New Rite Aid (RADCQ) 10-Q 22 Jun 15 2016 Q1 Quarterly report Financial data

Document and Entity Information

Document and Entity Information - shares	3 Months Ended
	May. 30, 2015	Jun. 14, 2015
Document and Entity Information
Entity Registrant Name	RITE AID CORP
Entity Central Index Key	84,129
Document Type	10-Q
Document Period End Date	May 30, 2015
Amendment Flag	false
Current Fiscal Year End Date	--02-27
Entity Current Reporting Status	Yes
Entity Filer Category	Large Accelerated Filer
Entity Common Stock, Shares Outstanding		1,014,924,539
Document Fiscal Year Focus	2,016
Document Fiscal Period Focus	Q1

CONDENSED CONSOLIDATED BALANCE

CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands	May. 30, 2015	Feb. 28, 2015
Current assets:
Cash and cash equivalents	$ 1,922,129	$ 115,899
Accounts receivable, net	969,725	980,904
Inventories, net of LIFO reserve of $1,003,515 and $997,528	2,820,784	2,882,980
Deferred tax assets	17,823	17,823
Prepaid expenses and other current assets	100,386	224,152
Total current assets	5,830,847	4,221,758
Property, plant and equipment, net	2,143,575	2,091,369
Goodwill	76,124	76,124
Other intangibles, net	403,085	421,480
Deferred tax assets	1,756,809	1,766,349
Other assets	319,334	286,172
Total assets	10,529,774	8,863,252
Current liabilities:
Current maturities of long-term debt and lease financing obligations	35,039	100,376
Accounts payable	1,167,354	1,133,520
Accrued salaries, wages and other current liabilities	1,144,889	1,193,419
Deferred tax liabilities	57,685	57,685
Total current liabilities	2,404,967	2,485,000
Long-term debt, less current maturities	7,142,247	5,483,415
Lease financing obligations, less current maturities	57,585	61,152
Other noncurrent liabilities	772,244	776,629
Total liabilities	$ 10,377,043	$ 8,806,196
Commitments and contingencies
Stockholders' equity:
Common stock, par value $1 per share; 1,500,000 shares authorized; shares issued and outstanding 1,014,827 and 988,558	$ 1,014,827	$ 988,558
Additional paid-in capital	4,570,996	4,521,023
Accumulated deficit	(5,387,839)	(5,406,675)
Accumulated other comprehensive loss	(45,253)	(45,850)
Total stockholders' equity	152,731	57,056
Total liabilities and stockholders' equity	$ 10,529,774	$ 8,863,252

CONDENSED CONSOLIDATED BALANCE3

CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) shares in Thousands, $ in Thousands	May. 30, 2015	Feb. 28, 2015
CONDENSED CONDENSED CONSOLIDATED BALANCE SHEETS
Inventories, LIFO reserve (in dollars)	$ 1,003,515	$ 997,528
Common stock, par value (in dollars per share)	$ 1	$ 1
Common stock, shares authorized	1,500,000	1,500,000
Common stock, shares issued	1,014,827	988,558
Common stock, shares outstanding	1,014,827	988,558

CONDENSED CONSOLIDATED STATEMEN

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) $ in Thousands	3 Months Ended
	May. 30, 2015	May. 31, 2014
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
Revenues	$ 6,647,561	$ 6,465,531
Costs and expenses:
Cost of goods sold	4,788,031	4,662,552
Selling, general and administrative expenses	1,699,585	1,644,354
Lease termination and impairment charges	5,022	4,848
Interest expense	123,607	100,820
Loss (gain) on sale of assets, net	39	(370)
Total costs and expenses	6,616,284	6,412,204
Income before income taxes	31,277	53,327
Income tax expense	12,441	11,881
Net income	18,836	41,446
Computation of income attributable to common stockholders:
Income attributable to common stockholders-basic	18,836	41,446
Income attributable to common stockholders-diluted	$ 18,836	$ 41,446
Basic income per share (in dollars per share)	$ 0.02	$ 0.04
Diluted income per share (in dollars per share)	$ 0.02	$ 0.04

CONDENSED CONSOLIDATED STATEME5

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME - USD ($) $ in Thousands	3 Months Ended
	May. 30, 2015	May. 31, 2014
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
Net income	$ 18,836	$ 41,446
Defined benefit pension plans:
Amortization of prior service cost, net transition obligation and net actuarial losses included in net periodic pension cost, net of $398 and $0 tax expense	597	659
Total other comprehensive income	597	659
Comprehensive income	$ 19,433	$ 42,105

CONDENSED CONSOLIDATED STATEME6

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (Parenthetical) - USD ($) $ in Thousands	3 Months Ended
	May. 30, 2015	May. 31, 2014
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
Amortization of prior service cost, net transition obligation and net actuarial losses included in net periodic pension cost, tax expense	$ 398	$ 0

CONDENSED CONSOLIDATED STATEME7

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands	3 Months Ended
	May. 30, 2015	May. 31, 2014
Operating activities:
Net income	$ 18,836	$ 41,446
Adjustments to reconcile to net cash provided by operating activities:
Depreciation and amortization	109,649	103,105
Lease termination and impairment charges	5,022	4,848
LIFO charges	5,987	1,545
Loss (gain) on sale of assets, net	39	(370)
Stock-based compensation expense	7,370	4,156
Changes in deferred taxes	9,540
Excess tax benefit on stock options and restricted stock	(2,820)	(10,522)
Changes in operating assets and liabilities:
Accounts receivable	11,027	41,347
Inventories	56,204	59,375
Accounts payable	79,715	86,324
Other assets and liabilities, net	67,266	(91,506)
Net cash provided by operating activities	367,835	239,748
Investing activities:
Payments for property, plant and equipment	(141,037)	(94,342)
Intangible assets acquired	(14,293)	(19,586)
Acquisition of Health Dialog and RediClinic, net of cash acquired		(65,306)
Proceeds from dispositions of assets and investments	2,838	1,873
Net cash used in investing activities	(152,492)	(177,361)
Financing activities:
Proceeds from issuance of long-term debt	1,800,000	1,152,293
Net payments to revolver	(141,000)	(49,000)
Principal payments on long-term debt	(5,577)	(1,157,443)
Change in zero balance cash accounts	(34,275)	(8,578)
Net proceeds from issuance of common stock	3,378	10,904
Excess tax benefit on stock options and restricted stock	2,820	10,522
Deferred financing costs paid	(34,459)	(1,488)
Net cash provided by (used in) financing activities	1,590,887	(42,790)
Increase in cash and cash equivalents	1,806,230	19,597
Cash and cash equivalents, beginning of period	115,899	146,406
Cash and cash equivalents, end of period	1,922,129	166,003
Supplementary cash flow data:
Cash paid for interest (net of capitalized amounts of $42 and $49, respectively)	72,194	90,584
Cash payments of income taxes, net of refunds	992	795
Equipment financed under capital leases	800	1,683
Equipment received for noncash consideration	545
Conversion of the 8.5% convertible notes to common stock	64,089
Gross borrowings from revolver	915,000	825,000
Gross payments to revolver	$ 1,056,000	$ 874,000

CONDENSED CONSOLIDATED STATEME8

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Parenthetical) - USD ($) $ in Thousands	3 Months Ended
	May. 30, 2015	May. 31, 2014
Cash paid for interest, capitalized amounts	$ 42	$ 49
8.5% convertible notes due May 2015
Debt instrument, stated interest rate (as a percent)	8.50%

