<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 11-K
ANNUAL REPORT
PURSUANT TO SECTION 15(d) OF THE
SECURITIES EXCHANGE ACT 1934
/ X / ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 [FEE REQUIRED] For the fiscal year ended
December 31, 1997.
OR
/ / TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED].
For the transition period from ________________ to
______________________.
Commission File No. 1-7623
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THE GENOVESE RETIREMENT AND SAVINGS PLAN
(the "Plan")
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(Full title of the Plan)
GENOVESE DRUG STORES, INC., 80 Marcus Drive, Melville, New York 11747
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(Name of Issuer of the securities held pursuant to the Plan and
the address of its executive office)
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<PAGE>
REQUIRED INFORMATION
Audited financial statements for the Plan prepared in accordance with the
financial reporting requirements of the Employee Retirement Income Security Act
of 1974, as amended, are filed herewith in lieu of an audited statement of
financial condition and statement of income and changes in plan equity.
Financial Statements and Exhibits
A) The following financial statements are filed as part of this
annual report and appear immediately after the signature page
hereof:
1) Statements of Assets Available for Plan Benefits - December 31,
1997 and December 31, 1996.
2) Statements of Changes in Assets Available for Plan Benefits -
December 31, 1997 and December 31, 1996.
B) The following exhibit is filed as part of this annual report:
Exhibit No. 23 ...... Consent of Independent Auditors
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<PAGE>
SIGNATURES
The Plan. Pursuant to the requirements of the Securities
Exchange Act of 1934, the trustees (or other persons who administer the
employee benefit plan) have duly caused this annual report to be signed on
their behalf by the undersigned hereunto duly authorized.
THE GENOVESE RETIREMENT
AND SAVINGS PLAN
Date: July 14, 1998 By: s/ Gene L. Wexler
-----------------------------------
Gene L. Wexler
Member - Administrative
Committee
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<PAGE>
FORM 11-K
INDEX TO EXHIBITS
EXHIBIT NO. PAGE NO.
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23 Consent of Independent Auditors
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<PAGE>
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The Genovese Retirement and Savings Plan
Financial Statements for the
Years Ended December 31, 1997 and 1996, and
Independent Auditors' Report
<PAGE>
THE GENOVESE RETIREMENT AND SAVINGS PLAN
TABLE OF CONTENTS
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INDEPENDENT AUDITORS' REPORT EXHIBIT
FINANCIAL STATEMENTS AS OF DECEMBER 31, 1997 AND 1996 AND
FOR THE YEARS THEN ENDED:
Statements of Assets Available for Plan Benefits A
Statements of Changes in Assets Available for Plan Benefits B
Notes to Financial Statements C
<PAGE>
INDEPENDENT AUDITORS' REPORT
To the Genovese Retirement and Savings Plan Committee
We have audited the accompanying statements of assets available for plan
benefits of the Genovese Retirement and Savings Plan (the "Plan") as of
December 31, 1997 and 1996, and the related statements of changes in assets
available for plan benefits for the years then ended. These financial
statements are the responsibility of the Plan's management. Our responsibility
is to express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, such financial statements present fairly, in all material
respects, the assets available for plan benefits of the Plan as of December 31,
1997 and 1996, and the changes in assets available for plan benefits for the
years then ended in conformity with generally accepted accounting principles.
June 24, 1998
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EXHIBIT A
THE GENOVESE RETIREMENT AND SAVINGS PLAN
STATEMENTS OF ASSETS AVAILABLE FOR PLAN BENEFITS
DECEMBER 31, 1997 AND 1996
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ASSETS: 1997 1996
Investments - at quoted market value
(Note 5) $ 20,921,423 $ 16,300,687
Loans receivable from participants 862,048 682,430
Employee contributions receivable 249,946 202,551
Employer contributions receivable 50,832 29,585
Cash 2,122 921
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ASSETS AVAILABLE FOR BENEFITS $ 22,086,371 $ 17,216,174
============= ============
See notes to financial statements.
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<PAGE>
EXHIBIT B
THE GENOVESE RETIREMENT AND SAVINGS PLAN
STATEMENTS OF CHANGES IN ASSETS AVAILABLE FOR PLAN BENEFITS
YEARS ENDED DECEMBER 31, 1997 AND 1996
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1997 1996
EMPLOYEE CONTRIBUTIONS $ 3,280,531 $ 2,971,773
EMPLOYER CONTRIBUTIONS 546,236 403,819
DIVIDEND AND INTEREST INCOME 1,271,398 883,198
NET APPRECIATION IN FAIR VALUE
OF ASSETS (NOTE 5) 1,769,277 1,261,226
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Total additions 6,867,442 5,520,016
PAYMENTS TO RETIRED AND TERMINATED
PARTICIPANTS AND WITHDRAWALS (1,997,245) (1,532,859)
------------ -----------
INCREASE IN ASSETS 4,870,197 3,987,157
ASSETS AVAILABLE FOR PLAN BENEFITS:
Beginning of year 17,216,174 13,229,017
------------ -----------
End of year $ 22,086,371 $ 17,216,174
============= ============
See notes to financial statements.
