SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
[ X ] ANNUAL REPORT PURSUANT TO SECTION 13 OR
15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934
For the fiscal year ended January 29, 1994
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR
15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
Commission File No. 0-15023
FRED MEYER, INC.
(Exact name of registrant as
specified in its charter)
Delaware 93-0798201
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
3800 SE 22nd Avenue
Portland, Oregon 97202
(Address of principal executive offices) (Zip Code)
(503) 232-8844
(Registrant's telephone number, including area code)
Securities registered pursuant to
Section 12(b) of the Act:
None
Securities registered pursuant to
Section 12(g) of the Act:
Common Stock, $.01 par value
(Title of class)
Indicate by check mark whether the Registrant
(1) has filed all reports required to be filed by
Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such
shorter period that the Registrant was required to file
such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes [ X ] No [ ]
Indicate by check mark if disclosure of
delinquent filers pursuant to Item 405 of Regulation S-
K is not contained herein, and will not be contained,
to the best of Registrant's knowledge, in definitive
proxy or information statement incorporated by
reference in Part III of this Form 10-K or any
amendment to this Form 10-K. [ ]
Aggregate market value of Common Stock held
by nonaffiliates of the Registrant at March 1, 1994:
$647,460,408
Number of shares of Common Stock outstanding
at March 1, 1994: 26,430,565
Documents Incorporated by Reference
-----------------------------------
Part of Form 10-K into
Document which incorporated
- - -------- ----------------------
Portions of 1993 Annual Parts II and IV
Report to Shareholders
Portions of Proxy Statement Part III
for 1994 Annual Meeting
of Shareholders
TABLE OF CONTENTS
-----------------
Item of Form 10-K . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Page
- - ----------------- ----
PART I
Item 1 - Business. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Item 2 - Properties. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Item 3 - Legal Proceedings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Item 4 - Submission of Matters to a Vote of Security Holders . . . . . . . . . . . . . . . 10
Item 4(a) - Executive Officers of the Registrant. . . . . . . . . . . . . . . . . . . . . . . 10
PART II
Item 5 - Market for the Registrant's Common Stock
and Related Stockholder Matters . . . . . . . . . . . . . . . . . . . . . . . . . 12
Item 6 - Selected Financial Data . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Item 7 - Management's Discussion and Analysis
of Financial Condition and Results
of Operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Item 8 - Financial Statements and Supplementary Data . . . . . . . . . . . . . . . . . . . 13
Item 9 - Changes in and Disagreements with Accountants
on Accounting and Financial Disclosure. . . . . . . . . . . . . . . . . . . . . . 13
PART III
Item 10 - Directors and Executive Officers of the Registrant. . . . . . . . . . . . . . . . 13
Item 11 - Executive Compensation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Item 12 - Security Ownership of Certain Beneficial
Owners and Management . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Item 13 - Certain Relationships and Related Transactions. . . . . . . . . . . . . . . . . . 13
PART IV
Item 14 - Exhibits, Financial Statement Schedules,
and Reports on Form 8-K . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
SIGNATURES. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
/TABLE
PART I
Item 1. Business.
- - ------ --------
GENERAL
Fred Meyer, Inc. (the "Company") is a leading
regional retailer of a wide range of food, apparel,
fine jewelry and products for the home. At January 29,
1994, the Company operated 127 stores in Oregon,
Washington, Utah, Alaska, Idaho, Northern California
and Montana under the name "Fred Meyer." Of these
stores, 97 are free-standing, multidepartment stores,
averaging approximately 137,000 square feet of retail
space, that emphasize one-stop-shopping for necessities
and items of everyday use. Of the 97 multidepartment
stores, 77 contain food and nonfood departments, and 20
contain nonfood departments only. The Company's
multidepartment stores accounted for approximately 98
percent of both the Company's total sales and operating
income for the Company's 1993 fiscal year ended January
29, 1994. Of the 30 specialty stores, 23 are jewelry
stores located in regional malls. The Company's
multidepartment stores contain up to seven departments
which include food, the home, apparel, home
electronics, fine jewelry, health and beauty aids and a
pharmacy. The Company's multidepartment stores are
unique in the Pacific Northwest in combining food with
a wide range of nonfood merchandise under one roof.
For the 1993 fiscal year, food and nonfood sales were
37.5 percent and 62.5 percent of total sales,
respectively.
The Company's principal business strategy is
to operate one-stop-shopping stores that provide
convenient shopping for a broad selection of products
in one location. Stores are organized into distinct
departments that specialize in the sale of particular
products. The Company believes that its business
strategy has generated high per-store sales volume and
frequent shopping by area residents and that its
departments achieve greater sales volume because they
are located within one-stop shopping stores. The
strength of the individual departments, with their
breadth and depth of product selection, national and
private label brands and emphasis on products of
everyday use, distinguishes the Company's stores from
other retailers and enables it to compete successfully
with supermarkets, drugstores, discount stores, mass
merchandisers, department and specialty stores. The
Company promotes cross-shopping by providing convenient
access between departments, making each department a
strong competitor in the market for its products and by
facilitating easy customer checkout through a cash
register system that allows customers to purchase
merchandise from any department at any checkout
location ("common checkout").
During the past several years, the Company
has committed substantial capital and management
resources to improve its one-stop-shopping strategy,
allowing it to better serve its customers and respond
to the many new competitors entering its markets. New
competitors in the past six years include Wal-Mart,
Food 4 Less, Cub Foods, Home Depot, HomeBase, Eagle,
Sam's Club and Incredible Universe. During the same
period, the Company also faced increased competition
from existing major national and regional retailers,
including Safeway, Albertson's, Costco, Lamonts,
Mervyn's, PayLess, Penneys, Carrs, QFC, Kmart, Target,
ShopKo and Toys-R-Us. Notwithstanding the competitive
environment and a slowdown in economic conditions in
some of the Company's markets, the Company has been
able to achieve total and comparable store sales growth
averaging 7.8 percent and 3.5 percent, respectively,
over the past five years (based on 52-week years).
Total and comparable store sales growth were 4.4 percent
and 2.4 percent, respectively, for the Company's 1993
fiscal year.
During the past five-year period, the Company
implemented common checkout for the majority of its
multidepartment stores to complement its storewide
merchandising efforts. The Company also remodeled 32
multidepartment stores and redesigned and remodeled
many food departments to include in-store bakeries,
delicatessens and service fish markets to respond to
customer shopping preferences. Beginning in 1987, the
Company implemented
2
an everyday low pricing strategy in its food
operations. In 1989, the Company reorganized its
operating management structure and for each store
designated a store director responsible for store
operations and profitability and departmental cross-
merchandising. In 1992 the Company augmented its store
management structure by establishing a regional
management structure of six regional management teams
closely aligned with the stores in the regions.
Beginning in 1991, management focused
increased attention on the Company's expenses. This
focus decreased expenses as a percent of sales by 2.36
percent since 1990 for advertising, store labor, store
occupancy and corporate support department expenses,
offset in part by increases in information services
("IS") expenses of .70 percent, resulting in a net
decrease of 1.66 percent. The Company is continuing to
pursue expense reductions as part of its efforts to
improve its financial performance.
The Company's capital expenditure budget for
its 1994 fiscal year is $265,000,000, compared to
capital expenditures of approximately $254,000,000 in
1993. Beginning in 1993, the Company implemented a
plan to increase new store development in its existing
markets and to increase the level of remodeling of
existing stores. As a result, the Company plans to
open at least five new multidepartment stores and
remodel at least seven existing stores in each of the
five fiscal years beginning in 1993. All of the new
stores scheduled for 1993 opened in the second half of
the 1993 fiscal year. Total retail space will increase
by approximately 6.0 percent in 1993 and 1994. The
Company is also constructing a new retail service
center in Chehalis, Washington and developing plans for
a food distribution facility near Seattle, Washington.
In addition, the Company is continuing its program to
replace and upgrade its old IS system with new
architecture and application programs. The Company's
new distribution facilities and new IS system are
designed to improve operations, permit better inventory
management and reduce distribution costs.
The Company was incorporated in Delaware in
1981, as a successor to the business of a company which
was incorporated in Oregon in 1923. The Company's
principal executive offices are located at 3800 SE 22nd
Avenue, Portland, Oregon 97202, and its telephone
number is (503) 232-8844. References in this Form 10-K
to the Company mean Fred Meyer, Inc., including its
subsidiaries, unless the context requires otherwise.
