Exhibit 99.1
CONSOLIDATED BALANCE SHEETS
(Dollars in thousands)
(unaudited)
November 27, 2004 February 28, 2004
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ASSETS
Current assets:
Cash and cash equivalents $ 95,768 $ 334,755
Accounts receivable, net 285,650 670,004
Inventories, net 2,464,097 2,223,171
Prepaid expenses and other current assets 41,881 150,067
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Total current assets 2,887,396 3,377,997
Property, plant and equipment, net 1,778,211 1,883,808
Goodwill 684,535 684,535
Other intangibles, net 179,881 176,672
Other assets 147,941 123,667
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Total assets $ 5,677,964 $ 6,246,679
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LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current maturities of long-term debt and lease financing obligations $ 184,620 $ 23,976
Accounts payable 827,163 758,290
Accrued salaries, wages and other current liabilities 700,912 701,484
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Total current liabilities: 1,712,695 1,483,750
Convertible notes 247,125 246,000
Long-term debt, less current maturities 2,619,875 3,451,352
Lease financing obligations, less current maturities 161,785 170,338
Other noncurrent liabilities 835,617 885,975
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Total liabilities
5,577,097 6,237,415
Commitments and contingencies - -
Stockholders' equity:
Preferred stock 443,376 417,803
Common stock 520,600 516,496
Additional paid-in capital 3,121,063 3,133,277
Accumulated deficit (3,961,293) (4,035,433)
Accumulated other comprehensive loss (22,879) (22,879)
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Total stockholders' equity 100,867 9,264
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Total liabilities and stockholders' equity $ 5,677,964 $ 6,246,679
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RITE AID CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Dollars in thousands, except per share amounts)
(unaudited)
Thirteen Weeks ended Thirteen Weeks ended
November 27, 2004 November 29, 2003
--------------------- ---------------------
Revenues $ 4,107,336 $ 4,105,844
Costs and expenses:
Costs of goods sold, including occupancy costs 3,097,712 3,104,990
Selling, general and administrative expenses 909,016 893,117
Store closing and impairment charges 2,551 3,064
Interest expense 70,653 77,718
Loss on debt modifications and retirements, net 20,216 -
Loss on sale of assets and investments, net 849 879
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4,100,997 4,079,768
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Income before income taxes 6,339 26,076
Income tax expense (benefit) 5,362 (47,518)
--------------------- ---------------------
Net income $ 977 $ 73,594
===================== =====================
Basic and diluted (loss) income per share:
Numerator for (loss) income per share:
Net income $ 977 $ 73,594
Accretion of redeemable preferred stock (26) (26)
Cumulative preferred stock dividends (8,694) (8,032)
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(Loss) income attributable to common stockholders - basic $ (7,743) $ 65,536
Add back - Interest on convertible debt - 2,968
Add back - Cumulative preferred stock dividends - 8,032
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(Loss) income attributable to common stockholders - diluted $ (7,743) $ 76,536
===================== =====================
Denominator:
Basic weighted average shares 519,876 516,226
Outstanding options - 17,894
Convertible debt - 38,462
Convertible preferred stock - 74,475
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Diluted weighted average shares 519,876 647,057
===================== =====================
Basic (loss) income per share $ (0.01) $ 0.13
Diluted (loss) income per share $ (0.01) $ 0.12
RITE AID CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Dollars in thousands, except per share amounts)
(unaudited)
Thirty-nine Weeks Thirty-nine Weeks
ended November 27, ended November 29,
2004 2003
--------------------- ---------------------
Revenues $ 12,475,599 $ 12,204,103
Costs and expenses:
Costs of goods sold, including occupancy costs 9,387,335 9,261,010
Selling, general and administrative expenses 2,748,014 2,694,884
Store closing and impairment charges 11,896 436
Interest expense 224,973 236,085
Loss on debt modifications and retirements, net 19,425 35,315
Gain on sale of assets and investments, net (1,323) (283)
--------------------------------------------
12,390,320 12,227,447
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Income (loss) before income taxes 85,279 (23,344)
Income tax expense (benefit) 11,139 (47,518)
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Net income $ 74,140 $ 24,174
===================== =====================
Basic and diluted income per share:
Numerator for income per share:
Net income $ 74,140 $ 24,174
Accretion of redeemable preferred stock (77) (78)
Cumulative preferred stock dividends (25,573) (15,906)
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Income attributable to common stockholders - basic and diluted $ 48,490 $ 8,190
===================== =====================
Denominator:
Basic weighted average shares 518,095 515,609
Outstanding options 13,963 9,894
--------------------- ---------------------
Diluted weighted average shares 532,058 525,503
===================== =====================
Basic and diluted income per share $ 0.09 $ 0.02
RITE AID CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollars in thousands)
(unaudited)
Thirty-nine Weeks ended Thirty-nine Weeks ended
November 27, 2004 November 29, 2003
----------------------- --- --------------------
