Matt Schroeder - Group Vice President of Strategy & Investor Relations and Treasurer John T. Standley - Chairman, Chief Executive Officer, President and Member of Executive Committee Kenneth A. Martindale - Chief Operating Officer and Senior Executive Vice President Frank G. Vitrano - Chief Administrative Officer, Chief Financial Officer and Senior Executive Vice President

John Heinbockel - Guggenheim Securities, LLC, Research Division Mark Wiltamuth - Morgan Stanley, Research Division Matthew J. Fassler - Goldman Sachs Group Inc., Research Division Carla Casella - JP Morgan Chase & Co, Research Division Bryan C. Hunt - Wells Fargo Securities, LLC, Research Division Edward J. Kelly - Crédit Suisse AG, Research Division Karru Martinson - Deutsche Bank AG, Research Division Steven Valiquette - UBS Investment Bank, Research Division Joseph Stauff - Susquehanna Financial Group, LLLP, Research Division Michael R. Minchak - JP Morgan Chase & Co, Research Division

Good morning. My name is Cassandra, and I will be your conference operator today. At this time, I would like to welcome everyone to the Rite Aid Fourth Quarter Fiscal 2013 Conference Call. [Operator Instructions] At this time, I would like to turn the call over to Frank Vitrano (sic) [Matt Schroeder]. You may begin.

