FILE PURSUANT TO RULE 424 (b)(4)
                                                 REGISTRATION NO. 33-55369

P R O S P E C T U S
                                  $500,000,000
                                     [LOGO]
 
                   $300,000,000 10 5/8% SENIOR NOTES DUE 2001
                $200,000,000 FLOATING RATE SENIOR NOTES DUE 2001
                               -----------------
 
    Interest  on the 10 5/8% Senior Notes due 2001 (the "Fixed Rate Notes") will
be payable semiannually on June 15 and December 15 of each year, commencing June
15, 1995. Up to 20% of the initial aggregate principal amount of the Fixed  Rate
Notes may be redeemed by Fleming Companies, Inc. ("Fleming" or the "Company") at
any  time on or  prior to December 15,  1997 within 180 days  of a Public Equity
Offering (as defined) with the net  proceeds from such offering at a  redemption
price  equal to 110% of the principal  amount thereof, together with accrued and
unpaid interest, if any, to the date of redemption; PROVIDED that, after  giving
effect  to such redemption, at least  $200 million aggregate principal amount of
the Fixed Rate Notes  remains outstanding. Upon a  Change of Control  Triggering
Event  (as defined), in certain circumstances each holder of the Notes will have
the right to require the Company to purchase all outstanding Fixed Rate Notes of
such holder at 101% of the  principal amount thereof, together with accrued  and
unpaid  interest, if any, to  the date of purchase.  In addition, the Fixed Rate
Notes may be redeemed, in whole or in part, at any time on or after December 15,
1999 at the redemption prices set forth herein, together with accrued and unpaid
interest, if any, to the date of redemption.
 
    Interest on the  Floating Rate  Senior Notes  due 2001  (the "Floating  Rate
Notes")  will  be payable  quarterly  on March  15,  June 15,  September  15 and
December 15 of each year, commencing March 15, 1995. The Floating Rate Notes may
be redeemed by the Company, in whole or in part, on any interest payment date on
or after  December  15,  1995 through  and  including  December 14,  1999  at  a
redemption  price  equal to  100.5% of  the principal  amount thereof  and after
December 14, 1999 at a  redemption price equal to  100% of the principal  amount
thereof,  in each case together with accrued and unpaid interest, if any, to the
date of  redemption. Upon  a  Change of  Control  Triggering Event,  in  certain
circumstances  each  holder of  the Notes  will  have the  right to  require the
Company to purchase all outstanding Floating  Rate Notes of such holder at  101%
of  the principal amount thereof, together  with accrued and unpaid interest, if
any, to the date of purchase. In addition, mandatory sinking fund payments  will
retire, prior to maturity, $1 million principal amount of Floating Rate Notes in
each of 1999 and 2000.
 
    The Fixed Rate Notes and the Floating Rate Notes (collectively, the "Notes")
offered  hereby (the  "Offering") will  be unsecured  senior obligations  of the
Company,  ranking  PARI  PASSU  with  all  other  existing  and  future   senior
indebtedness  of  the Company  and  senior in  right  of payment  to  any future
indebtedness  of  the   Company  that  is   expressly  subordinated  to   senior
indebtedness   of  the  Company.   The  Notes,  however,   will  be  effectively
subordinated to secured senior indebtedness of  the Company with respect to  the
assets  securing such  indebtedness, including indebtedness  under the Company's
bank credit agreement (the "Credit Agreement"), which is secured by the  capital
stock  of substantially all of the Company's subsidiaries, and substantially all
of the inventory and  accounts receivable of the  Company and its  subsidiaries,
and  indebtedness under two prior indentures  (the "Prior Indentures"), which is
secured by a portion of such  collateral. The payment of principal of,  premium,
if  any, and interest on the Notes is unconditionally guaranteed on an unsecured
senior basis  (the "Note  Guarantees")  by substantially  all of  the  Company's
subsidiaries  (the "Subsidiary Guarantors"). The  Note Guarantees will rank PARI
PASSU with all other existing and  future senior indebtedness of the  Subsidiary
Guarantors,  and senior in  right of payment  to any future  indebtedness of the
Subsidiary Guarantors that is expressly  subordinated to senior indebtedness  of
the  Subsidiary Guarantors.  The Note  Guarantees, however,  will be effectively
subordinated to secured senior indebtedness  of the Subsidiary Guarantors  under
the  Prior Indentures and the  Credit Agreement, each of  which is guaranteed by
substantially all of the Subsidiary Guarantors. See "Description of the  Notes."
As of October 1, 1994, after giving PRO FORMA effect to the Offering and the use
of  proceeds therefrom, senior indebtedness of  the Company and its subsidiaries
(including obligations under capitalized  leases) would have been  approximately
$2.07  billion, of which $1.57 billion  would have been secured indebtedness. As
of October 1, 1994, after giving PRO FORMA effect to the Offering and the use of
proceeds therefrom, the Subsidiary Guarantors would have had approximately $1.51
billion of senior indebtedness outstanding (including guarantees with respect to
the Notes and the Credit  Agreement and excluding obligations under  capitalized
leases),  of which  $1.00 billion  would have  been secured  indebtedness. As of
October 1, 1994, after giving  PRO FORMA effect to the  Offering and the use  of
proceeds  therefrom, the  total amount  of indebtedness  of the  Company and its
subsidiaries (including obligations under capitalized leases) ranking PARI PASSU
with the Notes would have been approximately $2.07 billion.
 
    SEE "INVESTMENT CONSIDERATIONS"  FOR A DISCUSSION  OF CERTAIN FACTORS  WHICH
SHOULD BE CONSIDERED BY PROSPECTIVE INVESTORS IN EVALUATING AN INVESTMENT IN THE
NOTES.
                          ---------------------------
 
THESE  SECURITIES  HAVE  NOT  BEEN APPROVED  OR  DISAPPROVED  BY  THE SECURITIES
  AND  EXCHANGE  COMMISSION  OR  ANY  STATE  SECURITIES  COMMISSION,  NOR  HAS
    THE   SECURITIES  AND  EXCHANGE  COMMISSION   OR  ANY  STATE  SECURITIES
      COMMISSION  PASSED   UPON  THE   ACCURACY   OR  ADEQUACY   OF   THIS
       PROSPECTUS.  ANY  REPRESENTATION  TO THE  CONTRARY  IS  A CRIMINAL
                                    OFFENSE.
 


                                       PRICE TO      UNDERWRITING     PROCEEDS TO
                                       PUBLIC(1)      DISCOUNT(2)    COMPANY(1)(3)
                                                            
Per Fixed Rate Note................      99.9%            2%             97.9%
Total..............................  $299,700,000     $6,000,000     $293,700,000
Per Floating Rate Note.............      100%             2%              98%
Total..............................  $200,000,000     $4,000,000     $196,000,000

(1)   Plus accrued interest, if any, from December 15, 1994.
(2)   The Company and  the Subsidiary  Guarantors have agreed  to indemnify  the
      several  Underwriters against  certain liabilities,  including liabilities
      under the Securities Act of 1933, as amended. See "Underwriting."
(3)   Before deducting expenses payable by the Company estimated at $1,250,000.

 
                          ---------------------------
 
    The Notes are offered  by the several Underwriters,  subject to prior  sale,
when,  as and if issued to and accepted  by them, subject to approval of certain
legal matters by counsel for the Underwriters and certain other conditions.  The
Underwriters  reserve the right to withdraw, cancel  or modify such offer and to
reject orders in whole  or in part.  It is expected that  delivery of the  Notes
will  be made in New York, New York on or about December 15, 1994. The offerings
of the  Fixed Rate  Notes and  the Floating  Rate Notes,  respectively, are  not
conditioned upon each other.
                          ---------------------------
MERRILL LYNCH & CO.                                  J.P. MORGAN SECURITIES INC.
                                  ------------
 
                The date of this Prospectus is December 8, 1994.

                                 [MAP TO COME]

                             AVAILABLE INFORMATION
 
    Fleming  is  subject to  the  informational requirements  of  the Securities
Exchange Act  of 1934,  as  amended (the  "Exchange  Act"), and,  in  accordance
therewith,  files  reports,  proxy  statements and  other  information  with the
Securities and  Exchange  Commission  (the "Commission").  Such  reports,  proxy
statements  and  other information  can be  inspected and  copied at  the public
reference facilities maintained by the Commission at Room 1024, Judiciary Plaza,
450 Fifth Street, N.W., Washington, D.C. 20549, and at the Commission's regional
offices at 7 World Trade Center, 13th Floor, New York, New York 10048 and  Suite
1400,  Northwestern Atrium Center, 14th Floor, 500 West Madison Street, Chicago,
Illinois 60661. Copies of such material can be obtained by mail from the  Public
Reference  Section of the Commission at prescribed rates at the principal office
of the Commission at Judiciary Plaza,  450 Fifth Street, N.W., Washington,  D.C.
20549.  In addition, such  reports, proxy statements  and information concerning
the Company can be inspected and copied at the New York Stock Exchange, Inc., 20
Broad Street, New York,  New York 10005, the  Pacific Stock Exchange, Inc.,  301
Pine Street, San Francisco, California 94104 and the Chicago Stock Exchange, 440
South LaSalle Street, Chicago, Illinois 60605.
 
    The  Company and the Subsidiary Guarantors  have filed with the Commission a
registration statement on  Form S-3  (herein, together with  all amendments  and
exhibits,  referred to as the "Registration Statement") under the Securities Act
of 1933, as amended (the "Securities Act"). This Prospectus does not contain all
the information set forth in the Registration Statement, certain parts of  which
are  omitted in accordance with the rules and regulations of the Commission. For
further information, reference is hereby made to the Registration Statement.
 
                INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
 
    The Company's Annual Report on Form 10-K for the fiscal year ended  December
25,  1993, the Company's Quarterly  Reports on Form 10-Q  for the quarters ended
April 16, July 9 and October 1, 1994 (as amended by Form 10-Q/A on November  16,
1994),  and the Company's Current Reports on  Form 8-K dated July 19 (as amended
by Form 8-K/A on September 2, 1994),  September 23, October 19 and November  30,
1994  filed under the Exchange Act (File  No. 1-8140) are hereby incorporated in
this Prospectus  by reference.  All  documents filed  by  the Company  with  the
Commission  pursuant to Sections 13(a),  13(c), 14 or 15(d)  of the Exchange Act
subsequent to the date of  this Prospectus and prior  to the termination of  the
Offering  described herein shall be deemed to be incorporated in this Prospectus
and to be  a part  hereof from  the date  of the  filing of  such document.  Any
statement  contained  herein  or in  a  document  incorporated or  deemed  to be
incorporated by reference herein  shall be deemed to  be modified or  superseded
for all purposes to the extent that a statement contained herein or in any other
subsequently  filed  document  which  is  also  incorporated  or  deemed  to  be
incorporated by reference modifies or  supersedes such statement. Any  statement
so  modified  or  superseded shall  not  be  deemed, except  as  so  modified or
superseded,  to  constitute  a  part  of  the  Registration  Statement  or  this
Prospectus.
 
    The  Company  will  provide  without  charge to  each  person  to  whom this
Prospectus is delivered,  upon written or  oral request of  such person, a  copy
(without   exhibits  unless  such  exhibits  are  specifically  incorporated  by
reference into such document) of any or all documents incorporated by  reference
in  this Prospectus. Written  requests or requests by  telephone for such copies
should be directed to  David R. Almond, Senior  Vice President, General  Counsel
and  Secretary, Fleming Companies, Inc., P.O. Box 26647, Oklahoma City, Oklahoma
73126 (telephone (405) 840-7200).
                            ------------------------
 
    IN CONNECTION WITH THIS OFFERING,  THE UNDERWRITERS MAY OVERALLOT OR  EFFECT
TRANSACTIONS  WHICH STABILIZE OR MAINTAIN THE  MARKET PRICE OF THE NOTES OFFERED
HEREBY AT LEVELS ABOVE THOSE WHICH  MIGHT OTHERWISE PREVAIL IN THE OPEN  MARKET.
SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME.
 
                                       3

                               PROSPECTUS SUMMARY
 
    THE  FOLLOWING SUMMARY  OF CERTAIN  INFORMATION CONTAINED  ELSEWHERE IN THIS
PROSPECTUS DOES NOT PURPORT TO BE COMPLETE  AND IS QUALIFIED IN ITS ENTIRETY  BY
REFERENCE   TO  THE   MORE  DETAILED  INFORMATION   AND  CONSOLIDATED  FINANCIAL
STATEMENTS, INCLUDING THE NOTES THERETO, APPEARING ELSEWHERE IN THIS PROSPECTUS.
UNLESS THE  CONTEXT REQUIRES  OTHERWISE,  THE TERM  "SCRIVNER GROUP"  REFERS  TO
HANIEL  CORPORATION ("HANIEL") AND  ITS SOLE DIRECT  SUBSIDIARY, SCRIVNER, INC.,
AND SCRIVNER, INC.'S SUBSIDIARIES; THE  TERMS "FLEMING" AND THE "COMPANY"  REFER
TO  FLEMING COMPANIES, INC.  AND ITS SUBSIDIARIES,  INCLUDING THE SCRIVNER GROUP
AFTER THE DATE OF THE ACQUISITION OF THE SCRIVNER GROUP (JULY 19, 1994).  UNLESS
OTHERWISE INDICATED, PRO FORMA INFORMATION GIVES EFFECT TO SUCH ACQUISITION.
 
                                  THE COMPANY
GENERAL
 
    The  Company is a  recognized leader in the  food marketing and distribution
industry with both wholesale and retail  operations. The Company is the  largest
food  wholesaler in  the United  States as  a result  of the  acquisition of the
Scrivner Group in  July 1994 (the  "Acquisition"), based on  PRO FORMA 1993  net
sales  of approximately $19 billion. The  Company serves as the principal source
of supply for approximately 10,000  retail food stores, including  approximately
3,700  supermarkets (defined as  any retail food  store with annual  sales of at
least $2 million) which represented approximately 13% of all supermarkets in the
United States at year-end 1993 and totaled approximately 97 million square  feet
in  size. The Company  serves food stores  of various sizes  operating in a wide
variety of formats,  including conventional  full-service stores,  supercenters,
price  impact  stores (including  warehouse  stores), combination  stores (which
typically carry a higher proportion  of non-food items) and convenience  stores.
With customers in 43 states, the Company services a geographically diverse area.
The  Company's wholesale operations  offer a wide variety  of national brand and
private label  products,  including  groceries,  meat,  dairy  and  delicatessen
products,  frozen  foods,  produce,  bakery  goods  and  a  variety  of  general
merchandise and related items. In addition,  the Company offers a wide range  of
support  services to  its customers to  help them compete  more effectively with
other food retailers in  their respective markets.  Such services include  store
development  and  expansion  services, merchandising  and  marketing assistance,
advertising,  consumer  education  programs,  retail  electronic  services   and
employee training.
 
    In  addition  to its  wholesale operations,  the  Company has  a significant
presence in  food  retailing,  owning  and operating  345  retail  food  stores,
including 283 supermarkets with an aggregate of approximately 9.5 million square
feet.  Company-owned stores operate under  a number of names  and vary in format
from super warehouse stores and conventional supermarkets to convenience stores.
PRO FORMA 1993 net sales from  retail operations were approximately $3  billion.
The  Company believes it is  one of the 20 largest  food retailers in the United
States based on PRO FORMA net sales.
 
COMPETITIVE STRENGTHS
 
    Fleming's  net  sales  grew  from  approximately  $5  billion  in  1983   to
approximately  $13  billion in  1993,  largely as  a  result of  acquisitions of
wholesale food distributors and operations. After giving PRO FORMA effect to the
Acquisition, the Company's 1993  net sales were  approximately $19 billion.  The
Company  believes  that its  position  as a  leader  in the  food  marketing and
distribution industry  is attributable  to a  number of  competitive  strengths,
including the following:
 
    SIZE.   As the largest food wholesaler in the United States, the Company has
    substantial purchasing power and is able to realize significant economies of
    scale.
 
    DIVERSE CUSTOMER  BASE.   In  1993,  chains and  multiple-store  independent
    operators  represented 40%  and 33%,  respectively, of  Fleming's net sales,
    with the balance  comprised of sales  to single-store independent  operators
    and  Fleming-owned stores.  Approximately one-third of  the Scrivner Group's
    1993 net  sales  were  to  Scrivner Group-owned  stores,  with  the  balance
    comprised  of  sales  to  multi-store  independent  operators,  single-store
    operators and  chains.  In  addition,  with  customers  in  43  states,  the
    Company's sales are geographically dispersed.
 
    EXPERTISE  IN PRIVATE LABEL PRODUCTS AND  PERISHABLES.  The Company offers a
    wide range  of private  label  products and  perishables and  has  developed
    extensive  expertise in handling, marketing and distributing these products.
    The Company  believes  that  these  products are  an  important  element  in
    attracting and
 
                                       4

    retaining  consumers. This expertise has permitted the Company to derive 41%
    of 1993  PRO FORMA  net sales  from the  sale of  perishables. In  addition,
    private  label  products and  certain perishables  (such as  produce, frozen
    foods and bakery  goods) generally  produce higher margins  than other  food
    categories.
 
    EFFICIENT  DISTRIBUTION NETWORK.   Fleming  has successfully  integrated the
    operations of previously  acquired food wholesalers,  thereby developing  an
    efficient  distribution network,  and has  recorded 19  consecutive years of
    warehouse  productivity   increases.   The  Company   aggressively   pursues
    opportunities  for  the consolidation  of  distribution centers,  seeking to
    eliminate  duplicative  operations  and   facilities  and  achieve   greater
    efficiencies.  In addition, the Company believes it is an industry leader in
    the development and application of advanced distribution technology.
 
    LONG-TERM SUPPLY CONTRACTS.  The Company pursues various means of  obtaining
    future  business, including  the formation  of alliances  with retailers. In
    particular, the Company has focused on retailers with demonstrated operating
    success, including operators of alternative formats such as warehouse stores
    and supercenters. The Company has  long-term supply contracts with a  number
    of  its major customers. For example, in December 1993, the Company signed a
    six-year supply agreement with Kmart Corporation ("Kmart") to serve its  new
    Super Kmart Centers in areas where the Company has distribution facilities.
 
    MANAGEMENT  TEAM.   The  Company is  led by  an experienced  management team
    comprised of individuals who  combine many years in  the food marketing  and
    distribution industry. See "Management."
 
BUSINESS STRATEGY
 
    The  Company's strategy is  to maintain and strengthen  its position in food
marketing and  distribution  by:  (i) consolidating  distribution  centers  into
larger,  more  efficient  centers  and eliminating  functions  that  do  not add
economic value;  (ii) maximizing  the  Company's substantial  purchasing  power;
(iii)  building and  maintaining long-term alliances  with successful retailers,
including both traditional and alternative  format operators; (iv) remaining  at
the  forefront  of  technology-driven distribution  systems;  (v)  continuing to
capitalize on the  Company's expertise  in handling private  label products  and
perishables; and (vi) focusing on the profitability of Company-owned stores on a
stand-alone  basis  and increasing  net sales  of  such stores  through internal
growth and, in the long term, selective acquisitions.
 
    The Company has  begun implementing a  number of the  steps outlined  above,
beginning   with  an  announced  plan   to  consolidate  facilities,  reorganize
management and reengineer operations. See "Investment Considerations -- Response
to  a  Changing  Industry,"  "Management's   Discussion  and  Analysis  --   The
Consolidation,  Reorganization and Reengineering Plan" and "Business -- Business
Strategy" and "-- The Consolidation, Reorganization and Reengineering Plan."
 
                                THE ACQUISITION
 
    In July 1994,  pursuant to a  stock purchase agreement  between Fleming  and
Franz  Haniel &  Cie. GmbH,  Fleming acquired  all of  the outstanding  stock of
Haniel. Haniel, its sole direct subsidiary, Scrivner, Inc., and Scrivner, Inc.'s
subsidiaries are  collectively  referred  to herein  as  the  "Scrivner  Group."
Fleming  paid  $388 million  in  cash and  refinanced  substantially all  of the
Scrivner Group's existing indebtedness (approximately $670 million in  aggregate
principal  amount  and premium).  In  connection with  the  Acquisition, Fleming
refinanced approximately $340 million in  aggregate principal amount of its  own
indebtedness.
 
    The  Acquisition of the Scrivner  Group significantly enhanced the Company's
position as  a leader  in the  food marketing  and distribution  industry. As  a
result of its dramatically increased size, in terms of both retail stores served
and  Company-owned  stores,  the  Company  believes  it  has  gained substantial
purchasing power. Fleming acquired 179  Scrivner Group-owned stores as a  result
of  the Acquisition. The Company benefits  from the Scrivner Group's product mix
which, like  Fleming's, is  favorably weighted  toward perishables  and  private
label  products. In  addition, the Acquisition  has resulted in  a broader, more
geographically diverse customer base with a larger Company-owned retail network.
The Company  believes it  will be  able to  utilize the  best features  of  both
Fleming's  and Scrivner's investments  in technology, a  crucial element for the
long-term success  of a  food marketing  and distribution  company. The  Company
expects  to  realize substantial  savings  through facilities  consolidation and
reductions in corporate overhead.
 
                                       5

    To finance  the  Acquisition and  to  provide future  working  capital,  the
Company  entered into  a $2.2 billion  credit facility  (the "Credit Agreement")
with a group of banks led by Morgan Guaranty Trust Company of New York  ("Morgan
Guaranty").  To secure its  obligations under the  Credit Agreement, the Company
pledged  the  capital  stock  of  substantially  all  of  its  subsidiaries  and
substantially  all of the  inventory and accounts receivable  of the Company and
its subsidiaries. A portion of the collateral was also pledged for the equal and
ratable benefit of the  holders of debt issued  under two prior indentures  (the
"Prior  Indentures"). See  "Certain Other  Obligations." The  collateral will be
released upon the earlier to occur of the repayment of the borrowings under  the
Credit  Agreement and the cancellation of the commitments thereunder or the date
on which the Company's senior  unsecured debt receives investment grade  ratings
from  both Standard &  Poor's Ratings Group and  Moody's Investors Service, Inc.
See "The Credit Agreement."
 
                                  THE OFFERING
 
                                 
NOTES OFFERED
  Fixed Rate Notes................  $300,000,000  aggregate  principal  amount  of  10  5/8%
                                    Senior Notes due 2001; and
  Floating Rate Notes.............  $200,000,000 aggregate principal amount of Floating Rate
                                    Senior Notes due 2001.
FIXED RATE NOTES
  Maturity Date...................  December 15, 2001.
  Interest Payment Dates..........  June  15 and December  15 of each  year, commencing June
                                    15, 1995.
  Optional Redemption.............  The  Company  may  redeem  up  to  20%  of  the  initial
                                    aggregate  principal amount  of the Fixed  Rate Notes at
                                    any time on or  prior to December  15, 1997, within  180
                                    days  of a Public Equity  Offering with the net proceeds
                                    of such offering, at a redemption price equal to 110% of
                                    the principal amount thereof, together with accrued  and
                                    unpaid  interest,  if any,  to  the date  of redemption;
                                    PROVIDED  that,  after  having  given  effect  to   such
                                    redemption,  at least  $200 million  aggregate principal
                                    amount of the Fixed  Rate Notes remains outstanding.  In
                                    addition,  the Company may redeem  the Fixed Rate Notes,
                                    in whole or in  part, at any time  on or after  December
                                    15,  1999, at  the redemption  prices set  forth herein,
                                    together with accrued  and unpaid interest,  if any,  to
                                    the date of redemption. See "Description of the Notes --
                                    Terms  Specific  to  the Fixed  Rate  Notes  -- OPTIONAL
                                    REDEMPTION."
FLOATING RATE NOTES
  Maturity Date...................  December 15, 2001.
  Interest Rate...................  A rate  per annum,  determined quarterly,  equal to  the
                                    Applicable  LIBOR Rate (225 basis  points over the LIBOR
                                    Rate). See "Description of  the Notes -- Terms  Specific
                                    to  the Floating  Rate Notes  -- MATURITY,  INTEREST AND
                                    PRINCIPAL."
  Interest Payment Dates..........  March 15, June 15, September 15 and December 15 of  each
                                    year, commencing March 15, 1995.
  Optional Redemption.............  The Company may redeem the Floating Rate Notes, in whole
                                    or  in part,  on any Interest  Payment Date  on or after
                                    December 15,  1995 through  and including  December  14,
                                    1999,  at  a redemption  price  equal to  100.5%  of the
                                    principal amount thereof, and after December 14, 1999 at
                                    a redemption price equal to 100% of the principal amount
                                    thereof, in each case  together with accrued and  unpaid
                                    interest,  if  any,  to  the  date  of  redemption.  See
                                    "Description of  the  Notes  -- Terms  Specific  to  the
                                    Floating Rate Notes -- OPTIONAL REDEMPTION."


 
                                       6

 
                                 
TERMS COMMON TO FIXED RATE NOTES
 AND FLOATING RATE NOTES
  Change of Control...............  Upon  the occurrence  of a Change  of Control Triggering
                                    Event (as defined  in the indentures  pursuant to  which
                                    the Notes will be issued; the "Senior Note Indentures"),
                                    and   after   satisfaction   by  the   Company   of  the
                                    requirements described below, each  holder of the  Notes
                                    will  have the right to  require the Company to purchase
                                    all of such holder's Notes at  a price equal to 101%  of
                                    the  principal amount thereof, together with accrued and
                                    unpaid interest, if any, to the date of purchase.  Prior
                                    to  mailing the notice of a Change of Control Triggering
                                    Event  to  holders  of   the  Notes,  the  Senior   Note
                                    Indentures  require  the Company  to retire  all amounts
                                    outstanding under the Credit Agreement, or to obtain any
                                    necessary consent thereunder.  Failure to  do so  within
                                    the time limits prescribed by the Senior Note Indentures
                                    would  constitute  a default  by  the Company  under the
                                    Senior Note Indentures and would entitle the holders  to
                                    accelerate  the obligations  due under  the Notes.  If a
                                    Change of Control Triggering Event occurs, there can  be
                                    no  assurance that the Company will have available funds
                                    sufficient to  redeem  the  Notes. Each  of  the  Credit
                                    Agreement  and the Prior Indentures requires the Company
                                    to repay  the Indebtedness  under the  Credit  Agreement
                                    ($1.55  billion as of November 1, 1994) and purchase the
                                    outstanding  Indebtedness  under  the  Prior  Indentures
                                    ($196  million as of November 1, 1994), respectively, in
                                    the event of  a change  of control. If  purchase of  the
                                    Notes,  repayment of  the Indebtedness  under the Credit
                                    Agreement and purchase  of the outstanding  Indebtedness
                                    under  the Prior  Indentures were  all triggered  at the
                                    same time,  it is  possible that  the Company  would  be
                                    unable  to satisfy these obligations.  One of the events
                                    which constitutes a Change  of Control Triggering  Event
                                    under  the Senior Note Indentures  is the disposition of
                                    "all or substantially all" of the Company's assets. This
                                    term has  not been  interpreted under  New York  law  to
                                    represent   a   specific   quantitative   test.   As   a
                                    consequence, in the event holders of the Notes elect  to
                                    require  the  Company  to  purchase  the  Notes  and the
                                    Company elects to contest such election, there can be no
                                    assurance as to  how a court  interpreting New York  law
                                    would  interpret  the  phrase. See  "Description  of the
                                    Notes -- Certain Covenants --  PURCHASE OF NOTES UPON  A
                                    CHANGE OF CONTROL TRIGGERING EVENT."
  Ranking.........................  The  Notes  are  unsecured  senior  obligations  of  the
                                    Company,  and  will  rank  PARI  PASSU  with  all  other
                                    existing  and future Senior  Indebtedness of the Company
                                    and  senior   in  right   of  payment   to  any   future
                                    Indebtedness   of   the   Company   that   is  expressly
                                    subordinated to Senior Indebtedness of the Company.  The
                                    Notes  are  effectively subordinated  to  secured Senior
                                    Indebtedness of the Company  with respect to the  assets
                                    securing such indebtedness, including Indebtedness under
                                    the  Credit Agreement,  which is secured  by the capital
                                    stock of substantially all of the Company's subsidiaries
                                    and substantially  all  of the  inventory  and  accounts
                                    receivable  of  the  Company and  its  subsidiaries, and
                                    Indebtedness   under   the   Prior   Indentures    which


 
                                       7

 
                                 
                                    is  secured by  a portion  of such  collateral. See "The
                                    Credit Agreement," "Description of the Notes -- Ranking"
                                    and "Certain Other Obligations." As of October 1,  1994,
                                    after  giving PRO FORMA  effect to the  Offering and the
                                    use of proceeds  therefrom, Senior  Indebtedness of  the
                                    Company (including obligations under capitalized leases)
                                    would  have been  approximately $2.07  billion, of which
                                    $1.57   billion   would   have   been   secured   Senior
                                    Indebtedness.  As of  October 1, 1994,  after giving PRO
                                    FORMA effect to  the Offering  and the  use of  proceeds
                                    therefrom,  the  total  amount  of  indebtedness  of the
                                    Company  and  its  subsidiaries  (including  obligations
                                    under  capitalized leases)  ranking PARI  PASSU with the
                                    Notes would have been approximately $2.07 billion.
  Guarantees......................  The payment  of  principal  of,  premium,  if  any,  and
                                    interest  on the Notes  is unconditionally guaranteed on
                                    an unsecured  senior basis  (the "Note  Guarantees")  by
                                    substantially  all  of the  Company's  subsidiaries (the
                                    "Subsidiary Guarantors"). Each Note Guarantee ranks PARI
                                    PASSU  with  all  other   existing  and  future   Senior
                                    Indebtedness  of the  Subsidiary Guarantor  issuing such
                                    Note Guarantee and  senior in  right of  payment to  any
                                    future Indebtedness of such Subsidiary Guarantor that is
                                    expressly  subordinated to  Senior Indebtedness  of such
                                    Subsidiary Guarantor. However,  the Note Guarantees  are
                                    effectively  subordinated to secured Senior Indebtedness
                                    of the Note  Guarantors under the  Prior Indentures  and
                                    the  Credit  Agreement,  the obligations  under  each of
                                    which are also  guaranteed by substantially  all of  the
                                    Subsidiary  Guarantors. See "Description of the Notes --
                                    Ranking" and  "-- Guarantees."  As of  October 1,  1994,
                                    after  giving PRO FORMA  effect to the  Offering and the
                                    use of proceeds  therefrom, Senior  Indebtedness of  the
                                    Subsidiary Guarantors (including guarantees with respect
                                    to  the  Notes and  the  Credit Agreement  and excluding
                                    obligations under  capitalized leases)  would have  been
                                    approximately  $1.51  billion,  of  which  $1.00 billion
                                    would have  been  secured  Senior  Indebtedness.  As  of
                                    October  1, 1994, after  giving PRO FORMA  effect to the
                                    Offering and the  use of proceeds  therefrom, the  total
                                    amount  of  indebtedness  (excluding  obligations  under
                                    capitalized leases) of the Subsidiary Guarantors ranking
                                    PARI PASSU with the Notes would have been  approximately
                                    $1.51 billion.
  Covenants.......................  The  Senior Note  Indentures contain  certain covenants,
                                    including,  without   limitation:  (i)   limitation   on
                                    restricted  payments;  (ii) limitation  on  liens; (iii)
                                    requirements  for   additional  guarantees;   and   (iv)
                                    restrictions  on  consolidations,  mergers  and  sale of
                                    substantially all assets. In addition, the Company  will
                                    be  prohibited  from  incurring  additional Indebtedness
                                    (other than Permitted Indebtedness and without regard to
                                    ranking) if after such incurrence the Consolidated Fixed
                                    Charge Coverage Ratio for the immediately preceding four
                                    fiscal quarters, calculated on  a PRO FORMA basis,  does
                                    not  meet or exceed  1.75 to 1.  See "Description of the
                                    Notes  --  Certain  Covenants"  and  "--  Consolidation,
                                    Merger, Sale of Assets."


 
                                       8

 
                                 
  Use of Proceeds.................  The  net proceeds  of the Offering  will be  used by the
                                    Company to reduce a portion of the indebtedness incurred
                                    under  the  Credit  Agreement  in  connection  with  the
                                    Acquisition. See "Use of Proceeds."
  Absence of Public Market........  There is no public trading market for the Notes, and the
                                    Company  does  not intend  to apply  for listing  of the
                                    Notes on  any securities  exchange or  quotation of  the
                                    Notes  on any inter-dealer quotation system. The Company
                                    has been advised by the Underwriters that, following the
                                    completion of  the initial  offering of  the Notes,  the
                                    Underwriters  presently intend  to make a  market in the
                                    Notes although the Underwriters are under no  obligation
                                    to  do so and  may discontinue any  market making at any
                                    time without notice.  No assurances can  be given as  to
                                    the  liquidity of the  trading markets for  the Notes or
                                    that active trading markets for the Notes will  develop.
                                    If  active public trading  markets for the  Notes do not
                                    develop, the market  prices and liquidity  of the  Notes
                                    may be adversely affected.


 
                           INVESTMENT CONSIDERATIONS
 
    For   a  discussion  of  certain  factors  which  should  be  considered  by
prospective investors in evaluating an investment in the Notes, see  "Investment
Considerations."
 
                                       9

                         SUMMARY FINANCIAL INFORMATION
    Set  forth below and on  the following pages is  summary PRO FORMA financial
information for the  Company and  summary historical  financial information  for
Fleming  and the Scrivner Group. Fleming's consolidated financial statements are
prepared on the basis of a  52 or 53 week year,  ending on the last Saturday  in
December.  Fleming's first fiscal quarter contains  16 weeks and each subsequent
quarter contains 12 weeks; the additional week in each 53 week year is added  to
the fourth fiscal quarter. The Scrivner Group's financial information is derived
from Haniel's consolidated financial statements which are prepared on a calendar
year basis.
 
THE COMPANY -- PRO FORMA
    The  unaudited PRO  FORMA financial  information for  the Company  set forth
below has  been  derived from  the  unaudited PRO  FORMA  financial  information
included  elsewhere in this  Prospectus and gives effect  to the Acquisition and
the financing thereof and the Offering and the use of proceeds therefrom, as  if
they  had occurred at the beginning of  the periods presented. The unaudited PRO
FORMA financial information  does not necessarily  represent what the  Company's
results  of  operations would  have been  if the  Acquisition and  the financing
thereof and the  Offering and the  use of proceeds  therefrom had actually  been
completed  on the dates indicated, and are not intended to project the Company's
results of operations  for any future  period. The following  summary PRO  FORMA
financial  information  should  be  read in  conjunction  with  the consolidated
financial statements of  Fleming and Haniel  and related notes  thereto and  the
unaudited  PRO FORMA financial information for the Company included elsewhere in
this Prospectus.
 


                                                                PRO FORMA
                                              PRO FORMA       40 WEEKS ENDED
                                             YEAR ENDED         OCTOBER 1,
                                          DECEMBER 25, 1993        1994
                                          -----------------   --------------
                                                (DOLLARS IN MILLIONS)
                                                        
STATEMENT OF OPERATIONS DATA(A):
Net sales...............................      $ 19,109           $ 14,281
Cost of sales(b)........................        17,497             13,058
Selling and administrative expense(b)...         1,314              1,048
Facilities consolidation and
 restructuring charge...................           108                 --
                                               -------            -------
Income from operations..................           190                175
Interest expense........................           202                148
Interest income(c)......................            69                 51
Losses from equity investments..........            12                 11
                                               -------            -------
Earnings before taxes...................            45                 67
Taxes on income.........................            24                 34
                                               -------            -------
Earnings before extraordinary item(d)...      $     21           $     33
                                               -------            -------
                                               -------            -------
OTHER DATA:
EBITDA(e)...............................      $    528(f)        $    367
Depreciation and amortization...........           174                141
Capital expenditures....................           108                107
Total debt, including capitalized
 leases(g)..............................            --              2,074
Ratio of EBITDA to interest expense.....          2.61x              2.48x
Ratio of earnings to fixed charges(h)...          1.19x              1.38x

- ------------------------------
(a)  No adjustments have been  made to reflect any  potential cost savings  that
     the  Company may realize from the  Company's plan to consolidate additional
     facilities, reorganize management  and reengineer operations  or which  may
     result from the Acquisition. See "Management's Discussion and Analysis" and
     "Business  -- Business Strategy" and  "-- The Consolidation, Reorganization
     and Reengineering Plan."
(b)  PRO FORMA statement of  operations data for cost  of sales and selling  and
     administrative  expense are affected  by classification differences between
     Fleming's and Haniel's consolidated financial statements. Certain costs and
     expenses included in determining cost  of sales for Fleming are  classified
     as  selling, operating and administrative expenses in Haniel's consolidated
     financial statements. Subsequent to the Acquisition, account classification
     will be conformed to that used by Fleming.
(c)  Consists primarily of interest earned  on notes receivable from  customers.
     Also  includes  income generated  from  direct financing  leases  of retail
     stores and related equipment.
(d)  In 1993,  the Company  realized  an extraordinary  after-tax loss  of  $2.3
     million related to the early retirement of indebtedness.
(e)  EBITDA  represents earnings  before extraordinary  item before  taking into
     consideration   interest   expense,   income   taxes,   depreciation    and
     amortization,  equity investment  results and  facilities consolidation and
     restructuring charge. EBITDA  should not  be considered  as an  alternative
     measure  of the Company's  net income, operating  performance, cash flow or
     liquidity. It is included herein to provide additional information  related
     to  the  Company's  ability to  service  debt. The  Senior  Note Indentures
     contain covenants  limiting  the  incurrence of  Indebtedness  (other  than
     Permitted  Indebtedness) and the making  of certain Restricted Payments (as
     defined) unless  a  minimum  required consolidated  fixed  charge  coverage
     ratio,  calculated  on  a  PRO  FORMA  basis,  is  met.  This  ratio, which
     approximates EBITDA divided by consolidated interest expense, is 1.75 to 1.
     For illustrative purposes, based on PRO FORMA consolidated interest expense
     of $202 million for  the year ended December  25, 1993, the minimum  EBITDA
     required  for  the Company  to  incur additional  Indebtedness  (other than
     Permitted  Indebtedness),  to  pay  dividends  or  to  make  certain  other
     Restricted Payments, was $354 million.
(f)  PRO  FORMA 1993 EBITDA has  been reduced by $13  million to reflect certain
     non-recurring  items  recorded  in  Fleming's  selling  and  administrative
     expense.
(g)  Total  debt, including capitalized leases, is calculated as if the Offering
     and the use  of proceeds  therefrom had occurred  on October  1, 1994.  See
     "Capitalization."
(h)  For  purposes of computing this ratio,  earnings consist of earnings before
     income taxes and fixed charges. Fixed charges consist of interest  expense,
     including  amortization of deferred  debt issuance costs,  and one-third of
     rental expense  (the  portion  considered representative  of  the  interest
     factor).

 
                                       10

FLEMING -- HISTORICAL
    The  following table sets forth certain historical financial information for
Fleming as of and  for the periods indicated.  The historical balance sheet  and
statement  of operations data as of and for the years ended the last Saturday in
December 1989 through 1993 have been derived from audited consolidated financial
statements of Fleming. The historical balance sheet and income statement data as
of and for the three  quarters (40 weeks) ended October  2, 1993 and October  1,
1994  have  been derived  from  the unaudited  consolidated  condensed financial
statements of Fleming. The  table should be read  in conjunction with  "Selected
Financial  Information,"  "Management's Discussion  and Analysis"  and Fleming's
consolidated financial statements and  related notes thereto included  elsewhere
in this Prospectus.
 


                                                                                                         40 WEEKS ENDED
                                                                                                      ---------------------
                                              YEAR ENDED LAST SATURDAY IN DECEMBER,                                 OCTOBER
                                ------------------------------------------------------------------    OCTOBER 2,      1,
                                   1989          1990          1991          1992          1993          1993       1994(A)
                                ----------    ----------    ----------    ----------    ----------    ----------    -------
                                                                                               
                                                                   (DOLLARS IN MILLIONS)
STATEMENT OF OPERATIONS DATA:
Net sales.....................  $   11,992    $   11,884    $   12,851    $   12,894    $   13,092    $ 9,946       $11,057
Gross margin..................         690           683           748           727           765        588          762
Selling and administrative
 expense......................         508           473           537           495           558        417          635
Facilities consolidation and
 restructuring charge(b)......          --            --            67            --           108          7           --
Income from operations........         182           210           144           232            99        164          127
Interest expense..............          96            94            93            81            78         59           76
Interest income(c)............          57            55            61            59            63         48           47
Earnings before taxes.........         139           165           104           195            72        147           87
Earnings before extraordinary
 items and accounting
 change(d)....................          80            97            64           119            37         85           46
BALANCE SHEET DATA (AT END OF
 PERIOD):
Working capital...............  $      363    $      377    $      424    $      528    $      442    $   409       $  454
Total assets..................       2,689         2,768         2,958         3,118         3,103      3,141        4,624
Total debt, including
 capitalized leases...........       1,009         1,012           989         1,086         1,078      1,055        2,064
Shareholders' equity..........         742           814           949         1,060         1,060      1,119        1,079
OTHER DATA:
EBITDA(e)(f)..................  $      303    $      342    $      378    $      380    $      358    $   283       $  276
Depreciation and
 amortization.................          78            83            91            94           101         77          102
Capital expenditures..........         105            51            65            62            53         32           82
Ratio of EBITDA to interest
 expense......................        3.16x         3.64x         4.06x         4.69x         4.59x      4.80x        3.63x
Ratio of earnings to fixed
 charges(g)...................        2.14x         2.40x         1.89x         2.85x         1.71x      2.90x        1.90x

- ------------------------------
(a)  Includes the Scrivner Group since the Acquisition.
(b)  See  further discussion contained in  "Management's Discussion and Analysis
     -- The Consolidation, Reorganization and Reengineering Plan."
(c)  Consists primarily of interest earned  on notes receivable from  customers.
     Also  includes  income generated  from  direct financing  leases  of retail
     stores and related equipment.
(d)  In 1992 and 1993,  the Company recorded  extraordinary after-tax losses  of
     $5.9   million  and  $2.3  million,  respectively,  related  to  the  early
     retirement of indebtedness. In 1991, the Company recognized a $9.3  million
     charge  to net earnings in connection with  the adoption of SFAS No. 106 --
     Employers' Accounting for Postretirement Benefits Other Than Pensions.
(e)  EBITDA represents earnings before extraordinary items and accounting change
     before  taking   into  consideration   interest  expense,   income   taxes,
     depreciation  and  amortization, equity  investment results  and facilities
     consolidation and restructuring charge. EBITDA should not be considered  as
     an  alternative measure of the Company's net income, operating performance,
     cash flow  or  liquidity.  It  is included  herein  to  provide  additional
     information  related to the  Company's ability to  service debt. The Senior
     Note Indentures contain covenants  limiting the incurrence of  Indebtedness
     (other  than Permitted Indebtedness)  and the making  of certain Restricted
     Payments unless  a  minimum  required consolidated  fixed  charge  coverage
     ratio,  calculated  on  a  PRO  FORMA  basis,  is  met.  This  ratio, which
     approximates EBITDA divided by consolidated interest expense, is 1.75 to 1.
     For illustrative purposes, based on PRO FORMA consolidated interest expense
     of $202 million for  the year ended December  25, 1993, the minimum  EBITDA
     required  for  the Company  to  incur additional  Indebtedness  (other than
     Permitted  Indebtedness),  to  pay  dividends  or  to  make  certain  other
     Restricted Payments, was $354 million.
(f)  In  1989 and 1990, EBITDA has been reduced to reflect non-recurring pre-tax
     gains of  approximately  $14 million  and  $6 million,  respectively,  that
     resulted  from selling minority equity positions in a former subsidiary. In
     1991, EBITDA has  been increased  by $15 million  to reflect  non-recurring
     pre-tax  charges related to litigation settlements  and the write-down of a
     non-operating asset.  In 1992,  EBITDA has  been reduced  to reflect  a  $5
     million  non-recurring pre-tax gain related to a litigation settlement. For
     each of the  year ended December  1993 and  the 40 weeks  ended October  2,
     1993,  EBITDA has been reduced by $13  million to reflect the net effect of
     certain non-recurring items. All such non-recurring items were recorded  in
     selling and administrative expense for the relevant period.
(g)  For  purposes of computing this ratio,  earnings consist of earnings before
     income taxes and fixed charges. Fixed charges consist of interest  expense,
     including  amortization of deferred  debt issuance costs,  and one-third of
     rental expense  (the  portion  considered representative  of  the  interest
     factor).

 
                                       11

THE SCRIVNER GROUP -- HISTORICAL
 
    The  following table sets forth certain historical financial information for
the Scrivner Group as of and
for the  periods  indicated.  The  historical balance  sheet  and  statement  of
operations  data as of  and for the  years ended December  31, 1989 through 1993
have been derived from the audited consolidated financial statements of  Haniel.
The  historical balance sheet and statement of operations data as of and for the
six months ended June  30, 1993 and  1994 have been  derived from the  unaudited
consolidated  financial  statements  of  Haniel. The  table  should  be  read in
conjunction with "Selected Financial Information", "Management's Discussion  and
Analysis  -- Analysis of the Scrivner  Group's Historical Results of Operations"
and the  Haniel  consolidated financial  statements  and related  notes  thereto
included elsewhere in this Prospectus.
 


                                                                                                                  SIX MONTHS
                                                                                                                    ENDED
                                                                               YEAR ENDED DECEMBER 31,             JUNE 30,
                                                                        --------------------------------------  --------------
                                                                         1989    1990    1991    1992    1993    1993    1994
                                                                        ------  ------  ------  ------  ------  ------  ------
                                                                                        (DOLLARS IN MILLIONS)
                                                                                                   
STATEMENT OF OPERATIONS DATA:
Net sales.............................................................  $3,765  $5,602  $5,606  $5,685  $6,017  $3,238  $3,224
Gross margin(a).......................................................     458     748     771     792     849     454     462
Selling, operating and administrative expense(a)......................     401     646     661     687     752     401     411
Income from operations................................................      57     102     110     105      97      53      51
Interest expense......................................................      36      82      72      62      56      31      28
Interest income(b)....................................................       4       7       6       6       6       3       4
Earnings before taxes.................................................      25      27      44      49      47      25      27
Net earnings..........................................................      13      14      22      25      25      13      13
BALANCE SHEET DATA (AT END OF PERIOD):
Working capital.......................................................  $  194  $  171  $  118  $  234  $  208  $  264  $  198
Total assets..........................................................   1,347   1,392   1,375   1,387   1,372   1,408   1,317
Total debt, including capitalized leases..............................     751     759     651     721     662     743     620
Shareholder's equity..................................................     175     189     211     242     267     254     280
OTHER DATA:
EBITDA(c).............................................................  $   96  $  166  $  175  $  170  $  168  $   91  $   90
Depreciation and amortization.........................................      35      57      59      59      65      35      35
Capital expenditures..................................................      50      62      49      42      55      31      25
Ratio of EBITDA to interest expense...................................    2.67x   2.02x   2.43x   2.74x   3.00x   2.94x   3.21x
Ratio of earnings to fixed charges(d).................................    1.64x   1.30x   1.54x   1.64x   1.65x   1.64x   1.73x

- ------------------------------
(a)  Certain  costs and expenses that Fleming  includes in determining its gross
     margin are classified as selling, operating and administrative expenses  in
     Haniel's consolidated financial statements.
 
(b)  Consists  primarily of interest earned  on notes receivable from customers.
     Also includes  income  generated from  direct  financing leases  of  retail
     stores and related equipment.
 
(c)  EBITDA  represents  earnings  before  taking  into  consideration  interest
     expense, income taxes, and depreciation and amortization. EBITDA should not
     be considered as an alternative measure of the Scrivner Group's net income,
     operating performance, cash  flow or  liquidity. It is  included herein  to
     provide  additional information related to  the Scrivner Group's ability to
     service debt.
 
(d)  For purposes of computing this  ratio, earnings consist of earnings  before
     income  taxes and fixed charges. Fixed charges consist of interest expense,
     including amortization of  deferred debt issuance  costs, and one-third  of
     rental  expense  (the  portion considered  representative  of  the interest
     factor).

 
                                       12

                           INVESTMENT CONSIDERATIONS
 
    In   addition  to  the  other  information  contained  in  this  Prospectus,
prospective investors  should consider  carefully the  following factors  before
purchasing the Notes offered hereby.
 
LEVERAGE AND DEBT SERVICE
 
    The  Company  incurred  substantial  indebtedness  in  connection  with  the
financing  of  the   Acquisition  and  is   subject  to  substantial   repayment
obligations.  As  of  October  1,  1994,  the  Company  had  total  indebtedness
(including capitalized  lease obligations)  of approximately  $2.06 billion  and
shareholders'  equity of approximately $1.08 billion (on a PRO FORMA basis after
giving effect to the Offering and  the use of proceeds therefrom, $2.07  billion
and $1.08 billion, respectively). Although the Company is subject to restrictive
covenants  under the Senior  Note Indentures and the  Credit Agreements (see "--
Restrictive Covenants"), there remains significant borrowing capacity under such
agreements. Although the Company has no present plans to pursue acquisitions, it
may borrow additional  amounts to do  so in the  future, resulting in  increased
leverage. See "Use of Proceeds" and "Capitalization."
 
    The   degree  to  which  the  Company  is  leveraged  could  have  important
consequences to the holders of the  Notes, including: (i) the Company's  ability
to  obtain additional  financing for  working capital  or other  purposes in the
future may be  limited; (ii) a  substantial portion of  the Company's cash  flow
from  operations  will be  dedicated  to the  payment  of the  principal  of and
interest on its indebtedness, thereby  reducing funds available for  operations;
(iii) certain of the Company's borrowings, including the Floating Rate Notes and
all borrowings under the Credit Agreement, will be at variable rates of interest
(subject to the requirement that the Company enter into interest rate protection
agreements  for  a  substantial  portion  of  its  borrowings  under  the Credit
Agreement; see  "The Credit  Agreement") which  could cause  the Company  to  be
vulnerable  to  increases  in  interest  rates; (iv)  the  Company  may  be more
vulnerable to economic  downturns and  be limited  in its  ability to  withstand
competitive  pressures; and (v)  all of the  indebtedness incurred in connection
with the Credit Agreement  will become due  prior to the  maturity of the  Notes
(except  for  the first  $1  million due  in  connection with  the  sinking fund
established for the benefit of the  Floating Rate Notes). The Company's  ability
to make scheduled payments of the principal of, premium, if any, or interest on,
or   to  refinance,  its  indebtedness  will  depend  on  its  future  operating
performance and cash flow, which are subject to prevailing economic  conditions,
prevailing  interest rate levels, and financial, competitive, business and other
factors, many of which are beyond its control. See "Management's Discussion  and
Analysis"  and "Description  of the  Notes --  Certain Covenants  -- PURCHASE OF
NOTES UPON A CHANGE OF CONTROL TRIGGERING EVENT."
 
