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 Rite Aid Reports Fiscal 2018 Third Quarter Results
   Wednesday, January 03, 2018 4:20:00 PM ET

--Third Quarter Adjusted EBITDA of $214.2 Million, Compared to the Prior Year Third Quarter Adjusted EBITDA of $274.1 Million

--Company Presents Operating Results of the 1,932 Stores and 3 Distribution Centers in the Process of Being Sold to WBA as a Discontinued Operation

--Results from Continuing Operations are Fully Burdened for Corporate Administration Costs that Support Both Continuing and Discontinued Operations Quarterly and Year to Date Results from Continuing Operations For Both Years Do Not Include $24 Million and $72 Million of Fees, Respectively that Would be Earned If All Stores Were Being Supported Under the TSA Agreement with WBA

--Third Quarter Net Loss from Continuing Operations of $18.2 Million or $0.02 Per Diluted Share, Compared to the Prior Year Third Quarter Net Income from Continuing Operations of $23.6 Million or $0.02 Per Diluted Share



--Third Quarter Adjusted Net Income from Continuing Operations Per Diluted Share of $0.00, Compared to the Prior Year Third Quarter Adjusted Net Income from Continuing Operations Per Diluted Share of $0.03

Rite Aid Corporation (RAD ) today reported operating results for its third fiscal quarter ended December 2, 2017.

For the third quarter, the company reported net income of $81.0 million, or $0.08 per diluted share and Adjusted EBITDA of $214.2 million. The company reported net loss from continuing operations of $18.2 million, or $0.02 per diluted share, Adjusted net income from continuing operations of $1.6 million, or $0.00 per share, and Adjusted EBITDA from continuing operations of $129.2 million, or 2.4 percent of revenues. Adjusted EBITDA from continuing operations in both quarters does not include $24 million of fees that would be earned if all of the stores to be sold to WBA were being supported under the TSA Agreement.

"Our pro-forma Adjusted EBITDA from continuing operations for the third quarter of $153 million, which includes $24 million in fees that would have been received if all of the divested stores were being managed under the TSA Agreement as of the beginning of the period, was in line with our expectations," said Rite Aid Chairman and CEO John Standley.

"The third quarter was a busy time for our team in preparing for and beginning the transfer of stores and related assets to Walgreens Boots Alliance," Standley added. "I would like to thank our entire Rite Aid team for their dedication and efforts in accomplishing this important business initiative for our company and our shareholders. To date, we have transferred 357 stores and have received approximately $715 million in proceeds, which we have used to pay down debt. Looking forward, in addition to completing the transfer process, we will continue to focus on our most significant business-building opportunities as we work together to deliver a great experience to our customers and patients."

As previously announced on November 27, 2017, the company completed the pilot closing and first subsequent closing under the amended and restated asset purchase agreement with Walgreens Boots Alliance, Inc. (WBA ), resulting in the transfer of 97 Rite Aid stores and related assets to WBA during the third quarter. Under the amended and restated agreement, WBA will purchase a total of 1,932 stores, three distribution centers and related inventory from Rite Aid for an all-cash purchase price of $4.375 billion. Rite Aid and WBA expect to continue to transfer ownership of the stores in phases over the coming months. Since the majority of the closing conditions have been satisfied, and the subsequent transfers of Rite Aid stores and related assets remain subject to minimal customary closing conditions applicable only to the stores being transferred in those phases, the company classified the assets and liabilities to be sold to WBA--1,932 stores and three distribution centers-- as held for sale and the corresponding operating results and cash flows of those stores as discontinued operations in its financial statements in accordance with GAAP.

Third Quarter Summary

Revenues from continuing operations for the quarter were $5.4 billion compared to revenues from continuing operations of $5.7 billion in the prior year’s third quarter, a decrease of $315.9 million or 5.6 percent. Retail Pharmacy Segment revenues were $4.0 billion and decreased 3.0 percent compared to the prior year period primarily as a result of a decrease in same store sales and reimbursement rates. Revenues in the company’s Pharmacy Services Segment were $1.4 billion and decreased 12.2 percent compared to the prior year period, due to an election to participate in fewer Medicare Part D regions and a decline in commercial business.

Same store sales from continuing operations for the quarter decreased 2.5 percent from the prior year, consisting of a 3.5 percent decrease in pharmacy sales and a 0.5 percent decrease in front-end sales. Pharmacy sales included an approximate 198 basis point negative impact from new generic introductions. The number of prescriptions filled in same stores, adjusted to 30-day equivalents, decreased 2.4 percent from the prior year period due in part to exclusion from certain pharmacy networks that Rite Aid participated in the prior year. Prescription sales from continuing operations accounted for 66.5 percent of total drugstore sales.

Net loss from continuing operations was $18.2 million or $0.02 per diluted share compared to last year’s third quarter net income from continuing operations of $23.6 million or $0.02 per diluted share. The decline in operating results was due primarily to a decline in Adjusted EBITDA, partially offset by a higher income tax benefit.

Adjusted net income from continuing operations was $1.6 million or $0.00 per diluted share compared to last year’s third quarter adjusted net income from continuing operations of $26.8 million or $0.03 per diluted share. The decline in Adjusted net income was due to a decline in Adjusted EBITDA, partially offset by a reduction in adjusted income tax expense.

Adjusted EBITDA from continuing operations (which is reconciled to net loss from continuing operations in the attached tables) was $129.2 million or 2.4 percent of revenues for the third quarter compared to $191.3 million or 3.4 percent of revenues for the same period last year. The decline in Adjusted EBITDA was due to a decrease of $50.0 million in the Retail Pharmacy Segment and $12.1 million in the Pharmacy Services Segment. The decrease in the Retail Pharmacy Segment EBITDA was primarily driven by a decline in pharmacy gross profit, due to a continued decline in reimbursement rates which the company was unable to fully offset with generic purchasing efficiencies, as well as lower script counts. Also impacting the decrease was lower net favorable legal settlements of approximately $15 million as compared to the prior year. These items were partially offset by an improvement in front-end gross profit dollars and effective cost control. The decrease in the Pharmacy Services Segment EBITDA was primarily driven by the decline in revenues described above. Results from continuing operations are fully burdened for corporate administration costs that support both continuing and discontinued operations. As the sale of stores to WBA occurs, the Company will perform certain back-office functions under a Transition Services Agreement (TSA) for these stores and will receive a fee for those services. This fee would be $96 million on an annualized basis, assuming all of the divested stores are covered under this agreement. Quarterly and year-to-date results from continuing operations for both years do not include $24 million and $72 million of fees, respectively, that would be earned if all stores were being supported under the TSA Agreement.

In the third quarter, the company opened 1 store, relocated 9 stores, remodeled 20 stores and expanded 1 store, bringing the total number of wellness stores chainwide to 2,505. The company sold 97 stores to WBA and closed 7 stores, resulting in a total store count of 4,404 at the end of the third quarter.

Rite Aid is one of the nation’s leading drugstore chains with 4,404 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.

