Rite Aid Corporation (NYSE: RAD) today reported revenues of $6.3 billion and a net loss of $116.0 million or $.14 per diluted share for its fiscal second quarter ended August 29, 2009. Adjusted EBITDA was $216.5 million or 3.4 percent of revenues.
Second Quarter Highlights
- Both pharmacy same store sales and the number of prescriptions filled continued to increase, by 0.8 percent and 1.4 percent respectively. A 274 basis point increase in generic dispensing year over year negatively impacted sales.
- Significant reduction in selling, general and administrative expenses as a percent of sales continued with SG&A 135 basis points lower than last year’s second quarter.
- Significant progress made in reducing inventory continued with FIFO inventory $351.1 million lower year over year.
- Liquidity remained strong with $822.3 million of availability on the company’s credit and accounts receivable facilities at quarter end.
“We again made significant progress on many of our key initiatives, reducing both SG&A and controlling inventory, and finished the quarter with strong liquidity. We increased the number of prescriptions filled, but our pharmacy results were negatively impacted by additional pressure on pharmacy margins. A more discount-driven customer buying more items on sale continued to have a negative impact on front end results.
“Because we expect these negative trends and a tough economy to continue throughout the second half of the year, we have lowered our outlook for fiscal 2010. We’re focusing on growing profitable sales and will continue to control expenses. We expect liquidity to remain strong,” she said.
Second Quarter Summary
Revenues for the 13-week second quarter were $6.3 billion versus revenues of $6.5 billion in the prior-year second quarter. Revenues declined 2.7 percent, primarily as a result of store closings and a decline in front-end same store sales.
Same store sales for the quarter decreased 1.1 percent over the prior-year 13-week period, consisting of a 4.9 percent decrease in the front end and a 0.8 percent increase in pharmacy. The number of prescriptions filled increased 1.4 percent. Prescription sales accounted for 68.1 percent of total drugstore sales, and third party prescription revenue was 96.3 percent of pharmacy sales.
Excluding the acquired Brooks Eckerd stores, same store sales for the 13-week second quarter decreased 0.6 percent over the prior-year period with front-end decreasing 4.9 percent and pharmacy growing 2.0 percent.
At the former Brooks Eckerd stores, same store sales for the 13-week second quarter decreased 2.3 percent over the prior-year period with front end decreasing 4.7 percent and pharmacy decreasing 1.4 percent.
Net loss for the quarter was $116.0 million or $.14 per diluted share compared to last year’s second quarter net loss of $222.0 million and $.27 per diluted share.
Adjusted EBITDA was $216.5 million or 3.4 percent of revenues for the second quarter compared to $219.9 million or 3.4 percent of revenues for the like period last year. Improvement in SG&A offset most of the decrease in sales and gross margin. As previously disclosed, adjusted EBITDA for the prior year second quarter reflects a $4.6 million reclassification of accounts receivable securitization fees as interest expense to make it comparable to the current period.
In the second quarter the company opened 3 stores, relocated 10 stores, remodeled 1 store and closed 16 stores. Stores in operation at the end of the second quarter totaled 4,812.
Company Lowers Fiscal 2010 Outlook
Based on expectations for a continued weak economy with high unemployment negatively impacting front end sales along with increased pressure on pharmacy gross margins, Rite Aid has lowered its fiscal 2010 guidance.
Total sales are expected to be between $25.7 billion and $26.2 billion in fiscal 2010 with same store sales ranging from a decrease of 1.0 percent to an increase of 1.0 percent over fiscal 2009. Adjusted EBITDA (which is reconciled to net loss on the attached table) is expected to be between $900 million and $1 billion. Net loss for fiscal 2010 is expected to be between $390 million and $615 million or a loss per diluted share of $.48 to $.74. Guidance for capital expenditures remains at approximately $250 million.
