Exhibit 99.1
INVESTORS: MEDIA:
Kevin Twomey Karen Rugen
717-731-6540 717-730-7766
or investor@riteaid.com
FOR IMMEDIATE RELEASE
RITE AID ANNOUNCES THIRD QUARTER RESULTS
REPORTS THIRD QUARTER NET LOSS OF $5.2 MILLION OR $.02 PER DILUTED
SHARE COMPARED TO NET INCOME OF $.3 MILLION OR $.02 LOSS PER DILUTED
SHARE IN PRIOR YEAR
REPORTS THIRD QUARTER ADJUSTED EBITDA OF $141.3 MILLION
COMPARED TO ADJUSTED EBITDA OF $163.0 MILLION IN PRIOR YEAR
Confirms Fiscal 2006 Guidance
CAMP HILL, PA, December 15, 2005--Rite Aid Corporation (NYSE, PCX: RAD) today
announced financial results for its third quarter ended November 26, 2005.
Revenues for the 13-week third quarter were $4.15 billion versus revenues of
$4.11 billion in the prior year third quarter. Revenues increased 0.9 percent.
Same store sales increased 1.7 percent during the third quarter as compared to
the year-ago like period, consisting of a 0.7 percent pharmacy same store sales
increase and a 3.4 percent increase in front-end same store sales. Prescription
sales accounted for 63.8 percent of total sales, and third party prescription
sales represented 94.1 percent of pharmacy sales.
The third quarter had a net loss of $5.2 million or $.02 per diluted share
compared to last year's third quarter net income of $.3 million or $.02 loss per
diluted share. The change was due primarily to a $21.7 million decrease in
adjusted EBITDA (which is reconciled to net loss or income on the attached
table), a $1.8 million increase in the LIFO charge, a $2.8 million increase in
depreciation and amortization expense and a $13.8 million decrease in gain from
litigation settlements. These negative factors were partially offset primarily
by a $3.7 million decrease in interest expense, a $1.1 million income tax
benefit compared to a $5.4 million income tax expense in the prior year quarter
and no loss on debt modification compared to a $20.2 million loss in the prior
year quarter.
- MORE -
Rite Aid Press Release - page two
Adjusted EBITDA amounted to $141.3 million or 3.4 percent of revenues. This
compares to $163.0 million or 4.0 percent of revenues for the like period last
year. The decrease was primarily due to an increase in salary, wages and benefit
expense and occupancy costs.
"We are pleased with the positive sales trends in the third quarter, with
pharmacy sales moving back into positive territory and solid gains on the front
end," said Mary Sammons, Rite Aid president and CEO. "We expect that with our
continued focus on initiatives to gain new customers and improve customer
satisfaction, along with the seasonality of our business and an extra week this
fiscal year, we will deliver a strong fourth quarter. We're also looking forward
to a significant number of new and relocated store openings in the fourth
quarter, keeping us on track to meet our goal of 80 new and relocated stores by
the end of the fiscal year."
In the third quarter, the company opened 8 stores, relocated 8 stores, acquired
2 stores, closed 22 stores, which includes 13 stores closed due to hurricane
Katrina, and remodeled 53 stores. Stores in operation at the end of the quarter
totaled 3,333.
Company Confirms Guidance for Fiscal 2006
- -----------------------------------------
Rite Aid confirmed its fiscal 2006 guidance. 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 over fiscal 2005. Net income for fiscal 2006 is
expected to be between $31 million and $62 million or a loss per share of $.01
to net income of $.04 per diluted share. Adjusted EBITDA (which is reconciled to
net income on the attached table) is expected to be between $675 million and
$725 million. Capital expenditures are expected to be 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 December 17. 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 3332166.
Rite Aid Corporation is one of the nation's leading drugstore chains with annual
revenues of $16.8 billion and approximately 3,300 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 Press Release - page three
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 private and
public 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 December 15,
2005 for definition, purpose and reconciliation of non-GAAP financial measures
referred to herein to most comparable GAAP financial measures.
