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 THIRD QUARTER RESULTS
REPORTS NET INCOME OF $22.5 MILLION VERSUS NET LOSS OF $16.4 MILLION
IN THE PRIOR YEAR
ACHIEVES $177.5 MILLION OF ADJUSTED EBITDA
Updates Fiscal 2004 Guidance
Provides Preliminary Outlook for Fiscal 2005
CAMP HILL, PA, December 18, 2003--Rite Aid Corporation (NYSE, PCX: RAD) today
announced financial results for its third quarter, ended November 29, 2003.
Revenues for the 13-week third quarter increased 6.1 percent to $4.1 billion
versus revenues of $3.9 billion in the prior year third quarter. Same store
sales increased 6.4 percent during the third quarter as compared to the
year-ago like period, consisting of a 6.5 percent pharmacy same store sales
increase and a 6.2 percent increase in front-end same store sales.
Prescription sales accounted for 64.3 percent of total sales, and third party
prescription sales represented 93.4 percent of pharmacy sales.
Net income for the quarter was $22.5 million or earnings of $.03 per common
share compared to last year's third quarter loss of $16.4 million or a loss of
$.05 per common share. The improvement was due primarily to a 10.2 percent
increase in adjusted EBITDA (which is reconciled to net income or loss on the
attached table) and a reduction in the LIFO charge. The current year quarter
includes a LIFO credit of $1.4 million versus a LIFO charge of $17.3 million
in the prior year third quarter.
- MORE -
Rite Aid Third Quarter Release - page 2
Adjusted EBITDA was $177.5 million or 4.3 percent of revenues compared to
$161.1 million or 4.2 percent of revenues last year.
In the third quarter, the company remodeled 63 stores and relocated two
stores. Stores in operation at the end of the quarter totaled 3,386.
"We had a very good third quarter with a 10.2 percent increase in EBITDA,
thanks to our focus on improving customer satisfaction and increasing sales,"
said Mary Sammons, Rite Aid president and CEO. "As we move into the fourth
quarter, this positive momentum continues and we are comfortable with
achieving the substantial improvement in results we've forecasted for this
year."
Company Updates Guidance for Fiscal 2004
- ----------------------------------------
Based on current trends, Rite Aid confirmed that 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 a $13.0 million net loss and $15.0 million net income. The company
also confirmed that its adjusted EBITDA guidance for the year, as reconciled
on the attached table, is expected to be between $700.0 million and $725.0
million.
Capital expenditures are expected to be between $170.0 million to $190.0
million in fiscal 2004, excluding the repurchase of $106.9 million of
distribution assets that were previously held under a synthetic lease
arrangement.
Preliminary Outlook for Fiscal 2005
- -----------------------------------
Based on preliminary business plans, Rite Aid said it expects sales of $17.4
billion to $17.6 billion in fiscal 2005, which ends February 26, 2005, with
same store sales improving 5.5 percent to 6.5 percent over fiscal 2004. Net
income for fiscal 2005 is expected to be between $112 million and $157
million. Adjusted EBITDA, as reconciled on the attached table, for next fiscal
year is expected to be $800 million to $850 million. The company also said it
expects capital expenditures to be in the range of $300 million to $325
million.
"With the investments we're making in our business, particularly in the
pharmacy area, we are well positioned to again significantly improve our
performance and to continue to deliver value to our shareholders in fiscal
2005," Sammons said.
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 December 20. 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 4464566.
- MORE -
Rite Aid Third 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.
Certain reclassifications have been made to prior years' amounts on the
attached tables to conform to the current year classifications.
