<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-Q
/X/ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended December 2, 1995
OR
/ / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE TRANSITION PERIOD FROM ----- TO ------
COMMISSION FILE NUMBER 1-5742
RITE AID CORPORATION
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
DELAWARE 23-1614034
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) IDENTIFICATION NO.)
30 HUNTER LANE 17011
CAMP HILL, PENNSYLVANIA (ZIP CODE)
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)
(717) 761-2633
(REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE)
NOT APPLICABLE
(FORMER NAME, FORMER ADDRESS AND FORMER FISCAL YEAR, IF CHANGED SINCE
LAST REPORT)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months, and (2) has been subject to such filing
requirements for the past 90 days.
YES X NO
------ -----
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
<TABLE>
<CAPTION>
OUTSTANDING AT
CLASS OF COMMON STOCK DECEMBER 2, 1995
--------------------- --------------------
<S> <C>
$1.00 PAR VALUE 83,758,467 SHARES
</TABLE>
<PAGE> 2
RITE AID CORPORATION
INDEX
<TABLE>
<S> <C>
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements:
Condensed Consolidated Balance Sheet as of December 2, 1995
and March 4, 1995 . . . . . . . . . . . . . . . . . . . . . . . 2
Condensed Consolidated Statement of Income Thirty-Nine
Weeks Ended December 2, 1995 and November 26, 1994. . . . . . . 4
Condensed Consolidated Statement of Income Thirteen
Weeks Ended December 2, 1995 and November 26, 1994. . . . . . . 5
Condensed Consolidated Statement of Cash Flows
Thirty-Nine Weeks Ended December 2, 1995 and
November 26, 1994 . . . . . . . . . . . . . . . . . . . . . . . 6
Notes to Condensed Consolidated Financial Statements . . . . . 7
Independent Auditors' Report . . . . . . . . . . . . . . . . . 9
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations . . . . . . . . . . . . . .10
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K . . . . . . . . . . . . . . . 12
</TABLE>
-1-
<PAGE> 3
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RITE AID CORPORATION
FORM 10-Q
FOR THE THIRTEEN WEEKS ENDED DECEMBER 2, 1995
- ---------------------------------------------------------------------------
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements:
RITE AID CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEET
(Dollars in Thousands)
<TABLE>
<CAPTION>
ASSETS December 2, 1995 March 4, 1995
- ------ ---------------- ---------------
(UNAUDITED)
<S> <C> <C>
Current Assets
Cash $ 28,273 $ 7,148
Accounts Receivable, Net 251,308 239,859
Inventories 1,218,234 1,070,346
Prepaid Expenses and Other Current Assets 37,262 28,716
Net Current Assets of Discontinued
Operations - 27,151
---------- ----------
Total Current Assets 1,535,077 1,373,220
---------- ----------
Property, Plant and Equipment 1,575,700 1,427,091
Less: Accumulated Depreciation and
Amortization 677,406 648,612
---------- ----------
898,294 778,479
---------- ----------
Intangible Assets
Excess of Cost Over Underlying Equity in
Subsidiaries (less accumulated amortiza-
tion of $9,796 and $7,691) 131,629 99,653
Lease Acquisition Costs and Other
Intangible Assets (less accumulated
amortization of $120,316 and $108,679) 190,653 154,359
---------- ----------
322,282 254,012
---------- ----------
Other Assets 36,249 26,153
---------- ----------
Net Noncurrent Assets of Discontinued
Operations - 40,743
---------- ---------
$2,791,902 $2,472,607
========== ==========
</TABLE>
See accompanying independent auditors' report and notes to condensed
consolidated financial statements.