Thank you, Cassandra, and good morning, everyone. We welcome you to our fourth quarter conference call. On the call with me are John Standley, our Chairman, President and Chief Executive Officer; Ken Martindale, our Chief Operating Officer; and Frank Vitrano, our Chief Financial and Chief Administrative Officer. On today's call, John will give an overview of our fourth quarter results and discuss our business. Ken will give an update on some of our key initiatives. Frank will discuss the key financial highlights and fiscal 2014 outlook, and then we will take questions. As we mentioned in our release, we are providing slides related to the material we will be discussing today. These slides include annual earnings and sales guidance. These slides are provided on our website, www.riteaid.com, under the Investor Relations information tab for conference calls. This guidance is a point-in-time estimate, and the company expressly disclaims any current intention to update it. This conference call and the related slides will be available on the company's website until the next earnings call, unless the company withdraws them earlier and should not be relied upon thereafter. We will not be referencing the slides directly in our remarks, but hope you will find them helpful as they summarize some of the key points made on the call. Before we start, I'd like to remind you that today's conference call includes certain forward-looking statements. These forward-looking statements are made in the context to certain risks and uncertainties that can cause actual results to differ. These risks and uncertainties are described in our press release, in Item 1A of our most recent annual report on Form 10-K and other documents we file or furnish to the Securities and Exchange Commission. Also we will be using a non-GAAP financial measure. The definition of the non-GAAP financial measure, along with the reconciliations to the related GAAP measure, are described in our press release. Also included in our slides are the non-GAAP financial measures of adjusted EBITDA gross profit and adjusted EBITDA SG&A and the reconciliations of these measures to their respective GAAP financial measure. These measures are compared to prior year fourth quarter results as reported, as well as the prior year fourth quarter results on a 13-week basis for purpose of comparability. With these remarks, I'd now like to turn it over to John. John T. Standley: Thank you, Matt, and thank you, everyone, for joining us to review our fiscal 2013 fourth quarter and full year results. I'm pleased to report that we generated outstanding results in the fourth quarter, which helped us deliver one of the best years in our company's 50-year history. Simply put, fiscal 2013 was a year to remember for Rite Aid. For our company, being able to share these results is a great moment that has been many years in the making. During this time, our entire team has been focused on executing key initiatives, growing sales, managing expenses and serving our customers like never before. I'm very proud of our nearly 90,000 associates who have embraced our challenges with passion and purpose. Together, we are successfully transforming Rite Aid into a true neighborhood destination for health and wellness. As a result, we are a stronger company that is better equipped to meet the individual wellness needs of our valued customers and patients. We followed up our return to profitability in the third quarter by earning net income of more than $123 million in the fourth quarter. We also generated more than $340 million in adjusted EBITDA, an increase of $84 million over the fourth quarter last year, excluding the prior year benefit of an extra week. Our fourth quarter results were driven by solid front-end same-store sales growth of 0.3%, increased profitability from new generics and a strong 3% increase in same-store prescription count, which is impressive given that Walgreens was back in the ESI network for the entire quarter. These strong fourth quarter results helped to achieve some significant milestones in our full year performance, and here are a few of the key highlights. We returned to profitability by posting our first full year net income since fiscal 2007. We set a new all-time company record for full year adjusted EBITDA. We grew same-store prescription count and pharmacy gross margin. We increased front-end same-store sales. We significantly reduced working capital. We reduced our debt and improved our leverage ratio. We completed a comprehensive refinancing that extends our maturities, reduces interest expense and provides the financial flexibility we need to execute our business plan. We exceeded our goal of administering at least 2 million flu immunizations. And we've now converted nearly 800 stores to our wellness format, with nearly 1,300 Wellness Ambassadors working in these stores and providing a higher level of customer service. As we take a closer look at full year results, our net income of $118 million represents a significant improvement over last year. A key driver was our growth in adjusted EBITDA, which increased by more than $203 million compared to the previous fiscal year when excluding the prior year benefit of 1 extra week. This increase helped us to reach a new full year company record of over $1.1 billion in adjusted EBITDA. Adjusted EBITDA benefited from an increase in same-store prescription count and the introduction of new generic medications, which had a significant positive impact on pharmacy gross margin despite having a negative impact on top line sales. A key area of success was our 3.4% increase in same-store prescription count. Early in the year, we acquired more than our fair share of new patients during the Express Scripts-Walgreens dispute. Our teams have done an excellent job of providing great service to our new ESI patients, and as a result, we have retained a large number of these prescriptions. We also had an outstanding year in terms of immunizations. In fiscal 2013, our Rite Aid pharmacists administered nearly 2.4 million flu shots, a 60% increase over last year, which allowed us to easily surpass our goal of 2 million. In addition, our pharmacists administered more than 400,000 non-flu immunizations to help our patients protect themselves from conditions such as shingles, pneumonia and whooping cough. These results are important, not only from a business perspective, but also as a key opportunity to expand the role of our pharmacists in providing services that strengthen Rite Aid as a wellness destination. There is no doubt that we had an excellent year in pharmacy. As we look forward, we're focused on continuing this positive momentum despite continued reimbursement rate pressure, our cycling of the ESI business we gained last year and the softening benefit of new generic introductions in fiscal 2014. In terms of the front end, we continued to experience steady growth in front-end same-store sales, which increased 1.4% during the year. Our highly successful wellness+ customer loyalty program, wellness store initiative and growth in Rite Aid brand penetration all contributed to this continued growth. Also during the year, we significantly improved our financial health by reducing our net debt by $250 million. This reduction in debt and our increase in adjusted EBITDA helped us improve our leverage ratio and gain better access to capital markets. As a result of these strong results, we completed a comprehensive refinancing that will allow our annual cash interest expense by approximately $49 million, extend the maturity of substantially all of our debt to 2017 and beyond and provide us with the financial flexibility we need to execute our business plan. Also in fiscal 2013, our emphasis on delivering an outstanding customer experience continued to pay off. According to the latest retail results from The American Customer Satisfaction Index, an independent and well-respected measure of customer satisfaction, our score has increased by 3% and we earned the top position among major drugstore chains. This is another great accomplishment for Rite Aid and proof that our associates are committed to showing customers that with us, it's personal. Looking ahead, we are beginning fiscal 2014 with positive momentum and have created a comprehensive strategy that will help us build on our recent success and position Rite Aid to capitalize on significant changes that are taking place in U.S. health care. Our strategy includes building upon many of the same initiatives that have fueled our improved performance, such as wellness+ customer loyalty program, our wellness store remodels and the Wellness Ambassador initiative. We will also embrace the future of health care delivery by continuing to expand the role of our pharmacists and pharmacy teams. We have made outstanding progress in this area over the past few years. A great example is how we have more than tripled our number of flu shots in just 2 years. We continued to expand our Medication Therapy Management offerings that provide individual counseling to patients with complex prescription therapies. And we have also established the Rite Care Prescription Advisor program, which promotes one-on-one interactions with patients so that our pharmacists can explain the importance of taking medications as prescribed. I'm proud of how our teams are embracing these opportunities. At the same time, we fully understand that this is merely the beginning of our transformation as a wellness destination. Looking ahead, we see further opportunities to develop programs that meet the specific needs of our poly-chronic patients, many of whom are seniors and 65 and older. Poly-chronic patients are those who suffer from multiple chronic conditions, such as heart disease, arthritis or diabetes, and they often have a difficult time managing their complex prescription therapies and overall health. As we continue to expand the role of our pharmacists, we believe that we can provide a wider, more sophisticated range of services that delivers convenient and affordable health solutions as a part of a more personalized drugstore experience. At this point, I'd like to turn it over to our Chief Operating Officer, Ken Martindale, who will provide an update and additional details on our key initiatives. Ken? Kenneth A. Martindale: Thanks, John, and thanks again, everybody, for joining us today. Our fourth quarter and fiscal '13 results show that we've made tremendous progress. This positive momentum is a direct result of executing against our key initiatives, which are designed to deliver a unique and engaging wellness experience for our customers. These initiatives are strengthening our brand of health and wellness, which will continue to be our driving force as we power our way into the future. A great example is our wellness+ customer loyalty program. Despite continued intense competition in the drugstore loyalty space, wellness+ is resonating with our patients and customers who clearly understand the outstanding savings and wellness rewards that are offered by our program. At the end of the quarter, we had nearly 25.2 million active wellness+ members, defined as those who have used their cards at least twice over the past 26 weeks. That number is up slightly from last quarter and represents a 3% increase over the same period a year ago. Card usage continues to be strong as wellness+ members accounted for 79% of front-end sales and 68% of prescriptions filled during the fourth quarter. In addition, the number of Gold and Silver members, our most valuable and most satisfied customers, continues to increase. It's also important to note that over 50% of these customers shop our stores every week. Heading forward, wellness+ will continue to be at the core of our strategy as we continue introducing further enhancements to this phenomenal program. We will also leverage wellness+ to build stronger customer relationships as we sharpen our focus on serving our most valuable patient groups. Our wellness stores are another key initiative at Rite Aid, and we continue to make significant progress with this program in the fourth quarter. We converted an additional 110 stores to the wellness format and achieved our goal of having nearly 800 wellness stores throughout our chain at the end of fiscal 2013. We view our wellness store initiative as a great opportunity to drive innovation throughout the company. As we reported last quarter, we recently developed our latest iteration of the wellness format with our genuine well-being store, which features new interior design, additional wellness items and unique merchandising displays so that our customers can make more informed purchase decisions. We will closely monitor the success of these and other features as we deliver innovative concepts designed to meet the rapidly changing needs of our customers, especially in key categories such as beauty, health and consumables. The format also features improved way-finding and an intuitive layout that creates a simplified shopping experience. Our new genuine well-being format has now been incorporated into several wellness remodels, and we're excited to roll out this innovative and functional store design to more locations across the country. In fact, we plan to convert approximately 400 additional stores to the wellness format in fiscal 2014. We're also excited that as we continue to grow the number of wellness stores in our chain, we can also introduce Wellness Ambassadors to a greater number of Rite Aid customers. To date, we have trained nearly 1,300 Wellness Ambassadors who are dedicated to providing a highly personal level of service that our competition just does not match. Simply put, our Wellness Ambassadors can help grow our business by forming strong customer and patient relationships, both in our stores and in the communities that we serve. They act as a bridge between the customers and the knowledge and services that our pharmacists provide. In the pharmacy, expanding the role of Rite Aid pharmacists continues to be a top priority as we look to provide a holistic pharmacy experience that goes beyond just filling prescriptions. Earlier, John talked about our success in expanding our pharmacy service offerings over the past several years. We're currently developing new ways to deliver additional care and services to our poly-chronic patients as they look to manage and improve their health. We are in a unique position to provide further support to these patients by playing a more significant role in their overall health care. Through our full portfolio of pharmacy services, we are focused on helping our patients reach their wellness goals to a higher level of service and engagement. NowClinic Online Care is another great example of how we're delivering innovative new wellness services to our patients. These virtual clinics provide Rite Aid customers with real-time access to quality medical care, information and resources from doctors and nurses. In the fourth quarter, we expanded this unique service to 58 additional stores in Baltimore, Boston, Philadelphia and Pittsburgh, in addition to Detroit, our original market. This service is also available online 24/7. Through NowClinic Online Care, we are expanding the range of wellness services that we provide in our stores while delivering a convenient and affordable health resource for our patients. As we improve the shopping experience inside our stores, we're also focused on providing enhanced digital resources that create a better Rite Aid experience outside our stores. In March, we took a significant step forward by introducing the new riteaid.com. Our company's website has a great new look and has been completely rebuilt to provide easier navigation, a more personalized web experience and an enhanced e-commerce presentation. Also during the quarter, we released the new version of our mobile app, which now gives customers the ability to order photo prints using their smartphone. And we continue to strengthen our presence on social media sites, such as Facebook, Twitter and Pinterest, through unique promotions and contests. Throughout the quarter, customers continued to respond positively to our enhanced Rite Aid brand architecture, which offers great value to our customers and strong margins for the company. Our Rite Aid brand penetration increased by 40 basis points in the fourth quarter and now stands at 18.7%. As we look to next year, we will continue focusing on driving operational and supply chain efficiencies to fund additional strategic investments in our business. Our $400 million budget for capital expenditures in fiscal 2014 includes allocations for additional wellness store remodels and prescription file purchases. We continue to view prescription file purchases as a significant opportunity for growth and will look to build upon the $21 million in purchases we made in the fourth quarter and our $67 million total for fiscal 2013. To sum it up, our key initiatives have played a critical role in driving our improved performance and will continue to serve as our foundation for delivering a convenient and comprehensive wellness experience for our customers. We're committed to actively working with our customers to keep them well, and we look forward to further developing the best products, services and advice to meet their individual wellness needs. At this time, I'll turn it over to our Chief Financial and Chief Administrative Officer, Frank Vitrano, who will provide some additional details about our financial results. Frank? Frank G. Vitrano: Thanks, Ken. Good morning, everyone. As John mentioned, the fourth quarter record results reflects solid progress in our turnaround and continued benefits from the various initiatives. This is the ninth consecutive quarter of adjusted EBITDA and same-store script count growth and our first full year of profitability since 2007. On the call this morning, I plan to walk through our fourth quarter financial results, discuss our liquidity position, certain balance sheet items, our capital expenditure program and finally, provide fiscal '14 annual guidance. As previously reported, revenues for the quarter were $6.5 billion, which was $691 million or 968 basis points lower than last year's fourth quarter. The decrease was due to the extra week last year and the impact of lower-cost generics on pharmacy sales. Overall, same-store sales declined 200 basis points in the quarter, reflecting a higher generic penetration rate. Front-end same-store sales were up 30 basis points, and pharmacy same-store sales were lower by 3.1%, which included an approximate 659 basis point negative impact from new generics. Pharmacy same-store comps were positive 300 basis points, primarily driven by retention of ESI patients. Adjusted EBITDA in the quarter was $340 million or 5.3% of revenues, which was $66 million or 24% higher than last year's fourth quarter of $274 million or 3.8% of revenues. Compared to last year's fourth quarter, without the 53rd week, this quarter was $84 million or 33% higher than last year. Results on a 13-week comparison basis were driven by favorable script growth and improved gross margin trends partially offset by higher SG&A. During the quarter, we began to cycle ESI-Walgreens script gains from last year's fourth quarter. Today, we estimate we are retaining approximately 75% to 80% of those new scripts. In the quarter, we estimated an incremental benefit from the dispute of $10 million to $12 million and overall, will realize approximately $70 million benefit in the year. Net income for the quarter was $123 million or $0.13 per diluted share compared to last year's fourth quarter net loss of $161 million or $0.18 loss per diluted share. The improvement was driven by a LIFO credit as compared to a charge last year and higher adjusted EBITDA partially offset by a loss on debt retirement. The LIFO credit of $175 million was due to significant generic deflation. Generic deflation was 42% versus 6% last year, while brand inflation was 12%, which was similar to last year. Front-end inflation was 1% versus 2% last year. Total gross profit dollars in the quarter were $266 million higher than last year's fourth quarter and 679 basis points higher as a percent to revenues. Adjusted EBITDA gross profit which excludes specific items, primarily LIFO and the wellness+ revenue deferral, was favorable to the prior year's fourth quarter, adjusted for the extra week, by $104 million or 243 basis points. Front-end gross profit was down slightly. Pharmacy gross profit dollars and margin rate were both higher due to script count growth and the benefit of new generics, partially offset by continued pharmacy reimbursement rate pressure. The pharmacy rate -- pharmacy margin rate increase was also driven by the reduction in sales due to higher generic penetration. Selling, general and administrative expenses for the quarter were lower by $76 million due to the extra week last year and 146 basis points as a percentage of revenues as compared to last year. Adjusted EBITDA SG&A dollars, which excludes specific items, were higher by $20 million or 102 basis points as a percent to revenue compared to last year on a 13-week basis. The increase in dollars reflects wage and benefit increases, as well as cost associated with the wellness remodel program. Turning to the balance sheet. FIFO inventory was $132 million lower than the fourth quarter of last year. The decrease reflects a higher mix of generic inventory, which has a lower cost and brand inventory, as well as other inventory reduction initiatives. Other assets compared to last year decreased due to $126 million reduction in a tax indemnification asset related to the conclusion of the pre-acquisitions period audit of the consolidated federal return of Brooks Eckerd. Settlement of this tax matter did not affect net income or net income per share due to the indemnification asset from PJC completely offset any tax credit. Our cash flow statement results for the quarter showed net cash from operating activities in the quarter as a source of $220 million as compared to a source of cash of $11 million in last year's fourth quarter. The improvement was driven by an increase in operating income along with lower inventory this year. Net cash used in investing activities for the quarter was $101 million versus $66 million last year. During the fourth quarter, we relocated 4 stores, remodeled 112 and closed 10 stores. At the end of fiscal '13, we have completed and grand reopened 797 wellness stores. Front-end same-store sales in the wellness stores now exceed the non-wellness stores by over 300 basis points. During the quarter, we completed a $2.4 billion refinancing of our Tranche 2 and Tranche 5 Term Loans and first and second lien bonds maturing in 2016. Replacing said debt with a new $1.795 billion revolving credit facility due in 2018 and a $1.161 billion Tranche 6 Term Loan due in 2020, as well as a $470 million second lien Tranche 1 Term Loan due -- also due in 2020. We also repaid $186 million of bond debt maturing in 2013. Annual interest expense savings are expected to be $60 million per year with cash interest savings of $49 million. Now let's discuss liquidity. At the end of the fourth quarter, we had $1.03 billion of liquidity with $16 million of invested cash. We had $665 million borrowings under our senior credit facility and $115 million of outstanding letters of credit. Total debt net of cash was lower by $252 million from last year's fourth quarter. Our leverage ratio, defined as total debt less invested cash over LTM adjusted EBITDA, improved to 5.3x from 6.6x as compared to the fourth quarter of fiscal '12. Now let's turn to fiscal '14 guidance. We developed our guidance based on the anticipated benefits of our wellness remodel program, customer loyalty program and other initiatives to grow sales and drive operational efficiencies. We also considered the cycling of scripts from the ESI-Walgreens dispute, planned wage and benefit increases, a softening of the new generic benefit in the second half of fiscal '14, a challenging reimbursement rate environment including implementation of AMP during the year. We assumed both ESI script retention and the January Med D preferred network enrollment period had stabilized. We have not included any Affordable Care Act benefit in fiscal '14 as the program will only be in effect for 2 months of the fiscal year, and we expect usage to be minimal in the early stages. The company expects total sales to be between $24.9 billion and $25.3 billion and expect adjusted EBITDA to be between $1.075 billion and $1.175 billion for fiscal '14. Same-store sales are expected to be in a range from a decrease of 75 basis points to an increase of 75 basis points, which reflects the anticipated negative pharmacy sale impact of approximately 250 basis points from new generic introductions and continued reimbursement rate pressure. We expect a fiscal 2014 earnings range of net income of $45 million or earnings per diluted share of $0.04 to net income of $200 million and earnings per diluted share of $0.20. The guidance doesn't include any refinancing assumptions. The range of guidance is primarily driven by our same-store sales range and pharmacy margins. Our fiscal 2014 capital expenditure plan is expected to be $400 million, with $175 million allocated to remodels and $65 million for file buys. The wellness remodels are now expected to average $400,000 to $430,000 per store, with the increase driven by additional maintenance CapEx requirements. We are planning to open 1 new store, complete 19 relocations and remodel 400 wellness stores. We expect to be free cash flow positive for the year. We expect to close a total of 50 stores of which the guidance includes a store lease closing provision for 10 to 15 stores with the balance closing on lease expiration. That completes my portion of the presentation, and I'd now like to turn it back to John. John T. Standley: Thank you, Frank. Looking ahead, we can see that rising health care costs and aging U.S. population and health care reform are rapidly changing the health care landscape in our country. We view these changes as a great opportunity to make our unique brand of health and wellness even more relevant to both current and potential customers. The initiative we have put in place over the past few years have positioned us to achieve this goal. But we also remain focused on responding to this changing environment in a way that gives customers the confidence to choose us first for their everyday health and wellness needs. So as we begin fiscal 2014, our company is focused on the significant changes that are coming our way and the unique opportunities that we have to make a meaningful difference in the lives of our customers and patients. Let me end by once again thanking all of our associates and business partners for their outstanding efforts this year. Fiscal 2013 was a banner year for Rite Aid, and our performance was a great way to celebrate our 50th anniversary as a company. Our entire team worked really hard to fundamentally improve our business and take full advantage of the opportunities that came our way. We have a great team, and we're really excited about the positive momentum as we begin our new fiscal year. That concludes our prepared remarks for today. Now we'll open the phone line for questions.