    Although the Company conducts substantial  operations at the parent  company
level,  the majority of operations are  conducted by the Company's subsidiaries.
In order to access  funds generated by subsidiary  operations, the Company  must
either cause such subsidiaries to declare dividends or otherwise must borrow the
funds  pursuant  to intercompany  credit  transactions. There  are  currently no
agreements which restrict any of the subsidiaries' ability to declare  dividends
or  lend  funds  to  the  Company,  and  the  Credit  Agreement  prohibits  such
agreements. The Company believes that, based upon current levels of  operations,
it  should be able to meet its debt service obligations, including principal and
interest payments  on  the Notes,  when  due.  If the  Company  cannot  generate
sufficient  cash flow from operations to meet its obligations, the Company might
be required to  refinance its  indebtedness. There can  be no  assurance that  a
refinancing could be effected on satisfactory terms or would be permitted by the
terms  of  the  Credit  Agreement,  the  Prior  Indentures  or  the  Senior Note
Indentures.
 
RESTRICTIVE COVENANTS
 
    The Credit  Agreement  and  the  Senior  Note  Indentures  contain  numerous
restrictive  covenants which  limit the  discretion of  the Company's management
with respect  to certain  business matters.  These covenants  place  significant
restrictions  on,  among  other  things,  the ability  of  the  Company  and the
Subsidiary Guarantors to incur additional indebtedness, to create liens or other
encumbrances, to make certain payments, investments, loans and guarantees and to
sell or otherwise dispose  of a substantial  portion of assets  to, or merge  or
consolidate  with, another  entity which is  not controlled by  the Company. See
"The Credit Agreement" and "Description of  the Notes -- Certain Covenants"  and
"-- Consolidation, Merger, Sale of Assets." The Credit Agreement also contains a
number    of    financial    covenants   which    require    the    Company   to
 
                                       13

meet certain  financial  ratios  and tests.  See  "Management's  Discussion  and
Analysis  --  Liquidity and  Capital Resources"  and  "The Credit  Agreement." A
failure to comply with the obligations contained in the Credit Agreement or  the
Senior Note Indentures, if not cured or waived, could permit acceleration of the
related  indebtedness and  acceleration of indebtedness  under other instruments
which contain  cross-acceleration or  cross-default provisions.  If the  Company
were  obligated  to repay  all  of its  senior  debt at  one  time, there  is no
assurance that the  Company would  have sufficient  cash to  do so  or that  the
Company  could successfully  refinance such indebtedness.  Other indebtedness of
the Company and its subsidiaries that may be incurred in the future may  contain
financial  or  other covenants  more restrictive  than  those applicable  to the
Credit Agreement and the Notes.
 
ASSET ENCUMBRANCES
 
    The Notes will not be secured by any  of the Company's assets or any of  the
Subsidiary  Guarantor's assets. The obligations of  the Company under the Credit
Agreement are secured by the capital stock of substantially all of the Company's
subsidiaries and substantially all of  the inventory and accounts receivable  of
the Company and its subsidiaries. The obligations of the Company under the Prior
Indentures  are secured by the capital  stock and the inter-company indebtedness
(including inter-company  accounts  receivable)  of  substantially  all  of  the
Company's subsidiaries. If the Company becomes insolvent or is liquidated, or if
payment under the Credit Agreement or other secured indebtedness is accelerated,
the  lenders  under the  Credit Agreement,  the Prior  Indentures and  any other
instruments defining  the rights  of lenders  of secured  indebtedness would  be
entitled to exercise the remedies available to a secured lender under applicable
law  so long as  such security remains  in place. Accordingly,  such lenders may
have a prior claim on a substantial portion of the assets of the Company and its
subsidiaries.
 
ABILITY TO INTEGRATE THE SCRIVNER GROUP; PROFITABILITY OF COMPANY-OWNED STORES
 
    The Acquisition represents a dramatic increase in the size and complexity of
the Company. Future operations and earnings  will be largely dependent upon  the
Company's  ability to integrate the Scrivner Group effectively. The Company must
identify and  close duplicative  facilities,  while retaining  and  transferring
related  business, and must  reduce combined administrative  costs and expenses.
There can  be no  assurance that  the Company  will successfully  integrate  the
Scrivner  Group, and a failure to do so  could have a material adverse effect on
the Company's  results  of  operations and  financial  condition.  Additionally,
integration  of the  Scrivner Group and  servicing the  indebtedness incurred in
connection with the Acquisition may limit the Company's ability to  successfully
pursue acquisition opportunities for the foreseeable future.
 
    In  addition, certain stores acquired in the Acquisition, as well as certain
other Company-owned  stores, are  not  profitable on  a stand-alone  basis.  The
Company has developed a specific retail strategy to improve the profitability of
its  retail operations.  Failure to  implement this  strategy successfully could
lead to the continued  underperformance of the  combined retail operations.  See
"Management's Discussion and Analysis."
 
RESPONSE TO A CHANGING INDUSTRY
 
    The  food  marketing  and distribution  industry  is  undergoing accelerated
change as producers,  manufacturers, distributors  and retailers  seek to  lower
costs  and  increase  services  in an  increasingly  competitive  environment of
relatively static  over-all  demand. Alternative  format  food stores  (such  as
warehouse  stores and supercenters) have gained  retail food market share at the
expense of  traditional supermarket  operators, including  independent  grocers,
many  of whom are customers of the Company. Vendors, seeking to ensure that more
of their promotional  dollars are used  by retailers to  increase sales  volume,
increasingly  direct promotional dollars to  large self-distributing chains. The
Company believes  that these  changes  have led  to  reduced margins  and  lower
profitability among many of its customers and at the Company itself. In response
to these changes and to feedback from its customers, the Company has initiated a
consolidation,  reorganization  and reengineering  plan to  redesign the  way in
which the Company markets, distributes and prices its products and services. The
Company will seek to  become the low-cost provider  of its products by  changing
its  pricing practices across most of its product  line so as to pass through to
its customers promotional fees and allowances received from vendors while  fully
recovering  its  expenses and  realizing an  adequate return.  Additionally, the
Company plans to unbundle certain services and provide only those services which
its
 
                                       14

customers want and  for which  they are  willing to  pay. See  "Business --  The
Consolidation, Reorganization and Reengineering Plan." The Company believes that
its  ultimate success will  depend on its ability  to reduce costs significantly
throughout its operations. Failure to achieve significant cost reductions  could
result  in  reduced margins  and  profitability. Failure  to  achieve sufficient
customer receptiveness to the reengineering plan or delays in its implementation
could result in diminished sales and margins while the Company seeks alternative
solutions.  Failure  to  develop  a  successful  response  to  changing   market
conditions  over  the long-term  could  have a  material  adverse effect  on the
Company's business as well as the Company's results of operations and  financial
condition.
 
POTENTIAL CREDIT LOSSES FROM INVESTMENTS IN RETAILERS
 
    The Company provides subleases and extends loans to and makes investments in
many  of its  retail customers, often  in conjunction with  the establishment of
long-term  supply  agreements  with  such  customers.  Loans  to  customers  are
generally  not  investment  grade and,  along  with equity  investments  in such
customers, are highly  illiquid. In  recent years, the  Company has  experienced
increasing  losses  associated  with  these  activities.  Credit  loss expenses,
including losses from receivables and investments in customers, increased to $49
million for  the  40 weeks  ended  October 1,  1994  from $30  million  for  the
comparable  1993 period and increased  to $52 million for  fiscal year 1993 from
$28 million  for  fiscal year  1992.  These increasing  losses  are due  to  the
combined  effects on customers'  financial conditions of  sluggish retail sales,
intensified retail competition and lack of  food price inflation. At October  1,
1994,  the  Company's total  of  loans to  customers  and equity  investments in
customers was  $507  million.  Such amount  excludes  investments  in  customers
through  direct  financing leases,  lease  guarantees, operating  leases, credit
extensions for  inventory  purchases and  the  recourse portion  of  notes  sold
evidencing  such loans.  During fiscal year  1993, 1992 and  1991, Fleming sold,
with limited recourse, $68 million,  $45 million and $82 million,  respectively,
of  notes evidencing  loans to its  customers. See  "Management's Discussion and
Analysis,"  "Business   --  Capital   Invested  in   Customers"  and   Fleming's
consolidated  financial statements and  the notes thereto  included elsewhere in
this  Prospectus.  Although  the  Company  has  begun  to  de-emphasize   credit
extensions  to and  investments in  customers, there  can be  no assurances that
credit losses from existing or future investments or commitments will not have a
material adverse  effect on  the Company's  results of  operations or  financial
condition.
 
COMPETITION
 
    The  food  marketing and  distribution industry  is highly  competitive. The
Company faces competition from national, regional and local food distributors on
the basis  of  price,  quality  and assortment,  schedules  and  reliability  of
deliveries  and the  range and  quality of  services provided.  The Company also
competes with  retail supermarket  chains that  provide their  own  distribution
function,  purchasing directly from producers and distributing products to their
supermarkets for sale to the consumer.
 
    In its retail operations,  the Company competes with  other food outlets  on
the  basis of  price, quality and  assortment, store location  and format, sales
promotions, advertising, availability of parking,  hours of operation and  store
appeal.  Traditional  mass merchandisers  have  gained a  growing  foothold with
alternative store  formats, such  as warehouse  stores and  supercenters,  which
depend on concentrated buying power and low-cost distribution technology. Market
share  of stores with alternative formats is expected to continue to grow in the
future. To meet  the challenges  of a  rapidly changing  and highly  competitive
retail  environment,  the  Company  must  maintain  operational  flexibility and
develop effective strategies across many market segments.
 
    In addition, food wholesalers have  competed by their willingness to  invest
capital  in their customers. The Company has determined to de-emphasize loans to
and investments in its customers and  to enter into such arrangements only  with
customers  who have demonstrated  their ability to  be successful operators. The
Company's new practice may cause it to lose business to competitors.
 
DEPENDENCE ON ECONOMIC CONDITIONS
 
    The slow  pace of  industry growth  and lack  of food  price inflation  have
dampened  the Company's sales growth in recent years. In addition, the Company's
distribution centers and retail stores are subject to
 
                                       15

regional and local economic conditions. While the Company supplies products  and
services  in 43 states, there can be  no assurance that future regional or local
economic downturns will  not have  a material  adverse effect  on the  Company's
results of operations and financial condition.
 
CERTAIN LITIGATION
 
    A  subsidiary of the  Company has been  named in two  related legal actions,
each alleging, among other things, that certain former employees of subsidiaries
of the  Company  participated  in  fraudulent activities  by  taking  money  for
confirming  "diverting" transactions  (a practice involving  arbitraging in food
and other goods  to profit from  price differentials given  by manufacturers  to
different  retailers and  wholesalers) which  had not  occurred. The allegations
include, among other  causes of action,  common law fraud,  breach of  contract,
negligence,  conversion and civil theft, and  violation of the federal Racketeer
Influenced  and  Corrupt  Organizations  Act  and  comparable  state   statutes.
Plaintiffs  seek damages, treble  damages, attorneys' fees,  costs, expenses and
other appropriate relief. While the amount  of damages sought under most  claims
is  not specified, plaintiffs  allege that hundreds of  millions of dollars were
lost as a  result of  the allegations contained  in the  complaint. The  Company
denies  the allegations of the complaint and will vigorously defend the actions.
The litigation is in its preliminary stages, and the ultimate outcome cannot  be
determined.  Furthermore, the Company is unable  to predict a potential range of
monetary exposure to the Company. Based  on the recovery sought, an  unfavorable
judgment  could have a material adverse effect  on the Company. See "Business --
Certain Legal Proceedings."
 
LABOR RELATIONS
 
    Almost half  of  the  Company's  approximately  43,000  full  and  part-time
associates   are   covered  by   collective   bargaining  agreements   with  the
International Brotherhood of Teamsters, Chauffeurs, Warehousemen and Helpers  of
America,   the   United   Food  and   Commercial   Workers,   the  International
Longshoremen's and Warehousemen's Union and the Retail Warehouse and  Department
Store  Union. The Company has 95 such  agreements, which expire at various times
throughout the next five years. While  the Company believes that relations  with
its associates are satisfactory, a prolonged labor dispute could have a material
adverse  effect on the  Company's business as  well as the  Company's results of
operations and financial condition.
 
FRAUDULENT CONVEYANCE CONSIDERATIONS
 
    Each Subsidiary  Guarantor's guarantee  of the  obligations of  the  Company
under  the  Notes may  be subject  to  review under  relevant federal  and state
fraudulent conveyance  statutes  (the  "fraudulent conveyance  statutes")  in  a
bankruptcy,  reorganization or  rehabilitation case  or similar  proceeding or a
lawsuit by or on behalf of unpaid  creditors of such Subsidiary Guarantor. If  a
court  were to find  under relevant fraudulent conveyance  statutes that, at the
time the Notes were issued, (a) a Subsidiary Guarantor guaranteed the Notes with
the intent of hindering, delaying or  defrauding current or future creditors  or
(b) (i) a Subsidiary Guarantor received less than reasonably equivalent value or
fair  consideration for guaranteeing the Notes and (ii) (A) was insolvent or was
rendered insolvent by reason of such  Note Guarantee, (B) was engaged, or  about
to  engage,  in  a business  or  transaction  for which  its  assets constituted
unreasonably small capital,  (C) intended to  incur, or believed  that it  would
incur, obligations beyond its ability to pay as such obligations matured (as all
of  the  foregoing terms  are defined  in or  interpreted under  such fraudulent
conveyance statutes) or (D) was a defendant  in an action for money damages,  or
had  a judgment for money damages docketed against it (if, in either case, after
final judgment,  the  judgment  is  unsatisfied),  such  court  could  avoid  or
subordinate such Note Guarantee to presently existing and future indebtedness of
such  Subsidiary Guarantor and  take other action detrimental  to the holders of
the Notes,  including,  under  certain  circumstances,  invalidating  such  Note
Guarantee.
 
    The  measure of insolvency for purposes of the foregoing considerations will
vary depending upon the federal or state  law that is being applied in any  such
proceeding.  Generally,  however,  a Subsidiary  Guarantor  would  be considered
insolvent if,  at  the  time  it incurs  the  obligations  constituting  a  Note
Guarantee,  either (i)  the fair  market value (or  fair saleable  value) of its
assets is less than the amount required to pay the
 
                                       16

probable liability on its total existing indebtedness and liabilities (including
contingent liabilities)  as  they become  absolute  and  mature or  (ii)  it  is
incurring  obligations beyond its  ability to pay as  such obligations mature or
become due.
 
    The Boards of Directors  and management of the  Company and each  Subsidiary
Guarantor  believe  that at  the  time of  issuance of  the  Notes and  the Note
Guarantees, each  Subsidiary Guarantor  (i) will  be (a)  neither insolvent  nor
rendered  insolvent thereby, (b) in possession of sufficient capital to meet its
obligations as  the  same mature  or  become due  and  to operate  its  business
effectively  and (c) incurring obligations within its ability to pay as the same
mature or  become  due and  (ii)  will have  sufficient  assets to  satisfy  any
probable  money  judgment against  it in  any  pending action.  There can  be no
assurance, however, that such beliefs will prove  to be correct or that a  court
passing on such questions would reach the same conclusions.
 
ABSENCE OF A PUBLIC MARKET FOR THE NOTES
 
    There  is no public trading  market for the Notes,  and the Company does not
intend to apply for listing of the Notes on any securities exchange or quotation
of the Notes on any inter-dealer quotation system. The Company has been  advised
by  the Underwriters that,  following the completion of  the initial offering of
the Notes, the  Underwriters presently  intend to make  a market  in the  Notes,
although  the Underwriters are under no obligation  to do so and may discontinue
any market making at any time without  notice. No assurances can be given as  to
the  liquidity  of the  trading markets  for  the Notes  or that  active trading
markets for the  Notes will develop.  If active public  trading markets for  the
Notes  do  not develop,  the market  prices and  liquidity of  the Notes  may be
adversely affected.
 
                                       17

                                  THE COMPANY
 
    The Company is a  recognized leader in the  food marketing and  distribution
industry  and is the largest food wholesaler in the United States. Fleming's net
sales grew from approximately $5 billion in 1983 to approximately $13 billion in
1993, largely as  a result of  acquisitions of wholesale  food distributors  and
operations.  After giving  PRO FORMA effect  to the acquisition  of the Scrivner
Group in  July 1994  (the  "Acquisition"), the  Company's  1993 net  sales  were
approximately $19 billion.
 
    The  Company  serves as  the principal  source  of supply  for approximately
10,000 retail  food stores  including approximately  3,700 supermarkets  (retail
food  stores  with  annual sales  of  at  least $2  million),  which represented
approximately 13% of all supermarkets in the United States at year-end 1993  and
totaled  approximately  97  million square  feet  in  size. In  addition  to its
wholesale operations, the Company has a significant presence in food  retailing,
owning  and operating 345 retail food  stores, including 283 supermarkets (which
are included in the  totals set forth  above) with an  aggregate of 9.5  million
square  feet. The Company-owned stores operate under  a number of names and vary
in  format  from  super  warehouse  stores  and  conventional  supermarkets   to
convenience  stores.  PRO  FORMA  1993 net  sales  from  retail  operations were
approximately $3 billion. The Company believes it is one of the 20 largest  food
retailers in the United States based on PRO FORMA net sales.
 
    Fleming  was incorporated  in Kansas  in 1915  and was  reincorporated as an
Oklahoma corporation in  1981. The  mailing address of  the Company's  principal
executive  office  is P.O.  Box 26647,  Oklahoma City,  Oklahoma 73126,  and its
telephone number is (405) 840-7200.
 
                                USE OF PROCEEDS
 
    The  proceeds  to  the  Company  from  the  Offering  are  estimated  to  be
approximately  $488 million, net of the  Underwriters' discount and certain fees
and expenses relating to the Offering.  The Company intends to apply the  entire
net  proceeds  of the  Offering, together  with  borrowings under  the Company's
revolving credit facility of  the Credit Agreement, to  retire Tranche B of  the
Credit Agreement, a loan facility maturing in July 1996 under which indebtedness
was incurred in connection with the Acquisition ("Tranche B"). As of November 1,
1994, borrowings of $500 million were outstanding under Tranche B at an interest
rate of 6.0%. See "Management's Discussion and Analysis -- Liquidity and Capital
Resources," "The Credit Agreement" and "Underwriting."
 
                                       18

                                 CAPITALIZATION
 
    The  following table sets forth the historical capitalization of the Company
as of October 1, 1994 and as adjusted  to give PRO FORMA effect to the  Offering
and  the  use  of  proceeds  therefrom.  See  "Use  of  Proceeds"  and Fleming's
consolidated  financial  statements  and  the  related  notes  thereto  included
elsewhere in this Prospectus.
 


                                                                                    AS OF OCTOBER 1, 1994
                                                                                  --------------------------
                                                                                                  PRO FORMA
                                                                                   THE COMPANY     FOR THE
                                                                                   HISTORICAL     OFFERING
                                                                                  -------------  -----------
                                                                                    (DOLLARS IN MILLIONS)
                                                                                           
SHORT-TERM DEBT(A):                                                                 $     109     $  108(b)
                                                                                       ------    -----------
                                                                                       ------    -----------
LONG-TERM DEBT, EXCLUDING CURRENT MATURITIES:
  Bank debt(c)..................................................................    $   1,413     $  957(b)
  The Fixed Rate Notes(c).......................................................       --            300
  The Floating Rate Notes(c)....................................................       --            200
  Long-term obligations under capital leases....................................          353        353
  Other long-term debt..........................................................          188        156(b)
                                                                                       ------    -----------
    Total long-term debt(d).....................................................        1,954      1,966
                                                                                       ------    -----------
SHAREHOLDERS' EQUITY
  Common stock, $2.50 par value 100,000,000 shares authorized; 37,403,000 shares
   issued and outstanding.......................................................           93         93
  Capital in excess of par value................................................          493        493
  Reinvested earnings...........................................................          505        505
  Less guarantee of ESOP debt...................................................          (12)       (12)
                                                                                       ------    -----------
    Total shareholders' equity..................................................        1,079      1,079
                                                                                       ------    -----------
  Total capitalization..........................................................    $   3,033     $3,045
                                                                                       ------    -----------
                                                                                       ------    -----------

- ------------------------
(a)  Consists  of current maturities  of long-term debt  and current obligations
     under capital leases.
(b)  On August 16,  1994, the  Company made  an offer  to purchase  up to  $97.0
     million  aggregate principal  amount of  a series  of Medium-Term  Notes in
     accordance with the terms  of the indenture under  which they were  issued.
     The  offer expired  on October  21, 1994,  with $33  million of  such Notes
     tendered. The Company financed the  purchase by drawing additional  amounts
     under  the revolving credit facility of  the Credit Agreement. See "Certain
     Other Obligations."
(c)  The offerings  of  the  Fixed  Rate Notes  and  the  Floating  Rate  Notes,
     respectively,  are not conditioned upon each other. If either such offering
     is not  completed, a  portion of  Tranche B  of the  Credit Agreement  will
     remain outstanding.
(d)  As  of October  1, 1994,  the Company also  had $130  million of contingent
     obligations under undrawn letters of credit, primarily related to insurance
     reserves associated with its normal risk management activities.

 
                                       19

                        PRO FORMA FINANCIAL INFORMATION
 
    The unaudited PRO FORMA financial  information set forth below presents  the
PRO  FORMA statement of operations of the Company for the 40 weeks ended October
1, 1994 as if the Acquisition and the financing thereof and the Offering and the
use of proceeds therefrom had  occurred on December 26,  1993 and the PRO  FORMA
statement  of operations of the Company for  the year ended December 25, 1993 as
if the Acquisition and  the financing thereof  and the Offering  and the use  of
proceeds therefrom had occurred on December 27, 1992.
 
    The unaudited PRO FORMA financial information has been prepared on the basis
of  assumptions described in the notes thereto and includes assumptions relating
to the allocation of the consideration paid for the Scrivner Group to the assets
and liabilities of the  Scrivner Group based on  preliminary estimates of  their
respective  fair values. The actual allocation  of such consideration may differ
from that reflected in  the PRO FORMA financial  statements after valuation  and
other  studies are completed.  The Acquisition has been  accounted for using the
purchase method of accounting.
 
    The unaudited PRO FORMA financial information does not necessarily represent
what the Company's results of operations would have been if the Acquisition  and
the  financing thereof and  the Offering and  the use of  proceeds therefrom had
actually been  completed as  of the  dates indicated,  and are  not intended  to
project  the Company's results of operations for any future period. In addition,
such information does  not reflect any  of the potential  cost savings that  the
Company  may realize from the Acquisition, including those from increased buying
power, facilities consolidation  and reduced corporate  overhead. Nor does  such
information   reflect  potential  cost  savings   from  the  Company's  plan  to
consolidate  additional   facilities,  reorganize   management  and   reengineer
operations. See "Management's Discussion and Analysis" and "Business -- Business
Strategy" and "-- The Consolidation, Reorganization and Reengineering Plan."
 
    The  unaudited PRO FORMA financial information should be read in conjunction
with the consolidated financial statements of Fleming and Haniel and the related
notes thereto included elsewhere in this Prospectus.
 
                                       20

                       PRO FORMA STATEMENTS OF OPERATIONS
                                  (UNAUDITED)
 


                                                                                   INTERIM PERIOD ENDED 1994(A)
                                                                        --------------------------------------------------
                                                                                   THE SCRIVNER
                                                                        FLEMING       GROUP        ADJUSTMENTS   PRO FORMA
                                                                        -------   --------------   -----------   ---------
                                                                                      (DOLLARS IN MILLIONS)
                                                                                                     
STATEMENT OF OPERATIONS DATA(B):
Net sales.............................................................  $11,057       $3,224         $            $14,281
Cost of sales(c)......................................................   10,295        2,762            1(d)       13,058
Selling and administrative expense(c).................................      635          411            1(d)        1,048
                                                                                                        2(e)
                                                                                                       (1)(f)
                                                                        -------       ------          ---        ---------
Income from operations................................................      127           51           (3)            175
Interest expense......................................................       76           28           44(g)          148
Interest income(h)....................................................       47            4                           51
Losses from equity investments........................................       11           --                           11
                                                                        -------       ------          ---        ---------
Earnings before taxes.................................................       87           27          (47)             67
Taxes on income.......................................................       41           14          (21)(i)          34
                                                                        -------       ------          ---        ---------
Net earnings..........................................................  $    46       $   13         $(26)        $    33
                                                                        -------       ------          ---        ---------
                                                                        -------       ------          ---        ---------
OTHER DATA:
EBITDA(j).............................................................  $   276       $   90                      $   367
Depreciation and amortization.........................................      102           35                          141
Capital expenditures..................................................       82           25                          107
Ratio of EBITDA to interest expense...................................     3.63x        3.21x                        2.48x
Ratio of earnings to fixed charges(k).................................     1.90x        1.73x                        1.38x

 


                                                                                         FISCAL YEAR ENDED 1993(A)
                                                                             -------------------------------------------------
                                                                                       THE SCRIVNER
                                                                             FLEMING      GROUP        ADJUSTMENTS   PRO FORMA
                                                                             -------  --------------   -----------   ---------
                                                                                           (DOLLARS IN MILLIONS)
                                                                                                         
STATEMENT OF OPERATIONS DATA(B):
Net sales..................................................................  $13,092      $6,017         $            $19,109
Cost of sales(c)...........................................................   12,327       5,168            2(d)       17,497
Selling and administrative expense(c)......................................      558         752            2(d)        1,314
                                                                                                            4(e)
                                                                                                           (2)(f)
Facilities consolidation and restructuring charge..........................      108          --                          108
                                                                             -------      ------          ---        ---------
Income from operations.....................................................       99          97           (6)            190
Interest expense...........................................................       78          56           68(g)          202
Interest income(h).........................................................       63           6                           69
Losses from equity investments.............................................       12          --                           12
                                                                             -------      ------          ---        ---------
Earnings before taxes......................................................       72          47          (74)             45
Taxes on income............................................................       35          22          (33)(i)          24
                                                                             -------      ------          ---        ---------
Earnings before extraordinary item(l)......................................  $    37      $   25         $(41)        $    21
                                                                             -------      ------          ---        ---------
                                                                             -------      ------          ---        ---------
OTHER DATA:
EBITDA(j)..................................................................  $   358(m)     $  168                    $   528(m)
Depreciation and amortization..............................................      101          65                          174
Capital expenditures.......................................................       53          55                          108
Ratio of EBITDA to interest expense........................................     4.59x       3.00x                        2.61x
Ratio of earnings to fixed charges(k)......................................     1.71x       1.65x                        1.19x
 
(FOOTNOTES ON FOLLOWING PAGE)

 
                                       21

                                                                                                         

                  NOTES TO PRO FORMA STATEMENTS OF OPERATIONS
 
(a)  PRO FORMA statement of operations data have been prepared by combining  the
     consolidated  statement of  operations of  Fleming for  the 40  weeks ended
     October 1,  1994 and  the fiscal  year  ended December  25, 1993  with  the
     consolidated  statement of  operations of  the Scrivner  Group for  the six
     months  ended  June  30,  1994  and  the  year  ended  December  31,  1993,
     respectively,  assuming the Acquisition  and the financing  thereof and the
     Offering and use  of proceeds therefrom  occurred at the  beginning of  the
     respective  periods.  The  Acquisition  has been  accounted  for  using the
     purchase method of accounting.
(b)  No adjustments have been made to reflect any of the potential cost  savings
     that  the Company  may realize from  the Acquisition,  including those from
     increased buying  power,  facilities consolidation  and  reduced  corporate
     overhead.  Nor have  any adjustments  been made  to reflect  potential cost
     savings from  the  Company's  plan to  consolidate  additional  facilities,
     reorganize   management  and   reengineer  operations.   See  "Management's
     Discussion and Analysis" and  "Business -- Business  Strategy" and "--  The
     Consolidation, Reorganization and Reengineering Plan."
(c)  PRO  FORMA statement of operations  data for cost of  sales and selling and
     administrative expense are affected  by classification differences  between
     Fleming's and Haniel's consolidated financial statements. Certain costs and
     expenses  included in determining cost of  sales for Fleming are classified
     as selling, operating and administrative expenses in Haniel's  consolidated
     financial statements. Subsequent to the Acquisition, account classification
     will be conformed to that used by Fleming.
(d)  To  depreciate the  estimated increase  in the  fair value  of property and
     equipment acquired over  the Scrivner  Group's historical  cost related  to
     such  property and equipment. Such fair  values are based on estimates made
     at the time of the Acquisition. Appraisals have not yet been completed.
(e)  To reflect the  net adjustment resulting  from (i) the  elimination of  the
     Scrivner  Group's  goodwill amortization  during the  period, and  (ii) the
     amortization over forty years of the excess of cost over the fair value  of
     assets  and liabilities acquired and assumed  in the Acquisition. Such fair
     values are  based  on  estimates  made at  the  time  of  the  Acquisition.
     Appraisals have not yet been completed.
(f)  To  eliminate the  salaries of former  Scrivner Group officers  who are not
     Company associates  and  whose  functions  have  been  assumed  by  Fleming
     officers.
(g)  To  reflect the net  adjustment for the  interim period ended  1994 and the
     fiscal  year  ended  1993  of  (i)  the  elimination  of  interest  expense
     associated  with approximately  $611 million aggregate  principal amount of
     Scrivner Group  indebtedness that  was refinanced  in connection  with  the
     Acquisition   ($26  million  and  $53   million,  respectively);  (ii)  the
     elimination of interest expense associated with approximately $307  million
     aggregate  principal amount of Fleming  indebtedness that was refinanced at
     the time of the  Acquisition ($11 million  and $18 million,  respectively);
     (iii)  the elimination of  interest expense associated  with $33 million of
     Fleming Medium-Term Notes  which were  purchased in late  October 1994  ($2
     million  and $3 million,  respectively); (iv) the  net addition of interest
     expense associated with indebtedness under  the Credit Agreement, based  on
     applying the interest rates in effect on the date of the Acquisition to PRO
     FORMA  indebtedness  outstanding  prior  to such  date,  after  taking into
     account the effect of interest  rate protection agreements the Company  has
     entered  into with respect  to $1 billion of  indebtedness ($39 million and
     $85 million, respectively); (v) the addition of interest expense associated
     with the Notes ($38  million and $49 million,  respectively), and (vi)  the
     addition  of amortization  of deferred debt  issuance costs  related to the
     Notes and the Credit Agreement  ($6 million and $8 million,  respectively).
     See  "Management's  Discussion and  Analysis  -- Results  of  Operations --
     Interest Expense."
     Each incremental  25  basis  point  increase or  decrease  in  the  assumed
     interest  rate of the  Fixed Rate Notes  and the Floating  Rate Notes would
     increase or decrease annual  interest expense on the  Fixed Rate Notes  and
     the Floating Rate Notes by $750,000 and $500,000, respectively.
(h)  Interest  income consists primarily of  interest earned on notes receivable
     from customers. Also  included is  income generated  from direct  financing
     leases of retail stores and related equipment.
(i)  To  provide for income  taxes at an  assumed effective rate  of 47% for all
     adjustments except those relating to goodwill amortization.
(j)  EBITDA represents  earnings before  extraordinary item  before taking  into
     consideration    interest   expense,   income   taxes,   depreciation   and
     amortization, equity investment  results and  facilities consolidation  and
     restructuring  charge. EBITDA  should not  be considered  as an alternative
     measure of net income, operating performance, cash flow or liquidity. It is
     included herein to provide additional information related to the ability to
     service debt. The  Senior Note  Indentures contain  covenants limiting  the
     incurrence  of  Indebtedness (other  than  Permitted Indebtedness)  and the
     making  of   certain  Restricted   Payments  unless   a  minimum   required
     consolidated  fixed charge coverage ratio, calculated on a PRO FORMA basis,
     is met.  This  ratio, which  approximates  EBITDA divided  by  consolidated
     interest  expense, is  1.75 to 1.  For illustrative purposes,  based on PRO
     FORMA consolidated  interest expense  of $202  million for  the year  ended
     December  25, 1993,  the minimum EBITDA  required for the  Company to incur
     additional  Indebtedness  (other  than  Permitted  Indebtedness),  to   pay
     dividends or to make certain other Restricted Payments, was $354 million.
(k)  For  purposes of computing this ratio,  earnings consist of earnings before
     income taxes and fixed charges. Fixed charges consist of interest  expense,
     including  amortization of deferred  debt issuance costs,  and one-third of
     rental expense  (the  portion  considered representative  of  the  interest
     factor).
(l)  In  1993,  the Company  realized an  extraordinary  after-tax loss  of $2.3
     million related to the early retirement of indebtedness.
(m)  1993 EBITDA has been reduced  by $13 million to  reflect the net effect  of
     certain non-recurring items recorded in selling and administrative expense.


 
                                       22

                         SELECTED FINANCIAL INFORMATION
FLEMING
    The  following is  a summary  of certain  financial information  relating to
Fleming. The information presented below for, and as of the end of, each of  the
fiscal  years in the  five-year period ended  December 25, 1993  is derived from
audited consolidated  financial statements  of Fleming.  In the  opinion of  the
Company,  the unaudited financial  information presented for  the 40 weeks ended
October 2, 1993 and October 1, 1994 contains all adjustments (consisting only of
normal  recurring  adjustments)  necessary  to  present  fairly  the   financial
information  included therein. Results  for interim periods  are not necessarily
indicative of  results  for  the full  year.  This  summary should  be  read  in
conjunction  with the detailed information and consolidated financial statements
of Fleming, including the notes thereto, included elsewhere in this Prospectus.
 


                                                                                                          40 WEEKS ENDED
                                                                                                      ----------------------
                                            YEAR ENDED THE LAST SATURDAY IN DECEMBER,                  OCTOBER      OCTOBER
                                ------------------------------------------------------------------       2,           1,
                                   1989          1990          1991          1992          1993         1993        1994(A)
                                ----------    ----------    ----------    ----------    ----------    ---------    ---------
                                                                   (DOLLARS IN MILLIONS)
                                                                                              
STATEMENT OF OPERATIONS DATA:
Net sales.....................  $   11,992    $   11,884    $   12,851    $   12,894    $   13,092    $9,946       $11,057
Gross margin..................         690           683           748           727           765       588          762
Selling and administrative
 expense......................         508           473           537           495           558       417          635
Facilities consolidation and
 restructuring charge(b)......          --            --            67            --           108         7           --
Income from operations........         182           210           144           232            99       164          127
Interest expense..............          96            94            93            81            78        59           76
Interest income(c)............          57            55            61            59            63        48           47
Earnings before taxes.........         139           165           104           195            72       147           87
Earnings before extraordinary
 items and accounting
 change(d)....................          80            97            64           119            37        85           46
BALANCE SHEET DATA (AT END OF
 PERIOD):
Working capital...............  $      363    $      377    $      424    $      528    $      442    $  409       $  454
Total assets..................       2,689         2,768         2,958         3,118         3,103     3,141        4,624
Total debt, including
 capitalized leases...........       1,009         1,012           989         1,086         1,078     1,055        2,064
Shareholders' equity..........         742           814           949         1,060         1,060     1,119        1,079
OTHER DATA:
EBITDA(e)(f)..................  $      303    $      342    $      378    $      380    $      358    $  283       $  276
Depreciation and
 amortization.................          78            83            91            94           101        77          102
Capital expenditures..........         105            51            65            62            53        32           82
Ratio of EBITDA to interest
 expense......................        3.16x         3.64x         4.06x         4.69x         4.59x     4.80x        3.63x
Ratio of earnings to fixed
 charges(g)...................        2.14x         2.40x         1.89x         2.85x         1.71x     2.90x        1.90x

- ------------------------------
(a)  Includes the Scrivner Group since the Acquisition.
(b)  See further discussion contained  in "Management's Discussion and  Analysis
     -- The Consolidation, Reorganization and Reengineering Plan."
(c)  Consists  primarily of interest earned  on notes receivable from customers.
     Also includes  income  generated from  direct  financing leases  of  retail
     stores and related equipment.
(d)  In  1992 and 1993,  the Company recorded  extraordinary after-tax losses of
     $5.9  million  and  $2.3  million,  respectively,  related  to  the   early
     retirement  of indebtedness. In 1991, the Company recognized a $9.3 million
     charge to net earnings in connection with  the adoption of SFAS No. 106  --
     Employers' Accounting for Post-retirement Benefits Other Than Pensions.
(e)  EBITDA represents earnings before extraordinary items and accounting change
     before   taking   into  consideration   interest  expense,   income  taxes,
     depreciation and  amortization, equity  investment results  and  facilities
     consolidation  and restructuring charge. EBITDA should not be considered as
     an alternative measure of the Company's net income, operating  performance,
     cash  flow  or  liquidity.  It is  included  herein  to  provide additional
     information related to the  Company's ability to  service debt. The  Senior
     Note  Indentures contain covenants limiting  the incurrence of Indebtedness
     (other than Permitted  Indebtedness) and the  making of certain  Restricted
     Payments  unless  a  minimum required  consolidated  fixed  charge coverage
     ratio, calculated  on  a  PRO  FORMA  basis,  is  met.  This  ratio,  which
     approximates EBITDA divided by consolidated interest expense, is 1.75 to 1.
     For illustrative purposes, based on PRO FORMA consolidated interest expense
     of  $202 million for the  year ended December 25,  1993, the minimum EBITDA
     required for  the  Company to  incur  additional Indebtedness  (other  than
     Permitted  Indebtedness),  to  pay  dividends  or  to  make  certain  other
     Restricted Payments, was $354 million.
(f)  In 1989 and 1990, EBITDA has been reduced to reflect non-recurring  pre-tax
     gains  of  approximately $14  million  and $6  million,  respectively, that
     resulted from selling minority equity positions in a former subsidiary.  In
     1991,  EBITDA has  been increased by  $15 million  to reflect non-recurring
     pre-tax charges related to litigation  settlements and the write-down of  a
     non-operating  asset.  In 1992,  EBITDA has  been reduced  to reflect  a $5
     million non-recurring pre-tax gain related to a litigation settlement.  For
     each  of the  year ended December  1993 and  the 40 weeks  ended October 2,
     1993, EBITDA has been reduced by $13  million to reflect the net effect  of
     certain  non-recurring items. All such non-recurring items were recorded in
     selling and administrative expense for the relevant period.
(g)  For purposes of computing this  ratio, earnings consist of earnings  before
     income  taxes and fixed charges. Fixed charges consist of interest expense,
     including amortization of  deferred debt issuance  costs, and one-third  of
     rental  expense  (the  portion considered  representative  of  the interest
     factor).

 
                                       23

THE SCRIVNER GROUP
 
    The following is a summary of certain financial information relating to  the
Scrivner  Group. The information presented below for, and as of the end of, each
of the years in the five-year period ended December 31, 1993 is derived from the
audited consolidated  financial statements  of  Haniel. In  the opinion  of  the
Company,  the unaudited financial information presented for the six months ended
June 30,  1993 and  1994 contains  all adjustments  (consisting only  of  normal
recurring  adjustments) necessary  to present  fairly the  financial information
included therein. Results for interim periods are not necessarily indicative  of
results  for the full year.  The summary should be  read in conjunction with the
detailed information and consolidated financial statements of Haniel,  including
the notes thereto, included elsewhere in this Prospectus.
 


                                                                                                          SIX MONTHS ENDED
                                                                YEAR ENDED DECEMBER 31,                       JUNE 30,
                                                 -----------------------------------------------------  --------------------
                                                   1989       1990       1991       1992       1993       1993       1994
                                                 ---------  ---------  ---------  ---------  ---------  ---------  ---------
                                                                            (DOLLARS IN MILLIONS)
                                                                                              
STATEMENT OF OPERATIONS DATA:
Net sales......................................  $   3,765  $   5,602  $   5,606  $   5,685  $   6,017  $   3,238  $   3,224
Gross margin(a)................................        458        748        771        792        849        454        462
Selling, operating and administrative
 expense(a)....................................        401        646        661        687        752        401        411
Income from operations.........................         57        102        110        105         97         53         51
Interest expense...............................         36         82         72         62         56         31         28
Interest income(b).............................          4          7          6          6          6          3          4
Earnings before taxes..........................         25         27         44         49         47         25         27
Net earnings...................................         13         14         22         25         25         13         13
BALANCE SHEET DATA (AT END OF PERIOD):
Working capital................................  $     194  $     171  $     118  $     234  $     208  $     264  $     198
Total assets...................................      1,347      1,392      1,375      1,387      1,372      1,408      1,317
Total debt, including capitalized
 leases........................................        751        759        651        721        662        743        620
Shareholder's equity...........................        175        189        211        242        267        254        280
OTHER DATA:
EBITDA(c)......................................  $      96  $     166  $     175  $     170  $     168  $      91  $      90
Depreciation and amortization..................         35         57         59         59         65         35         35
Capital expenditures...........................         50         62         49         42         55         31         25
Ratio of EBITDA to interest expense............       2.67x      2.02x      2.43x      2.74x      3.00x      2.94x      3.21x
Ratio of earnings to fixed charges(d)..........       1.64x      1.30x      1.54x      1.64x      1.65x      1.64x      1.73x

- ------------------------
(a)  Certain  costs and expenses that Fleming  includes in determining its gross
     margin are classified as selling, operating and administrative expenses  in
     Haniel's consolidated financial statements.
 
(b)  Consists  primarily of interest earned  on notes receivable from customers.
     Also includes  income  generated from  direct  financing leases  of  retail
     stores and related equipment.
 
(c)  EBITDA  represents  earnings  before  taking  into  consideration  interest
     expense, income taxes and depreciation and amortization. EBITDA should  not
     be considered as an alternative measure of the Scrivner Group's net income,
     operating  performance, cash  flow or liquidity.  It is  included herein to
     provide additional information related to  the Scrivner Group's ability  to
     service debt.
 
(d)  For  purposes of computing this ratio,  earnings consist of earnings before
     income taxes and fixed charges. Fixed charges consist of interest  expense,
     including  amortization of deferred  debt issuance costs,  and one-third of
     rental expense  (the  portion  considered representative  of  the  interest
     factor).

 
                                       24

                      MANAGEMENT'S DISCUSSION AND ANALYSIS
 
GENERAL
 
    THE  CONSOLIDATION, REORGANIZATION AND REENGINEERING PLAN.  In January 1994,
the  Company  announced  the  details  of  a  plan  to  consolidate  facilities,
restructure  its  organizational alignment  and  reengineer its  operations. The
Company's objective is to improve  its performance by eliminating functions  and
operations  that do  not add  economic value.  Charges associated  with the plan
consist of four  categories: facilities consolidation,  reengineering, focus  on
retail  stores and elimination of  regional operations. The actions contemplated
by the plan will affect the  Company's food and general merchandise  wholesaling
operations  as well  as certain  retailing operations.  The 1993  fourth quarter
results  reflect   a  charge   of  $101   million  resulting   from   facilities
consolidation,  restructuring  and  reengineering.  This  is  in  addition  to a
provision of $7 million  for facilities consolidation in  the second quarter  of
1993.  Related cash requirements during the 40  weeks ended October 1, 1994 were
$14 million; additional cash expenditures necessary to fully implement the  plan
during  the next two years are estimated to total $69 million. Cash requirements
are expected to be met by  internally generated cash flows and borrowings  under
the  Credit Agreement. The consolidation,  reorganization and reengineering plan
is expected to produce estimated net pre-tax savings of $65 million per year  by
1997,  after full  implementation. However,  unforeseen events  or circumstances
could cause the  Company to alter  planned work force  reductions or  facilities
consolidations, thereby delaying or reducing expected cost savings.
 
    Facilities  consolidation has resulted  in the closure  of four distribution
centers and is expected to result in the closure of one additional facility, the
relocation of  two  operations,  consolidation of  one  center's  administrative
function, and completion of the 1991 facilities consolidations. During the forty
weeks  ending  October  1,  1994,  approximately  700  associate  positions were
eliminated through facilities consolidations. Expected losses on disposition  of
the  related  property through  sale or  sublease are  provided for  through the
estimated disposal dates.
 
    The total  provision  for  facilities  consolidation  is  approximately  $60
million.  Estimated components include: severance costs -- $15 million; impaired
property and  equipment --  $13  million; other  related asset  impairments  and
obligations  -- $11 million; lease and  holding costs -- $10 million; completion
of actions contemplated  in the  1991 restructuring  charge --  $7 million;  and
product  handling and  damage --  $4 million.  The actions  are not  expected to
result in a material reduction in net sales. Transportation expense is  expected
to  increase as a result of trucks driving farther to serve customers. It is not
practical to estimate reduced depreciation and amortization, labor or  operating
costs  separately.  Management anticipates  that, in  the aggregate,  a positive
annual pre-tax earnings  impact of  approximately $20 million  will result  from
administrative expense savings and working capital and productivity improvements
once the facilities consolidation plan is fully implemented.
 
    The costs to complete activities, including the consolidation and closure of
distribution  facilities, contemplated  in the 1991  restructuring charge result
principally from additional estimated costs  related to dispositions of  related
real  estate assets, which are in process. Such costs are principally the result
of the deterioration of  the California Bay Area  commercial real estate  market
since  1991.  Increased  costs  to complete  the  1991  facilities consolidation
actions were partially offset by a  change in management's 1993 plans  regarding
the  consolidation of four existing facilities into  a large, new facility to be
constructed in the Kansas City area; the revised plan, which calls for enlarging
and utilizing existing  facilities, is  expected to result  in lower  associated
closure costs.
 
    The  reengineering  component  of the  charge  provides for  the  cash costs
associated  with  the   expected  termination   of  1,500   associates  due   to
reengineering.  Annual  payroll savings  are projected  to be  approximately $40
million.  The  provision  for   reengineering  is  approximately  $25   million.
Management believes that the benefits to operating results that will be realized
by  reengineering will also  apply to the  Scrivner Group. Reengineering efforts
with respect  to  the  Scrivner  Group  will not  begin  until  late  1995.  The
Acquisition  has  resulted  in  the  rescheduling  of  certain  aspects  of  the
reengineering plan due to the effort required to
 
                                       25

integrate the Scrivner Group. No fundamental changes to the plan have  occurred.
However,  the reengineering actions that will  result in a significant reduction
of employees are not expected to  occur until 1995. Management expects that  all
actions originally contemplated in the plan will be completed.
 
    Thirty retail supermarket locations leased or owned by the Company have been
deemed  to no longer  represent viable strategic  sites for stores  due to size,
location or age.  The charge  includes the present  value of  lease payments  on
these  locations, as well  as holding costs until  disposition, the write-off of
capital lease assets recorded for certain locations, and the expected loss on  a
location closed in 1994. The charge consists principally of cash costs for lease
payments  and the write-down of property.  Annual savings from these actions are
expected  to  be  $1  million.  The  provision  for  retail-related  assets   is
approximately $15 million.
 
    Elimination  of the Company's regional operations resulted in cash severance
payments  to  approximately  100  associates,   as  well  as  the  transfer   of
approximately  60 associates. The annual savings  are expected to be $4 million,
principally in payroll costs. The provision for eliminating regional  operations
is approximately $8 million, including the write-down to estimated fair value of
certain related assets.
 
    The  table presented below reflects changes  to the reserves recorded in the
statements  of  financial  position  related  to  facilities  consolidation  and
restructuring.
 


                                                                                       REENGINEERING/   CONSOLIDATION
                                                                                          SEVERANCE      COSTS/ASSET
                                                                              TOTAL         COSTS        IMPAIRMENTS
                                                                            ---------  ---------------  -------------
                                                                                      (DOLLARS IN MILLIONS)
                                                                                               
Charges for year ended December 28, 1991..................................  $    67.0     $    11.0       $    56.0
Expenditures and write-offs...............................................      (13.0)       --               (13.0)
                                                                            ---------         -----          ------
Balance, December 28, 1991................................................       54.0          11.0            43.0
Expenditures and write-offs...............................................      (24.1)         (2.8)          (21.3)
                                                                            ---------         -----          ------
Balance, December 26, 1992................................................       29.9           8.2            21.7
Charged to costs and expenses.............................................      107.8          25.0            82.8
Expenditures and write-offs...............................................      (52.2)         (8.1)          (44.1)
                                                                            ---------         -----          ------
Balance, December 25, 1993................................................       85.5          25.1            60.4
Expenditures and write-offs...............................................      (25.2)         (2.6)          (22.6)
                                                                            ---------         -----          ------
Balance, October 1, 1994..................................................  $    60.3     $    22.5       $    37.8
                                                                            ---------         -----          ------
                                                                            ---------         -----          ------

 
    THE  ACQUISITION.  Results  beginning with the third  quarter 1994 have been
materially affected by  the Acquisition.  In 1993,  the Scrivner  Group had  net
sales  of approximately $6 billion, income  from operations of approximately $97
million  and  net  earnings  of  approximately  $25  million.  Interest  expense
increased  materially as  a result of  the increased borrowing  level and higher
interest  rates  due   to  the  Acquisition.   Amortization  of  goodwill   will
significantly increase as a result of the goodwill created by the Acquisition.
 
    As  a result of  the Acquisition, the Company  has closed three distribution
centers and expects  to close seven  additional distribution centers  of the  49
currently  operated. The Company  has identified six of  such facilities, all of
which are Scrivner  Group facilities; the  last center to  be identified may  be
either  a  Fleming or  a  Scrivner Group  facility.  Two of  the  six facilities
identified, located in Blooming Prairie,  Minnesota and Buffalo, New York,  will
be  closed  in 1995.  Charges  related to  the  closing of  distribution centers
operated by  the  Scrivner Group  have  been considered  a  direct cost  of  the
Acquisition  and are  reflected as  goodwill as of  October 1,  1994. Any charge
related to the closing of a distribution center operated by Fleming prior to the
Acquisition will be  allocated to  current period earnings.  Integration of  the
Scrivner Group's operations is expected to take approximately two years.
 
