8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 OR 15(d) of The Securities Exchange Act of 1934

Date of Report (Date of Earliest Event Reported): April 28, 2005

THE PANTRY, INC.

(Exact name of registrant as specified in its charter)

Delaware	33-72574	56-1574463
(State or other jurisdiction of incorporation)	(Commission File Number)	(I.R.S. Employer Identification Number)

1801 Douglas Drive Sanford, North Carolina	27330-1410
(Address of principal executive officer)	(Zip Code)

(919) 774-6700

Registrant’s telephone number, including area code

N/A

(Former name or former address, if changed since last report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

¨ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

¨ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

¨ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

¨ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 2.02 Results of Operations and Financial Condition.

On April 28, 2005, the Company issued a press release announcing results for the three month and six month periods ended March 31, 2005. The full text of the press release is set forth in Exhibit 99.1 hereto and is incorporated herein by reference.

* Pursuant to General Instruction B.2 of Current Report on Form 8-K, the information in this report is furnished and shall not be deemed to be “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liability of that section. Furthermore, the information in this report shall not be deemed to be incorporated by reference into the filings of the registrant under the Securities Act of 1933, as amended.

Item 9.01 Financial Statements and Exhibits.

(c) Exhibits

Exhibit No.	Description of Document
99.1	Press Release dated April 28, 2005

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

THE PANTRY, INC.
By:	/s/ Daniel J. Kelly
	Daniel J. Kelly
	Vice President, Chief Financial Officer and Secretary
	(Authorized Officer and Principal Financial Officer)

Date: April 28, 2005

EXHIBIT INDEX

Exhibit No.	Description of Document
99.1	Press Release dated April 28, 2005

EX-99.1

Exhibit 99.1

For Immediate Release	Contact: Dan Kelly
April 28, 2005	(919) 774-6700

THE PANTRY REPORTS RECORD SECOND-QUARTER EARNINGS AND INCREASES ANNUAL EPS GUIDANCE

Sanford, North Carolina, April. 28, 2005 - The Pantry, Inc. (NASDAQ: PTRY), the leading independently operated convenience store chain in the southeastern U.S., today announced financial results for its second fiscal quarter ended March 31, 2005.

Revenues for the second quarter totaled $945.8 million, a 20.3% increase from $786.4 million in the corresponding period a year ago. Net income for the quarter was $3.8 million, or $0.18 per diluted share, compared with a net loss on a GAAP basis of $14.1 million, or $0.71 per share, in last year’s second quarter. Results for the year-ago period included $0.72 per share in early debt extinguishment costs, as well as $0.02 per share in expenses related to a secondary stock offering. In addition, there was duplicate interest expense of $0.05 per share on two issues of senior subordinated notes for a one-month period when both were outstanding. Net income excluding these financing-related items for the second quarter of fiscal 2004 was $1.6 million, or $0.08 per share; net income and earnings per share in the fiscal 2005 period were more than double the adjusted results for the year-ago quarter.

President and Chief Executive Officer Peter J. Sodini said, “We are pleased to report record earnings and comparable store volumes above our expectations for this seasonally weak period, which were achieved despite the dramatic escalation in gasoline costs during the quarter. Operating momentum in our core stores has continued to accelerate – in terms of both merchandise sales and gasoline gallons sold in comparable stores. We believe this reflects the impact of our store conversion and rebranding programs, as well as our continued focus on expanding higher-margin merchandise categories such as private label products and food service. In addition, our earnings continue to benefit from a reduction in interest expense following last year’s debt refinancing.”

Merchandise revenue for the quarter was up 6.6% on a comparable store basis. The merchandise gross margin of 37.2% increased 40 basis points from a year ago. Total merchandise gross profits rose 6.3% to $105.7 million, and accounted for approximately 76% of the Company’s total gross profits. Comparable store gasoline gallons increased 7.7% from a year ago. Gasoline revenues were up 28.1%, partly due to a 19.4% increase in the average retail price per gallon, to $1.91. The gross margin per gallon was 9.9 cents, compared with 10.5 cents in last year’s second quarter. Excluding the impact of the increase in credit card fees, gasoline margins per gallon were flat from a year ago. Gasoline gross profits for the quarter totaled $34.1 million, up 1.1% from a year ago.

During the quarter, the Company announced the acquisition of D & D Oil Co., Inc., which operated 53 Cowboys convenience stores, with two additional stores under construction and seven potential development sites. Located mostly in Georgia and Alabama, the Cowboys chain generated approximately $320 million in revenue in 2004. The acquisition closed on April 21, 2005, and is expected to be immediately accretive to the Company’s earnings per share.

“Successfully negotiating the Cowboys acquisition was clearly the strategic highlight of our second fiscal quarter,” Mr. Sodini said. “The transaction complements our existing store base in the Southeast extremely well, and provides us with many attractive, newer locations that generate high average volumes in both gasoline and merchandise.”

