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 Rite Aid Reports Net Income and Adjusted EBITDA for Fourth Quarter and Full 2015 Fiscal Year
   Wednesday, April 08, 2015 7:00:04 AM ET

--Full Year Net Income of $2.109 Billion and Net Income per Diluted Share of $2.08, Compared to the Prior Year Net Income of $249.4 Million and Net Income per Diluted Share of $0.23

--Current Year Fourth Quarter and Full Year Results Includes an Income Tax Benefit of $1.716 Billion and $1.682 Billion, Respectively, Primarily as a Result of a Reduction of Deferred Tax Asset Valuation Allowance

--Fourth Quarter Adjusted EBITDA of $343.3 Million Compared to Adjusted EBITDA of $356.3 Million in the Prior Year’s Fourth Quarter

--Full Year Adjusted EBITDA of $1,322.8 Million Compared to Adjusted EBITDA of $1,325.0 Million in the Prior Year

--Rite Aid Provides Outlook for Fiscal 2016

Rite Aid Corporation (RAD ) today reported operating results for its fourth quarter and fiscal year ended February 28, 2015.

For the fourth quarter, the company reported revenues of $6.8 billion and net income of $1.835 billion, or $1.79 per diluted share. For the full year, the company reported revenues of $26.5 billion and net income of $2.109 billion, or $2.08 per diluted share. Current year results for both the fourth quarter and the full year were favorably impacted by a reduction of the deferred tax asset valuation allowance and a full year provision of income tax expense at a statutory tax rate, the net effect of which resulted in an income tax benefit of $1.716 billion, or $1.67 per diluted share and $1.682 billion, or $1.65 per diluted share in the fourth quarter and full year, respectively. The company reported Adjusted EBITDA of $343.3 million or 5.0 percent of revenues in the fourth quarter and $1,322.8 million or 5.0 percent of revenues for the full year.

The reduction of the tax valuation allowance represents a non-cash benefit to earnings in fiscal 2015. While the company will record charges for income taxes in future periods, it does not expect to pay significant cash taxes for the foreseeable future.

"In the fourth quarter, our strong growth in same-store sales and prescription count as well as strong cost control helped drive continued profitability," said Rite Aid Chairman and CEO John Standley.

"These positive results contributed to a successful year in which we took significant steps to further position Rite Aid as a retail healthcare company," added Standley. "We look forward to building upon our success by leveraging our recent strategic investments to grow our business. We will also continue to implement our initiatives that deliver value to our customers and help us provide greater access to convenient, affordable and high quality healthcare. I thank our dedicated team of nearly 90,000 Rite Aid associates for the great work they did throughout the year to continue our recent momentum."

Fourth Quarter Summary

Revenues for the quarter were $6.8 billion versus revenues of $6.6 billion in the prior year’s fourth quarter. Revenues increased 3.8 percent primarily as a result of an increase in same store sales.

Same store sales for the quarter increased 4.5 percent over the prior year, consisting of a 5.7 percent increase in pharmacy sales and a 2.0 percent increase in front-end sales. Pharmacy sales included a negative impact of approximately 128 basis points from new generic introductions. The number of prescriptions filled in same stores increased 3.5 percent over the prior year period. Prescription sales accounted for 68.1 percent of total drugstore sales, and third party prescription revenue was 97.5 percent of pharmacy sales.

Net income was $1.835 billion or $1.79 per diluted share compared to last year’s fourth quarter net income of $55.4 million or $0.06 per diluted share. Current year net income included the favorable impact of a reduction of a deferred tax asset valuation allowance of $1.841 billion and income tax expense of $125.3 million compared to last year’s income tax benefit of $6.0 million.

Pre-tax income for the fourth quarter was $119.1 million or $0.12 per diluted share versus $49.4 million or $0.05 per diluted share in the prior year’s fourth quarter. Pre-tax income was favorably impacted by a LIFO credit in the current year of $23.5 million compared to last year’s LIFO charge of $44.1 million.

Adjusted EBITDA (which is reconciled to net income on the attached table) was $343.3 million or 5.0 percent of revenues for the fourth quarter compared to $356.3 million or 5.4 percent of revenues for the same period last year. Adjusted EBITDA in last year’s fourth quarter was favorably impacted by a $28 million reimbursement rate adjustment related to Medi-Cal.

In the fourth quarter, the company relocated 3 stores, remodeled 115 stores and expanded 2 stores, bringing the total number of wellness stores chainwide to 1,634. The company also opened 1 store, acquired 2 stores and closed 5 stores, resulting in a total store count of 4,570 at the end of the fourth quarter.

Full Year Results

For the fiscal year ended February 28, 2015, Rite Aid had revenues of $26.5 billion compared to $25.5 billion for the prior year. Revenues increased 3.9 percent primarily as a result of an increase in same store sales.

Same store sales for the year increased 4.3 percent consisting of a 5.8 percent increase in pharmacy sales and a 1.2 percent increase in front end sales. Pharmacy sales included a negative impact of approximately 175 basis points from new generic introductions. The number of prescriptions filled in same stores increased 3.5 percent over the prior year period. Prescription sales accounted for 68.8 percent of total drugstore sales, and third party prescription revenue was 97.5 percent of pharmacy sales.

