<PAGE>
Filed Pursuant to Rule 424(b)(5)
Registration No. 333-63794
PROSPECTUS SUPPLEMENT TO PROSPECTUS DATED DECEMBER 3, 1996
$1,000,000,000
[LOGO OF RITE AID]
RITE AID CORPORATION
$350,000,000 6.70% NOTES DUE DECEMBER 15, 2001
$350,000,000 7.125% NOTES DUE JANUARY 15, 2007
$300,000,000 7.70% DEBENTURES DUE FEBRUARY 15, 2027
----------------
The 6.70% Notes Due December 15, 2001 (the "6.70% Notes"), the 7.125% Notes
Due January 15, 2007 (the "7.125% Notes") and the 7.70% Debentures Due
February 15, 2027 (the "7.70% Debentures" and collectively with the 6.70%
Notes and the 7.125% Notes, the "Offered Debt Securities" or the "Securities")
will be unsecured obligations of Rite Aid Corporation (the "Company" or "Rite
Aid"). Interest on the 6.70% Notes is payable semiannually on June 15 and
December 15 of each year, commencing June 15, 1997; interest on the 7.125%
Notes is payable semiannually on July 15 and January 15 of each year,
commencing July 15, 1997; and interest on the 7.70% Debentures is payable
semiannually on August 15 and February 15 of each year, commencing August 15,
1997. The Securities will not be redeemable prior to maturity and will not be
subject to any sinking fund. See "Description of the Securities" in this
Prospectus Supplement.
Each tranche of the Offered Debt Securities will be represented by global
securities ("Global Securities") registered in the name of The Depository
Trust Company ("DTC") or its nominee. Interests in the Global Securities will
be shown on, and transfer thereof will be effected only through, records
maintained by DTC and its participants. Except as described in "Description of
the Securities--Book-Entry Securities," Offered Debt Securities in definitive
form will not be issued.
----------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS SUPPLEMENT OR
THE PROSPECTUS TO WHICH IT RELATES. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
----------------
<TABLE>
<CAPTION>
INITIAL PUBLIC UNDERWRITING PROCEEDS TO
OFFERING PRICE(1) DISCOUNT(2) COMPANY(1)(3)
----------------- ------------ -------------
<S> <C> <C> <C>
Per 6.70% Note Due December 2001.. 99.977% 0.600% 99.377%
Total............................. $349,919,500 $2,100,000 $347,819,500
Per 7.125% Note Due January 2007.. 99.871% 0.650% 99.221%
Total............................. $349,548,500 $2,275,000 $347,273,500
Per 7.70% Debenture Due February
2027............................. 99.716% 0.875% 98.841%
Total............................. $299,148,000 $2,625,000 $296,523,000
</TABLE>
- --------
(1) Plus accrued interest, if any, from December 20, 1996.
(2) The Company has agreed to indemnify the Underwriters against certain
liabilities, including certain liabilities under the Securities Act of
1933.
(3) Before deducting estimated expenses of $300,000 payable by the Company.
----------------
The Securities offered hereby are offered by the Underwriters, as specified
herein, subject to receipt and acceptance by them and subject to their right
to reject any order in whole or in part. It is expected that the Securities
will be ready for delivery in book-entry form only through the facilities of
DTC in New York, New York on or about December 20, 1996, against payment
therefor in immediately available funds.
GOLDMAN, SACHS & CO. DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION
BEAR, STEARNS & CO. INC. J.P. MORGAN & CO.
RAYMOND JAMES & ASSOCIATES, INC.
----------------
The date of this Prospectus Supplement is December 17, 1996.
<PAGE>
IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS MAY OVER-ALLOT OR EFFECT
TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE SECURITIES
OFFERED HEREBY AT LEVELS ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN
MARKET. SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME.
----------------
THE COMPANY
The following summary of the business of the Company is qualified in its
entirety by and should be read together with the more detailed information and
financial statements included or incorporated by reference in this Prospectus
Supplement and the accompanying Prospectus.
Rite Aid, incorporated in 1968, is one of the largest retail drugstore
chains in the United States. As of November 30, 1996, Rite Aid operated 2,788
drugstores, averaging within a range of approximately 7,200 to 11,000 square
feet per store in size, in 20 states and the District of Columbia and employed
over 36,000 employees. Pharmacy service forms the core of Rite Aid's business,
with prescriptions accounting for 56.4% of drugstore sales in the 26-week
period ended August 31, 1996. Rite Aid's drugstores cater to convenience,
offering a full selection of health and personal care products, seasonal
merchandise and a large private label product line. Express mail with
complementary services and one-hour photo departments have recently been added
in select locations. Rite Aid's Eagle Managed Care Corp. subsidiary markets
prescription plans and sells other managed health care services to large
employers and government-sponsored employee benefit programs. As described
below, on December 12, 1996, Rite Aid acquired Thrifty PayLess Holdings, Inc.
("Thrifty PayLess") pursuant to a merger of Thrifty PayLess into Rite Aid (the
"Thrifty PayLess Merger").
Rite Aid's strategy is to operate drugstores in large, fast-growing
metropolitan areas. Giving effect to the Thrifty PayLess Merger and the
Southeast Dispositions described below, Rite Aid is the largest drugstore
operator in the United States in terms of store count, operating in 26 states
and the District of Columbia. Of the 50 largest metropolitan statistical areas
("MSAs") in the United States, Rite Aid operates in 25 and is the largest or
second largest drugstore operation in 21 of those MSAs. On October 13, 1996,
in connection with the announcement of the agreement providing for the Thrifty
PayLess Merger, Rite Aid also announced that it plans to dispose of all of its
270 stores in Alabama, Florida, Georgia and North and South Carolina
(collectively, the "Southeast Dispositions"). The Company has entered into an
agreement to sell its approximately 200 stores in North and South Carolina to
Thrift Drug, Inc.
Rite Aid is a Delaware corporation with its principal executive offices
located at 30 Hunter Lane, Camp Hill, Pennsylvania 17011. The telephone number
of Rite Aid at such offices is (717) 761-2633.
RECENT DEVELOPMENTS
THE THRIFTY PAYLESS MERGER
Pursuant to the Thrifty PayLess Merger, among other things, each share of
Thrifty PayLess Common Stock was converted into the right to receive 0.65
shares of Common Stock of Rite Aid, and Thrifty PayLess was merged into Rite
Aid. Thrifty PayLess is the largest drugstore chain in the western United
States. As of September 29, 1996, Thrifty PayLess operated over 1,000
drugstores located in California, Oregon, Washington and eight other western
states. Thrifty PayLess' stores average approximately 17,500 square feet of
selling space, and it has over 31,000 employees. Thrifty PayLess' primary
focus is the sale of prescription drugs, which represented 33% of Thrifty
PayLess' total sales in its fiscal year ended September 29, 1996. Thrifty
PayLess drugstores also offer a wide variety of
S-2
<PAGE>
non-pharmacy merchandise, including health and beauty aids, cosmetics,
photofinishing, greeting cards, school and office supplies, seasonal
merchandise, general merchandise and consumable products such as snack food,
candy, ice cream and beverages, including liquor where permitted. Thrifty
PayLess' Bi-Mart Corporation subsidiary ("Bi-Mart") presently operates a chain
of 45 Bi-Mart membership discount stores, which the Company intends to divest
following the Thrifty PayLess Merger.
As soon as is reasonably practicable, Rite Aid expects to rename Thrifty
PayLess stores "Rite Aid" and integrate them with Rite Aid's operations, to
refinance substantially all of Thrifty PayLess' debt (to the extent
practicable) and to divest Bi-Mart. Rite Aid expects the elimination of
duplicative overhead expenses and the combined company's enhanced purchasing
efficiencies to result in annual cost savings of at least $65.0 million. Rite
Aid also believes that there are other cost-saving opportunities presented by
the Thrifty PayLess Merger (including lowering Thrifty PayLess' historical
debt expense, distribution costs and inventory shrinkage rate), as well as
opportunities for enhanced revenue growth from the increased scale of
operations and geographic diversity resulting from the Thrifty PayLess Merger.
In addition, the application of Rite Aid's systems and technology to Thrifty
PayLess' operations should result in greater efficiencies.
CERTAIN FINANCINGS RELATED TO THE THRIFTY PAYLESS MERGER
In connection with the Thrifty PayLess Merger, the Company entered into a
new revolving credit facility (the "Credit Facility") with a syndicate of
commercial banks that provides for loans in an aggregate amount of up to $1.0
billion. The Credit Facility is a revolving credit facility that converts in
December 1997 to a term loan that will mature in December 1998. The funds for
the repayment of Thrifty PayLess' outstanding obligations under its secured
bank facility (approximately $718.1 million aggregate principal amount at
December 12, 1996), the conversion of outstanding Thrifty PayLess stock
options into cash upon consummation of the Thrifty PayLess Merger
(approximately $46.3 million) and the payment of certain fees and expenses
relating to the Thrifty PayLess Merger (estimated at $30.0 million) were
provided through the issuance of commercial paper. The net proceeds of the
sale of the Offered Debt Securities will be used to repay commercial paper
issued in connection with the Thrifty PayLess Merger and to refinance other
commercial paper previously issued by the Company. See "Use of Proceeds."
As a result of the Thrifty PayLess Merger, the Company is obligated to offer
to repurchase all outstanding 12 1/4% Senior Subordinated Notes due 2004 of a
subsidiary of Thrifty PayLess acquired by the Company in the Thrifty PayLess
Merger (the "TPL Sub Debt") (approximately $195.0 million aggregate principal
amount) at 101% of the principal amount thereof (the "Event Risk Price").
However, prior to the announcement of the Thrifty PayLess Merger, the TPL Sub
Debt traded at prices above the Event Risk Price and since that announcement
the TPL Sub Debt has generally traded at higher levels. The Company presently
intends to make an offer to purchase all of the TPL Sub Debt at a price that
would substantially exceed the Event Risk Price, but is expected to result in
an all-in reduction of the Company's interest expense for such indebtedness.
Any such offer to purchase would be subject to various conditions. There can
be no assurance that any such offer to purchase will be made or as to the
timing, terms or results thereof.
S-3
<PAGE>
RITE AID'S RESULTS OF OPERATIONS
On December 16, 1996, the Company announced its results of operations for
its third fiscal quarter ended November 30, 1996. For the quarter, net sales
increased 11.5% to $1,484.6 million, compared to $1,331.8 million for the
comparable quarter of last year. Net income for the Company's third fiscal
quarter rose 14.5% to $37.4 million from $32.7 million in the comparable
quarter of the prior year. For the Company's 39-week fiscal period ended
November 30, 1996, net sales increased 7.4% to $4,313.0 million from $4,015.0
million for the comparable period of the prior year. Net income for such
period, before the nonrecurring charge for costs associated with the Company's
attempted acquisition of Revco D. S. Inc. ("Revco"), was $115.3 million, an
increase of 13.0% compared to $102.0 million for the comparable period of last
year. Net income for the 39-week fiscal period ended November 30, 1996 was
$105.3 million after the pre-tax charge of $16.1 million to write off costs
associated with the attempted Revco acquisition. The Company's same-store
sales rose 7.8% for the Company's third quarter and 7.2% for the 39-weeks
ended November 30, 1996. During the third quarter of this year, the Company
added 51 drugstores, closed or sold 59 smaller drugstores and enlarged or
relocated 64 drugstores. During the 39-week fiscal period ended November 30,
1996, the Company added 118 drugstores, closed or sold 89 drugstores and
enlarged or relocated 150 drugstores.
THRIFTY PAYLESS' RESULTS OF OPERATIONS
On December 3, 1996, Thrifty PayLess announced results for its fourth fiscal
quarter and fiscal year ended September 29, 1996. For the quarter, Thrifty
PayLess' operating profit increased $49.0 million to $53.4 million, up from
$4.4 million in the same period of the prior fiscal year. Income before
extraordinary loss for Thrifty PayLess' fourth fiscal quarter was $19.9
million compared to a loss of $(26.8) million in the same period of the prior
fiscal year. For the quarter, sales increased 6.3% to $1,155.3 million from
$1,086.6 million in the same period of the prior fiscal year. Comparable
Thrifty PayLess store sales in the quarter increased 5.6% with pharmacy
comparable store sales up 13.2% and non-pharmacy merchandise comparable store
sales up 1.9%. For the fiscal year, Thrifty PayLess' operating profit
increased $78.8 million to $190.4 million or 4.0% of sales, up from $111.6
million or 2.4% of sales in the prior fiscal year. Income before extraordinary
loss was $44.0 million or $0.95 per share versus a loss of $(22.8) million or
$(0.65) per share in the prior fiscal year. An extraordinary loss of $(112.8)
million or $(2.43) per share, comprised of premiums, consents, fees and
expenses associated with the early extinguishment of debt, an element of
Thrifty PayLess' April 1996 public offering and recapitalization, was also
recognized in the current fiscal year. Sales advanced 3.0% to $4,798.9 million
from $4,658.8 million the prior fiscal year. Comparable Thrifty PayLess' store
sales for the fiscal year increased 3.3% with pharmacy comparable store sales
up 12.4% and non-pharmacy merchandise comparable store sales lower by 0.7%.