Conference Call Broadcast
Rite Aid will hold an analyst call at 8:30 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. Slides related to materials discussed on the call will be available on both sites. A playback of the call will be available on both sites starting at 12 p.m. Eastern Time today. A playback of the call will also be available by telephone for 48 hours beginning at 12 p.m. Eastern Time today until 11:59 p.m. Eastern Time on September 26. 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 eight-digit reservation number 27203163.
Rite Aid Corporation is one of the nation’s leading drugstore chains with more than 4,800 stores in 31 states and the District of Columbia and fiscal 2009 annual revenues of more than $26.3 billion. Information about Rite Aid, including corporate background and press releases, is available through the company’s website at www.riteaid.com.
This press release contains forward-looking statements, including guidance, 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; general economic conditions, inflation and interest rate movements; our ability to improve the operating performance of our stores in accordance with our long term strategy, our ability to realize same store sales growth for the acquired Brooks Eckerd stores; our ability to hire and retain pharmacists and other store personnel; the efforts of private and public third-party payors to reduce prescription drug reimbursements and encourage mail order; competitive pricing pressures, including aggressive promotional activity from our competitors; decisions to close additional stores and distribution centers, which could result in further charges to our operating statement; our ability to manage expenses; our ability to realize the benefits from actions to further reduce costs and investment in working capital; continued consolidation of the drugstore industry; changes in state or federal legislation or regulations and the outcome of lawsuits and governmental investigations. Consequently, all of the forward-looking statements made in this press release, including our guidance, 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 attached table for a reconciliation of a non-GAAP financial measure, Adjusted EBITDA to net income (loss), the most comparable GAAP financial measure. We define Adjusted EBITDA as net income (loss) from operations excluding the impact of income taxes, interest expense and securitization costs, depreciation and amortization, LIFO adjustments, charges or credits for store closing and impairment, inventory write-downs related to closed stores, stock-based compensation expense, debt modifications and retirements, sale of assets and investments, and other non-recurring items. We reference this non-GAAP financial measure frequently in our decision-making because it provides supplemental information that facilitates internal comparisons to the historical operating performance of prior periods and external comparisons to competitors’ historical operating performance. In addition, incentive compensation is based on Adjusted EBITDA and we base our forward-looking estimates on Adjusted EBITDA to facilitate quantification of planned business activities and enhance subsequent follow-up with comparisons of actual to planned Adjusted EBITDA. We include this non-GAAP financial measure in our earnings announcement in order to provide transparency to our investors and enable investors to better compare our operating performance with the operating performance of our competitors.
