Document and Entity Information
Document and Entity Information - USD ($) | 12 Months Ended | ||
Feb. 29, 2020 | Apr. 16, 2020 | Aug. 31, 2019 | |
Cover [Abstract] | |||
Document Type | 10-K | ||
Document Annual Report | true | ||
Document Period End Date | Feb. 29, 2020 | ||
Entity File Number | 1-5742 | ||
Entity Registrant Name | RITE AID CORP | ||
Entity Incorporation, State or Country Code | DE | ||
Entity Tax Identification Number | 23-1614034 | ||
Entity Address, Address Line One | 30 Hunter Lane | ||
Entity Address, City or Town | Camp Hill | ||
Entity Address, State or Province | PA | ||
Entity Address, Postal Zip Code | 17011 | ||
City Area Code | 717 | ||
Local Phone Number | 761-2633 | ||
Title of 12(b) Security | Common Stock, $1.00 par value | ||
Trading Symbol | RAD | ||
Security Exchange Name | NYSE | ||
Entity Well-known Seasoned Issuer | Yes | ||
Entity Voluntary Filers | No | ||
Entity Current Reporting Status | Yes | ||
Entity Interactive Data Current | Yes | ||
Entity Filer Category | Accelerated Filer | ||
Entity Small Business | false | ||
Entity Emerging Growth Company | false | ||
Entity Shell Company | false | ||
Entity Common Stock, Shares Outstanding | 54,704,579 | ||
Entity Public Float | $ 349,426,555 | ||
Current Fiscal Year End Date | --02-29 | ||
Document Fiscal Year Focus | 2020 | ||
Document Fiscal Period Focus | FY | ||
Entity Central Index Key | 0000084129 | ||
Amendment Flag | false |
CONDENSED CONSOLIDATED BALANCE
CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands | Feb. 29, 2020 | Mar. 02, 2019 | Mar. 04, 2018 | Mar. 03, 2018 | Mar. 04, 2017 |
Current assets: | |||||
Cash and cash equivalents | $ 218,180 | $ 144,353 | $ 447,334 | $ 245,410 | |
Accounts receivable, net | 1,286,785 | 1,788,712 | $ 1,811,203 | 1,869,100 | |
Inventories, net | 1,921,604 | 1,871,941 | 1,850,660 | 1,799,539 | |
Prepaid expenses and other current assets | 181,794 | 179,132 | |||
Current assets held for sale | 92,278 | 117,581 | |||
Total current assets | 3,700,641 | 4,101,719 | |||
Property, plant and equipment, net | 1,215,838 | 1,308,514 | |||
Operating lease right-of-use asset | 2,903,256 | ||||
Goodwill | 1,108,136 | 1,108,136 | 1,421,120 | ||
Other intangibles, net | 359,491 | 448,706 | |||
Deferred tax assets | 16,680 | 409,084 | 592,235 | 594,019 | |
Other assets | 148,327 | 215,208 | |||
Total assets | 9,452,369 | 7,591,367 | 8,980,767 | 8,989,327 | |
Current liabilities: | |||||
Current maturities of long-term debt and lease financing obligations | 8,840 | 16,111 | |||
Accounts payable | 1,484,081 | 1,618,585 | |||
Accrued salaries, wages and other current liabilities | 746,318 | 808,439 | |||
Current portion of operating lease liabilities | 490,161 | ||||
Current liabilities held for sale | 37,063 | ||||
Total current liabilities | 2,766,463 | 2,443,135 | |||
Long-term debt, less current maturities | 3,077,268 | 3,454,585 | |||
Long-term operating lease liabilities | 2,710,347 | ||||
Lease financing obligations, less current maturities, ASC842 | 19,326 | ||||
Lease financing obligations, less current maturities, ASC840 | 24,064 | ||||
Other noncurrent liabilities | 204,438 | 482,893 | |||
Total liabilities | 8,777,842 | 6,404,677 | |||
Commitments and contingencies | |||||
Stockholders' equity: | |||||
Common stock, par value $1 per share; 75,000 shares authorized; shares issued and outstanding 54,716 and 54,016 | 54,716 | 54,016 | |||
Additional paid-in capital | 5,890,903 | 5,876,977 | |||
Accumulated deficit | (5,222,194) | (4,713,244) | (4,291,031) | (4,282,471) | |
Accumulated other comprehensive loss | (48,898) | (31,059) | |||
Total stockholders' equity | 674,527 | 1,186,690 | $ 1,592,450 | $ 1,601,010 | $ 614,070 |
Total liabilities and stockholders' equity | $ 9,452,369 | $ 7,591,367 |
CONDENSED CONSOLIDATED BALANC_2
CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares | Feb. 29, 2020 | Apr. 18, 2019 | Apr. 17, 2019 | Mar. 03, 2019 | Mar. 02, 2019 |
CONDENSED CONSOLIDATED BALANCE SHEETS | |||||
Common stock, par value (in dollars per share) | $ 1,000 | $ 1 | $ 1,000 | ||
Common stock, shares authorized | 75,000,000 | 75,000,000 | 1,500,000,000 | 75,000,000 | 75,000,000 |
Common stock, shares issued | 54,716,000 | 54,016,000 | 54,016,000 | ||
Common stock, shares outstanding | 54,716,000 | 54,016,000 | 54,016,000 |
CONDENSED CONSOLIDATED STATEMEN
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) $ in Thousands | 12 Months Ended | ||
Feb. 29, 2020 | Mar. 02, 2019 | Mar. 03, 2018 | |
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS | |||
Revenues | $ 21,928,393 | $ 21,639,557 | $ 21,528,968 |
Costs and expenses: | |||
Cost of revenues | 17,201,635 | 16,963,205 | 16,748,863 |
Selling, general and administrative expenses | 4,587,336 | 4,592,375 | 4,651,262 |
Lease termination and impairment charges | 42,843 | 107,994 | 58,765 |
Goodwill and intangible asset impairment charges | 375,190 | 261,727 | |
Interest expense | 229,657 | 227,728 | 202,768 |
(Gain) loss on debt retirements, net | (55,692) | 554 | |
Walgreens Boots Alliance merger termination fee | (325,000) | ||
Loss (gain) on sale of assets, net | 4,226 | (38,012) | (25,872) |
Total costs and expenses | 22,010,005 | 22,229,034 | 21,572,513 |
(Loss) income from continuing operations before income taxes | (81,612) | (589,477) | (43,545) |
Income tax expense | 387,607 | 77,477 | 305,987 |
Net (loss) income from continuing operations | (469,219) | (666,954) | (349,532) |
Net income from discontinued operations, net of tax | 17,045 | 244,741 | 1,293,002 |
Net (loss) income | (452,174) | (422,213) | 943,470 |
Computation of (loss) income attributable to common stockholders: | |||
Loss income from continuing operations attributable to common stockholders-basic and diluted | (469,219) | (666,954) | (349,532) |
Income from discontinued operations attributable to common stockholders-basic and diluted | 17,045 | 244,741 | 1,293,002 |
(Loss) income attributable to common stockholders-basic and diluted | $ (452,174) | $ (422,213) | $ 943,470 |
Basic income (loss) per share: | |||
Continuing operations | $ (8.82) | ||
Discontinued operations | 0.32 | ||
Net basic income (loss) per share | (8.50) | ||
Diluted income (loss) per share: | |||
Continuing operations | (8.82) | ||
Discontinued operations | 0.32 | ||
Net diluted income (loss) per share | (8.50) | ||
Basic and diluted (loss) income per share: | |||
Continuing operations | (8.82) | $ (12.62) | $ (6.66) |
Discontinued operations | 0.32 | 4.63 | 24.64 |
Net basic and diluted loss (income) per share | $ (8.50) | $ (7.99) | $ 17.98 |
CONDENSED CONSOLIDATED STATEM_2
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | |||||||||
Feb. 29, 2020 | Nov. 30, 2019 | Aug. 31, 2019 | Jun. 01, 2019 | Mar. 02, 2019 | Dec. 01, 2018 | Sep. 01, 2018 | Jun. 02, 2018 | Feb. 29, 2020 | Mar. 02, 2019 | Mar. 03, 2018 | |
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) | |||||||||||
Net (loss) income | $ (324,721) | $ 51,485 | $ (79,279) | $ (99,659) | $ (272,979) | $ (4,510) | $ (359,140) | $ 214,416 | $ (452,174) | $ (422,213) | $ 943,470 |
Defined benefit pension plans: | |||||||||||
Amortization of net actuarial losses included in net periodic pension cost, net of $0, $1,765 and $4,842 income tax expense | (17,351) | 3,490 | 7,255 | ||||||||
Change in fair value of interest rate cap | (488) | ||||||||||
Total other comprehensive (loss) income | (17,839) | 3,490 | 7,255 | ||||||||
Comprehensive (loss) income | $ (470,013) | $ (418,723) | $ 950,725 |
CONDENSED CONSOLIDATED STATEM_3
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (Parenthetical) - USD ($) $ in Thousands | 12 Months Ended | ||
Feb. 29, 2020 | Mar. 02, 2019 | Mar. 03, 2018 | |
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) | |||
Amortization of net actuarial losses included in net periodic pension cost, income tax expense | $ 0 | $ 1,765 | $ 4,842 |
CONDENSED CONSOLIDATED STATEM_4
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY - USD ($) shares in Thousands, $ in Thousands | Common Stock | Additional Paid-In Capital | Accumulated Deficit | Accumulated Other Comprehensive Loss | Total |
Other comprehensive (loss) income: | |||||
Adoption of ASU | Accounting Standards Update 2016-09 | $ 11,729 | $ 11,729 | |||
Adoption of ASU | Accounting Standards Update 2018-02 [Member] | (513) | $ 513 | |||
Balance - beginning of period at Mar. 04, 2017 | $ 52,685 | $ 5,840,859 | (5,237,157) | (42,317) | 614,070 |
BALANCE (in shares) at Mar. 04, 2017 | 52,685 | ||||
Increase (Decrease) in Stockholders' Deficit | |||||
Net income (loss) | 943,470 | 943,470 | |||
Other comprehensive (loss) income: | |||||
Changes in Defined Benefit Plans, net of tax expense | 7,255 | 7,255 | |||
Comprehensive (loss) income | 950,725 | ||||
Exchange of restricted shares for taxes | $ (73) | (4,030) | (4,103) | ||
Exchange of restricted shares for taxes (in shares) | (73) | ||||
Issuance of restricted stock | $ 693 | (693) | |||
Issuance of restricted stock (in shares) | 693 | ||||
Cancellation of restricted stock | $ (180) | 180 | |||
Cancellation of restricted stock (in shares) | (180) | ||||
Amortization of restricted stock balance | 18,365 | 18,365 | |||
Stock-based compensation expense | 2,761 | 2,761 | |||
Amortization of performance-based incentive plans | 1,667 | 1,667 | |||
Stock options exercised | $ 241 | 5,555 | $ 5,796 | ||
Stock options exercised (in shares) | 241 | 241 | |||
Balance - end of period at Mar. 03, 2018 | $ 53,366 | 5,864,664 | (4,282,471) | (34,549) | $ 1,601,010 |
BALANCE (in shares) at Mar. 03, 2018 | 53,366 | ||||
Other comprehensive (loss) income: | |||||
Adoption of ASU | Accounting Standards Update 2014-09 | (8,560) | (8,560) | |||
Net income (loss) | (422,213) | (422,213) | |||
Changes in Defined Benefit Plans, net of tax expense | 3,490 | 3,490 | |||
Comprehensive (loss) income | (418,723) | ||||
Exchange of restricted shares for taxes | $ (70) | (2,349) | (2,419) | ||
Exchange of restricted shares for taxes (in shares) | (70) | ||||
Issuance of restricted stock | $ 709 | (709) | |||
Issuance of restricted stock (in shares) | 709 | ||||
Cancellation of restricted stock | $ (88) | 88 | |||
Cancellation of restricted stock (in shares) | (88) | ||||
Amortization of restricted stock balance | 14,628 | 14,628 | |||
Stock-based compensation expense | (1,539) | (1,539) | |||
Stock options exercised | $ 99 | 2,194 | $ 2,293 | ||
Stock options exercised (in shares) | 99 | 99 | |||
Balance - end of period at Mar. 02, 2019 | $ 54,016 | 5,876,977 | (4,713,244) | (31,059) | $ 1,186,690 |
BALANCE (in shares) at Mar. 02, 2019 | 54,016 | ||||
Other comprehensive (loss) income: | |||||
Adoption of ASU | Accounting Standards Update 2016-02 | (56,776) | (56,776) | |||
Net income (loss) | (452,174) | (452,174) | |||
Changes in Defined Benefit Plans, net of tax expense | (17,351) | (17,351) | |||
Change in fair value of interest rate cap | (488) | (488) | |||
Comprehensive (loss) income | (470,013) | ||||
Exchange of restricted shares for taxes | $ (240) | (1,680) | (1,920) | ||
Exchange of restricted shares for taxes (in shares) | (240) | ||||
Issuance of restricted stock | $ 1,402 | (1,402) | |||
Issuance of restricted stock (in shares) | 1,402 | ||||
Cancellation of restricted stock | $ (462) | 462 | |||
Cancellation of restricted stock (in shares) | (462) | ||||
Amortization of restricted stock balance | 15,840 | 15,840 | |||
Stock-based compensation expense | 706 | 706 | |||
Balance - end of period at Feb. 29, 2020 | $ 54,716 | $ 5,890,903 | $ (5,222,194) | $ (48,898) | $ 674,527 |
BALANCE (in shares) at Feb. 29, 2020 | 54,716 |
CONDENSED CONSOLIDATED STATEM_5
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (Parenthetical) - USD ($) $ in Thousands | 12 Months Ended | ||
Feb. 29, 2020 | Mar. 02, 2019 | Mar. 03, 2018 | |
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY | |||
Changes in defined benefit plans, tax expense | $ 0 | $ 1,765 | $ 4,842 |
CONDENSED CONSOLIDATED STATEM_6
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands | 12 Months Ended | ||
Feb. 29, 2020 | Mar. 02, 2019 | Mar. 03, 2018 | |
Operating activities: | |||
Net (loss) income | $ (452,174) | $ (422,213) | $ 943,470 |
Net income from discontinued operations, net of tax | 17,045 | 244,741 | 1,293,002 |
Net loss from continuing operations | (469,219) | (666,954) | (349,532) |
Adjustments to reconcile to net cash provided by (used in) operating activities of continuing operations : | |||
Depreciation and amortization | 328,277 | 357,882 | 386,057 |
Lease termination and impairment charges | 42,843 | 107,994 | 58,765 |
Goodwill and intangible asset impairment charges | 375,190 | 261,727 | |
LIFO (credit) charge | (64,804) | 23,354 | (28,827) |
Loss (gain) on sale of assets, net | 4,226 | (38,012) | (25,872) |
Stock-based compensation expense | 16,087 | 12,115 | 25,793 |
(Gain) loss on debt retirements, net | (55,692) | 554 | |
Changes in deferred taxes | 385,904 | 95,638 | 260,411 |
Changes in operating assets and liabilities: | |||
Accounts receivable | 486,563 | (75,844) | (349,481) |
Inventories | 15,141 | (44,645) | 18,835 |
Accounts payable | (92,062) | 125,925 | 211,511 |
Operating lease right-of-use assets and operating lease liabilities | 14,112 | ||
Other assets | (38,351) | 1,000 | (10,082) |
Other liabilities | (62,168) | (439,906) | 52,165 |
Net cash provided by (used in) operating activities of continuing operations | 510,857 | (165,709) | 511,470 |
Investing activities: | |||
Payments for property, plant and equipment | (171,705) | (196,778) | (185,879) |
Intangible assets acquired | (42,681) | (47,911) | (28,885) |
Proceeds from insured loss | 4,239 | ||
Proceeds from dispositions of assets and investments | 59,658 | 43,550 | 27,586 |
Proceeds from sale-leaseback transactions, ASC842 | 4,879 | ||
Proceeds from sale-leaseback transactions, ACS 840 | 2,587 | ||
Net cash used in investing activities of continuing operations | (149,849) | (198,552) | (182,939) |
Financing activities: | |||
Proceeds from issuance of long-term debt | 600,000 | 450,000 | |
Net (payments to) proceeds from revolver | (225,000) | 875,000 | (265,000) |
Principal payments on long-term debt | (706,103) | (440,370) | (9,882) |
Change in zero balance cash accounts | 12,671 | (59,481) | 35,605 |
Net proceeds from issuance of common stock | 2,294 | 5,796 | |
Payments for taxes related to net share settlement of equity awards | (1,921) | (2,419) | (4,103) |
Financing fees paid for early debt redemption | (518) | (171) | |
Deferred financing costs paid | (5,781) | (21,564) | |
Net cash (used in) provided by financing activities of continuing operations | (326,652) | 803,289 | (237,584) |
Cash flows from discontinued operations: | |||
Operating activities of discontinued operations | (23,836) | (62,956) | (245,126) |
Investing activities of discontinued operations | 63,307 | 664,740 | 3,496,222 |
Financing activities of discontinued operations | 0 | (1,343,793) | (3,140,119) |
Net cash provided by (used in) discontinued operations | 39,471 | (742,009) | 110,977 |
Increase (decrease) in cash and cash equivalents | 73,827 | (302,981) | 201,924 |
Cash and cash equivalents, beginning of period | 144,353 | 447,334 | 245,410 |
Cash and cash equivalents, end of period | $ 218,180 | $ 144,353 | $ 447,334 |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 12 Months Ended |
Feb. 29, 2020 | |
Basis of Presentation | |
Summary of Significant Accounting Policies | 1. Summary of Significant Accounting Policies Description of Business The Company is a Delaware corporation and through its 100% owned subsidiaries, operates a pharmacy retail healthcare company in the United States of America. The Company operates through its two reportable segments: the Retail Pharmacy segment and the Pharmacy Services segment. The Retail Pharmacy segment operates one of the largest retail drugstore chains in the United States, with 2,461 stores in operation as of February 29, 2020. The Retail Pharmacy segment’s drugstores’ primary business is the sale of brand and generic prescription drugs. The Retail Pharmacy segment also sells a full selection of health and beauty aids and personal care products, seasonal merchandise and a large private brand product line. The Pharmacy Services segment operates both transparent and traditional pharmacy benefit management (“PBM”) businesses; mail-order and specialty pharmacy services through EnvisionPharmacies; a claims adjudication software platform through Laker Software; and a national Medicare Part D prescription drug plan through Envision Insurance Company (“EIC”). See Note 20 for additional details on the Company’s reportable segments. The discussion and presentation of the operating and financial results of our business segments have been impacted by the following event. Pursuant to the terms and subject to the conditions set forth in the Amended and Restated Asset Purchase Agreement (the "Amended and Restated Asset Purchase Agreement"), dated as of September 18, 2017, by and among Rite Aid, WBA and Walgreen Co., an Illinois corporation and 100% owned subsidiary of WBA ("Buyer"), Buyer agreed to purchase from Rite Aid 1,932 stores (the "Acquired Stores"), three distribution centers, related inventory and other specified assets and liabilities related thereto for a purchase price of approximately $4,375,000, on a cash free, debt free basis (the "Asset Sale" or the "Sale"). As of February 29, 2020, the Company has sold all 1,932 Acquired Stores, two distribution centers and related assets to WBA in exchange for proceeds of $4,280,711, which were used to repay outstanding debt. Based on its magnitude and because the Company has exited certain markets, the Sale represents a significant strategic shift that has a material effect on the Company’s operations and financial results. Accordingly, the Company has applied discontinued operations treatment for the Asset Sale as required by Accounting Standards Codification 210-05—Discontinued Operations (ASC 205-20). In accordance with ASC 205-20, the Company reclassified the assets and liabilities to be sold, including the 1,932 Acquired Stores, three distribution centers, related inventory and other specified assets and liabilities related thereto (collectively the “Assets to be Sold” or “Disposal Group”) to assets and liabilities held for sale on its consolidated balance sheets as of the periods ended February 29, 2020 and March 2, 2019, and reclassified the financial results of the Disposal Group in its consolidated statements of operations and consolidated statements of cash flows for all periods presented. Additionally, corporate support activities related to the Disposal Group were not reclassified to discontinued operations. See additional information as provided in Note 3 Asset Sale to WBA. Revenues for the Company are as follows: Year Ended February 29, March 2, March 3, 2020 2019 2018 (52 Weeks) (52 Weeks) (52 Weeks) Retail Pharmacy segment: Pharmacy sales $ 10,354,293 $ 10,391,539 $ 10,328,376 Front-end sales 5,114,976 5,215,152 5,348,613 Other revenue 146,917 150,461 155,636 Total Retail Pharmacy segment 15,616,186 15,757,152 15,832,625 Pharmacy Services segment revenue 6,559,560 6,093,688 5,896,669 Intersegment elimination (247,353) (211,283) (200,326) Total revenue $ 21,928,393 $ 21,639,557 $ 21,528,968 Sales of prescription drugs for our Retail Pharmacy segment represented approximately 67.0%, 66.6% and 65.9% of the Company’s total drugstore sales in fiscal years 2020, 2019 and 2018, respectively. The Retail Pharmacy segment’s principal classes of products in fiscal 2020 were the following: Percentage Product Class of Sales Prescription drugs 67.0 % Over-the-counter medications and personal care 11.0 % Health and beauty aids 5.0 % General merchandise and other 17.0 % Fiscal Year The Company’s fiscal year ends on the Saturday closest to February 29 or March 1. The fiscal years ended February 29, 2020, March 2, 2019 and March 3, 2018 included 52 weeks. Principles of Consolidation The consolidated financial statements include the accounts of the Company and all of its 100% owned subsidiaries. All significant intercompany accounts and transactions have been eliminated in consolidation. Cash and Cash Equivalents Cash and cash equivalents consist of cash on hand and highly liquid investments, which are readily convertible to known amounts of cash and which have original maturities of three months or less when purchased. Allowance for Uncollectible Receivables Substantially all prescription sales are made to customers who are covered by third-party payors, such as insurance companies, government agencies and employers. The Company recognizes receivables that represent the amount owed to the Company for sales made to customers or employees of those payors that have not yet been paid. The Company maintains a reserve for the amount of these receivables deemed to be uncollectible. This reserve is calculated based upon historical collection activity adjusted for current conditions. Inventories Inventories are stated at the lower of cost or market. Inventory balances include the capitalization of certain costs related to purchasing, freight and handling costs associated with placing inventory in its location and condition for sale. The Company uses the last-in, first-out (“LIFO”) cost flow assumption for substantially all of its inventories. The Company calculates its inflation index based on internal product mix and utilizes the link-chain LIFO method. Impairment of Long-Lived Assets Asset impairments are recorded when the carrying value of assets are not recoverable. For purposes of recognizing and measuring impairment of long-lived assets, the Company categorizes assets of operating stores as “Assets to Be Held and Used” and “Assets to Be Disposed Of.” The Company evaluates assets at the store level because this is the lowest level of identifiable cash flows ascertainable to evaluate impairment. Assets being tested for recoverability at the store level include tangible long-lived assets, right-of-use assets for leased stores, and identifiable, finite-lived intangibles that arose in purchase business combinations. Corporate assets to be held and used are evaluated for impairment based on excess cash flows from the stores that support those assets. The Company reviews long-lived assets to be held and used for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. If the sum of the undiscounted expected future cash flows is less than the carrying amount of the asset, the Company recognizes an impairment loss. Impairment losses are measured as the amount by which the carrying amount of the asset exceeds the fair value of the asset. When fair values are not available, the Company estimates fair value using the expected future cash flows discounted at a rate commensurate with the risks associated with the recovery of the asset. Property, Plant and Equipment Property, plant and equipment are stated at cost, net of accumulated depreciation and amortization. The Company provides for depreciation using the straight-line method over the following useful lives: buildings—30 to 45 years; equipment—3 to 15 years. Leasehold improvements are amortized on a straight-line basis over the shorter of the estimated useful life of the asset or the term of the lease. When determining the amortization period of a leasehold improvement, the Company considers whether discretionary exercise of a lease renewal option is reasonably assured. If it is determined that the exercise of such option is reasonably assured, the Company will amortize the leasehold improvement asset over the minimum lease term, plus the option period. This determination depends on the remaining life of the minimum lease term and any economic penalties that would be incurred if the lease option is not exercised. Capitalized lease assets are recorded at the lesser of the present value of minimum lease payments or fair market value and amortized over the estimated useful life of the related property or term of the lease. The Company capitalizes direct internal and external development costs associated with internal-use software. Neither preliminary evaluation costs nor costs associated with the software after implementation are capitalized. For fiscal years 2020, 2019 and 2018, the Company capitalized costs of approximately $15,240, $13,716 and $13,940, respectively. Goodwill The Company recognizes goodwill as the excess of the purchase price over the fair value of the assets acquired and liabilities assumed during business combinations. The Company accounts for goodwill under ASC Topic 350, “Intangibles—Goodwill and Other”, which does not permit amortization, but instead requires the Company to perform an annual impairment review, or more frequently if events or circumstances indicate that impairment may be more likely. See Note 13 for additional information on goodwill. Intangible Assets The Company has certain finite-lived intangible assets that are amortized over their useful lives. Prescription files acquired in business combinations are amortized over an estimated useful life of ten years on an accelerated basis, which approximates the anticipated prescription file retention and related cash flows. Purchased prescription files acquired in other than business combinations are amortized over their estimated useful lives of five years on a straight-line basis. The value of finite-lived trade names are amortized over 10 years on a straight-line basis. The value of customer relationships, acquired in connection with the Company’s acquisition of EnvisionRx, are amortized over a period between 10 and 20 years on a descending percentage method which matches the pattern of expected discounted cash flows. The Pharmacy Services segment’s contract with Centers for Medicare and Medicaid Services (“CMS”) for Medicare Part D (“Part D”), which is required in order to act as a national provider of the Part D benefit, is amortized over 25 years on a straight line basis. Indefinite lived assets The Company has a single indefinite-lived intangible asset consisting of a trade name. Intangible assets that are determined to have an indefinite life are not amortized, but are required to be evaluated at least annually for impairment. If the carrying value of an individual indefinite-lived intangible asset exceeds its fair value, such individual indefinite-lived intangible asset is impaired by the amount of the excess. Deferred Financing Costs Costs incurred to issue debt are deferred and amortized as a component of interest expense over the terms of the related debt agreements. Amortization expense of deferred financing costs was $10,187, $10,761 and $8,403 for fiscal 2020, 2019 and 2018, respectively. Revenue Recognition Retail Pharmacy Segment For front-end sales, the Retail Pharmacy segment recognizes revenues upon the transfer of control of the goods to the customer. The Company satisfies its performance obligation at the point of sale for front-end transactions. The Retail Pharmacy segment front-end revenue is measured based on the amount of fixed consideration that it expects to receive, net of an allowance for estimated future returns. Return activity is immaterial to revenues and results of operations in all periods presented. For pharmacy sales, the Retail Pharmacy segment recognizes revenue upon the transfer of control of the goods to the customer. The Company satisfies its performance obligation, upon pickup by the customer, which is when the customer takes title to the product. Each prescription claim represents an individual arrangement with the customer and is a performance obligation, separate and distinct from other prescription claims. The Company's revenue is measured based on the amount of fixed consideration that we expect to receive, reduced by refunds owed to the third party payor for pricing guarantees and performance against defined value-based service and performance metrics. The inputs to these estimates are not highly subjective or volatile. The effect of adjustments between estimated and actual amounts have not been material to the Company's results of operations or financial position. Prescriptions are generally not returnable. The Retail Pharmacy segment offers a chain-wide loyalty card program titled wellness+. Individual customers are able to become members of the wellness+ program. Members participating in the wellness+ loyalty card program earn points on a calendar year basis for eligible front-end merchandise purchases and qualifying prescription purchases. Effective January 1, 2020, members reach specific wellness+ tiers based on points accumulated during the six st th st st six st th six six calendar months. There is also a similar “Silver” level with a lower threshold and benefit level. Prior to January 1, 2020, the wellness+ tiers were based on points accumulated for a full calendar year, and entitled such customers to wellness+ benefits for the remainder of that calendar year and also the next calendar year. Points earned pursuant to the wellness+ program represent a performance obligation and the Company allocates revenue between the merchandise purchased and the wellness+ points based on the relative stand-alone selling price of each performance obligation. The relative value of the wellness+ points is initially deferred as a contract liability (included in other current and noncurrent liabilities). As members receive discounted front-end merchandise or when the benefit period expires, the Retail Pharmacy segment recognizes an allocable portion of the deferred contract liability into revenue. The Retail Pharmacy segment had accrued contract liabilities of $52,668 as of February 29, 2020, of which $52,668 is included in other current liabilities and $0 is included in noncurrent liabilities. The Retail Pharmacy segment had accrued contract liabilities of $63,720 as of March 2, 2019, of which $51,042 is included in other current liabilities and $12,678 is included in noncurrent liabilities. Pharmacy Services Segment The Pharmacy Services segment sells prescription drugs indirectly through its retail pharmacy network and directly through its mail service dispensing pharmacy. The Pharmacy Services segment recognizes revenue from prescription drugs sold by (i) its mail service dispensing pharmacy and (ii) under retail pharmacy network contracts where it is the principal at the contract prices negotiated with its clients, primarily employers, insurance companies, unions, government employee groups, health plans, Managed Medicaid plans, Medicare plans, and other sponsors of health benefit plans, and individuals throughout the United States. Revenues include: (i) the portion of the price the client pays directly to the Pharmacy Services segment, net of any volume-related or other discounts paid back to the client (see “Drug Discounts” below), (ii) the price paid to the Pharmacy Services segment by client plan members for mail order prescriptions (“Mail Co-Payments”), (iii) client plan member copayments made directly to the retail pharmacy network and (iv) administrative fees. Revenue is recognized when the Pharmacy Services segment meets its performance obligations relative to each transaction type. The following revenue recognition policies have been established for the Pharmacy Services segment: ● Revenues generated from prescription drugs sold by third party pharmacies in the Pharmacy Services segment’s retail pharmacy network and associated administrative fees are recognized at the Pharmacy Services segment’s point-of-sale, which is when the claim is adjudicated by the Pharmacy Services segment’s online claims processing system. At this point the Company has performed all of its performance obligations. ● Revenues generated from prescription drugs sold by the Pharmacy Services segment’s mail service dispensing pharmacy are recognized when the prescription is shipped. At the time of shipment, the Pharmacy Services segment has performed all of its performance obligations under its client contracts, as control of and title to the product has passed to the client plan members. The Pharmacy Services segment does not experience a significant level of returns or reshipments. ● Revenues generated from administrative fees based on membership or claims volume are recognized monthly based on the terms within the individual contracts, either a monthly member based fee, or a claims volume based fee. In the majority of its contracts, the Pharmacy Services segment is the principal because its client contracts give clients the right to obtain access to its pharmacy contracts under which the Pharmacy Services segment directs its pharmacy network to provide the services (drug dispensing, consultation, etc.) and goods (prescription drugs) to the clients’ members at its negotiated pricing. The Pharmacy Services segment’s obligations under its client contracts are separate and distinct from its obligations to the third party pharmacies included in its retail pharmacy network contracts. In the majority of these contracts, the Pharmacy Services segment is contractually required to pay the third party pharmacies in its retail pharmacy network for products sold after payment is received from its clients. The Pharmacy Services segment has control over these transactions until the prescription is transferred to the member and, thus, that it is acting as a principal. As such, the Pharmacy Services segment records the total prescription price contracted with clients in revenues. Amounts paid to pharmacies and amounts charged to clients are exclusive of the applicable co-payment under Pharmacy Services segment contracts. Retail pharmacy co-payments, which we instruct retail pharmacies to collect from members, are included in our revenues and our cost of revenues. For contracts under which the Pharmacy Services segment acts as an agent or does not control the prescription drugs prior to transfer to the client, no revenue is recognized, except the administrative fee. Drug Discounts—The Pharmacy Services segment deducts from its revenues that are generated from prescription drugs sold by third party pharmacies any rebates, inclusive of discounts and fees, earned by its clients based on utilization levels and other factors as negotiated with the prescription drug manufacturers or suppliers. Rebates are paid to clients in accordance with the terms of client contracts. Medicare Part D—The Pharmacy Services segment, through its EIC subsidiary, participates in the federal government’s Medicare Part D program as a Prescription Drug Plan (“PDP”). Please refer to Note 9, Medicare Part D. Disaggregation of Revenue The following tables disaggregate the Company’s revenue by major source in each segment for the fiscal year ended February 29, 2020: In thousands February 29, 2020 Retail Pharmacy segment: Pharmacy sales $ 10,354,293 Front-end sales 5,114,976 Other revenue 146,917 Total Retail Pharmacy segment 15,616,186 Pharmacy Services segment 6,559,560 Intersegment elimination (247,353) Total revenue $ 21,928,393 Impact of New Revenue Recognition Standard on Financial Statement Line Items The Company adopted the new revenue standard using the modified retrospective method. The cumulative effect of applying the new standard to all contracts was recorded as an adjustment to accumulated deficit as of the adoption date. As a result of applying the modified retrospective method to adopt the new revenue standard, the following adjustments were made to accounts on the consolidated balance sheet as of March 4, 2018: Impact of Change in Accounting Policy As Reported Adjusted In thousands March 3, 2018 Adjustments March 4, 2018 Consolidated Balance Sheet: Accounts receivable, net $ 1,869,100 $ (57,897) $ 1,811,203 Inventories, net 1,799,539 51,121 1,850,660 Deferred tax assets 594,019 (1,784) 592,235 Total assets 8,989,327 (8,560) 8,980,767 Accumulated deficit (4,282,471) (8,560) (4,291,031) Total shareholders’ equity 1,601,010 (8,560) 1,592,450 See Note 20 for additional information about the revenues of the Company’s business segments. Cost of Revenues Retail Pharmacy Segment Cost of revenues for the Retail Pharmacy segment includes the following: the cost of inventory sold during the period, including related vendor rebates and allowances, LIFO credit or charges, costs incurred to return merchandise to vendors, inventory shrink, purchasing costs and warehousing costs, which include inbound freight costs from the vendor, distribution payroll and benefit costs, distribution center occupancy costs and depreciation expense and delivery expenses to the stores. Pharmacy Services Segment The Pharmacy Services segment’s cost of revenues includes the cost of prescription drugs sold during the reporting period indirectly through its retail pharmacy network and directly through its mail service dispensing pharmacy. The cost of prescription drugs sold component of cost of revenues includes: (i) the cost of the prescription drugs purchased from manufacturers or distributors and shipped to members in clients’ benefit plans from the Pharmacy Services segment’s mail service dispensing pharmacy, net of any volume-related or other discounts (see the section entitled “Vendor Rebates and Allowances and Purchase Discounts” below) and (ii) the cost of prescription drugs sold through the Pharmacy Services segment’s retail pharmacy network under contracts where it is the principal, net of any volume-related or other discounts. See Note 20 for additional information about the cost of revenues of the Company’s business segments. Vendor Rebates and Allowances and Purchase Discounts Retail Pharmacy Segment The Retail Pharmacy segment rebates and allowances received from vendors relate to either buying and merchandising or promoting the product. Buying and merchandising related rebates and allowances are recorded as a reduction of cost of revenue as product is sold. Buying and merchandising rebates and allowances include all types of vendor programs such as cash discounts from timely payment of invoices, purchase discounts or rebates, volume purchase allowances, price reduction allowances and slotting allowances. Certain product promotion related rebates and allowances, primarily related to advertising, are recorded as a reduction in selling, general and administrative expenses when the advertising commitment has been satisfied. Pharmacy Services Segment The Pharmacy Services segment receives purchase discounts on products purchased. The Pharmacy Services segment’s contractual arrangements with vendors, including manufacturers, wholesalers and retail pharmacies, normally provide for the Pharmacy Services segment to receive purchase discounts from established list prices in one, or a combination, of the following forms: (i) a direct discount at the time of purchase, or (ii) a discount (or rebate) paid subsequent to dispensing when products are purchased indirectly from a manufacturer (e.g., through a wholesaler or retail pharmacy). These rebates are recognized when prescriptions are dispensed and are generally billed to manufacturers within 30 days of the end of each completed quarter. Historically, the effect of adjustments resulting from the reconciliation of rebates recognized to the amounts billed and collected has not been material to the Pharmacy Services segment’s results of operations. The Pharmacy Services segment accounts for the effect of any such differences as a change in accounting estimate in the period the reconciliation is completed. The Pharmacy Services segment also receives additional discounts under its wholesaler contracts and fees from pharmaceutical manufacturers for administrative services. Purchase discounts and administrative service fees are recorded as a reduction of cost of revenues. Rent The Company records rent expense on operating leases on a straight-line basis over the reasonably certain lease term. The Company begins to record rent expense at the time that the Company has the right to use the property. From time to time, the Company receives incentive payments from landlords that subsidize lease improvement construction. These leasehold incentives are recorded as a reduction to the right-of-use asset. Selling, General and Administrative Expenses Selling, general and administrative expenses include store and corporate administrative payroll and benefit costs, occupancy costs which include retail store and corporate rent costs, facility and leasehold improvement depreciation and utility costs, advertising, repair and maintenance, insurance, equipment depreciation and professional fees. Repairs and Maintenance Routine repairs and maintenance are charged to operations as incurred. Improvements and major repairs, which extend the useful life of an asset, are capitalized and depreciated. Advertising Advertising costs, net of specific vendor advertising allowances, are expensed in the period the advertisement first takes place. Advertising expenses, net of vendor advertising allowances, for fiscal 2020, 2019 and 2018 were $142,079, $147,519 and $161,826, respectively. Insurance The Company is self-insured for certain general liability and workers’ compensation claims. For claims that are self-insured, stop-loss insurance coverage is maintained for workers’ compensation occurrences exceeding $1,000 and general liability occurrences exceeding $3,000. The Company utilizes actuarial studies as the basis for developing reported claims and estimating claims incurred but not reported relating to the Company’s self-insurance. Workers’ compensation claims are discounted to present value using a risk-free interest rate. Benefit Plan Accruals The Company has several defined benefit plans, under which participants earn a retirement benefit based upon a formula set forth in the plan. The Company records expense related to these plans using actuarially determined amounts that are calculated under the provisions of ASC 715, “Compensation—Retirement Benefits.” Key assumptions used in the actuarial valuations include the discount rate, the expected rate of return on plan assets and the rate of increase in future compensation levels. Stock-Based Compensation The Company has several stock option plans, which are described in detail in Note 17. The Company accounts for stock-based compensation under ASC 718, “Compensation—Stock Compensation.” The Company recognizes option expense over the requisite service period of the award, net of an estimate for the impact of award forfeitures. Store Pre-opening Expenses Costs incurred prior to the opening of a new or relocated store, associated with a remodeled store or related to the opening of a distribution facility are charged to operations as incurred. Litigation Reserves The Company is involved in litigation on an ongoing basis. The Company accrues its best estimate of the probable loss related to legal claims. Such estimates are developed in consultation with in-house counsel, and are based upon a combination of litigation and settlement strategies. Income Taxes Deferred income taxes are determined based on the difference between the financial reporting and tax basis of assets and liabilities. Deferred income tax expense (benefit) represents the change during the reporting period in the deferred tax assets and deferred tax liabilities, net of the effect of acquisitions and dispositions. Deferred tax assets include tax loss and credit carryforwards and are reduced by a valuation allowance if, based on available evidence, it is more likely than not that some portion of the deferred tax assets will not be realized. Changes in valuation allowances from period to period are included in the tax provision in the period of change. The Company has net operating loss (“NOL”) carryforwards that can be utilized to offset future income for federal and state tax purposes. These NOLs generate a significant deferred tax asset. The Company regularly reviews the deferred tax assets for recoverability considering historical profitability, projected taxable income, the expected timing of the reversals of existing temporary differences and tax planning strategies. The Company recognizes tax liabilities in accordance with ASC 740, “Income Taxes” and the Company 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. The Tax Cuts and Jobs Act (the “Tax Act”), enacted on December 22, 2017, among other things, permanently lowered the statutory federal corporate tax rate from 35% to 21%, effective for tax years including or beginning January 1, 2018. Under the guidance of ASC 740, “Income Taxes” (“ASC 740”), the Company re-measured its net deferred tax assets on the date of enactment based on the reduction in the overall future tax benefit expected to be realized at the lower tax rate implemented by the new legislation. Sales Tax Collected Sales taxes collected from customers and remitted to various governmental agencies are presented on a net basis (excluded from revenues) in the Company’s statement of operations. Use of Estimates The preparation of the financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from those estimates. Significant Concentrations Retail Pharmacy Segment The Company’s pharmacy sales were primarily to customers covered by health plan contracts, which typically contract with a third party payor that agrees to pay for all or a portion of a customer’s eligible prescription purchases. During fiscal 2020, the top five third party payors accounted for approximately 79.9% of the Company’s pharmacy sales. The largest third party payor, Caremark, represented 28.8%, 28.3% and 27.2% of pharmacy sales during fiscal 2020, 2019 and 2018, respectively. Third party payors are entities such as an insurance company, governmental agency, health maintenance organization or other managed care provider, and typically represent several health care contracts and customers. During fiscal 2020, state sponsored Medicaid agencies and related managed care Medicaid payors accounted for approximately 19.0% of the Company’s pharmacy sales, the largest of which was approximately 1.4% of the Company’s pharmacy sales. During fiscal 2020, approximately 38.4% of the Company’s pharmacy sales were to customers covered by Medicare Part D. Any significant loss of third- party payor business could have a material adverse effect on the Company’s business and results of operations. During fiscal 2020, the Company purchased brand and generic pharmaceuticals, which amounted to approximately 99.0% of the dollar volume of its prescription drugs from McKesson Corporation (“McKesson”) under its expanded agreement executed on February 17, 2014 and amended in fiscal 2019 for our pharmaceutical purchasing and distribution whereby McKesson assumed responsibility for purchasing essentially all of the brand and generic medications the Company dispenses as well as providing a new direct store delivery model to all of the Company’s stores. If the Company’s relationship with McKesson was disrupted, it could temporarily have difficulty filling prescriptions for brand-named and generic drugs until it executed a replacement wholesaler agreement or developed and implemented self-distribution processes. Pharmacy Services Segment Our Pharmacy Services segment re |
Restructuring
Restructuring | 12 Months Ended |
Feb. 29, 2020 | |
Restructuring | |
Restructuring | 2. Restructuring Beginning in fiscal 2019, the Company initiated a series of restructuring plans designed to reorganize its executive management team, reduce managerial layers, and consolidate roles. The Company also initiated restructuring plans with regard to its future strategy and brand identification, which includes building tools to work with regional health plans to improve patient health outcomes, rationalizing SKU’s in its front-end offering to free up working capital, assessing its pricing and promotional strategy, rebranding its retail pharmacy and EnvisionRxOptions business, implementing executive team enhancements, further reducing SG&A and headcount, separating the front-end and retail pharmacy teams into separate units, integrating the Pharmacy Services segment both within the segment and across Rite Aid, including a detailed review of the EnvisionRxOptions cost structure and action plans to streamline. For the year ended February 29, 2020, the Company incurred total restructuring-related costs of $105,642, which are included as a component of SG&A. These costs are as follows: Retail Pharmacy Pharmacy segment Services segment Total Restructuring-related costs Severance and related costs associated with ongoing reorganization efforts (a) $ 47,154 $ 11,339 $ 58,493 Non-executive retention costs associated with the March 2019 reorganization (b) 8,927 4,243 13,170 Professional and other fees relating to restructuring activities (c) 31,657 2,322 33,979 Total restructuring-related costs $ 87,738 $ 17,904 $ 105,642 For the year ended March 2, 2019, the Company incurred total restructuring-related costs of $4,704, which are included as a component of SG&A. These costs are as follows: Retail Pharmacy Pharmacy segment Services segment Total Restructuring-related costs Severance and related costs associated with ongoing reorganization efforts (a) $ — $ — $ — Non-executive retention costs associated with the March 2019 reorganization (b) 3,224 1,480 4,704 Professional and other fees relating to restructuring activities (c) — — — Total restructuring-related costs $ 3,224 $ 1,480 $ 4,704 A summary of activity for the year ended February 29, 2020 in the restructuring-related liabilities associated with the programs noted above, which is included in accrued salaries, wages and other current liabilities, is as follows: Severance and related Professional and costs (a) Retention costs (b) other fees (c) Total Balance at March 2, 2019 $ — $ 4,704 $ — $ 4,704 Additions charged to expense 27,076 6,664 9,610 43,350 Cash payments (4,653) (242) (9,610) (14,505) Balance at June 1, 2019 $ 22,423 $ 11,126 $ — $ 33,549 Additions charged to expense 8,381 4,087 12,677 25,145 Cash payments (4,580) (11,200) (6,768) (22,548) Balance at August 31, 2019 $ 26,224 $ 4,013 $ 5,909 $ 36,146 Additions charged to expense 17,320 1,268 6,687 25,275 Cash payments (5,036) — (5,088) (10,124) Balance at November 30, 2019 $ 38,508 $ 5,281 $ 7,508 $ 51,297 Additions charged to expense 5,716 1,151 5,005 11,872 Cash payments (7,996) — (10,119) (18,115) Balance at February 29, 2020 $ 36,228 $ 6,432 $ 2,394 $ 45,054 (a) – Severance and related costs reflect severance accruals, executive search fees, outplacement services and other similar charges associated with ongoing reorganization efforts. (b) – As part of its March 2019 reorganization, the Company incurred costs with the implementation of a retention plan for certain of its key associates. (c) – Professional and other fees include costs incurred in connection with the identification and implementation of initiatives associated with restructuring activities. The Company anticipates incurring approximately $60,000 during fiscal 2021 in connection with its continued restructuring activities. |