Basis of Presentation

Basis of Presentation	3 Months Ended
	May. 30, 2015
Basis of Presentation
Basis of Presentation	1. Basis of Presentation The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States of America for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X and therefore do not include all of the information and footnotes required by accounting principles generally accepted in the United States of America for complete annual financial statements. The accompanying financial information reflects all adjustments which are of a recurring nature and, in the opinion of management, are necessary for a fair presentation of the results for the interim periods. The results of operations for the thirteen week period ended May 30, 2015 are not necessarily indicative of the results to be expected for the full year. These condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto included in the Rite Aid Corporation and Subsidiaries (the “Company”) Fiscal 2015 10-K. New Accounting Pronouncements In May 2013, the FASB issued a proposed Accounting Standards Update, Leases (Topic 842): a revision of the 2010 proposed Accounting Standards Update, Leases (Topic 840), that would require an entity to recognize assets and liabilities arising under lease contracts on the balance sheet. The proposed standard, as currently drafted, will have a material impact on the Company’s reported results of operations and financial position. In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers. This ASU supersedes the revenue recognition requirements in Accounting Standards Codification 605—Revenue Recognition and most industry-specific guidance throughout the Codification. The standard requires that an entity recognizes revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the company expects to be entitled in exchange for those goods or services. This ASU is effective for fiscal years beginning after December 15, 2017, and for interim periods within those fiscal years. The Company is in the process of assessing the impact of the adoption of ASU 2014-09 on its financial position, results of operations and cash flows. In January 2015, the FASB issued ASU No. 2015-01, Income Statement—Extraordinary and Unusual Items (Subtopic 225-20). This ASU eliminates the concept of extraordinary items in Accounting Standards Codification Subtopic 225-20, Income Statement—Extraordinary and Unusual Items. The standard eliminates and no longer requires that an entity recognize an unusual and infrequent event separately in the income statement as an extraordinary item, net of tax. This ASU is effective for fiscal years beginning after December 15, 2015, and for interim periods within those fiscal years. The Company does not expect the impact of the adoption of ASU 2015-01 to have a material impact on its financial position, results of operations and cash flows. In February 2015, the FASB issued ASU No. 2015-02, Consolidation—Amendments to the Consolidation Analysis (Topic 810). This ASU requires reporting entities to reevaluate whether they should consolidate certain legal entities under the revised consolidation model. This standard modifies the evaluation of whether limited partnerships and similar legal entities are variable interest entities (VIEs), eliminates the presumption that a general partner should consolidate a limited partnership, and affects the consolidation analysis of reporting entities that are involved with VIEs, especially those that have fee arrangements and related party relationships. This ASU is effective for fiscal years beginning after December 15, 2015, and for interim periods within those fiscal years. The Company is in the process of assessing the impact of the adoption of ASU 2015-02 on its financial position, results of operations and cash flows. In April 2015, the FASB issued ASU No. 2015-03, Interest—Imputation of Interest (Subtopic 835-30). This ASU simplifies the presentation of debt issuance costs by requiring that debt issuance costs related to a recognized debt liability be presented in the balance sheet as a direct reduction from the carrying amount of the debt liability, which is consistent with the treatment of debt discounts. The new guidance should be applied on a retrospective basis, and upon transition, an entity is required to comply with the applicable disclosures necessary for a change in accounting principle. This ASU is effective for fiscal years beginning after December 15, 2015, and for interim periods within those fiscal years. The Company is in the process of assessing the impact of the adoption of ASU 2015-03 on its financial position.

Pending Acquisition

Pending Acquisition	3 Months Ended
	May. 30, 2015
Pending Acquisition
Pending Acquisition	2. Pending Acquisition On February 10, 2015, the Company entered into a Definitive Agreement (“Agreement”) with a subsidiary of TPG Capital, L.P. Under the terms of the Agreement, the Company will acquire (the “Pending Acquisition”) from TPG, EnvisionRx, a full-service pharmacy benefit manager (“PBM”), a portfolio company of TPG. EnvisionRx provides both transparent and traditional PBM options through its EnvisionRx and MedTrak PBMs, respectively. EnvisionRx also offers fully integrated mail-order and specialty pharmacy services through Orchard Pharmaceutical Services; access to the nation’s largest cash pay infertility discount drug program via Design Rx; an innovative claims adjudication software platform in Laker Software; and a national Medicare Part D prescription drug plan through Envision Insurance Company’s EnvisionRx Plus product offering. Under the terms of the Agreement, the Company will pay $1,800,000 in cash, subject to working capital adjustments, financed with the proceeds from the April 2, 2015 issuance of $1,800,000 aggregate principal amount of 6.125% senior notes due 2023, and 27,862 shares of Rite Aid common stock. The Company and TPG have each made customary representations, warranties and covenants in the Agreement, including, among other things, that EnvisionRx and its subsidiaries will continue to conduct their business in the ordinary course between the execution of the Agreement and the closing of the Pending Acquisition. Completion of the Pending Acquisition is subject to regulatory approvals and other customary conditions. The Company expects the Pending Acquisition to close in the second quarter of fiscal 2016.

Income Per Share

Income Per Share	3 Months Ended
	May. 30, 2015
Income Per Share
Income Per Share	3. Income Per Share Basic income per share is computed by dividing income available to common stockholders by the weighted average number of shares of common stock outstanding for the period. Diluted income per share reflects the potential dilution that could occur if securities or other contracts to issue common stock were exercised or converted into common stock or resulted in the issuance of common stock that then shared in the income of the Company subject to anti-dilution limitations. Thirteen Week Period Ended May 30, 2015 May 31, 2014 Numerator for income per share: Income attributable to common stockholders—basic and diluted $ $ Denominator: Basic weighted average shares Outstanding options and restricted shares, net Diluted weighted average shares Basic income per share $ $ Diluted income per share $ $ Due to their antidilutive effect, the following potential common shares have been excluded from the computation of diluted income per share as of May 30, 2015 and May 31, 2014: Thirteen Week Period Ended May 30, 2015 May 31, 2014 Stock options — — Convertible notes — — During the thirteen week period ended May 30, 2015, $64,089 of the Company’s 8.5% convertible notes due 2015 were converted into 24,762 shares of common stock, pursuant to their terms.

Lease Termination and Impairmen

Lease Termination and Impairment Charges	3 Months Ended
	May. 30, 2015
Lease Termination and Impairment Charges
Lease Termination and Impairment Charges	4. Lease Termination and Impairment Charges Lease termination and impairment charges consist of amounts as follows: Thirteen Week Period Ended May 30, 2015 May 31, 2014 Impairment charges $ $ Lease termination charges $ $ Impairment Charges These amounts include the write-down of long-lived assets at locations that were assessed for impairment because of management’s intention to relocate or close the location or because of changes in circumstances that indicated the carrying value of an asset may not be recoverable. Lease Termination Charges As part of the Company’s ongoing business activities, the Company assesses stores and distribution centers for potential closure or relocation. Decisions to close or relocate stores or distribution centers in future periods would result in lease termination charges, lease exit costs and inventory liquidation charges, as well as impairment of assets at these locations. The following table reflects the closed store and distribution center charges that relate to new closures, changes in assumptions and interest accretion: Thirteen Week Period Ended May 30, 2015 May 31, 2014 Balance—beginning of period $ $ Provision for present value of noncancellable lease payments of closed stores Changes in assumptions about future sublease income, terminations and changes in interest rates ) ) Interest accretion Cash payments, net of sublease income ) ) Balance—end of period $ $

Fair Value Measurements

Fair Value Measurements	3 Months Ended
	May. 30, 2015
Fair Value Measurements
Fair Value Measurements	5. Fair Value Measurements The Company utilizes the three-level valuation hierarchy for the recognition and disclosure of fair value measurements. The categorization of assets and liabilities within this hierarchy is based upon the lowest level of input that is significant to the measurement of fair value. The three levels of the hierarchy consist of the following: · Level 1—Inputs to the valuation methodology are unadjusted quoted prices in active markets for identical assets or liabilities that the Company has the ability to access at the measurement date. · Level 2—Inputs to the valuation methodology are quoted prices for similar assets and liabilities in active markets, quoted prices in markets that are not active or inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the instrument. · Level 3—Inputs to the valuation methodology are unobservable inputs based upon management’s best estimate of inputs market participants could use in pricing the asset or liability at the measurement date, including assumptions about risk. Non-Financial Assets Measured on a Non-Recurring Basis Long-lived non-financial assets are measured at fair value on a nonrecurring basis for purposes of calculating impairment using Level 2 and Level 3 inputs as defined in the fair value hierarchy. The fair value of long-lived assets using Level 2 inputs is determined by evaluating the current economic conditions in the geographic area for similar use assets. The fair value of long-lived assets using Level 3 inputs is determined by estimating the amount and timing of net future cash flows (which are unobservable inputs) and discounting them using a risk-adjusted rate of interest (which is Level 1). The Company estimates future cash flows based on its experience and knowledge of the market in which the store is located. Significant increases or decreases in actual cash flows may result in valuation changes. During the thirteen week period ended May 30, 2015, long-lived assets from continuing operations with a carrying value of $1,289, primarily store assets, were written down to their fair value of $1,016, resulting in an impairment charge of $273. During the thirteen week period ended May 31, 2014, long-lived assets from continuing operations with a carrying value of $358, primarily store assets, were written down to their fair value of $207, resulting in an impairment charge of $151. If our actual future cash flows differ from our projections materially, certain stores that are either not impaired or partially impaired in the current period may be further impaired in future periods. The following table presents fair values for those assets measured at fair value on a non-recurring basis at May 30, 2015 and May 31, 2014: Fair Value Measurement Using Level 1 Level 2 Level 3 Total as of May 30, 2015 Long-lived assets held for use $ — $ — $ $ Long-lived assets held for sale $ — $ — $ — $ — Total $ — $ — $ $ Level 1 Level 2 Level 3 Total as of May 31, 2014 Long-lived assets held for use $ — $ — $ $ Long-lived assets held for sale $ — $ — $ — $ — Total $ — $ — $ $ As of May 30, 2015 and May 31, 2014, the Company did not have any financial assets measured on a recurring basis. Other Financial Instruments Financial instruments other than long-term indebtedness include cash and cash equivalents, accounts receivable and accounts payable. These instruments are recorded at book value, which we believe approximate their fair values due to their short term nature. The fair value for LIBOR-based borrowings under the Company’s senior secured credit facility and first and second lien term loans are estimated based on the quoted market price of the financial instrument which is considered Level 1 of the fair value hierarchy. The fair values of substantially all of the Company’s other long-term indebtedness are estimated based on quoted market prices of the financial instruments which are considered Level 1 of the fair value hierarchy. The carrying amount and estimated fair value of the Company’s total long-term indebtedness was $7,147,615 and $7,428,669, respectively, as of May 30, 2015. There were no outstanding derivative financial instruments as of May 30, 2015 and February 28, 2015.