USE OF PROCEEDS
The net proceeds from the sale of the Offered Debt Securities, estimated to
be $991,316,000 (after estimated expenses), will be used to repay commercial
paper issued by the Company in connection with the Thrifty PayLess Merger (see
"Recent Developments--Certain Financings Related to the Thrifty PayLess
Merger") and to refinance other commercial paper previously issued by the
Company. The Company's commercial paper to be repaid has a weighted average
interest rate of approximately 5.5% per annum. Obligations repaid under
Thrifty PayLess' secured bank facility in connection with the Thrifty PayLess
Merger had an average interest rate of 7.2% per annum and an average maturity
of 31 days as of November 24, 1996; the TPL Sub Debt bears interest at an
annual rate of 12.25% and matures in 2004.
S-4
<PAGE>
CAPITALIZATION
The following table sets forth the capitalization of the Company (i) as of
August 31, 1996, (ii) as adjusted to reflect the consummation of the Pro Forma
Transactions (as described below under "Unaudited Pro Forma Condensed
Consolidated Financial Data"), other than the issuance of the Securities and
the use of the proceeds therefrom, and (iii) as adjusted to reflect on a pro
forma basis the issuance of the Securities offered hereby and the application
of the estimated proceeds therefrom as described under "Use of Proceeds."
<TABLE>
<CAPTION>
AS OF AUGUST 31, 1996
------------------------------
PRO FORMA
AS
ACTUAL PRO FORMA ADJUSTED
-------- --------- ---------
(IN MILLIONS)
<S> <C> <C> <C>
Short-term debt and current maturities of long-
term debt....................................... $ 58.3 $ 58.3 $ 58.3
-------- -------- --------
Long-term debt:
Commercial Paper............................... 747.6 1,678.6 678.6
7 5/8% Notes Due 2005.......................... 200.0 200.0 200.0
6 7/8% Debentures Due 2013..................... 200.0 200.0 200.0
0% Notes Due 2006 (1).......................... 193.1 193.1 193.1
6.70% Notes Due December 15, 2001 offered
hereby........................................ -- -- 350.0
7.125% Notes Due January 15, 2007 offered
hereby........................................ -- -- 350.0
7.70% Debentures Due February 15, 2027 offered
hereby........................................ -- -- 300.0
Other.......................................... 42.1 42.1 42.1
-------- -------- --------
Total long-term debt......................... 1,382.8 2,313.8 2,313.8
Stockholders' equity:
Common stock................................... 90.4 129.1 129.1
Additional paid-in capital..................... 63.3 1,362.0 1,362.0
Retained earnings.............................. 1,092.7 1,092.7 1,092.7
Treasury stock................................. (104.8) (104.8) (104.8)
-------- -------- --------
Total stockholders' equity................... 1,141.6 2,479.0 2,479.0
-------- -------- --------
Total capitalization............................. $2,582.7 $4,851.1 $4,851.1
======== ======== ========
</TABLE>
- --------
(1) Accreting interest at 6 3/4% per annum.
S-5
<PAGE>
RATIO OF EARNINGS TO FIXED CHARGES
The following table sets forth the ratio of earnings to fixed charges for
each of the last five fiscal years and for the 26-week period ended August 31,
1996.
<TABLE>
<CAPTION>
26 WEEKS
ENDED AUGUST MARCH 2, MARCH 4, FEB. 26, FEB. 27, FEB. 29,
31, 1996 1996 1995 1994 1993 1992
------------ -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Ratio of Earnings to
Fixed Charges.......... 2.62 3.08 3.78 1.66 3.97 3.55
</TABLE>
On a pro forma basis, assuming that the Pro Forma Transactions described
under the caption "Unaudited Pro Forma Condensed Consolidated Financial Data"
had occurred on March 5, 1995, the unaudited ratio of earnings to fixed
charges for the 26 weeks ended August 31, 1996 and the year ended March 2,
1996 would have been 1.92 and 2.17, respectively.
For purposes of computing the ratio of earnings to fixed charges, earnings
represent earnings from continuing operations before income taxes plus
interest expense on indebtedness, amortization of debt discount and premium
and the portion of rent expense deemed representative of an interest factor.
Fixed charges include interest on indebtedness (whether expensed or
capitalized), amortization of debt discount and premium and the portion of
rent expense deemed representative of an interest factor.
S-6
<PAGE>
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL DATA
The following Unaudited Pro Forma Condensed Consolidated Statements of
Operations for the 26 weeks ended August 31, 1996 and the fiscal year ended
March 2, 1996 present unaudited pro forma operating results for the Company as
if the Thrifty PayLess Merger and the other transactions described in the next
paragraph (the "Pro Forma Transactions") had occurred as of the beginning of
the periods presented. The following Unaudited Pro Forma Condensed
Consolidated Balance Sheet presents the unaudited pro forma financial
condition of the Company as if the Pro Forma Transactions had occurred as of
August 31, 1996. The excess of the purchase price of Thrifty PayLess over the
net identifiable assets and liabilities of Thrifty PayLess is reported as
goodwill. The carrying values of Thrifty PayLess' net assets are assumed to
equal their fair values for purposes of these unaudited pro forma condensed
consolidated financial statements unless indicated otherwise in the Notes to
Unaudited Pro Forma Condensed Consolidated Financial Data. These values are
subject to revision following the results of any appraisals after consummation
of the Thrifty PayLess Merger and related transactions.
The Pro Forma Transactions are: (i) the Thrifty PayLess Merger, which is
accounted for under the purchase method of accounting; (ii) the establishment
by the Company of the Credit Facility; (iii) the payment of $859.6 million of
outstanding Thrifty PayLess debt, the conversion of outstanding Thrifty
PayLess stock options into cash upon consummation of the Thrifty PayLess
Merger (estimated at $42.0 million) and the payment of certain fees and
expenses relating to the Thrifty PayLess Merger (estimated at $30.0 million),
through the issuance by the Company of commercial paper and subsequently
repaid through the issuance of the Securities, each as more fully described in
"Recent Developments--Certain Financings Related to the Thrifty PayLess
Merger," "Use of Proceeds" and in the accompanying Notes to Unaudited Pro
Forma Condensed Consolidated Financial Data; and (iv) the Southeast
Dispositions, the divestiture of Bi-Mart subsequent to the Thrifty PayLess
Merger and other adjustments described in the accompanying Notes to Unaudited
Pro Forma Condensed Consolidated Financial Data. While the pro forma
adjustments are based upon certain assumptions the Company considered
reasonable in the circumstances, final amounts will differ from those set
forth in the following unaudited pro forma condensed consolidated financial
data.
The unaudited pro forma condensed consolidated financial data does not
reflect any synergies expected to be realized after the Thrifty PayLess Merger
(because their realization cannot be assured) or costs related to the
Southeast Dispositions (as such costs are non-recurring). See "Recent
Developments--Certain Financings Related to the Thrifty PayLess Merger" for a
discussion of the $65 million of cost benefits and synergies estimated by the
Company's management to be realizable annually. The accompanying Notes to
Unaudited Pro Forma Condensed Consolidated Financial Data describe other
adjustments related to the Thrifty PayLess Merger.
THE UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL DATA IS PRESENTED
FOR INFORMATIONAL PURPOSES ONLY AND IS NOT NECESSARILY INDICATIVE OF THE
OPERATING RESULTS OR FINANCIAL POSITION THAT WOULD HAVE OCCURRED HAD THE
THRIFTY PAYLESS MERGER AND OTHER TRANSACTIONS DESCRIBED HEREIN BEEN
CONSUMMATED AT THE DATES INDICATED, NOR IS IT NECESSARILY INDICATIVE OF THE
FUTURE OPERATING RESULTS OR FINANCIAL POSITION OF THE COMPANY FOLLOWING THE
THRIFTY PAYLESS MERGER. SEE "CERTAIN FORWARD-LOOKING STATEMENTS" IN THIS
PROSPECTUS SUPPLEMENT.
The unaudited pro forma condensed consolidated financial data should be read
in conjunction with the consolidated financial statements of each of the
Company and Thrifty PayLess and the related notes thereto contained in (i) the
Company's Annual Report on Form 10-K for the year ended March 2, 1996, (ii)
the Company's Quarterly Report on Form 10-Q for the quarter ended August 31,
1996, (iii) the Company's Current Report on Form 8-K dated December 16, 1996,
(iv) Thrifty PayLess' Annual Report on Form 10-K for the year ended October 1,
1995, and (v) Thrifty PayLess' Quarterly Report on Form 10-Q for the quarter
ended June 30, 1996, all of which are incorporated herein by reference. See
"Available Information" and "Incorporation of Certain Documents by Reference"
in the accompanying Prospectus.
S-7
<PAGE>
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE 26 WEEKS ENDED AUGUST 31, 1996
(IN MILLIONS, EXCEPT SHARE AND PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
RITE AID THRIFTY PAYLESS
26 WEEKS 26 WEEKS
ENDED ENDED PRO FORMA PRO FORMA
AUGUST 31, 1996 JUNE 30, 1996 ADJUSTMENTS COMBINED
--------------- --------------- ----------- -----------
<S> <C> <C> <C> <C>
Net sales............... $ 2,828.4 $ 2,336.5 $ -- $ 5,164.9
Cost of goods sold,
including occupancy
costs.................. 2,084.8 1,727.5 -- 3,812.3
Selling, general and
administrative
expenses............... 580.4 550.6 11.6 (a) 1,142.6
Interest expense........ 37.2 59.5 (25.6)(b) 71.6
0.5 (c)
Nonrecurring charge
related to
the attempted
acquisition of Revco
D.S. Inc............... 16.1 -- -- 16.1
---------- ---------- ----------- -----------
2,718.5 2,337.6 (13.5) 5,042.6
---------- ---------- ----------- -----------
Income (loss) from
continuing operations
before income taxes(1). 109.9 (1.1) 13.5 122.3
Income taxes (benefit).. 42.0 (0.5) 9.6 (d) 51.1
---------- ---------- ----------- -----------
Net income (loss)(1).... $ 67.9 $ (0.6) $ 3.9 $ 71.2
========== ========== =========== ===========
Average shares
outstanding............ 83,878,000 59,502,000 (20,826,000)(k) 122,554,000
Earnings (loss) per
share(1)............... $ 0.81 $ (0.01) $ -- $ 0.58
========== ========== =========== ===========
</TABLE>
- --------
(1) For Thrifty PayLess, excludes extraordinary loss from early extinguishment
of debt.
See the accompanying Notes to Unaudited Pro Forma Condensed Consolidated
Financial Data.
S-8
<PAGE>
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE FISCAL YEAR ENDED MARCH 2, 1996
(IN MILLIONS, EXCEPT SHARE AND PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
THRIFTY PAYLESS
RITE AID 52 WEEKS ENDED
52 WEEKS ENDED DECEMBER 31, PRO FORMA PRO FORMA
MARCH 2, 1996 1995 ADJUSTMENTS COMBINED
-------------- --------------- ------------ ------------
<S> <C> <C> <C> <C>
Net sales............... $ 5,446.0 $ 4,664.5 $ -- $ 10,110.5
Cost of goods sold,
including occupancy
costs.................. 4,017.4 3,435.1 -- 7,452.5
Selling, general and
administrative
expenses............... 1,104.1 1,100.7 23.1 (a) 2,227.9
Interest expense........ 68.3 139.5 (71.6)(b) 137.2
1.0 (c)
----------- ----------- ------------ ------------
5,189.8 4,675.3 (47.5) 9,817.6
----------- ----------- ------------ ------------
Income (loss) from
continuing operations
before income taxes(1). 256.2 (10.8) 47.5 292.9
Income taxes............ 97.3 5.0 27.0 (d) 129.3
----------- ----------- ------------ ------------
Net income (loss)(1).... $ 158.9 $ (15.8) $ 20.5 $ 163.6
=========== =========== ============ ============
Average shares outstand-
ing.................... 83,808,000 59,502,000 (20,826,000)(k) 122,484,000
Earnings (loss) per
share(1)............... $ 1.90 $ (0.27) -- $ 1.34
=========== =========== ============ ============
</TABLE>
- --------
(1) For Thrifty PayLess, excludes extraordinary loss from early extinguishment
of debt.
See the accompanying Notes to Unaudited Pro Forma Condensed Consolidated
Financial Data.
