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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 11-K
[X] ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934 (FEE REQUIRED)
For the fiscal year ended December 31, 1993
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934 (NO FEE REQUIRED)
For the transition period from ________ to ________
Commission file number 0-16998
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A. Full title of the plan:
DRUG EMPORIUM, INC.
EMPLOYEES 401(K) PLAN
B. Name of issuer of the securities held pursuant to the plan and the address
of its principal executive office:
Drug Emporium, Inc.
155 Hidden Ravines Drive
Powell, OH 43065
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REQUIRED INFORMATION
In lieu of the requirements of Items 1-3 of Form 11-K, the Drug Emporium,
Inc. Employees 401(k) Plan, formerly known as the Employees Stock Purchase
Plan, which is subject to the requirements of the Employee Retirement Income
Security Act of 1974, ("ERISA"), is filing herewith the plan financial
statements and schedules in accordance with the financial reporting
requirements of ERISA.
a) Financial Statements
Independent Auditors' Report
Statement of Net Assets Available
for Plan Benefits
Statement of Changes in Net Assets
Available for Plan Benefits
Notes to Financial Statements
Schedules:
Assets Held for Investment
Transactions or Series of Transactions
in Excess of 5% of the Current Value
of Plan Assets
b) Exhibits
(24.1) Independent Auditors' Consent
Ernst & Young
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
trustees (or other persons who administer the employee benefit plan) have duly
caused this annual report to be signed on its behalf by the undersigned
hereunto duly authorized.
DRUG EMPORIUM, INC. EMPLOYEES 401(K) PLAN
Date: June 29, 1994 /s/ Jane H. Lagusch
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Jane H. Lagusch, Vice President
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Audited Financial Statements
and Schedules
Drug Emporium, Inc.
Employees 401(k) Plan
YEARS ENDED DECEMBER 31, 1993 AND 1992
WITH REPORT OF INDEPENDENT AUDITORS
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Drug Emporium, Inc. Employees 401(k) Plan
Audited Financial Statements
and Schedules
Years ended December 31, 1993 and 1992
CONTENTS
Report of Independent Auditors . . . . . . . . . . . . . . . . . 1
Audited Financial Statements
Statements of Net Assets Available for Plan Benefits . . . . . . 2
Statements of Changes in Net Assets Available for
Plan Benefits . . . . . . . . . . . . . . . . . . . . . . . . . 3
Notes to Financial Statements . . . . . . . . . . . . . . . . . 4
Schedules
Assets Held for Investment . . . . . . . . . . . . . . . . . . . 7
Transactions or Series of Transactions in Excess of 5%
of the Current Value of Plan Assets . . . . . . . . . . . . . . 8
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Report of Independent Auditors
Participants of the
Drug Emporium, Inc.
Employees 401(k) Plan
We have audited the accompanying statements of net assets available for plan
benefits of the Drug Emporium, Inc. Employees 401(k) Plan (the Plan) (formerly
the Drug Emporium, Inc. Employees Stock Purchase Plan) as of December 31, 1993
and 1992, and the related statements of changes in net assets available for
plan benefits for the years then ended. These financial statements are the
responsibility of the Plan's management. Our responsibility is to express an
opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the net assets available for plan benefits of the Plan
at December 31, 1993 and 1992, and the changes in its net assets available for
plan benefits for the years then ended, in conformity with generally accepted
accounting principles.
Our audits were made for the purpose of forming an opinion on the financial
statements taken as a whole. The accompanying supplemental schedules of assets
held for investment as of December 31, 1992 and transactions or series of
transactions in excess of 5% of the current value of plan assets for the year
then ended, are presented for purposes of complying with the Department of
Labor's Rules and Regulations for Reporting and Disclosure under the Employee
Retirement Income Security Act of 1974 and are not a required part of the
financial statements. The supplemental schedules have been subjected to the
auditing procedures applied in our audit of the 1993 financial statements and,
in our opinion, are fairly stated in all material respects in relation to the
1993 financial statements taken as a whole.