| RITE AID CORPORATION AND SUBSIDIARIES | ||||||||
| CONSOLIDATED BALANCE SHEETS | ||||||||
| (Dollars in thousands) | ||||||||
| (unaudited) | ||||||||
| August 29, 2009 | February 28, 2009 | |||||||
| ASSETS | ||||||||
| Current assets: | ||||||||
| Cash and cash equivalents | $ | 121,007 | $ | 152,035 | ||||
| Accounts receivable, net | 621,336 | 526,742 | ||||||
| Inventories, net of LIFO reserve of $776,007 and $746,467 | 3,423,956 | 3,509,494 | ||||||
| Prepaid expenses and other current assets | 98,342 | 176,661 | ||||||
| Total current assets | 4,264,641 | 4,364,932 | ||||||
| Property, plant and equipment, net | 2,460,790 | 2,587,356 | ||||||
| Other intangibles, net | 917,429 | 1,017,011 | ||||||
| Other assets | 409,818 | 357,241 | ||||||
| Total assets | $ | 8,052,678 | $ | 8,326,540 | ||||
| LIABILITIES AND STOCKHOLDERS' DEFICIT | ||||||||
| Current liabilities: | ||||||||
| Current maturities of long-term debt and lease financing obligations | $ | 50,345 | $ | 40,683 | ||||
| Accounts payable | 1,233,771 | 1,256,982 | ||||||
| Accrued salaries, wages and other current liabilities | 1,042,294 | 1,004,762 | ||||||
| Total current liabilities | 2,326,410 | 2,302,427 | ||||||
| Long-term debt, less current maturities | 5,712,547 | 5,801,230 | ||||||
| Lease financing obligations, less current maturities | 151,749 | 169,796 | ||||||
| Other noncurrent liabilities | 1,262,501 | 1,252,739 | ||||||
| Total liabilities | 9,453,207 | 9,526,192 | ||||||
| Commitments and contingencies | - | - | ||||||
| Stockholders' deficit: | ||||||||
| Preferred stock - Series G | 1 | 1 | ||||||
| Preferred stock - Series H | 147,836 | 143,498 | ||||||
| Common stock | 887,951 | 886,113 | ||||||
| Additional paid-in capital | 4,270,496 | 4,265,211 | ||||||
| Accumulated deficit | (6,667,143 | ) | (6,452,696 | ) | ||||
| Accumulated other comprehensive loss | (39,670 | ) | (41,779 | ) | ||||
| Total stockholders' deficit | (1,400,529 | ) | (1,199,652 | ) | ||||
| Total liabilities and stockholders' deficit | $ | 8,052,678 | $ | 8,326,540 | ||||
| RITE AID CORPORATION AND SUBSIDIARIES | ||||||||
| CONSOLIDATED STATEMENTS OF OPERATIONS | ||||||||
| (Dollars in thousands, except per share amounts) | ||||||||
| (unaudited) | ||||||||
| Thirteen weeks | Thirteen weeks | |||||||
ended August 29, | ended August 30, | |||||||
| 2009 | 2008 | |||||||
| Revenues | $ | 6,321,870 | $ | 6,500,244 | ||||
| Costs and expenses: | ||||||||
| Cost of goods sold | 4,633,595 | 4,722,070 | ||||||
| Selling, general and administrative expenses | 1,645,913 | 1,780,631 | ||||||
| Lease termination and impairment charges | 28,752 | 51,825 | ||||||
| Interest expense | 128,828 | 118,565 | ||||||
| Loss on debt modifications and retirements, net | 993 | 36,197 | ||||||
| (Gain) loss on sale of assets, net | (4,188 | ) | 7,607 | |||||
| 6,433,893 | 6,716,895 | |||||||
| Loss before income taxes | (112,023 | ) | (216,651 | ) | ||||
| Income tax expense | 3,989 | 5,346 | ||||||
| Net loss | $ | (116,012 | ) | $ | (221,997 | ) | ||
| Basic and diluted loss per share: | ||||||||
