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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 10-K
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ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended January 31, 1998
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Commission file number 1-11609
TOYS "R" US, INC.
Incorporated pursuant to the Laws of Delaware
Internal Revenue Service - Employer Identification No. 22-3260693
461 From Road, Paramus, New Jersey 07652
(201) 262-7800
Securities Registered Pursuant to Section 12(b) of the Act:
Title of each class Name of each exchange on which registered
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Common Stock, $.10 par value New York Stock Exchange
Registrant has filed all reports to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months and has been
subject to such filing requirements for the past 90 days.
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. [ ]
At April 13, 1998, the aggregate market value of voting stock held by
non-affiliates was $8,092,191,726 based on the 279,041,094 shares of Common
Stock which were outstanding at that date.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the Registrant's Annual Report to Stockholders for the fiscal year
ended January 31, 1998 are incorporated by reference into Parts I and II of
this Form 10-K.
Portions of the Registrant's Proxy Statement for the Annual Meeting of
Stockholders to be held June 3, 1998, are incorporated by reference into Part
III of this Form 10-K.
INDEX
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PAGE
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PART I.
Item 1. Business...................................................... 2
Item 2. Properties.................................................... 5
Item 3. Legal Proceedings............................................. 6
Item 4. Submission of Matters to a Vote of Security Holders........... 7
PART II.
Item 5. Market for the Registrant's Common Stock
and Related Stockholder Matters........................ 7
Item 6. Selected Financial Data....................................... 7
Item 7. Management's Discussion and Analysis of
Financial Condition and Results of Operations.......... 7
Item 7a. Qualitative and Quantitative Disclosures About Market Risk.... 7
Item 8. Financial Statements and Supplementary Data................... 8
Item 9. Changes in and Disagreements with Accountants
on Accounting and Financial Disclosure................. 8
PART III.
Item 10. Directors and Executive Officers of the Registrant............ 8
Item 11. Executive Compensation........................................ 11
Item 12. Security Ownership of Certain Beneficial
Owners and Management.................................. 11
Item 13. Certain Relationships and Related Transactions................ 11
PART IV.
Item 14. Exhibits, Financial Statement Schedules, and Reports
on Form 8-K............................................ 11
1
PART I
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ITEM 1. BUSINESS
Toys "R" Us, Inc. and its subsidiaries (the "Company") is the world's
premier retailer of children's products, bringing toys, apparel and baby needs
to children and their families. As of January 31, 1998, the Company was engaged
in the operation of 1,454 children's specialty retail stores consisting of 1,013
United States locations comprised of 698 toy stores under the name "Toys "R"
Us", 215 children's clothing stores under the name "Kids "R" Us," 98
infant-toddler stores under the name "Babies "R" Us", and two superstores
combining all of the "R" Us" formats mentioned above under the name "Toys "R" Us
KidsWorld". Internationally, the Company operates 441 toy stores, including
franchise stores, under the name "Toys "R" Us." The Company is incorporated in
the state of Delaware.
(a) General Development of the Business
Merger with Baby Superstore
On February 3, 1997, the Company acquired Baby Superstore, Inc. ("Baby
Superstore") in a tax-free exchange of common stock valued at approximately $376
million. The Baby Superstore acquisition was accounted for as a purchase for
financial reporting purposes as of February 1, 1997. For a further discussion of
Baby Superstore, see "Item 1. Business - Narrative Description of the Business -
Babies "R" Us."
Worldwide Restructuring
The Company has substantially completed its 1995 restructuring program
action plan, including the strategic inventory repositioning, the closing of 3
toy stores and 7 Kids "R" Us stores in the United States and the franchising of
9 Toys "R" Us stores in the Netherlands, pending certain regulatory approvals.
In addition, the Company consolidated 3 distribution centers and various
administrative facilities in the United States and Europe. At January 31, 1998,
the Company had approximately $62 million of liabilities remaining for its
restructuring program primarily relating to long-term lease obligations and
other commitments. The Company believes these reserves are adequate to complete
the restructuring program.
(b) Financial Information About Geographic Segments
Information about geographic segments, as set forth in the notes to the
Consolidated Financial Statements on page 22 of the Company's 1997 Annual
Report, is incorporated herein by reference.
(c) Narrative Description of the Business
See the section "Store Locations" on page 27 of the Company's 1997
Annual Report, which section is incorporated herein by reference.
