25. 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, secured guaranteed notes and unsecured guaranteed notes (the "Subsidiary Guarantors"). Additionally, with the exception of EIC, the subsidiaries, including joint ventures, that do not guarantee the Amended and Restated Senior Secured Credit Facility, secured guaranteed notes and unsecured guaranteed notes, are minor.

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 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 3, 2018, March 4, 2017 and for the fiscal years ended March 3, 2018, March 4, 2017 and February 27, 2016. Separate financial statements for Subsidiary Guarantors are not presented.

	Rite Aid Corporation Condensed Consolidating Balance Sheet March 3, 2018
	Rite Aid Corporation (Parent Company Only)		Subsidiary Guarantors		Non- Guarantor Subsidiaries		Eliminations			Consolidated
	(in thousands)
ASSETS
Current assets:
Cash and cash equivalents	$	—	$	441,244	$	6,090	$	—		$	447,334
Accounts receivable, net		—		1,502,507		366,593		—			1,869,100
Intercompany receivable				223,413		—		(223,413	)(a)		—
Inventories, net of LIFO reserve of $0, $581,090, $0, $0, and $581,090		—		1,799,539		—		—			1,799,539
Prepaid expenses and other current assets		—		176,678		4,503		—			181,181
Current assets held for sale		—		438,137		—		—			438,137

Total current assets		—		4,581,518		377,186		(223,413	)		4,735,291
Property, plant and equipment, net		—		1,431,246		—		—			1,431,246
Goodwill		—		1,421,120		—		—			1,421,120
Other intangibles, net		—		539,115		51,328		—			590,443
Deferred tax assets		—		594,019		—		—			594,019
Investment in subsidiaries		8,745,390		54,076		—		(8,799,466	)(b)		—
Intercompany receivable		—		3,189,419		—		(3,189,419	)(a)		—
Other assets		—		209,926		7,282		—			217,208
Noncurrent assets held for sale		—		—		—		—			—

Total assets	$	8,745,390	$	12,020,439	$	435,796	$	(12,212,298	)	$	8,989,327


LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current maturities of long-term debt and lease financing obligations	$	90	$	20,671	$	—	$	—		$	20,761
Accounts payable		—		1,641,676		9,687		—			1,651,363
Intercompany payable		—		—		223,413		(223,413	)(a)		—
Accrued salaries, wages and other current liabilities		65,223		1,031,379		135,134		—			1,231,736
Current liabilities held for sales		549,549		10,656		—		—			560,205

Total current liabilities		614,862		2,704,382		368,234		(223,413	)		3,464,065
Long-term debt, less current maturities		3,340,099		—		—		—			3,340,099
Lease financing obligations, less current maturities		—		30,775		—		—			30,775
Intercompany payable		3,189,419		—		—		(3,189,419	)(a)		—
Other noncurrent liabilities		—		539,892		13,486		—			553,378
Noncurrent liabilities held for sale		—		—		—		—			—

Total liabilities		7,144,380		3,275,049		381,720		(3,412,832	)		7,388,317
Commitments and contingencies		—		—		—		—			—

Total stockholders' equity		1,601,010		8,745,390		54,076		(8,799,466	)(b)		1,601,010

Total liabilities and stockholders' equity	$	8,745,390	$	12,020,439	$	435,796	$	(12,212,298	)	$	8,989,327


(a)	Elimination of intercompany accounts receivable and accounts payable amounts.
(b)	Elimination of investments in consolidated subsidiaries.

	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, $607,326, $0, $0, and $607,326		—		1,789,541		—		—			1,789,541
Prepaid expenses and other current assets		—		203,033		8,508		—			211,541
Current assets held for sale		—		1,047,670		—		—			1,047,670

Total current assets		—		4,975,498		305,652		(215,862	)		5,065,288
Property, plant and equipment, net		—		1,526,462		—		—			1,526,462
Goodwill		—		1,682,847		—		—			1,682,847
Other intangibles, net		—		661,778		53,628		—			715,406
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		—		215,917		—		—			215,917
Noncurrent assets held for sale		—		882,268		—		—			882,268

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	$	17,619	$	—	$	—		$	17,709
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		1,207,240		67,342		—			1,340,947
Current liabilities held for sales		—		32,683		—		—			32,683

Total current liabilities		66,455		2,866,567		288,088		(215,862	)		3,005,248
Long-term debt, less current maturities		3,235,888		—		—		—			3,235,888
Lease financing obligations, less current maturities		—		37,204		—		—			37,204
Intercompany payable		7,331,675		—		—		(7,331,675	)(a)		—
Other noncurrent liabilities		—		622,762		21,188		—			643,950
Noncurrent liabilities held for sale		4,027,400		29,992							4,057,392

