximately $17.0 million of the gross unrecognized tax benefits, including penalties

and tax effected interest of $6.1 million, would result in income tax benefits in the income statement of a future period. A reconciliation of the beginning and

ending amount of total unrecognized tax benefits is as follows:

(in thousands)

Unrecognized Tax

Benefit

Interest and

Penalties Total

Balance at August 30, 2008 $ 31,515 $ 7,667 $ 39,182 Increases related to prior year tax positions 3,033 2,076 5,109 Decreases related to prior year tax positions (4,867) (202) (5,069) Increases related to current year tax positions 12,037 285 12,322 Settlements during the period (3,097) (863) (3,960) Lapse of statute of limitations (5,376) (2,841) (8,217)

Balance at August 29, 2009 $ 33,245 $ 6,122 $ 39,367 Increases related to prior year tax positions 849 2,004 2,853 Decreases related to prior year tax positions (327) (21) (348) Increases related to current year tax positions 2,260 411 2,671 Settlements during the period (16,907) (3,066) (19,973) Lapse of statute of limitations (785) (354) (1,139)

Balance at August 28, 2010 $ 18,335 $ 5,096 $ 23,431 Increases related to prior year tax positions 6,305 1,799 8,104 Decreases related to prior year tax positions (4,472) — (4,472) Increases related to current year tax positions 3,190 530 3,720 Settlements during the period (1,542) (553) (2,095) Lapse of statute of limitations (1,622) (795) (2,417)

Balance at August 27, 2011 $ 20,194 $ 6,077 $ 26,271

On a quarterly and annual basis, the Company accrues for the effects of open uncertain tax positions and the related interest and penalties. The Company is

subject to U.S. federal income tax as well as income tax in multiple state and local jurisdictions. As of August 27, 2011, the Company was subject to income

tax examinations for its U.S. federal income taxes for fiscal years ending subsequent to 2007. With few exceptions, the Company is subject to state and local

income tax examinations for fiscal years ending subsequent to 2007.

The amount of future unrecognized tax positions may be reduced because the statute of limitations has expired or the tax position is resolved with the taxing

authority. It is reasonably possible that during the next 12 months the unrecognized tax benefit may be reduced by a range of zero to $4.9 million due to

settlements of audits by taxing authorities. Such unrecognized tax benefits relate primarily to state tax issues.

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9. Employee Benefit Plans:

Incentive compensation plan

The Company has an incentive profit-sharing plan which allows for payments to certain employees and officers at an aggregate annual amount not to exceed

7% of the Company's consolidated income before income taxes and certain incentive compensation. Expenses under the profit-sharing plan were $17.8

million in fiscal 2011, $28.8 million in fiscal 2010 and $34.3 million in fiscal 2009.

Compensation deferral plans

The Company has a voluntary compensation deferral plan, under Section 401(k) of the Internal Revenue Code, available to eligible employees. At the

discretion of the Board of Directors, the Company makes contributions to the plan which are allocated to participants, and in which they become vested, in

accordance with formulas and schedules defined by the plan. Company expenses for contributions to the plan were $4.0 million in fiscal 2011, $4.2 million in

fiscal 2010 and $3.2 million in fiscal 2009, and are included in SG&A on the Consolidated Statements of Income.

The Company has a deferred compensation plan to provide certain key management employees the ability to defer a portion of their base compensation and

bonuses. The plan is an unfunded nonqualified plan. The deferred amounts and earnings thereon are payable to participants, or designated beneficiaries, at

either specified future dates, or upon separation from service or death. The Company does not make contributions to this plan or guarantee earnings.

10. Commitments and Contingencies:

Operating leases and other contractual obligations

The majority of the rental expense incurred by the Company relates to its stores and the majority of its stores are leased under agreements that generally have

an initial term of five or ten years and provide for fixed rentals. Additionally, most of the Company's leases require additional payments based upon a

percentage of sales, property taxes, insurance premiums, or common area maintenance charges. Rental expenses on all operating leases, both cancelable and

non-cancelable, for fiscal 2011, fiscal 2010 and fiscal 2009 were as follows:


Minimum rentals, net of minor sublease rentals $ 429,942 $ 399,319 $ 382,530 Contingent rentals 7,862 7,590 5,444

$ 437,804 $ 406,909 $ 387,974

Aggregate minimum annual rentals under operating leases as of August 27, 2011 are as follows:

(in thousands)

Minimum

Rentals

Fiscal 2012 $ 364,228 Fiscal 2013 323,424 Fiscal 2014 273,778 Fiscal 2015 220,029 Fiscal 2016 164,854 Thereafter 80,446

Total minimum rentals $ 1,426,759

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Additionally, the Company has outstanding standby letters of credit (which are primarily renewed on an annual basis), of which the majority are used as

surety for future premium and deductible payments to the Company's workers' compensation and general liability insurance carrier. The following table

shows the Company's other commercial commitments as of August 27, 2011:

(in thousands)

Total Amounts

Committed

Standby letters of credit $ 137,982 Surety bonds 9,445

Total $ 147,427

Litigation

Since 2004, certain individuals who held the position of Store Manager for the Company have filed lawsuits alleging that the Company violated the Fair

Labor Standards Act ("FLSA"), and/or similar state laws, by classifying them as "exempt" employees who are not entitled to overtime compensation. The

majority of the complaints in each action also request that the cases proceed as collective actions under the FLSA or as class actions under state laws and

request recovery of overtime pay, liquidated damages, and attorneys' fees and court costs. The Company currently has 22 such cases pending against it.

Grace v. Family Dollar Stores, Inc. and Ward v. Family Dollar Stores, Inc. are both pending in the U.S. District Court for the Western District of North

Carolina, Charlotte Division (the "N.C. Federal Court"). In those cases, the N.C. Federal Court has returned orders finding that the plaintiffs were not

similarly situated and, therefore, that neither nationwide notice nor collective treatment under the FLSA is appropriate. Hence, the Grace and Ward cases are

proceeding as 43 individual plaintiff cases.

On July 9, 2009, the N.C. Federal Court granted summary judgment against Irene Grace on the merits of her misclassification claim under the FLSA. The

Company has filed summary judgment motions related to each of the remaining 42 plaintiffs in the Grace and Ward cases. The plaintiffs appealed certain

rulings of the N.C. Federal Court to the United States Court of Appeals for the Fourth Circuit including the court's summary judgment order against Irene

Grace. On March 22, 2011, the Fourth Circuit affirmed the district court's decision finding that Ms. Grace was exempt from overtime compensation under the

FLSA. The Fourth Circuit did not address the class certification issue in the Grace and Ward cases since Ms. Grace's lawsuit would be dismissed on the

merits.

Including Grace and Ward, a total of 16 class and/or collective or single plaintiff misclassification cases are now pending before the N.C. Federal Court since

Hamilton v. Family Dollar Stores of Florida, Inc., Friedman v. Family Dollar Stores, Inc., et al. were dismissed on July 26, 2011, and September 23, 2011,

respectively. Additionally, in Itterly v. Family Dollar Stores, Inc., the N.C. Federal Court has dismissed the named plaintiff's and opt-ins' collective action and

individual claims under the FLSA. The state law class and individual claims under the Pennsylvania Minimum Wage Act remain in the Itterly litigation. The

named plaintiff and opt-in intervenors are seeking to have the case transferred back to the district court in Pennsylvania. The Company has opposed the

transfer.

On July 29, 2011, and August 11, 2011, the N.C. Federal Court granted summary judgment against Tanya Lakitska Warren and Catherine M. Dawson,

respectively, on the merits of their misclassification claims under the FLSA. Additionally, on September 26, 2011, the N.C. Federal Court granted two

additional summary judgments against John Gersch and Jodi Hare on the merits of their misclassification claims. Then, on October 14, 2011, the N.C. Federal

Court granted two more summary judgments against Brenda Bilbrey and Sally Villanueva. Warren, Dawson, Gersch, Hare and Bilbrey are all intervenors in

the Grace litigation. Villanueva is an intervenor in the Ward litigation. Warren and Dawson have filed Notices of Appeal with the United States Court of

Appeals for the Fourth Circuit. These appeals have been consolidated and Warren and Dawson are scheduled to file their appellant brief in October 2011.

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Presently, there are a total of 39 named plaintiffs and intervenors in the Grace and Ward cases, and 65 named plaintiffs and/or opt-ins in the remaining cases,

for which the N.C. Federal Court has not decided the class certification issue.

The Company has been sued in six additional class action lawsuits alleging that Store Managers should be non-exempt employees under various state laws.

The plaintiffs in these cases seek recovery of overtime pay, liquidated damages, and attorneys' fees and court costs. Twila Walters et. al. v. Family Dollar

Stores of Missouri, Inc., alleging violations of the Missouri Minimum Wage Law, was originally filed on January 26, 2010, and is pending in the Circuit Court

of Jackson County, Missouri (the "Circuit Court"). On May 10, 2011, the Circuit Court certified the class under the Missouri Minimum Wage Law and

common law. On May 20, 2011, the Company petitioned the Appellate Court for an interlocutory appeal of the Circuit Court's decision certifying the class.

The Appellate Court denied that petition on June 10, 2011. The Company filed a writ of prohibition with the Missouri Supreme Court on July 1, 2011. On

October 4, 2011, the Missouri Supreme Court denied the Company's writ of prohibition and vacated the stay of the litigation. Hegab v. Family Dollar Stores,

Inc., was filed in the United States District Court for the District of New Jersey on March 3, 2011. Plaintiff seeks recovery for himself and allegedly similarly

situated Store Managers under New Jersey law. The Company has sought a stay of the Hegab proceedings, which was denied. The parties are now engaged in

class discovery in this matter. Barker v. Family Dollar, Inc., alleging violations of the Kentucky Wages and Hours Law, was filed in Circuit Court in Jefferson

County, Kentucky on February 17, 2010, and removed to the United States District Court for the Western District of Kentucky. On March 11, 2011, the

district court denied the Company's partial motion to dismiss the overtime claim under Kentucky law and requested more discovery on that claim. The parties

will be conducting pre-certification discovery through December 2011. Youngblood, et al. v. Family Dollar Stores, Inc., Family Dollar, Inc., Family Dollar

Stores of New York, Inc. et al., was filed in the United States District Court for the Southern District of New York on April 2, 2009. Rancharan v. Family

Dollar Stores, Inc., was filed in the Supreme Court of the State of New York, Queens County on March 4, 2009, was removed to the United States District

Court for the Eastern District of New York on May 6, 2009, and was subsequently transferred to the Southern District of New York and has been consolidated

with Youngblood. On October 4, 2011, the New York District Court certified the class in the Rancharan and Youngblood cases under Rule 23. Cook, et al. v.

Family Dollar Stores of Connecticut, Inc., was filed in the Superior Court State of Connecticut on October 5, 2011, seeking unpaid overtime for a class of

current and former Connecticut Store Managers for alleged violations of the Connecticut Minimum Wage Act.

In general, the Company continues to believe that its Store Managers are "exempt" employees under the FLSA and have been and are being properly

compensated under both federal and state laws. The Company further believes that these actions are not appropriate for collective or class action treatment.

The Company intends to vigorously defend the claims in these actions. While the N.C. Federal Court has previously found that the Grace and Ward actions

are not appropriate for collective action treatment, at this time it is not possible to predict whether one or more of the remaining cases may be permitted to

proceed collectively on a nationwide or other basis. No assurances can be given that the Company will be successful in the defense of these actions, on the

merits or otherwise. The Company cannot reasonably estimate the possible loss or range of loss that may result from these actions.

If at some point in the future the Company determines that a reclassification of some or all of its Store Managers as non-exempt employees under the FLSA is

required, such action could have a material effect on the Company's financial position, liquidity or results of operation. At this time, the Company cannot

quantify the impact of such a determination.

On October 14, 2008, a complaint was filed in the U.S. District Court in Birmingham, Alabama, captioned Scott, et al. v. Family Dollar Stores, Inc., alleging

discriminatory pay practices with respect to the Company's female Store Managers. This case was pled as a putative class action or collective action under

applicable statutes on behalf of all Family Dollar female Store Managers. The plaintiffs seek recovery of compensatory and punitive money damages,

recovery of attorneys' fees and equitable relief. The case has been transferred to the N.C. Federal Court. Presently, there are 48 named plaintiffs in the Scott

case, with no additional opt-ins. In response to

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the recent United States Supreme Court decision of Dukes v. Walmart, on September 19, 2011, the Company filed a motion to dismiss seeking to strike the

plaintiffs' class claims. The plaintiffs' response to this motion is due in October, 2011.

