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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)
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 1, 2014 and
March 2, 2013 was $26,873 and $28,271 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 1, 2014 and March 2, 2013, inventories were $1,018,581 and $915,241, 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
charge for fiscal year 2014 of $104,142, compared to a LIFO credit of $147,882 for fiscal year 2013 and
a LIFO charge of $188,722 for fiscal year 2012. During fiscal 2014, 2013 and 2012, 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 $13,894, $4,316 and
$11,004 cost of sales decrease, with a corresponding reduction to the adjustment to LIFO for fiscal
2014, fiscal 2013 and fiscal 2012, respectively.
8. Property, Plant and Equipment
Following is a summary of property, plant and equipment, including capital lease assets, at
March 1, 2014 and March 2, 2013:
2014 2013
Land ...................................... $ 233,098 $ 243,413
Buildings ................................... 753,633 753,952
Leasehold improvements ........................ 1,890,369 1,733,607
Equipment .................................. 2,194,339 2,079,372
Construction in progress ........................ 69,388 55,013
5,140,827 4,865,357
Accumulated depreciation ....................... (3,183,498) (2,969,707)
Property, plant and equipment, net ................. $1,957,329 $ 1,895,650
Depreciation expense, which included the depreciation of assets recorded under capital leases, was
$284,603, $286,374 and $296,792 in fiscal 2014, 2013 and 2012, respectively.
Included in property, plant and equipment was the carrying amount of assets to be disposed of
totaling $1,887 and $14,702 at March 1, 2014 and March 2, 2013, respectively.
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