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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 February 28, 2015
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 30,
2014 was approximately $6,056,257,418. For purposes of this calculation, executive officers, directors and 5% shareholders
are deemed to be affiliates of the registrant.
As of April 9, 2015 the registrant had outstanding 989,140,531 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 25, 2015 are
incorporated by reference into Part III.

Table of contents

  • Page 1
    ... No.) 17011 (Zip Code) Registrant's telephone number, including area code: (717) 761-2633 Common Stock, $1.00 par value Securities registered pursuant to Section 12(g) of the Act: None New York Stock Exchange Indicate by check mark if the registrant is a well known seasoned issuer, as...

  • Page 2
    ... on Accounting and Financial Disclosure ...ITEM 9A. Controls and Procedures ...ITEM 9B. Other Information ...PART III ITEM 10. Directors, Executive Officers and Corporate Governance ITEM 11. Executive Compensation ITEM 12. Security Ownership of Certain Beneficial Owners and Management and Related...

  • Page 3
    ... including mail order; • our ability to achieve the benefits of our efforts to reduce the costs of our generic and other drugs; • our ability to continue to improve the operating performance of our stores in accordance with our long term strategy; • our ability to maintain or grow prescription...

  • Page 4
    ...; 53% of our stores included a drive-thru pharmacy; and 50% 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
    ...offering to meet the growing demand for high quality, convenient and affordable health services, including immunizations, medication compliance consultations, retail clinics and health coaching. And, after the recent announcement of our agreement to acquire the EnvisionRx pharmacy benefit management...

  • Page 6
    ... our program to patients with one or more chronic conditions such as congestive heart failure, COPD, high cholesterol and diabetes. Once a patient enrolls, Rite Aid pharmacists and specially trained in-store care coaches work with the physician to create a personalized health care action plan and...

  • Page 7
    ... 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 8
    ....5% as of the end of fiscal 2015. In fiscal 2016, we will continue to aggressively promote our private brands, which offer great value to our customers and strong margins for Rite Aid, through specific promotional programs and the introduction of new private brand items. We also plan to explore ways...

  • Page 9
    ... system can be expanded to accommodate new stores. Our customers may also order prescription refills over the Internet through our recently enhanced website, www.riteaid.com, or over the phone through our telephonic automated refill systems for pick up at a Rite Aid store. We have automated pharmacy...

  • Page 10
    ... 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 11
    ...: • 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 12
    ... and emails and the sale, advertisement and promotion of the products we sell, including tobacco and alcoholic beverages. Our business is also subject to patient privacy and other obligations, including corporate, pharmacy and associate responsibility imposed by the Health Insurance Portability...

  • Page 13
    ...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 14
    ... 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...

  • Page 15
    ...the restrictions described above, the payment of dividends, sale of assets, mergers and acquisitions and the granting of liens. Our senior secured credit facility has a financial covenant which requires us to maintain a minimum fixed charge coverage ratio. The covenant requires that, if availability...

  • Page 16
    ... disruption in our computer systems or a cyber security breach could adversely affect our operations. We rely extensively on our computer systems, including those used by RediClinic and Health Dialog, to manage our ordering, pricing, point-of-sale, inventory replenishment and other processes...

  • Page 17
    ...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 18
    ..., mass merchandisers, dollar stores and internet pharmacies. Competition from discount stores has significantly increased during the past few years. Some of our competitors have or may merge with or acquire pharmaceutical services companies, pharmacy benefit managers, mail order facilities or enter...

  • Page 19
    ..., 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 20
    ... drugs. In addition, federal and state laws that require our pharmacists to offer counseling, without additional charge, to their customers about medication, dosage, delivery systems, common side effects and other information the pharmacists deem significant can impact our business. Our pharmacists...

  • Page 21
    ... The sale of a substantial number of our shares by these or other stockholders within a short period of time could cause our stock price to decrease, make it more difficult for us to raise funds through future offerings of Rite Aid common stock or acquire other businesses using Rite Aid common stock...

