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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

For the quarterly period ended April 30, 2004

OR

For the transition period from              to             

Commission File Number 001-08772

HUGHES SUPPLY, INC.

(Exact name of registrant as specified in its charter)

Corporate Office

One Hughes Way

Orlando, Florida 32805

(Address of principal executive offices)

(407) 841-4755

(Registrant’s telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    

Yes  x    No  ¨

Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act).    

Yes  x    No  ¨

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.

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HUGHES SUPPLY, INC.

FORM 10-Q

INDEX

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PART I.    FINANCIAL INFORMATION

Item 1.    Financial Statements

HUGHES SUPPLY, INC.

Consolidated Statements of Income (unaudited)

(in millions, except per share data)

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

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HUGHES SUPPLY, INC.

Consolidated Balance Sheets

(in millions, except share and per share data)

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

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HUGHES SUPPLY, INC.

Consolidated Statements of Cash Flows (unaudited)

(in millions)

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

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HUGHES SUPPLY, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

Note 1.    Basis of Presentation

In our opinion, the accompanying unaudited consolidated financial statements contain all adjustments (consisting only of normal recurring adjustments) necessary to present fairly our results of operations for the three months ended April 30, 2004 and May 2, 2003, our financial position as of April 30, 2004, and cash flows for the three months ended April 30, 2004 and May 2, 2003. The results of operations for the three months ended April 30, 2004 are not necessarily indicative of the trends or results that may be expected for the full year. Certain information and disclosures normally included in the notes to the annual consolidated financial statements have been omitted from these interim consolidated financial statements. Accordingly, these interim consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in our Annual Report on Form 10-K (the “Annual Report”) for the fiscal year ended January 30, 2004, as filed with the Securities and Exchange Commission.

Business

Founded in 1928, we are one of the largest diversified wholesale distributors of construction, repair and maintenance-related products. We distribute over 350,000 products to more than 100,000 customers through approximately 500 branches located in 38 states. Our principal customers include electrical, plumbing and mechanical contractors; public utilities; property management companies; municipalities; and industrial companies. Although we have a national presence, we operate principally in the southeastern and southwestern United States.

Fiscal Year

Our fiscal year is a 52 or 53-week period ending on the last Friday in January. Fiscal year 2005 is a 52-week period as was fiscal year 2004. The three months ended April 30, 2004 and May 2, 2003 each contained 13 weeks.

Reclassifications

Certain prior year amounts in the consolidated financial statements have been reclassified to conform to the current year presentation. These reclassifications had no net impact on previously reported results of operations.

Recent Accounting Pronouncements

On March 31, 2004, the Financial Accounting Standards Board (“FASB”) issued an exposure draft, Share-Based Payment, an Amendment of FASB Statements No. 123 and 95. The proposed change in accounting would replace existing requirements under Statement of Financial Accounting Standards (“FAS”) 123, Accounting for Stock-Based Compensation, and Accounting Principles Board (“APB”) Opinion 25, Accounting for Stock Issued to Employees. The exposure draft covers a wide range of equity-based compensation arrangements. Under the FASB’s proposal, all forms of share-based payments to employees, including employee stock options, would be treated the same as other forms of compensation by recognizing the related cost in the income statement. The expense of the award would generally be measured at fair value at the grant date. The comment period for the exposure draft ends on June 30, 2004, and final rules are expected to be issued in late 2004. The standard would be applicable for fiscal years beginning after December 15, 2004. We are currently evaluating the impact of the proposed change in accounting, but will not know the ultimate impact until the final rules are issued.

In December 2003, a revision to FASB Interpretation 46, Consolidation of Variable Interest Entities, an Interpretation of ARB No. 51, (“FIN 46R”) was issued to clarify some of the provisions of the interpretation and to exempt certain entities from its requirements. Adoption of the provisions of FIN 46R is required for interim periods ending after March 15, 2004. Our adoption of FIN 46R in the first quarter of fiscal year 2005 did not have an impact on our consolidated financial statements.

