-----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, MAKxB279P+IH74zdWtWODrF8FFZw5S1BZs+iyttQTrNcTgwCVnxKT2xvPaW6QQuM 9TR/STlMqPhc9cHgypXLtA== 0000950172-05-001976.txt : 20050623 0000950172-05-001976.hdr.sgml : 20050623 20050623093931 ACCESSION NUMBER: 0000950172-05-001976 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20050623 ITEM INFORMATION: Results of Operations and Financial Condition ITEM INFORMATION: Financial Statements and Exhibits FILED AS OF DATE: 20050623 DATE AS OF CHANGE: 20050623 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: 05911433 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 nyc1010157.txt FORM 8-K 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) June 23, 2005 (June 23, 2005) 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 June 23, 2005, we announced our financial position and results of operations as of and for the thirteen weeks ended May 28, 2005. 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 June 23, 2005. 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: June 23, 2005 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 June 23, 2005. EX-99 2 riteaidex99.txt EXHIBIT 99.1 EXHIBIT 99.1 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 FIRST QUARTER RESULTS REPORTS FIRST QUARTER NET INCOME OF $.05 PER DILUTED SHARE COMPARED TO NET INCOME OF $.10 PER DILUTED SHARE IN PRIOR YEAR REPORTS FIRST QUARTER ADJUSTED EBITDA OF $203.6 MILLION COMPARED TO ADJUSTED EBITDA OF $224.2 MILLION IN PRIOR YEAR Revises Fiscal 2006 Guidance CAMP HILL, PA, June 23, 2005--Rite Aid Corporation (NYSE, PCX: RAD) today announced financial results for its first quarter ended May 28, 2005. Revenues for the 13-week first quarter were $4.22 billion versus revenues of $4.24 billion in the prior year first quarter. Revenues decreased 0.5 percent. Same store sales decreased 0.3 percent during the first quarter as compared to the year-ago like period, consisting of a 1.2 percent pharmacy same store sales decrease and a 1.4 percent increase in front-end same store sales. Prescription sales accounted for 64.0 percent of total sales, and third party prescription sales represented 93.9 percent of pharmacy sales. Net income for the first quarter decreased to $33.4 million or $.05 per diluted share compared to last year's first quarter net income of $63.7 million or $.10 per diluted share. The decrease was due primarily to a $20.5 million decrease in adjusted EBITDA (which is reconciled to net income on the attached table), a $15.5 million store closing and impairment charge which compared to a $4.6 million credit in the prior year quarter and an $8.9 million increase in income tax expense. These negative factors were partially offset by a $3.1 million decrease in the LIFO charge, a $7.0 million decrease in interest expense and $5.9 million litigation settlement income compared to $.5 million litigation expense in the prior year quarter. -MORE - Rite Aid FY06 Q1 Press Release - page 2 Adjusted EBITDA amounted to $203.6 million or 4.8 percent of revenues. This compares to $224.2 million or 5.3 percent of revenues for the like period last year. The decrease was due to an increase in selling, general and administrative expenses. "Front end sales improved this quarter, and we made good progress on our new store development program with 42 new and relocated stores already open or under construction. This keeps us on target for the 80 new and relocated stores we expect to open in fiscal 2006," said Mary Sammons, Rite Aid president and CEO. "Pharmacy sales were disappointing and put pressure on SG&A this quarter. We remain committed to increasing pharmacy sales, improving customer satisfaction and containing costs." In the first quarter, the company opened 2 new stores, relocated 3 stores, acquired 1 store, closed 5 stores and remodeled 47 stores. Stores in operation at the end of the quarter totaled 3,354. Company Revises Guidance for Fiscal 2006 - ---------------------------------------- Based on current trends, Rite Aid said that it is lowering its sales, net income and adjusted EBITDA guidance for fiscal 2006, which has 53 weeks. The company said it expects sales to be between $17.1 billion and $17.4 billion, with same store sales improving 0.5 percent to 2.0 percent as compared to previous guidance of $17.3 billion and $17.7 billion, with same stores sales improving 1.4 percent to 3.4 percent over fiscal 2005. Net income for fiscal 2006 is expected to be between $31 million and $62 million or zero cents to $.05 per diluted share as compared