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 Thirty-Nine Weeks Ended November 2, 1996
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 33777
(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 November 30, 1996, 70,412,675 shares of Common Stock, $.01 par value,
were outstanding.
<TABLE>
<CAPTION>
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
ECKERD CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS EXCEPT SHARE DATA)
ASSETS Unaudited Audited
11/2/96 2/3/96
----------- ----------
<S> <C> <C>
Current assets:
Cash $ 8,421 7,922
Receivables, less allowance for doubtful receivables of $3,000 90,262 70,137
Merchandise inventories 968,720 835,551
Prepaid expenses and other current assets 3,593 4,396
----------- ----------
Total current assets 1,070,996 918,006
----------- ----------
Property, plant and equipment, at cost 716,205 634,023
Less accumulated depreciation 320,359 282,974
----------- ----------
Net property, plant and equipment 395,846 351,049
----------- ----------
Excess of cost over net assets acquired, less
accumulated amortization 66,364 62,162
Favorable lease interests, less accumulated amortization 118,524 131,961
Unamortized debt expense 5,476 6,086
Other assets 31,643 31,055
----------- ----------
$ 1,688,849 1,500,319
=========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities:
Bank debit balances $ 16,919 59,620
Current installments of long-term debt 784 1,020
Accounts payable 402,986 311,411
Accrued expenses 240,921 234,957
----------- ----------
Total current liabilities 661,610 607,008
----------- ----------
Other noncurrent liabilities 134,342 136,772
Long-term debt, excluding current installments 768,705 701,798
Stockholders' equity:
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 70,384,275
and 69,937,790 704 700
Nonvoting common stock of $.01 par value.
Authorized 3,518,728 shares; none issued - -
Capital in excess of par value 320,305 317,654
Retained deficit (196,817) (263,613)
----------- ----------
Total stockholders' equity 124,192 54,741
----------- ----------
$ 1,688,849 1,500,319
=========== ==========
See accompanying notes to condensed consolidated financial statements.
</TABLE>
2
<TABLE>
<CAPTION>
ECKERD CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
(IN THOUSANDS EXCEPT PER SHARE DATA)
Thirteen Weeks Ended Thirty-Nine Weeks Ended
----------------------------- ----------------------------
11/2/96 10/28/95 11/2/96 10/28/95
---------- ---------- --------- ---------
<S> <C> <C> <C> <C>
Sales and other operating revenue $1,280,375 1,164,907 3,887,422 3,523,225
---------- ---------- --------- ---------
Costs and expenses:
Cost of sales, including store
occupancy, warehousing and
delivery expense 1,012,451 915,137 3,043,658 2,739,733
Operating and administrative expenses 238,295 224,301 712,036 666,724
---------- ---------- --------- ---------
Earnings before interest expense
and income taxes 29,629 25,469 131,728 116,768
Interest expense:
Interest expense, net 15,320 18,266 45,327 57,147
Amortization of original issue discount
and deferred debt expenses 261 454 765 1,522
---------- ---------- --------- ---------
Total interest expense 15,581 18,720 46,092 58,669
---------- ---------- --------- ---------
Earnings before income taxes
and extraordinary items 14,048 6,749 85,636 58,099
Income tax expense 3,118 1,147 18,840 9,877
---------- ---------- --------- ---------
Earnings before extraordinary
items 10,930 5,602 66,796 48,222
Extraordinary items - early retirement of
debt net of tax benefit of $947 and
$1,236 - (5,012) - (6,033)
---------- ---------- --------- ---------
Net earnings $ 10,930 590 66,796 42,189
========== ========== ========= =========
Earnings per common share:
Earnings before extraordinary item $ .15 .08 .93 .71
Extraordinary item - (.07) - (.09)
---------- ---------- --------- ---------
Net earnings per common share $ .15 .01 .93 .62
========== ========== ========= =========
See accompanying notes to condensed consolidated financial statements.
