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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 1995
Commission File Number 1-1011
MELVILLE CORPORATION
(Exact name of registrant as specified in its charter)
New York 04-1611460
(State of incorporation) (IRS Employer Identification No.)
One Theall Road, Rye, NY 10580
(Address of principal executive offices)
Registrant's telephone number, including area code: (914) 925-4000
Securities registered pursuant to Section 12(b) of the Act:
Name of each exchange
Title of each class on which registered
- ------------------- -------------------
Common stock (par value New York Stock Exchange
$1 per share)
Securities registered pursuant to Section 12(g) of the Act: None
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 the definitive proxy statement incorporated
by reference in Part III of this Form 10-K, or any amendment to this Form 10-K.
Yes (No disclosures are contained herein) X No ___
As of March 1, 1996, the aggregate market value of the voting stock* held by
non-affiliates** which was computed by reference to the price at which the stock
was last traded was $3,433,331,349.
Number of shares outstanding of the issuer's Common Stock (par value $1 per
share) at March 1, 1996: 105,218,990.
Documents Incorporated by Reference
l. Annual Report to Shareholders for the year ended December 31, 1995: Part I,
Item 1; Part II, Items 5, 6, 7 and 8; and Part IV, Item 14.
2. Proxy Statement dated March 7, 1996 issued in connection with the annual
meeting of shareholders: Part III, Items 10, 11, 12 and 13.
* Does not include 6,160,405 outstanding shares of Series One ESOP
Convertible Preference Stock ("ESOP Preference Stock"). As of March 1,
1996, each share of ESOP Preference Stock is entitled to one vote per share
on all matters submitted to a vote of the holders of Common Stock.
** Only stock held by directors and officers is excluded.
Item 1. Business
Melville Corporation, a New York corporation (in this Item 1 called the
"Company" and together with its subsidiaries, collectively called the
"Companies"), is one of the largest diversified specialty retailers in the
United States. On October 24, 1995, the Company announced a comprehensive
strategic restructuring program which would result in the creation of three
independent publicly traded retailing companies in the chain drug, footwear and
toy industries. As part of its restructuring, the Company also completed the
sale of its Marshalls business on November 17, 1995, and announced its intention
to try and sell its Wilsons and This End Up businesses. The chain drug holding
company will include the Company's CVS and, initially, its Linens 'n Things and
Bob's Stores businesses. The footwear company will be comprised of the Company's
Meldisco, Footaction and Thom McAn businesses. Because the footwear company
constitutes an entire segment, it has been classified as discontinued operations
in this report and in the Company's financial statements. The Kay-Bee Toy
business was to be the separate toy company. As discussed in more detail below,
the Company subsequently announced that it had reached an agreement to sell its
Kay-Bee Toy business. All of these actions are expected to be completed by the
summer of 1996.
In general, the retailing business is seasonal in nature with each
particular business of the Company affected, to varying degrees, by certain peak
selling periods. The peak selling periods are characterized by inventory
build-ups prior to such periods. The build-ups are financed, in part, with the
2
issuance of commercial paper and bank loan participation notes. To maintain
financial flexibility, the Company also has on file with the Securities and
Exchange Commission a shelf registration statement for the issuance of up to
$300 million in debt securities, including medium-term notes. No debt securities
have been issued to date.
The Christmas holiday is the most significant seasonal selling period for
the Company overall and the peak selling period for its toy and leather apparel
businesses. The peak selling periods, other than the Christmas holiday, for the
Company's non-leather apparel and footwear businesses coincide with the Easter
holiday and the opening of school in the fall. Competition is based upon such
factors as price, style, quality and design of product and the layout and
location of stores.
The Company's principal office is located in Rye, New York. As of December
31, 1995, the Companies had approximately 97,000 full and part-time associates.
BUSINESS SEGMENT INFORMATION
The Company is principally a specialty retailer conducting business in the
three major segments listed below:
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- Prescription drugs, health and beauty care retailing.
- Apparel retailing, which includes men's and women's specialty and
leather apparel and brand name and private label apparel for men,
women and children.
- Toys and home furnishings retailing, which includes retailing of toys,
domestics and furniture (as well as furniture manufacturing).
Because the Company announced its intention to spin-off its footwear
segment to shareholders in 1996 as part of its restructuring plan, the results
of operations for these footwear businesses have been classified as discontinued
operations for all periods presented in the consolidated statements of
operations in the Company's Annual Report to Shareholders incorporated herein by
reference. The financial information concerning industry segments required by
Item 101(b) of Regulation S-K is set forth on page 36 of the Company's Annual
Report to Shareholders for the year ended December 31, 1995, and is incorporated
herein by reference.