-2-
<PAGE> 4
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RITE AID CORPORATION
FORM 10-Q
FOR THE THIRTEEN WEEKS ENDED DECEMBER 2, 1995
- ---------------------------------------------------------------------------
Item 1. Financial Statements: (Continued)
RITE AID CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEET
(Dollars in Thousands)
<TABLE>
<CAPTION>
LIABILITIES December 2, 1995 March 4, 1995
- ----------- ---------------- ---------------
(UNAUDITED)
<S> <C> <C>
Current Liabilities
Short-Term Debt and
Current Maturities of Long-
Term Debt $ 251,171 $ 137,553
Accounts Payable 279,205 273,128
Income Taxes 55,073 38,241
Sales and Other Taxes Payable 10,549 13,796
Accrued Expenses 71,917 79,263
Reserve for Restructuring and
Other Charges 19,830 35,244
---------- ----------
Total Current Liabilities 687,745 577,225
---------- ----------
Long-Term Debt, Less Current Maturities 971,253 805,984
---------- ----------
Deferred Income Taxes 73,221 77,586
---------- ----------
Stockholders' Equity
Common Stock 90,291 90,290
Additional Paid-In Capital 61,124 60,655
Retained Earnings 1,014,318 955,111
Net Unrealized Gain on Marketable
Securities - 2,847
Cumulative Pension Liability
Adjustments (1,304) (1,314)
Treasury Stock, At Cost (104,746) (95,777)
---------- ----------
1,059,683 1,011,812
---------- ----------
$2,791,902 $2,472,607
========== ==========
</TABLE>
See accompanying independent auditors' report and notes to condensed
consolidated financial statements.
-3-
<PAGE> 5
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RITE AID CORPORATION
FORM 10-Q
FOR THE THIRTEEN WEEKS ENDED DECEMBER 2, 1995
- ---------------------------------------------------------------------------
Item 1. Financial Statements: (Continued)
RITE AID CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF INCOME
(Dollars In Thousands Except Per Share Amounts)
(UNAUDITED)
<TABLE>
<CAPTION>
THIRTY-NINE THIRTY-NINE
WEEKS ENDED WEEKS ENDED
DECEMBER 2, 1995 NOVEMBER 26, 1994
------------------- -----------------
<S> <C> <C>
NET SALES $4,015,036 $3,180,085
COSTS AND EXPENSES
Cost of Goods Sold Including
Occupancy Costs 2,960,998 2,334,994
Selling, General and
Administrative Expenses 837,629 671,823
Interest Expense 49,546 28,956
---------- ----------
3,848,173 3,035,773
---------- ----------
Income Before Income Taxes 166,863 144,312
Income Taxes 64,910 56,280
---------- ----------
NET INCOME $ 101,953 $ 88,032
========== ==========
EARNINGS PER SHARE $1.22 $1.04
===== =====
CASH DIVIDENDS PER COMMON SHARE $ .51 $ .45
===== =====
AVERAGE SHARES OUTSTANDING 83,816,000 84,977,000
</TABLE>
See accompanying independent auditors' report and notes to condensed
consolidated financial statements.
-4-
<PAGE> 6
- ---------------------------------------------------------------------------
RITE AID CORPORATION
FORM 10-Q
FOR THE THIRTEEN WEEKS ENDED DECEMBER 2, 1995
- ---------------------------------------------------------------------------
Item 1. Financial Statements: (Continued)
RITE AID CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF INCOME
(Dollars In Thousands Except Per Share Amounts)
(UNAUDITED)
<TABLE>
<CAPTION>
THIRTEEN THIRTEEN
WEEKS ENDED WEEKS ENDED
DECEMBER 2, 1995 NOVEMBER 26, 1994
---------------- -----------------
<S> <C> <C>
NET SALES $1,331,796 $1,093,811
COSTS AND EXPENSES
Cost of Goods Sold Including
Occupancy Costs 985,454 805,412
Selling, General and
Administrative Expenses 276,374 233,779
Interest Expense 16,515 10,478
---------- ----------
1,278,343 1,049,669
---------- ----------
Income Before Income Taxes 53,453 44,142
Income Taxes 20,793 17,214
---------- ----------
NET INCOME $ 32,660 $ 26,928
========== ==========
EARNINGS PER SHARE $.39 $.32
==== ====
CASH DIVIDENDS PER COMMON SHARE $.17 $.15
==== ====
AVERAGE SHARES OUTSTANDING 83,758,000 84,291,000
</TABLE>
See accompanying independent auditors' report and notes to condensed
consolidated financial statements.
