Exhibit 99.1
Press Release
For Further Information Contact:
INVESTORS: |
| MEDIA: |
Matt Schroeder |
| Susan Henderson |
(717) 214-8867 |
| (717) 730-7766 |
or investor@riteaid.com |
|
|
FOR IMMEDIATE RELEASE
RITE AID REPORTS IMPROVED SECOND QUARTER FISCAL 2013 RESULTS
· Second Quarter Net Loss of $0.05 per Diluted Share, Compared to Prior Second Quarter Net Loss of $0.11 per Diluted Share
· Second Quarter Adjusted EBITDA of $218.7 Million Compared to Adjusted EBITDA of $184.3 Million in Prior Second Quarter
· Second Quarter Results Benefited from Continued Front End Sales and Prescription Count Growth
· Seventh Consecutive Quarter of Adjusted EBITDA Increases
· Rite Aid Updates Fiscal 2013 Outlook
Camp Hill, Pa. (Sept. 20, 2012) - Rite Aid Corporation (NYSE: RAD) today reported improved financial results for its fiscal second quarter ended Sept.1, 2012.
The company reported revenues of $6.2 billion, a net loss of $38.8 million, or $0.05 per diluted share, and Adjusted EBITDA of $218.7 million, or 3.5 percent of revenues. Results benefited from continued front end sales and prescription count growth as well as an improvement in gross margin.
“We are pleased with our second quarter results as we continue to make significant progress in our turnaround efforts,” said Rite Aid Chairman, President and CEO John Standley. “We have now increased Adjusted EBITDA and same store prescription count for seven consecutive quarters, thanks to chainwide efforts to execute key sales initiatives, operate more efficiently and provide a superior customer experience. While the wave of new generic medications is negatively impacting same store sales, it’s having a positive impact on pharmacy gross margin.”
“We are working to continue this momentum as we focus on communicating the value of our wellness+ loyalty program, converting additional stores to our innovative new Wellness format and promoting the convenience of getting a flu shot at your neighborhood Rite Aid pharmacy,” Standley added.
-More-
Rite Aid FY 2013 Q2 Press Release – page 2
Second Quarter Summary
Revenues for the 13-week quarter were $6.2 billion versus revenues of $6.3 billion in the prior year second quarter. Revenues decreased 0.6 percent primarily as a result of a decrease in pharmacy same store sales and store closings.
Same store sales for the quarter were flat over the prior year 13-week period, consisting of a 1.4 percent increase in front end sales offset by a 0.7 percent decrease in pharmacy sales. Pharmacy sales included an approximate 750 basis point negative impact from new generic introductions. The number of prescriptions filled in same stores increased 4.0 percent over the prior year period, which includes the benefit of additional prescriptions resulting from the Walgreens/Express Scripts dispute. Prescription sales accounted for 67.5 percent of total drugstore sales, and third party prescription revenue was 96.5 percent of pharmacy sales.
Net loss was $38.8 million or $0.05 per diluted share compared to last year’s second quarter net loss of $92.3 million or $0.11 per diluted share. The decrease in net loss year over year resulted from an increase in Adjusted EBITDA and decreases in LIFO, store closing and impairment and depreciation and amortization charges.
Adjusted EBITDA (which is reconciled to net loss on the attached table) was $218.7 million or 3.5 percent of revenues for the second quarter compared to $184.3 million or 2.9 percent of revenues for the like period last year. Adjusted EBITDA improved due to increases in front end sales and script count as well as an improvement in pharmacy gross margin resulting from new generic introductions.
In the second quarter, the company relocated four stores, remodeled 147 stores and closed nine stores. Completed wellness remodels at the end of the second quarter totaled 570. Stores in operation at the end of the second quarter totaled 4,643.
