<PAGE>

                       SECURITIES AND EXCHANGE COMMISSION
                                WASHINGTON, D.C.

                                   FORM 10-Q
           Quarterly Report Pursuant to Section 13 or 15 (d) of the Securities
and Exchange Act of 1934 For the quarterly period ended September 25, 1999.
Commission file number 333-41239
                                  ------------------------------

                                DUANE READE INC.
             (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
<TABLE>
<S><C>
           DELAWARE                                                                                    04-3164702
(STATE OR OTHER JURISDICTION OF INCORPORATION OR ORGANIZATION)                           (IRS EMPLOYER IDENTIFICATION NUMBER)

              DRI  I INC.*                           DELAWARE                                       04-3166107
              DUANE READE*                           NEW YORK                                       11-2731721
              DUANE READE INTERNATIONAL, INC.*       DELAWARE                                       22-3672347
              DUANE READE REALTY, INC.*              DELAWARE                                       13-4074383

*  Guarantors with respect to the Company's 9 1/4% Senior Subordinated Notes due 2008
           440 NINTH AVENUE
          NEW YORK, NEW YORK                                                                          10001
     (ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)                                                       (ZIP CODE)

                                                  (212) 273-5700
                               (REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE)

                        -----------------------------

                            SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT:
         TITLE OF EACH CLASS                                          NAME OF EACH EXCHANGE ON WHICH REGISTERED
         -------------------                                          -----------------------------------------
Common Stock, $.01 par value per share                                                 New York Stock Exchange.Inc.
9 1/4% Senior Subordinated Notes due 2008                                              None
</TABLE>

                          ----------------------------

          SECURITIES REGISTERED PURSUANT TO SECTION 12 (g) OF THE ACT:
                                      None.

      Indicate by check mark whether the registrant: (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes |X| No |_|

 The number of shares of the Common Stock outstanding as of November 2, 1999:
 17,145,018

<PAGE>


                                      INDEX
<TABLE>
<CAPTION>


                                                                                      PAGE

PART I
     <S>                                                                           <C>

     ITEM 1. - FINANCIAL STATEMENTS

          Consolidated Statements of Operations (Unaudited) - For the 13 and 39
               Weeks Ended September 25, 1999 and September 26, 1998                      3

          Consolidated Balance Sheets
               As of September 25, 1999 (Unaudited) and December 26, 1998                 4

          Consolidated Statements of Cash Flows (Unaudited) -
               For the 39 Weeks Ended September 25, 1999 and September 26, 1998           5

          Notes to Consolidated Financial Statements                                      6

     ITEM 2. - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
                  CONDITION AND RESULTS OF OPERATIONS                                     9

PART II    -   OTHER INFORMATION                                                         15
</TABLE>

                                       2
<PAGE>


PART I - FINANCIAL INFORMATION
ITEM 1.  FINANCIAL STATEMENTS

                                Duane Reade Inc.
                Consolidated Statements of Operations (Unaudited)
                    (In thousands, except per share amounts)
<TABLE>
<CAPTION>

                                                   For the 13 Weeks Ended           For the 39 Weeks Ended
                                               ------------------------------   ------------------------------
                                               September 25,     September 26,   September 25,   September 26,
                                                   1999              1998             1999           1998
                                               ------------      ------------   --------------   -------------
<S>                                            <C>               <C>            <C>             <C>
Net sales                                       $ 211,085        $ 144,472      $ 610,124       $ 398,651
Cost of sales                                     154,989          105,362        455,853         296,172
                                                ---------        ---------      ---------       ---------
Gross profit                                       56,096           39,110        154,271         102,479
                                                ---------        ---------      ---------       ---------

Selling, general & administrative expenses         33,547           22,768         98,412          63,687
Amortization                                        2,783            1,561          7,574           4,413
Depreciation                                        2,790            1,762          7,593           4,148
Store pre-opening expenses                            284            1,141          1,280           3,008
                                                ---------        ---------      ---------       ---------
                                                   39,404           27,232        114,859          75,256
                                                ---------        ---------      ---------       ---------
Operating income                                   16,692           11,878         39,412          27,223
Interest expense, net                               7,730            6,115         21,680          18,674
                                                ---------        ---------      ---------       ---------

Income before income taxes                          8,962            5,763         17,732           8,549
Income taxes                                        1,702               --          3,369              --
                                                ---------        ---------      ---------       ---------
Income before extraordinary charge                  7,260            5,763         14,363           8,549
Extraordinary charge, net of income taxes
of $-0-                                                --               --             --         (23,600)
                                                ---------        ---------      ---------        ---------
Net income (loss)                               $   7,260        $   5,763      $  14,363       $ (15,051)
                                                ---------        ---------      ---------        ---------
                                                ---------        ---------      ---------        ---------


Per Common Share - Basic
   Income before extraordinary charge           $    0.42       $    0.34      $    0.84         $    0.54
   Extraordinary charge                                --              --             --             (1.48)
                                                ---------       ---------      ---------         ---------
   Net income (loss)                            $    0.42       $    0.34      $    0.84        $    (0.94)
                                                ---------       ---------      ---------         ---------
                                                ---------       ---------      ---------         ---------

   Weighted average common shares outstanding      17,115          16,986         17,104            15,936
                                                ---------       ---------      ---------         ---------
                                                ---------       ---------      ---------         ---------


Per Common Share - Diluted
   Income before extraordinary charge           $    0.39       $    0.31      $    0.78         $    0.50
   Extraordinary charge                                --              --             --             (1.37)
                                                ---------       ---------      ---------         ---------
   Net income (loss)                            $    0.39       $    0.31      $    0.78        $    (0.87)
                                                ---------       ---------      ---------         ---------
                                                ---------       ---------      ---------         ---------

   Weighted average common shares outstanding      18,425          18,355         18,377            17,211
                                                ---------       ---------      ---------         ---------
                                                ---------       ---------      ---------         ---------
</TABLE>

   The accompanying notes are an integral part of these financial statements.

                                       3
<PAGE>


                                                    Duane Reade Inc.
                                               Consolidated Balance Sheets
                                          (In thousands, except share amounts)

<TABLE>
<CAPTION>

                                                                    September 25,      December 26,
                                                                        1999               1998
                                                                   --------------      ------------
                                                                     (Unaudited)
                                       ASSETS
<S>                                                                <C>                 <C>
Current Assets
    Cash                                                           $     901             $     869
    Receivables                                                       34,689                25,547
    Inventories                                                      140,233               134,313
    Property held for sale                                             1,020                11,527
    Prepaid expenses and other current assets                          6,463                 4,774
                                                                   ---------             ---------
      TOTAL CURRENT ASSETS                                           183,306               177,030
Property and equipment, net                                           83,891                71,974
Goodwill, net of accumulated amortization of $25,410 and $21,954     169,132               144,946
Other assets                                                          39,968                34,190
                                                                   ---------             ---------
      TOTAL ASSETS                                                 $ 476,297             $ 428,140
                                                                   ---------             ---------
                                                                   ---------             ---------




                        LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
    Accounts payable                                               $  51,938             $  50,028
    Accrued interest                                                   5,155                 3,636
    Other accrued expenses                                            19,045                25,677
    Current portion of long-term debt                                  8,850                 5,600
    Current portion of capital leases                                  1,962                 2,089
                                                                   ---------             ---------
      TOTAL CURRENT LIABILITIES                                       86,950                87,030
Senior debt, less current portion                                    325,775               299,350
Capital lease obligations, less current portion                        3,508                 3,930
Other noncurrent liabilities                                          22,026                15,041
                                                                   ---------             ---------
      TOTAL LIABILITIES                                              438,259               405,351
                                                                   ---------             ---------

Stockholders' equity
    Preferred stock, $0.01 par; authorized 5,000,000 shares;
      issued and outstanding: none                                        --                    --
    Common stock, $0.01 par; authorized 30,000,000 shares;
      issued and outstanding 17,116,608 and 16,985,557 shares            171                   170
    Paid-in capital                                                  127,092               126,207
    Accumulated deficit                                              (89,225)             (103,588)
                                                                   ---------             ---------
      TOTAL STOCKHOLDERS' EQUITY                                      38,038                22,789
                                                                   ---------             ---------
      TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY                   $ 476,297             $ 428,140
                                                                   ---------             ---------
                                                                   ---------             ---------
</TABLE>

The accompanying notes are an integral part of these financial statements.