2
Toys "R" Us - United States
Toys "R" Us - United States ("Toys "R" Us") operates in 49 states and
Puerto Rico and sells both children's and adult's toys, games, bicycles,
sporting goods, VHS video tapes, electronic and video games, small pools, books,
infant and juvenile furniture and similar items, as well as educational and
entertainment computer software for children. The overall merchandising
philosophy of Toys "R" Us is the development of strong consumer recognition and
acceptance of its name by the use of mass media advertising that promotes its
broad selection.
Toys "R" Us believes the flexibility afforded by its
warehouse/distribution system and by ownership of its own fleet of trucks
provides maximum efficiency and capacity, particularly in light of the
seasonality of its business. Toys "R" Us utilizes a computerized inventory
system which allows management to constantly monitor the current activity and
inventory in each region and in each store. This system permits management to
allocate merchandise to each store and keep the stores adequately stocked at all
times. In 1996, an improved replenishment system was installed in approximately
one-third of the United States toy stores. This system pinpoints the exact
location of merchandise throughout the store. Ninety-two additional United
States toy stores have installed this system in 1997. Furthermore, during
1997 Toys "R" Us introduced a state of the art centralized distribution system
in Lees Summit, Missouri. Substantially all video game and computer software
merchandise are nationally distributed through this facility for all domestic
divisions. This facility has enabled Toys "R" Us to improve its in-stock
position and timeliness of replenishments of these products through this
facility.
Most Toys "R" Us stores conform to a 46,000 square feet prototype
design, with 30,000 and 20,000 square feet stores opened in smaller markets, and
are generally freestanding units or located in strip malls. Of its 698 stores,
609 are in the traditional format and 89 are designed in its "Concept 2000"
format. In addition, there are 2 KidsWorld superstores incorporating the "Toys
"R" Us, "Babies "R" Us" and "Kids "R" Us store concepts all under one roof,
averaging approximately 90,000 square feet.
Toys "R" Us opened 19 new toy stores and closed 1 store in 1997. The
Company will continue its long range growth plan by opening approximately 5 new
toy stores in the United States in 1998. The Company utilizes demographic data
to determine which markets to enter.
Toys "R" Us - International
Toys "R" Us - International ("International") operates or franchises
toy stores in 26 countries outside the United States. These stores generally
conform to prototypical designs similar to those used by Toys "R" Us.
International owns and maintains its own fleet of tractors and trailers in most
of the countries in which it operates stores. International also employs
computerized inventory systems similar to those utilized by Toys "R" Us. As part
of the Company's long range growth plans, International added 45 toy stores,
including 18 franchise stores in 1997. The Company plans to continue its
International expansion with approximately 35 new toy stores in 1998, including
approximately 15 franchise stores. The Company utilizes demographic data to
determine which markets to enter.
3
Kids "R" Us
Kids "R" Us children's clothing stores feature brand name and private
label first quality children's clothing. These stores conform to prototypical
designs consisting of approximately 15,500 to 21,500 square feet and are
typically freestanding units or located in strip centers. Using demographic data
to determine which markets to enter, Kids "R" Us opened 3 children's clothing
stores in 1997.
Babies "R" Us
The Company launched its new Babies "R" Us division with six stores
opened in 1996. These stores target the newborn to preschool market in a 38,000
to 42,000 square feet prototype that offers up to 40 room settings of juvenile
furniture such as cribs and dressers as well as playards, bumper seats, high
chairs, strollers, car seats, infant toddler and preschool toys, infant plush,
and gifts. These stores devote over 5,000 square feet of specialty name brand
and private label clothing and a wide range of feeding supplies, health and
beauty aides and infant care products. In addition, a computerized baby
registry service is offered. Babies "R" Us is designed with low profile
merchandise displays in the center of the stores providing a sweeping view of
the entire merchandise selection.
The Company accelerated the growth of the Babies "R" Us division with
the acquisition of Baby Superstore, a leading large format retailer of newborn
to preschool products in the United States. At the date of acquisition, Baby
Superstore operated 76 stores in 23 states, primarily in the southeast and
midwest. The Company has converted substantially all of the existing Baby
Superstore stores to the Babies "R" Us operating format. The Company opened 19
Babies "R" Us stores and closed 3 of the acquired Baby Superstore stores in
1997, and plans on opening approximately 15 to 20 stores in 1998. The Company
utilizes demographic data to determine which markets to enter.
(d) Trademarks
"TOYS "R" US", "KIDS "R" US", and "BABIES "R" US", as well as various
of the Company's family of "R" Us marks either have been registered, or have
trademark applications pending, with the United States Patent and Trademark
Office and with the trademark registries of many foreign countries. The Company
believes that its rights to these properties are adequately protected.
