EX-99.1 2 a13-26600_1ex99d1.htm PRESS RELEASE

Exhibit 99.1

 

GRAPHIC

 

Press Release

For Further Information Contact:

 

INVESTORS:

 

MEDIA:

Matt Schroeder

 

Susan Henderson

(717) 214-8867

 

(717) 730-7766

or investor@riteaid.com

 

 

 

FOR IMMEDIATE RELEASE

 

RITE AID REPORTS NET INCOME OF $71.5 MILLION

AND ADJUSTED EBITDA OF $282.3 MILLION FOR THIRD QUARTER FISCAL 2014

 

·            Third Quarter Net Income of $71.5 million, Compared to Prior Year’s Third Quarter Net Income of $61.9 million

 

·            Third Quarter Net Income of $0.04 per Diluted Share, Compared to Prior Year’s Third Quarter Net Income of $0.07 per Diluted Share

·                  Current Quarter Net Income per Share Negatively Impacted by $0.03 per Share Due to the Redemption of the Company’s Series G and H Convertible Preferred Stock

 

·            Third Quarter Adjusted EBITDA of $282.3 Million Compared to Adjusted EBITDA of $295.3 Million in Prior Year’s Third Quarter;

·                  Prior Year’s Third Quarter Adjusted EBITDA Includes an $18.1 Million Benefit Related to the Settlement of Interchange Fee Litigation.

 

·            Rite Aid Updates Fiscal 2014 Outlook

 

CAMP HILL, Pa. (Dec. 19, 2013) - Rite Aid Corporation (NYSE: RAD) today reported operating results for its fiscal third quarter ended Nov. 30, 2013. The company reported revenues of $6.4 billion, net income of $71.5 million or $0.04 per diluted share, and Adjusted EBITDA of $282.3 million, or 4.4 percent of revenues.  Prior year’s results included an $18.1 million or $0.02 per diluted share benefit from the settlement of interchange fee litigation. Current year earnings per diluted share were negatively impacted by $0.03 per share due to the redemption of the Company’s Series G and Series H Convertible Preferred stock on Sept. 30, 2013.

 

“Our solid third quarter results were driven by the continued success of our key wellness initiatives, specifically the strong start to our flu immunization campaign, and the completion of additional Wellness stores, which now represent nearly a quarter of all Rite Aid stores,” said Rite Aid Chairman and CEO John Standley.

 

“Our team of dedicated Rite Aid associates worked together to execute our strategy and deliver growth in same-store prescription counts, increased same-store sales and net income of more than $71 million,” he added.  “These results reflect our continued progress in building our unique brand of health, wellness and customer engagement.”

 

-More-

 



 

Third Quarter Summary

 

Revenues for the 13-week quarter were $6.4 billion versus revenues of $6.2 billion in the prior year’s third quarter. Revenues increased 1.9 percent primarily as a result of an increase in pharmacy same store sales.

 

Same store sales for the quarter increased 2.3 percent over the prior year’s 13-week period, consisting of a 3.5 percent increase in pharmacy sales, partially offset by a 0.2 percent decrease in front end sales. Pharmacy sales included an approximate 88 basis point negative impact from new generic introductions. The number of prescriptions filled in same stores increased 0.7 percent over the prior year period. Prescription sales accounted for 68.6 percent of total drugstore sales, and third party prescription revenue was 97.1 percent of pharmacy sales.

 

Net income was $71.5 million or $0.04 per diluted share compared to last year’s third quarter net income of $61.9 million or $0.07 per diluted share. The improvement in net income resulted primarily from decreases in interest expense and lease termination and impairment charges, partially offset by a higher LIFO charge and an $18.1 million benefit from the settlement of interchange fee litigation in the prior year third quarter. Diluted earnings per share were negatively impacted by $0.03 due to the redemption of the Company’s Series G and Series H Convertible Preferred Stock on Sept. 30, 2013, as previously announced.

 

Adjusted EBITDA (which is reconciled to net income on the attached table) was $282.3 million or 4.4 percent of revenues for the third quarter compared to $295.3 million or 4.7 percent of revenues for the like period last year. Prior year Adjusted EBITDA included an $18.1 million benefit from the settlement of interchange fee litigation. The current quarter’s Adjusted EBITDA benefited from an increase in pharmacy gross profit, driven by script count growth, and strong SG&A expense control, offset by a decrease in front-end gross profit.