</TABLE>
3
<TABLE>
<CAPTION>
ECKERD CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
(IN THOUSANDS)
Thirty-Nine Weeks Ended
-----------------------------
Cash flows from operating activities: 11/2/96 10/28/95
----------- ---------
<S> <C> <C>
Net earnings $ 66,796 42,189
Adjustments to reconcile net earnings to net cash provided by operating
activities:
Extraordinary charge related to early retirement of debt - 7,269
Depreciation and amortization 68,484 61,460
Amortization of original issue discount
and deferred debt expenses 765 1,522
Increase in receivables, merchandise
inventories and prepaid expenses (148,086) (111,044)
Increase in accounts payable and
accrued expenses 91,698 51,900
----------- ---------
Net cash provided by operating activities 79,657 53,296
----------- ---------
Cash flows from investing activities:
Additions to property, plant and equipment (89,791) (69,301)
Sale of property, plant and equipment 2,822 4,482
Acquisition of certain drug store assets (15,922) (69,628)
Net cash proceeds from sale of subsidiary - 5,231
Other (2,738) (4,224)
----------- ---------
Net cash used in investing activities (105,629) (133,440)
----------- ---------
Cash flows from financing activities:
Decrease in bank debit balances (42,701) (25,204)
Additions to long-term debt - 667
Reductions of long-term debt (829) (1,292)
Net additions under current credit agreement 67,500 117,860
Common stock sold in a public offering, net of expenses of sale - 82,322
Redemption of 11.125% subordinated debentures - (95,500)
Other 2,501 1,766
----------- ---------
Net cash provided by financing activities 26,471 80,619
----------- ---------
Net increase in cash 499 475
Cash at beginning of period 7,922 8,898
----------- ---------
Cash at end of period $ 8,421 9,373
=========== =========
See accompanying notes to condensed consolidated financial statements.
</TABLE>
4
ECKERD CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
(IN THOUSANDS)
Note 1.
-------
The condensed consolidated financial statements include the accounts of
the Company and its subsidiaries, 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 report for the
fiscal year ended February 3, 1996. The results of operations of the
periods indicated should not be considered as necessarily indicative of
operations for the full year.
Certain amounts have been reclassified in the February 3, 1996
condensed consolidated balance sheet to conform to the November 2, 1996
presentation.
Note 2.
-------
Substantially all inventories are determined on a last-in, first-out
(LIFO) cost basis. At November 2, 1996 and February 3, 1996 inventories
would have been greater by approximately $105,100 and $91,900,
respectively, if inventories were valued on a first-in, first-out
(FIFO) cost basis. Since LIFO inventory costs can only be determined at
the end of each fiscal year when inflation rates and inventory levels
are finalized, estimates of LIFO inventory costs are used for interim
financial statements. The cost of merchandise sold is calculated on an
estimated basis and adjusted based on inventories taken during the
fiscal year.
Note 3.
-------
The weighted average number of shares outstanding for thirteen and
thirty-nine weeks ended November 2, 1996 and October 28, 1995 were
72,154 and 71,955 in 1996 and 71,242 and 67,554 in 1995.
Note 4.
-------
All share information in these condensed consolidated financial
statements reflect the two-for-one stock split effected in the form of
a stock dividend which was paid on May 13, 1996 to stockholders of
record on April 22, 1996.
Note 5.
-------
Effective February 4, 1996, the Company adopted Statement of Financial
Accounting Standard No. 123, "Accounting for Stock Based Compensation"
(SFAS No. 123). This standard allows the Company to select either a
fair value based method or the current intrinsic value based method of
accounting for employee stock-based compensation. The Company retained
the intrinsic value method of accounting and, therefore, the adoption
of this standard did not have a material effect on the Company's
financial statements. The disclosure only provisions, as permitted by
SFAS No. 123, will be disclosed annually in the Company's audited
consolidated financial statements.
5
Note 6.