[Operator Instructions] Your first question comes from the line of John Heinbockel from Guggenheim. John Heinbockel - Guggenheim Securities, LLC, Research Division: So a couple of things. Of the 400 remodels you'll do this year, how many of those are the new prototype? John T. Standley: Vast majority. John Heinbockel - Guggenheim Securities, LLC, Research Division: Okay. And the 300 basis point lift that you're getting in total, is that all or predominantly front end? Frank G. Vitrano: It's all front end, John. John Heinbockel - Guggenheim Securities, LLC, Research Division: Okay. So how -- now that you're spending more on these, how do the returns compare? The lift is greater, the spend is greater, are the returns similar to what you were doing before? Frank G. Vitrano: John, the incremental spend that we have here this year to last year is really around the -- is really around incremental maintenance CapEx. So we look at items such as floor replacement, some exterior signage, exterior work, steel shelving and whatnot, those are really where we're spending incremental dollars. This year, we began to see those increases occur. This year, we'll probably spend on average about $320,000 per, and quite candidly, there's maintenance CapEx needs that it doesn't make sense for us not to address as we touch the stores. So that was the decision we made to address them as we continue to rollout the wellness program. In terms of the returns on this, we're still anticipating to see, with the 3% overall sales bump, to be able to get a 20% return. John Heinbockel - Guggenheim Securities, LLC, Research Division: So the -- if it's $100,000 more in spending, all of that is maintenance. Frank G. Vitrano: That's correct. John Heinbockel - Guggenheim Securities, LLC, Research Division: Now given the free cash you're likely to generate this year, at least, the way we've modeled it, it would strike me that you could spend more than $400 million if you wanted to and do more remodels. What's the thought on that? There would seem to be merit to doing that since they're performing better. Frank G. Vitrano: That's always the balance that we have here being highly leveraged, as well as investing back into the business. We did increase it from what we've spent this year. We will generate some cash flow, and this will also give us the opportunity to start to begin to pay down some debt. So that's kind of the balance we have here. John Heinbockel - Guggenheim Securities, LLC, Research Division: I assume you have the people. If you wanted to do 450 or 500, you could. Frank G. Vitrano: Absolutely. John Heinbockel - Guggenheim Securities, LLC, Research Division: All right. And then one last thing for Ken. When you look at the macro environment, fiscal restraint, et cetera, what are you seeing from your customer, because the last couple of holidays have been a little soft? And how do you respond to that, either within wellness+ or not? Kenneth A. Martindale: John, I think clearly, the economy is still pressuring the consumer out there. And I think you're right. Some of the discretionary spending during the holidays is a little bit tight. Easter wasn't too bad for us. But clearly, they're not very, very strong times. So I think we're sticking with our promotional program. We're -- eventually, we'd like to get less dependent on promotions and grow our core business, and I think that's where wellness+ really comes in. And so we're continuing to pound away on wellness+. We're going to roll out some more exciting things later this year and just keep growing this program. And I think it helps us block and tackle every day. John Heinbockel - Guggenheim Securities, LLC, Research Division: Do you think we can ultimately ever eliminate a weekly circular, if you do 90% of the front end through wellness+? Kenneth A. Martindale: I'm not sure we get to completely eliminate a circular, but we would certainly work to be less dependent on the circular than we are today. They're not in the near term.