 

In the third quarter, the company relocated four stores and remodeled 94 stores, bringing the total number of wellness stores chainwide to 1,117. The company closed nine stores, resulting in a total store count of 4,595 at the end of the third quarter.

 

Rite Aid Updates Fiscal 2014 Guidance

 

Rite Aid has updated its fiscal 2014 guidance with sales expected to be between $25.3 billion and $25.425 billion and same store sales to range from an increase of 0.35 percent to 0.85 percent compared to fiscal 2013. Adjusted EBITDA (which is reconciled to net income on the attached table) guidance is now expected to be between $1.250 billion and $1.280 billion and net income is now expected to be between $204.0 million or $0.17 per diluted share and $259.0 million or $0.23 per diluted share. Capital expenditures are expected to be $415.0 million.

 

2



 

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 beginning at 12 p.m. Eastern Time today until 11:59 p.m. Eastern Time on Dec. 21, 2013. The playback number is 1-855-859-2056 from within the U.S. and Canada or 1-404-537-3406 from outside the U.S. and Canada with the eight-digit reservation number 18263517.

 

Rite Aid is one of the nation’s leading drugstore chains with 4,595 stores in 31 states and the District of Columbia. Information about Rite Aid, including corporate background and press releases, is available through Rite Aid’s website at www.riteaid.com.

 

Statements, including guidance, in this release that are not historical are forward-looking statements made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Words such as “anticipate,” “believe,” “continue,” “could,” “estimate,” “expect,” “intend,” “may,” “plan,” “predict,” “project,” “should,” and “will” and variations of such words and similar expressions are intended to identify such forward-looking statements. These forward-looking statements are not guarantees of future performance and involve risks, assumptions and uncertainties, including, but not limited to, our high level of indebtedness and our ability to make interest and principal payments on our debt and satisfy the other covenants contained in our debt agreements, general economic, market and competitive conditions, our ability to improve the operating performance of our stores in accordance with our long term strategy, the impact of private and public third-party payers continued reduction in prescription drug reimbursements and efforts to encourage mail order, our ability to manage expenses and our investments in working capital, outcomes of legal and regulatory matters and changes in legislation or regulations, including healthcare reform. These and other risks, assumptions and uncertainties are described in Item 1A (Risk Factors) of our most recent Annual Report on Form 10-K and in other documents that we file or furnish with the Securities and Exchange Commission, which you are encouraged to read. Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those indicated or anticipated by such forward-looking statements. Accordingly, you are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date they are made. Rite Aid expressly disclaims any current intention to update publicly any forward-looking statement after the distribution of this release, whether as a result of new information, future events, changes in assumptions or otherwise.

 

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) excluding the impact of income taxes (and any corresponding adjustments to tax indemnification asset), interest expense, depreciation and amortization, LIFO adjustments, charges or credits for facility closing and impairment, inventory write-downs related to store closings, stock-based compensation expense, debt retirements, sale of assets and investments, revenue deferrals related to our customer loyalty program and other items.

 

###

 

3



 

RITE AID CORPORATION AND SUBSIDIARIES

 

CONSOLIDATED BALANCE SHEETS

(Dollars in thousands)

(unaudited)

 

 

 

November 30, 2013

 

March 2, 2013

 

ASSETS

 

 

 

 

 

Current assets:

 

 

 

 

 

Cash and cash equivalents

 

$

183,212

 

$

129,452

 

Accounts receivable, net

 

850,249

 

929,476

 

Inventories, net of LIFO reserve of $975,241 and $915,241

 

3,301,103

 

3,154,742

 

Prepaid expenses and other current assets

 

111,689

 

195,377

 

Total current assets

 

4,446,253

 

4,409,047

 

Property, plant and equipment, net

 

1,957,584

 

1,895,650

 

Other intangibles, net

 

438,281

 

464,404

 

Other assets

 

296,049

 

309,618

 

Total assets

 

$

7,138,167

 

$

7,078,719

 

 

 

 

 

 

 

LIABILITIES AND STOCKHOLDERS’ DEFICIT

 

 

 

 

 

Current liabilities:

 

 

 

 

 

Current maturities of long-term debt and lease financing obligations

 

$

47,753

 

$

37,311

 

Accounts payable

 

1,397,093

 

1,384,644

 

Accrued salaries, wages and other current liabilities

 

1,120,238

 

1,156,315

 

Total current liabilities

 

2,565,084

 

