UNITED STATES
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):
September 18, 2014 (September 18, 2014)
Rite Aid Corporation
(Exact name of registrant as specified in
its charter)
| Delaware |
1-5742 |
23-1614034 |
|
(State or Other Jurisdiction
of Incorporation) |
(Commission File Number) |
(IRS Employer
Identification Number) |
30 Hunter Lane, Camp Hill, Pennsylvania
17011
(Address of principal executive offices,
including zip code)
(717) 761-2633
(Registrant’s telephone number, including
area code)
N/A
(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 September 18, 2014, Rite Aid Corporation
(the “Company”) reported its financial position and results of operations as of and for the thirteen and twenty-six
week period ended August 30, 2014. The press release includes a non-GAAP financial measure, “Adjusted EBITDA.” The
Company uses this non-GAAP measure in assessing its performance in addition to net income determined in accordance with GAAP. The
Company believes adjusted EBITDA serves as an appropriate measure to be used in evaluating the performance of its business and
helps its investors better compare the Company’s operating performance with the operating performance of its competitors.
The Company defines Adjusted EBITDA as net income excluding the impact of income taxes (and any corresponding adjustment 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, debt retirements and other items (including stock-based compensation
expense, sale of assets and investments and revenue deferrals related to the Company’s customer loyalty program). The Company
references this non-GAAP financial measure frequently in its 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 in part on Adjusted EBITDA and the Company bases
certain of its forward-looking estimates and budgets on Adjusted EBITDA. Adjusted EBITDA should not be considered in isolation
from, and is not intended to represent an alternative measure of, operating results or of cash flows from operating activities,
as determined in accordance with GAAP. The Company’s definition of Adjusted EBITDA may not be comparable to similarly titled
measurements reported by other companies or similar terms in the Company’s debt facilities. The press release attached hereto
as Exhibit 99.1 includes a reconciliation of Adjusted EBITDA to net income, the most directly comparable GAAP financial measure.
Item 9.01. Financial Statements and Exhibits.
(d) Exhibits.
99.1 Press Release, dated September 18, 2014
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: September 18, 2014 |
By: |
/s/ Marc A. Strassler |
| |
|
Name: |
Marc A. Strassler |
| |
|
Title: |
Executive Vice President, |
| |
|
|
General Counsel and Secretary |
EXHIBIT INDEX
| Exhibit No. |
Description |
| 99.1 |
Press Release, dated September 18, 2014. |
Exhibit 99.1
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 $127.8
MILLION AND ADJUSTED EBITDA
OF $364.2 MILLION FOR SECOND QUARTER
FISCAL 2015
| · | Second Quarter Net Income of $127.8 Million and Net Income per Diluted Share |
of $0.13, Compared to Prior
Year’s Second Quarter Net Income of $32.8 Million
and Net Income per Diluted
Share of $0.03
| · | Second Quarter Adjusted EBITDA of $364.2 Million Compared to Adjusted EBITDA |
of $341.6 Million in Prior Second Quarter
| · | Rite Aid Lowers Guidance for Fiscal 2015 |
CAMP HILL, Pa. (Sept. 18, 2014) - Rite Aid Corporation (NYSE:
RAD) today reported operating results for its fiscal second quarter ended August 30, 2014. The company reported revenues of $6.5
billion, net income of $127.8 million or $0.13 per diluted share, and Adjusted EBITDA of $364.2 million, or 5.6 percent of revenues.
“In the second quarter, our team of dedicated Rite Aid
associates worked together to execute our strategy and deliver results that reflect growth in net income and Adjusted EBITDA and
significant increases in same-store sales and prescription count,” said Rite Aid Chairman and CEO John Standley. “Heading
forward, while we believe that our key initiatives will continue to drive top-line growth, we are revising our guidance based on
lower than anticipated pharmacy margin in the second half of Fiscal 2015. As we navigate these headwinds, we will remain focused
on growing our business, generating continued operational efficiencies and positioning our associates to deliver a consistently
outstanding experience for our customers.”
Second Quarter Summary
Revenues for the quarter were $6.5 billion versus revenues of
$6.3 billion in the prior year’s second quarter. Revenues increased 3.9 percent primarily as a result of an increase in pharmacy
same store sales.