-------
On November 3, 1996, the Company announced that J.C. Penney Company,
Inc. ("Penney"), a subsidiary of Penney and the Company had entered
into a definitive agreement (the "Merger Agreement") pursuant to which
Penney would acquire the Company through a cash tender offer and second
step merger. The aggregate transaction value, including the assumption
of Company debt, is approximately $3.3 billion.
The transaction will be effected through a cash tender offer at $35.00
per share for approximately 35.3 million shares, or 50.1% of Company
stock, which expired on December 6, 1996, to be followed by a second
step merger in which Company shareholders will receive (i) if the Stock
Condition (as defined in the Merger Agreement) has been satisfied,
0.6604 of a share of Penney stock for each remaining Company share not
purchased in the cash tender offer (valued at $35.00 per Company share,
based on the price of Penney's stock as of the close of trading on
November 1, 1996) or (ii) if the Stock Condition has not been
satisfied, $35.00 per share in cash. It is contemplated that if the
Company shareholders receive Penney stock in the merger the exchange of
shares in the second step of the transaction will be tax-free to the
Company's shareholders. It is expected that the acquisition will be
completed in early 1997.
The planned acquisition would create a combined 2,600 drug store
operation stretching across the Northeast, Midwest and the Sunbelt,
with combined 1997 sales expected to approach $10.0 billion.
6
Item 2. Management's Discussion and Analysis of Results of Operations and
Financial Condition.
ECKERD CORPORATION AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
RESULTS OF OPERATIONS AND FINANCIAL CONDITION
Results of Operations
Sales and other operating revenue for the third quarter and thirty-nine
weeks ended November 2, 1996, increased 9.9% and 10.3% over last year
to $1.3 and $3.9 billion. Sales benefited from significant increases in
prescription sales as well as from increases in front end sales and
from the acquisition of certain Florida drug stores from Rite Aid (the
"Florida Rite Aid Acquisition") at the beginning of the third quarter
of last year. Prescription sales increased 13.0% and 15.0% to $737.2
million and $2.2 billion, and front end sales increased 6.1% and 4.9%
to $541.3 million and $1.7 billion. Comparable drug store sales (stores
open one year or more, including 1.0% and 0.9% from the impact of
relocated stores open less than one year) increased 7.4% and 8.4%,
compared to a 10.5% and 9.5% increase in the third quarter and
thirty-nine weeks last year. The increase in comparable drug store
sales was primarily attributable to the increase in sales of
prescription drugs. Comparable drug store sales growth was also
positively affected by increased sales of non-prescription items in the
health and convenience categories.
Prescription sales as a percentage of drug store sales were 57.7% and
56.6% compared to 56.1% and 54.3% for the third quarter and thirty-nine
weeks last year. The growth in prescription sales was primarily the
result of increased managed care prescription sales and the Florida
Rite Aid Acquisition. These sales increases were in spite of a more
severe cough, cold and flu season in the first quarter of last year.
Managed care prescription sales increased to 76.4% and 75.1% of
prescription sales compared to 71.1% and 70.0% in the third quarter and
thirty-nine weeks last year. Prescription sales to managed care payors,
in terms of both dollar volume and as a percentage of total
prescription sales, are expected to continue to increase in the current
year and for the foreseeable future. Managed care payors typically
negotiate lower prescription prices than those on non-managed care
prescriptions, resulting in decreasing gross profit margins on
prescription sales. However, contracts with managed care payors
generally increase the volume of prescription sales and gross profit
dollars.
As a percentage of sales, cost of sales and related expenses were 79.1%
and 78.3% compared to 78.6% and 77.8% for the third quarter and
thirty-nine weeks last year. The cost of sales as a percentage of sales
increases resulted primarily from the continued increase in lower gross
profit margin managed care prescription sales. The LIFO charge was $4.6
and $13.2 million compared to $3.8 and $9.8 million for the third
quarter and thirty-nine weeks last year.
