<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington D.C. 20549
FORM 10-K
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the Fiscal Year Ended January 29, 1994
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from to
Commission file number 1-1117
TOYS 'R' US, INC.
(Exact name of registrant as specified in its charter)
<TABLE>
<S> <C>
Delaware 13-5159250
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
461 From Road, Paramus, New Jersey 07652
(Address of principal executive offices) (Zip Code)
</TABLE>
Registrant's telephone number, including area code (201) 262-7800
Securities registered pursuant to Section 12(b) of the Act:
<TABLE>
<S> <C>
Name of each exchange
Title of each class on which registered
Common Stock, par value $.10 New York Stock Exchange
</TABLE>
Securities registered pursuant to Section 12(g) of the Act:
None
(Title of Class)
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the Securities
Exchange Act of 1934 during the preceding 12 months (or for such shorter
period that the registrant was required to file such reports), and (2)
has been subject to such filing requirements for the past 90 days.
Yes [ X ] No [ ]
Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, and will not be
contained, to the best of registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form
10-K or any amendment to this Form 10-K.
[ X ]
<PAGE>
As of April 11, 1994, the aggregate market value of voting
stock held by non-affiliates of the registrant was $10,087,000,000 1.
As of April 11, 1994, 288,191,741 shares of the registrant's
sole class of common stock were outstanding.
DOCUMENTS INCORPORATED BY REFERENCE:
The following documents, or portions thereof, have been
incorporated herein by reference: (i) portions of the registrant's
Annual Report to Stockholders for the fiscal year ended January 29,
1994 (the 'Annual Report') are incorporated by reference into Parts
I and II hereof; and (ii) portions of the registrant's definitive
proxy statement for the 1994 Annual Meeting of Stockholders (the
'Proxy Statement') are incorporated by reference into Part III
hereof.
- - ------------------------
1 Included in this amount is voting stock having an aggregate
market value of approximately $1,414,000,000 (representing 14.0% of the
outstanding voting stock) which is owned by one stockholder.
<PAGE>
PART I
Item 1. Business
Toys 'R' Us, Inc. and its subsidiaries2 are principally engaged
in the operation of 1,022 children's specialty retail stores
consisting of 581 U.S. and 234 international toy stores under the
name 'Toys 'R' Us' and 207 children's clothing stores under the name
'Kids 'R' Us', as of April 11, 1994.
Recent Developments
In April 1994, the Company entered into an agreement with Petrie Stores
Corporation, a New York corporation ('Petrie'), the holder of approximately
14.0% of the Company's outstanding Common Stock. Pursuant to the agreement,
(i) Petrie will sell or otherwise transfer its retail apparel business and
other assets to a third party, (ii) the Company will exchange 37.1 million
shares of newly-issued Common Stock for the 40.4 million shares currently
owned by Petrie (subject to adjustment if Petrie sells any of the Common
Stock it holds), and (iii) the Company will sell to Petrie additional shares
of Common Stock (at market value) for up to $250 million in cash. Following
these transactions Petrie will dissolve and distribute the Common Stock it
holds (other than shares placed in escrow to cover contingent liabilities)
to its shareholders. The exchange is expected to be completed in the latter
part of 1994 or early 1995. The exchange is subject to, among other conditions,
approval by holders of two-thirds of Petrie's outstanding common stock, Petrie's
disposition of its retail operations, receipt of a
- - ---------------------------
2 When used in this report the term 'Company' refers to Toys
'R' Us, Inc. and its subsidiaries, the term 'Toys 'R' Us' refers
only to the Toys 'R' Us U.S.A. toy specialty retail chain and the
term 'registrant' refers only to Toys 'R' Us, Inc., a Delaware
corporation.
<PAGE>
favorable ruling from the Internal Revenue Service that the exchange will be
tax-free and the ability of Petrie to reduce its liabilities remaining at the
time of its dissolution. Milton Petrie, the owner of approximately 60% of
Petrie's outstanding common stock (or 54% on a fully diluted basis), has
agreed to vote in favor of the exchange.
Toys 'R' Us - United States
The Company believes that Toys 'R' Us is the largest and
fastest growing operation of its type in the country in terms of
sales and earnings. 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 and everyday low prices. Toys 'R' Us
operates in 46 states and Puerto Rico and sells children's and adult
toys, games, bicycles and other wheel goods, sporting goods,
electronic and video games, small pools, records, books, infant's
and juvenile furniture, infant's and children's clothing and similar
items.
Most of the Toys 'R' Us stores conform to a prototype design
consisting of approximately 46,000 square feet and are freestanding
units or located in strip centers. As an integral part of its long-
range growth plans, Toys 'R' Us has been increasing its toy store
square footage by opening 40 to 45 new toy stores each year. At
April 11, 1994, Toys 'R' Us utilized 19 warehouse/distribution
centers averaging approximately 369,000 square feet each in size,
and a large fleet of tractors and trailers, which it owns and
maintains, to service its 581 stores. Toys 'R' Us believes that 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.
<PAGE>
Toys 'R' Us employs a computerized inventory system which
allows management to constantly monitor the current activity and
inventory in each region and in each store, and permits management
to allocate the proper amount of merchandise to each store and to
keep the stores adequately stocked at all times.
The regional locations of Toys 'R' Us stores and warehouse/
distribution centers are listed in Item 2.
Toys 'R' Us utilizes demographic information in determining
which markets to enter. During the fiscal year ended January 29,
1994, the Company opened 41 new Toys 'R' Us stores.
Plans for the fiscal year ending January 28, 1995 call for
about 40 to 45 new Toys 'R' Us stores.
Toys 'R' Us - International
During the fiscal year ended January 29, 1994, the Company
opened its first stores in the following countries; Australia (seven
stores), Belgium (two stores), the Netherlands (five stores),
Portugal (two stores) and Switzerland (four stores). In addition,
the Company continued its international expansion with new toy store
openings in Canada (six stores), France (eight stores), Germany
(twelve stores), Japan (ten stores), Spain (five stores) and the
United Kingdom (six stores). The above countries are serviced by
executive and buying offices and warehouse/distribution centers
(see Item 2-Properties). There were a total of 11 international
warehouse/distribution centers in operation at April 11, 1994.
In 1994, the Company plans to open approximately 65 to 70 new
international toy stores, including its first stores in Denmark and
Sweden. These stores will be serviced by the distribution center in
the United Kingdom.
<PAGE>
The Company also operates, through 50%-owned joint ventures,
four stores in Hong Kong and three stores in Taiwan.
In 1993, the Company created a franchising division to provide
for the opening of stores in additional parts of the world. Two
franchise agreements were signed in 1993 which allow for the opening
of toy stores in parts of the Middle East commencing in 1994.
Financial information relating to foreign and domestic
operations is hereby incorporated by reference to page 14 of the
Company's Annual Report.
Kids 'R' Us
In 1993, the Company continued expansion of its Kids 'R' Us
children's clothing store division which was inaugurated in 1983.
These stores feature brand name first quality children's clothing.
Ten additional stores were opened during 1993 and four stores which
were not meeting expectations were closed. As part of a plan to
improve profitability, the Company plans to close an additional 15
to 20 stores in 1994 (of which 10 stores have already closed through
April 11, 1994), including all stores in Puerto Rico and Arizona. In
1994, the Company plans to open about 10 stores. All remaining
stores will be serviced from three existing distribution centers.
Competition
Retailing remains an intensely competitive industry and all of
the merchandise sold by the Company is available, in the markets in
which the Company operates, from various retailers at competitive
prices.
Employees
The Company employed approximately 55,000 associates at the end
of the fiscal year. During the 1993 Christmas season, the number of
employees increased to approximately 107,000.
<PAGE>
Seasonality and Working Capital
The Company's business is highly seasonal, with most of its
earnings occurring in the fourth quarter. See the quarterly
financial data contained in the Company's Annual Report, which
section is incorporated herein by reference to page 14 of the
Company's Annual Report. For a discussion of
the Company's working capital requirements, see 'Management's
Discussion - Results of Operations and Financial Condition -
Liquidity and Capital Resources' included in the Company's Annual
Report, which section is incorporated herein by reference to
page 6 of the Company's Annual Report.
Incorporation
The registrant was incorporated in Delaware in 1928.
<PAGE>
Item 2. Properties
As of April 11, 1994, Toys 'R' Us operated 19 distribution
centers, 15 of which are owned and four of which are leased. The
distribution centers average approximately 369,000 square feet each
in size.
As of April 11, 1994, Toys 'R' Us operated 581 toy stores, 354
of which are owned and 227 of which are leased. Most of the stores
conform to a prototype design consisting of approximately 46,000
square feet. Further, in smaller markets, the Company is also
opening 30,000 square foot stores. The toy stores are typically
freestanding units or located in strip centers.
Prior to 1980, Toys 'R' Us leased most of its properties
pursuant to long-term leases with multiple renewal options. Since
1981, a significant portion of the properties constructed by Toys
'R' Us have been owned. Toys 'R' Us plans to continue this policy
in 1994.
The following chart sets forth certain information concerning
the operating properties of Toys 'R' Us as of April 11, 1994:
<TABLE>
<CAPTION>
Distribution Region Number of
Center Serviced Stores in Region
<S> <C> <C>
Joliet, Illinois Illinois/Wisconsin/Minnesota 60
Rialto, California Southern California/Arizona/
Nevada/Hawaii 57
Atlanta, Georgia Georgia/South Carolina/
Tennessee/Alabama 47
Port Newark, New Jersey
Elizabeth, New Jersey New York/Northern New Jersey 46
Landover, Maryland Virginia/Maryland/North
Carolina 42
Houston, Texas Southern Texas/Louisiana/
Mississippi 37
Stockton, California Northern California 31
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C>
Northboro,
Massachusetts New England 31
Youngstown, Ohio Northeastern Ohio/Western
Pennsylvania/Northwestern New York 28
Fairfield, Ohio Central Ohio/Indiana/Kentucky 28
Canton, Michigan Michigan/Northwestern Ohio 27
Fairless Hills, Pennsylvania/Delaware/
Pennsylvania Southern New Jersey 27
Carrollton, Texas Northern Texas/Oklahoma/
Arkansas 24
Kansas City, Missouri Kansas/Missouri/Iowa/Nebraska 23
Miami, Florida Southern Florida/Puerto Rico 20
Orlando, Florida Northern Florida 19
Denver, Colorado Colorado/Utah/New Mexico 17
Kent, Washington Pacific Northwest/Alaska 17
---
581
===
</TABLE>
The Company also has corporate offices, which it leases, in
Paramus and Rochelle Park, New Jersey.
Kids 'R' Us
As of April 11, 1994, Kids 'R' Us operated 207 children's
clothing stores, of which 95 are owned and 112 are leased. Most of
the stores conform to prototypical designs consisting of
approximately 18,000 to 21,500 square feet. Kids 'R' Us is also
opening 15,000 square foot stores in smaller markets. The clothing
stores are typically freestanding units or located in strip centers.
As of April 11, 1994, Kids 'R' Us operated three distribution
centers, all of which are owned. The distribution centers average
approximately 307,000 square feet each in size.
<PAGE>
The following chart sets forth certain information concerning
the operating properties of Kids 'R' Us as of April 11, 1994:
<TABLE>
<CAPTION>
Distribution Centers Number of Stores Serviced
<S> <C>
Somerset, New Jersey 87
Southgate, Michigan 84
Irwindale, California 36
---
207
===
</TABLE>
Toys 'R' Us - International
Toys 'R' Us-International owns or leases properties in
Australia, Austria, Belgium, Canada, France, Germany, Japan, the
Netherlands, Portugal, Singapore, Spain, Switzerland and the United
Kingdom. The Toys 'R' Us international stores generally conform to
prototypical designs similar to those used in the United States.
The following chart sets forth certain information concerning
the operating properties of Toys 'R' Us-International, excluding
joint venture properties, as of April 11, 1994:
<TABLE>
<CAPTION> Number
Executive and Distribution Country of Stores
Buying Office Centers Serviced Serviced
<S> <C> <C> <C>
Canada Concord, Ontario Canada 50
United Kingdom Conventry United Kingdom 45
Germany Koln(2), Germany,Austria
Trossingen Belgium, The 60
Bocklemund Netherlands,
Switzerland
France Evry France 25
Spain Alcala de Henares Spain, Portugal 19
Japan Kobe Japan 16
Australia Regents Park, NSW Australia 7
- - -- Jurong Singapore 3
---
225
===
</TABLE>
Four of the warehouse/distribution centers are owned and
seven are leased. 82 of the stores are owned and 143 are leased.
See the Note, 'Leases,' in the Company's Notes to Consolidated
Financial Statements included in the Company's Annual Report, which
note is incorporated herein by reference, for additional information
with respect to the Company's leases.
<PAGE>
<TABLE>
<S> <C>
Item 3. Legal Proceedings
None.
Item 4. Submission of Matters to a Vote
of Security Holders
None.
Item 4A. Executive Officers of the Company
as of April 11, 1994
</TABLE>
(a) The following persons are the executive officers of
the Company, 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:
<TABLE>
<CAPTION>
Name Age Office
<S> <C> <C>
Michael Goldstein 52 Vice Chairman of the Board and
Chief Executive Officer
Robert C. Nakasone 46 President and Chief Operating
Officer
Larry D. Bouts 45 Vice President of the Company and
President of the International
Division of the Company
Roger V. Goddu 43 Executive Vice President and
General Merchandise Manager-USA
Toy Stores
Richard L. Markee 41 Vice President of the Company and
President of the Kids 'R' Us
Division of the Company
Louis Lipschitz 49 Senior Vice President-Finance
and Chief Financial Officer
Jonathan M. Friedman 38 Vice President - Controller
</TABLE>
(b) The following is a brief account of the business
experience during the past five years of each of the executive
officers of the Company:
<PAGE>
Mr. Goldstein has been employed by the Company for more
than five years. Effective January 31, 1994, he became Vice
Chairman of the Board and Chief Executive Officer. From February 1,
1993 to January 30, 1994, he was Vice Chairman of the Board and
Chief Administrative Officer. From prior to 1989 to January 31, 1993,
he was Vice Chairman of the Board and Chief Financial and Administrative
Officer.
Mr. Nakasone has been employed by the Company for more
than five years. Effective January 31, 1994, he became President
and Chief Operating Officer. From prior to 1989 to January 30, 1994,
he was Vice Chairman of the Board and President of Worldwide Toy Stores.
Mr. Bouts has been employed by the Company since September
1990. Effective February 3, 1991, he became Vice President of the
Company and President of the International Division. From prior to
1989 to August 1990, he was Vice President - Finance, Chief
Financial Officer of PepsiCo Foods International, a division of
PepsiCo, Inc.
Mr. Goddu has been employed by the Company since February
1989 as Executive Vice President - General Merchandise Manager - USA
Toy Stores.
Mr. Markee has been employed by the Company since October
1990. From March 1, 1993 to date, he has been President of the Kids
'R' Us Division and a Vice President of the Company. From October
1, 1990 to February 28, 1993, he was Vice President - General
Merchandise Manager for the Kids 'R' Us Division, and from prior to
1989 to September 1990, he was employed by Target Stores, a
specialty store division of Dayton Hudson Corporation, as Vice
<PAGE>
President - Divisional Merchandise Manager.
Mr. Lipschitz has been employed by the Company for more
than five years. From February 1, 1993 to date, he has been Senior
Vice President-Finance and Chief Financial Officer. From April 1990
to January 31, 1993, he was Vice President - Finance and Treasurer,
and from prior to 1989 to March 1990, he was Vice President -
Treasurer.
Mr. Friedman has been employed by the Company for more
than five years. From April 1990 to date, he has been Vice
President - Controller. From prior to 1989 to April 1990, he was
Assistant Controller.
<PAGE>
PART II
<TABLE>
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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 15 of the Company's Annual Report.
Item 6. Selected Financial Data
Selected financial data are hereby incorporated by
reference to page 1 of the Company's Annual Report.
Item 7. Management's Discussion and Analysis of
Financial Condition and Results of Operations
Management's discussion and analysis of financial
condition and results of operations is hereby incorporated by
reference to page 6 of the Company's Annual Report.
Item 8. Financial Statements
and Supplementary Data
</TABLE>
The following financial statements and supplementary data
are hereby incorporated by reference to pages 7 to 15 of the
Company's Annual Report.
<TABLE>
<S> <C>
(i) Consolidated Balance Sheets at January 29, 1994 and
January 30, 1993;
(ii) Consolidated Statements of Earnings for each of the
three years in the period ended January 29, 1994;
(iii) Consolidated Statements of Cash Flows for each of the
three years in the period ended January 29, 1994;
(iv) Consolidated Statements of Stockholders' Equity for
each of the three years in the period ended January
29, 1994;
</TABLE>
<PAGE>
<TABLE>
<S> <C>
(v) Notes to Consolidated Financial Statements; and
(vi) Opinion of Ernst & Young.
</TABLE>
Individual financial statements of the registrant's
subsidiaries are not furnished because consolidated financial
statements are furnished. The registrant is primarily an operating
company and all subsidiaries 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.
<TABLE>
<S> <C>
Item 9. Changes in and Disagreements with Accountants
on Accounting and Financial Disclosure
None.
</TABLE>
<PAGE>
PART III
<TABLE>
<S> <C>
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 Proxy Statement.
Information with respect to the executive officers of the
Company is set forth in Item 4A of Part I hereof.
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' and '- Aggregated Option
Exercises in Last Fiscal Year and Fiscal Year-End Option Values',
in the Company's Proxy Statement. The sections, '- Report of the
Compensation Committee on Executive Compensation' and '- Five-Year
Stockholder Return Comparison', in the Company's 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 Stockholder' and 'Election of
Directors', in the Company's Proxy Statement.
</TABLE>
<PAGE>
<TABLE>
<S> <C>
Item 13. Certain Relationships and
Related Transactions
Information with respect to certain relationships and
related transactions is hereby incorporated herein by reference to
the section, 'Election of Directors - Certain Transactions',
in the Company's Proxy Statement.
</TABLE>
<PAGE>
PART IV
<TABLE>
<S> <C>
Item 14. Exhibits, Financial Statement
Schedules, and Reports on Form 8-K
(a) (1) The response to this portion of Item 14 is set
forth in Item 8 of Part II hereof.
(2) Financial Statement Schedules (filed as part of
this Report):
</TABLE>
<TABLE>
<CAPTION>
Page
<S> <C>
Consent of Ernst & Young and Opinion on Financial
Statement Schedules for the years ended January 29, 1994
and January 30, 1993.
Opinion on Financial Statements and Financial Statement
Schedules of Deloitte & Touche for the year ended February
1, 1992.
II--Amounts Receivable from Underwriters, Promoters,
Directors, Officers, Employees, and Principal Holders
(Other than Affiliates) of Equity Securities of the Person
and its Affiliates.
V--Property, Plant and Equipment
VI--Accumulated Depreciation, Depletion and Amortization
of Property, Plant and Equipment
IX--Short-Term Borrowings
</TABLE>
All other 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.
<PAGE>
(b) On January 4, 1994, the Company filed a Form 8-K in
connection with certain changes in the management of the Company
which were announced in the Press Release dated January 3, 1994.
On January 12, 1994, the Company filed a Form 8-K in
connection with certain announcements made by the Company in the
Press Release dated January 11, 1994.
No other reports on Form 8-K have been filed by the
Company during the last quarter of the period covered by this
Report.
(c) Reference is made to Item 14(a)(3) above.
(d) Reference is made to Item 14(a)(2) above.
<PAGE>
REPORT AND CONSENT OF INDEPENDENT AUDITORS
The Board of Directors and Stockholders
Toys 'R' Us, Inc.
We consent to the incorporation by reference in this Annual Report
(Form 10-K) of Toys 'R' Us, Inc. and subsidiaries of our report
dated March 9, 1994, included in the 1993 Annual Report to
Stockholders of Toys 'R' Us, Inc. and subsidiaries.
Our audit also included the financial statement schedules of Toys
'R' Us, Inc. and subsidiaries listed in the Index at Item 14(a)(2)
for the years ended January 29, 1994 and January 30, 1993. These
financial statement schedules are the responsibility of the Company's
management. Our responsibility is to express an opinion based on
our audits. In our opinion, the financial statement schedules
referred to above, when considered in relation to the basic
financial statements taken as a whole, present fairly in all
material respects the information set forth therein.
We also consent to the incorporation by reference in Registration
Statements (Form S-3 Numbers 2-87794, 33-23264, 33-34273, 33-42237
and 33-51359) and in Registration Statements (Form S-8 Numbers 2-
64887, 2-91834, 33-16821 and 33-42627) of Toys 'R' Us, Inc. and
subsidiaries of our report dated March 9, 1994, with respect to the
consolidated financial statements incorporated herein by reference,
and our report included in the preceding paragraph with respect to
the financial statement schedules included in this Annual Report (Form 10-K)
of Toys 'R' Us, Inc. and subsidiaries.
/s/ Ernst & Young
New York, New York
March 9, 1994
<PAGE>
INDEPENDENT AUDITORS' REPORT
To the Board of Directors and Stockholders
Toys 'R' Us, Inc.
Paramus, New Jersey
We have audited the accompanying consolidated statements of earnings,
stockholders' equity and cash flows of Toys 'R' Us, Inc. and
subsidiaries for the year ended February 1, 1992. Our audit also
included the financial statement schedules listed in the Index at
Item 14(a)(2). These financial statements and financial statement
schedules are the responsibility of the Company's management. Our
responsibility is to express an opinion on the financial statements
and financial statement schedules based on our audit.
We conducted our audit 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 audit provides a
reasonable basis for our opinion.
In our opinion, such consolidated financial statements present
fairly, in all material respects, the results of operations of Toys 'R'
Us, Inc. and subsidiaries and their cash flows for the year ended
February 1, 1992 in conformity with generally accepted accounting
principles. Also, 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.
/s/ Deloitte & Touche
New York, New York
March 11, 1992
<PAGE>
TOYS 'R' US, INC. AND SUBSIDIARIES
SCHEDULE II -- AMOUNTS RECEIVABLE FROM UNDERWRITERS, PROMOTERS,
DIRECTORS, OFFICERS, EMPLOYEES, AND PRINCIPAL HOLDERS (OTHER THAN
AFFILIATES) OF EQUITY SECURITIES OF THE PERSON AND ITS AFFILIATES
YEAR ENDED JANUARY 30, 1993
<TABLE>
<CAPTION>
COLUMN A COLUMN B COLUMN C COLUMN D COLUMN E
- - ------------------------------------------ ------------ --------- ------------------------- ------------------
BALANCE AT END OF
DEDUCTIONS PERIOD
------------------------- ------------------
BALANCE AT (1) (2) (2)
BEGINNING OF AMOUNTS AMOUNTS (1) NOT
NAME OF DEBTOR PERIOD ADDITIONS COLLECTED WRITTEN OFF CURRENT CURRENT
- - ------------------------------------------ ------------ --------- ---------- ----------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
Charles Lazarus........................... $ 1,108,000 $ -- $1,108,000 $ -- $ -- $ --
</TABLE>
- - ------------
Represents a note receivable with interest at 6% in connection with the exercise
of stock options.