                                       4
<PAGE>


                                Duane Reade Inc.
                Consolidated Statements of Cash Flows (Unaudited)
                                (In thousands)
<TABLE>
<CAPTION>
                                                                                  For the 39 Weeks Ended
                                                                            ------------------------------------
                                                                               September 25,     September 26,
                                                                                   1999              1998
                                                                            ----------------    ----------------
<S>                                                                         <C>                 <C>
Cash flows from operating activities:
    Net income (loss)                                                              $  14,363    $ (15,051)
    Adjustments to reconcile net income (loss) to net cash
      used in operating activities:
        Extraordinary charge                                                              --       23,600
        Depreciation and amortization of property and equipment                        7,593        4,148
        Amortization of goodwill and other intangibles                                 8,580        5,258
        Accretion of principal of zero coupon debt                                        --        1,659
        Gain on sale of assets                                                          (444)          --
        Other                                                                          3,879        2,406
    Changes in operating assets and liabilities (net of effect of acquisitions):
      Receivables                                                                     (9,142)     (14,962)
      Inventories                                                                     (9,611)     (40,667)
      Accounts payable                                                                 1,910       16,036
      Prepaid and accrued expenses                                                   (10,146)      (7,422)
      Increase in other (assets) liabilities, net                                     (7,214)      (2,406)
                                                                                   ---------    ---------
        NET CASH USED IN OPERATING ACTIVITIES                                           (232)     (27,401)
                                                                                   ---------    ---------
Cash flows from investing activities:
    Pharmacy acquisitions                                                            (10,332)          --
    Proceeds from sales of assets                                                     10,732           --
    Purchase of Rock Bottom assets                                                        --      (64,906)
    Capital expenditures                                                             (28,126)     (23,058)
                                                                                   ---------    ---------
                                                                                   ---------    ---------
        NET CASH USED IN INVESTING ACTIVITIES                                        (27,726)     (87,964)
                                                                                   ---------    ---------
Cash flows from financing activities:
    Proceeds from initial public offering, net                                            --      101,606
    Proceeds from new term loan                                                       25,000      210,000
    Proceeds from new senior subordinated notes                                           --       80,000
    Repayment of old term loan                                                            --      (65,310)
    Repayment of old senior subordinated notes                                            --      (89,893)
    Repayment of zero coupon debt                                                         --      (99,346)
    Premiums paid on early extinguishment of debt                                         --      (11,496)
    Fees and expenses related to early extinguishment of debt                             --         (478)
    Net borrowings (repayments) - old revolving credit facility                           --      (24,500)
    Deferred financing costs                                                          (1,080)      (7,058)
    Exercise of stock options                                                            886          106
    Repayments of new term loan                                                       (4,325)        (900)
    Net borrowings - new revolving credit facility                                     9,000       24,500
    Repayments of capital lease obligations                                           (1,491)      (1,525)
                                                                                   ---------    ---------
        NET CASH PROVIDED BY  FINANCING ACTIVITIES                                    27,990      115,706
                                                                                   ---------    ---------

Net increase in cash                                                                      32          341
Cash at beginning of period                                                              869          261
                                                                                   ---------    ---------
                                                                                   ---------    ---------
Cash at end of period                                                              $     901    $     602
                                                                                   ---------    ---------
                                                                                   ---------    ---------
</TABLE>

   The accompanying notes are an integral part of these financial statements.


                                       5
<PAGE>

                                DUANE READE INC.
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)


1.  BASIS OF PRESENTATION

The consolidated financial statements included herein reflect all adjustments
which, in the opinion of management, are necessary to present fairly the results
of operations and financial position of Duane Reade Inc. (the "Company"), and
have been prepared in accordance with the same accounting principles followed in
the presentation of the Company's annual financial statements for the year ended
December 26, 1998. The financial statements should be read in conjunction with
the Company's financial statements included in its Annual Report on Form 10K for
the year ended December 26, 1998. The results for the interim periods presented
are not necessarily indicative of the results expected for the full year.

The Company has no assets or operations other than its investment in its
subsidiary guarantors. Accordingly, the consolidated financial statements
present the combined assets and operations of the subsidiary guarantors.

2.  NET INCOME (LOSS ) PER COMMON SHARE

Net income (loss) per common share is based on the weighted average shares
outstanding during each period in accordance with the provisions of FASB
Statement No. 128 "Earnings Per Share." Basic earnings per share are computed
based on the weighted average number of common shares outstanding during the
period. Diluted earnings per share gives effect to all dilutive potential common
shares outstanding during the period. Dilutive potential common shares include
shares issuable upon exercise of the Company's stock options. Options to
purchase 59,593 shares at September 25, 1999 and 17,901 shares at September
26, 1998 were not included in the computation of diluted earnings per share
because the options' exercise price was greater than the average market price
of the common shares.

3. INCOME TAXES

Income taxes are recorded based on the estimated effective tax rate expected to
be applicable for the full fiscal year. The effective tax rate is lower than the
statutory rate, reflecting the benefit of net operating loss carryforwards.
While such carryforwards are adequate to offset all federal taxes that are
expected to be payable for the year (and therefore no tax payments are
expected), for accounting purposes, the benefit of certain carryforwards serves
to reduce goodwill, and not income tax expense, resulting in an effective rate
greater than zero.

4. ACQUISITION

On September 11, 1998, the Company purchased substantially all of the
operating assets (including inventory and leases) of Rock Bottom Stores,
Inc., a health and beauty aid retailer operating 38 stores primarily in the
outer boroughs of New York City (the "Rock Bottom Acquisition"). The purchase
price paid was $64.9 million, subject to certain post-closing adjustments.
The acquisition, accounted for under the purchase method, was financed with
additional term loans under the Existing Credit Agreement (See Note 5).
During the quarter ended September 25, 1999, the Company finalized the sale
of acquired non-compatible closeout inventory and recorded a $7.7 million
adjustment to increase goodwill for the difference between estimated and
actual markdowns. Additionally, the Company finalized its retrofit program
for acquired stores and recorded a write-down of $9.6 million related to the
disposal of acquired furniture and fixtures. The Company is currently a party
to legal proceedings arising out of disputes with the seller over the
purchase price, a part of which relates to an attempt to recover a portion of
the purchase price paid for acquired inventory. The purchase price (as
adjusted) was allocated to inventory ($12.0 million), property held for sale
($6.7 million), property ($7.3 million), identifiable intangibles ($5.2
million) and goodwill ($46.3 million) net of reserves for expenses, store
closings and liabilities assumed ($12.6 million).

