764762--3/17/2006--LONGS_DRUG_STORES_CORP

related topics
{cost, operation, labor}
{regulation, government, change}
{condition, economic, financial}
{product, liability, claim}
{product, market, service}
{customer, product, revenue}
{personnel, key, retain}
{loan, real, estate}
{regulation, change, law}
If we are unable to successfully execute our strategic initiatives and the related organizational changes, our future productivity and profitability may be adversely affected. If the construction of and transition to our new front-end distribution center is not successful, our retail drug store sales and profitability could be adversely affected. If our new prescription drug plans do not generate the anticipated revenues or profitability, our financial results could be adversely affected. Changes in economic conditions could adversely affect consumer buying practices and reduce our revenues and profitability. The retail drug store and pharmacy benefit services industries are highly competitive and further increases in competition could adversely affect us. Reductions in third-party, including government, reimbursement levels for prescription drugs continue to reduce our margins on pharmacy sales and could have a significant effect on our retail drug store sales and gross profits. The significant investments we are making in our stores may not increase our retail drug store sales and profitability, which could adversely affect our results of operations, financial condition and cash flows. If our insurance-related costs increase significantly, our financial position and results of operations could be adversely affected. We are substantially dependent on a single supplier of pharmaceutical products to sell products to us on satisfactory terms. A disruption in our relationship with this supplier could have a material adverse effect on our business. Our ability to attract and retain pharmacy personnel and develop alternate fill sources is important to the continued success of our business. We are subject to governmental regulations, procedures and requirements. Our noncompliance with, or a significant change in, these regulations could have a material adverse effect on us. Should a product liability issue arise, inadequate insurance coverage against such risks or inability to maintain such insurance may result in a material adverse effect on our business. Our geographic concentration in the western United States presents certain risks that could adversely affect us.

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