to previous guidance of net income between $45 million and $71 million or $.02 to $.07 per diluted share. Adjusted EBITDA is expected to be between $675 million and $725 million as compared to previous guidance of $700 million to $750 million. Capital expenditures are expected to remain between $350 million and $400 million. Conference Call Broadcast - ------------------------- Rite Aid will hold an analyst call at 10:30 a.m. Eastern Time today with remarks by Rite Aid's management team. The call will be simulcast via the internet and can be accessed through the websites www.riteaid.com in the conference call section of investor information and www.StreetEvents.com. A playback of the call will be available on both sites starting at 2 p.m. Eastern Time today. A playback of the call will also be available by telephone for 48 hours beginning at 2 p.m. Eastern Time today until 2 p.m. Eastern Time on June 25. 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 7119887. Rite Aid Corporation is one of the nation's leading drugstore chains with annual revenues of $16.8 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. --MORE-- Rite Aid FY06 Q1 Press Release - page 3 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 June 23, 2005 for definition, purpose and reconciliation of non-GAAP financial measures referred to herein. ### RITE AID CORPORATION AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (Dollars in thousands) (unaudited)
May 28, 2005 February 26, 2005 ------------------- ------------------- ASSETS Current assets: Cash and cash equivalents $ 135,037 $ 162,821 Accounts receivable, net 461,137 483,455 Inventories, net 2,325,488 2,310,153 Prepaid expenses and other current assets 52,546 50,325 ------------------- ------------------- Total current assets 2,974,208 3,006,754 Property, plant and equipment, net 1,701,383 1,733,694 Goodwill 684,535 684,535 Other intangibles, net 177,085 179,480 Other assets 310,346 328,120 ------------------- ------------------- Total assets $ 5,847,557 $ 5,932,583 =================== =================== LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Current maturities of long-term debt and lease financing obligations $ 52,258 $ 223,815 Accounts payable 782,944 757,571 Accrued salaries, wages and other current liabilities 714,367 690,351 ------------------- ------------------- Total current liabilities: 1,549,569 1,671,737 Convertible notes 247,875 247,500 Long-term debt, less current maturities 2,681,530 2,680,998 Lease financing obligations, less current maturities 165,653 159,023 Other noncurrent liabilities 842,061 850,391 ------------------- ------------------- Total liabilities 5,486,688 5,609,649 Commitments and contingencies - - Stockholders' equity: Preferred stock - Series E 120,000 120,000 Preferred stock - Series F 115,343 113,081 Preferred stock - Series G 115,060 113,081 Preferred stock - Series H 114,777 113,081 Common stock 520,903 520,438 Additional paid-in capital 3,119,513 3,121,404 Accumulated deficit (3,722,722) (3,756,146) Accumulated other comprehensive loss (22,005) (22,005) ------------------- ------------------- Total stockholders' equity 360,869 322,934 ------------------- ------------------- Total liabilities and stockholders' equity $ 5,847,557 $ 5,932,583 =================== ===================
RITE AID CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS (Dollars in thousands, except per share amounts) (unaudited)
Thirteen Weeks ended Thirteen Weeks ended May 28, 2005 May 29, 2004 -------------------- -------------------- Revenues $ 4,221,436 $ 4,244,357 Costs and expenses: Costs of goods sold, including occupancy costs 3,140,803 3,191,456 Selling, general and administrative expenses 947,453 912,845 Store closing and impairment charges (credits) 15,532 (4,595) Interest expense 70,851 77,801 Gain on sale of assets and investments, net (538) (1,918) -------------------- -------------------- 4,174,101 4,175,589 -------------------- -------------------- Income before income taxes 47,335 68,768 Income tax expense 13,911 5,049 -------------------- -------------------- Net income $ 33,424 $ 63,719 ==================== ==================== Basic and diluted income per share: Numerator for income per share: Net income $ 33,424 $ 63,719 Accretion of redeemable preferred stock (26) (26) Cumulative preferred stock dividends (8,149) (8,356) -------------------- -------------------- Income attributable to common stockholders - basic $ 25,249 $ 55,337 Add back - Interest on convertible debt - 2,968 -------------------- -------------------- Income attributable to common stockholders - diluted $ 25,249 $ 58,305 ==================== ==================== Denominator: Basic weighted average shares 520,752 516,837 Outstanding options 8,932 18,792 Convertible debt - 38,462 -------------------- -------------------- Diluted weighted average shares 529,684 574,091 ==================== ==================== Basic income per share $ 0.05 $ 0.11 Diluted income per share $ 0.05 $ 0.10
