<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended May 31, 1997
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For The Transition Period From To
---- ----
COMMISSION FILE NUMBER 1-5742
RITE AID CORPORATION
--------------------
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
DELAWARE 23-1614034
-------- ----------
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) IDENTIFICATION NO.)
30 HUNTER LANE, CAMP HILL, PENNSYLVANIA 17011
-----------------------------------------------------------
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
(717) 761-2633
--------------
(REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE)
NOT APPLICABLE
--------------
(FORMER NAME, FORMER ADDRESS AND FORMER FISCAL YEAR, IF CHANGED SINCE LAST
REPORT)
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months, and (2) has been subject to such
filing requirements for the past 90 days.
[x] YES [ ] NO
Indicate the number of shares outstanding of each of the issuer's
classes of common stock, as of the latest practicable date.
The registrant had 122,948,422 shares of its $1.00 par value Common
Stock outstanding as of June 27, 1997.
Total number of sequentially numbered pages in this filing, including
exhibits thereto: 16.
---
<PAGE> 2
2
RITE AID CORPORATION
INDEX
<TABLE>
<S> <C> <C>
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements:
Condensed Consolidated Balance Sheets May 31, 1997 and March 1, 1997 2
Condensed Consolidated Statements of Income Thirteen Weeks Ended May 31, 1997 and June 1, 1996 3
Condensed Consolidated Statements of Cash Flows Thirteen Weeks Ended May 31, 1997 and June 1, 1996 4
Notes to Condensed Consolidated Financial Statements 5
Independent Auditors' Review Report 6
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 7
PART II. OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders 9
Item 6. Exhibits and Reports on Form 8-K 9
</TABLE>
-1-
<PAGE> 3
3
---------------------------------------------
RITE AID CORPORATION
FORM 10-Q
FOR THE THIRTEEN WEEKS ENDED MAY 31, 1997
---------------------------------------------
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements:
RITE AID CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Dollars in Thousands)
<TABLE>
<CAPTION>
May 31, 1997 March 1, 1997
------------ -------------
(Unaudited)
<S> <C> <C> <C> <C>
CURRENT ASSETS
Cash $3,703 $7,042
Accounts and Notes Receivable 366,440 370,588
Inventories 2,379,918 2,336,659
Prepaid Expenses and Other Current Assets 64,000 57,210
------ ------
TOTAL CURRENT ASSETS 2,814,061 2,771,499
--------- ---------
Property, Plant And Equipment, at Cost 2,770,329 2,669,856
Accumulated Depreciation 808,903 773,786
------- -------
PROPERTY, PLANT AND EQUIPMENT, NET 1,961,426 1,896,070
--------- ---------
INTANGIBLE ASSETS
Excess Of Cost Over Underlying Equity In Subsidiaries (less
accumulated amortization of $27,703 and $10,579) 1,253,901 1,260,777
Lease Acquisition Costs (less accumulated amortization of
$140,546 and $120,522) 388,030 383,862
------- -------
TOTAL INTANGIBLE ASSETS 1,641,931 1,644,639
--------- ---------
Other Assets 96,431 104,773
------ -------
TOTAL ASSETS $6,513,849 $6,416,981
========== ==========
CURRENT LIABILITIES
Short-Term Debt and Current Maturities of Long-Term Debt $44,505 $44,255
Accounts Payable 664,365 601,301
Income Taxes 55,435 18,484
Sales and Other Taxes Payable 37,294 34,985
Accrued Salaries, Wages and Other Current Liabilities 444,374 472,985
------- -------
TOTAL CURRENT LIABILITIES 1,245,973 1,172,010
--------- ---------
Long-Term Debt, Less Current Maturities 2,292,206 2,317,789
Capital Lease Obligations 95,909 97,863
Deferred Income Taxes 227,180 221,855
Noncurrent Liabilities 118,204 118,779
STOCKHOLDERS' EQUITY
Common Stock, Par Value $1 Per Share; Issued 129,442,374
and 90,412,997 129,442 129,342
Additional Paid-In-Capital 1,367,699 1,365,771
Retained Earnings 1,143,849 1,100,185
Cumulative Pension Liability Adjustments {1,867} {1,867}
Treasury Stock, at Cost (6,532,169 Shares) {104,746} {104,746}
--------- ---------
TOTAL STOCKHOLDERS' EQUITY 2,534,377 2,488,685
--------- ---------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $6,513,849 $6,416,981
========== ==========
</TABLE>
See accompanying independent auditors' review report and notes to condensed
consolidated financial statements.
