UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For Thirteen Weeks Ended April 30, 1994
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
--------- ---------
Commission File No. 1-4844
ECKERD CORPORATION
(Exact name of registrant as specified in charter)
DELAWARE 13-3302437
(State of incorporation) (I.R.S. Employer Identification No.)
8333 Bryan Dairy Road
Largo, Florida 34647
(Address and zip code of principal executive offices)
(813) 399-6000
(Registrant's telephone number, including area code)
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
----- -----
As of May 28, 1994 the following number of shares of Common Stock, $.01 par
value, were outstanding: 31,668,867 (including 605,022 shares of Non-Voting
Common Stock)
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<TABLE>
ECKERD CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS EXCEPT SHARE DATA)
<CAPTION>
Unaudited Audited
ASSETS 4/30/94 1/29/94
- - - ------ --------- ---------
<S> <C> <C>
Current assets:
Cash and short-term interest bearing deposits
plus accrued interest $ 11,349 12,110
Receivables, less allowance for doubtful
receivables of $5,000 and $5,000 100,263 92,672
Merchandise inventories 730,426 765,653
Prepaid expenses and other current assets 6,480 6,232
--------- ---------
Total current assets 848,518 876,667
--------- ---------
Property, plant and equipment, at cost 476,868 507,061
Less accumulated depreciation 226,391 238,425
--------- ---------
Net property, plant and equipment 250,477 268,636
Excess of cost over net assets acquired, less --------- ---------
accumulated amortization 31,009 31,594
Favorable lease interests, less accumulated amortization 171,130 177,803
Unamortized debt expense 37,540 38,779
Other assets 27,199 24,025
--------- ---------
$1,365,873 1,417,504
========== =========
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
- - - ----------------------------------------------
Current liabilities:
Bank debit balances $ 16,228 40,974
Current installments of long-term debt 1,896 1,905
Accounts payable 260,606 363,136
Accrued expenses 169,583 164,064
--------- ---------
Total current liabilities 448,313 570,079
--------- ---------
Other non-current liabilities 72,456 73,461
Long-term debt, excluding current installments 996,934 952,986
Stockholders' deficit:
Preferred stock of $.01 par value.
Authorized 20,000,000 shares; none issued - -
Voting common stock of $.01 par value.
Authorized 96,481,272 shares; issued 31,061,245
and 31,031,811 310 310
Non-voting common stock of $.01 par value.
Authorized 3,518,728 shares; issued 605,022 shares 6 6
Capital in excess of par value 225,807 225,560
Retained deficit (377,953) (404,898)
--------- ---------
Total stockholders' deficit (151,830) (179,022)
--------- ---------
$1,365,873 1,417,504
========== =========
</TABLE>
See accompanying notes to condensed consolidated financial statements.
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<TABLE>
ECKERD CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
(IN THOUSANDS EXCEPT PER SHARE DATA)
<CAPTION>
Thirteen Weeks Ended
---------------------------
4/30/94 5/1/93
---------- ---------
<S> <C> <C>
Sales and other operating
revenue $1,126,806 1,055,152
---------- ---------
Costs and expenses:
Cost of sales, including store
occupancy, warehousing and
delivery expense 856,694 793,329
Operating and administrative
expenses 217,846 210,420
--------- ---------
Earnings before interest
expenses 52,266 51,403
Interest expenses:
Interest expense, net 22,212 30,914
Amortization of original issue
discount and deferred debt
expenses 1,689 1,746
--------- ---------
Total interest expenses 23,901 32,660
--------- ---------
Earnings before income taxes 28,365 18,743
Income tax provision 1,420 923
--------- ---------
Net earnings for the period 26,945 17,820
Preferred stock dividends - 2,708
--------- ---------
Net earnings for the
period available to
common shares $ 26,945 15,112
========== =========
Net earnings per common share $ .84 .56
========== =========
</TABLE>
See accompanying notes to condensed consolidated financial statements.