3
The following table sets forth certain
statistical information with respect to the Company's
operations for the periods indicated:
Fiscal Year Ended
------------------------------------------------------------------------------------
January 29, January 30, February 1, February 2, February 3,
1994 1993 1992 1991 1990
---------- ---------- ---------- ---------- -----------
(53 weeks)
Percent of net sales:
Nonfood sales 62.5% 63.3% 63.7% 64.3% 66.8%
Food sales 37.5% 36.7% 36.3% 35.7% 33.2%
Sales per square foot of
selling space (weighted average) $312 $304 $283 $269 $261/1
Total stores sales growth 4.4% 5.6% 9.2% 11.6%/1 8.4%/1
Comparable store sales percentage increase: /2
Total Company 2.4% 3.0% 4.0% 3.6%/1 4.5%/1
Food 3.4% 2.8% 4.5% 8.3%/1 9.0%/1
Nonfood 1.9% 3.2% 3.8% 1.1%/1 2.3%/1
Number of multidepartment stores:
Operated at end of period 97 94 94 94 95
Opened 5 2 3 5 4
Closed 2 2 3 6 2
Remodeled 7 5 3 7 10
Number of specialty stores:
Operated at end of period 30 29 28 28 30
Opened 2 4 -- -- 11
Closed 1 3 -- 2 --
Remodeled -- -- -- -- --
Total Number of stores:
Operated at end of period 127 123 122 122 125
Opened 7 6 3 5 15
Closed 3 5 3 8 2
Remodeled 7 5 3 7 10
Total retail square feet:
At beginning of period 12,646,000 12,679,000 12,213,000 11,743,000 10,925,000
Added by new stores opened 811,000 295,000 584,000 940,000 785,000
Added by remodeling
of existing stores 80,000 39,000 63,000 24,000 155,000
Less closed stores 114,000 367,000/3 181,000 494,000 122,000
At end of period 13,423,000 12,646,000 12,679,000 12,213,000 11,743,000
__________________
<FN>
/1 Excludes 53rd week in the year ended February 3, 1990 for comparison purposes.
/2 Includes only sales of stores operating throughout each of the periods compared.
/3 Includes square footage for 30 restaurants that were converted to tenant space.
BUSINESS STRATEGY
The Company's principal business strategy is
to operate one-stop-shopping stores that provide
convenient shopping for a broad selection of products
in one location. Stores are organized into distinct
departments and sections within departments that
specialize in the sale of particular products. The
Company promotes cross-shopping through convenient
access between departments, by making each department a
strong competitor in the market for the products it
sells and by providing easy customer checkout through
its common checkout system that allows customers to
purchase merchandise from any department at any
checkout location.
Breadth and Depth of Selection.
- - ------------------------------
In most of its stores, the Company sells over 225,000
items, including a wide selection of food, apparel, and
products for the home, with an emphasis on necessities
and items of everyday use. In addition, the Company
takes advantage of the stores' high
4
and diverse customer traffic to sell many other
categories of goods which are purchased on a
discretionary basis, such as fine jewelry, home
electronics and fashion apparel. Within many
categories of apparel, products for the home, fine
jewelry and home electronics, the Company offers
customers the breadth of selection normally afforded by
department or specialty stores. Its selection of food
and groceries is comparable to that of large
supermarkets. The Company emphasizes the sale of
popular brands and its own private-label brands.
Multidepartment Stores.
- - ----------------------
The Company's large stores are organized into
departments and sections within departments that
specialize in the sale of particular products. The
Company endeavors to create individual, recognizable
identities for each department through specialized
design, fixtures, and decor. In most stores, common
checkout areas allow the checkout of items from the
Company's many departments at any cash register and
facilitate convenient shopping. Most of the Company's
departments are self-service, except service
delicatessens, home electronics, fine jewelry and other
areas where special sales assistance is required.
Stores consist of up to seven departments which are
comprised of a variety of specialty sections.
Departments and specialty sections within the large
Fred Meyer stores include full-service food, pharmacy,
nutrition, housewares, domestics, paint and home decor
items, plumbing and electrical items, hardware and
tools, building materials, garden, floral, sporting
goods, automotive, home office supplies and stationery,
cards and books, toys, basic and fashion apparel for
all ages, shoes, home electronics and fine jewelry.
Multidepartment stores that include food departments
are the Company's primary focus.
Store and Regional Management.
- - -----------------------------
In 1989, the Company reorganized its operating
management structure and for each store designated a
store director responsible for store operations and
profitability and departmental cross-merchandising.
Departments within multidepartment stores are managed
by merchandising managers, who report to store
directors. Each store director and department manager
is supported by a regional manager and other senior
managers who specialize in the market for products sold
in the stores. In 1992, the Company augmented its
store management structure by establishing regional
management teams that work closely with the stores in
their region to enhance sales and profit opportunities.
As a result of its specialized management structure,
the Company believes that each store and each
department within the store better serves its customers
and is able to respond quickly to market changes.
Location and Store Design.
- - -------------------------
New store sites are determined based on a review of
information on demographics and the competitive
environment for the market area in which the proposed
site is located. Most of the Company's stores are
situated in or near well-populated residential areas.
The Company selects store sites, determines store size
and designs stores with a view toward making each store
a very convenient, one-stop-shopping store in the area
it serves. In 1992, the Company standardized its store
design with two basic store plans, approximating
145,000 square feet and 165,000 square feet. The
Company anticipates using a given prototype depending
on the market to be served and the size of the site
being developed. The Company is flexible in its store
design plans where land sites require a specialized
store design.
Promotion and Advertising.
- - -------------------------
The Company aggressively promotes sales for all
departments through weekly advertising, primarily in
local and area newspapers, radio and television.
Advertising often features many high-demand products at
competitive prices. Sale items are usually items
regularly sold in the departments. The Company
emphasizes everyday low prices in its food departments
and for certain nonfood items, and generally offers
promotional sale pricing in its nonfood departments.
The Company believes that it is known for competitive
pricing and its liberal return policy.
Information Services.
- - --------------------
In the fall of 1991, the Company began a five-year
program to modernize its systems to better support its
business. The new systems will permit greater
utilization of information collected from the point-of-
sale bar scanning equipment installed in the Company's
stores.
5
In 1991, a mainframe computer was installed allowing
every store to be linked with the main office and
distribution centers. In 1992, electronic data
interchange ("EDI") was established, and a new pharmacy
system was added in the multidepartment stores. EDI
permits on-line computer communication between the
Company and its vendors and facilitates order entry and
inventory replenishment on a current basis. Currently,
over 500 vendors are on the EDI system, and the Company
has 6,000 items on the new computer-assisted automatic
replenishment system. In 1993, the Company implemented
a new distribution system and is in the process of
implementing new systems for merchandising information
and inventory management. The new systems are designed
to provide the company with better inventory turnover
and control, reduced markdowns, improved expense
controls, reduced distribution costs and better
customer service.
RETAIL OPERATIONS
The Company's stores contain up to seven departments.
Within each department is a variety of merchandise
sections operated like specialty businesses. The
following table sets forth the number of departments
(and lists certain of the sections within the Home and
Apparel departments) in the Company's 97
multidepartment stores at January 29, 1994:
Food . . . . . . . . . . . . . . . . . . . . . . . . . . . 77
Nonfood. . . . . . . . . . . . . . . . . . . . . . . . . . . 97
The Home. . . . . . . . . . . . . . . . . . . . . . . 97
Housewares, Domestics, and Home Decor
Sporting Goods
Garden
Home Improvement and Automotive
Cards and Books
Variety and Seasonal
Home Electronics. . . . . . . . . . . . . . . . . . . 97
Apparel . . . . . . . . . . . . . . . . . . . . . . . 97
Apparel
Cosmetics
Shoes
Toys
Pharmacy. . . . . . . . . . . . . . . . . . . . . . . 96
Health and Beauty Aids. . . . . . . . . . . . . . . . 97
Fine Jewelry. . . . . . . . . . . . . . . . . . . . . 83
The Food Department is typically the same size as free-
standing super food stores of competitors and carries a wide
variety of national brands together with the Company's private-
label brands of grocery items which are Fred Meyer, President's
Choice and FMV (Fred Meyer Value). Beginning in 1992, the
Company implemented a program to increase sales of its private
label grocery items. As a result, sales of private label grocery
items as a percentage of total grocery sales have increased to a
current level of approximately 20 percent from 12 percent in
1991. Private label items generally are sold at lower prices to
the customer and generate higher margins for the Company than
national brand products. The Company also carries fresh produce,
meat, dairy products, nutritional products, bakery products,
candy and tobacco, all sold on a self-selection basis. Most food
departments contain a nutrition section that includes name brand
and generic natural foods, dairy products, juices, vitamins,
supplements, sugar-free and fat-free products and meat
substitutes. Certain items, such as grains, nuts, fruits and
natural snacks, are also displayed in bulk to enable customers to
buy any amount and package their own purchases. In many
multidepartment stores, the Company operates in-store bakeries
and service departments that offer fresh seafood, delicatessen
and meat products. The Company's newer stores include sit-down
eating areas near in-store delicatessens and international take-
out
6
departments. The following table sets forth the number of
nutrition, in-store bakery and service departments at January 29,
1994:
Nutrition. . . . . . . . . . . . . . . . . . . . . . . . . . 81
Bakery . . . . . . . . . . . . . . . . . . . . . . . . . . . 73
Service Delicatessen . . . . . . . . . . . . . . . . . . . . 73
Service Fish Market. . . . . . . . . . . . . . . . . . . . . 51
Service Meat Market. . . . . . . . . . . . . . . . . . . . . 22
The Home Department offers a wide selection of home
decor, housewares, small appliances, domestics, furniture,
sporting goods, greeting cards, books, floral products, power
lawn mowers, garden tools, fertilizers and chemicals, seasonal
and holiday merchandise, hardware, tools, paint, building
materials, plumbing and electrical fixtures, automotive supplies
and related accessories. Some of the national brands featured
are Braun, Kitchen-Aid, Coleman, Rowenta, De Longhi, Glidden and
Weber. Home improvement, garden and automotive sections feature
many items for the do-it-yourself customer. High quality private
label products under our Northwest Home, Turf King and Kraft King
labels complement our national branded offering.