-5-
<PAGE> 7
- -----------------------------------------------------------------------------
RITE AID CORPORATION
FORM 10-Q
FOR THE THIRTEEN WEEKS ENDED DECEMBER 2, 1995
- -----------------------------------------------------------------------------
Item 1. Financial Statements: (Continued)
RITE AID CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
(Dollars in Thousands)
(UNAUDITED)
<TABLE>
<CAPTION>
THIRTY-NINE THIRTY-NINE
WEEKS ENDED WEEKS ENDED
DECEMBER 2, 1995 NOVEMBER 26, 1994
---------------- -----------------
<S> <C> <C>
Operating Activities
Income from Continuing Operations
Before Income Taxes $ 166,863 $ 144,312
Depreciation and Amortization 87,369 71,282
Accreted Interest on Zero Coupon Notes 9,499 8,947
Changes in Operating Assets and Liabilities,
Net of Effects from Acquisitions (231,726) (47,747)
--------- ---------
32,005 176,794
Discontinued Operations
Income from Operations Before Income Taxes 190 7,388
Depreciation and Amortization 700 7,196
Changes in Net Operating Assets - (7,806)
---------- ----------
890 6,778
Income Taxes Paid (29,822) (52,549)
--------- ---------
Net Cash Provided by Operations 3,073 131,023
--------- ---------
Investing Activities
Purchase of Property, Plant and Equipment (206,916) (120,167)
Purchase of Businesses, Net of Cash Acquired (95,374) (51,205)
Intangible Assets Acquired (21,183) (8,968)
Investing Activities of Discontinued Operations - (12,206)
Proceeds from Dispositions 136,928 86,289
other (11,248) 1,715
--------- ---------
Net Cash Provided (Used) by Investing
Activities (197,793) (104,542)
--------- ---------
Financing Activities
Proceeds from Sale of Senior Notes 197,702 -
Proceeds (Payments) of Commercial Paper 114,368 58,049
(Payments) of Sinking Fund Debentures (44,980) (16,020)
Cash Dividends Paid (42,746) (37,997)
Acquisition of Stock for Treasury (8,969) (33,780)
Proceeds from the Sale of Stock 470 1,004
--------- ---------
Net Cash Provided (Used) by Financing
Activities 215,845 (28,744)
--------- ---------
Increase (Decrease) in Cash $ 21,125 $ (2,263)
========= =========
</TABLE>
See accompanying independent auditors' report and notes to condensed
consolidated financial statements.
-6-
<PAGE> 8
- ---------------------------------------------------------------------------
RITE AID CORPORATION
FORM 10-Q
FOR THE THIRTEEN WEEKS ENDED DECEMBER 2, 1995
- ---------------------------------------------------------------------------
ITEM 1. Financial Statements: (Continued)
RITE AID CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1- BASIS OF PRESENTATION
The financial information included herein is unaudited. In addition,
the financial information does not include all disclosures required
under generally accepted accounting principles because certain note
information included in the Company's annual report has been omitted;
however, such information reflects all adjustments (consisting solely of
normal recurring adjustments) which are, in the opinion of management,
necessary to a fair statement of the results for the interim periods.
The report of KPMG Peat Marwick LLP commenting upon their review
accompanies the condensed consolidated financial statements included
in Item 1 of Part I.
The results of operations for the thirty-nine weeks and thirteen weeks
ended December 2, 1995 and November 26, 1994 are not necessarily
indicative of the results to be expected for the full year.
NOTE 2- EARNINGS PER SHARE
Earnings per share were computed by dividing net income by the weighted
average number of shares of common stock outstanding during the periods.
NOTE 3- DISCONTINUED OPERATIONS
On May 12, 1995, ADAP Inc. was sold to an investment group led by Falcon
Capital, Inc. Aggregate consideration for the transaction was
approximately $66,000,000, subject to certain adjustments primarily
based on the results of physical inventories. The management of Rite
Aid believes that the reserve amount for loss on disposal of ADAP is
adequate.
NOTE 4- COMMITMENTS AND CONTINGENCIES
The company had standby letters of credit of $34,198,000 and $31,390,000
at December 2, 1995 and March 4, 1995, respectively.
The company is the defendant in claims and lawsuits arising in the
ordinary course of business. In the opinion of management, these
matters are covered adequately by insurance, or if not so covered, are
of such nature or involve such amounts as would not have a material
effect on the financial statements of the company if decided adversely.