Your next question comes from the line of Mark Wiltamuth from Morgan Stanley. Mark Wiltamuth - Morgan Stanley, Research Division: Wanted to ask about the guidance for 2014 for adjusted EBITDA. It's kind of flattish from what you just delivered on an annual basis. Maybe walk through why you don't have some growth built in there? John T. Standley: Well, Mark, I think there's clearly minuses and pluses here. Certainly, on the plus side, we think there's benefit that we're going to get from the wellness remodel, continued benefits from wellness+ and some other sales initiatives. We continue to think there's opportunities for us to become more efficient in our operation, and we'll see some benefits from that. And those will -- obviously, positive things that will improve our cash flow. On the flip side, what we're all certainly mindful of is we're going to be cycling all the ESI, Walgreens scripts. We're going to see some wage and benefit increases. The second half of fiscal '14 is clearly not going to be as robust as what we saw in '13 for generics, okay? There's clearly going to be a softening that occurs in the second half of the year, so we'll try to factor that in. Reimbursement rate pressures are not going to go away, and so those are kind of balanced. Obviously, the range of guidance that we've provided, okay, it kind of spreads the current year's results down $50 million and up $50 million. Mark Wiltamuth - Morgan Stanley, Research Division: Okay. And on the generics, you would have probably, at least, one more quarter of really strong performance there, I would think. Is that fair to say? Kenneth A. Martindale: Yes, I think that's right. Mark Wiltamuth - Morgan Stanley, Research Division: And then also if you could give us a little color on the reduction of this tax indemnification as part of the EBITDA on this quarter. What was that exactly because you went through that a little quickly? John T. Standley: Yes, basically, that was a settlement. It relates to a pre-acquisition audit that was related to Brooks Eckerd. The matter was settled with the IRS. And we had, had a tax indemnification from PJC. There was no tax payment made, so we basically reversed the tax indemnification asset that we had, and it was offset by the credit in taxes.

