PR
Newswire -- August 3, 2010
BELLEVUE,
Wash., Aug. 3 /PRNewswire-FirstCall/ -- drugstore.com, inc. (Nasdaq:
DSCM),
a leading online retailer of health, beauty, vision, and pharmacy
products,
today announced its financial results for the second quarter ended
July 4,
2010.
In
the second quarter of 2010, drugstore.com's quarterly net sales increased
over
27% to $113.1 million(1), driven by solid over-the-counter (OTC) sales.
During
the quarter, the Company incurred combined transaction and integration
expenses
totaling approximately $450,000 associated with its completed
acquisition of
Salu, Inc. and third quarter 2010 sale of mail-order pharmacy
assets to Bioscrip
Pharmacy Services, Inc. Including these expenses, the Company
reported a net
loss of $2.7 million and adjusted EBITDA of $4.6 million, as the
gain on sale
of approximately $5.0 million related to the sale of its mail order
pharmacy
business, which closed on July 30, 2010, will now be recognized in the
third
quarter of 2010. This compares to net income of $1.0 million and adjusted
EBITDA
of $5.5 million reported in the same period of the prior year which
included
approximately $3.0 million contribution from the Company's discontinued
local
pick-up pharmacy business. Adjusted EBITDA is a non-GAAP financial measure
defined
as earnings before interest, taxes, depreciation, and amortization of
intangible
assets, adjusted to exclude the impact of stock-based compensation
expense. "In
a softer consumer spending environment, we were pleased to deliver 27%
year-over-year
revenue growth and strong gross margins of 30.4%," said Dawn
Lepore, chief
executive officer and chairman of the board of drugstore.com, inc.
"Revenue
growth was driven by OTC sales up 35%, including solid contributions
from our
recent acquisition, Salu, which added over $11.5 million. During the
quarter,
we generated new customer growth of 34%, offering further evidence that
we
are a clear leader in one of the least penetrated markets in ecommerce." "Today,
we announced an amended agreement with Medco Health Solutions that
extends
our partnership through 2018. Our relationship with Medco has proven to
be
highly strategic and incremental to the strength of our core business, and we
believe
this agreement positions both companies for long term success. Our
belief in
the power of the Medco relationship has not changed, however given the
slower
than anticipated ramp in partnership revenue in the first half of the
year,
we now expect overall partnership revenue in the range of $16 to $20
million
for 2010," concluded Ms. Lepore. Outlook
for Third Quarter of 2010 For
the third quarter of 2010, the Company is targeting net sales in the range
of
$107.0 million to $111.0 million, net income in the rangeof $2.0 million to
$3.25
million, and adjusted EBITDA in the range of $8.0 million to $9.0 million.
The
outlook for the third quarter of 2010 includes an estimated $5.0 million
gain
related to the sale of our mail-order pharmacy segment, which closed on
July
30, 2010. For
fiscal year 2010, which compares a 52-week year to a 53-week year, the
Company
expects OTC revenue growth between 24% and 28%, inclusive of $16 to $20
million
from partnerships, and vision revenue growth in the low single digits. Financial
and Operational Highlights for the Second Quarter of 2010 (All
comparisons are made to the second quarter of 2009 and reflect the
reporting
of the local pick-up and mail-order pharmacy businesses as
discontinued operations.) Key
Financial Highlights:
-- Gross margins increased 20 basis points to 30.4%.
-- Total contribution
margin dollars increased by approximately 29% to
$25.5 million.
-- Total
orders grew by 26% to 1.8 million and contribution margin dollars
per order
was $14.
-- Cash provided by operations during the quarter was $4.1 million,
a $1.5
million improvement from the prior year period.
-- Cash, cash equivalents,
and marketable securities were $30.6 million at
quarter end. Net
Sales Summary:
-- Total net sales increased 27% to $113.1 million.
-- OTC net sales grew
34.5% to $95.9 million, including Beauty.com growth
of 13% and total beauty
growth, including Salu, Inc., of 60%.
-- Vision net sales were $17.3 million.
-- Average net sales per order were $64. Average net sales per order for
OTC
increased 3% year-over-year to $59 and for Vision increased 3% to
$120.