Rite Aid Updates Sales, Adjusted EBITDA and Net Loss Guidance for Fiscal 2013
Rite Aid has updated its fiscal 2013 guidance with sales expected to be between $25.1 billion and $25.4 billion and same store sales to range from a decrease of 1.0 percent to an increase of 0.25 percent compared to fiscal 2012. The reduction in the company’s sales and same store sales guidance is driven by a projected 650 basis points negative impact of new generic introductions on pharmacy same store sales and continued reimbursement rate pressure. Rite Aid has also raised the lower end of its Adjusted EBITDA (which is reconciled to net loss on the attached table) guidance to be between $965 million and $1.025 billion and its net loss guidance to be between $69 million and $196 million or a loss per diluted share of $0.09 to $0.23. Capital expenditures are expected to be approximately $300 million.
Conference Call Broadcast
Rite Aid will hold an analyst call at 8:30 a.m. EDT 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. Slides related to materials discussed on the call will be available on both sites. A playback of the call will be available on both sites starting at 12 p.m. EDT today. A playback of the call will also be available by telephone beginning at 12 p.m. EDT today until 11:59 p.m. EDT on Sept.22, 2012. The playback number is 1-855-859-2056 from within the U.S. and Canada or 1-404-537-3406 from outside the U.S. and Canada with the eight-digit reservation number 25825690.
- More -
Rite Aid FY 2013 Q2 Press Release – page 3
Rite Aid is one of the nation’s leading drugstore chains with 4,643 stores in 31 states and the District of Columbia. Information about Rite Aid, including corporate background and press releases, is available through Rite Aid’s website at www.riteaid.com.
Statements, including guidance, in this release that are not historical are forward-looking statements made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Words such as “anticipate,” “believe,” “continue,” “could,” “estimate,” “expect,” “intend,” “may,” “plan,” “predict,” “project,” “should,” and “will” and variations of such words and similar expressions are intended to identify such forward-looking statements. These forward-looking statements are not guarantees of future performance and involve risks, assumptions and uncertainties, including, but not limited to, our high level of indebtedness and our ability to make interest and principal payments on our debt and satisfy the other covenants contained in our debt agreements, general economic, market and competitive conditions, our ability to improve the operating performance of our stores in accordance with our long term strategy, the efforts of private and public third-party payers to reduce prescription drug reimbursements and encourage mail order, our ability to manage expenses and our investments in working capital, outcomes of legal and regulatory matters and changes in legislation or regulations, including healthcare reform. These and other risks, assumptions and uncertainties are described in Item 1A (Risk Factors) of our most recent Annual Report on Form 10-K and in other documents that we file or furnish with the Securities and Exchange Commission, which you are encouraged to read. Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those indicated or anticipated by such forward-looking statements. Accordingly, you are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date they are made. Rite Aid expressly disclaims any current intention to update publicly any forward-looking statement after the distribution of this release, whether as a result of new information, future events, changes in assumptions or otherwise.
See the attached table for a reconciliation of a non-GAAP financial measure, Adjusted EBITDA to net income (loss), the most comparable GAAP financial measure. We define Adjusted EBITDA as net income (loss) excluding the impact of income taxes (and any corresponding reduction of tax indemnification asset), interest expense, depreciation and amortization, LIFO adjustments, charges or credits for facility closing and impairment, inventory write-downs related to store closings, stock-based compensation expense, debt modifications and retirements, sale of assets and investments, revenue deferrals related to our customer loyalty program and other items.
