EXHIBIT 99.3
DILLON COMPANIES, INC.
EMPLOYEES' STOCK OWNERSHIP AND SAVINGS PLAN
INDEX TO FINANCIAL STATEMENTS
DECEMBER 31, 1993
Report of Independent Accountants
Statement of Net Assets Available for Plan Benefits
at December 31, 1993
Statement of Net Assets Available for Plan Benefits
at December 31, 1992
Statement of Changes in Net Assets Available for Plan Benefits
For the Year Ended December 31, 1993
Statement of Changes in Net Assets Available for Plan Benefits
For the Year Ended December 31, 1992
Statement of Changes in Net Assets Available for Plan Benefits
For the Year Ended December 31, 1991
Notes to Financial Statements
Schedule of Investments
REPORT OF INDEPENDENT ACCOUNTANTS
The Administration Committee of
Dillon Companies, Inc. Employees'
Stock Ownership and Savings Plan
We have audited the financial statements and the financial statement
schedule of Dillon Companies, Inc. Employees' Stock Ownership and
Savings Plan as listed in the accompanying index. These financial
statements and financial statement schedule are the responsibility of
the Administration Committee of Dillon Companies, Inc. Employees'
Stock Ownership and Savings Plan. Our responsibility is to express
an opinion on these financial statements and financial statement
schedule based on our audits.
We conducted our audits in accordance with generally accepted
auditing standards. Those standards require that we plan and perform
the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements referred to above present
fairly, in all material respects, the net assets available for plan
benefits of Dillon Companies, Inc. Employees' Stock Ownership and
Savings Plan as of December 31, 1993 and 1992, and the changes in its
net assets available for plan benefits for each of the three years in
the period ended December 31, 1993, in conformity with generally
accepted accounting principles. In addition, in our opinion, the
financial statement schedule referred to above, when considered in
relation to the basic financial statements taken as a whole, presents
fairly, in all material respects, the information required to be
included therein.
(COOPERS & LYBRAND)
COOPERS & LYBRAND
Cincinnati, Ohio
April 22, 1994
DILLON COMPANIES, INC. EMPLOYEES' STOCK OWNERSHIP AND SAVINGS PLAN
Statement of Net Assets Available for Plan Benefits
December 31, 1993
(In Thousands)
401(k) ESOP
---------------------------------------------------------------------------
Balanced Index Fixed Stock Balanced Index Fixed Stock
Fund Fund Fund Fund Fund Fund Fund Fund Total
-------- ----- ----- ----- -------- ----- ----- ------ -----
ASSETS
Investments:
State Street Research and
Management $10,167 $266 $10,433
Mellon Capital Opening Stock
Index Fund $5,588 $161 5,749
Fixed Income Securities $52,565 $1,814 54,379
The Kroger Co. Common Stock
401(k) Cost - $39,113
ESOP Cost - $23,530 $64,845 $42,569 107,414
------ ------ ------- ------- ---- ---- ------ ------- ---------
Total Investments 10,167 5,588 52,565 64,845 266 161 1,814 42,569 177,975
Contributions Receivables and Other 1,015 207 1,121 27 6 38 2,414
------ ----- ------ ------ ---- ---- ------ ------- -------
NET ASSETS AVAILABLE FOR
PLAN BENEFITS $11,182 $5,795 $53,686 $64,845 $293 $167 $1,852 $42,569 $180,389
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The accompanying notes are an integral part of the financial statements.
DILLON COMPANIES, INC. EMPLOYEES' STOCK OWNERSHIP AND SAVINGS PLAN
Statement of Net Assets Available for Plan Benefits
December 31, 1992
(In Thousands)
401(k) ESOP
------------------------------------------------------------------------------
Balanced Index Fixed Stock Balanced Index Fixed Stock
Fund Fund Fund Fund Fund Fund Fund Fund Total
--------- ----- ----- ----- -------- ----- ----- ----- -----
ASSETS
Investments:
State Street Research
and Management $6,522 $132 $ 6,654
Mellon Capital Opening
Stock Index Fund $4,760 $136 4,896
Fixed Income Securities $41,538 $1,086 42,624
The Kroger Co. Common Stock
401(k) Cost - $35,435
ESOP Cost - $24,853 $44,637 $32,732 77,369
Temporary Cash Investment 19 19
------ ------ ------- ------- ---- ---- ------ ------- ---------
Total Investments 6,522 4,760 41,538 44,637 132 136 1,086 32,751 $ 131,562
Receivables:
Employer Contributions 782 782
----- ----- ------ ------ ---- ----- ------- -------- ----------
Total Assets 6,522 4,760 41,538 45,419 132 136 1,086 32,751 132,344
LIABILITIES
Excess Participants Contribution 4 5 22 79 19 129
------ ------ ------- ------- ---- ----- ------- ------- ---------
NET ASSETS AVAILABLE FOR PLAN BENEFITS $6,518 $4,755 $41,516 $45,340 $132 $136 $1,086 $32,732 $132,215
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The accompanying notes are an integral part of the financial statements.
