<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 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 August 31, 1996
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 AUGUST 31, 1996
--------------------- ------------------
<S> <C>
$1.00 PAR VALUE 83,909,074 SHARES
</TABLE>
Total number of sequentially numbered pages in this filing, including exhibits
thereto: 18 .
1
<PAGE> 2
RITE AID CORPORATION
INDEX
<TABLE>
<S> <C>
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements:
Condensed Consolidated Balance Sheets as of August 31, 1996
and March 2, 1996 . . . . . . . . . . . . . . . . . . . . . . .2
Condensed Consolidated Statements of Income Twenty-Six
Weeks Ended August 31, 1996 and September 2, 1995. . . . . . . .4
Condensed Consolidated Statements of Income Thirteen
Weeks Ended August 31, 1996 and September 2, 1995 . . . . . . . 5
Condensed Consolidated Statements of Cash Flows
Twenty-Six Weeks Ended August 31, 1996 and
September 2, 1995 . . . . . . . . . . . . . . . . . . . . . . . 6
Notes to Condensed Consolidated Financial Statements . . . . . 7
Independent Auditors' Report . . . . . . . . . . . . . . . . . 8
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations . . . . . . . . . . . . . . 9
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K . . . . . . . . . . . . . . . 12
</TABLE>
2
<PAGE> 3
RITE AID CORPORATION
FORM 10-Q
FOR THE THIRTEEN WEEKS ENDED AUGUST 31, 1996
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements:
RITE AID CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEET
(Dollars in Thousands)
<TABLE>
<CAPTION>
ASSETS AUGUST 31, 1996 MARCH 2, 1996
- ------ --------------- -------------
(UNAUDITED)
<S> <C> <C>
Current Assets
Cash $ 9,407 $ 3,131
Accounts Receivable, Net 248,038 246,966
Inventories 1,222,105 1,170,747
Prepaid Expenses and Other
Current Assets 40,917 44,204
---------- ----------
Total Current Assets 1,520,467 1,465,048
---------- ----------
Property, Plant and Equipment 1,888,234 1,677,510
Less: Accumulated Depreciation and
Amortization 746,100 697,961
---------- ----------
Total Property, Plant & Equipment, Net 1,142,134 979,549
---------- ----------
Intangible Assets
Excess of Cost Over Underlying Equity in
Subsidiaries (less accumulated amortiza-
tion of $11,248 and $9,619) 151,321 141,266
Lease Acquisition Costs and Other
Intangible Assets (less accumulated
amortization of $125,688 and $115,430) 221,002 197,129
---------- ----------
Total Intangible Assets 372,323 338,395
---------- ----------
Other Assets 67,557 59,003
---------- ----------
Total Assets $3,102,481 $2,841,995
========== ==========
</TABLE>
See accompanying independent auditors' report and notes to condensed
consolidated financial statements.
3
<PAGE> 4
RITE AID CORPORATION
FORM 10-Q
FOR THE THIRTEEN WEEKS ENDED AUGUST 31, 1996
Item 1. Financial Statements: (Continued)
RITE AID CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEET
(Dollars in Thousands)
<TABLE>
<CAPTION>
LIABILITIES AUGUST 31, 1996 MARCH 2, 1996
- ----------- --------------- -------------
(UNAUDITED)
<S> <C> <C>
Current Liabilities
Short-Term Debt and
Current Maturities of Long-
Term Debt $ 58,344 $ 232,811
Accounts Payable 253,305 271,782
Income Taxes 68,580 42,463
Sales and Other Taxes Payable 13,519 13,913
Accrued Expenses 66,153 50,158
Reserve for Restructuring and
Other Charges 4,222 18,872
---------- ----------
Total Current Liabilities 464,123 629,999
---------- ----------
Long-Term Debt, Less Current Maturities 1,382,859 994,321
---------- ----------
Deferred Income Taxes 113,862 114,056
---------- ----------
Total Liabilities 1,960,844 1,738,376
---------- ----------
Stockholders' Equity
Common Stock 90,441 90,380
Additional Paid-In Capital 63,713 62,623
Retained Earnings 1,092,662 1,055,795
Cumulative Pension Liability Adjustments (433) (433)
Treasury Stock, At Cost (104,746) (104,746)
---------- ----------
Total Stockholders' Equity 1,141,637 1,103,619
---------- ----------
Total Liabilities and
Stockholders' Equity $3,102,481 $2,841,995
========== ==========
</TABLE>
See accompanying independent auditors' report and notes to condensed
consolidated financial statements.