-2-
<PAGE> 4
4
-------------------------------------------
RITE AID CORPORATION
FORM 10-Q
FOR THE THIRTEEN WEEKS ENDED MAY 31, 1997
-------------------------------------------
Item 1. Financial Statements: (Continued)
RITE AID CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Dollars in Thousands Except Per Share Amounts)
(UNAUDITED)
<TABLE>
<CAPTION>
Thirteen Weeks Thirteen Weeks
Ended Ended
May 31, 1997 June 1, 1996
------------ ------------
<S> <C> <C>
SALES $2,664,600 $1,405,302
COSTS AND EXPENSES:
Costs of Goods Sold Including Occupancy Costs 1,925,551 1,034,127
Selling, General and Administrative Expenses 587,906 284,391
Interest Expense 36,837 17,787
Nonrecurring Costs - 16,057
- ------
2,550,294 1,352,362
--------- ---------
INCOME BEFORE INCOME TAXES 114,306 52,940
Income Taxes 46,065 20,224
------ ------
NET INCOME $68,241 $32,716
======= =======
EARNINGS PER SHARE $.56 $.39
==== ====
CASH DIVIDENDS PER COMMON SHARE $.20 $.185
==== =====
AVERAGE SHARES OUTSTANDING 122,834,000 83,865,000
=========== ==========
</TABLE>
See accompanying independent auditors' review report and notes to condensed
consolidated financial statements.
-3-
<PAGE> 5
5
-------------------------------------------
RITE AID CORPORATION
FORM 10-Q
FOR THE THIRTEEN WEEKS ENDED MAY 31, 1997
-------------------------------------------
Item 1. Financial Statements: (Continued)
RITE AID CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollars in Thousands)
(UNAUDITED)
<TABLE>
<CAPTION>
13 Weeks Ended 13 Weeks Ended
May 31, 1997 June 1, 1996
------------ ------------
<S> <C> <C>
OPERATING ACTIVITIES
INCOME FROM CONTINUING OPERATIONS BEFORE TAXES $114,306 $52,940
Adjustments To Reconcile Net Cash Provided By Operations:
Depreciation and Amortization 64,080 34,800
Accreted Interest on Long-Term Debt 5,115 3,233
Changes in Operating Assets and Liabilities, Net of Effects from Acquisitions:
(Increase) Decrease in Accounts Receivable 2,668 (10,105)
(Increase) Decrease in Inventories (65,303) 22,284
Increase in Accounts Payable 63,064 15,431
Other (29,454) (10,227)
-------- --------
154,476 108,356
Income Taxes (Paid) (2,872) (2,698)
------- -------
NET CASH PROVIDED BY OPERATING ACTIVITIES 151,604 105,658
------- -------
INVESTING ACTIVITIES
Purchase of Property, Plant and Equipment (111,644) (100,519)
Intangible Assets Acquired (13,250) (8,423)
Proceeds from Dispositions 17,489 -
Other 7,413 (445)
----- -----
NET CASH {USED IN} INVESTING ACTIVITIES (99,992) (109,387)
-------- ---------
FINANCING ACTIVITIES
Net Proceeds (Payments) of Commercial Paper and Other Long-Term Borrowings (32,308) 24,739
Cash Dividends Paid (24,577) (15,529)
Proceeds From Sale Of Stock 1,934 611
----- ---
NET CASH PROVIDED (USED) BY FINANCING ACTIVITIES (54,951) 9,821
-------- -----
INCREASE (DECREASE) IN CASH (3,339) 6,092
CASH AT BEGINNING OF PERIOD 7,042 3,131
----- -----
CASH AT END OF PERIOD $3,703 $9,223
====== ======
</TABLE>
See accompanying independent auditors' review report and notes to condensed
consolidated financial statements.
-4-
<PAGE> 6
6
----------------------------------------------
RITE AID CORPORATION
FORM 10-Q
FOR THE THIRTEEN WEEKS ENDED MAY 31, 1997
----------------------------------------------
Item 1. Financial Statements: (Continued)
RITE AID CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1- BASIS OF PRESENTATION
The financial information included herein is unaudited. In addition, the
financial information does not include all disclosures required under generally
accepted accounting principles because certain note information included in the
Company's annual report has not been included in this report; however, such
information reflects all adjustments (consisting primarily of normal recurring
adjustments) which are, in the opinion of management, necessary to a fair
statement of the results for the interim periods. The report of KPMG Peat
Marwick LLP, independent auditors, commenting upon their review accompanies the
condensed consolidated financial statements included in Item 1 of Part I.
