INVESTORS: MEDIA:
John Standley Karen Rugen
717-214-8857 717-730-7766
Kevin Twomey
717-731-6540
or investor@riteaid.com
FOR IMMEDIATE RELEASE
RITE AID ANNOUNCES SECOND QUARTER RESULTS
REDUCES NET LOSS TO $10.6 MILLION FROM $105.3 MILLION
ACHIEVES $152.9 MILLION OF ADJUSTED EBITDA,
A 22 PER CENT INCREASE OVER PRIOR YEAR
UPDATES FISCAL 2004 GUIDANCE
CAMP HILL, PA, September 25, 2003--Rite Aid Corporation (NYSE, PCX: RAD) today
announced financial results for its second quarter, ended August 30, 2003.
Revenues for the 13-week second quarter increased 5.1 percent to $4.052 billion
versus revenues of $3.857 billion in the prior year second quarter. Same store
sales increased 5.9 percent during the second quarter as compared to the
year-ago like period, consisting of a 6.8 percent pharmacy same store sales
increase and a 4.3 percent increase in front-end same store sales. Prescription
sales accounted for 63.8 percent of total sales, and third party prescription
sales represented 93.2 percent of pharmacy sales.
Net loss for the quarter was $10.6 million or a loss of $.04 per common share
compared to last year's second quarter loss of $105.3 million or a loss of $.21
per common share. The reduced loss is due primarily to a reduction in store
closing and impairment charges and a 22 percent increase in adjusted EBITDA
(which is reconciled to the net loss on the attached table), partially offset by
an increase in stock based compensation. The current year quarter included a
store closing and impairment credit of $9.0 million offset by an $8.8 million
charge for stock based compensation. The prior year quarter included a $58.2
million charge for store closing and impairment and a $6.7 million credit for
stock-based compensation, which combined to impact the prior year quarter net
loss by $.10 per common share. Reduced expense for LIFO charges, interest
expense and depreciation and amortization also benefited the current year
quarter.
- MORE -
Rite Aid Second Quarter Release - page 2
Adjusted EBITDA, which is reconciled to the net loss on the attached table,
amounted to $152.9 million or 3.8 percent of revenues compared to $125.4 million
or 3.3 percent of revenues last year.
"We're very pleased with our second quarter as operating performance improved
substantially over last year with a 22 percent increase in adjusted EBITDA. Our
team did an excellent job of leveraging our significant increase in same store
sales." said Mary Sammons, Rite Aid president and CEO. "We expect this very
positive momentum to continue as we move into the busiest selling season of the
year."
In the second quarter, the company remodeled 49 stores, relocated one store and
closed 11 stores. Stores in operation at the end of the quarter totaled 3,386.
Certain reclassifications have been made to prior years' amounts on the attached
tables to conform to the current year classifications.
Guidance for Fiscal 2004 Updated
Based on current trends, Rite Aid said it expects sales of $16.5 billion to
$16.7 billion in fiscal 2004 which ends February 28, 2004, with same store sales
improving 5.5 percent to 6.5 percent over fiscal 2003. Results for the fifty-two
weeks ending February 28, 2004 are expected to be between $4.0 million net
income and $27.0 million net loss as compared to previous guidance of a net loss
between zero to $63.0 million. The company also updated its adjusted EBITDA
guidance for the year, as reconciled on the attached table, to be between $700.0
million and $725.0 million compared to the prior range of $675.0 million to
$725.0 million.
Capital expenditures are expected to be between $170.0 million to $190.0 million
in fiscal 2004.
Conference Call Broadcast
Rite Aid will hold an analyst call at 10:30 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 2 p.m. Eastern Time today. A
playback of the call will also be available by telephone for 48 hours beginning
at 2 p.m. Eastern Time today until 2 p.m. Eastern Time on September 27. 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 2810478.
- MORE -
Rite Aid Second Quarter Release - page 3
Rite Aid Corporation is one of the nation's leading drugstore chains with annual
revenues of nearly $16 billion and approximately 3,400 stores in 28 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 management's long term strategy, our
ability to hire and retain pharmacists and other store personnel, the outcomes
of pending lawsuits and governmental investigations, competitive pricing
pressures, continued consolidation of the drugstore industry, the efforts of
third party payors to reduce prescription drug reimbursements, changes in state
or federal legislation or regulations, the success of planned advertising and
merchandising strategies, general economic conditions and inflation, interest
rate movements, access to capital and our relationship with our suppliers.
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".