Income Taxes

Income Taxes	3 Months Ended
	May. 30, 2015
Income Taxes
Income Taxes	6. Income Taxes The Company recorded an income tax expense of $12,441 and $11,881 for the thirteen week periods ended May 30, 2015 and May 31, 2014, respectively. The income tax expense for the period ended May 30, 2015 is based on an estimated effective tax rate of 39.8 %. The income tax expense for the period ended May 31, 2014 was recorded net of adjustments to maintain a full valuation allowance against the Company’s net deferred tax assets and was primarily attributable to an increase in the deferred tax valuation allowance to offset the windfall tax benefits recorded in Additional Paid in Capital (“APIC”) pursuant to the tax law ordering approach. The Company recognizes tax liabilities in accordance with the guidance for uncertain tax positions and management adjusts these liabilities with changes in judgment as a result of the evaluation of new information not previously available. Due to the complexity of some of these uncertainties, the ultimate resolution may result in a payment that is materially different from the current estimate of the tax liabilities. While it is expected that the amount of unrecognized tax benefits will change in the next twelve months, the Company does not expect the change to have a significant impact on the results of operations or the financial position of the Company. The Company regularly evaluates valuation allowances established for deferred tax assets for which future realization is uncertain. Management will continue to monitor all available evidence related to the net deferred tax assets that may change the most recent assessment, including events that have occurred or are anticipated to occur. As a result of the Company’s historical operating performance and the more favorable near term outlook for profitability, the Company released $1,841,304 of valuation allowance in the fourth quarter of fiscal year 2015. The Company continues to maintain a valuation allowance against net deferred tax assets of $231,683 and $231,679, which relates primarily to state deferred tax assets at May 30, 2015 and February 28, 2015, respectively.

Goodwill and Other Intangible A

Goodwill and Other Intangible Assets	3 Months Ended
	May. 30, 2015
Goodwill and Other Intangible Assets
Goodwill and Other Intangible Assets	7. Goodwill and Other Intangible Assets Goodwill is not amortized, but is instead evaluated for impairment on an annual basis at the end of the fiscal year, or more frequently if events or circumstances indicate that impairment may be more likely. During the thirteen weeks ended May 30, 2015 and the fifty-two weeks ended February 28, 2015, no impairment charges have been taken against the Company’s goodwill. The Company’s other intangible assets are finite-lived and amortized over their useful lives. Following is a summary of the Company’s amortizable intangible assets as of May 30, 2015 and February 28, 2015. May 30, 2015 February 28, 2015 Gross Carrying Amount Accumulated Amortization Remaining Weighted Average Amortization Period Gross Carrying Amount Accumulated Amortization Remaining Weighted Average Amortization Period Favorable leases and other $ $ ) 8 years $ $ ) 8 years Prescription files ) 3 years ) 3 years Total $ $ ) $ $ ) Also included in other non-current liabilities as of May 30, 2015 and February 28, 2015 are unfavorable lease intangibles with a net carrying amount of $53,638 and $55,571, respectively. These intangible liabilities are amortized over their remaining lease terms at the time of acquisition. Amortization expense for these intangible assets and liabilities was $31,941 and $29,237 for the thirteen week periods ended May 30, 2015 and May 31, 2014, respectively. The anticipated annual amortization expense for these intangible assets and liabilities is 2016—$118,669; 2017—$105,472; 2018—$67,542; 2019—$41,508 and 2020—$22,107.

