Exhibit 99.1
INVESTORS MEDIA
Dave Jessick Karen Rugen
717-975-5750 717-730-7766
or
[email protected]
RITE AID REACHES AGREEMENT TO SETTLE
CONSOLIDATED SECURITIES CLASS ACTION LAWSUITS
REQUIRED CASH PORTION OF SETTLEMENT FULLY COVERED BY INSURANCE
CAMP HILL, November 9, 2000 Rite Aid Corporation (NYSE, PSE: RAD)
announced today that it has reached an agreement to settle the consolidated
securities class action lawsuits pending against the Company in the U.S.
District Court for the Eastern District of Pennsylvania and the derivative
lawsuits pending there and in the U.S. District Court for Delaware. Charges
in the suits relate primarily to certain accounting practices and financial
reporting under former management.
"This settlement eliminates a large uncertainty surrounding Rite Aid and
doesn't require any cash other than funds from insurance," said Bob Miller,
Rite Aid chairman and chief executive officer, who joined the company last
December. "This is a major step in putting the past behind us as we
continue to focus our attention and resources on our primary
objective--operating first-class drugstores."
Under the agreement, which must be approved by the Courts, Rite Aid will
pay $45 million in cash, which will be fully funded by Rite Aid's officers'
and directors' liability insurance, and issue shares of Rite Aid common
stock in 2002. The shares will be valued over a 10-day trading period in
January 2002. If the value determined is at least $7.75 per share, Rite Aid
will issue 20 million shares. If the value determined is less than $7.75
per share, Rite Aid has the option to deliver any combination of common
stock, cash and short-term notes, with a total value of $155 million.
Rite Aid Reaches Agreement - Page 2
As additional consideration for the settlement, Rite Aid will assign to the
plaintiffs all of its claims against three former Rite Aid
executives Martin Grass, former chairman and chief executive officer;
Timothy Noonan, former president and chief operating officer; and Frank
Bergonzi, former chief financial officer and all of its claims against
the Company's former outside auditors, KPMG, LLP.
The timing and manner of distribution of the settlement to members of the
class will be subject to a plan of distribution to be developed by
plaintiffs' counsel, subject to court approval. Questions concerning the
terms of the settlement should be directed to co-lead counsel for the
class: David Bershad (212-594-5300) and Sherrie Savett (215-875-3071)
Rite Aid Corporation is one of the nation's leading drugstore chains with
annual revenues of more than $14 billion and approximately 3,800 stores in
30 states and the District of Columbia. Rite Aid owns approximately 15
percent of Advance Paradigm, Inc., the nation's largest pharmacy benefits
management and health improvement company, and approximately 15 percent of
drugstore.com, a leading online source for health, beauty and pharmacy
products. Information about Rite Aid, including corporate background and
press releases, is available through the company's website at
www.riteaid.com.
This press release may contain forward-looking statements, which are
subject to certain risks and uncertainties that could cause actual results
to differ materially from those expressed or implied in the forward-looking
statements. Factors that could cause actual results to differ materially
from those expressed or implied in such forward-looking statements include
our high level of indebtedness, our ability to make interest and principal
payments on our debt and satisfy the other covenants contained in our
credit facilities and other debt agreements, our ability to improve the
operating performance of our existing stores, and, in particular, our new
and relocated stores in accordance with our management's long term
strategy, the outcomes of pending lawsuits and governmental investigations,
both civil and criminal, involving our financial reporting and other
matters, competitive pricing pressures, continued consolidation of the
drugstore industry, third-party prescription reimbursement levels,
regulatory changes governing pharmacy practices, general economic
conditions and inflation, interest rate movements, access to capital and
merchandise supply constraints, and our failure to develop, implement and
maintain reliable and adequate internal accounting systems and controls.
Consequently, all of the forward-looking statements made in this press
release are qualified by these and other factors, risks and uncertainties.
Readers are also directed to consider other risks and uncertainties
discussed in documents filed by the Company with the Securities and
Exchange Commission.
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