S-9
<PAGE>
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
AS OF AUGUST 31, 1996
(IN MILLIONS)
<TABLE>
<CAPTION>
PRO FORMA
RITE AID ADJUSTMENTS
AUGUST 31, THRIFTY PAYLESS PRO FORMA FOR PRO FORMA
1996 JUNE 30, 1996 ADJUSTMENTS DISPOSITIONS(N) COMBINED
---------- --------------- ----------- --------------- ---------
<S> <C> <C> <C> <C> <C>
ASSETS
Cash.................... $ 9.4 $ 0.8 $ -- $ (2.0) $ 8.2
Accounts receivable,
net.................... 248.0 98.9 -- (19.4) 327.5
Inventories............. 1,222.1 1,097.0 28.0 (e) (159.6) 2,187.5
Other current assets.... 40.9 34.4 -- (2.5) 72.8
Current assets,
dispositions........... -- -- -- 183.5 183.5
-------- -------- -------- ------- --------
Total current assets.. 1,520.4 1,231.1 28.0 -- 2,779.5
-------- -------- -------- ------- --------
Property, plant &
equipment, net......... 1,142.1 560.1 123.0 (l) (61.7) 1,763.5
Intangible assets, net.. 372.3 133.4 1,036.9 (f) (6.6) 1,536.0
Other noncurrent assets. 67.6 50.7 8.9 (g) (2.9) 138.6
(18.3)(g)
32.6 (h)
Noncurrent assets,
dispositions........... -- -- 7.7 (h) 71.2 78.9
-------- -------- -------- ------- --------
Total assets.......... $3,102.4 $1,975.3 $1,218.8 $ -- $6,296.5
======== ======== ======== ======= ========
LIABILITIES AND
STOCKHOLDERS' EQUITY
Short-term debt and
current maturities of
long-term debt......... $ 58.3 $ 28.4 $ (28.4)(i) $ -- $ 58.3
Accounts payable........ 253.3 288.4 -- (31.4) 510.3
Other current
liabilities and
deferred taxes......... 152.5 381.7 24.0 (j) (25.2) 638.0
105.0 (m)
Other current
liabilities,
dispositions........... -- -- -- 56.6 56.6
-------- -------- -------- ------- --------
Total current
liabilities.......... 464.1 698.5 100.6 -- 1,263.2
-------- -------- -------- ------- --------
Long-term debt, net..... 1,382.8 836.1 76.3 (i) (5.5) 2,318.1
28.4 (i)
Deferred taxes.......... 113.9 (40.3) 10.8 (h) (13.7) 103.3
32.6 (h)
Other long-term
liabilities............ -- 106.0 -- -- 106.0
Noncurrent liabilities,
dispositions........... -- -- 7.7 (h) 19.2 26.9
Common stock............ 90.4 0.6 38.1 (k) -- 129.1
Additional paid-in
capital................ 63.7 503.4 795.3 (k) -- 1,362.4
Retained earnings....... 1,092.7 (118.7) 118.7 (k) -- 1,092.7
Cumulative pensions
liability adjustments.. (0.4) -- -- -- (0.4)
Treasury stock.......... (104.8) (10.3) 10.3 (k) -- (104.8)
-------- -------- -------- ------- --------
Total stockholders'
equity............... 1,141.6 375.0 962.4 -- 2,479.0
-------- -------- -------- ------- --------
Total liabilities and
stockholders' equity... $3,102.4 $1,975.3 $1,218.8 $ -- $6,296.5
======== ======== ======== ======= ========
</TABLE>
See the accompanying Notes to Unaudited Pro Forma Condensed Consolidated
Financial Data.
S-10
<PAGE>
NOTES TO UNAUDITED PRO FORMA
CONDENSED CONSOLIDATED FINANCIAL DATA
BASIS OF CONSOLIDATION
Thrifty PayLess' most recent audited fiscal year data that is available is
for the year ended October 1, 1995. For purposes of the Unaudited Pro Forma
Condensed Consolidated Statement of Operations for the fiscal year ended March
2, 1996, the Company's historical information is from the fiscal year ended
March 2, 1996, and the results of operations for Thrifty PayLess are for the
52 weeks ended December 31, 1995. For purposes of the interim Unaudited Pro
Forma Condensed Consolidated Statement of Operations for the 26 weeks ended
August 31, 1996, the results of operations for the 26-week period ended August
31, 1996 were used for the Company, and the results of operations for the 26-
week period ended June 30, 1996 were used for Thrifty PayLess.
As a result of its planned installation of standardized store systems in all
Thrifty PayLess locations, and combining and standardizing various
administrative support functions such as marketing, advertising, accounting
and management information systems, the Company's management expects to
operate the combined operations of the Company and Thrifty PayLess with a more
efficient overhead expense structure than each of the two entities operating
on a stand-alone basis. The Company also expects to achieve cost reductions as
a result of increased purchasing power derived from the combination of the two
companies. See "Recent Developments--Certain Financings Related to the Thrifty
PayLess Merger" in this Prospectus Supplement. However, for purposes of the
Unaudited Pro Forma Condensed Consolidated Statements of Operations, these and
other potential synergies in overhead expenses have not been reflected because
their realization cannot be assured.
DETERMINATION AND ALLOCATION OF PURCHASE PRICE
At the effective time of the Thrifty PayLess Merger, all of the outstanding
shares of Thrifty PayLess Common Stock were converted into the Company's
Common Stock at the exchange ratio of 0.65 shares of the Company's Common
Stock for each outstanding share of Thrifty PayLess Common Stock. The
following table sets forth the purchase price (in millions) based on an
assumed $34.58 per share market value, which amount is the average closing
price for the Company's Common Stock over a reasonable period of time before
and after the two companies reached agreement on the purchase price and the
proposed transaction was announced on October 14, 1996.
<TABLE>
<S> <C>
Market value of shares of the Company's Common Stock issued in the
Thrifty PayLess Merger........................................... $1,337.4
Transaction costs................................................. 30.0
Payment for outstanding Thrifty PayLess stock options............. 46.3
--------
Pro forma purchase price........................................ $1,413.7
========
</TABLE>
The Thrifty PayLess Merger will be accounted for as a purchase. The
preliminary allocation of the pro forma purchase price by the Company
is as follows (in millions):
<TABLE>
<S> <C>
Pro forma purchase price........................................... $1,413.7
Equity acquired.................................................... (375.0)
--------
Unallocated pro forma purchase price........................... $1,038.7
========
Pro forma purchase price allocation
Fixed assets..................................................... $ 123.0
Merger liabilities............................................... (105.0)
Inventory........................................................ 28.0
Goodwill......................................................... 1,036.9
Other............................................................ (44.2)
--------
Total.......................................................... $1,038.7
========
</TABLE>
S-11
<PAGE>
PRO FORMA ADJUSTMENTS
(a) Amortization of the estimated goodwill relating to the Thrifty PayLess
Merger of $1,036.9 million over a 40-year period ($1,036.9 million / 40 =
$25.9 million). The historical goodwill reflected on the Thrifty PayLess
balance sheet was being amortized over a 15-year period at $3.9 million
per year. The remaining balance of $45 million of goodwill will be
reconstituted as new goodwill and amortized over a 40-year period ($45
million / 40 = $1.1 million). Accordingly, the pro forma incremental
charge to goodwill is $23.1 million ($25.9 million + $1.1 million - $3.9
million). The pro forma adjustment for the 26-week period ended August 31,
1996 represents one-half of the annualized pro forma adjustment amount.
(b) Reflects the net pro forma additional interest expense on the Company's
total borrowings and the reversal of Thrifty PayLess' historical debt
discount and fee amortization. See "Capitalization" for a description of
the components of the Company's total pro forma combined debt after
Thrifty PayLess' debt is refinanced or retired.
(c) Reflects pro forma amortization of estimated financing fees for the Credit
Facility of $0.2 million and debt issuance costs of the Offered Debt
Securities of approximately $8.7 million amortized over the estimated
five-, ten- and 30-year lives of the respective debt issuances ($2.3
million at five years, $2.8 million at 10 years and $3.6 million at 30
years). The pro forma adjustment for the 26-weeks ended August 31, 1996
represents one-half of the annualized pro forma adjustment amount.
The pro forma combined interest expense reflects the difference between the
interest rates currently available to the Company and the historical rates
of interest paid by Thrifty PayLess.
(d) Income taxes have been calculated based on the Company's effective
statutory rate for the respective periods. Amortization of goodwill is not
deductible for tax purposes.
(e) Reflects the pro forma adjustment of LIFO inventories to value the
inventory at fair market value. The Company believes the adjusted carrying
values represent estimated selling prices of merchandise inventories less
the sum of costs of disposal and a reasonable profit allowance. This value
is subject to revisions pending completion of physical inventories.
(f) Records pro forma purchase price allocation to goodwill for excess of
purchase price over net assets and direct costs of the transaction,
primarily financial advisory and legal fees. Based on the purchase of all
of the outstanding shares of Thrifty PayLess Common Stock (approximately
59,502,000 shares) converted into the Company's Common Stock at an
exchange ratio of 0.65 (approximately 38,676,000 shares) valued at a
market price of $34.58 for the Company's Common Stock.
(g) Records the estimated $8.9 million in financing fees for the Credit
Facility and issuance of $1,000.0 million of securities (see Note (b)) and
removes Thrifty PayLess' unamortized debt issue costs of $18.3 million.
(h) Reclassifies the Thrifty PayLess historical net deferred tax assets and
records the deferred tax impact of the fair value adjustment to inventory.
(i) See "Use of Proceeds" for a discussion of certain Thrifty PayLess
indebtedness.
(j) Records pro forma premium on assumed purchase of TPL Sub Debt. See "Recent
Developments."
(k) Records the issuance of 38,676,000 shares of the Company's Common Stock at
$34.58 per share at the 0.65 exchange ratio and the elimination of Thrifty
PayLess' equity accounts.
(l) Records the fair value adjustments for Thrifty PayLess' fixed assets.
(m) The Company estimates that expenses associated with closing Thrifty
PayLess' corporate headquarters, severance and retention costs of
employees, and other merger costs will be $105 million. These costs will
be recorded as a liability assumed in the Thrifty PayLess Merger. There
S-12
<PAGE>
can be no assurance, however, that the amount of such charges will not
increase as the Company's integration plan is further developed and more
accurate estimates become available.
(n) The pro forma adjustments for the Southeast Dispositions and expected Bi-
Mart divestiture represent the reclassification of the Company's stores
being divested in Alabama, Georgia, Florida, North Carolina and South
Carolina, and the proposed divestiture of the Thrifty PayLess' Bi-Mart
stores. The table below presents the balances for the respective
dispositions. The Company estimates that it will receive approximately
$200 million from the sale of stores in the Southeast Dispositions and
between $50 to $80 million from the sale of Thrifty PayLess' Bi-Mart
stores.
<TABLE>
<CAPTION>
BI-
RITE AID MART TOTAL
-------- ------ -------
<S> <C> <C> <C>
ASSETS
Cash............................................. $ (2.0) $ -- $ (2.0)
Accounts receivable.............................. (13.1) (6.3) (19.4)
Inventories...................................... (83.8) (75.8) (159.6)
Other current assets............................. (1.3) (1.2) (2.5)
------- ------ -------
Total current assets........................... $(100.2) $(83.3) $(183.5)
======= ====== =======
Property and equipment, net...................... $ (53.2) $ (8.5) $ (61.7)
Intangible assets, net........................... (6.6) -- (6.6)
Other noncurrent assets.......................... -- (2.9) (2.9)
------- ------ -------
Total noncurrent assets........................ $ (59.8) $(11.4) $ (71.2)
======= ====== =======
LIABILITIES
Accounts payable................................. $ (3.3) $(28.1) $ (31.4)
Other current liabilities and deferred taxes..... (4.0) (21.2) (25.2)
------- ------ -------
Total current liabilities...................... $ (7.3) $(49.3) $ (56.6)
======= ====== =======
Long-term debt................................... $ (0.6) $ (4.9) $ (5.5)
Deferred taxes................................... (21.3) 7.6 (13.7)
------- ------ -------
Total noncurrent liabilities................... $ (21.9) $ 2.7 $ (19.2)
======= ====== =======
</TABLE>
S-13
<PAGE>
DESCRIPTION OF THE SECURITIES
The following description of the particular terms of the Securities
supplements and to the extent inconsistent therewith, supersedes, insofar as
such description relates to the Securities, the description of the Securities
set forth in the accompanying Prospectus, to which description reference is
hereby made. The Offered Debt Securities will be "Senior Debt Securities" as
that term is used in the accompanying Prospectus. Capitalized terms not
otherwise defined herein have the meanings given to them in the accompanying
Prospectus or the Indenture.
