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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, 1993
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
$1 PER SHARE) NEW YORK STOCK EXCHANGE
4-7/8% CONVERTIBLE SUBORDINATED
DEBENTURES DUE JUNE 1, 1996 NEW YORK STOCK EXCHANGE
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 /_/
PAGE 1 OF 2 PAGE COVER PAGE
AS OF MARCH 1, 1994, 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 $3,996,104,076.
NUMBER OF SHARES OUTSTANDING OF THE ISSUER'S COMMON STOCK (PAR VALUE
$1 PER SHARE) AT MARCH 1, 1994: 105,351,156.
DOCUMENTS INCORPORATED BY REFERENCE
1. ANNUAL REPORT TO SHAREHOLDERS FOR THE YEAR ENDED DECEMBER 31,
1993: PART I, ITEM 1; PART II, ITEMS 5, 6, 7 AND 8; AND PART IV, ITEM
14.
2. PROXY STATEMENT DATED MARCH 14, 1994 ISSUED IN CONNECTION WITH
THE ANNUAL MEETING OF SHAREHOLDERS: PART III, ITEMS 10, 11, 12 AND
13.
* DOES NOT INCLUDE 6,498,514 OUTSTANDING SHARES OF SERIES ONE ESOP
CONVERTIBLE PREFERENCE STOCK ("ESOP PREFERENCE STOCK"). AS OF
MARCH 1, 1994, 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.
Page 2 of 2 page Cover Page
Item 1. Business
Melville Corporation, a New York corporation (in this Item 1
called the "Company"), is one of the largest diversified specialty
retailers in the United States. On December 31, 1993, the Company,
through its subsidiaries (which together with the Company throughout
this Item 1 are collectively called the "Companies"), operated a total
of 7,282 retail stores and leased departments throughout the United
States, Puerto Rico, the U.S. Virgin Islands, Canada, the Czech
Republic and Slovakia. During 1993 the Companies also manufactured
men's and women's footwear in two factories and furniture in five
factories.
The Companies market products in chains of specialty retail
stores operating under various trade names. Prescription drugs,
health and beauty aids are sold in chains of stores operated under the
"CVS", "Peoples", "Standard Drug" and "Austin Drug" trade names.
Apparel and accessories are sold in chains of stores under the
"Marshalls", "Wilsons Suede & Leather", "Wilsons The Leather Experts",
"Bermans", "Bermans The Leather Experts", "Pelle Cuir", "Tannery
West", "Snyder Leather Outlets", "Georgetown Leather Design" and
"Bob's" trade names. Footwear is sold in chains of stores operated
under the "FootAction USA", "FootAction For Kids", "Fan Club", "Thom
McAn" and "B.O.Q." trade names and in leased departments in Kmart
discount department stores and Pay Less Drug Stores. Toy and hobby
products are sold in chains of stores operating under the "Kay-Bee
Toys", "Circus World", "K & K Toys", "Toy Works" and "Play Things"
trade names. Domestics are sold in a chain of stores operated under
3
the "Linens 'n Things" trade name. Furniture is sold in a chain of
stores under the "This End Up" and "Wood's End" trade names.
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 issuance of commercial paper
and bank loan participation notes, which are repaid from internally
generated funds. 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, and the Company does not currently have any plans to
issue such debt securities under this shelf registration because its
capital resources are sufficient to sustain current operations and
provide for future growth.
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.
4
The Company's principal office is located in Rye, New York.
As of December 31, 1993, the Companies had approximately 111,000 full
and part-time associates.
BUSINESS SEGMENT INFORMATION
The Company is principally a specialty retailer conducting
business in four major segments:
- Prescription drugs, health and beauty aids retailing.
- Apparel retailing, which includes men's and women's specialty
and leather apparel, brand name and private label apparel for
men, women and children.
- Footwear, which includes retailing of both discount and
popular-priced shoes; retailing of brand name shoes and
athletic footwear for men, women and children; and footwear
manufacturing.
- Toys and household furnishings, which include retailing of
toys, domestics and furniture (as well as furniture
manufacturing).
The financial information concerning industry segments
required by Item 101(b) of Regulation S-K is set forth on page 47 of
the Company's Annual Report to Shareholders for the year ended
December 31, 1993, and is incorporated herein by reference.