And Mark, just to be clear, it's not part of EBITDA, it's non-EBITDA. If you go back, if you look at our guidance charts and the reconciliation -- or our EBITDA chart, the reconciliation net income EBITDA, you'll see that, that indemnification asset benefit has backed out of EBITDA. Mark Wiltamuth - Morgan Stanley, Research Division: Okay, you're backing it out. So what -- it did not impact net income is what you're saying. Kenneth A. Martindale: The impact -- not net-net. There's basically a debit in SG&A and a credit in the income tax provision and the 2 flush out. It's obviously a noncash item. And as Frank said, it was an asset that was set up in the acquisition. So it's a debit in SG&A and a credit in the income tax provision, the 2 net to 0. Frank G. Vitrano: And we had broken that out on the guidance. Mark Wiltamuth - Morgan Stanley, Research Division: Okay. And just on more forward looking, even farther forward looking, talk a little bit about how Rite Aid is going to position for the Affordable Care Act? Kenneth A. Martindale: Well, we're working on a number of things. I guess, as you know, open enrollment starts in the fall. And so we've been, I guess, working on some programs in terms of how -- what role we're going to play, I guess, in the education around the Affordable Care Act. There's a number of challenges here. One challenge is going to be how to get people engaged with the Affordable Care Act, so that's certainly one aspect of this. In terms of the care itself, obviously, that's developing right now. I don't think we have all the answers in terms of how every state is going to bring the Affordable Care Act to life. There's a number of states doing different things. As it relates to pharmacy benefits, probably it comes to market a few different ways. There'll be in most states or every state, a public exchange. And we think as we're in a managed Medicaid program in that state, we'll likely have access to those patients. And then there'll be a private exchange where people, who are not receiving a subsidy, will likely go for insurance. And we think those probably are some bundle of services where a health care provider is either providing the pharmacy benefit or is teamed up with a PBM to provide the benefit. And we're in discussions with a number of networks to participate in those plans as well. But I think you're going to see potentially a lot of new people come to market. There's a segment of that population that are young and healthy. There's a segment of that population that are older and maybe have not had access to care before. But overall, we think it's probably a benefit when we stir it all together. Mark Wiltamuth - Morgan Stanley, Research Division: So really, it's just a volume positive, and what do you think the volume profile will be on that new volume? Kenneth A. Martindale: It's a little hard to tell right now. I mean some of the plans that we go -- seen go by are actually going to use existing networks. So we probably have a sense on those. And some of them quite honestly have been preferred networks. Some of them have been more open networks. We've kind of seen a mixture there as well. So it's going to depend, I think, as we see more states kind of come to life what that sort of blend looks like before we really have a great sense on rate. The other thing that happens here, obviously, is an AMP is likely to go into effect some point during this fiscal year. That will actually be a negative from a rate perspective and is included in our guidance.

Our next question comes from the line of Matthew Fassler from Goldman Sachs. Matthew J. Fassler - Goldman Sachs Group Inc., Research Division: I want to focus briefly on reimbursement pressure. Obviously, in the underlying momentum that you have on the gross margin line, it's overwhelming. Any pressure that's present today? What kind of trajectory do you expect going forward in a particularly given -- the sectors improving profitability here in recent quarters? At what point do you think reimbursement starts to become an issue that we actually have to think about and focus on a bit more as we project earnings going forward? John T. Standley: Well, I can honestly say we're focused on it all the time obviously. But to your point, basically, I guess the way we think this fiscal year is going to play out is that in the first quarter, maybe into the second quarter, we still have strong benefit from new generics that were introduced over the last couple of years. As those drugs' reimbursement rate continues to decline across this fiscal year, we'll see reimbursement rate pressures grow as we get into the back half of the year. And I think one of the challenges we face on the pharmacy margin line in this fiscal year is that as the benefit of the fiscal '13, new generics diminished, the amount of fiscal '14 new generics coming to market is substantially less. So that's when towards the back half of the year, that's when we think we'll be really sort of in the thick of trying to make sure we're being superefficient on the purchasing side and trying to offset what we proceeded to be as reimbursement rate pressure at that time.