Asset Sale to WBA
Asset Sale to WBA | 12 Months Ended |
Feb. 29, 2020 | |
Asset Sale to WBA | |
Asset Sale to WBA | 3. Asset Sale to WBA On September 18, 2017, the Company entered into the Amended and Restated Asset Purchase Agreement with WBA and Buyer, which amended and restated in its entirety the previously disclosed Asset Purchase Agreement, dated as of June 28, 2017, by and among the Company, WBA and Buyer. Pursuant to the terms and subject to the conditions set forth in the Amended and Restated Asset Purchase Agreement, Buyer agreed to purchase from the Company 1,932 Acquired Stores, three distribution centers, related inventory and other specified assets and liabilities related thereto for a purchase price of $4,375,000, on a cash-free, debt-free basis in the Sale. The Company announced on September 19, 2017 that the waiting period under the HSR Act, expired with respect to the Sale. The Company completed the store transfer process in March of 2018, which resulted in the transfer of all 1,932 stores and related assets to WBA, and received cash proceeds of $4,156,686. During fiscal 2019, the Company completed the sale of one of its distribution centers and related assets to WBA for proceeds of $61,251. The impact of the sale of the distribution center and related assets resulted in a pre-tax gain of $14,151, which has been included in the results of operations and cash flows of discontinued operations during the fifty-two week period ended March 2, 2019. During fiscal 2020, the Company completed the sale of the second distribution center and related assets to WBA for proceeds of $62,774. The impact of the sale of the distribution center and related assets resulted in a pre-tax gain of $19,268, which has been included in the results of operations and cash flows of discontinued operations during the fifty-two week period ended February 29, 2020. On April 1, 2020, we completed the inventory transfer at our remaining distribution center to WBA for proceeds of $19,280. The transfer of the remaining distribution center and related non-inventory assets remains subject to minimal customary closing conditions applicable only to the distribution center being transferred at such distribution center closing, as specified in the Amended and Restated Asset Purchase Agreement. The parties to the Amended and Restated Asset Purchase Agreement have each made customary representations and warranties. The Company has agreed to various covenants and agreements, including, among others, the Company’s agreement to conduct its business at the distribution centers being sold to WBA in the ordinary course during the period between the execution of the Amended and Restated Asset Purchase Agreement and the distribution center closing. The Company has also agreed to provide transition services to Buyer for up to three years after the initial closing of the Sale. Under the terms of the TSA, the Company provides various services on behalf of WBA, including but not limited to the purchase and distribution of inventory and virtually all selling, general and administrative activities. The term of the TSA has been extended to October 17, 2020. In connection with these services, the Company purchases the related inventory and incurs cash payments for the selling, general and administrative activities, which, the Company bills on a cash neutral basis to WBA in accordance with terms as outlined in the TSA. Total billings for these items during the fifty-two week periods ended February 29, 2020 and March 2, 2019 were $3,030,967 and $6,887,092, respectively, of which $38,737 and $293,662 is included in Accounts receivable, net. The Company charged WBA TSA fees of $37,922 during the fifty-two week period ended February 29, 2020 and $80,277 in the fifty-two week period ended March 2, 2019, which are reflected as a reduction to selling, general and administrative expenses. Based on its magnitude and because the Company exited certain markets, the Sale represented a significant strategic shift that has a material effect on the Company’s operations and financial results. Accordingly, the Company has applied discontinued operations treatment for the Sale as required by Accounting Standards Codification 210-05— Discontinued Operations March 2, 2019, and reclassified the financial results of the Disposal Group in its consolidated statements of operations and consolidated statements of cash flows for all periods presented. The Company also revised its discussion and presentation of operating and financial results to be reflective of its continuing operations as required by ASC 205-20. The carrying amount of the Assets to be Sold, which were included in the Retail Pharmacy segment, have been reclassified from their historical balance sheet presentation to current assets and liabilities held for sale as follows: February 29, March 2, 2020 2019 Inventories $ 13,719 $ 68,233 Property and equipment 43,576 49,348 Operating lease right-of-use asset 34,983 — Current assets held for sale $ 92,278 $ 117,581 Current portion of operating lease liabilities $ 2,002 $ — Long-term operating lease liabilities 35,061 — Current liabilities held for sale $ 37,063 $ — The operating results of the discontinued operations that are reflected on the consolidated statements of operations within net income from discontinued operations are as follows: February 29, March 2, March 3, 2020 2019 2018 (52 weeks) (52 weeks) (52 weeks) Revenues $ (21) $ 34,889 $ 8,686,397 Costs and expenses: Cost of revenues(a) (5,639) 24,271 6,406,067 Selling, general and administrative expenses(a) 1,498 20,681 2,134,276 Lease termination and impairment charges — — 77 Loss on debt retirements, net — 22,646 8,180 Interest expense(b) 1 4,616 224,300 Gain on stores sold to Walgreens Boots Alliance — (374,619) (2,128,832) (Gain) loss on sale of assets, net (19,937) 1,486 (377) (24,077) (300,919) 6,643,691 Income from discontinued operations before income taxes 24,056 335,808 2,042,706 Income tax expense 7,011 91,067 749,704 Net income from discontinued operations, net of tax $ 17,045 $ 244,741 $ 1,293,002 (a) Cost of revenues and selling, general and administrative expenses for the discontinued operations excludes corporate overhead. These charges are reflected in continuing operations. (b) In accordance with ASC 205-20, the operating results for the fifty-two week period ended February 29, 2020, the fifty-two week period ended March 2, 2019 and the fifty-two week period ended March 3, 2018, respectively, for the discontinued operations include interest expense relating to the outstanding indebtedness repaid with the estimated excess proceeds from the Sale. The operating results reflected above do not fully represent the Disposal Group’s historical operating results, as the results reported within net income from discontinued operations only include expenses that are directly attributable to the Disposal Group. |
(Loss) Income Per Share
(Loss) Income Per Share | 12 Months Ended |
Feb. 29, 2020 | |
Income (Loss) Per Share | |
(Loss) Income Per Share | 4. (Loss) Income Per Share Basic (loss) 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 (loss) 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. February 29, March 2, March 3, 2020 2019 2018 (52 Weeks) (52 Weeks) (52 Weeks) Basic and diluted (loss) income per share: Numerator: Net loss from continuing operations $ (469,219) $ (666,954) $ (349,532) Net income from discontinued operations 17,045 244,741 1,293,002 (Loss) income attributable to common stockholders— basic and diluted $ (452,174) $ (422,213) $ 943,470 Denominator: Basic weighted average shares 53,228 52,854 52,481 Outstanding options and restricted shares, net — — — Diluted weighted average shares 53,228 52,854 52,481 Basic and diluted (loss) income per share: Continuing operations $ (8.82) $ (12.62) $ (6.66) Discontinued operations 0.32 4.63 24.64 Net basic and diluted (loss) income per share $ (8.50) $ (7.99) $ 17.98 Due to their antidilutive effect, 1,295, 1,036 and 374 potential common shares related to stock options have been excluded from the computation of diluted income per share as of February 29, 2020, March 2, 2019 and March 3, 2018, respectively. Also, excluded from the computation of diluted income per share as of February 29, 2020, March 2, 2019 and March 3, 2018 are restricted shares of 1,253, 1,008 and 610, respectively, which are included in shares outstanding. On April 10, 2019, the Company’s Board of Directors approved a one-for- twenty twenty unchanged. A proportionate adjustment was also made to the maximum number of shares issuable under the Company’s 2014 Equity Incentive Plan. |
Lease Termination and Impairmen
Lease Termination and Impairment Charges | 12 Months Ended |
Feb. 29, 2020 | |
Lease Termination and Impairment Charges | |
Lease Termination and Impairment Charges | 5. Lease Termination and Impairment Charges Impairment Charges The Company evaluates long-lived assets for impairment whenever events or changes in circumstances indicate that an asset group has a carrying value that may not be recoverable. The individual operating store is the lowest level for which cash flows are identifiable. As such, the Company evaluates individual stores for recoverability of assets. To determine if a store needs to be tested for recoverability, the Company considers items such as decreases in market prices, changes in the manner in which the store is being used or physical condition, changes in legal factors or business climate, an accumulation of losses significantly in excess of budget, a current period operating or cash flow loss combined with a history of operating or cash flow losses or a projection of continuing losses, or an expectation that the store will be closed or sold. The Company monitors new and recently relocated stores against operational projections and other strategic factors such as regional economics, new competitive entries and other local market considerations to determine if an impairment evaluation is required. For other stores, it performs a recoverability analysis if it has experienced current-period and historical cash flow losses. In performing the recoverability test, the Company compares the expected future cash flows of a store to the carrying amount of its assets. Significant judgment is used to estimate future cash flows. Major assumptions that contribute to its future cash flow projections include expected sales, gross profit and distribution expenses; expected costs such as payroll, occupancy costs and advertising expenses; and estimates for other significant selling, and general and administrative expenses. Many long-term macro-economic and industry factors are considered, both quantitatively and qualitatively, in the future cash flow assumptions. In addition to current and expected economic conditions such as inflation, interest and unemployment rates that affect customer shopping patterns, the Company considers that it operates in a highly competitive industry which includes the actions of other national and regional drugstore chains, independently owned drugstores, supermarkets, mass merchandisers, dollar stores and internet pharmacies. Additionally, the Company takes into consideration that certain operating stores are executing specific improvement plans which are monitored quarterly to recoup recent capital investments, such as an acquisition of an independent pharmacy, which it has made to respond to specific competitive or local market conditions, or have specific programs tailored towards a specific geography or market. The Company recorded impairment charges of $39,875 in fiscal 2020, $63,492 in fiscal 2019 and $37,873 in fiscal 2018. The Company’s methodology for recording impairment charges has been consistently applied in the periods presented. At February 29, 2020, $965.5 million of the Company’s long-lived assets, including intangible assets, were associated with 2,461 active operating stores. Additionally, in connection with the adoption of ASU 2016-02 , Leases (Topic 842) If an operating store’s estimated future undiscounted cash flows are not sufficient to cover its carrying value, its carrying value is reduced to fair value. Fair value is its estimated future discounted cash flows. The discount rate is commensurate with the risks associated with the recovery of a similar asset. Beginning in fiscal year 2020, operating lease right-of-use assets are included within the stores’ asset groups. We obtain fair values of these right-of-use assets based on real estate market data. An impairment charge is recorded in the period that the store does not meet its original return on investment and/or has an operating loss for the last two years and its projected cash flows do not exceed its current asset carrying value. The amount of the impairment charge is the entire difference between the current asset carrying value and its fair value which is the estimated future discounted cash flows. The Company recorded impairment charges for active stores of $34,825 in fiscal 2020, $46,419 in fiscal 2019 and $34,782 in fiscal 2018. The Company reviews key performance results for active stores on a quarterly basis and approves certain stores for closure. Impairment for closed stores, if any (many stores are closed on lease expiration), are recorded in the quarter the closure decision is approved. Closure decisions are made on an individual store or regional basis considering all of the macro-economic, industry and other factors, in addition to, the active store’s individual operating results. The Company recorded impairment charges for closed facilities of $5,050 in fiscal 2020, $2,788 in fiscal 2019 and $3,091 in fiscal 2018. The following table summarizes the impairment charges and number of locations, segregated by closed facilities and active stores that have been recorded in fiscal 2020, 2019 and 2018: February 29, 2020 March 2, 2019 March 3, 2018 (in thousands, except number of stores) Number Charge Number Charge Number Charge Active stores: Stores previously impaired(1) 274 $ 11,449 288 $ 17,939 218 $ 7,313 New, relocated and remodeled stores(2) 8 11,228 22 10,595 28 13,100 Remaining stores not meeting the recoverability test(3) 38 12,148 74 17,885 60 14,369 Total impairment charges—active stores 320 34,825 384 46,419 306 34,782 Total impairment charges—closed facilities 30 5,050 62 2,788 67 3,091 Total impairment charges—other(4) — — — 14,285 — — Total impairment charges—all locations 350 $ 39,875 446 $ 63,492 373 $ 37,873 (1) These charges are related to stores that were impaired for the first time in prior periods. In an effort to improve the operating results or to meet geographical competition, the Company will often make additional capital additions in stores that were impaired in prior periods. These additions will be impaired in future periods if they are deemed to be unrecoverable. In connection with our March 3, 2019 adoption of ASU 2016-02 , Leases (Topic 842) , under the alternative transition method, and the recording of our corresponding right-of-use asset (“ROU”). Beginning with fiscal 2020, the Company includes the ROU in its recoverability assessment. The fiscal 2020 impairment charge includes $6,594 of impairment relating to the ROU and $4,855 of capital additions. (2) These charges are related to new stores (open at least three years ) and relocated stores (relocated in the last two years ) and significant strategic remodels (remodeled in the last year) that did not meet their recoverability test during the current period. These stores have not met their original return on investment projections and have a historical loss of at least two years . Their future cash flow projections do not recover their current carrying value. The fiscal 2020 impairment charge includes $5,625 of impairment relating to the ROU and $5,603 of capital assets. (3) These charges are related to the remaining active stores that did not meet the recoverability test during the current period. These stores have a historical loss of at least 2 years. Their future cash flow projections do not recover their current carrying value. The fiscal 2020 impairment charge includes $2,228 of impairment relating to the ROU and $9,920 of capital assets. (4) These fiscal 2019 charges were due to the impairment of assets related to the termination of a project to replace the point of sale software used in the Company’s stores. The primary drivers of its impairment charges are each store’s current and historical operating performance and the assumptions that the Company makes about each store’s operating performance in future periods. Projected cash flows are updated based on the next year’s operating budget which includes the qualitative factors noted above. 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. 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. The table below sets forth by level within the fair value hierarchy the long-lived assets, which include right-of-use assets in fiscal 2020, as of the impairment measurement date for which an impairment assessment was performed and total losses as of February 29, 2020 and March 2, 2019: Fair Values Total as of Charges Level 1 Level 2 Level 3 Impairment Date February 29, 2020 Long-lived assets held for use $ — $ 113,510 $ 278 $ 113,788 $ (38,878) Long-lived assets held for sale $ — $ 2,689 $ — $ 2,689 $ (997) Total $ — $ 116,199 $ 278 $ 116,477 $ (39,875) Fair Values Total as of Charges Level 1 Level 2 Level 3 Impairment Date March 2, 2019 Long-lived assets held for use $ — $ — $ 8,116 $ 8,116 $ (62,115) Long-lived assets held for sale $ — $ 1,545 $ — $ 1,545 $ (1,377) Total $ — $ 1,545 $ 8,116 $ 9,661 $ (63,492) The above assets reflected in the caption Long-lived assets held for sale are separate and apart from the Assets to be Sold and due to their immateriality, have not been reclassified to assets held for sale. Lease Termination and Facility Exit Charges Upon adoption of ASU 2016-02 , Leases (Topic 842), In fiscal 2020, 2019 and 2018, the Company recorded lease termination charges of $2,968, $44,502 and $20,892, respectively. The Company has no plans to close a significant number of stores in future periods. 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. When a store or distribution center is closed, the Company records an expense for unrecoverable costs and accrues a liability equal to the present value at current credit adjusted risk-free interest rates of any anticipated executory costs which are not included within the store or distribution center's respective lease liability under Topic 842. Other store or distribution center closing and liquidation costs are expensed when incurred. The following table reflects the closed store and distribution center charges that relate to new closures, changes in assumptions and interest accretion: Year Ended February 29, March 2, March 3, 2020 2019 2018 (52 Weeks) (52 Weeks) (52 Weeks) Balance—beginning of period $ 124,046 $ 133,290 $ 165,138 Existing Topic 420 liabilities eliminated by recording a reduction to the ROU asset (112,288) — — Provision for present value of noncancellable lease payments of closed stores — 35,190 8,871 Changes in assumptions about future sublease income, terminations and changes in interest rates — 737 1,082 Interest accretion — 9,741 11,439 Cash payments, net of sublease income (9,505) (54,912) (53,240) Balance—end of period $ 2,253 $ 124,046 $ 133,290 The Company’s revenues and income before income taxes for fiscal 2020, 2019 and 2018 included results from stores that have been closed or are approved for closure as of February 29, 2020. The revenue, operating expenses and income before income taxes of these stores for the periods are presented as follows: Year Ended February 29, March 2, March 3, 2020 2019 2018 Revenues $ 17,182 $ 191,110 $ 333,984 Operating expenses 18,046 209,645 369,859 Gain from sale of assets (2,550) (38,110) (18,221) Other expenses 776 2,490 2,442 Income (loss) before income taxes 910 17,085 (20,096) Included in these stores’ loss before income taxes are: Depreciation and amortization 292 960 2,058 Inventory liquidation charges (486) (5,536) (2,828) The above results are not necessarily indicative of the impact that these closures will have on revenues and operating results of the Company in the future, as the Company often transfers the business of a closed store to another Company store, thereby retaining a portion of these revenues and operating expenses. |
Fair Value Measurements
Fair Value Measurements | 12 Months Ended |
Feb. 29, 2020 | |
Fair Value Measurements | |
Fair Value Measurements | 6. Fair Value Measurements The Company utilizes the three-level valuation hierarchy as described in Note 5 for the recognition and disclosure of fair value measurements. As of February 29, 2020 and March 2, 2019, the Company did not have any financial assets measured on a recurring basis. Please see Note 5 for fair value measurements of non-financial assets measured on a non-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. In addition, as of February 29, 2020 and March 2, 2019, the Company has $7,022 and $7,191, respectively, of investments carried at amortized cost as these investments are being held to maturity. These investments are included as a component of other assets as of February 29, 2020 and as a component of prepaid expenses and other current assets as of March 2, 2019. The Company believes the carrying value of these investments approximates their fair value. The fair value for LIBOR-based borrowings under the Company’s senior secured credit facility is 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 $3,077,268 and $3,021,385, respectively, as of February 29, 2020. The carrying amount and estimated fair value of the Company’s total long-term indebtedness was $3,454,585 and $3,120,335, respectively, as of March 2, 2019. On March 15, 2019, the Company entered into an interest rate cap (“Cap”), which has been designated to the variable interest rate payments on the first $650.0 million notional amount of variable rate indebtedness. The Cap has an effective date of March 21, 2019 and expires on March 21, 2021. The Cap provides the Company with interest rate protection in the event that LIBOR increases above 2.75%. The nominal fair market value of the Cap is recorded as a component of other assets. LIBOR continues to be supported through maturity of the Cap. |
Income Taxes
Income Taxes | 12 Months Ended |
Feb. 29, 2020 | |
Income Taxes | |
Income Taxes | 7. Income Taxes On December 22, 2017 (the “Enactment Date”), H.R. 1, originally known as the Tax Cuts and Jobs Act, was enacted. The new law (Public Law No.115-97 hereinafter referred to as the “Tax Act”) includes significant changes to the U.S. corporate income tax system including, but not limited to, lowering the statutory corporate tax rate from 35% to 21%, limiting or eliminating certain deductions and the repeal of Corporate AMT tax regime. The majority of the provisions were applicable to the Company beginning with fiscal 2019. For fiscal 2018, the Company computed its income tax expense using a blended federal tax rate of 32.6%. The 21% federal tax rate applies to the fiscal year ending March 2, 2019 and each year thereafter. The provision for income tax expense (benefit) from continuing operations was as follows: Year Ended February 29, March 2, March 3, 2020 2019 2018 (52 Weeks) (52 Weeks) (52 Weeks) Current tax: Federal $ (6,758) $ (22,187) $ (210) State 13,725 9,866 51,279 6,967 (12,321) 51,069 Deferred tax and other: Federal 345,469 50,151 316,451 State 35,171 39,647 (61,533) 380,640 89,798 254,918 Total income tax expense $ 387,607 $ 77,477 $ 305,987 A reconciliation of the expected statutory federal tax and the total income tax expense (benefit) from continuing operations was as follows: Year Ended February 29, March 2, March 3, 2020 2019 2018 (52 Weeks) (52 Weeks) (52 Weeks) Federal statutory rate* $ (17,093) $ (123,790) $ (14,202) Federal tax rate change — — 324,765 Nondeductible expenses 1,025 2,890 1,213 State income taxes, net 46,620 (12,605) (22,836) Increase (decrease) of previously recorded liabilities (4,477) (3,105) 27,295 Nondeductible compensation 2,623 1,798 654 Officer life insurance 5,555 — — Qualified fringe disallowance 974 — — Acquisition costs — — 696 Stock based compensation 4,999 3,478 8,363 Valuation allowance 347,599 212,252 (8,853) Other (218) (3,441) (11,108) Total income tax expense $ 387,607 $ 77,477 $ 305,987 * Federal statutory rate included in the above table is 21.0%, 21.0% and 32.6%, respectively, for the fiscal years ended February 29, 2020, March 2, 2019 and March 3, 2018. Net loss for fiscal 2020 from continuing operations included income tax expense of $387,607, of which $347,599 relates to establishing a full valuation allowance for federal deferred tax assets and an increase to the valuation allowance for state net deferred tax assets that may not be realized based on the Company's most recent assessment of all available evidence including future projections of taxable income. Net loss for fiscal 2019 from continuing operations included income tax expense of $77,477, of which $212,252 relates to the increase in valuation allowance for federal and state net deferred tax assets that may not be realized based on the Company's future projections of taxable income. Net loss for fiscal 2018 from continuing operations included income tax expense of $305,987, of which $324,765 relates to the federal income tax rate change on the re-measurement of net deferred tax assets pursuant to the Tax Act. Additionally, the Company recorded within state income taxes the net impact of the Pennsylvania tax law change which resulted in a substantial increase to the state net operating loss carryforwards and a corresponding increase to the valuation allowance. The Company recognized tax expense of $7,011, $91,067 and $749,704 within Net loss (income) from discontinued operations, net of tax, in the Statement of Operations in fiscal 2020, fiscal 2019 and fiscal 2018, respectively. The Company’s effective income tax rate from discontinued operations included adjustments to the valuation allowance of $0, $(2,417) and $(32,870 ) for fiscal 2020, fiscal 2019 and fiscal 2018, respectively. The tax effect of temporary differences that gave rise to significant components of deferred tax assets and liabilities consisted of the following at February 29, 2020 and March 2, 2019: 2020 2019 Deferred tax assets: Accounts receivable $ 29,734 $ 36,607 Accrued expenses 99,637 107,356 Liability for lease exit costs 772 37,333 Pension, retirement and other benefits 98,408 87,397 Long-lived assets 303,630 320,561 Operating lease liabilities 903,020 — Credits 35,197 48,884 Net operating losses 1,284,831 1,084,139 Other 654 — Total gross deferred tax assets 2,755,883 1,722,277 Valuation allowance (1,673,119) (1,091,416) Total deferred tax assets 1,082,764 630,861 Deferred tax liabilities: Outside basis difference 5,616 5,392 Inventory 242,238 215,588 Operating lease right-of-use assets 818,230 — Other — 797 Total gross deferred tax liabilities 1,066,084 221,777 Net deferred tax assets $ 16,680 $ 409,084 A reconciliation of the beginning and ending amount of unrecognized tax benefits from continuing operations was as follows: 2020 2019 2018 Unrecognized tax benefits $ 219,839 $ 230,210 $ 8,939 Increases to prior year tax positions 440 155 — Decreases to tax positions in prior periods (6,448) (111) (1,015) Increases to current year tax positions — — 224,408 Settlements — — — Divestitures — (543) (1,607) Lapse of statute of limitations (15,506) (9,872) (515) Unrecognized tax benefits balance $ 198,325 $ 219,839 $ 230,210 The amount of the above unrecognized tax benefits at February 29, 2020, March 2, 2019 and March 3, 2018 which would impact the Company’s effective tax rate, if recognized, was $23,439, $28,482 and $31,377 respectively. Additionally, any impact on the effective rate may be mitigated by the valuation allowance that is remaining against the Company’s net deferred tax assets. The Company believes that it is reasonably possible that a decrease of up to $13,210 in unrecognized tax benefits related to state exposures may be necessary in the next twelve months however, management does not expect the change to have a significant impact on the results of operations or the financial position of the Company. The Company recognizes interest and penalties related to tax contingencies as income tax expense. The Company recognized an expense/(benefit) for interest and penalties in connection with tax matters of $(220), $(769) and $7,058 for fiscal years 2020, 2019 and 2018, respectively. As of February 29, 2020 and March 2, 2019 the total amount of accrued income tax-related interest and penalties was $6,332 and $6,553, respectively. The Company files U.S. federal income tax returns as well as income tax returns in those states where it does business. The consolidated federal income tax returns are closed for examination through fiscal year 2016. However, any net operating losses that were generated in these prior closed years may be subject to examination by the IRS upon utilization. Tax examinations by various state taxing authorities could generally be conducted for a period of three to five years after filing of the respective return. Net Operating Losses and Tax Credits At February 29, 2020, the Company had federal net operating loss carryforwards of approximately $1,152,396. Of these, $900,383 will expire, if not utilized, between fiscal 2029 and 2031. An additional $178,246 will expire, if not utilized, between fiscal 2032 and 2038. At February 29, 2020, the Company had state net operating loss carryforwards of approximately $11,413,504, the majority of which will expire ratably through fiscal 2031; the net tax effect of these carryforwards is $1,046,331 and are reflected in the table above. At February 29, 2020, the Company had federal business tax credit carryforwards of $18,427 the majority of which will expire between 2021 and 2025. In addition to these credits, the Company had an alternative minimum tax credit carryforwards of $6,748 which will be refunded to the Company between fiscal 2021 and 2022. The Company recorded a receivable for the refundable AMT tax credits of $6,748 for fiscal 2020. Valuation Allowances The valuation allowances as of February 29, 2020 and March 2, 2019 apply to the net deferred tax assets of the Company. The Company maintained a valuation allowance of $1,673,119 and $1,091,416 at February 29, 2020 and March 2, 2019, respectively. The primary driver of the increase for fiscal 2020 and fiscal 2019 is to reduce federal and state net deferred tax assets that may not be realized based on the Company's future projections of taxable income. |
Accounts Receivable
Accounts Receivable | 12 Months Ended |
Feb. 29, 2020 | |
Accounts Receivable | |
Accounts Receivable | 8. Accounts Receivable The Company maintains an allowance for doubtful accounts receivable based upon the expected collectability of accounts receivable. The allowance for uncollectible accounts at February 29, 2020 and March 2, 2019 was $12,849 and $13,106 respectively. The Company’s accounts receivable are due primarily from third-party payors (e.g., PBM companies, insurance companies or governmental agencies) and are recorded net of any allowances provided for under the respective plans. Since payments due from third-party payors are sensitive to payment criteria changes and legislative actions, the allowance is reviewed continually and adjusted for accounts deemed uncollectible by management. |
Medicare Part D
Medicare Part D | 12 Months Ended |
Feb. 29, 2020 | |
Medicare Part D | |
Medicare Part D | 9. Medicare Part D The Company offers Medicare Part D benefits through EIC, which has contracted with CMS to be a PDP and, pursuant to the Medicare Prescription Drug, Improvement and Modernization Act of 2003, must be a risk-bearing entity regulated under state insurance laws or similar statutes. EIC is a licensed domestic insurance company under the applicable laws and regulations. Pursuant to these laws and regulations, EIC must file quarterly and annual reports with the National Association of Insurance Commissioners (“NAIC”) and certain state regulators, must maintain certain minimum amounts of capital and surplus under formulas established by certain states and must, in certain circumstances, request and receive the approval of certain state regulators before making dividend payments or other capital distributions to the Company. The Company does not believe these limitations on dividends and distributions materially impact its financial position. EIC is subject to minimum capital and surplus requirements in certain states. The minimum amount of capital and surplus required to satisfy regulatory requirements in these states is $20,195 as of December 31, 2019. EIC was in excess of the minimum required amounts in these states as of February 29, 2020. The Company has recorded estimates of various assets and liabilities arising from its participation in the Medicare Part D program based on information in its claims management and enrollment systems. Significant estimates arising from its participation in this program include: (i) estimates of low-income cost subsidies, reinsurance amounts, and coverage gap discount amounts ultimately payable to CMS based on a detailed claims reconciliation that will occur in the following year; (ii) an estimate of amounts receivable from CMS under a risk-sharing feature of the Medicare Part D program design, referred to as the risk corridor and (iii) estimates for claims that have been reported and are in the process of being paid or contested and for our estimate of claims that have been incurred but have not yet been reported. On February 19, 2020, the Company entered into a receivable purchase agreement (the “Receivable Purchase Agreement”) with Bank of America, N.A. (the “Purchaser”). Pursuant to the terms and conditions set forth in the Receivable Purchase Agreement, the Company sold $501,422 of its calendar 2019 CMS receivable for $484,547, of which $449,949 was received on February 19, 2020. The remaining $34,598, which is included in accounts receivable, net as of February 29, 2020, is payable to the Company, subject to final CMS claim reconciliation adjustments, upon receipt of the final remittance from CMS. In connection therewith, the Company recognized a loss of $16,875, which is included as a component of loss on sale of assets, net. On February 19, 2020, concurrent with the Receivable Purchase Agreement, the Company entered into an indemnity agreement (the “Indemnity Agreement”), whereby the Company has agreed to indemnify, reimburse and hold Purchaser harmless from certain liabilities and expenses actually suffered or incurred by the Purchaser resulting from the occurrence of certain events as specified in the Indemnity Agreement. Based on its evaluation of the Indemnity Agreement, the Company has determined that it is highly unlikely that the events covered under the Indemnity Agreement would occur, and consequently, the Company has not recorded any indemnification liability associated with the Indemnity Agreement. As of February 29, 2020, accrued salaries, wages and other current liabilities included $14,083 of amounts due to CMS resulting from the receipt of the Company’s monthly capitation payment. As of March 2, 2019, accounts receivable, net included $392,400 due from CMS. |
Manufacturer Rebates Receivable
Manufacturer Rebates Receivables | 12 Months Ended |
Feb. 29, 2020 | |
Manufacturer Rebates Receivables | |
Manufacturer Rebates Receivables | 10. Manufacturer Rebates Receivables The Pharmacy Services Segment has manufacturer rebates receivables of $530,451 and $445,200 included in Accounts receivable, net, as of February 29, 2020 and March 2, 2019, respectively. |
Inventory
Inventory | 12 Months Ended |
Feb. 29, 2020 | |
Inventory | |
Inventory | 11. Inventory At February 29, 2020 and March 2, 2019, inventories were $539,640 and $604,444, respectively, lower than the amounts that would have been reported using the first-in, first-out (“FIFO”) cost flow assumption. The Company calculates its FIFO inventory valuation using the retail method for store inventories and the cost method for distribution facility inventories. The Company recorded a LIFO credit for fiscal year 2020 of $64,804, compared to a LIFO charge of $23,354 for fiscal year 2019 and a LIFO credit of $28,827 for fiscal year 2018. During fiscal 2020, 2019 and 2018, a reduction in non-pharmacy inventories resulted in the liquidation of applicable LIFO inventory quantities carried at lower costs in prior years. This LIFO liquidation resulted in a $14,449, $5,884 and $2,707 cost of revenues decrease, with a corresponding reduction to the adjustment to LIFO for fiscal 2020, fiscal 2019 and fiscal 2018, respectively. |
Property, Plant and Equipment
Property, Plant and Equipment | 12 Months Ended |
Feb. 29, 2020 | |
Property, Plant and Equipment | |
Property, Plant and Equipment | 12. Property, Plant and Equipment Following is a summary of property, plant and equipment, including capital lease assets, at February 29, 2020 and March 2, 2019: 2020 2019 Land $ 131,814 $ 139,406 Buildings 513,264 533,580 Leasehold improvements 1,533,729 1,527,371 Equipment 1,774,424 1,765,575 Software 60,035 38,680 Construction in progress 44,063 49,344 4,057,329 4,053,956 Accumulated depreciation (2,841,491) (2,745,442) Property, plant and equipment, net $ 1,215,838 $ 1,308,514 Depreciation expense, which included the depreciation of assets recorded under capital leases, was $224,336, $232,242 and $238,318 in fiscal 2020, 2019 and 2018, respectively. Included in property, plant and equipment was the carrying amount, which approximates fair value, of assets to be disposed of totaling $1,187 and $452 at February 29, 2020 and March 2, 2019, respectively. |
Goodwill and Other Intangible A
Goodwill and Other Intangible Assets | 12 Months Ended |
Feb. 29, 2020 | |
Goodwill and Other Intangible Assets | |
Goodwill and Other Intangible Assets | 13. Goodwill and Other Intangibles Goodwill and indefinitely-lived assets, such as certain trademarks acquired in connection with acquisition transactions, are not amortized, but are instead evaluated for impairment on an annual basis at the end of the fiscal year, or more frequently if events or circumstances indicate it may be more likely than not that the fair value of a reporting unit is less than its carrying amount. If the Company determines that it is more likely than not that the fair value of a reporting unit is less than its carrying amount, including goodwill, the Company performs a quantitative goodwill impairment test. The fair value estimates used in the quantitative impairment test are calculated using an average of the income and market approaches. The income approach is based on the present value of future cash flows of each reporting unit, while the market approach is based on certain multiples of selected guideline public companies or selected guideline transactions. The approaches, which qualify as Level 3 within the fair value hierarchy, incorporate a number of market participant assumptions including future growth rates, discount rates, income tax rates and market activity in assessing fair value and are reporting unit specific. If the carrying amount exceeds the reporting unit’s fair value, the Company recognizes an impairment charge for the amount by which the carrying amount exceeds the reporting unit’s fair value. In addition, the Company considers the income tax effect of any tax deductible goodwill when measuring a goodwill impairment loss. In the fiscal fourth quarter of fiscal 2020, the Company completed a quantitative goodwill impairment assessment and determined after evaluating the results, events and circumstances, that sufficient evidence existed to assert that it is more likely than not that the fair values of the reporting units exceeded their carrying values. Therefore, no goodwill impairment charge was assessed for the fiscal year ended February 29, 2020. In the fiscal second quarter of fiscal 2019, the Company completed a qualitative goodwill impairment assessment, at which time it was determined after evaluating results, events and circumstances that a quantitative assessment was necessary for the Pharmacy Services segment. The quantitative assessment concluded that the carrying amount of the Pharmacy Services segment exceeded its fair value principally due to a decrease in Adjusted EBITDA that was driven by commercial business compression and an increase in SG&A expenses. This resulted in goodwill impairment charges of $312,985 ( $235,698 net of the related income tax benefit) for the fiscal year ended March 2, 2019. As of February 29, 2020 and March 2, 2019, the accumulated impairment losses for the Pharmacy Services segment was $574,712 . Below is a summary of the changes in the carrying amount of goodwill by segment for the fiscal years ended February 29, 2020 and March 2, 2019: Retail Pharmacy Pharmacy Services Total Balance, March 3, 2018 $ 43,492 $ 1,377,628 $ 1,421,120 Goodwill impairment — (312,984) (312,984) Balance, March 2, 2019 43,492 1,064,644 1,108,136 Goodwill impairment — — — Balance, February 29, 2020 $ 43,492 $ 1,064,644 $ 1,108,136 The Company’s intangible assets are primarily finite-lived and amortized over their useful lives. Following is a summary of the Company’s finite-lived and indefinite-lived intangible assets as of February 29, 2020 and March 2, 2019. 2020 2019 Remaining Remaining Weighted Weighted Gross Average Gross Average Carrying Accumulated Amortization Carrying Accumulated Amortization Amount Amortization Net Period Amount Amortization Net Period Favorable leases, non-compete agreements and other(a)(b) $ 186,183 $ (163,575) $ 22,608 3 years $ 370,855 $ (318,503) $ 52,352 7 years Prescription files 950,887 (867,430) 83,457 3 years 919,749 (827,222) 92,527 3 years Customer relationships(a) 388,000 (231,015) 156,985 12 years 388,000 (193,352) 194,648 13 years CMS license 57,500 (10,772) 46,728 21 years 57,500 (8,472) 49,028 22 years Claims adjudication and other developed software 58,985 (39,459) 19,526 3 years 58,985 (31,030) 27,955 4 years Trademarks 20,100 (9,413) 10,687 6 years 20,100 (7,404) 12,696 7 years Backlog 11,500 (11,500) — 0 years 11,500 (11,500) — 0 years Total finite $ 1,673,155 $ (1,333,164) 339,991 $ 1,826,689 $ (1,397,483) $ 429,206 Trademarks 19,500 — 19,500 Indefinite 19,500 — 19,500 Indefinite Total $ 1,692,655 $ (1,333,164) $ 359,491 $ 1,846,189 $ (1,397,483) $ 448,706 (a) Amortized on an accelerated basis which is determined based on the remaining useful economic lives of the customer relationships that are expected to contribute directly or indirectly to future cash flows. (b) Favorable leases were reclassified into operating lease right-of-use assets upon the adoption of ASU 2016-02, Leases (Topic 842) . During fiscal 2019, the Company has recorded an impairment charge to reduce the book value of customer relationships by $48,205 (gross carrying amount of $77,000 less accumulated amortization of $28,795), and indefinite lived trademarks by $14,000, both of which charges are included within goodwill and intangible asset impairment charges within the consolidated statement of operations. In connection with the Company’s RxEvolution initiatives as previously announced on March 16, 2020, it is in process of rebranding its EnvisionRxOptions and MedTrak subsidiaries to its new brand name, Elixir. As of February 29, 2020, Other Intangibles, net included $30,187 relating to the historical brand names, composed of $10,687 of finite lived and $19,500 of indefinite lived Trademarks. Upon the implementation of the rebranding initiatives during fiscal 2021, the Company will subject these assets to the appropriate impairment test. Also included in other non-current liabilities as of February 29, 2020 and March 2, 2019 are unfavorable lease intangibles with a net carrying amount of $0 and $14,763, respectively. In connection with the Adoption of ASU 2016-02 , Leases (Topic 842) Amortization expense for these intangible assets and liabilities was $103,941, $125,640 and $147,739 for fiscal 2020, 2019 and 2018, respectively. The anticipated annual amortization expense for these intangible assets and liabilities is 2021—$84,107; 2022—$63,396; 2023—$48,262; 2024—$34,623 and 2025—$23,319. |
Accrued Salaries, Wages and Oth
Accrued Salaries, Wages and Other Current Liabilities | 12 Months Ended |
Feb. 29, 2020 | |
Accrued Salaries, Wages and Other Current Liabilities | |
Accrued Salaries, Wages and Other Current Liabilities | 14. Accrued Salaries, Wages and Other Current Liabilities Accrued salaries, wages and other current liabilities consisted of the following at February 29, 2020 and March 2, 2019: 2020 2019 Accrued wages, benefits and other personnel costs $ 254,773 $ 302,025 Accrued interest 12,073 13,991 Accrued sales and other taxes payable 76,816 80,708 Accrued store expense 97,801 143,053 Other 304,855 268,662 $ 746,318 $ 808,439 |
Indebtedness and Credit Agreeme
Indebtedness and Credit Agreements | 12 Months Ended |
Feb. 29, 2020 | |
Indebtedness and Credit Agreements | |
