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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 February 3, 1996
Commission File Number 000-19288
FRED'S, INC.
(Exact Name of Registrant as Specified in its Charter)
TENNESSEE 62-0634010
(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification Number)
4300 New Getwell Road
MEMPHIS, TENNESSEE 38118
(Address of Principal Executive Offices)
Registrant's telephone number, including area code (901) 365-8880
Securities Registered Pursuant to Section 12(b) of the Act:
Title of Each Class Name of Exchange on
Which Registered
Class A Common Stock, no par value NASDAQ Stock Market
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
definitive proxy or information statements incorporated by
reference in Part III of this Form 10-K or any amendment to this
Form 10-K [ ].
As of April 10, 1996, there were 9,335,232 shares outstanding
of the Registrant's Class A no par value voting common stock.
Based on the last reported sale price of $8.00 per share on the
NASDAQ Stock Market on April 10, 1996, the aggregate market value
of the Registrant's Common Stock held by those persons deemed by
the Registrant to be non-affiliates was $59,745,192.
As of April 10, 1996, there were no shares outstanding of the
Registrant's Class B no par value non-voting common stock.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the Annual Report to Shareholders for the year
ended February 3, 1996 are incorporated by reference into Part II,
Items 5, 6, 7 and 8, and into Part IV, Item 14.
Portions of the Proxy Statement for the annual shareholders'
meeting (expected to be held during July 1996) are incorporated
into Part III, Items 10, 11, 12 and 13.
Portions of the Company's Registration Statement on Form S-1
(file no. 33-45637) are incorporated as exhibits into Part IV.
With the exception of those portions that are specifically
incorporated herein by reference, the aforesaid documents are not
to be deemed filed as part of this report.
PART I
Item 1: Business
General
Fred's, Inc. ("Fred's" or the "Company"), founded in 1947,
operates 201 discount general merchandise stores in ten states in
the southeastern United States. Fred's stores generally serve low,
middle and fixed income families located in small to medium sized
towns (approximately 65% of Fred's stores are in markets with
populations of 15,000 or fewer people). Eighty-seven of the
Company's stores have full service pharmacies and there are five
stand-alone Fred's Xpress pharmacies. The Company also markets
goods and services to 34 franchised "Fred's" stores.
Fred's stores stock over 12,000 frequently purchased items
which address the everyday needs of its customers, including
nationally recognized brand name products, proprietary "Fred's"
label products and lower priced off-brand products. Fred's
management believes its customers shop Fred's stores as a result of
the stores' convenient location and size, low opening price points
in key product categories, consistent discount positions in health
and beauty aids and paper and cleaning supplies and regularly
advertised departmental promotions and seasonal specials. Fred's
stores have average selling space of 13,900 square feet and had
average sales of $1,979,000 in 1995.
Business Strategy
The Company's strategy is to meet the general merchandise
needs of the small to medium sized towns it serves by offering a
wider variety of quality merchandise and a more attractive price-
to-value relationship than either drug stores or smaller
variety/dollar stores and a shopper-friendly format which is more
convenient than larger sized discount merchandise stores. The
major elements of this strategy include:
Wide variety of frequently purchased, basic merchandise.
Fred's combines everyday basic merchandise with certain
specialty items to offer its customers a wide selection of
general merchandise. The selection of merchandise is
supplemented by seasonal specials, private label products and
the inclusion of pharmacies in 87 of its stores.
Discount prices. The Company provides value and low prices to
its customers (i.e., a good "price-to-value relationship")
through a coordinated discount strategy. As part of this
strategy, Fred's maintains low opening price points on the
basic items in each of its departments, maintains competitive
prices on the entire stock in the health and beauty aids and
paper and cleaning supplies departments, offers double value
for manufacturers' coupons, and regularly offers seasonal
specials and departmental promotions supported by strong
tabloid, television and radio advertising. During December
1994, Fred's implemented a highly competitive pricing program
that focuses on strong values day in and day out, while
reducing the Company's reliance on promotional activities.
Convenient shopper-friendly environment. Fred's stores are
typically located in a convenient strip shopping center, which
allows for easy access and shorter distances to the store
entrance. Fred's stores are of a manageable size and have an
understandable store layout, wide aisles and fast checkouts.