7
Operating and administrative expenses for the third quarter and
thirty-nine weeks increased 6.2% and 6.8% over last year to $238.3 and
$712.0 million. As a percentage of sales, operating and administrative
expenses decreased to 18.6% and 18.3% from 19.2% and 18.9%. The
decreases as a percentage of sales resulted primarily from operating
efficiencies related to higher sales and cost controls which helped
produce lower costs as a percentage of sales in such expense categories
as payroll and insurance.
Earnings before interest expense, income taxes and extraordinary items
for the third quarter and thirty-nine weeks increased 16.3% and 12.8%
over last year to $29.6 and $131.7 million. The increases were due
primarily to the increase in gross profit dollars as a result of higher
sales and other operating revenue, and the decrease in operating and
administrative expenses as a percentage of sales due to improved
productivity and expense control.
Total interest expense for the third quarter and thirty-nine weeks
decreased 16.8% and 21.4% from last year to $15.6 and $46.1 million.
The decreases were due to lower average borrowings, lower bank loan
interest rate spreads and the early retirement of high interest cost
subordinated debentures in the second and third quarters of last year.
Income tax expense for the third quarter and thirty-nine weeks was $3.1
and $18.8 million compared to $1.1 and $9.9 million last year, an
annual effective income tax rate of 22% compared to 17% last year.
Income tax expense in both periods represents alternative minimum tax
and state income taxes, and reflects a lower rate of utilization of net
operating loss carryforwards compared to last year.
As a result of the foregoing factors, net earnings before extraordinary
items for the third quarter and thirty-nine weeks were $10.9 and $66.8
million, compared to $5.6 and $48.2 million last year, an increase of
$5.3 and $18.6 million or 95.1% and 38.5%.
At November 2, 1996 the Company operated 1,730 Eckerd Drug stores and
555 Eckerd Express Photo labs.
Financial Condition and Liquidity
At November 2, 1996, $527.5 million in borrowings were outstanding
under the bank credit agreement ($200.0 million under the term loan
facility and $327.5 million under the revolving loan facility) and
$88.1 million was available for borrowing under the revolving loan
facility portion of the bank credit agreement which is net of $84.4
million of letters of credit. The term loan facility amortizes in $10.0
million quarterly payments ($20.0 million in the fourth quarter of each
year), and matures in full together with the revolving loan facility in
November 2000. At November 2, 1996 there was excess availability under
the revolving loan commitment, therefore, the required amortization
repayments were not treated as current.
8
On November 2, 1996 working capital was $409.4 million and the current
ratio was 1.6 to 1 compared to $311.0 million and 1.5 to 1 at February
3, 1996. Cash flow provided by operating activities increased $26.4
million to $79.7 million compared to $53.3 million for the thirty-nine
weeks last year. The increase was due to a $24.6 million higher
earnings increase, $6.3 million more depreciation and amortization and
a $2.8 million lower use of operating cash for working capital items.
Net cash used in investing activities for the thirty-nine weeks was
$105.6 million compared to $133.4 million last year. Uses of cash were
principally for capital expenditures of $89.8 million compared to $69.3
million last year for additions to drug stores and Express Photo units,
improvements to existing stores and for the installation of
point-of-sale product scanning equipment. Another use of cash was for
acquisitions of drug store assets of $15.9 million compared to $69.6
million last year. Capital improvements for the current year are
expected to be $130.0 million. Funds for the planned cash capital
expenditures are expected to come from cash flow from operating
activities and available borrowings, if necessary.
Financing activities for the thirty-nine weeks provided $26.5 million,
compared to $80.6 million last year. In the current year, funds were
provided by $67.5 million of bank borrowings which were primarily
offset by the reduction of $42.7 million of bank debit balances. Last
year $82.3 million of funds came from the August 2, 1995 public
offering. Funds were also provided by $117.9 million of bank borrowings
which were used primarily for the redemption of $78.9 and $16.6 million
(September and May of 1995) of 11.125% subordinated debentures, and for
the reduction of $25.2 million in bank debit balances.
