Rite Aid's fiscal Q4 earnings fell to US$55.4M from US$123.1M a year ago as revenues rose to US$6.6B from US$6.5B; for full year, company's earnings more than doubled to US$249.4M as revenues were virtually unchanged at US$25.5B

CAMP HILL, Pennsylvania , April 10, 2014 (press release) –

  • Fourth Quarter Net Income of $55.4 Million and Net Income per Diluted Share of $0.06, Compared to Prior Year’s Fourth Quarter Net Income of $123.1 Million and Net Income per Diluted Share of $0.13
  • Excluding LIFO and Losses on Debt Retirement in Both Periods, Net Income was $99.5 Million or $0.10 Per Diluted Share This Year Compared to $70.4 Million or $0.07 Per Diluted Share Last Year
  • Full Year Net Income of $249.4 Million and Net Income per Diluted Share of $0.23, Compared to Prior Year Net Income of $118.1 Million and Net Income per Diluted Share of $0.12
  • Record Fourth Quarter Adjusted EBITDA of $356.3 Million Compared to Adjusted EBITDA of $340.3 Million in Prior Year’s Fourth Quarter
  • Record Full Year Adjusted EBITDA of $1,325.0 Million Compared to Adjusted EBITDA of $1,128.4 Million in Prior Year, a 17.4 percent increase
  • Rite Aid Provides Outlook for Fiscal 2015
Rite Aid Corporation (RAD) today reported operating results for its fourth quarter and fiscal year ended March 1, 2014. For the fourth quarter, the company reported revenues of $6.6 billion, net income of $55.4 million or $0.06 per diluted share, and Adjusted EBITDA of $356.3 million, or 5.4 percent of revenues.

For the full year, the company reported revenues of $25.5 billion, net income of $249.4 million or $0.23 per diluted share, and Adjusted EBITDA of $1,325.0 million, or 5.2 percent of revenues.

“Thanks to the strong teamwork of our dedicated Rite Aid associates, we delivered strong fourth-quarter and fiscal 2014 results, including new company records for fourth-quarter and full-year Adjusted EBITDA,” said Rite Aid Chairman and CEO John Standley. “These accomplishments reflect the significant progress we’re making in executing key initiatives and delivering on our promise to actively work with our customers to keep them well.”

“Our recent acquisitions of Health Dialog and RediClinic, our expanded partnership with McKesson and our continued commitment to investing in our store base have positioned us to transition our strategy from turnaround to growth as we more aggressively pursue opportunities to become a growing retail healthcare company.”

Fourth Quarter Summary

Revenues for the quarter were $6.6 billion versus revenues of $6.5 billion in the prior year’s fourth quarter. Revenues increased 2.2 percent primarily as a result of an increase in pharmacy same store sales.

Same store sales for the quarter increased 2.1 percent over the prior year, consisting of a 3.5 percent increase in pharmacy sales, partially offset by a 0.7 percent decrease in front end sales. Pharmacy sales included an approximate 123 basis point negative impact from new generic introductions. The number of prescriptions filled in same stores decreased 1.8 percent over the prior year period, with 1.3 percent of this decrease being driven by a decrease in flu-related prescriptions and flu shots. Prescription sales accounted for 67.5 percent of total drugstore sales, and third party prescription revenue was 97.1 percent of pharmacy sales.

Net income was $55.4 million or $0.06 per diluted share compared to last year’s fourth quarter net income of $123.1 million or $0.13 per diluted share. Current year net income included a LIFO charge of $44.1 million due to pharmacy inflation while prior year net income included a LIFO credit of $175.4 million resulting from significant generic deflation. The increase in LIFO expense was partially offset by an increase in Adjusted EBITDA, no loss on debt retirement in the current year compared to a $122.7 million loss on debt retirement in the prior year and decreases in interest expense and lease termination and impairment charges. Excluding the LIFO charge, current year net income was $99.5 million or $.10 per diluted share. Excluding the LIFO credit and loss on debt retirement, prior year net income was $70.4 million or $.07 per diluted share.

Adjusted EBITDA (which is reconciled to net income on the attached table) was $356.3 million or 5.4 percent of revenues for the fourth quarter compared to $340.3 million or 5.3 percent of revenues for the like period last year. Adjusted EBITDA improved due to an increase in pharmacy gross profit, driven by improvements in pharmacy revenues and purchasing efficiencies, offset partially by an increase in selling general and administrative expenses.

