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RITE AID CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
For the Years Ended March 1, 2014, March 2, 2013 and March 3, 2012
(In thousands, except per share amounts)
11. Indebtedness and Credit Agreement (Continued)
2012 Transactions
In February 2012, the Company completed a tender offer for the 8.625% notes in which $404,844
aggregate principal amount of the outstanding 8.625% notes were tendered and repurchased, resulting
in an aggregate loss on debt retirement of $16,066, recorded in the fourth quarter of fiscal 2012. In
March 2012, the Company redeemed the remaining 8.625% notes for $55,644, which included the call
premium and interest through the redemption date.
During August 2011, the Company repurchased $41,000 of its 8.625% notes, $5,000 of its 9.375%
notes and $4,496 of its 6.875% debentures. These repurchases resulted in a gain for the period of
$4,924.
Interest Rates and Maturities
The annual weighted average interest rate on the Company’s indebtedness was 6.4%, 7.1%, and
7.4% for fiscal 2014, 2013, and 2012, respectively.
The aggregate annual principal payments of long-term debt for the five succeeding fiscal years are
as follows: 2015—$16,934; 2016—$75,798; 2017—$11,610; 2018—$411,610 and $5,130,853 in 2019 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 $8,369, $8,536, and $8,866, was $952,777,
$951,239, and $976,892 in fiscal 2014, 2013, and 2012, respectively. These amounts include contingent
rentals of $18,679, $21,026 and $22,659 in fiscal 2014, 2013, and 2012, respectively.
During fiscal 2014, the Company sold one owned operating store to an independent third party.
Net proceeds from the sale were $3,989. Concurrent with this sale, the Company entered into an
agreement to lease the store back from the purchaser over a minimum lease term of 20 years. The
Company accounted for this lease as an operating lease. The transaction resulted in a gain of $269
which is included in the gain on sale of assets, net for the fifty-two weeks ended March 1, 2014.
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.
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