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 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 costs, 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)
November 29, 2003 March 1, 2003
----------------- -------------
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 274,440 $ 365,321
Accounts receivable, net 632,117 575,518
Inventories, net 2,401,250 2,195,030
Prepaid expenses and other current assets 88,481 108,018
----------- -----------
Total current assets 3,396,288 3,243,887
PROPERTY, PLANT AND EQUIPMENT, NET 1,904,119 1,868,579
GOODWILL 684,535 684,535
OTHER INTANGIBLES, NET 184,503 199,768
OTHER ASSETS 137,892 136,746
----------- -----------
Total assets $ 6,307,337 $ 6,133,515
=========== ===========
LIABILITIES AND STOCKHOLDERS' DEFICIT
CURRENT LIABILITIES:
Short-term debt and current maturities of long-term debt
and lease financing obligations $ 23,114 $ 103,715
Accounts payable 934,599 755,284
Accrued salaries, wages and other current liabilities 721,204 707,999
----------- -----------
Total current liabilities 1,678,917 1,566,998
CONVERTIBLE NOTES 245,625 244,500
LONG-TERM DEBT, LESS CURRENT MATURITIES 3,453,757 3,345,365
LEASE FINANCING OBLIGATIONS, LESS CURRENT MATURITIES 163,125 169,048
OTHER NONCURRENT LIABILITIES 876,268 900,270
----------- -----------
Total liabilities 6,417,692 6,226,181
COMMITMENTS AND CONTINGENCIES
REDEEMABLE PREFERRED STOCK -- 19,663
STOCKHOLDERS' DEFICIT:
PREFERRED STOCK 409,611 393,705
COMMON STOCK 516,408 515,115
ADDITIONAL PAID-IN CAPITAL 3,136,783 3,119,619
ACCUMULATED DEFICIT (4,145,048) (4,118,119)
STOCK-BASED AND DEFERRED COMPENSATION -- 5,369
ACCUMULATED OTHER COMPREHENSIVE LOSS (28,109) (28,018)
----------- -----------
Total stockholders' deficit (110,355) (112,329)
----------- -----------
Total liabilities and stockholders' deficit $ 6,307,337 $ 6,133,515
=========== ===========
RITE AID CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Dollars in thousands, except per share amounts)
(unaudited)
Thirteen Weeks ended Thirteen Weeks ended
November 29, 2003 November 30, 2002
-------------------- --------------------
REVENUES $ 4,105,844 $ 3,871,246
COSTS AND EXPENSES:
Costs of goods sold, including occupancy costs 3,105,006 2,952,145
Selling, general and administrative expenses 885,827 849,242
Stock-based compensation expense 7,274 2,625
Store closing and impairment charges 3,064 2,945
Interest expense 77,718 80,941
Loss (gain) on sale of assets and investments, net 879 (775)
-------------------- --------------------
4,079,768 3,887,123
-------------------- --------------------
Income (loss) before income taxes 26,076 (15,877)
INCOME TAX EXPENSE 3,585 490
-------------------- --------------------
------------------------------------------
Net income (loss) $ 22,491 $ (16,367)
==========================================
Basic and diluted income (loss) per share
Net income (loss) $ 22,491 $ (16,367)
Accretion of redeemable preferred stock (26) (26)
Cumulative preferred stock dividends (8,032) (7,420)
-------------------- --------------------
Net income (loss) applicable to common stockholders $ 14,433 $ (23,813)
==================== ====================
Net income (loss) per share $ 0.03 $ (0.05)
==================== ====================
Weighted average shares outstanding 516,226 515,124
==================== ====================
RITE AID CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Dollars in thousands, except per share amounts)
(unaudited)
Thirty-nine Weeks Thirty-nine Weeks
ended November 29, ended November 30,
2003 2002
-------------------- --------------------
REVENUES $ 12,204,103 $ 11,651,487
COSTS AND EXPENSES:
Costs of goods sold, including occupancy costs 9,261,041 8,904,613
Selling, general and administrative expenses 2,668,897 2,614,316
Stock-based compensation expense 25,956 3,973
Store closing and impairment charges 436 57,051
Interest expense 236,085 250,527
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 (283) (16,163)
------------------------------------------
12,227,447 11,812,933
------------------------------------------
Loss before income taxes (23,344) (161,446)
INCOME TAX EXPENSE (BENEFIT) 3,585 (42,372)
-------------------- --------------------
-------------------- --------------------
Net loss $ (26,929) $ (119,074)
