Guarantor and Non-Guarantor Condensed Consolidating Financial Information

12 Months Ended

Feb. 29, 2020

Guarantor and Non-Guarantor Condensed Consolidating Financial Information

Guarantor and Non-Guarantor Condensed Consolidating Financial Information

24. Guarantor and Non-Guarantor Condensed Consolidating Financial Information

Rite Aid Corporation conducts the majority of its business through its subsidiaries. With the exception of EIC, substantially all of Rite Aid Corporation’s 100 % owned subsidiaries guarantee the obligations under the Existing Facilities, the secured guaranteed notes and unsecured guaranteed notes (the “Subsidiary Guarantors”). Additionally,

with the exception of EIC, the subsidiaries, including joint ventures, that do not guarantee the Existing Facilities, the secured guaranteed notes and unsecured guaranteed notes, are minor.

For the purposes of preparing the information below, Rite Aid Corporation uses the equity method to account for its investment in subsidiaries. The equity method has been used by Subsidiary Guarantors with respect to investments in the non-guarantor subsidiaries. The subsidiary guarantees related to the Company’s Existing Facilities, secured guaranteed notes and, on an unsecured basis, the unsecured guaranteed notes, are full and unconditional and joint and several. Presented below is condensed consolidating financial information for Rite Aid Corporation, the Subsidiary Guarantors, and the non-guarantor subsidiaries at February 29, 2020 and March 2, 2019 and for the fiscal years ended February 29, 2020, March 2, 2019 and March 3, 2018. Separate financial statements for Subsidiary Guarantors are not presented.

	Rite Aid Corporation
	Condensed Consolidating Balance Sheet
	February 29, 2020
	Rite Aid
	Corporation				Non-
	(Parent		Subsidiary		Guarantor
	Company Only)		Guarantors		Subsidiaries		Eliminations			Consolidated
	(in thousands)
ASSETS
Current assets:
Cash and cash equivalents	$	—	$	194,005	$	24,175	$	—		$	218,180
Accounts receivable, net		—		1,278,002		8,783		—			1,286,785
Intercompany receivable		—		(56,608)		43,304		13,304	(a)		—
Inventories, net of LIFO reserve of $0, $539,640, $0, $0, and $539,640		—		1,921,604		—		—			1,921,604
Prepaid expenses and other current assets		—		171,086		10,708		—			181,794
Current assets held for sale		—		92,278		—		—			92,278
Total current assets		—		3,600,367		86,970		13,304			3,700,641
Property, plant and equipment, net		—		1,215,838		—		—			1,215,838
Operating lease right-of-use assets		—		2,903,256		—		—			2,903,256
Goodwill		—		1,108,136		—		—			1,108,136
Other intangibles, net		—		312,763		46,728		—			359,491
Deferred tax assets		10,828		5,852		—		—			16,680
Investment in subsidiaries		7,843,411		67,342		—		(7,910,753)	(b)		—
Intercompany receivable		—		4,090,373		—		(4,090,373)	(a)		—
Other assets		—		141,305		7,022		—			148,327
Total assets	$	7,854,239	$	13,445,232	$	140,720	$	(11,987,822)		$	9,452,369
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Current maturities of long-term debt and lease financing obligations	$	—	$	8,840	$	—	$	—		$	8,840
Accounts payable		—		1,471,459		12,622		—			1,484,081
Intercompany payable		—		(43,304)		30,000		13,304	(a)		—
Accrued salaries, wages and other current liabilities		12,071		711,491		22,756		—			746,318
Current portion of operating lease liabilities		—		490,161		—		—			490,161
Current liabilities held for sale		—		37,063		—		—			37,063
Total current liabilities		12,071		2,675,710		65,378		13,304			2,766,463
Long-term debt, less current maturities		3,077,268		—		—		—			3,077,268
Long-term operating lease liabilities		—		2,710,347		—		—			2,710,347
Lease financing obligations, less current maturities		—		19,326		—		—			19,326
Intercompany payable		4,090,373		—		—		(4,090,373)	(a)		—
Other noncurrent liabilities		—		196,438		8,000		—			204,438
Total liabilities		7,179,712		5,601,821		73,378		(4,077,069)			8,777,842
Commitments and contingencies		—		—		—		—			—
Total stockholders’ equity		674,527		7,843,411		67,342		(7,910,753)	(b)		674,527
Total liabilities and stockholders’ equity	$	7,854,239	$	13,445,232	$	140,720	$	(11,987,822)		$	9,452,369

(a) Elimination of intercompany accounts receivable and accounts payable amounts.