<PAGE>
TOYS 'R' US, INC. AND SUBSIDIARIES
SCHEDULE II -- AMOUNTS RECEIVABLE FROM UNDERWRITERS, PROMOTERS,
DIRECTORS, OFFICERS, EMPLOYEES, AND PRINCIPAL HOLDERS (OTHER THAN
AFFILIATES) OF EQUITY SECURITIES OF THE PERSON AND ITS AFFILIATES
YEAR ENDED FEBRUARY 1, 1992
<TABLE>
<CAPTION>
COLUMN A COLUMN B COLUMN C COLUMN D COLUMN E
- - ------------------------------------------ ------------ --------- ------------------------- ------------------
BALANCE AT END OF
DEDUCTIONS PERIOD
------------------------- ------------------
BALANCE AT (1) (2) (2)
BEGINNING OF AMOUNTS AMOUNTS (1) NOT
NAME OF DEBTOR PERIOD ADDITIONS COLLECTED WRITTEN OFF CURRENT CURRENT
- - ------------------------------------------ ------------ --------- ---------- ----------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
Charles Lazarus........................... $ 1,108,000 $ -- $ -- $ -- $1,108,000(A) $ --
Norman Ricken............................. 204,717 -- 204,717 -- -- --
</TABLE>
- - ------------
(A) Represents a note receivable with interest at 6% due October 5, 1992 in
connection with the exercise of stock options.
<PAGE>
TOYS 'R' US, INC. AND SUBSIDIARIES
SCHEDULE V -- PROPERTY, PLANT AND EQUIPMENT
YEAR ENDED JANUARY 29, 1994
<TABLE>
<CAPTION>
COLUMN A COLUMN B COLUMN C COLUMN D COLUMN E COLUMN F
- - ----------------------------------- ------------ --------- ----------- ------------------ -------------
BALANCE AT SALES OTHER CHANGES --
BEGINNING OF ADDITIONS AND ADD (DEDUCT) -- BALANCE AT
CLASSIFICATION PERIOD AT COST RETIREMENTS DESCRIBE END OF PERIOD
- - ----------------------------------- ------------ --------- ----------- ------------------ -------------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
Property and equipment used in
operations:
Land............................... $ 642,368 $ 48,772 $ (228) $ 14,367 (A)
(11,542)(B) $ 693,727
Buildings.......................... 1,280,850 90,260 (336) 93,361 (A)
(17,858)(B) 1,446,277
Furniture and equipment............ 809,772 177,416 (28,669) 1,794 (A)
(6,953)(B) 953,360
Leasehold and leasehold 40,488 (A)
improvements..................... 510,780 116,382 (2,407) (7,052)(B) 658,191
(150,379)(A)
Construction in progress........... 72,895 120,294 -- (955)(B) 41,855
Leased property under capital
leases........................... 20,193 4,167 -- -- 24,360
------------ --------- ----------- ------------------ -------------
$ 3,336,858 $ 557,291 $ (31,640) $ (44,729) $ 3,817,780
------------ --------- ----------- ------------------ -------------
------------ --------- ----------- ------------------ -------------
</TABLE>
- - ------------
(A) Transfers
(B) Translation adjustments
<PAGE>
TOYS 'R' US, INC. AND SUBSIDIARIES
SCHEDULE V -- PROPERTY, PLANT AND EQUIPMENT
YEAR ENDED JANUARY 30, 1993
<TABLE>
<CAPTION>
COLUMN A COLUMN B COLUMN C COLUMN D COLUMN E COLUMN F
- - ----------------------------------- ------------ --------- ----------- ------------------ -------------
BALANCE AT OTHER CHANGES --
BEGINNING OF ADDITIONS ADD (DEDUCT) -- BALANCE AT
CLASSIFICATION PERIOD AT COST RETIREMENTS DESCRIBE END OF PERIOD
- - ----------------------------------- ------------ --------- ----------- ------------------ -------------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
Property and equipment used in
operations:
Land............................... $ 599,886 $ 49,926 $ -- $ 13,941 (A)
(21,385)(B) $ 642,368
Buildings.......................... 1,164,323 71,931 -- 68,738 (A)
(24,142)(B) 1,280,850
Furniture and equipment............ 695,820 123,798 (4,004) 3,707 (A)
(9,549)(B) 809,772
Leasehold and leasehold
improvements..................... 419,457 83,296 (1,111) 13,030 (A)
(3,892)(B) 510,780
Construction in progress........... 83,032 93,829 -- (99,416)(A)
(4,550)(B) 72,895
Leased property under capital
leases........................... 21,172 -- (979) -- 20,193
------------ --------- ----------- ------------------ -------------
$ 2,983,690 $ 422,780 $ (6,094) $ (63,518) $ 3,336,858
------------ --------- ----------- ------------------ -------------
------------ --------- ----------- ------------------ -------------
</TABLE>
- - ------------
(A) Transfers
(B) Translation adjustments
<PAGE>
TOYS 'R' US, INC. AND SUBSIDIARIES
SCHEDULE V -- PROPERTY, PLANT AND EQUIPMENT
YEAR ENDED FEBRUARY 1, 1992
<TABLE>
<CAPTION>
COLUMN A COLUMN B COLUMN C COLUMN D COLUMN E COLUMN F
- - ----------------------------------- ------------ --------- ----------- ------------------ -------------
BALANCE AT OTHER CHANGES --
BEGINNING OF ADDITIONS ADD (DEDUCT) -- BALANCE AT
CLASSIFICATION PERIOD AT COST RETIREMENTS DESCRIBE END OF PERIOD
- - ----------------------------------- ------------ --------- ----------- ------------------ -------------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
Property and equipment used in
operations:
Land............................... $ 479,802 $ 128,359 $ -- $ (139)(A)
(8,136)(B) $ 599,886
Buildings.......................... 961,892 104,193 -- 109,767 (A)
(11,529)(B) 1,164,323
Furniture and equipment............ 581,971 119,961 (5,616) 5,791 (A)
(6,287)(B) 695,820
Leasehold and leasehold
improvements..................... 364,065 37,777 (1,131) 26,563 (A)
(7,817)(B) 419,457
Construction in progress........... 66,334 159,107 (107) (141,982)(A)
(320)(B) 83,032
Leased property under capital
leases........................... 21,172 -- -- -- 21,172
------------ --------- ----------- ------------------ -------------
$ 2,475,236 $ 549,397 $ (6,854) $ (34,089) $ 2,983,690
------------ --------- ----------- ------------------ -------------
------------ --------- ----------- ------------------ -------------
</TABLE>
- - ------------
(A) Transfers
(B) Translation adjustments
<PAGE>
TOYS 'R' US, INC. AND SUBSIDIARIES
SCHEDULE VI -- ACCUMULATED DEPRECIATION, DEPLETION AND AMORTIZATION
OF PROPERTY, PLANT AND EQUIPMENT
YEAR ENDED JANUARY 29, 1994
<TABLE>
<CAPTION>
COLUMN A COLUMN B COLUMN C COLUMN D COLUMN E COLUMN F
- - ---------------------------------- ------------ ---------- ----------- ------------------ -------------
ADDITIONS
BALANCE AT CHARGED TO SALES OTHER CHANGES --
BEGINNING OF COSTS AND AND ADD (DEDUCT) -- BALANCE AT
CLASSIFICATION PERIOD EXPENSES RETIREMENTS DESCRIBE END OF PERIOD
- - ---------------------------------- ------------ ---------- ----------- ------------------ -------------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
Property and equipment used in
operations:
Buildings......................... $ 119,996 $ 26,802 $ (213) $ 304 (A)
(695)(B) $ 146,194
Furniture and equipment........... 306,746 81,526 (27,518) (11)(A)
(1,709)(B) 359,034
Leasehold and leasehold
improvements.................... 92,196 24,135 (2,255) (284)(A)
(984)(B) 112,808
Leased property under capital
leases.......................... 14,370 907 -- -- 15,277
------------ ---------- ----------- ------------------ -------------
$ 533,308 $133,370 $ (29,986) $ (3,379) $ 633,313
------------ ---------- ----------- ------------------ -------------
------------ ---------- ----------- ------------------ -------------
</TABLE>
- - ------------
(A) Transfers
(B) Translation adjustments
<PAGE>
TOYS 'R' US, INC. AND SUBSIDIARIES
SCHEDULE VI -- ACCUMULATED DEPRECIATION, DEPLETION AND AMORTIZATION
OF PROPERTY, PLANT AND EQUIPMENT
YEAR ENDED JANUARY 30, 1993
<TABLE>
<CAPTION>
COLUMN A COLUMN B COLUMN C COLUMN D COLUMN E COLUMN F
- - ---------------------------------- ------------ ---------- ----------- ------------------ -------------
ADDITIONS
BALANCE AT CHARGED TO OTHER CHANGES --
BEGINNING OF COSTS AND ADD (DEDUCT) -- BALANCE AT
CLASSIFICATION PERIOD EXPENSES RETIREMENTS DESCRIBE END OF PERIOD
- - ---------------------------------- ------------ ---------- ----------- ------------------ -------------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
Property and equipment used in
operations:
Buildings......................... $ 96,012 $ 25,938 $ -- $ (64)(A)
(1,890)(B) $ 119,996
Furniture and equipment........... 240,803 73,244 (3,503) 10 (A)
(3,808)(B) 306,746
Leasehold and leasehold
improvements.................... 74,198 19,092 (395) 54 (A)
(753)(B) 92,196
Leased property under capital
leases.......................... 14,590 760 (980) -- 14,370
------------ ---------- ----------- ------------------ -------------
$ 425,603 $119,034 $ (4,878) $ (6,451) $ 533,308
------------ ---------- ----------- ------------------ -------------
------------ ---------- ----------- ------------------ -------------
</TABLE>
- - ------------
(A) Transfers
(B) Translation adjustments
<PAGE>
TOYS 'R' US, INC. AND SUBSIDIARIES
SCHEDULE VI -- ACCUMULATED DEPRECIATION, DEPLETION AND AMORTIZATION
OF PROPERTY, PLANT AND EQUIPMENT
YEAR ENDED FEBRUARY 1, 1992
<TABLE>
<CAPTION>
COLUMN A COLUMN B COLUMN C COLUMN D COLUMN E COLUMN F
- - ---------------------------------- ------------ ---------- ----------- ------------------ -------------
ADDITIONS
BALANCE AT CHARGED TO OTHER CHANGES-
BEGINNING OF COSTS AND ADD (DEDUCT)- BALANCE AT
CLASSIFICATION PERIOD EXPENSES RETIREMENTS DESCRIBE END OF PERIOD
- - ---------------------------------- ------------ ---------- ----------- ------------------ -------------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
Property and equipment used in
operations:
Buildings......................... $ 75,299 $ 21,285 $ -- $ (28)(A)
(544)(B) $ 96,012
Furniture and equipment........... 185,661 62,043 (5,116) 3 (A)
(1,788)(B) 240,803
Leasehold and leasehold
improvements.................... 59,134 16,584 (879) 25 (A)
(666)(B) 74,198
Leased property under capital
leases.......................... 13,801 789 -- -- 14,590
------------ ---------- ----------- ------------------ -------------
$ 333,895 $100,701 $ (5,995) $ (2,998) $ 425,603
------------ ---------- ----------- ------------------ -------------
------------ ---------- ----------- ------------------ -------------
</TABLE>
- - ------------
(A) Transfers
(B) Translation adjustments
<PAGE>
TOYS 'R' US, INC. AND SUBSIDIARIES
SCHEDULE IX -- SHORT-TERM BORROWINGS
YEAR ENDED JANUARY 29, 1994
<TABLE>
<CAPTION>
COLUMN A COLUMN B COLUMN C COLUMN D COLUMN E COLUMN F
- - ------------------------------------------- ------------ ------------- ----------- ----------- -------------
MAXIMUM AVERAGE WEIGHTED
AMOUNT AMOUNT AVERAGE
BALANCE AT WEIGHTED OUTSTANDING OUTSTANDING INTEREST RATE
CATEGORY OF AGGREGATE END OF AVERAGE DURING THE DURING THE DURING THE
SHORT-TERM BORROWINGS PERIOD INTEREST RATE PERIOD PERIOD PERIOD
- - ------------------------------------------- ------------ ------------- ----------- ----------- -------------
(A) (B)
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
NOTES PAYABLE TO BANKS..................... $ 233,174 5.5% $ 360,355 $ 205,683 6.5%
------------ ------------- ----------- ----------- -------------
------------ ------------- ----------- ----------- -------------
COMMERCIAL PAPER........................... $ 6,688 2.8% $ 219,982 $ 48,197 3.0%
------------ ------------- ----------- ----------- -------------
------------ ------------- ----------- ----------- -------------
</TABLE>
- - ------------
(A) Average amount outstanding during the period is computed by dividing the
total of daily outstanding principal balances by 365.
(B) Average interest rate for the year is computed by dividing the actual
short-term interest expense by the average short-term debt outstanding.
<PAGE>
TOYS 'R' US, INC. AND SUBSIDIARIES
SCHEDULE IX -- SHORT-TERM BORROWINGS
YEAR ENDED JANUARY 30, 1993
<TABLE>
<CAPTION>
COLUMN A COLUMN B COLUMN C COLUMN D COLUMN E COLUMN F
- - ---------------------------------------------- ------------ ------------- ----------- ----------- -------------
MAXIMUM AVERAGE WEIGHTED
AMOUNT AMOUNT AVERAGE
BALANCE AT WEIGHTED OUTSTANDING OUTSTANDING INTEREST RATE
CATEGORY OF AGGREGATE END OF AVERAGE DURING THE DURING THE DURING THE
SHORT-TERM BORROWINGS PERIOD INTEREST RATE PERIOD PERIOD PERIOD
- - ---------------------------------------------- ------------ ------------- ----------- ----------- -------------
(A) (B)
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
NOTES PAYABLE TO BANKS........................ $117,378 8.4% $ 284,544 $ 149,959 8.9%
------------ ------------- ----------- ----------- -----
------------ ------------- ----------- ----------- -----
COMMERCIAL PAPER.............................. $ 3,394 2.6% $ 338,000 $ 153,108 3.5%
------------ ------------- ----------- ----------- -----
------------ ------------- ----------- ----------- -----
</TABLE>
- - ------------
(A) Average amount outstanding during the period is computed by dividing the
total of daily outstanding principal balances by 365.
(B) Average interest rate for the year is computed by dividing the actual
short-term interest expense by the average short-term debt outstanding.
<PAGE>
TOYS 'R' US, INC. AND SUBSIDIARIES
SCHEDULE IX -- SHORT-TERM BORROWINGS
YEAR ENDED FEBRUARY 1, 1992
<TABLE>
<CAPTION>
COLUMN A COLUMN B COLUMN C COLUMN D COLUMN E COLUMN F
- - ---------------------------------------------- ------------ ------------- ----------- ----------- -------------
MAXIMUM AVERAGE WEIGHTED
AMOUNT AMOUNT AVERAGE
BALANCE AT WEIGHTED OUTSTANDING OUTSTANDING INTEREST RATE
CATEGORY OF AGGREGATE END OF AVERAGE DURING THE DURING THE DURING THE
SHORT-TERM BORROWINGS PERIOD INTEREST RATE PERIOD PERIOD PERIOD
- - ---------------------------------------------- ------------ ------------- ----------- ----------- -------------
(A) (B)
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
NOTES PAYABLE TO BANKS........................ $241,659 9.5% $ 389,008 $ 165,536 9.8%
------------ ------------- ----------- ----------- -----
------------ ------------- ----------- ----------- -----
COMMERCIAL PAPER.............................. $ 50,000 3.8% $ 708,000 $ 398,648 5.9%
------------ ------------- ----------- ----------- -----
------------ ------------- ----------- ----------- -----
</TABLE>
- - ------------
(A) Average amount outstanding during the period is computed by dividing the
total of daily outstanding principal balances by 365.
(B) Average interest rate for the year is computed by dividing the actual
short-term interest expense by the average short-term debt outstanding.
<PAGE>
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.
TOYS 'R' US, INC.
(Registrant)
By Louis Lipschitz
Senior Vice President-Finance
and Chief Financial Officer
Date: April 21, 1994
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 21st day of April, 1994.
<TABLE>
<CAPTION>
Signature Title
<S> <C>
Charles Lazarus Chairman of the Board
Michael Goldstein Director, Vice Chairman of the Board
and Chief Executive Officer
(Principal Executive Officer)
Robert A. Bernhard Director
Milton S. Gould Director
Shirley Strum Kenny Director
Reuben Mark Director
Howard W. Moore Director
</TABLE>
<PAGE>
<TABLE>
<S> <C>
Robert C. Nakasone Director
Norman M. Schneider Director
Harold M. Wit Director
Louis Lipschitz Senior Vice President - Finance
and Chief Financial Officer
(Principal Financial and
Accounting Officer)
</TABLE>
The foregoing constitute all of the Board of Directors and the
Principal Executive, Financial and Accounting Officers of the
Registrant.
<PAGE>
GRAPHICS APPENDIX LIST
<TABLE>
<CAPTION>
EDGAR VERSION TYPESET VERSION
<S> <C>
1993 Form 10-K, Exhibit 13 -- 1993 Form 10-K, Exhibit 13 --
(Selected Portions of Toys 'R' Us (Selected Portions of Toys 'R' Us
1993 Annual Report to Stockholders) 1993 Annual Report to Stockholders)
Page 1 -- One bar chart omitted Page 1 -- One bar chart depicting Consolidated Net Sales
(billions). (The text and numbers used in this chart
appear in the text of the EDGAR Version).
Page 3 -- Two bar charts omitted Page 3 -- Two bar charts depicting Consolidated Net
Earnings (millions) and Consolidated Stockholders'
Equity (billions), respectively. (The text and numbers
used in these charts appear in the text of the EDGAR
Version).
Page 4 -- Two bar charts omitted Page 4 -- Two bar charts depicting Consolidated Number
of Stores and Net Sales -- International Division
(millions), respectively. (The text and numbers used in
these charts appear in the text of the EDGAR Version).
Page 5 -- One bar chart omitted Page 5 -- One bar chart depicting Number of
Countries -- International Division. (The text and
numbers used in this chart appear in the text of the
EDGAR Version).
</TABLE>
<PAGE>
INDEX TO EXHIBITS
The following is a list of all exhibits filed as part of this
Report:
<TABLE>
<CAPTION>
Exhibit Paper(P)
No. Document or Electronic(E)
<S> <C> <C>
3A Restated Certificate of Incorporation of
registrant. Incorporated herein by reference to
Exhibit 3A to registrant's Annual Report on Form
10-K for the year ended February 1, 1992.
3B By-Laws of registrant as amended and restated E
effective January 31, 1994.
4 i) Form of Indenture dated as of January 1, 1987
between the registrant and United Jersey Bank,
as Trustee, pursuant to which Securities in one
or more series in an unlimited amount may be
issued by the registrant. Incorporated herein
by reference to Exhibit 4(a) to registrant's
Registration Statement No. 33-11461.
ii) Form of the registrant's 8 1/4% Sinking Fund
Debentures due 2017 is incorporated herein by
reference to Exhibit 4(b) to Registration
Statement No. 33-11461.
iii) Form of Indenture between the 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 by the registrant. Incorporated herein
by reference to Exhibit 4 to registrant's
Registration Statement No. 33-42237.
iv) Form of the registrant's 8 3/4% Debentures due
2021 is incorporated herein by reference to
Exhibit 4 to registrant's Report on Form 8-K
dated August 29, 1991.
v) Substantially all other long-term debt of the
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, (a) industrial revenue bonds issued by
industrial development authorities and
guaranteed by the registrant, (b) mortgages held
by third parties on real estate owned by the
registrant, (c) stepped coupon guaranteed bonds
held by a third party and guaranteed by the
registrant and (d) an agreement under which the
registrant guaranteed certain yen-denominated
loans made by a third party to a subsidiary of
the registrant. The registrant will file with
the Securities and Exchange Commission (the
'Commission') copies of the constituent
documents relating to such debt upon request of
the Commission.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Exhibit Paper(P)
No. or Electronic(E)
<S> <C> <C>
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* An employment agreement dated March 14, 1978 and
an amendment thereto dated November 20, 1979
between registrant and Charles Lazarus are
incorporated herein by reference to Exhibit 2 to
a Schedule 13D dated February 1, 1980 filed by
Charles Lazarus, et al. An amendment dated
March 23, 1982 to such employment agreement is
incorporated herein by reference to Exhibit 10B
to registrant's Annual Report on Form 10-K for
the year ended January 31, 1982. An amendment
dated as of December 7, 1982 to such employment
agreement is incorporated herein by reference to
Exhibit 10B to registrant's Annual Report on
Form 10-K for the year ended January 30, 1983.
An amendment dated April 10, 1984 to such
employment agreement is incorporated herein by
reference to Exhibit 10B to the registrant's
Annual Report on Form 10-K for the year ended
January 29, 1984. An amendment dated as of
March 14, 1989 to such employment agreement is
incorporated herein by reference to Exhibit 10B
to registrant's Annual Report on Form 10-K for
the year ended January 29, 1989.
10C* A stock option plan and agreement dated March 6,
1984 between registrant and Charles Lazarus is
incorporated herein by reference to Exhibit 10E
to registrant's Annual Report on Form 10-K for
the year ended January 29, 1984. The first
amendment dated as of April 1, 1989 to such
agreement is incorporated herein by reference to
Exhibit 10E to registrant's Annual Report on
Form 10-K for the year ended January 29, 1989.
10D* Form of Indemnification Agreement between
registrant and each director is incorporated
herein by reference to Exhibit 10F to
registrant's Annual Report on Form 10-K for the
year ended February 1, 1987.
* 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.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Exhibit Paper(P)
No. or Electronic(E)
<S> <C> <C>
10E* A stock option agreement dated as of February 1,
1988 between registrant and Robert Nakasone is
incorporated herein by reference to Exhibit 10G
to registrant's Annual Report on Form 10-K for
the year ended January 31, 1988. The first
amendment dated as of April 1, 1989 to such
agreement is incorporated herein by reference to
Exhibit 10G to registrant's Annual Report on
Form 10-K for the year ended January 29, 1989.
The second amendment dated as of September 19,
1989 to such agreement is incorporated herein by
reference to Exhibit 10G to registrant's Annual
Report on Form 10-K for the year ended January
28, 1990.
10F* A stock option agreement dated as of February 1,
1988 between registrant and Michael Goldstein is
incorporated herein by reference to Exhibit 10H
to registrant's Annual Report on Form 10-K for
the year ended January 31, 1988. The first
amendment dated as of April 1, 1989 to such
agreement is incorporated herein by reference to
Exhibit 10H to registrant's Annual Report on
Form 10-K for the year ended January 29, 1989.
