SG&A expenses for the second quarter and first half of fiscal 2012 increased from the respective prior year periods as a result of incremental store growth and its impact on associated operational costs. On a percent of sales basis, SG&A expenses increased by 32 basis points during the quarter and decreased 13 basis points for the 26 weeks ended April 1, 2012, as compared to the comparable periods of the prior year. The Company’s emphasis on cost controls and improved labor management has been effective in offsetting a portion of the increases in health and welfare costs, pension expense and other fringe benefit costs, as well as increased costs associated with the Company’s store remodeling program.
SG&A expenses included new store pre-opening costs of $1.4 million (0.13% of sales) and $1.9 million (0.18% of sales) in the second quarter of fiscal 2012 and fiscal 2011, respectively. Pre-opening costs for the 26-week periods ended April 1, 2012 and April 3, 2011 were $2.8 million (0.13% of sales) and $3.9 million (0.18% of sales), respectively. New store pre-opening costs fluctuate between reporting periods depending on the new store opening schedule and market location.
The pre-tax loss from discontinued operations for the 26 weeks ended April 1, 2012 amounted to $18.3 million, $12.4 million after tax benefits or $0.25 per diluted share. As disclosed last year, the Company expected to incur additional non-cash charges for the settlement of pension liabilities and other employee benefits in connection with the sale of A&E. Accordingly, the Company recorded non-cash charges of $26.3 million ($12.9 million after tax) during the first half of fiscal 2012 that related to these anticipated costs. The majority of these losses resulted from adjustments for the recognition of a pro-rata share of the pension plan’s accumulated unrecognized net actuarial losses that was previously included in Accumulated Other Comprehensive Income and the impact from allocating existing plan assets under pension regulations and was based upon preliminary actuarial estimates. Actuarial valuations and the final purchase price allocation are not expected to be finalized until the Company’s third quarter of fiscal 2012 and could result in additional adjustments.
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