EXHIBIT 99.1
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P R E S S R E L E A S E
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Contacts: Xxxxx Xxxxx Holdings, Inc.
Xxxx Xxxxx
(000) 000-0000
SVP - Chief Financial Officer
Investors: Xxxx X'Xxxxx/Xxxxxxx Xxxxx
Press: Xxxxxxx Xxxxxxx
(000) 000-0000
Financial Dynamics
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FOR IMMEDIATE RELEASE
XXXXX XXXXX HOLDINGS, INC. REPORTS SECOND QUARTER 2006 RESULTS
~ Company Achieves Strong 7.3% Front-End Same Store Growth ~
~ Company Reaffirms Financial Expectations for the Full Year ~
New York, New York, August 8, 2006 - Xxxxx Xxxxx Holdings, Inc. today reported
financial results for the second quarter and first half ended July 1, 2006.
KEY HIGHLIGHTS
o Achieved strong front-end same-store sales growth of 7.3%
o Realized a 1.9% increase in pharmacy same-store sales
o Increased share of New York metro market
o Delivered a sequential increase in Adjusted FIFO EBITDA to $16.2
million, or 4.1% of sales, from $9.1 million, or 2.4% of sales, in
the first quarter
o Continued to make significant progress on Xxxxx Xxxxx Full Potential:
o Fully transitioned 39 stores to the new Xxxxx Xxxxx look and feel
o Realizing improved customer service metrics
o Working capital and cash flow initiatives and results are on plan
Xxxxxxx X. Xxxxxxxx, President and Chief Executive Officer, commented, "Our
six point strategic plan to transform and improve the business, which we
announced this March, is on track and beginning to have a favorable impact on
our business. Further, we benefited from a continued strong New York City
economy. The combination of these factors enabled us to achieve record growth
in front-end same-store sales and return our pharmacy same-store sales growth
to positive levels. Importantly, the strength in our front-end same-store
sales was broad based, with increases in most of our major product categories.
In addition, we delivered on our stated goal to generate a sequential increase
in our Adjusted FIFO EBITDA, and our working capital and cash flow results
were consistent with our plan.
"Our entire team is embracing the many changes we have implemented and it is
their dedicated effort that has made our progress to date possible. That said,
there is still much work to be done and we continue to view 2006 as a
transitional year, with the majority of our potential improvement still ahead
of us. We are optimistic that we are on the right path to achieve our
objectives and return our Company to its full potential."
SECOND QUARTER RESULTS
Excluding pharmacy resale activity, retail store sales increased 3.8% to
$388.8 million from $374.6 million in the prior year period. Total net sales
for the quarter were $398.8 million, compared to $399.5 million in the second
quarter of 2005. Total same-store sales increased 4.8%, with a front-end
same-store sales increase of 7.3% and a pharmacy same-store sales increase of
1.9%.
The front-end same-store sales increase reflects growth across almost all
front-end categories and was driven primarily by the continued strong
performance of the New York City economy, the success of the enhanced Dollar
Rewards customer loyalty card program, and the Company's recently implemented
customer service
-1-
initiatives. The Company estimates that approximately 0.5% of the improvement
was attributable to the shift of the Easter holiday to April this year from
March last year.
Pharmacy sales benefited from a strong spring allergy season and the cycling
of a portion of the previously reported union plan mandatory mail order
conversions. Lower priced but higher margin generics averaged 51.0% of
pharmacy prescriptions during the quarter, up by 3.1% from the second quarter
of 2005.
In line with expectations, net loss for the quarter was $21.1 million,
compared to a net loss of $10.3 million in the prior year period. The
increased loss was primarily attributable to a $9.6 million valuation reserve
on the current year's income tax benefit, as well as higher interest expenses
that were primarily associated with a debt refinancing in August of 2005. The
income tax expense, net of the valuation reserve, was $0.6 million for this
year's second quarter, as compared to an income tax benefit of $8.3 million
last year. These increased costs were partially offset by the non-recurrence
of $1.1 million of labor contingency expenses and $0.2 million of transaction
expenses, associated with the July 2004 acquisition of the Company, which
impacted the second quarter of 2005. In addition, other expenses decreased to
$0.5 million in this year's second quarter, compared to $2.0 million in the
prior year, principally due to non-recurring costs incurred last year in
connection with the Company's former Chairman and CEO.