Indebtedness and Credit Agreeme

Indebtedness and Credit Agreements	3 Months Ended
	May. 30, 2015
Indebtedness and Credit Agreements
Indebtedness and Credit Agreements	8. Indebtedness and Credit Agreements Following is a summary of indebtedness and lease financing obligations at May 30, 2015 and February 28, 2015: May 30, 2015 February 28, 2015 Secured Debt: Senior secured revolving credit facility due January 2020 $ $ 8.00% senior secured notes (senior lien) due August 2020 Tranche 1 Term Loan (second lien) due August 2020 Tranche 2 Term Loan (second lien) due June 2021 Other secured Unsecured Guaranteed Debt: 9.25% senior notes due March 2020 ($902,000 face value plus unamortized premium of $3,247 and $3,415) 6.75% senior notes due June 2021 6.125% senior notes due April 2023 — Unsecured Unguaranteed Debt: 8.5% convertible notes due May 2015 — 7.7% notes due February 2027 6.875% fixed-rate senior notes due December 2028 Lease financing obligations Total debt Current maturities of long-term debt and lease financing obligations ) ) Long-term debt and lease financing obligations, less current maturities $ $ Credit Facility On January 13, 2015, the Company amended and restated its senior secured credit facility (“Amended and Restated Senior Secured Credit Facility” or “revolver”), which, among other things, increased borrowing capacity from $1,795,000 to $3,000,000 (increasing to $3,700,000 upon the repayment of its 8.00% senior secured notes due August 2020 (“8.00% Notes”)), and extended the maturity to January 2020 from February 2018. The Company used borrowings under the revolver to repay and retire all of the $1,143,650 outstanding under its Tranche 7 Senior Secured Term Loan due 2020, along with associated fees and expenses. Borrowings under the revolver bear interest at a rate per annum between LIBOR plus 1.50% and LIBOR plus 2.00% based upon the average revolver availability (as defined in the Amended and Restated Senior Secured Credit Facility). The Company is required to pay fees between 0.250% and 0.375% per annum on the daily unused amount of the revolver, depending on the Average Revolver Availability (as defined in the Amended and Restated Senior Secured Credit Facility). Amounts drawn under the revolver become due and payable on January 13, 2020. On February 10, 2015, the Company amended the Amended and Restated Senior Secured Credit Facility to, among other things, increase the flexibility of Rite Aid to incur and/or issue unsecured indebtedness, including in connection with the Pending Acquisition, and made certain other modifications to the covenants applicable to Rite Aid and its subsidiaries. The Company’s ability to borrow under the revolver is based upon a specified borrowing base consisting of accounts receivable, inventory and prescription files. At May 30, 2015, the Company had $1,584,000 of borrowings outstanding under the revolver and had letters of credit outstanding against the revolver of $69,309, which resulted in additional borrowing capacity of $1,346,691. The Amended and Restated Senior Secured Credit Facility restricts the Company and the subsidiary guarantors from accumulating cash on hand, and under certain circumstances, requires the funds in the Company’s deposit accounts to be applied first to the repayment of outstanding revolving loans under the senior secured credit facility and then to be held as collateral for the senior obligations. This provision does not apply to the proceeds from the 6.125% senior notes due 2023 (the “6.125% Notes”) as discussed in the “Financing for the Pending Acquisition” section below. The Amended and Restated Senior Secured Credit Facility allows the Company to have outstanding, at any time, up to $1,500,000 (or $1,800,000 solely to the extent incurred in anticipation of the funding of the Pending Acquisition) in secured second priority debt, split-priority term loan debt, unsecured debt and disqualified preferred stock in addition to borrowings under the Amended and Restated Senior Secured Credit Facility and existing indebtedness, provided that not in excess of $750,000 of such secured second priority debt, split-priority term loan debt, unsecured debt and disqualified preferred stock shall mature or require scheduled payments of principal prior to 90 days after the latest of (a) the fifth anniversary of the effectiveness of the Amended and Restated Senior Secured Credit Facility and (b) the latest maturity date of any Term Loan or Other Revolving Loan (each as defined in the Amended and Restated Senior Secured Credit Facility) (excluding bridge facilities allowing extensions on customary terms to at least the date that is 90 days after such date and, with respect to any escrow notes issued by Rite Aid, excluding any special mandatory redemption of the type described in clause (iii) of the definition of “Escrow Notes” in the Amended and Restated Senior Secured Credit Facility). Subject to the limitations described in clauses (a) and (b) of the immediately preceding sentence, the Amended and Restated Senior Secured Credit Facility additionally allows the Company to issue or incur an unlimited amount of unsecured debt and disqualified preferred stock so long as a Financial Covenant Effectiveness Period (as defined in the Amended and Restated Senior Secured Credit Facility) is not in effect; provided, however, that certain of the Company’s other outstanding indebtedness limits the amount of unsecured debt that can be incurred if certain interest coverage levels are not met at the time of incurrence or other exemptions are not available. The Amended and Restated Senior Secured Credit Facility also contains certain restrictions on the amount of secured first priority debt the Company is able to incur. The Amended and Restated Senior Secured Credit Facility also allows for the voluntary repurchase of any debt or other convertible debt, so long as the Amended and Restated Senior Secured Credit Facility is not in default and the Company maintains availability under its revolving credit facility of more than (i) prior to the repayment of our 8.00% Notes, $300,000 and (ii) on and after the repayment of the Company’s 8.00% Notes, $365,000. As of January 13, 2015, the Amended and Restated Senior Secured Credit Facility has a financial covenant that requires the Company to maintain a minimum fixed charge coverage ratio of 1.00 to 1.00 (a) on any date on which availability under the revolving credit facility is less than (i) in the case of dates prior to the repayment of our 8.00% Notes, $175,000 and (ii) in the case of dates on and after the repayment of the Company’s 8.00% Notes, $200,000 or (b) on the third consecutive business day on which availability under the revolving credit facility is less than (i) in the case of dates prior to the repayment of the Company’s 8.00% Notes, $225,000 and (ii) in the case of dates on or after the repayment of the Company’s 8.00% Notes, $250,000 and, in each case, ending on and excluding the first day thereafter, if any, which is the 30th consecutive calendar day on which availability under the revolving credit facility is equal to or greater than (i) in the case of dates prior to the repayment of the Company’s 8.00% Notes, $225,000 and (ii) in the case of dates on or after the repayment of the Company’s 8.00% Notes, $250,000. As of May 30, 2015, the availability was at a level that did not trigger this covenant. The Amended and Restated Senior Secured Credit Facility also contains covenants which place restrictions on the incurrence of debt, the payments of dividends, sale of assets, mergers and acquisitions and the granting of liens. The Amended and Restated Senior Secured Credit Facility also provides for customary events of default. The Company also has two second priority secured term loan facilities. The first includes a $470,000 second priority secured term loan (the “Tranche 1 Term Loan”). The Tranche 1 Term Loan matures on August 21, 2020 and currently bears interest at a rate per annum equal to LIBOR plus 4.75% with a LIBOR floor of 1.00%, if the Company chooses to make LIBOR borrowings, or at Citibank’s base rate plus 3.75%. The second includes a $500,000 second priority secured term loan (the “Tranche 2 Term Loan”). The Tranche 2 Term Loan matures on June 21, 2021 and currently bears interest at a rate per annum equal to LIBOR plus 3.875% with a LIBOR floor of 1.00%, if the Company chooses to make LIBOR borrowings, or at Citibank’s base rate plus 2.875%. Substantially all of Rite Aid Corporation’s 100 percent owned subsidiaries guarantee the obligations under the Amended and Restated Senior Secured Credit Facility, second priority secured term loan facilities, secured guaranteed notes and unsecured guaranteed notes. The Amended and Restated Senior Secured Credit Facility, second priority secured term loan facilities and secured guaranteed notes are secured, on a senior or second priority basis, as applicable, by a lien on, among other things, accounts receivable, inventory and prescription files of the subsidiary guarantors. The subsidiary guarantees related to the Company’s Amended and Restated Senior Secured Credit Facility, second priority secured term loan facilities and secured guaranteed notes and, on an unsecured basis, the unsecured guaranteed notes are full and unconditional and joint and several, and there are no restrictions on the ability of the Company to obtain funds from its subsidiaries. The Company has no independent assets or operations. Additionally, the subsidiaries, including joint ventures, that do not guaranty the credit facility, second priority secured term loan facilities and applicable notes, are minor. Accordingly, condensed consolidating financial information for the Company and subsidiaries is not presented. Financing for the Pending Acquisition On April 2, 2015, the Company issued $1,800,000 aggregate principal amount of its 6.125% Notes to finance the cash portion of the Pending Acquisition. The Company’s obligations under the notes are fully and unconditionally guaranteed, jointly and severally, on an unsubordinated basis, by all of its subsidiaries that guarantee the Company’s obligations under the Amended and Restated Senior Secured Credit Facility, the Tranche 1 Term Loan, the Tranche 2 Term Loan, and the 8.00% Notes, the 9.25% senior notes due 2020 (the “9.25% Notes”) and the 6.75% senior notes due 2021 (the “6.75% Notes”) (the “Rite Aid Subsidiary Guarantors”), and, will be guaranteed upon completion of the acquisition, by EnvisionRx and certain of its domestic subsidiaries other than, among others, Envision Insurance Company (the “EnvisionRx Subsidiary Guarantors” and, together with the Rite Aid Subsidiary Guarantors, the “Subsidiary Guarantors”). The guarantees will be unsecured. The 6.125% Notes are unsecured, unsubordinated obligations of Rite Aid Corporation and rank equally in right of payment with all of its other unsecured, unsubordinated indebtedness. In the unlikely event that the Company does not complete the Pending Acquisition, it can redeem the 6.125% Notes at a price of 101% or can use the proceeds from the issuance of the 6.125% Notes to refinance other indebtedness. The net proceeds of the 6.125% Notes of $1,768,622 are included as a component of cash and cash equivalents as of May 30, 2015. Other Transactions During the thirteen week period ended May 30, 2015, $64,089 of the Company’s 8.5% convertible notes due 2015 were converted into 24,762 shares of common stock, pursuant to their terms. The remaining $79 of the Company’s 8.5% convertible notes due 2015 were repurchased by the Company upon maturity. Maturities The aggregate annual principal payments of long-term debt for the remainder of fiscal 2016 and thereafter are as follows: 2016—$5,368; 2017—$0; 2018—$0; 2019—$0; 2020—$1,584,000 and $5,555,000 thereafter.

Reclassifications from Accumula

Reclassifications from Accumulated Other Comprehensive Loss	3 Months Ended
	May. 30, 2015
Reclassifications from Accumulated Other Comprehensive Loss
Reclassifications from Accumulated Other Comprehensive Loss	9. Reclassifications from Accumulated Other Comprehensive Loss The following table summarizes the components of accumulated other comprehensive loss and the changes in balances of each component of accumulated other comprehensive loss, net of tax as applicable, for the thirteen week periods ended May 30, 2015 and May 31, 2014: Thirteen week period ended May 30, 2015 Thirteen week period ended May 31, 2014 Defined benefit pension plans Accumulated other comprehensive loss Defined benefit pension plans Accumulated other comprehensive loss Accumulated other comprehensive loss Balance—beginning of period $ ) $ ) $ ) $ ) Amounts reclassified from accumulated other comprehensive loss to net income, net of $398 and $0 tax expense Balance—end of period $ ) $ ) $ ) $ ) The following table summarizes the effects on net income of significant amounts classified out of each component of accumulated other comprehensive loss for the thirteen week periods ended May 30, 2015 and May 31, 2014: Thirteen Week Periods Ended May 30, 2015 and May 31, 2014 Amount reclassified from accumulated other comprehensive loss Details about accumulated other comprehensive loss components May 30, 2015 May 31, 2014 Affected line item in the condensed consolidated statements of operations Defined benefit pension plans Amortization of unrecognized prior service cost(a) $ ) $ ) Selling, general and administrative expenses Amortization of unrecognized net loss(a) ) ) Selling, general and administrative expenses ) ) Total before income tax expense — Income tax expense(b) $ ) $ ) Net of income tax expense (a) See Note 10, Retirement Plans for additional details. (b) Income tax expense is $0 for May 31, 2014 due to the valuation allowance. See Note 6, Income Taxes for additional details.

