SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C.

FORM 10-Q/A

Quarterly Report Pursuant to Section 13 or 15 (d) of the Securities and
Exchange Act of 1934

For the quarterly period ended September 25, 2004.

Commission file number 001-13843

 

DUANE READE INC.

(Exact name of registrant as specified in its charter)

 

(212) 273-5700

(Registrant’s telephone number, including area code)

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes o  No x

Indicate by check mark whether the registrant is an accelerated filer (as defined in the Exchange Act Rule 12b-2):

Yes o  No x

 

This Form 10-Q/A amends the Company’s quarterly report on Form 10-Q for the quarterly period ended September 25, 2004, as filed on November 15, 2004, to include adjustments to its previously filed consolidated financial statements related to (i) lease accounting under the provisions of FASB Technical Bulletin No. 85-3 (FTB 85-3), (ii) certain inventory resale activity under the provisions of Emerging Issues Task Force release 99-19 (EITF 99-19) and (iii) the classification of outstanding borrowings under the revolving loan facility as current liabilities, rather than as long-term debt as previously reported, because cash receipts controlled by the lenders are used to reduce outstanding debt, and the Company does not meet the criteria of Statement of Financial Accounting Standards No. 6 “Classification of Short Term Obligations Expected to be Refinanced” (FAS 6), to reclassify the debt as long-term, as well as to reflect certain previously unrecorded and immaterial audit adjustments related to the periods affected. This Form 10-Q/A further amends the Company’s quarterly report on Form 10-Q for the fiscal quarter ended September 25, 2004 to include adjustments to its previously filed consolidated statement of cash flows for the first nine months of 2004 and 2003 to reflect the reporting of revolving loan borrowings and repayments separately on a gross basis as required under Statement of Financial Accounting Standard No. 95 “Statement of Cash Flows” (FAS 95). In addition, this Form 10-Q/A amends the Company’s quarterly report on Form 10-Q for the period from July 31, 2004 through and as of September 25, 2004 to correct the lease accounting to reflect straight-line rent expense (for leases in effect on the July 30, 2004 acquisition date) calculated from the date of the Company’s acquisition by Oak Hill rather than from the original lease commencement dates as previously recorded. This accounting treatment is required under the provisions of Statement of Financial Accounting Standard No. 141 “Business Combinations (FAS 141). This adjusted lease accounting has no impact upon lease maturities, the timing of any lease payments or cash flows from past or future operating activities. It also amends the previously filed Form 10-Q to include in Part 1, Item 4, “Controls and Procedures,” the revised conclusion of the principal executive officer and principal financial officer regarding the effectiveness of the Company’s disclosure controls and procedures as of September 25, 2004. No attempt has been made in this Form 10-Q/A to modify or update other disclosures as presented in the Form 10-Q except to conform to changes as required by applicable law. For further information about the restatements, see “Item 2.—Management’s Discussion and Analysis of Financial Condition and Results of Operations—Restatements.”

INDEX

PART I—FINANCIAL INFORMATION		4
	ITEM 1.—FINANCIAL STATEMENTS	4
	Consolidated Statements of Operations (Unaudited)— For the period from July 31, 2004 through September 25, 2004 for the Successor and the periods from June 27, 2004 through July 30, 2004 and December 28, 2003 through July 30, 2004 and the 13 Weeks and 39 Weeks Ended September 27, 2003 for the Predecessor (restated)	4
	Consolidated Balance Sheets— As of September 25, 2004 (Unaudited) for the Successor and December 27, 2003 for the Predecessor (restated)	5
	Consolidated Statements of Cash Flows (Unaudited)— For the period from July 30, 2004 through September 25, 2004 for the Successor and the period from December 28, 2003 through July 30, 2004 and the 39 Weeks Ended September 27, 2003 for the Predecessor (restated)	6
	Notes to Consolidated Financial Statements (Unaudited)	7
	ITEM 2.—MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS	22
	ITEM 3.—QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK	38
	ITEM 4.—CONTROLS AND PROCEDURES	39
PART II—OTHER INFORMATION		40
SIGNATURES		47

 

SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

This and other of our public filings or public statements contain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, Section 21E of the Securities Exchange Act of 1934 and the Private Securities Litigation Reform Act of 1995, that involve a number of risks and uncertainties. These statements relate to future events or our future financial performance with respect to our financial condition, results of operations, business plans and strategies, operating efficiencies or synergies, competitive positions, growth opportunities for existing products such as private label merchandise, plans and objectives of management, capital expenditures, growth and maturation of our stores and other matters. These statements involve known and unknown risks, uncertainties and other factors that may cause our or our industry’s actual results, levels of activity, performance or achievements to be materially different from those expressed or implied by any forward-looking statements. In some cases, you can identify forward-looking statements by terminology such as “may,” “will,” “could,” “would,” “should,” “expect,” “plan,” “anticipate,” “intend,” “believe,” “estimate,” “predict,” “potential,” “pro forma,” “seek,” or “continue” or the negative of those terms or other comparable terminology. These statements are only predictions and such expectations may prove to be incorrect. Some of the things that could cause our actual results to differ substantially from our expectations are:

·       the competitive environment in the drugstore industry in general and in the New York greater metropolitan area;

·       the ability to open and operate new stores on a profitable basis and to increase sales in existing stores;

·       the continued efforts of health maintenance organizations, managed care organizations, pharmacy benefit management companies and other third party payers to reduce prescription reimbursement rates;

·       the continued efforts of federal, state and municipal government agencies to reduce Medicaid reimbursement rates, modify Medicare benefits and/or reduce prescription drug costs;

·       our significant indebtedness;

·       the strength of the economy in general and the economic conditions in the New York greater metropolitan area, in particular, including changes in consumer purchasing power and/or spending patterns;

·       changes in the cost of goods and services;

·       trends in the healthcare industry, including continued conversion of various prescription drugs to over-the-counter medications and the increasing market share on the part of internet-based and mail-order-based providers;

·       labor disturbances, including any resulting from the suspension or termination of our collective bargaining agreements;

·       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 minimum wage rates;

·       liability and other claims asserted against us including the items discussed under Part II, Item 1-Legal Proceedings;

·       changes in our operating strategy or development plans;

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·       our ability to attract, hire and retain qualified personnel, including our ability to attract qualified pharmacists;

·       interest rate fluctuations and changes in capital market conditions or other events affecting our ability to obtain necessary financing on favorable terms to fund the anticipated growth of our business;

·       the outcome of the legal proceedings that have been instituted against us and others following announcement of our merger agreement with Duane Reade Acquisition Corp. and Duane Reade Shareholders, LLC;

·       the continued impact of, or new occurrences of, terrorist attacks in the New York greater metropolitan area and any actions that may be taken by federal, state or municipal authorities in response to or in anticipation of such occurrences;

·       changes in our acquisition and capital expenditure plans;

·       our ability to continue to secure suitable new store locations under acceptable lease terms;

·       our ability to successfully implement and manage new computer systems and technologies;

·       our ability to limit fraud and shrink;

·       demographic changes; and

·       other risks and uncertainties detailed from time to time in our filings with the Securities and Exchange Commission (the “SEC”).

We undertake no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, after the date of this filing. We do not, nor does any other person, assume responsibility for the accuracy and completeness of those statements.

We caution you that the areas of risk described above may not be exhaustive. We operate in a continually changing business environment, and new risks emerge from time to time. Management cannot predict such new risks, nor can it assess the impact, if any, of such risks on our businesses or the extent to which any risk or combination of risks may cause actual results to differ materially from those projected in any forward-looking statements. In light of these risks, uncertainties and assumptions, you should keep in mind that any forward-looking statement made in this filing might not occur.

3

PART I—FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS

Duane Reade Inc.
Consolidated Statements of Operations (Unaudited)
(In thousands)

		Successor Restated					Predecessor—Restated
		Period from					Period from					Three Months					Period from					Nine Months
		July 31, 2004					June 27, 2004					Ended					Dec. 28, 2003					Ended
		through					through					September 27,					through					September 27,
		Sept. 25, 2004					July 30, 2004					2003					July 30, 2004					2003
Net sales			$	238,050				$	142,379				$	356,944				$	927,801				$	1,081,832
Cost of sales			194,116					115,557					284,389					745,090					861,405
Gross profit			43,934					26,822					72,555					182,711					220,427
Selling, general & administrative expenses			37,418					23,726					56,611					142,293					168,083
Labor contingency expense			689					411					—					2,611					—
Transaction expense			37,118					386					—					3,005					—
Depreciation and amortization			7,280					3,596					8,162					21,902					23,874
Store pre-opening expenses			366					105					154					470					798
Other			25,291					—					—					—					—
			108,162					28,224					64,927					170,281					192,755
Operating (loss) income			(64,228		)			(1,402		)			7,628					12,430					27,672
Interest expense, net			6,283					1,283					3,386					7,977					10,452
Debt extinguishment			—					—					707					—					812
(Loss) income before income taxes			(70,511		)			(2,685		)			3,535					4,453					16,408
Income tax (benefit) provision			(32,473		)			(1,714		)			1,558					1,136					7,225
Net (loss) income			$	(38,038	)			$	(971	)			$	1,977				$	3,317				$	9,183

