Defined benefit pension plans: Amortization of prior service cost, net transition obligation and net actuarial losses in
RITE AID CORPORATION AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (Dollars in thousands) (unaudited)
August 29, 2015 ASSETS Current assets: Cash and cash equivalents Accounts receivable, net Inventories, net of LIFO reserve of $1,009,501 and $997,528 Deferred tax assets Prepaid expenses and other current assets Total current assets Property, plant and equipment, net Goodwill Other intangibles, net Deferred tax assets Other assets Total assets LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Current maturities of long-term debt and lease financing obligations Accounts payable Accrued salaries, wages and other current liabilities Deferred tax liabilities Total current liabilities Long-term debt, less current maturities Lease financing obligations, less current maturities Other noncurrent liabilities Total liabilities Commitments and contingencies Stockholders' equity: Common stock Additional paid-in capital Accumulated deficit Accumulated other comprehensive loss Total stockholders' equity Total liabilities and stockholders' equity
$
$
$
February 28, 2015
152,647 1,872,976 2,902,749 17,823 140,939 5,087,134 2,198,674 1,533,827 1,225,531 1,617,311 316,754 11,979,231
$
29,002 1,594,411 1,703,545 57,622 3,384,580 7,361,079 54,232 749,637 11,549,528
$
$
-
$
1,045,622 4,795,106 (5,366,370) (44,655) 429,703 11,979,231
115,899 980,904 2,882,980 17,823 224,152 4,221,758 2,091,369 76,124 421,480 1,766,349 286,172 8,863,252
100,376 1,133,520 1,193,419 57,685 2,485,000 5,483,415 61,152 776,629 8,806,196 -
$
988,558 4,521,023 (5,406,675) (45,850) 57,056 8,863,252
RITE AID CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS (Dollars in thousands, except per share amounts) (unaudited)
Revenues Costs and expenses: Cost of goods sold Selling, general and administrative expenses Lease termination and impairment charges Interest expense Loss on debt retirements, net Loss (gain) on sale of assets, net
Income before income taxes Income tax expense Net income
Thirteen weeks ended August 29, 2015 $ 7,664,776
$
Thirteen weeks ended August 30, 2014 $ 6,522,584
5,742,485 1,725,826 9,637 115,410 33,205 281
4,628,005 1,640,524 7,111 100,950 (1,715)
7,626,844
6,374,875
37,932 16,463 21,469
147,709 19,860 127,849
$
Basic and diluted earnings per share: Numerator for earnings per share: Net income Add back - Interest on convertible notes Income attributable to common stockholders - diluted
$ $
Denominator: Basic weighted average shares Outstanding options and restricted shares, net Convertible notes Diluted weighted average shares Basic and diluted income per share
$
21,469 21,469
$ $
127,849 1,364 129,213
1,029,793 19,341 -
970,664 26,132 24,796
1,049,134
1,021,592
0.02
$
0.13
RITE AID CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS (Dollars in thousands, except per share amounts) (unaudited)
Revenues Costs and expenses: Cost of goods sold Selling, general and administrative expenses Lease termination and impairment charges Interest expense Loss on debt retirements, net Loss (gain) on sale of assets, net
Income before income taxes Income tax expense Net income
Twenty-six weeks ended August 29, 2015 $ 14,312,337
Twenty-six weeks ended August 30, 2014 $ 12,988,115
10,530,516 3,425,411 14,659 239,017 33,205 320
$
9,290,557 3,284,878 11,959 201,770 (2,085)
14,243,128
12,787,079
69,209 28,904 40,305
201,036 31,741 169,295
$
Basic and diluted earnings per share: Numerator for earnings per share: Net income Add back - Interest on convertible notes Income attributable to common stockholders - diluted
$ $
Denominator: Basic weighted average shares Outstanding options and restricted shares, net Convertible notes Diluted weighted average shares Basic income per share Diluted income per share
$ $
40,305 40,305
$ $
169,295 2,728 172,023
1,008,242 18,959 -
966,997 26,141 24,796
1,027,201
1,017,934
0.04 0.04
$ $
0.18 0.17
RITE AID CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (In thousands) (unaudited)
Net income 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, net of $398 and $0 tax expense Total other comprehensive income Comprehensive income
Thirteen weeks ended August 29, 2015 $ 21,469
Thirteen weeks ended August 30, 2014 $ 127,849
598 598 22,067
660 660 128,509
$
$
RITE AID CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (In thousands) (unaudited)
Twenty-six weeks ended August 29, 2015 $ 40,305
Twenty-six weeks ended August 30, 2014 $ 169,295
1,195 1,195 41,500
1,319 1,319 170,614
Net income 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, net of $796 and $0 tax expense Total other comprehensive income Comprehensive income $
$
RITE AID CORPORATION AND SUBSIDIARIES SUPPLEMENTAL SEGMENT OPERATING INFORMATION (Dollars in thousands) (unaudited)
Retail Pharmacy Segment Revenues (a) Cost of goods sold (a) Gross profit LIFO charge FIFO gross profit
Thirteen weeks ended August 29, 2015
Thirteen weeks ended August 30, 2014
$
$
Gross profit as a percentage of revenues LIFO charge as a percentage of revenues FIFO gross profit as a percentage of revenues
6,647,243 4,786,730 1,860,513 5,986 1,866,499
6,522,584 4,628,005 1,894,579 1,544 1,896,123
27.99% 0.09% 28.08%
29.05% 0.02% 29.07%
1,678,909 25.26%
1,640,524 25.15%
Cash interest expense Non-cash interest expense Total interest expense
109,796 5,608 115,404
96,558 4,392 100,950
Adjusted EBITDA Adjusted EBITDA as a percentage of revenues
313,602 4.72%
364,166 5.58%
Selling, general and administrative expenses Selling, general and administrative expenses as a percentage of revenues
Pharmacy Services Segment Revenues (a) Cost of goods sold (a) Gross profit Gross profit as a percentage of revenues Adjusted EBITDA Adjusted EBITDA as a percentage of revenues
$
1,071,889 1,010,111 61,778 5.76% 33,222 3.10%
(a) - Revenues and cost of goods sold include $54,356 of inter-segment activity that is eliminated in consolidation.