PRESCRIPTION DRUGS, HEALTH AND BEAUTY AIDS RETAILING
On December 31, 1993, the Companies operated 1,284
prescription drugs, health and beauty aids stores in 15 states and the
District of Columbia under the names "CVS", "Peoples", "Standard Drug"
and "Austin Drug", 1,081 of which have pharmacies. Net sales for
5
these stores for 1993 represented approximately 38% of the Companies'
consolidated net sales.
These stores are considered "destination" stores and are
located primarily in "strip" shopping centers and freestanding units.
In the prescription drugs, health and beauty aids 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 fifth in dollar volume and 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.
APPAREL RETAILING
On December 31, 1993, the Companies operated 448 off-price
quality brand name family apparel stores in 40 states under the name
"Marshalls". These stores are located primarily in "strip" shopping
centers in which Marshalls is an "anchor" tenant. Marshalls' net
sales for 1993 represented approximately 25% of the Companies'
consolidated net sales.
On December 31, 1993, the Companies operated 631 men's and
women's leather and suede apparel and accessory stores, which are
located primarily in regional shopping malls, in 45 states and the
District of Columbia under the names "Wilsons Suede & Leather",
"Wilsons The Leather Experts", "Tannery West", "Bermans The Leather
Experts", "Bermans", "Snyder Leather Outlets", "Pelle Cuir" and
6
"Georgetown Leather Design". Net sales for 1993 in these stores
represented approximately 5% of the Companies' consolidated net sales.
On December 31, 1993, the Companies operated 16 stores selling
casual clothing and footwear for the entire family under the name
"Bob's" principally in "strip" shopping centers located in
Connecticut, Massachusetts, New York and Rhode Island. Net sales at
Bob's stores for 1993 represented approximately 2% of the Companies'
consolidated net sales.
In the apparel retailing business, the Company believes it has
a significant presence in the markets for the products which it
carries; however, such products represent only a small portion of the
total apparel market.
FOOTWEAR
On December 31, 1993, the Companies operated 2,771 leased
footwear departments, 391 stores under the names "FootAction USA",
"FootAction For Kids" and "Fan Club" and 337 stores under the names
"Thom McAn" and "B.O.Q.". Collectively, these leased departments and
retail stores are located in all 50 states, Puerto Rico, the U.S.
Virgin Islands, the Czech Republic and Slovakia.
Each of the leased departments is operated by the Company's
Meldisco division which sells footwear for the entire family. All but
334 of the leased departments operated during the fiscal year ended
December 31, 1993 were located in Kmart discount department stores in
the United States, Puerto Rico, the Czech Republic and Slovakia. These
334 leased departments were located in Pay Less Drug Stores, which are
7
owned by Pay Less Drug Stores Northwest, Inc. ("Pay Less").
Pursuant to an agreement between the Company and Kmart
Corporation ("Kmart" then known as S.S. Kresge Company) entered into
as of January 1, 1975, and an agreement between the Company and Pay
Less dated October 10, 1988, all license agreements relating to such
leased departments have terms of 25 years, 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 42 such
subsidiaries in which the Company has a 100% equity interest. The
Company has a 100% equity interest in all the subsidiaries which
operate leased departments in Pay Less Drug Stores. Aggregate net
sales for 1993 of Meldisco leased departments represented
approximately 12% of the Companies' consolidated net sales.
FootAction stores (including Fan Club stores operated as part
of the FootAction division) 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 1993 represented approximately 3% of the
Companies' consolidated net sales.
A majority of the Thom McAn stores are also located in regional
shopping malls and substantially all of such stores sell footwear and
related items for men and women. Excluded from the operating results
8
of the Thom McAn chain were stores designated to be closed or
redeployed under the Company's strategic realignment program announced
in 1992. Of the stores excluded, over 200 were closed or redeployed
in 1993. Thom McAn's net sales for 1993 represented approximately 2%
of the Companies' consolidated net sales.
The Companies' footwear retailing is primarily in the discount
and popular-price categories. However, with the growth of its
FootAction division, the Company continues to increase its presence in
brand name casual and athletic footwear. During 1993, substantially
all of the footwear, as well as all hosiery, handbags and accessories
sold in these stores, was purchased from unrelated third parties.
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. According to research data
provided to the Company by Footwear Market Insights, a management
consulting and marketing research company specializing in footwear,
the seven largest footwear chain store and leased department operators
in the United States, ranked according to the number of pairs of
footwear sold and number of retail outlets, account for approximately
40.1% of total footwear pair sales, and the Companies are among such
seven largest operators.