Retirement Plans

Retirement Plans	3 Months Ended
	May. 30, 2015
Retirement Plans
Retirement Plans	10. Retirement Plans Net periodic pension expense recorded in the thirteen week periods ended May 30, 2015 and May 31, 2014, for the Company’s defined benefit plans includes the following components: Defined Benefit Pension Plan Nonqualified Executive Retirement Plans Thirteen Week Period Ended May 30, 2015 May 31, 2014 May 30, 2015 May 31, 2014 Service cost $ $ $ — $ — Interest cost Expected return on plan assets ) ) — — Amortization of unrecognized prior service cost — — Amortization of unrecognized net loss — — Net pension expense $ $ $ $ During the thirteen week period ended May 30, 2015 the Company contributed $377 to the Nonqualified Executive Retirement Plans and $0 to the Defined Benefit Pension Plan. During the remainder of fiscal 2016, the Company expects to contribute $1,173 to the Nonqualified Executive Retirement Plans and $0 to the Defined Benefit Pension Plan.

Commitments and Contingencies

Commitments and Contingencies	3 Months Ended
	May. 30, 2015
Commitments and Contingencies:
Commitments and Contingencies	11. Commitments and Contingencies Legal Matters The Company is a party to legal proceedings, investigations and claims in the ordinary course of its business, including the matters described below. The Company records accruals for outstanding legal matters when it believes it is probable that a loss will be incurred and the amount can be reasonably estimated. The Company evaluates, on a quarterly basis, developments in legal matters that could affect the amount of any accrual and developments that would make a loss contingency both probable and reasonably estimable. If a loss contingency is not both probable and estimable, the Company does not establish an accrued liability. The Company’s contingencies are subject to significant uncertainties, including, among other factors: (i) proceedings are in early stages; (ii) whether class or collective action status is sought and the likelihood of a class being certified; (iii) the outcome of pending appeals or motions; (iv) the extent of potential damages, fines or penalties, which are often unspecified or indeterminate; (v) the impact of discovery on the matter; (vi) whether novel or unsettled legal theories are at issue; (vii) there are significant factual issues to be resolved; and/or (viii) in the case of certain government agency investigations, whether a sealed qui tam lawsuit (“whistleblower” action) has been filed and whether the government agency makes a decision to intervene in the lawsuit following investigation. The Company has been named in a collective and class action lawsuit, Indergit v. Rite Aid Corporation et al pending in the United States District Court for the Southern District of New York, filed purportedly on behalf of current and former store managers working in the Company’s stores at various locations around the country. The lawsuit alleges that the Company failed to pay overtime to store managers as required under the FLSA and under certain New York state statutes. The lawsuit also seeks other relief, including liquidated damages, punitive damages, attorneys’ fees, costs and injunctive relief arising out of state and federal claims for overtime pay. On April 2, 2010, the Court conditionally certified a nationwide collective group of individuals who worked for the Company as store managers since March 31, 2007. The Court ordered that Notice of the Indergit action be sent to the purported members of the collective group (approximately 7,000 current and former store managers) and approximately 1,550 joined the Indergit action. Discovery as to certification issues has been completed. On September 26, 2013, the Court granted Rule 23 class certification of the New York store manager claims as to liability only, but denied it as to damages, and denied the Company’s motion for decertification of the nationwide collective action claims. The Company filed a motion seeking reconsideration of the Court’s September 26, 2013 decision which motion was denied in June 2014. The Company subsequently filed a petition for an interlocutory appeal of the Court’s September 26, 2013 ruling with the U. S. Court of Appeals for the Second Circuit which petition was denied in September 2014. N otice of the Rule 23 class certification as to liability only has been sent to approximately 1,750 current and former store managers in the state of New York. At this time, the Company is not able to either predict the outcome of this lawsuit or estimate a potential range of loss with respect to the lawsuit. The Company’s management believes, however, that this lawsuit is without merit and is vigorously defending this lawsuit. The Company is currently a defendant in several putative class action lawsuits filed in state Courts in California alleging violations of California wage and hour laws, rules and regulations pertaining primarily to failure to pay overtime, pay for missed meals and rest periods, failure to reimburse business expenses and failure to provide employee seating (the “California Cases”). These suits purport to be class actions and seek substantial damages. The Company has aggressively challenged both the merits of the lawsuits and the allegations that the cases should be certified as class or representative actions. With respect to cases involving pharmacist meal and rest periods ( Chase and Scherwin v. Rite Aid Corporation pending in Los Angeles County Superior Court and Kyle v. Rite Aid Corporation pending in Sacramento County Superior Court), during the period ended March 1, 2014, the Company recorded a legal accrual with respect to these matters. The Company and the attorneys representing the putative class of pharmacists have agreed to a class wide settlement of the case of $9.0 million subject to final Court approval. The parties are in the process of obtaining Court approval. In the employee seating case ( Hall v. Rite Aid Corporation, San Diego County Superior Court ), the Court, in October 2011, granted the plaintiff’s motion for class certification. The Company filed its motion for decertification, which motion was granted in November 2012. Plaintiff subsequently appealed the Court’s order which appeal was granted in May 2014. The Company filed a petition for review of the appellate court’s decision with the California Supreme Court, which petition was denied in August 2014. Proceedings in the Hall case are stayed pending a decision by the California Supreme Court in two similar cases. With respect to the California Cases (other than Chase and Scherwin and Kyle) , the Company, at this time, is not able to predict either the outcome of these lawsuits or estimate a potential range of loss with respect to said lawsuits. The Company was served with a Civil Investigative Demand Subpoena Duces Tecum dated August 26, 2011 by the United States Attorney’s Office for the Eastern District of Michigan. The subpoena requests records regarding Rite Aid’s Rx Savings Program and the reporting of usual and customary charges to publicly funded health programs. In connection with the same investigation, the Company was served with a Civil Subpoena Duces Tecum dated February 22, 2013 by the State of Indiana Office of the Attorney General. The Company has substantially completed its response to both of the subpoenas and is unable to predict the timing or outcome of any review by the government of such information. In April 2012, the Company received an administrative subpoena from the Drug Enforcement Administration (“DEA”), Albany, New York District Office, requesting information regarding the Company’s sale of products containing pseudoephedrine (“PSE”). In April 2012, it also received a communication from the United States Attorneys Office (“USAO”) for the Northern District of New York concerning an investigation of possible civil violations of the Combat Methamphetamine Epidemic Act of 2005 (“CMEA”). In April 2013, the Company received additional administrative subpoenas from DEA concerning certain retail PSE transactions at New York stores and the USAO commenced discussions with the Company regarding whether, from 2009 (upon implementation of an electronic PSE transaction logbook system) through the present, the Company sold products containing PSE in violation of the CMEA. The Company received additional administrative subpoenas from the DEA beginning in December 2013 requesting information in connection with an investigation of violations of the CMEA in West Virginia. Violations of the CMEA could result in the imposition of administrative, civil and/or criminal penalties against the Company. The Company is cooperating with the government and continues to provide information responsive to the subpoenas. The Company has entered into a tolling agreement with the USAO. Discussions are underway to resolve these matters, but whether an agreement can be reached and on what terms are uncertain. While the Company’s management cannot predict the outcome of these matters, it is possible that the Company’s results of operations or cash flows could be materially affected by an unfavorable resolution. In January 2013, the DEA, Los Angeles District Office, served an administrative subpoena on the Company seeking documents related to prescriptions by a certain prescriber. The USAO, Central District of California, also contacted the Company about a related investigation into allegations that Rite Aid pharmacies filled certain controlled substance prescriptions for a number of practitioners after their DEA registrations had expired or otherwise become invalid in violation of the federal Controlled Substances Act and DEA regulations. The Company responded to the administrative subpoena and subsequent informal requests for information from the USAO. The Company met with the USAO and DEA in January 2014 and is involved in ongoing discussions with the government regarding this matter. The Company recorded a legal accrual during the period ended March 1, 2014. The Company was served with a Civil Investigative Demand (“CID”) dated June 21, 2013 by the USAO for the Eastern District of California and the Attorney General’s Office of the State of California (the “AG”). The CID requests records and responses to interrogatories regarding Rite Aid’s Drug Utilization Review and prescription dispensing protocol and the dispensing of drugs designated “Code 1” by the State of California. The Company is in the process of producing responsive documents and interrogatory responses to the USAO and AG and is unable to predict the timing or outcome of any review by the government of such information. In addition to the above described matters, the Company is subject from time to time to various claims and lawsuits and governmental investigations arising in the ordinary course of business. While the Company’s management cannot predict the outcome of any of the claims, the Company’s management does not believe that the outcome of any of these legal matters will be material to the Company’s consolidated financial position. It is possible, however, that the Company’s results of operations or cash flows could be materially affected by an unfavorable resolution of pending litigation or contingencies. Contingencies The California Department of Health Care Services (“DHCS”), the agency responsible for administering the State of California Medicaid program, implemented retroactive reimbursement rate reductions effective June 1, 2011, impacting the medical provider community in California, including pharmacies. Numerous medical providers, including representatives of both chain and independent pharmacies, filed suits against DHCS in Federal District Court in California and obtained preliminary injunctions against the rate cuts, subject to a trial on the merits. DHCS appealed the preliminary injunctions to the Ninth Circuit Court of Appeals, which Court vacated the injunctions. Based upon the actions of DHCS and the decision of the Appeals Court, the Company recorded an appropriate accrual. In January 2014, the Center for Medicare and Medicaid Services approved a state plan amendment that excluded certain drugs from the retroactive reimbursement rate reductions effective March 31, 2012. Accordingly, the Company adjusted its accrual during that fiscal year to take into account this exclusion. As pertinent facts and circumstances develop, this accrual may be adjusted further.