| Numerator for loss per share: | ||||||||
| Net loss | $ | (116,012 | ) | $ | (221,997 | ) | ||
| Accretion of redeemable preferred stock | (26 | ) | (26 | ) | ||||
| Cumulative preferred stock dividends | (4,338 | ) | (5,368 | ) | ||||
| Loss attributable to common stockholders - basic and diluted | $ | (120,376 | ) | $ | (227,391 | ) | ||
| Basic and diluted weighted average shares | 880,683 | 837,913 | ||||||
| Basic and diluted loss per share | $ | (0.14 | ) | $ | (0.27 | ) | ||
| RITE AID CORPORATION AND SUBSIDIARIES | ||||||||
| CONSOLIDATED STATEMENTS OF OPERATIONS | ||||||||
| (Dollars in thousands, except per share amounts) | ||||||||
| (unaudited) | ||||||||
| Twenty-six weeks | Twenty-six weeks | |||||||
| ended August 29, | ended August 30, | |||||||
| 2009 | 2008 | |||||||
| Revenues | $ | 12,853,048 | $ | 13,113,100 | ||||
| Costs and expenses: | ||||||||
| Cost of goods sold | 9,390,707 | 9,526,680 | ||||||
| Selling, general and administrative expenses | 3,356,585 | 3,573,605 | ||||||
| Lease termination and impairment charges | 95,738 | 88,087 | ||||||
| Interest expense | 238,306 | 236,805 | ||||||
| Loss on debt modifications and retirements, net | 993 | 39,905 | ||||||
| (Gain) loss on sale of assets, net | (24,139 | ) | 12,947 | |||||
| 13,058,190 | 13,478,029 | |||||||
| Loss from continuing operations before income taxes | (205,142 | ) | (364,929 | ) | ||||
| Income tax expense | 9,316 | 10,339 | ||||||
| Net loss from continuing operations | (214,458 | ) | (375,268 | ) | ||||
| Loss from discontinued operations | - | (3,369 | ) | |||||
| Net loss | $ | (214,458 | ) | $ | (378,637 | ) | ||
| Basic and diluted loss per share: | ||||||||
| Numerator for loss per share: | ||||||||
| Net loss | $ | (214,458 | ) | $ | (378,637 | ) | ||
| Accretion of redeemable preferred stock | (51 | ) | (51 | ) | ||||
| Cumulative preferred stock dividends | (4,338 | ) | (11,490 | ) | ||||
| Loss attributable to common stockholders - basic and diluted | $ | (218,847 | ) | $ | (390,178 | ) | ||
| Basic and diluted weighted average shares | 880,179 | 830,499 | ||||||
| Basic and diluted loss per share | $ | (0.25 | ) | $ | (0.47 | ) | ||
| RITE AID CORPORATION AND SUBSIDIARIES | ||||||||
| SUPPLEMENTAL OPERATING AND CASH FLOW INFORMATION | ||||||||
| (Dollars in thousands, except per share amounts) | ||||||||
| (unaudited) | ||||||||
| Thirteen weeks ended | Thirteen weeks ended | |||||||
| August 29, 2009 | August 30, 2008 | |||||||
| SUPPLEMENTAL OPERATING INFORMATION | ||||||||
| Revenues | $ | 6,321,870 | $ | 6,500,244 | ||||
| Cost of goods sold | 4,633,595 | 4,722,070 | ||||||
| Gross profit | 1,688,275 | 1,778,174 | ||||||
| LIFO charge | 14,770 | 15,094 | ||||||
| FIFO gross profit | 1,703,045 | 1,793,268 | ||||||
| Gross profit as a percentage of revenues | 26.71 | % | 27.36 | % | ||||
| LIFO charge as a percentage of revenues | 0.23 | % | 0.23 | % | ||||
| FIFO gross profit as a percentage of revenues | 26.94 | % | 27.59 | % | ||||
| Selling, general and administrative expenses | 1,645,913 | 1,780,631 | ||||||
| Selling, general and administrative expenses as a percentage of revenues | 26.04 | % | 27.39 | % | ||||
| Cash interest expense | 118,761 | 112,915 | ||||||
| Non-cash interest expense | 10,067 | 5,650 | ||||||