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<TABLE>
ECKERD CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
(IN THOUSANDS)
<CAPTION>
Thirteen Weeks Ended
-------------------------
4/30/94 5/1/93
--------- --------
<S> <C> <C>
Cash flows from operating activities:
Net earnings for the period $ 26,945 17,820
Adjustments to reconcile net earnings for the
period to net cash provided by operating
activities:
Depreciation and amortization 18,278 23,030
Amortization of original issue discount
and deferred debt expenses 1,689 1,746
Decrease in receivables, merchandise
inventories and prepaid expenses 11,943 24,000
Decrease in accounts payable and accrued
expenses (95,249) (2,168)
-------- -------
Net cash provided by (used in)
operating activities (36,394) 64,428
-------- -------
Cash flows from investing activities:
Additions to property, plant and equipment (7,079) (9,775)
Sale of property, plant and equipment 95 1,336
Acquisition of certain drug store assets (376) (109)
Net cash proceeds from sale of Vision Group 23,654 -
Other 844 (985)
-------- -------
Net cash from (used in) investing
activities 17,138 (9,533)
-------- -------
Cash flows from financing activities:
Increase (decrease) in bank debit balances (24,746) 451
14.5% preferred stock cash dividends - (2,708)
Additions to long-term debt 23 373
Reductions of long-term debt (579) (878)
Net additions (reductions) under credit agreements 44,265 (48,500)
Other, including deferred financing costs (468) (722)
-------- -------
Net cash provided by (used in)
financing activities 18,495 (51,984)
-------- -------
Net increase (decrease) in cash and cash equivalents (761) 2,911
Cash and short-term interest bearing deposits plus
accrued interest at beginning of period 12,110 18,642
-------- -------
Cash and short-term interest bearing deposits plus
accrued interest at end of period $ 11,349 21,553
========= =======
</TABLE>
See accompanying notes to condensed consolidated financial statements.
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<TABLE>
ECKERD CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
<S> <C>
1. The condensed consolidated financial statements include the accounts of the
Company and its subsidiaries all of which are wholly owned, and were prepared
from the books and records of the Company without audit or verification and
in the opinion of management include all adjustments (none of which were
other than recurring accruals) necessary to present a fair statement of
results for such periods. It is suggested that these condensed consolidated
financial statements should be read in conjunction with the financial
statements and notes filed as part of the Form 10-K/A report for the fiscal
year ended January 29, 1994. The results of operations of the periods
indicated should not be considered as necessarily indicative of operations
for the full year.
2. Substantially all inventories are determined on a last-in, first-out (LIFO)
cost basis. At April 30, 1994 and January 29, 1994 inventories would have
been greater by approximately $68.6 million and $66.1 million, respectively,
if inventories were valued on a first-in, first-out (FIFO) cost basis. The
cost of merchandise sold is calculated primarily on estimated inventory
values and inflation rates based on physical inventories taken at all
locations at least once during the fiscal year.
3. Net earnings per common share calculations for the periods presented are
after considering any preferred dividends paid on the Company's 14.5%
cumulative redeemable preferred stock which was repurchased on July 15,
1993. The weighted average number of shares outstanding for the thirteen
weeks ended April 30, 1994 and May 1, 1993 were 32,224,000 and 26,917,000,
respectively.
</TABLE>
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<PAGE>
4.
<TABLE>
Eckerd Corporation
Condensed Consolidated Statements of Operations
(Unaudited)
(In Thousands Except Per Share Data)
<CAPTION>
Thirteen Weeks Ended
---------------------------------------
04/30/94 05/01/93
----------- -------------------------
Actual Actual Adjusted(A)
----------- ----------- -----------
<S> <C> <C> <C>
Sales $1,126,806 1,055,152 1,039,645
Cost of sales 856,694 793,329 786,008
Operating and administrative
expenses 217,846 210,420 203,594
--------- --------- ---------
Operating profit 52,266 51,403 50,043
Interest expense 23,901 32,660 32,185
Income taxes 1,420 923 879
--------- --------- ---------
Net earnings 26,945 17,820 16,979
Preferred stock dividends - 2,708 2,708
Net earnings available --------- --------- ---------
to common shares $ 26,945 15,112 14,271
Net earnings per ========== ========= =========
common share $.84 .56 .53
Weighted average number of ==== ==== ====
shares outstanding 32,224 26,917 26,917
Earnings before interest,
income taxes, depreciation
and amortization (EBITDA) $ 70,544 74,433 72,470
EBITDA, adjusted for
comparability (B) $ 74,116 74,945 72,982
Earnings before interest,
income taxes and
amortization (EBITA) $ 60,293 60,045 58,651
EBITA, adjusted for
comparability (B) $ 62,344 60,557 59,163
</TABLE>
(A) The adjusted financial data is based on the historical financial
statements of the Company, adjusted to give effect to the
Company's sale of the Vision Group operations which was sold
effective January 30, 1994, and the use of the net proceeds
therefrom as if such transaction had occurred as of the
beginning of the period ended May 1, 1993.
