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                                DUANE READE INC.
                (Name of Registrant as Specified In Its Charter)

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     (1)  Title of each class of securities to which transaction applies:
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EXPLANATORY NOTE: On April 21, 2004, Duane Reade Inc. held a conference call to
discuss the first quarter results for the 2004 fiscal year.


           In connection with the acquisition by Oak Hill, Duane Reade and the
Oak Hill entities have filed relevant materials with the Securities and Exchange
Commission (the "SEC"), including a preliminary proxy statement, which was filed
on March 19, 2004. The definitive proxy statement will be sent to holders of
Duane Reade's common stock if and when it becomes available. Holders of Duane
Reade common stock are urged to read the preliminary proxy statement on file
with the SEC, the definitive proxy statement if and when it becomes available
and any other relevant materials filed by Duane Reade or the Oak Hill entities
because they contain, or will contain, important information. The preliminary
proxy statement is available, and the definitive proxy statement will be
available if and when it is filed, for free (along with any other documents and
reports filed by Duane Reade with the SEC) at the SEC's website, www.sec.gov. In
addition, you may obtain documents filed with the SEC by Duane Reade free of
charge by requesting them in writing from Duane Reade Inc., 440 Ninth Avenue,
New York, New York 10001, Attention: Corporate Secretary, or by telephone at
(212) 273-5700.


           Duane Reade Shareholders, LLC, Duane Reade Holdings, Inc. and Duane
Reade Acquisition Corp. were formed as the acquiring entities at the direction
of the equity sponsors, which currently include Oak Hill Capital Partners, L.P.,
Oak Hill Capital Management Partners, L.P. and certain members of Duane Reade's
management. Andrew J. Nathanson and Tyler J. Wolfram are the initial directors
of each newly formed Delaware corporation. These entities and their directors
and officers may be deemed to be participants in the solicitation of proxies in
connection with the proposed transaction. As of the date of this communication,
Mr. Nathanson has an indirect interest (through his participation in an
investment partnership) of less than 1% in the outstanding shares of the common
stock of Duane Reade and none of the other foregoing participants has any direct
or indirect interest, by security holdings or otherwise, in Duane Reade.

           Duane Reade and its directors and executive officers may be deemed to
be participants in the solicitation of proxies from its stockholders in
connection with the proposed transaction. Certain information regarding the
participants and their interest in the solicitation is set forth in the proxy
statement for Duane Reade's 2003 annual meeting of stockholders filed with the
SEC on April 10, 2003 and the Form 4s filed by Duane Reade's directors and
executive officers since April 10, 2003. Stockholders may obtain additional
information regarding the interests of such participants by reading the
preliminary proxy statement and the definitive proxy statement, if and when it
becomes available.

Except for historical information contained herein and statements relating to
the acquisition of the Company by Oak Hill, the statements in this release and
the accompanying discussion on the earnings conference call are forward-looking
and made pursuant to the safe harbor provisions of the Private Securities
Litigation Reform Act of 1995. In addition, this document may contain
statements, estimates or projections relating to, among other things, the
acquisition of the Company by Oak Hill that constitute "forward-looking"
statements as defined under U.S. federal securities laws. Forward-looking
statements involve known and unknown risks and uncertainties, which may cause
the Company's actual results in future periods to differ materially from
forecasted or expected results. Those risks include, among other things, the
competitive environment in the drugstore industry in general and in the
Company's specific market area, inflation, changes in costs of goods and
services and economic conditions in general and in the Company's specific market
area. Those and other risks are more fully described in Duane Reade's reports
filed with the SEC from time to time, including its annual reports on Form 10-K,
quarterly reports on Form 10-Q and current reports on Form 8-K. You should not
place undue reliance on forward-looking statements, which speak only as of the
date they are made. Except to the extent otherwise required by federal
securities laws, we do not undertake to publicly update or revise any
forward-looking statements.




