Document and Entity Information
Document and Entity Information - shares | 3 Months Ended | |
May 30, 2020 | Jun. 22, 2020 | |
Cover [Abstract] | ||
Document Type | 10-Q | |
Document Quarterly Report | true | |
Document Transition Report | false | |
Document Period End Date | May 30, 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, $1.00 par value | |
Trading Symbol | RAD | |
Security Exchange Name | NYSE | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Accelerated Filer | |
Entity Small Business | false | |
Entity Emerging Growth Company | false | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding | 54,643,179 | |
Current Fiscal Year End Date | --02-27 | |
Document Fiscal Year Focus | 2021 | |
Document Fiscal Period Focus | Q1 | |
Entity Central Index Key | 0000084129 | |
Amendment Flag | false |
CONDENSED CONSOLIDATED BALANCE
CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands | May 30, 2020 | Feb. 29, 2020 |
Current assets: | ||
Cash and cash equivalents | $ 288,316 | $ 218,180 |
Accounts receivable, net | 1,592,799 | 1,286,785 |
Inventories, net of LIFO reserve of $527,574 and $539,640 | 1,890,024 | 1,921,604 |
Prepaid expenses and other current assets | 107,672 | 181,794 |
Current assets held for sale | 92,278 | |
Total current assets | 3,878,811 | 3,700,641 |
Property, plant and equipment, net | 1,180,346 | 1,215,838 |
Operating lease right-of-use asset | 2,894,333 | 2,903,256 |
Goodwill | 1,108,136 | 1,108,136 |
Other intangibles, net | 316,204 | 359,491 |
Deferred tax assets | 16,680 | 16,680 |
Other assets | 126,364 | 148,327 |
Total assets | 9,520,874 | 9,452,369 |
Current liabilities: | ||
Current maturities of long-term debt and lease financing obligations | 8,066 | 8,840 |
Accounts payable | 1,460,325 | 1,484,081 |
Accrued salaries, wages and other current liabilities | 679,322 | 746,318 |
Current portion of operating lease liabilities | 490,202 | 490,161 |
Current liabilities held for sale | 37,063 | |
Total current liabilities | 2,637,915 | 2,766,463 |
Long-term debt, less current maturities | 3,321,972 | 3,077,268 |
Long-term operating lease liabilities | 2,694,929 | 2,710,347 |
Lease financing obligations, less current maturities, ASC842 | 18,590 | 19,326 |
Other noncurrent liabilities | 233,679 | 204,438 |
Total liabilities | 8,907,085 | 8,777,842 |
Commitments and contingencies | ||
Stockholders' equity: | ||
Common stock, par value $1 per share; 75,000 shares authorized; shares issued and outstanding 54,675 and 54,716 | 54,675 | 54,716 |
Additional paid-in capital | 5,892,720 | 5,890,903 |
Accumulated deficit | (5,285,735) | (5,222,194) |
Accumulated other comprehensive loss | (47,871) | (48,898) |
Total stockholders' equity | 613,789 | 674,527 |
Total liabilities and stockholders' equity | $ 9,520,874 | $ 9,452,369 |
CONDENSED CONSOLIDATED BALANC_2
CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) shares in Thousands, $ in Thousands | May 30, 2020 | Feb. 29, 2020 |
CONDENSED CONSOLIDATED BALANCE SHEETS | ||
Inventory, LIFO Reserve | $ 527,574 | $ 539,640 |
Common stock, par value (in dollars per share) | $ 1 | $ 1 |
Common stock, shares authorized | 75,000 | 75,000 |
Common stock, shares issued | 54,675 | 54,716 |
Common stock, shares outstanding | 54,675 | 54,716 |
CONDENSED CONSOLIDATED STATEMEN
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) $ in Thousands | 3 Months Ended | |
May 30, 2020 | Jun. 01, 2019 | |
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS | ||
Revenues | $ 6,027,376 | $ 5,372,589 |
Costs and expenses: | ||
Cost of revenues | 4,829,057 | 4,245,866 |
Selling, general and administrative expenses | 1,197,147 | 1,162,652 |
Lease termination and impairment charges | 3,753 | 478 |
Intangible asset impairment charges | 29,852 | |
Interest expense | 50,547 | 58,270 |
Loss (gain) on sale of assets, net | (2,260) | (2,712) |
Total costs and expenses | 6,108,096 | 5,464,554 |
Loss from continuing operations before income taxes | (80,720) | (91,965) |
Income tax (benefit) expense | (8,018) | 7,374 |
Net loss from continuing operations | (72,702) | (99,339) |
Net income (loss) from discontinued operations, net of tax | 9,161 | (320) |
Net loss | (63,541) | (99,659) |
Computation of loss attributable to common stockholders: | ||
(Loss) income attributable to common stockholders-basic and diluted | $ (63,541) | $ (99,659) |
Basic and diluted income (loss) per share: | ||
Continuing operations | $ (1.36) | $ (1.88) |
Discontinued operations | 0.17 | 0 |
Net basic and diluted loss per share | $ (1.19) | $ (1.88) |
CONDENSED CONSOLIDATED STATEM_2
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) - USD ($) $ in Thousands | 3 Months Ended | |
May 30, 2020 | Jun. 01, 2019 | |
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) | ||
Net loss | $ (63,541) | $ (99,659) |
Defined benefit pension plans: | ||
Amortization of net actuarial losses included in net periodic pension cost, net of $0 and $0 tax expense | 911 | 415 |
Change in fair value of interest rate cap | 116 | (656) |
Total other comprehensive income | 1,027 | (241) |
Comprehensive loss | $ (62,514) | $ (99,900) |
CONDENSED CONSOLIDATED STATEM_3
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (Parenthetical) - USD ($) $ in Thousands | 3 Months Ended | |
May 30, 2020 | Jun. 01, 2019 | |
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) | ||
Amortization of net actuarial losses included in net periodic pension cost, income tax expense | $ 0 | $ 0 |
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 income (loss): | |||||
Adoption of ASU | $ (56,776) | $ (56,776) | |||
Balance - beginning 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 | ||||
Increase (Decrease) in Stockholders' Deficit | |||||
Net loss | (99,659) | (99,659) | |||
Other comprehensive income (loss): | |||||
Changes in Defined Benefit Plans, net of tax expense | 415 | 415 | |||
Change in fair value of interest rate cap | (656) | (656) | |||
Comprehensive loss | (99,900) | ||||
Exchange of restricted shares for taxes | $ (5) | (190) | (195) | ||
Exchange of restricted shares for taxes (in shares) | (5) | ||||
Cancellation of restricted stock | $ (178) | 178 | |||
Cancellation of restricted stock (in shares) | (178) | ||||
Amortization of restricted stock balance | 5,016 | 5,016 | |||
Stock-based compensation expense | 382 | 382 | |||
Balance - end of period at Jun. 01, 2019 | $ 53,833 | 5,882,363 | (4,869,679) | (31,300) | 1,035,217 |
BALANCE (in shares) at Jun. 01, 2019 | 53,833 | ||||
Balance - beginning 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 | ||||
Increase (Decrease) in Stockholders' Deficit | |||||
Net loss | (63,541) | (63,541) | |||
Other comprehensive income (loss): | |||||
Changes in Defined Benefit Plans, net of tax expense | 911 | 911 | |||
Change in fair value of interest rate cap | 116 | 116 | |||
Comprehensive loss | (62,514) | ||||
Exchange of restricted shares for taxes | $ (7) | (92) | (99) | ||
Exchange of restricted shares for taxes (in shares) | (7) | ||||
Issuance of restricted stock | $ 19 | (19) | |||
Issuance of restricted stock (in shares) | 19 | ||||
Cancellation of restricted stock | $ (53) | 53 | |||
Cancellation of restricted stock (in shares) | (53) | ||||
Amortization of restricted stock balance | 1,725 | 1,725 | |||
Stock-based compensation expense | 150 | 150 | |||
Balance - end of period at May. 30, 2020 | $ 54,675 | $ 5,892,720 | $ (5,285,735) | $ (47,871) | $ 613,789 |
BALANCE (in shares) at May. 30, 2020 | 54,675 |
CONDENSED CONSOLIDATED STATEM_5
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (Parenthetical) - USD ($) $ in Thousands | 3 Months Ended | |
May 30, 2020 | Jun. 01, 2019 | |
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY | ||
Changes in defined benefit plans, tax expense | $ 0 | $ 0 |
CONDENSED CONSOLIDATED STATEM_6
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands | 3 Months Ended | |
May 30, 2020 | Jun. 01, 2019 | |
Operating activities: | ||
Net loss | $ (63,541) | $ (99,659) |
Net income (loss) from discontinued operations, net of tax | 9,161 | (320) |
Net loss from continuing operations | (72,702) | (99,339) |
Adjustments to reconcile to net cash used in operating activities of continuing operations : | ||
Depreciation and amortization | 79,103 | 83,926 |
Lease termination and impairment charges | 3,753 | 478 |
Intangible asset impairment charges | 29,852 | |
LIFO (credit) charge | (12,066) | 7,489 |
Gain on sale of assets, net | (2,260) | (2,712) |
Stock-based compensation expense | 1,874 | 5,380 |
Changes in operating assets and liabilities: | ||
Accounts receivable | (308,636) | (17,565) |
Inventories | 43,647 | (11,454) |
Accounts payable | 13,320 | (75,893) |
Operating lease right-of-use assets and operating lease liabilities | (6,595) | (11,893) |
Other assets | 99,177 | 22,513 |
Other liabilities | 13,263 | 47,831 |
Net cash used in operating activities of continuing operations | (118,270) | (51,239) |
Investing activities: | ||
Payments for property, plant and equipment | (28,459) | (40,981) |
Intangible assets acquired | (10,715) | (8,210) |
Proceeds from dispositions of assets and investments | 2,755 | 658 |
Net cash used in investing activities of continuing operations | (36,419) | (48,533) |
Financing activities: | ||
Net proceeds from revolver | 242,000 | 125,000 |
Principal payments on long-term debt | (1,298) | (1,780) |
Change in zero balance cash accounts | (26,567) | 36,387 |
Payments for taxes related to net share settlement of equity awards | (99) | (195) |
Deferred financing costs paid | (1,332) | (186) |
Net cash provided by financing activities of continuing operations | 212,704 | 159,226 |
Cash flows from discontinued operations: | ||
Operating activities of discontinued operations | (82,189) | (13,877) |
Investing activities of discontinued operations | 94,310 | 523 |
Financing activities of discontinued operations | 0 | 0 |
Net cash provided by (used in) discontinued operations | 12,121 | (13,354) |
Increase in cash and cash equivalents | 70,136 | 46,100 |
Cash and cash equivalents, beginning of period | 218,180 | 144,353 |
Cash and cash equivalents, end of period | $ 288,316 | $ 190,453 |
Basis of Presentation and Signi
Basis of Presentation and Significant Accounting Policies | 3 Months Ended |
May 30, 2020 | |
Basis of Presentation | |
Basis of Presentation and Significant Accounting Policies | 1. Basis of Presentation and Significant Accounting Policies The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States of America for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X and therefore do not include all of the information and footnotes required by accounting principles generally accepted in the United States of America for complete annual financial statements. The accompanying financial information reflects all adjustments which are of a recurring nature and, in the opinion of management, are necessary for a fair presentation of the results for the interim periods. The results of operations for the thirteen week period ended May 30, 2020 are not necessarily indicative of the results to be expected for the full year. These condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto included in the Rite Aid Corporation (“Rite Aid”) and Subsidiaries (together with Rite Aid, the “Company”) Fiscal 2020 10-K. Revenue Recognition The following table disaggregates the Company’s revenue by major source in each segment for the thirteen week periods ended May 30, 2020 and June 1, 2019: May 30, June 1, 2020 2019 In thousands (13 weeks) (13 weeks) Retail Pharmacy segment: Pharmacy sales $ 2,625,544 $ 2,563,244 Front-end sales 1,465,467 1,265,361 Other revenue 32,260 36,203 Total Retail Pharmacy segment 4,123,271 3,864,808 Pharmacy Services segment 1,977,246 1,566,292 Intersegment elimination (73,141) (58,511) Total revenue $ 6,027,376 $ 5,372,589 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 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. For the thirteen week period ended May 30, 2020, the Company recognized approximately $11,600 of deferred contract liability into revenue. The Retail Pharmacy segment had accrued contract liabilities of $41,089 as of May 30, 2020, which is included in other current liabilities. The Retail Pharmacy segment had accrued contract liabilities of $52,668 as of February 29, 2020, which is included in other current liabilities. Recently Adopted Accounting Pronouncements In March 2020, the Securities and Exchange Commission (SEC) adopted final rules that amend the financial disclosure requirement for guarantors of registered debt securities in Rule 3-10 of Regulation S-X. The new rules amend and streamline the disclosures required by guarantors and issuers of guaranteed securities. Among other things, the new disclosures may be located outside the financial statements. The new rule is effective January 4, 2021, and early adoption is permitted. The Company elected to early adopt the new rule on May 30, 2020. Accordingly, the revised condensed consolidating financial information is presented in Item 2, Management's Discussion and Analysis of Financial Condition and Results of Operations. 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 Recently Issued Accounting Pronouncements Not Yet Adopted In August 2018, the FASB issued ASU 2018-14, Compensation - Retirement benefits (Topic 715-20) ASU is effective for fiscal years ending after December 15, 2020 and must be applied on a retrospective basis. The Company is evaluating the effect of adopting this new accounting guidance, but does not expect adoption will have a material impact on the Company’s financial position. |
