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 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 reimbursements, 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 February 28, 2004 ("the Fiscal 2004 10-K"), which we filed with the Securities and Exchange Commission ("SEC") on April 26, 2004 and is available on the SEC's website at www.sec.gov.

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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 29, 2004				February 28, 2004
ASSETS
Current assets:
Cash and cash equivalents				$	500,151			$	334,755
Accounts receivable, net					649,492				670,004
Inventories, net					2,250,627				2,223,171
Prepaid expenses and other current assets					100,774				150,067
Total current assets					3,501,044				3,377,997
Property, plant and equipment, net					1,862,584				1,883,808
Goodwill					684,535				684,535
Other intangibles, net					177,058				176,672
Other assets					134,929				123,667
Total assets				$	6,360,150			$	6,246,679
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current maturities of long-term debt and lease financing obligations				$	220,781			$	23,976
Accounts payable					828,524				758,290
Accrued salaries, wages and other current liabilities					700,297				701,484
Total current liabilities					1,749,602				1,483,750
Convertible notes					246,375				246,000
Long-term debt, less current maturities					3,250,799				3,451,352
Lease financing obligations, less current maturities					171,610				170,338
Other noncurrent liabilities					863,266				885,975
Total liabilities					6,281,652				6,237,415
Commitments and contingencies					—				—
Stockholders' equity:
Preferred stock, par value $1 per share, liquidation value $100 per share					426,159				417,803
Common stock, par value $1 per share					517,297				516,496
Additional paid-in capital					3,130,021				3,133,277
Accumulated deficit					(3,972,100	)			(4,035,433	)
Accumulated other comprehensive loss					(22,879	)			(22,879	)
Total stockholders' equity					78,498				9,264
Total liabilities and stockholders' equity				$	6,360,150			$	6,246,679

See accompanying notes to condensed consolidated financial statements.

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RITE AID CORPORATION AND SUBSIDIARIES

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

				Thirteen Week Period Ended
				May 29, 2004				May 31, 2003
Revenues				$	4,244,357			$	4,046,168
Costs and expenses:
Cost of goods sold, including occupancy costs					3,191,834				3,068,175
Selling, general and administrative expenses					908,863				889,733
Stock-based compensation expense					3,982				9,835
Store closing and impairment (credits) charges					(4,587	)			6,366
Interest expense