(e) Seasonality
Retail sales of toy and toy related products are highly seasonal, with
a majority of retail sales occurring during the period from September through
December. Consequently, a large portion of the Company's sales and earnings
occur during its fourth quarter.
See the quarterly financial data contained on page 26 of the Company's
1997 Annual Report, which section is incorporated herein by reference.
4
(f) Working Capital
For a discussion of the Company's working capital requirements, see
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" on pages 12 and 13 of the Company's 1997 Annual Report, which
section is incorporated herein by reference.
(g) Competition
All aspects of the retailing industry are highly competitive. All of
the merchandise sold by the Company, in markets in which the Company operates,
is available from various retailers at competitive prices. The Company's
competitors consist of other specialty retailers of toy and children related
products, department stores and discount and supercenter type retail stores.
(h) Employees
At January 31, 1998, the total number of persons employed by the
Company was approximately 68,000. The number of persons employed by the Company
increased to approximately 116,000 during the 1997 Holiday Season.
ITEM 2. PROPERTIES
See the Note, "Leases," in the Company's Notes to Consolidated
Financial Statements included on page 19 of the Company's 1997 Annual Report,
which note is incorporated herein by reference. Also see the section "Store
Locations" on page 27 of the Company's 1997 Annual Report, which section is
incorporated herein by reference.
Toys "R" Us - United States
A significant portion of the properties operated by Toys "R" Us are
owned. Toys "R" Us either purchases or leases properties depending on the
economic terms available. Where properties are leased, Toys "R" Us generally has
long-term leases with multiple renewal options. Toys "R" Us operates 698 toy
stores, 438 of which are owned and 260 are leased. Toys "R" Us also operates 2
KidsWorld stores, 1 of which is owned and 1 is leased. Toys "R" Us operates 17
distribution centers, 14 of which are owned and 3 are leased. These distribution
centers average approximately 443,000 square feet each in size and are
strategically located throughout the United States to efficiently service these
stores.
The Company also leases corporate offices in Paramus and Rochelle Park,
New Jersey and owns a data center in Parsippany, New Jersey. The Company
recently purchased a new office building in Montvale, New Jersey which will
replace the Rochelle Park office.
Toys "R" Us - International
International operates 367 stores, excluding 16 joint ventures and 58
franchised stores, 111 of which are owned and 256 are leased. International also
operates 12 distribution centers, 4 of which are owned and 8 are leased.
5
Kids "R" Us
Kids "R" Us operates 215 children's clothing stores, 99 of which are
owned and 116 are leased. Kids "R" Us operates 4 distribution centers, including
a new center in Lawrenceville, Georgia, 3 of which are owned and 1 is leased.
These distribution centers average approximately 281,000 square feet each in
size.
Babies "R" Us
Babies "R" Us operates 98 juvenile retail stores, 10 of which are owned
and 88 are leased. Babies "R" Us stores are serviced by existing Toys "R" Us and
Kids "R" Us distribution centers discussed above.
ITEM 3. LEGAL PROCEEDINGS
On July 12, 1996, an arbitrator rendered an award in favor of Yusuf
Ahmed Alghanim & Sons, W.L.L. ("Alghanim") and against the Company and awarded
Alghanim $46 million plus interest from December 1994. This award was rendered
in connection with a dispute between Alghanim and the Company involving rights
under a 1982 license agreement for toy store operations in the Middle East.
Accordingly, the Company recorded a provision of $60 million in 1996
representing all expected costs in connection with this matter. The Company
contested this award in the United States District Court. That motion was denied
on December 13, 1996 and the arbitration award was confirmed. On September 10,
1997, the Second Circuit affirmed the District Court's decision. The Company
sought review in the Supreme Court of the United States. On February 23, 1998,
the Supreme Court denied review. The Company paid the judgment on February 26,
1998.
On May 22, 1996, the Staff of the Federal Trade Commission (the "FTC")
filed an administrative complaint against the Company alleging that the Company
is in violation of Section 5 of the Federal Trade Commission Act for its
practices relating to warehouse clubs. The complaint alleges that the Company
reached understandings with various suppliers that such suppliers not sell to
the clubs the same items that they sell to the Company. The complaint also
alleges that the Company "facilitated understandings" among the manufacturers
that such manufacturers not sell to clubs. The complaint seeks an order that the
Company cease and desist from this practice. The matter was tried before an
administrative law judge in the period from March through May of 1997. On
September 30, 1997, the administrative law judge filed an Initial Decision
upholding the FTC's complaint against the Company.
