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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For The Fiscal Year Ended March 2, 2013
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For The Transition Period From To
Commission File Number 1-5742
RITE AID CORPORATION
(Exact name of registrant as specified in its charter)
Delaware 23-1614034
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
30 Hunter Lane, Camp Hill, Pennsylvania 17011
(Address of principal executive offices) (Zip Code)
Registrant’s telephone number, including area code: (717) 761-2633
Securities registered pursuant to Section 12(b) of the Act:
Title of each class Name of each exchange on which registered
Common Stock, $1.00 par value New York Stock Exchange
Securities registered pursuant to Section 12(g) of the Act: None
Indicate by check mark if the registrant is a well known seasoned issuer, as defined in Rule 405 of the Securities
Act. Yes No
Indicate by check mark if the registrant is not required to file reports pursuant to section 13 or section 15(d) of the
Exchange Act. Yes No
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of
the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes No
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Website, if
any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405
of this chapter) during the preceding 12 months (or for such shorter period that the Registrant was required to submit
and post such files). Yes No
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained
herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated
filer. See definition of ‘‘Accelerated Filer’’ and ‘‘Large Accelerated Filer’’ in Rule 12b-2 of the Exchange Act.
Large Accelerated Filer Accelerated Filer Non-Accelerated Filer Smaller reporting company
(Do not check if a
smaller reporting company)
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
Yes No
The aggregate market value of the voting and non-voting common stock of the registrant held by non-affiliates of
the registrant based on the closing price at which such stock was sold on the New York Stock Exchange on September 1,
2012 was approximately $861,991,122. For purposes of this calculation, executive officers, directors and 5% shareholders
are deemed to be affiliates of the registrant.
As of April 11, 2013 the registrant had outstanding 904,564,621 shares of common stock, par value $1.00 per share.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the proxy statement for the registrant’s annual meeting of stockholders to be held on June 20, 2013 are
incorporated by reference into Part III.

Table of contents

  • Page 1
    ...፤ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For The Fiscal Year Ended March 2, 2013 OR អ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For The Transition Period From To Commission File Number 1-5742 RITE AID...

  • Page 2
    ...Disclosures About Market Risk ...Financial Statements and Supplementary Data ...Changes in and Disagreements with Accountants on Accounting and Financial Disclosure ...Controls and Procedures ...Other Information ... ... 23 24 26 45 46 46 46 49 Directors, Executive Officers and Corporate Governance...

  • Page 3
    ... payors to reduce prescription drug reimbursement and encourage mail order and limit access to payor networks; • competitive pricing pressures, including aggressive promotional activity from our competitors; • decisions to close additional stores and distribution centers or undertake additional...

  • Page 4
    ...; 52% of our stores included a drive-thru pharmacy; and 47% included a GNC store within Rite Aid store. Our headquarters are located at 30 Hunter Lane, Camp Hill, Pennsylvania 17011, and our telephone number is (717) 761-2633. Our common stock is listed on the New York Stock Exchange under the...

  • Page 5
    ... wellness+ program has provided customers and patients with the opportunity to earn significant discounts and wellness rewards in return for being loyal Rite Aid shoppers. Enrolled members earn rewards based on the accumulation of points for certain front-end and prescription purchases. The program...

  • Page 6
    ... value to members earning enough points to reach the Gold, Silver or Bronze tier levels. In addition to tiered discounts and wellness rewards, members receive exclusive sale pricing and the opportunity to earn Plus Up Rewards, which are offers on certain items featured in our weekly circular...

  • Page 7
    ...programs in fiscal 2013, including the roll out of the Rite Care Prescription Advisor. The Rite Care Prescription Advisor gives our pharmacists a tool for initiating one-on-one consultations with patients in order to explain the health benefits of taking medications as prescribed. Other key pharmacy...