PRESCRIPTION DRUGS, HEALTH AND BEAUTY CARE RETAILING
On December 31, 1995, the Companies operated 1,366 prescription drugs,
health and beauty care stores in 14 states and the District of Columbia under
the name "CVS", substantially all of which have pharmacies. Net sales for these
4
stores for 1995 represented approximately 50.2% of the net sales of the
Companies' continuing operations.
These stores are considered "destination" stores and are located primarily
in "strip" shopping centers and freestanding units. In the prescription drugs,
health and beauty care retailing business, the Company counts itself among the
largest retailers in terms of number of stores in its primary marketing
territories, which is the mid-Atlantic and Northeast United States. The monthly
business periodical entitled "Chain Drug Review" has ranked CVS fourth in number
of stores and sixth in dollar volume among the top ten drug store chains in the
United States based upon dollar volume and store count. These stores also
compete with general merchandise stores, supermarkets and mail order pharmacies.
PharmaCare started in 1994 as a full service prescription benefits
management company that markets and administers prescription benefit programs
directly to managed care organizations, employers, and other health insurance
companies. PharmaCare was formed to serve as the strategic marketing arm of CVS.
It has developed a range of service offerings to distinguish CVS and PharmaCare
in the prescription management market.
APPAREL RETAILING
On December 31, 1995, the Companies operated 548 men's and women's leather
and suede apparel and accessory stores, which are located primarily in regional
5
shopping malls in 46 states, the District of Columbia and the United Kingdom
under the names "Wilsons Suede & Leather", "Wilsons The Leather Experts",
"Tannery West", "Bermans The Leather Experts", "Bermans", "Snyder Leather
Outlets", "Pelle Cuir" and "Georgetown Leather Design". Net sales for 1995 in
these stores represented approximately 4.7% of the net sales of the Companies'
continuing operations.
On December 31, 1995, the Companies operated 34 stores selling casual
clothing and footwear for the entire family under the name "Bob's Stores",
principally in "strip" shopping centers located in Connecticut, Massachusetts,
New York, New Jersey, Rhode Island, Pennsylvania, New Hampshire, Virginia and
Maryland. Net sales at Bob's stores for 1995 represented approximately 3.6% of
the net sales of the Companies' continuing operations.
TOYS AND HOME FURNISHINGS
On December 31, 1995, the Companies operated 1,004 toy and hobby stores in
all 50 states and Puerto Rico under the names "Kay-Bee Toys" and "Toy Works". As
discussed in more detail below, the Company announced on March 25, 1996, that it
expects to complete the sale of this toy business to Consolidated Stores
Corporation in May 1996. The Kay-Bee Toys stores are located primarily in
regional shopping malls. The Toy Works stores are located primarily in "strip"
shopping centers
6
and freestanding units. Net sales in toy and hobby stores for 1995 represented
approximately 11.1% of the net sales of the Companies' continuing operations.
On December 31, 1995, the Companies operated 155 quality brand name linens,
towels, bath and other household items stores, which are located primarily in
"strip" shopping centers in 29 states under the name "Linens 'n Things". Linens
'n Things' net sales for 1995 represented approximately 5.7% of the net sales of
the Companies' continuing operations.
On December 31, 1995, the Companies operated 228 stores carrying a
distinctive line of casual furniture and coordinated accessories for residential
and commercial use, located primarily in regional shopping malls in 33 states,
under the names "This End Up" and "Wood's End". Net sales of furniture for 1995
represented approximately 1.4% of the net sales of the Companies' continuing
operations.
In the toy retailing business, the Company is among the largest toy and
hobby chain store operators in the United States in terms of sales, as well as
number of retail outlets. Based upon sales volume, the business periodical
"Discount Store News" has ranked Kay-Bee among the top toy specialty chains in
the United States.
In the home furnishings retailing business, the Company believes itself to
be a significant factor in the markets for the products which it carries. Based
on total revenues, This End Up has been ranked by "Furniture Today", a weekly
7
business periodical, as the 17th largest home furnishing retailer in the United
States.
Manufacturing
During 1995, the Company, through This End Up Furniture Company,
manufactured a distinctive line of casual furniture in seven factories located
in the Southeast United States. Approximately 99% of the furniture manufactured
is sold through the Company's This End Up division. The Company believes that
these factories have the capacity to supply all of the sales volume requirements
of its "This End Up" and "Wood's End" retail stores and currently these
factories supply substantially all of such requirements.
This End Up Furniture Company manufactures a large portion of its furniture
from southern yellow pine, which is in plentiful supply in the Southeastern
United States. Southern yellow pine is a renewable resource and most producers
have reforestation programs in effect.