-- Net sales from repeat customers represented 75% of net sales. Key
Customer Milestones:
-- We served approximately 535,000 new customers, inclusive of our
strategic
partnerships, during the quarter, up 34% over the same period
in the prior
year.
-- Marketing and sales expense per new customer decreased slightly to
approximately $22. Conference
Call Investors,
analysts, and other interested parties are invited to join the
drugstore.com,
inc. quarterly conference call on August 3, 2010 at 4:30 p.m. ET
(1:30 p.m.
PT). To participate, callers should dial 1-888-549-7735
(international callers
should dial 1-480-629-9858) five minutes beforehand.
Investors may also listen
to the conference call live and view the financial
slides at http://investor.drugstore.com/,
by clicking on the "audio" hyperlink.
A replay of the call will be
available through Tuesday, August 10, 2010 by
dialing 800-406-7325 and enter
passcode 4331421# and international parties
should call 303-590-3030 and enter
passcode 4331421# beginning two hours after
completion of the call. Non-GAAP
Measures To
supplement the consolidated financial statements presented in accordance with
GAAP,
drugstore.com, inc. uses the non-GAAP measure of adjusted EBITDA, defined
as
earnings before interest, taxes, depreciation, and amortization of intangible
assets,
adjusted to exclude the impact of stock-based compensation expense. This
non-GAAP
measure is provided to enhance the user's overall understanding of the
Company's
current financial performance. Management believes that adjusted
EBITDA, as
defined, provides useful information to the Company and to investors
by excluding
certain items that may not be indicative of the Company's core
operating results.
In addition, because drugstore.com, inc. has historically
provided adjusted
EBITDA measures to investors, management believes that
including adjusted EBITDA
measures provides consistency in the Company's
financial reporting. However,
adjusted EBITDA should not be considered in
isolation, or as a substitute for,
or as superior to, net income/loss, cash
flows, or other consolidated income/loss
or cash flow data prepared in
accordance with GAAP, or as a measure of the
Company's profitability or
liquidity. Although adjusted EBITDA is frequently
used as a measure of operating
performance, it is not necessarily comparable
to other similarly titled captions
of other companies due to differences in
methods of calculation. Net income/loss
is the closest financial measure prepared
by the Company in accordance with GAAP
in terms of comparability to adjusted
EBITDA. A reconciliation of adjusted
EBITDA to net income/loss is included
with the financial statements attached to
this release. The
Company also uses the non-GAAP measure of ongoing adjusted EBITDA, defined
as
adjusted EBITDA excluding the impact of expenses or income from certain legal
actions,
settlements and related costs outside our normal course of business,
restructuring
and severance costs, impairment charges, and certain other
one-time charges
and credits specifically identified in the non-GAAP
reconciliation financial
schedules included in this financial release. In
addition, the Company uses the non-GAAP measure of free cash flow, defined as
net
cash provided by (used in) operating activities plus proceeds from the sale
of
discontinued operations less purchases of fixed assets as disclosed on our
consolidated
statements of cash flows. Management believes that free cash flow
is an important
liquidity metric because it measures, during a given period, the
amount of
cash generated that is available to service debt obligations, make
investments,
fund acquisitions and for certain other activities. Free cash flow
is not a
measure determined in accordance with GAAP and may not be defined or
calculated
by other companies in the same manner. Additionally, this financial
measure
is subject to variability quarter over quarter as a result of the timing
of
payments related to accounts payable, including inventory purchases, and
accounts
receivable. Since free cash flow includes investments in operating
assets,
management believes this non-GAAP liquidity metric is useful in addition
to
the most directly comparable GAAP measure of net cash provided by (used in)
operating
activities, and should not be used as a substitute for it or any other
measure
determined in accordance with GAAP. A reconciliation of free cash flow
to net
cash provided by operating activities is included with the supplemental
financial
schedules attached to this release. The
Company also uses the non-GAAP measure of core OTC, defined as sales
generated
through our OTC segment less sales generated through our partnerships
with
Medco Health Solutions, Inc. and Rite Aid Corporation. This non-GAAP
measure
is provided to enhance the user's overall understanding of the Company's
financial
performance in the OTC segment, excluding the partnerships. Management
believes
that this reporting metric provides useful information to the Company
and to
investors by providing the Company's core operating results in the OTC
segment
without the impact of the partnerships. By excluding partnership sales
from
OTC sales data, the Company can more effectively assess the buying behavior
of,
and the Company's financial performance with respect to, its own core OTC
customers.