Conference Call Broadcast

Rite Aid will hold an analyst call at 5:00 p.m. Eastern Time today with remarks by Rite Aid’s management team. The call will be simulcast via the internet and can be accessed at www.riteaid.com in the conference call section of investor information. Slides related to materials discussed on the call will also be available. A playback of the call will also be available by telephone beginning at 8 p.m. Eastern Time today until 11:59 p.m. Eastern Time on Jan. 4, 2018. 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 72531386.

Cautionary Statement Regarding Forward Looking Statements

Statements 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. Such statements include, but are not limited to, statements regarding the expected timing of the closing of the sale of stores and assets to WBA; the ability of the parties to complete the sale and related transactions considering the various closing conditions; the outcome of legal and regulatory matters in connection with the sale of store and assets of Rite Aid to WBA; the expected benefits of the transactions such as improved operations, growth potential, market profile and financial strength; the competitive ability and position of Rite Aid following completion of the proposed transactions; the ability of Rite Aid to implement new business strategies following the completion of the proposed transactions and any assumptions underlying any of the foregoing. 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, industry, market, competitive, regulatory and political 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; changes in legislation or regulations, including healthcare reform; our ability to achieve the benefits of our efforts to reduce the costs of our generic and other drugs; risks related to the proposed asset sale transactions with WBA, including the possibility that the remaining transactions may not close, or the business of Rite Aid may suffer as a result of uncertainty surrounding the proposed transactions; risks related to the ability to realize the anticipated benefits of the proposed transactions; disruption from the proposed transaction making it more difficult to maintain business and operational relationships; the effect of the pending sale on Rite Aid’s business relationships (including, without limitation, customers and suppliers) operating results and business generally; risks related to diverting management’s or employees’ attention from ongoing business operations; the risk that Rite Aid’s stock price may decline significantly if the remaining proposed transactions are not completed; significant transaction costs; unknown liabilities; the risk of litigation and/or regulatory actions related to the proposed transactions; potential changes to our strategy in the event the remaining proposed transactions do not close, which may include delaying or reducing capital or other expenditures, selling assets or other operations, attempting to restructure or refinance our debt, or seeking additional capital, and other business effects. These and other risks, assumptions and uncertainties are more fully 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.

Reconciliation of Non-GAAP Financial Measures

The company separately reports financial results on the basis of Adjusted Net Income (Loss), Adjusted Net Income (Loss) per Diluted Share, and Adjusted EBITDA, which are non-GAAP financial measures. See the attached tables for a reconciliation of Adjusted Net Income (Loss), Adjusted Net Income (Loss) per Diluted Share and Adjusted EBITDA to net income (loss), and net income (loss) per diluted share, which are the most directly comparable GAAP financial measures. Adjusted Net Income (Loss) and Adjusted Net Income (Loss) per Diluted Share exclude amortization of EnvisionRx intangible assets, merger and acquisition-related costs, loss on debt retirements, LIFO adjustments, and the Walgreens Boots Alliance, Inc. termination fee. Adjusted EBITDA is defined as net income (loss) excluding the impact of income taxes, interest expense, depreciation and amortization, LIFO adjustments, charges or credits for facility closing and impairment, inventory write-downs related to store closings, debt retirements, the Walgreens Boots Alliance, Inc. termination fee, and other items (including stock-based compensation expense, merger and acquisition-related costs, severance and costs related to distribution center closures, gain or loss on sale of assets and revenue deferrals related to our customer loyalty program).

 
                                                                                                         RITE AID CORPORATION AND SUBSIDIARIES
                                                                                                                                        
                                                                                                              CONSOLIDATED BALANCE SHEETS
                                                                                                                (Dollars in thousands)
                                                                                                                      (unaudited)
                                                                                                                                                                                                   
                                                                                                                                                                                                   
                                                                                                                                                                                                   
                                                                                                                                          December 2, 2017                                                            March 4, 2017
                                                                                                                        -----------------------------------------------------                     -----------------------------------------------------
ASSETS
Current assets:
                     Cash and cash equivalents                                                                                             $    169,800                                                              $    245,410
                     Accounts receivable, net                                                                                                 1,796,919                                                                 1,771,126
                     Inventories, net of LIFO reserve of $627,718 and $607,326                                                                1,853,886                                                                 1,789,541
                     Prepaid expenses and other current assets                                                                                  240,712                                                                   211,541
                     Current assets held for sale                                                                          1,868,128                           1,047,670  
                                                                                                                        -------------------- ---------- --------------------                      -------------------- ---------- --------------------
                                                        Total current assets                                                                  5,929,445                                                                 5,065,288
Property, plant and equipment, net                                                                                                            1,479,214                                                                 1,526,462
Goodwill                                                                                                                                      1,682,847                                                                 1,682,847
Other intangibles, net                                                                                                                          618,274                                                                   715,406
Deferred tax assets                                                                                                                           1,419,544                                                                 1,505,564
Other assets                                                                                                                                    211,290                                                                   215,917
Noncurrent assets held for sale                                                                                                    -                             882,268  
                                                                                                                        -------------------- ---------- --------------------                      -------------------- ---------- --------------------
                                                        Total assets                                                                       $ 11,340,614                                           $ 11,593,752  
                                                                                                                        ==================== ========== ====================                      ==================== ========== ====================
                                                                                                                                                                                                   
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
                     Current maturities of long-term debt and lease financing obligations                                                  $     20,354                                                              $     17,709
                     Accounts payable                                                                                                         1,789,456                                                                 1,613,909
                     Accrued salaries, wages and other current liabilities                                                                    1,258,586                                                                 1,340,947
                     Current liabilities held for sale                                                                     3,837,519                              32,683  
                                                                                                                        -------------------- ---------- --------------------                      -------------------- ---------- --------------------
                                                        Total current liabilities                                                             6,905,915                                                                 3,005,248
Long-term debt, less current maturities                                                                                                       2,985,700                                                                 3,235,888
Lease financing obligations, less current maturities                                                                                             31,654                                                                    37,204
Other noncurrent liabilities                                                                                                                    592,201                                                                   643,950
Noncurrent liabilities held for sale                                                                                               -                           4,057,392  
                                                                                                                        -------------------- ---------- --------------------                      -------------------- ---------- --------------------
                                                        Total liabilities                                                                    10,515,470                                                                10,979,682
                                                                                                                                                                                                   
Commitments and contingencies                                                                                                                         -                                                                         -
Stockholders’ equity:
                     Common stock                                                                                                             1,067,887                                                                 1,053,690
                     Additional paid-in capital                                                                                               4,846,213                                                                 4,839,854
                     Accumulated deficit                                                                                                     (5,048,182 )                                                              (5,237,157 )
                     Accumulated other comprehensive loss                                                                    (40,774 )                                              (42,317 )
                                                                                                                        -------------------- ---------- --------------------                      -------------------- ---------- --------------------
                                                        Total stockholders’ equity                                           825,144                             614,070  
                                                                                                                        -------------------- ---------- --------------------                      -------------------- ---------- --------------------
                                                        Total liabilities and stockholders’ equity                                         $ 11,340,614                                           $ 11,593,752  
                                                                                                                        ==================== ========== ====================                      ==================== ========== ====================
                                                                                                                                                                                                                                   
