EX-99 2 ex_99-1.htm PRESS RELEASE

 

INVESTORS:

MEDIA:

Kevin Twomey

Karen Rugen

717-731-6540

717-730-7766

or investor@riteaid.com

 

 

 

FOR IMMEDIATE RELEASE

 

RITE AID ANNOUNCES FOURTH QUARTER AND FISCAL 2007 RESULTS

 

Reports Fourth Quarter Income of $.01 Per Diluted Share, Full Year Loss of $.01 Per Diluted Share

 

Reports Fourth Quarter Adjusted EBITDA of $201.0 Million, Full Year Adjusted EBITDA of $696.9 Million

 

Provides Fiscal 2008 Guidance, Including Anticipated Impact Of Brooks Eckerd Acquisition

 

Expected To Close By End Of May

 

Estimates Brooks Eckerd Acquisition To Be Accretive To EPS In Fiscal 2009 By $.18 to $.20 Per Diluted Share

 

CAMP HILL, PA, April 12, 2007—Rite Aid Corporation (NYSE: RAD) today announced financial results for its fourth quarter and fiscal year ended March 3, 2007.

 

Revenues for the 13-week fourth quarter were $4.56 billion versus revenues of $4.77 billion in the prior year

14-week fourth quarter, a 4.4 percent decrease due to one less week in this year’s fourth quarter. The company’s fiscal 2007 had 52 weeks compared to 53 weeks in fiscal 2006, with the extra week in last year’s fourth quarter contributing approximately $345 million in revenues.

 

Same store sales for the 13-week fourth quarter increased 3.0 percent over the prior year 13-week comparable period, consisting of a 4.1 percent pharmacy same store sales increase and a 1.2 percent increase in front-end same store sales. The number of prescriptions filled in comparable drugstores increased 1.5 percent. Prescription sales accounted for 62.6 percent of total sales, and third party prescription sales represented 95.5 percent of pharmacy sales.

 

Net income for the fourth quarter was $15.1 million or $.01 per diluted share compared to last year’s fourth quarter of $1.246 billion or $1.83 per diluted share. Last year’s fourth quarter included a $1.231 billion or $1.82 per diluted share income tax benefit and a $.01 per diluted share benefit from the reversal of a $20 million accrual that had been established in fiscal 2003 for potential liability arising out of an investigation into prior management’s business practices. Included in this year’s fourth quarter results was an $18.7 million charge for the early redemption of debt and a LIFO charge of $16.2 million compared to last year’s LIFO charge of $9.4 million. Offsetting these negative factors was an increase in adjusted EBITDA of $19.6 million and a lower store closing and impairment charge of $25.2 million compared to last year’s $42.4 million charge.

 

- MORE –

 


 

Rite Aid FY’07 Q4 Press Release - page 2

 

Adjusted EBITDA (which is reconciled to net income on the attached table) was $201.0 million or 4.4 percent of revenues for the 13-week fourth quarter compared to $181.4 million or 3.8 percent of revenues for last year’s

14-week fourth quarter, with last year’s extra week contributing approximately $15.0 million of adjusted EBITDA. The $19.6 million increase in year over year adjusted EBITDA is primarily due to an improvement in gross margin rate and a reduction in expenses in relation to revenues.

 

In the fourth quarter, the company opened 19 stores, relocated 32 stores and closed 8 stores. Stores in operation at the end of the quarter totaled 3,333.

 

A significant event in the quarter was the overwhelming Rite Aid stockholder approval of the company’s pending acquisition of approximately 1,850 Brooks and Eckerd stores and six distribution centers. As announced today, the acquisition is expected to close by the end of May, pending final regulatory approval and the satisfaction of customary closing conditions.

 

“Our fourth quarter was a good finish to a milestone year for Rite Aid, in which we turned our pharmacy business around and reached agreement on an acquisition that will increase our store base by more than 50 percent -- giving us the scale to better compete with our drugstore competitors,” said Mary Sammons, Rite Aid president and CEO. “During the quarter, we achieved a solid increase in adjusted EBITDA, margin rate improvement and excellent expense control. We saw the same positive pharmacy trends in the quarter that we saw throughout fiscal 2007 -- a year where we also improved our bottom-line performance with good expense control, opened more than 100 new and relocated Customer World stores and gained a significant number of senior customers with our focus on Medicare Part D and our Living More senior loyalty program. At the same time we improved our core business, we developed an extensive, detailed integration plan for the upcoming Brooks and Eckerd integration and are ready to hit the ground running.”