FOOTWEAR - DISCONTINUED OPERATIONS
As part of the Company's restructuring plan, it plans to spin-off its
footwear operations to shareholders during 1996. As of December 31, 1995, these
included 2,568 leased footwear departments, 439 retail stores under the names
"FOOTACTION USA" and "FOOTACTION For Kids" and 315 retail stores under the names
"Thom McAn" and "B.O.Q.". Collectively, these leased departments and retail
8
stores are located in all 50 states, Puerto Rico, the U.S. Virgin Islands, the
Czech Republic, Slovakia, Mexico, Guam and Singapore.
Each of the leased departments is operated by the Company's Meldisco
division which sells footwear for the entire family. All but 390 of the leased
departments operated during the fiscal year ended December 31, 1995 were located
in Kmart discount department stores in the United States, Puerto Rico, the Czech
Republic, Slovakia, Mexico, Guam and Singapore. The 390 leased departments are
located in Pay Less or Thrifty Drug Stores, and are owned by Thrifty Pay Less,
Inc.
Pursuant to an agreement between the Company and Kmart Corporation
("Kmart") entered into effective July 1, 1995, and an agreement between the
Company and Pay Less Drug Stores Northwest, Inc. dated October 10, 1988, the
Company has the exclusive right to operate the footwear departments in Kmart and
Pay Less Drug stores. All license agreements relating to the Kmart leased
departments expire July 1, 2012 and all agreements relating to Pay Less and
Thrifty Drug stores have terms of 25 years and are subject to certain
performance standards. Rental payments under all such license agreements are
based on a percentage of sales, with additional payments to be made under
certain of the license agreements with Kmart based on profits. The Company has a
51% equity interest, and Kmart has a 49% equity interest, in all the
subsidiaries which operate leased departments in Kmart stores, with the
exception of 35 such subsidiaries in which the Company
9
has a 100% equity interest. The Company has a 100% equity interest in all the
subsidiaries which operate leased departments in Pay Less or Thrifty Drug
Stores. Aggregate net sales for 1995 of Meldisco leased departments represented
approximately 10.3% of the Companies' net sales, including the businesses
classified as discontinued operations.
Footaction stores are located primarily in regional shopping malls. These
stores specialize in brand name casual and athletic footwear and related apparel
for the entire family. Footaction's net sales for 1995 represented approximately
3.7% of the Companies' net sales, including the businesses classified as
discontinued operations.
A majority of the Thom McAn stores are also located in regional shopping
malls and sell footwear and related items for men and women. Thom McAn's net
sales for 1995 represented approximately 1.8% of the Companies' net sales,
including the businesses classified as discontinued operations.
In the footwear retailing business the Companies, through their retail
stores and leased departments, compete with footwear chain store operators and
many other types of footwear retailers, e.g., general merchandise stores,
traditional department stores, mail order businesses and apparel stores.
10
DISPOSITIONS
During 1995, the Company sold its Marshalls division to The TJX Companies,
Inc. for a total purchase price of approximately $600 million, consisting of
$375 million in cash and $175 million in TJX convertible preferred stock, with
the balance representing an adjustment to the purchase price based on the final
accounting for working capital. Net sales for the Marshalls division in 1995
through its date of disposition represented approximately 23.3% of the net sales
of the Companies' continuing operations.
RECENT DEVELOPMENTS
On March 25, 1996, the Company announced that it reached a definitive
agreement for the sale of its Kay-Bee Toys division to Consolidated Stores
Corporation for approximately $315 million, including $215 million in cash and
$100 million in a four-year subordinated note. This transaction, which is
subject to regulatory approval and certain closing conditions, is expected to
close in May, 1996.
Item 2. Properties
The registrant and its subsidiaries lease various retail stores and
warehouse, plant and office facilities. Most of these leases contain initial
terms ranging from 5 to 25 years and many have options for extension beyond the
initial term ranging from 5 to 15 years. Retail stores and office facilities are
leased in nearly all cases.
11
The Company operated twenty-nine distribution centers located in thirteen
states containing an aggregate of approximately 4,375,000 square feet that are
used in the health and beauty aids, linens, furniture and apparel business. All
such distribution centers are leased with the exception of 10 distribution
centers containing an aggregate of approximately 3,324,000 square feet, which
are owned by the registrant or one of its subsidiaries. During 1995, the Company
operated 9 distribution centers located in 7 states containing an aggregate of
approximately 2,189,000 square feet for use in connection with its footwear
operating units. All such distribution centers are leased with the exception of
3 distribution centers containing an aggregate of approximately 909,000 square
feet, which are owned by the registrant or one of its subsidiaries. By the end
of 1996, four of the distribution centers used by these footwear operating will
be closed. Six distribution centers, located in 5 states comprising
approximately 1,238,000 square feet are used in the toy business. All such
distribution centers are leased with the exception of (2) distribution centers
containing an aggregate of approximately, 610,000 square feet, which are owned
by the registrant or one of its subsidiaries.
