SUBSEQUENT EVENTS

12 Months Ended

Jan. 31, 2015

NOTE 15: SUBSEQUENT EVENTS

On March 25, 2015, the Company announced the intent to acquire Reeves-Sain Drug Store, Inc., a private specialty and retail pharmacy company based in the greater Nashville, Tennessee area. The acquisition includes both EntrustRx, a specialty pharmacy operation that has a strong regional presence in the Southeast serviced from facilities in Spring Hill, Tennessee and Columbus, Mississippi, as well as the single Reeves-Sain retail pharmacy in Murfreesboro, Tennessee. This acquisition closed on April 10, 2015 and will further expand our presence in the specialty pharmacy arena – the largest growth area of the pharmacy industry.

EntrustRx, which is licensed in all 50 states, dispenses specialty pharmaceuticals to treat complex conditions and diseases that typically require ongoing support for extensive periods of time. Its main therapy lines include hepatitis C, oncology, growth hormones, multiple sclerosis, and rheumatology.

Fred's acquired EntrustRx and the Reeves-Sain retail pharmacy for approximately $66 million, comprising $53 million in cash and a $13 million note payable. Fred's utilized available cash and borrowings under its new revolving loan and credit agreement entered into on April 9, 2015 (See Note 3 - Indebtedness) to fund the transaction. Fred's anticipates that the deal will be accretive to earnings per share in the first full year following closing.