Net income for fiscal 2015 was $2.109 billion or $2.08 per diluted share compared to last year’s net income of $249.4 million or $0.23 per diluted share. Current year results were favorably impacted by the reduction of a deferred tax asset valuation allowance of $1.841 billion, partially offset by income tax expense of $159.0 million compared to $0.8 million in the prior year.

Pre-tax income was $426.8 million or $0.42 per diluted share in fiscal 2015 compared to $250.2 million or $0.23 per diluted share in fiscal 2014. Current year results were favorably impacted by a LIFO credit of $18.9 million in the current year compared to a LIFO charge of $104.1 million in the prior year, a loss on debt retirement of $18.5 million compared to $62.4 million in the prior year, and lower interest expense.

Adjusted EBITDA was $1,322.8 million or 5.0 percent of revenues for the year compared to $1,325.0 million or 5.2 percent of revenues for last year.

For the year, the company relocated 14 stores, acquired 9 stores, remodeled 440 stores, expanded 5 stores, opened two stores, and closed 28 stores.

Outlook for Fiscal 2016

The company’s outlook for fiscal 2016 is based on the anticipated benefits of its wellness remodels, a full year of benefits from the pharmacy sourcing arrangement with McKesson and other initiatives to grow sales and drive operational efficiencies. The company’s outlook also considers planned wage and benefit increases, the introduction of certain new generics and a reimbursement rate environment that is expected to continue to be challenging. The outlook does not consider the impact of the EnvisionRx acquisition due to the uncertainty as to when the transaction will close. The company’s outlook also reflects an increase in income tax expense compared to fiscal 2015, which included an income tax benefit from the reduction of the deferred tax asset valuation allowance. The company expects cash tax payments to remain in a range of $10 million to $20 million for fiscal 2016 as it will continue to be able to utilize its tax net operating loss carryforward.

Rite Aid said it expects sales to be between $26.9 billion and $27.4 billion in fiscal 2016 with same store sales expected to range from an increase of 2.5 percent to an increase of 4.5 percent over fiscal 2015.

Adjusted EBITDA (which is reconciled to net income on the attached table) is expected to be between $1.250 billion and $1.350 billion.

Net income for fiscal 2016 is expected to be between $190 million and $275 million or income per diluted share of $0.19 to $0.27. This guidance is net of estimated income tax expense of between $130 million and $180 million, or $0.13 to $0.18 per diluted share, respectively.

Capital expenditures are expected to be approximately $650 million.

Conference Call Broadcast

Rite Aid will hold an analyst call at 8:30 a.m. Eastern Time today with remarks by Rite Aid’s management team. The call will be simulcast via the internet and can be accessed through the websites www.riteaid.com in the conference call section of investor information and www.StreetEvents.com. Slides related to materials discussed on the call will be available on both sites. A playback of the call will be available on both sites starting at 12 p.m. Eastern Time today. A playback of the call will also be available by telephone beginning at 12 p.m. Eastern Time today until 11:59 p.m. Eastern Time on Apr. 10, 2015. The playback number is 1-855-859-2056 from within the U.S. and Canada or 1-404-537-3406 from outside the U.S. and Canada with the eight-digit reservation number 11217760.

Rite Aid is one of the nation’s leading drugstore chains with 4,570 stores in 31 states and the District of Columbia. Information about Rite Aid, including corporate background and press releases, is available through Rite Aid’s website at www.riteaid.com.

Statements, including guidance, in this release that are not historical are forward-looking statements made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Words such as "anticipate," "believe," "continue," "could," "estimate," "expect," "intend," "may," "plan," "predict," "project," "should," and "will" and variations of such words and similar expressions are intended to identify such forward-looking statements. These forward-looking statements are not guarantees of future performance and involve risks, assumptions and uncertainties, including, but not limited to, our high level of indebtedness and our ability to make interest and principal payments on our debt and satisfy the other covenants contained in our debt agreements, general economic, market and competitive conditions, our ability to improve the operating performance of our stores in accordance with our long term strategy, the impact of private and public third-party payers continued reduction in prescription drug reimbursements and efforts to encourage mail order, our ability to manage expenses and our investments in working capital, outcomes of legal and regulatory matters and changes in legislation or regulations, including healthcare reform. These and other risks, assumptions and uncertainties are described in Item 1A (Risk Factors) of our most recent Annual Report on Form 10-K and in other documents that we file or furnish with the Securities and Exchange Commission, which you are encouraged to read. Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those indicated or anticipated by such forward-looking statements. Accordingly, you are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date they are made. Rite Aid expressly disclaims any current intention to update publicly any forward-looking statement after the distribution of this release, whether as a result of new information, future events, changes in assumptions or otherwise.

See the attached table for a reconciliation of a non-GAAP financial measure, Adjusted EBITDA to net income, the most comparable GAAP financial measure. We define Adjusted EBITDA as net income excluding the impact of income taxes (and any corresponding adjustments to tax indemnification asset), interest expense, depreciation and amortization, LIFO adjustments, charges or credits for facility closing and impairment, inventory write-downs 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).

