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 SECOND QUARTER FISCAL 2005 RESULTS
- --------------------------------------------------------------------------------
Carteret, New Jersey, September 8, 2005 - Pathmark Stores, Inc. (Nasdaq: PTMK)
today reported unaudited results for its second quarter and six-month period
ended July 30, 2005.
Sales for the second quarter of fiscal 2005 were $1,000.7 million, a decrease of
1.1% from $1,011.7 million in the prior year's second quarter. Same-store sales
decreased 2.0% in the second quarter. The Company reported a net loss of $5.1
million, or $0.12 per diluted share, in the second quarter of fiscal 2005
compared to a net loss of $1.6 million, or $0.05 per diluted share, in the prior
year's second quarter. The results for the second quarter of fiscal 2005
included a $2.8 million pretax charge, or $0.04 per diluted share, related to
the early extinguishment of debt. Excluding this item and a $0.2 million expense
relating to strategic alternatives, the Company would have reported a net loss
of $3.4 million, or $0.08 per diluted share.
John Standley, Chief Executive Officer, said, "When I took over as CEO two weeks
ago, I noted my confidence in Pathmark - a strong franchise with excellent
locations and store volumes. While there are some near-term challenges to
overcome, I am excited about Pathmark's potential." Mr. Standley continued, "Our
second quarter results were largely due to weak sales, a trend which has
continued into the third quarter. We have already begun implementing plans to
improve in-store merchandising and product assortments and to upgrade the look
of our stores. Looking forward, Pathmark will become a stronger, consumer-driven
company with better in-store execution and more compelling financial results."
Sales for the first six months of fiscal 2005 were $2,003.2 million, an increase
of 0.1% from $2,001.8 million in the prior year's six-month period. Same-store
sales decreased 0.9% in the six-month period. The net loss was $7.2 million, or
$0.20 per diluted share, in the first six months of fiscal 2005 compared to a
net loss of $3.4 million, or $0.11 per diluted share, in the prior year's
six-month period. The results for the first six months of fiscal 2005 included a
$1.1 million pretax expense, or $0.02 per diluted share, related to the
Company's review of strategic alternatives and a $2.8 million pretax charge, or
$0.05 per diluted share, related to the early extinguishment of debt. Excluding
these items, the Company would have reported a net loss of $5.0 million, or
$0.13 per diluted share. The results for the first six months of fiscal 2004
included a $1.2 million pre-tax gain, or $0.02 per diluted share, from the sale
of real estate. Excluding this item, the Company would have reported a net loss
of $4.1 million, or $0.13 per diluted share.
FIFO EBITDA, which the Company defines as loss before interest, taxes,
depreciation and amortization, and the LIFO charge was $31.5 million and $66.1
million, respectively, in the second quarter and the first six months of fiscal
2005, compared to $35.8 million and $70.8 million, respectively, in the prior
year's second quarter and six-month period. Excluding the $0.2 million expense
related to the strategic alternatives in the second quarter of fiscal 2005, FIFO
EBITDA would have been $31.7 million. Excluding the $1.1 million expense related
to the strategic alternatives in the first six months of fiscal 2005 and the
above-referenced real estate gain of $1.2 million in the first six months of
fiscal 2004, FIFO EBITDA would have been $67.2 million and $69.6 million,
respectively.
The Company is presenting FIFO EBITDA and each of FIFO EBITDA and net loss,
excluding the identified items above, in order to allow investors to compare
more fully Pathmark's performance in the second quarter and the first six months
of fiscal 2005 with its performance in the second quarter and the first six
months of fiscal 2004.
-1-
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.
Cash capital investments in the first six months of fiscal 2005 were $15.4
million. During the first half of fiscal 2005, the Company renovated one store
and closed one store. During the remainder of fiscal 2005, the Company plans to
open two new stores, close one store and complete seven store renovations. Total
capital investments for fiscal 2005 are expected to be approximately $75
million.
Pathmark will conduct a conference call at 2:00 p.m. Eastern Daylight Time (EDT)
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 6416942. 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'.
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
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)
-2-
Table A
Pathmark Stores, Inc.