Expansion Strategy
The Company expects that expansion of the Fred's concept will
occur primarily within its present market area and will be focused
in small to medium sized towns, although the Company may also enter
urban markets where it already has a market presence.
Addition of Stores
Fred's added a net of 17 new stores in 1995 and anticipates
opening up to ten stores and closing ten stores in 1996. The
Company's store prototype has from 10,000 to 15,000 square feet of
selling space. Opening a new store currently costs between
$350,000 and $450,000 for inventory, furniture, fixtures, equipment
and leasehold improvements.
Addition of Pharmacies
The addition of pharmacies to existing stores has increased
comparable store sales by adding sales of pharmaceuticals while
maintaining sales of non-pharmaceutical items. The Company
acquired 19 pharmacies in 1995, of which ten were incremental to
stores that already had a pharmacy, five were established as stand-
alone Fred's Xpress pharmacies, and four were additions to stores
that had not previously had a pharmacy. The Company plans to
acquire at least 15 more pharmacies in 1996. In substantially all
cases, Fred's intends to add pharmacies through the acquisition of
established independent pharmacies (either by employment of
formerly independent pharmacists or purchase of customer lists from
retiring independent pharmacists).
Proposed Acquisition of Rose's
On March 1, 1996, the Company signed a letter of intent to
acquire all of the outstanding stock of Rose's Stores, Inc., a
retailer that operates 105 stores in ten states in the southeastern
United States (primarily North Carolina and Virginia). The merger
is subject to satisfaction of the execution of a definitive merger
agreement, approval by the shareholders of Fred's and Rose's, and
certain other conditions.
Merchandising and Marketing
Management believes that Fred's has a distinctive niche in
that it offers a wider variety of merchandise at a more attractive
price-to-value relationship than either a drug store or smaller
variety/dollar store and is more shopper-friendly than a larger
discount store. The variety and depth of merchandise offered at
Fred's stores in high traffic departments, such as health and
beauty aids and paper and cleaning supplies, are comparable to
those of larger discount retailers. Management believes that its
knowledge of regional and local consumer preferences, developed in
almost fifty years of operation by the Company and its
predecessors, enables the Company to compete effectively in its
region.
Purchasing
The Company's buying activities are directed from the
corporate office by the Executive Vice President-Merchandising who
is supported by three Vice Presidents - Merchandising and a staff
of 22 buyers and assistants. The buyers and assistants are
participants in an incentive compensation program, which is based
upon various factors primarily relating to gross margin returns on
inventory controlled by each individual buyer. The Company
believes that adequate alternative sources of products are
available for all of its categories of merchandise.
Sales Mix
The Fred's store sales mix by major merchandise category
during 1995 was as follows:
Household Goods........................................27.1%
Pharmaceuticals........................................17.7%
Apparel and Linens.....................................17.2%
Health and Beauty Aids.................................16.0%
Paper and Cleaning Supplies............................12.3%
Food and Tobacco Products...............................9.7%
The sales mix varies from store to store depending upon local
consumer preferences and whether the stores include pharmacies and
a full-line of apparel. In 1995, the stores' average customer
transaction size was approximately $11.25, and the number of
customer transactions totaled approximately 33 million.
The Company presently has 81 full-line stores (those stores
with both pharmacy and apparel departments) that have been open
longer than 12 months. The pharmacy department contributed 28% of
the total sales by these full-line stores in 1995. Sales per
selling square foot averaged $157 for full-line stores compared to
$113 for non full-line stores. Average sales per store during 1995
were $2,585,000 for full-line stores compared to $1,434,000 for non
full-line stores.
Products sold under the "Fred's" private label program,
including household cleaning supplies, health and beauty aids,
disposable diapers, pet foods, paper products and a variety of
beverage and other products, constituted approximately 4% of total
sales in 1995. Private label products afford the Company higher
than average gross margins while providing the customer with lower
priced products that are of a quality comparable to that of
competing branded products. An independent laboratory testing
program is used for substantially all of the Company's private
label products.