                                       6
<PAGE>


                                DUANE READE INC.
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

4. Acquisition (Continued)

Ten stores acquired as part of the Rock Bottom Acquisition were designated
for sale or closure. These stores were operated for a period of time after
the acquisition was completed. Six of these stores were sold in March 1999
at no resultant gain or loss. One of the remaining stores has been turned
back to the landlord and the Company has been released from the lease
obligations. Two stores have been closed, one of which has been subleased.
The remaining store is still operating and is planned to close early next
year. The results of operations from these ten stores have not been
included in the Company's statements of operations through the period
ending September 25, 1999. Their results have been included in goodwill
which, during the year, yielded an increase in goodwill of $1.3 million.
As one store was not exited within one year from the acquisition date,
generally accepted accounting principles require that the results of
operations for this store will be included in the Company's statement
of operations from September 26, 1999.

The unaudited operating results of the Rock Bottom stores to be retained have
been included in the consolidated statement of operations from the date of
acquisition. The unaudited pro forma results for the 39 weeks ended September
26, 1998 presented below assume the acquisition occurred as of December 28,
1997 (in thousands, except per share amounts): <TABLE><CAPTION>

                                                                                For the 39 weeks ended
                                                                          --------------------------------
                                                                           September 25,    September 26,
                                                                                1999            1998
                                                                          ---------------- ---------------
                                                                           (Historical)         (Pro Forma)
<S>                                                                        <C>             <C>
Net sales                                                                   $   610,124    $       536,288
                                                                            -----------    ---------------
                                                                            -----------    ---------------
Operating income                                                            $    39,412    $        32,546
                                                                            -----------    ---------------
                                                                            -----------    ---------------

Income before extraordinary charge                                          $    14,363    $         9,482
Extraordinary charge, net of income taxes of $-0-                                    --            (23,600)
                                                                            -----------    ---------------
Net income (loss)                                                           $    14,363    $       (14,118)
                                                                            -----------    ---------------
                                                                            -----------    ---------------
Per Common Share-Basic:
Income before extraordinary charge                                          $      0.84   $           0.59
Extraordinary charge                                                                 --              (1.48)
                                                                            -----------    ---------------
Net income (loss)                                                           $      0.84   $          (0.89)
                                                                            -----------    ---------------
                                                                            -----------    ---------------
Per Common Share-Diluted:
Income before extraordinary charge                                          $      0.78    $          0.55
Extraordinary charge                                                                 --              (1.37)
                                                                            -----------    ---------------
Net income (loss)                                                           $      0.78              (0.82)
                                                                            -----------    ---------------
                                                                            -----------    ---------------
</TABLE>



In management's opinion, the unaudited pro forma combined results are not
necessarily indicative of the actual results that would have occurred had the
acquisition been consummated at the beginning of fiscal 1998 or of future
results of the combined operations under the ownership and management of the
Company.

                                       7
<PAGE>

                                DUANE READE INC.
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

5.  REFINANCING PLAN AND INITIAL PUBLIC OFFERING

In February 1998, the Company successfully completed an initial public offering
of its stock which was part of a plan to refinance all of the Company's existing
indebtedness (the "Refinancing Plan") in order to enhance the Company's
financial flexibility to pursue growth opportunities and implement capital
improvements. The Refinancing Plan resulted in a reduction in the Company's
overall indebtedness, a simplification of the Company's capital structure and
access to additional borrowings. The principal components of the Refinancing
Plan were: (i) the sale by the Company of 6.7 million shares of common stock for
net proceeds of approximately $102 million; (ii) the execution of a new secured
credit agreement (the "Existing Credit Agreement") which provided for borrowings
up to approximately $160 million ($130 million of term loans and up to $30
million of revolving loans); (iii) the issuance of $80 million aggregate
principal amount of the Company's 9 1/4% Senior Subordinated Notes due 2008 (the
"Senior Notes") for net proceeds of approximately $77 million; (iv) the
repayment of all outstanding borrowings under the Company's former credit
agreement (the "Old Credit Agreement"); (v) the redemption of the Company's
outstanding Zero Coupon Notes; and (vi) the redemption of the Company's
outstanding 12% Senior Notes due 2002. The interest rates under the Existing
Credit Agreement are approximately the same as interest rates under the Old
Credit Agreement.

6.  EXTRAORDINARY CHARGE

During the 39 weeks ended September 26, 1998, as a result of the completion of
the Refinancing Plan, the Company incurred a $23.6 million extraordinary charge
due to the early extinguishment of debt. The extraordinary charge included
redemption premiums on the Senior Notes and Zero Coupon Notes of approximately
$11.5 million, accelerated amortization of deferred financing costs and other
transaction expenses of approximately $8.1 million, and accelerated accretion of
Zero Coupon Notes to the indenture stated value of approximately $4.0 million.

7.       INCOME (LOSS) PER COMMON  SHARE

The following table sets forth the computation of income (loss) per common share
for the periods presented (in thousands, except per share amounts):
<TABLE>
<CAPTION>
                                                         For the 13 Weeks Ended            For the 39 Weeks Ended
                                                      -------------------------------    -------------------------------
                                                        September 25,    September 26,    September 25,    September 26,
                                                          1999              1998              1999            1998
                                                      --------------    -------------    --------------    -------------
<S>                                                   <C>               <C>              <C>              <C>
Income before extraordinary charge                     $ 7,260           $ 5,763            $14,363        $    8,549
Extraordinary charge                                        --                --                 --           (23,600)
                                                       -------           -------            -------        -----------
Net income (loss)                                      $ 7,260           $ 5,763            $14,363        $  (15,051)
                                                       -------           -------            -------        -----------
                                                       -------           -------            -------        -----------
Weighted average number of common shares
outstanding during the period - basic                   17,115            16,986             17,104           15,936
Dilutive potential securities                            1,310             1,369              1,273            1,275
                                                       -------           -------            -------        -----------
Weighted average number of shares outstanding -
diluted                                                 18,425            18,355             18,377           17,211
                                                       -------           -------            -------        -----------
                                                       -------           -------            -------        -----------
Per common share - basic
Income before extraordinary charge                     $  0.42          $   0.34            $  0.84        $    0.54
Extraordinary charge                                        --                --                 --            (1.48)
                                                       -------           -------            -------        -----------
Net income (loss)                                      $  0.42          $   0.34            $  0.84        $   (0.94)
                                                       -------           -------            -------        -----------
Per common share - diluted
Income before extraordinary charge                     $  0.39          $   0.31            $  0.78        $    0.50
Extraordinary charge                                        --                --                 --            (1.37)
                                                       -------           -------            -------        -----------
Net income (loss)                                      $  0.39          $   0.31             $ 0.78        $   (0.87)
                                                       -------           -------            -------        -----------
                                                       -------           -------            -------        -----------
</TABLE>

                                       8
<PAGE>


ITEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
               CONDITION AND RESULTS OF OPERATION