Indebtedness and Credit Agreements | 15. Indebtedness and Credit Agreement Following is a summary of indebtedness and lease financing obligations at February 29, 2020 and March 2, 2019: 2020 2019 Secured Debt: Senior secured revolving credit facility due December 2023 ($650,000 and $875,000 face value less unamortized debt issuance costs of $19,167 and $24,069) $ 630,833 $ 850,931 FILO term loan due December 2023 ($450,000 face value less unamortized debt issuance costs of $3,046 and $3,918) 446,954 446,082 1,077,787 1,297,013 Second Lien Secured Debt: 7.5% senior notes due July 2025 ($600,000 and $0 face value less unamortized debt issuance costs of $10,927 and $0) 589,073 — 589,073 — Guaranteed Unsecured Debt: 6.125% senior notes due April 2023 ($1,153,490 and $1,753,490 face value less unamortized debt issuance costs of $8,430 and $16,982) 1,145,060 1,736,508 1,145,060 1,736,508 Unguaranteed Unsecured Debt: 7.7% notes due February 2027 ($237,386 and $295,000 face value less unamortized debt issuance costs of $908 and $1,295) 236,478 293,705 6.875% fixed-rate senior notes due December 2028 ($29,001 and $128,000 face value less unamortized debt issuance costs of $131 and $642) 28,870 127,358 265,348 421,063 Lease financing obligations 28,166 40,176 Total debt 3,105,434 3,494,760 Current maturities of long-term debt and lease financing obligations (8,840) (16,111) Long-term debt and lease financing obligations, less current maturities $ 3,096,594 $ 3,478,649 Credit Facility On December 20, 2018, the Company entered into a senior secured credit agreement (as amended by the First Amendment to Credit Agreement, dated as of January 6, 2020, the “Credit Agreement”), consisting of a $2,700,000 senior secured asset-based revolving credit facility (“Senior Secured Revolving Credit Facility”) and a $450,000 “first-in, last out” senior secured term loan facility (“Senior Secured Term Loan,” and together with the Senior Secured Revolving Credit Facility, collectively, the “Existing Facilities”). The Company used proceeds from the Existing Facilities to refinance its prior $2,700,000 existing credit agreement (the “Old Facility”). The Existing Facilities extend the Company’s debt maturity profile and provide additional liquidity. Borrowings under the Senior Secured Revolving Credit Facility bear interest at a rate per annum between LIBOR plus 1.25% and LIBOR plus 1.75% based upon the Average ABL Availability (as defined in the Credit Agreement). Borrowings under the Senior Secured Term Loan bear interest at a rate per annum of LIBOR plus 3.00%. The Company is required to pay fees between 0.250% and 0.375% per annum on the daily unused amount of the commitments under the Senior Secured Revolving Credit Facility, depending on Average ABL Availability. The Company’s ability to borrow under the Senior Secured Revolving Credit Facility is based upon a specified borrowing base consisting of accounts receivable, inventory and prescription files. At February 29, 2020, the Company had $1,100,000 of borrowings outstanding under the Existing Facilities and had letters of credit outstanding against the Senior Secured Revolving Credit Facility of $110,013 which resulted in additional borrowing capacity under the Senior Secured Revolving Credit Facility of $1,939,987. If at any time the total credit exposure outstanding under our Existing Facilities and the principal amount of our other senior obligations exceed the borrowing base, the Company will be required to make certain other mandatory prepayments to eliminate such shortfall. The Credit Agreement restricts the Company and all of its subsidiaries that guarantee its obligations under the Existing Facilities, the secured guaranteed notes and unsecured guaranteed notes (collectively, the “Subsidiary Guarantors”) from accumulating cash on hand in excess of $200,000 at any time when revolving loans are outstanding (not including cash located in our store and lockbox deposit accounts and cash necessary to cover our current liabilities). The Credit Agreement also states that if at any time (other than following the exercise of remedies or acceleration of any senior obligations or second priority debt and receipt of a triggering notice by the senior collateral agent from a representative of the senior obligations or the second priority debt) either (i) an event of default exists under the Existing Facilities or (ii) the sum of the Company’s borrowing capacity under our Senior Secured Revolving Credit Facility and certain amounts held on deposit with the senior collateral agent in a concentration account is less than $275.0 million for three consecutive business days or less than or equal to $200.0 million on any day (a “cash sweep period”), the funds in the Company’s deposit accounts will be swept to a concentration account with the senior collateral agent and will be applied first to repay outstanding revolving loans under the Existing Facilities, and then held as collateral for the senior obligations until such cash sweep period is rescinded pursuant to the terms of our Existing Facilities. The Company’s obligations under the Existing Facilities and the Subsidiary Guarantors’ obligations under the related guarantees are secured by (i) a first-priority lien on all of the Subsidiary Guarantors’ cash and cash equivalents, accounts receivable, inventory, prescription files (including eligible script lists), intellectual property (prior to the repayment of the Senior Secured Term Loan) and certain other assets arising therefrom or related thereto (including substantially all of their deposit accounts, collectively, the “ABL priority collateral”) and (ii) a second-priority lien on all of the Subsidiary Guarantors’ equipment, fixtures, investment property (other than equity interests in subsidiaries), intellectual property (following the repayment of the Senior Secured Term Loan) and all other assets that do not constitute ABL priority collateral, in each case, subject to customary exceptions and limitations. The Credit Agreement allows the Company to have outstanding, at any time, up to an aggregate principal amount of $1,500,000 in secured second priority debt, split-priority debt, unsecured debt and disqualified preferred stock in addition to borrowings under the Existing Facilities and other existing indebtedness, provided that not in excess of $750,000 of such secured second priority debt, split-priority debt, unsecured debt and disqualified preferred stock shall mature or require scheduled payments of principal prior to 90 days after the latest of (i) the fifth anniversary of the effectiveness of the Existing Facilities and (ii) the latest maturity date of any Term Loan or Other Revolving Commitment (each as defined in the Credit Agreement) (excluding bridge facilities allowing extensions on customary terms to at least the date that is 90 days after such date). Subject to the limitations described in clauses (i) and (ii) of the immediately preceding sentence, the Credit Agreement 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 Credit Agreement) 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 Credit Agreement also contains certain restrictions on the amount of secured first priority debt the Company is able to incur. The Credit Agreement also allows for the voluntary repurchase of any debt or other convertible debt, so long as the Existing Facilities are not in default and the Company maintains availability under its revolver of more than $365,000. The Credit Agreement has a financial covenant that requires the Company to maintain a minimum fixed charge coverage ratio of 1.00 to 1.00 (i) on any date on which availability under the Senior Secured Revolving Credit Facility is less than $200,000 or (ii) on the third consecutive business day on which availability under the Senior Secured Revolving Credit Facility is less than $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 revolver is equal to or greater than $250,000. As of February 29, 2020, the Company’s fixed charge coverage ratio was greater than 1.00 to 1.00 and the Company was in compliance with the Credit Agreement’s financial covenant. The Credit Agreement also contains covenants which place restrictions on the incurrence of debt, the payments of dividends, the making of investments, sale of assets, mergers and acquisitions and the granting of liens. The Credit Agreement provides for customary events of default including nonpayment, misrepresentation, breach of covenants and bankruptcy. It is also an event of default if the Company fails to make any required payment on debt having a principal amount in excess of $50.0 million or any event occurs that enables, or which with the giving of notice or the lapse of time would enable, the holder of such debt to accelerate the maturity or require the repayment, repurchase, redemption or defeasance of such debt. With the exception of EIC, substantially all of Rite Aid Corporation’s 100% owned subsidiaries guarantee the obligations under the Existing Facilities, the secured guaranteed notes and unsecured guaranteed notes. The Company’s obligations under the Existing Facilities and the Subsidiary Guarantors’ obligations under the related guarantees are secured by (i) a first-priority lien on all of the Subsidiary Guarantors’ cash and cash equivalents, accounts receivable, inventory, prescription files (including eligible script lists), intellectual property (prior to the repayment of the Senior Secured Term Loan) and certain other assets arising therefrom or related thereto (including substantially all of their deposit accounts, collectively, the “ABL priority collateral”) and (ii) a second-priority lien on all of the Subsidiary Guarantors’ equipment, fixtures, investment property (other than equity interests in subsidiaries), intellectual property (following the repayment of the Senior Secured Term Loan) and all other assets that do not constitute ABL priority collateral, in each case, subject to customary exceptions and limitations. The subsidiary guarantees related to the Company’s Existing Facilities, the 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. Other than EIC, the subsidiaries, including joint ventures, that do not guarantee the Existing Facilities and applicable notes, are minor. As such, condensed consolidating financial information for the Company, its guaranteeing subsidiaries and non-guaranteeing subsidiaries is presented for those periods subsequent to the acquisition of EnvisionRx. See Note 24 “Guarantor and Non-Guarantor Condensed Consolidating Financial Information” for additional disclosure. Fiscal 2019 and 2020 Transactions During January 2018, the Company used proceeds from the Asset Sale to repay and retire all of its outstanding second lien $470,000 tranche 1 term loan and $500,000 tranche 2 term loan principal (the “Second Lien Term Loan Prepayment”). During February 2018, the Company reduced the borrowing capacity on its Old Facility from $3,700,000 to $3,000,000 (which was subsequently further reduced as described below). In connection with the transactions, the Company recorded a loss on debt retirement of $8,180, which included interest and unamortized debt issuance costs. The debt repayment and related loss on debt retirement is included in the results of operations and cash flows of discontinued operations. On February 27, 2018, the Company announced that it had commenced an offer to purchase up to $900,000 of the outstanding 9.25% senior notes due 2020 (the “9.25% Notes”), the 6.75% senior notes due 2021 (the “6.75% Notes”) and the 6.125% senior notes due 2023 (the “6.125% Notes”), pursuant to the asset sale provisions of the indentures of such notes. On March 29, 2018, the Company accepted for payment, pursuant to its offer to purchase, $3,454 principal amount of the 9.25% Notes, representing 0.38% of the outstanding principal amount of the 9.25% Notes, $3,471 principal amount of the 6.75% Notes, representing 0.43% of the outstanding principal amount of the 6.75% Notes, and $41,751 principal amount of the 6.125% Notes, representing 2.32% of the outstanding principal amount of the 6.125% Notes. In connection therewith, the Company recorded a loss on debt retirement of $49 which included unamortized debt issuance costs, partially offset by unamortized discount. The debt repayment and related loss on debt retirement is included in the results of operations and cash flows of discontinued operations. The debt repayment and related loss on debt retirement of $498 for the 6.125% Notes is included in the results of operations and cash flows of continuing operations. On March 13, 2018, the Company issued a notice of redemption for all of the 9.25% Notes that were outstanding on April 12, 2018, pursuant to the terms of the indenture of the 9.25% Notes. On April 12, 2018, the Company redeemed 100% of the remaining outstanding 9.25% Notes. In connection therewith, the Company recorded a loss on debt retirement of $3,422 which included unamortized debt issuance costs, partially offset by unamortized discount. The debt repayment and related loss on debt retirement is included in the results of operations and cash flows of discontinued operations. On April 19, 2018, the Company announced that it had commenced an offer to purchase up to $700,000 of its outstanding 6.75% Notes and its 6.125% Notes pursuant to the asset sale provisions of such indentures. On May 21, 2018, the Company accepted for payment, pursuant to its offer to purchase, $1,360 aggregate principal amount of the 6.75% Notes and $4,759 aggregate principal amount of the 6.125% Notes. The debt repayment and related loss on debt retirement of $8 for the 6.75% Notes is included in the results of operations and cash flows of discontinued operations. The debt repayment and related loss on debt retirement of $56 for the 6.125% Notes is included in the results of operations and cash flows of continuing operations. On April 29, 2018, the Company further reduced the borrowing capacity on its Old Facility from $3,000,000 to $2,700,000. In connection therewith, the Company recorded a loss on debt retirement of $1,091, which included unamortized debt issuance costs. The loss on debt retirement is included in the results of operations and cash flows of discontinued operations. On June 25, 2018, the Company redeemed the remaining $805,169 of its 6.75% Notes, which resulted in a loss on debt retirement of $18,075. The loss on debt retirement is included in the results of operations and cash flows of discontinued operations. On March 15, 2019, the Company entered into a Cap, which has been assigned to the variable interest rate payments on the first $650,000 notional amount of variable rate indebtedness. The Cap has an effective date of March 21, 2019 and expires on March 21, 2021. The Cap provides the Company with interest rate protection in the event that LIBOR increases above 2.75%. On October 11, 2019, the Company completed a privately negotiated purchase from a noteholder and its affiliated funds of $84,097 aggregate principal amount of the 7.70% Notes and 6.875% Notes for $51,300. In connection therewith, the Company recorded a gain on debt retirement of $32,416, which included unamortized debt issuance costs. The debt repayment and related gain on debt retirement is included in the results of operations and cash flows of continuing operations. On October 15, 2019, the Company commenced an offer to purchase up to $100,000 of its outstanding 7.70% Notes and its 6.875% Notes. In November 2019, the Company accepted for payment $18,075 aggregate principal amount of the 7.70% Notes and $39,441 aggregate principal amount of the 6.875% Notes for $38,392. In connection therewith, the Company recorded a gain on debt retirement of $18,510, which included unamortized debt issuance costs. The debt repayment and related gain on debt retirement is included in the results of operations and cash flows of continuing operations. During November 2019, the Company made additional purchases of $15,000 aggregate principal amount of the 7.70% Notes for $10,012. In connection therewith, the Company recorded a gain on debt retirement of $4,766, which included unamortized debt issuance costs. The debt repayment and related gain on debt retirement is included in the results of operations and cash flows of continuing operations On January 6, 2020, the Company commenced an offer to exchange up to $600,000 aggregate principal amount of the outstanding 6.125% Senior Notes due 2023 for newly issued 7.500% Senior Secured Notes due 2025. On February 5, 2020, the Company announced that the exchange offer was oversubscribed and accepted for payment $600,000 aggregate principal amount of the 6.125% Senior Notes due 2023 in exchange for newly issued 7.500% Senior Secured Notes due 2025. The Company accounted for the exchange as a debt modification and accordingly did not record a loss on debt retirement. The 7.500% Senior Secured Notes due 2025 mature on July 1, 2025, and are guaranteed on a senior secured basis by the same Subsidiary Guarantors that guarantee the Existing Facilities and the 6.125% Senior Notes due 2023. The 7.500% Senior Secured Notes due 2025 and the obligations under the related guarantees are secured by (i) a first-priority lien on all of the Subsidiary Guarantors’ equipment, fixtures, investment property (other than equity interests in subsidiaries), intellectual property (following the repayment of the Senior Secured Term Loan) and other collateral to the extent it does not constitute ABL priority collateral (as defined below), and (ii) a second-priority lien on all of the Subsidiary Guarantors’ cash and cash equivalents, accounts receivables, payment intangibles, inventory, prescription files (including eligible script lists) and, intellectual property (prior to the repayment of the Senior Secured Term Loan (collectively, the “ABL priority collateral”), which, in each cash, also secure the Existing Facilities. On February 19, 2020, the Company’s wholly-owned subsidiary, Envision Insurance Company, entered into a receivable purchase agreement with Bank of America, N.A. and Bank of America, N.A. purchased from Envision Insurance Company its right, title and interest in the 2019 Medicare Part D final reconciliation payment in the amount of $501,422 anticipated to be paid by the Centers for Medicare & Medicaid Services, an agency within CMS, to Envision Insurance Company on October 30, 2020. On the closing date, the Company realized net cash proceeds of $449,949. Interest Rates and Maturities The annual weighted average interest rate on the Company’s indebtedness was 5.7%, 5.6% and 7.1% for fiscal 2020, 2019 and 2018, respectively. The aggregate annual principal payments of long-term debt for the five succeeding fiscal years are as follows: 2021—$0; 2022—$0; 2023—$0; 2024—$2,253,490 and $866,387 in 2025 and thereafter. These aggregate annual principal payments of long-term debt assume that the Company has not repaid or refinanced its existing 6.125% Senior Notes due 2023 prior to December 31, 2022. |
Leases
Leases | 12 Months Ended |
Feb. 29, 2020 | |
Leases | |
Leases | 16. Leases The Company leases most of its retail stores and certain distribution facilities under noncancellable operating and finance leases, most of which have initial lease terms ranging from 5 to 22 years. The Company also leases certain of its equipment and other assets under noncancellable operating leases with initial terms ranging from 3 to 10 years. In addition to minimum rental payments, certain store leases require additional payments based on sales volume, as well as reimbursements for taxes, maintenance and insurance. Most leases contain renewal options, certain of which involve rent increases. The following table is a summary of the Company’s components of net lease cost for the year ended February 29, 2020: Year Ended February 29, 2020 Operating lease cost $ 653,803 Financing lease cost: Amortization of right-of-use asset 5,722 Interest on long-term finance lease liabilities 3,276 Total finance lease costs $ 8,998 Short-term lease costs 1,160 Variable lease costs 168,849 Less: sublease income (20,930) Net lease cost $ 811,880 Supplemental cash flow information related to leases for the year ended February 29, 2020: Year Ended February 29, 2020 Cash paid for amounts included in the measurement of lease liabilities: Operating cash flows paid for operating leases $ 641,709 Operating cash flows paid for interest portion of finance leases 3,276 Financing cash flows paid for principal portion of finance leases 6,313 Right-of-use assets obtained in exchange for lease obligations: Operating leases 365,192 Finance leases — Supplemental balance sheet information related to leases as of February 29, 2020 (in thousands, except lease term and discount rate): February 29, 2020 Operating leases: Operating lease right-of-use asset $ 2,903,256 Short-term operating lease liabilities $ 490,161 Long-term operating lease liabilities 2,710,347 Total operating lease liabilities $ 3,200,508 Finance leases: Property, plant and equipment, net $ 19,904 Current maturities of long-term debt and lease financing obligations $ 8,840 Lease financing obligations, less current maturities 19,326 Total finance lease liabilities $ 28,166 Weighted average remaining lease term Operating leases 7.8 Finance leases 8.9 Weighted average discount rate Operating leases 6.1 % Finance leases 10.2 % As a result of the Sale to WBA and the related Amended and Restated Asset Purchase Agreement, the Company has lease guarantee obligations related to 1,393 former stores. The Company is only obligated to pay for the lease guarantees in the event that WBA fails to perform under the lease agreements, as WBA is the primary obligor. The following table summarizes the maturity of lease liabilities under finance and operating leases as of February 29, 2020: February 29, 2020 Finance Operating Fiscal year Leases Leases (1) Total 2021 $ 11,307 $ 662,644 $ 673,951 2022 4,101 609,984 614,085 2023 3,946 556,433 560,379 2024 3,662 493,933 497,595 2025 3,402 395,822 399,224 Thereafter 16,660 1,314,774 1,331,434 Total lease payments 43,078 4,033,590 4,076,668 Less: imputed interest (14,912) (833,082) (847,994) Total lease liabilities $ 28,166 $ 3,200,508 $ 3,228,674 (1) Sale-Leaseback Transactions: During the year ended February 29, 2020, the Company sold one owned operating store to an independent third party. Net proceeds from the sale were $4,879. Concurrent with this sale, the Company entered into an agreement to lease the store back from the purchaser over a minimum lease term of 10 years . The Company accounted for this lease as an operating lease right-of-use asset and a corresponding operating lease liability in accordance with the Lease Standard. The transaction resulted in a gain of $4,149 Prior year disclosure before the adoption of ASU 2016-02: Total rental expense, net of sublease income of $4,509 and $4,682, was $626,166 and $628,511 in fiscal 2019 and fiscal 2018, respectively. These amounts include contingent rentals of $7,084 and $8,339 in fiscal 2019 and 2018, respectively. Following are the minimum lease payments for all properties under a lease agreement that will have to be made in each of the years indicated based on non-cancelable leases in effect as of March 2, 2019: Lease Financing Operating Fiscal year Obligations Leases 2020 $ 19,300 $ 687,412 2021 4,811 610,874 2022 4,588 545,863 2023 4,383 490,864 2024 4,042 431,714 Later years 20,470 1,541,408 Total minimum lease payments 57,594 $ 4,308,135 Amount representing interest (17,418) Present value of minimum lease payments $ 40,176 |
Stock Options and Stock Awards
Stock Options and Stock Awards | 12 Months Ended |
Feb. 29, 2020 | |
Stock Option and Stock Award Plans | |
Stock Options and Stock Awards | 17. Stock Option and Stock Award Plans The Company recognizes share-based compensation expense in accordance with ASC 718, “Compensation—Stock Compensation.” Expense is recognized over the requisite service period of the award, net of an estimate for the impact of forfeitures. Operating results for fiscal 2020, 2019 and 2018 include $16,087, $12,115 and $25,793 of compensation costs related to the Company’s stock-based compensation arrangements. In June 2010, the stockholders of Rite Aid Corporation approved the adoption of the Rite Aid Corporation 2010 Omnibus Equity Plan. Under the plan, 1,750 shares of Rite Aid common stock are available for granting of restricted stock, stock options, phantom stock, stock bonus awards and other equity based awards at the discretion of the Board of Directors. The adoption of the 2010 Omnibus Equity Plan became effective on June 23, 2010. In June 2012, the stockholders of Rite Aid Corporation approved the adoption of the Rite Aid Corporation 2012 Omnibus Equity Plan. Under the plan, 1,425 shares of Rite Aid common stock are available for granting of restricted stock, stock options, phantom stock, stock bonus awards and other equity based awards at the discretion of the Board of Directors. The adoption of the 2012 Omnibus Equity Plan became effective on June 21, 2012. In June 2014, the stockholders of Rite Aid Corporation approved the adoption of the Rite Aid Corporation 2014 Omnibus Equity Plan. Under the plan, 2,900 shares of Rite Aid common stock plus any shares of common stock remaining available for grant under the Rite Aid Corporation 2010 Omnibus Equity Plan and the Rite Aid Corporation 2012 Omnibus Equity Plan as of the effective date of the 2014 Plan (provided that no more than 1,250 shares may be granted as incentive stock options) are available for granting of restricted stock, stock options, phantom stock, stock bonus awards and other equity based awards at the discretion of the Board of Directors. The adoption of the 2014 Omnibus Equity Plan became effective on June 19, 2014. All of the plans provide for the Board of Directors (or at its election, the Compensation Committee) to determine both when and in what manner options may be exercised; however, it may not be more than 10 years from the date of grant. All of the plans provide that stock options may be granted at prices that are not less than the fair market value of a share of common stock on the date of grant. The aggregate number of remaining shares authorized for issuance for all plans is 580 as of February 29, 2020. Stock Options The Company determines the fair value of stock options issued on the date of grant using the Black-Scholes-Merton option-pricing model. The following weighted average assumptions were used for options granted in fiscal 2020, 2019 and 2018: 2020 2019 2018 Expected stock price volatility(1) 56 % N/A 58 % Expected dividend yield(2) 0.0 % N/A 0.0 % Risk-free interest rate(3) 1.5 % N/A 1.9 % Expected option life(4) 5.5 years N/A 5.5 years (1) The expected volatility is based on the historical volatility of the stock price over the most recent period equal to expected life of the option. (2) The dividend rate that will be paid out on the underlying shares during the expected term of the options. The Company does not currently pay dividends on its common stock, as such, the dividend rate is assumed to be 0%. (3) The risk free interest rate is equal to the rate available on United States Treasury zero-coupon issues as of the grant date of the option with a remaining term equal to the expected term. (4) The period of time for which the option is expected to be outstanding. The Company analyzed historical exercise behavior to estimate the life. The weighted average fair value of options granted during fiscal 2020, 2019 and 2018 was $3.66, $0.00 and $21.60, respectively. Following is a summary of stock option transactions for the fiscal years ended February 29, 2020, March 2, 2019 and March 3, 2018: Weighted Weighted Average Average Exercise Remaining Aggregate Price Contractual Intrinsic Shares Per Share Term Value Outstanding at March 4, 2017 1,694 $ 54.93 Granted 50 41.00 Exercised (241) 24.05 Cancelled (160) 126.61 Outstanding at March 3, 2018 1,343 $ 51.42 Granted — N/A Exercised (99) 23.07 Cancelled (208) 71.07 Outstanding at March 2, 2019 1,036 $ 50.15 Granted 612 7.21 Exercised — N/A Cancelled (353) 48.56 Outstanding at February 29, 2020 1,295 $ 30.29 5.61 $ 3,920 Vested or expected to vest at February 29, 2020 1,295 $ 30.29 5.61 $ 3,920 Exercisable at February 29, 2020 683 $ 50.97 2.14 $ 0 As of February 29, 2020, there was $1,916 of total unrecognized pre-tax compensation costs related to unvested stock options, net of forfeitures. These costs are expected to be recognized over a weighted average period of 3.24 years. Cash received from stock option exercises for fiscal 2020, 2019 and 2018 was $0, $2,294 and $5,796, respectively. The income tax benefit from stock options for fiscal 2020, 2019 and 2018 was $ 0, $7 and $10, respectively. The total intrinsic value of stock options exercised for fiscal 2020, 2019 and 2018 was $0, $726 and $3,032, respectively. Typically, stock options granted vest, and are subsequently exercisable in equal annual installments over a four-year period for employees. Restricted Stock The Company provides restricted stock grants to associates under plans approved by the stockholders. Shares awarded under the plans typically vest in equal annual installments over a three-year period. Unvested shares are forfeited upon termination of employment. Following is a summary of restricted stock transactions for the fiscal years ended February 29, 2020, March 2, 2019 and March 3, 2018: Weighted Average Grant Date Shares Fair Value Balance at March 4, 2017 291 $ 157.35 Granted 693 56.44 Vested (194) 160.61 Cancelled (179) 73.95 Balance at March 3, 2018 611 $ 66.34 Granted 700 16.05 Vested (215) 76.99 Cancelled (88) 72.87 Balance at March 2, 2019 1,008 $ 28.60 Granted 1,402 8.40 Vested (695) 28.59 Cancelled (462) 16.76 Balance at February 29, 2020 1,253 $ 10.32 At February 29, 2020, there was $10,396 of total unrecognized pre-tax compensation costs related to unvested restricted stock grants, net of forfeitures. These costs are expected to be recognized over a weighted average period of 1.91 years. The total fair value of restricted stock vested during fiscal years 2020, 2019 and 2018 was $19,846, $16,519 and $31,125, respectively. Performance Based Incentive Plan Beginning in fiscal 2015, the Company provided certain of its associates with performance based incentive plans under which the associates will receive a certain number of shares of the Company’s common stock or cash based on the Company meeting certain financial and performance goals. If such goals are not met, no stock-based compensation expense is recognized and any recognized stock-based compensation expense is reversed. The Company incurred $(461), $(1,084) and $4,122 related to these performance based incentive plans for fiscal 2020, 2019 and 2018, respectively, which is recorded as a component of stock-based compensation expense. |
Retirement Plans
Retirement Plans | 12 Months Ended |
Feb. 29, 2020 | |
Defined Benefit Plans and Other Postretirement Benefit Plans Disclosures [Abstract] | |
Retirement Plans | 18. Retirement Plans Defined Contribution Plans The Company and its subsidiaries sponsor several retirement plans that are primarily 401(k) defined contribution plans covering nonunion associates and certain union associates. The Company does not contribute to all of the plans. In accordance with those plan provisions, the Company matches 100% of a participant’s pretax payroll contributions, up to a maximum of 3% of such participant’s pretax annual compensation. Thereafter, the Company will match 50% of the participant’s additional pretax payroll contributions, up to a maximum of 2% of such participant’s additional pretax annual compensation. Total expense recognized for the above plans was $42,746 in fiscal 2020, $44,564 in fiscal 2019 and $67,949 in fiscal 2018. The Company sponsored a Supplemental Executive Retirement Plan (“SERP”) for its officers, based on an account-based plan design, that was subject to a five year graduated vesting schedule. On February 25, 2019, the SERP was terminated and additional allocations were discontinued and all prior benefits under the program became fully vested. During fiscal 2020, participant benefits under this program were paid in full. The expense recognized for the SERP was $3,871 in fiscal 2020, $4,913 in fiscal 2019 and $12,426 in fiscal 2018. Defined Benefit Plans The Company and its subsidiaries also sponsor a qualified defined benefit pension plan that requires benefits to be paid to eligible associates based upon years of service and, in some cases, eligible compensation. The Company’s funding policy for The Rite Aid Pension Plan (the “Defined Benefit Pension Plan”) is to contribute the minimum amount required by the Employee Retirement Income Security Act of 1974. However, the Company may, at its sole discretion, contribute additional funds to the plan. The Company made contributions of $0 in fiscal 2020, $2,715 in fiscal 2019 and $9,023 in fiscal 2018. Net periodic pension expense and other changes recognized in other comprehensive income for the defined benefit pension plans included the following components: Defined Benefit Pension Plan 2020 2019 2018 Service cost $ 462 $ 597 $ 1,212 Interest cost 6,186 6,159 6,340 Expected return on plan assets (4,793) (5,673) (4,525) Amortization of unrecognized net loss 1,695 1,769 3,393 Net periodic pension expense $ 3,550 $ 2,852 $ 6,420 Other changes recognized in other comprehensive loss: Unrecognized net (gain) loss arising during period $ 19,046 $ (3,486) $ (8,704) Amortization of unrecognized net (loss) gain (1,695) (1,769) (3,393) Net amount recognized in other comprehensive loss 17,351 (5,255) (12,097) Net amount recognized in pension expense and other comprehensive loss $ 20,901 $ (2,403) $ (5,677) The table below sets forth reconciliation from the beginning of the year for both the benefit obligation and plan assets of the Company’s defined benefit plans, as well as the funded status and amounts recognized in the Company’s balance sheet as of February 29, 2020 and March 2, 2019: Defined Benefit Pension Plan 2020 2019 Change in benefit obligations: Benefit obligation at end of prior year $ 150,705 $ 161,851 Service cost 462 597 Interest cost 6,186 6,159 Distributions (7,525) (8,816) Actuarial loss (gain) 29,076 (9,086) Benefit obligation at end of year $ 178,904 $ 150,705 Change in plan assets: Fair value of plan assets at beginning of year $ 124,832 $ 130,860 Employer contributions — 2,715 Actual return on plan assets 14,823 72 Distributions (including expenses paid by the plan) (7,525) (8,815) Fair value of plan assets at end of year $ 132,130 $ 124,832 Funded status $ (46,774) $ (25,873) Net amount recognized $ (46,774) $ (25,873) Amounts recognized in consolidated balance sheets consisted of: Accrued pension liability (46,774) (25,873) Net amount recognized $ (46,774) $ (25,873) Amounts recognized in accumulated other comprehensive loss consist of: Net actuarial loss $ (44,760) $ (27,409) Amount recognized $ (44,760) $ (27,409) The estimated net actuarial loss and prior service cost amounts that will be amortized from accumulated other comprehensive loss into net periodic pension expense in fiscal 2021 are $3,646 and $0, respectively. The accumulated benefit obligation for the defined benefit pension plan was $178,904 and $150,705 as of February 29, 2020 and March 2, 2019, respectively. The significant actuarial assumptions used for all defined benefit plans to determine the benefit obligation as of February 29, 2020, March 2, 2019 and March 3, 2018 were as follows: Defined Benefit Pension Plan 2020 2019 2018 Discount rate 2.75 % 4.25 % 4.00 % Rate of increase in future compensation levels N/A N/A N/A Expected long-term rate of return on plan assets 6.00 % 6.25 % 6.25 % Weighted average assumptions used to determine net cost for the fiscal years ended February 29, 2020, March 2, 2019 and March 3, 2018 were: Defined Benefit Pension Plan 2020 2019 2018 Discount rate 4.25 % 4.00 % 4.00 % Rate of increase in future compensation levels N/A N/A N/A Expected long-term rate of return on plan assets 6.25 % 6.25 % 6.50 % To develop the expected long-term rate of return on assets assumption, the Company considered the historical returns and the future expectations for returns for each asset class, as well as the target asset allocation of the pension portfolio. This resulted in the selection of the 6.25% long-term rate of return on plan assets assumption for fiscal 2020, 2019 and 2018. The Company’s pension plan asset allocations at February 29, 2020 and March 2, 2019 by asset category were as follows: February 29, March 2, 2020 2019 Equity securities 47 % 52 % Fixed income securities 53 % 48 % Total 100 % 100 % The investment objectives of the Defined Benefit Pension Plan, the only defined benefit plan with assets, are to: ● Achieve a rate of return on investments that exceeds inflation over a full market cycle and is consistent with actuarial assumptions; ● Balance the correlation between assets and liabilities by diversifying the portfolio among various asset classes to address return risk and interest rate risk; ● Balance the allocation of assets between the investment managers to minimize concentration risk; ● Maintain liquidity in the portfolio sufficient to meet plan obligations as they come due; and ● Control administrative and management costs. The asset allocation established for the pension investment program reflects the risk tolerance of the Company, as determined by: ● the current and anticipated financial strength of the Company; ● the funded status of the plan; and ● plan liabilities. Investments in both the equity and fixed income markets will be maintained, recognizing that historical results indicate that equities (primarily common stocks) have higher expected returns than fixed income investments. It is also recognized that the correlation between assets and liabilities must be balanced to address higher volatility of equity investments (return risk) and interest rate risk. The following targets are to be applied to the allocation of plan assets. Target Category Allocation Equity securities 52 % Fixed income securities 48 % Total 100 % On March 27, 2020, in an effort to mitigate the economic impact of COVID-19, the President of the United States signed the Coronavirus Aid, Relief, and Economic Security Act (“CARES”) into law. While the Company expects to contribute $6,330 to the Defined Benefit Pension Plan during fiscal 2021, it is still evaluating the impact of the CARES act on its fiscal 2021 contributions. Short Term Investments Short term investments, which is a short term investment fund, and is considered cash and cash equivalents, is classified within Level 2 of the valuation hierarchy due to the lack of an active market for trading. Common and Collective Trusts Common collective trust funds are stated at fair value as determined by the issuer of the common collective trust funds based on the net asset value (“NAV”) of the underlying investments in accordance with ASC 820. There are generally no restrictions on redemptions from these funds and no unfunded commitments to invest. In accordance with ASC subtopic 820-10, certain investments that were measured at NAV per share (or its equivalent) have not been classified in the fair value hierarchy. The underlying investments mainly consist of equity and fixed income securities funds that are valued based on the daily closing price as reported by the fund. The proceeding methods described may produce a fair value calculation that may not be indicative of net realizable value or reflective of future fair values. Furthermore, although the Company believes its valuation methods are appropriate and consistent with other market participants, the use of different methodologies or assumptions to determine the fair value of certain financial instruments could result in a different fair value measurement at February 29, 2020. The following table sets forth by level within the fair value hierarchy a summary of the plan’s investments measured at fair value on a recurring basis as of February 29, 2020 and March 2, 2019: Fair Value Measurements at February 29, 2020 Quoted Prices in Active Markets Significant Significant for Identical Observable Unobservable Assets (Level 1) Inputs (Level 2) Inputs (Level 3) Total Equity Securities International equity $ — $ — $ — $ 15,251 Large Cap — — — 33,174 Small-Mid Cap — — — 14,223 Fixed Income Long Term Credit Bond Index — — — 25,129 Long Term US Government Bonds — — — 18,897 20+ Year Treasury STRIPS — — — 1,447 Intermediate Fixed Income — — — 14,606 AGT High Yield Bond — — — 7,673 Other types of investments Short Term Investments — 1,729 — 1,729 Total $ — $ 1,729 $ — $ 132,129 Fair Value Measurements at March 2, 2019 Quoted Prices in Active Markets Significant Significant for Identical Observable Unobservable Assets (Level 1) Inputs (Level 2) Inputs (Level 3) Total Equity Securities International equity $ — $ — $ — $ 15,396 Large Cap — — — 34,058 Small-Mid Cap — — — 14,534 Fixed Income Long Term Credit Bond Index — — — 44,103 Long Term US Government Bonds — — — 8,383 20+ Year Treasury STRIPS — — — 847 Intermediate Fixed Income — — — 5,920 Other types of investments Short Term Investments — — — 1,591 Total $ — $ — $ — $ 124,832 Following are the future benefit payments expected to be paid for the Defined Benefit Pension Plan during the years indicated: Defined Benefit Fiscal Year Pension Plan 2021 $ 8,992 2022 9,025 2023 8,963 2024 9,212 2025 9,157 2026 - 2030 45,471 Total $ 90,820 |
Multiemployer Plans that Provid
Multiemployer Plans that Provide Pension Benefits | 12 Months Ended |
Feb. 29, 2020 | |
Multiemployer Plans that Provide Pension Benefits | |
Multiemployer Plans that Provide Pension Benefits | 19. Multiemployer Plans that Provide Pension Benefits The Company contributes to a number of multiemployer defined benefit pension plans under the terms of collective-bargaining agreements that cover certain of its union-represented employees. The risks of participating in these multiemployer plans are different from single-employer plans. Assets contributed to the multiemployer plan by one employer may be used to provide benefits to employees of other participating employers. If a participating employer stops contributing to the plan, the unfunded obligations of the plan may be borne by the remaining participating employers. Additionally, if the Company chooses to stop participating in some of its multiemployer plans, the Company may be required to pay those plans an amount based on the underfunded status of the plan, referred to as a withdrawal liability. The Company’s participation in these plans for the annual period ended February 29, 2020 is outlined in the table below. The “EIN/Pension Plan Number” column provides the Employer Identification Number (EIN) and the three-digit plan number, if applicable. The most recent Pension Protection Act zone status available for fiscal 2020 and fiscal 2019 is for the plan year-ends as indicated below. The zone status is based on information that the Company received from the plan and is certified by the plan’s actuary. Among other factors, plans in the red zone are generally less than 65% funded, plans in the yellow zone are less than 80% funded, and plans in the green zone are at least 80% funded. The “FIP/RP Status Pending/Implemented” column indicates plans for which a financial improvement plan (“FIP”) or a rehabilitation plan (“RP”) is either pending or has been implemented. In addition to regular plan contributions, the Company may be subject to a surcharge if the plan is in the red zone. The “Surcharge Imposed” column indicates whether a surcharge has been imposed on contributions to the plan. The last two columns list the expiration date(s) of the collective-bargaining agreement(s) to which the plans are subject and any minimum funding requirements. There have been no significant changes that affect the comparability of total employer contributions of fiscal years 2020, 2019 and 2018. Expiration FIP/ RP Date of Pension Protection Status Collective- Minimum EIN/Pension Act Zone Status Pending/ Contributions of the Company Surcharge Bargaining Funding Pension Plan Number 2020 2019 Implemented 2020 2019 2018 Imposed Agreement Requirements 1199 SEIU Health Care Employees Pension Fund 13-3604862-001 Green— Green— No $ 9,026 $ 9,670 $ 7,372 No 4/18/2022 Contribution rate of 12.6% of gross wages per associate beginning 09/30/2018. Contribution rate of 10.76% of gross wages earned per associate beginning 01/01/2016. Southern California United Food and Commercial Workers Unions and Drug Employers Pension Fund 51-6029925-001 Red— Red— Implemented 8,495 8,273 8,149 No 7/17/2021 From 01/01/2020 through 12/31/2020 contributions of $1.758 per hour worked for pharmacists and $0.797 per hour worked for non-pharmacists. From 01/01/2019 through 12/31/2019 contributions of $1.672 per hour for worked for pharmacists and $0.758 per hour worked for non pharmacists. From 01/01/2018 to 12/31/2018 contributions of $1.586 per hour worked. UFCW Pharmacists, Clerks and Drug Employers Pension Trust 94-2518312-001 Green— Green— No 2,421 2,666 2,739 No 7/13/2019 Effective 09/01/2014, contribution rate frozen at $0.55 per hour worked for associates. United Food and Commercial Workers Union-Employer Pension Fund 34-6665155-001 Red— Red— Implemented 738 772 786 No 2/28/2021 Effective 02/03/2019 contribution rate of $2.16 per hour worked. Effective 02/04/2018 contribution rate of $2.03 per hour worked. Effective 02/05/2017 contribution rate of $1.89 per hour worked. United Food and Commercial Workers Union Local 880—Mercantile Employers Joint Pension Fund 51-6031766-001 Yellow— Yellow— Implemented 437 470 495 No 2/28/2021 Effective 10/01/2019 contribution rate of $2.06 per hour worked. Effective 10/01/2018 contribution rate of $1.97 per hour worked. Effective 01/01/2017 contribution rate $1.88 per hour worked. Other Funds 1,554 1,648 1,438 $ 22,671 $ 23,499 $ 20,979 The Company was listed in these plans Forms 5500 as providing more than 5% of the total contributions for the following plans and plan years: Year Contributions to Plan Exceeded More Than 5 % of Total Contributions (as of Pension Fund the Plan’s Year-End) UFCW Pharmacists, Clerks and Drug Employers Pension Trust 12/31/2018 and 12/31/2017 Southern California United Food and Commercial Workers Unions and Drug Employers Pension Fund 12/31/2018 and 12/31/2017 United Food & Commercial Workers Union - Employer Pension Fund 9/30/2018 and 9/30/2017 United Food & Commercial Workers Union Local 880—Mercantile Employers Joint Pension Fund 9/30/2018 and 9/30/2017 At the date the Company’s financial statements were issued, certain Forms 5500 were not available. During fiscal 2020, 2019 and 2018, the Company did not withdraw from any plans or incur any additional withdrawal liabilities. |
Segment Reporting
Segment Reporting | 12 Months Ended |
Feb. 29, 2020 | |
Segment Reporting | |
Segment Reporting | 20. Segment Reporting The Company has two reportable segments, its retail drug stores (“Retail Pharmacy”), and its pharmacy services (“Pharmacy Services”) segments. The Retail Pharmacy segment’s primary business is the sale of prescription drugs and related consultation to its customers. Additionally, the Retail Pharmacy segment sells a full selection of health and beauty aids and personal care products, seasonal merchandise and a large private brand product line. The Pharmacy Services segment offers a full range of PBM services including plan design and administration, on both a transparent pass-through model and traditional model, formulary management and claims processing. Additionally, the Pharmacy Services segment offers specialty and mail order services, infertility treatment, and drug benefits to eligible beneficiaries under the federal government’s Medicare Part D program. The Company’s chief operating decision makers are its Chief Executive Officer, Chief Operating Officer, Chief Financial Officer and the President—Pharmacy Services (collectively the “CODM”). The CODM has ultimate responsibility for enterprise decisions. The CODM determines, in particular, resource allocation for, and monitors performance of, the consolidated enterprise, the Retail Pharmacy segment and the Pharmacy Services segment. The Retail Pharmacy and Pharmacy Services segment managers have responsibility for operating decisions, allocating resources and assessing performance within their respective segments. The CODM relies on internal management reporting that analyzes enterprise results on certain key performance indicators, namely, revenues, gross profit and Adjusted EBITDA. The following is balance sheet information for the Company’s reportable segments: Retail Pharmacy Pharmacy Services Eliminations(1) Consolidated February 29, 2020: Total Assets $ 6,757,196 $ 2,709,737 $ (14,564) $ 9,452,369 Goodwill 43,492 1,064,644 — 1,108,136 March 2, 2019: Total Assets $ 5,071,055 $ 2,534,771 $ (14,459) $ 7,591,367 Goodwill 43,492 1,064,644 — 1,108,136 (1) As of February 29, 2020 and March 2, 2019, intersegment eliminations include netting of the Pharmacy Services segment long-term deferred tax liability of $0 against the Retail Pharmacy segment long-term deferred tax asset for consolidation purposes in accordance with ASC 740, and intersegment accounts receivable of $14,564 and $14,459, respectively, that represents amounts owed from the Pharmacy Services segment to the Retail Pharmacy segment that are created when Pharmacy Services segment customers use Retail Pharmacy segment stores to purchase covered products. The following table is a reconciliation of the Company’s business segments to the consolidated financial statements for the fiscal years ended February 29, 2020, March 2, 2019 and March 3, 2018: Retail Pharmacy Intersegment Pharmacy Services Eliminations(1) Consolidated February 29, 2020: Revenues $ 15,616,186 $ 6,559,560 $ (247,353) $ 21,928,393 Gross Profit 4,274,836 451,922 — 4,726,758 Adjusted EBITDA(2) 370,435 167,776 — 538,211 Additions to property and equipment and intangible assets 192,489 21,897 — 214,386 March 2, 2019: Revenues $ 15,757,152 $ 6,093,688 $ (211,283) $ 21,639,557 Gross Profit 4,258,716 417,636 — 4,676,352 Adjusted EBITDA(2) 405,206 158,238 — 563,444 Additions to property and equipment and intangible assets 228,079 16,610 — 244,689 March 3, 2018: Revenues $ 15,832,625 $ 5,896,669 $ (200,326) $ 21,528,968 Gross Profit 4,372,373 407,732 — 4,780,105 Adjusted EBITDA(2) 388,320 171,534 — 559,854 Additions to property and equipment and intangible assets 199,437 15,327 — 214,764 (1) Intersegment eliminations include intersegment revenues and corresponding cost of revenues that occur when Pharmacy Services segment customers use Retail Pharmacy segment stores to purchase covered products. When this occurs, both the Retail Pharmacy and Pharmacy Services segments record the revenue on a stand-alone basis. (2) See the section entitled “Management’s Discussion and Analysis of Financial Condition and Results of Continuing Operations—Adjusted EBITDA, Adjusted Net Income (Loss), Adjusted Net Income (Loss) per Diluted Share and Other Non-GAAP Measures” for additional details. The following is a reconciliation of net (loss) income to Adjusted EBITDA for fiscal 2020, 2019 and 2018: February 29, March 2, March 3, 2020 2019 2018 (52 weeks) (52 weeks) (52 weeks) Net loss from continuing operations $ (469,219) $ (666,954) $ (349,532) Interest expense 229,657 227,728 202,768 Income tax expense 387,607 77,477 305,987 Depreciation and amortization 328,277 357,882 386,057 LIFO (credit) charge (64,804) 23,354 (28,827) Lease termination and impairment charges 42,843 107,994 58,765 Goodwill and intangible asset impairment charges — 375,190 261,727 (Gain) loss on debt retirements, net (55,692) 554 — Merger and Acquisition-related costs 3,599 37,821 24,283 Stock-based compensation expense 16,087 12,115 25,793 Restructuring-related costs 105,642 4,704 — Inventory write-downs related to store closings 4,652 13,487 7,586 Litigation settlement — 18,000 — Loss (gain) on sale of assets, net 4,226 (38,012) (25,872) Walgreens Boots Alliance merger termination fee — — (325,000) Other 5,336 12,104 16,119 Adjusted EBITDA from continuing operations $ 538,211 $ 563,444 $ 559,854 . |
Commitments, Contingencies and
Commitments, Contingencies and Guarantees | 12 Months Ended |
Feb. 29, 2020 | |
Commitments, Contingencies and Guarantees | |
Commitments, Contingencies and Guarantees | 21. Commitments, Contingencies and Guarantees Legal Matters and Regulatory Proceedings The Company is involved in numerous legal matters including litigation, arbitration, and other claims, and is subject to regulatory proceedings including investigations, inspections, audits, inquiries, and similar actions by pharmacy, health care, tax and other governmental authorities arising in the ordinary course of its business, including, without limitation, the matters described below. The Company records accruals for outstanding legal matters and applicable regulatory proceedings when it believes it is probable that a loss has been incurred, and the amount can be reasonably estimated. The Company evaluates, on a quarterly basis, developments in legal matters and regulatory proceedings that could affect the amount of any existing accrual and developments that would make a loss contingency both probable and reasonably estimable, and as a result, warrant an accrual. If a loss contingency is not both probable and estimable, the Company does not establish an accrued liability. None of the Company’s accruals for outstanding legal matters or regulatory proceedings are material individually or in the aggregate to the Company’s consolidated financial position. The Company’s contingencies are subject to significant uncertainties, many of which are beyond the Company’s control, 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 qui tam (“whistleblower” action) has been filed and whether the government agency makes a decision to intervene in the lawsuit following investigation. While the Company cannot predict the outcome of any of the contingencies, the Company’s management does not believe that the outcome of any of these legal matters or regulatory proceedings will be material to the Company’s consolidated financial position. It is possible, however, the Company’s results of operations or cash flows could be materially affected by unfavorable outcomes in outstanding legal matters or regulatory proceedings. California Employment Litigation. The Company is currently a defendant in several lawsuits filed in courts in California that contain allegations regarding violations of the California Business and Professions Code, various California employment laws and regulations, industry wage orders, wage-and-hour laws, rules and regulations pertaining primarily to failure to pay overtime, failure to pay premiums for missed meals and rest periods, failure to provide accurate wage statements, and failure to reimburse business expenses (the “California Cases”). Some of the California Cases purport or may be determined to be class actions or PAGA representative actions and seek substantial damages and penalties. These single-plaintiff and multi-plaintiff California Cases in the aggregate, seek substantial damages. The Company believes that its defenses and assertions in the California Cases have merit. The Company has aggressively challenged the merits of the lawsuits and, where applicable, allegations that the lawsuits should be certified as class or representative actions. Additionally, at this time the Company is not able to predict either the outcome of or estimate a potential range of loss with respect to the California Cases and is defending itself against these claims Usual and Customary and DUR/Code 1 Litigation. In January 2017, qui tam The State of Mississippi, by and through its Attorney General, filed a lawsuit against the Company and various purported related entities on September 27, 2016 alleging the Company failed to accurately report usual and customary prices to Mississippi’s Division of Medicaid. At this stage of the proceedings, 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, and is defending itself against these claims. The Company is involved in a putative consumer class action lawsuit in the United States District Court for the Southern District of California captioned Byron Stafford v. Rite Aid Corp Robert Josten v. Rite Aid Corp proceedings, the Company is not able to either predict the outcome or estimate a potential range of loss and is defending itself against these claims. In June 2013, the Company was served with a Civil Investigative Demand (“CID”) by the United States Attorney’s Office for the Eastern District of California (the “USAO”) regarding (1) the Company’s Drug Utilization Review (“DUR”) and prescription dispensing protocol; and (2) the dispensing of drugs designated as “Code 1” by the State of California. The Company cooperated with the investigation, researched the government’s allegations, and refuted the government’s position. The Company produced documents including certain prescription files related to Code 1 drugs to the USAO’s office and the State of California Department of Justice’s Bureau of Medical Fraud and Elder Abuse (“CADOJ”). In August 2014, the USAO and 8 states’ attorneys general declined to intervene in a California False Claim Act lawsuit filed under seal in the Eastern District of California by qui tam Pseudoephedrine Investigation. On April 26, 2012, the Company was served with an administrative subpoena from the U.S. 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 U.S. Attorney’s Office for the Northern District of New York (“USAO”) regarding an investigation of possible civil violations of the Combat Methamphetamine Epidemic Act of 2005 (“CMEA”). Additional subpoenas were subsequently served requesting broader information and documents regarding PSE sales and recordkeeping. The Company cooperated throughout the course of the investigation. The allegations forming the basis of the investigation occurred between 2009 and 2014. The Company recently finalized the civil settlement of the investigation for $4.75 million with no admission of liability. Controlled Substances Litigation, Audits and Investigations The Company along with various other defendants are named in multiple opioid-related lawsuits filed by counties, cities, municipalities, Native American tribes, hospitals, third-party payers, and others across the United States. In December 2017, the U.S. Judicial Panel on Multidistrict Litigation consolidated and transferred hundreds of federal opioid-related lawsuits that name the Company and/or a related entity as a defendant to the multi-district litigation (“MDL”) pending in the United States District Court for the Northern District of Ohio before Judge Dan Polster under In re National Prescription Opiate Litigation The Company also has received warrants, subpoenas, CIDs, and other requests for documents and information from, and is being investigated by, the federal and state governments regarding opioids and other controlled substances. The Company has been cooperating with and responding to these investigatory inquiries. Miscellaneous Litigation and Investigations. 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 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. These other legal proceedings include claims of improper disclosure of personal information, anticompetitive practices, general contractual matters, product liability, professional malpractice, non-compliance with state and federal regulatory regimes, marketing misconduct, intellectual property litigation and employment litigation. Some of these other legal proceedings are or are purported to be class actions or derivative claims. The Company is defending itself against the claims brought in these matters. |
