EXHIBIT 99.1
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 FIRST QUARTER RESULTS
REPORTS FIRST QUARTER NET INCOME OF $.05 PER DILUTED SHARE
COMPARED TO NET INCOME OF $.10 PER DILUTED SHARE IN PRIOR YEAR
REPORTS FIRST QUARTER ADJUSTED EBITDA OF $203.6 MILLION
COMPARED TO ADJUSTED EBITDA OF $224.2 MILLION IN PRIOR YEAR
Revises Fiscal 2006 Guidance
CAMP HILL, PA, June 23, 2005--Rite Aid Corporation (NYSE, PCX: RAD) today
announced financial results for its first quarter ended May 28, 2005.
Revenues for the 13-week first quarter were $4.22 billion versus revenues of
$4.24 billion in the prior year first quarter. Revenues decreased 0.5 percent.
Same store sales decreased 0.3 percent during the first quarter as compared to
the year-ago like period, consisting of a 1.2 percent pharmacy same store sales
decrease and a 1.4 percent increase in front-end same store sales. Prescription
sales accounted for 64.0 percent of total sales, and third party prescription
sales represented 93.9 percent of pharmacy sales.
Net income for the first quarter decreased to $33.4 million or $.05 per diluted
share compared to last year's first quarter net income of $63.7 million or $.10
per diluted share. The decrease was due primarily to a $20.5 million decrease
in adjusted EBITDA (which is reconciled to net income on the attached table), a
$15.5 million store closing and impairment charge which compared to a $4.6
million credit in the prior year quarter and an $8.9 million increase in income
tax expense. These negative factors were partially offset by a $3.1 million
decrease in the LIFO charge, a $7.0 million decrease in interest expense and
$5.9 million litigation settlement income compared to $.5 million litigation
expense in the prior year quarter.
-MORE -
Rite Aid FY06 Q1 Press Release - page 2
Adjusted EBITDA amounted to $203.6 million or 4.8 percent of revenues. This
compares to $224.2 million or 5.3 percent of revenues for the like period last
year. The decrease was due to an increase in selling, general and
administrative expenses.
"Front end sales improved this quarter, and we made good progress on our new
store development program with 42 new and relocated stores already open or
under construction. This keeps us on target for the 80 new and relocated stores
we expect to open in fiscal 2006," said Mary Sammons, Rite Aid president and
CEO. "Pharmacy sales were disappointing and put pressure on SG&A this quarter.
We remain committed to increasing pharmacy sales, improving customer
satisfaction and containing costs."
In the first quarter, the company opened 2 new stores, relocated 3 stores,
acquired 1 store, closed 5 stores and remodeled 47 stores. Stores in operation
at the end of the quarter totaled 3,354.
Company Revises Guidance for Fiscal 2006
- ----------------------------------------
Based on current trends, Rite Aid said that it is lowering its sales, net
income and adjusted EBITDA guidance for fiscal 2006, which has 53 weeks. The
company said it expects sales to be between $17.1 billion and $17.4 billion,
with same store sales improving 0.5 percent to 2.0 percent as compared to
previous guidance of $17.3 billion and $17.7 billion, with same stores sales
improving 1.4 percent to 3.4 percent over fiscal 2005. Net income for fiscal
2006 is expected to be between $31 million and $62 million or zero cents to
$.05 per diluted share as compared to previous guidance of net income between
$45 million and $71 million or $.02 to $.07 per diluted share. Adjusted EBITDA
is expected to be between $675 million and $725 million as compared to previous
guidance of $700 million to $750 million. Capital expenditures are expected to
remain between $350 million and $400 million.
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 June
25. 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 7119887.
Rite Aid Corporation is one of the nation's leading drugstore chains with
annual revenues of $16.8 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.
--MORE--
Rite Aid FY06 Q1 Press Release - page 3
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 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 and
encourage mail order, 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".
See the 8-K furnished to the Securities and Exchange Commission on June 23,
2005 for definition, purpose and reconciliation of non-GAAP financial measures
referred to herein.