The Securities are unsecured and unsubordinated obligations of the Company
and will rank pari passu with all other unsecured and unsubordinated
indebtedness of the Company. The 6.70% Notes, the 7.125% Notes and the 7.70%
Debentures will mature on December 15, 2001, January 15, 2007, and February
15, 2027, respectively. The Securities will bear interest at the rates per
annum shown on the cover page of this Prospectus Supplement. Interest on the
6.70% Notes will be payable semiannually on June 15 and December 15 of each
year (each a "6.70% Note Interest Payment Date") commencing June 15, 1997, to
the person for whose account the 6.70% Notes are held at the close of business
on June 1, and December 1, as the case may be, next preceding such 6.70% Note
Interest Payment Date. Interest on the 7.125% Notes will be payable
semiannually on January 15 and July 15 of each year (each a "7.125% Note
Interest Payment Date") commencing July 15, 1997, to the person for whose
account the 7.125% Notes are held at the close of business on January 1 and
July 1, as the case may be, next preceding such 7.125% Note Interest Payment
Date. Interest on the 7.70% Debentures will be payable semiannually on
February 15 and August 15 of each year (each a "7.70% Debenture Interest
Payment Date") commencing August 15, 1997, to the person for whose account the
7.70% Debentures are held at the close of business on February 1 and August 1,
as the case may be, next preceding such 7.70% Debenture Interest Payment Date.
REDEMPTION, SINKING FUND
The Securities will not be redeemable prior to their maturity and will not
be entitled to the benefit of a sinking fund.
DEFEASANCE
The provisions of the Indenture relating to defeasance and covenant
defeasance described under the caption "Description of Debt Securities--
Defeasance and Discharge" in the accompanying Prospectus will apply to the
Securities.
BOOK-ENTRY SECURITIES
The Securities will be issued in the form of global securities. The Global
Securities will be deposited with, or on behalf of DTC (the "Depositary"), and
registered in the name of the Depositary or a nominee thereof. Unless and
until it is exchanged in whole or in part for Securities in definitive form,
no Security may be transferred except as a whole by the Depositary to a
nominee of such Depositary or by a nominee of such Depositary to such
Depositary or another nominee of such Depositary or by such Depositary or any
such nominee to a successor of such Depositary or a nominee of such successor.
The Depositary has advised the Company as follows: The Depositary is a
limited purpose trust company organized under the New York Banking Law, a
"banking organization" within the meaning of the New York Banking Law, a
member of the Federal Reserve System, a "clearing corporation" within the
meaning of the New York Uniform Commercial Code, and a "clearing agency"
registered pursuant to the provisions of Section 17A of the Securities
Exchange Act of 1934, as amended. The Depositary was created to hold
securities of its participants and to facilitate the clearance and settlement
of
S-14
<PAGE>
securities transactions among its participants in such securities through
electronic book-entry changes in participants' accounts thereby eliminating
the need for physical movement of securities certificates. The Depositary's
participants include securities brokers and dealers, banks, trust companies,
clearing corporations, and certain other organizations, some of whom (and/or
their representatives) own the Depositary. Access to the Depositary's book-
entry system is also available to others, such as banks, brokers, dealers and
trust companies that clear through or maintain a custodial relationship with a
participant, either directly or indirectly. The rules applicable to the
Depositary are on file with the Securities and Exchange Commission.
UNDERWRITING
Subject to the terms and conditions set forth in the Underwriting Agreement
and the Pricing Agreement, the Company has agreed to sell to each of the
Underwriters named below and each of the Underwriters has severally agreed to
purchase the Offered Debt Securities set forth opposite its name below:
<TABLE>
<CAPTION>
PRINCIPAL PRINCIPAL PRINCIPAL
AMOUNT OF 6.70% AMOUNT OF 7.125% AMOUNT OF 7.70%
NOTES DUE NOTES DUE DEBENTURES DUE
UNDERWRITER DECEMBER 2001 JANUARY 2007 FEBRUARY 2027
----------- --------------- ---------------- ---------------
<S> <C> <C> <C>
Goldman, Sachs & Co. ......... $ 83,125,000 $ 83,125,000 $ 71,250,000
Bear, Stearns & Co. Inc. ..... 83,125,000 83,125,000 71,250,000
Donaldson, Lufkin & Jenrette
Securities Corporation....... 83,125,000 83,125,000 71,250,000
J.P. Morgan Securities Inc.... 83,125,000 83,125,000 71,250,000
Raymond James & Associates,
Inc. ........................ 17,500,000 17,500,000 15,000,000
------------ ------------ ------------
$350,000,000 $350,000,000 $300,000,000
============ ============ ============
</TABLE>
Under the terms and conditions of the Underwriting Agreement and related
Pricing Agreement, the Underwriters are committed to take and pay for all of
the Securities, if any are taken.
The Underwriters propose to offer the Securities in part directly to the
public at the initial public offering prices set forth on the cover page of
this Prospectus Supplement, and in part to certain securities dealers at such
prices less a concession of 0.350% of the principal amount of the 6.70% Notes,
0.40% of the principal amount of the 7.125% Notes and 0.50% of the principal
amount of the 7.70% Debentures. The Underwriters may allow, and such dealers
may reallow, to certain brokers and dealers a concession not to exceed 0.25%
of the principal amount of each of the 6.70% Notes, the 7.125% Notes and the
7.70% Debentures. After the Securities are released for sale to the public,
the offering prices and other selling terms may from time to time be varied by
the Underwriters.
The Securities are new issues with no established trading market. The
Company has been advised by the Underwriters that they intend to make a market
in the Securities, but they are not obligated to do so and may discontinue
such market making at any time without notice. No assurance can be given as to
the liquidity of the trading market for the Securities. The Securities will
not be listed on any national securities exchange.
The Company has agreed to indemnify the Underwriters against certain
liabilities, including certain liabilities under the Securities Act of 1933.
From time to time, the Underwriters have provided various commercial
banking, investment banking and other services to the Company for which they
have received customary compensation.
S-15
<PAGE>
LEGAL MATTERS
Certain legal matters in connection with the offering to which this
Prospectus Supplement and the accompanying Prospectus relates will be passed
upon for the Company by Elliot S. Gerson, Esq., Senior Vice President and
Assistant Chief Counsel for the Company and by Jones, Day, Reavis & Pogue, New
York, New York. Certain legal matters will be passed on for the Underwriters
by Cravath, Swaine & Moore, New York, New York.
CERTAIN FORWARD-LOOKING STATEMENTS
This Prospectus Supplement and the accompanying Prospectus (including the
documents incorporated by reference herein and therein) contains certain
forward-looking statements (as such term is defined in the Private Securities
Litigation Reform Act of 1995) and information relating to the Company and
Thrifty PayLess that are based on the beliefs of the management of the Company
as well as assumptions made by and information currently available to the
management of the Company. When used in this Prospectus Supplement and the
accompanying Prospectus, the words "anticipate," "believe," "estimate,"
"expect," "intend" and similar expressions, as they relate to the Company,
Thrifty PayLess or the management of the Company, identify forward-looking
statements. Such statements, which include, without limitation, the matters
set forth herein under the captions "The Company," "Recent Developments" and
"Unaudited Pro Forma Condensed Consolidated Financial Data," reflect the
current views of the Company with respect to future events, the outcome of
which is subject to certain risks, including among others (i) competition from
other drugstore chains, supermarkets, membership clubs and other retailers as
well as third-party plans and mail order providers, (ii) the continued efforts
of third-party payors to reduce prescription drug costs, and (iii) possible
federal and state health care reform initiatives to reduce governmental health
costs. The forward-looking statements referred to above are also subject to
uncertainties and assumptions relating to the operations and results of
operations of the Company following the Thrifty PayLess Merger, including the
Company's ability successfully to integrate the operations of the Company and
Thrifty PayLess (particularly in light of the different merchandising
strategies and store sizes and the geographic separation of the two chains)
while continuing to manage the day-to-day business of the combined company,
pricing pressures, shifts in market demand and general economic conditions,
all of which are factors that may affect the timing and realization of cost
savings and other synergistic benefits of the Thrifty PayLess Merger assumed
by the Company. Should one or more of these risks or uncertainties
materialize, or should underlying assumptions prove incorrect, actual results
or outcomes may vary materially from those described herein as anticipated,
believed, estimated, expected or intended.
S-16
<PAGE>
PROSPECTUS
$1,000,000,000
RITE AID CORPORATION
DEBT SECURITIES
COMMON STOCK
PREFERRED STOCK
WARRANTS
----------------
Rite Aid Corporation (the "Company") may offer from time to time, together
or separately, (i) debt securities ("Debt Securities") consisting of notes,
debentures or other evidences of indebtedness in one or more series, (ii)
shares of its Common Stock, par value $1.00 per share (the "Common Stock"),
(iii) shares of its Preferred Stock, par value $1.00 per share (the "Preferred
Stock"), and (iv) warrants to purchase Debt Securities, Common Stock or
Preferred Stock, or any combination thereof, as may be designated by the
Company at the time of the offering (the "Warrants") in amounts, at prices and
on terms to be determined at the time of the offering. The Debt Securities,
Common Stock, Preferred Stock and Warrants are collectively called the
"Securities".
The Securities may be offered in separate series or issuances at an
aggregate initial public offering price not to exceed $1,000,000,000 (but not
to exceed $600,000,000 of Securities other than Debt Securities and warrants
to purchase Debt Securities) or, if applicable, the equivalent thereof in
other currencies, at prices and on terms to be determined at the time or times
of offering.
The specific terms of the Securities with respect to which this Prospectus
is being delivered are set forth in the accompanying Prospectus Supplement and
include, where applicable, (i) in the case of Debt Securities, the specific
designation, aggregate principal amount, purchase price, maturity, rate (or
method of calculation thereof) and time of payment of interest, if any, any
conversion or exchange provisions, any redemption provisions, any
subordination provisions and any other specific terms of the Debt Securities
offered hereby not set forth herein under the caption "Description of Debt
Securities" in this Prospectus, and any listing thereof on a securities
exchange; (ii) in the case of Common Stock, the number of shares and any
initial public offering price; (iii) in the case of Preferred Stock, the
number of shares, the specific title, the aggregate amount, any dividend
(including the method of calculating payment of dividends), seniority,
liquidation, redemption, voting and other rights, any terms for any conversion
or exchange into other Securities, any listing on a securities exchange, the
initial public offering price and any other terms; and (iv) in the case of
Warrants, the designation and number, the exercise price, any listing of the
Warrants or the underlying Securities on a securities exchange and any other
terms in connection with the offering, sale and exercise of the Warrants. Any
statement contained in this Prospectus will be deemed to be modified or
superseded by any inconsistent statement contained in the accompanying
Prospectus Supplement.
The Company's Common Stock is listed on the New York Stock Exchange (the
"NYSE") and the Pacific Stock Exchange ("PSE") under the trading symbol "RAD".
Any Common Stock sold pursuant to a Prospectus Supplement will be listed on
the NYSE and the PSE, subject to official notice of issuance.
----------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION, NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
----------------
The Securities will be sold directly, through agents, underwriters or
dealers as designated from time to time or through a combination of such
methods. If agents of the Company or any dealers or underwriters are involved
in the sale of the Securities in respect of which this Prospectus is being
delivered, the names of such underwriters, dealers or agents and any
applicable commissions or discounts are set forth in or may be calculated from
the Prospectus Supplement with respect to such Securities.
This Prospectus may not be used to consummate sales of Securities unless
accompanied by a Prospectus Supplement.
----------------
The date of this Prospectus is December 3, 1996.
<PAGE>
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS OTHER THAN THOSE CONTAINED OR INCORPORATED BY REFERENCE IN
THIS PROSPECTUS IN CONNECTION WITH THE OFFER CONTAINED IN THIS PROSPECTUS AND,
IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON
AS HAVING BEEN AUTHORIZED BY THE COMPANY OR ANY UNDERWRITERS, DEALERS OR
AGENTS. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OR SOLICITATION
OF AN OFFER TO BUY SECURITIES IN ANY JURISDICTION TO ANY PERSON TO WHOM IT IS
UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION. NEITHER THE DELIVERY OF THIS
PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE
AN IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF THE COMPANY
SINCE THE DATE HEREOF OR THAT THE INFORMATION CONTAINED HEREIN IS CORRECT AT
ANY TIME SUBSEQUENT TO THE DATE HEREOF.
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and in accordance
therewith files reports, proxy statements and other information with the
Securities and Exchange Commission (the "Commission"). Such reports, proxy
statements and other information can be inspected and copied at the public
reference facilities maintained by the Commission at Judiciary Plaza, 450
Fifth Street, N.W., Washington, D.C. 20549; 7 World Trade Center, New York,
New York 10048; and Citicorp Center, 500 West Madison Street, Suite 1400,
Chicago, Illinois 60606. Copies of such materials can be obtained from the
Public Reference Section of the Commission at Judiciary Plaza, 450 Fifth
Street, N.W., Washington, D.C. 20549 at prescribed rates. Such material can
also be inspected at the offices of the New York Stock Exchange, 20 Broad
Street, New York, New York 10005 and at the offices of the Pacific Stock
Exchange, 301 Pine Street, San Francisco, California 94109, on which the
Company's Common Stock is listed. The Commission maintains a Web site that
contains reports, proxy statements and other information filed electronically
by the Company with the Commission which can be accessed over the Internet at
http://www.sec.gov.