                                                                                                                                                                         
                                                                                                      RITE AID CORPORATION AND SUBSIDIARIES
                                                                                                                
                                                                                                      CONSOLIDATED STATEMENTS OF OPERATIONS
                                                                                                (Dollars in thousands, except per share amounts)
                                                                                                                   (unaudited)
                                                                                                                                                                                              
                                                                                                                                                                                              
                                                                                                                                                                                              
                                                                                                                                    Thirteen weeks ended                                                     Thirteen weeks ended
                                                                                                                                      December 2, 2017                                                         November 26, 2016
                                                                                                                    -------------------------------------------------                        -------------------------------------------------
Revenues                                                                                                                               $ 5,353,170                                                              $ 5,669,111
Costs and expenses:
                     Cost of revenues                                                                                                    4,166,447                                                                4,424,259
                     Selling, general and administrative expenses                                                                        1,166,514                                                                1,168,646
                     Lease termination and impairment charges                                                                                3,939                                                                    7,199
                     Interest expense                                                                                                       50,308                                                                   50,304
                     Loss (gain) on sale of assets, net                                                                     205                               (225 )
                                                                                                                    -------------------- --------- --------------------                      -------------------- --------- --------------------
                                                                                                                                                                                              
                                                                                                                      5,387,413                          5,650,183  
                                                                                                                    -------------------- --------- --------------------                      -------------------- --------- --------------------
                                                                                                                                                                                              
(Loss) income from continuing operations before income taxes                                                                               (34,243 )                                                                 18,928
Income tax benefit                                                                                                      (16,061 )                                              (4,682 )
                                                                                                                    -------------------- --------- --------------------                      -------------------- --------- --------------------
                     Net (loss) income from continuing operations                                                                          (18,182 )                                                                 23,610
                     Net income (loss) from discontinued operations, net of tax                                          99,213                             (8,600 )
                                                                                                                    -------------------- --------- --------------------                      -------------------- --------- --------------------
                     Net income                                                                                                        $    81,031                                           $    15,010  
                                                                                                                    ==================== ========= ====================                      ==================== ========= ====================
                                                                                                                                                                                              
                                                                                                                                                                                              
                                                                                                                                                                                              
Basic and diluted (loss) income per share:
                                                                                                                                                                                              
Numerator for (loss) income per share:
                     Net (loss) income from continuing operations attributable to common
                                                       stockholders - basic and diluted                                                $   (18,182 )                                                            $    23,610
                     Net income (loss) from discontinued operations attributable to
                                                       common stockholders - basic and diluted                           99,213                             (8,600 )
                                                                                                                    -------------------- --------- --------------------                      -------------------- --------- --------------------
                     Income attributable to common stockholders - basic and diluted                                                    $    81,031                                           $    15,010  
                                                                                                                    ==================== ========= ====================                      ==================== ========= ====================
                                                                                                                                                                                              
                                                                                                                                                                                              
                                                                                                                                                                                              
Denominator:
                     Basic weighted average shares                                                                                       1,048,502                                                                1,045,028
                     Outstanding options and restricted shares, net                                                       7,367                             15,735  
                                                                                                                    -------------------- --------- --------------------                      -------------------- --------- --------------------
                                                                                                                                                                                              
                     Diluted weighted average shares                                                                  1,055,869                          1,060,763  
                                                                                                                    ==================== ========= ====================                      ==================== ========= ====================
                                                                                                                                                                                              
Basic (loss) income per share
                     Continuing operations                                                                                             $     (0.02 )                                                            $      0.02
                     Discontinued operations                                                                                           $      0.10                                           $     (0.01 )
                                                                                                                    -------------------- --------- --------------------                      -------------------- --------- --------------------
                     Net basic income per share                                                                                        $      0.08                                           $      0.01  
                                                                                                                    ==================== ========= ====================                      ==================== ========= ====================
                                                                                                                                                                                              
Diluted (loss) income per share
                     Continuing operations                                                                                             $     (0.02 )                                                            $      0.02
                     Discontinued operations                                                                                           $      0.10                                           $     (0.01 )
                                                                                                                    -------------------- --------- --------------------                      -------------------- --------- --------------------
                     Net diluted income per share                                                                                      $      0.08                                           $      0.01  
                                                                                                                    ==================== ========= ====================                      ==================== ========= ====================
                                                                                                                                                                                                                             
                                                                                                                                                                        
                                                                                                      RITE AID CORPORATION AND SUBSIDIARIES
                                                                                                               
                                                                                                      CONSOLIDATED STATEMENTS OF OPERATIONS
                                                                                                (Dollars in thousands, except per share amounts)
                                                                                                                   (unaudited)
                                                                                                                                                                                             
                                                                                                                                                                                             
                                                                                                                                                                                             
                                                                                                                                 Thirty-nine weeks ended                                                   Thirty-nine weeks ended
                                                                                                                                    December 2, 2017                                                          November 26, 2016
                                                                                                                  --------------------------------------------------                        --------------------------------------------------
Revenues                                                                                                                             $ 16,134,704                                                              $ 17,024,154
Costs and expenses:
                     Cost of revenues                                                                                                  12,624,365                                                                13,308,505
                     Selling, general and administrative expenses                                                                       3,469,298                                                                 3,523,850
                     Lease termination and impairment charges                                                                              11,090                                                                    20,203
                     Interest expense                                                                                                     152,165                                                                   146,674
                     Walgreens Boots Alliance merger termination fee                                                                     (325,000 )                                                                       -
                     Gain on sale of assets, net                                                                       (20,623 )                                                 (388 )
                                                                                                                  -------------------- ---------- --------------------                      -------------------- ---------- --------------------
                                                                                                                                                                                             
                                                                                                                    15,911,295                          16,998,844  
                                                                                                                  -------------------- ---------- --------------------                      -------------------- ---------- --------------------
                                                                                                                                                                                             
Income from continuing operations before income taxes                                                                                     223,409                                                                    25,310
Income tax expense (benefit)                                                                                            89,268                              (3,824 )
                                                                                                                  -------------------- ---------- --------------------                      -------------------- ---------- --------------------
                     Net income from continuing operations                                                                                134,141                                                                    29,134
                     Net income (loss) from discontinued operations, net of tax                                         42,257                              (3,939 )
                                                                                                                  -------------------- ---------- --------------------                      -------------------- ---------- --------------------
                     Net income                                                                                                      $    176,398                                           $     25,195  
                                                                                                                  ==================== ========== ====================                      ==================== ========== ====================
                                                                                                                                                                                             
                                                                                                                                                                                             
                                                                                                                                                                                             
Basic and diluted income (loss) per share:
                                                                                                                                                                                             
Numerator for income (loss) per share:
                     Net income from continuing operations attributable to common
                                                     stockholders - basic and diluted                                                $    134,141                                                              $     29,134
                     Net income (loss) from discontinued operations attributable to
                                                     common stockholders - basic and diluted                            42,257                              (3,939 )
                                                                                                                  -------------------- ---------- --------------------                      -------------------- ---------- --------------------
                     Income attributable to common stockholders - basic and diluted                                                  $    176,398                                           $     25,195  
                                                                                                                  ==================== ========== ====================                      ==================== ========== ====================
                                                                                                                                                                                             
                                                                                                                                                                                             
                                                                                                                                                                                             