However, this non-GAAP measure should not be considered in isolation,
or as
a substitute for, or as superior to, OTC segment sales data prepared in
accordance
with GAAP, or as a measure of the Company's overall performance in
the OTC
segment. OTC segment sales measures are the closest financial measures
prepared
by the Company in accordance with GAAP in terms of comparability to OTC
segment
sales measures that exclude partnership sales. About
drugstore.com, inc. drugstore.com,
inc. (Nasdaq:DSCM) is a leading online retailer of health,
beauty, clinical
skincare, vision, and pharmacy products. Our portfolio of
brands includes:
drugstore.com(TM), Beauty.com(TM), SkinStore.com(TM), and
VisionDirect.com(TM).
All provide a convenient, private, and informative
shopping experience while
offering a wide assortment of more than 55,000
non-prescription products at
competitive prices. The
drugstore.com pharmacy service is certified by the National Association of
Boards
of Pharmacy (NABP) as a Verified Internet Pharmacy Practice Site (VIPPS)
and
complies with federal and state laws and regulations in the United States. The
financial results contained in this press release are preliminary and
unaudited.
In addition, this press release contains forward-looking statements
regarding
future events or the future financial and operational performance of
drugstore.com,
inc. Words such as "will," "expect," "target," "believe,"
"may,"
"continue," and similar expressions, are intended
to identify forward-looking
statements. Forward-looking statements are based
on current expectations, are
not guarantees of future performance and involve
assumptions, risks, and
uncertainties. Actual performance may differ materially
from those contained or
implied in such forward-looking statements. Risks and
uncertainties that could
lead to such differences could include, among other
things: the risk that the
Salu transaction disrupts current plans and operations;
the risk that
anticipated synergies and opportunities as a result of the Salu
transaction will
not be realized; difficulty or unanticipated expenses in connection
with
integrating Salu into drugstore.com; the risk that the acquired business
does
not perform as planned; effects of changes in the economy; changes in
consumer
spending and consumer trends; fluctuations in the stock market; changes
affecting
the Internet, online retailing, and advertising; difficulties
establishing
our brand and building a critical mass of customers; the
unpredictability of
future revenues, expenses, and potential fluctuations in
revenues and operating
results; risks related to business combinations and
strategic alliances; possible
tax liabilities relating to the collection of
sales tax; the level of competition;
seasonality; the timing and success of
expansion efforts; changes in senior
management; risks related to systems
interruptions; possible changes in governmental
regulation; possible increases
in the price of fuel used in the transportation
of packages, or other energy
products; and the Company's ability to manage
multiple growing businesses.
Additional information regarding factors that
potentially could affect the
business, financial condition, and operating results
of drugstore.com, inc. is
included in the Company's periodic filings with the
SEC on Forms 10-K, 10-Q, and
8-K. drugstore.com, inc. expressly disclaims any
intent or obligation to update
any forward-looking statement, except as otherwise
specifically stated by it. (1)
In connection with the Company's previous announcement regarding its
agreement
to sell the assets of its mail order pharmacy business, the results of
operations,
including net sales of $7.1 million and $11.5 million for the second
quarter
of 2010 and 2009, respectively, of this segment are now presented as
discontinued
operations in the consolidated financial statements.
drugstore.com, inc.