In the fourth quarter, the company relocated 2 stores, remodeled 94 stores and expanded 3 stores, bringing the total number of wellness stores chainwide to 1,215. The company also closed 8 stores, resulting in a total store count of 4,587 at the end of the fourth quarter.

Full Year Results

For the fiscal year ended March 1, 2014, Rite Aid had revenues of $25.5 billion compared to $25.4 billion for the prior year. Revenues increased 0.5 percent primarily as a result of an increase in same store sales.

Same store sales for the year increased 0.7 percent consisting of a 1.2 percent increase in pharmacy sales, partially offset by a 0.2 percent decrease in front end sales. Pharmacy sales included an approximate 232 basis point negative impact from new generic introductions. The number of prescriptions filled in same stores decreased 0.3 percent over the prior year period. Prescription sales accounted for 67.9 percent of total drugstore sales, and third party prescription revenue was 97.0 percent of pharmacy sales.

Net income for fiscal 2014 was $249.4 million or $0.23 per diluted share compared to last year’s net income of $118.1 million or $0.12 per diluted share. Contributing to the increase in net income was an increase in Adjusted EBITDA and lower interest expense, a loss on debt retirement of $62.4 million versus $140.5 million in the prior year, and lower lease termination and impairment charges. Partially offsetting these improvements was a LIFO charge of $104.1 million in the current year compared to a LIFO credit of $147.9 million in the prior year.

As computed on the attached table, Adjusted EBITDA was $1,325.0 million or 5.2 percent of revenues for the year compared to $1,128.4 million or 4.4 percent of revenues for last year. The increase in Adjusted EBITDA was driven by increased pharmacy gross profit due to the continued benefit of generic introductions on pharmacy gross margin in the first half of the fiscal year, purchasing efficiencies on generic drugs and strong cost control.

For the year, the company relocated 11 stores, acquired 1 store, remodeled 405 stores, expanded 4 stores, and closed 37 stores.

Outlook for Fiscal 2015

The company’s outlook for fiscal 2015 is based on the anticipated benefits of its wellness remodels, customer loyalty program, new pharmacy sourcing arrangement with McKesson and other initiatives to grow sales and drive operational efficiencies. The company’s outlook also considers planned wage and benefit increases, the introduction of new generics in the second half of Fiscal 2015, generic drug price increases and a challenging reimbursement rate environment.

Rite Aid said it expects sales to be between $26.0 billion and $26.5 billion in fiscal 2015 with same store sales expected to range from an increase of 2.50 percent to an increase of 4.50 percent over fiscal 2014.

Adjusted EBITDA (which is reconciled to net income on the attached table) is expected to be between $1.325 billion and $1.4 billion.

Net income for fiscal 2015 is expected to be between $313.0 million and $423.0 million or income per diluted share of $0.31 to $0.42.

Capital expenditures are expected to be approximately $525 million. This number does not include the purchases of Health Dialog or RediClinic.

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 Daylight Time today. A playback of the call will also be available by telephone beginning at 12 p.m. Eastern Daylight Time today until 11:59 p.m. Eastern Time on April 12, 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 17821795.

Rite Aid is one of the nation’s leading drugstore chains with nearly 4,600 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.

         
RITE AID CORPORATION AND SUBSIDIARIES
         
CONSOLIDATED BALANCE SHEETS
(Dollars in thousands)
(unaudited)
         
    March 1, 2014   March 2, 2013
ASSETS        
Current assets:        
Cash and cash equivalents   $ 146,406     $ 129,452  
Accounts receivable, net     949,062       929,476  
Inventories, net of LIFO reserve of $1,018,581 and $915,241     2,993,948      

3,154,742

 
Prepaid expenses and other current assets     195,709       195,377  
Total current assets     4,285,125       4,409,047  
Property, plant and equipment, net     1,957,329       1,895,650  
Other intangibles, net     431,227       464,404  
Other assets     271,190       309,618  
Total assets   $ 6,944,871     $ 7,078,719  
         
LIABILITIES AND STOCKHOLDERS' DEFICIT        
Current liabilities:        
Current maturities of long-term debt and lease financing obligations   $

49,174

    $ 37,311  
Accounts payable     1,292,419       1,384,644  
Accrued salaries, wages and other current liabilities     1,165,859       1,156,315  
Total current liabilities     2,507,452       2,578,270  
Long-term debt, less current maturities     5,632,798       5,904,370  
Lease financing obligations, less current maturities    

