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The Pantry Announces Fourth Quarter And Fiscal 2012 Financial Results

Safe Harbor Statement

Statements made by the Company in this press release relating to future plans, events, or financial condition or performance are "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements can generally be identified by the use of words such as “expect,” “plan,” “anticipate,” “intend,” “outlook,” “guidance,” “believes,” “should,” “target,” “goal,” “forecast,” “will,” “may” or words of similar meaning. Forward-looking statements are likely to address matters such as the Company’s anticipated sales, expenses, margins, tax rates, capital expenditures, profits, cash flows, liquidity and debt levels, as well as our pricing strategies and their anticipated impact and our expectations relating to the costs and benefits of our merchandising and store remodel initiatives. These forward-looking statements are based on the Company's current plans and expectations and involve a number of risks and uncertainties that could cause actual results and events to vary materially from the results and events anticipated or implied by such forward-looking statements. Any number of factors could affect actual results and events, including, without limitation; the Company's ability to enhance its operating performance through its in-store initiatives and its store remodel program; fluctuations in domestic and global petroleum and fuel markets; realizing expected benefits from the Company's fuel supply agreements; changes in the competitive landscape of the convenience store industry, including fuel stations and other non-traditional retailers located in the Company's markets; the effect of national and regional economic conditions on the convenience store industry and the Company's markets; the global financial crisis and uncertainty in global economic conditions; wholesale cost increases of, and tax increases on, tobacco products; the effect of regional weather conditions and climate change on customer traffic and spending; legal, technological, political and scientific developments regarding climate change; financial difficulties of suppliers, including the Company's principal suppliers of fuel and merchandise, and their ability to continue to supply its stores; the Company's financial leverage and debt covenants; a disruption of our IT systems or a failure to protect sensitive customer, employee or vendor data; the ability of the Company to take advantage of expected synergies in connection with acquisitions; the actual operating results of new or acquired stores; the ability of the Company to divest non-core assets; environmental risks associated with selling petroleum products; and governmental laws and regulations, including those relating to the environment and the impact of mandated health care laws. These and other risk factors are discussed in the Company's Annual Report on Form 10-K and in its other filings with the Securities and Exchange Commission. In addition, the forward-looking statements included in this press release are based on the Company's estimates and plans as of December 11, 2012. While the Company may elect to update these forward-looking statements at some point in the future, it specifically disclaims any obligation to do so.

 
The Pantry, Inc.
Unaudited Condensed Consolidated Statements of Operations and Selected Financial Data
(In thousands, except per share and per gallon amounts, margin data and store count)
       
Three Months Ended Twelve Months Ended
September 27, 2012 September 29, 2011 September 27, 2012 September 29, 2011
(13 weeks) (13 weeks) (26 weeks) (26 weeks)
Revenues:
Merchandise $ 469,537 $ 466,308 $ 1,809,288 $ 1,778,819
Fuel   1,621,443     1,712,907     6,443,955     6,359,681  
Total revenues   2,090,980     2,179,215     8,253,243     8,138,500  
Costs and operating expenses:
Merchandise cost of goods sold 307,028 308,619 1,199,453 1,175,630
Fuel cost of goods sold 1,577,396 1,648,507 6,233,638 6,102,607
Store operating 129,698 134,987 512,782 524,357
General and administrative 24,053 22,729 97,244 104,178
Asset impairment 1,514 8,338 6,257 12,555
Depreciation and amortization   33,231     29,265     119,672     117,025  
Total costs and operating expenses   2,072,920     2,152,445     8,169,046     8,036,352  
Income from operations   18,060     26,770     84,197     102,148  
Other expenses:
Loss on extinguishment of debt 2,993 15 5,532 15
Interest expense, net   22,936     22,177     84,219     87,491  
Total other expenses   25,929     22,192     89,751     87,506  
Income (loss) before income taxes (7,869 ) 4,578 (5,554 ) 14,642
Income tax (expense) benefit   3,094     (1,249 )   3,007     (4,827 )
Net income (loss) $ (4,775 ) $ 3,329   $ (2,547 ) $ 9,815  
Loss per share:
Earnings (loss) per diluted share $ (0.21 ) $ 0.15 $ (0.11 ) $ 0.44
Shares outstanding 22,600 22,561 22,569 22,529
 
Selected financial data:
Adjusted EBITDA $ 52,805 $ 64,373 $ 210,126 $ 231,728
Payments made for lease finance obligations $ 13,272 $ 12,669 $ 51,797 $ 49,208
Merchandise gross profit $ 162,509 $ 157,689 $ 609,835 $ 603,189
Merchandise margin 34.6 % 33.8 % 33.7 % 33.9 %
Retail fuel data:
Gallons 454,523 474,684 1,811,823 1,889,045
Margin per gallon (1) $ 0.095 $ 0.135 $ 0.115 $ 0.135
Retail price per gallon $ 3.50 $ 3.56 $ 3.49 $ 3.33
Total fuel gross profit $ 44,047 $ 64,400 $ 210,317 $ 257,074
 
Comparable store data:
Merchandise sales % 3.3 % -0.8 % 3.3 % 0.2 %
Fuel gallons % -2.6 % -8.3 % -3.1 % -7.4 %
 
Number of stores:
End of period 1,578 1,649 1,578 1,649
Weighted-average store count 1,587 1,654 1,611 1,655
 

1.