 

Year-End Results

 

For the 52-week fiscal year ended March 3, 2007, Rite Aid had revenues of $17.5 billion as compared to revenues of $17.3 billion for the 53-week prior year, which included an additional approximate $345 million in revenues because of the extra week. Revenues year-over-year increased 1.4%.

 

Same store sales for the 52-week year increased 3.4 percent over the prior 52-week comparable period. This increase consisted of a 4.4 percent pharmacy same store sales increase and a 1.9 percent increase in front-end same store sales. The number of prescriptions filled in comparable drugstores increased 2.0 percent. Prescription sales accounted for 63.7 percent of total sales, and third party prescription sales were 95.4 percent of pharmacy sales.

 

Net income for the year was $26.8 million but a loss of $.01 per diluted share because of the negative impact of preferred stock dividends. This compared to last year’s net income of $1.273 billion or $1.89 per diluted share, including a $1.239 billion or $1.90 per diluted share income tax benefit and a $.01 per diluted share benefit from the reversal of a $20 million accrual established in fiscal 2003 for potential liability arising out of an investigation into prior management’s business practices. Included in the results were a LIFO charge of $43.0 million compared to last year’s charge of $32.2 million and depreciation and amortization expense of $270.3 million compared to last year’s expense of $249.8 million. Partially offsetting these negative factors was an increase in adjusted EBITDA of $21.3 million and store closing and impairment charges of $49.3 million compared to last year’s $68.7 million charge.

 

- MORE -

 


 

Rite Aid FY’07 Q4 Press Release - page 3

 

Adjusted EBITDA (which is reconciled to net income on the attached table) was $696.9 million or 4.0 percent of revenues for the 52-week year compared to $675.6 million or 3.9 percent of revenues for the 53-week previous year, with the extra week accounting for approximately $15.0 million in adjusted EBITDA. The $21.3 million increase in year-over-year adjusted EBITDA is primarily due to the increase in revenues and a reduction in expenses in relation to revenues.

 

For the year, the company opened 40 new stores, relocated 66 stores, acquired two stores, closed 32 stores and remodeled 19 stores. Stores in operation at the end of the year totaled 3,333.

 

Company Announces Fiscal 2008 Guidance, Including Nine Months of Acquired Operations

 

Because the acquisition of Brooks Eckerd is expected to close by the end of May, Rite Aid’s fiscal 2008 guidance includes nine months of the acquired operations. The company said it expects total sales for fiscal 2008 to be between $25.3 billion and $26.0 billion. Same store sales, which will not include the acquired stores until one year after close, are expected to improve 3.8 percent to 5.8 percent over fiscal 2007. Adjusted EBITDA (which is reconciled to net loss on the attached table) is expected to be between $1.0 billion and $1.1 billion and includes nine months of acquisition-related cost savings of approximately $155 million, which are expected to come in the areas of merchandising, purchasing, advertising, distribution and administration. Net loss for fiscal 2008 is expected to be between $47 million and $129 million or a loss per diluted share of $.11 to $.23 and includes estimated expense of integrating the acquired stores of $145 million. Capital expenditures, including integration capital expenditures but excluding proceeds from sale and leaseback transactions, are expected to be between $825 million and $875 million. Proceeds from sale and leaseback transactions are expected to be approximately $100 million.

 

Brooks Eckerd Acquisition Expected To Be Accretive in Fiscal 2009 by $.18 to $.20 Per Diluted Share  

 

The company said it expects to limit activities to integrate the Brooks and Eckerd stores during the calendar 2007 holiday season to minimize disruptions to customers. By doing so, the integration activities are expected to be substantially completed by the end of the second quarter fiscal 2009. The company expects the additional acquisition-related cost savings, net of the remaining integration expenses, to be accretive by $.18 to $.20 per diluted share in fiscal 2009. Included in the accretion estimates are cost savings of approximately $225 million and estimated integration expenses of approximately $60 million and no acquisition-related closed store or debt modification charges. The cost savings are expected to come in the areas of merchandising, purchasing, advertising, distribution and administration.

