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 FOURTH QUARTER AND FULL YEAR RESULTS
REPORTS 14-WEEK FOURTH QUARTER NET INCOME, INCLUDING TAX BENEFIT,
OF $1.83 PER DILUTED SHARE COMPARED TO $.35 PER DILUTED SHARE
IN 13-WEEK PRIOR YEAR FOURTH QUARTER
REPORTS 53-WEEK FISCAL 2006 NET INCOME, INCLUDING TAX BENEFIT,
OF $1.89 PER DILUTED SHARE COMPARED TO $.47 PER DILUTED SHARE
IN 52-WEEK FISCAL 2005
REPORTS 14-WEEK FOURTH QUARTER ADJUSTED EBITDA OF $181.4 MILLION
COMPARED TO ADJUSTED EBITDA OF $167.9 MILLION
IN 13-WEEK PRIOR YEAR FOURTH QUARTER
REPORTS 53-WEEK FISCAL 2006 ADJUSTED EBITDA OF $675.6 MILLION
COMPARED TO $726.0 MILLION IN 52-WEEK FISCAL 2005
Provides Fiscal 2007 Guidance
CAMP HILL, PA, April 6, 2006--Rite Aid Corporation (NYSE, PCX: RAD) today
announced financial results for its fourth quarter ended March 4, 2006.
Revenues for the 14-week fourth quarter were $4.77 billion versus revenues of
$4.34 billion in the prior year 13-week fourth quarter. Revenues increased 9.9
percent.
Same store sales for the 14-week fourth quarter increased 2.5 percent over the
prior year 14-week comparable period, consisting of a 2.5 percent pharmacy same
store sales increase and a 2.5 percent increase in front-end same store sales.
Prescription sales accounted for 62.2 percent of total sales, and third party
prescription sales represented 93.7 percent of pharmacy sales.
MORE -
Rite Aid FY'06 Q4 Press Release - page 2
Net income for the fourth quarter increased to $1.246 billion or $1.83 per
diluted share compared to last year's fourth quarter net income of $228.6
million or $.35 per diluted share. The increase was primarily due to a $1.231
billion or $1.82 per diluted share income tax benefit from the reduction of a
valuation allowance against deferred tax assets compared to a $179.5 million or
$.29 per diluted share similar valuation allowance reduction for the like
period last year. Also contributing to the increase is a reversal of the $20
million or $.01 per diluted share accrual established in fiscal 2003 for
potential liability arising out of the U.S Attorney's investigation into prior
management's business practices under former CEO Martin Grass, which is no
longer needed because the investigation of the company has been closed without
any fine to Rite Aid. Included in the fourth quarter results were a LIFO charge
of $9.4 million compared to last year's LIFO credit of $36.2 million and store
closing and impairment charges of $42.4 million compared to last year's $24.4
million charge.
Adjusted EBITDA (which is reconciled to net income on the attached table) of
$181.4 million or 3.8 percent of revenues for the fourth quarter compared to
$167.9 million or 3.9 percent of revenues for the like period last year. The
$13.5 million increase is primarily due to the extra week in the current year's
fourth quarter. Excluding the extra week, which contributed approximately $15.0
million, adjusted EBITDA was flat.
"We are pleased with the improvements in our business during the fourth
quarter, including a return to positive increases in pharmacy same store sales
despite a milder cough, cold and flu season than last year. We also saw an
increase in the number of prescriptions we filled for seniors despite the
challenges all pharmacies experienced implementing Medicare Part D," said Mary
Sammons, Rite Aid president and CEO. "With the opening of 40 new and relocated
stores in the quarter, we completed fiscal 2006 with three times as many new
and relocated stores as the year before.
"A significant event during the period was notification by the U.S. Attorney's
Office that it has closed its investigation of the company relating to the
business practices of prior management," Sammons said. "We are pleased that the
U.S. Attorney informed us that no penalty would be levied against Rite Aid."
In the fourth quarter, the company opened 7 stores, relocated 33 stores,
acquired 1 store, closed 18 stores and remodeled 10 stores. Stores in operation
at the end of the quarter totaled 3,323.