                                       26

RESULTS OF OPERATIONS
 
    Set  forth in the following table is information regarding Fleming net sales
and certain  components of  earnings expressed  as a  percentage of  net  sales,
before  the effect  of early debt  retirement in  1993 and 1992,  and before the
accounting change in 1991:
 


                                                                                                           40 WEEKS ENDED
                                                                               YEAR ENDED LAST           -------------------
                                                                            SATURDAY IN DECEMBER,        OCTOBER    OCTOBER
                                                                        ------------------------------      2,         1,
                                                                          1991       1992       1993       1993       1994
                                                                        --------   --------   --------   --------   --------
                                                                                                     
Net sales.............................................................   100.00%    100.00%    100.00%    100.00%    100.00%
Gross margin..........................................................     5.82       5.64       5.85       5.91       6.89
Less:
  Selling and administrative expense..................................     4.18       3.84       4.27       4.20       5.74
  Interest expense....................................................     0.73       0.63       0.60       0.59       0.68
  Interest income.....................................................    (0.48)     (0.46)     (0.48)     (0.48)     (0.42)
  Equity investment results...........................................     0.06       0.12       0.09       0.06       0.10
  Facilities consolidation and restructuring charge...................     0.52         --       0.82       0.06         --
                                                                        --------   --------   --------   --------   --------
    Total.............................................................     5.01       4.13       5.30       4.43       6.10
                                                                        --------   --------   --------   --------   --------
Earnings before taxes.................................................     0.81       1.51       0.55       1.48       0.79
Taxes on income.......................................................     0.31       0.59       0.26       0.63       0.38
                                                                        --------   --------   --------   --------   --------
Earnings before extraordinary items and accounting change.............     0.50%      0.92%      0.29%      0.85%      0.41%
                                                                        --------   --------   --------   --------   --------
                                                                        --------   --------   --------   --------   --------

 
40 WEEKS ENDED OCTOBER 2, 1993 AND OCTOBER 1, 1994
 
    Earnings in the 40  week period ended  October 1, 1994  were $46 million,  a
decrease  of 46% compared to 1993; earnings in the third quarter of 1994 were $3
million, down 87% from the same  period in 1993. Several factors contributed  to
the  decline and include lack  of sales growth (before  the addition of Scrivner
Group sales),  increased  losses from  Company-owned  retail stores  and  retail
equity  investments,  increased credit  loss expense  (including a  $6.5 million
expense due to the bankruptcy of a large customer), higher interest expense  due
to the Acquisition, an adverse LIFO effect and a higher effective tax rate.
 
    NET  SALES.  Net sales  for the 40 weeks ended  October 1, 1994 increased by
$1.11 billion, or 11.2%, to $11.06 billion from $9.95 billion for the comparable
period in 1993. The increase in net sales was attributable to the $1.35  billion
of  net  sales generated  by Scrivner  Group  operations since  the Acquisition.
Without the Scrivner Group,  net sales would have  declined by $238 million,  or
2.4%,  due to several  factors, none of  which was individually  material to net
sales, including: the  expiration of the  temporary agreement with  Albertson's,
Inc.  as its distribution center came on line,  the sale of the Royal New Jersey
distribution center, the loss of a customer at one of the Company's distribution
centers and the loss of business due to the bankruptcy of Megafoods Stores, Inc.
These losses  were partially  offset by  the addition  of business  from  Kmart,
Florida  retail operations acquired in the  fourth quarter of 1993 ("Hyde Park")
and Randall's Food Markets, Inc.
 
    Fleming measures inflation using data derived from the average cost of a ton
of product sold by  the Company; for  the 40 weeks ended  October 1, 1994,  food
price  inflation was negligible.  Tonnage of food  product sold in  the 40 weeks
ended October 1, 1994, without giving effect to the Acquisition, declined by  6%
compared  to  the comparable  period in  1993,  reflecting the  difficult retail
environment. Consistent  tonnage  statistics  for the  Scrivner  Group  are  not
available.
 
    GROSS MARGIN.  Gross margin for the 40 weeks ended October 1, 1994 increased
by  $174 million, or 29.6%, to $762 million from $588 million for the comparable
period in 1993 and increased as a percentage  of net sales to 6.9% for the  1994
period  from  5.9%  for  the  comparable  1993  period.  Without  Scrivner Group
operations, gross margin  would have  been 6.3% of  net sales.  The increase  in
gross  margin was due to retail stores, principally the 179 stores acquired with
the Scrivner Group as well as the  21 Hyde Park stores and 24 Consumers  stores,
which  were  not included  in 1993  results.  See "--  Results of  Operations --
Other." Retail
 
                                       27

operations typically have both a higher gross margin and higher selling expenses
than wholesale operations. In addition, product handling expenses, which consist
of warehouse, truck  and building  expenses, decreased  as a  percentage of  net
sales  for the 1994  period from the comparable  1993 period due  in part to the
positive impact of the Company's facilities consolidation program and to  higher
fees  charged to certain customers. These  gross margin increases were partially
offset by  charges  to  income  resulting from  the  LIFO  method  of  inventory
valuation in the 1994 period compared to credits to income in the 1993 period.
 
    SELLING  AND ADMINISTRATIVE EXPENSE.  Selling and administrative expense for
the 40 weeks ended October 1, 1994 increased by $218 million, or 52.3%, to  $635
million  from $417 million for the comparable  period in 1993 and increased as a
percentage of net sales to 5.7% for the 1994 period from 4.2% in the  comparable
period  in  1993. This  increase was  due  primarily to  the acquisition  of the
Scrivner Group, particularly its retail  operations, as well as the  acquisition
of  21 Hyde Park stores and 24 Consumers  stores which were not included in 1993
results. Retail operations typically have higher selling expenses than wholesale
operations. Selling and administrative expenses also increased by reason of  the
provision  for  additional  goodwill amortization,  principally  related  to the
Acquisition.
 
    Credit loss expense included in  selling and administrative expense for  the
40  weeks ended October 1, 1994 increased by $19 million to $49 million from $30
million in the comparable period in 1993. This increase, after the $6.5  million
credit  loss  discussed  below,  was  due  to  the  continued  difficult  retail
environment and low  levels of food  price inflation. Although  the Company  has
begun  to de-emphasize credit extensions to and investments in customers and has
adopted more stringent credit practices, there  can be no assurance that  credit
losses  from  existing or  future  investments or  commitments  will not  have a
material adverse effect on results of operations or financial condition.
 
    In August  1994, a  customer  of the  Company,  Megafoods Stores,  Inc.  and
certain   of  its   affiliates  ("Megafoods"),   filed  Chapter   11  bankruptcy
proceedings. As of such date, Megafood's total indebtedness to Fleming for goods
sold on open account,  equipment leases and  loans aggregated approximately  $20
million.  The Company holds collateral with  respect to a substantial portion of
these obligations. Megafoods is also liable to the Company under store  sublease
agreements for approximately $37 million, and the Company is contingently liable
on  certain lease guarantees  given by the  Company on behalf  of Megafoods. The
Company is  partially secured  as to  these obligations.  Megafoods has  alleged
claims   against  the  Company   arising  from  breach   of  contract,  tortious
interference with contracts and business relationships and wrongful set-off of a
$12  million  cash  security  deposit  and  has  threatened  to  seek  equitable
subordination  of the Company's claims. The Company denies these allegations and
will vigorously protect its interests. Based  on this event, the Company took  a
charge  to earnings of  $6.5 million in the  third quarter of  1994 to cover its
estimated net credit exposure.  However, the exact amount  of the ultimate  loss
may  vary  depending  upon  future developments  in  the  bankruptcy proceedings
including those related to collateral values, priority issues and the  Company's
ultimate  expense, if any, related to certain customer store leases. An estimate
of additional possible loss, or the  range of additional losses, if any,  cannot
be  made at this early stage of  the proceedings. The Company estimates that its
annualized sales to Megafoods  prior to the  bankruptcy were approximately  $335
million  and currently are  approximately $170 million  pursuant to a short-term
arrangement.
 
    INTEREST EXPENSE.  Interest expense for  the 40 weeks ended October 1,  1994
increased  $17 million to $76 million from $59 million for the comparable period
in 1993.  The increase  was due  to  the indebtedness  incurred to  finance  the
Acquisition  and  higher  interest rates  imposed  on  the Company  as  a result
thereof. Without  these  factors,  interest  expense  for  the  1994  period  is
estimated to have been approximately the same as the comparable 1993 period.
 
    The  Company enters  into financial derivatives  as a method  of hedging its
interest rate  exposure. During  July  1994, management  terminated all  of  its
outstanding  derivative  contracts  at an  immaterial  net gain,  which  will be
amortized over  the original  term  of each  derivative instrument.  The  Credit
Agreement  requires  the  Company  to  provide  interest  rate  protection  on a
substantial portion of the indebtedness outstanding thereunder. The Company  has
entered  into  interest  rate  swaps  and  caps  covering  $1  billion aggregate
principal  amount  of  floating  rate  indebtedness.  This  amount  exceeds  the
requirements set forth in the Credit Agreement.
 
                                       28

    The  average interest  rate on the  Company's floating  rate indebtedness is
equal to the London interbank offered interest rate ("LIBOR") plus a margin. The
average fixed interest rate paid  by the Company on  the interest rate swaps  is
6.794%,  covering $750 million of floating  rate indebtedness. The interest rate
swap agreements, which  were implemented through  eight counterparty banks,  and
which  have an average remaining  life of 3.6 years,  provide for the Company to
receive substantially the same LIBOR that the Company pays on its floating  rate
indebtedness. For the remaining $250 million, the Company has purchased interest
rate  cap agreements  from an  additional two  counterparty banks  covering $250
million of its  floating rate indebtedness.  The agreements cap  LIBOR at  7.33%
over  the next 4.2  years. The Company's payment  obligations under the interest
rate swap and cap agreements meet  the criteria for hedge accounting  treatment.
Accordingly,  the Company's  payment obligations  are accounted  for as interest
expense.
 
    With respect to the interest  rate hedging agreements, the Company  believes
its  exposure to potential credit loss expense is minimized primarily due to the
relatively strong  credit  ratings of  the  counterparties for  their  unsecured
long-term  debt (A+  or higher from  Standard &  Poor's Ratings Group  and A1 or
higher from Moody's Investors Service, Inc.)  and the size and diversity of  the
counterparty  banks.  The hedge  agreements are  subject to  market risk  to the
extent that  market interest  rates for  similar instruments  decrease, and  the
Company  terminates the  hedges prior  to their  maturity. However,  the Company
believes this risk is  minimized as it currently  foresees no need to  terminate
any hedge agreements prior to their maturity.
 
    On  an annualized  basis, the $1  billion of interest  rate hedge agreements
account for $53 million of fixed annual interest expense. For the quarter  ended
October  1, 1994, the  interest rate hedge agreements  contributed $8 million to
interest expense. The estimated fair value of the hedge agreements at October 1,
1994 was $13 million.
 
    INTEREST INCOME.   Interest income for  the 40 weeks  ended October 1,  1994
declined by $1 million to $47 million from $48 million for the comparable period
in  1993. The decrease was due to a  lower average level of notes receivable and
direct financing leases in 1994, combined with lower average interest rates. The
Company has sold certain notes receivable  with limited recourse in prior  years
and may do so again in the future.
 
    EQUITY  INVESTMENT RESULTS.  The Company's  portion of operating losses from
equity investments  for the  40 weeks  ended  October 1,  1994 increased  by  $5
million  to $11 million from  $6 million for the  comparable period in 1993. The
increase resulted primarily from losses related to the Company's investments  in
small  retail operators under the Company's Equity Store Program, offset in part
by improved results  from investments in  strategic multi-store customers  under
the  Company's Business Development  Ventures Program. See  "Business -- Capital
Invested in Customers."
 
    TAXES ON INCOME.  The  Company's effective tax rate  for the 40 weeks  ended
October  1, 1994 increased to 47.5% from 42.5% for the comparable period in 1993
primarily as a result of the lower than expected earnings for 1994, the Scrivner
Group's operations  in  states with  higher  tax rates  and  increased  goodwill
amortization  with no related tax deduction. The Company's ultimate tax rate for
1994 will depend on annual earnings and may be higher than 47.5%.
 
    OTHER.   In August  1994 the  Company increased  its indirect  ownership  of
Consumers  Markets, Inc. ("Consumers"), the  operator of 24 supermarkets located
in Missouri, Arkansas and Kansas with annual sales of $225 million, from 40%  to
79%.  On October 29, 1994, the Company  acquired all of the outstanding stock of
Consumers. Results of  operations and  financial position of  Consumers are  not
material.
 
    On  November 30, the Company announced  that Smitty's Super Valu, a customer
based in Arizona, had challenged the enforceability of its supply contract  with
Fleming  and may seek alternate arrangements. Smitty's has provided Fleming with
the opportunity to match the terms offered by a competitor. Under the provisions
of its supply contract, Fleming has three months in which to respond.  Fleming's
supply  contract will expire in  31 months if the  Company matches the competing
offer and in 15 months if it does not. Fleming intends to comply fully with  the
supply  contract  and  expects  Smitty's  to  do  likewise.  Smitty's  purchased
approximately $290 million of products from Fleming during the past 12 months.
 
                                       29

    A subsidiary of  the Company  has been named  in two  related legal  actions
filed in the U.S. District Court in Miami in December 1993. The litigation is in
its   preliminary  stages,  and  the  ultimate  outcome  cannot  be  determined.
Furthermore, the Company  is unable  to predict  a potential  range of  monetary
exposure  to the Company. Based on  the recovery sought, an unfavorable judgment
could have a material  adverse effect on the  Company. See "Business --  Certain
Legal Proceedings."
 
    Management  believes that  several factors  affecting earnings  in the third
quarter are likely to continue and will depress results in the fourth quarter of
1994 and beyond. Such factors include: flat wholesale sales; lack of food  price
inflation;  operating losses in Company-owned  retail stores; increased interest
expense, goodwill amortization and integration costs related to the Acquisition;
and a higher effective tax rate.
 
1993, 1992, 1991
 
    NET SALES.  Net sales in 1993 increased by $199 million, or 1.5%, to  $13.09
billion from $12.89 billion for 1992, and net sales in 1992 remained essentially
unchanged  from  1991. The  1993 net  sales  increase was  primarily due  to the
following items,  none of  which individually  was material  to net  sales:  the
inclusion  of a  full year  of operation of  Baker's Supermarkets  Inc. in 1993,
compared  to  12  weeks  in  1992,  and  the  addition  of  the  Garland,  Texas
distribution  center purchased  in August  1993. Also  contributing to  the 1993
increase were the  addition of  new customers,  including Kmart.  For 1993,  the
Company  experienced food price deflation of  0.1% compared to deflation of 1.0%
in 1992 and inflation of 0.8% in 1991.  The Company's outlook for 1994 is for  a
low level of food price inflation.
 
    Tonnage  of food product sold  in 1993 was essentially  the same as 1992. In
1992, tonnage of food product sold increased 1.6% over the 1991 level. The lower
tonnage growth rate in 1993 reflects sluggish retail food industry sales and the
lack of net expansion of the Company's customer base.
 
    GROSS MARGIN.  Gross margin  in 1993 increased by  $39 million, or 5.3%,  to
$765  million from $727  million for 1992  and increased as  a percentage of net
sales to 5.9% from 5.6% in 1992. Gross margin in 1992 decreased by $21  million,
or  2.9%, from $748 million  in 1991 and decreased as  a percentage of net sales
from 5.8% in 1991. The increase in gross margin in 1993 was due to increased net
sales by Company-owned stores (which included the ten Baker's Supermarkets  Inc.
stores  acquired in September  1992). Retail operations  typically have a higher
gross margin  than  wholesale  operations. Product  handling  expense  for  1993
decreased  as a  percentage of  net sales from  1992. The  resulting increase in
gross margin was offset in part by lower wholesale margins.
 
    The decrease in gross  margin in 1992  compared to 1991  was due to  several
factors,  including the absence of the  Company-owned Dixieland food stores sold
in December 1991, offset by the presence  of the ten Baker's stores acquired  at
the  beginning of the fourth quarter of  1992. In addition, there were increased
transportation expenses in  1992, due  principally to  the Company's  facilities
consolidation  program  which  resulted  in trucks  driving  farther  to deliver
product. Gross  margin  in  1992 was  also  increased  by $5  million  from  the
favorable  resolution  of  certain  litigation.  The  LIFO  method  of inventory
valuation increased gross margin by $9  million, an increase of $5 million  from
1991.
 
    SELLING  AND ADMINISTRATIVE EXPENSE.   Selling and administrative expense in
1993 increased $63 million, or 12.8%, to $558 million from $495 million in  1992
and  increased  as a  percentage of  net sales  to 4.3%  from 3.8%.  Selling and
administrative expense in 1992 decreased $42 million, or 7.8%, from $537 million
in 1991  and decreased  as a  percentage of  net sales  from 4.2%  in 1991.  The
increase  in 1993  was due  primarily to  the higher  selling and administrative
expense associated with a higher number of Company-owned stores (which  included
the ten Baker's stores acquired at the beginning of the fourth quarter of 1992).
Retail   operations  generally  have  higher  selling  expenses  than  wholesale
operations. In addition, selling and administrative expense included credit loss
expense of $52 million in 1993 compared  with $28 million in 1992. The  increase
was  due to the combined effects  on customers' financial conditions of sluggish
retail sales, intensified retail competition  and lack of food price  inflation.
These  increases were offset in part by  reductions in certain other selling and
administrative expense categories.
 
    Furthermore, in 1993,  selling and  administrative expense  was affected  by
several  non-recurring items. The Company recorded $11 million of pre-tax income
resulting from cash received from the favorable
 
                                       30

resolution of litigation and  a $1 million accrual  for expected settlements  in
other legal proceedings. The Company estimated that its contingent liability for
lease obligations exceeded its previously established reserves by $2 million and
recorded  this  amount as  an  expense. A  $5 million  gain  from a  real estate
transaction was also recorded.
 
    Of the decrease in selling and  administrative expense in 1992, $25  million
was  due to a reduction in the number of Company-owned stores resulting from the
sale of  the Dixieland  Food  stores at  the  end of  1991,  offset in  part  by
additional  selling expenses related to the ten Baker's supermarkets acquired at
the beginning of the fourth quarter of 1992. The reduction in 1992 was also  due
in  part to  $15 million of  selling and  administrative expense in  1991 due to
unusual charges  related  to litigation  settlements  and the  write-down  of  a
non-operating  asset. These benefits were offset in part by a higher credit loss
expense in 1992 of $28 million compared to credit loss expense of $17 million in
1991. The increase in  credit loss expense  was due to  the combined effects  on
customers'  financial conditions  of sluggish  retail sales,  intensified retail
competition and lack of food price inflation.
 
    Also contributing to the reduction in the selling and administrative expense
in 1992 compared to 1991 were the  effects of cost controls and the benefits  of
certain  completed  facilities consolidations.  Gains on  the sales  of customer
notes receivable reduced  selling and  administrative expense by  $3 million  in
each of 1993, 1992 and 1991.
 
    INTEREST  EXPENSE.   Interest expense  in 1993  declined $3  million, to $78
million from $81  million in  1992. Interest expense  in 1992  decreased by  $12
million,  from $93 million  in 1991. The  decrease in 1993  was due primarily to
lower short-term interest  rates and  lower average borrowing  levels. The  1992
decrease  in interest  expense was  due primarily  to lower  interest rates. The
Company entered into interest  rate hedge agreements to  manage its exposure  to
interest rates.
 
    INTEREST  INCOME.  Interest income  in 1993 increased by  $3 million, to $63
million from $59  million in 1992.  The increase was  due to higher  outstanding
notes  receivable  and direct  financing leases,  partially  offset by  a slight
decline in interest rates. Interest income in 1992 declined by $2 million,  from
$61  million in 1991.  The decrease was  due to lower  interest rates, partially
offset by higher  average notes  receivable balances.  Interest income  consists
primarily  of  interest earned  on notes  receivable  and income  generated from
direct financing leases of retail stores and related equipment.
 
    EQUITY INVESTMENT RESULTS.   The  Company's share of  operating losses  from
equity  investments in  certain customers (including  customers participating in
the Company's Equity Store Program or the Business Development Venture  Program)
accounted  for under the equity  method in 1993 decreased  by $3 million, to $12
million from $15  million in  1992. Operating  losses from  investments in  such
customers  in  1992  increased by  $7  million,  from $8  million  in  1991. The
improvement in 1993 was due to improved operating performance by certain of  the
Company's  Business Development Ventures partially offset by the Company's share
of losses from customers  participating in the  Company's Equity Store  Program.
Business  Development Ventures were  responsible for equity  method losses of $6
million in 1993, compared  to $11 million  in 1992 and $4  million in 1991.  The
increase  in  1992  was attributable  to  poor performance  by  certain Business
Development  Ventures.  The  continued   effects  on  the  Company's   customers
(including  those in which the Company has made equity investments) of a lack of
food price inflation and intense competition has resulted in continuing  losses.
The  Company's equity investments in its customers are usually coupled with long
term supply agreements. In the  past, the Company sought additional  incremental
sales  resulting  from  such  investments. See,  however,  "Business  -- Capital
Invested in Customers -- EQUITY INVESTMENTS."
 
    EARLY DEBT RETIREMENT.  In the fourth quarters of 1993 and 1992, the Company
recorded extraordinary losses related to the early retirement of debt. In  1993,
the  Company retired $63 million of the 9.5% debentures at a cost of $2 million,
net of tax benefits of $2 million. In 1992, the Company recorded a charge of  $6
million,  net of tax benefits of $4  million. The 1992 costs related to retiring
$173 million  aggregate  principal  amount of  convertible  notes,  $30  million
aggregate principal amount of 9.5% debentures and certain other debt.
 
                                       31

    TAXES  ON INCOME.  The  effective income tax rate  for 1993 increased to 48%
from 39% in  1992 and  38.3% in  1991. The 1993  increase was  primarily due  to
facilities consolidation and related restructuring charges. As a result, pre-tax
income  was  reduced, causing  nondeductible items  for tax  purposes to  have a
larger impact on the effective tax rate. In addition, both the federal and state
income tax rates increased by 1% due to a new tax law enacted in 1993. Moreover,
the 1992 effective  rate had been  reduced due to  favorable settlements of  tax
assessments  recorded in prior years. The 1991 rate was lower than the 1992 rate
primarily due  to  one-time  benefits  related to  the  difference  between  the
financial  and tax  basis in an  insurance subsidiary  sold in 1991  and a lower
combined state income tax rate.
 
    OTHER.  In 1993,  the Company reduced the  discount rate assumption used  to
determine  its obligations for defined  benefit pension plans and postretirement
benefits. The 1% decline will  cause pension and postretirement benefit  expense
recognized in 1994 to increase by approximately $3 million compared to 1993.
 
LIQUIDITY AND CAPITAL RESOURCES
 
    The  Company's principal sources of liquidity  are cash flows from operating
activities and bank borrowings. Operating  activities generated $325 million  of
cash  flow for the  first 40 weeks of  1994 as compared to  $246 million for the
comparable period in 1993. The increase was principally due to larger reductions
of inventory and a larger increase in accounts payable before the effects of the
Acquisition during the 1994 period compared  to the 1993 period. Cash flow  from
operations  was $209 million in 1993, up  from $90 million in 1992. The increase
was attributable to reduced trade receivables and inventories.
 
    Working capital was  $454 million  at October 1,  1994, an  increase of  $12
million  from December 25, 1993. The current  ratio decreased to 1.32 to 1.00 at
October 1, 1994  compared to 1.48  to 1.00 at  December 25, 1993.  The ratio  of
total  indebtedness, including  capitalized lease obligations,  to total capital
was 66% at October  1, 1994, compared  to 50% at December  25, 1993. Such  total
indebtedness  at October 1, 1994 increased by $985 million to $2.06 billion from
$1.08 billion at December 25, 1993 principally as a result of the Acquisition.
 
    Capital expenditures for the  40 weeks ending October  1, 1994 and the  year
ended  December  25,  1993,  were approximately  $82  million  and  $53 million,
respectively.  The  Company   expects  that  1994   capital  expenditures   will
approximate $150 million.
 
    The  Company  incurred  substantial  indebtedness  in  connection  with  the
financing  of  the   Acquisition  and  is   subject  to  substantial   repayment
obligations.  At November 1, 1994, the Company had an aggregate of $1.55 billion
borrowed under the Credit Agreement consisting of $250 million borrowed pursuant
to Tranche A (the five-year revolving facility), $500 million borrowed  pursuant
to  Tranche  B  (the two-year  term  loan  facility) and  $800  million borrowed
pursuant to Tranche C (the six-year amortizing facility). Net proceeds from  the
Offering  will  be used  to repay  borrowings outstanding  under Tranche  B. See
"Capitalization,"  "Use  of  Proceeds"  and  "The  Credit  Agreement."  Assuming
consummation  of the Offering  and the use of  proceeds therefrom, the Company's
debt repayment obligations will be approximately $34 million for the balance  of
1994,  $118 million for 1995, $77 million  for 1996, $152 million for 1997, $208
million for 1998, and  $497 million for  1999. There are  no committed lines  of
credit other than the Credit Agreement.
 
    The  Credit Agreement  contains customary covenants  associated with similar
facilities including,  without limitation,  the following  financial  covenants:
maintenance  of a borrowed funds to net worth  ratio of not more than 2.45 to 1;
maintenance of a minimum consolidated net worth of $851 million; and maintenance
of a fixed charge coverage ratio of at least 1.40 to 1. The Company is currently
in compliance with  all financial covenants  under the Credit  Agreement. As  of
November 1, 1994, the restricted payments test would have allowed the Company to
pay dividends or repurchase capital stock in the aggregate amount of $17 million
for the balance of 1994. The borrowed funds to net worth test would have allowed
the Company to borrow an additional $547 million. The fixed charge coverage test
would  have allowed  the Company  to incur an  additional $33  million of annual
interest expense. See "Investment Considerations  -- Leverage and Debt  Service"
and "-- Restrictive Covenants."
 
                                       32

    The  Credit Agreement and the Senior  Note Indentures also place significant
restrictions on  the  Company's ability  to  incur additional  indebtedness,  to
create liens or other encumbrances, to make certain payments, investments, loans
and  guarantees and  to sell  or otherwise dispose  of a  substantial portion of
assets to, or merge or consolidate with, another entity which is not  controlled
by the Company.
 
    From time to time the Company sells, with limited recourse, notes evidencing
certain  secured  loans made  to retailers.  The  Company also  plans to  sell a
portion of its investment in direct  financing leases during 1995. See  "Certain
Other  Obligations  --  Sales  of Certain  Secured  Loans  and  Direct Financing
Leases."
 
    At October 1, 1994  the Company had $130  million of contingent  obligations
under  undrawn  letters  of  credit,  primarily  related  to  insurance reserves
associated with its normal risk management activities. To the extent that any of
these letters of  credit were drawn,  payments would be  financed by  borrowings
under Tranche A of the Credit Agreement.
 
    The  consummation  of the  Acquisition and  the  resulting downgrade  in the
ratings  of  the  Company's  long-term  unsecured  indebtedness  represented   a
"repurchase event" under the indenture governing the Company's Medium-Term Notes
which  required the Company to offer to  purchase one series of such Medium-Term
Notes. On August  16, 1994,  the Company  made an  offer to  purchase the  notes
issued  in this series, which offer terminated October 21, 1994. An aggregate of
$33 million of such Medium-Term Notes were purchased on October 31, 1994,  using
borrowings under Tranche A of the Credit Agreement.
 
    The  Company  believes that  cash flows  from  operating activities  and its
ability to  borrow under  the Credit  Agreement  will be  adequate to  meet  the
Company's  working capital needs, planned  capital expenditures and debt service
obligations for the foreseeable future.
 
    CERTAIN ACCOUNTING MATTERS.  Statement of Financial Accounting Standards No.
114 -- Accounting by Creditors for Impairment of a Loan (as amended by Statement
of Financial  Accounting  Standards  No.  118 --  Accounting  by  Creditors  for
Impairment of a Loan -- Income Recognition and Disclosures) will be effective in
the  first quarter  of the Company's  1995 fiscal year.  This statement requires
that loans that are determined  to be impaired must  be measured by the  present
value  of expected future cash flows discounted at the loan's effective interest
rate. Management has  not yet determined  the impact, if  any, on the  Company's
consolidated statements of earnings or financial position.
 
                                       33

ANALYSIS OF THE SCRIVNER GROUP'S HISTORICAL RESULTS OF OPERATIONS
 
    Set  forth below  is Fleming's analysis  of the Scrivner  Group's results of
operations for the three years ended 1993  and for the first six months of  1994
and 1993.
 
GENERAL
 
    The  statement  of  operations  data  for  the  Scrivner  Group  may  not be
comparable  to  that  for  Fleming  because  cost  of  sales  and  selling   and
administrative expense are affected by classification differences. Certain costs
and expenses included in determining cost of sales for Fleming are classified as
selling,  operating  and  administrative  expenses for  the  Scrivner  Group. In
addition, the Scrivner Group-owned stores accounted for approximately 33% of the
Scrivner Group's  net sales  in 1993  while Company-owned  stores accounted  for
approximately 7% of Fleming's net sales in 1993.
 
RESULTS OF OPERATIONS
 
    Set  forth in the following table  is information regarding Scrivner Group's
net sales and certain  components of earnings expressed  as a percentage of  net
sales:
 


                                                                                                  SIX MONTHS ENDED
                                                              YEAR ENDED DECEMBER 31,         ------------------------
                                                       -------------------------------------   JUNE 30,     JUNE 30,
                                                          1991         1992         1993         1993         1994
                                                       -----------  -----------  -----------  -----------  -----------
                                                                                            
Net sales............................................     100.00%      100.00%      100.00%      100.00%      100.00%
Gross margin.........................................      13.75        13.94        14.12        14.01        14.32
Less:
  Selling, operating and administrative expense......      11.80        12.08        12.51        12.38        12.75
  Interest expense...................................       1.28         1.09         0.94         0.96         0.86
  Interest income....................................      (0.11)       (0.11)       (0.10)       (0.10)       (0.12)
                                                       -----------  -----------  -----------  -----------  -----------
    Total............................................      12.97        13.06        13.35        13.24        13.49
                                                       -----------  -----------  -----------  -----------  -----------
Income before income taxes...........................       0.78         0.88         0.77         0.77         0.83
Provision for income taxes...........................       0.41         0.43         0.36         0.38         0.41
                                                       -----------  -----------  -----------  -----------  -----------
Net income...........................................       0.37%        0.45%        0.41%        0.39%        0.42%
                                                       -----------  -----------  -----------  -----------  -----------
                                                       -----------  -----------  -----------  -----------  -----------

 
SIX MONTHS ENDED JUNE 30, 1994 AND 1993
 
    NET  SALES.  Net sales for the six  months ended June 30, 1994 decreased $14
million, or 0.4%, from  $3.24 billion to $3.22  billion for the comparable  1993
period.  The  flat  net sales  were  attributable  to low  food  price inflation
(measured by  reference to  the Consumer  Price Index-Food  at Home)  and  lower
volume  in  the 1994  period  versus the  1993  period, partially  offset  by an
increase in net sales by the Scrivner Group-owned stores.
 
    GROSS MARGIN.   Gross margin for  the 1994 period  increased $8 million,  or
1.8%,  to $462  million from  $454 million  for the  comparable 1993  period and
increased as a percent of net sales to 14.3% from 14.0% for the 1993 period. The
increase in gross margin  was primarily attributable to  increased net sales  at
the  Scrivner Group-owned  stores and a  modest shift  in the sales  mix of such
stores to higher margin items during the 1994 period, offset in part by a  small
decrease in gross margin for wholesale operations primarily as a result of lower
food  price inflation during the 1994 period. Retail operations typically have a
higher gross margin than wholesale operations.
 
    SELLING, OPERATING  AND  ADMINISTRATIVE  EXPENSE.   Selling,  operating  and
administrative expense increased $10 million, or 2.6%, to $411 million from $401
million  for the comparable period in 1993, and increased as a percentage of net
sales to  12.8%  from 12.4%  in  the 1993  period.  The increase  was  primarily
attributable  to higher payroll and related benefit expenses and occupancy costs
at the Scrivner  Group-owned stores  during the 1994  period. Retail  operations
typically have higher selling expenses than wholesale operations.
 
    INTEREST  EXPENSE.   Interest expense  during the  1994 period  decreased $4
million, to $28 million  from $31 million  in the 1993  period. The decrease  in
interest  expense  occurred as  a  result of  lower  borrowings during  the 1994
period, partially offset by higher interest rates.
 
                                       34

    INTEREST INCOME.  Interest income for the 1994 period increased $1  million,
to  $4 million from $3 million for the comparable period in 1993, as a result of
higher interest rates during the 1994 period.
 
    PROVISION FOR INCOME TAXES.  The Scrivner Group's effective tax rate for the
six months ended June 30, 1994 increased to 49.9% from 49.3% for the  comparable
1993  period as a result of the higher federal tax rate resulting from a tax law
enacted in 1993.
 
1993, 1992 AND 1991
 
    NET SALES.   Net sales in  1993 increased  $332 million, or  5.8%, to  $6.02
billion  from $5.69 billion in 1992. Net sales in 1992 increased $79 million, or
1.4%, from $5.61  billion in  1991. The 1993  increase was  attributable to  the
Scrivner Group's purchase of certain assets of the Peter J. Schmitt Company (the
"Schmitt  Company") in January  1993 and a  modest increase in  food prices. The
assets purchased from  the Schmitt  Company consisted  of the  inventory at  two
distribution centers, seven retail food stores and franchise and lease rights to
twenty-six  retail food stores.  The 1992 increase resulted  from an increase in
net sales by Scrivner Group-owned stores  and a slight increase in food  prices,
partially  offset by  the absence of  sales from foodservice  operations sold in
April 1992.
 
    GROSS MARGIN.  Gross margin  in 1993 increased by  $57 million, or 7.2%,  to
$849  million from $792  million in 1992,  and increased as  a percentage of net
sales to 14.1% from 13.9% in 1992.  Gross margin in 1992 increased $21  million,
or  2.7%, from $771 million in 1991, and  increased as a percentage of net sales
from 13.8% in  1991. The increase  in 1993  was primarily due  to increased  net
sales  at Scrivner  Group-owned stores  as a result  of the  inclusion of former
Schmitt Company retail food stores and improvements resulting from remodels  and
expansions  of Scrivner Group-owned stores. The 1992 increase resulted primarily
from increased net sales at Scrivner Group-owned stores, partially offset by the
absence of  sales  from  foodservice  operations  sold  in  April  1992.  Retail
operations typically have a higher gross margin than wholesale operations.
 
    SELLING,  OPERATING  AND  ADMINISTRATIVE EXPENSE.    Selling,  operating and
administrative expense in 1993 increased $65  million, or 9.5%, to $752  million
from  $687 million in 1992, and increased as  a percentage of net sales to 12.5%
from 12.1%  in  1992. Selling,  operating  and administrative  expense  in  1992
increased  $26 million, or 3.9%,  from $661 million in  1991, and increased as a
percentage of net sales from 11.8% in 1991. The 1993 increase was primarily  due
to  increases in payroll and related  expenses and advertising costs at Scrivner
Group-owned stores,  one-time  costs associated  with  the purchase  of  certain
assets  of  the  Schmitt  Company  and  start-up  expenses  for  a  new  general
merchandise distribution  center in  Buffalo, New  York. The  1992 increase  was
primarily  attributable  to  higher  payroll and  related  expenses  and product
handling costs in wholesale operations.
 
    INTEREST EXPENSE.   Interest expense in  1993 decreased $6  million, to  $56
million  from $62 million in 1992. Interest expense in 1992 decreased $9 million
from $72 million  in 1991.  The decrease  in both  1993 and  1992 was  primarily
attributable  to lower interest rates and, with respect to 1993, lower borrowing
levels.
 
    INTEREST INCOME.    Interest  income remained  stable  at  approximately  $6
million  during fiscal years 1993, 1992 and 1991 as a result of increased levels
of notes receivable from customers offset by lower interest rates.
 
    PROVISION FOR INCOME  TAXES.   The effective  income tax  rates were  46.1%,
49.6% and 51.5% in 1993, 1992 and 1991, respectively. The lower effective income
tax  rate in 1993  resulted from a tax  credit of $3  million from net operating
loss carryforwards, offset in part by an increase in the federal tax rate of  1%
due to the passage of a new tax law and increases in state taxes.
 
                                       35

                                    BUSINESS
 
    The  Company is a  recognized leader in the  food marketing and distribution
industry with both wholesale and retail  operations. The Company is the  largest
food  wholesaler in  the United  States as  a result  of the  acquisition of the
Scrivner Group in  July 1994 (the  "Acquisition"), based on  PRO FORMA 1993  net
sales  of approximately $19 billion. The  Company serves as the principal source
of supply for approximately 10,000  retail food stores, including  approximately
3,700  supermarkets (defined as  any retail food  store with annual  sales of at
least $2 million) which represented approximately 13% of all supermarkets in the
United States at year-end 1993 and totaled approximately 97 million square  feet
in  size. The Company  serves food stores  of various sizes  operating in a wide
variety of formats,  including conventional  full-service stores,  supercenters,
price  impact  stores (including  warehouse  stores), combination  stores (which
typically carry a higher proportion  of non-food items) and convenience  stores.
With customers in 43 states, the Company services a geographically diverse area.
The  Company's wholesale operations  offer a wide variety  of national brand and
private label  products,  including  groceries,  meat,  dairy  and  delicatessen
products,  frozen  foods,  produce,  bakery  goods  and  a  variety  of  general
merchandise and related items. In addition,  the Company offers a wide range  of
support  services to  its customers to  help them compete  more effectively with
other food retailers in  their respective markets.  Such services include  store
development  and  expansion  services, merchandising  and  marketing assistance,
advertising,  consumer  education  programs,  retail  electronic  services   and
employee training.
 
    In  addition to its food wholesale operations, the Company has a significant
presence in  food  retailing,  owning  and operating  345  retail  food  stores,
including 283 supermarkets with an aggregate of approximately 9.5 million square
feet.  Company-owned stores operate under  a number of names  and vary in format
from super warehouse stores and conventional supermarkets to convenience stores.
PRO FORMA 1993 net sales from  retail operations were approximately $3  billion.
The  Company believes it is  one of the 20 largest  food retailers in the United
States based on PRO FORMA net sales.
 
    Fleming's  net  sales  grew  from  approximately  $5  billion  in  1983   to
approximately  $13  billion in  1993,  largely as  a  result of  acquisitions of
wholesale food distributors and operations. After giving PRO FORMA effect to the
Acquisition, the Company's 1993  net sales were  approximately $19 billion.  The
Company  believes  that its  position  as a  leader  in the  food  marketing and
distribution industry  is attributable  to a  number of  competitive  strengths,
including the following:
 
    SIZE.   As the largest food wholesaler in the United States, the Company has
    substantial purchasing power and is able to realize significant economies of
    scale.
 
    DIVERSE CUSTOMER  BASE.   In  1993,  chains and  multiple-store  independent
    operators  represented 40%  and 33%,  respectively, of  Fleming's net sales,
    with the balance  comprised of sales  to single-store independent  operators
    and  Fleming-owned stores.  Approximately one-third of  the Scrivner Group's
    1993 net  sales  were  to  Scrivner Group-owned  stores,  with  the  balance
    comprised  of  sales  to  multi-store  independent  operators,  single-store
    operators and  chains.  In  addition,  with  customers  in  43  states,  the
    Company's sales are geographically dispersed.
 
    EXPERTISE  IN PRIVATE LABEL PRODUCTS AND  PERISHABLES.  The Company offers a
    wide range  of private  label  products and  perishables and  has  developed
    extensive  expertise in handling, marketing and distributing these products.
    The Company  believes  that  these  products are  an  important  element  in
    attracting and retaining consumers. This expertise has permitted the Company
    to  derive 41% of 1993 PRO FORMA net  sales from the sale of perishables. In
    addition, private label products and  certain perishables (such as  produce,
    frozen  foods and bakery goods) generally  produce higher margins than other
    food categories.
 
    EFFICIENT DISTRIBUTION  NETWORK.   Fleming has  successfully integrated  the
    operations  of previously  acquired food wholesalers,  thereby developing an
    efficient distribution network,  and has  recorded 19  consecutive years  of
    warehouse   productivity   increases.  The   Company   aggressively  pursues
    opportunities for  the consolidation  of  distribution centers,  seeking  to
    eliminate   duplicative  operations  and   facilities  and  achieve  greater
    efficiencies. In addition, the Company believes it is an industry leader  in
    the development and application of advanced distribution technology.
 
                                       36

    LONG-TERM  SUPPLY CONTRACTS.  The Company pursues various means of obtaining
    future business, including  the formation  of alliances  with retailers.  In
    particular, the Company has focused on retailers with demonstrated operating
    success, including operators of alternative formats such as warehouse stores
    and  supercenters. The Company  has long-term supply  contracts with many of
    its major customers.  For example,  in December  1993 the  Company signed  a
    six-year  supply agreement with Kmart Corporation ("Kmart") to serve its new
    Super Kmart Centers in areas where the Company has distribution facilities.
 
    MANAGEMENT TEAM.   The  Company is  led by  an experienced  management  team
    comprised  of individuals who  combine many years in  the food marketing and
    distribution industry. See "Management."
 
BUSINESS STRATEGY
 
    The Company's strategy is  to maintain and strengthen  its position in  food
marketing  and  distribution  by: (i)  consolidating  distribution  centers into
larger, more  efficient  centers  and  eliminating functions  that  do  not  add
economic  value;  (ii) maximizing  the  Company's substantial  purchasing power;
(iii) building and  maintaining long-term alliances  with successful  retailers,
including  both traditional and alternative  format operators; (iv) remaining at
the forefront  of  technology-driven  distribution systems;  (v)  continuing  to
capitalize  on the  Company's expertise in  handling private  label products and
perishables; and (vi) focusing on the profitability of Company-owned stores on a
stand-alone basis  and increasing  net  sales of  such stores  through  internal
growth and, in the long term, selective acquisitions.
 
    CONSOLIDATE  DISTRIBUTION CENTERS;  ELIMINATE FUNCTIONS  NOT ADDING ECONOMIC
VALUE.   In January  1994, the  Company's  Board of  Directors approved  a  plan
designed to improve the Company's performance by, among other things, developing
larger,  more productive distribution  centers and by  eliminating functions and
operations that do not  add economic value. Estimated  pre-tax cost savings  are
expected  to grow to at  least $65 million per year  beginning in 1997 after the
plan is fully implemented. Such estimates do not include any incremental savings
which may  be  realized  as  a  result  of  closing  distribution  centers  made
duplicative  by the Acquisition. The plan  calls for reorganizing the management
of operations, consolidating  facilities and reengineering  the way the  Company
conducts  business. See "-- The  Consolidation, Reorganization and Reengineering
Plan."
 
    MAXIMIZE PURCHASING POWER.   The  Company's position as  the largest  single
customer of most of its suppliers provides it with substantial purchasing power.
The  Company will seek to  maximize this purchasing power,  which will result in
lower unit costs, through increased use of centralized procurement and increased
volume.
 
    MAINTAIN LONG-TERM ALLIANCES WITH RETAILERS.   The Company maintains  strong
relationships  with successful retailers and has long-term supply contracts with
many of its major customers.  Recently, mass merchandisers and warehouse  stores
have begun to compete with more traditional forms of retail food stores, gaining
an increasing share of retail food dollars. The Company believes that it is well
positioned  to  serve  these  alternative format  stores  not  only  through its
extensive product offerings and efficient distribution system, but also  through
the various retail services it offers. In December 1993 the Company entered into
a  six-year  supply  agreement  with  Kmart to  serve  new  Super  Kmart Centers
(combination stores  with an  average of  approximately 170,000  square feet  of
which  approximately 60,000 square feet is devoted to food and related products)
in selected areas. By expanding  the Company's network of distribution  centers,
the  Acquisition has increased the number of potential Super Kmart Centers which
the Company could serve. The Company will pursue other similar contracts in  the
future.
 
    REMAIN  AT  THE FOREFRONT  OF TECHNOLOGY-DRIVEN  DISTRIBUTION SYSTEMS.   The
Company believes its success is in part a result of its ability to identify  new
technology  for  application to  food  marketing and  distribution.  The Company
intends to remain at the technological  forefront of its industry. To this  end,
the  Company has been a leader in developing technology related to the Efficient
Consumer  Response  ("ECR")  industry  initiative.  ECR  is  a   consumer-driven
grocery-industry  strategy whereby wholesalers, retailers, and vendors cooperate
to  improve  responsiveness   to  consumer  needs   through  greater   operating
efficiencies  and lower distribution  costs. ECR focuses  on removing costs from
the entire food distribution system  while creating better assortment,  in-stock
service,  convenience and  prices through a  leaner, faster  and more responsive
 
                                       37

supply chain. ECR  will make use  of computer-to-computer trading  relationships
among  wholesalers, retailers and  vendors to enable  automatic replenishment of
inventories. The Company is developing  applications to link its customers,  the
Company  and vendors. The electronic network will better facilitate the movement
of information and products while collecting consumer purchasing data to be used
in marketing and promotion, category management and new product development.
 
    CAPITALIZE ON  EXPERTISE IN  PRIVATE LABEL  PRODUCTS AND  PERISHABLES.   The
Company believes private label products and perishables are in increasing demand
by  many consumers. Additionally, private label products and certain perishables
(such as produce,  frozen foods and  bakery goods) produce  higher margins  than
other retail food categories. The Company expects to capitalize on opportunities
for  broader distribution of expanded product lines as a result of acquiring the
private label products  handled by the  Scrivner Group. The  Company intends  to
further  develop its expertise  in handling, marketing  and distributing private
label products and perishables.
 
    FOCUS ON PROFITABILITY  OF RETAIL  FOOD STORES.   At July  9, 1994,  Fleming
owned  139 retail food stores  and, primarily as the  result of the Acquisition,
the Company owns 345 retail stores as of November 1, 1994. The Company  recently
recruited a senior officer to assume management responsibility for the Company's
retail  operating results. Retail operations previously had been conducted as an
extension of the Company's wholesale  operations, with each store being  managed
by  the distribution center personnel supplying  it. The Company has initiated a
comprehensive evaluation  of  its  retail  operations in  order  to  focus  such
operations on stand-alone profitability. The Company intends to increase the net
sales  of its retail operations  through internal growth and,  in the long term,
selective acquisitions.
 
THE CONSOLIDATION, REORGANIZATION AND REENGINEERING PLAN
 
    Under the leadership  of Robert  E. Stauth,  who was  elected President  and
Chief  Operating Officer in March 1993,  Chief Executive Officer in October 1993
and Chairman in April 1994, Fleming  determined that its performance during  the
past  several  years, along  with  the performance  of  a number  of  its retail
customers, has been  unfavorably affected by  a number of  changes taking  place
within   the  food  marketing  and   distribution  industry,  which  has  become
increasingly competitive in an environment of relatively static over-all demand.
Alternative format food stores (such as warehouse stores and supercenters)  have
gained  retail  food  market share  at  the expense  of  traditional supermarket
operators, including  independent grocers,  many of  whom are  customers of  the
Company.  Vendors, seeking to ensure that  more of their promotional dollars are
used by  retailers to  increase sales  volume, increasingly  direct  promotional
dollars  to  large self-distributing  chains.  The Company  believes  that these
changes have led to  reduced margins and lower  profitability among many of  its
customers  and at the Company itself. See "Investment Considerations -- Response
to  a  Changing  Industry."  Having  identified  these  market  forces,  Fleming
initiated  specific actions to respond to, and help its retail customers respond
to, changes in the marketplace.
 
    In January  1994,  Fleming  announced  the details  of  a  plan  to  improve
operating   performance  by   consolidating  facilities,   eliminating  regional
operations and reengineering the distribution and pricing of goods and services.
The Company believes consolidation, reorganization and reengineering will result
in significant  cost  savings through  lower  product handling  expenses,  lower
selling  and administrative expenses  and reduced staffing  of retailer services
(or increased income from  retailers to offset the  cost of retailer  services).
Estimated  pre-tax cost savings are expected to grow to at least $65 million per
year beginning in 1997  after the plan has  been fully implemented. The  Company
believes these expense savings and income offsets will allow it to deliver goods
and  services to  its customers  at a  lower all-in  cost, while  increasing the
Company's profitability. However, unforeseen events or circumstances could cause
the Company to alter planned work force reductions or facilities consolidations,
thereby delaying or reducing expected cost savings.
 
    CONSOLIDATION.   In order  to improve  operating efficiencies,  the  Company
closed  four distribution centers, with  the closing of one  more facility to be
announced. The  business formerly  conducted through  these closed  distribution
centers  has been  transferred to  certain other  Company facilities.  In the 40
weeks  ended  October  1,  1994,  approximately  700  associate  positions  were
eliminated through facilities consolidation.
 
                                       38

    OPERATIONAL   REORGANIZATION.    Historically,   Fleming's  operations  were
organized around geographical divisions each  of which functioned as a  separate
business  unit. Each  division contained sales,  merchandising, human resources,
distribution,  procurement,   accounting,  store   development  and   management
information  functions, and  provided services to  a number of  retail stores of
various formats located within a certain geographical area.
 
    As a first  step in  its organizational realignment,  Fleming determined  to
close  its regional administrative offices, the last being closed in April 1994.
This resulted in the elimination of approximately 100 associate positions. Staff
functions previously performed at the  regional offices were moved to  corporate
headquarters, moved into the divisions or eliminated.
 
    REENGINEERING.   Fleming commissioned  an internal management  task force to
reengineer Fleming's business  processes at  both the  divisional and  corporate
level.  The task force  made specific reengineering  recommendations, which were
approved by Fleming's Board of Directors, to enhance value-added services and to
eliminate non-value-added services.
 
    The Company is  reorganizing itself around  five key value-added  functions:
Customer  Management, Retailer Services, Category Marketing, Product Supply, and
Support Services. Customer Management, Retailer Services, and Category Marketing
represent the marketing functions of the Company. Product Supply represents  the
procurement and distribution functions of the Company.
 