  • Page 22
    ... ...District of Columbia Georgia ...Idaho ...Indiana ...Kentucky ...Louisiana ...Massachusetts ...Maine ...Maryland ...Michigan ...Mississippi ...North Carolina ...Nevada ...New Hampshire ...New Jersey ...New York ...Ohio ...Oregon ...Pennsylvania ...Rhode Island ...South Carolina ...Tennessee...

  • Page 23
    ...United States. We also own a 55,600 square foot ice cream manufacturing facility and lease a 32,000 square foot storage facility located in El Monte, California. As a result of our April 2014 acquisition of RediClinic, we lease approximately 18,071 square feet in 32 HEB grocery stores in Texas under...

  • Page 24
    ... 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 stores at various locations around the country. The lawsuit alleges...

  • Page 25
    ... 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 about a related investigation into allegations that Rite Aid pharmacies filled...

  • Page 26
    ... stock is listed on the NYSE under the symbol ''RAD.'' On April 9, 2015, we had approximately 20,940 stockholders of record. Quarterly high and low closing stock prices, based on the composite transactions, are shown below. Fiscal Year Quarter High Low 2016 (through April 9, 2015) ...2015 ... 2014...

  • Page 27
    ... Return Assumes Initial Investment of $100 on February 27, 2010 February 28, 2015 600.00 500.00 400.00 300.00 200.00 100.00 0.00 2/27/2010 2/26/2011 Rite Aid Corporation Russell 1000 Consumer Staples Index 3/3/2012 3/2/2013 Russell 1000 Index Russell 2000 Consumer Staples Index 3/1/2014...

  • Page 28
    ... Year Ended March 1, March 2, March 3, February 26, 2014 2013 2012 2011 (52 weeks) (52 weeks) (53 weeks) (52 weeks) (Dollars in thousands, except per share amounts) Summary of Operations: Revenues ...$26,528,377 $25,526,413 $25,392,263 $26,121,222 $25,214,907 Costs and expense: Cost of goods sold...

  • Page 29
    ... 5.2 percent of revenues for fiscal year 2014. Adjusted EBITDA was positively impacted by an increase in pharmacy and front end gross profit, offset by an increase in selling, general and administrative expenses related to our higher level of sales. On February 17, 2014, we executed an expanded five...

  • Page 30
    ... eliminate cash taxes for the last 3 years as well as (4) business plans showing continued profitability. The reduction of the valuation allowance in the fourth quarter was based on a pattern of sustained earnings exhibited by us over the most recent 10 quarters through February 28, 2015, projected...

  • Page 31
    ... 28, 2015 (52 Weeks) Year Ended March 1, 2014 (52 Weeks) (Dollars in thousands) March 2, 2013 (52 Weeks) Revenues ...Revenue growth (decline) ...Same store sales growth (decline) ...Pharmacy sales growth (decline) ...Same store prescription count increase (decrease) Same store pharmacy sales growth...

  • Page 32
    ...of our wellness + loyalty program, incremental sales from our Wellness format stores, and other management initiatives to increase front end sales. Costs and Expenses February 28, 2015 (52 Weeks) Year Ended March 1, 2014 (52 Weeks) (Dollars in thousands) March 2, 2013 (52 Weeks) Costs of goods sold...

  • Page 33
    ...tax indemnification assets resulted from our settlement with the IRS associated with a pre-acquisition Brooks Eckerd tax audit, and was offset by an income tax benefit. SG&A as a percentage of revenues was 25.7% in fiscal 2014 compared to 26.0% in fiscal 2013. The decrease in SG&A as a percentage of...

  • Page 34
    ... operating stores are executing specific improvement plans which are monitored quarterly to recoup recent capital investments, such as an acquisition of an independent pharmacy, which we have made to respond to specific competitive or local market conditions, or have specific programs tailored...

  • Page 35
    ... of lease expirations. We recorded impairment charges for closed facilities of $2.3 million in fiscal 2015, $1.3 million in fiscal 2014 and $0.9 million in fiscal 2013. The following table summarizes the impairment charges and number of locations, segregated by closed facilities and active stores...