Denominator:
                     Basic weighted average shares                                                                                      1,048,342                                                                 1,043,887
                     Outstanding options and restricted shares, net                                                     18,948                              17,117  
                                                                                                                  -------------------- ---------- --------------------                      -------------------- ---------- --------------------
                                                                                                                                                                                             
                     Diluted weighted average shares                                                                 1,067,290                           1,061,004  
                                                                                                                  ==================== ========== ====================                      ==================== ========== ====================
                                                                                                                                                                                             
Basic income (loss) per share
                     Continuing operations                                                                                           $       0.13                                                              $       0.03
                     Discontinued operations                                                                                         $       0.04                                           $      (0.01 )
                                                                                                                  -------------------- ---------- --------------------                      -------------------- ---------- --------------------
                     Net basic income per share                                                                                      $       0.17                                           $       0.02  
                                                                                                                  ==================== ========== ====================                      ==================== ========== ====================
                                                                                                                                                                                             
Diluted income (loss) per share
                     Continuing operations                                                                                           $       0.13                                                              $       0.03
                     Discontinued operations                                                                                         $       0.04                                           $      (0.01 )
                                                                                                                  -------------------- ---------- --------------------                      -------------------- ---------- --------------------
                     Net diluted income per share                                                                                    $       0.17                                           $       0.02  
                                                                                                                  ==================== ========== ====================                      ==================== ========== ====================
                                                                                                                                                                                             
                                                                                                                                                                   
                                                                                         RITE AID CORPORATION AND SUBSIDIARIES
                                                                                                          
                                                                                    CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
                                                                                                    (In thousands)
                                                                                                      (unaudited)
                                                                                                                                                                                        
                                                                                                                                                                                        
                                                                                                                                                                                        
                                                                                                                                        Thirteen weeks ended                                 Thirteen weeks ended
                                                                                                                                          December 2, 2017                                     November 26, 2016
                                                                                                                                  ------------------------------                       ------------------------------
Net income                                                                                                                                           $     81,031                                         $     15,010
Other comprehensive income:
                     Defined benefit pension plans:
                                          Amortization of prior service cost, net transition obligation and                                514                               681
                                          net actuarial losses included in net periodic pension cost, net of
                                          $342 and $451 tax expense
                                                                                                                                  -------------------- ----------                      -------------------- ----------
                     Total other comprehensive income                                                                                      514                               681
                                                                                                                                  -------------------- ----------                      -------------------- ----------
Comprehensive income                                                                                                                                 $     81,545                                         $     15,691
                                                                                                                                  ==================== ==========                      ==================== ==========
                                                                                                                                                                                        
                                                                                                                                                                    
                                                                                          RITE AID CORPORATION AND SUBSIDIARIES
                                                                                                           
                                                                                     CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
                                                                                                     (In thousands)
                                                                                                       (unaudited)
                                                                                                                                                                                         
                                                                                                                                                                                         
                                                                                                                                                                                         
                                                                                                                                       Thirty-nine weeks ended                               Thirty-nine weeks ended
                                                                                                                                          December 2, 2017                                      November 26, 2016
                                                                                                                                  -------------------------------                       -------------------------------
Net income                                                                                                                                           $     176,398                                         $      25,195
Other comprehensive income:
                     Defined benefit pension plans:
                                          Amortization of prior service cost, net transition obligation and                               1,543                              2,043
                                          net actuarial losses included in net periodic pension cost, net of
                                          $1,026 and $1,353 tax expense
                                                                                                                                  -------------------- -----------                      -------------------- -----------
                     Total other comprehensive income                                                                                     1,543                              2,043
                                                                                                                                  -------------------- -----------                      -------------------- -----------
Comprehensive income                                                                                                                                 $     177,941                                         $      27,238
                                                                                                                                  ==================== ===========                      ==================== ===========
                                                                                                                                                                                         
                                                                                                                                                                                          
                                                                                                               RITE AID CORPORATION AND SUBSIDIARIES
                                                                                           
                                                                                                            SUPPLEMENTAL SEGMENT OPERATING INFORMATION
                                                                                                                      (Dollars in thousands)
                                                                                                                            (unaudited)
                                                                                                                                                                                                               
                                                                                                                                                                                                               
                                                                                                                                                     Thirteen weeks ended                                                     Thirteen weeks ended
                                                                                                                                                       December 2, 2017                                                         November 26, 2016
                                                                                                                                     -------------------------------------------------                        -------------------------------------------------
                                                                                                                                                                                                               
Retail Pharmacy Segment
                                          Revenues from continuing operations (a)                                                                       $ 3,959,002                                                              $ 4,082,278
                                          Cost of revenues from continuing operations (a)                                              2,871,114                          2,940,484  
                                                                                                                                     -------------------- --------- --------------------                      -------------------- --------- --------------------
                                          Gross profit from continuing operations                                                                         1,087,888                                                                1,141,794
                                          LIFO charge from continuing operations                                                           6,784                              8,373  
                                                                                                                                     -------------------- --------- --------------------                      -------------------- --------- --------------------
                                          FIFO gross profit from continuing operations                                                                    1,094,672                                                                1,150,167
                                                                                                                                                                                                               
                                          Gross profit as a percentage of revenues - continuing operations                                                    27.48 %                                                                  27.97 %
                                          LIFO charge as a percentage of revenues - continuing operations                                                      0.17 %                                                                   0.21 %
                                          FIFO gross profit as a percentage of revenues - continuing operations                                               27.65 %                                                                  28.17 %
                                                                                                                                                                                                               
                                          Selling, general and administrative expenses from continuing                                                    1,086,857                                                                1,095,409
                                          operations
                                          Selling, general and administrative expenses as a percentage of
                                                                  revenues - continuing operations                                                            27.45 %                                                                  26.83 %
                                                                                                                                                                                                               
                                          Cash interest expense                                                                                             103,946                                                                  101,015
                                          Non-cash interest expense                                                                        5,439                              5,271  
                                                                                                                                     -------------------- --------- --------------------                      -------------------- --------- --------------------
                                          Total interest expense                                                                                            109,385                                                                  106,286
                                          Interest expense - continuing operations                                                        49,929                             50,281  
                                                                                                                                     -------------------- --------- --------------------                      -------------------- --------- --------------------
                                          Interest expense - discontinued operations                                                                         59,456                                                                   56,005
                                                                                                                                                                                                               
                                          Adjusted EBITDA - continuing operations                                                                            88,886                                                                  138,903
                                          Adjusted EBITDA as a percentage of revenues - continuing operations                                                  2.25 %                                                                   3.40 %
                                                                                                                                                                                                               
                                                                                                                                                                                                               
Pharmacy Services Segment
                                          Revenues from continuing operations (a)                                                                       $ 1,445,140                                                              $ 1,645,835
                                          Cost of revenues from continuing operations (a)                                              1,346,305                          1,542,778  
                                                                                                                                     -------------------- --------- --------------------                      -------------------- --------- --------------------
                                          Gross profit from continuing operations                                                                            98,835                                                                  103,057
                                                                                                                                                                                                               
                                          Gross profit as a percentage of revenues - continuing operations                                                     6.84 %                                                                   6.26 %
                                                                                                                                                                                                               