Supplementary Cash Flow Data
Supplementary Cash Flow Data | 12 Months Ended |
Feb. 29, 2020 | |
Supplementary Cash Flow Data | |
Supplementary Cash Flow Data | 22. Supplementary Cash Flow Data February 29, March 2, March 3, 2020 2019 2018 Cash paid for interest(a) $ 216,489 $ 267,760 $ 405,579 Cash (refunds) payments for income taxes, net(a) $ (4,935) $ 17,383 $ 87,087 Equipment financed under capital leases $ 3,715 $ 4,165 $ 13,123 Equipment received for noncash consideration $ — $ — $ 2,044 Reduction in lease financing obligation $ — $ — $ 4,740 Accrued capital expenditures $ 15,952 $ 15,298 $ 28,869 Gross borrowings from revolver(a) $ 2,897,000 $ 4,257,000 $ 4,221,000 Gross repayments to revolver(a) $ 3,122,000 $ 3,382,000 $ 6,651,000 (a)–Amounts are presented on a total company basis. Significant components of cash used by Other Liabilities of $62,168 for the fifty-two week period ended February 29, 2020 includes cash used resulting from changes in accrued wages, benefits and other personnel costs of $47,252 and changes in accrued store expenses of $45,252. |
Related Party Transactions
Related Party Transactions | 12 Months Ended |
Feb. 29, 2020 | |
Related Party Transactions | |
Related Party Transactions | 23. Related Party Transactions There were receivables from related parties of $0 and $11 at February 29, 2020 and March 2, 2019, respectively. |
Guarantor and Non-Guarantor Con
Guarantor and Non-Guarantor Condensed Consolidating Financial Information | 12 Months Ended |
Feb. 29, 2020 | |
Guarantor and Non-Guarantor Condensed Consolidating Financial Information | |
Guarantor and Non-Guarantor Condensed Consolidating Financial Information | 24. Guarantor and Non-Guarantor Condensed Consolidating Financial Information Rite Aid Corporation conducts the majority of its business through its subsidiaries. With the exception of EIC, substantially all of Rite Aid Corporation’s 100 % owned subsidiaries guarantee the obligations under the Existing Facilities, the secured guaranteed notes and unsecured guaranteed notes (the “Subsidiary Guarantors”). Additionally, with the exception of EIC, the subsidiaries, including joint ventures, that do not guarantee the Existing Facilities, the secured guaranteed notes and unsecured guaranteed notes, are minor. For the purposes of preparing the information below, Rite Aid Corporation uses the equity method to account for its investment in subsidiaries. The equity method has been used by Subsidiary Guarantors with respect to investments in the non-guarantor subsidiaries. The subsidiary guarantees related to the Company’s Existing Facilities, secured guaranteed notes and, on an unsecured basis, the unsecured guaranteed notes, are full and unconditional and joint and several. Presented below is condensed consolidating financial information for Rite Aid Corporation, the Subsidiary Guarantors, and the non-guarantor subsidiaries at February 29, 2020 and March 2, 2019 and for the fiscal years ended February 29, 2020, March 2, 2019 and March 3, 2018. Separate financial statements for Subsidiary Guarantors are not presented. Rite Aid Corporation Condensed Consolidating Balance Sheet February 29, 2020 Rite Aid Corporation Non- (Parent Subsidiary Guarantor Company Only) Guarantors Subsidiaries Eliminations Consolidated (in thousands) ASSETS Current assets: Cash and cash equivalents $ — $ 194,005 $ 24,175 $ — $ 218,180 Accounts receivable, net — 1,278,002 8,783 — 1,286,785 Intercompany receivable — (56,608) 43,304 13,304 (a) — Inventories, net of LIFO reserve of $0, $539,640, $0, $0, and $539,640 — 1,921,604 — — 1,921,604 Prepaid expenses and other current assets — 171,086 10,708 — 181,794 Current assets held for sale — 92,278 — — 92,278 Total current assets — 3,600,367 86,970 13,304 3,700,641 Property, plant and equipment, net — 1,215,838 — — 1,215,838 Operating lease right-of-use assets — 2,903,256 — — 2,903,256 Goodwill — 1,108,136 — — 1,108,136 Other intangibles, net — 312,763 46,728 — 359,491 Deferred tax assets 10,828 5,852 — — 16,680 Investment in subsidiaries 7,843,411 67,342 — (7,910,753) (b) — Intercompany receivable — 4,090,373 — (4,090,373) (a) — Other assets — 141,305 7,022 — 148,327 Total assets $ 7,854,239 $ 13,445,232 $ 140,720 $ (11,987,822) $ 9,452,369 LIABILITIES AND STOCKHOLDERS’ EQUITY Current liabilities: Current maturities of long-term debt and lease financing obligations $ — $ 8,840 $ — $ — $ 8,840 Accounts payable — 1,471,459 12,622 — 1,484,081 Intercompany payable — (43,304) 30,000 13,304 (a) — Accrued salaries, wages and other current liabilities 12,071 711,491 22,756 — 746,318 Current portion of operating lease liabilities — 490,161 — — 490,161 Current liabilities held for sale — 37,063 — — 37,063 Total current liabilities 12,071 2,675,710 65,378 13,304 2,766,463 Long-term debt, less current maturities 3,077,268 — — — 3,077,268 Long-term operating lease liabilities — 2,710,347 — — 2,710,347 Lease financing obligations, less current maturities — 19,326 — — 19,326 Intercompany payable 4,090,373 — — (4,090,373) (a) — Other noncurrent liabilities — 196,438 8,000 — 204,438 Total liabilities 7,179,712 5,601,821 73,378 (4,077,069) 8,777,842 Commitments and contingencies — — — — — Total stockholders’ equity 674,527 7,843,411 67,342 (7,910,753) (b) 674,527 Total liabilities and stockholders’ equity $ 7,854,239 $ 13,445,232 $ 140,720 $ (11,987,822) $ 9,452,369 (a) Elimination of intercompany accounts receivable and accounts payable amounts. (b) Elimination of investments in consolidated subsidiaries. Rite Aid Corporation Condensed Consolidating Balance Sheet March 2, 2019 Rite Aid Corporation Non- (Parent Subsidiary Guarantor Company Only) Guarantors Subsidiaries Eliminations Consolidated (in thousands) ASSETS Current assets: Cash and cash equivalents $ — $ 122,134 $ 22,219 $ — $ 144,353 Accounts receivable, net — 1,377,342 411,370 — 1,788,712 Intercompany receivable — 400,526 — (400,526) (a) — Inventories, net of LIFO reserve of $0, $604,444, $0, $0, and $604,444 — 1,871,941 — — 1,871,941 Prepaid expenses and other current assets — 172,448 6,684 — 179,132 Current assets held for sale — 117,581 — — 117,581 Total current assets — 4,061,972 440,273 (400,526) 4,101,719 Property, plant and equipment, net — 1,308,514 — — 1,308,514 Goodwill — 1,108,136 — — 1,108,136 Other intangibles, net — 399,678 49,028 — 448,706 Deferred tax assets — 419,122 (10,038) — 409,084 Investment in subsidiaries 8,294,315 55,109 — (8,349,424) (b) — Intercompany receivable — 3,639,035 — (3,639,035) (a) — Other assets — 208,018 7,190 — 215,208 Total assets $ 8,294,315 $ 11,199,584 $ 486,453 $ (12,388,985) $ 7,591,367 LIABILITIES AND STOCKHOLDERS’ EQUITY Current liabilities: Current maturities of long-term debt and lease financing obligations $ — $ 16,111 $ — $ — $ 16,111 Accounts payable — 1,612,181 6,404 — 1,618,585 Intercompany payable — — 400,526 (400,526) (a) — Accrued salaries, wages and other current liabilities 14,005 778,020 16,414 — 808,439 Total current liabilities 14,005 2,406,312 423,344 (400,526) 2,443,135 Long-term debt, less current maturities 3,454,585 — — — 3,454,585 Lease financing obligations, less current maturities — 24,064 — — 24,064 Intercompany payable 3,639,035 — — (3,639,035) (a) — Other noncurrent liabilities — 474,893 8,000 — 482,893 Total liabilities 7,107,625 2,905,269 431,344 (4,039,561) 6,404,677 Commitments and contingencies — — — — — Total stockholders’ equity 1,186,690 8,294,315 55,109 (8,349,424) (b) 1,186,690 Total liabilities and stockholders’ equity $ 8,294,315 $ 11,199,584 $ 486,453 $ (12,388,985) $ 7,591,367 (a) Elimination of intercompany accounts receivable and accounts payable amounts. (b) Elimination of investments in consolidated subsidiaries. Rite Aid Corporation Condensed Consolidating Statement of Operations For the Year Ended February 29, 2020 Rite Aid Corporation Non- (Parent Subsidiary Guarantor Company Only) Guarantors Subsidiaries Eliminations Consolidated (in thousands) Revenues $ — $ 21,514,693 $ 441,827 $ (28,127) (a) $ 21,928,393 Costs and expenses: Cost of revenues — 16,818,111 411,266 (27,742) (a) 17,201,635 Selling, general and administrative expenses — 4,560,220 27,501 (385) (a) 4,587,336 Lease termination and impairment charges — 42,843 — — 42,843 Interest expense 216,834 13,586 (763) — 229,657 Gain on debt retirements — (55,692) — — (55,692) Loss on sale of assets, net — 4,226 — — 4,226 Equity in earnings of subsidiaries, net of tax 235,340 (12,233) — (223,107) (b) — 452,174 21,371,061 438,004 (251,234) 22,010,005 (Loss) income from continuing operations before income taxes (452,174) 143,632 3,823 223,107 (81,612) Income tax expense (benefit) — 396,017 (8,410) — 387,607 Net (loss) income from continuing operations $ (452,174) $ (252,385) $ 12,233 $ 223,107 $ (469,219) Net income from discontinued operations — 17,045 — — 17,045 Net (loss) income (452,174) (235,340) 12,233 223,107 (b) (452,174) Total other comprehensive (loss) income (17,839) (17,351) — 17,351 (17,839) Comprehensive (loss) income $ (470,013) $ (252,691) $ 12,233 $ 240,458 $ (470,013) (a) Elimination of intercompany revenues and expenses. (b) Elimination of equity in earnings of subsidiaries. Rite Aid Corporation Condensed Consolidating Statement of Operations For the Year Ended March 2, 2019 Rite Aid Corporation Non- (Parent Subsidiary Guarantor Company Only) Guarantors Subsidiaries Eliminations Consolidated (in thousands) Revenues $ — $ 21,297,937 $ 397,328 $ (55,708) (a) $ 21,639,557 Costs and expenses: Cost of revenues — 16,648,099 370,413 (55,307) (a) 16,963,205 Selling, general and administrative expenses — 4,567,690 25,086 (401) (a) 4,592,375 Lease termination and impairment charges — 107,994 — — 107,994 Goodwill and intangible asset impairment charges — 375,190 — — 375,190 Interest expense 206,862 21,704 (838) — 227,728 Loss on debt retirements — 554 — — 554 Gain on sale of assets, net — (38,012) — — (38,012) Equity in earnings of subsidiaries, net of tax 210,736 (1,033) — (209,703) (b) — 417,598 21,682,186 394,661 (265,411) 22,229,034 (Loss) income from continuing operations before income taxes (417,598) (384,249) 2,667 209,703 (589,477) Income tax benefit — 75,843 1,634 — 77,477 Net (loss) income from continuing operations $ (417,598) $ (460,092) $ 1,033 $ 209,703 $ (666,954) Net income from discontinued operations (4,615) 249,356 — — 244,741 Net (loss) income (422,213) (210,736) 1,033 209,703 (b) (422,213) Total other comprehensive income (loss) 3,490 3,490 — (3,490) 3,490 Comprehensive (loss) income $ (418,723) $ (207,246) $ 1,033 $ 206,213 $ (418,723) (a) Elimination of intercompany revenues and expenses. (b) Elimination of equity in earnings of subsidiaries. Rite Aid Corporation Condensed Consolidating Statement of Operations For the Year Ended March 3, 2018 Rite Aid Corporation Non- (Parent Subsidiary Guarantor Company Only) Guarantors Subsidiaries Eliminations Consolidated (in thousands) Revenues $ — $ 21,413,734 $ 209,356 $ (94,122) (a) $ 21,528,968 Costs and expenses: Cost of revenues — 16,645,136 197,084 (93,357) (a) 16,748,863 Selling, general and administrative expenses — 4,635,531 16,496 (765) (a) 4,651,262 Lease termination and impairment expenses — 58,765 — — 58,765 Goodwill and intangible asset impairment charges — 261,727 — — 261,727 Interest expense 183,825 19,261 (318) — 202,768 Walgreens Boots Alliance, Inc. termination fee (325,000) — — — (325,000) Gain on sale of assets, net — (25,872) — — (25,872) Equity in earnings of subsidiaries, net of tax (1,034,775) (4,072) — 1,038,847 (b) — (1,175,950) 21,590,476 213,262 944,725 21,572,513 (Loss) income from continuing operations before income taxes 1,175,950 (176,742) (3,906) (1,038,847) (43,545) Income tax expense — 313,965 (7,978) — 305,987 Net (loss) income from continuing operations 1,175,950 (490,707) 4,072 (1,038,847) (349,532) Net loss from discontinued operations (232,480) 1,525,482 — — 1,293,002 Net (loss) income $ 943,470 $ 1,034,775 $ 4,072 $ (1,038,847) (b) $ 943,470 Total other comprehensive income (loss) 7,255 7,255 — (7,255) 7,255 Comprehensive (loss) income $ 950,725 $ 1,042,030 $ 4,072 $ (1,046,102) $ 950,725 (a) Elimination of intercompany revenues and expenses. (b) Elimination of equity in earnings of subsidiaries. Rite Aid Corporation Condensed Consolidating Statement of Cash Flows Year Ended February 29, 2020 Rite Aid Corporation Non- (Parent Subsidiary Guarantor Company Only) Guarantors Subsidiaries Eliminations Consolidated (in thousands) Operating activities: Net cash (used in) provided by operating activities $ (214,470) $ 723,371 $ 1,956 $ — $ 510,857 Investing activities: Payments for property, plant and equipment — (171,705) — — (171,705) Intangible assets acquired — (42,681) — — (42,681) Intercompany activity — (539,344) — 539,344 — Proceeds from dispositions of assets and investments — 59,658 — — 59,658 Proceeds from sale-leaseback transactions — 4,879 — — 4,879 Net cash used in investing activities — (689,193) — 539,344 (149,849) Financing activities: Proceeds from issuance of long-term debt 600,000 — — — 600,000 Net payments to revolver (225,000) — — — (225,000) Principal payments on long-term debt (694,093) (12,010) — — (706,103) Change in zero balance cash accounts — 12,671 — — 12,671 Financing fees paid for early debt redemption — (518) — — (518) Payments for taxes related to net share settlement of equity awards — (1,921) — — (1,921) Deferred financing costs paid (5,781) — — — (5,781) Intercompany activity 539,344 — — (539,344) — Net cash provided by (used in) financing activities 214,470 (1,778) — (539,344) (326,652) Cash flows of discontinued operations: Operating activities of discontinued operations — (23,836) — — (23,836) Investing activities of discontinued operations — 63,307 — — 63,307 Financing activities of discontinued operations — — — — — Net cash provided by discontinued operations — 39,471 — — 39,471 Increase in cash and cash equivalents — 71,871 1,956 — 73,827 Cash and cash equivalents, beginning of period — 122,134 22,219 — 144,353 Cash and cash equivalents, end of period $ — $ 194,005 $ 24,175 $ — $ 218,180 Rite Aid Corporation Condensed Consolidating Statement of Cash Flows Year Ended March 2, 2019 Rite Aid Corporation (Parent Non- Company Subsidiary Guarantor Only) Guarantors Subsidiaries Eliminations Consolidated (in thousands) Operating activities: Net cash (used in) provided by operating activities $ (255,962) $ 74,124 $ 16,129 $ — $ (165,709) Investing activities: Payments for property, plant and equipment — (196,778) — — (196,778) Intangible assets acquired — (47,911) — — (47,911) Intercompany activity — (727,221) — 727,221 — Proceeds from dispositions of assets and investments — 43,550 — — 43,550 Proceeds from sale-leaseback transactions — 2,587 — — 2,587 Net cash (used in) provided by investing activities — (925,773) — 727,221 (198,552) Financing activities: Proceeds from issuance of long-term debt 450,000 — — — 450,000 Net proceeds from revolver 875,000 — — — 875,000 Principal payments on long-term debt (427,992) (12,378) — — (440,370) Change in zero balance cash accounts — (59,481) — — (59,481) Net proceeds from issuance of common stock 2,294 — — — 2,294 Payments for taxes related to net share settlement of equity awards — (2,419) — — (2,419) Financing fees paid for early redemption — (171) — — (171) Deferred financing costs paid (21,564) — — — (21,564) Intercompany activity 727,221 — — (727,221) — Net cash provided by (used in) financing activities 1,604,959 (74,449) — (727,221) 803,289 Cash flows of discontinued operations: Operating activities of discontinued operations (4,615) (58,341) — — (62,956) Investing activities of discontinued operations — 664,740 — — 664,740 Financing activities of discontinued operations (1,344,382) 589 — — (1,343,793) Net cash (used in) provided by discontinued operations (1,348,997) 606,988 — — (742,009) (Decrease) increase in cash and cash equivalents — (319,110) 16,129 — (302,981) Cash and cash equivalents, beginning of period — 441,244 6,090 — 447,334 Cash and cash equivalents, end of period $ — $ 122,134 $ 22,219 $ — $ 144,353 Rite Aid Corporation Condensed Consolidating Statement of Cash Flows For the Year Ended March 3, 2018 Rite Aid Corporation (Parent Non- Company Subsidiary Guarantor Only) Guarantors Subsidiaries Eliminations Consolidated (in thousands) Operating activities: Net cash (used in) provided by operating activities $ 158,247 $ 379,439 $ (26,216) $ — $ 511,470 Investing activities: Payments for property, plant and equipment — (185,879) — — (185,879) Intangible assets acquired — (28,885) — — (28,885) Intercompany activity — (3,460,291) — 3,460,291 — Proceeds from insured loss — 4,239 — — 4,239 Proceeds from dispositions of assets and investments — 27,586 — — 27,586 Net cash (used in) provided by investing activities — (3,643,230) — 3,460,291 (182,939) Financing activities: Net payments to revolver (265,000) — — — (265,000) Principal payments on long-term debt — (9,882) — — (9,882) Change in zero balance cash accounts — 35,605 — — 35,605 Net proceeds from issuance of common stock 5,796 — — — 5,796 Payments for taxes related to net share settlement of equity awards — (4,103) — — (4,103) Intercompany activity 3,460,291 — — (3,460,291) — Net cash provided by (used in) financing activities 3,201,087 21,620 — (3,460,291) (237,584) Cash flows of discontinued operations: Operating activities of discontinued operations (224,300) (20,826) — — (245,126) Investing activities of discontinued operations — 3,496,222 — — 3,496,222 Financing activities of discontinued operations (3,135,034) (5,085) — — (3,140,119) Net cash provided by (used in) discontinued operations (3,359,334) 3,470,311 — — 110,977 Increase (decrease) in cash and cash equivalents — 228,140 (26,216) — 201,924 Cash and cash equivalents, beginning of period — 213,104 32,306 — 245,410 Cash and cash equivalents, end of period $ — $ 441,244 $ 6,090 $ — $ 447,334 |
Interim Financial Results (Unau
Interim Financial Results (Unaudited) | 12 Months Ended |
Feb. 29, 2020 | |
Interim Financial Results (Unaudited) | |
Interim Financial Results (Unaudited) | 25. Interim Financial Results (Unaudited) Fiscal Year 2020 First Second Third Fourth Quarter Quarter Quarter Quarter Year Revenues $ 5,372,589 $ 5,366,264 $ 5,462,298 $ 5,727,242 $ 21,928,393 Cost of revenues 4,245,866 4,221,825 4,273,323 4,460,621 17,201,635 Selling, general and administrative expenses 1,162,652 1,135,530 1,134,854 1,154,300 4,587,336 Lease termination and impairment charges 478 1,471 166 40,728 42,843 Interest expense 58,270 60,102 57,856 53,429 229,657 Gain on debt retirements, net — — (55,692) — (55,692) (Gain) loss on sale of assets, net (2,712) (1,587) (1,371) 9,896 4,226 5,464,554 5,417,341 5,409,136 5,718,974 22,010,005 (Loss) income from continuing operations before income taxes (91,965) (51,077) 53,162 8,268 (81,612) Income tax (benefit) expense 7,374 27,628 876 351,729 387,607 Loss from continuing operations (99,339) (78,705) 52,286 (343,461) (469,219) Net income (loss) from discontinued operations, net of tax (320) (574) (801) 18,740 17,045 Net income (loss) (99,659) (79,279) 51,485 (324,721) (452,174) Basic (loss) income per share(a): Continuing operations $ (1.88) $ (1.48) $ 0.98 $ (6.43) $ (8.82) Discontinued operations $ — $ (0.01) $ (0.01) $ 0.35 $ 0.32 Net basic (loss) income per share $ (1.88) $ (1.49) $ 0.97 $ (6.08) $ (8.50) Diluted (loss) income per share(a): Continuing operations $ (1.88) $ (1.48) $ 0.98 $ (6.43) $ (8.82) Discontinued operations $ — $ (0.01) $ (0.02) $ 0.35 $ 0.32 Net diluted (loss) income per share $ (1.88) $ (1.49) $ 0.96 $ (6.08) $ (8.50) Fiscal Year 2019 First Second Third Fourth Quarter Quarter Quarter Quarter Year Revenues $ 5,388,490 $ 5,421,362 $ 5,450,060 $ 5,379,645 $ 21,639,557 Cost of revenues 4,219,741 4,260,211 4,267,972 4,215,281 16,963,205 Selling, general and administrative expenses 1,152,627 1,153,991 1,142,555 1,143,202 4,592,375 Lease termination and impairment charges 9,859 39,609 2,628 55,898 107,994 Goodwill and intangible asset impairment charges — 375,190 — — 375,190 Interest expense 62,792 56,233 56,008 52,695 227,728 Loss on debt retirements, net 554 — — 554 Gain on sale of assets, net (5,859) (4,965) (382) (26,806) (38,012) 5,439,714 5,880,269 5,468,781 5,440,270 22,229,034 Loss from continuing operations before income taxes (51,224) (458,907) (18,721) (60,625) (589,477) Income tax (benefit) expense (9,497) (106,559) (1,471) 195,004 77,477 Loss from continuing operations (41,727) (352,348) (17,250) (255,629) (666,954) Net income (loss) from discontinued operations, net of tax 256,143 (6,792) 12,740 (17,350) 244,741 Net income (loss) $ 214,416 $ (359,140) $ (4,510) $ (272,979) $ (422,213) Basic and diluted income (loss) per share(a): Continuing operations $ (0.79) $ (6.67) $ (0.33) $ (4.83) $ (12.62) Discontinued operations $ 4.86 $ (0.13) $ 0.24 $ (0.32) $ 4.63 Net basic and diluted income (loss) per share $ 4.07 $ (6.80) $ (0.09) $ (5.15) $ (7.99) (a) Income per share amounts for each quarter may not necessarily total to the yearly income per share due to the weighting of shares outstanding on a quarterly and year-to-date basis. During the fourth quarter of fiscal 2020, the Company recorded an income tax expense of $347,599 in connection with the revaluation of the Company’s deferred tax assets resulting from an increase in the valuation allowance as discussed in Note 7 and facilities impairment charges of $38,342. Also, during the fourth quarter of fiscal 2020, the Company recorded a LIFO credit of $72,357 which resulted from deflation in generic drug costs, partially offset by brand drug inflation compared to a LIFO charge recognized at prior year end caused by higher inflation on pharmaceutical drugs. During the fourth quarter of fiscal 2019, the Company recorded an income tax expense of $212,252 in connection with the revaluation of the Company’s deferred tax assets resulting from an increase in the valuation allowance as discussed in Note 7 and facilities impairment charges of $28,920. Also, during the fourth quarter of fiscal 2019, the Company recorded a LIFO charge of $4,043 due to higher inflation on pharmaceutical drugs as compared to a LIFO credit recognized at prior year end caused by deflation on pharmacy generics. |
Financial Instruments
Financial Instruments | 12 Months Ended |
Feb. 29, 2020 | |
Financial Instruments | |
Financial Instruments | 26. Financial Instruments The carrying amounts and fair values of financial instruments at February 29, 2020 and March 2, 2019 are listed as follows: 2020 2019 Carrying Fair Carrying Fair Amount Value Amount Value Variable rate indebtedness $ 1,077,787 $ 1,100,000 $ 1,297,013 $ 1,325,000 Fixed rate indebtedness $ 1,999,481 $ 1,921,385 $ 2,157,571 $ 1,795,335 Cash, trade receivables and trade payables are carried at market value, which approximates their fair values due to the short-term maturity of these instruments. In addition, as of February 29, 2020 and March 2, 2019, the Company had $7,022 and $7,191, respectively, of investments carried at amortized cost, as these investments are being held to maturity. As of February 29, 2020, these investments are included as a component of other assets. As of March 2, 2019, these investments are included as a component of prepaid expenses and other current assets. The Company believes the carrying value of these investments approximates their fair value. The following methods and assumptions were used in estimating fair value disclosures for financial instruments: LIBOR-based borrowings under credit facilities: The carrying amounts for LIBOR-based borrowings under the credit facilities and term notes are estimated based on the quoted market price of the financial instruments. Long-term indebtedness: The fair values of long-term indebtedness are estimated based on the quoted market prices of the financial instruments. If quoted market prices were not available, the Company estimated the fair value based on the quoted market price of a financial instrument with similar characteristics. |
Subsequent Events
Subsequent Events | 12 Months Ended |
Feb. 29, 2020 | |
Subsequent Event. | |
Subsequent Event | 27. Subsequent Events In March 2020, the outbreak of COVID-19 caused by a novel strain of the coronavirus was recognized as a pandemic by the World Health Organization, and the outbreak has become increasingly widespread in the United States, including in the markets in which we operate. In an effort to limit the spread of COVID-19, governmental entities have taken various regulatory actions including, but not limited to “shelter in place” orders and the temporary closures of many non-life sustaining businesses. Entities that provide life-sustaining services, such as healthcare providers, retail pharmacy, grocery stores and gas stations have generally been permitted to remain open, which has allowed the Company to continue to serve its customers during the pandemic. As of April 16, 2020, the Company had liquidity of $1.9 billion, which consisted of availability to borrow under its Senior Secured Revolving Credit Facility of $1.7 billion and cash on hand of $180.0 million. The Company will continue to assess the impact of COVID-19 on the Company’s financial position. However, the extent to which the COVID-19 outbreak will impact the Company’s operations or financial results is uncertain, but such impact could be material. |
SCHEDULE II-VALUATION AND QUALI
SCHEDULE II-VALUATION AND QUALIFYING ACCOUNTS | 12 Months Ended |
Feb. 29, 2020 | |
SCHEDULE II-VALUATION AND QUALIFYING ACCOUNTS | |
SCHEDULE II-VALUATION AND QUALIFYING ACCOUNTS | SCHEDULE II—VALUATION AND QUALIFYING ACCOUNTS For the Years Ended February 29, 2020, March 2, 2019 and March 3, 2018 (dollars in thousands) Additions Balance at Charged to Balance at Allowances deducted from accounts receivable for estimated Beginning Costs and End of uncollectible amounts: of Period Expenses Deductions Period Year ended February 29, 2020 $ 13,106 $ 40,357 $ 40,614 $ 12,849 Year ended March 2, 2019 $ 25,134 $ 48,728 $ 60,756 $ 13,106 Year ended March 3, 2018 $ 30,891 $ 94,006 $ 99,763 $ 25,134 |
Summary of Significant Accoun_2
Summary of Significant Accounting Policies (Policies) | 12 Months Ended |
Feb. 29, 2020 | |
Basis of Presentation | |
Fiscal Year | Fiscal Year The Company’s fiscal year ends on the Saturday closest to February 29 or March 1. The fiscal years ended February 29, 2020, March 2, 2019 and March 3, 2018 included 52 weeks. |
Principles of Consolidation | Principles of Consolidation The consolidated financial statements include the accounts of the Company and all of its 100% owned subsidiaries. All significant intercompany accounts and transactions have been eliminated in consolidation. |
Cash and Cash Equivalents | Cash and Cash Equivalents Cash and cash equivalents consist of cash on hand and highly liquid investments, which are readily convertible to known amounts of cash and which have original maturities of three months or less when purchased. |
Allowance for Uncollectible Receivables | Allowance for Uncollectible Receivables Substantially all prescription sales are made to customers who are covered by third-party payors, such as insurance companies, government agencies and employers. The Company recognizes receivables that represent the amount owed to the Company for sales made to customers or employees of those payors that have not yet been paid. The Company maintains a reserve for the amount of these receivables deemed to be uncollectible. This reserve is calculated based upon historical collection activity adjusted for current conditions. |
Inventories | Inventories Inventories are stated at the lower of cost or market. Inventory balances include the capitalization of certain costs related to purchasing, freight and handling costs associated with placing inventory in its location and condition for sale. The Company uses the last-in, first-out (“LIFO”) cost flow assumption for substantially all of its inventories. The Company calculates its inflation index based on internal product mix and utilizes the link-chain LIFO method. |
Impairment of Long-Lived Assets | Impairment of Long-Lived Assets Asset impairments are recorded when the carrying value of assets are not recoverable. For purposes of recognizing and measuring impairment of long-lived assets, the Company categorizes assets of operating stores as “Assets to Be Held and Used” and “Assets to Be Disposed Of.” The Company evaluates assets at the store level because this is the lowest level of identifiable cash flows ascertainable to evaluate impairment. Assets being tested for recoverability at the store level include tangible long-lived assets, right-of-use assets for leased stores, and identifiable, finite-lived intangibles that arose in purchase business combinations. Corporate assets to be held and used are evaluated for impairment based on excess cash flows from the stores that support those assets. The Company reviews long-lived assets to be held and used for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. If the sum of the undiscounted expected future cash flows is less than the carrying amount of the asset, the Company recognizes an impairment loss. Impairment losses are measured as the amount by which the carrying amount of the asset exceeds the fair value of the asset. When fair values are not available, the Company estimates fair value using the expected future cash flows discounted at a rate commensurate with the risks associated with the recovery of the asset. |
Property, Plant and Equipment | Property, Plant and Equipment Property, plant and equipment are stated at cost, net of accumulated depreciation and amortization. The Company provides for depreciation using the straight-line method over the following useful lives: buildings—30 to 45 years; equipment—3 to 15 years. Leasehold improvements are amortized on a straight-line basis over the shorter of the estimated useful life of the asset or the term of the lease. When determining the amortization period of a leasehold improvement, the Company considers whether discretionary exercise of a lease renewal option is reasonably assured. If it is determined that the exercise of such option is reasonably assured, the Company will amortize the leasehold improvement asset over the minimum lease term, plus the option period. This determination depends on the remaining life of the minimum lease term and any economic penalties that would be incurred if the lease option is not exercised. Capitalized lease assets are recorded at the lesser of the present value of minimum lease payments or fair market value and amortized over the estimated useful life of the related property or term of the lease. The Company capitalizes direct internal and external development costs associated with internal-use software. Neither preliminary evaluation costs nor costs associated with the software after implementation are capitalized. For fiscal years 2020, 2019 and 2018, the Company capitalized costs of approximately $15,240, $13,716 and $13,940, respectively. |
Goodwill | Goodwill The Company recognizes goodwill as the excess of the purchase price over the fair value of the assets acquired and liabilities assumed during business combinations. The Company accounts for goodwill under ASC Topic 350, “Intangibles—Goodwill and Other”, which does not permit amortization, but instead requires the Company to perform an annual impairment review, or more frequently if events or circumstances indicate that impairment may be more likely. See Note 13 for additional information on goodwill. |
Intangible Assets | Intangible Assets The Company has certain finite-lived intangible assets that are amortized over their useful lives. Prescription files acquired in business combinations are amortized over an estimated useful life of ten years on an accelerated basis, which approximates the anticipated prescription file retention and related cash flows. Purchased prescription files acquired in other than business combinations are amortized over their estimated useful lives of five years on a straight-line basis. The value of finite-lived trade names are amortized over 10 years on a straight-line basis. The value of customer relationships, acquired in connection with the Company’s acquisition of EnvisionRx, are amortized over a period between 10 and 20 years on a descending percentage method which matches the pattern of expected discounted cash flows. The Pharmacy Services segment’s contract with Centers for Medicare and Medicaid Services (“CMS”) for Medicare Part D (“Part D”), which is required in order to act as a national provider of the Part D benefit, is amortized over 25 years on a straight line basis. |
Indefinite lived assets | Indefinite lived assets The Company has a single indefinite-lived intangible asset consisting of a trade name. Intangible assets that are determined to have an indefinite life are not amortized, but are required to be evaluated at least annually for impairment. If the carrying value of an individual indefinite-lived intangible asset exceeds its fair value, such individual indefinite-lived intangible asset is impaired by the amount of the excess. |
Deferred Financing Costs | Deferred Financing Costs Costs incurred to issue debt are deferred and amortized as a component of interest expense over the terms of the related debt agreements. Amortization expense of deferred financing costs was $10,187, $10,761 and $8,403 for fiscal 2020, 2019 and 2018, respectively. |
Revenue Recognition | Revenue Recognition Retail Pharmacy Segment For front-end sales, the Retail Pharmacy segment recognizes revenues upon the transfer of control of the goods to the customer. The Company satisfies its performance obligation at the point of sale for front-end transactions. The Retail Pharmacy segment front-end revenue is measured based on the amount of fixed consideration that it expects to receive, net of an allowance for estimated future returns. Return activity is immaterial to revenues and results of operations in all periods presented. For pharmacy sales, the Retail Pharmacy segment recognizes revenue upon the transfer of control of the goods to the customer. The Company satisfies its performance obligation, upon pickup by the customer, which is when the customer takes title to the product. Each prescription claim represents an individual arrangement with the customer and is a performance obligation, separate and distinct from other prescription claims. The Company's revenue is measured based on the amount of fixed consideration that we expect to receive, reduced by refunds owed to the third party payor for pricing guarantees and performance against defined value-based service and performance metrics. The inputs to these estimates are not highly subjective or volatile. The effect of adjustments between estimated and actual amounts have not been material to the Company's results of operations or financial position. Prescriptions are generally not returnable. The Retail Pharmacy segment offers a chain-wide loyalty card program titled wellness+. Individual customers are able to become members of the wellness+ program. Members participating in the wellness+ loyalty card program earn points on a calendar year basis for eligible front-end merchandise purchases and qualifying prescription purchases. Effective January 1, 2020, members reach specific wellness+ tiers based on points accumulated during the six st th st st six st th six six calendar months. There is also a similar “Silver” level with a lower threshold and benefit level. Prior to January 1, 2020, the wellness+ tiers were based on points accumulated for a full calendar year, and entitled such customers to wellness+ benefits for the remainder of that calendar year and also the next calendar year. Points earned pursuant to the wellness+ program represent a performance obligation and the Company allocates revenue between the merchandise purchased and the wellness+ points based on the relative stand-alone selling price of each performance obligation. The relative value of the wellness+ points is initially deferred as a contract liability (included in other current and noncurrent liabilities). As members receive discounted front-end merchandise or when the benefit period expires, the Retail Pharmacy segment recognizes an allocable portion of the deferred contract liability into revenue. The Retail Pharmacy segment had accrued contract liabilities of $52,668 as of February 29, 2020, of which $52,668 is included in other current liabilities and $0 is included in noncurrent liabilities. The Retail Pharmacy segment had accrued contract liabilities of $63,720 as of March 2, 2019, of which $51,042 is included in other current liabilities and $12,678 is included in noncurrent liabilities. Pharmacy Services Segment The Pharmacy Services segment sells prescription drugs indirectly through its retail pharmacy network and directly through its mail service dispensing pharmacy. The Pharmacy Services segment recognizes revenue from prescription drugs sold by (i) its mail service dispensing pharmacy and (ii) under retail pharmacy network contracts where it is the principal at the contract prices negotiated with its clients, primarily employers, insurance companies, unions, government employee groups, health plans, Managed Medicaid plans, Medicare plans, and other sponsors of health benefit plans, and individuals throughout the United States. Revenues include: (i) the portion of the price the client pays directly to the Pharmacy Services segment, net of any volume-related or other discounts paid back to the client (see “Drug Discounts” below), (ii) the price paid to the Pharmacy Services segment by client plan members for mail order prescriptions (“Mail Co-Payments”), (iii) client plan member copayments made directly to the retail pharmacy network and (iv) administrative fees. Revenue is recognized when the Pharmacy Services segment meets its performance obligations relative to each transaction type. The following revenue recognition policies have been established for the Pharmacy Services segment: ● Revenues generated from prescription drugs sold by third party pharmacies in the Pharmacy Services segment’s retail pharmacy network and associated administrative fees are recognized at the Pharmacy Services segment’s point-of-sale, which is when the claim is adjudicated by the Pharmacy Services segment’s online claims processing system. At this point the Company has performed all of its performance obligations. ● Revenues generated from prescription drugs sold by the Pharmacy Services segment’s mail service dispensing pharmacy are recognized when the prescription is shipped. At the time of shipment, the Pharmacy Services segment has performed all of its performance obligations under its client contracts, as control of and title to the product has passed to the client plan members. The Pharmacy Services segment does not experience a significant level of returns or reshipments. ● Revenues generated from administrative fees based on membership or claims volume are recognized monthly based on the terms within the individual contracts, either a monthly member based fee, or a claims volume based fee. In the majority of its contracts, the Pharmacy Services segment is the principal because its client contracts give clients the right to obtain access to its pharmacy contracts under which the Pharmacy Services segment directs its pharmacy network to provide the services (drug dispensing, consultation, etc.) and goods (prescription drugs) to the clients’ members at its negotiated pricing. The Pharmacy Services segment’s obligations under its client contracts are separate and distinct from its obligations to the third party pharmacies included in its retail pharmacy network contracts. In the majority of these contracts, the Pharmacy Services segment is contractually required to pay the third party pharmacies in its retail pharmacy network for products sold after payment is received from its clients. The Pharmacy Services segment has control over these transactions until the prescription is transferred to the member and, thus, that it is acting as a principal. As such, the Pharmacy Services segment records the total prescription price contracted with clients in revenues. Amounts paid to pharmacies and amounts charged to clients are exclusive of the applicable co-payment under Pharmacy Services segment contracts. Retail pharmacy co-payments, which we instruct retail pharmacies to collect from members, are included in our revenues and our cost of revenues. For contracts under which the Pharmacy Services segment acts as an agent or does not control the prescription drugs prior to transfer to the client, no revenue is recognized, except the administrative fee. Drug Discounts—The Pharmacy Services segment deducts from its revenues that are generated from prescription drugs sold by third party pharmacies any rebates, inclusive of discounts and fees, earned by its clients based on utilization levels and other factors as negotiated with the prescription drug manufacturers or suppliers. Rebates are paid to clients in accordance with the terms of client contracts. Medicare Part D—The Pharmacy Services segment, through its EIC subsidiary, participates in the federal government’s Medicare Part D program as a Prescription Drug Plan (“PDP”). Please refer to Note 9, Medicare Part D. Disaggregation of Revenue The following tables disaggregate the Company’s revenue by major source in each segment for the fiscal year ended February 29, 2020: In thousands February 29, 2020 Retail Pharmacy segment: Pharmacy sales $ 10,354,293 Front-end sales 5,114,976 Other revenue 146,917 Total Retail Pharmacy segment 15,616,186 Pharmacy Services segment 6,559,560 Intersegment elimination (247,353) Total revenue $ 21,928,393 Impact of New Revenue Recognition Standard on Financial Statement Line Items The Company adopted the new revenue standard using the modified retrospective method. The cumulative effect of applying the new standard to all contracts was recorded as an adjustment to accumulated deficit as of the adoption date. As a result of applying the modified retrospective method to adopt the new revenue standard, the following adjustments were made to accounts on the consolidated balance sheet as of March 4, 2018: Impact of Change in Accounting Policy As Reported Adjusted In thousands March 3, 2018 Adjustments March 4, 2018 Consolidated Balance Sheet: Accounts receivable, net $ 1,869,100 $ (57,897) $ 1,811,203 Inventories, net 1,799,539 51,121 1,850,660 Deferred tax assets 594,019 (1,784) 592,235 Total assets 8,989,327 (8,560) 8,980,767 Accumulated deficit (4,282,471) (8,560) (4,291,031) Total shareholders’ equity 1,601,010 (8,560) 1,592,450 See Note 20 for additional information about the revenues of the Company’s business segments. |
Cost of Revenues | Cost of Revenues Retail Pharmacy Segment Cost of revenues for the Retail Pharmacy segment includes the following: the cost of inventory sold during the period, including related vendor rebates and allowances, LIFO credit or charges, costs incurred to return merchandise to vendors, inventory shrink, purchasing costs and warehousing costs, which include inbound freight costs from the vendor, distribution payroll and benefit costs, distribution center occupancy costs and depreciation expense and delivery expenses to the stores. Pharmacy Services Segment The Pharmacy Services segment’s cost of revenues includes the cost of prescription drugs sold during the reporting period indirectly through its retail pharmacy network and directly through its mail service dispensing pharmacy. The cost of prescription drugs sold component of cost of revenues includes: (i) the cost of the prescription drugs purchased from manufacturers or distributors and shipped to members in clients’ benefit plans from the Pharmacy Services segment’s mail service dispensing pharmacy, net of any volume-related or other discounts (see the section entitled “Vendor Rebates and Allowances and Purchase Discounts” below) and (ii) the cost of prescription drugs sold through the Pharmacy Services segment’s retail pharmacy network under contracts where it is the principal, net of any volume-related or other discounts. See Note 20 for additional information about the cost of revenues of the Company’s business segments. Vendor Rebates and Allowances and Purchase Discounts Retail Pharmacy Segment The Retail Pharmacy segment rebates and allowances received from vendors relate to either buying and merchandising or promoting the product. Buying and merchandising related rebates and allowances are recorded as a reduction of cost of revenue as product is sold. Buying and merchandising rebates and allowances include all types of vendor programs such as cash discounts from timely payment of invoices, purchase discounts or rebates, volume purchase allowances, price reduction allowances and slotting allowances. Certain product promotion related rebates and allowances, primarily related to advertising, are recorded as a reduction in selling, general and administrative expenses when the advertising commitment has been satisfied. Pharmacy Services Segment The Pharmacy Services segment receives purchase discounts on products purchased. The Pharmacy Services segment’s contractual arrangements with vendors, including manufacturers, wholesalers and retail pharmacies, normally provide for the Pharmacy Services segment to receive purchase discounts from established list prices in one, or a combination, of the following forms: (i) a direct discount at the time of purchase, or (ii) a discount (or rebate) paid subsequent to dispensing when products are purchased indirectly from a manufacturer (e.g., through a wholesaler or retail pharmacy). These rebates are recognized when prescriptions are dispensed and are generally billed to manufacturers within 30 days of the end of each completed quarter. Historically, the effect of adjustments resulting from the reconciliation of rebates recognized to the amounts billed and collected has not been material to the Pharmacy Services segment’s results of operations. The Pharmacy Services segment accounts for the effect of any such differences as a change in accounting estimate in the period the reconciliation is completed. The Pharmacy Services segment also receives additional discounts under its wholesaler contracts and fees from pharmaceutical manufacturers for administrative services. Purchase discounts and administrative service fees are recorded as a reduction of cost of revenues. |
Rent | Rent The Company records rent expense on operating leases on a straight-line basis over the reasonably certain lease term. The Company begins to record rent expense at the time that the Company has the right to use the property. From time to time, the Company receives incentive payments from landlords that subsidize lease improvement construction. These leasehold incentives are recorded as a reduction to the right-of-use asset. |
Selling, General and Administrative Expenses | Selling, General and Administrative Expenses Selling, general and administrative expenses include store and corporate administrative payroll and benefit costs, occupancy costs which include retail store and corporate rent costs, facility and leasehold improvement depreciation and utility costs, advertising, repair and maintenance, insurance, equipment depreciation and professional fees. |
