Exhibit 12
RITE AID CORPORATION AND SUBSIDIARIES
STATEMENT REGARDING THE COMPUTATION OF THE RATIO OF EARNINGS TO FIXED CHARGES AND RATIO OF EARNINGS TO COMBINED FIXED CHARGES AND PREFERRED STOCK
DIVIDENDS
We have calculated the ratio of earnings to fixed charges and the ratio of earnings to combined fixed charges and preferred stock dividends in the following table by dividing earnings by fixed charges and earnings by the sum of fixed charges and preferred stock dividends, respectively. For this purpose, earnings include pre-tax income from continuing operations plus fixed charges, before capitalized interest. Fixed charges include interest, whether expensed or capitalized, amortization of debt expense, preferred stock dividend requirement and that portion of rental expense which is representative of the interest factor in those rentals.
| | Twenty-Six Weeks Ended | | Fiscal Year Ended | |
| | August 28,
2010 | | August 29,
2009 | | February 27,
2010
(52 weeks) | | February 28,
2009
(52 weeks) | | March 1,
2008
(52 weeks) | | March 3,
2007
(52 weeks) | | March 4,
2006
(53 weeks) | |
Fixed charges: | | | | | | | | | | | | | | | |
Interest expense | | $ | 281,335 | | $ | 238,306 | | $ | 515,763 | | $ | 477,627 | | $ | 449,596 | | $ | 275,219 | | $ | 277,017 | |
Interest portion of net rental expense(1) | | 159,437 | | 159,510 | | 320,506 | | 320,947 | | 287,934 | | 195,592 | | 189,756 | |
Fixed charges before capitalized interest | | 440,772 | | 397,816 | | 836,269 | | 798,574 | | 737,530 | | 470,811 | | 466,773 | |
Capitalized interest | | 302 | | 244 | | 859 | | 1,434 | | 2,069 | | 1,474 | | 934 | |
Total fixed charges | | 441,074 | | 398,060 | | $ | 837,128 | | $ | 800,008 | | $ | 739,599 | | $ | 472,285 | | $ | 467,707 | |
Preferred stock dividend requirement(2) | | 9,206 | | 8,676 | | 17,614 | | 43,536 | | 65,066 | | 62,910 | | 65,446 | |
Total combined fixed charges and preferred stock dividends | | $ | 450,280 | | $ | 406,736 | | $ | 854,742 | | $ | 843,544 | | $ | 804,665 | | $ | 535,195 | | $ | 533,153 | |
Earnings: | | | | | | | | | | | | | | | |
(Loss) income before income taxes | | $ | (260,693 | ) | $ | (205,142 | ) | $ | (479,918 | ) | $ | (2,582,794 | ) | $ | (273,499 | ) | $ | 13,582 | | $ | 43,254 | |
Fixed charges before capitalized interest | | 440,772 | | 397,816 | | 836,269 | | 798,574 | | 737,530 | | 470,811 | | 466,773 | |
Total earnings and fixed charges | | 180,079 | | 192,674 | | $ | 356,351 | | $ | (1,784,220 | ) | $ | 464,031 | | $ | 484,393 | | $ | 510,027 | |
Ratio of earnings to fixed charges | | — | | — | | — | | — | | — | | 1.03x | | 1.09x | |
Ratio of earnings to combined fixed charges and preferred stock dividends(3) | | — | | — | | — | | — | | — | | — | | — | |
Deficiency of earnings to fixed charges | | $ | (260,995 | ) | $ | (205,386 | ) | $ | (480,777 | ) | $ | (2,584,228 | ) | $ | (275,568 | ) | — | | — | |
Deficiency of earnings to combined fixed charges and preferred stock dividends | | $ | (270,201 | ) | $ | (214,062 | ) | $ | (498,391 | ) | $ | (2,627,764 | ) | $ | (340,634 | ) | $ | (50,802 | ) | $ | (23,126 | ) |
(1) The interest portion of net rental expense is estimated to be equal to one-third of the minimum rental expense for the period.
(2) The preferred stock dividend requirement is computed as the pre-tax earnings that would be required to cover preferred stock dividends.
(3) For the twenty-six week periods ended August 28, 2010 and August 29, 2009 and the fiscal years ended February 27, 2010, February 28, 2009, March 1, 2008, March 3, 2007 and March 4, 2006, earnings were insufficient to cover fixed charges by approximately $270.2 million, $214.1 million, $498.4 million, $2.6 billion, $340.6 million, $50.8 million and $23.1 million, respectively.