DILLON COMPANIES, INC. EMPLOYEES' STOCK OWNERSHIP AND SAVINGS PLAN
Statement of Changes in Net Assets Available for Plan Benefits
December 31, 1993
(In Thousands)
401(k) ESOP
---------------------------------------- --------------------------------------
Balanced Index Fixed Stock Balanced Index Fixed Stock
Fund Fund Fund Fund Fund Fund Fund Fund Total
---------- ----- ----- ------- -------- ----- ----- ----- -----
Employee Contributions $1,393 $1,022 $7,423 $8,484 $ 18,322
Employer Contributions 1,713 1,713
Transfers from (to) Other Funds 2,619 (134) 3,036 (5,521) $155 $24 $ 729 ($908) 0
------ ------ ------ ------ ---- ----- ------ ------ --------
4,012 888 10,459 4,676 155 24 729 (908) 20,035
Investment Income:
State Street Research and Management 945 20 965
Mellon Capital Stock Index Fund 480 12 492
Interest 3,956 131 4,087
Net Appreciation 17,472 11,692 29,164
------ ------ ------- ------ ---- ---- ------ ------- --------
Total Additions 4,957 1,368 14,415 22,148 175 36 860 10,784 54,743
Expenses 5 4 31 1 41
Distributions to Participants 288 324 2,214 2,643 14 5 93 947 6,528
----- ----- ------ ------ ---- ---- ------ ------- --------
Net Increase 4,664 1,040 12,170 19,505 161 31 766 9,837 48,174
Net Assets Available for Plan Benefits:
Beginning of Year 6,518 4,755 41,516 45,340 132 136 1,086 32,732 132,215
------- ------ ------- ------- ---- ----- ------- -------- ---------
End of Year $11,182 $5,795 $53,686 $64,845 $293 $167 $1,852 $42,569 $180,389
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The accompanying notes are an integral part of the financial statements.
DILLON COMPANIES, INC. EMPLOYEES' STOCK OWNERSHIP AND SAVINGS PLAN
Statement of Changes in Net Assets Available for Plan Benefits
December 31, 1992
(In Thousands)
401(k) ESOP
--------------------------------------- -------------------------------------------
Balanced Index Fixed Stock Balanced Index Fixed Stock
Fund Fund Fund Fund Fund Fund Fund Fund Total
-------- ----- ----- ----- -------- ----- ----- ----- -----
Employee Contributions $1,094 $856 $6,764 $7,975 $ 16,689
Employer Contributions 782 782
Transfers from (to) Other Funds 304 33 (2,361) 2,024 $ 64 $ 47 $ 112 ($223) 0
------ ---- ------ ------ ---- ---- ------ ----- --------
1,398 889 4,403 10,781 64 47 112 (223) 17,471
Investment Income:
State Street Research and Management 525 10 535
Mellon Capital Stock Index Fund 319 10 329
Interest 3,404 96 3,500
Net Depreciation (12,597) (11,897) (24,494)
----- ----- ----- ------- -- ----- ------- -------- --------
Total Additions (Deductions) 1,923 1,208 7,807 (1,816) 74 57 208 (12,120) (2,659)
Distributions to Participants 232 194 1,952 1,779 8 8 60 640 4,873
----- ----- ----- ------- -- ----- ------- ------- --------
Net Increase (Decrease) 1,691 1,014 5,855 (3,595) 66 49 148 (12,760) (7,532)
Net Assets Available for Plan Benefits:
Beginning of Year 4,827 3,741 35,661 48,935 66 87 938 45,492 139,747
------ ------ ------- ------- ----- ----- ------- ------- --------
End of Year $6,518 $4,755 $41,516 $45,340 $132 $ 136 $ 1,086 $32,732 $132,215
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The accompanying notes are an integral part of the financial statements.