9
Manufacturing
As of December 31, 1993, the Company operated two factories in
the Southeast United States which produce shoes and contain facilities
for product development, product testing and quality control. During
1993, the manufactured footwear represented an insignificant
percentage of the total footwear sold by the Companies.
The two factories which produce footwear for the Companies' retail
stores will be closed in 1994. The costs associated with the shutdown
of the operations were provided for as a part of the strategic
realignment charge recorded in 1992.
TOYS AND HOUSEHOLD FURNISHINGS
On December 31, 1993, the Companies operated 1,026 toy and
hobby stores in all 50 states and Puerto Rico under the names
"Kay-Bee Toys", "Circus World", "K & K Toys", "Toy Works" and "Play
Things". The "Kay-Bee Toys", "Circus World", "Play Things" and
"K & K Toys" stores are located primarily in regional shopping malls.
The "Toy Works" stores are located primarily in "strip" shopping
centers and freestanding units. Excluded from operating results were
stores that the Company designated to close or not renew under its
strategic realignment program announced in 1992. Of the stores excluded,
over 70 were closed in 1993. Net sales in toy and hobby stores for
1993 represented approximately 9% of the Companies' consolidated net sales.
On December 31, 1993, the Companies operated 143 quality brand
name linens, towels, bath and other household items stores, which are
located primarily in "strip" shopping centers in 27 states
10
under the name "Linens 'n Things". Linens 'n Things' net sales for
1993 represented approximately 3% of the Companies' consolidated net
sales.
On December 31, 1993, the Companies operated 235 stores
retailing a distinctive line of casual crate-designed furniture and
coordinated accessories for residential and commercial use, located
primarily in regional shopping malls in 33 states and Canada, under
the names "This End Up", and "Wood's End". Net sales of furniture for
1993 represented approximately 1% of the Companies' consolidated net
sales.
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 household 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 business periodical, among
the top 25 furniture retailers in the United States.
Manufacturing
During 1993, the Company, through This End Up Furniture
Company, manufactured a distinctive line of casual furniture in five
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
11
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.
ACQUISITIONS
During 1993, the Company acquired 59 prescription drugs,
health and beauty aids stores, 31 leather apparel stores and 10 stores
selling branded athletic footwear and apparel.
DISPOSITIONS
Effective May 17, 1993, the Company completed the sale of all
487 of its Chess King stores; effective May 29, 1993, the Company
completed the sale of all of its 103 Prints Plus stores, and
effective October 16, 1993, the Company completed the sale of all of
its 114 Accessory Lady stores. Net sales for each of these chains in
1993 through their date of disposition represented less than 1% of the
Companies' consolidated net sales.
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.
12
In the fiscal year ended December 31, 1993, the registrant and its
subsidiaries operated fifty-three distribution centers, located in 18
states, containing an aggregate of approximately 10,106,000 square
feet. All such distribution centers are leased with the exception of
sixteen distribution centers containing an aggregate of approximately
5,053,000 square feet which are owned by the registrant or one of its
subsidiaries. Sixteen distribution centers (comprising approximately
3,340,000 square feet) are used in the prescription drugs, health and
beauty aids business; ten distribution centers (comprising
approximately 3,356,000 square feet) are used in the apparel
businesses; ten distribution centers (comprising approximately
1,923,000 square feet) are used in the footwear businesses; and
seventeen distribution centers (comprising approximately 1,487,000
square feet) are used in the toys and household furnishings
businesses.
In the fiscal year ended December 31, 1993, the registrant and
its subsidiaries operated seven factories, all of which are
located in North Carolina. Two are footwear factories, one with the
capacity to produce over 1,500,000 pairs of shoes annually. (As
discussed above, these two factories will be closed in 1994). Five
are furniture factories with the total capacity to produce
approximately 780,000 pieces of furniture annually. The registrant or
one of its subsidiaries own all of such factories.
Item 3. Legal Proceedings
There are no material pending legal proceedings, other than
ordinary routine litigation incidental to the business, to
13
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 ending December 31, 1993.
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 14, 1994.
