Rite Aid 2013 Annual Report Download - page 87

RITE AID CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
For the Years Ended March 2, 2013, March 3, 2012 and February 26, 2011
(In thousands, except per share amounts)
6. Accounts Receivable
The Company maintains an allowance for doubtful accounts receivable based upon the expected
collectability of accounts receivable. The allowance for uncollectible accounts at March 2, 2013 and
March 3, 2012 was $28,271 and $28,832 respectively. The Company’s accounts receivable are due
primarily from third-party payors (e.g., pharmacy benefit management companies, insurance companies
or governmental agencies) and are recorded net of any allowances provided for under the respective
plans. Since payments due from third-party payors are sensitive to payment criteria changes and
legislative actions, the allowance is reviewed continually and adjusted for accounts deemed uncollectible
by management.
7. Inventory
At March 2, 2013 and March 3, 2012, inventories were $915,241 and $1,063,123, respectively, lower
than the amounts that would have been reported using the first-in, first-out (‘‘FIFO’’) cost flow
assumption. The Company calculates its FIFO inventory valuation using the retail method for store
inventories and the cost method for distribution facility inventories. The Company recorded a LIFO
credit for fiscal year 2013 of $147,882 compared to LIFO charges for fiscal years 2012 and 2011 of
$188,722 and $44,905, respectively. During fiscal 2013, 2012 and 2011, a reduction in inventories related
to working capital initiatives resulted in the liquidation of applicable LIFO inventory quantities carried
at lower costs in prior years. This LIFO liquidation resulted in a $4,316, $11,004 and $2,647 cost of
sales decrease, with a corresponding reduction to the adjustment to LIFO for fiscal 2013, fiscal 2012
and fiscal 2011, respectively.
8. Property, Plant and Equipment
Following is a summary of property, plant and equipment, including capital lease assets, at
March 2, 2013 and March 3, 2012:
2013 2012
Land ...................................... $ 243,413 $ 249,906
Buildings ................................... 753,952 746,568
Leasehold improvements ........................ 1,733,607 1,618,042
Equipment .................................. 2,079,372 2,020,366
Construction in progress ........................ 55,013 57,983
4,865,357 4,692,865
Accumulated depreciation ....................... (2,969,707) (2,790,844)
Property, plant and equipment, net ................. $1,895,650 $ 1,902,021
Depreciation expense, which included the depreciation of assets recorded under capital leases, was
$286,374, $296,792 and $331,928 in fiscal 2013, 2012 and 2011, respectively.
Included in property, plant and equipment was the carrying amount of assets to be disposed of
totaling $14,702 and $2,774 at March 2, 2013 and March 3, 2012, respectively.
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