RITE AID CORPORATION AND SUBSIDIARIES SUPPLEMENTAL SEGMENT OPERATING INFORMATION (Dollars in thousands) (unaudited)
Retail Pharmacy Segment Revenues (a) Cost of goods sold (a) Gross profit LIFO charge FIFO gross profit
Twenty-six weeks ended August 29, 2015
Twenty-six weeks ended August 30, 2014
$
$
Gross profit as a percentage of revenues LIFO charge as a percentage of revenues FIFO gross profit as a percentage of revenues
13,294,804 9,574,761 3,720,043 11,973 3,732,016
12,988,115 9,290,557 3,697,558 3,089 3,700,647
27.98% 0.09% 28.07%
28.47% 0.02% 28.49%
3,378,494 25.41%
3,284,878 25.29%
Cash interest expense Non-cash interest expense Total interest expense
212,558 26,453 239,011
192,993 8,777 201,770
Adjusted EBITDA Adjusted EBITDA as a percentage of revenues
612,865 4.61%
646,779 4.98%
Selling, general and administrative expenses Selling, general and administrative expenses as a percentage of revenues
Pharmacy Services Segment Revenues (a) Cost of goods sold (a) Gross profit Gross profit as a percentage of revenues Adjusted EBITDA Adjusted EBITDA as a percentage of revenues
$
1,071,889 1,010,111 61,778 5.76% 33,222 3.10%
(a) - Revenues and cost of goods sold include $54,356 of inter-segment activity that is eliminated in consolidation.
RITE AID CORPORATION AND SUBSIDIARIES SUPPLEMENTAL INFORMATION RECONCILIATION OF NET INCOME TO ADJUSTED EBITDA (In thousands) (unaudited)
Reconciliation of net income to adjusted EBITDA: Net income Adjustments: Interest expense Income tax expense Depreciation and amortization LIFO charge Lease termination and impairment charges Loss on debt retirements, net Other Adjusted EBITDA Percent of revenues
Thirteen weeks ended August 29, 2015
Thirteen weeks ended August 30, 2014
$
$
$
21,469 115,410 16,463 127,699 5,986 9,637 33,205 16,955 346,824 4.52%
$
127,849 100,950 19,860 101,484 1,544 7,111 5,368 364,166 5.58%
RITE AID CORPORATION AND SUBSIDIARIES SUPPLEMENTAL INFORMATION RECONCILIATION OF NET INCOME TO ADJUSTED EBITDA (In thousands) (unaudited)
Reconciliation of net income to adjusted EBITDA: Net income Adjustments: Interest expense Income tax expense Depreciation and amortization LIFO charge Lease termination and impairment charges Loss on debt retirements, net Other Adjusted EBITDA Percent of revenues
Twenty-six weeks ended August 29, 2015
Twenty-six weeks ended August 30, 2014
$
$
$
40,305 239,017 28,904 237,348 11,973 14,659 33,205 40,676 646,087 4.51%
$
169,295 201,770 31,741 204,589 3,089 11,959 24,336 646,779 4.98%
RITE AID CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (Dollars in thousands) (unaudited)
OPERATING ACTIVITIES: Net income Adjustments to reconcile to net cash (used in) provided by operating activities: Depreciation and amortization Lease termination and impairment charges LIFO charge Loss (gain) on sale of assets, net Stock-based compensation expense Loss on debt retirements, net Changes in deferred taxes Excess tax benefit on stock options and restricted stock Changes in operating assets and liabilities: Accounts receivable Inventories Accounts payable Other assets and liabilities, net Net cash (used in) provided by operating activities INVESTING ACTIVITIES: Payments for property, plant and equipment Intangible assets acquired Acquisition of businesses, net of cash acquired Proceeds from dispositions of assets and investments Net cash used in investing activities FINANCING ACTIVITIES: Net proceeds from revolver Principal payments on long-term debt Change in zero balance cash accounts Net proceeds from the issuance of common stock Financing fees paid for early debt redemption Excess tax benefit on stock options and restricted stock Deferred financing costs paid Net cash provided by financing activities (Decrease) increase in cash and cash equivalents Cash and cash equivalents, beginning of period Cash and cash equivalents, end of period
Thirteen weeks ended August 29, 2015
