Family Dollar announced that it will be unable to file its annual report on Form 10-K for the fiscal year ended August 26, 2006, by the due date of November 9, 2006.
The Company previously filed a Form 8-K with the Securities and Exchange Commission ("SEC") on September 25, 2006, in which the Company advised that the Company is a nominal defendant in a lawsuit filed in Mecklenburg County Superior Court alleging that certain of the Company's stock option grants were "backdated."
The Company's Board of Directors has formed a Special Committee, which consists solely of independent directors who are not defendants in that action, to conduct an independent investigation of the Company's stock option practices, evaluate the Lawsuit and take such actions with respect to the Lawsuit and related matters as the Special Committee deems appropriate.
Because the work of the Special Committee is not complete, the Company is unable to file its annual report on Form 10-K by the due date.
While the review of the Special Committee and its outside, independent counsel and advisors is ongoing, the Company currently believes that the incorrect measurement date was used for accounting purposes with respect to certain stock option grants made to newly hired employees and in connection with the Company's annual grant of stock options in one or more years.
The Company is currently unable to determine the materiality of any non-cash charges associated with such incorrect measurement dates and accordingly, has not yet determined the impact on the Company's previously filed financial statements.
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