Date Date First
Appointed Appointed an
to Present Officer of
Name/Office Age Office the Registrant
- ----------- --- ---------- --------------
James E. Alward 50 3/17/92 3/17/92
Vice President
Norman Axelrod 41 3/07/88 3/07/88
Vice President
(President of
Linens 'n Things)
Warren D. Feldberg 44 10/18/91 10/18/91
Vice President
(Chairman and Chief
Executive Officer
of Marshalls)
Michael A. Friedheim 50 1/01/94 7/14/82
Vice President
(Chairman and Chief
Executive Officer of
Bob's)
Philip C. Galbo 43 8/01/89 8/01/89
Treasurer
14
Date Date First
Appointed Appointed an
to Present Officer of
Name/Office Age Office the Registrant
- ----------- --- ---------- --------------
Stanley P. Goldstein 59 1/01/87 4/13/71
Chairman of the
Board and Chief
Executive Officer
Thomas E. Harms 47 3/10/94 3/10/94
Vice President
Robert G. House 47 9/11/91 9/11/91
Vice President
Robert D. Huth 48 4/06/87 4/06/87
Executive Vice
President and Chief
Financial Officer
Daniel B. Katz 48 2/19/91 3/12/86
Senior Vice
President (President
of Melville Realty
Company, Inc.)
William C. Kingsford 47 3/12/86 7/13/79
Vice President
Jerald L. Maurer 51 1/01/94 1/01/94
Senior Vice
President
Larry A. McVey 52 3/14/84 3/14/84
Vice President
(President of
Thom McAn)
John I. Mitchell, Jr. 54 10/12/88 10/12/88
Vice President and
Chief Information
Officer
Ralph T. Parks 48 3/10/94 3/10/94
Vice President
(President of
FootAction)
Jerald S. Politzer 48 10/09/91 6/21/89
Executive Vice
President (Acting
President of Kay-Bee)
15
Date Date First
Appointed Appointed an
to Present Officer of
Name/Office Age Office the Registrant
- ----------- --- ---------- --------------
Shahid Quraeshi 45 7/13/88 7/13/88
Vice President and
Controller (Principal
Accounting Officer)
Arthur V. Richards 55 9/13/89 4/12/77
Vice President
and Secretary
J. M. Robinson 47 7/13/88 7/13/88
Vice President
(President of Meldisco)
Harvey Rosenthal 51 1/01/94 10/17/84
President and
Chief Operating
Officer
Thomas M. Ryan 41 1/01/94 1/01/94
Vice President
(President and Chief
Executive Officer
of CVS)
Joel N. Waller 53 3/11/87 3/11/87
Vice President
(Chairman of Wilsons)
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. Harms,
Kingsford, Maurer and House) 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
16
the same office(s) with the same responsibilities for more than
the past five years, are indicated below:
James E. Alward - Director of Taxation (January, 1979 to
Present) of the registrant.
Warren D. Feldberg - President (January, 1991 to November, 1991)
of Target Stores, a division of Dayton Hudson
Corporation, Executive Vice President (December, 1988
to January, 1991) of Target Stores, Senior Vice
President (March, 1988 to December, 1988) of Target
Stores.
Michael A. Friedheim - Executive Vice President (February,
1986 to January, 1994) of the registrant.
Philip C. Galbo - Assistant Treasurer (October, 1988 to July,
1989) of the registrant.
Thomas E. Harms - Vice President Human Resources (July, 1993
to March, 1994) and Director Human Resources
(September, 1990 to July, 1993) of the CVS division
of the registrant; Director of Personnel of Marshall
Field's (August, 1988 to August, 1990).
Robert G. House - Consultant (January, 1988 to July, 1991) Temple,
Barker & Sloane, general management consultants.
Daniel B. Katz - Vice President (March, 1986 to February, 1991) of
the registrant; President (March, 1978 to Present) of
Melville Realty Company, Inc., a subsidiary
of the registrant.
Jerald L. Maurer - Corporate Vice President of Strategic Human
Resource Management of Aetna Life and Casualty
Company (January, 1992 to January, 1994); Vice
President of Human Resources (January, 1991 to
January 1992) of Medstat Systems, Inc.; Senior Vice
President of Human resources (1988 to January, 1990)
of John Wiley & Sons, Inc.
Ralph T. Parks - President of the FootAction division of the
registrant (November, 1991 to Present); Executive
Vice President and Chief Operating Officer of
FootAction, Inc. (March, 1987 to November, 1991).
Jerald S. Politzer - Group Vice President (June, 1989 to
October, 1991) of the registrant; President and Chief
Executive Officer (November, 1986 to June, 1989) of G.
Fox & Company, a division of The May Department Stores
Company.
