The new senior secured credit facility allows for the issuance of up to $700.0 million in additional term loans or additional revolver availability. Rite Aid may request the additional loans at any time prior to the maturity of the senior secured credit facility, provided we are not in default of any terms of the facility, nor are we in violation of any of our financial covenants. The new senior secured credit facility allows us to have outstanding, at any time, up to $1.8 billion in secured subordinated debt in addition to the senior secured credit facility (which amount is reduced by any additional unsecured debt that matures prior to December 31, 2009, as described below). We also have the ability to incur an unlimited amount of unsecured debt, if the debt does not mature or require scheduled payments of principal prior to December 31, 2009. We have the ability to incur additional unsecured debt of up to $200.0 million with a scheduled maturity prior to December 31, 2009. The maximum amount of additional secured subordinated debt and unsecured debt with a maturity prior to December 31, 2009 that can be incurred is $1.8 billion. At November 27, 2004, remaining additional permitted secured subordinated debt under the new senior credit facility is $998.0 million. The new senior secured credit facility also allows for the repurchase of any debt with a maturity on or before September 22, 2009, and for the repurchase of debt with a maturity after September 22, 2009, if we maintain availability on the revolving credit facility of at least $300.0 million.

The new senior secured credit facility contains customary covenants, which place restrictions on the incurrence of debt beyond the restrictions described above, the payment of dividends, mergers, and the granting of liens. The new senior secured credit facility also requires us to meet certain financial covenant ratios, but only if availability on the revolving credit facility is less than $300.0 million. If availability on the revolving credit facility is less than $300.0 million, the covenants would have required us to maintain a maximum leverage ratio of 6.20:1 for the twelve months ended November 27, 2004. Subsequent to November 27, 2004, the ratio gradually decreases to 3.20:1 for the twelve months ending August 29, 2009. In addition, if availability on the revolving credit facility is less than $300.0 million, we would have been required to maintain a minimum fixed charge ratio of 1.05:1 for the twelve months ended November 27, 2004. Subsequent to November 27, 2004, the ratio gradually increases to 1.25:1 for the twelve months ending August 29, 2009.

The new senior secured credit facility provides for customary events of default, including nonpayment, misrepresentation, breach of covenants and bankruptcy. It is also an event of default if we fail to make any required payment on debt having a principal amount in excess of $25.0 million or any event occurs that enables, or which with the giving of notice or the lapse of time would enable, the holder of such debt to accelerate the maturity of such debt.

Our ability to borrow under the new senior secured credit facility is based on a specified borrowing base consisting of inventory and prescription files. At November 27, 2004, the term loan was fully drawn and we have borrowings under the revolving credit facility of $99.0 million. At November 27, 2004, we also had letters of credit outstanding against the revolving credit facility of $112.1 million. After considering the borrowing base, outstanding letters of credit, and financial covenant ratios, we had additional borrowing capacity of $739.0 million at November 27, 2004.

As a result of the placement of the new senior secured credit facility and the receivable securitization agreements, we recorded a loss on debt modification of $20.2 million in the thirteen week period ended November 27, 2004.

Securitization Agreement

On September 22, 2004, we entered into receivables securitization agreements with several multi-seller asset-backed commercial paper vehicles. Under the terms of the securitization agreements, we sell substantially all of our eligible third party pharmaceutical receivables to a bankruptcy remote Special Purpose Entity (SPE) and retains servicing responsibility. The assets of the SPE are not available to satisfy the creditors of any other person, including any of our affiliates. These agreements provide for us to sell, and for the SPE to purchase these receivables, and for the SPE to borrow funds secured by these receivables of up to $400.0 million. The amount of receivables funded at any one time is dependent upon a formula that takes into account such factors as default history, obligor concentrations and potential dilution. Adjustments to this amount can occur on a weekly basis. At November 27, 2004, proceeds from

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the sale of receivables to the SPE totaled $335.0 million. At November 27, 2004, we retained an interest in the third party pharmaceutical receivables in the form of overcollateralization of $225.9 million, which is included in accounts receivable, net, on the consolidated balance sheet at allocated cost, which approximates fair value. The proceeds from collections reinvested in securitizations amounted to $1.481 billion in the thirteen and thirty-nine week periods ended November 27, 2004.