4
<PAGE> 5
RITE AID CORPORATION
FORM 10-Q
FOR THE THIRTEEN WEEKS ENDED AUGUST 31, 1996
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>
TWENTY-SIX TWENTY-SIX
WEEKS ENDED WEEKS ENDED
AUGUST 31, 1996 SEPTEMBER 2, 1995
--------------- -----------------
<S> <C> <C>
NET SALES $2,828,378 $2,683,240
COSTS AND EXPENSES
Cost of Goods Sold Including
Occupancy Costs 2,084,762 1,975,544
Selling, General and
Administrative Expenses 580,451 561,255
Interest Expense 37,199 33,031
Nonrecurring Charge Related to
Revco D.S., Inc. Acquisition Costs 16,057 -
---------- ----------
2,718,469 2,569,830
---------- ----------
Income Before Income Taxes 109,909 113,410
Income Taxes 41,984 44,117
---------- ----------
NET INCOME $ 67,925 $ 69,293
========== ==========
EARNINGS PER SHARE $.81 $.83
==== ====
CASH DIVIDENDS PER COMMON SHARE $.37 $.34
==== ====
AVERAGE SHARES OUTSTANDING 83,878,000 83,844,000
</TABLE>
See accompanying independent auditors' report and notes to condensed
consolidated financial statements.
5
<PAGE> 6
RITE AID CORPORATION
FORM 10-Q
FOR THE THIRTEEN WEEKS ENDED AUGUST 31, 1996
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
AUGUST 31, 1996 SEPTEMBER 2, 1995
--------------- -----------------
<S> <C> <C>
NET SALES $1,423,076 $1,328,399
COSTS AND EXPENSES
Cost of Goods Sold Including
Occupancy Costs 1,050,635 979,333
Selling, General and
Administrative Expenses 296,060 281,804
Interest Expense 19,412 16,775
---------- ----------
1,366,107 1,277,912
---------- ----------
Income Before Income Taxes 56,969 50,487
Income Taxes 21,760 19,577
---------- ----------
NET INCOME $ 35,209 $ 30,910
========== ==========
EARNINGS PER SHARE $.42 $.37
==== ====
CASH DIVIDENDS PER COMMON SHARE $.185 $.17
===== ====
AVERAGE SHARES OUTSTANDING 83,890,000 83,758,000
</TABLE>
See accompanying independent auditors' report and notes to condensed
consolidated financial statements.
6
<PAGE> 7
RITE AID CORPORATION
FORM 10-Q
FOR THE THIRTEEN WEEKS ENDED AUGUST 31, 1996
Item 1. Financial Statements: (Continued)
RITE AID CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
(Dollars in Thousands)
(UNAUDITED)
<TABLE>
<CAPTION>
TWENTY-SIX TWENTY-SIX
WEEKS ENDED WEEKS ENDED
AUGUST 31, 1996 SEPTEMBER 2, 1995
--------------- -----------------
<S> <C> <C>
Operating Activities
Income from Continuing Operations
Before Income Taxes $ 109,909 $ 113,410
Depreciation and Amortization 70,397 56,876
Accreted Interest on Zero Coupon Notes 6,588 6,368
Changes in Operating Assets and Liabilities,
Net of Effects from Acquisitions (57,631) (86,072)
--------- ---------
129,263 90,582
Discontinued Operations
Income from Operations Before Income Taxes - 190
Depreciation and Amortization - 700
--------- ---------
- 890
Income Taxes Paid (16,391) (29,322)
--------- ---------
Net Cash Provided by Operations 112,872 62,150
--------- ---------
Investing Activities
Purchase of Property, Plant and Equipment (216,309) (123,766)
Purchase of Businesses, Net of Cash Acquired (25,771) (84,385)
Intangible Assets Acquired (33,298) (16,330)
Proceeds from Dispositions - 136,357
Other (8,794) (3,637)
--------- ---------
Net Cash Used by Investing Activities (284,172) (91,761)
--------- ---------
Financing Activities
Proceeds from Sale of Senior Notes - 197,702
Proceeds (Payments) of Commercial Paper 221,645 (79,920)
Payments of Long-Term Debt (14,143) (44,980)
Cash Dividends Paid (31,058) (28,494)
Acquisition of Stock for Treasury - (8,969)
Proceeds from the Sale of Stock 1,132 470
--------- ---------
Net Cash Provided by Financing Activities 177,576 35,809
--------- ---------
Increase in Cash $ 6,276 $ 6,198
========= =========
</TABLE>
See accompanying independent auditors' report and notes to condensed
consolidated financial statements.