DILLON COMPANIES, INC. EMPLOYEES' STOCK OWNERSHIP AND SAVINGS PLAN
Statement of Changes in Net Assets Available for Plan Benefits
December 31, 1991
(In Thousands)
401(k) ESOP
---------------------------------------- -----------------------------------------
Balanced Index Fixed Stock Balanced Index Fixed Stock
Fund Fund Fund Fund Fund Fund Fund Fund Total
--------- ----- ----- ------ -------- ----- ----- ----- -----
Employee Contributions $894 $650 $6,292 $7,188 $15,024
Employer Contributions 699 $3 702
Transfers from (to) Other Funds (828) 293 (529) 1,064 $2 ($19) $355 (338) 0
------ ------ ------- ------ --- ---- ---- ------ --------
66 943 5,763 8,951 2 (19) 355 (335) 15,726
Investment Income:
State Street Research and Management 940 15 955
Mellon Capital Stock Index Fund 700 20 720
Interest 3,067 86 3,153
Net Appreciation 11,621 12,336 23,957
------ ------ ------ ------- -- ---- ---- ------- --------
Total Additions 1,006 1,643 8,830 20,572 17 1 441 12,001 44,511
Distributions to Participants 181 181 1,809 2,232 13 1 52 1,159 5,628
------ ------ ------ ------- -- ---- --- ------- --------
Net Increase 825 1,462 7,021 18,340 4 0 389 10,842 38,883
Net Assets Available for Plan Benefits:
Beginning of Year 4,002 2,279 28,640 30,595 62 87 549 34,650 100,864
------ ------ ------- ------- --- --- ---- ------- --------
End of Year $4,827 $3,741 $35,661 $48,935 $66 $87 $938 $45,492 $139,747
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The accompanying notes are an integral part of the financial statements.
DILLON COMPANIES, INC.
EMPLOYEES' STOCK OWNERSHIP AND SAVINGS PLAN
Notes to Financial Statements
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
------------------------------------------
The following describes the significant policies followed in the
preparation of these financial statements.
INVESTMENTS VALUATION
---------------------
Investments in securities (common and preferred stock) traded on
a national securities exchange are valued at the last reported
sales price on the last business day of the year. Guaranteed
Investment Contracts (GICs) with Insurance Companies are valued
at contract value. Benefit Accessible Securities Investment
Contracts (BASICs) are carried in the financial statements at
amortized cost. Investments in the Index and Balanced Funds are
valued at their fair value on the last business day of the year.
Investment in Pacific Investment Management Company is valued
at amortized cost.
OTHER
-----
Purchases and sales of securities are reflected on a trade date
basis.
In accordance with the policy of stating investments at fair
value, the Plan presents in the Statement of Changes in Net
Assets the net appreciation (depreciation) in the fair value of
its investments which consists of the realized gains or losses
and the unrealized appreciation (depreciation) on those
investments.
2. PARTICIPANT DATA
----------------
At December 31, 1993, the approximate number of employees,
including former employees with remaining balances,
participating by investment direction was:
401(k) ESOP
------ ----
Stock Fund 2,903 12,312
GIC Fund 913 249
Balanced Fund 64 7
Index Fund 27 6
Stock Fund and GIC Fund 6,221 379
Stock Fund and Balanced Fund 427 6
Stock Fund and Index Fund 284 7
GIC Fund and Balanced Fund 169 20
GIC Fund and Index Fund 55 7
Balanced Fund and Index Fund 39 3
Participation in three or more funds 2,990 25
------ -------
Total participants 14,092 13,021
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3. PLAN DESCRIPTION
----------------
Employees of Dillon Companies, Inc. and its subsidiaries
(Company) with one year of service and who have attained age 21
are eligible to become a participant as of the earliest January
1 or July 1 following completion of said eligibility
requirements.
The interest of all participants in the Plan are fully vested at
all times and are not subject to forfeiture or cancellation
under any circumstances. Plan assets are for participants only
and may never revert to the employer.
Plan income and expenses for each period are allocated to the
participants' accounts in the ratio that the balance in the
account of each participant bears to the balance of all the
participants' accounts immediately before the allocation. ESOP
employer contributions are allocated based on participants'
salaries as stated in the Plan.
All distributions to participants are in cash or in whole shares
of The Kroger Co. common stock (cash is paid for fractional
shares). Participants and beneficiaries individually exercise
voting rights on the shares of The Kroger Co. common stock
allocated to their account.