Thirteen weeks ended August 30, 2014
$
$
$
21,469
127,849
127,699 9,637 5,986 281 8,831 33,205 (7,966) (18,049)
101,484 7,111 1,544 (1,715) 5,736 (16,536)
(2,908) (80,673) (47,806) (75,969) (26,263)
(40,906) 9,542 (113,074) 41,448 122,483
(130,646) (29,169) (1,779,571) 3,243 (1,936,143)
(99,291) (20,437) (4,487) 4,229 (119,986)
869,000 (655,640) (17,034) 4,727 (26,003) 18,049 (175) 192,924 (1,769,482) 1,922,129 152,647
54,000 (8,180) (48,967) 3,887 16,536 (18) 17,258 19,755 166,003 185,758
$
SUPPLEMENTAL CASH FLOW INFORMATION Payments for property, plant and equipment Intangible assets acquired Total cash capital expenditures Equipment received for noncash consideration Equipment financed under capital leases Gross capital expenditures
$
$
130,646 29,169 159,815 1,466 471 161,752
$
$
99,291 20,437 119,728 1,337 2,242 123,307
RITE AID CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (Dollars in thousands) (unaudited)
Twenty-six weeks ended August 29, 2015
OPERATING ACTIVITIES: Net income Adjustments to reconcile to net cash provided by operating activities: Depreciation and amortization Lease termination and impairment charges LIFO charge Loss (gain) on sale of assets, net Stock-based compensation expense Loss on debt retirements, net Changes in deferred taxes Excess tax benefit on stock options and restricted stock Changes in operating assets and liabilities: Accounts receivable Inventories Accounts payable Other assets and liabilities, net Net cash provided by operating activities INVESTING ACTIVITIES: Payments for property, plant and equipment Intangible assets acquired Acquisition of businesses, net of cash acquired Proceeds from dispositions of assets and investments Net cash used in investing activities FINANCING ACTIVITIES: Proceeds from issuance of long-term debt Net proceeds from revolver Principal payments on long-term debt Change in zero balance cash accounts Net proceeds from the issuance of common stock Financing fees paid for early debt redemption Excess tax benefit on stock options and restricted stock Deferred financing costs paid Net cash provided by (used in) financing activities Increase in cash and cash equivalents Cash and cash equivalents, beginning of period Cash and cash equivalents, end of period
$
$
40,305
Twenty-six weeks ended August 30, 2014
$
169,295
237,348 14,659 11,973 320 16,201 33,205 1,574 (20,869)
204,589 11,959 3,089 (2,085) 9,892 (27,058)
8,119 (24,469) 31,909 (8,703) 341,572
441 68,917 (26,750) (50,058) 362,231
(271,683) (43,462) (1,779,571) 6,081 (2,088,635)
(193,633) (40,023) (69,793) 6,102 (297,347)
1,800,000 728,000 (661,217) (51,309) 8,105 (26,003) 20,869 (34,634) 1,783,811 36,748 115,899 152,647
1,152,293 5,000 (1,165,623) (57,545) 14,791 27,058 (1,506) (25,532) 39,352 146,406 185,758
$
SUPPLEMENTAL CASH FLOW INFORMATION Payments for property, plant and equipment Intangible assets acquired Total cash capital expenditures Equipment received for noncash consideration Equipment financed under capital leases Gross capital expenditures
$
$
271,683 43,462 315,145 2,011 1,271 318,427
$
$
193,633 40,023 233,656 1,337 3,925 238,918
RITE AID CORPORATION AND SUBSIDIARIES SUPPLEMENTAL INFORMATION RECONCILIATION OF NET INCOME GUIDANCE TO ADJUSTED EBITDA GUIDANCE YEAR ENDING FEBRUARY 27, 2016 (In thousands, except per share amounts) (unaudited)
Guidance Range Low High Total revenues
$
30,800,000
$
31,100,000
Drugstore sales
$
26,700,000
$
27,000,000
Same store sales Gross capital expenditures Reconciliation of net income to adjusted EBITDA: Net income Adjustments: Interest expense Income tax expense Depreciation and amortization LIFO charge Loss on debt retirement Store closing and impairment charges Other Adjusted EBITDA
Diluted income per share
1.50%
2.50%
$
665,000
$
665,000
$
125,000
$
195,000
$
455,000 90,000 507,000 30,000 33,000 55,000 65,000 1,360,000
$
455,000 135,000 502,000 10,000 33,000 45,000 65,000 1,440,000
$
0.12
$
0.19