THE INFORMATION CONTAINED HEREIN INCLUDES CERTAIN FORWARD-LOOKING STATEMENTS
THAT INVOLVE A NUMBER OF RISKS AND UNCERTAINTIES. A NUMBER OF FACTS COULD CAUSE
ACTUAL RESULTS, PERFORMANCE, ACHIEVEMENTS OF THE COMPANY, OR INDUSTRY RESULTS TO
BE MATERIALLY DIFFERENT FROM ANY FUTURE RESULTS, PERFORMANCE OR ACHIEVEMENTS
EXPRESSED OR IMPLIED BY SUCH FORWARD-LOOKING STATEMENTS. THESE FACTORS INCLUDE,
BUT ARE NOT LIMITED TO, THE COMPETITIVE ENVIRONMENT IN THE DRUGSTORE INDUSTRY IN
GENERAL AND IN THE COMPANY'S SPECIFIC MARKET AREA; INFLATION, CHANGES IN COSTS
OF GOODS AND SERVICES; ECONOMIC CONDITIONS IN GENERAL AND IN THE COMPANY'S
SPECIFIC MARKET AREAS; DEMOGRAPHIC CHANGES; CHANGES IN PREVAILING INTEREST RATES
AND THE AVAILABILITY OF AND TERMS OF FINANCING TO FUND THE ANTICIPATED GROWTH OF
THE COMPANY'S BUSINESS; LIABILITY AND OTHER CLAIMS ASSERTED AGAINST THE COMPANY;
CHANGES IN OPERATION STRATEGY OR DEVELOPMENT PLANS; THE ABILITY TO ATTRACT AND
RETAIN QUALIFIED PERSONNEL; THE SIGNIFICANT INDEBTEDNESS OF THE COMPANY; LABOR
DISTURBANCE; CHANGES IN THE COMPANY'S ACQUISITION AND CAPITAL EXPENDITURE PLANS;
AND OTHER FACTORS REFERENCED HEREIN. IN ADDITION, SUCH FORWARD LOOKING
STATEMENTS ARE NECESSARILY DEPENDENT UPON ASSUMPTIONS, ESTIMATES AND DATES THAT
MAY BE INCORRECT OR IMPRECISE AND INVOLVE KNOWN AND UNKNOWN RISKS, UNCERTAINTIES
AND OTHER FACTORS. ACCORDINGLY, ANY FORWARD-LOOKING STATEMENTS INCLUDED HEREIN
DO NOT PURPORT TO BE PREDICTIONS OF FUTURE EVENTS OR CIRCUMSTANCES AND MAY NOT
BE REALIZED. FORWARD-LOOKING STATEMENTS CAN BE IDENTIFIED BY, AMONG OTHER
THINGS, THE USE OF FORWARD-LOOKING TERMINOLOGY SUCH AS "BELIEVES," "EXPECTS, "
"MAY, " "WILL," "SHOULD," "SEEKS," "PRO FORMA," "ANTICIPATES," "INTENDS" OR THE
NEGATIVE OF ANY THEREOF OR OTHER VARIATIONS THEREON OR COMPARABLE TERMINOLOGY,
OR BY DISCUSSION OF STRATEGY OR INTENTIONS. GIVEN THESE UNCERTAINTIES,
PROSPECTIVE INVESTORS ARE CAUTIONED NOT TO PLACE UNDUE RELIANCE ON SUCH
FORWARD-LOOKING STATEMENTS. THE COMPANY DISCLAIMS ANY OBLIGATIONS TO UPDATE ANY
SUCH FACTORS OR TO PUBLICLY ANNOUNCE THE RESULTS OF ANY REVISIONS TO ANY OF THE
FORWARD-LOOKING STATEMENTS CONTAINED HEREIN TO REFLECT FUTURE EVENTS OR
DEVELOPMENTS.

RESULTS OF OPERATIONS

The following sets forth the results of operations as a percentage of sales for
the periods indicated.


<TABLE>
<CAPTION>



                                        For the 13 Weeks Ended                   For the 39 Weeks Ended
                                      --------------------------------      ---------------------------------
                                      September 25,      September 26,      September 25,       September 26,
                                         1999               1998               1999                1998
                                         ----               ----               ----                ----
<S>                                    <C>               <C>                <C>                  <C>
Net sales                               100.0%             100.0%             100.0%                100.0%
Cost of sales                            73.4               72.9               74.7                  74.3
                                        -----              -----              -----                 -----
Gross profit                             26.6               27.1               25.3                  25.7
Selling, general and administrative      15.9               15.8               16.1                  16.0
   expenses
Amortization                              1.3                1.1                1.2                   1.1
Depreciation                              1.3                1.2                1.3                   1.0
Store pre-opening expenses                0.1                0.8                0.2                   0.8
                                        -----               -----             -----                 -----
Operating income                          8.0                8.2                6.5                   6.8
Interest expense, net                     3.7                4.2                3.6                   4.7
                                        -----               -----             -----                 -----
Income before income taxes                4.3                4.0                2.9                   2.1
Income taxes                              0.8                 --                0.5                    --
                                        -----               -----             -----                 -----
Income before extraordinary charge        3.5                4.0                2.4                   2.1
Extraordinary charge                       --                 --                 --                  (5.9)
                                        -----               -----             -----                 -----
Net income (loss)                         3.5%               4.0%               2.4%                 (3.8)%
                                        -----               -----             -----                 -----
                                        -----               -----             -----                 -----
</TABLE>

                                                         9
<PAGE>
THIRD QUARTER 1999 VERSUS THIRD QUARTER 1998.

Net sales in the third quarter 1999 were $211.1 million, an increase of 46.1%
over last year's third quarter net sales of $144.5 million. The increase was
primarily attributable to sales from the 28 former Rock Bottom stores that the
Company purchased in September 1998, increased comparable store sales of 9.0%,
the inclusion of 16 stores opened during the second half of fiscal year 1998 and
the sales from 18 new stores opened during the current fiscal year. The Company
opened three stores during the third quarter of 1999 compared to twelve store
openings during the third quarter of 1998. At September 25, 1999 the Company
operated 145 stores.

Cost of sales as a percentage of net sales increased to 73.4% this quarter from
72.9% in the comparable quarter last year resulting in a decrease in gross
profit margin to 26.6% from 27.1%. The decrease in gross profit margin was
principally related to the impact of the Rock Bottom stores acquired in
September of 1998 as well as the impact of the increase in pharmacy sales as a
percentage of total sales. Pharmacy sales have a lower gross profit margin
percentage than front end store sales.

Selling, general and administrative expenses were $33.5 million or 15.9% of net
sales and $22.8 million or 15.8% of net sales in the third quarter of 1999 and
1998, respectively.

Amortization of goodwill and other intangibles in the third quarter of 1999 and
1998 was $2.8 million and $1.6 million, respectively. The increase in
amortization resulted principally from the amortization of goodwill and
identifiable intangible assets related to the acquisition of the 28 former Rock
Bottom stores and the acquisition of six Love's stores in May 1999 as well as
increases in the amortization of lease acquisition and customer list costs for
pharmacy acquisitions during 1998 and 1999.

The increase in depreciation from $1.8 million in the third quarter of 1998
to $2.8 million in the third quarter of 1999 resulted principally from
depreciation on new stores opened in the fourth quarter of 1998 and the first
nine months of 1999, capital invested in renovations of existing stores and
depreciation expense on the 28 former Rock Bottom stores.

The Company incurred pre-opening costs of $0.3 million during the third quarter
of 1999 related to the opening of three stores. Pre-opening costs of $1.1
million were incurred during the third quarter of 1998 for the opening of twelve
stores.

Net interest expense increased 26.4% to $7.7 million in the third quarter of
1999 from $6.1 million in the third quarter of 1998. The increase was
principally due to the impact of additional term loans of $80 million incurred
in connection with the Rock Bottom Acquisition in the third quarter of 1998 and
$25 million incurred in March 1999 for the Company's store expansion program.

Income before income taxes increased by 55.5% or $3.2 million to $9.0 million in
the third quarter of 1999 from $5.8 million in the third quarter of 1998
primarily as a result of increased sales and gross profit dollars partially
offset by increased selling, general and administrative expenses, depreciation,
amortization and net interest expense.

