Exhibit 99.1
PATHMARK STORES, INC.
200 MILIK STREET
CARTERET, NEW JERSEY 07008
FOR IMMEDIATE RELEASE CONTACT: HARVEY M. GUTMAN
(732) 499-4327
PATHMARK ANNOUNCES THIRD QUARTER RESULTS
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Carteret, New Jersey, December 2, 2004 - Pathmark Stores, Inc. (Nasdaq: PTMK)
today reported results for its third quarter and nine-month period ended October
30, 2004.
Sales for the third quarter of fiscal 2004 were $979.9 million, an increase of
0.1% from $978.5 million in the prior year's third quarter. Same-store sales
decreased 0.5% in the third quarter. The Company reported a net loss of $3.6
million, or $0.12 per diluted share, in the third quarter of fiscal 2004
compared to a net loss of $0.2 million, or $0.01 per diluted share, in the prior
year's third quarter. The results for the third quarter of fiscal 2004 included
a $1.5 million pre-tax interest charge, or $0.02 per diluted share, related to
the early extinguishment of the Company's bank credit agreement dated September
19, 2000 (the "Credit Agreement") in connection with the previously disclosed
refinancing of the Credit Agreement on October 1, 2004. Excluding this item, the
net loss in the third quarter of fiscal 2004 would have been $2.8 million, or
$0.10 per diluted share. The results for the third quarter of fiscal 2003
included a $4.2 million pre-tax interest charge, or $0.08 per diluted share,
related to the early extinguishment of $102 million of the Company's term loan
under the Credit Agreement. Excluding this item, net earnings in the third
quarter of fiscal 2003 would have been $2.3 million, or $0.07 per diluted share.
Eileen Scott, Chief Executive Officer said, "While we are clearly disappointed
with our third quarter results, we have taken steps to improve our business
trend. We have adjusted our sales and advertising programs to be better aligned
with our current sales expectations and have implemented expense control
initiatives. We are on target to achieve the fiscal 2004 guidance we provided in
late October."
The Company noted that its Board of Directors has retained Dresdner Kleinwort
Wasserstein to assist the Board in evaluating strategic alternatives for the
Company. This process could result in a decision to sell the Company, although
no such decision has been made at this point in time. Furthermore, there can be
no assurance, if the Board does decide to sell the Company, that it will be able
to reach a definitive agreement with a buyer or that such a transaction, if
agreed, could be consummated or on what terms.
Ms. Scott continued, "Our commitment to enhance shareholder value is our number
one priority and, while we are working hard to improve our performance, we are
looking at a number of alternatives in our efforts to build value for our
shareholders."
Sales for the first nine months of fiscal 2004 were $2,981.7 million, an
increase of 0.1% from $2,978.8 million in the prior year's nine-month period.
Same-store sales decreased 0.2% in the first nine months of fiscal 2004. The net
loss was $7.0 million, or $0.23 per diluted share, in the first nine months of
fiscal 2004 compared to net earnings of $6.9 million, or $0.23 per diluted
share, in the prior year's nine-month period. The results for the first nine
months of fiscal 2004 included a $1.5 million pre-tax interest charge, or $0.02
per diluted share, related to the early extinguishment of the Credit Agreement
and an offsetting $1.5 million pre-tax gain, or $0.02 per diluted share, from
the disposition of real estate. The results for the first nine months of fiscal
2003 included a $13.7 million pre-tax gain, or $0.27 per diluted share, from the
disposition
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of real estate, an $8.1 million pre-tax charge, or $0.16 per diluted share,
related to labor buyout and headcount reduction programs and a $4.7 million
pre-tax interest charge, or $0.09 per diluted share, related to both the
aforementioned refinancing in the third quarter and the repayment of $18 million
of our term loan. Excluding these items, net earnings in the first nine months
of fiscal 2003 would have been $6.4 million, or $0.21 per diluted share.
FIFO EBITDA, which the Company defines as earnings before interest, taxes,
depreciation and amortization and the LIFO charge was $31.7 million and $102.5
million, respectively, in the third quarter and the first nine months of fiscal
2004 compared to $41.2 million and $131.0 million, respectively, in the prior
year's third quarter and nine-month period. Excluding the $1.5 million real
estate gain in the first nine months of fiscal 2004, FIFO EBITDA would have been
$101.0 million. Excluding the above-referenced $13.7 million real estate gain
and the $8.1 million charge in the first nine months of fiscal 2003, FIFO EBITDA
would have been $125.4 million.
The Company is presenting FIFO EBITDA and each of FIFO EBITDA and net earnings
(loss) excluding the identified items above in order to allow investors to
compare more fully Pathmark's performance in the third quarter and the first
nine months of fiscal 2004 with its performance in the third quarter and the
first nine months of fiscal 2003. None of these measures is calculated in
accordance with generally accepted accounting principles. See the notes to the
tables attached to this release for more information regarding FIFO EBITDA.