  • Page 36
    .... 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 2015, 2014 and 2013, we recorded lease termination charges of...

  • Page 37
    ... tax assets at fiscal year-end 2015 and 2014, respectively. Dilutive Equity Issuances On February 28, 2015, 988.6 million shares of common stock, which includes unvested restricted shares, were outstanding and an additional 66.5 million shares of common stock were issuable related to outstanding...

  • Page 38
    ... stock to be issued in connection with our pending acquisition of EnvisionRx. Liquidity and Capital Resources General We have two primary sources of liquidity: (i) cash provided by operating activities and (ii) borrowings under our senior secured revolving credit facility. Our principal uses of cash...

  • Page 39
    ... cash portion of our pending acquisition of EnvisionRx, and certain other exceptions) and from accumulating cash on hand with revolver borrowings in excess of $100.0 million over three consecutive business days. The Amended and Restated Senior Secured Credit Facility also states that if at any time...

  • Page 40
    ... 28, 2015, the availability was at a level that did not did not trigger this covenant. The Amended and Restated Senior Secured Credit Facility also contains covenants which place restrictions on the incurrence of debt, the payments of dividends, sale of assets, mergers and acquisitions and the...

  • Page 41
    ... other than Envision Insurance Company (the ''EnvisionRx Subsidiary Guarantors'' and, together with the Rite Aid Subsidiary Guarantors, the ''Subsidiary Guarantors''). The guarantees will be unsecured. The 6.125% senior notes are unsecured, unsubordinated obligations of Rite Aid Corporation and will...

  • Page 42
    ...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 43
    ...28, 2015, as well as other contractual cash obligations and commitments. Less Than 1 Year Payment due by period 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...

  • Page 44
    ... to the acquisitions of Health Dialog and RediClinic. 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...

  • Page 45
    ...: February 28, 2015 (52 weeks) Year Ended March 1, 2014 (52 weeks) March 2, 2013 (52 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 46
    ...we will pay $1.8 billion in cash, subject to working capital adjustments, which we expect to be financed with proceeds from the April 2, 2015 issuance of $1.8 billion aggregate principal amount of our 6.125% senior notes due 2023, and approximately 27.9 million shares of Rite Aid common stock (equal...

  • Page 47
    ... value of the goodwill. During our qualitative assessment we make significant estimates, assumptions, and judgments, including, but not limited to, the overall economy, industry and market conditions, financial performance of the Company, changes in our share price, and forecasts of revenue, profit...

  • Page 48
    ...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 qualifying prescriptions. One point is awarded...

  • Page 49
    A 20 basis point difference in the discount rate for the year ended February 28, 2015, would have affected pretax income by approximately $1.7 million. Lease termination charges: We record reserves for closed stores based on future lease commitments, anticipated ancillary occupancy costs and ...

  • Page 50
    ... closing and impairment, inventory writedowns related to store closings, debt retirements, and other items (including stock-based compensation expense, sale of assets and investments, and revenue deferrals related to our customer loyalty program). We reference this particular non-GAAP financial...

  • Page 51
    ...market prices and interest rates. Our major market risk exposure is changing interest rates. Increases in interest rates would increase our interest expense. We enter into debt obligations to support capital expenditures, acquisitions, working capital needs and general corporate purposes. Our policy...

  • Page 52
    ..., 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 53
    ... and financial statement schedule as of and for the year ended February 28, 2015 of the Company and our report dated April 23, 2015 expressed an unqualified opinion on those financial statements and financial statement schedule. /s/ Deloitte & Touche LLP Philadelphia, Pennsylvania April 23, 2015 53

  • Page 54
    ... Statements of Cash Flows for the fiscal years ended February 28, 2015, March 1, 2014 and March 2, 2013 ...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 55
    ...By Reference To Exhibit Numbers 2.1 Agreement and Plan of Merger, dated as of February 10, 2015, by and among Rite Aid Corporation, Eagle Merger Sub 1 LLC, Eagle Merger Sub 2 LLC, TPG VI Envision BL, LLC, Envision Topco Holdings, LLC and Shareholder Representative Services LLC, in its capacity as...