Asset Sale to WBA
Asset Sale to WBA | 3 Months Ended |
May 30, 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 Walgreens Boots Alliance, Inc. (“WBA”) and Walgreen Co., an Illinois corporation and 100 % owned subsidiary of WBA (“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 (the “Original Asset Purchase Agreement”). Pursuant to the terms and subject to the conditions set forth in the Amended and Restated Asset Purchase Agreement, Buyer purchased from the Company 1,932 stores (the “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 (the “Asset Sale” or “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. During the first quarter of fiscal 2021, the Company completed the sale of the final distribution center and related assets to WBA for proceeds of $94,289. The impact of the sale of the distribution center and related assets resulted in a pre-tax gain of $12,690, which has been included in the results of operations and cash flows of discontinued operations during the thirteen week period ended May 30, 2020. The transfer of the final distribution center and related assets constitutes the final closing under the Amended and Restated Asset Purchase Agreement. The Company had agreed to provide transition services to Buyer for up to three years after the initial closing of the Sale. Under the terms of the Transition Services Agreement (“TSA”), the Company provided 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 had been extended to October 17, 2020, unless earlier terminated. In connection with these services, the Company purchased the related inventory and incurred cash payments for the selling, general and administrative activities, which, the Company billed on a cash neutral basis to WBA in accordance with terms as outlined in the TSA. Total billings for these items during the thirteen week periods ended May 30, 2020 and June 1, 2019 were $31,005 and $1,192,791, respectively, of which $4,398 and $224,385 is included in Accounts receivable, net. The Company recorded WBA TSA fees of $1,080 and $14,225 during the thirteen week periods ended May 30, 2020 and June 1, 2019, respectively, which are reflected as a reduction to selling, general and administrative expenses. In conjunction with the transfer of the final distribution center during the quarter ended May 30, 2020, the Company has substantially completed its obligations under the TSA. 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 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: May 30, February 29, 2020 2020 Inventories $ — $ 13,719 Property and equipment — 43,576 Operating lease right-of-use asset — 34,983 Current assets held for sale $ — $ 92,278 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 (loss) from discontinued operations are as follows: May 30, June 1, 2020 2019 (13 weeks) (13 weeks) Revenues $ 174 $ (88) Costs and expenses: Cost of revenues(a) 8 265 Selling, general and administrative expenses(a) 871 486 Gain on sale of assets, net (14,149) (522) (13,270) 229 Income (loss) from discontinued operations before income taxes 13,444 (317) Income tax expense 4,283 3 Net income (loss) from discontinued operations, net of tax $ 9,161 $ (320) (a) Cost of revenues and selling, general and administrative expenses for the discontinued operations excludes corporate overhead. These charges are reflected in continuing operations. The operating results reflected above do not fully represent the Disposal Group’s historical operating results, as the results reported within net income (loss) from discontinued operations only include expenses that are directly attributable to the Disposal Group. |
Income (Loss) Per Share
Income (Loss) Per Share | 3 Months Ended |
May 30, 2020 | |
Income (Loss) Per Share | |
Income (Loss) Per Share | 4. Income (Loss) Per Share Basic income (loss) per share is computed by dividing income available to common stockholders by the weighted average number of shares of common stock outstanding for the period. Diluted income (loss) per share reflects the potential dilution that could occur if securities or other contracts to issue common stock were exercised or converted into common stock or resulted in the issuance of common stock that then shared in the income of the Company, subject to anti-dilution limitations. Thirteen Week Period Ended May 30, June 1, 2020 2019 Basic and diluted income (loss) per share: Numerator: Net loss from continuing operations $ (72,702) $ (99,339) Net income (loss) from discontinued operations 9,161 (320) Loss attributable to common stockholders— basic and diluted $ (63,541) $ (99,659) Denominator: Basic weighted average shares 53,462 52,976 Outstanding options and restricted shares, net — — Diluted weighted average shares 53,462 52,976 Basic and diluted income (loss) per share: Continuing operations $ (1.36) $ (1.88) Discontinued operations 0.17 0.00 Net basic and diluted loss per share $ (1.19) $ (1.88) Due to their antidilutive effect, 1,264 and 992 potential common shares related to stock options have been excluded from the computation of diluted income (loss) per share for the thirteen week periods ended May 30, 2020 and June 1, 2019, respectively. Also, excluded from the computation of diluted income (loss) per share for the thirteen week periods ended May 30, 2020 and June 1, 2019 are restricted shares of 1,198 and 813, respectively, which are included in shares outstanding. |
Lease Termination and Impairmen
Lease Termination and Impairment Charges | 3 Months Ended |
May 30, 2020 | |
Lease Termination and Impairment Charges | |
Lease Termination and Impairment Charges | 5. Lease Termination and Impairment Charges Lease termination and impairment charges consist of amounts as follows: Thirteen Week Period Ended May 30, June 1, 2020 2019 Impairment charges $ 2,203 $ 123 Lease termination charges — — Facility exit charges 1,550 355 $ 3,753 $ 478 Impairment Charges These amounts include the write-down of long-lived assets at locations that were assessed for impairment because of management’s intention to relocate or close the location or because of changes in circumstances that indicated the carrying value of an asset may not be recoverable. The Company utilizes the three-level valuation hierarchy for the recognition and disclosure of fair value measurements. The categorization of assets and liabilities within this hierarchy is based upon the lowest level of input that is significant to the measurement of fair value. The three levels of the hierarchy consist of the following: ● Level 1—Inputs to the valuation methodology are unadjusted quoted prices in active markets for identical assets or liabilities that the Company has the ability to access at the measurement date. ● Level 2—Inputs to the valuation methodology are quoted prices for similar assets and liabilities in active markets, quoted prices in markets that are not active or inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the instrument. ● Level 3—Inputs to the valuation methodology are unobservable inputs based upon management’s best estimate of inputs market participants could use in pricing the asset or liability at the measurement date, including assumptions about risk. Non-Financial Assets Measured on a Non-Recurring Basis Long-lived non-financial assets are measured at fair value on a nonrecurring basis for purposes of calculating impairment using Level 2 and Level 3 inputs as defined in the fair value hierarchy. The fair value of long-lived assets using Level 2 inputs is determined by evaluating the current economic conditions in the geographic area for similar use assets. The fair value of long-lived assets using Level 3 inputs is determined by estimating the amount and timing of net future cash flows (which are unobservable inputs) and discounting them using a risk-adjusted rate of interest (which is Level 1). The Company estimates future cash flows based on its experience and knowledge of the market in which the store is located. Significant increases or decreases in actual cash flows may result in valuation changes. During the thirteen week period ended May 30, 2020, long-lived assets from continuing operations with a carrying value of $2,203, were written down to their fair value of $0, resulting in an impairment charge of $2,203. Of the $2,203, $1,919 relates to a terminated software project and $284 relates to store assets. During the thirteen week period ended June 1, 2019, long-lived assets from continuing operations with a carrying value of $123, primarily store assets, were written down to their fair value of $0, resulting in an impairment charge of $123. If our actual future cash flows differ from our projections materially, certain stores that are either not impaired or partially impaired in the current period may be further impaired in future periods. The following table presents fair values for those assets measured at fair value on a non-recurring basis at May 30, 2020 and June 1, 2019: Fair Values Total as of Charges Level 1 Level 2 Level 3 Impairment Date May 30, 2020 Long-lived assets held for use $ — $ — $ — $ — $ (2,203) Long-lived assets held for sale $ — $ — $ — $ — $ — Total $ — $ — $ — $ — $ (2,203) Fair Values Total as of Charges Level 1 Level 2 Level 3 Impairment Date June 1, 2019 Long-lived assets held for use $ — $ — $ — $ — $ (123) Long-lived assets held for sale $ — $ — $ — $ — $ — Total $ — $ — $ — $ — $ (123) 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 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: Thirteen Week Period Ended May 30, June 1, 2020 2019 Balance—beginning of period $ 2,253 $ 124,046 Existing Topic 420 liabilities eliminated by recording a reduction to the ROU asset — (112,288) Cash payments, net of sublease income (83) (2,425) Balance—end of period $ 2,170 $ 9,333 |
Fair Value Measurements
Fair Value Measurements | 3 Months Ended |
May 30, 2020 | |
Fair Value Measurements | |
Fair Value Measurements | 6. Fair Value Measurements The Company utilizes the three-level valuation hierarchy as described in Note 5, Lease Termination and Impairment Charges, 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 May 30, 2020 and February 29, 2020, the Company has $7,014 and $7,022, respectively, of investments carried at amortized cost as these investments are being held to maturity, which are included as a component of other assets. 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 $3,321,972 and $3,206,395, respectively, as of May 30, 2020. 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. |