Good morning ladies and gentlemen and welcome to the Duane Reade Inc. first
quarter conference call. [Operator Instructions] Finally, any reproduction of
this call in whole or in part is not permitted without prior express written or
authorization of Duane Reade. And, as a reminder, ladies and gentlemen, this
conference is being recorded. I would now like to introduce your host for
today's conference, Ms. Cara O'Brien of Financial Dynamics. Please go ahead

CARA O'BRIEN - Financial Dynamics
Thank you Operator. Good morning everyone and thank you for joining this
discussion of Duane Reade's first quarter results. By now you should have
received a copy of the press release, but if you have not, please call our
offices at 212-850-5600 and we will send one out to you immediately.

Before introducing Duane Reade's management team, I'd like to read the Safe
Harbor language. Any statement in today's press release or this conference call
that may be considered as forward-looking is subject to risks and uncertainties
that could cause actual results to differ materially. Actual results may differ
from such forward-looking statements due to the factors discussed in Duane
Reade's forms filed with the SEC, which the Company urges investors to consider.
Please note that any forward-looking statements used in this call should not be
relied upon as current after today's date.

I would now like to introduce Tony Cuti, Chairman of the Board and CEO, and John
Henry, Senior Vice President and CFO. Tony and John will make some opening
comments about the quarter and then they will take your questions. Tony, please
go ahead.

TONY CUTI - Duane Reade - Chairman & CEO
Thank you Cara and good morning everyone. Our first quarter report is out, and I
will give you a brief overview of the quarter, proceed with John Henry's
financial review and again, leave most of the discussion for the Q&A period.

First quarter sales continued in the trend of previous quarters in many ways.
More specifically, front-end sales were sluggish and pharmacy sales are still
reflective of an overall industry downturn in the pharmacy sector. Nevertheless,
one can see a basis to read some improvement the first quarter front-end figures
if one discounts the adverse effects of tobacco and weather on the first
quarter. Taking these issues into account one might conclude our front-end sales
are flat to slightly positive in the first quarter; not sterling, but
nevertheless it's a slight improvement over the '03 trend. Pharmacy sales
performance continues to indicate that the uninsured, unemployed are not
refilling at the same rates as they were when insured. Additionally, we believe
that some mandatory mail-order plans, as well as reimportation opportunities,
are moving customers away from their local pharmacy.

The Company has made large strides to improve its expenses in view of these
sales weaknesses, and I'm pleased with the Company's ability to manage margins
and minimize the impact of the lost sales volume. The Company continues to
leverage its pharmacy expenses and its shortage in pharmacists through more
active use of its central fill facilities and more recently with the
introduction of its remote interactive kiosks. The Company has also made
significant improvements in shrink control, which have begun to show noteworthy
improvement in the last few quarters, and which we believe will continue to
support margin improvement throughout the year.

The Company's real estate program, though contained to a 17 store objective this
year, has been very productive and continues to be successful at acquiring the
more premier and attractive retail locations in the metro New York area.
Additionally, some these locations have been used to successfully reposition
older Duane Reade stores to make them more productive and grab more market share
of their respective areas. We are also taking advantage of a number of
independent pharmacy fill buys in order to bolster our pharmacy business and
help close the gap that is occurring right now in pharmacy.


With regard to the previously announced transaction with Oak Hill, we remain on
track with a target closing date of June this year. I'm going to refrain from
other comments, as I said, and ask John to take you through the financial
statistics, and then I will be available for Q&A.

JOHN HENRY - Duane Reade - SVP & CFO
Net income for the first quarter ended March 27th, excluding pre-tax transaction
costs of 1.1 million incurred in connection with the planned acquisition by Oak
Hill and pre-tax labor contingency expenses of 1.1 million attributable to the
previously announced NLRB administrative law judge recommendation, was 2.7
million or 11 cents per diluted share. The previous year's first quarter net
income including a pre-tax charge of 0.1 million representing the early
retirement premium on the redemption of higher cost debt was 3.1 million or 13
cents per diluted share. For the current year's first quarter net income,
including the transaction and labor contingency costs I just described, it
amounted to 1.4 million or 6 cents per diluted share.