Operating activities:
Net income $ 74,140 $ 24,174
Adjustments to reconcile to net cash provided by operations:
Depreciation and amortization 185,358 195,633
Stock-based compensation expense 14,525 25,956
Store closing and impairment charges 11,896 436
Loss on debt modifications and retirements, net 19,425 35,315
Gain on sale of assets and investments, net (1,323) (283)
Net proceeds from sale of accounts receivable 335,000 -
Changes in income tax receivables and payables 37,642 (51,103)
Changes in operating assets and liabilities (152,765) (129,818)
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Net cash provided by operating activities 523,898 100,310
Investing activities:
Expenditures for property, plant and equipment (120,455) (198,172)
Intangible assets acquired (21,202) (11,816)
Proceeds from sale-leaseback transactions 53,800 -
Proceeds from dispositions 6,178 17,463
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Net cash used in investing activities (81,679) (192,525)
Financing activities:
Principal payments on long-term debt (78,676) (260,766)
Principal payments on bank credit facilities (1,150,000) (1,372,500)
Proceeds from issuance of new bank credit facilities 438,015 1,150,000
Net proceeds from revolver 99,000 -
Change in zero balance cash accounts 11,500 9,375
Proceeds from the issuance of stock 2,996 3,260
Proceeds from issuance of bonds - 502,950
Deferred financing costs paid (4,041) (30,985)
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Net cash (used in) provided by financing activities (681,206) 1,334
--------------------- ---------------------
Decrease in cash and cash equivalents (238,987) (90,881)
Cash and cash equivalents, beginning of period 334,755 365,321
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Cash and cash equivalents, end of period $ 95,768 $ 274,440
===================== =====================
RITE AID CORPORATION AND SUBSIDIARIES
SUPPLEMENTAL INFORMATION
RECONCILIATION OF NET INCOME TO ADJUSTED EBITDA
(In thousands)
Thirteen Weeks Thirteen Weeks
ended November ended November
27, 2004 29, 2003
------------------ ----------------
Reconciliation of net income to adjusted EBITDA:
Net income $ 977 $ 73,594
Adjustments:
Interest expense 70,653 77,718
Recurring income tax expense 5,362 3,565
Nonrecurring income tax benefit - (51,083)
Depreciation and amortization 60,259 64,961
LIFO charges (credits) (a) 5,763 (1,423)
Store closing and impairment charges 2,551 3,064
Stock-based compensation expense 5,421 7,274
Loss on sale of assets and investments, net 849 879
Loss on debt modifications and retirements, net (b) 20,216 -
Litigation settlements, net (c) (14,508) (7,345)
Legal and accounting expenses (d) 3,243 5,202
Closed store liquidation expense (e) 2,454 941
Other 547 116
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Adjusted EBITDA $ 163,787 $ 177,463
================== ==================
Percent of revenues 3.99% 4.32%
Notes:
(a) Represents non-cash charges (credits) to value our inventories under the
last-in first-out ("LIFO") method.
(b) Represents loss related to debt modifications and retirements, net.
(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.
(e) Represents costs to liquidate inventory at stores that are in the process
of closing.
RITE AID CORPORATION AND SUBSIDIARIES
SUPPLEMENTAL INFORMATION
RECONCILIATION OF NET INCOME TO ADJUSTED EBITDA
(In thousands)
Thirty-nine Weeks Thirty-nine Weeks
ended November ended November
27, 2004 29, 2003
------------------ ------------------
Reconciliation of net income to adjusted EBITDA:
Net income $ 74,140 $ 24,174
Adjustments:
Interest expense 224,973 236,085
Recurring income tax expense 11,139 3,565
Nonrecurring income tax benefit - (51,083)
Depreciation and amortization 185,358 195,633
LIFO charges (a) 17,276 25,397
Store closing and impairment charges 11,896 436
Stock-based compensation expense 14,525 25,956
Gain on sale of assets and investments, net (1,323) (283)
Loss on debt modifications and retirements, net (b) 19,425 35,315
Litigation settlements, net (c) (14,183) (8,095)
Legal and accounting expenses (d) 8,050 13,829
Closed store liquidation expense (e) 5,849 4,170
Other 1,601 367
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Adjusted EBITDA $ 558,726 $ 505,466
================== ==================
Percent of revenues 4.48% 4.14%
Notes:
(a) Represents non-cash charges to value our inventories under the last-in
first-out ("LIFO") method.
(b) Represents loss related to debt modifications and retirements, net.
(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, to defend prior management, and for transaction consultation.
(e) Represents costs to liquidate inventory at stores that are in the process
of closing.
RITE AID CORPORATION AND SUBSIDIARIES
SUPPLEMENTAL INFORMATION
RECONCILIATION OF NET INCOME GUIDANCE TO ADJUSTED EBITDA GUIDANCE
(In thousands)
Guidance Range
-------------------------------
Low High
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Year Ending Year Ending
February 26, February 26,
2005 2005
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Reconciliation of net income to adjusted EBITDA:
Net income $ 49,000 $ 99,000
Adjustments:
Interest expense 295,000 295,000
Income tax expense, net 11,500 11,500
Depreciation and amortization 246,000 246,000
LIFO charge 23,000 23,000
Store closing, liquidation, and impairment charges 50,000 50,000
Stock-based compensation expense 21,000 21,000
Loss on debt modifications and retirements, net 19,500 19,500
Legal and accounting expenses and litigation settlements, net (15,000) (15,000)
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Adjusted EBITDA $ 700,000 $ 750,000
=============== ===============
Diluted income per share $ 0.03 $ 0.12