Same store sales for the quarter increased 4.1 percent over
the prior year, consisting of a 1.1 percent increase
in front-end sales and a 5.6 percent increase in pharmacy sales.
Pharmacy sales included an approximate
199 basis point negative impact from new generic introductions.
The number of prescriptions filled in same stores increased 3.7 percent over the prior year period. Prescription sales accounted
for 68.8 percent of total drugstore sales, and third party prescription revenue was 97.5 percent of pharmacy sales.
-MORE-
Rite Aid FY 2015 Q2 Press Release - page 2
Net income was $127.8 million or $0.13 per diluted share compared
to last year’s second quarter net income of $32.8 million or $0.03 per diluted share. The improvement in net income resulted
primarily from an increase in Adjusted EBITDA, a lower LIFO charge due to pharmacy inventory reductions and a $62.2 million loss
on debt retirement in the prior year, partially offset by higher income tax expense.
Adjusted EBITDA (which is reconciled to net income on the attached
table) was $364.2 million or
5.6 percent of revenues for the second quarter compared to $341.6
million or 5.4 percent of revenues for the like period last year. Adjusted EBITDA improved due to an increase in front-end and
pharmacy gross profit, partially offset by an increase in selling, general and administrative expenses related to our higher level
of sales. The improved pharmacy gross profit was driven by the increase in pharmacy revenues and the impact on inventory valuation
related to the company’s transition to its new drug purchasing and delivery arrangement with McKesson, partially offset by
lower reimbursement rates. The net effect on inventory valuation resulting from the transition to the outsourced McKesson arrangement
is not expected to be material to Fiscal 2015 results, but did increase gross profit, Adjusted EBITDA and pre-tax income by approximately
$40 million in the second quarter.
In the second quarter, the company relocated 5 stores, remodeled
117 stores and expanded 1 store, bringing the total number of wellness stores chainwide to 1,433. The company also opened 1 store
and closed 10 stores, resulting in a total store count of 4,572 at the end of the second quarter.
Rite Aid Lowers Fiscal 2015 Guidance
Based upon current estimates for reimbursement rates and anticipated
lower profitability from new generics and generic drugs that recently lost exclusivity, the company is expecting decreases in
pharmacy margin in the second half of Fiscal 2015 as compared to its prior estimates and therefore is lowering its guidance for
Adjusted EBITDA, net income and net income per diluted share. Adjusted EBITDA (which is reconciled to net income on the attached
table) is expected to be between $1.200 billion and $1.275 billion. Net income is expected to be between $223.0 million and $333.0
million and income per diluted share between $0.22 and $0.33. The company is also narrowing guidance for sales and same store
sales. Sales are expected to be between $26.0 billion and $26.3 billion and same store sales to range from an increase of 3.00
percent to an increase of 4.00 percent over Fiscal 2014. Capital expenditures are expected to be approximately $525 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 beginning at 12 p.m. Eastern Time today until 11:59 p.m. Eastern Time on Sept. 20, 2014. 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 96416227.
-More-
Rite Aid FY 2015 Q2 Press Release - page 3
Rite Aid is one of the nation’s leading drugstore chains
with 4,572 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, the most comparable GAAP financial measure. We define Adjusted EBITDA as net
income 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, debt retirements and other items (including stock-based compensation expense, sale of assets and investments
and revenue deferrals related to our customer loyalty program).
