Common use of FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA Clause in Contracts

FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA. Independent Auditors' Report The Board of Directors and Shareholders Florida East Coast Industries, Inc.: We have audited the consolidated balance sheets of Florida East Coast Industries, Inc. and subsidiaries as of December 31, 2000 and 1999, and the related consolidated statements of income, changes in shareholders’ equity and comprehensive income, and cash flows for each of the years in the three-year period ended December 31, 2000. In connection with our audits of the consolidated financial statements, we also audited the financial statement schedule as listed in the accompanying Index on Page 59 of this Report on Form 10-K for the year 2000. These consolidated financial statements and financial statement schedule are the responsibility of the Company's management. Our responsibility is to express an opinion on these consolidated financial statements and financial statement schedule based on our audits. We conducted our audits in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Florida East Coast Industries, Inc. and subsidiaries as of December 31, 2000 and 1999, and the results of their operations and their cash flows for each of the years in the three-year period ended December 31, 2000, in conformity with accounting principles generally accepted in the United States of America. Also in our opinion, the related financial statement schedule, when considered in relation to the basic consolidated financial statements taken as a whole, presents fairly, in all material respects, the information set forth therein. KPMG LLP Jacksonville, Florida February 9, 2001 Consolidated Statements of Income Years ended December 31, 2000, 1999 and 1998 Years ended December 31, (dollars in thousands, except per share amounts) 2000 1999 1998 Operating Revenues 276,276 323,887 246,812 Operating Expenses (Note 4) 241,092 262,863 189,939 Operating Profit 35,184 61,024 56,873 Other Income (net) (Note 15) 7,832 4,986 13,326 Income before Income Taxes 43,016 66,010 70,199 Provision for Income Taxes (Note 8) 17,258 25,231 26,578 Net Income 25,758 40,779 43,621 Per Share Data: Cash Dividends $0.10 $0.10 $0.10 Basic Net Income Per Share $0.71 $1.12 $1.20 Diluted Net Income Per Share $0.70 $1.12 $1.20 Average Shares Outstanding-Basic 36,364,867 36,301,527 36,286,360 Average Shares Outstanding-Diluted 36,705,908 36,508,631 36,298,906 (Prior years results have been reclassified to conform to current year’s presentation.) See accompanying notes to consolidated financial statements. CONSOLIDATED BALANCE SHEETS December 31, 2000 and 1999 (dollars in thousands) 2000 1999 Assets Current Assets: Cash and Cash Equivalents 18,444 15,715 Short-Term Investments (Note 6) 12,942 46,433 Accounts Receivable (net) 34,513 25,130 Materials and Supplies 3,653 5,565 Other Current Assets (Note 8) 8,772 6,408 Total Current Assets 78,324 99,251 Other Investments (Note 6) 1,304 40,404 Properties, Less Accumulated Depreciation (Note 5) 989,283 742,176 Other Assets and Deferred Charges 42,627 29,047 Total Assets 1,111,538 910,878 Liabilities and Shareholders' Equity Current Liabilities: Accounts Payable 81,814 31,880 Income Taxes 4,834 2,409 Accrued Casualty and Other Liabilities (Note 10) 2,647 2,533 Other Accrued Liabilities 5,568 4,547 Total Current Liabilities 94,863 41,369 Deferred Income Taxes (Note 8) 136,170 133,444 Long-Term Debt 88,000 0 Accrued Casualty, Deferred Revenue, and Other Liabilities (Note 10) 44,401 11,624 Shareholders' Equity: Common Stock: 65,762 64,049 Class A Common Stock, no par value; 50,000,000 shares authorized; 17,674,811 shares issued and 16,875,727 shares outstanding at December 31, 2000, and 37,194,244 shares issued and 36,395,160 outstanding at December 31, 1999 Class B Common Stock, no par value; 100,000,000 shares authorized; 19,609,216 shares issued and outstanding at December 31, 2000 and 0 shares issued and outstanding at December 31, 1999 Retained Earnings 693,384 671,269 Accumulated Other Comprehensive Income-Unrealized Gain On Securities (net) (Notes 6 and 12) 13 317 Restricted Stock Deferred Compensation (Note 13) (1,700) (1,839) Treasury Stock at Cost (799,084 shares) (9,355) (9,355) Total Shareholders' Equity 748,104 724,441 Total Liabilities and Shareholders' Equity 1,111,538 910,878 See accompanying notes to consolidated financial statements.

FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA. Independent AuditorsINDEPENDENT AUDITORS' Report The REPORT To the Board of Directors and Shareholders Florida East Coast Industries, Inc.The Xxxxx-Xxxxxxx Stores Corp.: We have audited the accompanying consolidated balance sheets of Florida East Coast Industries, Inc. The Xxxxx-Xxxxxxx Stores Corp. and subsidiaries (the "Company") as of December 31February 1, 2000 2003 and 1999February 2, 2002, and the related consolidated statements of incomeoperations, changes in shareholders’ ' equity and comprehensive income, and cash flows for each of the three fiscal years in the three-year period ended December 31February 1, 2000. In connection with our audits of the consolidated financial statements, we also audited the financial statement schedule as listed in the accompanying Index on Page 59 of this Report on Form 10-K for the year 20002003. These consolidated financial statements and financial statement schedule are the responsibility of the Company's management. Our responsibility is to express an opinion on these consolidated financial statements and financial statement schedule based on our audits. We conducted our audits in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the consolidated such financial statements referred to above present fairly, in all material respects, the consolidated financial position of Florida East Coast Industries, Inc. the Company and its subsidiaries as of December 31February 1, 2000 2003 and 1999February 2, 2002 and the consolidated results of their operations and their cash flows for each of the three fiscal years in the three-year period ended December 31February 1, 20002003, in conformity with accounting principles generally accepted in the United States of America. Also As discussed in our opinionNote B to the financial statements, the related financial statement schedule, when considered in relation to the basic consolidated financial statements taken as a whole, presents fairly, in all material respects, the information set forth therein. KPMG LLP Jacksonville, Florida February 9, 2001 Consolidated Statements Company changed its method of Income Years ended December 31, 2000, 1999 accounting for goodwill and 1998 Years ended December 31, (dollars in thousands, except per share amounts) 2000 1999 1998 Operating Revenues 276,276 323,887 246,812 Operating Expenses (Note 4) 241,092 262,863 189,939 Operating Profit 35,184 61,024 56,873 Other Income (net) (Note 15) 7,832 4,986 13,326 Income before Income Taxes 43,016 66,010 70,199 Provision for Income Taxes (Note 8) 17,258 25,231 26,578 Net Income 25,758 40,779 43,621 Per Share Data: Cash Dividends $0.10 $0.10 $0.10 Basic Net Income Per Share $0.71 $1.12 $1.20 Diluted Net Income Per Share $0.70 $1.12 $1.20 Average Shares Outstanding-Basic 36,364,867 36,301,527 36,286,360 Average Shares Outstanding-Diluted 36,705,908 36,508,631 36,298,906 (Prior years results have been reclassified other intangible assets to conform to current year’s presentation.Statement of Financial Accounting Standards No. 142 in the fiscal year ended February 1, 2003. In addition, as discussed in Note H to the financial statements, the Company changed its method of accounting for unrecognized actuarial gains and losses related to pension benefits in the fiscal year ended February 1, 2003. DELOITTE & TOUCHE LLP March 20, 2003 Dayton, Ohio CONSOLIDATED STATEMENTS OF OPERATIONS YEARS ENDED FEBRUARY 1, FEBRUARY 2, FEBRUARY 3, 2003 2002 2001 (DOLLARS IN THOUSANDS, EXCEPT SHARE DATA) REVENUES: Net sales............................................ $639,848 $643,052 $656,164 Financing............................................ 27,570 27,273 28,162 Other................................................ 3,200 3,191 3,304 Total revenues.................................... 670,618 673,516 687,630 COSTS AND EXPENSES: Cost of merchandise sold, occupancy and buying expenses.......................................... 462,001 459,886 476,313 Selling, general, administrative and other expenses.......................................... 