24. Guarantor and Non-Guarantor Condensed Consolidating Financial Information

Rite Aid Corporation conducts the majority of its business through its subsidiaries. With the exception of EIC, substantially all of Rite Aid Corporation's 100 percent owned subsidiaries guarantee the obligations under the Amended and Restated Senior Secured Credit Facility, second priority secured term loan facilities, secured guaranteed notes and unsecured guaranteed notes (the "Subsidiary Guarantors"). Additionally, prior to the Acquisition, the subsidiaries, including joint ventures, that did not guarantee the Amended and Restated Senior Secured Credit Facility, second priority secured term loan facilities, secured guaranteed notes and unsecured guaranteed notes, were minor. Accordingly, condensed consolidating financial information for the Company and subsidiaries is not presented for those periods. Condensed consolidating financial information for the Company, its Subsidiary Guarantors and non-guarantor subsidiaries, is presented for periods subsequent to the Acquisition.

For the purposes of preparing the information below, Rite Aid Corporation uses the equity method to account for its investment in subsidiaries. The equity method has been used by Subsidiary Guarantors with respect to investments in the non-guarantor subsidiaries. The subsidiary guarantees related to the Company's Amended and Restated Senior Secured Credit Facility, second priority secured term loan facilities and secured guaranteed notes and, on an unsecured basis, the unsecured guaranteed notes, are full and unconditional and joint and several. Presented below is condensed consolidating financial information for Rite Aid Corporation, the Subsidiary Guarantors, and the non-guarantor subsidiaries at March 4, 2017, February 27, 2016 and for the fiscal years ended March 4, 2017 and February 27, 2016. Separate financial statements for Subsidiary Guarantors are not presented.

	Rite Aid Corporation Condensed Consolidating Balance Sheet March 4, 2017
	Rite Aid Corporation (Parent Company Only)		Subsidiary Guarantors		Non- Guarantor Subsidiaries		Eliminations			Consolidated
	(in thousands)
ASSETS
Current assets:
Cash and cash equivalents	$	—	$	213,104	$	32,306	$	—		$	245,410
Accounts receivable, net		—		1,506,288		264,838		—			1,771,126
Intercompany receivable		—		215,862		—		(215,862	)(a)		—
Inventories, net of LIFO reserve of $0, $999,776, $0, $0, and $999,776		—		2,837,211		—		—			2,837,211
Prepaid expenses and other current assets		—		203,033		8,508		—			211,541

Total current assets		—		4,975,498		305,652		(215,862	)		5,065,288
Property, plant and equipment, net		—		2,251,692		—		—			2,251,692
Goodwill		—		1,715,479		—		—			1,715,479
Other intangibles, net		—		782,167		53,628		—			835,795
Deferred tax assets		—		1,505,564		—		—			1,505,564
Investment in subsidiaries		15,275,488		50,004		—		(15,325,492	)(b)		—
Intercompany receivable		—		7,331,675		—		(7,331,675	)(a)		—
Other assets		—		219,934		—		—			219,934

Total assets	$	15,275,488	$	18,832,013	$	359,280	$	(22,873,029	)	$	11,593,752


LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current maturities of long-term debt and lease financing obligations	$	90	$	21,245	$	—	$	—		$	21,335
Accounts payable		—		1,609,025		4,884		—			1,613,909
Intercompany payable		—		—		215,862		(215,862	)(a)		—
Accrued salaries, wages and other current liabilities		66,365		1,236,297		67,342		—			1,370,004

Total current liabilities		66,455		2,866,567		288,088		(215,862	)		3,005,248
Long-term debt, less current maturities		7,263,288		—		—		—			7,263,288
Lease financing obligations, less current maturities		—		44,070		—		—			44,070
Intercompany payable		7,331,675		—		—		(7,331,675	)(a)		—
Other noncurrent liabilities		—		645,888		21,188		—			667,076

Total liabilities		14,661,418		3,556,525		309,276		(7,547,537	)		10,979,682
Commitments and contingencies		—		—		—		—			—

Total stockholders' equity		614,070		15,275,488		50,004		(15,325,492	)(b)		614,070

Total liabilities and stockholders' equity	$	15,275,488	$	18,832,013	$	359,280	$	(22,873,029	)	$	11,593,752

(a)

Elimination of intercompany accounts receivable and accounts payable amounts.

(b)

Elimination of investments in consolidated subsidiaries.