The second amendment dated as of September 19,
1989 to such agreement is incorporated herein by
reference to Exhibit 10H to registrant's Annual
Report on Form 10-K for the year ended January
28, 1990.
10G* Stock Option Plan and Agreement dated as of
March 14, 1989 between the registrant and
Charles Lazarus, and a First Amendment thereto
dated as of September 19, 1989 is incorporated
by reference to Exhibit 10I to registrant's
Annual Report on Form 10-K for the year ended
January 28, 1990.
10H* 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. Incorporated
herein by reference to Exhibit 10H to
registrant's Annual Report on Form 10-K for the
year ended February 1, 1992.
10I* 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.
* 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.
</TABLE>
<PAGE>
[CAPTION]
<TABLE>
Exhibit Paper(P)
No. or Electronic(E)
<S> <C> <C>
10J* 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.
10K* Toys 'R' Us, Inc. 1994 Stock Option and E
Performance Incentive Plan effective November 1,
1993, subject to stockholder approval.
10L* Management Incentive Compensation Plan of the E
registrant adopted March 28, 1994.
13 Registrant's Annual Report to Stockholders for E
the year ended January 29, 1994. Except for the
portions thereof which 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.
22 Subsidiaries of registrant. E
24 Reference is made to the Report and Consent of
Independent Auditors, Ernst & Young, contained
on page 20 of this Form 10-K.
* 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.
</TABLE>
<PAGE>
BY-LAWS
of
TOYS 'R' US, INC.
(As Amended and Restated
effective January 31, 1994)
<PAGE>
TOYS 'R' US, INC.
A Delaware corporation
BY-LAWS
________________________________
ARTICLE I
STOCKHOLDERS
Section 1.1 Annual Meeting. An annual meeting of
stockholders for the purpose of electing directors and of
transacting such other business as may come before it shall be
held each year at such date, time and place, either within or
without the State of Delaware, as may be specified by the Board
of Directors.
Section 1.2 Special Meetings. Special meetings of
stockholders for any purpose or purposes may be held at any time
upon call of the Chairman of the Board, the President, or a
majority of the Board of Directors, at such time and place either
within or without the State of Delaware as may be stated in the
call and notice. A special meeting of stockholders shall be
called by the President upon the written request, stating time,
place and the purpose or purposes of the meeting, of stockholders
who together own of record a majority of the outstanding stock
entitled to vote at such meeting.
Section 1.3 Notice of Meetings. Notice of
Stockholders meetings, stating the place, date and hour thereof,
and, in the case of a special meeting, the purpose or purposes
for which the meeting is called, shall be given by the Chairman
of the Board, the President, any Vice President, or the
Secretary, to each stockholder of record entitled to vote thereat
at least ten days but not more than sixty days before the date of
the meeting, unless a different period is prescribed by law.
Section 1.4 Quorum. Except as otherwise provided by
law, the certificate of incorporation, or these By-Laws, at any
meeting of stockholders, the holders of a majority of the
outstanding shares of stock entitled to vote at the meeting and,
where a class vote is required by law or the certificate of
incorporation, a majority of the outstanding shares of each class
of stock entitled to a class vote, shall be present or
represented by proxy in order to constitute a quorum for the
transaction of business. In the absence of a quorum, a majority
<PAGE>
in interest of the stockholders present or the chairman of the
meeting may adjourn the meeting from time to time in the manner
provided in Section 1.5 of these By-Laws until a quorum shall
attend. The absence from any meeting of the number of shares
required by law, the certificate of incorporation, or these By-
Laws for action upon any given matter shall not prevent action at
such meeting upon any other matter or matters which may properly
come before the meeting, if the number of shares required in
respect of such other matters shall be present.
Section 1.5 Adjournment. Any meeting of stockholders,
annual or special, may adjourn from time to time to reconvene at
the same or some other place, and notice need not be given of any
such adjourned meeting if the time and place thereof are
announced at the meeting at which the adjournment is taken. At
the adjournment meeting, the Corporation may transact any
business which might have been transacted at the original
meeting. If the adjournment is for more than thirty days, or if
after the adjournment a new record date is fixed for the
adjourned meeting, a notice of the adjourned meeting shall be
given to each stockholder of record entitled to vote at the
meeting.
Section 1.6 Organization. The Chairman of the Board,
or in his absence the President, or in their absence any Vice
President, shall call to order meetings of stockholders and shall
act as chairman of such meetings. The Board of Directors, or if
the Board fails to act, the Stockholders may appoint any
stockholder or any director or officer of the Corporation to act
as chairman of any meeting in the absence of the Chairman of the
Board, the President and a Vice President.
The Secretary of the Corporation shall act as secretary
of all meetings of stockholders, but in the absence of the
Secretary, the chairman of the meeting may appoint any other
person to act as secretary of the meeting.
Section 1.7 Voting. Except as otherwise provided by
law, the certificate of incorporation, or these By-Laws, at any
meeting duly called and held at which a quorum is present, a
majority of the votes cast at such meeting upon a given question
by the holders of outstanding shares of stock of all classes of
stock of the Corporation entitled to vote thereon who are present
in person or by proxy shall decide such question.
ARTICLE II
BOARD OF DIRECTORS
Section 2.1 Number, Term of Office and Notice of
Nomination. The business, property and affairs of the
2
<PAGE>
Corporation shall be managed and controlled by a Board of eleven
directors; provided, however, that the Board, by resolution
adopted by vote of a majority of the then authorized number of
directors, may increase or decrease the number of directors. The
directors shall be elected at the annual meeting of stockholders,
and serve (subject to the provisions of Article IV) until the
next succeeding annual meeting of stockholders and until the
election and qualification of their respective successors.
Nominations for the election of directors may be made
by the Board of Directors or by any stockholder entitled to vote
for the election of directors. Nominations by any stockholder
shall be made by notice in writing, delivered or mailed by first
class United States mail, postage prepaid, to the Secretary of
the Corporation not less than 14 days nor more than 50 days prior
to any meeting of the stockholders called for the election of
directors; provided, however, that if less than 21 days' notice
of the meeting is given to stockholders, such written notice
shall be delivered or mailed, as prescribed, to the Secretary of
the Corporation not later than the close of the tenth day
following the day on which notice of the meeting was mailed to
stockholders. Notice of nominations which are proposed by the
Board of Directors may be made at any time and shall be given by
the Chairman on behalf of the Board.
Each notice under the preceding paragraph shall set
forth (i) the name, age, business address and, if known,
residence address of each nominee proposed in such notice, (ii)
the principal occupation or employment of each such nominee, and
(iii) the number of shares of stock of the Corporation which are
beneficially owned by each such nominee.
The Chairman of the meeting may, if the facts warrant,
determine and declare to the meeting that a nomination was not
made in accordance with the foregoing procedure, and if he should
so determine, he shall so declare to the meeting and the
effective nomination shall be disregarded.
Section 2.2 Meetings. The annual meeting of the Board
of Directors, for the election of officers and the transaction of
such other business as may come before the meeting, shall be held
without notice at the same place as, and immediately following,
the annual meeting of the stockholders.
Regular meetings of the Board of Directors may be held
without notice at such time and place as shall from time to time
be determined by the Board.
Special meetings of the Board of Directors shall be
held at such time and place as shall be designated in the notice
of the meeting whenever called by the Chairman of the Board, the
President, or two of the directors then in office.
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Section 2.3 Notice of Special Meetings. The
Secretary, or in his absence any other officer of the
Corporation, shall give each director notice of the time and
place of holding of special meetings of the Board of Directors by
mail at least five days before the meeting, or by telegram, cable
or radiogram or personal service at least two days before the
meeting. Unless otherwise stated in the notice thereof, any and
all business may be transacted at any meeting without specifica-
tion of such business in the notice.
Section 2.4 Quorum and Organization of Meetings. A
majority of the total number of members of the Board of Directors
as constituted from time to time shall constitute a quorum for
the transaction of business, but if at any meeting of the Board
of Directors there shall be less than a quorum present, a
majority of those present may adjourn the meeting from time to
time, and the meeting may be held as adjourned without further
notice or waiver. Except as otherwise provided by law, the
certificate of incorporation, or these By-Laws, a majority of the
directors present at any meeting at which a quorum is present may
decide any question brought before such meeting. Meetings shall
be presided over by the Chairman of the Board, or in his absence
a Vice Chairman, or by such other person as may be selected by
the directors. The Secretary of the Corporation shall act as
secretary of the meeting, but in his absence the chairman of the
meeting may appoint any person to act as secretary of the
meeting.
Section 2.5 Committees. The Board of Directors may,
by resolution passed by a majority of the whole Board, designate
one or more committees, each committee to consist of one or more
of the directors of the Corporation. A majority of the total
number of members of a Committee shall constitute a quorum for
the transaction of business. The Board may designate one or more
directors as alternate members of any committee, who may replace
any absent or disqualified member at any meeting of the
committee. In the absence or disqualification of a member of a
committee, the member or members thereof present at any meeting
and not disqualified from voting, whether or not he or they
constitute a quorum, may unanimously appoint another member of
the Board of Directors to act at the meeting in place of any such
absent or disqualified member. Any such committee, to the extent
provided in the resolution of the Board of Directors, shall have
and may exercise all the powers and authority of the Board of
Directors in the management of the business and affairs of the
Corporation, and may authorize the seal of the Corporation to be
affixed to all papers which may require it; but no such committee
shall have power or authority in reference to amending the
certificate of incorporation of the Corporation, adopting an
agreement of merger or consolidation, recommending to the
stockholders the sale, lease or exchange of all or substantially
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all of the Corporation's property and assets, recommending to the
stockholders a dissolution of the Corporation or a revocation of
dissolution, or amending these By-Laws; and, unless the
resolution expressly so provided, no such committee shall have
the power or authority to declare a dividend or to authorize the
issuance of stock. Each committee which may be established by
the Board of Directors or these By-Laws may fix its own rules and
procedures. Notice of meetings of committees, other than of
regular meetings provided for by the rules, shall be given to
committee members. All action taken by committees shall be
recorded in minutes of the meetings.
Section 2.6 Action Without Meeting. Nothing contained
in these By-Laws shall be deemed to restrict the power of the
directors or members of any committee to take any action,
required or permitted to be taken by them, without a meeting, in
accordance with applicable provisions of law.
Section 2.7 Telephone Meetings. Members of the Board
of Directors, or any committee designated by the Board, may
participate in a meeting of the Board, or committee, by means of
conference telephone or similar communications equipment by means
of which all persons participating in the meeting can hear each
other, and participation in a meeting pursuant to this Section
shall constitute presence in person at such meetings.
ARTICLE III
OFFICERS
Section 3.1 Executive Officers. The executive
officers of the Corporation shall be one or more Vice Chairmen of
the Board, a President, one or more Vice Presidents, a Treasurer
and a Secretary, each of whom shall be elected by the Board of
Directors. The Board may also elect or appoint a Chairman of the
Board who shall not be an officer of the Corporation. The
Chairman of the Board and any Vice Chairman shall be a director
of the Corporation. The Board of Directors may elect or appoint
such other officers (including a Controller and one or more
Assistant Treasurers and Assistant Secretaries) as it may deem
necessary or desirable, each of whom shall have such authority,
shall perform such duties and shall hold office for such term as
may be prescribed by the Board of Directors from time to time.
Any person may hold at one time two or more offices.
Section 3.2 Powers and Duties. The Chairman of the
Board shall preside at all meetings of the stockholders and of
the Board of Directors. In the absence of the Chairman, a Vice
Chairman appointed by the Chairman of the Board shall perform all
the duties of the Chairman. The Vice Chairman (or, if there
shall be two or more Vice Chairmen, a Vice Chairman designated by
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the Board of Directors) shall be the chief executive officer of
the Corporation. The officers and agents of the Corporation
shall each have such powers and perform such duties in the
management of the business and affairs of the Corporation as
generally pertain to their respective offices, as well as such
powers and duties as from time to time may be prescribed by the
Board of Directors.
ARTICLE IV
RESIGNATIONS, REMOVALS AND VACANCIES
Section 4.1 Resignations. Any director or officer of
the Corporation, or any member of any committee, may resign at
any time by giving written notice to the Board of Directors, the
President or the Secretary of the Corporation. Any such
resignation shall take effect at the time specified therein or,
if the time be not specified therein, then upon receipt thereof.
The acceptance of such resignation shall not be necessary to make
it effective.
Section 4.2 Removals. The Board of Directors, at any
meeting thereof, or by written consent, may, to the extent
permitted by law, at any time, remove with or without cause from
office or terminate the employment of any officer or member of
any committee. Except as provided by law or the certificate of
incorporation, the holders of a majority of the shares entitled
to vote at an election of directors may remove any director with
or without cause; provided, however, that if less than the entire
Board is to be removed, no director may be removed without cause
if the votes cast against his removal would be sufficient to
elect him if voted cumulatively at an election of the entire
Board.
Section 4.3 Vacancies. Except as provided by law or
the certificate of incorporation, any vacancy in the office of
any director or officer through death, resignation, removal,
disqualification or other cause, and any additional directorship
resulting from increase in the number of directors, may be filled
at any time by a majority of the directors then in office (even
though less than a quorum remains) or by the stockholders, and,
subject to the provisions of this Article, the person so chosen
shall hold office until his successor shall have been chosen and
shall have qualified; or if the person so chosen is a director
elected to fill a vacancy, he shall hold office for the unexpired
term of his predecessor.
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ARTICLE V
CAPITAL STOCK
Section 5.1 Stock Certificates. The certificates for
shares of the capital stock of the Corporation shall be in such
form as shall be prescribed by law and approved, from time to
time, by the Board of Directors.
Section 5.2 Transfer of Shares. Shares of the capital
stock of the Corporation may be transferred on the books of the
Corporation only by the holder of such shares or by his duly
authorized attorney, upon the surrender to the Corporation or its
transfer agent of the certificate for such shares properly
endorsed.
Section 5.3 Fixing Record Date. In order that the
Corporation may determined the stockholders entitled to notice of
or to vote at any meeting of stockholders or any adjournment
thereof, or to express consent to corporate action in writing
without a meeting, or entitled to receive payment of any dividend
or other distribution or allotment of any rights, or entitled to
exercise any rights in respect of any change, conversion or
exchange of stock or for the purpose of any other lawful action,
the Board of Directors may fix, in advance, a record date, which
shall not be more than sixty nor less ten days before the date of
such meeting, nor more than sixty days prior to any other action.
Section 5.4 Regulations. The Board of Directors shall
have power and authority to make all such rules and regulations
as it may deem expedient concerning the issue, transfer,
registration, cancellation and replacement of certificates for
shares of stock of the Corporation.
ARTICLE VI
MISCELLANEOUS
Section 6.1 Corporate Seal. The corporate seal shall
have inscribed thereto the name of the Corporation and shall be
in such form as may be approved from time to time by the Board of
Directors.
Section 6.2 Fiscal Year. The fiscal year of the
Corporation shall end on the Saturday which falls nearest to the
last day of January in each year.
Section 6.3 Notice and Waivers Thereof. Whenever any
notice as required by law, the certificate of incorporation, or
these By-Laws to be given to any stockholder, director, or
officer, such notice, except as otherwise revised by law, may be
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given personally or by mail, or, in the case of directors or
officers, by telegram, cable or radiogram, addressed to such
address as appears on the books of the Corporation. Any notice
given by telegram, cable or radiogram shall be deemed to have
been given when it shall have been delivered for transmission and
any notice given by mail shall be deemed to have been given when
it shall have been deposited in the United States mail with
postage there on prepaid.
Whenever a notice is required to be given by law, the
certificate of incorporation, or these By-Laws, a waiver thereof
in writing, signed by the person or persons entitled to such
notice, whether before or after the meeting or the time stated
therein, shall be deemed equivalent in all respects to such
notice.
Section 6.4 Stock of Other Corporations or Other
Interests. Unless otherwise directed by the Board of Directors,
the Chairman of the Board, the President, the Secretary and such
attorneys or agents of the Corporation as may be from time to
time authorized by the Board of Directors, the Chairman of the
Board, or the President, shall have full power and authority on
behalf of this Corporation to attend and to act and vote in
person or by proxy at any meeting of the holders of securities of
any corporation or other entity in which this Corporation may own
or hold shares or other securities, and at such meetings shall
possess and may exercise all the rights and powers incident to
the ownership of such shares or other securities which this
Corporation, as the owner or holder thereof, might have possessed
and exercised if present. The Chairman of the Board, the
President, or the Secretary, or such attorneys or agents, may
also execute and deliver on behalf of the Corporation powers of
attorney, proxies, consents, waivers, and other instruments
relating to the shares or securities owned or held by this
Corporation.
Section 6.5 Periodic Reports. The Corporation shall
send periodic reports to each of its stockholders, not less than
once each year, which shall include profit and loss statements
and balance sheets prepared in accordance with generally accepted
accounting principles.
ARTICLE VII
AMENDMENTS
The holders of shares entitled at the time to vote for
the election of directors shall have power to adopt, alter, amend
or repeal the By-Laws of the Corporation by vote of not less than
a majority of such shares, and the Board of Directors shall have
power equal in all respects to that of the stockholders to adopt,
alter, amend or repeal the By-Laws by vote of not less than a
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majority of the entire Board. However, any By-Law adopted by the
Board may be amended or repealed by vote of the holders of a
majority of the shares entitled at the time to vote for the
election of directors.
<PAGE>
TOYS 'R' US, INC.
1994 STOCK OPTION AND PERFORMANCE INCENTIVE PLAN
<PAGE>
TOYS 'R' US, INC.
1994 STOCK OPTION AND PERFORMANCE INCENTIVE PLAN
TABLE OF CONTENTS
<TABLE>
<CAPTION>
<S> <C> <C>
Page
ARTICLE 1. ESTABLISHMENT AND PURPOSE . . . . . . . . 1
1.1 Establishment and Effective Date . . . . . 1
1.2 Purpose. . . . . . . . . . . . . . . . . . 1
ARTICLE 2. AWARDS . . . . . . . . . . . . . . . . . . 1
2.1 Form of Awards . . . . . . . . . . . . . . 1
2.2 Maximum Shares Available . . . . . . . . . 2
2.3 Return of Prior Awards . . . . . . . . . . 2
ARTICLE 3. ADMINISTRATION . . . . . . . . . . . . . . 2
3.1 Committee. . . . . . . . . . . . . . . . . 2
3.2 Powers of Committee. . . . . . . . . . . . 2
3.3 Delegation . . . . . . . . . . . . . . . . 3
3.4 Interpretations. . . . . . . . . . . . . . 3
3.5 Liability; Indemnification . . . . . . . . 3
ARTICLE 4. ELIGIBILITY. . . . . . . . . . . . . . . . 3
ARTICLE 5. STOCK OPTIONS. . . . . . . . . . . . . . . 4
5.1 Grant of Options . . . . . . . . . . . . . 4
5.2 Designation as Non-Qualified Stock Option
or Incentive Stock Option. . . . . . . . . 4
5.3 Option Price . . . . . . . . . . . . . . . 4
5.4 Limitation on Amount of Incentive
Stock Options. . . . . . . . . . . . . . . 5
5.5 Limitation on Time of Grant. . . . . . . . 5
5.6 Exercise and Payment . . . . . . . . . . . 5
5.7 Term of Options. . . . . . . . . . . . . . 5
5.8 Rights as Stockholder. . . . . . . . . . . 5
5.9 General Restrictions . . . . . . . . . . . 5
5.10 Cancellation of Stock Appreciation Rights. 6
ARTICLE 6. STOCK APPRECIATION RIGHTS. . . . . . . . . 6
6.1 Grants of Stock Appreciation Rights. . . . 6
6.2 Limitations on Exercise. . . . . . . . . . 6
6.3 Surrender or Exchange of Tandem Stock
Appreciation Rights. . . . . . . . . . . . 6
6.4 Exercise of Nontandem Stock Appreciation
Rights . . . . . . . . . . . . . . . . . . 6
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6.5 Settlement of Stock Appreciation Rights . 7
6.6 Cash Settlement . . . . . . . . . . . . . 7
ARTICLE 7. NONTRANSFERABILITY OF OPTIONS AND STOCK
APPRECIATION RIGHTS . . . . . . . . . . . 7
ARTICLE 8. EFFECT OF TERMINATION OF EMPLOYMENT,
RELOCATION EVENT, DISABILITY, RETIREMENT,
DEATH OR SPECIAL
EVENT . . . . . . . . . . . . . . . . . . 7
8.1 General Rule. . . . . . . . . . . . . . . 7
8.2 Relocation Event. . . . . . . . . . . . . 8
8.3 Disability or Retirement. . . . . . . . . 8
8.4 Death . . . . . . . . . . . . . . . . . . 9
8.5 Special Event . . . . . . . . . . . . . . 9
8.6 Leave of Absence. . . . . . . . . . . . . 10
ARTICLE 9. RESTRICTED SHARES . . . . . . . . . . . . 10
9.1 Grant of Restricted Shares. . . . . . . . 10
9.2 Restrictions. . . . . . . . . . . . . . . 10
9.3 Restricted Stock Certificates . . . . . . 10
9.4 Rights of Holders of Restricted Shares. . 10
9.5 Forfeiture. . . . . . . . . . . . . . . . 10
9.6 Delivery of Restricted Shares . . . . . . 11
ARTICLE 10. PERFORMANCE SHARES. . . . . . . . . . . . 11
10.1 Award of Performance Shares . . . . . . . 11
10.2 Performance Period. . . . . . . . . . . . 11
10.3 Right to Payment of Performance Shares. . 11
10.4 Payment for Performance Shares. . . . . . 11
10.5 Voting and Dividend Rights. . . . . . . . 12
ARTICLE 11. PERFORMANCE UNITS . . . . . . . . . . . . 12
11.1 Award of Performance Units. . . . . . . . 12
11.2 Right to Payment of Performance Units . . 12
11.3 Payment for Performance Units . . . . . . 12
ARTICLE 12. UNRESTRICTED SHARES . . . . . . . . . . . 13
12.1 Award of Unrestricted Shares. . . . . . . 13
12.2 Delivery of Unrestricted Shares . . . . . 13
ARTICLE 13. TAX OFFSET PAYMENTS . . . . . . . . . . . 13
ARTICLE 14. ADJUSTMENT UPON CHANGES IN
CAPITALIZATION. . . . . . . . . . . . . . 14
ARTICLE 15. AMENDMENT AND TERMINATION . . . . . . . . 14
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ARTICLE 16. WRITTEN AGREEMENT. . . . . . . . . . . . 14
ARTICLE 17. MISCELLANEOUS PROVISIONS . . . . . . . . 14
17.1 Tax Withholding. . . . . . . . . . . . . 14
17.2 Compliance With Section 16(b). . . . . . 15
17.3 Successors . . . . . . . . . . . . . . . 15
17.4 General Creditor Status. . . . . . . . . 15
17.5 No Right to Employment . . . . . . . . . 15
17.6 Other Plans. . . . . . . . . . . . . . . 15
17.7 Notices. . . . . . . . . . . . . . . . . 16
17.8 Severability . . . . . . . . . . . . . . 16
17.9 Governing Law. . . . . . . . . . . . . . 16
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TOYS 'R' US, INC.