175,469 181,480 192,078 Depreciation and amortization........................ 20,083 19,578 16,200 Interest expense..................................... 11,299 13,574 13,014 Total costs and expenses.......................... 668,852 674,518 697,605 EARNINGS (LOSS) BEFORE INCOME TAX PROVISION (BENEFIT), DISCONTINUED OPERATIONS AND CUMULATIVE EFFECT OF CHANGES IN ACCOUNTING PRINCIPLES..................... 1,766 (1,002) (9,975) INCOME TAX PROVISION (BENEFIT)......................... 821 (82) (3,151) EARNINGS (LOSS) FROM CONTINUING OPERATIONS............. 945 (920) (6,824) DISCONTINUED OPERATIONS................................ 89 EARNINGS (LOSS) BEFORE CUMULATIVE EFFECT OF CHANGES IN ACCOUNTING PRINCIPLES................................ 945 (920) (6,735) CUMULATIVE EFFECT OF CHANGES IN ACCOUNTING PRINCIPLES........................................... (15,118) NET LOSS............................................... $(14,173) $ (920) $ (6,735) ======== ======== ======== EARNINGS (LOSS) PER COMMON SHARE -- Basic: Continuing operations................................ $ 0.08 $ (0.08) $ (0.51) Discontinued operations.............................. 0.01 Cumulative effect of changes in accounting principles........................................ (1.33) Net loss.......................................... $ (1.25) $ (0.08) $ (0.50) ======== ======== ======== EARNINGS (LOSS) PER COMMON SHARE -- Diluted: Continuing operations................................ $ 0.08 $ (0.08) $ (0.51) Discontinued operations.............................. 0.01 Cumulative effect of changes in accounting principles........................................ (1.32) Net loss.......................................... $ (1.24) $ (0.08) $ (0.50) ======== ======== ======== See accompanying notes to the consolidated financial statements. 18 CONSOLIDATED BALANCE SHEETS ASSETS Current Assets: AS OF FEBRUARY 1, FEBRUARY 2, 2003 2002 (DOLLARS IN THOUSANDS) Cash and equivalents...................................... $ 9,735 $ 7,142 Customer accounts receivable, net......................... 127,786 129,121 Merchandise inventories................................... 138,748 151,761 Other current assets...................................... 17,162 21,435 Total current assets................................... 293,431 309,459 Property: Land and improvements..................................... 996 996 Buildings and leasehold improvements...................... 79,681 78,461 Furniture, fixtures, and equipment........................ 133,132 130,572 Construction in progress.................................. 251 1,600 Total cost................................................ 214,060 211,629 Less accumulated depreciation and amortization............ (123,879) (113,551) Total property, net.................................... 90,181 98,078 Goodwill, Net............................................... 16,012 Other Assets................................................ 27,436 27,513 $ 411,048 $ 451,062 ========= ========= LIABILITIES AND SHAREHOLDERS' EQUITY Current Liabilities: Current portion of long-term obligations.................. $ 5,456 $ 5,531 Accounts payable.......................................... 40,607 39,108 Accrued liabilities: Compensation and related items......................... 7,004 5,912 Income and other taxes................................. 7,480 7,225 Rent................................................... 4,554 4,071 Other.................................................. 12,880 9,611 Total current liabilities............................ 77,981 71,458 Long-term Obligations -- Less current portion............... 115,127 148,489 Deferred Items.............................................. 11,214 12,823 Commitments and Contingencies (Note N) Shareholders' Equity: Common stock, no par, 11,536,460 shares at February 1, 2003 and 11,494,266 shares at February 2, 2002 issued and outstanding........................................ 243,419 243,355 Unearned compensation -- restricted stock................. (197) (302) Accumulated deficit....................................... (34,043) (19,870) Accumulated other comprehensive loss...................... (2,453) (4,891) Total shareholders' equity........................... 206,726 218,292 $ 411,048 $ 451,062 ========= ========= See notes to the consolidated financial statements. CONSOLIDATED BALANCE SHEETS December 31STATEMENTS OF SHAREHOLDERS' EQUITY UNEARNED ACCUMULATED COMMON STOCK COMPENSATION- OTHER --------------------- RESTRICTED COMPREHENSIVE COMPREHENSIVE SHARES AMOUNT STOCK, 2000 and 1999 NET DEFICIT LOSS (dollars in thousands) 2000 1999 Assets Current Assets: Cash and Cash Equivalents 18,444 15,715 Short-Term Investments (Note 6) 12,942 46,433 Accounts Receivable (net) 34,513 25,130 Materials and Supplies 3,653 5,565 Other Current Assets (Note 8) 8,772 6,408 Total Current Assets 78,324 99,251 Other Investments (Note 6) 1,304 40,404 Properties, Less Accumulated Depreciation (Note 5) 989,283 742,176 Other Assets and Deferred Charges 42,627 29,047 Total Assets 1,111,538 910,878 Liabilities and Shareholders' Equity Current Liabilities: Accounts Payable 81,814 31,880 Income Taxes 4,834 2,409 Accrued Casualty and Other Liabilities (Note 10) 2,647 2,533 Other Accrued Liabilities 5,568 4,547 Total Current Liabilities 94,863 41,369 Deferred Income Taxes (Note 8) 136,170 133,444 Long-Term Debt 88,000 0 Accrued Casualty, Deferred Revenue, and Other Liabilities (Note 10) 44,401 11,624 Shareholders' Equity: Common Stock: 65,762 64,049 Class A Common Stock, no par value; 50,000,000 shares authorized; 17,674,811 shares issued and 16,875,727 shares outstanding at December 31, 2000, and 37,194,244 shares issued and 36,395,160 outstanding at December 31, 1999 Class B Common Stock, no par value; 100,000,000 shares authorized; 19,609,216 shares issued and outstanding at December 31, 2000 and 0 shares issued and outstanding at December 31, 1999 Retained Earnings 693,384 671,269 Accumulated Other Comprehensive Income-Unrealized Gain On Securities (netLOSS) (Notes 6 and 12) 13 317 Restricted Stock Deferred Compensation (Note 13) (1,700) (1,839) Treasury Stock at Cost (799,084 shares) (9,355) (9,355) Total Shareholders' Equity 748,104 724,441 Total Liabilities and Shareholders' Equity 1,111,538 910,878 See accompanying notes to consolidated financial statements.DOLLARS IN THOUSANDS)

FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA. Independent Auditors' Report The REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the Board of Directors and Shareholders Florida East Coast IndustriesStockholders of Rite Aid Corporation Camp Hill, Inc.: Pennsylvania We have audited the accompanying consolidated balance sheets of Florida East Coast Industries, Inc. Rite Aid Corporation and subsidiaries (the “Company”) as of December 31March 4, 2000 2017 and 1999February 27, 2016, and the related consolidated statements of operations, comprehensive income, changes in shareholdersstockholders’ equity and comprehensive incomeequity, and cash flows for each of the three years in the three-year period ended December 31March 4, 20002017. In connection with our Our audits of the consolidated financial statements, we also audited included the financial statement schedule as listed in the accompanying Index on Page 59 of this Report on Form 10-K for the year 2000at Item 8. These consolidated financial statements and financial statement schedule are the responsibility of the Company's ’s management. Our responsibility is to express an opinion on these consolidated the financial statements and financial statement schedule based on our audits. We conducted our audits in accordance with auditing the standards generally accepted in of the Public Company Accounting Oversight Board (United States of AmericaStates). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the such consolidated financial statements referred to above present fairly, in all material respects, the financial position of Florida East Coast Industries, Inc. Rite Aid Corporation and subsidiaries as of December 31March 4, 2000 2017 and 1999February 27, 2016, and the results of their operations and their cash flows for each of the three years in the three-year period ended December 31March 4, 20002017, in conformity with accounting principles generally accepted in the United States of America. Also Also, in our opinion, the related such financial statement schedule, when considered in relation to the basic consolidated financial statements taken as a whole, presents fairly, in all material respects, the information set forth therein. KPMG We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the Company’s internal control over financial reporting as of March 4, 2017, based on the criteria established in Internal Control—Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Xxxxxxxx Commission and our report dated May 3, 2017 (not presented herein) expressed an unqualified opinion on the Company’s internal control over financial reporting. /s/ Deloitte & Touche LLP JacksonvillePhiladelphia, Florida February 9Pennsylvania May 3, 2001 Consolidated Statements of Income Years ended December 312017, 2000except for Note 27, 1999 and 1998 Years ended December 31as to which the date is April 5, 2018 RITE AID CORPORATION AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (dollars in In thousands, except per share amounts) 2000 1999 1998 Operating Revenues 276,276 323,887 246,812 Operating Expenses March 4, 2017 February 27, 2016 ASSETS Current assets: Cash and cash equivalents $ 245,410 $ 124,471 Accounts receivable, net 1,771,126 1,601,008 Inventories, net 1,789,541 1,734,937 Prepaid expenses and other current assets 211,541 128,144 Current assets held for sale 1,047,670 962,167 Total current assets 5,065,288 4,550,727 Property, plant and equipment, net 1,526,462 1,579,564 Goodwill 1,682,847 1,680,843 Other intangibles, net 715,406 847,996 Deferred tax assets 1,505,564 1,539,141 Other assets 215,917 208,827 Noncurrent assets held for sale 882,268 869,912 Total assets $ 11,593,752 $ 11,277,010 LIABILITIES AND STOCKHOLDERS’ EQUITY Current liabilities: Current maturities of long-term debt and lease financing obligations $ 17,709 $ 23,236 Accounts payable 1,613,909 1,542,797 Accrued salaries, wages and other current liabilities 1,340,947 1,393,618 Current liabilities held for sale 32,683 37,244 Total current liabilities 3,005,248 2,996,895 Long-term debt, less current maturities 3,235,888 2,886,993 Lease financing obligations, less current maturities 37,204 41,364 Other noncurrent liabilities 643,950 706,679 Noncurrent liabilities held for sale 4,057,392 4,063,651 Total liabilities 10,979,682 10,695,582 Commitments and contingencies — — Stockholders’ equity: Common stock, par value $1 per share; 1,500,000 shares authorized; shares issued and outstanding 1,053,690 and 1,047,754 1,053,690 1,047,754 Additional paid-in capital 4,839,854 4,822,665 Accumulated deficit (Note 4) 241,092 262,863 189,939 Operating Profit 35,184 61,024 56,873 Other Income (net5,237,157 ) (Note 155,241,210 ) 7,832 4,986 13,326 Income before Income Taxes 43,016 66,010 70,199 Provision for Income Taxes Accumulated other comprehensive loss (Note 8) 17,258 25,231 26,578 Net Income 25,758 40,779 43,621 Per Share Data: Cash Dividends $0.10 $0.10 $0.10 Basic Net Income Per Share $0.71 $1.12 $1.20 Diluted Net Income Per Share $0.70 $1.12 $1.20 Average Shares Outstanding-Basic 36,364,867 36,301,527 36,286,360 Average Shares Outstanding-Diluted 36,705,908 36,508,631 36,298,906 42,317 ) (Prior years results have been reclassified to conform to current year’s presentation.47,781 ) See Total stockholders’ equity 614,070 581,428 Total liabilities and stockholders’ equity $ 11,593,752 $ 11,277,010 The accompanying notes to are an integral part of these consolidated financial statements. RITE AID CORPORATION AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS December 31STATEMENTS OF OPERATIONS (In thousands, 2000 except per share amounts) Year Ended March 4, 2017 (53 Weeks) February 27, 2016 (52 Weeks) February 28, 2015 (52 Weeks) Revenues $ 22,927,540 $ 20,770,237 $ 16,558,195 Costs and 1999 expenses: Cost of revenues 17,862,833 15,778,258 11,838,785 Xxxxxxx, general and administrative expenses 4,776,995 4,581,171 4,279,280 Lease termination and impairment charges 45,778 40,477 37,204 Interest expense 200,065 186,132 116,997 Loss on debt retirements, net — 33,205 18,512 Gain on sale of assets, net (dollars in 6,649 ) (606 ) (4,916 ) 22,879,022 20,618,637 16,285,862 Income before income taxes 48,518 151,600 272,333 Income tax expense (benefit) 44,438 49,512 (1,739,513 ) Net income from continuing operations $ 4,080 $ 102,088 $ 2,011,846 Net (loss) income from discontinued operations, net of tax (27 ) 63,377 97,327 Net income $ 4,053 $ 165,465 $ 2,109,173 Computation of income (loss) attributable to common stockholders: Income from continuing operations attributable to common stockholders—basic $ 4,080 $ 102,088 $ 2,011,846 Add back—interest on convertible notes — — 5,456 Income from continuing operations attributable to common stockholders—diluted $ 4,080 $ 102,088 $ 2,017,302 (Loss) income from discontinued operations attributable to common stockholders—basic and diluted (27 ) 63,377 97,327 Income attributable to common stockholders—diluted $ 4,053 $ 165,465 $ 2,114,629 Basic income per share: Continuing operations $ 0.00 $ 0.10 $ 2.07 Discontinued operations 0.00 0.06 0.10 Net basic income per share $ 0.00 $ 0.16 $ 2.17 Diluted income per share: Continuing operations $ 0.00 $ 0.10 $ 1.98 Discontinued operations 0.00 0.06 0.10 Net diluted income per share $ 0.00 $ 0.16 $ 2.08 The accompanying notes are an integral part of these consolidated financial statements. RITE AID CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (In thousands) 2000 1999 Assets Current AssetsYear Ended March 4, 2017 (53 Weeks) February 27, 2016 (52 Weeks) February 28, 2015 (52 Weeks) Net income $ 4,053 $ 165,465 $ 2,109,173 Other comprehensive income (loss): Defined benefit pension plans: Cash Amortization of prior service cost, net transition obligation and Cash Equivalents 18,444 15,715 Short-Term Investments net actuarial losses included in net periodic pension cost, net of $3,600, $(Note 6) 12,942 46,433 Accounts Receivable (net) 34,513 25,130 Materials and Supplies 3,653 5,565 Other Current Assets (Note 8) 8,772 6,408 Total Current Assets 78,324 99,251 Other Investments (Note 6) 1,304 40,404 Properties, Less Accumulated Depreciation (Note 5) 989,283 742,176 Other Assets and Deferred Charges 42,627 29,047 Total Assets 1,111,538 910,878 Liabilities and Shareholders' Equity Current Liabilities: Accounts Payable 81,814 31,880 Income Taxes 4,834 2,409 Accrued Casualty and Other Liabilities (Note 10) 2,647 2,533 Other Accrued Liabilities 5,568 4,547 Total Current Liabilities 94,863 41,369 Deferred Income Taxes (Note 8) 136,170 133,444 Long-Term Debt 88,000 0 Accrued Casualty, Deferred Revenue1,681), and Other Liabilities $(Note 106,042) 44,401 11,624 Shareholders' Equity: tax expense (benefit) 5,464 (1,931 ) (8,516 ) Total other comprehensive income (loss) 5,464 (1,931 ) (8,516 ) Comprehensive income $ 9,517 $ 163,534 $ 2,100,657 The accompanying notes are an integral part of these consolidated financial statements. RITE AID CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY For the Years Ended March 4, 2017, February 27, 2016 and February 28, 2015 (In thousands, except per share amounts) Common Stock: 65,762 64,049 Class A Common Stock, no par value; 50,000,000 shares authorized; 17,674,811 shares issued and 16,875,727 shares outstanding at December 31, 2000, and 37,194,244 shares issued and 36,395,160 outstanding at December 31, 1999 Class B Common Stock, no par value; 100,000,000 shares authorized; 19,609,216 shares issued and outstanding at December 31, 2000 and 0 shares issued and outstanding at December 31, 1999 Retained Earnings 693,384 671,269 Stock Additional Paid-In Accumulated Accumulated Other Comprehensive Income-Unrealized Gain On Securities Shares Amount Capital Deficit Loss Total BALANCE MARCH 1, 2014 971,331 $ 971,331 $ 4,468,149 $ (net7,515,848 ) $ (37,334 ) $ (2,113,702 ) Net income 2,109,173 2,109,173 Other comprehensive loss: Changes in Defined Benefit Plans, net of $6,042 tax benefit (8,516 ) (Notes 6 and 128,516 ) 13 317 Restricted Stock Deferred Compensation Comprehensive income 2,100,657 Exchange of restricted shares for taxes (Note 132,115 ) (1,7002,115 ) (1,839) Treasury Stock at Cost (799,084 shares13,063 ) (9,35515,178 ) Issuance of restricted stock 3,303 3,303 (3,303 ) — Cancellation of restricted stock (454 ) (9,355454 ) Total Shareholders' Equity 748,104 724,441 Total Liabilities 454 — Amortization of restricted stock balance 12,441 12,441 Stock-based compensation expense 10,949 10,949 Tax benefit from exercise of stock options and Shareholders' Equity 1,111,538 910,878 