Under the 401(k) salary reduction provision, each participant
may make an election to have the Company contribute to the Plan
on their behalf from two percent (2%) to twenty percent (20%) of
the qualifying compensation that would otherwise be payable to
them for the Plan year.
A basic matching employer contribution is allocated to
participants of the Stock Fund equal to ten percent (10%) of
salaries directed by participants. A supplemental employer
contribution is allocated in proportion to all participants'
salaries directed to all investments. The supplemental
contribution is based on the annual financial results as set by
the Board of Directors of The Kroger Co. and ranges from none to
twenty percent (20%) of participant contributions. For 1993,
the Company made both a basic matching contribution and a
supplemental contribution; for 1992 and 1991, the Company made
only the basic matching contribution.
The Company currently has discontinued contributions to the ESOP
portion of the Plan and has no present intentions to resume such
contributions.
Further information about the Plan, including vesting,
allocation and benefit provisions, and employer and employee
contributions is contained in the Plan, and Plan amendments.
Copies of these documents are available from the Company's
Personnel Department.
4. INVESTMENTS
-----------
The Plan's investments are held by the Dillon Companies, Inc.
Employee Master Trust (the Trust) and are administered by the
Dillon Companies, Inc. Trust Committee. The Trust Committee has
selected investment managers, State Street Research and
Management Company and the Mellon Capital Management Corp., to
manage some of the fund assets. The State Street Research and
Management Company is granted discretionary authority concerning
investment of assets they manage. The Mellon Capital Stock
Index Fund is directed by the Trust Committee to maintain a
portfolio which performs comparable to the Standard & Poor's 500
Index. The net change in funds managed by investment managers
includes revenue earned, unrealized and realized gains and
losses on investments, and fiduciary expenses.
The Plan transfers shares of The Kroger Co. common stock (at
fair market value) to and from the other employee benefit
plans of the Company participating in the Trust. The cost of
the shares recorded by the Plan is the original cost of the
shares of the transferring employee benefit plan. The resulting
difference between the cost recorded and amount paid for the
purchased shares is included in the determination of the net
appreciation (depreciation) in fair value of the Plan's
investments, which was $(1,474) in 1993, $(631) in 1992, and
$1,075 in 1991.
The Plan's investments (including investments bought, sold and
held during the period), appreciated (depreciated) in value as
follows:
Kroger Stock 401(k) ESOP Total
------------ ------ ----- -----
1991 $ 11,621 $ 12,336 $ 23,957
1992 (12,597) (11,897) (24,494)
1993 17,472 11,692 29,164
5. TAX STATUS
----------
The Fund constitutes a qualified trust under Section 401 of
the Internal Revenue Code and is therefore exempt from federal
income taxes under the provisions of Section 501(a).
Participant contributions and earnings of the Plan are not
subject to federal income tax until distribution, at which time
they are taxable to the recipient.
DILLON COMPANIES, INC.
EMPLOYEES' STOCK OWNERSHIP AND SAVINGS PLAN
SCHEDULE OF INVESTMENTS
December 31, 1993 and 1992
(In Thousands)
1993 1992
----------------------------- -----------------------------
Number of Number of
Shares or Shares or
Principal Principal
Name of Issuer and Title of Issue Amount Cost Value Amount Cost Value
- - --------------------------------- --------- ---- ----- --------- ---- -----
BALANCED FUND
State Street Research and Management
401(k) $10,167 $10,167 $10,167 $6,522 $6,522 $6,522
ESOP $266 266 266 $132 132 132
INDEX FUND
Mellon Capital Stock Index Fund
401(k) $5,588 5,588 5,588 $4,760 4,760 4,760
ESOP $161 161 161 $136 136 136
FIXED FUND
Contracts with Insurance Companies,
Benefit Accessible Securities
Investment Contracts, and Pacific
Investment Management Company
401(k) $52,565 52,565 52,565 $41,538 41,538 41,538
ESOP $1,814 1,814 1,814 $1,086 1,086 1,086
STOCK FUND
The Kroger Co. Common Shares
401(k) 3,222 39,113 64,845 3,052 35,435 44,637
ESOP 2,115 23,530 42,569 2,238 24,853 32,732
Temporary Cash Investments
ESOP -- -- -- $19 19 19
-------- -------- -------- --------
$133,204 $177,975 $114,481 $131,562
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