###
RITE AID CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Dollars in thousands)
(unaudited)
|
| September 1, 2012 |
| March 3, 2012 |
| ||
ASSETS |
|
|
|
|
| ||
Current assets: |
|
|
|
|
| ||
Cash and cash equivalents |
| $ | 94,325 |
| $ | 162,285 |
|
Accounts receivable, net |
| 926,428 |
| 1,013,233 |
| ||
Inventories, net of LIFO reserve of $1,090,625 and $1,063,123 |
| 3,022,707 |
| 3,138,455 |
| ||
Prepaid expenses and other current assets |
| 197,467 |
| 190,613 |
| ||
Total current assets |
| 4,240,927 |
| 4,504,586 |
| ||
Property, plant and equipment, net |
| 1,899,866 |
| 1,902,021 |
| ||
Other intangibles, net |
| 482,453 |
| 528,775 |
| ||
Other assets |
| 327,332 |
| 428,909 |
| ||
Total assets |
| $ | 6,950,578 |
| $ | 7,364,291 |
|
|
|
|
|
|
| ||
LIABILITIES AND STOCKHOLDERS’ DEFICIT |
|
|
|
|
| ||
Current liabilities: |
|
|
|
|
| ||
Current maturities of long-term debt and lease financing obligations |
| $ | 228,134 |
| $ | 79,421 |
|
Accounts payable |
| 1,258,460 |
| 1,426,391 |
| ||
Accrued salaries, wages and other current liabilities |
| 1,138,588 |
| 1,064,507 |
| ||
Total current liabilities |
| 2,625,182 |
| 2,570,319 |
| ||
Long-term debt, less current maturities |
| 5,829,582 |
| 6,141,773 |
| ||
Lease financing obligations, less current maturities |
| 101,195 |
| 107,007 |
| ||
Other noncurrent liabilities |
| 1,037,942 |
| 1,131,948 |
| ||
Total liabilities |
| 9,593,901 |
| 9,951,047 |
| ||
|
|
|
|
|
| ||
Commitments and contingencies |
| — |
| — |
| ||
Stockholders’ deficit: |
|
|
|
|
| ||
Preferred stock - Series G |
| 1 |
| 1 |
| ||
Preferred stock - Series H |
| 176,755 |
| 171,569 |
| ||
Common stock |
| 903,786 |
| 898,687 |
| ||
Additional paid-in capital |
| 4,276,950 |
| 4,278,988 |
| ||
Accumulated deficit |
| (7,950,220 | ) | (7,883,367 | ) | ||
Accumulated other comprehensive loss |
| (50,595 | ) | (52,634 | ) | ||
Total stockholders’ deficit |
| (2,643,323 | ) | (2,586,756 | ) | ||
Total liabilities and stockholders’ deficit |
| $ | 6,950,578 |
| $ | 7,364,291 |
|
RITE AID CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Dollars in thousands, except per share amounts)
(unaudited)
|
| Thirteen weeks ended |
| Thirteen weeks ended |
| ||
Revenues |
| $ | 6,230,884 |
| $ | 6,271,091 |
|
Costs and expenses: |
|
|
|
|
| ||
Cost of goods sold |
| 4,520,463 |
| 4,622,130 |
| ||
Selling, general and administrative expenses |
| 1,618,169 |
| 1,603,752 |
| ||
Lease termination and impairment charges |
| 7,783 |
| 15,118 |
| ||
Interest expense |
| 129,054 |
| 130,829 |
| ||
Gain on debt modifications and retirements, net |
| — |
| (4,924 | ) | ||
Gain on sale of assets, net |
| (2,954 | ) | (848 | ) | ||
|
|
|
|
|
| ||
|
| 6,272,515 |
| 6,366,057 |
| ||
|
|
|
|
|
| ||
Loss before income taxes |
| (41,631 | ) | (94,966 | ) | ||
Income tax benefit |
| (2,866 | ) | (2,712 | ) | ||
Net loss |
| $ | (38,765 | ) | $ | (92,254 | ) |
|
|
|
|
|
| ||
Basic and diluted loss per share: |
|
|
|
|
| ||
|
|
|
|
|
| ||
Numerator for loss per share: |
|
|
|
|
| ||