/s/ Ernst & Young
June 23, 1994
Columbus, Ohio
1
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<TABLE>
Drug Emporium, Inc. Employees 401(k) Plan
Statements of Net Assets Available for Plan Benefits
<CAPTION>
DECEMBER 31
1993 1992
-----------------------------
<S> <C> <C>
ASSETS
Investments (NOTES 4 AND 5) $918,528 $866,990
Receivables:
Contributions from participants 15,128 17,092
Accrued investment income 24 74
-----------------------------
15,152 17,166
-----------------------------
Total assets 933,680 884,156
LIABILITIES
Benefit claims payable 20,982 43,339
Contributions due employees 1,645 1,314
-----------------------------
Total liabilities 22,627 44,653
-----------------------------
Net assets available for plan benefits $911,053 $839,503
=============================
<FN>
SEE ACCOMPANYING NOTES.
</TABLE>
2
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<TABLE>
Drug Emporium, Inc. Employees 401(k) Plan
Statements of Changes in Net Assets Available for Plan Benefits
<CAPTION>
YEAR ENDED DECEMBER 31
1993 1992
-----------------------------
<S> <C> <C>
ADDITIONS
Contributions from participants $397,255 $447,782
Investment income 771 5,238
-----------------------------
398,026 453,020
DEDUCTIONS
Distributions to retired and terminated participants 202,394 105,612
Net realized and unrealized depreciation in value of
investments (NOTE 4) 124,082 104,421
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326,476 210,033
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Net increase in net assets available for plan benefits 71,550 242,987
Net assets available for plan benefits at beginning
of period 839,503 596,516
-----------------------------
Net assets available for plan benefits at end of period $911,053 $839,503
=============================
<FN>
SEE ACCOMPANYING NOTES.
</TABLE>
3
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Drug Emporium, Inc. Employees 401(k) Plan
Notes to Financial Statements
December 31, 1993
1. SIGNIFICANT ACCOUNTING POLICIES
BASIS OF PRESENTATION
The accounting records of the Drug Emporium, Inc. Employees 401(k) Plan (the
Plan) (formerly the Drug Emporium, Inc. Employees Stock Purchase Plan) are
maintained on an accrual basis. The Plan includes participants who are
employees of Drug Emporium, Inc. and its subsidiaries (the Company).
INVESTMENTS
Investments are valued at fair value based on quoted market values.
ADMINISTRATIVE EXPENSES
Administrative expenses are paid by Drug Emporium, Inc.
2. DESCRIPTION OF THE PLAN
The Plan is a stock purchase plan that provides retirement savings for
employees who meet certain requirements as to age and length of service.
Employees who meet the eligibility requirements and elect to participate in the
Plan make cash contributions based upon certain percentages of their monthly
pay, as defined in the Plan Agreement. The Plan Administrator maintains an
individual account for each participant for the allocation of contributions,
earnings and losses thereon. The benefit to which a participant is entitled is
the benefit that can be provided from the participant's account, for which
payment is made directly by the Administrator. All amounts contributed by an
individual participant are nonforfeitable.
The Company has the right to discontinue and terminate the Plan. In the event
of a termination or partial termination of the Plan, the right of each
participant to benefits accrued to the date of such termination or partial
termination shall be nonforfeitable.
Information about the Plan Agreement, the vesting and benefit provisions, the
allocation provisions and the disposition of forfeitures is contained in a
summary plan description. Copies of the summary plan description are available
from the plan administrator.
4
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Drug Emporium, Inc. Employees 401(k) Plan
Notes to Financial Statements (continued)
3. INCOME TAX STATUS
The Plan has submitted a request for tax status determination from the Internal
Revenue Service (IRS). The IRS has not presently ruled on this request as the
IRS is not currently ruling on stock bonus plans until there is further
clarification of the changes imposed by the Tax Reform Act of 1986 by the
Treasury Department. The Plan intends to resubmit for a ruling as soon as the
IRS indicates it is accepting applications for this type of plan.