    Through  Customer Management, the Company will manage its relationships with
customers primarily on the  basis of customer  type instead of  on the basis  of
geography.  This will  enable the  Company to be  more effective  in serving its
diverse customer  base.  Through  Retailer  Services,  the  Company  will  offer
retailers  the  same support  services it  currently  offers, except  that these
services will be offered on a fee basis to those retailers choosing to  purchase
such  services. In the past, Fleming has offered many support services without a
direct charge  but  has indirectly  charged  all customers  for  such  services.
Through  Category  Marketing,  the  Company  will  more  efficiently  manage its
relationships with vendors, manufacturers and other suppliers, working to obtain
the best  possible  promotional benefits  offered  by suppliers  and  will  pass
through  directly to retailers 100% of those benefits related to grocery, frozen
foods and dairy products. Through Product Supply, which will be comprised of all
food distribution  centers and  operations,  the Company  will work  to  provide
retailers  with the lowest possible  "landed" cost of goods  (I.E., the total of
cost of product and  all related charges plus  the Company's distribution  fee).
Through  Support  Services,  various  functions --  such  as  Finance, Associate
Support, and  Corporate/Business  Development  --  will  provide  a  variety  of
administrative  support  services  more  efficiently  to  all  of  the Company's
operations.
 
    A new flexible sales plan for grocery, frozen foods and dairy products  will
be based on a new pricing policy whereby retailers will pay the Company's actual
cost  of acquiring goods, receiving 100%  of available promotional benefits from
the vendor arranged by the Company, including those derived from forward buying.
Customers will pay all costs incurred  by the Company for transportation  (which
currently  are  often subsidized  by  the Company).  Instead  of paying  a basic
distribution fee, customers will pay handling and storage charges, which will be
higher than the prior distribution fee. Additionally, retail customers will  pay
for  all other  retailer services purchased.  The Company  believes its flexible
sales plan will result in  increased promotional benefits being offered  through
the Company which will attract new business due to lower landed cost of goods to
the retailer.
 
    Based  on customer feedback, the Company believes its customers will support
the new pricing policy  and the unbundling of  retailer services and that  these
changes will add value to customers primarily through cost savings to be derived
through  the Company's more  efficient organization. The  Company estimates that
the reengineering process will be completed by the end of 1996. Certain  aspects
of reengineering are currently being tested with implementation to take place at
the  Company's  operations in  the western  and midwestern  parts of  the United
States based on a scheduled roll-out over the course of 1995. Reengineering will
be implemented at the Company's operations in the eastern and southern parts  of
the United States over the course of 1996.
 
                                       39

PRODUCTS
 
    The  Company  supplies its  customers  with a  full  line of  national brand
products as well as  an extensive range of  private label, including  controlled
label,  products, perishables  and non-food  items. Controlled  labels are those
which the Company  controls and private  labels are those  which may be  offered
only  in stores operating under specific banners,  which may or may not be under
the Company's control. Among  the controlled labels offered  by the Company  are
TV-R-,  Hyde Park-R-, Marquee-R-, Bonnie  Hubbard-R-, Montco-R-, Best Yet-R- and
Rainbow-R-. Among the private labels handled  by the Company are IGA-R-,  Piggly
Wiggly-R-, and Sentry-R-. Controlled label and private label products offer both
the  wholesaler and the retailer opportunities for  high margins as the costs of
national advertising campaigns can be  eliminated. The controlled label  program
is  augmented with marketing  and promotional support  programs developed by the
Company.
 
    Certain categories of  perishables also  offer both the  wholesaler and  the
retailer  significant  opportunities  for  improved  margins  as  consumers  are
generally willing to pay relatively higher  prices for produce and bakery  goods
and high quality frozen foods. Furthermore, retailers are increasingly competing
for business through an emphasis on perishables and private label products.
 
    The  Company's PRO FORMA product  mix as a percentage  of 1993 net sales was
53% groceries, 41% perishables and 6% general merchandise.
 
SERVICES TO CUSTOMERS
 
    The Company offers value-added services  to its retailer customers,  thereby
differentiating  itself from  most of  its competitors.  These services include,
among others,  merchandising  and marketing  assistance,  in-house  advertising,
consumer  education programs, retail electronic  services and employee training.
See also "-- Capital Invested in Customers."
 
    In addition, the Company  provides its retail  customers with assistance  in
the  development and expansion of retail stores, including retail site selection
and market surveys; store  design, layout, and  decor assistance; and  equipment
and  fixture  planning.  The  Company also  has  expertise  in  developing sales
promotions,  including  employee  and  customer  incentive  programs,  such   as
"continuity programs" designed to entice the customer to return regularly to the
store.
 
SALE TERMS
 
    The  Company currently charges customers for  products based generally on an
agreed price which includes  the Company's defined "cost"  (which does not  give
effect to promotional fees and allowances from vendors), to which is added a fee
determined  by the volume of the  customer's purchase. In some geographic areas,
product charges are based upon a percentage markup over cost. A delivery  charge
is usually added based on order size and mileage from the distribution center to
the  customer's store. Payment  may be received  upon delivery of  the order, or
within credit terms that generally are weekly or semi-weekly.
 
    As part of the reengineering process,  the Company will begin to charge  the
actual  costs of  acquiring its  grocery, frozen  food and  dairy products while
passing through to its  customers all promotional  fees and allowances  received
from  vendors. In addition, the  Company will charge customers  for the costs of
transportation and will charge for handling  and storage, which charges will  be
higher  than the  previous basic distribution  fee. The Company  will also begin
charging  retailers  directly  for  services   for  which  they  formerly   paid
indirectly. As a result, the Company believes it will lower the cost of products
to  most of its customers while  increasing the Company's profitability. See "--
The Consolidation, Reorganization and Reengineering Plan."
 
DISTRIBUTION
 
    The  Company  currently  operates  49  distribution  centers,  including  39
full-service   food  distribution   centers  which   are  responsible   for  the
distribution of  national brand  and private  label groceries,  meat, dairy  and
delicatessen  products, frozen  foods, produce,  bakery goods  and a  variety of
related food and non-food items. Seven general merchandise distribution  centers
distribute   health  and  beauty  care  items  and  other  non-food  items.  Two
distribution centers  serve  convenience  stores  and  one  distribution  center
handles  only  dairy, delicatessen  and fresh  meat products.  Substantially all
facilities are equipped with modern material
 
                                       40

handling equipment  for  receiving, storing  and  shipping large  quantities  of
merchandise.  The Company believes that the technology currently in place at its
distribution facilities  offers a  competitive  advantage. As  a result  of  the
Acquisition,  the Company has  closed three distribution  centers, has announced
plans to close two distribution centers (Buffalo, New York and Blooming Prairie,
Minnesota), and  expects  to  close an  additional  five  distribution  centers.
Pursuant  to  the  consolidation,  reorganization  and  reengineering  plan, the
Company has  closed four  distribution  centers and  will close  one  additional
distribution center.
 
    The  Company's distribution facilities comprise  more than 20 million square
feet of warehouse space. Additionally, the Company rents, on a short-term basis,
approximately seven million square feet of off-site temporary storage space.
 
    Most distribution divisions  operate a  truck fleet to  deliver products  to
customers.  The  Company  increases  the  utilization  of  its  truck  fleet  by
backhauling products from many suppliers,  thereby reducing the number of  empty
miles  traveled. To further increase its fleet utilization, the Company has made
its truck fleet available to other firms on a for-hire carriage basis.
 
RETAIL STORES SERVED
 
    The Company serves approximately 10,000  retail stores ranging in size  from
small convenience outlets to conventional supermarkets, combination units, price
impact  stores and large supercenters. Among the stores served are approximately
3,700 supermarkets with an  aggregate of approximately  97 million square  feet.
Fleming's  customers are geographically  diverse, with operations  in 43 states.
The Company's principal customers  are supermarkets carrying  a wide variety  of
grocery,  meat, produce,  frozen food  and dairy  products. Most  customers also
handle an  assortment  of  non-food  items, including  health  and  beauty  care
products  and general merchandise such as housewares, soft goods and stationery.
Most supermarkets  also  operate  one  or more  specialty  departments  such  as
in-store bakeries, delicatessens, seafood departments and floral departments.
 
    The  Company  believes  that its  focus  on quality  service,  broad product
offerings, competitive prices  and value-added services  enables the Company  to
maintain  long-term customer  relationships while attracting  new customers. The
Company has  successfully targeted  self-distributing  chains and  operators  of
alternative format stores as sources of incremental sales. These operations have
gained  increasing market share in the retail food industry in recent years. The
Company currently serves over  1,000 chain stores, compared  to 810 at  year-end
1993. In December 1993, Fleming signed a six-year supply agreement with Kmart to
serve   new  Super  Kmart  Centers  in  areas  where  Fleming  has  distribution
facilities. The Company currently supplies 37 Super Kmart Centers and the  total
number  of Super Kmart Centers supplied is expected to increase to approximately
60 by year-end 1995.
 
    The Company also licenses or grants  franchises to retailers to use  certain
trade  names such as IGA-R-, Piggly Wiggly-R-,  Food 4 Less-R-, Big Star-R-, Big
T-R-,  Buy-for-Less-R-,  Checkers-R-,   Festival  Foods-R-,  Jubilee   Foods-R-,
Jamboree  Foods-R-, MEGA MARKET-R-, Minimax-R-, Sentry-TM-, Shop 'n Bag-R-, Shop
'n Kart-R-,  Super 1  Foods-R-, Super  Save-R-, Super  Thrift-R-,  Thriftway-R-,
United  Supers-R-, and Value King-R-. There  are approximately 1,700 food stores
operating under Company franchises or licenses.
 
    The Company believes  that its ten  largest customers on  a PRO FORMA  basis
accounted  for  approximately  16% of  net  sales  during 1993,  with  no single
customer representing more than 3.5% of net sales.
 
COMPANY-OWNED STORES
 
    Principally as  a result  of the  Acquisition, the  number of  Company-owned
stores  increased from 139 at July 9, 1994 to 345 at November 1, 1994, including
283 supermarkets with an aggregate of approximately 9.5 million square feet. The
Company-owned stores  are  located  in 14  states  and  are all  served  by  the
Company's  distribution centers.  Formats vary  from super  warehouse stores and
conventional supermarkets to convenience stores.  Generally in the industry,  an
average  super warehouse store is 58,000 square feet, a conventional supermarket
is 23,000 square feet and a convenience store is 2,500 square feet. All Company-
owned supermarkets are designed and equipped to offer a broad selection of  both
national  brands as  well as private  label products at  attractive prices while
maintaining   high    levels    of    service.    Most    supermarket    formats
 
                                       41

have   one  or  more  specialty  departments  such  as  bakeries,  full  service
delicatessens, extensive  produce  departments  and complete  seafood  and  meat
departments.  Specialty departments  generally produce higher  gross margins per
selling square foot than general grocery sections.
 
    The Company-owned stores provide added  purchasing power as they enable  the
Company  to  commit to  certain  promotional efforts  at  the retail  level. The
Company, through its  owned stores, is  able to retain  many of the  promotional
savings offered by vendors in exchange for volume increases.
 
    Until  recently, the Company conducted its retail operations primarily as an
extension of its wholesale business. Each Company-owned retail store was managed
by personnel at the distribution center  serving such store and did not  benefit
from   any  coordinated  retail  strategy.   The  Company  emphasized  wholesale
operations, and many of its retail stores, while making a positive  contribution
to  overall Company profitability  through increased wholesale  volume, were not
profitable on a stand-alone basis.
 
    In  1993,  the   Company  determined   that  its   retail  operations   were
underperforming  and  that, as  a  part of  its  overall business  strategy, the
Company would  aggressively  pursue  stand-alone  profitability  in  its  retail
operations.  The Company recruited a senior officer to assume responsibility for
retail operating  results for  all  Company-owned stores  and  to focus  on  the
development of successful retail strategies. See "Management."
 
    The Company has developed a comprehensive plan to evaluate the retail stores
in each of its markets in order to improve profitability on a stand-alone basis.
The  analysis includes evaluation of the management team, the local marketplace,
reporting systems and technology and results in a defined action plan which  may
include  changes  in management,  renovation,  reduction in  overhead  and store
closures. The  Company has  begun  to implement  its  plan in  several  markets,
including  Florida, where  management anticipates  improved results  from its 21
stores in 1995.
 
    The Company intends to increase net sales derived from Company-owned  stores
through  the implementation of the retail  plan described above, internal growth
and, in the long term, selective acquisitions of retail chains in niche markets.
See "-- Business Strategy."
 
TECHNOLOGY
 
    Fleming has  played a  leading  role in  employing technology  for  internal
operations  as well  as for  its independent  retail customers.  The Company may
enter into agreements  with one  or more  technology partners  to maintain  this
position. See "-- Business Strategy."
 
    Over  the past three years, Fleming has introduced radio-frequency terminals
in its distribution centers to track inventory, further improve customer service
levels,  reduce   out-of-stock   conditions   and   obtain   other   operational
improvements.  Most  Fleming distribution  centers  are managed  by computerized
inventory control  systems, along  with  warehouse productivity  monitoring  and
scheduling  systems.  Fleming intends  to add  these  technological aids  to the
Scrivner Group distribution system.  Most of Fleming's  truck fleet is  equipped
with  on-board  computers  to  monitor  the  efficiency  of  deliveries  to  its
customers.
 
    Fleming's Retail  Technology  Group  provides value-added  services  to  its
retailers  including  point-of-sale  scanning  systems  (including  hardware and
software, on  both  a  sale  and  lease  basis),  in-store  personal  computers,
electronic   shopping  programs,  electronic  order   entry  and  many  specific
applications designed for  independent supermarket operators.  In addition,  the
Company  has  been  a  leader  in  developing  technology  related  to  the  ECR
initiative. The Company's role in the continued development of ECR will  further
strengthen its relationship with retail customers and vendors.
 
SUPPLIERS
 
    The  Company  purchases  goods from  numerous  vendors and  growers.  As the
largest single customer of most of its suppliers, the Company is able to  secure
favorable  terms and volume discounts on most of its purchases, leading to lower
unit costs. The Company purchases products from a diverse group of suppliers and
believes it has adequate and alternative sources of supply for substantially all
of its products.
 
                                       42

CAPITAL INVESTED IN CUSTOMERS
 
    As part  of its  services  to retailers,  the  Company provides  capital  to
customers  in  several ways,  although  the Company  has  decided to  reduce its
financial exposure to such customers  by more selectively allocating capital  in
the  future. In  making credit and  investment decisions,  the Company considers
many factors, including estimated return on capital, risk and the benefits to be
derived from sustained or increased product sales. Any equity investment or loan
of $250,000  or more  must be  approved by  the Company's  business  development
committee and any investment or loan in excess of $5 million must be approved by
the  Board  of  Directors.  For  equity  investments,  the  Company  has  active
representation on the customer's board  of directors. The Company also  conducts
periodic  credit reviews, receives and  analyzes customers' financial statements
and  visits  customers'  locations  regularly.  On  an  ongoing  basis,   senior
management reviews the Company's largest investments and credit exposures.
 
    The  Company provides capital to certain  customers by becoming primarily or
secondarily  liable  for  store  leases,  by  extending  credit  for   inventory
purchases,  and by  guaranteeing loans  and making  secured loans  to and equity
investments in customers.
 
    STORE LEASES.  The Company leases stores for sublease to certain  customers.
Sublease rentals are generally higher than the base rental to the Company. As of
November  1, 1994,  the Company  was the  primary lessee  of approximately 1,100
retail store  locations  subleased to  and  operated by  customers.  In  certain
circumstances,  the  Company also  guarantees the  lease obligations  of certain
customers.
 
    EXTENSION OF  CREDIT  FOR  INVENTORY  PURCHASES.   The  Company  has  supply
agreements  with customers in which it invests and, in connection with supplying
such customers,  will, in  certain circumstances,  extend credit  for  inventory
purchases.  Customary trade credits terms are up  to seven days; the Company has
extended credit for additional periods under certain circumstances.
 
    GUARANTEES AND SECURED  LOANS.   The Company guarantees  the obligations  of
certain  of its customers. Loans are also  made to customers primarily for store
expansions or improvements. These loans  are typically secured by inventory  and
store  fixtures, bear interest at rates at or  above the prime rate, and are for
terms of up to ten years. During  fiscal year 1993, 1992 and 1991 Fleming  sold,
with  limited recourse, $68 million, $45  million and $82 million, respectively,
of notes evidencing  such loans. During  fiscal years 1993,  1992 and 1991,  the
Scrivner  Group sold,  with limited recourse,  $51 million, $40  million and $35
million, respectively, of notes evidencing  similar loans. The Company  believes
its  loans to customers are illiquid and would not be investment grade if rated.
At October 1, 1994, the Company had outstanding $415 million of notes receivable
from customers, of which $31.2  million were greater than  90 days past due.  At
that date, the Company had reserves covering 67% of such past due amount.
 
    EQUITY  INVESTMENTS.  The  Company has made  equity investments in strategic
multi-store customers, which it refers to as Business Development Ventures,  and
in  smaller operators, referred  to as Equity  Stores. Equity Store participants
typically retain the right to purchase  the Company's investment over a five  to
ten  year period.  Many of the  customers in  which the Company  has made equity
investments  are  highly  leveraged,  and   the  Company  believes  its   equity
investments are highly illiquid.
 
                                       43

    The  following table  sets forth  the components  of Fleming's  portfolio of
loans to and investments in customers at year end 1993 and 1992.
 


                                                   CUSTOMERS WITH EQUITY INVESTMENTS
                                               -----------------------------------------
                                                                                            CUSTOMERS
                                                BUSINESS                                     WITH NO
                                               DEVELOPMENT   EQUITY     OTHER      SUB       EQUITY
                                                VENTURES     STORES   STORES(A)   TOTAL    INVESTMENTS   TOTAL
                                               -----------   ------   ---------   ------   -----------   -----
                                                                    (DOLLARS IN MILLIONS)
                                                                                       
1993
  Loans(b)...................................     $ 78        $55        $ 2       $135       $178       $ 313
  Equity Investments.........................       28         15         12         55         --          55
                                                 -----       ------      ---      ------     -----       -----
    Total....................................     $106        $70        $14       $190       $178       $ 368
                                                 -----       ------      ---      ------     -----       -----
                                                 -----       ------      ---      ------     -----       -----
1992
  Loans(b)...................................     $114        $49        $--       $163       $193       $ 356
  Equity Investments.........................       18         18         10         46         --          46
                                                 -----       ------      ---      ------     -----       -----
    Total....................................     $132        $67        $10       $209       $193       $ 402
                                                 -----       ------      ---      ------     -----       -----
                                                 -----       ------      ---      ------     -----       -----

- ------------------------
(a)  Other stores are Company-owned stores pending sale.
(b)  Includes  current  portion  of  loans,   which  amounts  are  recorded   as
     receivables on the Company's balance sheet.

 
    The  table  does  not  include  the  Scrivner  Group's  loans  to  or equity
investments in  customers  or the  Company's  investments in  customers  through
direct  financing leases, lease guarantees, operating leases, loan guarantees or
credit extensions  for  inventory  purchases.  As  of  December  25,  1993,  the
Company's  undiscounted  obligations  under direct  financing  leases  and lease
guarantees were $424 million  and $335 million, respectively.  As of October  1,
1994, total loans to and equity investments in customers was $507 million.
 
    The  Company has shifted its strategy to emphasize ownership of, rather than
investment in, retail stores. In  addition, the Company intends to  de-emphasize
credit  extensions to its customers and to  reduce future credit loss expense by
raising  the  Company's  financial  standards  for  credit  extensions  and   by
conducting  post-financing reviews more frequently  and in more depth. Fleming's
credit loss expense, including from receivables  as well as from investments  in
customers,  was  $49 million  in  the 40  weeks ended  October  1, 1994  and $52
million, $28 million and $17 million in 1993, 1992 and 1991, respectively.
 
    Prior to the Acquisition, the  Scrivner Group provided capital to  customers
in  similar ways.  At June  30, 1994, the  Scrivner Group's  portfolio of credit
extensions to customers (excluding prime  lease obligations) consisted of  loans
aggregating $72 million, obligations under direct financing leases of $2 million
and equity investments of $418,000. The Scrivner Group's credit loss expense was
approximately  $8 million,  $6 million  and $8 million  in 1993,  1992 and 1991,
respectively.
 
COMPETITION
 
    Competition in the food marketing and distribution industry is intense.  The
Company's  primary  competitors  are  national  chains  who  perform  their  own
distribution (such  as The  Kroger  Co. and  Albertson's, Inc.),  national  food
distributors  (such as SUPERVALU Inc.) and regional and local food distributors.
The principal competitive factors include product price, quality and  assortment
of  product  lines, schedules  and reliability  of delivery,  and the  range and
quality of customer services. The sales volume of wholesale food distributors is
dependent on the level of sales achieved  by the retail food stores they  serve.
Retail  stores served by the  Company compete with other  retail food outlets in
their geographic areas on  the basis of product  price, quality and  assortment,
store  location  and  format,  sales  promotions,  advertising,  availability of
parking, hours of operation and store  appeal. The Company believes it  compares
favorably  with its competition by virtue of its purchasing power, which results
in more  favorable  pricing  for retail  customers,  efficient,  technologically
advanced distribution centers and value-added services to customers.
 
    The  primary competitors of the  Company-owned stores are national, regional
and local chains, as  well as independent  supermarkets and convenience  stores.
The principal competitive factors include product price, quality and assortment,
store  location  and  format,  sales  promotions,  advertising,  availability of
 
                                       44

parking,  hours  of  operation  and  store  appeal.  The  Company  believes  its
competitive  advantages  are  its  competitive  prices,  varied  store  formats,
complete specialty food departments and broad variety of both private label  and
national brand food and non-food items.
 
EMPLOYEES
 
    Upon  consummation of the Acquisition,  the Company had approximately 43,000
full time and part-time associates. Almost half of the Company's associates  are
covered  by collective bargaining agreements  with the International Brotherhood
of Teamsters, Chauffeurs, Warehousemen and  Helpers of America, the United  Food
and  Commercial  Workers,  the International  Longshoremen's  and Warehousemen's
Union and the Retail  Warehouse and Department Store  Union. The Company has  95
such  agreements which expire  at various times throughout  the next five years.
The Company  believes it  has satisfactory  relationships with  its unions.  The
Company's  work force is expected to decrease  by 1,500 associates by the end of
1996. See  "-- The  Consolidation, Reorganization  and Reengineering  Plan."  In
addition,  the  Company expects  to further  reduce  associate positions  due to
facilities consolidations  resulting from  the Acquisition  and the  effects  of
applying its reengineering plan to the Scrivner Group's operations.
 
CERTAIN LEGAL PROCEEDINGS
 
    A  Company subsidiary has been named as a defendant in the following related
cases:
 
    TROPIN V.  THENEN,  ET  AL.,  CASE  NO.  93-2502-CIV-MORENO,  UNITED  STATES
    DISTRICT  COURT, SOUTHERN DISTRICT OF  FLORIDA; and WALCO INVESTMENTS, INC.,
    ET AL.  V.  THENEN,  ET  AL., CASE  NO.  93-2534-CIV-MORENO,  UNITED  STATES
    DISTRICT COURT, SOUTHERN DISTRICT OF FLORIDA.
 
    These  cases were filed in the United States District Court for the Southern
District of Florida on December 21,  1993. Both cases name numerous  defendants,
including,  in one  case, four former  employees of subsidiaries  of the Company
and, in the  other, two former  employees of  a subsidiary of  the Company.  The
cases contain similar factual allegations and the plaintiffs allege, among other
things,  that  the former  employees  participated in  fraudulent  activities by
taking money  for  confirming  "diverting" transactions  (a  practice  involving
arbitraging  in food and other goods to profit from price differentials given by
manufacturers to different retailers and wholesalers) which had not occurred and
that, in  so  doing,  the former  employees  acted  within the  scope  of  their
employment.  Plaintiffs also allege  that the subsidiary allowed  its name to be
used in furtherance of the alleged fraud.
 
    The allegations include,  among other  causes of action,  common law  fraud,
breach  of contract, negligence,  conversion and civil  theft, and violations of
the federal Racketeer  Influenced and Corrupt  Organizations Act and  comparable
state  law.  Plaintiffs seek  damages, treble  damages, attorneys'  fees, costs,
expenses and other appropriate relief. While the amount of damages sought  under
most  claims is  not specified, plaintiffs  allege that hundreds  of millions of
dollars were lost as the result  of the allegations contained in the  complaint.
The  Company denies the allegations of the complaints and will vigorously defend
the actions.  The litigation  is in  its preliminary  stages, and  the  ultimate
outcome  cannot be determined.  Furthermore, the Company is  unable to predict a
potential range  of monetary  exposure to  the Company.  Based on  the  recovery
sought,  an unfavorable  judgment could  have a  material adverse  effect on the
Company.
 
    The Company has been designated by the U.S. Environmental Protection  Agency
as  a  potentially  responsible  party  under  the  Comprehensive  Environmental
Response, Compensation and Liability Act ("CERCLA," also known as  "Superfund"),
with  others, with  respect to  EPA-designated Superfund  sites. While liability
under CERCLA for  remediation at such  sites is joint  and several, the  Company
believes  that, to the extent it is ultimately determined to be liable for clean
up at any such site, such liability will not result in a material adverse effect
on its consolidated financial position or results of operations.
 
    The Company is a party to various other litigation, possible tax assessments
and other matters,  some of which  are for substantial  amounts, arising in  the
ordinary course of business. While the ultimate effect of such actions cannot be
predicted  with certainty, the Company expects that the outcome of these matters
will not  result in  a material  adverse effect  on its  consolidated  financial
position or results of operations.
 
                                       45

                                   MANAGEMENT
 
    The  following are  the members of  the Company's  management committee. The
management committee is comprised of executive  officers of the Company and  has
oversight over the operations of the Company.
 
    ROBERT  E. STAUTH -- Mr. Stauth has  served as President and Chief Operating
Officer of the Company since April  1993, and was named Chief Executive  Officer
in October 1993 and Chairman in April 1994. Mr. Stauth has been with the Company
more  than 20 years. Prior to being named President and Chief Operating Officer,
Mr. Stauth  was named  Senior Vice  President --  Western Region  in 1991,  with
responsibility  for the Company's  eight West Coast operations.  In 1992, he was
appointed Executive Vice President  -- Division Operations, with  responsibility
for  Fleming's operations  in the  Western, Southern,  Mid-America and Mid-South
regions. From  1987 to  1991, Mr.  Stauth served  as Vice  President --  Arizona
operations.
 
    GERALD  G.  AUSTIN --  Mr. Austin  was elected  Executive Vice  President --
Operations in  October  1993,  after  serving  three  years  as  Executive  Vice
President  -- Marketing. Mr.  Austin is responsible  for the Company's wholesale
food divisions, marketing  and general merchandise  activities, retail  concepts
and store development and planning. Mr. Austin is supervising the implementation
of  the  Company's  reengineering program,  having  served  as a  member  of the
steering committee that created  the plan. Mr. Austin  has been an associate  of
Fleming for 35 years.
 
    E. STEPHEN DAVIS -- Mr. Davis serves as Executive Vice President -- Scrivner
Group.  In addition, Mr. Davis is responsible for integrating the Scrivner Group
into Fleming. Mr.  Davis is  overseeing executives  responsible for  operations,
finance,  human resources, marketing  and management information  systems at the
Scrivner Group.  Mr. Davis  has directed  the Company's  corporate  distribution
function  for the  past 14 years,  most of  them as Executive  Vice President --
Distribution. Mr. Davis  has held numerous  positions during his  34 years as  a
Fleming associate.
 
    HARRY  L.  WINN,  JR. --  Mr.  Winn  joined the  Company  as  Executive Vice
President --  Chief  Financial  Officer  in  May  1994.  Mr.  Winn  has  overall
responsibility  for accounting, legal,  management information systems, retailer
credit, capital management, tax, audit and planning. He came to the Company from
UtiliCorp United in  Kansas City, where  he had served  as managing senior  vice
president  and chief financial  officer from 1990  to 1993. UtiliCorp  is a NYSE
energy company with revenues  of $1.3 billion whose  operations include gas  and
electric  utilities  in eight  states, Canada  and  New Zealand  and unregulated
natural gas  and oil  operations  in the  U.S. and  the  U.K. Prior  to  joining
UtiliCorp,  Mr. Winn was an  independent consultant from 1988  to 1990. Prior to
that he held the roles of vice president -- controller of Squibb United  States,
vice  president -- treasurer of Squibb  Corporation, vice president -- treasurer
of Baxter International,  treasurer of  American Hospital  Supply and  assistant
vice president of American National Bank.
 
    DARRELD  R. EASTER -- Mr. Easter serves the Company as Senior Vice President
- -- Marketing.  Mr. Easter  is also  responsible for  Fleming's entire  marketing
function,  which  encompasses  the  merchandising and  procurement  of  all food
product lines, including groceries, meat,  dairy, produce, frozen foods,  bakery
goods and private label products, as well as marketing services, sales promotion
and  consumer services. Prior to  election to his current  post in October 1993,
Mr. Easter served three years as Senior Vice President -- Produce, Meat,  Bakery
and  Deli. Mr. Easter joined Fleming in  1985 as Director -- Produce Procurement
after spending 25 years with a leading retail food chain based in Kansas.
 
    WILLIAM M. LAWSON, JR.  -- Mr. Lawson was  elected Senior Vice President  --
Corporate  Development/ International Operations effective August 1, 1994. He is
responsible for identifying  business ventures that  offer growth  opportunities
for  the  Company  such  as  acquisitions,  divestitures,  joint  ventures (both
domestic and international) and start-up  situations. Prior to joining  Fleming,
Mr. Lawson had practiced law in Phoenix since 1976.
 
    LARRY A. WAGNER -- Mr. Wagner is Senior Vice President -- Human Resources of
the   Company,  with  responsibility  for  organizational  planning,  management
development and training, benefit programs, salary administration and employment
procedures.  Mr.   Wagner  began   working   for  Fleming   15  years   ago   as
 
                                       46

Manager of Human Resources for the Houston division. In 1979, he was promoted to
Regional Director of Human Resources. He was promoted to Vice President -- Human
Resources in January 1989, and to his present position in February 1991.
 
    The  following officers  of the  Company have  oversight over  the Company's
general merchandise and  retail operations  at the direction  of the  management
committee:
 
    RONALD  C. ANDERSON  -- Mr. Anderson  was elected Vice  President -- General
Merchandise of the Company in June  1993, with responsibility for the  Company's
general  merchandise  operations. Prior  to joining  Fleming  in June  1993, Mr.
Anderson served  as  president of  the  service merchandising  division  of  the
nation's  largest wholesale  distributor of  pharmaceuticals, health  and beauty
care products, specialty foods and  general merchandise. He also has  experience
at  many levels of retail business, with 17 years service at a major supermarket
chain based in Salt Lake City.
 
    THOMAS L. ZARICKI -- Mr. Zaricki was elected Senior Vice President -- Retail
Operations of the Company in October 1993. The Company formed the Fleming Retail
Group to  oversee operations  of  all Company-owned  stores  and has  named  Mr.
Zaricki President -- Fleming Retail Group. Mr. Zaricki joined Fleming in October
1993 with over 30 years experience in supermarket management, having served most
recently as president of a regional supermarket chain headquartered in Phoenix.
 
                                       47

                              THE CREDIT AGREEMENT
 
    The  following  discussion  of  certain  of  the  provisions  of  the Credit
Agreement is not intended to be exhaustive  and is qualified in its entirety  by
the  provisions of the Credit Agreement contained as an Exhibit to the Company's
Current Report on Form 8-K, dated July  19, 1994, which is incorporated in  this
Prospectus by reference.
 
    On  July  19,  1994,  Fleming  executed  the  Credit  Agreement  with Morgan
Guaranty, as Managing  Agent, and  twelve other  domestic and  foreign banks  as
Agents. The Credit Agreement is divided into the following three facilities: (i)
a  $900 million five-year  revolving credit facility ("Tranche  A"), (ii) a $500
million two-year term  loan facility ("Tranche  B"), and (iii)  an $800  million
six-year  amortizing term loan facility ("Tranche C"). At November 1, 1994, $250
million was borrowed under Tranche A, $500 million was borrowed under Tranche  B
and $800 million was borrowed under Tranche C.
 
    GUARANTEES.    The  Company's  obligations under  the  Credit  Agreement are
unconditionally guaranteed, on a joint  and several basis, by substantially  all
direct  and indirect  subsidiaries of the  Company. The Company  is obligated to
maintain guarantees by its subsidiaries such that the assets of the guaranteeing
subsidiaries, together with the assets of the Company, comprise at least 85%  of
the assets of the Company on a consolidated basis.
 
    COLLATERAL.   Borrowings under  the Credit Agreement  (and obligations under
certain Letters of  Credit and under  certain derivative financial  transactions
entered  into to  hedge the Company's  interest rate  exposure thereunder) must,
except as described below, be secured by a perfected pledge of substantially all
of the  inventory  and accounts  receivable  of Fleming  and  its  subsidiaries.
Obligations  under the  Credit Agreement  are also  secured by  a pledge  of the
capital stock of substantially all of the Company's guaranteeing subsidiaries.
 
    The collateral will be released  upon the earlier to  occur of (i) all  debt
under the Credit Agreement being repaid and all commitments thereunder canceled,
(ii)  Fleming's senior unsecured long-term debt  being rated investment grade or
higher by Standard & Poor's Ratings Group,  a division of McGraw Hill, Inc.  and
by  Moody's Investors Service, Inc. or (iii)  upon the affirmative vote of Banks
holding 85% of the obligations under the Credit Agreement.
 
    MANDATORY PREPAYMENTS.   The  net proceeds  of the  Offering, together  with
borrowings  under  Tranche A,  will  be used  to repay  Tranche  B (see  "Use of
Proceeds"). Upon repayment of  Tranche B, 50%  of the net  cash proceeds of  any
asset  sales, 75% of the  net cash proceeds of equity  issuances and 100% of the
net cash proceeds  of any debt  financing will  be applied to  reduce Tranche  C
borrowings. Tranche C amortizes on a quarterly basis, beginning March 31, 1995.
 
    INTEREST  RATE.   Under  the  Credit Agreement,  the  interest rate  for any
Tranche may be  based on  LIBOR, CD  rates or prime  rates, as  selected by  the
Company  from time to time, plus a  borrowing margin. The borrowing margins vary
depending upon the rating of the Company's senior unsecured long-term debt.
 
    INTEREST RATE PROTECTION.  The Credit Agreement stipulates that the  Company
must enter into interest rate protection agreements for at least 50% of the bank
debt  outstanding under Tranche A and Tranche C (less $150 million) until it has
received investment grade credit  ratings for its senior  unsecured debt. As  of
the date of this Prospectus, the Company had fully complied with this provision.
 
    COVENANTS.   The  Credit Agreement  contains customary  covenants associated
with  similar  facilities,  including,  without  limitation:  maintenance  of  a
specified   borrowed  funds  to  net  worth  ratio;  maintenance  of  a  minimum
consolidated net worth; maintenance of a specified fixed charge coverage  ratio;
a  limitation  on restricted  payments  (including dividends  and  Company stock
repurchases); prohibition  of certain  liens; prohibitions  of certain  mergers,
consolidations  and sales of assets; restrictions  on the incurrence of debt and
additional  guarantees;  limitations  on  restricted  payments;  limitations  on
transactions  with  affiliates;  limitations  on  acquisitions  and investments;
limitations on  capital expenditures;  and limitations  on payment  restrictions
affecting  subsidiaries.  The  Company  is  currently  in  compliance  with  all
financial covenants under  the Credit  Agreement. As  of November  1, 1994,  the
restricted payments test would have allowed the
 
                                       48

Company to pay dividends and/or repurchase capital stock in the aggregate amount
of  $17 million for  the balance of 1994.  The borrowed funds  to net worth test
would have allowed the Company to  borrow an additional $547 million. The  fixed
charge  coverage test would have allowed the  Company to incur an additional $33
million of annual interest expense.
 
    EVENTS OF  DEFAULT.    The  Credit Agreement  contains  Events  of  Default,
including,  but not limited to, failure to pay principal or interest, failure to
meet covenants, representations  or warranties  false in  any material  respect,
cross default to other indebtedness of the Company, and a change of control.
 
                           CERTAIN OTHER OBLIGATIONS
 
THE PRIOR INDENTURES
 
    On  March  15,  1986,  the  Company  entered  into  an  Indenture  (the  "86
Indenture") with Morgan Guaranty, as Trustee,  regarding $100 million of 9  1/2%
Debentures  due  2016  (the  "9  1/2%  Debentures").  As  of  the  date  of this
Prospectus, approximately  $7.0 million  in aggregate  principal amount  of  the
9  1/2%  Debentures  were outstanding.  The  terms  of the  Indenture  include a
negative pledge obligating the Company to equally and ratably secure the holders
of the 9 1/2% Debentures in the event the Company secures any debt by placing  a
lien or other encumbrance upon the shares of stock or indebtedness of certain of
its subsidiaries.
 
    On  December  1,  1989,  the  Company entered  into  an  Indenture  (the "89
Indenture") with Morgan Guaranty as Trustee.  Pursuant to the 89 Indenture,  the
Company  issued, from time to time, an  aggregate of $275 million of Medium-Term
Notes in three  series. As of  November 1, 1994,  approximately $189 million  in
aggregate  principal  amount  of  Medium-Term  Notes  were  outstanding.  The 89
Indenture contains a negative  pledge substantially identical  to that found  in
the 86 Indenture.
 
    The  securing of obligations under the Credit Agreement by the pledge of the
stock of the Company's subsidiaries and the pledge of the accounts receivable of
the Company and its subsidiaries  activated the negative pledge covenants  under
both Prior Indentures. Contemporaneously with entering into the Credit Agreement
and securing its obligations thereunder, the Company equally and ratably secured
the  holders of the 9 1/2% Debentures and the Medium-Term Notes by the pledge of
the capital stock  and the inter-company  indebtedness (including  inter-company
accounts receivable) of substantially all of the Company's subsidiaries.
 
    Additionally,  the  first series  of  Medium-Term Notes  ("Series  A Notes")
contain a provision requiring  the Company to offer  to purchase such notes  (at
par plus accrued but unpaid interest) upon the occurrence of certain "repurchase
events."  The consummation of the Acquisition and the resulting downgrade in the
ratings of the  Company's long-term  unsecured indebtedness  represented such  a
repurchase  event. On August 16, 1994, the Company made an offer to purchase the
Series A Notes  in accordance  with the provisions  of the  89 Indenture,  which
offer  terminated on October 21, 1994, with  $33 million of such notes tendered.
The Company financed the purchase by drawing additional amounts under Tranche  A
of  the Credit  Agreement. Neither the  9 1/2%  Debentures nor any  of the other
series of Medium-Term Notes contains a similar provision.
 
SALES OF CERTAIN SECURED LOANS AND DIRECT FINANCING LEASES
 
    From time to time the Company  sells notes evidencing certain secured  loans
made  to retailers. See "Business --  Capital Invested in Customers." Such notes
are typically sold, with limited recourse, directly to financial institutions or
to a grantor  trust, with financial  institutions purchasing trust  certificates
representing an interest in a pool of notes.
 
    The  Company  leases electronic  equipment  to certain  retailers, including
point-of-sale scanning systems  and other computer  equipment, related  software
and  peripherals. Such leases, which  had an aggregate book  value at October 1,
1994 of approximately $20 million, generally  have lease terms of three to  five
years  with  optional  renewal provisions.  The  Company expects  to  sell, with
limited recourse, an interest in a  substantial portion of such leases  directly
or indirectly to financial institutions during 1995.
 
                                       49

                            DESCRIPTION OF THE NOTES
 
    The  Fixed Rate Notes offered hereby will be issued under an indenture to be
dated as  of December  15, 1994  (the "Fixed  Rate Note  Indenture"), among  the
Company,  as issuer, each of the Subsidiary Guarantors, as guarantors, and Texas
Commerce Bank, National  Association, as trustee  (the "Trustee"). The  Floating
Rate  Notes offered hereby will  be issued under an indenture  to be dated as of
December 15, 1994  (the "Floating Rate  Note Indenture" and,  together with  the
Fixed  Rate Note Indenture, the "Senior Note Indentures"), among the Company, as
issuer, each of the  Subsidiary Guarantors, as guarantors,  and the Trustee,  as
trustee.
 
    Copies  of the forms of the Senior  Note Indentures are filed as exhibits to
the Registration Statement of which this  Prospectus is a part. The Senior  Note
Indentures are subject to and governed by the Trust Indenture Act. The following
summaries  of  the material  provisions  of the  Senior  Note Indentures  do not
purport to be complete and are subject  to, and qualified in their entirety  by,
reference  to all of the provisions of the Senior Note Indentures, including the
definitions of certain terms  contained therein and those  terms made a part  of
the  Senior  Note Indentures  by  the Trust  Indenture  Act. For  definitions of
certain capitalized  terms  used  in  the following  summary,  see  "--  Certain
Definitions."
 
    The Fixed Rate Notes and the Floating Rate Notes (collectively, the "Notes")
are identical except as indicated below.
 
GENERAL
 
    Principal  of, premium, if any,  and interest on the  Notes will be payable,
and the Notes will be exchangeable and transferable, at the office or agency  of
the  Company  in  The City  of  New  York maintained  for  such  purposes (which
initially will be the office of  the Trustee maintained at Texas Commerce  Trust
Company  of New  York, 80 Broad  Street, Suite  400, New York,  New York 10004);
PROVIDED, HOWEVER, that payment of  interest may be made,  at the option of  the
Company, by check mailed to the Person entitled thereto as shown on the security
register.  (Sections 301, 305  and 307) The  Notes will be  issued only in fully
registered form  without coupons  in denominations  of $1,000  and any  integral
multiple  thereof.  (Section  302)  No  service  charge  will  be  made  for any
registration of transfer,  exchange or  redemption of Notes,  except in  certain
circumstances  for any tax or  other governmental charge that  may be imposed in
connection therewith. (Section 305)
 
TERMS SPECIFIC TO THE FIXED RATE NOTES
 
MATURITY, INTEREST AND PRINCIPAL
 
    The Fixed Rate Notes will mature on December 15, 2001, and will be unsecured
senior obligations  of the  Company  limited in  aggregate principal  amount  to
$300,000,000.  The Fixed  Rate Notes  will bear interest  at the  rate set forth
opposite their name on the cover page hereof from December 15, 1994 or from  the
most  recent  interest payment  date to  which interest  has been  paid, payable
semi-annually on June 15 and December 15 of each year commencing June 15,  1995,
to  the Person in whose name  the Fixed Rate Note is  registered at the close of
business on the June 1 or December 1 next preceding such interest payment  date.
Interest  will be computed  on the basis  of a 360-day  year comprised of twelve
30-day months. (Sections 301, 307 and 310 of the Fixed Rate Note Indenture)
 
OPTIONAL REDEMPTION
 
    The Fixed Rate Notes may be redeemed at the option of the Company, in  whole
or  in part, at any time on or after December 15, 1999, at the redemption prices
(expressed as percentages of  principal amount) set  forth below, together  with
accrued  and unpaid  interest, if  any, to the  date of  redemption, if redeemed
during the 12-month period beginning on December 15 of the years indicated below
(subject to the right of holders of  record on relevant record dates to  receive
interest due on an interest payment date):
 


                                                                          REDEMPTION
YEAR                                                                         PRICE
- -----------------------------------------------------------------------  -------------
                                                                      
1999...................................................................        103.0%
2000...................................................................        101.5  %

 
                                       50

    In  addition, up  to 20%  of the initial  aggregate principal  amount of the
Fixed Rate Notes may be redeemed on or prior to December 15, 1997, at the option
of the  Company, within  180  days of  a Public  Equity  Offering with  the  net
proceeds  of such offering at a redemption  price equal to 110% of the principal
amount thereof, together with accrued and  unpaid interest, if any, to the  date
of  redemption (subject  to the  right of holders  of record  on relevant record
dates to receive  interest due  on relevant interest  payment dates);  PROVIDED,
that  after giving  effect to  such redemption  at least  $200 million aggregate
principal amount of the Fixed Rate Notes remains outstanding.
 
SINKING FUND
 
    The Fixed Rate  Notes will not  be entitled  to the benefit  of any  sinking
fund.
 
TERMS SPECIFIC TO THE FLOATING RATE NOTES
 
MATURITY, INTEREST AND PRINCIPAL
 
    The  Floating  Rate Notes  will mature  on  December 15,  2001, and  will be
unsecured senior  obligations  of the  Company  limited in  aggregate  principal
amount to $200,000,000. The Floating Rate Notes will bear interest from December
15,  1994 or from  the most recent  interest payment date  to which interest has
been paid at the rate described below.
 
    Interest on the  Floating Rate  Notes will  accrue at  a rate  equal to  the
Applicable LIBOR Rate and will be payable quarterly in arrears on March 15, June
15,  September 15  and December 15  of each year,  or if  any such day  is not a
Business Day, on the next succeeding Business Day, commencing on March 15,  1995
(each  a "Floating  Rate Interest  Payment Date")  to holders  of record  on the
immediately preceding March 1, June 1,  September 1 and December 1. Interest  on
the Floating Rate Notes will be calculated on a formula basis by multiplying the
principal  amount of the Floating Rate  Notes then outstanding by the Applicable
LIBOR Rate, and multiplying such product by the LIBOR Fraction.
 
    "APPLICABLE LIBOR RATE"  means for the Initial Quarterly Period and for each
Quarterly Period during which any Floating  Rate Note is outstanding, 225  basis
points  over the "LIBOR Rate", which shall be the rate determined by the Company
(notice of such rate  to be sent to  the Trustee by the  Company on the date  of
determination  thereof) equal to the average  (rounded upwards, if necessary, to
the nearest 1/16 of 1%) of the offered rates for deposits in U.S. dollars for  a
period of three months, as set forth on the Reuters Screen LIBO Page as of 11:00
a.m., London time, on the applicable Interest Rate Determination Date; PROVIDED,
HOWEVER,  that if only one such offered  rate appears on the Reuters Screen LIBO
Page, the LIBOR Rate will mean such offered rate. If such rate is not  available
at  11:00 a.m., London time, on the applicable Interest Rate Determination Date,
then the  LIBOR  Rate  will  mean  the  arithmetic  mean  (rounded  upwards,  if
necessary,  to the nearest 1/16 of 1%) of  the interest rates per annum at which
deposits in amounts  equal to  $1 million  in U.S.  dollars are  offered by  the
Reference  Banks to leading banks in the London Interbank Market for a period of
three months  as of  11:00 a.m,  London time,  on the  applicable Interest  Rate
Determination  Date. If on any Interest Rate Determination Date, at least two of
the Reference Banks provide such offered quotations, then the LIBOR Rate will be
determined in accordance with the preceding sentence on the basis of the offered
quotations  of  those  Reference  Banks  providing  such  quotations;  PROVIDED,
HOWEVER,  that if  fewer than  two of  the Reference  Banks are  so quoting such
interest rates as mentioned above, the Applicable LIBOR Rate shall be deemed  to
be  the Applicable LIBOR Rate for the next preceding Quarterly Period and in the
case of the Quarterly Period next  succeeding the Initial Quarterly Period,  the
Applicable  LIBOR  Rate  shall be  the  Applicable  LIBOR Rate  for  the Initial
Quarterly Period and in the case of the Initial Quarterly Period, the Applicable
LIBOR Rate shall be 8.625%.
 
    "INTEREST RATE  DETERMINATION DATE"    means, with  respect to  the  Initial
Quarterly  Period, December 13, 1994, and with respect to each Quarterly Period,
the second Working Day prior to the first day of such Quarterly Period.
 
    "LIBOR FRACTION"  means the actual  number of days in the Initial  Quarterly
Period  or Quarterly Period,  as applicable, divided  by 360; PROVIDED, HOWEVER,
that the  number of  days in  the Initial  Quarterly Period  and each  Quarterly
Period  shall be calculated by including the first day of such Initial Quarterly
Period or Quarterly Period and excluding the last.
 
                                       51

    "INITIAL QUARTERLY PERIOD"  means the period from and including December 15,
1994 through and including March 14, 1995.
 
    "QUARTERLY PERIOD"  means the period from and including a scheduled Floating
Rate Interest  Payment  Date  through  the  day  next  preceding  the  following
scheduled Floating Rate Interest Payment Date.
 
    "REFERENCE  BANKS"  means each of Barclays Bank PLC, London Branch, the Bank
of Tokyo,  Ltd.,  London  Branch,  Bankers Trust  Company,  London  Branch,  and
National  Westminster Bank  PLC, London  Branch, and  any such  replacement bank
thereof as  listed  on  the  Reuters  Screen  LIBO  Page  and  their  respective
successors,  and if any of  such banks are not  at the applicable time providing
interest rates as contemplated  within the definition  of the "APPLICABLE  LIBOR
RATE,"  Reference Banks shall mean the remaining bank or banks so providing such
rates. In the event that fewer than two of such banks are providing such  rates,
the  Company shall use reasonable efforts  to appoint additional Reference Banks
so that  there are  at least  two  such banks  providing such  rates;  PROVIDED,
HOWEVER,  that such banks  appointed by the  Company shall be  London offices of
leading banks  engaged  in the  Eurodollar  market  (the market  in  which  U.S.
currency,  which is deposited by corporations  and national governments in banks
outside the United States, is used for settling international transactions).
 
    "REUTERS SCREEN LIBO PAGE"  means  the display designated as page "LIBO"  on
the  Reuter Monitor Money Rates  Service (or such other  page as may replace the
LIBO page on that service for the purpose of displaying London Interbank Offered
Rates of leading banks).
 
    "WORKING DAY"  means  any day which is  not a Saturday, Sunday  or a day  on
which  banking  institutions  in  New  York, New  York  or  London,  England are
authorized or obligated by law or executive order to close.
 
OPTIONAL REDEMPTION
 
    The Floating Rate Notes will be redeemable at the option of the Company,  in
whole  or  in part,  on  any Floating  Rate Interest  Payment  Date on  or after
December 15, 1995 and  on or prior  to December 14, 1999  at a redemption  price
equal  to  100.5% of  the principal  amount thereof,  together with  accrued and
unpaid interest, if any, to the date of redemption, and after December 14,  1999
at  a redemption price equal  to 100% of the  principal amount thereof, together
with accrued and unpaid interest, if any, to the date of redemption (subject  to
the  right of holders of record on relevant record dates to receive interest due
on an interest payment date).
 