17
Arthur V. Richards - Secretary (April, 1977 to Present), General
Counsel (September, 1989 to October, 1990) and General
Attorney (April, 1977 to September, 1989) of the
registrant.
Harvey Rosenthal - President and Chief Executive Officer (October,
1984 to January, 1994) of the CVS division of the
registrant.
Thomas M. Ryan - Executive Vice President (January, 1990 to
January, 1994) and Senior Vice President-Pharmacy
(January, 1988 to January, 1990) of the CVS division
of the registrant.
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 7,600 as of December 31, 1993. All other
information required by this item is included in the registrant's Annual
Report to Shareholders for the year ended December 31, 1993 on pages 1 and
46 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,
1993 on page 48 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,
1993 on pages 30 through 33 and is incorporated herein by reference.
18
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,
1993 on pages 35 through 47, and is incorporated herein by reference.
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 14, 1994.
The other information required by this item is included in
the registrant's definitive proxy statement dated March 14, 1994
on pages 1 through 3 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 14, 1994 on
pages 7 through 13 and is incorporated herein by reference.
19
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 14, 1994 on pages 1
through 5 and is incorporated herein by reference.
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, 1993 and the related consolidated
financial statement schedules are set forth in the index to
consolidated financial statements and consolidated schedules on
page 26 hereof.
3. Exhibits
(a) The Exhibits filed as part of this report are listed
below:
20
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 December 8, 1993.
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).
21
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).
(v) Directors Retirement Plan (incorporated by
reference to Exhibit 10(iii)(A)(vi) to
registrant's Annual Report on Form 10-K
for year ended December 31, 1992).
(vi) Profit Incentive Plan of Melville Corporation
(incorporated by reference to Exhibit A to
registrant's definitive Proxy Statement dated
March 14, 1994).
11 Statement re: Computation of Per Share Earnings.
12 Statement re: Computation of Ratios.
22
Exhibit
Table
Number:
- -------
13 Annual Report to Shareholders for the year ended
December 31, 1993. (Except for the portions
incorporated herein by reference, such report
is furnished for the information of the 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.
(b) No reports on Form 8-K were filed in the last
fiscal quarter ending December 31, 1993.
23
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 30, 1994
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
--------- ----- ----
Chairman of the Board and
Director (Chief Executive
/S/ STANLEY P. GOLDSTEIN Officer) March 28, 1994
- ----------------------------
(Stanley P. Goldstein)
Executive Vice
President and Director
/S/ ROBERT D. HUTH (Chief Financial Officer) March 28, 1994
- -----------------------------
(Robert D. Huth)
Vice President and
Corporate Controller
(Principal Accounting
/S/ SHAHID QURAESHI Officer) March 28, 1994
- -----------------------------
(Shahid Quraeshi)
/S/ HYMAN L. BATTLE, JR. Director March 28, 1994
- -----------------------------
(Hyman L. Battle, Jr.)
/S/ ALLAN J. BLOOSTEIN Director March 28, 1994
- -----------------------------
(Allan J. Bloostein)
/S/ JOHN J. CREEDON Director March 28, 1994
- -----------------------------
(John J. Creedon)
24
Signature Title Date
--------- ----- ----
Vice President
/S/ MICHAEL A. FRIEDHEIM and Director March 29, 1994
- -----------------------------
(Michael A. Friedheim)
/S/ MICHAEL H. JORDAN Director March 28, 1994
- -----------------------------
(Michael H. Jordan)
/S/ TERRY R. LAUTENBACH Director March 28, 1994
- -----------------------------
(Terry R. Lautenbach)
/S/ THEODORE LEVITT Director March 28, 1994
- -----------------------------
(Theodore Levitt)
/S/ DONALD F. MCCULLOUGH Director March 28, 1994
- -----------------------------
(Donald F. McCullough)
/S/ FRANK MELVILLE Director March 28, 1994
- -----------------------------
(Frank Melville)
Executive Vice
President and Director March __, 1994
- -----------------------------
(Jerald S. Politzer)
President, Chief
Operating Officer
/S/ HARVEY ROSENTHAL and Director March 28, 1994
- -----------------------------
(Harvey Rosenthal)
/S/ IVAN G. SEIDENBERG Director March 29, 1994
- -----------------------------
(Ivan G. Seidenberg)
/S/ PATRICIA CARRY STEWART Director March 27, 1994
- -----------------------------
(Patricia Carry Stewart)
/S/ M. CABELL WOODWARD, JR. Director March 28, 1994
- -----------------------------
(M. Cabell Woodward, Jr.)
