EX-99.1 3 file002.txt REGISTRANT'S PRESS RELEASE 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 SECOND QUARTER RESULTS REDUCES NET LOSS TO $10.6 MILLION FROM $105.3 MILLION ACHIEVES $152.9 MILLION OF ADJUSTED EBITDA, A 22 PER CENT INCREASE OVER PRIOR YEAR UPDATES FISCAL 2004 GUIDANCE CAMP HILL, PA, September 25, 2003--Rite Aid Corporation (NYSE, PCX: RAD) today announced financial results for its second quarter, ended August 30, 2003. Revenues for the 13-week second quarter increased 5.1 percent to $4.052 billion versus revenues of $3.857 billion in the prior year second quarter. Same store sales increased 5.9 percent during the second quarter as compared to the year-ago like period, consisting of a 6.8 percent pharmacy same store sales increase and a 4.3 percent increase in front-end same store sales. Prescription sales accounted for 63.8 percent of total sales, and third party prescription sales represented 93.2 percent of pharmacy sales. Net loss for the quarter was $10.6 million or a loss of $.04 per common share compared to last year's second quarter loss of $105.3 million or a loss of $.21 per common share. The reduced loss is due primarily to a reduction in store closing and impairment charges and a 22 percent increase in adjusted EBITDA (which is reconciled to the net loss on the attached table), partially offset by an increase in stock based compensation. The current year quarter included a store closing and impairment credit of $9.0 million offset by an $8.8 million charge for stock based compensation. The prior year quarter included a $58.2 million charge for store closing and impairment and a $6.7 million credit for stock-based compensation, which combined to impact the prior year quarter net loss by $.10 per common share. Reduced expense for LIFO charges, interest expense and depreciation and amortization also benefited the current year quarter. - MORE - Rite Aid Second Quarter Release - page 2 Adjusted EBITDA, which is reconciled to the net loss on the attached table, amounted to $152.9 million or 3.8 percent of revenues compared to $125.4 million or 3.3 percent of revenues last year. "We're very pleased with our second quarter as operating performance improved substantially over last year with a 22 percent increase in adjusted EBITDA. Our team did an excellent job of leveraging our significant increase in same store sales." said Mary Sammons, Rite Aid president and CEO. "We expect this very positive momentum to continue as we move into the busiest selling season of the year." In the second quarter, the company remodeled 49 stores, relocated one store and closed 11 stores. Stores in operation at the end of the quarter totaled 3,386. Certain reclassifications have been made to prior years' amounts on the attached tables to conform to the current year classifications. Guidance for Fiscal 2004 Updated Based on current trends, Rite Aid said it expects sales of $16.5 billion to $16.7 billion in fiscal 2004 which ends February 28, 2004, with same store sales improving 5.5 percent to 6.5 percent over fiscal 2003. Results for the fifty-two weeks ending February 28, 2004 are expected to be between $4.0 million net income and $27.0 million net loss as compared to previous guidance of a net loss between zero to $63.0 million. The company also updated its adjusted EBITDA guidance for the year, as reconciled on the attached table, to be between $700.0 million and $725.0 million compared to the prior range of $675.0 million to $725.0 million. Capital expenditures are expected to be between $170.0 million to $190.0 million in fiscal 2004. 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 September 27. 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 2810478. - MORE - Rite Aid Second Quarter Release - page 3 Rite Aid Corporation is one of the nation's leading drugstore chains with annual revenues of nearly $16 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. 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 management's 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, 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". ### RITE AID CORPORATION AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS (Dollars in thousands) (unaudited)