 

“With the positive momentum in our core business, we’re in a good position to take on the upcoming integration. We expect to leverage our merchandising, systems, programs and best practices to improve the profitability of the Brooks and Eckerd stores in addition to reducing costs,” Sammons said. “Besides the $225 million we expect in annual savings, we believe we’ll see additional benefit from improving the front end productivity of the acquired stores, increased purchasing scale, rationalizing the store base and optimizing our distribution network.”

 

Conference Call Broadcast

 

Rite Aid will hold an analyst call at 8:30 a.m. Eastern Time today with remarks by Rite Aid’s management team. The call will be simulcast via the internet and can be accessed through the websites www.riteaid.com in the conference call section of investor information and www.StreetEvents.com. A playback of the call will be available on both sites starting at 12 p.m. Eastern Time today. A playback of the call will also be available by telephone for 48 hours beginning at 12 p.m. Eastern Time today until 12 p.m. Eastern Time on April 14. The playback number is 1-800-642-1687 from within the U.S. and Canada or 1-706-645-9291 from outside the U.S. and Canada with the seven-digit reservation number 4698658.

 

- MORE -

 


 

Rite Aid Press Release - page 4

 

Rite Aid Corporation is one of the nation’s leading drugstore chains with annual revenues of approximately

$17.5 billion and more than 3,330 stores in 27 states and the District of Columbia. Information about Rite Aid, including corporate background and press releases, is available through the company’s website at www.riteaid.com.

 

This press release may contain forward-looking statements, which are subject to certain risks and uncertainties that could cause actual results to differ materially from those expressed or implied in the forward-looking statements. Factors that could cause actual results to differ materially from those expressed or implied in such forward-looking statements include our high level of indebtedness, our ability to make interest and principal payments on our debt and satisfy the other covenants contained in our senior secured credit facility and other debt agreements, our ability to improve the operating performance of our existing stores in accordance with our long term strategy, our ability to hire and retain pharmacists and other store personnel, the efforts of private and public third-party payors to reduce prescription drug reimbursements and encourage mail order, competitive pricing pressures, continued consolidation of the drugstore industry, changes in state or federal legislation or regulations, the outcome of lawsuits and governmental investigations, general economic conditions and inflation, interest rate movements, access to capital and the ability of Rite Aid to consummate the transaction with Jean Coutu Group and realize the benefits of such transaction . Consequently, all of the forward-looking statements made in this press release are qualified by these and other factors, risks and uncertainties. Readers are also directed to consider other risks and uncertainties discussed in documents filed by the Company with the Securities and Exchange Commission. Forward-looking statements can be identified through the use of words such as “may”, “will”, “intend”, “plan”, “project”, “expect”, “anticipate”, “could”, “should”, “would”, “believe”, “estimate”, “contemplate”, and “possible”.

 

See the 8-K furnished to the Securities and Exchange Commission on April 12, 2007 for definition, purpose and reconciliation of a non-GAAP financial measure referred to herein to the most comparable GAAP financial measure.

 

###

 


 

RITE AID CORPORATION AND SUBSIDIARIES

 

CONSOLIDATED BALANCE SHEETS

(Dollars in thousands)

(unaudited)

 

 

 

 

 

 

 

 

 

 

March 3, 2007

 

March 4, 2006

 

ASSETS

 

 

 

 

Current assets:

 

 

 

 

 

Cash and cash equivalents

$

106,148 

 

$

76,067 

 

 

Accounts receivable, net

374,493 

 

354,949 

 

 

Inventories, net

2,335,679 

 

2,341,410 

 

 

Prepaid expenses and other current assets

136,668 

 

112,386 

 

 

 

Total current assets

2,952,988 

 

2,884,812 

 

Property, plant and equipment, net

1,743,104 

 

1,717,022 

 

Goodwill

 

656,037 

 

656,037 

 

Other intangibles, net

178,220 

 

193,228 

 

Deferred tax assets

1,380,942 

 

1,392,889 

 

Other assets

179,733 

 

144,383 

 

 

 

Total assets

$

7,091,024 

 

$

6,988,371 

 

 

 

 

 

 

 

 

LIABILITIES AND STOCKHOLDERS’ EQUITY

 

 

 

 

Current liabilities:

 

 

 

 

 

Current maturities of convertible notes, long-term debt and lease financing obligations

$

16,184 

 