Consolidated Statements of Operations
(in thousands,
except share and per share data)
(unaudited)
Three Months Ended
------------------
July 4, June 28,
2010 2009
---- ----
Net
sales $113,147 $88,880
Costs and expenses: (1) (2)
Cost of sales 78,705 62,040
Fulfillment and
order processing 12,559 9,915
Marketing and sales 12,088 9,002
Technology
and content 6,978 6,066
General and administrative 5,500 4,187
Amortization
of intangible assets 128 214
--- ---
Total costs and expenses 115,958
91,424
------- ------
Operating loss (2,811) (2,544)
Interest income (expense), net (137) 14
---- ---
Loss from continuing operations (2,948) (2,530)
Gain from discontinued operations:
Local pick-up pharmacy segment - 2,961
Mail order pharmacy segment 274 595
--- ---
274 3,556
Net income (loss) $(2,674) $1,026
======= ======
Basic and diluted net income (loss) per share $(0.03) $0.01
====== =====
Weighted average shares used in computation
of:
Basic net income (loss)
per share 104,992,447 99,727,521
=========== ==========
Diluted net income
(loss) per share 104,992,447 99,727,521
=========== ==========
_________
(1) Set forth below are the amounts of stock-
based compensation
by operating function
recorded in the Statements of Operations:
Fulfillment and order processing $439 $95
Marketing and sales 867 306
Technology and content 509 219
General and administrative 1,831 448
-----
---
$3,646 $1,068
====== ======
(2) Set forth below are the amounts of
depreciation by operating function
recorded
in the Statements of Operations:
Fulfillment and order processing $629 $745
Marketing and sales 1 1
Technology
and content 2,588 2,337
General and administrative 126 111
--- ---
$3,344 $3,194
====== ======
Six Months Ended
----------------
July 4, June 28,
2010 2009
----
---- Net sales
$224,080 $178,408
Costs and expenses: (1) (2)
Cost of sales 156,458 125,566
Fulfillment
and order processing 24,534 19,993
Marketing and sales 22,995 18,212
Technology
and content 13,586 11,987
General and administrative 12,195 7,534
Amortization
of intangible assets 176 421
--- ---
Total costs and expenses 229,944
183,713
------- -------
Operating loss (5,864) (5,305)
Interest income (expense), net (200) 57
---- ---
Loss from continuing operations (6,064) (5,248)
Gain from discontinued operations:
Local pick-up pharmacy segment - 5,946
Mail order pharmacy segment 774 1,182
--- -----
774 7,128
Net income (loss) $(5,290) $1,880
======= ======
Basic and diluted net income (loss) per share $(0.05) $0.02
====== =====
Weighted average shares used in computation
of:
Basic net income (loss)
per share 103,849,844 98,541,567
=========== ==========
Diluted net income
(loss) per share 103,849,844 98,541,567
=========== ==========
_________
(1) Set forth below are the amounts of stock-
based compensation
by operating function
recorded in the Statements of Operations:
Fulfillment and order processing $537 $214
Marketing and sales 1,186 656
Technology and content 714 464
General and administrative 3,036 755
-----
---
$5,473 $2,089
====== ======
(2) Set forth below are the amounts of
depreciation by operating function
recorded
in the Statements of Operations:
Fulfillment and order processing $1,263 $1,491
Marketing and sales 2 2
Technology and content 5,040 4,560
General and administrative 243 223
--- ---
$6,548 $6,276
====== ======
SUPPLEMENTAL INFORMATION: Gross Profit and Gross Margin Information:
Three Months Ended
------------------
July 4, June 28,
(In thousands,
unless otherwise indicated) 2010 2009
---- ----
Net sales $113,147 $88,880
Cost of sales 78,705 62,040
------ ------
Gross profit $34,442 $26,840
======= =======
Gross margin 30.4% 30.2%
==== ====
SUPPLEMENTAL INFORMATION: Segment Information
(see Note 3 below):
Three Months Ended
------------------
July 4, June 28,
2010 2009
---- ----
Net sales:
Over-the-Counter (OTC) $95,893 $71,299
Vision
17,254 17,581
------ ------
$113,147 $88,880
Cost of sales:
OTC
$65,683 $48,687
Vision 13,022 13,353
------ ------
$78,705 $62,040
Gross profit:
OTC $30,210 $22,612
Vision 4,232 4,228
$34,442 $26,840
======= =======
Gross margin:
OTC 31.5% 31.7%
Vision 24.5% 24.0%
---- ----
30.4% 30.2%
==== ====
Variable order costs (3):
OTC
$8,115 $6,248
Vision 795 787
--- ---
$8,910 $7,035
Contribution
margin:
OTC $22,095 $16,364
Vision 3,437 3,441
$25,532 $19,805
======= =======
Six Months Ended
----------------
July 4, June 28,
(In thousands,
unless otherwise indicated) 2010 2009
---- ----
Net sales $224,080 $178,408
Cost of sales 156,458 125,566
------- -------
Gross profit $67,622 $52,842
======= =======
Gross margin 30.2% 29.6%
==== ====
SUPPLEMENTAL INFORMATION: Segment Information
(see Note 3 below):
Six Months Ended
----------------
July 4, June 28,
2010 2009
----
----
Net sales:
Over-the-Counter (OTC) $188,885 $143,386
Vision 35,195
35,022
------ ------
$224,080 $178,408
Cost of sales:
OTC $129,323
$98,614
Vision 27,135 26,952
------ ------
$156,458 $125,566
Gross
profit:
OTC 59,562 44,772
Vision 8,060 8,070
$67,622 $52,842
=======
=======
Gross margin:
OTC 31.5% 31.2%
Vision 22.9% 23.0%
----
----
30.2% 29.6%
==== ====
Variable order costs (3):
OTC $16,095
$12,616
Vision 1,616 1,563
----- -----
17,711 14,179
Contribution
margin:
OTC $43,467 $32,156
Vision 6,444 6,507
$49,911 $38,663
======= =======
NOTE 3: We define variable order costs as the incremental (variable)
costs
of fulfilling, processing, and delivering the order (labor,
packaging supplies,
credit card fees, and royalty costs that are
variable based on sales volume).