The Company has appealed the Initial Decision to the Commissioners of
the FTC. That appeal was argued on February 19, 1998. The Company will be
entitled to have the United States Court of Appeals review any adverse decision
by the FTC.
6
After the filing of the FTC complaint, several class action suits were
filed against the Company in State courts in Alabama and California, alleging
that the Company has violated certain state competition laws as a consequence of
the behavior alleged in the FTC complaint. After the Initial Decision was handed
down, more than thirty purported class actions were filed in federal and state
courts in various jurisdictions alleging that the Company has violated the
federal antitrust laws as a consequence of the behavior alleged in the FTC
complaint. In addition, the attorneys general of thirty-eight states, the
District of Columbia and Puerto Rico have filed a suit against the Company in
their capacity as representatives of the consumers of their states, alleging
that the Company has violated federal and state antitrust laws as a consequence
of the behavior alleged in the FTC complaint. These suits seek damages in
unspecified amounts and other relief under state and/or federal law.
The Company believes that both its policy and its conduct in connection
with the foregoing are within the law. The Company also believes that these
actions will not have a material adverse effect on its financial condition,
results of operations or cash flow.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None.
PART II
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ITEM 5. MARKET FOR THE REGISTRANT'S COMMON STOCK AND RELATED STOCKHOLDER MATTERS
Market prices and other information with respect to the Company's
common stock are hereby incorporated by reference to page 26 of the Company's
1997 Annual Report.
ITEM 6. SELECTED FINANCIAL DATA
Selected financial data is hereby incorporated by reference to page 3
of the Company's 1997 Annual Report.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND
FINANCIAL CONDITION
Management's discussion and analysis of results of operations and
financial condition is hereby incorporated by reference to pages 12 and 13
of the Company's 1997 Annual Report.
ITEM 7a. QUALITATIVE AND QUANTITATIVE DISCLOSURES ABOUT MARKET RISK
Qualitative and quantitative disclosures about market risk is hereby
incorporated by reference to page 13 of the Company's 1997 Annual Report.
7
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The following financial statements and supplementary data are hereby
incorporated by reference to pages 14 to 23 of the Company's 1997 Annual Report.
(a) Consolidated Balance Sheets as of January 31, 1998 and February 1, 1997
(b) Consolidated Statements of Earnings for each of the three years in the
period ended January 31, 1998
(c) Consolidated Statements of Cash Flows for each of the three years in the
period ended January 31, 1998
(d) Consolidated Statements of Stockholders' Equity for each of the three years
in the period ended January 31, 1998
(e) Notes to Consolidated Financial Statements; and
(f) Report of Ernst & Young LLP.
Individual financial statements of the registrant's subsidiaries are
not furnished because consolidated financial statements are furnished. The
registrant is primarily a holding company, the expenses and obligations of which
are paid by its consolidated subsidiaries through a fee based on expenses
incurred for its consideration for management services provided to such
subsidiaries by the registrant. All subsidiaries of the registrant are at least
80% owned.
Financial statements of 50%-owned joint ventures are not submitted
because such companies, considered in the aggregate, are not considered a
significant subsidiary as defined in Regulation S-X.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
None.
PART III
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ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
Information with respect to the directors of the Company is hereby
incorporated herein by reference to the section, "Election of Directors", in the
Company's 1997 Proxy Statement.
8
Executive Officers of the Company
(a) The following persons are the executive officers of the Company as of
April 15, 1998, having been elected to their respective offices by
the Board of Directors of the Company to serve until the election and
qualification of their respective successors:
Name Age Position with the Company
---- --- -------------------------
Robert C. Nakasone 50 Chief Executive Officer
Bruce W. Krysiak 47 President and Chief Operating
Officer, and President of U.S.
Toy Store Division
Louis Lipschitz 53 Executive Vice President and
Chief Financial Officer
Michael J. Madden 49 Executive Vice President -
President of Operations of
U.S. Toy Store Division
Richard L. Markee 45 Executive Vice President -
President of Kids "R" Us and
Babies "R" Us Divisions
Gregory R. Staley 50 Executive Vice President -
President of Toys "R" Us
International Division
Keith Van Beek 51 Executive Vice President -
President of Merchandising and
Marketing of U.S. Toy Store Division
Roger Gaston 42 Senior Vice President -
Human Resources
Joseph J. Lombardi 36 Vice President - Controller
(b) The following is a brief account of the business experience during the
past five years for each of the executive officers of the Company:
Mr. Nakasone has been employed by the Company for more than five years.