 

The accompanying notes are an integral part of these financial statements.

4

Duane Reade Inc.
Consolidated Balance Sheets
(In thousands, except share and per share data)

		Successor					Predecessor
		Restated					Restated
		September 25,					December 27,
		2004					2003
		(Unaudited)
ASSETS
Current Assets
Cash			$	1,377				$	1,252
Receivables, net			55,461					53,430
Inventories, net			271,101					258,139
Deferred income taxes			22,454					10,811
Prepaid expenses and other current assets			19,224					20,263
TOTAL CURRENT ASSETS			369,617					343,895
Property and equipment, net			227,025					189,469
Goodwill, net			116,875					161,318
Deferred income taxes			—					13,854
Other assets			254,224					88,836
TOTAL ASSETS			$	967,741				$	797,372
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities
Accounts payable			$	80,323				$	85,528
Accrued interest			3,839					1,633
Other accrued expenses			56,639					30,086
Current portion of debt			152,939					70,353
Current portion of capital lease obligations			762					422
TOTAL CURRENT LIABILITIES			294,502					188,022
Long-term debt			350,032					201,032
Capital lease obligations, less current portion			2,209					1,103
Deferred income taxes			70,299					—
Other non-current liabilities			49,239					79,954
TOTAL LIABILITIES			766,281					470,111
Commitments and Contingencies (Note 10)
Stockholders’ equity
Preferred stock, $0.01 par; authorized 5,000,000 shares; issued and outstanding: none (Predecessor)								—
Series A preferred stock, $0.01 par; authorized 75,000 shares; issued and outstanding: none (Predecessor)								—
Common stock, $0.01 par; authorized 75,000,000 shares; issued and outstanding: 24,403,550 shares (Predecessor)								244
Preferred stock, $0.01 par; authorized 50,000 shares; issued and outstanding: none (Successor)			—
Common stock, $0.01 par; authorized 2,950,000 shares; issued and outstanding: 2,594,977 shares (Successor)			26
Additional paid-in capital			239,472					331,917
Retained deficit			(38,038		)			(4,900		)
TOTAL STOCKHOLDERS’ EQUITY			201,460					327,261
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY			$	967,741				$	797,372

 

The accompanying notes are an integral part of these financial statements.

5

Duane Reade Inc.
Consolidated Statements of Cash Flows (Unaudited)
(In thousands)

		Successor
		Restated					Predecessor—Restated
		Period from					Period from					Nine Months
		July 31, 2004					Dec. 28, 2003					Ended
		through					through					September 27,
		Sept. 25, 2004					July 30, 2004					2003
Cash flows (used in) provided by operating activities:
Net (loss) income			$	(38,038	)			$	3,317				$	9,183
Adjustments to reconcile net (loss) income to net cash (used in) provided by operating activities:
Depreciation and amortization			8,011					23,003					25,333
Deferred income taxes			(32,473		)			5,900					5,798
Debt extinguishment								—					730
Non-cash rent expense			2,488					4,383					6,813
Changes in operating assets and liabilities (net of the effect of acquisitions):
Receivables			1,026					(3,057		)			(1,117		)
Inventories			(7,521		)			4,385					(23,851		)
Accounts payable			14,842					(20,047		)			12,261
Prepaid and accrued expenses			27,540					747					174
Other assets and liabilities, net			2,129					2,921					(5,560		)
NET CASH (USED IN) PROVIDED BY OPERATING ACTIVITIES			(21,996		)			21,552					29,764
Cash flows used in investing activities:
Capital expenditures			(4,571		)			(17,552		)			(34,523		)
Lease acquisition, customer file and other costs			(7,633		)			(14,925		)			(11,261		)
Purchase of Duane Reade			(413,684		)			—					—
NET CASH USED IN INVESTING ACTIVITIES			(425,888		)			(32,477		)			(45,784		)
Cash flows from financing activities:
Proceeds from Term Loan			155,000					—					—
Proceeds from Senior Notes			195,000					—					—
Repurchase of Convertible Notes			(201,000		)			—					—
Proceeds from sale of common stock			239,498					—					—
Repayment of term notes			—					—					(65,091		)
Retirement of senior subordinated notes			—					—					(1,621		)
Borrowings from revolving credit facility			415,047					941,503					554,463
Repayments of revolving credit facility			(343,453		)			(930,511		)			(472,047		)
Proceeds from exercise of stock options			—					1,126					—
Deferred financing costs			(12,049		)			(841		)			(2,191		)
Repayments of capital lease obligations			(120		)			(266		)			(373		)
NET CASH PROVIDED BY FINANCING ACTIVITIES			447,923					11,011					13,140
Net increase (decrease) in cash			39					86					(2,880		)
Cash at beginning of period			1,338					1,252					4,183
Cash at end of period			$	1,377				$	1,338				$	1,303