Income Taxes
Income Taxes | 3 Months Ended |
May 30, 2020 | |
Income Taxes | |
Income Taxes | 7. Income Taxes The Company recorded an income tax benefit from continuing operations of $8,018 and an income tax expense from continuing operations of $7,374 for the thirteen week periods ended May 30, 2020 and June 1, 2019, respectively. The effective tax rate for the thirteen week periods ended May 30, 2020 and June 1, 2019 was 9.9% and (8.0)%, respectively. The effective tax rate for the thirteen week periods ended May 30, 2020 and June 1, 2019 was net of an adjustment of (10.6)% and (34.5)%, respectively, to adjust the valuation allowance against deferred tax assets. The Company recognizes tax liabilities in accordance with the guidance for uncertain tax positions and management adjusts these liabilities with changes in judgment as a result of the evaluation of new information not previously available. Due to the complexity of some of these uncertainties, the ultimate resolution may result in a payment that is materially different from the current estimate of the tax liabilities. 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 regularly evaluates valuation allowances established for deferred tax assets for which future realization is uncertain. Management will continue to monitor all available evidence related to the net deferred tax assets that may change the most recent assessment, including events that have occurred or are anticipated to occur. The Company continues to maintain a valuation allowance against net deferred tax assets of $1,681,399 and $1,673,119, which relates to federal and state deferred tax assets that may not be realized based on the Company's future projections of taxable income at May 30, 2020 and February 29, 2020, respectively. |
Medicare Part D
Medicare Part D | 3 Months Ended |
May 30, 2020 | |
Medicare Part D | |
Medicare Part D | 8. 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 $9,675 as of March 31, 2020. EIC was in excess of the minimum required amounts in these states as of May 30, 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 May 30, 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 in the fourth quarter of fiscal 2020. 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 May 30, 2020, accounts receivable, net included $268,312 due from CMS. As of February 29, 2020, accrued salaries, wages and other current liabilities included $14,083 of amounts due to CMS. |
Manufacturer Rebates Receivable
Manufacturer Rebates Receivables | 3 Months Ended |
May 30, 2020 | |
Manufacturer Rebates Receivables | |
Manufacturer Rebates Receivables | 9. Manufacturer Rebates Receivables The Pharmacy Services Segment has manufacturer rebates receivables of $593,774 and $530,451 included in Accounts receivable, net, as of May 30, 2020 and February 29, 2020, respectively. |
Goodwill and Other Intangible A
Goodwill and Other Intangible Assets | 3 Months Ended |
May 30, 2020 | |
Goodwill and Other Intangible Assets | |
Goodwill and Other Intangible Assets | 10. Goodwill and Other Intangible Assets There was no goodwill impairment charge for the thirteen week period ended May 30, 2020. At May 30, 2020 and February 29, 2020, accumulated impairment losses for the Pharmacy Services segment was $574,712. 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 May 30, 2020 and February 29, 2020. May 30,2020 February 29, 2020 Remaining Remaining Weighted Weighted Gross Average Gross Average Carrying Accumulated Amortization Carrying Accumulated Amortization Amount Amortization Net Period Amount Amortization Net Period Non-compete agreements and other(a) $ 189,073 $ (165,712) $ 23,361 3 years $ 186,183 $ (163,575) $ 22,608 3 years Prescription files 957,073 (875,955) 81,118 3 years 950,887 (867,430) 83,457 3 years Customer relationships(a) 388,000 (239,848) 148,152 11 years 388,000 (231,015) 156,985 12 years CMS license 57,500 (11,346) 46,154 20 years 57,500 (10,772) 46,728 21 years Claims adjudication and other developed software 58,985 (41,566) 17,419 2 years 58,985 (39,459) 19,526 3 years Trademarks — — — 0 years 20,100 (9,413) 10,687 6 years Backlog 11,500 (11,500) — 0 years 11,500 (11,500) — 0 years Total finite $ 1,662,131 $ (1,345,927) 316,204 $ 1,673,155 $ (1,333,164) $ 339,991 Trademarks — — — Indefinite 19,500 — 19,500 Indefinite Total $ 1,662,131 $ (1,345,927) $ 316,204 $ 1,692,655 $ (1,333,164) $ 359,491 (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. In connection with the RxEvolution initiatives previously announced on March 16, 2020, the Company is in process of rebranding its EnvisionRxOptions and MedTrak subsidiaries to its new brand name, Elixir. These trademarks qualify as Level 3 within the fair value hierarchy. Upon the implementation of the rebranding initiatives during the first quarter of fiscal 2021, the Company has determined that the carrying value exceeded the fair value and consequently the Company incurred an impairment charge of $29,852 for these trademarks, which is included within intangible asset impairment charges within the condensed consolidated statement of operations. Amortization expense for these intangible assets and liabilities was $24,420 and $27,660 for the thirteen week periods ended |
Indebtedness and Credit Agreeme
Indebtedness and Credit Agreements | 3 Months Ended |
May 30, 2020 | |
Indebtedness and Credit Agreements | |
Indebtedness and Credit Agreements | 11. Indebtedness and Credit Agreements Following is a summary of indebtedness and lease financing obligations at May 30, 2020 and February 29, 2020: May 30, February 29, 2020 2020 Secured Debt: Senior secured revolving credit facility due December 2023 ($892,000 and $650,000 face value less unamortized debt issuance costs of $17,901 and $19,167) $ 874,099 $ 630,833 FILO term loan due December 2023 ($450,000 face value less unamortized debt issuance costs of $2,842 and $3,046) 447,158 446,954 1,321,257 1,077,787 Second Lien Secured Debt: 7.5% senior notes due July 2025 ($600,000 face value less unamortized debt issuance costs of $10,414 and $10,927) 589,586 589,073 589,586 589,073 Guaranteed Unsecured Debt: 6.125% senior notes due April 2023 ($1,153,490 face value less unamortized debt issuance costs of $7,745 and $8,430) 1,145,745 1,145,060 1,145,745 1,145,060 Unguaranteed Unsecured Debt: 7.70% notes due February 2027 ($237,386 face value less unamortized debt issuance costs of $876 and $908) 236,510 236,478 6.875% fixed-rate senior notes due December 2028 ($29,001 face value less unamortized debt issuance costs of $127 and $131) 28,874 28,870 265,384 265,348 Lease financing obligations 26,656 28,166 Total debt 3,348,628 3,105,434 Current maturities of long-term debt and lease financing obligations (8,066) (8,840) Long-term debt and lease financing obligations, less current maturities $ 3,340,562 $ 3,096,594 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 borrowing capacity under the Senior Secured Revolving Credit Facility is based upon a specified borrowing base consisting of accounts receivable, inventory and prescription files. At May 30, 2020, the Company had $1,342,000 of borrowings outstanding under the Existing Facilities and had letters of credit outstanding against the Senior Secured Revolving Credit Facility of $102,939 which resulted in additional borrowing capacity under the Senior Secured Revolving Credit Facility of $1,705,061. If at any time the total credit exposure outstanding under the 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 store and lockbox deposit accounts and cash necessary to cover 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 the 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 the 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 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 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 May 30, 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. Fiscal 2019 and 2020 Transactions On March 13, 2018, the Company issued a notice of redemption for all of the 9.25% Senior Notes due 2020 (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 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% Senior Notes due 2021 (the “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 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 due 2027 (the “7.70% Notes”) and 6.875% fixed-rate Senior Notes due 2028 (the “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% Notes for newly issued 7.500% Senior Secured Notes due 2025 (the “7.500% Notes”). 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% Notes in exchange for newly issued 7.500% Notes. The Company accounted for the exchange as a debt modification and accordingly did not record a loss on debt retirement. The 7.500% Notes 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% Notes. The 7.500% Notes 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 case, also secure the Existing Facilities. On June 25, 2020, the Company commenced an offer to exchange (the “June 25, 2020 Exchange Offer”) up to $750,000 aggregate principal amount of the outstanding 6.125% Notes for a combination of $600,000 newly issued 8.0% Senior Secured Notes due 2026 (the “8.0% Notes”) and $145,500 cash. The Company anticipates that the exchange will be considered a debt modification and accordingly, anticipates a minimal loss on the exchange during the second quarter of fiscal 2021. The 8.0% Notes will be secured on an equal and ratable basis by the same assets that secure the 7.500% Notes. The 8.0% Notes will be guaranteed on a senior secured basis by the same subsidiaries that guarantee the 7.500% Notes. In conjunction with the June 25, 2020 Exchange Offer, the Company also commenced a solicitation of consents from the holders of outstanding 6.125% Notes to certain proposed amendments to the indenture governing the 6.125% Notes, which would modify certain limitations in the debt covenant to allow for the creation of the 8.0% Notes. Maturities The aggregate annual principal payments of long-term debt for the remainder of fiscal 2021 and thereafter are as follows: 2021—$0; 2022—$0; 2023—$0; 2024—$2,495,490; 2025—$0 and $866,387 thereafter (without giving effect to the June 25, 2020 Exchange Offer). These aggregate annual principal payments of long-term debt assume that the Company has repaid or refinanced its existing 6.125% Notes prior to December 31, 2022. |
Leases
Leases | 3 Months Ended |
May 30, 2020 | |
Leases | |
Leases | 12. Leases The Company leases most of its retail stores and certain distribution facilities under noncancelable operating The following table is a summary of the Company’s components of net lease cost for the thirteen week Thirteen Week Period Ended May 30, 2020 June 1, 2019 Operating lease cost $ 161,866 $ 164,983 Financing lease cost: Amortization of right-of-use asset 1,131 1,536 Interest on long-term finance lease liabilities 689 905 Total finance lease costs $ 1,820 $ 2,441 Short-term lease costs 153 1 Variable lease costs 42,448 40,545 Less: sublease income (4,132) (5,751) Net lease cost $ 202,155 $ 202,219 Supplemental cash flow information related to leases for the thirteen week periods ended May 30, 2020 and June 1, 2019: Thirteen Week Period Ended May 30, 2020 June 1, 2019 Cash paid for amounts included in the measurement of lease liabilities: Operating cash flows paid for operating leases $ 170,370 $ 176,237 Operating cash flows paid for interest portion of finance leases 689 905 Financing cash flows paid for principal portion of finance leases 1,243 3,490 Right-of-use assets obtained in exchange for lease obligations: Operating leases 107,913 77,384 Finance leases — — Supplemental balance sheet information related to leases as of May 30, 2020 and February 29, 2020 (in thousands, except lease term and discount rate): May 30, February 29, 2020 2020 Operating leases: Operating lease right-of-use asset $ 2,894,333 $ 2,903,256 Short-term operating lease liabilities $ 490,202 $ 490,161 Long-term operating lease liabilities 2,694,929 2,710,347 Total operating lease liabilities $ 3,185,131 $ 3,200,508 Finance leases: Property, plant and equipment, net $ 18,533 $ 19,904 Current maturities of long-term debt and lease financing obligations $ 8,066 $ 8,840 Lease financing obligations, less current maturities 18,590 19,326 Total finance lease liabilities $ 26,656 $ 28,166 Weighted average remaining lease term Operating leases 7.7 7.8 Finance leases 9.0 8.9 Weighted average discount rate Operating leases 6.1 % 6.1 % Finance leases 10.4 % 10.2 % The following table summarizes the maturity of lease liabilities under finance and operating leases as of May 30, 2020: May 30, 2020 Finance Operating Fiscal year Leases Leases (1) Total 2021 (remaining thirty-nine weeks) $ 10,225 $ 500,821 $ 511,046 2022 4,078 625,642 629,720 2023 3,876 573,793 577,669 2024 3,597 512,399 515,996 2025 3,280 414,314 417,594 Thereafter 15,914 1,382,115 1,398,029 Total lease payments 40,970 4,009,084 4,050,054 Less: imputed interest (14,314) (823,953) (838,267) Total lease liabilities $ 26,656 $ 3,185,131 $ 3,211,787 (1) – Future operating lease payments have not been reduced by minimum sublease rentals of $44 million due in the future under noncancelable leases. During the thirteen week June 1, 2019 |