During the fiscal year ended December 31, 1995, the registrant and its
subsidiaries operated seven factories, all of which were located in North
Carolina and are furniture factories with the total capacity to produce
approximately 1,092,000 pieces of furniture annually. The registrant or one of
12
its subsidiaries own all such factories remaining in operation at the end of the
year.
Item 3. Legal Proceedings
There are no material pending legal proceedings, other than ordinary
routine litigation incidental to the business, to which the registrant or any of
its subsidiaries is a party or of which any of its or their property is the
subject.
Item 4. Submission of Matters to a Vote of Security Holders
There were no matters submitted to a vote of security holders, through
solicitation of proxies or otherwise, during the fourth quarter of the fiscal
year ended December 31, 1995.
13
EXECUTIVE OFFICERS OF THE REGISTRANT
The following is included as an unnumbered item in Part I of this report
since the registrant did not furnish such information in its definitive proxy
statement dated March 7, 1996.
Date Date First
Appointed Appointed an
to Present Officer of
Name/Office Age Office the Registrant
- ----------- --- ------ --------------
Carlos E. Alberini 40 1/10/96 7/12/95
Vice President and
Acting Chief Financial
Officer
James E. Alward 52 3/17/92 3/17/92
Vice President
Norman Axelrod 43 3/07/88 3/07/88
Vice President
(President and
Chief Executive
Officer of
Linens 'n Things)
Nancy R. Christal 37 10/11/95 10/11/95
Vice President
Michael A. Friedheim 52 1/01/94 7/14/82
Vice President
(Chairman and Chief
Executive Officer of
Bob's Stores)
Philip C. Galbo 45 7/13/94 8/01/89
Vice President and
Treasurer
Stanley P. Goldstein 61 1/01/87 4/13/71
Chairman of the
Board and Chief
Executive Officer
14
Date Date First
Appointed Appointed an
to Present Officer of
Name/Office Age Office the Registrant
- ----------- --- ------ --------------
Peggy Kelston 46 12/7/94 12/7/94
Vice President
Robert A. Kemeny 40 7/13/94 7/13/94
Vice President
(President and Chief
Executive Officer of
This End Up)
William C. Kingsford 49 3/12/86 7/13/79
Vice President
Jerald L. Maurer 53 1/01/94 1/01/94
Senior Vice
President
Larry A. McVey 54 3/14/84 3/14/84
Vice President
(President and Chief
Executive Officer of
Thom McAn)
Ralph T. Parks 50 3/10/94 3/10/94
Vice President
(President and Chief
Executive Officer of
Footaction)
Jerald S. Politzer 50 10/09/91 6/21/89
Executive Vice
President
Arthur V. Richards 57 9/13/89 4/12/77
Vice President
and Corporate Secretary
Maureen Richards 39 10/11/95 10/9/91
Vice President and
Assistant Corporate
Secretary
15
Date Date First
Appointed Appointed an
to Present Officer of
Name/Office Age Office the Registrant
- ----------- --- ------ --------------
J. M. Robinson 49 7/13/88 7/13/88
Vice President
(President and Chief
Executive Officer of
Meldisco)
Harvey Rosenthal 53 1/01/94 10/17/84
President and
Chief Operating
Officer
Thomas M. Ryan 43 1/01/94 1/01/94
Vice President
(President and Chief
Executive Officer of CVS)
Joel N. Waller 55 3/11/87 3/11/87
Vice President
(Chairman and Chief
Executive Officer of
Wilsons)
Jeffery A. Warzel 39 1/11/95 1/11/95
Vice President
In each case the term of office extends to the date of the board of
directors meeting following the next annual meeting of shareholders of the
registrant. In addition to the office(s) which they hold in the registrant as
shown above, each of the individuals listed (with the exception of Messrs.
Kingsford, Maurer, Warzel, Ms. Christal and Ms. Kelston) hold various offices in
certain subsidiaries of the registrant. Previous positions and responsibilities
held by each of the above officers with the registrant and for each of the above
officers who have not held the same office(s) with the same responsibilities for
more than the past five years, are indicated below:
16
Carlos A. Alberini - Senior Vice President and Chief Financial Officer
(1990 to May, 1995) of the Bon Ton Stores Inc.
James E. Alward - Director of Taxation (January, 1979 to Present) of
the registrant.
Nancy R. Christal - Vice President of Investor Relations (January,
1992 to September, 1995) and Director of Investor Relations
(January 1991 to December, 1991) of Ogden Corporation.
MichaelA. Friedheim - Executive Vice President (February, 1986 to
January, 1994) of the registrant.
Philip C. Galbo - Treasurer (July, 1989 to Present) of the registrant.