7
<PAGE> 8
RITE AID CORPORATION
FORM 10-Q
FOR THE THIRTEEN WEEKS ENDED AUGUST 31, 1996
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, independent
auditors, commenting upon their review accompanies the condensed
consolidated financial statements included in Item 1 of Part I.
The results of operations for the twenty-six weeks and thirteen weeks
ended August 31, 1996 and September 2, 1995 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 - NONRECURRING CHARGE
On April 17, 1996, the Federal Trade Commission (FTC) voted to deny
approval of Rite Aid's proposed acquisition with Revco D.S., Inc. As
a result of the FTC's action, Rite Aid charged approximately
$16,057,000 against earnings for costs related to the proposed
acquisition in the first quarter of the current fiscal year. The
charge had the effect of reducing net income approximately $.12 per
share for the twenty-six week period ended August 31, 1996.
NOTE 4 - COMMITMENTS AND CONTINGENCIES
The company had standby letters of credit of $33,900,000 and
$33,188,000 at August 31, 1996 and March 2, 1996, 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.
8
<PAGE> 9
RITE AID CORPORATION
FORM 10-Q
FOR THE THIRTEEN WEEKS ENDED AUGUST 31, 1996
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 August 31, 1996, and the related condensed
consolidated statements of income for the twenty-six and thirteen week periods
ended August 31, 1996 and September 2, 1995, and the condensed consolidated
statements of cash flows for the twenty-six week periods ended August 31, 1996
and September 2, 1995. 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 2, 1996, 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 24, 1996, 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 2, 1996, is fairly stated, in all material respects,
in relation to the consolidated balance sheet from which it has been derived.
KPMG PEAT MARWICK LLP
Harrisburg, Pennsylvania
October 4, 1996
9
<PAGE> 10
RITE AID CORPORATION
FORM 10-Q
FOR THE THIRTEEN WEEKS ENDED AUGUST 31, 1996
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations:
Net sales for the thirteen-week and twenty-six week periods ended August 31,
1996 were $1,423,076,000 and $2,828,378,000, respectively, representing
increases of 7.1% and 5.4% over the same periods from the previous year.
Same-store sales increased 7.1% for the thirteen weeks and 6.9% year to date
compared to 6.8% and 7.1% for the comparable periods last year. Revenues a
year ago included sales of approximately $69,000,000 for the second quarter
from the 183 stores which were sold or closed in the Florida, Massachusetts and
Rhode Island markets and the nursing home line of business. Excluding the
revenues from these dispositions, the adjusted sales increases for the quarter
would have been approximately 13%. As of August 31, 1996, the company operated
2,796 stores.
Cost of goods sold including occupancy costs, as a percentage of sales, was
73.8% for the quarter and 73.7% for the year-to-date period compared to 73.7%
and 73.6% for the respective periods a year earlier. Following the industry
trend, a growing percentage of prescription sales are paid for by third-party
plans. These third-party sales typically provide a lower gross margin than
other pharmacy sales. Historically, the company has reported the portion of
prescription sales reimbursed by entities other than the customers as
third-party sales. Co-payment amounts required to be paid by the customers
under third-party plans were not included in the third-party sales figures. In
order to present third-party sales information in a manner consistent for
industry comparisons, the company has elected to begin reporting the total
sales controlled by third-party or managed care entities, including the
customers' co-payments and third-party cash card programs, as third-party
sales. The ratios of third-party to total pharmacy sales under the restated
method compared to the previous method of reporting is as follows:
<TABLE>
<CAPTION>
Fiscal 1997 Fiscal 1996
Restated Previous Restated Previous
-------- -------- -------- --------
<S> <C> <C> <C> <C>
First Quarter 78.6% 64.5% 74.0% 60.6%
Second Quarter 79.0% 65.2% 74.0% 62.3%
Twenty-Six Weeks 78.8% 64.7% 74.0% 61.6%
Third Quarter 75.7% 64.0%
Thirty-Nine Weeks 74.6% 62.3%
Fourth Quarter 76.9% 63.0%
Fiscal Year 75.3% 62.8%
</TABLE>
The company was able to offset the effect of greater third-party sales somewhat
through a favorable front-end sales mix, increasing sales of generic versus
brand drugs, stabilizing margins in third party plans and the discontinuance of
the nursing home line of business last year which was realizing lower margins.