The results of operations for the thirteen weeks ended May 31, 1997 and June 1,
1996 are not necessarily indicative of the results to be expected for the full
year.
NOTE 2- EARNINGS PER SHARE
Earnings per share were computed by dividing net income by the weighted average
number of common stock shares outstanding during the periods.
NOTE 3- RECENT ACCOUNTING PRONOUNCEMENT
In February 1997, the Financial Accounting Standards Board issued Statement No.
128, "Earnings per Share" (SFAS No. 128). SFAS No. 128 establishes new
standards for computing and presenting earnings per share (EPS) for entities
with publicly-held common stock. The Company is required to adopt SFAS No. 128
for the year ending February 28, 1998. If the provisions of SFAS No. 128 had
been used to calculate EPS for the 13-weeks ended May 31, 1997 and June 1,
1996, proforma EPS would have been:
<TABLE>
<CAPTION>
13 Weeks Ended 13 Weeks Ended
May 31, 1997 June 1, 1996
------------ ------------
<S> <C> <C>
Basic Earnings Per Share $.56 $.39
==== ====
Diluted Earnings Per Share $.54 $.38
==== ====
</TABLE>
-5-
<PAGE> 7
7
----------------------------------------------
RITE AID CORPORATION
FORM 10-Q
FOR THE THIRTEEN WEEKS ENDED MAY 31, 1997
----------------------------------------------
Item 1. Financial Statements: (Continued)
INDEPENDENT AUDITORS' REVIEW REPORT
The Board of Directors
Rite Aid Corporation
Camp Hill, Pennsylvania
We have reviewed the condensed consolidated balance sheet of Rite Aid
Corporation and subsidiaries as of May 31, 1997, and the related condensed
consolidated statements of income and cash flows for the thirteen week periods
ended May 31, 1997 and June 1, 1996. These financial statements are the
responsibility of the Company's management.
We conducted our review in accordance with standards established by
the American Institute of Certified Public Accountants. A review of interim
financial information consists principally of applying analytical procedures to
financial data and making inquiries of persons responsible for financial and
accounting matters. It is substantially less in scope than an audit in
accordance with generally accepted auditing standards, the objective of which
is the expression of an opinion regarding the financial statements taken as a
whole. Accordingly, we do not express such an opinion.
Based on our review, we are not aware of any material modifications
that should be made to the condensed consolidated financial statements referred
to above for them to be in conformity with generally accepted accounting
principles.
We have previously audited, in accordance with generally accepted
auditing standards, the consolidated balance sheet of Rite Aid Corporation and
subsidiaries as of March 1, 1997, and the related consolidated statements of
income, stockholders' equity and cash flows for the year then ended (not
presented herein); and in our report dated April 24, 1997, we expressed an
unqualified opinion on those consolidated financial statements. In our opinion,
the information set forth in the accompanying condensed consolidated balance
sheet as of March 1, 1997, is fairly stated, in all material respects, in
relation to the consolidated balance sheet from which it has been derived.
KPMG PEAT MARWICK LLP
Harrisburg, Pennsylvania
July 11, 1997
-6-
<PAGE> 8
8
----------------------------------------------
RITE AID CORPORATION
FORM 10-Q
FOR THE THIRTEEN WEEKS ENDED MAY 31, 1997
----------------------------------------------
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations:
Net income increased 108.6 percent to $68,241,000 from $32,716,000, or $.56 per
share from $.39 per share. Income from the prior year quarter included a
pre-tax charge of $16,057,000 for costs associated with the attempted
acquisition of Revco D.S. Inc. Net income for the first quarter of last year,
before the charge, was $42,639,000 or $.51 per share.
Sales for the 13-week quarter increased 89.6 percent to $2,664,600,000 compared
to $1,405,302,000 in the prior year. Prescription revenue accounted for 50.0
percent of drugstore sales, and third party prescription revenue represented
81.9 percent of pharmacy sales. Last year, prescription revenue accounted for
56.6 percent of drugstore sales, and third party prescription revenue
represented 78.6 percent of pharmacy sales.