 

The accompanying notes are an integral part of these financial statements.

6

Notes to Unaudited Consolidated Interim Financial Statements
(dollars in thousands, except per share data)

1.   Basis of Presentation

On July 30, 2004, Duane Reade Inc. was acquired through a merger transaction with Duane Reade Acquisition Corp. (“Duane Reade Acquisition”), a wholly owned subsidiary of Duane Reade Holdings, Inc. and an affiliate of Oak Hill Capital Partners, L.P. (“Oak Hill”), a private equity firm (the “Acquisition”). The Acquisition was accomplished through the merger of Duane Reade Acquisition into Duane Reade Inc., with Duane Reade Inc. being the surviving entity.

The accompanying financial statements designated as the “Successor” are the financial statements of Duane Reade Inc. and subsidiaries for periods subsequent to July 30, 2004. Although Duane Reade Inc. was the legal entity that remained after the Acquisition, all financial statements for periods prior to and including July 30, 2004, the date of the Acquisition, are referred to as the financial statements of the “Predecessor.” The “Company” refers to the operations of Duane Reade Inc. and subsidiaries for both the Predecessor and Successor periods.

The Acquisition was accounted for in accordance with the purchase method of accounting. Accordingly, the purchase price of the Acquisition has been allocated to identifiable assets acquired and liabilities assumed based upon their estimated fair values at the acquisition date. This allocation is preliminary and includes a number of estimates which, upon further evaluation, may require modification.

The Unaudited Consolidated Interim Financial Statements included herein reflect all adjustments which, in the opinion of management, are necessary to present fairly the results of operations, financial position and cash flows of Duane Reade Inc. (the “Company”), and have been prepared, in all material respects, in accordance with the same accounting principles followed in the preparation of the Predecessor’s Annual Consolidated Financial Statements for the year ended December 27, 2003. These Unaudited Consolidated Interim Financial Statements should be read in conjunction with the Predecessor’s Consolidated Financial Statements included in its Annual Report on Form 10-K, as amended to date, for the year ended December 27, 2003. The Unaudited Consolidated Interim Financial Statements include the accounts of the Company and its subsidiaries. All significant intercompany transactions and balances have been eliminated. The results for the interim periods presented are not necessarily indicative of the results expected for the full year.

The Company has no assets or operations other than its investment in its subsidiaries, each of which, other than Duane Reade, a New York general partnership which is the Companys’ principal operating company and of which the Company is a general partner (“Duane Reade GP”), is a guarantor of the Company’s various debt instruments. Duane Reade GP is a co-obligor under each of the Company’s debt facilities. Accordingly, the Unaudited Consolidated Interim Financial Statements present the consolidated assets and operations of the subsidiary guarantors. The guarantees of the subsidiary guarantors, which relate to the Company’s obligations under its debt and credit agreements, are full and unconditional, joint and several.