Net loss |
| $ | (38,765 | ) | $ | (92,254 | ) |
Accretion of redeemable preferred stock |
| (26 | ) | (26 | ) | ||
Cumulative preferred stock dividends |
| (2,612 | ) | (2,461 | ) | ||
Loss attributable to common stockholders - basic and diluted |
| $ | (41,403 | ) | $ | (94,741 | ) |
|
|
|
|
|
| ||
Basic and diluted weighted average shares |
| 889,645 |
| 885,621 |
| ||
|
|
|
|
|
| ||
Basic and diluted loss per share |
| $ | (0.05 | ) | $ | (0.11 | ) |
RITE AID CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Dollars in thousands, except per share amounts)
(unaudited)
|
| Twenty-six weeks ended |
| Twenty-six weeks |
| ||
Revenues |
| $ | 12,699,171 |
| $ | 12,661,884 |
|
Costs and expenses: |
|
|
|
|
| ||
Cost of goods sold |
| 9,239,979 |
| 9,322,004 |
| ||
Selling, general and administrative expenses |
| 3,306,235 |
| 3,189,988 |
| ||
Lease termination and impairment charges |
| 19,926 |
| 32,208 |
| ||
Interest expense |
| 259,642 |
| 261,589 |
| ||
Loss on debt modifications and retirements, net |
| 17,842 |
| 17,510 |
| ||
Gain on sale of assets, net |
| (13,005 | ) | (5,640 | ) | ||
|
|
|
|
|
| ||
|
| 12,830,619 |
| 12,817,659 |
| ||
|
|
|
|
|
| ||
Loss before income taxes |
| (131,448 | ) | (155,775 | ) | ||
Income tax benefit |
| (64,595 | ) | (439 | ) | ||
Net loss |
| $ | (66,853 | ) | $ | (155,336 | ) |
|
|
|
|
|
| ||
Basic and diluted loss per share: |
|
|
|
|
| ||
|
|
|
|
|
| ||
Numerator for loss per share: |
|
|
|
|
| ||
Net loss |
| $ | (66,853 | ) | $ | (155,336 | ) |
Accretion of redeemable preferred stock |
| (51 | ) | (51 | ) | ||
Cumulative preferred stock dividends |
| (5,186 | ) | (4,886 | ) | ||
Loss attributable to common stockholders - basic and diluted |
| $ | (72,090 | ) | $ | (160,273 | ) |
|
|
|
|
|
| ||
Basic and diluted weighted average shares |
| 888,573 |
| 884,768 |
| ||
|
|
|
|
|
| ||
Basic and diluted loss per share |
| $ | (0.08 | ) | $ | (0.18 | ) |
RITE AID CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS
(In thousands)
(unaudited)
|
| Thirteen weeks ended |
| Thirteen weeks ended |
| ||
Net loss |
| $ | (38,765 | ) | $ | (92,254 | ) |
Other comprehensive income: |
|
|
|
|
| ||
Defined benefit pension plans: |
|
|
|
|
| ||
Amortization of prior service cost, net transition obligation and net actuarial losses included in net periodic pension cost |
| 1,019 |
| 591 |
| ||
Total other comprehensive income |
| $ | 1,019 |
| $ | 591 |
|
Comprehensive loss |
| $ | (37,746 | ) | $ | (91,663 | ) |
RITE AID CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS
(In thousands)
(unaudited)
|
| Twenty-six weeks ended |
| Twenty-six weeks |
| ||
Net loss |
| $ | (66,853 | ) | $ | (155,336 | ) |
Other comprehensive income: |
|
|
|
|
| ||
Defined benefit pension plans: |
|
|
|
|
| ||
Amortization of prior service cost, net transition obligation and net actuarial losses included in net periodic pension cost |
| 2,039 |
| 1,181 |
| ||
Total other comprehensive income |
| $ | 2,039 |
| $ | 1,181 |
|
Comprehensive loss |
| $ | (64,814 | ) | $ | (154,155 | ) |