Year-End Results
- ----------------
For the 53-week fiscal year ended March 4, 2006, Rite Aid had revenues of $17.3
billion as compared to revenues of $16.8 billion for the 52-week prior year.
Revenues increased 2.7%.
Same store sales for the 53-week year increased 1.1 percent over the prior
53-week comparable period. This increase consisted of a 0.3 percent pharmacy
same store sales increase and a 2.6 percent increase in front-end same store
sales. Prescription sales accounted for 63.2 percent of total sales, and third
party prescription sales were 93.9 percent of pharmacy sales.
Net income for the year was $1.273 billion, or $1.89 per diluted share,
compared to net income of $302.5 million or $.47 per diluted share for last
year. The increase was primarily due to a $1.239 billion or $1.90 per diluted
share income tax benefit from the reduction of a valuation allowance against
deferred tax assets compared to a $179.5 million or $.32 per diluted share
similar valuation allowance reduction last year. Included in the results for
the year were a LIFO charge of $32.2 million compared to last year's LIFO
credit of $18.9 million and store closing and impairment charges of $68.7
million compared to last year's $35.7 million charge. These negative factors
were partially offset by a reduction in interest expense and a lower loss on
debt modifications and retirements.
As computed on the attached table, adjusted EBITDA of $675.6 million or 3.9
percent of revenues for this year compared to $726.0 million or 4.3 percent of
revenues for last year. The $50.4 million decrease is primarily due to higher
selling, general and administrative expenses. Partially offsetting these higher
expenses was the $15.0 million of contribution from the extra week.
- MORE -
Rite Aid FY'06 Q4 Press Release--page 3
"While our full year results are not as strong as we had hoped, we believe the
investment we made in staffing the stores to improve customer satisfaction,
ramping up our real estate department for our growth program and marketing to
seniors to promote our pharmacists' expertise in Medicare Part D will pay off
significantly down the road," Sammons said.
For the year, the company opened 17 new stores, relocated 53 stores, acquired
six stores, closed 56 stores, which includes 13 stores closed due to hurricane
Katrina, and remodeled 173 stores. Stores in operation at the end of the year
totaled 3,323.
Company Announces Guidance for Fiscal 2007
- ------------------------------------------
Rite Aid announces that it expects sales to be between $17.350 billion and
$17.6 billion in fiscal 2007, which has 52 weeks, with same store sales
improving 1.75 percent to 3.25 percent over fiscal 2006. Net income (loss) for
fiscal 2007 is expected to be between a net loss of $5 million and net income
of $40 million or a loss per diluted share of $.07 to net income per diluted
share of $.02. Adjusted EBITDA (which is reconciled to net income on the
attached table) is expected to be between $650 million and $725 million.
Capital expenditures, excluding proceeds from sale and leaseback transactions,
are expected to be between $450 million and $500 million. Proceeds from sale
and leaseback transaction are expected to be between $50 million and $100
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 April
8. 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 6860163.