2,578,270

 

Long-term debt, less current maturities

 

5,825,816

 

5,904,370

 

Lease financing obligations, less current maturities

 

78,857

 

91,850

 

Other noncurrent liabilities

 

897,235

 

963,663

 

Total liabilities

 

9,366,992

 

9,538,153

 

 

 

 

 

 

 

Commitments and contingencies

 

 

 

Stockholders’ deficit:

 

 

 

 

 

Preferred stock - Series G

 

 

1

 

Preferred stock - Series H

 

 

182,097

 

Common stock

 

965,411

 

904,268

 

Additional paid-in capital

 

4,434,570

 

4,280,831

 

Accumulated deficit

 

(7,571,225

)

(7,765,262

)

Accumulated other comprehensive loss

 

(57,581

)

(61,369

)

Total stockholders’ deficit

 

(2,228,825

)

(2,459,434

)

Total liabilities and stockholders’ deficit

 

$

7,138,167

 

$

7,078,719

 

 

Chart 1

 



 

RITE AID CORPORATION AND SUBSIDIARIES

 

CONSOLIDATED STATEMENTS OF OPERATIONS

(Dollars in thousands, except per share amounts)

(unaudited)

 

 

 

Thirteen weeks ended
November 30, 2013

 

Thirteen weeks ended
December 1, 2012

 

Revenues

 

$

6,357,732

 

$

6,237,847

 

Costs and expenses:

 

 

 

 

 

Cost of goods sold

 

4,557,066

 

4,426,526

 

Selling, general and administrative expenses

 

1,632,299

 

1,612,198

 

Lease termination and impairment charges

 

1,672

 

14,366

 

Interest expense

 

102,819

 

128,371

 

Loss on debt retirements, net

 

271

 

 

Gain on sale of assets, net

 

(9,331

)

(6,262

)

 

 

 

 

 

 

 

 

6,284,796

 

6,175,199

 

 

 

 

 

 

 

Income before income taxes

 

72,936

 

62,648

 

Income tax expense

 

1,388

 

777

 

Net income

 

$

71,548

 

$

61,871

 

 

 

 

 

 

 

Basic and diluted earnings per share:

 

 

 

 

 

 

 

 

 

 

 

Numerator for earnings per share:

 

 

 

 

 

Net income

 

$

71,548

 

$

61,871

 

Accretion of redeemable preferred stock

 

(26

)

(26

)

Cumulative preferred stock dividends

 

(2,814

)

(2,651

)

Conversion of Series G and H preferred stock

 

(25,603

)

 

Income attributable to common stockholders - basic

 

43,105

 

59,194

 

Add back - Interest on convertible notes

 

 

1,334

 

Income attributable to common stockholders - diluted

 

$

43,105

 

$

60,528

 

 

 

 

 

 

 

Denominator:

 

 

 

 

 

Basic weighted average shares

 

938,994

 

891,031

 

Outstanding options and restricted shares, net

 

48,843

 

1,977

 

Convertible notes

 

 

24,800

 

 

 

 

 

 

 

Diluted weighted average shares

 

987,837

 

917,808

 

 

 

 

 

 

 

Basic income per share

 

$

0.05

 

$

0.07

 

Diluted income per share

 

$

0.04

 

$

0.07

 

 

Chart 2

 



 

RITE AID CORPORATION AND SUBSIDIARIES

 

CONSOLIDATED STATEMENTS OF OPERATIONS

(Dollars in thousands, except per share amounts)

(unaudited)

 

 

 

Thirty-nine weeks ended
November 30, 2013

 

Thirty-nine weeks ended
December 1, 2012

 

Revenues

 

$

18,928,954

 

$

18,937,018

 

Costs and expenses:

 

 

 

 

 

Cost of goods sold

 

13,490,936

 

13,666,505

 

Selling, general and administrative expenses

 

4,844,491

 

4,918,433

 

Lease termination and impairment charges

 

24,034

 

34,292

 

Interest expense

 

322,599

 

388,013

 

Loss on debt retirements, net

 

62,443

 

17,842

 

Gain on sale of assets, net

 

(16,396

)

(19,267

)

 

 

 

 

 

 

 

 

18,728,107

 

19,005,818

 

 

 

 

 

 

 

Income (loss) before income taxes

 

200,847

 

(68,800

)

Income tax expense (benefit)

 

6,810

 

(63,818

)

Net income (loss)