  • Page 8
    ... for both the Android and iPhone platforms. This free app allows our customers to use their smartphones to order refills by scanning their prescription bottle, manage their wellness + account, access the weekly circular to view sale items, order photo prints and locate a nearby Rite Aid store 7

  • Page 9
    ... results of operations. In fiscal 2013, 96.6% of our pharmacy sales were to customers covered by third party payors (such as insurance companies, prescription benefit management companies, government agencies, private employers or other managed care providers) that agree to pay for all or a portion...

  • Page 10
    ...: • Product price promotions to draw customers to our stores; • Our wellness + loyalty program, which benefits members based on accumulating points for certain front end and prescription purchases, and offers + UP rewards to provide members additional savings; • Emphasis on the value of our...

  • Page 11
    ... and pricing. Pursuant to the Omnibus Budget Reconciliation Act of 1990 (''OBRA'') and comparable state regulations, our pharmacists are required to offer counseling, without additional charge, to our customers about medication, dosage, delivery systems, common side effects and other information...

  • Page 12
    ...for the Chief Executive Officer and Senior Financial Officers, our Code of Ethics and Business Conduct and our Related Person Transaction Policy are posted on the corporate governance section of our website at www.riteaid.com and are available in print upon request to Rite Aid Corporation, 30 Hunter...

  • Page 13
    ... on our business. Our existing debt agreements limit our ability to take certain of these actions. Our failure to generate sufficient operating cash flow to pay our debts or refinance our indebtedness could have a material adverse effect on us. Borrowings under our senior secured credit facility are...

  • Page 14
    ... could cause our stock price to decrease. The shares of Rite Aid common stock that the Jean Coutu Group currently holds are subject to limitations on sale and may only be sold under certain circumstances, including pursuant to a registered underwritten public offering under the Securities Act or in...

  • Page 15
    ... of operations, financial condition and cash flows and our ability to make principal or interest payments on our debt. For so long as Jean Coutu Group (and, subject to certain conditions, certain members of the Coutu family) maintain certain levels of Rite Aid stock ownership, Jean Coutu Group (and...

  • Page 16
    ... results of operations, financial condition and cash flows. A significant disruption in our computer systems or a cyber security breach could adversely affect our operations. We rely extensively on our computer systems to manage our ordering, pricing, point-of-sale, inventory replenishment and other...

  • Page 17
    ... as Canada, as well as from large-scale retailers that offer generic drugs at a substantial discount. Some of our competitors have or may merge with or acquire pharmaceutical services companies, pharmacy benefit managers or mail order facilities, which may further increase competition. We may not...

  • Page 18
    ..., health maintenance organizations, managed care organizations, pharmacy benefit management companies, other State and local government entities, and other third-party payors to reduce prescription drug costs and pharmacy reimbursement rates, as well as litigation relating to how drugs are priced...

  • Page 19
    ...be subject to costly government enforcement actions or private litigation. Through our sales and marketing activities, we collect and store certain personal information that our customers provide to purchase products or services, enroll in promotional programs, register on our web site, or otherwise...

  • Page 20
    ... a comprehensive information security program, revise HIPAA-related policies and procedures and retain an independent assessor to conduct periodic compliance reviews. Item 1B. None Item 2. Properties Unresolved SEC Staff Comments As of March 2, 2013, we operated 4,623 retail drugstores. The overall...

  • Page 21
    ...State Store Count Alabama ...California ...Colorado ...Connecticut ...Delaware ...District of Columbia Georgia ...Idaho ...Indiana ...Kentucky ...Louisiana ...Massachusetts ...Maine ...Maryland ...Michigan ...Mississippi ...North Carolina ...Nevada ...New Hampshire ...New Jersey ...New York ...Ohio...

  • Page 22
    ... and acquisitions of facilities and prescription files. When we reduce in size, close or relocate a store or close distribution center facilities, we often continue to have leasing obligations or own the property. We attempt to sublease this space. As of March 2, 2013, we had 7,864,223 square feet...

  • Page 23
    ...March 13, 2013 concluding the matter. We have been named in a collective and class action lawsuit, Indergit v. Rite Aid Corporation et al pending in the United States District Court for the Southern District of New York, filed purportedly on behalf of current and former store managers working in our...