Rite Aid same-store sales for the quarter increased 9.5 percent, reflecting a
13.5 percent increase in comparable pharmacy sales and a 4.1 percent increase
in front end same-store sales. Last year first quarter same-store sales
increased 6.7 percent. Thrifty PayLess same-store sales increased by 5.3
percent for the period, consisting of an increase of 12.6 percent in comparable
pharmacy sales and a 1.3 percent increase in front end sales. During the
quarter, the company opened 28 drugstores, closed 29 smaller outlets, enlarged
6 locations, and relocated 29 units. Stores in operation at the end of the
quarter totaled 3,622.
Costs of goods sold including occupancy costs, as a percentage of sales, were
72.3% for the quarter ending May 31, 1997 compared to 73.6% last year. The
company uses the LIFO inventory method for valuation that requires interim
estimates of annual inflation rates. Accordingly, costs of goods sold includes
a LIFO provision of $7,000,000 ($.03 per share) for the quarter ending May 31,
1997 compared to $5,900,000 ($.04 per share) in the quarter a year ago. The
trend of third party reimbursed prescription sales continued to adversely
impact pharmacy gross margins, but were offset with front end gross margin
increases over the prior year quarter resulting from a changing sales mix and
retail price changes. Overall, gross margins improved because of Thrifty
PayLess' greater mix of front end sales to total sales.
Selling, general and administrative expenses of $587,906,000 for the first
quarter and $284,391,000 for the comparable period last year represented 22.0%
and 20.2% of sales, respectively. Thrifty PayLess integration expenses and
duplicative headquarters expenses were the primary causes of the increased
ratio of selling, general and administrative expenses to sales. In addition,
Thrifty PayLess' historical ratio of selling, general and administrative
expenses to sales is greater than that experienced by the company in its east
coast operations.
Interest expense increased to $36,837,000 for the quarter ending May 31, 1997
compared to $17,787,000 for the quarter ending June 1, 1996. Interest expense
increased as a result of adding debt to finance the Thrifty PayLess merger in
the fourth quarter last year. The weighted average yield on short-term
commercial paper obligations was 5.6% for the quarter ending May 31, 1997.
Income taxes were $46,065,000 for the quarter ending May 31, 1997 compared to
$20,224,000 for the quarter ending June 1, 1996. The effective income tax rate
increased to 40.3% for the quarter ending May 31, 1997 reflecting the impact of
nondeductible amortization expenses resulting from the Thrifty PayLess
acquisition. Depreciation and amortization was $64,080,000 for the quarter
ending May 31, 1997 compared to $34,800,000 in the comparable quarter last
year.
Working capital was $1,568,088,000 at May 31, 1997 compared to $1,599,489,000
at March 1, 1997 and the current ratios were 2.3:1 and 2.4:1, respectively.
Cash flows generated by operating activities were approximately $151,604,000
for the quarter ending May 31, 1997 compared to $105,658,000 for the first
quarter last year. Capital expenditures for property, plant and equipment were
$111,644,000 in connection with the company's store construction, renovation
and relocation programs. Cash was also used for dividend payments of
$24,577,000 and reduction of long-term debt of $32,308,000. Long-term debt to
total capitalization was 46.1% as of May 31, 1997, compared to 46.8% at March
1, 1997.
The company maintains $1,250,000,000 in revolving credit commitments to provide
additional borrowing capacity and support its commercial paper program.
-7-
<PAGE> 9
9
----------------------------------------------
RITE AID CORPORATION
FORM 10-Q
FOR THE THIRTEEN WEEKS ENDED MAY 31, 1997
----------------------------------------------
Item 2. Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations: (Continued)
Certain statements contained herein and elsewhere in this Form 10-Q which are
not historical facts are forward-looking statements made pursuant to the safe
harbor provisions of the Private Securities Litigation Reform Act of 1995.
These forward-looking statements address activities or events which the company
expects will or may occur in the future, such as increases in same-store sales,
increases in third-party prescription volumes, increases in the ratio of front
end sales to total sales, increases in gross profits, future capital
expenditures, store openings, closings, remodels, renovations, expansions and
relocations, additional distribution facilities, and other aspects of the
company's future business and operations. The company cautions that a number
of important factors could cause actual results to differ materially from those
expressed in any forward-looking statements, whether written or oral, made by
or on behalf of the company. Such factors include, but are not limited to,
competitive pricing pressures, consumer preferences, general economic
conditions, inflation, merchandise supply constraints, interest rate movements,
availability of real estate, construction and start-up of drugstore and
distribution center facilities, and the effects of commercialization and
technological difficulties. Consequently, all of the forward-looking
statements made are qualified by these and other factors, risks and
uncertainties.