RITE AID CORPORATION AND SUBSIDIARIES SUPPLEMENTAL INFORMATION RECONCILIATION OF NET INCOME TO ADJUSTED EBITDA (In thousands)
Thirteen Weeks Thirteen Weeks ended May 28, 2005 ended May 29, 2004 ------------------ ------------------ Reconciliation of net income to adjusted EBITDA: Net income $ 33,424 $ 63,719 Adjustments: Interest expense 70,851 77,801 Recurring income tax expense 21,759 5,049 Income tax benefit from favorable tax settlement (7,848) - Depreciation and amortization 60,330 63,192 LIFO charges (a) 7,612 10,689 Store closing and impairment charges (credits) 15,532 (4,595) Stock-based compensation expense 4,890 3,982 Gain on sale of assets and investments, net (538) (1,918) Litigation settlements, net (b) (5,907) 460 Legal and accounting expenses (c) 1,114 4,023 Closed store liquidation expense (d) 1,646 1,686 Other 749 72 ------------------ ------------------ Adjusted EBITDA $ 203,614 $ 224,160 ================== ================== Percent of revenues 4.82% 5.28% Notes: (a) Represents non-cash charges to value our inventories under the last-in first-out ("LIFO") method. (b) Represents net impact of non-recurring litigation. (c) 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. (d) Represents costs to liquidate inventory at stores that are in the process of closing.
RITE AID CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (Dollars in thousands) (unaudited)
Thirteen Weeks Thirteen Weeks ended May 28, ended May 29, 2005 2004 ---------------- ---------------- Operating activities: Net income $ 33,424 $ 63,719 Adjustments to reconcile to net cash provided by operations: Depreciation and amortization 60,330 63,192 Stock-based compensation expense 4,890 3,982 Store closings and impairment charges (credits) 15,532 (4,595) Gain on sale of assets and investments, net (538) (1,918) Change in income tax receivables and payables 20,030 41,279 Change in operating assets and liabilities 39,172 50,900 ---------------- ---------------- Net cash provided by operating activities 172,840 216,559 Investing activities: Expenditures for property, plant and equipment (41,795) (35,088) Intangible assets acquired (7,922) (6,730) Proceeds from sale-leaseback transactions 18,784 - Proceeds from dispositions 8,787 3,483 ---------------- ---------------- Net cash used in investing activities (22,146) (38,335) Financing activities: Principal payments on long-term debt (172,955) (6,162) Principal payments on bank credit facilities (1,125) - Proceeds from financing secured by owned property 5,352 - Change in zero balance cash accounts (9,219) (8,586) Payments for preferred stock (2,212) - Proceeds from the issuance of common stock 1,885 1,920 Deferred financing costs paid (204) - ---------------- ---------------- Net cash used in financing activities (178,478) (12,828) ---------------- ---------------- Decrease in cash and cash equivalents (27,784) 165,396 Cash and cash equivalents, beginning of period 162,821 334,755 ---------------- ---------------- Cash and cash equivalents, end of period $ 135,037 $ 500,151 ================ ================
RITE AID CORPORATION AND SUBSIDIARIES SUPPLEMENTAL INFORMATION RECONCILIATION OF NET INCOME GUIDANCE TO ADJUSTED EBITDA GUIDANCE (In thousands)
Guidance Range ------------------------------- Low High --------------- --------------- Year Ending Year Ending March 4, 2006 March 4, 2006 --------------- --------------- Reconciliation of net income to adjusted EBITDA: Net income $ 31,000 $ 62,000 Adjustments: Interest expense 275,000 275,000 Income tax expense, net 19,000 38,000 Loss on debt modifications and retirements, net 9,000 9,000 Depreciation and amortization 252,000 252,000 LIFO charge 30,000 30,000 Store closing, liquidation, and impairment charges 46,000 46,000 Stock-based compensation expense 23,000 23,000 Legal and accounting expenses and litigation settlements, net (10,000) (10,000) --------------- --------------- Adjusted EBITDA $ 675,000 $ 725,000 =============== =============== Diluted income per share $ 0.00 $ 0.05
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