Proceeds from the initial sale of the receivables were used to repay outstanding amounts under the existing senior secured credit facility. Any additional proceeds will be used to fund operations. We paid one-time arrangement and marketing fees of $2.4 million at the closing date, which are recorded as a loss on debt modification. We must pay an ongoing program fee of approximately LIBOR plus 1.125% on the amount sold to the SPE under the securitization agreements and must pay a liquidity fee of 0.375% on the daily unused amount under the securitization agreements. The program and liquidity fees are recorded as a component of selling, general and administrative expenses. Rite Aid Corporation guarantees certain performance obligations of its affiliates under the securitization agreements, but does not guarantee the collectibility of the receivables and obligor creditworthiness.

The vehicles that make loans to the SPE have a commitment to lend that ends September 2005 with the option to annually extend the commitment to purchase. Should any of the vehicles fail to renew their commitment, we have access to a backstop credit facility, which is backed by the entities that make loans to the SPE's. The backstop facility is committed through September 2007.

We believe that the transaction meets the criteria for sales treatment in accordance with SFAS No. 140 "Accounting for Transfers and Servicing of Financial Assets and Extinguishments of Liabilities". Additionally, we believe that consolidation is not appropriate in accordance with FIN 46R, "Consolidation of Variable Interest Entities".

Sale Leaseback Transactions

On October 1, 2004, we sold the land and buildings on 21 owned stores to a third party. Proceeds from this sale were $53.8 million. We entered into an agreement to lease these stores back from the purchaser over a minimum lease term of 20 years. The leases are being accounted for as operating leases. A gain on the transaction of $3.8 million has been deferred and is being recorded over the minimum lease term. A loss of $1.5 million, which relates to certain stores in the transaction portfolio, was recorded as a loss on sale of fixed assets in the thirteen week period ended November 27, 2004. Future scheduled minimum payments under these leases, for the remainder of fiscal 2005 and the succeeding four fiscal years are as follows: 2005; $1.1 million, 2006; $4.5 million, 2007; $4.5 million, 2008; $4.5 million, 2009; $4.5 million, and $76.0 million in 2010 and thereafter.

On December 15, 2004, we sold the land and buildings on 14 owned stores to an outside entity. Proceeds from this sale were $37.5 million. We entered into an agreement to lease these stores back from the purchaser over a minimum lease term of 20 years. The leases are being accounted for as operating leases. We expect to defer a gain of $10.7 million over the minimum lease term, and record a loss of $0.2 million as a loss on sale of fixed assets in the thirteen week period ending February 26, 2005. Future scheduled lease payments under these leases, for the remainder of fiscal 2005 and the succeeding four fiscal years, are as follows: 2005 – $0.6 million; 2006 – $3.1 million; 2007 – $3.1 million; 2008 – $3.1 million; 2009 – $3.1 million and $52.3 million in 2010 and thereafter.

Other Transactions

During the thirty-nine week period ended November 27, 2004, we made open market purchases of the following securities (in thousands):

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Debt Redeemed				Principal Amount Redeemed				Amount Paid				Gain / (loss)
7.625% notes due 2005				$	27,500			$	28,275			$	(795	)
7.125% notes due 2007					26,000				26,548				(605	)
6.875% fixed rate senior notes due 2028					12,000				9,660				2,191
Total				$	65,500			$	64,483			$	791

The gain on the transactions listed above is recorded as part of the loss on debt modifications in the accompanying statement of operations for the thirty-nine week period ended November 27, 2004.

During the thirty-nine week period ended November 29, 2003, we replaced our senior secured credit facility due March 2005 with a new senior secured credit facility due April 2008. As a result of the placement of this facility, we recorded a loss on debt modification in the thirty-nine week period ended November 29, 2003 of $43.2 million.

During the thirty-nine week period ended November 29, 2003, we made open market purchases of the following securities (in thousands):

Debt Redeemed				Principal Amount Redeemed				Amount Paid				Gain / (loss)
6.0% fixed rate senior notes due 2005				$	37,848			$	36,853			$	865
7.125% notes due 2007					124,926				120,216				4,314
6.875% senior debentures due 2013					15,227				13,144				1,981
7.7% notes due 2027					5,000				4,219				715
6.875% fixed rate senior notes due 2028					10,000				7,975				1,895
12.5% senior secured notes due 2006					10,000				11,275				(1,888	)
Total				$	203,001			$	193,682			$	7,882

The net gain on the transactions listed above is recorded as part of the "loss on debt modifications" in the accompanying statement of operations for the thirty-nine week period ended November 29, 2003.

Other

As of November 27, 2004, we had no material off balance sheet arrangements, other than the receivables securitization agreements described above. Our contractual obligations and commitments, which consist primarily of debt, capital and operating leases, open purchase orders, lease guarantees, and outstanding letters of credit have not changed materially from the amounts disclosed in our Fiscal 2004 10-K.