Retirement Plans
Retirement Plans | 3 Months Ended |
May 30, 2020 | |
Defined Benefit Plans and Other Postretirement Benefit Plans Disclosures [Abstract] | |
Retirement Plans | 13. Retirement Plans Net periodic pension expense for the thirteen June 1, 2019 Defined Benefit Pension Plan Thirteen Week Period Ended May 30, June 1, 2020 2019 Service cost $ 144 $ 143 Interest cost 1,199 1,556 Expected return on plan assets (1,177) (1,214) Amortization of unrecognized net loss 911 415 Net periodic pension expense $ 1,077 $ 900 During the thirteen week |
Segment Reporting
Segment Reporting | 3 Months Ended |
May 30, 2020 | |
Segment Reporting | |
Segment Reporting | 14. 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 pharmacy benefit management 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 May 30, 2020: Total Assets $ 6,815,598 $ 2,721,741 $ (16,465) $ 9,520,874 Goodwill 43,492 1,064,644 — 1,108,136 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 (1) As of May 30, 2020 and February 29, 2020, 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 $16,465 and $14,564, 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 thirteen week periods ended May 30, 2020 and June 1, 2019 Retail Pharmacy Intersegment Pharmacy Services Eliminations(1) Consolidated Thirteen Week Period Ended May 30, 2020: Revenues $ 4,123,271 $ 1,977,246 $ (73,141) $ 6,027,376 Gross Profit 1,081,536 116,783 — 1,198,319 Adjusted EBITDA(2) 62,982 44,410 — 107,392 Additions to property and equipment and intangible assets 36,607 2,567 — 39,174 June 1, 2019: Revenues $ 3,864,808 $ 1,566,292 $ (58,511) $ 5,372,589 Gross Profit 1,030,495 96,228 — 1,126,723 Adjusted EBITDA(2) 84,008 26,339 — 110,347 Additions to property and equipment and intangible assets 44,244 4,947 — 49,191 (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 “Adjusted EBITDA, Adjusted Net Income (Loss), Adjusted Net Income (Loss) per Diluted Share and Other Non-GAAP Measures” in MD&A for additional details. The following is a reconciliation of net income (loss) to Adjusted EBITDA for the thirteen June 1, 2019 May 30, June 1, 2020 2019 (13 weeks) (13 weeks) Net loss from continuing operations $ (72,702) $ (99,339) Interest expense 50,547 58,270 Income tax (benefit) expense (8,018) 7,374 Depreciation and amortization 79,103 83,926 LIFO (credit) charge (12,066) 7,489 Lease termination and impairment charges 3,753 478 Intangible asset impairment charges 29,852 — Merger and Acquisition-related costs — 3,085 Stock-based compensation expense 1,874 5,380 Restructuring-related costs 35,735 43,350 Inventory write-downs related to store closings 834 841 Gain on sale of assets, net (2,260) (2,712) Other 740 2,205 Adjusted EBITDA from continuing operations $ 107,392 $ 110,347 |
Commitments, Contingencies and
Commitments, Contingencies and Guarantees | 3 Months Ended |
May 30, 2020 | |
Commitments, Contingencies and Guarantees | |
Commitments, Contingencies and Guarantees | 15. 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 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 the Company failed to do so because the prices it reported were not equal to or adjusted to account for the prices that Rite Aid offers to uninsured and underinsured customers through its Rx Savings Program. At this stage of the 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. On February 6, 2019, Humana, Inc, filed an arbitration claim alleging that the Company improperly submitted various usual and customary overcharges by failing to report its Rx Savings Program pricing to Humana. At this stage of the proceedings, the Company is not able to either predict the outcome of this arbitration proceeding 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 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. The U.S. Securities and Exchange Commission (“SEC”) is investigating trading in the Company’s securities that occurred in or around January 2017, and has subpoenaed information from the Company in connection with that investigation. The Company is cooperating with the SEC in this matter. 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 | 3 Months Ended |
May 30, 2020 | |
Supplementary Cash Flow Data | |
Supplementary Cash Flow Data | 16. Supplementary Cash Flow Data Thirteen Week Period Ended May 30, 2020 June 1, 2019 Cash paid for interest(a) $ 12,843 $ 19,462 Cash payments for income taxes, net(a) $ 2,100 $ 830 Equipment financed under capital leases $ 335 $ 1,253 Gross borrowings from revolver(a) $ 2,139,000 $ 499,000 Gross repayments to revolver(a) $ 1,897,000 $ 374,000 (a) — Amounts are presented on a total company basis. Significant components of cash provided by Other Liabilities of $13,263 for the thirteen |
Subsequent Events
Subsequent Events | 3 Months Ended |
May 30, 2020 | |
Subsequent Event. | |
Subsequent Events | 17. Subsequent Events The Company is closely monitoring the impact of the COVID-19 pandemic on all aspects of its business and the markets in which it operates, including how the pandemic will impact its customers, associates, suppliers, vendors, business partners and supply chain. Due to the significant amount of uncertainties that continue to exist relative to the pandemic, the Company is unable to predict the impact that COVID-19 will have on its financial position and results of operations, but such impact could be material. As of June 25, 2020, the Company had liquidity of $1.7 billion, which consisted of availability to borrow under its Senior Secured Revolving Credit Facility of $1.5 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. During late May 2020 and early June 2020, a period of civil unrest took place in certain markets in which the Company operates and some of the Company’s stores were damaged. As of July 2, 2020, the Company was still assessing damages and losses and some of such damaged stores remain closed. The Company maintains insurance coverage for inventory and property damage and also maintains business interruption insurance coverage. The Company does not believe that the damages and losses, net of insurance claim settlement proceeds, will have a material impact on the Company's financial position or results of operations in future periods. |
Basis of Presentation and Sig_2
Basis of Presentation and Significant Accounting Policies (Policies) | 3 Months Ended |
May 30, 2020 | |
Basis of Presentation | |
Basis of Presentation | The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States of America for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X and therefore do not include all of the information and footnotes required by accounting principles generally accepted in the United States of America for complete annual financial statements. The accompanying financial information reflects all adjustments which are of a recurring nature and, in the opinion of management, are necessary for a fair presentation of the results for the interim periods. The results of operations for the thirteen week period ended May 30, 2020 are not necessarily indicative of the results to be expected for the full year. These condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto included in the Rite Aid Corporation (“Rite Aid”) and Subsidiaries (together with Rite Aid, the “Company”) Fiscal 2020 10-K. |
Revenue Recognition | Revenue Recognition The following table disaggregates the Company’s revenue by major source in each segment for the thirteen week periods ended May 30, 2020 and June 1, 2019: May 30, June 1, 2020 2019 In thousands (13 weeks) (13 weeks) Retail Pharmacy segment: Pharmacy sales $ 2,625,544 $ 2,563,244 Front-end sales 1,465,467 1,265,361 Other revenue 32,260 36,203 Total Retail Pharmacy segment 4,123,271 3,864,808 Pharmacy Services segment 1,977,246 1,566,292 Intersegment elimination (73,141) (58,511) Total revenue $ 6,027,376 $ 5,372,589 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 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. For the thirteen week period ended May 30, 2020, the Company recognized approximately $11,600 of deferred contract liability into revenue. The Retail Pharmacy segment had accrued contract liabilities of $41,089 as of May 30, 2020, which is included in other current liabilities. The Retail Pharmacy segment had accrued contract liabilities of $52,668 as of February 29, 2020, which is included in other current liabilities. |
Recently Adopted Accounting Pronouncements | Recently Adopted Accounting Pronouncements In March 2020, the Securities and Exchange Commission (SEC) adopted final rules that amend the financial disclosure requirement for guarantors of registered debt securities in Rule 3-10 of Regulation S-X. The new rules amend and streamline the disclosures required by guarantors and issuers of guaranteed securities. Among other things, the new disclosures may be located outside the financial statements. The new rule is effective January 4, 2021, and early adoption is permitted. The Company elected to early adopt the new rule on May 30, 2020. Accordingly, the revised condensed consolidating financial information is presented in Item 2, Management's Discussion and Analysis of Financial Condition and Results of Operations. 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 |
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) ASU is effective for fiscal years ending after December 15, 2020 and must be applied on a retrospective basis. The Company is evaluating the effect of adopting this new accounting guidance, but does not expect adoption will have a material impact on the Company’s financial position. |
Basis of Presentation and Sig_3
Basis of Presentation and Significant Accounting Policies (Tables) | 3 Months Ended |
May 30, 2020 | |
Basis of Presentation | |
Schedule of revenues | May 30, June 1, 2020 2019 In thousands (13 weeks) (13 weeks) Retail Pharmacy segment: Pharmacy sales $ 2,625,544 $ 2,563,244 Front-end sales 1,465,467 1,265,361 Other revenue 32,260 36,203 Total Retail Pharmacy segment 4,123,271 3,864,808 Pharmacy Services segment 1,977,246 1,566,292 Intersegment elimination (73,141) (58,511) Total revenue $ 6,027,376 $ 5,372,589 |
Restructuring (Tables)
Restructuring (Tables) | 3 Months Ended |
May 30, 2020 | |
Restructuring | |
Schedule of restructuring-related costs | For the thirteen week period ended May 30, 2020, the Company incurred total restructuring-related costs of $35,735, of which $9,972 is included as a component of SG&A and $25,763 is included as a component of cost of revenues. 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) $ 4,559 $ 252 $ 4,811 Non-executive retention costs associated with the March 2019 reorganization (b) 855 (226) 629 Professional and other fees relating to restructuring activities (c) 4,532 — 4,532 SKU optimization charges (d) 25,763 — 25,763 Total restructuring-related costs $ 35,709 $ 26 $ 35,735 For the thirteen week period ended June 1, 2019, the Company incurred total restructuring-related costs of $43,350, 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) $ 25,272 $ 1,804 $ 27,076 Non-executive retention costs associated with the March 2019 reorganization (b) 4,499 2,165 6,664 Professional and other fees relating to restructuring activities (c) 9,610 — 9,610 Total restructuring-related costs $ 39,381 $ 3,969 $ 43,350 |