75,171

      91,850  
Other noncurrent liabilities     843,152       963,663  
Total liabilities     9,058,573       9,538,153  
         
Commitments and contingencies     -       -  
Stockholders' deficit:        
Preferred stock - Series G     -       1  
Preferred stock - Series H     -       182,097  
Common stock     971,331       904,268  
Additional paid-in capital     4,468,149       4,280,831  
Accumulated deficit     (7,515,848 )     (7,765,262 )
Accumulated other comprehensive loss     (37,334 )     (61,369 )
Total stockholders' deficit     (2,113,702 )     (2,459,434 )
Total liabilities and stockholders' deficit   $ 6,944,871     $ 7,078,719  
 
RITE AID CORPORATION AND SUBSIDIARIES
         
CONSOLIDATED STATEMENTS OF OPERATIONS
(Dollars in thousands, except per share amounts)
(unaudited)
         
         
    Thirteen weeks ended   Thirteen weeks ended
    March 1, 2014   March 2, 2013
Revenues   $ 6,597,459     $ 6,455,245  
Costs and expenses:        
Cost of goods sold     4,711,743       4,407,482  
Selling, general and administrative expenses     1,716,671       1,682,332  
Lease termination and impairment charges     17,270       36,567  
Interest expense     101,992       127,408  
Loss on debt retirements, net     -       122,660  
Loss on sale of assets, net     412       2,491  
         
      6,548,088       6,378,940  
         
Income before income taxes     49,371       76,305  
Income tax benefit     (6,006 )     (46,782 )
Net income   $ 55,377     $ 123,087  
         
Basic and diluted earnings per share:        
         
Numerator for earnings per share:        
Net income   $ 55,377     $ 123,087  
Accretion of redeemable preferred stock     -       (25 )
Cumulative preferred stock dividends     -       (2,691 )
Income attributable to common stockholders - basic     55,377       120,371  
Add back - Interest on convertible notes     1,364       1,364  
Add back - Cumulative preferred stock dividends     -       2,691  
Income attributable to common stockholders - diluted   $ 56,741     $ 124,426  
         
         
         
Denominator:        
Basic weighted average shares     956,925       891,303  
Outstanding options and restricted shares, net     35,304       19,608  
Convertible preferred stock     -       33,109  
Convertible notes     24,800       24,800  
         
Diluted weighted average shares     1,017,029       968,820  
         
Basic income per share   $ 0.06     $ 0.14  
Diluted income per share   $ 0.06     $ 0.13  
 
RITE AID CORPORATION AND SUBSIDIARIES
         
CONSOLIDATED STATEMENTS OF OPERATIONS
(Dollars in thousands, except per share amounts)
(unaudited)
         
         
    Fifty-two weeks ended   Fifty-two weeks ended
    March 1, 2014   March 2, 2013
Revenues   $ 25,526,413     $ 25,392,263  
Costs and expenses:        
Cost of goods sold     18,202,679       18,073,987  
Selling, general and administrative expenses     6,561,162       6,600,765  
Lease termination and impairment charges     41,304       70,859  
Interest expense     424,591       515,421  
Loss on debt retirements, net     62,443       140,502  
Gain on sale of assets, net     (15,984 )     (16,776 )
         
      25,276,195       25,384,758  
         
Income before income taxes     250,218       7,505  
Income tax expense (benefit)     804       (110,600 )
Net income   $ 249,414     $ 118,105  
         
Basic and diluted earnings per share:        
         
Numerator for earnings per share:        
Net income   $ 249,414     $ 118,105  
Accretion of redeemable preferred stock     (77 )     (102 )
Cumulative preferred stock dividends     (8,318 )     (10,528 )
Conversion of Series G and H preferred stock     (25,603 )     -  
Income attributable to common stockholders - basic     215,416       107,475  
Add back - Interest on convertible notes     5,456       -  
Income attributable to common stockholders - diluted   $ 220,872     $ 107,475  
         
         
         
Denominator:        
Basic weighted average shares     922,199       889,562  
Outstanding options and restricted shares, net     32,093       17,697  
Convertible notes     24,800       -  
         
Diluted weighted average shares     979,092       907,259  
         
Basic income per share   $ 0.23     $ 0.12  
Diluted income per share   $ 0.23     $ 0.12  
 