-7-
<PAGE> 9
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RITE AID CORPORATION
FORM 10-Q
FOR THE THIRTEEN WEEKS ENDED DECEMBER 2, 1995
- ---------------------------------------------------------------------------
NOTE 5 - REVCO ACQUISITION
On December 4, 1995, Rite Aid commenced its cash tender offer to
purchase 50.1% of the shares of common stock of Revco D. S., Inc. at a
price of $27.50 per share in cash. The remainder of the outstanding
Revco shares would be converted into Rite Aid stock in a second-step
merger based on formulas set forth in the merger agreement announced on
November 30, 1995, and described in the tender offer materials. The
tender offer will expire at 12:00 midnight, New York City time, on
Tuesday, January 2, 1996, unless the offer is extended. The tender
offer is not conditioned on obtaining financing. The total value of
the transaction is approximately $1.8 billion. The acquisition was
approved by each company's Board of Directors, and should be
completed by March 31, 1996.
NOTE 6 - RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS
In March 1995, the Financial Accounting Standards Board (FASB) issued
Statement of Financial Accounting Standard (SFAS) 121 "Accounting for
the impairment of Long Lived Assets and for Long Lived Assets to be
Disposed of." The statement establishes standards for accounting for
the impairment of long-lived assets, certain identifiable
intangibles, and goodwill related to those assets to be held and used
and for long lived assets and certain identifiable intangibles to be
disposed of. The statement is effective for financial statements for
fiscal years beginning after December 15, 1995. Management does not
expect the adoption of the standard to have a material impact on the
financial statements of the Company.
In October 1995, the FASB issued SFAS 123 "Accounting for Stock
Based Compensation." The statement permits a company to chose
to account for its stock-based compensation arrangements under either
the new fair value based method, or the current intrinsic method
prescribed under APB Opinion 25. For companies electing to continue
to report under APB 25, the statement requires pro forma disclosure of
net income and earnings per share computed as if the fair value based
method had been applied in the financial statements. The statement is
effective for fiscal years beginning after December 15, 1995.
Management intends to continue to report its stock based compensation
under the provisions of APB 25. The pro forma effects on income have
not been determined.
-8-
<PAGE> 10
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RITE AID CORPORATION
FORM 10-Q
FOR THE THIRTEEN WEEKS ENDED DECEMBER 2, 1995
- ---------------------------------------------------------------------------
Item 1. Financial Statements: (Continued)
INDEPENDENT AUDITORS' REPORT
The Board of Directors
Rite Aid Corporation
Camp Hill, Pennsylvania
We have reviewed the condensed consolidated balance sheet of Rite Aid
Corporation and subsidiaries as of December 2, 1995, and the related condensed
consolidated statements of income for the thirty-nine and thirteen week periods
ended December 2, 1995 and November 26, 1994, and the condensed consolidated
statements of cash flows for the thirty-nine week periods ended December 2,
1995 and November 26, 1994. These financial statements are the responsibility
of the Company's management.
We conducted our review in accordance with standards established by the
American Institute of Certified Public Accountants. A review of interim
financial information consists principally of applying analytical procedures to
financial data, and making inquiries of persons responsible for financial and
accounting matters. It is substantially less in scope than an audit in
accordance with generally accepted auditing standards, the objective of which
is the expression of an opinion regarding the financial statements taken as a
whole. Accordingly, we do not express such an opinion.
Based on our review, we are not aware of any material modifications that
should be made to the condensed consolidated financial statements referred to
above for them to be in conformity with generally accepted accounting
principles.
We have previously audited, in accordance with generally accepted auditing
standards, the consolidated balance sheet of Rite Aid Corporation and
subsidiaries as of March 4, 1995, and the related consolidated statements of
income, stockholders' equity and cash flows for the year then ended (not
presented herein); and in our report dated April 21, 1995, we expressed an
unqualified opinion on those consolidated financial statements. In our
opinion, the information set forth in the accompanying condensed consolidated
balance sheet as of March 4, 1995, is fairly stated, in all material aspects,
in relation to the consolidated balance sheet from which it has been derived.
The company changed its method of accounting for investments in the fourth
quarter of fiscal year 1995 to conform with Statement of Financial Accounting
Standards No. 115.