(B) Two financing transactions entered into in April and June of
1993 relating to the placement of certain inventory on
consignment and the sale and leaseback of certain photo
processing equipment negatively impacted the comparability of
first quarter EBITDA and EBITA with last year by approximately
$3,060 and $1,539, respectively.
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<PAGE>
ECKERD CORPORATION
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
RESULTS OF OPERATIONS AND FINANCIAL CONDITION
Results of Operations
The Company sold its Vision Group operations effective January 30, 1994. The
following results of operations discussion will compare the first quarter of
fiscal 1994 to the adjusted first quarter of fiscal 1993 (thirteen weeks ended
April 30, 1994 and May 1, 1993) which gives effect to the Company's sale of the
Vision Group operations. See "footnote 4 of Notes to Condensed Consolidated
Financial Statements."
The Company's sales and other operating revenue for the first quarter of fiscal
1994 and 1993 were $1,126.8 million and $1,039.6 million, respectively, an
increase of 8.4%. Comparable drug store sales (stores open for one year or
more) increased 7.4% in the first quarter of fiscal 1994, compared to 6.2% for
the first quarter of fiscal 1993 in spite of a severe cough, cold and flu virus
which stimulated sales during the first quarter of fiscal 1993. The increase
in comparable drug store sales in the first quarter was due to the increase in
sales of prescription drugs resulting from sales related to new third-party
prescription plan contracts and the Company's competitive pricing program. In
addition, comparable drug store sales growth was positively affected by
increased sales of non prescription items in the health, beauty and skincare,
greeting card, convenience food and photofinishing categories resulting from
increased marketing emphasis and shelf space for these categories. Total sales
growth in the first quarter was positively affected by the growth in
comparable drug store sales, as well as the inclusion of 19 drug stores
acquired during the fourth quarter of fiscal 1993.
Prescription sales as a percentage of drug store sales was approximately 50.3%
for the first quarter of fiscal 1994 as compared with approximately 47.8% for
the first quarter of fiscal 1993. The growth in prescription sales in the
first quarter was primarily the result of increased third-party prescription
sales and the Company's competitive pricing program. Third-party prescription
sales represented approximately 62.7% and 55.3% of the Company's prescription
sales in the first quarter of fiscal 1994 and 1993, respectively. The Company
expects prescription sales to third-party payors, in terms of both dollar
volume and as a percentage of total prescription sales, to continue to increase
in fiscal 1994 and thereafter. Although contracts with third-party payors
generally increase the volume of prescription sales and gross profit dollars,
third-party payors typically negotiate lower prescription prices than those on
non third-party prescriptions, resulting in decreasing gross profit margins on
the Company's prescription sales.
Cost of sales and related expenses in the first quarter of fiscal 1994 and 1993
was $856.7 million and $786.0 million, respectively, an increase of 9.0%. As a
percentage of sales, cost of sales and related expenses were 76.0% compared to
75.6% for the first quarter of fiscal 1994 and 1993, respectively. The
competitive pricing strategy for non third-party prescription sales and the
continued increase in third-party prescription sales with typically lower gross
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<PAGE>
profit margins than non third-party prescription sales partially offset by a
lower LIFO charge of $2.5 million ($4.0 million in the first quarter of fiscal
1993) were the primary reasons for the increase in cost of sales and related
expenses in the first quarter of fiscal 1994.
