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HOOK-SUPERX, INC. ANNOUNCES RESULTS OF OPERATIONS FOR QUARTER ENDED NOV. 30, 1993 AND OTHER RECENT DEVELOPMENTS

 CINCINNATI, Jan. 5 /PRNewswire/ -- Hook-SupeRx, Inc. (HSI) (NYSE: HSX) today announced its results of operations for the three months ended Nov. 30, 1993 and other recent company developments.
 Net sales for the period were $567.9 million, which represented an increase of 4.4 percent over the comparable period of the prior year. Sales increases from stores opened one year or more were 4.5 percent. For the period, prescription sales increased 9.7 percent over the prior year to $302.9 million, which represented 53.3 percent of net sales, up from 46.7 percent in the prior year. Prescription sales to third party payors increased 17.9 percent over the prior year to $152.6 million, which represented 50.4 percent of total prescription sales, up from 46.9 percent in the prior year.
 Gross profit increased 1.5 percent to $165.1 million (29.1 percent of net sales) from $162.6 million (29.9 percent of net sales). One of the principal reasons for the decline in gross margin was the duplicate warehouse and distribution expenses incurred by the company during the first quarter arising from the transition away from its current warehouse and distribution arrangement with Peyton for the SupeRx stores into the enlarged Midwestern facility operated by the company. The company currently provides seasonal and promotional product to all of its SupeRx stores from its Midwestern distribution facility while still utilizing Peyton as the product source to the SupeRx stores for everyday products. The duplicate warehouse and distribution expenses incurred during the first quarter, which were estimated to be approximately $3.0 million, represent the cost of continuing the arrangement with Peyton for the distribution of non-seasonal and non-promotional product to the SupeRx stores. In January 1994, the company will begin shipment of everyday products to its SupeRx stores from its Midwestern facility with the transition from Peyton expected to be completed by March or April 1994. The other principal reason for the decline in gross margin was the continuing shift of prescription sales to lower gross margin third party prescription sales. For the period, the company recorded a LIFO charge of $2.4 million as compared with $3.2 million for the prior year.
 Operating income margin declined from 1.1 percent for the three months ended Nov. 30, 1992 to .8 percent in the current fiscal year. Excluding the effect of the estimated duplicate warehousing and distribution expenses, operating income margin would have increased to 1.4 percent as a result of a 60 basis point improvement in selling, general and administrative expenses, which declined from 24.3 percent of net sales in the prior year to 23.7 percent of net sales for the current period. The decline in selling, general and administrative expenses, as a percent of net sales, was primarily due to more stringent cost control measures combined with the benefits derived from the company's ongoing consolidation efforts as well as the elimination of costs previously incurred by stores which were closed as part of the company's asset Divestiture Program undertaken in fiscal 1993.
 For the months ended Nov. 30, 1993, the company reported a loss before cumulative effect of an accounting change of $1.7 million or $.08 per share, compared with a loss before cumulative effect of an accounting change of $2 million or $.10 per share in the prior year.
 As was previously announced, HSI adopted Statement of Financial Accounting Standards (SFAS) No. 109 - Accounting For Income Taxes, as of Sept. 1, 1993. This statement requires a change from the deferred method of accounting for income taxes (as previously required by Accounting Principles Board Opinion No. 11) to the liability method. Under the liability method, deferred income taxes are recognized for the tax consequences of "temporary differences" by applying enacted statutory tax rates applicable to future years to differences between the carrying amounts of assets and liabilities for financial reporting purposes and the tax bases of these assets and liabilities. The company has reflected this change in accounting for income taxes ($5.2 million or $.25 per share) as the cumulative effect of an accounting change in the Consolidated Statement of Operations. During the fourth quarter of fiscal 1993, the company adopted SFAS No. 106 -- Employers' Accounting for Postretirement Benefits Other than Pensions. Consistent with the provisions of this statement, when adoption of this statement is in any quarter other than the first, the adoption is effective as of the beginning of the fiscal year, Sept. 1, 1992 in this instance. Accordingly, the previously issued results of operations for the three months ended Nov. 30, 1992 have been restated to give effect to this adoption as of the beginning of the fiscal year. The cumulative effect on prior years of this change in accounting was $18.6 million or $.89 per share and is presented in the Consolidated Statement of Operations in a similar manner to that discussed above regarding SFAS No. 109.