Operating Results (Unaudited)
(in millions, except per share data)
Consolidated Statements of Operations
13 Weeks Ended 26 Weeks Ended
---------------------- ----------------------
July 30, July 31, July 30, July 31,
2005 2004 2005 2004
---------- ---------- ---------- ----------
Sales................................................... $ 1,000.7 $ 1,011.7 $ 2,003.2 $ 2,001.8
Cost of goods sold...................................... (714.8) (728.0) (1,432.3) (1,438.7)
---------- ---------- ---------- ----------
Gross profit............................................ 285.9 283.7 570.9 563.1
Selling, general and administrative expenses............ (254.9) (248.2) (505.8) (492.8)
Depreciation and amortization........................... (22.3) (21.5) (44.5) (43.0)
---------- ---------- ---------- ----------
Operating earnings...................................... 8.7 14.0 20.6 27.3
Interest expense (a).................................... (18.2) (16.3) (34.5) (32.8)
---------- ---------- ---------- ----------
Loss before income taxes................................ (9.5) (2.3) (13.9) (5.5)
Income tax benefit (b).................................. 4.4 0.7 6.7 2.1
---------- ---------- ---------- ----------
Net loss................................................ $ (5.1) $ (1.6) $ (7.2) $ (3.4)
========== ========== ========== ==========
Weighted average number of shares outstanding -
basic and diluted..................................... 41.5 30.1 35.8 30.1
========== ========== ========== ==========
Net loss per share - basic and diluted.................. $ (0.12) $ (0.05) $ (0.20) $ (0.11)
========== ========== ========== ==========
Supplemental Operating Results Data
13 Weeks Ended 26 Weeks Ended
---------------------- ----------------------
July 30, July 31, July 30, July 31,
2005 2004 2005 2004
---------- ---------- ---------- ----------
FIFO EBITDA (c)......................................... $ 31.5 $ 35.8 $ 66.1 $ 70.8
========== ========== ========== ==========
Cash capital expenditures, including technology......... $ 8.7 $ 22.8 $ 15.4 $ 44.9
Capital lease expenditures, including technology........ -- 6.3 -- 15.1
Acquisition of Community Supermarket Corporation........ -- -- -- 4.5
---------- ---------- ---------- ----------
Total capital investment, including technology.......... $ 8.7 $ 29.1 $ 15.4 $ 64.5
========== ========== ========== ==========
Gross profit (% of sales)............................... 28.6% 28.0% 28.5% 28.1%
========== ========== ========== ==========
LIFO charge (% of sales)................................ --% --% 0.1% --%
========== ========== ========== ==========
Selling, general and administrative expenses (% of
sales)................................................ 25.5% 24.5% 25.3% 24.6%
========== ========== ========== ==========
FIFO EBITDA (% of sales)................................ 3.1% 3.5% 3.3% 3.5%
========== ========== ========== ==========
Net loss (% of sales)................................... (0.5)% (0.2)% (0.4)% (0.2)%
========== ========== ========== ==========
See notes to financial statements.
-3-
Table B
Pathmark Stores, Inc.
Consolidated Balance Sheets (Unaudited)
(in millions)
July 30, January 29,
2005 2005
---------- ----------
ASSETS
Current assets
Cash and cash equivalents............................. $ 135.4 $ 42.6
Accounts receivable, net.............................. 19.7 19.9
Merchandise inventories............................... 188.3 182.2
Due from suppliers.................................... 65.1 74.7
Other current assets................................. 28.9 21.4
---------- ----------
Total current assets................................ 437.4 340.8
Property and equipment, net............................. 547.3 575.0
Goodwill................................................ 144.7 144.7
Other noncurrent assets................................. 195.8 192.9
---------- ----------
Total assets............................................ $ 1,325.2 $ 1,253.4
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Accounts payable...................................... $ 115.7 $ 102.1
Current maturities of debt............................ 0.7 36.6
Current portion of lease obligations.................. 14.3 15.1
Accrued expenses and other current liabilities........ 163.9 160.3
---------- ----------
Total current liabilities........................... 294.6 314.1
Long-term debt.......................................... 424.2 444.6
Long-term lease obligations............................. 172.5 178.3
Deferred income taxes................................... 63.9 72.0
Other noncurrent liabilities............................ 173.7 179.2
---------- ----------
Total liabilities....................................... 1,128.9 1,188.2
Stockholders' equity.................................... 196.3 65.2
---------- ----------
Total liabilities and stockholders' equity.............. $ 1,325.2 $ 1,253.4
========== ==========
Capitalization
July 30, January 29,
2005 2005
---------- ----------
Debt.................................................... $ 424.9 $ 481.2
Capital lease obligations............................... 186.8 193.4
---------- ----------
Total debt and capital lease obligations................ 611.7 674.6
Stockholders' equity.................................... 196.3 65.2
---------- ----------
Total capitalization.................................... $ 808.0 $ 739.8
========== ==========
See notes to financial statements.