Selling, general and administrative costs of $296,000,000 for the quarter and
$580,451,000 year to date were 20.8% and 20.5% of sales, respectively. This
compares favorably to 21.2% and 20.9% for the respective periods in the
previous year. The decrease demonstrates the benefits of the company's
continuing cost control efforts at all levels of the organization and the
elimination of overhead costs related to the Florida and New England stores
which historically had higher operating expense to sales ratios.
10
<PAGE> 11
RITE AID CORPORATION
FORM 10-Q
FOR THE THIRTEEN WEEKS ENDED AUGUST 31, 1996
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations: (CONTINUED)
Interest expense was $19,412,000 for the thirteen week period and $37,199,000
for the twenty-six week period this year compared to $16,775,000 and
$33,031,000 for the respective periods last year. The higher expense resulted
from increased debt which is being used to support store construction,
expansion and relocations, fund working capital for the larger prototype stores
being built; and the purchase of independent drugstores and smaller drugstore
chains. The impact of the higher indebtedness was offset by slightly lower
weighted average rates on the company's commercial paper of approximately 5.5%
for the quarter and year-to-date periods compared to 6.0% for the quarter and
6.1% for the twenty-six week period in the prior year.
During the first quarter of fiscal 1997, the company recorded a nonrecurring,
pre-tax charge of $16,057,000 to write off the costs associated with the
proposed acquisition of Revco D. S., Inc. The charge reflected legal fees
incurred in conjunction with settling federal and state issues regarding the
proposed merger, professional fees to prepare economic analyses for the Federal
Trade Commission, costs incurred to arrange financing for the merger, and
consulting fees for information system integration to provide compatibility
between systems and accommodate the increased volume of activity.
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 remaining stores with leases which
have not been terminated. Where favorable terms cannot be agreed upon, the
company will endeavor to sublet the locations until the leases expire.
Working capital was $1,056,344,000 at August 31, 1996 compared to $898,295,000
at September 2, 1995 and the current ratios were 3.3:1 and 2.9:1 respectively.
Cash from operations is used to support current operations, fund dividend
distributions to shareholders and contribute to investing activities including
store expansion and acquisitions. For the twenty-six week period ended August
31, 1996, cash from operations and working capital were impacted primarily by
increased inventories. The rise in inventories was due principally to the
nonrenewal of a wholesaler contract to carry and supply pharmaceuticals to
stores in the Michigan market. As a result, the company is now carrying
increased stock levels at its distribution centers for servicing the Michigan
stores which had previously been serviced by that wholesaler.
On July 24, 1996, certain holders of the company's 6 3/4% zero coupon
subordinated convertible notes exercised the right to tender their notes at a
price of $514.86 which was equal to the issue price plus accrued original
discount. The company redeemed approximately 27,400 of the notes.
11
<PAGE> 12
RITE AID CORPORATION
FORM 10-Q
FOR THE THIRTEEN WEEKS ENDED AUGUST 31, 1996
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations: (CONTINUED)
During the second quarter, the company entered into a five-year $1 billion
revolving credit commitment to provide additional borrowing capacity and
support its commercial paper program. This new commitment replaces the
company's $600,000,000 revolving credit commitment which consisted of a
$250,000,000 364-day facility and a $350,000,000 five-year credit facility.
This new credit facility has an .085% per annum facility fee irrespective of
usage. The increased facility allowed the company to expand its commercial
paper program which is used for general corporate purposes including financing
the company's store expansion, relocation, construction and acquisition
programs. During the quarter, the company added 49 drugstores, closed 20
smaller outlets, enlarged 15 locations and relocated 36 units. Since the
beginning of the fiscal year, the company has added 67 stores, closed 30
outlets, enlarged 24 locations and relocated 62 units. The company also has
shelf registration statements filed on Forms S-3 which provide the ability to
issue up to $400 million in debt securities.
