84129--4/28/2010--RITE_AID

related topics

{condition, economic, financial}

{debt, indebtedness, cash}

{regulation, government, change}

{product, liability, claim}

{personnel, key, retain}

{stock, price, share}

{competitive, industry, competition}

{financial, litigation, operation}

{regulation, change, law}

{customer, product, revenue}

Factors Affecting our Future Prospects Risks Related to Our Financial Condition Current economic conditions may adversely affect our industry, business and results of operations. We are highly leveraged. Our substantial indebtedness could limit cash flow available for our operations and could adversely affect our ability to service debt or obtain additional financing if necessary. Borrowings under our senior secured credit facility are based upon variable rates of interest, which could result in higher expense in the event of increases in interest rates. The covenants in the instruments that govern our current indebtedness may limit our operating and financial flexibility. Our stockholders will experience dilution if we issue additional common stock. Subject to certain limitations, Jean Coutu Group may sell Rite Aid common stock at any time, which could cause our stock price to decrease. We are in compliance with all New York Stock Exchange continued listing requirements. However, if we do not continue to maintain compliance with such requirements, our common stock may be delisted. Risks Related to Our Operations We need to continue to improve our operations in order to improve our financial condition, but our operations will not improve if we cannot continue to effectively implement our business strategy or if our strategy is negatively affected by worsening economic conditions. For so long as Jean Coutu Group (and, subject to certain conditions, certain members of the Coutu family) maintain certain levels of Rite Aid stock ownership, Jean Coutu Group (and, subject to certain conditions, certain members of the Coutu family) could exercise significant influence over us. Conflicts of interest may arise between us and Jean Coutu Group, which may be resolved in a manner that adversely affects our business, financial condition or results of operations. We are dependent on our management team, and the loss of their services could have a material adverse effect on our business and the results of our operations or financial condition. We are substantially dependent on a single wholesaler of branded pharmaceutical products to sell products to us on satisfactory terms. A disruption in this relationship may have a negative effect on our results of operations, financial condition and cash flow. Risks Related to Our Industry The markets in which we operate are very competitive and further increases in competition could adversely affect us. Drug benefit plan sponsors and third party payors could change their plan eligibility criteria and further encourage or require the use of mail-order prescriptions which could decrease our sales and reduce our margins and have a material adverse effect on our business. The availability of pharmacy drugs is subject to governmental regulations. Changes in third party reimbursement levels for prescription drugs and changes in industry pricing benchmarks could reduce our margins and have a material adverse effect on our business. We are subject to governmental regulations, procedures and requirements; our noncompliance or a significant regulatory change could adversely affect our business, the results of our operations or our financial condition. Certain risks are inherent in providing pharmacy services; our insurance may not be adequate to cover any claims against us. We will not be able to compete effectively if we are unable to attract, hire and retain qualified pharmacists. We may be subject to significant liability should the consumption of any of our products cause injury, illness or death. If we fail to protect the security of personal information about our customers and associates, we could be subject to costly government enforcement actions or private litigation.

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84129--4/28/2010--RITE_AID_CORP