At this time, it is not possible to predict whether the N.C. Federal Court ultimately will permit the Scott action to proceed collectively under the Equal Pay Act

or as a class under Title VII of the Civil Rights Act. Although the Company intends to vigorously defend the action, no assurances can be given that the

Company will be successful in the defense on the merits or otherwise. Similarly, at this time the Company cannot estimate either the size of any potential

class or the value of the claims raised in this action. For these reasons, the Company is unable to estimate any potential loss or range of loss. The Company

has tendered the matter to its Employment Practices Liability Insurance ("EPLI") carrier for coverage under its EPLI policy. At this time, the Company

expects that the EPLI carrier will participate in any resolution of some or all of the plaintiffs' claims.

On March 16, 2011, Ronald Rothenberg v. Howard Levine, et al,. a purported class action complaint relating to the rejection of a proposal by Trian Group to

acquire the Company and the adoption of a stockholders' rights plan was filed in North Carolina State Court, Mecklenburg County, and later removed to the

North Carolina Business Court, the case was filed against the Company's Board of Directors by Ronald Rothenberg, individually and on behalf of all of the

Company's stockholders other than defendants and their affiliates. The plaintiffs alleged, among other allegations, that the Company's directors breached their

fiduciary duties by not agreeing to sell the Company and by adopting a stockholders' rights plan. The complaint sought various forms of relief, including

damages and an order that the Board of Directors enter into negotiations to sell the Company to Trian Group and redeem or rescind the stockholders' rights

plan. This lawsuit was voluntarily dismissed without prejudice on July 19, 2011.

The Company is involved in numerous other legal proceedings and claims incidental to its business, including litigation related to alleged failures to comply

with various state and federal employment laws, some of which are or may be pled as class or collective actions, and litigation related to alleged personal or

property damage, as to which the Company carries insurance coverage and/or has established accrued liabilities as set forth in the Company's financial

statements. While the ultimate outcome cannot be determined, the Company currently believes that these proceedings and claims, both individually and in the

aggregate, should not have a material effect on the Company's financial position, liquidity or results of operations. However, the outcome of any litigation is

inherently uncertain and, if decided adversely to the Company, or, if the Company determines that settlement of such actions is appropriate, the Company may

be subject to liability that could have a material effect on the Company's financial position, liquidity or results of operations.

11. Stock-Based Compensation:

The Family Dollar Stores, Inc. 2006 Incentive Plan (the "2006 Plan") permits the granting of a variety of compensatory award types. The Company currently

grants non-qualified stock options and performance share rights under the 2006 Plan. Shares issued related to stock options and performance share rights

represent new issuances of common stock. A total of 12.0 million common shares are reserved and available for issuance under the 2006 Plan, plus any shares

awarded under the Company's previous plan (1989 Non-Qualified Stock Option Plan) that expired or were canceled or forfeited after the adoption of the 2006

Plan. As of August 27, 2011, there were 10.0 million shares remaining available for grant under the 2006 Plan. The Company also issues shares under the

2006 Plan in connection with director compensation. These shares are currently issued out of treasury stock and are not material.

The Company's results for fiscal 2011, fiscal 2010 and fiscal 2009 include stock-based compensation expense of $14.7 million, $15.7 million and $13.3

million, respectively. These amounts are included within SG&A on the Consolidated Statements of Income. Tax benefits recognized in fiscal 2011, fiscal

2010 and fiscal 2009 for stock-based compensation totaled $5.4 million, $5.8 million and $4.9 million, respectively.

56

Table of Contents

Stock Options

The Company grants stock options to key employees at prices not less than the fair market value of the Company's common stock on the grant date. The

Company's practice for a number of years has been to make a single annual grant to all employees participating in the stock option program and generally to

make other grants only in connection with employment or promotions. Options expire five years from the grant date and are exercisable to the extent of 40%

after the second anniversary of the grant and an additional 30% at each of the following two anniversary dates on a cumulative basis. Compensation cost is

recognized on a straight-line basis, net of estimated forfeitures, over the requisite service period. The Company uses the Black-Scholes option-pricing model

to estimate the grant-date fair value of each option. The fair values of options granted were estimated using the following weighted-average assumptions:

Years Ended

August 27, 2011 August 28, 2010 August 29, 2009

Expected dividend yield 1.56% 2.27% 2.51% Expected stock price volatility 33.8% 35.20% 34.00% Weighted average risk-free interest rate 1.01% 2.07% 2.23% Expected life of options (years) 4.42 4.50 4.43

The expected dividend yield is based on the projected annual dividend payment per share divided by the stock price on the grant date. Expected stock price

volatility is derived from an analysis of the historical and implied volatility of the Company's publicly traded stock. The risk-free interest rate is based on the

U.S. Treasury rates on the grant date with maturity dates approximating the expected life of the option on the grant date. The expected life of the options is

based on an analysis of historical and expected future exercise behavior, as well as certain demographic characteristics. These assumptions are evaluated and

revised for future grants, as necessary, to reflect market conditions and experience. There were no significant changes made to the methodology used to

determine the assumptions during fiscal 2011. The weighted-average grant-date fair value of stock options granted was $11.60 during fiscal 2011, $7.33

during fiscal 2010 and $5.78 during fiscal 2009.

The following table summarizes the transactions under the stock option plans during fiscal 2011:

(in thousands, except per share amounts)

Options

Outstanding

Weighted-

Average Exercise

Price

Weighted-Average

Remaining

Contractual Life in

Years

Aggregate Intrinsic

Value

Balance at August 28, 2010 2,769 $ 26.47 Granted 504 46.24 Exercised (618) 27.90 Forfeited (147) 29.82 Expired (2) 23.87 Balance at August 27, 2011 2,506 $ 29.90 2.62 $ 44,283

Exercisable at August 27, 2011 587 $ 25.64 1.67 $ 12,883

The total intrinsic value of stock options exercised was $11.2 million during fiscal 2011, $9.1 million during fiscal 2010 and $7.1 million during fiscal

2009. As of August 27, 2011, there was approximately $6.9 million of unrecognized compensation cost related to outstanding stock options. The

unrecognized compensation cost will be recognized over a weighted-average period of 2.4 years.

Performance Share Rights

The Company grants performance share rights to key employees on an annual basis and in connection with employment or promotion. Performance share

rights give employees the right to receive shares of the Company's common stock at a future date based on the Company's performance relative to a peer

group. Performance is

57

Table of Contents

measured based on two pre-tax metrics: Return on Equity and Income Growth. The Leadership Development and Compensation Committee of the Board of

Directors establishes the peer group and performance metrics. The performance share rights vest at the end of the performance period (generally three years)

and the shares are issued shortly thereafter. The actual number of shares issued can range from 0% to 200% of the employee's target award depending on the

Company's performance relative to the peer group. The following table summarizes the transactions under the performance share rights program during fiscal

2011:

Weighted Performance Average

Share Rights Grant-Date

(in thousands, except per share amounts) Outstanding Fair Value

Nonvested—August 28, 2010 694 $ 26.27 Granted 160 46.38 Vested (335) 27.10 Cancellations (29) 32.96 Adjustments 92 N/A

Nonvested—August 27, 2011 582 $ 31.13

The grant-date fair value of the performance share rights is based on the stock price on the grant date. The weighted-average grant-date fair value of

performance share rights granted was $46.38 during fiscal 2011, $28.37 during fiscal 2010 and $23.56 during fiscal 2009. Compensation cost is recognized on

a straight-line basis, net of estimated forfeitures, over the requisite service period and adjusted quarterly to reflect the ultimate number of shares expected to

be issued. The adjustments of performance share rights outstanding in the table above represent the performance adjustment for shares vested during the

period. The total fair value of performance share rights vested was $15.0 million during fiscal 2011, $6.9 million during fiscal 2010 and $5.3 million during

fiscal 2009. As of August 27, 2011, there was approximately $10.8 million of unrecognized compensation cost related to outstanding performance share

rights, based on the Company's most recent performance analysis. The unrecognized compensation cost will be recognized over a weighted-average period of

1.6 years.

12. Stock Repurchases:

During fiscal 2011, the Company purchased a total of 13.9 million shares of its common stock at a cost of $670.5 million, of which 8.6 million shares were

purchased on the open market at a cost of $420.5 million. On October 5, 2010, the Company entered into an accelerated share repurchase agreement with a

large financial institution. In connection with the agreement, the Company made a prepayment of $250.0 million to the financial institution and immediately

received 4.4 million shares (80% of the prepayment amount). The financial institution purchased shares of the Company's common stock in the open market

over an averaging period in order to cover its position with respect to shares it borrowed for the initial delivery and for any shares payable upon settlement.

Upon settlement, another 0.9 million shares were delivered to the Company.

During fiscal 2010, the Company purchased 9.4 million shares of its common stock at a cost of $332.2 million, of which 6.7 million shares were purchased on

the open market at a cost of $232.2 million. During fiscal 2010, the Company entered into two structured repurchase agreements with large financial

institutions for a total of $100 million. In connection with each agreement, the Company made a prepayment of $50.0 million to the financial institution. The

financial institution purchased shares of the Company's common stock in the open market and delivered shares to the Company at specified intervals during

the contract term. The number of shares delivered was based on the volume weighted average price ("VWAP") of the Company's common stock during the

purchase period less an agreed upon discount. The Company received 2.7 million shares under the agreements, which were completed prior to the end of

fiscal 2010.

During fiscal 2009, the Company purchased 2.3 million shares at a cost of $71.1 million, all of which were purchased on the open market.

58

Table of Contents

All shares are purchased pursuant to share repurchase authorizations approved by the Board of Directors. On November 18, 2009, the Board of Directors

authorized the Company to purchase up to $400 million of the Company's outstanding common stock from time to time as market conditions warrant. On

September 29, 2010, the Company announced that the Board of Directors authorized the Company to purchase up to $750 million of the Company's

outstanding common stock (the "2010 authorization"). The remaining amount under the previous authorization was cancelled. As of August 27, 2011, the

Company had $87.3 million remaining under the 2010 authorization.

On September 26, 2011, the Company announced that the Board of Directors authorized the Company to purchase up to an additional $250 million of the

Company's outstanding common stock. As such, after the announcement, the Company has $337.3 million remaining under current authorizations.

There is no expiration date related to the above referenced authorizations. Shares purchased under the share repurchase authorizations are generally held in

treasury or are cancelled and returned to the status of authorized but unissued shares.

13. Rights Plan

Stock

holde

rs'

On March 2, 2011, the Company adopted a stockholders' rights plan whereby the Board of Directors of the Company authorized and declared a dividend

distribution of one right for each outstanding share of common stock of the Company to stockholders of record at the close of business on March 2, 2011.

Each right entitles the registered holder to purchase from the Company a unit consisting of one one-thousandth of a share of Series A Junior Participating

Preferred Stock, par value $1.00 per share, at a price of $250.00 per unit, subject to adjustment. The rights are not presently exercisable and remain attached to the shares of common stock until the occurrence of certain triggering events. Subject to certain exceptions, the rights will separate from the shares of common

stock and a distribution date will be deemed to occur on the earlier of (i) the 10th

business day after a person or group becomes a beneficial owner of at least

10% of the Company's outstanding common stock or (ii) the 10th

business day after the date that a tender or exchange offer is launched that would, if

completed, result in a person or group becoming a beneficial owner of at least 10% of the Company's outstanding common stock. Upon such an event, each

holder of a right, other than the person or group becoming a beneficial owner of at least 10% of the Company's outstanding common stock, will thereafter

have the right to receive, upon exercise, common stock (or, in certain circumstances, cash, property or other securities of the Company) having a value equal

to two times the exercise price of the right. The Company may redeem the rights in whole at a price of $0.001 per right. The rights will expire on March 2, 2012, unless exercised, redeemed or exchanged prior to that time. The Board may terminate the rights plan before the expiration date or extend the expiration

date. The rights have no voting or dividend privileges, and, unless and until they become exercisable, have no dilutive effect on the earnings of the Company.

14. Earnings per Share:

Basic net income per common share is computed by dividing net income by the weighted average number of shares outstanding during each period. Diluted

net income per common share gives effect to all securities representing potential common shares that were dilutive and outstanding during the period. Certain

stock options and performance share rights were excluded from the calculation of diluted net income per common share because their effects were antidilutive

(0.3 million, 0.6 million and 1.7 million shares for fiscal 2011, fiscal 2010 and fiscal 2009, respectively). In the calculation of diluted net income per common

share, the denominator includes the number of additional common shares that would have been outstanding if the Company's outstanding dilutive stock

options and performance share rights had been exercised, as determined pursuant to the treasury stock method.

59

Table of Contents

The following table sets forth the computation of basic and diluted net income per common share:

(in thousands, except per share amounts) Fiscal 2011 Fiscal 2010 Fiscal 2009

Basic Net Income Per Share: Net income $ 388,445 $ 358,135 $ 291,266

Weighted average number of shares outstanding 123,360 135,745 139,894


Diluted Net Income Per Share: Net income $ 388,445 $ 358,135 $ 291,266

Weighted average number of shares outstanding 123,360 135,745 139,894 Effect of dilutive securities—stock options 677 406 262 Effect of dilutive securities—performance share rights 449 445 366



15. Comprehensive Income:

The following table provides a reconciliation of net income to comprehensive income. The unrealized gains and losses on investment securities are shown net

of tax ($0.6 million income tax expense in fiscal 2011, $1.2 million income tax expense in fiscal 2010 and $2.5 million income tax benefit in fiscal 2009).

