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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 1, 2014
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 August 31,
2013 was approximately $3,137,147,179. For purposes of this calculation, executive officers, directors and 5% shareholders
are deemed to be affiliates of the registrant.
As of April 11, 2014 the registrant had outstanding 971,797,750 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 19, 2014 are
incorporated by reference into Part III.

Table of contents

  • Page 1
    ... 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...

  • Page 2
    ... About Market Risk ...ITEM 8. Financial Statements and Supplementary Data ...ITEM 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure ...ITEM 9A. Controls and Procedures ...ITEM 9B. Other Information ...PART III ITEM 10. Directors, Executive Officers and Corporate...

  • Page 3
    ... to offset cost increases for generic drugs; • decisions to close additional stores and distribution centers or undertake additional refinancing activities, which could result in further charges to our operating statement; • our ability to manage expenses and our investment in working capital...

  • Page 4
    ... Affordable Care Act and the discovery of new and better drug therapies. We carry a full assortment of front-end products, which accounted for the remaining 32.1% of our total sales in fiscal 2014. Front-end products include over-the-counter medications, health and beauty aids, personal care items...

  • Page 5
    ... 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 has been well received by Rite Aid customers and...

  • Page 6
    ... our total number of Wellness stores to 1,215 by the end of the fiscal year. As a result, more than a quarter of all Rite Aid stores are now Wellness stores. In addition to improved interior design, expanded clinical pharmacy services, innovative merchandising and new wellness product offerings...

  • Page 7
    ... coaches work with the physician to create a personalized health care action plan and engage with the patient between physician visits to support the patient in implementing the plan and improving overall health. As of March 1, 2014, the Rite Aid Health Alliance program was active in three markets...

  • Page 8
    ... offer photo finishing services in a majority of our stores. Our principal classes of products in fiscal 2014 were the following: Product Class Percentage of Sales Prescription drugs ...Over-the-counter medications and Health and beauty aids ...General merchandise and other . . ...personal care...

  • Page 9
    ... iPhone platforms. This free app allows our customers to use their smartphones to manage their wellness + account, access the weekly circular to view sale items, order photo prints and locate a nearby Rite Aid store. We have continued to strengthen our presence on social media sites such as Facebook...

  • Page 10
    ... on the following: • 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...

  • Page 11
    ... and Affordable Care Act (ACA); regulations of the U.S. Food and Drug Administration and the U.S. Drug Enforcement Administration, including regulations governing the purchase, sale, storing and dispensing of controlled substances and other products, as well as regulations promulgated by state and...

  • 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
    ....1 million, net of outstanding letters of credit of $79.9 million. Our earnings were sufficient to cover fixed charges for fiscal 2014 by $233.4 million. However, our earnings were insufficient to cover fixed charges and preferred stock dividends for fiscal 2013, 2012, 2011 and 2010 by $14.0 million...

  • Page 14
    ... weakness in general economic conditions or major industries can adversely affect drug benefit plans and reduce our pharmacy sales. Adverse changes in general economic conditions could affect consumer buying practices and consequently reduce our sales of front end products, and cause a decrease in...

  • Page 15
    ...face intense competition with local, regional and national companies, including other drugstore chains, independently owned drugstores, supermarkets, mass merchandisers, dollar stores and internet pharmacies. Competition from discount stores has significantly increased during the past few years. Our...

  • Page 16
    ...plans and state sponsored Medicaid and related managed care Medicaid agencies, represented 97.0% of our business in fiscal 2014. The continued efforts of the Federal government, health maintenance organizations, managed care organizations, pharmacy benefit management companies, other State and local...

  • Page 17
    ...are also governed by federal and state laws of general applicability, including laws regulating matters of wage and hour laws, working conditions, health and safety and equal employment opportunity. Certain risks are inherent in providing pharmacy services; our insurance may not be adequate to cover...

  • Page 18
    ...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 19
    ...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 20
    ... warehousing use and additional administrative personnel. We own additional buildings near Harrisburg, Pennsylvania which total 105,800 square feet and house our model store and additional administrative personnel. We operate the following distribution centers and satellite distribution locations...

  • Page 21
    ...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 stores at various locations around the country. The lawsuit alleges that we failed to pay...

  • Page 22
    ... the timing or outcome of any review by the government of such information. In January 2013, the DEA, Los Angeles District Office, served an administrative subpoena on us seeking documents related to prescriptions by a certain prescriber. The USAO, Central District of California, also contacted us...

  • Page 23
    ...ability to pay dividends. We have not sold any unregistered equity securities during the period covered by this report, nor have we repurchased any of our common stock, during the period covered by this report. Rite Aid Lease Management Company, a subsidiary of the Company, had 213,000 shares of its...