SINKING FUND
 
    The Floating Rate Note Indenture will provide for the redemption on each  of
December  15, 1999  and December  15, 2000,  of $1  million principal  amount of
Floating Rate Notes,  at a  redemption price equal  to 100%  of their  principal
amount, plus accrued interest to the redemption date. (Section 1401)
 
TERMS COMMON TO THE FIXED RATE NOTES AND THE FLOATING RATE NOTES
 
REDEMPTION
 
    CHANGE  OF CONTROL.  As  described below, if a  Change of Control Triggering
Event shall occur at any time, then each holder of Notes shall have the right to
require that the Company purchase such holder's Notes, in whole or in part, at a
purchase price equal to 101% of the principal amount of such Notes plus  accrued
and  unpaid interest, if any, to the date of purchase. See "-- Certain Covenants
- -- PURCHASE OF NOTES UPON A CHANGE OF CONTROL TRIGGERING EVENT." (Section 1101)
 
    SELECTION AND NOTICE.   In the event  that less than all  of the Fixed  Rate
Notes  or Floating  Rate Notes,  respectively, are to  be redeemed  at any time,
selection of the Fixed Rate Notes for redemption will be made by the Trustee  on
a  PRO RATA basis, by lot or by such other method as the Trustee shall deem fair
and appropriate and selection of the Floating Rate Notes for redemption will  be
made  by the Trustee PRO RATA unless prohibited by applicable law, in which case
by such other method as the  Trustee shall deem fair and appropriate;  PROVIDED,
HOWEVER,  that no Note of a principal amount of $1,000 or less shall be redeemed
in part. Notice of redemption  shall be mailed by first  class mail at least  30
but  not more than  60 days before the  redemption date to  each holder of Fixed
Rate Notes or Floating Rate Notes to  be redeemed at its registered address.  If
any  Note is to be redeemed in part  only, the notice of redemption that relates
to such Note shall
 
                                       52

state the portion of the principal amount thereof to be redeemed. A new Note  in
a principal amount equal to the unredeemed portion thereof will be issued in the
name  of the holder thereof upon cancellation  of the original Note. On or after
the redemption date, interest will cease to accrue on Notes or portions  thereof
called  for redemption and accepted for  payment. (Sections 1104, 1105, 1107 and
1108)
 
GUARANTEES
 
    Payment of the  principal of, premium,  if any, and  interest on the  Notes,
when  and as  the same  become due  and payable  (whether at  Stated Maturity or
purchase upon a Change of Control  Triggering Event, and whether by  declaration
of  acceleration, a Change  of Control Triggering Event,  call for redemption or
otherwise), will be guaranteed, jointly and severally, on a senior basis by  the
Subsidiary Guarantors. (Section 1201)
 
RANKING
 
    The  Notes  will be  unsecured senior  obligations of  the Company,  and the
Indebtedness represented by the Notes and the payment of principal of,  premium,
if  any, and interest on the Notes will rank PARI PASSU in right of payment with
all other existing and future Senior Indebtedness and senior in right of payment
to all future Subordinated  Indebtedness of the  Company. The Company  currently
has  no  Subordinated  Indebtedness.  The Notes,  however,  will  be effectively
subordinated to secured Senior Indebtedness of  the Company with respect to  the
assets  securing  such  Indebtedness, including  Indebtedness  under  the Credit
Agreement which is  secured by  the capital stock  of substantially  all of  the
Company's  subsidiaries  and substantially  all  of the  inventory  and accounts
receivable of the Company and its subsidiaries and Indebtedness under the  Prior
Indentures  which is secured by  a portion of such  collateral. As of October 1,
1994, on PRO  FORMA basis after  giving effect to  the Offering and  the use  of
proceeds  therefrom, Senior  Indebtedness of the  Company (including capitalized
leases) would  have been  approximately $2.07  billion, of  which $1.57  billion
would  have been secured  Senior Indebtedness. As  of October 1,  1994, on a PRO
FORMA basis  after  giving  effect to  the  Offering  and the  use  of  proceeds
therefrom,  the total amount of Indebtedness of the Company and its subsidiaries
(including capitalized leases) ranking PARI PASSU with the Notes would have been
approximately $2.07  billion.  See  "Investment  Considerations  --  Restrictive
Covenants; Asset Encumbrances" and "The Credit Agreement."
 
    Each Note Guarantee will be an unsecured senior obligation of the Subsidiary
Guarantor  issuing such Note  Guarantee, ranking PARI PASSU  in right of payment
with all existing and  future Senior Indebtedness  of such Subsidiary  Guarantor
and  senior in  right of  payment to any  future Indebtedness  of the Subsidiary
Guarantors  that  is  expressly  subordinated  to  Senior  Indebtedness  of  the
Subsidiary  Guarantors. (Section 1203) The  Subsidiary Guarantors currently have
no Subordinated  Indebtedness.  Each  Note  Guarantee  issued  by  a  Subsidiary
Guarantor,   however,  will  be  effectively   subordinated  to  secured  Senior
Indebtedness of such  Subsidiary Guarantor with  respect to the  assets of  such
Subsidiary Guarantor securing such Indebtedness, including the guarantee by each
such  Subsidiary  Guarantor  of  the  Company's  Indebtedness  under  the Credit
Agreement and the Prior Senior Note Indentures. As of October 1, 1994, on a  PRO
FORMA  basis  after  giving effect  to  the  Offering and  the  use  of proceeds
therefrom,  Senior  Indebtedness   of  the   Subsidiary  Guarantors   (including
guarantees  with respect  to the  Notes and  the Credit  Agreement but excluding
capitalized leases) would have been approximately $1.51 billion, of which  $1.00
billion would have been secured Senior Indebtedness. As of October 1, 1994, on a
PRO  FORMA basis, after  giving effect to  the Offering and  the use of proceeds
therefrom, the  total  amount  of  Indebtedness  of  the  Subsidiary  Guarantors
(excluding capitalized leases) ranking PARI PASSU with the Notes would have been
approximately $1.51 billion. See "The Credit Agreement."
 
CERTAIN COVENANTS
 
    The  Senior  Note Indentures  will  contain the  following  covenants, among
others:
 
    LIMITATION ON INDEBTEDNESS.  The Company  will not, and will not permit  any
of  its Subsidiaries to, create, assume,  or directly or indirectly guarantee or
in any other manner become directly or indirectly liable for the payment of,  or
otherwise   incur  (collectively,  "incur"),  any  Indebtedness  (including  any
Acquired Indebtedness) other than Permitted Indebtedness, unless, at the time of
such event (and after giving effect on  a PRO FORMA basis to (i) the  incurrence
of   such   Indebtedness;   (ii)  the   incurrence,   repayment   or  retirement
 
                                       53

of any other Indebtedness by the Company or its Subsidiaries since the first day
of such four-quarter  period as  if such  Indebtedness was  incurred, repaid  or
retired  at the beginning of such four-quarter period; and (iii) the acquisition
(whether by  purchase, merger  or otherwise)  or disposition  (whether by  sale,
merger  or otherwise) of any company, entity or business acquired or disposed of
by the Company or its Subsidiaries, as the  case may be, since the first day  of
such  four-quarter period as if such  acquisition or disposition had occurred at
the beginning  of  such  four-quarter period),  the  Consolidated  Fixed  Charge
Coverage  Ratio of  the Company  for the  four full  fiscal quarters immediately
preceding such event, taken as one period and calculated on the assumption  that
such Indebtedness had been incurred on the first day of such four-quarter period
and,  in the case of  Acquired Indebtedness, on the  assumption that the related
acquisition (whether  by  means  of  purchase, merger  or  otherwise)  also  had
occurred  on such  date with  the appropriate  adjustments with  respect to such
acquisition being included  in such PRO  FORMA calculation, would  have been  at
least equal to 1.75 to 1. (Section 1010)
 
    LIMITATION  ON RESTRICTED PAYMENTS.  (a)  The Company will not, and will not
permit any Subsidiary of the Company to, directly or indirectly:
 
        (i) declare or  pay any dividend  on, or make  any distribution to,  the
    holders  of,  any Capital  Stock  of the  Company  (other than  dividends or
    distributions payable solely  in shares  of Qualified Capital  Stock of  the
    Company  or in options, warrants or  other rights to purchase such Qualified
    Capital Stock);
 
        (ii) purchase, redeem or otherwise acquire or retire for value, directly
    or indirectly, any  Capital Stock of  the Company or  any Subsidiary or  any
    options, warrants or other rights to acquire such Capital Stock;
 
       (iii)  make any principal  payment on, or  redeem, repurchase, defease or
    otherwise acquire or  retire for  value, prior to  any scheduled  repayment,
    sinking  fund payment or maturity, any  Indebtedness of the Company which is
    subordinate in right of payment to the Notes or of any Subsidiary  Guarantor
    that is subordinate to such Subsidiary Guarantor's Note Guarantee;
 
        (iv) declare or pay any dividend or distribution on any Capital Stock of
    any  Subsidiary of the Company to any  Person (other than the Company or any
    Wholly Owned Subsidiary  of the  Company) or purchase,  redeem or  otherwise
    acquire  or retire  for value  any Capital  Stock of  any Subsidiary  of the
    Company held  by any  Person (other  than the  Company or  any Wholly  Owned
    Subsidiary of the Company);
 
        (v)  create, assume or suffer to  exist any guarantee of Indebtedness of
    any Affiliate of the  Company (other than a  Wholly Owned Subsidiary of  the
    Company in accordance with the terms of the Indenture); or
 
        (vi)  make any Investment  (other than any  Permitted Investment) in any
    Person
 
(such payments described in clauses (i) through (vi) and not excepted  therefrom
are collectively referred to herein as "Restricted Payments") unless at the time
of  and immediately after giving effect  to the proposed Restricted Payment (the
amount of any such Restricted Payment, if other than cash, as determined by  the
Board  of Directors of the Company,  whose determination shall be conclusive and
evidenced by a Board Resolution), (1) no Default or Event of Default shall  have
occurred  and be continuing and (2) the  Company could incur $1.00 of additional
Indebtedness  (other  than  Permitted  Indebtedness)  in  accordance  with   the
provisions described under "-- Certain Covenants -- LIMITATION ON INDEBTEDNESS."
 
    (b)  Notwithstanding paragraph (a)  above, the Company  and its Subsidiaries
may take the following actions so long as (with respect to clauses (ii),  (iii),
and  (iv), below)  no Default  or Event  of Default  shall have  occurred and be
continuing:
 
        (i) the  payment  of any  dividend  within 60  days  after the  date  of
    declaration  thereof, if at such  declaration date such declaration complied
    with the provisions of paragraph (a) above;
 
        (ii) the purchase,  redemption or  other acquisition  or retirement  for
    value of any shares of Capital Stock of the Company, in exchange for, or out
    of  the net cash  proceeds of, a substantially  concurrent issuance and sale
    (other than  to a  Subsidiary) of  shares of  Capital Stock  of the  Company
    (other  than Redeemable Capital  Stock, unless the  redemption provisions of
    such Redeemable Capital Stock prohibit  the redemption thereof prior to  the
    date on which the Capital Stock to be acquired or retired was, by its terms,
    required to be redeemed);
 
                                       54

       (iii)  the  purchase,  redemption,  defeasance  or  other  acquisition or
    retirement for value of any Subordinated Indebtedness (other than Redeemable
    Capital Stock)  in  exchange for  or  out of  the  net cash  proceeds  of  a
    substantially  concurrent issuance and sale (other  than to a Subsidiary) of
    shares of Capital Stock of the Company (other than Redeemable Capital Stock,
    unless the redemption provisions of  such Redeemable Capital Stock  prohibit
    the  redemption thereof  prior to  the Stated  Maturity of  the Subordinated
    Indebtedness to be acquired or retired); and
 
        (iv) the  purchase,  redemption,  defeasance  or  other  acquisition  or
    retirement  for value  of Subordinated  Indebtedness (other  than Redeemable
    Capital Stock)  in exchange  for,  or out  of the  net  cash proceeds  of  a
    substantially concurrent incurrence or sale (other than to a Subsidiary) of,
    new  Subordinated Indebtedness of  the Company so long  as (A) the principal
    amount of such new Subordinated  Indebtedness does not exceed the  principal
    amount  (or, if such Subordinated Indebtedness being refinanced provides for
    an amount less than the principal amount thereof to be due and payable  upon
    a  declaration of acceleration thereof, such lesser amount as of the date of
    determination)  of  the  Subordinated   Indebtedness  being  so   purchased,
    redeemed,  defeased, acquired  or retired,  PLUS the  amount of  any premium
    required to be  paid in  connection with  such refinancing  pursuant to  the
    terms  of  the Subordinated  Indebtedness refinanced  or  the amount  of any
    premium reasonably determined by the Company as necessary to accomplish such
    refinancing, PLUS  the  amount  of  expenses  of  the  Company  incurred  in
    connection  with such refinancing, (B) such new Subordinated Indebtedness is
    subordinated  to  the  Notes  to  the  same  extent  as  such   Subordinated
    Indebtedness  so purchased, redeemed, defeased,  acquired or retired and (C)
    such new  Subordinated Indebtedness  has  an Average  Life longer  than  the
    Average  Life of the  Notes and a  final Stated Maturity  of principal later
    than the final Stated Maturity of principal of the Notes.
 
    LIMITATION ON  LIENS.    The  Company  will not  and  will  not  permit  any
Subsidiary  of the Company to, directly  or indirectly, create, incur, assume or
suffer to exist  any Lien  (other than  Permitted Liens)  of any  kind upon  any
Principal Property or upon any shares of stock or indebtedness of any Subsidiary
of  the  Company  now  owned or  acquired  after  the date  of  the  Senior Note
Indentures, or  any  income or  profits  therefrom,  unless (a)  the  Notes  are
directly secured equally and ratably with (or prior to in the case of Liens with
respect  to Subordinated  Indebtedness) the  obligation or  liability secured by
such Lien or  (b) any such  Lien is in  favor of the  Company or any  Subsidiary
Guarantor. (Section 1012)
 
    PURCHASE OF NOTES UPON A CHANGE OF CONTROL TRIGGERING EVENT.  If a Change of
Control  Triggering Event  shall occur  at any time,  then each  holder of Notes
shall have the right to require the  Company to purchase such holder's Notes  in
whole  or  in part  in integral  multiples of  $1,000 at  a purchase  price (the
"Change of Control Purchase Price")  in cash in an amount  equal to 101% of  the
principal amount of such Notes, plus accrued and unpaid interest, if any, to the
date  of purchase (the "Change of Control Purchase Date"), pursuant to the offer
described  below  (the  "Change  of  Control  Purchase  Offer")  and  the  other
procedures  set forth in  the Senior Note  Indentures. Reference is  made to "--
Certain Definitions"  for the  definitions of  "Change of  Control," "Change  of
Control  Triggering Event," "Rating Agencies,"  "Rating Decline" and "Investment
Grade." The foregoing rights  are triggered only upon  the occurrence of both  a
Change  of Control  and a  Rating Decline.  A Rating  Decline is  defined as the
occurrence on,  or within  90  days after,  the date  of  public notice  of  the
occurrence  of a Change of Control or of the intention of the Company or Persons
controlling the Company  to effect a  Change of Control  (which period shall  be
extended  so  long  as the  rating  of  the Notes  is  under  publicly announced
consideration for  possible downgrade  by any  of the  Rating Agencies)  of  the
following:  (i) if  the Notes  are rated by  either Rating  Agency as Investment
Grade immediately prior to the beginning of such period, the rating of the Notes
by both Rating Agencies shall  be below Investment Grade;  or (ii) if the  Notes
are  rated below Investment  Grade by both Rating  Agencies immediately prior to
the beginning of such period, the rating  of such Notes by either Rating  Agency
shall  be decreased by one or more gradation (including gradations within Rating
Categories as well as between Rating Categories).
 
    Upon the occurrence of a Change of Control Triggering Event and prior to the
mailing of the notice to Holders provided for in the Senior Note Indentures, the
Company covenants to either (x) repay in full all Indebtedness under the  Credit
Agreement  or offer  to repay  in full  all such  Indebtedness and  to repay the
Indebtedness of each of the Banks that has accepted such offer or (y) obtain any
requisite consent under the Credit Agreement to permit the purchase of the Notes
pursuant to a Change of Control Purchase Offer as
 
                                       55

provided for in the Senior  Note Indentures or take any  other action as may  be
required  under the Credit Agreement to  permit such purchase. The Company shall
first comply with  such covenants before  it shall be  required to purchase  the
Notes pursuant to the Senior Note Indentures. (Section 1009)
 
    Within  30 days following the occurrence of any Change of Control Triggering
Event, the Company  shall notify  the Trustee and  give written  notice of  such
Change of Control Triggering Event to each holder of Notes, by first-class mail,
postage  prepaid, at  the address appearing  in the  security register, stating,
among other things, the Change of Control Purchase Price and that the Change  of
Control  Purchase Date shall be a Business Day no earlier than 30 days nor later
than 60 days  from the  date such notice  is mailed,  or such later  date as  is
necessary  to comply with requirements under the Exchange Act; that any Note not
tendered will continue to accrue interest; that, unless the Company defaults  in
the  payment of  the Change  of Control Purchase  Price, any  Notes accepted for
payment of  the Change  of Control  Purchase  Price pursuant  to the  Change  of
Control  Purchase  Offer shall  cease  to accrue  interest  after the  Change of
Control Purchase Date; and certain other procedures that a holder of Notes  must
follow  to  accept  a Change  of  Control  Purchase Offer  or  to  withdraw such
acceptance.
 
    The Credit Agreement prohibits the  Company from incurring any  Indebtedness
which  grants  to  holders  thereof  the  option  of  requiring  the  Company to
repurchase such  debt  prior  to  the  retirement  of  all  amounts  outstanding
thereunder.  Upon the  occurrence of a  Change of Control  Triggering Event, the
Company is obligated  to retire all  amounts then outstanding  under the  Credit
Agreement  or to  obtain a  waiver of  such prohibition  for the  benefit of the
holders of  the Notes.  Upon such  retirement or  waiver following  a Change  of
Control  Triggering  Event, each  holder of  the  Notes will  have the  right to
require the Company to purchase all of such holder's Notes at a redemption price
equal to 101% of the principal amount thereof, together with accrued and  unpaid
interest,  if any, to the date of purchase. Failure by the Company to retire all
obligations then outstanding under  the Credit Agreement or  to obtain a  waiver
upon  the occurrence of a Change of  Control Triggering Event would constitute a
default by the Company  under the Senior Note  Indentures and would entitle  the
requisite  holders to accelerate  the obligations due  under the Notes (although
without a premium). If a Change of Control Triggering Event occurs, there can be
no assurance that the  Company will have available  funds sufficient to pay  the
Change of Control Purchase Price for all of the Notes that might be delivered by
holders of the Notes seeking to accept the Change of Control Purchase Offer and,
accordingly,  none of the holders of the Notes may receive the Change of Control
Purchase Price for their Notes  in the event of  a Change of Control  Triggering
Event.  Each  of the  Credit  Agreement and  the  Prior Indentures  requires the
Company to repay the Indebtedness under  the Credit Agreement ($1.55 billion  as
of November 1, 1994) and repurchase the outstanding Indebtedness under the Prior
Indentures  ($196 million as of November 1, 1994), respectively, in the event of
a change of control. If a purchase  of the Notes, repayment of the  Indebtedness
under  the Credit Agreement  and purchase of  the outstanding Indebtedness under
the Prior Indentures were  all triggered at  the same time,  it is possible  the
Company would be unable to satisfy these obligations. The failure of the Company
to  make or consummate the Change of Control Purchase Offer or pay the Change of
Control Purchase Price when  due will give  the Trustee and  the holders of  the
Notes the rights described under "-- Events of Default."
 
    One  of the events  which constitutes a  Change of Control  under the Senior
Note Indentures  is  the  disposition  of "all  or  substantially  all"  of  the
Company's  assets. This term has not been  interpreted under New York law (which
is the governing  law of  the Senior Note  Indentures) to  represent a  specific
quantitative  test. As a consequence, in the event holders of the Notes elect to
require the Company to purchase the Notes and the Company elects to contest such
election, there can be no assurance as to how a court interpreting New York  law
would interpret the phrase.
 
    The  existence of a holder's  right to require the  Company to purchase such
holder's Notes upon a Change of Control Triggering Event may deter a third party
from acquiring  the Company  in  a transaction  which  constitutes a  Change  of
Control.
 
                                       56

    In  addition  to  the  obligations  of the  Company  under  the  Senior Note
Indentures with  respect to  the Notes  in the  event of  a "Change  of  Control
Triggering  Event," the Credit Agreement contains  a provision designating as an
event of default a  change in control as  described therein which obligates  the
Company  to  repay  amounts  outstanding  under  the  Credit  Agreement  upon an
acceleration of the indebtedness issued thereunder.
 
    The provisions of the Senior Note Indentures may not afford holders of Notes
the right to  require the Company  to repurchase such  Notes in the  event of  a
highly   leveraged  transaction  or  certain  transactions  with  the  Company's
management or its affiliates, including a reorganization, restructuring,  merger
or   similar   transaction  involving   the   Company  (including,   in  certain
circumstances, an acquisition of  the Company by  management or its  affiliates)
that  may adversely affect  holders of the  Notes, if such  transaction is not a
transaction defined as a Change of Control. See "-- Certain Definitions" for the
definition of  "Change  of  Control."  A  transaction  involving  the  Company's
management  or its affiliates, or a  transaction involving a recapitalization of
the Company, will result in a Change of Control if it is the type of transaction
specified by such definition.
 
    The Company will comply  with the applicable  tender offer rules,  including
Rule  14e-1 under the Exchange Act, and  any other applicable securities laws or
regulations in  connection with  a Change  of Control  Purchase Offer.  (Section
1009)
 
    ADDITIONAL  GUARANTEES.   If the  Company or  any of  its Subsidiaries shall
acquire or form a Subsidiary, the Company will cause any such Subsidiary  (other
than  an Equity Store or Business Development Venture, PROVIDED that such Equity
Store or Business Development Venture does not guarantee the Senior Indebtedness
of any  other  Person) that  is  or becomes  a  Significant Subsidiary  or  that
guarantees any Senior Indebtedness of the Company or any Subsidiary Guarantor to
(i)  execute and deliver  to the applicable Trustee  a supplemental indenture in
form and substance  reasonably satisfactory  to such Trustee  pursuant to  which
such  Subsidiary  shall guarantee  all of  the obligations  of the  Company with
respect to the  Notes issued under  such Indenture  on a senior  basis and  (ii)
deliver  to such Trustee  an Opinion of Counsel  reasonably satisfactory to such
Trustee to the effect that a  supplemental indenture has been duly executed  and
delivered  by  such  Subsidiary and  is  in  compliance with  the  terms  of the
applicable Indenture.
 
    PROVISION OF FINANCIAL STATEMENTS.  Whether or not the Company is subject to
Section 13(a), 13(c) or 15(d)  of the Exchange Act,  the Company will file  with
the  Commission the annual  reports, quarterly reports  and other documents that
the Company is or would have been required to file with the Commission  pursuant
to  such Section  13(a), 13(c)  or 15(d)  if the  Company were  so subject, such
documents to be filed with  the Commission on or  prior to the respective  dates
(the  "Required Filing Dates") by which the  Company would have been required so
to file such documents if the Company were so subject. The Company will also  in
any  event within 15 days  of each Required Filing Date  (within 30 days of such
Required Filing Date for any reports filed on Form 10-K) (i) transmit by mail to
each holder  of the  Notes, as  its name  and address  appears in  the  security
register,  without cost to such holder and (ii) file with each Trustee copies of
the annual reports, quarterly reports and  other documents which the Company  is
or  would have  been required  to file with  the Commission  pursuant to Section
13(a), 13(c)  or 15(d)  of the  Exchange Act  if the  Company were  so  subject.
(Section 1014)
 
CONSOLIDATION, MERGER, SALE OF ASSETS
 
    The  Company  shall not,  in a  single  transaction or  a series  of related
transactions, consolidate with or merge with  or into any other Person or  sell,
assign,  convey, transfer or lease or  otherwise dispose of all or substantially
all of its properties and assets to  any Person or group of affiliated  Persons,
or  permit  any  of its  Subsidiaries  to  enter into  any  such  transaction or
transactions if such transaction or transactions, in the aggregate, would result
in a sale, assignment, transfer, lease  or disposal of all or substantially  all
of  the  properties  and  assets  of  the  Company  and  its  Subsidiaries  on a
Consolidated basis to any other Person or group of affiliated Persons, unless at
the time and after giving effect thereto (i) either (A) the Company shall be the
surviving or  continuing corporation,  or  (B) the  Person  (if other  than  the
Company) formed by such consolidation or into which the Company is merged or the
Person  which  acquires  by  sale, assignment,  conveyance,  transfer,  lease or
disposition the  properties  and  assets  of the  Company  substantially  as  an
 
                                       57

entirety  (the "Surviving  Entity") shall  be a  corporation duly  organized and
validly existing under the laws of the  United States, any state thereof or  the
District of Columbia and shall, in any case, expressly assume, by a supplemental
indenture,  executed and delivered  to the Trustee, in  form satisfactory to the
Trustee, all the obligations of the Company, under the Notes and the Senior Note
Indentures, and  the Senior  Note  Indentures shall  remain  in full  force  and
effect;  (ii) immediately  before and  immediately after  giving effect  to such
transaction on a PRO FORMA basis  (and treating any Indebtedness not  previously
an  obligation  of the  Company  or any  of  its Subsidiaries  which  becomes an
obligation of the Company or any of its Subsidiaries in connection with or as  a
result  of  such  transaction  as  having been  incurred  at  the  time  of such
transaction), no  Default  or  Event  of Default  shall  have  occurred  and  be
continuing; (iii) immediately before and immediately after giving effect to such
transaction  on  a  PRO FORMA  basis  (on  the assumption  that  the transaction
occurred on the first  day of the four-quarter  period immediately prior to  the
consummation  of such transaction with  the appropriate adjustments with respect
to the transaction being  included in such PRO  FORMA calculation), the  Company
(or  the Surviving Entity if the Company is not the continuing obligor under the
Indenture) could incur  $1.00 of additional  Indebtedness (other than  Permitted
Indebtedness)  under the  provisions of "--  Certain Covenants  -- LIMITATION ON
INDEBTEDNESS" above;  (iv) each  Subsidiary Guarantor,  unless it  is the  other
party to the transactions described above, shall have confirmed, by supplemental
indenture  to  each of  the  Senior Note  Indentures,  that its  respective Note
Guarantees with respect to  the Notes shall apply  to such Person's  obligations
under  the Senior Note Indentures  and the Notes; (v) if  any of the property or
assets of the Company or any of its Subsidiaries would thereupon become  subject
to any Lien, the provisions of "-- Certain Covenants -- LIMITATION ON LIENS" are
complied  with;  and (vi)  the Company  shall  have delivered,  or caused  to be
delivered, to the Trustee  with respect to the  Senior Note Indentures, in  form
and  substance satisfactory  to such  Trustee, an  officers' certificate  and an
opinion of counsel, each  to the effect that  such consolidation, merger,  sale,
assignment,   conveyance,  transfer,   lease  or   other  transaction   and  the
supplemental indenture in respect thereto comply with the provisions in  clauses
(i)  through  (v) of  this paragraph  and that  all conditions  precedent herein
provided for relating to such transaction have been complied with.
 
    In the event  of any  consolidation, merger,  sale, assignment,  conveyance,
transfer,  lease  or other  transaction described  in,  and complying  with, the
conditions listed in the immediately preceding paragraph in which the Company is
not the continuing corporation, the  successor Person formed or remaining  shall
succeed  to, and be substituted for, and  may exercise every right and power of,
the Company, as the case  may be, and the Company  shall be discharged from  all
obligations  and  covenants  under the  Senior  Note Indentures  and  the Notes;
PROVIDED that, in the case of a transfer by lease, the predecessor shall not  be
released from its obligations with respect to the payment of principal (premium,
if any) and interest on the Notes. (Sections 801 and 802)
 
EVENTS OF DEFAULT
 
    An  Event of Default will occur under  the Senior Note Indenture pursuant to
which such Notes were issued if any of the following events occurs with  respect
to such Senior Note Indenture:
 
        (i)  there shall  be a default  in the  payment of any  interest on such
    series of Notes issued under such  Senior Note Indenture when such  interest
    becomes  due and payable, and continuance of such default for a period of 30
    days;
 
        (ii) there shall be  a default in  the payment of  the principal of  (or
    premium,  if any,  on) any  series of  Notes issued  under such  Senior Note
    Indenture at its Stated Maturity;
 
       (iii) (A) there shall be a default in the performance, or breach, of  any
    covenant  or agreement of the Company or any Subsidiary Guarantor under such
    Senior Note Indenture (other than a  default in the performance, or  breach,
    of  a  covenant  or  agreement  which  is  specifically  dealt  with  in the
    immediately preceding clauses (i) or (ii) or  in clauses (B) or (C) of  this
    clause  (iii)) and such default or breach  shall continue for a period of 60
    days after written  notice has  been given, by  certified mail,  (x) to  the
    Company  by the applicable Trustee or (y)  to the Company and the applicable
    Trustee by the holders of at least 25% in aggregate principal amount of  the
    outstanding Notes; (B) there shall be a default in the performance or breach
    of  the provisions described in "--  Consolidation, Merger, Sale of Assets";
    or
 
                                       58

    (C) the Company shall have failed to make or consummate a Change of  Control
    Purchase Offer in accordance with the provisions of "-- Certain Covenants --
    PURCHASE OF NOTES UPON A CHANGE OF CONTROL TRIGGERING EVENT";
 
        (iv) (A) any default in the payment of the principal of any Indebtedness
    shall  have  occurred  under  any  agreements,  indentures  (including, with
    respect to any Notes  issued under the Fixed  Rate Note Indenture, any  such
    default  under the  Floating Rate Note  Indenture, and, with  respect to the
    Floating Rate Notes, any such default  under the Fixed Rate Note  Indenture)
    or instruments under which the Company or any Subsidiary of the Company then
    has  outstanding Indebtedness in  excess of $50 million  when the same shall
    become due and payable in full  and such default shall have continued  after
    any  applicable grace period and shall not  have been cured or waived or (B)
    an event  of default  as defined  in any  of the  agreements, indentures  or
    instruments  described in clause (A) of this clause (iv) shall have occurred
    and the  Indebtedness  thereunder,  if  not already  matured  at  its  final
    maturity in accordance with its terms, shall have been accelerated;
 
        (v)  any Person  entitled to  take the  actions described  below in this
    clause (v), after the occurrence of any event of default on Indebtedness  in
    excess  of $50 million  in the aggregate  of the Company  or any Subsidiary,
    shall notify the applicable Trustee of  the intended sale or disposition  of
    any assets of the Company or any Subsidiary that have been pledged to or for
    the  benefit of  such Person to  secure such Indebtedness  or shall commence
    proceedings, or take any action (including  by way of set-off) to retain  in
    satisfaction  of any  Indebtedness, or to  collect on, seize,  dispose of or
    apply, any such assets of the Company or any Subsidiary (including funds  on
    deposit  or  held  pursuant  to lock-box  and  other  similar arrangements),
    pursuant to the terms of such Indebtedness or in accordance with  applicable
    law;
 
        (vi)  any Note Guarantee  of any Significant  Subsidiary individually or
    any other Subsidiaries if such  Subsidiaries in the aggregate represent  15%
    or  more of the assets of the Company and its Subsidiaries on a consolidated
    basis with respect to  such Notes shall  for any reason cease  to be, or  be
    asserted  in writing by  the Company, any Subsidiary  Guarantor or any other
    Subsidiary of  the Company,  as applicable,  not to  be, in  full force  and
    effect,  enforceable in  accordance with its  terms, except  pursuant to the
    release of any such Note Guarantee in accordance with the applicable  Senior
    Note Indenture;
 
       (vii)  one or more judgments, orders or  decrees for the payment of money
    in excess  of $50  million (net  of amounts  covered by  insurance, bond  or
    similar  instrument),  either individually  or  in the  aggregate,  shall be
    entered against the Company or any Subsidiary of the Company or any of their
    respective properties  and  shall  not  be discharged  and  either  (A)  any
    creditor  shall have commenced an enforcement proceeding upon such judgment,
    order or decree or (B) their shall have been a period of 60 consecutive days
    during which a stay of enforcement of  such judgment or order, by reason  of
    an appeal or otherwise, shall not be in effect;
 
      (viii)   there  shall  have  been  the  entry  by  a  court  of  competent
    jurisdiction of (A) a decree or order  for relief in respect of the  Company
    or any Significant Subsidiary in an involuntary case or proceeding under any
    applicable  Bankruptcy Law or (B) a decree or order adjudging the Company or
    any Significant Subsidiary bankrupt or insolvent, or seeking reorganization,
    arrangement, adjustment or composition  of or in respect  of the Company  or
    any  Significant Subsidiary  under any applicable  federal or  state law, or
    appointing   a   custodian,   receiver,   liquidator,   assignee,   trustee,
    sequestrator  or other  similar official of  the Company  or any Significant
    Subsidiary or  of any  substantial part  of its  property, or  ordering  the
    winding  up or liquidation of its affairs,  and any such decree or order for
    relief shall continue to  be in effect,  or any such  other decree or  order
    shall be unstayed and in effect, for a period of 60 consecutive days; or
 
        (ix) (A) the Company or any Significant Subsidiary commences a voluntary
    case  or proceeding under any applicable Bankruptcy Law or any other case or
    proceeding to be adjudicated bankrupt or  insolvent, (B) the Company or  any
    Significant Subsidiary consents to the entry of a decree or order for relief
    in  respect of the Company or  such Significant Subsidiary in an involuntary
    case  or  proceeding  under  any   applicable  Bankruptcy  Law  or  to   the
    commencement  of any bankruptcy or insolvency case or proceeding against it,
    (C) the Company or any Significant Subsidiary files a petition or answer  or
 
                                       59

    consent  seeking reorganization  or relief  under any  applicable federal or
    state law, (D) the Company or any Significant Subsidiary (x) consents to the
    filing of such petition  or the appointment of,  or taking possession by,  a
    custodian,  receiver, liquidator, assignee, trustee, sequestrator or similar
    official of the Company or such Significant Subsidiary or of any substantial
    part of its property, (y) makes  an assignment for the benefit of  creditors
    or  (z) admits in writing  its inability to pay  its debts generally as they
    become due  or (E)  the  Company or  any  Significant Subsidiary  takes  any
    corporate action in furtherance of any such actions in this clause (ix).
 
    If an Event of Default (other than as specified in clauses (viii) or (ix) of
the  immediately preceding paragraph) shall occur and be continuing with respect
to any series of the Notes, the applicable Trustee, by notice to the Company, or
the holders of at  least 25% in aggregate  principal amount then outstanding  of
such  Notes, by notice to the applicable Trustee and to the Company, may declare
such Notes  due and  payable immediately,  upon which  declaration, all  amounts
payable  in respect of  such Notes shall  be immediately due  and payable. If an
Event of Default specified in clause (viii) or (ix) of the immediately preceding
paragraph occurs and is continuing, then all of the outstanding Notes under each
of the Senior Note Indentures shall IPSO FACTO become and be immediately due and
payable without  any  declaration  or other  act  on  the part  of  the  Trustee
thereunder or any holder of such Notes.
 
    After  a declaration  of acceleration, but  before a judgment  or decree for
payment of  the money  due has  been  obtained by  the applicable  Trustee,  the
holders of a majority in aggregate principal amount outstanding of any series of
Notes,  by  written notice  to  the Company  and  such Trustee,  may  annul such
declaration if (a) the  Company has paid  or deposited with  such Trustee a  sum
sufficient  to pay (i) all sums paid or advanced by such Trustee under the Fixed
Rate Note Indenture, with respect to such series of Notes, or the Floating  Rate
Note  Indenture, as the case may  be, and the reasonable compensation, expenses,
disbursements, and advances of  such Trustee, its agents  and counsel, (ii)  all
overdue  interest on all  of the Notes of  such series, and  (iii) to the extent
that payment of such interest is  lawful, interest upon overdue interest at  the
rate  borne by the  Notes of such series;  and (b) all  Events of Default, other
than the non-payment of principal of such Notes which have become due solely  by
such declaration of acceleration, have been cured or waived. (Section 502)
 
    The  holders of a majority  in aggregate principal amount  of the Fixed Rate
Notes and the Floating Rate Notes  outstanding, respectively, may, on behalf  of
the  holders of all of such Notes, waive  any past defaults under the Fixed Rate
Note Indenture, or the Floating Rate Note Indenture, as the case may be,  except
a  default in the payment  of the principal of, premium,  if any, or interest on
any such  Note, or  in  respect of  a covenant  or  provision which  under  such
Indenture  cannot be modified  or amended without  the consent of  the holder of
each such outstanding Fixed Rate Note or Floating Rate Note. (Section 513)
 
    The Company is also required  to notify the Trustee  within ten days of  the
occurrence of any Default. (Section 515)
 
    The  Trust Indenture Act contains limitations  on the rights of the Trustee,
acting as trustee with respect to the Notes, should it become a creditor of  the
Company  or any  Subsidiary Guarantor,  to obtain  payment of  claims in certain
cases or to realize on  certain property received by it  in respect of any  such
claims,  as security or otherwise. Such Trustee  is permitted to engage in other
transactions, PROVIDED that  if it  acquires any conflicting  interest, it  must
eliminate  such conflict  upon the  occurrence of  an Event  of Default  or else
resign.
 
DEFEASANCE OR COVENANT DEFEASANCE OF SENIOR NOTE INDENTURES
 
    The Company  may,  at  its  option  and at  any  time,  elect  to  have  the
obligations  of the Company and any Subsidiary Guarantor discharged with respect
to any Notes issued under either Senior Note Indenture ("defeasance").  (Section
1301)  Such defeasance means that  the Company shall be  deemed to have paid and
discharged the entire indebtedness represented by such outstanding Notes, except
for (i) the rights of holders of  such outstanding Notes to receive payments  in
respect  of the principal of,  premium, if any, and  interest on such Notes when
such payments are due or on the  redemption date with respect to such Notes,  as
the  case may  be, (ii)  the Company's  obligations with  respect to  such Notes
concerning issuing temporary Notes, registration of Notes, mutilated, destroyed,
lost   or   stolen   Notes,    and   the   maintenance    of   an   office    or
 
                                       60

agency  for payment  and money  for security payments  held in  trust, (iii) the
rights, powers, trusts,  duties and  immunities of the  applicable Trustee,  and
(iv)  the defeasance provisions  of the applicable  Indenture. (Section 1302) In
addition, the Company  may, at its  option and at  any time, elect  to have  the
obligations  of the Company released with  respect to certain covenants that are
described in the Senior Note  Indentures ("covenant defeasance") and  thereafter
any  omission to comply with such obligations  shall not constitute a Default or
an Event of Default with respect to such Notes. In the event covenant defeasance
occurs, certain events  (not including non-payment,  enforceability of any  Note
Guarantee,  bankruptcy  and insolvency  events)  described under  "--  Events of
Default" will no  longer constitute  an Event of  Default with  respect to  such
Notes. (Sections 1303 and 1304)
 
    In  order to exercise either defeasance  or covenant defeasance with respect
to the Notes  under the  Fixed Rate  Note Indenture  or the  Floating Rate  Note
Indenture, as the case may be, (i) the Company must irrevocably deposit with the
Trustee,  in trust, for the benefit of the holders of such Notes, cash in United
States dollars,  U.S. Government  Obligations  (as defined  in the  Senior  Note
Indentures), or a combination thereof, in such amounts as will be sufficient, in
the  opinion of a nationally recognized  firm of independent public accountants,
to pay and  discharge the principal  of, premium,  if any, and  interest on  the
Notes  outstanding on the  Stated Maturity thereof or  on an optional redemption
date (such date being referred to  as the "Defeasance Redemption Date"), as  the
case may be, if in the case of a Defeasance Redemption Date prior to electing to
exercise  either defeasance or covenant defeasance, the Company has delivered to
the Trustee an irrevocable notice to redeem all of the outstanding Notes on such
Defeasance Redemption Date; (ii)  in the case of  defeasance, the Company  shall
have  delivered to the Trustee  an opinion of independent  counsel in the United
States stating  that  (A) the  Company  has received  from,  or there  has  been
published by, the Internal Revenue Service a ruling or (B) since the date of the
Senior Note Indentures, there has been a change in the applicable federal income
tax  law, in either case  to the effect that, and  based thereon such opinion of
counsel in the United States shall confirm that, the holders of the  outstanding
Notes will not recognize income, gain or loss for federal income tax purposes as
a  result of such  defeasance and will be  subject to federal  income tax on the
same amounts, in the same  manner and at the same  times as would have been  the
case  if  such  defeasance had  not  occurred;  (iii) in  the  case  of covenant
defeasance, the  Company shall  have  delivered to  the  Trustee an  opinion  of
independent  counsel in the United States to  the effect that the holders of the
outstanding Notes will not recognize income, gain or loss for federal income tax
purposes as a result of such covenant defeasance and will be subject to  federal
income  tax on the  same amounts, in  the same manner  and at the  same times as
would have been the case if such  covenant defeasance had not occurred; (iv)  no
Default or Event of Default shall have occurred and be continuing on the date of
such  deposit or  insofar as  clause (viii) and  (ix) under  the first paragraph
under "-- Events of Default" are concerned, at any time during the period ending
on the 91st  day after  the date  of deposit;  (v) such  defeasance or  covenant
defeasance shall not result in a breach or violation of, or constitute a Default
under,  the Senior Note Indentures or any other material agreement or instrument
to which the Company or  any Subsidiary Guarantor is a  party or by which it  is
bound;  (vi)  the  Company shall  have  delivered  to the  Trustee  an officers'
certificate stating that the deposit was not made by the Company with the intent
of preferring the  holders of  the Notes or  any Subsidiary  Guarantor over  the
other creditors of the Company or any Subsidiary Guarantor or with the intent of
defecting,  hindering,  delaying or  defrauding  creditors of  the  Company, any
Subsidiary Guarantor or others;  and (vii) the Company  shall have delivered  to
the  Trustee  an officers'  certificate  stating that  all  conditions precedent
provided for relating to  either the defeasance or  the covenant defeasance,  as
the case may be, have been complied with. (Section 1304)
 
SATISFACTION AND DISCHARGE
 
    Each  of the  Senior Note  Indentures shall  cease to  be of  further effect
(except as surviving rights of registration of transfer or exchange of the Notes
issued thereunder, as expressly provided for  in each such Indenture) as to  all
outstanding  Notes issued thereunder when (i)  either (A) all Notes issued under
the Fixed Rate Note Indenture or the  Floating Rate Note Indenture, as the  case
may  be, and  theretofore authenticated  and delivered  (except lost,  stolen or
destroyed Notes of such series  which have been replaced  or paid and Notes  for
whose  payment funds have been deposited in  trust by the Company and thereafter
repaid to the Company or discharged from such trust) have been delivered to  the
Trustee for cancellation or (B) all
 
                                       61

Notes  issued under  the Fixed  Rate Note  Indenture or  the Floating  Rate Note
Indenture, as the case may be,  and not theretofore delivered to the  applicable
Trustee  for cancellation (x) have become due and payable or (y) will become due
and payable at their Stated Maturity within one year, and either the Company  or
any  Subsidiary Guarantor  has irrevocably deposited  or caused  to be deposited
with such Trustee funds in an amount sufficient to pay and discharge the  entire
indebtedness  in respect of such  Notes, for principal of,  premium, if any, and
interest to the date  of deposit; (ii) the  Company or any Subsidiary  Guarantor
has  paid all  other sums  payable by the  Company and  any Subsidiary Guarantor
under the applicable Senior Note Indenture; and (iii) the Company has  delivered
to  the Trustee an officers' certificate and  an opinion of counsel each stating
that all conditions precedent to the  satisfaction and discharge of such  Senior
Note  Indenture, as  specified therein,  have been  complied with  and that such
satisfaction and  discharge will  not result  in a  breach or  violation of,  or
constitute  a default under,  such Indenture or any  other material agreement or
instrument to which the  Company or any  Subsidiary Guarantor is  a party or  by
which it is bound. (Section 401)
 
MODIFICATION AND AMENDMENTS
 
    Modifications  and amendments of  the Senior Note Indentures  may be made by
the Company,  the Subsidiary  Guarantors  and the  applicable Trustee  with  the
consent  of the holders of a  majority in aggregate outstanding principal amount
of each  series of  Notes issued  thereunder; PROVIDED,  HOWEVER, that  no  such
modification  or  amendment  may, without  the  consent  of the  holder  of each
outstanding Note of each series affected thereby; (i) change the Stated Maturity
of the  principal  of,  or any  installment  of  interest on,  any  Note  issued
thereunder  or  reduce the  principal  amount thereof  or  the rate  of interest
thereon or any premium payable upon  the redemption thereof, or change the  coin
or currency in which any Note or any premium or the interest thereon is payable,
or  impair the right to  institute suit for the  enforcement of any such payment
after the Stated Maturity thereof; (ii)  amend, change or modify the  obligation
of  the Company to make and consummate a Change of Control Purchase Offer in the
event of a Change of Control Triggering Event or modify any of the provisions or
definitions with  respect  thereto; (iii)  reduce  the percentage  in  principal
amount of outstanding Notes thereunder, the consent of whose holders is required
for  any modification or amendment to such Senior Note Indenture, or the consent
of whose holders  is required for  any waiver  thereof; (iv) modify  any of  the
provisions  relating to supplemental indentures requiring the consent of holders
or relating to the waiver of past defaults or relating to the waiver of  certain
covenants,  except  to  increase  the  percentage  of  outstanding  Notes issued
thereunder required for such actions or to provide that certain other provisions
of such Senior Note Indenture cannot  be modified or waived without the  consent
of  the holder of each Note affected  thereby; (v) except as otherwise permitted
under "-- Consolidation, Merger, Sale of  Assets," consent to the assignment  or
transfer  by the Company  or any Subsidiary  Guarantor of any  of its rights and
obligations under such Senior Note Indenture; or (vi) amend or modify any of the
provisions of such Senior  Note Indenture in any  manner which subordinates  the
Notes issued thereunder in right of payment to other Indebtedness of the Company
or  which  subordinates  any  Note  Guarantee  in  right  of  payment  to  other
Indebtedness of the Subsidiary Guarantor  issuing such Guarantee. (Sections  901
and 902)
 
    The  holders of a majority in aggregate principal amount of the Notes issued
under a Senior Note Indenture and outstanding may waive compliance with  certain
restrictive  covenants and  provisions of  such Senior  Note Indenture. (Section
1015)
 
CERTAIN DEFINITIONS
 
    "Acquired Indebtedness" means Indebtedness of  a Person (i) existing at  the
time  such Person becomes  a Subsidiary or  (ii) assumed in  connection with the
acquisition of assets from  such Person, in each  case, other than  Indebtedness
incurred  in connection  with, or  in contemplation  of, such  Person becoming a
Subsidiary or such acquisition.
 
    "Affiliate" means,  with respect  to  any specified  Person, (i)  any  other
Person  directly or indirectly  controlling or controlled by  or under direct or
indirect common control with such specified Person or (ii) any other Person that
owns, directly or indirectly, 5% or more  of such Person's Capital Stock or  any
executive  officer or director of any such specified Person. For the purposes of
this definition, "control", when used with
 
                                       62

respect to any specified  Person, means the power  to direct the management  and
policies  of such Person,  directly or indirectly,  whether through ownership of
Voting Stock,  by  contract  or  otherwise;  and  the  terms  "controlling"  and
"controlled" have meanings correlative to the foregoing.
 
    "Average  Life to  Stated Maturity" means,  as of the  date of determination
with respect to any Indebtedness, the quotient obtained by dividing (i) the  sum
of the products of (A) the number of years from the date of determination to the
date   or  dates  of  each  successive   scheduled  principal  payment  of  such
Indebtedness multiplied by (B) the amount of each such principal payment by (ii)
the sum of all such principal payments.
 
    "Bankruptcy Law" means Title 11, United  States Bankruptcy Code of 1978,  as
amended,  or  any  similar  United  States  federal  or  state  law  relating to
bankruptcy, insolvency, receivership, winding-up, liquidation, reorganization or
relief of debtors or any amendment to, succession to or change in any such law.
 
    "Banks" means the banks and other  financial institutions from time to  time
that are lenders under the Credit Agreement.
 
    "Business  Day" means each  Monday, Tuesday, Wednesday,  Thursday and Friday
which is not a  day on which banking  institutions in the City  of New York  are
authorized or obligated by law or executive order to close.
 
    "Capital Lease Obligation" of any Person means any obligation of such Person
and  its Subsidiaries on a Consolidated basis under any capital lease of real or
personal property  which,  in accordance  with  GAAP,  has been  recorded  as  a
capitalized lease obligation.
 
    "Capital   Stock"  of  any  Person  means  any  and  all  shares,  interest,
partnership interests, participations or other equivalents (however  designated)
of  such Person's capital stock whether now outstanding or issued after the date
of the Senior Note Indentures,  including, without limitation, all common  stock
and preferred stock.
 
    "Change of Control" means the occurrence of any of the following events: (i)
any  "person" or "group" (as such terms are  used in Sections 13(d) and 14(d) of
the Exchange Act)  is or  becomes the "beneficial  owner" (as  defined in  Rules
13d-3  and 13d-5 under the Exchange Act, except that a Person shall be deemed to
have beneficial  ownership of  all shares  that  such Person  has the  right  to
acquire, whether such right is exercisable immediately or only after the passage
of  time), directly  or indirectly,  of more than  50% of  the total outstanding
Voting Stock of the  Company; (ii) during any  period of two consecutive  years,
individuals  who  at  the beginning  of  such  period constituted  the  Board of
Directors of the Company (together with any new directors whose election to such
Board of Directors, or whose nomination for election by the stockholders of  the
Company, was approved by a vote of 66 2/3% of the directors then still in office
who  were either directors at the beginning  of such period or whose election or
nomination for election  was previously  so approved)  cease for  any reason  to
constitute  a majority  of such  Board of  Directors then  in office;  (iii) the
Company consolidates  with  or  merges  with or  into  any  Person  or  conveys,
transfers,  leases  or otherwise  disposes of  all or  substantially all  of its
assets to any Person, or any Person consolidates with or merges into or with the
Company, in any such  event pursuant to a  transaction in which the  outstanding
Voting Stock of the Company is changed into or exchanged for cash, securities or
other  property, other  than any such  transaction where  the outstanding Voting
Stock of the Company is  not changed or exchanged at  all (except to the  extent
necessary  to  reflect a  change  in the  jurisdiction  of incorporation  of the
Company) or where  (A) the outstanding  Voting Stock of  the Company is  changed
into or exchanged for (x) Voting Stock of the surviving corporation which is not
Redeemable  Capital Stock or (y) cash,  securities or other property (other than
Capital Stock of the surviving corporation) in an amount which could be paid  by
the  Company as a Restricted Payment as described under "-- Certain Covenants --
LIMITATION ON  RESTRICTED PAYMENTS"  (and  such amount  shall  be treated  as  a
Restricted  Payment  subject to  the provisions  in  the Senior  Note Indentures
described under "-- Certain Covenants -- LIMITATION ON RESTRICTED PAYMENTS") and
(B) immediately after such  transaction, no "person" or  "group" (as such  terms
are  used in Sections  13(d) and 14(d)  of the Exchange  Act) is the "beneficial
owner" (as defined in Rules 13d-3 and 13d-5 under the Exchange Act, except  that
a  Person shall be deemed  to have beneficial ownership  of all shares that such
Person has the right to acquire,  whether such right is exercisable  immediately
or only after the passage of time), directly or
 
                                       63

indirectly,  of  more than  50% of  the  total outstanding  Voting Stock  of the
surviving corporation; or (iv) the Company is liquidated or dissolved or  adopts
a  plan of liquidation or dissolution other than in a transaction which complies
with the provisions described under "-- Consolidation, Merger, Sale of Assets."
 