###
RITE AID CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Dollars in thousands)
(unaudited)
| | |
August 30, 2014 | | |
March 1, 2014 | |
| ASSETS | |
| | |
| |
| Current assets: | |
| | | |
| | |
| Cash and cash equivalents | |
$ | 185,758 | | |
$ | 146,406 | |
| Accounts receivable, net | |
| 954,785 | | |
| 949,062 | |
| Inventories, net of LIFO reserve of $1,021,670 and $1,018,581 | |
| 2,922,203 | | |
| 2,993,948 | |
| Prepaid expenses and other current assets | |
| 131,281 | | |
| 195,709 | |
| Total current assets | |
| 4,194,027 | | |
| 4,285,125 | |
| Property, plant and equipment, net | |
| 2,006,872 | | |
| 1,957,329 | |
| Goodwill | |
| 73,103 | | |
| - | |
| Other intangibles, net | |
| 411,295 | | |
| 431,227 | |
| Other assets | |
| 274,047 | | |
| 271,190 | |
| Total assets | |
$ | 6,959,344 | | |
$ | 6,944,871 | |
| | |
| | | |
| | |
| LIABILITIES AND STOCKHOLDERS' DEFICIT | |
| | | |
| | |
| Current liabilities: | |
| | | |
| | |
| Current maturities of long-term debt and lease financing obligations | |
$ | 113,070 | | |
$ | 49,174 | |
| Accounts payable | |
| 1,205,834 | | |
| 1,292,419 | |
| Accrued salaries, wages and other current liabilities | |
| 1,092,072 | | |
| 1,165,859 | |
| Total current liabilities | |
| 2,410,976 | | |
| 2,507,452 | |
| Long-term debt, less current maturities | |
| 5,570,583 | | |
| 5,632,798 | |
| Lease financing obligations, less current maturities | |
| 68,633 | | |
| 75,171 | |
| Other noncurrent liabilities | |
| 815,677 | | |
| 843,152 | |
| Total liabilities | |
| 8,865,869 | | |
| 9,058,573 | |
| | |
| | | |
| | |
| Commitments and contingencies | |
| - | | |
| - | |
| Stockholders' deficit: | |
| | | |
| | |
| Common stock | |
| 981,339 | | |
| 971,331 | |
| Additional paid-in capital | |
| 4,494,704 | | |
| 4,468,149 | |
| Accumulated deficit | |
| (7,346,553 | ) | |
| (7,515,848 | ) |
| Accumulated other comprehensive loss | |
| (36,015 | ) | |
| (37,334 | ) |
| Total stockholders' deficit | |
| (1,906,525 | ) | |
| (2,113,702 | ) |
| Total liabilities and stockholders' deficit | |
$ | 6,959,344 | | |
$ | 6,944,871 | |
Chart 1
RITE AID CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Dollars in thousands, except per share amounts)
(unaudited)
| | |
Thirteen weeks ended
August 30, 2014 | | |
Thirteen weeks ended
August 31, 2013 | |
| Revenues | |
$ |
6,522,584 | | |
$ |
6,278,165 | |
| Costs and expenses: | |
| | | |
| | |
| Cost of goods sold | |
| 4,628,005 | | |
| 4,461,804 | |
| Selling, general and administrative expenses | |
| 1,640,524 | | |
| 1,602,931 | |
| Lease termination and impairment charges | |
| 7,111 | | |
| 11,390 | |
| Interest expense | |
| 100,950 | | |
| 106,716 | |
| Loss on debt retirements, net | |
| - | | |
| 62,172 | |
| Gain on sale of assets, net | |
| (1,715 | ) | |
| (1,885 | ) |
| | |
| | | |
| | |
| | |
| 6,374,875 | | |
| 6,243,128 | |
| | |
| | | |
| | |
| Income before income taxes | |
| 147,709 | | |
| 35,037 | |
| Income tax expense | |
| 19,860 | | |
| 2,210 | |
| Net income | |
$ | 127,849 | | |
$ | 32,827 | |
| | |
| | | |
| | |
| Basic and diluted earnings per share: | |
| | | |
| | |
| | |
| | | |
| | |
| Numerator for earnings per share: | |
| | | |
| | |
| Net income | |
$ | 127,849 | | |
$ | 32,827 | |
| Accretion of redeemable preferred stock | |