See restricted stock vesting 37,772 37,772 Stock options exercised 16,485 16,485 7,612 24,097 Conversion of convertible debt instruments 8 8 12 20 BALANCE FEBRUARY 28, 2015 988,558 $ 988,558 $ 4,521,023 $ (5,406,675 ) $ (45,850 ) $ 57,056 Net income 165,465 165,465 Other comprehensive loss: Changes in Defined Benefit Plans, net of $1,681 tax benefit (1,931 ) (1,931 ) Comprehensive income 163,534 Exchange of restricted shares for taxes (2,045 ) (2,045 ) (15,461 ) (17,506 ) Issuance of restricted stock 2,751 2,751 (2,751 ) — Cancellation of restricted stock (420 ) (420 ) 420 — Amortization of restricted stock balance 28,342 28,342 Stock-based compensation expense 11,164 11,164 Conversion of convertible debt instruments 24,762 24,762 39,327 64,089 Tax benefit from exercise of stock options and restricted stock vesting 22,466 22,466 Stock options exercised 6,394 6,394 4,982 11,376 Shares issued for EnvisionRx acquisition 27,754 27,754 213,153 240,907 BALANCE FEBRUARY 27, 2016 1,047,754 $ 1,047,754 $ 4,822,665 $ (5,241,210 ) $ (47,781 ) $ 581,428 Net income 4,053 4,053 Other comprehensive loss: Changes in Defined Benefit Plans, net of $3,600 tax expense 5,464 5,464 Comprehensive income 9,517 Exchange of restricted shares for taxes (809 ) (809 ) (5,446 ) (6,255 ) Issuance of restricted stock 3,613 3,613 (3,613 ) — Cancellation of restricted stock (424 ) (424 ) 424 — Amortization of restricted stock balance 12,588 12,588 Stock-based compensation expense 9,989 9,989 Tax benefit from exercise of stock options and restricted stock vesting (148 ) (148 ) Stock options exercised 3,556 3,556 3,395 6,951 BALANCE MARCH 4, 2017 1,053,690 $ 1,053,690 $ 4,839,854 $ (5,237,157 ) $ (42,317 ) $ 614,070 The accompanying notes to are an integral part of these consolidated financial statements.. RITE AID CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (In thousands) Year Ended March 4, 2017 (53 Weeks) February 27, 2016 (52 Weeks) February 28, 2015 (52 Weeks) OPERATING ACTIVITIES: Net income $ 4,053 $ 165,465 $ 2,109,173 Net (loss) income from discontinued operations (27 ) 63,377 97,327 Net income from continuing operations 4,080 102,088 2,011,846 Adjustments to reconcile to net cash provided by operating activities: Depreciation and amortization 407,366 361,134 277,241 Lease termination and impairment charges 45,778 40,477 37,204 XXXX (credit) charge (3,721 ) 7,892 (10,023 ) (Gain) loss on sale of assets, net (6,649 ) (606 ) (4,916 ) Stock-based compensation expense 23,482 37,948 23,390 Loss on debt retirements, net — 33,205 18,512 Changes in deferred taxes 35,038 79,488 (1,726,487 ) Excess tax benefit on stock options and restricted stock (543 ) (22,884 ) (41,563 ) Changes in operating assets and liabilities: Accounts receivable (159,590 ) 264,525 (43,103 ) Inventories (49,381 ) 136,823 111,820 Accounts payable 39,542 (480 ) (181,555 ) Other assets and liabilities, net (152,375 ) (329,267 ) (112,709 ) Net cash provided by operating activities from continuing operations 183,027 710,343 359,657 INVESTING ACTIVITIES: Payments for property, plant and equipment (254,149 ) (391,199 ) (295,975 ) Intangible assets acquired (39,648 ) (89,874 ) (79,054 ) Acquisition of businesses, net of cash acquired — (1,778,377 ) (37,161 ) Proceeds from sale-leaseback transactions — 26,953 — Proceeds from dispositions of assets and investments 16,852 9,773 15,494 Net cash used in investing activities from continuing operations (276,945 ) (2,222,724 ) (396,696 ) FINANCING ACTIVITIES: Proceeds from issuance of long-term debt — 1,800,000 1,152,293 Net proceeds from revolver 330,000 375,000 1,325,000 Principal payments on long-term debt (16,588 ) (667,494 ) (2,590,841 ) Change in zero balance cash accounts 43,080 (62,878 ) 1,081 Net proceeds from the issuance of common stock 6,951 11,376 24,117 Financing fees paid for early debt redemption — (26,003 ) (13,841 ) Excess tax benefit on stock options and restricted stock 543 22,884 41,563 Deferred financing costs paid — (34,634 ) (20,285 ) Payments for taxes related to net share settlement of equity awards (6,254 ) (17,506 ) (15,178 ) Net cash provided by (used in) financing activities from continuing operations 357,732 1,400,745 (96,091 ) Cash flows of discontinued operations Operating activities of discontinued operations 49,090 304,565 304,480 Investing activities of discontinued operations (187,314 ) (179,134 ) (196,989 ) Financing activities of discontinued operations (4,651 ) (5,223 ) (4,868 ) Net cash provided by (used in) discontinued activities (142,875 ) 120,208 102,623 Increase (decrease) in cash and cash equivalents 120,939 8,572 (30,507 ) Cash and cash equivalents, beginning of year 124,471 115,899 146,406 Cash and cash equivalents, end of year $ 245,410 $ 124,471 $ 115,899 The accompanying notes are an integral part of these consolidated financial statements. RITE AID CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS For the Years Ended March 4, 2017, February 27, 2016 and February 28, 2015 (In thousands, except per share amounts)

FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA. Independent Auditors' Report The Board REPORT OF INDEPENDENT ACCOUNTANTS ---------------- To the Shareholders of Directors and Shareholders Florida East Coast Industries, Inc.: Chesapeake Utilities Corporation We have audited the accompanying consolidated balance sheets of Florida East Coast Industries, Inc. Chesapeake Utilities Corporation and subsidiaries Subsidiaries as of December 31, 2000 1994 and 19991993, and the related consolidated statements of income, changes in shareholders’ equity and comprehensive incomecash flows, stockholders' equity, and cash flows income taxes for each of the three years in the three-year period ended December 31, 2000. In connection with our audits of 1994, and the consolidated financial statements, we also audited the financial statement schedule as schedules listed in the accompanying Index on Page 59 Item 14(a)(1) and (2) of this Report on Form 10-K for the year 2000. K. These consolidated financial statements and financial statement schedule schedules are the responsibility of the Company's managementManagement. Our responsibility is to express an opinion on these consolidated financial statements and financial statement schedule schedules based on our audits. audits.‌ We conducted our audits in accordance with auditing standards generally accepted in the United States of Americaauditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates estimate made by managementManagement, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the consolidated financial position of Florida East Coast Industries, Inc. Chesapeake Utilities Corporation and subsidiaries Subsidiaries as of December 31, 2000 1994 and 19991993, and the consolidated results of their operations and their cash flows for each of the three years in the three-year period ended December 31, 2000, 1994 in conformity with accounting principles generally accepted in the United States of Americaaccounting principles. Also In addition, in our opinion, the related consolidated financial statement scheduleschedules referred to above, when considered in relation to the basic consolidated financial statements taken as a whole, presents present fairly, in all material respects, the information set forth required to be included therein. KPMG LLP JacksonvilleAs discussed in Note A to the consolidated financial statements, Florida February 9effective January 1, 2001 Consolidated Statements 1993, the Company changed its method of Income Years accounting for income taxes. We have also previously audited, in accordance with generally accepted standards, the consolidated balance sheets as of December 31, 1992, 1991, and 1990, and the related consolidated statements of income, cash flows, stockholders' equity, and income taxes for each of the two years in the period ended December 31, 20001991, 1999 (none of which are presented herein); and 1998 Years we expressed unqualified opinion on those financial statements. In our opinion, the information set forth in the Selected Financial Data section, for each of the five years in the period ended December 31, (dollars 1994, is fairly stated in thousandsall material respect in relation to the financial statements from which it has been derived. Coopers & Xxxxxxx, except per share amounts) 2000 1999 1998 Operating Revenues 276,276 323,887 246,812 Operating Expenses (Note 4) 241,092 262,863 189,939 Operating Profit 35,184 61,024 56,873 Other Income (net) (Note 15) 7,832 4,986 13,326 Income before Income Taxes 43,016 66,010 70,199 Provision for Income Taxes (Note 8) 17,258 25,231 26,578 Net Income 25,758 40,779 43,621 Per Share Data: Cash Dividends $0.10 $0.10 $0.10 Basic Net Income Per Share $0.71 $1.12 $1.20 Diluted Net Income Per Share $0.70 $1.12 $1.20 Average Shares Outstanding-Basic 36,364,867 36,301,527 36,286,360 Average Shares Outstanding-Diluted 36,705,908 36,508,631 36,298,906 (Prior years results have been reclassified to conform to current year’s presentation.) See accompanying notes to consolidated financial statements. L.L.P. Baltimore, Maryland February 10, 1995 CONSOLIDATED BALANCE SHEETS December STATEMENTS OF INCOME FOR THE YEARS ENDED DECEMBER 31, 2000 ------------------------------------- 1994 ----------- 1993 ----------- 1992 ----------- OPERATING REVENUES...................... OPERATING EXPENSES $98,572,297 ----------- $85,872,632 ----------- $75,934,708 ----------- Purchased gas costs................... 