                                          Adjusted EBITDA - continuing operations                                                                            40,363                                                                   52,431
                                          Adjusted EBITDA as a percentage of revenues - continuing operations                                                  2.79 %                                                                   3.19 %
                                                                                                                                                                                                               
                        
(a) -  Revenues and cost of revenues include $50,972 and $59,002 of
       inter-segment activity for the thirteen weeks ended December 2, 2017
       and November 26, 2016, respectively, that is eliminated in
       consolidation.
                                                                                                                RITE AID CORPORATION AND SUBSIDIARIES
                                                                                            
                                                                                                             SUPPLEMENTAL SEGMENT OPERATING INFORMATION
                                                                                                                       (Dollars in thousands)
                                                                                                                             (unaudited)
                                                                                                                                                                                                                
                                                                                                                                                                                                                
                                                                                                                                                    Thirty-nine weeks ended                                                   Thirty-nine weeks ended
                                                                                                                                                       December 2, 2017                                                          November 26, 2016
                                                                                                                                     --------------------------------------------------                        --------------------------------------------------
                                                                                                                                                                                                                
Retail Pharmacy Segment
                                          Revenues from continuing operations (a)                                                                       $ 11,833,195                                                              $ 12,319,445
                                          Cost of revenues from continuing operations (a)                                               8,629,925                           8,893,180  
                                                                                                                                     -------------------- ---------- --------------------                      -------------------- ---------- --------------------
                                          Gross profit from continuing operations                                                                          3,203,270                                                                 3,426,265
                                          LIFO charge from continuing operations                                                           20,393                              25,266  
                                                                                                                                     -------------------- ---------- --------------------                      -------------------- ---------- --------------------
                                          FIFO gross profit from continuing operations                                                                     3,223,663                                                                 3,451,531
                                                                                                                                                                                                                
                                          Gross profit as a percentage of revenues - continuing operations                                                     27.07 %                                                                   27.81 %
                                          LIFO charge as a percentage of revenues - continuing operations                                                       0.17 %                                                                    0.21 %
                                          FIFO gross profit as a percentage of revenues - continuing operations                                                27.24 %                                                                   28.02 %
                                                                                                                                                                                                                
                                          Selling, general and administrative expenses from continuing                                                     3,235,309                                                                 3,311,655
                                          operations
                                          Selling, general and administrative expenses as a percentage of
                                                                  revenues - continuing operations                                                             27.34 %                                                                   26.88 %
                                                                                                                                                                                                                
                                          Cash interest expense                                                                                              313,576                                                                   300,802
                                          Non-cash interest expense                                                                        16,349                              15,973  
                                                                                                                                     -------------------- ---------- --------------------                      -------------------- ---------- --------------------
                                          Total interest expense                                                                                             329,925                                                                   316,775
                                          Interest expense - continuing operations                                                        151,128                             146,639  
                                                                                                                                     -------------------- ---------- --------------------                      -------------------- ---------- --------------------
                                          Interest expense - discontinued operations                                                                         178,797                                                                   170,136
                                                                                                                                                                                                                
                                          Adjusted EBITDA - continuing operations                                                                            264,253                                                                   428,864
                                          Adjusted EBITDA as a percentage of revenues - continuing operations                                                   2.23 %                                                                    3.48 %
                                                                                                                                                                                                                
                                                                                                                                                                                                                
Pharmacy Services Segment
                                          Revenues from continuing operations (a)                                                                       $  4,451,212                                                              $  4,883,070
                                          Cost of revenues from continuing operations (a)                                               4,144,143                           4,593,686  
                                                                                                                                     -------------------- ---------- --------------------                      -------------------- ---------- --------------------
                                          Gross profit from continuing operations                                                                            307,069                                                                   289,384
                                                                                                                                                                                                                
                                          Gross profit as a percentage of revenues - continuing operations                                                      6.90 %                                                                    5.93 %
                                                                                                                                                                                                                
                                          Adjusted EBITDA - continuing operations                                                                            138,237                                                                   143,616
                                          Adjusted EBITDA as a percentage of revenues - continuing operations                                                   3.11 %                                                                    2.94 %
                                                                                                                                                                                                                
 
                        
(a) - Revenues and cost of revenues include $149,703 and $178,361 of
      inter-segment activity for the thirty-nine weeks ended December 2,
      2017 and November 26, 2016, respectively, that is eliminated in
      consolidation.
 
                                                                                                                      RITE AID CORPORATION AND SUBSIDIARIES
                                                                                                                            SUPPLEMENTAL INFORMATION
                                                                                                             RECONCILIATION OF NET (LOSS) INCOME TO ADJUSTED EBITDA
                                                                                                                                 (In thousands)
                                                                                                                                   (unaudited)
                                                                                                           
                                                                                                                                                                                                                               
                                                                                                                                                                                                                               
                                                                                                                                                                     Thirteen weeks ended                                                    Thirteen weeks ended
                                                                                                                                                                       December 2, 2017                                                        November 26, 2016
                                                                                                                                                      ------------------------------------------------                        -----------------------------------------------
                                                                                                                                                                                                                               
                                                                                                                                                                                                                               
Reconciliation of net (loss) income to adjusted EBITDA:
                                          Net (loss) income - continuing operations                                                                                      $  (18,182 )                                                            $  23,610
                                          Adjustments:
                                                               Interest expense                                                                                              50,308                                                                 50,304
                                                               Income tax benefit                                                                                           (16,061 )                                                               (4,682 )
                                                               Depreciation and amortization                                                                                 95,764                                                                101,953
                                                               LIFO charge                                                                                                    6,784                                                                  8,373
                                                               Lease termination and impairment charges                                                                       3,939                                                                  7,199
                                                               Other                                                                                       6,697                            4,577  
                                                                                                                                                      -------------------- -------- --------------------                      -------------------- ------- --------------------
                                                                                     Adjusted EBITDA - continuing operations                                             $  129,249                                                              $ 191,334
                                                                                     Adjusted EBITDA - discontinued operations                            84,926                           82,813  
                                                                                                                                                      -------------------- -------- --------------------                      -------------------- ------- --------------------
                                                                                     Adjusted EBITDA                                                                     $  214,175                                           $ 274,147  
                                                                                                                                                      ==================== ======== ====================                      ==================== ======= ====================
                                                                                     Percent of revenues - continuing operations                                               2.41 %                                                                 3.38 %
                                                                                                                                                                                                                               
                                                                                                                                                                                                                               
                                                                                                                                                                                                                               
Reconciliation of net income (loss) to adjusted EBITDA:
                                          Net income (loss) - discontinued operations                                                                                    $   99,213                                                              $  (8,600 )
                                          Adjustments:
                                                               Interest expense                                                                                              59,456                                                                 56,005
                                                               Income tax expense (benefit)                                                                                  60,155                                                                 (3,405 )
                                                               Depreciation and amortization                                                                                 21,952                                                                 41,292
                                                               LIFO charge                                                                                                    4,469                                                                  5,377
                                                               Lease termination and impairment charges                                                                          11                                                                     66
                                                               Gain on stores sold to Walgreens Boots Alliance                                                             (157,010 )                                                                    -
                                                               Other                                                                                      (3,320 )                                            (7,922 )
                                                                                                                                                      -------------------- -------- --------------------                      -------------------- ------- --------------------
                                                                                     Adjusted EBITDA - discontinued operations                                           $   84,926                                           $  82,813  
                                                                                                                                                      ==================== ======== ====================                      ==================== ======= ====================
                                                                                                                                                                                                                                                            
