Rite Aid 2016 Annual Report Download - page 154

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RITE AID CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
For the Years Ended February 27, 2016, February 28, 2015 and March 1, 2014
(In thousands, except per share amounts)
25. Interim Financial Results (Unaudited) (Continued)
During the second quarter of 2016, the Company recorded a loss on debt retirement related to the
August 2015 redemption of the outstanding 8.00% Notes as discussed in Note 14. During the fourth
quarter of fiscal 2016, the Company recorded facilities impairment charges of $16,401 and a LIFO
credit of $6,796 due to lower deflation on pharmacy generics as compared to a larger LIFO credit
recognized at prior year end caused by lower pharmacy inventory due to its Purchasing and Delivery
Arrangement.
During the third quarter of 2015, the Company recorded a loss on debt retirement related to the
October 2014 redemption of the outstanding 10.25% senior notes due 2019 as discussed in Note 14.
During the fourth quarter of fiscal 2015, the Company recorded facilities impairment charges of
$13,105 and a LIFO credit of $23,489 due to lower pharmacy inventory in both its stores and
distribution centers in connection with its Purchasing and Delivery Arrangement as compared to a
LIFO charge recognized at prior year end caused by higher pharmacy inflation rates.
26. Financial Instruments
The carrying amounts and fair values of financial instruments at February 27, 2016 and
February 28, 2015 are listed as follows:
2016 2015
Carrying Fair Carrying Fair
Amount Value Amount Value
Variable rate indebtedness ................... $3,027,675 $3,025,500 $2,642,008 $2,649,825
Fixed rate indebtedness ..................... $3,886,808 $4,210,416 $2,825,115 $3,230,801
Cash, trade receivables and trade payables are carried at market value, which approximates their
fair values due to the short-term maturity of these instruments. In addition, the Company has $6,069 of
investments, carried at amortized cost as these investments are being held to maturity, which are
included as a component of other assets as of February 27, 2016. The Company believes the carrying
value of these investments approximates their fair value.
The following methods and assumptions were used in estimating fair value disclosures for financial
instruments:
LIBOR-based borrowings under credit facilities:
The carrying amounts for LIBOR-based borrowings under the credit facilities, term loans and term
notes are estimated based on the quoted market price of the financial instruments.
Long-term indebtedness:
The fair values of long-term indebtedness are estimated based on the quoted market prices of the
financial instruments. If quoted market prices were not available, the Company estimated the fair value
based on the quoted market price of a financial instrument with similar characteristics.
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