Adjusted FIFO EBITDA, as defined on the attached schedule of operating data,
was $16.2 million, or 4.1% of sales, versus $17.6 million, or 4.4% of sales,
in the prior year period. The decline primarily reflects lower pharmacy gross
margins associated with the new Medicare Part D program and expected increases
in store labor costs associated with the January 1, 2006 New York State
minimum wage increase. This was partially offset by the elimination of Xxxx
consulting costs due to the conclusion of their engagement in the first
quarter of 2006. Adjusted FIFO EBITDA improved by $7.1 million on a sequential
basis from $9.1 million, or 2.4% of sales, in the first quarter, reflecting
stronger sales growth and improved leveraging of expenses.
Total debt at quarter end was $565.2 million, with approximately $69.6 million
of availability under the Company's revolving credit facility and was in line
with plan.
The Company opened two new stores and closed two stores in the quarter,
compared with one new store opened and no stores closed in the second quarter
of 2005.
SIX MONTH RESULTS
Excluding pharmacy resale activity, retail store sales increased 3.0% to
$763.2 million from $741.3 million in the prior year period. Total net sales
for the six month period were $784.7 million, compared to $794.3 million last
year. Total same-store sales increased 3.3%, with a front-end same-store sales
increase of 5.6% and a pharmacy same-store sales increase of 0.7%.
Adjusted FIFO EBITDA, as defined on the attached schedule of operating data,
was $25.3 million, or 3.2% of sales, versus $29.7 million, or 3.7% of sales,
in the prior year period.
UPDATE ON XXXXX XXXXX FULL POTENTIAL
During the second quarter, the Company continued to make steady progress
towards the implementation of Xxxxx Xxxxx Full Potential. The Company
completed the transition of 39 stores to the new Xxxxx Xxxxx look and feel and
211 stores have received new window graphics. The Company expects to complete
at least 80 store upgrades by the end of this year, with the full chain
conversion within two years. Specific front-end merchandising improvements
included a chain-wide roll-out of new convenience categories, several new
private label products, and expanded beauty and wellness offerings .
The Company's new customer service program has been implemented chain-wide,
and each store is being independently shopped every other week in order to
monitor and assess the success of the new initiatives. Initial results of the
new service programs have been encouraging, and measurable improvements are
beginning to take hold. In addition, the Company has begun an ongoing
initiative to reengineer process improvements in a number of areas to reduce
operating costs and improve efficiency through a "best practices" approach.
-2-
COMPANY OUTLOOK
For the full year, the Company expects total store sales growth in the range
of 1.5% to 2.5%, total same-store sales growth of 2.5% to 3.5%, and Adjusted
FIFO EBITDA (as illustrated in table 5 of this press release) in the range of
$60 to $65 million.
Xx. Xxxxxxxx concluded, "We continue to be pleased with the progress we are
making in implementing the Xxxxx Xxxxx Full Potential program and believe
these actions will drive substantial improvements in our operations and levels
of customer satisfaction over the long-term. While we are off to a solid
start, our program is still in its early stages and a number of challenges
remain. We are confident that we are equal to the tasks ahead of us and will
remain focused on achieving steady improvement from quarter to quarter as our
initiatives begin to transform our business."
CONFERENCE CALL INFORMATION
The Company will hold a conference call on Tuesday, August 8, 2006 at 10:00 AM
Eastern Time to discuss financial results for the second quarter ended July 1,
2006. A live webcast of the call will be accessible from the Investor
Information section of the Xxxxx Xxxxx website (XXXX://XXX.XXXXXXXXXX.XXX),
and the call will be archived on the website approximately one hour after
completion of the call through August 22, 2006. Additionally, a replay of the
conference call will be available from approximately 12:00 PM Eastern Time on
August 8, 2006 through August 12, 2006. The replay can be accessed by dialing
(000) 000-0000 access code 7666843.
ABOUT XXXXX XXXXX
Founded in 1960, Xxxxx Xxxxx is the largest drug store chain in the
metropolitan New York City area, offering a wide variety of prescription and
over-the-counter drugs, health and beauty care items, cosmetics, greeting
cards, photo supplies and photofinishing. As of July 1, 2006, the Company
operated 247 stores.
