| Respond to one or more question(s) from each of the three categories below. Category: Operating Activities 1. State whether your corporation uses the direct or indirect method of preparing the Statement of Cash Flows and describe how the Statement would be different under these two methods. 2. What are the largest increases and decreases in the operating activities section of your corporation's Statement of Cash Flows? 3. Given the industry your corporation operates in and the current economic environment, explain any unexpected operating activities that caused cash flow to decrease. Category: Investing and Financing Activities 1. Explain similarities and or differences in preparing the Statement of Cash Flows using International Financial Reporting Standards (IFRS). 2. Describe investments reported on your corporation's Statement of Cash Flows in the current and most recent past year. 3. Review your corporation's Statement of Cash Flows over the past 3 years and explain any financing trends. Category: Analysis 1. Calculate the following ratio for the most recent two years and comment on the results of your ratio analysis. How does the result for your corporation compare to the industry average? a. Free cash flow RITE AID CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (In thousands) | | | | | | | | | | | | | | | Year Ended | | | | | March 3, 2018 (52 Weeks) | | March 4, 2017 (53 Weeks) | | February 27, 2016 (52 Weeks) | | | OPERATING ACTIVITIES: | | | | | | | | | | | | Net income | | $ | 943,470 | | $ | 4,053 | | $ | 165,465 | | | Net income (loss) from discontinued operations, net of tax | | | 1,293,002 | | | (27 | ) | | 63,377 | | | ? | ? | ? | ? | ? | ? | ? | ? | ? | ? | ? | | Net (loss) income from continuing operations | | $ | (349,532 | ) | $ | 4,080 | | $ | 102,088 | | | ? | ? | ? | ? | ? | ? | ? | ? | ? | ? | ? | | ? | ? | ? | ? | ? | ? | ? | ? | ? | ? | ? | | ? | ? | ? | ? | ? | ? | ? | ? | ? | ? | ? | | Adjustments to reconcile to net cash provided by operating activities: | | | | | | | | | | | | Depreciation and amortization | | | 386,057 | | | 407,366 | | | 361,134 | | | Lease termination and impairment charges | | | 58,765 | | | 45,778 | | | 40,477 | | | Goodwill impairment | | | 261,727 | | | | | | | | | LIFO (credit) charge | | | (28,827 | ) | | (3,721 | ) | | 7,892 | | | Gain on sale of assets, net | | | (25,872 | ) | | (6,649 | ) | | (606 | ) | | Stock-based compensation expense | | | 25,793 | | | 23,482 | | | 37,948 | | | Loss on debt retirements, net | | | | | | | | | 33,205 | | | Changes in deferred taxes | | | 260,411 | | | 35,038 | | | 79,488 | | | Excess tax benefit on stock options and restricted stock | | | | | | (543 | ) | | (22,884 | ) | | Changes in operating assets and liabilities: | | | | | | | | | | | | Accounts receivable | | | (349,481 | ) | | (159,590 | ) | | 264,525 | | | Inventories | | | 18,835 | | | (49,381 | ) | | 136,823 | | | Accounts payable | | | 211,511 | | | 39,542 | | | (480 | ) | | Other assets and liabilities, net | | | 42,083 | | | (152,375 | ) | | (329,267 | ) | | ? | ? | ? | ? | ? | ? | ? | ? | ? | ? | ? | | Net cash provided by operating activities of continuing operations | | | 511,470 | | | 183,027 | | | 710,343 | | | ? | ? | ? | ? | ? | ? | ? | ? | ? | ? | ? | | INVESTING ACTIVITIES: | | | | | | | | | | | | Payments for property, plant and equipment | | | (185,879 | ) | | (254,149 | ) | | (391,199 | ) | | Intangible assets acquired | | | (28,885 | ) | | (39,648 | ) | | (89,874 | ) | | Acquisition of businesses, net of cash acquired | | | | | | | | | (1,778,377 | ) | | Proceeds from insured loss | | | 4,239 | | | | | | | | | Proceeds from sale-leaseback transactions | | | | | | | | | 26,953 | | | Proceeds from dispositions of assets and investments | | | 27,586 | | | 16,852 | | | 9,773 | | | ? | ? | ? | ? | ? | ? | ? | ? | ? | ? | ? | | Net cash used in investing activities of continuing operations | | | (182,939 | ) | | (276,945 | ) | | (2,222,724 | ) | | ? | ? | ? | ? | ? | ? | ? | ? | ? | ? | ? | | FINANCING ACTIVITIES: | | | | | | | | | | | | Proceeds from issuance of long-term debt | | | | | | | | | 1,800,000 | | | Net (payments to) proceeds from revolver | | | (265,000 | ) | | 330,000 | | | 375,000 | | | Principal payments on long-term debt | | | (9,882 | ) | | (16,588 | ) | | (667,494 | ) | | Change in zero balance cash accounts | | | 35,605 | | | 43,080 | | | (62,878 | ) | | Net proceeds from the issuance of common stock | | | 5,796 | | | 6,951 | | | 11,376 | | | Financing fees paid for early debt redemption | | | | | | | | | (26,003 | ) | | Excess tax benefit on stock options and restricted stock | | | | | | 543 | | | 22,884 | | | Deferred financing costs paid | | | | | | | | | (34,634 | ) | | Payment for taxes related to net share settlement of equity awards | | | (4,103 | ) | | (6,254 | ) | | (17,506 | ) | | ? | ? | ? | ? | ? | ? | ? | ? | ? | ? | ? | | Net cash (used in) provided by financing activities of continuing operations | | | (237,584 | ) | | 357,732 | | | 1,400,745 | | | ? | ? | ? | ? | ? | ? | ? | ? | ? | ? | ? | | Cash flows from discontinued operations: | | | | | | | | | | | | Operating activities of discontinued operations | | | (245,126 | ) | | 49,090 | | | 304,565 | | | Investing activities of discontinued operations | | | 3,496,222 | | | (187,314 | ) | | (179,134 | ) | | Financing activities of discontinued operations | | | (3,140,119 | ) | | (4,651 | ) | | (5,223 | ) | | ? | ? | ? | ? | ? | ? | ? | ? | ? | ? | ? | | Net cash provided by (used in) discontinued operations | | | 110,977 | | | (142,875 | ) | | 120,208 | | | ? | ? | ? | ? | ? | ? | ? | ? | ? | ? | ? | | Increase in cash and cash equivalents | | | 201,924 | | | 120,939 | | | 8,572 | | | Cash and cash equivalents, beginning of year | | | 245,410 | | | 124,471 | | | 115,899 | | | ? | ? | ? | ? | ? | ? | ? | ? | ? | ? | ? | | Cash and cash equivalents, end of year | | $ | 447,334 | | $ | 245,410 | | $ | 124,471 | | | ? | ? | ? | ? | ? | ? | ? | ? | ? | ? | ? | | ? | ? | ? | ? | ? | ? | ? | ? | ? | ? | ? | | ? | ? | ? | ? | ? | ? | ? | ? | ? | ? | ? | |