$

584,196 

 

 

Accounts payable

902,807 

 

862,192 

 

 

Accrued salaries, wages and other current liabilities

670,934 

 

696,936 

 

 

 

Total current liabilities

1,589,925 

 

2,143,324 

 

Long-term debt, less current maturities

2,909,983 

 

2,298,706 

 

Lease financing obligations, less current maturities

174,121 

 

168,544 

 

Other noncurrent liabilities

754,149 

 

770,876 

 

 

 

Total liabilities

5,428,178 

 

5,381,450 

 

 

 

 

 

 

 

 

Commitments and contingencies

-  

 

-  

 

Stockholders’ equity:

 

 

 

 

 

Preferred stock - Series E

120,000 

 

120,000 

 

 

Preferred stock - Series G

129,917 

 

121,207 

 

 

Preferred stock - Series H

127,385 

 

120,020 

 

 

Preferred stock - Series I

116,415 

 

116,074 

 

 

Common stock

536,686 

 

527,667 

 

 

Additional paid-in capital

3,118,298 

 

3,114,997 

 

 

Accumulated deficit

(2,462,196)

 

(2,489,023)

 

 

Accumulated other comprehensive loss

(23,659)

 

(24,021)

 

 

 

Total stockholders’ equity

1,662,846 

 

1,606,921 

 

 

 

Total liabilities and stockholders’ equity

$

7,091,024 

 

$

6,988,371 

 

 

 


 

RITE AID CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

(Dollars in thousands, except per share amounts)

(unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Thirteen Weeks
ended March 3, 2007

 

Fourteen Weeks
ended March 4, 2006

Revenues

$

4,562,069 

 

$

4,771,326 

Costs and expenses:

 

 

 

 

Cost of goods sold

3,335,025 

 

3,496,777 

 

Selling, general and administrative expenses

1,123,273 

 

1,157,029 

 

Store closing and impairment charges

25,164 

 

42,387 

 

Interest expense

69,516 

 

71,744 

 

Loss on debt modifications and retirements, net

18,662 

 

-  

 

Gain on sale of assets and investments, net

(9,736)

 

(2,597)

 

 

 

 

 

 

 

 

 

4,561,904 

 

4,765,340 

 

 

 

 

 

 

Income before income taxes

165 

 

5,986 

 

 

 

 

 

 

Income tax benefit

(14,932)

 

(1,240,387)

 

 

 

 

 

 

 

Net income

$

15,097

 

$

1,246,373 

 

 

 

 

 

 

Basic and diluted income per share:

 

 

 

 

 

 

 

 

 

Numerator for income per share:

 

 

 

 

Net income

$

15,097 

 

$

1,246,373 

 

Accretion of redeemable preferred stock

(25)

 

(25)

 

Cumulative preferred stock dividends

(7,961)

 

(7,703)

 

Income attributable to common stockholders - basic

$

7,111 

 

$

1,238,645 

 

Add back - Interest on convertible debt

 

1,484 

 

Add back - Cumulative preferred stock dividends

 

7,703 

 

Income attributable to common stockholders - diluted

$

7,111 

 

$

1,247,832 

 

 

 

 

 

 

 

 

 

 

 

 

Denominator:

 

 

 

 

Basic weighted average shares

527,427 

 

525,724 

 

Outstanding options and restricted shares

19,867 

 

6,620 

 

Convertible debt

-  

 

38,462 

 

Convertible preferred stock - Series E

-  

 

34,722 

 

Convertible preferred stock - Series G

-  

 

22,038 

 

Convertible preferred stock - Series H

-  

 

21,822 

 

Convertible preferred stock - Series I

-  

 

33,472 

 

 

 

 

 

 

Diluted weighted average shares

547,294 

 

682,860 

 

 

 

 

 

 

Basic income per share

$

0.01 

 

$

2.36 

 

Diluted income per share

$

0.01 

 

$

1.83 

 

 


 

RITE AID CORPORATION AND SUBSIDIARIES

 

CONSOLIDATED STATEMENTS OF OPERATIONS

(Dollars in thousands, except per share amounts)

(unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Fifty-two Weeks
ended March 3, 2007

 

Fifty-three Weeks
ended March 4,
2006

Revenues

$

17,507,719 

 

$

17,270,968 

Costs and expenses:

 

 

 

 