Rite Aid Corporation is one of the nation's leading drugstore chains with
annual revenues of $17.3 billion and approximately 3,320 stores in 27 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 long term strategy,
our ability to hire and retain pharmacists and other store personnel,
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 April 6,
2006 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)
March 4, 2006 February 26, 2005
-------------------- ------------------
ASSETS
Current assets:
Cash and cash equivalents $ 76,067 $ 162,821
Accounts receivable, net 354,949 483,455
Inventories, net 2,341,410 2,310,153
Prepaid expenses and other current assets 112,386 50,325
-------------------- ------------------
Total current assets 2,884,812 3,006,754
Property, plant and equipment, net 1,717,022 1,733,694
Goodwill 656,037 684,535
Other intangibles, net 193,228 179,480
Deferred income taxes 1,392,889 189,270
Other assets 144,383 138,850
-------------------- ------------------
Total assets $ 6,988,371 $ 5,932,583
==================== ==================
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current maturities of convertible notes, long-term debt and
lease financing obligations $ 584,196 $ 223,815
Accounts payable 862,192 757,571
Accrued salaries, wages and other current liabilities 696,936 690,351
-------------------- ------------------
Total current liabilities: 2,143,324 1,671,737
Convertible notes - 247,500
Long-term debt, less current maturities 2,298,706 2,680,998
Lease financing obligations, less current maturities 168,544 159,023
Other noncurrent liabilities 770,876 850,391
-------------------- ------------------
Total liabilities 5,381,450 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 121,207 113,081
Preferred stock - Series H 120,020 113,081
Preferred stock - Series I 116,074 -
Common stock 527,667 520,438
Additional paid-in capital 3,114,997 3,121,404
Accumulated deficit (2,489,023) (3,756,146)
Accumulated other comprehensive loss (24,021) (22,005)
-------------------- ------------------
Total stockholders' equity 1,606,921 322,934
-------------------- ------------------
Total liabilities and stockholders' equity $ 6,988,371 $ 5,932,583
==================== ==================
RITE AID CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Dollars in thousands, except per share amounts)
(unaudited)
Fourteen Weeks Thirteen Weeks
ended March 4, ended February 26,
2006 2005
------------------ -------------------
Revenues $ 4,771,326 $ 4,340,840
Costs and expenses:
Costs of goods sold 3,496,777 3,123,931
Selling, general and administrative expenses 1,157,029 1,070,263
Store closing and impairment charges 42,387 24,392
Interest expense 71,744 69,898
Gain on debt modifications and retirements, net - (196)
(Gain) loss on sale of assets and investments, net (2,597) 3,570
------------------ -------------------
4,765,340 4,291,858
------------------ -------------------
Income before income taxes 5,986 48,982
Income tax benefit (1,240,387) (179,610)
------------------ -------------------
Net income $ 1,246,373 $ 228,592
================== ===================
Basic and diluted income per share:
Numerator for income per share:
Net income $ 1,246,373 $ 228,592
Accretion of redeemable preferred stock (25) (25)
Cumulative preferred stock dividends (7,703) (9,653)
Premium to redeem preferred stock - (5,650)
------------------ -------------------
Income attributable to common stockholders - basic $ 1,238,645 $ 213,264
------------------ -------------------
Add back - Interest on convertible debt 1,484 2,968
Add back - Cumulative preferred stock dividends 7,703 7,240
------------------ -------------------
Income attributable to common stockholders - diluted $ 1,247,832 $ 223,472
================== ===================
Denominator:
Basic weighted average shares 525,724 520,576
Outstanding options 6,620 7,624
Convertible debt 38,462 38,462
Convertible preferred stock - Series E 34,722 11,639
Convertible preferred stock - Series F - 20,560
Convertible preferred stock - Series G 22,038 20,560
Convertible preferred stock - Series H 21,822 20,561
Convertible preferred stock - Series I 33,472 -
------------------ -------------------
Diluted weighted average shares
682,860 639,982
================== ===================
Basic income per share $ 2.36 $ 0.41
Diluted income per share $ 1.83 $ 0.35
Note 1: The statement of operations for the thirteen week period ended
February 26, 2005 has been reclassified to conform to current year's
presentation of occupancy costs in selling, general and administrative
expenses and warehousing and outbound freight costs in costs of goods
sold.
Note 2: Schedules showing the impact of the above referenced
reclassification on each quarterly period in the fiscal years ended March
4, 2006 and February 26, 2005 have been included as part of this release.