KPMG PEAT MARWICK LLP
Harrisburg, Pennsylvania
December 26, 1995
-9-
<PAGE> 11
- ---------------------------------------------------------------------------
RITE AID CORPORATION
FORM 10-Q
FOR THE THIRTEEN WEEKS ENDED DECEMBER 2, 1995
- ---------------------------------------------------------------------------
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations:
Net sales for the thirteen-week and thirty-nine week periods ended December 2,
1995 were $1,331,796,000 and $4,015,036,000, respectively, representing
increases of 21.8% and 26.3% over the same periods in the prior year. Included
in the sales amounts were revenues generated by the 224 Perry drugstores
acquired on January 27, 1995 of $181,640,000 for the quarter and $558,186,000
year to date. Same-store sales increased 6.6% for the thirteen weeks and 7.0%
for the thirty-nine weeks compared to 8.1% and 6.5% for like periods last year.
During the quarter, the Company added 51 drugstores, closed 22, and expanded or
relocated 60 units to the 10,000 square foot store size. Since the beginning
of the fiscal year, 93 stores were opened, 205 were closed or sold, and 144
were enlarged or relocated. Revenues from the closed stores included in the
fiscal 1995 third quarter amounted to $61,374,000. As of December 2, 1995, the
company operated 2,717 drugstores.
Cost of goods sold including occupancy costs, as a percentage of sales, was
74.0% and 73.7% for the current quarter and year-to-date period, respectively,
compared to 73.6% and 73.4% for the respective year-earlier periods. The
growth of third party prescription sales, which have lower margins than other
pharmacy sales, continued to pressure gross profits. Third party prescription
sales accounted for 64.0% of pharmacy revenues for the thirteen weeks and 62.3%
for the thirty-nine weeks ended December 2, 1995. For the comparable periods
last year, third party to pharmacy sales were 58.9% and 58.3%, respectively.
Selling, general and administrative expenses amounted to 20.8% of sales for the
quarter and 20.9% for the thirty-nine weeks. Last year, the operating expenses
to sales ratios were 21.4% and 21.1%, respectively. The current third quarter
reflects the expense savings associated with Perry's headquarters closed for
the entire thirteen week period. In addition, fiscal 1996 benefited from
leveraging operating expenses against strong same-store sales increases and an
aggressive expense control program.
Interest expense rose during the current fiscal year to $16,515,000 for the
thirteen weeks and $49,546,000 year to date from $10,478,000 and $28,956,000
for the year-earlier periods. The higher expense resulted from increased
borrowings by the Company used to finance the purchase of the Perry drugstores
and other acquisitions. Contributing to the increased expense was the general
rise in short term interest rates. The weighted average rate on the company's
commercial paper was 6.0% and 6.1% for the quarter and thirty-nine week period,
respectively, compared to 5.0% and 4.5% for the same periods last year. In
July 1995, the Company moved to eliminate its highest rate debt by redeeming
the 9 5/8% sinking fund debentures totaling $44,980,000, with proceeds received
from the sale of ADAP.
The reserve for restructuring and other charges remains adequate to cover the
unsettled leases of the 200 drugstores closed during fiscal 1995. The company
continues to negotiate with landlords of the closed stores to terminate their
leases. Where favorable terms cannot be agreed upon, the Company will endeavor
to sublet the locations until the leases expire.
-10-
<PAGE> 12
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RITE AID CORPORATION
FORM 10-Q
FOR THE THIRTEEN WEEKS ENDED DECEMBER 2, 1995
- ---------------------------------------------------------------------------
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations: (CONTINUED)
Working capital was $847,332,000 at December 2, 1995 compared to $795,995,000
at March 4, 1995, and the current ratios were 2.2:1 and 2.4:1, respectively.
Typically, cash provided by operations is adequate to support operations,
contribute to investing activities and fund dividend distributions to our
shareholders. For the thirty-nine weeks ended December 2, 1995, cash from
operations was impacted by an increase in inventory without a corresponding
increase in accounts payable. The inventory increase reflects: Christmas
merchandise, the build-up of private label inventories for the Perry stores to
support the name change to Rite Aid, merchandise for the new price and product
advertising campaign launched in December, and cold and flu remedies stock at
the stores. Also, the new 10,000 square foot format and the large Perry store
size allow for additional merchandise. The usual terms for much of the
seasonal merchandise requires payment by the first of December. As a result,
there were vendor invoices that were paid during the period ended December 2,
1995 that would have been outstanding as of the end of last year's third
quarter at November 26, 1994.
The company has a $600,000,000 revolving credit commitment to provide
additional borrowing capacity and support its commercial paper program. In
July 1995, Rite Aid filed a Form S-3 Shelf Registration Statement for
$375,000,000. Including $25,000,000 remaining on a previously filed shelf
registration, the Company has the ability to issue $400,000,000 in registered
debt securities.