1994 STOCK OPTION AND PERFORMANCE INCENTIVE PLAN
ARTICLE 1.
ESTABLISHMENT AND PURPOSE
1.1 Establishment and Effective Date. Toys 'R' Us, Inc., a
Delaware corporation (the 'Corporation'), hereby establishes a stock incentive plan
to be known as the 'Toys 'R' Us, Inc. 1994 Stock Option and Performance
Incentive Plan' (the 'Plan'). The Plan shall become effective as of November 1,
1993, subject to the approval of the Corporation's stockholders at the 1994 Annual
Meeting of Stockholders. In the event that such stockholder approval is not
obtained, any awards made hereunder shall be cancelled and all rights of employees
with respect to such awards shall thereupon cease. Upon approval by the Board of
Directors of the Corporation (the 'Board') and the Board's Management
Compensation and Stock Option Committee (the 'Committee'), awards may be
made as provided herein.
1.2 Purpose. The purpose of the Plan is to encourage and enable all
employees (subject to such requirements as may be prescribed by the Committee) of
the Corporation and its subsidiaries to acquire a proprietary interest in the
Corporation through the ownership of the Corporation's common stock, par value
$.10 per share ('Common Stock'), and other rights with respect to the Common
Stock. Such ownership will provide such employees with a more direct stake in the
future welfare of the Corporation and encourage them to remain with the
Corporation and its subsidiaries. It is also expected that the Plan will encourage
qualified persons to seek and accept employment with the Corporation and its sub-
sidiaries.
ARTICLE 2.
AWARDS
2.1 Form of Awards. Awards under the Plan may be granted in any
one or all of the following forms: (i) incentive stock options ('Incentive Stock
Options') meeting the requirements of Section 422 of the Internal Revenue Code of
1986, as amended (the 'Code'); (ii) non-qualified stock options ('Non-qualified
Stock Options') (unless otherwise indicated, references in the Plan to 'Options'
shall include both Incentive Stock Options and Non-qualified Stock Options); (iii)
stock appreciation rights ('Stock Appreciation Rights'), as described in Article 6
hereof, which may be awarded either in tandem with Options ('Tandem Stock
Appreciation Rights') or on a stand-alone basis ('Nontandem Stock Appreciation
Rights'); (iv) shares of Common Stock which are restricted as provided in Article 9
hereof ('Restricted Shares'); (v) units representing shares of Common Stock, as
described in Article 10 hereof ('Performance Shares'); (vi) units which do not
represent shares of Common Stock but which may be paid in the form of Common
Stock, as described in Article 11 hereof ('Performance Units'); (vii) shares of
Common Stock that are not subject to any conditions to vesting ('Unrestricted
Shares'); and (viii) tax offset payments ('Tax Offset Payments'), as described in
Article 13 hereof.
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2.2 Maximum Shares Available. The maximum aggregate number
of shares of Common Stock available for award under the Plan is 15,000,000
subject to adjustment pursuant to Article 14 hereof. In addition, Tax Offset
Payments which may be awarded under the Plan will not exceed the number of
shares available for issuance under the Plan. Shares of Common Stock issued
pursuant to the Plan may be either authorized but unissued shares or issued shares
reacquired by the Corporation. In the event that prior to the end of the period
during which Options may be granted under the Plan, any Option or any Nontandem
Stock Appreciation Rights under the Plan expires unexercised or is terminated,
surrendered or cancelled (other than in connection with the exercise of Stock
Appreciation Rights) without being exercised in whole or in part for any reason, or
any Restricted Shares, Performance Shares or Performance Units are forfeited, or if
such awards are settled in cash in lieu of shares of Common Stock, then such shares
or units shall be available for subsequent awards under the Plan, upon such terms as
the Committee may determine.
2.3 Return of Prior Awards. As a condition to any subsequent
award, the Committee shall have the right, at its discretion, to require employees to
return to the Corporation awards previously granted under the Plan. Subject to the
provisions of the Plan, such new award shall be upon such terms and conditions as
are specified by the Committee at the time the new award is granted.
ARTICLE 3.
ADMINISTRATION
3.1 Committee. Awards shall be determined, and the Plan shall be
administered, by the Committee as appointed from time to time by the Board, which
Committee shall consist of not less than two (2) members of the Board. Except as
permitted by Rule 16b-3 of the Securities Exchange Act of 1934, as amended (the
'Act'), and by Section 162(m) of the Code (or Regulations promulgated thereunder),
no member of the Board may serve on the Committee if such member: (i) is or has
been granted or awarded stock, stock options, stock appreciation rights or any other
equity security or derivative security of the Corporation or any of its affiliates
pursuant to the Plan or any other plan of the Corporation or its affiliates either while
serving on the Committee or during the one year period prior to being appointed to
the Committee; (ii) is an employee or former employee of the Corporation; or (iii)
receives remuneration from the Corporation, either directly or indirectly, in any
capacity other than as a director.
3.2 Powers of Committee. Subject to the express provisions of the
Plan, the Committee shall have the power and authority (i) to grant Options and to
determine the purchase price of the Common Stock covered by each Option, the
term of each Option, the number of shares of Common Stock to be covered by each
Option and any performance objectives or vesting standards applicable to each
Option; (ii) to designate Options as Incentive Stock Options or Non-qualified Stock
Options and to determine which Options, if any, shall be accompanied by Tandem
Stock Appreciation Rights, (iii) to grant Tandem Stock Appreciation Rights and
Nontandem Stock Appreciation Rights and to determine the terms and conditions of
such rights; (iv) to grant Restricted Shares and to determine the term of the
restricted period and other conditions and restrictions applicable to such shares; (v)
to grant Performance Shares and Performance Units and to determine the
performance objectives, performance periods and other conditions applicable to such
shares or units; (vi)
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to grant Unrestricted Shares; (vii) to determine the amount of,
and to make, Tax Offset Payments; and (viii) to determine the employees to whom,
and the time or times at which, Options, Stock Appreciation Rights, Restricted
Shares, Performance Shares, Performance Units and Unrestricted Shares shall be
granted.
3.3 Delegation. The Committee may delegate to one or more of its
members or to any other person or persons such ministerial duties as it may deem
advisable; provided, however, that the Committee may not delegate any of its
responsibilities hereunder if such delegation would cause the Plan to fail to comply
with the 'disinterested administration' rules under Section 16 of the Act. The
Committee may also employ attorneys, consultants, accountants or other
professional advisors and shall be entitled to rely upon the advice, opinions or
valuations of any such advisors.
3.4 Interpretations. The Committee shall have sole discretionary
authority to interpret the terms of the Plan, to adopt and revise rules, regulations and
policies to administer the Plan and to make any other factual determinations which
it believes to be necessary or advisable for the administration of the Plan. All
actions taken and interpretations and determinations made by the Committee in good
faith shall be final and binding upon the Corporation, all employees who have
received awards under the Plan and all other interested persons.
3.5 Liability; Indemnification. No member of the Committee, nor
any person to whom ministerial duties have been delegated, shall be personally
liable for any action, interpretation or determination made with respect to the Plan
or awards made thereunder, and each member of the Committee shall be fully
indemnified and protected by the Corporation with respect to any liability he or she
may incur with respect to any such action, interpretation or determination, to the
extent permitted by applicable law and to the extent provided in the Corporation's
Certificate of Incorporation and Bylaws, as amended from time to time, or under
any agreement between any such member and the Corporation.
ARTICLE 4.
ELIGIBILITY
Awards may be made to all employees of the Corporation or any of its
subsidiaries (subject to such requirements as may be prescribed by the Committee);
provided, however, that no employee may receive awards of or relating to more than
250,000 shares of Common Stock in the aggregate in any fiscal year of the
Corporation. Awards may be made to a director of the Corporation who is not also
a member of the Committee, provided that the director is also an employee. In
determining the employees to whom awards shall be granted and the number of
shares to be covered by each award, the Committee shall take into account the
nature of the services rendered by such employees, their present and potential
contributions to the success of the Corporation and its subsidiaries and such other
factors as the Committee in its sole discretion shall deem relevant.
As used herein, the term 'subsidiary' shall mean any present or future
corporation, partnership or joint venture in which the Corporation owns, directly or
indirectly, 40% or more of the economic interests. Notwithstanding the foregoing,
only employees of the Corporation and any present or future corporation which is or
may be a 'subsidiary corporation' of the Corporation (as such term is defined in
Section 424 (f) of the Code) shall be eligible to receive Incentive Stock Options.
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ARTICLE 5.
STOCK OPTIONS
5.1 Grant of Options. Options may be granted under the Plan for
the purchase of shares of Common Stock. Options shall be granted in such form
and upon such terms and conditions, including the satisfaction of corporate or
individual performance objectives and other vesting standards, as the Committee
shall from time to time determine.
5.2 Designation as Non-qualified Stock Option or Incentive Stock
Option. In connection with any grant of Options, the Committee shall designate in
the written agreement required pursuant to Article 16 hereof whether the Options
granted shall be Incentive Stock Options or Non-qualified Stock Options, or in the
case both are granted, the number of shares of each.
5.3 Option Price. The purchase price per share under each Incentive
Stock Option shall be the Market Price (as hereinafter defined) of the Common
Stock on the date the Incentive Stock Option is granted. The purchase price per
share under each Non-qualified Stock Option shall be specified by the Committee,
but in no event shall it be less than 90% of the Market Price on the date the Non-
qualified Stock Option is granted. In no case, however, shall the purchase price per
share of either an Incentive Stock Option or Non-qualified Stock Option be less than
the par value of the Common Stock ($.10). Notwithstanding the foregoing, to the
extent required by the Code, the purchase price per share under each Non-qualified
Stock Option granted to an employee who is treated as a 'covered employee' (as
defined in Section 162(m)(3) of the Code) on the date such Non-Qualified Option is
exercised shall not be less than 100% of the Market Price of the Common Stock on
the date of grant. In the case of an Incentive Stock Option granted to an employee
owning (actually or constructively under Section 424(d) of the Code), more than
10% of the total combined voting power of all classes of stock of the Corporation or
of a subsidiary (a '10% Stockholder'), the option price shall not be less than 110%
of the Market Price of the Common Stock on the date of grant.
The 'Market Price' of the Common Stock on any day shall be
determined as follows: (i) if the Common Stock is listed on a national securities
exchange or quoted through the NASDAQ National Market System, the Market
Price on any day shall be the average of the high and low reported Consolidated
Trading sales prices, or if no such sale is made on such day, the average of the
closing bid and asked prices reported on the Consolidated Trading listing for such
day; (ii) if the Common Stock is quoted on the NASDAQ inter-dealer quotation
system, the Market Price on any day shall be the average of the representative bid
and asked prices at the close of business for such day; or (iii) if the Common Stock
is not listed on a national stock exchange or quoted on NASDAQ, the Market Price
on any day shall be the average of the high bid and low asked prices reported by
the National Quotation Bureau, Inc. for such day. In no event shall the Market
Price of a share of Common Stock subject to an Incentive Stock Option be less than
the fair market value as determined for purposes of Section 422(b)(4) of the Code.
The Option price so determined shall also be applicable in connection
with the exercise of any Tandem Stock Appreciation Rights granted with respect to
such Option.
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5.4 Limitation on Amount of Incentive Stock Options. In the case
of Incentive Stock Options, the aggregate Market Price (determined at the time the
Incentive Stock Option is granted) of the Common Stock with respect to which
Incentive Stock Options are exercisable for the first time by any optionee during any
calendar year (under all plans of the Corporation and any subsidiary) shall not
exceed $100,000.
5.5 Limitation on Time of Grant. No grant of an Incentive Stock
Option shall be made under the Plan more than ten (10) years after the date the Plan
is approved by stockholders of the Corporation.
5.6 Exercise and Payment. Options may be exercised in whole or in
part. Common Stock purchased upon the exercise of Options shall be paid for in
full at the time of purchase. Such payment shall be made in cash or, in the
discretion of the Committee, through delivery of shares of Common Stock or a
combination of cash and Common Stock, in accordance with procedures to be
established by the Committee. Any shares so delivered shall be valued at their
Market Price on the date of exercise. Upon receipt of notice of exercise and
payment in accordance with procedures to be established by the Committee, the
Corporation or its agent shall deliver to the person exercising the Option (or his or
her designee) a certificate for such shares.
5.7 Term. The term of each Option granted hereunder shall be
determined by the Committee; provided, however, that, notwithstanding any other
provision of the Plan, in no event shall an Incentive Stock Option be exercisable
after ten (10) years from the date it is granted, or in the case of an Incentive Stock
Option granted to a 10% Stockholder, five (5) years from the date it is granted.
5.8 Rights as a Stockholder. A recipient of Options shall have no
rights as a stockholder with respect to any shares issuable or transferable upon
exercise thereof until the date a stock certificate is issued to such recipient
representing such shares. Except as otherwise expressly provided in the Plan, no
adjustment shall be made for cash dividends or other rights for which the record
date is prior to the date such stock certificate is issued.
5.9 General Restrictions. Each Option granted under the Plan shall
be subject to the requirement that, if at any time the Board shall determine, in its
discretion, that the listing, registration or qualification of the shares issuable or
transferable upon exercise thereof upon any securities exchange or under any state
or federal law, or the consent or approval of any governmental regulatory body, is
necessary or desirable as a condition of, or in connection with, the granting of such
Option or the issue, transfer, or purchase of shares thereunder, such Option may not
be exercised in whole or in part unless such listing, registration, qualification,
consent, or approval shall have been effected or obtained free of any conditions not
acceptable to the Board.
The Board or the Committee may, in connection with the granting of
any Option, require the individual to whom the Option is to be granted to enter into
an agreement with the Corporation stating that as a condition precedent to each
exercise of the Option, in whole or in part, such individual shall if then required by
the Corporation represent to the Corporation in writing that such exercise is for
investment only and not with a view to distribution, and also setting forth such other
terms and conditions as the Board or the Committee may prescribe.
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5.10 Cancellation of Stock Appreciation Rights. Upon exercise of all
or a portion of an Option, the related Tandem Stock Appreciation Rights shall be
cancelled with respect to an equal number of shares of Common Stock.
ARTICLE 6.
STOCK APPRECIATION RIGHTS
6.1 Grants of Stock Appreciation Rights. Tandem Stock Appreciation
Rights may be awarded by the Committee in connection with any Option granted
under the Plan, either at the time the Option is granted or thereafter at any time
prior to the exercise, termination or expiration of the Option. Nontandem Stock
Appreciation Rights may also be granted by the Committee at any time. At the
time of grant of Nontandem Stock Appreciation Rights, the Committee shall specify
the number of shares of Common Stock covered by such right and the base price of
shares of Common Stock to be used in connection with the calculation described in
Section 6.4 below. The base price of any Nontandem Stock Appreciation Rights
shall be not less than 100% of the Market Price of a share of Common Stock on the
date of grant. Stock Appreciation Rights shall be subject to such terms and
conditions not inconsistent with the other provisions of the Plan as the Committee
shall determine.
6.2 Limitations on Exercise. Tandem Stock Appreciation Rights shall
be exercisable only to the extent that the related Option is exercisable and shall be
exercisable only for such period as the Committee may determine (which period
may expire prior to the expiration date of the related Option). Upon the exercise of
all or a portion of Tandem Stock Appreciation Rights, the related Option shall be
cancelled with respect to an equal number of shares of Common Stock. Shares of
Common Stock subject to Options, or portions thereof, surrendered upon exercise of
Tandem Stock Appreciation Rights shall not be available for subsequent awards
under the Plan. Nontandem Stock Appreciation Rights shall be exercisable during
such period as the Committee shall determine.
6.3 Surrender or Exchange of Tandem Stock Appreciation Rights.
Tandem Stock Appreciation Rights shall entitle the recipient to surrender to the
Corporation unexercised the related Option, or any portion thereof, and to receive
from the Corporation in exchange therefor that number of shares of Common Stock
having an aggregate Market Price equal to (A) the excess of (i) the Market Price of
one (1) share of Common Stock as of the date the Tandem Stock Appreciation
Rights are exercised over (ii) the option price per share specified in such Option,
multiplied by (B) the number of shares of Common Stock subject to the Option, or
portion thereof, which is surrendered. Cash shall be delivered in lieu of any
fractional shares.
6.4 Exercise of Nontandem Stock Appreciation Rights. The exercise
of Nontandem Stock Appreciation Rights shall entitle the recipient to receive from
the Corporation that number of shares of Common Stock having an aggregate
Market Price equal to (A) the excess of (i) the Market Price of one (1) share of
Common Stock as of the date on which the Nontandem Stock Appreciation Rights
are exercised over (ii) the base price of the shares covered by the Nontandem Stock
Appreciation Rights, multiplied by (B) the number of shares of Common Stock
covered by the Nontandem Stock Appreciation Rights, or the portion thereof being
exercised. Cash shall be delivered in lieu of any fractional shares.
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6.5 Settlement of Stock Appreciation Rights. As soon as is
reasonably practicable after the exercise of any Stock Appreciation Rights, the
Corporation shall (i) issue, in the name of the recipient, stock certificates
representing the total number of full shares of Common Stock to which the recipient
is entitled pursuant to Section 6.3 or 6.4 hereof and cash in an amount equal to the
Market Price, as of the date of exercise, of any resulting fractional shares, and (ii) if
the Committee causes the Corporation to elect to settle all or part of its obligations
arising out of the exercise of the Stock Appreciation Rights in cash pursuant to
Section 6.6 hereof, deliver to the recipient an amount in cash equal to the Market
Price, as of the date of exercise, of the shares of Common Stock it would otherwise
be obligated to deliver.
6.6 Cash Settlement. The Committee, in its discretion, may cause the
Corporation to settle all or any part of its obligation arising out of the exercise of
Stock Appreciation Rights by the payment of cash in lieu of all or part of the shares
of Common Stock it would otherwise be obligated to deliver in an amount equal to
the Market Price of such shares on the date of exercise.
ARTICLE 7.
NONTRANSFERABILITY OF OPTIONS AND STOCK APPRECIATION RIGHTS
No Option or Stock Appreciation Rights may be transferred, assigned,
pledged or hypothecated (whether by operation of law or otherwise), except as
provided by will or the applicable laws of descent and distribution, and no Option
or Stock Appreciation Rights shall be subject to execution, attachment or similar
process. Any attempted assignment, transfer, pledge, hypothecation or other
disposition of an Option or Stock Appreciation Rights not specifically permitted
herein shall be null and void and without effect. An Option or Stock Appreciation
Rights may be exercised by the recipient only during his or her lifetime, or
following his or her death pursuant to Section 8.4 hereof.
Notwithstanding anything to the contrary in the preceding paragraph,
the Committee may, in its sole discretion, cause the written agreement relating to
any Non-qualified Stock Options or Stock Appreciation Rights granted hereunder to
provide that the recipient of such Non-qualified Stock Options or Stock
Appreciation Rights may transfer any of such Non-qualified Stock Options or Stock
Appreciation Rights other than by will or the laws of descent and distribution in any
manner authorized under applicable law; provided, however, that in no event may
the Committee permit any transfers which would cause this Plan to fail to satisfy the
applicable requirements of Rule 16b-3 under the Act, or would cause any recipient
of awards hereunder to fail to be entitled to the benefits Rule 16b-3 or other
exemptive rules under Section 16 of the Act or be subject to liability thereunder.
ARTICLE 8.
EFFECT OF TERMINATION OF EMPLOYMENT, RELOCATION EVENT,
DISABILITY, RETIREMENT, DEATH OR SPECIAL EVENT
8.1 General Rule. Except as expressly determined by the Committee
in its sole discretion, no Option or Stock Appreciation Rights shall be exercisable
after 30 days following the recipient's termination of employment with the
Corporation or a subsidiary, unless such termination of employment occurs by
reason of (i) a Relocation Event (as defined in Section 8.2), (ii) Retirement (as
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defined in Section 8.3), (iii) death or (iv) a Special Event (as defined in Section
8.5), provided that, in the case of a Special Event, the Committee shall have
modified such Option or Stock Appreciation Rights to remain exercisable as
provided in Section 8.5.
Options and Stock Appreciation Rights shall not be affected by any
change of employment so long as the recipient continues to be employed by either
the Corporation or a subsidiary. The Committee may, in its sole discretion, cause
any Option or Stock Appreciation Rights to be forfeited upon an employee's
termination of employment if the employee was terminated for one (or more) of the
following reasons: (i) the employee's conviction, or plea of guilty or nolo
contendere to the commission of a felony, (ii) the employee's commission of any
fraud, misappropriation or misconduct which causes demonstrable injury to the
Corporation or a subsidiary, (iii) an act of dishonesty by the employee resulting or
intended to result, directly or indirectly, in gain or personal enrichment at the
expense of the Corporation or a subsidiary, (iv) any breach of the employee's
fiduciary duties to the Corporation as an employee or officer, or (v) a violation by
the employee of the Toys 'R' Us Ethics Agreement or any other serious violation of
a Corporation policy. It shall be within the sole discretion of the Committee to
determine whether the employee's termination was for one of the foregoing reasons,
and the decision of the Committee shall be final and conclusive.
8.2 Relocation Event. Options and Stock Appreciation Rights
granted to an employee shall remain outstanding after termination of such
employee's employment with the Corporation or a subsidiary, if such termination
solely occurs by reason of a 'Relocation Event,' which shall be deemed to occur if
(i) a husband and wife are both current employees of the Corporation, (ii) the
Corporation transfers one spouse to a new location, (iii) the Corporation is unable to
offer the other spouse a position that is substantially comparable to his or her
current position, and (iv) as a result, the other spouse's employment with the
Corporation is terminated and the other spouse, as recipient, holds outstanding
Options or Stock Appreciation Rights.
In case of a Relocation Event, the Options or Stock Appreciation
Rights held by a terminated employee shall be exercisable for a period equal to the
lesser of (i) the period such Options or Stock Appreciation Rights would be
exercisable absent the termination of such employee, and (ii) the period such
Options or Stock Appreciation Rights would be exercisable if granted to the spouse
continuing in the Corporation's employ on the date originally granted to the
terminated spouse.
8.3 Disability or Retirement. Except as expressly provided
otherwise in the written agreement relating to any Option or Stock Appreciation
Rights granted under the Plan, in the event of the Disability or Retirement of a
recipient of Options or Stock Appreciation Rights, the Options or Stock
Appreciation Rights which are held by such recipient on the date of such Disability
or Retirement, whether or not otherwise exercisable on such date, shall be
exercisable at any time until the expiration date of the Options or Stock
Appreciation Rights; provided, however, that any Incentive Stock Option of such
recipient shall no longer be treated as an Incentive Stock Option unless exercised
within three (3) months of the date of such Disability or Retirement (or within one
(1) year in the case of an employee who is 'disabled' within the meaning of Section
22(e)(3) of the Code).
