Pathmark Stores (NASDAQ:PTMK)
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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.