Robert A. Kemeny - Independent Salesman (January, 1991 to July, 1994)
Peggy Kelston - Vice President Human Resources (July, 1989 to
September, 1994) of Calbro Corp.
Jerald L. Maurer - Corporate Vice President of Strategic Human
Resource Management (January, 1992 to January, 1994); of Aetna
Life and Casualty Company; Vice President of Human Resources
(January, 1991 to January, 1992) of Medstat Systems, Inc.
Ralph T. Parks - President of the Footaction division of the
registrant (November, 1991 to Present); Executive Vice
President and Chief Operating Officer (March, 1987 to November,
1991) of Footaction, Inc.
Jerald S. Politzer - Group Vice President (June, 1989 to October,
1991) of the registrant.
Arthur V. Richards - Secretary (April, 1977 to Present) of the
Registrant
Maureen Richards - Corporate and Trademark Counsel and Assistant
Corporate Secretary (October, 1991 to October, 1995) of the
registrant.
Harvey Rosenthal - President and Chief Executive Officer (October,
1984 to January, 1994) of the CVS division of the registrant.
17
Thomas M. Ryan - Executive Vice President (January, 1990 to January,
1994) of the CVS division of the registrant.
Jeffery A. Warzel - Director of Process Improvement (September, 1992 to
January, 1995) of the registrant; Senior Manager (April, 1988
to August, 1992) of Deloitte & Touche LLP.
18
Part II
Item 5. Market Price of and Dividends on the Registrant's
Common Equity and Related Stockholder Matters
The number of holders of the registrant's Common Stock, based upon the
number of record holders, was approximately 6,500 as of December 31, 1995. All
other information required by this item is included in the registrant's Annual
Report to Shareholders for the year ended December 31, 1995 on page 35 and is
incorporated herein by reference.
Item 6. Selected Financial Data
The information required by this item is included in the registrant's
Annual Report to Shareholders for the year ended December 31, 1995 on page 37
and is incorporated herein by reference.
Item 7. Management's Discussion and Analysis of
Financial Condition and Results of Operations
The information required by this item is included in the registrant's
Annual Report to Shareholders for the year ended December 31, 1995 on pages 18
through 22 and is incorporated herein by reference.
Item 8. Financial Statements and Supplementary Data
The information required by this item is included in the registrant's
Annual Report to Shareholders for the year ended December 31, 1995 on pages 24
through 36, and is incorporated herein by reference.
19
Item 9. Changes in and Disagreements with Accountants on Accounting
and Financial Disclosure
During the registrant's two most recent fiscal years or any subsequent
interim period, no event occurred which would require disclosure under this
item.
PART III
Item 10. Directors and Executive Officers of the Registrant
Information regarding the executive officers is furnished under the heading
"EXECUTIVE OFFICERS OF THE REGISTRANT" in Part I of this report since the
registrant did not furnish such information in its definitive proxy statement
dated March 7, 1996.
The other information required by this item is included in the registrant's
definitive proxy statement dated March 7, 1996 on pages 1 through 4 and is
incorporated herein by reference.
Item 11. Executive Compensation
The information required by this item is included in the registrant's
definitive proxy statement dated March 7, 1996 on pages 5 through 11 and page 14
and is incorporated herein by reference.
Item 12. Security Ownership of Certain
Beneficial Owners and Management
The information required by this item is included in the registrant's
definitive proxy statement dated March 7, 1996 on pages 1 through 5 and is
incorporated herein by reference.
20
Item 13. Certain Relationships and Related Transactions
No information is required to be reported by this item.
PART IV
Item 14. Exhibits, Financial Statement Schedules
and Reports on Form 8-K
(a) Documents filed as part of this report:
l. and 2. Financial Statements and Financial Statement Schedules.
The consolidated financial statements of Melville Corporation and its
subsidiary companies incorporated herein by reference to the Annual Report to
Shareholders for the fiscal year ended December 31, 1995 and the related
consolidated financial statement schedule are set forth in the Index to
Consolidated Financial Statements and Schedule on page 28 hereof.
21
3. Exhibits
Exhibit
Table
Number:
(a) The Exhibits filed as part of this report are listed below:
3(a) Restated Certificate of Incorporation, as amended as of April 18, 1990
(incorporated by reference to Exhibit 3 filed with the registrant's
Quarterly Report on Form 10-Q for the fiscal quarter ended June 30,
1990).
3(b) By-Laws, as amended through March 8, 1995 (incorporated by reference to
Exhibit 3 (b) filed with the registrant's Annual Report on Form 10-K
for the fiscal year ended December 31, 1994).