  • Page 56
    ...between Rite Aid Corporation and Harris Trust and Savings Bank, related to the Company's 6.875% Notes due 2028 Indenture, dated as of May 29, 2008, between Rite Aid Corporation, as issuer, and The Bank of New York Trust Company, N.A., as trustee, related to the Company's Senior Debt Securities First...

  • Page 57
    ...April 2, 2015, among Rite Aid Corporation, the subsidiary guarantors named therein and Citigroup Global Markets Inc., Merrill Lynch, Pierce, Fenner & Smith Incorporated, Wells Fargo Securities, LLC, Credit Suisse Securities (USA) LLC and Goldman, Sachs & Co., as the initial purchasers of the Company...

  • Page 58
    ..., to the 2012 Omnibus Equity Plan* 2014 Omnibus Equity Plan* Form of Award Agreement* Supplemental Executive Retirement Plan* Executive Incentive Plan for Officers of Rite Aid Corporation* Amended and Restated Employment Agreement by and between Rite Aid Corporation and John T. Standley, dated as...

  • Page 59
    ... 2014, by and between Rite Aid Corporation and Darren W. Karst Amended and Restated Credit Agreement, dated as of June 27, 2001, as amended and restated as of January 13, 2015, among Rite Aid Corporation, the lenders from time to time party thereto and Citicorp North America, Inc., as administrative...

  • Page 60
    ... 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 61
    ... each additional Senior Representative from time to time party thereto Lockup Agreement, dated as of February 10, 2015, by and among Rite Aid Corporation, TPG VI Envision, L.P., TPG VI DE BDH, L.P. and Envision Rx Options Holdings Inc. Statement regarding computation of earnings per share (See Note...

  • Page 62
    ... Statements of Cash Flow for the fiscal years ended February 28, 2015, March 1, 2014 and March 2, 2013 and (vi) Notes to Consolidated Financial Statements, tagged in detail. Filed herewith Filed herewith 31.2 Filed herewith 32 Filed herewith 101. * ** Constitutes a compensatory plan...

  • Page 63
    ... 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 64
    ... financial statements present fairly, in all material respects, the financial position of Rite Aid Corporation and subsidiaries as of February 28, 2015 and March 1, 2014, and the results of their operations and their cash flows for each of the three years in the period ended February 28, 2015...

  • Page 65
    RITE AID CORPORATION AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (In thousands, except per share amounts) February 28, 2015 March 1, 2014 ASSETS Current assets: Cash and cash equivalents . Accounts receivable, net . . Inventories... are an integral part of these consolidated financial statements. 65

  • Page 66
    ... CONSOLIDATED STATEMENTS OF OPERATIONS (In thousands, except per share amounts) Year Ended March 1, 2014 (52 Weeks) February 28, 2015 (52 Weeks) March 2, 2013 (52 Weeks) Revenues ...Costs and expenses: Cost of goods sold ...Selling, general and administrative expenses Lease termination...

  • Page 67
    RITE AID CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (In thousands) Year Ended March 1, 2014 (52 Weeks) February 28, 2015 (52 Weeks) March 2, 2013 (52 Weeks) Net income ...Other comprehensive income: Defined benefit pension plans: Amortization of prior service ...

  • Page 68
    RITE AID CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIT) For the Years Ended February 28, 2015, March 1, 2014 and March 2, 2013 (In thousands, except per share amounts) Accumulated Other Comprehensive Income (Loss) $(52,634) (8,735) (1,060) 5,450 (360) 1,551 ...

  • Page 69
    RITE AID CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (In thousands) Year Ended March 1, 2014 (52 Weeks) February 28, 2015 (52 Weeks) March 2, 2013 (52 Weeks) OPERATING ACTIVITIES: Net income ...Adjustments to reconcile to net cash provided by operating activities: ...