Also during the quarter, the Company completed gasoline and merchandise brand conversions or image upgrades at an additional 126 stores. That brought the total completed as of March 31, 2005, to 860 stores out of approximately 1,100 stores targeted for conversion or reimaging under one of three gasoline brands – BP®/Amoco®, Citgo® or the Company’s own Kangaroo® private label brand. All of these stores’ merchandise operations are also being remodeled and rebranded under the Kangaroo Express^SM banner.

For the first six months of fiscal 2005, net income was $15.9 million, or $0.75 per diluted share, compared with a net loss of $9.1 million, or $0.48 per share, in the first half of fiscal 2004. Results for the year-ago period included the financing related expenses described above, as well as an additional $0.02 per share incurred in the first quarter of that year. Excluding these items, net income for the first half of fiscal 2004 was $6.9 million, or $0.36 per share, and earnings for the first six months of the current year were more than double the year-earlier results. EBITDA for the first half of fiscal 2005 was $73.1 million, a 15.8% increase from a year ago.

Mr. Sodini concluded, “Given our strong first-half results and the recent addition of the high-volume Cowboys stores, we now believe our earnings per share for fiscal 2005 are likely to fall in a range between $2.05 and $2.15, above our previous expectations. Longer term, The Pantry remains well-positioned to capitalize on its leading market positions across the Southeast, with solid momentum in our core operations and the financial resources to continue growing through strategic acquisitions.”

Conference Call

Interested parties are invited to listen to the second quarter earnings conference call scheduled for Thursday, April 28, 2005 at 10:00 a.m. Eastern Time. The call will be broadcast live over the Internet and is accessible at www.thepantry.com or www.companyboardroom.com. An online archive will be available immediately following the call and will be accessible until May 5, 2005.

Use of Non-GAAP Measures

EBITDA is not a measure of operating performance under accounting principles generally accepted in the United States of America, and should not be considered as a substitute for net income, cash flows from operating activities and other income or cash flow statement data. We have included information concerning EBITDA as one measure of our cash flow and historical ability to service debt and because we believe investors find this information useful as it reflects the resources available for strategic opportunities including, among others, to invest in the business, make strategic acquisitions and to service debt. EBITDA as defined may not be comparable to similarly titled measures reported by other companies.

We use net income and earnings per share, each excluding certain unusual expense items, to evaluate our operations. Management believes this presentation is appropriate and enables investors to compare more accurately our ongoing financial performance over the periods presented. The information regarding net income and earnings per share, each excluding certain unusual expense items, as presented here may not be comparable to similarly titled measures reported by other companies.

About The Pantry

Headquartered in Sanford, North Carolina, The Pantry, Inc. is the leading independently operated convenience store chain in the southeastern United States and one of the largest independently operated convenience store chains in the country, with net sales for fiscal 2004 of approximately $3.5 billion. As of March 31, 2005, the Company operated 1,345 stores in 10 states under a number of banners including Kangaroo Express^SM, The Pantry^®, Golden Gallon^®, and Lil Champ Food Store^®. The Pantry’s stores offer a broad selection of merchandise, as well as gasoline and other ancillary services designed to appeal to the convenience needs of its customers.

Safe Harbor Statement

Statements made by the Company in this press release relating to future plans, events, or financial performance are “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements are based on the Company’s current plans and expectations and involve a number of risks and uncertainties that could cause actual results and events to vary materially from the results and events anticipated or implied by such forward-looking statements. Any number of factors could affect actual results and events, including, without limitation: the ability of the Company to take advantage of expected synergies in connection with the acquisition of D&D Oil Co., Inc.; the actual operating results of the stores acquired in the D&D Oil Co., Inc. transaction; fluctuations in domestic and global petroleum and gasoline markets, changes in the competitive landscape of the convenience store industry, including gasoline stations and other non-traditional retailers located in the Company’s markets; the effect of national and regional economic conditions on the convenience store industry and the markets we serve; the effect of regional weather conditions on customer traffic; financial difficulties of suppliers, including our principal suppliers of gas and merchandise; environmental risks associated with selling petroleum products; governmental regulations, including those

regulating the environment; and acts of war or terrorist activity. These and other risk factors are discussed in the Company’s Annual Report on Form 10-K, and in its other filings with the Securities and Exchange Commission. In addition, the forward-looking statements included in this press release are based on the Company’s estimates and plans as of April 28, 2005. While the Company may elect to update these forward-looking statements at some point in the future, it specifically disclaims any obligation to do so.

The Pantry, Inc.