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<PAGE>
EXHIBIT C
THE GENOVESE RETIREMENT AND SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1997 AND 1996
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1. PLAN DESCRIPTION
The following description of the Plan provides only general information.
Participants should refer to the Plan agreement for a more complete
description of the Plan.
a. General - Genovese Drug Stores, Inc. (the "Employer") provides a
retirement and savings plan for substantially all of its employees.
The Plan is a defined contribution plan and is available to all
employees who have attained age 21 and have completed one year of
service. The normal retirement date under the Plan is the
Employer's year-end date following the member's sixty-fifth
birthday. Early retirements are permitted up to five years before
the normal retirement date. Retirement benefits are reduced to the
amount vested at that time. The Genovese Retirement and Savings
Plan Committee and the Plan Administrator control and manage the
operation and administration of the Plan. The Dreyfus Trust Company
serves as the trustee of the Plan. The Plan is subject to the
provisions of the Employee Retirement Income Security Act of 1974
(ERISA).
b. Contributions - The Employer's contribution is made on a monthly
basis and is determined by the Company's management. Effective July
1, 1997 the Employer's contribution may consist of up to $.40 on
each dollar that an employee contributes up to 4 percent of the
employee's annual earnings, as defined. Prior to July 1, 1997, the
Employer's contribution could consist of up to $.50 on each dollar
that an employee contributes up to two percent of an employee's
annual earnings, as defined. Contributions may be made in cash or
in shares of the Employer's Stock at the discretion of the
Company's management.
c. Participants Accounts - Each participant's account is credited with
the participant's contributions and withdrawals, as applicable, and
allocations of (a) the Employer's contributions and (b) Plan
earnings. Allocations are based on participant earnings or account
balances, as defined. Forfeited balances of terminated
participants' nonvested accounts are used to reduce future Employer
contributions. The benefit to which a participant is entitled is
the benefit that can be provided from the participant's account.
d. Vesting - Employees have immediate vesting in their own
contributions and the accumulated earnings thereon. Employer
contributions and earnings thereon become 20 percent vested to
members who are credited with one year of service as defined by the
Plan. Vesting increases 20 percent for each of the next four years,
with full vesting after five years of service.
e. Investment Options - Upon enrollment in the Plan, a participant may
direct employee contributions in one percent increments of ten
options. Participants may change or transfer their investments
options daily. Genovese Drug Stores, Inc.'s matching contributions
are made monthly.
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Capital Preservation Fund - Consists of Guaranteed Investment
Contracts (GIC's) and other stable value instruments. These
instruments are fixed income investments that are intended to have
a stable principal value.
Balanced Fund - Invests in both equity (stock) and debt
instruments. Fund manager may move money between the two types of
investments in order to strike a balance between capital growth
from stocks and income from bonds.
New Leader's Fund - Invests in a portfolio made up mainly of common
stocks. Seeks to invest in emerging smaller sized companies which
the Fund's manager believes to have new or innovative products or
services to offer which should enhance prospects for growth.
Appreciation Fund - Common stock mutual fund; invests in large,
high quality companies that have prominent positions in both
domestic and international markets.
Genovese Co. Stock - Consists of stock of Genovese Drug Stores,
Inc. (Party in Interest).
During fiscal year 1997, the Plan added the following funds:
S&P 500 Index Fund - Contains stocks of the nation's largest
corporations in most major Industries.
Templeton Foreign Fund - Designed to take advantage of the growth
potential of foreign stock markets. The Fund's share price and
return will fluctuate with market conditions, and the economic and
political climates where investments are made.
Lifetime Growth & Income Portfolio Fund - Mutual fund whose goal is
capital appreciation.
Lifetime Income Portfolio Fund - Mutual fund whose primary goal is
to maximize current income and secondary goal is capital
appreciation.
Lifetime Growth Portfolio Fund - Mutual fund whose goal is to
maximize total return, consisting of capital appreciation and
current income.