Schedule of restructuring-related liabilities | Severance and related Professional and costs (a) Retention costs (b) other fees (c) Total Balance at February 29, 2020 $ 36,228 $ 6,432 $ 2,394 $ 45,054 Additions charged to expense 4,811 629 4,532 9,972 Cash payments (13,055) — (5,046) (18,101) Balance at May 30, 2020 $ 27,984 $ 7,061 $ 1,880 $ 36,925 (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. (d) – Inventory reserve on product lines the Company is exiting and will no longer carry as part of its rebranding initiative. |
Asset Sale to WBA (Tables)
Asset Sale to WBA (Tables) | 3 Months Ended |
May 30, 2020 | |
Asset Sale to WBA | |
Schedule of assets and operating results of discontinued operations | May 30, February 29, 2020 2020 Inventories $ — $ 13,719 Property and equipment — 43,576 Operating lease right-of-use asset — 34,983 Current assets held for sale $ — $ 92,278 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 (loss) from discontinued operations are as follows: May 30, June 1, 2020 2019 (13 weeks) (13 weeks) Revenues $ 174 $ (88) Costs and expenses: Cost of revenues(a) 8 265 Selling, general and administrative expenses(a) 871 486 Gain on sale of assets, net (14,149) (522) (13,270) 229 Income (loss) from discontinued operations before income taxes 13,444 (317) Income tax expense 4,283 3 Net income (loss) from discontinued operations, net of tax $ 9,161 $ (320) (a) Cost of revenues and selling, general and administrative expenses for the discontinued operations excludes corporate overhead. These charges are reflected in continuing operations. |
Income (Loss) Per Share (Tables
Income (Loss) Per Share (Tables) | 3 Months Ended |
May 30, 2020 | |
Income (Loss) Per Share | |
Schedule of calculation of basic and diluted income (loss) per share | Thirteen Week Period Ended May 30, June 1, 2020 2019 Basic and diluted income (loss) per share: Numerator: Net loss from continuing operations $ (72,702) $ (99,339) Net income (loss) from discontinued operations 9,161 (320) Loss attributable to common stockholders— basic and diluted $ (63,541) $ (99,659) Denominator: Basic weighted average shares 53,462 52,976 Outstanding options and restricted shares, net — — Diluted weighted average shares 53,462 52,976 Basic and diluted income (loss) per share: Continuing operations $ (1.36) $ (1.88) Discontinued operations 0.17 0.00 Net basic and diluted loss per share $ (1.19) $ (1.88) |
Lease Termination and Impairm_2
Lease Termination and Impairment Charges (Tables) | 3 Months Ended |
May 30, 2020 | |
Lease Termination and Impairment Charges | |
Schedule of amounts relating to lease termination and impairment charges | Thirteen Week Period Ended May 30, June 1, 2020 2019 Impairment charges $ 2,203 $ 123 Lease termination charges — — Facility exit charges 1,550 355 $ 3,753 $ 478 |
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 May 30, 2020 Long-lived assets held for use $ — $ — $ — $ — $ (2,203) Long-lived assets held for sale $ — $ — $ — $ — $ — Total $ — $ — $ — $ — $ (2,203) Fair Values Total as of Charges Level 1 Level 2 Level 3 Impairment Date June 1, 2019 Long-lived assets held for use $ — $ — $ — $ — $ (123) Long-lived assets held for sale $ — $ — $ — $ — $ — Total $ — $ — $ — $ — $ (123) |
Schedule of closed store and distribution center charges related to new closures, changes in assumptions and interest accretion | Thirteen Week Period Ended May 30, June 1, 2020 2019 Balance—beginning of period $ 2,253 $ 124,046 Existing Topic 420 liabilities eliminated by recording a reduction to the ROU asset — (112,288) Cash payments, net of sublease income (83) (2,425) Balance—end of period $ 2,170 $ 9,333 |
Goodwill and Other Intangible_2
Goodwill and Other Intangible Assets (Tables) | 3 Months Ended |
May 30, 2020 | |
Goodwill and Other Intangible Assets | |
Schedule of Indefinite-Lived Intangible Assets [Table Text Block] | May 30,2020 February 29, 2020 Remaining Remaining Weighted Weighted Gross Average Gross Average Carrying Accumulated Amortization Carrying Accumulated Amortization Amount Amortization Net Period Amount Amortization Net Period Non-compete agreements and other(a) $ 189,073 $ (165,712) $ 23,361 3 years $ 186,183 $ (163,575) $ 22,608 3 years Prescription files 957,073 (875,955) 81,118 3 years 950,887 (867,430) 83,457 3 years Customer relationships(a) 388,000 (239,848) 148,152 11 years 388,000 (231,015) 156,985 12 years CMS license 57,500 (11,346) 46,154 20 years 57,500 (10,772) 46,728 21 years Claims adjudication and other developed software 58,985 (41,566) 17,419 2 years 58,985 (39,459) 19,526 3 years Trademarks — — — 0 years 20,100 (9,413) 10,687 6 years Backlog 11,500 (11,500) — 0 years 11,500 (11,500) — 0 years Total finite $ 1,662,131 $ (1,345,927) 316,204 $ 1,673,155 $ (1,333,164) $ 339,991 Trademarks — — — Indefinite 19,500 — 19,500 Indefinite Total $ 1,662,131 $ (1,345,927) $ 316,204 $ 1,692,655 $ (1,333,164) $ 359,491 (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. |
Schedule of Finite-Lived Intangible Assets [Table Text Block] | May 30,2020 February 29, 2020 Remaining Remaining Weighted Weighted Gross Average Gross Average Carrying Accumulated Amortization Carrying Accumulated Amortization Amount Amortization Net Period Amount Amortization Net Period Non-compete agreements and other(a) $ 189,073 $ (165,712) $ 23,361 3 years $ 186,183 $ (163,575) $ 22,608 3 years Prescription files 957,073 (875,955) 81,118 3 years 950,887 (867,430) 83,457 3 years Customer relationships(a) 388,000 (239,848) 148,152 11 years 388,000 (231,015) 156,985 12 years CMS license 57,500 (11,346) 46,154 20 years 57,500 (10,772) 46,728 21 years Claims adjudication and other developed software 58,985 (41,566) 17,419 2 years 58,985 (39,459) 19,526 3 years Trademarks — — — 0 years 20,100 (9,413) 10,687 6 years Backlog 11,500 (11,500) — 0 years 11,500 (11,500) — 0 years Total finite $ 1,662,131 $ (1,345,927) 316,204 $ 1,673,155 $ (1,333,164) $ 339,991 Trademarks — — — Indefinite 19,500 — 19,500 Indefinite Total $ 1,662,131 $ (1,345,927) $ 316,204 $ 1,692,655 $ (1,333,164) $ 359,491 (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. |
Indebtedness and Credit Agree_2
Indebtedness and Credit Agreements (Tables) | 3 Months Ended |
May 30, 2020 | |
Indebtedness and Credit Agreements | |
Summary of indebtedness and lease financing obligations | May 30, February 29, 2020 2020 Secured Debt: Senior secured revolving credit facility due December 2023 ($892,000 and $650,000 face value less unamortized debt issuance costs of $17,901 and $19,167) $ 874,099 $ 630,833 FILO term loan due December 2023 ($450,000 face value less unamortized debt issuance costs of $2,842 and $3,046) 447,158 446,954 1,321,257 1,077,787 Second Lien Secured Debt: 7.5% senior notes due July 2025 ($600,000 face value less unamortized debt issuance costs of $10,414 and $10,927) 589,586 589,073 589,586 589,073 Guaranteed Unsecured Debt: 6.125% senior notes due April 2023 ($1,153,490 face value less unamortized debt issuance costs of $7,745 and $8,430) 1,145,745 1,145,060 1,145,745 1,145,060 Unguaranteed Unsecured Debt: 7.70% notes due February 2027 ($237,386 face value less unamortized debt issuance costs of $876 and $908) 236,510 236,478 6.875% fixed-rate senior notes due December 2028 ($29,001 face value less unamortized debt issuance costs of $127 and $131) 28,874 28,870 265,384 265,348 Lease financing obligations 26,656 28,166 Total debt 3,348,628 3,105,434 Current maturities of long-term debt and lease financing obligations (8,066) (8,840) Long-term debt and lease financing obligations, less current maturities $ 3,340,562 $ 3,096,594 |
Leases (Tables)
Leases (Tables) | 3 Months Ended |
May 30, 2020 | |
Leases | |
Schedule of components of net lease cost | Thirteen Week Period Ended May 30, 2020 June 1, 2019 Operating lease cost $ 161,866 $ 164,983 Financing lease cost: Amortization of right-of-use asset 1,131 1,536 Interest on long-term finance lease liabilities 689 905 Total finance lease costs $ 1,820 $ 2,441 Short-term lease costs 153 1 Variable lease costs 42,448 40,545 Less: sublease income (4,132) (5,751) Net lease cost $ 202,155 $ 202,219 |
Schedule of supplemental cash flow information related to leases | Thirteen Week Period Ended May 30, 2020 June 1, 2019 Cash paid for amounts included in the measurement of lease liabilities: Operating cash flows paid for operating leases $ 170,370 $ 176,237 Operating cash flows paid for interest portion of finance leases 689 905 Financing cash flows paid for principal portion of finance leases 1,243 3,490 Right-of-use assets obtained in exchange for lease obligations: Operating leases 107,913 77,384 Finance leases — — |
Schedule of supplemental balance sheet information related to leases | May 30, February 29, 2020 2020 Operating leases: Operating lease right-of-use asset $ 2,894,333 $ 2,903,256 Short-term operating lease liabilities $ 490,202 $ 490,161 Long-term operating lease liabilities 2,694,929 2,710,347 Total operating lease liabilities $ 3,185,131 $ 3,200,508 Finance leases: Property, plant and equipment, net $ 18,533 $ 19,904 Current maturities of long-term debt and lease financing obligations $ 8,066 $ 8,840 Lease financing obligations, less current maturities 18,590 19,326 Total finance lease liabilities $ 26,656 $ 28,166 Weighted average remaining lease term Operating leases 7.7 7.8 Finance leases 9.0 8.9 Weighted average discount rate Operating leases 6.1 % 6.1 % Finance leases 10.4 % 10.2 % |
Schedule of minimum lease payments, financing leases, ASC842 | May 30, 2020 Finance Operating Fiscal year Leases Leases (1) Total 2021 (remaining thirty-nine weeks) $ 10,225 $ 500,821 $ 511,046 2022 4,078 625,642 629,720 2023 3,876 573,793 577,669 2024 3,597 512,399 515,996 2025 3,280 414,314 417,594 Thereafter 15,914 1,382,115 1,398,029 Total lease payments 40,970 4,009,084 4,050,054 Less: imputed interest (14,314) (823,953) (838,267) Total lease liabilities $ 26,656 $ 3,185,131 $ 3,211,787 (1) – Future operating lease payments have not been reduced by minimum sublease rentals of $44 million due in the future under noncancelable leases. |
Schedule of minimum lease payments, operating leases, ASC842 | May 30, 2020 Finance Operating Fiscal year Leases Leases (1) Total 2021 (remaining thirty-nine weeks) $ 10,225 $ 500,821 $ 511,046 2022 4,078 625,642 629,720 2023 3,876 573,793 577,669 2024 3,597 512,399 515,996 2025 3,280 414,314 417,594 Thereafter 15,914 1,382,115 1,398,029 Total lease payments 40,970 4,009,084 4,050,054 Less: imputed interest (14,314) (823,953) (838,267) Total lease liabilities $ 26,656 $ 3,185,131 $ 3,211,787 (1) – Future operating lease payments have not been reduced by minimum sublease rentals of $44 million due in the future under noncancelable leases. |
Retirement Plans (Tables)
Retirement Plans (Tables) | 3 Months Ended |
May 30, 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 Thirteen Week Period Ended May 30, June 1, 2020 2019 Service cost $ 144 $ 143 Interest cost 1,199 1,556 Expected return on plan assets (1,177) (1,214) Amortization of unrecognized net loss 911 415 Net periodic pension expense $ 1,077 $ 900 |
Segment Reporting (Tables)
Segment Reporting (Tables) | 3 Months Ended |
May 30, 2020 | |
Segment Reporting | |
