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e . Rec r s'* Results Donaldson, Lufkin & Tenrette First-half revenues rose 116% to $315.3 million from $146.2 million. More important, the company turned the corner on profitability, .-ecording first-half net income of $1.8 million ve.-sus lent year's, $2.4-million loss during the same period. ="The numbers translate to earnings of $0.09 per share against a S0.21 loss in fiscal 1985's first half. Results exceeded general expectations and our estimates. (DLJ had projected a small first-half loss.) Strong sales were enhanced by nine additional warehouses versus last year's number. COST totaled 21 units at the end of the second quarter. Sarre units averaged a 31% increase in volume during the period. Excellent sales provided the beginning of what we believe will be sharp operating leverage in the near future. Gross margins during the second quarter were 11.2%, and the SGA operating cost ratio improved to 9.8% from 11.3%. Both company operating costs and inventories were on target with company budgets and general projections. Interestingly, the better-than-expected results were realized despite more than a doubling in preopening expenses in the second quarter and continued sizable interest charges. Hi as Nei sates S308.5 Memoership fees. other 6.8 Total revenues $315.3 Cost of goods S279.0 Gross profit 362 SGA expenses 322 Preopeningi costs 16 Operating profit 24 Deferred compensation -- Interest expense S 12 Interest income .5 Other income .1 Pretax profit 18 T*Kes S .7 Not before extra i t Tax-loss carrtl-forward : Net income 1.8 6PS i0.09 Table 1 Costco Wholesale Corp. Profit and Loss Analysis Dollars ,n millions) % H1 85 % 978 S 144.2 98.6 2.2 2.0 1.4 100-Vii S146.2 100.0% 90.4% S1291 89 5'/0 11 5 17.0 116 10.2 170 11.6 .5 1.5 1.0 .8 (1 41 11.01 -- .5 .31 4% S 6 4% .2 .2 .1 6 (2 41 (1 6) 38 9% -- -- 3 (2 41 0.61 .2% -- -- 6 1241 (1 6) ($0 21) R a2 86 S 174 0 3.8 $177.8 $157.9 19.9 175 .5 1.8 S0.08 979 2.1 100 0% 90.7% 11.2 98 .3 1.0 3°.0 3 1 10 38 9aa -.6 400 1.0 02 85 S65 7 1.1 S86.6 771 9.7 98 .2 4.3) 3 S 6 2 (9) 987 1.3 100.0% 90.0 11.2 113 .2 4.31 .3 7% 2 10