Pathmark Announces Second Quarter Fiscal 2006 Results; Same-Store Sales Increase 0.5%; Merchandising Initiatives Gain Traction
September 06 2006 - 6:40AM
Business Wire
Pathmark Stores, Inc. (Nasdaq: PTMK) today reported unaudited
results for its second quarter ended July 29, 2006. Sales for the
second quarter of fiscal 2006 were $1,002.9 million, an increase of
0.2% from $1,000.7 million in the prior year's second quarter.
Same-store sales increased 0.5% in the second quarter of fiscal
2006. The Company reported a net loss of $8.8 million, or $0.17 per
diluted share, in the second quarter of fiscal 2006 compared to a
net loss of $5.1 million, or $0.12 per diluted share, in the prior
year's second quarter. The decline was primarily due to a decrease
in Adjusted EBITDA, partially offset by lower interest expense.
Adjusted EBITDA was $26.9 million in the second quarter of fiscal
2006 compared to $31.7 million in the prior year's second quarter.
The decrease of $4.8 million was due to lower gross profit of $1.0
million, primarily due to lower pharmacy gross margin associated
with the new Medicare Part D program, and higher costs for
utilities of $2.3 million, self-insured workers' compensation and
general liability claims of $2.2 million, medical and pension of
$1.9 million and supplies of $0.6 million, partially offset by
breakage income related to gift cards of $3.2 million. Adjusted
EBITDA is reconciled to net loss in Table C. John Standley, Chief
Executive Officer, said, "We are encouraged by the sales trend in
the second quarter. As our merchandising initiatives continue to
gain traction with consumers, we expect to see improvements in
gross margin due to sales mix and lower shrink as the fiscal year
progresses. On the cost side, we expect our various initiatives
will help mitigate expected expense increases during the remainder
of the fiscal year." Capital expenditures during the first six
months of fiscal 2006 were $34.7 million. Capital expenditures for
fiscal 2006 are expected to be approximately $70 million. The
Company completed three store renovations during the first six
months of fiscal 2006 and expects to complete ten store renovations
during the third quarter and one store renovation during the fourth
quarter. Pathmark will conduct a conference call at 2:00 p.m.
Eastern Daylight Time (EDT) today. The call may be accessed via a
simultaneous webcast by visiting www.calleci.com. A replay of the
call will be available for 14 days after the completion of the call
at 1-877-519-4471, Pass Code 7700877. This press release and other
financial and statistical information to be presented on the
conference call will be accessible on the web by going to
www.pathmark.com, 'Investor Relations', then clicking on 'Press
Releases'. Pathmark Stores, Inc. is a regional supermarket
currently operating 141 supermarkets primarily in the New York -
New Jersey and Philadelphia metropolitan areas. Except for
historical information contained herein, the matters discussed in
this release and the accompanying discussions on the earnings
conference call are "forward-looking statements" within the meaning
of the Private Securities Litigation Reform Act of 1995. Such
statements relate to, among other things, operating costs,
stock-based compensation expense, earnings estimates, Adjusted
EBITDA, sales, same-store sales and capital expenditures and are
indicated by words or phrases such as "anticipates", "believes",
"expects", "forecasts", " guidance", "intends", "may", "ongoing",
"plans", "projects", "will" and similar words and phrases. By their
nature, such forward-looking statements are subject to risks,
uncertainties and other factors, which are, in many instances,
beyond our control, that could cause actual results to differ
materially from future results expressed or implied by such
forward-looking statements. These statements are based on
management's assumptions and beliefs in the light of information
currently available to it and assume no significant changes in
general economic trends, consumer confidence or other risk factors
that may affect the forward-looking statements. The Company
expressly disclaims any current intention to update the information
contained herein. Factors that may affect results include changes
in business and economic conditions generally and in the Company's
operating areas, the competitive environment in which the Company
operates, results of our merchandising, operating and cost
reduction initiatives, medical and pension costs and other risks
detailed from time to time in the Company's reports and filings
available from the Securities and Exchange Commission. You should
not place undue reliance on forward-looking statements, which speak
only as of the date they are made. -0- *T Table A Pathmark Stores,
Inc. Operating Results (Unaudited) (in millions, except per share
data) Consolidated Statements of Operations 13 Weeks Ended 26 Weeks
Ended ----------------- ----------------- July 29, July 30, July
29, July 30, 2006 2005 2006 2005 --------- -------- --------