                                                                                                                                 
                                                                                            RITE AID CORPORATION AND SUBSIDIARIES
                                                                                                                                                                         
                                                                                                 CONSOLIDATED BALANCE SHEETS
                                                                                                   (Dollars in thousands)
                                                                                                         (unaudited)
                                                                                                                                                                         
                                                                                                                February 28, 2015                                                           March 1, 2014
                                                                                              -----------------------------------------------------                     -----------------------------------------------------
                                 ASSETS
Current assets:
    Cash and cash equivalents                                                                                    $    115,899                                                              $    146,406
    Accounts receivable, net                                                                                          980,904                                                                   949,062
    Inventories, net of LIFO reserve of $997,528 and $1,018,581                                                     2,882,980                                                                 2,993,948
    Deferred tax assets                                                                                                17,823                                                                         -
    Prepaid expenses and other current assets                                                      224,152                             195,709  
                                                                                              -------------------- ---------- --------------------                      -------------------- ---------- --------------------
        Total current assets                                                                                        4,221,758                                                                 4,285,125
Property, plant and equipment, net                                                                                  2,091,369                                                                 1,957,329
Goodwill                                                                                                               76,124                                                                         -
Other intangibles, net                                                                                                421,480                                                                   431,227
Deferred tax assets                                                                                                 1,766,349                                                                         -
Other assets                                                                                       286,172                             271,190  
                                                                                              -------------------- ---------- --------------------                      -------------------- ---------- --------------------
        Total assets                                                                                             $  8,863,252                                           $  6,944,871  
                                                                                              ==================== ========== ====================                      ==================== ========== ====================
                                                                                                                                                                         
             LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT)
Current liabilities:
    Current maturities of long-term debt and lease financing obligations                                         $    100,376                                                              $     49,174
    Accounts payable                                                                                                1,133,520                                                                 1,292,419
    Accrued salaries, wages and other current liabilities                                                           1,193,419                                                                 1,165,859
    Deferred tax liabilities                                                                        57,685                                   -  
                                                                                              -------------------- ---------- --------------------                      -------------------- ---------- --------------------
        Total current liabilities                                                                                   2,485,000                                                                 2,507,452
Long-term debt, less current maturities                                                                             5,483,415                                                                 5,632,798
Lease financing obligations, less current maturities                                                                   61,152                                                                    75,171
Other noncurrent liabilities                                                                       776,629                             843,152  
                                                                                              -------------------- ---------- --------------------                      -------------------- ---------- --------------------
        Total liabilities                                                                                           8,806,196                                                                 9,058,573
                                                                                                                                                                         
Commitments and contingencies                                                                                               -                                                                         -
Stockholders’ equity (deficit):
    Common stock                                                                                                      988,558                                                                   971,331
    Additional paid-in capital                                                                                      4,521,023                                                                 4,468,149
    Accumulated deficit                                                                                            (5,406,675 )                                                              (7,515,848 )
    Accumulated other comprehensive loss                                                           (45,850 )                                              (37,334 )
                                                                                              -------------------- ---------- --------------------                      -------------------- ---------- --------------------
        Total stockholders’ equity (deficit)                                                        57,056                          (2,113,702 )
                                                                                              -------------------- ---------- --------------------                      -------------------- ---------- --------------------
        Total liabilities and stockholders’ equity (deficit)                                                     $  8,863,252                                           $  6,944,871  
                                                                                              ==================== ========== ====================                      ==================== ========== ====================
                                                                                                                 
                                                                                    RITE AID CORPORATION AND SUBSIDIARIES
                                                                                                                                                         
                                                                                    CONSOLIDATED STATEMENTS OF OPERATIONS
                                                                              (Dollars in thousands, except per share amounts)
                                                                                                 (unaudited)
                                                                                                                                                         
                                                                                                                                                         
                                                                                              Thirteen weeks ended                                                      Thirteen weeks ended
                                                                                                February 28, 2015                                                           March 1, 2014
                                                                              -----------------------------------------------------                     ----------------------------------------------------
Revenues                                                                                         $  6,847,929                                                              $ 6,597,459
Costs and expenses:
    Cost of goods sold                                                                              4,892,068                                                                4,711,743
    Selling, general and administrative expenses                                                    1,718,327                                                                1,716,671
    Lease termination and impairment charges                                                           21,284                                                                   17,270
    Interest expense                                                                                   98,442                                                                  101,992
    (Gain) loss on sale of assets, net                                              (1,259 )                                                 412  
                                                                              -------------------- ---------- --------------------                      -------------------- --------- --------------------
                                                                                                                                                         
                                                                                 6,728,862                          6,548,088  
                                                                              -------------------- ---------- --------------------                      -------------------- --------- --------------------
                                                                                                                                                         
Income before income taxes                                                                            119,067                                                                   49,371
Income tax benefit                                                              (1,715,965 )                                              (6,006 )
                                                                              -------------------- ---------- --------------------                      -------------------- --------- --------------------
    Net income                                                                                   $  1,835,032                                           $    55,377  
                                                                              ==================== ========== ====================                      ==================== ========= ====================
                                                                                                                                                         
Basic and diluted earnings per share:
                                                                                                                                                         
Numerator for earnings per share:
    Net income                                                                                   $  1,835,032                                                              $    55,377
    Add back - Interest on convertible notes                                         1,364                              1,364  
                                                                              -------------------- ---------- --------------------                      -------------------- --------- --------------------
    Income attributable to common stockholders - diluted                                         $  1,836,396                                           $    56,741  
                                                                              ==================== ========== ====================                      ==================== ========= ====================
                                                                                                                                                         
                                                                                                                                                         
                                                                                                                                                         