Summary of Significant Accounti

Summary of Significant Accounting Policies (Policies)	3 Months Ended
	May. 30, 2015
Basis of Presentation
Basis of Presentation	1. Basis of Presentation The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States of America for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X and therefore do not include all of the information and footnotes required by accounting principles generally accepted in the United States of America for complete annual financial statements. The accompanying financial information reflects all adjustments which are of a recurring nature and, in the opinion of management, are necessary for a fair presentation of the results for the interim periods. The results of operations for the thirteen week period ended May 30, 2015 are not necessarily indicative of the results to be expected for the full year. These condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto included in the Rite Aid Corporation and Subsidiaries (the “Company”) Fiscal 2015 10-K.
New Accounting Pronouncements	New Accounting Pronouncements In May 2013, the FASB issued a proposed Accounting Standards Update, Leases (Topic 842): a revision of the 2010 proposed Accounting Standards Update, Leases (Topic 840), that would require an entity to recognize assets and liabilities arising under lease contracts on the balance sheet. The proposed standard, as currently drafted, will have a material impact on the Company’s reported results of operations and financial position. In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers. This ASU supersedes the revenue recognition requirements in Accounting Standards Codification 605—Revenue Recognition and most industry-specific guidance throughout the Codification. The standard requires that an entity recognizes revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the company expects to be entitled in exchange for those goods or services. This ASU is effective for fiscal years beginning after December 15, 2017, and for interim periods within those fiscal years. The Company is in the process of assessing the impact of the adoption of ASU 2014-09 on its financial position, results of operations and cash flows. In January 2015, the FASB issued ASU No. 2015-01, Income Statement—Extraordinary and Unusual Items (Subtopic 225-20). This ASU eliminates the concept of extraordinary items in Accounting Standards Codification Subtopic 225-20, Income Statement—Extraordinary and Unusual Items. The standard eliminates and no longer requires that an entity recognize an unusual and infrequent event separately in the income statement as an extraordinary item, net of tax. This ASU is effective for fiscal years beginning after December 15, 2015, and for interim periods within those fiscal years. The Company does not expect the impact of the adoption of ASU 2015-01 to have a material impact on its financial position, results of operations and cash flows. In February 2015, the FASB issued ASU No. 2015-02, Consolidation—Amendments to the Consolidation Analysis (Topic 810). This ASU requires reporting entities to reevaluate whether they should consolidate certain legal entities under the revised consolidation model. This standard modifies the evaluation of whether limited partnerships and similar legal entities are variable interest entities (VIEs), eliminates the presumption that a general partner should consolidate a limited partnership, and affects the consolidation analysis of reporting entities that are involved with VIEs, especially those that have fee arrangements and related party relationships. This ASU is effective for fiscal years beginning after December 15, 2015, and for interim periods within those fiscal years. The Company is in the process of assessing the impact of the adoption of ASU 2015-02 on its financial position, results of operations and cash flows. In April 2015, the FASB issued ASU No. 2015-03, Interest—Imputation of Interest (Subtopic 835-30). This ASU simplifies the presentation of debt issuance costs by requiring that debt issuance costs related to a recognized debt liability be presented in the balance sheet as a direct reduction from the carrying amount of the debt liability, which is consistent with the treatment of debt discounts. The new guidance should be applied on a retrospective basis, and upon transition, an entity is required to comply with the applicable disclosures necessary for a change in accounting principle. This ASU is effective for fiscal years beginning after December 15, 2015, and for interim periods within those fiscal years. The Company is in the process of assessing the impact of the adoption of ASU 2015-03 on its financial position.

Income Per Share (Tables)

Income Per Share (Tables)	3 Months Ended
	May. 30, 2015
Income Per Share
Schedule of calculation of basic and diluted income per share	Thirteen Week Period Ended May 30, 2015 May 31, 2014 Numerator for income per share: Income attributable to common stockholders—basic and diluted $ $ Denominator: Basic weighted average shares Outstanding options and restricted shares, net Diluted weighted average shares Basic income per share $ $ Diluted income per share $ $
Schedule of antidilutive effect of potential common shares, excluded from computation of diluted income per share	Thirteen Week Period Ended May 30, 2015 May 31, 2014 Stock options — — Convertible notes — —

Lease Termination and Impairm22

Lease Termination and Impairment Charges (Tables)	3 Months Ended
	May. 30, 2015
Lease Termination and Impairment Charges
Schedule of amounts relating to lease termination and impairment charges	Thirteen Week Period Ended May 30, 2015 May 31, 2014 Impairment charges $ $ Lease termination charges $ $
Schedule of closed store and distribution center charges related to new closures, changes in assumptions and interest accretion	Thirteen Week Period Ended May 30, 2015 May 31, 2014 Balance—beginning of period $ $ Provision for present value of noncancellable lease payments of closed stores Changes in assumptions about future sublease income, terminations and changes in interest rates ) ) Interest accretion Cash payments, net of sublease income ) ) Balance—end of period $ $

Fair Value Measurements (Tables

Fair Value Measurements (Tables)	3 Months Ended
	May. 30, 2015
Fair Value Measurements
Schedule of fair value of assets measured on non-recurring basis	Level 1 Level 2 Level 3 Total as of May 30, 2015 Long-lived assets held for use $ — $ — $ $ Long-lived assets held for sale $ — $ — $ — $ — Total $ — $ — $ $ Level 1 Level 2 Level 3 Total as of May 31, 2014 Long-lived assets held for use $ — $ — $ $ Long-lived assets held for sale $ — $ — $ — $ — Total $ — $ — $ $

Goodwill and Other Intangible24

Goodwill and Other Intangible Assets (Tables)	3 Months Ended
	May. 30, 2015
Goodwill and Other Intangible Assets
Summary of the Company's amortizable intangible assets	May 30, 2015 February 28, 2015 Gross Carrying Amount Accumulated Amortization Remaining Weighted Average Amortization Period Gross Carrying Amount Accumulated Amortization Remaining Weighted Average Amortization Period Favorable leases and other $ $ ) 8 years $ $ ) 8 years Prescription files ) 3 years ) 3 years Total $ $ ) $ $ )

Indebtedness and Credit Agree25

Indebtedness and Credit Agreement (Tables)	3 Months Ended
	May. 30, 2015
Indebtedness and Credit Agreements
Summary of indebtedness and lease financing obligations	May 30, 2015 February 28, 2015 Secured Debt: Senior secured revolving credit facility due January 2020 $ $ 8.00% senior secured notes (senior lien) due August 2020 Tranche 1 Term Loan (second lien) due August 2020 Tranche 2 Term Loan (second lien) due June 2021 Other secured Unsecured Guaranteed Debt: 9.25% senior notes due March 2020 ($902,000 face value plus unamortized premium of $3,247 and $3,415) 6.75% senior notes due June 2021 6.125% senior notes due April 2023 — Unsecured Unguaranteed Debt: 8.5% convertible notes due May 2015 — 7.7% notes due February 2027 6.875% fixed-rate senior notes due December 2028 Lease financing obligations Total debt Current maturities of long-term debt and lease financing obligations ) ) Long-term debt and lease financing obligations, less current maturities $ $

Reclassifications from Accumu26

Reclassifications from Accumulated Other Comprehensive Loss (Tables)	3 Months Ended
	May. 30, 2015
Reclassifications from Accumulated Other Comprehensive Loss
Summary of components of accumulated other comprehensive loss and the changes in balances of each component of accumulated other comprehensive loss, net of tax	Thirteen week period ended May 30, 2015 Thirteen week period ended May 31, 2014 Defined benefit pension plans Accumulated other comprehensive loss Defined benefit pension plans Accumulated other comprehensive loss Accumulated other comprehensive loss Balance—beginning of period $ ) $ ) $ ) $ ) Amounts reclassified from accumulated other comprehensive loss to net income, net of $398 and $0 tax expense Balance—end of period $ ) $ ) $ ) $ )
Summary of effects on net income of significant amounts classified out of each component of accumulated other comprehensive loss	Thirteen Week Periods Ended May 30, 2015 and May 31, 2014 Amount reclassified from accumulated other comprehensive loss Details about accumulated other comprehensive loss components May 30, 2015 May 31, 2014 Affected line item in the condensed consolidated statements of operations Defined benefit pension plans Amortization of unrecognized prior service cost(a) $ ) $ ) Selling, general and administrative expenses Amortization of unrecognized net loss(a) ) ) Selling, general and administrative expenses ) ) Total before income tax expense — Income tax expense(b) $ ) $ ) Net of income tax expense (a) See Note 10, Retirement Plans for additional details. (b) Income tax expense is $0 for May 31, 2014 due to the valuation allowance. See Note 6, Income Taxes for additional details.