August 30, March 1, 2003 2003 ----------- ----------- ASSETS CURRENT ASSETS: Cash and cash equivalents $ 259,931 $ 365,321 Accounts receivable, net 637,159 575,518 Inventories, net 2,331,144 2,195,030 Prepaid expenses and other current assets 101,249 108,018 ----------- ----------- Total current assets 3,329,483 3,243,887 PROPERTY, PLANT AND EQUIPMENT, NET 1,909,756 1,868,579 GOODWILL 684,535 684,535 OTHER INTANGIBLES, NET 188,607 199,768 OTHER ASSETS 135,186 136,746 ----------- ----------- Total assets 6,247,567 6,133,515 =========== =========== LIABILITIES AND STOCKHOLDERS' DEFICIT CURRENT LIABILITIES: Short-term debt and current maturities of long-term debt and lease financing obligations $ 78,496 $ 103,715 Accounts payable 863,501 755,284 Accrued salaries, wages and other current liabilities 696,536 707,999 ----------- ----------- Total current liabilities 1,638,533 1,566,998 CONVERTIBLE NOTES 245,250 244,500 LONG-TERM DEBT, LESS CURRENT MATURITIES 3,456,645 3,345,365 LEASE FINANCING OBLIGATIONS, LESS CURRENT MATURITIES 166,250 169,048 OTHER NONCURRENT LIABILITIES 863,283 900,270 ----------- ----------- Total liabilities 6,369,961 6,226,181 ----------- ----------- COMMITMENTS AND CONTINGENCIES REDEEMABLE PREFERRED STOCK 19,714 19,663 STOCKHOLDERS' DEFICIT: PREFERRED STOCK 401,579 393,705 COMMON STOCK 515,515 515,115 ADDITIONAL PAID-IN CAPITAL 3,136,446 3,119,619 ACCUMULATED DEFICIT (4,167,539) (4,118,119) STOCK-BASED AND DEFERRED COMPENSATION - 5,369 ACCUMULATED OTHER COMPREHENSIVE LOSS (28,109) (28,018) ----------- ----------- Total stockholders' deficit (142,108) (112,329) ----------- ----------- Total liabilities and stockholders' deficit 6,247,567 6,133,515 =========== ===========
RITE AID CORPORATION AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Dollars in thousands, except per share amounts) (unaudited)
Thirteen Thirteen Weeks Weeks ended ended August 30, August 31, 2003 2002 ----------- ----------- REVENUES $ 4,052,091 $ 3,856,510 COSTS AND EXPENSES: Costs of goods sold, including occupancy costs 3,087,860 2,958,690 Selling, general and administrative expenses 893,337 865,931 Stock-based compensation expense (benefit) 8,847 (6,746) Store closing and impairment (credits) charges (8,994) 58,223 Interest expense 79,409 84,955 Interest rate swap contracts - 14 Loss (gain) on debt modifications and retirements, net 1,888 (1,392) Loss on sale of assets and investments, net 342 1,477 ----------- ----------- 4,062,689 3,961,152 ----------- ----------- Loss before income taxes (10,598) (104,642) INCOME TAX EXPENSE - 649 ----------- ----------- ----------- ----------- Net loss (10,598) (105,291) =========== =========== Basic and diluted loss per share Net loss (10,598) (105,291) Accretion of redeemable preferred stock (26) (26) Cumulative preferred stock dividends (7,874) (2,263) ----------- ----------- Net loss applicable to common stockholders (18,498) (107,580) =========== =========== Net loss per share (0.04) (0.21) =========== =========== Weighted average shares outstanding 515,402 515,158 =========== ===========
RITE AID CORPORATION AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Dollars in thousands, except per share amounts) (unaudited)
Twenty-six Twenty-six Weeks Weeks ended ended August 30, August 31, 2003 2002 ----------- ----------- REVENUES $ 8,098,259 $ 7,780,241 COSTS AND EXPENSES: Costs of goods sold, including occupancy costs 6,156,035 5,952,468 Selling, general and administrative expenses 1,783,070 1,765,074 Stock-based compensation expense 18,682 1,348 Store closing and impairment (credits) charges (2,628) 54,106 Interest expense 158,367 169,586 Interest rate swap contracts - 278 Loss (gain) on debt modifications and retirements, net 35,315 (1,662) Gain on sale of assets and investments, net (1,162) (15,388) ----------- ----------- 8,147,679 7,925,810 ----------- ----------- Loss before income taxes (49,420) (145,569) INCOME TAX BENEFIT - (42,862) ----------- ----------- ----------- ----------- Net loss (49,420) (102,707) =========== =========== Basic and diluted loss per share Net loss (49,420) (102,707) Accretion of redeemable preferred stock (52) (51) Cumulative preferred stock dividends (7,874) (9,493) ----------- ----------- Net loss applicable to common stockholders (57,346) (112,251) =========== =========== Net loss per share (0.11) (0.22) =========== =========== Weighted average shares outstanding 515,227 515,139 =========== ===========