###
RITE AID CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Dollars in thousands)
(unaudited)
August 30, March 1,
2003 2003
----------- -----------
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 259,931 $ 365,321
Accounts receivable, net 637,159 575,518
Inventories, net 2,331,144 2,195,030
Prepaid expenses and other current assets 101,249 108,018
----------- -----------
Total current assets 3,329,483 3,243,887
PROPERTY, PLANT AND EQUIPMENT, NET 1,909,756 1,868,579
GOODWILL 684,535 684,535
OTHER INTANGIBLES, NET 188,607 199,768
OTHER ASSETS 135,186 136,746
----------- -----------
Total assets 6,247,567 6,133,515
=========== ===========
LIABILITIES AND STOCKHOLDERS' DEFICIT
CURRENT LIABILITIES:
Short-term debt and current maturities of
long-term debt and lease financing
obligations $ 78,496 $ 103,715
Accounts payable 863,501 755,284
Accrued salaries, wages and other current
liabilities 696,536 707,999
----------- -----------
Total current liabilities 1,638,533 1,566,998
CONVERTIBLE NOTES 245,250 244,500
LONG-TERM DEBT, LESS CURRENT MATURITIES 3,456,645 3,345,365
LEASE FINANCING OBLIGATIONS, LESS CURRENT
MATURITIES 166,250 169,048
OTHER NONCURRENT LIABILITIES 863,283 900,270
----------- -----------
Total liabilities 6,369,961 6,226,181
----------- -----------
COMMITMENTS AND CONTINGENCIES
REDEEMABLE PREFERRED STOCK 19,714 19,663
STOCKHOLDERS' DEFICIT:
PREFERRED STOCK 401,579 393,705
COMMON STOCK 515,515 515,115
ADDITIONAL PAID-IN CAPITAL 3,136,446 3,119,619
ACCUMULATED DEFICIT (4,167,539) (4,118,119)
STOCK-BASED AND DEFERRED COMPENSATION - 5,369
ACCUMULATED OTHER COMPREHENSIVE LOSS (28,109) (28,018)
----------- -----------
Total stockholders' deficit (142,108) (112,329)
----------- -----------
Total liabilities and stockholders'
deficit 6,247,567 6,133,515
=========== ===========
RITE AID CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Dollars in thousands, except per share amounts)
(unaudited)
Thirteen Thirteen
Weeks Weeks
ended ended
August 30, August 31,
2003 2002
----------- -----------
REVENUES $ 4,052,091 $ 3,856,510
COSTS AND EXPENSES:
Costs of goods sold, including occupancy
costs 3,087,860 2,958,690
Selling, general and administrative
expenses 893,337 865,931
Stock-based compensation expense (benefit) 8,847 (6,746)
Store closing and impairment (credits)
charges (8,994) 58,223
Interest expense 79,409 84,955
Interest rate swap contracts - 14
Loss (gain) on debt modifications and
retirements, net 1,888 (1,392)
Loss on sale of assets and investments, net 342 1,477
----------- -----------
4,062,689 3,961,152
----------- -----------
Loss before income taxes (10,598) (104,642)
INCOME TAX EXPENSE - 649
----------- -----------
----------- -----------
Net loss (10,598) (105,291)
=========== ===========
Basic and diluted loss per share
Net loss (10,598) (105,291)
Accretion of redeemable preferred stock (26) (26)
Cumulative preferred stock dividends (7,874) (2,263)
----------- -----------
Net loss applicable to common
stockholders (18,498) (107,580)
=========== ===========
Net loss per share (0.04) (0.21)
=========== ===========
Weighted average shares outstanding 515,402 515,158
=========== ===========
RITE AID CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Dollars in thousands, except per share amounts)
(unaudited)
Twenty-six Twenty-six
Weeks Weeks
ended ended
August 30, August 31,
2003 2002
----------- -----------
REVENUES $ 8,098,259 $ 7,780,241
COSTS AND EXPENSES:
Costs of goods sold, including occupancy
costs 6,156,035 5,952,468
Selling, general and administrative
expenses 1,783,070 1,765,074
Stock-based compensation expense 18,682 1,348
Store closing and impairment (credits)
charges (2,628) 54,106
Interest expense 158,367 169,586
Interest rate swap contracts - 278
Loss (gain) on debt modifications and
retirements, net 35,315 (1,662)
Gain on sale of assets and investments, net (1,162) (15,388)
----------- -----------
8,147,679 7,925,810
----------- -----------
Loss before income taxes (49,420) (145,569)
INCOME TAX BENEFIT - (42,862)
----------- -----------
----------- -----------
Net loss (49,420) (102,707)
=========== ===========
Basic and diluted loss per share
