Document and Entity Information
Document and Entity Information - shares | 6 Months Ended | |
Aug. 29, 2020 | Sep. 22, 2020 | |
Cover [Abstract] | ||
Document Type | 10-Q | |
Document Quarterly Report | true | |
Document Transition Report | false | |
Document Period End Date | Aug. 29, 2020 | |
Entity File Number | 1-5742 | |
Entity Registrant Name | RITE AID CORP | |
Entity Incorporation, State or Country Code | DE | |
Entity Tax Identification Number | 23-1614034 | |
Entity Address, Address Line One | 30 Hunter Lane | |
Entity Address, City or Town | Camp Hill | |
Entity Address, State or Province | PA | |
Entity Address, Postal Zip Code | 17011 | |
City Area Code | 717 | |
Local Phone Number | 761-2633 | |
Title of 12(b) Security | Common Stock, $1.00 par value | |
Trading Symbol | RAD | |
Security Exchange Name | NYSE | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Accelerated Filer | |
Entity Small Business | false | |
Entity Emerging Growth Company | false | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding | 55,224,101 | |
Current Fiscal Year End Date | --02-27 | |
Document Fiscal Year Focus | 2021 | |
Document Fiscal Period Focus | Q2 | |
Entity Central Index Key | 0000084129 | |
Amendment Flag | false |
CONDENSED CONSOLIDATED BALANCE
CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands | Aug. 29, 2020 | Feb. 29, 2020 |
Current assets: | ||
Cash and cash equivalents | $ 92,730 | $ 218,180 |
Accounts receivable, net | 1,920,866 | 1,286,785 |
Inventories, net of LIFO reserve of $518,824 and $539,640 | 1,937,953 | 1,921,604 |
Prepaid expenses and other current assets | 114,148 | 181,794 |
Current assets held for sale | 92,278 | |
Total current assets | 4,065,697 | 3,700,641 |
Property, plant and equipment, net | 1,140,658 | 1,215,838 |
Operating lease right-of-use asset | 2,860,710 | 2,903,256 |
Goodwill | 1,108,136 | 1,108,136 |
Other intangibles, net | 305,730 | 359,491 |
Deferred tax assets | 16,680 | 16,680 |
Other assets | 122,588 | 148,327 |
Total assets | 9,620,199 | 9,452,369 |
Current liabilities: | ||
Current maturities of long-term debt and lease financing obligations | 6,902 | 8,840 |
Accounts payable | 1,448,682 | 1,484,081 |
Accrued salaries, wages and other current liabilities | 637,610 | 746,318 |
Current portion of operating lease liabilities | 487,844 | 490,161 |
Current liabilities held for sale | 37,063 | |
Total current liabilities | 2,581,038 | 2,766,463 |
Long-term debt, less current maturities | 3,506,708 | 3,077,268 |
Long-term operating lease liabilities | 2,657,891 | 2,710,347 |
Lease financing obligations, less current maturities, ASC842 | 17,935 | 19,326 |
Other noncurrent liabilities | 253,589 | 204,438 |
Total liabilities | 9,017,161 | 8,777,842 |
Commitments and contingencies | ||
Stockholders' equity: | ||
Common stock, par value $1 per share; 75,000 shares authorized; shares issued and outstanding 55,224 and 54,716 | 55,224 | 54,716 |
Additional paid-in capital | 5,893,590 | 5,890,903 |
Accumulated deficit | (5,298,932) | (5,222,194) |
Accumulated other comprehensive loss | (46,844) | (48,898) |
Total stockholders' equity | 603,038 | 674,527 |
Total liabilities and stockholders' equity | $ 9,620,199 | $ 9,452,369 |
CONDENSED CONSOLIDATED BALANC_2
CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) shares in Thousands, $ in Thousands | Aug. 29, 2020 | Feb. 29, 2020 |
CONDENSED CONSOLIDATED BALANCE SHEETS | ||
Inventory, LIFO Reserve | $ 518,824 | $ 539,640 |
Common stock, par value (in dollars per share) | $ 1 | $ 1 |
Common stock, shares authorized | 75,000 | 75,000 |
Common stock, shares issued | 55,224 | 54,716 |
Common stock, shares outstanding | 55,224 | 54,716 |
CONDENSED CONSOLIDATED STATEMEN
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Aug. 29, 2020 | Aug. 31, 2019 | Aug. 29, 2020 | Aug. 31, 2019 | |
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS | ||||
Revenues | $ 5,981,970 | $ 5,366,264 | $ 12,009,346 | $ 10,738,853 |
Costs and expenses: | ||||
Cost of revenues | 4,821,625 | 4,221,825 | 9,650,682 | 8,467,691 |
Selling, general and administrative expenses | 1,116,142 | 1,135,530 | 2,313,289 | 2,298,182 |
Lease termination and impairment charges | 11,528 | 1,471 | 15,281 | 1,949 |
Intangible asset impairment charges | 29,852 | |||
Interest expense | 50,007 | 60,102 | 100,554 | 118,372 |
Gain on debt modification, net | (5,274) | (5,274) | ||
Loss (gain) on sale of assets, net | 1,092 | (1,587) | (1,168) | (4,299) |
Total costs and expenses | 5,995,120 | 5,417,341 | 12,103,216 | 10,881,895 |
Loss from continuing operations before income taxes | (13,150) | (51,077) | (93,870) | (143,042) |
Income tax (benefit) expense | 47 | 27,628 | (7,971) | 35,002 |
Net loss from continuing operations | (13,197) | (78,705) | (85,899) | (178,044) |
Net income (loss) from discontinued operations, net of tax | (574) | 9,161 | (894) | |
Net loss | (13,197) | (79,279) | (76,738) | (178,938) |
Computation of loss attributable to common stockholders: | ||||
Loss from continuing operations attributable to common stockholders-basic and diluted | (13,197) | (78,705) | (85,899) | (178,044) |
Income (loss) from discontinued operations attributable to common stockholders-basic and diluted | (574) | 9,161 | (894) | |
Loss attributable to common stockholders-basic and diluted | $ (13,197) | $ (79,279) | $ (76,738) | $ (178,938) |
Basic and diluted loss per share: | ||||
Continuing operations | $ (0.25) | $ (1.48) | $ (1.60) | $ (3.35) |
Discontinued operations | (0.01) | 0.17 | (0.02) | |
Net basic and diluted loss per share | $ (0.25) | $ (1.49) | $ (1.43) | $ (3.37) |
CONDENSED CONSOLIDATED STATEM_2
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Aug. 29, 2020 | Aug. 31, 2019 | Aug. 29, 2020 | Aug. 31, 2019 | |
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) | ||||
Net loss | $ (13,197) | $ (79,279) | $ (76,738) | $ (178,938) |
Defined benefit pension plans: | ||||
Amortization of net actuarial losses included in net periodic pension cost, net of $0 and $0 tax expense | 912 | 415 | 1,823 | 830 |
Change in fair value of interest rate cap | 115 | (17) | 231 | (673) |
Total other comprehensive income | 1,027 | 398 | 2,054 | 157 |
Comprehensive loss | $ (12,170) | $ (78,881) | $ (74,684) | $ (178,781) |
CONDENSED CONSOLIDATED STATEM_3
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (Parenthetical) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||||
Aug. 29, 2020 | May 30, 2020 | Aug. 31, 2019 | Jun. 01, 2019 | Aug. 29, 2020 | Aug. 31, 2019 | |
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) | ||||||
Amortization of net actuarial losses included in net periodic pension cost, income tax expense | $ 0 | $ 0 | $ 0 | $ 0 | $ 0 | $ 0 |
CONDENSED CONSOLIDATED STATEM_4
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY - USD ($) shares in Thousands, $ in Thousands | Cumulative Effect, Period of Adoption, Adjustment [Member]Accumulated Deficit | Cumulative Effect, Period of Adoption, Adjustment [Member] | Common Stock | Additional Paid-In Capital | Accumulated Deficit | Accumulated Other Comprehensive Loss | Total |
Balance - beginning of period at Mar. 02, 2019 | $ (56,776) | $ (56,776) | $ 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: | |||||||
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 Mar. 02, 2019 | $ (56,776) | $ (56,776) | $ 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 | (178,938) | ||||||
Other comprehensive income: | |||||||
Changes in Defined Benefit Plans, net of tax expense | 830 | ||||||
Change in fair value of interest rate cap | (673) | ||||||
Comprehensive loss | (178,781) | ||||||
Balance - end of period at Aug. 31, 2019 | $ 54,896 | 5,885,550 | (4,948,958) | (30,902) | 960,586 | ||
BALANCE (in shares) at Aug. 31, 2019 | 54,896 | ||||||
Balance - beginning 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 | ||||||
Increase (Decrease) in Stockholders' Deficit | |||||||
Net loss | (79,279) | (79,279) | |||||
Other comprehensive income: | |||||||
Changes in Defined Benefit Plans, net of tax expense | 415 | 415 | |||||
Change in fair value of interest rate cap | (17) | (17) | |||||
Comprehensive loss | (78,881) | ||||||
Exchange of restricted shares for taxes | $ (134) | (656) | (790) | ||||
Exchange of restricted shares for taxes (in shares) | (134) | ||||||
Issuance of restricted stock | $ 1,257 | (1,257) | |||||
Issuance of restricted stock (in shares) | 1,257 | ||||||
Cancellation of restricted stock | $ (60) | 60 | |||||
Cancellation of restricted stock (in shares) | (60) | ||||||
Amortization of restricted stock balance | 5,003 | 5,003 | |||||
Stock-based compensation expense | 37 | 37 | |||||
Balance - end of period at Aug. 31, 2019 | $ 54,896 | 5,885,550 | (4,948,958) | (30,902) | 960,586 | ||
BALANCE (in shares) at Aug. 31, 2019 | 54,896 | ||||||
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: | |||||||
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 | ||||||
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 | (76,738) | ||||||
Other comprehensive income: | |||||||
Changes in Defined Benefit Plans, net of tax expense | 1,823 | ||||||
Change in fair value of interest rate cap | 231 | ||||||
Comprehensive loss | (74,684) | ||||||
Balance - end of period at Aug. 29, 2020 | $ 55,224 | 5,893,590 | (5,298,932) | (46,844) | 603,038 | ||
BALANCE (in shares) at Aug. 29, 2020 | 55,224 | ||||||
Balance - beginning 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 | ||||||
Increase (Decrease) in Stockholders' Deficit | |||||||
Net loss | (13,197) | (13,197) | |||||
Other comprehensive income: | |||||||
Changes in Defined Benefit Plans, net of tax expense | 912 | 912 | |||||
Change in fair value of interest rate cap | 115 | 115 | |||||
Comprehensive loss | (12,170) | ||||||
Exchange of restricted shares for taxes | $ (131) | (1,872) | (2,003) | ||||
Exchange of restricted shares for taxes (in shares) | (131) | ||||||
Issuance of restricted stock | $ 717 | (717) | |||||
Issuance of restricted stock (in shares) | 717 | ||||||
Cancellation of restricted stock | $ (37) | 37 | |||||
Cancellation of restricted stock (in shares) | (37) | ||||||
Amortization of restricted stock balance | 3,272 | 3,272 | |||||
Stock-based compensation expense | 150 | 150 | |||||
Balance - end of period at Aug. 29, 2020 | $ 55,224 | $ 5,893,590 | $ (5,298,932) | $ (46,844) | $ 603,038 | ||
BALANCE (in shares) at Aug. 29, 2020 | 55,224 |
CONDENSED CONSOLIDATED STATEM_5
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (Parenthetical) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||||
Aug. 29, 2020 | May 30, 2020 | Aug. 31, 2019 | Jun. 01, 2019 | Aug. 29, 2020 | Aug. 31, 2019 | |
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY | ||||||
Changes in defined benefit plans, tax expense | $ 0 | $ 0 | $ 0 | $ 0 | $ 0 | $ 0 |
CONDENSED CONSOLIDATED STATEM_6
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands | 6 Months Ended | |
Aug. 29, 2020 | Aug. 31, 2019 | |
Operating activities: | ||
Net loss | $ (76,738) | $ (178,938) |
Net income (loss) from discontinued operations, net of tax | 9,161 | (894) |
Net loss from continuing operations | (85,899) | (178,044) |
Adjustments to reconcile to net cash used in operating activities of continuing operations : | ||
Depreciation and amortization | 166,220 | 166,970 |
Lease termination and impairment charges | 15,281 | 1,949 |
Intangible asset impairment charges | 29,852 | |
LIFO (credit) charge | (20,816) | 14,993 |
Gain on sale of assets, net | (1,168) | (4,299) |
Stock-based compensation expense | 5,810 | 10,092 |
Gain on debt modification, net | (5,274) | |
Changes in deferred taxes | 26,979 | |
Changes in operating assets and liabilities: | ||
Accounts receivable | (636,555) | (153,269) |
Inventories | 4,473 | (111,990) |
Accounts payable | 1,948 | (85,623) |
Operating lease right-of-use assets and operating lease liabilities | (18,493) | 34,982 |
Other assets | 79,513 | (44,674) |
Other liabilities | (11,484) | (8,104) |
Net cash used in operating activities of continuing operations | (476,592) | (330,038) |
Investing activities: | ||
Payments for property, plant and equipment | (63,085) | (84,060) |
Intangible assets acquired | (22,572) | (15,708) |
Proceeds from insured loss | 12,500 | |
Proceeds from dispositions of assets and investments | 5,910 | 4,423 |
Proceeds from sale-leaseback transactions, ASC842 | 8,461 | |
Net cash used in investing activities of continuing operations | (58,786) | (95,345) |