Years Ended

(in thousands) August 27, 2011 August 28, 2010 August 29, 2009

Net income

Other comprehensive income: $ 388,445 $ 358,135 $ 291,266

Unrealized gains (losses) on investment securities 904 1,914 (4,626) Reclassification adjustment for gains realized in net other income Other

—

(261)

—

— 528

—

Comprehensive income $ 389,088 $ 360,049 $ 287,168

The following table details the components of accumulated other comprehensive loss.


Unrealized losses on investment securities (net of income taxes) $ (6,142) $ (7,046) Other (261) —

Accumulated other comprehensive loss $ (6,403) $ (7,046)

60

Table of Contents

16. Segment Information:

The Company operates a chain of more than 7,000 general merchandise retail discount stores in 44 states, serving the basic needs of customers primarily in

low- and middle-income brackets. The stores are supported by nine distribution centers and one corporate headquarters. All of the stores operate under the

Family Dollar name and are substantially the same in terms of size, merchandise, customers, distribution and operations. The Company has no franchised

locations or other lines of business. All of the Company's operations are located in the United States with the exception of certain sourcing entities located in

Asia. The foreign operations are not material. The Company manages the business on the basis of one operating segment and therefore, has only one

reportable segment. The following table presents net sales by classes of similar products.

Years Ended


Classes of similar products: Consumables $ 5,686,576 $ 5,119,911 $ 4,764,835 Home Products 1,084,480 1,035,944 988,550 Apparel and Accessories 854,602 840,929 831,321 Seasonal and Electronics 922,177 870,187 815,900

Net Sales $ 8,547,835 $ 7,866,971 $ 7,400,606

The following table describes the Company's product categories in more detail:

Consumables Household chemicals

Paper products

Food

Health and beauty aids

Hardware and automotive supplies

Pet food and supplies Home Products Domestics, including blankets, sheets and towels

Housewares

Giftware

Home décor Apparel and Accessories Men's clothing

Women's clothing

Boys' and girls' clothing

Infants' clothing

Shoes

Fashion accessories Seasonal and Electronics Toys

Stationery and school supplies

Seasonal goods

Personal electronics, including pre-paid cellular phones and services

61

Table of Contents

17. Unaudited Summaries of Quarterly Results:

First Second Third Fourth


2011 Quarter Quarter Quarter Quarter

Net sales $ 1,996,941 $ 2,263,169 $ 2,153,395 $ 2,134,330 Gross profit 719,565 807,367 779,756 725,607 Net income 74,315 123,180 111,101 79,849

Net income per common share(1)

0.58 0.98 0.91 0.66 2010



0.49 0.81 0.77 0.56

(1) Figures represent diluted earnings per share. The sum of the quarterly net income per common share may not equal the annual net income per common share due to rounding.

18. Related Party Transactions:

There were no material related party transactions during fiscal 2011, fiscal 2010 or fiscal 2009.

62

FAMILY DOLLAR STORES, INC.,

PATRONUOJAMOSIOS

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

FAMILY DOLLAR STORES, INC.

Page No.

Report of Independent Registered Public Accounting Firm 36 Consolidated Statements of Income for fiscal 2011, fiscal 2010, and fiscal 2009 37 Consolidated Balance Sheets as of August 27, 2011, and August 28, 2010 38 Consolidated Statements of Shareholders' Equity for fiscal 2011, fiscal 2010, and fiscal 2009 39 Consolidated Statements of Cash Flows for fiscal 2011, fiscal 2010, and fiscal 2009 40 Notes to Consolidated Financial Statements 41

Nepriklausomos registruotos apskaitos įmonės ataskaita

Skirta „Family Dollar Stores Inc.“ Direktorių valdybai ir akcininkams:

Mūsų nuomone, priede pateiktos konsoliduotos finansinės ataskaitos visais reikšmingais atžvilgiais teisingai parodo

„Family Dollar Stores Inc.“ ir jos patronuojamųjų įmonių finansinę padėtį 2011 m. rugpjūčio 27 d. ir 2010 m. rugpjūčio 28

d. , veiklos rezultatus ir pinigų srautus per visus tris finansinius metus, pasibaigusius 2011 m. rugpjūčio 27 d. pagal

bendrai JAV taikomus apskaitos principus. Taip pat mūsų nuomone Bendrovė visais reikšmingais atžvilgiais užtikrino ir

išlaikė finansinės atskaitomybės vidaus kontrolę 2011 n. rugpjūčio 27 d. remdamasi Tradeway komisijos rėmimo

organizacijų komiteto (COSO) išleista Integruota vidaus kontrolės sistema (Internal Control - integrated system). Bendrovės

vadovybė yra atsakinga už šias finansines ataskaitas, už veiksmingą finansinės atskaitomybės vidaus kontrolę, ir už jos

finansinės atskaitomybės vidaus kontrolės veiksmingumo vertinimą, kuris pateiktas Vadovybės ataskaitoje dėl finansinės

atskaitomybės vidaus kontrolės (šios ataskaitos 9A punktas). Mūsų pareiga - pareikšti nuomonę apie šias finansines

ataskaitas ir Bendrovės įgyvendinamą finansinės atskaitomybės vidaus kontrolę vadovaujantis mūsų atliktu integruotu

auditu. Mes atlikome auditą pagal Akcinių bendrovių apskaitos priežiūros valdybos (JAV) patvirtintus standartus.

Pagal tuos standartus mes privalome įgyti pakankamą užtikrinimą, kad finansinėse ataskaitose nėra reikšmingų

iškraipymų, ir kad visais reikšmingais atžvilgiais buvo užtikrinta veiksminga finansinės atskaitomybės vidaus kontrolė.

Atlikdami finansinių atskaitų auditą mes testais patikrinome sumas ir atskleidžiamą informaciją patvirtinančius

įrodymus, vertindami taikomus apskaitos principus ir vadovybės padarytus svarbiausius apskaitinius įvertinimus, taip

pat vertinome bendrą finansinių ataskaitų pateikimą. Atlikdami finansinės atskaitomybės vidaus kontrolės auditą mes

susipažinome su finansinės atskaitomybės vidaus kontrole, įvertinome reikšmingų trūkumų riziką ir atsižvelgdami į

įvertintą riziką patikrinome ir įvertiname vidaus kontrolės veiklos struktūrą ir veiksmingumą. Atlikdami auditą mes taip

pat taikėme kitas procedūras, kokios mūsų manymu buvo reikalingos, atsižvelgus į aplinkybes. Mes tikime, kad mūsų

atliktas auditas suteikė mums pakankamą pagrindą pareikšti mūsų nuomonei.

Bendrovės finansinės atskaitomybės vidaus kontrolė yra procesas, skirtas suteikti pakankamo užtikrinimo dėl finansinės

atskaitomybės patikimumo, ir parengti finansines ataskaitas išorės vartotojams pagal bendrai priimtus apskaitos

principus. Bendrovės finansinės atskaitomybės vidaus kontrolės sistema apima politikos priemones ir procedūras, kurios

i) užtikrina, kad būtų pakankamai detaliai, tiksliai ir teisingai registruojami bendrovės vykdomi sandoriai, ir turto

pardavimai; ii) suteikia pakankamą užtikrinimą, kad sandoriai būtų registruojami taip, kad galima būtų sudaryti

finansines ataskaitas pagal bendrai priimtus apskaitos principus, o bendrovė gautų ar mokėtų lėšas tik gavusi bendrovės

vadovybės ir direktorių leidimus, ir iii) suteikia pakankamą užtikrinimą, kad laiku galima bus nustatyti nepatvirtintus

bendrovės turto įsigijimo, naudojimo ar pardavimo sandorius, kurie galėtų turėti reikšmingos įtakos finansinėms

ataskaitoms.

Dėl savo vidaus apribojimų finansinės atskaitomybės vidaus kontrolė negali nustatyti iškraipymų, ar jiems užkirsti kelio.

Be to, būsimųjų laikotarpių veiksmingumo vertinimo prognozės yra susijusios su rizika, kad kontrolės priemonės gali

tapti nepakankamos dėl sąlygų pasikeitimo, arba mažesniu lygiu atitiks politikos ir procedūrų reikalavimus.

PricewaterhouseCoopers

LLP Charlotte,

Š.Karolina,


PATRONUOJAMOSIOS

2011 m. spalio 25 d.

KONSOLIDUOTA PELNO (NUOSTOLIŲ)

ATASKAITA

Metai, metų pabaiga

(tūkst., išskyrus akcijas) 2011-08-27 2010-08-28 2009-08-29

Grynasis pardavimas

Sąnaudos ir išlaidos : $ 8,547,835 $ 7,866,971 $ 7,400,606

Pardavimo sąnaudos 5,515,540 5,058,971 4,822,401 Pardavimo, bendrosios ir administracinės 2,394,223 2,232,402 2,120,936

Pardavimo sąnaudos ir veiklos išlaidos 7,909,763 7,291,373 6,943,337

Veiklos pelnas 638,072 575,598 457,269 Investicinės pajamos 1,532 1,597 6,595 Palūkanų išlaidos 22,446 13,337 12,939

Pajamos prieš pajamų mokesčius 617,158 563,858 450,925 Pajamų mokestis 228,713 205,723 159,659

Grynosios pajamos $ 388,445 $ 358,135 $ 291,266

Paprastųjų akcijų grynosios pajamos $ 3.15 $ 2.64 $ 2.08

Svertinis akcijų vidurkis - bazinis 123,360 135,745 139,894

Paprastųjų akcijų grynosios pajamos —sumažintos $ 3.12 $ 2.62 $ 2.07

Svertinis akcijų vidurkis - sumažintas 124,486 136,596 140,522

Pridedamas aiškinamasis raštas yra neatskiriama finansinių ataskaitų dalis.

KONSOLIDUOTAS BALANSAS

RUGPJŪČIO 27 D.


PATRONUOJAMOSIOS

August 28,

(tūkst., išskyrus akcijas ir akcijų verčių sumas)

Turtas

Trumpalaikis turtas:

2011 2010

Pinigai ir pinigų ekvivalentai $ 141,405 $ 382,754 Trumpalaikiai investiciniai vertybiniai popieriai 96,006 120,325 Prekių atsargos 1,154,660 1,028,022 Atidėti pajamų mokesčiai 60,011 52,190 Gautinos pajamų mokesčių grąžinimo sumos 10,326 — Išankstiniai mokėjimai ir kitas trumpalaikis turtas 71,436 63,005

Trumpalaikis turtas, iš viso 1,533,844 1,646,296 Ilgalaikis turtas ir įrenginiai, grynas 1,280,589 1,111,966 Investiciniai vertybiniai popieriai 107,458 147,108 Kitas turtas 74,314 62,775

Turtas iš viso $ 2,996,205 $ 2,968,145

Įsipareigojimai ir akcininkų nuosavybė

Trumpalaikiai įsipareigojimai:

Ilgalaikės skolos einamųjų metų dalis $ 16,200 $ — Mokėtinos sumos 685,063 676,975

Sukaupti įsipareigojimai 310,818 309,347 Pajamų mokesčiai 4,974 18,447

Trumpalaikiai įsipareigojimai iš viso 1,017,055 1,004,769 Ilgalaikė skola 532,370 250,000 Kiti įsipareigojimai 270,466 253,576 Atidėti pajamų mokesčiai 89,240 38,246 Įsipareigojimai ir neapibrėžtumai (10 pastaba) Akcininkų nuosavybė:

Privilegijuotos akcijos, $1 nominali vertė; patvirtinta 500,000 akcijų; nėra išleistų ar neišpirktų akcijų — — Paprastosios akcijos, $.10 nominali vertė; patvirtinta 600,000,000 akcijų; išleista 147,316,232 akcijų 2011 m. rugpjūčio 27 d., ir 146,496,237

Akcijų 2010 m. rugpjūčio 28 d., ir anksčiau išleistų - 117,353,341 akcijų 2011 m. rugpjūčio 27 d., ir 130,452,959 – 2010 m. rugpjūčio 28 d. 14,732 14,650

Nominalią vertę viršijantis kapitalas 274,445 243,831 Nepaskirstytas pelnas 1,969,749 1,665,646 Sukauptieji ir kiti bendrieji nuostoliai (6,403) (7,046) Paprastosios akcijos, laikomos ižde, savikaina (29,962,891 akcijos 2011 m. rugpjūčio 27 d., ir 16,043,278 – 2010 m. rugpjūčio 28 d.