Highly Competitive Pricing Strategy
The implementation of a new pricing strategy in December 1994
included price reductions for many key items and the elimination of
four sale events for 1995. The price reductions and fewer sale
events resulted in lower sales and negatively impacted gross
margins. However, management expects that as customers begin to
recognize Fred's as a store that offers good values everyday, they
will shop Fred's stores more regularly, not just during sale
events. The Company plans to eliminate an additional four sale
events in 1996.
Advertising and Promotions
Advertising and promotion costs represented 1.9% of sales in
1995. The Company uses direct mail, television, radio and
newspaper advertising to promote its merchandise, special
promotional events and discount retail image. The Company's
advertising is directed towards a typical Fred's customer, a female
over the age of 25 in a rural location with household income
averaging $25,000.
The Company's buyers have discretion to mark down slow moving
items, and the Company runs regular clearances of seasonal
merchandise and conducts sales and promotions of particular items.
The Company also encourages its store managers to create in-store
advertising displays and signage in order to increase customer
traffic and impulse purchases. The store managers, with corporate
approval, are permitted to tailor the price structure at their
particular stores to meet competitive conditions within each
store's marketing area.
Store Operations
All Fred's stores are open six days a week (Monday through
Saturday), and many stores are open seven days a week. Store hours
are generally from 9:00 a.m. to 9:00 p.m.; however, certain stores
are open only until 6:00 p.m. Each Fred's store is managed by a
full-time store manager. The Company's twelve district managers
supervise the management and operation of Fred's stores.
The Company has an incentive compensation plan for store
managers, pharmacists and district managers based on meeting or
exceeding targeted profit percentage contributions. Various
factors included in determining profit percentage contribution are
gross profits and controllable expenses at the store level.
Management believes that this incentive compensation plan, together
with the Company's store management training program, are
instrumental in maximizing store performance.
The following tables set forth certain information with
respect to stores and pharmacies for each of the last five years:
1991 1992 1993 1994 1995
------ ------ ------ ------ ------
Stores open at beginning
of period 136 144 156 170 184
Stores opened/acquired
during period 9 13 18 20 31
Stores closed during period (1) (1) (4) (6) (14)
------ ------ ------ ------ ------
Stores open at end of
period 144 156 170 184 201
====== ====== ====== ====== ======
Pharmacies open at
beginning of period 40 45 60 75 83
Pharmacies opened/acquired
during period 6 15 16 8 9
Pharmacies closed during
period (1) - (1) - -
------ ------ ------ ------ ------
Pharmacies open at end of
period 45 60 75 83 92
====== ====== ====== ====== ======
Square feet of selling
space at end of period
(in thousands) 1,877 2,071 2,311 2,625 2,797
====== ====== ====== ====== ======
Average square feet of
selling space per store 13,033 13,277 13,594 14,266 13,915
====== ====== ====== ====== ======
Franchise stores at end
of period 43 39 37 35 34
====== ====== ====== ====== ======
Pharmacy Operations
Fred's operates 87 in-store pharmacies and five Fred's Xpress
pharmacies, all of which offer brand name and generic
pharmaceuticals and are staffed by licensed pharmacists. Pharmacy
sales have become an increasingly important segment of the
Company's sales, increasing from 9.4% of retail sales in 1988 to
17.7% in 1995.
The addition of acquired pharmacies in the Company's stores
has resulted in increased store sales and sales per selling square
foot. Management believes that in-store pharmacies also increase
customer traffic and repeat visits.
The pharmacies in Fred's stores that are clustered together
typically operate at a lower cost because three pharmacists are
able to staff two Fred's stores (versus competitors' typical two
pharmacists per store). This competitive advantage will accelerate
because the Company is continuing to add pharmacies in clustered
stores.
Inventory Control and Distribution
SWORD and POS Systems
The Company's computerized central management information
system (known as "SWORD," which stands for Store Warehouse Order
Replenishment and Distribution) maintains a daily SKU level
inventory and current and historical sales information for each
store and the distribution center. This system is supported by in-
store point-of-sale ("POS") cash registers which capture SKU and
other data at the time of sale for daily transmission to the
Company's central computer. Data received from the stores is used
to automatically replenish frequently purchased merchandise on a
weekly basis and to assist the Company's buyers in their decision
making process.