RITE AID CORPORATION AND SUBSIDIARIES
         
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(In thousands)
(unaudited)
         
         
    Thirteen weeks ended   Thirteen weeks ended
    March 1, 2014   March 2, 2013
Net income   $ 55,377   $ 123,087  
Other comprehensive income (loss):        
Defined benefit pension plans:        
Amortization of prior service cost, net transition obligation and net actuarial losses included in net periodic pension cost     20,247     (11,794 )
Total other comprehensive income (loss)     20,247     (11,794 )
Comprehensive income   $ 75,624   $ 111,293  
         
RITE AID CORPORATION AND SUBSIDIARIES
         
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(In thousands)
(unaudited)
         
         
    Fifty-two weeks ended   Fifty-two weeks ended
    March 1, 2014   March 2, 2013
Net income   $ 249,414   $ 118,105  
Other comprehensive income (loss):        
Defined benefit pension plans:        

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

    24,035     (8,735 )
Total other comprehensive income (loss)     24,035     (8,735 )
Comprehensive income   $ 273,449   $ 109,370  
 
RITE AID CORPORATION AND SUBSIDIARIES
         
SUPPLEMENTAL OPERATING AND CASH FLOW INFORMATION
(Dollars in thousands, except per share amounts)
(unaudited)
         
         
    Thirteen weeks ended   Thirteen weeks ended
    March 1, 2014   March 2, 2013
         
SUPPLEMENTAL OPERATING INFORMATION        
         
Revenues   $ 6,597,459     $ 6,455,245  
Cost of goods sold     4,711,743       4,407,482  
Gross profit     1,885,716       2,047,763  
LIFO charge (credit)     44,142       (175,384 )
FIFO gross profit     1,929,858       1,872,379  
         
Gross profit as a percentage of revenues     28.58 %     31.72 %
LIFO charge (credit) as a percentage of revenues     0.67 %     -2.72 %
FIFO gross profit as a percentage of revenues     29.25 %     29.01 %
         
Selling, general and administrative expenses     1,716,671       1,682,332  
Selling, general and administrative expenses as a percentage of revenues     26.02 %     26.06 %
         
Cash interest expense     98,015       119,497  
Non-cash interest expense     3,977       7,911  
Total interest expense     101,992       127,408  
         
         
Adjusted EBITDA     356,330       340,277  
Adjusted EBITDA as a percentage of revenues     5.40 %     5.27 %
         
Net income     55,377       123,087  
Net income as a percentage of revenues     0.84 %     1.91 %
         
Total debt     5,757,143       6,033,531  
Invested cash     2,484       16,127  
Total debt net of invested cash     5,754,659       6,017,404  
         
         
SUPPLEMENTAL CASH FLOW INFORMATION        
         
Payments for property, plant and equipment     78,601       82,651  
Intangible assets acquired     22,748       21,475  
Total cash capital expenditures     101,349       104,126  
Equipment received for noncash consideration     1,237       649  
Equipment financed under capital leases     3,042       655  
Gross capital expenditures   $ 105,628     $ 105,430  
 
RITE AID CORPORATION AND SUBSIDIARIES
         
SUPPLEMENTAL OPERATING AND CASH FLOW INFORMATION
(Dollars in thousands, except per share amounts)
(unaudited)
         
         
    Fifty-two weeks ended   Fifty-two weeks ended
    March 1, 2014   March 2, 2013
         
SUPPLEMENTAL OPERATING INFORMATION        
         
Revenues   $ 25,526,413     $ 25,392,263  
Cost of goods sold     18,202,679       18,073,987  
Gross profit     7,323,734       7,318,276  
LIFO charge (credit)     104,142       (147,882 )
FIFO gross profit     7,427,876       7,170,394  
         
Gross profit as a percentage of revenues     28.69 %     28.82 %
LIFO charge (credit) as a percentage of revenues     0.41 %     -0.58 %
FIFO gross profit as a percentage of revenues     29.10 %     28.24 %
         
Selling, general and administrative expenses     6,561,162       6,600,765  
Selling, general and administrative expenses as a percentage of revenues     25.70 %     26.00 %
         
Cash interest expense     407,957       484,426  
Non-cash interest expense     16,634       30,995  
Total interest expense     424,591       515,421  
         
