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December 3, 2009
Bank of America Merrill Lynch
Credit Conference
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Company Update3
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Leading National Drugstore
Chain
Leading national drug chain with 4,812
stores as of August 29, 2009 Over $26 billion in pharmacy and front
end revenues and $996 million (1)
Adjusted EBITDA for LTM August 2009
Fill approximately 300 million scripts per
year 27.7% of the U.S. population visits our
stores at least once a year
4
Strong National Footprint
140
1471
1
600
2220
287
10230
117
88
67
27 95
98
244
575
104
81
196
38 69
1624779
271
43D.C.
199
664
7146
Source: Metro Market Data(1) Rite Aid adjusted EBITDA is a Non-GAAP financial measure and is reconciled to operating results in the
Appendix hereto. Includes add-back related to A/R securitization expense of $45 million.(2) Excludes Florida.
Overview
Leadership Position in Eastern U.S. MSAs(2) Market Share for Selected Markets
#1 Share34%
#2 Share31%
#3 Share19%
Other16%
Note: As of 8/29/09.
Rite Aid States
No. of Rite Aid stores
Rite Aid Distribution Centers
#1 Share
34%
#2 Share
31%
#3 Share
19%
Other
16%
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Last 12 Months Progress
5
Game Plan Progress
Refinance 2010 maturities $2.5 billion refinanced
Improve our liquidity Improved to $822 million, 50% increase from prior year
Reduce our costs SG&A declined $90.5 million
(1)
from prior year 2
nd
Quarter
Grow our EBITDA First half steady despite the challenging environment
Improve our cash flow First half cash flow from operations increased by $220
million
Reduce our debt Debt is $407 million lower than prior year 2nd Quarter
(1) Represents Adjusted EBITDA SG&A.
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Fiscal 2010 1st Half
Adjusted EBITDA Results
6
($ in millions)
Actual Prior Year B/(W)Revenues $12,853 $13,113 $(260)
Gross Profit (1) $3,506 $3,636 $(129)
% to sales 27.3% 27.7% -0.4%
SG&A (1) $3,041 $3,175 $134
% to sales 23.7% 24.2% 0.5%
Adjusted EBITDA $466 $461 $5
% to sales 3.6% 3.5% 0.1%
(1) Presented on an Adjusted EBITDA basis and reconciled to the related GAAP measure in the Appendix hereto.
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Comparable Script Count
Growth
7
0.2%
(1.7%)
(1.0%)(0.9%)
2.2%
1.4%
1.8%1.8%
-2.0%
-1.5%
-1.0%
-0.5%
0.0%
0.5%
1.0%
1.5%
2.0%
2.5%
Q1 FY'09 Q2 FY'09 Q3 FY'09 Q4 FY'09 Q1 FY'10 Q2 FY'10 Sept Oct
FY09 FY10
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Front End Comparable
Store Sales
8
1.7% 1.9%
2.3%
(2.0%)(1.6%)
(4.9%)
(2.3%)(2.7%)
-5.5%
-4.5%
-3.5%
-2.5%
-1.5%
-0.5%
0.5%
1.5%
2.5%
3.5%
Q1 FY'09 Q2 FY'09 Q3 FY'09 Q4 FY'09 Q1 FY'10 Q2 FY'10 Sept Oct
FY09 FY10
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SG&A Growth/Decline (1)
9(1) Calculated as the change in Adjusted EBITDA SG&A compared to the corresponding prior year quarter.
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Operating Initiatives
10
Segmentation (targeted at specific stores/customers)
High volume store operating improvement
New operating model for low volume stores
Sales growth opportunities in front end and pharmacy
All Stores
wellness+
Grow script count
Control labor costs
Reduce shrink expense
Reduce supply chain costs
Increase private brand penetration
Indirect procurement
Reduce working capital
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Segmentation Initiatives
11
High Volume Stores
Best Ball
Metro store operating model Changes to field structure to support high volume stores
Low Volume Stores
New ad format with fewer pages
Fewer deliveries
New labor model
Sales Growth Opportunities
Low volume FE/High Volume RX
Low volume RX/High Volume FE
New Pricing Strategy
Based on store segmentation/clustering
$550
$500
$400
$300
$200
$150
Fiscal 2010 EstimatedSavings in Millions
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Low Volume Stores Adjusted
EBITDA Improvement
12
($ in millions) AdjustedEBITDAImpact (1)
Front End Sales & Gross Profit ($9.8)
Payroll 11.4
DC Freight & Handling 7.0
Other Operating Expenses 2.0
Total Improvement $10.6
New labor model
Bi-weekly delivery
Inventory reduction
Reduced ad in some stores
2nd Quarter Fiscal 2010 Compared to 2nd Quarter Fiscal 2009
(1) Excludes impact of Rx sales and margin.