) (1,165,449) (495,527) Akcininkų nuosavybė iš viso 1,087,074 1,421,554

Įsipareigojimų ir akcininkų nuosavybė iš viso $ 2,996,205 $ 2,968,145


38


PATRONUOJAMOSIOS

KONSOLIDUOTOS AKCININKŲ NUOSAVYBĖS ATASKAITOS

Metai, pasibaigę 2011 m. rugpjūčio 27 d., 2010 m. rugpjūčio 28 d.,

2009 m. rugpjūčio 29 d.,

((tūkst., išskyrus akcijas ir akcijų verčių sumas) Likutis, 2008 m. rugpjūčio 30 d.

(139,704,542 paprastųjų akcijų;

Paprast.

akcijo

s

Nominalią

vertę virš.

kapitalas

Nepaski

rstytas

pelnas

Sukauptas ir

kitas bendrasis

nuostolis

Supirktos

akcijos

Iš viso:

4,427,779 iždo akcijų) $ 14,413 $ 166,669 $ 1,170,652 $ (4,862) $ (92,789) $ 1,254,083 Grynosios pajamos per metus 291,266 291,266

Nerealizuotas pelnas (nuostolis) iš investicinių vertybinių popierių (be 2,5 mln. USD mokesčių) (4,626) (4,626)

Koregavimas perklasifikuojant dėl (pelno) nuostolio, realizuoto grynosiose pajamose (be 0,3 mln. USD mokesčių) 528 528

Bendrosios pajamos 287,168

1,353,413 paprastųjų akcijų emisija pagal skatinimo planą, įskaitant mokesčių nuolaidas 136 31,450 31,586

Supirktos 2,271,528 paprastosios akcijos (71,067) (71,067)

9,405 akcijų išleidimas pagal skatinimo planą (Direktorių atlyginimas) 197 73 270

Atlyginimas akcijomis 12,033 12,033

Paprastųjų akcijų dividendai, 0,53 USD už akciją (74,013) (74,013)

Likutis, 2009 m. rugpjūčio 29 d.

(138,795,832 paprastosios akcijos;

6,689,902 supirktų akcijų) 14,549 210,349 1,387,905 (8,960) (163,783) 1,440,060 Grynosios pajamos per metus 358,135 358,135

Nerealizuotas investicinių vertybinių pelnas (nuostolis) (be 1,2 mln. USD mokesčių) 1,914 1,914

Bendrosios pajamos 360,049

1,010,503 paprastųjų akcijų emisija pagal skatinimo planą, įskaitant mokesčių nuolaidas 101 21,045 21,146

Supirktos 9,370,908 paprastosios akcijos (332,189) (332,189)




Likutis, 2010 m. rugpjūčio 28 d.

(130,452,959 paprastosios akcijos;

16,043,278 supirktos akcijos) 14,650 243,831 1,665,646 (7,046) (495,527) 1,421,554 Grynosios pajamos per metus 388,445 388,445

Nerealizuotas pelnas (nuostolis) iš investicinių vertybinių popierių (be 0,6 mln. USD mokesčių) 904 904 Kita (261) (261)

Bendrosios pajamas 389,088

819,995 paprastųjų akcijų emisija pagal skatinimo planą, įskaitant mokesčių nuolaidas 82 16,430 16,512

Supirkta 13,934,868 paprastųjų akcijų (670,466) (670,466)




Likutis, 2011 m. rugpjūčio 27 d. (117,353,341 paprastųjų akcijų;

29,962,891 supirktų akcijų) $ 14,732 $ 274,445 $ 1,969,749 $ (6,403) $ (1,165,449) $ 1,087,074


39


PATRONUOJAMOSIOS

KONSOLIDUOTOS PINIGŲ SRAUTŲ ATASKAITOS

Metai, pasibaigę

(tūkst.)

Pagrindinės veiklos pinigų srautai:

2011-08-27 2010-08-28 2009-08-29

Grynosios pajamos $ 388,445 $ 358,135 $ 291,266 Koregavimas derinant grynąsias pajamas su pagrindinės veiklos generuojamais grynaisiais pinigais:

Nusidėvėjimas ir amortizacija 182,455 172,037 159,808 Atidėtas pajamų mokestis 46,805 8,123 4,426 Papildomos mokesčių nuolaidos iš atlyginimo akcijomis (4,745) (1,676) (704) Atlyginimas akcijomis 14,728 13,163 11,538 Nuostolis pardavus turtą ir įrenginius, įskaitant nusidėvėjimą 9,461 7,244 9,924 Kitas pelnas ir nuostolis — — 1,228 Veiklos turto ir įsipareigojimų pokytis:

Prekių atsargos (126,638) (34,225) 38,888 Prepayments and other current assets (8,409) 200 238 Kitas turtas (4,888) 2,666 6,027 Mokėtinos lėšos ir sukaupti įsipareigojimai 37,057 61,646 12,373 Pajamų mokesčiai (23,799) 25,389 (1,401) Kiti įsipareigojimai 17,592 (21,163) (4,412)

528,064 591,539 529,199

Investicinės veiklos pinigų srautai :

Investicinių vertybinių popierių pirkimas (352,082) (142,730) — Investicinių vertybinių popierių pardavimas 415,877 46,888 44,943 Kapitalo išlaidos (345,268) (212,435) (155,401) Pajamos pardavus turtą ir įrenginius 1,055 1,329 1,103

(280,418) (306,948) (109,355)

Finansinės veiklos pinigų srautai :

Skolinimasis pagal atsinaujinančio kredito liniją 46,000 — — Grąžinimas pagal atsinaujinančio kredito liniją (46,000) — — Ilgalaikių skolos priemonių išleidimas 298,482 — — Skolos priemonių išleidimo sąnaudų mokėjimas (7,811) (651) (624)

Paprastųjų akcijų išpirkimas (670,466) (332,189) (71,067)

Grynųjų pinigų sąskaitos perviršio pokytis (47,722) 49,687 (27,256) Pajamos realizavus darbuotojų akcijų opcionus 17,216 19,663 31,525

Papildomos mokesčių nuolaidos dėl atlyginimo akcijomis 4,745 1,676 704 Dividendų mokėjimas (83,439) (78,913) (72,738)

(488,995) (340,727) (139,456)

Grynasis pinigų ir pinigų ekvivalentų pokytis (241,349) (56,136) 280,388

Pinigai ir pinigų ekvivalentai metų pradžioje 382,754 438,890 158,502

Pinigai ir pinigų ekvivalentai metų pabaigoje $ 141,405 $ 382,754 $ 438,890

Papildoma su pinigų srautais susijusi atskleidžiama informacija:

Ilgalaikio turto ir įrenginių pirkimas, mokėjimas laukia patvirtinimo, įtrauktas į mokėtinas lėšas $ 36,220 $ 22,848 $ 4,575 Per laikotarpį sumokėti grynieji pinigai:

Palūkanos, atėmus kapitalizuotas sumas 20,395 12,568 12,192 Pajamų mokesčiai, be grąžinamų sumų 201,843 175,915 158,486


.


PATRONUOJAMOSIOS

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1. of Business and Summary of Significant Accounting Policies:

D

escri

ption

Description of business

The Company operates a chain of more than 7,000 general merchandise retail discount stores in 44 contiguous states, providing low- and middle-income

consumers with a selection of competitively priced merchandise in convenient neighborhood stores. The Company's products include health and beauty aids,

packaged food and refrigerated products, home cleaning supplies, housewares, stationery, seasonal goods, apparel and domestics. In the typical Family Dollar

store, the majority of the products are priced at $10 or less, with many of the products priced at $1 or less. The Company manages its business on the basis of

one operating segment.

Principles of consolidation

The consolidated financial statements include the accounts of the Company and its subsidiaries, all of which are wholly owned. All significant intercompany

balances and transactions have been eliminated.

Finansiniai metai

The Company's fiscal year generally ends on the Saturday closest to August 31 of each year, which generally results in an extra week every six years. Fiscal

2011, fiscal 2010 and fiscal 2009 were 52-week years.

Use of estimates

The preparation of the Company's consolidated financial statements, in conformity with accounting principles generally accepted in the United States of

America, requires management to make estimates and assumptions. These estimates and assumptions affect the reported amounts of assets and liabilities, the

disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting

period. Actual results could differ from these estimates.

Cash equivalents

The Company considers all highly liquid investments with an original maturity of three months or less to be cash equivalents. The carrying amount of the

Company's cash equivalents approximates fair value due to the short maturities of these investments and consists primarily of money market funds and other

overnight investments. The Company maintains cash deposits with major banks, which from time to time may exceed federally insured limits. The Company

periodically assesses the financial condition of the institutions and believes that the risk of any loss is remote. Payments due from banks for third-party credit

card, debit card and electronic benefit transactions are generally processed within 24-72 hours and are classified as cash equivalents.

The Company maintains zero balance cash disbursement accounts with certain banks. Outstanding checks in excess of funds on deposit with respect to these

banks, referred to as cash overdrafts, are classified as accounts payable on the Consolidated Balance Sheets, and totaled $2.0 million at the end of fiscal 2011.

Cash overdrafts totaled $49.7 million at the end of fiscal 2010. Changes in these overdraft amounts are recorded as financing activities on the Consolidated

Statements of Cash Flows.

The Company's wholly-owned captive insurance subsidiary maintains balances in cash and cash equivalents that are used in connection with the Company's

retained workers' compensation, general liability and automobile liability risks and are not designated for general corporate purposes. These cash and cash

equivalents balances totaled $53.2 million as of the end of fiscal 2011 and $42.1 million as of the end of fiscal 2010.

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Investment securities

The Company classifies all investment securities as available-for-sale. Securities accounted for as available-for-sale are required to be reported at fair value

with unrealized gains and losses, net of taxes, excluded from net income and shown separately as a component of accumulated other comprehensive income

within shareholders' equity. The Company's short-term investment securities currently consist primarily of debt securities such as municipal bonds, and

variable-rate demand notes. The Company's long-term investment securities currently consist of auction rate securities. See Notes 2 and 3 for more

information on the Company's investment securities.

In addition to the cash and cash equivalents balances discussed above, the Company's wholly-owned captive insurance subsidiary also maintains balances in

investment securities that are not designated for general corporate purposes. These investment securities balances totaled $93.0 million as of the end of fiscal

2011 and $104.1 million as of the end of fiscal 2010.

Merchandise inventories

Inventories are valued using the retail method, based on retail prices less mark-on percentages, which approximates the lower of first-in, first-out (FIFO) cost

or market. The Company records adjustments to inventory through cost of goods sold when retail price reductions, or markdowns, are taken against on-hand

inventory. In addition, the Company makes estimates and judgments regarding, among other things, initial markups, markdowns, future demand for specific

product categories and market conditions, all of which can significantly impact inventory valuation. These estimates and judgments are based on the

application of a consistent methodology each period. The Company estimates inventory losses for damaged, lost or stolen inventory (inventory shrinkage) for

the period from the most recent physical inventory to the financial statement date. The accrual for estimated inventory shrinkage is based on the trailing

twelve-month actual inventory shrinkage rate and can fluctuate from period to period based on the timing of the physical inventory counts. Stores conduct a

physical inventory at least annually.

Property and equipment

Property and equipment is stated at cost. Depreciation for financial reporting purposes is calculated using the straight-line method over the estimated useful

lives of the related assets. For leasehold improvements, this depreciation is over the shorter of the term of the related lease (generally five or ten years) or the

asset's useful economic life.

Estimated useful lives are as follows:

Buildings and building improvements 10-40 years Furniture, fixtures and equipment 3-10 years Transportation equipment 3-10 years Leasehold improvements 5-10 years

The Company capitalizes certain costs incurred in connection with developing, obtaining and implementing software for internal use. Capitalized costs are

amortized over the expected economic life of the assets, generally ranging from three to eight years.

Property and equipment is reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be

recoverable. Historically, impairment losses on fixed assets, which typically relate to normal store closings, have not been material to the Company's financial

position or results of operations.

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Revenues

The Company recognizes revenue, net of returns and sales tax, at the time the customer tenders payment for and takes possession of the merchandise.

Cost of sales

Cost of sales includes the purchase cost of merchandise and transportation costs to the Company's distribution centers and stores. Buying, distribution center

and occupancy costs, including depreciation, are not included in cost of sales. As a result, cost of sales may not be comparable to those of other retailers that

may include these costs in their cost of sales.

Selling, general and administrative expenses

All operating costs, except transportation costs to the Company's distribution centers and stores, are included in selling, general, and administrative expenses

("SG&A"). Buying, distribution center and occupancy costs, including depreciation, are included in SG&A rather than cost of sales.

Insurance liabilities

The Company is primarily self-insured for health care, property loss, workers' compensation, general liability, and auto liability costs. These liabilities are

based on the total estimated costs of claims filed and estimates of claims incurred but not reported, less amounts paid against such claims, and are not

discounted.

Advertising costs

Advertising costs, net of co-op recoveries from vendors, are expensed during the period of the advertisement and amounted to $17.1 million, $12.4 million

and $9.8 million in fiscal 2011, fiscal 2010 and fiscal 2009, respectively.