Cost of goods sold

12,791,597 

 

12,571,860 

 

Selling, general and administrative expenses

4,370,481 

 

4,307,421 

 

Store closing and impairment charges

49,317 

 

68,692 

 

Interest expense

275,219 

 

277,017 

 

Loss on debt modifications and retirements, net

18,662 

 

9,186 

 

Gain on sale of assets and investments, net

(11,139)

 

(6,462)

 

 

 

 

 

 

 

 

 

17,494,137 

 

17,227,714 

 

 

 

 

 

 

Income before income taxes

13,582 

 

43,254 

 

 

 

 

 

 

Income tax benefit

(13,244)

 

(1,229,752)

 

 

 

 

 

 

 

Net income

$

26,826 

 

$

1,273,006 

 

 

 

 

 

 

Basic and diluted (loss) income per share:

 

 

 

 

 

 

 

 

 

Numerator for (loss) income per share:

 

 

 

 

Net income

$

26,826 

 

$

1,273,006 

 

Premium to redeem preferred stock

 

(5,883)

 

Accretion of redeemable preferred stock

(102)

 

(102)

 

Cumulative preferred stock dividends

(31,455)

 

(32,723)

 

(Loss) income attributable to common stockholders - basic

$

(4,731)

 

$

1,234,298 

 

Add back - Interest on convertible debt

 

5,936 

 

Add back - Cumulative preferred stock dividends

 

32,723 

 

Add back - Liquidation premium on preferred stock

 

5,883 

 

(Loss) income attributable to common stockholders - diluted

$

(4,731)

 

$

1,278,840 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Denominator:

 

 

 

 

Basic weighted average shares

524,460 

 

523,938 

 

Outstanding options and restricted shares

-  

 

7,749 

 

Convertible debt

-  

 

38,462 

 

Convertible preferred stock - Series E

-  

 

34,722 

 

Convertible preferred stock - Series F

-  

 

9,804 

 

Convertible preferred stock - Series G

-  

 

22,038 

 

Convertible preferred stock - Series H

-  

 

21,822 

 

Convertible preferred stock - Series I

-  

 

18,131 

 

 

 

 

 

 

 

Diluted weighted average shares

524,460 

 

676,666 

 

 

 

 

 

 

 

Basic (loss) income per share

$

(0.01)

 

$

2.36 

 

Diluted (loss) income per share

$

(0.01)

 

$

1.89 

 

 


 

RITE AID CORPORATION AND SUBSIDIARIES

SUPPLEMENTAL INFORMATION

RECONCILIATION OF NET INCOME TO ADJUSTED EBITDA

(In thousands)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Thirteen Weeks
ended March 3,
2007

 

Fourteen Weeks
ended March 4,
2006

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Reconciliation of net income to adjusted EBITDA:

 

 

 

 

 

Net income

 

$

15,097 

 

$

1,246,373 

 

 

Adjustments:

 

 

 

 

 

 

 

Interest expense

69,516 

 

71,744 

 

 

 

Recurring income tax benefit

(14,932)

 

(9,306)

 

 

 

Income tax valuation allowance reduction

-  

 

(1,231,081)

 

 

 

Depreciation and amortization

69,079 

 

65,015 

 

 

 

LIFO charges (a)

16,168 

 

9,354 

 

 

 

Store closing and impairment charges

25,164 

 

42,387 

 

 

 

Stock-based compensation expense

6,480 

 

5,042 

 

 

 

Gain on sale of assets and investments, net

(9,736)

 

(2,597)

 

 

 

Loss on debt modifications and retirements, net (b)

18,662 

 

-  

 

 

 

Litigation settlements, net (c)

-  

 

(20,000)

 

 

 

Legal and accounting expenses (d)

266 

 

-  

 

 

 

Non recurring Brooks Eckerd integration expenses (e)

2,824 

 

-  

 

 

 

Closed store liquidation expense (f)

1,457 

 

4,023 

 

 

 

Other

988 

 

452 

 

 

 

 

 

Adjusted EBITDA

$

201,033 

 

$

181,406 

 

 

 

 

 

Percent of revenues

4.41%

 

3.80%

 

 

 

 

 

 

 

 

 

 

 

 

Adjustment for impact of fourteenth week (g)

 

(15,000)

 

 

 

Thirteen week comparable adjusted EBITDA

$

201,033 

 

$

166,406 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Notes:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(a)

 

Represents non-cash charges to value our inventories under the last-in first-out ("LIFO") method.

