We sell and distribute products that are typically found in supermarkets and operate three reportable operating segments. The Military segment consists primarily of seven distribution centers that distribute products exclusively to military commissaries and exchanges. During fiscal 2010, our military distribution centers in Columbus, Georgia and Bloomington, Indiana became operational. Excluded from the Military segment totals are two adjacent military distribution centers we purchased during the third quarter of fiscal 2010 in Oklahoma City, Oklahoma, which are scheduled to become operational during fiscal 2012. Our food distribution segment consists of 14 distribution centers that sell to independently operated retail food stores, our corporate owned stores and other customers. During the third quarter of fiscal 2010, we closed our food distribution center in Bridgeport, Michigan at the end of its lease term. The retail segment consists of 46 corporate-owned stores that sell directly to the consumer. We sold four retail stores and closed two retail stores during fiscal 2011. We closed two retail stores during fiscal 2010.

We evaluate segment performance and allocate resources based on profit or loss before income taxes, interest associated with corporate debt and other discrete items. The accounting policies of the reportable segments are the same as those described in the summary of accounting policies.

Inter‑segment sales are recorded on a market price-plus-fee and freight basis. For segment financial reporting purposes, a portion of the operational profits recorded at our distribution centers related to corporate-owned stores is allocated to the Retail segment. Certain revenues and costs from our distribution centers are specifically identifiable to either the independent or corporate-owned stores that they serve. The revenues and costs that are specifically identifiable to corporate-owned stores are allocated to the Retail segment. Those that are specifically identifiable to independent customers are recorded in the Food Distribution segment. The remaining revenues and costs that are not specifically identifiable to either the independent or corporate-owned stores are allocated to the Retail segment as a percentage of corporate-owned store distribution sales to total distribution center sales. For fiscal 2011, 24% of such warehouse operational profits were allocated to the Retail segment compared to 23% and 18% in fiscal 2010 and 2009, respectively.

(in thousands)	Military	Food Distribution	Retail	Total
Revenue from external customers	$ 2,340,277	$ 1,996,968	$ 469,970	$ 4,807,215
Inter-segment revenue	-	237,328	-	237,328
Interest income	-	(39)	-	(39)
Interest expense (including capitalized lease interest)	(1)	(39)	3,603	3,563
Depreciation expense	10,044	17,920	7,740	35,704
Segment profit	50,412	23,745	5,602	79,759
Assets	497,224	460,498	113,895	1,071,617
Expenditures for long-lived assets	53,501	9,038	6,061	68,600

(in thousands)	Military	Food Distribution	Retail	Total
Revenue from external customers	$ 2,289,987	$ 2,183,730	$ 518,262	$ 4,991,979
Inter-segment revenue	-	258,175	-	258,175
Interest income	-	(37)	-	(37)
Interest expense (including capitalized lease interest)	12	(36)	3,633	3,609
Depreciation expense	6,269	19,674	10,176	36,119
Segment profit	51,301	33,650	6,660	91,611
Assets	441,866	490,467	115,470	1,047,803
Expenditures for long-lived assets	48,356	8,777	2,162	59,295

(in thousands)	Military	Food Distribution	Retail	Total
Revenue from external customers	$ 2,254,395	$ 2,385,930	$ 572,330	$ 5,212,655
Inter-segment revenue	-	290,523	-	290,523
Interest income	-	(26)	-	(26)
Interest expense (including capitalized lease interest)	32	(25)	3,438	3,445
Depreciation expense	5,689	23,228	11,686	40,603
Segment profit	48,057	38,860	396	87,313
Assets	369,201	497,327	127,558	994,086
Expenditures for long-lived assets	10,760	12,898	6,744	30,402

(in thousands)		2011		2010		2009
Revenues
Total external revenue for segments	$	4,807,215	$	4,991,979	$	5,212,655
Inter-segment revenue from reportable segments		237,328		258,175		290,523
Elimination of inter-segment revenues		(237,328)		(258,175)		(290,523)
Total consolidated revenues	$	4,807,215	$	4,991,979	$	5,212,655
Profit
Total profit for segments	$	79,759	$	91,611	$	87,313
Unallocated amounts:
Interest		(21,331)		(19,485)		(20,928)
Goodwill impairment		-		-		(50,927)
Gain on acquisition of a business		-		-		6,682
Gain on litigation settlement		-		-		7,630
Special charge		-		-		(6,020)
Earnings before income taxes	$	58,428	$	72,126	$	23,750
Assets
Total assets for segments		1,071,617		1,047,803		994,086
Unallocated corporate assets		2,151		2,872		5,450
Total consolidated assets	$	1,073,768	$	1,050,675	$	999,536

All revenues are attributed to and all assets are held in the United States. Our market areas are in the Midwest, Mid-Atlantic, Great Lakes and Southeast United States.

	First Quarter		Second Quarter		Third Quarter		Fourth Quarter
	12 Weeks		12 Weeks		16 Weeks		12 Weeks
	2011	2010	2011	2010	2011	2010	2011	2010

Sales	$ 1,099,809	$ 1,179,693	$ 1,099,575	$ 1,154,617	$ 1,471,357	$ 1,510,881	$ 1,136,474	$ 1,146,788
Cost of sales	1,010,820	1,087,873	1,008,998	1,060,280	1,357,669	1,388,926	1,049,702	1,054,112
Gross profit	88,989	91,820	90,577	94,337	113,688	121,955	86,772	92,676
Earnings before income taxes	12,370	13,330	16,614	17,966	16,737	22,830	12,707	18,000
Income tax expense	4,889	5,389	6,563	7,252	6,644	7,484	4,527	1,060
Net earnings	7,481	7,941	10,051	10,714	10,093	15,346	8,180	16,940
Net earnings as percentage of sales	0.68%	0.67%	0.91%	0.93%	0.69%	1.02%	0.72%	1.48%
Basic earnings per share	$ 0.59	$ 0.61	$ 0.79	$ 0.83	$ 0.78	$ 1.21	$ 0.63	$ 1.34
Diluted earnings per share	$ 0.57	$ 0.59	$ 0.77	$ 0.81	$ 0.77	$ 1.18	$ 0.62	$ 1.30

1. Restructuring costs related to Food Distribution overhead centralization of $0.5 million, $0.9 million, and $0.2 million during the second, third, and fourth quarters, respectively, of fiscal 2011.

2. Unusual professional fees of $2.0 million and $0.5 million during the third and fourth quarters, respectively, of fiscal 2011.

3. Conversion and transition costs related to new military food distribution facilities of $0.9 million, $0.3 million, $0.4 million, and $0.4 million during the first, second, third, and fourth quarters, respectively, of fiscal 2011.

4. Non-cash LIFO charges of $0.5 million, $2.1 million, $7.1 million, and $4.5 million during the first, second, third, and fourth quarters, respectively, of fiscal 2011.

5. The write off of $1.8 million in deferred financing costs during the fourth quarter of fiscal 2011 due to the refinancing of the Company’s asset-backed credit agreement.

6. A loss on the write-down of long-lived assets of $2.0 million and $0.1 million during the first and second quarters, respectively, of fiscal 2011.

7. Conversion and opening costs related to opening of new military food distribution facilities of $0.4 million, $0.3 million, $1.1 million and $1.1 million during the first, second, third and fourth quarters, respectively, of fiscal 2010.

8. Closing costs related to a food distribution facility of $1.2 million and $0.5 million during the second and third quarters, respectively, of fiscal 2010.

9. The reversal of previously recorded income tax reserves of $2.2 million and $4.7 million during the third and fourth quarters, respectively, of fiscal 2010.