Vendor allowances

Cash consideration received from a vendor is presumed to be a reduction of the purchase cost of merchandise and is reflected as a reduction of cost of sales,

unless it can be demonstrated that it offsets an incremental expense, in which case it is netted against that expense.

Store opening and closing costs

The Company charges pre-opening costs against operating results when incurred. For properties under operating lease agreements, the present value of any

remaining liability under the lease, net of expected sublease and lease termination recoveries, is expensed when the closing occurs.

Operating leases

Except for its corporate headquarters and distribution centers, the Company generally conducts its operations from leased facilities. Generally, store real estate

leases have an initial term of five or ten years with multiple renewal options for additional five-year periods. The Company also has leases for equipment

generally with lease terms of five years to ten years.

All of the Company's store leases are classified as operating leases. The Company recognizes rental expense for its store leases on a straight-line basis over

the base, non-cancelable lease term. For purposes of recognizing incentives, premiums and minimum rental expenses, the Company uses the date of initial

possession to begin

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amortization, which is generally when the Company enters the space and begins to make improvements in preparation for intended use. For tenant

improvement allowances and rent holidays, the Company records a deferred rent liability at the inception of the lease term and amortizes the deferred rent

over the terms of the leases as reductions to rent expense on the Consolidated Statements of Income. See the "Revisions" section below for information about

the revision of the classification of the deferred rent liability in fiscal 2011.

Certain leases provide for contingent rental payments based upon a percentage of store sales. The Company accrues for contingent rental expense as it

becomes probable that specified sales targets will be met.

Income taxes

The Company records deferred income tax assets and liabilities for the expected future tax consequences of temporary differences between the financial

reporting basis and the income tax basis of its assets and liabilities. The Company estimates contingent income tax liabilities based on an assessment of the

probability of the income-tax-related exposures and settlements related to uncertain tax positions. See Note 8 for more information on the Company's income

taxes.

Stock-based compensation

The Company recognizes compensation expense related to its stock-based awards based on the fair value of the awards on the grant date. The Company

utilizes the Black-Scholes option-pricing model to estimate the grant-date fair value of its stock option awards. The grant-date fair value of the Company's

performance share rights awards is based on the stock price on the grant date. Compensation expense for the Company's stock-based awards is recognized on

a straight-line basis, net of estimated forfeitures, over the service period of each award. See Note 11 for more information on the Company's stock-based

compensation plans.

Revisions

Certain prior period amounts have been revised to conform to current classifications. The deferred rent liability of $38.3 million as of August 28, 2010,

previously classified as a current liability within Accrued Liabilities on the Consolidated Balance Sheets, has been moved to Other Liabilities (non-current).

The portion of deferred income taxes related to deferred rent has also been revised and is now classified as non-current in the Consolidated Balance

Sheets. These changes were not material and had no impact on the consolidated statements of earnings, shareholders' equity or cash flows for any of the

periods presented.

New accounting pronouncements

In April 2011, the Financial Accounting Standards Board ("FASB") issued Accounting Standard Update ("ASU") 2011-04 "Fair Value Measurement:

Amendments to Achieve Common Fair Value Measurement and Disclosure Requirements in U.S. GAAP and IFRSs" ("ASU 2011-04"). ASU 2011-04

amends current fair value measurement and disclosure guidance to include increased transparency around valuation inputs and investment categorization. The

new guidance is effective for fiscal year and interim periods beginning after December 15, 2011. The Company will adopt this guidance in the third quarter of

fiscal 2012. The adoption of ASU 2011-04 is not expected to have a material impact on the Company's Consolidated Financial Statements.

In June 2011, FASB issued ASU 2011-05 "Presentation of Comprehensive Income" ("ASU 2011-05"). ASU 2011-05 allows an entity to present components

of net income and other comprehensive income in one continuous statement, referred to as the statement of comprehensive income, or in two separate, but

consecutive statements. The new guidance eliminates the current option to report other comprehensive income and its components in the statement of changes

in equity. While ASU 2011-05 changes the presentation of comprehensive income, there are no changes to the components that are recognized in net income

or other

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comprehensive income under current accounting guidance. The new guidance is effective for fiscal year and interim periods beginning after December 15,

2011. The Company will adopt this guidance in the third quarter of fiscal 2012. The adoption of ASU 2011-05 is not expected to have a material impact on

the Company's Consolidated Financial Statements.

2. Fair Value Measurements:

Fair value accounting standards define fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction

between market participants at the measurement date. The following fair value hierarchy prioritizes the inputs used to measure fair value into three levels,

with Level 1 being of the highest priority.

• Level 1—Quoted prices in active markets for identical assets or liabilities.

• Level 2—Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly, such as quoted prices for similar assets or liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets that are not active, inputs other than quoted prices that are observable for the asset or liability, or inputs that are derived principally from or corroborated by observable market data by correlation or other means.

• Level 3—Inputs that are unobservable for the asset or liability.

The unobservable inputs in Level 3 can only be used to measure fair value to the extent that observable inputs in Level 1 and Level 2 are not available. The

following table represents the Company's fair value hierarchy as of August 27, 2011, and August 28, 2010, for items that are required to be measured at fair

value on a recurring basis:

2011 m. rugpjūčio 27 d.

(tūkst) Tikroji vertė I lygis II Lygis III lygis

Pinigų ekvivalentai: Pinigų rinkos fondai

Investiciniai vertybiniai popieriai: $ 77,842 $ 77,842 $ — $ —

Auction rate securities 107,608 — 150 107,458 Variable rate demand notes 42,299 42,299 — — Municipal debt securities 51,398 — 51,398 — Įmonių obligacijos 950 — 950 — Equity securities

Kitas turtas: 1,209 1,209 — —

Investiciniai fondai(1)

15,580 15,580 — —

2010 m. rugpjūčio 28 d.

(tūkstančiais) Tikroji vertė I lygis II Lygis III lygis

Pinigų ekvivalentai: Money market funds $ 287,003 $ 287,003 $ — $ —

Investment securities: Auction rate securities 154,158 — 7,050 147,108 Variable rate demand notes 27,490 27,490 — — Municipal debt securities 44,224 — 44,224 — Corporate debt securities 14,575 11,996 2,579 — JAV vyriausybės agentūros skolos vp 25,017 25,017 — — Equity securities 1,969 1,969 — —

Kitas turtas: Mutual funds

(1) 11,402 11,402 — —

(1) Turtas, laikomas pagal atidėto atlyginimo planą kai kuriems pagrindiniams vadovaujantiems darbuotojams.

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During fiscal 2011, the Company re-evaluated its fair value hierarchy, specifically as it relates to a portion of its municipal and corporate debt securities.

Although the Company believes these investments trade in active markets and prices could be obtained for identical assets, the Company believed that the

classification of these investments as Level 2 was more appropriate because these investments are valued by a third-party pricing service where matrix pricing

is used. Additionally, the classification of Level 2 versus Level 1 does not indicate a change in fair value or deterioration in the market where these

investments are traded; it is a classification change based only on how the fair values were derived for these assets. As a result, the Company has revised the

classification of these investments where matrix pricing is used to Level 2 for all periods presented.

On a non-recurring basis, the Company adjusts certain property and equipment to fair value through impairment charges. Property and equipment is reviewed

for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. The fair value of the

property and equipment is determined based on a discounted cash flow analysis using Level 3 inputs. The Company estimates future cash flows based on

historical experience and its expectations of future cash flows. Impairment charges were not material during fiscal 2011.

Auction Rate Securities

The Company's investment securities include student loan auction rate securities that were measured at fair value using either Level 2 or Level 3 inputs. The

auction rate securities are tax-exempt bonds that are collateralized by federally guaranteed student loans. While the underlying securities generally have long-

term nominal maturities that exceed one year, the interest rates reset periodically in scheduled auctions (generally every 7-35 days). The Company generally

has the opportunity to sell its investments during such periodic auctions subject to the availability of buyers.

Beginning in the second quarter of fiscal 2008, issues in the global credit and capital markets led to failed auctions with respect to substantially all of the

Company's auction rate securities. A failed auction typically occurs when the number of securities submitted for sale in the auction exceeds the number of

purchase bids. As of August 27, 2011, substantially all of the Company's $116.9 million par value investments were subject to failed auctions. As a result of

the failed auctions, the interest rates on the investments reset to the established rates per the applicable investment offering statements. The Company will not

be able to liquidate the investments until a successful auction occurs, a buyer is found outside the auction process, the securities are called or refinanced by the

issuer, the securities are repurchased by the broker dealers, or the securities mature.

The Company does not currently expect to liquidate any auction rate securities going forward through the normal auction process. However, the Company

does expect to be able to liquidate substantially all of its remaining auction rate securities at par through issuer calls or refinancings or upon maturity. During

fiscal 2011, the Company liquidated $48.7 million of auction rate securities at par as a result of issuer calls. Substantially all of the Company's remaining

auction rate securities were classified as long-term assets due to the continued failure of the auction process and the continued uncertainty regarding the

timing of future liquidity, and were measured at fair value using Level 3 inputs, as discussed below.

Due to the liquidity issues noted above, the Company had a temporary gross unrealized loss of $9.3 million ($5.8 million, net of taxes) with respect to these

investments as of August 27, 2011. Changes in the unrealized loss are included in Accumulated Other Comprehensive Loss within Shareholders' Equity on

the Consolidated Balance Sheets. Because there is no active market for the Company's auction rate securities, the fair value of each security was determined

through the use of a discounted cash flow analysis using Level 3 inputs. The terms used in the analysis were based on management's estimate of the timing of

future liquidity, which assumes that the securities will be called or refinanced by the issuer or repurchased by the broker dealers prior to maturity. The

discount rates used in the analysis were based on market rates for similar liquid tax-exempt securities with comparable ratings and maturities. Due to the

uncertainty surrounding the timing of future liquidity, the discount rates were adjusted further to reflect the illiquidity of the investments. The Company's

valuation is sensitive to

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market conditions and management's judgment and can change significantly based on the assumptions used. A 100 basis point increase or decrease in the

discount rate along with a 12-month increase or decrease in the term could result in a gross unrealized loss ranging from $3.9 million to $17.0 million.

The Company evaluated each of its auction rate securities for other-than-temporary impairment. The Company determined that there was no other-than-

temporary impairment as of August 27, 2011. The Company's evaluation was based on an analysis of the credit rating and parity ratio of each security. The

parity ratio is the ratio of trust assets available for distribution to creditors to the trust obligations to those creditors. The credit quality of the Company's

auction rate securities portfolio remains high (95% AAA rated and 5% A rated) and the securities had a weighted average parity ratio of 109.5% as of

August 27, 2011.

The following table summarizes the change in the fair value of the Company's auction rate securities measured using Level 3 inputs during fiscal 2011 and

fiscal 2010:

(tūkst.) Fiscal 2011 Fiscal 2010

Beginning Balance $ 147,108 $ 163,545 Net unrealized gains included in other comprehensive income 2,125 3,813 Sales (41,625) (13,200) Transfers out of Level 3 (150) (7,050)

Ending Balance $ 107,458 $ 147,108

The transfers out of Level 3 during fiscal 2011 and fiscal 2010 resulted from issuer call notices (at par). The Company treated the call notices as quoted prices

in an inactive market (Level 2 inputs).

Additional Fair Value Disclosures

The estimated fair value of the Company's current and long-term debt was $566.0 million as of August 27, 2011, and $277.8 million as of August 28, 2010.

The significant increase in the fair value is primarily due to the issuance of $300 million par value of senior unsecured notes on January 28, 2011, as discussed

in Note 5 below. The fair value for these new notes is determined using Level 1 inputs as quoted prices in active markets for identical assets or liabilities are

available. Because a portion of the Company's debt was a private placement and there are no quoted prices in active markets, the fair value of that portion was

determined through the use of a discounted cash flow analysis using Level 3 inputs. The discount rate used in the analysis was based on borrowing rates

available to the Company for debt of the same remaining maturities, issued in the same private placement debt market. The fair value of the Company's

current and long-term debt was greater than the carrying value of the debt by $16.0 million as of August 27, 2011, and $27.8 million as of August 28, 2010.

See Note 5 for more information on the Company's long-term debt.

3. Investment Securities:

All of the Company's investment securities are currently classified as available-for-sale due to the fact that the Company does not intend to hold the securities

to maturity and does not purchase the securities for the purpose of selling them to make a profit on short-term differences in price. Available-for-sale

securities are carried at estimated fair value, with unrealized gains and losses, if any, reported as a component of Shareholders' Equity.