###
RITE AID CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Dollars in thousands)
(unaudited)
May 28, 2005 February 26, 2005
------------------- -------------------
ASSETS
Current assets:
Cash and cash equivalents $ 135,037 $ 162,821
Accounts receivable, net 461,137 483,455
Inventories, net 2,325,488 2,310,153
Prepaid expenses and other current assets 52,546 50,325
------------------- -------------------
Total current assets 2,974,208 3,006,754
Property, plant and equipment, net 1,701,383 1,733,694
Goodwill 684,535 684,535
Other intangibles, net 177,085 179,480
Other assets 310,346 328,120
------------------- -------------------
Total assets $ 5,847,557 $ 5,932,583
=================== ===================
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current maturities of long-term debt and lease financing obligations $ 52,258 $ 223,815
Accounts payable 782,944 757,571
Accrued salaries, wages and other current liabilities 714,367 690,351
------------------- -------------------
Total current liabilities: 1,549,569 1,671,737
Convertible notes 247,875 247,500
Long-term debt, less current maturities 2,681,530 2,680,998
Lease financing obligations, less current maturities 165,653 159,023
Other noncurrent liabilities 842,061 850,391
------------------- -------------------
Total liabilities 5,486,688 5,609,649
Commitments and contingencies - -
Stockholders' equity:
Preferred stock - Series E 120,000 120,000
Preferred stock - Series F 115,343 113,081
Preferred stock - Series G 115,060 113,081
Preferred stock - Series H 114,777 113,081
Common stock 520,903 520,438
Additional paid-in capital 3,119,513 3,121,404
Accumulated deficit (3,722,722) (3,756,146)
Accumulated other comprehensive loss (22,005) (22,005)
------------------- -------------------
Total stockholders' equity 360,869 322,934
------------------- -------------------
Total liabilities and stockholders' equity $ 5,847,557 $ 5,932,583
=================== ===================
RITE AID CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Dollars in thousands, except per share amounts)
(unaudited)
Thirteen Weeks ended Thirteen Weeks ended
May 28, 2005 May 29, 2004
-------------------- --------------------
Revenues $ 4,221,436 $ 4,244,357
Costs and expenses:
Costs of goods sold, including occupancy costs 3,140,803 3,191,456
Selling, general and administrative expenses 947,453 912,845
Store closing and impairment charges (credits) 15,532 (4,595)
Interest expense 70,851 77,801
Gain on sale of assets and investments, net (538) (1,918)
-------------------- --------------------
4,174,101 4,175,589
-------------------- --------------------
Income before income taxes 47,335 68,768
Income tax expense 13,911 5,049
-------------------- --------------------
Net income $ 33,424 $ 63,719
==================== ====================
Basic and diluted income per share:
Numerator for income per share:
Net income $ 33,424 $ 63,719
Accretion of redeemable preferred stock (26) (26)
Cumulative preferred stock dividends (8,149) (8,356)
-------------------- --------------------
Income attributable to common stockholders - basic $ 25,249 $ 55,337
Add back - Interest on convertible debt - 2,968
-------------------- --------------------
Income attributable to common stockholders - diluted $ 25,249 $ 58,305
==================== ====================
Denominator:
Basic weighted average shares 520,752 516,837
Outstanding options 8,932 18,792
Convertible debt - 38,462
-------------------- --------------------
Diluted weighted average shares 529,684 574,091
==================== ====================
Basic income per share $ 0.05 $ 0.11
Diluted income per share $ 0.05 $ 0.10
RITE AID CORPORATION AND SUBSIDIARIES
SUPPLEMENTAL INFORMATION
RECONCILIATION OF NET INCOME TO ADJUSTED EBITDA
(In thousands)
Thirteen Weeks Thirteen Weeks
ended May 28, 2005 ended May 29, 2004
------------------ ------------------
Reconciliation of net income to adjusted EBITDA:
Net income $ 33,424 $ 63,719
Adjustments:
Interest expense 70,851 77,801
Recurring income tax expense 21,759 5,049
Income tax benefit from favorable tax settlement (7,848) -
Depreciation and amortization 60,330 63,192
LIFO charges (a) 7,612 10,689
Store closing and impairment charges (credits) 15,532 (4,595)
Stock-based compensation expense 4,890 3,982
Gain on sale of assets and investments, net (538) (1,918)
Litigation settlements, net (b) (5,907) 460
Legal and accounting expenses (c) 1,114 4,023
Closed store liquidation expense (d) 1,646 1,686
Other 749 72
------------------ ------------------
Adjusted EBITDA $ 203,614 $ 224,160
================== ==================
Percent of revenues 4.82% 5.28%
Notes:
(a) Represents non-cash charges to value our inventories under the last-in first-out ("LIFO") method.
(b) Represents net impact of non-recurring litigation.
(c) 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.
(d) Represents costs to liquidate inventory at stores that are in the process of closing.
RITE AID CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollars in thousands)
(unaudited)
Thirteen Weeks Thirteen Weeks
ended May 28, ended May 29,
2005 2004
---------------- ----------------
Operating activities:
Net income $ 33,424 $ 63,719
Adjustments to reconcile to net cash provided by operations:
Depreciation and amortization 60,330 63,192
Stock-based compensation expense 4,890 3,982
Store closings and impairment charges (credits) 15,532 (4,595)
Gain on sale of assets and investments, net (538) (1,918)
Change in income tax receivables and payables 20,030 41,279
Change in operating assets and liabilities 39,172 50,900
---------------- ----------------
Net cash provided by operating activities 172,840 216,559
Investing activities:
Expenditures for property, plant and equipment (41,795) (35,088)
Intangible assets acquired (7,922) (6,730)
Proceeds from sale-leaseback transactions 18,784 -
Proceeds from dispositions 8,787 3,483
---------------- ----------------
Net cash used in investing activities (22,146) (38,335)
Financing activities:
Principal payments on long-term debt (172,955) (6,162)
Principal payments on bank credit facilities (1,125) -
Proceeds from financing secured by owned property 5,352 -
Change in zero balance cash accounts (9,219) (8,586)
Payments for preferred stock (2,212) -
Proceeds from the issuance of common stock 1,885 1,920
Deferred financing costs paid (204) -
---------------- ----------------
Net cash used in financing activities (178,478) (12,828)
---------------- ----------------
Decrease in cash and cash equivalents (27,784) 165,396
Cash and cash equivalents, beginning of period 162,821 334,755
---------------- ----------------
Cash and cash equivalents, end of period $ 135,037 $ 500,151
================ ================
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
March 4, 2006 March 4, 2006
--------------- ---------------
Reconciliation of net income to adjusted EBITDA:
Net income $ 31,000 $ 62,000
Adjustments:
Interest expense 275,000 275,000
Income tax expense, net 19,000 38,000
Loss on debt modifications and retirements, net 9,000 9,000
Depreciation and amortization 252,000 252,000
LIFO charge 30,000 30,000
Store closing, liquidation, and impairment charges 46,000 46,000
Stock-based compensation expense 23,000 23,000
Legal and accounting expenses and litigation settlements, net (10,000) (10,000)
--------------- ---------------
Adjusted EBITDA $ 675,000 $ 725,000
=============== ===============
Diluted income per share $ 0.00 $ 0.05