'Disability' shall mean any termination of employment with the
Corporation or a subsidiary because of a long-term or total disability, as determined
by the Committee in its sole discretion. 'Retirement' shall mean a termination of
employment with the
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Corporation or a subsidiary either (i) on a voluntary basis by a
recipient who is at least 60 years of age and has at least 15 years of service with the
Corporation or a subsidiary or (ii) otherwise with the written consent of the
Committee in its sole discretion. The decision of the Committee shall be final and
conclusive.
8.4 Death. In the event of the death of a recipient of Options or
Stock Appreciation Rights while an employee of the Corporation or any subsidiary,
Options or Stock Appreciation Rights which are held by such employee at the date
of death, whether or not otherwise exercisable on the date of death, shall be
exercisable by the beneficiary designated by the employee for such purpose (the
'Designated Beneficiary') or if no Designated Beneficiary shall be appointed or if
the Designated Beneficiary shall predecease the employee, by the employee's
personal representatives, heirs or legatees at any time within three (3) years from the
date of death (subject to the limitation in Section 5.7 hereof), at which time such
Options or Stock Appreciation Rights shall terminate; provided, however, that any
Incentive Stock Option of such recipient shall no longer be treated as an Incentive
Stock Option unless exercised within three (3) months of the date of the recipient's
death.
In the event of the death of a recipient of Options or Stock
Appreciation Rights following a termination of employment due to Retirement,
Disability or a Special Event (as defined in Section 8.5 hereof), if such death occurs
before the Options or Stock Appreciation Rights are exercised, the Options or Stock
Appreciation Rights which are held by such recipient on the date of termination of
employment, whether or not otherwise exercisable on such date, shall be exercisable
by such recipient's Designated Beneficiary, or if no Designated Beneficiary shall be
appointed or if the Designated Beneficiary shall predecease such recipient, by such
recipient's personal representatives, heirs or legatees to the same extent such
Options or Stock Appreciation Rights were exercisable by the recipient following
such termination of employment.
8.5 Special Event. In the case of a Special Event, the Committee in
its sole discretion may elect to modify all or any lesser number of any Options or
Stock Appreciation Rights held by an employee terminated as a result of a Special
Event which are or are not exercisable on the date of termination, to provide that
any of such Options or Stock Appreciation Rights may continue to be exercisable
for the term and in the manner specified therein or for such other term and subject
to such other provisions and conditions (including, without limitation, acceleration
of the time or times at which any such Options or Stock Appreciation Rights may
be exercised) as the Committee shall specify. The Committee shall have the sole
discretion to determine the employees to whom and in the manner in which any
such modification shall be made. If the Committee does not elect to modify an
Option or Stock Appreciation Rights, then only Options and Stock Appreciation
Rights currently exercisable at the date of termination shall be exercisable as
provided in the first sentence of Section 8.1 hereof.
A 'Special Event' shall mean (i) the sale or other disposition of a
subsidiary or division of the Corporation; (ii) the closing or discontinuation of a
specific operation of the Corporation or any subsidiary; (iii) the elimination of job
categories; or (iv) a limited program of terminations in connection with a personnel
reorganization or restructuring of the Corporation or any subsidiary of the
Corporation scheduled to be completed on a date certain, provided, however, that
only those employees who meet the terms and conditions as established by the
Board or the Committee in its discretion shall be eligible to receive accelerated
vesting of Options and Stock Appreciation Rights.
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8.6 Leave of Absence. In the case of an employee on an approved
leave of absence, the Options and Stock Appreciation Rights of such employee shall
not be affected unless such leave is longer than 13 weeks. The date of
exercisability of any Options or Stock Appreciation Rights of an employee which
are unexercisable at the beginning of an approved leave of absence lasting longer
than 13 weeks shall be postponed for a period equal to the length of such leave of
absence. Notwithstanding the foregoing, the Committee may, in its sole discretion,
waive in writing any such postponement of the date of exercisability of any Options
or Stock Appreciation Rights due to a leave of absence.
ARTICLE 9.
RESTRICTED SHARES
9.1 Grant of Restricted Shares. The Committee may from time to
time cause the Corporation to grant Restricted Shares under the Plan to employees,
subject to such restrictions, conditions and other terms as the Committee may
determine.
9.2 Restrictions. At the time a grant of Restricted Shares is made, the
Committee shall establish a period of time (the 'Restricted Period') applicable to
such Restricted Shares. Each grant of Restricted Shares may be subject to a
different Restricted Period. The Committee may, in its sole discretion, at the time a
grant is made, prescribe restrictions in addition to or other than the expiration of the
Restricted Period, including the satisfaction of corporate or individual performance
objectives, which shall be applicable to all or any portion of the Restricted Shares.
The Committee may also, in its sole discretion, shorten or terminate the Restricted
Period or waive any other restrictions applicable to all or a portion of such
Restricted Shares. None of the Restricted Shares may be sold, transferred, assigned,
pledged or otherwise encumbered or disposed of during the Restricted Period or
prior to the satisfaction of any other restrictions prescribed by the Committee with
respect to such Restricted Shares.
9.3 Restricted Stock Certificates. The Corporation shall issue, in the
name of each employee to whom Restricted Shares have been granted, stock
certificates representing the total number of Restricted Shares granted to the
employee, as soon as reasonably practicable after the grant. The Corporation, at the
direction of the Committee, shall hold such certificates, properly endorsed for
transfer, for the employee's benefit until such time as the Restricted Shares are
forfeited to the Corporation, or the restrictions lapse.
9.4 Rights of Holders of Restricted Shares. Holders of Restricted
Shares shall not have the right to vote such shares or the right to receive any cash
dividends with respect to such shares. All distributions, if any, received by an
employee with respect to Restricted Shares as a result of any stock split, stock
distribution, a combination of shares, or other similar transaction shall be subject to
the restrictions of this Article 9.
9.5 Forfeiture. Any Restricted Shares granted to an employee
pursuant to the Plan shall be forfeited if the employee terminates employment with
the Corporation or its subsidiaries prior to the expiration or termination of the
Restricted Period and the satisfaction of any other conditions applicable to such
Restricted Shares. Upon such forfeiture, the Restricted Shares that are forfeited
shall be retained in the treasury of the Corporation and available for subsequent
awards under the Plan, unless the Committee directs that such Restricted Shares be
cancelled upon forfeiture. If the employee's employment terminates as a result of
his or her Disability, Retirement or death, or a
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Relocation Event or Special Event, Restricted Shares of such employee shall be
forfeited, unless the Committee, in its sole discretion, shall determine
otherwise.
9.6 Delivery of Restricted Shares. Upon the expiration or termination
of the Restricted Period and the satisfaction of any other conditions prescribed by
the Committee, the restrictions applicable to the Restricted Shares shall lapse and a
stock certificate for the number of Restricted Shares with respect to which the
restrictions have lapsed shall be delivered, free of all such restrictions, to the
employee or the employee's beneficiary or estate, as the case may be.
ARTICLE 10.
PERFORMANCE SHARES
10.1 Award of Performance Shares. For each Performance Period (as
defined in Section 10.2), Performance Shares may be granted under the Plan to such
employees of the Corporation and its subsidiaries as the Committee shall determine
in its sole discretion. Each Performance Share shall be deemed to be equivalent to
one (1) share of Common Stock. Performance Shares granted to an employee shall
be credited to an account (a 'Performance Share Account') established and
maintained for such employee.
10.2 Performance Period. 'Performance Period' shall mean such
period of time as shall be determined by the Committee in its sole discretion.
Different Performance Periods may be established for different employees receiving
Performance Shares. Performance Periods may run consecutively or concurrently.
10.3 Right to Payment of Performance Shares. With respect to each
award of Performance Shares under the Plan, the Committee shall specify
performance objectives (the 'Performance Objectives') which must be satisfied in
order for the employee to vest in the Performance Shares which have been awarded
to him or her for the Performance Period. If the Performance Objectives established
for an employee for the Performance Period are partially but not fully met, the
Committee may, nonetheless, in its sole discretion, determine that all or a portion of
the Performance Shares have vested. If the Performance Objectives for a
Performance Period are exceeded, the Committee may, in its sole discretion, grant
additional, fully vested Performance Shares to the employee. The Committee may
also determine, in its sole discretion, that Performance Shares awarded to an
employee shall become partially or fully vested upon the employee's Disability,
Retirement or death, or upon a Relocation Event or Special Event, or upon the
termination of the employee's employment prior to the end of the Performance
Period.
10.4 Payment for Performance Shares. As soon as practicable
following the end of a Performance Period, the Committee shall determine whether
the Performance Objectives for the Performance Period have been achieved (or
partially achieved to the extent necessary to permit partial vesting at the discretion
of the Committee pursuant to Section 10.3). If the Performance Objectives for the
Performance Period have been exceeded, the Committee shall determine whether
additional Performance Shares shall be granted to the employee pursuant to Section
10.3. As soon as reasonably practicable after such determinations, or at such later
date as the Committee shall determine at the time of grant, the Corporation shall
pay to the employee an amount with respect to each vested Performance Share equal
to the Market Price of a share of Common Stock on such payment date or, if the
Committee shall so specify at the time of grant, an amount equal to (i) the
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Market Price of a share of Common Stock on the payment date less (ii) the Market Price of
a share of Common Stock on the date of grant of the Performance Share. Payment
shall be made entirely in cash, entirely in Common Stock (including Restricted
Shares) or in such combination of cash and Common Stock as the Committee shall
determine in its sole discretion.
10.5 Voting and Dividend Rights. Except as provided in Article 14
hereof, no employee shall be entitled to any voting rights, to receive any cash
dividends, or to have his or her Performance Share Account credited or increased as
a result of any cash dividends or other distribution with respect to Common Stock.
Notwithstanding the foregoing, within sixty (60) days from the date of payment of a
cash dividend by the Corporation on its shares of Common Stock, the Committee, in
its sole discretion, may credit an employee's Performance Share Account with
additional Performance Shares having an aggregate Market Price equal to the cash
dividend per share paid on the Common Stock multiplied by the number of
Performance Shares credited to his or her account at the time the cash dividend was
declared.
ARTICLE 11.
PERFORMANCE UNITS
11.1 Award of Performance Units. For each Performance Period (as
defined in Section 10.2), Performance Units may be granted under the Plan to such
employees of the Corporation and its subsidiaries as the Committee shall determine
in its sole discretion. The award agreement covering such Performance Units shall
specify a value for each Performance Unit or shall set forth a formula for
determining the value of each Performance Unit at the time of payment (the
'Ending Value'). If necessary to make the calculation of the amount to be paid to
the employee pursuant to Section 11.3, the Committee shall also state in the award
agreement the initial value of each Performance Unit (the 'Initial Value').
Performance Units granted to an employee shall be credited to an account (a
'Performance Unit Account') established and maintained for such employee.
11.2 Right to Payment of Performance Units. With respect to each
award of Performance Units under the Plan, the Committee shall specify
Performance Objectives which must be satisfied in order for the employee to vest in
the Performance Units which have been awarded to him or her for the Performance
Period. If the Performance Objectives established for an employee for the
Performance Period are partially but not fully met, the Committee may, nonetheless,
in its sole discretion, determine that all or a portion of the Performance Units have
vested. If the Performance Objectives for a Performance Period are exceeded, the
Committee may, in its sole discretion, grant additional, fully vested Performance
Units to the employee. The Committee may, in its sole discretion, adjust the
Performance Objectives or the Initial Value or Ending Value of any Performance
Units to reflect extraordinary events, such as stock splits, recapitalizations, mergers,
combinations, divestitures, spin-offs and the like. The Committee may also
determine, in its sole discretion, that Performance Units awarded to an employee
shall become partially or fully vested upon the employee's termination of
employment due to Disability, Retirement, death or otherwise, or upon a Relocation
Event or Special Event.
11.3 Payment for Performance Units. As soon as practicable
following the end of a Performance Period, the Committee shall determine whether
the Performance Objectives for the Performance Period have been achieved (or
partially achieved to the
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extent necessary to permit partial vesting at the discretion
of the Committee pursuant to Section 11.2). If the Performance Objectives for the
Performance Period have been exceeded, the Committee shall determine whether
additional Performance Units shall be granted to the employee pursuant to Section
11.2. As soon as reasonably practicable after such determinations, or at such later
date as the Committee shall determine at the time of grant, the Corporation shall
pay to the employee an amount with respect to each vested Performance Unit equal
to the Ending Value of the Performance Unit or, if the Committee shall so specify
at the time of grant, an amount equal to (i) the Ending Value of the Performance
Unit less (ii) the Initial Value of the Performance Unit. Payment shall be made
entirely in cash, entirely in Common Stock (including Restricted Shares) or in such
combination of cash and Common Stock as the Committee shall determine in its
sole discretion.
ARTICLE 12.
UNRESTRICTED SHARES
12.1 Award of Unrestricted Shares. The Committee may cause the
Corporation to grant Unrestricted Shares to employees at such time or times, in such
amounts and for such reasons as the Committee, in its sole discretion, shall
determine. No payment shall be required for Unrestricted Shares.
12.2 Delivery of Unrestricted Shares. The Corporation shall issue, in
the name of each employee to whom Unrestricted Shares have been granted, stock
certificates representing the total number of Unrestricted Shares granted to the
employee, and shall deliver such certificates to the employee as soon as reasonably
practicable after the date of grant or on such later date as the Committee shall
determine at the time of grant.
ARTICLE 13.
TAX OFFSET PAYMENTS
The Committee shall have the authority at the time of any award under
the Plan or anytime thereafter to make Tax Offset Payments to assist employees in
paying income taxes incurred as a result of their participation in the Plan. The Tax
Offset Payments shall be determined by multiplying a percentage established by the
Committee times all or a portion (as the Committee shall determine) of the taxable
income recognized by an employee upon (i) the exercise of Non-qualified Stock
Options or Stock Appreciation Rights, (ii) the disposition of shares received upon
exercise of Incentive Stock Options, (iii) the lapse of restrictions on Restricted
Shares, (iv) the award of Unrestricted Shares, or (v) payments for Performance
Shares or Performance Units. The percentage shall be established, from time to
time, by the Committee at that rate which the Committee, in its sole discretion,
determines to be appropriate and in the best interests of the Corporation to assist
employees in paying income taxes incurred as a result of the events described in the
preceding sentence. Tax Offset Payments shall be subject to the restrictions on
transferability applicable to Options and Stock Appreciation Rights under Article 7.
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ARTICLE 14.
ADJUSTMENT UPON CHANGES IN CAPITALIZATION
Notwithstanding any other provision of the Plan, the Committee may:
(i) at any time, make or provide for such adjustments to the Plan or to the number
and class of shares available thereunder or (ii) at the time of grant of any Options,
Stock Appreciation Rights, Restricted Shares or Performance Shares, provide for
such adjustments to such Options, Stock Appreciation Rights, Restricted Shares or
Performance Shares, in each case, as the Committee shall deem appropriate to
prevent dilution or enlargement of rights, including, without limitation, adjustments
in the event of stock dividends, stock splits, recapitalizations, mergers,
consolidations, combinations or exchanges of shares, separations, spin-offs,
reorganizations, liquidations and the like.
ARTICLE 15.
AMENDMENT AND TERMINATION
The Board may suspend, terminate, modify or amend the Plan,
provided that any amendment that would (i) materially increase the aggregate
number of shares which may be issued under the Plan, (ii) materially increase the
benefits accruing to employees under the Plan, or (iii) materially modify the
requirements as to eligibility for participation in the Plan, shall be subject to the
approval of the Corporation's stockholders, except that any such increase or
modification that may result from adjustments authorized by Article 14 hereof shall
not require such stockholder approval. If the Plan is terminated, the terms of the
Plan shall, notwithstanding such termination, continue to apply to awards granted
prior to such termination. No suspension, termination, modification or amendment
of the Plan may, without the consent of the employee to whom an award shall
theretofore have been granted, adversely affect the rights of such employee under
such award.
ARTICLE 16.
WRITTEN AGREEMENT
Each award of Options, Stock Appreciation Rights, Restricted Shares,
Performance Shares, Performance Units, Unrestricted Shares and Tax Offset
Payments shall be evidenced by a written agreement containing such restrictions,
terms and conditions, if any, as the Committee may require. In the event of any
conflict between a written agreement and the Plan, the terms of the Plan shall
govern.
ARTICLE 17.
MISCELLANEOUS PROVISIONS
17.1 Tax Withholding. The Corporation shall have the right to
require employees or their beneficiaries or legal representatives to remit to the
Corporation an amount sufficient to satisfy Federal, state and local withholding tax
requirements, or to deduct from all payments under the Plan, including Tax Offset
Payments, amounts sufficient to satisfy all withholding tax requirements. Whenever
payments under the Plan are to be
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<PAGE>
made to an employee in cash, such payments
shall be net of any amounts sufficient to satisfy all Federal, state and local
withholding tax requirements. The Committee may, in its sole discretion, permit an
employee to satisfy his or her tax withholding obligation either by (i) surrendering
shares owned by the employee or (ii) having the Corporation withhold from shares
otherwise deliverable to the employee. Shares surrendered or withheld shall be
valued at their Market Price as of the date on which income is required to be
recognized for income tax purposes.
17.2 Compliance With Section 16(b). In the case of employees who
are or may be subject to Section 16 of the Act, it is the intent of the Corporation
that the Plan and any award granted hereunder satisfy and be interpreted in a
manner that satisfies the applicable requirements of Rule 16b-3, so that such persons
will be entitled to the benefits of Rule 16b-3 or other exemptive rules under Section
16 of the Act and will not be subjected to liability thereunder. If any provision of
the Plan or any award would otherwise conflict with the intent expressed herein,
that provision, to the extent possible, shall be interpreted and deemed amended so as
to avoid such conflict. To the extent of any remaining irreconcilable conflict with
such intent, such provision shall be deemed void as applicable to employees who
are or may be subject to Section 16 of the Act.
17.3 Successors. The obligations of the Corporation under the Plan
shall be binding upon any successor corporation or organization resulting from the
merger, consolidation or other reorganization of the Corporation, or upon any
successor corporation or organization succeeding to all or substantially all of the
assets and business of the Corporation. In the event of any of the foregoing, the
Committee may, at its discretion prior to the consummation of the transaction and
subject to Article 15 hereof, cancel, offer to purchase, exchange, adjust or modify
any outstanding awards, at such time and in such manner as the Committee deems
appropriate and in accordance with applicable law.
17.4 General Creditor Status. Employees shall have no right, title, or
interest whatsoever in or to any investments which the Corporation may make to aid
it in meeting its obligations under the Plan. Nothing contained in the Plan, and no
action taken pursuant to its provisions, shall create or be construed to create a trust
of any kind, or a fiduciary relationship between the Corporation and any employee
or beneficiary or legal representative of such employee. To the extent that any
person acquires a right to receive payments from the Corporation under the Plan,
such right shall be no greater than the right of an unsecured general creditor of the
Corporation. All payments to be made hereunder shall be paid from the general
funds of the Corporation and no special or separate fund shall be established and no
segregation of assets shall be made to assure payment of such amounts except as
expressly set forth in the Plan.
17.5 No Right to Employment. Nothing in the Plan or in any written
agreement entered into pursuant to Article 16 hereof, nor the grant of any award,
shall confer upon any employee any right to continue in the employ of the
Corporation or a subsidiary or to be entitled to any remuneration or benefits not set
forth in the Plan or such written agreement or interfere with or limit the right of the
Corporation or a subsidiary to modify the terms of or terminate such employee's
employment at any time.
17.6 Other Plans. Effective upon the adoption of the Plan by the
stockholders, no further awards shall be made under The Toys 'R' Us, Inc. Stock
Option Plan, originally adopted on April 7, 1978 and last amended and restated as
of April 22, 1993 (the 'Prior Plan'). Thereafter, all awards made under the Prior
Plan prior to adoption
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<PAGE>
of the Plan by the stockholders shall continue in accordance with the terms of
the Prior Plan.
17.7 Notices. Notices required or permitted to be made under the
Plan shall be sufficiently made if personally delivered to the employee or sent by
regular mail addressed (a) to the employee at the employee's address as set forth in
the books and records of the Corporation or its subsidiaries, or (b) to the
Corporation or the Committee at the principal office of the Corporation clearly
marked 'Attention: Stock Option Committee.'
17.8 Severability. In the event that any provision of the Plan shall be
held illegal or invalid for any reason, such illegality or invalidity shall not affect the
remaining parts of the Plan, and the Plan shall be construed and enforced as if the
illegal or invalid provision had not been included.
17.9 Governing Law. To the extent not preempted by Federal law,
the Plan, and all agreements hereunder, shall be construed in accordance with and
governed by the laws of the State of New York.
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</TABLE>
<PAGE>
TOYS 'R' US, INC.
MANAGEMENT INCENTIVE COMPENSATION PLAN
1. DEFINITIONS
'Award' shall mean the amount payable to a Participant as
determined by the Committee in accordance with this Plan as an
annual incentive bonus for any Fiscal Year.
'Base Amount' shall have the meaning ascribed thereto in
Section 4(b) hereof.
'Base Salary Percentage' shall have the meaning ascribed
thereto in Section 4(c) hereof.
'Board of Directors' shall mean the Board of Directors of
the Company.
'Code' shall mean the Internal Revenue Code of 1986, as
amended, and references to particular provisions of the Code
shall include any amendments thereto or successor provisions and
any final, temporary or proposed rules and regulations
promulgated thereunder.
'Committee' shall mean the Management Compensation and Stock
Option Committee of the Board of Directors or any other duly
established committee or subcommittee of the Board of Directors
in each case satisfying the requirements of Section 162(m)(4)(C)
of the Code that the Board of Directors hereinafter determines
shall act as the Committee for purposes of the Plan.
'Company' shall mean Toys 'R' Us, Inc., a Delaware
corporation.
'Covered Employee' shall mean any Participant who is deemed
to be a 'covered employee' within the meaning of Section 162(m)
of the Code.
'Financial Goals' shall have the meaning ascribed thereto in
Section 4(a) hereof.
'Fiscal Year' shall mean the fiscal year of the Company
ending on the Saturday closest to January 31 or such other period
which the Company may hereafter adopt as its fiscal year.
'Participant' shall mean each management employee of the
Company or its subsidiaries or divisions who has been designated
for participation in the Plan by the Committee in accordance with
Section 4 hereof.
<PAGE>
'Plan' shall mean this Toys 'R' Us, Inc. Management
Incentive Compensation Plan, as it may be amended from time to
time.
'Pool Amount,' for any Fiscal Year, shall mean 0.5% of the
consolidated pre-tax earnings of the Company, determined in
accordance with generally accepted accounting principles
consistently applied.
'Target' shall have the meaning ascribed thereto in Section
4(a) hereof.
2. PURPOSE
The purpose of the Plan is to permit the Company, through
awards of annual incentive compensation, to attract and retain
qualified management employees and to motivate such management
employees to achieve maximum profitability and stockholder
returns.