Sales for the quarter amounted to 349.6 million. That represents an increase of
4.8 percent over the first quarter last year. Pharmacy sales were up 10.2
percent and represented 45.3 percent of total sales. Same-store sales increased
1.6 percent with pharmacy same-store sales increasing 6.6 percent and front-end
same-store sales declining by 2.3 percent. As Tony mentioned, the same-store
decline on the front-end was impacted to declines -- weather factors and a
number of other things, among which was the decline of tobacco sales in New York
City. Excluding the tobacco sales decline, the same-store front-end decline
would have been 0.6 percent. Third party prescription sales as a percentage of
pharmacy sales in the first quarter was 92 percent. Last year it was 91.1 and in
the fourth quarter it was 91.7.

At the end of the quarter we operated 243 stores, including 3 stores we've
opened from the beginning of the year, reduced by 1 store which was closed
during the quarter.

Gross margin for the quarter was 21.7 percent, and that compares to 21 percent
in the prior year. The increase was primarily attributable to higher front-end
selling margins and reduced shrink losses that more than offset increased
proportion of lower margin pharmacy sales. The higher selling margins were
partially due to lower holiday clearance markdowns than experienced in the
previous year and an earlier Easter holiday this year.

Selling, general and administrative expenses as a percent of sales amounted to
16.8 percent compared to 16.1 last year. The higher expense ratio is primarily
attributable to continued low rates of same-store sales growth, increased
litigation related expenses that were primarily associated with our efforts to
recover our World Trade Center business interruption insurance claim and
litigation related to certain labor issues. The quarter also saw higher
promotional advertising expenses, as well as severance costs associated with
certain administrative staff reductions. In addition, insurance cost increases
that became effective in May of last year and increased labor costs associated
with expanded store operating hours and higher pharmacist labor costs continue
to adversely affect the comparison.

FIFO EBITDA for the quarter amounted to 18.8 million or 5.4 percent of sales
compared to 18.6 million or 5.6 percent of sales last year. The current year's
first quarter EBITDA included about 900,000 in additional litigation and
severance related costs, and excluding these costs the current year's FIFO
EBITDA would have been 19.7 million or 5.6 percent of sales.

Turning to the balance sheet, total working capital at the end of March was
224.3 million compared to 227.6 million at the end of December and 205.2 million
at the end of March last year. The previous year's first quarter working capital
was lower than normal by approximately 21.6 million attributable to the revolver
and Term A loans being classified as current liabilities prior to being
refinanced. Excluding the current portion of the revolver and term loans in the
previous year, working capital actually declined by about 2.5 million from the
first quarter of last year. The decline in working capital is attributable to
reduced inventory purchases in the current year's first quarter.


Cash flow from operating activities for the quarter amounted to 12.2 million or
3.5 percent of first quarter sales compared to 3.7 million or 1.1 percent of
sales in the first quarter last year. The improvement in cash flow from
operating activities is largely due to our reduction in purchases.

Total debt at the end of the quarter was 277.9 million. It was an increase of 5
million from the end of December, attributable to about 17.1 million of
investment spending during the quarter. Investment spending included about 7.8
million of capital expenditures in support of new store growth, store
relocations, renovations and technology upgrades.

That really concludes the financial update, and I am just going to turn it back
over for question-and-answer.

TONY CUTI - Duane Reade - Chairman & CEO
Operator, can you go to Q&A please?

Q U E S T I O N S  A N D  A N S W E R S

[Operator Instructions]  John Heinbockel, Goldman Sachs.

JOHN HEINBOCKEL - Goldman Sachs - Analyst
If you look at the operating performance in the quarter -- flat EBITDA with the
litigation -- and your reference in the press release about some encouraging
signs, do you think we've seen a bottom in profitability, at least EBITDA
dollars as opposed to maybe margin? Or is that still unclear?

TONY CUTI - Duane Reade - Chairman & CEO
I think it's tough to look out with certainty, but we feel that certainly first
quarter EBITDA is going to be the lowest quarter of the year and we're
encouraged by a lot of the issues that we've got our arms around like shrink
control, like margin. I think we were chasing margin last year and I think we've
got margin under control. We've got shrink now better than we have anticipated
it. And I think we're also moving more productively in the pharmacy sector to
bolster our sales shortfall.