Operating and administrative expenses in the first quarter of fiscal 1994 and
1993 were $217.8 million and $203.6 million, respectively, an increase of
7.0%. As a percentage of sales, operating and administrative expenses
decreased to 19.3% in the first quarter of fiscal 1994 from 19.6% in the first
quarter of fiscal 1993 as a result of the higher sales increases in fiscal 1994
and lower costs as a percentage of sales in such expense categories as payroll
and insurance. Non-cash, tax deductible amortization of intangibles included
in operating and administrative expenses in the first quarter of fiscal 1994
and 1993 were $8.0 million, compared to $8.6 million, respectively, a decrease
of 6.8%.
Earnings before interest expenses were $52.3 million in the first quarter of
fiscal 1994, compared to $50.0 million in the first quarter of fiscal 1993, an
increase of 4.4% primarily due to the increase in gross profit dollars as a
result of higher sales and other operating revenue, and a decrease in operating
and administrative expenses as a percentage of sales. Two financing
transactions entered into in April and June of 1993 relating to the placement
of certain inventory on consignment and the sale and leaseback of certain photo
processing equipment negatively impacted the comparability of first quarter
earnings before interest expenses by $1.5 million with a corresponding positive
impact on interest expense. Earnings before interest expenses adjusted for
comparability increased from $50.5 million in the first quarter of fiscal 1993
to $54.3 million in the first quarter of fiscal 1994, an increase of 7.4%.
Total interest expenses were $23.9 million compared to $32.2 million in the
first quarter of fiscal 1994 and 1993, respectively, a decrease of 25.7%. The
decrease was due primarily to the lower cost of debt for the Company after the
June 1993 refinancing, the August 1993 initial public offering and November
1993 9.25% Senior Subordinated Note issuance.
Income taxes for the first quarter of fiscal 1994 and 1993 of $1.4 million and
$.9 million, respectively, represent alternative minimum and state income taxes
for the Company.
As a result of the foregoing factors, the Company had net earnings in the first
quarter of fiscal 1994 of $26.9 million, or 2.4% of sales, compared with net
earnings of $17.0 million, or 1.6% of sales in the first quarter of fiscal
1993.
At April 30, 1994 the Company operated 1,709 Eckerd Drug stores and 436 Eckerd
Express Photo labs and Insta-Care Pharmacy Services a provider of
pharmaceutical care to institutions.
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<PAGE>
Financial Condition and Liquidity
With respect to the balance sheet at April 30, 1994 compared to the balance
sheet at January 29, 1994, merchandise inventories decreased $35.2 million (net
of the LIFO charge of $2.5 million) to $730.4 million, accounts receivable
increased $7.6 million to $100.3 million and property, plant and equipment
decreased $30.2 million to $476.9 million. The sale of the Vision Group
operations reduced inventories, receivables and property, plant and equipment
by approximately $12.5 million, $2.6 million and $26.7 million, respectively.
The balance of the inventory reduction is a result of strong first quarter
sales coupled with good inventory management and control. The receivables
increase is attributable primarily to the increase in institutional and
third-party prescription sales. Additions to property, plant and equipment of
$7.1 million were primarily due to improvements to existing stores and
facilities and the addition of new stores and retirements of fully depreciated
assets were $10.5 million.
At April 30, 1994, $620.4 million in borrowings were outstanding under the
Credit Agreement ($410.9 million under Tranche A, $138.5 million under Tranche
B, $60.0 million Revolving Loan borrowings and $11.0 million of banker's
acceptances) and the Company had unused and available borrowing commitments
thereunder of $151.6 million. The Tranche A loan commitment of $410.9 million
(originally $500.0 million was reduced by $27.5 million from net proceeds from
the IPO and $61.6 million of prepayments and scheduled payments) amortizes in
unequal quarterly payments and matures in full in July 1999. The Tranche A
loan commitment amortizes by $18.5 million by the end of fiscal year 1994, by
$64.6 million for fiscal year 1995, by $83.1 million for fiscal years 1996,
1997 and 1998 and by $78.5 million for fiscal year 1999. The Tranche B term
loan commitment of $138.5 million (originally $150.0 million was reduced by
$8.3 million from net proceeds from the IPO and $3.2 million of prepayments)
amortizes in unequal semi-annual payments and matures in full in June 2000.