Net loss (49,420) (102,707)
Accretion of redeemable preferred stock (52) (51)
Cumulative preferred stock dividends (7,874) (9,493)
----------- -----------
Net loss applicable to common
stockholders (57,346) (112,251)
=========== ===========
Net loss per share (0.11) (0.22)
=========== ===========
Weighted average shares outstanding 515,227 515,139
=========== ===========
RITE AID CORPORATION AND SUBSIDIARIES
SUPPLEMENTAL INFORMATION
RECONCILIATION OF NET LOSS TO ADJUSTED EBITDA
(In thousands)
Thirteen Thirteen
Weeks Weeks
Ended ended
August 30, August 31,
2003 2002
----------- -----------
RECONCILIATION OF NET LOSS TO ADJUSTED
EBITDA:
Net loss $ (10,598) $ (105,291)
Adjustments:
LIFO charge (a) 11,790 17,250
Store closing and impairment (credits)
charges (8,994) 58,223
Closed store liquidation expense (b) 2,246 528
Stock-based compensation expense (benefit) 8,847 (6,746)
Loss (gain) on debt modifications and
retirements, net (c) 1,888 (1,392)
Litigation settlements, net (d) - 261
Loss on sale of assets and investments 342 1,477
Legal and accounting expenses (e) 2,639 3,210
Interest expense 79,409 84,955
Interest rate swap contracts - 14
Recurring income tax expense - 649
Depreciation and amortization 65,097 72,307
Other 231 (5)
----------- -----------
Adjusted EBITDA $ 152,897 $ 125,440
=========== ===========
Percent of revenues 3.77% 3.25%
NOTES:
(a) Represents non-cash charges to value our inventories under the last-in
first-out ("LIFO") method.
(b) Represents costs to liquidate inventory at stores that are in the
process of closing.
(c) Represents loss (gain) related to debt modifications and
retirements, net.
(d) Represents net impact of non- recurring litigation.
(e) 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.
RITE AID CORPORATION AND SUBSIDIARIES
SUPPLEMENTAL INFORMATION
RECONCILIATION OF NET LOSS TO ADJUSTED EBITDA
(In thousands)
Twenty-six Twenty-six
Weeks Weeks
ended ended
August 30, August 31,
2003 2002
----------- -----------
RECONCILIATION OF NET LOSS TO ADJUSTED
EBITDA:
Net loss $ (49,420) $ (102,707)
Adjustments:
LIFO charge (a) 26,820 34,500
Store closing and impairment (credits)
charges (2,628) 54,106
Closed store liquidation expense (b) 3,229 8,221
Stock-based compensation expense 18,682 1,348
Loss (gain) on debt modifications and
retirements, net (c) 35,315 (1,662)
Litigation settlements, net (d) (750) 20,261
Gain on sale of assets and investments (1,162) (15,388)
Legal and accounting expenses (e) 8,627 9,882
Non-recurring income tax benefit - (44,011)
Interest expense 158,367 169,586
Interest rate swap contracts - 278
Recurring income tax expense - 1,149
Depreciation and amortization 130,672 147,326
Other 251 870
----------- -----------
Adjusted EBITDA $ 328,003 $ 283,759
=========== ===========
Percent of revenues 4.05% 3.65%
NOTES:
(a) Represents non-cash charges to value our inventories under the last-in
first-out ("LIFO") method.
(b) Represents costs to liquidate inventory at stores that are in the
process of closing.
(c) Represents loss (gain) related to debt modifications and
retirements, net.
(d) Represents net impact of non- recurring litigation.
(e) 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.
RITE AID CORPORATION AND SUBSIDIARIES
SUPPLEMENTAL INFORMATION
RECONCILIATION OF NET (LOSS) INCOME GUIDANCE TO ADJUSTED
EBITDA GUIDANCE
(In thousands)
Guidance Range
-----------------------
Low High
----------- -----------
Year Year
Ending Ending
February February
28, 2004 28, 2004
----------- -----------
RECONCILIATION OF NET (LOSS) INCOME TO
ADJUSTED EBITDA
Net (loss) income $ (27,000) $ 4,000
Adjustments:
LIFO charge 55,000 55,000
Store closing, liquidation, and
impairment charges 45,000 45,000
Stock-based compensation expense 31,000 29,000
Loss on debt modifications and
retirements, net 35,000 35,000
Legal and accounting expenses 13,000 13,000
Income tax benefit, net (22,000) (22,000)
Interest expense 313,000 313,000
Depreciation and amortization 258,000 255,000
Litigation settlements, gain on sale of
assets and investments, and other (1,000) (2,000)
----------- -----------
Adjusted EBITDA $ 700,000 $ 725,000
=========== ===========