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The Company's investments consisted of the following available-for-sale securities at the end of fiscal 2011 and fiscal 2010 (in thousands):


Gross

Unrealized

Holding

Gains

Gross

Unrealized

Holding

Losses Fair Value


$ 107,608 Variable rate demand notes 42,299 — — 42,299 Municipal debt securities 51,125 273 — 51,398 Corporate debt securities 941 9 — 950 Equity securities 1,979 — 770 1,209



Gross

Unrealized

Holding

Gains

Gross

Unrealized

Holding

Losses Fair Value


$ 154,158 Variable rate demand notes 27,500 — 10 27,490 Municipal debt securities 44,072 152 — 44,224 Corporate debt securities 14,551 24 — 14,575 US government agency debt securities 25,017 — — 25,017 Equity securities 1,979 — 10 1,969


As noted in Note 2 above, substantially all of the Company's auction rate securities are not currently liquid and have contractual maturities ranging from 15

years to 46 years. The Company's other debt securities include municipal bonds, variable-rate demand notes, agency bonds, discount notes, and commercial

paper, and have weighted average maturities of less than one year. While the variable rate demand notes have underlying contractual maturities beyond one

year, the securities are traded in the short-term as a result of 7-day put options.

Proceeds from sales of investment securities available-for-sale during fiscal 2011 were $415.9 million compared to $46.9 million in fiscal 2010 and $44.9

million in fiscal 2009. No material gains or losses were realized on those sales for fiscal 2011, fiscal 2010 and fiscal 2009.

The Company also holds investments in mutual funds in connection with a deferred compensation plan for certain key management employees. These

investments are classified as trading securities and are included, at fair value, in other assets on the Consolidated Balance Sheet. The Company records an

offsetting deferred compensation liability in Other Liabilities. The fair value of the deferred compensation plan assets was $15.6 million as of the end of fiscal

2011 and $11.4 million as of the end of fiscal 2010. See Note 9 below for more information on the deferred compensation plan.

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4. Property and Equipment:

Property and equipment is recorded at cost and consisted of the following at the end of fiscal 2011 and fiscal 2010:


Buildings and building improvements $ 572,039 $ 537,647 Furniture, fixtures and equipment 1,460,116 1,291,282 Transportation equipment 87,274 80,161 Leasehold improvements 398,803 357,768 Construction in progress 61,152 19,831

2,579,384 2,286,689 Less: accumulated depreciation and amortization 1,391,806 1,250,881

1,187,578 1,035,808 Land 93,011 76,158

$ 1,280,589 $ 1,111,966

Depreciation expense was $179.5 million, $171.2 million and $159.8 million for fiscal 2011, fiscal 2010 and fiscal 2009, respectively.

5. Current and Long-Term Debt:

Current and long-term debt consisted of the following at the end of fiscal 2011 and fiscal 2010:


5.24% Notes due September 27, 2015 $ 81,000 $ 81,000 5.41% Notes due September 27, 2015 169,000 169,000 5.00% Notes due February 1, 2021 298,570 —

548,570 250,000 Less: current portion 16,200 —

Long-term portion $ 532,370 $ 250,000

On January 28, 2011, the Company issued $300 million of 5.00% unsecured senior notes due February 1, 2021 (the "2021 Notes"), through a public offering.

The Company's proceeds were approximately $298.5 million, net of an issuance discount of $1.5 million. In addition, the Company incurred issuance costs of

approximately $3.3 million. Both the discount and issuance costs are being amortized to interest expense over the term of the 2021 Notes. Interest on the 2021

Notes is payable semi-annually in arrears on the 1st

day of February and August of each year, commencing on August 1, 2011. The 2021 Notes rank pari

passu in right of payment with the Company's other unsecured senior indebtedness and will be senior in right of payment to any subordinated indebtedness.

The Company may redeem the 2021 Notes in whole at any time or in part from time to time, at the option of the Company, subject to a make-whole premium.

In addition, upon the occurrence of certain change of control triggering events, the Company may be required to repurchase the 2021 Notes, at a price equal to

101% of their principal amount, plus accrued and unpaid interest to the date of repurchase.

On September 27, 2005, the Company obtained $250 million through a private placement of unsecured senior notes due September 27, 2015 (the "2015

Notes"), to a group of institutional accredited investors. The 2015 Notes were issued in two tranches at par and rank pari passu in right of payment with the

Company's other unsecured senior indebtedness. The first tranche has an aggregate principal amount of $169 million, is payable in a single installment on

September 27, 2015, and bears interest at a rate of 5.41% per annum from the date of issuance. The second tranche has an aggregate principal amount of $81

million, matures on September 27, 2015, with amortization commencing on September 27, 2011, and bears interest at a rate of 5.24% per annum from the

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(in thousands) August 27, 2011 August 28, 2010 Compensation $ 106,047 $ 110,932 Taxes other than income taxes 95,973 88,672 Self-insurance liabilities 56,964 64,004

(in thousands) August 27, 2011 August 28, 2010 Self-insurance liabilities $ 193,169 $ 185,676

date of issuance. The second tranche has a required principal payment of $16.2 million on September 27, 2011, and on each September 27 thereafter to and

including September 27, 2015. Interest on the 2015 Notes is payable semi-annually in arrears on the 27th

day of March and September of each year. The 2015

Notes contain certain restrictive financial covenants, which include a consolidated debt to consolidated total capitalization ratio, a fixed charge coverage ratio,

and a priority debt to consolidated net worth ratio. As of August 27, 2011, the Company was in compliance with all such covenants.

On November 17, 2010, the Company amended the 2015 Notes to remove the subsidiary co-borrower and all subsidiary guarantors.

Credit Facilities

On November 17, 2010, the Company entered into a new four-year unsecured revolving credit facility with a syndicate of lenders for borrowings of up to

$400 million. The credit facility matures on November 17, 2014, and provides for two, one-year extensions that require lender consent. Any borrowings under

the credit facility accrue interest at a variable rate based on short-term market interest rates. The credit facility replaced the previous 364-day $250 million

unsecured revolving credit facility.

On August 17, 2011, the Company entered into a new five-year unsecured revolving credit facility with a syndicate of lenders for borrowings of up to $300

million. The credit facility matures on August 17, 2016, and provides for two, one-year extensions that require lender consent. Any borrowings under the

credit facility accrue interest at a variable rate based on short-term market interest rates. The credit facility replaced the Company's previous five-year $200

million unsecured credit facility.

During fiscal 2011, the Company borrowed $46.0 million under the credit facilities at a weighted-average interest rate of 1.3%. As of August 27, 2011, and

August 28, 2010, the Company had no outstanding borrowings under the credit facilities. The credit facilities contain certain restrictive financial covenants,

which include a consolidated debt to consolidated total capitalization ratio, a fixed charge coverage ratio, and a priority debt to consolidated net worth ratio.

As of August 27, 2011, the Company was in compliance with all such covenants.

6. Accrued Liabilities:

Accrued liabilities consisted of the following at the end of fiscal 2011 and fiscal 2010:

Other

(1) 51,834 45,739

$ 310,818 $ 309,347

(1) Other accrued liabilities consist primarily of store utility accruals, certain store rental accruals, litigation accruals, and accrued interest.

7. Other Liabilities:

Other liabilities consisted of the following at the end of fiscal 2011 and fiscal 2010:

Other

(1) 77,297 67,900

$ 270,466 $ 253,576

(1) Other liabilities consist primarily of deferred rent, income taxes and deferred compensation.

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State 25,974 23,272 17,633 Other 41 — —

181,908 197,600 155,233

Deferred: Federal 44,964 8,621 4,971 State 1,832 (498) (545) Other 9 — —

46,805 8,123 4,426

8. Income Taxes:

The provisions for income taxes in fiscal 2011, fiscal 2010 and fiscal 2009 were as follows:


Current:

Federal $ 155,893 $ 174,328 $ 137,600

Total $ 228,713 $ 205,723 $ 159,659

The following table summarizes the components of income tax expense in fiscal 2011, fiscal 2010 and fiscal 2009:

Fiscal 2011 Fiscal 2010 Fiscal 2009

(in thousands)

Income tax

expense

% of pre-tax

income

Income tax

expense

% of pre-tax

income

Income tax

expense

% of pre-tax

income

Computed federal income tax $ 216,005 35.0% $ 197,351 35.0% $ 157,823 35.0% State income taxes, net of federal income tax benefit 17,149 2.8 15,885 2.8 11,599 2.6

Valuation allowance 1,566 0.3 (1,286) (0.2) (653) (0.2) Other (6,007) (1.0) (6,227) (1.1) (9,110) (2.0)

Actual income tax expense $ 228,713 37.1% $ 205,723 36.5% $ 159,659 35.4%

The tax effects of temporary differences that give rise to significant portions of the deferred tax assets and deferred tax liabilities as of the end of fiscal 2011

and the end of fiscal 2010, were as follows:


Deferred income tax liabilities: Excess of book over tax basis of property and equipment $ 124,243 $ 73,341

Deferred income tax assets: Excess of tax over book basis of inventories

Nondeductible accruals for: $ 17,372 $ 10,403

Insurance 19,078 20,057 Compensation 29,463 32,426 Deferred rent 14,708 13,913 Litigation charge 151 508

Other 18,241 12,410

Gross deferred income tax assets 99,013 89,717

Less: valuation allowance (3,999) (2,433)

Net deferred tax assets $ 95,014 $ 87,284

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The Company had state net operating loss carryforwards of $112.4 million as of August 27, 2011, and $95.6 million as of August 28, 2010, in various states.

These carryforwards expire at different intervals up to fiscal year 2031. Management considers all available evidence in determining the likelihood that a

deferred tax asset will not be realized. As a result, the Company increased the valuation allowances related to these state loss carryforwards.

The Company classifies accrued interest expense and penalties related to uncertain tax positions as a component of income tax expense. During fiscal 2011

interest and penalties increased income tax expense by $1.0 million and for fiscal 2010 and fiscal 2009 interest and penalties reduced income tax expense by

$1.5 million and $0.2 million, respectively. The increase is related to uncertain tax positions booked during the fiscal year as compared to prior years that

were decreased due to settlements of uncertain tax positions.

As of August 27, 2011, the Company had a liability related to uncertain tax positions of $26.3 million, including a gross unrecognized tax benefit of $20.2

million and accrued interest and penalties of $6.1 million. The related non-current deferred tax asset balance was $9.3 million as of August 27, 2011. If the

Company were to prevail on all unrecognized tax benefits recorded, approximately $17.0 million of the gross unrecognized tax benefits, including penalties

and tax effected interest of $6.1 million, would result in income tax benefits in the income statement of a future period. A reconciliation of the beginning and

ending amount of total unrecognized tax benefits is as follows:

(in thousands)

Unrecognized Tax

Benefit

Interest and

Penalties Total

Balance at August 30, 2008 $ 31,515 $ 7,667 $ 39,182 Increases related to prior year tax positions 3,033 2,076 5,109 Decreases related to prior year tax positions (4,867) (202) (5,069) Increases related to current year tax positions 12,037 285 12,322 Settlements during the period (3,097) (863) (3,960) Lapse of statute of limitations (5,376) (2,841) (8,217)

Balance at August 29, 2009 $ 33,245 $ 6,122 $ 39,367 Increases related to prior year tax positions 849 2,004 2,853 Decreases related to prior year tax positions (327) (21) (348) Increases related to current year tax positions 2,260 411 2,671 Settlements during the period (16,907) (3,066) (19,973) Lapse of statute of limitations (785) (354) (1,139)

Balance at August 28, 2010 $ 18,335 $ 5,096 $ 23,431 Increases related to prior year tax positions 6,305 1,799 8,104 Decreases related to prior year tax positions (4,472) — (4,472) Increases related to current year tax positions 3,190 530 3,720 Settlements during the period (1,542) (553) (2,095) Lapse of statute of limitations (1,622) (795) (2,417)

Balance at August 27, 2011 $ 20,194 $ 6,077 $ 26,271

On a quarterly and annual basis, the Company accrues for the effects of open uncertain tax positions and the related interest and penalties. The Company is

subject to U.S. federal income tax as well as income tax in multiple state and local jurisdictions. As of August 27, 2011, the Company was subject to income

tax examinations for its U.S. federal income taxes for fiscal years ending subsequent to 2007. With few exceptions, the Company is subject to state and local

income tax examinations for fiscal years ending subsequent to 2007.

The amount of future unrecognized tax positions may be reduced because the statute of limitations has expired or the tax position is resolved with the taxing

authority. It is reasonably possible that during the next 12 months the unrecognized tax benefit may be reduced by a range of zero to $4.9 million due to

settlements of audits by taxing authorities. Such unrecognized tax benefits relate primarily to state tax issues.

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9. Employee Benefit Plans:

Incentive compensation plan

The Company has an incentive profit-sharing plan which allows for payments to certain employees and officers at an aggregate annual amount not to exceed

7% of the Company's consolidated income before income taxes and certain incentive compensation. Expenses under the profit-sharing plan were $17.8

million in fiscal 2011, $28.8 million in fiscal 2010 and $34.3 million in fiscal 2009.