2. SIGNIFICANT ACCOUNTING POLICIES
a. Basis of Presentation - The accompanying financial statements have
been prepared on the accrual basis of accounting.
b. Valuation of Investments - Investments are carried at quoted market
value. The increase in unrealized appreciation represents the
changes in the quoted market value of the investments. Security
transactions are recorded as of the trade date, realized gains and
losses are based on average cost, and dividends are recorded when
declared.
c. Benefit Payments - Benefits paid to participants are recorded when
disbursed.
d. Loans to Participants - The loans to participants are valued at
cost plus accrued interest which approximates fair value.
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<PAGE>
e. Administrative Expenses - Although not required under the terms of
the Plan, personnel and facilities of the Employer have been used
for its accounting and other activities at no charge to the Plan.
Certain administrative costs incurred in connection with investment
transactions and other activities are paid by the Employer.
3. PLAN TERMINATION POLICIES
The Employer intends to continue the Plan indefinitely but reserves the
right to amend or terminate the Plan at its discretion. If the Plan were
terminated, the interests of the participants would become fully vested
and nonforfeitable.
4. FEDERAL INCOME TAXES
The Plan is intended to qualify under Section 401(a) of the Internal
Revenue Code and to be tax exempt under Section 501(a) of the Internal
Revenue Code. The Plan has received a favorable determination letter from
the Internal Revenue Service dated October 12, 1993. Plan management
believes that the Plan is currently designed and being operated in
compliance with the applicable requirements of the Code. Therefore, no
provision for income taxes has been included in the Plan's financial
statements.
5. INVESTMENTS
Investments at December 31, 1997 consisted of the following:
Description Cost Fair Value
Dreyfus Trust Company -
Capital Preservation Fund $ 7,493,195 $ 7,493,195
Dreyfus Trust Company -
Appreciation Fund 2,600,265 3,792,108
Dreyfus Trust Company -
New Leaders Fund 2,785,444 3,129,706
Dreyfus Trust Company -
Balanced Fund 2,501,949 2,626,498
Dreyfus Trust Company -
S&P 500 Index Fund 315,181 320,339
Dreyfus Trust Company -
Templeton Foreign Fund 229,688 200,369
Dreyfus Trust Company -
Lifetime Growth/Income Portfolio Fund 141,663 125,155
Dreyfus Trust Company -
Lifetime Income Portfolio Fund 120,549 99,395
Dreyfus Trust Company -
Lifetime Growth Portfolio Fund 37,390 34,700
Genovese Drug Stores, Inc. -
Class A Common Stock 1,850,038 3,099,958
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$ 18,075,362 $ 20,921,423
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<PAGE>
Investments at December 31, 1997 consisted of the following:
Description Cost Fair Value
Dreyfus Trust Company -
Capital Preservation Fund $ 7,301,524 $ 7,301,524
Dreyfus Trust Company -
Balanced Fund 1,798,481 1,980,227
Dreyfus Trust Company -
New Leaders Fund 2,088,031 2,303,806
Dreyfus Trust Company -
Appreciation Fund 1,774,327 2,446,356
Genovese Drug Stores, Inc. -
Class A Common Stock 1,558,785 2,268,774
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$ 14,521,148 $ 16,300,687
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<PAGE>
Activities in the various investment funds during the year ended December 31,
1997 were as follows:
<TABLE>
<CAPTION>
Dreyfus
Dreyfus Dreyfus Dreyfus Dreyfus Lifetime
Capital Dreyfus New Dreyfus S&P 500 Templeton Growth &
Preservation Appreciation Leaders Balanced Index Foreign Income
Fund Fund Fund Fund Fund Fund Portfolio Fund
<S> <C> <C> <C> <C> <C> <C> <C>
ADDITIONS TO ASSETS:
Employee contributions $ 954,968 $ 655,116 $ 607,921 $ 444,066 $ 57,693 $ 42,028 $ 25,108
Employer contributions 169,424 98,859 92,322 68,399 9,662 6,633 4,801
Dividend and interest income 449,301 48,378 285,212 363,220 8,630 20,553 20,463
Net appreciation in fair value
of assets -- 709,553 205,566 9,037 5,778 (32,237) (16,720
Loan repayments 168,566 73,546 50,413 37,116 6,452 4,044 5,806
Transfers in 540,388 588,235 225,412 247,632 293,215 187,119 88,160
------------ ------------ ----------- ----------- ----------- ----------- --------------
Total additions 2,282,647 2,173,687 1,466,846 1,169,470 381,430 228,140 127,618
DEDUCTIONS FROM ASSETS:
Payments to retired and
terminated participants and
withdrawals 885,624 422,918 258,129 263,763 1,202 -- 1,555
Loans issued 293,098 119,843 93,573 77,297 -- -- --
Transfers out 912,254 285,174 289,244 182,139 59,889 27,771 908
------------ ------------ ----------- ----------- ----------- ----------- --------------
NET ADDITIONS TO ASSETS 191,671 1,345,752 825,900 646,271 320,339 200,369 125,155
ASSETS AVAILABLE FOR
PLAN BENEFITS:
Beginning of year 7,301,524 2,446,356 2,303,806 1,980,227 -- -- --
------------ ------------ ----------- ----------- ----------- ----------- --------------
End of year $ 7,493,195 $ 3,792,108 $ 3,129,706 $ 2,626,498 $ 320,339 $ 200,369 $ 125,155
============ ============ =========== =========== =========== =========== ==============
<CAPTION>
Dreyfus Dreyfus Drug
Lifetime Lifetime Stores,
Income Growth Inc.