Maintaining an "in-stock" supply of high-turn, low gross
margin items, such as health and beauty aids and paper and cleaning
supplies and frequently consumed items in other categories,
preserves customer loyalty which leads to purchases of higher gross
margin items in other product categories.
Over the past three years, the Company has installed enhanced
POS register systems in all of its stores. The new registers have
improved labor productivity at the stores and continue to be the
data gathering device for the SWORD system. The scanning and price
look-up features included in the new system significantly reduce
the amount of labor required to tag merchandise in connection with
the Company's sale events and reduce the number of cashier errors.
Distribution
Fred's has an 800,000 square foot centralized distribution
center in Memphis, Tennessee (see "Properties" below). Excess
capacity exists in the distribution center which will accommodate
the Company's expansion plans for Fred's stores for the next two
years. The Company is reviewing opportunities to enhance the
logistics of the distribution center and to modernize the related
sortation and handling equipment in order to increase the center's
capacity and efficiencies. Approximately 78% of the merchandise
received by Fred's stores in 1995 was shipped through the
distribution center, with the remainder (primarily pharmaceuticals,
certain snack food items, greeting cards, beverages and tobacco
products) being shipped directly to the stores by vendors. For
distribution, the Company uses owned and leased trailers and leased
tractors, as well as common carriers.
Wholesale and Franchise Sales
The Company engages in wholesale sales to its 34 franchised
"Fred's" stores and to certain other retailers. The franchised
stores utilize the Company's SWORD system. Revenues from wholesale
sales during the last three years were $40,300,000 in 1995,
$39,000,000 in 1994 and $40,800,000 in 1993. In addition,
franchise and other fees totaling approximately $2 million have
been earned by Fred's in each of the three years (recorded as a
reduction to the Company's operating expenses).
Each of the Company's franchised stores operates under a
franchise agreement whereby the Company is the primary provider of
merchandise and the store is granted an exclusive market area.
Franchisees purchase merchandise from the Company at wholesale
prices and pay a franchise fee for the right to use the Fred's
tradename. The fee is equal to 3% of the retail price of a
franchisee's purchases. A franchisee may elect to have merchandise
delivered by the Company for a fee ranging from 1.75% to 2.75% of
the retail value of the merchandise delivered, varying with the
distance between the Company's distribution center and the
franchisee's store. Franchisees participate in advertising for
"Fred's" stores in their marketing area by paying for the cost of
advertising on television and distributing tabloid advertisements.
At this time, the Company is not soliciting new franchisees.
Employees
At February 3, 1996, the Company had approximately 4,800 full-
time and part-time employees, comprising 500 corporate employees
and 4,300 store employees. The number of employees varies during
the year, reaching a peak during the Christmas selling season. The
Company's labor force is not subject to a collective bargaining
agreement.
Almost all of the Company's salaried employees not covered by
the store or merchandising incentive compensation programs are
covered by incentive compensation plans, under which compensation
is payable based upon the Company meeting or exceeding profit
targets.
Item 2: Properties
As of February 3, 1996, the geographical distribution of
Fred's 201 Company-owned stores was as follows:
State Number of Stores
----- ----------------
Mississippi 63
Arkansas 42
Tennessee 38
Louisiana 19
Georgia 16
Alabama 15
North Carolina 3
Missouri 2
Kentucky 2
Florida 1
The Company owns the real estate and the buildings for 61
store locations, of which five are subject to ground leases. The
Company leases the remaining 140 locations from third parties
pursuant to leases that provide for monthly rental payments
primarily at fixed rates (although a few provide for additional
rent based on sales). Fred's stores range in size from 5,000
square feet to 27,000 square feet. One hundred and forty-two of
Fred's stores are in strip centers or adjoined with a downtown
shopping district, with the remainder being free-standing.
It is anticipated that existing buildings and buildings to be
developed by others will be available for lease to satisfy the
Company's present store growth intentions in the near term. It is
management's intention to enter into leases of relatively moderate
length with renewal options, rather than entering into long-term
leases. The Company will thus have maximum flexibility in store
relocation in the future, since continued availability of existing
buildings is anticipated in the Company's market areas.
The Company owns its distribution center and corporate
headquarters situated on a 60 acre complex in Memphis, Tennessee.