RITE AID CORPORATION AND SUBSIDIARIES
SUPPLEMENTAL OPERATING AND CASH FLOW INFORMATION
(Dollars in thousands, except per share amounts)
(unaudited)
|
| Thirteen weeks ended |
| Thirteen weeks ended |
| ||
|
|
|
|
|
| ||
SUPPLEMENTAL OPERATING INFORMATION |
|
|
|
|
| ||
|
|
|
|
|
| ||
Revenues |
| $ | 6,230,884 |
| $ | 6,271,091 |
|
Cost of goods sold |
| 4,520,463 |
| 4,622,130 |
| ||
Gross profit |
| 1,710,421 |
| 1,648,961 |
| ||
LIFO charge |
| 8,752 |
| 20,001 |
| ||
FIFO gross profit |
| 1,719,173 |
| 1,668,962 |
| ||
|
|
|
|
|
| ||
Gross profit as a percentage of revenues |
| 27.45 | % | 26.29 | % | ||
LIFO charge as a percentage of revenues |
| 0.14 | % | 0.32 | % | ||
FIFO gross profit as a percentage of revenues |
| 27.59 | % | 26.61 | % | ||
|
|
|
|
|
| ||
Selling, general and administrative expenses |
| 1,618,169 |
| 1,603,752 |
| ||
Selling, general and administrative expenses as a percentage of revenues |
| 25.97 | % | 25.57 | % | ||
|
|
|
|
|
| ||
Cash interest expense |
| 121,383 |
| 122,231 |
| ||
Non-cash interest expense |
| 7,671 |
| 8,598 |
| ||
Total interest expense |
| 129,054 |
| 130,829 |
| ||
|
|
|
|
|
| ||
Adjusted EBITDA |
| 218,653 |
| 184,256 |
| ||
Adjusted EBITDA as a percentage of revenues |
| 3.51 | % | 2.94 | % | ||
|
|
|
|
|
| ||
Net loss |
| (38,765 | ) | (92,254 | ) | ||
Net loss as a percentage of revenues |
| -0.62 | % | -1.47 | % | ||
|
|
|
|
|
| ||
Total debt |
| 6,158,911 |
| 6,191,829 |
| ||
Invested cash |
| 831 |
| 1,573 |
| ||
Total debt net of invested cash |
| 6,158,080 |
| 6,190,256 |
| ||
|
|
|
|
|
| ||
SUPPLEMENTAL CASH FLOW INFORMATION |
|
|
|
|
| ||
|
|
|
|
|
| ||
Payments for property, plant and equipment |
| 70,211 |
| 41,531 |
| ||
Intangible assets acquired |
| 11,009 |
| 8,375 |
| ||
Total cash capital expenditures |
| 81,220 |
| 49,906 |
| ||
Equipment received for noncash consideration |
| 2,132 |
| 1,734 |
| ||
Equipment financed under capital leases |
| 1,369 |
| 819 |
| ||
Gross capital expenditures |
| $ | 84,721 |
| $ | 52,459 |
|
RITE AID CORPORATION AND SUBSIDIARIES
SUPPLEMENTAL OPERATING AND CASH FLOW INFORMATION
(Dollars in thousands, except per share amounts)
(unaudited)
|
| Twenty-six weeks ended |
| Twenty-six weeks |
| ||
|
|
|
|
|
| ||
SUPPLEMENTAL OPERATING INFORMATION |
|
|
|
|
| ||
|
|
|
|
|
| ||
Revenues |
| $ | 12,699,171 |
| $ | 12,661,884 |
|
Cost of goods sold |
| 9,239,979 |
| 9,322,004 |
| ||
Gross profit |
| 3,459,192 |
| 3,339,880 |
| ||
LIFO charge |
| 27,502 |
| 40,002 |
| ||
FIFO gross profit |
| 3,486,694 |
| 3,379,882 |
| ||
|
|
|
|
|
| ||
Gross profit as a percentage of revenues |
| 27.24 | % | 26.38 | % | ||
LIFO charge as a percentage of revenues |
| 0.22 | % | 0.32 | % | ||
FIFO gross profit as a percentage of revenues |
| 27.46 | % | 26.69 | % | ||
|
|
|
|
|
| ||
Selling, general and administrative expenses |
| 3,306,235 |
| 3,189,988 |
| ||
Selling, general and administrative expenses as a percentage of revenues |
| 26.04 | % | 25.19 | % | ||
|
|
|
|
|
| ||
Cash interest expense |
| 244,210 |