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Store Segmentation Script
Opportunity Stores
13
Same Store Script GrowthScript Growth Tool Box
Improve customer service Grass roots marketing effort
Transfer coupons
Rx Savings Card
Courtesy refill
-1.00%
0.00%
1.00%
2.00%
3.00%
4.00%
5.00%
6.00%
7.00%
March April May June July August September October
All Other Stores Rx Opportunity
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All Store Initiatives
14
wellness+
Grow Script Count
Control Labor Costs
Reduce Shrink Expense
Reduce Supply Chain Costs
Increase Private Brand Penetration
Indirect Procurement
Reduce Working Capital
Fiscal 2010 EstimatedSavings in Millions
$200
$150
$100
$50
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wellness+
15
for every125 points*
500 points
500 points
1,000 points
A one time, 10% off non-prescription purchasesshopping pass
10% off all non-prescription purchases every day
Free health screening
20% off all non-prescription purchases every day
*Up to 375 points
For every dollar spent on eligible non-prescription purchases when theyscan their card at the register
25 points For every prescription when they scan their card at the register
Every time members scan their wellness+ card, they earn points
Accumulate points to earn tiered benefits
1 point
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Improve Pharmacy Service
& Grow Scripts
16
Improve customer service in thestore
Ready When Promised Nexgen key performance
indicators
Fully utilize customer feedbacktools
Focus on underperformingstores
69%
70%
71%
72%
73%
74%
75%
76%77%
78%
CSIScore
FY08 FY09 FY10 Linear (FY08)
Pharmacy CSI FY Comparison (1)
(1) CSI = Customer Satisfaction Indicator
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Improve Pharmacy Service
& Grow Scripts
17
Grow our automated courtesyrefill program
Continue persistency &compliance programs
Expand Voxify capacity
Grow Rx Savings Card
Targeted use of transfercoupons
Grass roots marketingcampaigns at store level
Monthly Program Membership Growth
100,000
150,000
200,000
250,000
300,000
350,000
100,000
600,000
1,100,000
1,600,000
2,100,000
2,600,000
3,100,000
3,600,000
4,100,000
MonthlyNewUse
rCount
Acc
umulatedUserCount
Monthly New Users Accumulated Users
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Control Labor Costs
18
Pharmacy Scripts per Pharmacist HourFront End Sales per Labor Hour
$90
$100
$110
Mar Apr May Jun Jul Aug Sept Oct
FY09 FY10
12
13
14
15
Mar Apr May Jun Jul Aug Sept Oct
FY09 FY10
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Total Headcount Reduction
19
Total Headcount (000s)
107.5
106.0105.5
102.4
99.1
100.3
98.698.1 97.6
96.0
98.0
100.0
102.0
104.0
106.0
108.0
110.0
Feb '08 May '08 Aug '08 Nov '08 Feb '09 May '09 Aug '09 Sep '09 Oct '09
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Reduce Supply Chain Costs
Enabled by lowering inventoryinvestment
Warehouse operating efficiencies
Elimination of satellite facilities
Facility closures
Atlanta
Long Island
Improved transportation routing
More efficient delivery model basedon store segmentation
20
Distr ibution Costs as % of Sales
1.79%1.80%
1.69%
1.53%
1.48%
1.55%
Q1 Q2 Q3 Q4 Q1 Q2
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Private Brand Penetration
21
Private Brand Initiatives
New brand architecture
250 new items
Package redesign
Increased promotional support
Pricing review
13.9%
14.5%
15.3% 15.1% 15.5%
15.0% 15.0% 14.8%
12.5%
14.1% 14.2%
15.0%14.4%
13.6%13.3%
12.8%
10.0%
11.0%
12.0%
13.0%
14.0%
15.0%
16.0%
17.0%
18.0%
Mar Apr May June July Aug Sept Oct
PercentPenet
ration
FY 2010 FY 2009
Fi l 2010 I di t
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Fiscal 2010 IndirectProcurement
Expense Reduction
22
P Card Purchasing
Telecom
In-bound Freight
Rx Temp Labor
Online Auctions
Identified Savings
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Working Capital Reduction
Working Capital Initiatives
Reduced 3,700 SKUs
Improve controls around itemselection
Implement assortmentoptimization during plan-o-gramreviews
Reduce discontinued andoutdated inventory costs
Markdowns
Labor
Transportation
23
$4,551
$4,256
$4,116 $4,200
$3,700
$3,900
$4,100
$4,300
$4,500
$4,700
Q2 Q4 Q1 Q2
FIFO Inventory
($ in millions)
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Financial Highlights24
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Historical Financial
Summary
25
$10.9 $11.0
$16.2$17.6 $17.6
$6.3 $6.3
$8.0$17.3 $17.4
$24.3
$26.3 $26.0
$8.6 $8.4
$0.0
$5.0
$10.0
$15.0
$20.0
$25.0
$30.0
Fiscal 2006 Fiscal 2007 Fiscal 2008 Fiscal 2009 LTM 8/29/2009
Rx Sales Front End Sales
Revenue (1) Adjusted EBITDA (2)
($ in billions)
$719
$985 $991 $996
$688
4.0% 4.1%3.8% 3.8%
4.0%
$0
$200
$400
$600
$800
$1,000
Fiscal 2006 Fiscal 2007 Fiscal 2008 Fiscal 2009 LTM 8/29/2009
0.0%
2.0%
4.0%
6.0%
8.0%
($ in millions)
Note: For Fiscal year ended February 28. Fiscal 2006 includes 53rd week. Rite Aid acquired Jean Coutu on June 4, 2007 (Fiscal 2008).(1) Includes other revenue which is not a component of sales.(2) Rite Aid adjusted EBITDA is a Non-GAAP financial measure and is reconciled to operating results in the Appendix hereto. Includes adjustment related to A/R securitization expense.