Net Cash Provided by/Used in Operating, Investing and Financing Activities

Our operating activities provided $523.9 million of cash in the thirty-nine week period ended November 27, 2004 and $100.3 million of cash in the thirty-nine week period ended November 29, 2003. Operating cash flow for the thirty-nine week period ended November 27, 2004 was positively impacted by improved operating results and proceeds of $335.0 million from the sale of certain of our third party receivables, partially offset by $191.2 million of interest payments and an increase in inventory due to holiday season purchases. Operating cash flow for the thirty-nine week period ended November 29, 2003 was positively impacted by improved operating results and an increase in accounts payable related to the increase in inventory, which was partially offset by $201.9 million of interest payments and increases in accounts receivable due to increased pharmacy sales and inventory, due to holiday season purchases.

Cash used in investing activities was $81.7 million for the thirty-nine week period ended November 27, 2004, due primarily to expenditures for property, plant and equipment as well as intangible assets, offset by proceeds from our sale leaseback transaction and other asset dispositions. Cash used in investing activities was $192.5 million for the thirty-nine week period ended November 29, 2003, due primarily to the purchase of land and buildings at our Perryman, MD and Lancaster, CA distribution centers, which

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had previously been held under a synthetic lease arrangement. Also impacting cash used in investing activities were expenditures for property, plant and equipment and intangible assets, offset by other asset dispositions.

Cash used in financing activities was $681.2 million for the thirty-nine week period ended November 27, 2004, due to the restructuring of our credit facility and early redemption of several bonds. Cash provided by financing activities was $1.3 million for the thirty-nine week period ended November 29, 2003. Cash provided by financing activities in the thirty-nine week period ended November 29, 2003 was positively impacted by proceeds from bond issuances, offset by the change in our credit facility and the repurchase of several bonds.

Capital Expenditures

During the thirty-nine week period ended November 27, 2004, we spent $141.6 million on capital expenditures, consisting of $74.7 million related to new store construction, store relocation and other store construction projects. An additional $66.9 million was related to other store improvement activities and the purchase of prescription files from independent pharmacists. We plan to make total capital expenditures of approximately $225 to $250 million during fiscal 2005. These expenditures consist of approximately $105 to $120 million related to new store construction, store relocation and store remodel projects, $85 to $90 million dedicated to technology enhancements, improvements to distribution centers and other corporate requirements, and $35 to $40 million dedicated to the purchase of prescription files from independent pharmacies. Management expects that these capital expenditures will be financed primarily with cash flow from operations.

During the thirty-nine week period ended November 29, 2003, we spent $210.0 million on capital expenditures, consisting of $106.9 million related to the purchase of land and buildings at our Perryman, MD and Lancaster, CA distribution centers, which had previously been held under a synthetic lease arrangement, $48.3 million related to new store construction, store relocation and other store construction projects and $54.8 million related to other store improvement activities and the purchase of prescription files from independent pharmacists.

Future Liquidity

We are highly leveraged. Our high level of indebtedness: (i) limits our ability to obtain additional financing; (ii) limits our flexibility in planning for, or reacting to, changes in our business and the industry; (iii) places us at a competitive disadvantage relative to our competitors with less debt; (iv) renders us more vulnerable to general adverse economic and industry conditions; and (v) requires us to dedicate a substantial portion of our cash flow to service our debt. Based upon current levels of operations and planned improvements in our operating performance, management believes that cash flow from operations together with available borrowing under the new senior secured credit facility and other sources of liquidity will be adequate to meet our anticipated annual requirements for working capital, debt service and capital expenditures through the end of fiscal 2006. We will continue to assess our liquidity position and potential sources of supplemental liquidity in light of our operating performance and other relevant circumstances. Should we determine, at any time, that it is necessary to seek additional short-term liquidity, we will evaluate our alternatives and take appropriate steps to obtain sufficient additional funds. The restrictions on the incurrence of additional indebtedness in our new senior secured credit facility and several of our bond indentures may limit our ability to obtain additional funds. There can be no assurance that any such supplemental funding, if sought, could be obtained or, if available, would be on terms acceptable to us.

Factors Affecting Our Future Prospects

For a discussion of risks related to our financial condition, operations and industry, refer to "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, which we filed with the SEC on April 26, 2004.