  • Page 24
    ... Duces Tecum dated August 26, 2011 by the United States Attorney's Office for the Eastern District of Michigan. The subpoena requests records regarding Rite Aid's Rx Savings Program and the reporting of usual and customary charges to publicly funded health programs. In connection with the same...

  • Page 25
    ... managers typically select. STOCK PERFORMANCE GRAPH Comparison of 5 Year Cumulative Total Return Assumes Initial Investment of $100 March 2013 180.00 160.00 140.00 120.00 100.00 80.00 60.00 40.00 20.00 0.00 3/1/2008 Rite Aid Corporation Russell 2000 Index 2/28/2009 2/27/2010 2/26/2011 3/3/2012...

  • Page 26
    ...Diluted income (loss) per share ...Year-End Financial Position: Working capital ...Property, plant and equipment, net . Total assets ...Total debt ...Stockholders' deficit ...Other Data: Cash flows (used in) provided by: Operating activities ...Investing activities ...Financing activities ...Capital...

  • Page 27
    ... same store prescription count and a current year LIFO credit. We record the value of our inventory on the Last-In, First-Out (LIFO) method. We recorded a non-cash LIFO credit of $147.9 million, a non-cash LIFO charge of $188.7 million and a non-cash LIFO charge of $44.9 million in fiscal 2013, 2012...

  • Page 28
    ... of the Brooks Eckerd fiscal years 2004 - 2007 and fiscal years 2005 - 2007, respectively. The settlements with the IRS and the Commonwealth of Massachusetts did not impact our net financial position, results of operations or cash flows. The benefit recognized in fiscal 2013 was primarily...

  • Page 29
    ...prescription count was driven in part by the Walgreens / Express Scripts dispute which was settled in September 2012, our immunization program and our wellness + loyalty program. We expect lower reimbursement rates, our cycling of the Express Scripts business and the softening benefit of new generic...

  • Page 30
    ... prescription count, partially offset by an approximate 1.7% negative impact from new generic introductions and lower reimbursement rates from pharmacy benefit managers and government payors. Front end same store sales increased 1.1% from the prior year reflecting the positive impact of our wellness...

  • Page 31
    ... of new generics including generic Lipitor, partially offset by continued pressure on pharmacy benefit manager and governmental reimbursement rates. Front-end gross profit was driven by higher sales reflecting the positive impact of our wellness + loyalty program and continued strong Rite Aid Brand...

  • Page 32
    ... related to prescription drugs, as well as, expected revenues and costs related to the Patient Protection and Affordable Care Act (health care reform). Additionally, we take into consideration that certain operating stores are executing specific improvement plans which are monitored quarterly to...

  • Page 33
    ... assets using discounted future cash flows. Most stores are fully impaired in the period that the impairment charge is originally recorded. We recorded impairment charges for active stores of $24.0 million in fiscal 2013, $43.4 million in fiscal 2012 and $109.0 million in fiscal 2011. We review key...

  • Page 34
    ... that have been recorded in fiscal 2013, 2012 and 2011: March 2, 2013 Number Charge Year Ended March 3, 2012 Number Charge February 26, 2011 Number Charge Closed facilities: Actual and approved store closings ...Actual and approved relocations ...Distribution center closings ...Existing surplus...

  • Page 35
    ... centers for potential closure. Decisions to close or relocate stores or distribution centers in future periods would result in lease termination charges for lease exit costs and liquidation of inventory, as well as impairment of assets at these locations. In fiscal 2013, 2012 and 2011, we recorded...

  • Page 36
    ... year end 2013 and 2012, respectively. Dilutive Equity Issuances On March 2, 2013, 904.3 million shares of common stock, which includes unvested restricted shares, were outstanding and an additional 138.9 million shares of common stock were issuable related to outstanding stock options, convertible...

  • Page 37
    ... working capital for operations, to service our obligations to pay interest and principal on debt and to fund capital expenditures. Total liquidity as of March 2, 2013 was $1,031.2 million, which consisted of revolver borrowing capacity of $1,015.0 million and invested cash of $16.2 million. Credit...