Schedule of balance sheet information for the Company's reportable segments | Retail Pharmacy Pharmacy Services Eliminations(1) Consolidated May 30, 2020: Total Assets $ 6,815,598 $ 2,721,741 $ (16,465) $ 9,520,874 Goodwill 43,492 1,064,644 — 1,108,136 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 (1) As of May 30, 2020 and February 29, 2020, 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 $16,465 and $14,564, 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 Thirteen Week Period Ended May 30, 2020: Revenues $ 4,123,271 $ 1,977,246 $ (73,141) $ 6,027,376 Gross Profit 1,081,536 116,783 — 1,198,319 Adjusted EBITDA(2) 62,982 44,410 — 107,392 Additions to property and equipment and intangible assets 36,607 2,567 — 39,174 June 1, 2019: Revenues $ 3,864,808 $ 1,566,292 $ (58,511) $ 5,372,589 Gross Profit 1,030,495 96,228 — 1,126,723 Adjusted EBITDA(2) 84,008 26,339 — 110,347 Additions to property and equipment and intangible assets 44,244 4,947 — 49,191 (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 “Adjusted EBITDA, Adjusted Net Income (Loss), Adjusted Net Income (Loss) per Diluted Share and Other Non-GAAP Measures” in MD&A for additional details. |
Schedule of reconciliation of net (loss) income to Adjusted EBITDA | May 30, June 1, 2020 2019 (13 weeks) (13 weeks) Net loss from continuing operations $ (72,702) $ (99,339) Interest expense 50,547 58,270 Income tax (benefit) expense (8,018) 7,374 Depreciation and amortization 79,103 83,926 LIFO (credit) charge (12,066) 7,489 Lease termination and impairment charges 3,753 478 Intangible asset impairment charges 29,852 — Merger and Acquisition-related costs — 3,085 Stock-based compensation expense 1,874 5,380 Restructuring-related costs 35,735 43,350 Inventory write-downs related to store closings 834 841 Gain on sale of assets, net (2,260) (2,712) Other 740 2,205 Adjusted EBITDA from continuing operations $ 107,392 $ 110,347 |
Supplementary Cash Flow Data (T
Supplementary Cash Flow Data (Tables) | 3 Months Ended |
May 30, 2020 | |
Supplementary Cash Flow Data | |
Schedule of supplementary cash flow data | Thirteen Week Period Ended May 30, 2020 June 1, 2019 Cash paid for interest(a) $ 12,843 $ 19,462 Cash payments for income taxes, net(a) $ 2,100 $ 830 Equipment financed under capital leases $ 335 $ 1,253 Gross borrowings from revolver(a) $ 2,139,000 $ 499,000 Gross repayments to revolver(a) $ 1,897,000 $ 374,000 (a) — Amounts are presented on a total company basis. |
Basis of Presentation and Sig_4
Basis of Presentation and Significant Accounting Policies (Details) $ in Thousands | Jan. 02, 2020item | May 30, 2020USD ($) | Jun. 01, 2019USD ($) | Feb. 29, 2020USD ($) |
Disaggregation of Revenue [Abstract] | ||||
Total revenue | $ 6,027,376 | $ 5,372,589 | ||
Measurement period | 6 months | |||
Number of points for Gold status | item | 500 | |||
Percentage discount on qualifying purchases of front end merchandise on achieving "Gold" tier | 20.00% | |||
Liability recognized | 11,600 | |||
Intersegment elimination | ||||
Disaggregation of Revenue [Abstract] | ||||
Revenue from contract with customer | (73,141) | (58,511) | ||
Total revenue | (73,141) | (58,511) | ||
Retail Pharmacy | ||||
Disaggregation of Revenue [Abstract] | ||||
Other revenue | 32,260 | 36,203 | ||
Total revenue | 4,123,271 | 3,864,808 | ||
Accrued contract liabilities | 41,089 | $ 52,668 | ||
Pharmacy sales | ||||
Disaggregation of Revenue [Abstract] | ||||
Revenue from contract with customer | 2,625,544 | 2,563,244 | ||
Front end sales | ||||
Disaggregation of Revenue [Abstract] | ||||
Revenue from contract with customer | 1,465,467 | 1,265,361 | ||
Pharmacy Services | ||||
Disaggregation of Revenue [Abstract] | ||||
Revenue from contract with customer | $ 1,977,246 | $ 1,566,292 |
Restructuring (Details)
Restructuring (Details) - USD ($) $ in Thousands | 3 Months Ended | |
May 30, 2020 | Jun. 01, 2019 | |
Restructuring related liabilities | ||
Anticipated restructuring-related costs in fiscal 2021 | $ 60,000 | |
Trademarks | ||
Restructuring related liabilities | ||
Impairment of intangible assets | 29,852 | |
Reorganization Of Executive Management Team, Ongoing Workforce Reduction And Consolidation, And Transformation Initiatives [Member] | ||
Restructuring related liabilities | ||
Balance-beginning of period | 45,054 | |
Restructuring expense | 35,735 | $ 43,350 |
Cash payments | (18,101) | |
Balance-end of period | 36,925 | |
Reorganization Of Executive Management Team, Ongoing Workforce Reduction And Consolidation, And Transformation Initiatives [Member] | Selling, general and administrative expenses | ||
Restructuring related liabilities | ||
Restructuring expense | 9,972 | 43,350 |
Reorganization Of Executive Management Team, Ongoing Workforce Reduction And Consolidation, And Transformation Initiatives [Member] | Cost of revenues | ||
Restructuring related liabilities | ||
Restructuring expense | 25,763 | |
Severance and related costs | ||
Restructuring related liabilities | ||
Balance-beginning of period | 36,228 | |
Restructuring expense | 4,811 | 27,076 |
Cash payments | (13,055) | |
Balance-end of period | 27,984 | |
Severance and related costs | Selling, general and administrative expenses | ||
Restructuring related liabilities | ||
Restructuring expense | 4,811 | |
Non-executive retention costs | ||
Restructuring related liabilities | ||
Balance-beginning of period | 6,432 | |
Restructuring expense | 629 | 6,664 |
Balance-end of period | 7,061 | |
Non-executive retention costs | Selling, general and administrative expenses | ||
Restructuring related liabilities | ||
Restructuring expense | 629 | |
Professional and other fees | ||
Restructuring related liabilities | ||
Balance-beginning of period | 2,394 | |
Restructuring expense | 4,532 | 9,610 |
Cash payments | (5,046) | |
Balance-end of period | 1,880 | |
Professional and other fees | Selling, general and administrative expenses | ||
Restructuring related liabilities | ||
Restructuring expense | 4,532 | |
SKU Optimization [Member] | ||
Restructuring related liabilities | ||
Restructuring expense | 25,763 | |
Retail Pharmacy | Reorganization Of Executive Management Team, Ongoing Workforce Reduction And Consolidation, And Transformation Initiatives [Member] | ||
Restructuring related liabilities | ||
Restructuring expense | 35,709 | 39,381 |
Retail Pharmacy | Severance and related costs | ||
Restructuring related liabilities | ||
Restructuring expense | 4,559 | 25,272 |
Retail Pharmacy | Non-executive retention costs | ||
Restructuring related liabilities | ||
Restructuring expense | 855 | 4,499 |
Retail Pharmacy | Professional and other fees | ||
Restructuring related liabilities | ||
Restructuring expense | 4,532 | 9,610 |
Retail Pharmacy | SKU Optimization [Member] | ||
Restructuring related liabilities | ||
Restructuring expense | 25,763 | |
Pharmacy Services | Reorganization Of Executive Management Team, Ongoing Workforce Reduction And Consolidation, And Transformation Initiatives [Member] | ||
Restructuring related liabilities | ||
Restructuring expense | 26 | 3,969 |
Pharmacy Services | Severance and related costs | ||
Restructuring related liabilities | ||
Restructuring expense | 252 | 1,804 |
Pharmacy Services | Non-executive retention costs | ||
Restructuring related liabilities | ||
Restructuring expense | $ (226) | $ 2,165 |
Asset Sale to WBA (Details)
Asset Sale to WBA (Details) $ in Thousands | Sep. 18, 2017USD ($)itemstore | Mar. 31, 2018USD ($)store | May 30, 2020USD ($) | Jun. 01, 2019USD ($) | Feb. 29, 2020USD ($) | Mar. 02, 2019USD ($)item |
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | ||||||
Accounts receivable, net | $ 1,592,799 | $ 1,286,785 | ||||
Discontinued Operation, Name of Segment [Extensible List] | Retail Pharmacy [Member] | Retail Pharmacy [Member] | ||||
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% | |||||
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 | |||||
Number of distribution centers | item | 3 | |||||
Purchase price per agreement | $ 4,375,000 | |||||
Discontinued Operations, Disposed of by Sale [Member] | ||||||
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | ||||||
Accounts receivable, net | $ 224,385 | |||||
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 | |||||
Number of distribution centers | item | 1 | |||||
Proceeds from assets sold | $ 4,156,686 | $ 94,289 | 62,774 | $ 61,251 | ||
Pre-tax gain on sale | 12,690 | $ 19,268 | $ 14,151 | |||
Period of transition | 3 years | |||||
Payments for inventory and selling, general and administrative activities | 31,005 | 1,192,791 | ||||
Accounts receivable, net | 4,398 | |||||
TSA fees | $ 1,080 | $ 14,225 |
Asset Sale to WBA - Carrying am
Asset Sale to WBA - Carrying amount of assets to be sold (Details) $ in Thousands | Feb. 29, 2020USD ($) |
Current assets held for sale | |
Current assets held for sale | $ 92,278 |
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 |
Property and equipment | 43,576 |
Operating lease right-of-use asset | 34,983 |
Current assets held for sale | 92,278 |
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 | |
May 30, 2020 | Jun. 01, 2019 | |
Costs and expenses: | ||
Net income from discontinued operations, net of tax | $ 9,161 | $ (320) |
Discontinued Operations, Disposed of by Sale [Member] | Sale Of Assets To Walgreens Boots Alliance WBA And Buyer [Member] | ||
Income statement disclosures | ||
Revenues | 174 | (88) |
Costs and expenses: | ||
Cost of revenues | 8 | 265 |
Selling, general and administrative expenses | 871 | 486 |
Gain on sale of assets, net | (14,149) | (522) |
Net expenses and non-operating income | (13,270) | 229 |
Income from discontinued operations before income taxes | 13,444 | (317) |
Income tax expense | 4,283 | 3 |
Net income from discontinued operations, net of tax | $ 9,161 | $ (320) |
Income (Loss) Per Share (Detail
Income (Loss) Per Share (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 3 Months Ended | |
May 30, 2020 | Jun. 01, 2019 | |
Numerator: | ||
Net loss from continuing operations | $ (72,702) | $ (99,339) |
Net income (loss) from discontinued operations, net of tax | 9,161 | (320) |
(Loss) income attributable to common stockholders-basic and diluted | $ (63,541) | $ (99,659) |
Denominator: | ||
Basic weighted average shares | 53,462 | 52,976 |
Diluted weighted average shares | 53,462 | 52,976 |
Continuing operations | $ (1.36) | $ (1.88) |
Discontinued operations | 0.17 | 0 |
Net basic and diluted loss per share | $ (1.19) | $ (1.88) |
Stock options | ||
Antidilutive securities excluded from computation of income per share | ||
Shares excluded from the computation of diluted income per share | 1,264 | 992 |
Restricted shares | ||
Antidilutive securities excluded from computation of income per share | ||
Shares excluded from the computation of diluted income per share | 1,198 | 813 |
Lease Termination and Impairm_3
Lease Termination and Impairment Charges (Details) - USD ($) $ in Thousands | 3 Months Ended | ||
May 30, 2020 | Jun. 01, 2019 | Feb. 29, 2020 | |
Lease termination and impairment charges | |||
Lease termination and impairment charges | $ 3,753 | $ 478 | |
Carrying value of long-lived assets | 2,203 | 123 | |
Operating right-of-use assets | 2,894,333 | $ 2,903,256 | |
Impairment related to terminated software project | 1,919 | ||
Impairment charges, store assets | 284 | ||
Impairment charges | |||
Lease termination and impairment charges | |||
Lease termination and impairment charges | 2,203 | 123 | |
Facility Closing | |||
Lease termination and impairment charges | |||
Lease termination and impairment charges | $ 1,550 | $ 355 |
Lease Termination and Impairm_4
Lease Termination and Impairment Charges - Fair value (Details) - Nonrecurring basis - USD ($) $ in Thousands | 3 Months Ended | |
May 30, 2020 | Jun. 01, 2019 | |
Non Financial Assets Measured on a Non Recurring Basis | ||
Long-lived assets held and used, impairment charges | $ (2,203) | $ (123) |
Total Charges | (2,203) | (123) |
Fair Value | ||
Non Financial Assets Measured on a Non Recurring Basis | ||
Fair value of Total | $ 0 | $ 0 |
Lease Termination and Impairm_5
Lease Termination and Impairment Charges - Closures (Details) - Lease termination charges - USD ($) $ in Thousands | 3 Months Ended | |
May 30, 2020 | Jun. 01, 2019 | |
Closed store and distribution center charges | ||
