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 |
|
Fourteen Weeks | ||||
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 |
|
Fifty-three Weeks | ||
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 |
|
Fourteen Weeks | ||||
|
|
|
|
|
|
|
|
| ||||
|
|
|
|
|
|
|
|
| ||||
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: |
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| |||||||
|
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|
|
|
|
|
|
| ||||
|
|
|
(a) |
|
Represents non-cash charges to value our inventories under the last-in first-out ("LIFO") method. | |||||||
|
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|
|
|
|
|
|
| ||||
|
|
|
(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 |
|
Fifty-three Weeks | ||||||||||
|
|
|
|
|
|
|
|
| ||||||||||
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 |
|
Fourteen Weeks | ||||||||||||||||||
|
|
|
|
| ||||||||||||||||||
|
|
|
|
| ||||||||||||||||||
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 |
|
Fifty-three Weeks | |||||||||
|
|
|
|
| |||||||||
|
|
|
|
| |||||||||
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) | ||||