  • Page 24
    ...5 Year Cumulative Total Return Assumes Initial Investment of $100 March 2014 2,500.00 2,000.00 1,500.00 1,000.00 500.00 0.00 2/28/2009 Rite Aid Corporation 2/27/2010 2/26/2011 3/3/2012 3/2/2013 3/1/2014 Russell 2000 Index Russell 2000 Consumer Staples Index 17APR201405431606 2010 2011 2012 2013...

  • Page 25
    ... Condition and Results of Operations'' and the audited consolidated financial statements and related notes. March 1, 2014 (52 weeks) Fiscal Year Ended March 2, March 3, February 26, February 27, 2013 2012 2011 2010 (52 weeks) (53 weeks) (52 weeks) (52 weeks) (Dollars in thousands, except per share...

  • Page 26
    ... rates and store closings. Gross Profit: Our gross profit was positively impacted by the continued impact of generic introductions, which have a higher gross profit than their brand counterparts, and purchasing efficiencies on generic drugs, offset by a higher LIFO charge. We record the value of our...

  • Page 27
    ... 2014 (52 Weeks) Year Ended March 2, March 3, 2013 2012 (52 Weeks) (53 Weeks) (Dollars in thousands) Revenues ...Revenue growth (decline) ...Same store sales growth (decline) ...Pharmacy sales growth (decline) ...Same store prescription count (decrease) increase ...Same store pharmacy sales growth...

  • Page 28
    ...by the positive impact of our wellness + loyalty program, incremental sales from our Wellness format stores, and other management initiatives to increase front end sales. Active wellness + members, defined as those who have used their cards at least twice during the last twenty-six weeks, was nearly...

  • Page 29
    ...+ customer loyalty program and other markdowns, partially offset by increased sales. We use the last-in, first-out (LIFO) method of inventory valuation, which is determined annually when inflation rates and inventory levels are finalized. Therefore, LIFO costs for interim period financial statements...

  • Page 30
    ... items such as decreases in market prices, changes in the manner in which the store is being used or physical condition, changes in legal factors or business climate, an accumulation of losses significantly in excess of budget, a current period operating or cash flow loss combined with a history...

  • Page 31
    ... the pricing and regulations 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...

  • Page 32
    ... the local markets where the assets are located. The following table summarizes the impairment charges and number of locations, segregated by closed facilities and active stores that have been recorded in fiscal 2014, 2013 and 2012: March 1, 2014 Number Charge Year Ended March 2, 2013 Number Charge...

  • Page 33
    .... 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 2014, 2013 and 2012, we recorded lease termination charges...

  • Page 34
    ... fiscal 2013 included income tax benefit of $110.6 million primarily comprised of adjustments to unrecognized tax benefits for the appellate settlements of the Brooks Eckerd IRS Audit for the fiscal years 2004 - 2007 and the Commonwealth of Massachusetts Audit for fiscal years 2005 - 2007 as well as...

  • Page 35
    ... under the revolving credit facility of our senior secured credit facility. Our principal uses of cash are to provide 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 1, 2014 was $1,317...

  • Page 36
    ... mandatory repurchase of our 8.5% convertible notes due 2015. 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...

  • Page 37
    ... H preferred stock'', collectively the ''Preferred Stock'') of the Company (the ''Exchange''), held by Green Equity Investors III, L.P. (''LGP'') for 40,000,000 shares of our common stock, par value $1.00 per share with a market value of $190.4 million at the $4.76 per share closing price on the...

  • Page 38
    ...378,883 shares of common stock issued upon conversion at the $4.76 per share closing price on the Settlement Date. As of March 2, 2013, Rite Aid Lease Management Company, a 100 percent owned subsidiary, had 213,000 shares of its Cumulative Preferred Stock, Class A, par value $100 per share (''RALMCO...

  • Page 39
    ...period Less Than 1 Year 1 to 3 Years 3 to 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 ...Other, primarily self insurance and retirement plan obligations(4) ...Minimum...

  • Page 40
    ... to support sales growth. Cash used in investing activities was $364.9 million in fiscal 2014. Cash used for the purchase of property, plant and equipment and prescriptions files was higher than in the prior year due to a higher investment in Wellness store remodels and prescription file buys, which...

  • Page 41
    ...follows: March 1, 2014 (52 weeks) Year Ended March 2, 2013 (52 weeks) March 3, 2012 (53 weeks) New store construction, store relocation and store remodel projects ...Technology enhancements, improvements to distribution centers and other corporate requirements ...Purchase of prescription files from...