Repairs and Maintenance | Repairs and Maintenance Routine repairs and maintenance are charged to operations as incurred. Improvements and major repairs, which extend the useful life of an asset, are capitalized and depreciated. |
Advertising | Advertising Advertising costs, net of specific vendor advertising allowances, are expensed in the period the advertisement first takes place. Advertising expenses, net of vendor advertising allowances, for fiscal 2020, 2019 and 2018 were $142,079, $147,519 and $161,826, respectively. |
Insurance | Insurance The Company is self-insured for certain general liability and workers’ compensation claims. For claims that are self-insured, stop-loss insurance coverage is maintained for workers’ compensation occurrences exceeding $1,000 and general liability occurrences exceeding $3,000. The Company utilizes actuarial studies as the basis for developing reported claims and estimating claims incurred but not reported relating to the Company’s self-insurance. Workers’ compensation claims are discounted to present value using a risk-free interest rate. |
Benefit Plan Accruals | Benefit Plan Accruals The Company has several defined benefit plans, under which participants earn a retirement benefit based upon a formula set forth in the plan. The Company records expense related to these plans using actuarially determined amounts that are calculated under the provisions of ASC 715, “Compensation—Retirement Benefits.” Key assumptions used in the actuarial valuations include the discount rate, the expected rate of return on plan assets and the rate of increase in future compensation levels. |
Stock-Based Compensation | Stock-Based Compensation The Company has several stock option plans, which are described in detail in Note 17. The Company accounts for stock-based compensation under ASC 718, “Compensation—Stock Compensation.” The Company recognizes option expense over the requisite service period of the award, net of an estimate for the impact of award forfeitures. |
Store Pre-opening Expenses | Store Pre-opening Expenses Costs incurred prior to the opening of a new or relocated store, associated with a remodeled store or related to the opening of a distribution facility are charged to operations as incurred. |
Litigation Reserves | Litigation Reserves The Company is involved in litigation on an ongoing basis. The Company accrues its best estimate of the probable loss related to legal claims. Such estimates are developed in consultation with in-house counsel, and are based upon a combination of litigation and settlement strategies. |
Income Taxes | Income Taxes Deferred income taxes are determined based on the difference between the financial reporting and tax basis of assets and liabilities. Deferred income tax expense (benefit) represents the change during the reporting period in the deferred tax assets and deferred tax liabilities, net of the effect of acquisitions and dispositions. Deferred tax assets include tax loss and credit carryforwards and are reduced by a valuation allowance if, based on available evidence, it is more likely than not that some portion of the deferred tax assets will not be realized. Changes in valuation allowances from period to period are included in the tax provision in the period of change. The Company has net operating loss (“NOL”) carryforwards that can be utilized to offset future income for federal and state tax purposes. These NOLs generate a significant deferred tax asset. The Company regularly reviews the deferred tax assets for recoverability considering historical profitability, projected taxable income, the expected timing of the reversals of existing temporary differences and tax planning strategies. The Company recognizes tax liabilities in accordance with ASC 740, “Income Taxes” and the Company 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. The Tax Cuts and Jobs Act (the “Tax Act”), enacted on December 22, 2017, among other things, permanently lowered the statutory federal corporate tax rate from 35% to 21%, effective for tax years including or beginning January 1, 2018. Under the guidance of ASC 740, “Income Taxes” (“ASC 740”), the Company re-measured its net deferred tax assets on the date of enactment based on the reduction in the overall future tax benefit expected to be realized at the lower tax rate implemented by the new legislation. |
Sales Tax Collected | Sales Tax Collected Sales taxes collected from customers and remitted to various governmental agencies are presented on a net basis (excluded from revenues) in the Company’s statement of operations. |
Use of Estimates | Use of Estimates The preparation of the financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from those estimates. |
Significant Concentrations | Significant Concentrations Retail Pharmacy Segment The Company’s pharmacy sales were primarily to customers covered by health plan contracts, which typically contract with a third party payor that agrees to pay for all or a portion of a customer’s eligible prescription purchases. During fiscal 2020, the top five third party payors accounted for approximately 79.9% of the Company’s pharmacy sales. The largest third party payor, Caremark, represented 28.8%, 28.3% and 27.2% of pharmacy sales during fiscal 2020, 2019 and 2018, respectively. Third party payors are entities such as an insurance company, governmental agency, health maintenance organization or other managed care provider, and typically represent several health care contracts and customers. During fiscal 2020, state sponsored Medicaid agencies and related managed care Medicaid payors accounted for approximately 19.0% of the Company’s pharmacy sales, the largest of which was approximately 1.4% of the Company’s pharmacy sales. During fiscal 2020, approximately 38.4% of the Company’s pharmacy sales were to customers covered by Medicare Part D. Any significant loss of third- party payor business could have a material adverse effect on the Company’s business and results of operations. During fiscal 2020, the Company purchased brand and generic pharmaceuticals, which amounted to approximately 99.0% of the dollar volume of its prescription drugs from McKesson Corporation (“McKesson”) under its expanded agreement executed on February 17, 2014 and amended in fiscal 2019 for our pharmaceutical purchasing and distribution whereby McKesson assumed responsibility for purchasing essentially all of the brand and generic medications the Company dispenses as well as providing a new direct store delivery model to all of the Company’s stores. If the Company’s relationship with McKesson was disrupted, it could temporarily have difficulty filling prescriptions for brand-named and generic drugs until it executed a replacement wholesaler agreement or developed and implemented self-distribution processes. Pharmacy Services Segment Our Pharmacy Services segment revenue is currently generated from a limited number of customers. During fiscal 2020, our top five customers accounted for 53.2% of our Pharmacy Services segment revenue. The largest payor, CMS, represented 27.4%, 23.0% and 17.3 % of Pharmacy Services segment revenue during fiscal 2020, 2019 and 2018, respectively. Pharmacy Services segment customers are entities such as employers, insurance companies, unions, government employee groups, health plans, Managed Medicaid plans, Medicare plans, and other sponsors of health benefit plans, and individuals throughout the United States. The Pharmacy Services segment, through its EIC subsidiary, participates in the federal government’s Medicare Part D program as a PDP. During fiscal 2020, fiscal 2019 and fiscal 2018, net revenues of $436,435 (2.0% of consolidated revenues), $391,024 (1.8% of consolidated revenues) and $203,361 (1.0% of consolidated revenues), respectively, include insurance premiums earned by the PDP, which are determined based on the PDP’s annual bid and related contractual arrangements with CMS. |
Derivatives | Derivatives The Company may enter into interest rate swap agreements to hedge the exposure to increasing rates with respect to its variable rate debt, when the Company deems it prudent to do so. Upon inception of interest rate swap or cap agreements, or modifications thereto, the Company performs a comprehensive review of the interest rate swap agreements based on the criteria as provided by ASC 815, “Derivatives and Hedging.” As of March 2, 2019, the Company had no |
Recently Adopted Accounting Pronouncements | Recently Adopted Accounting Pronouncements In February 2016, the FASB issued ASU No. 2016-02 , Leases, (Topic 842) During July 2018, the FASB issued ASU 2018-11, Leases (Topic 842): The Company adopted the Lease Standard on March 3, 2019 under the alternative transition method as permissible under ASU 2018-11, and applied the Lease Standard to all leases through a cumulative-effect adjustment to beginning accumulated deficit. As a result, comparative financial information has not been restated and continues to be reported under the accounting standards in effect for those periods. The Company elected the package of practical expedients As permitted under the practical expedient concerning assessment of lease portfolio, the Company chose not to reassess its lease portfolio, and consequently, all existing leases that were classified as operating leases in accordance with Topic 840, continue to be classified as operating leases, and all existing leases that were classified as capital leases under Topic 840 continue to be classified as finance leases. The Company performed an evaluation of ROU asset for impairment on transition. Stores that had previously been impaired and continued to fail the recoverability test as of March 2, 2019 were evaluated. Any store ROU asset with a carrying amount in excess of fair value was written down to the fair value. Fair value of those ROU assets was determined based on a study of market rents for similar active/operating retails sites. The result of this impairment assessment was a $81,745 write-down of the ROU assets on transition to accumulated deficit. In addition, the Company recognized $24,969 of deferred gains as a reduction to accumulated deficit upon transition related to prior sale-leaseback transactions along with other minor adjustments. As of March 2, 2019, the Company had $124,046 in closed store and lease exit liabilities under Topic 420 (“Topic 420 Liabilities”). Under transition to Topic 842, existing Topic 420 liabilities were eliminated by recording a reduction to the ROU asset balance. However, in certain cases the Company had larger existing Topic 420 liabilities than the ROU asset balances. This excess amount of $9,333 continues to be recorded as a liability and will reduce lease expense over the remaining lease term of the affected stores. In addition, upon transition, the Company reclassified deferred rent, including unamortized tenant income allowances, prepaid rent, and favorable and unfavorable lease balances resulting from prior acquisition accounting to the ROU asset. The following is a discussion of the Company’s lease policy under the new lease accounting standard: The Company determines if an arrangement contains a lease at the inception of a contract. Operating lease right-of-use assets represent the Company’s right to use an underlying asset for the lease term and operating lease liabilities represent the Company’s obligation to make lease payments arising from the lease. Operating lease right-of-use assets and operating lease liabilities are recognized at the commencement date based on the present value of the remaining future minimum lease payments. As the interest rate implicit in the Company’s leases is not readily determinable, the Company utilizes its incremental borrowing rate, determined by class of underlying asset, to discount the lease payments. The incremental borrowing rate is determined using a portfolio approach based on the rate of interest that we would pay to borrow an amount equal to the lease payments on a collateralized basis over a similar term. We use quoted interest rates obtained from financial institutions in an input to derive our incremental borrowing rate as the discount rate for the lease. The ROU asset is equal to the operating lease liability plus lease payments made before commencement, less lease incentives received from the landlord. The Company’s real estate leases typically contain options that permit lease extensions for additional periods of up to five years each. For real estate leases, generally, the renewal periods are not included within the lease term and the associated payments are not included in the measurement of the ROU asset and operating lease liability as the options to extend are not considered reasonably certain to occur at lease commencement. The Company reevaluates each lease on a regular basis to consider the economic and strategic incentives of exercising the renewal options and will include all reasonably certain options in the measurement of our lease term. Generally, the renewal option periods are not included within the lease term and the associated payments are not included in the measurement of the operating lease right-of-use asset and the operating lease liability until the renewals are i) evaluated and ii) determined to be exercised. The Company has an insignificant amount of non-real estate leases however, renewal options are not included in the lease term for non-real estate leases because they are not considered reasonably certain of being exercised at lease commencement. The Company rarely executes leases less than 12 months. On transition, the Company did include in its ROU asset balance leases with less than 12 months remaining. For real estate leases, the Company accounts for lease components and non-lease components as a single lease component. Certain real estate leases require additional payments based on sales volume, as well as reimbursement for real estate taxes, common area maintenance and insurance, which are expensed as incurred as variable lease costs. Other real estate leases contain one fixed lease payment that includes real estate taxes, common area maintenance and insurance. These fixed payments are considered part of the lease payment and included in the operating lease right-of-use assets and operating lease liabilities. Impact of the Lease Standard on Financial Statement Line Items As a result of applying the alternative transition method to adopt the Lease Standard, the following adjustments were made to accounts on the unaudited condensed consolidated balance sheet as of March 3, 2019: Impact of change in accounting policy (in thousands) As reported As adjusted March 2, 2019 Adjustments March 3, 2019 ASSETS Current assets: Cash and cash equivalents $ 144,353 $ — $ 144,353 Accounts receivable, net 1,788,712 — 1,788,712 Inventories, net 1,871,941 — 1,871,941 Prepaid expenses and other current assets 179,132 (51,448) 127,684 Current assets held for sale 117,581 43,697 161,278 Total current assets 4,101,719 (7,751) 4,093,968 Property, plant and equipment, net 1,308,514 — 1,308,514 Operating lease right-of-use asset — 3,026,976 3,026,976 Goodwill 1,108,136 — 1,108,136 Other intangibles, net 448,706 (29,632) 419,074 Deferred tax assets 409,084 — 409,084 Other assets 215,208 (1,086) 214,122 Total assets $ 7,591,367 $ 2,988,507 $ 10,579,874 LIABILITIES AND STOCKHOLDERS’ EQUITY Current liabilities: Current maturities of long-term debt and lease financing obligations $ 16,111 $ — $ 16,111 Accounts payable 1,618,585 — 1,618,585 Accrued salaries, wages and other current liabilities 808,439 (56,553) 751,886 Current portion of operating lease liabilities — 457,305 457,305 Current liabilities held for sale — 45,167 45,167 Total current liabilities 2,443,135 445,919 2,889,054 Long-term debt, less current maturities 3,454,585 — 3,454,585 Long-term operating lease liabilities — 2,838,022 2,838,022 Lease financing obligations, less current maturities 24,064 — 24,064 Other noncurrent liabilities 482,893 (238,658) 244,235 Total liabilities 6,404,677 3,045,283 9,449,960 Commitments and contingencies — — — Stockholders’ equity: Common stock, par value $1 per share; 75,000 shares authorized; shares issued and outstanding 54,016 54,016 — 54,016 Additional paid-in capital 5,876,977 — 5,876,977 Accumulated deficit (4,713,244) (56,776) (4,770,020) Accumulated other comprehensive loss (31,059) — (31,059) Total stockholders’ equity 1,186,690 (56,776) 1,129,914 Total liabilities and stockholders’ equity $ 7,591,367 $ 2,988,507 $ 10,579,874 See Note 16 for additional information. In May 2014, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2014-09, Revenue from Contracts with Customers (Topic 606) Principal Versus Agent Considerations (Reporting Revenue Gross Versus Net), the principal-versus-agent implementation guidance and in April 2016, the FASB issued ASU No. 2016-10, Identifying Performance Obligations and Licensing, The Company adopted the new revenue standard as of March 4, 2018 using the modified retrospective method and applying the new standard to all contracts with customers. Therefore, the comparative financial information has not been restated and continues to be reported under the accounting standards in effect for those periods. In connection with the adoption of the new revenue standard, the Company identified one difference in its Retail Pharmacy segment related to the timing of revenue recognition for third party prescription revenues, which was historically recognized at the time the prescription was filled. Upon adoption of ASU No. 2014-09, this revenue is recognized at the time the customer takes possession of the merchandise. In connection with its March 4, 2018 adoption of the new revenue standard on a modified retrospective basis, the Company recorded a reduction to accounts receivable of $57,897, a reduction to deferred tax assets of $1,784, an increase to inventory of $51,121, and a corresponding increase to accumulated deficit of $8,560 within its Retail Pharmacy segment. In addition, the Company identified revenues under one specific rebate administration program under which the Company’s Pharmacy Services segment was determined to be the principal and historically recognized revenues and cost of revenues on a gross basis of approximately $123,500 during fiscal 2018. Upon adoption of the new revenue standard, the Company is now recording revenue from this program on a net basis. |
Recently Issued Accounting Pronouncements Not Yet Adopted | Recently Issued Accounting Pronouncements Not Yet Adopted In August 2018, the FASB issued ASU 2018-14, Compensation - Retirement benefits (Topic 715-20) In August 2018, the FASB issued ASU No. 2018-15, Intangibles-Goodwill and Other-Internal-Use Software (Subtopic 350-40) In June 2016, the FASB issued ASU 2016-13, Measurement of Credit Losses on Financial Instruments receivables, financial guarantees, loans and loan commitments and held-to-maturity debt securities). The Company is evaluating the effect of adopting ASU 2016-13, but does not expect the adoption to have a material impact on the Company’s financial position, results of operations and cash flows. |
Summary of Significant Accoun_3
Summary of Significant Accounting Policies (Tables) | 12 Months Ended |
Feb. 29, 2020 | |
Schedule of revenues | Year Ended February 29, March 2, March 3, 2020 2019 2018 (52 Weeks) (52 Weeks) (52 Weeks) Retail Pharmacy segment: Pharmacy sales $ 10,354,293 $ 10,391,539 $ 10,328,376 Front-end sales 5,114,976 5,215,152 5,348,613 Other revenue 146,917 150,461 155,636 Total Retail Pharmacy segment 15,616,186 15,757,152 15,832,625 Pharmacy Services segment revenue 6,559,560 6,093,688 5,896,669 Intersegment elimination (247,353) (211,283) (200,326) Total revenue $ 21,928,393 $ 21,639,557 $ 21,528,968 |
Schedule of principal classes of products | Percentage Product Class of Sales Prescription drugs 67.0 % Over-the-counter medications and personal care 11.0 % Health and beauty aids 5.0 % General merchandise and other 17.0 % |
Schedule of disaggregation of revenue | In thousands February 29, 2020 Retail Pharmacy segment: Pharmacy sales $ 10,354,293 Front-end sales 5,114,976 Other revenue 146,917 Total Retail Pharmacy segment 15,616,186 Pharmacy Services segment 6,559,560 Intersegment elimination (247,353) Total revenue $ 21,928,393 |
Accounting Standards Update 2016-02 | |
Schedule of impact of the Company's adoption of the ASU on the prior period consolidated balance sheet | Impact of change in accounting policy (in thousands) As reported As adjusted March 2, 2019 Adjustments March 3, 2019 ASSETS Current assets: Cash and cash equivalents $ 144,353 $ — $ 144,353 Accounts receivable, net 1,788,712 — 1,788,712 Inventories, net 1,871,941 — 1,871,941 Prepaid expenses and other current assets 179,132 (51,448) 127,684 Current assets held for sale 117,581 43,697 161,278 Total current assets 4,101,719 (7,751) 4,093,968 Property, plant and equipment, net 1,308,514 — 1,308,514 Operating lease right-of-use asset — 3,026,976 3,026,976 Goodwill 1,108,136 — 1,108,136 Other intangibles, net 448,706 (29,632) 419,074 Deferred tax assets 409,084 — 409,084 Other assets 215,208 (1,086) 214,122 Total assets $ 7,591,367 $ 2,988,507 $ 10,579,874 LIABILITIES AND STOCKHOLDERS’ EQUITY Current liabilities: Current maturities of long-term debt and lease financing obligations $ 16,111 $ — $ 16,111 Accounts payable 1,618,585 — 1,618,585 Accrued salaries, wages and other current liabilities 808,439 (56,553) 751,886 Current portion of operating lease liabilities — 457,305 457,305 Current liabilities held for sale — 45,167 45,167 Total current liabilities 2,443,135 445,919 2,889,054 Long-term debt, less current maturities 3,454,585 — 3,454,585 Long-term operating lease liabilities — 2,838,022 2,838,022 Lease financing obligations, less current maturities 24,064 — 24,064 Other noncurrent liabilities 482,893 (238,658) 244,235 Total liabilities 6,404,677 3,045,283 9,449,960 Commitments and contingencies — — — Stockholders’ equity: Common stock, par value $1 per share; 75,000 shares authorized; shares issued and outstanding 54,016 54,016 — 54,016 Additional paid-in capital 5,876,977 — 5,876,977 Accumulated deficit (4,713,244) (56,776) (4,770,020) Accumulated other comprehensive loss (31,059) — (31,059) Total stockholders’ equity 1,186,690 (56,776) 1,129,914 Total liabilities and stockholders’ equity $ 7,591,367 $ 2,988,507 $ 10,579,874 |
Accounting Standards Update 2014-09 | |
Schedule of impact of the Company's adoption of the ASU on the prior period consolidated balance sheet | Impact of Change in Accounting Policy As Reported Adjusted In thousands March 3, 2018 Adjustments March 4, 2018 Consolidated Balance Sheet: Accounts receivable, net $ 1,869,100 $ (57,897) $ 1,811,203 Inventories, net 1,799,539 51,121 1,850,660 Deferred tax assets 594,019 (1,784) 592,235 Total assets 8,989,327 (8,560) 8,980,767 Accumulated deficit (4,282,471) (8,560) (4,291,031) Total shareholders’ equity 1,601,010 (8,560) 1,592,450 |
Restructuring (Tables)
Restructuring (Tables) | 12 Months Ended |
Feb. 29, 2020 | |
Restructuring | |
Schedule of restructuring-related costs | Retail Pharmacy Pharmacy segment Services segment Total Restructuring-related costs Severance and related costs associated with ongoing reorganization efforts (a) $ 47,154 $ 11,339 $ 58,493 Non-executive retention costs associated with the March 2019 reorganization (b) 8,927 4,243 13,170 Professional and other fees relating to restructuring activities (c) 31,657 2,322 33,979 Total restructuring-related costs $ 87,738 $ 17,904 $ 105,642 Retail Pharmacy Pharmacy segment Services segment Total Restructuring-related costs Severance and related costs associated with ongoing reorganization efforts (a) $ — $ — $ — Non-executive retention costs associated with the March 2019 reorganization (b) 3,224 1,480 4,704 Professional and other fees relating to restructuring activities (c) — — — Total restructuring-related costs $ 3,224 $ 1,480 $ 4,704 |
Schedule of restructuring-related liabilities | Severance and related Professional and costs (a) Retention costs (b) other fees (c) Total Balance at March 2, 2019 $ — $ 4,704 $ — $ 4,704 Additions charged to expense 27,076 6,664 9,610 43,350 Cash payments (4,653) (242) (9,610) (14,505) Balance at June 1, 2019 $ 22,423 $ 11,126 $ — $ 33,549 Additions charged to expense 8,381 4,087 12,677 25,145 Cash payments (4,580) (11,200) (6,768) (22,548) Balance at August 31, 2019 $ 26,224 $ 4,013 $ 5,909 $ 36,146 Additions charged to expense 17,320 1,268 6,687 25,275 Cash payments (5,036) — (5,088) (10,124) Balance at November 30, 2019 $ 38,508 $ 5,281 $ 7,508 $ 51,297 Additions charged to expense 5,716 1,151 5,005 11,872 Cash payments (7,996) — (10,119) (18,115) Balance at February 29, 2020 $ 36,228 $ 6,432 $ 2,394 $ 45,054 (a) – Severance and related costs reflect severance accruals, executive search fees, outplacement services and other similar charges associated with ongoing reorganization efforts. (b) – As part of its March 2019 reorganization, the Company incurred costs with the implementation of a retention plan for certain of its key associates. (c) – Professional and other fees include costs incurred in connection with the identification and implementation of initiatives associated with restructuring activities. |
Asset Sale to WBA (Tables)
Asset Sale to WBA (Tables) | 12 Months Ended |
Feb. 29, 2020 | |
Asset Sale to WBA | |
Schedule of assets and operating results of discontinued operations | February 29, March 2, 2020 2019 Inventories $ 13,719 $ 68,233 Property and equipment 43,576 49,348 Operating lease right-of-use asset 34,983 — Current assets held for sale $ 92,278 $ 117,581 Current portion of operating lease liabilities $ 2,002 $ — Long-term operating lease liabilities 35,061 — Current liabilities held for sale $ 37,063 $ — The operating results of the discontinued operations that are reflected on the consolidated statements of operations within net income from discontinued operations are as follows: February 29, March 2, March 3, 2020 2019 2018 (52 weeks) (52 weeks) (52 weeks) Revenues $ (21) $ 34,889 $ 8,686,397 Costs and expenses: Cost of revenues(a) (5,639) 24,271 6,406,067 Selling, general and administrative expenses(a) 1,498 20,681 2,134,276 Lease termination and impairment charges — — 77 Loss on debt retirements, net — 22,646 8,180 Interest expense(b) 1 4,616 224,300 Gain on stores sold to Walgreens Boots Alliance — (374,619) (2,128,832) (Gain) loss on sale of assets, net (19,937) 1,486 (377) (24,077) (300,919) 6,643,691 Income from discontinued operations before income taxes 24,056 335,808 2,042,706 Income tax expense 7,011 91,067 749,704 Net income from discontinued operations, net of tax $ 17,045 $ 244,741 $ 1,293,002 (a) Cost of revenues and selling, general and administrative expenses for the discontinued operations excludes corporate overhead. These charges are reflected in continuing operations. (b) In accordance with ASC 205-20, the operating results for the fifty-two week period ended February 29, 2020, the fifty-two week period ended March 2, 2019 and the fifty-two week period ended March 3, 2018, respectively, for the discontinued operations include interest expense relating to the outstanding indebtedness repaid with the estimated excess proceeds from the Sale. |
(Loss) Income Per Share (Tables
(Loss) Income Per Share (Tables) | 12 Months Ended |
Feb. 29, 2020 | |
Income (Loss) Per Share | |
Schedule of calculation of basic and diluted income (loss) per share | February 29, March 2, March 3, 2020 2019 2018 (52 Weeks) (52 Weeks) (52 Weeks) Basic and diluted (loss) income per share: Numerator: Net loss from continuing operations $ (469,219) $ (666,954) $ (349,532) Net income from discontinued operations 17,045 244,741 1,293,002 (Loss) income attributable to common stockholders— basic and diluted $ (452,174) $ (422,213) $ 943,470 Denominator: Basic weighted average shares 53,228 52,854 52,481 Outstanding options and restricted shares, net — — — Diluted weighted average shares 53,228 52,854 52,481 Basic and diluted (loss) income per share: Continuing operations $ (8.82) $ (12.62) $ (6.66) Discontinued operations 0.32 4.63 24.64 Net basic and diluted (loss) income per share $ (8.50) $ (7.99) $ 17.98 |
Lease Termination and Impairm_2
Lease Termination and Impairment Charges (Tables) | 12 Months Ended |
Feb. 29, 2020 | |
Lease Termination and Impairment Charges | |
Schedule of amounts relating to lease termination and impairment charges | February 29, 2020 March 2, 2019 March 3, 2018 (in thousands, except number of stores) Number Charge Number Charge Number Charge Active stores: Stores previously impaired(1) 274 $ 11,449 288 $ 17,939 218 $ 7,313 New, relocated and remodeled stores(2) 8 11,228 22 10,595 28 13,100 Remaining stores not meeting the recoverability test(3) 38 12,148 74 17,885 60 14,369 Total impairment charges—active stores 320 34,825 384 46,419 306 34,782 Total impairment charges—closed facilities 30 5,050 62 2,788 67 3,091 Total impairment charges—other(4) — — — 14,285 — — Total impairment charges—all locations 350 $ 39,875 446 $ 63,492 373 $ 37,873 (1) These charges are related to stores that were impaired for the first time in prior periods. In an effort to improve the operating results or to meet geographical competition, the Company will often make additional capital additions in stores that were impaired in prior periods. These additions will be impaired in future periods if they are deemed to be unrecoverable. In connection with our March 3, 2019 adoption of ASU 2016-02 , Leases (Topic 842) , under the alternative transition method, and the recording of our corresponding right-of-use asset (“ROU”). Beginning with fiscal 2020, the Company includes the ROU in its recoverability assessment. The fiscal 2020 impairment charge includes $6,594 of impairment relating to the ROU and $4,855 of capital additions. (2) These charges are related to new stores (open at least three years ) and relocated stores (relocated in the last two years ) and significant strategic remodels (remodeled in the last year) that did not meet their recoverability test during the current period. These stores have not met their original return on investment projections and have a historical loss of at least two years . Their future cash flow projections do not recover their current carrying value. The fiscal 2020 impairment charge includes $5,625 of impairment relating to the ROU and $5,603 of capital assets. (3) These charges are related to the remaining active stores that did not meet the recoverability test during the current period. These stores have a historical loss of at least 2 years. Their future cash flow projections do not recover their current carrying value. The fiscal 2020 impairment charge includes $2,228 of impairment relating to the ROU and $9,920 of capital assets. (4) These fiscal 2019 charges were due to the impairment of assets related to the termination of a project to replace the point of sale software used in the Company’s stores. |
Schedule of fair value of long-lived assets measured on recurring and non-recurring basis | Fair Values Total as of Charges Level 1 Level 2 Level 3 Impairment Date February 29, 2020 Long-lived assets held for use $ — $ 113,510 $ 278 $ 113,788 $ (38,878) Long-lived assets held for sale $ — $ 2,689 $ — $ 2,689 $ (997) Total $ — $ 116,199 $ 278 $ 116,477 $ (39,875) Fair Values Total as of Charges Level 1 Level 2 Level 3 Impairment Date March 2, 2019 Long-lived assets held for use $ — $ — $ 8,116 $ 8,116 $ (62,115) Long-lived assets held for sale $ — $ 1,545 $ — $ 1,545 $ (1,377) Total $ — $ 1,545 $ 8,116 $ 9,661 $ (63,492) |
Schedule of closed store and distribution center charges related to new closures, changes in assumptions and interest accretion | Year Ended February 29, March 2, March 3, 2020 2019 2018 (52 Weeks) (52 Weeks) (52 Weeks) Balance—beginning of period $ 124,046 $ 133,290 $ 165,138 Existing Topic 420 liabilities eliminated by recording a reduction to the ROU asset (112,288) — — Provision for present value of noncancellable lease payments of closed stores — 35,190 8,871 Changes in assumptions about future sublease income, terminations and changes in interest rates — 737 1,082 Interest accretion — 9,741 11,439 Cash payments, net of sublease income (9,505) (54,912) (53,240) Balance—end of period $ 2,253 $ 124,046 $ 133,290 |
Schedule of revenue, operating expenses, and income before income taxes of stores | Year Ended February 29, March 2, March 3, 2020 2019 2018 Revenues $ 17,182 $ 191,110 $ 333,984 Operating expenses 18,046 209,645 369,859 Gain from sale of assets (2,550) (38,110) (18,221) Other expenses 776 2,490 2,442 Income (loss) before income taxes 910 17,085 (20,096) Included in these stores’ loss before income taxes are: Depreciation and amortization 292 960 2,058 Inventory liquidation charges (486) (5,536) (2,828) |
Income Taxes (Tables)
Income Taxes (Tables) | 12 Months Ended |
Feb. 29, 2020 | |
Income Taxes | |
Schedule of provision for income tax expense (benefit) from continuing operations | Year Ended February 29, March 2, March 3, 2020 2019 2018 (52 Weeks) (52 Weeks) (52 Weeks) Current tax: Federal $ (6,758) $ (22,187) $ (210) State 13,725 9,866 51,279 6,967 (12,321) 51,069 Deferred tax and other: Federal 345,469 50,151 316,451 State 35,171 39,647 (61,533) 380,640 89,798 254,918 Total income tax expense $ 387,607 $ 77,477 $ 305,987 |
Schedule of reconciliation of the expected statutory federal tax and the total income tax expense (benefit) from continuing operations | Year Ended February 29, March 2, March 3, 2020 2019 2018 (52 Weeks) (52 Weeks) (52 Weeks) Federal statutory rate* $ (17,093) $ (123,790) $ (14,202) Federal tax rate change — — 324,765 Nondeductible expenses 1,025 2,890 1,213 State income taxes, net 46,620 (12,605) (22,836) Increase (decrease) of previously recorded liabilities (4,477) (3,105) 27,295 Nondeductible compensation 2,623 1,798 654 Officer life insurance 5,555 — — Qualified fringe disallowance 974 — — Acquisition costs — — 696 Stock based compensation 4,999 3,478 8,363 Valuation allowance 347,599 212,252 (8,853) Other (218) (3,441) (11,108) Total income tax expense $ 387,607 $ 77,477 $ 305,987 * Federal statutory rate included in the above table is 21.0%, 21.0% and 32.6%, respectively, for the fiscal years ended February 29, 2020, March 2, 2019 and March 3, 2018. |
Schedule of significant components of deferred tax assets and liabilities | 2020 2019 Deferred tax assets: Accounts receivable $ 29,734 $ 36,607 Accrued expenses 99,637 107,356 Liability for lease exit costs 772 37,333 Pension, retirement and other benefits 98,408 87,397 Long-lived assets 303,630 320,561 Operating lease liabilities 903,020 — Credits 35,197 48,884 Net operating losses 1,284,831 1,084,139 Other 654 — Total gross deferred tax assets 2,755,883 1,722,277 Valuation allowance (1,673,119) (1,091,416) Total deferred tax assets 1,082,764 630,861 Deferred tax liabilities: Outside basis difference 5,616 5,392 Inventory 242,238 215,588 Operating lease right-of-use assets 818,230 — Other — 797 Total gross deferred tax liabilities 1,066,084 221,777 Net deferred tax assets $ 16,680 $ 409,084 |
Schedule of reconciliation of the beginning and ending amount of unrecognized tax benefits from continuing operations | 2020 2019 2018 Unrecognized tax benefits $ 219,839 $ 230,210 $ 8,939 Increases to prior year tax positions 440 155 — Decreases to tax positions in prior periods (6,448) (111) (1,015) Increases to current year tax positions — — 224,408 Settlements — — — Divestitures — (543) (1,607) Lapse of statute of limitations (15,506) (9,872) (515) Unrecognized tax benefits balance $ 198,325 $ 219,839 $ 230,210 |
Property, Plant and Equipment (
Property, Plant and Equipment (Tables) | 12 Months Ended |
Feb. 29, 2020 | |
Property, Plant and Equipment | |
Schedule of property, plant and equipment, including capital lease assets | 2020 2019 Land $ 131,814 $ 139,406 Buildings 513,264 533,580 Leasehold improvements 1,533,729 1,527,371 Equipment 1,774,424 1,765,575 Software 60,035 38,680 Construction in progress 44,063 49,344 4,057,329 4,053,956 Accumulated depreciation (2,841,491) (2,745,442) Property, plant and equipment, net $ 1,215,838 $ 1,308,514 |
Goodwill and Other Intangible_2
Goodwill and Other Intangible Assets (Tables) | 12 Months Ended |
Feb. 29, 2020 | |
Goodwill and Other Intangible Assets | |
Summary of the changes in the carrying amount of goodwill | Retail Pharmacy Pharmacy Services Total Balance, March 3, 2018 $ 43,492 $ 1,377,628 $ 1,421,120 Goodwill impairment — (312,984) (312,984) Balance, March 2, 2019 43,492 1,064,644 1,108,136 Goodwill impairment — — — Balance, February 29, 2020 $ 43,492 $ 1,064,644 $ 1,108,136 |
Schedule of Indefinite-Lived Intangible Assets [Table Text Block] | 2020 2019 Remaining Remaining Weighted Weighted Gross Average Gross Average Carrying Accumulated Amortization Carrying Accumulated Amortization Amount Amortization Net Period Amount Amortization Net Period Favorable leases, non-compete agreements and other(a)(b) $ 186,183 $ (163,575) $ 22,608 3 years $ 370,855 $ (318,503) $ 52,352 7 years Prescription files 950,887 (867,430) 83,457 3 years 919,749 (827,222) 92,527 3 years Customer relationships(a) 388,000 (231,015) 156,985 12 years 388,000 (193,352) 194,648 13 years CMS license 57,500 (10,772) 46,728 21 years 57,500 (8,472) 49,028 22 years Claims adjudication and other developed software 58,985 (39,459) 19,526 3 years 58,985 (31,030) 27,955 4 years Trademarks 20,100 (9,413) 10,687 6 years 20,100 (7,404) 12,696 7 years Backlog 11,500 (11,500) — 0 years 11,500 (11,500) — 0 years Total finite $ 1,673,155 $ (1,333,164) 339,991 $ 1,826,689 $ (1,397,483) $ 429,206 Trademarks 19,500 — 19,500 Indefinite 19,500 — 19,500 Indefinite Total $ 1,692,655 $ (1,333,164) $ 359,491 $ 1,846,189 $ (1,397,483) $ 448,706 (a) Amortized on an accelerated basis which is determined based on the remaining useful economic lives of the customer relationships that are expected to contribute directly or indirectly to future cash flows. (b) Favorable leases were reclassified into operating lease right-of-use assets upon the adoption of ASU 2016-02, Leases (Topic 842) . |
Schedule of Finite-Lived Intangible Assets [Table Text Block] | 2020 2019 Remaining Remaining Weighted Weighted Gross Average Gross Average Carrying Accumulated Amortization Carrying Accumulated Amortization Amount Amortization Net Period Amount Amortization Net Period Favorable leases, non-compete agreements and other(a)(b) $ 186,183 $ (163,575) $ 22,608 3 years $ 370,855 $ (318,503) $ 52,352 7 years Prescription files 950,887 (867,430) 83,457 3 years 919,749 (827,222) 92,527 3 years Customer relationships(a) 388,000 (231,015) 156,985 12 years 388,000 (193,352) 194,648 13 years CMS license 57,500 (10,772) 46,728 21 years 57,500 (8,472) 49,028 22 years Claims adjudication and other developed software 58,985 (39,459) 19,526 3 years 58,985 (31,030) 27,955 4 years Trademarks 20,100 (9,413) 10,687 6 years 20,100 (7,404) 12,696 7 years Backlog 11,500 (11,500) — 0 years 11,500 (11,500) — 0 years Total finite $ 1,673,155 $ (1,333,164) 339,991 $ 1,826,689 $ (1,397,483) $ 429,206 Trademarks 19,500 — 19,500 Indefinite 19,500 — 19,500 Indefinite Total $ 1,692,655 $ (1,333,164) $ 359,491 $ 1,846,189 $ (1,397,483) $ 448,706 (a) Amortized on an accelerated basis which is determined based on the remaining useful economic lives of the customer relationships that are expected to contribute directly or indirectly to future cash flows. (b) Favorable leases were reclassified into operating lease right-of-use assets upon the adoption of ASU 2016-02, Leases (Topic 842) . |
Accrued Salaries, Wages and O_2
Accrued Salaries, Wages and Other Current Liabilities (Tables) | 12 Months Ended |
Feb. 29, 2020 | |
Accrued Salaries, Wages and Other Current Liabilities | |
Schedule of accrued salaries, wages and other current liabilities | 2020 2019 Accrued wages, benefits and other personnel costs $ 254,773 $ 302,025 Accrued interest 12,073 13,991 Accrued sales and other taxes payable 76,816 80,708 Accrued store expense 97,801 143,053 Other 304,855 268,662 $ 746,318 $ 808,439 |
Indebtedness and Credit Agree_2
Indebtedness and Credit Agreements (Tables) | 12 Months Ended |
Feb. 29, 2020 | |
Indebtedness and Credit Agreements | |
Summary of indebtedness and lease financing obligations | 2020 2019 Secured Debt: Senior secured revolving credit facility due December 2023 ($650,000 and $875,000 face value less unamortized debt issuance costs of $19,167 and $24,069) $ 630,833 $ 850,931 FILO term loan due December 2023 ($450,000 face value less unamortized debt issuance costs of $3,046 and $3,918) 446,954 446,082 1,077,787 1,297,013 Second Lien Secured Debt: 7.5% senior notes due July 2025 ($600,000 and $0 face value less unamortized debt issuance costs of $10,927 and $0) 589,073 — 589,073 — Guaranteed Unsecured Debt: 6.125% senior notes due April 2023 ($1,153,490 and $1,753,490 face value less unamortized debt issuance costs of $8,430 and $16,982) 1,145,060 1,736,508 1,145,060 1,736,508 Unguaranteed Unsecured Debt: 7.7% notes due February 2027 ($237,386 and $295,000 face value less unamortized debt issuance costs of $908 and $1,295) 236,478 293,705 6.875% fixed-rate senior notes due December 2028 ($29,001 and $128,000 face value less unamortized debt issuance costs of $131 and $642) 28,870 127,358 265,348 421,063 Lease financing obligations 28,166 40,176 Total debt 3,105,434 3,494,760 Current maturities of long-term debt and lease financing obligations (8,840) (16,111) Long-term debt and lease financing obligations, less current maturities $ 3,096,594 $ 3,478,649 |
Leases (Tables)
Leases (Tables) | 12 Months Ended |
Feb. 29, 2020 | |
Leases | |
Schedule of components of net lease cost | Year Ended February 29, 2020 Operating lease cost $ 653,803 Financing lease cost: Amortization of right-of-use asset 5,722 Interest on long-term finance lease liabilities 3,276 Total finance lease costs $ 8,998 Short-term lease costs 1,160 Variable lease costs 168,849 Less: sublease income (20,930) Net lease cost $ 811,880 |
Schedule of supplemental cash flow information related to leases | Year Ended February 29, 2020 Cash paid for amounts included in the measurement of lease liabilities: Operating cash flows paid for operating leases $ 641,709 Operating cash flows paid for interest portion of finance leases 3,276 Financing cash flows paid for principal portion of finance leases 6,313 Right-of-use assets obtained in exchange for lease obligations: Operating leases 365,192 Finance leases — |
Schedule of supplemental balance sheet information related to leases | February 29, 2020 Operating leases: Operating lease right-of-use asset $ 2,903,256 Short-term operating lease liabilities $ 490,161 Long-term operating lease liabilities 2,710,347 Total operating lease liabilities $ 3,200,508 Finance leases: Property, plant and equipment, net $ 19,904 Current maturities of long-term debt and lease financing obligations $ 8,840 Lease financing obligations, less current maturities 19,326 Total finance lease liabilities $ 28,166 Weighted average remaining lease term Operating leases 7.8 Finance leases 8.9 Weighted average discount rate Operating leases 6.1 % Finance leases 10.2 % |
Schedule of minimum lease payments, financing leases, ASC842 | February 29, 2020 Finance Operating Fiscal year Leases Leases (1) Total 2021 $ 11,307 $ 662,644 $ 673,951 2022 4,101 609,984 614,085 2023 3,946 556,433 560,379 2024 3,662 493,933 497,595 2025 3,402 395,822 399,224 Thereafter 16,660 1,314,774 1,331,434 Total lease payments 43,078 4,033,590 4,076,668 Less: imputed interest (14,912) (833,082) (847,994) Total lease liabilities $ 28,166 $ 3,200,508 $ 3,228,674 |
Schedule of minimum lease payments, operating leases, ASC842 | February 29, 2020 Finance Operating Fiscal year Leases Leases (1) Total 2021 $ 11,307 $ 662,644 $ 673,951 2022 4,101 609,984 614,085 2023 3,946 556,433 560,379 2024 3,662 493,933 497,595 2025 3,402 395,822 399,224 Thereafter 16,660 1,314,774 1,331,434 Total lease payments 43,078 4,033,590 4,076,668 Less: imputed interest (14,912) (833,082) (847,994) Total lease liabilities $ 28,166 $ 3,200,508 $ 3,228,674 |
Schedule of minimum lease payments, financing leases, ASC840 | Lease Financing Operating Fiscal year Obligations Leases 2020 $ 19,300 $ 687,412 2021 4,811 610,874 2022 4,588 545,863 2023 4,383 490,864 2024 4,042 431,714 Later years 20,470 1,541,408 Total minimum lease payments 57,594 $ 4,308,135 Amount representing interest (17,418) Present value of minimum lease payments $ 40,176 |
Schedule of minimum lease payments, operating leases, ASC840 | Lease Financing Operating Fiscal year Obligations Leases 2020 $ 19,300 $ 687,412 2021 4,811 610,874 2022 4,588 545,863 2023 4,383 490,864 2024 4,042 431,714 Later years 20,470 1,541,408 Total minimum lease payments 57,594 $ 4,308,135 Amount representing interest (17,418) Present value of minimum lease payments $ 40,176 |
Stock Options and Stock Awards
Stock Options and Stock Awards (Tables) | 12 Months Ended |
Feb. 29, 2020 | |
Stock Option and Stock Award Plans | |
Schedule of weighted average assumptions used for options granted | 2020 2019 2018 Expected stock price volatility(1) 56 % N/A 58 % Expected dividend yield(2) 0.0 % N/A 0.0 % Risk-free interest rate(3) 1.5 % N/A 1.9 % Expected option life(4) 5.5 years N/A 5.5 years (1) The expected volatility is based on the historical volatility of the stock price over the most recent period equal to expected life of the option. (2) The dividend rate that will be paid out on the underlying shares during the expected term of the options. The Company does not currently pay dividends on its common stock, as such, the dividend rate is assumed to be 0%. (3) The risk free interest rate is equal to the rate available on United States Treasury zero-coupon issues as of the grant date of the option with a remaining term equal to the expected term. (4) The period of time for which the option is expected to be outstanding. The Company analyzed historical exercise behavior to estimate the life. |
Schedule of stock option transactions | Weighted Weighted Average Average Exercise Remaining Aggregate Price Contractual Intrinsic Shares Per Share Term Value Outstanding at March 4, 2017 1,694 $ 54.93 Granted 50 41.00 Exercised (241) 24.05 Cancelled (160) 126.61 Outstanding at March 3, 2018 1,343 $ 51.42 Granted — N/A Exercised (99) 23.07 Cancelled (208) 71.07 Outstanding at March 2, 2019 1,036 $ 50.15 Granted 612 7.21 Exercised — N/A Cancelled (353) 48.56 Outstanding at February 29, 2020 1,295 $ 30.29 5.61 $ 3,920 Vested or expected to vest at February 29, 2020 1,295 $ 30.29 5.61 $ 3,920 Exercisable at February 29, 2020 683 $ 50.97 2.14 $ 0 |
Schedule of restricted stock transactions | Weighted Average Grant Date Shares Fair Value Balance at March 4, 2017 291 $ 157.35 Granted 693 56.44 Vested (194) 160.61 Cancelled (179) 73.95 Balance at March 3, 2018 611 $ 66.34 Granted 700 16.05 Vested (215) 76.99 Cancelled (88) 72.87 Balance at March 2, 2019 1,008 $ 28.60 Granted 1,402 8.40 Vested (695) 28.59 Cancelled (462) 16.76 Balance at February 29, 2020 1,253 $ 10.32 |
Retirement Plans (Tables)
Retirement Plans (Tables) | 12 Months Ended |
Feb. 29, 2020 | |
Defined Benefit Plans and Other Postretirement Benefit Plans Disclosures [Abstract] | |
Summary of net periodic pension expense for the defined benefit plans | Defined Benefit Pension Plan 2020 2019 2018 Service cost $ 462 $ 597 $ 1,212 Interest cost 6,186 6,159 6,340 Expected return on plan assets (4,793) (5,673) (4,525) Amortization of unrecognized net loss 1,695 1,769 3,393 Net periodic pension expense $ 3,550 $ 2,852 $ 6,420 Other changes recognized in other comprehensive loss: Unrecognized net (gain) loss arising during period $ 19,046 $ (3,486) $ (8,704) Amortization of unrecognized net (loss) gain (1,695) (1,769) (3,393) Net amount recognized in other comprehensive loss 17,351 (5,255) (12,097) Net amount recognized in pension expense and other comprehensive loss $ 20,901 $ (2,403) $ (5,677) |
Schedule of reconciliation for both benefit obligation and plan assets of defined benefit plans, as well as funded status and amounts recognized in balance sheet | Defined Benefit Pension Plan 2020 2019 Change in benefit obligations: Benefit obligation at end of prior year $ 150,705 $ 161,851 Service cost 462 597 Interest cost 6,186 6,159 Distributions (7,525) (8,816) Actuarial loss (gain) 29,076 (9,086) Benefit obligation at end of year $ 178,904 $ 150,705 Change in plan assets: Fair value of plan assets at beginning of year $ 124,832 $ 130,860 Employer contributions — 2,715 Actual return on plan assets 14,823 72 Distributions (including expenses paid by the plan) (7,525) (8,815) Fair value of plan assets at end of year $ 132,130 $ 124,832 Funded status $ (46,774) $ (25,873) Net amount recognized $ (46,774) $ (25,873) Amounts recognized in consolidated balance sheets consisted of: Accrued pension liability (46,774) (25,873) Net amount recognized $ (46,774) $ (25,873) Amounts recognized in accumulated other comprehensive loss consist of: Net actuarial loss $ (44,760) $ (27,409) Amount recognized $ (44,760) $ (27,409) |
Schedules of assumptions used for benefit obligation and cost | Defined Benefit Pension Plan 2020 2019 2018 Discount rate 2.75 % 4.25 % 4.00 % Rate of increase in future compensation levels N/A N/A N/A Expected long-term rate of return on plan assets 6.00 % 6.25 % 6.25 % Defined Benefit Pension Plan 2020 2019 2018 Discount rate 4.25 % 4.00 % 4.00 % Rate of increase in future compensation levels N/A N/A N/A Expected long-term rate of return on plan assets 6.25 % 6.25 % 6.50 % |
Schedule of pension plan asset allocation percentages | February 29, March 2, 2020 2019 Equity securities 47 % 52 % Fixed income securities 53 % 48 % Total 100 % 100 % |
Schedule of target allocation of plan assets | Target Category Allocation Equity securities 52 % Fixed income securities 48 % Total 100 % |
Summary of the plan's investments measured at fair value on a recurring basis | Fair Value Measurements at February 29, 2020 Quoted Prices in Active Markets Significant Significant for Identical Observable Unobservable Assets (Level 1) Inputs (Level 2) Inputs (Level 3) Total Equity Securities International equity $ — $ — $ — $ 15,251 Large Cap — — — 33,174 Small-Mid Cap — — — 14,223 Fixed Income Long Term Credit Bond Index — — — 25,129 Long Term US Government Bonds — — — 18,897 20+ Year Treasury STRIPS — — — 1,447 Intermediate Fixed Income — — — 14,606 AGT High Yield Bond — — — 7,673 Other types of investments Short Term Investments — 1,729 — 1,729 Total $ — $ 1,729 $ — $ 132,129 Fair Value Measurements at March 2, 2019 Quoted Prices in Active Markets Significant Significant for Identical Observable Unobservable Assets (Level 1) Inputs (Level 2) Inputs (Level 3) Total Equity Securities International equity $ — $ — $ — $ 15,396 Large Cap — — — 34,058 Small-Mid Cap — — — 14,534 Fixed Income Long Term Credit Bond Index — — — 44,103 Long Term US Government Bonds — — — 8,383 20+ Year Treasury STRIPS — — — 847 Intermediate Fixed Income — — — 5,920 Other types of investments Short Term Investments — — — 1,591 Total $ — $ — $ — $ 124,832 |
