Event Brief of Rite Aid will grow to Approximately 5,000 Drugstores as the Jean Coutu Group Agrees to Merge all Brooks and Eckerd Stores into Rite Aid - Final.

Original Source: FD (FAIR DISCLOSURE) WIRE

PARTICIPANTS

. Mary Sammons, Rite Aid, President, CEO . Kevin Twomey, Rite Aid, CFO . Andre Belzile, Jean Coutu Group, SVP, Finance & Corporate Affairs

. Jean Coutu, Jean Coutu Group, Chairman, Pres., CEO . Meredith Adler, Lehman Brothers, Analyst . Ed Kelly, Credit Suisse, Analyst

. Patricia Baker, Merrill Lynch, Analyst . Francois Coutu, Jean Coutu Group, Pres, Canadian Ops, Vice Chairman . Irene Nattel, RBC Capital, Analyst . Pierre Legault, Jean Coutu Group, Group EVP

. Steve Chick, JP Morgan, Analyst . Winston Lee, Credit Suisse, Analyst . Mark Wiltamuth, Morgan Stanley, Analyst . Karim Salamatian, BMO Capital Markets, Analyst . John Heinbockel, Goldman Sachs, Analyst

. Keith Hallett, Desjardins Securities, Analyst . Neil Currie, UBS, Analyst . Jim Durran, National Bank Finance, Analyst . Mark Husson, HSBC, Analyst . Ron Ho, Raymond James, Analyst . Karen Miller, Bear Stearns, Analyst . Ryan Balgopal, Scotia Capital, Analyst

. John Ransom, Raymond James, Analyst

OVERVIEW

RAD reported that the Co. and The Jean Coutu Group (PJC) have reached an agreement on a transaction that will add 1,858 Brooks and Eckerd stores and six distribution centers to its RAD's network, and grow its chain to approx. 5,000 stores. All of the acquired stores will be rebranded RAD. In return, PJC will receive $1.45b in cash and 250m shares of RAD common stock, making them RAD's largest shareholder.

FINANCIAL DATA

A. Key Data From Call 1. FY07 sales guidance = $17.40-17.65b. 2. FY07 net income guidance = a net loss of $5m to net income of $40m. 3. FY07 diluted EPS guidance = loss per share $0.07 to EPS of $0.02.

PRESENTATION SUMMARY

S1. About the Announcement (M.S.) 1. Details: 1. RAD and The Jean Coutu Group (PJC) have reached an agreement on a transaction that will add 1,858 Brooks and Eckerd stores and six distribution centers to the RAD network, and grow the Co.'s chain to approx. 5,000 stores. 2. All of the acquired stores will be rebranded RAD.

3. In return, PJC will receive $1.45b in cash and 250m shares of

RAD common stock, making them RAD's largest shareholder.

1. RAD intends to assume $850m of PJC's long-term debt in a transaction valued at approx. $3.4b. 4. When the transaction is completed, RAD's current CEO will continue to lead RAD, adding the role of Chairman of the Board to her responsibilities as President and CEO. 1. Michel Coutu will become Co-Chairman of the Board, and PJC will have three other Board seats on the 14-member Board,

including Francois and Andre. 2. Bob Miller, RAD's current Chairman, will remain a Director. 3. Pierre Legault will become RAD's Chief Administrative Officer, while the Co.'s current senior management team remains in place. 5. This transaction accelerates RAD's growth strategy, particularly in areas where it has already been focusing its new store development. 1. This allows RAD to grow to roughly 5,000 stores and nearly $27b in sales virtually overnight, and reach a scale comparable to its two major drugstore competitors. 6. The Brooks and Eckerd stores are in good locations.

1. 70% of the stores are located in 14 states where RAD already

operates, including areas of focus such as: 1. New York. 2. New Jersey. 3. Connecticut. 4. Pennsylvania. 5. Maryland. 6. Delaware. 7. Virginia. 2. This transaction will enable RAD to enter Massachusetts,

Rhode Island, North Carolina, and South Carolina on a competitive basis. 7. Over 50% of the stores are freestanding and almost 50% have drive-throughs. 1. The stores have strong pharmacy share with pharmacy same-store sales that have continued to grow.

2. Front-end same-store sales have started to improve over the

last few months and RAD will employee its successful front-end merchandising, marketing, and promotion programs to move them even further ahead and increase the front-end sales per store. 2. Eckerd's Southern Stores: 1. Their sales per store are only slightly less than other Eckerd stores in the network and they have EBITDA as a percent of sales and avg. script count per store that matches or beats many of the Eckerd stores in other geographic areas.

2. RAD believes that it can improve the sales and profitability

of stores throughout the Eckerd network by leveraging the

Co.'s infrastructure. 3. Other Details: 1. As all of the acquired stores are already in RAD's state or adjacent to them, it expects to leverage its already-existing systems, programs, and management talent to achieve substantial cost savings as well as gross sales. 2. The Co. estimates that substantial annual net synergies of approx. $150m will be realized after a 12-month integration period, with some savings during the first year.