Denominator:
    Basic weighted average shares                                                                     977,716                                                                  956,925
    Outstanding options and restricted shares, net                                                     22,097                                                                   35,304
    Convertible notes                                                               24,792                             24,800  
                                                                              -------------------- ---------- --------------------                      -------------------- --------- --------------------
                                                                                                                                                         
    Diluted weighted average shares                                              1,024,605                          1,017,029  
                                                                              ==================== ========== ====================                      ==================== ========= ====================
                                                                                                                                                         
    Basic income per share                                                                       $       1.88                                                              $      0.06
    Diluted income per share                                                                     $       1.79                                                              $      0.06
                                                                                                                 
                                                                                    RITE AID CORPORATION AND SUBSIDIARIES
                                                                                                                                                         
                                                                                    CONSOLIDATED STATEMENTS OF OPERATIONS
                                                                              (Dollars in thousands, except per share amounts)
                                                                                                 (unaudited)
                                                                                                                                                         
                                                                                                                                                         
                                                                                              Fifty-two weeks ended                                                     Fifty-two weeks ended
                                                                                                February 28, 2015                                                           March 1, 2014
                                                                              -----------------------------------------------------                     -----------------------------------------------------
Revenues                                                                                         $ 26,528,377                                                              $ 25,526,413
Costs and expenses:
    Cost of goods sold                                                                             18,951,645                                                                18,202,679
    Selling, general and administrative expenses                                                    6,695,642                                                                 6,561,162
    Lease termination and impairment charges                                                           41,945                                                                    41,304
    Interest expense                                                                                  397,612                                                                   424,591
    Loss on debt retirements, net                                                                      18,512                                                                    62,443
    Gain on sale of assets, net                                                     (3,799 )                                              (15,984 )
                                                                              -------------------- ---------- --------------------                      -------------------- ---------- --------------------
                                                                                                                                                         
                                                                                26,101,557                          25,276,195  
                                                                              -------------------- ---------- --------------------                      -------------------- ---------- --------------------
                                                                                                                                                         
Income before income taxes                                                                            426,820                                                                   250,218
Income tax (benefit) expense                                                    (1,682,353 )                                                  804  
                                                                              -------------------- ---------- --------------------                      -------------------- ---------- --------------------
    Net income                                                                                   $  2,109,173                                           $    249,414  
                                                                              ==================== ========== ====================                      ==================== ========== ====================
                                                                                                                                                         
Basic and diluted earnings per share:
                                                                                                                                                         
Numerator for earnings per share:
    Net income                                                                                   $  2,109,173                                                              $    249,414
    Accretion of redeemable preferred stock                                                                 -                                                                       (77 )
    Cumulative preferred stock dividends                                                                    -                                                                    (8,318 )
    Conversion of Series G and H preferred stock                                         -                             (25,603 )
                                                                              -------------------- ---------- --------------------                      -------------------- ---------- --------------------
    Income attributable to common stockholders - basic                                              2,109,173                                                                   215,416
    Add back - Interest on convertible notes                                         5,456                               5,456  
                                                                              -------------------- ---------- --------------------                      -------------------- ---------- --------------------
    Income attributable to common stockholders - diluted                                         $  2,114,629                                           $    220,872  
                                                                              ==================== ========== ====================                      ==================== ========== ====================
                                                                                                                                                         
                                                                                                                                                         
                                                                                                                                                         
Denominator:
    Basic weighted average shares                                                                     971,102                                                                   922,199
    Outstanding options and restricted shares, net                                                     21,967                                                                    32,093
    Convertible notes                                                               24,792                              24,800  
                                                                              -------------------- ---------- --------------------                      -------------------- ---------- --------------------
                                                                                                                                                         
    Diluted weighted average shares                                              1,017,861                             979,092  
                                                                              ==================== ========== ====================                      ==================== ========== ====================
                                                                                                                                                         
    Basic income per share                                                                       $       2.17                                                              $       0.23
    Diluted income per share                                                                     $       2.08                                                              $       0.23
                                                                                                                                  
                                                                                           RITE AID CORPORATION AND SUBSIDIARIES
                                                                                                                                                                                                      
                                                                                      CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
                                                                                                      (In thousands)
                                                                                                        (unaudited)
                                                                                                                                                                                                      
                                                                                                                                                                                                      
                                                                                                                Thirteen weeks ended                                                   Thirteen weeks ended
                                                                                                                  February 28, 2015                                                        March 1, 2014
                                                                                                ----------------------------------------------------                     -------------------------------------------------
Net income                                                                                                         $ 1,835,032                                                              $ 55,377
Other comprehensive (loss) income:
    Defined benefit pension plans:
        Amortization of prior service cost, net transition obligation and                           (10,495 )                                           20,247  
        net actuarial losses included in net periodic pension cost, net of
        $6,042 and $0 tax benefit
                                                                                                -------------------- --------- --------------------                      -------------------- ------ --------------------
    Total other comprehensive (loss) income                                                         (10,495 )                                           20,247  
                                                                                                -------------------- --------- --------------------                      -------------------- ------ --------------------
Comprehensive income                                                                                               $ 1,824,537                                           $ 75,624  
                                                                                                ==================== ========= ====================                      ==================== ====== ====================
                                                                                                                                  
                                                                                           RITE AID CORPORATION AND SUBSIDIARIES
                                                                                                                                                                                                       
                                                                                      CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
                                                                                                      (In thousands)
                                                                                                        (unaudited)
                                                                                                                                                                                                       