| 244,423 |
| ||
Non-cash interest expense |
| 15,432 |
| 17,166 |
| ||
Total interest expense |
| 259,642 |
| 261,589 |
| ||
|
|
|
|
|
| ||
Adjusted EBITDA |
| 492,818 |
| 447,110 |
| ||
Adjusted EBITDA as a percentage of revenues |
| 3.88 | % | 3.53 | % | ||
|
|
|
|
|
| ||
Net loss |
| (66,853 | ) | (155,336 | ) | ||
Net loss as a percentage of revenues |
| -0.53 | % | -1.23 | % | ||
|
|
|
|
|
| ||
Total debt |
| 6,158,911 |
| 6,191,829 |
| ||
Invested cash |
| 831 |
| 1,573 |
| ||
Total debt net of invested cash |
| 6,158,080 |
| 6,190,256 |
| ||
|
|
|
|
|
| ||
SUPPLEMENTAL CASH FLOW INFORMATION |
|
|
|
|
| ||
|
|
|
|
|
| ||
Payments for property, plant and equipment |
| 148,211 |
| 90,286 |
| ||
Intangible assets acquired |
| 19,967 |
| 16,447 |
| ||
Total cash capital expenditures |
| 168,178 |
| 106,733 |
| ||
Equipment received for noncash consideration |
| 2,132 |
| 1,734 |
| ||
Equipment financed under capital leases |
| 5,234 |
| 2,381 |
| ||
Gross capital expenditures |
| $ | 175,544 |
| $ | 110,848 |
|
RITE AID CORPORATION AND SUBSIDIARIES
SUPPLEMENTAL INFORMATION
RECONCILIATION OF NET LOSS TO ADJUSTED EBITDA
(In thousands)
|
| Thirteen weeks ended |
| Thirteen weeks ended |
| ||
|
|
|
|
|
| ||
Reconciliation of net loss to adjusted EBITDA: |
|
|
|
|
| ||
Net loss |
| $ | (38,765 | ) | $ | (92,254 | ) |
Adjustments: |
|
|
|
|
| ||
Interest expense |
| 129,054 |
| 130,829 |
| ||
Income tax benefit |
| (2,866 | ) | (2,712 | ) | ||
Depreciation and amortization |
| 101,999 |
| 108,712 |
| ||
LIFO charges |
| 8,752 |
| 20,001 |
| ||
Lease termination and impairment charges |
| 7,783 |
| 15,118 |
| ||
Stock-based compensation expense |
| 4,695 |
| 3,952 |
| ||
Gain on sale of assets, net |
| (2,954 | ) | (848 | ) | ||
Gain on debt modifications and retirements, net |
| — |
| (4,924 | ) | ||
Closed facility liquidation expense |
| 1,411 |
| 985 |
| ||
Severance costs |
| (72 | ) | 305 |
| ||
Customer loyalty card program revenue deferral |
| 4,813 |
| 6,885 |
| ||
Other |
| 4,803 |
| (1,793 | ) | ||
Adjusted EBITDA |
| $ | 218,653 |
| $ | 184,256 |
|
Percent of revenues |
| 3.51 | % | 2.94 | % | ||
RITE AID CORPORATION AND SUBSIDIARIES
SUPPLEMENTAL INFORMATION
RECONCILIATION OF NET LOSS TO ADJUSTED EBITDA
(In thousands)
|
| Twenty-six weeks ended |
| Twenty-six weeks |
| ||
|
|
|
|
|
| ||
Reconciliation of net loss to adjusted EBITDA: |
|
|
|
|
| ||
Net loss |
| $ | (66,853 | ) | $ | (155,336 | ) |
Adjustments: |
|
|
|
|
| ||
Interest expense |
| 259,642 |
| 261,589 |
| ||
Income tax benefit |
| (64,595 | ) | (439 | ) | ||
Reduction of tax indemnification asset |
| 60,237 |
| — |
| ||
Depreciation and amortization |
| 208,370 |
| 225,802 |
| ||
LIFO charges |
| 27,502 |
| 40,002 |
| ||
Lease termination and impairment charges |
| 19,926 |
| 32,208 |
| ||
Stock-based compensation expense |
| 8,653 |
| 7,523 |
| ||
Gain on sale of assets, net |
| (13,005 | ) | (5,640 | ) | ||
Loss on debt modifications and retirements, net |
| 17,842 |
| 17,510 |
| ||
Closed facility liquidation expense |