Your next question comes from the line of Carla Casella. Carla Casella - JP Morgan Chase & Co, Research Division: I'm wondering if your guidance reflects any additional refinancing of some of your high-cost debt that's callable this year. Frank G. Vitrano: Carla, it does not. Carla Casella - JP Morgan Chase & Co, Research Division: Okay, great. So that one could be added to EPS. And then the slowdown in wellness+ remodels to 400 this year from 500 last year, why the change? Frank G. Vitrano: Carla, it's really, it's really a decision for us to, it was a decision how much we wanted to spend this year for CapEx and the recognition that the reno's that we're going to be doing this year was going to cost us a lot more in terms of maintenance CapEx. Kenneth A. Martindale: And they're broader in scope. That's why the maintenance CapEx is going up. We're addressing more issues in the store, which is going to take more time. And so that's why we thought 400 probably made more sense than 500 that we did last year. Carla Casella - JP Morgan Chase & Co, Research Division: Okay, that's great. And then when you look at the wellness+ ambassadors, are you seeing any direct correlation to benefits from either front end in the pharmacy? John T. Standley: Yes. I think it's difficult the way we track sales. We don't it by person, so I'm not sure I can sit here and tell you that I have x dollars of sales growth that I can specifically tie to a Wellness Ambassador. But when we look at the overall comp results as well as the customer satisfaction indexes that we track, we see, we think, a significant impact from the services that the Wellness Ambassador providing in the stores. So we're very encouraged by the results there. And if you think about it, as we talk about providing a higher level of care, helping polychronic patients, having someone in the front end to really bridge the front end in the pharmacy, it makes a lot of sense. Carla Casella - JP Morgan Chase & Co, Research Division: Okay, great. And then how much of the, I guess, the increased rate at SG&A, the sales, is some of that related to the ambassadors then? And will we see that come down over time as they get the full benefit of having them in there, I guess, for an extended period of time? Frank G. Vitrano: Yes, some of the dollar increase, Carla, is clearly due to the incremental cost associated with the ambassador. On a rate basis, I think it's really driven more on the pharmacy sales impact than anything else. But dollars are up in total about $20 million in the quarter, and a piece of that is the incremental cost associated with the ambassador. Kenneth A. Martindale: We're going to continue to invest in ambassadors in fiscal '14. It will be a net investment, so we'll cycle the ones that we added in '12 and '13, but we're going to continue to add new ambassadors in '14. So those costs will continue to increase in '14. Carla Casella - JP Morgan Chase & Co, Research Division: Okay. And then just one last one on the prescriptions. Where are you in terms of an average prescriptions filled per week? And would you say that the gap between you and CVS or Walgreens is changing it all in the most recent few months? John T. Standley: I don't know if I've given a weekly average script number. But what basically happened is that coming through the Walgreen-ESI dispute, our average store scripts per week tightened with Walgreens because we gained some scripts, and they lost some. And that's probably the biggest change that's happened in the past year in terms of average store volume.

The next question comes from the line of Bryan Hunt. Bryan C. Hunt - Wells Fargo Securities, LLC, Research Division: I was wondering if you could talk about your ROI in purchased scripts, relative retention rates. And if you did put incremental dollars to work, what does your decision tree look like between purchasing scripts and accelerating remodels? John T. Standley: I guess -- I'll let Frank answer that, okay? Frank G. Vitrano: Yes. Now, we're looking to spend about $65 million this year on file buys. The return on those continued to be strong, 20% returns on our investment. And where we have opportunities to purchase the scripts, we're actively in the market attempting to do this. In terms of the balance between whether we do a file buy or whether we do a wellness remodel, we need to do both, okay? And so we're trying to balance here between how much we can allocate towards reinvesting back into the stores. And then what's -- realistically, what's out there, what's available for us to buy on the markets, in the file-buy market. Right now, I think we feel reasonably comfortable that we can purchase about $65 million, and that's kind of how we thought about it. If there's opportunities for us to buy more, then we would do that, okay? But for planning purposes, we're kind of earmarked to $65 million. Bryan C. Hunt - Wells Fargo Securities, LLC, Research Division: And Frank, I guess a lot of us on the outside anticipated the excess cash flow generated by the refinancing. And you have yet another, looks like a couple of bond issues to refi this year and save some -- lower your interest expense by double-digit figure again. Where is the target in terms of debt reduction or leverage where you feel comfortable enough of putting all of your excess cash flow into remodels and growing the business? John T. Standley: Honestly, the credit ratios continue to get better, but we'd like to -- we'd love to see a leverage ratio with a nice decent forehandle [ph] on it. I think that's a much more comfortable place to be. So I think that's something in the long run we continue to kind of keep an eyeball on. But I would tell you, too, we're talking about file buys and remodels and all those things. We do have a lot of opportunities to put capital to work on our business. I think the renovations are critical, upgrading our store base. The file buys are really a great way to grow volume in existing stores, and we can be, as Frank said, much more opportunistic with those. So as we go through the year, and maybe not exactly answering your question, but I think getting to the point, if cash flow is stronger than we expect, we're doing better than we expect, the easiest way for us to put capital back to work is really through file buys, if we can find them. Bryan C. Hunt - Wells Fargo Securities, LLC, Research Division: Okay. And then my last question is this is the first time I think I've heard you all talk about polychronic patients. Is there any way you can give us an idea of what percent of your scripts go to polychronic patients, and how that's been growing over the last couple of years? John T. Standley: Yes, it's really, it's following -- honestly, it's following the aging demographic pretty well. So one of the things that's obviously going on in the overall demographics of our country as we have an aging population, and we have a large number of people kind of hitting the senior class every year. And as you get older, you tend to get more disease states. I mean that's just kind of a fact of life. And so, the 2 skew pretty closely together: polychronics and seniors. So the 2 are kind of tracking each other. In terms of our script count, it's a big chunk of our scripts. And if you look at best customers, they're virtually all polychronics.