On December 4, 1995, Rite Aid commenced its cash tender offer to purchase 50.1%
of the shares of common stock of Revco D. S., Inc. at a price of $27.50 per
share in cash. The remainder of the outstanding Revco shares would be
converted into Rite Aid stock in a second-step merger based on formulas set
forth in the merger agreement announced on November 30, 1995, and described in
the tender offer materials. The tender offer will expire at 12:00 midnight,
New York City time, on Tuesday, January 2, 1996, unless the offer is extended.
The tender offer is not conditioned on obtaining financing. The total value of
the transaction is approximately $1.8 billion. The acquisition was approved by
each company's Board of Directors, and should be completed by March 31, 1996.
Rite Aid is in the process of establishing a $2.5 billion five-year revolving
credit facility in the syndicated bank market. Borrowings under this credit
facility will be used for the Revco acquisition, to refinance certain existing
debt of Rite Aid and Revco, and for working capital and general corporate
purposes. This new credit facility will replace the existing $600,000,000
revolving credit commitment.
-11-
<PAGE> 13
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RITE AID CORPORATION
FORM 10-Q
FOR THE THIRTEEN WEEKS ENDED DECEMBER 2, 1995
- ---------------------------------------------------------------------------
PART II
Item 6. Exhibits and Reports on Form 8-K:
(a) Exhibits
Item 11. - Statement regarding computation of per share earnings
Item 15. - Copy of letter from independent accountants' regarding
unaudited interim financial information
Item 27. - Financial Data Schedule (EDGAR Filing Only)
(b) Reports on Form 8-K
The registrant filed a Form 8-K dated November 29, 1995 with the
Securities and Exchange Commission. The filing disclosed that on
November 29, 1995, Rite Aid Corporation (the "Registrant") and its
wholly owned subsidiary, Ocean Acquisition Corporation (the
"Purchaser"), entered into an Agreement and Plan of Merger (the "Merger
Agreement") with Revco D.S., Inc. ("Revco") which provides for the
merger of the Purchaser with and into Revco and for the Purchaser to
make a cash tender offer (the "Offer") for at least 50.1% of the
outstanding shares of common stock, par value $.01, of Revco (the
"Shares") on a fully diluted basis at a price of $27.50 per Share.
Pursuant to the Merger Agreement, the Offer will be followed by a
second-step merger in which each Share not acquired in the Offer will be
converted into the right to receive the Registrant's common stock, par
value $1.00 per share, and/or, under certain circumstances, cash.
-12-
<PAGE> 14
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RITE AID CORPORATION
FORM 10-Q
FOR THE THIRTEEN WEEKS ENDED DECEMBER 2, 1995
- ---------------------------------------------------------------------------
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
RITE AID CORPORATION
(Registrant)
Date: December 26, 1995 /S/ Frank Bergonzi
------------------------- ------------------------
Frank Bergonzi
Executive Vice President,
Chief Financial Officer
-13-
<PAGE> 1
EXHIBIT 11
RITE AID CORPORATION AND SUBSIDIARIES
STATEMENT RE COMPUTATION OF PER SHARE EARNINGS
THIRTY-NINE WEEKS ENDED DECEMBER 2, 1995 AND NOVEMBER 26, 1994
(In Thousands Except Per Share Amounts)
<TABLE>
<CAPTION>
1996 1995
---- ----
<S> <C> <C>
Earnings Per Common Share-Assuming No Dilution
- ----------------------------------------------
Net Income $101,953 $ 88,032
======== ========
Weighted average number of common shares
outstanding 83,816 84,977
======== ========
Primary earnings per common share $1.22 $1.04
======== ========
Earnings Per Common Share-Assuming Full Dilution
- ------------------------------------------------
Earnings
Net Income $101,953 $ 88,032
Add after tax interest expense applicable to 6 3/4%
convertible notes (a) 5,845 5,458
-------- --------
Net income as adjusted $107,798 $ 93,490
======== ========
Shares
Weighted average number of common shares
outstanding 83,816 84,977
Assuming conversion of 6 3/4% convertible
notes 6,395 6,395
Assuming exercise of options reduced by the number
of shares which could have been purchased with the
proceeds from exercise of such options 747 741
-------- --------
Weighted average number of common shares outstanding
as adjusted 90,958 92,113
======== ========
Earnings per common share assuming full dilution $1.19(b) $1.01(b)
===== =====
</TABLE>
(a) Shown net of income taxes which were calculated at the company's
effective tax rate.