The Tranche B loan commitment amortizes by $9.1 million for fiscal year 1998,
by $18.6 million for fiscal year 1999 and by $110.8 million for fiscal year
2000. The Revolving Loan commitment of $300.0 million matures in full at the
end of July 1999. At April 30, 1994 the Company had excess availability under
the Revolving Loan commitment and accordingly did not treat the $18.5 million
Tranche A loan maturity as current.
On April 30, 1994 the Company had working capital of $400.2 million and a
current ratio of 1.9 to 1 compared to $306.6 million and 1.5 to 1 at January
29, 1994. Including the Company's first quarter net earnings of $26.9 million
and $17.8 million for fiscal years 1994 and 1993, respectively, cash flow
provided by operating activities declined $100.8 million for fiscal 1994
compared with fiscal 1993. This decline was principally due to the initiation
of the inventory consignment program of approximately $52 million in the first
quarter of fiscal 1993 and higher than normal cash payments to merchandise
vendors in the first quarter of fiscal 1994, as a result of the reduction of
accounts payable from an abnormally high balance at January 29, 1994 primarily
from the timing of vendor payment due dates.
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<PAGE>
Net cash from investing activities for the first quarter of fiscal 1994 and
1993 provided $17.1 million and used $9.5 million, respectively. Uses of cash
were principally for capital expenditures of $7.1 million and $9.8 million for
fiscal 1994 and 1993, respectively, for additions to the Company's drug stores,
and Express Photo units and improvements to existing stores. In fiscal 1994, a
source of cash to the Company from investing activities was provided by a
partial payment for the sale of the Vision Group operations. Capital
expenditures planned for fiscal 1994 are expected to be approximately $45
million. Funds for the planned cash capital expenditures are expected to come
from cash flow from operating activities and available borrowings, if
necessary. In addition, the Company is financing expansion or upgrade of
photoprocessing equipment through five-year operating leases in an amount of up
to $10 million per year under a sale and leaseback agreement effective June,
1993. Approximately $1.7 million has been financed as operating leases during
the first quarter of fiscal 1994. Such items were treated as capital
expenditures during the first quarter of fiscal 1993.
Financing activities for the first quarter of fiscal 1994 provided $18.5
million primarily from bank borrowings to support working capital needs and the
reduction of $24.7 million of bank debit balances. Financing activities for
the first quarter of fiscal 1993 used $52.0 million primarily to reduce bank
borrowings and pay cash dividends on the Company's 14.5% cumulative redeemable
preferred stock which was repurchased on July 15, 1993.
The Company anticipates that the combination of amortization of intangibles and
interest on debt will have a negative impact upon future earnings and, to a
lesser degree, cash flow from operating activities. The Company does not
believe, however, that the impact of such planned amortization and interest
expenses upon earnings indicates a present or future impairment of liquidity.
Based upon the Company's ability to generate cash flow from operating
activities, the available unused portion of the working capital revolving
credit loans under the Credit Agreement and other existing financing sources,
the Company believes that it will have the funds necessary to meet the
principal and interest payments on its debt as they become due and to operate
and expand its businesses.
REVIEW BY INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
The Company's independent public accountants have made a limited review of the
financial information furnished herein in accordance with standards established
by the American Institute of Certified Public Accountants. The Auditors'
Report is presented on page 11 of this report.
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<PAGE>
Auditors' Report
----------------
The Board of Directors
Eckerd Corporation:
We have reviewed the condensed consolidated balance sheet of Eckerd Corporation
and subsidiaries as of April 30, 1994 and the related condensed consolidated
statements of operations and cash flows for the thirteen weeks ended April 30,
1994. These condensed consolidated financial statements are the responsibility
of the Company's management.
We conducted our review in accordance with standards established by the
American Institute of Certified Public Accountants. A review of interim
financial information consists principally of applying analytical procedures to
financial data and making inquiries of persons responsible for financial and
accounting matters. It is substantially less in scope than an audit conducted
in accordance with generally accepted auditing standards, the objective of
which is the expression of an opinion regarding the financial statements taken
as a whole. Accordingly, we do not express such an opinion.