    "Change of Control Triggering Event" means  the occurrence of both a  Change
of Control and a Rating Decline.
 
    "Commission"  means the Securities and Exchange  Commission, as from time to
time constituted, created under the  Exchange Act, or if  at any time after  the
execution  of the  Senior Note  Indentures such  Commission is  not existing and
performing the duties now assigned to it under the Trust Indenture Act, then the
body performing such duties at such time.
 
    "Consolidated" means, with respect to  any Person, the consolidation of  the
accounts  of such Person and  each of its subsidiaries if  and to the extent the
accounts of  such  Person  and  each  of  its  subsidiaries  would  normally  be
consolidated with those of such Person, all in accordance with GAAP consistently
applied.
 
    "Consolidated  Fixed Charge  Coverage Ratio" of  the Company  means, for any
period, the  ratio of  (a)  the sum  of  Consolidated Net  Income,  Consolidated
Interest  Expense,  Consolidated Income  Tax  Expense and  Consolidated Non-Cash
Charges deducted in computing  Consolidated Net Income, in  each case, for  such
period,  of  the  Company and  its  Subsidiaries  on a  Consolidated  basis, all
determined in accordance with GAAP to (b) Consolidated Interest Expense for such
period; PROVIDED that (i) in making such computation, the Consolidated  Interest
Expense  attributable to  interest on any  Indebtedness computed on  a PRO FORMA
basis and (A) bearing a floating interest rate shall be computed as if the  rate
in effect on the date of computation had been the applicable rate for the entire
period  and  (B) which  was  not outstanding  during  the period  for  which the
computation is being made but which bears, at the option of the Company, a fixed
or floating rate of interest,  shall be computed by  applying, at the option  of
the  Company,  either  the  fixed  or floating  rate  and  (ii)  in  making such
computation, Consolidated  Interest  Expense  attributable to  interest  on  any
Indebtedness  under a  revolving credit facility  computed on a  PRO FORMA basis
shall be computed  based upon  the average  daily balance  of such  Indebtedness
during the applicable period.
 
    "Consolidated  Income Tax  Expense" means for  any period  the provision for
federal,  state,  local  and  foreign  income  taxes  of  the  Company  and  its
Subsidiaries for such period as determined on a Consolidated basis in accordance
with GAAP.
 
    "Consolidated  Interest Expense" means, without duplication, for any period,
the sum of (A) the interest expense of the Company and its Subsidiaries for such
period, as determined on a Consolidated basis in accordance with GAAP including,
without limitation, (i) amortization of debt  discount, (ii) the net cost  under
Interest  Rate  Agreements  (including  amortization  of  discount),  (iii)  the
interest portion of any deferred  payment obligation and (iv) accrued  interest,
plus  (B) the aggregate  amount for such  period of dividends  on any Redeemable
Capital Stock or Preferred  Stock of the Company  and its Subsidiaries, (C)  the
interest  component  of  the  Capital  Lease  Obligations  paid,  accrued and/or
scheduled to be paid, or accrued by  such Person during such period and (D)  all
capitalized  interest  of  the  Company and  its  Subsidiaries  determined  on a
Consolidated basis in accordance with GAAP.
 
    "Consolidated Net Income" means, for any period, the Consolidated net income
(or loss) of the Company and its Subsidiaries for such period as determined on a
Consolidated basis in accordance with GAAP, adjusted, to the extent included  in
calculating  such net income (loss), by  excluding, without duplication, (i) any
net after-tax extraordinary gains or losses (less all fees and expenses relating
thereto), (ii)  the $101.3  million facilities  consolidation and  restructuring
charge  originally reflected in the Company's Consolidated statement of earnings
for the year ended December 25, 1993; (iii) the portion of net income (or  loss)
of the Company and its Subsidiaries determined on a Consolidated basis allocable
to  minority  interests  in  unconsolidated  Persons  to  the  extent  that cash
dividends or distributions have not actually been received by the Company or any
Subsidiary; (iv) net income (or loss) of any Person combined with the Company or
any Subsidiary on  a "pooling  of interests"  basis attributable  to any  period
prior  to the date of combination and (v) net gains or losses (less all fees and
expenses relating thereto) in  respect of dispositions of  assets other than  in
the ordinary course of business and (vi) the net income of any Subsidiary to the
extent  that  the  declaration of  dividends  or similar  distributions  by that
Subsidiary of that income is not at the time
 
                                       64

permitted, directly or indirectly, by operation  of the terms of its charter  or
any   agreement,  instrument,   judgment,  decree,   order,  statute,   rule  or
governmental regulation applicable to that Subsidiary or its shareholders.
 
    "Consolidated Net  Tangible  Assets"  means  the total  of  all  the  assets
appearing  on the Consolidated balance sheet of  the Company and its majority or
Wholly Owned  Subsidiaries  less the  following:  (1) current  liabilities;  (2)
reserves  for depreciation  and other  asset valuation  reserves; (3) intangible
assets including, without limitation, items such as goodwill, trademarks,  trade
names,  patents and unamortized  debt discount and  expense; and (4) appropriate
adjustments on account of minority interests  of other Persons holding stock  in
any majority-owned Subsidiary of the Company.
 
    "Consolidated  Non-Cash  Charges"  means,  for  any  period,  the  aggregate
depreciation, amortization and  other non-cash  charges of the  Company and  its
Subsidiaries  for  such  period,  as  determined  on  a  Consolidated  basis  in
accordance with GAAP (excluding any non-cash charges which require an accrual or
reserve for any future period).
 
    "Credit Agreement" means the  Credit Agreement, dated as  of July 19,  1994,
among  the Company,  the Banks,  the Agents  listed therein  and Morgan Guaranty
Trust Company of New York, as Managing Agent, as such agreement may be  amended,
renewed, extended, substituted, refinanced, restructured, replaced, supplemented
or  otherwise modified  from time  to time  (including, without  limitation, any
successive renewals,  extensions, substitutions,  refinancings,  restructurings,
replacements, supplementations or other modifications of the foregoing).
 
    "Currency  Agreements" means any spot or forward foreign exchange agreements
and currency  swap, currency  option or  other similar  financial agreements  or
arrangements  entered into  by the  Company or  any of  its Subsidiaries  in the
ordinary course of business and designed  to protect against or manage  exposure
to fluctuations in foreign currency exchange rates.
 
    "Default"  means any event which is, or  after notice or passage of any time
or both would be, an Event of Default.
 
    "Equity  Store"  means  a  Person  in  which  the  Company  or  any  of  its
Subsidiaries  has invested capital or  to which it has  made loans in accordance
with the business practice of the Company and its Subsidiaries of making  equity
investments  in Persons, and  making or guaranteeing loans  to such Persons, for
the purpose of  assisting such  Person in  acquiring, remodeling,  refurbishing,
expanding  or operating one or more retail  grocery stores and pursuant to which
such Person is permitted or required to reduce the Company's or the Subsidiary's
equity interest to a minority position over time (usually five to ten years).
 
    "Exchange Act" means the Securities Exchange Act of 1934, as amended.
 
    "Generally  Accepted  Accounting  Principles"  or  "GAAP"  means   generally
accepted  accounting principles  in the United  States, as applied  from time to
time by the Company in the preparation of its consolidated financial statements.
 
    "Guaranteed Debt" means,  with respect to  any Person, without  duplication,
all  Indebtedness  of  any  other  Person  referred  to  in  the  definition  of
Indebtedness contained herein guaranteed directly or indirectly in any manner by
such Person,  or in  effect guaranteed  directly or  indirectly by  such  Person
through  an agreement (i) to pay or  purchase such Indebtedness or to advance or
supply funds for the payment or purchase of such Indebtedness, (ii) to purchase,
sell or lease (as lessee or lessor)  property, or to purchase or sell  services,
primarily  for  the purpose  of  enabling the  debtor  to make  payment  of such
Indebtedness or to assure the holder of such Indebtedness against loss, (iii) to
supply funds to, or  in any other  manner invest in,  the debtor (including  any
agreement  to pay for property or  services without requiring that such property
be received or such services be  rendered), (iv) to maintain working capital  or
equity  capital of the debtor, or otherwise  to maintain the net worth, solvency
or other financial condition of the debtor or (v) otherwise to assure a creditor
against loss, PROVIDED that the term "guarantee" shall not include  endorsements
for collection or deposit, in either case in the ordinary course of business.
 
                                       65

    "Indebtedness"  means, with respect to  any Person, without duplication, (i)
all liabilities of such Person for borrowed money (including overdrafts) or  for
the  deferred  purchase  price  of property  or  services,  excluding  any trade
payables and other accrued current liabilities arising in the ordinary course of
business, but  including, without  limitation,  all obligations,  contingent  or
otherwise,  of  such  Person  in  connection  with  any  letters  of  credit and
acceptances issued under letter of  credit facilities, acceptance facilities  or
other  similar  facilities, (ii)  all obligations  of  such Person  evidenced by
bonds, notes, debentures or other similar instruments, (iii) all indebtedness of
such Person  created  or arising  under  any  conditioned sale  or  other  title
retention  agreement with respect  to property acquired by  such Person (even if
the rights and  remedies of the  seller or  lender under such  agreement in  the
event  of default  are limited  to repossession or  sale of  such property), but
excluding trade payables arising  in the ordinary course  of business, (iv)  all
Capital  Lease Obligations  of such Person,  (v) all  obligations under Interest
Rate Agreements  or  Currency  Agreements  of  such  Person,  (vi)  Indebtedness
referred  to in clauses (i) through (v) above of other Persons and all dividends
of other Persons, the payment of which is secured by (or for which the holder of
such Indebtedness has an existing right, contingent or otherwise, to be  secured
by)  any Lien, upon or with  respect to property (including, without limitation,
accounts and contract rights) owned by such Person, even though such Person  has
not  assumed or become  liable for the  payment of such  Indebtedness, (vii) all
Guaranteed Debt of such  Person, (viii) all Redeemable  Capital Stock valued  at
the  greater of its voluntary or involuntary maximum fixed repurchase price plus
accrued and unpaid dividends, and (ix) any amendment, supplement,  modification,
deferral,  renewal, extension, refunding or refinancing  of any liability of the
types referred to in clauses (i) through (viii) above. For purposes hereof,  the
"maximum  fixed repurchase price" of any Redeemable Capital Stock which does not
have a fixed repurchase  price shall be calculated  in accordance with terms  of
such Redeemable Capital Stock as if such Redeemable Capital Stock were purchased
on any date on which Indebtedness shall be required to be determined pursuant to
the  Indenture, and if such price is based upon, or measured by, the fair market
value of  such  Redeemable  Capital Stock,  such  fair  market value  is  to  be
determined  in  good faith  by  the Board  of Directors  of  the issuer  of such
Redeemable Capital Stock.
 
    "Interest Rate Agreements" means any interest rate protection agreements and
other types of interest rate hedging agreements (including, without  limitation,
interest  rate swaps, caps, floors, collars  and similar agreements) designed to
protect against or manage exposure to fluctuations in interest rates in  respect
of Indebtedness.
 
    "Investment"  means, with respect to any Person, directly or indirectly, any
advance (other than advances  to customers in the  ordinary course of  business,
which  are recorded as accounts  receivable on the balance  sheet of the Company
and its Subsidiaries), loan or other extension of credit or capital contribution
to (by means of any transfer of cash or other property to others or any  payment
for  property or services  for the account  or use of  others), or any purchase,
acquisitions or ownership  by such Person  of any Capital  Stock, bonds,  notes,
debentures or other securities or assets issued or owned by any other Person.
 
    "Investment  Grade" means BBB- or higher by S&P or Baa3 or higher by Moody's
or the equivalent  of such  ratings by S&P  or Moody's  or in the  event S&P  or
Moody's  shall cease  rating the  Notes and the  Company shall  select any other
Rating Agency, the equivalent of such ratings by such other Rating Agency.
 
    "Lien" means any  mortgage, charge, pledge,  lien (statutory or  otherwise),
privilege,  security interest, hypothecation  or other encumbrance  upon or with
respect to any property of any kind, real or personal, movable or immovable, now
owned or hereafter acquired.
 
    "Maturity" when used with respect to the  Notes means the date on which  the
principal  of  the Notes  becomes  due and  payable  as therein  provided  or as
provided in the Senior Note Indenture pursuant to which such Notes were  issued,
whether  at Stated Maturity, purchase upon  a Change of Control Triggering Event
or redemption  date,  and whether  by  declaration of  acceleration,  Change  of
Control, call for redemption or purchase or otherwise.
 
    "Moody's"  means  Moody's Investors  Service, Inc.  or any  successor rating
agency.
 
    "Note Guarantee"  means  any guarantee  by  a Subsidiary  Guarantor  of  the
Company's  obligations under the Fixed Rate  Note Indenture or the Floating Rate
Note Indenture.
 
                                       66

    "Permitted Indebtedness"  means any  of the  following Indebtedness  of  the
Company or any Subsidiary, as the case may be:
 
        (i)  Indebtedness  of  the  Company  and  guarantees  of  the Subsidiary
    Guarantors under the Credit Agreement (including Indebtedness of the Company
    under Tranche A  of the Credit  Agreement to the  extent that the  aggregate
    commitment  thereunder does not  exceed $900 million,  the maximum aggregate
    commitment for such facility on the date of the Senior Note Indentures,  and
    any  guarantees with respect  thereto outstanding on the  date of the Senior
    Note  Indentures  and  any  additional  guarantees  executed  in  connection
    therewith)  in an aggregate principal amount at any one time outstanding not
    to exceed $1.7 billion (after giving PRO FORMA effect to the use of proceeds
    of the Offering) less mandatory repayments  actually made in respect of  any
    term Indebtedness thereunder;
 
        (ii) Indebtedness of the Company under uncommitted bank lines of credit;
    PROVIDED,  HOWEVER,  that  the aggregate  principal  amount  of Indebtedness
    incurred pursuant  to clauses  (i),  (ii) and  (xi)  of this  definition  of
    "Permitted  Indebtedness"  does not  exceed $1.7  billion (after  giving PRO
    FORMA effect  to  the  use  of proceeds  of  the  Offering)  less  mandatory
    repayments actually made in respect of any term Indebtedness thereunder;
 
       (iii)  Indebtedness of the Company evidenced  by the Fixed Rate Notes and
    the  Note  Guarantees  with  respect  thereto  under  the  Fixed  Rate  Note
    Indenture;
 
        (iv)  Indebtedness of the  Company evidenced by  the Floating Rate Notes
    and the Note Guarantees  with respect thereto under  the Floating Rate  Note
    Indenture;
 
        (v)  Indebtedness of  the Company or  any Subsidiary  outstanding on the
    date of the Senior Note Indentures and listed on a schedule thereto;
 
        (vi) obligations of the  Company or any Subsidiary  entered into in  the
    ordinary  course  of  business  (a)  pursuant  to  Interest  Rate Agreements
    designed to protect against or  manage exposure to fluctuations in  interest
    rates  in respect of  Indebtedness or retailer  notes receivables, which, if
    related to Indebtedness or  such retailer notes  receivables, do not  exceed
    the  aggregate notional principal amount of  such Indebtedness to which such
    Interest Rate Agreements relate, or (b) under any Currency Agreements in the
    ordinary course  of  business and  designed  to protect  against  or  manage
    exposure  to  fluctuations  in  foreign currency  exchange  rates  which, if
    related to Indebtedness,  do not  increase the amount  of such  Indebtedness
    other than as a result of foreign exchange fluctuations;
 
       (vii)  Indebtedness of the Company owing  to a Wholly Owned Subsidiary or
    of any  Subsidiary owing  to the  Company or  any Wholly  Owned  Subsidiary;
    PROVIDED  that any disposition, pledge or  transfer of any such Indebtedness
    to a Person  (other than  the Company  or another  Wholly Owned  Subsidiary)
    shall  be deemed to be an incurrence  of such Indebtedness by the Company or
    Subsidiary, as the case may be, not permitted by this clause (vii);
 
      (viii) Indebtedness  in respect  of letters  of credit,  surety bonds  and
    performance bonds provided in the ordinary course of business;
 
        (ix) Indebtedness arising from the honoring by a bank or other financial
    institution  of  a check,  draft or  similar instrument  inadvertently drawn
    against insufficient funds in the ordinary course of business; PROVIDED that
    such  Indebtedness  is  extinguished  within  five  business  days  of   its
    incurrence;
 
        (x)  Indebtedness  of  the  Company  or  any  Subsidiary  consisting  of
    guarantees,  indemnities  or  obligations  in  respect  of  purchase   price
    adjustments in connection with the acquisition or disposition of assets;
 
        (xi) Indebtedness of the Company evidenced by commercial paper issued by
    the  Company;  PROVIDED, HOWEVER,  that  the aggregate  principal  amount of
    Indebtedness incurred  pursuant  to  clauses  (i), (ii)  and  (xi)  of  this
    definition  of "Permitted Indebtedness" does  not exceed $1.7 billion (after
    giving PRO  FORMA  effect to  the  use of  proceeds  of the  Offering)  less
    mandatory  repayments  actually made  in  respect of  any  term Indebtedness
    thereunder;
 
                                       67

       (xii) Indebtedness of the Company  pursuant to guarantees by the  Company
    or  any Subsidiary  Guarantor in  connection with  any Permitted Receivables
    Financing; PROVIDED, HOWEVER, that such Indebtedness shall not exceed 15% of
    the book value of the Transferred Receivables or in the case of  receivables
    arising  from direct financing leases for retail electronics systems, 30% of
    the book value thereof;
 
      (xiii) Indebtedness of  the Company  and its Subsidiaries  in addition  to
    that described in clauses (i) through (xii) of this definition of "Permitted
    Indebtedness,"  together  with any  other outstanding  Indebtedness incurred
    pursuant to  this clause  (xiii), not  to exceed  $100 million  at any  time
    outstanding in the aggregate; and
 
       (xiv)  any renewals, extensions,  substitutions, refundings, refinancings
    or replacements (each,  a "refinancing")  of any  Indebtedness described  in
    clauses (ii), (iii) and (iv) of this definition of "Permitted Indebtedness,"
    including  any  successive  refinancings,  so  long  as  (A)  the  aggregate
    principal amount of  Indebtedness represented  thereby is  not increased  by
    such  refinancing to an  amount greater than such  principal amount plus the
    lesser of (x) the stated amount of any premium or other payment required  to
    be  paid in connection with such a  refinancing pursuant to the terms of the
    Indebtedness being refinanced or (y) the amount of premium or other  payment
    actually  paid at such  time to refinance the  Indebtedness, plus, in either
    case, the amount of expenses of the  Company or Subsidiary, as the case  may
    be,  incurred in connection  with such refinancing  and (B) such refinancing
    does not reduce the Average Life  to Stated Maturity or the Stated  Maturity
    of such Indebtedness.
 
    "Permitted  Investment" means (i) Investment  in any Wholly Owned Subsidiary
or any Investment in any Person by the Company or any Wholly Owned Subsidiary as
a result  of  which  such  Person  becomes a  Wholly  Owned  Subsidiary  or  any
Investment  in  the  Company by  a  Wholly Owned  Subsidiary;  (ii) intercompany
Indebtedness to the  extent permitted  under clause  (vi) of  the definition  of
"Permitted  Indebtedness"; (iii) Temporary Cash Investments; (iv) sales of goods
on trade credit terms consistent with the Company's past practices or  otherwise
consistent  with  trade  credit  terms  in  common  use  in  the  industry;  (v)
Investments in direct financing  leases for equipment owned  by the Company  and
leased  to its customers in the ordinary course of business consistent with past
practice; (vi)  Investments  in  existence  on  the  date  of  the  Senior  Note
Indentures;  and (vii)  any substitutions or  replacements of  any Investment so
long as  the  aggregate amount  of  such Investment  is  not increased  by  such
substitution or replacement.
 
    "Permitted Liens" means, with respect to any Person:
 
        (a) any Lien existing as of the date of the Senior Note Indenture;
 
        (b)  any Lien arising by reason of  (1) any judgment, decree or order of
    any court, so  long as such  Lien is adequately  bonded and any  appropriate
    legal  proceedings which may have been duly initiated for the review of such
    judgment, decree or  order shall  not have  been finally  terminated or  the
    period  within  which  such  proceedings may  be  initiated  shall  not have
    expired; (2)  taxes, assessments,  governmental charges  or levies  not  yet
    delinquent  or which  are being  contested in  good faith;  (3) security for
    payment of workers' compensation  or other insurance;  (4) security for  the
    performance of tenders, leases (including, without limitation, statutory and
    common  law landlord's  liens) and contracts  (other than  contracts for the
    payment  of   money);   (5)  zoning   restrictions,   easements,   licenses,
    reservations,  title defects, rights of others for rights of way, utilities,
    sewers, electric  lines, telephone  or telegraph  lines, and  other  similar
    purposes, provisions, covenants, conditions, waivers and restrictions on the
    use  of  property or  minor irregularities  of title  (and, with  respect to
    leasehold interests, mortgages,  obligations, liens  and other  encumbrances
    incurred,  created, assumed or permitted to exist and arising by, through or
    under a landlord or owner of the leased property, with or without consent of
    the lessee),  none of  which materially  impairs the  use of  any parcel  of
    property  material to the  operation of the  business of the  Company or any
    Subsidiary or the value of such  property for the purpose of such  business;
    (6) deposits to secure public or statutory obligations; (7) operation of law
    in  favor of growers, dealers and  suppliers of fresh fruits and vegetables,
    carriers, mechanics, materialmen, laborers, employees or suppliers, incurred
    in the ordinary course of business for sums which are not yet delinquent  or
    are  being  contested  in  good  faith  by  negotiations  or  by appropriate
    proceedings which suspend the collection
 
                                       68

    thereof; (8) the  grant by the  Company to licensees,  pursuant to  security
    agreements,  of security  interest in  trademarks and  goodwill, patents and
    trade secrets  of  the  Company to  secure  the  damages, if  any,  of  such
    licensees,  resulting from the rejection of the license of such licensees in
    a bankruptcy,  reorganization  or similar  proceeding  with respect  to  the
    Company; or (9) security for surety or appeal bonds;
 
        (c)  any extension, renewal,  refinancing or replacement  of any Lien on
    property of the Company  or any Subsidiary  existing as of  the date of  the
    Senior  Note  Indenture  and  securing  the  Indebtedness  under  the Credit
    Agreement in  an aggregate  principal  amount not  to exceed  the  principal
    amount  of the  Indebtedness outstanding as  permitted by clause  (i) of the
    definition of "Permitted Indebtedness" so  long as no additional  collateral
    is  granted as  security thereby;  PROVIDED that  this clause  (c) shall not
    apply to any Lien on such property that  has not been subject to a Lien  for
    30 days;
 
        (d)  any Lien on any property or assets  of a Subsidiary in favor of the
    Company or any Wholly Owned Subsidiary;
 
        (e) any Lien securing  Acquired Indebtedness created  prior to (and  not
    created  in connection with, or in  contemplation of) the incurrence of such
    Indebtedness by the Company or any Subsidiary; PROVIDED that such Lien  does
    not  extend to any  assets of the  Company or any  Subsidiary other than the
    assets acquired in the transaction  resulting in such Acquired  Indebtedness
    being incurred by the Company or Subsidiary, as the case may be;
 
        (f) any Lien to secure the performance of bids, trade contracts, letters
    of  credit  and other  obligations  of a  like  nature and  incurred  in the
    ordinary course of business of the Company or any Subsidiary;
 
        (g)  any  Lien  securing  any  Interest  Rate  Agreements  or   Currency
    Agreements permitted to be incurred pursuant to clause (v) of the definition
    of  "Permitted Indebtedness" or any collateral for the Indebtedness to which
    such Interest Rate Agreements or Currency Agreements relate;
 
        (h) any Lien securing the Notes;
 
        (i) any Lien on an asset securing Indebtedness (including Capital  Lease
    Obligations)  incurred or  assumed for the  purpose of financing  all or any
    part of the cost of acquiring or constructing such asset; PROVIDED that such
    Lien attaches  to such  asset  concurrently or  within  180 days  after  the
    acquisition or completion of construction thereof;
 
        (j)  any  Lien  on  real or  personal  property  securing  Capital Lease
    Obligations of the Company or any Subsidiary as lessee with respect to  such
    real  or  personal property  (1)  to the  extent  that the  Company  or such
    Subsidiary  has  entered  into  (and  not  terminated),  or  has  a  binding
    commitment  for, subleases on terms  which, to the Company,  are at least as
    favorable, on a  current basis, as  the terms of  the corresponding  capital
    lease  or (2)  under which the  aggregate principal component  of the annual
    rent payable does not exceed $5 million;
 
        (k) any  Lien on  a Financing  Receivable or  other receivable  that  is
    transferred in a Permitted Receivables Financing;
 
        (l) any Lien consisting of any pledge to any Person of Indebtedness owed
    by  any  Subsidiary  to  the  Company or  to  any  Wholly  Owned Subsidiary;
    PROVIDED, that (i) such  Subsidiary is a Subsidiary  Guarantor and (ii)  the
    principal  amount pledged does  not exceed the  Indebtedness secured by such
    pledge;
 
       (m) any extension, renewal,  refinancing or replacement,  in whole or  in
    part,  of  any Lien  described in  the foregoing  clause (a)  so long  as no
    additional collateral is granted as security thereby.
 
    "Permitted  Receivables  Financing"  means  any  transaction  involving  the
transfer  (by way  of sale, pledge  or otherwise) by  the Company or  any of its
Subsidiaries of  receivables to  any other  Person, PROVIDED  that after  giving
effect  to such transaction the sum of (i) the aggregate uncollected balances of
the receivables so
 
                                       69

transferred ("Transferred Receivables")  PLUS (ii) the  aggregate amount of  all
collections  on Transferred Receivables  theretofore received by  the seller but
not yet remitted to the  purchaser, in each case  at the date of  determination,
would not exceed $750 million.
 
    "Person"  means  any  individual,  corporation,  limited  liability company,
partnership,   joint   venture,   association,   joint-stock   company,   trust,
unincorporated organization or government or any agency or political subdivision
thereof.
 
    "Preferred  Stock" means,  with respect to  any Person, any  and all shares,
interests, participations  or other  equivalents  (however designated)  of  such
Person's  preferred stock whether  now outstanding, or issued  after the date of
the Indenture,  and including,  without limitation,  all classes  and series  of
preferred or preference stock of such Person.
 
    "Principal  Property" means  any manufacturing  or processing  plant, office
facility, retail store (other than  an Equity Store), warehouse or  distribution
center,  including,  in each  case,  the fixtures  appurtenant  thereto, located
within the continental United States and owned and operated now or hereafter  by
the  Company or any Subsidiary and  having a book value on  the date as of which
the determination is  being made of  more than 2%  of Consolidated Net  Tangible
Assets.
 
    "Public   Equity  Offering"  means  a  primary  public  offering  of  equity
securities of the Company, pursuant to an effective registration statement under
the Securities Act with net cash proceeds of at least $50 million.
 
    "Qualified Capital Stock" of any Person  means any and all Capital Stock  of
such Person other than Redeemable Capital Stock.
 
    "Rating  Agency"  means any  of (i)  S&P, (ii)  Moody's or  (iii) if  S&P or
Moody's or both  shall not  make a  rating of  the Notes  publicly available,  a
security rating agency or agencies, as the case may be, nationally recognized in
the  United States, selected by the Company,  which shall be substituted for S&P
or Moody's or both, as the case may be.
 
    "Rating Category"  means (i)  with  respect to  S&P,  any of  the  following
categories:  AAA, AA, A, BBB,  BB, B, CCC, CC, C  and D (or equivalent successor
categories); (ii) with respect to Moody's, any of the following categories: Aaa,
Aa, A, Baa, Ba, B,  Caa, Ca, C and D  (or equivalent successor categories);  and
(iii)  the equivalent  of any such  category of  S&P or Moody's  used by another
Rating Agency. In determining whether the  rating of the Notes has decreased  by
one  or more gradation, gradations within Rating Categories (+ and - for S&P; 1,
2 and 3  for Moody's; or  the equivalent gradations  for another Rating  Agency)
shall be taken into account (e.g., with respect to S&P, a decline in rating from
BB+  to  BB, as  well as  from  BB- to  B+, will  constitute  a decrease  of one
gradation).
 
    "Rating Decline" means the occurrence on, or within 90 days after, the  date
of public notice of the occurrence of a Change of Control or of the intention of
the  Company or Persons  controlling the Company  to effect a  Change of Control
(which period shall  be extended so  long as the  rating of the  Notes is  under
publicly  announced consideration  for possible downgrade  by any  of the Rating
Agencies) of the following: (i) if the  Notes are rated by either Rating  Agency
as  Investment  Grade immediately  prior to  the beginning  of such  period, the
rating of the Notes by both Rating Agencies shall be below Investment Grade;  or
(ii)  if the  Notes are  rated below  Investment Grade  by both  Rating Agencies
immediately prior to the beginning  of such period, the  rating of the Notes  by
either  Rating Agency  shall be decreased  by one or  more gradations (including
gradations within Rating Categories as well as between Rating Categories).
 
    "Redeemable Capital Stock" means any Capital Stock that, either by its terms
or by the terms of any security into which it is convertible or exchangeable  or
otherwise,  is, or upon the  happening of an event or  passage of time would be,
required to be redeemed  prior to any  Stated Maturity of  the principal of  the
Notes  or is redeemable at the option of the holder thereof at any time prior to
any such  Stated Maturity,  or  is convertible  into  or exchangeable  for  debt
securities  at any time prior  to any such Stated Maturity  at the option of the
holder thereof.
 
    "Securities Act" means the Securities Act of 1933, as amended.
 
                                       70

    "Senior  Indebtedness"  means  Indebtedness   of  the  Company  other   than
Subordinated Indebtedness.
 
    "Significant  Subsidiary" of the Company means any Subsidiary of the Company
that is a "significant subsidiary" as defined in Rule 1.02(v) of Regulation  S-X
under the Securities Act.
 
    "S&P" means Standard & Poor's Ratings Group, a division of McGraw Hill Inc.,
a New York corporation, or any successor rating agency.
 
    "Stated  Maturity"  when  used  with  respect  to  any  Indebtedness  or any
installment of interest thereon means  the dates specified in such  Indebtedness
as  the fixed date on which the principal of or premiums on such Indebtedness or
such installment of interest is due and payable.
 
    "Subordinated Indebtedness" means Indebtedness  of the Company  subordinated
in right of payment to the Notes.
 
    "Subsidiary"  means any  Person a  majority of  the equity  ownership or the
Voting Stock of  which is  at the  time owned,  directly or  indirectly, by  the
Company  or by one or more other Subsidiaries, or by the Company and one or more
other Subsidiaries.
 
    "Subsidiary Guarantor" means, in each case as applicable, any Person that is
required pursuant to the "Additional Guarantees" covenant, on or after the  date
of  the applicable  Senior Note  Indenture, to execute  a Note  Guarantee of the
Fixed Rate Notes pursuant to the Fixed  Rate Note Indenture or a Note  Guarantee
of  the Floating Rate Notes pursuant to the Floating Rate Note Indenture, as the
case may  be,  until  a  successor  replaces any  such  party  pursuant  to  the
applicable  provisions of the applicable  Senior Note Indenture and, thereafter,
shall mean such successor, and, in the case of each such Senior Note  Indenture,
the  following Subsidiaries of the Company: 109 West Main Street, Inc., 121 East
Main Street, Inc.,  27 Slayton Avenue,  Inc., 29 Super  Market, Inc., 35  Church
Street,  Inc., ATI, Inc., Badger Markets, Inc., Baker's Supermarkets, Inc., Ball
Motor Service,  Inc., Boogaart  Stores  of Nebraska,  Inc., Central  Park  Super
Duper,  Inc., Commercial Cold/Dry Storage Company, Consumers Markets, Inc., D.L.
Food Stores, Inc., Del-Arrow  Super Duper, Inc.,  Festival Foods, Inc.,  Fleming
Direct  Sales Corporation,  Fleming Foods  East, Inc.,  Fleming Foods  of Texas,
Inc., Fleming Foods of Tennessee, Inc., Fleming Foods of Virginia, Inc., Fleming
Foods of Alabama, Inc., Fleming Foods of Ohio, Inc., Fleming Foods South,  Inc.,
Fleming   Foods  West,   Inc.,  Fleming   Foreign  Sales   Corporation,  Fleming
Franchising, Inc., Fleming Holdings,  Inc., Fleming International Ltd.,  Fleming
Site  Media,  Inc., Fleming  Supermarkets of  Florida, Inc.,  Fleming Technology
Leasing Company, Inc., Fleming Transportation Service, Inc., Food Brands,  Inc.,
Food  Holdings,  Inc.,  Food Saver  of  Iowa, Inc.,  Food-4-Less,  Inc., Gateway
Development Co., Inc.,  Gateway Food  Distributors, Inc.,  Gateway Foods,  Inc.,
Gateway  Foods of  Altoona, Inc., Gateway  Foods of  Pennsylvania, Inc., Gateway
Foods of  Twin Ports,  Inc.,  Gateway Food  Service Corporation,  Grand  Central
Leasing  Corporation, Great  Bend Supermarkets,  Inc., Hub  City Transportation,
Inc., Kensington  and Harlem,  Inc., Ladysmith  East IGA,  Inc., Ladysmith  IGA,
Inc.,  Lake Markets, Inc., LAS, Inc., M&H Desoto, Inc., M&H Financial Corp., M&H
Realty Corp., Malone & Hyde of  Lafayette, Inc., Malone & Hyde, Inc.,  Manitowoc
IGA,  Inc., Moberly  Foods, Inc.,  Mt. Morris  Super Duper,  Inc., Niagara Falls
Super Duper, Inc., Northern Supermarkets of Oregon, Inc., Northgate Plaza, Inc.,
Peshtigo IGA, Inc., Piggly Wiggly Corporation, Quality Incentive Company,  Inc.,
Rainbow  Transportation  Services, Inc.,  Richland Center  IGA, Inc.,  Route 16,
Inc., Route 219,  Inc., Route 417,  Inc., Scrivner, Inc.,  Scrivner of  Alabama,
Inc.,  Scrivner of Illinois,  Inc., Scrivner of Iowa,  Inc., Scrivner of Kansas,
Inc., Scrivner of New York, Inc., Scrivner of North Carolina, Inc., Scrivner  of
Pennsylvania,  Inc.,  Scrivner  of  Tennessee, Inc.,  Scrivner  of  Texas, Inc.,
Scrivner Super Stores of  Illinois, Inc., Scrivner Super  Stores of Iowa,  Inc.,
Scrivner  Transportation, Inc., Scrivner-Food Holdings, Inc., Sehon Foods, Inc.,
Selected Products,  Inc., Sentry  Markets, Inc.,  SmarTrans, Inc.,  South  Ogden
Super Duper, Inc., Southern Supermarkets, Inc. (TX), Southern Supermarkets, Inc.
(OK),  Southern  Supermarkets of  Louisiana, Inc.,  Star Groceries,  Inc., Store
Equipment, Inc.,  Sundries Service,  Inc., Switzer  Foods, Inc.,  Thompson  Food
Basket, Inc., and WPC, Inc.
 
    "Temporary  Cash Investments" means (i)  any evidence of Indebtedness issued
by the United States,  or an instrumentality or  agency thereof, and  guaranteed
fully  as to principal, premium, if any, and interest by the United States, (ii)
any  certificate  of  deposit  issued  by,  or  time  deposit  of,  a  financial
institution that is a
 
                                       71

member  of the  Federal Reserve System  having combined capital  and surplus and
undivided profits of not less than $500 million, whose debt has a rating, at the
time of which any investment  therein is made, of  "A" (or higher) according  to
Moody's  or "A" (or higher) according to S&P, (iii) commercial paper issued by a
corporation (other than an Affiliate or Subsidiary of the Company) organized and
existing under the laws of  the United States with a  rating, at the time as  of
which  any investment therein is made, of "P-1" (or higher) according to Moody's
or "A-1" (or higher)  according to S&P, (iv)  any money market deposit  accounts
issued  or offered by  a financial institution  that is a  member of the Federal
Reserve System having capital and surplus  in excess of $500 million, (v)  short
term  tax-exempt bonds with a rating, at the  time as of which any investment is
made therein, of  "Aa2" (or  higher) according to  Moody's or  "AA" (or  higher)
according  to S&P, (vi) shares  in a mutual fund,  the investment objectives and
policies of which require it to  invest substantially in the investments of  the
type  described  in  clause  (v) and  (vii)  repurchase  and  reverse repurchase
obligations with the term of not more than seven days for underlying  securities
of  the types described in clauses (i)  and (ii) entered into with any financial
institution meeting the qualifications specified  in clause (ii); PROVIDED  that
in  the case of clauses  (i), (ii), (iii), (v),  (vi) and (vii), such investment
matures within one year from the date of acquisition thereof.
 
    "Transferred Receivables" has  the meaning  specified in  the definition  of
"Permitted Receivables Financing" set forth herein.
 
    "Trust Indenture Act" means the Trust Indenture Act of 1939, as amended.
 
    "Voting  Stock" means stock  of the class  or classes pursuant  to which the
holders thereof have the  general voting power  under ordinary circumstances  to
elect  at least a majority of the board  of directors, managers or trustees of a
Person (irrespective of whether or not at  the time stock of any other class  or
classes  shall have or might have voting power by reason of the happening of any
contingency).
 
    "Wholly Owned Subsidiary" means  a Subsidiary all  the Capital Stock  (other
than  directors' qualifying shares) of which is  owned by the Company or another
Wholly Owned Subsidiary.
 
                                       72

                                  UNDERWRITING
 
    Subject  to the terms and conditions  set forth in an underwriting agreement
(the "Underwriting Agreement")  between the Company  and Merrill Lynch,  Pierce,
Fenner  & Smith Incorporated  ("Merrill Lynch") and  J.P. Morgan Securities Inc.
("J.P. Morgan Securities" and together with Merrill Lynch, the  "Underwriters"),
the  Company has agreed to  sell to the Underwriters,  and the Underwriters have
severally agreed to purchase, the respective principal amounts of the Notes  set
forth  after their  names below.  The Underwriting  Agreement provides  that the
obligations of the Underwriters are subject to certain conditions precedent  and
that  the Underwriters will be obligated to purchase all of the Notes if any are
purchased.
 


                                                                                                PRINCIPAL AMOUNT
                                                                            PRINCIPAL AMOUNT           OF
                                                                                   OF            FLOATING RATE
             UNDERWRITER                                                    FIXED RATE NOTES         NOTES
- -------------------------------------------------------------------------  ------------------  ------------------
                                                                                         
Merrill Lynch, Pierce, Fenner & Smith
          Incorporated...................................................    $  270,000,000      $  180,000,000
J.P. Morgan Securities Inc. .............................................        30,000,000          20,000,000
                                                                           ------------------  ------------------
          Total..........................................................    $  300,000,000      $  200,000,000
                                                                           ------------------  ------------------
                                                                           ------------------  ------------------

 
    The Underwriters have  advised the  Company that they  propose initially  to
offer  the Notes to  the public at the  public offering prices  set forth on the
cover page of  this Prospectus, and  to certain  dealers at such  prices less  a
concession  not in excess of .5% of the principal amount of the Fixed Rate Notes
and less  a concession  not in  excess of  .5% of  the principal  amount of  the
Floating Rate Notes. The Underwriters may allow, and such dealers may reallow, a
discount  not in excess of .25% of the  principal amount of the Fixed Rate Notes
and a discount not  in excess of  .25% of the principal  amount of the  Floating
Rate  Notes to  certain other  dealers. After  the initial  public offering, the
public offering prices, concessions and discounts may be changed.
 
    There is no public trading  market for the Notes,  and the Company does  not
intend  to apply  for listing  of the  Notes on  any securities  exchange or any
inter-dealer quotation system. The Company has been advised by the  Underwriters
that,  following  the  completion of  the  initial  offering of  the  Notes, the
Underwriters presently  intend to  make  a market  in  the Notes,  although  the
Underwriters  are under no  obligation to do  so and may  discontinue any market
making at  any  time without  notice.  No assurances  can  be given  as  to  the
liquidity  of the trading markets for the Notes or that an active trading market
for the Notes will develop.  If active public trading  markets for the Notes  do
not  develop, the  market prices  and liquidity  of the  Notes may  be adversely
affected.
 
    The Company  and the  Subsidiary  Guarantors have  agreed to  indemnify  the
Underwriters  against certain liabilities, including civil liabilities under the
Securities Act,  or to  contribute to  payments which  the Underwriters  may  be
required to make in respect thereof.
 
    As  further discussed in "Use  of Proceeds," the Company  intends to use the
proceeds of the Offering to repay all obligations outstanding under Tranche B of
the Credit Agreement.  The offerings of  the Fixed Rate  Notes and the  Floating
Rate  Notes, respectively, are  not conditioned upon each  other. If either such
offering is not completed, a portion of  Tranche B of the Credit Agreement  will
remain outstanding.
 
    The  Underwriters have  from time  to time  provided and  may in  the future
provide investment banking and financial  advisory services to the Company,  and
have  received and may in  the future receive customary  fees for such services.
Morgan Guaranty, an affiliate of J.P.  Morgan Securities, has from time to  time
provided and may in the future provide commercial banking services and financial
advisory services for the Company and has received and may in the future receive
customary  fees for  such services. Currently,  Morgan Guaranty  is the managing
agent and a lender to the Company pursuant to the Credit Agreement.
 
    Because more than  10% of the  net proceeds of  the Offering, not  including
underwriting compensation, will be used to repay the Tranche B obligations under
the  Credit Agreement for the  benefit of Morgan Guaranty,  an affiliate of J.P.
Morgan Securities, one  of the Underwriters  for the Offering,  the Offering  is
being  made pursuant to the  provisions of Article III,  Section 44(c)(8) of the
Rules of Fair Practice of the  National Association of Securities Dealers,  Inc.
In    accordance   with    these   provisions,    Merrill   Lynch    is   acting
 
                                       73

as a "qualified independent underwriter," and the yield on the Fixed Rate  Notes
and Floating Rate Notes, respectively, offered hereby will be no lower than that
recommended  by  Merrill  Lynch.  Merrill Lynch  has  also  participated  in the
preparation of the Registration Statement of which this Prospectus is a part and
has performed due diligence with respect thereto.
 
                                 LEGAL OPINIONS
 
    The validity of  the Notes offered  hereby and the  Note Guarantees will  be
passed  upon for the Company by McAfee  & Taft A Professional Corporation, Tenth
Floor, Two  Leadership  Square,  Oklahoma  City, Oklahoma  73102,  and  for  the
Underwriters  by Shearman &  Sterling, 599 Lexington Avenue,  New York, New York
10022.
 
                                    EXPERTS
 
    The consolidated financial statements as  of December 25, 1993 and  December
26,  1992 and for each of the three  years in the period ended December 25, 1993
included in  this  Prospectus  have  been audited  by  Deloitte  &  Touche  LLP,
independent  auditors,  as  stated in  their  report appearing  herein,  and are
included in reliance upon the report of such firm given upon their authority  as
experts  in accounting  and auditing.  The consolidated  financial statements of
Haniel Corporation included in or  incorporated by reference in this  Prospectus
or  the  related  Registration Statement,  to  the  extent and  for  the periods
indicated  in  their  reports,  have  been  audited  by  Arthur  Andersen   LLP,
independent  public accountants, and are included in reliance upon the authority
of said firm as experts in accounting and auditing in giving said reports.
 
                                       74

                         INDEX TO FINANCIAL STATEMENTS
 
                                                                                    
FLEMING COMPANIES, INC. AND SUBSIDIARIES
Consolidated Condensed Statements of Earnings for the 40 weeks ended October 2, 1993
 and October 1, 1994.................................................................        F-2
Consolidated Condensed Balance Sheets as of December 25, 1993 and October 1, 1994....        F-3
Consolidated Condensed Statements of Cash Flows for the 40 weeks ended October 2,
 1993 and October 1, 1994............................................................        F-4
Notes to Consolidated Condensed Financial Statements.................................        F-5
Independent Auditors' Report.........................................................        F-6
Consolidated Statements of Earnings for the three years in the period ended December
 25, 1993............................................................................        F-7
Consolidated Balance Sheets as of December 26, 1992 and December 25, 1993............        F-8
Consolidated Statements of Shareholders' Equity for the three years in the period
 ended December 25, 1993.............................................................        F-9
Consolidated Statements of Cash Flows for the three years in the period ended
 December 25, 1993...................................................................       F-10
Notes to Consolidated Financial Statements...........................................       F-11
Quarterly Financial Information for the years ended December 26, 1992 and December
 25, 1993 (unaudited)................................................................       F-24
 
HANIEL CORPORATION
Report of Independent Public Accountants.............................................       F-26
Consolidated Balance Sheets as of December 31, 1992 and 1993 and June 30, 1994.......       F-27
Consolidated Statements of Income for the three years ended December 31, 1993 and the
 six months ended June 30, 1993 and 1994.............................................       F-28
Consolidated Statements of Stockholder's Equity for the three years ended December
 31, 1993 and the six months ended June 30, 1994.....................................       F-29
Consolidated Statements of Cash Flows for the three years ended December 31, 1993 and
 the six months ended June 30, 1993 and 1994.........................................       F-30
Notes to Consolidated Financial Statements...........................................       F-31


 
                                      F-1

                            FLEMING COMPANIES, INC.
 
                 CONSOLIDATED CONDENSED STATEMENTS OF EARNINGS
 
          FOR THE 40 WEEKS ENDED OCTOBER 2, 1993, AND OCTOBER 1, 1994
                    (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
 


                                                                                           1993          1994
                                                                                       ------------  -------------
                                                                                               
Net sales............................................................................  $  9,945,559  $  11,057,167
Costs and expenses:
  Cost of sales......................................................................     9,357,706     10,295,126
  Selling and administrative.........................................................       417,365        635,141
  Interest expense...................................................................        59,081         75,692
  Interest income....................................................................       (47,902)       (46,885)
  Equity investment results..........................................................         5,824         11,027
  Facilities consolidation...........................................................         6,500             --
                                                                                       ------------  -------------
    Total costs and expenses.........................................................     9,798,574     10,970,101
                                                                                       ------------  -------------
Earnings before taxes................................................................       146,985         87,066
Taxes on income......................................................................        62,469         41,356
                                                                                       ------------  -------------
Net earnings.........................................................................  $     84,516  $      45,710
                                                                                       ------------  -------------
                                                                                       ------------  -------------
Net earnings per share...............................................................  $       2.30  $        1.23
Dividends paid per share.............................................................  $        .90  $         .90
Weighted average shares outstanding..................................................        36,773         37,204

 
    Sales  to customers accounted for under the equity method were approximately
$1.1 billion in 1994 and 1993.
 
           See notes to consolidated condensed financial statements.
 
                                      F-2

                            FLEMING COMPANIES, INC.
 
                     CONSOLIDATED CONDENSED BALANCE SHEETS
 
                                 (IN THOUSANDS)
 
                                     ASSETS
 


                                                                                             DECEMBER 25,      OCTOBER 1,
                                                                                                 1993             1994
                                                                                            ---------------   ------------
Current assets:
                                                                                                        
  Cash and cash equivalents...............................................................   $       1,634    $      5,625
  Receivables.............................................................................         301,514         406,860
  Inventories.............................................................................         923,280       1,312,369
  Other current assets....................................................................         134,229         134,363
                                                                                            ---------------   ------------
    Total current assets..................................................................       1,360,657       1,859,217
Investments and notes receivable..........................................................         309,237         418,281
Investment in direct financing leases.....................................................         235,263         234,590
Property and equipment....................................................................       1,061,905       1,394,381
    Less accumulated depreciation and amortization........................................         426,846         458,290
                                                                                            ---------------   ------------
Property and equipment, net...............................................................         635,059         936,091
Other assets..............................................................................          90,633         186,118
Goodwill..................................................................................         471,783         989,416
                                                                                            ---------------   ------------
Total assets..............................................................................   $   3,102,632    $  4,623,713
                                                                                            ---------------   ------------
                                                                                            ---------------   ------------
 
                                           LIABILITIES AND SHAREHOLDERS' EQUITY
 
Current liabilities:
  Accounts payable........................................................................   $     682,988    $  1,046,144
  Current maturities of long-term debt....................................................          61,329          94,302
  Current obligations under capital leases................................................          13,172          15,163
  Other current liabilities...............................................................         161,043         250,012
                                                                                            ---------------   ------------
    Total current liabilities.............................................................         918,532       1,405,621
Long-term debt............................................................................         666,819       1,601,402
Long-term obligations under capital leases................................................         337,009         352,894
Deferred income taxes.....................................................................          27,500          67,873
Other liabilities.........................................................................          92,366         117,253
Shareholders' equity:
  Common stock, $2.50 par value per share.................................................          92,350          93,361
  Capital in excess of par value..........................................................         489,044         493,372
  Reinvested earnings.....................................................................         492,250         504,647
  Cumulative currency translation adjustment..............................................            (288)           (663)
                                                                                            ---------------   ------------
                                                                                                 1,073,356       1,090,717
    Less guarantee of ESOP debt...........................................................          12,950          12,047
                                                                                            ---------------   ------------
      Total shareholders' equity..........................................................       1,060,406       1,078,670
                                                                                            ---------------   ------------
Total liabilities and shareholders' equity................................................   $   3,102,632    $  4,623,713
                                                                                            ---------------   ------------
                                                                                            ---------------   ------------

 
    Receivables include  $36.7  million and  $48.3  million in  1994  and  1993,
respectively, from customers accounted for under the equity method.
 