| Total interest expense | 128,828 | 118,565 | ||||||
| Securitization costs (included in SG&A) | 14,055 | 4,646 | ||||||
| Total interest expense and securitization costs | 142,883 | 123,211 | ||||||
| Adjusted EBITDA | 216,535 | 219,897 | ||||||
| Adjusted EBITDA as a percentage of revenues | 3.43 | % | 3.38 | % | ||||
| Net loss | (116,012 | ) | (221,997 | ) | ||||
| Net loss as a percentage of revenues | -1.84 | % | -3.42 | % | ||||
| Total debt | 5,914,641 | 6,216,637 | ||||||
| Accounts receivable securitization facility | 395,520 | 500,000 | ||||||
| Total debt including accounts receivable facility | 6,310,161 | 6,716,637 | ||||||
| SUPPLEMENTAL CASH FLOW INFORMATION | ||||||||
| Payments for property, plant and equipment | 38,895 | 153,079 | ||||||
| Intangible assets acquired | 1,482 | 25,342 | ||||||
| Total cash capital expenditures | 40,377 | 178,421 | ||||||
| Equipment received for noncash consideration | 7,019 | 20,231 | ||||||
| Equipment financed under capital leases | 33 | 3,105 | ||||||
| Gross capital expenditures | $ | 47,429 | $ | 201,757 | ||||
| RITE AID CORPORATION AND SUBSIDIARIES | ||||||||
| SUPPLEMENTAL OPERATING AND CASH FLOW INFORMATION | ||||||||
| (Dollars in thousands, except per share amounts) | ||||||||
| (unaudited) | ||||||||
| Twenty-six weeks | Twenty-six weeks | |||||||
| ended August 29, | ended August 30, | |||||||
| 2009 | 2008 | |||||||
| SUPPLEMENTAL OPERATING INFORMATION | ||||||||
| Revenues | $ | 12,853,048 | $ | 13,113,100 | ||||
| Cost of goods sold | 9,390,707 | 9,526,680 | ||||||
| Gross profit | 3,462,341 | 3,586,420 | ||||||
| LIFO charge | 29,540 | 30,188 | ||||||
| FIFO gross profit | 3,491,881 | 3,616,608 | ||||||
| Gross profit as a percentage of revenues | 26.94 | % | 27.35 | % | ||||
| LIFO charge as a percentage of revenues | 0.23 | % | 0.23 | % | ||||
| FIFO gross profit as a percentage of revenues | 27.17 | % | 27.58 | % | ||||
| Selling, general and administrative expenses | 3,356,585 | 3,573,605 | ||||||
| Selling, general and administrative expenses as a percentage of revenues | 26.12 | % | 27.25 | % | ||||
| Cash interest expense | 220,584 | 225,813 | ||||||
| Non-cash interest expense | 17,722 | 10,992 | ||||||
| Total interest expense | 238,306 | 236,805 | ||||||
| Securitization costs (included in SG&A) | 28,500 | 9,309 | ||||||
| Total interest expense and securitization costs | 266,806 | 246,114 | ||||||
| Adjusted EBITDA | 465,731 | 460,989 | ||||||
| Adjusted EBITDA as a percentage of revenues | 3.62 | % | 3.52 | % | ||||
| Net loss | (214,458 | ) | (378,637 | ) | ||||
| Net loss as a percentage of revenues | -1.67 | % | -2.89 | % | ||||
| Total debt | 5,914,641 | 6,216,637 | ||||||
| Accounts receivable securitization facility | 395,520 | 500,000 | ||||||
| Total debt including accounts receivable facility | 6,310,161 | 6,716,637 | ||||||
| SUPPLEMENTAL CASH FLOW INFORMATION | ||||||||
| Payments for property, plant and equipment | 81,199 | 302,955 | ||||||
| Intangible assets acquired | 3,447 | 61,464 | ||||||
| Total cash capital expenditures | 84,646 | 364,419 | ||||||
| Equipment received for noncash consideration | 7,838 | 22,232 | ||||||
| Equipment financed under capital leases | 185 | 4,336 | ||||||
| Gross capital expenditures | $ | 92,669 | $ | 390,987 | ||||