EXCEPT FOR HISTORICAL INFORMATION CONTAINED HEREIN, THE STATEMENTS IN THIS
RELEASE AND THE ACCOMPANYING DISCUSSION ON THE EARNINGS CONFERENCE CALL ARE
FORWARD-LOOKING AND MADE PURSUANT TO THE SAFE HARBOR PROVISIONS OF THE PRIVATE
SECURITIES LITIGATION REFORM ACT OF 1995. IN ADDITION, THIS DOCUMENT MAY
CONTAIN STATEMENTS, ESTIMATES OR PROJECTIONS THAT CONSTITUTE "FORWARD-LOOKING"
STATEMENTS AS DEFINED UNDER U.S. FEDERAL SECURITIES LAWS. FORWARD-LOOKING
STATEMENTS INVOLVE KNOWN AND UNKNOWN RISKS AND UNCERTAINTIES, WHICH MAY CAUSE
THE COMPANY'S ACTUAL RESULTS IN FUTURE PERIODS TO DIFFER MATERIALLY FROM
FORECASTED OR EXPECTED RESULTS. THOSE RISKS INCLUDE, AMONG OTHER THINGS, THE
COMPETITIVE ENVIRONMENT IN THE DRUG STORE INDUSTRY IN GENERAL AND IN THE NEW
YORK METROPOLITAN AREA, THE ABILITY TO OPEN AND OPERATE NEW STORES, THE
CONTINUED EFFORTS BY PAYERS AND GOVERNMENT AGENCIES TO REDUCE PRESCRIPTION
REIMBURSEMENT RATES AND PRESCRIPTION DRUG BENEFITS, THE COMPANY'S SIGNIFICANT
INDEBTEDNESS, THE STRENGTH OF THE ECONOMY IN GENERAL, THE ECONOMIC CONDITIONS
IN THE NEW YORK GREATER METROPOLITAN AREA, CHANGES IN FEDERAL AND STATE LAWS
AND REGULATIONS, INCLUDING THE POTENTIAL IMPACT OF CHANGES IN REGULATIONS
SURROUNDING THE IMPORTATION OF PHARMACEUTICALS FROM FOREIGN COUNTRIES AND
CHANGES IN LAWS GOVERNING MINIMUM WAGE REQUIREMENTS, CHANGES IN THE COMPANY'S
OPERATING STRATEGY INCLUDING ITS ABILITY TO IMPLEMENT THE "XXXXX XXXXX FULL
POTENTIAL" PROGRAM, CAPITAL EXPENDITURE PLANS OR DEVELOPMENT PLANS, THE
COMPANY'S ABILITY TO ATTRACT, HIRE AND RETAIN QUALIFIED PHARMACY AND OTHER
PERSONNEL, LABOR DISTURBANCES, THE CONTINUED IMPACT OF, OR NEW OCCURRENCES OF,
TERRORIST ATTACKS IN THE NEW YORK GREATER METROPOLITAN AREA AND ANY ACTIONS
THAT MAY BE TAKEN IN RESPONSE, DEMOGRAPHIC CHANGES, THE COMPANY'S ABILITY TO
LIMIT FRAUD AND SHRINK, TRENDS IN THE HEALTHCARE INDUSTRY AND RECALLS OF
PHARMACEUTICAL PRODUCTS DUE TO HEALTH CONCERNS OR OTHER REASONS. THOSE AND
OTHER RISKS ARE MORE FULLY DESCRIBED IN XXXXX XXXXX'X REPORTS FILED WITH THE
SEC FROM TIME TO TIME, INCLUDING ITS ANNUAL REPORTS ON FORM 10-K, QUARTERLY
REPORTS ON FORM 10-Q AND CURRENT REPORTS ON FORM 8-K. YOU SHOULD NOT PLACE
UNDUE RELIANCE ON FORWARD-LOOKING STATEMENTS, WHICH SPEAK ONLY AS OF THE DATE
THEY ARE MADE. EXCEPT TO THE EXTENT OTHERWISE REQUIRED BY FEDERAL SECURITIES
LAWS, WE DO NOT UNDERTAKE TO PUBLICLY UPDATE OR REVISE ANY FORWARD-LOOKING
STATEMENTS.
###
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XXXXX XXXXX HOLDINGS, INC.