Balance-beginning of period | $ 2,253 | $ 124,046 |
Existing Topic 420 liabilities eliminated by recording a reduction to the ROU asset | (112,288) | |
Cash payments, net of sublease income | (83) | (2,425) |
Balance-end of period | $ 2,170 | $ 9,333 |
Fair Value Measurements (Detail
Fair Value Measurements (Details) - USD ($) $ in Thousands | May 30, 2020 | Feb. 29, 2020 |
Other Financial Instruments | ||
Held to maturity investments | $ 7,014 | $ 7,022 |
Level 1 | ||
Other Financial Instruments | ||
Carrying value of total long-term indebtedness | 3,321,972 | 3,077,268 |
Estimated fair value of total long-term indebtedness | $ 3,206,395 | $ 3,021,385 |
Income Taxes (Details)
Income Taxes (Details) - USD ($) $ in Thousands | 3 Months Ended | ||
May 30, 2020 | Jun. 01, 2019 | Feb. 29, 2020 | |
Income Taxes | |||
Income tax (benefit) expense | $ (8,018) | $ 7,374 | |
Estimated effective tax rate (as a percent) | 9.90% | 8.00% | |
Increase in valuation allowance to offset the current year deferred state tax benefits (as a percent) | (10.60%) | (34.50%) | |
Decrease in unrecognized tax benefits related to state exposures | $ 13,210 | ||
Valuation allowance against net deferred tax assets | $ 1,681,399 | $ 1,673,119 |
Medicare Part D (Details)
Medicare Part D (Details) - USD ($) $ in Thousands | Feb. 19, 2020 | Feb. 29, 2020 | May 30, 2020 | Mar. 31, 2020 |
Statutory Accounting Practices [Line Items] | ||||
Minimum amount of capital and surplus required by regulatory requirements | $ 9,675 | |||
Accounts receivable, net | $ 1,286,785 | $ 1,592,799 | ||
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 | 679,322 | ||
EIC | ||||
Statutory Accounting Practices [Line Items] | ||||
Accounts receivable, net | $ 268,312 | |||
Medicare Part D | ||||
Accrued salaries, wages and other current liabilities | $ 14,083 |
Manufacturer Rebates Receivab_2
Manufacturer Rebates Receivables (Details) - USD ($) $ in Thousands | May 30, 2020 | Feb. 29, 2020 |
Manufacturer Rebates Receivables | ||
Manufacturer rebates receivables | $ 593,774 | $ 530,451 |
Goodwill and Other Intangibles
Goodwill and Other Intangibles - Goodwill (Details) - USD ($) $ in Thousands | 3 Months Ended | |
May 30, 2020 | Feb. 29, 2020 | |
Goodwill | ||
Accumulated impairment losses | $ 574,712 | $ 574,712 |
Carrying amount of goodwill | ||
Beginning Balance | 1,108,136 | |
Goodwill impairment | 0 | |
Ending Balance | $ 1,108,136 |
Goodwill and Other Intangible_3
Goodwill and Other Intangible Assets - Intangibles (Details) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended |
May 30, 2020 | Feb. 29, 2020 | |
Finite Lived And Indefinite Lived Intangible Assets By Major Class | ||
Goodwill impairment | $ 0 | |
Accumulated impairment losses | 574,712 | $ 574,712 |
Gross Carrying Amount, Finite Lived | 1,662,131 | 1,673,155 |
Accumulated Amortization | (1,345,927) | (1,333,164) |
Net | 316,204 | 339,991 |
Gross Carrying Amount, Total | 1,662,131 | 1,692,655 |
Net, Total | 316,204 | 359,491 |
Other intangibles, net | 316,204 | 359,491 |
Trademarks | ||
Finite Lived And Indefinite Lived Intangible Assets By Major Class | ||
Gross Carrying Amount, Indefinite Lived | 19,500 | |
Impairment of intangible assets | 29,852 | |
Noncompete agreements and other | ||
Finite Lived And Indefinite Lived Intangible Assets By Major Class | ||
Gross Carrying Amount, Finite Lived | 189,073 | 186,183 |
Accumulated Amortization | (165,712) | (163,575) |
Net | $ 23,361 | $ 22,608 |
Remaining Weighted Average Amortization Period | 3 years | 3 years |
Prescription files | ||
Finite Lived And Indefinite Lived Intangible Assets By Major Class | ||
Gross Carrying Amount, Finite Lived | $ 957,073 | $ 950,887 |
Accumulated Amortization | (875,955) | (867,430) |
Net | $ 81,118 | $ 83,457 |
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 | (239,848) | (231,015) |
Net | $ 148,152 | $ 156,985 |
Remaining Weighted Average Amortization Period | 11 years | 12 years |
CMS license | ||
Finite Lived And Indefinite Lived Intangible Assets By Major Class | ||
Gross Carrying Amount, Finite Lived | $ 57,500 | $ 57,500 |
Accumulated Amortization | (11,346) | (10,772) |
Net | $ 46,154 | $ 46,728 |
Remaining Weighted Average Amortization Period | 20 years | 21 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 | (41,566) | (39,459) |
Net | $ 17,419 | $ 19,526 |
Remaining Weighted Average Amortization Period | 2 years | 3 years |
Trademarks | ||
Finite Lived And Indefinite Lived Intangible Assets By Major Class | ||
Gross Carrying Amount, Finite Lived | $ 20,100 | |
Accumulated Amortization | (9,413) | |
Net | $ 10,687 | |
Remaining Weighted Average Amortization Period | 0 years | 6 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 |
Goodwill and Other Intangible_4
Goodwill and Other Intangible Assets - Unfavorable lease intangibles and amortization expense (Details) - USD ($) $ in Thousands | 3 Months Ended | |
May 30, 2020 | Jun. 01, 2019 | |
Goodwill and Other Intangible Assets | ||
Amortization expense for intangible assets and liabilities | $ 24,420 | $ 27,660 |
Anticipated annual amortization expense for intangible assets and liabilities | ||
2021 | 84,368 | |
2022 | 63,491 | |
2023 | 48,303 | |
2024 | 34,663 | |
2025 | $ 23,402 |
Indebtedness and Credit Agree_3
Indebtedness and Credit Agreements - Indebtedness and lease financing obligations (Details) - USD ($) $ in Thousands | May 30, 2020 | Feb. 29, 2020 | Feb. 05, 2020 | Jan. 06, 2020 | Nov. 30, 2019 | Oct. 15, 2019 | Oct. 11, 2019 | Dec. 20, 2018 | Jun. 25, 2018 | May 21, 2018 | Apr. 19, 2018 | Apr. 12, 2018 |
Indebtedness and credit agreements | ||||||||||||
Lease financing obligations, ASC842 | $ 26,656 | $ 28,166 | ||||||||||
Total Debt | 3,348,628 | 3,105,434 | ||||||||||
Current maturities of long-term debt and lease financing obligations | (8,066) | (8,840) | ||||||||||
Long-term debt and lease financing obligations, less current maturities | 3,340,562 | 3,096,594 | ||||||||||
Senior Secured Debt [Member] | ||||||||||||
Indebtedness and credit agreements | ||||||||||||
Long-term debt | 1,321,257 | 1,077,787 | ||||||||||
Senior secured revolving credit facility due December 2023 | ||||||||||||
Indebtedness and credit agreements | ||||||||||||
Long-term debt | 874,099 | 630,833 | ||||||||||
Principal amount of debt | 892,000 | 650,000 | ||||||||||
Unamortized debt issuance costs | 17,901 | 19,167 | ||||||||||
FILO term loan due December 2023 | ||||||||||||
Indebtedness and credit agreements | ||||||||||||
Long-term debt | 447,158 | 446,954 | ||||||||||
Principal amount of debt | 450,000 | 450,000 | $ 450,000 | |||||||||
Unamortized debt issuance costs | 2,842 | 3,046 | ||||||||||
Second Lien Secured Debt | ||||||||||||
Indebtedness and credit agreements | ||||||||||||
Long-term debt | 589,586 | 589,073 | ||||||||||
7.5% senior notes due July 2025 | ||||||||||||
Indebtedness and credit agreements | ||||||||||||
Long-term debt | $ 589,586 | $ 589,073 | ||||||||||
Debt instrument, stated interest rate (as a percent) | 7.50% | 7.50% | 7.50% | 7.50% | ||||||||
Principal amount of debt | $ 600,000 | $ 600,000 | ||||||||||
Unamortized debt issuance costs | 10,414 | 10,927 | ||||||||||
Guaranteed Unsecured Debt | ||||||||||||
Indebtedness and credit agreements | ||||||||||||
Long-term debt | 1,145,745 | 1,145,060 | ||||||||||
9.25% senior notes due March 2020 | ||||||||||||
Indebtedness and credit agreements | ||||||||||||
Debt instrument, stated interest rate (as a percent) | 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% | |||||||||
6.125% senior notes due April 2023 | ||||||||||||
Indebtedness and credit agreements | ||||||||||||
Long-term debt | $ 1,145,745 | $ 1,145,060 | ||||||||||
Debt instrument, stated interest rate (as a percent) | 6.125% | 6.125% | 6.125% | 6.125% | 6.125% | 6.125% | ||||||
Principal amount of debt | $ 1,153,490 | $ 1,153,490 | ||||||||||
Unamortized debt issuance costs | 8,430 | 7,745 | ||||||||||
Unguaranteed Unsecured Debt | ||||||||||||
Indebtedness and credit agreements | ||||||||||||
Long-term debt | 265,384 | 265,348 | ||||||||||
7.7% notes due February 2027 | ||||||||||||
Indebtedness and credit agreements | ||||||||||||
Long-term debt | $ 236,510 | $ 236,478 | ||||||||||
Debt instrument, stated interest rate (as a percent) | 7.70% | 7.70% | 7.70% | 7.70% | 7.70% | |||||||
Principal amount of debt | $ 237,386 | $ 237,386 | ||||||||||
Unamortized debt issuance costs | 908 | 876 | ||||||||||
6.875% fixed-rate senior notes due December 2028 | ||||||||||||
Indebtedness and credit agreements | ||||||||||||
Long-term debt | $ 28,874 | $ 28,870 | ||||||||||
Debt instrument, stated interest rate (as a percent) | 6.875% | 6.875% | 6.875% | 6.875% | 6.875% | |||||||
Principal amount of debt | $ 29,001 | $ 29,001 | ||||||||||
Unamortized debt issuance costs | $ 131 | $ 127 |
Indebtedness and Credit Agree_4
Indebtedness and Credit Agreement - Credit Facility (Details) - USD ($) $ in Thousands | 3 Months Ended | ||||||||
May 30, 2020 | Feb. 29, 2020 | Feb. 05, 2020 | Jan. 06, 2020 | Dec. 20, 2018 | May 21, 2018 | Apr. 29, 2018 | Apr. 28, 2018 | Apr. 19, 2018 | |
Credit facility | |||||||||
Cash sweep, 3-day minimum threshold | $ 275,000 | ||||||||
Cash sweep, 1-day minimum threshold | $ 200,000 | ||||||||
Rite Aid Subsidiaries [Member] | |||||||||
Credit facility | |||||||||
Ownership interest (as a percent) | 100.00% | ||||||||
Existing Facilities | |||||||||
Credit facility | |||||||||
Outstanding borrowings | $ 1,342,000 | ||||||||
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 | ||||||||
Minimum principal balance for which non-payment causes default | $ 50,000 | ||||||||
Existing Facilities | Minimum | |||||||||
Credit facility | |||||||||
Fixed charge coverage ratio | 1 | ||||||||
Senior secured revolving credit facility due December 2023 | |||||||||
Credit facility | |||||||||
Maximum borrowing capacity | $ 2,700,000 | ||||||||
Principal amount of debt | $ 892,000 | $ 650,000 | |||||||
Letters of credit outstanding | 102,939 | ||||||||
Additional borrowing capacity | $ 1,705,061 | ||||||||
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 thirtieth consecutive 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% | ||||||||
FILO term loan due December 2023 | |||||||||
Credit facility | |||||||||
Principal amount of debt | $ 450,000 | 450,000 | 450,000 | ||||||
FILO term loan due December 2023 | LIBOR | |||||||||
Credit facility | |||||||||
Percentage points added to the reference rate | 0.03% | ||||||||
Senior secured revolving credit facility due January 2020 | |||||||||
Credit facility | |||||||||
Maximum borrowing capacity | $ 2,700,000 | $ 2,700,000 | $ 3,000,000 | ||||||
6.125% senior notes due April 2023 | |||||||||
Credit facility | |||||||||
Principal amount of debt | $ 1,153,490 | $ 1,153,490 | |||||||
Debt instrument, stated interest rate (as a percent) | 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 | Jun. 25, 2020 | Feb. 19, 2020 | Oct. 11, 2019 | Jun. 25, 2018 | May 21, 2018 | Apr. 29, 2018 | Apr. 19, 2018 | Apr. 12, 2018 | Nov. 30, 2019 | May 30, 2020 | Feb. 29, 2020 | Feb. 05, 2020 | Jan. 06, 2020 | Oct. 15, 2019 | Dec. 20, 2018 | Apr. 28, 2018 |
Indebtedness and credit agreements | ||||||||||||||||
Amount of receivables sold under Receivable Purchase Agreement | $ 501,422 | |||||||||||||||
Receipts from sale of receivables | $ 449,949 | |||||||||||||||
Maturities | ||||||||||||||||
2021 | $ 0 | |||||||||||||||
2022 | 0 | |||||||||||||||
2023 | 0 | |||||||||||||||
2024 | 2,495,490 | |||||||||||||||
2024 | 0 | |||||||||||||||
thereafter | $ 866,387 | |||||||||||||||
9.25% senior notes due March 2020 | ||||||||||||||||
Indebtedness and credit agreements | ||||||||||||||||
Gain (loss) on debt retirements, net | $ (3,422) | |||||||||||||||
Debt instrument, stated interest rate (as a percent) | 9.25% | |||||||||||||||
Percentage of outstanding principal amount redeemed | 100.00% | |||||||||||||||
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 | ||||||||||||||
Gain (loss) on debt retirements, net | $ (18,075) | $ (8) | ||||||||||||||