Fuel margin per gallon represents fuel revenue less cost of product and expenses associated with credit card processing

fees and repairs and maintenance on fuel equipment. Fuel margin per gallon as presented may not be comparable to

similarly titled measures reported by other companies.

 
 
The Pantry, Inc.
Unaudited Condensed Consolidated Balance Sheets
(In thousands)
   
 
September 27, 2012 September 29, 2011
ASSETS
Cash and cash equivalents $ 89,175 $ 213,768
Receivables, net 80,014 98,144
Inventories 137,376 133,383
Prepaid expenses and other current assets 21,734 25,828
Deferred income taxes   17,376   11,792
Total current assets   345,675   482,915
 
Property and equipment, net 935,841 991,308
Goodwill and other intangible assets 441,070 441,681
Other noncurrent assets   76,954   69,257
Total assets $ 1,799,540 $ 1,985,161
 
LIABILITIES AND SHAREHOLDERS' EQUITY
Current maturities of long-term debt $ 62,840 $ 31,883
Current maturities of lease finance obligations 10,947 8,212
Accounts payable 155,008 151,835
Other accrued liabilities   121,760   117,639
Total current liabilities   350,555   309,569
 
Long-term debt 500,600 715,275
Lease finance obligations 443,020 449,255
Deferred income taxes 62,766 61,579
Deferred vendor rebates 11,886 18,714
Other noncurrent liabilities 106,162 108,449
Total shareholders' equity   324,551   322,320
Total liabilities and shareholders' equity $ 1,799,540 $ 1,985,161
 
 
 
The Pantry, Inc.
Reconciliation of Non-GAAP Financial Measures
(In thousands)
       
Three Months Ended Twelve Months Ended
 
September 27, 2012 September 29, 2011 September 27, 2012 September 29, 2011
 
Adjusted EBITDA $ 52,805 $ 64,373 $ 210,126 $ 231,728
Impairment charges (1,514 ) (8,338 ) (6,257 ) (12,555 )
Loss on debt extinguishment (2,993 ) (15 ) (5,532 ) (15 )
Interest expense, net (22,936 ) (22,177 ) (84,219 ) (87,491 )
Depreciation and amortization (33,231 ) (29,265 ) (119,672 ) (117,025 )
Income tax benefit (expense)   3,094     (1,249 )   3,007     (4,827 )
Net income (loss) $ (4,775 ) $ 3,329   $ (2,547 ) $ 9,815  
 
Adjusted EBITDA $ 52,805 $ 64,373 $ 210,126 $ 231,728
Loss on debt extinguishment (2,993 )

 

(15 )

 

(5,532 )

 

(15 )
Interest expense, net (22,936 ) (22,177 ) (84,219 ) (87,491 )
Income tax benefit (expense) 3,094 (1,249 ) 3,007 (4,827 )
Stock-based compensation expense 653 (191 ) 2,823 2,153
Changes in operating assets and liabilities (5,495 ) 29,878 6,931 6,621
(Benefit) provision for deferred income taxes (812 ) (793 ) (2,516 ) 22,071
Other   4,201     1,740     13,397     8,470  
Net cash provided by operating activities $ 28,517   $ 71,566   $ 144,017   $ 178,710  
 
Additions to property and equipment, net

$

(8,860 ) $ (27,404 ) $ (54,980 ) $ (92,760 )
Acquisitions of businesses, net   -     -     -     (47,564 )
Net cash used in investing activities $ (8,860 ) $ (27,404 ) $ (54,980 ) $ (140,324 )
 
Net cash used in financing activities $ (110,276 ) $ (12,619 ) $ (213,630 ) $ (25,255 )
 
Net increase (decrease) in cash $ (90,619 ) $ 31,543   $ (124,593 ) $ 13,131  
 
       
Three Months Ended Three Months Ended
September 27, 2012 September 29, 2011
   

Pre Tax

After Tax

EPS

Pre Tax

After Tax

EPS

Loss, as reported $ (7,869 ) $ (4,775 ) $ (0.21 ) $ 4,578 $ 3,329 $ 0.15
Impairment charges 1,514 926 0.04 8,338 5,098 0.23
Loss on extinguishment of debt   2,993     1,830     0.08     15   9   -
Income/(loss), as adjusted $ (3,362 ) $ (2,019 ) $ (0.09 ) $ 12,931 $ 8,436 $ 0.37
 
 
Twelve Months Ended Twelve Months Ended
September 27, 2012 September 29, 2011
 

Pre Tax

After Tax

EPS

Pre Tax

After Tax

EPS

Loss, as reported $ (5,554 ) $ (2,547 ) $ (0.11 ) $ 14,642 $ 9,815 $ 0.44
Impairment charges 6,257 3,826 0.17 12,555 7,676 0.34
Loss on extinguishment of debt   5,532     3,382     0.15     15   9   -
Income/(loss), as adjusted $ 6,235   $ 4,661   $ 0.21   $ 27,212 $ 17,500 $ 0.78




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