Rite Aid 2016 Annual Report Download - page 66

The interest rate on our variable rate borrowings, which include our revolving credit facility,
Tranche 1 Term Loan and our Tranche 2 Term Loan, are all based on LIBOR. However, the interest
rate on our Tranche 1 Term Loan and Tranche 2 Term Loan have a LIBOR floor of 100 basis points. If
the market rates of interest for LIBOR changed by 100 basis points as of February 27, 2016, our
annual interest expense would change by approximately $25.3 million.
A change in interest rates does not have an impact upon our future earnings and cash flow for
fixed-rate debt instruments. As fixed-rate debt matures, however, and if additional debt is acquired to
fund the debt repayment, future earnings and cash flow may be affected by changes in interest rates.
This effect would be realized in the periods subsequent to the periods when the debt matures.
Increases in interest rates would also impact our ability to refinance existing maturities on favorable
terms.
Item 8. Financial Statements and Supplementary Data
Our consolidated financial statements and notes thereto are included elsewhere in this report and
are incorporated by reference herein. See Item 15 of Part IV.
Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
Not applicable
Item 9A. Controls and Procedures
(a) Disclosure Controls and Procedures
Our management, with the participation of our Chief Executive Officer and Chief Financial
Officer, has evaluated the effectiveness of disclosure controls and procedures (as such term is defined
in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the
‘‘Exchange Act’’)) as of the end of the period covered by this report. Based on such evaluation, our
Chief Executive Officer and Chief Financial Officer have concluded that, as of the end of such period,
our disclosure controls and procedures are effective.
(b) Internal Control Over Financial Reporting
Management’s Annual Report on Internal Control Over Financial Reporting
Our management is responsible for establishing and maintaining adequate internal control over
financial reporting, as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act.
Under the supervision and with the participation of our management, including our Chief Executive
Officer and Chief Financial Officer, we have conducted an evaluation of the effectiveness of our
internal control over financial reporting based on the framework in ‘‘Internal Control—Integrated
Framework’’ (2013) issued by the Committee of Sponsoring Organizations of the Treadway
Commission. We acquired EnvisionRx on June 24, 2015, for additional information regarding the
acquisition, see Note 2 to the consolidated financial statements included in this annual report.
Management has excluded EnvisionRx from the assessment of internal control over financial reporting.
EnvisionRx represented approximately 26%, 13%, and 13%, of total assets, total revenue and net
income, respectively, of the related consolidated financial statement amounts as of and for the year
ended February 27, 2016. SEC guidance permits management to omit an assessment of an acquired
business’ internal control over financial reporting from management’s assessment of internal control
over financial reporting for a period not to exceed one year from the date of acquisition. We are in the
process of integrating the EnvisionRx operations within our internal control structure. Accordingly, we
have excluded EnvisionRx from our annual assessment of internal control over financial reporting as of
February 27, 2016. Based on this evaluation, our management has concluded that, as of February 27,
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