25
MELVILLE CORPORATION AND SUBSIDIARY COMPANIES
Index to Consolidated Financial Statements and Schedules
The consolidated financial statements of Melville Corporation and
Subsidiary Companies together with the report on such consolidated
financial statements of KPMG Peat Marwick dated February 10, 1994,
except as to the subsequent event note, which is as of March 1, 1994,
which appear on the pages listed below of the 1993 Annual Report to
shareholders, are incorporated by reference in this Annual Report on
Form 10-K.
Page Number
in 1993
Annual Report
to Shareholders
---------------
Independent Auditors' Report .............................. 34
Consolidated Statements of Earnings for the years
ended December 31, 1993, 1992 and 1991 ................ 35
Consolidated Balance Sheets as of December 31,
1993 and 1992 ..........................................36-37
Consolidated Statements of Shareholders'
Equity for the years ended December 31, 1993,
1992 and 1991 ..........................................38
Consolidated Statements of Cash Flows for the
years ended December 31, 1993, 1992 and 1991 ...........39
Notes to Consolidated Financial Statements .................40-47
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 Schedules of Melville Corporation
and Subsidiary Companies ...............................F-2
Consolidated Financial Statement Schedules of Melville
Corporation and Subsidiary Companies for the
years ended December 31, 1993, 1992 and 1991:
V - Property, Plant and Equipment ...................S-1
VI - Accumulated Depreciation and Amortization
of Property, Plant and Equipment ..............S-2
VIII - Valuation and Qualifying Accounts ...............S-3
IX - Short-Term Borrowings ...........................S-4
X - Supplementary Consolidated Statements of
Earnings Information ..........................S-5
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.
26
Schedule V
----------
MELVILLE CORPORATION AND SUBSIDIARY COMPANIES
Property, Plant and Equipment
Years ended December 31, 1993, 1992 and 1991
($ in Thousands)
Annual Balance at Balance at
Depreciation Beginning Additions Retirements Other Changes End
Classification Rates of Year at Cost (1) or Sales Add/(Deduct)(2) of Year
- -------------- ------------- ---------- ----------- ------------ -------------- ---------
Year ended December
31, 1993:
Land $ 20,016 $ 5,686 $ 0 $ (118) $ 25,584
Buildings and
improvements 2.5% to 10.0% 173,284 18,139 820 (4,578) 186,025
Fixture and
equipment 10.0% to 20.0% 980,604 247,807 90,952 (86,307) 1,051,152
Leasehold
improvements 6.7% to 20.0% 640,454 115,090 43,809 (88,332) 623,403
---------- -------- -------- ---------- -----------
Total assets
owned $1,814,358 $386,722 $135,581 $(179,335) $1,886,164
========== ======== ======== ========= ==========
Leased property
under capital
leases 3.3% to 12.5% $ 55,706 $ 2 $ 6,768 $ (1,075) $ 47,865
========== ======== ======== ========= ==========
Year ended December
31, 1992:
Land $ 16,296 $ 1,468 $ 34 $ 2,286 $ 20,016
Buildings and
improvements 2.5% to 10.0% 144,903 28,993 992 380 173,284
Fixture and
equipment 10.0% to 20.0% 902,644 175,243 100,504 3,221 980,604
Leasehold
improvements 6.7% to 20.0% 611,684 98,641 57,878 (11,993) 640,454
--------- -------- -------- ---------- -----------
Total assets
owned $ 1,675,527 $304,345 $159,408 $ (6,106) $1,814,358
========== ======== ======== ========= ==========
Leased property
under capital
leases 3.3% to 12.5% $ 60,755 $ -- $ 5,049 -- $ 55,706
========== ======== ======== ========= ==========
Year ended December
31, 1991:
Land $ 16,322 $ -- $ 81 $ 55 $ 16,296
Buildings and
improvements 2.5% to 10.0% 138,266 1,681 267 5,223 144,903
Fixture and
equipment 10.0% to 20.0% 819,832 167,115 108,102 23,799 902,644
Leasehold
improvements 6.7% to 20.0% 579,228 84,276 57,460 5,640 611,684
--------- -------- -------- ---------- -----------
Total assets
owned $ 1,553,648 $253,072 $165,910 $ 34,717 $1,675,527
========== ======== ======== ========= ==========
Leased property
under capital
leases 3.3% to 12.5% $ 67,350 $ -- $ 3,503 $ (3,092) $ 60,755
========== ======== ======== ========= ==========
(1) Excludes assets obtained in connection with acquisitions.