  • Page 38
    .... Our senior secured credit facility contains covenants which place restrictions on the incurrence of debt beyond the restrictions described above, the payment of dividends, sale of assets, mergers and acquisitions and the granting of liens. Our credit facility also has one financial covenant, which...

  • Page 39
    ... repurchases resulted in a gain for the period of $5.0 million. 2011 Transactions In August 2010, we issued $650.0 million of our 8.00% senior secured notes due August 2020. These notes are unsecured, unsubordinated obligations of Rite Aid Corporation and rank equally in right of payment with all...

  • Page 40
    ...5 Years After 5 Years (Dollars in thousands) Total Contractual Cash Obligations Long term debt(1) ...Capital lease obligations(2) ...Operating leases(3) ...Open purchase orders ...Redeemable preferred stock(4) ...Other, primarily self insurance and retirement plan obligations(5) ...Minimum purchase...

  • Page 41
    ...fiscal 2013. Cash flow was positively impacted by net income and a reduction of inventory resulting primarily from recent generic introductions, generic price reductions, management initiatives to reduce inventory levels and fewer open stores, and a reduction of accounts receivable due to the timing...

  • Page 42
    ... relocation and store remodel projects, $115.8 million related to technology enhancements, improvements to distribution centers and other corporate requirements, and $67.1 million related to the purchase of prescription files from other retail pharmacies. We plan on making total capital expenditures...

  • Page 43
    ... its estimated future discounted cash flows. The discount rate is commensurate with the risks associated with the recovery of a similar asset. We regularly approve certain stores for closure. Impairment charges for closed stores, if any, are evaluated and recorded in the quarter the closure decision...

  • Page 44
    ... our discount rate of 50 basis points would not have a material impact on the total impairment recorded in fiscal 2013. Revenue recognition for our loyalty program: We offer a chain wide customer loyalty program, ''wellness+''. Members participating in our wellness+ loyalty card program earn points...

  • Page 45
    ...or credits for facility closing and impairment, inventory writedowns related to store closings, stock- based compensation expense, debt retirements, sale of assets and investments, revenue deferrals related to customer loyalty programs and other items. We reference this particular non-GAAP financial...

  • Page 46
    ... expense ...LIFO (credits) charges ...Lease termination and impairment charges . Stock-based compensation expense ...Gain on sale of assets, net ...Loss on debt retirements, net ...Closed facility liquidation expense ...Severance costs ...Customer loyalty card program revenue deferral ...Other...

  • Page 47
    ... 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...

  • Page 48
    ... 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...

  • Page 49
    ...over financial reporting of Rite Aid Corporation and subsidiaries (the ''Company'') as of March 2, 2013, based on criteria established in Internal Control- Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission. The Company's management is responsible for...

  • Page 50
    ... Statements of Cash Flows for the fiscal years ended March 2, 2013, March 3, 2012 and February 26, 2011 ...Notes to Consolidated Financial Statements ...2. Financial Statement Schedule Schedule II-Valuation and Qualifying Accounts All other schedules are omitted because they are not applicable...

  • Page 51
    ... 23, 2006, amended and restated as of June 4, 2007, between Rite Aid Corporation, The Jean Coutu Group (PJC) Inc., Jean Coutu, Marcelle Coutu, Francois J. Coutu, Michel Coutu, Louis Coutu, Sylvie Coutu and Marie-Josee Coutu Letter Agreement to the Amended and Restated Stockholder Agreement, dated...

  • Page 52
    ...named therein and The Bank of New York Trust Company, N.A. to the Indenture dated as of February 21, 2007, among Rite Aid Corporation, the subsidiary guarantors named therein and The Bank of New York Trust Company, N.A., related to the Company's 7.5% Senior Secured Notes due 2017 Second Supplemental...