The distribution center contains approximately 800,000 square feet
of space. The site also contains 250,000 square feet of office and
retail space. Presently, the Company utilizes 90,000 square feet
of office space and 22,000 square feet of retail space at the
complex; of the balance, approximately 75,000 square feet is leased
to the U.S. Government. The retail space is operated as a Fred's
store and is used to test new products, merchandising ideas and
technology.
Item 3: Legal Proceedings
The Company is party to several pending legal proceedings and
claims. Although the outcome of the proceedings and claims cannot
be determined with certainty, management of the Company is of the
opinion that it is unlikely that these proceedings and claims will
have a material effect on the results of operations or the
financial condition of the Company.
Item 4: Submission of Matters to a Vote of Security Holders
No matters were submitted to a vote of security holders during
the fourth quarter of the fiscal year ended February 3, 1996.
PART II
Item 5: Market for the Registrant's Common Stock and Related
Stockholder Matters
The information required by this item is furnished by
incorporation by reference of Page 25 of the Annual Report to
Shareholders for the year ended February 3, 1996.
Item 6: Selected Financial Data
The selected financial data for the five years ended February
3, 1996, which appears on page 8 of the Annual Report to
Shareholders is incorporated herein by reference.
Item 7: Management's Discussion and Analysis of Financial
Condition and Results of Operations
Management's Discussion and Analysis of financial condition
and results of operations appearing on pages 9 through 11 of the
Annual Report to Shareholders is incorporated herein by reference.
Item 8: Financial Statements and Supplementary Data
The consolidated financial statements, together with the
report thereon of Price Waterhouse LLP dated March 8, 1996,
appearing on pages 12 through 24 of the Annual Report to
Shareholders are incorporated herein by reference.
Item 9: Changes In and Disagreements With Accountants on
Accounting and Financial Disclosure
None.
PART III
Item 10: Directors and Executive Officers of the Registrant
Information regarding directors is incorporated herein by
reference from the information under the caption "Election of
Directors" in the Company's Proxy Statement relating to the Annual
Meeting of Shareholders, expected to be held in July 1996 (the
"Proxy Statement").
The following information is furnished with respect to each of
the executive officers of the Registrant:
Name Age Positions and Offices
- ---- --- ---------------------
Michael J. Hayes 54 Director, Managing Director (1),
Chief Executive Officer and President
David A. Gardner 48 Director and Managing Director (1)
Michael K. Spear 51 Executive Vice President -
Merchandising
Bruce D. Smith 37 Executive Vice President and Chief
Financial Officer
Victor Saig 60 Senior Vice President - Store
Operations
Blanchard J. Box 57 Senior Vice President - Management
Information Systems
John A. Casey 49 Senior Vice President - Pharmacy
Operations
Charles S. Vail 52 Corporate Secretary, Vice President -
Legal Services and General Counsel
________________________________
(1) According to the By-laws of the Company, the Managing
Directors (Messrs. Hayes and Gardner) are the chief executive
officers of the Company and have general supervisory
responsibility for the business of the Company.
Michael J. Hayes was elected a director of the Company in
January 1987 and has been a Managing Director of the Company since
October 1989. Mr. Hayes has been Chief Executive Officer since
October 1989 and President since May 1991. Additionally, Mr. Hayes
is a Managing Director of Hayes Financial Corp. He was previously
employed by Oppenheimer & Company, Inc. in various capacities from
1976 to 1985, including Managing Director and Executive Vice
President - Corporate Finance and Financial Services.
David A. Gardner was elected a director of the Company in
January 1987 and has been a Managing Director of the Company since
October 1989. Mr. Gardner has been President of Gardner Capital
Corporation, a real estate and venture capital investment firm
since April 1980. Additionally, Mr. Gardner is a director of
Gulfstar Energy, Inc., Great American Management and Investment,
Inc. and Joyce International, Inc.
Michael K. Spear was hired in March 1995 as Executive Vice
President - Merchandising. Mr. Spear had previously spent 21 years
with Wal-Mart Stores, Inc., including 4 years in store operations,
followed by 17 years in merchandising. Most recently he served
Wal-Mart as Vice President, Divisional Merchandise Manager for the
Sam's Clubs.