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ITEM 3.    Quantitative and Qualitative Disclosures About Market Risk

Our future earnings, cash flow and fair values relevant to financial instruments are dependent upon prevalent market rates. Market risk is the risk of loss from adverse changes in market prices and interest rates. The major market risk exposure is changing interest rates. Increases in interest rates would increase our interest expense. Since the end of fiscal 2004, our primary risk exposure has not changed. We enter into debt obligations to support capital expenditures, acquisitions, working capital needs and general corporate purposes. Our policy is to manage interest rates through the use of a combination of variable-rate credit facilities, fixed-rate long-term obligations and derivative transactions.

The table below provides information about our financial instruments that are sensitive to changes in interest rates. The table presents principal payments and the related weighted average interest rates by expected maturity dates as of November 27, 2004.

				2005				2006				2007				2008				2009				Thereafter				Total				Fair Value at November 27, 2004
				(dollars in thousands)
Long-term debt, Including current portion
Fixed rate				$	207			$	208,917			$	570,677			$	870			$	300,091			$	1,412,618			$	2,493,380			$	2,495,154
Average Interest Rate					8.00	%			7.33	%			7.50	%			8.00	%			8.69	%			8.20	%			8.03	%
Variable Rate				$	1,125			$	5,625			$	4,500			$	4,500			$	4,500			$	528,750			$	549,000			$	549,000
Average Interest Rate					3.75	%			3.75	%			3.75	%			3.75	%			3.75	%			3.86	%			3.86	%

As of November 27, 2004, 17.1% of our total debt, the debt outstanding under our senior secured credit facility, is exposed to fluctuations in variable interest rates. The interest rate on the variable rate borrowings on our senior secured credit facility as of November 27, 2004 is LIBOR plus 1.75% for the term loan and the revolving credit facility.

Our ability to satisfy interest payment obligations on our outstanding debt will depend largely on our future performance, which, in turn, is subject to prevailing economic conditions and to financial, business and other factors beyond our control. If we do not have sufficient cash flow to service our interest payment obligations on our outstanding indebtedness and if we cannot borrow or obtain equity financing to satisfy those obligations, our business and results of operations will be materially adversely affected. We cannot assure you that any such borrowing or equity financing could be successfully completed.

As of November 27, 2004, the corporate rating is B+ by Standard & Poor's.

ITEM 4.    Controls and Procedures

(a) Disclosure Controls and Procedures.    The Company's management, with the participation of the Company's Chief Executive Officer and Chief Financial Officer, has evaluated the effectiveness of the Company's disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the "Exchange Act")) as of the end of the period covered by this report. Based on such evaluation, the Company's Chief Executive Officer and Chief Financial Officer have concluded that, as of the end of such period, the Company's disclosure controls and procedures are effective in recording, processing, summarizing and reporting, on a timely basis, information required to be disclosed by the Company in the reports that it files or submits under the Exchange Act.

(b) Internal Control Over Financial Reporting.    There have not been any changes in the Company's internal control over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during the fiscal quarter to which this report relates that have materially affected, or are reasonably likely to materially affect, the Company's internal control over financial reporting.

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PART II. OTHER INFORMATION

ITEM 1.    Legal Proceedings

Not applicable

ITEM 2.    Unregistered Sales of Equity Securities and Use of Proceeds

Not applicable.

ITEM 3.    Defaults Upon Senior Securities

Not applicable.

ITEM 4.    Submission of Matters to a Vote of Security Holders

Not applicable.

ITEM 5.    Other Information

Not applicable.

ITEM 6.    Exhibits

(a)    The following exhibits are filed as part of this report.

Exhibit Numbers

Description

Incorporation By Reference To

3.1

Restated Certificate of Incorporation dated December 12, 1996

Exhibit 3(i) to Form 8-K, filed on November 2, 1999

3.2

Certificate of Amendment to the Restated Certificate of Incorporation dated February 22, 1999

Exhibit 3(ii) to Form 8-K, filed on November 2, 1999

3.3

Certificate of Amendment to the Restated Certificate of Incorporation dated June 27, 2001

Exhibit 3.4 to Registration Statement on Form S-1, File No. 333-64950, filed on July 12, 2001

3.4

8% Series D Cumulative Pay-in-Kind Preferred Stock Certificate of Designation dated October 3, 2001

Exhibit 3.5 to Form 10-Q, filed on October 12, 2001

3.5

By-laws, as amended on November 8, 2000

Exhibit 3.1 to Form 8-K, filed on November 13, 2000

3.6

Amendment to By-laws, adopted January 30, 2002

Exhibit T3B.2 to Form T-3, filed on March 4, 2002

4.1

Indenture, dated August 1, 1993 by and between Rite Aid Corporation, as issuer, and Morgan Guaranty Trust Company of New York, as trustee, related to the Company's 6.70% Notes due 2001, 7.125% Notes due 2007, 7.70% Notes due 2027, 7.625% Notes due 2005 and 6.875% Notes due 2013

