Restructuring

6 Months Ended

Aug. 31, 2019

Restructuring

Restructuring

2. Restructuring

In March 2019, the Board of Directors implemented a reorganization of our executive management team to further streamline our business. In addition, the Company announced a restructuring plan that will reduce managerial layers and consolidate roles across the organization, resulting in the elimination of approximately 400 full-time positions located at the Company’s headquarters and across the field organization. Approximately two-thirds of the reductions took place at the time of the announcement and the balance will occur by the end of fiscal 2020.

In April 2019, the Company implemented its Path to the Future transformation initiative, which focuses primarily on opportunities to drive further growth and operating efficiency, including i) building tools to work with regional health plans to improve patient health outcomes, ii) rationalize SKU’s in its front-end offering to free up

working capital, improve front-end profitability and improve the customer experience, iii) an assessment of the Company’s pricing and promotional strategy and, iv) a continued review of the Company’s cost structure, which includes opportunities to use technology and vendor partners to help reduce costs.

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 the March 2019 reorganization (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 the Path to the Future transformation initiative (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 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 the March 2019 reorganization (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 the Path to the Future transformation initiative (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 31, 2019 in the restructuring-related liabilities associated with the programs noted above, which is included in accrued salaries, wages and other current liabilities, is as follows:

	Severance and related				Professional and
	costs (a)		Retention costs (b)		other fees (c)		Total
Balance at March 2, 2019	$	—	$	4,704	$	—	$	4,704
Additions charged to expense		27,076		6,664		9,610		43,350
Cash payments		(4,653)		(242)		(9,610)		(14,505)
Balance at June 1, 2019		22,423		11,126		—		33,549
Additions charged to expense		8,381		4,087		12,677		25,145
Cash payments		(4,580)		(11,200)		(6,768)		(22,548)
Balance at August 31, 2019	$	26,224	$	4,013	$	5,909	$	36,146

(a) – Severance and related costs reflect severance accruals, executive search fees, outplacement services and other similar charges associated with the March 2019 reorganization.

(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 transformation initiatives associated with the Path to the Future initiative.

The Company anticipates its total fiscal 2020 restructuring-related costs to be approximately $90,000.