59,013,165 49,838,349 42,356,210 Operations............................ 19,681,435 18,178,500 16,792,136 Maintenance........................... 2,181,404 1,833,244 1,791,866 Depreciation and 1999 (dollars in thousands) 2000 1999 Assets Current Assets: Cash and Cash Equivalents 18,444 15,715 Short-Term Investments (Note 6) 12,942 46,433 Accounts Receivable (net) 34,513 25,130 Materials and Supplies 3,653 5,565 amortization......... 5,140,679 5,087,087 4,674,645 Other Current Assets (Note 8) 8,772 6,408 Total Current Assets 78,324 99,251 Other Investments (Note 6) 1,304 40,404 Properties, Less Accumulated Depreciation (Note 5) 989,283 742,176 Other Assets and Deferred Charges 42,627 29,047 Total Assets 1,111,538 910,878 Liabilities and Shareholders' Equity Current Liabilities: Accounts Payable 81,814 31,880 Income Taxes 4,834 2,409 Accrued Casualty and Other Liabilities (Note 10) 2,647 2,533 Other Accrued Liabilities 5,568 4,547 Total Current Liabilities 94,863 41,369 Deferred Income Taxes (Note 8) 136,170 133,444 Long-Term Debt 88,000 0 Accrued Casualty, Deferred Revenue, and Other Liabilities (Note 10) 44,401 11,624 Shareholders' Equity: Common Stock: 65,762 64,049 Class A Common Stock, no par value; 50,000,000 shares authorized; 17,674,811 shares issued and 16,875,727 shares outstanding at December 31, 2000, and 37,194,244 shares issued and 36,395,160 outstanding at December 31, 1999 Class B Common Stock, no par value; 100,000,000 shares authorized; 19,609,216 shares issued and outstanding at December 31, 2000 and 0 shares issued and outstanding at December 31, 1999 Retained Earnings 693,384 671,269 Accumulated Other Comprehensive Income-Unrealized Gain On Securities (net) (Notes 6 and 12) 13 317 Restricted Stock Deferred Compensation (Note 13) (1,700) (1,839) Treasury Stock at Cost (799,084 shares) (9,355) (9,355) Total Shareholders' Equity 748,104 724,441 Total Liabilities and Shareholders' Equity 1,111,538 910,878 See accompanying notes to consolidated financial statements.taxes........................... 2,798,905 2,635,072 2,431,968

FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA. Independent Auditors‌ INDEPENDENT AUDITORS' Report The REPORT Board of Directors and Shareholders Florida East Coast IndustriesStockholders Diamond Offshore Drilling, Inc.: Inc. and subsidiaries Houston, Texas We have audited the accompanying consolidated balance sheets of Florida East Coast IndustriesDiamond Offshore Drilling, Inc. and subsidiaries (the "Company") as of December 31, 2000 2001 and 19992000, and the related consolidated statements of income, changes in shareholders’ equity and stockholders' equity, comprehensive income, income and cash flows for each of the three years in the three-year period ended December 31, 2000. In connection with our audits of the consolidated financial statements, we also audited the financial statement schedule as listed in the accompanying Index on Page 59 of this Report on Form 10-K for the year 20002001. These consolidated financial statements and financial statement schedule are the responsibility of the Company's management. Our responsibility is to express an opinion on these consolidated financial statements and financial statement schedule based on our audits. We conducted our audits in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the such consolidated financial statements referred to above present fairly, in all material respects, the financial position of Florida East Coast IndustriesDiamond Offshore Drilling, Inc. and subsidiaries as of December 31, 2000 2001 and 19992000, and the results of their operations and their cash flows for each of the three years in the three-year period ended December 31, 20002001, in conformity with accounting principles generally accepted in the United States of America. Also in our opinionDeloitte & Touche LLP Houston, the related financial statement scheduleTexas January 22, when considered in relation 2002 (February 14, 2002 as to the basic consolidated financial statements taken as a wholesettlement of put options described in Note 1) DIAMOND OFFSHORE DRILLING, presents fairly, in all material respects, the information set forth thereinINC. KPMG LLP Jacksonville, Florida February 9, 2001 Consolidated Statements of Income Years ended December 31, 2000, 1999 and 1998 Years ended December 31, (dollars in thousands, except per share amounts) 2000 1999 1998 Operating Revenues 276,276 323,887 246,812 Operating Expenses (Note 4) 241,092 262,863 189,939 Operating Profit 35,184 61,024 56,873 Other Income (net) (Note 15) 7,832 4,986 13,326 Income before Income Taxes 43,016 66,010 70,199 Provision for Income Taxes (Note 8) 17,258 25,231 26,578 Net Income 25,758 40,779 43,621 Per Share Data: Cash Dividends $0.10 $0.10 $0.10 Basic Net Income Per Share $0.71 $1.12 $1.20 Diluted Net Income Per Share $0.70 $1.12 $1.20 Average Shares Outstanding-Basic 36,364,867 36,301,527 36,286,360 Average Shares Outstanding-Diluted 36,705,908 36,508,631 36,298,906 (Prior years results have been reclassified to conform to current year’s presentation.) See accompanying notes to consolidated financial statements. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS December (IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA) ASSETS DECEMBER 31, 2001 2000 and 1999 (dollars in thousands) 2000 1999 Assets Current Assetsassets: Cash and Cash Equivalents 18,444 15,715 Shortcash equivalents................................. $ 398,990 $ 144,456 Marketable securities..................................... 748,387 717,678 Accounts receivable....................................... 193,653 153,452 Rig inventory and supplies................................ 40,814 40,698 Prepaid expenses and other................................ 45,571 15,906 Total current assets.............................. 1,427,415 1,072,190 Drilling and other property and equipment, net of accumulated depreciation.................................. 2,002,873 1,931,182 Goodwill, net of accumulated amortization................... 38,329 55,205 Other assets................................................ 33,900 20,929 Total assets...................................... $3,502,517 $3,079,506 ========== ========== LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Current portion of long-Term Investments (Note 6) 12,942 46,433 term debt......................... $ 10,426 $ 9,732 Accounts Receivable (net) 34,513 25,130 Materials and Supplies 3,653 5,565 Other Current Assets (Note 8) 8,772 6,408 payable.......................................... 31,924 39,795 Accrued liabilities....................................... 87,742 73,149 Taxes payable............................................. 5,862 337 Securities sold under repurchase agreements............... 199,062 -- Total Current Assets 78,324 99,251 Other Investments (Note 6) 1,304 40,404 Properties, Less Accumulated Depreciation (Note 5) 989,283 742,176 Other Assets and Deferred Charges 42,627 29,047 Total Assets 1,111,538 910,878 Liabilities and Shareholders' Equity Current Liabilities: Accounts Payable 81,814 31,880 Income Taxes 4,834 2,409 Accrued Casualty and Other Liabilities (Note 10) 2,647 2,533 Other Accrued Liabilities 5,568 4,547 Total Current Liabilities 94,863 41,369 Deferred Income Taxes (Note 8) 136,170 133,444 current liabilities......................... 335,016 123,013 Long-Term Debt 88,000 0 Accrued Casualtyterm debt.............................................. 920,636 856,559 Deferred tax liability...................................... 