###
RITE AID CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Dollars in thousands)
(unaudited)
November 26, 2005 February 26, 2005
-------------------- ------------------
ASSETS
Current assets:
Cash and cash equivalents $ 105,130 $ 162,821
Accounts receivable, net 308,702 483,455
Inventories, net 2,485,723 2,310,153
Prepaid expenses and other current assets 62,904 50,325
-------------------- ------------------
Total current assets 2,962,459 3,006,754
Property, plant and equipment, net 1,678,357 1,733,694
Goodwill 684,535 684,535
Other intangibles, net 186,360 179,480
Other assets 324,540 328,120
-------------------- ------------------
Total assets $ 5,836,251 $ 5,932,583
==================== ==================
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current maturities of long-term debt and lease financing obligations $ 188,684 $ 223,815
Accounts payable 870,886 757,571
Accrued salaries, wages and other current liabilities 714,740 690,351
-------------------- ------------------
Total current liabilities: 1,774,310 1,671,737
Convertible notes 248,625 247,500
Long-term debt, less current maturities 2,478,758 2,680,998
Lease financing obligations, less current maturities 165,122 159,023
Other noncurrent liabilities 817,118 850,391
-------------------- ------------------
Total liabilities 5,483,933 5,609,649
Commitments and contingencies - -
Stockholders' equity:
Preferred stock - Series E 120,000 120,000
Preferred stock - Series F - 113,081
Preferred stock - Series G 119,122 113,081
Preferred stock - Series H 118,247 113,081
Preferred stock - Series I 116,074 -
Common stock 525,407 520,438
Additional paid-in capital 3,110,869 3,121,404
Accumulated deficit (3,735,396) (3,756,146)
Accumulated other comprehensive loss (22,005) (22,005)
-------------------- ------------------
Total stockholders' equity 352,318 322,934
-------------------- ------------------
Total liabilities and stockholders' equity $ 5,836,251 $ 5,932,583
==================== ==================
RITE AID CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Dollars in thousands, except per share amounts)
(unaudited)
Thirteen Weeks Thirteen Weeks
ended November 26, ended November 27,
2005 2004
-------------------- --------------------
Revenues $ 4,145,683 $ 4,107,336
Costs and expenses:
Costs of goods sold, including occupancy costs 3,127,776 3,098,555
Selling, general and administrative expenses 956,017 909,016
Store closing and impairment charges 2,652 2,397
Interest expense 66,909 70,653
Loss on debt modifications and retirements, net - 20,216
(Gain) loss on sale of assets and investments, net (1,372) 849
-------------------- --------------------
4,151,982 4,101,686
-------------------- --------------------
(Loss) income before income taxes (6,299) 5,650
Income tax (benefit) expense (1,079) 5,362
-------------------- --------------------
Net (loss) income $ (5,220) $ 288
==================== ====================
Basic and diluted (loss) income per share:
Numerator for (loss) income per share:
Net (loss) income $ (5,220) $ 288
Accretion of redeemable preferred stock (26) (26)
Cumulative preferred stock dividends (7,254) (8,694)
-------------------- --------------------
Loss attributable to common stockholders - basic and diluted $ (12,500) $ (8,432)
==================== ====================
Denominator:
Basic and diluted weighted average shares 525,349 519,876
Basic and diluted loss per share $ (0.02) $ (0.02)
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 26, ended November 27,
2005 2004
-------------------- -------------------
Revenues $ 12,499,642 $ 12,475,599
Costs and expenses:
Costs of goods sold, including occupancy costs 9,386,317 9,388,222
Selling, general and administrative expenses 2,839,158 2,748,014
Store closing and impairment charges 26,305 11,263
Interest expense 205,273 224,973
Loss on debt modifications and retirements, net 9,186 19,425
Gain on sale of assets and investments, net (3,865) (1,323)
-------------------- -------------------