4 No instrument which defines the rights of holders of long and
intermediate debt of the registrant and its subsidiaries is filed
herewith pursuant to Regulation S-K, Item 601(b)(4)(iii)(A) other
than the June 23, 1989 amendment to the Restated Certificate of
Incorporation defining the rights of the holders of the Series One
ESOP Convertible Preference Stock (see above exhibit table number
3(a)). The registrant hereby agrees to furnish a copy of any such
instrument to the Securities and Exchange Commission upon request.
22
Exhibit
Table
Number:
EXECUTIVE COMPENSATION PLANS AND ARRANGEMENTS
10(iii)(A) (i) 1973 Stock Option Plan (incorporated by reference to Exhibit (10)
(iii) (A) (i) to the registrant's Annual Report on Form 10-K for
the fiscal year ended December 31, 1987). (ii) 1987 Stock Option
Plan (incorporated by reference to Exhibit (10) (iii) (A) (iii)
to the registrant's Annual Report on Form 10-K for the fiscal
year ended December 31, 1987).
(iii) 1989 Directors Stock Option Plan (incorporated by reference to
Exhibit B to the registrant's Annual Report on Form 10-K for the
fiscal year ended December 31, 1988).
(iv) Melville Corporation Omnibus Stock Incentive Plan (incorporated
by reference to Exhibit B to the registrant's Annual Report on
Form 10-K for the fiscal year ended December 31, 1989 and Exhibit
A to the registrant's definitive Proxy Statement dated March 7,
1995).
(v) Directors Retirement Plan (incorporated by reference to Exhibit
10(iii)(A)(vi) to the registrant's Annual Report on Form 10-K for
the fiscal year ended December 31, 1992).
(vi) Profit Incentive Plan of Melville Corporation (incorporated by
reference to Exhibit A to the registrant's definitive Proxy
Statement dated March 14, 1994).
23
Exhibit
Table
Number:
(vii) Supplemental Retirement Plan for Select Senior Management of
Melville Corporation I as amended through July, 1995.
(viii) Supplemental Retirement Plan for Select Senior Management of
Melville Corporation II as amended through July, 1995.
(ix) Income Continuation Policy for Select Senior Executives of
Melville Corporation as amended through May 12, 1988
(incorporated by reference to Exhibit 10 (viii) to the
registrant's Annual Report on Form 10-K for the fiscal year ended
December 31, 1994).
(x) Employment Agreement between Jerald L. Maurer and the registrant.
(xi) Employment Agreement between Harvey Rosenthal and the registrant.
(xii) Employment Agreement between Jerald S. Politzer and the
registrant.
11 Statement re: Computation of Per Share Earnings.
12 Statement re: Computation of Ratios.
13 Annual Report to Shareholders for the fiscal year ended December 31, 1995.
(Except for the portions incorporated herein by reference, such report is
furnished for the information of the Securities and Exchange Commission
(SEC) and is not deemed "filed" as part of this Form 10-K report.)
18 Letter re: Change in Accounting Principle.
22 Subsidiaries of the registrant.
24
Exhibit
Table
Number:
- -------
27 Financial Data Schedule.
27A Restated Financial Data Schedule - September 30, 1995
27B Restated Financial Data Schedule - July 1, 1995
27C Restated Financial Data Schedule - April 1, 1995
27D Restated Financial Data Schedule - December 31, 1994
27E Restated Financial Data Schedule - October 1, 1994
25
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.
MELVILLE CORPORATION
By /S/ ARTHUR V. RICHARDS
---------------------------
Arthur V. Richards
Vice President and Secretary
March 29, 1996
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has also been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated.
Signature Title Date
--------- ----- ----
/S/ STANLEY P. GOLDSTEIN Chairman of the Board and
- ----------------------------- Director (Chief Executive
(Stanley P. Goldstein) Officer) March 29, 1996
/S/ CARLOS E. ALBERINI Vice President and
- ----------------------------- Acting Chief Financial
(Carlos E. Alberini) Officer March 29, 1996
/S/ ALLAN J. BLOOSTEIN Director March 25, 1996
- -----------------------------
Allan J. Bloostein)
/S/ W. DON CORNWELL Director March 25, 1996
- -----------------------------
(W. Don Cornwell)
/S/ THOMAS P. GERRITY Director March 23, 1996
- -----------------------------
(Thomas P. Gerrity)
/S/ MICHAEL H. JORDAN Director March 25, 1996
- -----------------------------
(Michael H. Jordan)
26
Signature Title Date
--------- ----- ----
/S/ WILLIAM H. JOYCE Director March 23, 1996
- -----------------------------
(William H. Joyce)
/S/ TERRY R. LAUTENBACH Director March 23, 1996
- -----------------------------
(Terry R. Lautenbach)
/S/ DONALD F. MCCULLOUGH Director March 25, 1996
- -----------------------------
(Donald F. McCullough)
/S/ HARVEY ROSENTHAL President, Chief
- ----------------------------- Operating Officer
(Harvey Rosenthal) and Director March 29, 1996
/S/ IVAN G. SEIDENBERG Director March 23, 1996
- -----------------------------
(Ivan G. Seidenberg)
/S/ PATRICIA CARRY STEWART Director March 23, 1996
- -----------------------------
(Patricia Carry Stewart)
/S/ M. CABELL WOODWARD, JR. Director March 24, 1996
- -----------------------------
(M. Cabell Woodward, Jr.)