The Home Electronics Department offers the latest name-
brand high-technology merchandise, such as televisions, audio
components, camcorders, cellular phones, computers, computer
software and a large selection of video games. Some of the
national brands featured are SONY, JBL, Pioneer, IBM and
Magnavox. It also offers a large selection of compact discs,
tapes, and for-sale video and includes a photo-finishing section.
One-hour photo-finishing has also been added to selected
locations.
The Apparel Department offers moderately priced
national brand and private-label apparel, sportswear, cosmetics,
accessories, toys and family and active shoes. Major national
brands carried by the apparel departments include Levi's, Jockey,
Maidenform, Vanity Fair, Nike, Reebok, Adidas, Gotcha, Villager,
Eastland, Union Bay, Columbia Sportswear, Capezio, Lee, Bali and
Keds. High quality private label products under our Fred Bear,
Katherine Bishop and KB & Co. labels complement our national
branded offering.
The Pharmacy Department sells a full line of name brand
and generic prescription drugs dispensed by full-time licensed
pharmacists and participates with all major third party HMO and
PPO plans.
The Health and Beauty Aids Department offers a wide
selection of national and private label brands of health and
beauty aid products. It also offers candy and confections and
dietary food products.
The Fine Jewelry Department offers an extensive
selection of bridal jewelry and diamond fashion jewelry,
including precious and semi-precious stones. It also offers name
brand watches and an assortment of 14-carat gold chains and
earrings.
Most of the Company's multidepartment stores are open
from 8:00 a.m. until 10:00 p.m., seven days a week, including all
holidays except Christmas. Multidepartment stores in markets
where the Company does not sell food are open from 9:00 a.m.
until 10:00 p.m. Most of the Company's multidepartment store
locations have unaffiliated tenants which offer goods and
services complementing those offered by the Company, such as
banks, optical centers, restaurants, self-service laundries,
insurance agencies and beauty and barber shops. The Company's
specialty store hours vary depending on location.
The Company honors most nationally recognized credit
cards for sales in all its departments. In addition, the Company
has its own credit card programs which are serviced by national
credit card processors and are generally on a nonrecourse basis.
Beginning in 1992, the Company began accepting debit cards that
do not require customer-activated personal identification number
("PIN") pads.
7
EXPANSION AND STORE DEVELOPMENT
The Company constructs, enlarges, remodels, closes or
sells stores in light of their past performance and the Company's
assessment of their potential. The Company continually evaluates
its position in its various market areas to determine whether it
should expand or consolidate its operations in those areas. In
1989 and 1990, the Company opened a total of nine new
multidepartment stores and remodeled seventeen existing stores.
In 1991 and 1992, new store openings, development and remodeling
activity declined to a total of five new multidepartment stores
and eight remodels while the Company focused on reducing expenses
and improving profitability. Beginning in 1993, the Company
implemented a plan to increase new store development in its
existing markets and to increase the level of remodeling of
existing stores. During 1993, the Company opened five new
multidepartment stores, one of which replaced an older store;
closed two multidepartment stores (including the one store that
was replaced); and remodeled seven stores. Generally, the
Company plans to open at least five new multidepartment stores
and remodel at least seven existing stores in each of the five
years beginning in 1994. It plans to close one multidepartment
store in 1994. In 1993, capital expenditures for new store
development and remodels were approximately $156,000,000,
compared with expenditures in 1992 of approximately $57,000,000.
A portion of this increase reflects spending for stores to open
in 1994. Total retail space increased 777,000 square feet during
1993, representing an increase of approximately 6.1 percent. New
multidepartment store openings during the year 1993 were as
follows:
Total
Retail Space
Location Square Footage Opened
-------- -------------- ------
Orchards, Washington. . . . . . . . . . . . . . . . . . 165,000 October, 1993
Anchorage, Alaska . . . . . . . . . . . . . . . . . . . 169,000 November, 1993
Spokane, Washington . . . . . . . . . . . . . . . . . . 165,000 November, 1993
Burlington, Washington. . . . . . . . . . . . . . . . . 165,000 November, 1993
Medford, Oregon . . . . . . . . . . . . . . . . . . . . 144,000 January, 1994
Planned new multidepartment store openings during the year 1994
are as follows:
Total
Retail Space
Location Square Footage Planned Opening
-------- -------------- ---------------
Soldotna, Alaska. . . . . . . . . . . . . . . . . . . . 157,000 April, 1994
Brookings, Oregon . . . . . . . . . . . . . . . . . . . 143,000 April, 1994
East Vancouver, Washington. . . . . . . . . . . . . . . 166,000 July, 1994
Boise, Idaho. . . . . . . . . . . . . . . . . . . . . . 164,000 August, 1994
Bonney Lake (Seattle), Washington . . . . . . . . . . . 166,000 September, 1994
In 1994, the Company is planning capital
expenditures estimated to be $265,000,000. Total
capital expenditures for 1993 were approximately
$254,000,000. In addition to the new store and remodel
program, the Company is initiating or continuing many
capital projects aimed at improving operating
efficiencies, including improvements to its
distribution centers, central bakery, and dairy plant,
continued IS enhancements and the just completed
construction of a new wing to its main office complex.
The new office wing enabled the Company to consolidate
its corporate offices into one facility from the three
locations it previously occupied in the Portland area.
8
DISTRIBUTION AND PROCESSING
The Company operates a centralized
distribution facility in a complex at Clackamas,
Oregon, near Portland, containing 1,528,000 square feet
and also maintains a distribution facility in Salt Lake
City, Utah, containing 122,000 square feet.
Approximately two-thirds of the merchandise the Company
sells is currently shipped from its Clackamas and Salt
Lake City distribution centers, with approximately one-
third shipped directly by vendors to the Company's
stores.
As a result of its recent investment in IS
systems and distribution facility improvements, the
Company has been able to establish EDI and automated
replenishment programs with many vendors. These "quick
response" capabilities are designed to improve
inventory management and reduce handling of inventory
in the distribution process, which the Company believes
will result in lower markdowns and lower distribution
costs.
The Company believes that its distribution
and related IS systems provide it with several
advantages. First, they permit its stores to maintain
proper inventory levels for more than 190,000 items
supplied through its central distribution centers.
Second, centralized purchasing and distribution reduces
the Company's cost of merchandise and related
transportation costs. Third, because distribution can
be made to stores frequently, the Company is able to
reduce the in-store stockroom space and maximize the
square footage available for retail selling. Fourth,
the Company is able to lower its total level of
inventory investment and related financing costs.
The Company opened a retail service
center in April, 1994 in Chehalis, Washington
containing approximately 310,000 square feet to serve
as the centralized processing facility for certain
apparel and other nonfood items. This facility will
replace approximately 350,000 square feet of outside
store space currently leased from third parties,
including the Salt Lake City facility. It will also
allow the Company to meet its nonfood distribution
center needs past the year 2000. The Company's new
Chehalis facility is designed to minimize the required
handling and processing of goods received from vendors
and distributed to the Company's stores. The Company
believes that this "flow through" system will enable it
to improve inventory management and to further reduce
the distribution costs for the goods shipped through
the Chehalis facility. The Company is also developing
plans for a new 600,000 square-foot centralized food
distribution facility in Puyallup, Washington near
Seattle to serve stores in the Puget Sound Region and
Alaska.
The Company operates a large fleet of trucks
for distribution of goods to its retail stores and
operates a central bakery and dairy.
COMPETITION
The retail merchandising business is highly
competitive and it is projected to become more
competitive in the years to come. Because of the broad
range of merchandise sold by the Company, it competes
with many types of retail companies, including
national, regional, and local supermarkets, discount
stores, drug stores, conventional department stores and
specialty stores. The Company's competitive position
in the retail business varies by type of goods and the
communities in which its stores are located. In the
last few years, many new competitors have entered the
markets in which the Company operates. New competitors
in the past six years include Wal-Mart, Food 4 Less,
Cub Foods, Home Depot, HomeBase, Eagle, Sam's Club and
Incredible Universe. During the same period, the
Company also faced increased competition from existing
major national and regional retailers, including Safeway,
Albertson's, Costco, Lamonts, Mervyn's, PayLess,
Penneys, Carrs, QFC, Kmart, Target, ShopKo and Toys-R-Us.