Schedule of future benefit payments expected to be paid | Defined Benefit Fiscal Year Pension Plan 2021 $ 8,992 2022 9,025 2023 8,963 2024 9,212 2025 9,157 2026 - 2030 45,471 Total $ 90,820 |
Multiemployer Plans that Prov_2
Multiemployer Plans that Provide Pension Benefits (Tables) | 12 Months Ended |
Feb. 29, 2020 | |
Multiemployer Plans that Provide Pension Benefits | |
Schedule of multiemployer defined benefit pension plans | Expiration FIP/ RP Date of Pension Protection Status Collective- Minimum EIN/Pension Act Zone Status Pending/ Contributions of the Company Surcharge Bargaining Funding Pension Plan Number 2020 2019 Implemented 2020 2019 2018 Imposed Agreement Requirements 1199 SEIU Health Care Employees Pension Fund 13-3604862-001 Green— Green— No $ 9,026 $ 9,670 $ 7,372 No 4/18/2022 Contribution rate of 12.6% of gross wages per associate beginning 09/30/2018. Contribution rate of 10.76% of gross wages earned per associate beginning 01/01/2016. Southern California United Food and Commercial Workers Unions and Drug Employers Pension Fund 51-6029925-001 Red— Red— Implemented 8,495 8,273 8,149 No 7/17/2021 From 01/01/2020 through 12/31/2020 contributions of $1.758 per hour worked for pharmacists and $0.797 per hour worked for non-pharmacists. From 01/01/2019 through 12/31/2019 contributions of $1.672 per hour for worked for pharmacists and $0.758 per hour worked for non pharmacists. From 01/01/2018 to 12/31/2018 contributions of $1.586 per hour worked. UFCW Pharmacists, Clerks and Drug Employers Pension Trust 94-2518312-001 Green— Green— No 2,421 2,666 2,739 No 7/13/2019 Effective 09/01/2014, contribution rate frozen at $0.55 per hour worked for associates. United Food and Commercial Workers Union-Employer Pension Fund 34-6665155-001 Red— Red— Implemented 738 772 786 No 2/28/2021 Effective 02/03/2019 contribution rate of $2.16 per hour worked. Effective 02/04/2018 contribution rate of $2.03 per hour worked. Effective 02/05/2017 contribution rate of $1.89 per hour worked. United Food and Commercial Workers Union Local 880—Mercantile Employers Joint Pension Fund 51-6031766-001 Yellow— Yellow— Implemented 437 470 495 No 2/28/2021 Effective 10/01/2019 contribution rate of $2.06 per hour worked. Effective 10/01/2018 contribution rate of $1.97 per hour worked. Effective 01/01/2017 contribution rate $1.88 per hour worked. Other Funds 1,554 1,648 1,438 $ 22,671 $ 23,499 $ 20,979 |
Schedule of years in which contributions to plan that exceeded more than 5 percent of the total contributions | Year Contributions to Plan Exceeded More Than 5 % of Total Contributions (as of Pension Fund the Plan’s Year-End) UFCW Pharmacists, Clerks and Drug Employers Pension Trust 12/31/2018 and 12/31/2017 Southern California United Food and Commercial Workers Unions and Drug Employers Pension Fund 12/31/2018 and 12/31/2017 United Food & Commercial Workers Union - Employer Pension Fund 9/30/2018 and 9/30/2017 United Food & Commercial Workers Union Local 880—Mercantile Employers Joint Pension Fund 9/30/2018 and 9/30/2017 |
Segment Reporting (Tables)
Segment Reporting (Tables) | 12 Months Ended |
Feb. 29, 2020 | |
Segment Reporting | |
Schedule of balance sheet information for the Company's reportable segments | Retail Pharmacy Pharmacy Services Eliminations(1) Consolidated February 29, 2020: Total Assets $ 6,757,196 $ 2,709,737 $ (14,564) $ 9,452,369 Goodwill 43,492 1,064,644 — 1,108,136 March 2, 2019: Total Assets $ 5,071,055 $ 2,534,771 $ (14,459) $ 7,591,367 Goodwill 43,492 1,064,644 — 1,108,136 (1) As of February 29, 2020 and March 2, 2019, intersegment eliminations include netting of the Pharmacy Services segment long-term deferred tax liability of $0 against the Retail Pharmacy segment long-term deferred tax asset for consolidation purposes in accordance with ASC 740, and intersegment accounts receivable of $14,564 and $14,459, respectively, that represents amounts owed from the Pharmacy Services segment to the Retail Pharmacy segment that are created when Pharmacy Services segment customers use Retail Pharmacy segment stores to purchase covered products. |
Schedule of reconciliation of the Company's business segments to the condensed consolidated financial statements | Retail Pharmacy Intersegment Pharmacy Services Eliminations(1) Consolidated February 29, 2020: Revenues $ 15,616,186 $ 6,559,560 $ (247,353) $ 21,928,393 Gross Profit 4,274,836 451,922 — 4,726,758 Adjusted EBITDA(2) 370,435 167,776 — 538,211 Additions to property and equipment and intangible assets 192,489 21,897 — 214,386 March 2, 2019: Revenues $ 15,757,152 $ 6,093,688 $ (211,283) $ 21,639,557 Gross Profit 4,258,716 417,636 — 4,676,352 Adjusted EBITDA(2) 405,206 158,238 — 563,444 Additions to property and equipment and intangible assets 228,079 16,610 — 244,689 March 3, 2018: Revenues $ 15,832,625 $ 5,896,669 $ (200,326) $ 21,528,968 Gross Profit 4,372,373 407,732 — 4,780,105 Adjusted EBITDA(2) 388,320 171,534 — 559,854 Additions to property and equipment and intangible assets 199,437 15,327 — 214,764 (1) Intersegment eliminations include intersegment revenues and corresponding cost of revenues that occur when Pharmacy Services segment customers use Retail Pharmacy segment stores to purchase covered products. When this occurs, both the Retail Pharmacy and Pharmacy Services segments record the revenue on a stand-alone basis. (2) See the section entitled “Management’s Discussion and Analysis of Financial Condition and Results of Continuing Operations—Adjusted EBITDA, Adjusted Net Income (Loss), Adjusted Net Income (Loss) per Diluted Share and Other Non-GAAP Measures” for additional details. |
Schedule of reconciliation of net (loss) income to Adjusted EBITDA | February 29, March 2, March 3, 2020 2019 2018 (52 weeks) (52 weeks) (52 weeks) Net loss from continuing operations $ (469,219) $ (666,954) $ (349,532) Interest expense 229,657 227,728 202,768 Income tax expense 387,607 77,477 305,987 Depreciation and amortization 328,277 357,882 386,057 LIFO (credit) charge (64,804) 23,354 (28,827) Lease termination and impairment charges 42,843 107,994 58,765 Goodwill and intangible asset impairment charges — 375,190 261,727 (Gain) loss on debt retirements, net (55,692) 554 — Merger and Acquisition-related costs 3,599 37,821 24,283 Stock-based compensation expense 16,087 12,115 25,793 Restructuring-related costs 105,642 4,704 — Inventory write-downs related to store closings 4,652 13,487 7,586 Litigation settlement — 18,000 — Loss (gain) on sale of assets, net 4,226 (38,012) (25,872) Walgreens Boots Alliance merger termination fee — — (325,000) Other 5,336 12,104 16,119 Adjusted EBITDA from continuing operations $ 538,211 $ 563,444 $ 559,854 . |
Supplementary Cash Flow Data (T
Supplementary Cash Flow Data (Tables) | 12 Months Ended |
Feb. 29, 2020 | |
Supplementary Cash Flow Data | |
Schedule of supplementary cash flow data | February 29, March 2, March 3, 2020 2019 2018 Cash paid for interest(a) $ 216,489 $ 267,760 $ 405,579 Cash (refunds) payments for income taxes, net(a) $ (4,935) $ 17,383 $ 87,087 Equipment financed under capital leases $ 3,715 $ 4,165 $ 13,123 Equipment received for noncash consideration $ — $ — $ 2,044 Reduction in lease financing obligation $ — $ — $ 4,740 Accrued capital expenditures $ 15,952 $ 15,298 $ 28,869 Gross borrowings from revolver(a) $ 2,897,000 $ 4,257,000 $ 4,221,000 Gross repayments to revolver(a) $ 3,122,000 $ 3,382,000 $ 6,651,000 (a)–Amounts are presented on a total company basis. |
Guarantor and Non-Guarantor C_2
Guarantor and Non-Guarantor Condensed Consolidating Financial Information (Tables) | 12 Months Ended |
Feb. 29, 2020 | |
Guarantor and Non-Guarantor Condensed Consolidating Financial Information | |
Schedule of condensed consolidating balance sheet | Rite Aid Corporation Condensed Consolidating Balance Sheet February 29, 2020 Rite Aid Corporation Non- (Parent Subsidiary Guarantor Company Only) Guarantors Subsidiaries Eliminations Consolidated (in thousands) ASSETS Current assets: Cash and cash equivalents $ — $ 194,005 $ 24,175 $ — $ 218,180 Accounts receivable, net — 1,278,002 8,783 — 1,286,785 Intercompany receivable — (56,608) 43,304 13,304 (a) — Inventories, net of LIFO reserve of $0, $539,640, $0, $0, and $539,640 — 1,921,604 — — 1,921,604 Prepaid expenses and other current assets — 171,086 10,708 — 181,794 Current assets held for sale — 92,278 — — 92,278 Total current assets — 3,600,367 86,970 13,304 3,700,641 Property, plant and equipment, net — 1,215,838 — — 1,215,838 Operating lease right-of-use assets — 2,903,256 — — 2,903,256 Goodwill — 1,108,136 — — 1,108,136 Other intangibles, net — 312,763 46,728 — 359,491 Deferred tax assets 10,828 5,852 — — 16,680 Investment in subsidiaries 7,843,411 67,342 — (7,910,753) (b) — Intercompany receivable — 4,090,373 — (4,090,373) (a) — Other assets — 141,305 7,022 — 148,327 Total assets $ 7,854,239 $ 13,445,232 $ 140,720 $ (11,987,822) $ 9,452,369 LIABILITIES AND STOCKHOLDERS’ EQUITY Current liabilities: Current maturities of long-term debt and lease financing obligations $ — $ 8,840 $ — $ — $ 8,840 Accounts payable — 1,471,459 12,622 — 1,484,081 Intercompany payable — (43,304) 30,000 13,304 (a) — Accrued salaries, wages and other current liabilities 12,071 711,491 22,756 — 746,318 Current portion of operating lease liabilities — 490,161 — — 490,161 Current liabilities held for sale — 37,063 — — 37,063 Total current liabilities 12,071 2,675,710 65,378 13,304 2,766,463 Long-term debt, less current maturities 3,077,268 — — — 3,077,268 Long-term operating lease liabilities — 2,710,347 — — 2,710,347 Lease financing obligations, less current maturities — 19,326 — — 19,326 Intercompany payable 4,090,373 — — (4,090,373) (a) — Other noncurrent liabilities — 196,438 8,000 — 204,438 Total liabilities 7,179,712 5,601,821 73,378 (4,077,069) 8,777,842 Commitments and contingencies — — — — — Total stockholders’ equity 674,527 7,843,411 67,342 (7,910,753) (b) 674,527 Total liabilities and stockholders’ equity $ 7,854,239 $ 13,445,232 $ 140,720 $ (11,987,822) $ 9,452,369 (a) Elimination of intercompany accounts receivable and accounts payable amounts. (b) Elimination of investments in consolidated subsidiaries. Rite Aid Corporation Condensed Consolidating Balance Sheet March 2, 2019 Rite Aid Corporation Non- (Parent Subsidiary Guarantor Company Only) Guarantors Subsidiaries Eliminations Consolidated (in thousands) ASSETS Current assets: Cash and cash equivalents $ — $ 122,134 $ 22,219 $ — $ 144,353 Accounts receivable, net — 1,377,342 411,370 — 1,788,712 Intercompany receivable — 400,526 — (400,526) (a) — Inventories, net of LIFO reserve of $0, $604,444, $0, $0, and $604,444 — 1,871,941 — — 1,871,941 Prepaid expenses and other current assets — 172,448 6,684 — 179,132 Current assets held for sale — 117,581 — — 117,581 Total current assets — 4,061,972 440,273 (400,526) 4,101,719 Property, plant and equipment, net — 1,308,514 — — 1,308,514 Goodwill — 1,108,136 — — 1,108,136 Other intangibles, net — 399,678 49,028 — 448,706 Deferred tax assets — 419,122 (10,038) — 409,084 Investment in subsidiaries 8,294,315 55,109 — (8,349,424) (b) — Intercompany receivable — 3,639,035 — (3,639,035) (a) — Other assets — 208,018 7,190 — 215,208 Total assets $ 8,294,315 $ 11,199,584 $ 486,453 $ (12,388,985) $ 7,591,367 LIABILITIES AND STOCKHOLDERS’ EQUITY Current liabilities: Current maturities of long-term debt and lease financing obligations $ — $ 16,111 $ — $ — $ 16,111 Accounts payable — 1,612,181 6,404 — 1,618,585 Intercompany payable — — 400,526 (400,526) (a) — Accrued salaries, wages and other current liabilities 14,005 778,020 16,414 — 808,439 Total current liabilities 14,005 2,406,312 423,344 (400,526) 2,443,135 Long-term debt, less current maturities 3,454,585 — — — 3,454,585 Lease financing obligations, less current maturities — 24,064 — — 24,064 Intercompany payable 3,639,035 — — (3,639,035) (a) — Other noncurrent liabilities — 474,893 8,000 — 482,893 Total liabilities 7,107,625 2,905,269 431,344 (4,039,561) 6,404,677 Commitments and contingencies — — — — — Total stockholders’ equity 1,186,690 8,294,315 55,109 (8,349,424) (b) 1,186,690 Total liabilities and stockholders’ equity $ 8,294,315 $ 11,199,584 $ 486,453 $ (12,388,985) $ 7,591,367 (a) Elimination of intercompany accounts receivable and accounts payable amounts. (b) Elimination of investments in consolidated subsidiaries. |
Schedule of condensed consolidating statement of operations | Rite Aid Corporation Condensed Consolidating Statement of Operations For the Year Ended February 29, 2020 Rite Aid Corporation Non- (Parent Subsidiary Guarantor Company Only) Guarantors Subsidiaries Eliminations Consolidated (in thousands) Revenues $ — $ 21,514,693 $ 441,827 $ (28,127) (a) $ 21,928,393 Costs and expenses: Cost of revenues — 16,818,111 411,266 (27,742) (a) 17,201,635 Selling, general and administrative expenses — 4,560,220 27,501 (385) (a) 4,587,336 Lease termination and impairment charges — 42,843 — — 42,843 Interest expense 216,834 13,586 (763) — 229,657 Gain on debt retirements — (55,692) — — (55,692) Loss on sale of assets, net — 4,226 — — 4,226 Equity in earnings of subsidiaries, net of tax 235,340 (12,233) — (223,107) (b) — 452,174 21,371,061 438,004 (251,234) 22,010,005 (Loss) income from continuing operations before income taxes (452,174) 143,632 3,823 223,107 (81,612) Income tax expense (benefit) — 396,017 (8,410) — 387,607 Net (loss) income from continuing operations $ (452,174) $ (252,385) $ 12,233 $ 223,107 $ (469,219) Net income from discontinued operations — 17,045 — — 17,045 Net (loss) income (452,174) (235,340) 12,233 223,107 (b) (452,174) Total other comprehensive (loss) income (17,839) (17,351) — 17,351 (17,839) Comprehensive (loss) income $ (470,013) $ (252,691) $ 12,233 $ 240,458 $ (470,013) (a) Elimination of intercompany revenues and expenses. (b) Elimination of equity in earnings of subsidiaries. Rite Aid Corporation Condensed Consolidating Statement of Operations For the Year Ended March 2, 2019 Rite Aid Corporation Non- (Parent Subsidiary Guarantor Company Only) Guarantors Subsidiaries Eliminations Consolidated (in thousands) Revenues $ — $ 21,297,937 $ 397,328 $ (55,708) (a) $ 21,639,557 Costs and expenses: Cost of revenues — 16,648,099 370,413 (55,307) (a) 16,963,205 Selling, general and administrative expenses — 4,567,690 25,086 (401) (a) 4,592,375 Lease termination and impairment charges — 107,994 — — 107,994 Goodwill and intangible asset impairment charges — 375,190 — — 375,190 Interest expense 206,862 21,704 (838) — 227,728 Loss on debt retirements — 554 — — 554 Gain on sale of assets, net — (38,012) — — (38,012) Equity in earnings of subsidiaries, net of tax 210,736 (1,033) — (209,703) (b) — 417,598 21,682,186 394,661 (265,411) 22,229,034 (Loss) income from continuing operations before income taxes (417,598) (384,249) 2,667 209,703 (589,477) Income tax benefit — 75,843 1,634 — 77,477 Net (loss) income from continuing operations $ (417,598) $ (460,092) $ 1,033 $ 209,703 $ (666,954) Net income from discontinued operations (4,615) 249,356 — — 244,741 Net (loss) income (422,213) (210,736) 1,033 209,703 (b) (422,213) Total other comprehensive income (loss) 3,490 3,490 — (3,490) 3,490 Comprehensive (loss) income $ (418,723) $ (207,246) $ 1,033 $ 206,213 $ (418,723) (a) Elimination of intercompany revenues and expenses. (b) Elimination of equity in earnings of subsidiaries. Rite Aid Corporation Condensed Consolidating Statement of Operations For the Year Ended March 3, 2018 Rite Aid Corporation Non- (Parent Subsidiary Guarantor Company Only) Guarantors Subsidiaries Eliminations Consolidated (in thousands) Revenues $ — $ 21,413,734 $ 209,356 $ (94,122) (a) $ 21,528,968 Costs and expenses: Cost of revenues — 16,645,136 197,084 (93,357) (a) 16,748,863 Selling, general and administrative expenses — 4,635,531 16,496 (765) (a) 4,651,262 Lease termination and impairment expenses — 58,765 — — 58,765 Goodwill and intangible asset impairment charges — 261,727 — — 261,727 Interest expense 183,825 19,261 (318) — 202,768 Walgreens Boots Alliance, Inc. termination fee (325,000) — — — (325,000) Gain on sale of assets, net — (25,872) — — (25,872) Equity in earnings of subsidiaries, net of tax (1,034,775) (4,072) — 1,038,847 (b) — (1,175,950) 21,590,476 213,262 944,725 21,572,513 (Loss) income from continuing operations before income taxes 1,175,950 (176,742) (3,906) (1,038,847) (43,545) Income tax expense — 313,965 (7,978) — 305,987 Net (loss) income from continuing operations 1,175,950 (490,707) 4,072 (1,038,847) (349,532) Net loss from discontinued operations (232,480) 1,525,482 — — 1,293,002 Net (loss) income $ 943,470 $ 1,034,775 $ 4,072 $ (1,038,847) (b) $ 943,470 Total other comprehensive income (loss) 7,255 7,255 — (7,255) 7,255 Comprehensive (loss) income $ 950,725 $ 1,042,030 $ 4,072 $ (1,046,102) $ 950,725 (a) Elimination of intercompany revenues and expenses. (b) Elimination of equity in earnings of subsidiaries. |
Schedule of condensed consolidating statement of cash flows | Rite Aid Corporation Condensed Consolidating Statement of Cash Flows Year Ended February 29, 2020 Rite Aid Corporation Non- (Parent Subsidiary Guarantor Company Only) Guarantors Subsidiaries Eliminations Consolidated (in thousands) Operating activities: Net cash (used in) provided by operating activities $ (214,470) $ 723,371 $ 1,956 $ — $ 510,857 Investing activities: Payments for property, plant and equipment — (171,705) — — (171,705) Intangible assets acquired — (42,681) — — (42,681) Intercompany activity — (539,344) — 539,344 — Proceeds from dispositions of assets and investments — 59,658 — — 59,658 Proceeds from sale-leaseback transactions — 4,879 — — 4,879 Net cash used in investing activities — (689,193) — 539,344 (149,849) Financing activities: Proceeds from issuance of long-term debt 600,000 — — — 600,000 Net payments to revolver (225,000) — — — (225,000) Principal payments on long-term debt (694,093) (12,010) — — (706,103) Change in zero balance cash accounts — 12,671 — — 12,671 Financing fees paid for early debt redemption — (518) — — (518) Payments for taxes related to net share settlement of equity awards — (1,921) — — (1,921) Deferred financing costs paid (5,781) — — — (5,781) Intercompany activity 539,344 — — (539,344) — Net cash provided by (used in) financing activities 214,470 (1,778) — (539,344) (326,652) Cash flows of discontinued operations: Operating activities of discontinued operations — (23,836) — — (23,836) Investing activities of discontinued operations — 63,307 — — 63,307 Financing activities of discontinued operations — — — — — Net cash provided by discontinued operations — 39,471 — — 39,471 Increase in cash and cash equivalents — 71,871 1,956 — 73,827 Cash and cash equivalents, beginning of period — 122,134 22,219 — 144,353 Cash and cash equivalents, end of period $ — $ 194,005 $ 24,175 $ — $ 218,180 Rite Aid Corporation Condensed Consolidating Statement of Cash Flows Year Ended March 2, 2019 Rite Aid Corporation (Parent Non- Company Subsidiary Guarantor Only) Guarantors Subsidiaries Eliminations Consolidated (in thousands) Operating activities: Net cash (used in) provided by operating activities $ (255,962) $ 74,124 $ 16,129 $ — $ (165,709) Investing activities: Payments for property, plant and equipment — (196,778) — — (196,778) Intangible assets acquired — (47,911) — — (47,911) Intercompany activity — (727,221) — 727,221 — Proceeds from dispositions of assets and investments — 43,550 — — 43,550 Proceeds from sale-leaseback transactions — 2,587 — — 2,587 Net cash (used in) provided by investing activities — (925,773) — 727,221 (198,552) Financing activities: Proceeds from issuance of long-term debt 450,000 — — — 450,000 Net proceeds from revolver 875,000 — — — 875,000 Principal payments on long-term debt (427,992) (12,378) — — (440,370) Change in zero balance cash accounts — (59,481) — — (59,481) Net proceeds from issuance of common stock 2,294 — — — 2,294 Payments for taxes related to net share settlement of equity awards — (2,419) — — (2,419) Financing fees paid for early redemption — (171) — — (171) Deferred financing costs paid (21,564) — — — (21,564) Intercompany activity 727,221 — — (727,221) — Net cash provided by (used in) financing activities 1,604,959 (74,449) — (727,221) 803,289 Cash flows of discontinued operations: Operating activities of discontinued operations (4,615) (58,341) — — (62,956) Investing activities of discontinued operations — 664,740 — — 664,740 Financing activities of discontinued operations (1,344,382) 589 — — (1,343,793) Net cash (used in) provided by discontinued operations (1,348,997) 606,988 — — (742,009) (Decrease) increase in cash and cash equivalents — (319,110) 16,129 — (302,981) Cash and cash equivalents, beginning of period — 441,244 6,090 — 447,334 Cash and cash equivalents, end of period $ — $ 122,134 $ 22,219 $ — $ 144,353 Rite Aid Corporation Condensed Consolidating Statement of Cash Flows For the Year Ended March 3, 2018 Rite Aid Corporation (Parent Non- Company Subsidiary Guarantor Only) Guarantors Subsidiaries Eliminations Consolidated (in thousands) Operating activities: Net cash (used in) provided by operating activities $ 158,247 $ 379,439 $ (26,216) $ — $ 511,470 Investing activities: Payments for property, plant and equipment — (185,879) — — (185,879) Intangible assets acquired — (28,885) — — (28,885) Intercompany activity — (3,460,291) — 3,460,291 — Proceeds from insured loss — 4,239 — — 4,239 Proceeds from dispositions of assets and investments — 27,586 — — 27,586 Net cash (used in) provided by investing activities — (3,643,230) — 3,460,291 (182,939) Financing activities: Net payments to revolver (265,000) — — — (265,000) Principal payments on long-term debt — (9,882) — — (9,882) Change in zero balance cash accounts — 35,605 — — 35,605 Net proceeds from issuance of common stock 5,796 — — — 5,796 Payments for taxes related to net share settlement of equity awards — (4,103) — — (4,103) Intercompany activity 3,460,291 — — (3,460,291) — Net cash provided by (used in) financing activities 3,201,087 21,620 — (3,460,291) (237,584) Cash flows of discontinued operations: Operating activities of discontinued operations (224,300) (20,826) — — (245,126) Investing activities of discontinued operations — 3,496,222 — — 3,496,222 Financing activities of discontinued operations (3,135,034) (5,085) — — (3,140,119) Net cash provided by (used in) discontinued operations (3,359,334) 3,470,311 — — 110,977 Increase (decrease) in cash and cash equivalents — 228,140 (26,216) — 201,924 Cash and cash equivalents, beginning of period — 213,104 32,306 — 245,410 Cash and cash equivalents, end of period $ — $ 441,244 $ 6,090 $ — $ 447,334 |
Interim Financial Results (Un_2
Interim Financial Results (Unaudited) (Tables) | 12 Months Ended |
Feb. 29, 2020 | |
Interim Financial Results (Unaudited) | |
Schedule of interim financial results (unaudited) | Fiscal Year 2020 First Second Third Fourth Quarter Quarter Quarter Quarter Year Revenues $ 5,372,589 $ 5,366,264 $ 5,462,298 $ 5,727,242 $ 21,928,393 Cost of revenues 4,245,866 4,221,825 4,273,323 4,460,621 17,201,635 Selling, general and administrative expenses 1,162,652 1,135,530 1,134,854 1,154,300 4,587,336 Lease termination and impairment charges 478 1,471 166 40,728 42,843 Interest expense 58,270 60,102 57,856 53,429 229,657 Gain on debt retirements, net — — (55,692) — (55,692) (Gain) loss on sale of assets, net (2,712) (1,587) (1,371) 9,896 4,226 5,464,554 5,417,341 5,409,136 5,718,974 22,010,005 (Loss) income from continuing operations before income taxes (91,965) (51,077) 53,162 8,268 (81,612) Income tax (benefit) expense 7,374 27,628 876 351,729 387,607 Loss from continuing operations (99,339) (78,705) 52,286 (343,461) (469,219) Net income (loss) from discontinued operations, net of tax (320) (574) (801) 18,740 17,045 Net income (loss) (99,659) (79,279) 51,485 (324,721) (452,174) Basic (loss) income per share(a): Continuing operations $ (1.88) $ (1.48) $ 0.98 $ (6.43) $ (8.82) Discontinued operations $ — $ (0.01) $ (0.01) $ 0.35 $ 0.32 Net basic (loss) income per share $ (1.88) $ (1.49) $ 0.97 $ (6.08) $ (8.50) Diluted (loss) income per share(a): Continuing operations $ (1.88) $ (1.48) $ 0.98 $ (6.43) $ (8.82) Discontinued operations $ — $ (0.01) $ (0.02) $ 0.35 $ 0.32 Net diluted (loss) income per share $ (1.88) $ (1.49) $ 0.96 $ (6.08) $ (8.50) Fiscal Year 2019 First Second Third Fourth Quarter Quarter Quarter Quarter Year Revenues $ 5,388,490 $ 5,421,362 $ 5,450,060 $ 5,379,645 $ 21,639,557 Cost of revenues 4,219,741 4,260,211 4,267,972 4,215,281 16,963,205 Selling, general and administrative expenses 1,152,627 1,153,991 1,142,555 1,143,202 4,592,375 Lease termination and impairment charges 9,859 39,609 2,628 55,898 107,994 Goodwill and intangible asset impairment charges — 375,190 — — 375,190 Interest expense 62,792 56,233 56,008 52,695 227,728 Loss on debt retirements, net 554 — — 554 Gain on sale of assets, net (5,859) (4,965) (382) (26,806) (38,012) 5,439,714 5,880,269 5,468,781 5,440,270 22,229,034 Loss from continuing operations before income taxes (51,224) (458,907) (18,721) (60,625) (589,477) Income tax (benefit) expense (9,497) (106,559) (1,471) 195,004 77,477 Loss from continuing operations (41,727) (352,348) (17,250) (255,629) (666,954) Net income (loss) from discontinued operations, net of tax 256,143 (6,792) 12,740 (17,350) 244,741 Net income (loss) $ 214,416 $ (359,140) $ (4,510) $ (272,979) $ (422,213) Basic and diluted income (loss) per share(a): Continuing operations $ (0.79) $ (6.67) $ (0.33) $ (4.83) $ (12.62) Discontinued operations $ 4.86 $ (0.13) $ 0.24 $ (0.32) $ 4.63 Net basic and diluted income (loss) per share $ 4.07 $ (6.80) $ (0.09) $ (5.15) $ (7.99) (a) Income per share amounts for each quarter may not necessarily total to the yearly income per share due to the weighting of shares outstanding on a quarterly and year-to-date basis. |
Financial Instruments (Tables)
Financial Instruments (Tables) | 12 Months Ended |
Feb. 29, 2020 | |
Financial Instruments | |
Schedule of carrying amounts and fair values of financial instruments | 2020 2019 Carrying Fair Carrying Fair Amount Value Amount Value Variable rate indebtedness $ 1,077,787 $ 1,100,000 $ 1,297,013 $ 1,325,000 Fixed rate indebtedness $ 1,999,481 $ 1,921,385 $ 2,157,571 $ 1,795,335 |
Summary of Significant Accoun_4
Summary of Significant Accounting Policies - Description of Business, Asset Sale (Details) $ in Thousands | 1 Months Ended | 12 Months Ended | 29 Months Ended | |||
Mar. 31, 2018USD ($)store | Feb. 29, 2020USD ($)storeitemsegment | Mar. 02, 2019USD ($)storeitem | Feb. 29, 2020USD ($)storeitem | Sep. 18, 2017USD ($)itemstore | Jun. 28, 2017item | |
Description of Business | ||||||
Number of reportable segments | segment | 2 | |||||
Number of stores | 2,461 | 2,461 | ||||
Assets held for sale | Sale Of Assets To Walgreens Boots Alliance WBA And Buyer [Member] | ||||||
Description of Business | ||||||
Number of stores | 1,932 | 1,932 | 1,932 | 1,932 | ||
Number of distribution centers | item | 3 | 3 | 3 | 3 | 3 | |
Purchase price per Agreement | $ | $ 4,375,000 | |||||
Discontinued Operations, Disposed of by Sale [Member] | Sale Of Assets To Walgreens Boots Alliance WBA And Buyer [Member] | ||||||
Description of Business | ||||||
Number of stores | 1,932 | 1,932 | 1,932 | |||
Number of distribution centers | 2 | 1 | 2 | |||
Proceeds from assets sold | $ | $ 4,156,686 | $ 62,774 | $ 61,251 | $ 4,280,711 | ||
Walgreens | Walgreens Boots Alliance WBA [Member] | ||||||
Description of Business | ||||||
Ownership interest (as a percent) | 100.00% | |||||
Rite Aid Subsidiaries [Member] | ||||||
Description of Business | ||||||
Ownership interest (as a percent) | 100.00% | 100.00% |
Summary of Significant Accoun_5
Summary of Significant Accounting Policies - Sales (Details) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | |||||||||
Feb. 29, 2020 | Nov. 30, 2019 | Aug. 31, 2019 | Jun. 01, 2019 | Mar. 02, 2019 | Dec. 01, 2018 | Sep. 01, 2018 | Jun. 02, 2018 | Feb. 29, 2020 | Mar. 02, 2019 | Mar. 03, 2018 | |
Product Class | |||||||||||
Total revenue | $ 5,727,242 | $ 5,462,298 | $ 5,366,264 | $ 5,372,589 | $ 5,379,645 | $ 5,450,060 | $ 5,421,362 | $ 5,388,490 | $ 21,928,393 | $ 21,639,557 | $ 21,528,968 |
Intersegment elimination | |||||||||||
Product Class | |||||||||||
Total revenue | (247,353) | (211,283) | (200,326) | ||||||||
Retail Pharmacy | |||||||||||
Product Class | |||||||||||
Other revenue | 146,917 | 150,461 | 155,636 | ||||||||
Total revenue | $ 15,616,186 | $ 15,757,152 | $ 15,832,625 | ||||||||
Retail Pharmacy | Prescription drugs | Revenue from Contract with Customer, Segment Benchmark [Member] | |||||||||||
Product Class | |||||||||||
Percentage of sales | 67.00% | 66.60% | 65.90% | ||||||||
Retail Pharmacy | Over-the-counter medications and personal care | Revenue from Contract with Customer, Segment Benchmark [Member] | |||||||||||
Product Class | |||||||||||
Percentage of sales | 11.00% | ||||||||||
Retail Pharmacy | Health and beauty aids | Revenue from Contract with Customer, Segment Benchmark [Member] | |||||||||||
Product Class | |||||||||||
Percentage of sales | 5.00% | ||||||||||
Retail Pharmacy | General merchandise and other | Revenue from Contract with Customer, Segment Benchmark [Member] | |||||||||||
Product Class | |||||||||||
Percentage of sales | 17.00% | ||||||||||
Pharmacy sales | |||||||||||
Product Class | |||||||||||
Revenue from contract with customer | $ 10,354,293 | $ 10,391,539 | $ 10,328,376 | ||||||||
Front end sales | |||||||||||
Product Class | |||||||||||
Revenue from contract with customer | 5,114,976 | 5,215,152 | 5,348,613 | ||||||||
Pharmacy Services | |||||||||||
Product Class | |||||||||||
Total revenue | $ 6,559,560 | $ 6,093,688 | $ 5,896,669 |
Summary of Significant Accoun_6
Summary of Significant Accounting Policies - FY thru Revenue (Details) $ in Thousands | Jan. 01, 2020item | Feb. 29, 2020USD ($) | Nov. 30, 2019USD ($) | Aug. 31, 2019USD ($) | Jun. 01, 2019USD ($) | Mar. 02, 2019USD ($) | Dec. 01, 2018USD ($) | Sep. 01, 2018USD ($) | Jun. 02, 2018USD ($) | Feb. 29, 2020USD ($) | Mar. 02, 2019USD ($) | Mar. 03, 2018USD ($) |
Fiscal Year | ||||||||||||
Length of reporting period | 364 days | 364 days | 364 days | |||||||||
Deferred Financing Costs | ||||||||||||
Amortization expenses of deferred financing costs | $ 10,187 | $ 10,761 | $ 8,403 | |||||||||
Revenue Recognition | ||||||||||||
Number of points for Gold status | item | 500 | |||||||||||
Measurement period | 6 months | |||||||||||
Percentage discount on qualifying purchases of front end merchandise on achieving "Gold" tier | 20.00% | |||||||||||
Total revenue | $ 5,727,242 | $ 5,462,298 | $ 5,366,264 | $ 5,372,589 | $ 5,379,645 | $ 5,450,060 | $ 5,421,362 | $ 5,388,490 | 21,928,393 | 21,639,557 | 21,528,968 | |
Intersegment elimination | ||||||||||||
Revenue Recognition | ||||||||||||
Total revenue | (247,353) | (211,283) | (200,326) | |||||||||
Retail Pharmacy | ||||||||||||
Revenue Recognition | ||||||||||||
Accrued contract liabilities | 52,668 | 63,720 | 52,668 | 63,720 | ||||||||
Accrued contract liabilities included in other current liabilities | 52,668 | 51,042 | 52,668 | 51,042 | ||||||||
Accrued contract liabilities included in noncurrent liabilities | $ 0 | $ 12,678 | 0 | 12,678 | ||||||||
Other revenue | 146,917 | 150,461 | 155,636 | |||||||||
Total revenue | 15,616,186 | 15,757,152 | 15,832,625 | |||||||||
Pharmacy sales | ||||||||||||
Revenue Recognition | ||||||||||||
Revenue from contract with customer | 10,354,293 | 10,391,539 | 10,328,376 | |||||||||
Front end sales | ||||||||||||
Revenue Recognition | ||||||||||||
Revenue from contract with customer | 5,114,976 | 5,215,152 | 5,348,613 | |||||||||
Pharmacy Services | ||||||||||||
Revenue Recognition | ||||||||||||
Total revenue | $ 6,559,560 | 6,093,688 | 5,896,669 | |||||||||
Prescription files | ||||||||||||
Intangible Assets | ||||||||||||
Estimated useful life, acquired assets | 10 years | |||||||||||
Estimated useful life of purchased prescription files acquired in other than business combinations | 5 years | |||||||||||
Trade names | ||||||||||||
Intangible Assets | ||||||||||||
Estimated useful life of purchased prescription files acquired in other than business combinations | 10 years | |||||||||||
CMS license | ||||||||||||
Intangible Assets | ||||||||||||
Estimated useful life of purchased prescription files acquired in other than business combinations | 25 years | |||||||||||
Minimum | Customer relationships | ||||||||||||
Intangible Assets | ||||||||||||
Estimated useful life, acquired assets | 10 years | |||||||||||
Maximum | Customer relationships | ||||||||||||
Intangible Assets | ||||||||||||
Estimated useful life, acquired assets | 20 years | |||||||||||
Buildings | Minimum | ||||||||||||
Fiscal Year | ||||||||||||
Useful life | 30 years | |||||||||||
Buildings | Maximum | ||||||||||||
Fiscal Year | ||||||||||||
Useful life | 45 years | |||||||||||
Equipment | Minimum | ||||||||||||
Fiscal Year | ||||||||||||
Useful life | 3 years | |||||||||||
Equipment | Maximum | ||||||||||||
Fiscal Year | ||||||||||||
Useful life | 15 years | |||||||||||
Internal-use software | ||||||||||||
Fiscal Year | ||||||||||||
Capitalized costs | $ 15,240 | $ 13,716 | $ 13,940 | |||||||||
Rite Aid Subsidiaries [Member] | ||||||||||||
Fiscal Year | ||||||||||||
Ownership interest (as a percent) | 100.00% | 100.00% |
Summary of Significant Accoun_7
Summary of Significant Accounting Policies - Impact of revenue adoption (Details) - USD ($) $ in Thousands | Feb. 29, 2020 | Mar. 02, 2019 | Mar. 04, 2018 | Mar. 03, 2018 | Mar. 04, 2017 |
New accounting pronouncements | |||||
Accounts receivable, net | $ 1,286,785 | $ 1,788,712 | $ 1,811,203 | $ 1,869,100 | |
Inventories, net | 1,921,604 | 1,871,941 | 1,850,660 | 1,799,539 | |
Deferred tax assets | 16,680 | 409,084 | 592,235 | 594,019 | |
Assets | 9,452,369 | 7,591,367 | 8,980,767 | 8,989,327 | |
Accumulated deficit | (5,222,194) | (4,713,244) | (4,291,031) | (4,282,471) | |
Total stockholders' equity | $ 674,527 | $ 1,186,690 | 1,592,450 | $ 1,601,010 | $ 614,070 |
Revenue Adjustments | |||||
New accounting pronouncements | |||||
Accounts receivable, net | (57,897) | ||||
Inventories, net | 51,121 | ||||
Deferred tax assets | (1,784) | ||||
Assets | (8,560) | ||||
Accumulated deficit | (8,560) | ||||
Total stockholders' equity | (8,560) | ||||
Accounting Standards Update 2014-09 | Revenue Adjustments | |||||
New accounting pronouncements | |||||
Accounts receivable, net | (57,897) | ||||
Inventories, net | 51,121 | ||||
Deferred tax assets | (1,784) | ||||
Accumulated deficit | $ (8,560) |
Summary of Significant Accoun_8
Summary of Significant Accounting Policies - Cost of revenue thru Estimates (Details) - USD ($) $ in Thousands | Dec. 22, 2017 | Dec. 21, 2017 | Feb. 29, 2020 | Mar. 02, 2019 | Dec. 31, 2018 | Mar. 03, 2018 |
Advertising | ||||||
Advertising expenses, net of vendor advertising allowances | $ 142,079 | $ 147,519 | $ 161,826 | |||
Insurance | ||||||
Self-insurance, minimum occurrence, workers' compensation | 1,000 | |||||
Self-insurance, minimum occurrence, general liability | $ 3,000 | |||||
Income Taxes | ||||||
Federal statutory rate (as a percent) | 35.00% | 35.00% | 21.00% | 21.00% | 21.00% | 32.60% |
Pharmacy Services | ||||||
Vendor Rebates and Allowances and Purchase Discounts | ||||||
Period for rebates are dispensed to manufacturers | 30 days |
Summary of Significant Accoun_9
Summary of Significant Accounting Policies - Significant Concentrations (Details) $ in Thousands | 12 Months Ended | |||
Feb. 29, 2020USD ($) | Mar. 02, 2019USD ($)derivative | Mar. 03, 2018USD ($) | Mar. 15, 2019USD ($) | |
Derivatives | ||||
Number of interest rate swap arrangements or other derivatives held | derivative | 0 | |||
Interest rate cap | ||||
Derivatives | ||||
Derivative notional amount | $ 650,000 | $ 650,000 | ||
Interest rate cap (as a percent) | 2.75% | |||
Interest rate cap | LIBOR | ||||
Derivatives | ||||
Interest rate cap (as a percent) | 2.75% | |||
Retail Pharmacy | Purchases | Suppliers | McKesson Corp. | ||||
Significant Concentrations | ||||
Percentage of concentration risk | 99.00% | |||
Pharmacy sales | Revenue from Contract with Customer, Segment Benchmark [Member] | Customers | Top five third party payors | ||||
Significant Concentrations | ||||
Percentage of concentration risk | 79.90% | |||
Pharmacy sales | Revenue from Contract with Customer, Segment Benchmark [Member] | Customers | Largest third party payor | Express Scripts | ||||
Significant Concentrations | ||||
Percentage of concentration risk | 27.20% | |||
Pharmacy sales | Revenue from Contract with Customer, Segment Benchmark [Member] | Customers | Largest third party payor | Caremark | ||||
Significant Concentrations | ||||
Percentage of concentration risk | 28.80% | 28.30% | ||
Pharmacy sales | Revenue from Contract with Customer, Segment Benchmark [Member] | Customers | Medicaid agencies and related managed care Medicaid payors | ||||
Significant Concentrations | ||||
Percentage of concentration risk | 19.00% | |||
Pharmacy sales | Revenue from Contract with Customer, Segment Benchmark [Member] | Customers | Largest Medicaid agency | ||||
Significant Concentrations | ||||
Percentage of concentration risk | 1.40% | |||
Pharmacy sales | Revenue from Contract with Customer, Segment Benchmark [Member] | Customers | Medicare Part D | ||||
Significant Concentrations | ||||
Percentage of concentration risk | 38.40% | |||
Pharmacy Services | Medicare Part D | ||||
Significant Concentrations | ||||
Net revenues | $ 436,435 | $ 391,024 | $ 203,361 | |
Pharmacy Services | Revenue from Contract with Customer, Segment Benchmark [Member] | Customers | Top Five Customers [Member] | ||||
Significant Concentrations | ||||
Percentage of concentration risk | 53.20% | |||
Pharmacy Services | Revenue from Contract with Customer, Segment Benchmark [Member] | Customers | Largest Customer [Member] | ||||
Significant Concentrations | ||||
Percentage of concentration risk | 27.40% | 23.00% | 17.30% | |
Pharmacy Services | Consolidated revenues | Customers | Medicare Part D | ||||
Significant Concentrations | ||||
Percentage of concentration risk | 2.00% | 1.80% | 1.00% |
Summary of Significant Accou_10
Summary of Significant Accounting Policies - Recently adopted accounting pronouncements (Details) | Mar. 03, 2019USD ($)$ / sharesshares | Feb. 29, 2020USD ($)item$ / sharesshares | Mar. 03, 2018USD ($) | Apr. 18, 2019shares | Apr. 17, 2019shares | Mar. 02, 2019USD ($)$ / sharesshares | Mar. 04, 2018USD ($) | Mar. 04, 2017USD ($) |
Basis of presentation | ||||||||
Lease, Practical Expedients, Package [true false] | true | |||||||
Operating lease liability | $ 3,200,508,000 | |||||||
Operating right-of-use assets | 2,903,256,000 | |||||||
Retained Earnings (Accumulated Deficit) | (5,222,194,000) | $ (4,282,471,000) | $ (4,713,244,000) | $ (4,291,031,000) | ||||
Deferred gains on sale-leaseback transactions | 4,149,000 | |||||||
Lease exit liability | $ 2,253,000 | 133,290,000 | 124,046,000 | $ 165,138,000 | ||||
Number of fixed lease payment | item | 1 | |||||||
Current assets: | ||||||||
Cash and cash equivalents | $ 218,180,000 | 447,334,000 | 144,353,000 | 245,410,000 | ||||
Accounts receivable, net | 1,286,785,000 | 1,869,100,000 | 1,788,712,000 | 1,811,203,000 | ||||
Inventories, net | 1,921,604,000 | 1,799,539,000 | 1,871,941,000 | 1,850,660,000 | ||||
Prepaid expenses and other current assets | 181,794,000 | 179,132,000 | ||||||
Current assets held for sale | 92,278,000 | 117,581,000 | ||||||
Total current assets | 3,700,641,000 | 4,101,719,000 | ||||||
Property, plant and equipment, net | 1,215,838,000 | 1,308,514,000 | ||||||
Operating lease right-of-use asset | 2,903,256,000 | |||||||
Goodwill | 1,108,136,000 | 1,421,120,000 | 1,108,136,000 | |||||
Other intangibles, net | 359,491,000 | 448,706,000 | ||||||
Deferred tax assets | 16,680,000 | 594,019,000 | 409,084,000 | 592,235,000 | ||||
Other assets | 148,327,000 | 215,208,000 | ||||||
Total assets | 9,452,369,000 | 8,989,327,000 | 7,591,367,000 | 8,980,767,000 | ||||
Current liabilities: | ||||||||
Current maturities of long-term debt and lease financing obligations | 8,840,000 | 16,111,000 | ||||||
Accounts payable | 1,484,081,000 | 1,618,585,000 | ||||||
Accrued salaries, wages and other current liabilities | 746,318,000 | 808,439,000 | ||||||
Current portion of operating lease liabilities | 490,161,000 | |||||||
Current liabilities held for sale | 37,063,000 | |||||||
Total current liabilities | 2,766,463,000 | 2,443,135,000 | ||||||
Long-term debt, less current maturities | 3,077,268,000 | 3,454,585,000 | ||||||
Long-term operating lease liabilities | 2,710,347,000 | |||||||
Lease financing obligations, less current maturities, ASC842 | 19,326,000 | |||||||
Lease financing obligations, less current maturities, ASC840 | 24,064,000 | |||||||
Other noncurrent liabilities | 204,438,000 | 482,893,000 | ||||||
Total liabilities | 8,777,842,000 | 6,404,677,000 | ||||||
Commitments and contingencies | ||||||||
Stockholders' equity: | ||||||||
Common stock, par value $1 per share; 75,000 shares authorized; shares issued and outstanding 54,016 | 54,716,000 | 54,016,000 | ||||||
Additional paid-in capital | 5,890,903,000 | 5,876,977,000 | ||||||
Accumulated deficit | (5,222,194,000) | (4,282,471,000) | (4,713,244,000) | (4,291,031,000) | ||||
Accumulated other comprehensive loss | (48,898,000) | (31,059,000) | ||||||
Total stockholders' equity | 674,527,000 | 1,601,010,000 | 1,186,690,000 | 1,592,450,000 | $ 614,070,000 | |||
Total liabilities and stockholders' equity | $ 9,452,369,000 | $ 7,591,367,000 | ||||||
Common stock, par value (in dollars per share) | $ / shares | $ 1 | $ 1,000 | $ 1,000 | |||||
Common stock, shares authorized | shares | 75,000,000 | 75,000,000 | 75,000,000 | 1,500,000,000 | 75,000,000 | |||
Common stock, shares issued | shares | 54,016,000 | 54,716,000 | 54,016,000 | |||||
Common stock, shares outstanding | shares | 54,016,000 | 54,716,000 | 54,016,000 | |||||
Accounts Receivable, Net, Current | $ 1,286,785,000 | 1,869,100,000 | $ 1,788,712,000 | 1,811,203,000 | ||||
Deferred Tax Assets, Net, Noncurrent | 16,680,000 | 594,019,000 | 409,084,000 | 592,235,000 | ||||
Inventory, Net | $ 1,921,604,000 | 1,799,539,000 | 1,871,941,000 | 1,850,660,000 | ||||
Maximum | ||||||||
Basis of presentation | ||||||||
Maximum additional period for lease extension | 5 years | |||||||
Revenue Adjustments | ||||||||
Basis of presentation | ||||||||
Retained Earnings (Accumulated Deficit) | (8,560,000) | |||||||
Current assets: | ||||||||
Accounts receivable, net | (57,897,000) | |||||||
Inventories, net | 51,121,000 | |||||||
Deferred tax assets | (1,784,000) | |||||||
Total assets | (8,560,000) | |||||||
Stockholders' equity: | ||||||||
Accumulated deficit | (8,560,000) | |||||||
Total stockholders' equity | (8,560,000) | |||||||
Accounts Receivable, Net, Current | (57,897,000) | |||||||
Deferred Tax Assets, Net, Noncurrent | (1,784,000) | |||||||
Inventory, Net | 51,121,000 | |||||||
Accounting Standards Update 2016-02 | ||||||||
Basis of presentation | ||||||||
Operating right-of-use assets | $ 3,026,976 | |||||||
Retained Earnings (Accumulated Deficit) | (4,770,020) | |||||||
Current assets: | ||||||||
Cash and cash equivalents | 144,353 | |||||||
Accounts receivable, net | 1,788,712 | |||||||
Inventories, net | 1,871,941 | |||||||
Prepaid expenses and other current assets | 127,684 | |||||||
Current assets held for sale | 161,278 | |||||||
Total current assets | 4,093,968 | |||||||
Property, plant and equipment, net | 1,308,514 | |||||||
Operating lease right-of-use asset | 3,026,976 | |||||||
Goodwill | 1,108,136 | |||||||
Other intangibles, net | 419,074 | |||||||
Deferred tax assets | 409,084 | |||||||
Other assets | 214,122 | |||||||
Total assets | 10,579,874 | |||||||
Current liabilities: | ||||||||
Current maturities of long-term debt and lease financing obligations | 16,111 | |||||||
Accounts payable | 1,618,585 | |||||||
Accrued salaries, wages and other current liabilities | 751,886 | |||||||
Current portion of operating lease liabilities | 457,305 | |||||||
Current liabilities held for sale | 45,167 | |||||||
Total current liabilities | 2,889,054 | |||||||
Long-term debt, less current maturities | 3,454,585 | |||||||
Long-term operating lease liabilities | 2,838,022 | |||||||
Lease financing obligations, less current maturities, ASC842 | 24,064 | |||||||
Other noncurrent liabilities | 244,235 | |||||||
Total liabilities | 9,449,960 | |||||||
Stockholders' equity: | ||||||||
Common stock, par value $1 per share; 75,000 shares authorized; shares issued and outstanding 54,016 | 54,016 | |||||||
Additional paid-in capital | 5,876,977 | |||||||
Accumulated deficit | (4,770,020) | |||||||
Accumulated other comprehensive loss | (31,059) | |||||||
Total stockholders' equity | 1,129,914 | |||||||
Total liabilities and stockholders' equity | 10,579,874 | |||||||
Accounts Receivable, Net, Current | 1,788,712 | |||||||
Deferred Tax Assets, Net, Noncurrent | 409,084 | |||||||
Inventory, Net | 1,871,941 | |||||||
Accounting Standards Update 2016-02 | As Previously Reported | ||||||||
Basis of presentation | ||||||||
Retained Earnings (Accumulated Deficit) | (4,713,244) | |||||||
Current assets: | ||||||||
Cash and cash equivalents | 144,353 | |||||||
Accounts receivable, net | 1,788,712 | |||||||
Inventories, net | 1,871,941 | |||||||
Prepaid expenses and other current assets | 179,132 | |||||||
Current assets held for sale | 117,581 | |||||||
Total current assets | 4,101,719 | |||||||
Property, plant and equipment, net | 1,308,514 | |||||||
Goodwill | 1,108,136 | |||||||
Other intangibles, net | 448,706 | |||||||
Deferred tax assets | 409,084 | |||||||
Other assets | 215,208 | |||||||
Total assets | 7,591,367 | |||||||
Current liabilities: | ||||||||
Current maturities of long-term debt and lease financing obligations | 16,111 | |||||||
Accounts payable | 1,618,585 | |||||||
Accrued salaries, wages and other current liabilities | 808,439 | |||||||
Total current liabilities | 2,443,135 | |||||||
Long-term debt, less current maturities | 3,454,585 | |||||||
Lease financing obligations, less current maturities, ASC840 | 24,064 | |||||||
Other noncurrent liabilities | 482,893 | |||||||
Total liabilities | 6,404,677 | |||||||
Stockholders' equity: | ||||||||
Common stock, par value $1 per share; 75,000 shares authorized; shares issued and outstanding 54,016 | 54,016 | |||||||
Additional paid-in capital | 5,876,977 | |||||||
Accumulated deficit | (4,713,244) | |||||||
Accumulated other comprehensive loss | (31,059) | |||||||
Total stockholders' equity | 1,186,690 | |||||||
Total liabilities and stockholders' equity | 7,591,367 | |||||||
Accounts Receivable, Net, Current | 1,788,712 | |||||||
Deferred Tax Assets, Net, Noncurrent | 409,084 | |||||||
Inventory, Net | 1,871,941 | |||||||
Accounting Standards Update 2016-02 | Adjustments | ||||||||
Basis of presentation | ||||||||
Operating lease liability | 3,295,327 | |||||||
Operating right-of-use assets | 3,026,976 | |||||||
Retained Earnings (Accumulated Deficit) | (56,776) | |||||||
Impairment loss | 81,745 | |||||||
Deferred gains on sale-leaseback transactions | 24,969 | |||||||
Lease exit liability | 9,333 | $ 124,046 | ||||||
Current assets: | ||||||||
Prepaid expenses and other current assets | (51,448) | |||||||
Current assets held for sale | 43,697 | |||||||
Total current assets | (7,751) | |||||||
Operating lease right-of-use asset | 3,026,976 | |||||||
Other intangibles, net | (29,632) | |||||||
Other assets | (1,086) | |||||||
Total assets | 2,988,507 | |||||||
Current liabilities: | ||||||||
Accrued salaries, wages and other current liabilities | (56,553) | |||||||
Current portion of operating lease liabilities | 457,305 | |||||||
Current liabilities held for sale | 45,167 | |||||||
Total current liabilities | 445,919 | |||||||
Long-term operating lease liabilities | 2,838,022 | |||||||
Other noncurrent liabilities | (238,658) | |||||||
Total liabilities | 3,045,283 | |||||||
Stockholders' equity: | ||||||||
Accumulated deficit | (56,776) | |||||||
Total stockholders' equity | (56,776) | |||||||
Total liabilities and stockholders' equity | $ 2,988,507 | |||||||
Accounting Standards Update 2014-09 | ||||||||
Stockholders' equity: | ||||||||
Revenue and costs previously reported gross | $ 123,500,000 | |||||||
Accounting Standards Update 2014-09 | Revenue Adjustments | ||||||||
Basis of presentation | ||||||||
Retained Earnings (Accumulated Deficit) | (8,560,000) | |||||||
Current assets: | ||||||||
Accounts receivable, net | (57,897,000) | |||||||
Inventories, net | 51,121,000 | |||||||
Deferred tax assets | (1,784,000) | |||||||
Stockholders' equity: | ||||||||
Accumulated deficit | (8,560,000) | |||||||
Accounts Receivable, Net, Current | (57,897,000) | |||||||
Deferred Tax Assets, Net, Noncurrent | (1,784,000) | |||||||
Inventory, Net | $ 51,121,000 |
Restructuring (Details)
Restructuring (Details) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | |||||
Feb. 29, 2020 | Nov. 30, 2019 | Aug. 31, 2019 | Jun. 01, 2019 | Feb. 29, 2020 | Mar. 02, 2019 | Mar. 03, 2018 | |
Restructuring related liabilities | |||||||
Balance-beginning of period | $ 124,046 | $ 124,046 | $ 133,290 | $ 165,138 | |||
Restructuring expense | 105,642 | ||||||
Balance-end of period | $ 2,253 | 2,253 | 124,046 | $ 133,290 | |||
Anticipated restructuring-related costs in fiscal 2020 | 60,000 | 60,000 | |||||
Reorganization Of Executive Management Team, Ongoing Workforce Reduction And Consolidation, And Transformation Initiatives [Member] | |||||||
Restructuring related liabilities | |||||||
Balance-beginning of period | 51,297 | $ 36,146 | $ 33,549 | 4,704 | 4,704 | ||
Restructuring expense | 11,872 | 25,275 | 25,145 | 43,350 | 4,704 | ||
Cash payments | (18,115) | (10,124) | (22,548) | (14,505) | |||
Balance-end of period | 45,054 | 51,297 | 36,146 | 33,549 | 45,054 | 4,704 | |
Severance and related costs | |||||||
Restructuring related liabilities | |||||||
Balance-beginning of period | 38,508 | 26,224 | 22,423 | ||||
Restructuring expense | 5,716 | 17,320 | 8,381 | 27,076 | 58,493 | ||
Cash payments | (7,996) | (5,036) | (4,580) | (4,653) | |||
Balance-end of period | 36,228 | 38,508 | 26,224 | 22,423 | 36,228 | ||
Non-executive retention costs | |||||||
