-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, O91xGuLUzOtReHPDBnBr62uo2y//ezJywG+5UqwRHIacuZhX3odiIBYmbTLsJfWs nVEc6eJVkZe1fXa5s4lVFw== 0000950172-04-002990.txt : 20041216 0000950172-04-002990.hdr.sgml : 20041216 20041216101517 ACCESSION NUMBER: 0000950172-04-002990 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 20041216 ITEM INFORMATION: Results of Operations and Financial Condition ITEM INFORMATION: Financial Statements and Exhibits FILED AS OF DATE: 20041216 DATE AS OF CHANGE: 20041216 FILER: COMPANY DATA: COMPANY CONFORMED NAME: RITE AID CORP CENTRAL INDEX KEY: 0000084129 STANDARD INDUSTRIAL CLASSIFICATION: RETAIL-DRUG STORES AND PROPRIETARY STORES [5912] IRS NUMBER: 231614034 STATE OF INCORPORATION: DE FISCAL YEAR END: 0302 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 001-05742 FILM NUMBER: 041206592 BUSINESS ADDRESS: STREET 1: 30 HUNTER LANE CITY: CAMP HILL OWN STATE: PA ZIP: 17011 BUSINESS PHONE: 7177612633 MAIL ADDRESS: STREET 1: PO BOX 3165 CITY: HARRISBURG STATE: PA ZIP: 17105 FORMER COMPANY: FORMER CONFORMED NAME: RACK RITE DISTRIBUTORS DATE OF NAME CHANGE: 19680510 FORMER COMPANY: FORMER CONFORMED NAME: LEHRMAN LOUIS & CO DATE OF NAME CHANGE: 19680510 8-K 1 ny952371.txt SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 8-K CURRENT REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Date of report (Date of earliest event reported) December 16, 2004 (December 16, 2004) RITE AID CORPORATION _____________________________________________________________________________ (Exact name of registrant as specified in its charter) Delaware 1-5742 23-1614034 ____________________________________________________________________________ (State or Other Jurisdiction (Commission (IRS Employer of Incorporation) File Number) Identification No.) 30 Hunter Lane, Camp Hill, Pennsylvania 17011 ______________________________________________________________________________ (Address of Principal Executive Offices) (Zip Code) Registrant's telephone number, including area code (717) 761-2633 ________________________ None _____________________________________________________________________________ (Former Name or Former Address, if Changed Since Last Report) Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below): [ ] Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) [ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) [ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) [ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) Item 2.02. Results of Operations and Financial Condition. On December 16, 2004, we announced our financial position and results of operations as of and for our third quarter, ended November 27, 2004. The press release is attached hereto as Exhibit 99.1 and is incorporated herein by reference. The announcement includes a non-GAAP financial measure, "Adjusted EBITDA." Adjusted EBITDA represents net income (loss) from operations excluding the impact of income taxes, interest expense, 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, litigation proceeds, litigation expense, expense of the defense against litigation related to prior managements' business practices and the defense of prior management, sales of assets and investments, and 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 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 investors and enable investors to compare our operating performance with the operating performance of our competitors. Item 9.01. Financial Statements and Exhibits. (c) Exhibits. 99.1 Registrant's Press Release, dated December 16, 2004. SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized. RITE AID CORPORATION Dated: December 16, 2004 By: /s/Robert B. Sari --------------------------- Name: Robert B. Sari Title: Senior Vice President, General Counsel and Secretary EXHIBIT INDEX Exhibit No. Description 99.1 Registrant's Press Release dated December 16, 2004. EX-99 2 rite_release.txt EXHIBIT 99 - 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 THIRD QUARTER RESULTS REPORTS NET INCOME OF $1.0 MILLION OR A LOSS OF $.01 PER DILUTED SHARE ACHIEVES $163.8 MILLION OF ADJUSTED EBITDA Revises Fiscal 2005 Guidance CAMP HILL, PA, December 16, 2004--Rite Aid Corporation (NYSE, PCX: RAD) today announced financial results for its third quarter, ended November 27, 2004. Revenues of $4.1 billion for the 13-week third quarter were flat compared to revenues in the prior year third quarter. Same store sales increased 0.2 percent during the third quarter as compared to the year-ago like period, consisting of 0.1 percent pharmacy same store sales increase and a 0.3 percent increase in front-end same store sales. Prescription sales accounted for 64.3 percent of total sales, and third party prescription sales represented 93.4 percent of pharmacy sales. Net income for the quarter was $1.0 million or a loss of $.01 per diluted common share compared to last year's third quarter net income of $73.6 million or $.12 per diluted common share. The decrease in net income was due primarily to a $13.7 million decrease in