Exhibit 4A to Registration Statement on Form S-3, File No. 333-63794, filed on June 3, 1993

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Exhibit Numbers				Description				Incorporation By Reference To
	4.2			Supplemental Indenture dated as of February 3, 2000, between Rite Aid Corporation, as issuer, and U.S. Bank Trust National Association as successor to Morgan Guaranty Trust Company of New York, to the Indenture dated as of August 1, 1993, relating to the Company's 6.70% Notes due 2001, 7.125% Notes due 2007, 7.70% Notes due 2027, 7.625% Notes due 2005 and 6.875% Notes due 2013				Exhibit 4.1 to Form 8-K filed on February 7, 2000
	4.3			Indenture, dated as of December 21, 1998, between Rite Aid Corporation, as issuer, and Harris Trust and Savings Bank, as trustee, related to the Company's 5.50% Notes due 2000, 6% Notes due 2005, 6.125% Notes due 2008 and 6.875% Notes due 2028				Exhibit 4.1 to Registration Statement on Form S-4, File No. 333-74751, filed on March 19, 1999
	4.4			Supplemental Indenture, dated as of February 3, 2000, between Rite Aid Corporation and Harris Trust and Savings Bank, to the Indenture dated December 21, 1998, between Rite Aid Corporation and Harris Trust and Savings Bank, related to the Company's 5.50% Notes due 2000, 6% Notes due 2005, 6.125% Notes due 2008 and 6.875% Notes due 2028				Exhibit 4.4 to Form 8-K filed on February 7, 2000
	4.5			Indenture, dated as of June 27, 2001, between Rite Aid Corporation, as issuer and State Street Bank and Trust Company, as trustee, related to the Company's 12.50% Senior Secured Notes due 2006				Exhibit 4.7 to Registration Statement on Form S-1, File No. 333-64950, filed on July 12, 2001
	4.6			Indenture, dated as of June 27, 2001 between Rite Aid Corporation, as issuer and BNY Midwest Trust Company, as trustee, related to the Company's 11 1/4% Senior Notes due 2008				Exhibit 4.8 to Registration Statement on Form S-1, File No. 333-64950, filed on July 12, 2001
	4.7			Indenture, dated as of November 19, 2001, between Rite Aid Corporation, as issuer, and BNY Midwest Trust Company, as trustee, related to the Company's 4.75% Convertible Notes due December 1, 2006				Exhibit 4.3 to Form 10-Q, filed on January 15, 2002
	4.8			Indenture, dated as of February 12, 2003, between Rite Aid Corporation, as issuer, and BNY Midwest Trust Company, as trustee, related to the Company's 9 1/2% Senior Secured Notes due 2011				Exhibit 4.1 to Form 8-K, filed on March 5, 2003
	4.9			Indenture, dated as of April 22, 2003, between Rite Aid Corporation, as issuer, and BNY Midwest Trust Company, as trustee, related to the Company's 8.125% Senior Secured Notes due 2010				Exhibit 4.11 to Form 10-K, filed on May 2, 2003

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Exhibit Numbers				Description				Incorporation By Reference To
	4.10			Indenture, dated as of May 20, 2003, between Rite Aid Corporation, as issuer, and BNY Midwest Trust Company, as trustee, related to the Company's 9.25% Senior Notes due 2013				Exhibit 4.12 to Form 10-Q, filed on July 3, 2003
	11			Statement regarding computation of earnings per share. (See Note 3 to the condensed consolidated financial statements)				Filed herewith
	31.1			Certification of CEO pursuant to Rule 13a-14(a)/15d-14(a) under the Securities Exchange Act of 1934.				Filed herewith
	31.2			Certification of CFO pursuant to Rule 13a-14(a)/15d-14(a) under the Securities Exchange Act of 1934.				Filed herewith
	32			Certification of CEO and CFO pursuant to 18 United States Code, Section 1350, as enacted by Section 906 of the Sarbanes-Oxley Act of 2002				Filed herewith

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	Date: December 21, 2004				RITE AID CORPORATION By:  /s/ ROBERT B. SARI Robert B. Sari Senior Vice President and General Counsel
	Date: December 21, 2004				By:  /s/ JOHN T. STANDLEY John T. Standley Senior Executive Vice President, Chief Administrative Officer, and Chief Financial Officer

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