==================== ====================
Basic and diluted loss per share
Net loss $ (26,929) $ (119,074)
Accretion of redeemable preferred stock (78) (77)
Cumulative preferred stock dividends (15,906) (16,913)
-------------------- --------------------
Net loss applicable to common stockholders $ (42,913) $ (136,064)
==================== ====================
Net loss per share $ (0.08) $ (0.26)
==================== ====================
Weighted average shares outstanding 515,609 515,134
==================== ====================
RITE AID CORPORATION AND SUBSIDIARIES
SUPPLEMENTAL INFORMATION
RECONCILIATION OF NET INCOME (LOSS) TO ADJUSTED EBITDA
(In thousands)
Thirteen Weeks Thirteen Weeks
ended November 29, ended November
2003 30, 2002
--------------------------------------
RECONCILIATION OF NET INCOME (LOSS) TO ADJUSTED EBITDA:
Net income (loss) $ 22,491 $ (16,367)
Adjustments:
LIFO (credit) charge (a) (1,423) 17,250
Store closing and impairment charges 3,064 2,945
Closed store liquidation expense (b) 941 7,451
Stock-based compensation expense 7,274 2,625
Litigation settlements, net (c) (7,345) (6,611)
Loss (gain) on sale of assets and investments 879 (775)
Legal and accounting expenses (d) 5,202 3,295
Interest expense 77,718 80,941
Recurring income tax expense 3,585 490
Depreciation and amortization 64,961 69,731
Other 116 134
------------------- ------------------
Adjusted EBITDA $ 177,463 $ 161,109
=================== ==================
Percent of revenues 4.32% 4.16%
NOTES:
(a) Represents non-cash (credits) 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 net impact of non-recurring litigation.
(d) 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)
Thirty-nine Weeks Thirty-nine
ended November 29, Weeks ended
2003 November 30, 2002
--------------------------------------
RECONCILIATION OF NET LOSS TO ADJUSTED EBITDA:
Net loss $ (26,929) $ (119,074)
Adjustments:
LIFO charge (a) 25,397 51,750
Store closing and impairment charges 436 57,051
Closed store liquidation expense (b) 4,170 15,671
Stock-based compensation expense 25,956 3,973
Loss (gain) on debt modifications and retirements, net (c) 35,315 (1,662)
Litigation settlements, net (d) (8,095) 13,650
Gain on sale of assets and investments (283) (16,163)
Legal and accounting expenses (e) 13,829 13,177
Non-recurring income tax benefit - (44,011)
Interest expense 236,085 250,527
Interest rate swap contracts - 278
Recurring income tax expense 3,585 1,639
Depreciation and amortization 195,633 217,057
Other 367 1,005
------------------- ------------------
Adjusted EBITDA $ 505,466 $ 444,868
=================== ==================
Percent of revenues 4.14% 3.82%
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 Ending Year Ending
February 28, 2004 February 28, 2004
---------------- ----------------
RECONCILIATION OF NET (LOSS) INCOME TO ADJUSTED EBITDA
Net (loss) income $ (13,000) $ 15,000
Adjustments:
LIFO charge 35,000 35,000
Store closing, liquidation, and impairment charges 40,000 40,000
Stock-based compensation expense 32,000 30,000
Loss on debt modifications and retirements, net 35,000 35,000
Legal and accounting expenses 15,000 15,000
Income tax benefit, net (20,000) (20,000)
Interest expense 315,000 315,000
Depreciation and amortization 262,000 262,000
Litigation settlements, gain on sale of assets and investments,
and other (1,000) (2,000)
---------------- ----------------
Adjusted EBITDA $ 700,000 $ 725,000
================ ================
RITE AID CORPORATION AND SUBSIDIARIES
SUPPLEMENTAL INFORMATION
RECONCILIATION OF NET INCOME GUIDANCE TO ADJUSTED EBITDA GUIDANCE
(In thousands)
Guidance Range
--------------------------------
Low High
------------- ---------------
Year Ending Year Ending
February 26, February 26,
2005 2005
-------------------------------
RECONCILIATION OF NET INCOME TO ADJUSTED EBITDA
Net income $ 112,000 $ 157,000
Adjustments:
LIFO charge 40,000 40,000
Store closing, liquidation, and impairment charges 40,000 40,000
Stock-based compensation expense 23,000 23,000
Legal and accounting expenses 5,000 5,000
Income tax expense, net 15,000 20,000
Interest expense 315,000 315,000
Depreciation and amortization 250,000 250,000
------------- ---------------
Adjusted EBITDA $ 800,000 $ 850,000
============= ===============