-------- Sales $1,002.9 $1,000.7 $ 2,001.4 $ 2,003.2 Cost of goods
sold (718.0) (714.8) (1,427.0) (1,432.3) --------- --------
--------- --------- Gross profit 284.9 285.9 574.4 570.9 Selling,
general and administrative expenses (261.1) (254.9) (520.9) (505.8)
Depreciation and amortization (23.1) (22.3) (46.1) (44.5) ---------
-------- --------- --------- Operating earnings 0.7 8.7 7.4 20.6
Interest expense, net (see Note 1) (15.4) (18.2) (30.9) (34.5)
--------- -------- --------- --------- Loss before income taxes
(14.7) (9.5) (23.5) (13.9) Income tax benefit 5.9 4.4 9.3 6.7
--------- -------- --------- --------- Net loss $ (8.8)$ (5.1)$
(14.2)$ (7.2) ========= ======== ========= ========= Weighted
average number of shares outstanding - basic and diluted 52.1 41.5
52.0 35.8 ========= ======== ========= ========= Net loss per share
- basic and diluted $ (0.17)$ (0.12)$ (0.27)$ (0.20) =========
======== ========= ========= Supplemental Operating Results Data 13
Weeks Ended 26 Weeks Ended ----------------- ---------------- July
29, July 30, July 29, July 30, 2006 2005 2006 2005 ---------
-------- -------- -------- Adjusted EBITDA (see Note 2) $ 26.9 $
31.7 $ 59.3 $ 67.2 ========== ======== ========= ======= Capital
expenditures $ 22.6 $ 8.7 $ 34.7 $ 15.4 ========== ========
========= ======= Gross profit (% of sales) 28.4% 28.6% 28.7% 28.5%
========== ======== ========= ======= Selling, general and
administrative expenses (% of sales) 26.0% 25.5% 26.0% 25.3%
========== ======== ========= ======= Non-cash stock-based
compensation expense (% of sales) 0.2% -- 0.2% -- ==========
======== ========= ======= LIFO charge (% of sales) 0.1% 0.1% 0.1%
0.1% ========== ======== ========= ======= Adjusted EBITDA (% of
sales) 2.7% 3.2% 3.0% 3.3% ========== ======== ========= =======
Net loss (% of sales) (0.9)% (0.5)% (0.7)% (0.4)% ==========
======== ========= ======= Table B Pathmark Stores, Inc.
Consolidated Balance Sheets (Unaudited) (in millions) July 29,
January 28, 2006 2006 -------- ----------- ASSETS Current assets
Cash and cash equivalents $ 61.8 $ 73.4 Marketable securities --
4.0 Accounts receivable, net 22.9 21.1 Merchandise inventories
182.0 180.6 Due from suppliers 64.2 69.6 Other current assets 21.0
23.9 --------- ------- Total current assets 351.9 372.6 Property
and equipment, net 544.9 552.3 Goodwill 144.7 144.7 Other
noncurrent assets 184.2 185.0 --------- ------- Total assets
$1,225.7 $1,254.6 ======== ======== LIABILITIES AND STOCKHOLDERS'
EQUITY Current liabilities Accounts payable $ 107.7 $ 100.2 Current
maturities of debt 0.7 2.1 Current portion of capital lease
obligations 9.8 11.1 Accrued expenses and other current liabilities
168.8 167.1 --------- ------- Total current liabilities 287.0 280.5
Long-term debt 423.5 423.8 Long-term capital lease obligations
164.3 168.5 Other noncurrent liabilities 189.3 210.5 ---------
------- Total liabilities 1,064.1 1,083.3 Stockholders' equity
161.6 171.3 --------- ------- Total liabilities and stockholders'
equity $1,225.7 $1,254.6 ========= ======= Capitalization July 29,
January 28, 2006 2006 --------- ------- Debt $ 424.2 $ 425.9
Capital lease obligations 174.1 179.6 --------- ------- Total debt
and capital lease obligations 598.3 605.5 Stockholders' equity
161.6 171.3 --------- ------- Total capitalization $ 759.9 $ 776.8
========= ======== Table C Pathmark Stores, Inc. Reconciliation of
GAAP Net Loss to Adjusted EBITDA (Unaudited) (in millions) 13 Weeks
Ended 26 Weeks Ended ----------------- ----------------- July 29,
July 30, July 29, July 30, 2006 2005 2006 2005 --------- --------
--------- --------- Net loss $ (8.8)$ (5.1)$ (14.2)$ (7.2)
Adjustments: Interest expense, net (see Note 1) 15.4 18.2 30.9 34.5
Income tax benefit (5.9) (4.4) (9.3) (6.7) Depreciation and
amortization 23.1 22.3 46.1 44.5 LIFO charge 0.7 0.5 1.3 1.0
Non-cash stock-based compensation expense 2.4 4.5 Strategic
alternative expense -- 0.2 1.1 ---------- --------- --------
-------- Adjusted EBITDA (see Note 2) $ 26.9 $ 31.7 $ 59.3 $ 67.2
========== ========= ======== ======== *T Notes to Financial
Statements (1) Interest expense for the 13 weeks and the 26 weeks
ended July 30, 2005 included a $2.8 million early extinguishment of
debt charge related to the defeasance of mortgage liability. (2)
Adjusted EBITDA represents net loss, excluding interest expense,
the impact of taxes, depreciation and amortization, LIFO
adjustments, non-cash stock-based compensation expense and
strategic alternative expense. We believe that our investors find
Adjusted EBITDA to be a useful analytical tool for measuring our
performance and for comparing that performance with the performance
of other companies in our industry having different capital
structures. Adjusted EBITDA is a non-GAAP measure and 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. Our
measurement of Adjusted EBITDA may not be comparable to similarly
titled measures reported by other companies.
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