RITE AID CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Dollars in thousands, except per share amounts)
(unaudited)
Fifty-three Weeks Fifty-two Weeks 2005
ended March 4, ended February 26,
2006 2005
------------------- --------------------
Revenues $ 17,270,968 $ 16,816,439
Costs and expenses:
Costs of goods sold 12,571,860 12,202,894
Selling, general and administrative expenses 4,307,421 4,127,536
Store closing and impairment charges 68,692 35,655
Interest expense 277,017 294,871
Loss on debt modifications and retirements, net 9,186 19,229
(Gain) loss on sale of assets and investments, net (6,462) 2,247
------------------- --------------------
17,227,714 16,682,432
------------------- --------------------
Income before income taxes 43,254 134,007
Income tax benefit (1,229,752) (168,471)
------------------- --------------------
Net income $ 1,273,006 $ 302,478
=================== ====================
Basic and diluted income per share:
Numerator for income per share:
Net income $ 1,273,006 $ 302,478
Accretion of redeemable preferred stock (102) (102)
Cumulative preferred stock dividends (32,723) (35,226)
Premium to redeem preferred stock (5,883) (5,650)
------------------- --------------------
Income attributable to common stockholders - basic $ 1,234,298 $ 261,500
------------------- --------------------
Add back - Interest on convertible debt 5,936 11,872
Add back - Cumulative preferred stock dividends 32,723 26,420
Add back - Liquidation premium on preferred stock 5,883 -
------------------- --------------------
Income attributable to common stockholders - diluted $ 1,278,840 $ 299,792
=================== ====================
Denominator:
Basic weighted average shares 523,938 518,716
Outstanding options 7,749 12,293
Convertible debt 38,462 38,462
Convertible preferred stock - Series E 34,722 2,910
Convertible preferred stock - Series F 9,804 20,560
Convertible preferred stock - Series G 22,038 20,560
Convertible preferred stock - Series H 21,822 20,561
Convertible preferred stock - Series I 18,131 -
------------------- --------------------
Diluted weighted average shares
676,666 634,062
=================== ====================
Basic income per share $ 2.36 $ 0.50
Diluted income per share $ 1.89 $ 0.47
Note 1: The statement of operations for the fifty-two week period ended
February 26, 2005 has been reclassified to conform to current year's
presentation of occupancy costs in selling, general and administrative
expenses and warehousing and outbound freight costs in costs of goods
sold.
RITE AID CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
QUARTERLY PERIODS FOR FISCAL YEAR 2006
(Dollars in thousands, except per share amounts)
(unaudited and reclassified)
First Quarter Second Quarter Third Quarter Fourth Quarter
-------------- -------------- -------------- --------------
Revenues $ 4,221,436 $ 4,132,523 $ 4,145,683 $ 4,771,326
Costs and expenses:
Costs of goods sold 3,041,980 3,009,364 3,023,739 3,496,777
Selling, general and administrative expenses 1,046,276 1,044,062 1,060,054 1,157,029
Store closing and impairment charges 15,532 8,121 2,652 42,387
Interest expense 70,851 67,513 66,909 71,744
Loss on debt modifications and retirements,
net - 9,186 - -
Gain on sale of assets and investments, net (538) (1,955) (1,372) (2,597)
-------------- -------------- -------------- --------------
4,174,101 4,136,291 4,151,982 4,765,340
-------------- -------------- -------------- --------------
Income (loss) before income taxes 47,335 (3,768) (6,299) 5,986
Income tax expense (benefit) 13,911 (2,197) (1,079) (1,240,387)
-------------- -------------- -------------- --------------
Net income (loss) $ 33,424 $ (1,571) $ (5,220) $ 1,246,373
============== ============== ============== ==============
Basic and diluted income (loss) per share:
Numerator for income per share:
Net income (loss) $ 33,424 $ (1,571) $ (5,220) $ 1,246,373
Accretion of redeemable preferred stock (26) (25) (26) (25)
Cumulative preferred stock dividends (8,149) (9,617) (7,254) (7,703)
Premium to redeem preferred stock - (5,883) - -
-------------- -------------- -------------- --------------
Income (loss) attributable to common
stockholders - basic $ 25,249 $ (17,096) $ (12,500) $ 1,238,645
-------------- -------------- -------------- --------------
Add back - Interest on convertible debt - - - 1,484
Add back - Cumulative preferred stock
dividends - - - 7,703
-------------- -------------- -------------- --------------
Income (loss) attributable to common
stockholders - diluted $ 25,249 $ (17,096) $ (12,500) $ 1,247,832
============== ============== ============== ==============
Denominator:
Basic weighted average shares 520,752 523,789 525,349 525,724
Outstanding options 8,932 - - 6,620