RITE AID CORPORATION AND SUBSIDIARIES SUPPLEMENTAL INFORMATION RECONCILIATION OF NET LOSS TO ADJUSTED EBITDA (In thousands)
Thirteen Thirteen Weeks Weeks Ended ended August 30, August 31, 2003 2002 ----------- ----------- RECONCILIATION OF NET LOSS TO ADJUSTED EBITDA: Net loss $ (10,598) $ (105,291) Adjustments: LIFO charge (a) 11,790 17,250 Store closing and impairment (credits) charges (8,994) 58,223 Closed store liquidation expense (b) 2,246 528 Stock-based compensation expense (benefit) 8,847 (6,746) Loss (gain) on debt modifications and retirements, net (c) 1,888 (1,392) Litigation settlements, net (d) - 261 Loss on sale of assets and investments 342 1,477 Legal and accounting expenses (e) 2,639 3,210 Interest expense 79,409 84,955 Interest rate swap contracts - 14 Recurring income tax expense - 649 Depreciation and amortization 65,097 72,307 Other 231 (5) ----------- ----------- Adjusted EBITDA $ 152,897 $ 125,440 =========== =========== Percent of revenues 3.77% 3.25%
NOTES: (a) Represents non-cash charges to value our inventories under the last-in first-out ("LIFO") method. (b) Represents costs to liquidate inventory at stores that are in the process of closing. (c) Represents loss (gain) related to debt modifications and retirements, net. (d) Represents net impact of non- recurring litigation. (e) 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. RITE AID CORPORATION AND SUBSIDIARIES SUPPLEMENTAL INFORMATION RECONCILIATION OF NET LOSS TO ADJUSTED EBITDA (In thousands)
Twenty-six Twenty-six Weeks Weeks ended ended August 30, August 31, 2003 2002 ----------- ----------- RECONCILIATION OF NET LOSS TO ADJUSTED EBITDA: Net loss $ (49,420) $ (102,707) Adjustments: LIFO charge (a) 26,820 34,500 Store closing and impairment (credits) charges (2,628) 54,106 Closed store liquidation expense (b) 3,229 8,221 Stock-based compensation expense 18,682 1,348 Loss (gain) on debt modifications and retirements, net (c) 35,315 (1,662) Litigation settlements, net (d) (750) 20,261 Gain on sale of assets and investments (1,162) (15,388) Legal and accounting expenses (e) 8,627 9,882 Non-recurring income tax benefit - (44,011) Interest expense 158,367 169,586 Interest rate swap contracts - 278 Recurring income tax expense - 1,149 Depreciation and amortization 130,672 147,326 Other 251 870 ----------- ----------- Adjusted EBITDA $ 328,003 $ 283,759 =========== =========== Percent of revenues 4.05% 3.65%
NOTES: (a) Represents non-cash charges to value our inventories under the last-in first-out ("LIFO") method. (b) Represents costs to liquidate inventory at stores that are in the process of closing. (c) Represents loss (gain) related to debt modifications and retirements, net. (d) Represents net impact of non- recurring litigation. (e) 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. RITE AID CORPORATION AND SUBSIDIARIES SUPPLEMENTAL INFORMATION RECONCILIATION OF NET (LOSS) INCOME GUIDANCE TO ADJUSTED EBITDA GUIDANCE (In thousands)
Guidance Range ----------------------- Low High ----------- ----------- Year Year Ending Ending February February 28, 2004 28, 2004 ----------- ----------- RECONCILIATION OF NET (LOSS) INCOME TO ADJUSTED EBITDA Net (loss) income $ (27,000) $ 4,000 Adjustments: LIFO charge 55,000 55,000 Store closing, liquidation, and impairment charges 45,000 45,000 Stock-based compensation expense 31,000 29,000 Loss on debt modifications and retirements, net 35,000 35,000 Legal and accounting expenses 13,000 13,000 Income tax benefit, net (22,000) (22,000) Interest expense 313,000 313,000 Depreciation and amortization 258,000 255,000 Litigation settlements, gain on sale of assets and investments, and other (1,000) (2,000) ----------- ----------- Adjusted EBITDA $ 700,000 $ 725,000 =========== ===========