  • Page 70
    ... beauty aids and personal care products, seasonal merchandise and a large private brand product line. The Company's operations consist solely of the retail drug segment. Revenues are as follows: February 28, 2015 (52 Weeks) Year Ended March 1, 2014 (52 Weeks) March 2, 2013 (52 Weeks) Pharmacy sales...

  • Page 71
    RITE AID CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) For the Years Ended February 28, 2015, March 1, 2014 and March 2, 2013 (In thousands, except per share amounts) 1. Summary of Significant Accounting Policies (Continued) Cash and Cash Equivalents Cash and ...

  • Page 72
    ...CONSOLIDATED FINANCIAL STATEMENTS (Continued) For the Years Ended February 28, 2015, March 1, 2014 and March 2, 2013 (In thousands, except per share amounts) 1. Summary of Significant Accounting Policies (Continued) Property, Plant and Equipment Property, plant and equipment are stated at cost, net...

  • Page 73
    ...,896 for fiscal 2015, 2014 and 2013, 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 allowance for estimated future returns. Return activity is immaterial to...

  • Page 74
    ... CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) For the Years Ended February 28, 2015, March 1, 2014 and March 2, 2013 (In thousands, except per share amounts) 1. Summary of Significant Accounting Policies (Continued) vendors, inventory shrink, purchasing costs...

  • Page 75
    ...the basis for developing reported claims and estimating 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...

  • Page 76
    RITE AID CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) For the Years Ended February 28, 2015, March 1, 2014 and March 2, 2013 (In thousands, except per share amounts) 1. Summary of Significant Accounting Policies (Continued) portion of the deferred tax assets ...

  • Page 77
    RITE AID CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) For the Years Ended February 28, 2015, March 1, 2014 and March 2, 2013 (In thousands, except per share amounts) 1. Summary of Significant Accounting Policies (Continued) On February 17, 2014, the Company ...

  • Page 78
    ... of the adoption of ASU 2015-02 on its financial position, results of operations and cash flows. 2. Acquisitions On April 1, 2014, the Company acquired Boston-based Health Dialog Services Corporation, which is engaged in providing health coaching, shared decision making and healthcare analytics...

  • Page 79
    ... and traditional PBM options through its EnvisionRx and MedTrak PBMs, respectively. EnvisionRx also offers fully integrated mail-order and specialty pharmacy services through Orchard Pharmaceutical Services; access to the nation's largest cash pay infertility discount drug program via Design Rx; an...

  • Page 80
    RITE AID CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) For the Years Ended February 28, 2015, March 1, 2014 and March 2, 2013 (In thousands, except per share amounts) 4. Income Per Share (Continued) stock were exercised or converted into common stock or ...

  • Page 81
    ... the Company exchanged 40,000,000 shares of its common stock, par value of $1.00 per share, with a market value of $190,400 at the $4.76 per share closing price on September 30, 2013, for all of the outstanding Convertible Preferred Stock. Accordingly, income attributable to common stock holders was...

  • Page 82
    RITE AID CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) For the Years Ended February 28, 2015, March 1, 2014 and March 2, 2013 (In thousands, except per share amounts) 5. Lease Termination and Impairment Charges (Continued) The Company recorded impairment ...

  • Page 83
    ... share amounts) 5. Lease Termination and Impairment Charges (Continued) The following table summarizes the impairment charges and number of locations, segregated by closed facilities and active stores that have been recorded in fiscal 2015, 2014 and 2013: February 28, 2015 Number Charge Year Ended...

  • Page 84
    RITE AID CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) For the Years Ended February 28, 2015, March 1, 2014 and March 2, 2013 (In thousands, except per share amounts) 5. Lease Termination and Impairment Charges (Continued) in future periods. Projected cash ...

  • Page 85
    ... 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: February 28, 2015 (52 Weeks) Year Ended March 1, March 2, 2014 2013 (52 Weeks...

