Rite Aid 2013 Annual Report Download - page 93

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RITE AID CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
For the Years Ended March 2, 2013, March 3, 2012 and February 26, 2011
(In thousands, except per share amounts)
11. Indebtedness and Credit Agreement (Continued)
contains covenant provisions that, among other things, allow the holders of the notes to participate
along with the term loan holders in the mandatory prepayments resulting from the proceeds of certain
asset dispositions (at the option of the noteholder) and include limitations on the Company’s ability to
pay dividends, make investments or other restricted payments, incur debt, grant liens, sell assets and
enter into sale-leaseback transactions.
In July 2010, the Company repurchased $93,812 of its $158,000 outstanding 8.5% convertible notes.
The remaining 8.5% convertible notes require that the Company maintain a listing on the New York
Stock Exchange. In the event of a delisting, holders of these notes could require the Company to
repurchase them. The Company has the ability to repurchase these notes under its credit agreement.
Interest Rates and Maturities
The annual weighted average interest rate on the Company’s indebtedness was 7.1%, 7.4%, and
7.5% for fiscal 2013, 2012, and 2011, respectively.
The aggregate annual principal payments of long-term debt for the five succeeding fiscal years are
as follows: 2014—$14,006; 2015—$11,610; 2016—$740,798; 2017—$511,610 and $4,642,462 in 2018 and
thereafter.
12. 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 10 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 $8,536, $8,866, and $9,662, was $951,239,
$976,892, and $965,665 in fiscal 2013, 2012, and 2011, respectively. These amounts include contingent
rentals of $21,026, $22,659 and $23,336 in fiscal 2013, 2012, and 2011, respectively.
During fiscal 2013, the Company sold two owned operating stores to independent third parties.
Net proceeds from the sale were $6,355. Concurrent with these sales, the Company entered into
agreements to lease the stores back from the purchasers over a minimum lease term of 12 to 20 years.
The Company accounted for these leases as operating leases. The transactions resulted in a gain of
$1,818 which is included in the gain on sale of assets, net for the fifty-two weeks ended March 2, 2013.
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 term of 7 to 10 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.
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