 

$

194,037

 

$

(4,982

)

 

 

 

 

 

 

Basic and diluted earnings (loss) per share:

 

 

 

 

 

 

 

 

 

 

 

Numerator for earnings (loss) per share:

 

 

 

 

 

Net income (loss)

 

$

194,037

 

$

(4,982

)

Accretion of redeemable preferred stock

 

(77

)

(77

)

Cumulative preferred stock dividends

 

(8,318

)

(7,837

)

Conversion of Series G and H preferred stock

 

(25,603

)

 

Income (loss) attributable to common stockholders - basic and diluted

 

$

160,039

 

$

(12,896

)

 

 

 

 

 

 

Denominator:

 

 

 

 

 

Basic weighted average shares

 

911,608

 

889,187

 

Outstanding options and restricted shares, net

 

41,227

 

 

 

 

 

 

 

 

Diluted weighted average shares

 

952,835

 

889,187

 

 

 

 

 

 

 

Basic income (loss) per share

 

$

0.18

 

$

(0.01

)

Diluted income (loss) per share

 

$

0.17

 

$

(0.01

)

 

Chart 3

 



 

RITE AID CORPORATION AND SUBSIDIARIES

 

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(In thousands)

(unaudited)

 

 

 

Thirteen weeks ended
November 30, 2013

 

Thirteen weeks ended
December 1, 2012

 

Net income

 

$

71,548

 

$

61,871

 

Other comprehensive income:

 

 

 

 

 

Defined benefit pension plans:

 

 

 

 

 

Amortization of prior service cost, net transition obligation and net actuarial losses included in net periodic pension cost

 

1,263

 

1,020

 

Total other comprehensive income

 

1,263

 

1,020

 

Comprehensive income

 

$

72,811

 

$

62,891

 

 

Chart 4

 



 

RITE AID CORPORATION AND SUBSIDIARIES

 

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(In thousands)

(unaudited)

 

 

 

Thirty-nine weeks ended 
November 30, 2013

 

Thirty-nine weeks ended 
December 1, 2012

 

Net income (loss)

 

$

194,037

 

$

(4,982

)

Other comprehensive income:

 

 

 

 

 

Defined benefit pension plans:

 

 

 

 

 

Amortization of prior service cost, net transition obligation and net actuarial losses included in net periodic pension cost

 

3,788

 

3,059

 

Total other comprehensive income

 

3,788

 

3,059

 

Comprehensive income (loss)

 

$

197,825

 

$

(1,923

)

 

Chart 5

 



 

RITE AID CORPORATION AND SUBSIDIARIES

 

SUPPLEMENTAL OPERATING AND CASH FLOW INFORMATION

(Dollars in thousands, except per share amounts)

(unaudited)

 

 

 

Thirteen weeks ended 
November 30, 2013

 

Thirteen weeks ended 
December 1, 2012

 

 

 

 

 

 

 

SUPPLEMENTAL OPERATING INFORMATION

 

 

 

 

 

 

 

 

 

 

 

Revenues

 

$

6,357,732

 

$

6,237,847

 

Cost of goods sold

 

4,557,066

 

4,426,526

 

Gross profit

 

1,800,666

 

1,811,321

 

LIFO charge

 

25,000

 

 

FIFO gross profit

 

1,825,666

 

1,811,321

 

 

 

 

 

 

 

Gross profit as a percentage of revenues

 

28.32

%

29.04

%

LIFO charge as a percentage of revenues

 

0.39

%

0.00

%

FIFO gross profit as a percentage of revenues

 

28.72

%

29.04

%

 

 

 

 

 

 

Selling, general and administrative expenses

 

1,632,299

 

1,612,198

 

Selling, general and administrative expenses as a percentage of revenues

 

25.67

%

25.85

%

 

 

 

 

 

 

Cash interest expense

 

98,838

 

120,719

 

Non-cash interest expense

 

3,981

 

7,652

 

Total interest expense

 

102,819

 

128,371

 

 

 

 

 

 

 

Adjusted EBITDA

 

282,262

 

295,284

 

Adjusted EBITDA as a percentage of revenues

 

4.44

%

4.73

%

 

 

 

 

 

 

Net income

 

71,548

 

61,871

 

Net income as a percentage of revenues

 

1.13

%

0.99

%

 

 

 

 

 

 

Total debt

 

5,952,426

 

6,152,411

 

Invested cash

 