	Rite Aid Corporation Condensed Consolidating Balance Sheet February 27, 2016
	Rite Aid Corporation (Parent Company Only)		Subsidiary Guarantors		Non- Guarantor Subsidiaries		Eliminations			Consolidated
	(in thousands)
ASSETS
Current assets:
Cash and cash equivalents	$	—	$	90,569	$	33,902	$	—		$	124,471
Accounts receivable, net		—		1,316,797		284,211		—			1,601,008
Intercompany receivable		—		224,220		—		(224,220)	(a)		—
Inventories, net of LIFO reserve of $0, $1,006,396, $0, $0, and $1,006,396		—		2,697,104		—		—			2,697,104
Prepaid expenses and other current assets		—		121,684		6,460		—			128,144

Total current assets		—		4,450,374		324,573		(224,220	)		4,550,727
Property, plant and equipment, net		—		2,255,398		—		—			2,255,398
Goodwill		—		1,713,475		—		—			1,713,475
Other intangibles, net		—		948,451		55,928		—			1,004,379
Deferred tax assets		—		1,539,141		—		—			1,539,141
Investment in subsidiaries		14,832,523		57,167		—		(14,889,690)	(b)		—
Intercompany receivable		—		7,270,869		—		(7,270,869)	(a)		—
Other assets		—		207,821		6,069		—			213,890

Total assets	$	14,832,523	$	18,442,696	$	386,570	$	(22,384,779	)	$	11,277,010


LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current maturities of long-term debt and lease financing obligations	$	90	$	26,758	$	—	$	—		$	26,848
Accounts payable		—		1,541,984		813		—			1,542,797
Intercompany payable		—		—		224,220		(224,220)	(a)		—
Accrued salaries, wages and other current liabilities		65,743		1,274,074		87,433		—			1,427,250

Total current liabilities		65,833		2,842,816		312,466		(224,220	)		2,996,895
Long-term debt, less current maturities		6,914,393		—		—		—			6,914,393
Lease financing obligations, less current maturities		—		52,895		—		—			52,895
Intercompany payable		7,270,869		—		—		(7,270,869)	(a)		—
Other noncurrent liabilities		—		714,462		16,937		—			731,399

Total liabilities		14,251,095		3,610,173		329,403		(7,495,089	)		10,695,582
Commitments and contingencies		—		—		—		—			—

Total stockholders' equity		581,428		14,832,523		57,167		(14,889,690)	(b)		581,428

Total liabilities and stockholders' equity	$	14,832,523	$	18,442,696	$	386,570	$	(22,384,779	)	$	11,277,010

(a)

Elimination of intercompany accounts receivable and accounts payable amounts.

(b)

Elimination of investments in consolidated subsidiaries.

	Rite Aid Corporation Condensed Consolidating Statement of Operations For the Year Ended March 4, 2017
	Rite Aid Corporation (Parent Company Only)			Subsidiary Guarantors			Non- Guarantor Subsidiaries			Eliminations			Consolidated
	(in thousands)
Revenues	$	—		$	32,739,473		$	223,077		$	(117,477)	(a)	$	32,845,073
Costs and expenses:
Cost of revenues		—			24,975,538			213,225			(117,755)	(a)		25,071,008
Selling, general and administrative expenses		—			7,228,540			13,541			278	(a)		7,242,359
Lease termination and impairment expenses		—			55,294			—			—			55,294
Interest expense		414,208			17,796			(13	)		—			431,991
Gain on sale of assets, net		—			(4,024	)		—			—			(4,024	)
Equity in earnings of subsidiaries, net of tax		(418,261	)		5,101			—			413,160	(b)		—

		(4,053	)		32,278,245			226,753			295,683			32,796,628

Income (loss) before income taxes		4,053			461,228			(3,676	)		(413,160	)		48,445
Income tax expense		—			42,967			1,425			—			44,392

Net income (loss)	$	4,053		$	418,261		$	(5,101	)	$	(413,160)	(b)	$	4,053
Total other comprehensive income (loss)		5,464			5,464			—			(5,464	)		5,464

Comprehensive income (loss)	$	9,517		$	423,725		$	(5,101	)	$	(418,624	)	$	9,517

(a)

Elimination of intercompany revenues and expenses.

(b)

Elimination of equity in earnings of subsidiaries.

	Rite Aid Corporation Condensed Consolidating Statement of Operations For the Year Ended February 27, 2016
	Rite Aid Corporation (Parent Company Only)			Subsidiary Guarantors			Non- Guarantor Subsidiaries			Eliminations			Consolidated
	(in thousands)
Revenues	$	—		$	30,731,771		$	162,620		$	(157,734)	(a)	$	30,736,657
Costs and expenses:
Cost of revenues		—			22,910,402			154,838			(154,838)	(a)		22,910,402
Selling, general and administrative expenses		—			7,004,321			11,921			(2,896)	(a)		7,013,346
Lease termination and impairment expenses		—			48,423			—			—			48,423
Interest expense		415,304			34,268			2			—			449,574
Loss on debt retirement, net		33,205			—			—			—			33,205
Loss on sale of assets, net		—			3,303			—			—			3,303
Equity in earnings of subsidiaries, net of tax		(613,974	)		3,972			—			610,002	(b)		—