Effective February 1998, he became Chief Executive Officer. From February 1994
to February 1998, he was President and Chief Operating Officer. From prior to
1993 to February 1994, he was Vice Chairman of the Board and President of
Worldwide Toy Stores.
9
Mr. Krysiak has been employed by the Company since April 1998 as President
and Chief Operating Officer and President of U.S. Toy Store Division. From
January 1997 to April 1998, he was President and Chief Operating Officer of
Dollar General Corporation. From April 1995 to June 1996, he was Chief Operating
Officer of Circle K Corporation. From prior to 1993 to December 1994, he was
Chairman of Giant Joint Venture.
Mr. Lipschitz has been employed by the Company for more than five years.
Effective February 1996, he became Executive Vice President and Chief Financial
Officer. From February 1993 to January 1996, he was Senior Vice President -
Finance and Chief Financial Officer.
Mr. Madden has been employed by the Company for more than five years.
Effective February 1996, he became Executive Vice President of the Company and
President of Operations of U.S. Toy Store Division. From March 1995 to January
1996, he was Group Vice President of Store Operations - U.S. Toy Store Division.
From February 1993 to February 1995, he was Senior Vice President, Regional
Operations and Distribution - U.S. Toy Store Division.
Mr. Markee has been employed by the Company for more than five years.
Effective February 1996, he became Executive Vice President of the Company and
has served as President of Kids "R" Us Division since March 1993 and Babies "R"
Us Division since its inception in September 1995.
Mr. Staley has been employed by the Company for more than five years.
Effective February 1996, he became Executive Vice President of the Company and
has served as President of Toys "R" Us International Division since August 1995.
From prior to 1993 to July 1995, he was Senior Vice President - General
Merchandise Manager for Toys "R" Us International Division.
Mr. Van Beek has been employed by the Company for more than five years.
Effective February 1998, he became Executive Vice President of the Company and
President of Merchandising and Marketing of U.S. Toy Store Division. Effective
August 1995, he became President - Toys "R" Us (Canada) Ltd. From prior to 1993
to August 1995, he was Vice President - Business Development of Toys "R" Us
International Division.
Mr. Gaston has been employed by the Company since December 1996 as Senior
Vice President - Human Resources. From September 1993 to November 1996, he was
Executive Vice President - Human Resources of Carson, Pirie, Scott and Company.
From prior to 1993 to August 1993, he was Group Vice President - Human Resources
and Administration of Finest Supermarkets-AHOLD, USA.
Mr. Lombardi has been employed by the Company since August 1995 as Vice
President - Controller. From October 1994 to July 1995, he was a Partner with
Ernst & Young LLP, a public accounting firm, and was a Senior Manager with Ernst
& Young LLP, since prior to 1993 to September 1994.
10
ITEM 11. EXECUTIVE COMPENSATION
Information with respect to executive compensation is hereby
incorporated herein by reference to the sections, "Election of Directors",
"Compensation of Directors", "Executive Compensation", "Summary Compensation
Table", "Option Grants in Last Fiscal Year", "Aggregated Option Exercises in
Last Fiscal Year and Fiscal Year-End Option Values" and "Long-Term Incentive
Plans - Awards in Last Fiscal Year" in the Company's 1997 Proxy Statement. The
sections, "Report of the Management Compensation and Stock Option Committee on
Executive Compensation" and "Five-Year Stockholder Return Comparison", in the
Company's 1997 Proxy Statement are not incorporated by reference herein. Such
sections are furnished solely for information and shall not be deemed to be
soliciting material or to be "filed" as a part of this report.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
Information with respect to security ownership of certain beneficial
owners and management is hereby incorporated by reference to the sections,
"Principal Stockholders" and "Election of Directors", in the Company's 1997
Proxy Statement.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
None.
PART IV
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ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
(a) Financial Statements
(1) The response to this portion of Item 14 is set forth in Item 8 of
Part II of this report on Form 10-K.
(2) Financial Statement Schedules have been omitted because they are
inapplicable, not required, or the information is included elsewhere in the
financial statements or notes thereto.
(3) See accompanying Index to Exhibits. The Company will furnish to any
stockholder, upon written request, any exhibit listed in the accompanying Index
to Exhibits upon payment by such stockholder of the Company's reasonable
expenses in furnishing any such exhibit.