Notwithstanding the competitive environment and a slowdown
in economic conditions in some of the Company's markets,
the Company has been able to achieve total and comparable
store sales
9
growth averaging 7.8 percent and 3.5 percent,
respectively, over the past five years (based on 52-week
years).
The Company emphasizes customer satisfaction,
large selections of high-quality popular products, and
competitive pricing. In addition, the Company believes
that the convenience, attractiveness and cleanliness of
its stores, together with a sales staff knowledgeable
in specialty areas, enhances its retail sales efforts.
EMPLOYEES
Currently, the Company employs approximately
25,000 full- and part-time employees. Approximately
56 percent of the Company's employees are represented
by 30 different labor unions (or locals). These employees
are covered by 107 different collective bargaining
agreements, none of which covers more than 2,400 employees.
Approximately 35 percent of the agreements will expire
during 1994, including agreements covering employees
in both large metropolitan and smaller nonmetropolitan
areas where the Company operates and at its distribution
facilities in Clackamas, Oregon. The last work stoppage
the Company experienced involved the multiemployer
bargaining unit for food clerks and meatcutters in
Portland, Oregon in 1990. There were no work stoppages
in 1991, 1992 or 1993. The Company believes that it
has good relations with the many unions representing
its employees.
On April 3, 1994 agreements covering
approximately 1,000 employees at the Company's Clackamas
Distribution Center were scheduled to expire. The agreements
have been extended on a day-to-day basis, subject to termination
on seventy-two hour advance written notice. The Company and
the leadership of the unions involved are in negotiation for
a new agreement. No assurance can be given that the parties
will be able to reach new agreements without the occurrence
of a work stoppage.
Item 2. Properties.
- - ------ ----------
As a part of the leveraged buyout transaction
in which the Company was incorporated in 1981, Fred
Meyer Real Estate Properties, Ltd., whose name was
changed in 1991 to Real Estate Properties Limited
Partnership ("Properties"), acquired the real estate
assets of the corporation that was the predecessor to
the Company.
In 1986, the Company amended and restated 76
leases relating to 71 stores, its distribution center,
and four other facilities. The leases provide, among
other things: (1) fixed rent expense in the aggregate
for accounting purposes over the initial term of the
leases at levels below rent expense under the prior
leases for the fiscal year ended January 30, 1988; (2)
initial lease terms generally averaging 20 years; (3)
future rent from certain unrelated subtenants to be
paid to the Company; and (4) seven five-year renewal
options under leases for the 36 leased properties owned
by Metropolitan Life Insurance Company (the
"Institutional Investor") at rents for the first five
option periods below the average rents during the
initial term, and an option for the Company to purchase
any of the leased properties at the end of the initial
term and at the end of each option period. Properties
sold to the Institutional Investor its interest in 36
of the 76 properties which were leased to the Company.
The Institutional Investor is also an investor in
Properties and FMI Associates. At March 1, 1994, FMI
Associates beneficially owned 38.2 percent of the
Company's common stock.
Twenty locations are owned by the Company and
its subsidiaries. The balance of the Company's
locations are leased from the Institutional Investor,
Properties or third parties. All of the Company's
stores and its distribution and processing facilities
are in good condition. Additionally, the Company owns
fifteen parcels of land. Ten are being held for
development of future stores, and three in California
and two in Washington are being held for sale.
10
The following table as of January 29, 1994,
summarizes the remaining lease years, assuming the
exercise of all options, for store locations and the
Company's distribution facilities, warehouses, and
plants.
Distribution Facilities
Store Locations Warehouses & Plants
--------------------------- --------------------------
Remaining Number Square Ft. of % of Total Square Ft. of % of Total
of Lease Years Retail Space Square Ft. Facility Space Square Ft.
- - ---------------- ------------- ---------- -------------- ----------
Less than 5 years 320,405 2.4 265,400 11.1
5 through 15 years 378,871 2.8 0 0.0
16 through 25 years 2,878,206 21.4 122,000 5.1
Over 25 years 7,287,224 54.3 1,527,875 63.8
---------- ----- --------- -----
Total Leased 10,864,706 80.9 1,915,275 80.0
---------- ----- --------- -----
Owned Properties 2,558,435 19.1 479,414 20.0
---------- ----- --------- -----
13,423,141 100.0 2,394,689 100.0
Total ========== ===== ========= =====
Item 3. Legal Proceedings.
- - ------ -----------------
The Company and its subsidiaries are parties
to various legal claims, actions, and complaints which
have arisen in the ordinary course of business.
Although the Company is unable to predict with
certainty whether it will ultimately be successful in
these legal proceedings or, if not, what the impact
might be, management presently believes that
disposition of these matters will not have a material
adverse effect on the Company's consolidated financial
position or consolidated results of operations.
Item 4. Submission of Matters to a
- - ------ Vote of Security Holders.
------------------------
Not applicable.
Item 4(a). Executive Officers of the Registrant.
- - --------- ------------------------------------
As of March 1, 1994, the executive officers
of the Company were as set forth below.
Original
Date of
Name Age Position Employment
- - ---- --- -------- ----------
Robert G. Miller 49 Chairman of the Board and 1991
Chief Executive Officer
Cyril K. Green 62 President and Chief Operating Officer 1947
R. Eric Baltzell 53 Senior Vice President, Stores 1962
Roger J. Bladholm 54 Senior Vice President, Distribution 1973
Centers and Transportation
Roger A. Cooke 45 Senior Vice President, General Counsel 1992
and Secretary
Edward A. Dayoob 54 Senior Vice President, Jewelry Group 1973
Curt A. Lerew, III 46 Senior Vice President, Food Group 1991
11
Keith W. Lovett 50 Senior Vice President, 1992
Human Resources
Ronald J. McEvoy 46 Senior Vice President, 1991
Chief Information Officer
Norman O. Myhr 46 Senior Vice President, 1978
Sales Promotion and Marketing
Cheryl D. Perrin 55 Senior Vice President, Public Affairs 1976
Mary F. Sammons 47 Senior Vice President, General Group 1973
Kenneth Thrasher 44 Senior Vice President - Finance and 1982
Chief Financial Officer
Scott L. Wippel 40 Senior Vice President, 1992
Corporate Facilities
The executive officers of the Company are
elected annually for one year and hold office until
their successors are elected and qualified. There are
no family relationships among the executive officers of
the Company.
Mr. Miller became Chairman of the Board and
Chief Executive Officer of the Company in August of
1991. Prior to that time he was employed by
Albertson's, where his most recent positions were
Executive Vice President of Retail Operations from 1989
to 1991, and Senior Vice President and Regional Manager
from 1985 to 1989. Mr. Miller has 30 years of
experience in the retail food industry.
Mr. Green became President and Chief
Operating Officer in 1972, and has been with the
Company since 1947. He has held many positions with
the Company prior to his election to President.
Mr. Baltzell served as Vice President, Food
Operations of the Company from 1982 until his election
as Senior Vice President, Store Operations Division in
June 1989.
Mr. Bladholm served as Vice President,
Distribution Centers and Plants from 1984 until his
election as Vice President, Distribution Centers,
Plants, and Transportation in 1990. He was elected
Senior Vice President, Distribution Centers, Plants,
and Transportation on April 14, 1992.
Mr. Cooke became Vice President, General
Counsel and Secretary of the Company in August 1992.
He was elected Senior Vice President in April 1993.
From 1982 to 1992, he was an officer of Pan American
World Airways, Inc., serving as Senior Vice President
and General Counsel from 1990 to 1992. From 1973 to
1980, he was associated with the law firm Simpson
Thacher and Bartlett.
Mr. Dayoob served as Vice President, Jewelry
Division of the Company from 1979 until his election as
Senior Vice President, Photo Electronics and Jewelry
Division in June 1989. This Division was renamed the
Home Electronics and Jewelry Group in 1990. The Home
Electronics Division was merged into the General Group
in 1993.
Mr. Lerew became Senior Vice President, Food
Group in October 1991. Prior to that time he was
employed by Albertson's, where his most recent
positions were Senior Vice President and Regional
Manager in 1991, Senior Vice President of Corporate
Merchandising from 1990 to 1991, and Vice
12
President, Western Washington Division, from 1987 to
1990. Mr. Lerew has more than 25 years of experience
in the retail food industry.
Mr. Lovett became Senior Vice President,
Human Resources of the Company in February of 1992.
Prior to that time he was employed by Eagle Food
Centers, where he was Senior Vice President of Human
Resources and Vice President of Industrial Relations.
Mr. Lovett has 22 years of experience in labor
negotiations and human resource management.
Mr. McEvoy became Senior Vice President,
Chief Information Officer in charge of the Company's
Information Services in July 1991. For the year prior
to that, he worked for IBM United States as a business
advisor in the retail industry. From 1987 to 1990, he
was Senior Vice President for Management Information
Systems (MIS) for J.B. Ivey. He held the same position
from 1983 to 1987 with John Wanamaker. He also held
various MIS and financial positions with Hecht's from
1969 to 1983. Mr. McEvoy has 23 years of experience in
the retail industry.