| - | | |
| (26 | ) |
| Cumulative preferred stock dividends | |
| - | | |
| (2,772 | ) |
| Income attributable to common stockholders - basic | |
| 127,849 | | |
| 30,029 | |
| Add back - Interest on convertible notes | |
| 1,364 | | |
| - | |
| Income attributable to common stockholders - diluted | |
$ | 129,213 | | |
$ | 30,029 | |
| | |
| | | |
| | |
| Denominator: | |
| | | |
| | |
| Basic weighted average shares | |
| 970,664 | | |
| 901,992 | |
| Outstanding options and restricted shares, net | |
| 26,132 | | |
| 44,726 | |
| Convertible notes | |
| 24,796 | | |
| - | |
| | |
| | | |
| | |
| Diluted weighted average shares | |
| 1,021,592 | | |
| 946,718 | |
| | |
| | | |
| | |
| Basic and diluted income per share | |
$ | 0.13 | | |
$ | 0.03 | |
Chart 2
RITE AID CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Dollars in thousands, except per share amounts)
(unaudited)
| | |
Twenty-six weeks ended
August 30, 2014 | | |
Twenty-six weeks ended
August 31, 2013 | |
| Revenues | |
$ |
12,988,115 | | |
$ |
12,571,222 | |
| Costs and expenses: | |
| | | |
| | |
| Cost of goods sold | |
| 9,290,557 | | |
| 8,933,870 | |
| Selling, general and administrative expenses | |
| 3,284,878 | | |
| 3,212,192 | |
| Lease termination and impairment charges | |
| 11,959 | | |
| 22,362 | |
| Interest expense | |
| 201,770 | | |
| 219,780 | |
| Loss on debt retirements, net | |
| - | | |
| 62,172 | |
| Gain on sale of assets, net | |
| (2,085 | ) | |
| (7,065 | ) |
| | |
| | | |
| | |
| | |
| 12,787,079 | | |
| 12,443,311 | |
| | |
| | | |
| | |
| Income before income taxes | |
| 201,036 | | |
| 127,911 | |
| Income tax expense | |
| 31,741 | | |
| 5,422 | |
| Net income | |
$ | 169,295 | | |
$ | 122,489 | |
| | |
| | | |
| | |
| Basic and diluted earnings per share: | |
| | | |
| | |
| | |
| | | |
| | |
| Numerator for earnings per share: | |
| | | |
| | |
| Net income | |
$ | 169,295 | | |
$ | 122,489 | |
| Accretion of redeemable preferred stock | |
| - | | |
| (51 | ) |
| Cumulative preferred stock dividends | |
| - | | |
| (5,504 | ) |
| Income attributable to common stockholders - basic | |
| 169,295 | | |
| 116,934 | |
| Add back - Interest on convertible notes | |
| 2,728 | | |
| 2,728 | |
| Income attributable to common stockholders - diluted | |
$ | 172,023 | | |
$ | 119,662 | |
| | |
| | | |
| | |
| Denominator: | |
| | | |
| | |
| Basic weighted average shares | |
| 966,997 | | |
| 897,993 | |
| Outstanding options and restricted shares, net | |
| 26,141 | | |
| 40,143 | |
| Convertible notes | |
| 24,796 | | |
| 24,800 | |
| | |
| | | |
| | |
| Diluted weighted average shares | |
| 1,017,934 | | |
| 962,936 | |
| | |
| | | |
| | |
| Basic income per share | |
$ | 0.18 | | |
$ | 0.13 | |
| Diluted income per share | |
$ | 0.17 | | |
$ | 0.12 | |
Chart 3
RITE AID CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(In thousands)
(unaudited)
| | |
Thirteen weeks ended
August 30, 2014 | | |
Thirteen weeks ended
August 31, 2013 | |
| Net income | |
$ | 127,849 | | |
$ | 32,827 | |
| 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 | |
| 660 | | |
| 1,262 | |
| Total other comprehensive income | |
| 660 | | |
| 1,262 | |
| Comprehensive income | |
$ | 128,509 | | |
$ | 34,089 | |
Chart 4
RITE AID CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(In thousands)