| RITE AID CORPORATION AND SUBSIDIARIES | ||||||||
| SUPPLEMENTAL INFORMATION | ||||||||
| RECONCILIATION OF NET LOSS TO ADJUSTED EBITDA | ||||||||
| (In thousands) | ||||||||
| Thirteen weeks | Thirteen weeks | |||||||
| ended August 29, | ended August 30, | |||||||
| 2009 | 2008 | |||||||
Reconciliation of net loss to Adjusted EBITDA: | ||||||||
| Net loss | $ | (116,012 | ) | $ | (221,997 | ) | ||
| Adjustments: | ||||||||
| Interest expense and securitization costs (a) | 142,883 | 123,211 | ||||||
| Income tax expense | 3,989 | 5,346 | ||||||
| Depreciation and amortization | 133,522 | 150,901 | ||||||
| LIFO charges (b) | 14,770 | 15,094 | ||||||
| Lease termination and impairment charges | 28,752 | 51,825 | ||||||
| Stock-based compensation expense | 6,092 | 7,524 | ||||||
| (Gain) loss on sale of assets, net | (4,188 | ) | 7,607 | |||||
| Loss on debt modifications and retirements, net | 993 | 36,197 | ||||||
| Incremental acquisition costs (c) | - | 32,385 | ||||||
| Closed store liquidation expense (d) | 1,890 | 5,675 | ||||||
| Severance costs | 2,053 | - | ||||||
| Other | 1,791 | 6,129 | ||||||
| Adjusted EBITDA (a) | $ | 216,535 | $ | 219,897 | ||||
| Percent of revenues | 3.43 | % | 3.38 | % | ||||
| Notes: | |||||
| (a) | Securitization costs of $4,646 for the thirteen weeks ended August 30, 2008 have been excluded from Adjusted EBITDA. | ||||
| (b) | Represents non-cash charges to value our inventories under the last-in first-out ("LIFO") method. | ||||
| (c) | Represents incremental costs related to the acquisition of Jean Coutu, USA. | ||||
| (d) | Represents costs to liquidate inventory at stores that are in the process of closing. | ||||
| RITE AID CORPORATION AND SUBSIDIARIES | ||||||||
| SUPPLEMENTAL INFORMATION | ||||||||
| RECONCILIATION OF NET LOSS TO ADJUSTED EBITDA | ||||||||
| (In thousands) | ||||||||
Twenty-six weeks |
Twenty-six weeks | |||||||
Reconciliation of net loss to Adjusted EBITDA: | ||||||||
| Net loss | $ | (214,458 | ) | $ | (378,637 | ) | ||
| Adjustments: | ||||||||
| Interest expense and securitization costs (a) | 266,806 | 246,114 | ||||||
| Income tax expense | 9,316 | 10,339 | ||||||
| Depreciation and amortization | 271,760 | 295,942 | ||||||
| LIFO charges (b) | 29,540 | 30,188 | ||||||
| Lease termination and impairment charges | 95,738 | 88,087 | ||||||
| Stock-based compensation expense | 12,509 | 16,203 | ||||||
| (Gain) loss on sale of assets, net | (24,139 | ) | 12,995 | |||||
| Loss on debt modifications and retirements, net | 993 | 39,905 | ||||||
| Incremental acquisition costs (c) | - | 76,876 | ||||||
| Closed store liquidation expense (d) | 7,869 | 10,535 | ||||||
| Severance costs | 6,049 | - | ||||||
| Other | 3,748 | 12,442 | ||||||
| Adjusted EBITDA (a) | $ | 465,731 | $ | 460,989 | ||||
| Percent of revenues | 3.62 | % | 3.52 | % | ||||
| Results of discontinued operations (e) | - | 1,882 | ||||||
| Adjusted EBITDA from continuing operations | $ | 465,731 | $ | 462,871 | ||||
| Notes: | |||||
| (a) | Securitization costs of $9,309 for the twenty-six weeks ended August 30, 2008 have been excluded from Adjusted EBITDA. | ||||
| (b) | Represents non-cash charges to value our inventories under the last-in first-out ("LIFO") method. | ||||
| (c) | Represents incremental costs related to the acquisition of Jean Coutu, USA. | ||||