Based upon the Company's ability to generate cash flow from operating
activities, the available unused portion of the revolving loan facility
under the bank credit agreement and other 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 business.
On November 3, 1996, the Company announced that J.C. Penney Company,
Inc. ("Penney"), a subsidiary of Penney and the Company had entered
into a definitive agreement (the "Merger Agreement") pursuant to which
Penney would acquire the Company through a cash tender offer and second
step merger. The aggregate transaction value, including the assumption
of Company debt, is approximately $3.3 billion.
The transaction will be effected through a cash tender offer at $35.00
per share for approximately 35.3 million shares, or 50.1% of Company
stock, which expired on December 6, 1996, to be followed by a second
9
step merger in which Company shareholders will receive (i) if the Stock
Condition (as defined in the Merger Agreement) has been satisfied,
0.6604 of a share of Penney stock for each remaining Company share not
purchased in the cash tender offer (valued at $35.00 per Company share,
based on the price of Penney's stock as of the close of trading on
November 1, 1996) or (ii) if the Stock Condition has not been
satisfied, $35.00 per share in cash. It is contemplated that if the
Company shareholders receive Penney stock in the merger the exchange of
shares in the second step of the transaction will be tax-free to the
Company's shareholders. It is expected that the acquisition will be
completed in early 1997.
The planned acquisition would create a combined 2,600 drug store
operation, stretching across the Northeast, Midwest and the Sunbelt,
with combined 1997 sales expected to approach $10.0 billion.
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 Accountants' Report is presented on page 11 of this
report.
10
Accountants' Report
The Board of Directors
Eckerd Corporation:
We have reviewed the condensed consolidated balance sheet of Eckerd
Corporation and subsidiaries as of November 2, 1996, and the related
condensed consolidated statements of operations and cash flows for the
thirteen and thirty-nine weeks ended November 2, 1996 and October 28,
1995. 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 February 3,
1996, and the related consolidated statements of operations,
stockholders' equity, and cash flows, for the year then ended (not
presented herein); and in our report dated March 26, 1996, 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 February 3, 1996 is fairly stated, in
all material respects, in relation to the consolidated balance sheet
from which it has been derived.
KPMG PEAT MARWICK LLP
December 9, 1996
11
PART II. OTHER INFORMATION
Item 5. Other Information
On November 3, 1996, the Company announced that J.C. Penney
Company, Inc. ("Penney"), a subsidiary of Penney and the
Company had entered into a definitive agreement (the "Merger
Agreement") pursuant to which Penney would acquire the Company
through a cash tender offer and second step merger. The
aggregate transaction value, including the assumption of
Company debt, is approximately $3.3 billion.
The transaction will be effected through a cash tender offer
at $35.00 per share for approximately 35.3 million shares, or
50.1% of Company stock, which expired on December 6, 1996, to
be followed by a second step merger in which Company
shareholders will receive (i) if the Stock Condition (as
defined in the Merger Agreement) has been satisfied, 0.6604 of
a share of Penney stock for each remaining Company share not
purchased in the cash tender offer (valued at $35.00 per
Company share, based on the price of Penney's stock as of the
close of trading on November 1, 1996) or (ii) if the Stock
Condition has not been satisfied, $35.00 per share in cash. It
is contemplated that if the Company shareholders receive
Penney stock in the merger the exchange of shares in the
second step of the transaction will be tax-free to the
Company's shareholders. It is expected that the acquisition
will be completed in early 1997.