12
<PAGE> 13
RITE AID CORPORATION
FORM 10-Q
FOR THE THIRTEEN WEEKS ENDED AUGUST 31, 1996
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)
13
<PAGE> 14
RITE AID CORPORATION
FORM 10-Q
FOR THE THIRTEEN WEEKS ENDED AUGUST 31, 1996
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: October 9, 1996 /S/ FRANK BERGONZI
------------------------- -------------------------
Frank Bergonzi
Executive Vice President,
Chief Financial Officer
14
<PAGE> 1
EXHIBIT 11
RITE AID CORPORATION AND SUBSIDIARIES
STATEMENT RE COMPUTATION OF PER SHARE EARNINGS
TWENTY-SIX WEEKS ENDED AUGUST 31, 1996 AND SEPTEMBER 2, 1995
(In Thousands Except Per Share Amounts)
<TABLE>
<CAPTION>
1996 1995
---- ----
<S> <C> <C>
Earnings Per Common Share-Assuming No Dilution
- ----------------------------------------------
Net Income $ 67,925 $ 69,293
======== ========
Weighted average number of common shares outstanding 83,878 83,844
======== ========
Primary earnings per common share $.81 $.83
==== ====
Earnings Per Common Share-Assuming Full Dilution
- ------------------------------------------------
Earnings
Net Income $ 67,925 $ 69,293
Add after tax interest expense applicable to
6 3/4% convertible notes (a) 4,071 3,891
-------- --------
Net income as adjusted $ 71,996 $ 73,184
======== ========
Shares
Weighted average number of common shares outstanding 83,878 83,844
Assuming conversion of 6 3/4% convertible notes 5,953 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 714 758
-------- --------
Weighted average number of common shares outstanding
as adjusted 90,545 90,997
======== ========
Earnings per common share assuming full dilution $.80(b) $.80(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%.
15
<PAGE> 2
EXHIBIT 11
RITE AID CORPORATION AND SUBSIDIARIES
STATEMENT RE COMPUTATION OF PER SHARE EARNINGS
THIRTEEN WEEKS ENDED AUGUST 31, 1996 AND SEPTEMBER 2, 1995
(In Thousands Except Per Share Amounts)
<TABLE>
<CAPTION>
1996 1995
---- ----
<S> <C> <C>
Earnings Per Common Share-Assuming No Dilution
- ----------------------------------------------
Net Income $ 35,209 $ 30,910
======== ========
Weighted average number of common shares outstanding 83,890 83,758
======== ========
Primary earnings per common share $.42 $.37
==== ====
Earnings Per Common Share-Assuming Full Dilution
- ------------------------------------------------
Earnings
Net Income $ 35,209 $ 30,910
Add after tax interest expense applicable to
6 3/4% convertible notes (a) 2,073 1,951
-------- --------
Net income as adjusted $ 37,282 $ 32,861
======== ========
Shares
Weighted average number of common shares outstanding 83,890 83,758
Assuming conversion of 6 3/4% convertible notes 5,953 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 714 758
-------- --------
Weighted average number of common shares outstanding
as adjusted 90,557 90,911
======== ========
Earnings per common share assuming full dilution $.41(b) $.36(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%.
16
<PAGE> 1
Exhibit 15
(KPMG PEAT MARWICK LLP LETTERHEAD)
Rite Aid Corporation
Camp Hill, Pennsylvania
Gentlemen:
Re: Registration Statement No. 2-87981; No. 33-61185; and No. 333-8071
With respect to the subject registration statements, we acknowledge our
awareness of the incorporation by reference therein of our report dated October
4, 1996 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
October 4, 1996
17
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM RITE AID
CORPORATION AND SUBSIDIARIES ARTICLE 5 FINANCIAL DATA SCHEDULES FORM 10-Q AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH SECOND QUARTER ENDED AUGUST 31,
1996
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> MAR-01-1997
<PERIOD-END> AUG-31-1996
<CASH> 9,407
<SECURITIES> 0
<RECEIVABLES> 251,537
<ALLOWANCES> 3,499
<INVENTORY> 1,222,105
<CURRENT-ASSETS> 1,520,467
<PP&E> 1,888,234
<DEPRECIATION> 746,100
<TOTAL-ASSETS> 3,102,481
<CURRENT-LIABILITIES> 464,123
<BONDS> 1,382,859
0
0
<COMMON> 90,441
<OTHER-SE> 1,051,196
<TOTAL-LIABILITY-AND-EQUITY> 3,102,481
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<CGS> 2,084,762
<TOTAL-COSTS> 2,084,762
<OTHER-EXPENSES> 596,508
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<INTEREST-EXPENSE> 37,199
<INCOME-PRETAX> 109,909
<INCOME-TAX> 41,984
<INCOME-CONTINUING> 67,925
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<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 67,925
<EPS-PRIMARY> .81
<EPS-DILUTED> .80
</TABLE>