11,323

 

167,241

 

Total debt net of invested cash

 

5,941,103

 

5,985,170

 

 

 

 

 

 

 

SUPPLEMENTAL CASH FLOW INFORMATION

 

 

 

 

 

 

 

 

 

 

 

Payments for property, plant and equipment

 

84,419

 

84,984

 

Intangible assets acquired

 

28,954

 

25,692

 

Total cash capital expenditures

 

113,373

 

110,676

 

Equipment received for noncash consideration

 

1,588

 

504

 

Equipment financed under capital leases

 

1,906

 

2,017

 

Gross capital expenditures

 

$

116,867

 

$

113,197

 

 

Chart 6

 



 

RITE AID CORPORATION AND SUBSIDIARIES

 

SUPPLEMENTAL OPERATING AND CASH FLOW INFORMATION

(Dollars in thousands, except per share amounts)

(unaudited)

 

 

 

Thirty-nine weeks ended
November 30, 2013

 

Thirty-nine weeks ended 
December 1, 2012

 

 

 

 

 

 

 

SUPPLEMENTAL OPERATING INFORMATION

 

 

 

 

 

 

 

 

 

 

 

Revenues

 

$

18,928,954

 

$

18,937,018

 

Cost of goods sold

 

13,490,936

 

13,666,505

 

Gross profit

 

5,438,018

 

5,270,513

 

LIFO charge

 

60,000

 

27,502

 

FIFO gross profit

 

5,498,018

 

5,298,015

 

 

 

 

 

 

 

Gross profit as a percentage of revenues

 

28.73

%

27.83

%

LIFO charge as a percentage of revenues

 

0.32

%

0.15

%

FIFO gross profit as a percentage of revenues

 

29.05

%

27.98

%

 

 

 

 

 

 

Selling, general and administrative expenses

 

4,844,491

 

4,918,433

 

Selling, general and administrative expenses as a percentage of revenues

 

25.59

%

25.97

%

 

 

 

 

 

 

Cash interest expense

 

309,942

 

364,929

 

Non-cash interest expense

 

12,657

 

23,084

 

Total interest expense

 

322,599

 

388,013

 

 

 

 

 

 

 

Adjusted EBITDA

 

968,629

 

788,102

 

Adjusted EBITDA as a percentage of revenues

 

5.12

%

4.16

%

 

 

 

 

 

 

Net income (loss)

 

194,037

 

(4,982

)

Net income (loss) as a percentage of revenues

 

1.03

%

-0.03

%

 

 

 

 

 

 

Total debt

 

5,952,426

 

6,152,411

 

Invested cash

 

11,323

 

167,241

 

Total debt net of invested cash

 

5,941,103

 

5,985,170

 

 

 

 

 

 

 

SUPPLEMENTAL CASH FLOW INFORMATION

 

 

 

 

 

 

 

 

 

 

 

Payments for property, plant and equipment

 

255,269

 

233,195

 

Intangible assets acquired

 

64,605

 

45,659

 

Total cash capital expenditures

 

319,874

 

278,854

 

Equipment received for noncash consideration

 

1,588

 

2,636

 

Equipment financed under capital leases

 

15,023

 

7,251

 

Gross capital expenditures

 

$

336,485

 

$

288,741

 

 

Chart 7

 



 

RITE AID CORPORATION AND SUBSIDIARIES

SUPPLEMENTAL INFORMATION

RECONCILIATION OF NET INCOME TO ADJUSTED EBITDA

(In thousands)

 

 

 

Thirteen weeks ended
November 30, 2013

 

Thirteen weeks ended
December 1, 2012

 

 

 

 

 

 

 

Reconciliation of net income to adjusted EBITDA:

 

 

 

 

 

Net income

 

$

71,548

 

$

61,871

 

Adjustments:

 

 

 

 

 

Interest expense

 

102,819

 

128,371

 

Income tax expense

 

1,388

 

777

 

Adjustments to tax indemnification asset

 

(613

)

 

Depreciation and amortization

 

101,188

 

102,790

 

LIFO charge

 

25,000

 

 

Lease termination and impairment charges

 

1,672

 

14,366

 

Stock-based compensation expense

 

4,117

 

4,219

 

Gain on sale of assets, net

 

(9,331

)

(6,262

)

Loss on debt retirements, net

 

271

 

 

Closed facility liquidation expense

 

1,058

 

1,396

 