 For the quarter, after providing for the cumulative effect of the accounting change for income taxes, discussed above, the company recorded a net loss of $6.9 million or $.33 per share, as compared to a net loss, after providing for the cumulative effect of the change in accounting for postretirement benefits other than pensions, discussed above, of $20.6 million of $.99 per share in the prior year.
 For the quarter, the company opened 10 new stores and closed 19 (14 of which were closed in connection with the asset divestiture program) as compared with 27 new store openings and nine closings for the comparable period of the prior year. At Nov. 30, 1993, the company operated 1,115 drug stores and 33 home health care centers, primarily in the Midwestern and Northeastern regions of the United States.
 Other Developments
 In December 1993, the company entered into a contract with Hughes Network Systems, Inc. to install and maintain an interactive satellite communications network for all of the company's stores. During fiscal 1994, satellite communication equipment will be installed in approximately 90 stores and equipment will be installed in the remaining company stores as the company implements its point-of-sale scanning technology during fiscal years 1995 and 1996.
 In December 1993, the company entered into an agreement with one of its vendors which will have exclusive rights to provide certain products and services to the company under a multi-year contract. Pursuant to this agreement, the company will receive a substantial cash payment in January 1994. The cash payment will be used to reduce the company's borrowings under its revolving line of credit. For financial reporting purposes, the company will reflect this amount as deferred revenue and will recognize the income over the term of the agreement.
 HOOK-SUPERX, INC.
 Digest of Earnings
 (dollars in thousands, except per share amounts)
 Three Months Ended Nov. 30, 1993 % 1992 %
 Net sales $567,877 $544,129
 Gross profit 165,066 29.1 162,572 29.9
 Selling, general and
 administrative expenses 134,516 23.7 132,429 24.3
 Rent 16,768 3.0 16,040 3.0
 Depreciation and amortization 9,089 1.6 8,284 1.5
 Operating income 4,693 .8 5,819 1.1
 Interest 7,539 1.3 7,843 1.4
 Loss before income taxes and
 cumulative effect of
 accounting change (2,846) .5 (2,024) .3
 Income taxes (benefit) (1,132) .2
 Loss before cumulative effect
 of accounting change (1,714) .3 (2,024) .3
 Cumulative effect of a change
 in accounting for income taxes (5,192) .9
 Cumulative effect of a change in
 accounting for postretirement
 benefits other than pensions (18,612) 3.4
 Net loss $(6,906) 1.2 $(20,636) 3.7
 Average shares outstanding 20,986,516 20,904,980
 Loss per share:
 Before cumulative effect
 of accounting change $(.08) $(.10)
 Cumulative effect of a
 change in accounting for
 income taxes (.25)
 Cumulative effect of a change in
 accounting for postretirement
 benefits other than pensions (.89)
 Net loss $(.33) $(.99)
 Note: During the fourth quarter of fiscal 1993, the company adopted Statement of Financial Accounting Standards No. 106 -- Employers' Accounting for Postretirement Benefits Other than Pensions. Consistent with the provisions of this statement, when adoption of this statement is in any quarter other than the first, the adoption is effective as of the beginning of the fiscal year (Sept. 1, 1992 in this instance). Accordingly, the previously issued results of operations for three months ended Nov. 30, 1992 have been restated to give effect to this adoption as of the beginning of the fiscal year. The result of the restatement was an increase of $18,939 in the previously reported net loss.
 -0- 1/5/94 R
 /CONTACT: Keith A. Cheesman, 513-782-3573, or Chris Beseler, 513-782-3115, both of Hook-SupeRx, Inc./
 (HSX)


CO: Hook-SupeRx, Inc. ST: Ohio IN: REA SU: ERN

CK-LD -- NY089 -- 9653 01/06/94 08:49 EST
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