3. ADMINISTRATION
The Plan shall be administered by the Committee, which shall
have full authority to interpret the Plan, to establish rules and
regulations relating to the operation of the Plan, to determine
the amount of any Awards (subject to the terms and conditions
hereof) and to make all other determinations and take all other
actions necessary or appropriate for the proper administration of
the Plan. The Committee's interpretation of the Plan, and all
actions taken within the scope of its authority, shall be final
and binding on the Company, any Participants, former Participants
or their designated beneficiaries, and other employees of the
Company and its subsidiaries. No member of the Committee shall
be eligible to participate in the Plan.
4. DETERMINATION OF TARGET, BASE AMOUNT AND
BASE SALARY PERCENTAGE
Prior to the beginning of each Fiscal Year (or with respect
to the Fiscal Year ending January 28, 1995, prior to April 1,
1994), or prior to any later date to the extent the
determinations set forth in this Section 4 may be made prior to a
later date without causing any Award to fail to qualify as
performance-based compensation under Section 162(m) of the Code
(the 'Determination Date'), the Committee shall select the
Participants for the Fiscal Year and adopt in writing, with
respect to each Participant, each of the following:
(a) a Target which shall be equal to a desired level for
such Fiscal Year of any or a combination of the
following: (i) pre-tax earnings, (ii) operating
earnings, (iii) after-tax earnings, (iv) return on
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<PAGE>
investment or (v) earned value added (collectively, the
'Financial Goals'), in each case determined in
accordance with generally accepted accounting
principles (subject to modifications approved by the
Committee) consistently applied for the Company on a
consolidated basis; provided, however, that, with
respect to Participants who are employees of any of the
Company's divisions, the Financial Goals may be based
on divisional rather than consolidated results, or a
combination of the two;
(b) a Base Amount, with respect to each Target, based upon
one or more Financial Goals, representing a minimum
amount which, if not exceeded, would result in no Award
being made to the Participant; and
(c) a Base Salary Percentage, representing the percentage
of the Participant's base salary which shall be payable
as an Award in the event that 100% of the Participant's
Target is achieved.
The Committee shall also determine on each Determination
Date for each Participant a mathematical formula or matrix which
shall indicate the extent to which Awards will be made if the
Base Amount is exceeded, including if the Target is attained or
exceeded, and the Committee may also determine on any
Determination Date alternative formulas or matrices to account
for potential or anticipated significant transactions or events
during such Fiscal Year.
5. CALCULATION OF AWARDS; CERTIFICATION
As soon as practicable after the close of each Fiscal Year
in which any Participant is participating in the Plan, the
Committee shall determine with respect to each Participant
whether and the extent to which the applicable Base Amount is
exceeded, including the extent to which, if any, the Target was
attained or exceeded. Each Participant's Award, if any, for such
Fiscal Year shall be determined in accordance with the
mathematical formula or matrix determined pursuant to Section 4,
and subject to the limitations set forth in Section 6 hereof.
The Committee shall certify in writing to the Board of Directors
the amounts of such Awards and whether each material term of the
Plan relating to such Awards has been satisfied.
6. LIMITATIONS WITH RESPECT TO AWARDS
Each Award determined pursuant to Section 5 hereof shall be
subject to modification or forfeiture in accordance with the
following provisions:
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<PAGE>
(a) No Participant shall have any right to receive payment
of any Award unless the Participant remains in the
employ of the Company or its subsidiaries through the
date of certification of such Award; provided, however,
that the Committee may, in its sole discretion, pay all
or part of an Award to any Participant whose employment
with the Company or its subsidiaries is terminated
prior to such date of certification for any reason.
The determination of the Committee shall be final and
conclusive.
(b) In no event shall Covered Employees, as a group,
receive awards in excess of 100% of the Pool Amount for
any Fiscal Year and in no event shall any Covered
Employee receive an Award in excess of 35% of the Pool
Amount for any Fiscal Year. Each Covered Employee's
Award shall be reduced pro rata in the event that the
foregoing 100% limitation is exceeded.
(c) The Committee may, in its sole discretion, (i) increase
or decrease the Award payable to any Participant who is
not a Covered Employee and who would not become a
Covered Employee as a result of such increase or (ii)
decrease the Award payable to any Covered Employee (or
increase such Award to the extent permitted under
Section 162(m) of the Code), in each case, to reflect
the individual performance and contribution of, and
other factors relating to, such Participant. The
determination of the Committee shall be final and
conclusive.
7. PAYMENT OF AWARDS
Subject to the limitations of Section 6 hereof, each
Participant shall receive, as soon as practicable after the
amount of such Participant's Award for a Fiscal Year has been
determined and certified in accordance with Section 5 hereof, the
amount of such Award in cash.
8. DESIGNATION OF BENEFICIARY
A Participant may designate a beneficiary or beneficiaries
who, in the event of the Participant's death prior to the payment
of any Award earned hereunder, shall receive such payment when
due under the Plan. Such designation shall be made by the
Participant on a form prescribed by the Committee. The
Participant may at any time change or revoke such designation. A
beneficiary designation, or revocation of a prior beneficiary
designation, will be effective only if it is made in writing on a
form provided by the Company, signed by the Participant and
received by the Company. If the Participant does not designate a
beneficiary or the designated beneficiary dies prior to the
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<PAGE>
payment of any Award, any amounts remaining to be paid shall be
paid to the Participant's estate.
9. ADJUSTMENTS
If any Target or other criterion upon which Awards for any
Fiscal Year is based shall have been affected by special factors
(including material changes in accounting policies or practices,
material acquisitions or dispositions of property, or other
unusual or unplanned items) which in the Committee's judgment
should or should not be taken into account, in whole or in part,
in the equitable administration of the Plan, the Committee may,
for any purpose of the Plan, adjust such Target or criterion for
such Fiscal Year (and subsequent Fiscal Years, as appropriate)
and make credits, payments and reductions accordingly under the
Plan; provided, however, that the Committee shall not have the
authority to make any such adjustments with respect to Awards
paid to any Participant who is at such time a Covered Employee.
10. AMENDMENTS
The Committee may at any time amend this Plan, provided that
no such amendment shall be effective which alters the Award,
Target or other criteria relating to an Award applicable to a
Covered Employee for the Fiscal Year in which such amendment is
made or any prior Fiscal Year, except any such amendment which
may be made without the loss of any tax deduction to the Company
under Section 162(m) of the Code.
11. TERMINATION
The Board of Directors may terminate this Plan at any time;
provided, however, that any Award determined and certified
pursuant to Section 5 hereof but not yet paid as of the date of
such termination shall be paid as soon as practicable, but in no
event later than 30 days after the date of such termination.
12. MISCELLANEOUS PROVISIONS
(a) This Plan is not a contract between the Company and any
Participant or other employee. No Participant or other
employee shall have any claim or right to be paid an
Award under this Plan until the amount of such Award
shall have been determined and certified in accordance
with Section 5 hereof. Neither the establishment of
this Plan, nor any action taken hereunder, shall be
construed as giving any Participant or other employee
any right to remain in the employ of the Company or its
subsidiaries for any period. Nothing contained in this
Plan shall limit the ability of the Company to make
payments or awards to employees under any other plan,
agreement or arrangement.
- 5 -
<PAGE>
(b) A Participant's right and interest in any Award under
the Plan may not be assigned or transferred, except as
provided in Section 8 hereof, and any attempted
assignment or transfer shall be null and void and shall
permit the Committee, in its sole discretion, to
extinguish the Company's obligation under the Plan to
pay any Award with respect to such Participant.
(c) The Plan shall be unfunded. The Company shall not be
required to establish any special segregation of assets
to assure payment of Awards.
(d) The Company shall have the right to deduct at the time
of payment of any Award any amounts required by law to
be withheld for the payment of taxes or otherwise.
(e) If the Company for any reason fails to make payment of
an Award at the time such Award becomes payable, the
Company shall not be liable for any interest or other
charges thereon.
(f) Except where federal law is applicable, the provisions
of the Plan shall be governed by and construed in
accordance with the laws of the State of New York.
(g) If any provision of this Plan is found to be illegal or
invalid or would cause any Award not to constitute
performance-based compensation under Section
162(m)(4)(C) of the Code, the Committee shall have
discretion to sever that provision from this Plan and,
thereupon, such provision shall not be deemed to be a
part of this Plan.
(h) No member of the Board of Directors or the Committee,
and no officer, employee or agent of the Company or its
subsidiaries shall be liable for any act or action
hereunder, whether of commission or omission, taken by
any other member, or by any officer, agent, or
employee, or, except in circumstances involving bad
faith, for anything done or omitted to be done in the
administration of the Plan.
13. EFFECTIVE DATE
The Plan shall be effective beginning with the Fiscal Year
ending January 28, 1995.
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<PAGE>
<TABLE>
<CAPTION>
TABLE OF CONTENTS
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<S> <C>
1 Financial Highlights
2 Letters to Our Stockholders
6 Management's Discussion -- Results of Operations and Financial Condition
7 Financial Statements
15 Report of Management
15 Market Information
15 Report of Independent Auditors
16 Directors and Officers
17 Corporate Data
</TABLE>
Toys 'R' Us is the world's largest and fastest growing children's specialty
retail chain in terms of both sales and earnings. At January 29, 1994, the
Company operated 581 toy stores in the United States, 234 international toy
stores and 217 Kids 'R' Us children's clothing stores.
STORE LOCATIONS
TOYS 'R' US UNITED STATES -- 581 LOCATIONS
Alabama - 7
Alaska - 1
Arizona - 10
Arkansas - 2
California - 74
Colorado - 9
Connecticut - 8
Delaware - 2
Florida - 36
Georgia - 14
Hawaii - 1
Idaho - 1
Illinois - 33
Indiana - 12
Iowa - 6
Kansas - 4
Kentucky - 7
Louisiana - 8
Maine - 2
Maryland - 16
Massachusetts - 16
Michigan - 23
Minnesota - 11
Mississippi - 3
Missouri - 12
Montana - 1
Nebraska - 3
Nevada - 3
New Hampshire - 5
New Jersey - 21
New Mexico - 3
New York - 36
North Carolina - 15
Ohio - 27
Oklahoma - 4
Oregon - 5
Pennsylvania - 27
Rhode Island - 1
South Carolina - 8
Tennessee - 11
Texas - 43
Utah - 5
Virginia - 17
Washington - 10
West Virginia - 3
Wisconsin - 11
Puerto Rico - 4
KIDS 'R' US -- 217 LOCATIONS
Alabama - 1
Arizona - 4
California - 31
Connecticut - 6
Delaware - 1
Florida - 7
Georgia - 4
Illinois - 21
Indiana - 7
Iowa - 1
Kansas - 1
Maine - 2
Maryland - 8
Massachusetts - 4
Michigan - 13
Minnesota - 6
Missouri - 4
Nebraska - 1
New Hampshire - 2
New Jersey - 17
New York - 20
Ohio - 19
Pennsylvania - 14
Rhode Island - 1
Tennessee - 1
Texas - 5
Utah - 3
Virginia - 7
Wisconsin - 3
Puerto Rico - 3
TOYS 'R' US INTERNATIONAL -- 234 LOCATIONS
Australia - 7
Austria -5
Belgium -2
Canada - 50
France - 25
Germany -44
Hong Kong - 4
Japan - 16
Malaysia - 2
Netherlands - 5
Portugal - 2
Singapore - 3
Spain - 17
Switzerland - 4
Taiwan - 3
United Kingdom - 45
[RECYCLED SYMBOL]
Printed on
recycled paper
<PAGE>
TOYS 'R' US, INC. AND SUBSIDIARIES
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
(Dollars in millions except per share information)
Fiscal Year Ended
Jan. 29, Jan. 30, Feb. 1, Feb. 2, Jan. 28, Jan. 29, Jan. 31, Feb. 1, Feb. 2, Feb. 3,
1994 1993 1992 1991 1990 1989 1988 1987 1986 1985
- - -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
OPERATIONS:
Net Sales..................... $ 7,946 $ 7,169 $ 6,124 $ 5,510 $ 4,788 $ 4,000 $ 3,137 $ 2,445 $ 1,976 $ 1,702
Net Earnings.................. 483 438 340 326 321 268 204 152 120 111
Earnings Per Share............ 1.63 1.47 1.15 1.11 1.09 .91 .69 .52 .41 .39
FINANCIAL POSITION AT
YEAR END:
Working Capital............... 633 797 328 177 238 255 225 155 181 222
Real Estate-Net............... 2,040 1,877 1,751 1,433 1,142 952 762 601 423 279
Total Assets.................. 6,150 5,323 4,583 3,582 3,075 2,555 2,027 1,523 1,226 1,099
Long-Term Obligations......... 724 671 391 195 173 174 177 85 88 88
Stockholders' Equity............ 3,148 2,889 2,426 2,046 1,705 1,424 1,135 901 717 579
NUMBER OF STORES
AT YEAR END:
Toys 'R' Us -- United States.. 581 540 497 451 404 358 313 271 233 198
Toys 'R' Us -- International.. 234 167 126 97 74 52 37 24 13 5
Kids 'R' Us................... 217 211 189 164 137 112 74 43 23 10
</TABLE>
<TABLE>
<CAPTION>
CONSOLIDATED NET SALES (BILLIONS)
(GRAPHIC MATERIAL OMITTED)
<S> <C> <C>
FISCAL YEAR 1984 $1,702
1985 1,976
1986 2,445
1987 3,137
1988 4,000
1989 4,788
1990 5,510
1991 6,124
1992 7,169
1993 7,946
</TABLE>
<PAGE>
TO OUR STOCKHOLDERS
FINANCIAL HIGHLIGHTS
We are pleased to report another excellent year for Toys 'R' Us. In 1993, we
once again achieved record sales and earnings as well as significant market
share gains. Since Toys 'R' Us became a public company, we have reported 15
consecutive years of sales and earnings increases, with an annual compounded
growth rate over that period of 25%.
Our sales reached $7.9 billion, an 11% increase over the $7.2 billion reported
in the previous year. Pre-tax earnings increased 12% while net earnings rose to
$483 million, a 10% increase over the $438 million in 1992. Earnings per share
were $1.63 compared to $1.47 a year ago. Our stockholders' equity increased to
$3.1 billion by the end of 1993.
We achieved these outstanding results by having the best selection of
merchandise, being stocked in depth, and by being competitive with our everyday
low prices. Our strong performance also reflects several new marketing and
merchandising initiatives implemented this year; including the wider
distribution of our Holiday Toy Catalog, the expansion of Books 'R' Us shops
within our U.S.A. toy stores and increased customer service initiatives.
Our existing and new strategies contributed to comparable store sales increases
in our U.S.A. toy stores of 6.5% in the fourth quarter and 3.3% for the year.
These results are particularly impressive as they come on top of strong
increases in each of the last two years.
Internationally, Germany and Japan had comparable store sales decreases in their
local currencies, reflecting the recessionary economic conditions in those
countries. Canada, the United Kingdom, France and Spain had comparable store
sales increases. We continue to be pleased with the acceptance of our new stores
throughout the world. Our International division once again, demonstrated its
ability to improve inventory management and increase labor and distribution
productivity in spite of the difficult economic environment in Europe and Japan.
[Photo of Robert C. Nakasone, President and Chief Operating Officer and Michael
Goldstein, Vice Chairman and Chief Executive Officer.]
We have created a franchising division that will enable us to bring additional
countries into the Toys 'R' Us family on an accelerated basis, and provide for
the opening of stores in additional parts of the world. We have already signed
two franchise agreements which allow for the opening of Toys 'R' Us stores in
the Middle East commencing in 1994. We will receive royalty and other related
franchise service fees providing meaningful cash flow and earnings for our
International division.
Our Kids 'R' Us children's clothing stores' sales improved throughout the second
half of the year, and despite a difficult apparel sales environment, ended the
year with a slight increase. Operating profits increased approximately 25%
following a 50% increase in 1992 reflecting the improved expense and inventory
control as well as new marketing and merchandising strategies. Kids 'R' Us
continues to make strategic improvements to increase its profitability. In 1993,
four stores were closed and we anticipate closing another 15 to 20 stores which
are not meeting expectations.
Lastly, we announced a plan to buy back $1 billion of our common stock over the
next several years. Even with our aggressive expansion, Toys 'R' Us expects to
generate excess cash flow. We believe that in addition to investing in our
ongoing business, the repurchase of Toys 'R' Us common stock will increase
shareholder value.
OPERATIONAL HIGHLIGHTS
We are proud of our ability to provide our customers with the best selection of
merchandise, stocked in depth with everyday low prices, while maintaining one of
the lowest expense structures in the industry. The following highlights some
1993 accomplishments along with our plans for 1994.
In 1993, we significantly expanded the distribution of our Holiday Toy Catalog
providing our customers with even more coupons than in prior years. The catalog
was very successful and allowed us to highlight the broad selection of
merchandise that can be found at Toys 'R' Us. Customers used the catalog as a
shopping aid throughout the Holiday season.
We have continued testing various 'specialty shops' within our stores: the most
notable being 'Books 'R' Us'.
2
<PAGE>
<TABLE>
<CAPTION>
CONSOLIDATED NET EARNINGS (MILLIONS)
(GRAPHIC MATERIAL OMITTED)
<S> <C> <C>
FISCAL YEAR 1984 $111
1985 120
1986 152
1987 204
1988 268
1989 321
1990 326
1991 340
1992 438
1993 483
</TABLE>
The Books 'R' Us shops offer a broad selection of children's books and encourage
children to read. In 1993, we added about 160 'Books 'R' Us' shops and plan to
have over 300 shops by the end of 1994. We have also been experimenting with
other shops such as construction toys, large outdoor playsets and stuffed
animals. We believe that these shops help distinguish Toys 'R' Us from our
competitors.
Enhancing customer service continues to be a primary focus for Toys 'R' Us. In
1993, we expanded our successful 'Geoffrey Helper' program in both the U.S.A.
and International toy stores. In 1994, we will install customer friendly
in-aisle price scanners and other service oriented technology to assist our
customers who are our number one priority.
In 1990, we began remodeling about fifteen of our older U.S.A. toy stores each
year. The remodeled stores enhance the customers' shopping experience while
increasing in-store productivity. In 1993, we accelerated this program to about
25 stores and expect to remodel another 25 to 30 stores in 1994.
The use of technology to control expenses is a priority at Toys 'R' Us. We again
increased productivity and improved our ability to replenish stores by building
an automated state-of-the-art distribution facility in southern Germany and
retrofitting an existing facility in California with our new automated systems.
In 1994, we plan to replace four U.S.A. toy distribution centers with two
automated facilities in Missouri and Florida. Distribution facilities in France,
Germany and Spain will also be retrofitted with new automated systems.
All U.S.A. toy stores were provided with laser radio terminal (LRT) technology
in 1993, which takes advantage of wireless radio frequency communications within
our stores. This equipment enhances shelf replenishment and improves employee
productivity.
We installed satellite technology in North America. This technology
instantaneously links our stores with our headquarters' computer databases as
well as our customer transaction authorization networks in a more cost effective
manner. We have also been able to utilize business television in our North
American stores.
STORE GROWTH
In 1993, we opened 41 toy stores in the United States. Internationally, 67
stores opened in 11 countries, including our first stores in Australia,
Portugal, Belgium, Switzerland and the Netherlands. For the first time, our
International division opened more toy stores than the United States division.
We also opened 10 Kids 'R' Us stores. At the end of 1993, we had 815 toy stores
operating in 46 states and Puerto Rico, Canada; Europe -- the United Kingdom,
Germany, France, Spain, Austria, Switzerland, the Netherlands, Belgium and
Portugal; Asia -Japan, Hong Kong, Singapore, Malaysia and Taiwan; and Australia.
We also had 217 Kids 'R' Us stores operating in 29 states.
In 1994, we plan to open 40 to 45 toy stores in the U.S.A. and 65 to 70 stores
internationally, including our first stores in Scandinavia. The new Scandinavian
stores will be serviced from the United Kingdom. Once again, our anticipated
opening of international stores will exceed the openings in the U.S.A. The
international stores will capitalize on the existing infrastructure thereby
enhancing the profitability of new
<TABLE>
<CAPTION>
CONSOLIDATED STOCKHOLDERS' EQUITY (BILLIONS)
(GRAPHIC MATERIAL OMITTED)
<S> <C> <C>
FISCAL YEAR 1984 $ 579
1985 717
1986 901
1987 1,135
1988 1,424
1989 1,705
1990 2,046
1991 2,426
1992 2,889
1993 3,148
</TABLE>
3
<PAGE>
and existing stores. We plan to open about 10 new Kids 'R' Us stores.
With our financial strength, we intend to capitalize on our strong competitive
position throughout the world, by continued expansion to achieve greater sales,
earnings and market share gains.
CORPORATE CITIZENSHIP
Toys 'R' Us maintains a corporate-wide giving program focusing on improving the
health care needs of children by supporting many national and regional
children's health care organizations. In 1993, we contributed funds to more than
10 new children's health care organizations. We expanded our Hospital Playroom
Program in 1993 by opening 4 additional playrooms bringing the total to 18. This
program fixtures and equips quality children's play centers in hospitals. We
expect to expand our program into eight additional hospitals in 1994.
Once again we were very involved in assisting those in need in the aftermath of
the floods in the Midwest and the Southern California earthquake by providing
free diapers and other basic consumables.
Toys 'R' Us is a signatory to a Fair Share Agreement with the NAACP and has
taken steps to support women and other minorities in the workplace. We are the
leading purchaser of products from several minority-owned toy companies.
<TABLE>
<CAPTION>
CONSOLIDATED NUMBER OF STORES
(GRAPHIC MATERIAL OMITTED)
<S> <C> <C>
FISCAL YEAR 1984 213
1985 269
1986 338
1987 424
1988 522
1989 615
1990 712
1991 812
1992 918
1993 1,032
</TABLE>
<TABLE>
<CAPTION>
NET SALES - INTERNATIONAL DIVISION (MILLIONS)
(GRAPHIC MATERIAL OMITTED)
<S> <C> <C>
FISCAL YEAR 1984 $ 14
1985 34
1986 101
1987 210
1988 368
1989 534
1990 773
1991 970
1992 1,374
1993 1,667
</TABLE>
Toys 'R' Us continues to have a strong toy safety program which includes the
inspection of directly imported toys. Furthermore, we continue to take numerous
pro-active initiatives, including a leadership position in eliminating the sale
of look-a-like toy guns.
Through our new Books 'R' Us shops, we are promoting literacy by demonstrating
to children that reading is fun. We introduced a reading initiative called
Geoffrey's Reading Railroad which offers a free reading kit with prize
incentives for reading up to nine books. In conjunction with the opening of
Books 'R' Us shops, Toys 'R' Us reached out to the community and selected
Reading Is Fundamental (RIF) as the recipient of a grant. Part of this grant
went towards RIF's Project Open Book, a program that provides books to children
in homeless shelters.