                                                                                                                                                                                                       
                                                                                                                Fifty-two weeks ended                                                   Fifty-two weeks ended
                                                                                                                  February 28, 2015                                                         March 1, 2014
                                                                                                ----------------------------------------------------                     --------------------------------------------------
Net income                                                                                                         $ 2,109,173                                                              $ 249,414
Other comprehensive (loss) income:
    Defined benefit pension plans:
        Amortization of prior service cost, net transition obligation and                            (8,516 )                                            24,035  
        net actuarial losses included in net periodic pension cost, net of
        $6,042 and $0 tax benefit
                                                                                                -------------------- --------- --------------------                      -------------------- ------- --------------------
    Total other comprehensive (loss) income                                                          (8,516 )                                            24,035  
                                                                                                -------------------- --------- --------------------                      -------------------- ------- --------------------
Comprehensive income                                                                                               $ 2,100,657                                           $ 273,449  
                                                                                                ==================== ========= ====================                      ==================== ======= ====================
                                                                                                                       
                                                                                       RITE AID CORPORATION AND SUBSIDIARIES
                                                                                                                                                               
                                                                                 SUPPLEMENTAL OPERATING AND CASH FLOW INFORMATION
                                                                                 (Dollars in thousands, except per share amounts)
                                                                                                    (unaudited)
                                                                                                                                                               
                                                                                                                                                               
                                                                                                     Thirteen weeks ended                                                     Thirteen weeks ended
                                                                                                       February 28, 2015                                                          March 1, 2014
                                                                                     ----------------------------------------------------                     ----------------------------------------------------
                                                                                                                                                               
SUPPLEMENTAL OPERATING INFORMATION
                                                                                                                                                               
Revenues                                                                                                $ 6,847,929                                                              $ 6,597,459
Cost of goods sold                                                                     4,892,068                          4,711,743  
                                                                                     -------------------- --------- --------------------                      -------------------- --------- --------------------
Gross profit                                                                                              1,955,861                                                                1,885,716
LIFO (credit) charge                                                                     (23,489 )                                              44,142  
                                                                                     -------------------- --------- --------------------                      -------------------- --------- --------------------
FIFO gross profit                                                                                         1,932,372                                                                1,929,858
                                                                                                                                                               
Gross profit as a percentage of revenues                                                                      28.56 %                                                                  28.58 %
LIFO (credit) charge as a percentage of revenues                                                              -0.34 %                                                                   0.67 %
FIFO gross profit as a percentage of revenues                                                                 28.22 %                                                                  29.25 %
                                                                                                                                                               
Selling, general and administrative expenses                                                              1,718,327                                                                1,716,671
Selling, general and administrative expenses as a percentage of                                               25.09 %                                                                  26.02 %
revenues
                                                                                                                                                               
Cash interest expense                                                                                        86,774                                                                   98,015
Non-cash interest expense                                                                 11,668                              3,977  
                                                                                     -------------------- --------- --------------------                      -------------------- --------- --------------------
Total interest expense                                                                                       98,442                                                                  101,992
                                                                                                                                                               
                                                                                                                                                               
Adjusted EBITDA                                                                                             343,295                                                                  356,330
Adjusted EBITDA as a percentage of revenues                                                                    5.01 %                                                                   5.40 %
                                                                                                                                                               
Net income                                                                                                1,835,032                                                                   55,377
Net income as a percentage of revenues                                                                        26.80 %                                                                   0.84 %
                                                                                                                                                               
Total debt                                                                                                5,644,943                                                                5,757,143
Invested cash                                                                                227                              2,484  
                                                                                     -------------------- --------- --------------------                      -------------------- --------- --------------------
Total debt net of invested cash                                                                           5,644,716                                                                5,754,659
                                                                                                                                                               
                                                                                                                                                               
SUPPLEMENTAL CASH FLOW INFORMATION
                                                                                                                                                               
Payments for property, plant and equipment                                                                  101,890                                                                   78,601
Intangible assets acquired                                                                32,949                             22,748  
                                                                                     -------------------- --------- --------------------                      -------------------- --------- --------------------
Total cash capital expenditures                                                                             134,839                                                                  101,349
Equipment received for noncash consideration                                                                      -                                                                    1,237
Equipment financed under capital leases                                                    1,408                              3,042  
                                                                                     -------------------- --------- --------------------                      -------------------- --------- --------------------
Gross capital expenditures                                                                              $   136,247                                           $   105,628  
                                                                                     ==================== ========= ====================                      ==================== ========= ====================
                                                                                                                        
                                                                                        RITE AID CORPORATION AND SUBSIDIARIES
                                                                                                                                                                
                                                                                  SUPPLEMENTAL OPERATING AND CASH FLOW INFORMATION
                                                                                  (Dollars in thousands, except per share amounts)
                                                                                                     (unaudited)
                                                                                                                                                                
                                                                                                                                                                
                                                                                                     Fifty-two weeks ended                                                     Fifty-two weeks ended
                                                                                                       February 28, 2015                                                           March 1, 2014
                                                                                     -----------------------------------------------------                     -----------------------------------------------------
                                                                                                                                                                