Consolidated Statements of Operations (Unaudited)
(In thousands)
FOR THE 13 WEEKS ENDED FOR THE 26 WEEKS ENDED
----------------------------- -----------------------------
July 1, June 25, July 1, June 25,
2006 2005 2006 2005
------------- ------------- -------------- -------------
Net sales $ 398,789 $ 399,500 $ 784,658 $ 794,267
Cost of sales 317,704 320,905 628,098 642,863
------------- ------------- -------------- -------------
Gross profit 81,085 78,595 156,560 151,404
------------- ------------- -------------- -------------
Selling, general & administrative expenses 68,146 64,541 137,612 129,040
Labor contingency expense - 1,100 (18,004) 2,200
Transaction expense - 154 - 581
Depreciation and amortization 18,628 17,851 37,306 35,497
Store pre-opening expenses 102 50 152 150
Other 533 2,033 1,635 3,182
------------- ------------- -------------- -------------
87,409 85,729 158,701 170,650
------------- ------------- -------------- -------------
Operating loss (6,324) (7,134) (2,141) (19,246)
Interest expense, net 14,135 11,499 27,873 22,664
------------- ------------- -------------- -------------
Loss before income taxes (20,459) (18,633) (30,014) (41,910)
Income tax expense (benefit) 619 (8,345) 927 (18,819)
------------- ------------- -------------- -------------
Net loss $ (21,078) $ (10,288) $ (30,941) $ (23,091)
============= ============= ============== =============
XXXXX XXXXX HOLDINGS, INC.
Consolidated Balance Sheets (Unaudited)
(In thousands)
July 1, December 31,
2006 2005
-------------- -------------
Current Assets
Cash $ 1,351 $ 1,362
Receivables, net (1) 50,047 52,320
Inventories (2) 226,249 235,639
Deferred Income Taxes 5,980 7,717
Prepaid Expenses and Other Current Assets 27,093 26,114
-------------- -------------
Total Current Assets 310,720 323,152
Property and Equipment, net 221,624 229,134
Goodwill 67,791 67,791
Other Assets, net (3) 236,738 251,341
-------------- -------------
Total Assets $ 836,873 $ 871,418
============== =============
Current Liabilities
Accounts Payable (4) $ 78,505 $ 72,711
Accrued Expenses (5) 63,523 61,181
Current Portion of Debt and Capital Leases (6) (7) 151,505 138,876
-------------- -------------
Total Current Liabilities 293,533 272,768
Long Term Debt and Capital Leases 413,742 415,346
Deferred Income Taxes 31,241 32,117
Other Liabilities (8) 44,500 67,265
-------------- -------------
Total Liabilities 783,016 787,496
-------------- -------------
Total Stockholders' Equity 53,857 83,922
-------------- -------------
Total Liabilities and Stockholders' Equity $ 836,873 $ 871,418
============== =============
(1) Includes third party pharmacy receivables of $36,851 and $36,673 at July
1, 2006 and December 31, 2005, respectively.
(2) Decrease in inventory from December 31, 2005 reflects the Company's
working capital management initiatives as well as the impact of the
closure of four net stores in the first six months of 2006.
(3) Decrease in other assets from December 31, 2005 is primarily due to the
amortization of intangible assets resulting from the valuation step-up in
connection with the Oak Hill acquisition.
(4) Increase in accounts payable from December 31, 2005 of $5.8 million is
primarily due to the timing of merchandise receipts in the two weeks
prior to the quarter-end dates, as receipts were lower at the end of 2005
due to limited holiday shipping and receiving schedules.
(5) Increase in accrued expenses from December 31, 2005 is primarily due to
the reclassification of the Split Dollar Life Insurance policy that was
scheduled to be transferred to the former Chairman & CEO on July 30,
2006, partially offset by the timing of the Company's sales tax payment
cycle.
(6) Increase in current portion of debt and capital leases from December 31,
2005 of $12.6 million primarily reflects general working capital
borrowings on the Company's asset-based revolving loan agreement during
the first half of the year.
(7) The outstanding revolver loan balance of $148.3 million at July 1, 2006
and $135.7 million at December 31, 2005 has been classified as a current
liability because cash receipts controlled by the lenders are used to
reduce outstanding debt, and the Company does not meet the criteria of
FAS 6 - "Classification of Short-Term Obligations Expected to be
Refinanced," to reclassify the debt as long-term. It should be noted that
this reclassification is not a result of a change in status or compliance
with the terms of this indebtedness. The Company expects to continue to
borrow under this facility until its recently extended maturity in 2011.
(8) Decrease in other liabilities from December 31, 2005 is primarily due to
the reversal of the majority of the previously accrued labor contingency
expenses recorded in connection with the settlement of the Company's
labor contract negotiations.