-4-
Table C
Pathmark Stores, Inc.
Reconciliation of GAAP Net Loss to Proforma Net Loss (Unaudited)
(Dollars in millions)
13 Weeks Ended
--------------------------------------------------------------------------
July 30, 2005 July 31, 2004
----------------------------------- -----------------------------------
Per Per
Net of diluted Net of diluted
Pretax tax share Pretax tax share
---------- ---------- ----------- ---------- ---------- -----------
As reported loss................... $ (9.5) $ (5.1) $ (0.12) $ (2.3) $ (1.6) $ (0.05)
Strategic alternative expenses..... 0.2 0.1 -- -- -- --
Early extinguishment of debt....... 2.8 1.6 0.04 -- -- --
---------- ---------- ----------- ---------- ---------- -----------
Proforma loss...................... $ (6.5) $ (3.4) $ (0.08) $ (2.3) $ (1.6) $ (0.05)
========== ========== =========== ========== ========== ===========
26 Weeks Ended
--------------------------------------------------------------------------
July 30, 2005 July 31, 2004
----------------------------------- -----------------------------------
Per Per
Net of diluted Net of diluted
Pretax tax share Pretax tax share
---------- ---------- ----------- ---------- ---------- -----------
As reported loss................... $ (13.9) $ (7.2) $ (0.20) $ (5.5) $ (3.4) $ (0.11)
Strategic alternative expenses...... 1.1 0.6 0.02 -- -- --
Early extinguishment of debt........ 2.8 1.6 0.05 -- -- --
Gain on sale of real estate......... -- -- -- (1.2) (0.7) (0.02)
--------- ---------- ----------- ---------- ---------- -----------
Proforma loss....................... $ (10.0) $ (5.0) $ (0.13) $ (6.7) $ (4.1) $ (0.13)
========= ========== =========== ========== ========== ===========
-5-
Pathmark Stores, Inc.
Notes to Financial Statements
a) Interest expense for the 13 weeks and the 26 weeks ended July 30, 2005
includes a $2.8 million early extinguishment of debt charge related to the
defeasance of mortgage liabilities.
b) The income tax benefit was $4.4 million in the second quarter of fiscal 2005
compared to $0.7 million in the second quarter of fiscal 2004 and was based
on an effective tax rate of 46.7% in the second quarter of fiscal 2005
compared to 30.0% in the second quarter of fiscal 2004. The income tax
benefit was $6.7 million in the first six months of fiscal 2005 compared to
$2.1 million in the first six months of fiscal 2004 and was based on an
effective tax rate of 48.6% in the first six months of fiscal 2005 compared
to 38.0% in the first six months of fiscal 2004. The higher effective tax
rate in the second quarter and in the first six months of fiscal 2005 was
primarily due to the Work Opportunity Tax Credit ("WOTC"), which increased
the tax benefit. The effective tax rate in the second quarter and in the
first six months of fiscal 2004 did not include the WOTC due to its
expiration on December 31, 2003. The WOTC was reinstated in September 2004,
retroactive to January 1, 2004.
c) FIFO EBITDA represents 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, before proforma
adjustments, is consistent with the targets utilized in our incentive
compensation program. FIFO EBITDA, before 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 proforma adjustments, as presented
below (in millions), may not be comparable to similarly titled measures
reported by other companies:
13 Weeks Ended 26 Weeks Ended
---------------------- ----------------------
July 30, July 31, July 30, July 31,
2005 2004 2005 2004
---------- ---------- ---------- ----------
Net loss...................................... $ (5.1) $ (1.6) $ (7.2) $ (3.4)
Adjustments to calculate FIFO EBITDA:
Interest expense............................ 18.2 16.3 34.5 32.8
Income tax benefit.......................... (4.4) (0.7) (6.7) (2.1)
Depreciation and amortization............... 22.3 21.5 44.5 43.0
LIFO charge................................. 0.5 0.3 1.0 0.5
---------- ---------- ---------- ----------
FIFO EBITDA................................... 31.5 35.8 66.1 70.8
Proforma adjustments:
Strategic alternative expenses.............. 0.2 -- 1.1 --
Gain on sale of real estate................. -- -- -- (1.2)
---------- ---------- ---------- ----------
FIFO EBITDA, before proforma adjustments...... $ 31.7 $ 35.8 $ 67.2 $ 69.6
========== ========== ========== ==========
-6-