-8-
<PAGE> 10
10
----------------------------------------------
RITE AID CORPORATION
FORM 10-Q
FOR THE THIRTEEN WEEKS ENDED MAY 31, 1997
----------------------------------------------
PART II. OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders:
(a) On July 9, 1997 Rite Aid Corporation held its annual meeting
of stockholders.
(b) The following directors were elected as members of the Board
at the meeting:
William J. Bratton (Term to expire 2000)
Franklin C. Brown (Term to expire 2000)
Martin L. Grass (Term to expire 2000)
Preston Robert Tisch (Term to expire 2000)
Leonard I. Green (Term to expire 1999)
The following directors' terms of office continued after the
meeting:
Alex Grass (Term to expire 1998)
Philip Neivert (Term to expire 1998)
Gerald Tsai, Jr. (Term to expire 1998)
Timothy J. Noonan (Term to expire 1999)
Nancy A. Lieberman (Term to expire 1999)
Leonard Stern (Term to expire 1999)
(c) An amendment to the 1990 Omnibus Stock Incentive Plan was
approved to increase the number of shares of Common Stock
which may be issued under the Omnibus Plan by 4,000,000 shares
and to increase the number of options, stock appreciation
rights and stock-based awards which may be granted to any one
employee in any calendar year by 600,000 shares.
(d) No other matters were submitted to a vote of security holders
at the annual stockholders' meeting.
Item 6. Exhibits and Reports on Form 8-K:
(a) Exhibits
Item 11. Statement re computations of per share earnings
Item 12. Statement re computations of ratios of earnings to
fixed charges
Item 15. Copy of letter from independent accountants regarding
unaudited interim financial information
Item 27. Financial Data Schedule (EDGAR Filing Only)
(b) Reports on Form 8-K
None.
-9-
<PAGE> 11
11
----------------------------------------------
RITE AID CORPORATION
FORM 10-Q
FOR THE THIRTEEN WEEKS ENDED MAY 31, 1997
----------------------------------------------
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
RITE AID CORPORATION
--------------------
(Registrant)
Date: July 11, 1997 /s/ Frank Bergonzi
- -------------------------------- ------------------------------
Frank Bergonzi
Executive Vice President,
Chief Financial Officer
-10-
<PAGE> 12
12
EXHIBIT INDEX
EXHIBIT NO. DESCRIPTION
ITEM 11 STATEMENTS RE COMPUTATION OF PER SHARE EARNINGS.
ITEM 12 STATEMENTS RE COMPUTATION OF RATIOS OF EARNINGS TO FIXED
CHARGES
ITEM 15 COPY OF LETTER FROM INDEPENDENT ACCOUNTANTS' REGARDING
UNAUDITED INTERIM FINANCIAL INFORMATION
ITEM 27 FINANCIAL DATA SCHEDULE (EDGAR FILING ONLY).
-11-
<PAGE> 1
13
EXHIBIT 11
RITE AID CORPORATION AND SUBSIDIARIES
STATEMENTS RE COMPUTATION OF PER SHARE EARNINGS
THIRTEEN WEEKS ENDED MAY 31, 1997 AND JUNE 1, 1996
(In Thousands Except Per Share Amounts)
<TABLE>
<CAPTION>
May 31, 1997 June 1, 1996
------------ ------------
<S> <C> <C>
EARNINGS PER COMMON SHARE - ASSUMING NO DILUTION
------------------------------------------------
Net income $68,241 $32,716
======= =======
Weighted average number of common shares outstanding 122,834 83,865
======= ======
Earnings per common share - assuming no dilution $.56 $.39
==== ====
EARNINGS PER COMMON SHARE - ASSUMING FULL DILUTION (b)
------------------------------------------------------
Earnings
--------
Net income $68,241 $32,716
Add after tax interest expense applicable to 6 3/4% convertible debentures (a) 2,404 1,998
----- -----
Net income, as adjusted (b) $70,645 $34,714
======= =======
Common Shares
-------------
Weighted average number of common shares outstanding 122,834 83,865
Assuming conversion of 6 3/4% convertible debentures 5,875 6,395
Assuming exercise of options reduced by the number of shares which could have been
purchased with the proceeds from exercise of such options 1,991 620
----- ---
Weighted average number of common shares outstanding, as adjusted (b) 130,700 90,880
======= ======
Earnings per common share assuming full dilution (b) $.54 $.38
==== ====
</TABLE>
(a) Shown net of income taxes which were calculated at the
Company's effective tax rate.