  • Page 53
    ... Rite Aid Corporation, as issuer, and Morgan Guaranty Trust Company of New York, as trustee, related to the Company's 7.70% Notes due 2027 and 6.875% Senior Debentures due 2013 Supplemental Indenture, dated as of February 3, 2000, between Rite Aid Corporation and U.S. Bank Trust National Association...

  • Page 54
    ... as of February 21, 2013, between Rite Aid Corporation and U.S. Bank Trust National Association to the Indenture dated as of August 1, 1993, between Rite Aid Corporation and Morgan Guaranty Trust Company of New York, relating to the Company's 6.875% Senior Debentures due 2013 Indenture, dated as of...

  • Page 55
    ... January 16, 2013, to the 2010 Omnibus Equity Plan* 2012 Omnibus Equity Plan* Amendment No. 1, dated January 16, 2013, to the 2012 Omnibus Equity Plan* Form of Award Agreement* Supplemental Executive Retirement Plan* Executive Incentive Plan for Officers of Rite Aid Corporation* Amended and Restated...

  • Page 56
    ...By Reference To 10.21 10.22 Rite Aid Corporation Special Executive Retirement Plan* Employment Agreement by and between Rite Aid Corporation and Brian Fiala, dated as of June 26, 2007* Amendment No. 1 to Employment Agreement by and between Rite Aid Corporation and Brian Fiala, dated as of December...

  • Page 57
    ... administrative agent and collateral agent Credit Agreement, dated as of February 21, 2013, among Rite Aid Corporation, the lenders from time to time party thereto and Citicorp North America, Inc., as administrative agent and collateral agent Exhibit 10.30 to Form 10-K, filed on April 17, 2009 10...

  • Page 58
    ... as of June 5, 2009, among Rite Aid Corporation, each subsidiary named therein or which becomes a party thereto, Wilmington Trust Company, as collateral trustee, Citicorp North America, Inc., as senior collateral processing agent, The Bank of New York Trust Company, N.A., as trustee under the 2017...

  • Page 59
    ... Senior Loan Secured Parties (as defined therein), The Bank of New York Mellon Trust Company, N.A., as Senior Representative (as defined therein) for the Initial Additional Senior Debt Parties (as defined therein), and each additional Senior Representative from time to time party thereto Statement...

  • Page 60
    ..., 2011, (v) Consolidated Statements of Cash Flow for the fiscal years ended March 2, 2013, March 3, 2012 and February 26, 2011 and (vi) Notes to Consolidated Financial Statements, tagged in detail. Filed herewith 31.2 Filed herewith 32 Filed herewith 101. * ** Constitutes a compensatory plan...

  • Page 61
    ... not describe the actual state of affairs as of the date they were made or at any other time. Additional information about Rite Aid Corporation may be found elsewhere in this report and the Company's other public filings, which are available without charge through the SEC's website at http://www.sec...

  • Page 62
    ... financial position of Rite Aid Corporation and subsidiaries as of March 2, 2013 and March 3, 2012, and the results of their operations and their cash flows for each of the three years in the period ended March 2, 2013, in conformity with accounting principles generally accepted in the United States...

  • Page 63
    RITE AID CORPORATION AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (In thousands, except per share amounts) March 2, 2013 March 3, 2012 ASSETS Current assets: Cash and cash equivalents . Accounts receivable, net . . Inventories, net ...Prepaid expenses and other ...current assets ...net ...$ 129,452...

  • Page 64
    RITE AID CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS (In thousands, except per share amounts) Year Ended March 3, 2012 (53 Weeks) March 2, 2013 (52 Weeks) February 26, 2011 (52 Weeks) Revenues ...Costs and expenses: Cost of goods sold ...Selling, general and administrative ...

  • Page 65
    RITE AID CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (In thousands) Year Ended March 3, 2012 (53 Weeks) March 2, 2013 (52 Weeks) February 26, 2011 (52 Weeks) Net income (loss) ...Other comprehensive (loss) income: Defined benefit pension plans: Amortization...