(unaudited)
| | |
Twenty-six weeks ended
August 30, 2014 | | |
Twenty-six weeks ended
August 31, 2013 | |
| Net income | |
$ | 169,295 | | |
$ | 122,489 | |
| 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 | |
| 1,319 | | |
| 2,525 | |
| Total other comprehensive income | |
| 1,319 | | |
| 2,525 | |
| Comprehensive income | |
$ | 170,614 | | |
$ | 125,014 | |
Chart 5
RITE AID CORPORATION AND SUBSIDIARIES
SUPPLEMENTAL OPERATING AND CASH FLOW INFORMATION
(Dollars in thousands, except per share amounts)
(unaudited)
| | |
Thirteen weeks ended August 30, 2014 | | |
Thirteen weeks ended August 31, 2013 | |
| | |
| | | |
| | |
| SUPPLEMENTAL OPERATING INFORMATION | |
| | | |
| | |
| | |
| | | |
| | |
| Revenues | |
$ | 6,522,584 | | |
$ | 6,278,165 | |
| Cost of goods sold | |
| 4,628,005 | | |
| 4,461,804 | |
| Gross profit | |
| 1,894,579 | | |
| 1,816,361 | |
| LIFO charge | |
| 1,544 | | |
| 23,000 | |
| FIFO gross profit | |
| 1,896,123 | | |
| 1,839,361 | |
| | |
| | | |
| | |
| Gross profit as a percentage of revenues | |
| 29.05 | % | |
| 28.93 | % |
| LIFO charge as a percentage of revenues | |
| 0.02 | % | |
| 0.37 | % |
| FIFO gross profit as a percentage of revenues | |
| 29.07 | % | |
| 29.30 | % |
| | |
| | | |
| | |
| Selling, general and administrative expenses | |
| 1,640,524 | | |
| 1,602,931 | |
| Selling, general and administrative expenses as a percentage of revenues | |
| 25.15 | % | |
| 25.53 | % |
| | |
| | | |
| | |
| Cash interest expense | |
| 96,558 | | |
| 102,556 | |
| Non-cash interest expense | |
| 4,392 | | |
| 4,160 | |
| Total interest expense | |
| 100,950 | | |
| 106,716 | |
| | |
| | | |
| | |
| | |
| | | |
| | |
| Adjusted EBITDA | |
| 364,166 | | |
| 341,589 | |
| Adjusted EBITDA as a percentage of revenues | |
| 5.58 | % | |
| 5.44 | % |
| | |
| | | |
| | |
| Net income | |
| 127,849 | | |
| 32,827 | |
| Net income as a percentage of revenues | |
| 1.96 | % | |
| 0.52 | % |
| | |
| | | |
| | |
| Total debt | |
| 5,752,286 | | |
| 6,051,559 | |
| Invested cash | |
| 50,577 | | |
| 1,629 | |
| Total debt net of invested cash | |
| 5,701,709 | | |
| 6,049,930 | |
| | |
| | | |
| | |
| | |
| | | |
| | |
| SUPPLEMENTAL CASH FLOW INFORMATION | |
| | | |
| | |
| | |
| | | |
| | |
| Payments for property, plant and equipment | |
| 99,291 | | |
| 89,944 | |
| Intangible assets acquired | |
| 20,437 | | |
| 23,865 | |
| Total cash capital expenditures | |
| 119,728 | | |
| 113,809 | |
| Equipment received for noncash consideration | |
| 1,337 | | |
| - | |
| Equipment financed under capital leases | |
| 2,242 | | |
| 7,744 | |
| Gross capital expenditures | |
$ | 123,307 | | |
$ | 121,553 | |
Chart 6
RITE AID CORPORATION AND SUBSIDIARIES
SUPPLEMENTAL OPERATING AND CASH FLOW INFORMATION
(Dollars in thousands, except per share amounts)
(unaudited)
| | |
Twenty-six weeks ended
August 30, 2014 | | |
Twenty-six weeks ended
August 31, 2013 | |
| | |
| | |
| |
| SUPPLEMENTAL OPERATING INFORMATION | |
| | | |
| | |
| | |
| | | |
| | |
| Revenues | |
$ | 12,988,115 | | |
$ | 12,571,222 | |
| Cost of goods sold | |
| 9,290,557 | | |
| 8,933,870 | |
| Gross profit | |
| 3,697,558 | | |
| 3,637,352 | |
| LIFO charge | |
| 3,089 | | |
| 35,000 | |
| FIFO gross profit | |
| 3,700,647 | | |
| 3,672,352 | |
| | |
| | | |
| | |
