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FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported)
JUNE 25, 1997
(Exact name of registrant as specified in its charter)
DRUG EMPORIUM, INC.
(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
DELAWARE 0-16998 31-1064888
(Address of principal executive offices)
155 HIDDEN RAVINES DRIVE
POWELL, OHIO 43065
Registrant's telephone number, including area code
(614) 548-7080
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ITEM 5. OTHER EVENTS
The annual meeting of the stockholders of Drug Emporium, Inc. was held on June
25, 1997. The items voted on at the meeting were the election of directors,
ratification of Ernst & Young LLP as the independent auditors, and two
stockholder proposals. The proxies for the meeting were solicited pursuant to
Regulation 14 under the Securities Exchange Act of 1934, there was no
solicitation in opposition to management's nominees and all such nominees were
elected.
The following persons were elected as directors for a three-year term:
<TABLE>
<CAPTION>
Votes Withheld Broker
Name For Authority Non-Votes
---- ----- --------- ---------
<S> <C> <C> <C>
Macy T. Block 11,177,715 753,615 0
Thomas D. Igoe 11,174,879 756,451 0
David L. Kriegel 11,171,729 759,601 0
</TABLE>
The following summarizes the vote with respect to the other matters:
APPOINTMENT OF AUDITORS
<TABLE>
<CAPTION>
Votes For Votes Against Abstentions Broker Non-Votes
--------- ------------- ----------- ----------------
<S> <C> <C> <C>
11,876,263 34,941 20,126 0
</TABLE>
ELIMINATION OF DIRECTOR CLASSES
<TABLE>
<CAPTION>
Votes For Votes Against Abstentions Broker Non-Votes
--------- ------------- ----------- ----------------
<S> <C> <C> <C>
4,309,430 5,460,964 98,597 2,062,338
</TABLE>
RETENTION OF INVESTMENT BANKER
<TABLE>
<CAPTION>
Votes For Votes Against Abstentions Broker Non-Votes
--------- ------------- ----------- ----------------
<S> <C> <C> <C>
722,651 9,033,350 112,631 2,062,698
</TABLE>
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NEWS ARTICLES RELATED TO THE ANNUAL
MEETING AND COMPANY OPERATIONS
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
(c) Exhibits
Exhibit 99. Additional Exhibits
News Article related to Annual Meeting and Company Operations.
Drug Emporium, Inc. yesterday held off shareholder attempts to force the
sale of the underperforming discount drugstore chain and to reorganize its
board.
During a shareholders meeting at Drug Emporium's Powell, Ohio,
headquarters, Chairman David Kriegel turned back proposals from the co-founders
of the Great Neck, N.Y.-based Investors Rights Association of America to change
the course of the company dramatically.
"In view of the unacceptable performance of the company over the past five
years, the deplorable stock price, and in my opinion, ineffective management,
the board of directors should take immediate action," wrote Charles Miller, who
owns 850 shares of Drug Emporium stock. He wanted the company to hire an
investment banker to pursue the sale of the company.
Kriegel called the proposal "absolutely gut-wrenching," adding that it was
the first time the company has faced such a challenge. While Drug Emporium
posted record sales of more than $855 million last year, its net income dropped
by half from the preceding year, from $2.3 million to $1.1 million.
The picture looks worse viewed from five years back. Since 1992, Drug
Emporium's cumulative stockholder return has dropped by a third. During the same
period, the company's industry peers -- including Revco, Rite Aid Corp. and
Walgreen Co. -- saw shareholder returns more than double.
Nevertheless, Kriegel said he wasn't surprised that Miller's attempt to
force the sale of the company was defeated resoundingly. Shareholders, he said,
understand that Drug Emporium's profitability has been affected by six
acquisitions in the past two years that added 38 stores to the chain but cost
more than $53 million.
Kriegel said he interpreted the action as a show of support for Drug
Emporium management during a period when the average industry profit has fallen
to 2 percent and several chains have combined.
The consolidation craze hasn't escaped Drug Emporium, he added. Competitors
have been making merger overtures to Drug Emporium for several years and are
becoming "more serious now," he said.
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In that environment, Kriegel said it is likely Drug Emporium would join
with a remaining chain with stores compatible to Drug Emporium's. In that event,
"I would believe that Drug Emporium would be the surviving name and the
surviving management," he said.
Drug Emporium stock closed at 5 yesterday, down 3/16.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
Date: July 10, 1997 DRUG EMPORIUM, INC.
/s/ David L. Kriegel
--------------------------
David L. Kriegel,President