SUPPLEMENTAL OPERATING INFORMATION
                                                                                                                                                                
Revenues                                                                                                $ 26,528,377                                                              $ 25,526,413
Cost of goods sold                                                                     18,951,645                          18,202,679  
                                                                                     -------------------- ---------- --------------------                      -------------------- ---------- --------------------
Gross profit                                                                                               7,576,732                                                                 7,323,734
LIFO (credit) charge                                                                      (18,857 )                                              104,142  
                                                                                     -------------------- ---------- --------------------                      -------------------- ---------- --------------------
FIFO gross profit                                                                                          7,557,875                                                                 7,427,876
                                                                                                                                                                
Gross profit as a percentage of revenues                                                                       28.56 %                                                                   28.69 %
LIFO (credit) charge as a percentage of revenues                                                               -0.07 %                                                                    0.41 %
FIFO gross profit as a percentage of revenues                                                                  28.49 %                                                                   29.10 %
                                                                                                                                                                
Selling, general and administrative expenses                                                               6,695,642                                                                 6,561,162
Selling, general and administrative expenses as a percentage of                                                25.24 %                                                                   25.70 %
revenues
                                                                                                                                                                
Cash interest expense                                                                                        372,909                                                                   407,957
Non-cash interest expense                                                                  24,703                              16,634  
                                                                                     -------------------- ---------- --------------------                      -------------------- ---------- --------------------
Total interest expense                                                                                       397,612                                                                   424,591
                                                                                                                                                                
                                                                                                                                                                
Adjusted EBITDA                                                                                            1,322,843                                                                 1,324,959
Adjusted EBITDA as a percentage of revenues                                                                     4.99 %                                                                    5.19 %
                                                                                                                                                                
Net income                                                                                                 2,109,173                                                                   249,414
Net income as a percentage of revenues                                                                          7.95 %                                                                    0.98 %
                                                                                                                                                                
Total debt                                                                                                 5,644,943                                                                 5,757,143
Invested cash                                                                                 227                               2,484  
                                                                                     -------------------- ---------- --------------------                      -------------------- ---------- --------------------
Total debt net of invested cash                                                                            5,644,716                                                                 5,754,659
                                                                                                                                                                
                                                                                                                                                                
SUPPLEMENTAL CASH FLOW INFORMATION
                                                                                                                                                                
Payments for property, plant and equipment                                                                   426,828                                                                   333,870
Intangible assets acquired                                                                112,558                              87,353  
                                                                                     -------------------- ---------- --------------------                      -------------------- ---------- --------------------
Total cash capital expenditures                                                                              539,386                                                                   421,223
Equipment received for noncash consideration                                                                   1,600                                                                     2,825
Equipment financed under capital leases                                                     6,157                              18,065  
                                                                                     -------------------- ---------- --------------------                      -------------------- ---------- --------------------
Gross capital expenditures                                                                              $    547,143                                           $    442,113  
                                                                                     ==================== ========== ====================                      ==================== ========== ====================
 
                                                                                RITE AID CORPORATION AND SUBSIDIARIES
                                                                                      SUPPLEMENTAL INFORMATION
                                                                           RECONCILIATION OF NET INCOME TO ADJUSTED EBITDA
                                                                                           (In thousands)
                                                                                                           
                                                                                                                                                   
                                                                                        Thirteen weeks ended                                                     Thirteen weeks ended
                                                                                          February 28, 2015                                                          March 1, 2014
                                                                        -----------------------------------------------------                     --------------------------------------------------
                                                                                                                                                   
                                                                                                                                                   
Reconciliation of net income to adjusted EBITDA:
      Net income                                                                           $  1,835,032                                                              $  55,377
      Adjustments:
          Interest expense                                                                       98,442                                                                101,992
          Income tax expense (benefit)                                                          125,339                                                                 (6,006 )
          Income tax valuation allowance reduction                                           (1,841,304 )                                                                    -
          Depreciation and amortization                                                         107,425                                                                102,060
          LIFO (credit) charge                                                                  (23,489 )                                                               44,142
          Lease termination and impairment charges                                               21,284                                                                 17,270
          Other                                                               20,566                           41,495  
                                                                        -------------------- ---------- --------------------                      -------------------- ------- --------------------
                Adjusted EBITDA                                                            $    343,295                                           $ 356,330  
                                                                        ==================== ========== ====================                      ==================== ======= ====================
                Percent of revenues                                                                5.01 %                                                                 5.40 %
 
                                                                                 RITE AID CORPORATION AND SUBSIDIARIES
                                                                                       SUPPLEMENTAL INFORMATION
                                                                            RECONCILIATION OF NET INCOME TO ADJUSTED EBITDA
                                                                                            (In thousands)
                                                                                                           
                                                                                                                                                   
                                                                                        Fifty-two weeks ended                                                     Fifty-two weeks ended
                                                                                          February 28, 2015                                                           March 1, 2014
                                                                        -----------------------------------------------------                     ----------------------------------------------------
                                                                                                                                                   
                                                                                                                                                   
Reconciliation of net income to adjusted EBITDA:
      Net income                                                                           $  2,109,173                                                              $   249,414
      Adjustments:
          Interest expense                                                                      397,612                                                                  424,591
          Income tax expense                                                                    158,951                                                                      804
          Income tax valuation allowance reduction                                           (1,841,304 )                                                                      -
          Depreciation and amortization                                                         416,628                                                                  403,741
          LIFO (credit) charge                                                                  (18,857 )                                                                104,142
          Lease termination and impairment charges                                               41,945                                                                   41,304
          Other                                                               58,695                            100,963  
                                                                        -------------------- ---------- --------------------                      -------------------- --------- --------------------
                Adjusted EBITDA                                                            $  1,322,843                                           $ 1,324,959  
                                                                        ==================== ========== ====================                      ==================== ========= ====================
                Percent of revenues                                                                4.99 %                                                                   5.19 %
                                                                                                                     