Income tax expense for the third quarter of 1999 was $1.7 million or 0.8% of net
sales versus no provision for income taxes in the third quarter of 1998. The
Company anticipates that in 1999 it will begin to utilize the net tax loss
carryforward benefits it has accumulated in past years and, therefore, has
provided for income tax expense at its anticipated current year effective tax
rate of 19% (See Note 3 to consolidated financial statements).

The Company's net income increased by $1.5 million to $7.3 million in the third
quarter of 1999 from $5.8 million in the third quarter of 1998 due to factors
discussed above.

                                      10
<PAGE>
THIRTY-NINE WEEKS ENDED SEPTEMBER 25, 1999 VERSUS THIRTY-NINE WEEKS ENDED
SEPTEMBER 26, 1998

Net sales for the thirty-nine weeks ended September 25, 1999 were $610.1
million, an increase of 53.0% over the net sales for the first thirty-nine weeks
of 1998 of $398.7 million. The increase was attributable to sales from the 28
former Rock Bottom stores that the Company purchased in September 1998,
increased comparable store sales of 7.9%, the inclusion of 29 stores opened
during the 39 weeks ended September 26, 1998 for the entire period, four stores
opened during the fourth quarter of fiscal year 1998 and the sales generated by
18 new stores opened during the current fiscal year. The Company opened 18
stores and closed one store during the period compared to 29 store openings
during the same period last year.

Cost of sales for the thirty-nine weeks ended September 25, 1999 as a percentage
of net sales increased to 74.7% from 74.3% in the comparable period last year,
resulting in a decrease in gross profit margin to 25.3% from 25.7%. The decrease
in gross profit margin was principally related to the impact of the Rock Bottom
stores acquired in September 1998 as well as the impact of the increase in
pharmacy sales as a percentage of total sales. Pharmacy sales have a lower gross
profit margin percentage than front end store sales.

Selling, general and administrative expenses were $98.4 million or 16.1% of
net sales and $63.7 million or 16.0% of net sales for the thirty-nine weeks
ended September 25, 1999 and September 26, 1998, respectively. The percentage
increase in 1999 compared to 1998 resulted principally from Rock Bottom
related transition costs of approximately $600,000 incurred during the first
quarter of 1999.

Amortization of goodwill and other intangibles for the thirty-nine weeks ended
September 25, 1999 and September 26, 1998 was $7.6 million and
$4.4 million, respectively. The increase in amortization resulted
principally from the amortization of goodwill and identifiable
intangible assets related to the September 1998 acquisition of the
28 former Rock Bottom stores and May 1999 acquisition of six Love's
stores as well as increases in the amortization of lease acquisition
and customer list costs for pharmacy acquisitions during 1998 and 1999.

The increase in depreciation from $4.1 million for the thirty-nine weeks ended
September 26, 1998 to $7.6 million for the thirty-nine weeks ended September 25,
1999 resulted principally from new stores opened in 1998 and the first nine
months of 1999, capital invested in renovations of existing stores and
depreciation expense on the 28 former Rock Bottom stores.

The Company incurred pre-opening costs of $1.3 million during the thirty-nine
weeks ended September 25, 1999 related to the opening of 18 stores. Pre-opening
costs of $3.0 million were incurred during the thirty-nine weeks ended
September 26, 1998 for the opening of 29 stores.

Net interest expense increased 16.1% to $21.7 million during the thirty-nine
weeks ended September 25, 1999 from $18.7 million in the comparable period
last year. The increase was principally due to the impact of additional term
loans of $80 million incurred during the third quarter of 1998 in connection
with the Rock Bottom Acquisition and $25 million incurred in March 1999 for
the Company's store expansion program.

Income before income taxes for the thirty-nine weeks ended September 25, 1999
increased by $9.2 million to $17.7 million from $8.5 million in the comparable
prior year period, primarily as a result of increased sales and gross profit
dollars partially offset by increased selling, general and administrative
expenses, depreciation, amortization and net interest expense.

Income tax expense for the thirty-nine weeks ended September 25, 1999 amounted
to $3.4 million or .5% of net sales versus no provision for income taxes in the
comparable prior year period. The Company anticipates it will begin to utilize
in 1999 the net tax loss carryforward benefits it has accumulated in past years
and, therefore, has provided for income tax expense at its current year
anticipated effective tax rate of 19% (See Note 3 to consolidated financial
statements).

The Company's income before extraordinary charge increased by $5.9 million to
$14.4 million for the thirty-nine weeks ended September 25, 1999 from $8.5
million in the thirty-nine weeks ended September 26, 1998 due to the factors
discussed above.

                                       11

<PAGE>
Net loss for the thirty-nine weeks ended September 26, 1998 included a
$23.6 million extraordinary charge for costs associated with the early
extinguishment of debt as part of the Company's initial public offering
and related financing. Net income for the thirty-nine weeks ended September 25,
1999 was $14.4 million compared to a net loss for the thirty-nine weeks ended
September 26, 1998 of $15.1 million.

LIQUIDITY AND CAPITAL RESOURCES

Working capital was $96.4 million and $90.0 million as of September 25, 1999 and
December 26, 1998, respectively. The increase is principally due to increases in
inventory and receivables partially offset by a reduction in property held for
sale. The increase in inventory reflects inventory related to the opening of 18
additional stores less one store closed during the period. The property held for
sale was reduced as a result of the disposition of six stores acquired from Rock
Bottom Stores, Inc. which the Company elected not to continue to operate and the
related inventories as well as the disposition of the Company's former
distribution center facility.

The Company's EBITDA (earnings before interest, taxes, depreciation,
amortization, extraordinary charge and other non-cash items) for the third
quarter of 1999 increased by 44.4% to $23.7 million from $16.4 million for the
third quarter of 1998. EBITDA as a percentage of sales was 11.2% for the third
quarter of 1999 compared to 11.4% for the third quarter of 1998. The Company's
EBITDA for the thirty-nine weeks ended September 25, 1999 increased by 51.9% to
$58.0 million from $38.2 million for the thirty-nine weeks ended September 26,
1998. EBITDA as a percentage of sales was 9.5% and 9.6% in each of the
thirty-nine week periods respectively.

For the thirty-nine weeks ended September 25, 1999, net cash used in
operating activities was $0.2 million, compared to $27.4 million during the
thirty-nine weeks ended September 26, 1998. Increases in inventory related to
new stores as well as increases in vendor receivables and third party
pharmacy receivables contributed to the use of cash in the period.

During the thirty-nine weeks ended September 25, 1999, net cash used in
investing activities was $27.7 million compared to $88.0 million during the
thirty-nine weeks ended September 26, 1998. This reflects capital expenditures
in 1999 related to the conversion of former Rock Bottom stores to the hybrid
Duane Reade format, new store openings and remodelings and the acquisition of
seven pharmacies, net of proceeds related to the disposition of six former Rock
Bottom store locations and the Company's former distribution center facility.
The Company sold the leases for the six stores for proceeds of approximately
$3.5 million and liquidated the stores' inventories for proceeds of
approximately $3.0 million. The Company sold its former distribution center
facility for proceeds of approximately $4.2 million.

For the thirty-nine weeks ended September 25, 1999, net cash provided by
financing activities was $28.0 million compared to $115.7 million for the
thirty-nine weeks ended September 26, 1998. The decrease from last year
resulted from the implementation of the Company's Refinancing Plan during the
first half of 1998 and additional financings incurred in connection with the
Rock Bottom Acquisition in the third quarter of 1998. During the quarter
ended March 27, 1999, the Company secured an additional term loan of $25
million. In addition, the Company increased its revolving credit facility
from $30 million to $40 million. This will provide the Company with
additional flexibility under the existing credit agreement for the Company's
working capital requirements.