Mr. Myhr served as Vice President, Sales
Promotion of the Company from 1982 until his election
as Senior Vice President, Strategic Marketing in June
1989. He now serves as Senior Vice President, Sales
Promotion and Marketing.
Ms. Perrin served as Vice President,
Government Affairs from 1985 until her election as Vice
President, Public Affairs in 1988. She was elected
Senior Vice President, Public Affairs in April 1992.
Ms. Sammons served as Vice President within
the Soft Goods Division of the Company from 1980 until
her election as Senior Vice President, Soft Goods
Division in January 1986. In June 1989, she was
elected Senior Vice President, General Merchandise
Division. This Division was renamed the General Group
in 1990.
Mr. Thrasher served as Vice President,
Corporate Treasurer of the Company from 1982 until his
election as Vice President - Finance, Chief Financial
Officer, and Secretary in June 1987. He was elected
Senior Vice President - Finance effective March 1989.
Mr. Wippel became Vice President, Corporate
Facilities in June 1992. He was elected Senior Vice
President in April 1993. Prior to that, he was
employed by Albertson's, where his most recent
positions were Vice President of Real Estate from 1990
to 1992 and Director of Real Estate from 1988 to 1990.
PART II
Item 5. Market for the Registrant's Common
- - ------ Stock and Related Stockholder Matters.
-------------------------------------
The information required by this item is
included under "Common Stock Information" on page 20 of
the Company's 1993 Annual Report to Shareholders and is
incorporated herein by reference.
Item 6. Selected Financial Data.
- - ------ -----------------------
The information required by this item is
included under "Selected Financial Data" on pages 16
and 17 of the Company's 1993 Annual Report to
Shareholders and is incorporated herein by reference.
13
Item 7. Management's Discussion and
- - ------ Analysis of Financial Condition
and Results of Operations.
-------------------------
The information required by this item is
included under "Management's Discussion and Analysis"
on pages 18 through 20 of the Company's 1993 Annual
Report to Shareholders and is incorporated herein by
reference.
Item 8. Financial Statements and Supplementary Data.
- - ------ -------------------------------------------
The information required by this item is
incorporated by reference from the Company's 1993
Annual Report to Shareholders as listed in Item 14 of
Part IV of this Report.
Item 9. Changes in and Disagreements with Accountants
- - ------ on Accounting and Financial Disclosure.
--------------------------------------
Not applicable.
PART III
Item 10. Directors and Executive
- - ------- Officers of the Registrant.
--------------------------
Information with respect to directors of the
Company is included under "Election of Directors" in
the Company's Proxy Statement for its 1994 Annual
Meeting of Shareholders and is incorporated herein by
reference. Information with respect to executive
officers of the Company is included under Item 4(a) of
Part I of this Report.
Item 11. Executive Compensation.
- - ------- ----------------------
Information with respect to executive
compensation is included under "Executive Compensation"
in the Company's Proxy Statement for its 1994 Annual
Meeting of Shareholders and is incorporated herein by
reference, except for items appearing under the
subheadings "Compensation Committee Report on Executive
Compensation" and "Comparison of Five Year Cumulative
Total Return" which are not incorporated herein.
Item 12. Security Ownership of Certain
- - ------- Beneficial Owners and Management.
--------------------------------
Information with respect to security
ownership of certain beneficial owners and management
is included under "Voting Securities and Principal
Shareholders" and "Election of Directors" in the
Company's Proxy Statement for its 1994 Annual Meeting
of Shareholders and is incorporated herein by
reference.
Item 13. Certain Relationships and
Related Transactions.
- - ------- --------------------
Information required by this item is included
under "Certain Transactions" in the Company's Proxy
Statement for its 1994 Annual Meeting of Shareholders
and is incorporated herein by reference.
PART IV
Item 14. Exhibits, Financial Statement
- - ------- Schedules, and Reports on Form 8-K.
----------------------------------
(a)(1) Financial Statements.
The following documents are included in the
Company's 1993 Annual
14
Report to Shareholders at the pages indicated and are
incorporated herein by reference:
Page in 1993 Annual
Report to Shareholders
----------------------
Fred Meyer, Inc. and Subsidiaries:
Consolidated Balance Sheets -
January 29, 1994 and January 30, 1993 22-23
Statements of Consolidated Operations -
Years Ended January 29, 1994, January 30, 1993
and February 1, 1992 21
Statements of Consolidated Cash Flows -
Years Ended January 29, 1994, January 30, 1993
and February 1, 1992 24
Statements of Changes in Consolidated
Stockholders' Equity -
Years Ended February 1, 1992,
January 30, 1993 and January 29, 1994 25
Notes to Consolidated Financial Statements 26-31
Independent Auditors' Report 32
(a)(2) Financial Statement Schedules.
-----------------------------
The following schedules and related
independent auditors' report are filed herewith:
Independent Auditors' Report
Schedule II - Notes Receivable from Related Parties
Schedule V - Property, Plant, and Equipment
Schedule VI - Accumulated Depreciation and
Amortization of Property, Plant,
and Equipment
Schedule X - Supplementary Income Statement
Information
All other schedules are omitted as the
required information is inapplicable or is presented in
the financial statements or related notes thereto.
(a)(3) Exhibits.
--------
3A Restated Certificate of Incorporation of Fred Meyer, Inc. Incorporated by
reference to Exhibit 3A to the Company's Registration Statement on Form S-1,
Registration No. 33-8574.
3B Amended and Restated Bylaws of Fred Meyer, Inc. Incorporated by reference to
Exhibit 4B to the Company's Registration Statement on Form S-8, Registration
No. 33-49638.
4A Specimen Stock Certificate. Incorporated by reference to Exhibit 4C to the
Company's Registration Statement on Form S-3, Registration No. 33-67670.
4B Credit Agreement dated as of June 15, 1990, as amended June 25, 1990, among Fred
Meyer, Inc., various banks named therein, and Continental Bank, N.A., as Agent
("Credit Agreement"). Incorporated by reference to Exhibit 4 to the Company's
Quarterly Report on Form 10-Q for the quarter ended August 18, 1990 (File
No.0-15023). Second Amendment and Extension of Credit Agreement dated as of June
28, 1991. Incorporated by reference to Exhibit 4 to the Company's Quarterly
Report on Form 10-Q for the quarter ended August 17, 1991 (File No. 0-15023).
Third Amendment to Credit Agreement dated as of January 29, 1992.
15
Incorporated by reference to Exhibit 4 to the Company's Annual Report on Form 10-K
for the year ended February 1, 1992. Fourth Amendment and Extension to Credit
Agreement dated as of July 31, 1992. Incorporated by reference to Exhibit 4D to
the Company's Registration Statement on Form S-3, Registration
No. 33-67670. Fifth Amendment and Extension to Credit Agreement dated as of July
31, 1993. Incorporated by reference to Exhibit 4D to the Company's Registration
Statement on Form S-3, Registration No. 33-67670.
4C Term Promissory Notes in an original aggregate principal amount of $70,000,000,
including the Intercreditor Agreement dated June 29, 1993 among the Company, and
various banks and financial institutions named therein. Incorporated by reference
to Exhibit 4E to the Company's Registration Statement on Form S-3, Registration
No. 33-67670.
10A-1 Fred Meyer, Inc. 1983 Stock Option Plan, as amended. Incorporated by reference to
Exhibit 10D to the Company's Annual Report on Form 10-K for the year ended January
28, 1989 (File No. 0-15023).
10A-2 Fred Meyer, Inc. 1990 Stock Incentive Plan, as amended. Incorporated by reference
to Exhibit 28 to the Company's Quarterly Report on Form 10-Q for the quarter ended
August 18, 1990 (File No. 0-15023).
10B Fred Meyer, Inc. Bonus Plan Description, as amended.
10C Assumption Agreement and Unconditional Guaranty of Certain Obligations, dated
December 11, 1981, among Fred Meyer, Inc., The Predecessor Company, DTC
Acquisition Corporation, and Real Estate Properties Limited Partnership (formerly
Fred Meyer Real Estate Properties, Ltd.). Incorporated by reference to Exhibit
10FF to the Company's Registration Statement on Form S-1, Registration No. 2-
87139.
10D Fred Meyer, Inc. Management Cash Incentive Program. Incorporated by reference to
Exhibit 10G to the Company's Registration Statement on Form S-1, Registration No.
33-8574.
10E Fred Meyer, Inc. Excess Deferral Plan. Incorporated by reference to Exhibit 10G
to the Company's Annual Report on Form 10-K for the year ended January 30, 1988
(File No. 0-15023). Amendment No. 1 to Fred Meyer, Inc. Excess Deferral Plan.
Incorporated by reference to Exhibit 10G to the Company's Annual Report on Form
10-K for the year ended January 28, 1989 (File No. 0-15023).