| 2,867 |
| 3,632 |
| ||
Severance costs |
| (72 | ) | 256 |
| ||
Customer loyalty card program revenue deferral |
| 27,993 |
| 28,751 |
| ||
Other |
| 4,311 |
| (8,748 | ) | ||
Adjusted EBITDA |
| $ | 492,818 |
| $ | 447,110 |
|
Percent of revenues |
| 3.88 | % | 3.53 | % | ||
RITE AID CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollars in thousands)
(unaudited)
|
| Thirteen weeks ended |
| Thirteen weeks ended |
| ||
|
|
|
|
|
| ||
OPERATING ACTIVITIES: |
|
|
|
|
| ||
Net loss |
| $ | (38,765 | ) | $ | (92,254 | ) |
Adjustments to reconcile to net cash used in operating activities: |
|
|
|
|
| ||
Depreciation and amortization |
| 101,999 |
| 108,712 |
| ||
Lease termination and impairment charges |
| 7,783 |
| 15,118 |
| ||
LIFO charges |
| 8,752 |
| 20,001 |
| ||
Gain on sale of assets, net |
| (2,954 | ) | (848 | ) | ||
Stock-based compensation expense |
| 4,695 |
| 3,952 |
| ||
Gain on debt modifications and retirements, net |
| — |
| (4,924 | ) | ||
Changes in operating assets and liabilities: |
|
|
|
|
| ||
Accounts receivable |
| (9,996 | ) | 12,536 |
| ||
Inventories |
| (10,214 | ) | (139,804 | ) | ||
Accounts payable |
| (78,413 | ) | (23,472 | ) | ||
Other assets and liabilities, net |
| (15,773 | ) | (30,292 | ) | ||
Net cash used in operating activities |
| (32,886 | ) | (131,275 | ) | ||
INVESTING ACTIVITIES: |
|
|
|
|
| ||
Payments for property, plant and equipment |
| (70,211 | ) | (41,531 | ) | ||
Intangible assets acquired |
| (11,009 | ) | (8,375 | ) | ||
Proceeds from sale-leaseback transactions |
| 3,950 |
| — |
| ||
Proceeds from dispositions of assets and investments |
| 4,617 |
| 940 |
| ||
Net cash used in investing activities |
| (72,653 | ) | (48,966 | ) | ||
FINANCING ACTIVITIES: |
|
|
|
|
| ||
Net proceeds from revolver |
| — |
| 73,000 |
| ||
Principal payments on long-term debt |
| (7,686 | ) | (49,296 | ) | ||
Change in zero balance cash accounts |
| (6,580 | ) | 3,816 |
| ||
Net proceeds from the issuance of common stock |
| 470 |
| 447 |
| ||
Deferred financing costs paid |
| (1,114 | ) | — |
| ||
Net cash (used in) provided by financing activities |
| (14,910 | ) | 27,967 |
| ||
Decrease in cash and cash equivalents |
| (120,449 | ) | (152,274 | ) | ||
Cash and cash equivalents, beginning of period |
| 214,774 |
| 230,637 |
| ||
Cash and cash equivalents, end of period |
| $ | 94,325 |
| $ | 78,363 |
|
RITE AID CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollars in thousands)
(unaudited)
|
| Twenty-six weeks ended |
| Twenty-six weeks |
| ||
|
|
|
|
|
| ||
OPERATING ACTIVITIES: |
|
|
|
|
| ||
Net loss |
| $ | (66,853 | ) | $ | (155,336 | ) |
Adjustments to reconcile to net cash provided by operating activities: |
|
|
|
|
| ||
Depreciation and amortization |
| 208,370 |
| 225,802 |
| ||
Lease termination and impairment charges |
| 19,926 |
| 32,208 |
| ||
LIFO charges |
| 27,502 |
| 40,002 |
| ||
Gain on sale of assets, net |
| (13,005 | ) | (5,640 | ) | ||
Stock-based compensation expense |
| 8,653 |
| 7,523 |
| ||
Loss on debt modifications and retirements, net |