  • Page 66
    RITE AID CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF STOCKHOLDERS' DEFICIT For the Years Ended March 2, 2013, March 3, 2012 and February 26, 2011 (In thousands) Accumulated Other Comprehensive Income (Loss) $(31,320) 1,178 (1,103) 3,905 (385) 244 93 - $1 1,616 9,346 $161,650 890,297 $890...

  • Page 67
    RITE AID CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (In thousands) Year Ended March 3, 2012 (53 Weeks) March 2, 2013 (52 Weeks) February 26, 2011 (52 Weeks) OPERATING ACTIVITIES: Net income (loss) ...Adjustments to reconcile to net cash provided by operating activities: ...

  • Page 68
    RITE AID CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS For the Years Ended March 2, 2013, March 3, 2012 and February 26, 2011 (In thousands, except per share amounts) 1. Summary of Significant Accounting Policies Description of Business The Company is a Delaware ...

  • Page 69
    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) 1. Summary of Significant Accounting Policies (Continued) Cash and Cash Equivalents Cash and ...

  • Page 70
    ... expense of deferred financing costs was $21,896, $22,049 and $23,797 for fiscal 2013, 2012 and 2011, respectively. Revenue Recognition For front end sales, the Company recognizes revenue from the sale of merchandise at the time the merchandise is sold. The Company records revenue net of an...

  • Page 71
    ... not returnable. The Company offers a chain wide loyalty card program titled wellness +. Members participating in the wellness + loyalty card program earn points on a calendar year basis for eligible front end merchandise purchases and qualifying prescriptions. One point is awarded for each dollar...

  • Page 72
    ... claims incurred but not reported relating to the Company's self-insurance. Workers' compensation claims are discounted to present value using a risk-free interest rate. Benefit Plan Accruals The Company has several defined benefit plans, under which participants earn a retirement benefit based upon...

  • Page 73
    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) 1. Summary of Significant Accounting Policies (Continued) Stock-Based Compensation The Company...

  • Page 74
    ... health care contracts and customers. During fiscal 2013, state sponsored Medicaid agencies and related managed care Medicaid payors accounted for approximately 17.4% of the Company's pharmacy sales, the largest of which was approximately 1.1% of the Company's pharmacy sales. During fiscal 2013...

  • Page 75
    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) 1. Summary of Significant Accounting Policies (Continued) Derivatives The Company may enter ...

  • Page 76
    ... if securities or other contracts to issue common stock were exercised or converted into common stock or resulted in the issuance of common stock that then shared in the income of the Company subject to anti-dilution limitations. March 2, 2013 (52 Weeks) Year Ended March 3, 2012 (53 Weeks) February...

  • Page 77
    ... to prescription drugs, as well as, expected revenues and costs related to the Patient Protection and Affordable Care Act (health care reform). Additionally, the Company takes into consideration that certain operating stores are executing specific improvement plans which are monitored quarterly to...

  • Page 78
    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) 3. Lease Termination and Impairment Charges (Continued) The Company recorded impairment ...

  • Page 79
    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) 3. Lease Termination and Impairment Charges (Continued) The following table summarizes the ...

  • Page 80
    ... amount and timing of net future cash flows (which are unobservable inputs) and discounting them using a risk-adjusted rate of interest (which is Level 1). The Company estimates future cash flows based on its experience and knowledge of the market in which the store is located. Significant increases...

  • Page 81
    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) 3. Lease Termination and Impairment Charges (Continued) The table below sets forth by level ...

  • Page 82
    ... Years Ended March 2, 2013, March 3, 2012 and February 26, 2011 (In thousands, except per share amounts) 3. Lease Termination and Impairment Charges (Continued) impairment of assets at these locations. The following table reflects the closed store and distribution center charges that relate to new...

  • Page 83
    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) 4. Fair Value Measurements The Company utilizes the three-level valuation hierarchy as ...

  • Page 84
    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) 5. Income Taxes (Continued) A reconciliation of the expected statutory federal tax and the ...

  • Page 85
    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) 5. Income Taxes (Continued) The tax effect of temporary differences that gave rise to ...