HUMAN RESOURCES
The excellence of our management team and associates enables Toys 'R' Us to
expand aggressively and profitably.
We have made the following important promotions and additions to our executive
ranks:
CORPORATE AND ADMINISTRATIVE:
Michael J. Corrigan, Vice President -- Compensation and Benefits
TOYS 'R' US, UNITED STATES:
Lee Richardson, Vice President -- Advertising
Karl S. Taylor, Vice President -- Merchandise Planning and Allocation
TOYS 'R' US, INTERNATIONAL:
Ken Bonning, Vice President -- Logistics
Keith C. Spurgeon, Vice President -- Toys 'R' Us, Asia/Australia
KIDS 'R' US:
Virginia Harris, Senior Vice President -- General Merchandise Manager
Lorna E. Nagler, Vice President -- Divisional Merchandise Manager
4
<PAGE>
<TABLE>
<CAPTION>
NUMBER OF COUNTRIES - INTERNATIONAL DIVISION
(GRAPHIC MATERIAL OMITTED)
<S> <C> <C>
FISCAL YEAR 1985 3
1986 4
1987 5
1988 6
1989 8
1990 8
1991 10
1992 11
1993 16
1994* 18
</TABLE>
- - -----------
* Projected
SUMMARY
The exciting world of Toys 'R' Us continues to expand. We look forward to a
strong year in 1994, with profit improvement in all three divisions. We will
work hard to continue being the most trusted store in town.
We value our excellent relationships with our innovative suppliers and commend
them for their products, which create excitement in our stores. Our assessment
of the February New York Toy Fair indicates an exciting year in basic categories
such as crafts, construction, action figures, preschool and dolls with
reasonably priced quality product.
We recognize the dedication and quality work of our associates around the world
who have made this another record year. Our appreciation is also extended to
you, our stockholders, for your commitment and loyalty to Toys 'R' Us.
Finally, we would like to thank Charles Lazarus, our founder and the Chairman of
the Board for his confidence in us and the rest of the Toys 'R' Us team. He has
created an impressive organization and a great legacy. We intend to fully meet
his expectations and live up to the standards he set.
Sincerely,
/s/ Michael Goldstein
Michael Goldstein
Vice Chairman and
Chief Executive Officer
/s/ Robert C. Nakasone
Robert C. Nakasone
President and Chief
Operating Officer
March 30, 1994
[Photo of Charles Lazarus, Chairman of the Board]
LETTER FROM THE CHAIRMAN
Over the past 46 years since I opened my first toy store in Washington, D.C., I
have seen Toys 'R' Us grow to become a sophisticated, multinational company with
stores throughout the world. Many people have contributed to the success of our
company, none more than Mike Goldstein, our new Vice Chairman and Chief
Executive Officer, and Bob Nakasone, our new President and Chief Operating
Officer. These appointments are an integral part of our succession planning
process and give added responsibilities to our two most senior executives.
In my new role, I will continue to be significantly involved with Toys 'R' Us in
a variety of ways. First and foremost, I will ensure that the vision of Toys 'R'
Us remains intact by visiting our U.S.A. and International operations. I will
also be providing guidance in the development of new merchandising and marketing
concepts. Lastly, I will be working with governmental officials throughout the
world to ensure that Toys 'R' Us is able to continue its global expansion.
I look forward to my new role and remain as excited about the future prospects
of Toys 'R' Us today, as I first did more than four decades ago.
/s/ Charles Lazarus
Charles Lazarus
Chairman of the Board
5
<PAGE>
MANAGEMENT'S DISCUSSION -- RESULTS OF OPERATIONS AND FINANCIAL CONDITION
RESULTS OF OPERATIONS*
The Company has experienced sales growth in each of its last three years; sales
were up 10.8% in 1993, 17.1% in 1992 and 11.1% in 1991. Part of the growth is
attributable to the opening of 130 new U.S.A. toy stores, 137 international toy
stores and 57 children's clothing stores during the three year period, and a
portion of the increase is due to comparable U.S.A. toy store sales increases of
3.3%, 6.9% and 2.4% in 1993, 1992 and 1991, respectively.
Cost of sales as a percentage of sales decreased to 69.2% in 1993 from 69.3% in
1992 and from 70.0% in 1991 due to a more favorable merchandise mix.
Selling, advertising, general and administrative expenses as a percentage of
sales increased to 18.8% in 1993 from 18.7% in 1992 primarily as a result of
start-up costs for the opening of our new market in Australia. These expenses
decreased in 1992 from 18.8% in 1991 as a result of labor productivity gains and
other cost cutting measures.
Interest expense increased in 1993 and 1992 compared to 1991 due to increased
average borrowings, the mix between short-term and long-term borrowings and the
mix between countries, partially offset by lower short-term interest rates.
Short-term interest income increased during these periods due to an increase in
cash available for investment.
The effective tax rate increased to 37.5% in 1993 from 36.5% in 1992, due to a
1% increase in the U.S. Federal corporate income tax rate and an adjustment for
the retroactive impact of this tax change. The effective tax rate decreased to
36.5% in 1992 from 37.0% in 1991, due to a change in the mix of foreign earnings
and certain foreign tax benefits. The Company believes its deferred tax assets,
as reported, are fully realizable.
The Company believes that its risks attendant to foreign operations are minimal
as it operates in sixteen different countries which are politically stable.
International sales and operating earnings were unfavorably impacted by the
translation of local currency results into U.S. dollars at lower average
exchange rates in 1993 than in 1992. However, the strong dollar had a favorable
impact on the cost of international capital investment in 1993.
Inflation has had little effect on the Company's operations in the last three
years.
LIQUIDITY AND CAPITAL RESOURCES
The Company continues to maintain a strong financial position as evidenced by
its working capital of $633 million at January 29, 1994 and $797 million at
January 30, 1993. The long-term debt to equity percentage is 23.0% at January
29, 1994 as compared to 23.2% at January 30, 1993.
The Company plans to open 105 to 115 toy stores in 1994 in the United States,
Australia, Austria, Belgium, Canada, France, Germany, Japan, the Netherlands,
Portugal, Spain, Switzerland and the United Kingdom, as well as the new markets
of Denmark and Sweden. Additionally, the Company plans to open about 10 Kids 'R'
Us children's clothing stores and close approximately 15 to 20 stores (4 stores
closed in 1993). The Company believes that the store closings will not have a
significant impact on its financial position. The Company opened 108 toy stores
in 1993, 84 in 1992 and 75 in 1991 and 10 Kids 'R' Us children's clothing stores
in 1993, 23 in 1992 and 25 in 1991.
Since 1981, the Company has purchased a significant portion of its real estate
and plans to continue this policy. Generally, real estate acquisitions are
financed through internally generated funds.
For 1994, capital requirements for real estate, store and warehouse fixtures and
equipment, leasehold improvements and other additions to property and equipment
are estimated at $650 million (including real estate and related costs of $400
million).
In 1993, the Company completed its five million share repurchase program and
announced a new one billion dollar share repurchase program which will occur
over the next several years. During the three years ended January 29, 1994, the
Company repurchased 5,648,000 shares of its common stock for $210,477,000
pursuant to these programs. The repurchase of shares during 1994 is anticipated
to be financed by internally generated funds.
The seasonal nature of the business (approximately 49% of sales take place in
the fourth quarter) typically causes cash to decline from the beginning of the
year through October as inventory increases for the Christmas season and funds
are used for land purchases and construction of new stores, which usually open
in the first ten months of the year. Therefore, the Company has commitments
and backup lines from numerous financial institutions to adequately
support its short-term financing needs. Management expects that seasonal cash
requirements will continue to be met primarily through operations, issuance of
short-term commercial paper and bank borrowings for its foreign subsidiaries.
Where appropriate, the Company may convert short-term borrowings to long-term
debt to achieve a balance between fixed and variable interest rates. In this
regard, during 1993 the Company's Japanese subsidiary borrowed 4 billion yen
(approximately $36 million) at various interest rates with a third party in
Japan.
* References to 1993, 1992 and 1991 are for the 52 weeks ended January 29, 1994,
January 30, 1993 and February 1, 1992, respectively.
6
<PAGE>
TOYS 'R' US, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EARNINGS
<TABLE>
<CAPTION>
Year Ended
- - --------------------------------------------------------------------------------------------------------------
(In thousands except per share information) January 29, January 30, February 1,
1994 1993 1992
<S> <C> <C> <C>
Net sales............................................................... $7,946,067 $7,169,290 $6,124,209
Costs and expenses:
Cost of sales........................................................... 5,494,766 4,968,555 4,286,639
Selling, advertising, general and administrative........................ 1,497,011 1,342,262 1,153,576
Depreciation and amortization........................................... 133,370 119,034 100,701
Interest expense........................................................ 72,283 69,134 57,885
Interest and other income............................................... (24,116) (18,719) (13,521)
---------- ---------- ----------
7,173,314 6,480,266 5,585,280
---------- ---------- ----------
Earnings before taxes on income......................................... 772,753 689,024 538,929
Taxes on income......................................................... 289,800 251,500 199,400
---------- ---------- ----------
Net earnings............................................................ $ 482,953 $ 437,524 $ 339,529
---------- ---------- ----------
---------- ---------- ----------
Earnings per share...................................................... $ 1.63 $ 1.47 $ 1.15
---------- ---------- ----------
---------- ---------- ----------
</TABLE>
See notes to consolidated financial statements.
7
<PAGE>
TOYS 'R' US, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
(In thousands)
- - --------------------------------------------------------------------------------------------------------------
January 29, January 30,
1994 1993
<S> <C> <C>
ASSETS
Current Assets:
Cash and cash equivalents............................................................. $ 791,893 $ 763,721
Accounts and other receivables........................................................ 98,534 69,385
Merchandise inventories............................................................... 1,777,569 1,498,671
Prepaid expenses and other............................................................ 40,400 52,731
---------- ----------
Total Current Assets.................................................................. 2,708,396 2,384,508
Property and Equipment:
Real estate, net...................................................................... 2,035,673 1,876,835
Other, net............................................................................ 1,148,794 926,715
---------- ----------
Total Property and Equipment.......................................................... 3,184,467 2,803,550
Other Assets.......................................................................... 256,746 134,794
---------- ----------
$6,149,609 $5,322,852
---------- ----------
---------- ----------
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Short-term borrowings................................................................. $ 239,862 $ 120,772
Accounts payable...................................................................... 1,156,411 941,375
Accrued expenses and other current liabilities........................................ 471,782 361,661
Income taxes payable.................................................................. 206,996 163,841
---------- ----------
Total Current Liabilities............................................................. 2,075,051 1,587,649
Deferred Income Taxes................................................................. 202,663 175,430
Long-Term Debt........................................................................ 710,365 660,488
Obligations Under Capital Leases...................................................... 13,248 10,264
Stockholders' Equity:
Common stock.......................................................................... 29,794 29,794
Additional paid-in capital............................................................ 454,061 465,494
Retained earnings..................................................................... 3,012,806 2,529,853
Foreign currency translation adjustments.............................................. (56,021) 14,317
Treasury shares, at cost.............................................................. (292,358) (150,437)
---------- ----------
3,148,282 2,889,021
---------- ----------
$6,149,609 $5,322,852
---------- ----------
---------- ----------
</TABLE>
See notes to consolidated financial statements.
8
<PAGE>
TOYS 'R' US, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
Year Ended
- - -------------------------------------------------------------------------------------------------------------
(In thousands)
January 29, January 30, February 1,
1994 1993 1992
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net earnings............................................................... $ 482,953 $ 437,524 $ 339,529
--------- --------- ---------
Adjustments to reconcile net earnings to net cash provided by operating
activities:
Depreciation and amortization......................................... 133,370 119,034 100,701
Deferred income taxes................................................. 36,534 13,998 15,817
Changes in operating assets and liabilities:
Accounts and other receivables...................................... (29,149) (5,307) 9,092
Merchandise inventories............................................. (278,898) (108,066) (115,436)
Prepaid expenses and other operating assets......................... (39,448) (36,249) (16,176)
Accounts payable, accrued expenses and other liabilities............ 325,165 112,232 462,152
Income taxes payable................................................ 26,588 40,091 7,071
--------- --------- ---------
Total adjustments.......................................................... 174,162 135,733 463,221
--------- --------- ---------
Net cash provided by operating activities............................. 657,115 573,257 802,750
--------- --------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES
Capital expenditures, net.................................................. (555,258) (421,564) (548,538)
Other assets............................................................... (58,383) (22,175) (17,110)
--------- --------- ---------
Net cash used in investing activities................................. (613,641) (443,739) (565,648)
--------- --------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES
Short-term borrowings, net................................................. 119,090 (170,887) (94,811)
Long-term borrowings....................................................... 40,576 318,035 197,802
Long-term debt repayments.................................................. (1,335) (7,926) (1,590)
Exercise of stock options.................................................. 29,879 86,323 32,707
Share repurchase program................................................... (183,233) (27,244) --
--------- --------- ---------
Net cash provided by financing activities............................. 4,977 198,301 134,108
--------- --------- ---------
Effect of exchange rate changes on cash and cash equivalents............... (20,279) (8,691) 38,378
CASH AND CASH EQUIVALENTS
Increase during year....................................................... 28,172 319,128 409,588
Beginning of year.......................................................... 763,721 444,593 35,005
--------- --------- ---------
End of year................................................................ $ 791,893 $ 763,721 $ 444,593
--------- --------- ---------
--------- --------- ---------
</TABLE>
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
The Company considers its highly liquid investments purchased as part of its
daily cash management activities to be cash equivalents. During the years ended
January 29, 1994, January 30, 1993 and February 1, 1992, the Company made income
tax payments of $220,229, $151,722 and $155,469 and interest payments (net of
amounts capitalized) of $104,281,$83,584 and $46,763, respectively.
See notes to consolidated financial statements.
9
<PAGE>
TOYS 'R' US, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
Common Stock
-----------------------------
Issued In Treasury
----------------- -----------Additional
paid-in Retained
(In thousands) Shares Amount Amount capital earnings
- - -------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Balance, February 2, 1991........................... 297,938 $ 29,794 ($ 129,340) $353,924 $1,752,800
Net earnings for the year........................... -- -- -- -- 339,529
Exercise of stock options (1,640 Treasury shares)... -- -- 1,623 15,259 --
Tax benefit from exercise of stock options.......... -- -- -- 15,620 --
-------- -------- ----------- --------- ----------
Balance, February 1, 1992........................... 297,938 29,794 (127,717) 384,803 2,092,329
Net earnings for the year........................... -- -- -- -- 437,524
Share repurchase program (708 Treasury shares)...... -- -- (27,244) -- --
Exercise of stock options (4,479 Treasury shares)... -- -- 4,524 35,301 --
Tax benefit from exercise of stock options.......... -- -- -- 45,390 --
-------- -------- ----------- --------- ----------
Balance, January 30, 1993........................... 297,938 29,794 (150,437) 465,494 2,529,853
Net earnings for the year........................... -- -- -- -- 482,953
Share repurchase program (4,940 Treasury shares).... -- -- (183,233) -- --
Exercise of stock options (1,394 Treasury shares)... -- -- 41,312 (21,464) --
Tax benefit from exercise of stock options.......... -- -- -- 10,031 --
-------- -------- ----------- --------- ----------
Balance, January 29, 1994........................... 297,938 $ 29,794 ($ 292,358) $454,061 $3,012,806
-------- -------- ----------- --------- ----------
-------- -------- ----------- --------- ----------
</TABLE>
See notes to consolidated financial statements.
10
<PAGE>
TOYS 'R' US, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- - --------------------------------------------------------------------------------
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
- - --------------------------------------------------------------------------------
FISCAL YEAR
The Company's fiscal year ends on the Saturday nearest to January 31. References
to 1993, 1992 and 1991 are for the 52 weeks ended January 29, 1994, January 30,
1993 and February 1, 1992, respectively.
PRINCIPLES OF CONSOLIDATION
The consolidated financial statements include the accounts of the Company and
its subsidiaries. All material intercompany balances and transactions have been
eliminated. Assets and liabilities of foreign operations are translated at
current rates of exchange at the balance sheet date while results of operations
are translated at average rates in effect for the period. Translation gains or
losses are shown as a separate component of stockholders' equity. The increase
(decrease) in the foreign currency translation adjustment was ($70,338,000),
($33,650,000), and $7,539,000 for 1993, 1992 and 1991, respectively.
MERCHANDISE INVENTORIES
Merchandise inventories for the U.S.A. toy store operations, which represent
over 66% of total inventories, are stated at the lower of LIFO (last-in,
first-out) cost or market as determined by the retail inventory method. If
inventories had been valued at the lower of FIFO (first-in, first-out) cost or
market, inventories would show no change at January 29, 1994 or January 30,
1993. All other merchandise inventories are stated at the lower of FIFO cost or
market as determined by the retail inventory method.
PROPERTY AND EQUIPMENT
Property and equipment are recorded at cost. Depreciation and amortization are
provided using the straight-line method over the estimated useful lives of the
assets or, where applicable, the terms of the respective leases, whichever is
shorter.
PREOPENING COSTS
Preopening costs, which consist primarily of advertising, occupancy and payroll
expenses, are amortized over expected sales to the end of the fiscal year in
which the store opens.
CAPITALIZED INTEREST
Interest on borrowed funds is capitalized during construction of property and is
amortized by charges to earnings over the depreciable lives of the related
assets. Interest of $7,300,000, $8,403,000 and $12,237,000 was capitalized
during 1993, 1992 and 1991, respectively.
FINANCIAL INSTRUMENTS
The carrying amounts reported in the balance sheets for cash and cash
equivalents and short-term borrowings approximate their fair market values.
FORWARD FOREIGN EXCHANGE CONTRACTS
The Company enters into forward foreign exchange contracts to eliminate currency
movement relating to certain transactions denominated in foreign currency. Gains
and losses which offset the movement in the underlying transactions are
recognized as part of such transactions. As of January 29, 1994, the Company had
$290,000,000 of outstanding forward contracts maturing in 1994. There were no
open contracts at January 30, 1993. The Company does not expect to incur any
losses as a result of counterparty defaults.
PROPERTY AND EQUIPMENT
- - --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Useful Life January 29, January 30,
(In thousands) (in years) 1994 1993
- - --------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Land.................................................................... $ 693,737 $ 642,368
Buildings............................................................... 45-50 1,446,277 1,280,850
Furniture and equipment................................................. 5-20 953,360 809,772
Leaseholds and leasehold improvements................................... 12 1/2-50 658,191 510,780
Construction in progress................................................ 41,855 72,895
Leased property under capital leases.................................... 24,360 20,193
---------- ---------- ----------
3,817,780 3,336,858
Less accumulated depreciation and amortization.......................... 633,313 533,308
---------- ----------
$3,184,467 $2,803,550
---------- ----------
---------- ----------
</TABLE>
11
<PAGE>
LONG-TERM DEBT
- - --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
January 29, January 30,
(In thousands) 1994 1993
- - ---------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Industrial revenue bonds, net of expenses (a)...........................................$ 74,208 $ 74,174
Mortgage notes payable at annual interest rates from 7 1/8% to 11% (b).................. 13,318 13,708
Japanese yen loans payable at annual interest rates from 3.85% to 6.46%, due in varying
amounts through 2012.................................................................. 142,688 93,904
British pound sterling 11% Stepped Coupon Guaranteed Bonds, due 2017.................... 194,415 193,180
8 1/4% sinking fund debentures, due 2017, net of discounts.............................. 88,117 88,013
8 3/4% debentures, due 2021, net of expenses............................................ 197,978 197,906
----------- -----------
710,724 660,885
Less current portion.................................................................... 359 397
----------- -----------
$ 710,365 $ 660,488
----------- -----------
----------- -----------
</TABLE>
(a) Bank letters of credit of $57,135,000, expiring in 1995, support certain
industrial revenue bonds. The Company expects the bank letters of credit
expiring in 1995 will be renewed. The bonds have fixed or variable interest
rates with an average of 2.5% at January 29, 1994.
(b) Mortgage notes payable are collateralized by property and equipment with an
aggregate carrying value of $18,628,000 at January 29, 1994.
The fair market value of the Company's long-term debt at January 29, 1994 is
approximately $846,000,000. The fair market value was estimated using quoted
market rates for publicly traded debt and estimated current interest rates for
non-public debt.
The annual maturities of long-term debt at January 29, 1994 are as follows:
<TABLE>
<CAPTION>
Year ending in (In thousands)
- - -------------------------------------------------------------------------------------------
<S> <C>
1995..........................................................................$ 359
1996.......................................................................... 1,655
1997.......................................................................... 3,045
1998.......................................................................... 4,360
1999.......................................................................... 5,310
2000 and subsequent........................................................... 695,995
-------------
$ 710,724
-------------
-------------
</TABLE>
LEASES
- - --------------------------------------------------------------------------------
The Company leases a portion of the real estate used in its operations. Most
leases require the Company to pay real estate taxes and other expenses; some
require additional amounts based on percentages of sales.
Obligations under capital leases require minimum payments as follows:
<TABLE>
<CAPTION>
Year ending in (In thousands)
- - -------------------------------------------------------------------------------------------
<S> <C>
1995..........................................................................$ 2,582
1996.......................................................................... 2,630
1997.......................................................................... 2,475
1998.......................................................................... 2,255
1999.......................................................................... 1,996
2000 and subsequent........................................................... 12,451
-------------
Total minimum lease payments.................................................. 24,389
Less amount representing interest............................................. 9,957
-------------
Obligations under capital leases.............................................. 14,432
Less current portion.......................................................... 1,184
-------------
$ 13,248
-------------
-------------
</TABLE>
Minimum rental commitments under noncancellable operating leases having a term
of more than one year as of January 29, 1994 were as follows:
<TABLE>
<CAPTION>
Gross Net
(In thousands) minimum Sublease minimum
Year ending in rentals income rentals
- - --------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
1995.......................................................................$ 207,664 $ 7,139 $ 200,525
1996....................................................................... 207,462 6,593 200,869
1997....................................................................... 204,867 5,754 199,113
1998....................................................................... 204,730 5,587 199,143
1999....................................................................... 203,461 4,688 198,773
2000 and subsequent........................................................ 2,770,005 31,359 2,738,646
-----------------------------
$3,798,189 $61,120 $3,737,069
-----------------------------
-----------------------------
</TABLE>
Total rental expense was as follows:
<TABLE>
<CAPTION>
Year ended
- - ----------------------------------------------------------------------------------------------------------
January 29, January 30, February 1,
(In thousands) 1994 1993 1992
- - ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Minimum rentals......................................................$ 180,118 $ 149,027 $ 118,583
Additional amounts computed as percentages of sales.................. 5,604 5,447 5,140
-------------------------------------
185,722 154,474 123,723
Less sublease income................................................. 7,935 5,788 2,629
-------------------------------------
$ 177,787 $ 148,686 $ 121,094
-------------------------------------
-------------------------------------
</TABLE>
12
<PAGE>
STOCKHOLDERS' EQUITY
The common shares of the Company, par value $.10 per share, were as follows:
<TABLE>
<CAPTION>
January 29, January 30,
(In thousands) 1994 1993
- - ---------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Authorized shares....................................................................... 550,000 550,000
----------- -----------
----------- -----------
Issued shares........................................................................... 297,938 297,938
----------- -----------
----------- -----------
Treasury shares......................................................................... 8,416 4,870
----------- -----------
----------- -----------
</TABLE>
Earnings per share is computed by dividing net earnings by the weighted average
number of common shares outstanding after reduction for treasury shares and
assuming exercise of dilutive stock options computed by the treasury stock
method using the average market price during the year.