  • Page 42
    to meet our requirements for working capital, debt service and capital expenditures at least for the next twelve months. Based on our liquidity position, which we expect to remain strong throughout the year, we do not expect to be subject to the fixed charge covenant in our senior secured credit ...

  • Page 43
    ... the total impairment recorded in fiscal 2014. 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 on a calendar year basis for eligible front end merchandise purchases and...

  • Page 44
    25 basis point difference in the discount rate for the year ended March 1, 2014, would have affected pretax income by approximately $2.1 million. Lease termination charges: We record reserves for closed stores based on future lease commitments, anticipated ancillary occupancy costs and anticipated ...

  • 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 program and other items. We reference this particular non-GAAP financial...

  • Page 46
    ... reported by other companies. Item 7A. Quantitative and Qualitative Disclosures About Market Risk Our future earnings, cash flow and fair values relevant to financial instruments are dependent upon prevalent market rates. Market risk is the risk of loss from adverse changes in market prices...

  • Page 47
    ..., 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...

  • Page 48
    ... executive and principal financial officers, or persons performing similar functions, and effected by the company's board of directors, management, and other personnel to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements...

  • Page 49
    ... Statements of Cash Flows for the fiscal years ended March 1, 2014, March 2, 2013 and March 3, 2012 ...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 50
    ... 16, 2010, among Rite Aid Corporation, as issuer, the subsidiary guarantors named therein and The Bank of New York Mellon Trust Company, N.A., as trustee, related to the Company's 8.00% Senior Secured Notes due 2020 Indenture, dated as of February 27, 2012, among Rite Aid Corporation, as issuer, the...

  • Page 51
    ..., 2008, between Rite Aid Corporation and The Bank of New York Trust Company, N.A., related to the Company's 8.5% Convertible Notes due 2015 Exhibit 4.1 to Form 8-K filed on February 7, 2000 4.7 Exhibit 4.3 to Form 8-K, filed on February 21, 2013 4.8 Exhibit 4.1 to Registration Statement on Form...

  • Page 52
    ... as of July 2, 2013, among Rite Aid Corporation, as issuer, the subsidiary guarantors named therein and The Bank of New York Mellon Trust Company, N.A., related to the Company's 6.75% Senior Notes due 2021 1999 Stock Option Plan* 2000 Omnibus Equity Plan* 2001 Stock Option Plan* 2004 Omnibus Equity...

  • Page 53
    ... dated as of August 1, 2000* Amendment No. 1 to Employment Agreement by and between Rite Aid Corporation and Douglas E. Donley, dated as of December 18, 2008* Rite Aid Corporation Special Executive Retirement Plan* Employment Agreement by and between Rite Aid Corporation and Ken Martindale, dated as...

  • Page 54
    ... 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 55
    ... and Restated Senior Indemnity, Subrogation and Contribution Agreement, dated as of May 28, 2003, and supplemented as of September 27, 2004, among Rite Aid Corporation, the Subsidiary Guarantors, and Citicorp North America, Inc. and JPMorgan Chase Bank, N.A., as collateral processing co-agents...

  • Page 56
    ... 12, 2009, among Rite Aid Corporation, the subsidiary guarantors named therein, Citicorp North America, Inc., as senior collateral agent for the Senior Secured Parties (as defined therein), Citicorp North America, Inc., as senior representative for the Senior Loan Secured Parties (as defined therein...

  • Page 57
    ... 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 58
    ...' deficit, and cash flows for each of the three years in the period ended March 1, 2014. Our audits also included the financial statement schedule listed in the Index at Item 15(a)(2). These financial statements and financial statement schedule are the responsibility of the Company's management. Our...

  • Page 59
    RITE AID CORPORATION AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (In thousands, except per share amounts) March 1, 2014 March 2, 2013 ASSETS Current assets: Cash and cash equivalents . Accounts receivable, net . . Inventories, net ...Prepaid expenses and other ...current assets ...net ...$ 146,406...

  • Page 60
    RITE AID CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS (In thousands, except per share amounts) Year Ended March 2, 2013 (52 Weeks) March 1, 2014 (52 Weeks) March 3, 2012 (53 Weeks) Revenues ...Costs and expenses: Cost of goods sold ...Selling, general and administrative ...

  • Page 61
    RITE AID CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (In thousands) Year Ended March 2, 2013 (52 Weeks) March 1, 2014 (52 Weeks) March 3, 2012 (53 Weeks) Net income (loss) ...Other comprehensive income (loss): Defined benefit pension plans: Amortization of ...