27
MELVILLE CORPORATION AND SUBSIDIARY COMPANIES
Index to Consolidated Financial Statements and Schedule
The consolidated financial statements of Melville Corporation and
Subsidiary Companies together with the report on such consolidated financial
statements of KPMG Peat Marwick LLP dated February 15, 1996, which appear on the
pages listed below of the 1995 Annual Report to shareholders, are incorporated
by reference in this Annual Report on Form 10-K.
Page Number
in 1995
Annual Report
to Shareholders
---------------
Independent Auditors' Report .............................. 23
Consolidated Statements of Operations for the years
ended December 31, 1995, 1994 and 1993 ............... 24
Consolidated Balance Sheets as of December 31,
1995 and 1994 ........................................ 25
Consolidated Statements of Shareholders'
Equity for the years ended December 31, 1995,
1994 and 1993 26
Consolidated Statements of Cash Flows for the
years ended December 31, 1995, 1994 and 1993 ......... 27
Notes to Consolidated Financial Statements ................ 28-36
Included in Part IV of this report: Page
----
Consent of Independent Auditors
for Melville Corporation
and Subsidiary Companies ............................. F-1
Independent Auditors' Report on Consolidated
Financial Statement Schedule of Melville Corporation
and Subsidiary Companies ............................. F-2
Consolidated Financial Statement Schedule of Melville Corporation and Subsidiary
Companies for the years ended December 31, 1995, 1994 and 1993:
II - Valuation and Qualifying Accounts ................. S-1
Schedules not included above have been omitted because they are not
applicable or the required information is shown in the consolidated financial
statements or related notes.
28
INDEX TO EXHIBITS
Exhibit
Table
Number:
- -------
3 (a) Restated Certificate of Incorporation, as amended as of April 18,
1990 (incorporated by reference to Exhibit 3 filed with the
registrant's Quarterly Report on Form 10-Q for the fiscal quarter
ended June 30, 1990).
3 (b) By-Laws, as amended through March 8, 1995 (incorporated by
reference to Exhibit 3(b) filed with the registrant's Annual
Report on Form 10-K for the fiscal year ended December 31, 1994).
4 No instrument which defines the rights of holders of long and
intermediate debt of the registrant and its subsidiaries is filed
herewith pursuant to Regulation S-K, Item 601(b)(4)(iii)(A) other
than the June 23, 1989 amendment to the Restated Certificate of
Incorporation defining the rights of the holders of the Series
One ESOP Convertible Preference Stock (see above exhibit table
number 3(a)). The registrant hereby agrees to furnish a copy of
any such instrument to the Securities and Exchange Commission
upon request.
EXECUTIVE COMPENSATION PLANS AND ARRANGEMENTS
10(iii)(A)(i) 1973 Stock Option Plan (incorporated by reference to Exhibit (10)
(iii) (A) (i) to the registrant's Annual Report on Form 10-K for
the fiscal year ended December 31, 1987).
1
Exhibit
Table
Number:
- -------
(ii) 1987 Stock Option Plan (incorporated by reference to Exhibit (10)
(iii) (A) (iii) to the registrant's Annual Report on Form 10-K
for the fiscal year ended December 31, 1987).
(iii)1989 Directors Stock Option Plan (incorporated by reference to
Exhibit B to the registrant's Annual Report on Form 10-K for the
fiscal year ended December 31, 1988).
(iv) Melville Corporation Omnibus Stock Incentive Plan (incorporated
by reference to Exhibit B to the registrant's Annual Report on
Form 10-K for the fiscal year ended December 31, 1989 and Exhibit
A to the registrant's definitive Proxy Statement dated March 7,
1995).
(v) Directors Retirement Plan (incorporated by reference to Exhibit
10(iii)(A)(vi) to the registrant's Annual Report on Form 10-K for
the fiscal year ended December 31, 1992).
(vi) Profit Incentive Plan of Melville Corporation (incorporated by
reference to Exhibit A to the registrant's definitive Proxy
Statement dated March 14, 1994).
(vii)Supplemental Retirement Plan for Select Senior Management of
Melville Corporation I as amended through July, 1995.
(viii) Supplemental Retirement Plan for Select Senior Management of
Melville Corporation II as amended through July, 1995.