(b) Elimination of investments in consolidated subsidiaries.

	Rite Aid Corporation
	Condensed Consolidating Balance Sheet
	March 2, 2019
	Rite Aid
	Corporation				Non-
	(Parent		Subsidiary		Guarantor
	Company Only)		Guarantors		Subsidiaries		Eliminations			Consolidated
		(in thousands)
ASSETS
Current assets:
Cash and cash equivalents	$	—	$	122,134	$	22,219	$	—		$	144,353
Accounts receivable, net		—		1,377,342		411,370		—			1,788,712
Intercompany receivable		—		400,526		—		(400,526)	(a)		—
Inventories, net of LIFO reserve of $0, $604,444, $0, $0, and $604,444		—		1,871,941		—		—			1,871,941
Prepaid expenses and other current assets		—		172,448		6,684		—			179,132
Current assets held for sale		—		117,581		—		—			117,581
Total current assets		—		4,061,972		440,273		(400,526)			4,101,719
Property, plant and equipment, net		—		1,308,514		—		—			1,308,514
Goodwill		—		1,108,136		—		—			1,108,136
Other intangibles, net		—		399,678		49,028		—			448,706
Deferred tax assets		—		419,122		(10,038)		—			409,084
Investment in subsidiaries		8,294,315		55,109		—		(8,349,424)	(b)		—
Intercompany receivable		—		3,639,035		—		(3,639,035)	(a)		—
Other assets		—		208,018		7,190		—			215,208
Total assets	$	8,294,315	$	11,199,584	$	486,453	$	(12,388,985)		$	7,591,367
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Current maturities of long-term debt and lease financing obligations	$	—	$	16,111	$	—	$	—		$	16,111
Accounts payable		—		1,612,181		6,404		—			1,618,585
Intercompany payable		—		—		400,526		(400,526)	(a)		—
Accrued salaries, wages and other current liabilities		14,005		778,020		16,414		—			808,439
Total current liabilities		14,005		2,406,312		423,344		(400,526)			2,443,135
Long-term debt, less current maturities		3,454,585		—		—		—			3,454,585
Lease financing obligations, less current maturities		—		24,064		—		—			24,064
Intercompany payable		3,639,035		—		—		(3,639,035)	(a)		—
Other noncurrent liabilities		—		474,893		8,000		—			482,893
Total liabilities		7,107,625		2,905,269		431,344		(4,039,561)			6,404,677
Commitments and contingencies		—		—		—		—			—
Total stockholders’ equity		1,186,690		8,294,315		55,109		(8,349,424)	(b)		1,186,690
Total liabilities and stockholders’ equity	$	8,294,315	$	11,199,584	$	486,453	$	(12,388,985)		$	7,591,367

(a) Elimination of intercompany accounts receivable and accounts payable amounts.

(b) Elimination of investments in consolidated subsidiaries.