(b) This calculation is submitted in accordance with Regulation
S-K item 601(b)(11) although not required by APB Opinion No. 15
since the dilution is not material.
<PAGE> 1
14
EXHIBIT 12
RITE AID CORPORATION AND SUBSIDIARIES
STATEMENTS RE COMPUTATION OF RATIOS OF EARNINGS TO FIXED CHARGES
QUARTER ENDED MAY 31, 1997 AND
YEARS ENDED MARCH 1, 1997, MARCH 2, 1996, MARCH 4, 1995, FEBRUARY 26, 1994 AND
FEBRUARY 27, 1993
(Dollar Amounts in Thousands)
<TABLE>
<CAPTION>
Quarter Ended Year Ended Year Ended Year Ended Year Ended Year Ended
May 31, March 1, March 2, March 4, February 26, February 27,
1997 1997 1996 1995 1994 1993
---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
Fixed Charges
Interest Expense $36,837 $96,473 $68,341 $42,300 $28,683 $29,387
Interest Portion(1)
of Net Rental Expense 25,787 66,067 52,080 40,424 40,427 37,659
------ ------ ------ ------ ------ ------
Fixed Charges Before
Capitalized Interest 62,624 162,540 120,421 82,724 69,110 67,046
Capitalized Interest 737 1,897 1,948 373 217 445
--- ----- ----- --- --- ---
Total Fixed Charges $63,361 $164,437 $122,369 $83,097 $69,327 $67,491
======= ======== ======== ======= ======= =======
Earnings
Income Before Extra-
ordinary Loss and
Income Taxes $114,306 $258,927 (3) $256,202 $231,464 $45,670 (2) $200,569
Fixed Charges Before
Capitalized Interest 62,624 162,540 120,421 82,724 69,110 67,046
------ ------- ------- ------ ------ ------
Total Adjusted Earnings $176,930 $421,467 $376,623 $314,188 $114,780 $267,615
======== ======== ======== ======== ======== ========
Ratio of Earnings to
Fixed Charges 2.79 2.56 3.08 3.78 1.66 3.97
==== ==== ==== ==== ==== ====
</TABLE>
(1) The interest portion of the net rental expense is estimated to be
equal to one-third of the minimum rental expense for the period.
(2) Income before extraordinary loss and income taxes for fiscal year
1994 includes a $149,196,000 one-time, pre-tax provision for
corporate restructuring and other charges.
(3) Income before extraordinary loss and income taxes for fiscal year
1997 includes a $68,057,000 one-time, pre-tax charge for nonrecurring
and other charges.
<PAGE> 1
15
Exhibit 15
Rite Aid Corporation
Camp Hill, Pennsylvania
Gentlemen:
Re: Registration Statement No. 333-08071; No. 333-21207
With respect to the subject registration statements, we acknowledge our
awareness of the incorporation by reference therein of our report dated July
11, 1997 related to our review of interim financial information.
Pursuant to Rule 436(c) under the Securities Act of 1933, such report is not
considered a part of a registration statement prepared or certified by an
accountant or a report prepared or certified by an accountant within the
meaning of Sections 7 and 11 of the Act.
Very truly yours,
/s/ KPMG PEAT MARWICK LLP
Harrisburg, PA
July 11, 1997
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> FEB-28-1998
<PERIOD-END> MAY-31-1997
<CASH> 3,703
<SECURITIES> 0
<RECEIVABLES> 376,273
<ALLOWANCES> 9,833
<INVENTORY> 2,379,918
<CURRENT-ASSETS> 2,814,061
<PP&E> 2,770,329
<DEPRECIATION> 808,903
<TOTAL-ASSETS> 6,513,849
<CURRENT-LIABILITIES> 1,245,973
<BONDS> 2,388,115
0
0
<COMMON> 129,442
<OTHER-SE> 2,404,935
<TOTAL-LIABILITY-AND-EQUITY> 6,513,849
<SALES> 2,664,600
<TOTAL-REVENUES> 2,664,600
<CGS> 1,925,551
<TOTAL-COSTS> 1,925,551
<OTHER-EXPENSES> 587,906
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 36,837
<INCOME-PRETAX> 114,306
<INCOME-TAX> 46,065
<INCOME-CONTINUING> 68,241
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 68,241
<EPS-PRIMARY> .56
<EPS-DILUTED> .54
</TABLE>