The Company's capital requirements primarily result from opening and stocking
new stores and renovating existing stores. The Company believes that there
are significant opportunities to open additional stores, and currently plans
to open 30 to 40 stores during fiscal years 1999 and 2000. The Company has
expended approximately $28.1 million on capital expenditures during the
thirty-nine weeks ended September 25, 1999 and expects to spend
approximately $3.0 million during the remainder of 1999. Capital
expenditures are made primarily for new and replacement stores and the
renovation of existing stores. Working capital is also required to support
inventory for the Company's existing stores. Historically, the Company has been
able to lease its store locations. On September 14, 1999, the Company filed a
Registration Statement on Form S-4 with the Securities and Exchange
Commission to register 506,329 shares of common stock which the Company may
issue as consideration for acquisitions of independent drug stores that may
be made from time to time. This represents an additional source of capital
available to the Company.

                                       12

<PAGE>

The Company records significant accounts receivable related to pharmacy sales in
connection with third party plans and these receivables are collectible within
30 to 45 days. Prior to September 8, 1998, the Company had a non-recourse
factoring arrangement with an independent third party, Pharmacy Fund, Inc. (the
"Pharmacy Fund") under which the Company sold it accounts receivable associated
with the third party plans. On September 8, 1998, Pharmacy Fund declared
bankruptcy and no longer purchases the Company's third party plan receivables.
The outstanding amount from Pharmacy Fund was collected by the Company during
September 1999. The Company did not suffer any loss from the bankruptcy. The
Company plans to collect its own receivables for the foreseeable future.

The Company believes that, based on current levels of operations and anticipated
growth, cash flow from operations, together with borrowing facilities and the
ability to increase lines if needed, will be adequate for at least the next two
years to make required payments of principal and interest on the Company's
indebtedness, to fund anticipated capital expenditures and working capital
requirements and to comply with terms of its debt agreements. As of September
25, 1999, the Company had borrowed approximately $25.5 million under the
revolving portion of its bank credit facility and had approximately $14.0
million of remaining availability. The ability of the Company to meet its debt
service obligations and reduce its total debt will be dependent upon the future
performance of the Company and its subsidiaries which, in turn, will be subject
to general economic, financial, business, competitive, legislative, regulatory
and other conditions, many of which are beyond the Company's control. In
addition, there can be no assurance that the Company's operating results, cash
flow and capital resources will be sufficient for repayment of its indebtedness
in the future. Substantially all of the Company's borrowings under the Existing
Credit Agreement bear interest at floating rates; therefore, the Company's
financial condition will be affected by the changes in prevailing interest
rates. The Company has entered into interest rate protection agreements to
minimize the impact from a rise in interest rates.

TAX BENEFITS FROM NET OPERATING LOSSES

At December 26, 1998, the Company had net operating loss carryforwards
("NOLs") of approximately $107 million, which are due to expire in the years
2007 through 2018. These NOLs may be used to offset future taxable income and
thereby reduce or eliminate the Company's federal income taxes otherwise
payable. The Internal Revenue Code of 1986, as amended (the "Code"), imposes
significant limitations on the utilization of NOLs in the event of an
"ownership change," as defined in Section 382 of the Code (the "Section 382
Limitation"). The Section 382 Limitation is an annual limitation on the
amount of pre-ownership change NOLs that a corporation may use to offset its
post-ownership change income. The Section 382 Limitation is calculated by
multiplying the value of a corporation's stock immediately before an
ownership change by the long-term tax-exempt rate (as published by the
Internal Revenue Service). Generally, an ownership change occurs with respect
to a corporation if the aggregate increase in the percentage of stock
ownership (by value) of that corporation by one or more 5% shareholders
(including certain groups of shareholders who in the aggregate own at least
5% of that corporation's stock) exceeds 50 percentage points over a
three-year testing period. The recapitalization of the Company in June 1997
(the "Recapitalization") caused the Company to experience an ownership
change. As a result, the Company currently is subject to an annual Section
382 Limitation of approximately $5.1 million on the amount of NOLs generated
prior to the Recapitalization that the Company may utilize to offset future
taxable income. NOLs generated by the Company since the Recapitalization
(approximately $37 million) are not subject to the Section 382 Limitation and
may be used to offset future taxable income. There can be no assurance that
any NOLs will be able to be used by the Company to offset future taxable
income or that such NOLs will not become subject to limitation due to future
ownership changes.

YEAR 2000 UPDATE

The Company has implemented a program to ensure that the Company's computer
systems and applications (IT Systems) and non-IT Systems will function properly
beyond 1999. This program includes inventorying year 2000 items; assigning
priorities to the identified items; assessing year 2000 compliance of items
determined to be material to the Company; remediating or replacing material
items that are not year 2000 compliant; and determining contingency plans that
may be required.

                                       13
<PAGE>

The Company has completed implementing year 2000 compliance for its IT Systems
and is in the process of completing its non-IT Systems, which includes surveying
significant third party vendors. Year 2000 compliance of the Company's IT
Systems has been successfully tested. The Company plans to complete year 2000
compliance for its non-IT systems prior to December 31, 1999.

The Company is using both internal and external resources to address year
2000 issues and believes that the cost of such modifications will approximate
$600,000, most of which has been expended. Approximately $250,000 of this
includes system upgrades that had been previously identified for operational
enhancements. Management regularly monitors the status of the year 2000
compliance process.

The failure to correct a material year 2000 problem could result in an
interruption in, or failure of, certain normal business activities or
operations. Such failures could materially and adversely affect the Company's
results of operations, financial condition and liquidity. No assurances,
however, can be given that the Company will be able to identify and address all
year 2000 issues due to their complexity as well as the Company's dependence on
the technical skills of employees and independent contractors and on the
representations and preparedness of third parties with which the Company does
business. Although the Company believes that its efforts are designed to
appropriately identify and address year 2000 issues that are subject to the
Company's reasonable control, there can be no assurance that year 2000 issues
will not have a material adverse effect on the Company's business, financial
condition or results of operations.

SEASONALITY

In general, sales of drugstore items such as prescription drugs, OTC drugs and
health and beauty care products exhibit limited seasonality in the aggregate,
but do vary by product category. Quarterly results are primarily affected by the
timing of new store openings and the sale of seasonable products. In view of the
Company's recent expansion of seasonal merchandising, the Company expects
slightly greater revenue sensitivity relating to seasonality in the future.

RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS

FASB Statement No. 133 "Accounting for Derivative Instruments and Hedging
Activities" requires that derivative instruments such as options, forward
contracts and swaps be recorded as assets and liabilities at fair value and
provides guidance for recognition of changes in fair value depending on the
reason for holding the derivative. The Company does not presently have
significant transactions involving derivative instruments, but may do so in the
future. The Company is required to adopt Statement No. 133 for the Third quarter
of 2001 and may adopt it earlier.

MARKET RISK

The financial results of the Company are subject to risk from interest rate
fluctuations on debt, which carries variable interest rates. Variable rate debt
outstanding under the Existing Credit Agreement was approximately $254.6
million at September 25, 1999, which is somewhat lower than the Company expects
its outstanding variable rate debt to be during the next twelve months. The
anticipated outstanding balances however, are not expected to be materially
greater than at September 25, 1999. Based on September 25, 1999 outstanding
balances, a 0.50% change in interest rates would affect annual results of
operations by approximately $1.3 million on a pre-tax basis. The Company also
has $80 million of Senior Notes outstanding at September 25, 1999. These notes,
which bear interest at a fixed rate of 9 1/4%, are not subject to risk from
interest rate fluctuations.

