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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)
4. Fair Value Measurements
The Company utilizes the three-level valuation hierarchy as described in Note 3, Lease Termination
and Impairment Charges, for the recognition and disclosure of fair value measurements.
As of March 1, 2014 and March 2, 2013, the Company did not have any financial assets measured
on a recurring basis. Please see Note 3 for fair value measurements of non-financial assets measured on
a non-recurring basis.
Other Financial Instruments
Financial instruments other than long-term indebtedness include cash and cash equivalents,
accounts receivable and accounts payable. These instruments are recorded at book value, which we
believe approximate their fair values due to their short term nature.
The fair value for LIBOR-based borrowings under the Company’s senior secured credit facility and
first and second lien term loans are estimated based on the quoted market price of the financial
instrument which is considered Level 1 of the fair value hierarchy. The fair values of substantially all of
the Company’s other long-term indebtedness are estimated based on quoted market prices of the
financial instruments which are considered Level 1 of the fair value hierarchy. The carrying amount and
estimated fair value of the Company’s total long-term indebtedness was $5,649,732 and $6,094,285,
respectively, as of March 1, 2014. The carrying amount and estimated fair value of the Company’s total
long-term indebtedness was $5,918,352 and $6,188,597, respectively, as of March 2, 2013. There were no
outstanding derivative financial instruments as of March 1, 2014 and March 2, 2013.
5. Income Taxes
The provision for income tax expense (benefit) was as follows:
Year Ended
March 1, March 2, March 3,
2014 2013 2012
(52 Weeks) (52 Weeks) (53 Weeks)
Current tax:
Federal .............................. $ — $ (6,305) $ —
State ............................... 4,748 7,928 3,654
4,748 1,623 3,654
Deferred tax and other:
Federal .............................. — (61,544) 1,729
State ............................... (30,609) (50,679) (29,069)
Tax expense recorded as an increase of
additional paid-in-capital ............... 26,665 — —
(3,944) (112,223) (27,340)
Total income tax expense (benefit) ............ $ 804 $(110,600) $(23,686)
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