Albertsons 2007 Annual Report Download - page 29

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Supply chain services Net sales, compared with last year’s Supply chain services Operating earnings of
$
214, o
r
2.3 percent o
f
Supp
l
yc
h
a
i
n serv
i
ces Net sa
l
es. T
h
e
i
ncrease
i
n Supp
l
yc
h
a
i
n serv
i
ces Operat
i
ng earn
i
ngs, as a
percent of Suppl
y
chain services Net sales, primaril
y
reflects improved sales levera
g
e
.
Net Interest Ex
p
ens
e
Net interest expense was
$
558 in fiscal 2007 compared with
$
106 last year. The increase primarily reflects
i
nterest expense re
l
ate
d
to assume
dd
e
b
tan
d
new
b
orrow
i
ngs re
l
ate
d
to t
h
e Acqu
i
s
i
t
i
on.
I
ncome
T
axe
s
T
he effective tax rates were 39.
5
percent and 37.4 percent in fiscal 2007 and fiscal 2006, respectivel
y
. The
increase is primarily due to the Acquisition and the write-off of non tax-deductible goodwill primarily related t
o
the planned disposition of 18 Scott’s stores in fiscal 2007. The fiscal 200
6
effective tax rate was primaril
y
impacted b
y
the write-off of non tax-deductible
g
oodwill related to the sale of Chica
g
o. Without these items, th
e
effective tax rates would have been 38.6 percent and 37.0 percent for fiscal 2007 and fiscal 2006, respectively
.
Net Earn
i
ng
s
Net earnings were
$
452 for fiscal 2007 compared with Net earnings of
$
206 last year. Results for fiscal 2007
include Acquisition-related costs of $40 after tax, a char
g
e related to plans to dispose of Scott’s of $23 after ta
x
a
nd incremental stock option expense related to the Company’s adoption of SFAS No. 123(R) of
$
15 after tax.
R
esults for fiscal 2006 include charges of
$
111 after tax primarily related to Chicago and Pittsburgh
.
Weighted average basic shares increased to 189 for fiscal 2007 compared with 136 shares last year. Weighte
d
a
verage diluted shares increased to 19
6
for fiscal 2007 compared with 14
6
shares last year. The increase is
primaril
y
due to the shares issued in con
j
unction with the Acquisition on June 2, 200
6.
Com
p
arison of fift
y
-two weeks ended Februar
y
25, 2006
(
fiscal 2006
)
with fift
y
-two weeks ende
d
February 26, 2005
(
fiscal 2005
)
:
I
n fiscal 2006, the Company achieved Net sales of
$
19,864 compared with
$
19,543 in fiscal 2005, an increase of
1.6 percent. Net earnin
g
s for fiscal 2006 were $206 compared with Net earnin
g
s of $386 in fiscal 2005. Results
f
or fiscal 2006 include charges of
$
111 after tax primarily related to Chicago and Pittsburgh. Results for fisca
l
2005 include a net after-tax gain on the sale of the Company’s minority interest in WinCo Foods, Inc. (“WinCo”)
o
f $68.
Net
S
ales
Net sales for fiscal 2006 were
$
19,864 com
p
ared with
$
19,543 in fiscal 2005. Retail food sales were
a
pproximately 54 percent of Net sales and Supply chain services sales were approximately 46 percent of Net
sales for each of fiscal 2006 and fiscal 200
5
.
R
etail food sales for fiscal 2006 were
$
10,635 compared to
$
10,549 in fiscal 2005, an increase of 0.8 percent
.
T
he increase primaril
y
reflects net new store
g
rowth, which was partiall
y
offset b
y
ne
g
ative same store sales. For
f
iscal 2006, same-store retail sales, defined as stores operating for four full quarters, including store expansions,
d
ecreased 0.5 percent compared to fiscal 2005.
Fiscal 2006 store activity, including licensed units, resulted in 68 new stores opened and 8
5
stores closed.
Exc
l
us
i
ve o
f
t
h
eC
hi
cago, P
i
tts
b
urg
h
an
d
Dea
l
s stores, tota
l
reta
il
square
f
ootage,
i
nc
l
u
di
ng
li
cense
d
stores,
increased approximatel
y
two percent over the prior
y
ear.
23