  • Page 62
    RITE AID CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF STOCKHOLDERS' DEFICIT For the Years Ended March 1, 2014, March 2, 2013 and March 3, 2012 (In thousands, except per share amounts) Preferred Stock-Series G Preferred Stock-Series H Amount Common Stock Shares Amount Accumulated ...

  • Page 63
    RITE AID CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (In thousands) Year Ended March 2, 2013 (52 Weeks) March 1, 2014 (52 Weeks) March 3, 2012 (53 Weeks) OPERATING ACTIVITIES: Net income (loss) ...Adjustments to reconcile to net cash provided by operating activities: ...

  • Page 64
    ....1% of the Company's total sales in fiscal years 2014, 2013 and 2012, respectively. The Company's principal classes of products in fiscal 2014 were the following: Product Class Percentage of Sales Prescription drugs ...Over-the-counter medications and personal care Health and beauty aids ...General...

  • Page 65
    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) 1. Summary of Significant Accounting Policies (Continued) Cash and Cash Equivalents Cash and cash ...

  • Page 66
    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) 1. Summary of Significant Accounting Policies (Continued) Property, Plant and Equipment Property, ...

  • Page 67
    ... at the point of sale. Prescriptions are generally 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...

  • Page 68
    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) 1. Summary of Significant Accounting Policies (Continued) recorded as a reduction in selling, ...

  • Page 69
    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) 1. Summary of Significant Accounting Policies (Continued) Stock-Based Compensation The Company has...

  • Page 70
    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) 1. Summary of Significant Accounting Policies (Continued) Sales Tax Collected Sales taxes ...

  • Page 71
    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) 1. Summary of Significant Accounting Policies (Continued) inception of interest rate swap ...

  • Page 72
    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) 2. Income (Loss) Per Share (Continued) issuance of common stock that then shared in the income of ...

  • Page 73
    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) 2. Income (Loss) Per Share (Continued) Also excluded from the computation of diluted income (loss)...

  • Page 74
    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) 3. Lease Termination and Impairment Charges (Continued) Additionally, the Company takes into ...

  • Page 75
    ... FINANCIAL STATEMENTS (Continued) For the Years Ended March 1, 2014, March 2, 2013 and March 3, 2012 (In thousands, except per share amounts) 3. Lease Termination and Impairment Charges (Continued) The following table summarizes the impairment charges and number of locations, segregated by closed...

  • Page 76
    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) 3. Lease Termination and Impairment Charges (Continued) future periods. Of this total, 375, 464 ...

  • Page 77
    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) 3. Lease Termination and Impairment Charges (Continued) the store is located. Significant ...

  • Page 78
    ...exit costs and liquidation of inventory, as well as impairment of assets at these locations. The following table reflects the closed store and distribution center charges that relate to new closures, changes in assumptions and interest accretion: March 1, 2014 (52 Weeks) Year Ended March 2, 2013 (52...

  • Page 79
    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) 4. Fair Value Measurements The Company utilizes the three-level valuation hierarchy as described ...

  • Page 80
    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) 5. Income Taxes (Continued) A reconciliation of the expected statutory federal tax and the total ...

  • Page 81
    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) 5. Income Taxes (Continued) The tax effect of temporary differences that gave rise to significant ...

  • Page 82
    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) 5. Income Taxes (Continued) acquisition. Accordingly, as of March 1, 2014, March 2, 2013 and March...

  • Page 83
    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) 6. Accounts Receivable The Company maintains an allowance for doubtful accounts receivable based ...

  • Page 84
    ... 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) 9. Other Intangibles The Company's intangible assets are finite-lived and amortized over their useful...

  • Page 85
    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 Following is a summary of indebtedness and lease financing ...

  • Page 86
    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) as defined in the senior secured credit facility...

  • Page 87
    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) Company chooses to make LIBOR borrowings, or at ...

  • Page 88
    ... 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) In connection with these refinancing transactions, the Company recorded a loss on debt retirement...

  • Page 89
    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 ...

  • Page 90
    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) 12. Leases (Continued) During fiscal 2012, the Company sold two owned operating stores to ...

  • Page 91
    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) 13. Stock Option and Stock Award Plans The Company recognizes share-based compensation expense in ...

  • Page 92
    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) 13. Stock Option and Stock Award Plans (Continued) Stock Options The Company determines the fair ...

  • Page 93
    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) 13. Stock Option and Stock Award Plans (Continued) The weighted average fair value of options ...

  • Page 94
    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) 13. Stock Option and Stock Award Plans (Continued) of restricted stock transactions for the fiscal...

  • Page 95
    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) 14. Reclassifications from Accumulated Other Comprehensive Loss The following table summarizes the...