Total capital investments in the first nine months of fiscal 2004 were $101.3
million, including cash capital expenditures of $81.5 million, $4.5 million for
the acquisition of the remaining 67% of a supermarket joint venture in Newark,
New Jersey ("Newark Store") and capital leases of $15.3 million. During the
first nine months of fiscal 2004, the Company opened two stores (including the
Newark Store), renovated 17 stores, and closed two stores, one of which was
operated by a joint venture in Brooklyn, New York. During the remainder of
fiscal 2004, the Company expects to complete three store renovations. Capital
expenditures for fiscal 2004, including property acquired under capital leases,
the acquisition of the Newark Store and technology investments, are expected to
be approximately $114 million.
The Company reaffirmed its guidance for fiscal 2004 that same-store sales will
be down 1% to flat compared to fiscal 2003, net loss per diluted share will be
between $0.13 and $0.25 and FIFO EBITDA will be between $140 million and $146
million. The Company will not be providing guidance for fiscal 2005 at the
current time due to uncertainty in the market outlook and a lack of visibility
on the long-term impact of its initiatives.
Pathmark will conduct a conference call at 2:00 p.m. Eastern Standard Time (EST)
today. The call may be accessed via a simultaneous webcast by visiting
www.calleci.com. A replay of the call will be available for 14 days after the
completion of the call at 1-877-519-4471, Pass Code 5405479. This press release
and other financial and statistical information to be presented on the
conference call, will be accessible on the web by going to www.pathmark.com,
'Investor Relations', then clicking on 'Press Releases'. The reconciliation of
annual FIFO EBITDA guidance is available in our October 25, 2004 press release
at the aforementioned web address.
Pathmark Stores, Inc. is a regional supermarket currently operating 142
supermarkets primarily in the New York - New Jersey and Philadelphia
metropolitan areas.
Except for historical information contained herein, the matters discussed in
this release and the accompanying discussions on the earnings conference call
are "forward-looking statements" within the meaning of the Private Securities
Litigation Reform Act of 1995. Such statements relate to, among other things,
operating costs, earnings estimates, FIFO EBITDA, sales and capital expenditures
and are indicated by words or phrases such as "anticipates", "believes",
"expects", "forecasts", "guidance", "intends", "may", "plans", "projects",
"will" and similar words and phrases. By their nature, such forward-looking
statements are subject to risks, uncertainties and other factors that could
cause actual results to differ materially from future results expressed or
implied by such forward-looking statements. These statements are based on
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management's assumptions and beliefs in the light of information currently
available to it and assume no significant changes in general economic trends,
consumer confidence or other risk factors that may affect the forward-looking
statements. The Company expressly disclaims any current intention to update the
information contained herein. Factors that may affect results include changes in
business and economic conditions generally and in the Company's operating areas,
the competitive environment in which the Company operates and other risks
detailed from time to time in the Company's reports and filings available from
the Securities and Exchange Commission. You should not place undue reliance on
forward-looking statements, which speak only as of the date they are made.
(Tables Attached)
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Table A
Pathmark Stores, Inc.
Operating Results (Unaudited)
(in millions, except per share data)
Consolidated Statements of Operations
13 Weeks Ended 39 Weeks Ended
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October 30, November 1, October 30, November 1,
2004 2003 2004 2003
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Sales............................................................ $ 979.9 $ 978.5 $ 2,981.7 $ 2,978.8
Cost of goods sold............................................... (702.7) (700.6) (2,141.4) (2,133.4)
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Gross profit..................................................... 277.2 277.9 840.3 845.4
Selling, general and administrative expenses..................... (245.8) (236.7) (738.6) (715.4)
Depreciation and amortization.................................... (21.6) (20.7) (64.6) (63.2)
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Operating earnings............................................... 9.8 20.5 37.1 66.8
Interest expense (a)............................................. (18.0) (20.8) (50.8) (55.2)
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Earnings (loss) before income taxes.............................. (8.2) (0.3) (13.7) 11.6
Income tax benefit (provision) (b)............................... 4.6 0.1 6.7 (4.7)
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Net earnings (loss).............................................. $ (3.6) $ (0.2) $ (7.0) $ 6.9
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Weighted average number of shares outstanding - basic............ 30.1 30.1 30.1 30.1
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Weighted average number of shares outstanding - diluted.......... 30.1 30.1 30.1 30.4
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Net earnings (loss) per share - basic and diluted................ $ (0.12) $ (0.01) $ (0.23) $ 0.23
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Supplemental Operating Results Data
13 Weeks Ended 39 Weeks Ended
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October 30, November 1, October 30, November 1,
2004 2003 2004 2003
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FIFO EBITDA (c).................................................. $ 31.7 $ 41.2 $ 102.5 $ 131.0
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Cash capital expenditures, including technology.................. $ 36.6 $ 17.6 $ 81.5 $ 43.1
Capital lease expenditures, including technology................. 0.2 -- 15.3 5.3
Acquisition of Community Supermarket Corporation................. -- -- 4.5 --
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Total capital investment, including technology................... $ 36.8 $ 17.6 $ 101.3 $ 48.4
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Gross profit (% of sales)........................................ 28.3% 28.4% 28.2% 28.4%
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Selling, general and administrative expenses (% of sales)........ 25.1% 24.2% 24.8% 24.0%
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FIFO EBITDA (% of sales)......................................... 3.2% 4.2% 3.4% 4.4%
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Net earnings (loss) (% of sales)................................. (0.3%) --% (0.2%) 0.2%
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See notes to financial information
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Table B
Pathmark Stores, Inc.