2.   Restatements

The Company has restated its consolidated financial statements to conform certain accounting practices to the following accounting requirements:

1.     Lease accounting under FASB Technical Bulletin No. 85-3 (FTB 85-3)

2.     Acquisition lease accounting under FASB No. 141 “Business Combinations”

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3.     Gross versus net sales and cost of sales accounting under Emerging Issues Task Force Release 99-19 (EITF 99-19)

4.     Balance sheet classification of outstanding borrowings under the revolving loan facility because cash receipts controlled by the lenders are used to reduce outstanding debt, and the Company does not meet the criteria under FASB No. 6 “Classification of Short-Term Obligations Expected to be Refinanced” (FAS 6) to reclassify the debt as long-term

5.     Reporting of revolving loan facility borrowings and repayments under FASB No. 95 “Statement of Cash Flows” (FAS 95)

6.     Restatements to include certain previously unrecorded and immaterial audit adjustments related to the periods affected.

In connection with these restatements, the Company obtained from the administrative agent under the amended asset-based revolving loan facility, an acknowledgement confirming that these restatements do not constitute an event of technical default, as defined in the document governing the amended asset-based revolving loan facility.

Based upon a review of the Company’s lease accounting methods the Company determined that its previous policy of commencing rent expense when a store opens (and not at the commencement of the lease) was inconsistent with FTB 85-3. For construction purposes, the Company often takes possession of leased properties prior to opening. In accordance with FTB 85-3, the Company will record rent expense commencing on the date of possession. In accordance with the provisions of FAS 141, the Company has restated reported balance sheet liabilities, goodwill and results of operations, cost of sales and selling, general and administrative expenses to correct the lease accounting to reflect straight-line rent expense (for leases in effect on the July 30, 2004 acquisition date) calculated from the date of the Company’s acquisition by Oak Hill rather than from the original lease commencement dates as previously recorded. This adjusted lease accounting has no impact upon lease maturities, the timing of any lease payments or cash flows from past or future operating activities. The Company is restating its previously issued financial statements to reflect certain resales of retail inventory on a gross revenue and cost of sales basis in accordance with EITF 99-19, rather than on a net basis as previously reported. The Company is restating its previously reported balance sheets for September 25, 2004 and December 27, 2003 to reflect the classification of outstanding borrowings under the revolving loan facility as current liabilities rather than as long-term debt, as previously reported. The change is being made because cash receipts controlled by the lenders are used to reduce outstanding debt, and the Company does not meet the criteria of FAS 6 to reclassify the debt as long-term. This is not an indication that this credit facility is expected to be retired within the next year. This facility expires in July 2008 and the Company intends to continue to access it for its working capital needs throughout the remaining term. The Company has also restated its consolidated statements of cash flows for the successor period from July 31, 2004 through September 25, 2004 and the predecessor periods from December 28, 2003 through July 30, 2004 and the first nine months of fiscal 2003 to reflect the reporting of revolving loan facility borrowings and repayments separately on a gross basis as required under FAS 95. The effect of these restatements on the consolidated financial statements for the successor period from July 31, 2004 through September 25, 2004 and the predecessor periods from June 27, 2004 through July 30, 2004, from December 28, 2003 through July 30, 2004 and the thirteen and thirty-nine weeks ended September 27, 2003 is shown below. The Company has identified the source of the restatements from lease accounting (FTB 85-3), acquisition lease accounting (FAS 141), gross sales and cost of sales (EITF 99-19), classification of outstanding borrowings under the revolving loan facility (FAS 6), reporting of revolving borrowings and payments (FAS 95) and other previously unrecorded and immaterial adjustments (Other).

8

Duane Reade Inc.
Consolidated Profit & Loss Restatement
(in thousands)