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Note 2.    Business Combinations

As more fully disclosed in Note 2 of the notes to the consolidated financial statements in our fiscal year 2004 Annual Report, on December 19, 2003, we acquired Century Maintenance Supply, Inc. (“Century”), a leading supplier of maintenance, repair and operations products serving the multi-family market throughout the United States. The results of Century’s operations have been included in our consolidated statements of income since December 19, 2003. Unaudited operating results of operations for the three months ended April 30, 2004 compared to the pro forma operating results of operations for the three months ended May 2, 2003, assuming the acquisition of Century had been completed as of the beginning of fiscal year 2004, are as follows (in millions except per share data):

The pro forma results have been prepared for comparative purposes only and do not purport to be indicative of what would have occurred had the acquisition been made at the beginning of the period presented or the results which may occur in the future.

Note 3.    Stock-Based Compensation

We account for our stock option plans using the intrinsic value based method of accounting, under which no compensation expense has been recognized for stock option awards granted at fair market value. For purposes of pro forma disclosures under FAS 123, Accounting for Stock-Based Compensation, as amended by FAS 148, Accounting for Stock-Based Compensation- Transition and Disclosure, the estimated fair value of the stock options is amortized to compensation expense over the options’ vesting period. The following table illustrates the effect on net income and earnings per share if the fair value based method had been applied to all outstanding and unvested awards in each period (in millions except per share data):

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The fair value of each stock option is estimated on the date of grant using the Black-Scholes option-pricing model with the following weighted-average assumptions for grants issued during the three months ended April 30, 2004 and May 2, 2003:

The weighted-average estimated fair value of employee stock options granted was $19.30 and $10.38 per share for the three months ended April 30, 2004 and May 2, 2003, respectively.

The Black-Scholes option-pricing model was developed for use in estimating the fair value of traded options that have no vesting restrictions and are fully transferable. Option-pricing models require the input of highly subjective assumptions, including the expected stock price volatility. Because our stock options have characteristics significantly different from those of traded options, and because changes in the subjective input assumptions could materially affect the fair value estimate, in our opinion, the existing models do not necessarily provide a reliable single measure of the fair value of our stock options.

Note 4.    Branch Closures and Consolidation Activities

As more fully disclosed in Note 5 of the notes to the consolidated financial statements in our fiscal year 2004 Annual Report, we approved plans to relocate our corporate offices and to close and consolidate certain branches that did not strategically fit into our core businesses and/or did not perform to our expectations. The liability balance, included in other current liabilities, related to these activities as of the three months ended April 30, 2004 and the year ended January 30, 2004 was as follows (in millions):

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Note 5.    Long-Term Debt

Long-term debt at April 30, 2004 and January 30, 2004 consisted of the following (in millions):

On March 16, 2004, we entered into a sale-leaseback transaction in which we sold our corporate headquarters building in Orlando, Florida, excluding certain furniture and fixtures and other office equipment relating to the property, to a subsidiary of Wachovia Development Corporation (“WDC”) for $23.0 million and leased the property back for a period of 20 years. The proceeds from the sale approximated the net book value of the property sold and were paid by WDC to SunTrust Bank (“SunTrust”) for application against amounts outstanding under a separate real estate term credit agreement (the “credit agreement”) we had previously executed on June 5, 2002 with SunTrust. We repaid the remaining amounts outstanding under the credit agreement with SunTrust in the first quarter of fiscal year 2005. The total amount of debt extinguished in the first quarter of fiscal year 2005 under the credit agreement with SunTrust totaled approximately $24.4 million. See Note 8 for further information regarding our lease with WDC.

At April 30, 2004, we were in compliance with all financial and non-financial covenants.

Note 6.    Earnings Per Share

Basic earnings per share is calculated by dividing net income by the weighted-average number of shares outstanding. Diluted earnings per share includes the additional dilutive effect of our potential common shares, which include certain employee and director stock options and unvested shares of restricted stock. The following summarizes the incremental shares from these potentially dilutive common shares, calculated using the treasury method, as included in the calculation of diluted weighted-average shares:

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Excluded from the above computations of diluted weighted-average shares outstanding were 35,000 and 10,000 unvested shares of restricted common stock at average prices of $56.25 and $31.35 per share during the first quarter of fiscal years 2005 and 2004, respectively, because their effect would have been anti-dilutive. Options to purchase 873,159 shares of common stock at an average exercise price of $33.48 during the first quarter of fiscal year 2004 were excluded from the above computations of diluted weighted-average shares outstanding because their effect would have been anti-dilutive. There were no employee or director stock options that were considered to have an anti-dilutive effect in the first quarter of fiscal year 2005.