Retirement Plans (Tables)

Retirement Plans (Tables)	3 Months Ended
	May. 30, 2015
Retirement Plans
Summary of net periodic pension expense for the defined benefit plans	Defined Benefit Pension Plan Nonqualified Executive Retirement Plans Thirteen Week Period Ended May 30, 2015 May 31, 2014 May 30, 2015 May 31, 2014 Service cost $ $ $ — $ — Interest cost Expected return on plan assets ) ) — — Amortization of unrecognized prior service cost — — Amortization of unrecognized net loss — — Net pension expense $ $ $ $

Pending Acquisition (Details)

Pending Acquisition (Details) - USD ($) shares in Thousands, $ in Thousands	Feb. 10, 2015	May. 30, 2015	Apr. 02, 2015
6.125% senior notes due 2023
Pending Acquisition
Debt instrument, stated interest rate (as a percent)		6.125%
T P G EnvisionRx | 6.125% senior notes due 2023
Pending Acquisition
Principal amount of debt			$ 1,800,000
Debt instrument, stated interest rate (as a percent)			6.125%
T P G EnvisionRx | Forecast
Pending Acquisition
Cash payment	$ 1,800,000
Number of shares of common stock issued	27,862

Income Per Share (Details)

Income Per Share (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands	3 Months Ended
	May. 30, 2015	May. 31, 2014	Feb. 28, 2015
Numerator for income per share:
Income attributable to common stockholders-basic	$ 18,836	$ 41,446
Income attributable to common stockholders-diluted	$ 18,836	$ 41,446
Denominator:
Basic weighted average shares	986,691	963,332
Outstanding options and restricted shares, net (in shares)	22,461	33,222
Diluted weighted average shares	1,009,152	996,554
Basic income per share (in dollars per share)	$ 0.02	$ 0.04
Diluted income per share (in dollars per share)	$ 0.02	$ 0.04
Antidilutive securities excluded from computation of earnings per share
Potential common shares excluded from the computation of diluted income per share		24,800
Convertible notes due 2015
Convertible notes amount	$ 64,089
Convertible notes
Antidilutive securities excluded from computation of earnings per share
Potential common shares excluded from the computation of diluted income per share		24,800
8.5% convertible notes due May 2015
Convertible notes due 2015
Convertible notes amount	$ 68,089
Debt instrument, stated interest rate (as a percent)	8.50%		8.50%
Convertible notes due 2015 were converted into common stock (in shares)	24,762

Lease Termination and Impairm30

Lease Termination and Impairment Charges (Details) - USD ($) $ in Thousands	3 Months Ended
	May. 30, 2015	May. 31, 2014
Lease termination and impairment charges
Lease termination and impairment charges	$ 5,022	$ 4,848
Impairment charges
Lease termination and impairment charges
Lease termination and impairment charges	273	151
Lease termination charges
Lease termination and impairment charges
Lease termination and impairment charges	4,749	4,697
Closed store and distribution center charges
Balance-beginning of period	241,047	284,270
Provision for present value of noncancellable lease payments of closed stores	1,546	142
Changes in assumptions about future sublease income, terminations and changes in interest rates	(571)	(427)
Interest accretion	4,303	4,982
Cash payments, net of sublease income	(15,522)	(18,645)
Balance-end of period	$ 230,803	$ 270,322

Fair Value Measurements (Detail

Fair Value Measurements (Details) - USD ($) $ in Thousands	3 Months Ended
	May. 30, 2015	May. 31, 2014	Feb. 28, 2015
Non-financial assets measured on a non-recurring basis
Outstanding derivative financial instruments	$ 0		$ 0
Nonrecurring basis
Non-financial assets measured on a non-recurring basis
Carrying value of long-lived assets	1,289	$ 358
Impairment charges	273	151
Nonrecurring basis | Fair Value
Non-financial assets measured on a non-recurring basis
Fair value of Long-lived assets held for use	1,016	207
Fair value of Total	1,016	207
Nonrecurring basis | Level 1
Non-financial assets measured on a non-recurring basis
Carrying value of total long-term indebtedness	7,147,615
Estimated fair value of total long-term indebtedness	7,428,669
Nonrecurring basis | Level 3
Non-financial assets measured on a non-recurring basis
Fair value of Long-lived assets held for use	1,016	207
Fair value of Total	$ 1,016	$ 207

Income Taxes (Details)

Income Taxes (Details) - USD ($) $ in Thousands	3 Months Ended
	May. 30, 2015	Feb. 28, 2015	May. 31, 2014
Income Taxes
Income tax expense	$ 12,441		$ 11,881
Estimated effective tax rate (as a percent)	39.80%
Valuation allowance released		$ 1,841,304
Valuation allowance against net deferred tax assets	$ 231,683	$ 231,679

Goodwill and Other Intangible33

Goodwill and Other Intangible Assets (Details) - USD ($) $ in Thousands	3 Months Ended		12 Months Ended
	May. 30, 2015	May. 31, 2014	Feb. 28, 2015
Goodwill and Other Intangible Assets
Goodwill impairment charges	$ 0		$ 0
Finite-lived intangible assets
Gross Carrying Amount	2,107,419		2,093,531
Accumulated Amortization	(1,704,334)		(1,672,051)
Unfavorable lease intangibles	53,638		55,571
Amortization expense for intangible assets and liabilities	31,941	$ 29,237
Anticipated annual amortization expense for intangible assets and liabilities
2,016	118,669
2,017	105,472
2,018	67,542
2,019	41,508
2,020	22,107
Favorable leases and other
Finite-lived intangible assets
Gross Carrying Amount	657,137		653,377
Accumulated Amortization	$ (490,273)		$ (481,041)
Remaining Weighted Average Amortization Period	8 years		8 years
Prescription files
Finite-lived intangible assets
Gross Carrying Amount	$ 1,450,282		$ 1,440,154
Accumulated Amortization	$ (1,214,061)		$ (1,191,010)
Remaining Weighted Average Amortization Period	3 years		3 years