This Prospectus constitutes a part of a Registration Statement filed by the
Company with the Commission under the Securities Act of 1933, as amended (the
"Act"). This Prospectus omits certain of the information contained in the
Registration Statement, and reference is hereby made to the Registration
Statement and to the exhibits relating thereto for further information with
respect to the Company and the Securities offered hereby. Any statements
contained herein concerning the provisions of any document are not necessarily
complete, and, in each instance, reference is made to such copy filed as an
exhibit to the Registration Statement or otherwise filed with the Commission.
Each such statement is qualified in its entirety by such reference. The
Registration Statement and the exhibits thereto may be inspected without
charge at the office of the Commission at Judiciary Plaza, 450 Fifth Street,
N.W., Washington, D.C. 20549, and copies thereof may be obtained from the
Commission at prescribed rates.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents filed by the Company with the Commission are
incorporated in and made a part of this Prospectus by reference:
1. The Company's Annual Report on Form 10-K for the year ended March 2,
1996, which incorporates by reference certain portions of the Company's
1996 Annual Report to Stockholders;
2. The Company's Quarterly Reports on Form 10-Q for the quarterly periods
ended June 1, 1996 and August 31, 1996;
3. The Company's Current Report on Form 8-K dated April 29, 1996;
2
<PAGE>
4. The description of the Company's Common Stock contained in the
Company's Registration Statement on Form 8-A dated July 18, 1991 filed
under the Exchange Act under File No. 2-28883, including any amendments and
reports filed for the purpose of updating such description;
5. The Company's Joint Proxy Statement/Prospectus dated November 12,
1996;
6. Thrifty PayLess Holdings, Inc.'s Annual Report on Form 10-K for the
fiscal year ended October 1, 1995; and
7. Thrifty PayLess Holdings, Inc.'s Quarterly Reports on Form 10-Q for
the fiscal quarters ended December 31, 1995, March 31, 1996 and June 30,
1996.
All reports and any definitive proxy or information statements filed by the
Company with the Commission pursuant to Section 13(a), 13(c), 14 or 15(d) of
the Exchange Act subsequent to the date of this Prospectus and prior to the
termination of the offering of the Securities shall be deemed to be
incorporated by reference in this Prospectus and to be a part hereof from the
date of filing of such documents. The Company will provide without charge to
each person to whom a copy of this Prospectus is delivered, on the written or
oral request of any such person, a copy of any or all of the documents
incorporated herein by reference (other than exhibits). Requests for such
copies should be directed to the Secretary, Rite Aid Corporation, 30 Hunter
Lane, Camp Hill, Pennsylvania 17011 (telephone: (717) 761-2633).
THE COMPANY
The Company is one of the largest retail drug store chains in the United
States. As of August 31, 1996, the Company operated 2,796 drug stores,
averaging within a range of approximately 7,200 to 11,000 square feet per
store in size, in 21 states and the District of Columbia and employed over
36,000 employees. Pharmacy service forms the core of the Company's business,
with prescriptions accounting for 56.4% of drug store sales in the 26 week
period ended August 31, 1996. The Company's drug stores cater to convenience,
offering a full selection of health and personal care products, seasonal
merchandise and a large private label product line. Express mail with
complementary services and one-hour photo departments have recently been added
in select locations. The Company's Eagle managed care subsidiary markets
prescription plans and sells other managed health care services to large
employers and government-sponsored employee benefit programs.
The Company's strategy is to operate drug stores in large, fast-growing
metropolitan areas. Following the proposed merger of Thrifty PayLess Holdings,
Inc. ("Thrifty PayLess") into the Company (the "Merger"), and giving effect to
the Southeast Dispositions described below, the Company will be the largest
drug store operator in the United States in terms of store count, operating in
26 states. Of the 50 largest metropolitan statistical areas in the United
States, the Company will operate in 25 and will be the largest or second
largest drug store operation in 21 of those metropolitan areas. In connection
with the announcement of the Merger, the Company also announced that it plans
to dispose of all of its 270 stores in Alabama, Florida, Georgia and North and
South Carolina (collectively, the "Southeast Dispositions"), and that in
connection therewith the Company entered into an agreement to sell its
approximately 200 stores in North and South Carolina to Thrift Drug, Inc. As
soon as is reasonably practicable following the Merger, the Company expects to
rename all Thrifty PayLess stores "Rite Aid" and integrate them with the
Company's operations, to refinance substantially all of Thrifty PayLess'
existing debt (to the extent practicable), to close Thrifty PayLess'
Wilsonville, Oregon headquarters and to divest Thrifty PayLess' Bi-Mart
membership discount stores.
The Company is a Delaware corporation with its principal executive offices
located at 30 Hunter Lane, Camp Hill, Pennsylvania 17011. The telephone number
of Rite Aid at such offices is (717) 761-2633.
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USE OF PROCEEDS
Except as may otherwise be set forth in the applicable Prospectus
Supplement, the net proceeds from the sale of the Securities offered hereby
will be used for general corporate purposes, which could include acquisitions
and the refinancing of indebtedness in connection therewith, including the
Merger. Any specific proposed use of proceeds of the sale of Securities will
be described in a Prospectus Supplement.
DESCRIPTION OF DEBT SECURITIES
The Senior Debt Securities are to be issued under an Indenture (the "Senior
Indenture"), between the Company and First Trust of New York, National
Association, as Trustee (the "Trustee"). The Subordinated Debt Securities are
to be issued under an Indenture (the "Subordinated Indenture"), between the
Company and the Trustee. The Senior Indenture and the Subordinated Indenture
are sometimes referred to together as the "Indenture." Copies of the Senior
Indenture and the Subordinated Indenture have been filed as exhibits to the
Registration Statement. The following summary of certain general provisions of
the Senior Indenture and the Subordinated Indenture and the Debt Securities
does not purport to be complete and is subject to, and is qualified in its
entirety by reference to, the provisions of the Senior Indenture or the
Subordinated Indenture, as the case may be, including the definitions therein
of certain terms. The Senior Indenture and the Subordinated Indenture are
identical in all respects except as otherwise indicated below.
The particular terms of the Debt Securities offered by any Prospectus
Supplement (the "Offered Debt Securities") and the extent, if any, to which
such general provisions may apply to the Offered Debt Securities will be
described in the Prospectus Supplement relating to such Offered Debt
Securities. The Prospectus Supplement relating to the Offered Debt Securities
will also set forth whether the Offered Debt Securities are Senior Debt
Securities or Subordinated Debt Securities.
GENERAL
The Indenture does not limit the amount of Debt Securities which may be
issued thereunder and provides that Debt Securities may be issued thereunder
up to the aggregate principal amount which may be authorized from time to
time. In addition to the ability to issue Debt Securities with terms different
from those of Debt Securities previously issued, the Indenture provides the
Company with the ability to "reopen" a previous issue of a series of Debt
Securities and issue additional Debt Securities of such series. The Debt
Securities may be issued from time to time in one or more series. Unless
otherwise specified in the Prospectus Supplement, the Senior Debt Securities
will be unsecured and will rank equally with all other unsecured and
unsubordinated indebtedness of the Company. The Subordinated Debt Securities
will be subordinated in right of payment to the prior payment in full of the
Senior Indebtedness (as defined) of the Company, as described below under
"Subordination of Subordinated Debt Securities" and in a Prospectus Supplement
applicable to an offering of Subordinated Debt Securities.
Reference is made to the Prospectus Supplement relating to the particular
series of Offered Debt Securities offered thereby for the following terms of
the Offered Debt Securities: (i) the designation, aggregate principal amount
(and any limit on the aggregate principal amount of the Offered Debt
Securities) and authorized denominations of the Offered Debt Securities; (ii)
the price (which may be expressed as a percentage of the aggregate principal
amount thereof) at which the Offered Debt Securities will be issued; (iii) the
date or dates on which the principal of the Offered Debt Securities will be
payable; (iv) the rate or rates per annum (which may be fixed, floating or
adjustable) at which the Offered Debt Securities will bear interest, if any,
or the formula pursuant to which such rate or rates shall be determined; (v)
the date from which such interest, if any, on the Offered Debt Securities will
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accrue, the dates on which such interest, if any, will be payable, the date on
which payment of such interest, if any, will commence and the Regular Record
Dates for such Interest Payment Dates, if any, and the Person to whom any
interest on the Offered Debt Securities will be payable, if other than the
Person in whose name such Offered Debt Securities are registered on any
Regular Record Date; (vi) any optional or mandatory sinking fund provisions;
(vii) the date, if any, after which and the price or prices at which the
Offered Debt Securities may, pursuant to any optional or mandatory redemption
provisions, be redeemed at the option of the Company or the Holder and any
other terms and provisions of such optional or mandatory redemptions; (viii)
if applicable, the terms of any right to convert or exchange the Offered Debt
Securities into Common Stock of the Company; (ix) if other than denominations
of $1,000 and any integral multiple thereof, the denominations in which
Offered Debt Securities of the series will be issuable; (x) if other than the
principal amount thereof, the portion of the principal amount of Offered Debt
Securities which will be payable upon declaration of acceleration of maturity
thereof or provable in bankruptcy; (xi) the currency or currencies, including
composite currencies and currency units, in which payment of the principal of
(and premium, if any) and interest, if any, on the Offered Debt Securities
will be payable (if other than the currency of the United States of America),
which unless otherwise specified will be the currency of the United States of
America as at the time of payment is legal tender for payment of public or
private debts; (xii) if the principal of (and premium, if any), or interest,
if any, on the Offered Debt Securities are to be payable, at the election of
the Company or any Holder thereof, in a coin, currency or currency unit other
than that in which the Offered Debt Securities of the series are stated to be
payable, the period or periods within which, and the terms and conditions upon
which, such election may be made; (xiii) if such securities are to be
denominated in a currency or currencies, including composite currencies and
currency units, other than the currency of the United States of America, the
equivalent price in the currency of the United States of America for purposes
of determining the voting rights of Holders of such Debt Securities as
Outstanding Securities under the Indenture; (xiv) if the amount of payments of
principal of (and premium, if any), or portions thereof, or interest, if any,
on the Offered Debt Securities may be determined with reference to an index,
formula or other method, the manner in which such amounts will be determined;
(xv) whether the Offered Debt Securities shall be issued in whole or in part
in the form of a Global Security or Securities; the terms and conditions, if
any, upon which such Global Security or Securities may be exchanged in whole
or in part for other definitive Debt Securities; and the depositary for such
Global Security or Securities, which depositary must be a clearing agency
registered under the Exchange Act; (xvi) any authenticating or paying agents,
registrars, conversion agents or any other agents with respect to the Offered
Debt Securities; or (xvii) any additional terms relating to the Offered Debt
Securities (which may not be inconsistent with the Indenture).
Unless otherwise indicated in the Prospectus Supplement relating thereto,
the Debt Securities will be issued only in fully registered form, without
coupons, in denominations of $1,000 or any integral multiple thereof. No
service charge will be made for any transfer or exchange of the Debt
Securities, but the Company may require payment of a sum sufficient to cover
any tax or other governmental charge payable in connection therewith.
(Sections 3.2, 3.5.) Unless otherwise indicated in the Prospectus Supplement
relating thereto, principal, premium, if any, and interest, if any, will be
payable and the Debt Securities will be transferable and convertible, if
applicable, at the corporate trust office of the Trustee. Unless other
arrangements are made, interest will be paid by checks mailed to the Holders
at their registered addresses. (Sections 3.5, 3.7, 10.2.) Some or all of the
Debt Securities may be issued as discounted Debt Securities (bearing no
interest or interest at a rate which at the time of issuance is below market
rates) to be sold at a substantial discount below their stated principal
amount. Federal income tax consequences and other special considerations
applicable to any such discounted Debt Securities will be described in the
Prospectus Supplement relating thereto.
The rights of the Company, and hence the right of creditors of the Company
(including the Holders of Debt Securities), to participate in any distribution
of the assets of any subsidiary upon its liquidation or reorganization or
otherwise is necessarily subject to the prior claims of creditors of the
subsidiary,
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except to the extent that claims of the Company itself as a creditor of the
subsidiary may be recognized.
Debt Securities denominated or payable in foreign currencies may entail
significant risks. These risks include, without limitation, the possibility of
significant fluctuations in the foreign currency markets. These risks will
vary depending upon the currency or currencies involved. If applicable, these
risks will be more fully described in the Prospectus Supplement relating
thereto.
