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Smart & Final Fourth-Quarter Income From Continuing Operations Rises

Los Angeles - Smart & Final, Inc. today reported income from continuing operations of $9.2 million, or 30 cents per diluted share, for the 12-week quarter ended Dec. 28. This represents an increase of 68.3 percent from prior-year fourth-quarter results of $5.4 million, or 18 cents per diluted share.

Income from continuing operations in the 2003 fourth quarter included $4.2 million of pretax income resulting from the partial reversal of litigation reserves taken earlier in 2003, partially offset by $0.3 million of depreciation expense resulting from the second-quarter consolidation of the company's real estate synthetic lease facility. Adjusted for these two items net of tax, 2003 fourth-quarter income from continuing operations was $6.8 million, or 22 cents per diluted share, an increase of 25.4 percent when compared with the $5.4 million, or 18 cents per diluted share, reported in the prior-year fourth quarter.

Sales from continuing operations in the current-year quarter were $444.4 million, an increase of 21.9 percent over prior-year fourth-quarter sales of $364.6 million. Fourth-quarter 2003 comparable-store sales increased by 20.9 percent. The company estimates that approximately $50 million in incremental sales in the current-year fourth quarter resulted from the labor action under way against the three largest Southern California retail supermarket chains.

Excluding the estimated impact of the strike-related additional sales, the company estimates that its fourth-quarter 2003 comparable-store sales would have increased by 7.1 percent. The company estimates that during the fourth quarter, sales at approximately 105 of its 229 stores were positively affected by the labor actions.

"Our fourth-quarter sales and income performance was extraordinary, and obviously the effects of the Southern California grocers' strike was a factor," said Ross Roeder, chairman and c.e.o. "Smart & Final store sales in most of the Southern California market increased sharply as many households turned to us as an alternative to the affected grocery chains. We've done our very best to welcome our new customers, and we're optimistic that many will continue to find Smart & Final an attractive shopping alternative long after the labor dispute comes to an end.

"As important as this additional business has been, it's noteworthy that we continued to record strong growth throughout our entire store base, which covers the western U.S. Excluding the estimated effect of the strike, we estimate that our comparable-store sales increased by over 7 percent, led by growth in customer visits and average transaction size in both of our store formats and all geographic areas," Roeder added.
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