Financing activities: | ||
Proceeds from issuance of long-term debt | 849,918 | |
Net proceeds from revolver | 650,000 | 375,000 |
Principal payments on long-term debt | (1,056,182) | (3,451) |
Change in zero balance cash accounts | (26,829) | 54,712 |
Payments for taxes related to net share settlement of equity awards | (2,101) | (986) |
Financing fees paid for early debt redemption | (2,399) | |
Deferred financing costs paid | (14,600) | (315) |
Net cash provided by financing activities of continuing operations | 397,807 | 424,960 |
Cash flows from discontinued operations: | ||
Operating activities of discontinued operations | (82,189) | (2,272) |
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 | (1,749) |
Decrease in cash and cash equivalents | (125,450) | (2,172) |
Cash and cash equivalents, beginning of period | 218,180 | 144,353 |
Cash and cash equivalents, end of period | $ 92,730 | $ 142,181 |
Basis of Presentation and Signi
Basis of Presentation and Significant Accounting Policies | 6 Months Ended |
Aug. 29, 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 and twenty-six week periods ended August 29, 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 and twenty-six week periods ended August 29, 2020 and August 31, 2019: August 29, August 31, August 29, August 31, 2020 2019 2020 2019 In thousands (13 weeks) (13 weeks) (26 weeks) (26 weeks) Retail Pharmacy segment: Pharmacy sales $ 2,660,462 $ 2,561,468 $ 5,286,005 $ 5,137,222 Front-end sales 1,322,932 1,251,489 2,788,399 2,516,850 Other revenue 34,518 35,147 66,779 58,840 Total Retail Pharmacy segment 4,017,912 3,848,104 8,141,183 7,712,912 Pharmacy Services segment 2,038,378 1,579,069 4,015,624 3,145,361 Intersegment elimination (74,320) (60,909) (147,461) (119,420) Total revenue $ 5,981,970 $ 5,366,264 $ 12,009,346 $ 10,738,853 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 August 29, 2020, the Company recognized $17,286 of deferred contract liability into revenue. The Retail Pharmacy segment had accrued contract liabilities of $23,803 as of August 29, 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. The existing wellness+ program will be terminated on December 31, 2020. Members that had earned a discount through June 30, 2020 will be eligible to receive that discount on purchases made through December, 31 2020. Selling, General and Administrative Expenses During the thirteen week period ended August 29, 2020, the Company changed its compensated absence policy for certain associates. Under the revised policy, benefits are earned and used within the same year, whereas previously benefits earned in one year could be used within a succeeding year. The impact of this change resulted in a reduction in our associate paid time off “PTO” accrual of approximately $39,800 during the thirteen week period ended August 29, 2020. Recently Adopted Accounting Pronouncements 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 December 2019, the FASB issued ASU 2019-12, Simplifying the Accounting for Income Taxes (Topic 740) for calculating income taxes in the interim period. The amendments also improve consistent application of and simplify GAAP for other areas of Topic 740 by clarifying and amending existing guidance. This ASU is effective for fiscal years ending after December 15, 2020. 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. In August 2018, the FASB issued ASU 2018-14, Compensation - Retirement benefits (Topic 715-20) |
Restructuring
Restructuring | 6 Months Ended |
Aug. 29, 2020 | |
Restructuring | |
Restructuring | 2. Restructuring Beginning in fiscal 2019, the Company initiated a series of restructuring plans designed to reorganize its executive management team, reduce managerial layers, and consolidate roles. In March 2020, the Company announced the details of its RxEvolution strategy, which includes building tools to work with regional health plans to improve patient health outcomes, rationalizing SKU’s in its front-end offering to free up working capital and update its merchandise assortment, assessing its pricing and promotional strategy, rebranding its retail pharmacy and pharmacy services business, launching its Store of the Future format and further reducing SG&A and headcount, including integrating certain back office functions in the Pharmacy Services segment both within the segment and across Rite Aid. For the thirteen week period ended August 29, 2020, the Company incurred total restructuring-related costs of $23,186, 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) $ 8,049 $ 2,539 $ 10,588 Non-executive retention costs associated with the March 2019 reorganization (b) 281 102 383 Professional and other fees relating to restructuring activities (c) 12,111 104 12,215 Total restructuring-related costs $ 20,441 $ 2,745 $ 23,186 For the thirteen week period ended August 31, 2019, the Company incurred total restructuring-related costs of $25,145, 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) $ 7,870 $ 511 $ 8,381 Non-executive retention costs associated with the March 2019 reorganization (b) 2,830 1,257 4,087 Professional and other fees relating to restructuring activities (c) 10,355 2,322 12,677 Total restructuring-related costs $ 21,055 $ 4,090 $ 25,145 For the twenty-six week period ended August 29, 2020, the Company incurred total restructuring-related costs of $58,921, of which $33,158 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) $ 12,608 $ 2,791 $ 15,399 Non-executive retention costs associated with the March 2019 reorganization (b) 1,136 (124) 1,012 Professional and other fees relating to restructuring activities (c) 16,643 104 16,747 SKU optimization charges (d) 25,763 — 25,763 Total restructuring-related costs $ 56,150 $ 2,771 $ 58,921 In addition, during the thirteen week period ended May 30, 2020, the Company incurred intangible asset impairment charges of $29,852 in connection with its rebranding initiatives as described in Note 10, Goodwill and Other Intangible Assets For the twenty-six week period ended August 31, 2019, the Company incurred total restructuring-related costs of $68,495, 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) $ 33,142 $ 2,315 $ 35,457 Non-executive retention costs associated with the March 2019 reorganization (b) 7,329 3,422 10,751 Professional and other fees relating to restructuring activities (c) 19,965 2,322 22,287 Total restructuring-related costs $ 60,436 $ 8,059 $ 68,495 A summary of activity for the twenty-six week period ended August 29, 2020 in the restructuring-related liabilities associated with the programs noted above, which is included in accrued salaries, wages and other current liabilities, is as follows: Severance and related Professional and costs (a) Retention costs (b) other fees (c) Total Balance at 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 Additions charged to expense 10,588 383 12,215 23,186 Cash payments (9,077) (7,444) (12,554) (29,075) Balance at August 29, 2020 $ 29,495 $ — $ 1,541 $ 31,036 (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. The Company anticipates incurring approximately $75,000 during fiscal 2021 in connection with its continued restructuring activities. |
Asset Sale to WBA
Asset Sale to WBA | 6 Months Ended |
Aug. 29, 2020 | |
Asset Sale to WBA | |
Asset Sale to WBA | 3. Asset Sale to WBA On September 18, 2017, the Company entered into the Amended and Restated Asset Purchase Agreement with 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 was 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 and twenty-six week periods ended August 29, 2020 were $4,162 and $35,167, respectively, of which $0 is included in Accounts receivable, net. Total billings for these items during the thirteen and twenty-six week periods ended August 31, 2019 were $913,965 and $2,106,756, respectively, of which $196,002 is included in Accounts receivable, net. The Company recorded WBA TSA fees of $388 and $1,467 during the thirteen and twenty-six week periods ended August 29, 2020, respectively, which are reflected as a reduction to selling, general and administrative expenses. The Company recorded WBA TSA fees of $11,308 and $25,533 during the thirteen and twenty-six week periods ended August 31, 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. On July 14, 2020, the Company entered into a letter agreement with WBA to terminate the services under the TSA, other than certain specified services relating to real estate, accounting, tax, and accounts receivable systems that will continue until no later than October 17, 2020 and certain specified services relating to human resources to be performed after October 17, 2020. 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: August 29, 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: August 29, August 31, August 29, August 31, 2020 2019 2020 2019 (13 weeks) (13 weeks) (26 weeks) (26 weeks) Revenues $ — $ (36) $ 174 $ (124) Costs and expenses: Cost of revenues(a) — 197 8 461 Selling, general and administrative expenses(a) — 379 871 866 Gain on sale of assets, net — — (14,149) (522) — 576 (13,270) 805 (Loss) income from discontinued operations before income taxes — (612) 13,444 (929) Income tax (benefit) expense — (38) 4,283 (35) Net (loss) income from discontinued operations, net of tax $ — $ (574) $ 9,161 $ (894) (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 | 6 Months Ended |
Aug. 29, 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 Twenty-Six Week Period Ended August 29, August 31, August 29, August 31, 2020 2019 2020 2019 Basic and diluted loss per share: Numerator: Net loss from continuing operations $ (13,197) $ (78,705) $ (85,899) $ (178,044) Net (loss) income from discontinued operations — (574) 9,161 (894) Loss attributable to common stockholders— basic and diluted $ (13,197) $ (79,279) $ (76,738) $ (178,938) Denominator: Basic weighted average shares 53,573 53,041 53,528 53,084 Outstanding options and restricted shares, net — — — — Diluted weighted average shares 53,573 53,041 53,528 53,084 Basic and diluted (loss) income per share: Continuing operations $ (0.25) $ (1.48) $ (1.60) $ (3.35) Discontinued operations - (0.01) 0.17 (0.02) Net basic and diluted loss per share $ (0.25) $ (1.49) $ (1.43) $ (3.37) Due to their antidilutive effect, 798 and 1,367 potential common shares related to stock options have been excluded from the computation of diluted income (loss) per share for the thirteen and twenty-six week periods ended August 29, 2020 and August 31, 2019, respectively. Also, excluded from the computation of diluted income (loss) per share for the thirteen and twenty-six week periods ended August 29, 2020 and August 31, 2019 are restricted shares of 1,487 and 1,628, respectively, which are included in shares outstanding. |
Lease Termination and Impairmen
Lease Termination and Impairment Charges | 6 Months Ended |
Aug. 29, 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 Twenty-Six Week Period Ended Ended August 29, August 31, August 29, August 31, 2020 2019 2020 2019 Impairment charges $ 9,230 $ 1,289 $ 11,433 $ 1,412 Lease termination charges — — — — Facility exit charges 2,298 182 3,848 537 $ 11,528 $ 1,471 $ 15,281 $ 1,949 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 twenty-six week period ended August 29, 2020, long-lived assets from continuing operations with a carrying value of $12,654, were written down to their fair value of $1,221, resulting in an impairment charge of $11,433 of which $9,230 relates to the thirteen week period ended August 29, 2020. Of the $11,433, $4,779 relates to a terminated software project and the replacement of existing software, $4,995 relates to the closure of the remaining RediClinic operations and $1,659 relates to store and corporate assets. During the twenty-six week period ended August 31, 2019, long-lived assets from continuing operations with a carrying value of $1,412, primarily store assets, were written down to their fair value of $0, resulting in an impairment charge of $1,412 of which $1,289 relates to the thirteen week period ended August 31, 2019. 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 August 29, 2020 and August 31, 2019: Fair Values Total as of Charges Level 1 Level 2 Level 3 Impairment Date August 29, 2020 Long-lived assets held for use $ — $ — $ 1,071 $ 1,071 $ (11,416) Long-lived assets held for sale $ — $ 150 $ — $ 150 $ (17) Total $ — $ 150 $ 1,071 $ 1,221 $ (11,433) Fair Values Total as of Charges Level 1 Level 2 Level 3 Impairment Date August 31, 2019 Long-lived assets held for use $ — $ — $ — $ — $ (1,412) Long-lived assets held for sale $ — $ — $ — $ — $ — Total $ — $ — $ — $ — $ (1,412) 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 Twenty-Six Week Period Ended Ended August 29, August 31, August 29, August 31, 2020 2019 2020 2019 Balance—beginning of period $ 2,170 $ 9,333 $ 2,253 $ 124,046 Existing Topic 420 liabilities eliminated by recording a reduction to the ROU asset — — — (112,288) Changes in assumptions about future sublease income 495 — 495 — Cash payments, net of sublease income (60) (2,992) (143) (5,417) Balance—end of period $ 2,605 $ 6,341 $ 2,605 $ 6,341 |