Note 7.    Capital Stock

On March 15, 1999, our Board of Directors authorized us to repurchase up to 2.5 million shares of our outstanding common stock to be used for general corporate purposes. Since March 15, 1999, we have repurchased a total of 1,831,400 shares at an average price of $22.91 per share. There were no shares repurchased during the first quarter of fiscal year 2005.

Treasury stock of 88,002 and 5,700 shares were issued under stock plans during the first quarter of fiscal years 2005 and 2004, respectively.

Note 8.    Commitments and Contingencies

Lease Commitments

As discussed in Note 5, on March 16, 2004, we entered into a sale-leaseback transaction in which we sold our corporate headquarters building in Orlando, Florida to a subsidiary of WDC for $23.0 million and leased the property back for a period of 20 years. The lease expires on March 16, 2024, with five 5-year extensions exercisable at our option upon 12 months notice. We do not have an option to purchase the leased facility at the end of the minimum lease term and have not issued any residual value guarantee on the value of the leased facility. The lease is accounted for as an operating lease with future minimum annual lease payments totaling $1.2 million occurring during fiscal year 2005, $1.4 million per year occurring during fiscal years 2006 through 2009 and $25.6 million occurring thereafter.

On April 30, 2004, we completed a sale-leaseback transaction for a portfolio of properties associated with 18 different branches. The properties were sold at a price of $32.7 million and leased back pursuant to 15-year minimum term operating leases. A loss of approximately $1.3 million resulting from the sale was recognized during the first quarter of fiscal year 2005 for the branches that were sold at a price less than their net book value. A gain of approximately $9.1 million resulting from the sale was deferred and will be amortized over the minimum term of the leases for branches that were sold at a price greater than their net book value. We do not have an option to purchase the leased facilities at the end of the minimum lease terms and have not issued any residual guarantees of the value of the leased facilities. The leases are accounted for as operating leases with future minimum annual lease payments totaling $1.9 million occurring during fiscal year 2005, $2.6 million per year occurring during fiscal years 2006 through 2008, $2.7 million occurring during fiscal year 2009 and $28.8 million occurring thereafter.

Legal Matters

We are involved in various legal proceedings arising in the normal course of our business. In our opinion, none of the proceedings are material in relation to our consolidated operations, cash flows or financial position.

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Note 9.    Supplemental Cash Flows Information

Additional supplemental information related to the accompanying consolidated statements of cash flows is as follows (in millions):

During April 2004, we awarded an aggregate of 31,000 restricted shares of our common stock to certain key employees in accordance with our 1997 Executive Stock Plan. The majority of the shares vest five years from the award date. The market value of the restricted shares was $1.8 million at the date of the grant and was recorded as unearned compensation, a component of shareholders’ equity. This amount is being charged ratably to expense over the vesting period. There were no restricted stock grants made to employees during the first quarter of fiscal year 2004.

On March 9, 2004, our Board of Directors declared a quarterly cash dividend of $0.13 per share that was payable on May 14, 2004 to shareholders of record on May 3, 2004. Dividends declared but not paid totaled $4.0 million and $2.3 million at April 30, 2004 and May 2, 2003, respectively.

The income tax benefit of stock options exercised during the first quarter of fiscal year 2005 totaled $0.3 million.

Note 10.    Segment Information

We are organized on a product line basis and report the results of our operations associated with our product lines in six operating segments and an Other category. The six operating segments are: Water & Sewer; Plumbing/Heating, Ventilating and Air Conditioning (HVAC); Utilities; Electrical; Maintenance, Repair and Operations (MRO); and Industrial PVF. We include our Building Materials, Fire Protection and Mechanical Industrial product lines in the Other category.