Our next question comes from the line of Edward Kelly from Credit Suisse. Edward J. Kelly - Crédit Suisse AG, Research Division: So just a few questions for you. First on the ESI Scripts. You talked about 75% to 80% retention, which is a great number. Can you talk about how the pace of the script loss has transpired over the last few months? And have we kind of settled in here at that rate now? Is that what you were trying to suggest? John T. Standley: Yes. I mean I think that the customers that we have at this point, we're working hard to continue to retain, but we feel obviously better as we get further away from Walgreens' reentrance into the network, that we're going to keep those customers. So in terms of its impact on our comps though, it's probably important to remember that right now, we're not comping against the fully ramped-up number. So there'll be some more pressure, I think, on our pharmacy comps as we get in to July, August, September, kind at that timeframe. But we feel good about, we feel good about the customers we have right now. Is there going to be some more attrition out there? Probably is, but hopefully it's not significant. Edward J. Kelly - Crédit Suisse AG, Research Division: So if we think about your guidance for next year and retention, I guess it sounds like you're not assuming 75% to 80% retention. But it sounds like you're assuming something pretty close. John T. Standley: That's correct. Frank G. Vitrano: Yes. Edward J. Kelly - Crédit Suisse AG, Research Division: That's good. On the front end, I thought I heard you say something about gross profit down in the front end. Could you maybe talk a little bit about what's going on there from a competitive promotional standpoint? John T. Standley: I think the market remains competitive, Ken and... Kenneth A. Martindale: I think -- I don't think anything's really changed a whole lot. And we continue to invest heavily in the wellness+ because it's really what drives both the front end, and it also drives script count and retention of our best patients and best customers. So the front end is where we really invest very, very heavily, and we continue to do that. But I don't think there's a big change in competitive activity out there. Edward J. Kelly - Crédit Suisse AG, Research Division: Have you seen anything new and different from dollar stores, for instance, from a competitive standpoint that you'd call out that has mattered at all? Kenneth A. Martindale: I don't think we're seeing a huge impact. Clearly, they are expanding breadth of their offering, and they're building new stores, especially out on the West Coast. And so, I think we'll continue to have to deal with those guys. But I don't see anything special right now that we haven't seen over the last 1 year or 1.5 years. Edward J. Kelly - Crédit Suisse AG, Research Division: And John, there's been a lot going on in the marketplace with sort of evolving models on the sourcing side in pharmacy, with WAG and ABC and the Alliance Boots deal. What are your thoughts, I guess, first of all? Is there an opportunity for you to rethink your sourcing model and maybe partner with other players to drive that cost of product down over time? John T. Standley: We think about our sourcing model every day. I guess we're in the marketplace, obviously, buying drugs. It's -- honestly, it's something we've looked at for quite a period of time. And in the right circumstances at the right opportunity, we're open-minded about things that can make our business more efficient. So. . . Edward J. Kelly - Crédit Suisse AG, Research Division: You think this is where the business is going long term? John T. Standley: In terms of consolidating purchasing power? Edward J. Kelly - Crédit Suisse AG, Research Division: Yes, partnerships, that type of stuff to get that done? John T. Standley: I think it can -- I think at some point, the market gets kind of saturated with this stuff. But it appears like it could probably generate some value. Edward J. Kelly - Crédit Suisse AG, Research Division: Okay. And then, John, the last question I have for you is when you came into the company a few years back, the stock price was significantly lower. The earnings in the EBITDA -- there were no earnings, right? The EBITDA was a lot lower. Can you maybe just talk about how things have evolved over time relative to sort of what your expectation was going in? And how -- and how you think about the ability to really sort of turn this company around at this point versus the point you thought you were getting into? Because the market's clearly looking at it differently now. John T. Standley: I mean we've clearly come a long, long way from where we were back in 2008, I guess, that was. And versus what we thought the situation, it's always different when you're on the outside looking in. Then you get into something, it's always different than you expect, so I won't repeat the famous Bob Miller quote that lives on, on this call. But I will tell you that one of the things when I came here that I believed, which has really turned out to be the case, is that there was a great team of people here from store associates, right up here to where we sit in corporate office that could really make this company go. I really, really believe that. And what we worked really hard to do over the last couple of years is to try and really facilitate the great people that we have, provide them the tools and the resources and the things they need to be successful. And that's really been the driver of this thing, getting people empowered to do the right things to take care of our customers and our patients, that's what's made the difference. And that's what I believe when I got here, and I think that's turned out to be true. Edward J. Kelly - Crédit Suisse AG, Research Division: More optimistic now than what you were back then about really moving forward? John T. Standley: Yes, yes, yes, really excited. There's so much going on in health care today. It's such an exciting market place, it's going to change a lot over the next couple of years. It's hard to see everything is going to happen. Obviously, it's going to -- that's part of what makes it interesting. But it's clearly going to create opportunity for us. And if I think we can be nimble here and adjust a little bit as we go, we're going to find some great stuff.

The next question comes from the line of Karru Martinson from Deutsche Bank. Karru Martinson - Deutsche Bank AG, Research Division: When we look at the wellness loyalty members driving 68% of pharmacy sales, what is it going to take to get that other 32% kind of converted over to your programs? John T. Standley: Well, that's a pretty exciting opportunity, isn't it? And I'll let Ken, I think, kind of maybe answer this. But we do think that's a huge opportunity, and that's a big part of what the program is about. And Ken and his team were working really hard, putting together a process to do that. And Ken, you want... Kenneth A. Martindale: Yes, I guess the one thing to keep in mind, one of the reasons that it's lower than the front end is that, currently, if you have the government script, you don't get any points. And if you live in New York or New Jersey, you don't get any points. So there's not a real incentive for a certain portion of the population that shops our stores to use the wellness card on the prescriptions. That doesn't necessarily mean that those people aren't using the card in the store, it just means that they're not pulling out, using it at a prescription counter because they're not getting credit. So we're working diligently on finding new ways to engage more people more heavily in the program. And later this year, we'll have some more things that we'll introduce to the marketplace, and we're very excited about it. I don't know that we want to get too much deeper into it that than. Karru Martinson - Deutsche Bank AG, Research Division: Okay. And we look at the script count gains that you've had here, I mean are we still kind of around 300 million scripts? And when we look at the valuations for the scripts, what are you guys seeing in the market? John T. Standley: This year, we'll have just shy of 300 million scripts. And again, we -- in terms of file buy, in terms of what it costs, Karru, as we've said many times in the past, it really depends on the circumstances. But the range of $10 to $20 is still a pretty good range of what it costs per script. Karru Martinson - Deutsche Bank AG, Research Division: All right. And when we look at the store closures and kind of overhauling the base, where has dark store rent gone to? And kind of what's the expectation going forward? John T. Standley: This year, we'll have about $75 million in dark store rent. So that's down probably close to $100 million... Frank G. Vitrano: More than $105 a couple of years ago. Karru Martinson - Deutsche Bank AG, Research Division: Okay, and then that will continue to settle and come down, correct? Frank G. Vitrano: That's correct.