Convertible debt - - - 38,462
Convertible preferred stock - Series E - - - 34,722
Convertible preferred stock - Series G - - - 22,038
Convertible preferred stock - Series H - - - 21,822
Convertible preferred stock - Series I - - - 33,472
-------------- -------------- -------------- --------------
Diluted weighted average shares 529,684 523,789 525,349 682,860
============== ============== ============== ==============
Basic income (loss) per share
$ 0.05 $ (0.03) $ (0.02) $ 2.36
Diluted income (loss) per share $ 0.05 $ (0.03) $ (0.02) $ 1.83
RITE AID CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
QUARTERLY PERIODS FOR FISCAL YEAR 2005
(Dollars in thousands, except per share amounts)
(unaudited and reclassified)
First Quarter Second Quarter Third Quarter Fourth Quarter
--------------- --------------- -------------- ---------------
Revenues $ 4,244,357 $ 4,123,906 $ 4,107,336 $ 4,340,840
Costs and expenses:
Costs of goods sold 3,089,508 2,995,114 2,994,341 3,123,931
Selling, general and administrative
expenses 1,014,793 1,029,250 1,013,230 1,070,263
Store closing and impairment (credits)
charges (4,595) 13,461 2,397 24,392
Interest expense 77,801 76,519 70,653 69,898
(Gain) loss on debt modifications and
retirements, net - (791) 20,216 (196)
(Gain) loss on sale of assets and
investments, net (1,918) (254) 849 3,570
--------------- --------------- -------------- ---------------
4,175,589 4,113,299 4,101,686 4,291,858
--------------- --------------- -------------- ---------------
Income before income taxes 68,768 10,607 5,650 48,982
Income tax expense (benefit) 5,049 728 5,362 (179,610)
--------------- --------------- -------------- ---------------
Net income $ 63,719 $ 9,879 $ 288 $ 228,592
=============== =============== ============== ===============
Basic and diluted income (loss) per share:
Numerator for income per share:
Net income $ 63,719 $ 9,879 $ 288 $ 228,592
Accretion of redeemable preferred stock (26) (25) (26) (25)
Cumulative preferred stock dividends (8,356) (8,523) (8,694) (9,653)
Premium to redeem preferred stock - - - (5,650)
--------------- --------------- -------------- ---------------
Income (loss) attributable to common
stockholders - basic $ 55,337 $ 1,331 $ (8,432) $ 213,264
--------------- --------------- -------------- ---------------
Add back - Interest on convertible debt 2,968 - - 2,968
Add back - Cumulative preferred stock
dividends - - - 7,240
--------------- --------------- -------------- ---------------
Income (loss) attributable to common
stockholders - diluted $ 58,305 $ 1,331 $ (8,432) $ 223,472
=============== =============== ============== ===============
Denominator:
Basic weighted average shares 516,837 517,589 519,876 520,576
Outstanding options 18,792 16,285 - 7,624
Convertible debt 38,462 - - 38,462
Convertible preferred stock - Series E - - - 11,639
Convertible preferred stock - Series F - - - 20,560
Convertible preferred stock - Series G - - - 20,560
Convertible preferred stock - Series H - - - 20,561
--------------- --------------- -------------- ---------------
Diluted weighted average shares 574,091 533,874 519,876 639,982
=============== =============== ============== ===============
Basic income (loss) per share $ 0.11 $ 0.00 $ (0.02) $ 0.41
Diluted income (loss) per share $ 0.10 $ 0.00 $ (0.02) $ 0.35
RITE AID CORPORATION AND SUBSIDIARIES
SUPPLEMENTAL INFORMATION
RECONCILIATION OF NET INCOME TO ADJUSTED EBITDA
(In thousands)
Fourteen Weeks Thirteen Weeks 2005
ended March 4, ended February 26,
2006 2005
------------------ -------------------
Reconciliation of net income to adjusted EBITDA:
Net income $ 1,246,373 $ 228,592
Adjustments:
Interest expense 71,744 69,898
Recurring income tax benefit (9,306) (110)
Income tax valuation allowance reduction (1,231,081) (179,500)
Depreciation and amortization 65,015 61,161
LIFO charges (credits) (a) 9,354 (36,195)
Store closing and impairment charges 42,387 24,392
Stock-based compensation expense 5,042 4,492
(Gain) loss on sale of assets and investments, net (2,597) 3,570
Gain on debt modifications and retirements, net (b) - (196)
Litigation settlements, net (c) (20,000) (12,058)
Legal and accounting expenses (d) - 841
Closed store liquidation expense (e) 4,023 2,597
Other 452 404
------------------ -------------------
Adjusted EBITDA $ 181,406 $ 167,888
================== ===================
Percent of revenues 3.80% 3.87%
Adjustment for impact of fourteenth week (f) (15,000) -
------------------ -------------------
Thirteen week comparable adjusted EBITDA $ 166,406 $ 167,888
================== ===================
Notes:
(a) Represents non-cash charges (credits) to value our
inventories under the last-in first-out ("LIFO")
method.