11
(b) Cautionary Statement Regarding Forward Looking Information
All of the statements made on this Form 10-K, other than historical facts,
are forward looking statements made in reliance on the safe harbor
provisions of the Private Securities Litigation Reform Act of 1995. As
such, they involve risks and uncertainties that could cause actual results
to differ materially. The Company's forward looking statements are based on
assumptions about many important factors, including ongoing competitive
pressures in the retail industry, changes in consumer spending, general
United States economic conditions (such as higher interest rates and
consumer confidence), the anticipated decline in credit results from
historical levels and normal business uncertainty. While the Company
believes that its assumptions are reasonable, it cautions that it is
impossible to predict the impact of certain factors which could cause
actual results to differ materially from expected results.
(c) Reports on Form 8-K
On January 8, 1998, the Company filed a Form 8-K in connection with the
Company's announced adoption of a Stockholder Rights Plan.
12
SIGNATURES
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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.
TOYS "R" US, INC.
(Registrant)
By Louis Lipschitz, Executive Vice President
and Chief Financial Officer
Date: April 24, 1998
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 the 24th day of April, 1998.
Signature Title
--------- -----
Michael Goldstein Chairman of the Board
Robert C. Nakasone Director and Chief Executive Officer
(Principal Executive Officer)
Bruce W. Krysiak Director, President and Chief
Operating Officer
Louis Lipschitz Executive Vice President and Chief
Financial Officer
(Principal Financial Officer)
Joseph J. Lombardi Vice President - Controller
(Principal Accounting Officer)
Robert A. Bernhard Director
RoAnn Costin Director
Calvin Hill Director
Shirley Strum Kenny Director
Charles Lazarus Director, Chairman Emeritus
Norman S. Matthews Director
Howard W. Moore Director
Arthur B. Newman Director
The foregoing constitute all of the Board of Directors and the Principal
Executive, Financial and Accounting Officers of the Registrant.
13
INDEX TO EXHIBITS
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The following is a list of all exhibits filed as part of this Report:
Exhibit No. Document
----------- --------
2A Agreement and Plan of Merger, dated as of December 8,
1995, by and among registrant, Toys "R" Us - Delaware,
Inc. (f/k/a Toys "R" Us, Inc.) and TRU Interim, Inc.
Incorporated herein by reference to Exhibit 2.1 to
registrant's Registration of Securities of Certain
Successor Issuers on Form 8-B dated January 3, 1996
(the "Form 8-B").
2B Agreement and Plan of Merger, dated as of October 1,
1996, and as amended and restated as of December 26,
1996, among registrant, BSST Acquisition Corp., Baby
Superstore, Inc. and Jack P. Tate. Incorporated by
reference to Annex A to the Proxy Statement/Prospectus
Statement No. 333-18863.
3A Restated Certificate of Incorporation of registrant
(filed on January 2, 1996). Incorporated herein by
reference to Exhibit 3.1 to the Form 8-B.
3B Amended and Restated By-Laws of registrant (as of
January 1, 1996). Incorporated herein by reference to
Exhibit 3.2 to the Form 8-B. An amendment dated March
11, 1997 to Amended and Restated By-Laws is filed
herewith.
4 i) Form of Indenture dated as of January 1, 1987 between
registrant and United Jersey Bank, as Trustee,
pursuant to which securities in one or more series in
an unlimited amount may be issued by registrant.
Incorporated herein by reference to Exhibit 4(a) to
Registration Statement No. 33-11461.
Ii) Form of the registrant's 8 1/4% Sinking Fund
Debentures due 2017. Incorporated herein by reference
to Exhibit 4(a) to Registration Statement No.33-11461.
Iii) Form of Indenture between registrant and United Jersey
Bank, as Trustee, pursuant to which one or more series
of debt securities up to $300,000,000 in principal
amount may be issued to registrant. Incorporated
herein by reference to Exhibit 4 to registrant's
Registration Statement No. 33-42237.
Iv) Form of registrant's 8 3/4% Debentures due 2021.
Incorporated herein by reference to Exhibit 4 to
registrant's Report on Form 8-K dated August 29, 1991.
14
Exhibit No. Document
----------- --------
4 v) Substantially all other long-term debt of registrant
(which other debt does not exceed on an aggregate
basis 10% of the total assets of the registrant and
its subsidiaries on a consolidated basis) is
evidenced by, among other things, (i) industrial
revenue bonds issued by industrial development
authorities and guaranteed by registrant, (ii)
mortgages held by third parties on real estate owned
by registrant, (iii) stepped coupon guaranteed bonds
held by a third party and guaranteed by registrant
and (iv) an agreement under which registrant
guaranteed certain yen-denominated loans made by a
third party subsidiary of registrant. Registrant will
file with the Securities and Exchange Commission (the
"Commission")copies of constituent documents relating
to such upon request of the Commission.