                                                                                                                                                                                                          
                                                                                                                      RITE AID CORPORATION AND SUBSIDIARIES
                                                                                                                            SUPPLEMENTAL INFORMATION
                                                                                                             RECONCILIATION OF NET INCOME (LOSS) TO ADJUSTED EBITDA
                                                                                                                                 (In thousands)
                                                                                                                                   (unaudited)
                                                                                                           
                                                                                                                                                                                                                               
                                                                                                                                                                                                                               
                                                                                                                                                                    Thirty-nine weeks ended                                                 Thirty-nine weeks ended
                                                                                                                                                                       December 2, 2017                                                        November 26, 2016
                                                                                                                                                      ------------------------------------------------                        -----------------------------------------------
                                                                                                                                                                                                                               
                                                                                                                                                                                                                               
Reconciliation of net income to adjusted EBITDA:
                                          Net income - continuing operations                                                                                             $  134,141                                                              $  29,134
                                          Adjustments:
                                                               Interest expense                                                                                             152,165                                                                146,674
                                                               Income tax expense (benefit)                                                                                  89,268                                                                 (3,824 )
                                                               Depreciation and amortization                                                                                292,448                                                                304,460
                                                               LIFO charge                                                                                                   20,393                                                                 25,266
                                                               Lease termination and impairment charges                                                                      11,090                                                                 20,203
                                                               Walgreens Boots Alliance merger termination fee                                                             (325,000 )                                                                    -
                                                               Other                                                                                      27,985                           50,567  
                                                                                                                                                      -------------------- -------- --------------------                      -------------------- ------- --------------------
                                                                                     Adjusted EBITDA - continuing operations                                             $  402,490                                                              $ 572,480
                                                                                     Adjusted EBITDA - discontinued operations                           217,519                          300,322  
                                                                                                                                                      -------------------- -------- --------------------                      -------------------- ------- --------------------
                                                                                     Adjusted EBITDA                                                                     $  620,009                                           $ 872,802  
                                                                                                                                                      ==================== ======== ====================                      ==================== ======= ====================
                                                                                     Percent of revenues - continuing operations                                               2.49 %                                                                 3.36 %
                                                                                                                                                                                                                               
                                                                                                                                                                                                                               
                                                                                                                                                                                                                               
Reconciliation of net income (loss) to adjusted EBITDA:
                                          Net income (loss) - discontinued operations                                                                                    $   42,257                                                              $  (3,939 )
                                          Adjustments:
                                                               Interest expense                                                                                             178,797                                                                170,136
                                                               Income tax expense                                                                                            26,705                                                                    356
                                                               Depreciation and amortization                                                                                 99,372                                                                119,624
                                                               LIFO charge                                                                                                   13,366                                                                 15,995
                                                               Lease termination and impairment charges                                                                          74                                                                     76
                                                               Gain on stores sold to Walgreens Boots Alliance                                                             (157,010 )                                                                    -
                                                               Other                                                                                      13,958                           (1,926 )
                                                                                                                                                      -------------------- -------- --------------------                      -------------------- ------- --------------------
                                                                                     Adjusted EBITDA - discontinued operations                                           $  217,519                                           $ 300,322  
                                                                                                                                                      ==================== ======== ====================                      ==================== ======= ====================
                                                                                                                                                                                                                                                            
 
                                                                                                                        RITE AID CORPORATION AND SUBSIDIARIES
                                                                                                                              SUPPLEMENTAL INFORMATION
                                                                                                                                 ADJUSTED NET INCOME
                                                                                                                  (Dollars in thousands, except per share amounts)
                                                                                                                                     (unaudited)
                                                                                                              
                                                                                                                                                                                                                                  
                                                                                                                                                                        Thirteen weeks ended                                                     Thirteen weeks ended
                                                                                                                                                                          December 2, 2017                                                         November 26, 2016
                                                                                                                                                        -------------------------------------------------                        -------------------------------------------------
                                                                                                                                                                                                                                  
 Net (loss) income from continuing operations                                                                                                                              $   (18,182 )                                                            $    23,610
                     Add back - Income tax benefit                                                                                                          (16,061 )                                              (4,682 )
                                                                                                                                                        -------------------- --------- --------------------                      -------------------- --------- --------------------
                                                               (Loss) income before income taxes - continuing operations                                                       (34,243 )                                                                 18,928
                                                                                                                                                                                                                                  
                     Adjustments:
                                          Amortization of EnvisionRx intangible assets                                                                                          19,139                                                                   21,049
                                          LIFO charge                                                                                                                            6,784                                                                    8,373
                                          Merger and Acquisition-related costs                                                                                6,550                              1,964  
                                                                                                                                                        -------------------- --------- --------------------                      -------------------- --------- --------------------
                                                                                                                                                                                                                                  
                                                               Adjusted (loss) income before income taxes - continuing operations                                               (1,770 )                                                                 50,314
                                                                                                                                                                                                                                  
                                                               Adjusted income tax (benefit) expense (a)                                                     (3,389 )                                              23,559  
                                                                                                                                                        -------------------- --------- --------------------                      -------------------- --------- --------------------
                                                               Adjusted net income from continuing operations                                                              $     1,619                                           $    26,755  
                                                                                                                                                        ==================== ========= ====================                      ==================== ========= ====================
                                                                                                                                                                                                                                  
                     Adjusted net income per diluted share - continuing operations:
                                                                                                                                                                                                                                  
                     Numerator for adjusted net income per diluted share:
                                          Adjusted net income from continuing operations                                                                                   $     1,619                                           $    26,755  
                                                                                                                                                        ==================== ========= ====================                      ==================== ========= ====================
                                                                                                                                                                                                                                  
                                                                                                                                                                                                                                  
                                                                                                                                                                                                                                  
                     Denominator:
                                          Basic weighted average shares                                                                                                      1,048,502                                                                1,045,028
                                          Outstanding options and restricted shares, net                                                                      7,367                             15,735  
                                                                                                                                                        -------------------- --------- --------------------                      -------------------- --------- --------------------
                                                                                                                                                                                                                                  
                                          Diluted weighted average shares                                                                                 1,055,869                          1,060,763  
                                                                                                                                                        ==================== ========= ====================                      ==================== ========= ====================
                                                                                                                                                                                                                                  
                                                               Net (loss) income from continuing operations per diluted
                                                                                                 share - continuing operations                                             $     (0.02 )                                                            $      0.02
                                                                                                                                                                                                                                  
                                                                                                                                                                                                                                  
                                                               Adjusted net income per diluted share - continuing operations                                               $      0.00                                                              $      0.03
                                                                                                                                                                                                                                                                 
(a)   The fiscal year 2018 and 2017 annual effective tax rates, adjusted
                         to exclude amortization of EnvisionRx intangible assets, LIFO
                         charges and Merger and Acquisition-related costs from book income,
                         are used for the thirteen weeks ended December 2, 2017 and
                         November 26, 2016, respectively.
                          