Fair Value Measurements
Fair Value Measurements | 6 Months Ended |
Aug. 29, 2020 | |
Fair Value Measurements | |
Fair Value Measurements | 6. Fair Value Measurements The Company utilizes the three-level valuation hierarchy as described in Note 5, 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 August 29, 2020 and February 29, 2020, the Company has $7,020 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 $3,506,708 and $3,544,160, respectively, as of August 29, 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 | 6 Months Ended |
Aug. 29, 2020 | |
Income Taxes | |
Income Taxes | 7. Income Taxes The Company recorded an income tax expense from continuing operations of $47 and $27,628 for the thirteen week periods ended August 29, 2020 and August 31, 2019, respectively. The Company recorded an income tax benefit from continuing operations of $7,971 and an income tax expense from continuing operations of $35,002 for the twenty-six week periods ended August 29, 2020 and August 31, 2019, respectively. The effective tax rate for the thirteen week periods ended August 29, 2020 and August 31, 2019 was (0.4)% and (54.1)%, respectively. The effective tax rate for the twenty-six week periods ended August 29, 2020 and August 31, 2019 was 8.5% and (24.5)%, respectively. The effective tax rate for the thirteen and twenty-six week periods ended August 29, 2020 was net of an adjustment of 7.6% and (8.1)%, respectively, to adjust the valuation allowance against deferred tax assets. The effective tax rate for the thirteen and twenty-six week periods ended August 31, 2019 was net of an adjustment of (78.4)% and (50.2)%, respectively, to increase 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 $1,680,103 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 August 29, 2020 and February 29, 2020, respectively. |
Medicare Part D
Medicare Part D | 6 Months Ended |
Aug. 29, 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 $16,622 as of June 30, 2020. EIC was in excess of the minimum required amounts in these states as of August 29, 2020. The Company has recorded estimates of various assets and liabilities arising from its participation in the Medicare Part D program based on information in its claims management and enrollment systems. Significant estimates arising from its participation in this program include: (i) estimates of low-income cost subsidies, reinsurance amounts, and coverage gap discount amounts ultimately payable to CMS based on a detailed claims reconciliation that will occur in the following year; (ii) an estimate of amounts receivable from CMS under a risk-sharing feature of the Medicare Part D program design, referred to as the risk corridor and (iii) estimates for claims that have been reported and are in the process of being paid or contested and for our estimate of claims that have been incurred but have not yet been reported. On February 19, 2020, the Company entered into a receivable purchase agreement (the “Receivable Purchase Agreement”) with Bank of America, N.A. (the “Purchaser”). Pursuant to the terms and conditions set forth in the Receivable Purchase Agreement, the Company sold $501,422 of its calendar 2019 CMS receivable for $484,547, of which $449,949 was received on February 19, 2020. As of August 29, 2020, $30,227, which is included in accounts receivable, net, 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 August 29, 2020, accounts receivable, net included $513,009 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 | 6 Months Ended |
Aug. 29, 2020 | |
Manufacturer Rebates Receivables | |
Manufacturer Rebates Receivables | 9. Manufacturer Rebates Receivables The Pharmacy Services Segment has manufacturer rebates receivables of $607,025 and $530,451 included in Accounts receivable, net, as of August 29, 2020 and February 29, 2020, respectively. |
Goodwill and Other Intangible A
Goodwill and Other Intangible Assets | 6 Months Ended |
Aug. 29, 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 and twenty-six week periods ended August 29, 2020. At August 29, 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 August 29, 2020 and February 29, 2020. August 29, 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) $ 192,272 $ (168,324) $ 23,948 3 years $ 186,183 $ (163,575) $ 22,608 3 years Prescription files 964,532 (884,237) 80,295 3 years 950,887 (867,430) 83,457 3 years Customer relationships(a) 388,000 (247,404) 140,596 11 years 388,000 (231,015) 156,985 12 years CMS license 57,500 (11,921) 45,579 20 years 57,500 (10,772) 46,728 21 years Claims adjudication and other developed software 58,985 (43,673) 15,312 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 $ 1,672,789 $ (1,367,059) 305,730 $ 1,673,155 $ (1,333,164) $ 339,991 Trademarks — — — Indefinite 19,500 — 19,500 Indefinite Total $ 1,672,789 $ (1,367,059) $ 305,730 $ 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 rebranded 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 $22,695 and $47,115 for the thirteen and twenty-six week periods ended |
Indebtedness and Credit Agreeme
Indebtedness and Credit Agreements | 6 Months Ended |
Aug. 29, 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 August 29, 2020 and February 29, 2020: August 29, February 29, 2020 2020 Secured Debt: Senior secured revolving credit facility due December 2023 ($1,300,000 and $650,000 face value less unamortized debt issuance costs of $16,635 and $19,167) $ 1,283,365 $ 630,833 FILO term loan due December 2023 ($450,000 face value less unamortized debt issuance costs of $2,638 and $3,046) 447,362 446,954 1,730,727 1,077,787 Second Lien Secured Debt: 7.5% senior notes due July 2025 ($600,000 face value less unamortized debt issuance costs of $9,901 and $10,927) 590,099 589,073 8.0% senior notes due November 2026 ($849,918 and $0 face value less unamortized debt issuance costs of $19,710 and $0) 830,208 — 1,420,307 589,073 Guaranteed Unsecured Debt: 6.125% senior notes due April 2023 ($90,808 and $1,153,490 face value less unamortized debt issuance costs of $555 and $8,430) 90,253 1,145,060 90,253 1,145,060 Unguaranteed Unsecured Debt: 7.70% notes due February 2027 ($237,386 face value less unamortized debt issuance costs of $842 and $908) 236,544 236,478 6.875% fixed-rate senior notes due December 2028 ($29,001 face value less unamortized debt issuance costs of $124 and $131) 28,877 28,870 265,421 265,348 Lease financing obligations 24,837 28,166 Total debt 3,531,545 3,105,434 Current maturities of long-term debt and lease financing obligations (6,902) (8,840) Long-term debt and lease financing obligations, less current maturities $ 3,524,643 $ 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 August 29, 2020, the Company had $1,750,000 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 $1,297,061. 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. 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. 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 August 29, 2020, the Company’s fixed charge coverage ratio was greater than 1.00 to 1.00, and the Company was in compliance with the Credit Agreement’s financial covenant. The Credit Agreement also contains covenants which place restrictions on the incurrence of debt, the payments of dividends, the making of investments, sale of assets, mergers and acquisitions and the granting of liens. The Credit Agreement provides for customary events of default including nonpayment, misrepresentation, breach of covenants and bankruptcy. It is also an event of default if the Company fails to make any required payment on debt having a principal amount in excess of $50.0 million or any event occurs that enables, or which with the giving of notice or the lapse of time would enable, the holder of such debt to accelerate the maturity or require the repayment, repurchase, redemption or defeasance of such debt. Fiscal 2020 and 2021 Transactions 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. On July 10, 2020, the Company increased the maximum amount of 6.125% Notes that may be accepted for exchange from $750,000 to $1,125,000 and, on July 24, 2020, the Company announced that it accepted for payment $1,062,682 aggregate principal amount of the 6.125% Notes in exchange for $849,918 aggregate principal amount of newly issued 8.0% Notes and $206,373 in cash. In connection therewith, the Company recorded a gain on debt modification of $5,274 which is included in the results of operations and cash flows of continuing operations. The 8.0% Notes are secured on an equal and ratable basis by the same assets that secure the 7.500% Notes. The 8.0% Notes are 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. On July 9, 2020, following the receipt of the requisite number of consents, the Company entered into a supplemental indenture, by and among the Company, the guarantors thereto and The Bank of New York Mellon Trust Company, N.A., the trustee of the 6.125% Notes, which modified 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—$1,840,808; 2025—$0 and $1,716,305 thereafter. 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 | 6 Months Ended |
Aug. 29, 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 and twenty-six week Thirteen Week Period Ended Twenty-Six Week Period Ended August 29, 2020 August 31, 2019 August 29, 2020 August 31, 2019 Operating lease cost $ 160,898 $ 164,002 $ 322,764 $ 328,985 Financing lease cost: Amortization of right-of-use asset 1,093 1,508 2,224 3,044 Interest on long-term finance lease liabilities 643 856 1,332 1,762 Total finance lease costs $ 1,736 $ 2,364 $ 3,556 $ 4,806 Short-term lease costs 284 115 437 116 Variable lease costs 42,681 42,768 85,129 83,314 Less: sublease income (3,887) (5,407) (8,019) (11,158) Net lease cost $ 201,712 $ 203,842 $ 403,867 $ 406,063 Supplemental cash flow information related to leases for the twenty-six week periods ended August 29, 2020 and August 31, 2019: Twenty-Six Week Period Ended August 29, 2020 August 31, 2019 Cash paid for amounts included in the measurement of lease liabilities: Operating cash flows paid for operating leases $ 339,486 $ 293,884 Operating cash flows paid for interest portion of finance leases 1,332 1,762 Financing cash flows paid for principal portion of finance leases 2,446 4,453 Right-of-use assets obtained in exchange for lease obligations: Operating leases 194,843 158,463 Finance leases — — Supplemental balance sheet information related to leases as of August 29, 2020 and February 29, 2020 (in thousands, except lease term and discount rate): August 29, February 29, 2020 2020 Operating leases: Operating lease right-of-use asset $ 2,860,710 $ 2,903,256 Short-term operating lease liabilities $ 487,844 $ 490,161 Long-term operating lease liabilities 2,657,891 2,710,347 Total operating lease liabilities $ 3,145,735 $ 3,200,508 Finance leases: Property, plant and equipment, net $ 17,210 $ 19,904 Current maturities of long-term debt and lease financing obligations $ 6,902 $ 8,840 Lease financing obligations, less current maturities 17,935 19,326 Total finance lease liabilities $ 24,837 $ 28,166 Weighted average remaining lease term Operating leases 7.6 7.8 Finance leases 8.9 8.9 Weighted average discount rate Operating leases 6.1 % 6.1 % Finance leases 10.1 % 10.2 % The following table summarizes the maturity of lease liabilities under finance and operating leases as of August 29, 2020: August 29, 2020 Finance Operating Fiscal year Leases Leases (1) Total 2021 (remaining twenty-six weeks) $ 6,560 $ 334,473 $ 341,033 2022 6,531 637,584 644,115 2023 3,723 586,575 590,298 2024 3,530 526,524 530,054 2025 3,163 430,907 434,070 Thereafter 15,181 1,440,520 1,455,701 Total lease payments 38,688 3,956,583 3,995,271 Less: imputed interest (13,851) (810,848) (824,699) Total lease liabilities $ 24,837 $ 3,145,735 $ 3,170,572 (1) – Future operating lease payments have not been reduced by minimum sublease rentals of $43 million due in the future under noncancelable leases. During the thirteen and twenty-six week August 31, 2019 |