(b) This calculation is submitted in accordance with Regulation S-K item 601
(b)(11) although not required by APB Opinion No. 15 since dilution is less
than 3%.
<PAGE> 2
EXHIBIT 11
RITE AID CORPORATION AND SUBSIDIARIES
STATEMENT RE COMPUTATION OF PER SHARE EARNINGS
THIRTEEN WEEKS ENDED DECEMBER 2, 1995 AND NOVEMBER 26, 1994
(In Thousands Except Per Share Amounts)
<TABLE>
<CAPTION>
1996 1995
---- ----
<S> <C> <C>
Earnings Per Common Share-Assuming No Dilution
- ----------------------------------------------
Net Income $ 32,660 $ 26,928
======== ========
Weighted average number of common shares outstanding 83,758 84,291
======== ========
Primary earnings per common share $.39 $.32
======== ========
Earnings Per Common Share-Assuming Full Dilution
- ------------------------------------------------
Earnings
Net Income $ 32,660 $ 26,928
Add after tax interest expense applicable to 6 3/4%
convertible notes (a) 1,954 1,879
-------- --------
Net income as adjusted $ 34,614 $ 28,807
======== ========
Shares
Weighted average number of common shares outstanding 83,758 84,291
Assuming conversion of 6 3/4% convertible notes 6,395 6,395
Assuming exercise of options reduced by the number
of shares which could have been purchased with the
proceeds from exercise of such options 747 741
-------- --------
Weighted average number of common shares outstanding
as adjusted 90,900 91,427
======== ========
Earnings per common share assuming full
dilution $.38(b) $.32(b)
==== ====
</TABLE>
(a) Shown net of income taxes which were calculated at the company's
effective tax rate.
(b) This calculation is submitted in accordance with Regulation S-K item 601
(b)(11) although not required by APB Opinion No. 15 since dilution is less
than 3%.
<PAGE> 1
Exhibit 15
(KPMG PEAT MARWICK LLP LETTERHEAD)
Rite Aid Corporation
Camp Hill, Pennsylvania
Gentlemen:
Re: Registration Statement No. 2-87981; and No. 33-61185
With respect to the subject registration statements, we acknowledge our
awareness of the incorporation by reference therein of our report dated
December 26, 1995 related to our review of interim financial information.
Pursuant to Rule 436(c) under the Securities Act of 1933, such report is not
considered a part of a registration statement prepared or certified by an
accountant or a report prepared or certified by an accountant within the
meaning of Sections 7 and 11 of the Act.
Very truly yours,
KPMG PEAT MARWICK LLP
Harrisburg, Pennsylvania
December 26, 1995
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
RITE AID CORPORATION AND SUBSIDIARIES EXHIBIT 27
ARTICLE 5 FINANCIAL DATA SCHEDULES
FORM 10-Q
THIRD QUARTER ENDED DECEMBER 2, 1995
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> MAR-02-1996
<PERIOD-END> DEC-02-1995
<CASH> 28,273
<SECURITIES> 0
<RECEIVABLES> 256,416
<ALLOWANCES> 5,108
<INVENTORY> 1,218,234
<CURRENT-ASSETS> 1,535,077
<PP&E> 1,575,700
<DEPRECIATION> 677,406
<TOTAL-ASSETS> 2,791,902
<CURRENT-LIABILITIES> 687,745
<BONDS> 971,253
<COMMON> 90,291
0
0
<OTHER-SE> 969,392
<TOTAL-LIABILITY-AND-EQUITY> 2,791,902
<SALES> 4,015,036
<TOTAL-REVENUES> 4,015,036
<CGS> 2,960,998
<TOTAL-COSTS> 2,960,998
<OTHER-EXPENSES> 837,629
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 49,546
<INCOME-PRETAX> 166,863
<INCOME-TAX> 64,910
<INCOME-CONTINUING> 101,953
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 101,953
<EPS-PRIMARY> 1.22
<EPS-DILUTED> 1.19
</TABLE>