 

 

 

 

 

 

 

 

 

 

 

 

(b)

 

Represents loss related to debt modifications and retirements, net.

 

 

 

 

 

 

 

 

 

 

 

 

(c)

 

Represents net impact of non-recurring litigation.

 

 

 

 

 

 

 

 

 

(d)

 

Charges consist primarily of fees paid for legal services related to defending against litigation related

 

 

 

 

 

to prior management's business practices and to defend prior management.

 

 

 

 

 

 

 

 

 

(e)

 

Represents incremental costs related to the pending acquisition of Jean Coutu USA.

 

 

 

 

 

 

 

 

 

(f)

 

Represents costs to liquidate inventory at stores that are in the process of closing.

 

 

 

 

 

 

 

 

 

 

 

 

(g)

 

Represents the estimated additional EBITDA resulting from the extra week in the fourteen

 

 

 

 

 

week period ended March 4, 2006

 

 


 

RITE AID CORPORATION AND SUBSIDIARIES

SUPPLEMENTAL INFORMATION

RECONCILIATION OF NET INCOME TO ADJUSTED EBITDA

(In thousands)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Fifty-two Weeks
ended March 3,
2007

 

Fifty-three Weeks
ended March 4,
2006

 

 

 

 

 

 

 

 

 

Reconciliation of net income to adjusted EBITDA:

 

 

 

 

 

Net income

 

$

26,826 

 

$

1,273,006 

 

 

Adjustments:

 

 

 

 

 

 

 

Interest expense

275,219 

 

277,017 

 

 

 

Recurring income tax (benefit) expense

(13,244)

 

9,177 

 

 

 

Income tax valuation allowance reduction and favorable tax settlements

 

(1,238,929)

 

 

 

Depreciation and amortization

270,307 

 

249,755 

 

 

 

LIFO charges (a)

43,006 

 

32,191 

 

 

 

Store closing and impairment charges

49,317 

 

68,692 

 

 

 

Stock-based compensation expense

22,331 

 

20,261 

 

 

 

Gain on sale of assets and investments, net

(11,139)

 

(6,462)

 

 

 

Loss on debt modifications and retirements, net (b)

18,662 

 

9,186 

 

 

 

Litigation settlements, net (c)

(1,294)

 

(32,444)

 

 

 

Legal and accounting expenses (d)

1,016 

 

1,415 

 

 

 

Non recurring Brooks Eckerd integration expenses (e)

3,566 

 

 

 

 

Closed store liquidation expense (f)

8,628 

 

10,236 

 

 

 

Other

 

3,709 

 

2,495 

 

 

 

 

 

Adjusted EBITDA

$

696,910 

 

$

675,596 

 

 

 

 

 

Percent of revenues

3.98%

 

3.91%

 

 

 

 

 

 

 

 

 

 

 

 

Adjustment for impact of fifty-third week (g)

-  

 

(15,000)

 

 

 

Fifty-two week comparable adjusted EBITDA

$

696,910 

 

$

660,596 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Notes:

 

 

 

 

 

 

 

 

 

 

 

 

 

(a)

 

Represents non-cash charges to value our inventories under the last-in first-out ("LIFO") method.

 

 

 

 

 

 

 

 

 

(b)

 

Represents loss related to debt modifications and retirements, net

 

 

 

 

 

 

 

 

 

(c)

 

Represents net impact of non-recurring litigation.

 

 

 

 

 

 

 

 

 

(d)

 

Charges consist primarily of fees paid for legal services related to defending against litigation related

 

 

 

 

 

to prior management's business practices and to defend prior management.

 

 

 

 

 

 

 

 

 

(e)

 

Represents incremental costs related to the pending acquisition of Jean Coutu USA.

 

 

 

 

 

 

 

 

 

(f)

 

Represents costs to liquidate inventory at stores that are in the process of closing.