The Corporate category includes corporate level expenses not allocated to our operating segments. Inter-segment sales are excluded from net sales presented for each segment. Operating income for each segment includes certain corporate expense allocations for employee benefits, corporate overhead expenses, data processing expenses and property/casualty insurance. These allocations are based on consumption or at a standard rate determined by management.

The following table presents net sales and other financial information by segment for the first quarter of fiscal years 2005 and 2004 (in millions):

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The following tables include our investment in assets (accounts receivable less allowance for doubtful accounts, inventories and goodwill) and accounts payable for each segment as of April 30, 2004 and January 30, 2004 (in millions):

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Note 11.  Related Party Transaction

During the first quarter of fiscal year 2005, we approved donations totaling $0.5 million to Hughes Supply Foundation, Inc. (“HSF”), a not-for-profit charitable organization designed to help provide financial assistance for families in need in areas where we operate. The Board of Directors of HSF is comprised of certain of our executives, including the Chairman of the Board, the President and Chief Executive Officer, and the Executive Vice President and Chief Financial Officer.

Note 12.  Subsequent Events

On May 3, 2004, we completed the acquisition of Standard Wholesale Supply Company (“Standard”), a distributor of waterworks, electrical and plumbing products primarily serving the residential and infrastructure construction markets in Las Vegas, Nevada. Standard generated sales of approximately $73 million in its latest fiscal year ended December 31, 2003, with product offerings including pipes, hydrants, valves, fittings, poles, street lights, wire and cable, and fixtures. The acquisition of Standard allows us to accelerate our expansion into the high-growth market of Las Vegas, Nevada, and also allows us to invest in a profitable business that is well-aligned with our culture of providing the highest level of service possible to the customer, along with quality products.

On May 28, 2004, we completed the acquisition of Todd Pipe & Supply (“Todd Pipe”), one of the largest independent wholesale plumbing suppliers in Southern California and Las Vegas, Nevada. Todd Pipe generated sales of approximately $211 million during the twelve months ended January 31, 2004. The acquisition of Todd Pipe allows us to expand our geographic footprint into attractive, high-growth markets and to invest in businesses with leadership market positions and superior operating models, thus improving our overall operating portfolio and financial returns.

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PART I.    FINANCIAL INFORMATION — Continued

HUGHES SUPPLY, INC.

Item 2.    Management’s Discussion and Analysis of Financial Condition and Results of Operations

Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”) is intended to provide information to assist the reader in better understanding and evaluating our business and results of operations. This information is a discussion and analysis of certain significant factors that have affected our results of operations for the three months ended April 30, 2004 and May 2, 2003, and our financial condition as of April 30, 2004. MD&A should be read in conjunction with our consolidated financial statements and the notes thereto contained herein and in our Annual Report on Form 10-K (the “Annual Report”) for the fiscal year ended January 30, 2004.

Forward-Looking Statements

Certain statements made by us or incorporated by reference in this report constitute “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Act of 1934, as amended, and are subject to the safe harbor provisions created by such sections. When used in this report, the words “believe,” “anticipate,” “estimate,” “expect,” “may,” “will,” “should,” “plan,” “intend,” and similar expressions are intended to identify forward-looking statements. Although we believe that the expectations reflected in such forward-looking statements are reasonable, we can give no assurance that such expectations will prove to be correct. Actual results or events may differ significantly from those indicated in such forward-looking statements as a result of various important factors. These factors are discussed under the caption “Item 1. Business—Risk Factors” in our Annual Report on Form 10-K for the year ended January 30, 2004. All forward-looking statements are qualified by and should be read in conjunction with those risk factors. Except as may be required by applicable law, we undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

Business

Founded in 1928, we are one of the largest diversified wholesale distributors of construction, repair and maintenance-related products. We distribute over 350,000 products to more than 100,000 customers through approximately 500 branches located in 38 states. Our principal customers include electrical, plumbing and mechanical contractors; public utilities; property management companies; municipalities; and industrial companies. Although we have a national presence, we operate principally in the southeastern and southwestern United States.

Fiscal Year

Our fiscal year is a 52 or 53-week period ending on the last Friday in January. Fiscal year 2005 is a 52-week period as was fiscal year 2004. The three months ended April 30, 2004 and May 2, 2003 each contained 13 weeks.