Debt instrument, stated interest rate (as a percent) | 6.75% | 6.75% | 6.75% | |||||||||||||
6.125% senior notes due April 2023 | ||||||||||||||||
Indebtedness and credit agreements | ||||||||||||||||
Notes redeemed and discharged | $ 4,759 | |||||||||||||||
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% | ||||||||||
Face amount of debt repurchased | $ 600,000 | $ 600,000 | ||||||||||||||
Principal amount of debt | $ 1,153,490 | $ 1,153,490 | ||||||||||||||
6.125% senior notes due April 2023 | Subsequent Event | ||||||||||||||||
Indebtedness and credit agreements | ||||||||||||||||
Notes redeemed and discharged | $ 750,000 | |||||||||||||||
Debt instrument, stated interest rate (as a percent) | 6.125% | |||||||||||||||
Issuance of debt | $ 145,500 | |||||||||||||||
Senior Notes 7.70 Percent And 6.875 Percent [Member] | ||||||||||||||||
Indebtedness and credit agreements | ||||||||||||||||
Notes redeemed and discharged | $ 84,097 | |||||||||||||||
Gain (loss) on debt retirements, net | 32,416 | $ 18,510 | ||||||||||||||
Early redemption of debt | $ 51,300 | 38,392 | ||||||||||||||
Senior Notes 7.70 Percent And 6.875 Percent [Member] | Maximum | ||||||||||||||||
Indebtedness and credit agreements | ||||||||||||||||
Face amount of debt repurchased | $ 100,000 | |||||||||||||||
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% | |||||||||||
Principal amount of debt | $ 29,001 | $ 29,001 | ||||||||||||||
7.7% notes due February 2027 | ||||||||||||||||
Indebtedness and credit agreements | ||||||||||||||||
Notes redeemed and discharged | $ 18,075 | |||||||||||||||
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% | |||||||||||
Face amount of debt repurchased | $ 15,000 | |||||||||||||||
Amount of debt repurchased | $ 10,012 | |||||||||||||||
Principal amount of debt | $ 237,386 | $ 237,386 | ||||||||||||||
7.5% senior notes due July 2025 | ||||||||||||||||
Indebtedness and credit agreements | ||||||||||||||||
Debt instrument, stated interest rate (as a percent) | 7.50% | 7.50% | 7.50% | 7.50% | ||||||||||||
Principal amount of debt | $ 600,000 | $ 600,000 | ||||||||||||||
7.5% senior notes due July 2025 | Subsequent Event | ||||||||||||||||
Indebtedness and credit agreements | ||||||||||||||||
Debt instrument, stated interest rate (as a percent) | 7.50% | |||||||||||||||
8.0% senior secured notes due 2026 | Subsequent Event | ||||||||||||||||
Indebtedness and credit agreements | ||||||||||||||||
Debt instrument, stated interest rate (as a percent) | 8.00% | |||||||||||||||
Principal amount of debt | $ 600,000 | |||||||||||||||
Senior secured revolving credit facility due December 2023 | ||||||||||||||||
Indebtedness and credit agreements | ||||||||||||||||
Maximum borrowing capacity | $ 2,700,000 | |||||||||||||||
Principal amount of debt | $ 892,000 | $ 650,000 | ||||||||||||||
Senior secured revolving credit facility due January 2020 | ||||||||||||||||
Indebtedness and credit agreements | ||||||||||||||||
Maximum borrowing capacity | $ 2,700,000 | $ 2,700,000 | $ 3,000,000 | |||||||||||||
Gain (loss) on debt retirements, net | $ (1,091) |
Leases (Details)
Leases (Details) - USD ($) $ in Thousands | 3 Months Ended | |
May 30, 2020 | Jun. 01, 2019 | |
Property, Plant and Equipment [Line Items] | ||
Operating lease cost | $ 161,866 | $ 164,983 |
Financing lease cost: | ||
Amortization of right-of-use asset | 1,131 | 1,536 |
Interest on long-term finance lease liabilities | 689 | 905 |
Total finance lease costs | 1,820 | 2,441 |
Short-term lease costs | 153 | 1 |
Variable lease costs | 42,448 | 40,545 |
Less: sublease income | (4,132) | (5,751) |
Net lease cost | $ 202,155 | $ 202,219 |
Buildings | Minimum | ||
Property, Plant and Equipment [Line Items] | ||
Initial terms of noncancellable operating leases | 5 years | |
Initial terms of noncancellable finance leases | 5 years | |
Buildings | Maximum | ||
Property, Plant and Equipment [Line Items] | ||
Initial terms of noncancellable operating leases | 22 years | |
Initial terms of noncancellable finance 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) - USD ($) $ in Thousands | 3 Months Ended | |
May 30, 2020 | Jun. 01, 2019 | |
Cash paid for amounts included in the measurement of lease liabilities: | ||
Operating cash flows paid for operating leases | $ 170,370 | $ 176,237 |
Operating cash flows paid for interest portion of finance leases | 689 | 905 |
Financing cash flows paid for principal portion of finance leases | 1,243 | 3,490 |
Right-of-use assets obtained in exchange for lease obligations: | ||
Operating leases | 107,913 | 77,384 |
Finance leases | $ 0 | $ 0 |
Leases - Supplemental B_S Infor
Leases - Supplemental B/S Information (Details) - USD ($) $ in Thousands | May 30, 2020 | Feb. 29, 2020 |
Operating leases: | ||
Operating lease right-of-use asset | $ 2,894,333 | $ 2,903,256 |
Short-term operating lease liabilities | 490,202 | 490,161 |
Long-term operating lease liabilities | 2,694,929 | 2,710,347 |
Total operating lease liabilities | 3,185,131 | 3,200,508 |
Finance leases: | ||
Property, plant and equipment, net | 1,180,346 | 1,215,838 |
Current maturities of long-term debt and lease financing obligations | 8,066 | 8,840 |
Lease financing obligations, less current maturities, ASC842 | 18,590 | 19,326 |
Total finance lease liabilities, ASC842 | $ 26,656 | $ 28,166 |
Weighted average remaining lease term | ||
Operating leases (in years) | 7 years 8 months 12 days | 7 years 9 months 18 days |
Finance leases (in years) | 9 years | 8 years 10 months 24 days |
Weighted average discount rate | ||
Operating leases (as a percent) | 6.10% | 6.10% |
Finance leases (as a percent) | 10.40% | 10.20% |
Finance Leased Assets [Member] | ||
Finance leases: | ||
Property, plant and equipment, net | $ 18,533 | $ 19,904 |
Leases - Maturity of lease liab
Leases - Maturity of lease liabilities under finance and operating leases (Details) - USD ($) $ in Thousands | May 30, 2020 | Feb. 29, 2020 |
Finance Leases, ASC842 | ||
2021 | $ 10,225 | |
2022 | 4,078 | |
2023 | 3,876 | |
2024 | 3,597 | |
2025 | 3,280 | |
Thereafter | 15,914 | |
Total lease payments | 40,970 | |
Less: imputed interest | (14,314) | |
Total finance lease liabilities, ASC842 | 26,656 | $ 28,166 |
Operating Leases, ASC842 | ||
2021 | 500,821 | |
2022 | 625,642 | |
2023 | 573,793 | |
2024 | 512,399 | |
2025 | 414,314 | |
Thereafter | 1,382,115 | |
Total lease payments | 4,009,084 | |
Less: imputed interest | (823,953) | |
Total operating lease liabilities | 3,185,131 | $ 3,200,508 |
Minimum sublease rentals | 44,000 | |
Operating and finance leases, ASC842 | ||
2021 | 511,046 | |
2022 | 629,720 | |
2023 | 577,669 | |
2024 | 515,996 | |
2025 | 417,594 | |
Thereafter | 1,398,029 | |
Total lease payments | 4,050,054 | |
Less: imputed interest | (838,267) | |
Total lease liabilities | $ 3,211,787 |
Retirement Plans - Net periodic
Retirement Plans - Net periodic cost (Details) - Pension Plan - USD ($) $ in Thousands | 3 Months Ended | |
May 30, 2020 | Jun. 01, 2019 | |
Net periodic pension expense | ||
Service cost (credit) | $ 144 | $ 143 |
Interest cost | 1,199 | 1,556 |
Expected return on plan assets | (1,177) | (1,214) |
Amortization of unrecognized net loss | 911 | 415 |
Net periodic pension expense | $ 1,077 | $ 900 |
Retirement Plans - Benefit obli
Retirement Plans - Benefit obligation and funded status (Details) - Pension Plan - USD ($) $ in Thousands | 3 Months Ended | |
May 30, 2020 | Jun. 01, 2019 | |
Change in benefit obligations: | ||
Interest cost | $ 1,199 | $ 1,556 |
Change in plan assets: | ||
Employer contributions | $ 0 |
Retirement Plans - Assumptions
Retirement Plans - Assumptions and assets (Details) $ in Thousands | May 30, 2020USD ($) |
Pension Plan | |
Defined benefit plans estimated future employer contributions | |
Expected employer contribution during next fiscal year | $ 6,330 |
Segment Reporting - Balance She
Segment Reporting - Balance Sheet information (Details) $ in Thousands | 3 Months Ended | |
May 30, 2020USD ($)segment | Feb. 29, 2020USD ($) | |
Segment Reporting | ||
Number of reportable segments | segment | 2 | |
Total assets | $ 9,520,874 | $ 9,452,369 |
Goodwill | 1,108,136 | 1,108,136 |
Accounts receivable | 1,592,799 | 1,286,785 |
Operating segments | Retail Pharmacy | ||
Segment Reporting | ||
Total assets | 6,815,598 | 6,757,196 |
Goodwill | 43,492 | 43,492 |
Operating segments | Pharmacy Services | ||
Segment Reporting | ||
Total assets | 2,721,741 | 2,709,737 |
Goodwill | 1,064,644 | 1,064,644 |
Intersegment elimination | ||
Segment Reporting | ||
Total assets | (16,465) | (14,564) |
Long-term deferred tax liability | 0 | 0 |
Accounts receivable | $ (16,465) | $ (14,564) |
Segment Reporting - Revenues (D
Segment Reporting - Revenues (Details) - USD ($) $ in Thousands | 3 Months Ended | |
May 30, 2020 | Jun. 01, 2019 | |
Segment Reporting | ||
Revenues | $ 6,027,376 | $ 5,372,589 |
Gross Profit | 1,198,319 | 1,126,723 |
Adjusted EBITDA from continuing operations | 107,392 | 110,347 |
Additions to property and equipment and intangible assets | 39,174 | 49,191 |
Retail Pharmacy | ||
Segment Reporting | ||
Revenues | 4,123,271 | 3,864,808 |
Operating segments | Retail Pharmacy | ||
Segment Reporting | ||
Revenues | 4,123,271 | 3,864,808 |
Gross Profit | 1,081,536 | 1,030,495 |
Adjusted EBITDA from continuing operations | 62,982 | 84,008 |
Additions to property and equipment and intangible assets | 36,607 | 44,244 |
Operating segments | Pharmacy Services | ||
Segment Reporting | ||
Revenues | 1,977,246 | 1,566,292 |
Gross Profit | 116,783 | 96,228 |
Adjusted EBITDA from continuing operations | 44,410 | 26,339 |
Additions to property and equipment and intangible assets | 2,567 | 4,947 |
Intersegment elimination | ||
Segment Reporting | ||
Revenues | $ (73,141) | $ (58,511) |
Segment Reporting - Adjusted EB
Segment Reporting - Adjusted EBITDA (Details) - USD ($) $ in Thousands | 3 Months Ended | |
May 30, 2020 | Jun. 01, 2019 | |
Segment Reporting | ||
Net loss from continuing operations | $ (72,702) | $ (99,339) |
Interest expense | 50,547 | 58,270 |
Income tax (benefit) expense | (8,018) | 7,374 |
Depreciation and amortization | 79,103 | 83,926 |
LIFO (credit) charge | (12,066) | 7,489 |
Lease termination and impairment charges | 3,753 | 478 |
Intangible asset impairment charges | 29,852 | |
Merger and Acquisition-related costs | 3,085 | |
Stock-based compensation expense | 1,874 | 5,380 |
Restructuring-related costs | 35,735 | 43,350 |
Inventory write-downs related to store closings | 834 | 841 |
Gain (loss) on sale of assets, net | (2,260) | (2,712) |
Other | 740 | 2,205 |
Adjusted EBITDA from continuing operations | $ 107,392 | $ 110,347 |
Commitments, Contingencies an_2
Commitments, Contingencies and Guarantees (Details) - state | 1 Months Ended | |
Aug. 31, 2014 | Jan. 31, 2017 | |
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 | 3 Months Ended | |
May 30, 2020 | Jun. 01, 2019 | |
Supplementary Cash Flow Data | ||
Cash paid for interest | $ 12,843 | $ 19,462 |
Cash payments for income taxes, net | 2,100 | 830 |
Equipment financed under capital leases | 335 | 1,253 |
Gross borrowings from revolver | 2,139,000 | 499,000 |
Gross repayments to revolver | 1,897,000 | 374,000 |
Significant components of cash provided by Other Liabilities | ||
Other liabilities | (13,263) | $ (47,831) |
Deferrals under CARES Act | $ 26,308 |
Subsequent Events (Details)
Subsequent Events (Details) - USD ($) $ in Thousands | Jun. 25, 2020 | May 30, 2020 | Feb. 29, 2020 |
Subsequent Event [Line Items] | |||
Cash and cash equivalents | $ 288,316 | $ 218,180 | |
Senior secured revolving credit facility due December 2023 | |||
Subsequent Event [Line Items] | |||
Additional borrowing capacity | $ 1,705,061 | ||
Subsequent Event | |||
Subsequent Event [Line Items] | |||
Liquidity | $ 1,700,000 | ||
Cash and cash equivalents | 180,000 | ||
Subsequent Event | Senior secured revolving credit facility due December 2023 | |||
Subsequent Event [Line Items] | |||
Additional borrowing capacity | $ 1,500,000 |