		(165,465	)		30,004,689			166,761			452,268			30,458,253

Income (loss) before income taxes		165,465			727,082			(4,141	)		(610,002	)		278,404
Income tax expense (benefit)		—			113,108			(169	)		—			112,939

Net income (loss)	$	165,465		$	613,974		$	(3,972	)	$	(610,002)	(b)	$	165,465
Total other comprehensive (loss) income		(1,931	)		(1,931	)		—			1,931			(1,931	)

Comprehensive income (loss)	$	163,534		$	612,043		$	(3,972	)	$	(608,071	)	$	163,534

(a)

Elimination of intercompany revenues and expenses.

(b)

Elimination of equity in earnings of subsidiaries.

	Rite Aid Corporation Condensed Consolidating Statement of Cash Flows For the Year Ended March 4, 2017
	Rite Aid Corporation (Parent Company Only)			Subsidiary Guarantors			Non- Guarantor Subsidiaries			Eliminations			Consolidated
	(in thousands)
Operating activities:
Net cash (used in) provided by operating activities	$	(394,768	)	$	622,227		$	(1,596	)	$	—		$	225,863

Investing activities:
Payments for property, plant and equipment		—			(424,289	)		—			—			(424,289	)
Intangible assets acquired		—			(56,822	)		—			—			(56,822	)
Intercompany activity		—			(57,817	)		—			57,817			—
Proceeds from dispositions of assets and investments		—			16,852			—			—			16,852

Net cash (used in) provided by investing activities		—			(522,076	)		—			57,817			(464,259	)

Financing activities:
Net proceeds from revolver		330,000			—			—			—			330,000
Principal payments on long-term debt		—			(21,239	)		—			—			(21,239	)
Change in zero balance cash accounts		—			43,080			—			—			43,080
Net proceeds from issuance of common stock		6,951			—			—			—			6,951
Excess tax benefit on stock options and restricted stock		—			543			—			—			543
Intercompany activity		57,817			—			—			(57,817	)		—

Net cash provided by (used in) financing activities		394,768			22,384			—			(57,817	)		359,335

Increase (decrease) in cash and cash equivalents		—			122,535			(1,596	)		—			120,939
Cash and cash equivalents, beginning of period		—			90,569			33,902			—			124,471

Cash and cash equivalents, end of period	$	—		$	213,104		$	32,306		$	—		$	245,410

	Rite Aid Corporation Condensed Consolidating Statement of Cash Flows For the Year Ended February 27, 2016
	Rite Aid Corporation (Parent Company Only)			Subsidiary Guarantors			Non- Guarantor Subsidiaries			Eliminations			Consolidated
	(in thousands)
Operating activities:
Net cash (used in) provided by operating activities	$	(387,871	)	$	1,391,759		$	(6,486	)	$	—		$	997,402

Investing activities:
Payments for property, plant and equipment		—			(541,347	)		—			—			(541,347	)
Intangible assets acquired		—			(128,648	)		—			—			(128,648	)
Acquisition of businesses, net of cash acquired		(1,778,377	)		—			—			—			(1,778,377	)
Intercompany activity		(103,834	)		(794,422	)		—			898,256			—
Proceeds from sale-leaseback transaction		—			36,732			—			—			36,732
Proceeds from dispositions of assets and investments		—			9,782			—			—			9,782

Net cash (used in) provided by investing activities		(1,882,211	)		(1,417,903	)		—			898,256			(2,401,858	)

Financing activities:
Proceeds from issuance of long-term debt		1,800,000			—			—			—			1,800,000
Net proceeds from revolver		375,000			—			—			—			375,000
Principal payments on long-term debt		(650,079	)		(22,638	)		—			—			(672,717	)
Change in zero balance cash accounts		—			(62,878	)		—			—			(62,878	)
Net proceeds from issuance of common stock		11,376			—			—			—			11,376
Financing fees paid for early debt redemption		(26,003	)		—			—			—			(26,003	)
Excess tax benefit on stock options and restricted stock		—			22,884			—			—			22,884
Deferred financing costs paid		(34,634	)		—			—			—			(34,634	)
Intercompany activity		794,422			63,446			40,388			(898,256	)		—

Net cash provided by (used in) financing activities		2,270,082			814			40,388			(898,256	)		1,413,028

(Decrease) increase in cash and cash equivalents		—			(25,330	)		33,902			—			8,572
Cash and cash equivalents, beginning of period		—			115,899			—			—			115,899

Cash and cash equivalents, end of period	$	—		$	90,569		$	33,902		$	—		$	124,471