  • Page 86
    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) 5. Income Taxes (Continued) acquisition. Accordingly, as of March 2, 2013, March 3, 2012 and ...

  • Page 87
    ... have been reported using the first-in, first-out (''FIFO'') cost flow assumption. The Company calculates its FIFO inventory valuation using the retail method for store inventories and the cost method for distribution facility inventories. The Company recorded a LIFO credit for fiscal year 2013 of...

  • Page 88
    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) 9. Other Intangibles The Company's intangible assets are finite-lived and amortized over their...

  • Page 89
    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 Following is a summary of indebtedness and lease ...

  • Page 90
    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) Credit Facility The Company has a senior ...

  • Page 91
    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) The senior secured credit facility contains ...

  • Page 92
    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) In February 2013, the Company also used ...

  • Page 93
    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 ...

  • Page 94
    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) 12. Leases (Continued) The net book values of assets under capital leases and sale-leasebacks ...

  • Page 95
    ...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...

  • Page 96
    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) 15. Stock Option and Stock Award Plans (Continued) In November 1999, the Company adopted the ...

  • Page 97
    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) 15. Stock Option and Stock Award Plans (Continued) Stock Options The Company determines the ...

  • Page 98
    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) 15. Stock Option and Stock Award Plans (Continued) The weighted average fair value of options ...

  • Page 99
    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) 15. Stock Option and Stock Award Plans (Continued) Restricted Stock The Company provides ...

  • Page 100
    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) 16. Retirement Plans (Continued) compensation. Total expense recognized for the above plans ...

  • Page 101
    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) 16. Retirement Plans (Continued) Net periodic pension expense and other changes recognized in ...

  • Page 102
    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) 16. Retirement Plans (Continued) The table below sets forth reconciliation from the beginning ...

  • Page 103
    ...net cost for the fiscal years ended March 2, 2013, March 3, 2012 and February 26, 2011 were: Defined Benefit Pension Plan 2013 2012 2011 Nonqualified Executive Retirement Plan 2013 2012 2011 Discount rate ...Rate of increase in future compensation levels ...Expected long-term rate of return on plan...

  • Page 104
    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) 16. Retirement Plans (Continued) The investment objectives of the Defined Benefit Pension Plan...

  • Page 105
    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) 16. Retirement Plans (Continued) The following table sets forth by level within the fair value...

  • Page 106
    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) 16. Retirement Plans (Continued) Following are the future benefit payments expected to be paid...

  • Page 107
    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) 17. Multiemployer Plans that Provide Pension Benefits (Continued) subject and any minimum ...

  • Page 108
    ... et al v. Rite Aid Corporation pending in the United States District Court for the Southern District of New York. The lawsuits allege that the Company failed to pay overtime to salaried assistant store managers and comanagers as purportedly required under the Fair Labor Standards Act (''FLSA'') and...

  • Page 109
    ... 13, 2013 concluding the matter. The Company has been named in a collective and class action lawsuit, Indergit v. Rite Aid Corporation et al pending in the United States District Court for the Southern District of New York, filed purportedly on behalf of current and former store managers working in...

  • Page 110
    ... 26, 2011 by the United States Attorney's Office for the Eastern District of Michigan. The subpoena requests records regarding Rite Aid's Rx Savings Program and the reporting of usual and customary charges to publicly funded health programs. In connection with the same investigation, the Company was...

  • Page 111
    ... March 2, 2013, the Jean Coutu Group owned 178,401,162 shares (19.0% of the voting power of the Company) of common stock. On April 17, 2013, the Jean Coutu Group announced that it had sold 72,500,000 of its 178,401,162 shares of Rite Aid's common stock. As a result of such sale, the Jean Coutu Group...

  • Page 112
    ...Quarter Second Quarter Fiscal Year 2013 Third Quarter Fourth Quarter Year Revenues ...Cost of goods sold ...Selling, general and administrative expenses ...Lease termination and impairment charges ...Interest expense ...Loss on debt retirements, net ...(Gain) loss on sale of assets and investments...