Stock Options and Stock Awards
Stock Options and Stock Awards | 6 Months Ended |
Aug. 29, 2020 | |
Stock Option and Stock Award Plans | |
Stock Options and Stock Awards | 13. Stock Options and Stock Awards The Company recognizes share-based compensation expense over the requisite service period of the award, net of an estimate for the impact of forfeitures. Operating results for the twenty-six week periods ended August 29, 2020 and August 31, 2019 include $5,810 and $10,092, respectively, of compensation costs related to the Company’s stock-based compensation arrangements. The Company provides certain of its associates with performance based incentive plans under which the associates will receive a certain number of shares of the Company’s common stock or cash based on the Company meeting certain financial and performance goals. If such goals are not met, no stock-based compensation expense is recognized and any recognized stock-based compensation expense is reversed. During the twenty-six week periods ended August 29, 2020 and August 31, 2019, the Company incurred expense of $513 compared to a benefit of $348 related to these performance based incentive plans, respectively, which is recorded as a component of stock-based compensation expense. The total number and type of newly awarded grants and the related weighted average fair value for the twenty-six week periods ended August 29, 2020 and August 31, 2019 are as follows: August 29, 2020 August 31, 2019 Shares Weighted Average Fair Value Shares Weighted Average Fair Value Stock options granted — $ N/A 503 $ 3.54 Restricted stock awards granted 736 $ 17.97 1,232 $ 7.60 Total awards 736 1,735 Typically, stock options granted vest, and are subsequently exercisable in equal annual installments over a four-year period for employees. Restricted stock awards typically vest in equal annual installments over a three-year period. The Company calculates the fair value of stock options using the Black-Scholes-Merton option pricing model. As of August 29, 2020, the total unrecognized pre-tax compensation costs related to unvested stock options and restricted stock awards granted, net of estimated forfeitures and the weighted average period of cost amortization are as follows: August 29, 2020 Unvested Unvested Unvested stock restricted performance options stock shares Unrecognized pre-tax costs $ 1,617 $ 17,431 $ 7,707 Weighted average amortization period 2.8 years 2.5 years 2.5 years |
Retirement Plans
Retirement Plans | 6 Months Ended |
Aug. 29, 2020 | |
Defined Benefit Plans and Other Postretirement Benefit Plans Disclosures [Abstract] | |
Retirement Plans | 14. Retirement Plans Net periodic pension expense for the thirteen and twenty-six August 31, 2019 Defined Benefit Defined Benefit Pension Plan Pension Plan Thirteen Week Period Ended Twenty-Six Week Period Ended August 29, August 31, August 29, August 31, 2020 2019 2020 2019 Service cost $ 144 $ 143 $ 288 $ 285 Interest cost 1,199 1,556 2,398 3,111 Expected return on plan assets (1,177) (1,214) (2,354) (2,427) Amortization of unrecognized net loss 912 415 1,823 830 Net periodic pension expense $ 1,078 $ 900 $ 2,155 $ 1,799 During the thirteen and twenty-six week |
Segment Reporting
Segment Reporting | 6 Months Ended |
Aug. 29, 2020 | |
Segment Reporting | |
Segment Reporting | 15. 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, 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 August 29, 2020: Total Assets $ 6,947,566 $ 2,688,478 $ (15,845) $ 9,620,199 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 August 29, 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 $15,845 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 and twenty-six week periods ended August 29, 2020 and August 31, 2019 Retail Pharmacy Intersegment Pharmacy Services Eliminations(1) Consolidated Thirteen Week Period Ended August 29, 2020: Revenues $ 4,017,912 $ 2,038,378 $ (74,320) $ 5,981,970 Gross Profit 1,061,913 98,432 — 1,160,345 Adjusted EBITDA(2) 122,340 29,263 — 151,603 Additions to property and equipment and intangible assets 42,121 4,362 — 46,483 August 31, 2019: Revenues $ 3,848,104 $ 1,579,069 $ (60,909) $ 5,366,264 Gross Profit 1,032,444 111,995 — 1,144,439 Adjusted EBITDA(2) 92,673 41,517 — 134,190 Additions to property and equipment and intangible assets 43,328 7,249 — 50,577 Twenty-Six Week Period Ended August 29, 2020: Revenues $ 8,141,183 $ 4,015,624 $ (147,461) $ 12,009,346 Gross Profit 2,143,449 215,215 — 2,358,664 Adjusted EBITDA(2) 185,322 73,673 — 258,995 Additions to property and equipment and intangible assets 78,728 6,929 — 85,657 August 31, 2019: Revenues $ 7,712,912 $ 3,145,361 $ (119,420) $ 10,738,853 Gross Profit 2,062,939 208,223 — 2,271,162 Adjusted EBITDA(2) 176,681 67,856 — 244,537 Additions to property and equipment and intangible assets 87,572 12,196 — 99,768 (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 and twenty-six August 31, 2019 August 29, August 31, August 29, August 31, 2020 2019 2020 2019 (13 weeks) (13 weeks) (26 weeks) (26 weeks) Net loss from continuing operations $ (13,197) $ (78,705) $ (85,899) $ (178,044) Interest expense 50,007 60,102 100,554 118,372 Income tax expense (benefit) 47 27,628 (7,971) 35,002 Depreciation and amortization 87,117 83,044 166,220 166,970 LIFO (credit) charge (8,750) 7,504 (20,816) 14,993 Lease termination and impairment charges 11,528 1,471 15,281 1,949 Intangible asset impairment charges — — 29,852 — Gain on debt modification, net (5,274) — (5,274) — Merger and Acquisition-related costs — 514 — 3,599 Stock-based compensation expense 3,936 4,712 5,810 10,092 Restructuring-related costs 23,186 25,145 58,921 68,495 Inventory write-downs related to store closings 1,058 3,149 1,892 3,990 Loss (gain) on sale of assets, net 1,092 (1,587) (1,168) (4,299) Other 853 1,213 1,593 3,418 Adjusted EBITDA from continuing operations $ 151,603 $ 134,190 $ 258,995 $ 244,537 |
Commitments, Contingencies and
Commitments, Contingencies and Guarantees | 6 Months Ended |
Aug. 29, 2020 | |
Commitments, Contingencies and Guarantees | |
Commitments, Contingencies and Guarantees | 16. 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 or advanced; (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 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 2012, qui tam plaintiff, Loyd F. Schmuckley (“Relator”) filed a complaint under seal against the Company alleging that it failed to comply with certain requirements of California’s Medicaid program between 2007 and 2014. Specifically, the Relator alleged that the Company did not perform special verification and documentation for certain medications known as “Code 1” drugs. While the complaint remained under seal, the United States Department of Justice conducted an extensive investigation and ultimately declined to intervene. Although numerous states declined to intervene, in September 2017, the State of California filed a complaint in intervention. At this stage of the proceedings, the Company is not able to either predict the outcome of this matter or estimate a potential range of loss with respect to this matter, and is defending itself against these claims. 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 more than a thousand 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 | 6 Months Ended |
Aug. 29, 2020 | |
Supplementary Cash Flow Data | |
Supplementary Cash Flow Data | 17. Supplementary Cash Flow Data Twenty-Six Week Period Ended August 29, 2020 August 31, 2019 Cash paid for interest(a) $ 88,744 $ 110,401 Cash payments for income taxes, net(a) $ 6,415 $ 4,059 Equipment financed under capital leases $ 428 $ 2,077 Gross borrowings from revolver(a) $ 4,354,000 $ 1,524,000 Gross repayments to revolver(a) $ 3,704,000 $ 1,149,000 (a) — Amounts are presented on a total company basis. Significant components of cash used in Other Liabilities of $11,484 for the twenty-six |
Basis of Presentation and Sig_2
Basis of Presentation and Significant Accounting Policies (Policies) | 6 Months Ended |
Aug. 29, 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 and twenty-six week periods ended August 29, 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 and twenty-six week periods ended August 29, 2020 and August 31, 2019: August 29, August 31, August 29, August 31, 2020 2019 2020 2019 In thousands (13 weeks) (13 weeks) (26 weeks) (26 weeks) Retail Pharmacy segment: Pharmacy sales $ 2,660,462 $ 2,561,468 $ 5,286,005 $ 5,137,222 Front-end sales 1,322,932 1,251,489 2,788,399 2,516,850 Other revenue 34,518 35,147 66,779 58,840 Total Retail Pharmacy segment 4,017,912 3,848,104 8,141,183 7,712,912 Pharmacy Services segment 2,038,378 1,579,069 4,015,624 3,145,361 Intersegment elimination (74,320) (60,909) (147,461) (119,420) Total revenue $ 5,981,970 $ 5,366,264 $ 12,009,346 $ 10,738,853 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 August 29, 2020, the Company recognized $17,286 of deferred contract liability into revenue. The Retail Pharmacy segment had accrued contract liabilities of $23,803 as of August 29, 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. The existing wellness+ program will be terminated on December 31, 2020. Members that had earned a discount through June 30, 2020 will be eligible to receive that discount on purchases made through December, 31 2020. |
Selling, General and Administrative Expenses | Selling, General and Administrative Expenses During the thirteen week period ended August 29, 2020, the Company changed its compensated absence policy for certain associates. Under the revised policy, benefits are earned and used within the same year, whereas previously benefits earned in one year could be used within a succeeding year. The impact of this change resulted in a reduction in our associate paid time off “PTO” accrual of approximately $39,800 during the thirteen week period ended August 29, 2020. |
Recently Adopted Accounting Pronouncements | Recently Adopted Accounting Pronouncements 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 December 2019, the FASB issued ASU 2019-12, Simplifying the Accounting for Income Taxes (Topic 740) for calculating income taxes in the interim period. The amendments also improve consistent application of and simplify GAAP for other areas of Topic 740 by clarifying and amending existing guidance. This ASU is effective for fiscal years ending after December 15, 2020. 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. In August 2018, the FASB issued ASU 2018-14, Compensation - Retirement benefits (Topic 715-20) |
Basis of Presentation and Sig_3
Basis of Presentation and Significant Accounting Policies (Tables) | 6 Months Ended |
Aug. 29, 2020 | |
Basis of Presentation | |
Schedule of revenues | August 29, August 31, August 29, August 31, 2020 2019 2020 2019 In thousands (13 weeks) (13 weeks) (26 weeks) (26 weeks) Retail Pharmacy segment: Pharmacy sales $ 2,660,462 $ 2,561,468 $ 5,286,005 $ 5,137,222 Front-end sales 1,322,932 1,251,489 2,788,399 2,516,850 Other revenue 34,518 35,147 66,779 58,840 Total Retail Pharmacy segment 4,017,912 3,848,104 8,141,183 7,712,912 Pharmacy Services segment 2,038,378 1,579,069 4,015,624 3,145,361 Intersegment elimination (74,320) (60,909) (147,461) (119,420) Total revenue $ 5,981,970 $ 5,366,264 $ 12,009,346 $ 10,738,853 |
Restructuring (Tables)
Restructuring (Tables) | 6 Months Ended |
Aug. 29, 2020 | |
Restructuring | |
