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 REVISION TO GOODWILL IMPAIRMENT CHARGE
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Carteret, New Jersey, April 29, 2005 - Pathmark Stores, Inc. (Nasdaq: PTMK)
today revised its non-cash goodwill and long-lived asset impairment charge that
had been reported on April 13, 2005 in the Company's preliminary unaudited
results for its fourth quarter and fiscal year ended January 29, 2005. Pathmark
attributed the revision to an audit adjustment related to the calculation of the
fair market value of certain assets and liabilities, which impacted the
impairment charge.
The Company reported that its goodwill and long-lived impairment charge is
$302.6 million after tax, or $10.06 per diluted share, rather than the $263.6
million, or $8.76 per diluted share, that was reported in the Company's
preliminary unaudited results issued April 13, 2005. Pathmark's net loss for the
fourth quarter of fiscal 2004 is $301.6 million, or $10.03 per diluted share,
versus the $262.3 million, or $8.73 per diluted share, previously reported. For
the full 2004 fiscal year, Pathmark reported a net loss of $308.6 million, or
$10.26 per diluted share, versus the $269.3 million, or $8.96 per diluted share,
previously reported.
The Company's previously reported proforma results for the fourth quarter and
full fiscal 2004 are not impacted by the aforementioned revision (see Table A).
Pathmark also reported that it would file its 2004 Form 10-K today.
The Company has determined that it did not maintain effective controls over
processes followed in its year-end calculation of goodwill impairment and its
accounting for book overdrafts related to the right of offset of certain cash
accounts against accounts payable, and these constitute material weaknesses
under Section 404 of the Sarbanes-Oxley Act. The Company will take remediation
steps and monitor the effectiveness of new procedures and controls.
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 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 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.
Reconciliation of GAAP Net Earnings (Loss) to Proforma Net Earnings (Unaudited)
(Dollars in millions)
13 Weeks Ended
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January 29, 2005 January 31, 2004
----------------------------------------- -------------------------------------
Per Per
Net of diluted Net of diluted
Pre-tax tax share Pre-tax tax share
-------------------------- ------------- ------------ --------- ------------
Net earnings (loss), as
reported................... $ (304.2) $ (301.6) $ (10.03) $ 16.7 $9.6 $ 0.32
Impairment of goodwill
and long-lived assets...... 309.0 302.6 10.06 - - -
Long-term disability -medical
expense adjustment......... 3.0 1.8 0.06 - - -
Depreciation adjustment on
leasehold improvements..... 2.0 1.2 0.04 - - -
Deferred financing costs
write-off and derivative
settlement charge.......... - - - 1.6 0.9 0.03
Deferred rent liability
straight-line expense
adjustment................. (4.4) (2.6) (0.09) - - -
Net tax provision adjustment
related to state NOLs, net
of a deferred tax liability
benefit.................... - 1.1 0.04 - - -
-------------------------- ------------- ------------ --------- ------------
Proforma earnings,
as reported................ $5.4 $ 2.5 $ 0.08 $ 18.3 $ 10.5 $0.35
========================== ============= ============ ========= ============
Proforma earnings,
as previously reported..... $5.4 $ 2.5 $ 0.08 $ 18.3 $ 10.5 $0.35
========================== ============= ============ ========= ============
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Table A (Continued)
Pathmark Stores, Inc.
Reconciliation of GAAP Net Earnings (Loss) to Proforma Net Earnings (Loss)
(Unaudited)
(Dollars in millions)
52 Weeks Ended
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January 29, 2005 January 31, 2004
------------------------------------------- -----------------------------------
Per Per
Net of diluted Net of diluted
Pre-tax tax share Pre-tax tax share
------------- ------------ ------------ ----------- --------- ------------
Net earnings (loss), as
reported................... $ (317.9) $(308.6) $(10.26) $28.3 $16.5 0.54
Impairment of goodwill and
long-lived assets.......... 309.0 302.6 10.06 - - -
Long-term disability -medical
expense adjustment......... 3.0 1.8 0.06 - - -
Depreciation adjustment on
leasehold improvements..... 2.0 1.2 0.04 - - -
Deferred financing costs
write-off and derivative
settlement charge.......... 1.7 1.0 0.03 6.3 3.7 0.13
Gain on asset sales........... (1.5) (0.9) (0.03) (13.7) (8.2) (0.27)
Deferred rent liability
straight-line expense
adjustment................. (4.4) (2.6) (0.09) - - -
Reorganization charges........ - - - 8.1 4.9 0.16
Net tax provision adjustment
related to state NOLs, net
of a deferred tax liability
Benefit.................... - 1.1 0.04 - - -
------------- ------------ ------------ ----------- --------- ------------
Proforma earnings (loss)
as reported................ $ (8.1) $ (4.4) $ (0.15) $ 29.0 $ 16.9 $ 0.56
============= ============ ============ =========== ========= ============
Proforma earnings (loss)
as previously reported..... $ (8.1) $ (4.4) $ (0.15) $ 29.0 $ 16.9 $ 0.56
============= ============ ============ =========== ========= ============
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Table B
Pathmark Stores, Inc.
Reconciliation of GAAP Net Earnings (Loss)
to Proforma FIFO EBITDA
FIFO EBITDA represents earnings (loss) before interest, taxes, depreciation
and amortization and the LIFO charge (credit) and before impairment charges
and proforma adjustments. We believe that our investors find FIFO EBITDA,
before impairment charges and proforma adjustments, 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, before impairment charges and proforma adjustments, is
consistent with the targets utilized in our incentive compensation program.
FIFO EBITDA, before impairment charges and proforma adjustments, 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, before impairment charges and proforma
adjustments, as presented below (in millions), may not be comparable to
similarly titled measures reported by other companies:
13 Weeks Ended 52 Weeks Ended
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January January January January
29, 2005 31, 2004 29, 2005 31, 2004
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Net earnings (loss)................................... $ (301.6) $ 9.6 $ (308.6) $ 16.5
Adjustments to calculate FIFO EBITDA:
Interest expense................................... 16.2 17.3 67.0 72.5
Income tax provision (benefit)..................... (2.6) 7.1 (9.3) 11.8
Depreciation and amortization...................... 24.8 20.8 89.4 84.0
Impairment of goodwill and long-lived
assets......................................... 309.0 -- 309.0 --
LIFO charge (credit)............................... 1.2 (0.8) 2.0 0.1
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FIFO EBITDA (before impairment charges)............... 47.0 54.0 149.5 184.9
Proforma adjustments:
Long-term disability - medical expense
adjustment..................................... 3.0 -- 3.0 --
Deferred rent liability straight-line
expense adjustment............................. (4.4) -- (4.4) --
Gain on sale of real estate........................ -- -- (1.5) (13.7)
Reorganization charges............................. -- -- -- 8.1
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FIFO EBITDA (before impairment charges
and proforma adjustments)...................... $ 45.6 $ 54.0 $ 146.6 $ 179.3
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