10F Non-Employee Directors Stock Compensation Plan, adopted November 17, 1992.
Incorporated by reference to Exhibit 10F to the Company's Annual Report on Form
10-K for the year ended January 30, 1993.
10G Form of contract for Senior Executive Long-Term Disability Program. Incorporated
by reference to Exhibit 10G to the Company's Annual Report on Form 10-K for the
year ended January 30, 1993.
16
10H Fred Meyer Supplemental Income Plan dated January 1, 1994.
10I Employment Agreement between Fred Meyer, Inc. and Robert G. Miller. Incorporated
by reference to Exhibit 28 to the Company's Current Report on Form 8-K dated March
6, 1992 (File No. 0-15023).
10J Indemnity Agreement. Incorporated by reference to Exhibit 10I to the Company's
Registration Statement on Form S-1, Registration No. 33-8574.
10K Form of Lease Agreement for substantially identical leases covering 36 stores and
other locations leased by Fred Meyer, Inc. (or a wholly owned subsidiary) from
Real Estate Properties Limited Partnership (formerly Fred Meyer Real Estate
Properties, Ltd.) including form of Assignment of Master Lease wherein Fred Meyer
Real Estate Properties, Ltd. (now Real Estate Properties Limited Partnership)
assigned its interest to Metropolitan Life Insurance Company and a First Amendment
to Lease Agreement, dated November 25, 1986, with appendices containing certain
nonstandard provisions of the Lease Agreement and the First Amendment; Collateral
Matters Agreement and Indemnification Agreement, each dated November 25, 1986,
between Fred Meyer, Inc. and Metropolitan Life Insurance Company. Incorporated by
reference to Exhibit 10I to the Company's Annual Report on Form 10-K for the year
ended January 31, 1987 (File No. 0-15023). Memorandum of First Amendment to Lease
Agreement, dated March 6, 1987, between Metropolitan Life Insurance Company
("Metropolitan"), Landlord and Fred Meyer, Inc., Tenant; and Assignment of Master
Lease, dated March 6, 1987, between Real Estate Properties Limited Partnership
(formerly Fred Meyer Real Estate Properties, Ltd.) (Assignor) and Metropolitan
(Assignee) for Nampa, Idaho. Incorporated by reference to Exhibit 10I to the
Company's Annual Report on Form 10-K for the year ended January 30, 1988 (File No.
0-15023).
10L Form of Lease Agreement for substantially identical leases covering 27 stores and
other locations subleased by Fred Meyer, Inc. (or a wholly owned subsidiary) from
Real Estate Properties Limited Partnership (formerly Fred Meyer Real Estate
Properties, Ltd.) with appendices containing certain nonstandard provisions
contained in the Lease Agreement. Incorporated by reference to Exhibit 10J to the
Company's Annual Report on Form 10-K for the year ended January 31, 1987 (File No.
0-15023). Appendices containing certain additional nonstandard provisions.
Incorporated by reference to Exhibit 10J to the Company's Annual Reports on Form
10-K for the years ended January 28, 1989, February 3, 1990, and February 2, 1991
(File No. 0-15023). Certain lease modifications for Burien, Washington facility.
Incorporated by reference to Exhibit 10K to the Company's Annual Report on Form
10-K for the year ended January 30, 1993.
10M Form of Sublease, dated May 1, 1984, Fred Meyer Real Estate Properties, Ltd. (now
Real Estate Properties Limited Partnership), Lessor to Fred Meyer, Inc., Lessee
for the Stadium Parking Lot. Incorporated by reference to Exhibit 10J(6) to the
Company's Registration Statement on Form S-1, Registration No. 33-8574.
17
10N Form of Sublease, dated May 1, 1984, Fred Meyer Real Estate Properties, Ltd. (now
Real Estate Properties Limited Partnership), Lessor to Roundup Co., Lessee for
Photo Plant Parking Lot. Incorporated by reference to Exhibit 10J(7) to the
Company's Registration Statement on Form S-1, Registration No. 33-8574.
10O Lease Agreement, dated October 22, 1986, including Amendment, dated April 30,
1987, between Fred Meyer Real Estate Properties, Ltd. (now Real Estate Properties
Limited Partnership), and Roundup Co. for Midway store. Incorporated by reference
to Exhibit 10N to the Company's Annual Report on Form 10-K for the year ended
January 31, 1987 (File No. 0-15023).
10P Lease Agreement, dated February 1, 1990, relating to additional property adjacent
to Oak Grove store location between Vanoak Corporation, Lessor, and Fred Meyer,
Inc., Lessee. Incorporated by reference to Exhibit 10P to the Company's Annual
Report on Form 10-K for the year ended February 2, 1991 (File No. 0-15023).
10Q Lease Agreement, dated February 19, 1987, including Addendum, dated September 16,
1987, between Fred Meyer, Inc., as Lessee, and Duane Company, as Lessor, for the
Gateway store. Incorporated by reference to Exhibit 10Q to the Company's Annual
Report on Form 10-K for the year ended January 30, 1988 (File No. 0-15023).
Addendum No. 2 to Lease Agreement. Incorporated by reference to Exhibit 10Q to
the Company's Annual Report on Form 10-K for the year ended February 2, 1991 (File
No. 0-15023).
10R Assignment of Lease, dated August 13, 1987, between Fred Meyer, Inc. and Fred
Meyer Real Estate Properties, Ltd. (now Real Estate Properties Limited
Partnership) for Newport store. Incorporated by reference to Exhibit 10R to the
Company's Annual Report on Form 10-K for the year ended January 30, 1988 (File No.
0-15023).
10S Lease Agreement, dated December 12, 1988, between Fred Meyer, Inc., as Lessee, and
Fifth Avenue Corporation, as Lessor, for the Burlingame store. Incorporated by
reference to Exhibit 10S to the Company's Annual Report on Form 10-K for the year
ended January 28, 1989 (File No. 0-15023).
10T Assignment of Lease and Termination of Subleases, dated as of February 7, 1992
between Fred Meyer, Inc. and Real Estate Properties Limited Partnership (formerly
Fred Meyer Real Estate Properties, Ltd.) for Sixth and Alder location.
Incorporated by reference to Exhibit 10S to the Company's Annual Report on Form
10-K for the year ended January 30, 1993.
10U Purchase and Sale and Lease Termination Agreement, dated May 22, 1992 between Fred
Meyer, Inc. and Real Estate Properties Limited Partnership (formerly Fred Meyer
Real Estate Properties, Ltd.) for the Swan Island Dairy facility. Incorporated by
reference to Exhibit 10T to the Company's Annual Report on Form 10-K for the year
ended January 30, 1993.
10V Purchase and Sale and Lease Termination Agreement, dated October 27, 1992 between
Fred Meyer, Inc. and Union Central Company, controlled by Real Estate Properties
Limited Partnership (formerly Fred Meyer Real Estate
18
Properties, Ltd.) for the Main Office facility. Incorporated by reference to
Exhibit 10U to the Company's Annual Report on Form 10-K for the year ended
January 30, 1993.
10W Assignment of Lease dated April 12, 1993 between Fred Meyer, Inc. and Real Estate
Properties Limited Partnership ("REPL") for Southeast store, including the Lease
Modification Agreement, dated April 12, 1993 between Southeast Company and REPL.
11 Computation of Earnings per Common Share.
13 Portions of the Annual Report to Shareholders of the Company for the year ended
January 29, 1994 are incorporated by reference herein.
21 List of Subsidiaries.
23 Consent of Deloitte & Touche.
24 Powers of Attorney.
(b) Reports on Form 8-K.
-------------------
No reports on Form 8-K were filed by the Company during the last quarter of the year
ended January 29, 1994.
/TABLE
19
SIGNATURES
----------
Pursuant to the requirements of Section 13 or
15(d) of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly
authorized.
FRED MEYER, INC.
Date: April 26, 1994 By KENNETH THRASHER
----------------
Kenneth Thrasher,
Chief Financial Officer,
Senior Vice President-
Finance
Pursuant to the requirements of the Securities
Exchange Act of 1934, this report has been signed below
by the following persons on behalf of the registrant
and in the capacities indicated on April 26, 1994.
Signature Title
--------- -----
(1) Principal Executive Officer
ROBERT G. MILLER Chairman of the
- - ------------------------------ Board and Chief
Robert G. Miller Executive Officer
(2) Principal Financial Officer
KENNETH THRASHER Chief Financial
- - ------------------------------ Officer, Senior Vice
Kenneth Thrasher President - Finance
(3) Principal Accounting Officer
THOMAS R. HUGHES Vice President
- - ------------------------------ and Controller
Thomas R. Hughes
(4) Directors
* JEROME KOHLBERG, JR. Director
- - ------------------------------
Jerome Kohlberg, Jr.