Schedule of restructuring-related costs | For the thirteen week period ended August 29, 2020, the Company incurred total restructuring-related costs of $23,186, 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) $ 8,049 $ 2,539 $ 10,588 Non-executive retention costs associated with the March 2019 reorganization (b) 281 102 383 Professional and other fees relating to restructuring activities (c) 12,111 104 12,215 Total restructuring-related costs $ 20,441 $ 2,745 $ 23,186 For the thirteen week period ended August 31, 2019, the Company incurred total restructuring-related costs of $25,145, 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) $ 7,870 $ 511 $ 8,381 Non-executive retention costs associated with the March 2019 reorganization (b) 2,830 1,257 4,087 Professional and other fees relating to restructuring activities (c) 10,355 2,322 12,677 Total restructuring-related costs $ 21,055 $ 4,090 $ 25,145 For the twenty-six week period ended August 29, 2020, the Company incurred total restructuring-related costs of $58,921, of which $33,158 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) $ 12,608 $ 2,791 $ 15,399 Non-executive retention costs associated with the March 2019 reorganization (b) 1,136 (124) 1,012 Professional and other fees relating to restructuring activities (c) 16,643 104 16,747 SKU optimization charges (d) 25,763 — 25,763 Total restructuring-related costs $ 56,150 $ 2,771 $ 58,921 For the twenty-six week period ended August 31, 2019, the Company incurred total restructuring-related costs of $68,495, 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) $ 33,142 $ 2,315 $ 35,457 Non-executive retention costs associated with the March 2019 reorganization (b) 7,329 3,422 10,751 Professional and other fees relating to restructuring activities (c) 19,965 2,322 22,287 Total restructuring-related costs $ 60,436 $ 8,059 $ 68,495 |
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 Additions charged to expense 10,588 383 12,215 23,186 Cash payments (9,077) (7,444) (12,554) (29,075) Balance at August 29, 2020 $ 29,495 $ — $ 1,541 $ 31,036 (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) | 6 Months Ended |
Aug. 29, 2020 | |
Asset Sale to WBA | |
Schedule of assets and operating results of discontinued operations | August 29, 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: August 29, August 31, August 29, August 31, 2020 2019 2020 2019 (13 weeks) (13 weeks) (26 weeks) (26 weeks) Revenues $ — $ (36) $ 174 $ (124) Costs and expenses: Cost of revenues(a) — 197 8 461 Selling, general and administrative expenses(a) — 379 871 866 Gain on sale of assets, net — — (14,149) (522) — 576 (13,270) 805 (Loss) income from discontinued operations before income taxes — (612) 13,444 (929) Income tax (benefit) expense — (38) 4,283 (35) Net (loss) income from discontinued operations, net of tax $ — $ (574) $ 9,161 $ (894) (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) | 6 Months Ended |
Aug. 29, 2020 | |
Income (Loss) Per Share | |
Schedule of calculation of basic and diluted income (loss) per share | Thirteen Week Period Ended Twenty-Six Week Period Ended August 29, August 31, August 29, August 31, 2020 2019 2020 2019 Basic and diluted loss per share: Numerator: Net loss from continuing operations $ (13,197) $ (78,705) $ (85,899) $ (178,044) Net (loss) income from discontinued operations — (574) 9,161 (894) Loss attributable to common stockholders— basic and diluted $ (13,197) $ (79,279) $ (76,738) $ (178,938) Denominator: Basic weighted average shares 53,573 53,041 53,528 53,084 Outstanding options and restricted shares, net — — — — Diluted weighted average shares 53,573 53,041 53,528 53,084 Basic and diluted (loss) income per share: Continuing operations $ (0.25) $ (1.48) $ (1.60) $ (3.35) Discontinued operations - (0.01) 0.17 (0.02) Net basic and diluted loss per share $ (0.25) $ (1.49) $ (1.43) $ (3.37) |
Lease Termination and Impairm_2
Lease Termination and Impairment Charges (Tables) | 6 Months Ended |
Aug. 29, 2020 | |
Lease Termination and Impairment Charges | |
Schedule of amounts relating to lease termination and impairment charges | Thirteen Week Period Twenty-Six Week Period Ended Ended August 29, August 31, August 29, August 31, 2020 2019 2020 2019 Impairment charges $ 9,230 $ 1,289 $ 11,433 $ 1,412 Lease termination charges — — — — Facility exit charges 2,298 182 3,848 537 $ 11,528 $ 1,471 $ 15,281 $ 1,949 |
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 August 29, 2020 Long-lived assets held for use $ — $ — $ 1,071 $ 1,071 $ (11,416) Long-lived assets held for sale $ — $ 150 $ — $ 150 $ (17) Total $ — $ 150 $ 1,071 $ 1,221 $ (11,433) Fair Values Total as of Charges Level 1 Level 2 Level 3 Impairment Date August 31, 2019 Long-lived assets held for use $ — $ — $ — $ — $ (1,412) Long-lived assets held for sale $ — $ — $ — $ — $ — Total $ — $ — $ — $ — $ (1,412) |
Schedule of closed store and distribution center charges related to new closures, changes in assumptions and interest accretion | Thirteen Week Period Twenty-Six Week Period Ended Ended August 29, August 31, August 29, August 31, 2020 2019 2020 2019 Balance—beginning of period $ 2,170 $ 9,333 $ 2,253 $ 124,046 Existing Topic 420 liabilities eliminated by recording a reduction to the ROU asset — — — (112,288) Changes in assumptions about future sublease income 495 — 495 — Cash payments, net of sublease income (60) (2,992) (143) (5,417) Balance—end of period $ 2,605 $ 6,341 $ 2,605 $ 6,341 |
Goodwill and Other Intangible_2
Goodwill and Other Intangible Assets (Tables) | 6 Months Ended |
Aug. 29, 2020 | |
Goodwill and Other Intangible Assets | |
Schedule of Indefinite-Lived Intangible Assets [Table Text Block] | August 29, 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) $ 192,272 $ (168,324) $ 23,948 3 years $ 186,183 $ (163,575) $ 22,608 3 years Prescription files 964,532 (884,237) 80,295 3 years 950,887 (867,430) 83,457 3 years Customer relationships(a) 388,000 (247,404) 140,596 11 years 388,000 (231,015) 156,985 12 years CMS license 57,500 (11,921) 45,579 20 years 57,500 (10,772) 46,728 21 years Claims adjudication and other developed software 58,985 (43,673) 15,312 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 $ 1,672,789 $ (1,367,059) 305,730 $ 1,673,155 $ (1,333,164) $ 339,991 Trademarks — — — Indefinite 19,500 — 19,500 Indefinite Total $ 1,672,789 $ (1,367,059) $ 305,730 $ 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] | August 29, 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) $ 192,272 $ (168,324) $ 23,948 3 years $ 186,183 $ (163,575) $ 22,608 3 years Prescription files 964,532 (884,237) 80,295 3 years 950,887 (867,430) 83,457 3 years Customer relationships(a) 388,000 (247,404) 140,596 11 years 388,000 (231,015) 156,985 12 years CMS license 57,500 (11,921) 45,579 20 years 57,500 (10,772) 46,728 21 years Claims adjudication and other developed software 58,985 (43,673) 15,312 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 $ 1,672,789 $ (1,367,059) 305,730 $ 1,673,155 $ (1,333,164) $ 339,991 Trademarks — — — Indefinite 19,500 — 19,500 Indefinite Total $ 1,672,789 $ (1,367,059) $ 305,730 $ 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) | 6 Months Ended |
Aug. 29, 2020 | |
Indebtedness and Credit Agreements | |
Summary of indebtedness and lease financing obligations | August 29, February 29, 2020 2020 Secured Debt: Senior secured revolving credit facility due December 2023 ($1,300,000 and $650,000 face value less unamortized debt issuance costs of $16,635 and $19,167) $ 1,283,365 $ 630,833 FILO term loan due December 2023 ($450,000 face value less unamortized debt issuance costs of $2,638 and $3,046) 447,362 446,954 1,730,727 1,077,787 Second Lien Secured Debt: 7.5% senior notes due July 2025 ($600,000 face value less unamortized debt issuance costs of $9,901 and $10,927) 590,099 589,073 8.0% senior notes due November 2026 ($849,918 and $0 face value less unamortized debt issuance costs of $19,710 and $0) 830,208 — 1,420,307 589,073 Guaranteed Unsecured Debt: 6.125% senior notes due April 2023 ($90,808 and $1,153,490 face value less unamortized debt issuance costs of $555 and $8,430) 90,253 1,145,060 90,253 1,145,060 Unguaranteed Unsecured Debt: 7.70% notes due February 2027 ($237,386 face value less unamortized debt issuance costs of $842 and $908) 236,544 236,478 6.875% fixed-rate senior notes due December 2028 ($29,001 face value less unamortized debt issuance costs of $124 and $131) 28,877 28,870 265,421 265,348 Lease financing obligations 24,837 28,166 Total debt 3,531,545 3,105,434 Current maturities of long-term debt and lease financing obligations (6,902) (8,840) Long-term debt and lease financing obligations, less current maturities $ 3,524,643 $ 3,096,594 |
Leases (Tables)
Leases (Tables) | 6 Months Ended |
Aug. 29, 2020 | |
Leases | |
Schedule of components of net lease cost | Thirteen Week Period Ended Twenty-Six Week Period Ended August 29, 2020 August 31, 2019 August 29, 2020 August 31, 2019 Operating lease cost $ 160,898 $ 164,002 $ 322,764 $ 328,985 Financing lease cost: Amortization of right-of-use asset 1,093 1,508 2,224 3,044 Interest on long-term finance lease liabilities 643 856 1,332 1,762 Total finance lease costs $ 1,736 $ 2,364 $ 3,556 $ 4,806 Short-term lease costs 284 115 437 116 Variable lease costs 42,681 42,768 85,129 83,314 Less: sublease income (3,887) (5,407) (8,019) (11,158) Net lease cost $ 201,712 $ 203,842 $ 403,867 $ 406,063 |
Schedule of supplemental cash flow information related to leases | Twenty-Six Week Period Ended August 29, 2020 August 31, 2019 Cash paid for amounts included in the measurement of lease liabilities: Operating cash flows paid for operating leases $ 339,486 $ 293,884 Operating cash flows paid for interest portion of finance leases 1,332 1,762 Financing cash flows paid for principal portion of finance leases 2,446 4,453 Right-of-use assets obtained in exchange for lease obligations: Operating leases 194,843 158,463 Finance leases — — |
Schedule of supplemental balance sheet information related to leases | August 29, February 29, 2020 2020 Operating leases: Operating lease right-of-use asset $ 2,860,710 $ 2,903,256 Short-term operating lease liabilities $ 487,844 $ 490,161 Long-term operating lease liabilities 2,657,891 2,710,347 Total operating lease liabilities $ 3,145,735 $ 3,200,508 Finance leases: Property, plant and equipment, net $ 17,210 $ 19,904 Current maturities of long-term debt and lease financing obligations $ 6,902 $ 8,840 Lease financing obligations, less current maturities 17,935 19,326 Total finance lease liabilities $ 24,837 $ 28,166 Weighted average remaining lease term Operating leases 7.6 7.8 Finance leases 8.9 8.9 Weighted average discount rate Operating leases 6.1 % 6.1 % Finance leases 10.1 % 10.2 % |
Schedule of minimum lease payments, financing leases, ASC842 | August 29, 2020 Finance Operating Fiscal year Leases Leases (1) Total 2021 (remaining twenty-six weeks) $ 6,560 $ 334,473 $ 341,033 2022 6,531 637,584 644,115 2023 3,723 586,575 590,298 2024 3,530 526,524 530,054 2025 3,163 430,907 434,070 Thereafter 15,181 1,440,520 1,455,701 Total lease payments 38,688 3,956,583 3,995,271 Less: imputed interest (13,851) (810,848) (824,699) Total lease liabilities $ 24,837 $ 3,145,735 $ 3,170,572 (1) – Future operating lease payments have not been reduced by minimum sublease rentals of $43 million due in the future under noncancelable leases. |
Schedule of minimum lease payments, operating leases, ASC842 | August 29, 2020 Finance Operating Fiscal year Leases Leases (1) Total 2021 (remaining twenty-six weeks) $ 6,560 $ 334,473 $ 341,033 2022 6,531 637,584 644,115 2023 3,723 586,575 590,298 2024 3,530 526,524 530,054 2025 3,163 430,907 434,070 Thereafter 15,181 1,440,520 1,455,701 Total lease payments 38,688 3,956,583 3,995,271 Less: imputed interest (13,851) (810,848) (824,699) Total lease liabilities $ 24,837 $ 3,145,735 $ 3,170,572 (1) – Future operating lease payments have not been reduced by minimum sublease rentals of $43 million due in the future under noncancelable leases. |
Stock Options and Stock Awards
Stock Options and Stock Awards (Tables) | 6 Months Ended |
Aug. 29, 2020 | |
Stock Option and Stock Award Plans | |
Schedule of total number and type of newly awarded grants and the related weighted average fair value | August 29, 2020 August 31, 2019 Shares Weighted Average Fair Value Shares Weighted Average Fair Value Stock options granted — $ N/A 503 $ 3.54 Restricted stock awards granted 736 $ 17.97 1,232 $ 7.60 Total awards 736 1,735 |
Schedule of unrecognized pre-tax compensation costs, net of estimated forfeitures and the weighted average period of cost amortization | August 29, 2020 Unvested Unvested Unvested stock restricted performance options stock shares Unrecognized pre-tax costs $ 1,617 $ 17,431 $ 7,707 Weighted average amortization period 2.8 years 2.5 years 2.5 years |
Retirement Plans (Tables)
Retirement Plans (Tables) | 6 Months Ended |
Aug. 29, 2020 | |
Defined Benefit Plans and Other Postretirement Benefit Plans Disclosures [Abstract] | |