Weighted average numbers of shares used in computing earnings per share were as
follows:
<TABLE>
<CAPTION>
Year ended
- - --------------------------------------------------------------------------------------------------------------
January 29, January 30, February 1,
(In thousands) 1994 1993 1992
- - --------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Common and common equivalent shares........................................ 296,463 297,718 296,139
----------- ----------- -----------
----------- ----------- -----------
</TABLE>
TAXES ON INCOME
The provisions for income taxes consist of the following:
<TABLE>
<CAPTION>
Year ended
- - --------------------------------------------------------------------------------------------------------------
January 29, January 30, February 1,
(In thousands) 1994 1993 1992
- - --------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Current:
Federal............................................................... $ 200,303 $ 186,013 $ 138,779
Foreign............................................................... 17,259 15,605 15,378
State................................................................. 35,704 35,884 29,426
----------- ----------- -----------
253,266 237,502 183,583
----------- ----------- -----------
Deferred:
Federal............................................................... 49,961 17,187 19,545
Foreign............................................................... (16,186) (6,705) (7,678)
State................................................................. 2,759 3,516 3,950
----------- ----------- -----------
36,534 13,998 15,817
----------- ----------- -----------
Total...................................................................... $ 289,800 $ 251,500 $ 199,400
----------- ----------- -----------
----------- ----------- -----------
</TABLE>
Deferred tax liabilities and deferred tax assets reflect the net tax effects of
temporary differences between the carrying amounts of assets and liabilities for
financial reporting purposes and the amounts used for income tax purposes. The
Company has gross deferred tax liabilities of $251.7 million at January 29, 1994
and $190.4 million at January 30, 1993 which consist primarily of temporary
differences related to fixed assets of $194.0 million and $171.9 million,
respectively. The Company had gross deferred tax assets of $92.8 million at
January 29, 1994 and $63.8 million at January 30, 1993, which consist primarily
of net operating losses of foreign start-up operations of $60.4 million and
$38.5 million, and operating costs not currently deductible for tax purposes of
$23.2 million and $18.6 million, respectively. Valuation allowances are not
significant.
A reconciliation of the federal statutory tax rate with the effective tax rate
follows:
<TABLE>
<CAPTION>
Year ended
- - -----------------------------------------------------------------------------------------------------------------
January 29, January 30, February 1,
(In thousands) 1994 1993 1992
<S> <C> <C> <C>
- - -----------------------------------------------------------------------------------------------------------------
Statutory tax rate........................................................... 35.0% 34.0% 34.0%
State income taxes, net of federal income tax benefit........................ 3.2 4.0 4.1
Foreign...................................................................... (0.5) (1.2) (0.5)
Other, net................................................................... (0.2) (0.3) (0.6)
----- ----- ----
37.5% 36.5% 37.0%
----- ----- ----
----- ----- ----
</TABLE>
Deferred income taxes were not provided on unremitted earnings of foreign
subsidiaries that are intended to be indefinitely invested. Unremitted earnings
were approximately $101 million at January 29, 1994, exclusive of amounts that
if remitted would result in little or no tax under current
U.S. tax laws. Net income taxes of approximately $35 million would be due if
these earnings were to be remitted.
PROFIT SHARING PLAN
The Company has a profit sharing plan with a 401(k) salary deferral feature for
eligible domestic employees. The terms of the plan call for annual contributions
by the Company as determined by the Board of Directors, subject to certain
limitations. The profit sharing plan may be terminated at the Company's
discretion. Provisions of $29,961,000, $29,824,000 and $15,513,000 have been
charged to operations in 1993, 1992 and 1991, respectively.
13
<PAGE>
STOCK OPTIONS
- - -------------
The Company has Stock Option Plans (the 'Plans'), including a
new plan subject to shareholder approval, which provide for the
granting of options to purchase the Company's common stock to
substantially all employees and non-employee directors of the
Company. The Plans provide for the issuance of non-qualified
options, incentive stock options, performance share options,
performance units, stock appreciation rights, restricted shares
and unrestricted shares. The majority of the options become
exercisable four years and nine months from the date of grant.
Certain non-qualified options become exercisable nine years from
the date of grant, however the exercise date of all or a portion
of such options may be accelerated if the price of the
Company's common stock reaches certain target amounts. The
options granted to non-employee directors are exercisable 20%
each year on a cumulative basis commencing one year from the
date of grant.
In addition to the aforementioned Plans, stock options
aggregating 6,659,375 shares were granted to certain senior
executives during the period from 1984 to 1993 pursuant to
individual plans. These options are exercisable 20% each year
on a cumulative basis commencing one year from the date of
grant.
The exercise price per share of all options granted has been the
market price of the Company's common stock on the date of grant.
Outstanding options must be exercised within ten years from the
date of grant.
At January 29, 1994, 13,327,781 shares were available for future
grants under the Plans and 4,807,607 options were exercisable.
All outstanding options expire at dates varying from May 1994 to
December 2003.
At January 29, 1994, an aggregate of 30,574,872 shares of
authorized common stock was reserved for all of the Plans noted
above.
Stock option transactions are summarized as follows:
<TABLE>
<CAPTION>
Shares Under Option
- - ----------------------------------------------------------------------------------------
(In thousands except price range) Incentive Non-Qualified Price Range
- - ----------------------------------------------------------------------------------------
<S> <C> <C> <C>
Outstanding January 30, 1993............ 752 13,201 $7.03 - 39.63
Granted................................. -- 5,645 36.44 - 40.94
Exercised............................... (224) (1,170) 7.03 - 36.94
Cancelled............................... (1) (956) 9.74 - 39.88
--------- ------ -------------
Outstanding January 29, 1994............ 527 16,720 $7.68 - 40.94
--------- ------ -------------
--------- ------ -------------
</TABLE>
The exercise of non-qualified stock options results in state and
federal income tax benefits to the Company related to the
difference between the market price at the date of exercise and
the option price. During 1993, 1992 and 1991, $10,031,000,
$45,390,000 and $15,620,000, respectively, was credited to
additional paid-in capital.
FOREIGN OPERATIONS
- - ------------------
Certain information relating to the Company's foreign operations
is set forth below. Corporate assets include all cash and cash
equivalents and other related assets.
<TABLE>
<CAPTION>
Year ended
- - ----------------------------------------------------------------------------------------
January 29, January 30, February 1,
(In thousands) 1994 1993 1992
- - ----------------------------------------------------------------------------------------
<S> <C> <C> <C>
Sales
Domestic........................ $6,278,591 $5,795,119 $5,154,215
Foreign......................... 1,667,476 1,374,171 969,994
---------- ---------- ----------
Total............................. $7,946,067 $7,169,290 $6,124,209
---------- ---------- ----------
---------- ---------- ----------
Operating Profit
Domestic........................ $724,818 $647,640 $527,695
Foreign......................... 102,923 101,132 62,846
General corporate expenses........ (6,821) (9,333) (7,248)
Interest expense, net............. (48,167) (50,415) (44,364)
---------- ---------- ----------
Earnings before taxes on income... $772,753 $689,024 $538,929
---------- ---------- ----------
---------- ---------- ----------
Identifiable Assets
Domestic........................ $3,630,921 $3,277,527 $3,095,178
Foreign......................... 1,694,565 1,248,827 1,009,455
Corporate....................... 824,123 796,498 477,975
---------- ---------- ----------
Total............................. $6,149,609 $5,322,852 $4,582,608
---------- ---------- ----------
---------- ---------- ----------
</TABLE>
QUARTERLY FINANCIAL DATA
- - ------------------------
The following table sets forth certain unaudited quarterly
financial information.
<TABLE>
<CAPTION>
(In thousands except First Second Third Fourth
per share information) Quarter Quarter Quarter Quarter
- - ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
YEAR ENDED JANUARY 29, 1994
- - ---------------------------
Net Sales.......................... $1,286,479 $1,317,012 $1,449,118 $3,893,458
Cost of Sales...................... 882,876 902,414 982,151 2,727,325
Net Earnings....................... 35,436 35,505 37,457 374,555
Earnings per Share................. $.12 $.12 $.13 $1.27
YEAR ENDED JANUARY 30, 1993
- - ---------------------------
Net Sales.......................... $1,172,476 $1,249,144 $1,345,835 $3,401,835
Cost of Sales...................... 809,929 864,511 922,619 2,371,496
Net Earnings....................... 28,304 32,709 36,796 339,715
Earnings per Share................. $.10 $.11 $.12 $1.14
</TABLE>
14
<PAGE>
REPORT OF MANAGEMENT
- - --------------------
Responsibility for the integrity and objectivity of the
financial information presented in this Annual Report rests with
Toys 'R' Us management. The accompanying financial statements
have been prepared from accounting records which management
believes fairly and accurately reflect the operations and
financial position of the Company. Management has established a
system of internal controls to provide reasonable assurance that
assets are maintained and accounted for in accordance with its
policies and that transactions are recorded accurately on the
Company's books and records.
The Company's comprehensive internal audit program provides for
constant evaluation of the adequacy of the adherence to
management's established policies and procedures. The Company
has distributed to key employees its policies for conducting
business affairs in a lawful and ethical manner.
The 1993 and 1992 financial statements of the Company have been
audited by Ernst & Young, independent auditors, in accordance
with generally accepted auditing standards, including a review
of financial reporting matters and internal controls to the
extent necessary to express an opinion on the consolidated
financial statements.
/s/ Michael Goldstein /s/ Louis Lipschitz
Michael Goldstein Louis Lipschitz
Vice Chairman and Senior Vice President-Finance
Chief Executive Officer and Chief Financial Officer
MARKET INFORMATION
- - ------------------
The Company's common stock is listed on the New York Stock
Exchange. The following table reflects the high and low prices
(rounded to the nearest one-eighth) based on New York Stock
Exchange trading since February 1, 1992.
The Company has not paid any cash dividends and a change in this
policy is not under consideration by the Board of Directors.
The number of stockholders of record of common stock on March 9,
1994 was approximately 25,500.
<TABLE>
<CAPTION>
High Low
- - ----------------------------------------------------------------------
<S> <C> <C>
1992
1st Quarter 38 5/8 30 3/8
2nd Quarter 37 1/8 31
3rd Quarter 41 34 3/4
4th Quarter 41 1/4 35 5/8
1993
1st Quarter 42 3/8 36 5/8
2nd Quarter 39 3/4 32 3/8
3rd Quarter 40 3/8 33 3/4
4th Quarter 42 7/8 36
</TABLE>
REPORT OF INDEPENDENT AUDITORS
- - ------------------------------
The Board of Directors and Stockholders
Toys 'R' Us, Inc.
We have audited the accompanying consolidated balance sheets of
Toys 'R' Us, Inc. and subsidiaries, as of January 29, 1994 and
January 30, 1993, and the related consolidated statements of
earnings, stockholders' equity and cash flows for the years then
ended. These financial statements are the responsibility of the
Company's management. Our responsibility is to express an
opinion on these financial statements based on our audit. The
consolidated statements of earnings, stockholders' equity and
cash flows of Toys 'R' Us, Inc. and subsidiaries for the year
ended February 1, 1992 were audited by other auditors whose
report dated March 11, 1992, expressed an unqualified opinion on
those statements.
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, the 1993 and 1992 financial statements referred
to above present fairly, in all material respects, the
consolidated financial position of Toys 'R' Us, Inc. and
subsidiaries at January 29, 1994 and January 30, 1993 and the
consolidated results of their operations and their cash flows
for the years then ended in conformity with generally accepted
accounting principles.
/s/ Ernst & Young
New York, New York
March 9, 1994
15
<PAGE>
DIRECTORS AND OFFICERS
- - ----------------------
DIRECTORS
- - ---------
CHARLES LAZARUS
Chairman of the Board of the Company
ROBERT A. BERNHARD
Real Estate Developer
MICHAEL GOLDSTEIN
Vice Chairman and Chief Executive
Officer of the Company
MILTON S. GOULD
Attorney-at-law; Partner - Shea & Gould
SHIRLEY STRUM KENNY
President, Queens College of The City
University of New York
REUBEN MARK
Chairman and CEO
Colgate-Palmolive Company
HOWARD W. MOORE
Former Executive Vice President-General
Merchandise Manager of the Company; Consultant
ROBERT C. NAKASONE
President and Chief Operating Officer of the Company
NORMAN M. SCHNEIDER
Former Chairman, Leisure Products
Division of Beatrice Foods Company;
Consultant
HAROLD M. WIT
Managing Director, Allen & Company
Incorporated; Investment Bankers
OFFICERS - CORPORATE AND ADMINISTRATIVE
- - ---------------------------------------
MICHAEL GOLDSTEIN
Vice Chairman and Chief Executive Officer
ROBERT C. NAKASONE
President and Chief Operating Officer
DENNIS HEALEY
Senior Vice President -
Management Information Systems
LOUIS LIPSCHITZ
Senior Vice President-Finance and
Chief Financial Officer
MICHAEL P. MILLER
Senior Vice President-Real Estate
JEFFREY S. WELLS
Senior Vice President-Human Resources
GAYLE C. AERTKER
Vice President - Real Estate
MICHAEL J. CORRIGAN
Vice President - Compensation and Benefits
JONATHAN M. FRIEDMAN
Vice President - Controller
EILEEN C. GABRIEL
Vice President - Information Systems
JON W. KIMMINS
Vice President - Treasurer
MATTHEW J. LOMBARDI
Vice President - Information Technology
ERIC A. SWARTWOOD
Vice President - Architecture and Construction
MICHAEL L. TUMOLO
Vice President - Real Estate Counsel
PETER W. WEISS
Vice President - Taxes
ANDRE WEISS
Secretary-Attorney-at-law;
Partner-Schulte Roth & Zabel
TOYS 'R' US UNITED STATES - OFFICERS AND GENERAL MANAGERS
- - ---------------------------------------------------------
ROGER V. GODDU
Executive Vice President-
General Merchandise Manager
VAN H. BUTLER
Senior Vice President - Marketing and
Divisional Merchandise Manager
BRUCE C. HALL
Senior Vice President - Store Operations and
Support Services
MICHAEL J. MADDEN
Senior Vice President - Distribution
THOMAS J. REINEBACH
Senior Vice President - Chief Financial Officer
ERNEST V. SPERANZA
Senior Vice President - Advertising/Marketing
ROBERT J. WEINBERG
Senior Vice President - Divisional Merchandise Manager
KRISTOPHER M. BROWN
Vice President - Distribution Operations
RICHARD N. CUDRIN
Vice President-
Employee and Labor Relations
HARVEY J. FINKEL
Vice President - Operations
MARTIN FOGELMAN
Vice President -
Divisional Merchandise Manager
LEE RICHARDSON
Vice President - Advertising
JOHN P. SULLIVAN
Vice President -
Divisional Merchandise Manager
KARL S. TAYLOR
Vice President - Merchandise Planning and Allocation
GENERAL MANAGERS
ROBERT F. PRICE
Vice President
New York/Northern New Jersey
LARRY D. GARDNER
Pacific Northwest/Alaska
MICHAEL A. GERETY
Georgia/South Carolina/Tennessee/Alabama
GARY H. GILLIARD
Colorado/Utah/New Mexico/Montana
MARK H. HAAG
Southern California/Arizona/Nevada/Hawaii
DANIEL D. HLAVATY
Central Ohio/Indiana/Kentucky
DEBRA M. KACHURAK
New England
RICHARD A. MOYER
S. Texas/Louisiana/Mississippi
GERALD S. PARKER
Northern California
JOHN J. PRAWLOCKI
Florida/Puerto Rico
J. MICHAEL ROBERTS
Pennsylvania/Delaware/Southern New Jersey
EDWARD F. SIEGLER
Kansas/Missouri/Iowa/Nebraska
CARL P. SPAULDING
N.E. Ohio/W. Pennsylvania/N. New York
WILLIAM A. STEPHENSON
Illinois/Wisconsin/Minnesota
JOHN P. SUOZZO
Maryland/Virginia/North Carolina
BRIAN L. VOORHEES
N. Texas/Oklahoma/Arkansas
DENNIS J. WILLIAMS
Michigan/N.W. Ohio
16
<PAGE>
KIDS 'R' US - OFFICERS
- - ----------------------
RICHARD L. MARKEE
President
VIRGINIA HARRIS
Senior Vice President - General Merchandise Manager
JAMES L. EASTON
Vice President - Divisional
Merchandise Manager
JEREL G. HOLLENS
Vice President -
Merchandise Planning and
Management Information Systems
DEBRA G. HYMAN
Vice President - Divisional
Merchandise Manager
ELIZABETH S. JORDAN
Vice President - Human Resources
LORNA E. NAGLER
Vice President - Divisional
Merchandise Manager
JAMES G. PARROS
Vice President - Stores and
Physical Distribution
TOYS 'R' US INTERNATIONAL - OFFICERS AND COUNTRY MANAGEMENT
- - -----------------------------------------------------------
LARRY D. BOUTS
President
GREGORY R. STALEY
Senior Vice President -
General Merchandise Manager
LAWRENCE H. MEYER
Vice President -
Chief Financial Officer
PHILIP BLOOM
Vice President -
General Merchandise Manager
KEN BONNING
Vice President-Logistics
JOSEPH GIAMELLI
Vice President -
Information Systems
ADAM SZOPINSKI
Vice President - Operations
KEITH VAN BEEK
Vice President - Development
COUNTRY MANAGEMENT
DAVID RURKA
President - Toys 'R' Us Europe
Managing Director -
Toys 'R' Us Holdings PLC
(United Kingdom)
ARNT KLOSER
President - Toys 'R' Us Central Europe
Managing Director - TRU A.G. (Switzerland)
JACQUES LE FOLL
President - Toys 'R' Us
S.A.R.L. (France)
CARL OLSEN
Managing Director - Toys 'R' Us
(Australia) Pty. Ltd.
GUILLERMO PORRATI
Managing Director - Toys 'R' Us
Iberia, S.A. (Spain)
MANABU TAZAKI
President - Toys 'R' Us Japan, Ltd.
ELLIOTT WAHLE
President - Toys 'R' Us (Canada) Ltd.
KEITH C. SPURGEON
Vice President-Asia/Australia
SCOTT CHEN
General Manager - Toys 'R' Us
Lifung Taiwan Limited
MICHAEL YEO
General Manager - Toys 'R' Us
Metro Pte. Ltd. (Singapore)
CORPORATE DATA
- - --------------
ANNUAL MEETING
- - --------------
The Annual Meeting of the Stockholders of Toys 'R' Us will be
held at the offices of the Company, 461 From Road, Paramus, New
Jersey on Wednesday, June 8, 1994 at 10:00 a.m.
STOCKHOLDER INFORMATION
- - -----------------------
The Company will supply to any owner of Common Stock, upon
written request to Mr. Louis Lipschitz of the Company at the
address set forth below, and without charge, a copy of the
Annual Report on Form 10-K for the year ended January 29, 1994,
which has been filed with the Securities and Exchange Commission.
COMMON STOCK LISTED
- - -------------------
New York Stock Exchange, Symbol: TOY
THE OFFICE OF THE COMPANY IS LOCATED AT
- - ---------------------------------------
461 From Road
Paramus, New Jersey 07652
Telephone: 201-262-7800
GENERAL COUNSEL
- - ---------------
Schulte Roth & Zabel
900 Third Avenue
New York, New York 10022
INDEPENDENT AUDITORS
- - --------------------
Ernst & Young
787 Seventh Avenue
New York, New York 10019
REGISTRAR AND TRANSFER AGENT
- - ----------------------------
American Stock Transfer and Trust Company
40 Wall Street
New York, New York 10005
Telephone: 718-921-8200
[RECYCLED SYMBOL]
Printed on recycled paper
17
<PAGE>
EXHIBIT 22
SUBSIDIARIES OF THE REGISTRANT
AS OF JANUARY 29, 1994
<TABLE>
<S> <C>
Name Jurisdiction of Incorporation
- - ---- -----------------------------
TRU, Inc. Delaware
Geoffrey, Inc. Delaware
Toys 'R' Us-NY Holdings, Inc. Delaware
Toys 'R' Us-Ohio, Inc. Delaware
Toys 'R' Us-Headquarters, Inc. Delaware
KRU, Inc. Delaware
Toys 'R' Us-Mass., Inc. Massachusetts
ABG Corp. Nevada
Toys 'R' Us-N.J., Inc. New Jersey
Toys 'R' Us-NYTEX, Inc. New York
Toys 'R' Us-N.Y. Limited Partnership New York
Toys 'R' Us-Penn., Inc. Pennsylvania
TRU of Puerto Rico, Inc. Puerto Rico
Toys 'R' Us-Texas, Inc. Texas
Toys 'R' Us Handelsgesellschaft m.b.H. Austria
Toys 'R' Us (Australia) Pty, Ltd. Australia
TRU (Barbados), Ltd. Barbados
Toys 'R' Us - Belgium, N.V. Belgium
Toys 'R' Us (Canada) Ltd. Ontario, Canada
Geoffrey Toys (Canada) Ltd. Canada
TRU (NRO) Investments Ltd. Alberta, Canada
TRU (NRO) II Investments Ltd. Alberta, Canada
Toys 'R' Us A/S Denmark
Toys 'R' Us S.A.R.L. France
Toys 'R' Us GmbH Germany
Toys 'R' Us Operations GmbH Germany
Toys 'R' Us Logistik GmbH Germany
Toys 'R' Us Service GmbH Germany
TRU (HK) Limited Hong Kong
Toys 'R' Us Limited Hong Kong
Toys 'R' Us S.r.l. Italy
Toys 'R' Us-Japan, Ltd.* Japan
Toys 'R' Us (Mexico), S.A. de C.V. Mexico
TRU (Netherlands) B.V. Netherlands
Toys 'R' Us (Netherlands) B.V. Netherlands
Toys R Us Portugal, Limitada Portugal
Toys 'R' Us-Singapore (Pte) Limited Singapore
Toys R Us, Iberia, S.A. Spain
Toys 'R' Us, Aktiebolag Sweden
TRU Toys R Us AG Switzerland
TRU AG, Switzerland Switzerland
Toys 'R' Us Limited United Kingdom
Toys 'R' Us Holdings PLC United Kingdom
Toys 'R' Us Properties Limited United Kingdom
</TABLE>
Other subsidiaries are omitted because considered in the aggregate
such subsidiaries would not constitute a significant subsidiary.
* 80% owned