The principal objective of the Company's investment management activities is to
maintain acceptable levels of interest rate and liquidity risk to facilitate the
funding needs of the Company. As part of its investment management, the Company
may use derivative financial products such as interest rate hedges and interest
rate swaps. During the nine months ended September 26, 1998, there were no
derivative positions. During the nine-months ended September 25, 1999, in
connection with the Existing Credit Agreement requirements, the Company has an
interest rate protection agreement in place. The interest rate protection
agreement caps the LIBOR interest rate at 6.5% on $65 million of variable rate
debt and expires in November 2000.  At September 25, 1999, the 30-day LIBOR
rate was 5.31%.


                                       14
<PAGE>


PART II
                                OTHER INFORMATION


                  ITEM 1.  LEGAL PROCEEDINGS

                  The Company is a party to certain legal actions arising in the
ordinary course of business. Based on information presently available to the
Company, the Company believes that it has adequate legal defenses or insurance
coverage for these actions and that the ultimate outcome of these actions will
not have a material adverse effect on the Company.

                  In addition, the Company is currently party to legal
proceedings arising out of disputes over the purchase price with respect
to the Rock Bottom Acquisition. The disputed amounts claimed against the
Company are not material to the Company, and the Company believes that the
ultimate outcome of these actions will not have a material adverse effect
on the Company.

                  ITEM 2.  CHANGES IN SECURITIES AND USE OF PROCEEDS.

                  Not applicable.

                  ITEM 3.  DEFAULTS UPON SENIOR SECURITIES

                  None.
 .
                  ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.

                  Not applicable.

                  ITEM 5.  OTHER INFORMATION

                  Not applicable.

                  ITEM 6. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS
                          ON FORM 8-K

                  (a)      The following documents are filed as a part of this
                           report:

                           (i)      Financial Statements

                           (ii)     Exhibits:

<TABLE>
<CAPTION>
<S>                          <C>
  3.1(i)                     Amended  and  Restated  Certificate  of  Incorporation  of the  Company  (incorporated  by
                             reference to Exhibit  3.1(i) to the Company's  Registration  Statement No.  333-41239 (the
                             "Common Stock S-1")).
  3.1(ii)                    Form of Amended and Restated Bylaws of the Company  (incorporated  by reference to Exhibit
                             3.1(i) to the Common Stock S-1).
  3.2(i)                     Certificate of  Incorporation  of DRI I Inc.  (incorporated by reference to Exhibit 3.2(i)
                             to the S-1  Registration  Statement  No.  333-43313  with respect to the  Company's 9 1/4%
                             Senior Subordinated Notes due 2008 (the "Notes S-1")).
  3.2(ii)                    By-laws of DRI I Inc. (incorporated by reference to Exhibit 3.2(ii) of the Notes S-1)
  3.3                        Third  Amended  and  Restated  Partnership  Agreement  of  Duane  Reade  (incorporated  by
                             reference to Exhibit 3.3 of the Notes S-1)

</TABLE>

                                       15
<PAGE>

<TABLE>
<CAPTION>
<S>                          <C>
 3.4(i)*                     Certificate of Incorporation of Duane Reade International, Inc.
 3.4(ii)*                    Bylaws of Duane Reade International, Inc.
 3.5(i)*                     Certificate of Incorporation of Duane Reade Realty, Inc.
 3.5(ii)*                    Bylaws of Duane Reade Realty, Inc.
 4.1                         Form of Indenture (incorporated by reference to Exhibit 4.1 of the Notes S-1).
10.1                         Duane Reade Inc.  1997 Equity  Participation  Plan  (incorporated  by reference to Exhibit
                             10.1 to the Company's Form S-1 registration Statement (File No. 333-41239), the "Common Stock
                             S-1").
10.2                         Duane Reade Inc.  Holding Corp.  1992 Stock Incentive Plan  (incorporated  by reference to
                             Exhibit 10.2 to the Common Stock S-1).
10.3                         Employment  Agreement,  dated as of October 27,  1997,  between the Company and Anthony J.
                             Cuti (incorporated by reference to Exhibit 10.3 to the Common Stock S-1).
10.4                         Employment Agreement, dated as of February 22, 1993, as amended, between the Company and Gary
                             Charboneau (incorporated by reference to Exhibit 10.4 to the Common Stock S-1).
10.5                         Employment Agreement, dated as of April 10, 1995, as amended, between Duane Reade and Jerry M. Ray
                             (incorporated by reference to Exhibit 10.5 to the Common Stock S-1).
10.6                         Employment Letter Agreement, dated as of October 9, 1996, between Duane Reade and Joseph Lacko
                             (incorporated by reference to Exhibit 10.6 to the Common Stock S-1).
10.7                         Employment  Letter  Agreement,  dated as of  February  12,  1997,  between the Company and
                             William Tennant (incorporated by reference to Exhibit 10.7 to the Common Stock S-1).
10.8                         Agreement,  dated as of  November  22,  1996  between  Duane  Reade  and  Drug,  Chemical,
                             Cosmetic,  Plastics and Affiliated  Industries Warehouse Employees Local 815 (incorporated
                             by reference to Exhibit 10.8 to the Common Stock S-1).
10.9                         Agreement, dated July 16, 1992, as amended, between Duane Reade and Allied Trades Council
                             (incorporated by reference to Exhibit 10.9 to the Common Stock S-1).
10.10                        Agreement, dated February 4, 1997, as amended between Duane Reade and The Pharmacy Fund, Inc.
                             (incorporated by reference to Exhibit 10.10 to the Common Stock S-1).
10.11                        Stockholders and Registration Rights Agreement, dated as of June 18, 1997, among the Company,
                             DLJMB Funding II, Inc., DLJ Merchant Banking Partners II, L.P., DLJ Diversified Partners, L.P., DLJ
                             Third ESC L.L.C., DLJ Offshore Partners, II, C.V., DLJ EAB Partners, L.P., UK Investment Plan 1997
                             Partners, Bankers Trust New York Corporation, Conac & Co., Muico & Co., Roton & Co. , Putnam High
                             Yield Trust, PaineWebber Managed Investment Trust on behalf of PaineWebber High Income Fund, USL
                             Capital Corporation, Pearlman Family Partners, The Marion Trust, Bruce L. Weitz, BCIP Associates,
                             BCIP Trust Associates, L.P., Tyler Capital Fund L.P., Tyler International, L.P.-II, and Tyler
                             Massachusetts, L.P. (incorporated by reference to Exhibit 10.13 to the Common Stock S-1).
10.12                        Third Amended and Restated Credit Agreement, dated as of March 17, 1999, among Duane Reade, as the
                             Borrower, Duane Reade Inc. and DRI I Inc., as the Parent Guarantors, Various Financial Institutions
                             set forth therein, as the Lenders, DLJ Capital Funding, Inc., as the Syndication Agent for the
                             Lenders, Fleet National Bank, as the Administrative Agent for the Lenders and Credit Lyonnais New
                             York Branch, as the Documentation Agent for the Lenders (incorporated by reference to Exhibit 10.12
                             of the Company's Quarterly Report on Form 10-Q for the quarter ended March 27, 1999).
10.13                        Amended and Restated Partnership Security Agreement, dated as of September 11, 1998, among
                             Duane Reade Inc. and DRI I Inc. and Fleet National Bank, as Administrative Agent (Incorporated by
                             reference to Exhibit 10.15 of the Company's Current Report on Form 8-K dated September 24, 1998).
</TABLE>