Summary of net periodic pension expense for the defined benefit plans | Defined Benefit Defined Benefit Pension Plan Pension Plan Thirteen Week Period Ended Twenty-Six Week Period Ended August 29, August 31, August 29, August 31, 2020 2019 2020 2019 Service cost $ 144 $ 143 $ 288 $ 285 Interest cost 1,199 1,556 2,398 3,111 Expected return on plan assets (1,177) (1,214) (2,354) (2,427) Amortization of unrecognized net loss 912 415 1,823 830 Net periodic pension expense $ 1,078 $ 900 $ 2,155 $ 1,799 |
Segment Reporting (Tables)
Segment Reporting (Tables) | 6 Months Ended |
Aug. 29, 2020 | |
Segment Reporting | |
Schedule of balance sheet information for the Company's reportable segments | Retail Pharmacy Pharmacy Services Eliminations(1) Consolidated August 29, 2020: Total Assets $ 6,947,566 $ 2,688,478 $ (15,845) $ 9,620,199 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 August 29, 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 $15,845 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 August 29, 2020: Revenues $ 4,017,912 $ 2,038,378 $ (74,320) $ 5,981,970 Gross Profit 1,061,913 98,432 — 1,160,345 Adjusted EBITDA(2) 122,340 29,263 — 151,603 Additions to property and equipment and intangible assets 42,121 4,362 — 46,483 August 31, 2019: Revenues $ 3,848,104 $ 1,579,069 $ (60,909) $ 5,366,264 Gross Profit 1,032,444 111,995 — 1,144,439 Adjusted EBITDA(2) 92,673 41,517 — 134,190 Additions to property and equipment and intangible assets 43,328 7,249 — 50,577 Twenty-Six Week Period Ended August 29, 2020: Revenues $ 8,141,183 $ 4,015,624 $ (147,461) $ 12,009,346 Gross Profit 2,143,449 215,215 — 2,358,664 Adjusted EBITDA(2) 185,322 73,673 — 258,995 Additions to property and equipment and intangible assets 78,728 6,929 — 85,657 August 31, 2019: Revenues $ 7,712,912 $ 3,145,361 $ (119,420) $ 10,738,853 Gross Profit 2,062,939 208,223 — 2,271,162 Adjusted EBITDA(2) 176,681 67,856 — 244,537 Additions to property and equipment and intangible assets 87,572 12,196 — 99,768 (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 | August 29, August 31, August 29, August 31, 2020 2019 2020 2019 (13 weeks) (13 weeks) (26 weeks) (26 weeks) Net loss from continuing operations $ (13,197) $ (78,705) $ (85,899) $ (178,044) Interest expense 50,007 60,102 100,554 118,372 Income tax expense (benefit) 47 27,628 (7,971) 35,002 Depreciation and amortization 87,117 83,044 166,220 166,970 LIFO (credit) charge (8,750) 7,504 (20,816) 14,993 Lease termination and impairment charges 11,528 1,471 15,281 1,949 Intangible asset impairment charges — — 29,852 — Gain on debt modification, net (5,274) — (5,274) — Merger and Acquisition-related costs — 514 — 3,599 Stock-based compensation expense 3,936 4,712 5,810 10,092 Restructuring-related costs 23,186 25,145 58,921 68,495 Inventory write-downs related to store closings 1,058 3,149 1,892 3,990 Loss (gain) on sale of assets, net 1,092 (1,587) (1,168) (4,299) Other 853 1,213 1,593 3,418 Adjusted EBITDA from continuing operations $ 151,603 $ 134,190 $ 258,995 $ 244,537 |
Supplementary Cash Flow Data (T
Supplementary Cash Flow Data (Tables) | 6 Months Ended |
Aug. 29, 2020 | |
Supplementary Cash Flow Data | |
Schedule of supplementary cash flow data | Twenty-Six Week Period Ended August 29, 2020 August 31, 2019 Cash paid for interest(a) $ 88,744 $ 110,401 Cash payments for income taxes, net(a) $ 6,415 $ 4,059 Equipment financed under capital leases $ 428 $ 2,077 Gross borrowings from revolver(a) $ 4,354,000 $ 1,524,000 Gross repayments to revolver(a) $ 3,704,000 $ 1,149,000 (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 | Aug. 29, 2020USD ($) | Aug. 31, 2019USD ($) | Aug. 29, 2020USD ($) | Aug. 31, 2019USD ($) | Feb. 29, 2020USD ($) |
Disaggregation of Revenue [Abstract] | ||||||
Total revenue | $ 5,981,970 | $ 5,366,264 | $ 12,009,346 | $ 10,738,853 | ||
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 into revenue | 17,286 | |||||
Reduction in accrued benefits | 39,800 | |||||
Intersegment elimination | ||||||
Disaggregation of Revenue [Abstract] | ||||||
Revenue from contract with customer | (74,320) | (60,909) | (147,461) | (119,420) | ||
Total revenue | (74,320) | (60,909) | (147,461) | (119,420) | ||
Retail Pharmacy | ||||||
Disaggregation of Revenue [Abstract] | ||||||
Other revenue | 34,518 | 35,147 | 66,779 | 58,840 | ||
Total revenue | 4,017,912 | 3,848,104 | 8,141,183 | 7,712,912 | ||
Accrued contract liabilities | 23,803 | 23,803 | $ 52,668 | |||
Pharmacy sales | ||||||
Disaggregation of Revenue [Abstract] | ||||||
Revenue from contract with customer | 2,660,462 | 2,561,468 | 5,286,005 | 5,137,222 | ||
Front end sales | ||||||
Disaggregation of Revenue [Abstract] | ||||||
Revenue from contract with customer | 1,322,932 | 1,251,489 | 2,788,399 | 2,516,850 | ||
Pharmacy Services | ||||||
Disaggregation of Revenue [Abstract] | ||||||
Revenue from contract with customer | $ 2,038,378 | $ 1,579,069 | $ 4,015,624 | $ 3,145,361 |
Restructuring (Details)
Restructuring (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | |||
Aug. 29, 2020 | May 30, 2020 | Aug. 31, 2019 | Aug. 29, 2020 | Aug. 31, 2019 | |
Restructuring related liabilities | |||||
Anticipated restructuring-related costs | $ 75,000 | $ 75,000 | |||
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 | 36,925 | 45,054 | 45,054 | ||
Restructuring expense | 23,186 | $ 25,145 | 58,921 | $ 68,495 | |
Cash payments | (29,075) | (18,101) | |||
Balance-end of period | 31,036 | 36,925 | 31,036 | ||
Reorganization Of Executive Management Team, Ongoing Workforce Reduction And Consolidation, And Transformation Initiatives [Member] | Selling, general and administrative expenses | |||||
Restructuring related liabilities | |||||
Restructuring expense | 23,186 | 9,972 | 25,145 | 33,158 | 68,495 |
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 | 27,984 | 36,228 | 36,228 | ||
Restructuring expense | 10,588 | 8,381 | 15,399 | 35,457 | |
Cash payments | (9,077) | (13,055) | |||
Balance-end of period | 29,495 | 27,984 | 29,495 | ||
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 | 7,061 | 6,432 | 6,432 | ||
Restructuring expense | 383 | 4,087 | 1,012 | 10,751 | |
Cash payments | (7,444) | ||||
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 | 1,880 | 2,394 | 2,394 | ||
Restructuring expense | 12,215 | 12,677 | 16,747 | 22,287 | |
Cash payments | (12,554) | (5,046) | |||
Balance-end of period | 1,541 | 1,880 | 1,541 | ||
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 | 20,441 | 21,055 | 56,150 | 60,436 | |
Retail Pharmacy | Severance and related costs | |||||
Restructuring related liabilities | |||||
Restructuring expense | 8,049 | 7,870 | 12,608 | 33,142 | |
Retail Pharmacy | Non-executive retention costs | |||||
Restructuring related liabilities | |||||
Restructuring expense | 281 | 2,830 | 1,136 | 7,329 | |
Retail Pharmacy | Professional and other fees | |||||
Restructuring related liabilities | |||||
Restructuring expense | 12,111 | 10,355 | 16,643 | 19,965 | |
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 | 2,745 | 4,090 | 2,771 | 8,059 | |
Pharmacy Services | Severance and related costs | |||||
Restructuring related liabilities | |||||
Restructuring expense | 2,539 | 511 | 2,791 | 2,315 | |
Pharmacy Services | Non-executive retention costs | |||||
Restructuring related liabilities | |||||
Restructuring expense | 102 | 1,257 | (124) | 3,422 | |
Pharmacy Services | Professional and other fees | |||||
Restructuring related liabilities | |||||
Restructuring expense | $ 104 | $ 2,322 | $ 104 | $ 2,322 |
Asset Sale to WBA (Details)
Asset Sale to WBA (Details) $ in Thousands | Sep. 18, 2017USD ($)storeitem | Mar. 31, 2018USD ($)store | Aug. 29, 2020USD ($) | May 30, 2020USD ($) | Aug. 31, 2019USD ($) | Aug. 29, 2020USD ($) | Aug. 31, 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 | $ 1,920,866 | $ 1,920,866 | $ 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] | 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 | 4,162 | $ 913,965 | $ 35,167 | $ 2,106,756 | |||||
Accounts receivable, net | 0 | 196,002 | 0 | 196,002 | |||||
TSA fees | $ 388 | $ 11,308 | $ 1,467 | $ 25,533 |
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 | 6 Months Ended | |
Aug. 31, 2019 | Aug. 29, 2020 | Aug. 31, 2019 | |
Costs and expenses: | |||
Net income from discontinued operations, net of tax | $ (574) | $ 9,161 | $ (894) |
Discontinued Operations, Disposed of by Sale [Member] | Sale Of Assets To Walgreens Boots Alliance WBA And Buyer [Member] | |||
Income statement disclosures | |||
Revenues | (36) | 174 | (124) |
Costs and expenses: | |||
Cost of revenues | 197 | 8 | 461 |
Selling, general and administrative expenses | 379 | 871 | 866 |
Gain on sale of assets, net | (14,149) | (522) | |
Net expenses and non-operating income | 576 | (13,270) | 805 |
Income from discontinued operations before income taxes | (612) | 13,444 | (929) |
Income tax (benefit) expense, discontinued operation | (38) | 4,283 | (35) |
Net income from discontinued operations, net of tax | $ (574) | $ 9,161 | $ (894) |
Income (Loss) Per Share (Detail
Income (Loss) Per Share (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Aug. 29, 2020 | Aug. 31, 2019 | Aug. 29, 2020 | Aug. 31, 2019 | |
Numerator: | ||||
Loss from continuing operations attributable to common stockholders-basic and diluted | $ (13,197) | $ (78,705) | $ (85,899) | $ (178,044) |
Income (loss) from discontinued operations attributable to common stockholders-basic and diluted | (574) | 9,161 | (894) | |
Loss attributable to common stockholders-basic and diluted | $ (13,197) | $ (79,279) | $ (76,738) | $ (178,938) |
Denominator: | ||||
Basic weighted average shares | 53,573 | 53,041 | 53,528 | 53,084 |
Diluted weighted average shares | 53,573 | 53,041 | 53,528 | 53,084 |
Continuing operations | $ (0.25) | $ (1.48) | $ (1.60) | $ (3.35) |
Discontinued operations | (0.01) | 0.17 | (0.02) | |
Net basic and diluted loss per share | $ (0.25) | $ (1.49) | $ (1.43) | $ (3.37) |
Stock options | ||||
Antidilutive securities excluded from computation of income per share | ||||
Shares excluded from the computation of diluted income per share | 798 | 798 | 1,367 | |
Restricted shares | ||||
Antidilutive securities excluded from computation of income per share | ||||
Shares excluded from the computation of diluted income per share | 1,487 | 1,628 | 1,487 | 1,628 |
Lease Termination and Impairm_3
Lease Termination and Impairment Charges (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | |||
Aug. 29, 2020 | Aug. 31, 2019 | Aug. 29, 2020 | Aug. 31, 2019 | Feb. 29, 2020 | |
Lease termination and impairment charges | |||||
Lease termination and impairment charges | $ 11,528 | $ 1,471 | $ 15,281 | $ 1,949 | |
Carrying value of long-lived assets | 12,654 | 1,412 | 12,654 | 1,412 | |
Operating right-of-use assets | 2,860,710 | 2,860,710 | $ 2,903,256 | ||
Impairment related to terminated software project | 4,779 | ||||
Impairment charges, joint venture | 4,995 | ||||
Impairment charges, store assets | 1,659 | ||||
Impairment charges | |||||
Lease termination and impairment charges | |||||
Lease termination and impairment charges | 9,230 | 1,289 | 11,433 | 1,412 | |
Facility Closing | |||||
Lease termination and impairment charges | |||||
Lease termination and impairment charges | $ 2,298 | $ 182 | $ 3,848 | $ 537 |
Lease Termination and Impairm_4
Lease Termination and Impairment Charges - Fair value (Details) - Nonrecurring basis - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Aug. 29, 2020 | Aug. 31, 2019 | Aug. 29, 2020 | Aug. 31, 2019 | |
Non Financial Assets Measured on a Non Recurring Basis | ||||
Fair value of Long-lived assets held for use | $ 1,071 | $ 1,071 | ||
Fair value of Long-lived assets held for sale | 150 | 150 | ||
Fair value of Total | 1,221 | 1,221 | ||
Long-lived assets held and used, impairment charges | (11,416) | $ (1,412) | ||
Long-lived assets held for sale, impairment charges | (17) | |||
Total Charges | (9,230) | $ (1,289) | (11,433) | (1,412) |
Fair Value | ||||
Non Financial Assets Measured on a Non Recurring Basis | ||||
Fair value of Total | 1,221 | $ 0 | 1,221 | $ 0 |
Level 2 | ||||
Non Financial Assets Measured on a Non Recurring Basis | ||||
Fair value of Long-lived assets held for sale | 150 | 150 | ||
Fair value of Total | 150 | 150 | ||
Level 3 | ||||
Non Financial Assets Measured on a Non Recurring Basis | ||||
Fair value of Long-lived assets held for use | 1,071 | 1,071 | ||
Fair value of Total | $ 1,071 | $ 1,071 |
Lease Termination and Impairm_5