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 Statement of Operations For the Year Ended March 3, 2018
	Rite Aid Corporation (Parent Company Only)			Subsidiary Guarantors			Non- Guarantor Subsidiaries			Eliminations			Consolidated
	(in thousands)
Revenues	$	—		$	21,413,734		$	209,356		$	(94,122	)(a)	$	21,528,968
Costs and expenses:
Cost of revenues		—			16,645,136			197,084			(93,357	)(a)		16,748,863
Selling, general and administrative expenses		—			4,635,531			16,496			(765	)(a)		4,651,262
Lease termination and impairment expenses		—			58,765			—			—			58,765
Interest expense		183,825			19,261			(318	)		—			202,768
Goodwill impairment		—			261,727			—			—			261,727
Walgreens Boots Alliance, Inc. termination fee		(325,000	)		—			—			—			(325,000	)
Gain on sale of assets, net		—			(25,872	)		—			—			(25,872	)
Equity in earnings of subsidiaries, net of tax		(1,034,775	)		(4,072	)		—			1,038,847	(b)		—

		(1,175,950	)		21,590,476			213,262			944,725			21,572,513

Income (loss) from continuing operations before income taxes		1,175,950			(176,742	)		(3,906	)		(1,038,847	)		(43,545	)
Income tax expense (benefit)		—			313,965			(7,978	)		—			305,987

Net income (loss) from continuing operations		1,175,950			(490,707	)		4,072			(1,038,847	)		(349,532	)
Net income (loss) from discontinued operations		(232,480	)		1,525,482			—			—			1,293,002

Net income (loss)	$	943,470		$	1,034,775		$	4,072		$	(1,038,847	)(b)	$	943,470
Total other comprehensive income (loss)		7,255			7,255			—			(7,255	)		7,255

Comprehensive income (loss)	$	950,725		$	1,042,030		$	4,072		$	(1,046,102	)	$	950,725


(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 March 4, 2017
	Rite Aid Corporation (Parent Company Only)			Subsidiary Guarantors			Non- Guarantor Subsidiaries			Eliminations			Consolidated
	(in thousands)
Revenues	$	—		$	22,821,940		$	223,077		$	(117,477	)(a)	$	22,927,540
Costs and expenses:
Cost of revenues		—			17,767,363			213,225			(117,755	)(a)		17,862,833
Selling, general and administrative expenses		—			4,763,176			13,541			278	(a)		4,776,995
Lease termination and impairment expenses		—			45,778			—			—			45,778
Interest expense		182,282			17,796			(13	)		—			200,065
Gain on sale of assets, net		—			(6,649	)		—			—			(6,649	)
Equity in earnings of subsidiaries, net of tax		(418,261	)		5,101			—			413,160	(b)		—

		(235,979	)		22,592,565			226,753			295,683			22,879,022

Income (loss) before income taxes		235,979			229,375			(3,676	)		(413,160	)		48,518
Income tax expense		—			43,013			1,425			—			44,438

Net income (loss) from continuing operations		235,979			186,362			(5,101	)		(413,160	)(b)		4,080
Net income (loss) from discontinued operations		(231,926	)		231,899			—			—			(27	)

Net income (loss)	$	4,053		$	418,261		$	(5,101	)	$	(413,160	)	$	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	$	—		$	20,765,351		$	162,620		$	(157,734	)(a)	$	20,770,237
Costs and expenses:
Cost of revenues		—			15,778,258			154,838			(154,838	)(a)		15,778,258
Selling, general and administrative expenses		—			4,572,146			11,921			(2,896	)(a)		4,581,171
Lease termination and impairment expenses		—			40,477			—			—			40,477
Interest expense		151,862			34,268			2			—			186,132
Loss on debt retirement, net		33,205			—			—			—			33,205
Loss on sale of assets, net		—			(606	)		—			—			(606	)
Equity in earnings of subsidiaries, net of tax		(613,974	)		3,972			—			610,002	(b)		—

		(428,907	)		20,428,515			166,761			452,268			20,618,637

Income (loss) before income taxes		428,907			336,836			(4,141	)		(610,002	)		151,600
Income tax expense (benefit)		—			49,681			(169	)		—			49,512

Net income (loss) from continuing operations		428,907			287,155			(3,972	)		(610,002	)(b)		102,088
Net income (loss) from discontinued operations		(263,442	)		326,819			—			—			63,377