Restructuring related liabilities | |||||||
Balance-beginning of period | 5,281 | 4,013 | 11,126 | 4,704 | 4,704 | ||
Restructuring expense | 1,151 | 1,268 | 4,087 | 6,664 | 13,170 | 4,704 | |
Cash payments | (11,200) | (242) | |||||
Balance-end of period | 6,432 | 5,281 | 4,013 | 11,126 | 6,432 | 4,704 | |
Professional and other fees | |||||||
Restructuring related liabilities | |||||||
Balance-beginning of period | 7,508 | 5,909 | |||||
Restructuring expense | 5,005 | 6,687 | 12,677 | 9,610 | 33,979 | ||
Cash payments | (10,119) | (5,088) | (6,768) | $ (9,610) | |||
Balance-end of period | $ 2,394 | $ 7,508 | $ 5,909 | 2,394 | |||
Retail Pharmacy | |||||||
Restructuring related liabilities | |||||||
Restructuring expense | 87,738 | 3,224 | |||||
Retail Pharmacy | Severance and related costs | |||||||
Restructuring related liabilities | |||||||
Restructuring expense | 47,154 | ||||||
Retail Pharmacy | Non-executive retention costs | |||||||
Restructuring related liabilities | |||||||
Restructuring expense | 8,927 | 3,224 | |||||
Retail Pharmacy | Professional and other fees | |||||||
Restructuring related liabilities | |||||||
Restructuring expense | 31,657 | ||||||
Pharmacy Services | |||||||
Restructuring related liabilities | |||||||
Restructuring expense | 17,904 | 1,480 | |||||
Pharmacy Services | Severance and related costs | |||||||
Restructuring related liabilities | |||||||
Restructuring expense | 11,339 | ||||||
Pharmacy Services | Non-executive retention costs | |||||||
Restructuring related liabilities | |||||||
Restructuring expense | 4,243 | $ 1,480 | |||||
Pharmacy Services | Professional and other fees | |||||||
Restructuring related liabilities | |||||||
Restructuring expense | $ 2,322 |
Asset Sale to WBA (Details)
Asset Sale to WBA (Details) $ in Thousands | Apr. 01, 2020USD ($) | Mar. 31, 2018USD ($)store | Feb. 29, 2020USD ($)storeitem | Mar. 02, 2019USD ($)storeitem | Feb. 29, 2020USD ($)storeitem | Mar. 04, 2018USD ($) | Mar. 03, 2018USD ($) | Sep. 18, 2017USD ($)itemstore | Jun. 28, 2017item |
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | |||||||||
Number of stores | store | 2,461 | 2,461 | |||||||
Accounts receivable, net | $ 1,286,785 | $ 1,788,712 | $ 1,286,785 | $ 1,811,203 | $ 1,869,100 | ||||
Walgreens Boots Alliance WBA [Member] | Walgreens | |||||||||
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | |||||||||
Ownership interest (as a percent) | 100.00% | ||||||||
Sale Of Assets To Walgreens Boots Alliance WBA And Buyer [Member] | Subsequent Event | |||||||||
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | |||||||||
Proceeds from assets sold | $ 19,280 | ||||||||
Assets held for sale | Sale Of Assets To Walgreens Boots Alliance WBA And Buyer [Member] | |||||||||
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | |||||||||
Number of stores | store | 1,932 | 1,932 | 1,932 | 1,932 | |||||
Number of distribution centers | item | 3 | 3 | 3 | 3 | 3 | ||||
Purchase price per Agreement | $ 4,375,000 | ||||||||
Discontinued Operations, Disposed of by Sale [Member] | Sale Of Assets To Walgreens Boots Alliance WBA And Buyer [Member] | |||||||||
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | |||||||||
Number of stores | store | 1,932 | 1,932 | 1,932 | ||||||
Number of distribution centers | 2 | 1 | 2 | ||||||
Proceeds from assets sold | $ 4,156,686 | $ 62,774 | $ 61,251 | $ 4,280,711 | |||||
Pre-tax gain on sale | $ 19,268 | 14,151 | |||||||
Period of transition | 3 years | ||||||||
Payments for inventory and selling, general and administrative activities | $ 3,030,967 | 6,887,092 | |||||||
Accounts receivable, net | 38,737 | 293,662 | $ 38,737 | ||||||
TSA fees | $ 37,922 | $ 80,277 |
Asset Sale to WBA - Carrying am
Asset Sale to WBA - Carrying amount of assets to be sold (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Feb. 29, 2020 | Mar. 02, 2019 | |
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | ||
Discontinued Operation, Name of Segment [Extensible List] | Retail Pharmacy [Member] | Retail Pharmacy [Member] |
Current assets held for sale | ||
Current assets held for sale | $ 92,278 | $ 117,581 |
Current liabilities held for sale | ||
Current liabilities held for sale | 37,063 | |
Sale Of Assets To Walgreens Boots Alliance WBA And Buyer [Member] | Assets held for sale | ||
Current assets held for sale | ||
Inventories | 13,719 | 68,233 |
Property and equipment | 43,576 | 49,348 |
Operating lease right-of-use asset | 34,983 | |
Current assets held for sale | 92,278 | $ 117,581 |
Current liabilities held for sale | ||
Current portion of operating lease liabilities | 2,002 | |
Long-term operating lease liabilities | 35,061 | |
Current liabilities held for sale | $ 37,063 |
Asset Sale to WBA - Operating r
Asset Sale to WBA - Operating results of discontinued operations (Details) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | |||||||||
Feb. 29, 2020 | Nov. 30, 2019 | Aug. 31, 2019 | Jun. 01, 2019 | Mar. 02, 2019 | Dec. 01, 2018 | Sep. 01, 2018 | Jun. 02, 2018 | Feb. 29, 2020 | Mar. 02, 2019 | Mar. 03, 2018 | |
Costs and expenses: | |||||||||||
Income tax expense | $ 7,011 | $ 91,067 | $ 749,704 | ||||||||
Net income from discontinued operations, net of tax | $ 18,740 | $ (801) | $ (574) | $ (320) | $ (17,350) | $ 12,740 | $ (6,792) | $ 256,143 | 17,045 | 244,741 | 1,293,002 |
Discontinued Operations, Held-for-sale or Disposed of by Sale [Member] | Sale Of Assets To Walgreens Boots Alliance WBA And Buyer [Member] | |||||||||||
Income statement disclosures | |||||||||||
Revenues | (21) | 34,889 | 8,686,397 | ||||||||
Costs and expenses: | |||||||||||
Cost of revenues | 24,271 | 6,406,067 | |||||||||
Net credit to cost of revenues | (5,639) | ||||||||||
Selling, general and administrative expenses | 1,498 | 20,681 | 2,134,276 | ||||||||
Lease termination and impairment charges | 77 | ||||||||||
Loss on debt retirements, net | 22,646 | 8,180 | |||||||||
Interest expense | 1 | 4,616 | 224,300 | ||||||||
Gain on stores sold to Walgreens Boots Alliance | (374,619) | (2,128,832) | |||||||||
Gain on sale of assets, net | (19,937) | 1,486 | (377) | ||||||||
Net expenses and non-operating income | (24,077) | (300,919) | 6,643,691 | ||||||||
Income from discontinued operations before income taxes | 24,056 | 335,808 | 2,042,706 | ||||||||
Income tax expense | 7,011 | 91,067 | 749,704 | ||||||||
Net income from discontinued operations, net of tax | $ 17,045 | $ 244,741 | $ 1,293,002 |
(Loss) Income Per Share (Detail
(Loss) Income Per Share (Details) $ / shares in Units, $ in Thousands | Apr. 18, 2019shares | Feb. 29, 2020USD ($)$ / sharesshares | Nov. 30, 2019USD ($)$ / shares | Aug. 31, 2019USD ($)$ / shares | Jun. 01, 2019USD ($)$ / shares | Mar. 02, 2019USD ($)$ / sharesshares | Dec. 01, 2018USD ($)$ / shares | Sep. 01, 2018USD ($)$ / shares | Jun. 02, 2018USD ($)$ / shares | Feb. 29, 2020USD ($)$ / sharesshares | Mar. 02, 2019USD ($)$ / sharesshares | Mar. 03, 2018USD ($)$ / sharesshares | Apr. 17, 2019shares | Mar. 03, 2019shares |
Numerator: | ||||||||||||||
Net loss from continuing operations | $ | $ (343,461) | $ 52,286 | $ (78,705) | $ (99,339) | $ (255,629) | $ (17,250) | $ (352,348) | $ (41,727) | $ (469,219) | $ (666,954) | $ (349,532) | |||
Net income from discontinued operations, net of tax | $ | $ 18,740 | $ (801) | $ (574) | $ (320) | $ (17,350) | $ 12,740 | $ (6,792) | $ 256,143 | 17,045 | 244,741 | 1,293,002 | |||
(Loss) income attributable to common stockholders-basic and diluted | $ | $ (452,174) | $ (422,213) | $ 943,470 | |||||||||||
Denominator: | ||||||||||||||
Basic weighted average shares | shares | 53,228,000 | 52,854,000 | 52,481,000 | |||||||||||
Diluted weighted average shares | shares | 53,228,000 | 52,854,000 | 52,481,000 | |||||||||||
Continuing operations | $ (4.83) | $ (0.33) | $ (6.67) | $ (0.79) | $ (8.82) | $ (12.62) | $ (6.66) | |||||||
Discontinued operations | (0.32) | 0.24 | (0.13) | 4.86 | 0.32 | 4.63 | 24.64 | |||||||
Net basic and diluted loss (income) per share | $ (5.15) | $ (0.09) | $ (6.80) | $ 4.07 | (8.50) | $ (7.99) | $ 17.98 | |||||||
Basic income (loss) per share: | ||||||||||||||
Continuing operations | $ (6.43) | $ 0.98 | $ (1.48) | $ (1.88) | (8.82) | |||||||||
Discontinued operations | 0.35 | (0.01) | (0.01) | 0.32 | ||||||||||
Net basic income (loss) per share | (6.08) | 0.97 | (1.49) | (1.88) | (8.50) | |||||||||
Diluted income (loss) per share: | ||||||||||||||
Continuing operations | (6.43) | 0.98 | (1.48) | (1.88) | (8.82) | |||||||||
Discontinued operations | 0.35 | (0.02) | (0.01) | 0.32 | ||||||||||
Net diluted income (loss) per share | $ (6.08) | $ 0.96 | $ (1.49) | $ (1.88) | $ (8.50) | |||||||||
Reverse stock split | ||||||||||||||
Reverse stock split ratio | 0.05 | |||||||||||||
Common stock, shares authorized | shares | 75,000,000 | 75,000,000 | 75,000,000 | 75,000,000 | 75,000,000 | 1,500,000,000 | 75,000,000 | |||||||
Stock options | ||||||||||||||
Antidilutive securities excluded from computation of income per share | ||||||||||||||
Shares excluded from the computation of diluted income per share | shares | 1,295,000 | 1,036,000 | 374,000 | |||||||||||
Restricted shares | ||||||||||||||
Antidilutive securities excluded from computation of income per share | ||||||||||||||
Shares excluded from the computation of diluted income per share | shares | 1,253,000 | 1,008,000 | 6,100,000 |
Lease Termination and Impairm_3
Lease Termination and Impairment Charges (Details) $ in Thousands | 12 Months Ended | ||
Feb. 29, 2020USD ($)locationstore | Mar. 02, 2019USD ($)store | Mar. 03, 2018USD ($)storelocation | |
Lease termination and impairment charges | |||
Long-lived assets held and used, impairment charges | $ 38,878 | $ 62,115 | |
Number of stores | store | 2,461 | ||
Operating right-of-use assets | $ 2,903,256 | ||
Impairment charges, closed facilities | $ 997 | $ 1,377 | |
Number of impaired locations | 350 | 446 | 373 |
Impairment charges, other | $ 14,285 | ||
Impairment Charges, Total | $ 39,875 | 63,492 | $ 37,873 |
Retail Sites In Active Status [Member] | |||
Lease termination and impairment charges | |||
Long-lived assets held and used, impairment charges | 34,825 | $ 46,419 | $ 34,782 |
Carrying value of long-lived assets | $ 965,500 | ||
Number of stores | store | 2,461 | ||
Operating right-of-use assets | $ 2,800,000 | ||
Number of impaired locations | store | 320 | 384 | 306 |
Retail Sites Previously Impaired [Member] | |||
Lease termination and impairment charges | |||
Long-lived assets held and used, impairment charges | $ 11,449 | $ 17,939 | $ 7,313 |
Number of impaired locations | store | 274 | 288 | 218 |
ROU assets impairment | $ 6,594 | ||
Capital asset impairment | 4,855 | ||
Retail Sites New, Relocated And Remodeled [Member] | |||
Lease termination and impairment charges | |||
Long-lived assets held and used, impairment charges | $ 11,228 | $ 10,595 | $ 13,100 |
Number of impaired locations | store | 8 | 22 | 28 |
ROU assets impairment | $ 5,625 | ||
Capital asset impairment | $ 5,603 | ||
Period considered for impairment of relocated stores | 2 years | ||
Other Retail Sites [Member] | |||
Lease termination and impairment charges | |||
Long-lived assets held and used, impairment charges | $ 12,148 | $ 17,885 | $ 14,369 |
Number of impaired locations | store | 38 | 74 | 60 |
Retail Sites In Closed Status [Member] | |||
Lease termination and impairment charges | |||
Impairment charges, closed facilities | $ 5,050 | $ 2,788 | $ 3,091 |
Number of impaired locations | store | 30 | 62 | 67 |
Minimum | |||
Lease termination and impairment charges | |||
Period considered for recording impairment charges on the basis of operating loss | 2 years | ||
Minimum | Retail Sites New, Relocated And Remodeled [Member] | |||
Lease termination and impairment charges | |||
Period considered for recording impairment charges on the basis of operating loss | 2 years | ||
Period considered for impairment of new stores | 3 years | ||
Minimum | Other Retail Sites [Member] | |||
Lease termination and impairment charges | |||
Period considered for recording impairment charges on the basis of operating loss | 2 years |
Lease Termination and Impairm_4
Lease Termination and Impairment Charges - Fair value (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Feb. 29, 2020 | Mar. 02, 2019 | Mar. 03, 2018 | |
Non Financial Assets Measured on a Non Recurring Basis | |||
Fair value of Long-lived assets held for use | $ 113,788 | $ 8,116 | |
Fair value of Long-lived assets held for sale | 2,689 | 1,545 | |
Fair value of Total | 116,477 | 9,661 | |
Long-lived assets held and used, impairment charges | (38,878) | (62,115) | |
Long-lived assets held for sale, impairment charges | (997) | (1,377) | |
Total Charges | (39,875) | (63,492) | $ (37,873) |
Nonrecurring basis | Level 2 | |||
Non Financial Assets Measured on a Non Recurring Basis | |||
Fair value of Long-lived assets held for use | 113,510 | ||
Fair value of Long-lived assets held for sale | 2,689 | 1,545 | |
Fair value of Total | 116,199 | 1,545 | |
Nonrecurring basis | Level 3 | |||
Non Financial Assets Measured on a Non Recurring Basis | |||
Fair value of Long-lived assets held for use | 278 | 8,116 | |
Fair value of Total | $ 278 | $ 8,116 |
Lease Termination and Impairm_5
Lease Termination and Impairment Charges - Lease Terminations (Details) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | |||||||||
Feb. 29, 2020 | Nov. 30, 2019 | Aug. 31, 2019 | Jun. 01, 2019 | Mar. 02, 2019 | Dec. 01, 2018 | Sep. 01, 2018 | Jun. 02, 2018 | Feb. 29, 2020 | Mar. 02, 2019 | Mar. 03, 2018 | |
Lease termination and impairment charges | |||||||||||
Lease termination charges | $ 2,968 | $ 44,502 | $ 20,892 | ||||||||
Closed store and distribution center charges | |||||||||||
Balance-beginning of period | $ 124,046 | $ 133,290 | 124,046 | 133,290 | 165,138 | ||||||
Existing Topic 420 liabilities eliminated by recording a reduction to the ROU asset | (112,288) | ||||||||||
Provision for present value of noncancellable lease payments of closed stores | 105,642 | ||||||||||
Changes in assumptions about future sublease income, terminations and changes in interest rates | 737 | 1,082 | |||||||||
Interest accretion | 9,741 | 11,439 | |||||||||
Cash payments, net of sublease income | (9,505) | (54,912) | (53,240) | ||||||||
Balance-end of period | $ 2,253 | $ 124,046 | 2,253 | 124,046 | 133,290 | ||||||
Revenues and operating losses of closed stores or stores approved for closure | |||||||||||
Income (loss) before income taxes | $ 8,268 | $ 53,162 | $ (51,077) | $ (91,965) | $ (60,625) | $ (18,721) | $ (458,907) | $ (51,224) | (81,612) | (589,477) | (43,545) |
Depreciation and amortization | 328,277 | 357,882 | 386,057 | ||||||||
Retail Sites In Closed Or Approved For Closure Status [Member] | |||||||||||
Revenues and operating losses of closed stores or stores approved for closure | |||||||||||
Revenue from contract with customer | 17,182 | 191,110 | 333,984 | ||||||||
Operating expenses | 18,046 | 209,645 | 369,859 | ||||||||
Gain from sale of assets | (2,550) | (38,110) | (18,221) | ||||||||
Other expenses | 776 | 2,490 | 2,442 | ||||||||
Income (loss) before income taxes | 910 | 17,085 | (20,096) | ||||||||
Depreciation and amortization | 292 | 960 | 2,058 | ||||||||
Inventory liquidation charges | $ (486) | (5,536) | (2,828) | ||||||||
Lease termination charges | |||||||||||
Closed store and distribution center charges | |||||||||||
Provision for present value of noncancellable lease payments of closed stores | $ 35,190 | $ 8,871 |
Fair Value Measurements (Detail
Fair Value Measurements (Details) - USD ($) $ in Thousands | Feb. 29, 2020 | Mar. 15, 2019 | Mar. 02, 2019 |
Other Financial Instruments | |||
Held to maturity investments | $ 7,022 | $ 7,191 | |
Interest rate cap | |||
Other Financial Instruments | |||
Derivative notional amount | $ 650,000 | $ 650,000 | |
Interest rate cap (as a percent) | 2.75% | ||
Interest rate cap | LIBOR | |||
Other Financial Instruments | |||
Interest rate cap (as a percent) | 2.75% | ||
Nonrecurring basis | Level 1 | |||
Other Financial Instruments | |||
Carrying value of total long-term indebtedness | $ 3,077,268 | 3,454,585 | |
Estimated fair value of total long-term indebtedness | $ 3,021,385 | $ 3,120,335 |
Income Taxes (Details)
Income Taxes (Details) - USD ($) $ in Thousands | Dec. 22, 2017 | Dec. 21, 2017 | Feb. 29, 2020 | Nov. 30, 2019 | Aug. 31, 2019 | Jun. 01, 2019 | Mar. 02, 2019 | Dec. 01, 2018 | Sep. 01, 2018 | Jun. 02, 2018 | Feb. 29, 2020 | Mar. 02, 2019 | Dec. 31, 2018 | Mar. 03, 2018 |
Income Taxes | ||||||||||||||
Federal statutory rate (as a percent) | 35.00% | 35.00% | 21.00% | 21.00% | 21.00% | 32.60% | ||||||||
Current tax: | ||||||||||||||
Federal | $ (6,758) | $ (22,187) | $ (210) | |||||||||||
State | 13,725 | 9,866 | 51,279 | |||||||||||
Total current tax expense (benefit) | 6,967 | (12,321) | 51,069 | |||||||||||
Deferred tax and other: | ||||||||||||||
Federal | 345,469 | 50,151 | 316,451 | |||||||||||
State | 35,171 | 39,647 | (61,533) | |||||||||||
Total deferred tax expense (benefit) | 380,640 | 89,798 | 254,918 | |||||||||||
Total income tax expense (benefit) | $ 351,729 | $ 876 | $ 27,628 | $ 7,374 | $ 195,004 | $ (1,471) | $ (106,559) | $ (9,497) | $ 387,607 | $ 77,477 | $ 305,987 |
Income Taxes - Rate reconciliat
Income Taxes - Rate reconciliation (Details) - USD ($) | Dec. 22, 2017 | Dec. 21, 2017 | Feb. 29, 2020 | Nov. 30, 2019 | Aug. 31, 2019 | Jun. 01, 2019 | Mar. 02, 2019 | Dec. 01, 2018 | Sep. 01, 2018 | Jun. 02, 2018 | Feb. 29, 2020 | Mar. 02, 2019 | Dec. 31, 2018 | Mar. 03, 2018 |
Federal statutory rate (as a percent) | 35.00% | 35.00% | 21.00% | 21.00% | 21.00% | 32.60% | ||||||||
Reconciliation of the expected statutory federal tax and the total income tax expense (benefit) | ||||||||||||||
Federal statutory rate | $ (17,093,000) | $ (123,790,000) | $ (14,202,000) | |||||||||||
Federal tax rate change | $ 347,599,000 | $ 212,252,000 | 324,765,000 | |||||||||||
Nondeductible expenses | 1,025,000 | 2,890,000 | 1,213,000 | |||||||||||
State income taxes, net | 46,620,000 | (12,605,000) | (22,836,000) | |||||||||||
Increase/(decrease) of previously recorded liabilities | (4,477,000) | (3,105,000) | 27,295,000 | |||||||||||
Nondeductible compensation | 2,623,000 | 1,798,000 | 654,000 | |||||||||||
Officer life insurance | 5,555,000 | |||||||||||||
Qualified fringe disallowance | 974,000 | |||||||||||||
Acquisition costs | 696,000 | |||||||||||||
Stock based compensation | 4,999,000 | 3,478,000 | 8,363,000 | |||||||||||
Valuation allowance | 347,599,000 | 212,252,000 | (8,853,000) | |||||||||||
Other | (218,000) | (3,441,000) | (11,108,000) | |||||||||||
Total income tax expense (benefit) | $ 351,729,000 | $ 876,000 | $ 27,628,000 | $ 7,374,000 | $ 195,004,000 | $ (1,471,000) | $ (106,559,000) | $ (9,497,000) | 387,607,000 | 77,477,000 | 305,987,000 | |||
Income tax (benefit) expense, discontinued operation | 7,011,000 | 91,067,000 | 749,704,000 | |||||||||||
Discontinued operations | ||||||||||||||
Reconciliation of the expected statutory federal tax and the total income tax expense (benefit) | ||||||||||||||
Valuation allowance | $ 0 | $ (2,417,000) | $ (32,870,000) |
Income Taxes - Deferred Tax Ass
Income Taxes - Deferred Tax Assets and Liabilities (Details) - USD ($) $ in Thousands | Feb. 29, 2020 | Mar. 02, 2019 |
Deferred tax assets: | ||
Accounts receivable | $ 29,734 | $ 36,607 |
Accrued expenses | 99,637 | 107,356 |
Liability for lease exit costs | 772 | 37,333 |
Pension, retirement and other benefits | 98,408 | 87,397 |
Long-lived assets | 303,630 | 320,561 |
Operating lease liabilities | 903,020 | |
Credits | 35,197 | 48,884 |
Net operating losses | 1,284,831 | 1,084,139 |
Other | 654 | |
Total gross deferred tax assets | 2,755,883 | 1,722,277 |
Valuation allowance | (1,673,119) | (1,091,416) |
Total deferred tax assets | 1,082,764 | 630,861 |
Deferred tax liabilities: | ||
Outside basis difference | 5,616 | 5,392 |
Inventory | 242,238 | 215,588 |
Operating lease right of use assets | 818,230 | |
Other | 797 | |
Total gross deferred tax liabilities | 1,066,084 | 221,777 |
Net deferred tax assets | $ 16,680 | $ 409,084 |
Income Taxes - Unrecognized Ben
Income Taxes - Unrecognized Benefit (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Feb. 29, 2020 | Mar. 02, 2019 | Mar. 03, 2018 | |
Reconciliation of beginning and ending amount of unrecognized tax benefits | |||
Unrecognized tax benefits at beginning of the period | $ 219,839 | $ 230,210 | $ 8,939 |
Increases to prior year tax positions | 440 | 155 | |
Decreases to tax positions in prior periods | (6,448) | (111) | (1,015) |
Increases to current year tax positions | 224,408 | ||
Divestitures | (543) | (1,607) | |
Lapse of statute of limitations | (15,506) | (9,872) | (515) |
Unrecognized tax benefits balance at end of the period | 198,325 | 219,839 | 230,210 |
Unrecognized tax benefits which would impact effective tax rate, if recognized | 23,439 | $ 28,482 | $ 31,377 |
Decrease in unrecognized tax benefits related to state exposures | $ 13,210 |
Income Taxes - Tax Contingencie
Income Taxes - Tax Contingencies (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Feb. 29, 2020 | Mar. 02, 2019 | Mar. 03, 2018 | |
Income Taxes | |||
Interest and penalties related to tax contingencies recognized as income tax expense / (benefit) | $ (220) | $ (769) | $ 7,058 |
Accrued income tax-related interest and penalties | $ 6,332 | $ 6,553 |
Income Taxes - Net Operating Lo
Income Taxes - Net Operating Losses and Tax Credits (Details) - USD ($) $ in Thousands | Feb. 29, 2020 | Mar. 02, 2019 |
Net Operating Losses and Tax Credits | ||
Net tax effect of state carryforwards | $ 1,046,331 | |
Alternative minimum tax credit carryforwards | 6,748 | |
Valuation Allowance | ||
Valuation allowance | 1,673,119 | $ 1,091,416 |
Federal | ||
Net Operating Losses and Tax Credits | ||
Net operating loss carryforwards | 1,152,396 | |
Federal business tax credit carryforwards | 18,427 | |
Federal | Tax Period Between Fiscal 2029 And 2031 [Member] | ||
Net Operating Losses and Tax Credits | ||
Net operating losses subject to expiration | 900,383 | |
Federal | Tax Period Between Fiscal 2032 and 2038 | ||
Net Operating Losses and Tax Credits | ||
Net operating losses subject to expiration | 178,246 | |
State | ||
Net Operating Losses and Tax Credits | ||
Net operating loss carryforwards | $ 11,413,504 |
Accounts Receivable (Details)
Accounts Receivable (Details) - USD ($) $ in Thousands | Feb. 29, 2020 | Mar. 02, 2019 |
Accounts Receivable | ||
Allowance for uncollectible accounts | $ 12,849 | $ 13,106 |
Medicare Part D (Details)
Medicare Part D (Details) - USD ($) $ in Thousands | Feb. 19, 2020 | Feb. 29, 2020 | Dec. 31, 2019 | Mar. 02, 2019 | Mar. 04, 2018 | Mar. 03, 2018 |
Statutory Accounting Practices [Line Items] | ||||||
Accounts receivable, net | $ 1,286,785 | $ 1,788,712 | $ 1,811,203 | $ 1,869,100 | ||
Medicare Part D | ||||||
Amount of receivables sold under Receivable Purchase Agreement | $ 501,422 | |||||
Sale price for receivables sold | 484,547 | |||||
Receipts from sale of receivables | $ 449,949 | |||||
Remaining receivable for receivables sold to third party | 34,598 | |||||
Loss on sale of receivable | 16,875 | |||||
Accrued salaries, wages and other current liabilities | 746,318 | 808,439 | ||||
EIC | ||||||
Statutory Accounting Practices [Line Items] | ||||||
Minimum amount of capital and surplus required by regulatory requirements | $ 20,195 | |||||
Accounts receivable, net | $ 392,400 | |||||
Medicare Part D | ||||||
Accrued salaries, wages and other current liabilities | $ 14,083 |
Manufacturer Rebates Receivab_2
Manufacturer Rebates Receivables (Details) - USD ($) $ in Thousands | Feb. 29, 2020 | Mar. 02, 2019 |
Manufacturer Rebates Receivables | ||
Manufacturer rebates receivables | $ 530,451 | $ 445,200 |
Inventory (Details)
Inventory (Details) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | |||
Feb. 29, 2020 | Mar. 02, 2019 | Feb. 29, 2020 | Mar. 02, 2019 | Mar. 03, 2018 | |
Inventory | |||||
Amount by which LIFO value is lower than FIFO value | $ 539,640 | $ 604,444 | $ 539,640 | $ 604,444 | |
LIFO charge (credit) | $ (72,357) | $ 4,043 | (64,804) | 23,354 | $ (28,827) |
Amount of decrease in the cost of revenues due to the effect of LIFO inventory liquidation | $ 14,449 | $ 5,884 | $ 2,707 |
Property, Plant and Equipment_2
Property, Plant and Equipment (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Feb. 29, 2020 | Mar. 02, 2019 | Mar. 03, 2018 | |
Property, Plant and Equipment | |||
Property, plant and equipment, gross | $ 4,057,329 | $ 4,053,956 | |
Accumulated depreciation | (2,841,491) | (2,745,442) | |
Property, plant and equipment, net | 1,215,838 | 1,308,514 | |
Depreciation expense | 224,336 | 232,242 | $ 238,318 |
Carrying amount of assets to be disposed | 1,187 | 452 | |
Land | |||
Property, Plant and Equipment | |||
Property, plant and equipment, gross | 131,814 | 139,406 | |
Buildings | |||
Property, Plant and Equipment | |||
Property, plant and equipment, gross | 513,264 | 533,580 | |
Leasehold improvements | |||
Property, Plant and Equipment | |||
Property, plant and equipment, gross | 1,533,729 | 1,527,371 | |
Equipment | |||
Property, Plant and Equipment | |||
Property, plant and equipment, gross | 1,774,424 | 1,765,575 | |
Software | |||
Property, Plant and Equipment | |||
Property, plant and equipment, gross | 60,035 | 38,680 | |
Construction in progress | |||
Property, Plant and Equipment | |||
Property, plant and equipment, gross | $ 44,063 | $ 49,344 |
Goodwill and Other Intangibles
Goodwill and Other Intangibles - Goodwill (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Feb. 29, 2020 | Mar. 02, 2019 | |
Carrying amount of goodwill | ||
Beginning Balance | $ 1,108,136 | $ 1,421,120 |
Goodwill impairment | 0 | (312,984) |
Ending Balance | 1,108,136 | 1,108,136 |
Retail Pharmacy | ||
Carrying amount of goodwill | ||
Beginning Balance | 43,492 | 43,492 |
Ending Balance | 43,492 | 43,492 |
Pharmacy Services | ||
Goodwill | ||
Goodwill impairment, net of tax | 235,698 | |
Accumulated impairment losses | 574,712 | 574,712 |
Carrying amount of goodwill | ||
Beginning Balance | 1,064,644 | 1,377,628 |
Goodwill impairment | (312,984) | |
Ending Balance | $ 1,064,644 | $ 1,064,644 |
Goodwill and Other Intangible_3
Goodwill and Other Intangible Assets - Intangibles (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Feb. 29, 2020 | Mar. 02, 2019 | |
Finite Lived And Indefinite Lived Intangible Assets By Major Class | ||
Goodwill impairment | $ 0 | $ (312,984) |
Gross Carrying Amount, Finite Lived | 1,673,155 | 1,826,689 |
Accumulated Amortization | (1,333,164) | (1,397,483) |
Net | 339,991 | 429,206 |
Gross Carrying Amount, Total | 1,692,655 | 1,846,189 |
Net, Total | 359,491 | 448,706 |
Other intangibles, net | 359,491 | 448,706 |
Trademarks | ||
Finite Lived And Indefinite Lived Intangible Assets By Major Class | ||
Gross Carrying Amount, Indefinite Lived | 19,500 | 19,500 |
Impairment of Intangible Assets, Indefinite-lived (Excluding Goodwill) | 14,000 | |
Favorable leases, noncompete agreements and other | ||
Finite Lived And Indefinite Lived Intangible Assets By Major Class | ||
Gross Carrying Amount, Finite Lived | 186,183 | 370,855 |
Accumulated Amortization | (163,575) | (318,503) |
Net | $ 22,608 | $ 52,352 |
Remaining Weighted Average Amortization Period | 3 years | 7 years |
Prescription files | ||
Finite Lived And Indefinite Lived Intangible Assets By Major Class | ||
Gross Carrying Amount, Finite Lived | $ 950,887 | $ 919,749 |
Accumulated Amortization | (867,430) | (827,222) |
Net | $ 83,457 | $ 92,527 |
Remaining Weighted Average Amortization Period | 3 years | 3 years |
Customer relationships | ||
Finite Lived And Indefinite Lived Intangible Assets By Major Class | ||
Gross Carrying Amount, Finite Lived | $ 388,000 | $ 388,000 |
Accumulated Amortization | (231,015) | (193,352) |
Net | $ 156,985 | $ 194,648 |
Remaining Weighted Average Amortization Period | 12 years | 13 years |
Net impairment charge | $ 48,205 | |
Gross carrying amount of assets impaired | 77,000 | |
Accumulated amortization of assets impaired | 28,795 | |
CMS license | ||
Finite Lived And Indefinite Lived Intangible Assets By Major Class | ||
Gross Carrying Amount, Finite Lived | $ 57,500 | 57,500 |
Accumulated Amortization | (10,772) | (8,472) |
Net | $ 46,728 | $ 49,028 |
Remaining Weighted Average Amortization Period | 21 years | 22 years |
Claims adjudication and other developed software | ||
Finite Lived And Indefinite Lived Intangible Assets By Major Class | ||
Gross Carrying Amount, Finite Lived | $ 58,985 | $ 58,985 |
Accumulated Amortization | (39,459) | (31,030) |
Net | $ 19,526 | $ 27,955 |
Remaining Weighted Average Amortization Period | 3 years | 4 years |
Trademarks | ||
Finite Lived And Indefinite Lived Intangible Assets By Major Class | ||
Gross Carrying Amount, Finite Lived | $ 20,100 | $ 20,100 |
Accumulated Amortization | (9,413) | (7,404) |
Net | $ 10,687 | $ 12,696 |
Remaining Weighted Average Amortization Period | 6 years | 7 years |
Backlog | ||
Finite Lived And Indefinite Lived Intangible Assets By Major Class | ||
Gross Carrying Amount, Finite Lived | $ 11,500 | $ 11,500 |
Accumulated Amortization | $ (11,500) | $ (11,500) |
Remaining Weighted Average Amortization Period | 0 years | 0 years |
EIC | ||
Finite Lived And Indefinite Lived Intangible Assets By Major Class | ||
Other intangibles, net | $ 30,187 | |
EIC | Trademarks | ||
Finite Lived And Indefinite Lived Intangible Assets By Major Class | ||
Other intangibles, net | 19,500 | |
EIC | Trademarks | ||
Finite Lived And Indefinite Lived Intangible Assets By Major Class | ||
Other intangibles, net | $ 10,687 |
Goodwill and Other Intangible_4
Goodwill and Other Intangible Assets - Unfavorable lease intangibles and amortization expense (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Feb. 29, 2020 | Mar. 02, 2019 | Mar. 03, 2018 | |
Goodwill and Other Intangible Assets | |||
Unfavorable lease intangibles | $ 0 | $ 14,763 | |
Amortization expense for intangible assets and liabilities | 103,941 | $ 125,640 | $ 147,739 |
Anticipated annual amortization expense for intangible assets and liabilities | |||
2021 | 84,107 | ||
2022 | 63,396 | ||
2023 | 48,262 | ||
2024 | 34,623 | ||
2025 | $ 23,319 |
Accrued Salaries, Wages and O_3
Accrued Salaries, Wages and Other Current Liabilities (Details) - USD ($) $ in Thousands | Feb. 29, 2020 | Mar. 02, 2019 |
Accrued Salaries, Wages and Other Current Liabilities | ||
Accrued wages, benefits and other personnel costs | $ 254,773 | $ 302,025 |
Accrued interest | 12,073 | 13,991 |
Accrued sales and other taxes payable | 76,816 | 80,708 |
Accrued store expense | 97,801 | 143,053 |
Other | 304,855 | 268,662 |
Accrued salaries, wages and other current liabilities | $ 746,318 | $ 808,439 |
Indebtedness and Credit Agree_3
Indebtedness and Credit Agreements - Indebtedness and lease financing obligations (Details) - USD ($) $ in Thousands | Feb. 29, 2020 | Feb. 05, 2020 | Jan. 06, 2020 | Nov. 30, 2019 | Oct. 15, 2019 | Oct. 11, 2019 | Mar. 02, 2019 | Dec. 20, 2018 | Jun. 25, 2018 | May 21, 2018 | Apr. 19, 2018 | Apr. 12, 2018 | Mar. 29, 2018 | Mar. 13, 2018 | Feb. 27, 2018 |
Indebtedness and credit agreements | |||||||||||||||
Lease financing obligations, ASC842 | $ 28,166 | ||||||||||||||
Lease financing obligations, ASC840 | $ 40,176 | ||||||||||||||
Total Debt | 3,105,434 | 3,494,760 | |||||||||||||
Current maturities of long-term debt and lease financing obligations | (8,840) | (16,111) | |||||||||||||
Long-term debt and lease financing obligations, less current maturities | 3,096,594 | 3,478,649 | |||||||||||||
Secured Debt | |||||||||||||||
Indebtedness and credit agreements | |||||||||||||||
Long-term debt | 1,077,787 | 1,297,013 | |||||||||||||
Senior secured revolving credit facility due December 2023 | |||||||||||||||
Indebtedness and credit agreements | |||||||||||||||
Long-term debt | 630,833 | 850,931 | |||||||||||||
Principal amount of debt | 650,000 | 875,000 | |||||||||||||
Unamortized debt issuance costs | 19,167 | 24,069 | |||||||||||||
Senior secured term loan due December 2023 | |||||||||||||||
Indebtedness and credit agreements | |||||||||||||||
Long-term debt | 446,954 | 446,082 | |||||||||||||
Principal amount of debt | 450,000 | 450,000 | $ 450,000 | ||||||||||||
Unamortized debt issuance costs | 3,046 | 3,918 | |||||||||||||
Senior Notes 7.5 Percent [Member] | |||||||||||||||
Indebtedness and credit agreements | |||||||||||||||
Long-term debt | 589,073 | ||||||||||||||
Debt instrument, stated interest rate (as a percent) | 7.50% | 7.50% | |||||||||||||
Guaranteed Unsecured Debt | |||||||||||||||
Indebtedness and credit agreements | |||||||||||||||
Long-term debt | 1,145,060 | 1,736,508 | |||||||||||||
9.25% senior notes due March 2020 | |||||||||||||||
Indebtedness and credit agreements | |||||||||||||||
Debt instrument, stated interest rate (as a percent) | 9.25% | 9.25% | 9.25% | 9.25% | |||||||||||
6.75% senior notes due June 2021 | |||||||||||||||
Indebtedness and credit agreements | |||||||||||||||
Debt instrument, stated interest rate (as a percent) | 6.75% | 6.75% | 6.75% | 6.75% | 6.75% | ||||||||||
6.125% senior notes due April 2023 | |||||||||||||||
Indebtedness and credit agreements | |||||||||||||||
Long-term debt | $ 1,145,060 | $ 1,736,508 | |||||||||||||
Debt instrument, stated interest rate (as a percent) | 6.125% | 6.125% | 6.125% | 6.125% | 6.125% | 6.125% | 6.125% | 6.125% | 6.125% | ||||||
Principal amount of debt | $ 1,153,490 | $ 1,753,490 | |||||||||||||
Unamortized debt issuance costs | 8,430 | 16,982 | |||||||||||||
Unguaranteed Unsecured Debt | |||||||||||||||
Indebtedness and credit agreements | |||||||||||||||
Long-term debt | 265,348 | 421,063 | |||||||||||||
7.7% notes due February 2027 | |||||||||||||||
Indebtedness and credit agreements | |||||||||||||||
Long-term debt | $ 236,478 | $ 293,705 | |||||||||||||
Debt instrument, stated interest rate (as a percent) | 7.70% | 7.70% | 7.70% | 7.70% | 7.70% | ||||||||||
Principal amount of debt | $ 237,386 | $ 295,000 | |||||||||||||
Unamortized debt issuance costs | 908 | 1,295 | |||||||||||||
6.875% fixed-rate senior notes due December 2028 | |||||||||||||||
Indebtedness and credit agreements | |||||||||||||||
Long-term debt | $ 28,870 | $ 127,358 | |||||||||||||
Debt instrument, stated interest rate (as a percent) | 6.875% | 6.875% | 6.875% | 6.875% | 6.875% | ||||||||||
Principal amount of debt | $ 29,001 | $ 128,000 | |||||||||||||
Unamortized debt issuance costs | $ 131 | $ 642 |
Indebtedness and Credit Agree_4
Indebtedness and Credit Agreement - Credit Facility (Details) - USD ($) $ in Thousands | Dec. 20, 2018 | Feb. 29, 2020 | Feb. 05, 2020 | Jan. 06, 2020 | Mar. 02, 2019 | May 21, 2018 | Apr. 29, 2018 | Apr. 28, 2018 | Apr. 19, 2018 | Mar. 29, 2018 | Feb. 28, 2018 | Feb. 27, 2018 | Jan. 31, 2018 |
Credit facility | |||||||||||||
Cash sweep, 3-day minimum threshold | $ 275,000 | ||||||||||||
Cash sweep, 1-day minimum threshold | 200,000 | ||||||||||||
Minimum principal balance for which non-payment causes default | $ 50,000 | ||||||||||||
Rite Aid Subsidiaries [Member] | |||||||||||||
Credit facility | |||||||||||||
Ownership interest (as a percent) | 100.00% | ||||||||||||
Existing Facilities | |||||||||||||
Credit facility | |||||||||||||
Outstanding borrowings | $ 1,100,000 | ||||||||||||
Maximum amount of accumulated cash on hand | $ 200,000 | ||||||||||||
Amount of debt allowed to be outstanding | 1,500,000 | ||||||||||||
Threshold amount of debt | $ 750,000 | ||||||||||||
Number of days relating to debt threshold | 90 days | ||||||||||||
Existing Facilities | Minimum | |||||||||||||
Credit facility | |||||||||||||
Fixed charge coverage ratio | 1 | 1 | |||||||||||
Senior secured revolving credit facility due December 2023 | |||||||||||||
Credit facility | |||||||||||||
Maximum borrowing capacity | $ 2,700,000 | ||||||||||||
Principal amount of debt | $ 650,000 | $ 875,000 | |||||||||||
Letters of credit outstanding | 110,013 | ||||||||||||
Additional borrowing capacity | 1,939,987 | ||||||||||||
Senior secured revolving credit facility due December 2023 | Minimum | |||||||||||||
Credit facility | |||||||||||||
Credit facility commitment fee (as a percent) | 0.25% | ||||||||||||
Additional borrowing capacity | 365,000 | ||||||||||||
Threshold availability on the third consecutive business day | $ 250,000 | ||||||||||||
Senior secured revolving credit facility due December 2023 | Maximum | |||||||||||||
Credit facility | |||||||||||||
Credit facility commitment fee (as a percent) | 0.375% | ||||||||||||
Threshold availability on revolving credit facility to trigger fixed charge coverage requirements | $ 200,000 | ||||||||||||
Threshold availability on the third consecutive business day | $ 250,000 | ||||||||||||
Senior secured revolving credit facility due December 2023 | LIBOR | Minimum | |||||||||||||
Credit facility | |||||||||||||
Percentage points added to the reference rate | 1.25% | ||||||||||||
Senior secured revolving credit facility due December 2023 | LIBOR | Maximum | |||||||||||||
Credit facility | |||||||||||||
Percentage points added to the reference rate | 1.75% | ||||||||||||
Senior secured term loan due December 2023 | |||||||||||||
Credit facility | |||||||||||||
Principal amount of debt | $ 450,000 | $ 450,000 | 450,000 | ||||||||||
Senior secured term loan due December 2023 | LIBOR | |||||||||||||
Credit facility | |||||||||||||
Percentage points added to the reference rate | 3.00% | ||||||||||||
Senior secured revolving credit facility due January 2020 | |||||||||||||
Credit facility | |||||||||||||
Maximum borrowing capacity | $ 2,700,000 | $ 2,700,000 | $ 3,000,000 | $ 3,000,000 | $ 3,700,000 | ||||||||
Number of days relating to debt threshold | 90 days | ||||||||||||
6.125% senior notes due April 2023 | |||||||||||||
Credit facility | |||||||||||||
Principal amount of debt | $ 1,153,490 | $ 1,753,490 | |||||||||||
Debt instrument, stated interest rate (as a percent) | 6.125% | 6.125% | 6.125% | 6.125% | 6.125% | 6.125% | 6.125% | 6.125% | 6.125% |
Indebtedness and Credit Agree_5
Indebtedness and Credit Agreement - Transactions and Maturity (Details) - USD ($) $ in Thousands | Feb. 19, 2020 | Feb. 05, 2020 | Jan. 06, 2020 | Oct. 15, 2019 | Oct. 11, 2019 | Jun. 25, 2018 | May 21, 2018 | Apr. 29, 2018 | Apr. 19, 2018 | Apr. 12, 2018 | Mar. 29, 2018 | Feb. 27, 2018 | Nov. 30, 2019 | Nov. 30, 2019 | Feb. 28, 2018 | Jan. 31, 2018 | Nov. 30, 2019 | Jun. 02, 2018 | Feb. 29, 2020 | Mar. 02, 2019 | Mar. 15, 2019 | Dec. 20, 2018 | Apr. 28, 2018 | Mar. 13, 2018 | Mar. 03, 2018 |
Indebtedness and credit agreements | |||||||||||||||||||||||||
Gain (loss) on debt retirements, net | $ (8,180) | $ 55,692 | $ (554) | $ 55,692 | $ (554) | ||||||||||||||||||||
Amount of receivables sold under Receivable Purchase Agreement | $ 501,422 | ||||||||||||||||||||||||
Receipts from sale of receivables | $ 449,949 | ||||||||||||||||||||||||
Interest Rates and Maturities | |||||||||||||||||||||||||
Annual weighted average rate (as a percent) | 5.70% | 5.60% | 7.10% | ||||||||||||||||||||||
Maturities | |||||||||||||||||||||||||
2021 | $ 0 | ||||||||||||||||||||||||
2022 | 0 | ||||||||||||||||||||||||
2023 | 0 | ||||||||||||||||||||||||
2024 | 2,253,490 | ||||||||||||||||||||||||
2025 and thereafter | 866,387 | ||||||||||||||||||||||||
Interest rate cap | |||||||||||||||||||||||||
Indebtedness and credit agreements | |||||||||||||||||||||||||
Derivative notional amount | $ 650,000 | $ 650,000 | |||||||||||||||||||||||
Interest rate cap (as a percent) | 2.75% | ||||||||||||||||||||||||
Continuing operations | |||||||||||||||||||||||||
Indebtedness and credit agreements | |||||||||||||||||||||||||
Gain (loss) on debt retirements, net | $ 55,692 | $ (554) | |||||||||||||||||||||||
LIBOR | Interest rate cap | |||||||||||||||||||||||||
Indebtedness and credit agreements | |||||||||||||||||||||||||
Interest rate cap (as a percent) | 2.75% | ||||||||||||||||||||||||
Senior Notes 7.70 Percent And 6.875 Percent [Member] | |||||||||||||||||||||||||
Indebtedness and credit agreements | |||||||||||||||||||||||||
Notes redeemed and discharged | $ 100,000 | $ 84,097 | |||||||||||||||||||||||
Gain (loss) on debt retirements, net | 32,416 | $ 18,510 | |||||||||||||||||||||||
Early redemption of debt | $ 51,300 | 38,392 | |||||||||||||||||||||||
6.875% fixed-rate senior notes due December 2028 | |||||||||||||||||||||||||
Indebtedness and credit agreements | |||||||||||||||||||||||||
Notes redeemed and discharged | $ 39,441 | ||||||||||||||||||||||||
Debt instrument, stated interest rate (as a percent) | 6.875% | 6.875% | 6.875% | 6.875% | 6.875% | 6.875% | 6.875% | ||||||||||||||||||
7.7% notes due February 2027 | |||||||||||||||||||||||||
Indebtedness and credit agreements | |||||||||||||||||||||||||
Notes redeemed and discharged | $ 18,075 | $ 15,000 | |||||||||||||||||||||||
Gain (loss) on debt retirements, net | $ 4,766 | ||||||||||||||||||||||||
Debt instrument, stated interest rate (as a percent) | 7.70% | 7.70% | 7.70% | 7.70% | 7.70% | 7.70% | 7.70% | ||||||||||||||||||
Early redemption of debt | $ 10,012 | ||||||||||||||||||||||||
9.25% senior notes due March 2020 | |||||||||||||||||||||||||
Indebtedness and credit agreements | |||||||||||||||||||||||||
Notes redeemed and discharged | $ 3,454 | ||||||||||||||||||||||||
Gain (loss) on debt retirements, net | $ (3,422) | ||||||||||||||||||||||||
Debt instrument, stated interest rate (as a percent) | 9.25% | 9.25% | 9.25% | 9.25% | |||||||||||||||||||||
Percentage of outstanding principal amount redeemed | 100.00% | 0.38% | |||||||||||||||||||||||
9.25% senior notes due March 2020 | Maximum | |||||||||||||||||||||||||
Indebtedness and credit agreements | |||||||||||||||||||||||||
Notes redeemed and discharged | $ 900,000 | ||||||||||||||||||||||||
6.75% and 6.125% senior notes | |||||||||||||||||||||||||
Indebtedness and credit agreements | |||||||||||||||||||||||||
Notes redeemed and discharged | $ 700,000 | ||||||||||||||||||||||||
6.75% and 6.125% senior notes | Maximum | |||||||||||||||||||||||||
Indebtedness and credit agreements | |||||||||||||||||||||||||
Notes redeemed and discharged | $ 700,000 | ||||||||||||||||||||||||
6.75% senior notes due June 2021 | |||||||||||||||||||||||||
Indebtedness and credit agreements | |||||||||||||||||||||||||
Notes redeemed and discharged | $ 805,169 | $ 1,360 | $ 3,471 | ||||||||||||||||||||||
Gain (loss) on debt retirements, net | $ (18,075) | $ (8) | |||||||||||||||||||||||
Debt instrument, stated interest rate (as a percent) | 6.75% | 6.75% | 6.75% | 6.75% | 6.75% | ||||||||||||||||||||
Percentage of outstanding principal amount redeemed | 0.43% | ||||||||||||||||||||||||
6.125% senior notes due April 2023 | |||||||||||||||||||||||||
Indebtedness and credit agreements | |||||||||||||||||||||||||
Notes redeemed and discharged | $ 600,000 | $ 4,759 | $ 41,751 | ||||||||||||||||||||||
Gain (loss) on debt retirements, net | $ (56) | ||||||||||||||||||||||||
Debt instrument, stated interest rate (as a percent) | 6.125% | 6.125% | 6.125% | 6.125% | 6.125% | 6.125% | 6.125% | 6.125% | 6.125% | ||||||||||||||||
Percentage of outstanding principal amount redeemed | 2.32% | ||||||||||||||||||||||||
6.125% senior notes due April 2023 | Continuing operations | |||||||||||||||||||||||||
Indebtedness and credit agreements | |||||||||||||||||||||||||
Gain (loss) on debt retirements, net | $ (498) | ||||||||||||||||||||||||
Debt instrument, stated interest rate (as a percent) | 6.125% | ||||||||||||||||||||||||
6.125% senior notes due April 2023 | Discontinued operations | |||||||||||||||||||||||||
Indebtedness and credit agreements | |||||||||||||||||||||||||
Gain (loss) on debt retirements, net | $ (49) | ||||||||||||||||||||||||
Debt instrument, stated interest rate (as a percent) | 6.125% | ||||||||||||||||||||||||
6.125% senior notes due April 2023 | Maximum | |||||||||||||||||||||||||
Indebtedness and credit agreements | |||||||||||||||||||||||||
Notes redeemed and discharged | $ 600,000 | ||||||||||||||||||||||||
Senior Notes 7.5 Percent [Member] | |||||||||||||||||||||||||
Indebtedness and credit agreements | |||||||||||||||||||||||||
Debt instrument, stated interest rate (as a percent) | 7.50% | 7.50% | |||||||||||||||||||||||
Senior secured revolving credit facility due December 2023 | |||||||||||||||||||||||||
Indebtedness and credit agreements | |||||||||||||||||||||||||
Maximum borrowing capacity | $ 2,700,000 | ||||||||||||||||||||||||
Senior secured revolving credit facility due January 2020 | |||||||||||||||||||||||||
Indebtedness and credit agreements | |||||||||||||||||||||||||
Maximum borrowing capacity | $ 2,700,000 | $ 3,000,000 | $ 3,700,000 | $ 2,700,000 | $ 3,000,000 | ||||||||||||||||||||
Gain (loss) on debt retirements, net | $ (1,091) | ||||||||||||||||||||||||
Tranche 1 Term Loan (second lien) due August 2020 | |||||||||||||||||||||||||
Indebtedness and credit agreements | |||||||||||||||||||||||||
Notes redeemed and discharged | 470,000 | ||||||||||||||||||||||||
Tranche 2 Term Loan (second lien) due June 2021 | |||||||||||||||||||||||||
Indebtedness and credit agreements | |||||||||||||||||||||||||
Notes redeemed and discharged | $ 500,000 |
Leases (Details)
Leases (Details) $ in Thousands | 12 Months Ended |
Feb. 29, 2020USD ($) | |
Property, Plant and Equipment [Line Items] | |
Operating lease cost | $ 653,803 |
Financing lease cost: | |
Amortization of right-of-use asset | 5,722 |
Interest on long-term finance lease liabilities | 3,276 |
Total finance lease costs | 8,998 |
Short-term lease costs | 1,160 |
Variable lease costs | 168,849 |
Less: sublease income | (20,930) |
Net lease cost | $ 811,880 |
Buildings | Minimum | |
Property, Plant and Equipment [Line Items] | |
Initial terms of noncancellable capital leases | 5 years |
Buildings | Maximum | |
Property, Plant and Equipment [Line Items] | |
Initial terms of noncancellable capital leases | 22 years |
Equipment | Minimum | |
Property, Plant and Equipment [Line Items] | |
Initial terms of noncancellable operating leases | 3 years |
Equipment | Maximum | |
Property, Plant and Equipment [Line Items] | |
Initial terms of noncancellable operating leases | 10 years |
Leases - Supplemental cash flow
Leases - Supplemental cash flow information related to leases (Details) $ in Thousands | 12 Months Ended |
Feb. 29, 2020USD ($) | |
Cash paid for amounts included in the measurement of lease liabilities: | |
Operating cash flows paid for operating leases | $ 641,709 |
Operating cash flows paid for interest portion of finance leases | 3,276 |
Financing cash flows paid for principal portion of finance leases | 6,313 |
Right-of-use assets obtained in exchange for lease obligations: | |
Operating leases | $ 365,192 |
Leases - Supplemental B_S Infor
Leases - Supplemental B/S Information (Details) $ in Thousands | 12 Months Ended | |
Feb. 29, 2020USD ($)store | Mar. 02, 2019USD ($) | |
Operating leases: | ||
Operating lease right-of-use asset | $ 2,903,256 | |
Short-term operating lease liabilities | 490,161 | |
Long-term operating lease liabilities | 2,710,347 | |
Total operating lease liabilities | 3,200,508 | |
Finance leases: | ||
Property, plant and equipment, net | 1,215,838 | $ 1,308,514 |
Current maturities of long-term debt and lease financing obligations | 8,840 | |
Lease financing obligations, less current maturities, ASC842 | 19,326 | |
Total finance lease liabilities, ASC842 | $ 28,166 | |
Weighted average remaining lease term | ||
Operating leases (in years) | 7 years 9 months 18 days | |
Finance leases (in years) | 8 years 10 months 24 days | |
Weighted average discount rate | ||
Operating leases (as a percent) | 6.10% | |
Finance leases (as a percent) | 10.20% | |
Number of former stores with lease guarantee obligations | store | 1,393 | |
Finance Leased Assets [Member] | ||
Finance leases: | ||
Property, plant and equipment, net | $ 19,904 |
Leases - Maturity of lease liab
Leases - Maturity of lease liabilities under finance and operating leases (Details) $ in Thousands | Feb. 29, 2020USD ($) |
Finance Leases, ASC842 | |
2021 | $ 11,307 |
2022 | 4,101 |
2023 | 3,946 |
2024 | 3,662 |
2025 | 3,402 |
Thereafter | 16,660 |
Total lease payments | 43,078 |
Less: imputed interest | (14,912) |
Total finance lease liabilities, ASC842 | 28,166 |
Operating Leases, ASC842 | |
2021 | 662,644 |
2022 | 609,984 |
2023 | 556,433 |
2024 | 493,933 |
2025 | 395,822 |
Thereafter | 1,314,774 |
Total lease payments | 4,033,590 |
Less: imputed interest | (833,082) |
Total operating lease liabilities | 3,200,508 |
Minimum sublease rentals | 48 |
Operating and finance leases, ASC842 | |
2021 | 673,951 |
2022 | 614,085 |
2023 | 560,379 |
2024 | 497,595 |
2025 | 399,224 |
Thereafter | 1,331,434 |
Total lease payments | 4,076,668 |
Less: imputed interest | (847,994) |
Total lease liabilities | $ 3,228,674 |
Leases - Sale_Leaseback (Detail
Leases - Sale/Leaseback (Details) $ in Thousands | 12 Months Ended |
Feb. 29, 2020USD ($)item | |
Leases | |
Number of stores in sale/leaseback | item | 1 |
Sale/leaseback proceeds | $ 4,879 |
Leaseback term | 10 years |
Gain on sale-leaseback transactions | $ 4,149 |
Leases - Minimum lease payments
Leases - Minimum lease payments - ASC840 (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Mar. 02, 2019 | Mar. 03, 2018 | |
Leases | ||
Total rental expense, net of sublease income | $ 626,166 | $ 628,511 |
Sublease income | 4,509 | 4,682 |
Contingent rental | 7,084 | $ 8,339 |
Minimum payments for Lease Financing Obligations, ASC840 | ||
2020 | 19,300 | |
2021 | 4,811 | |
2022 | 4,588 | |
2023 | 4,383 | |
2024 | 4,042 | |
Later years | 20,470 | |
Total minimum lease payments | 57,594 | |
Amount representing interest | (17,418) | |
Present value of minimum lease payments | 40,176 | |
Minimum payments for Operating Leases, ASC840 | ||
2021 | 687,412 | |
2021 | 610,874 | |
2022 | 545,863 | |
2023 | 490,864 | |
2024 | 431,714 | |
Later years | 1,541,408 | |
Total minimum lease payments | $ 4,308,135 |
Stock Options and Stock Award_2
Stock Options and Stock Awards (Details) - USD ($) shares in Thousands, $ in Thousands | 12 Months Ended | ||
Feb. 29, 2020 | Mar. 02, 2019 | Mar. 03, 2018 | |
Stock options and stock award Plans | |||
Stock-based compensation costs | $ 16,087 | $ 12,115 | $ 25,793 |
Shares of common stock available for grant | 580 | ||
Maximum | |||
Stock options and stock award Plans | |||
Term of options | 10 years | ||
Performance based awards | |||
Stock options and stock award Plans | |||
Stock-based compensation costs | $ (461) | $ (1,084) | $ 4,122 |
2010 Omnibus Equity Plan | |||
Stock options and stock award Plans | |||
Shares of common stock authorized under stock-based compensation plans | 1,750 | ||
2012 Omnibus Equity Plan | |||
Stock options and stock award Plans | |||