CERTAIN RESTRICTIONS
Absence of Certain Protections in the Indenture. The Indenture does not
contain any provisions that permit the Holders of the Debt Securities to
require prepayment in the event of a change in the management or control of
the Company, or that afford Holders of the Debt Securities protection in the
event of a highly leveraged transaction, reorganization, restructuring, merger
or similar transaction involving the Company that may adversely affect Holders
of the Debt Securities (except to the limited extent that the covenants
described below might affect the Company's ability to consummate such
transactions). Any such provisions applicable to a particular series of
Offered Debt Securities will be described in the applicable Prospectus
Supplement and a reference thereto (or the absence thereof) will be included
in the cover page therefor.
General. The various restrictive provisions of the Indenture applicable to
the Company and its Restricted Subsidiaries do not apply to Unrestricted
Subsidiaries. The assets and indebtedness of Unrestricted Subsidiaries are not
consolidated with those of the Company and its Restricted Subsidiaries in
calculating Consolidated Net Tangible Assets under the Senior Indenture and
Investments by the Company or by its Restricted Subsidiaries in Unrestricted
Subsidiaries are excluded in computing Consolidated Net Tangible Assets.
"Unrestricted Subsidiaries" are those Subsidiaries which are designated as
Unrestricted Subsidiaries by the Board of Directors from time to time pursuant
to the Indenture (in each case, unless and until designated as Restricted
Subsidiaries by the Board of Directors pursuant to the Indenture). "Restricted
Subsidiaries" are all Subsidiaries other than Unrestricted Subsidiaries. A
"Wholly-owned Restricted Subsidiary" is a Restricted Subsidiary at least 99%
of the outstanding voting stock of which (except directors' qualifying shares)
is owned by the Company and its other Wholly-owned Restricted Subsidiaries.
(Section 1.1 of the Senior Indenture and, in relation to the designation of
Restricted Subsidiaries and Unrestricted Subsidiaries, Section 1.1 of the
Subordinated Indenture.)
An Unrestricted Subsidiary may not be designated a Restricted Subsidiary if
it has any Secured Debt, Funded Debt or Attributable Debt in respect of Sale
and Leaseback Transactions, except such debt as the Company would be permitted
to allow under the terms of the Senior Indenture, immediately after such
Unrestricted Subsidiary becomes a Restricted Subsidiary. (Section 10.11(a) of
the Senior Indenture.)
Restrictions Upon Secured Debt. Neither the Company nor a Restricted
Subsidiary is permitted to incur or guarantee certain indebtedness secured by
any lien, mortgage, pledge or other encumbrance on its property without
equally and ratably securing the Senior Debt Securities. This restriction does
not apply to certain permitted encumbrances described in the Senior Indenture,
including purchase money mortgages, encumbrances existing on property at the
time it is acquired by the Company or a Restricted Subsidiary, conditional
sales and similar agreements, and the extension, renewal or refunding of any
of the foregoing and any Secured Debt of a Restricted Subsidiary owing to the
Company or a Wholly-owned Restricted Subsidiary. Section 10.10(d) of the
Senior Indenture also permits other indebtedness secured by encumbrances not
otherwise specifically permitted which, together with Attributable Debt
respecting existing Sale and Leaseback Transactions (excluding Sale and
Leaseback Transactions entered into in respect of property acquired by the
Company or a Restricted Subsidiary not more than 24 months prior to the date
such Transaction is entered into), and
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unsecured Funded Debt of Restricted Subsidiaries (excluding unsecured Funded
Debt incurred through extension, refund or renewal where Consolidated Funded
Debt was not thereby increased and excluding any Funded Debt owed to the
Company or a Wholly-owned Restricted Subsidiary), incurred or entered into, as
the case may be, after the date of the Senior Indenture, would not at the time
exceed 20% of the Consolidated Net Tangible Assets of the Company and its
Restricted Subsidiaries. (Section 10.10 of the Senior Indenture.)
Under the Indenture, (i) "Consolidated Net Tangible Assets" means the total
amount of assets on a consolidated balance sheet of the Company and its
Restricted Subsidiaries (less applicable reserves and other properly
deductible items and after excluding any investments made in Unrestricted
Subsidiaries or in corporations while they were Unrestricted Subsidiaries but
which are not Subsidiaries at the time of computation) after deducting (a) all
liabilities and liability items, including amounts in respect of obligations
under leases (or guarantees thereof) which under generally accepted accounting
principles would be included on such balance sheet, except Funded Debt,
capital stock and surplus, surplus reserves and provisions for deferred income
taxes and (b) goodwill, trade names, trademarks, patents, unamortized debt
discount and expense and other like intangibles (Section 1.1 of the Senior
Indenture); (ii) "Funded Debt" means any indebtedness for money borrowed,
created, issued, incurred, assumed or guaranteed, whether secured or
unsecured, maturing more than one year after the date of determination thereof
and any indebtedness, regardless of its term, renewable pursuant to the terms
thereof or of a revolving credit or similar agreement effective for more than
one year after the date of the creation of the indebtedness, which would, in
accordance with generally accepted accounting practice, be classified as
funded debt, excluding (a) indebtedness for which money in satisfaction
thereof has been deposited in trust, (b) certain guarantees arising in the
ordinary course of business and (c) liabilities resulting from capitalization
of lease rentals (Section 1.1 of the Senior Indenture); and (iii) "Secured
Debt" means indebtedness for money borrowed which is secured by a lien or
other encumbrance on property of the Company or any Restricted Subsidiary,
excluding certain guarantees arising in the ordinary course of business.
(Section 1.1 of the Senior Indenture.)
Restrictions Upon Sales with Leases Back. The Company is not permitted, and
may not permit a Restricted Subsidiary, to sell or transfer (except to the
Company or one or more Wholly-owned Restricted Subsidiaries) any manufacturing
plant, warehouse, retail store or equipment owned and operated by the Company
or a Restricted Subsidiary on or after the date of the Senior Indenture with
the intention that the Company or any Restricted Subsidiaries take back a
lease thereof, except a lease for a period, including renewals, of not more
than 24 months by the end of which period it is intended that the use of such
property by the lessee will be discontinued, except (i) where the Company
would be entitled under Section 10.10(d) of the Senior Indenture to incur
additional secured indebtedness not otherwise specifically permitted by the
Senior Indenture in an amount equal to the Attributable Debt respecting such
Sale and Leaseback Transaction, (ii) where the Sale and Leaseback Transaction
is entered into in respect of property acquired by the Company or a Restricted
Subsidiary within 24 months of such acquisition, or (iii) where the Company
within 120 days of entering into the Sale and Leaseback Transaction applies to
the retirement of its Secured Debt an amount equal to the greater of (a) the
net proceeds of the sale of the property leased pursuant to such Transaction
or (b) the fair market value of the property so leased. (Section 10.9 of the
Senior Indenture.)
Restrictions Upon Funded Debt of Restricted Subsidiaries. Restricted
Subsidiaries are prohibited from becoming liable for any unsecured Funded Debt
except where the Company would be entitled under Section 10.10(d) of the
Senior Indenture to incur additional secured indebtedness not otherwise
specifically permitted by the Senior Indenture in an amount equal to such
Funded Debt and except for certain extensions, refunding and renewals of
Funded Debt and Funded Debt owing to the Company or a Wholly-owned Restricted
Subsidiary. (Section 10.8 of the Senior Indenture.)
Restrictions Upon Merger and Sale of Assets. The Senior Indenture provides
that no merger of the Company with or sale of the Company's property
substantially as an entirety to any other
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corporation shall be made if, as a result, properties or assets of the Company
would become subject to a mortgage, lien or other encumbrance which would not
be permitted by the Senior Indenture, unless the Senior Debt Securities shall
be equally and ratably secured with such obligations. (Section 8.1 of the
Senior Indenture.) Any successor entity must be a corporation organized in the
United States, assume the payment of the principal and interest on the Debt
Securities and the performance of every covenant under the Senior Indenture
and, immediately after giving effect to a merger or consolidation, no Event of
Default, and no event which, after notice or lapse of time or both, would
become an Event of Default, shall have happened and be continuing. (Section
8.1.)
Although the amount of the Company's property that will constitute a sale of
such property "substantially as an entirety" is not readily quantifiable, a
determination as to whether such a sale has occurred will depend on the
percentage of operating and total assets transferred, among other
measurements, and other facts and circumstances of the transaction. In any
particular transaction, the determination of whether such a sale has occurred
will be made by the Company, and the Company will give notice of such
occurrence to the Holders of the Debt Securities. Because of the uncertainty
regarding whether a particular sale will constitute a sale of property
"substantially as an entirety," Holders will not be able to determine for
themselves whether such a transaction has occurred and will have to rely on
the Company's determination. If such a transaction occurs, the person to which
such amount of the Company's property is transferred shall enter into a
supplemental Indenture satisfactory in form to the Trustee.
MODIFICATION OF THE INDENTURE
The Indenture and the rights of the Holders may be modified by the Company
only with the consent of the Holders of not less than a majority in aggregate
principal amount of the outstanding Debt Securities of each series affected by
the modification; but no modification altering the terms of payment of
principal or interest, changing the place or medium of payment of principal or
interest, impairing the rights of Holders to institute suit for payment,
adversely changing the right to convert or exchange any Debt Security,
including decreasing the conversion rate or increasing the conversion price of
such Debt Security (if applicable), reducing the percentage required for
modification or, in the case of the Subordinated Indenture, modifying the
subordination provisions in a manner adverse to the Holders of the
Subordinated Debt Securities will be effective against any Holder without his,
her or its consent. (Section 9.2.)
EVENTS OF DEFAULT
The Indenture defines an Event of Default with respect to the Debt
Securities of any series as being any one of the following events: (i) default
for 30 days in any payment of interest upon any Security of that series when
due (in the case of the Subordinated Indenture, whether or not payment is
prohibited by the provisions described under the heading "Subordination of
Subordinated Debt Securities" below), (ii) default in any payment of principal
of (or premium, if any) upon any Security of that series when due (in the case
of the Subordinated Indenture, whether or not payment is prohibited by the
provisions described under the heading "Subordination of Subordinated Debt
Securities" below), (iii) default in the deposit of any sinking fund payment,
(iv) default for 60 days after appropriate notice in the performance of any
other covenant in the Debt Securities of that series or the Indenture (other
than a covenant included in the Indenture solely for the benefit of any series
of Debt Securities other than that series), (v) certain events in bankruptcy,
insolvency or reorganization, or (vi) certain events of default resulting in
the acceleration of the maturity of the related indebtedness aggregating in
excess of $10,000,000 under any mortgages, indentures (including the
Indenture) or instruments under which the Company may have issued, or by which
there may have been secured or evidenced, any other indebtedness (including
Debt Securities of any series) of the Company. In case an Event of Default
shall occur and be continuing with respect to the Debt Securities of any
series, the Trustee or the Holders of not less than 25% in aggregate principal
amount of the Debt Securities then outstanding
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of that series may declare the principal of the Debt Securities of such series
(or, if the Debt Securities of that series were issued as discounted Debt
Securities, such portion of the principal as may be specified in the terms of
that series) and the accrued interest thereon, if any, to be due and payable.
Any Event of Default with respect to the Debt Securities of any series which
has been cured may be waived by the Holders of a majority in aggregate
principal amount of the Debt Securities of that series then outstanding.
(Sections 5.1, 5.2, 5.13.)
The Indenture requires the Company to file annually with the Trustee a
written statement signed by an officer of the Company as to the absence of
certain defaults under the terms of the Indenture. The Indenture provides that
the Trustee may withhold notice to the Holders of any default (except in
payment of principal or premium, if any, or interest) if it considers it in
the interest of the Holders to do so. (Sections 6.2 and 10.13 of the Senior
Indenture and Sections 6.2 and 10.10 of the Subordinated Indenture.)
Subject to the provisions of the Indenture relating to the duties of the
Trustee in case an Event of Default shall occur and be continuing, the
Indenture provides that the Trustee shall be under no obligation to exercise
any of its rights or powers under the Indenture at the request, order or
direction of Holders unless such Holders shall have offered to the Trustee
reasonable indemnity. Subject to such provisions for indemnification and
certain other rights of the Trustee, the Indenture provides that the Holders
of a majority in principal amount of the Debt Securities of any series then
outstanding shall have the right to direct the time, method and place of
conducting any proceeding for any remedy available to the Trustee or
exercising any trust or power conferred on the Trustee. (Sections 5.12, 6.3.)
CONVERSION RIGHTS
The terms on which Debt Securities of any series are convertible into or
exchangeable for Common Stock of the Company will be set forth in the
Prospectus Supplement relating thereto. Such terms shall include provisions as
to whether conversion or exchange is mandatory, at the option of the holder or
at the option of the Company, and may include provisions pursuant to which the
number of shares of Common Stock of the Company to be received by the holders
of Debt Securities would be calculated according to the market price of Common
Stock of the Company as of a time stated in the Prospectus Supplement.
(Article Thirteen.)