 
                                                                                                                         RITE AID CORPORATION AND SUBSIDIARIES
                                                                                                                               SUPPLEMENTAL INFORMATION
                                                                                                                              ADJUSTED NET (LOSS) INCOME
                                                                                                                   (Dollars in thousands, except per share amounts)
                                                                                                                                      (unaudited)
                                                                                                                
                                                                                                                                                                                                                                    
                                                                                                                                                                         Thirty-nine weeks ended                                                  Thirty-nine weeks ended
                                                                                                                                                                            December 2, 2017                                                         November 26, 2016
                                                                                                                                                          -------------------------------------------------                        -------------------------------------------------
                                                                                                                                                                                                                                    
 Net income from continuing operations                                                                                                                                       $   134,141                                                              $    29,134
                     Add back - Income tax expense (benefit)                                                                                                   89,268                             (3,824 )
                                                                                                                                                          -------------------- --------- --------------------                      -------------------- --------- --------------------
                                                               Income before income taxes - continuing operations                                                                223,409                                                                   25,310
                                                                                                                                                                                                                                    
                     Adjustments:
                                          Amortization of EnvisionRx intangible assets                                                                                            59,415                                                                   62,217
                                          LIFO charge                                                                                                                             20,393                                                                   25,266
                                          Merger and Acquisition-related costs                                                                                                    17,274                                                                    6,117
                                          Walgreens Boots Alliance merger termination fee                                                                    (325,000 )                                                   -  
                                                                                                                                                          -------------------- --------- --------------------                      -------------------- --------- --------------------
                                                                                                                                                                                                                                    
                                                               Adjusted (loss) income before income taxes - continuing operations                                                 (4,509 )                                                                118,910
                                                                                                                                                                                                                                    
                                                               Adjusted income tax expense (a)                                                                  5,573                             54,183  
                                                                                                                                                          -------------------- --------- --------------------                      -------------------- --------- --------------------
                                                               Adjusted net (loss) income from continuing operations                                                         $   (10,082 )                                                            $    64,727  
                                                                                                                                                          ==================== ========= ====================                      ==================== ========= ====================
                                                                                                                                                                                                                                    
                     Adjusted net (loss) income per diluted share - continuing operations:
                                                                                                                                                                                                                                    
                     Numerator for adjusted net (loss) income per diluted share:
                                          Adjusted net (loss) income from continuing operations                                                                              $   (10,082 )                                                            $    64,727  
                                                                                                                                                          ==================== ========= ====================                      ==================== ========= ====================
                                                                                                                                                                                                                                    
                                                                                                                                                                                                                                    
                                                                                                                                                                                                                                    
                     Denominator:
                                          Basic weighted average shares                                                                                                        1,048,342                                                                1,043,887
                                          Outstanding options and restricted shares, net                                                                       18,948                             17,117  
                                                                                                                                                          -------------------- --------- --------------------                      -------------------- --------- --------------------
                                                                                                                                                                                                                                    
                                          Diluted weighted average shares                                                                                   1,067,290                          1,061,004  
                                                                                                                                                          ==================== ========= ====================                      ==================== ========= ====================
                                                                                                                                                                                                                                    
                                                               Net income from continuing operations per diluted
                                                                                                  share - continuing operations                                              $      0.13                                                              $      0.03
                                                                                                                                                                                                                                    
                                                               Adjusted net (loss) income per diluted share - continuing operations                                          $     (0.01 )                                                            $      0.06
                                                                                                                                                                                                                                                                   
(a)   The fiscal year 2018 and 2017 annual effective tax rates, adjusted
                         to exclude amortization of EnvisionRx intangible assets, LIFO
                         charges, Merger and Acquisition-related costs and the Walgreens
                         Boots Alliance merger termination fee from book income, are used
                         for the thirty-nine weeks ended December 2, 2017 and November 26,
                         2016, respectively.
                                         
 
                                                                                                                                   RITE AID CORPORATION AND SUBSIDIARIES
                                                                                                                                     
                                                                                                                                   CONSOLIDATED STATEMENTS OF CASH FLOWS
                                                                                                                                          (Dollars in thousands)
                                                                                                                                                (unaudited)
                                                                                                                                                                                                                                                         
                                                                                                                                                                                                                                                         
                                                                                                                                                                                                                                                         
                                                                                                                                                                                               Thirteen weeks ended                                                    Thirteen weeks ended
                                                                                                                                                                                                 December 2, 2017                                                        November 26, 2016
                                                                                                                                                                                ------------------------------------------------                        ------------------------------------------------
                                                                                                                                                                                                                                                         
                                                                                                                                                                                                                                                         
 OPERATING ACTIVITIES:
 Net income                                                                                                                                                                                        $   81,031                                                              $   15,010
 Net income (loss) from discontinued operations, net of tax                                                                                                                         99,213                            (8,600 )
                                                                                                                                                                                -------------------- -------- --------------------                      -------------------- -------- --------------------
 Net (loss) income from continuing operations                                                                                                                                                      $  (18,182 )                                                            $   23,610
Adjustments to reconcile to net cash provided by operating
activities of continuing operations:
                      Depreciation and amortization                                                                                                                                                    95,764                                                                 101,953
                      Lease termination and impairment charges                                                                                                                                          3,939                                                                   7,199
                      LIFO charge                                                                                                                                                                       6,784                                                                   8,373
                      Loss (gain) on sale of assets, net                                                                                                                                                  205                                                                    (225 )
                      Stock-based compensation expense                                                                                                                                                  7,186                                                                  13,070
                      Changes in deferred taxes                                                                                                                                                        33,747                                                                   4,167
                      Excess tax benefit on stock options and restricted stock                                                                                                                              -                                                                    (561 )
                      Changes in operating assets and liabilities:
                                           Accounts receivable                                                                                                                                         68,883                                                                 141,479
                                           Inventories                                                                                                                                                (57,277 )                                                               (72,372 )
                                           Accounts payable                                                                                                                                            59,670                                                                  96,023
                                           Other assets and liabilities, net                                                                                                       (71,744 )                                           (104,001 )
                                                                                                                                                                                -------------------- -------- --------------------                      -------------------- -------- --------------------
                                                                Net cash provided by operating activities of continuing operations                                                                    128,975                                                                 218,715
 INVESTING ACTIVITIES:
                      Payments for property, plant and equipment                                                                                                                                      (61,700 )                                                               (54,759 )
                      Intangible assets acquired                                                                                                                                                      (10,522 )                                                               (13,573 )
                      Proceeds from dispositions of assets and investments                                                                                                           1,847                             3,384  
                                                                                                                                                                                -------------------- -------- --------------------                      -------------------- -------- --------------------
                                                                Net cash used in investing activities of continuing operations                                                                        (70,375 )                                                               (64,948 )
 FINANCING ACTIVITIES:
                      Net (payments to) proceeds from revolver                                                                                                                                        (74,080 )                                                                30,000
                      Principal payments on long-term debt                                                                                                                                             (2,906 )                                                                (4,046 )
                      Change in zero balance cash accounts                                                                                                                                             17,405                                                                  30,151
                      Net proceeds from the issuance of common stock                                                                                                                                    4,201                                                                     454
                      Excess tax benefit on stock options and restricted stock                                                                                                                              -                                                                     561
                      Payments for taxes related to net share settlement of equity awards                                                                                              (32 )                                                (81 )
                                                                                                                                                                                -------------------- -------- --------------------                      -------------------- -------- --------------------
                                                                Net cash (used in) provided by financing activities of continuing                                                  (55,412 )                                             57,039  
                                                                operations
                                                                                                                                                                                -------------------- -------- --------------------                      -------------------- -------- --------------------
 Cash flows from discontinued operations:
                      Operating activities of discontinued operations                                                                                                                                 (64,650 )                                                               (66,047 )
                      Investing activities of discontinued operations                                                                                                                                 233,914                                                                 (59,674 )
                      Financing activities of discontinued operations                                                                                                             (241,630 )                                             (1,150 )
                                                                                                                                                                                -------------------- -------- --------------------                      -------------------- -------- --------------------
                                                                Net cash used in discontinued operations                                                                           (72,366 )                                           (126,871 )
                                                                                                                                                                                -------------------- -------- --------------------                      -------------------- -------- --------------------
 (Decrease) increase in cash and cash equivalents                                                                                                                                                     (69,178 )                                                                83,935
 Cash and cash equivalents, beginning of period                                                                                                                                    238,978                           136,093  
                                                                                                                                                                                -------------------- -------- --------------------                      -------------------- -------- --------------------
 Cash and cash equivalents, end of period                                                                                                                                                          $  169,800                                           $  220,028  
                                                                                                                                                                                ==================== ======== ====================                      ==================== ======== ====================
                                                                                                                                                                                                                                                                                       