2
Exhibit
Table
Number:
- -------
(ix) Income Continuation Policy for Select Senior Executives of
Melville Corporation as amended through May 12, 1988
(incorporated by reference to Exhibit 10 (viii) to the
registrant's Annual Report on Form 10-K for the fiscal year ended
December 31, 1994).
(x) Employment Agreement between Jerald L. Maurer and the registrant.
(xi) Employment Agreement between Harvey Rosenthal and the registrant.
(xii)Employment Agreement between Jerald S. Politzer and the
registrant.
11 Statement re: Computation of Per Share Earnings.
12 Statement re: Computation of Ratios.
13 Annual Report to Shareholders for the fiscal year ended December
31, 1995. (Except for the portions incorporated herein by
reference, such report is furnished for the information of the
Securities and Exchange Commission (SEC) and is not deemed
"filed" as part of this Form 10-K report.)
18 Letter re: Change in Accounting Principle.
22 Subsidiaries of the registrant.
27 Financial Data Schedule.
27A Restated Financial Data Schedule - September 30, 1995
27B Restated Financial Data Schedule - July 1, 1995
27C Restated Financial Data Schedule - April 1, 1995
27D Restated Financial Data Schedule - December 31, 1994
27E Restated Financial Data Schedule - October 1, 1994
3
Consent of Independent Auditors
The Board of Directors and Shareholders
Melville Corporation:
We consent to incorporation by reference in the Registration Statements Numbers
33-40251, 33-17181 and 2-97913 on Form S-8 and Number 33-34946 on Form S-3 of
Melville Corporation of our report dated February 15, 1996, relating to the
consolidated balance sheets of Melville Corporation and subsidiary companies as
of December 31, 1995 and 1994, and the related consolidated statement of
operations, shareholders' equity and cash flows for each of the years in the
three-year period ended December 31, 1995, which report is incorporated by
reference in the December 31, 1995 annual report on Form 10-K of Melville
Corporation and to our report dated February 15, 1996 on the related financial
statement schedule, which report appears in the December 31, 1995 annual report
on Form 10-K of Melville Corporation.
Our reports refer to the adoption of the Financial Accounting Standards Board's
Statement of Financial Accounting Standards No. 121, "Accounting for the
Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of" in
1995, a change in the method of accounting for internally developed software
costs in 1995, and a change in the method of determining retail price indices
used in the valuation of LIFO inventories in 1993.
KPMG Peat Marwick LLP
New York, New York
March 29, 1996
F-1
Independent Auditors' Report
The Board of Directors and Shareholders
Melville Corporation:
Under date of February 15, 1996, we reported on the consolidated balance sheets
of Melville Corporation and subsidiary companies as of December 31, 1995 and
1994, and related consolidated statements of operations, shareholders' equity
and cash flows for each of the years in the three-year period ended December 31,
1995, as contained in the 1995 annual report to shareholders. These consolidated
financial statements and our report thereon are incorporated by reference in the
annual report on Form 10-K for the year 1995. In connection with our audits of
the aforementioned consolidated financial statements, we also audited the
related consolidated financial statement schedule as listed in the accompanying
index. This financial statement schedule is the responsibility of the Company's
management. Our responsibility is to express an opinion on this financial
statement schedule based on our audits.
In our opinion, such financial statement schedule, when considered in relation
to the basic consolidated financial statements taken as a whole, presents
fairly, in all material respects, the information set forth therein.
As discussed on page 28 of the Annual Report to Shareholders, the Company
adopted the provisions of the Financial Accounting Standards Board's Statement
of Financial Accounting Standards No. 121, "Accounting for the Impairment of
Long-Lived Assets and for Long-Lived Assets to Be Disposed of," in 1995, and as
discussed on page 28, the Company changed its policy for accounting for
internally developed software costs in 1995. Also, as discussed on page 30, the
Company changed its method of determining retail prices indices used in the
valuation of LIFO inventories in 1993.
New York, New York
February 15, 1996
F-2
SCHEDULE II
MELVILLE CORPORATION AND SUBSIDIARY COMPANIES
Valuation and Qualifying Accounts
Years ended December 31, 1995, 1994 and 1993
($ in Thousands)
Balance at Additions Charged Balance at
Description Beginning of Year to Costs and Expenses Deductions (1) End of Year
----------- ----------------- --------------------- -------------- -----------
Accounts Receivable:
Allowance for Doubtful Accounts:
Year Ended December 31, 1995 $18,858 $33,836 $19,256 $33,438
======================== ======================= =================== =================
Year Ended December 31, 1994 $32,534 $14,484 $28,160 $18,858
======================== ======================= =================== =================
Year Ended December 31, 1993 $25,131 $23,173 $15,770 $32,534
======================== ======================= =================== =================
(1) Write-offs, net of recoveries
S-1