Lease Termination and Impairment Charges - Closures (Details) - Lease termination charges - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Aug. 29, 2020 | Aug. 31, 2019 | Aug. 29, 2020 | Aug. 31, 2019 | |
Closed store and distribution center charges | ||||
Balance-beginning of period | $ 2,170 | $ 9,333 | $ 2,253 | $ 124,046 |
Existing Topic 420 liabilities eliminated by recording a reduction to the ROU asset | (112,288) | |||
Changes in assumptions about future sublease income, terminations and changes in interest rates | 495 | 495 | ||
Cash payments, net of sublease income | (60) | (2,992) | (143) | (5,417) |
Balance-end of period | $ 2,605 | $ 6,341 | $ 2,605 | $ 6,341 |
Fair Value Measurements (Detail
Fair Value Measurements (Details) - USD ($) $ in Thousands | Aug. 29, 2020 | Feb. 29, 2020 |
Other Financial Instruments | ||
Held to maturity investments | $ 7,020 | $ 7,022 |
Level 1 | ||
Other Financial Instruments | ||
Carrying value of total long-term indebtedness | 3,506,708 | 3,077,268 |
Estimated fair value of total long-term indebtedness | $ 3,544,160 | $ 3,021,385 |
Income Taxes (Details)
Income Taxes (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | |||
Aug. 29, 2020 | Aug. 31, 2019 | Aug. 29, 2020 | Aug. 31, 2019 | Feb. 29, 2020 | |
Income Taxes | |||||
Income tax (benefit) expense | $ 47 | $ 27,628 | $ (7,971) | $ 35,002 | |
Estimated effective tax rate (as a percent) | 0.40% | 54.10% | 8.50% | 24.50% | |
Increase in valuation allowance to offset the current year deferred state tax benefits (as a percent) | 7.60% | (78.40%) | (8.10%) | (50.20%) | |
Decrease in unrecognized tax benefits related to state exposures | $ 13,210 | $ 13,210 | |||
Valuation allowance against net deferred tax assets | $ 1,680,103 | $ 1,680,103 | $ 1,673,119 |
Medicare Part D (Details)
Medicare Part D (Details) - USD ($) $ in Thousands | Feb. 19, 2020 | Feb. 29, 2020 | Aug. 29, 2020 | Jun. 30, 2020 |
Statutory Accounting Practices [Line Items] | ||||
Minimum amount of capital and surplus required by regulatory requirements | $ 16,622 | |||
Accounts receivable, net | $ 1,286,785 | $ 1,920,866 | ||
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 | 30,227 | |||
Loss on sale of receivable | 16,875 | |||
Accrued salaries, wages and other current liabilities | 746,318 | 637,610 | ||
EIC | ||||
Statutory Accounting Practices [Line Items] | ||||
Accounts receivable, net | $ 513,009 | |||
Medicare Part D | ||||
Accrued salaries, wages and other current liabilities | $ 14,083 |
Manufacturer Rebates Receivab_2
Manufacturer Rebates Receivables (Details) - USD ($) $ in Thousands | Aug. 29, 2020 | Feb. 29, 2020 |
Manufacturer Rebates Receivables | ||
Manufacturer rebates receivables | $ 607,025 | $ 530,451 |
Goodwill and Other Intangibles
Goodwill and Other Intangibles - Goodwill (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | |
Aug. 29, 2020 | Aug. 29, 2020 | Feb. 29, 2020 | |
Goodwill | |||
Accumulated impairment losses | $ 574,712 | $ 574,712 | $ 574,712 |
Carrying amount of goodwill | |||
Beginning Balance | 1,108,136 | ||
Goodwill impairment | 0 | 0 | |
Ending Balance | $ 1,108,136 | $ 1,108,136 |
Goodwill and Other Intangible_3
Goodwill and Other Intangible Assets - Intangibles (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | 12 Months Ended | |
Aug. 29, 2020 | May 30, 2020 | Aug. 29, 2020 | Feb. 29, 2020 | |
Finite Lived And Indefinite Lived Intangible Assets By Major Class | ||||
Goodwill impairment | $ 0 | $ 0 | ||
Accumulated impairment losses | 574,712 | 574,712 | $ 574,712 | |
Gross Carrying Amount, Finite Lived | 1,672,789 | 1,672,789 | 1,673,155 | |
Accumulated Amortization | (1,367,059) | (1,367,059) | (1,333,164) | |
Net | 305,730 | 305,730 | 339,991 | |
Gross Carrying Amount, Total | 1,672,789 | 1,672,789 | 1,692,655 | |
Net, Total | 305,730 | 305,730 | 359,491 | |
Other intangibles, net | 305,730 | 305,730 | 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 | 192,272 | 192,272 | 186,183 | |
Accumulated Amortization | (168,324) | (168,324) | (163,575) | |
Net | 23,948 | $ 23,948 | $ 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 | 964,532 | $ 964,532 | $ 950,887 | |
Accumulated Amortization | (884,237) | (884,237) | (867,430) | |
Net | 80,295 | $ 80,295 | $ 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 | $ 388,000 | |
Accumulated Amortization | (247,404) | (247,404) | (231,015) | |
Net | 140,596 | $ 140,596 | $ 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 | $ 57,500 | |
Accumulated Amortization | (11,921) | (11,921) | (10,772) | |
Net | 45,579 | $ 45,579 | $ 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 | $ 58,985 | |
Accumulated Amortization | (43,673) | (43,673) | (39,459) | |
Net | 15,312 | $ 15,312 | $ 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 | $ 11,500 | |
Accumulated Amortization | $ (11,500) | $ (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 | 6 Months Ended | ||
Aug. 29, 2020 | Aug. 31, 2019 | Aug. 29, 2020 | Aug. 31, 2019 | |
Goodwill and Other Intangible Assets | ||||
Amortization expense for intangible assets and liabilities | $ 22,695 | $ 26,596 | $ 47,115 | $ 54,256 |
Anticipated annual amortization expense for intangible assets and liabilities | ||||
2021 | 88,157 | 88,157 | ||
2022 | 65,889 | 65,889 | ||
2023 | 50,659 | 50,659 | ||
2024 | 37,003 | 37,003 | ||
2025 | $ 25,736 | $ 25,736 |
Indebtedness and Credit Agree_3
Indebtedness and Credit Agreements - Indebtedness and lease financing obligations (Details) - USD ($) $ in Thousands | Aug. 29, 2020 | Jul. 24, 2020 | Jul. 10, 2020 | Jul. 09, 2020 | Jun. 25, 2020 | Feb. 29, 2020 | Feb. 05, 2020 | Jan. 06, 2020 | Nov. 30, 2019 | Oct. 15, 2019 | Oct. 11, 2019 | Dec. 20, 2018 |
Indebtedness and credit agreements | ||||||||||||
Lease financing obligations, ASC842 | $ 24,837 | $ 28,166 | ||||||||||
Total Debt | 3,531,545 | 3,105,434 | ||||||||||
Current maturities of long-term debt and lease financing obligations | (6,902) | (8,840) | ||||||||||
Long-term debt and lease financing obligations, less current maturities | 3,524,643 | 3,096,594 | ||||||||||
Senior Secured Debt [Member] | ||||||||||||
Indebtedness and credit agreements | ||||||||||||
Long-term debt | 1,730,727 | 1,077,787 | ||||||||||
Senior secured revolving credit facility due December 2023 | ||||||||||||
Indebtedness and credit agreements | ||||||||||||
Long-term debt | 1,283,365 | 630,833 | ||||||||||
Principal amount of debt | 1,300,000 | 650,000 | ||||||||||
Unamortized debt issuance costs | 16,635 | 19,167 | ||||||||||
FILO term loan due December 2023 | ||||||||||||
Indebtedness and credit agreements | ||||||||||||
Long-term debt | 447,362 | 446,954 | ||||||||||
Principal amount of debt | 450,000 | 450,000 | $ 450,000 | |||||||||
Unamortized debt issuance costs | 2,638 | 3,046 | ||||||||||
Second Lien Secured Debt | ||||||||||||
Indebtedness and credit agreements | ||||||||||||
Long-term debt | 1,420,307 | 589,073 | ||||||||||
7.5% senior notes due July 2025 | ||||||||||||
Indebtedness and credit agreements | ||||||||||||
Long-term debt | $ 590,099 | $ 589,073 | ||||||||||
Debt instrument, stated interest rate (as a percent) | 7.50% | 7.50% | 7.50% | 7.50% | 7.50% | |||||||
Principal amount of debt | $ 600,000 | $ 600,000 | ||||||||||
Unamortized debt issuance costs | 9,901 | 10,927 | ||||||||||
8.0% senior secured notes due 2026 | ||||||||||||
Indebtedness and credit agreements | ||||||||||||
Long-term debt | $ 830,208 | |||||||||||
Debt instrument, stated interest rate (as a percent) | 8.00% | 8.00% | 8.00% | 8.00% | ||||||||
Principal amount of debt | $ 849,918 | $ 849,918 | $ 600,000 | 0 | ||||||||
Unamortized debt issuance costs | 19,710 | 0 | ||||||||||
Guaranteed Unsecured Debt | ||||||||||||
Indebtedness and credit agreements | ||||||||||||
Long-term debt | 90,253 | 1,145,060 | ||||||||||
6.125% senior notes due April 2023 | ||||||||||||
Indebtedness and credit agreements | ||||||||||||
Long-term debt | $ 90,253 | $ 1,145,060 | ||||||||||
Debt instrument, stated interest rate (as a percent) | 6.125% | 6.125% | 6.125% | 6.125% | 6.125% | 6.125% | 6.125% | 6.125% | ||||
Principal amount of debt | $ 90,808 | $ 1,153,490 | ||||||||||
Unamortized debt issuance costs | 555 | 8,430 | ||||||||||
Unguaranteed Unsecured Debt | ||||||||||||
Indebtedness and credit agreements | ||||||||||||
Long-term debt | 265,421 | 265,348 | ||||||||||
7.7% notes due February 2027 | ||||||||||||
Indebtedness and credit agreements | ||||||||||||
Long-term debt | $ 236,544 | $ 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 | 842 | 908 | ||||||||||
6.875% fixed-rate senior notes due December 2028 | ||||||||||||
Indebtedness and credit agreements | ||||||||||||
Long-term debt | $ 28,877 | $ 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 | $ 124 | $ 131 |
Indebtedness and Credit Agree_4
Indebtedness and Credit Agreement - Credit Facility (Details) - USD ($) $ in Thousands | 6 Months Ended | ||||||||
Aug. 29, 2020 | Jul. 24, 2020 | Jul. 10, 2020 | Jul. 09, 2020 | Jun. 25, 2020 | Feb. 29, 2020 | Feb. 05, 2020 | Jan. 06, 2020 | Dec. 20, 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 | $ 1,750,000 | ||||||||
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 | $ 1,300,000 | $ 650,000 | |||||||
Letters of credit outstanding | 102,939 | ||||||||
Additional borrowing capacity | $ 1,297,061 | ||||||||
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 | ||||||||
6.125% senior notes due April 2023 | |||||||||
Credit facility | |||||||||
Principal amount of debt | $ 90,808 | $ 1,153,490 | |||||||
Debt instrument, stated interest rate (as a percent) | 6.125% | 6.125% | 6.125% | 6.125% | 6.125% | 6.125% | 6.125% | 6.125% |
Indebtedness and Credit Agree_5
Indebtedness and Credit Agreement - Transactions and Maturity (Details) - USD ($) $ in Thousands | Jul. 24, 2020 | Jul. 10, 2020 | Jun. 25, 2020 | Oct. 11, 2019 | Nov. 30, 2019 | Aug. 29, 2020 | Aug. 29, 2020 | Jul. 09, 2020 | Feb. 29, 2020 | Feb. 05, 2020 | Jan. 06, 2020 | Oct. 15, 2019 |
Indebtedness and credit agreements | ||||||||||||
Proceeds from issuance of debt | $ 206,373 | |||||||||||
Gain on debt modification | $ 5,274 | $ 5,274 | ||||||||||
Maturities | ||||||||||||
2021 | 0 | 0 | ||||||||||
2022 | 0 | 0 | ||||||||||
2023 | 0 | 0 | ||||||||||
2024 | 1,840,808 | 1,840,808 | ||||||||||
2025 | 0 | 0 | ||||||||||
thereafter | $ 1,716,305 | $ 1,716,305 | ||||||||||
6.125% senior notes due April 2023 | ||||||||||||
Indebtedness and credit agreements | ||||||||||||
Notes redeemed and discharged | $ 1,125,000 | $ 750,000 | ||||||||||
Debt instrument, stated interest rate (as a percent) | 6.125% | 6.125% | 6.125% | 6.125% | 6.125% | 6.125% | 6.125% | 6.125% | 6.125% | |||
Face amount of debt repurchased | $ 1,062,682 | $ 600,000 | $ 600,000 | |||||||||
Principal amount of debt | $ 90,808 | $ 90,808 | $ 1,153,490 | |||||||||
Proceeds from 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 | |||||||||||
Early redemption of debt | 51,300 | $ 38,392 | ||||||||||
Gain (loss) on debt retirements, net | $ 32,416 | 18,510 | ||||||||||
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% | 6.875% | ||||||
Principal amount of debt | $ 29,001 | $ 29,001 | $ 29,001 | |||||||||
7.7% notes due February 2027 | ||||||||||||
Indebtedness and credit agreements | ||||||||||||
Notes redeemed and discharged | $ 18,075 | |||||||||||
Debt instrument, stated interest rate (as a percent) | 7.70% | 7.70% | 7.70% | 7.70% | 7.70% | 7.70% | ||||||
Early redemption of debt | $ 10,012 | |||||||||||
Gain (loss) on debt retirements, net | 4,766 | |||||||||||
Face amount of debt repurchased | $ 15,000 | |||||||||||
Principal amount of debt | $ 237,386 | $ 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% | 7.50% | 7.50% | ||||||
Principal amount of debt | $ 600,000 | $ 600,000 | $ 600,000 | |||||||||
8.0% senior secured notes due 2026 | ||||||||||||
Indebtedness and credit agreements | ||||||||||||
Debt instrument, stated interest rate (as a percent) | 8.00% | 8.00% | 8.00% | 8.00% | 8.00% | |||||||
Principal amount of debt | $ 849,918 | $ 600,000 | $ 849,918 | $ 849,918 | 0 | |||||||
Senior secured revolving credit facility due December 2023 | ||||||||||||
Indebtedness and credit agreements | ||||||||||||
Principal amount of debt | $ 1,300,000 | $ 1,300,000 | $ 650,000 |
Leases (Details)
Leases (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Aug. 29, 2020 | Aug. 31, 2019 | Aug. 29, 2020 | Aug. 31, 2019 | |
Property, Plant and Equipment [Line Items] | ||||
Operating lease cost | $ 160,898 | $ 164,002 | $ 322,764 | $ 328,985 |