(b) Represents gain 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.
(f) Represents the estimated additional EBITDA resulting
from the extra week in the fourteen week period ended
March 4, 2006.
RITE AID CORPORATION AND SUBSIDIARIES
SUPPLEMENTAL INFORMATION
RECONCILIATION OF NET INCOME TO ADJUSTED EBITDA
(In thousands)
Fifty-three Weeks Fifty-two Weeks 2005
ended March 4, ended February 26,
2006 2005
------------------ --------------------
Reconciliation of net income to adjusted EBITDA:
Net income $ 1,273,006 $ 302,478
Adjustments:
Interest expense 277,017 294,871
Recurring income tax expense 9,177 11,029
Income tax valuation allowance reduction and favorable tax settlements (1,238,929) (179,500)
Depreciation and amortization 249,755 246,742
LIFO charges (credits) (a) 32,191 (18,919)
Store closing and impairment charges 68,692 35,655
Stock-based compensation expense 20,261 19,018
(Gain) loss on sale of assets and investments, net (6,462) 2,247
Loss on debt modifications and retirements, net (b) 9,186 19,229
Litigation settlements, net (c) (32,444) (26,241)
Legal and accounting expenses (d) 1,415 8,891
Closed store liquidation expense (e) 10,236 8,446
Other 2,495 2,004
------------------ -------------------
Adjusted EBITDA $ 675,596 $ 725,950
================== ===================
Percent of revenues 3.91% 4.32%
Adjustment for impact of fifty-third week (f) (15,000) -
------------------ -------------------
Fifty-two week comparable adjusted EBITDA $ 660,596 $ 725,950
================== ===================
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, to
defend prior management and for transaction
consultation.
(e) Represents costs to liquidate inventory at stores that
are in the process of closing.
(f) Represents the estimated additional EBITDA resulting
from the extra week in the fifty-three week period
ended March 4, 2006.
RITE AID CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollars in thousands)
(unaudited)
Fourteen Weeks Thirteen Weeks
ended March 4, ended February 26,
2006 2005
------------------ --------------------
Operating activities:
Net income $ 1,246,373 $ 228,592
Adjustments to reconcile to net cash provided by operations:
Depreciation and amortization 65,015 61,161
Stock-based compensation expense 5,042 4,492
Store closings and impairment charges 42,387 24,392
Gain on debt modifications and retirements, net - (196)
(Gain) loss on sale of assets and investments, net (2,597) 3,570
Changes in income tax receivables and payables (22,281) (6,810)
Changes in deferred taxes (1,225,228) (179,538)
Tax benefit from the exercise of options 2,976 5,293
Proceeds from insured loss 24,319 -
Change in operating assets and liabilities (40,599) 38,592
Net repayments to accounts receivable securitization (15,000) (185,000)
------------------ --------------------
Net cash provided by (used in) operating activities 80,407 (5,452)
Investing activities:
Expenditures for property, plant and equipment (96,601) (70,337)
Intangible assets acquired (18,965) (10,423)
Proceeds from sale-leaseback transactions 4,802 40,351
Proceeds from dispositions 5,259 3,103
Proceeds from insured loss 6,603 -
------------------ --------------------
Net cash used in investing activities (98,902) (37,306)
Financing activities:
Principal payments on long-term debt (40,586) (3,440)
Principal payments on bank credit facilities - (1,125)
Net proceeds from (repayments to) revolver 4,000 (99,000)
Proceeds from issuance of bonds - 200,000
Change in zero balance cash accounts 21,142 14,292
Proceeds from financing secured by owned property 2,649 -
Proceeds from the issuance of preferred stock - 121,250
