Rite Aid 2015 Annual Report Download - 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 the 8.625% senior notes and the 9.375% senior notes,
respectively. These notes are unsecured, unsubordinated obligations of Rite Aid Corporation and rank
equally in right of payment with all other unsubordinated indebtedness. The Company’s obligations
under the notes are fully and unconditionally guaranteed, jointly and severally, on an unsubordinated
basis, by all of its subsidiaries that guarantee the Company’s obligations under the senior secured credit
facility, the second priority secured term loan facility and the outstanding 8.00% senior secured notes,
7.5% senior secured notes, 10.25% senior secured notes and 9.5% senior notes.
In May 2012, the Company completed a tender offer for the 9.375% notes in which $296,269
aggregate principal amount of the outstanding 9.375% notes were tendered and repurchased. In June
2012, the Company redeemed the remaining 9.375% notes for $108,731, which included the call
premium and interest through the redemption date. The May 2012 refinancing resulted in an aggregate
loss on debt retirement of $17,842.
Interest Rates and Maturities
The annual weighted average interest rate on the Company’s indebtedness was 5.7%, 6.4%, and
7.1% for fiscal 2015, 2014, and 2013, respectively.
The aggregate annual principal payments of long-term debt for the five succeeding fiscal years are
as follows: 2016—$69,535; 2017—$0; 2018—$0; 2019—$0 and $5,480,000 in 2020 and thereafter.
14. Leases
The Company leases most of its retail stores and certain distribution facilities under noncancellable
operating and capital leases, most of which have initial lease terms ranging from 5 to 22 years. The
Company also leases certain of its equipment and other assets under noncancellable operating leases
with initial terms ranging from 3 to 10 years. In addition to minimum rental payments, certain store
leases require additional payments based on sales volume, as well as reimbursements for taxes,
maintenance and insurance. Most leases contain renewal options, certain of which involve rent
increases. Total rental expense, net of sublease income of $8,559, $8,369, and $8,536, was $964,484,
$952,777, and $951,239 in fiscal 2015, 2014, and 2013, respectively. These amounts include contingent
rentals of $18,919, $18,679 and $21,026 in fiscal 2015, 2014, and 2013, respectively.
During fiscal 2015, the Company did not enter into any sale-leaseback transactions whereby the
Company sold owned operating stores to independent third parties and concurrent with the sale,
entered into an agreement to lease the store back from the purchasers.
During fiscal 2014, the Company sold one owned operating store to an independent third party.
Net proceeds from the sale were $3,989. Concurrent with this sale, the Company entered into an
agreement to lease the store back from the purchaser over a minimum lease term of 20 years. The
Company accounted for this lease as an operating lease. The transaction resulted in a gain of $269
which is included in the gain on sale of assets, net for the fifty-two weeks ended March 1, 2014.
During fiscal 2013, the Company sold two owned operating stores to independent third parties.
Net proceeds from the sale were $6,355. Concurrent with these sales, the Company entered into
agreements to lease the stores back from the purchasers over a minimum lease term of 12 to 20 years.
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