Compensation deferral plans

The Company has a voluntary compensation deferral plan, under Section 401(k) of the Internal Revenue Code, available to eligible employees. At the

discretion of the Board of Directors, the Company makes contributions to the plan which are allocated to participants, and in which they become vested, in

accordance with formulas and schedules defined by the plan. Company expenses for contributions to the plan were $4.0 million in fiscal 2011, $4.2 million in

fiscal 2010 and $3.2 million in fiscal 2009, and are included in SG&A on the Consolidated Statements of Income.

The Company has a deferred compensation plan to provide certain key management employees the ability to defer a portion of their base compensation and

bonuses. The plan is an unfunded nonqualified plan. The deferred amounts and earnings thereon are payable to participants, or designated beneficiaries, at

either specified future dates, or upon separation from service or death. The Company does not make contributions to this plan or guarantee earnings.

10. Commitments and Contingencies:

Operating leases and other contractual obligations

The majority of the rental expense incurred by the Company relates to its stores and the majority of its stores are leased under agreements that generally have

an initial term of five or ten years and provide for fixed rentals. Additionally, most of the Company's leases require additional payments based upon a

percentage of sales, property taxes, insurance premiums, or common area maintenance charges. Rental expenses on all operating leases, both cancelable and

non-cancelable, for fiscal 2011, fiscal 2010 and fiscal 2009 were as follows:


Minimum rentals, net of minor sublease rentals $ 429,942 $ 399,319 $ 382,530 Contingent rentals 7,862 7,590 5,444

$ 437,804 $ 406,909 $ 387,974

Aggregate minimum annual rentals under operating leases as of August 27, 2011 are as follows:

(in thousands)

Minimum

Rentals

Fiscal 2012 $ 364,228 Fiscal 2013 323,424 Fiscal 2014 273,778 Fiscal 2015 220,029 Fiscal 2016 164,854 Thereafter 80,446

Total minimum rentals $ 1,426,759

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Additionally, the Company has outstanding standby letters of credit (which are primarily renewed on an annual basis), of which the majority are used as

surety for future premium and deductible payments to the Company's workers' compensation and general liability insurance carrier. The following table

shows the Company's other commercial commitments as of August 27, 2011:

(in thousands)

Total Amounts

Committed

Standby letters of credit $ 137,982 Surety bonds 9,445

Total $ 147,427

Litigation

Since 2004, certain individuals who held the position of Store Manager for the Company have filed lawsuits alleging that the Company violated the Fair

Labor Standards Act ("FLSA"), and/or similar state laws, by classifying them as "exempt" employees who are not entitled to overtime compensation. The

majority of the complaints in each action also request that the cases proceed as collective actions under the FLSA or as class actions under state laws and

request recovery of overtime pay, liquidated damages, and attorneys' fees and court costs. The Company currently has 22 such cases pending against it.

Grace v. Family Dollar Stores, Inc. and Ward v. Family Dollar Stores, Inc. are both pending in the U.S. District Court for the Western District of North

Carolina, Charlotte Division (the "N.C. Federal Court"). In those cases, the N.C. Federal Court has returned orders finding that the plaintiffs were not

similarly situated and, therefore, that neither nationwide notice nor collective treatment under the FLSA is appropriate. Hence, the Grace and Ward cases are

proceeding as 43 individual plaintiff cases.

On July 9, 2009, the N.C. Federal Court granted summary judgment against Irene Grace on the merits of her misclassification claim under the FLSA. The

Company has filed summary judgment motions related to each of the remaining 42 plaintiffs in the Grace and Ward cases. The plaintiffs appealed certain

rulings of the N.C. Federal Court to the United States Court of Appeals for the Fourth Circuit including the court's summary judgment order against Irene

Grace. On March 22, 2011, the Fourth Circuit affirmed the district court's decision finding that Ms. Grace was exempt from overtime compensation under the

FLSA. The Fourth Circuit did not address the class certification issue in the Grace and Ward cases since Ms. Grace's lawsuit would be dismissed on the

merits.

Including Grace and Ward, a total of 16 class and/or collective or single plaintiff misclassification cases are now pending before the N.C. Federal Court since

Hamilton v. Family Dollar Stores of Florida, Inc., Friedman v. Family Dollar Stores, Inc., et al. were dismissed on July 26, 2011, and September 23, 2011,

respectively. Additionally, in Itterly v. Family Dollar Stores, Inc., the N.C. Federal Court has dismissed the named plaintiff's and opt-ins' collective action and

individual claims under the FLSA. The state law class and individual claims under the Pennsylvania Minimum Wage Act remain in the Itterly litigation. The

named plaintiff and opt-in intervenors are seeking to have the case transferred back to the district court in Pennsylvania. The Company has opposed the

transfer.

On July 29, 2011, and August 11, 2011, the N.C. Federal Court granted summary judgment against Tanya Lakitska Warren and Catherine M. Dawson,

respectively, on the merits of their misclassification claims under the FLSA. Additionally, on September 26, 2011, the N.C. Federal Court granted two

additional summary judgments against John Gersch and Jodi Hare on the merits of their misclassification claims. Then, on October 14, 2011, the N.C. Federal

Court granted two more summary judgments against Brenda Bilbrey and Sally Villanueva. Warren, Dawson, Gersch, Hare and Bilbrey are all intervenors in

the Grace litigation. Villanueva is an intervenor in the Ward litigation. Warren and Dawson have filed Notices of Appeal with the United States Court of

Appeals for the Fourth Circuit. These appeals have been consolidated and Warren and Dawson are scheduled to file their appellant brief in October 2011.

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Presently, there are a total of 39 named plaintiffs and intervenors in the Grace and Ward cases, and 65 named plaintiffs and/or opt-ins in the remaining cases,

for which the N.C. Federal Court has not decided the class certification issue.

The Company has been sued in six additional class action lawsuits alleging that Store Managers should be non-exempt employees under various state laws.

The plaintiffs in these cases seek recovery of overtime pay, liquidated damages, and attorneys' fees and court costs. Twila Walters et. al. v. Family Dollar

Stores of Missouri, Inc., alleging violations of the Missouri Minimum Wage Law, was originally filed on January 26, 2010, and is pending in the Circuit Court

of Jackson County, Missouri (the "Circuit Court"). On May 10, 2011, the Circuit Court certified the class under the Missouri Minimum Wage Law and

common law. On May 20, 2011, the Company petitioned the Appellate Court for an interlocutory appeal of the Circuit Court's decision certifying the class.

The Appellate Court denied that petition on June 10, 2011. The Company filed a writ of prohibition with the Missouri Supreme Court on July 1, 2011. On

October 4, 2011, the Missouri Supreme Court denied the Company's writ of prohibition and vacated the stay of the litigation. Hegab v. Family Dollar Stores,

Inc., was filed in the United States District Court for the District of New Jersey on March 3, 2011. Plaintiff seeks recovery for himself and allegedly similarly

situated Store Managers under New Jersey law. The Company has sought a stay of the Hegab proceedings, which was denied. The parties are now engaged in

class discovery in this matter. Barker v. Family Dollar, Inc., alleging violations of the Kentucky Wages and Hours Law, was filed in Circuit Court in Jefferson

County, Kentucky on February 17, 2010, and removed to the United States District Court for the Western District of Kentucky. On March 11, 2011, the

district court denied the Company's partial motion to dismiss the overtime claim under Kentucky law and requested more discovery on that claim. The parties

will be conducting pre-certification discovery through December 2011. Youngblood, et al. v. Family Dollar Stores, Inc., Family Dollar, Inc., Family Dollar

Stores of New York, Inc. et al., was filed in the United States District Court for the Southern District of New York on April 2, 2009. Rancharan v. Family

Dollar Stores, Inc., was filed in the Supreme Court of the State of New York, Queens County on March 4, 2009, was removed to the United States District

Court for the Eastern District of New York on May 6, 2009, and was subsequently transferred to the Southern District of New York and has been consolidated

with Youngblood. On October 4, 2011, the New York District Court certified the class in the Rancharan and Youngblood cases under Rule 23. Cook, et al. v.

Family Dollar Stores of Connecticut, Inc., was filed in the Superior Court State of Connecticut on October 5, 2011, seeking unpaid overtime for a class of

current and former Connecticut Store Managers for alleged violations of the Connecticut Minimum Wage Act.

In general, the Company continues to believe that its Store Managers are "exempt" employees under the FLSA and have been and are being properly

compensated under both federal and state laws. The Company further believes that these actions are not appropriate for collective or class action treatment.

The Company intends to vigorously defend the claims in these actions. While the N.C. Federal Court has previously found that the Grace and Ward actions

are not appropriate for collective action treatment, at this time it is not possible to predict whether one or more of the remaining cases may be permitted to

proceed collectively on a nationwide or other basis. No assurances can be given that the Company will be successful in the defense of these actions, on the

merits or otherwise. The Company cannot reasonably estimate the possible loss or range of loss that may result from these actions.

If at some point in the future the Company determines that a reclassification of some or all of its Store Managers as non-exempt employees under the FLSA is

required, such action could have a material effect on the Company's financial position, liquidity or results of operation. At this time, the Company cannot

quantify the impact of such a determination.

On October 14, 2008, a complaint was filed in the U.S. District Court in Birmingham, Alabama, captioned Scott, et al. v. Family Dollar Stores, Inc., alleging

discriminatory pay practices with respect to the Company's female Store Managers. This case was pled as a putative class action or collective action under

applicable statutes on behalf of all Family Dollar female Store Managers. The plaintiffs seek recovery of compensatory and punitive money damages,

recovery of attorneys' fees and equitable relief. The case has been transferred to the N.C. Federal Court. Presently, there are 48 named plaintiffs in the Scott

case, with no additional opt-ins. In response to

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the recent United States Supreme Court decision of Dukes v. Walmart, on September 19, 2011, the Company filed a motion to dismiss seeking to strike the

plaintiffs' class claims. The plaintiffs' response to this motion is due in October, 2011.

At this time, it is not possible to predict whether the N.C. Federal Court ultimately will permit the Scott action to proceed collectively under the Equal Pay Act

or as a class under Title VII of the Civil Rights Act. Although the Company intends to vigorously defend the action, no assurances can be given that the

Company will be successful in the defense on the merits or otherwise. Similarly, at this time the Company cannot estimate either the size of any potential

class or the value of the claims raised in this action. For these reasons, the Company is unable to estimate any potential loss or range of loss. The Company

has tendered the matter to its Employment Practices Liability Insurance ("EPLI") carrier for coverage under its EPLI policy. At this time, the Company

expects that the EPLI carrier will participate in any resolution of some or all of the plaintiffs' claims.

On March 16, 2011, Ronald Rothenberg v. Howard Levine, et al,. a purported class action complaint relating to the rejection of a proposal by Trian Group to

acquire the Company and the adoption of a stockholders' rights plan was filed in North Carolina State Court, Mecklenburg County, and later removed to the

North Carolina Business Court, the case was filed against the Company's Board of Directors by Ronald Rothenberg, individually and on behalf of all of the

Company's stockholders other than defendants and their affiliates. The plaintiffs alleged, among other allegations, that the Company's directors breached their

fiduciary duties by not agreeing to sell the Company and by adopting a stockholders' rights plan. The complaint sought various forms of relief, including

damages and an order that the Board of Directors enter into negotiations to sell the Company to Trian Group and redeem or rescind the stockholders' rights

plan. This lawsuit was voluntarily dismissed without prejudice on July 19, 2011.

The Company is involved in numerous other legal proceedings and claims incidental to its business, including litigation related to alleged failures to comply

with various state and federal employment laws, some of which are or may be pled as class or collective actions, and litigation related to alleged personal or

property damage, as to which the Company carries insurance coverage and/or has established accrued liabilities as set forth in the Company's financial

statements. While the ultimate outcome cannot be determined, the Company currently believes that these proceedings and claims, both individually and in the

aggregate, should not have a material effect on the Company's financial position, liquidity or results of operations. However, the outcome of any litigation is

inherently uncertain and, if decided adversely to the Company, or, if the Company determines that settlement of such actions is appropriate, the Company may

be subject to liability that could have a material effect on the Company's financial position, liquidity or results of operations.

11. Stock-Based Compensation:

The Family Dollar Stores, Inc. 2006 Incentive Plan (the "2006 Plan") permits the granting of a variety of compensatory award types. The Company currently

grants non-qualified stock options and performance share rights under the 2006 Plan. Shares issued related to stock options and performance share rights

represent new issuances of common stock. A total of 12.0 million common shares are reserved and available for issuance under the 2006 Plan, plus any shares

awarded under the Company's previous plan (1989 Non-Qualified Stock Option Plan) that expired or were canceled or forfeited after the adoption of the 2006

Plan. As of August 27, 2011, there were 10.0 million shares remaining available for grant under the 2006 Plan. The Company also issues shares under the

2006 Plan in connection with director compensation. These shares are currently issued out of treasury stock and are not material.