Bruce D. Smith joined the Company in September 1991 as
Executive Vice President and Chief Financial Officer. Prior to
joining the Company, Mr. Smith was employed by Price Waterhouse LLP
for eleven years and attained the position of Senior Audit Manager.
Victor Saig is the Senior Vice President - Store Operations,
a position he has held since November 1989. Mr. Saig joined the
Company in 1963. Prior to this appointment, Mr. Saig served as
Vice President - Hard Lines Merchandising and in various other
operational and merchandising positions.
Blanchard J. Box is the Senior Vice President - Management
Information Systems of the Company, a position he has held since
May 1991. Mr. Box, who joined the Company in 1989, was previously
Vice President - Management Information Systems. Prior thereto,
Mr. Box was responsible for management information systems at
OTASCO, Inc., an Oklahoma retailer, from 1984 until 1989.
John A. Casey was promoted to Senior Vice President - Pharmacy
Operations in January 1994. Mr. Casey joined the Company in 1979.
Prior to this appointment, Mr. Casey was Vice President - Pharmacy
Operations from 1990 to 1994 and Director of Pharmacy Operations
from 1988 to 1990. Prior to 1988, Mr. Casey was a pharmacy
district manager and a pharmacist.
Charles S. Vail has served the Company for more than nine
years as Corporate Secretary, Vice President - Legal Services and
General Counsel. Mr. Vail joined the Company in 1973.
Item 11: Executive Compensation
Information regarding executive compensation is incorporated
herein by reference from the information in the Company's Proxy
Statement.
Item 12: Security Ownership of Certain Beneficial Owners and
Management
Information regarding security ownership of certain beneficial
owners and management is incorporated herein by reference from the
Company's Proxy Statement.
Item 13: Certain Relationships and Related Transactions
This information is incorporated herein by reference from the
information under the caption "Compensation Committee Interlocks
and Insider Participation" in the Company's Proxy Statement.
PART IV
Item 14: Exhibits, Financial Statement Schedules and Reports on
Form 8-K
(a)(1) Consolidated Financial Statements
The following consolidated financial statements are
incorporated herein by reference from pages 12 through 24
of the Annual Report to Shareholders for the year ended
February 3, 1996.
Consolidated Statements of Income for the years
ended February 3, 1996, January 28, 1995 and
January 29, 1994.
Consolidated Balance Sheets as of February 3, 1996
and January 28, 1995.
Consolidated Statements of Changes in Shareholders'
Equity for the years ended February 3, 1996,
January 28, 1995 and January 29, 1994.
Consolidated Statements of Cash Flows for the years
ended February 3, 1996, January 28, 1995 and
January 29, 1994.
Notes to Consolidated Financial Statements.
Report of Independent Accountants.
(a)(2) Financial Statement Schedules:
All schedules are omitted because they are not applicable
or not required, or because the information is included
in the financial statements or notes thereto.
(a)(3) Those exhibits required to be filed as Exhibits to this
Annual Report on Form 10-K pursuant to Item 601 of
Regulation S-K are as follows:
3.1 Certificate of Incorporation, as amended
[incorporated herein by reference to Exhibit
3.1 to the Form S-1 as filed with the
Securities and Exchange Commission February
7, 1992 (SEC File No. 33-45637) (the "Form
S-1")].
3.2 By-laws, as amended [incorporated herein by
reference to Exhibit 3.2 to the Form S-1].
4.1 See Exhibits 3.1 and 3.2 hereto.
4.2 Specimen Common Stock Certificate
[incorporated herein by reference to Exhibit
4.2 to Pre-Effective Amendment No. 3 to the
Form S-1]
9.1 Baddour, Inc. (Registrant changed its name to
"Fred's, Inc." in 1991) Shareholders
Agreement dated as of June 28, 1986
[incorporated herein by reference to Exhibit
C, pages C-1 through C-42 to Baddour, Inc.'s
Report on Form 8-K dated July 1, 1986]
10.6 Lease Agreement dated November 12, 1991 with
the U.S. Government [incorporated herein by
reference to Exhibit 10.6 to the Form S-1].
