Rite Aid 2015 Annual Report Download - page 88

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RITE AID CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
For the Years Ended February 28, 2015, March 1, 2014 and March 2, 2013
(In thousands, except per share amounts)
7. Income Taxes (Continued)
years and the Company’s historical ability of predicting earnings. Based upon the Company’s
projections for future taxable income over the periods in which the deferred tax assets are recoverable,
management believes that it is more likely than not that the Company will realize the benefits of
substantially all the net deferred tax assets existing at February 28, 2015.
Net Income for fiscal 2014 included income tax expense of $804 resulting from an increase in the
deferred tax valuation allowance for the windfall tax benefits recorded in additional paid-in capital
(‘‘APIC’’) pursuant to the tax law ordering approach offset by adjustments to unrecognized tax benefits
due to the lapse of statute of limitations. Net Income for fiscal 2013 included income tax benefit of
$110,600 primarily comprised of adjustments to unrecognized tax benefits for the appellate settlements
of the Brooks Eckerd IRS Audit for the fiscal years 2004 - 2007 and the Commonwealth of
Massachusetts Audit for fiscal years 2005 - 2007 as well as for the lapse of statute of limitations. The
appellate settlements were offset by a reversal of the related tax indemnification asset which was
recorded in selling, general and administrative expenses as these audits were related to pre-acquisition
periods.
The tax effect of temporary differences that gave rise to significant components of deferred tax
assets and liabilities consisted of the following at February 28, 2015 and March 1, 2014:
2015 2014
Deferred tax assets:
Accounts receivable ........................... $ 68,582 $ 62,973
Accrued expenses ............................ 207,553 204,346
Liability for lease exit costs ..................... 98,906 116,803
Pension, retirement and other benefits ............. 175,081 174,917
Long-lived assets ............................. 475,187 424,290
Other ..................................... 5,232 1,989
Credits .................................... 63,826 60,951
Net operating losses .......................... 1,300,964 1,428,751
Total gross deferred tax assets .................. 2,395,331 2,475,020
Valuation allowance ........................... (231,679) (2,060,811)
Total deferred tax assets ...................... 2,163,652 414,209
Deferred tax liabilities:
Inventory .................................. 437,165 414,209
Total gross deferred tax liabilities ............... 437,165 414,209
Net deferred tax assets .......................... $1,726,487 $ —
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