  • Page 86
    RITE AID CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) For the Years Ended February 28, 2015, March 1, 2014 and March 2, 2013 (In thousands, except per share amounts) 5. Lease Termination and Impairment Charges (Continued) revenue, operating expenses and income...

  • Page 87
    RITE AID CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) For the Years Ended February 28, 2015, March 1, 2014 and March 2, 2013 (In thousands, except per share amounts) 7. Income Taxes The provision for income tax (benefit) expense was as follows: February 28, ...

  • Page 88
    RITE AID CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) For the Years Ended February 28, 2015, March 1, 2014 and March 2, 2013 (In thousands, except per share amounts) 7. Income Taxes (Continued) years and the Company's historical ability of predicting earnings....

  • Page 89
    RITE AID CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) For the Years Ended February 28, 2015, March 1, 2014 and March 2, 2013 (In thousands, except per share amounts) 7. Income Taxes (Continued) A reconciliation of the beginning and ending amount of ...

  • Page 90
    ... AID CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) For the Years Ended February 28, 2015, March 1, 2014 and March 2, 2013 (In thousands, except per share amounts) 7. Income Taxes (Continued) Net Operating Losses and Tax Credits At February 28, 2015, the Company...

  • Page 91
    ...to, the overall economy, industry and market conditions, financial performance of the Company, changes in the Company's share price, and forecasts of revenue, profit, working capital requirements, and cash flows. The Company considers the sole reporting unit's historical results and operating trends...

  • Page 92
    RITE AID CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) For the Years Ended February 28, 2015, March 1, 2014 and March 2, 2013 (In thousands, except per share amounts) 11. Goodwill and Other Intangibles (Continued) In the fiscal fourth quarter the Company ...

  • Page 93
    RITE AID CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) For the Years Ended February 28, 2015, March 1, 2014 and March 2, 2013 (In thousands, except per share amounts) 12. Accrued Salaries, Wages and Other Current Liabilities Accrued salaries, wages and other ...

  • Page 94
    ... AID CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) For the Years Ended February 28, 2015, March 1, 2014 and March 2, 2013 (In thousands, except per share amounts) 13. Indebtedness and Credit Agreement (Continued) Credit Facility On January 13, 2015, the Company...

  • Page 95
    RITE AID CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) For the Years Ended February 28, 2015, March 1, 2014 and March 2, 2013 (In thousands, except per share amounts) 13. Indebtedness and Credit Agreement (Continued) Senior Secured Credit Facility). Subject to ...

  • Page 96
    RITE AID CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) For the Years Ended February 28, 2015, March 1, 2014 and March 2, 2013 (In thousands, except per share amounts) 13. Indebtedness and Credit Agreement (Continued) term loan facilities, secured guaranteed ...

  • Page 97
    RITE AID CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) For the Years Ended February 28, 2015, March 1, 2014 and March 2, 2013 (In thousands, except per share amounts) 13. Indebtedness and Credit Agreement (Continued) On July 2, 2013, the Company issued $810,000...

  • Page 98
    RITE AID CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) For the Years Ended February 28, 2015, March 1, 2014 and March 2, 2013 (In thousands, except per share amounts) 13. Indebtedness and Credit Agreement (Continued) with available cash, were used to repurchase...

  • Page 99
    RITE AID CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) For the Years Ended February 28, 2015, March 1, 2014 and March 2, 2013 (In thousands, except per share amounts) 14. Leases (Continued) The Company accounted for these leases as operating leases. The ...

  • Page 100
    RITE AID CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) For the Years Ended February 28, 2015, March 1, 2014 and March 2, 2013 (In thousands, except per share amounts) 15. Stock Option and Stock Award Plans (Continued) award, net of an estimate for the impact of...

  • Page 101
    RITE AID CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) For the Years Ended February 28, 2015, March 1, 2014 and March 2, 2013 (In thousands, except per share amounts) 15. Stock Option and Stock Award Plans (Continued) All of the plans provide for the Board of ...