Payments for the redemption of preferred stock - (118,651)
Payments for preferred stock dividends (3,845) (1,060)
Proceeds from the issuance of common stock 6,072 45
Deferred financing costs paid - (2,500)
------------------ --------------------
Net cash (used in) provided by financing activities (10,568) 109,811
(Decrease) increase in cash and cash equivalents (29,063) 67,053
Cash and cash equivalents, beginning of period 105,130 95,768
------------------ --------------------
Cash and cash equivalents, end of period $ 76,067 $ 162,821
================== ====================
RITE AID CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollars in thousands)
(unaudited)
Fifty-three Weeks Fifty-two Weeks 2005
ended March 4, ended February 26,
2006 2005
------------------- --------------------
Operating activities:
Net income $ 1,273,006 $ 302,478
Adjustments to reconcile to net cash provided by operations:
Depreciation and amortization 249,755 246,742
Stock-based compensation expense 20,261 19,018
Store closings and impairment charges 68,692 35,655
Loss on debt modifications and retirements, net 9,186 19,229
(Gain) loss on sale of assets and investments, net (6,462) 2,247
Changes in income tax receivables and payables
(21,263) 30,832
Changes in deferred taxes (1,211,646) (179,538)
Tax benefit from the exercise of options 2,976 5,293
Proceeds from insured loss 24,319 -
Change in operating assets and liabilities (171,659) (113,510)
Net proceeds from accounts receivable securitization 180,000 150,000
------------------- --------------------
Net cash provided by operating activities 417,165 518,446
Investing activities:
Expenditures for property, plant and equipment (287,785) (190,792)
Intangible assets acquired (53,564) (31,625)
Proceeds from sale-leaseback transactions 77,307 94,151
Proceeds from dispositions 26,355 9,281
Proceeds from insured loss 6,603 -
------------------- --------------------
Net cash used in investing activities (231,084) (118,985)
Financing activities:
Principal payments on long-term debt (377,023) (82,116)
Principal payments on bank credit facilities (448,875) (1,151,125)
Proceeds from issuance of bank credit facilities - 438,015
Net proceeds from revolver 534,000 -
Proceeds from issuance of bonds - 200,000
Change in zero balance cash accounts 26,393 25,792
Proceeds from financing secured by owned property 8,001 -
Proceeds from the issuance of preferred stock 116,885 121,250
Payments for the redemption of preferred stock (123,533) (118,651)
Payments for preferred stock dividends (13,089) (1,060)
Proceeds from the issuance of common stock 11,562 3,041
Deferred financing costs paid (7,156) (6,541)
------------------- --------------------
Net cash used in financing activities (272,835) (571,395)
------------------- --------------------
Decrease in cash and cash equivalents (86,754) (171,934)
Cash and cash equivalents, beginning of period 162,821 334,755
------------------- --------------------
Cash and cash equivalents, end of period $ 76,067 $ 162,821
=================== ====================
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
March 3, 2007 March 3, 2007
---------------- ----------------
Reconciliation of net (loss) income to adjusted EBITDA:
Net (loss) income $ (5,000) $ 40,000
Adjustments:
Interest expense 280,000 280,000
Income tax (benefit) expense, net (5,000) 15,000
Depreciation and amortization 275,000 275,000
LIFO charge 30,000 35,000
Store closing, liquidation, and impairment charges 50,000 55,000
Stock-based compensation expense 25,000 25,000
--------------- ----------------
Adjusted EBITDA $ 650,000 $ 725,000
=============== ================
Diluted (loss) income per share $ (0.07) $ 0.02