           See notes to consolidated condensed financial statements.
 
                                      F-3

                            FLEMING COMPANIES, INC.
 
                CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
 
          FOR THE 40 WEEKS ENDED OCTOBER 2, 1993, AND OCTOBER 1, 1994
                                 (IN THOUSANDS)
 


                                                                                           1993          1994
                                                                                        -----------  -------------
                                                                                               
Net cash provided by operating activities.............................................  $   246,409  $     325,027
Cash flows from investing activities:
  Collections on notes receivable.....................................................       68,111         62,341
  Notes receivable funded.............................................................     (116,794)       (93,316)
  Purchase of property and equipment..................................................      (35,835)       (85,448)
  Proceeds from sale of property and equipment........................................        1,493          5,467
  Investments in customers............................................................      (23,398)       (12,764)
  Proceeds from sale of investment....................................................        6,054          4,665
  Business acquired...................................................................      (50,812)      (387,488)
  Proceeds from sale of businesses....................................................      --               6,682
  Other investing activities..........................................................         (692)        (1,584)
                                                                                        -----------  -------------
    Net cash used in investing activities.............................................     (151,873)      (501,445)
                                                                                        -----------  -------------
Cash flows from financing activities:
  Proceeds from long-term borrowings..................................................      331,502      1,665,751
  Principal payments on long-term debt................................................     (387,484)    (1,425,563)
  Principal payments on capital lease obligations.....................................       (8,309)        (9,916)
  Sale of common stock under incentive stock and stock ownership plans................        5,921          5,339
  Dividends paid......................................................................      (33,087)       (33,314)
  Other financing activities..........................................................       (2,213)       (21,888)
                                                                                        -----------  -------------
    Net cash provided by (used in) financing activities...............................      (93,670)       180,409
                                                                                        -----------  -------------
Net increase in cash and cash equivalents.............................................          866          3,991
Cash and cash equivalents, beginning of period........................................        4,712          1,634
                                                                                        -----------  -------------
Cash and cash equivalents, end of period..............................................  $     5,578  $       5,625
                                                                                        -----------  -------------
                                                                                        -----------  -------------
Supplemental information:
  Cash paid for interest..............................................................  $    56,908  $      58,431
  Cash paid for taxes.................................................................  $    67,906  $      36,504
                                                                                        -----------  -------------
                                                                                        -----------  -------------

 
           See notes to consolidated condensed financial statements.
 
                                      F-4

                            FLEMING COMPANIES, INC.
 
              NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
 
    1.   The consolidated condensed balance sheet as of October 1, 1994, and the
consolidated condensed  statements of  earnings and  cash flows  for the  12-and
40-week  periods ended October 1, 1994, and  October 2, 1993, have been prepared
by the company,  without audit. In  the opinion of  management, all  adjustments
necessary to present fairly the company's financial position at October 1, 1994,
and the results of operations and cash flows for the periods presented have been
made.  All such adjustments are of  a normal, recurring nature. Primary earnings
per common share are calculated  using the weighted average shares  outstanding.
The  impact of outstanding  stock options on  primary earnings per  share is not
material.
 
    2.   Certain  information  and footnote  disclosures  normally  included  in
financial  statements prepared in accordance  with generally accepted accounting
principles  have  been  condensed  or  omitted.  These  consolidated   condensed
financial  statements  should  be  read  in  conjunction  with  the consolidated
financial statements and  related notes  included in the  company's 1993  annual
report on Form 10-K.
 
    3.   The LIFO method of inventory valuation is used for determining the cost
of substantially all grocery and  certain perishable inventories. The excess  of
current  cost of LIFO inventories  over their stated value  was $14.8 million at
October 1, 1994 and $12.5 million at December 25, 1993.
 
    4.  On  July 19, 1994,  Fleming acquired Haniel  Corporation, the parent  of
Scrivner,  Inc. Fleming paid  $388 million in  cash for the  stock of Haniel and
refinanced substantially  all  of  Haniel's  and  Scrivner's  pre-existing  debt
(approximately  $680  million in  aggregate principal  amount and  premium). The
acquisition has been accounted for under the purchase method of accounting.  The
results  of operations reflect the operations of Scrivner since the beginning of
the third quarter. The initial purchase  price allocation as of October 1,  1994
has  resulted  in  an excess  of  purchase  price over  net  assets  acquired of
approximately $535 million. Property and equipment appraisals are in process.
 
    The following pro  forma summary  of consolidated results  of operations  is
prepared  as though the acquisition had occurred at the beginning of the periods
presented.
 


                                                                   40 WEEKS ENDED
                                                                --------------------
                                                                  1993       1994
                                                                ---------  ---------
                                                                (IN MILLIONS, EXCEPT
                                                                 PER SHARE AMOUNTS)
                                                                     
Net sales.....................................................  $  14,553  $  14,281
Net earnings..................................................  $      64  $      33
Net earnings per share........................................  $    1.73  $     .89
                                                                ---------  ---------
                                                                ---------  ---------

 
    5.  In December 1993, the  company and numerous other defendants were  named
in two suits in U.S. District Court in Miami. The plaintiffs allege liability on
the  part  of  a  subsidiary of  the  company  as a  consequence  of  an alleged
fraudulent scheme conducted  by Premium  Sales Corporation and  others in  which
large  losses in  the Premium-related  entities occurred  to the  detriment of a
purported class of investors which has brought one of the suits. The other  suit
is  by  the  receiver/trustee of  the  estates  of Premium  and  certain  of its
affiliated entities. Plaintiffs seek  damages, treble damages, attorney's  fees,
costs, expenses and other appropriate relief. While the amount of damages sought
under  most claims is not specified, plaintiffs allege that hundreds of millions
of dollars  were  lost  as  the  result of  the  allegations  contained  in  the
complaint.
 
    The  litigation is in its preliminary stages and the ultimate outcome cannot
presently  be  determined.  Furthermore,  management  is  unable  to  predict  a
potential range of monetary exposure, if any, to the company. Based on the large
recovery sought, an unfavorable judgment could have a material adverse effect on
the company. Management believes, however, that a material adverse effect on the
company's  consolidated financial position is not likely. The company intends to
vigorously defend the actions.
 
                                      F-5

                          INDEPENDENT AUDITORS' REPORT
 
To the Board of Directors and Shareholders
Fleming Companies, Inc.
 
    We  have  audited the  accompanying consolidated  balance sheets  of Fleming
Companies, Inc. and subsidiaries as of December 26, 1992 and December 25,  1993,
and  the related consolidated statements  of earnings, shareholders' equity, and
cash flows for each of  the three years in the  period ended December 25,  1993.
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 audits.
 
    We  conducted  our audits  in  accordance with  generally  accepted auditing
standards. Those standards require that we plan and perform the audit to  obtain
reasonable assurance about whether the financial statements are free of material
misstatement.  An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also  includes
assessing  the  accounting principles  used  and significant  estimates  made by
management, as well as evaluating the overall financial statement  presentation.
We believe that our audits provide a reasonable basis for our opinion.
 
    In  our opinion, such  consolidated financial statements  present fairly, in
all material respects,  the financial  position of Fleming  Companies, Inc.  and
subsidiaries  as of December 26, 1992 and  December 25, 1993, and the results of
their operations and their cash flows for each of the three years in the  period
ended  December  25,  1993  in  conformity  with  generally  accepted accounting
principles.
 
DELOITTE & TOUCHE LLP
 
Oklahoma City, Oklahoma
February 10, 1994 (October 1, 1994 as
to Subsidiary Guarantors note)
 
                                      F-6

                            FLEMING COMPANIES, INC.
 
                      CONSOLIDATED STATEMENTS OF EARNINGS
 
FOR THE YEARS ENDED DECEMBER 28, 1991, DECEMBER 26, 1992, AND DECEMBER 25, 1993
                    (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
 


                                                                          1991           1992           1993
                                                                      -------------  -------------  -------------
                                                                                           
Net sales...........................................................  $  12,851,129  $  12,893,534  $  13,092,145
Costs and expenses:
  Cost of sales.....................................................     12,103,080     12,166,858     12,326,778
  Selling and administrative........................................        537,058        494,983        558,470
  Interest expense..................................................         93,353         81,102         78,029
  Interest income...................................................        (61,381)       (59,477)       (62,902)
  Equity investment results.........................................          7,690         15,127         11,865
  Facilities consolidation and restructuring........................         67,000             --        107,827
                                                                      -------------  -------------  -------------
    Total costs and expenses........................................     12,746,800     12,698,593     13,020,067
Earnings before taxes...............................................        104,329        194,941         72,078
Taxes on income.....................................................         39,964         76,037         34,598
                                                                      -------------  -------------  -------------
Earnings before extraordinary loss and cumulative effect of
 accounting change..................................................         64,365        118,904         37,480
Extraordinary loss from early retirement of debt....................             --          5,864          2,308
Cumulative effect of change in accounting for postretirement health
 care benefits......................................................          9,270             --             --
                                                                      -------------  -------------  -------------
Net earnings........................................................  $      55,095  $     113,040  $      35,172
                                                                      -------------  -------------  -------------
                                                                      -------------  -------------  -------------
Net earnings available to common shareholders.......................  $      51,955  $     113,040  $      35,172
                                                                      -------------  -------------  -------------
                                                                      -------------  -------------  -------------
Net earnings per common share:
  Primary before extraordinary loss and accounting change...........  $        1.82  $        3.33  $        1.02
  Extraordinary loss................................................             --            .16            .06
  Accounting change.................................................            .28             --             --
                                                                      -------------  -------------  -------------
  Primary...........................................................  $        1.54  $        3.16  $         .96
                                                                      -------------  -------------  -------------
                                                                      -------------  -------------  -------------
  Fully diluted before extraordinary loss and accounting change.....  $        1.82  $        3.21  $        1.02
  Extraordinary loss................................................             --            .15            .06
  Accounting change.................................................            .28             --             --
                                                                      -------------  -------------  -------------
  Fully diluted.....................................................  $        1.54  $        3.06  $         .96
                                                                      -------------  -------------  -------------
                                                                      -------------  -------------  -------------
Weighted average common shares outstanding..........................         33,651         35,759         36,801
                                                                      -------------  -------------  -------------
                                                                      -------------  -------------  -------------

 
    Sales to customers accounted for under the equity method were  approximately
$1 billion, $1.3 billion and $1.6 billion in 1991, 1992 and 1993, respectively.
 
                See notes to consolidated financial statements.
 
                                      F-7

                            FLEMING COMPANIES, INC.
 
                          CONSOLIDATED BALANCE SHEETS
 
                  AT DECEMBER 26, 1992, AND DECEMBER 25, 1993
                    (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
 
                                     ASSETS
 


                                                                                      1992          1993
                                                                                  ------------  ------------
                                                                                          
Current assets:
  Cash and cash equivalents.....................................................  $      4,712  $      1,634
  Receivables...................................................................       349,324       301,514
  Inventories...................................................................       959,134       923,280
  Other current assets..........................................................        90,040       134,229
                                                                                  ------------  ------------
    Total current assets........................................................     1,403,210     1,360,657
Investments and notes receivable................................................       344,000       309,237
Investment in direct financing leases...........................................       213,956       235,263
Property and equipment:
  Land..........................................................................        46,293        49,580
  Buildings.....................................................................       251,320       268,317
  Fixtures and equipment........................................................       438,068       466,904
  Leasehold improvements........................................................       123,734       133,897
  Leased assets under capital leases............................................       152,737       143,207
                                                                                  ------------  ------------
                                                                                     1,012,152     1,061,905
  Less accumulated depreciation and amortization................................       401,446       426,846
                                                                                  ------------  ------------
    Net property and equipment..................................................       610,706       635,059
Other assets....................................................................        79,686        90,633
Goodwill........................................................................       466,147       471,783
                                                                                  ------------  ------------
    Total assets................................................................  $  3,117,705  $  3,102,632
                                                                                  ------------  ------------
                                                                                  ------------  ------------
 
                                    LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
  Accounts payable..............................................................  $    717,484  $    682,988
  Current maturities of long-term debt..........................................        36,474        61,329
  Current obligations under capital leases......................................        10,927        13,172
  Other current liabilities.....................................................       110,051       161,043
                                                                                  ------------  ------------
    Total current liabilities...................................................       874,936       918,532
Long-term debt..................................................................       735,565       666,819
Long-term obligations under capital leases......................................       302,618       337,009
Deferred income taxes...........................................................        39,194        27,500
Other liabilities...............................................................       104,958        92,366
Shareholders' equity:
  Common stock, $2.50 par value, authorized--100,000 shares, issued and
   outstanding--36,698 and 36,940 shares........................................        91,746        92,350
  Capital in excess of par value................................................       482,107       489,044
  Reinvested earnings...........................................................       501,231       492,250
  Cumulative currency translation adjustment....................................            --          (288)
                                                                                  ------------  ------------
                                                                                     1,075,084     1,073,356
    Less guarantee of ESOP debt.................................................        14,650        12,950
                                                                                  ------------  ------------
      Total shareholders' equity................................................     1,060,434     1,060,406
                                                                                  ------------  ------------
Total liabilities and shareholders' equity......................................  $  3,117,705  $  3,102,632
                                                                                  ------------  ------------
                                                                                  ------------  ------------

 
    Receivables  include  $48.9  million and  $48.3  million in  1992  and 1993,
respectively, due from customers accounted for under the equity method.
 
                See notes to consolidated financial statements.
 
                                      F-8

                            FLEMING COMPANIES, INC.
 
                CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
 
FOR THE YEARS ENDED DECEMBER 28, 1991, DECEMBER 26, 1992, AND DECEMBER 25, 1993
                                 (IN THOUSANDS)
 


                                                      1991                    1992                     1993
                                              ---------------------  -----------------------  -----------------------
                                               SHARES      AMOUNT     SHARES       AMOUNT      SHARES       AMOUNT
                                              ---------  ----------  ---------  ------------  ---------  ------------
                                                                                       
Preferred stock:
  Beginning of year.........................         50  $   50,000
  Redemption................................        (50)    (50,000)
                                              ---------  ----------
  End of year...............................         --          --
                                              ---------  ----------
                                              ---------  ----------
Common stock:
  Beginning of year.........................     30,548  $   76,369     35,433  $     88,584     36,698  $     91,746
  Incentive stock and stock ownership
   plans....................................        285         715        191           478        242           604
  Stock issued for acquisition..............         --          --      1,074         2,684         --            --
  Stock offering............................      4,600      11,500         --            --         --            --
                                              ---------  ----------  ---------  ------------  ---------  ------------
  End of year...............................     35,433      88,584     36,698        91,746     36,940        92,350
                                              ---------  ----------  ---------  ------------  ---------  ------------
                                              ---------              ---------                ---------
Capital in excess of par value:
  Beginning of year.........................                287,665                  445,501                  482,107
  Stock offering, net.......................                148,436                       --                       --
  Incentive stock and stock ownership
   plans....................................                  9,400                    5,165                    6,937
  Stock issued for acquisition..............                     --                   31,441                       --
                                                         ----------             ------------             ------------
  End of year...............................                445,501                  482,107                  489,044
                                                         ----------             ------------             ------------
Reinvested earnings:
  Beginning of year.........................                418,085                  431,120                  501,231
  Net earnings..............................                 55,095                  113,040                   35,172
  Cash dividends:
    Common ($1.14 per share in 1991, $1.20
     in 1992 and 1993)......................                (38,920)                 (42,929)                 (44,153)
    Preferred...............................                 (3,140)                      --                       --
                                                         ----------             ------------             ------------
  End of year...............................                431,120                  501,231                  492,250
                                                         ----------             ------------             ------------
Cumulative currency translation adjustment:
  Beginning of year.........................                                                                       --
  Currency translation adjustments..........                                                                     (288)
                                                                                                         ------------
  End of year...............................                                                                     (288)
                                                                                                         ------------
Guarantee of ESOP debt:
  Beginning of year.........................                (17,665)                 (16,218)                 (14,650)
  Payments..................................                  1,447                    1,568                    1,700
                                                         ----------             ------------             ------------
  End of year                                               (16,218)                 (14,650)                 (12,950)
                                                         ----------             ------------             ------------
Total shareholders' equity, end of year.....             $  948,987             $  1,060,434             $  1,060,406
                                                         ----------             ------------             ------------
                                                         ----------             ------------             ------------

 
                See notes to consolidated financial statements.
 
                                      F-9

                            FLEMING COMPANIES, INC.
 
                     CONSOLIDATED STATEMENTS OF CASH FLOWS
 
FOR THE YEARS ENDED DECEMBER 28, 1991, DECEMBER 26, 1992, AND DECEMBER 25, 1993
                                 (IN THOUSANDS)
 


                                                                                1991         1992         1993
                                                                             -----------  -----------  -----------
                                                                                              
Cash flows from operating activities:
  Net earnings.............................................................  $    55,095  $   113,040  $    35,172
  Adjustments to reconcile net earnings to net cash provided by operating
   activities:
    Depreciation and amortization..........................................       91,252       93,827      101,103
    Credit losses..........................................................       17,281       28,258       52,018
    Deferred income taxes..................................................      (34,158)      11,343      (24,471)
    Equity investment results..............................................        7,690       15,128       11,865
    Facilities consolidation and reserve activities, net...................       53,l50      (31,226)      87,211
    Postretirement health care benefits....................................       15,000           --           --
    Change in assets and liabilities:
      Receivables..........................................................      (45,094)     (75,924)     (16,420)
      Inventories..........................................................      (74,500)        (440)      58,625
      Other assets.........................................................      (31,124)     (10,218)     (48,984)
      Accounts payable.....................................................       37,166      (41,285)     (38,472)
      Other liabilities....................................................        4,251      (16,566)     (10,883)
    Other adjustments, net.................................................         (634)       3,918        1,779
                                                                             -----------  -----------  -----------
      Net cash provided by operating activities............................       95,375       89,855      208,543
                                                                             -----------  -----------  -----------
Cash flows from investing activities:
  Collections on notes receivable..........................................       95,045       88,851       82,497
  Notes receivable funded..................................................     (193,643)    (168,814)    (130,846)
  Notes receivable sold....................................................       81,986       44,970       67,554
  Purchase of property and equipment.......................................      (67,295)     (66,376)     (55,554)
  Proceeds from sale of property and equipment.............................        4,748        3,603        2,955
  Investments in customers.................................................      (21,108)     (17,315)     (37,196)
  Businesses acquired......................................................           --       (8,233)     (51,110)
  Proceeds from sale of investments........................................        7,156        9,763        7,077
  Other investing activities...............................................       (8,428)        (353)         197
                                                                             -----------  -----------  -----------
    Net cash used in investing activities..................................     (101,539)    (113,904)    (114,426)
                                                                             -----------  -----------  -----------
Cash flows from financing activities:
  Proceeds from long-term borrowings.......................................      353,381      462,726      331,502
  Principal payments on long-term debt.....................................     (432,364)    (383,188)    (373,693)
  Principal payments on capital lease obligations..........................      (11,565)     (10,904)     (11,316)
  Sale of common stock under incentive stock and stock ownership plans.....        8,870        5,653        7,541
  Dividends paid...........................................................      (41,979)     (42,929)     (44,153)
  Redemption of preferred stock............................................      (30,900)     (19,100)          --
  Proceeds from common stock sale..........................................      159,936           --           --
  Other financing activities...............................................          588       (4,587)      (7,076)
                                                                             -----------  -----------  -----------
    Net cash provided by (used in) financing activities....................        5,967        7,671      (97,195)
                                                                             -----------  -----------  -----------
Net decrease in cash and cash equivalents..................................         (197)     (16,378)      (3,078)
Cash and cash equivalents, beginning of year...............................       21,287       21,090        4,712
                                                                             -----------  -----------  -----------
Cash and cash equivalents, end of year.....................................  $    21,090  $     4,712  $     1,634
                                                                             -----------  -----------  -----------
                                                                             -----------  -----------  -----------

 
                See notes to consolidated financial statements.
 
                                      F-10

                            FLEMING COMPANIES, INC.
 
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 
 FOR THE YEARS ENDED DECEMBER 25, 1993, DECEMBER 26, 1992 AND DECEMBER 28, 1991
 
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
 
    FISCAL  YEAR:   The  company's  fiscal year  ends  on the  last  Saturday in
December.
 
    PRINCIPLES OF CONSOLIDATION:  The consolidated financial statements  include
all material subsidiaries. Material intercompany items have been eliminated. The
equity method of accounting is used for investments in certain entities in which
the  company has an investment in common stock of between 20% and 50%. Under the
equity method, original  investments are recorded  at cost and  adjusted by  the
company's  share of  earnings or  losses of these  entities and  for declines in
estimated realizable values deemed to be other than temporary.
 
    CASH AND CASH EQUIVALENTS:   Cash equivalents consist of liquid  investments
readily  convertible  to cash  with  a maturity  of  three months  or  less. The
carrying amount for cash equivalents is a reasonable estimate of fair value.
 
    RECEIVABLES:   Receivables include  the current  portion of  customer  notes
receivable  of $67.8  million (1992) and  $69.9 million  (1993). Receivables are
shown net  of allowance  for credit  losses of  $25.3 million  (1992) and  $44.3
million  (1993). The company extends credit to its retail customers located over
a broad geographic base. Regional concentrations of credit risk are limited.
 
    INVENTORIES:  Inventories are  valued at the lower  of cost or market.  Most
grocery  and certain perishable  inventories are valued  on a last-in, first-out
(LIFO) method.  Other inventories  are valued  on a  first-in, first-out  (FIFO)
method.
 
    PROPERTY AND EQUIPMENT:  Property and equipment are recorded at cost or, for
leased  assets  under capital  leases,  at the  present  value of  minimum lease
payments. Depreciation, as well as amortization of assets under capital  leases,
are based on the estimated useful asset lives using the straight-line method.
 
    FIXED ASSET IMPAIRMENT:  Fixed asset impairments are recorded when events or
changes  in circumstances indicate that the  carrying amount of the fixed assets
may not be recoverable. Such impairment losses are measured by the excess of the
carrying amount of the fixed asset over the fair value of the related asset.
 
    GOODWILL:  The  excess of purchase  price over  the value of  net assets  of
businesses  acquired is amortized  on the straight-line  method over periods not
exceeding 40 years.  Goodwill is shown  net of accumulated  amortization of  $60
million  (1992) and  $74.2 million  (1993). Goodwill  is written  down if  it is
probable that estimated  operating income,  measured on  an undiscounted  basis,
generated by the related assets will be less than the carrying amount.
 
    ACCOUNTS  PAYABLE:  Accounts  payable include $11.2  million (1992) and $8.8
million (1993) of  issued checks that  have not yet  cleared the company's  bank
accounts, less deposits in transit.
 
    FINANCIAL INSTRUMENTS:  Interest rate hedge transactions and other financial
instruments  are  utilized  to  manage interest  rate  exposure.  The difference
between amounts to be paid or received  is accrued and recognized over the  life
of the contracts.
 
    TAXES  ON INCOME:   Deferred income  taxes arise  from temporary differences
between financial and tax bases of certain assets and liabilities.
 
    DISCLOSURES ABOUT  FAIR VALUE  OF FINANCIAL  INSTRUMENTS:   The methods  and
assumptions used to estimate the fair value of significant financial instruments
are discussed in the Investments and Notes Receivable, and Long-Term Debt notes.
 
    FOREIGN  CURRENCY TRANSLATION:  Net exchange  gains or losses resulting from
the translation of  assets and  liabilities of an  international investment  are
included in shareholders' equity.
 
                                      F-11

                            FLEMING COMPANIES, INC.
 
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
 
 FOR THE YEARS ENDED DECEMBER 25, 1993, DECEMBER 26, 1992 AND DECEMBER 28, 1991
 
    NET  EARNINGS  PER COMMON  SHARE:   Primary  earnings  per common  share are
computed based  on net  earnings, less  dividends on  preferred stock  in  1991,
divided  by the weighted average common shares outstanding. The impact of common
stock options on primary earnings per  common share is not materially  dilutive.
Fully  diluted earnings  per common share  assume conversion  of the convertible
subordinated notes that were redeemed during 1992.
 
    CONTINGENT LIABILITIES:   The company has  aggregate contingent  liabilities
under debt guarantees and future minimum rental commitments of $370 million.
 
    RECLASSIFICATIONS:   Certain reclassifications have  been made to prior year
amounts to conform to current year classifications.
 
INVENTORIES
 
    Inventories are valued as follows:
 


                                                                          DEC. 26,    DEC. 25,
                                                                            1992        1993
                                                                         ----------  ----------
                                                                             (IN THOUSANDS)
                                                                               
LIFO method............................................................  $  689,358  $  638,383
FIFO method............................................................     269,776     284,897
                                                                         ----------  ----------
  Inventories..........................................................  $  959,134  $  923,280
                                                                         ----------  ----------
                                                                         ----------  ----------

 
    Current replacement cost of LIFO inventories were greater than the  carrying
amounts  by approximately $19.3 million at  December 26, 1992, and $12.5 million
at December 25, 1993.
 
INVESTMENTS AND NOTES RECEIVABLE
 
    Investments and notes receivable consist of the following:
 


                                                                          DEC. 26,    DEC. 25,
                                                                            1992        1993
                                                                         ----------  ----------
                                                                             (IN THOUSANDS)
                                                                               
Investments in and advances to customers...............................  $  176,092  $  164,292
Notes receivable from customers........................................     157,655     133,935
Other investments and receivables......................................      10,253      11,010
                                                                         ----------  ----------
Investments and notes receivable.......................................  $  344,000  $  309,237
                                                                         ----------  ----------
                                                                         ----------  ----------

 
    The company extends long-term credit to certain retail customers it  serves.
Loans  are primarily collateralized  by inventory and  fixtures. Investments and
notes receivable are shown net of  allowance for credit losses of $18.2  million
and $18.3 million in 1992 and 1993, respectively. Interest rates are above prime
with  terms up to 10 years. The carrying amount of notes receivable approximates
fair value because of the variable interest rates charged on the notes.
 
    The Financial Accounting Standards Board  has issued Statement of  Financial
Accounting Standards (SFAS) No. 114--Accounting by Creditors for Impairment of a
Loan.  This  new statement  requires  that loans  determined  to be  impaired be
measured by the present  value of expected future  cash flows discounted at  the
loan's  effective interest  rate. The  new standard  is effective  for the first
quarter of the company's  1995 fiscal year. The  company has not yet  determined
the  impact, if  any, on  the consolidated  statements of  earnings or financial
position.
 
    The company has  sold certain notes  receivable at face  value with  limited
recourse.  The outstanding balance at year end  1993 on all notes sold is $155.4
million, of which the  company is contingently liable  for $31.3 million  should
all  the notes  become uncollectible.  The company  guarantees bank  debt of $35
million for a customer.
 
                                      F-12

                            FLEMING COMPANIES, INC.
 
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
 
 FOR THE YEARS ENDED DECEMBER 25, 1993, DECEMBER 26, 1992 AND DECEMBER 28, 1991
 
LONG-TERM DEBT
 
    Long-term debt consists of the following:
 


                                                                         DEC. 26,    DEC. 25,
                                                                           1992        1993
                                                                        ----------  ----------
                                                                            (IN THOUSANDS)
                                                                              
Medium-term notes, due 1994 to 2003, average interest rates of 8.3%
 and 7.5%.............................................................  $  194,450  $  222,450
Commercial paper, average interest rate of 3.3% in 1993...............          --     165,866
Unsecured term bank loans, due 1994 to 1996, average interest rates of
 4.2% and 3.7%........................................................      95,000     160,000
Unsecured credit lines, average interest rates of 3.9% and 3.3%.......     340,000     145,000
9.5% Debentures, due 2010, annual sinking fund payments of $5,000
 commencing in 1997...................................................      70,000       7,000
Guaranteed bank loan of employee stock ownership plan.................      14,650      12,950
Mortgaged real estate notes and other debt, varying interest rates
 from 3.5% to 8%, due 1994 to 2019....................................      57,939      14,882
                                                                        ----------  ----------
                                                                           772,039     728,148
Less current maturities...............................................      36,474      61,329
                                                                        ----------  ----------
Long-term debt........................................................  $  735,565  $  666,819
                                                                        ----------  ----------
                                                                        ----------  ----------

 
    Aggregate maturities  of long-term  debt  for the  next  five years  are  as
follows:  1994 -- $61.3  million; 1995 --  $140.3 million; 1996  -- $69 million;
1997 -- $13.8 million and 1998 -- $27.8 million.
 
    In 1993  and  1992, the  company  recorded extraordinary  losses  for  early
retirement  of  debt. In  1993,  the company  retired  $63 million  of  the 9.5%
debentures. The extraordinary loss was  $2.3 million, after income tax  benefits
of  $2.1 million, or $.06 per share. The funding source for the early redemption
was the  sale of  notes receivable.  In  1992, the  company retired  the  $172.5
million  of convertible subordinated  notes, $30 million  of the 9.5% debentures
and certain other debt.  The extraordinary loss was  $5.9 million, after  income
tax  benefits of $3.7 million, or $.15 per share. Funding sources related to the
1992 early  retirement  were  bank  lines,  medium-term  notes,  sale  of  notes
receivable and commercial paper.
 
    The  company has two  commercial paper programs  supported by committed $400
million and $200  million revolving  credit agreements  with a  group of  banks.
Currently,  the company limits the amount of commercial paper issued at any time
plus the amount of borrowing under uncommitted credit lines to the unused credit
available through  the  committed credit  agreements.  The $400  million  credit
agreement  matures in October 1997. The $200 million credit agreement matures in
October 1994, but the company intends to renew the agreement prior to  maturity.
At  year end,  the company  had no borrowings  under the  agreements which carry
combined annual  facility and  commitment fees  of .25%  and .15%  for the  $400
million  agreement and  the $200  million agreement,  respectively. The interest
rate is based on various money market rates selected by the company at the  time
of borrowing.
 
    The  credit agreements contain various  covenants, including restrictions on
additional indebtedness,  payment  of  cash dividends  and  acquisition  of  the
company's  common stock. None of these covenants negatively impact the company's
liquidity  or  capital   resources  at   this  time.   Reinvested  earnings   of
approximately  $92 million  were available  at year  end for  cash dividends and
acquisition of the company's stock. The agreements contain a provision that,  in
the  event  of  a  defined  change of  control,  the  credit  agreements  may be
terminated.
 
                                      F-13

                            FLEMING COMPANIES, INC.
 
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
 
 FOR THE YEARS ENDED DECEMBER 25, 1993, DECEMBER 26, 1992 AND DECEMBER 28, 1991
 
    The company has registered $565 million  in medium-term notes. Of this,  the
remaining  $289.6 million may be issued from  time to time, at fixed or floating
interest rates, as determined at the time of issuance.
 
    The unsecured term bank  loans have original maturities  of three years  and
bear interest at floating rates. Unsecured credit lines have original maturities
of  generally less than one year and  bear interest at floating rates. The loans
contain essentially the same  covenants as the  revolving credit agreements  and
are prepayable without penalty.
 
    The  carrying  value of  assets collateralized  under mortgaged  real estate
notes and other debt was approximately $123 million and $9.4 million at year end
1992 and 1993, respectively.
 
    Components of interest expense are as follows:
 


                                                                 1991       1992       1993
                                                               ---------  ---------  ---------
                                                                       (IN THOUSANDS)
                                                                            
Interest costs incurred:
  Long-term debt.............................................  $  64,068  $  50,524  $  44,628
  Capital lease obligations..................................     26,915     29,103     31,355
  Other......................................................      2,539      1,475      2,046
                                                               ---------  ---------  ---------
    Total incurred...........................................     93,522     81,102     78,029
Less interest capitalized....................................        169         --         --
                                                               ---------  ---------  ---------
Interest expense.............................................  $  93,353  $  81,102  $  78,029
                                                               ---------  ---------  ---------
                                                               ---------  ---------  ---------

 
    The company's employee stock ownership plan (ESOP) allows substantially  all
associates  to participate.  The ESOP purchased  640,000 shares  of common stock
from the company at $31.25 per share, resulting in proceeds of $20 million.  The
ESOP  borrowed the money from a bank.  The company guaranteed the bank loan. The
loan balance is presented  in long-term debt  with an offset  as a reduction  of
shareholders'  equity. The ESOP  will repay the loan  with proceeds from company
contributions.
 
    The company makes contributions based on fixed debt service requirements  of
the  ESOP loan.  The ESOP used  $.6 million  of common stock  dividends for debt
service in each of 1991, 1992 and 1993. During 1991, 1992 and 1993, the  company
recognized   $.8  million,  $.9  million  and  $1.1  million,  respectively,  in
compensation expense.  Interest expense  of $1.3  million, $.7  million and  $.5
million was recognized at average rates of 7.7%, 4.4% and 3.7% in 1991, 1992 and
1993, respectively.
 
    The  company enters into  interest rate hedge  agreements to manage interest
costs and  exposure to  changing interest  rates.  At year  end 1992  and  1993,
agreements  were in place that  effectively fixed rates on  $270 million and $70
million, respectively, of  the company's floating  rate debt. Additionally,  for
both  years, $60 million of agreements convert fixed rate debt to floating and a
$100 million transaction hedges the company's risk of fluctuation between  prime
rate  and LIBOR. The maturities for such agreements range from 1995 to 1998. The
counterparties  to  these  agreements  are  major  national  and   international
financial institutions.
 
    The fair value of long-term debt as of year end 1992 and 1993 was determined
using  valuation  techniques that  considered cash  flows discounted  at current
market rates  and  management's best  estimate  for instruments  without  quoted
market  prices. At year end  1992 and 1993, the fair  value of debt exceeded the
carrying amount by $16.5 million  and $13.8 million, respectively. For  interest
rate  swap  agreements,  the fair  value  was estimated  using  termination cash
values. At year end 1993, swap agreements  had no fair value. At year end  1992,
swap  agreements had a fair value of $1.7 million. The company does not have any
financial basis in the hedge agreements  other than accrued interest payable  or
receivable.
 
                                      F-14

                            FLEMING COMPANIES, INC.
 
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
 
 FOR THE YEARS ENDED DECEMBER 25, 1993, DECEMBER 26, 1992 AND DECEMBER 28, 1991
 
SUBSIDIARY GUARANTORS
 
    The company plans to issue $500 million principal amount of senior debt (the
"Senior Notes") which will be guaranteed by all direct and indirect subsidiaries
of  the company (except for certain subsidiaries which are inconsequential), all
of which  are wholly  owned. The  guarantees will  be joint  and several,  full,
complete  and unconditional. There are currently  no restrictions on the ability
of the subsidiary guarantors  to transfer funds  to the company  in the form  of
cash  dividends, loans or advances. Full financial statements for the subsidiary
guarantors are not  presented herein  because management does  not believe  such
information  would be material. Set forth  below is certain summarized financial
data regarding the subsidiary guarantors on a combined basis.
 
    The following summarized financial  information for the combined  subsidiary
guarantors  has  been prepared  from  the books  and  records maintained  by the
subsidiary guarantors and the company. Intercompany transactions are eliminated.
The summarized financial information  may not necessarily  be indicative of  the
results  of operations or financial position  had the subsidiary guarantors been
operated as independent entities. The summarized financial information  includes
allocations  of  material amounts  of expenses  such  as corporate  services and
administration, interest  expense  on indebtedness,  and  taxes on  income.  The
allocations  are generally based on proportional amounts of sales or assets, and
taxes on income are allocated consistent  with the asset and liability  approach
used  for consolidated  financial statement purposes.  Management believes these
allocation methods are reasonable.
 


                                                                                               OCTOBER 1,
                                                                           1992       1993        1994
                                                                         ---------  ---------  -----------
                                                                                   (IN MILLIONS)
                                                                                               (UNAUDITED)
                                                                                      
Current assets.........................................................  $   1,204  $   1,168   $   1,642
Noncurrent assets......................................................      1,508      1,579       2,543
Current liabilities....................................................        708        764       1,103
Noncurrent liabilities.................................................        957        936       1,755

 


                                                                                              40 WEEKS
                                                                                                ENDED
                                                                                             OCTOBER 1,
                                                              1991       1992       1993        1994
                                                            ---------  ---------  ---------  -----------
                                                                           (IN MILLIONS)
                                                                                 
                                                                                             (UNAUDITED)
Net sales.................................................  $  11,423  $  11,488  $  11,759   $  10,070
Costs and expenses........................................     11,299     11,321     11,674       9,987
Earnings before extraordinary items and cumulative effect
 of accounting change.....................................         77        102         44          44
Net earnings..............................................         69         97         42          44

 
LEASE AGREEMENTS
 
    CAPITAL AND  OPERATING  LEASES:   The  company leases  certain  distribution
facilities  with terms generally ranging from 20  to 30 years, while lease terms
for other operating  facilities range from  1 to 15  years. The leases  normally
provide  for minimum  annual rentals  plus executory  costs and  usually include
provisions for one to five renewal options of five years.
 
    The company  leases  company-operated  retail store  facilities  with  terms
generally  ranging from  3 to  20 years.  These agreements  normally provide for
contingent rentals based on sales  performance in excess of specified  minimums.
The leases usually include provisions for one to three renewal options of two to
five  years. Certain equipment  is leased under  agreements ranging from  2 to 8
years with no renewal options.
 
    Accumulated amortization related to leased  assets under capital leases  was
$59.5 million and $41.7 million at year end 1992 and 1993, respectively.
 
                                      F-15

                            FLEMING COMPANIES, INC.
 
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
 
 FOR THE YEARS ENDED DECEMBER 25, 1993, DECEMBER 26, 1992 AND DECEMBER 28, 1991
 
    Future  minimum lease  payment obligations  for leased  assets under capital
leases as of year end 1993 are set forth below:
 


                                                                                 LEASE
YEARS                                                                         OBLIGATIONS
- ---------------------------------------------------------------------------  --------------
                                                                             (IN THOUSANDS)
                                                                          
1994.......................................................................     $ 16,719
1995.......................................................................       16,672
1996.......................................................................       16,554
1997.......................................................................       16,244
1998.......................................................................       15,816
Later......................................................................      143,209
Total minimum lease payments...............................................      225,214
Less estimated executory costs.............................................          332
                                                                             --------------
Net minimum lease payments.................................................      224,882
Less interest..............................................................      101,754
                                                                             --------------
Present value of net minimum lease payments................................      123,128
Less current obligations...................................................        5,618
                                                                             --------------
Long-term obligations......................................................     $117,510
                                                                             --------------
                                                                             --------------

 
    Future minimum  lease payments  required at  year end  1993 under  operating
leases  that  have  initial noncancelable  lease  terms exceeding  one  year are
presented in the following table:
 


                                                          FACILITY   FACILITIES   EQUIPMENT      NET
YEARS                                                     RENTALS    SUBLEASED     RENTALS     RENTALS
- -------------------------------------------------------  ----------  ----------  -----------  ----------
                                                                         (IN THOUSANDS)
                                                                                  
1994...................................................  $   92,936  $   46,105   $  16,407   $   63,238
1995...................................................      83,905      43,084      10,277       51,098
1996...................................................      77,680      39,733       5,057       43,004
1997...................................................      71,364      36,700       1,219       35,883
1998...................................................      64,559      32,702         347       32,204
Later..................................................     368,039     165,396          --      202,643
                                                         ----------  ----------  -----------  ----------
Total minimum lease payments...........................  $  758,483  $  363,720   $  33,307   $  428,070
                                                         ----------  ----------  -----------  ----------
                                                         ----------  ----------  -----------  ----------

 
    The following table  shows the  composition of total  annual rental  expense
under  noncancelable operating  leases and subleases  with initial  terms of one
year or greater:
 


                                                              1991        1992        1993
                                                           ----------  ----------  ----------
                                                                     (IN THOUSANDS)
                                                                          
Minimum rentals..........................................  $  119,819  $  123,189  $  126,040
Contingent rentals.......................................         415         247         182
Less sublease income.....................................      51,506      54,348      57,308
                                                           ----------  ----------  ----------
Rental expense...........................................  $   68,728  $   69,088  $   68,914
                                                           ----------  ----------  ----------
                                                           ----------  ----------  ----------

 
    At year end  1993, the  company is  contingently liable  for future  minimum
rental commitments of $335 million.
 
                                      F-16

                            FLEMING COMPANIES, INC.
 
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
 
 FOR THE YEARS ENDED DECEMBER 25, 1993, DECEMBER 26, 1992 AND DECEMBER 28, 1991
 
    DIRECT  FINANCING LEASES:   The company  leases retail  store facilities for
sublease to customers  with terms  generally ranging from  5 to  25 years.  Most
leases  provide for a contingent rental based  on sales performance in excess of
specified minimums. Sublease rentals are generally higher than the rental  paid.
The  leases and  subleases usually  contain provisions  for one  to four renewal
options of two to five years.
 
    The following table shows  the future minimum rentals  to be received  under
direct  financing  leases and  future  minimum lease  payment  obligations under
capital leases in effect at December 25, 1993:
 


                                                                    LEASE RENTALS     LEASE
YEARS                                                                RECEIVABLE    OBLIGATIONS
- ------------------------------------------------------------------  -------------  -----------
                                                                          (IN THOUSANDS)
                                                                             
1994..............................................................   $    41,633    $  29,375
1995..............................................................        40,560       29,553
1996..............................................................        39,083       29,617
1997..............................................................        36,751       29,646
1998..............................................................        33,229       29,599
Later.............................................................       293,696      277,785
                                                                    -------------  -----------
Total minimum lease payments......................................       484,952      425,575
Less estimated executory costs....................................         2,062        2,055
                                                                    -------------  -----------
Net minimum lease payments........................................       482,890      423,520
Less unearned income..............................................       235,813           --
Less interest.....................................................            --      196,467
                                                                    -------------  -----------
Present value of net minimum lease payments.......................       247,077      227,053
Less current portion..............................................        11,814        7,554
                                                                    -------------  -----------
Long-term portion.................................................   $   235,263    $ 219,499
                                                                    -------------  -----------
                                                                    -------------  -----------

 
    Contingent rental income and contingent rental expense were not material  in
1993, 1992 or 1991.
 
FACILITIES CONSOLIDATION AND RESTRUCTURING
 
    The  results  in 1993  include  a charge  of  $107.8 million  for additional
facilities consolidations,  reengineering, impairment  of retail-related  assets
and elimination of regional operations. Facilities consolidations will result in
the  closure of five distribution centers, the relocation of two operations, the
consolidation of a center's administrative  function and completion of the  1991
facilities  consolidation  actions. The  related  charge provides  for severance
costs, impaired  property  and  equipment,  product  handling  and  damage,  and
impaired  other assets. The  reengineering component of  the charge provides for
severance costs of terminating associates  displaced by the reengineering  plan.
Impairment  of retail-related  assets provides  for the  present value  of lease
payments and assets associated with certain retail supermarket locations  leased
or  owned by the company. These sites  are no longer strategically viable due to
size, location or  age. Elimination of  regional operations in  early 1994  will
result in cash severance payments to affected associates.
 
    The  1991  restructuring plan  was initiated  to  reduce costs  and increase
operating efficiency  by consolidating  four distribution  centers into  larger,
higher  volume and  more efficient facilities.  The $67  million charge included
associate severance, lease  terminations and impairment  of related assets.  The
plan  has  resulted in  the closing  or consolidation  of four  facilities whose
operations  were  assimilated  into   other  distribution  centers.   Additional
estimated  costs, related primarily to asset  dispositions in process, were made
in the 1993 charge.
 
                                      F-17

                            FLEMING COMPANIES, INC.
 
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
 
 FOR THE YEARS ENDED DECEMBER 25, 1993, DECEMBER 26, 1992 AND DECEMBER 28, 1991
 
TAXES ON INCOME
 
    Components of taxes on income (tax benefit) are as follows:
 


                                                                            1991       1992        1993
                                                                         ----------  ---------  ----------
                                                                                  (IN THOUSANDS)
                                                                                       
Current:
  Federal..............................................................  $   56,634  $  55,473  $   48,742
  State................................................................       8,849     11,814      10,327
                                                                         ----------  ---------  ----------
    Total current......................................................      65,483     67,287      59,069
                                                                         ----------  ---------  ----------
Deferred:
  Federal..............................................................     (21,500)     7,280     (20,160)
  State................................................................      (4,019)     1,470      (4,311)
                                                                         ----------  ---------  ----------
    Total deferred.....................................................     (25,519)     8,750     (24,471)
                                                                         ----------  ---------  ----------
Taxes on income........................................................  $   39,964  $  76,037  $   34,598
                                                                         ----------  ---------  ----------
                                                                         ----------  ---------  ----------

 
    Deferred tax expense  (benefit) relating to  temporary differences  includes
the following components:
 


                                                                           1991       1992        1993
                                                                        ----------  ---------  ----------
                                                                                 (IN THOUSANDS)
                                                                                      
Depreciation..........................................................  $     (301) $   2,161  $      516
Facilities consolidation and reserve activities.......................     (20,977)    10,989     (31,519)
Retirement benefits...................................................        (350)       517      13,094
Equity investment results.............................................      (1,717)    (4,292)     (6,767)
Credit losses.........................................................         421     (4,539)     (5,417)
Prepaid expenses......................................................          --         --       3,200
Asset dispositions....................................................         186      3,818       2,670
Lease transactions....................................................        (509)      (230)     (2,307)
Noncompete agreement..................................................       2,556      2,552       2,170
Associate benefits....................................................      (6,525)    (3,494)     (2,115)
Note sales............................................................       1,038        623       1,880
Other.................................................................         659        645         124
                                                                        ----------  ---------  ----------
Deferred tax expense (benefit)........................................  $  (25,519) $   8,750  $  (24,471)
                                                                        ----------  ---------  ----------
                                                                        ----------  ---------  ----------

 
                                      F-18

                            FLEMING COMPANIES, INC.
 
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
 
 FOR THE YEARS ENDED DECEMBER 25, 1993, DECEMBER 26, 1992 AND DECEMBER 28, 1991
 
    Temporary  differences that give rise to deferred tax assets and liabilities
as of December 25, 1993, are as follows:
 


                                                                          DEFERRED    DEFERRED
                                                                            TAX         TAX
                                                                           ASSETS    LIABILITIES
                                                                         ----------  ----------
                                                                             (IN THOUSANDS)
                                                                               
Depreciation...........................................................  $    4,333  $   88,609
Facilities consolidation and reserve activities........................      51,942          --
Associate benefits.....................................................      31,878          --
Credit losses..........................................................      22,579          --
Equity investment results..............................................      13,848       1,758
Lease transactions.....................................................       8,857       1,623
Inventory..............................................................       7,743      18,401
Asset dispositions.....................................................       5,580          --
Acquired loss carryforwards............................................       4,514          --
Retirement benefits....................................................          --      16,568
Note sales.............................................................          --       3,555
Prepaid expenses.......................................................          --       3,200
Other..................................................................       8,954       8,582
                                                                         ----------  ----------
Gross deferred taxes...................................................     160,228     142,296
Valuation allowance....................................................      (6,514)         --
                                                                         ----------  ----------
  Total deferred taxes.................................................  $  153,714  $  142,296
                                                                         ----------  ----------
                                                                         ----------  ----------
  Total deferred taxes, December 26, 1992..............................  $  112,904  $  125,957
                                                                         ----------  ----------
                                                                         ----------  ----------

 
    The effect of the increase in the federal statutory rate to 35% on  deferred
tax assets and liabilities was immaterial. The valuation allowance contains $4.5
million  of acquired loss  carryforwards that, if utilized,  will be reversed to
goodwill in future years.
 
    The effective  income tax  rates are  different from  the statutory  federal
income tax rates for the following reasons:
 


                                                           1991     1992     1993
                                                          ------   ------   ------
                                                                   
Statutory rate..........................................   34.0%    34.0%    35.0%
State income taxes, net of federal tax benefit..........    3.1      4.4      5.4
Acquisition-related differences.........................    4.7      2.3      6.6
Possible assessments....................................    2.1     (1.4)      --
Sale of insurance subsidiary............................   (4.8)      --       --
Other...................................................    (.8)     (.3)     1.0
                                                          ------   ------   ------
Effective rate..........................................   38.3%    39.0%    48.0%
                                                          ------   ------   ------
                                                          ------   ------   ------

 
SHAREHOLDER'S EQUITY
 
    The  company offers  a Dividend Reinvestment  and Stock  Purchase Plan which
offers shareholders the opportunity to automatically reinvest their dividends in
common stock at a 5% discount from market value. Shareholders also may  purchase
shares  at  market value  by  making cash  payments  up to  $5,000  per calendar
quarter. Shareholders reinvested dividends in 157,000 and 174,000 new shares  in
1992 and 1993, respectively. Additional shares totaling 13,000 and 9,000 in 1992
and 1993, respectively, were purchased at market value by shareholders.
 
    The  company has a shareholder rights  plan designed to protect shareholders
should the company become  the target of coercive  and unfair takeover  tactics.
Shareholders have one right for each share of stock held. When exercisable, each
right entitles shareholders to buy one share of common stock at a specific price
in the event of certain defined actions that constitute a change of control. The
rights expire on July 6, 1996.
 
                                      F-19

                            FLEMING COMPANIES, INC.
 
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 
 FOR THE YEARS ENDED DECEMBER 25, 1993, DECEMBER 26, 1992 AND DECEMBER 28, 1991
 
    The company has severance agreements with certain management associates. The
agreements  generally  provide  two years'  salary  to these  associates  if the
associate's employment terminates within two years after a change of control. In
the event of a change of control, a supplemental trust will be funded to provide
these salary obligations.
 
INCENTIVE STOCK PLANS
 
    The company's stock option  plans allow the  granting of nonqualified  stock
options  and incentive stock options, with  or without stock appreciation rights
(SARs), to key associates.
 
    In 1992 and 1993, options with  SARs were exercisable for 46,000 and  35,000
shares,  respectively. Options without SARs  were exercisable for 805,000 shares
in 1992 and 841,000  shares in 1993.  At year end 1993,  there were 1.5  million
shares available for grant under the stock option plans.
 