Indebtedness and Credit Agree34

Indebtedness and Credit Agreements (Details) shares in Thousands, $ in Thousands	May. 30, 2015USD ($)	Apr. 02, 2015USD ($)	May. 30, 2015USD ($)loanshares	Feb. 28, 2015USD ($)	Jan. 13, 2015USD ($)	Jan. 12, 2015USD ($)
Indebtedness and credit agreement
Lease financing obligations	$ 87,256		$ 87,256	$ 91,993
Total debt	7,234,871		7,234,871	5,644,943
Current maturities of long-term debt and lease financing obligations	(35,039)		(35,039)	(100,376)
Long-term debt and lease financing obligations, less current maturities	$ 7,199,832		7,199,832	5,544,567
Convertible notes amount			$ 64,089
Credit facility
Number of second priority secured term loan facilities | loan			2
Ownership interest (as a percent)	100.00%		100.00%
Maturities
Remainder of fiscal 2016	$ 5,368		$ 5,368
2,017	0		0
2,018	0		0
2,019	0		0
2,020	1,584,000		1,584,000
Thereafter	5,555,000		5,555,000
Senior secured credit facility
Indebtedness and credit agreement
Long-term debt	3,209,368		3,209,368	3,350,367
Senior secured revolving credit facility due January 2020
Indebtedness and credit agreement
Long-term debt	1,584,000		1,584,000	1,725,000
Credit facility
Maximum borrowing capacity					$ 3,000,000	$ 1,795,000
Outstanding borrowings	1,584,000		1,584,000
Letters of credit outstanding	69,309		69,309
Additional borrowing capacity	1,346,691		1,346,691
Amount of debt allowed to be outstanding			1,500,000
Amount of debt allowed to be outstanding related to Pending Acquisition			1,800,000
Threshold amount of debt			$ 750,000
Number of days relating to debt threshold			90 days
Period allowed for extensions on customary terms			90 days
Senior secured revolving credit facility due January 2020 | Minimum
Credit facility
Percentage of fee payable on daily unused revolver availability			0.25%
Fixed charge coverage ratio			1
Senior secured revolving credit facility due January 2020 | Maximum
Credit facility
Percentage of fee payable on daily unused revolver availability			0.375%
Senior secured revolving credit facility due January 2020 | LIBOR | Minimum
Credit facility
Percentage points added to the reference rate			1.50%
Senior secured revolving credit facility due January 2020 | LIBOR | Maximum
Credit facility
Percentage points added to the reference rate			2.00%
Tranche 7 Term Loan due February 2020
Credit facility
Amount of debt repurchased					$ 1,143,650
8.00% senior secured notes (senior lien) due August 2020
Indebtedness and credit agreement
Long-term debt	$ 650,000		$ 650,000	$ 650,000
Debt instrument, stated interest rate (as a percent)	8.00%		8.00%	8.00%	8.00%
Tranche 1 Term Loan (second lien) due August 2020
Indebtedness and credit agreement
Long-term debt	$ 470,000		$ 470,000	$ 470,000
Principal amount of debt	470,000		$ 470,000
Tranche 1 Term Loan (second lien) due August 2020 | LIBOR
Credit facility
Percentage points added to the reference rate			4.75%
LIBOR floor (as a percent)			1.00%
Tranche 1 Term Loan (second lien) due August 2020 | Citibank's base rate
Credit facility
Percentage points added to the reference rate			3.75%
Tranche 2 Term Loan (second lien) due June 2021
Indebtedness and credit agreement
Long-term debt	500,000		$ 500,000	500,000
Principal amount of debt	500,000		$ 500,000
Tranche 2 Term Loan (second lien) due June 2021 | LIBOR
Credit facility
Percentage points added to the reference rate			3.875%
LIBOR floor (as a percent)			1.00%
Tranche 2 Term Loan (second lien) due June 2021 | Citibank's base rate
Credit facility
Percentage points added to the reference rate			2.875%
Other secured
Indebtedness and credit agreement
Long-term debt	5,368		$ 5,368	5,367
Unsecured Guaranteed Debt
Indebtedness and credit agreement
Long-term debt	3,515,247		3,515,247	1,715,415
9.25% senior notes due March 2020
Indebtedness and credit agreement
Long-term debt	905,247		905,247	905,415
Principal amount of debt	902,000		902,000	902,000
Unamortized premium	$ 3,247		$ 3,247	$ 3,415
Debt instrument, stated interest rate (as a percent)	9.25%		9.25%	9.25%
6.75% senior notes due June 2021
Indebtedness and credit agreement
Long-term debt	$ 810,000		$ 810,000	$ 810,000
Debt instrument, stated interest rate (as a percent)	6.75%		6.75%	6.75%
6.125% senior notes due 2023
Indebtedness and credit agreement
Long-term debt	$ 1,800,000		$ 1,800,000
Debt instrument, stated interest rate (as a percent)	6.125%		6.125%
Unsecured Unguaranteed Debt
Indebtedness and credit agreement
Long-term debt	$ 423,000		$ 423,000	$ 487,168
8.5% convertible notes due May 2015
Indebtedness and credit agreement
Long-term debt				$ 64,168
Debt instrument, stated interest rate (as a percent)	8.50%		8.50%	8.50%
Convertible notes amount			$ 68,089
Convertible notes due 2015 were converted into common stock (in shares) | shares			24,762
Face amount of debt repurchased	$ 79		$ 79
7.7% notes due February 2027
Indebtedness and credit agreement
Long-term debt	$ 295,000		$ 295,000	$ 295,000
Debt instrument, stated interest rate (as a percent)	7.70%		7.70%	7.70%
6.875% fixed-rate senior notes due December 2028
Indebtedness and credit agreement
Long-term debt	$ 128,000		$ 128,000	$ 128,000
Debt instrument, stated interest rate (as a percent)	6.875%		6.875%	6.875%
Forecast | Senior secured revolving credit facility due January 2020
Credit facility
Maximum borrowing capacity					$ 3,700,000
Prior to repayment of 2020 8.00% Notes | Senior secured revolving credit facility due January 2020 | Minimum
Credit facility
Additional borrowing capacity	$ 300,000		$ 300,000
Threshold availability on the thirtieth consecutive calendar day			225,000
Prior to repayment of 2020 8.00% Notes | Senior secured revolving credit facility due January 2020 | Maximum
Credit facility
Threshold availability on revolving credit facility to trigger fixed charge coverage requirements			175,000
Threshold availability on the third consecutive business day			225,000
On and after repayment of 2020 8.00% Notes | Senior secured revolving credit facility due January 2020 | Minimum
Credit facility
Additional borrowing capacity	365,000		365,000
Threshold availability on the thirtieth consecutive calendar day			250,000
On and after repayment of 2020 8.00% Notes | Senior secured revolving credit facility due January 2020 | Maximum
Credit facility
Threshold availability on revolving credit facility to trigger fixed charge coverage requirements			200,000
Threshold availability on the third consecutive business day			$ 250,000
T P G EnvisionRx | 6.125% senior notes due 2023
Indebtedness and credit agreement
Principal amount of debt		$ 1,800,000
Debt instrument, stated interest rate (as a percent)		6.125%
Credit facility
Redemption price		101.00%
Net proceeds included in cash and cash equivalents	$ 1,768,622

Reclassifications from Accumu35

Reclassifications from Accumulated Other Comprehensive Loss (Details) - USD ($) $ in Thousands	3 Months Ended
	May. 30, 2015	May. 31, 2014
Accumulated other comprehensive loss
Balance - beginning of period	$ (45,850)	$ (37,334)
Amounts reclassified from accumulated other comprehensive loss to net income, net of $398 and $0 tax expense	597	659
Balance - end of period	(45,253)	(36,675)
Defined benefit pension plans
Accumulated other comprehensive loss
Balance - beginning of period	(45,850)	(37,334)
Amounts reclassified from accumulated other comprehensive loss to net income, net of $398 and $0 tax expense	597	659
Balance - end of period	(45,253)	(36,675)
Amounts reclassified from accumulated other comprehensive loss to net income, tax expense	$ 398	$ 0

Reclassifications from Accumu36

Reclassifications from Accumulated Other Comprehensive Loss (Details 2) - USD ($) $ in Thousands	3 Months Ended
	May. 30, 2015	May. 31, 2014
Reclassification from accumulated other comprehensive loss
Income before income taxes	$ 31,277	$ 53,327
Income tax expense	(12,441)	(11,881)
Net income	18,836	41,446
Defined benefit pension plans | Reclassification from accumulated other comprehensive loss
Reclassification from accumulated other comprehensive loss
Income before income taxes	(995)	(659)
Income tax expense	398
Net income	(597)	(659)
Defined benefit pension plans | Reclassification from accumulated other comprehensive loss | Selling, general and administrative expenses
Reclassification from accumulated other comprehensive loss
Amortization of unrecognized prior service costs	(17)	(60)
Amortization of unrecognized net loss	$ (978)	$ (599)

Retirement Plans (Details)

Retirement Plans (Details) - USD ($) $ in Thousands	3 Months Ended
	May. 30, 2015	May. 31, 2014
Defined Benefit Pension Plan
Net periodic pension expense
Service cost	$ 512	$ 793
Interest cost	1,633	1,631
Expected return on plan assets	(1,593)	(1,929)
Amortization of unrecognized prior service cost	17	60
Amortization of unrecognized net loss (gain)	978	599
Net pension expense	1,547	1,154
Employer contributions	0
Expected employer contribution during the remainder of fiscal year	0
Nonqualified Executive Retirement Plan
Net periodic pension expense
Interest cost	119	135
Net pension expense	119	$ 135
Employer contributions	377
Expected employer contribution during the remainder of fiscal year	$ 1,173

Commitments and Contingencies (

Commitments and Contingencies (Details) - May. 30, 2015 $ in Millions	USD ($)caseStoreManager
Indergit
Commitments and contingencies
Number of current and former store managers court ordered notices to be sent	7,000
Number of current and former store managers who joined the action	1,550
Number of current and former store managers to whom notices have been sent	1,750
Chase and Scherwin and Kyle
Commitments and contingencies
Legal settlement amount | $	$ 9
Hall
Commitments and contingencies
Number of similar cases | case	2