| Gross profit as a percentage of revenues | |
| 28.47 | % | |
| 28.93 | % |
| LIFO charge as a percentage of revenues | |
| 0.02 | % | |
| 0.28 | % |
| FIFO gross profit as a percentage of revenues | |
| 28.49 | % | |
| 29.21 | % |
| | |
| | | |
| | |
| Selling, general and administrative expenses | |
| 3,284,878 | | |
| 3,212,192 | |
| Selling, general and administrative expenses as a percentage of revenues | |
| 25.29 | % | |
| 25.55 | % |
| | |
| | | |
| | |
| Cash interest expense | |
| 192,993 | | |
| 211,104 | |
| Non-cash interest expense | |
| 8,777 | | |
| 8,676 | |
| Total interest expense | |
| 201,770 | | |
| 219,780 | |
| | |
| | | |
| | |
| | |
| | | |
| | |
| Adjusted EBITDA | |
| 646,779 | | |
| 686,367 | |
| Adjusted EBITDA as a percentage of revenues | |
| 4.98 | % | |
| 5.46 | % |
| | |
| | | |
| | |
| Net income | |
| 169,295 | | |
| 122,489 | |
| Net income as a percentage of revenues | |
| 1.30 | % | |
| 0.97 | % |
| | |
| | | |
| | |
| Total debt | |
| 5,752,286 | | |
| 6,051,559 | |
| Invested cash | |
| 50,577 | | |
| 1,629 | |
| Total debt net of invested cash | |
| 5,701,709 | | |
| 6,049,930 | |
| | |
| | | |
| | |
| | |
| | | |
| | |
| SUPPLEMENTAL CASH FLOW INFORMATION | |
| | | |
| | |
| | |
| | | |
| | |
| Payments for property, plant and equipment | |
| 193,633 | | |
| 170,850 | |
| Intangible assets acquired | |
| 40,023 | | |
| 35,651 | |
| Total cash capital expenditures | |
| 233,656 | | |
| 206,501 | |
| Equipment received for noncash consideration | |
| 1,337 | | |
| - | |
| Equipment financed under capital leases | |
| 3,925 | | |
| 13,117 | |
| Gross capital expenditures | |
$ | 238,918 | | |
$ | 219,618 | |
Chart 7
RITE AID CORPORATION AND SUBSIDIARIES
SUPPLEMENTAL INFORMATION
RECONCILIATION OF NET INCOME TO ADJUSTED EBITDA
(In thousands)
| | |
Thirteen weeks ended
August 30, 2014 | | |
Thirteen weeks ended
August 31, 2013 | |
| | |
| | |
| |
| Reconciliation of net income to adjusted EBITDA: | |
| | | |
| | |
| Net income | |
$ | 127,849 | | |
$ | 32,827 | |
| Adjustments: | |
| | | |
| | |
| Interest expense | |
| 100,950 | | |
| 106,716 | |
| Income tax expense | |
| 19,860 | | |
| 2,210 | |
| Depreciation and amortization | |
| 101,484 | | |
| 99,247 | |
| LIFO charge | |
| 1,544 | | |
| 23,000 | |
| Lease termination and impairment charges | |
| 7,111 | | |
| 11,390 | |
| Other | |
| 5,368 | | |
| 66,199 | |
| Adjusted EBITDA | |
$ | 364,166 | | |
$ | 341,589 | |
| Percent of revenues | |
| 5.58 | % | |
| 5.44 | % |
Chart 8
RITE AID CORPORATION AND SUBSIDIARIES
SUPPLEMENTAL INFORMATION
RECONCILIATION OF NET INCOME TO ADJUSTED EBITDA
(In thousands)
| | |
Twenty-six weeks ended
August 30, 2014 | | |
Twenty-six weeks ended
August 31, 2013 | |
| | |
| | |
| |
| Reconciliation of net income to adjusted EBITDA: | |
| | | |
| | |
| Net income | |
$ | 169,295 | | |
$ | 122,489 | |
| Adjustments: | |
| | | |
| | |
| Interest expense | |
| 201,770 | | |
| 219,780 | |
| Income tax expense | |
| 31,741 | | |
| 5,422 | |
| Depreciation and amortization | |
| 204,589 | | |
| 200,493 | |
| LIFO charge | |
| 3,089 | | |
| 35,000 | |
| Lease termination and impairment charges | |
| 11,959 | | |
| 22,362 | |
| Other | |
| 24,336 | | |
| 80,821 | |
| Adjusted EBITDA | |
$ | 646,779 | | |
$ | 686,367 | |
| Percent of revenues | |
