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UNITED STATES SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934

For The Quarterly Period Ended May 31, 2003

OR

[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934

For The Transition Period From              To             

Commission File Number 1-5742

RITE AID CORPORATION

(Exact name of registrant as specified in its charter)


Delaware 23-1614034
(State or other jurisdiction of
incorporation or organization)		 (I.R.S. Employer
Identification No.)
 
30 Hunter Lane,
Camp Hill, Pennsylvania
(Address of principal executive offices)		 17011
(Zip Code)

Registrant's telephone number, including area code: (717) 761-2633

(Former name, former address and former fiscal year, if changed since last report) Not Applicable

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months, and (2) has been subject to such filing requirements for the past 90 days. Yes [X]   No [ ]

Indicate by check whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act). Yes [X]   No [ ]

Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date.

The registrant had 515,408,556 shares of its $1.00 par value common stock outstanding as of June 27, 2003.

   

RITE AID CORPORATION

TABLE OF CONTENTS


    Page
  Cautionary Statement Regarding Forward Looking Statements   3  
PART I
FINANCIAL INFORMATION
ITEM 1. Financial Statements:      
  Condensed Consolidated Balance Sheets as of May 31, 2003 and March 1, 2003   4  
  Condensed Consolidated Statements of Operations for the Thirteen Week Periods     Ended May 31, 2003 and June 1, 2002   5  
  Condensed Consolidated Statements of Cash Flows for the Thirteen Week Periods     Ended May 31, 2003 and June 1, 2002   6  
  Notes to Condensed Consolidated Financial Statements   7  
ITEM 2. Management's Discussion and Analysis of Financial Condition and Results of     Operations   18  
ITEM 3. Quantitative and Qualitative Disclosures About Market Risk   26  
ITEM 4. Controls and Procedures   27  
PART II
OTHER INFORMATION
ITEM 1. Legal Proceedings   28  
ITEM 2. Changes in Securities and Use of Proceeds   28  
ITEM 3. Defaults Upon Senior Securities   28  
ITEM 4. Submission of Matters to a Vote of Security Holders   28  
ITEM 5. Other Information   28  
ITEM 6. Exhibits and Reports on Form 8-K   29  

2

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

This report includes forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements are identified by terms and phrases such as "anticipate," "believe," "intend," "estimate," "expect," "continue," "should," "could," "may," "plan," "project," "predict," "will" and similar expressions and include references to assumptions and relate to our future prospects, developments and business strategies.

Factors that could cause actual results to differ materially from those expressed or implied in such forward-looking statements include, but are not limited to:

• our high level of indebtedness;
• our ability to make interest and principal payments on our debt and satisfy the other covenants contained in our new senior secured credit facility and other debt agreements;
• our ability to improve the operating performance of our existing stores in accordance with our management's long term strategy;
• our ability to hire and retain pharmacists and other store personnel;
• the outcomes of pending lawsuits and governmental investigations;
• competitive pricing pressures and continued consolidation of the drugstore industry; and
• the efforts of third party payors to reduce prescription drug costs, changes in state or federal legislation or regulations, the success of planned advertising and merchandising strategies, general economic conditions and inflation, interest rate movements, access to capital, and our relationships with our suppliers.

We undertake no obligation to revise the forward-looking statements included in this report to reflect any future events or circumstances. Our actual results, performance or achievements could differ materially from the results expressed in, or implied by, these forward-looking statements. Factors that could cause or contribute to such differences are discussed in the section entitled "Management's Discussion and Analysis of Financial Condition and Results of Operations—Overview and Factors Affecting Our Future Prospects" included in our Annual Report on Form 10-K for the fiscal year ended March 1, 2003 ("the Fiscal 2003 10-K"), which we filed with the Securities and Exchange Commission ("SEC") on May 2, 2003 and is available on the SEC's website at www.sec.gov.

3

PART I. FINANCIAL INFORMATION

ITEM 1.    Financial Statements

RITE AID CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except per share amounts)
(unaudited)


  May 31, 2003 March 1, 2003
ASSETS            
CURRENT ASSETS:            
Cash and cash equivalents $ 342,742   $ 365,321  
Accounts receivable, net   628,348     575,518  
Inventories, net   2,226,611     2,195,030  
Prepaid expenses and other current assets   98,851     108,018  
Total current assets   3,296,552     3,243,887  
PROPERTY, PLANT AND EQUIPMENT, NET   1,932,726     1,868,579  
GOODWILL   684,535     684,535  
OTHER INTANGIBLES, NET   195,190     199,768  
OTHER ASSETS   130,097     136,746  
Total assets $ 6,239,100   $ 6,133,515  
LIABILITIES AND STOCKHOLDERS' DEFICIT            
CURRENT LIABILITIES:            
Short-term debt and current maturities of long-term debt and lease financing obligations $ 70,911   $ 103,715  
Accounts payable   837,445     755,284  
Accrued salaries, wages and other current liabilities   684,434     707,999  
Total current liabilities   1,592,790     1,566,998  
CONVERTIBLE NOTES   244,875     244,500  
LONG-TERM DEBT, LESS CURRENT MATURITIES   3,465,797     3,345,365  
LEASE FINANCING OBLIGATIONS, LESS CURRENT MATURITIES   167,121     169,048  
OTHER NONCURRENT LIABILITIES   889,464     900,270  
Total liabilities   6,360,047     6,226,181  
COMMITMENTS AND CONTINGENCIES   —     —  
REDEEMABLE PREFERRED STOCK   19,689     19,663  
STOCKHOLDERS' DEFICIT:            
Preferred stock, par value $1 per share, liquidation value $100 per share   393,705     393,705  
Common stock, par value $1 per share   515,372     515,115  
Additional paid-in capital   3,135,246     3,119,619