	Rite Aid Corporation
	Condensed Consolidating Statement of Operations
	For the Year Ended February 29, 2020
	Rite Aid
	Corporation				Non-
	(Parent		Subsidiary		Guarantor
	Company Only)		Guarantors		Subsidiaries		Eliminations			Consolidated
		(in thousands)
Revenues	$	—	$	21,514,693	$	441,827	$	(28,127)	(a)	$	21,928,393
Costs and expenses:
Cost of revenues		—		16,818,111		411,266		(27,742)	(a)		17,201,635
Selling, general and administrative expenses		—		4,560,220		27,501		(385)	(a)		4,587,336
Lease termination and impairment charges		—		42,843		—		—			42,843
Interest expense		216,834		13,586		(763)		—			229,657
Gain on debt retirements		—		(55,692)		—		—			(55,692)
Loss on sale of assets, net		—		4,226		—		—			4,226
Equity in earnings of subsidiaries, net of tax		235,340		(12,233)		—		(223,107)	(b)		—
		452,174		21,371,061		438,004		(251,234)			22,010,005
(Loss) income from continuing operations before income taxes		(452,174)		143,632		3,823		223,107			(81,612)
Income tax expense (benefit)		—		396,017		(8,410)		—			387,607
Net (loss) income from continuing operations	$	(452,174)	$	(252,385)	$	12,233	$	223,107		$	(469,219)
Net income from discontinued operations		—		17,045		—		—			17,045
Net (loss) income		(452,174)		(235,340)		12,233		223,107	(b)		(452,174)
Total other comprehensive (loss) income		(17,839)		(17,351)		—		17,351			(17,839)
Comprehensive (loss) income	$	(470,013)	$	(252,691)	$	12,233	$	240,458		$	(470,013)

(a) Elimination of intercompany revenues and expenses.

(b) Elimination of equity in earnings of subsidiaries.

	Rite Aid Corporation
	Condensed Consolidating Statement of Operations
	For the Year Ended March 2, 2019
	Rite Aid
	Corporation				Non-
	(Parent		Subsidiary		Guarantor
	Company Only)		Guarantors		Subsidiaries		Eliminations			Consolidated
	(in thousands)
Revenues	$	—	$	21,297,937	$	397,328	$	(55,708)	(a)	$	21,639,557
Costs and expenses:
Cost of revenues		—		16,648,099		370,413		(55,307)	(a)		16,963,205
Selling, general and administrative expenses		—		4,567,690		25,086		(401)	(a)		4,592,375
Lease termination and impairment charges		—		107,994		—		—			107,994
Goodwill and intangible asset impairment charges		—		375,190		—		—			375,190
Interest expense		206,862		21,704		(838)		—			227,728
Loss on debt retirements		—		554		—		—			554
Gain on sale of assets, net		—		(38,012)		—		—			(38,012)
Equity in earnings of subsidiaries, net of tax		210,736		(1,033)		—		(209,703)	(b)		—
		417,598		21,682,186		394,661		(265,411)			22,229,034
(Loss) income from continuing operations before income taxes		(417,598)		(384,249)		2,667		209,703			(589,477)
Income tax benefit		—		75,843		1,634		—			77,477
Net (loss) income from continuing operations	$	(417,598)	$	(460,092)	$	1,033	$	209,703		$	(666,954)
Net income from discontinued operations		(4,615)		249,356		—		—			244,741
Net (loss) income		(422,213)		(210,736)		1,033		209,703	(b)		(422,213)
Total other comprehensive income (loss)		3,490		3,490		—		(3,490)			3,490
Comprehensive (loss) income	$	(418,723)	$	(207,246)	$	1,033	$	206,213		$	(418,723)

(a) Elimination of intercompany revenues and expenses.

(b) Elimination of equity in earnings of subsidiaries.