  • Page 102
    RITE AID CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) For the Years Ended February 28, 2015, March 1, 2014 and March 2, 2013 (In thousands, except per share amounts) 15. Stock Option and Stock Award Plans (Continued) The weighted average fair value of options ...

  • Page 103
    RITE AID CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) For the Years Ended February 28, 2015, March 1, 2014 and March 2, 2013 (In thousands, except per share amounts) 15. Stock Option and Stock Award Plans (Continued) summary of restricted stock transactions ...

  • Page 104
    ... loss and the changes in balances of each component of accumulated other comprehensive loss, net of tax as applicable, for the fiscal years ended February 28, 2015, March 1, 2014 and March 2, 2013: February 28, 2015 (52 Weeks) Defined Accumulated benefit other pension comprehensive plans loss March...

  • Page 105
    RITE AID CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) For the Years Ended February 28, 2015, March 1, 2014 and March 2, 2013 (In thousands, except per share amounts) 16. Reclassifications from Accumulated Other Comprehensive Loss (Continued) The following ...

  • Page 106
    ... be paid to eligible associates based upon years of service and, in some cases, eligible compensation. The Company's funding policy for The Rite Aid Pension Plan (The ''Defined Benefit Pension Plan'') is to contribute the minimum amount required by the Employee Retirement Income Security Act of 1974...

  • Page 107
    ...as well as the funded status and amounts recognized in the Company's balance sheet as of February 28, 2015 and March 1, 2014: Defined Benefit Pension Plan 2015 2014 Nonqualified Executive Retirement Plan 2015 2014 Change in benefit obligations: Benefit obligation at end of prior year . Service cost...

  • Page 108
    ... net cost for the fiscal years ended February 28, 2015, March 1, 2014 and March 2, 2013 were: Defined Benefit Pension Plan 2015 2014 2013 Nonqualified Executive Retirement Plan 2015 2014 2013 Discount rate ...4.50% 4.00% 4.50% 4.50% 4.00% 4.50% Rate of increase in future compensation levels...

  • Page 109
    RITE AID CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) For the Years Ended February 28, 2015, March 1, 2014 and March 2, 2013 (In thousands, except per share amounts) 17. Retirement Plans (Continued) • Balance the correlation between assets and liabilities by...

  • Page 110
    RITE AID CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) For the Years Ended February 28, 2015, March 1, 2014 and March 2, 2013 (In thousands, except per share amounts) 17. Retirement Plans (Continued) The following table sets forth by level within the fair value...

  • Page 111
    ... the Employer Identification Number (EIN) and the three-digit plan number, if applicable. The most recent Pension Protection Act (PPA) zone status available for fiscal 2015 and fiscal 2014 is for the plan year-ends as indicated below. The zone status is based on information that the Company received...

  • Page 112
    ...Commercial Workers Unions and Drug Employers Pension Fund ... EIN/Pension Plan Number 13-3604862-001 Green- Green- 12/31/2013 12/31/2012 $11,568 $14,093 $ 9,830 51-6029925-001 Red- Red- Implemented 12/31/2014 12/31/2013 7,002 6,476 3,416 No 7/12/2015 Contributions of $1.242 per hour worked...

  • Page 113
    RITE AID CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) For the Years Ended February 28, 2015, March 1, 2014 and March 2, 2013 (In thousands, except per share amounts) 18. Multiemployer Plans that Provide Pension Benefits (Continued) The Company was listed in ...

  • Page 114
    ...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 the Company's stores at various locations around the country...

  • Page 115
    ... DEA, Los Angeles District Office, served an administrative subpoena on the Company seeking documents related to prescriptions by a certain prescriber. The USAO, Central District of California, also contacted the Company about a related investigation into allegations that Rite Aid pharmacies filled...

  • Page 116
    RITE AID CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) For the Years Ended February 28, 2015, March 1, 2014 and March 2, 2013 (In thousands, except per share amounts) 19. Commitments, Contingencies and Guarantees (Continued) The Company was served with a Civil ...