Customer loyalty card program revenue deferral

 

(16,950

)

(11,746

)

Other

 

95

 

(498

)

Adjusted EBITDA

 

$

282,262

 

$

295,284

 

Percent of revenues

 

4.44

%

4.73

%

 

Chart 8

 



 

RITE AID CORPORATION AND SUBSIDIARIES

SUPPLEMENTAL INFORMATION

RECONCILIATION OF NET INCOME (LOSS) TO ADJUSTED EBITDA

(In thousands)

 

 

 

Thirty-nine weeks ended
November 30, 2013

 

Thirty-nine weeks ended
December 1, 2012

 

 

 

 

 

 

 

Reconciliation of net income (loss) to adjusted EBITDA:

 

 

 

 

 

Net income (loss)

 

$

194,037

 

$

(4,982

)

Adjustments:

 

 

 

 

 

Interest expense

 

322,599

 

388,013

 

Income tax expense (benefit)

 

6,810

 

(63,818

)

Adjustments to tax indemnification asset

 

(1,840

)

60,237

 

Depreciation and amortization

 

301,681

 

311,160

 

LIFO charge

 

60,000

 

27,502

 

Lease termination and impairment charges

 

24,034

 

34,292

 

Stock-based compensation expense

 

12,194

 

12,872

 

Gain on sale of assets, net

 

(16,396

)

(19,267

)

Loss on debt retirements, net

 

62,443

 

17,842

 

Closed facility liquidation expense

 

2,848

 

4,263

 

Severance costs

 

 

(72

)

Customer loyalty card program revenue deferral

 

(822

)

16,247

 

Other

 

1,041

 

3,813

 

Adjusted EBITDA

 

$

968,629

 

$

788,102

 

Percent of revenues

 

5.12

%

4.16

%

 

Chart 9

 



 

RITE AID CORPORATION AND SUBSIDIARIES

 

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Dollars in thousands)

(unaudited)

 

 

 

Thirteen weeks ended
November 30, 2013

 

Thirteen weeks ended
December 1, 2012

 

 

 

 

 

 

 

OPERATING ACTIVITIES:

 

 

 

 

 

Net income

 

$

71,548

 

$

61,871

 

Adjustments to reconcile to net cash provided by operating activities:

 

 

 

 

 

Depreciation and amortization

 

101,188

 

102,790

 

Lease termination and impairment charges

 

1,672

 

14,366

 

Gain from lease termination

 

(8,750

)

 

LIFO charge

 

25,000

 

 

Gain on sale of assets, net

 

(9,331

)

(6,262

)

Stock-based compensation expense

 

4,117

 

4,219

 

Loss on debt retirements, net

 

271

 

 

Changes in operating assets and liabilities:

 

 

 

 

 

Accounts receivable

 

76,532

 

9,343

 

Inventories

 

(110,482

)

(74,724

)

Accounts payable

 

(11,040

)

172,614

 

Other assets and liabilities, net

 

106,661

 

(15,697

)

Net cash provided by operating activities

 

247,386

 

268,520

 

INVESTING ACTIVITIES:

 

 

 

 

 

Payments for property, plant and equipment

 

(84,419

)

(84,984

)

Intangible assets acquired

 

(28,954

)

(25,692

)

Proceeds from sale-leaseback transactions

 

 

2,405

 

Proceeds from dispositions of assets and investments

 

4,459

 

11,844

 

Proceeds from lease termination

 

8,750

 

 

Proceeds from insured loss

 

2,758

 

 

Net cash used in investing activities

 

(97,406

)

(96,427

)

FINANCING ACTIVITIES:

 

 

 

 

 

Net payments to revolver

 

(87,000

)

 

Principal payments on long-term debt

 

(10,557

)

(7,824

)

Change in zero balance cash accounts

 

(4,842

)

4,974

 

Net proceeds from the issuance of common stock

 

12,618

 

99

 

Payments for the repurchase of preferred stock

 

(21,034

)

 

Deferred financing costs paid

 

(120

)

(26

)

Net cash used in financing activities

 

(110,935

)

(2,777

)

Increase in cash and cash equivalents

 

39,045

 

169,316

 

Cash and cash equivalents, beginning of period

 

144,167

 

94,325

 

Cash and cash equivalents, end of period

 

$

183,212

 

$

263,641

 

 

Chart 10

 



 

RITE AID CORPORATION AND SUBSIDIARIES

 