                                       16
<PAGE>



<TABLE>
<CAPTION>
<S>                         <C>
10.14                        Amended  and  Restated  Borrower  Security  Agreement,  dated as of  September  11,  1998,
                             between  Duane Reade and Fleet  National Bank as  Administrative  Agent  (Incorporated  by
                             reference to Exhibit 10.16 of the  Company's  Current  Report on Form 8-K dated  September
                             24, 1998).
10.15                        Amended and Restated  Holdings  Pledge  Agreement,  dated as of September 11, 1998,  among
                             Duane Reade Inc.  and Fleet  National  Bank,  as  Administrative  Agent  (incorporated  by
                             reference to Exhibit 10.17 of the  Company's  Current  Report on Form 8-K dated  September
                             24, 1998).
10.16                        Amendment  Agreement to Credit  Agreement,  dated as of March 17, 1999, among Duane Reade,
                             Duane Reade Inc.,  DRI I Inc.,  various  financial  institutions  as Lenders,  DLJ Capital
                             Funding,  Inc., as Syndication  Agent,  Fleet National Bank, as Administrative  Agent, and
                             Credit Lyonnais New York Branch,  as  Documentation  Agent  (incorporated  by reference to
                             Exhibit 10.16 of the Company's  Quarterly  Report on Form 10-Q for the quarter ended March
                             27, 1999).
10.17                        Promissory  Note,  dated as of November  9, 1998,  between the Company and Anthony J. Cuti
                             and  (incorporated  by reference to Exhibit 10.17 to the  Company's  1998 Annual Report on
                             Form 10-K).

27.1*                        Financial Data Schedule.
</TABLE>

* Filed herewith.

                  (b)      Reports on Form 8-K:   None.

                  (c)      Financial Statement Schedules:     None.

Schedules for which provision is made in the applicable accounting regulations
of the Commission are either not required under the related instructions, are
inapplicable or not material, or the information called for thereby is otherwise
included in the financial statements and therefore has been omitted.



                                       17
<PAGE>

                                   SIGNATURES

                  Pursuant to the requirements of Section 13 or 15(d) 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.


Dated:   November 8, 1999
                                              DUANE READE INC.
                                              (Registrant)

                                              By: /s/ John  Henry
                                                 ------------------------
                                              Name:  John Henry
                                              Title:  Senior Vice President and
                                                      Chief Financial Officer

                  Pursuant to the requirements of the Securities Exchange Act of
1934, this report has been signed below by the following persons on behalf of
the registrant in the capacities indicated on November 8, 1999:
<TABLE>
<CAPTION>

         SIGNATURES                                  TITLES
         ----------                                  ------
<S>                                                  <C>
    /s/ Anthony  J. Cuti                             President and Chief Executive Officer and Director
    --------------------                             (Principal Executive Officer)
    Anthony J. Cuti

    /s/ John Henry                                   Senior Vice President, Chief Financial Officer
    --------------------                             (Principal Accounting and Financial Officer)
    John Henry
</TABLE>


                                       18
<PAGE>


                                   SIGNATURES

                  Pursuant to the requirements of Section 13 or 15(d) 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.


Dated:   November 8, 1999
                                              DRI I INC.

                                              By:  /s/ John Henry
                                              -------------------------------
                                              Name:    John Henry
                                              Title:   Senior Vice President and
                                                       Chief Financial Officer

                  Pursuant to the requirements of the Securities Exchange Act of
1934, this report has been signed on November 8, 1999 by:

         SIGNATURES                                  TITLES
         ----------                                  ------
<TABLE>
<CAPTION>
<S>                                                 <C>
/s/ Anthony  J. Cuti                                 President and Chief Executive Officer and Director
--------------------                                 (Principal Executive Officer)
    Anthony J. Cuti


/s/ John Henry                                       Senior Vice President, Chief Financial Officer
--------------------                                 (Principal Accounting and Financial Officer)
    John Henry
</TABLE>



                                       19
<PAGE>

                                   SIGNATURES

                  Pursuant to the requirements of Section 13 or 15(d) 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.

Dated:   November 8, 1999
                                                              DUANE READE INC.,
<TABLE>
<CAPTION>
<S>                                                           <C>
By:      DRI I Inc. a general partner                         By:      Duane Reade Inc., a general partner


By: /s/ John Henry                                            By: /s/ John Henry
    -----------------------------                             --------------------------------------
Name:    John Henry                                           Name:    John Henry
Title:   Senior Vice President and Chief Financial Officer    Title:   Senior Vice President and Chief Financial
                                                                       Officer
</TABLE>

                  Pursuant to the requirements of the Securities Exchange Act of
1934, this report has been signed below on November 8, 1999 by the following
persons in the capacities indicated with respect to Duane Reade Inc. and DRI I
Inc., the general partners of Duane Reade, on behalf of Duane Reade (except as
otherwise indicated):
<TABLE>
<CAPTION>

                  SIGNATURES                                           TITLES
                  ----------                                           ------
<S>                                                  <C>
/s/ Anthony J. Cuti                                  President and Chief Executive Officer and Director
-------------------                                  (Principal Executive Officer)
    Anthony J. Cuti


/s/ John Henry                                       Senior Vice President, Chief Financial Officer
-------------------                                  (Principal Accounting and Financial Officer)
    John Henry
</TABLE>

                                       20
<PAGE>


                                   SIGNATURES

                  Pursuant to the requirements of Section 13 or 15(d) 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.


Dated:   November 8, 1999
                                              DUANE READE INTERNATIONAL, INC.

                                              By:  /s/ John Henry
                                              -------------------------------
                                              Name:    John Henry
                                              Title:   Senior Vice President and
                                                       Chief Financial Officer

                  Pursuant to the requirements of the Securities Exchange Act of
1934, this report has been signed on November 8, 1999 by:

         SIGNATURES                                  TITLES
         ----------                                  ------
<TABLE>
<CAPTION>
<S>                                                 <C>
/s/ Anthony  J. Cuti                                 President and Chief Executive Officer and Director
--------------------                                 (Principal Executive Officer)
    Anthony J. Cuti


/s/ John Henry                                       Senior Vice President, Chief Financial Officer
--------------------                                 (Principal Accounting and Financial Officer)
    John Henry
</TABLE>



                                       21
<PAGE>


                                   SIGNATURES

                  Pursuant to the requirements of Section 13 or 15(d) 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.


Dated:   November 8, 1999
                                              DUANE READE REALTY, INC.

                                              By:  /s/ John Henry
                                              -------------------------------
                                              Name:    John Henry
                                              Title:   Senior Vice President and
                                                       Chief Financial Officer

                  Pursuant to the requirements of the Securities Exchange Act of
1934, this report has been signed on November 8, 1999 by:

         SIGNATURES                                  TITLES
         ----------                                  ------
<TABLE>
<CAPTION>
<S>                                                 <C>
/s/ Anthony  J. Cuti                                 President and Chief Executive Officer and Director
--------------------                                 (Principal Executive Officer)
    Anthony J. Cuti


/s/ John Henry                                       Senior Vice President, Chief Financial Officer
--------------------                                 (Principal Accounting and Financial Officer)
    John Henry
</TABLE>



                                       22