10.8 Form of Fred's, Inc. Franchise Agreement
[incorporated herein by reference to Exhibit
10.8 to the Form S-1].
10.9 401(k) Plan dated as of May 13, 1991
[incorporated herein by reference to Exhibit
10.9 to the Form S-1].
10.10 Employee Stock Ownership Plan (ESOP) dated as
of January 1, 1987 [incorporated herein by
reference to Exhibit 10.10 to the Form S-1].
10.11* Incentive Stock Option Plan dated as of
December 22, 1986 [incorporated herein by
reference to Exhibit 10.11 to the Form S-1].
10.15 Lease Agreement by and between Hogan Motor
Leasing, Inc. and Fred's, Inc. dated February
5, 1992 for the lease of truck tractors to
Fred's, Inc. and the servicing of those
vehicles and other equipment of Fred's, Inc.
[incorporated herein by reference to Exhibit
10.15 to Pre-Effective Amendment No. 1 to the
Form S-1].
10.17 Revolving Loan and Credit Agreement between
Fred's, Inc. and Union Planters National Bank
dated as of May 15, 1992 [incorporated herein
by reference to the Company's report on Form
10-Q for the quarter ended May 2, 1992].
10.18 Note and Security Agreement between National
Bank of Commerce as Trustee for the ESOP of
Fred's, Inc., together with the Limited
Guaranty of Fred's, Inc. dated as of May 29,
1992 [incorporated herein by reference to the
Company's report on Form 10-Q for the quarter
ended August 1, 1992].
10.19* 1993 Long Term Incentive Plan dated as of
January 21, 1993 [incorporated herein by
reference to the Company's report on Form 10-
Q for the quarter ended July 31, 1993].
* Management Compensatory Plan
10.20 Negative Pledge and Loan Agreement between
Fred's, Inc. and National Bank of Commerce
dated as of February 17, 1994 [incorporated
herein by reference to the Company's report
on Form 10-K for the year ended January 29,
1994].
10.21 Modification Agreement between Fred's, Inc.
and Union Planters National Bank dated as of
May 31, 1995 (modifies the Revolving Loan and
Credit Agreement included as Exhibit 10.17)
[incorporated herein by reference to the
Company's report on Form 10-Q for the quarter
ended July 29, 1995].
10.22 Second Modification Agreement between Fred's,
Inc. and Union Planters National Bank dated
as of July 31, 1995 (modifies the Revolving
Loan and Credit Agreement included as Exhibit
10.17) [incorporated herein by reference to
the Company's report on Form 10-Q for the
quarter ended July 29, 1995].
10.23 Seasonal Overline Revolving Credit Agreement
between Fred's, Inc. and Union Planters
National Bank dated as of July 31, 1995
[incorporated herein by reference to the
Company's report on Form 10-Q for the quarter
ended July 29, 1995].
10.24** Employment Agreement between Fred's, Inc. and
Michael K. Spear dated as of March 6, 1995.
11.1** Computation of Net Income per Share
13.1** Annual report to shareholders for the year
ended February 3, 1996 (to the extent
incorporated herein by reference).
21.1** Subsidiaries of Registrant
23.1** Consent of Price Waterhouse LLP.
27. ** Financial Data Schedule.
(b) No reports on Form 8-K were filed by the registrant during
the last quarter of the period covered by this report.
However, a report on Form 8-K dated March 1, 1996 was filed
subsequent to the fourth quarter regarding the proposed
acquisition by merger of Rose's Stores, Inc. by Fred's.
** Filed herewith
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, on this 29th day of April, 1996.
FRED'S, INC.
By: /s/ Michael J. Hayes
-----------------------------------------
Michael J. Hayes, Chief Executive
Officer and President
By: /s/ Bruce D. Smith
-----------------------------------------
Bruce D. Smith, Executive Vice President
and Chief Financial Officer (Principal
Accounting and Financial Officer)
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 this 29th day of April, 1996.
Signature Title
--------- -----
/s/ Michael J. Hayes Director, Managing Director,
Michael J. Hayes Chief Executive Officer and
President
/s/ David A. Gardner Director and Managing
David A. Gardner Director
/s/ Roger T. Knox Director
Roger T. Knox
/s/ John R. Eisenman Director
John R. Eisenman