In the second quarter of 2010, our
chief
operating decision makers modified
our definition of variable order
costs to exclude partnership-related royalty
costs, which are
considered
marketing costs, in order to assess the performance
of our OTC
segment contribution margin excluding these costs. Partnership-
related
royalty costs of $660,000, as previously reported in the first
quarter of 2010, were excluded from the six-month period ended July
4, 2010,
and partnership-related royalty costs of $124,000 and $204,000 were
excluded
from the three-and-six month periods ended June 28,
2009, respectively.
SUPPLEMENTAL INFORMATION: Reconciliation of OTC net sales, cost of
sales,
gross profit, gross margin, variable order costs, and
contribution margin
to Core OTC net
sales, cost of sales, gross profit, gross margin, variable
order
costs and contribution margin (See Note 4 below):
Three Months Ended
------------------
July 4, June 28,
2010 2009
---- ----
(In thousands)
Over-the-Counter (OTC):
Net sales $95,893
$71,299
Less: Partnerships 5,257 941
Core OTC net sales $90,636 $70,358
======= =======
Cost of sales $65,683 $48,687
Less: Partnerships 3,977 635
Core OTC cost
of sales $61,706 $48,052
======= =======
Gross profit $30,210 $22,612
Less: Partnerships 1,280 306
Core OTC gross
profit $28,930 $22,306
======= =======
Gross margin 31.5% 31.7%
Partnerships 24.3% 32.5%
Core OTC gross margin
31.9% 31.7%
==== ====
Variable order costs $8,115 $6,248
Less: Partnerships 553 95
Core OTC
variable order costs $7,562 $6,153
====== ======
Contribution margin: $22,095 $16,364
Less: Partnerships 727 211
Core OTC
contribution margin $21,368 $16,153
======= =======
Six Months Ended
----------------
July 4, June 28,
2010 2009
----
----
(In thousands)
Over-the-Counter (OTC):
Net sales $188,885 $143,386
Less: Partnerships 9,825 1,489
Core OTC net sales $179,060 $141,897
========
========
Cost
of sales $129,323 $98,614
Less: Partnerships 7,312 1,005
Core OTC cost
of sales $122,011 $97,609
======== =======
Gross profit 59,562 44,772
Less: Partnerships 2,513 484
Core OTC gross
profit $57,049 $44,288
======= =======
Gross margin 31.5% 31.2%
Partnerships 25.6% 32.5%
Core OTC gross margin
31.9% 31.2%
==== ====
Variable order costs 16,095 12,616
Less: Partnerships 965 150
Core OTC
variable order costs $15,130 $12,466
======= =======
Contribution margin: 43,467 32,156
Less: Partnerships 1,548 334
Core OTC
contribution margin $41,919 $31,822
======= =======
NOTE 4: Supplemental information related to the Company's Core OTC
net sales,
cost of sales, gross profit, and gross margin
for the three and six months
ended July 4, 2010 and June 28, 2009 is
presented for informational purposes
only and is not
prepared in accordance with generally accepted accounting
principles.