 

 

 

 

 

 

 

 

 

(g)

 

Represents the estimated additional EBITDA resulting from the extra week in the fifty-three

 

 

 

 

 

week period ended March 4, 2006

 

 


 

RITE AID CORPORATION AND SUBSIDIARIES

 

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Dollars in thousands)

(unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Thirteen Weeks
ended March 3,
2007

 

Fourteen Weeks
ended March 4,
2006

 

 

 

 

 

 

 

 

 

 

OPERATING ACTIVITIES:

 

 

 

 

Net income

 

$

15,097 

 

$

1,246,373 

Adjustments to reconcile to net cash provided by operating activities:

 

 

 

 

 

Depreciation and amortization

 

69,079 

 

65,015 

 

Store closing and impairment charges

 

25,164 

 

42,387 

 

LIFO charges

 

16,168 

 

9,354 

 

Gain on sale of assets and investments, net

 

(9,736)

 

(2,597)

 

Stock-based compensation expense

 

6,480 

 

5,042 

 

Loss on debt modifications and retirements, net

 

18,662 

 

-  

 

Changes in deferred taxes

 

(18,664)

 

(1,225,228)

 

Tax benefit from exercise of stock options

 

-  

 

2,976 

 

Proceeds from insured loss

 

593 

 

24,319

 

Changes in operating assets and liabilities:

 

 

 

 

 

 

Net payments on accounts receivable securitization

 

(20,000)

 

(15,000)

 

 

Accounts receivable

 

(32,672)

 

(31,247)

 

 

Inventories

 

116,575 

 

134,959 

 

 

Prepaid expenses and other current assets

 

1,714 

 

(49,483)

 

 

Other assets

 

21,079 

 

(17,754)

 

 

Income taxes receivable/payable

 

8,733 

 

(22,281)

 

 

Accounts payable

 

(40,124)

 

(39,722)

 

 

Other liabilities

 

(51,748)

 

(46,706)

 

 

 

Net cash provided by operating activities

 

126,400 

 

80,407 

INVESTING ACTIVITIES:

 

Expenditures for property, plant and equipment

 

(110,477)

 

(96,601)

 

Intangible assets acquired

 

(5,430)

 

(18,965)

 

Expenditures for business acquisition

 

(18,369)

 

 

Proceeds from sale-leaseback transactions

 

23,881 

 

4,802 

 

Proceeds from dispositions of assets and investments

 

1,634 

 

5,259 

 

Proceeds from insured loss

 

4,406 

 

6,603 

 

 

 

Net cash used in investing activities

 

(104,355)

 

(98,902)

FINANCING ACTIVITIES:

 

Proceeds from issuance of long-term debt

 

1,000,000 

 

 

Net (payments to) proceeds from revolver

 

(575,000)

 

4,000 

 

Proceeds from financing secured by owned property

 

15,455 

 

2,649 

 

Principal payments on long-term debt

 

(501,412)

 

(40,586)

 

Change in zero balance cash accounts

 

6,020 

 

21,142 

 

Excess tax deduction on stock options

 

1,153 

 

-  

 

Net proceeds from the issuance of common stock

 

16,085 

 

6,072 

 

Payments for preferred stock dividends

 

(3,845)

 

(3,845)

 

Deferred financing costs paid

 

(22,750)

 

-  

 

 

 

Net cash used in financing activities

 

(64,294)

 

(10,568)

Decrease in cash and cash equivalents

 

(42,249)

 

(29,063)

Cash and cash equivalents, beginning of period

 

148,397 

 

105,130 

Cash and cash equivalents, end of period

 

$

106,148 

 

$

76,067 

 

 


 

RITE AID CORPORATION AND SUBSIDIARIES

 

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Dollars in thousands)

(unaudited)

 

 

 

 

 

 

 

 

Fifty-two Weeks
ended March 3,
2007

 

Fifty-three Weeks
ended March 4,
2006

 

 

 

 

 

 

 

 

 

 

OPERATING ACTIVITIES:

 

 

 

 

Net income

 

$

26,826 

 

$

1,273,006 

Adjustments to reconcile to net cash provided by operating activities:

 

 

 

 

 

Depreciation and amortization

 

270,307 

 

249,755 

 

Store closing and impairment charges

 

49,317 

 

68,692 

 

LIFO charges

 

43,006 

 

32,188 

 

Gain on sale of assets and investments, net

 

(11,139)

 

(6,462)

 

Stock-based compensation expense

 

22,331 

 

20,261 

 

Loss on debt modifications and retirements, net

 

18,662 

 

9,186 

 

Changes in deferred taxes

 