10A* Stock Option Plan of the registrant, as amended as of
April 22, 1993. Incorporated herein by reference to
Exhibit 10A to registrant's Annual Report on Form
10-K for the year ended January 30, 1993.
10B* Employment Agreement dated March 14, 1978 between
registrant and Charles Lazarus and an amendment
thereto dated November 20, 1979 (incorporated herein
by reference to Exhibit 2 in Schedule 13D dated
February 1, 1980 filed by Charles Lazarus, et al).
An amendment dated March 23, 1982 to such employment
agreement (incorporated herein by reference to
Exhibit 10B to registrant's Annual Report on Form
10-K for the year ended January 31, 1982, Commission
File Number 1-1117). An amendment dated December 7,
1982 to such employment agreement (incorporated
herein by reference to Exhibit 10B to registrant's
Annual Report on Form 10-K for the year ended January
30, 1983, Commission File Number 1-1117). An
amendment dated April 10, 1984 to such employment
agreement (incorporated herein by reference to
Exhibit 10B to registrant's Annual Report on Form
10-K for the year ended January 29, 1989, Commission
File Number 1-1117).
* Management contract or compensatory plan or arrangement required to be filed
as an exhibit to this Form 10-K pursuant to Item 14(c) hereof.
15
Exhibit No. Document
----------- --------
10C* Form of Indemnification Agreement between
registrant and each director. Incorporated herein
by reference to Exhibit 10F to registrant's Annual
Report on Form 10-K for the year ended February 1,
1987, Commission File Number 1-1117.
10D* Stock Option Agreement dated as of February 1,
1988 between registrant and Robert Nakasone.
Incorporated herein by reference to Exhibit 10G to
registrant's Annual Report on Form 10-K for the
year ended January 31, 1988, Commission File
Number 1-117. The first amendment dated as of
April 1, 1989 to such agreement (incorporated
herein by reference to Exhibit 10G to registrant's
Annual Report on Form 10-K for the year ended
January 29, 1989, Commission File Number 1-1117).
The second amendment dated as of September 19,
1989 to such agreement (incorporated herein by
reference to Exhibit 10G to registrant's Annual
Report on Form 10-K for the year ended January 28,
1990, Commission File Number 1-1117).
10E* Stock Option Agreement dated as of February 1,
1988 between registrant and Michael Goldstein
(incorporated herein by reference to Exhibit 10H
to registrant's Annual Report on Form 10-K for the
year ended January 31, 1988, Commission File
Number 1-1117). The first amendment dated as of
April 1, 1989 to such agreement (incorporated
herein by reference to Exhibit 10H to registrant's
Annual Report on Form 10-K for the year ended
January 29, 1989, Commission File Number 1-1117).
The second amendment dated as of September 19,
1989 to such agreement (incorporated herein by
reference to Exhibit 10H to registrant's Annual
Report on Form 10-K for the year ended January 28,
1990, Commission File Number 1-1117).
* Management contract or compensatory plan or arrangement required to be filed
as an exhibit to this Form 10-K pursuant to Item 14(c) hereof.
16
Exhibit No. Document
----------- --------
10F* Stock Option Plan and Agreement dated as of March
14, 1989 between registrant and Charles Lazarus,
and a First Amendment thereto dated as of
September 19, 1989. Incorporated by reference to
Exhibit 10I to registrant's Annual Report on Form
10-K for the year ended January 28, 1990,
Commission File Number 1-1117.
10G* Non-Employee Directors' Stock Option Plan as
adopted by the Board of Directors on September 19,
1990 and approved by the registrant's stockholders
on June 3, 1991, and amended and restated as of
December 6, 1995. Incorporated herein by reference
to Exhibit 10A to registrant's Proxy Statement for
the year ended February 3, 1996.
10H* Stock Option Plan and Agreement dated as of
December 2, 1992 between the registrant and Robert
C. Nakasone. Incorporated herein by reference to
Exhibit 10I to registrant's Annual Report on Form
10-K for the year ended January 30, 1993.
10I* Stock Option Plan and Agreement dated as of
December 2, 1992 between the registrant and
Michael Goldstein. Incorporated herein by
reference to Exhibit 10J to registrant's Annual
Report on Form 10-K for the year ended January 30,
1993.