(2) Amount primarily represents assets obtained in connection with acquisitions
and also reflects disposals of assets in connection with operations sold.
S-1
Schedule VI
MELVILLE CORPORATION AND SUBSIDIARY COMPANIES
Accumulated Depreciation and Amortization
of Property, Plant and Equipment
Years ended December 31, 1993, 1992 and 1991
($ in Thousands)
Charged to Balance
Balance at Costs at
Beginning and Retirements Other Changes End
Classification of Year Expenses or Sales Add/(Deduct)(1) of Year
- -------------- ---------- --------- ----------- -------------- --------
Year ended December 31, 1993:
Buildings and improvements $ 32,900 $ 5,918 $ 462 $ (245) $ 38,111
Fixtures and equipment 346,706 97,354 61,543 (38,467) 344,050
Leasehold improvements 226,881 51,056 27,155 (48,979) 201,803
-------- -------- -------- -------- --------
Total $606,487 $154,328 $ 89,160 $(87,691) $583,964
======== ======== ======== ======== ========
Leased property under capital leases $38,538 $ 2,578 $ 6,768 $ (1,160) $ 33,188
======== ======== ======== ======== ========
Year ended December 31, 1992:
Buildings and improvements $ 28,384 5,153 $ 623 $ (14) $ 32,900
Fixtures and equipment 324,198 98,520 71,987 (4,025) 346,706
Leasehold improvements 217,658 53,503 41,451 (2,829) 226,881
-------- -------- -------- -------- --------
Total $570,240 $157,176 $114,061 $ (6,868) $606,487
======== ======== ======== ======== ========
Leased property under capital
leases $ 39,920 $ 3,099 $ 4,481 $ -- $ 38,538
======== ======== ======== ======== ========
Year ended December 31, 1991
Buildings and improvements $ 23,596 $ 5,082 $ 294 $ -- $ 28,384
Fixtures and equipment 340,287 82,292 100,421 2,040 324,198
Leasehold improvements 224,680 47,787 53,951 (858) 217,658
-------- -------- -------- -------- --------
Total $588,563 $135,161 $154,666 $ 1,182 $570,240
======== ======== ======== ======== ========
Leased property under capital
leases $42,282 $ 3,323 $ 5,685 $ -- $ 39,920
======== ======== ======== ======== ========
(1) Amounts represent reclassifications of assets and accumulated depreciation
of assets acquired and also reflects disposals in connection with
operations sold.
S-2
Schedule VIII
-------------
MELVILLE CORPORATION AND SUBSIDIARY COMPANIES
Valuation and Qualifying Accounts
Years ended December 31, 1993, 1992 and 1991
($ in Thousands)
Additions
Balance at Charged to Balance at
Beginning Costs and End
Description of Year Expenses Deductions(1) of Year
------------ ----------- ----------- ------------- ---------
Accounts Receivable:
Allowance for Doubtful Accounts:
Year Ended December 31, 1993 $ 25,131 $ 23,173 $ 15,770 $ 32,534
======== ======== ======== ========
Year Ended December 31, 1992 $ 21,717 $ 12,087 $ 8,673 $ 25,131
======== ======== ======== ========
Year Ended December 31, 1991 $ 15,170 $ 17,642 $ 11,095 $ 21,717
======== ======== ======== ========
(1) Write-offs, net of recoveries
S-3
SCHEDULE IX
-----------
MELVILLE CORPORATION AND SUBSIDIARY COMPANIES
Short-Term Borrowings
Years ended December 31, 1993, 1992 and 1991
($ in Thousands)
Weighted
Maximum Average Average
Weighted Amount Amount Interest
Average Outstanding Outstaning Rate
Balance at Interest During the During the During the
End of Year Rate Year Year (A) Year (A)
----------- -------- ---------- ---------- -----------
Year Ended December 31, 1993
Commercial Paper $ 90,000 3.32% $ 875,000 $ 464,792 3.08%
========== ====== ============ ========== ======
Notes payable to banks $ -- -- $ -- $ -- --
========== ====== ============ ========== ======
Year Ended December 31, 1992
Commercial Paper $ -- -- $ 819,950 $ 542,171 3.46%
========== ====== ============ ========== ======
Notes payable to banks $ -- -- $ -- $ -- --
========== ====== ============ ========== ======
Year Ended December 31, 1991
Commercial Paper $ 50,000 4.98% $ 747,750 $ 453,398 5.61%
========== ====== ============ ========== ======
Notes payable to banks $ -- -- $ -- $ -- --
========== ====== ============ ========== ======
(A) Calculated on a daily basis.