  • Page 96
    ... additional pretax annual compensation. Total expense recognized for the above plans was $57,857 in fiscal 2014, $56,480 in fiscal 2013 and $57,036 in fiscal 2012. The Company sponsors a Supplemental Executive Retirement Plan (''SERP'') for its officers, which is a defined contribution plan that is...

  • Page 97
    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) 15. Retirement Plans (Continued) Defined Benefit Plans The Company and its subsidiaries also ...

  • Page 98
    ..., as well as the funded status and amounts recognized in the Company's balance sheet as of March 1, 2014 and March 2, 2013: Defined Benefit Pension Plan 2014 2013 Nonqualified Executive Retirement Plan 2014 2013 Change in benefit obligations: Benefit obligation at end of prior year . Service cost...

  • Page 99
    ... assumptions used to determine net cost for the fiscal years ended March 1, 2014, March 2, 2013 and March 3, 2012 were: Defined Benefit Pension Plan 2014 2013 2012 Nonqualified Executive Retirement Plan 2014 2013 2012 Discount rate ...Rate of increase in future compensation levels ...Expected...

  • Page 100
    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) 15. Retirement Plans (Continued) • Balance the allocation of assets between the investment ...

  • Page 101
    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) 15. Retirement Plans (Continued) The following table sets forth by level within the fair value ...

  • Page 102
    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) 15. Retirement Plans (Continued) Following are the future benefit payments expected to be paid for...

  • Page 103
    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) 16. Multiemployer Plans that Provide Pension Benefits (Continued) collective-bargaining agreement...

  • Page 104
    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) 16. Multiemployer Plans that Provide Pension Benefits (Continued) At the date the Company's ...

  • Page 105
    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) 17. Commitments, Contingencies and Guarantees (Continued) store manager claims as to liability ...

  • Page 106
    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) 17. Commitments, Contingencies and Guarantees (Continued) In April 2012, the Company received an ...

  • Page 107
    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) 17. Commitments, Contingencies and Guarantees (Continued) Contingencies The California Department ...

  • Page 108
    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) 19. Related Party Transactions (Continued) On September 26, 2013, the Company agreed to exchange ...

  • Page 109
    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) 20. Subsequent Events (Continued) On April 10, 2014, the Company acquired Houston based RediClinic...

  • Page 110
    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) 21. Interim Financial Results (Unaudited) (Continued) Fiscal Year 2013 Third Quarter First ...

  • Page 111
    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) 22. Financial Instruments The carrying amounts and fair values of financial instruments at March ...

  • Page 112
    RITE AID CORPORATION AND SUBSIDIARIES SCHEDULE II-VALUATION AND QUALIFYING ACCOUNTS For the Years Ended March 1, 2014, March 2, 2013 and March 3, 2012 (dollars in thousands) Balance at Beginning of Period Additions Charged to Costs and Expenses Balance at End of Period Allowances deducted from ...

  • Page 113
    ..., thereunto duly authorized. RITE AID CORPORATION By: /s/ JOHN T. STANDLEY John T. Standley Chairman and Chief Executive Officer Dated: April 23, 2014 Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the...

  • Page 114
    Signature Title /s/ MYRTLE S. POTTER Myrtle S. Potter Director /s/ MICHAEL N. REGAN Michael N. Regan Director /s/ MARCY SYMS Marcy Syms Director 113

  • Page 115
    ...of debt expense, preferred stock dividend requirement and that portion of rental expense which is representative of the interest factor in those rentals. March 1, 2014 (52 Weeks) Year Ended March 2, March 3, February 26, 2013 2012 2011 (52 Weeks) (53 Weeks) (52 Weeks) (dollars in thousands) February...

  • Page 116
    ... ...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 117
    ...Rite 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...

  • Page 118
    Company (Name in which such subsidiary conducts business if other than corporate name): State of Incorporation or Organization Rite Aid Rome Distribution Center, Inc...Rite Aid Services, LLC ...Rite Aid Specialty Pharmacy LLC ...Rite Aid Transport, Inc...Rite Fund, Inc...Rite Investments Corp...Rx...

  • Page 119
    ... 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 1, 2014...

  • Page 120
    ...CERTIFICATION OF CHIEF EXECUTIVE OFFICER I, John T. Standley, Chairman 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...

  • Page 121
    ...Vitrano, Senior Executive Vice President, Chief Financial Officer and Chief Administrative 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 122
    ... 10-K of Rite Aid Corporation (the ''Company'') for the annual period ended March 1, 2014 as filed with the Securities and Exchange Commission on the date hereof (the ''Report''), John T. Standley, as Chairman and Chief Executive Officer of the Company, and Frank G. Vitrano, as Senior Executive Vice...