                                                                                     RITE AID CORPORATION AND SUBSIDIARIES
                                                                                                                                                             
                                                                                     CONSOLIDATED STATEMENTS OF CASH FLOWS
                                                                                            (Dollars in thousands)
                                                                                                  (unaudited)
                                                                                                                                                             
                                                                                                                                                             
                                                                                                                                                             
                                                                                                  Thirteen weeks ended                                                     Thirteen weeks ended
                                                                                                    February 28, 2015                                                          March 1, 2014
                                                                                  -----------------------------------------------------                     ---------------------------------------------------
                                                                                                                                                             
                                                                                                                                                             
OPERATING ACTIVITIES:
Net income                                                                                           $  1,835,032                                                              $   55,377
Adjustments to reconcile to net cash provided by operating
activities:
    Depreciation and amortization                                                                         107,425                                                                 102,060
    Lease termination and impairment charges                                                               21,284                                                                  17,270
    LIFO (credit) charge                                                                                  (23,489 )                                                                44,142
    (Gain) loss on sale of assets, net                                                                     (1,259 )                                                                   412
    Stock-based compensation expense                                                                        6,458                                                                   4,000
    Changes in deferred taxes                                                                          (1,726,487 )                                                                     -
    Excess tax benefit on stock options and restricted stock                                              (13,916 )                                                               (26,665 )
    Changes in operating assets and liabilities:
        Accounts receivable                                                                                15,591                                                                (107,946 )
        Inventories                                                                                       138,023                                                                 262,965
        Accounts payable                                                                                 (124,905 )                                                              (125,934 )
        Other assets and liabilities, net                                              (58,757 )                                            (31,553 )
                                                                                  -------------------- ---------- --------------------                      -------------------- -------- --------------------
            Net cash provided by operating activities                                                     175,000                                                                 194,128
INVESTING ACTIVITIES:
    Payments for property, plant and equipment                                                           (101,890 )                                                               (78,601 )
    Intangible assets acquired                                                                            (32,949 )                                                               (22,748 )
    Proceeds from dispositions of assets and investments                                                    4,935                                                                  14,259
    Proceeds from insured loss                                                               -                             9,006  
                                                                                  -------------------- ---------- --------------------                      -------------------- -------- --------------------
            Net cash used in investing activities                                                        (129,904 )                                                               (78,084 )
FINANCING ACTIVITIES:
    Net proceeds from (payments to) revolver                                                              945,000                                                                (190,000 )
    Principal payments on long-term debt                                                               (1,151,897 )                                                                (7,907 )
    Change in zero balance cash accounts                                                                   41,015                                                                  10,066
    Net proceeds from the issuance of common stock                                                          8,594                                                                   8,336
    Excess tax benefit on stock options and restricted stock                                               13,916                                                                  26,665
    Deferred financing costs paid                                                      (18,779 )                                                (10 )
                                                                                  -------------------- ---------- --------------------                      -------------------- -------- --------------------
            Net cash used in financing activities                                     (162,151 )                                           (152,850 )
                                                                                  -------------------- ---------- --------------------                      -------------------- -------- --------------------
Decrease in cash and cash equivalents                                                                    (117,055 )                                                               (36,806 )
Cash and cash equivalents, beginning of period                                         232,954                           183,212  
                                                                                  -------------------- ---------- --------------------                      -------------------- -------- --------------------
Cash and cash equivalents, end of period                                                             $    115,899                                           $  146,406  
                                                                                  ==================== ========== ====================                      ==================== ======== ====================
                                                                                                                                                             
                                                                                                                              
                                                                                           RITE AID CORPORATION AND SUBSIDIARIES
                                                                                                                                                                      
                                                                                           CONSOLIDATED STATEMENTS OF CASH FLOWS
                                                                                                  (Dollars in thousands)
                                                                                                        (unaudited)
                                                                                                                                                                      
                                                                                                                                                                      
                                                                                                                                                                      
                                                                                                           Fifty-two weeks ended                                                     Fifty-two weeks ended
                                                                                                             February 28, 2015                                                           March 1, 2014
                                                                                           -----------------------------------------------------                     -----------------------------------------------------
                                                                                                                                                                      