S-4
Schedule X
----------
MELVILLE CORPORATION AND SUBSIDIARY COMPANIES
Supplementary Consolidated Statement of Earnings Information
Years ended December 31, 1993, 1992 and 1991
($ in Thousands)
Amount Charged to Costs and Expenses
Item 1993 1992 1991
---- ---- ---- ----
Taxes, other than payroll and
income taxes $ 113,922 $ 108,536 $ 101,762
======= ======= =======
Advertising costs $ 174,297 $ 154,839 $ 131,092
======= ======= =======
Amounts for maintenance and repairs, depreciation and amortization of
intangible assets, pre-opening costs and similar deferrals and royalties
are not presented as such amounts are less than 1% of sales.
S-5
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 Numbers 33-62664 and
33-34946 on Form S-3 of Melville Corporation and subsidiary companies of our
report dated February 10, 1994, except as to the Subsequent Event note, which
is as of March 1, 1994, related to the consoldiated balance sheets of Melville
Corporations and subsidiary companies as of December 31, 1993 and 1992,
and the related consolidated statements of earnings, shareholders' equity
and cash flows and related financial statement schedules for each of
the years in the three-year period ended December 31, 1993, which reports
appear (or are incorporated by reference) in the December 31, 1993 annual
report on Form 10-K of Melville Corporation and subsidiary companies.
Our reports refer to the adoption of the Financial Accounting Standards
Board's Statement of Financial Accounting Standards No. 106, "Employers'
Accounting for Postretirement Benefits Other Than Pensions," in 1992 and to a
change in the method of determining retail price indices used in the valuation
of LIFO inventories in 1993.
Very truly yours,
/s/KPMG PEAT MARWICK
KPMG Peat Marwick
New York, New York
March 30, 1994
F-1
INDEPENDENT AUDITORS' REPORT
The Board of Directors and Shareholders
Melville Corporation:
Under date of February 10, 1994, except as to the Subsequent Event note,
which is as of March 1, 1994, we reported on the consolidated balance
sheets of Melville Corporation and subsidiary companies as of December 31,
1993 and 1992, and related consolidated statements of earnings, shareholders'
equity and cash flows for each of the years in the three-year period ended
December 31, 1993, as contained in the 1993 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 1993.
In connection with our audits of the aforementioned consolidated financial
statements, we also have audited the related financial statement schedules
listed in the accompanying index. These financial statement schedules are the
responsibility of the Company's management. Our responsibility is to express
an opinion on these financial statement schedules based on our audits.
In our opinion, such financial statement schedules, when considered in
relation to the basic consolidated financial statements taken as a whole,
present fairly, in all material respects, the information set forth therein.
As discussed on page 44 of the Annual Report to Stockholders, the Company
adopted the provisions of the Financial Accounting Standards Board's Statement
of Financial Accounting Standards No. 106, "Employers' Accounting for
Postretirement Benefits Other Than Pensions," in 1992. Also, as discussed on
page 41, the Company changed its method of determining retail price indices
used in the valuation of LIFO inventories in 1993.
/s/KPMG PEAT MARWICK
KPMG Peat Marwick
New York, New York
February 10, 1994, except as to the Subsequent Event note, which is as of
March 1, 1994
F-2
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 December 8, 1993.
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.
1
EXECUTIVE COMPENSATION PLANS AND ARRANGEMENTS
Exhibit
Table
Number :
- ------------
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).
(v) Directors Retirement Plan (incorporated by reference to
Exhibit 10 (iii) (A) (vi) to registrant's Annual Report
on Form 10-K for year ended December 31, 1992).
(vi) Profit Incentive Plan of Melville Corporation
(incorporated by reference to Exhibit A to registrant's
definitive Proxy Statement dated March 14, 1994).
2
Exhibit
Table
Number:
- -----------
* 11 Statement re: Computation of Per Share Earnings.
* 12 Statement re: Computation of Ratios.
* 13 Annual Report to Shareholders for the year ended
December 31, 1993. (Except for the portions
incorporated herein by reference, such report is
furnished for the information of the 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.
3