  • Page 113
    ... impairment charges of $24,012 and a LIFO credit of $175,384 due to significant deflation associated with generic products, partially offset by normal brand inflation. During the first quarter of 2012, the Company recorded a loss on debt retirement related to the repayment of its Tranche 3 Term...

  • Page 114
    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) 22. Financial Instruments The carrying amounts and fair values of financial instruments at ...

  • Page 115
    RITE AID CORPORATION AND SUBSIDIARIES SCHEDULE II-VALUATION AND QUALIFYING ACCOUNTS For the Years Ended March 2, 2013, March 3, 2012 and February 26, 2011 (dollars in thousands) Balance at Beginning of Period Additions Charged to Costs and Expenses Balance at End of Period Allowances deducted from ...

  • Page 116
    ... duly authorized. RITE AID CORPORATION By: /s/ JOHN T. STANDLEY John T. Standley Chairman/President and Chief Executive Officer Dated: April 23, 2013 Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of...

  • Page 117
    Signature Title /s/ DAVID R. JESSICK David R. Jessick Director /s/ MICHAEL N. REGAN Michael N. Regan Director /s/ MARY F. SAMMONS Mary F. Sammons Director /s/ MARCY SYMS Marcy Syms Director 116

  • Page 118
    ... of debt expense, preferred stock dividend requirement and that portion of rental expense which is representative of the interest factor in those rentals. March 2, 2013 (52 Weeks) Year Ended March 3, February 26, February 27, 2012 2011 2010 (53 Weeks) (52 Weeks) (52 Weeks) (dollars in thousands...

  • Page 119
    ...LLC ...Apex Drug Stores, Inc...Broadview and Wallings-Broadview Heights Ohio, Inc. Central Avenue & Main Street Petal-MS, LLC ...Eagle Managed Care Corp...Eckerd Corporation ...EDC Drug Stores, Inc...Eighth and Water Streets-Urichsville, Ohio, LLC ...England Street-Asheland Corporation ...Fairground...

  • Page 120
    ...Aid of Maine, Inc...Rite Aid of Maryland, Inc...Rite Aid of Massachusetts, Inc...Rite Aid of Michigan, Inc...Rite Aid of New Hampshire, Inc. . Rite Aid of New Jersey, Inc...Rite Aid of New York, Inc...Rite Aid of North Carolina, Inc. . Rite Aid of Ohio, Inc...Rite Aid of Pennsylvania, Inc...Rite Aid...

  • Page 121
    ..., LLC . State Street and Hill Road-Gerard, Ohio, LLC ...The Jean Coutu Group (PJC) USA, Inc...The Lane Drug Company ...Thrift Drug Inc...Thrifty Corporation ...Thrifty PayLess, Inc...Tyler and Sanders Roads-Birmingham, Alabama, LLC . ... ... ... ... ... ... Delaware New York Delaware Delaware...

  • Page 122
    ... statements and financial statement schedule of Rite Aid Corporation and subsidiaries, and the effectiveness of Rite Aid Corporation and subsidiaries' internal control over financial reporting, appearing in this Annual Report on Form 10-K of Rite Aid Corporation for the year ended March 2, 2013...

  • Page 123
    ..., Chairman, President and Chief Executive Officer, certify that: 1. 2. I have reviewed this annual report on Form 10-K of Rite Aid Corporation (the ''Registrant''); Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary...

  • Page 124
    ...Vitrano, Senior Executive Vice President, Chief Financial Officer and Chief Administration Officer, certify that: 1. 2. I have reviewed this annual report on Form 10-K of Rite Aid Corporation (the ''Registrant''); Based on my knowledge, this report does not contain any untrue statement of a material...

  • Page 125
    ...of Rite Aid Corporation (the ''Company'') for the annual period ended March 2, 2013 as filed with the Securities and Exchange Commission on the date hereof (the ''Report''), John T. Standley, as Chairman, President and Chief Executive Officer of the Company, and Frank G. Vitrano, as Senior Executive...