Portfolio Portfolio Class A
Fund Fund Stock Total
<S> <C> <C> <C> <C>
ADDITIONS TO ASSETS:
Employee contributions $ 15,263 $ 25,626 $ 405,347 $ 3,233,136
Employer contributions 2,131 4,504 68,253 524,988
Dividend and interest income 3,501 23,962 46,977 1,270,197
Net appreciation in fair value
of assets (2,682) (21,145) 912,127 1,769,277
Loan repayments 2,276 3,186 27,983 379,388
Transfers in 14,510 63,692 223,449 2,471,812
----------- ----------- ----------- -----------
Total additions 34,999 99,825 1,684,136 9,648,798
DEDUCTIONS FROM ASSETS:
Payments to retired and
terminated participants and
withdrawals 79 16 125,429 1,958,715
Loans issued -- -- 13,724 597,535
Transfers out 220 414 713,799 2,471,812
----------- ----------- ----------- -----------
NET ADDITIONS TO ASSETS 34,700 99,395 831,184 4,620,736
ASSETS AVAILABLE FOR
PLAN BENEFITS:
Beginning of year -- -- 2,268,774 16,300,687
----------- ----------- ----------- -----------
End of year $ 34,700 $ 99,395 $ 3,099,958 $20,921,423
=========== =========== =========== ===========
</TABLE>
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<PAGE>
Activities in the various investment funds during the year ended December
31,1996 were as follows:
<TABLE>
<CAPTION>
Dreyfus Dreyfus Stores,
Capital Dreyfus New Dreyfus Inc.
Preservation Appreciation Leaders Balanced Class A
Fund Fund Fund Fund Stock Total
<S> <C> <C> <C> <C> <C> <C>
ADDITIONS TO ASSETS:
Employee contributions $ 1,095,974 $ 543,869 $ 590,640 $ 459,182 $ 290,480 $ 2,980,145
Employer contributions 166,879 66,275 72,252 58,926 40,347 404,679
Dividend and interest income 420,375 30,101 168,423 128,001 136,298 883,198
Net appreciation in fair value
of assets - 439,702 151,615 78,542 591,367 1,261,226
Loan repayments 137,974 31,342 37,148 27,257 11,921 245,642
Transfers in 107,184 285,744 136,451 58,007 262,576 849,962
------------ ------------ ------------ ------------ ------------ ------------
Total additions 1,928,386 1,397,033 1,156,529 809,915 1,332,989 6,624,852
DEDUCTIONS FROM ASSETS:
Payments to retired and terminated
participants and withdrawals 754,459 264,017 260,336 183,789 62,511 1,525,112
Loans issued 280,757 99,583 86,797 55,948 - 523,085
Transfers out 388,355 128,291 108,349 114,086 110,881 849,962
------------ ------------ ------------ ------------ ------------ ------------
NET ADDITIONS TO ASSETS 504,815 905,142 701,047 456,092 1,159,597 3,726,693
ASSETS AVAILABLE FOR PLAN
BENEFITS:
Beginning of year 6,796,709 1,541,214 1,602,759 1,524,135 1,109,177 12,573,994
------------ ------------ ------------ ------------ ------------ ------------
End of year $ 7,301,524 $ 2,446,356 $ 2,303,806 $ 1,980,227 $ 2,268,774 $ 16,300,687
============ ============ ============ ============ ============ ============
</TABLE>
* * * * * *
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<PAGE>
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in Registration Statement No.
33-53529 of Genovese Drug Stores, Inc. on Form S-8 of our report dated June 24,
1998 appearing in the Annual Report on Form 11-K of the Genovese Retirement and
Savings Plan for the year ended December 31, 1997.
New York, New York
June 25, 1998