Segment Information

We are organized on a product line basis and report the results of our operations associated with our product lines in six operating segments and an Other category. The six operating segments are: Water & Sewer; Plumbing/Heating, Ventilating and Air Conditioning (HVAC); Utilities; Electrical; Maintenance, Repair and Operations (MRO); and Industrial PVF. We include our Building Materials, Fire Protection and Mechanical Industrial product lines in the Other category.

Inter-segment sales are excluded from the net sales presented for each segment. Operating income for each segment includes certain corporate expense allocations for employee benefits, corporate overhead expenses, data processing expenses and insurance. These allocations are based on consumption or at a standard rate determined by management.

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Same-Store Sales Methodology

During the first quarter of fiscal year 2005, we changed our same-store sales methodology to include all branches, including those that are newly opened, closed and acquired during the comparative fiscal periods. For comparative purposes, prior period sales will be reported on a pro forma basis to include pre-acquisition sales activity. Branches of any divested business will continue to be excluded from our calculation. We believe the new methodology more accurately reflects the current sales performance of all our branches, including those newly acquired.

Results of Operations

Our results of operations for the first quarter of fiscal year 2005 reflect strong quarterly net sales, net income and diluted earnings per share growth. Net sales increased 26.8% to $992.8 million in the first quarter of fiscal year 2005, compared to the $782.8 million reported in the prior year’s first quarter. Same-store sales increased 14.3% with good growth reported in all of our segments and the three product lines comprising the Other category. Our gross margin ratio to net sales of 24.3%, our highest ratio in recent history, along with our ability to hold the ratio of operating expenses to net sales flat, were the primary drivers of a 152.5% improvement in net income. Net income in the first quarter of 2005 totaled $29.8 million, an $18.0 million increase compared to the prior year’s first quarter net income of $11.8 million. Diluted earnings per share in the first quarter of fiscal year 2005 totaled $0.97 on 30.9 million shares outstanding, compared to $0.51 per diluted share reported in the prior year on 23.1 million shares outstanding.

Net Sales

Net sales are affected by numerous factors, including, but not limited to, commodity pricing, seasonality, weather, competition and construction cycles. The following table presents the major components of our consolidated net sales during the first quarter of fiscal years 2005 and 2004 (dollars in millions):

Net sales in the first quarter of fiscal year 2005 totaled $992.8 million, an increase of $210.0 million or 26.8%, compared to the prior year’s first quarter net sales of $782.8 million. This increase was primarily due to the acquisitions of Century Maintenance Supply, Inc. (“Century”) and Marden Susco, LLC (“Marden Susco”) completed during the fourth and third quarters of fiscal year 2004, respectively, in addition to increased demand from a strengthening commercial construction sector and commodity price increases. The Century and Marden Susco acquisitions added $97.8 million of net sales to the first quarter of fiscal year 2005.

The same-store sales increase of $123.9 million or 14.3% primarily reflected increased commercial and public sector construction activity, continued strength in the residential construction market and significant price increases in commodities such as steel, PVC, copper, nickel and lumber. Four of our six segments and the three product lines comprising our Other category (Building Materials, Fire Protection and Mechanical Industrial) reported growth in excess of 10%.

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Gross Margin

Gross margin is affected by numerous factors, including, but not limited to product mix changes, commodity pricing, competition, vendor rebates and direct shipments compared to stock sales. Gross margin and gross margin ratio to net sales during the first quarter of fiscal years 2005 and 2004 were as follows (dollars in millions):

Gross margin ratio to net sales totaled 24.3% and 22.4% in the first quarter of fiscal years 2005 and 2004, respectively. The improvement was mainly attributable to our ability to capitalize on the strong pricing environment and greater demand experienced in most of our businesses, as well as increased rebate income resulting from our continued vendor consolidation efforts and improved programs with our suppliers. Product mix was also a part of the improved gross margin with increased sales from our higher-margin MRO business comprising 10.8% of our net sales in the first quarter of fiscal year 2005 compared to 3.9% in the prior year’s first quarter as a result of the Century acquisition. The Industrial PVF and Building Materials businesses, which have historically generated higher margins than our other businesses, also comprised a greater percentage of our net sales during the first quarter of fiscal year 2005.