  • Page 117
    RITE AID CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) For the Years Ended February 28, 2015, March 1, 2014 and March 2, 2013 (In thousands, except per share amounts) 20. Supplementary Cash Flow Data February 28, 2015 Year Ended March 1, 2014 March 2, 2013 ...

  • Page 118
    ... at the $4.76 per share closing price on the Settlement Date. 22. Interim Financial Results (Unaudited) First Quarter Second Quarter Fiscal Year 2015 Third Quarter Fourth Quarter Year Revenues ...Cost of goods sold ...Selling, general and administrative expenses ...Lease termination and impairment...

  • Page 119
    ...) For the Years Ended February 28, 2015, March 1, 2014 and March 2, 2013 (In thousands, except per share amounts) 22. Interim Financial Results (Unaudited) (Continued) Fiscal Year 2014 Third Quarter First Quarter Second Quarter Fourth Quarter Year Revenues ...Cost of goods sold ...Selling...

  • Page 120
    ...FINANCIAL STATEMENTS (Continued) For the Years Ended February 28, 2015, March 1, 2014 and March 2, 2013 (In thousands, except per share amounts) 23. Financial Instruments The carrying amounts and fair values of financial instruments at February 28, 2015 and March 1, 2014 are listed as follows: 2015...

  • Page 121
    RITE AID CORPORATION AND SUBSIDIARIES SCHEDULE II-VALUATION AND QUALIFYING ACCOUNTS For the Years Ended February 28, 2015, March 1, 2014 and March 2, 2013 (dollars in thousands) Balance at Beginning of Period Additions Charged to Costs and Expenses Balance at End of Period Allowances deducted from ...

  • Page 122
    ..., thereunto duly authorized. RITE AID CORPORATION By: /s/ JOHN T. STANDLEY John T. Standley Chairman and Chief Executive Officer Dated: April 23, 2015 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 123
    Signature Title /s/ MYRTLE S. POTTER Myrtle S. Potter Director /s/ MICHAEL N. REGAN Michael N. Regan Director /s/ MARCY SYMS Marcy Syms Director 123

  • Page 124
    ...of debt expense, preferred stock dividend requirement and that portion of rental expense which is representative of the interest factor in those rentals. February 28, 2015 (52 Weeks) Year Ended March 1, March 2, March 3, 2014 2013 2012 (52 Weeks) (52 Weeks) (53 Weeks) (dollars in thousands) February...

  • Page 125
    ... 21 Company (Name in which such subsidiary conducts business if other than corporate name): State of Incorporation or Organization 112 Burleigh Avenue Norfolk, LLC ...1515 West State Street Boise, Idaho, LLC ...1740 Associates, LLC ...3581 Carter Hill Road-Montgomery Corp...4042 Warrensville Center...

  • Page 126
    ...Delaware Delaware Michigan Michigan Maryland Delaware Delaware Delaware Delaware California Alabama Connecticut Delaware Florida Georgia Illinois Indiana Kentucky Maine Maryland Massachusetts Michigan New Hampshire New Jersey New York North Carolina Ohio Pennsylvania South Carolina Tennessee Vermont...

  • Page 127
    ... subsidiary conducts business if other than corporate name): State of Incorporation or Organization Rite Aid Online Store Inc...Rite Aid Payroll Management Inc...Rite Aid Realty Corp...Rite Aid Rome Distribution Center, Inc...Rite Aid Services, LLC ...Rite Aid Specialty Pharmacy LLC ...Rite Aid...

  • Page 128
    ...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 February 28, 2015. /s/ DELOITTE & TOUCHE LLP Philadelphia, Pennsylvania...

  • Page 129
    ... 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 fact or omit to state...

  • Page 130
    ... W. Karst, Executive Vice President and Chief Financial 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...

  • Page 131
    ... with the Annual Report on Form 10-K of Rite Aid Corporation (the ''Company'') for the annual period ended February 28, 2015 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 Darren...