Rite Aid 2014 Annual Report Download - page 77

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RITE AID CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
For the Years Ended March 1, 2014, March 2, 2013 and March 3, 2012
(In thousands, except per share amounts)
3. Lease Termination and Impairment Charges (Continued)
the store is located. Significant increases or decreases in actual cash flows may result in valuation
changes.
The table below sets forth by level within the fair value hierarchy the long-lived assets as of the
impairment measurement date for which an impairment assessment was performed and total losses as
of March 1, 2014 and March 2, 2013:
Quoted Prices in Significant Fair Values
Active Markets Other Significant as of Total
for Identical Observable Unobservable Impairment Charges
Assets (Level 1) Inputs (Level 2) Inputs (Level 3) Date March 1, 2014
Long-lived assets held and
used ................. $— $ 42 $15,051 $15,093 $(12,279)
Long-lived assets held for
sale ................. — 14,656 — 14,656 (798)
Total .................. $— $14,698 $15,051 $29,749 $(13,077)
Quoted Prices in Significant Fair Values
Active Markets Other Significant as of Total
for Identical Observable Unobservable Impairment Charges
Assets (Level 1) Inputs (Level 2) Inputs (Level 3) Date March 2, 2013
Long-lived assets held and
used ................. $— $1,018 $21,739 $22,757 $(24,298)
Long-lived assets held for
sale ................. — 1,842 — 1,842 (594)
Total .................. $— $2,860 $21,739 $24,599 $(24,892)
Lease Termination Charges
Charges to close a store, which principally consist of continuing lease obligations, are recorded at
the time the store is closed and all inventory is liquidated, pursuant to the guidance set forth in
ASC 420, ‘‘Exit or Disposal Cost Obligations.’’ The Company calculates the liability for closed stores on
a store-by-store basis. The calculation includes the discounted effect of future minimum lease payments
and related ancillary costs, from the date of closure to the end of the remaining lease term, net of
estimated cost recoveries that may be achieved through subletting or favorable lease terminations. The
Company evaluates these assumptions each quarter and adjusts the liability accordingly.
In fiscal 2014, 2013 and 2012, the Company recorded lease termination charges of $28,227, $45,967
and $48,055, respectively. These charges related to changes in future assumptions, interest accretion
and provisions for 15 stores in fiscal 2014, 14 stores in fiscal 2013, and 23 stores in fiscal 2012. Of the
approximate 40 store closures for fiscal 2015, the Company anticipates that 15 will require a store lease
closing provision.
As part of its ongoing business activities, the Company assesses stores and distribution centers for
potential closure. Decisions to close or relocate stores or distribution centers in future periods would
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