1. They will be generated by cost efficiencies in merchandising, purchasing, advertising, distribution, and administration, and RAD believes there is potential to achieve further value from revenue synergies, cost-containment initiatives, and the ability to apply best practices across the network. 3. While the transaction entails the use of substantial leverage, RAD expects its debt coverage ratio to be less than it is today after all of the expected synergies are realized, and over the next few years it expects to improve its debt coverage ratio as it continues to pay down debt. 4. As a result of these synergies, RAD expects this transaction

to be accretive to its earnings by $0.09-0.15 per diluted

share after the first 12 months. 1. RAD expects it to be dilutive during the first 12 months by $0.03-0.07 per share because of integration costs and non-recurring expenses. 5. The RAD banner will go up on all of the acquired stores within a matter of weeks after the transaction is final and it expects the stores to be fully integrated into the Co. after one year. 6. RAD plans to invest up to $500m in the acquired stores in the first year and up to another $450m on the stores and the distribution centers over the next four years, as needed. 7. In the first year, RAD will convert all of the Brooks and Eckerd stores to RAD's system. 1. This includes installing next-gen or state-of-the-art

pharmacy dispensing system, front-end point-of-sale, labor management, and all back-office systems support. 2. RAD will invest in the training necessary to minimize any disruptions and it will invest in labor in the stores and in field supervision to improve customer satisfaction. 3. The Co. will reset and re-merchandise the stores and add other decor upgrades that reflect elements of its very successful new customer world design. 4. RAD will begin a remodel program on the stores that need it most and will focus on opportunities to reduce shrink, increase the generic dispense rate, and expand private-brand penetration, which will all contribute to margin improvement. 5. The Co. will continue its organic growth program with plans to open 125 new and relocated stores in [FY06] and 800-1000

new and relocated stores over the next five years. 6. RAD will take the expanded store base into consideration when deciding on locations as it continues its current strategy of growing in areas where it already operates.

S2. Six Topics (K.T.) 1. Timing for the Closing: 1. RAD is unable to currently give a precise date for closing the transaction.

2. The actual closing is dependent on: 1. Obtaining a vote of approval from RAD's stockholders at a special meeting. 2. Completing the regulatory review process. 3. Closing could occur as early as sometime in 4Q, but RAD does not know any more than that at this time. 4. Until RAD has a better idea of when closing will actually occur, it will describe the impact to net income, diluted EPS, and net synergies in 12-month time frames. 2. Net Synergies: 1. RAD believes synergies will develop quickly after close, but will take full 12 months to reach a fully developed run rate. 2. The Co. estimates that after close, the first 12 months' net synergies will be approx. $35m and the next 12 months' net

synergies will be approx. $150m. 3. All synergies can be characterized into one of four general categories: 1. Gross profit improvement that comes from larger scale and purchasing and use of best practices in merchandising. 2. Advertising expense optimization that comes from eliminating duplicate costs in common markets. 3. Distribution system improved productivity that comes from higher volume. 4. Improved back office and administrative expense coverage that comes from eliminating duplicate costs and covering the fixed cost component over a larger store base. 3. Integration Plans, Costs, and Timing: 1. RAD's integration plan is anchored in and will fully utilize its existing systems and processes. 2. The Co. has already started the integration planning, which will have four phases. 1. RAD has placed a priority on communication and training throughout all four phases. 2. Phase I is a thorough store analysis that becomes a platform for launching the other three phases. 1. This phase will be completed before RAD closes. 3. Phase II consists of several activities, such as retrofitting the planogram for all Brooks and Eckerd stores,

converting these store systems to RAD's store systems, and converting the supply chain processes. 1. RAD believes this phase will take approx. 7-9 months. 4. Phase III consists of remerchandising and resetting the stores. 1. Some of Phase III may overlap with Phase II, but for the most part Phase III will take up to 12 months. 5. Phase IV is to remodel the stores, and that will take several years, but RAD will certainly begin in the first 12 months. 3. The integration costs have been included in the dilution and accretion amounts described earlier. 4. The integration plans require up to $500m of CapEx in the first 12 months and another approximate $500m over the next four years, as needed. 5. RAD has the human resources, the capital resources, and the liquidity to support this integration plan. 4. Financing: 1. Setting the equity portion of the transaction aside, the transaction funding needs are $1.45b for the seller plus transaction costs, with the expectation that RAD will assume the $850m, 8.5% senior subordinated notes of PJC, subject to satisfaction of certain conditions. 2. RAD intends to address its FY07 required debt maturities that

total $576m as part of its financing activities. 3. Therefore, the total funding needs after assuming the 8.5% notes are approx. $2.2b. 4. The Co.'s funding sources will be the use of: 1. Excess cash on-hand. 2. Draws on the existing revolver. 3. Term loans. 4. Secured notes. 5. RAD has entered into a …