| (d) | Represents costs to liquidate inventory at stores that are in the process of closing. | ||||
| (e) | Represents losses from our disposed Las Vegas market that are included in prior year's Adjusted EBITDA. | ||||
| RITE AID CORPORATION AND SUBSIDIARIES | ||||||||
| CONSOLIDATED STATEMENTS OF CASH FLOWS | ||||||||
| (Dollars in thousands) | ||||||||
| (unaudited) | ||||||||
Thirteen weeks |
Thirteen weeks | |||||||
| OPERATING ACTIVITIES: | ||||||||
| Net loss | $ | (116,012 | ) | $ | (221,997 | ) | ||
| Adjustments to reconcile to net cash (used in) provided by operating activities: | ||||||||
| Depreciation and amortization | 133,522 | 150,901 | ||||||
| Lease termination and impairment charges | 28,752 | 51,825 | ||||||
| LIFO charges | 14,770 | 15,094 | ||||||
| (Gain) loss on sale of assets, net | (4,188 | ) | 7,607 | |||||
| Stock-based compensation expense | 6,092 | 7,524 | ||||||
| Loss on debt modifications and retirements, net | 993 | 36,197 | ||||||
| Proceeds from insured loss | 63 | - | ||||||
| Changes in operating assets and liabilities: | ||||||||
| Net repayments to accounts receivable securitization | (125,000 | ) | (5,000 | ) | ||||
| Accounts receivable | 111,168 | 56,587 | ||||||
| Inventories | (82,936 | ) | (44,091 | ) | ||||
| Accounts payable | (16,163 | ) | 133,900 | |||||
| Other assets and liabilities, net | (97,917 | ) | (92,428 | ) | ||||
| Net cash (used in) provided by operating activities | (146,856 | ) | 96,119 | |||||
| INVESTING ACTIVITIES: | ||||||||
| Payments for property, plant and equipment | (38,895 | ) | (153,079 | ) | ||||
| Intangible assets acquired | (1,482 | ) | (25,342 | ) | ||||
| Proceeds from sale-leaseback transactions | 6,532 | 73,933 | ||||||
| Proceeds from dispositions of assets and investments | 6,878 | 13,953 | ||||||
| Net cash used in investing activities | (26,967 | ) | (90,535 | ) | ||||
| FINANCING ACTIVITIES: | ||||||||
| Proceeds from issuance of long-term debt | 906,604 | 740,764 | ||||||
| Net payments to revolver | (535,000 | ) | (22,000 | ) | ||||
| Principal payments on long-term debt | (152,398 | ) | (700,225 | ) | ||||
| Proceeds from financing secured by owned property | - | 20,134 | ||||||
| Change in zero balance cash accounts | (15,690 | ) | 14,518 | |||||
| Payments for preferred stock dividends | - | (831 | ) | |||||
| Financing costs paid | (45,145 | ) | (39,873 | ) | ||||
| Net cash provided by financing activities | 158,371 | 12,487 | ||||||
| (Decrease) increase in cash and cash equivalents | (15,452 | ) | 18,071 | |||||
| Cash and cash equivalents, beginning of period | 136,459 | 152,189 | ||||||
| Cash and cash equivalents, end of period | $ | 121,007 | $ | 170,260 | ||||
| RITE AID CORPORATION AND SUBSIDIARIES | ||||||||
| CONSOLIDATED STATEMENTS OF CASH FLOWS | ||||||||
| (Dollars in thousands) | ||||||||
| (unaudited) | ||||||||
Twenty-six |
Twenty-six | |||||||
| OPERATING ACTIVITIES: | ||||||||
| Net loss | $ | (214,458 | ) | $ | (378,637 | ) | ||
| Adjustments to reconcile to net cash provided by (used in) operating activities: | ||||||||
| Depreciation and amortization | 271,760 | 295,942 | ||||||
| Lease termination and impairment charges | 95,738 | 88,087 | ||||||
| LIFO charges | 29,540 | 30,188 | ||||||
