Rite Aid 2011 Annual Report Download - page 103

RITE AID CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
For the Years Ended February 26, 2011, February 27, 2010 and February 28, 2009
(In thousands, except per share amounts)
16. Commitments, Contingencies and Guarantees (Continued)
nationwide collective group of individuals who worked for the Company as store managers since
March 31, 2007. The Court ordered that Notice of the Indergit action be sent to the purported
members of the collective group (approximately 7,000 current and former store managers) and
approximately 1,550 have joined the Indergit action. At this time, the Company is not able to predict
the outcome of these lawsuits, or any possible monetary exposure associated with the lawsuits. The
Company’s management believes, however, that the lawsuits are without merit and not appropriate for
collective or class action treatment. The Company is vigorously defending all of these claims.
The Company is currently a defendant in several putative class action lawsuits filed in state courts
in California alleging violations of California wage and hour laws pertaining primarily to pay for missed
meals and rest periods. These suits purport to be class actions and seek substantial damages. At this
time, the Company is not able to predict the outcome of these lawsuits, or any possible monetary
exposure associated with the lawsuits. The Company’s management believes, however, that the
plaintiffs’ allegations are without merit and that their claims are not appropriate for class action
treatment. The Company is vigorously defending all of these claims.
The Company was served with a United States Department of Health and Human Services Office
of the Inspector General (‘‘OIG’’) Subpoena dated March 5, 2010 in connection with an investigation
being conducted by the OIG, the United States Attorney’s Office for the Central District of California
and the United States Department of Justice Commercial Litigation Branch. The subpoena requests
records related to any gift card or similar programs for customers who transferred prescriptions for
drugs or medicines to the Company’s pharmacies, and whether any customers who receive federally
funded prescription benefits (e.g. Medicare and Medicaid) may have benefited from those programs.
The Company is in the process of producing records in response to the subpoena and is unable to
predict with certainty the timing or outcome of the investigation.
The Company does not believe that any of these matters will have a material adverse effect on its
business or financial condition. The Company cannot give assurance, however, that an unfavorable
outcome in one or more of these matters will not have a material adverse effect on its results of
operations for the period in which they are resolved.
The Company is subject from time to time to various claims and lawsuits and governmental
investigations arising in the ordinary course of our business. While the Company’s management cannot
predict the outcome of these claims with certainty, the Company’s management does not believe that
the outcome of any of these legal matters will have a material adverse effect on our business,
consolidated results of operations or financial position.
Guaranteed Lease Obligations
In connection with certain business dispositions, the Company continues to guarantee lease
obligations for 127 former stores. The respective purchasers assume the Company’s obligations and are,
therefore, primarily liable for these obligations. Assuming that each respective purchaser became
insolvent, an event which the Company believes to be highly unlikely, management estimates that it
could settle these obligations for amounts substantially less than the aggregate obligation of $209,051 as
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