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Strategies & Market Trends : Z PORTFOLIO -- Ignore unavailable to you. Want to Upgrade?

To: Larry S. who wrote (2920)	7/13/1999 7:19:00 PM
From: Susan Saline	Read Replies (1) \| Respond to of 11568

RAD this sounds okay by me ... I joined ya in this today at 22 5/16, a partial position, expecting to average up ... biz.yahoo.com RITE AID CORP (RAD) Quarterly Report (SEC form 10-Q) MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS: RESULTS OF OPERATIONS Sales for the thirteen-week period ended May 29, 1999 were $3,624.5 million compared to $3,032.7 million in the same period last year, representing an increase of 19.5%. Included in total sales for the period were revenues attributable to PCS Health Systems, Inc. of $260.9 million. Same-store sales for the quarter ended May 29, 1999, increased 10.0% as compared to the year-ago period reflecting a 16.2% increase in pharmacy comparable sales and a 2.6% increase in front-end same-unit sales, which are all non-pharmacy sales. Prescription sales accounted for 58.2% of drugstore sales for the quarter, compared to 53.5% last year. Third party prescription sales, which represent prescription sales that are paid by a person or entity other than the recipient of the prescribed pharmaceutical and are generally subject to negotiated reimbursement rates in conjunction with a pharmacy benefit plan, were 87.1% of pharmacy sales compared to 84.6% last year. During the quarter the company added or acquired 52 drugstores, closed 20 smaller outlets and expanded or relocated 52 units. Stores in operation at the end of the quarter totaled 3,853. As a percentage of sales, cost of goods sold including occupancy costs were 73.5% for the thirteen-week period ended May 29, 1999, compared to 72.6% for the same period in the previous year. The company continues to experience a mix shift between prescription and front-end sales at its retail drugstores, and consequently, a decline in overall gross margins resulted for the thirteen-week period ended May 29, 1999, because prescription gross margins are lower than front-end gross margins. Also impacting gross margins were increases in occupancy costs. Front-end sales to total sales declined to 41.8% of sales for the thirteen weeks ended May 29, 1999 compared to 46.5% in the prior year. Also, front-end shrinkage expense increased $1.0 million from the prior year to $13.5 million or .40% of total drugstore sales. Pharmacy gross profit margins increased slightly when compared to the same period in the prior year, despite an increase in third party sales to total prescription sales. The company uses the LIFO inventory method that requires interim estimates of annual inflation rates. Accordingly, costs of goods sold included a LIFO provision of $9.0 million for the thirteen weeks ended May 29, 1999, compared to $8.0 million in the same period last year. The LIFO method of valuing inventory had the effect of reducing net income $ .02 per diluted share for the 13-week periods ended May 29, 1999 and May 30, 1998.