DEFEASANCE AND DISCHARGE
The terms of the Indenture provide the Company with the option to be
discharged from any and all obligations with respect to a particular series of
Debt Securities, including, in the case of Subordinated Debt Securities, the
provisions described under the heading "Subordination of Subordinated Debt
Securities" herein (except for certain obligations to register the transfer or
exchange of Debt Securities, to replace stolen, lost or mutilated Debt
Securities, to maintain paying agencies and hold moneys for payment in trust)
upon the deposit with the Trustee, in trust, of money or U.S. Government
Obligations (as defined) (or Foreign Government Obligations (as defined) in
case of Debt Securities denominated in foreign currencies), or both, which
through the payment of interest and principal thereof in accordance with their
terms will provide money in an amount sufficient to pay any installment of
principal (and premium, if any) and interest on and any mandatory sinking fund
payments in respect of such Debt Securities on the Stated Maturity of such
payments or on the applicable Redemption Date in accordance with the terms of
the Indenture and such Debt Securities. Such option may only be exercised (i)
if the Company has received from, or there has been published by, the United
States Internal Revenue Service a ruling to the effect that such a discharge
will not be deemed, or result in, a taxable event with respect to Holders of
such series of Debt Securities, (ii) there is no Event of Default or event
which may become an Event of Default then occurring, and (iii) such action
would not cause any outstanding Debt Securities to become delisted as a result
thereof. (Section 4.3.)
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DEFEASANCE OF CERTAIN COVENANTS
The terms of the Indenture provide the Company with the option to have the
occurrence of events described in (iv) or (v) under the heading "Events of
Default" above no longer be Events of Default and, in the case of Senior Debt
Securities, to omit to comply with certain of the covenants described under
the heading "Certain Restrictions" above, and, in the case of Subordinated
Debt Securities, the provisions described under the heading "Subordination of
Subordinated Debt Securities" below will no longer be applicable, in each
case, with respect to a particular series of Debt Securities. The Company, in
order to exercise such option, will be required to deposit with the Trustee
money or U.S. Government Obligations (or Foreign Government Obligations (as
defined) in case of Debt Securities denominated in foreign currencies), or
both, which through the payment of interest and principal thereof in
accordance with their terms will provide money in an amount sufficient to pay
principal (and premium, if any) and interest on and any mandatory sinking fund
payments in respect of such Debt Securities on the Stated Maturity of such
payments or on the applicable Redemption Date in accordance with the terms of
the Indenture and such Debt Securities. Additionally, no Event of Default or
event which may become an Event of Default may have occurred and be continuing
on the date of deposit with the Trustee. The Company will also be required to
deliver to the Trustee an opinion of counsel to the effect that the deposit
and related covenant defeasance will not cause the Holders of such series of
Debt Securities to recognize income, gain or loss for federal income tax
purposes. (Section 10.12 of the Senior Indenture and Section 10.9 of the
Subordinated Indenture.)
The Company may exercise its defeasance option with respect to such Debt
Securities notwithstanding its prior exercise of its covenant defeasance
option. If the Company exercises its defeasance option, payment of such Debt
Securities may not be accelerated because of an Event of Default. If the
Company exercises its covenant defeasance option, payment of such Debt
Securities may not be accelerated by reference to the provisions described in
the preceding paragraph. In the event the Company omits to comply with its
remaining obligations with respect to such Debt Securities under the Indenture
after exercising its covenant defeasance option and such Debt Securities are
declared due and payable because of the occurrence of any Event of Default,
the amount of money and U.S. Government Obligations (or Foreign Government
Obligations in case of Debt Securities denominated in foreign currencies) on
deposit with the Trustee may be insufficient to pay amounts due on the Debt
Securities of such series at the time of the acceleration resulting from such
Event of Default. However, the Company will remain liable in respect of such
payments. (Sections 4.3 and 10.12 of the Senior Indenture and Sections 4.3 and
10.9 of the Subordinated Indenture.)
SUBORDINATION OF SUBORDINATED DEBT SECURITIES
The Subordinated Debt Securities will be subordinated in right of payment,
as set forth in the Subordinated Indenture, to the prior payment in full of
all existing and future Senior Indebtedness of the Company. (Section 14.1 of
the Subordinated Indenture.) "Senior Indebtedness" means the principal of (and
premium, if any) and interest on (including interest accruing after the filing
of a petition initiating any proceeding pursuant to any bankruptcy law, but
only to the extent allowed or permitted to the holder of such Debt against the
bankruptcy or any other insolvency estate of the Company in such proceeding)
or accrued original issue discount on and other amounts due on or in
connection with any Debt incurred, assumed or guaranteed by the Company,
whether presently outstanding or hereafter incurred, assumed or guaranteed,
and all renewals, extensions and refundings of any such Debt; provided
however, that the following will not constitute Senior Indebtedness: (i) any
Debt which expressly provides (a) that such Debt shall not be senior in right
of payment to the Subordinated Debt Securities or (b) that such Debt shall be
subordinated to any other Debt of the Company, unless such Debt expressly
provides that such Debt shall be senior in right of payment to the
Subordinated Debt Securities; (ii) any Debt of the Company in respect of the
Subordinated Debt Securities; (iii) any Debt or liability for compensation to
employees, for goods or materials purchased in the ordinary course of business
or for services; (iv) any Debt of the Company to any subsidiary for money
borrowed or
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advanced from such subsidiary; and (v) any liability for federal, state, local
or other taxes owed or owing by the Company. "Debt" means (a) all indebtedness
for borrowed money (whether or not the recourse of the lender is to the whole
of the assets of the borrower or only to a portion thereof and including all
indebtedness evidenced by notes, bonds, debentures or other securities sold
for money), (b) all indebtedness incurred or assumed in the acquisition
(whether by way of purchase, merger, consolidation or otherwise) of any
business, real property or other assets (except assets other than real
property acquired in the ordinary course of the conduct of the acquirer's
usual business), (c) all Capital Lease Obligations, (d) Hedging Obligations,
(e) guarantees of indebtedness described in clauses (a), (b), (c) or (d) of
any other person, and (f) renewals, extensions, refundings, deferrals,
restructurings, amendments and modifications of any such indebtedness
(including, without limitation, exchange offers), obligation or guarantee.
By reason of the subordination described herein, in the event of insolvency,
upon any distribution of the assets of the Company or any assignment for the
benefit of creditors or any other marshalling of assets and liabilities of the
Company, (i) the Holders of Subordinated Debt Securities are required to pay
over their share of such distribution to the trustee in bankruptcy, receiver
or other person distributing the assets of the Company for application to the
payment of all Senior Indebtedness remaining unpaid, to the extent necessary
to pay all holders of Senior Indebtedness in full and (ii) unsecured creditors
of the Company who are not Holders of Subordinated Debt Securities or holders
of Senior Indebtedness of the Company may recover less, ratably, than holders
of Senior Indebtedness of the Company and may recover more, ratably, than the
Holders of Subordinated Debt Securities. (Section 14.2 of the Subordinated
Indenture.)
In the event that any Subordinated Debt Securities are declared due and
payable prior to their Stated Maturity by reason of the occurrence of an Event
of Default, then the Company is obligated to notify promptly holders of Senior
Indebtedness of such acceleration. The Company may not pay the Subordinated
Debt Securities until 120 days have passed after such acceleration occurs and
may thereafter pay the Subordinated Debt Securities if the terms of the
Indenture otherwise permit payment at that time. (Section 14.3 of the
Subordinated Indenture.)
No payment of the principal, premium, if any, or interest with respect to
any Subordinated Debt Securities may be made, nor may the Company acquire any
Subordinated Debt Securities except as set forth in the Indenture, if any
default with respect to Senior Indebtedness occurs and is continuing that
permits the acceleration of the maturity thereof and the Company has actual
knowledge of the default, unless (i) 120 days pass after notice of the default
is given to the Trustee and such default is not then the subject of judicial
proceedings or the default with respect to the Senior Indebtedness is cured
(including, without limitation, by the payment of such Senior Indebtedness in
full) or waived and (ii) the terms of the Indenture otherwise permit the
payment or acquisition of Subordinated Debt Securities at that time. The
Company is required to give the Trustee notice of a default with respect to
Senior Indebtedness within five Business Days after the Company has actual
knowledge of the default or potential default. (Section 14.4 of the
Subordinated Indenture.)
The Subordinated Indenture does not limit or prohibit the incurrence of
additional Senior Indebtedness, which may include indebtedness that is senior
to the Subordinated Debt Securities, but subordinate to other obligations of
the Company. The Senior Debt Securities, when issued, will constitute Senior
Indebtedness.
The Prospectus Supplement may further describe the provisions, if any,
applicable to the subordination of the Subordinated Debt Securities of a
particular series.
GLOBAL SECURITIES
Securities of a series may be issued in whole or in part in the form of one
or more Global Securities that will be deposited with, or on behalf of, a
depositary identified in the Prospectus
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Supplement relating to such series. Global Securities will be issued in
registered form and in either temporary or permanent form. Unless and until it
is exchanged for Debt Securities in definitive form, a temporary Global
Security may not be transferred except as a whole by the depositary for such
Global Security to a nominee of such depositary or any such nominee to a
successor of such depositary or a nominee of such successor.
The specific terms of the depositary arrangement with respect to a series of
Securities will be described in the Prospectus Supplement relating to such
series. The Company anticipates that the following provisions will apply to
any depositary arrangements.
Upon the issuance of a Global Security, the depositary for such Global
Security or its nominee will credit the accounts of persons held with it with
the respective principal amounts of the Securities represented by such Global
Security. Such accounts shall be designated by the underwriters or agents with
respect to such Securities or by the Company if such Securities are offered
and sold directly by the Company. Ownership of beneficial interests in a
Global Security will be limited to persons that have accounts with the
depositary for such Global Security or its nominee ("participants") or persons
that may hold interests through participants. Ownership of beneficial
interests in such Global Security will be shown on, and the transfer of that
ownership will be effected only through, records maintained by the depositary
(with respect to participants' interests) for such Global Security or by
participants or persons that hold through participants (with respect to
beneficial owners' interests).
CONCERNING THE TRUSTEE
First Trust of New York, National Association is the Trustee under the
Senior Indenture, the Subordinated Indenture and the Company's Indenture dated
as of July 2, 1984 and has been appointed by the Company as initial Security
Registrar and Paying Agent with regard to the Debt Securities.
DESCRIPTION OF CAPITAL STOCK
The following statements with respect to the capital stock of the Company
are subject to the detailed provisions of the Company's Certificate of
Incorporation, as amended (the "Certificate of Incorporation"), and By-Laws,
as amended (the "By-Laws"). These statements do not purport to be complete, or
to give full effect to the provisions of statutory or common law, and are
subject to, and are qualified in their entirety by reference to, the terms of
the Certificate of Incorporation and the By-Laws. The Certificate of
Incorporation and the By-Laws are filed as exhibits to the Registration
Statement of which this Prospectus is a part.
GENERAL
The authorized capital stock of the Company consists of 240,000,000 shares
of Common Stock, par value $1.00 per share, and 20,000,000 shares of Preferred
Stock, par value $1.00 per share. If the Merger becomes effective, the
Company's authorized Common Stock will be increased to 300,000,000 shares. The
Certificate of Incorporation authorizes the Company's Board of Directors to
provide for the issuance, from time to time, of series of preferred stock, to
establish the number of shares to be included in any such series and to fix
the designations, powers, preferences and rights of the shares of each such
series and any qualifications, limitations or restrictions thereof. No shares
of Preferred Stock of the Company are outstanding as of the date hereof.
VOTING RIGHTS
Each holder of Common Stock is entitled to one vote for each share
registered in his name on the books of the Company on all matters submitted to
a vote of stockholders. Except as otherwise
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<PAGE>
provided by law, the holders of Common Stock vote as one class. The shares of
Common Stock do not have cumulative voting rights. As a result, subject to the
voting rights, if any, of the holders of any shares of the Company's preferred
stock which may at the time be outstanding, the holders of Common Stock
entitled to exercise more than 50% of the voting rights in an election of
directors can elect 100% of the directors to be elected in a particular year
if they choose to do so. In such event, the holders of the remaining Common
Stock voting for the election of directors will not be able to elect any
persons to the Board of Directors.
DIVIDEND RIGHTS
Subject to the rights of the holders of any shares of the Company's
preferred stock which may at the time be outstanding, holders of Common Stock
are entitled to such dividends as the Board of Directors may declare out of
funds legally available therefor.
LIQUIDATION RIGHTS AND OTHER PROVISIONS
Subject to the prior rights of creditors and the holders of outstanding
preferred stock, if any, the holders of the Common Stock are entitled in the
event of liquidation, dissolution or winding up to share pro rata in the
distributions of all remaining assets.
The Common Stock is fully paid and is not liable to any calls or assessments
and is not convertible into any other securities. There are no redemption or
sinking fund provisions applicable to the Common Stock, and the Certificate of
Incorporation provides that there shall be no preemptive rights.