As disclosed in Note 3, we changed our definition of
variable
order costs to exclude royalty costs. Accordingly, all
previously reported
royalties have been excluded from variable
costs in the three- and-six month
periods ended July 4, 2010 and
June 28, 2009.
SUPPLEMENTAL INFORMATION: Reconciliation of Net Income (Loss) to
Adjusted
EBITDA (See Note 5 below):
Three Months Ended
------------------
July 4, June 28,
(In thousands,
unless otherwise indicated) 2010 2009
---- ----
Net income (loss) $(2,674) $1,026
Amortization of intangible assets 128 214
Stock-based compensation 3,646 1,068
Depreciation 3,344 3,194
Interest
(income) expense, net 137 (14)
--- ---
Adjusted EBITDA $4,581 $5,488
====== ======
Six Months Ended
----------------
July 4, June 28,
(In thousands,
unless otherwise indicated) 2010 2009
---- ----
Net income (loss) $(5,290) $1,880
Amortization of intangible assets 176 421
Stock-based compensation 5,473 2,089
Depreciation 6,548 6,276
Interest
(income) expense, net 200 (57)
--- ---
Adjusted EBITDA $7,107 $10,609
====== =======
NOTE 5: Supplemental information related to the Company's adjusted
EBITDA
for the three and six months ended July 4, 2010 and June 28,
2009
is presented
for informational purposes only and is not prepared in
accordance with generally
accepted accounting principles. Adjusted
EBITDA is
defined as earnings
before interest, taxes, depreciation, and
amortization of intangible assets,
adjusted to exclude the impact of
stock-based
compensation expense.
SUPPLEMENTAL INFORMATION: Reconciliation of Adjusted EBITDA to Ongoing
Adjusted
EBITDA (See Note 6 below):
Three Months Ended Six Months Ended
------------------ ----------------
July 4, June 28, July 4, June 28,
(In thousands, unless
otherwise indicated)
2010 2009 2010 2009
---- ---- ---- ----
Adjusted EBITDA $4,581 $5,488 $7,107 $10,609
Less: Proceeds from sale of
LPU - (2,961) - (5,946)
Less: Discontinued Rx mail
operations (274) (595)
(774) (1,182)
Less: Litigation related
settlements - - (725)
Add:
IVD migration one-time
charges - - 650 -
Add: Salu and Luxottica
transaction
and integration
related costs 309 - 2,095 -
--- - ----- -
Ongoing
Adjusted EBITDA $4,616 $1,932 $9,078 $2,756
====== ====== ====== ======
NOTE 6: Supplemental information related to the Company's ongoing adjusted EBITDA
for the three and six months ended July 4, 2010 and June 28, 2009
is presented
for informational purposes only and is not prepared in accordance with generally
accepted accounting principles. Ongoing adjusted EBITDA is
defined as adjusted
EBITDA excluding the impact of expenses or income from certain legal actions,
settlements and related costs outside our normal course
of business, restructuring
and severance costs, impairment charges, and certain other specifically identified
one-time charges and credits.
SUPPLEMENTAL INFORMATION: Reconciliation of Forecasted Q3 2010 Net Income,
Adjusted EBITDA, and Ongoing Adjusted EBITDA Range (See Note 7 below):
Range Calculated As: Three Months Ended
October 3, 2010
---------------
(In thousands, unless
otherwise indicated) Range High Range Low
----------
---------
Net
income $3,250 $2,000
Amortization of intangible
assets 125 125
Stock-based
compensation 2,100 2,300
Depreciation 3,400 3,450
Interest expense, net
125 125
--- ---
Adjusted EBITDA $9,000 $8,000
====== ======
Less:
Discontinued Rx mail
operations (5000) (5000)
Add: Salu and Luxottica
transaction and integration
related costs 150 150
Ongoing Adjusted EBITDA
$4,150 $3,150
NOTE 7: Supplemental information related to the Company's forecasted
net
income and adjusted EBITDA for the three months ended October 3,
2010
includes the estimated gain on sale of our mail-order pharmacy
segment in
connection with the Company's previously announced sale to
Bioscrip, Inc.
which closed in July 2010.
