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 long term strategy;

•	our ability to hire and retain pharmacists and other store personnel;

•	our ability to open or relocate stores according to our real estate development program;

•	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 and encourage mail order, 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 26, 2005 ("the Fiscal 2005 10-K"), which we filed with the Securities and Exchange Commission ("SEC") on April 29, 2005 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 28, 2005				February 26, 2005
ASSETS
Current assets:
Cash and cash equivalents				$	135,037			$	162,821
Accounts receivable, net					461,137				483,455
Inventories, net					2,325,488				2,310,153
Prepaid expenses and other current assets					52,546				50,325
Total current assets					2,974,208				3,006,754
Property, plant and equipment, net					1,701,383				1,733,694
Goodwill					684,535				684,535
Other intangibles, net					177,085				179,480
Other assets					310,346				328,120
Total assets				$	5,847,557			$	5,932,583
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current maturities of long-term debt and lease financing obligations				$	52,258			$	223,815
Accounts payable					782,944				757,571
Accrued salaries, wages and other current liabilities					714,367				690,351
Total current liabilities					1,549,569				1,671,737
Convertible notes					247,875				247,500
Long-term debt, less current maturities					2,681,530				2,680,998
Lease financing obligations, less current maturities					165,653				159,023
Other noncurrent liabilities					842,061				850,391
Total liabilities					5,486,688				5,609,649
Commitments and contingencies					—				—
Stockholders' equity:
Preferred stock – series E, par value $1 per share; liquidation value $50 per share					120,000				120,000
Preferred stock – series F, par value $1 per share; liquidation value $100 per share					115,343				113,081
Preferred stock – series G, par value $1 per share; liquidation value $100 per share					115,060				113,081
Preferred stock – series H, par value $1 per share; liquidation value $100 per share					114,777				113,081
Common stock, par value $1 per share					520,903				520,438
Additional paid-in capital					3,119,513				3,121,404
Accumulated deficit					(3,722,722	)			(3,756,146	)
Accumulated other comprehensive loss					(22,005	)			(22,005	)
Total stockholders' equity					360,869				322,934
Total liabilities and stockholders' equity				$	5,847,557			$	5,932,583

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 28, 2005				May 29, 2004
Revenues				$	4,221,436			$	4,244,357