adjusted EBITDA (which is reconciled to net income on the attached table), a $20.2 million loss on debt modifications resulting from the pay down and refinancing of the company's credit facility during the third quarter and a $47.5 million tax benefit in the prior year third quarter compared to a $5.4 million tax provision in this year's third quarter. Adjusted EBITDA was $163.8 million or 4.0 percent of revenues compared to $177.5 million or 4.3 percent of revenues last year. In the third quarter, the company remodeled 46 stores, relocated 4 stores opened 2 new stores and closed 9 stores. Stores in operation at the end of the quarter totaled 3,363. Refinancing That Lowers Borrowing Costs, Reduces Debt Also Completed in Third Quarter Other significant events in the quarter include the previously announced completion of a refinancing that lowered the company's overall borrowing costs by approximately $27 million annually and reduced debt by $634 million to approximately $3.2 billion. The refinancing included a new $1.4 billion senior secured credit facility and a $400 million three-year accounts receivable asset securitization facility. The new credit facility consists of a $450 million term loan and a $950 million revolving credit facility maturing in September 2009. The new accounts receivable asset securitization facility matures in September 2007. Company Lowers Guidance for Fiscal 2005 Based on current trends, Rite Aid said that it is lowering its fiscal 2005 guidance for sales, net income and adjusted EBITDA. The company said it expects sales to be between $16.7 billion and $16.8 billion, with same store sales improving 1.2 percent to 2.1 percent as compared to previous guidance of $16.9 billion and $17.0 billion, with same store sales improving 2.75 percent to 3.25 percent. Net income for fiscal 2005 is expected to be between $49.0 million and $99.0 million or between $.03 and $.12 per diluted share as compared to previous guidance of net income between $122 million and $150 million or between $.16 and $.22 per diluted share. Adjusted EBITDA (which is reconciled to net income on the attached table) is expected to be between $700 million and $750 million as compared to previous guidance of between $770 million and $800 million. Capital expenditure guidance is expected to be $225 million to $250 million as compared to previous guidance of $275 million to $325 million. "This was a difficult quarter as we continued to feel the negative impact of the United Auto Workers mandatory mail program on our sales and faced tougher year-over-year comparisons because of the significant business we gained last year from the Southern California grocery strike. A slow start to the flu season, which began in earnest mid-November last year, also hurt our sales," said Mary Sammons, Rite Aid president and CEO. "While we will cycle the impact of the UAW mandatory mail program and the results of last year's grocery strike in the next three to six months, we expect these factors to negatively impact our business the rest of the year, which led us to lower guidance. Our team continues to be focused on initiatives to deliver shareholder value long-term, including our new store development program designed to strengthen our market share and competitive positioning." 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 18. 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 2682528. Rite Aid Corporation is one of the nation's leading drugstore chains with annual revenues of $16.6 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 long term strategy, our ability to hire and retain pharmacists and other store personnel, the outcomes of pending lawsuits and governmental investigations, competitive pricing pressures, continued consolidation of the drugstore industry, the efforts of third-party payors to reduce prescription drug reimbursements and encourage mail order, changes in state or federal legislation or regulations, the success of planned advertising and merchandising strategies, general economic conditions and inflation, interest rate movements, access to capital and our relationship with our suppliers. Consequently, all of the forward-looking statements made in this press release are qualified by these and other factors, risks and uncertainties. Readers are also directed to consider other risks and uncertainties discussed in documents filed by the Company with the Securities and Exchange Commission. Forward-looking statements can be identified through the use of words such as "may", "will", "intend", "plan", "project", "expect", "anticipate", "could", "should", "would", "believe", "estimate", "contemplate", and "possible". See the 8-K furnished to the Securities and Exchange Commission on December 16, 2004 for definition, purpose and reconciliation of non-GAAP financial measures referred to herein. ### EX-99 3 rtaidtables.txt FINANCIAL TABLES Exhibit 99.1