20
* PAUL E. RAETHER Director
- - ------------------------------
Paul E. Raether
* SAUL A. FOX Director
- - ------------------------------
Saul A. Fox
* MICHAEL W. MICHELSON Director
- - ------------------------------
Michael W. Michelson
* ROGER S. MEIER Director
- - ------------------------------
Roger S. Meier
* A.M. GLEASON Director
- - ------------------------------
A.M. Gleason
* By KENNETH THRASHER
-------------------------
Kenneth Thrasher
As Attorney in Fact
21
INDEPENDENT AUDITORS' REPORT
Fred Meyer, Inc.:
We have audited the consolidated financial statements
of Fred Meyer, Inc. and subsidiaries as of January 29,
1994 and January 30, 1993, and for each of the three
fiscal years in the period ended January 29, 1994, and
have issued our report thereon dated March 7, 1994
(which expresses an unqualified opinion and includes an
explanatory paragraph relating to a change in method of
accounting for incomes taxes in the fiscal year ended
January 29, 1994 and other postretirement benefits in
the fiscal year ended January 30, 1993); such financial
statements and report are included in your 1993 Annual
Report to shareholders and are incorporated herein by
reference. Our audits also included the financial
statement schedules of Fred Meyer, Inc., listed in Item
14. These financial statement schedules are the
responsibility of the Company's management. Our
responsibility is to express an opinion based on our
audits. In our opinion, such financial statement
schedules, when considered in relation to the basic
financial statements taken as a whole, present fairly
in all material respects the information set forth
therein.
DELOITTE & TOUCHE
March 7, 1994
22
FRED MEYER, INC. AND SUBSIDIARIES
SCHEDULE II-NOTES RECEIVABLE FROM RELATED PARTIES
(in thousands)
Balance Balance
Beginning End of
of Period Additions Deductions Period
--------- --------- ---------- -------
YEAR ENDED JANUARY 29, 1994:
R.J. McEvoy . . . . . . . . . . . . . . . . . . . . $ 18 $ 0 $ 18 $ 0
====== ====== ====== ======
YEAR ENDED JANUARY 30, 1993:
R.G. Miller . . . . . . . . . . . . . . . . . . . . $ 975 $ 0 $ 975 $ 0
R.J. McEvoy . . . . . . . . . . . . . . . . . . . . 120 0 102 18
------ ------ ------ ------
TOTAL. . . . . . . . . . . . . . . . . $1,095 $ 0 $1,077 $ 18
====== ====== ====== ======
YEAR ENDED FEBRUARY 1, 1992:
R.G. Miller . . . . . . . . . . . . . . . . . . . . $ 0 $ 975 $ 0 $ 975
R.J. McEvoy . . . . . . . . . . . . . . . . . . . . 0 120 0 120
------ ------ ------ ------
TOTAL. . . . . . . . . . . . . . . . . $ 0 $1,095 $ 0 $1,095
====== ====== ====== ======
/TABLE
23
FRED MEYER, INC. AND SUBSIDIARIES
SCHEDULE V-PROPERTY, PLANT, AND EQUIPMENT
(in thousands)
Balance Balance
Beginning End of
of Period Additions Retirements Period
--------- --------- ----------- -------
YEAR ENDED JANUARY 29, 1994:
Buildings, fixtures, and equipment. . . . . . . . . . . $752,336 $214,600 $(10,576) $ 956,360
Property held under capital leases. . . . . . . . . . . 23,855 --- (4,037) 19,818
Land . . . . . . . . . . . . . . . . . . . . . . . 82,840 34,960 (2,295) 115,505
-------- -------- -------- ----------
TOTAL. . . . . . . . . . . . . . . . . . $859,031 $249,560 $(16,908) $1,091,683
======== ======== ======== ==========
YEAR ENDED JANUARY 30, 1993:
Buildings, fixtures, and equipment. . . . . . . . . . . $647,017 $120,559 $(15,240) $752,336
Property held under capital leases. . . . . . . . . . . 24,991 --- (1,136) 23,855
Land . . . . . . . . . . . . . . . . . . . . . . . . 58,771 24,069 --- 82,840
-------- -------- -------- --------
TOTAL. . . . . . . . . . . . . . . . . . $730,779 $144,628 $(16,376) $859,031
======== ======== ======== ========
YEAR ENDED FEBRUARY 1, 1992:
Buildings, fixtures, and equipment. . . . . . . . . . . $563,499 $103,572 $(20,054) $647,017
Property held under capital leases. . . . . . . . . . . 24,991 --- --- 24,991
Land . . . . . . . . . . . . . . . . . . . . . . . . 57,470 2,310 (1,009) 58,771
-------- -------- -------- --------
TOTAL. . . . . . . . . . . . . . . . . . $645,960 $105,882 $(21,063) $730,779
======== ======== ======== ========
/TABLE
24
FRED MEYER, INC. AND SUBSIDIARIES
SCHEDULE VI-ACCUMULATED DEPRECIATION AND
AMORTIZATION OF PROPERTY, PLANT, AND EQUIPMENT
(in thousands)
Balance Balance
Beginning End of
of Period Additions Retirements Period
--------- --------- ----------- -------
YEAR ENDED JANUARY 29, 1994:
Buildings, fixtures, and equipment. . . . . . . . . . . . $309,113 $69,600 $(12,440) $366,273
Property held under capital leases. . . . . . . . . . . . 7,708 761 (2,397) 6,072
-------- ------- -------- --------
TOTAL. . . . . . . . . . . . . . . . . . . $316,821 $70,361 $(14,837) $372,345
======== ======= ======== ========
YEAR ENDED JANUARY 30, 1993:
Buildings, fixtures, and equipment. . . . . . . . . . . . $244,598 $66,102 $ (1,587) $309,113
Property held under capital leases. . . . . . . . . . . . 7,156 856 (304) 7,708
-------- ------- -------- --------
TOTAL. . . . . . . . . . . . . . . . . . . $251,754 $66,958 $ (1,891) $316,821
======== ======= ======== ========
YEAR ENDED FEBRUARY 1, 1992:
Buildings, fixtures, and equipment. . . . . . . . . . . . $206,294 $56,388 $(18,084) $244,598
Property held under capital leases. . . . . . . . . . . . 6,668 488 --- 7,156
-------- ------- -------- --------
TOTAL. . . . . . . . . . . . . . . . . . . $212,962 $56,876 $(18,084) $251,754
======== ======= ======== ========
25
FRED MEYER, INC. AND SUBSIDIARIES
SCHEDULE X-SUPPLEMENTARY INCOME STATEMENT INFORMATION
(in thousands)
Fiscal Year Ended
-------------------------------------------------------
January 29, January 30, February 1,
1994 1993 1992
---------- ---------- ----------
Advertising Costs . . . . . . . . . . . . . . . . . . . . . . . $33,602 $34,299 $39,763
======= ======= =======
/TABLE
EXHIBIT INDEX
Sequential
Exhibit Page
Number Number
- - ------- ----------
3A Restated Certificate of Incorporation of Fred Meyer, Inc.
Incorporated by reference to Exhibit 3A to the Company's
Registration Statement on Form S-1, Registration No. 33-8574.
3B Amended and Restated Bylaws of Fred Meyer, Inc. Incorporated by
reference to Exhibit 4B to the Company's Registration Statement on
Form S-8, Registration No. 33-49638.
4A Specimen Stock Certificate. Incorporated by reference to Exhibit
4C to the Company's Registration Statement on Form S-3,
Registration No. 33-67670.
4B Credit Agreement dated as of June 15, 1990, as amended June 25,
1990, among Fred Meyer, Inc., various banks named therein, and
Continental Bank, N.A., as Agent ("Credit Agreement").
Incorporated by reference to Exhibit 4 to the Company's Quarterly
Report on Form 10-Q for the quarter ended August 18, 1990 (File
No.0-15023). Second Amendment and Extension of Credit Agreement
dated as of June 28, 1991. Incorporated by reference to Exhibit 4
to the Company's Quarterly Report on Form 10-Q for the quarter
ended August 17, 1991 (File No. 0-15023). Third Amendment to
Credit Agreement dated as of January 29, 1992. Incorporated by
reference to Exhibit 4 to the Company's Annual Report on Form 10-K
for the year ended February 1, 1992. Fourth Amendment and
Extension to Credit Agreement dated as of July 31, 1992.
Incorporated by reference to Exhibit 4D to the Company's
Registration Statement on Form S-3, Registration No. 33-67670.
Fifth Amendment and Extension to Credit Agreement dated as of July
31, 1993. Incorporated by reference to Exhibit 4D to the Company's
Registration Statement on Form S-3, Registration No. 33-67670.
4C Term Promissory Notes in an original aggregate principal amount of
$70,000,000, including the Intercreditor Agreement dated June 29,
1993 among the Company, and various banks and financial
institutions named therein. Incorporated by reference to Exhibit
4E to the Company's Registration Statement on Form S-3,
Registration No. 33-67670.
10A-1 Fred Meyer, Inc. 1983 Stock Option Plan, as amended. Incorporated
by reference to Exhibit 10D to the Company's Annual Report on Form
10-K for the year ended January 28, 1989 (File No. 0-15023).