4. INVESTMENTS
The Plan's investments are held by a trust fund administered by Merrill Lynch
Trust Company. The following table presents the cost of the Plan's investments
at December 31, 1993 and 1992 and the net realized and unrealized loss for the
years then ended:
<TABLE>
<CAPTION>
NET REALIZED AND
UNREALIZED LOSS FOR THE
COST AT YEAR ENDED
DECEMBER 31 DECEMBER 31
1993 1992 1993 1992
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<S> <C> <C> <C> <C>
Drug Emporium, Inc. common stock $1,177,293 $1,068,505 $124,082 $104,421
Monitor Money Market II 8,753 24,817 - -
CMA Money Fund 6,529 - - -
</TABLE>
The current value of individual investments that represent 5% or more of the
Plan's assets as of December 31, 1993 is as follows:
Drug Emporium, Inc. common stock (190,157 shares at $4.75 per share) $903,246
At December 31, 1993, the market value of Drug Emporium, Inc. common stock was
approximately $4.75 per share.
5
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Drug Emporium, Inc. Employees 401(k) Plan
Notes to Financial Statements (continued)
5. TRANSACTIONS WITH PARTIES-IN-INTEREST
At December 31, 1993 the Plan owned 190,157 shares of the Company's common
stock, 71,388 shares of which were purchased during the year ended December 31,
1992 for $433,695 and 64,508 shares of which were purchased during the year
ended December 31, 1993 for $337,674. For the year ended December 31, 1993,
31,895 shares valued at $194,833 were distributed to participants who
terminated from the Plan. The market value of the Company's common stock at
December 31, 1993 and 1992 was based on quoted market values. Cash dividends
received during the years ended December 31, 1993 and 1992 from the Company
were $0 and $4,263, respectively.
6
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<TABLE>
Drug Emporium, Inc. Employee 401(k) Plan
Assets Held for Investment
December 31, 1993
<CAPTION>
FACE VALUE OR
NUMBER OF CURRENT
SHARES IDENTITY COST VALUE
- - ---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
8,753 Monitor Money Market II $ 8,753 $ 8,753
190,157 Drug Emporium, Inc. common stock 1,177,293 903,246
6,529 CMA Money Fund 6,529 6,529
</TABLE>
7
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<TABLE>
Drug Emporium, Inc. Employees 401(k) Plan
Transactions or Series of Transactions in Excess of 5%
of the Current Value of Plan Assets
Year ended December 31, 1993
<CAPTION>
DESCRIPTION OF ASSET PURCHASE SELLING COST OF
IDENTITY OF PARTY INVOLVED PRICE PRICE ASSET
<S> <C> <C> <C> <C>
Category (i) - Individual transactions in a securities issue aggregating in excess of 5% of plan assets.
-------------------------------------------------------------------------------------------------------
COMMON STOCK
Goldman, Sachs & Co. Drug Emporium, Inc. $ 46,851 - $ 46,851
Smith Barney, Harris Upham & Co. Drug Emporium, Inc. 61,452 - 61,452
Category (iii) - Series of transactions in a securities issue aggregating in excess of 5% of plan assets.
- - --------------------------------------------------------------------------------------------------------
Drug Emporium, Inc.
common stock 10 purchases 337,674 - 337,674
66 sales - 194,833 255,510
Monitor Money Market II 32 purchases 227,407 - 227,407
22 sales - 243,471 243,471
Monitor Money Market IX 22 purchases 160,128 - 160,128
9 sales - 160,128 160,128
<CAPTION>
CURRENT VALUE NET
OF ASSET ON GAIN
TRANSACTION DATE (LOSS)
- - ---------------------------------
<C> <C>
$ 46,851 $ -
61,452 -
337,674 -
255,510 (60,677)
227,407 -
243,471 -
160,128 -
160,128 -
<FN>
There were no Category (ii) or (iv) transactions or series of transactions in excess of 5% of plan assets which occurred during
- - -------------------------------------------------------------------------------------------------------------------------------
1993.
- - -----
</TABLE>
8
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Consent of Ernst & Young, Independent Auditors
We consent to the incorporation by reference in the Registration
Statement (Form S-8 No. 33-25768) pertaining to the Drug Emporium, Inc.
Employees 401(k) Plan of our report dated June 23, 1994, with respect to the
financial statements and schedules of Drug Emporium, Inc. Employees 401(k)
Plan included in this Annual Report (Form 11-K) for the year ended December 31,
1993.
/s/ Ernst & Young
ERNST & YOUNG
Columbus, Ohio
June 23, 1994
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