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RITE AID CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
For the Years Ended March 3, 2012, February 26, 2011 and February 27, 2010
(In thousands, except per share amounts)
10. Leases
The Company leases most of its retail stores and certain distribution facilities under noncancellable
operating and capital leases, most of which have initial lease terms ranging from 5 to 22 years. The
Company also leases certain of its equipment and other assets under noncancellable operating leases
with initial terms ranging from 3 to 22 years. In addition to minimum rental payments, certain store
leases require additional payments based on sales volume, as well as reimbursements for taxes,
maintenance and insurance. Most leases contain renewal options, certain of which involve rent
increases. Total rental expense, net of sublease income of $8,866, $9,662, and $11,027, was $976,892,
$965,665 and $961,519 in fiscal 2012, 2011, and 2010, respectively. These amounts include contingent
rentals of $22,659, $23,336 and $27,260 in fiscal 2012, 2011, and 2010, respectively.
During fiscal 2012 the Company sold two owned operating stores to independent third parties. Net
proceeds from the sale were $6,038. Concurrent with these sales, the Company entered into agreements
to lease the stores back from the purchasers over a minimum lease terms of 7 to10 years. The
Company accounted for these leases as operating leases. The transactions resulted in a loss of $3,896
which is included in the gain on sale of assets, net for the fifty-three weeks ended March 3, 2012.
During fiscal 2011, the Company had no sale-leaseback transactions.
During fiscal 2010, the Company sold a total of 3 owned properties to independent third parties.
Net proceeds from these sales were $7,967. Concurrent with these sales, the Company entered into
agreements to lease the stores back from the purchasers over minimum lease terms of 10 to 20 years.
The Company accounted for all of these leases as operating leases. A gain on the sale of these stores
of $5,301 was deferred and is being recorded over the minimum term of these leases.
The net book values of assets under capital leases and sale-leasebacks accounted for under the
financing method at March 3, 2012 and February 26, 2011 are summarized as follows:
2012 2011
Land......................................... $ 6,695 $ 7,528
Buildings ...................................... 142,483 148,262
Leasehold improvements ........................... 1,236 1,639
Equipment ..................................... 19,261 22,515
Accumulated depreciation .......................... (100,300) (100,561)
$ 69,375 $ 79,383
Following is a summary of lease finance obligations at March 3, 2012 and February 26, 2011:
2012 2011
Obligations under financing leases ..................... $119,108 $128,994
Sale-leaseback obligations ........................... 7,876 11,303
Less current obligation ............................. (19,977) (18,003)
Long-term lease finance obligations .................... $107,007 $122,294
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