Unaudited Consolidated Statements of Operations and Selected Financial Data

(In thousands, except per share and per gallon amounts, margin data and store count)

	Quarter Ended						Six Months Ended
	March 31, 2005			March 25, 2004			March 31, 2005			March 25, 2004
	(13 weeks)			(13 weeks)			(26 weeks)			(26 weeks)
Revenues:
Merchandise	$	284,289		$	270,073		$	571,356		$	540,222
Gasoline		661,471			516,280			1,315,947			990,572
Total revenues		945,760			786,353			1,887,303			1,530,794
Cost of sales:
Merchandise		178,557			170,587			361,532			341,562
Gasoline		627,351			482,539			1,231,940			915,895
Total cost of sales		805,908			653,126			1,593,472			1,257,457
Gross profit		139,852			133,227			293,831			273,337
Operating expenses:
Operating, general and administrative		110,569			105,443			221,839			210,570
Depreciation and amortization		14,214			13,533			28,600			27,608
Total operating expenses		124,783			118,976			250,439			238,178
Income from operations		15,069			14,251			43,392			35,159
Other income (expense):
Loss on extinguishment of debt		—			(23,087	)		—			(23,087	)
Interest expense		(9,618	)		(14,166	)		(18,604	)		(27,307	)
Miscellaneous		682			105			1,104			367
Total other expense		(8,936	)		(37,148	)		(17,500	)		(50,027	)
Income (loss) before income taxes		6,133			(22,897	)		25,892			(14,868	)
Income tax benefit (expense)		(2,361	)		8,815			(9,968	)		5,723
Net income (loss)	$	3,772		$	(14,082	)	$	15,924		$	(9,145	)
Earnings (loss) per share:
Net income (loss) per diluted share	$	0.18		$	(0.71	)	$	0.75		$	(0.48	)
Diluted shares outstanding		21,520			19,799			21,302			19,103
Selected financial data:
EBITDA	$	29,965		$	27,889		$	73,096		$	63,134
Net cash provided by operating activities	$	10,738		$	6,210		$	26,879		$	7,412
Merchandise gross profit	$	105,732		$	99,486		$	209,824		$	198,660
Merchandise margin		37.2	%		36.8	%		36.7	%		36.8	%
Gasoline gallons		346,152			321,805			686,796			647,385
Gasoline gross profit	$	34,120		$	33,741		$	84,007		$	74,677
Gasoline margin per gallon (1)	$	0.0986		$	0.1048		$	0.1223		$	0.1154
Gasoline retail per gallon	$	1.91		$	1.60		$	1.92		$	1.53
Comparable store data:
Merchandise sales %		6.6	%		3.4	%		6.2	%		2.9	%
Gasoline gallons %		7.7	%		1.2	%		5.9	%		2.3	%
Number of stores:
End of period		1,345			1,374			1,345			1,374
Weighted-average store count		1,348			1,380			1,351			1,370

Notes:

(1) Gasoline margin per gallon represents gasoline revenue less cost of product and expenses associated with credit card processing fees and repairs and maintenance on gasoline equipment. Gasoline margin per gallon as presented may not be comparable to similarly titled measures reported by other companies.

The Pantry, Inc.

Unaudited Condensed Consolidated Balance Sheets

(In thousands)

	March 31, 2005		September 30, 2004
Assets
Cash and cash equivalents	$	104,777	$	108,048
Receivables, net		41,723		43,664
Inventories		96,852		95,228
Other current assets		33,844		26,892
Total current assets		277,196		273,832
Property and equipment, net		403,999		411,501
Goodwill, net		341,898		341,652
Other		38,685		35,155
Total assets	$	1,061,778	$	1,062,140
Liabilities and shareholders’ equity
Current maturities of long-term debt	$	16,025	$	16,029
Current maturities of capital lease obligations		1,197		1,197
Accounts payable		110,504		121,151
Other accrued liabilities		60,278		72,581
Total current liabilities		188,004		210,958
Long-term debt		543,000		551,010
Environmental expenses		15,098		14,051
Deferred income taxes		68,651		63,257
Deferred revenue		33,501		35,051
Capital lease obligations		13,969		14,582
Other		23,056		21,045
Total shareholders’ equity		176,499		152,186
Total liabilities and shareholders’ equity	$	1,061,778	$	1,062,140

The Pantry, Inc.

Reconciliation of Non-GAAP Financial Measures

(In thousands)

	Quarter Ended						Six Months Ended
	March 31, 2005			March 25, 2004			March 31, 2005			March 25, 2004
EBITDA	$	29,965		$	27,889		$	73,096		$	63,134
Interest expense and loss on extinguishment of debt		(9,618	)		(37,253	)		(18,604	)		(50,394	)
Adjustments to reconcile net income (loss) to net cash provided by operating activities (other than depreciation and amortization and provision for deferred income taxes)		1,040			24,499			739			25,390
Changes in operating assets and liabilities, net:
Assets		(9,284	)		(4,756	)		(6,443	)		(5,409	)
Liabilities		(1,365	)		(4,169	)		(21,909	)		(25,309	)
Net cash provided by operating activities	$	10,738		$	6,210		$	26,879		$	7,412