                                                                                                                                                                      
OPERATING ACTIVITIES:
Net income                                                                                                    $  2,109,173                                                              $    249,414
Adjustments to reconcile to net cash provided by operating
activities:
    Depreciation and amortization                                                                                  416,628                                                                   403,741
    Lease termination and impairment charges                                                                        41,945                                                                    41,304
    Gain from lease termination                                                                                          -                                                                    (8,750 )
    LIFO (credit) charge                                                                                           (18,857 )                                                                 104,142
    Gain on sale of assets, net                                                                                     (3,799 )                                                                 (15,984 )
    Stock-based compensation expense                                                                                23,390                                                                    16,194
    Loss on debt retirements, net                                                                                   18,512                                                                    62,443
    Changes in deferred taxes                                                                                   (1,726,487 )                                                                       -
     Excess tax benefit on stock options and restricted stock                                                      (41,563 )                                                                 (26,665 )
    Changes in operating assets and liabilities:
        Accounts receivable                                                                                        (25,902 )                                                                 (28,051 )
        Inventories                                                                                                129,985                                                                    56,557
        Accounts payable                                                                                          (169,952 )                                                                (100,774 )
        Other assets and liabilities, net                                                      (104,114 )                                              (51,525 )
                                                                                           -------------------- ---------- --------------------                      -------------------- ---------- --------------------
            Net cash provided by operating activities                                                              648,959                                                                   702,046
INVESTING ACTIVITIES:
    Payments for property, plant and equipment                                                                    (426,828 )                                                                (333,870 )
    Intangible assets acquired                                                                                    (112,558 )                                                                 (87,353 )
    Acquisition of Health Dialog and RediClinic, net of cash acquired                                              (69,793 )                                                                       -
    Proceeds from sale-leaseback transactions                                                                            -                                                                     3,989
    Proceeds from dispositions of assets and investments                                                            15,494                                                                    28,416
    Proceeds from lease termination                                                                                      -                                                                     8,750
    Proceeds from insured loss                                                                        -                              15,144  
                                                                                           -------------------- ---------- --------------------                      -------------------- ---------- --------------------
            Net cash used in investing activities                                                                 (593,685 )                                                                (364,924 )
FINANCING ACTIVITIES:
    Proceeds from issuance of long-term debt                                                                     1,152,293                                                                 1,310,000
    Net proceeds from (payments to) revolver                                                                     1,325,000                                                                  (265,000 )
    Principal payments on long-term debt                                                                        (2,595,709 )                                                              (1,340,435 )
    Change in zero balance cash accounts                                                                             1,081                                                                       (95 )
    Net proceeds from the issuance of common stock                                                                  24,117                                                                    33,217
    Payments for the repurchase of preferred stock                                                                       -                                                                   (21,034 )
    Financing fees paid for early debt redemption                                                                  (13,841 )                                                                 (45,636 )
    Excess tax benefit on stock options and restricted stock                                                        41,563                                                                    26,665
    Deferred financing costs paid                                                               (20,285 )                                              (17,850 )
                                                                                           -------------------- ---------- --------------------                      -------------------- ---------- --------------------
            Net cash used in financing activities                                               (85,781 )                                             (320,168 )
                                                                                           -------------------- ---------- --------------------                      -------------------- ---------- --------------------
(Decrease) increase in cash and cash equivalents                                                                   (30,507 )                                                                  16,954
Cash and cash equivalents, beginning of period                                                  146,406                             129,452  
                                                                                           -------------------- ---------- --------------------                      -------------------- ---------- --------------------
Cash and cash equivalents, end of period                                                                      $    115,899                                           $    146,406  
                                                                                           ==================== ========== ====================                      ==================== ========== ====================
                                                                                                                                                                      
                                                                                                         
                                                                                RITE AID CORPORATION AND SUBSIDIARIES
                                                                                      SUPPLEMENTAL INFORMATION
                                                                  RECONCILIATION OF NET INCOME GUIDANCE TO ADJUSTED EBITDA GUIDANCE
                                                                                    YEAR ENDING FEBRUARY 27, 2016
                                                                              (In thousands, except per share amounts)
                                                                                                                                                 
                                                                                                                                                 
                                                                                                                              Guidance Range
                                                                      -------------------------------------------------------------------------------------------------------------------------------
                                                                                               Low                                                                      High
                                                                      -----------------------------------------------------                     -----------------------------------------------------
                                                                                                                                                 
Sales                                                                                    $ 26,900,000                                                              $ 27,400,000
                                                                                                                                                 
Same store sales                                                                                 2.50 %                                                                    4.50 %
                                                                                                                                                 
Gross capital expenditures                                                               $    650,000                                                              $    650,000
                                                                                                                                                 
Reconciliation of net income to adjusted EBITDA:
    Net income                                                                           $    190,000                                                              $    275,000
    Adjustments:
        Interest expense                                                                      350,000                                                                   350,000
        Income tax expense                                                                    130,000                                                                   180,000
        Depreciation and amortization                                                         445,000                                                                   440,000
        LIFO charge                                                                            30,000                                                                    10,000
        Store closing and impairment charges                                                   55,000                                                                    45,000
        Other                                                               50,000                              50,000  
                                                                      -------------------- ---------- --------------------                      -------------------- ---------- --------------------
            Adjusted EBITDA (1)                                                          $  1,250,000                                           $  1,350,000  
                                                                      ==================== ========== ====================                      ==================== ========== ====================
                                                                                                                                                 
                                                                                                                                                 
        Diluted income per share                                                         $       0.19                                                              $       0.27
                                                                                                                                                 
(1) Does not include certain estimated amounts related to our
pending EnvisionRx acquisition. Preliminary annual estimates for
EBITDA, Interest expense and Depreciation and amortization are
$155,000, $110,000, and $38,000 respectively. We expect to incur a
portion of the annual interest expense prior to closing the
acquisition.
 

http://cts.businesswire.com/ct/CT?id=bwnews&sty=20150408005501r1&sid=cmtx6&distro=nx&lang=en

SOURCE: Rite Aid Corporation

Rite Aid Corporation 
Investors: 
Matt Schroeder, 717-214-8867 
investor@riteaid.com 
or 
Media: 
Susan Henderson, 717-730-7766


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