Your next question comes from the line of Steven Valiquette from UBS. Steven Valiquette - UBS Investment Bank, Research Division: So obviously, a lot of moving parts in the fiscal '14 guidance. But if we take a step back and kind of look at the ranges, sales are going to be down a little bit, but the adjusted EBITDA, flattish at the midpoint. You would logically have to have some margin expansion to meet those projections. So I guess my general question is, is there any general color on where that margin expansion might come from, more on the adjusted gross margin line or maybe more on the adjusted SG&A line, just given all the moving parts? And again, definitely asking on an adjusted basis, because clearly, your LIFO gross margin probably is going to be down a little bit. John T. Standley: Yes. I think we've touched on pharmacy margin a little bit. So I guess we kind of stand back and look at the year. If you kind of look at the midpoint of that guidance, I guess, it's kind of a place to start. I think it's our expectation that we can get out with the gross profit dollars that look a lot like the last year and keep SG&A in line. Top line's a little funky just because we have the continued deterioration of sales from the generic drug impact that will work its way through the years. So I guess that's the best I can maybe try and explain it, Frank, is that? Steven Valiquette - UBS Investment Bank, Research Division: Okay. And then 1 quick follow-up. You guys -- you flagged that you have some planned wage and benefit increases that are baked in the guidance. Is there anything unusually high above those for this year, or is that just sort of normal course increases for FY '14? John T. Standley: Normal course, Steve.

Your next question comes from the line of Joe Stauff from Susquehanna. Joseph Stauff - Susquehanna Financial Group, LLLP, Research Division: A couple of questions, please. On the Affordable Care, I mean obviously the numbers are all over the place. But generally, the traffic levels will increase by some rate, I guess, and that starts to clearly occur in January. In your initial comments, you had indicated that it's going to be nonmaterial for the year certainly. But how do we think about, basically, how material that could be for you, again largely in fiscal year '15? And I got 2 follow-ups, please. John T. Standley: I think we've kind of said previously, and I'm going to stick with it at this point, because I don't have a lot more color to give it, is that if you look at some -- there's a number of different estimates about how many people are going to engage here with the Affordable Care Act. And I think the way to think about it is, if we get our market share of that population, that's probably a reasonable way to sort of think about it. There's a couple of things are happening. I think the number of people that are expected to engage with the Affordable Care Act has probably come down a little bit over time. I think, initially, people were talking about all of the uninsured. Now there's been some carve-outs, adjustments, so there's probably something less than that. How much of the coverage will come through preferred networks that we're in or out of versus open network. It's still something that will shake itself out over the next year. So it's still a little bit of a broad estimate, but I think that's the way to sort of, at least, initially think about it. And as we gain more insight into it, we'll try and keep you up to speed on to what's happening. Joseph Stauff - Susquehanna Financial Group, LLLP, Research Division: Okay, that make sense. And so, but clearer on the, margin, the Affordable Care largely is likely to be a good event, just in terms of your earnings trajectory. Clearly, the generic profitability cycle, starting to wind down later this year. As you suggested, I mean this cycle's a little bit -- the duration of this cycle is a little bit longer versus the other one in terms of, again, sort of the magnitude and profitability. So is it fair to say that just relative to your financials as it starts to hit them in a more material fashion year-over-year in the fourth quarter of this fiscal year. Is that fair? I know it starts to. . . John T. Standley: I think it's kind of the second half-ish, I guess, is what I would say. And then when we get to '15, new generics will pick up a little bit, cycle will pick up a little bit more. So we'll actually, probably see a good benefit over '14 and '15. Joseph Stauff - Susquehanna Financial Group, LLLP, Research Division: And then the final question, obviously, is the investments, clearly, in -- which largely benefits your front end from remodels and so forth. Where are you, I guess, in terms of the overall store base and the amount of capital that you've invested into the various boxes? Are you fourth inning of where you need to be? And I mean, obviously, we can do the numbers in terms of the total remodels. But you've invested, obviously, in your stores other than that. So kind of where are we just in terms of sort of the capital allocation reinvestment back into the boxes? Frank G. Vitrano: I think, Joe, we're still early on, okay? We touched 800 stores. We have over 4,000 stores, so I would say we're still early on in that investment. John T. Standley: Okay. I mean I think what we're spending is an ongoing investment for an extended period of time. We're going to need to continue to maintain and update store base forever. So that's just -- that's part of retail, and that's part of the cash flow that we're going to spend. Joseph Stauff - Susquehanna Financial Group, LLLP, Research Division: It makes sense. And then the final thing, just sort of the dissection of gross margin. I mean gross margin was up meaningfully, obviously, in the third quarter as well as this quarter, up huge. And so, can you guys give me a rundown or maybe later on in terms of the percentage of gross profit front end versus the pharmacy, and how that has sort of evolved, especially in this past year? Kenneth A. Martindale: I think as we said earlier, Joe, I mean for the quarter, front end was down slightly, okay? And then for the fourth quarter, the drive in overall gross profit was really driven by pharmacy. That's really where it came from.

And your final question comes from the line of Lisa Gill from JPMorgan. Michael R. Minchak - JP Morgan Chase & Co, Research Division: It's actually Mike Minchak in for Lisa. I was just wondering if you could give us some additional thoughts around narrow or preferred retail pharmacy networks? Are you seeing managed care and PBMs approaching you more often to participate in these types of networks? And is health care reform driving an increase in these conversations? And then I guess more broadly, do you see these types of networks as an effective way to drive traffic despite a likely lower reimbursement rate? John T. Standley: I don't know if health care reform has, in particular, driven more of these things. They're clearly in the marketplace. It is a -- what I would I guess describe as a continuing trend in the marketplace. Is it a way to get foot traffic? It is. I mean you do trade off rate, but if you think about marginalizing your customer base, that's what you're doing. We're just moving markets here around between preferred networks at the end of the day. So in the short run, you can gain some share. In the long run, it's probably not a great answer. And I think that wraps up the call today. Again, thank you for participating, and we appreciate the support and interest, and look forward to talking to you soon. Thank you.

This concludes today's conference call. You may now disconnect.