RITE AID CORP - 10-Q Quarterly Report

(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)

(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

Indicate by check whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act). Yes

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 516,010,629 shares of its $1.00 par value common stock outstanding as of September 26, 2003.


		Page
	Cautionary Statement Regarding Forward Looking Statements		3
PART I FINANCIAL INFORMATION
ITEM 1.	Financial Statements:
	Condensed Consolidated Balance Sheets as of August 30, 2003 and March 1, 2003		4
	Condensed Consolidated Statements of Operations for the Thirteen Week Periods Ended August 30, 2003 and August 31, 2002		5
	Condensed Consolidated Statements of Operations for the Twenty-Six Week Periods Ended August 30, 2003 and August 31, 2002		6
	Condensed Consolidated Statements of Cash Flows for the Twenty-Six Week Periods Ended August 30, 2003 and August 31, 2002		7
	Notes to Condensed Consolidated Financial Statements		8
ITEM 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations		18
ITEM 3.	Quantitative and Qualitative Disclosures About Market Risk		25
ITEM 4.	Controls and Procedures		26
PART II OTHER INFORMATION
ITEM 1.	Legal Proceedings		27
ITEM 2.	Changes in Securities and Use of Proceeds		27
ITEM 3.	Defaults Upon Senior Securities		27
ITEM 4.	Submission of Matters to a Vote of Security Holders		27
ITEM 5.	Other Information		27
ITEM 6.	Exhibits and Reports on Form 8-K		28

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:

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.

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


	August 30, 2003			March 1, 2003
ASSETS
CURRENT ASSETS:
Cash and cash equivalents	$	259,931		$	365,321
Accounts receivable, net		637,159			575,518
Inventories, net		2,331,144			2,195,030
Prepaid expenses and other current assets		101,249			108,018
Total current assets		3,329,483			3,243,887
PROPERTY, PLANT AND EQUIPMENT, NET		1,909,756			1,868,579
GOODWILL		684,535			684,535
OTHER INTANGIBLES, NET		188,607			199,768
OTHER ASSETS		135,186			136,746
Total assets	$	6,247,567		$	6,133,515
LIABILITIES AND STOCKHOLDERS' DEFICIT
CURRENT LIABILITIES:
Short-term debt and current maturities of long-term debt and lease financing obligations	$	78,496		$	103,715
Accounts payable		863,501			755,284
Accrued salaries, wages and other current liabilities		696,536			707,999
Total current liabilities		1,638,533			1,566,998
CONVERTIBLE NOTES		245,250			244,500
LONG-TERM DEBT, LESS CURRENT MATURITIES		3,456,645			3,345,365
LEASE FINANCING OBLIGATIONS, LESS CURRENT MATURITIES		166,250			169,048
OTHER NONCURRENT LIABILITIES		863,283			900,270
Total liabilities		6,369,961			6,226,181
COMMITMENTS AND CONTINGENCIES		—			—
REDEEMABLE PREFERRED STOCK		19,714			19,663
STOCKHOLDERS' DEFICIT:
Preferred stock, par value $1 per share, liquidation value $100 per share		401,579			393,705
Common stock, par value $1 per share		515,515			515,115
Additional paid-in capital		3,136,446			3,119,619
Accumulated deficit		(4,167,539	)		(4,118,119	)
Stock-based and deferred compensation		—			5,369
Accumulated other comprehensive loss		(28,109	)		(28,018	)
Total stockholders' deficit		(142,108	)		(112,329	)
Total liabilities and stockholders' deficit	$	6,247,567		$	6,133,515

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share amounts)
(unaudited)


	Thirteen Week Period Ended
	August 30, 2003			August 31, 2002
REVENUES	$	4,052,091		$	3,856,510
COSTS AND EXPENSES:
Cost of goods sold, including occupancy costs		3,087,860			2,958,690
Selling, general and administrative expenses		893,337			865,931
Stock-based compensation expense (benefit)		8,847			(6,746	)
Store closing and impairment (credits) charges		(8,994	)		58,223
Interest expense		79,409			84,955
Interest rate swap contracts


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


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