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Dollars in thousands)

(unaudited)

 

 

 

Thirty-nine weeks ended
November 30, 2013

 

Thirty-nine weeks ended
December 1, 2012

 

 

 

 

 

 

 

OPERATING ACTIVITIES:

 

 

 

 

 

Net income (loss)

 

$

194,037

 

$

(4,982

)

Adjustments to reconcile to net cash provided by operating activities:

 

 

 

 

 

Depreciation and amortization

 

301,681

 

311,160

 

Lease termination and impairment charges

 

24,034

 

34,292

 

Gain from lease termination

 

(8,750

)

 

LIFO charge

 

60,000

 

27,502

 

Gain on sale of assets, net

 

(16,396

)

(19,267

)

Stock-based compensation expense

 

12,194

 

12,872

 

Loss on debt retirements, net

 

62,443

 

17,842

 

Changes in operating assets and liabilities:

 

 

 

 

 

Accounts receivable

 

79,895

 

95,732

 

Inventories

 

(206,408

)

13,055

 

Accounts payable

 

25,160

 

55,498

 

Other assets and liabilities, net

 

(19,972

)

55,533

 

Net cash provided by operating activities

 

507,918

 

599,237

 

INVESTING ACTIVITIES:

 

 

 

 

 

Payments for property, plant and equipment

 

(255,269

)

(233,195

)

Intangible assets acquired

 

(64,605

)

(45,659

)

Proceeds from sale-leaseback transactions

 

3,989

 

6,355

 

Proceeds from dispositions of assets and investments

 

14,157

 

27,744

 

Proceeds from lease termination

 

8,750

 

 

Proceeds from insured loss

 

6,138

 

 

Net cash used in investing activities

 

(286,840

)

(244,755

)

FINANCING ACTIVITIES:

 

 

 

 

 

Proceeds from issuance of long-term debt

 

1,310,000

 

426,263

 

Net payments to revolver

 

(75,000

)

(136,000

)

Principal payments on long-term debt

 

(1,332,528

)

(479,147

)

Change in zero balance cash accounts

 

(10,161

)

(43,507

)

Net proceeds from the issuance of common stock

 

24,881

 

1,103

 

Payments for the repurchase of preferred stock

 

(21,034

)

 

Financing fees paid for early debt redemption

 

(45,636

)

(11,069

)

Deferred financing costs paid

 

(17,840

)

(10,769

)

Net cash used in financing activities

 

(167,318

)

(253,126

)

Increase in cash and cash equivalents

 

53,760

 

101,356

 

Cash and cash equivalents, beginning of period

 

129,452

 

162,285

 

Cash and cash equivalents, end of period

 

$

183,212

 

$

263,641

 

 

Chart 11

 



 

RITE AID CORPORATION AND SUBSIDIARIES

SUPPLEMENTAL INFORMATION

RECONCILIATION OF NET INCOME GUIDANCE TO ADJUSTED EBITDA GUIDANCE

YEAR ENDING MARCH 1, 2014

(In thousands, except per share amounts)

 

 

 

Guidance Range

 

 

 

Low

 

High

 

 

 

 

 

 

 

Sales

 

$

25,300,000

 

$

25,425,000

 

 

 

 

 

 

 

Same store sales

 

0.35

%

0.85

%

 

 

 

 

 

 

Gross capital expenditures

 

$

415,000

 

$

415,000

 

 

 

 

 

 

 

Reconciliation of net income to adjusted EBITDA:

 

 

 

 

 

Net income

 

$

204,000

 

$

259,000

 

Adjustments:

 

 

 

 

 

Interest expense

 

427,000

 

427,000

 

Income tax benefit

 

(25,000

)

(25,000

)

Adjustments to tax indemnification asset

 

30,000

 

30,000

 

Depreciation and amortization

 

405,000

 

405,000

 

LIFO charge

 

90,000

 

70,000

 

Store closing and impairment charges

 

50,000

 

45,000

 

Stock-based compensation expense

 

16,000

 

16,000

 

Loss on debt retirement

 

62,000

 

62,000

 

Customer loyalty card program revenue deferral

 

3,000

 

3,000

 

Other

 

(12,000

)

(12,000

)

Adjusted EBITDA

 

$

1,250,000

 

$

1,280,000

 

 

 

 

 

 

 

Diluted income per share

 

$

0.17

 

$

0.23

 

 

Chart 12