	Rite Aid Corporation
	Condensed Consolidating Statement of Operations
	For the Year Ended March 3, 2018
	Rite Aid
	Corporation				Non-
	(Parent		Subsidiary		Guarantor
	Company Only)		Guarantors		Subsidiaries		Eliminations			Consolidated
	(in thousands)
Revenues	$	—	$	21,413,734	$	209,356	$	(94,122)	(a)	$	21,528,968
Costs and expenses:
Cost of revenues		—		16,645,136		197,084		(93,357)	(a)		16,748,863
Selling, general and administrative expenses		—		4,635,531		16,496		(765)	(a)		4,651,262
Lease termination and impairment expenses		—		58,765		—		—			58,765
Goodwill and intangible asset impairment charges		—		261,727		—		—			261,727
Interest expense		183,825		19,261		(318)		—			202,768
Walgreens Boots Alliance, Inc. termination fee		(325,000)		—		—		—			(325,000)
Gain on sale of assets, net		—		(25,872)		—		—			(25,872)
Equity in earnings of subsidiaries, net of tax		(1,034,775)		(4,072)		—		1,038,847	(b)		—
		(1,175,950)		21,590,476		213,262		944,725			21,572,513
(Loss) income from continuing operations before income taxes		1,175,950		(176,742)		(3,906)		(1,038,847)			(43,545)
Income tax expense		—		313,965		(7,978)		—			305,987
Net (loss) income from continuing operations		1,175,950		(490,707)		4,072		(1,038,847)			(349,532)
Net loss from discontinued operations		(232,480)		1,525,482		—		—			1,293,002
Net (loss) income	$	943,470	$	1,034,775	$	4,072	$	(1,038,847)	(b)	$	943,470
Total other comprehensive income (loss)		7,255		7,255		—		(7,255)			7,255
Comprehensive (loss) income	$	950,725	$	1,042,030	$	4,072	$	(1,046,102)		$	950,725

(a) Elimination of intercompany revenues and expenses.

(b) Elimination of equity in earnings of subsidiaries.

	Rite Aid Corporation
	Condensed Consolidating Statement of Cash Flows
	Year Ended February 29, 2020
	Rite Aid
	Corporation				Non-
	(Parent		Subsidiary		Guarantor
	Company Only)		Guarantors		Subsidiaries		Eliminations		Consolidated
	(in thousands)
Operating activities:
Net cash (used in) provided by operating activities	$	(214,470)	$	723,371	$	1,956	$	—	$	510,857
Investing activities:
Payments for property, plant and equipment		—		(171,705)		—		—		(171,705)
Intangible assets acquired		—		(42,681)		—		—		(42,681)
Intercompany activity		—		(539,344)		—		539,344		—
Proceeds from dispositions of assets and investments		—		59,658		—		—		59,658
Proceeds from sale-leaseback transactions		—		4,879		—		—		4,879
Net cash used in investing activities		—		(689,193)		—		539,344		(149,849)
Financing activities:
Proceeds from issuance of long-term debt		600,000		—		—		—		600,000
Net payments to revolver		(225,000)		—		—		—		(225,000)
Principal payments on long-term debt		(694,093)		(12,010)		—		—		(706,103)
Change in zero balance cash accounts		—		12,671		—		—		12,671
Financing fees paid for early debt redemption		—		(518)		—		—		(518)
Payments for taxes related to net share settlement of equity awards		—		(1,921)		—		—		(1,921)
Deferred financing costs paid		(5,781)		—		—		—		(5,781)
Intercompany activity		539,344		—		—		(539,344)		—
Net cash provided by (used in) financing activities		214,470		(1,778)		—		(539,344)		(326,652)
Cash flows of discontinued operations:
Operating activities of discontinued operations		—		(23,836)		—		—		(23,836)
Investing activities of discontinued operations		—		63,307		—		—		63,307
Financing activities of discontinued operations		—		—		—		—		—
Net cash provided by discontinued operations		—		39,471		—		—		39,471
Increase in cash and cash equivalents		—		71,871		1,956		—		73,827
Cash and cash equivalents, beginning of period		—		122,134		22,219		—		144,353
Cash and cash equivalents, end of period	$	—	$	194,005	$	24,175	$	—	$	218,180

