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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
The provision for income tax (benefit) expense was as follows:
Year Ended
February 28, March 1, March 2,
2015 2014 2013
(52 Weeks) (52 Weeks) (52 Weeks)
Current tax:
Federal ............................ $ — $ — $ (6,305)
State .............................. 6,011 4,748 7,928
6,011 4,748 1,623
Deferred tax and other:
Federal ............................ (1,544,344) — (61,544)
State .............................. (144,020) (30,609) (50,679)
Tax expense recorded as an increase of
additional paid-in- capital ............. — 26,665 —
(1,688,364) (3,944) (112,223)
Total income tax (benefit) expense ........ $(1,682,353) $ 804 $(110,600)
A reconciliation of the expected statutory federal tax and the total income tax (benefit) expense
was as follows:
Year Ended
February 28, March 1, March 2,
2015 2014 2013
(52 Weeks) (52 Weeks) (52 Weeks)
Expected federal statutory expense at 35% . . . $ 149,389 $ 87,576 $ 2,626
Nondeductible expenses ................. 805 857 1,897
State income taxes, net .................. 11,565 44,366 39,470
Decrease of previously recorded liabilities .... (3,698) (21,101) (91,881)
Nondeductible compensation ............. 5,136 44,244 —
Recoverable federal tax due to special 5-year
NOL carryback ...................... — — (6,305)
Release of indemnification asset ........... — 5,941 37,324
Indemnification receipt .................. — — 587
Valuation allowance .................... (1,841,304) (161,079) (94,318)
Other .............................. (4,246) — —
Total income tax (benefit) expense ......... $(1,682,353) $ 804 $(110,600)
The income tax benefit of $1,682,353 was primarily attributable to the reduction of the deferred
tax valuation allowance. The reduction of the valuation allowance was based upon the Company’s
achievement of cumulative profitability over a three year window, reported earnings for ten consecutive
quarters, utilization of federal and state net operating losses against taxable income for the last three
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