SUPPLEMENTAL INFORMATION: Reconciliation of Net Cash Provided by
(Used in)
Operating Activities to Free Cash Flow:
Three Months Ended
------------------
July 4, June 28,
(In thousands,
unless otherwise indicated) 2010 2009
---- ----
Net cash provided by operating activities $4,130 $2,640
Add: Proceeds from
sale of discontinued
operations - 2,973
Less: Purchases of fixed assets
(3,812) (1,961)
Free Cash Flow $318 $3,652
==== ======
Trailing Twelve
Months Ended
---------------
July 4, June 28,
(In thousands, unless otherwise indicated) 2010 2009
---- ----
Net cash provided by operating activities $10,105 $6,333
Add: Proceeds from
sale of discontinued
operations - 9,910
Less: Purchases of fixed assets
(10,781) (8,774)
Free Cash Flow $(676) $7,469
===== ======
drugstore.com, inc.
Consolidated Balance Sheets
(in thousands, except
share data)
January
July 4, 3,
2010 2010
---- ----
(unaudited) (audited)
ASSETS
Current assets:
Cash and cash
equivalents $20,716 $22,175
Marketable securities 9,842 14,678
Accounts receivable,
net of allowances
12,642 13,275
Inventories 40,340 39,300
Other current assets 3,577 2,406
Assets of discontinued
operations 2,805 2,832
----- -----
Total current
assets 89,922 94,666
Fixed assets, net 23,305 24,104
Other intangible
assets, net 14,528 3,398
Goodwill 57,374 32,202
Other long-term assets 159 159
--- ---
Total
assets $185,288 $154,529
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable
$37,244 $34,408
Accrued compensation 4,319 5,707
Accrued marketing
expenses 2,891 5,247
Other current
liabilities 1,854 1,542
Current
portion of
long-term debt 13,072 195
Liabilities of
discontinued
operations 4,676 4,581
----- -----
Total current
liabilities 64,056
51,680 Long-term
debt, less
current portion 5 3,011
Deferred income taxes 4,017 959
Other long-term
liabilities 1,275 1,213
Stockholders' equity:
Common stock, $.0001 par value,
stated at amounts
paid in:
Authorized shares -250,000,000
Issued shares -106,120,804 and
100,362,285
Outstanding shares -106,015,248
and 100,256,729
as of
July 4, 2010 and
January 3, 2010,
respectively 892,842 869,146
Treasury
stock -
105,556 shares as of
July 4, 2010 and
January 3, 2010 (151)
(151)
Accumulated other
comprehensive loss (235) (98)
Accumulated
deficit (776,521) (771,231)
-------- --------
Total stockholders'
equity 115,935 97,666
------- ------
Total liabilities and
stockholders'
equity $185,288 $154,529
======== ========
drugstore.com, inc.
Consolidated Statements of Cash Flows
(in thousands)
Three Months
Ended
------------
July June
4, 28,
2010 2009
---- ----
(unaudited)
Operating activities:
Net income (loss) $(2,674)
$1,026
Less gain from discontinued
operations 274 3,556
--- -----
Loss from continuing operations $(2,948) $(2,530)
Adjustments to reconcile
net income
(loss) to net cash provided by
operating activities:
Depreciation
3,344 3,194
Amortization of intangible assets 128 214
Stock-based compensation
3,646 1,068
Other, net (17) (4)
Changes in, net of acquisitions:
Accounts
receivable (1,002) (617)
Inventories (20) 1,314
Other assets 192 (186)
Accounts payable, accrued expenses
and other liabilities 155 (2,629)
---
------
Net cash provided by (used in)
continuing operations 3,478 (176)
Net cash provided by discontinued
operations 652 2,816
--- -----
Net
cash provided by operating
activities 4,130 2,640
Investing activities:
Purchases of marketable securities (6,831) (9,453)
Sales and maturities of marketable
securities 9,501 4,750
Proceeds from
the sale of
discontinued operations - 2,973
Purchases of fixed assets
(3,352) (1,961)
Purchase of Salu, less cash acquired 92 -
Purchases of
intangible assets - (11)
--- ---
Net cash used in continuing investing
activities (590) (3,702)