				Successor						Predecessor
				Period from						Period from					Period from					For the 13			For the 39
				7/31/04						6/27/04					12/28/03					Weeks			Weeks
				through						through					through					Ended			Ended
				9/25/04						7/30/04					7/30/04					9/27/03			9/27/03
Sales		as reported			$	217,556					$	132,085				$	846,841			$	338,630		$	1,027,398
		adjustment—EITF 99-19			20,494						10,294					80,960				18,314			54,434
		as restated			$	238,050					$	142,379				$	927,801			$	356,944		$	1,081,832
Cost of Sales		as reported			$	172,765					$	104,421				$	663,224			$	266,520		$	808,124
		adjustment—EITF 99-19			20,494						10,294					80,960				18,314			54,434
		adjustment—FTB 85-3			308						217					977				129			935
		adjustment—FAS 141			865						—					—				—			—
		adjustment—Other			(316		)				625					(71		)		(574		)	(2,088		)
		as restated			$	194,116					$	115,557				$	745,090			$	284,389		$	861,405
Gross Profit		as reported			$	44,791					$	27,664				$	183,617			$	72,110		$	219,274
		adjustment—FTB 85-3			(308		)				(217		)			(977		)		(129		)	(935		)
		adjustment—FAS 141			(865		)				—					—				—			—
		adjustment—Other			316						(625		)			71				574			2,088
		as restated			$	43,934					$	26,822				$	182,711			$	72,555		$	220,427
Selling, general and administrative expenses		as reported			$	37,355					$	23,726				$	142,293			$	56,296		$	167,130
		adjustment—FAS 141			63						—					—				—			—
		adjustment—Other			—						—					—				315			953
		as restated			$	37,418					$	23,726				$	142,293			$	56,611		$	168,083
Earnings before tax		as reported			$	(69,591	)				$	(1,843	)			$	5,360			$	3,405		$	16,208
		adjustment			(920		)				(842		)			(907		)		130			200
		as restated			$	(70,511	)				$	(2,685	)			$	4,453			$	3,535		$	16,408
Income tax provision		as reported			$	(32,048	)				$	(1,325	)			$	1,555			$	1,499		$	7,132
		adjustment			(425		)				(389		)			(419		)		59			93
		as restated			$	(32,473	)				$	(1,714	)			$	1,136			$	1,558		$	7,225
Net income		as reported			$	(37,543	)				$	(518	)			$	3,805			$	1,906		$	9,076
		adjustment			(495		)				(453		)			(488		)		71			107
		as restated			$	(38,038	)				$	(971	)			$	3,317			$	1,977		$	9,183

 

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Duane Reade Inc.
Consolidated Balance Sheet Restatement
(in thousands)

				Successor											Predecessor
				As at September 25, 2004											As at December 27, 2003
Caption affected by restatement				As Reported					Adjustment			As Restated			As Reported					Adjustment					As Restated
Receivables					$	56,686			$	(1,225	)	$	55,461			$	53,689				$	(259	)			$	53,430
Inventory					264,064				7,037			271,101				259,765					(1,626		)			258,139
Current portion of deferred income taxes					20,590				1,864			22,454				8,150					2,661					10,811
Prepaid & other current assets					19,224				—			19,224				19,504					759					20,263
Total current assets					361,941				7,676			369,617				342,360					1,535					343,895
Property & equipment, net					194,809				32,216			227,025				189,469					—					189,469
Goodwill, net					188,892				(72,017		)	116,875				161,318					—					161,318
Deferred income taxes					—				—			—				5,543					8,311					13,854
Other assets					217,508				36,716			254,224				88,836					—					88,836
Total assets					$	963,150			$	4,591		$	967,741			$	787,526				$	9,846				$	797,372
Accounts payable					$	80,323			$	—		$	80,323			$	85,258				$	270				$	85,528
Accrued expenses					63,747				(7,108		)	56,639				27,489					2,597					30,086
Current portion of debt					—				152,939			152,939				—					70,353					70,353
Total current liabilities					148,671				145,831			294,502				114,802					73,220					188,022
Long-term debt					502,971				(152,939		)	350,032				271,385					(70,353		)			201,032
Deferred income taxes					17,196				53,103			70,299				—					—					—
Other noncurrent liabilities					90,149				(40,910		)	49,239				62,915					17,039					79,954
Total liabilities					$	761,196			$	5,085		$	766,281			$	450,205				$	19,906				$	470,111
Retained earnings					$	(37,543	)		$	(494	)	$	(38,038	)		$	5,160				$	(10,060	)			$	(4,900	)
Total stockholders’ equity					$	201,954			$	(494	)	$	201,460			$	337,321				$	(10,060	)			$	327,261
Total liabilities and stockholders’ equity					$	963,150			$	4,591		$	967,741			$	787,526				$	9,846				$	797,372

 

The adjustments to other noncurrent liabilities and noncurrent deferred income taxes relate to lease accounting under FAS 141 and FTB 85-3. The adjustments to debt relate to the classification of the revolving loan balance as a current liability as discussed above. All other balance sheet adjustments relate to purchase price accounting and other previously unrecorded and immaterial adjustments.

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