Harris Trust Company of New York acts as transfer agent and registrar for
the Common Stock.
CHANGE OF CONTROL
The provisions of the Certificate of Incorporation summarized in the
succeeding paragraphs may be deemed to have an anti-takeover effect and may
delay, deter or prevent a tender offer or takeover attempt that a stockholder
might consider to be in such stockholder's best interest, including those
attempts that might result in a premium over the market price for the shares
held by stockholders.
The Board of Directors of the Company is divided into three classes that are
elected for staggered three-year terms.
Pursuant to the Certificate of Incorporation, the Board of Directors by
resolution may establish one or more series of Company preferred stock having
such number of shares, designation, relative voting rights, dividend rates,
liquidation and other rights, preferences and limitations as may be fixed by
the Board of Directors without any further stockholder approval. Such rights,
preferences, privileges and limitations as may be established could have the
effect of impeding or discouraging the acquisition of control of the Company.
In addition, the Certificate of Incorporation provides that the affirmative
vote of no less than 75% of the outstanding voting stock of the Company,
voting as one class, shall be required for the adoption or authorization of
certain Business Combinations (as defined below) with a Related Person (as
defined below). Such vote will not be required if (i) the agreement to
effectuate the Business Combination with a Related Person is approved by a
majority of the Continuing Directors (as defined below), even if such majority
does not constitute a quorum of the Board of Directors then in office, or (ii)
the Business Combination satisfies certain minimum price criteria and
procedural requirements which are intended to assure an adequate and fair
price under the circumstances.
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<PAGE>
A "Business Combination" includes: (i) any merger or consolidation of the
Company with or into any Related Person; (ii) the sale, lease, exchange,
mortgage, pledge, transfer or other disposition (in one transaction or a
series of transactions) to or with any Related Person of any assets of the
Company or any subsidiary thereof having an aggregate fair market value of
$15,000,000 or more; (iii) the issuance or transfer by the Company or any
subsidiary thereof (in one transaction or a series of transactions) of any
securities of the Company or any subsidiary thereof to any Related Person in
exchange for cash, securities or other property (or a combination thereof)
having an aggregate fair market value of $15,000,000 or more; (iv) the
adoption of any plan or proposal for the liquidation or dissolution of the
Company proposed by or on behalf of any Related Person; or (v) any
reclassification or recapitalization of securities of the Company if the
effect, directly or indirectly, of such transaction is to increase the
relative voting power of any Related Person. A "Related Person" includes any
person, together with any affiliate or associate of such person, which has
beneficial ownership, directly or indirectly, of shares of stock of the
Company entitling such person to exercise more than ten percent (10%) of the
total voting power of all classes of stock of the Company entitled to vote in
elections of directors, considered as one class, together with the successors
and assigns of any such person in any transaction or series of transactions
not involving a public offering of the Company stock within the meaning of the
Securities Act. A "Continuing Director" is a member of the Board of Directors
who was not affiliated with the Related Person and was a member of the Board
of Directors prior to the time that the Related Person acquired the last
shares of stock of the Company entitling such Related Person to exercise, in
the aggregate, in excess of ten percent (10%) of the total voting power of all
classes of stock of the Company entitled to vote in elections of directors, or
a person recommended to succeed a Continuing Director by a majority of
Continuing Directors.
DESCRIPTION OF WARRANTS
The Company may issue Warrants for the purchase of Debt Securities, Common
Stock, Preferred Stock, or any combination thereof. Warrants may be issued
independently, together with any other Securities offered by a Prospectus
Supplement, and may be attached to or separate from such Securities. Warrants
may be issued under warrants agreements (each, a "Warrant Agreement") to be
entered into between the Company and a warrant agent specified in the
applicable Prospectus Supplement (the "Warrant Agent"). The Warrant Agent will
act solely as an agent of the Company in connection with the Warrants of a
particular series and will not assume any obligation or relationship of agency
or trust for or with any holders or beneficial owners of Warrants. The
following sets forth certain general terms and provisions of the Warrants
offered hereby. Further terms of the Warrants and the applicable Warrant
Agreement will be set forth in the applicable Prospectus Supplement.
The applicable Prospectus Supplement will describe the terms of the Warrants
in respect of which this Prospectus is being delivered, including, where
applicable, the following: (i) the title of such Warrants; (ii) the aggregate
number of such Warrants; (iii) the price or prices at which such Warrants will
be issued; (iv) the designation, number and terms of the Debt Securities,
Common Stock, Preferred Stock, or combination thereof, purchasable upon
exercise of such Warrants; (v) the designation and terms of the other
Securities, if any, with which such Warrants are issued and the number of such
Warrants issued with each such Security; (vi) the date, if any, on and after
which such Warrants and the related underlying Securities will be separately
transferable; (vii) the price at which each underlying Security purchasable
upon exercise of such Warrants may be purchased; (viii) the date on which the
right to exercise such Warrants shall commence and the date on which such
right shall expire; (ix) the minimum amount of such Warrants which may be
exercised at any one time; (x) information with respect to book-entry
procedures, if any; (xi) a discussion of any applicable federal income tax
considerations; and (xii) any other terms of such Warrants, including terms,
procedures and limitations relating to the transferability, exchange and
exercise of such Warrants.
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<PAGE>
PLAN OF DISTRIBUTION
The Company may sell Securities to or through underwriters, and also may
sell Securities directly to other purchasers or through agents, including on a
continuing basis. The Prospectus Supplement with respect to the Securities
being offered thereby sets forth the terms of the offering of such Securities,
including the name or names of any underwriters, the purchase price of such
Securities and the proceeds to the Company from such sale, any underwriting
discounts and other items constituting underwriters' compensation, any initial
public offering price, any discounts or concessions allowed or reallowed or
paid to dealers and any securities exchanges on which such Securities may be
listed. Only underwriters so named in the Prospectus Supplement are deemed to
be underwriters in connection with the Securities offered thereby.
The distribution of the Securities may be effected from time to time in one
or more transactions at a fixed price or prices, which may be changed, or at
market prices prevailing at the time of sale, at prices relating to such
prevailing market prices or at negotiated prices.
In connection with the sale of Securities, underwriters may receive
compensation from the Company or from purchasers of Securities for whom they
may act as agents in the form of discounts, concessions or commissions.
Underwriters, dealers and agents that participate in the distribution of
Securities may be deemed to be underwriters and any discounts or commissions
received by them and any profit on the resale of Securities by them may be
deemed to be underwriting discounts and commissions under the Act. Any such
underwriter or agent will be identified, and any such compensation will be
described, in a Prospectus Supplement.
Under agreements which may be entered into by the Company, underwriters,
dealers and agents who participate in the distribution of Securities may be
entitled to indemnification by the Company against certain civil liabilities,
including liabilities under the Act.
If so indicated in the Prospectus Supplement, the Company will authorize the
underwriters to solicit offers by certain institutions to purchase Securities
from the Company at the public offering price set forth in the Prospectus
Supplement pursuant to Delayed Delivery Contracts providing for payment and
delivery on the date stated in the Prospectus Supplement. Each such contract
will be for an amount not less than, and unless the Company otherwise agrees,
the aggregate principal amount of Securities sold pursuant to such contracts
shall not be more than, the respective amounts stated in the Prospectus
Supplement. Institutions with whom such contracts, when authorized, may be
made include commercial and savings banks, insurance companies, pension funds,
investment companies, educational and charitable institutions, and other
institutions, but shall in all cases be subject to the approval of the
Company. Delayed Delivery Contracts will not be subject to any conditions
except that the purchase by an institution of the Securities covered thereby
shall not at the time of delivery be prohibited under the laws of any
jurisdiction in the United States to which such institution is subject.
The Underwriting Agreement entered into with respect to any Securities sold
through underwriters provides that the obligations of the underwriter or
underwriters will be subject to certain conditions precedent and that the
underwriters will be obligated to purchase all of the Securities covered by
the applicable Prospectus Supplement if any are purchased.
LEGAL OPINIONS
The validity of the Securities offered hereby has been passed upon for the
Company by Jones, Day, Reavis & Pogue, 599 Lexington Avenue, New York, New
York 10022. Certain legal matters in connection with the offering to which
this Prospectus relates will be passed upon for the Company by Franklin C.
Brown, Esq., General Counsel for the Company.
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<PAGE>
EXPERTS
The consolidated financial statements and schedule of the Company and its
subsidiaries as of March 2, 1996 and March 4, 1995, and for each of the years
in the three-year period ended March 2, 1996, have been incorporated by
reference herein and in the registration statement in reliance upon the
reports of KPMG Peat Marwick LLP, independent certified public accountants,
incorporated by reference herein, and upon authority of said firm as experts
in accounting and auditing. The report of KPMG Peat Marwick LLP covering the
March 4, 1995 consolidated financial statements refers to a change in the
method of accounting for investments.
With respect to the unaudited interim financial information of the Company
and subsidiaries for the periods ended June 1, 1996 and August 31, 1996,
incorporated by reference herein, the independent certified public accountants
have reported that they applied limited procedures in accordance with
professional standards for a review of such information. However, their
separate reports included in the Company's quarterly reports on Form 10-Q for
the quarters ended June 1, 1996 and August 31, 1996, and incorporated by
reference herein, state that they did not audit and they do not express an
opinion on the interim financial information. Accordingly, the degree of
reliance on their reports on such information should be restricted in light of
the limited nature of the review procedures applied. The accountants are not
subject to the liability provisions of Section 11 of the Securities Act for
their report on the unaudited interim financial information because that
report is not a "report" or a "part" of the registration statement prepared or
certified by the accountants within the meaning of Sections 7 and 11 of the
Securities Act.
The consolidated financial statements and schedule of Thrifty PayLess
Holdings, Inc. and subsidiaries as of October 1, 1995 and October 2, 1994 and
for each of the years in the three-year period ended October 1, 1995, have
been incorporated by reference in this Prospectus in reliance upon the report
of KPMG Peat Marwick LLP, independent certified public accountants,
incorporated by reference herein, and upon the authority of said firm as
experts in accounting and auditing.
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NO DEALER, SALESPERSON OR OTHER INDIVIDUAL HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED OR
INCORPORATED BY REFERENCE IN THIS PROSPECTUS SUPPLEMENT OR THE PROSPECTUS AND,
IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON
AS HAVING BEEN AUTHORIZED BY THE COMPANY, THE UNDERWRITERS OR ANY OTHER
PERSON. NEITHER THE DELIVERY OF THIS PROSPECTUS SUPPLEMENT AND THE PROSPECTUS
NOR ANY SALE MADE HEREUNDER SHALL UNDER ANY CIRCUMSTANCES CREATE AN
IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF THE COMPANY SINCE
THE DATE HEREOF OR THEREOF OR THAT THE INFORMATION CONTAINED HEREIN OR THEREIN
IS CORRECT AS OF ANY TIME SUBSEQUENT TO ITS DATE. THIS PROSPECTUS SUPPLEMENT
AND THE PROSPECTUS DO NOT CONSTITUTE AN OFFER OR SOLICITATION BY ANYONE IN ANY
JURISDICTION IN WHICH SUCH OFFER OR SOLICITATION IS NOT AUTHORIZED OR IN WHICH
THE PERSON MAKING SUCH OFFER OR SOLICITATION IS NOT QUALIFIED TO DO SO OR TO
ANYONE TO WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION.
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TABLE OF CONTENTS
PROSPECTUS SUPPLEMENT
<TABLE>
<CAPTION>
PAGE
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<S> <C>
The Company................................................................ S-2
Recent Developments........................................................ S-2
Use of Proceeds............................................................ S-4
Capitalization............................................................. S-5
Ratio of Earnings to Fixed Charges......................................... S-6
Unaudited Pro Forma Condensed Consolidated Financial Data.................. S-7
Description of the Securities.............................................. S-14
Underwriting............................................................... S-15
Legal Matters.............................................................. S-16
Certain Forward-Looking Statements......................................... S-16
PROSPECTUS
Available Information...................................................... 2
Incorporation of Certain Documents by Reference............................ 2
The Company................................................................ 3
Use of Proceeds............................................................ 4
Description of Debt Securities............................................. 4
Description of Capital Stock............................................... 12
Description of Warrants.................................................... 14
Plan of Distribution....................................................... 15
Legal Opinions............................................................. 15
Experts.................................................................... 16
</TABLE>
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$1,000,000,000
RITE AID CORPORATION
$350,000,000 6.70% NOTES DUE DECEMBER 15, 2001
$350,000,000 7.125% NOTES DUE JANUARY 15, 2007
$300,000,000 7.70% DEBENTURES DUE FEBRUARY 15, 2027
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[LOGO OF RITE AID]
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GOLDMAN, SACHS & CO.
BEAR, STEARNS & CO. INC.
DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION
J.P. MORGAN & CO.
RAYMOND JAMES & ASSOCIATES, INC.
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