XXXXX XXXXX HOLDINGS, INC.
Operating Data
(Unaudited)
(Dollars in thousands)
FOR THE 13 WEEKS ENDED FOR THE 26 WEEKS ENDED
------------------------- -------------------------
July 1, June 25, July 1, June 25,
2006 2005 2006 2005
----------- ----------- ----------- ------------
LIFO EBITDA (1) $ 12,304 $ 11,971 $ 17,161 $ 19,032
LIFO Expense (2) 550 300 1,100 84
----------- ----------- ----------- ------------
FIFO EBITDA (1) $ 12,854 $ 12,271 $ 18,261 $ 19,116
----------- ----------- ----------- ------------
FIFO EBITDA as a percentage of net sales 3.2% 3.1% 2.3% 2.4%
Adjusted FIFO EBITDA (3) $ 16,213 $ 17,611 $ 25,307 $ 29,733
Adjusted FIFO EBITDA as a percentage of sales 4.1% 4.4% 3.2% 3.7%
Capital expenditures $ 8,557 $ 7,178 $ 12,270 $ 14,310
Lease acquisitions and other investing activities $ 2,293 $ 2,668 $ 4,107 $ 5,764
Same-store sales growth 4.8% 0.5% 3.3% 1.2%
Pharmacy same-store sales growth 1.9% 0.2% 0.7% 1.1%
Front-end same-store sales growth 7.3% 0.7% 5.6% 1.3%
Pharmacy sales as a % of net sales 45.9% 48.8% 46.2% 49.2%
Third Party sales as a % of
prescription sales 92.9% 92.8% 92.7% 92.8%
Average weekly prescriptions
filled per store (4) 827 841 817 837
Number of stores at end of period 247 250
Retail square footage at end of period 1,714,178 1,742,706
Average store size (sq.ft.) at end of period 6,940 6,971
(1) As used in this report, FIFO EBITDA means earnings before interest,
income taxes, depreciation, amortization, debt extinguishment, expenses
related to the acquisition transaction, labor contingency expense, non-cash
charges and credits related to the LIFO inventory valuation method,
extraordinary charges and other non-recurring charges. We believe that FIFO
EBITDA, as presented, represents a useful measure of assessing the performance
of our ongoing operating activities, as it reflects our earnings trends
without the impact of certain non-cash charges and other non-recurring items.
Targets and positive trends in FIFO EBITDA are used as performance measures
for determining certain compensation of management. FIFO EBITDA is also used
as a performance measure in our various debt agreements. LIFO EBITDA reflects
FIFO EBITDA adjusted to include the effect of non-cash charges and credits
related to the LIFO inventory valuation method.
We understand that, although security analysts frequently use FIFO EBITDA in
the evaluation of companies, it is not necessarily comparable to other
similarly titled captions of other companies due to potential inconsistencies
in the method of calculation. FIFO EBITDA is not intended as an alternative to
net income as an indicator of our operating performance, or as an alternative
to any other measure of performance in conformity with generally accepted
accounting principles, nor as an alternative to cash flow from operating
activities as a measure of liquidity.
Reconciliations of net loss to FIFO EBITDA, Adjusted FIFO EBITDA and operating
cash flow for each period included above and highlighted elsewhere in this
document are provided in the tables on the following pages of this press
release.
(2) LIFO expense for the 26 weeks ended June 26, 2005 includes the remaining
portion of the purchase accounting valuation step-up of $0.5 million, offset
by the estimated impact of inflation of approximately $0.6 million.
(3) As used in this report, Adjusted FIFO EBITDA means FIFO EBITDA as defined
above, adjusted to exclude non-cash rent expense and certain charges related
to the acquisition transaction, inventory valuation step-up adjustments and
certain non-recurring payments to the current CEO and former CEO that are not
included in the definition of EBITDA used for our various debt agreements.
(4) Comparative stores only, does not include new stores.
XXXXX XXXXX HOLDINGS, INC.