CONSOLIDATED BALANCE SHEETS (Dollars in thousands) (unaudited) November 27, 2004 February 28, 2004 ------------------- ------------------- ASSETS Current assets: Cash and cash equivalents $ 95,768 $ 334,755 Accounts receivable, net 285,650 670,004 Inventories, net 2,464,097 2,223,171 Prepaid expenses and other current assets 41,881 150,067 ------------------- ------------------- Total current assets 2,887,396 3,377,997 Property, plant and equipment, net 1,778,211 1,883,808 Goodwill 684,535 684,535 Other intangibles, net 179,881 176,672 Other assets 147,941 123,667 ------------------- ------------------- Total assets $ 5,677,964 $ 6,246,679 =================== =================== LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Current maturities of long-term debt and lease financing obligations $ 184,620 $ 23,976 Accounts payable 827,163 758,290 Accrued salaries, wages and other current liabilities 700,912 701,484 ------------------- ------------------- Total current liabilities: 1,712,695 1,483,750 Convertible notes 247,125 246,000 Long-term debt, less current maturities 2,619,875 3,451,352 Lease financing obligations, less current maturities 161,785 170,338 Other noncurrent liabilities 835,617 885,975 ------------------- ------------------- Total liabilities 5,577,097 6,237,415 Commitments and contingencies - - Stockholders' equity: Preferred stock 443,376 417,803 Common stock 520,600 516,496 Additional paid-in capital 3,121,063 3,133,277 Accumulated deficit (3,961,293) (4,035,433) Accumulated other comprehensive loss (22,879) (22,879) ------------------- ------------------- Total stockholders' equity 100,867 9,264 ------------------- ------------------- Total liabilities and stockholders' equity $ 5,677,964 $ 6,246,679 =================== ===================
RITE AID CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS (Dollars in thousands, except per share amounts) (unaudited) Thirteen Weeks ended Thirteen Weeks ended November 27, 2004 November 29, 2003 --------------------- --------------------- Revenues $ 4,107,336 $ 4,105,844 Costs and expenses: Costs of goods sold, including occupancy costs 3,097,712 3,104,990 Selling, general and administrative expenses 909,016 893,117 Store closing and impairment charges 2,551 3,064 Interest expense 70,653 77,718 Loss on debt modifications and retirements, net 20,216 - Loss on sale of assets and investments, net 849 879 --------------------- --------------------- 4,100,997 4,079,768 --------------------- --------------------- Income before income taxes 6,339 26,076 Income tax expense (benefit) 5,362 (47,518) --------------------- --------------------- Net income $ 977 $ 73,594 ===================== ===================== Basic and diluted (loss) income per share: Numerator for (loss) income per share: Net income $ 977 $ 73,594 Accretion of redeemable preferred stock (26) (26) Cumulative preferred stock dividends (8,694) (8,032) --------------------- --------------------- (Loss) income attributable to common stockholders - basic $ (7,743) $ 65,536 Add back - Interest on convertible debt - 2,968 Add back - Cumulative preferred stock dividends - 8,032 --------------------- --------------------- (Loss) income attributable to common stockholders - diluted $ (7,743) $ 76,536 ===================== ===================== Denominator: Basic weighted average shares 519,876 516,226 Outstanding options - 17,894 Convertible debt - 38,462 Convertible preferred stock - 74,475 --------------------- --------------------- Diluted weighted average shares 519,876 647,057 ===================== ===================== Basic (loss) income per share $ (0.01) $ 0.13 Diluted (loss) income per share $ (0.01) $ 0.12
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 27, ended November 29, 2004 2003 --------------------- --------------------- Revenues $ 12,475,599 $ 12,204,103 Costs and expenses: Costs of goods sold, including occupancy costs 9,387,335 9,261,010 Selling, general and administrative expenses 2,748,014 2,694,884 Store closing and impairment charges 11,896 436 Interest expense 224,973 236,085 Loss on debt modifications and retirements, net 19,425 35,315 Gain on sale of assets and investments, net (1,323) (283) -------------------------------------------- 12,390,320 12,227,447 -------------------------------------------- Income (loss) before income taxes 85,279 (23,344) Income tax expense (benefit) 11,139 (47,518) --------------------- --------------------- Net income $ 74,140 $ 24,174 ===================== ===================== Basic and diluted income per share: Numerator for income per share: Net income $ 74,140 $ 24,174 Accretion of redeemable preferred stock (77) (78) Cumulative preferred stock dividends (25,573) (15,906) --------------------- --------------------- Income attributable to common stockholders - basic and diluted $ 48,490 $ 8,190 ===================== ===================== Denominator: Basic weighted average shares 518,095 515,609 Outstanding options 13,963 9,894 --------------------- --------------------- Diluted weighted average shares 532,058 525,503 ===================== ===================== Basic and diluted income per share $ 0.09 $ 0.02
