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NOTES ON QUARTERLY REPORT <br />FIRST QUARTER ENDED MARCH 31, 1971 <br />BALANCE SHEET <br />INVENTORIES INCREASED $369431. FROM THE END OF THE PREVIOUS QUARTER, BUT <br />ONLY $3,640. FROM MARCH 31, 1970. <br />A CERTIFICATE OF DEPOSIT IN THE AMOUNT OF $100,000. EARNS INTEREST AT THE <br />RATE OF 7% PER ANNUM AND MATURES MAY 4, 1971. A SECOND CERTIFICATE OF <br />DEPOSIT IN THE AMOUNT OF $50,000. WAS PURCHASED ON FEBRUARY 25, 1971. IT <br />EARNS INTEREST AT THE RATE OF 5% PER ANNUM AND MATURES AUGUST 25, 1971. <br />INCOME STATEMENT <br />TOTAL SALES DECREASED $2,610. FROM 1970, BUT NET INCOME INCREASED $12,609. <br />INCREASED OPERATING EXPENSES OF $7,383. WERE OFFSET BY AN INCREASE IN <br />PROMOTIONAL DISCOUNTS OF $8,137. ARISING FROM A $69.443. INCREASE IN PUR- <br />CHASES AND A SIGNIFICANTLY IMPROVED PROFIT MARGIN ON MERCHANDISE SOLD. <br />NET NON-OPERATING INCOME INCREASED $2,380. PRINCIPALLY FROM CASH DISCOUNTS <br />ON INCREASED PURCHASES INTEREST FROM LARGER INVESTED FUNDS. <br />STORE ONE <br />NET SALES DECREASED :19,673. THE OFF SALE STORE GROSS PROFIT MARGIN BE- <br />FORE PROMOTIONAL DISCOUNTS WAS 18.5% AS COMPARED WITH 13.8% FOR THE PREV- <br />IOUS YEAR. THE INCREASED MARGIN OFFSET THE DECLINE IN SALES AND NET IN- <br />COME FOR THE STORE INCREASED 54,498. <br />STORE TWO <br />NET SALES INCREASED $17,063. THE OFF SALE STORE GROSS PROFIT MARGIN BEFORE <br />PROMOTIONAL DISCOUNTS WAS 19.0% AS COMPARED WITH 18.0% FOR THE PREVIOUS <br />YEAR. INCREASED MARGIN AND INCREASED SALES PRODUCED AN INCREASE IN NET <br />INCOME OF $8,111. <br />OPERATING EXPENSES <br />TOTAL STORE -WIDE OPERATING EXPENSES INCREASED $7,383. OR 8.4% FROM MARCH <br />31, 1970. PAYROLL AND FRINGE BENEFIT COSTS INCREASED $5,705. OR 77.3% <br />OF THE TOTAL INCREASE. CASUALTY AND LIABILITY INSURANCE PREMIUMS INCREASED <br />DRAMATICALLY ON FEBRUARY 19, 1971, WHEN A NEW LIQUOR LIABILITY POLICY WAS <br />PURCHASED. <br />GENERAL <br />QUARTERLY REPORTS MAY BE MORE UNDERSTANDABLE AND EASIER TO TYPE IF PENNIES <br />WERE DROPPED AND ALL AMOUNTS ROUNDED TO THE NEAREST DOLLAR. PERCENTAGES <br />WOULD ALSO NOT LOSE THEIR SIGNIFICANCE IF THEY WERE CARRIED TO ONE DECIMAL <br />PLACE INSTEAD OF TWO. <br />