 
                                                                                                                          RITE AID CORPORATION AND SUBSIDIARIES
                                                                                                                                                         
                                                                                                                          CONSOLIDATED STATEMENTS OF CASH FLOWS
                                                                                                                                 (Dollars in thousands)
                                                                                                                                       (unaudited)
                                                                                                                                                                                                                                       
                                                                                                                                                                                                                                       
                                                                                                                                                                                                                                       
                                                                                                                                                                            Thirty-nine weeks ended                                                 Thirty-nine weeks ended
                                                                                                                                                                               December 2, 2017                                                        November 26, 2016
                                                                                                                                                              ------------------------------------------------                        ------------------------------------------------
                                                                                                                                                                                                                                       
                                                                                                                                                                                                                                       
 OPERATING ACTIVITIES:
 Net income                                                                                                                                                                      $  176,398                                                              $   25,195
 Net income (loss) from discontinued operations, net of tax                                                                                                       42,257                            (3,939 )
                                                                                                                                                              -------------------- -------- --------------------                      -------------------- -------- --------------------
 Net income from continuing operations                                                                                                                                           $  134,141                                                              $   29,134
 Adjustments to reconcile to net cash provided by operating
 activities of continuing operations:
                      Depreciation and amortization                                                                                                                                 292,448                                                                 304,460
                      Lease termination and impairment charges                                                                                                                       11,090                                                                  20,203
                      LIFO charge                                                                                                                                                    20,393                                                                  25,266
                      Gain on sale of assets, net                                                                                                                                   (20,623 )                                                                  (388 )
                      Stock-based compensation expense                                                                                                                               22,550                                                                  36,766
                      Changes in deferred taxes                                                                                                                                      98,597                                                                   6,165
                      Excess tax benefit on stock options and restricted stock                                                                                                            -                                                                  (3,809 )
                      Changes in operating assets and liabilities:
                                           Accounts receivable                                                                                                                      (19,865 )                                                               (81,520 )
                                           Inventories                                                                                                                              (84,731 )                                                              (128,568 )
                                           Accounts payable                                                                                                                         118,941                                                                 178,266
                                           Other assets and liabilities, net                                                                                    (148,491 )                                           (212,727 )
                                                                                                                                                              -------------------- -------- --------------------                      -------------------- -------- --------------------
                                                                Net cash provided by operating activities of continuing operations                                                  424,450                                                                 173,248
 INVESTING ACTIVITIES:
                      Payments for property, plant and equipment                                                                                                                   (140,816 )                                                              (197,723 )
                      Intangible assets acquired                                                                                                                                    (20,201 )                                                               (35,986 )
                      Proceeds from insured loss                                                                                                                                      3,627                                                                       -
                      Proceeds from dispositions of assets and investments                                                                                        19,254                            10,217  
                                                                                                                                                              -------------------- -------- --------------------                      -------------------- -------- --------------------
                                                                Net cash used in investing activities of continuing operations                                                     (138,136 )                                                              (223,492 )
 FINANCING ACTIVITIES:
                      Net (payments to) proceeds from revolver                                                                                                                     (264,080 )                                                               280,000
                      Principal payments on long-term debt                                                                                                                           (7,292 )                                                               (12,728 )
                      Change in zero balance cash accounts                                                                                                                           27,594                                                                  30,685
                      Net proceeds from the issuance of common stock                                                                                                                  4,416                                                                   4,412
                      Excess tax benefit on stock options and restricted stock                                                                                                            -                                                                   3,809
                      Payments for taxes related to net share settlement of equity awards                                                                         (4,103 )                                             (6,254 )
                                                                                                                                                              -------------------- -------- --------------------                      -------------------- -------- --------------------
                                                                Net cash (used in) provided by financing activities of continuing                               (243,465 )                                            299,924  
                                                                operations
                                                                                                                                                              -------------------- -------- --------------------                      -------------------- -------- --------------------
 Cash flows from discontinued operations:
                      Operating activities of discontinued operations                                                                                                               (62,294 )                                                                (1,541 )
                      Investing activities of discontinued operations                                                                                                               189,175                                                                (148,884 )
                      Financing activities of discontinued operations                                                                                           (245,340 )                                             (3,698 )
                                                                                                                                                              -------------------- -------- --------------------                      -------------------- -------- --------------------
                                                                Net cash used in discontinued operations                                                        (118,459 )                                           (154,123 )
                                                                                                                                                              -------------------- -------- --------------------                      -------------------- -------- --------------------
 (Decrease) increase in cash and cash equivalents                                                                                                                                   (75,610 )                                                                95,557
 Cash and cash equivalents, beginning of period                                                                                                                  245,410                           124,471  
                                                                                                                                                              -------------------- -------- --------------------                      -------------------- -------- --------------------
 Cash and cash equivalents, end of period                                                                                                                                        $  169,800                                           $  220,028  
                                                                                                                                                              ==================== ======== ====================                      ==================== ======== ====================
                                                                                                                                                                                                                                                                     

http://cts.businesswire.com/ct/CT?id=bwnews&sty=20180103006170r1&sid=cmtx6&distro=nx&lang=en

View source version on businesswire.com: http://www.businesswire.com/news/home/20180103006170/en/

SOURCE: Rite Aid Corporation

Rite Aid Corporation 
INVESTORS: 
Byron Purcell, 717-975-5809 
investor@riteaid.com 
or 
MEDIA: 
Susan Henderson, 717-730-7766


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