Rite Aid 2012 Annual Report Download - page 14

56,000,000 of its 234,401,162 shares of our common stock. We have entered into a registration rights
agreement with Jean Coutu Group, which will give Jean Coutu Group the right to require us to
register all or a portion of its shares at any time (subject to certain exceptions). The sale of a
substantial number of our shares by Jean Coutu Group or our other stockholders within a short period
of time could cause our stock price to decrease, make it more difficult for us to raise funds through
future offerings of Rite Aid common stock or acquire other businesses using Rite Aid common stock as
consideration.
We are in compliance with all New York Stock Exchange continued listing requirements. However, if we do not
continue to maintain compliance with such requirements, our common stock may be delisted.
On March 1, 2011, we were notified by the NYSE that, as of March 1, 2011, we regained
compliance with the NYSE minimum share price listing requirement. We are now in compliance with
all NYSE listing rules, have actively been taking steps to maintain our listing and expect our efforts to
maintain our NYSE listing will be successful. However, there can be no assurance that we will maintain
compliance with the NYSE minimum share price rule or other continued listing requirements. In the
event of a delisting, all holders of our $64.2 million of outstanding 8.5% Convertible Notes due May
2015 (‘‘Convertible Notes’’) would be entitled to require us to repurchase their Convertible Notes. Our
senior secured credit facility permits us to make such a repurchase of the Convertible Notes; provided
that, before and after such transaction, no default or event of default shall have occurred and be
continuing under the senior secured credit facility and we have more than $100.0 million of availability
under our revolving credit facility. Our ability to pay cash to holders of the Convertible Notes may be
limited by our financial resources at the time of such repurchase. We cannot assure you that sufficient
financing will be available on terms acceptable to us if necessary to make any required repurchase of
the Convertible Notes.
Risks Related to our Operations
We need to improve our operations in order to improve our financial condition, but our operations will not
improve if we cannot effectively implement our business strategy or if our strategy is negatively affected by
worsening economic conditions.
We have not yet achieved the sales productivity level of our major competitors. We believe that
improving the sales of existing stores is important to improving profitability and operating cash flow. If
we are not successful in implementing our strategies, including our efforts to increase sales and further
reduce costs, or if our strategies are not effective, we may not be able to improve our operations. In
addition, any further adverse change or continued weakness in general economic conditions or major
industries can adversely affect drug benefit plans and reduce our pharmacy sales. Adverse changes in
general economic conditions could affect consumer buying practices and consequently reduce our sales
of front end products, and cause a decrease in our profitability. Failure to improve operations or a
continued weakness in major industries or general economic conditions would adversely affect our
results of operations, financial condition and cash flows and our ability to make principal or interest
payments on our debt.
For so long as Jean Coutu Group (and, subject to certain conditions, certain members of the Coutu family)
maintain certain levels of Rite Aid stock ownership, Jean Coutu Group (and, subject to certain conditions,
certain members of the Coutu family) could exercise significant influence over us.
At March 3, 2012, Jean Coutu Group owned approximately 25.2% of the voting power of Rite
Aid. Jean Coutu Group (and, subject to certain conditions, certain members of the Coutu family)
generally has the ability to significantly influence the outcome of any matter submitted for the vote of
our stockholders. The Stockholder Agreement provides that Jean Coutu Group (and, subject to certain
conditions, certain members of the Coutu family) has the right to designate three of the eleven
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