| 17,842 |
| 17,510 |
| ||
Changes in operating assets and liabilities: |
|
|
|
|
| ||
Accounts receivable |
| 86,389 |
| 13,554 |
| ||
Inventories |
| 87,779 |
| (172,290 | ) | ||
Accounts payable |
| (117,116 | ) | 151,125 |
| ||
Other assets and liabilities, net |
| 71,230 |
| 99,601 |
| ||
Net cash provided by operating activities |
| 330,717 |
| 254,059 |
| ||
INVESTING ACTIVITIES: |
|
|
|
|
| ||
Payments for property, plant and equipment |
| (148,211 | ) | (90,286 | ) | ||
Intangible assets acquired |
| (19,967 | ) | (16,447 | ) | ||
Proceeds from sale-leaseback transactions |
| 3,950 |
| — |
| ||
Proceeds from dispositions of assets and investments |
| 15,900 |
| 9,363 |
| ||
Net cash used in investing activities |
| (148,328 | ) | (97,370 | ) | ||
FINANCING ACTIVITIES: |
|
|
|
|
| ||
Proceeds from issuance of long-term debt |
| 426,263 |
| 341,285 |
| ||
Net (repayments to) proceeds from revolver |
| (136,000 | ) | 45,000 |
| ||
Principal payments on long-term debt |
| (471,323 | ) | (435,161 | ) | ||
Change in zero balance cash accounts |
| (48,481 | ) | (118,281 | ) | ||
Net proceeds from the issuance of common stock |
| 1,004 |
| 504 |
| ||
Financing fees paid for early debt redemption |
| (11,069 | ) | — |
| ||
Deferred financing costs paid |
| (10,743 | ) | (2,789 | ) | ||
Net cash used in financing activities |
| (250,349 | ) | (169,442 | ) | ||
Decrease in cash and cash equivalents |
| (67,960 | ) | (12,753 | ) | ||
Cash and cash equivalents, beginning of period |
| 162,285 |
| 91,116 |
| ||
Cash and cash equivalents, end of period |
| $ | 94,325 |
| $ | 78,363 |
|
RITE AID CORPORATION AND SUBSIDIARIES
SUPPLEMENTAL INFORMATION
RECONCILIATION OF NET LOSS GUIDANCE TO ADJUSTED EBITDA GUIDANCE
YEAR ENDING MARCH 2, 2013
(In thousands, except per share amounts)
|
| Guidance Range |
| ||||
|
| Low |
| High |
| ||
|
|
|
|
|
| ||
Sales |
| $ | 25,100,000 |
| $ | 25,400,000 |
|
|
|
|
|
|
| ||
Same store sales (a) |
| -1.0 | % | 0.25 | % | ||
|
|
|
|
|
| ||
Gross capital expenditures |
| $ | 300,000 |
| $ | 300,000 |
|
|
|
|
|
|
| ||
Reconciliation of net loss to adjusted EBITDA: |
|
|
|
|
| ||
Net loss |
| $ | (196,000 | ) | $ | (69,000 | ) |
Adjustments: |
|
|
|
|
| ||
Interest expense |
| 525,000 |
| 520,000 |
| ||
Income tax benefit |
| (102,000 | ) | (104,000 | ) | ||
Reduction of tax indemnification asset |
| 95,000 |
| 95,000 |
| ||
Depreciation and amortization |
| 415,000 |
| 410,000 |
| ||
LIFO charge |
| 70,000 |
| 40,000 |
| ||
Store closing and impairment charges |
| 100,000 |
| 90,000 |
| ||
Stock-based compensation expense |
| 18,000 |
| 16,000 |
| ||
Loss on debt modification |
| 18,000 |
| 18,000 |
| ||
Customer loyalty card program revenue deferral |
| 28,000 |
| 24,000 |
| ||
Other |
| (6,000 | ) | (15,000 | ) | ||
Adjusted EBITDA |
| $ | 965,000 |
| $ | 1,025,000 |
|
|
|
|
|
|
| ||
Diluted loss per share |
| $ | (0.23 | ) | $ | (0.09 | ) |
(a) Reflects approximately 650 basis points reduction in pharmacy same store sales from new generic introductions.