Net income (loss)	$	165,465		$	613,974		$	(3,972	)	$	(610,002	)	$	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 3, 2018
	Rite Aid Corporation (Parent Company Only)			Subsidiary Guarantors			Non- Guarantor Subsidiaries			Eliminations			Consolidated
	(in thousands)
Operating activities:
Net cash provided by operating activities	$	158,247		$	379,439		$	(26,216	)	$	—		$	511,470

Investing activities:
Payments for property, plant and equipment		—			(185,879	)		—			—			(185,879	)
Intangible assets acquired		—			(28,885	)		—			—			(28,885	)
Intercompany activity		—			(3,460,291	)		—			3,460,291			—
Proceeds from dispositions of assets and investments		—			27,586			—			—			27,586
Proceeds from insured loss		—			4,239			—			—			4,239

Net cash (used in) provided by investing activities		—			(3,643,230	)		—			3,460,291			(182,939	)

Financing activities:
Net payments to revolver		(265,000	)		—			—			—			(265,000	)
Principal payments on long-term debt		—			(9,882	)		—			—			(9,882	)
Change in zero balance cash accounts		—			35,605			—			—			35,605
Net proceeds from issuance of common stock		5,796			—			—			—			5,796
Payments for taxes related to net share settlement of equity awards		—			(4,103	)		—			—			(4,103	)
Intercompany activity		3,460,291			—			—			(3,460,291	)		—

Net cash provided by (used in) financing activities		3,201,087			21,620			—			(3,460,291	)		(237,584	)

Cash flows of discontinued operations:
Operating activities of discontinued operations		(224,300	)		(20,826	)		—			—			(245,126	)
Investing activities of discontinued operations		—			3,496,222			—			—			3,496,222
Financing activities of discontinued operations		(3,135,034	)		(5,085	)		—			—			(3,140,119	)

Net cash provided by (used in) discontinued operations		(3,359,334	)		3,470,311			—			—			110,977

(Decrease) increase in cash and cash equivalents		—			228,140			(26,216	)		—			201,924
Cash and cash equivalents, beginning of period		—			213,104			32,306			—			245,410

Cash and cash equivalents, end of period	$	—		$	441,244		$	6,090		$	—		$	447,334

	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	$	(162,842	)	$	347,465		$	(1,596	)	$	—		$	183,027

Investing activities:
Payments for property, plant and equipment		—			(254,149	)		—			—			(254,149	)
Intangible assets acquired		—			(39,648	)		—			—			(39,648	)
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		—			(334,762	)		—			57,817			(276,945	)

Financing activities:
Net proceeds from revolver		330,000			—			—			—			330,000
Principal payments on long-term debt		—			(16,588	)		—			—			(16,588	)
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
Payments for taxes related to net share settlement of equity awards		—			(6,254	)		—			—			(6,254	)
Intercompany activity		57,817			—			—			(57,817	)		—

Net cash provided by (used in) financing activities		394,768			20,781			—			(57,817	)		357,732

Cash flows of discontinued operations:
Operating activities of discontinued operations		(231,926	)		281,016			—			—			49,090
Investing activities of discontinued operations		—			(187,314	)		—			—			(187,314	)
Financing activities of discontinued operations		—			(4,651	)		—			—			(4,651	)

Net cash provided by (used in) discontinued operations		(231,926	)		89,051			—			—			(142,875	)

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	$	(124,429	)	$	841,258		$	(6,486	)	$	—		$	710,343

Investing activities:
Payments for property, plant and equipment		—			(391,199	)		—			—			(391,199	)
Intangible assets acquired		—			(89,874	)		—			—			(89,874	)
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		—			26,953			—			—			26,953
Proceeds from dispositions of assets and investments		—			9,773			—			—			9,773

Net cash (used in) provided by investing activities		(1,882,211	)		(1,238,769	)		—			898,256			(2,222,724	)

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	)		(17,415	)		—			—			(667,494	)
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
Payments for taxes related to net share settlement of equity awards		—			(17,506	)		—			—			(17,506	)
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			(11,469	)		40,388			(898,256	)		1,400,745

Cash flows of discontinued operations:
Operating activities of discontinued operations		(263,442	)		568,007			—			—			304,565
Investing activities of discontinued operations		—			(179,134	)		—			—			(179,134	)
Financing activities of discontinued operations		—			(5,223	)		—			—			(5,223	)

Net cash provided by (used in) discontinued operations		(263,442	)		383,650			—			—			120,208

(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