Reconciliation of Net Sales to Retail Store Sales
(in thousands)
For the 13 Weeks Ended For the 26 Weeks Ended
------------------------- -------------------------
July 1, June 25, July 1, June 25,
2006 2005 2006 2005
----------- ----------- ----------- -----------
Net sales $ 398,789 $ 399,500 $ 784,658 $ 794,267
Resale activity 10,001 24,881 21,443 53,006
----------- ----------- ----------- -----------
Retail store sales $ 388,788 $ 374,619 $ 763,215 $ 741,261
=========== =========== =========== ===========
Reconciliation of EBITDA to Net Loss and
Net Cash Provided by (Used in) Operating Activities
(Unaudited)
(in thousands)
For the 13 Weeks Ended For the 26 Weeks Ended
------------------------- -------------------------
July 1, June 25, July 1, June 25,
2006 2005 2006 2005
----------- ----------- ----------- -----------
FIFO EBITDA $ 12,854 $ 12,271 $ 18,261 $ 19,116
LIFO Expense 550 300 1,100 84
----------- ----------- ----------- -----------
LIFO EBITDA 12,304 11,971 17,161 19,032
Depreciation and amortization (18,628) (17,851) (37,306) (35,497)
Labor contingency (expense) income - (1,100) 18,004 (2,200)
Transaction expense - (154) - (581)
Interest expense (14,135) (11,499) (27,873) (22,664)
Income tax (provision) benefit (619) 8,345 (927) 18,819
----------- ----------- ----------- -----------
Net loss $ (21,078) $ (10,288) $ (30,941) $ (23,091)
----------- ----------- ----------- -----------
Net loss (21,078) (10,288) (30,941) (23,091)
Adjustments to reconcile net loss
to cash provided by (used in)
operating activities:
Depreciation and amortization 19,689 18,679 39,430 37,238
Deferred tax provision (benefit) 585 (8,384) 861 (18,858)
Non-cash rent expense 2,591 3,307 5,150 6,901
Other non-cash expense 79 - 104 -
Changes in operating assets and liabilities
(net of effect of acquisitions):
Receivables (3,195) 4,703 2,273 5,600
Inventories 6,527 (16,596) 9,390 (15,187)
Accounts payable (6,705) 9,298 5,794 8,288
Prepaid and accrued expenses 8,099 7,015 1,835 (15,891)
Other assets/liabilities, net (2,550) 248 (30,027) 6,331
----------- ----------- ----------- -----------
Cash provided by (used in) operating activities $ 4,042 $ 7,982 $ 3,869 $ (8,669)
----------- ----------- ----------- -----------
Calculation of Adjusted FIFO EBITDA
FIFO EBITDA as above $ 12,854 $ 12,271 $ 18,261 $ 19,116
Non-cash rent expense 2,591 3,307 5,150 6,901
Former CEO-related expenses 34 1,721 385 2,557
Oak Hill management fee 312 312 624 625
Executive severance reserve 26 - 300 -
Executive relocation expenses 156 - 156 -
Other 161 - 326 -
FAS 123R stock option expense 79 - 105 -
Purchase accounting inventory
valuation adjustment (1) - - - 534
----------- ----------- ----------- -----------
Adjusted FIFO EBITDA $ 16,213 $ 17,611 $ 25,307 $ 29,733
=========== =========== =========== ===========
(1) The application of purchase accounting under SFAS 141 resulted in an
increase in the inventory valuation by $8.5 million over FIFO cost as of July
30, 2004. During the quarter ended December 25, 2004, approximately $7.9
million of this non-cash purchase accounting adjustment was charged to cost of
sales on a FIFO EBITDA basis. The balance of the purchase accounting
adjustment was charged to cost of sales during the first quarter of 2005.
XXXXX XXXXX HOLDINGS, INC.
Reconciliation of Range of Projected EBITDA
to Net Loss (Unaudited)
(in thousands)
For the 52 Weeks Ended
December 30, 2006
---------------------------------
Annual sales $ 1,616,250 $ 1,631,050
--------------- ---------------
EBITDA (Adjusted FIFO Basis) $ 60,000 $ 65,000
Deferred rent expense (10,200) (10,200)
Other expense (1) (3,000) (3,000)
--------------- ---------------
EBITDA (FIFO Basis) 46,800 51,800
LIFO expense (2,200) (2,200)
--------------- ---------------
EBITDA (LIFO Basis) 44,600 49,600
Depreciation and amortization expense (74,900) (74,900)
Labor contingency income 18,000 18,000
Interest expense (53,100) (53,100)
Income taxes - -
--------------- ---------------
Net loss $ (65,400) $ (60,400)
=============== ===============
(1) Includes employment-related expenses of the current and former CEOs, Oak
Hill management fees, executive severance and relocation expenses and
stock option expenses in accordance with FAS 123R.