Based on our review, we are not aware of any material modifications that should
be made to the accompanying condensed consolidated financial statements for
them to be in conformity with generally accepted accounting principles.
We have previously audited, in accordance with generally accepted auditing
standards, the consolidated balance sheet as of January 29, 1994, and the
related consolidated statements of operations, stockholders' equity (deficit),
and cash flows, for the year then ended (not presented herein); and in our
report dated March 18, 1994, we expressed an unqualified opinion on those
consolidated financial statements. In our opinion, the information set forth
in the accompanying condensed consolidated balance sheet as of January 29, 1994
is fairly stated in all material respects in relation to the consolidated
balance sheet from which it has been derived.
KPMG PEAT MARWICK
June 8, 1994
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<PAGE>
PART II - OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders
- - - ------------------------------------------------------------
The Company's Annual Meeting of Stockholders was held on May 17, 1994. As of
that date proxies covering 27,550,745 shares of 31,037,880 shares outstanding
were entitled to vote. The following Class I directors were elected to the
Company's Board of Directors for a term of three years until the Annual Meeting
in 1997.
<TABLE>
<CAPTION>
Withheld
Nominee In Favor Authority
- - - ------- ---------- ------------
<S> <C> <C>
John W. Boyle 27,481,976 68,769
Dr. James T. Doluisio 27,512,372 38,373
Rupinder S. Sidhu 27,434,170 116,675
</TABLE>
Donald F. Dunn, Alexis P. Michas and Francis A. Newman are Class II directors
and their terms expire on the date of the Annual Meeting in 1995. Albert J.
Fitzgibbons, III, Lewis W. Lehr and Stewart Turley are Class III directors and
their terms expire on the date of the Annual Meeting in 1996.
The results of voting by stockholders on the adoption of a resolution ratifying
the selection of KPMG Peat Marwick by the Board of Directors as independent
auditors of the Company for the ensuing year was as follows:
<TABLE>
<CAPTION>
In Favor Opposed Abstained
---------- --------- ---------
<S> <C> <C> <C>
27,536,603 8,899 5,243
Item 6. Exhibits and Reports on Form 8-K
- - - -----------------------------------------
(a) Exhibits
15.1 Letter re unaudited interim financial information
(b) Reports on Form 8-K
The Company did not file any reports on Form 8-K during the thirteen
weeks ended April 30, 1994.
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.
ECKERD CORPORATION
(Registrant)
/s/Samuel G. Wright
June 14, 1994 -----------------------------------
- - - ------------- Samuel G. Wright
Date Senior Vice President-Finance
(Principal Accounting Officer)
</TABLE>
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Exhibit Index
-------------
Eckerd Corporation
Form 10-Q
Exhibit No Description of Exhibit Page
- - - ---------- ---------------------- ----
15.1 Letter re unaudited interim financial information 14
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<TABLE>
<CAPTION>
EXHIBIT 15.1
<S> <C>
Eckerd Corporation and Subsidiaries
8333 Bryan Dairy Road
Largo, FL 34647
Gentlemen:
Re: Registration Statement on Form S-3 (No. 33-50223)
Registration Statement on Form S-8 (No. 33-49977)
Registration Statement on Form S-3 (No. 33-10721)
Registration Statement on Form S-8 (No. 33-50755)
Registration Statement on Form S-3 (No. 33-52939)
With respect to the above referenced registration statements, we acknowledge our
awareness of the incorporation by reference therein of our report dated June 8,
1994 related to our review of interim financial information, which report was
included in the Form 10-Q of Eckerd Corporation and Subsidiaries for the thirteen
weeks ended April 30, 1994.
Pursuant to Rule 436(c) under the Securities Act of 1993, such report is not
considered a part of a registration statement prepared or certified by an
accountant or a report prepared or certified by an accountant within the meaning of
sections 7 and 11 of the Act.
Very truly yours,
KPMG PEAT MARWICK
Tampa, Florida
June 14, 1994
</TABLE>
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