The Company's results for fiscal 2011, fiscal 2010 and fiscal 2009 include stock-based compensation expense of $14.7 million, $15.7 million and $13.3

million, respectively. These amounts are included within SG&A on the Consolidated Statements of Income. Tax benefits recognized in fiscal 2011, fiscal

2010 and fiscal 2009 for stock-based compensation totaled $5.4 million, $5.8 million and $4.9 million, respectively.

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Stock Options

The Company grants stock options to key employees at prices not less than the fair market value of the Company's common stock on the grant date. The

Company's practice for a number of years has been to make a single annual grant to all employees participating in the stock option program and generally to

make other grants only in connection with employment or promotions. Options expire five years from the grant date and are exercisable to the extent of 40%

after the second anniversary of the grant and an additional 30% at each of the following two anniversary dates on a cumulative basis. Compensation cost is

recognized on a straight-line basis, net of estimated forfeitures, over the requisite service period. The Company uses the Black-Scholes option-pricing model

to estimate the grant-date fair value of each option. The fair values of options granted were estimated using the following weighted-average assumptions:

Years Ended

August 27, 2011 August 28, 2010 August 29, 2009

Expected dividend yield 1.56% 2.27% 2.51% Expected stock price volatility 33.8% 35.20% 34.00% Weighted average risk-free interest rate 1.01% 2.07% 2.23% Expected life of options (years) 4.42 4.50 4.43

The expected dividend yield is based on the projected annual dividend payment per share divided by the stock price on the grant date. Expected stock price

volatility is derived from an analysis of the historical and implied volatility of the Company's publicly traded stock. The risk-free interest rate is based on the

U.S. Treasury rates on the grant date with maturity dates approximating the expected life of the option on the grant date. The expected life of the options is

based on an analysis of historical and expected future exercise behavior, as well as certain demographic characteristics. These assumptions are evaluated and

revised for future grants, as necessary, to reflect market conditions and experience. There were no significant changes made to the methodology used to

determine the assumptions during fiscal 2011. The weighted-average grant-date fair value of stock options granted was $11.60 during fiscal 2011, $7.33

during fiscal 2010 and $5.78 during fiscal 2009.

The following table summarizes the transactions under the stock option plans during fiscal 2011:


Options

Outstanding

Weighted-

Average Exercise

Price

Weighted-Average

Remaining

Contractual Life in

Years

Aggregate Intrinsic

Value

Balance at August 28, 2010 2,769 $ 26.47 Granted 504 46.24 Exercised (618) 27.90 Forfeited (147) 29.82 Expired (2) 23.87 Balance at August 27, 2011 2,506 $ 29.90 2.62 $ 44,283

Exercisable at August 27, 2011 587 $ 25.64 1.67 $ 12,883

The total intrinsic value of stock options exercised was $11.2 million during fiscal 2011, $9.1 million during fiscal 2010 and $7.1 million during fiscal

2009. As of August 27, 2011, there was approximately $6.9 million of unrecognized compensation cost related to outstanding stock options. The

unrecognized compensation cost will be recognized over a weighted-average period of 2.4 years.

Performance Share Rights

The Company grants performance share rights to key employees on an annual basis and in connection with employment or promotion. Performance share

rights give employees the right to receive shares of the Company's common stock at a future date based on the Company's performance relative to a peer

group. Performance is

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measured based on two pre-tax metrics: Return on Equity and Income Growth. The Leadership Development and Compensation Committee of the Board of

Directors establishes the peer group and performance metrics. The performance share rights vest at the end of the performance period (generally three years)

and the shares are issued shortly thereafter. The actual number of shares issued can range from 0% to 200% of the employee's target award depending on the

Company's performance relative to the peer group. The following table summarizes the transactions under the performance share rights program during fiscal

2011:

Weighted Performance Average

Share Rights Grant-Date

(in thousands, except per share amounts) Outstanding Fair Value

Nonvested—August 28, 2010 694 $ 26.27 Granted 160 46.38 Vested (335) 27.10 Cancellations (29) 32.96 Adjustments 92 N/A

Nonvested—August 27, 2011 582 $ 31.13

The grant-date fair value of the performance share rights is based on the stock price on the grant date. The weighted-average grant-date fair value of

performance share rights granted was $46.38 during fiscal 2011, $28.37 during fiscal 2010 and $23.56 during fiscal 2009. Compensation cost is recognized on

a straight-line basis, net of estimated forfeitures, over the requisite service period and adjusted quarterly to reflect the ultimate number of shares expected to

be issued. The adjustments of performance share rights outstanding in the table above represent the performance adjustment for shares vested during the

period. The total fair value of performance share rights vested was $15.0 million during fiscal 2011, $6.9 million during fiscal 2010 and $5.3 million during

fiscal 2009. As of August 27, 2011, there was approximately $10.8 million of unrecognized compensation cost related to outstanding performance share

rights, based on the Company's most recent performance analysis. The unrecognized compensation cost will be recognized over a weighted-average period of

1.6 years.

12. Stock Repurchases:

During fiscal 2011, the Company purchased a total of 13.9 million shares of its common stock at a cost of $670.5 million, of which 8.6 million shares were

purchased on the open market at a cost of $420.5 million. On October 5, 2010, the Company entered into an accelerated share repurchase agreement with a

large financial institution. In connection with the agreement, the Company made a prepayment of $250.0 million to the financial institution and immediately

received 4.4 million shares (80% of the prepayment amount). The financial institution purchased shares of the Company's common stock in the open market

over an averaging period in order to cover its position with respect to shares it borrowed for the initial delivery and for any shares payable upon settlement.

Upon settlement, another 0.9 million shares were delivered to the Company.

During fiscal 2010, the Company purchased 9.4 million shares of its common stock at a cost of $332.2 million, of which 6.7 million shares were purchased on

the open market at a cost of $232.2 million. During fiscal 2010, the Company entered into two structured repurchase agreements with large financial

institutions for a total of $100 million. In connection with each agreement, the Company made a prepayment of $50.0 million to the financial institution. The

financial institution purchased shares of the Company's common stock in the open market and delivered shares to the Company at specified intervals during

the contract term. The number of shares delivered was based on the volume weighted average price ("VWAP") of the Company's common stock during the

purchase period less an agreed upon discount. The Company received 2.7 million shares under the agreements, which were completed prior to the end of

fiscal 2010.

During fiscal 2009, the Company purchased 2.3 million shares at a cost of $71.1 million, all of which were purchased on the open market.

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All shares are purchased pursuant to share repurchase authorizations approved by the Board of Directors. On November 18, 2009, the Board of Directors

authorized the Company to purchase up to $400 million of the Company's outstanding common stock from time to time as market conditions warrant. On

September 29, 2010, the Company announced that the Board of Directors authorized the Company to purchase up to $750 million of the Company's

outstanding common stock (the "2010 authorization"). The remaining amount under the previous authorization was cancelled. As of August 27, 2011, the

Company had $87.3 million remaining under the 2010 authorization.

On September 26, 2011, the Company announced that the Board of Directors authorized the Company to purchase up to an additional $250 million of the

Company's outstanding common stock. As such, after the announcement, the Company has $337.3 million remaining under current authorizations.

There is no expiration date related to the above referenced authorizations. Shares purchased under the share repurchase authorizations are generally held in

treasury or are cancelled and returned to the status of authorized but unissued shares.

13. Rights Plan

Stock

holde

rs'

On March 2, 2011, the Company adopted a stockholders' rights plan whereby the Board of Directors of the Company authorized and declared a dividend

distribution of one right for each outstanding share of common stock of the Company to stockholders of record at the close of business on March 2, 2011.

Each right entitles the registered holder to purchase from the Company a unit consisting of one one-thousandth of a share of Series A Junior Participating

Preferred Stock, par value $1.00 per share, at a price of $250.00 per unit, subject to adjustment. The rights are not presently exercisable and remain attached to the shares of common stock until the occurrence of certain triggering events. Subject to certain exceptions, the rights will separate from the shares of common

stock and a distribution date will be deemed to occur on the earlier of (i) the 10th

business day after a person or group becomes a beneficial owner of at least

10% of the Company's outstanding common stock or (ii) the 10th

business day after the date that a tender or exchange offer is launched that would, if

completed, result in a person or group becoming a beneficial owner of at least 10% of the Company's outstanding common stock. Upon such an event, each

holder of a right, other than the person or group becoming a beneficial owner of at least 10% of the Company's outstanding common stock, will thereafter

have the right to receive, upon exercise, common stock (or, in certain circumstances, cash, property or other securities of the Company) having a value equal

to two times the exercise price of the right. The Company may redeem the rights in whole at a price of $0.001 per right. The rights will expire on March 2, 2012, unless exercised, redeemed or exchanged prior to that time. The Board may terminate the rights plan before the expiration date or extend the expiration

date. The rights have no voting or dividend privileges, and, unless and until they become exercisable, have no dilutive effect on the earnings of the Company.

14. Earnings per Share:

Basic net income per common share is computed by dividing net income by the weighted average number of shares outstanding during each period. Diluted

net income per common share gives effect to all securities representing potential common shares that were dilutive and outstanding during the period. Certain

stock options and performance share rights were excluded from the calculation of diluted net income per common share because their effects were antidilutive

(0.3 million, 0.6 million and 1.7 million shares for fiscal 2011, fiscal 2010 and fiscal 2009, respectively). In the calculation of diluted net income per common

share, the denominator includes the number of additional common shares that would have been outstanding if the Company's outstanding dilutive stock

options and performance share rights had been exercised, as determined pursuant to the treasury stock method.

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Table of Contents

The following table sets forth the computation of basic and diluted net income per common share:

(in thousands, except per share amounts) Fiscal 2011 Fiscal 2010 Fiscal 2009

Basic Net Income Per Share: Net income $ 388,445 $ 358,135 $ 291,266

Weighted average number of shares outstanding 123,360 135,745 139,894


Diluted Net Income Per Share: Net income $ 388,445 $ 358,135 $ 291,266

Weighted average number of shares outstanding 123,360 135,745 139,894 Effect of dilutive securities—stock options 677 406 262 Effect of dilutive securities—performance share rights 449 445 366



15. Comprehensive Income:

The following table provides a reconciliation of net income to comprehensive income. The unrealized gains and losses on investment securities are shown net

of tax ($0.6 million income tax expense in fiscal 2011, $1.2 million income tax expense in fiscal 2010 and $2.5 million income tax benefit in fiscal 2009).

Years Ended


Net income

Other comprehensive income: $ 388,445 $ 358,135 $ 291,266

Unrealized gains (losses) on investment securities 904 1,914 (4,626) Reclassification adjustment for gains realized in net other income Other

—

(261)

—

— 528

—

Comprehensive income $ 389,088 $ 360,049 $ 287,168

The following table details the components of accumulated other comprehensive loss.


Unrealized losses on investment securities (net of income taxes) $ (6,142) $ (7,046) Other (261) —

Accumulated other comprehensive loss $ (6,403) $ (7,046)

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Table of Contents

16. Segment Information:

The Company operates a chain of more than 7,000 general merchandise retail discount stores in 44 states, serving the basic needs of customers primarily in

low- and middle-income brackets. The stores are supported by nine distribution centers and one corporate headquarters. All of the stores operate under the

Family Dollar name and are substantially the same in terms of size, merchandise, customers, distribution and operations. The Company has no franchised

locations or other lines of business. All of the Company's operations are located in the United States with the exception of certain sourcing entities located in

Asia. The foreign operations are not material. The Company manages the business on the basis of one operating segment and therefore, has only one

reportable segment. The following table presents net sales by classes of similar products.

Years Ended


Classes of similar products: Consumables $ 5,686,576 $ 5,119,911 $ 4,764,835 Home Products 1,084,480 1,035,944 988,550 Apparel and Accessories 854,602 840,929 831,321 Seasonal and Electronics 922,177 870,187 815,900

Net Sales $ 8,547,835 $ 7,866,971 $ 7,400,606

The following table describes the Company's product categories in more detail:

Vartojimo prekės Household chemicals

Paper products

Food

Health and beauty aids

Hardware and automotive supplies

Pet food and supplies Home Products Domestics, including blankets, sheets and towels

Housewares

Giftware

Home décor Apparel and Accessories Men's clothing

Women's clothing

Boys' and girls' clothing

Infants' clothing

Shoes

Fashion accessories Seasonal and Electronics Toys

Stationery and school supplies

Seasonal goods

Personal electronics, including pre-paid cellular phones and services

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17. Unaudited Summaries of Quarterly Results:

First Second Third Fourth


2011 Quarter Quarter Quarter Quarter



0.58 0.98 0.91 0.66 2010



0.49 0.81 0.77 0.56

(1) Figures represent diluted earnings per share. The sum of the quarterly net income per common share may not equal the annual net income per common share due to rounding.

18. Related Party Transactions:

There were no material related party transactions during fiscal 2011, fiscal 2010 or fiscal 2009.

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