Original Source: FD (FAIR DISCLOSURE) WIRE
OPERATOR: Good day and welcome to the Ingles Market Inc. conference call. Today's call is being recorded. At this time for opening remarks and introductions I would like to turn the call over to the Vice President Finance, Chief Financial Officer, Ms. Brenda Tudor.
BRENDA TUDOR, CFO, VP-FINANCE & TREASURER, INGLES MARKETS: Good morning. Welcome to Ingles Markets' 2005 first-quarter conference call for the quarter ended December 25, 2004. With me today are Robert Ingle, founder of our Company and Chief Executive Officer; Robert Ingle II, Chairman of the Board; Jim Lanning, President; and Tom Outlaw, Vice President Sales and Marketing.
Statements made on this call include forward-looking statements as defined by and subject to the safe harbors created by federal securities laws. Words such as expects, anticipates, intends, plans, and believes are intended to identify forward-looking statements. These statements are not guarantees of future performance and involve risks, uncertainties, and assumptions which are difficult to predict. Therefore, actual outcomes and results may differ materially from what is expressed on this call.
We do not undertake to update publicly any forward-looking statements whether as a result of new information, future events, or otherwise. For a description of factors that could cause actual results to differ materially from that anticipated by forward-looking statements, you are referred to the Company's public filings including the Form 10-K for the fiscal year ended September 25, 2004.
Now I will give you a brief overview of our fiscal 2005 first-quarter results then we'll be happy to take your questions. Our 10-Q is being filed today and our press release issued this morning is available on our website at www.Ingles-Markets.com.
We're very pleased to report to you today continued growth in both sales and earnings for our first quarter. Net income grew 110.7% to $5.1 million or $0.21 per share for the December 2004 quarter compared to 2.4 million or $0.10 per share for the December 2003 quarter. Solid comparable store sales growth and improved gross margin in the December 2004 quarter provided strong earnings growth. Both net sales and comparable store sales increased 4.7%. We're particularly proud of the comparable store sales growth since we were up against comparable sales growth of 6.3% from the December 2003 quarter when we introduced our Ingles advantage savings and reward card.
Sales grew in all major departments, but the largest percentage growth was in our higher margin perishable department. Ingles operated one less store at the end of the December 2004 quarter than at the end of the December 2003 quarter and retail square footage remained about the same at 9.3 million square feet.
Gross profit dollars increased 6.5% for the quarter while gross profit margin increased 43 basis points due primarily to increased sales in the higher margin perishable department and increased promotional activity in the December 2003 quarter when the card was introduced.
Our operating expenses increased 3.5% for the quarter but decreased as a percentage of sales by 24 basis points for the fourth quarter -- for the first quarter. The increased sales volume resulted in lower operating expenses as a percentage of sales as certain fixed costs were spread over higher volume. The December 2004 quarter did include approximately $1.1 million in professional fees in connection with the previously disclosed internal investigation, resulting SEC inquiry, and restated financial statements.
Net rental income remained constant at 1.5 million for both the December 2004 and December 2003 quarters. Income from operations increased 27% for the December 2004 quarter compared to the December 2003 quarter. Other income for the December 2004 quarter was $447,000 compared to 1.3 million in the December 2003 quarter. The December 2003 quarter included a gain of $1 million from the sale of an outparcel adjacent to an existing Ingles shopping center.
For the December, 2004 quarter, interest expense increased 823,000 over the same quarter last year - decreased; I'm sorry, 823,000 over the same quarter last year. No new debt was incurred during fiscal 2004 or in the first quarter of fiscal 2005. Total debt decreased $35.3 million to 595.2 million at December 2004 compared to 630.5 million at December 2003.
We currently have committed lines of credit totaling 135 million. No amounts are borrowed on these lines; however, letters of credit totaling 13.8 million reduced the amount available to be drawn under the lines to 121.2 million at December 25, 2004. 120 million of the lines mature in …