12,462,374 12,390,574
-------------------- -------------------
Income before income taxes 37,268 85,025
Income tax expense 10,635 11,139
-------------------- -------------------
Net income $ 26,633 $ 73,886
==================== ===================
Basic and diluted (loss) income per share:
Numerator for (loss) income per share:
Net income $ 26,633 $ 73,886
Premium to redeem preferred stock (5,883) -
Accretion of redeemable preferred stock (77) (77)
Cumulative preferred stock dividends (25,020) (25,573)
-------------------- -------------------
(Loss) income attributable to common stockholders - basic and diluted $ (4,347) $ 48,236
==================== ===================
Denominator:
Basic weighted average shares 523,296 518,095
Outstanding options - 13,963
-------------------- -------------------
Diluted weighted average shares 523,296 532,058
==================== ===================
Basic and diluted (loss) income per share $ (0.01) $ 0.09
RITE AID CORPORATION AND SUBSIDIARIES
SUPPLEMENTAL INFORMATION
RECONCILIATION OF NET (LOSS) INCOME TO ADJUSTED EBITDA
(In thousands)
Thirteen Weeks Thirteen Weeks
ended November 26, ended November 27,
2005 2004
------------------- --------------------
Reconciliation of net (loss) income to adjusted EBITDA:
Net (loss) income $ (5,220) $ 288
Adjustments:
Interest expense 66,909 70,653
Recurring income tax (benefit) expense (1,079) 5,362
Depreciation and amortization 63,114 60,334
LIFO charges (a) 7,612 5,763
Store closing and impairment charges 2,652 2,397
Stock-based compensation expense 6,054 5,421
(Gain) loss on sale of assets and investments, net (1,372) 849
Loss on debt modifications and retirements, net (b) - 20,216
Litigation settlements, net (c) (701) (14,508)
Legal and accounting expenses (d) 65 3,243
Closed store liquidation expense (e) 2,609 2,454
Other 656 547
------------------ ------------------
Adjusted EBITDA $ 141,299 $ 163,019
================== ==================
Percent of revenues 3.41% 3.97%
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 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 26, ended November 27,
2005 2004
-------------------- ---------------------
Reconciliation of net income to adjusted EBITDA:
Net income $ 26,633 $ 73,886
Adjustments:
Interest expense 205,273 224,973
Recurring income tax expense 18,483 11,139
Income tax benefit from favorable tax settlement (7,848) -
Depreciation and amortization 184,740 185,581
LIFO charges (a) 22,837 17,276
Store closing and impairment charges 26,305 11,263
Stock-based compensation expense 15,219 14,525
Gain on sale of assets and investments, net (3,865) (1,323)
Loss on debt modifications and retirements, net (b) 9,186 19,425
Litigation settlements, net (c) (13,145) (14,183)
Legal and accounting expenses (d) 2,301 8,050
Closed store liquidation expense (e) 6,213 5,849
Other 1,858 1,601
-------------------- ---------------------
Adjusted EBITDA $ 494,190 $ 558,062
==================== =====================
Percent of revenues 3.95% 4.47%
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
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollars in thousands)
(unaudited)
Thirteen Weeks Thirteen Weeks
ended November 26, ended November 27,
2005 2004
-------------------- --------------------
Operating activities:
Net (loss) income $ (5,220) $ 288
Adjustments to reconcile to net cash provided by operations:
Depreciation and amortization 63,114 60,334
Stock-based compensation expense 6,054 5,421
Store closing and impairment charges 2,652 2,397
Loss on debt modifications and retirements, net - 20,216
(Gain) loss on sale of assets and investments, net (1,372) 849
Benefit for deferred income taxes (1,253) (514)
Change in income tax receivables and payables 375 (186)
Change in operating assets and liabilities (96,478) (132,395)
Net proceeds from accounts receivable securitization 55,000 335,000
-------------------- --------------------
Net cash provided by operating activities 22,872 291,410
Investing activities:
Expenditures for property, plant and equipment (97,439) (44,627)