| 4.98 | % | |
| 5.46 | % |
Chart 9
RITE AID CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollars in thousands)
(unaudited)
| | |
Thirteen weeks ended
August 30, 2014 | | |
Thirteen weeks ended
August 31, 2013 | |
| | |
| | |
| |
| OPERATING ACTIVITIES: | |
| | | |
| | |
| Net income | |
$ | 127,849 | | |
$ | 32,827 | |
| Adjustments to reconcile to net cash provided by operating activities: | |
| | | |
| | |
| Depreciation and amortization | |
| 101,484 | | |
| 99,247 | |
| Lease termination and impairment charges | |
| 7,111 | | |
| 11,390 | |
| LIFO charge | |
| 1,544 | | |
| 23,000 | |
| Gain on sale of assets, net | |
| (1,715 | ) | |
| (1,885 | ) |
| Stock-based compensation expense | |
| 5,736 | | |
| 3,837 | |
| Loss on debt retirements, net | |
| - | | |
| 62,172 | |
| Excess tax benefit on stock options | |
| (16,536 | ) | |
| - | |
| Changes in operating assets and liabilities: | |
| | | |
| | |
| Accounts receivable | |
| (40,906 | ) | |
| (41,054 | ) |
| Inventories | |
| 9,542 | | |
| (102,861 | ) |
| Accounts payable | |
| (113,074 | ) | |
| 51,747 | |
| Other assets and liabilities, net | |
| 41,448 | | |
| (58,955 | ) |
| Net cash provided by operating activities | |
| 122,483 | | |
| 79,465 | |
| INVESTING ACTIVITIES: | |
| | | |
| | |
| Payments for property, plant and equipment | |
| (99,291 | ) | |
| (89,944 | ) |
| Intangible assets acquired | |
| (20,437 | ) | |
| (23,865 | ) |
| Acquisition of Health Dialog and RediClinic, net of cash acquired | |
| (4,487 | ) | |
| - | |
| Proceeds from dispositions of assets and investments | |
| 4,229 | | |
| 3,088 | |
| Net cash used in investing activities | |
| (119,986 | ) | |
| (110,721 | ) |
| FINANCING ACTIVITIES: | |
| | | |
| | |
| Proceeds from issuance of long-term debt | |
| - | | |
| 1,310,000 | |
| Net proceeds from revolver | |
| 54,000 | | |
| 135,000 | |
| Principal payments on long-term debt | |
| (8,180 | ) | |
| (1,317,593 | ) |
| Change in zero balance cash accounts | |
| (48,967 | ) | |
| (4,452 | ) |
| Net proceeds from the issuance of common stock | |
| 3,887 | | |
| 5,519 | |
| Financing fees paid for early debt redemption | |
| - | | |
| (45,636 | ) |
| Excess tax benefit on stock options | |
| 16,536 | | |
| - | |
| Deferred financing costs paid | |
| (18 | ) | |
| (16,317 | ) |
| Net cash provided by financing activities | |
| 17,258 | | |
| 66,521 | |
| Increase in cash and cash equivalents | |
| 19,755 | | |
| 35,265 | |
| Cash and cash equivalents, beginning of period | |
| 166,003 | | |
| 108,902 | |
| Cash and cash equivalents, end of period | |
$ | 185,758 | | |
$ | 144,167 | |
Chart 10
RITE AID CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollars in thousands)
(unaudited)
| | |
Twenty-six weeks ended
August 30, 2014 | | |
Twenty-six weeks ended
August 31, 2013 | |
| | |
| | |
| |
| OPERATING ACTIVITIES: | |
| | | |
| | |
| Net income | |
$ | 169,295 | | |
$ | 122,489 | |
| Adjustments to reconcile to net cash provided by operating activities: | |
| | | |
| | |
| Depreciation and amortization | |
| 204,589 | | |
| 200,493 | |
| Lease termination and impairment charges | |
| 11,959 | | |
| 22,362 | |
| LIFO charge | |
| 3,089 | | |
| 35,000 | |
| Gain on sale of assets, net | |
| (2,085 | ) | |
| (7,065 | ) |
| Stock-based compensation expense | |