Net cash used in discontinued
investing activities
(460) -
---- ---
Net cash used in investing activities (1,050) (3,702)
Financing activities:
Proceeds from exercise of stock
options and employee
stock purchase
plan 581 46
Borrowings on line of credit - -
Principal
payments on debt
obligations (46) (776)
Purchases of treasury stock -
(151)
--- ----
Net cash provided by (used in)
financing activities
535 (881)
--- ----
Net increase (decrease) in cash and
cash equivalents 3,615 (1,943)
Cash
and cash equivalents, beginning
of period 17,101 25,976
------ ------
Cash and cash equivalents, end of
period $20,716 $24,033
======= =======
Non-cash activities:
Common stock issued for purchase of
Salu $(91) $-
Equipment acquired under capital
leases $- $290
Six Months Ended
----------------
July June
4, 28,
2010 2009
---- ----
(unaudited)
Operating activities:
Net income (loss) $(5,290)
$1,880
Less gain from discontinued
operations 774 7,128
--- -----
Loss from continuing operations $(6,064) $(5,248)
Adjustments to reconcile
net income
(loss) to net cash provided by
operating activities:
Depreciation
6,548 6,276
Amortization of intangible assets 176 421
Stock-based compensation
5,473 2,089
Other, net (10) (52)
Changes in, net of acquisitions:
Accounts receivable 1,485 (1,066)
Inventories 3,480 2,261
Other assets
(840) (947)
Accounts payable, accrued expenses
and other liabilities (4,827)
(6,284)
------ ------
Net cash provided by (used in)
continuing operations
5,421 (2,550)
Net cash provided by discontinued
operations 1,704 3,370
----- -----
Net cash provided by operating
activities 7,125 820
Investing activities:
Purchases of marketable securities (9,087) (11,153)
Sales and maturities of marketable
securities 13,886 8,649
Proceeds from
the sale of
discontinued operations - 5,946
Purchases of fixed assets
(5,325) (3,693)
Purchase of Salu, less cash acquired (17,977) -
Purchases
of intangible assets (29) (145)
--- ----
Net cash used in continuing investing
activities (18,532) (396)
Net cash used in discontinued
investing activities
(826) -
---- ---
Net cash used in investing activities (19,358) (396)
Financing activities:
Proceeds from exercise of stock
options and employee
stock purchase
plan 903 94
Borrowings on line of credit 10,000 -
Principal
payments on debt
obligations (129) (1,531)
Purchases of treasury stock
- (151)
--- ----
Net cash provided by (used in)
financing activities
10,774 (1,588)
------ ------
Net increase (decrease) in cash and
cash equivalents (1,459) (1,164)
Cash
and cash equivalents, beginning
of period 22,175 25,197
------ ------
Cash and cash equivalents, end of
period $20,716 $24,033
======= =======
Non-cash activities:
Common stock issued for purchase of
Salu $17,271
$-
Equipment acquired under capital
leases $- $382
Investor Relations: Media Relations:
Brinlea Johnson Anne Marshall
212-551-1453
425-372-3464
brinlea@blueshirtgroup.com amarshall@drugstore.com SOURCE
drugstore.com, inc.
Subject
Codes: PC/t.100803161208942, PT/lang.en, PC/ticker, IN/REA,
IN/HEA, IN/FAS,
IN/HOU, IN/CPR, IN/ECM, SU/ERN, SU/ERP,
SU/CCA, RE/Washington, PC/priority.r,
PC/category.f,
PC/class.1278, PC/class.1255, PC/WAVO_....r.,
PC/APT_....r,
PC/trade_r, PC/wavo5_r, PC/class.1000,
PC/WAVO_..b..., PC/APT_..b.., PC/circuit_b,
PC/wavo3_b,
PC/class.1062, PC/WAVO_w....., PC/APT_w...., PC/state_w,
PC/wavo1_w,
PC/DataFeat_natl3, PC/port_32,
PC/Billing_FC1, PC/Billing_IRW, PC/Billing_RWB,
PC/Billing_TNW, PC/Billing_US1, PC/1stAcc_903870,
PC/bureau_SF, PC/port_01,
PC/port_96, PC/port_31,
PC/port_33, PC/port_19, PC/port_91, PC/contact,
PC/website, PC/photo, PC/id_SF44716
Company Codes: NASDAQ-NMS:DSCM
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