Quarterly Comp Store Sales
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Q2 Fiscal 2010
Financial Highlights
26
26
2nd Quarter Result Commentary
Revenue
$6.3 billion
Same Store Sales
Total: (1.1)%
Pharmacy: 0.8%
Front end: (4.9)%
Solid sales performance in pharmacy as the numberof prescriptions filled increased 1.4%
Front end sales negatively impacted by a morediscount-driven customer in weak economicenvironment
$217 million
3.4% margin
Strong improvement in various cost savings
initiatives SG&A margins improved 75 basis points from last
years second quarter
$116 million No integration costs
Less store closing and impairment charges
No loss on debt modification
$822 million Revolver andsecuritization availability
Benefits from working capital initiatives
Benefits from expense initiatives and reduced capital
expenditures
Net Loss
Adjusted EBITDA (1)
Revenues and SameStore Sales
(1) Rite Aid adjusted EBITDA is a Non-GAAP financial measure and is reconciled to operating results in the Appendix hereto. Includes adjustment related to A/R securitization expense.
Liquidity
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Fiscal 2010 Guidance Recap
27
27
Fiscal 2010 Guidance
Low High
Sales $25.7 billion $26.2 billion
Same Store Sales (1.00)% 1.00%
Adjusted EBITDA (1) $900 million $1,000 million
Net Loss ($615 million) ($390 million)
Gross Capital Expenditures $250 million $250 million
(1) Rite Aid adjusted EBITDA is a Non-GAAP financial measure and is reconciled to operating results in the Appendix hereto. Includes adjustment related to A/R securitization expense.
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FYE February New Relocations Total2008 1909 65 1974
2009 42 56 98
2010 18 42 60
$740
$541
$250
$100
$300
$500
$700
$900
2008 2009 2010
CapitalExpe
nditures
(1)
(1) Guidance given on September 24, 2009
(1)
Investment in Cap Ex by Fiscal Year
Capex and New Store
Development
29
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Ample Liquidity to Execute
Plan
29
$340
$549
$430
$724
$902
$822
$0
$200
$400
$600
$800
$1,000
Q1 Q2 Q3 Q4 Q1 Q2
Liquidity Trend Over Last Six Quarters(Revolver & Securitization Capacity)
($ in millions)
$970(1)
(1) Pro forma for the refinancing
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Financing Overview30
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Refinancing of September 2010Maturities Completed with this
Transaction Successfully amended existing credit facility to permit the refinancing of Rite Aids existing 2010
maturities
Completed refinancing of the $1,750 million Revolver and $145 million Tranche 1 Term Loan dueSeptember 2010 in June 2009
$1,000 million new Revolver
$525 million Tranche 4 Term Loan
$410 million 1st Lien Senior Secured Notes
Refinancing the existing A/R Securitization facilities will completely refinance the September 2010maturities
$175 million Revolver Add-on
$125 million Tranche 4 Term Loan Add-on
$270 million 2nd Lien Senior Secured Notes
Benefits of this refinancing include:
Lower interest costs
Eliminate borrowing base deficiencies
Extend maturities
31
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Refinancing Improves Debt
Maturity Profile
32
Pro Forma for Refinancing($ in millions)
Tranche 4 TermLoan Add-on =
$125
New 2nd
Lien Notes =$270
(1)
Revolver Add-on =$175
Note: Calendar years and face amounts are reflected in graphs.(1) $1,175 million Revolver matures in September 2012. Pro forma for the refinancing, $37 million outstanding as of 8/29/09.
$1,175
$1,439
$650
$410$470
$270
$500$423
$1,068
$191
$11
$810
$0
$400
$800
$1,200
$1,600
2009 2010 2011 2012 2013 2014 2015 2016 2017 Thereafter
1st Lien 2nd Lien Unsecured
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Conclusion
We have identified significant quantifiable opportunities to
improve our results
We have a number of key initiatives underway to capture these
opportunities
Our initiatives do not require a significant amount of capital
Our initiatives are starting to have a positive impact on critical
components of our business
We have adequate liquidity to run our business
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December 3, 2009
Bank of America Merrill Lynch
Credit Conference
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