Rite Aid 2014 Annual Report Download - page 41

Cash used in financing activities was $506.1 million in fiscal 2013 and was primarily due to the
issuance of our $1,161.0 million Tranche 6 Term Loan due 2020, $470.0 million Tranche 1 Term Loan
due 2020 and $426.3 million of our 9.25% Senior Notes due 2020, along with borrowings under our
revolving credit facility of $685.0 million. Proceeds from these issuances were used to repay our
$1,036.3 million Tranche 2 Term Loan due 2014, $470.0 million of our 10.375% Senior Secured Notes
due 2016, $410.0 million of our 9.750% Senior Secured Notes due 2016, our $330.9 million Tranche 5
Term Loan due 2018, $405.0 million of our 9.375% Senior Notes due 2015, $54.2 million of our 8.625%
Senior Notes due 2015, $6.0 million of our 9.25% Senior Notes due 2013. We also made scheduled
payments of $18.5 million and $9.0 million of our capital lease obligations and our Tranche 2 and
Tranche 5 Term Loans, respectively. Additionally, we incurred financing fees for early debt retirement
of $75.4 million and cash paid for deferred financing costs of $54.8 million in connection with the
above transactions.
Cash provided by financing activities was $25.8 million in fiscal 2012 and was primarily due to
increased revolver borrowings coupled with the February 2012 issuance of $481.0 million of our 9.25%
senior notes due March 15, 2020 and concurrent repurchase of $404.8 million of our 8.625% senior
notes due March 2015. The remaining $54.2 million of the 8.625% senior notes due March 2015 were
repurchased in March 2012.
Capital Expenditures
During the fiscal years ended March 1, 2014, March 2, 2013, and March 3, 2012 capital
expenditures were as follows:
Year Ended
March 1, March 2, March 3,
2014 2013 2012
(52 weeks) (52 weeks) (53 weeks)
New store construction, store relocation and store
remodel projects ........................ $218,454 $200,101 $ 93,958
Technology enhancements, improvements to
distribution centers and other corporate
requirements ........................... 115,416 115,745 121,046
Purchase of prescription files from other retail
pharmacies ............................ 87,353 67,134 35,133
Total capital expenditures ................... $421,223 $382,980 $250,137
We have completed 1,215 Wellness store remodels as of March 1, 2014. We plan on making total
capital expenditures of approximately $525.0 million during fiscal 2015, consisting of approximately 53%
related to store relocations and remodels and new store construction, 30% related to infrastructure and
maintenance requirements and 17% related to prescription file purchases. Management expects that
these capital expenditures will be financed primarily with cash flow from operating activities.
Future Liquidity
We are highly leveraged. Our high level of indebtedness could: (i) limit our ability to obtain
additional financing; (ii) limit our flexibility in planning for, or reacting to, changes in our business and
the industry; (iii) place us at a competitive disadvantage relative to our competitors with less debt;
(iv) render us more vulnerable to general adverse economic and industry conditions; and (v) require us
to dedicate a substantial portion of our cash flow to service our debt. Based upon our current levels of
operations and the anticipated estimated working capital benefit of $150.0 million resulting from our
new supply agreement with McKesson, we believe that cash flow from operations together with
available borrowings under the revolving credit facility and other sources of liquidity will be adequate
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