         
Adjusted EBITDA     1,324,959       1,128,379  
Adjusted EBITDA as a percentage of revenues     5.19 %     4.44 %
         
Net income     249,414       118,105  
Net income as a percentage of revenues     0.98 %     0.47 %
         
Total debt     5,757,143       6,033,531  
Invested cash     2,484       16,127  
Total debt net of invested cash     5,754,659       6,017,404  
         
         
SUPPLEMENTAL CASH FLOW INFORMATION        
         
Payments for property, plant and equipment     333,870       315,846  
Intangible assets acquired     87,353       67,134  
Total cash capital expenditures     421,223       382,980  
Equipment received for noncash consideration     2,825       3,285  
Equipment financed under capital leases     18,065       7,906  
Gross capital expenditures   $ 442,113     $ 394,171  
 
RITE AID CORPORATION AND SUBSIDIARIES
SUPPLEMENTAL INFORMATION
RECONCILIATION OF NET INCOME TO ADJUSTED EBITDA
(In thousands)
         
         
    Thirteen weeks ended   Thirteen weeks ended
    March 1, 2014   March 2, 2013
         
         
Reconciliation of net income to adjusted EBITDA:        
Net income   $ 55,377     $ 123,087  
Adjustments:        
Interest expense     101,992       127,408  
Income tax benefit     (6,006 )     (46,782 )

Adjustments to tax indemnification asset

    32,356       31,077  
Depreciation and amortization     102,060       102,951  
LIFO charge (credit)     44,142       (175,384 )
Lease termination and impairment charges     17,270       36,567  
Stock-based compensation expense     4,000       4,845  
Loss on sale of assets, net     412       2,491  
Loss on debt retirements, net     -       122,660  
Closed facility liquidation expense     1,001       1,009  
Customer loyalty card program revenue deferral     3,501       10,317  
Other     225       31  
Adjusted EBITDA   $ 356,330     $ 340,277  
Percent of revenues     5.40 %     5.27 %
 
RITE AID CORPORATION AND SUBSIDIARIES
SUPPLEMENTAL INFORMATION
RECONCILIATION OF NET INCOME TO ADJUSTED EBITDA
(In thousands)
         
         
    Fifty-two weeks ended   Fifty-two weeks ended
    March 1, 2014   March 2, 2013
         
         
Reconciliation of net income to adjusted EBITDA:        
Net income   $ 249,414     $ 118,105  
Adjustments:        
Interest expense     424,591       515,421  
Income tax expense (benefit)     804       (110,600 )

Adjustments to tax indemnification asset

    30,516       91,314  
Depreciation and amortization     403,741       414,111  
LIFO charge (credit)     104,142       (147,882 )
Lease termination and impairment charges     41,304       70,859  
Stock-based compensation expense     16,194       17,717  
Gain on sale of assets, net     (15,984 )     (16,776 )
Loss on debt retirements, net     62,443       140,502  
Closed facility liquidation expense     3,849       5,272  
Severance costs     -       (72 )
Customer loyalty card program revenue deferral     2,679       26,564  
Other     1,266       3,844  
Adjusted EBITDA   $ 1,324,959     $ 1,128,379  
Percent of revenues     5.19 %     4.44 %
 
RITE AID CORPORATION AND SUBSIDIARIES
         
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollars in thousands)
(unaudited)
         
         
         
    Thirteen weeks ended   Thirteen weeks ended
    March 1, 2014   March 2, 2013
         
         
OPERATING ACTIVITIES:        
Net income   $ 55,377     $ 123,087  
Adjustments to reconcile to net cash provided by operating activities:        
Depreciation and amortization     102,060       102,951  
Lease termination and impairment charges     17,270       36,567  
LIFO charge (credit)     44,142       (175,384 )
Loss on sale of assets, net     412       2,491  
Stock-based compensation expense     4,000       4,845  
Loss on debt retirements, net     -       122,660  
Excess tax benefit on stock options     (26,665 )     -  
Changes in operating assets and liabilities:        
Accounts receivable     (107,946 )     (13,011 )
Inventories     262,965       117,045  
Accounts payable     (125,934 )     (55,566 )
Other assets and liabilities, net     (31,553 )     (45,334 )