The planned acquisition would create a combined 2,600 drug
store operation, stretching across the Northeast, Midwest and
the Sunbelt, with combined 1997 sales expected to approach
$10.0 billion. Eckerd President and Chief Executive Officer,
Frank A. Newman, will become Chief Executive officer of the
combined drug store operations of Eckerd and Thrift Drug
(Penney's drug store subsidiary). Mr. Newman will report
directly to James E. Oesterreicher, Chief Executive Officer of
Penney, and will become a member of the Penney Management
Committee. A transition team headed by Mr. Newman and
including John E. Fesperman, Penney Senior Vice President and
Chairman of the Board of Thrift Drug, and Robert Hannan,
President and Chief Executive Officer of Thrift Drug, has been
formed to ensure an orderly integration of the two operations.
12
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
10.1 Amended and Restated Agreement and Plan of Merger
among Eckerd Corporation, J.C. Penney Company,
Inc. and Omega Acquisition Corporation, Inc., dated
as of November 2, 1996 (filed as Exhibit (c)(1) to the
Schedule 14D-1 dated November 7, 1996 and
incorporated herein by reference).
10.2 Amended and Restated Stock Option Agreement dated
as of November 2, 1996, between Eckerd Corporation
and J.C. Penney Company, Inc. (filed as Exhibit (c)(2)
to the Schedule 14D-1 dated November 7, 1996 and
incorporated herein by reference).
10.3 Amendment No. 1, dated as of November 2, 1996, to the
Employment Agreement made as of February 4, 1996, by
and between Eckerd Corporation and Francis A. Newman
(filed as Exhibit (c)(3) to the Schedule 14D-1 dated
November 7, 1996 and incorporated herein by reference).
15.1 Letter re unaudited interim financial information.
27 Financial Data Schedule.
(b) Reports on Form 8-K
The Company did not file any reports on Form 8-K during the
thirteen weeks ended November 2, 1996.
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)
December 13, 1996 /s/ Samuel G. Wright
----------------------
Samuel G. Wright
Executive Vice President/
Chief Financial Officer
(Principal Accounting Officer)
13
Exhibit Index
Eckerd Corporation
Form 10-Q
Exhibit No. Description of Exhibit Page
10.1 Amended and Restated Agreement and Plan *
of Merger among Eckerd Corporation, J.C. Penney
Company, Inc. and Omega Acquisition Corporation,
Inc. dated as of November 2, 1996
10.2 Amended and Restated Stock Option Agreement *
dated as of November 2, 1996 between Eckerd
Corporation and J.C. Penney Company, Inc.
10.3 Amendment No. 1 dated as of November 2, 1996 *
to the Employment Agreement made as of
February 4, 1996 by and between Eckerd Corporation
and Francis A. Newman
15.1 Letter re unaudited interim financial information
27 Financial Data Schedule
-----------------------------
* Incorporated by reference
14
EXHIBIT 15.1
The Board of Directors
Eckerd Corporation and Subsidiaries:
RE: Registration Statement on Form S-3 (No. 33-50223)
Registration Statement on Form S-8 (No. 33-49977)
Registration Statement on Form S-8 (No. 33-50755)
Registration Statement on Form S-3 (No. 33-56261)
Registration Statement on Form S-8 (No. 33-60175)
With respect to the above referenced registration statements, we
acknowledge our awareness of the incorporation by reference therein of
our report dated December 9, 1996 related to our review of interim
financial information, which report was included in the Form 10-Q of
Eckerd Corporation and Subsidiaries for the thirty-nine weeks ended
November 2, 1996.
Pursuant to Rule 436(c) under the Securities Act of 1933, 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.
KPMG PEAT MARWICK LLP
Tampa, Florida
December 9, 1996
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<EPS-DILUTED> .93 <F1>
<FN>
<F1>EPS PRIMARY AND DILUTED REFLECTS THE TWO-FOR-ONE STOCK SPLIT EFFECTED IN THE
FORM OF A STOCK DIVIDEND WHICH WAS PAID ON MAY 13, 1996 TO STOCKHOLDERS OF
RECORD ON APRIL 22, 1996.
</FN>
</TABLE>