376,095 316,627 Other liabilities........................................... 17,624 15,454 Total liabilities................................. 1,649,371 1,311,653 Commitments and contingencies Stockholders' equity: Preferred stock (par value $0.01, Deferred Revenue, and Other Liabilities (Note 10) 44,401 11,624 Shareholders' Equity: Common Stock: 65,762 64,049 Class A Common Stock, no par value; 50,000,000 25,000,000 shares authorized; 17,674,811 , none issued and outstanding)............... -- -- Common stock (par value $0.01, 500,000,000 shares authorized, 133,457,055 shares issued and 16,875,727 132,053,155 shares outstanding at December 31, 2000, 2001 and 37,194,244 shares issued and 36,395,160 outstanding at December 31, 1999 Class B Common Stock, no par value; 100,000,000 shares authorized; 19,609,216 133,150,477 shares issued and outstanding at December 31, 2000).... 1,335 1,332 Additional paid-in capital................................ 1,267,952 1,248,665 Retained earnings......................................... 624,507 517,186 Accumulated other comprehensive gains (losses)............ (2,880) 670 Treasury stock, at cost (1,403,900 shares)................ (37,768) -- Total stockholders' equity........................ 1,853,146 1,767,853 Total liabilities and stockholders' equity........ $3,502,517========== $3,079,506========== The accompanying notes are an integral part of the consolidated financial statements. DIAMOND OFFSHORE DRILLING, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME (IN THOUSANDS, EXCEPT PER SHARE DATA) YEAR ENDED DECEMBER 31, 2001 2000 1999 Revenues.................................................... $885,349 $659,436 $821,024 Operating expenses: Contract drilling......................................... 464,964 433,091 431,523 Depreciation and 0 amortization............................. 170,017 145,596 142,963 General and administrative................................ 25,502 23,803 22,877 Total operating expenses.......................... 660,483 602,490 597,363 Operating income............................................ 224,866 56,946 223,661 Other income (expense): Gain on sale of assets.................................... 327 14,324 231 Interest income........................................... 48,682 49,525 34,985 Interest expense.......................................... (26,205) (10,272) (9,212) Other, net................................................ 24,695 344 (9,302) Income before income tax expense and extraordinary loss..... 272,365 110,867 240,363 Income tax expense.......................................... (90,820) (38,586) (84,292) Income before extraordinary loss............................ 181,545 72,281 156,071 Extraordinary loss from early debt extinguishment, net of income tax benefit of $4,158.............................. (7,722) -- -- Net income.................................................. $173,823 $ 72,281 $156,071 ======== ======== ======== Earnings per share: Basic Income before extraordinary loss....................... $ 1.37 $ 0.53 $ 1.15 Extraordinary loss..................................... (0.06) -- -- Net............................................... $ 1.31 $ 0.53 $ 1.15 ======== ======== ======== Diluted Income before extraordinary loss....................... $ 1.31 $ 0.53 $ 1.11 Extraordinary loss..................................... (0.05) -- -- Net............................................... $ 1.26 $ 0.53 $ 1.11 ======== ======== ======== Weighted average shares issued and outstanding at outstanding: Shares of common stock.................................... 132,886 135,164 135,822 Dilutive potential shares of common stock................. 16,408 9,876 9,876 Total weighted average shares outstanding......... 149,294 145,040 145,698 ======== ======== ======== The accompanying notes are an integral part of the consolidated financial statements. DIAMOND OFFSHORE DRILLING, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (IN THOUSANDS, EXCEPT NUMBER OF SHARES) COMMON STOCK ADDITIONAL ACCUMULATED OTHER COMPREHENSIVE TREASURY STOCK TOTAL -------------------- PAID-IN RETAINED GAINS --------------------- STOCKHOLDERS' SHARES AMOUNT CAPITAL EARNINGS (LOSSES) SHARES AMOUNT EQUITY ----------- ------ ---------- -------- ------------- ---------- -------- ------------- January 1, 1999........... 139,333,635 $1,393 $1,302,806 $547,783 $(7,998) 3,518,100 $(88,726) $1,755,258 Net income................ -- -- -- 156,071 -- -- -- 156,071 Dividends to stockholders............ -- -- -- (67,911) -- -- -- (67,911) Stock options exercised... 8,746 -- 35 -- -- -- -- 35 Exchange rate changes, net..................... -- -- -- -- (983) -- -- (983) Loss on investments, net..................... -- -- -- -- (248) -- -- (248) ----------- ------ ---------- -------- ------- ---------- -------- ---------- December 31, 1999 Retained Earnings 693,384 671,269 Accumulated Other Comprehensive Income-Unrealized Gain On Securities 1999......... 139,342,381 1,393 1,302,841 635,943 (net9,229) 3,518,100 (88,726) 1,842,222 ----------- ------ ---------- -------- ------- ---------- -------- ---------- Net income................ -- -- -- 72,281 -- -- -- 72,281 Treasury stock Purchase................ -- -- -- -- -- 2,705,100 (92,959) (Notes 6 and 1292,959) 13 317 Restricted Stock Deferred Compensation Retirement.............. (Note 136,223,200) (1,70062) (1,839) Treasury Stock at Cost (799,084 shares58,193) (9,355123,430) -- (6,223,200) 181,685 -- Dividends to stockholders............ -- -- -- (67,608) -- -- -- (67,608) Stock options exercised... 30,803 1 122 -- -- -- -- 123 Put option premiums....... -- -- 3,875 -- -- -- -- 3,875 Conversion of long-term debt.................... 493 -- 20 -- -- -- -- 20 Exchange rate changes, net..................... -- -- -- -- 506 -- -- 506 Gain on investments, net..................... -- -- -- -- 9,393 -- -- 9,393 ----------- ------ ---------- -------- ------- ---------- -------- ---------- December 31, 2000......... 133,150,477 1,332 1,248,665 517,186 670 -- -- 1,767,853 ----------- ------ ---------- -------- ------- ---------- -------- ---------- Net income................ -- -- -- 173,823 -- -- -- 173,823 Treasury stock purchase... -- -- -- -- -- 1,403,900 (37,768) (9,35537,768) Total Shareholders' Equity 748,104 724,441 Total Liabilities and Shareholders' Equity 1,111,538 910,878 See Dividends to stockholders............ -- -- -- (66,502) -- -- -- (66,502) Put option premiums....... -- -- 6,876 -- -- -- -- 6,876 Conversion of long-term debt.................... 306,578 3 12,411 -- -- -- -- 12,414 Exchange rate changes, net..................... -- -- -- -- (170) -- -- (170) Loss on investments, net..................... -- -- -- -- (620) -- -- (620) Minimum pension adjustment.............. -- -- -- -- (2,760) -- -- (2,760) ----------- ------ ---------- -------- ------- ---------- -------- ---------- December 31, 2001......... 133,457,055 $1,335 $1,267,952 $624,507 $(2,880) 1,403,900 $(37,768) $1,853,146 =========== ====== ========== ======== ======= ========== ======== ========== The accompanying notes to are an integral part of the consolidated financial statements.. DIAMOND OFFSHORE DRILLING, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (IN THOUSANDS) YEAR ENDED DECEMBER 31, 2001 2000 1999 Net income.................................................. $173,823 $72,281 $156,071 Other comprehensive gains (losses), net of tax: Foreign currency translation (loss) gain.................. (170) 506 (983) Unrealized holding gain (loss) on investments............. 2,501 3,259 (5,903) Reclassification adjustment for (gain) loss included in net income........................................... (3,121) 6,134 5,655 Minimum pension liability adjustment...................... (2,760) -- -- Total other comprehensive (loss) gain............. (3,550) 9,899 (1,231) Comprehensive income........................................ $170,273 $82,180 $154,840 ======== ======= ======== The accompanying notes are an integral part of the consolidated financial statements. DIAMOND OFFSHORE DRILLING, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (IN THOUSANDS) YEAR ENDED DECEMBER 31, 2001 2000 1999 Operating activities: Net income............................................... $ 173,823 $ 72,281 $156,071 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization......................... 170,017 145,596 142,963 Gain on sale of assets................................ (327) (14,324) (231) (Gain) loss on sale of marketable securities.......... (27,141) (2,103) 522 Extraordinary loss from early debt extinguishment, net of tax.............................................. 7,722 -- -- Impairment write-down of marketable securities........ -- -- 10,671 Deferred tax provision................................ 74,264 26,155 38,529 Accretion of discount on marketable securities........ (2,369) (7,535) (9,316) Amortization of debt issuance costs................... 1,482 864 541 Amortization of discount on zero coupon convertible debentures.......................................... 14,481 8,033 -- Changes in operating assets and liabilities: Accounts receivable................................... (40,201) (9,883) 90,279 Rig inventory and supplies and other current assets... 3 (9,190) (7,527) Other assets, non-current............................. (11,178) (604) (2,639) Accounts payable and accrued liabilities.............. 6,762 (4,592) (30,540) Taxes payable......................................... 9,443 (12,658) 11,193 Other liabilities, non-current........................ 1,426 3,261 (881) Other, net............................................ (4,176) 1,234 (1,513) Net cash provided by operating activities........ 374,031 196,535 398,122 Investing activities: Capital expenditures.................................. (268,617) (323,924) (324,133) Proceeds from sale of assets.......................... 1,726 33,279 662 Net change in marketable securities................... 1,753 (164,548) 4,343 Securities sold under repurchase agreements........... 199,062 -- -- Proceeds from settlement of forward contracts......... 226 -- -- Net cash used in investing activities............ (65,850) (455,193) (319,128) Financing activities: Acquisition of treasury stock......................... (37,768) (92,959) -- Proceeds from sale of put options..................... 6,876 3,875 -- Payment of dividends.................................. (66,502) (67,608) (67,911) Proceeds from stock options exercised................. -- 123 35 Issuance of zero coupon convertible debentures........ -- 402,178 -- Debt issuance costs-zero coupon convertible debentures.......................................... -- (9,556) -- Lease-leaseback agreement............................. (9,732) 55,000 -- Arrangement fees-lease-leaseback agreement............ -- (255) -- Early extinguishment of debt -- 3.75% convertible subordinated notes.................................. (395,622) -- -- Issuance of 1.5% convertible senior debentures........ 460,000 -- -- Debt issuance costs -- 1.5% convertible senior debentures.......................................... (10,899) -- -- Net cash provided by (used in) financing activities..................................... (53,647) 290,798 (67,876) Net change in cash and cash equivalents.................... 254,534 32,140 11,118 Cash and cash equivalents, beginning of year.......... 144,456 112,316 101,198 Cash and cash equivalents, end of year................ $ 398,990 $ 144,456 $112,316 ========= ========= ======== The accompanying notes are an integral part of the consolidated financial statements. DIAMOND OFFSHORE DRILLING, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA. Independent Auditors' Report The Board of Directors and Shareholders Florida East Coast MANAGEMENT REPORT Katy Industries, Inc.Inc. management is responsible for the fair presentation and consistency of all financial data included in this Annual Report in accordance with generally accepted accounting principles. Where necessary, the data reflect management's best estimates and judgements. Management also is responsible for maintaining an internal control structure with the objective of providing reasonable assurance that Katy's assets are safeguarded against material loss from unauthorized use or disposition and that authorized transactions are properly recorded to permit the preparation of accurate financial data. Cost-benefit judgements are an important consideration in this regard. The effectiveness of internal controls is maintained by: (1) personnel selection and training; (2) division of responsibilities; (3) establishment and communication of policies; and (4) ongoing internal review programs and audits. Management believes that Katy's system of internal controls is effective and adequate to accomplish the above described objectives. /s/ Xxxxxx X. Xxxxxxx _____________________________________ Xxxxxx X. Xxxxxxx President and Chief Executive Officer /s/ Xxxxxxx X. Xxxxxxxxx _____________________________________ Xxxxxxx X. Xxxxxxxxx Vice President, Finance and Chief Financial Officer REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS TO KATY INDUSTRIES, INC.: We have audited the accompanying consolidated balance sheets of Florida East Coast IndustriesKATY INDUSTRIES, Inc. INC., (a Delaware corporation) and subsidiaries as of December 31, 2000 and 1999, and the related consolidated statements of incomeoperations, changes in shareholders’ stockholders' equity and comprehensive income, and cash flows for each of the three years in the three-year period ended December 31, 2000. In connection with our audits of the consolidated financial statements, we also audited the financial statement schedule as listed in the accompanying Index on Page 59 of this Report on Form 10-K for the year 2000. These consolidated financial statements and financial statement schedule are the responsibility of the Company's management. Our responsibility is to express an opinion on these consolidated financial statements and financial statement schedule based on our audits. We conducted our audits in accordance with auditing standards generally accepted in the United States of AmericaStates. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Florida East Coast Katy Industries, Inc. and subsidiaries as of December 31, 2000 and 1999, and the results of their operations and their cash flows for each of the three years in the three-year period ended December 31, 2000, 2000 in conformity with accounting principles generally accepted in the United States of AmericaStates. Also in our opinionXXXXXX XXXXXXXX LLP Denver, the related financial statement schedule, when considered in relation to the basic consolidated financial statements taken as a whole, presents fairly, in all material respects, the information set forth therein. KPMG LLP Jacksonville, Florida February 9Colorado March 30, 2001 Consolidated Statements of Income Years ended December 31KATY INDUSTRIES, 2000, 1999 and 1998 Years ended December 31, (dollars in thousands, except per share amounts) 2000 1999 1998 Operating Revenues 276,276 323,887 246,812 Operating Expenses (Note 4) 241,092 262,863 189,939 Operating Profit 35,184 61,024 56,873 Other Income (net) (Note 15) 7,832 4,986 13,326 Income before Income Taxes 43,016 66,010 70,199 Provision for Income Taxes (Note 8) 17,258 25,231 26,578 Net Income 25,758 40,779 43,621 Per Share Data: Cash Dividends $0.10 $0.10 $0.10 Basic Net Income Per Share $0.71 $1.12 $1.20 Diluted Net Income Per Share $0.70 $1.12 $1.20 Average Shares Outstanding-Basic 36,364,867 36,301,527 36,286,360 Average Shares Outstanding-Diluted 36,705,908 36,508,631 36,298,906 (Prior years results have been reclassified to conform to current year’s presentation.) See accompanying notes to consolidated financial statementsINC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS As of December 31, 2000 and 1999 (dollars in thousands) 2000 1999 Assets Current Assets: Cash and Cash Equivalents 18,444 15,715 Short-Term Investments (Note 6) 12,942 46,433 Accounts Receivable (net) 34,513 25,130 Materials and Supplies 3,653 5,565 Other Current Assets (Note 8) 8,772 6,408 Total Current Assets 78,324 99,251 Other Investments (Note 6) 1,304 40,404 Properties, Less Accumulated Depreciation (Note 5) 989,283 742,176 Other Assets and Deferred Charges 42,627 29,047 Total Assets 1,111,538 910,878 Liabilities and Shareholders' Equity Current Liabilities: Accounts Payable 81,814 31,880 Income Taxes 4,834 2,409 Accrued Casualty and Other Liabilities (Note 10) 2,647 2,533 Other Accrued Liabilities 5,568 4,547 Total Current Liabilities 94,863 41,369 Deferred Income Taxes (Note 8) 136,170 133,444 Long-Term Debt 88,000 0 Accrued Casualty, Deferred Revenue, and Other Liabilities (Note 10) 44,401 11,624 Shareholders' Equity: Common Stock: 65,762 64,049 Class A Common Stock, no par value; 50,000,000 shares authorized; 17,674,811 shares issued and 16,875,727 shares outstanding at December 31, 2000, and 37,194,244 shares issued and 36,395,160 outstanding at December 31, 1999 Class B Common Stock, no par value; 100,000,000 shares authorized; 19,609,216 shares issued and outstanding at December 31, 2000 and 0 shares issued and outstanding at December 31, 1999 Retained Earnings 693,384 671,269 Accumulated Other Comprehensive Income-Unrealized Gain On Securities (net) (Notes 6 and 12) 13 317 Restricted Stock Deferred Compensation (Note 13) (1,700) (1,839) Treasury Stock at Cost (799,084 shares) (9,355) (9,355) Total Shareholders' Equity 748,104 724,441 Total Liabilities and Shareholders' Equity 1,111,538 910,878 See accompanying notes to consolidated financial statements.Thousands of Dollars)

FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA. Independent Auditors‌ INDEPENDENT AUDITORS' Report The REPORT Board of Directors and Shareholders Florida East Coast IndustriesStockholders Diamond Offshore Drilling, Inc.: Inc. and subsidiaries Houston, Texas We have audited the accompanying consolidated balance sheets of Florida East Coast IndustriesDiamond Offshore Drilling, Inc. and subsidiaries (the "Company") as of December 31, 2000 1998 and 19991997, and the related consolidated statements of income, changes in shareholders’ equity and stockholders' equity, comprehensive income, income and cash flows for each of the three years in the three-year period ended December 31, 2000. In connection with our audits of the consolidated financial statements, we also audited the financial statement schedule as listed in the accompanying Index on Page 59 of this Report on Form 10-K for the year 20001998. These consolidated financial statements and financial statement schedule are the responsibility of the Company's management. Our responsibility is to express an opinion on these consolidated financial statements and financial statement schedule based on our audits. We conducted our audits in accordance with auditing standards generally accepted in the United States of Americaauditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the such consolidated financial statements referred to above present fairly, in all material respects, the financial position of Florida East Coast IndustriesDiamond Offshore Drilling, Inc. and subsidiaries as of December 31, 2000 1998 and 19991997, and the results of their operations and their cash flows for each of the three years in the three-year period ended December 31, 20001998, in conformity with accounting principles generally accepted in the United States of Americaaccounting principles. Also in our opinionDELOITTE & TOUCHE LLP Houston, the related financial statement schedule, when considered in relation to the basic consolidated financial statements taken as a whole, presents fairly, in all material respects, the information set forth therein. KPMG LLP Jacksonville, Florida February 9, 2001 Consolidated Statements of Income Years ended December 31, 2000Texas January 25, 1999 and 1998 Years ended December 3128 DIAMOND OFFSHORE DRILLING, (dollars in thousands, except per share amounts) 2000 1999 1998 Operating Revenues 276,276 323,887 246,812 Operating Expenses (Note 4) 241,092 262,863 189,939 Operating Profit 35,184 61,024 56,873 Other Income (net) (Note 15) 7,832 4,986 13,326 Income before Income Taxes 43,016 66,010 70,199 Provision for Income Taxes (Note 8) 17,258 25,231 26,578 Net Income 25,758 40,779 43,621 Per Share Data: Cash Dividends $0.10 $0.10 $0.10 Basic Net Income Per Share $0.71 $1.12 $1.20 Diluted Net Income Per Share $0.70 $1.12 $1.20 Average Shares Outstanding-Basic 36,364,867 36,301,527 36,286,360 Average Shares Outstanding-Diluted 36,705,908 36,508,631 36,298,906 (Prior years results have been reclassified to conform to current year’s presentation.) See accompanying notes to consolidated financial statementsINC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS December (IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA) ASSETS DECEMBER 31, 2000 and 1999 (dollars in thousands) 2000 1999 Assets 1998 1997 Current Assetsassets: Cash and Cash Equivalents 18,444 15,715 Short-Term Investments (Note 6) 12,942 46,433 cash equivalents................................. $ 101,198 $ 102,958 Marketable securities..................................... 535,774 363,137 Accounts Receivable (net) 34,513 25,130 Materials receivable....................................... 233,719 205,589 Rig inventory and Supplies 3,653 5,565 supplies................................ 35,794 33,714 Prepaid expenses and other................................ 31,939 13,377 Total current assets.............................. 938,424 718,775 Drilling and other property and equipment, net of accumulated depreciation.................................. 1,551,820 1,451,741 Goodwill, net of accumulated amortization................... 109,825 118,623 Other assets................................................ 9,647 9,422 Total assets...................................... $2,609,716 $2,298,561 ========== ========== LIABILITIES AND STOCKHOLDERS' EQUITY Current Assets (Note 8) 8,772 6,408 Total Current Assets 78,324 99,251 Other Investments (Note 6) 1,304 40,404 Properties, Less Accumulated Depreciation (Note 5) 989,283 742,176 Other Assets and Deferred Charges 42,627 29,047 Total Assets 1,111,538 910,878 Liabilities and Shareholders' Equity Current Liabilitiesliabilities: Accounts Payable 81,814 31,880 Income payable.......................................... $ 93,938 $ 57,557 Accrued liabilities....................................... 53,283 48,935 Taxes 4,834 2,409 Accrued Casualty and Other Liabilities (Note 10) 2,647 2,533 Other Accrued Liabilities 5,568 4,547 payable............................................. 13,180 24,653 Total Current Liabilities 94,863 41,369 Deferred Income Taxes (Note 8) 136,170 133,444 current liabilities......................... 160,401 131,145 Long-Term Debt 88,000 0 Accrued Casualtyterm debt.............................................. 400,000 400,000 Deferred tax liability...................................... 263,797 209,513 Other liabilities........................................... 30,260 22,376 Total liabilities................................. 854,458 763,034 Commitments and contingencies Stockholders' equity: Preferred stock (par value $0.01, Deferred Revenue, and Other Liabilities (Note 10) 44,401 11,624 Shareholders' Equity: Common Stock: 65,762 64,049 Class A Common Stock, no par value; 50,000,000 25,000,000 shares authorized; 17,674,811 shares , none issued and 16,875,727 outstanding)............... -- -- Common stock (par value $0.01, 500,000,000 shares authorized, 139,333,635 issued, 135,815,535 outstanding at December 31, 2000, 1998 and 37,194,244 shares issued and 36,395,160 outstanding at December 31, 1999 Class B Common Stock, no par value; 100,000,000 shares authorized; 19,609,216 139,309,948 shares issued and outstanding at December 31, 2000 and 0 shares issued and outstanding at December 31, 1999 1997)...................... 1,393 1,393 Additional paid-in capital.................................. 1,302,806 1,302,712 Retained Earnings 693,384 671,269 earnings........................................... 547,783 233,350 Accumulated Other Comprehensive Income-Unrealized Gain On Securities other comprehensive losses...................... (net7,998) (Notes 6 and 12) 13 317 Restricted Stock Deferred Compensation (Note 13) (1,700) (1,8391,928) Treasury Stock stock, at Cost cost (799,084 3,518,100 shares).................. (88,726) (9,355) (9,355) -- Total Shareholdersstockholders' Equity 748,104 724,441 equity........................ 1,755,258 1,535,527 Total Liabilities liabilities and Shareholdersstockholders' Equity 1,111,538 910,878 See equity........ $2,609,716========== $2,298,561========== The accompanying notes to are an integral part of the consolidated financial statements.. DIAMOND OFFSHORE DRILLING, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME (IN THOUSANDS, EXCEPT PER SHARE DATA) YEAR ENDED DECEMBER 31, --------------------------------- 1998 ---------- 1997 --------- 1996 -------- Revenues................................................... $1,208,801 $ 956,093 $611,430 Operating expenses: Contract drilling........................................ 484,625 406,343 341,654 Depreciation and amortization............................ 130,271 108,335 75,767 General and administrative............................... 25,324 22,556 15,640