RITE AID CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (Dollars in thousands) (unaudited) Thirty-nine Weeks ended Thirty-nine Weeks ended November 27, 2004 November 29, 2003 ----------------------- --- -------------------- Operating activities: Net income $ 74,140 $ 24,174 Adjustments to reconcile to net cash provided by operations: Depreciation and amortization 185,358 195,633 Stock-based compensation expense 14,525 25,956 Store closing and impairment charges 11,896 436 Loss on debt modifications and retirements, net 19,425 35,315 Gain on sale of assets and investments, net (1,323) (283) Net proceeds from sale of accounts receivable 335,000 - Changes in income tax receivables and payables 37,642 (51,103) Changes in operating assets and liabilities (152,765) (129,818) --------------------- --------------------- Net cash provided by operating activities 523,898 100,310 Investing activities: Expenditures for property, plant and equipment (120,455) (198,172) Intangible assets acquired (21,202) (11,816) Proceeds from sale-leaseback transactions 53,800 - Proceeds from dispositions 6,178 17,463 --------------------- --------------------- Net cash used in investing activities (81,679) (192,525) Financing activities: Principal payments on long-term debt (78,676) (260,766) Principal payments on bank credit facilities (1,150,000) (1,372,500) Proceeds from issuance of new bank credit facilities 438,015 1,150,000 Net proceeds from revolver 99,000 - Change in zero balance cash accounts 11,500 9,375 Proceeds from the issuance of stock 2,996 3,260 Proceeds from issuance of bonds - 502,950 Deferred financing costs paid (4,041) (30,985) --------------------- --------------------- Net cash (used in) provided by financing activities (681,206) 1,334 --------------------- --------------------- Decrease in cash and cash equivalents (238,987) (90,881) Cash and cash equivalents, beginning of period 334,755 365,321 --------------------- --------------------- Cash and cash equivalents, end of period $ 95,768 $ 274,440 ===================== =====================
RITE AID CORPORATION AND SUBSIDIARIES SUPPLEMENTAL INFORMATION RECONCILIATION OF NET INCOME TO ADJUSTED EBITDA (In thousands) Thirteen Weeks Thirteen Weeks ended November ended November 27, 2004 29, 2003 ------------------ ---------------- Reconciliation of net income to adjusted EBITDA: Net income $ 977 $ 73,594 Adjustments: Interest expense 70,653 77,718 Recurring income tax expense 5,362 3,565 Nonrecurring income tax benefit - (51,083) Depreciation and amortization 60,259 64,961 LIFO charges (credits) (a) 5,763 (1,423) Store closing and impairment charges 2,551 3,064 Stock-based compensation expense 5,421 7,274 Loss on sale of assets and investments, net 849 879 Loss on debt modifications and retirements, net (b) 20,216 - Litigation settlements, net (c) (14,508) (7,345) Legal and accounting expenses (d) 3,243 5,202 Closed store liquidation expense (e) 2,454 941 Other 547 116 ------------------ ------------------ Adjusted EBITDA $ 163,787 $ 177,463 ================== ================== Percent of revenues 3.99% 4.32% 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 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 ended November 27, 2004 29, 2003 ------------------ ------------------ Reconciliation of net income to adjusted EBITDA: Net income $ 74,140 $ 24,174 Adjustments: Interest expense 224,973 236,085 Recurring income tax expense 11,139 3,565 Nonrecurring income tax benefit - (51,083) Depreciation and amortization 185,358 195,633 LIFO charges (a) 17,276 25,397 Store closing and impairment charges 11,896 436 Stock-based compensation expense 14,525 25,956 Gain on sale of assets and investments, net (1,323) (283) Loss on debt modifications and retirements, net (b) 19,425 35,315 Litigation settlements, net (c) (14,183) (8,095) Legal and accounting expenses (d) 8,050 13,829 Closed store liquidation expense (e) 5,849 4,170 Other 1,601 367 ------------------ ------------------ Adjusted EBITDA $ 558,726 $ 505,466 ================== ================== Percent of revenues 4.48% 4.14% 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 SUPPLEMENTAL INFORMATION RECONCILIATION OF NET INCOME GUIDANCE TO ADJUSTED EBITDA GUIDANCE (In thousands) Guidance Range ------------------------------- Low High --------------- --------------- Year Ending Year Ending February 26, February 26, 2005 2005 --------------- --------------- Reconciliation of net income to adjusted EBITDA: Net income $ 49,000 $ 99,000 Adjustments: Interest expense 295,000 295,000 Income tax expense, net 11,500 11,500 Depreciation and amortization 246,000 246,000 LIFO charge 23,000 23,000 Store closing, liquidation, and impairment charges 50,000 50,000 Stock-based compensation expense 21,000 21,000 Loss on debt modifications and retirements, net 19,500 19,500 Legal and accounting expenses and litigation settlements, net (15,000) (15,000) --------------- --------------- Adjusted EBITDA $ 700,000 $ 750,000 =============== =============== Diluted income per share $ 0.03 $ 0.12
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