Financing lease cost: | ||||
Amortization of right-of-use asset | 1,093 | 1,508 | 2,224 | 3,044 |
Interest on long-term finance lease liabilities | 643 | 856 | 1,332 | 1,762 |
Total finance lease costs | 1,736 | 2,364 | 3,556 | 4,806 |
Short-term lease costs | 284 | 115 | 437 | 116 |
Variable lease costs | 42,681 | 42,768 | 85,129 | 83,314 |
Less: sublease income | (3,887) | (5,407) | (8,019) | (11,158) |
Net lease cost | $ 201,712 | $ 203,842 | $ 403,867 | $ 406,063 |
Buildings | Minimum | ||||
Property, Plant and Equipment [Line Items] | ||||
Initial terms of noncancellable operating leases | 5 years | 5 years | ||
Initial terms of noncancellable finance leases | 5 years | 5 years | ||
Buildings | Maximum | ||||
Property, Plant and Equipment [Line Items] | ||||
Initial terms of noncancellable operating leases | 22 years | 22 years | ||
Initial terms of noncancellable finance leases | 22 years | 22 years | ||
Equipment | Minimum | ||||
Property, Plant and Equipment [Line Items] | ||||
Initial terms of noncancellable operating leases | 3 years | 3 years | ||
Equipment | Maximum | ||||
Property, Plant and Equipment [Line Items] | ||||
Initial terms of noncancellable operating leases | 10 years | 10 years |
Leases - Supplemental cash flow
Leases - Supplemental cash flow information related to leases (Details) - USD ($) $ in Thousands | 6 Months Ended | |
Aug. 29, 2020 | Aug. 31, 2019 | |
Cash paid for amounts included in the measurement of lease liabilities: | ||
Operating cash flows paid for operating leases | $ 339,486 | $ 293,884 |
Operating cash flows paid for interest portion of finance leases | 1,332 | 1,762 |
Financing cash flows paid for principal portion of finance leases | 2,446 | 4,453 |
Right-of-use assets obtained in exchange for lease obligations: | ||
Operating leases | 194,843 | 158,463 |
Finance leases | $ 0 | $ 0 |
Leases - Supplemental B_S Infor
Leases - Supplemental B/S Information (Details) - USD ($) $ in Thousands | Aug. 29, 2020 | Feb. 29, 2020 |
Operating leases: | ||
Operating lease right-of-use asset | $ 2,860,710 | $ 2,903,256 |
Short-term operating lease liabilities | 487,844 | 490,161 |
Long-term operating lease liabilities | 2,657,891 | 2,710,347 |
Total operating lease liabilities | 3,145,735 | 3,200,508 |
Finance leases: | ||
Property, plant and equipment, net | 1,140,658 | 1,215,838 |
Current maturities of long-term debt and lease financing obligations | 6,902 | 8,840 |
Lease financing obligations, less current maturities, ASC842 | 17,935 | 19,326 |
Total finance lease liabilities, ASC842 | $ 24,837 | $ 28,166 |
Weighted average remaining lease term | ||
Operating leases (in years) | 7 years 7 months 6 days | 7 years 9 months 18 days |
Finance leases (in years) | 8 years 10 months 24 days | 8 years 10 months 24 days |
Weighted average discount rate | ||
Operating leases (as a percent) | 6.10% | 6.10% |
Finance leases (as a percent) | 10.10% | 10.20% |
Finance Leased Assets [Member] | ||
Finance leases: | ||
Property, plant and equipment, net | $ 17,210 | $ 19,904 |
Leases - Maturity of lease liab
Leases - Maturity of lease liabilities under finance and operating leases (Details) - USD ($) $ in Thousands | Aug. 29, 2020 | Feb. 29, 2020 |
Finance Leases, ASC842 | ||
2021 | $ 6,560 | |
2022 | 6,531 | |
2023 | 3,723 | |
2024 | 3,530 | |
2025 | 3,163 | |
Thereafter | 15,181 | |
Total lease payments | 38,688 | |
Less: imputed interest | (13,851) | |
Total finance lease liabilities, ASC842 | 24,837 | $ 28,166 |
Operating Leases, ASC842 | ||
2021 | 334,473 | |
2022 | 637,584 | |
2023 | 586,575 | |
2024 | 526,524 | |
2025 | 430,907 | |
Thereafter | 1,440,520 | |
Total lease payments | 3,956,583 | |
Less: imputed interest | (810,848) | |
Total operating lease liabilities | 3,145,735 | $ 3,200,508 |
Minimum sublease rentals | 43,000 | |
Operating and finance leases, ASC842 | ||
2021 | 341,033 | |
2022 | 644,115 | |
2023 | 590,298 | |
2024 | 530,054 | |
2025 | 434,070 | |
Thereafter | 1,455,701 | |
Total lease payments | 3,995,271 | |
Less: imputed interest | (824,699) | |
Total lease liabilities | $ 3,170,572 |
Leases - Sale_Leaseback (Detail
Leases - Sale/Leaseback (Details) $ in Thousands | 3 Months Ended | 6 Months Ended |
Aug. 29, 2020USD ($)facility | Aug. 29, 2020USD ($)facility | |
Leases | ||
Number of stores in sale/leaseback | facility | 1 | 1 |
Sale/leaseback proceeds | $ 8,461 | $ 8,461 |
Leaseback term | 15 years | 15 years |
Gain on sale-leaseback transactions | $ 6,219 | $ 6,219 |
Stock Options and Stock Award_2
Stock Options and Stock Awards (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Aug. 29, 2020 | Aug. 31, 2019 | Aug. 29, 2020 | Aug. 31, 2019 | |
Stock options and stock award Plans | ||||
Stock-based compensation costs | $ 3,936 | $ 4,712 | $ 5,810 | $ 10,092 |
Stock options | ||||
Stock options and stock award Plans | ||||
Term of options | 4 years | |||
Performance based awards | ||||
Stock options and stock award Plans | ||||
Stock-based compensation costs | $ 513 | $ (348) |
Stock Options and Stock Award_3
Stock Options and Stock Awards - Options (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 6 Months Ended | |
Aug. 29, 2020 | Aug. 31, 2019 | |
Stock options and stock award Plans | ||
Weighted average fair value of options granted (in dollars per share) | $ 3.54 | |
Options, Shares activity | ||
Granted (in shares) | 503 | |
Stock options | ||
Unrecognized pre-tax compensation costs related to unvested stock options and restricted stock grants | ||
Unrecognized pre-tax costs | $ 1,617 | |
Weighted average amortization period | 2 years 9 months 18 days |
Stock Options and Stock Awards-
Stock Options and Stock Awards- Restricted Stock, etc. (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Aug. 29, 2020 | Aug. 31, 2019 | Aug. 29, 2020 | Aug. 31, 2019 | |
Restricted stock, Shares activity | ||||
Granted (in shares) | 736 | 1,232 | ||
Restricted stock, Fair value | ||||
Granted (in dollars per share) | $ 17.97 | $ 7.60 | ||
Additional General Disclosures | ||||
Stock-based compensation costs | $ 3,936 | $ 4,712 | $ 5,810 | $ 10,092 |
Total awards (in shares) | 736 | 1,735 | ||
Restricted shares | ||||
Stock options and stock award Plans | ||||
Vesting period | 3 years | |||
Unrecognized pre-tax compensation costs related to unvested stock options and restricted stock grants | ||||
Unrecognized pre-tax costs | 17,431 | $ 17,431 | ||
Weighted average amortization period | 2 years 6 months | |||
Performance based awards | ||||
Unrecognized pre-tax compensation costs related to unvested stock options and restricted stock grants | ||||
Unrecognized pre-tax costs | $ 7,707 | $ 7,707 | ||
Weighted average amortization period | 2 years 6 months | |||
Additional General Disclosures | ||||
Stock-based compensation costs | $ 513 | $ (348) |
Retirement Plans - Net periodic
Retirement Plans - Net periodic cost (Details) - Pension Plan - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Aug. 29, 2020 | Aug. 31, 2019 | Aug. 29, 2020 | Aug. 31, 2019 | |
Net periodic pension expense | ||||
Service cost | $ 144 | $ 143 | $ 288 | $ 285 |
Interest cost | 1,199 | 1,556 | 2,398 | 3,111 |
Expected return on plan assets | (1,177) | (1,214) | (2,354) | (2,427) |
Amortization of unrecognized net loss | 912 | 415 | 1,823 | 830 |
Net periodic pension expense | $ 1,078 | $ 900 | $ 2,155 | $ 1,799 |
Retirement Plans - Benefit obli
Retirement Plans - Benefit obligation and funded status (Details) - Pension Plan - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Aug. 29, 2020 | Aug. 31, 2019 | Aug. 29, 2020 | Aug. 31, 2019 | |
Change in benefit obligations: | ||||
Service cost | $ 144 | $ 143 | $ 288 | $ 285 |
Interest cost | 1,199 | $ 1,556 | 2,398 | $ 3,111 |
Change in plan assets: | ||||
Employer contributions | $ 854 | $ 854 |
Retirement Plans - Assumptions
Retirement Plans - Assumptions and assets (Details) $ in Thousands | Aug. 29, 2020USD ($) |
Pension Plan | |
Defined benefit plans estimated future employer contributions | |
Expected employer contribution during next fiscal year | $ 5,608 |
Segment Reporting - Balance She
Segment Reporting - Balance Sheet information (Details) $ in Thousands | 6 Months Ended | |
Aug. 29, 2020USD ($)segment | Feb. 29, 2020USD ($) | |
Segment Reporting | ||
Number of reportable segments | segment | 2 | |
Total assets | $ 9,620,199 | $ 9,452,369 |
Goodwill | 1,108,136 | 1,108,136 |
Accounts receivable | 1,920,866 | 1,286,785 |
Operating segments | Retail Pharmacy | ||
Segment Reporting | ||
Total assets | 6,947,566 | 6,757,196 |
Goodwill | 43,492 | 43,492 |
Operating segments | Pharmacy Services | ||
Segment Reporting | ||
Total assets | 2,688,478 | 2,709,737 |
Goodwill | 1,064,644 | 1,064,644 |
Intersegment elimination | ||
Segment Reporting | ||
Total assets | (15,845) | (14,564) |
Long-term deferred tax liability | 0 | 0 |
Accounts receivable | $ 15,845 | $ 14,564 |
Segment Reporting - Revenues (D
Segment Reporting - Revenues (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Aug. 29, 2020 | Aug. 31, 2019 | Aug. 29, 2020 | Aug. 31, 2019 | |
Segment Reporting | ||||
Revenues | $ 5,981,970 | $ 5,366,264 | $ 12,009,346 | $ 10,738,853 |
Gross Profit | 1,160,345 | 1,144,439 | 2,358,664 | 2,271,162 |
Adjusted EBITDA from continuing operations | 151,603 | 134,190 | 258,995 | 244,537 |
Additions to property and equipment and intangible assets | 46,483 | 50,577 | 85,657 | 99,768 |
Retail Pharmacy | ||||
Segment Reporting | ||||
Revenues | 4,017,912 | 3,848,104 | 8,141,183 | 7,712,912 |
Operating segments | Retail Pharmacy | ||||
Segment Reporting | ||||
Revenues | 4,017,912 | 3,848,104 | 8,141,183 | 7,712,912 |
Gross Profit | 1,061,913 | 1,032,444 | 2,143,449 | 2,062,939 |
Adjusted EBITDA from continuing operations | 122,340 | 92,673 | 185,322 | 176,681 |
Additions to property and equipment and intangible assets | 42,121 | 43,328 | 78,728 | 87,572 |
Operating segments | Pharmacy Services | ||||
Segment Reporting | ||||
Revenues | 2,038,378 | 1,579,069 | 4,015,624 | 3,145,361 |
Gross Profit | 98,432 | 111,995 | 215,215 | 208,223 |
Adjusted EBITDA from continuing operations | 29,263 | 41,517 | 73,673 | 67,856 |
Additions to property and equipment and intangible assets | 4,362 | 7,249 | 6,929 | 12,196 |
Intersegment elimination | ||||
Segment Reporting | ||||
Revenues | $ (74,320) | $ (60,909) | $ (147,461) | $ (119,420) |
Segment Reporting - Adjusted EB
Segment Reporting - Adjusted EBITDA (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Aug. 29, 2020 | Aug. 31, 2019 | Aug. 29, 2020 | Aug. 31, 2019 | |
Segment Reporting | ||||
Net loss from continuing operations | $ (13,197) | $ (78,705) | $ (85,899) | $ (178,044) |
Interest expense | 50,007 | 60,102 | 100,554 | 118,372 |
Income tax expense (benefit) | 47 | 27,628 | (7,971) | 35,002 |
Depreciation and amortization | 87,117 | 83,044 | 166,220 | 166,970 |
LIFO (credit) charge | (8,750) | 7,504 | (20,816) | 14,993 |
Lease termination and impairment charges | 11,528 | 1,471 | 15,281 | 1,949 |
Intangible asset impairment charges | 29,852 | |||
Gain on debt modification, net | (5,274) | (5,274) | ||
Merger and Acquisition-related costs | 514 | 3,599 | ||
Stock-based compensation expense | 3,936 | 4,712 | 5,810 | 10,092 |
Restructuring-related costs | 23,186 | 25,145 | 58,921 | 68,495 |
Inventory write-downs related to store closings | 1,058 | 3,149 | 1,892 | 3,990 |
Loss (gain) on sale of assets, net | 1,092 | (1,587) | (1,168) | (4,299) |
Other | 853 | 1,213 | 1,593 | 3,418 |
Adjusted EBITDA from continuing operations | $ 151,603 | $ 134,190 | $ 258,995 | $ 244,537 |
Commitments, Contingencies an_2
Commitments, Contingencies and Guarantees (Details) | Jan. 31, 2017state |
Commitments, Contingencies and Guarantees | |
Number of states failed to report Rx savings prices | 18 |
Supplementary Cash Flow Data (D
Supplementary Cash Flow Data (Details) - USD ($) $ in Thousands | 6 Months Ended | |
Aug. 29, 2020 | Aug. 31, 2019 | |
Supplementary Cash Flow Data | ||
Cash paid for interest | $ 88,744 | $ 110,401 |
Cash payments for income taxes, net | 6,415 | 4,059 |
Equipment financed under capital leases | 428 | 2,077 |
Gross borrowings from revolver | 4,354,000 | 1,524,000 |
Gross repayments to revolver | 3,704,000 | 1,149,000 |
Significant components of cash provided by Other Liabilities | ||
Other liabilities | 11,484 | $ 8,104 |
Decrease in compensation and benefit accruals | 68,286 | |
Tax payment deferral | $ 52,733 |