Financial Position
(in millions)
Consolidated Balance Sheets
(Unaudited)
October 30, January 31,
2004 2004
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ASSETS
Current assets
Cash.......................................................................... $ 11.2 $ 8.9
Accounts receivable, net...................................................... 20.1 21.2
Merchandise inventories....................................................... 202.7 185.8
Due from suppliers............................................................ 65.6 81.3
Other current assets.......................................................... 33.3 33.4
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Total current assets....................................................... 332.9 330.6
Property and equipment, net...................................................... 598.1 584.5
Goodwill......................................................................... 438.5 434.0
Other noncurrent assets.......................................................... 191.3 171.8
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Total assets..................................................................... $ 1,560.8 $ 1,520.9
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LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Accounts payable.............................................................. $ 96.9 $ 87.2
Current maturities of debt.................................................... 53.4 7.1
Current portion of lease obligations.......................................... 15.4 17.6
Accrued expenses and other current liabilities................................ 135.3 148.2
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Total current liabilities.................................................. 301.0 260.1
Long-term debt................................................................... 444.8 421.3
Long-term lease obligations...................................................... 181.8 178.9
Deferred income taxes............................................................ 84.0 93.6
Other noncurrent liabilities..................................................... 181.2 192.0
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Total liabilities................................................................ 1,192.8 1,145.9
Stockholders' equity............................................................... 368.0 375.0
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Total liabilities and stockholders' equity....................................... $ 1,560.8 $ 1,520.9
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Capitalization
(Unaudited)
October 30, January 31,
2004 2004
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Debt............................................................................. $ 498.2 $ 428.4
Capital lease obligations........................................................ 197.2 196.5
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Total debt and capital lease obligations......................................... 695.4 624.9
Stockholders' equity............................................................. 368.0 375.0
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Total capitalization............................................................. $ 1,063.4 $ 999.9
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Pathmark Stores, Inc.
Notes to Financial Information
a) Interest expense in the third quarter and the first nine months of fiscal
2004 includes the write off of deferred financing costs of $1.5 million
related to the early extinguishment of the Credit Agreement. Interest
expense in the third quarter and the first nine months of fiscal 2003
included a derivative settlement charge of $2.8 million related to the
termination and settlement of $100 million of the Company's interest rate
zero-cost collar and the write off of deferred financing costs of $1.4
million related to the repayment of $102 million of the term loan from the
proceeds of additional borrowings under the Senior Subordinated Notes.
Interest expense in the first nine months of fiscal 2003 also included the
write off of deferred financing costs of $0.5 million related to the
repayment of $18 million of the term loan in the second quarter of fiscal
2003.
b) The income tax benefits of $4.6 million in the third quarter of fiscal 2004
and $6.7 million in the first nine months of fiscal 2004 reflect a
provision for certain state taxes and a change in the effective annual
income tax rate recorded in the third quarter of fiscal 2004, which
includes the legislative reinstatement of the Work Opportunity Tax Credit,
retroactive to the beginning of 2004. As a result, the effective tax rates
for the third quarter and the first nine months of fiscal 2004 were
approximately 57.1% and 49.2%, respectively. The income tax benefit of $0.1
million in the third quarter and the income tax provision of $4.7 million
in the first nine months of fiscal 2003 were based on an effective income
tax rate of 40.3% for fiscal 2003.
c) FIFO EBITDA represents earnings (loss) before interest, taxes, depreciation
and amortization and the LIFO charge. We believe that our investors find
FIFO EBITDA to be a useful analytical tool for measuring our performance
and for comparing our performance with the performance of other companies
having different capital structures. In addition, FIFO EBITDA is consistent
with the targets utilized in our incentive compensation program. FIFO
EBITDA is a non-GAAP measure and should not be considered in isolation
from, and is not intended to represent an alternative measure of, operating
earnings or of cash flows from operating activities, as determined in
accordance with GAAP. Our measurement of FIFO EBITDA, as presented below
(in millions), may not be comparable to similarly titled measures reported
by other companies:
13 Weeks Ended 39 Weeks Ended
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October 30, November 1, October 30, November 1,
2004 2003 2004 2003
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Net earnings (loss).................................. $ (3.6) $ (0.2) $ (7.0) $ 6.9
Adjustments to calculate FIFO EBITDA:
Interest expense.................................. 18.0 20.8 50.8 55.2
Income tax provision (benefit).................... (4.6) (0.1) (6.7) 4.7
Depreciation and amortization..................... 21.6 20.7 64.6 63.2
LIFO charge....................................... 0.3 -- 0.8 1.0
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FIFO EBITDA.......................................... $ 31.7 $ 41.2 $ 102.5 $ 131.0
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