Intangible assets acquired (11,269) (8,482)
Proceeds from sale-leaseback transactions 24,603 53,800
Proceeds from dispositions 8,034 2,062
-------------------- --------------------
Net cash (used in) provided by investing activities (76,071) 2,753
Financing activities:
Principal payments on long-term debt (2,429) (4,519)
Principal payments on bank credit facility (446,625) (1,147,125)
Proceeds from bank credit facility - 438,015
Net proceeds from revolver 496,000 99,000
Change in zero balance cash accounts 24,921 13,358
Proceeds from the issuance of preferred stock 5,335 -
Payments for preferred stock dividends (3,458) -
Proceeds from the issuance of common stock 1,380 32
Deferred financing costs paid (6,889) (4,041)
-------------------- --------------------
Net cash provided by (used in) financing activities 68,235 (605,280)
-------------------- --------------------
Increase (decrease) in cash and cash equivalents 15,036 (311,117)
Cash and cash equivalents, beginning of period 90,094 406,885
-------------------- --------------------
Cash and cash equivalents, end of period $ 105,130 $ 95,768
==================== ====================
RITE AID CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollars in thousands)
(unaudited)
Thirty-nine Weeks Thirty-nine Weeks
ended November 26, ended November 27,
2005 2004
-------------------- ---------------------
Operating activities:
Net income $ 26,633 $ 73,886
Adjustments to reconcile to net cash provided by operations:
Depreciation and amortization 184,740 185,581
Stock-based compensation expense 15,219 14,525
Store closing and impairment charges 26,305 11,263
Loss on debt modifications and retirements, net 9,186 19,425
Gain on sale of assets and investments, net (3,865) (1,323)
Provision (benefit) for deferred income taxes 13,582 (2,712)
Change in income tax receivables and payables 1,018 40,354
Change in operating assets and liabilities (131,060) (152,101)
Net proceeds from accounts receivable securitization 195,000 335,000
-------------------- ---------------------
Net cash provided by operating activities 336,758 523,898
Investing activities:
Expenditures for property, plant and equipment (191,184) (120,455)
Intangible assets acquired (34,599) (21,202)
Proceeds from sale-leaseback transactions 72,505 53,800
Proceeds from dispositions 21,096 6,178
-------------------- ---------------------
Net cash used in investing activities (132,182) (81,679)
Financing activities:
Principal payments on long-term debt (336,437) (78,676)
Principal payments on bank credit facility (448,875) (1,150,000)
Proceeds from bank credit facility - 438,015
Net proceeds from revolver 530,000 99,000
Change in zero balance cash accounts 5,251 11,500
Proceeds from financing secured by owned property 5,352 -
Proceeds from the issuance of preferred stock 116,885 -
Payments for the redemption of preferred stock (123,533) -
Payments for preferred stock dividends (9,244) -
Proceeds from the issuance of common stock 5,490 2,996
Deferred financing costs paid (7,156) (4,041)
-------------------- ---------------------
Net cash used in financing activities (262,267) (681,206)
-------------------- ---------------------
Decrease in cash and cash equivalents (57,691) (238,987)
Cash and cash equivalents, beginning of period 162,821 334,755
-------------------- ---------------------
Cash and cash equivalents, end of period $ 105,130 $ 95,768
==================== =====================
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 23,000 32,000
Loss on debt modifications and retirements, net 9,000 9,000
Depreciation and amortization 252,000 252,000
LIFO charge 25,000 30,000
Store closing, liquidation, and impairment charges 50,000 55,000
Stock-based compensation expense 20,000 20,000
Legal and accounting expenses and litigation settlements, net (10,000) (10,000)
---------------- ----------------
Adjusted EBITDA $ 675,000 $ 725,000
================ ================
Diluted (loss) income per share $ (0.01) $ 0.04