10A-2 Fred Meyer, Inc. 1990 Stock Incentive Plan, as amended.
Incorporated by reference to Exhibit 28 to the Company's Quarterly
Report on Form 10-Q for the quarter ended August 18, 1990 (File No.
0-15023).
10B Fred Meyer, Inc. Bonus Plan Description, as amended.
10C Assumption Agreement and Unconditional Guaranty of Certain
Obligations, dated December 11, 1981, among Fred Meyer, Inc., The
Predecessor Company, DTC Acquisition Corporation, and Real Estate
Properties Limited Partnership (formerly Fred Meyer Real Estate
Properties, Ltd.). Incorporated by reference to Exhibit 10FF to
the Company's Registration Statement on Form S-1, Registration No.
2-87139.
10D Fred Meyer, Inc. Management Cash Incentive Program. Incorporated
by reference to Exhibit 10G to the Company's Registration Statement
on Form S-1, Registration No. 33-8574.
10E Fred Meyer, Inc. Excess Deferral Plan. Incorporated by reference
to Exhibit 10G to the Company's Annual Report on Form 10-K for the
year ended January 30, 1988 (File No. 0-15023). Amendment No. 1 to
Fred Meyer, Inc. Excess Deferral Plan. Incorporated by reference
to Exhibit 10G to the Company's Annual Report on Form 10-K for the
year ended January 28, 1989 (File No. 0-15023).
10F Non-Employee Directors Stock Compensation Plan, adopted November
17, 1992. Incorporated by reference to Exhibit 10F to the
Company's Annual Report on Form 10-K for the year ended January 30,
1993.
10G Form of contract for Senior Executive Long-Term Disability Program.
Incorporated by reference to Exhibit 10G to the Company's Annual
Report on Form 10-K for the year ended January 30, 1993.
10H Fred Meyer Supplemental Income Plan dated January 1, 1994.
10I Employment Agreement between Fred Meyer, Inc. and Robert G. Miller.
Incorporated by reference to Exhibit 28 to the Company's Current
Report on Form 8-K dated March 6, 1992 (File No. 0-15023).
10J Indemnity Agreement. Incorporated by reference to Exhibit 10I to
the Company's Registration Statement on Form S-1, Registration No.
33-8574.
10K Form of Lease Agreement for substantially identical leases covering
36 stores and other locations leased by Fred Meyer, Inc. (or a
wholly owned subsidiary) from Real Estate Properties Limited
Partnership (formerly Fred Meyer Real Estate Properties, Ltd.)
including form of Assignment of Master Lease wherein Fred Meyer
Real Estate Properties, Ltd. (now Real Estate Properties Limited
Partnership) assigned its interest to Metropolitan Life Insurance
Company and a First Amendment to Lease Agreement, dated November
25, 1986, with appendices containing certain nonstandard provisions
of the Lease Agreement and the First Amendment; Collateral Matters
Agreement and Indemnification Agreement, each dated November 25,
1986, between Fred Meyer, Inc. and Metropolitan Life Insurance
Company. Incorporated by reference to Exhibit 10I to the Company's
Annual Report on Form 10-K for the year ended January 31, 1987
(File No. 0-15023). Memorandum of First Amendment to Lease
Agreement, dated March 6, 1987, between Metropolitan Life Insurance
Company ("Metropolitan"), Landlord and Fred Meyer, Inc., Tenant;
and Assignment of Master Lease, dated March 6, 1987, between Real
Estate Properties Limited Partnership (formerly Fred Meyer Real
Estate Properties, Ltd.) (Assignor) and Metropolitan (Assignee) for
Nampa, Idaho. Incorporated by reference to Exhibit 10I to the
Company's Annual Report on Form 10-K for the year ended January 30,
1988 (File No. 0-15023).
10L Form of Lease Agreement for substantially identical leases covering
27 stores and other locations subleased by Fred Meyer, Inc. (or a
wholly owned subsidiary) from Real Estate Properties Limited
Partnership (formerly Fred Meyer Real Estate Properties, Ltd.) with
appendices containing certain nonstandard provisions contained in
the Lease Agreement. Incorporated by reference to Exhibit 10J to
the Company's Annual Report on Form 10-K for the year ended January
31, 1987 (File No. 0-15023). Appendices containing certain
additional nonstandard provisions. Incorporated by reference to
Exhibit 10J to the Company's Annual Reports on Form 10-K for the
years ended January 28, 1989, February 3, 1990, and February 2,
1991 (File No. 0-15023). Certain lease modifications for Burien,
Washington facility. Incorporated by reference to Exhibit 10K to
the Company's Annual Report on Form 10-K for the year ended January
30, 1993.
10M Form of Sublease, dated May 1, 1984, Fred Meyer Real Estate
Properties, Ltd. (now Real Estate Properties Limited Partnership),
Lessor to Fred Meyer, Inc., Lessee for the Stadium Parking Lot.
Incorporated by reference to Exhibit 10J(6) to the Company's
Registration Statement on Form S-1, Registration No. 33-8574.
10N Form of Sublease, dated May 1, 1984, Fred Meyer Real Estate
Properties, Ltd. (now Real Estate Properties Limited Partnership),
Lessor to Roundup Co., Lessee for Photo Plant Parking Lot.
Incorporated by reference to Exhibit 10J(7) to the Company's
Registration Statement on Form S-1, Registration No. 33-8574.
10O Lease Agreement, dated October 22, 1986, including Amendment, dated
April 30, 1987, between Fred Meyer Real Estate Properties, Ltd.
(now Real Estate Properties Limited Partnership), and Roundup Co.
for Midway store. Incorporated by reference to Exhibit 10N to the
Company's Annual Report on Form 10-K for the year ended January 31,
1987 (File No. 0-15023).
10P Lease Agreement, dated February 1, 1990, relating to additional
property adjacent to Oak Grove store location between Vanoak
Corporation, Lessor, and Fred Meyer, Inc., Lessee. Incorporated by
reference to Exhibit 10P to the Company's Annual Report on Form 10-
K for the year ended February 2, 1991 (File No. 0-15023).
10Q Lease Agreement, dated February 19, 1987, including Addendum, dated
September 16, 1987, between Fred Meyer, Inc., as Lessee, and Duane
Company, as Lessor, for the Gateway store. Incorporated by
reference to Exhibit 10Q to the Company's Annual Report on
Form 10-K for the
year ended January 30, 1988 (File No. 0-15023). Addendum
No. 2 to Lease Agreement. Incorporated by reference to Exhibit 10Q
to the Company's Annual Report on Form 10-K for the year ended
February 2, 1991 (File No. 0-15023).
10R Assignment of Lease, dated August 13, 1987, between Fred Meyer,
Inc. and Fred Meyer Real Estate Properties, Ltd. (now Real Estate
Properties Limited Partnership) for Newport store. Incorporated by
reference to Exhibit 10R to the Company's Annual Report on
Form 10-K for the year ended January 30, 1988 (File No. 0-15023).
10S Lease Agreement, dated December 12, 1988, between Fred Meyer, Inc.,
as Lessee, and Fifth Avenue Corporation, as Lessor, for the
Burlingame store. Incorporated by reference to Exhibit 10S to the
Company's Annual Report on Form 10-K for the year ended January 28,
1989 (File No. 0-15023).
10T Assignment of Lease and Termination of Subleases, dated as of
February 7, 1992 between Fred Meyer, Inc. and Real Estate
Properties Limited Partnership (formerly Fred Meyer Real Estate
Properties, Ltd.) for Sixth and Alder location. Incorporated by
reference to Exhibit 10S to the Company's Annual Report on
Form 10-K for the year ended January 30, 1993.
10U Purchase and Sale and Lease Termination Agreement, dated May 22,
1992 between Fred Meyer, Inc. and Real Estate Properties Limited
Partnership (formerly Fred Meyer Real Estate Properties, Ltd.) for
the Swan Island Dairy facility. Incorporated by reference to
Exhibit 10T to the Company's Annual Report on Form 10-K for the
year ended January 30, 1993.
10V Purchase and Sale and Lease Termination Agreement, dated October
27, 1992 between Fred Meyer, Inc. and Union Central Company,
controlled by Real Estate Properties Limited Partnership (formerly
Fred Meyer Real Estate Properties, Ltd.) for the Main Office
facility. Incorporated by reference to Exhibit 10U to the
Company's Annual Report on Form 10-K for the year ended January 30,
1993.
10W Assignment of Lease dated April 12, 1993 between Fred Meyer, Inc.
and Real Estate Properties Limited Partnership ("REPL") for
Southeast store, including the Lease Modification Agreement, dated
April 12, 1993 between Southeast Company and REPL.
11 Computation of Earnings per Common Share.
13 Portions of the Annual Report to Shareholders of the Company for
the year ended January 29, 1994 are incorporated by reference
herein.
21 List of Subsidiaries.
23 Consent of Deloitte & Touche.
24 Powers of Attorney.