Net cash provided by operating activities

    194,128       220,351  
INVESTING ACTIVITIES:        
Payments for property, plant and equipment     (78,601 )     (82,651 )
Intangible assets acquired     (22,748 )     (21,475 )
Proceeds from dispositions of assets and investments     14,259       2,576  
Proceeds from insured loss     9,006       -  
Net cash used in investing activities     (78,084 )     (101,550 )
FINANCING ACTIVITIES:        
Proceeds from issuance of long-term debt     -       1,631,000  
Net (payments to) proceeds from revolver     (190,000 )     665,000  
Principal payments on long-term debt     (7,907 )     (2,441,062 )
Change in zero balance cash accounts     10,066       (152 )
Net proceeds from the issuance of common stock     8,336       543  
Financing fees paid for early debt redemption     -       (64,305 )
Excess tax benefit on stock options     26,665       -  
Deferred financing costs paid     (10 )     (44,014 )
Net cash used in financing activities     (152,850 )     (252,990 )
Decrease in cash and cash equivalents     (36,806 )     (134,189 )
Cash and cash equivalents, beginning of period     183,212       263,641  
Cash and cash equivalents, end of period   $ 146,406     $ 129,452  
 
RITE AID CORPORATION AND SUBSIDIARIES
         
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollars in thousands)
(unaudited)
         
         
         
    Fifty-two weeks ended   Fifty-two weeks ended
    March 1, 2014   March 2, 2013
         
         
OPERATING ACTIVITIES:        
Net income   $ 249,414     $ 118,105  
Adjustments to reconcile to net cash provided by operating activities:        
Depreciation and amortization     403,741       414,111  
Lease termination and impairment charges     41,304       70,859  
Gain from lease termination     (8,750 )     -  
LIFO charge (credit)     104,142       (147,882 )
Gain on sale of assets, net     (15,984 )     (16,776 )
Stock-based compensation expense     16,194       17,717  
Loss on debt retirements, net     62,443       140,502  
Excess tax benefit on stock options     (26,665 )     -  
Changes in operating assets and liabilities:        
Accounts receivable     (28,051 )     82,721  
Inventories     56,557       130,100  
Accounts payable     (100,774 )     (68 )
Other assets and liabilities, net     (51,525 )     10,199  
Net cash provided by operating activities     702,046       819,588  
INVESTING ACTIVITIES:        
Payments for property, plant and equipment     (333,870 )     (315,846 )
Intangible assets acquired     (87,353 )     (67,134 )
Proceeds from sale-leaseback transactions     3,989       6,355  
Proceeds from dispositions of assets and investments     28,416       30,320  
Proceeds from lease termination     8,750       -  
Proceeds from insured loss     15,144       -  
Net cash used in investing activities     (364,924 )     (346,305 )
FINANCING ACTIVITIES:        
Proceeds from issuance of long-term debt     1,310,000       2,057,263  
Net (payments to) proceeds from revolver     (265,000 )     529,000  
Principal payments on long-term debt     (1,340,435 )     (2,920,209 )
Change in zero balance cash accounts     (95 )     (43,659 )
Net proceeds from the issuance of common stock     33,217       1,646  
Payments for the repurchase of preferred stock     (21,034 )     -  
Financing fees paid for early debt redemption     (45,636 )     (75,374 )
Excess tax benefit on stock options     26,665       -  
Deferred financing costs paid     (17,850 )     (54,783 )
Net cash used in financing activities     (320,168 )     (506,116 )
Increase (decrease) in cash and cash equivalents     16,954       (32,833 )
Cash and cash equivalents, beginning of period     129,452       162,285  
Cash and cash equivalents, end of period   $ 146,406     $ 129,452  
 
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     $ 26,500,000  
         
Same store sales     2.50 %     4.50 %
         
Gross capital expenditures   $ 525,000     $ 525,000  
         
Reconciliation of net income to adjusted EBITDA:        
Net income   $ 313,000     $ 423,000  
Adjustments:        
Interest expense     390,000    

 

390,000  
Income tax expense     70,000       60,000  
Depreciation and amortization     411,000       409,000  
LIFO charge     50,000       35,000  
Store closing and impairment charges     55,000       50,000  
Loss on debt retirement     17,000       17,000  
Other     19,000       16,000  
Adjusted EBITDA   $ 1,325,000     $ 1,400,000  
         
         
Diluted income per share   $ 0.31     $ 0.42  
         

 

Contact:
Rite Aid Corporation
Investors:
Matt Schroeder, 717-214-8867
investor@riteaid.com
or
Media:
Susan Henderson, 717-730-7766

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