| 9,892 | | |
| 8,077 | |
| Loss on debt retirements, net | |
| - | | |
| 62,172 | |
| Excess tax benefit on stock options | |
| (27,058 | ) | |
| - | |
| Changes in operating assets and liabilities: | |
| | | |
| | |
| Accounts receivable | |
| 441 | | |
| 6,743 | |
| Inventories | |
| 68,917 | | |
| (95,926 | ) |
| Accounts payable | |
| (26,750 | ) | |
| 36,200 | |
| Other assets and liabilities, net | |
| (50,058 | ) | |
| (126,633 | ) |
| Net cash provided by operating activities | |
| 362,231 | | |
| 263,912 | |
| INVESTING ACTIVITIES: | |
| | | |
| | |
| Payments for property, plant and equipment | |
| (193,633 | ) | |
| (170,850 | ) |
| Intangible assets acquired | |
| (40,023 | ) | |
| (35,651 | ) |
| Acquisition of Health Dialog and RediClinic, net of cash acquired | |
| (69,793 | ) | |
| - | |
| Proceeds from sale-leaseback transactions | |
| - | | |
| 3,989 | |
| Proceeds from dispositions of assets and investments | |
| 6,102 | | |
| 9,698 | |
| Net cash used in investing activities | |
| (297,347 | ) | |
| (192,814 | ) |
| FINANCING ACTIVITIES: | |
| | | |
| | |
| Proceeds from issuance of long-term debt | |
| 1,152,293 | | |
| 1,310,000 | |
| Net proceeds from revolver | |
| 5,000 | | |
| 12,000 | |
| Principal payments on long-term debt | |
| (1,165,623 | ) | |
| (1,321,971 | ) |
| Change in zero balance cash accounts | |
| (57,545 | ) | |
| (5,319 | ) |
| Net proceeds from the issuance of common stock | |
| 14,791 | | |
| 12,263 | |
| Financing fees paid for early debt redemption | |
| - | | |
| (45,636 | ) |
| Excess tax benefit on stock options | |
| 27,058 | | |
| - | |
| Deferred financing costs paid | |
| (1,506 | ) | |
| (17,720 | ) |
| Net cash used in financing activities | |
| (25,532 | ) | |
| (56,383 | ) |
| Increase in cash and cash equivalents | |
| 39,352 | | |
| 14,715 | |
| Cash and cash equivalents, beginning of period | |
| 146,406 | | |
| 129,452 | |
| Cash and cash equivalents, end of period | |
$ | 185,758 | | |
$ | 144,167 | |
Chart 11
RITE AID CORPORATION AND SUBSIDIARIES
SUPPLEMENTAL INFORMATION
RECONCILIATION OF NET INCOME GUIDANCE TO ADJUSTED EBITDA GUIDANCE
YEAR ENDING FEBRUARY 28, 2015
(In thousands, except per share amounts)
| | |
Guidance Range | |
| | |
Low | | |
High | |
| | |
| | |
| |
| Sales | |
$ | 26,000,000 | | |
$ | 26,300,000 | |
| | |
| | | |
| | |
| Same store sales | |
| 3.00 | % | |
| 4.00 | % |
| | |
| | | |
| | |
| Gross capital expenditures | |
$ | 525,000 | | |
$ | 525,000 | |
| | |
| | | |
| | |
| Reconciliation of net income to adjusted EBITDA: | |
| | | |
| | |
| Net income | |
$ | 223,000 | | |
$ | 333,000 | |
| Adjustments: | |
| | | |
| | |
| Interest expense | |
| 393,000 | | |
| 393,000 | |
| Income tax expense | |
| 55,000 | | |
| 45,000 | |
| Depreciation and amortization | |
| 418,000 | | |
| 416,000 | |
| LIFO charge | |
| 15,000 | | |
| - | |
| Store closing and impairment charges | |
| 50,000 | | |
| 46,000 | |
| Loss on debt retirement | |
| 18,000 | | |
| 18,000 | |
| Other | |
| 28,000 | | |
| 24,000 | |
| Adjusted EBITDA | |
$ | 1,200,000 | | |
$ | 1,275,000 | |
| | |
| | | |
| | |
| Diluted income per share | |
$ | 0.22 | | |
$ | 0.33 | |
Chart 12
Rite Aid (NYSE:RAD)
Historical Stock Chart
From Mar 2024 to Apr 2024
Rite Aid (NYSE:RAD)
Historical Stock Chart
From Apr 2023 to Apr 2024