(13,362)

 

(1,211,646)

 

Tax benefit from exercise of stock options

 

-  

 

2,976 

 

Proceeds from insured loss

 

593

 

24,319 

 

Changes in operating assets and liabilities:

 

 

 

 

 

 

Net payments on accounts receivable securitization

 

20,000 

 

180,000 

 

 

Accounts receivable

 

(39,543)

 

(51,494)

 

 

Inventories

 

(37,275)

 

(63,445)

 

 

Prepaid expenses and other current assets

 

1,028 

 

(62,061)

 

 

Other assets

 

13,427 

 

(13,961)

 

 

Income taxes receivable/payable

 

1,454 

 

(21,263)

 

 

Accounts payable

 

14,219 

 

71,641

 

 

Other liabilities

 

(70,706)

 

(84,527)

 

 

 

Net cash provided by operating activities

 

309,145 

 

417,165 

INVESTING ACTIVITIES:

 

 

 

 

 

Expenditures for property, plant and equipment

 

(334,485)

 

(287,785)

 

Intangible assets acquired

 

(29,243)

 

(53,564)

 

Expenditures for business acquisition

 

(18,369)

 

-  

 

Proceeds from sale-leaseback transactions

 

55,563 

 

77,307 

 

Proceeds from dispositions of assets and investments

 

9,348 

 

26,355 

 

Proceeds from insured loss

 

4,406 

 

6,603 

 

 

Net cash used in investing activities

 

 

(312,780)

 

(231,084)

FINANCING ACTIVITIES:

 

 

 

 

 

 

Proceeds from issuance of bank term debt

 

145,000 

 

-  

 

Proceeds from issuance of long-term debt

 

1,000,000 

 

-  

 

Net (payments to) proceeds from revolver

 

(234,000)

 

534,000

 

Principal payments on bank credit facilities

 

-  

 

(448,875)

 

Proceeds from financing secured by owned property

 

26,527 

 

8,001

 

Principal payments on long-term debt

 

(901,297)

 

(377,023)

 

Change in zero balance cash accounts

 

15,662 

 

26,393

 

Excess tax deduction on stock options

 

1,587 

 

-  

 

Net proceeds from the issuance of common stock

 

20,386 

 

11,562 

 

Net proceeds from the issuance of preferred stock

 

-  

 

116,885 

 

Payments for the redemption of preferred stock

 

-  

 

(123,533)

 

Payments for preferred stock dividends

 

(15,380)

 

(13,089)

 

Deferred financing costs paid

 

(24,769)

 

(7,156)

 

 

 

Net cash provided by (used in) financing activities

 

33,716 

 

(272,835)

Increase (decrease) in cash and cash equivalents

 

30,081 

 

(86,754)

Cash and cash equivalents, beginning of period

 

76,067 

 

162,821 

Cash and cash equivalents, end of period

 

$

106,148 

 

$

76,067 

 

 


 

RITE AID CORPORATION AND SUBSIDIARIES

SUPPLEMENTAL INFORMATION

RECONCILIATION OF NET LOSS GUIDANCE TO ADJUSTED EBITDA GUIDANCE

YEAR ENDING MARCH 1, 2008

(In thousands)

 

 

 

 

 

Guidance Range

 

Low

 

High

 

 

 

 

Reconciliation of net loss to adjusted EBITDA:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net loss

$

(128,900)

 

$

(46,900)

 

 

Adjustments:

 

 

 

 

 

 

Interest expense

420,000 

 

420,000 

 

 

 

Income tax benefit, net

(69,000)

 

(26,000)

 

 

 

Depreciation and amortization

420,000 

 

420,000 

 

 

 

LIFO charge

60,000 

 

60,000 

 

 

 

Store closing, liquidation, and impairment charges

115,000 

 

115,000 

 

 

 

Non recurring Brooks-Eckerd integration expenses

145,000 

 

145,000 

 

 

 

Loss on debt modification

9,200 

 

9,200 

 

 

 

Stock-based compensation expense

30,000 

 

30,000 

 

 

 

Other

(1,300)

 

(1,300)

 

 

 

 

 

Adjusted EBITDA

$

1,000,000 

 

$

1,125,000 

 

 

 

 

 

 

 

 

 

 

 

 

 

Diluted loss per share

$

(0.23)

 

$

(0.11)