Operating Expenses

Operating expenses and percentage of net sales for the first quarter of fiscal years 2005 and 2004 were as follows (dollars in millions):

As a percentage of net sales, personnel expenses remained relatively flat at 12.1% and 12.2% for the first quarter of fiscal years 2005 and 2004, respectively, with the $25.2 million increase in costs quarter over quarter primarily relating to the Century and Marden Susco acquisitions and increased employee benefit costs. The Century and Marden Susco acquisitions collectively added $12.1 million of personnel expenses to the first quarter of fiscal year 2005 and contributed to a 15.3% increase in our workforce, from approximately 7,200 employees at May 2, 2003 to approximately 8,300 at April 30, 2004. Employee healthcare insurance expenses increased $4.1 million due to higher enrollment and increasing healthcare costs.

As a percentage of net sales, other selling, general and administrative expenses remained relatively flat at 6.4% and 6.3% for the first quarter of fiscal years 2005 and 2004, respectively, with the $14.9 million increase in costs primarily relating to the Century and Marden Susco acquisitions and various other expense increases. The acquisitions of Century and Marden Susco added $8.8 million of other selling, general and administrative expenses to the first quarter of fiscal year 2005. Other selling, general and administrative costs also increased as a result of $2.4 million of additional tax and tax-related expenses, $1.2 million of additional marketing expenses

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due to increased efforts to obtain new business opportunities as well as continued investments in programs that target both customers and vendors, $1.1 million of increased telecommunications costs due to our continued investment in bandwidth capacity and information technology initiatives, and a donation of $0.5 million in the first quarter of fiscal year 2005 to the Hughes Supply Foundation, Inc., a not-for-profit charitable organization.

As a percentage of net sales, depreciation and amortization expenses remained relatively flat at 0.6% and 0.7% for the first quarter of fiscal years 2005 and 2004, respectively. The increase of $0.9 million during the first quarter of fiscal year 2005 compared to the first quarter of fiscal year 2004 was primarily driven by amortization of intangible assets related to the Century and Marden Susco acquisitions.

Operating Income

Operating income is affected significantly by fluctuations in net sales as well as changes in business and product mix. Operating income for the first quarter of fiscal years 2005 and 2004 was as follows (dollars in millions):

Operating income during the first quarter of fiscal year 2005 totaled $50.6 million, increasing $24.7 million or 95.4%, compared to the prior year’s first quarter operating income of $25.9 million. The acquisitions of Century and Marden Susco added $9.2 million of operating income to the first quarter of fiscal year 2005. Operating income as a percentage of net sales increased 180 basis points to 5.1% in the first quarter of fiscal year 2005 compared to 3.3% in fiscal year 2004 primarily due to improved product pricing and mix and our continued efforts to manage our expenses to leverage increased net sales.

Interest and Other Income

Interest and other income totaled $1.7 million and $1.5 million in the first quarter of fiscal years 2005 and 2004, respectively. The increase in fiscal year 2005 was primarily due to $0.2 million of interest received during the first quarter relating to the settlement of amended prior year federal income tax filings.

Interest Expense

Interest expense totaled $6.3 million and $7.7 million in the first quarter of fiscal years 2005 and 2004, respectively. The decrease in interest expense was primarily due to a reduction in higher-cost debt balances. Total debt decreased $118.9 million, or 25.5%, from $465.8 million as of May 2, 2003 to $346.9 million as of April 30, 2004 and our weighted-average interest rate for the first quarter of fiscal year 2005 decreased 60 basis points compared to the prior year’s first quarter.

Income Taxes

Our effective tax rate in the first quarter of fiscal years 2005 and 2004 was 35.3% and 40.0%, respectively. The decrease was primarily attributable to a $1.7 million tax benefit realized in the first quarter of fiscal year 2005 related to federal income tax filing amendments associated with prior fiscal years. Our effective tax rate is expected to be 39.0% for the remainder of fiscal year 2005.

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Segment Results

Consolidated and same-store sales by segment in the first quarter of fiscal years 2005 and 2004 were as follows (dollars in millions):