I think the front-end question still remains open as how is that sales trend
going to play out for the rest of the year. But as I indicated in my opening
that if you discount the back on weather, which discounting weather is always a
tricky thing but we try to look at it as objectively as one can, and if you do
that you do see an improvement in front-end trends third, fourth to first
quarter, and therefore we are hopeful that the front-end performance as we go
out will not be as dour as it was in the first quarter and that will also help
the profit profile. So everything seems to be moving in a direction where, yes,
I would indicate the first quarter EBITDA for the year is a low point for us
right now.

JOHN HEINBOCKEL - Goldman Sachs - Analyst
What was the adverse impact profit-wise of the drop off in tobacco sales? I
imagine it was less -- more hit your sales line more than your profit line.

TONY CUTI - Duane Reade - Chairman & CEO
It's not a heavy profit issue. It's a low margin product. In an explanation of
sales it does explain the sales drop. I would say tobacco does hit you, but it's
probably -- John, was it 10 percent or something on the margin line?

JOHN HENRY - Duane Reade - SVP & CFO
It was probably about 12 percent on the margin line.

TONY CUTI - Duane Reade - Chairman & CEO
So it's a very low margin line and it's not a big hit on the margin line.
Although, you know, considering the dollars you're losing, it's still a number.
The real issue here when we talk about taking tobacco out of the figure is just
so that we can understand where our baseline business is moving. And I would
tell you that the baseline front-end business is improving. It is not


improving strongly -- I don't want to give anyone the impression that we're back
to a vibrant economy yet -- but it is certainly moving in a trend that is
positive. And I would think that that's why -- that combined with the fact that
we think we have our arms around a lot of the expense control issues and margin
achievement issues that haunted us in '03 -- I think that makes for much more
productive upcoming quarters.

JOHN HEINBOCKEL - Goldman Sachs - Analyst
Finally, if you would get where EBITDA margin is today and you look out three or
four years to some type of a significant recovery -- a couple of hundred basis
points -- where is that going to come from primarily? Is it going to be gross
going up recovering or is it going to be all in the expense line?

TONY CUTI - Duane Reade - Chairman & CEO
You start going out three or four years, John, it is tricky. I think the go
forward plan we've discussed with our partners coming into this deal in June,
we're trying to move the business from the sixes, which is where we are running
now in EBITDA as a percent of sales, up toward eight. But the issue becomes how
do we achieve that. And I think the best way to achieve that for this business
is a manifold way. There is no silver bullet here. It is first and foremost
working to continue to shore up a very rapidly changing pharmacy scene so we can
maximize margin on pharmacy dollars that are constantly being challenged on the
margin line by other outlets like mail-order and aggressive third party

On the front-end side we're moving very, very efficiently toward a wider array
of offerings in the front end. We're looking into coffee kiosks, we're looking
into a lot of financial service products and we're also looking into a broader
array of health and beauty aides and health aides at the pharmacy OTC counter.
And in combination we want to bring a better offering in the existing
brick-and-mortar. The more we can offer the existing brick-and-mortar, the
better the return, the better the EBITDA trend.

So we believe that the formula to get there is manifold and we do believe it's
achievable. So I say if I look out over the period you asked me to look out to,
I would be hopeful that we could return the business to the eights as a percent
to sales.

JOHN HEINBOCKEL - Goldman Sachs - Analyst

[Operator Instructions] Gentlemen, there are no further questions. Please
continue with any closing comments.

TONY CUTI - Duane Reade - Chairman & CEO
Thank you very much, and I would just remind you that John Henry, our Chief
Financial Officer, has been fielding any interested parties' questions, and he
is available with contact directly to our offices. I want to take this
opportunity to thank our shareholders who are on this phone call for their
patience and understanding with regard to all of the events of the last few
months and the assistance we've been receiving and the support we've been
receiving toward the consummation of this transaction. Thank you and good day.

Ladies and gentlemen, that does conclude our conference call for today. You may
all disconnect and thank you for participating.