	Rite Aid Corporation
	Condensed Consolidating Statement of Cash Flows
	Year Ended March 2, 2019
	Rite Aid
	Corporation
	(Parent				Non-
	Company		Subsidiary		Guarantor
	Only)		Guarantors		Subsidiaries		Eliminations		Consolidated
	(in thousands)
Operating activities:
Net cash (used in) provided by operating activities	$	(255,962)	$	74,124	$	16,129	$	—	$	(165,709)
Investing activities:
Payments for property, plant and equipment		—		(196,778)		—		—		(196,778)
Intangible assets acquired		—		(47,911)		—		—		(47,911)
Intercompany activity		—		(727,221)		—		727,221		—
Proceeds from dispositions of assets and investments		—		43,550		—		—		43,550
Proceeds from sale-leaseback transactions		—		2,587		—		—		2,587
Net cash (used in) provided by investing activities		—		(925,773)		—		727,221		(198,552)
Financing activities:
Proceeds from issuance of long-term debt		450,000		—		—		—		450,000
Net proceeds from revolver		875,000		—		—		—		875,000
Principal payments on long-term debt		(427,992)		(12,378)		—		—		(440,370)
Change in zero balance cash accounts		—		(59,481)		—		—		(59,481)
Net proceeds from issuance of common stock		2,294		—		—		—		2,294
Payments for taxes related to net share settlement of equity awards		—		(2,419)		—		—		(2,419)
Financing fees paid for early redemption		—		(171)		—		—		(171)
Deferred financing costs paid		(21,564)		—		—		—		(21,564)
Intercompany activity		727,221		—		—		(727,221)		—
Net cash provided by (used in) financing activities		1,604,959		(74,449)		—		(727,221)		803,289
Cash flows of discontinued operations:
Operating activities of discontinued operations		(4,615)		(58,341)		—		—		(62,956)
Investing activities of discontinued operations		—		664,740		—		—		664,740
Financing activities of discontinued operations		(1,344,382)		589		—		—		(1,343,793)
Net cash (used in) provided by discontinued operations		(1,348,997)		606,988		—		—		(742,009)
(Decrease) increase in cash and cash equivalents		—		(319,110)		16,129		—		(302,981)
Cash and cash equivalents, beginning of period		—		441,244		6,090		—		447,334
Cash and cash equivalents, end of period	$	—	$	122,134	$	22,219	$	—	$	144,353

	Rite Aid Corporation
	Condensed Consolidating Statement of Cash Flows
	For the Year Ended March 3, 2018
	Rite Aid
	Corporation
	(Parent				Non-
	Company		Subsidiary		Guarantor
	Only)		Guarantors		Subsidiaries		Eliminations		Consolidated
	(in thousands)
Operating activities:
Net cash (used in) provided by operating activities	$	158,247	$	379,439	$	(26,216)	$	—	$	511,470
Investing activities:
Payments for property, plant and equipment		—		(185,879)		—		—		(185,879)
Intangible assets acquired		—		(28,885)		—		—		(28,885)
Intercompany activity		—		(3,460,291)		—		3,460,291		—
Proceeds from insured loss		—		4,239		—		—		4,239
Proceeds from dispositions of assets and investments		—		27,586		—		—		27,586
Net cash (used in) provided by investing activities		—		(3,643,230)		—		3,460,291		(182,939)
Financing activities:
Net payments to revolver		(265,000)		—		—		—		(265,000)
Principal payments on long-term debt		—		(9,882)		—		—		(9,882)
Change in zero balance cash accounts		—		35,605		—		—		35,605
Net proceeds from issuance of common stock		5,796		—		—		—		5,796
Payments for taxes related to net share settlement of equity awards		—		(4,103)		—		—		(4,103)
Intercompany activity		3,460,291		—		—		(3,460,291)		—
Net cash provided by (used in) financing activities		3,201,087		21,620		—		(3,460,291)		(237,584)
Cash flows of discontinued operations:
Operating activities of discontinued operations		(224,300)		(20,826)		—		—		(245,126)
Investing activities of discontinued operations		—		3,496,222		—		—		3,496,222
Financing activities of discontinued operations		(3,135,034)		(5,085)		—		—		(3,140,119)
Net cash provided by (used in) discontinued operations		(3,359,334)		3,470,311		—		—		110,977
Increase (decrease) in cash and cash equivalents		—		228,140		(26,216)		—		201,924
Cash and cash equivalents, beginning of period		—		213,104		32,306		—		245,410
Cash and cash equivalents, end of period	$	—	$	441,244	$	6,090	$	—	$	447,334