Rite Aid 2013 Annual Report Download - page 95

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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)
13. Redeemable Preferred Stock
In March 1999 and February 1999, Rite Aid Lease Management Company, a 100 percent owned
subsidiary of the Company, issued 63,000 and 150,000 shares of Cumulative Preferred Stock, Class A,
par value $100 per share, respectively. The Class A Cumulative Preferred Stock is mandatorily
redeemable on April 1, 2019 at a redemption price of $100 per share plus accumulated and unpaid
dividends. The Class A Cumulative Preferred Stock pays dividends quarterly at a rate of 7.0% per
annum of the par value of $100 per share when, as and if declared by the Board of Directors of Rite
Aid Lease Management Company in its sole discretion. The amount of dividends payable in respect of
the Class A Cumulative Preferred Stock may be adjusted under certain events. The outstanding shares
of the Class A Preferred Stock were recorded at their estimated fair value of $19,253 for the fiscal 2000
issuances, which equaled the sale price on the date of issuance. Because the fair value of the Class A
Preferred Stock was less than the mandatory redemption amount at issuance, periodic accretions to
expense using the interest method are made so that the carrying amount equals the redemption amount
on the mandatory redemption date. Accretion was $102 in fiscal 2013, 2012 and 2011. The amount of
this instrument is $20,686 and $20,583 and is recorded in Other Non-Current Liabilities as of March 2,
2013 and March 3, 2012, respectively.
14. Capital Stock
As of March 2, 2013, the authorized capital stock of the Company consists of 1,500,000 shares of
common stock and 20,000 shares of preferred stock, each having a par value of $1.00 per share.
Preferred stock is issued in series, subject to terms established by the Board of Directors.
The Company has outstanding Series G and Series H preferred stock. The Series G preferred
stock has a liquidation preference of $100 per share and pays quarterly dividends at 7% of liquidation
preference. The Series G preferred stock can be redeemed at the Company’s election after January
2009. The Company has not elected to redeem the remaining Series G preferred stock as of March 2,
2013.
The Series H preferred stock pays dividends of 6% of liquidation preference and can be redeemed
at the Company’s election after January 2010. All dividends can be paid in either cash or in additional
shares of preferred stock, at the election of the Company. Any redemptions are at 105% of the
liquidation preference of $100 per share, plus accrued and unpaid dividends. The Series H shares are
convertible into common stock of the Company, at the holder’s option, at a conversion rate of $5.50
per share. The Company has not elected to redeem the Series H preferred stock as of March 2, 2013.
15. Stock Option and Stock Award Plans
The Company recognizes share-based compensation expense in accordance with ASC 718,
‘‘Compensation—Stock Compensation.’’ Expense is recognized over the requisite service period of the
award, net of an estimate for the impact of forfeitures. Operating results for fiscal 2013, 2012 and 2011
include $17,717, $15,861 and $17,336 of compensation costs related to the Company’s stock-based
compensation arrangements.
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