| (Gain) loss on sale of assets, net | (24,139 | ) | 12,995 | |||||
| Stock-based compensation expense | 12,509 | 16,203 | ||||||
| Loss on debt modifications and retirements, net | 993 | 39,905 | ||||||
| Proceeds from insured loss | 1,380 | - | ||||||
| Changes in operating assets and liabilities: | ||||||||
| Net (repayments to) proceeds from accounts receivable securitization | (155,000 | ) | 65,000 | |||||
| Accounts receivable | 56,886 | 7,745 | ||||||
| Inventories | 55,039 | (95,194 | ) | |||||
| Accounts payable | 37,003 | 16,971 | ||||||
| Other assets and liabilities, net | 43,491 | (108,414 | ) | |||||
| Net cash provided by (used in) operating activities | 210,742 | (9,209 | ) | |||||
| INVESTING ACTIVITIES: | ||||||||
| Payments for property, plant and equipment | (81,199 | ) | (302,955 | ) | ||||
| Intangible assets acquired | (3,447 | ) | (61,464 | ) | ||||
| Expenditures for business acquisition | - | (112 | ) | |||||
| Proceeds from sale-leaseback transactions | 6,532 | 161,553 | ||||||
| Proceeds from dispositions of assets and investments | 35,698 | 18,629 | ||||||
| Net cash used in investing activities | (42,416 | ) | (184,349 | ) | ||||
| FINANCING ACTIVITIES: | ||||||||
| Proceeds from issuance of long-term debt | 906,604 | 898,764 | ||||||
| Net (payments to) proceeds from revolver | (838,000 | ) | 164,000 | |||||
| Principal payments on long-term debt | (159,890 | ) | (855,190 | ) | ||||
| Proceeds from financing secured by owned property | - | 31,266 | ||||||
| Change in zero balance cash accounts | (62,923 | ) | 20,060 | |||||
| Net proceeds from the issuance of common stock | - | 1,117 | ||||||
| Payments for preferred stock dividends | - | (2,488 | ) | |||||
| Financing costs paid | (45,145 | ) | (49,473 | ) | ||||
| Net cash (used in) provided by financing activities | (199,354 | ) | 208,056 | |||||
| (Decrease) increase in cash and cash equivalents | (31,028 | ) | 14,498 | |||||
| Cash and cash equivalents, beginning of period | 152,035 | 155,762 | ||||||
| Cash and cash equivalents, end of period | $ | 121,007 | $ | 170,260 | ||||
| RITE AID CORPORATION AND SUBSIDIARIES | ||||||||
| SUPPLEMENTAL INFORMATION | ||||||||
| RECONCILIATION OF NET LOSS GUIDANCE TO ADJUSTED EBITDA GUIDANCE | ||||||||
| YEAR ENDING FEBRUARY 27, 2010 | ||||||||
| (In thousands, except per share amounts) | ||||||||
| Guidance Range | ||||||||
| Low | High | |||||||
| Sales | $ | 25,700,000 | $ | 26,200,000 | ||||
| Same store sales | -1.00 | % | 1.00 | % | ||||
| Gross capital expenditures | $ | 250,000 | $ | 250,000 | ||||
Reconciliation of net loss to Adjusted EBITDA: | ||||||||
| Net loss | $ | (615,000 | ) | $ | (390,000 | ) | ||
| Adjustments: | ||||||||
| Interest expense and securitization costs | 585,000 | 570,000 | ||||||
| Income tax expense | 17,000 | 16,000 | ||||||
| Depreciation and amortization | 565,000 | 545,000 | ||||||
| LIFO charge | 70,000 | 50,000 | ||||||
| Store closing, liquidation, and impairment charges | 242,000 | 204,000 | ||||||
| Stock-based compensation expense | 25,000 | 20,000 | ||||||
| Other | 11,000 | (15,000 | ) | |||||
| Adjusted EBITDA | $ | 900,000 | $ | 1,000,000 | ||||
| Diluted loss per share | $ | (0.74 | ) | $ | (0.48 | ) | ||
Contacts:
INVESTORS:
Chris Hall, 717-214-8834
investor@riteaid.com
or
MEDIA:
Karen
Rugen, 717-730-7766