10J* Toys "R" Us, Inc. 1994 Stock Option and
Performance Incentive Plan effective November 1,
1993, as amended. Incorporated herein by
reference to Exhibit 4.1 to registrant's
Registration Statement No. 33-64315.
10K* Toys "R" Us, Inc. Management Incentive
Compensation Plan adopted March 28, 1994
(incorporated herein by reference to Exhibit 10L
to registrant's Annual Report on Form 10-K for the
year ended January 29, 1994). The first amendment
to such plan adopted on April 20, 1995
(incorporated herein by reference to Exhibit 10.11
to the Form 8-B).
* Management contract or compensatory plan or arrangement required to be filed
as an exhibit to this Form 10-K pursuant to Item 14(c) hereof.
17
Exhibit No. Document
----------- --------
10L* Toys "R" Us, Inc. Partnership Group Deferred
Compensation Plan effective as of May 17,
1995. Incorporated herein by reference to
Exhibit 10.13 to the Form 8-B.
10M* Toys "R" Us, Inc. Grantor Trust Agreement
dated as of October 1, 1995 between registrant
and American Express Trust Company.
Incorporated herein by reference to Exhibit
10.14 to the Form 8-B.
10N* Toys "R" Us, Inc. Supplemental Executive
Retirement Plan, effective as of December 6,
1995. Incorporated by reference to Exhibit 10N
to registrant's Annual Report on Form 10-K for
the year ended February 3, 1996.
10O Shareholders Agreement, dated October 1, 1996,
by and among registrant, Jack P.Tate and Linda
M. Robertson. Incorporated by reference to
Exhibit A to Exhibit 2 to registrant's
Quarterly Report on Form 10-Q for the quarter
ended November 2, 1996, File No. 1-11609 (the
"Form 10-Q").
* Management contract or compensatory plan or arrangement required to be filed
as an exhibit to this Form 10-K pursuant to Item 14(c) hereof.
18
Exhibit No. Document
----------- --------
10P* Retention Agreements
--------------------
- Retention Agreement between Toys "R" Us,
Inc. and Roger Gaston dated as of May 1, 1997.
- Retention Agreement between Toys "R" Us,
Inc. and Louis Lipschitz dated as of May 1,
1997.
- Retention Agreement between Toys "R" Us,
Inc. and Michael J. Madden dated as of May 1,
1997.
- Retention Agreement between Toys "R" Us,
Inc. and Richard L. Markee dated as of May 1,
1997.
- Retention Agreement between Toys "R" Us,
Inc. and Gregory R. Staley dated as of May 1,
1997.
Each incorporated herein by reference to
Exhibit 10P to registrant's Quarterly Report
on Form 10-Q for the quarterly period ended
May 3, 1997.
10Q Form of Rights Agreement, dated as of January
7, 1998, between Toys "R" Us, Inc. and
American Stock Transfer & Trust Company, which
includes as Exhibit A the Form of Rights
Certificate and, as Exhibit B, the Summary of
Rights to Purchase Common Stock (incorporated
herein by reference to Exhibit 1 to
registrant's Report on Form 8-K dated January
7, 1998).
10R* Retention Agreement between Toys "R" Us, Inc.
and Michael Goldstein dated as of February 25,
1998.
10S* Retention Agreement between Toys "R" Us, Inc.
and Robert C. Nakasone dated as of February
25, 1998.
* Management contract or compensatory plan or arrangement required to be filed
as an exhibit to this Form 10-K pursuant to Item 14 (c) hereof.
19
Exhibit No. Document
----------- --------
10T* Retention Agreement between Toys "R" Us, Inc.
and Keith Van Beek dated as of February 25,
1998.
10U* Retention Agreement between Toys "R" Us, Inc.
and Bruce W. Krysiak dated as of February 12,
1998.
13 Registrant's Annual Report to Stockholders for
the year ended January 31, 1998. Except for
the portions thereof that are expressly
incorporated by reference into this report,
such Annual Report is furnished solely for the
information of the Commission and is not to be
deemed "filed" as part of this report.
21 Subsidiaries of registrant.
23 Consent of Independent Auditors, Ernst & Young
LLP.
27.1 Financial Data Schedule for the year ended
January 31, 1998.
27.2 Financial Data Schedule for the year ended
February 1, 1997 - Restated.
27.3 Financial Data Schedule for the year ended
February 3, 1996 - Restated.
* Management contract or compensatory plan or arrangement required to be filed
as an exhibit to this Form 10-K pursuant to Item 14 (c) hereof.
20