Shares of common stock authorized under stock-based compensation plans | 1,425 | ||
2014 Omnibus Equity Plan | |||
Stock options and stock award Plans | |||
Shares of common stock authorized under stock-based compensation plans | 2,900 | ||
2014 Omnibus Equity Plan | Stock options | Maximum | |||
Stock options and stock award Plans | |||
Shares of common stock authorized under stock-based compensation plans | 1,250 |
Stock Options and Stock Award_3
Stock Options and Stock Awards - Options (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 12 Months Ended | ||
Feb. 29, 2020 | Mar. 02, 2019 | Mar. 03, 2018 | |
Fair value assumptions | |||
Expected dividend yield (as a percent) | 0.00% | ||
Weighted average fair value of options granted (in dollars per share) | $ 3.66 | $ 0 | $ 21.60 |
Options, Shares activity | |||
Outstanding at the beginning of the period (in shares) | 1,036 | 1,343 | 1,694 |
Granted (in shares) | 612 | 50 | |
Cancelled (in shares) | (353) | (208) | (160) |
Outstanding at the end of the period (in shares) | 1,295 | 1,036 | 1,343 |
Vested or expected to vest at the end of the period (in shares) | 1,295 | ||
Exercisable at the end of the period (in shares) | 683 | ||
Options, Weighted Average Exercise Price | |||
Outstanding at the beginning of the period (in dollars per share) | $ 50.15 | $ 51.42 | $ 54.93 |
Granted (in dollars per share) | 7.21 | 41 | |
Exercised (in dollars per share) | 23.07 | 24.05 | |
Cancelled (in dollars per share) | 48.56 | 71.07 | 126.61 |
Outstanding at the end of the period (in dollars per share) | 30.29 | $ 50.15 | $ 51.42 |
Vested or expected to vest at the end of the period (in dollars per share) | 30.29 | ||
Exercisable at the end of the period (in dollars per share) | $ 50.97 | ||
Options, Additional Disclosures | |||
Contractual term, Outstanding at the end of the period | 5 years 7 months 9 days | ||
Contractual term, Vested or expected to vest at the end of the period | 5 years 7 months 9 days | ||
Contractual term, Exercisable at the end of the period | 2 years 1 month 20 days | ||
Intrinsic value, Outstanding at the end of the period | $ 3,920 | ||
Intrinsic value, Vested or expected to vest at the end of the period | 3,920 | ||
Intrinsic value, Exercisable at the end of the period | 0 | ||
Additional General Disclosures | |||
Total intrinsic value of options exercised | $ 0 | $ 726 | $ 3,032 |
Stock options | |||
Fair value assumptions | |||
Expected stock price volatility (as a percent) | 56.00% | 58.00% | |
Expected dividend yield (as a percent) | 0.00% | 0.00% | |
Risk-free interest rate (as a percent) | 1.50% | 1.90% | |
Expected option life (in years) | 5 years 6 months | 5 years 6 months | |
Unrecognized pre-tax compensation costs related to unvested stock options and restricted stock grants | |||
Unrecognized pre-tax costs | $ 1,916 | ||
Weighted average amortization period | 3 years 2 months 26 days | ||
Additional General Disclosures | |||
Cash received from stock option exercises | $ 0 | 2,294 | $ 5,796 |
Income tax benefit from stock options | $ 0 | $ 7 | $ 10 |
Vesting period | 4 years |
Stock Options and Stock Awards-
Stock Options and Stock Awards- Restricted Stock, etc. (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 12 Months Ended | ||
Feb. 29, 2020 | Mar. 02, 2019 | Mar. 03, 2018 | |
Additional General Disclosures | |||
Stock-based compensation costs | $ 16,087 | $ 12,115 | $ 25,793 |
Restricted shares | |||
Stock options and stock award Plans | |||
Vesting period | 3 years | ||
Restricted stock, Shares activity | |||
Outstanding at the beginning of the period (in shares) | 1,008 | 611 | 291 |
Granted (in shares) | 1,402 | 700 | 693 |
Vested (in shares) | (695) | (215) | (194) |
Cancelled (in shares) | (462) | (88) | (179) |
Outstanding at the end of the period (in shares) | 1,253 | 1,008 | 611 |
Restricted stock, Fair value | |||
Outstanding at the beginning of the period (in dollars per share) | $ 28.60 | $ 66.34 | $ 157.35 |
Granted (in dollars per share) | 8.40 | 16.05 | 56.44 |
Vested (in dollars per share) | 28.59 | 76.99 | 160.61 |
Cancelled (in dollars per share) | 16.76 | 72.87 | 73.95 |
Outstanding at the end of the period (in dollars per share) | $ 10.32 | $ 28.60 | $ 66.34 |
Unrecognized pre-tax compensation costs related to unvested stock options and restricted stock grants | |||
Unrecognized pre-tax costs | $ 10,396 | ||
Weighted average amortization period | 1 year 10 months 28 days | ||
Restricted stock, Additional disclosures | |||
Total fair value of awards vested during the period | $ 19,846 | $ 16,519 | $ 31,125 |
Performance based awards | |||
Additional General Disclosures | |||
Stock-based compensation costs | $ (461) | $ (1,084) | $ 4,122 |
Retirement Plans (Details)
Retirement Plans (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Feb. 29, 2020 | Mar. 02, 2019 | Mar. 03, 2018 | |
Pension Plan | |||
Retirement Plans | |||
Employer match of employee contributions up to 3% of pretax annual compensation to 401 (k) defined contribution plan (as a percent) | 100.00% | ||
Percentage of participant's pretax annual compensation matched 100% by employer | 3.00% | ||
Employer match of employee contributions of additional 2% of pretax annual compensation to 401 (k) defined contribution plan (as a percent) | 50.00% | ||
Percentage of participant's pretax annual compensation matched 50% by employer | 2.00% | ||
Total expense recognized | $ 42,746 | $ 44,564 | $ 67,949 |
Employer contributions | 0 | 2,715 | 9,023 |
Supplemental Executive Retirement Plan | |||
Retirement Plans | |||
Total expense recognized | $ 3,871 | $ 4,913 | $ 12,426 |
Vesting period | 5 years |
Retirement Plans - Net periodic
Retirement Plans - Net periodic cost (Details) - Pension Plan - USD ($) $ in Thousands | 12 Months Ended | ||
Feb. 29, 2020 | Mar. 02, 2019 | Mar. 03, 2018 | |
Net periodic pension expense | |||
Service cost | $ 462 | $ 597 | $ 1,212 |
Interest cost | 6,186 | 6,159 | 6,340 |
Expected return on plan assets | (4,793) | (5,673) | (4,525) |
Amortization of unrecognized net loss | 1,695 | 1,769 | 3,393 |
Net periodic pension expense | 3,550 | 2,852 | 6,420 |
Other changes recognized in other comprehensive loss: | |||
Unrecognized net (gain) loss arising during period | 19,046 | (3,486) | (8,704) |
Amortization of unrecognized net (loss) gain | (1,695) | (1,769) | (3,393) |
Net amount recognized in other comprehensive loss | 17,351 | (5,255) | (12,097) |
Net amount recognized in pension expense and other comprehensive loss | $ 20,901 | $ (2,403) | $ (5,677) |
Retirement Plans - Benefit obli
Retirement Plans - Benefit obligation and funded status (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Feb. 29, 2020 | Mar. 02, 2019 | Mar. 03, 2018 | |
Estimated amounts that will be amortized from accumulated other comprehensive loss into net periodic pension expense | |||
Net actuarial loss | $ 3,646 | ||
Prior service cost | 0 | ||
Pension Plan | |||
Change in benefit obligations: | |||
Benefit obligation at end of prior year | 150,705 | $ 161,851 | |
Service cost | 462 | 597 | $ 1,212 |
Interest cost | 6,186 | 6,159 | 6,340 |
Distributions | (7,525) | (8,816) | |
Actuarial loss (gain) | 29,076 | (9,086) | |
Benefit obligation at end of year | 178,904 | 150,705 | 161,851 |
Change in plan assets: | |||
Fair value of plan assets at beginning of year | 124,832 | 130,860 | |
Employer contributions | 0 | 2,715 | 9,023 |
Actual return on plan assets | 14,823 | 72 | |
Distributions (including expenses paid by the plan) | (7,525) | (8,815) | |
Fair value of plan assets at end of year | 132,130 | 124,832 | $ 130,860 |
Funded status | (46,774) | (25,873) | |
Amounts recognized in consolidated balance sheets consisted of: | |||
Accrued pension liability | (46,774) | (25,873) | |
Net amount recognized in balance sheet | (46,774) | (25,873) | |
Amounts recognized in accumulated other comprehensive loss consist of: | |||
Net actuarial loss | (44,760) | (27,409) | |
Amount recognized in other comprehensive income | (44,760) | (27,409) | |
Estimated amounts that will be amortized from accumulated other comprehensive loss into net periodic pension expense | |||
Accumulated benefit obligation | $ 178,904 | $ 150,705 |
Retirement Plans - Assumptions
Retirement Plans - Assumptions and assets (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Feb. 29, 2020 | Mar. 02, 2019 | Mar. 03, 2018 | |
Significant actuarial assumptions used for all defined benefit plans to determine the benefit obligation | |||
Expected long-term rate of return on plan assets | 6.25% | ||
Asset allocations | |||
Actual allocation (as a percent) | 100.00% | 100.00% | |
Target allocation of plan assets | |||
Target allocation (as a percent) | 100.00% | ||
Equity securities | |||
Asset allocations | |||
Actual allocation (as a percent) | 47.00% | 52.00% | |
U.S. equities | |||
Target allocation of plan assets | |||
Target allocation (as a percent) | 52.00% | ||
Fixed income securities | |||
Asset allocations | |||
Actual allocation (as a percent) | 53.00% | 48.00% | |
Target allocation of plan assets | |||
Target allocation (as a percent) | 48.00% | ||
Pension Plan | |||
Significant actuarial assumptions used for all defined benefit plans to determine the benefit obligation | |||
Discount rate (as a percent) | 2.75% | 4.25% | 4.00% |
Expected long-term rate of return on plan assets | 6.00% | 6.25% | 6.25% |
Weighted average assumptions used to determine net cost | |||
Discount rate (as a percent) | 4.25% | 4.00% | 4.00% |
Expected long-term rate of return on plan assets (as a percent) | 6.25% | 6.25% | 6.50% |
Defined benefit plans estimated future employer contributions | |||
Expected employer contribution during next fiscal year | $ 6,330 |
Retirement Plans - Fair Value (
Retirement Plans - Fair Value (Details) - Recurring - USD ($) $ in Thousands | Feb. 29, 2020 | Mar. 02, 2019 |
Retirement Plans | ||
Total assets at fair value | $ 132,129 | $ 124,832 |
International equity | ||
Retirement Plans | ||
Total assets at fair value | 15,251 | 15,396 |
Large Cap | ||
Retirement Plans | ||
Total assets at fair value | 33,174 | 34,058 |
Small-Mid Cap | ||
Retirement Plans | ||
Total assets at fair value | 14,223 | 14,534 |
Long Term Credit Bond Index | ||
Retirement Plans | ||
Total assets at fair value | 25,129 | 44,103 |
Long Term US Government Bonds | ||
Retirement Plans | ||
Total assets at fair value | 18,897 | 8,383 |
20+ Year Treasury STRIPS | ||
Retirement Plans | ||
Total assets at fair value | 1,447 | 847 |
Intermediate Fixed Income | ||
Retirement Plans | ||
Total assets at fair value | 14,606 | 5,920 |
AGT High Yield Bond [Member] | ||
Retirement Plans | ||
Total assets at fair value | 7,673 | |
Short Term Investments | ||
Retirement Plans | ||
Total assets at fair value | 1,729 | $ 1,591 |
Level 2 | ||
Retirement Plans | ||
Total assets at fair value | 1,729 | |
Level 2 | Short Term Investments | ||
Retirement Plans | ||
Total assets at fair value | $ 1,729 |
Retirement Plans - Future Benef
Retirement Plans - Future Benefit Payments (Details) - Pension Plan $ in Thousands | Feb. 29, 2020USD ($) |
Future benefit payments expected to be paid in Fiscal Year | |
2021 | $ 8,992 |
2022 | 9,025 |
2023 | 8,963 |
2024 | 9,212 |
2025 | 9,157 |
2026 - 2030 | 45,471 |
Total | $ 90,820 |
Multiemployer Plans that Prov_3
Multiemployer Plans that Provide Pension Benefits (Details) $ in Thousands | Oct. 01, 2019$ / h | Feb. 03, 2019$ / h | Oct. 01, 2018$ / h | Sep. 30, 2018 | Feb. 04, 2018$ / h | Feb. 05, 2017$ / h | Jan. 01, 2016 | Sep. 01, 2014$ / h | Dec. 31, 2020$ / h | Feb. 29, 2020USD ($) | Dec. 31, 2019$ / h | Mar. 02, 2019USD ($) | Dec. 31, 2018$ / h | Mar. 03, 2018USD ($) | Dec. 31, 2017$ / h |
Multiemployer Plans that Provide Pension Benefits | |||||||||||||||
Contributions by employer | $ 22,671 | $ 23,499 | $ 20,979 | ||||||||||||
1199 SEIU Health Care Employees Pension Fund | |||||||||||||||
Multiemployer Plans that Provide Pension Benefits | |||||||||||||||
Contributions by employer | 9,026 | 9,670 | 7,372 | ||||||||||||
Minimum funding requirements (as a percent) | 12.60% | 10.76% | |||||||||||||
Southern California United Food and Commercial Workers Unions and Drug Employers Pension Fund | |||||||||||||||
Multiemployer Plans that Provide Pension Benefits | |||||||||||||||
Contributions by employer | 8,495 | 8,273 | 8,149 | ||||||||||||
Minimum funding requirements for pharmacists (in dollars per hour) | $ / h | 1.758 | 1.672 | |||||||||||||
Minimum funding requirements for non pharmacists (in dollars per hour) | $ / h | 0.797 | 0.758 | |||||||||||||
Minimum funding requirements (in dollars per hour) | $ / h | 1.586 | ||||||||||||||
UFCW Pharmacists, Clerks and Drug Employers Pension Trust | |||||||||||||||
Multiemployer Plans that Provide Pension Benefits | |||||||||||||||
Contributions by employer | 2,421 | 2,666 | 2,739 | ||||||||||||
Minimum funding requirements (in dollars per hour) | $ / h | 0.55 | ||||||||||||||
United Food and Commercial Workers Union-Employer Pension Fund | |||||||||||||||
Multiemployer Plans that Provide Pension Benefits | |||||||||||||||
Contributions by employer | 738 | 772 | 786 | ||||||||||||
Minimum funding requirements (in dollars per hour) | $ / h | 2.16 | 2.03 | 1.89 | ||||||||||||
United Food and Commercial Workers Union Local 880 - Mercantile Employers Joint Pension Fund | |||||||||||||||
Multiemployer Plans that Provide Pension Benefits | |||||||||||||||
Contributions by employer | 437 | 470 | 495 | ||||||||||||
Minimum funding requirements (in dollars per hour) | $ / h | 2.06 | 1.97 | 1.88 | ||||||||||||
Other Funds | |||||||||||||||
Multiemployer Plans that Provide Pension Benefits | |||||||||||||||
Contributions by employer | $ 1,554 | $ 1,648 | $ 1,438 |
Segment Reporting - Balance She
Segment Reporting - Balance Sheet information (Details) $ in Thousands | 12 Months Ended | |||
Feb. 29, 2020USD ($)segment | Mar. 02, 2019USD ($) | Mar. 04, 2018USD ($) | Mar. 03, 2018USD ($) | |
Segment Reporting | ||||
Number of reportable segments | segment | 2 | |||
Total assets | $ 9,452,369 | $ 7,591,367 | $ 8,980,767 | $ 8,989,327 |
Goodwill | 1,108,136 | 1,108,136 | 1,421,120 | |
Accounts receivable | 1,286,785 | 1,788,712 | $ 1,811,203 | 1,869,100 |
Retail Pharmacy | ||||
Segment Reporting | ||||
Goodwill | 43,492 | 43,492 | 43,492 | |
Pharmacy Services | ||||
Segment Reporting | ||||
Goodwill | 1,064,644 | 1,064,644 | $ 1,377,628 | |
Operating segments | Retail Pharmacy | ||||
Segment Reporting | ||||
Total assets | 6,757,196 | 5,071,055 | ||
Goodwill | 43,492 | 43,492 | ||
Operating segments | Pharmacy Services | ||||
Segment Reporting | ||||
Total assets | 2,709,737 | 2,534,771 | ||
Goodwill | 1,064,644 | 1,064,644 | ||
Intersegment elimination | ||||
Segment Reporting | ||||
Total assets | (14,564) | (14,459) | ||
Long-term deferred tax liability | 0 | 0 | ||
Accounts receivable | $ 14,564 | $ 14,459 |
Segment Reporting - Revenues (D
Segment Reporting - Revenues (Details) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | |||||||||
Feb. 29, 2020 | Nov. 30, 2019 | Aug. 31, 2019 | Jun. 01, 2019 | Mar. 02, 2019 | Dec. 01, 2018 | Sep. 01, 2018 | Jun. 02, 2018 | Feb. 29, 2020 | Mar. 02, 2019 | Mar. 03, 2018 | |
Segment Reporting | |||||||||||
Revenues | $ 5,727,242 | $ 5,462,298 | $ 5,366,264 | $ 5,372,589 | $ 5,379,645 | $ 5,450,060 | $ 5,421,362 | $ 5,388,490 | $ 21,928,393 | $ 21,639,557 | $ 21,528,968 |
Gross Profit | 4,726,758 | 4,676,352 | 4,780,105 | ||||||||
Additions to property and equipment and intangible assets | 214,386 | 244,689 | 214,764 | ||||||||
Continuing operations | |||||||||||
Segment Reporting | |||||||||||
Adjusted EBITDA | 538,211 | 563,444 | 559,854 | ||||||||
Retail Pharmacy | |||||||||||
Segment Reporting | |||||||||||
Revenues | 15,616,186 | 15,757,152 | 15,832,625 | ||||||||
Pharmacy Services | |||||||||||
Segment Reporting | |||||||||||
Revenues | 6,559,560 | 6,093,688 | 5,896,669 | ||||||||
Operating segments | Retail Pharmacy | |||||||||||
Segment Reporting | |||||||||||
Revenues | 15,616,186 | 15,757,152 | 15,832,625 | ||||||||
Gross Profit | 4,274,836 | 4,258,716 | 4,372,373 | ||||||||
Additions to property and equipment and intangible assets | 192,489 | 228,079 | 199,437 | ||||||||
Operating segments | Retail Pharmacy | Continuing operations | |||||||||||
Segment Reporting | |||||||||||
Adjusted EBITDA | 370,435 | 405,206 | 388,320 | ||||||||
Operating segments | Pharmacy Services | |||||||||||
Segment Reporting | |||||||||||
Revenues | 6,559,560 | 6,093,688 | 5,896,669 | ||||||||
Gross Profit | 451,922 | 417,636 | 407,732 | ||||||||
Additions to property and equipment and intangible assets | 21,897 | 16,610 | 15,327 | ||||||||
Operating segments | Pharmacy Services | Continuing operations | |||||||||||
Segment Reporting | |||||||||||
Adjusted EBITDA | 167,776 | 158,238 | 171,534 | ||||||||
Intersegment elimination | |||||||||||
Segment Reporting | |||||||||||
Revenues | $ (247,353) | $ (211,283) | $ (200,326) |
Segment Reporting - Adjusted EB
Segment Reporting - Adjusted EBITDA (Details) - USD ($) $ in Thousands | 1 Months Ended | 3 Months Ended | 12 Months Ended | |||||||||
Feb. 28, 2018 | Feb. 29, 2020 | Nov. 30, 2019 | Aug. 31, 2019 | Jun. 01, 2019 | Mar. 02, 2019 | Dec. 01, 2018 | Sep. 01, 2018 | Jun. 02, 2018 | Feb. 29, 2020 | Mar. 02, 2019 | Mar. 03, 2018 | |
Segment Reporting Information [Line Items] | ||||||||||||
Net (loss) income from continuing operations | $ (343,461) | $ 52,286 | $ (78,705) | $ (99,339) | $ (255,629) | $ (17,250) | $ (352,348) | $ (41,727) | $ (469,219) | $ (666,954) | $ (349,532) | |
Interest expense | 53,429 | 57,856 | 60,102 | 58,270 | 52,695 | 56,008 | 56,233 | 62,792 | 229,657 | 227,728 | 202,768 | |
Income tax expense | 351,729 | 876 | 27,628 | 7,374 | 195,004 | (1,471) | (106,559) | (9,497) | 387,607 | 77,477 | 305,987 | |
Depreciation and amortization | 328,277 | 357,882 | 386,057 | |||||||||
LIFO (credit) charge | (72,357) | 4,043 | (64,804) | 23,354 | (28,827) | |||||||
Lease termination and impairment charges | 40,728 | 166 | 1,471 | 478 | 55,898 | 2,628 | 39,609 | 9,859 | 42,843 | 107,994 | 58,765 | |
Goodwill and intangible asset impairment charges | 375,190 | 375,190 | 261,727 | |||||||||
(Gain) loss on debt retirements, net | $ 8,180 | (55,692) | 554 | (55,692) | 554 | |||||||
Stock-based compensation expense | 16,087 | 12,115 | 25,793 | |||||||||
Loss (gain) on sale of assets, net | $ 9,896 | $ (1,371) | $ (1,587) | $ (2,712) | $ (26,806) | $ (382) | $ (4,965) | $ (5,859) | 4,226 | (38,012) | (25,872) | |
Walgreens Boots Alliance merger termination fee | (325,000) | |||||||||||
Continuing operations | ||||||||||||
Segment Reporting Information [Line Items] | ||||||||||||
Net (loss) income from continuing operations | (469,219) | (666,954) | (349,532) | |||||||||
Interest expense | 229,657 | 227,728 | 202,768 | |||||||||
Income tax expense | 387,607 | 77,477 | 305,987 | |||||||||
Depreciation and amortization | 328,277 | 357,882 | 386,057 | |||||||||
LIFO (credit) charge | (64,804) | 23,354 | (28,827) | |||||||||
Lease termination and impairment charges | 42,843 | 107,994 | 58,765 | |||||||||
Goodwill and intangible asset impairment charges | 375,190 | 261,727 | ||||||||||
(Gain) loss on debt retirements, net | (55,692) | 554 | ||||||||||
Merger and Acquisition-related costs | (3,599) | (37,821) | (24,283) | |||||||||
Stock-based compensation expense | 16,087 | 12,115 | 25,793 | |||||||||
Restructuring-related costs | 105,642 | 4,704 | ||||||||||
Inventory write-downs related to store closings | 4,652 | 13,487 | 7,586 | |||||||||
Litigation settlement | 18,000 | |||||||||||
Loss (gain) on sale of assets, net | 4,226 | (38,012) | (25,872) | |||||||||
Walgreens Boots Alliance merger termination fee | (325,000) | |||||||||||
Other | $ (5,336) | $ (12,104) | $ (16,119) |
Commitments, Contingencies an_2
Commitments, Contingencies and Guarantees (Details) $ in Thousands | 1 Months Ended | 12 Months Ended | |
Aug. 31, 2014item | Feb. 29, 2020USD ($) | Jan. 31, 2017item | |
Commitments, Contingencies and Guarantees | |||
Civil settlement amount | $ | $ 4,750 | ||
Rx Savings Program False Claims Act Lawsuit [Member] | |||
Commitments, Contingencies and Guarantees | |||
Number of states failed to report Rx savings prices | 18 | ||
Civil Investigative Demand Regarding Code 1 Drugs [Member] | |||
Commitments, Contingencies and Guarantees | |||
The number of states attorneys general declined to intervene in action | 8 |
Supplementary Cash Flow Data (D
Supplementary Cash Flow Data (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Feb. 29, 2020 | Mar. 02, 2019 | Mar. 03, 2018 | |
Supplementary Cash Flow Data | |||
Cash paid for interest | $ 216,489 | $ 267,760 | $ 405,579 |
Cash (refunds) payments for income taxes, net | (4,935) | 17,383 | 87,087 |
Equipment financed under capital leases | 3,715 | 4,165 | 13,123 |
Equipment received for noncash consideration | 2,044 | ||
Reduction in lease financing obligation | 4,740 | ||
Accrued capital expenditures | 15,952 | 15,298 | 28,869 |
Gross borrowings from revolver | 2,897,000 | 4,257,000 | 4,221,000 |
Gross repayments to revolver | 3,122,000 | 3,382,000 | 6,651,000 |
Significant components of cash provided by Other Liabilities | |||
Other liabilities | 62,168 | $ 439,906 | $ (52,165) |
Changes in accrued wages, benefits and other personnel costs | 47,252 | ||
Changes in accrued store expenses | $ 45,252 |
Related Party Transactions (Det
Related Party Transactions (Details) - USD ($) $ in Thousands | Feb. 29, 2020 | Mar. 02, 2019 |
Related Party Transactions | ||
Receivables from related parties | $ 0 | $ 11 |
Guarantor and Non-Guarantor C_3
Guarantor and Non-Guarantor Condensed Consolidating Financial Information - Balance Sheet (Details) - USD ($) $ in Thousands | Feb. 29, 2020 | Mar. 02, 2019 | Mar. 04, 2018 | Mar. 03, 2018 | Mar. 04, 2017 |
Current assets: | |||||
Cash and cash equivalents | $ 218,180 | $ 144,353 | $ 447,334 | $ 245,410 | |
Accounts receivable, net | 1,286,785 | 1,788,712 | $ 1,811,203 | 1,869,100 | |
Inventories, net of LIFO reserve of $539,640 and $604,444, respectively | 1,921,604 | 1,871,941 | 1,850,660 | 1,799,539 | |
Prepaid expenses and other current assets | 181,794 | 179,132 | |||
Current assets held for sale | 92,278 | 117,581 | |||
Total current assets | 3,700,641 | 4,101,719 | |||
Property, plant and equipment, net | 1,215,838 | 1,308,514 | |||
Operating right-of-use assets | 2,903,256 | ||||
Goodwill | 1,108,136 | 1,108,136 | 1,421,120 | ||
Other intangibles, net | 359,491 | 448,706 | |||
Deferred tax assets | 16,680 | 409,084 | 592,235 | 594,019 | |
Other assets | 148,327 | 215,208 | |||
Total assets | 9,452,369 | 7,591,367 | 8,980,767 | 8,989,327 | |
Current liabilities: | |||||
Current maturities of long-term debt and lease financing obligations | 8,840 | 16,111 | |||
Accounts payable | 1,484,081 | 1,618,585 | |||
Accrued salaries, wages and other current liabilities | 746,318 | 808,439 | |||
Current portion of operating lease liabilities | 490,161 | ||||
Current liabilities held for sale | 37,063 | ||||
Total current liabilities | 2,766,463 | 2,443,135 | |||
Long-term debt, less current maturities | 3,077,268 | 3,454,585 | |||
Long-term operating lease liabilities | 2,710,347 | ||||
Lease financing obligations, less current maturities, ASC842 | 19,326 | ||||
Lease financing obligations, less current maturities, ASC840 | 24,064 | ||||
Other noncurrent liabilities | 204,438 | 482,893 | |||
Total liabilities | 8,777,842 | 6,404,677 | |||
Commitments and contingencies | |||||
Total stockholders' equity | 674,527 | 1,186,690 | $ 1,592,450 | 1,601,010 | 614,070 |
Total liabilities and stockholders' equity | 9,452,369 | 7,591,367 | |||
Inventories, LIFO reserve (in dollars) | 539,640 | 604,444 | |||
Subsidiary Guarantors | |||||
Current assets: | |||||
Cash and cash equivalents | 441,244 | 213,104 | |||
Non-Guarantor Subsidiaries | |||||
Current assets: | |||||
Cash and cash equivalents | 6,090 | $ 32,306 | |||
Reportable legal entity | Rite Aid Corporation (Parent Company Only) | |||||
Current assets: | |||||
Deferred tax assets | 10,828 | ||||
Investment in subsidiaries | 7,843,411 | 8,294,315 | |||
Total assets | 7,854,239 | 8,294,315 | |||
Current liabilities: | |||||
Accrued salaries, wages and other current liabilities | 12,071 | 14,005 | |||
Total current liabilities | 12,071 | 14,005 | |||
Long-term debt, less current maturities | 3,077,268 | 3,454,585 | |||
Intercompany payable | 4,090,373 | 3,639,035 | |||
Total liabilities | 7,179,712 | 7,107,625 | |||
Commitments and contingencies | |||||
Total stockholders' equity | 674,527 | 1,186,690 | |||
Total liabilities and stockholders' equity | 7,854,239 | 8,294,315 | |||
Inventories, LIFO reserve (in dollars) | 0 | 0 | |||
Reportable legal entity | Subsidiary Guarantors | |||||
Current assets: | |||||
Cash and cash equivalents | 194,005 | 122,134 | 441,244 | ||
Accounts receivable, net | 1,278,002 | 1,377,342 | |||
Intercompany receivable | (56,608) | 400,526 | |||
Inventories, net of LIFO reserve of $539,640 and $604,444, respectively | 1,921,604 | 1,871,941 | |||
Prepaid expenses and other current assets | 171,086 | 172,448 | |||
Current assets held for sale | 92,278 | 117,581 | |||
Total current assets | 3,600,367 | 4,061,972 | |||
Property, plant and equipment, net | 1,215,838 | 1,308,514 | |||
Operating right-of-use assets | 2,903,256 | ||||
Goodwill | 1,108,136 | 1,108,136 | |||
Other intangibles, net | 312,763 | 399,678 | |||
Deferred tax assets | 5,852 | 419,122 | |||
Investment in subsidiaries | 67,342 | 55,109 | |||
Intercompany receivable | 4,090,373 | 3,639,035 | |||
Other assets | 141,305 | 208,018 | |||
Total assets | 13,445,232 | 11,199,584 | |||
Current liabilities: | |||||
Current maturities of long-term debt and lease financing obligations | 8,840 | 16,111 | |||
Accounts payable | 1,471,459 | 1,612,181 | |||
Intercompany payable | (43,304) | ||||
Accrued salaries, wages and other current liabilities | 711,491 | 778,020 | |||
Current portion of operating lease liabilities | 490,161 | ||||
Current liabilities held for sale | 37,063 | ||||
Total current liabilities | 2,675,710 | 2,406,312 | |||
Long-term operating lease liabilities | 2,710,347 | ||||
Lease financing obligations, less current maturities, ASC842 | 19,326 | ||||
Lease financing obligations, less current maturities, ASC840 | 24,064 | ||||
Other noncurrent liabilities | 196,438 | 474,893 | |||
Total liabilities | 5,601,821 | 2,905,269 | |||
Commitments and contingencies | |||||
Total stockholders' equity | 7,843,411 | 8,294,315 | |||
Total liabilities and stockholders' equity | 13,445,232 | 11,199,584 | |||
Inventories, LIFO reserve (in dollars) | 539,640 | 604,444 | |||
Reportable legal entity | Non-Guarantor Subsidiaries | |||||
Current assets: | |||||
Cash and cash equivalents | 24,175 | 22,219 | $ 6,090 | ||
Accounts receivable, net | 8,783 | 411,370 | |||
Intercompany receivable | 43,304 | ||||
Prepaid expenses and other current assets | 10,708 | 6,684 | |||
Total current assets | 86,970 | 440,273 | |||
Other intangibles, net | 46,728 | 49,028 | |||
Deferred tax assets | (10,038) | ||||
Other assets | 7,022 | 7,190 | |||
Total assets | 140,720 | 486,453 | |||
Current liabilities: | |||||
Accounts payable | 12,622 | 6,404 | |||
Intercompany payable | 30,000 | 400,526 | |||
Accrued salaries, wages and other current liabilities | 22,756 | 16,414 | |||
Total current liabilities | 65,378 | 423,344 | |||
Other noncurrent liabilities | 8,000 | 8,000 | |||
Total liabilities | 73,378 | 431,344 | |||
Commitments and contingencies | |||||
Total stockholders' equity | 67,342 | 55,109 | |||
Total liabilities and stockholders' equity | 140,720 | 486,453 | |||
Inventories, LIFO reserve (in dollars) | 0 | 0 | |||
Eliminations | |||||
Current assets: | |||||
Intercompany receivable | 13,304 | (400,526) | |||
Total current assets | 13,304 | (400,526) | |||
Investment in subsidiaries | (7,910,753) | (8,349,424) | |||
Intercompany receivable | (4,090,373) | (3,639,035) | |||
Total assets | (11,987,822) | (12,388,985) | |||
Current liabilities: | |||||
Intercompany payable | 13,304 | (400,526) | |||
Total current liabilities | 13,304 | (400,526) | |||
Intercompany payable | (4,090,373) | (3,639,035) | |||
Total liabilities | (4,077,069) | (4,039,561) | |||
Commitments and contingencies | |||||
Total stockholders' equity | (7,910,753) | (8,349,424) | |||
Total liabilities and stockholders' equity | (11,987,822) | (12,388,985) | |||
Inventories, LIFO reserve (in dollars) | $ 0 | $ 0 | |||
Rite Aid Subsidiaries [Member] | |||||
Condensed Consolidating Balance Sheet | |||||
Ownership interest (as a percent) | 100.00% |
Guarantor and Non-Guarantor C_4
Guarantor and Non-Guarantor Condensed Consolidating Financial Information - Statement of Operations (Details) - USD ($) $ in Thousands | 1 Months Ended | 3 Months Ended | 12 Months Ended | |||||||||
Feb. 28, 2018 | Feb. 29, 2020 | Nov. 30, 2019 | Aug. 31, 2019 | Jun. 01, 2019 | Mar. 02, 2019 | Dec. 01, 2018 | Sep. 01, 2018 | Jun. 02, 2018 | Feb. 29, 2020 | Mar. 02, 2019 | Mar. 03, 2018 | |
Condensed Consolidating Statement of Operations | ||||||||||||
Revenues | $ 5,727,242 | $ 5,462,298 | $ 5,366,264 | $ 5,372,589 | $ 5,379,645 | $ 5,450,060 | $ 5,421,362 | $ 5,388,490 | $ 21,928,393 | $ 21,639,557 | $ 21,528,968 | |
Costs and expenses: | ||||||||||||
Cost of revenues | 4,460,621 | 4,273,323 | 4,221,825 | 4,245,866 | 4,215,281 | 4,267,972 | 4,260,211 | 4,219,741 | 17,201,635 | 16,963,205 | 16,748,863 | |
Selling, general and administrative expenses | 1,154,300 | 1,134,854 | 1,135,530 | 1,162,652 | 1,143,202 | 1,142,555 | 1,153,991 | 1,152,627 | 4,587,336 | 4,592,375 | 4,651,262 | |
Lease termination and impairment charges | 40,728 | 166 | 1,471 | 478 | 55,898 | 2,628 | 39,609 | 9,859 | 42,843 | 107,994 | 58,765 | |
Goodwill and intangible asset impairment charges | 375,190 | 375,190 | 261,727 | |||||||||
Interest expense | 53,429 | 57,856 | 60,102 | 58,270 | 52,695 | 56,008 | 56,233 | 62,792 | 229,657 | 227,728 | 202,768 | |
(Gain) loss on debt retirements, net | $ 8,180 | (55,692) | 554 | (55,692) | 554 | |||||||
Walgreens Boots Alliance merger termination fee | (325,000) | |||||||||||
(Gain) loss on sale of assets, net | 9,896 | (1,371) | (1,587) | (2,712) | (26,806) | (382) | (4,965) | (5,859) | 4,226 | (38,012) | (25,872) | |
Total costs and expenses | 5,718,974 | 5,409,136 | 5,417,341 | 5,464,554 | 5,440,270 | 5,468,781 | 5,880,269 | 5,439,714 | 22,010,005 | 22,229,034 | 21,572,513 | |
(Loss) income from continuing operations before income taxes | 8,268 | 53,162 | (51,077) | (91,965) | (60,625) | (18,721) | (458,907) | (51,224) | (81,612) | (589,477) | (43,545) | |
Income tax expense (benefit) | 351,729 | 876 | 27,628 | 7,374 | 195,004 | (1,471) | (106,559) | (9,497) | 387,607 | 77,477 | 305,987 | |
Net (loss) income from continuing operations | (343,461) | 52,286 | (78,705) | (99,339) | (255,629) | (17,250) | (352,348) | (41,727) | (469,219) | (666,954) | (349,532) | |
Net income (loss) from discontinued operations | 18,740 | (801) | (574) | (320) | (17,350) | 12,740 | (6,792) | 256,143 | 17,045 | 244,741 | 1,293,002 | |
Net (loss) income | $ (324,721) | $ 51,485 | $ (79,279) | $ (99,659) | $ (272,979) | $ (4,510) | $ (359,140) | $ 214,416 | (452,174) | (422,213) | 943,470 | |
Total other comprehensive (loss) income | (17,839) | 3,490 | 7,255 | |||||||||
Comprehensive (loss) income | (470,013) | (418,723) | 950,725 | |||||||||
Rite Aid Corporation (Parent Company Only) | ||||||||||||
Costs and expenses: | ||||||||||||
Interest expense | 183,825 | |||||||||||
Walgreens Boots Alliance merger termination fee | (325,000) | |||||||||||
Equity in earnings of subsidiaries, net of tax | (1,034,775) | |||||||||||
Total costs and expenses | (1,175,950) | |||||||||||
(Loss) income from continuing operations before income taxes | 1,175,950 | |||||||||||
Net (loss) income from continuing operations | 1,175,950 | |||||||||||
Net income (loss) from discontinued operations | (232,480) | |||||||||||
Net (loss) income | 943,470 | |||||||||||
Total other comprehensive (loss) income | 7,255 | |||||||||||
Comprehensive (loss) income | 950,725 | |||||||||||
Subsidiary Guarantors | ||||||||||||
Condensed Consolidating Statement of Operations | ||||||||||||
Revenues | 21,413,734 | |||||||||||
Costs and expenses: | ||||||||||||
Cost of revenues | 16,645,136 | |||||||||||
Selling, general and administrative expenses | 4,635,531 | |||||||||||
Lease termination and impairment charges | 58,765 | |||||||||||
Goodwill and intangible asset impairment charges | 261,727 | |||||||||||
Interest expense | 19,261 | |||||||||||
(Gain) loss on sale of assets, net | (25,872) | |||||||||||
Equity in earnings of subsidiaries, net of tax | (4,072) | |||||||||||
Total costs and expenses | 21,590,476 | |||||||||||
(Loss) income from continuing operations before income taxes | (176,742) | |||||||||||
Income tax expense (benefit) | 313,965 | |||||||||||
Net (loss) income from continuing operations | (490,707) | |||||||||||
Net income (loss) from discontinued operations | 1,525,482 | |||||||||||
Net (loss) income | 1,034,775 | |||||||||||
Total other comprehensive (loss) income | 7,255 | |||||||||||
Comprehensive (loss) income | 1,042,030 | |||||||||||
Non-Guarantor Subsidiaries | ||||||||||||
Condensed Consolidating Statement of Operations | ||||||||||||
Revenues | 209,356 | |||||||||||
Costs and expenses: | ||||||||||||
Cost of revenues | 197,084 | |||||||||||
Selling, general and administrative expenses | 16,496 | |||||||||||
Interest expense | (318) | |||||||||||
Total costs and expenses | 213,262 | |||||||||||
(Loss) income from continuing operations before income taxes | (3,906) | |||||||||||
Income tax expense (benefit) | (7,978) | |||||||||||
Net (loss) income from continuing operations | 4,072 | |||||||||||
Net (loss) income | 4,072 | |||||||||||
Comprehensive (loss) income | 4,072 | |||||||||||
Reportable legal entity | Rite Aid Corporation (Parent Company Only) | ||||||||||||
Costs and expenses: | ||||||||||||
Interest expense | 216,834 | 206,862 | ||||||||||
Equity in earnings of subsidiaries, net of tax | 235,340 | 210,736 | ||||||||||
Total costs and expenses | 452,174 | 417,598 | ||||||||||
(Loss) income from continuing operations before income taxes | (452,174) | (417,598) | ||||||||||
Net (loss) income from continuing operations | (452,174) | (417,598) | ||||||||||
Net income (loss) from discontinued operations | (4,615) | |||||||||||
Net (loss) income | (452,174) | (422,213) | ||||||||||
Total other comprehensive (loss) income | (17,839) | 3,490 | ||||||||||
Comprehensive (loss) income | (470,013) | (418,723) | ||||||||||
Reportable legal entity | Subsidiary Guarantors | ||||||||||||
Condensed Consolidating Statement of Operations | ||||||||||||
Revenues | 21,514,693 | 21,297,937 | ||||||||||
Costs and expenses: | ||||||||||||
Cost of revenues | 16,818,111 | 16,648,099 | ||||||||||
Selling, general and administrative expenses | 4,560,220 | 4,567,690 | ||||||||||
Lease termination and impairment charges | 42,843 | 107,994 | ||||||||||
Goodwill and intangible asset impairment charges | 375,190 | |||||||||||
Interest expense | 13,586 | 21,704 | ||||||||||
(Gain) loss on debt retirements, net | (55,692) | 554 | ||||||||||
(Gain) loss on sale of assets, net | 4,226 | (38,012) | ||||||||||
Equity in earnings of subsidiaries, net of tax | (12,233) | (1,033) | ||||||||||
Total costs and expenses | 21,371,061 | 21,682,186 | ||||||||||
(Loss) income from continuing operations before income taxes | 143,632 | (384,249) | ||||||||||
Income tax expense (benefit) | 396,017 | 75,843 | ||||||||||
Net (loss) income from continuing operations | (252,385) | (460,092) | ||||||||||
Net income (loss) from discontinued operations | 17,045 | 249,356 | ||||||||||
Net (loss) income | (235,340) | (210,736) | ||||||||||
Total other comprehensive (loss) income | (17,351) | 3,490 | ||||||||||
Comprehensive (loss) income | (252,691) | (207,246) | ||||||||||
Reportable legal entity | Non-Guarantor Subsidiaries | ||||||||||||
Condensed Consolidating Statement of Operations | ||||||||||||
Revenues | 441,827 | 397,328 | ||||||||||
Costs and expenses: | ||||||||||||
Cost of revenues | 411,266 | 370,413 | ||||||||||
Selling, general and administrative expenses | 27,501 | 25,086 | ||||||||||
Interest expense | (763) | (838) | ||||||||||
Total costs and expenses | 438,004 | 394,661 | ||||||||||
(Loss) income from continuing operations before income taxes | 3,823 | 2,667 | ||||||||||
Income tax expense (benefit) | (8,410) | 1,634 | ||||||||||
Net (loss) income from continuing operations | 12,233 | 1,033 | ||||||||||
Net (loss) income | 12,233 | 1,033 | ||||||||||
Comprehensive (loss) income | 12,233 | 1,033 | ||||||||||
Eliminations | ||||||||||||
Condensed Consolidating Statement of Operations | ||||||||||||
Revenues | (28,127) | (55,708) | (94,122) | |||||||||
Costs and expenses: | ||||||||||||
Cost of revenues | (27,742) | (55,307) | (93,357) | |||||||||
Selling, general and administrative expenses | (385) | (401) | (765) | |||||||||
Equity in earnings of subsidiaries, net of tax | (223,107) | (209,703) | 1,038,847 | |||||||||
Total costs and expenses | (251,234) | (265,411) | 944,725 | |||||||||
(Loss) income from continuing operations before income taxes | 223,107 | 209,703 | (1,038,847) | |||||||||
Net (loss) income from continuing operations | 223,107 | 209,703 | (1,038,847) | |||||||||
Net (loss) income | 223,107 | 209,703 | (1,038,847) | |||||||||
Total other comprehensive (loss) income | 17,351 | (3,490) | (7,255) | |||||||||
Comprehensive (loss) income | $ 240,458 | $ 206,213 | $ (1,046,102) |
Guarantor and Non-Guarantor C_5
Guarantor and Non-Guarantor Condensed Consolidating Financial Information - Statement of Cash Flow (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Feb. 29, 2020 | Mar. 02, 2019 | Mar. 03, 2018 | |
Operating activities: | |||
Net cash (used in) provided by operating activities | $ 510,857 | $ (165,709) | $ 511,470 |
Investing activities: | |||
Payments for property, plant and equipment | (171,705) | (196,778) | (185,879) |
Intangible assets acquired | (42,681) | (47,911) | (28,885) |
Proceeds from dispositions of assets and investments | 59,658 | 43,550 | 27,586 |
Proceeds from sale-leaseback transactions, ASC842 | 4,879 | ||
Proceeds from sale-leaseback transactions, ACS 840 | 2,587 | ||
Proceeds from insured loss | 4,239 | ||
Net cash used in investing activities of continuing operations | (149,849) | (198,552) | (182,939) |
Financing activities: | |||
Proceeds from issuance of long-term debt | 600,000 | 450,000 | |
Net (payments to) proceeds from revolver | (225,000) | 875,000 | (265,000) |
Principal payments on long-term debt | (706,103) | (440,370) | (9,882) |
Change in zero balance cash accounts | 12,671 | (59,481) | 35,605 |
Net proceeds from issuance of common stock | 2,294 | 5,796 | |
Payments for taxes related to net share settlement of equity awards | (1,921) | (2,419) | (4,103) |
Financing fees paid for early debt redemption | (518) | (171) | |
Deferred financing costs paid | (5,781) | (21,564) | |
Net cash (used in) provided by financing activities of continuing operations | (326,652) | 803,289 | (237,584) |
Cash flows of discontinued operations: | |||
Operating activities of discontinued operations | (23,836) | (62,956) | (245,126) |
Investing activities of discontinued operations | 63,307 | 664,740 | 3,496,222 |
Financing activities of discontinued operations | 0 | (1,343,793) | (3,140,119) |
Net cash provided by (used in) discontinued operations | 39,471 | (742,009) | 110,977 |
Increase (decrease) in cash and cash equivalents | 73,827 | (302,981) | 201,924 |
Cash and cash equivalents, beginning of period | 144,353 | 447,334 | 245,410 |
Cash and cash equivalents, end of period | 218,180 | 144,353 | 447,334 |
Rite Aid Corporation (Parent Company Only) | |||
Operating activities: | |||
Net cash (used in) provided by operating activities | (255,962) | 158,247 | |
Financing activities: | |||
Proceeds from issuance of long-term debt | 450,000 | ||
Net (payments to) proceeds from revolver | 875,000 | (265,000) | |
Principal payments on long-term debt | (427,992) | ||
Net proceeds from issuance of common stock | 2,294 | 5,796 | |
Deferred financing costs paid | (21,564) | ||
Intercompany activity | 727,221 | 3,460,291 | |
Net cash (used in) provided by financing activities of continuing operations | 1,604,959 | 3,201,087 | |
Cash flows of discontinued operations: | |||
Operating activities of discontinued operations | (4,615) | (224,300) | |
Financing activities of discontinued operations | (1,344,382) | (3,135,034) | |
Net cash provided by (used in) discontinued operations | (1,348,997) | (3,359,334) | |
Subsidiary Guarantors | |||
Operating activities: | |||
Net cash (used in) provided by operating activities | 379,439 | ||
Investing activities: | |||
Payments for property, plant and equipment | (185,879) | ||
Intangible assets acquired | (28,885) | ||
Intercompany activity | (3,460,291) | ||
Proceeds from dispositions of assets and investments | 27,586 | ||
Proceeds from insured loss | 4,239 | ||
Net cash used in investing activities of continuing operations | (3,643,230) | ||
Financing activities: | |||
Principal payments on long-term debt | (9,882) | ||
Change in zero balance cash accounts | 35,605 | ||
Payments for taxes related to net share settlement of equity awards | (4,103) | ||
Net cash (used in) provided by financing activities of continuing operations | 21,620 | ||
Cash flows of discontinued operations: | |||
Operating activities of discontinued operations | (20,826) | ||
Investing activities of discontinued operations | 3,496,222 | ||
Financing activities of discontinued operations | (5,085) | ||
Net cash provided by (used in) discontinued operations | 3,470,311 | ||
Increase (decrease) in cash and cash equivalents | 228,140 | ||
Non-Guarantor Subsidiaries | |||
Operating activities: | |||
Net cash (used in) provided by operating activities | (26,216) | ||
Cash flows of discontinued operations: | |||
Increase (decrease) in cash and cash equivalents | (26,216) | ||
Reportable legal entity | Rite Aid Corporation (Parent Company Only) | |||
Operating activities: | |||
Net cash (used in) provided by operating activities | (214,470) | ||
Financing activities: | |||
Proceeds from issuance of long-term debt | 600,000 | ||
Net (payments to) proceeds from revolver | (225,000) | ||
Principal payments on long-term debt | (694,093) | ||
Deferred financing costs paid | (5,781) | ||
Intercompany activity | 539,344 | ||
Net cash (used in) provided by financing activities of continuing operations | 214,470 | ||
Cash flows of discontinued operations: | |||
Financing activities of discontinued operations | 0 | ||
Reportable legal entity | Subsidiary Guarantors | |||
Operating activities: | |||
Net cash (used in) provided by operating activities | 723,371 | 74,124 | |
Investing activities: | |||
Payments for property, plant and equipment | (171,705) | (196,778) | |
Intangible assets acquired | (42,681) | (47,911) | |
Intercompany activity | (539,344) | (727,221) | |
Proceeds from dispositions of assets and investments | 59,658 | 43,550 | |
Proceeds from sale-leaseback transactions, ASC842 | 4,879 | ||
Proceeds from sale-leaseback transactions, ACS 840 | 2,587 | ||
Net cash used in investing activities of continuing operations | (689,193) | (925,773) | |
Financing activities: | |||
Principal payments on long-term debt | (12,010) | (12,378) | |
Change in zero balance cash accounts | 12,671 | (59,481) | |
Payments for taxes related to net share settlement of equity awards | (1,921) | (2,419) | |
Financing fees paid for early debt redemption | (518) | (171) | |
Net cash (used in) provided by financing activities of continuing operations | (1,778) | (74,449) | |
Cash flows of discontinued operations: | |||
Operating activities of discontinued operations | (23,836) | (58,341) | |
Investing activities of discontinued operations | 63,307 | 664,740 | |
Financing activities of discontinued operations | 0 | 589 | |
Net cash provided by (used in) discontinued operations | 39,471 | 606,988 | |
Increase (decrease) in cash and cash equivalents | 71,871 | (319,110) | |
Cash and cash equivalents, beginning of period | 122,134 | ||
Cash and cash equivalents, end of period | 122,134 | ||
Reportable legal entity | Non-Guarantor Subsidiaries | |||
Operating activities: | |||
Net cash (used in) provided by operating activities | 1,956 | 16,129 | |
Cash flows of discontinued operations: | |||
Financing activities of discontinued operations | 0 | ||
Increase (decrease) in cash and cash equivalents | 1,956 | 16,129 | |
Cash and cash equivalents, beginning of period | 22,219 | ||
Cash and cash equivalents, end of period | 22,219 | ||
Eliminations | |||
Investing activities: | |||
Intercompany activity | 539,344 | 727,221 | 3,460,291 |
Net cash used in investing activities of continuing operations | 539,344 | 727,221 | 3,460,291 |
Financing activities: | |||
Intercompany activity | (539,344) | (727,221) | (3,460,291) |
Net cash (used in) provided by financing activities of continuing operations | (539,344) | $ (727,221) | $ (3,460,291) |
Cash flows of discontinued operations: | |||
Financing activities of discontinued operations | $ 0 |
Interim Financial Results (Un_3
Interim Financial Results (Unaudited) (Details) - USD ($) $ / shares in Units, $ in Thousands | 1 Months Ended | 3 Months Ended | 12 Months Ended | |||||||||
Feb. 28, 2018 | Feb. 29, 2020 | Nov. 30, 2019 | Aug. 31, 2019 | Jun. 01, 2019 | Mar. 02, 2019 | Dec. 01, 2018 | Sep. 01, 2018 | Jun. 02, 2018 | Feb. 29, 2020 | Mar. 02, 2019 | Mar. 03, 2018 | |
Interim Financial Results (Unaudited) | ||||||||||||
Revenues | $ 5,727,242 | $ 5,462,298 | $ 5,366,264 | $ 5,372,589 | $ 5,379,645 | $ 5,450,060 | $ 5,421,362 | $ 5,388,490 | $ 21,928,393 | $ 21,639,557 | $ 21,528,968 | |
Cost of revenues | 4,460,621 | 4,273,323 | 4,221,825 | 4,245,866 | 4,215,281 | 4,267,972 | 4,260,211 | 4,219,741 | 17,201,635 | 16,963,205 | 16,748,863 | |
Selling, general and administrative expenses | 1,154,300 | 1,134,854 | 1,135,530 | 1,162,652 | 1,143,202 | 1,142,555 | 1,153,991 | 1,152,627 | 4,587,336 | 4,592,375 | 4,651,262 | |
Lease termination and impairment charges | 40,728 | 166 | 1,471 | 478 | 55,898 | 2,628 | 39,609 | 9,859 | 42,843 | 107,994 | 58,765 | |
Goodwill and intangible asset impairment charges | 375,190 | 375,190 | 261,727 | |||||||||
Goodwill impairment | 0 | 312,984 | ||||||||||
Interest expense | 53,429 | 57,856 | 60,102 | 58,270 | 52,695 | 56,008 | 56,233 | 62,792 | 229,657 | 227,728 | 202,768 | |
(Gain) loss on debt retirements, net | $ 8,180 | (55,692) | 554 | (55,692) | 554 | |||||||
Walgreens Boots Alliance merger termination fee | (325,000) | |||||||||||
Loss (gain) on sale of assets, net | 9,896 | (1,371) | (1,587) | (2,712) | (26,806) | (382) | (4,965) | (5,859) | 4,226 | (38,012) | (25,872) | |
Total costs and expenses | 5,718,974 | 5,409,136 | 5,417,341 | 5,464,554 | 5,440,270 | 5,468,781 | 5,880,269 | 5,439,714 | 22,010,005 | 22,229,034 | 21,572,513 | |
(Loss) income from continuing operations before income taxes | 8,268 | 53,162 | (51,077) | (91,965) | (60,625) | (18,721) | (458,907) | (51,224) | (81,612) | (589,477) | (43,545) | |
Income tax expense (benefit) | 351,729 | 876 | 27,628 | 7,374 | 195,004 | (1,471) | (106,559) | (9,497) | 387,607 | 77,477 | 305,987 | |
Net (loss) income from continuing operations | (343,461) | 52,286 | (78,705) | (99,339) | (255,629) | (17,250) | (352,348) | (41,727) | (469,219) | (666,954) | (349,532) | |
Net (loss) income from discontinued operations, net of tax | 18,740 | (801) | (574) | (320) | (17,350) | 12,740 | (6,792) | 256,143 | 17,045 | 244,741 | 1,293,002 | |
Net (loss) income | $ (324,721) | $ 51,485 | $ (79,279) | $ (99,659) | $ (272,979) | $ (4,510) | $ (359,140) | $ 214,416 | $ (452,174) | $ (422,213) | $ 943,470 | |
Basic income (loss) per share: | ||||||||||||
Continuing operations | $ (6.43) | $ 0.98 | $ (1.48) | $ (1.88) | $ (8.82) | |||||||
Discontinued operations | 0.35 | (0.01) | (0.01) | 0.32 | ||||||||
Net basic income (loss) per share | (6.08) | 0.97 | (1.49) | (1.88) | (8.50) | |||||||
Diluted income (loss) per share: | ||||||||||||
Continuing operations | (6.43) | 0.98 | (1.48) | (1.88) | (8.82) | |||||||
Discontinued operations | 0.35 | (0.02) | (0.01) | 0.32 | ||||||||
Net diluted income (loss) per share | $ (6.08) | $ 0.96 | $ (1.49) | $ (1.88) | (8.50) | |||||||
Basic and diluted (loss) income per share: | ||||||||||||
Continuing operations | $ (4.83) | $ (0.33) | $ (6.67) | $ (0.79) | (8.82) | $ (12.62) | $ (6.66) | |||||
Discontinued operations | (0.32) | 0.24 | (0.13) | 4.86 | 0.32 | 4.63 | 24.64 | |||||
Net basic and diluted loss (income) per share | $ (5.15) | $ (0.09) | $ (6.80) | $ 4.07 | $ (8.50) | $ (7.99) | $ 17.98 | |||||
Income tax expense recorded in connection with revaluation of deferred tax assets | $ 347,599 | $ 212,252 | $ 324,765 | |||||||||
Facilities impairment charges | 38,342 | 28,920 | ||||||||||
LIFO charge (credit) | $ (72,357) | $ 4,043 | $ (64,804) | $ 23,354 | $ (28,827) |
Financial Instruments (Details)
Financial Instruments (Details) - USD ($) $ in Thousands | Feb. 29, 2020 | Mar. 02, 2019 |
Financial instruments | ||
Investment at amortized cost | $ 7,022 | $ 7,191 |
Carrying Amount | ||
Financial instruments | ||
Variable rate indebtedness | 1,077,787 | 1,297,013 |
Fixed rate indebtedness | 1,999,481 | 2,157,571 |
Fair Value | ||
Financial instruments | ||
Variable rate indebtedness | 1,100,000 | 1,325,000 |
Fixed rate indebtedness | $ 1,921,385 | $ 1,795,335 |
Subsequent Events (Details)
Subsequent Events (Details) - USD ($) $ in Thousands | Apr. 16, 2020 | Feb. 29, 2020 | Mar. 02, 2019 | Mar. 03, 2018 | Mar. 04, 2017 |
Subsequent Event [Line Items] | |||||
Cash and cash equivalents | $ 218,180 | $ 144,353 | $ 447,334 | $ 245,410 | |
Senior secured revolving credit facility due December 2023 | |||||
Subsequent Event [Line Items] | |||||
Additional borrowing capacity | $ 1,939,987 | ||||
Subsequent Event | |||||
Subsequent Event [Line Items] | |||||
Liquidity | $ 1,900,000 | ||||
Cash and cash equivalents | 180,000 | ||||
Subsequent Event | Senior secured revolving credit facility due December 2023 | |||||
Subsequent Event [Line Items] | |||||
Additional borrowing capacity | $ 1,700,000 |
SCHEDULE II-VALUATION AND QUA_2
SCHEDULE II-VALUATION AND QUALIFYING ACCOUNTS (Details) - Allowances deducted from accounts receivable for estimated uncollectible amounts: - USD ($) $ in Thousands | 12 Months Ended | ||
Feb. 29, 2020 | Mar. 02, 2019 | Mar. 03, 2018 | |
Allowances deducted from accounts receivable for estimated uncollectible amounts: | |||
Balance at Beginning of Period | $ 13,106 | $ 25,134 | $ 30,891 |
Additions Charged to Costs and Expenses | 40,357 | 48,728 | 94,006 |
Deductions | 40,614 | 60,756 | 99,763 |
Balance at End of Period | $ 12,849 | $ 13,106 | $ 25,134 |