    Stock option transactions are as follows:
 


                                                                      OPTIONS      PRICE RANGE
                                                                    -----------  ----------------
                                                                        (SHARES IN THOUSANDS)
                                                                           
Outstanding, December 29, 1990....................................       1,225   $   4.72 - 42.13
  Exercised.......................................................         (34)  $  12.88 - 37.06
  Canceled and forfeited..........................................         (23)                --
                                                                         -----   ----------------
Outstanding, December 28, 1991....................................       1,168   $   4.72 - 42.13
  Granted.........................................................           4   $          30.00
  Exercised.......................................................         (28)  $  12.88 - 29.81
  Canceled and forfeited..........................................         (60)                --
                                                                         -----   ----------------
Outstanding, December 26, 1992....................................       1,084   $   4.72 - 42.13
  Exercised.......................................................         (59)  $  20.33 - 31.75
  Canceled and forfeited..........................................         (42)                --
                                                                         -----   ----------------
Outstanding, December 25, 1993....................................         983   $   4.72 - 42.13
                                                                         -----   ----------------
                                                                         -----   ----------------

 
    The  company has a stock incentive plan that allows awards to key associates
of up to 400,000 restricted shares of common stock and phantom stock units.  The
company  has  issued  133,000 restricted  common  shares, net  of  10,000 shares
forfeited in 1993. These shares were  recorded at the market value when  issued,
$4.4  million, and are amortized to  expense as earned. The unamortized portion,
$2.1 million and $1.8 million in 1992 and 1993, respectively, is netted  against
capital  in excess of par  value within shareholders' equity.  In the event of a
change of control,  the company may  accelerate the vesting  and payment of  any
award or make a payment in lieu of an award.
 
ASSOCIATE RETIREMENT PLANS
 
    The  company sponsors retirement and  profit sharing plans for substantially
all nonunion  and some  union  associates. The  company also  has  nonqualified,
unfunded  supplemental  retirement plans  for  selected associates.  These plans
comprise the company's defined benefit pension plans.
 
    Contributory  profit  sharing  plans  maintained  by  the  company  are  for
associates   who  meet  certain  types  of  employment  and  length  of  service
requirements. Company contributions under  these defined contribution plans  are
made  at the discretion of the board of directors. Expenses for these plans were
$.8 million, $1.1 million and $2 million in 1991, 1992 and 1993, respectively.
 
                                      F-20

                            FLEMING COMPANIES, INC.
 
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
 
 FOR THE YEARS ENDED DECEMBER 25, 1993, DECEMBER 26, 1992 AND DECEMBER 28, 1991
 
    Benefit calculations for  the company's  defined benefit  pension plans  are
primarily  a function of years of service and final average earnings at the time
of retirement. Final average earnings are the average of the highest five  years
of  compensation during the last 10 years of employment. The company funds these
plans by  contributing  the  actuarially  computed  amounts  that  meet  funding
requirements.
 
    The  following table sets forth the company's defined benefit pension plans'
funded status  and  the  amounts  recognized  in  the  statements  of  earnings.
Substantially  all the plans'  assets are invested  in listed stocks, short-term
investments and  bonds.  The  significant  actuarial  assumptions  used  in  the
calculation  of funded status for  1992 and 1993 are:  discount rate -- 8.5% and
7.5%, respectively;  compensation  increases --  5%  and 4%,  respectively;  and
return on assets -- 10% and 9.5%, respectively.
 


                                                                DECEMBER 26, 1992           DECEMBER 25, 1993
                                                            --------------------------  --------------------------
                                                               ASSETS     ACCUMULATED      ASSETS     ACCUMULATED
                                                               EXCEED       BENEFITS       EXCEED       BENEFITS
                                                            ACCUMULATED      EXCEED     ACCUMULATED      EXCEED
                                                              BENEFITS       ASSETS       BENEFITS       ASSETS
                                                            ------------  ------------  ------------  ------------
                                                                                (IN THOUSANDS)
                                                                                          
Actuarial present value of accumulated benefit
 obligations:
  Vested..................................................   $  129,248    $   11,701    $  166,474    $    9,587
  Total...................................................   $  135,895    $   12,444    $  174,332    $   16,577
                                                            ------------  ------------  ------------  ------------
                                                            ------------  ------------  ------------  ------------
Projected benefit obligations.............................   $  149,108    $   13,886    $  187,833    $   18,302
Plan assets at fair value.................................      139,989            --       176,307            --
                                                            ------------  ------------  ------------  ------------
Projected benefit obligation in excess of plan
 assets...................................................        9,119        13,886        11,526        18,302
Unrecognized net loss.....................................      (19,800)       (5,416)      (42,195)       (7,672)
Unrecognized prior service cost...........................       (2,910)           --        (2,293)         (777)
Unrecognized net asset (obligation).......................        1,447          (749)          291          (216)
                                                            ------------  ------------  ------------  ------------
Pension liability (asset).................................   $  (12,144)   $    7,721    $  (32,671)   $    9,637
                                                            ------------  ------------  ------------  ------------
                                                            ------------  ------------  ------------  ------------

 
    Net pension expense includes the following components:
 


                                                                1991       1992        1993
                                                             ----------  ---------  ----------
                                                                      (IN THOUSANDS)
                                                                           
Service cost...............................................  $    4,651  $   4,997  $    5,323
Interest cost..............................................      11,955     13,503      14,792
Actual return on plan assets...............................     (24,159)    (8,159)    (19,103)
Net amortization and deferral..............................      15,170     (5,030)      8,039
                                                             ----------  ---------  ----------
Net pension expense........................................  $    7,617  $   5,311  $    9,051
                                                             ----------  ---------  ----------
                                                             ----------  ---------  ----------

 
    Certain  associates  have pension  and health  care benefits  provided under
collectively bargained  multiemployer agreements.  Expenses for  these  benefits
were  $37.1  million, $40  million  and $44  million  for 1991,  1992  and 1993,
respectively.
 
ASSOCIATE POSTRETIREMENT HEALTH CARE BENEFITS
 
    In 1991,  the company  adopted SFAS  No. 106  -- Employers'  Accounting  for
Postretirement  Benefits Other Than  Pensions. The company  elected to recognize
immediately the accumulated  postretirement benefit obligation,  resulting in  a
charge  to net earnings  of $9.3 million. The  effect of the  change on 1991 net
earnings, excluding the cumulative effect upon adoption, was not material.
 
                                      F-21

                            FLEMING COMPANIES, INC.
 
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
 
 FOR THE YEARS ENDED DECEMBER 25, 1993, DECEMBER 26, 1992 AND DECEMBER 28, 1991
 
    The company offers a  comprehensive major medical  plan to eligible  retired
associates who meet certain age and years of service requirements. This unfunded
defined   benefit  plan  generally  provides  medical  benefits  until  Medicare
insurance commences.
 
    Components of postretirement benefits expense are as follows:
 


                                                                     1991       1992       1993
                                                                   ---------  ---------  ---------
                                                                           (IN THOUSANDS)
                                                                                
Service cost.....................................................  $     194  $     108  $     140
Interest cost....................................................      1,210      1,430      1,628
Amortization of net loss.........................................         --         --        138
                                                                   ---------  ---------  ---------
Postretirement expense...........................................  $   1,404  $   1,538  $   1,906
                                                                   ---------  ---------  ---------
                                                                   ---------  ---------  ---------

 
    The composition of the accumulated postretirement benefit obligation  (APBO)
and the amounts recognized in the balance sheets are presented below.
 


                                                                            1992       1993
                                                                          ---------  ---------
                                                                             (IN THOUSANDS)
                                                                               
Retirees................................................................  $  13,824  $  13,299
Fully eligible actives..................................................      1,695      1,916
Others..................................................................      1,485      1,680
                                                                          ---------  ---------
APBO....................................................................     17,004     16,895
Unrecognized net loss...................................................         --      3,333
                                                                          ---------  ---------
Accrued postretirement benefit cost.....................................  $  17,004  $  13,562
                                                                          ---------  ---------
                                                                          ---------  ---------

 
    During  1993, a postretirement benefit obligation was settled. No additional
benefit payments will be made for this terminated obligation.
 
    The weighted average discount rate used in determining the APBO was 9.5% and
7.5% for 1992 and 1993, respectively. For measurement purposes in 1992 and 1993,
a 15% and 14%, respectively, annual rate  of increase in the per capita cost  of
covered  medical care  benefits was  assumed. In 1993,  the rate  was assumed to
decrease to 8% by 2000, then to 7.5%  in 2001 and thereafter. In 1992, the  rate
was  assumed to  decrease to  8% by  1999 and  remain at  8% thereafter.  If the
assumed health care cost increased by 1% for each future year, the current  cost
and the APBO would have increased by 3% to 5% for all periods presented.
 
    The  company also provides  other benefits for  certain inactive associates.
Expenses related to these benefits are immaterial.
 
SUPPLEMENTAL CASH FLOWS INFORMATION
 


                                                                 1991       1992       1993
                                                               ---------  ---------  ---------
                                                                       (IN THOUSANDS)
                                                                            
Cash paid during the year for:
Interest, net of amounts capitalized.........................  $  91,301  $  82,051  $  79,634
  Income taxes...............................................  $  61,437  $  65,884  $  74,320
Direct financing leases and related obligations..............  $  44,055  $  27,507  $  33,594
Property and equipment additions by capital leases...........  $   9,182  $  22,513  $  21,011

 
    In  1993,  the  company  acquired  the  assets  or  common  stock  of  three
businesses.  In August, the company purchased distribution center assets located
in Garland,  Texas. In  September and  November, the  company purchased  certain
assets  and  the common  stock, respectively,  of  two supermarket  operators in
southern
 
                                      F-22

                            FLEMING COMPANIES, INC.
 
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
 
 FOR THE YEARS ENDED DECEMBER 25, 1993, DECEMBER 26, 1992 AND DECEMBER 28, 1991
 
Florida. The acquisitions were accounted for as purchases. The results of  these
entities are not material to the company. Cash paid for the acquisitions, net of
cash  acquired, was $51.1 million. The fair  value of assets acquired was $111.1
million, with liabilities assumed or created of $9 million.
 
    In 1992, the company acquired the common stock of Baker's Supermarkets,  the
operator of 10 supermarkets located in Omaha, Neb. The acquisition was accounted
for  as a purchase.  The results of  Baker's operations are  not material to the
company. The  company issued  1,073,512 shares  of common  stock at  a price  of
$31.79  per share, or $34.1 million. The fair value of assets acquired was $88.7
million, with liabilities assumed or created of $39.8 million. Cash paid for the
acquisition, net of cash acquired, was $8.2 million.
 
LITIGATION AND CONTINGENCIES
 
    In December 1993, the  company and numerous other  defendants were named  in
two suits filed in U.S. District Court in Miami. The plaintiffs allege liability
on  the part  of the company  as a  consequence of an  alleged fraudulent scheme
conducted by  Premium  Sales Corporation  and  others  in which  losses  in  the
Premium-related  entities  occurred to  the detriment  of  a purported  class of
investors which  has  brought  one of  the  suits.  The other  suit  is  by  the
receiver/trustee  of  the  estates  of Premium  and  certain  of  its affiliated
entities. Plaintiffs  seek  damages,  treble  damages,  attorneys  fees,  costs,
expenses  and other appropriate relief. While the amount of damages sought under
most claims is  not specified, plaintiffs  allege that hundreds  of millions  of
dollars were lost as the result of the allegations contained in the complaint.
 
    The  litigation is in its preliminary stages and the ultimate outcome cannot
presently  be  determined.  Furthermore,  management  is  unable  to  predict  a
potential range of monetary exposure, if any, to the company. Based on the large
recovery sought, an unfavorable judgment could have a material adverse effect on
the company. Management believes, however, that a material adverse effect on the
company's  consolidated financial position is not likely. The company intends to
vigorously defend the actions.
 
    The company's  facilities  are  subject  to  various  laws  and  regulations
regarding  the discharge of  materials into the  environment. In conformity with
these provisions,  the  company has  a  comprehensive program  for  testing  and
removal,  replacement or  repair of its  underground fuel storage  tanks and for
site remediation where necessary. The  company has established reserves that  it
believes   will  be  sufficient  to  satisfy  anticipated  costs  of  all  known
remediation requirements. In addition, the  company is addressing several  other
environmental cleanup matters involving its properties, all of which the company
believes are immaterial.
 
    The  company has been designated by the U.S. Environmental Protection Agency
("EPA") as a potentially responsible party under the Comprehensive Environmental
Response, Compensation and Liability Act ("CERCLA," also known as  "Superfund"),
with  others, with  respect to  EPA-designated Superfund  sites. While liability
under CERCLA  for remediation  at such  sites is  joint and  several with  other
responsible  parties, the company believes that,  to the extent it is ultimately
determined to be liable for clean up  at any such site, such liability will  not
result  in a material  adverse effect on its  consolidated financial position or
results of operations.
 
    The company  is  committed to  maintaining  the environment  and  protecting
natural  resources and to achieving full compliance with all applicable laws and
regulations.
 
    The company is a party to various other litigation, possible tax assessments
and other matters,  some of which  are for substantial  amounts, arising in  the
ordinary course of business. While the ultimate effect of such actions cannot be
predicted  with certainty, the company expects that the outcome of these matters
will not  result in  a material  adverse effect  on its  consolidated  financial
position or results of operations.
 
- --------------------------------------------------------------------------------
 
                                      F-23

                        QUARTERLY FINANCIAL INFORMATION
 
                    (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
 
                                  (UNAUDITED)
 


                                               FIRST         SECOND        THIRD         FOURTH         YEAR
                                            ------------  ------------  ------------  ------------  -------------
                                                                                     
1993
Net sales.................................  $  4,044,894  $  2,964,655  $  2,936,010  $  3,146,586  $  13,092,145
Costs and expenses:
  Cost of sales...........................     3,803,545     2,787,087     2,767,074     2,969,072     12,326,778
  Selling and administrative..............       170,893       121,366       125,106       141,105        558,470
  Interest expense........................        23,481        17,804        17,796        18,948         78,029
  Interest income.........................       (18,548)      (14,469)      (14,885)      (15,000)       (62,902)
  Equity investment results...............         2,067           805         2,952         6,041         11,865
  Facilities consolidation and
   restructuring..........................       --              6,500       --            101,327        107,827
                                            ------------  ------------  ------------  ------------  -------------
    Total costs and expenses..............     3,981,438     2,919,093     2,898,043     3,221,493     13,020,067
                                            ------------  ------------  ------------  ------------  -------------
Earnings (loss) before taxes..............        63,456        45,562        37,967       (74,907)        72,078
Taxes on income (tax benefit).............        26,081        18,726        17,662       (27,871)        34,598
                                            ------------  ------------  ------------  ------------  -------------
Earnings (loss) before extraordinary
 loss.....................................        37,375        26,836        20,305       (47,036)        37,480
Extraordinary loss from early retirement
 of debt..................................       --            --            --              2,308          2,308
                                            ------------  ------------  ------------  ------------  -------------
Net earnings (loss).......................  $     37,375  $     26,836  $     20,305  $    (49,344) $      35,172
                                            ------------  ------------  ------------  ------------  -------------
                                            ------------  ------------  ------------  ------------  -------------
Net earnings (loss) per share:
  Primary before extraordinary loss.......  $       1.02  $        .73  $        .55  $      (1.28) $        1.02
  Extraordinary loss......................       --            --            --                .06            .06
                                            ------------  ------------  ------------  ------------  -------------
  Primary.................................  $       1.02  $        .73  $        .55  $      (1.34) $         .96
                                            ------------  ------------  ------------  ------------  -------------
                                            ------------  ------------  ------------  ------------  -------------
  Fully diluted before extraordinary
   loss...................................  $       1.02  $        .73  $        .55  $      (1.28) $        1.02
  Extraordinary loss......................       --            --            --                .06            .06
                                            ------------  ------------  ------------  ------------  -------------
  Fully diluted...........................  $       1.02  $        .73  $        .55  $      (1.34) $         .96
                                            ------------  ------------  ------------  ------------  -------------
                                            ------------  ------------  ------------  ------------  -------------
Dividends paid per share..................  $        .30  $        .30  $        .30  $        .30  $        1.20
Weighted average shares outstanding.......        36,722        36,780        36,833        36,896         36,801
                                            ------------  ------------  ------------  ------------  -------------
                                            ------------  ------------  ------------  ------------  -------------

 
    The  first quarter of 1993 and 1992 consists of 16 weeks, all other quarters
are 12 weeks.
 
    The second quarter of 1993 includes $11.2 million of pretax income resulting
from the favorable resolution of a litigation matter and a $1.2 million  accrual
for charges in other legal proceedings. Also included is a $2 million charge for
an  increase  to  previously  established  reserves  related  to  the  company's
contingent liability for  lease obligations.  The company also  recorded a  $4.6
million gain from a real estate transaction during the second quarter of 1993.
 
    The effective tax rate was increased in the third quarter of 1993 due to the
new tax law enacted in August 1993.
 
    See  discussion of facilities consolidation and restructuring charges in the
notes to consolidated financial statements.
 
                                      F-24

                        QUARTERLY FINANCIAL INFORMATION
                    (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
                                  (UNAUDITED)
 


                                               FIRST         SECOND        THIRD         FOURTH         YEAR
                                            ------------  ------------  ------------  ------------  -------------
                                                                                     
1992
Net sales.................................  $  3,905,861  $  2,955,934  $  2,926,805  $  3,104,934  $  12,893,534
Cost and expenses:
  Cost of sales...........................     3,678,598     2,796,876     2,773,220     2,918,164     12,166,858
  Selling and administrative..............       151,033       107,633       107,154       129,163        494,983
  Interest expense........................        26,332        18,577        18,626        17,567         81,102
  Interest income.........................       (17,032)      (14,524)      (13,585)      (14,336)       (59,477)
  Equity investment results...............         3,486         3,931         4,013         3,697         15,127
                                            ------------  ------------  ------------  ------------  -------------
    Total costs and expenses..............     3,842,417     2,912,493     2,889,428     3,054,255     12,698,593
                                            ------------  ------------  ------------  ------------  -------------
Earnings before taxes.....................        63,444        43,441        37,377        50,679        194,941
Taxes on income...........................        24,749        16,943        14,573        19,772         76,037
                                            ------------  ------------  ------------  ------------  -------------
Earnings before extraordinary loss........        38,695        26,498        22,804        30,907        118,904
Extraordinary loss from early retirement
 of debt..................................       --            --            --              5,864          5,864
                                            ------------  ------------  ------------  ------------  -------------
Net earnings..............................  $     38,695  $     26,498  $     22,804  $     25,043  $     113,040
                                            ------------  ------------  ------------  ------------  -------------
                                            ------------  ------------  ------------  ------------  -------------
Net earnings per share:
  Primary before extraordinary loss.......  $       1.09  $        .75  $        .64  $        .84  $        3.33
  Extraordinary loss......................       --            --            --                .16            .16
                                            ------------  ------------  ------------  ------------  -------------
  Primary.................................  $       1.09  $        .75  $        .64  $        .68  $        3.16
                                            ------------  ------------  ------------  ------------  -------------
                                            ------------  ------------  ------------  ------------  -------------
  Fully diluted before extraordinary
   loss...................................  $       1.04  $        .72  $        .62  $        .83  $        3.21
  Extraordinary loss......................       --            --            --                .16            .15
                                            ------------  ------------  ------------  ------------  -------------
  Fully diluted...........................  $       1.04  $        .72  $        .62  $        .68  $        3.06
                                            ------------  ------------  ------------  ------------  -------------
                                            ------------  ------------  ------------  ------------  -------------
Dividends paid per share..................  $        .30  $        .30  $        .30  $        .30  $        1.20
Weighted average common shares
 outstanding..............................        35,449        35,493        35,541        36,657         35,759
                                            ------------  ------------  ------------  ------------  -------------
                                            ------------  ------------  ------------  ------------  -------------

 
    The fourth quarter of 1992 reflects $4.9 million of income related to
litigation settlement.
 
                                      F-25

                    REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
 
To Haniel Corporation:
 
    We have  audited  the accompanying  consolidated  balance sheets  of  Haniel
Corporation  (a Delaware corporation)  and subsidiaries as  of December 31, 1992
and 1993,  and  the related  consolidated  statements of  income,  stockholder's
equity  and cash flows for each of the  three years in the period ended December
31, 1993. 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 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 financial  position  of Haniel  Corporation and
subsidiaries as  of  December  31, 1992  and  1993,  and the  results  of  their
operations  and their cash flows for each of the three years in the period ended
December 31, 1993, in conformity with generally accepted accounting principles.
 
    As discussed in Note 6 to the financial statements, the Company changed  its
method  of accounting for income taxes in 1993 and restated prior year financial
statements to reflect the  change. In addition,  as discussed in  Note 5 to  the
financial   statements,  the  Company  changed  its  method  of  accounting  for
postretirement benefits other than pensions, effective January 1, 1993.
 
                                                  ARTHUR ANDERSEN & CO.
 
Oklahoma City, Oklahoma,
March 11, 1994
 
                                      F-26

                               HANIEL CORPORATION
                          CONSOLIDATED BALANCE SHEETS
 
                                       ASSETS
 


                                                        DECEMBER 31,
                                               ------------------------------     JUNE 30,
                                                    1992            1993            1994
                                               --------------  --------------  --------------
                                                                                (UNAUDITED)
                                                                      
Current Assets:
  Cash.......................................  $    2,703,700  $    3,252,760  $    2,461,225
  Receivables-
    Accounts receivable......................     147,241,595     154,674,250     148,704,447
    Notes receivable.........................      44,092,855      53,877,158      71,630,512
    Less-Allowance for doubtful accounts.....     (18,208,359)    (18,160,262)    (22,497,023)
                                               --------------  --------------  --------------
                                                  173,126,091     190,391,146     197,837,936
  Inventories................................     441,534,444     415,560,007     372,250,362
  Other current assets.......................      22,193,935      16,780,520      12,147,871
                                               --------------  --------------  --------------
      Total current assets...................     639,558,170     625,984,433     584,697,394
                                               --------------  --------------  --------------
Direct financing leases, net of current
 portion.....................................       2,604,875       2,280,345       2,110,575
Investments..................................       1,897,725       1,805,165       1,503,210
Property and equipment, at cost
  Land and buildings.........................     212,322,536     223,064,269     229,324,212
  Furniture, fixtures and equipment..........     200,407,415     225,683,911     237,002,425
  Transportation equipment...................      83,047,275      85,122,869      83,906,755
  Leasehold improvements.....................      56,589,307      64,903,194      64,589,031
                                               --------------  --------------  --------------
                                                  552,366,533     598,774,243     614,822,423
  Less-Accumulated depreciation and
   amortization..............................    (218,254,460)   (263,480,135)   (282,075,739)
                                               --------------  --------------  --------------
                                                  334,112,073     335,294,108     332,746,684
Intangible assets............................     393,343,279     388,586,106     381,788,061
Other assets.................................      15,030,473      17,964,971      14,538,180
                                               --------------  --------------  --------------
                                                  408,373,752     406,551,077     396,326,241
                                               --------------  --------------  --------------
      Total Assets...........................  $1,386,546,595  $1,371,915,128  $1,317,384,104
                                               --------------  --------------  --------------
                                               --------------  --------------  --------------
 
                            LIABILITIES AND STOCKHOLDER'S EQUITY
Current Liabilities:
  Accounts payable...........................  $  253,759,183  $  276,628,540  $  235,885,834
  Current portion of long-term debt and
   capitalized lease obligations.............      32,862,051      20,048,742      15,821,059
  Other current liabilities..................     118,959,028     121,553,230     135,458,771
                                               --------------  --------------  --------------
      Total current liabilities..............     405,580,262     418,230,512     387,165,664
                                               --------------  --------------  --------------
Long-term debt, net of current portion.......     682,300,947     638,043,771     600,859,660
Capitalized lease obligations, net of current
 portion.....................................       5,691,370       3,774,524       3,381,862
Deferred income taxes........................      49,108,353      42,582,700      42,582,700
Other liabilities............................       2,173,014       2,374,286       3,096,186
Commitments and Contingencies
Stockholder's Equity:
  Common stock, par value $100 per share,
   500,000 shares authorized, issued and
   outstanding...............................      50,000,000      50,000,000      50,000,000
  Additional paid-in capital.................      12,026,436      12,026,436      12,026,436
  Retained earnings..........................     179,666,213     204,882,899     218,271,596
                                               --------------  --------------  --------------
                                                  241,692,649     266,909,335     280,298,032
                                               --------------  --------------  --------------
      Total Liabilities and Stockholder's
       Equity................................  $1,386,546,595  $1,371,915,128  $1,317,384,104
                                               --------------  --------------  --------------
                                               --------------  --------------  --------------

 
   The accompanying notes are an integral part of these consolidated balance
                                    sheets.
 
                                      F-27

                               HANIEL CORPORATION
 
                       CONSOLIDATED STATEMENTS OF INCOME
 


                                         FOR THE YEARS ENDED DECEMBER 31,            FOR THE SIX MONTHS ENDED JUNE 30,
                               ----------------------------------------------------  ----------------------------------
                                     1991              1992              1993              1993              1994
                               ----------------  ----------------  ----------------  ----------------  ----------------
                                                                                                (UNAUDITED)
                                                                                        
Net sales....................  $  5,606,198,504  $  5,684,888,683  $  6,016,975,280  $  3,237,938,862  $  3,224,344,635
Costs and expenses:
  Cost of goods sold.........     4,835,078,213     4,892,604,182     5,167,570,482     2,784,290,579     2,762,698,270
  Selling, operating and
   administrative expenses...       661,332,632       686,954,018       752,430,781       400,719,857       411,094,534
Interest:
  Interest income............         6,191,346         6,100,801         6,079,193         3,229,956         3,746,665
  Interest expense...........       (71,520,472)      (62,022,838)      (56,297,924)      (31,150,028)      (27,569,099)
                               ----------------  ----------------  ----------------  ----------------  ----------------
Income before income taxes...        44,458,533        49,408,446        46,755,286        25,008,354        26,729,397
Provision for income taxes...        22,890,300        24,490,563        21,538,600        12,337,514        13,340,700
                               ----------------  ----------------  ----------------  ----------------  ----------------
    Net income...............  $     21,568,233  $     24,917,883  $     25,216,686  $     12,670,840  $     13,388,697
                               ----------------  ----------------  ----------------  ----------------  ----------------
                               ----------------  ----------------  ----------------  ----------------  ----------------

 
  The accompanying notes are an integral part of these consolidated financial
                                  statements.
 
                                      F-28

                               HANIEL CORPORATION
 
                CONSOLIDATED STATEMENTS OF STOCKHOLDER'S EQUITY
 


                                              COMMON STOCK          ADDITIONAL
                                        ------------------------     PAID-IN         RETAINED
                                         SHARES       AMOUNT         CAPITAL         EARNINGS         TOTAL
                                        ---------  -------------  --------------  --------------  --------------
                                                                                   
Balance, December 31, 1990............    500,000  $  50,000,000   $  6,000,000   $  131,669,709  $  187,669,709
  Cumulative effect of accounting
   change (Note 6)....................         --             --             --        1,510,388       1,510,388
                                        ---------  -------------  --------------  --------------  --------------
Balance, December 31, 1990, as
 restated.............................    500,000     50,000,000      6,000,000      133,180,097     189,180,097
  Net income..........................         --             --             --       21,568,233      21,568,233
                                        ---------  -------------  --------------  --------------  --------------
Balance, December 31, 1991............    500,000     50,000,000      6,000,000      154,748,330     210,748,330
  Net income..........................         --             --             --       24,917,883      24,917,883
  Capital contribution (Note 2).......         --             --      6,026,436               --       6,026,436
                                        ---------  -------------  --------------  --------------  --------------
Balance, December 31, 1992............    500,000     50,000,000     12,026,436      179,666,213     241,692,649
  Net Income..........................         --             --             --       25,216,686      25,216,686
                                        ---------  -------------  --------------  --------------  --------------
Balance, December 31, 1993............    500,000     50,000,000     12,026,436      204,882,899     266,909,335
  Net income (unaudited)..............         --             --             --       13,388,697      13,388,697
                                        ---------  -------------  --------------  --------------  --------------
Balance, June 30, 1994
  (unaudited).........................    500,000  $  50,000,000   $ 12,026,436   $  218,271,596  $  280,298,032
                                        ---------  -------------  --------------  --------------  --------------
                                        ---------  -------------  --------------  --------------  --------------

 
  The accompanying notes are an integral part of these consolidated financial
                                  statements.
 
                                      F-29

                               HANIEL CORPORATION
 
                     CONSOLIDATED STATEMENTS OF CASH FLOWS
 


 
                                                                                                        FOR THE SIX MONTHS ENDED
                                                             FOR THE YEARS ENDED DECEMBER 31,                   JUNE 30,
                                                       ---------------------------------------------  ----------------------------
                                                            1991           1992            1993           1993           1994
                                                       --------------  -------------  --------------  -------------  -------------
                                                                                                              (UNAUDITED)
 
                                                                                                      
CASH FLOWS FROM OPERATING ACTIVITIES:
  Net income.........................................  $   21,568,233  $  24,917,883  $   25,216,686  $  12,670,840  $  13,388,697
  Adjustments to reconcile net income to net cash
   provided by operating activities:
    Depreciation and amortization of property and
     equipment.......................................      46,306,580     46,152,193      50,255,461     26,768,610     26,680,948
    Amortization of excess purchase price............       9,156,576      9,253,793       9,930,338      5,412,126      5,352,524
    Amortization of other noncurrent assets..........       3,613,324      3,482,314       5,003,846      2,428,285      3,066,140
    Deferred items...................................        (688,696)     2,027,741      (6,324,381)     2,459,212        721,900
    Changes in assets and liabilities:
      Increase in receivables........................        (575,334)   (17,682,429)    (17,296,491)   (31,660,300)    (7,446,790)
      Decrease (increase) in inventories.............     (33,536,329)      (261,128)     25,974,437     18,791,065     43,309,645
      Decrease (increase) in other current assets....      16,932,007     (2,551,500)      5,413,415     (2,520,416)     4,632,649
      Increase (decrease) in accounts payable........      77,406,313    (35,568,099)     22,869,357    (19,043,230)   (40,742,706)
      Increase (decrease) in other current
       liabilities...................................      (6,807,629)    (7,359,969)      2,594,202      3,450,087     13,905,541
                                                       --------------  -------------  --------------  -------------  -------------
        Net cash provided by operating activities....     133,375,045     22,410,799     123,636,870     18,756,279     62,868,548
                                                       --------------  -------------  --------------  -------------  -------------
CASH FLOWS FROM INVESTING ACTIVITIES:
  Changes in long-term investments...................        (437,990)       285,414          92,560         48,007        301,955
  Proceeds from sale of property and equipment,
   net...............................................      24,919,819      3,162,820       3,572,706        396,825        608,104
  Capital expenditures...............................     (49,333,751)   (41,717,059)    (55,010,202)   (31,483,633)   (24,741,628)
  Reductions of (additions to) intangible and other
   assets............................................      (1,654,937)   (11,977,364)    (13,111,509)    (7,911,559)     1,806,172
                                                       --------------  -------------  --------------  -------------  -------------
        Net cash used in investing activities........     (26,506,859)   (50,246,189)    (64,456,445)   (38,950,360)   (22,025,397)
                                                       --------------  -------------  --------------  -------------  -------------
CASH FLOWS FROM FINANCING ACTIVITIES:
  Decrease in direct financing leases................         437,397        449,513         355,966        188,912        169,770
  Repayments of capital lease obligations............        (849,198)      (748,314)     (1,916,846)    (1,620,481)      (392,662)
  Changes in long-term debt..........................    (107,526,535)    22,371,304     (57,070,485)    23,337,259    (41,411,794
  Capital contribution...............................              --      6,026,436              --             --             --
                                                       --------------  -------------  --------------  -------------  -------------
        Net cash effect of financing activities......    (107,938,336)    28,098,939     (58,631,365)    21,905,690    (41,634,686)
                                                       --------------  -------------  --------------  -------------  -------------
        Net increase (decrease) in cash..............      (1,070,150)       263,549         549,060      1,711,609       (791,535)
Cash at beginning of period..........................       3,510,301      2,440,151       2,703,700      2,703,700      3,252,760
                                                       --------------  -------------  --------------  -------------  -------------
Cash at end of period................................  $    2,440,151  $   2,703,700  $    3,252,760  $   4,415,309  $   2,461,225
                                                       --------------  -------------  --------------  -------------  -------------
                                                       --------------  -------------  --------------  -------------  -------------
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
  Cash paid during the period for-
    Interest (net of amounts capitalized)............  $   70,347,000  $  59,745,000  $   58,916,000  $  32,334,000  $  26,213,000
    Income taxes.....................................      20,243,000     26,523,000      22,537,000     10,887,000      7,865,000

 
  The accompanying notes are an integral part of these consolidated financial
                                  statements.
 
                                      F-30

                               HANIEL CORPORATION
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
       (INFORMATION WITH RESPECT TO JUNE 30, 1993 AND 1994 IS UNAUDITED)
 
1.  ACCOUNTING POLICIES:
 
PRINCIPLES OF CONSOLIDATION
 
    Haniel Corporation is a United States subsidiary of Franz Haniel & Cie. GmbH
("Franz  Haniel"). Haniel Corporation's principal  operations consist of holding
investments  in  the  companies  described  below.  The  consolidated  financial
statements  include  the accounts  of Haniel  Corporation  and its  wholly owned
subsidiaries,  Scrivner,   Inc.,  Hanamerica   Energy  Corporation   and   their
subsidiaries,  collectively  referred  to as  (the  "Company").  All significant
intercompany transactions and balances have been eliminated.
 
NOTES RECEIVABLE
 
    Notes receivable  amounts due  beyond one  year which  total $33,324,000  at
December 31, 1992, $44,747,000 at December 31, 1993, and $55,078,000 at June 30,
1994, are included in current assets, primarily in anticipation of their sale to
banks.  The majority of the notes receivable  bear interest at prime plus 2% (8%
at December 31, 1993  and 9.25% at  June 30, 1994) and  are scheduled to  mature
over  the  next  five years  and  thereafter  as follows:  $16,552,508  in 1994;
$4,748,287 in 1995; $7,401,489 in 1996;  $8,795,049 in 1997; $7,468,237 in  1998
and $26,664,942 thereafter.
 
INVENTORIES
 
    As further discussed in Note 3, wholesale and retail grocery inventories are
priced  at  the lower  of  cost or  market, with  cost  being determined  by the
last-in, first-out (LIFO) method and the first-in, first-out (FIFO) method.
 
PROPERTY AND EQUIPMENT
 
    Depreciation  of  property  and  equipment  is  computed  primarily  on  the
straight-line  method,  based on  the estimated  useful lives  of the  assets as
follows:
 


                                                                            USEFUL
                                                                           LIFE IN
                                                                            YEARS
                                                                          ----------
                                                                       
Buildings...............................................................  4 - 45
Furniture, fixtures and equipment.......................................  2 - 15
Transportation equipment................................................  2 - 7

 
    Leasehold improvements are amortized over the shorter of their useful  lives
or terms of their leases.
 
INTANGIBLE ASSETS
 
    At  December 31,  1992 and  1993 and  June 30,  1994, unamortized intangible
assets attributable  to excess  purchase  price over  net assets  acquired  were
approximately  $352,127,544, $342,502,204 and  $337,373,805, respectively, which
are being amortized on a straight-line basis over 10 to 40 years. The  remaining
amounts  of $41,215,735, $46,083,902 and $44,414,256 as of December 31, 1992 and
1993 and  June 30,  1994,  respectively, consist  of other  acquired  intangible
assets which are being amortized over 3 to 40 years. Accumulated amortization of
intangible  assets was $45,635,636, $57,996,557  and $65,749,961 at December 31,
1992 and 1993 and June 30, 1994, respectively.
 
INCOME TAXES
 
    The Company adopted Statement of Financial Accounting Standards ("SFAS") No.
109, "Accounting for  Income Taxes," in  1993 and elected  to restate its  prior
years'  financial  statements  as discussed  in  Note 6.  Deferred  income taxes
reflect the  estimated  future  tax effects  of  differences  between  financial
statement and tax bases of assets and liabilities at each year-end.
 
FAIR VALUE OF FINANCIAL INSTRUMENTS
 
    The  methods and assumptions used to  estimate the fair value of significant
financial instruments are discussed in the various footnotes.
 
                                      F-31

                               HANIEL CORPORATION
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
       (INFORMATION WITH RESPECT TO JUNE 30, 1993 AND 1994 IS UNAUDITED)
 
1.  ACCOUNTING POLICIES: (CONTINUED)
POSTEMPLOYMENT BENEFITS
 
    In November 1992, the Financial  Accounting Standards Board ("FASB")  issued
SFAS  No. 112, "Employers' Accounting  for Postemployment Benefits." The Company
will adopt  SFAS No.  112 in  1994. The  annual postemployment  benefit  expense
computed  in accordance with the new standard will not have a material effect on
the Company's financial position or future results of operations.
 
INSURANCE
 
    The Company self-insures  the first  $125,000 of  medical coverage  provided
certain  of its  employees, the physical  damage coverage  on its transportation
equipment and the first $350,000 of its workers compensation, general, and  auto
liability coverage.
 
    A  provision for self-insured claims is recorded when sufficient information
is available to reasonably estimate the amount of the loss.
 
CAPITALIZATION OF INTEREST
 
    Interest attributed to funds used  to finance major capital expenditures  is
capitalized  as  an additional  cost of  the  related assets.  Capitalization of
interest ceases when the related assets are substantially complete and ready for
their intended use.
 
2.  POOLING OF INTERESTS:
    Effective June 6, 1992, all of the outstanding stock of Food Holdings,  Inc.
was  acquired by Franz Haniel for $8,084,046 and contributed to the Company. The
purchase price  over the  net  tangible assets  was $6,026,436.  Food  Holdings'
primary  asset is its 50% common stock interest in Gateway Foods, Inc. through a
holding company in which Scrivner holds the remaining 50% common stock interest.
 
    The contribution of Food Holdings' common stock has been accounted for as  a
pooling  of  interests  and,  accordingly, the  financial  statements  have been
restated to include the accounts and operations of Food Holdings for all periods
beginning September 1989, the date  Scrivner and Food Holdings acquired  Gateway
Foods.
 
3.  INVENTORIES:
    All  inventories  are valued  at  the lower  of  cost or  market.  Costs are
determined through use of the LIFO and FIFO methods as follows (in thousands  of
dollars):
 


                                                           DECEMBER 31,
                                                       --------------------   JUNE 30,
                                                         1992       1993        1994
                                                       ---------  ---------  -----------
                                                                             (UNAUDITED)
                                                                    
LIFO.................................................  $ 406,139  $ 399,657   $ 360,493
FIFO.................................................     35,395     15,903      11,757
                                                       ---------  ---------  -----------
                                                       $ 441,534  $ 415,560   $ 372,250
                                                       ---------  ---------  -----------
                                                       ---------  ---------  -----------

 
    Inventories  on a FIFO basis would  have been stated higher by approximately
$53,781,530  at  December  31,  1992,  $55,028,898  at  December  31,  1993  and
$55,232,785  at  June  30, 1994.  Accordingly,  reported net  income  would have
increased by approximately $356,000 and $121,000  for the six months ended  June
30,  1993 and 1994, respectively, and by approximately $757,000 and $662,000 for
the years ended December 31, 1992 and 1993, respectively.
 
                                      F-32

                               HANIEL CORPORATION
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
       (INFORMATION WITH RESPECT TO JUNE 30, 1993 AND 1994 IS UNAUDITED)
 
4.  DEBT OBLIGATIONS:
 
NOTES PAYABLE
 
    The Company has  informal agreements with  various banks from  which it  may
borrow up to $385,000,000 (subject to formal approval by the banks).
 
LONG-TERM DEBT
 
    Long-term debt at December 31, 1992 and 1993 and June 30, 1994, consisted of
the following (in thousands of dollars):
 


                                                           DECEMBER 31,
                                                       --------------------   JUNE 30,
                                                         1992       1993        1994
                                                       ---------  ---------  -----------
                                                                             (UNAUDITED)
                                                                    
Unsecured notes, at rates approximating prime rate
 minus 2%, to 12% due through various dates to
 2003................................................  $   5,298  $   3,594   $   2,951
Real estate mortgage notes, at fixed rates ranging
 from 4% to 10.5% and variable rates at 60% of prime
 rate, due serially through various dates to 2003....     10,078      9,758       6,248
Amounts covered under revolving credit agreements....    283,000    237,000     199,750
Amounts payable under Senior Term Notes..............    166,000    157,000     157,000
Amounts payable under Senior Subordinated Notes......    150,000    150,000     150,000
Amounts payable under Senior Notes...................     50,000     50,000      50,000
Amounts payable under Subordinated Notes.............     50,000     50,000      50,000
Other................................................         39         39          39
                                                       ---------  ---------  -----------
                                                         714,415    657,391     615,988
Less-Current portion.................................     32,114     19,347      15,129
                                                       ---------  ---------  -----------
  Long-term debt, net of current portion.............  $ 682,301  $ 638,044   $ 600,859
                                                       ---------  ---------  -----------
                                                       ---------  ---------  -----------

 
    Scrivner's  $180,000,000  revolving  credit  agreement  and  Gateway  Foods'
$150,000,000 revolving credit  agreement and $65,000,000  Senior Term loan  were
refinanced  with  a  five-year  $430,000,000  revolving  credit  agreement dated
November 19, 1993.
 
    Under terms of its revolving credit agreement, the Company may borrow up  to
the  lower of $430,000,000 or  a Borrowing Base amount  equal to a percentage of
the Company's eligible receivables and inventories, as defined in the agreement,
through November  19, 1998,  at principally  the prime  interest rate,  adjusted
certificate  of deposit rate or a rate  based on the Eurodollar London Interbank
interest rate ("LIBOR"). The Company  is required to pay fees  of 3/8 of 1%  per
annum  on  the unborrowed  portion. There  are  no requirements  for maintaining
compensating balances. At  December 31,  1992 and 1993  and June  30, 1994,  the
Company  had  borrowings  covered  under  its  revolving  credit  agreements  of
$283,000,000, $237,000,000 and $199,750,000, respectively.
 
    The Company's $157,000,000  of Senior Term  Notes at December  31, 1993  and
June 30, 1994 consist of $92,000,000 which bears interest at 10% and $65,000,000
which  bears interest at 10.6%.  The $92,000,000 Senior Term  Note is payable in
annual installments of $8,000,000 in  1994 and $12,000,000 each year  thereafter
through  2001.  The  $65,000,000  note  is  payable  in  annual  installments of
$5,000,000 through 1996 and $10,000,000 each year thereafter through 2001.
 
    The $150,000,000  Senior Subordinated  Notes bear  interest at  12.86%.  The
notes  are payable in annual installments of $30,000,000 beginning September 15,
1997 and each year thereafter through 2001.
 
                                      F-33

                               HANIEL CORPORATION
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
       (INFORMATION WITH RESPECT TO JUNE 30, 1993 AND 1994 IS UNAUDITED)
 
4.  DEBT OBLIGATIONS: (CONTINUED)
    As of December 31, 1991, the Company had outstanding debt of $48,595,048  to
Franz  Haniel and Haniel Finance  B.V., a subsidiary of  Franz Haniel. This debt
consisted of short-term borrowings  bearing interest at  various rates based  on
LIBOR.  In  1992, the  weighted average  interest rate  on these  borrowings was
approximately 4.85%. The Company incurred interest  on its debt to Franz  Haniel
and  Haniel Finance B.V.  of approximately $1,672,000 in  1992 and $3,463,000 in
1991.
 
    In September 1992, Haniel borrowed $100,000,000 from two banks. The proceeds
of these loans were used to retire all notes payable to Haniel Finance B.V.  and
Franz  Haniel  and  Food  Holdings' outstanding  debt  and  accrued  interest of
$43,020,841. The new debt  consists of a  $50,000,000 subordinated note  payable
bearing  interest  at LIBOR  plus  1 1/8%  and  $50,000,000 senior  note payable
bearing interest at LIBOR plus 3/8 of 1%. The subordinated note matures in  1999
while the senior note matures in 1998. No principal payments are due until these
maturity dates.
 
    The  revolving credit agreement and the  note agreements impose, among other
things, certain restrictions on the payment  of cash dividends and provide  that
neither  the Company nor any  subsidiary, without the consent  of the holders of
the notes, shall (a) pledge  any of its assets, except  as provided in the  loan
agreements,  (b) enter into any merger or consolidation proceedings or dissolve,
sell, dispose  of  or lease  all  or substantially  all  of its  assets  or  (c)
guarantee  debt obligations  of any other  corporation or  individual, except as
provided. Under  the  terms  of  these agreements,  the  Company  has  available
$5,000,000,  plus 50% of net income recognized  after December 31, 1993, for the
payment of cash dividends.
 
    The real estate mortgage notes are collateralized by property and  equipment
(primarily land, buildings and equipment) with a net book value of approximately
$9,238,000 and $8,617,000 at December 31, 1993 and June 30, 1994, respectively.
 
    Payments  on long-term debt as of December 31, 1993, for the next five years
are as follows (in thousands of dollars):
 
                                                         
1994......................................................  $  19,347
1995......................................................     18,819
1996......................................................     18,814
1997......................................................     53,135
1998......................................................    337,770


 
    At December 31, 1993 and  June 30, 1994, the  Company has interest rate  cap
agreements  on $170,000,000, which limit the interest rate the Company would pay
on its floating rate debt, from 7.5% to 11.5%.
 
    The Company also enters into interest rate swap and forward rate  agreements
in  order to hedge the impact of future interest rate increases. At December 31,
1993 and June 30, 1994, the Company had an outstanding forward rate agreement of
$50,000,000, which  matures in  July  1994. There  were  no interest  rate  swap
agreements  outstanding at December 31, 1993  or June 30, 1994. The differential
paid on the  interest rate  swap and forward  rate agreements  is recognized  as
interest expense.
 
    The  fair  value  of long-term  debt,  interest  rate cap  and  forward rate
agreements as of December  31, 1993, was  determined using valuation  techniques
that  considered cash flows discounted at current market rates for similar types
of borrowing arrangements.  At December  31, 1992 and  1993, the  fair value  of
debt, interest rate cap and forward rate agreements exceeded the carrying amount
by approximately $28,116,000 and $43,993,000, respectively.
 
                                      F-34

                               HANIEL CORPORATION
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
       (INFORMATION WITH RESPECT TO JUNE 30, 1993 AND 1994 IS UNAUDITED)
 
5.  BENEFIT PLANS:
    The   Company  and  its  subsidiaries   sponsor  or  contribute  to  various
contributory   and   noncontributory   defined   benefit   pension   plans   and
noncontributory  profit sharing plans. These  plans provide for certain benefits
upon retirement  or  termination for  all  full-time employees  not  covered  by
union-sponsored, collectively-bargained multiemployer pension plans. The Company
also  has a  nonqualified supplemental  retirement plan  for selected management
employees. Annual expense for  the above-mentioned benefit  plans is as  follows
(in thousands of dollars):
 


                                                                                     1991       1992       1993
                                                                                   ---------  ---------  ---------
                                                                                                
Pension and supplemental plans...................................................  $     676  $     257  $     215
Profit sharing plans.............................................................      6,333      7,097      7,053
Multiemployer plans..............................................................      9,000      9,066      9,732
                                                                                   ---------  ---------  ---------
  Total..........................................................................  $  16,009  $  16,420  $  17,000
                                                                                   ---------  ---------  ---------
                                                                                   ---------  ---------  ---------

 
    The  pension plan benefits are based on years of service and a percentage of
the participant's compensation  during years  of employment.  The Company  makes
annual  contributions  to  the  plans  that  comply  with  the  minimum  funding
provisions of the  Employee Retirement Income  Security Act. Such  contributions
are intended to provide not only for benefits attributed to service to date, but
also for those expected to be earned in the future.
 
    The  following table  sets forth the  Company's defined  benefit pension and
supplemental plans'  funded  status  and amounts  recognized  in  the  Company's
financial statements (in thousands of dollars):
 


                                                      DECEMBER 31, 1992           DECEMBER 31, 1993
                                                  --------------------------  --------------------------
                                                     ASSETS     ACCUMULATED      ASSETS     ACCUMULATED
                                                     EXCEED       BENEFITS       EXCEED       BENEFITS
                                                  ACCUMULATED      EXCEED     ACCUMULATED      EXCEED
                                                    BENEFITS       ASSETS       BENEFITS       ASSETS
                                                  ------------  ------------  ------------  ------------
                                                                                
Actuarial present value of accumulated benefit
 obligations:
  Vested........................................   $   13,507    $      130    $   15,025    $       --
  Total.........................................       13,755         3,239        15,247         2,685
                                                  ------------  ------------  ------------  ------------
                                                  ------------  ------------  ------------  ------------
Projected benefit obligations...................       14,646         3,025        16,469         2,557
Plan assets at fair value.......................       17,543           455        17,346           737
                                                  ------------  ------------  ------------  ------------
Plan assets in excess of or (less than)
 projected benefit obligations..................        2,897        (2,570)          877        (1,820)
Unrecognized net loss (gain)....................          235           127         2,031          (355)
Unrecognized prior service cost.................          (52)        1,622           (47)        1,497
Unrecognized net asset..........................       (2,013)           --        (1,738)           --
                                                  ------------  ------------  ------------  ------------
Pension asset (liability).......................   $    1,067    $     (821)   $    1,123    $     (678)
                                                  ------------  ------------  ------------  ------------
                                                  ------------  ------------  ------------  ------------

 


                                                                            1991       1992       1993
                                                                          ---------  ---------  ---------
                                                                                       
Net pension expense included the following components:
  Service cost-benefits earned during the year..........................  $   1,160  $     796  $     605
  Interest expense on projected benefit obligation......................      1,738      1,378      1,499
  Actual return on plan assets..........................................     (1,919)      (353)      (603)
  Net amortization and deferral.........................................       (303)    (1,564)    (1,286)
                                                                          ---------  ---------  ---------
Net periodic pension expense............................................  $     676  $     257  $     215
                                                                          ---------  ---------  ---------
                                                                          ---------  ---------  ---------

 
                                      F-35

                               HANIEL CORPORATION
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
       (INFORMATION WITH RESPECT TO JUNE 30, 1993 AND 1994 IS UNAUDITED)
 
5.  BENEFIT PLANS: (CONTINUED)
    The  weighted-average  discount  rates  and  rates  of  increase  in  future
compensation levels  used in  determining  the actuarial  present value  of  the
projected  benefit obligations at  December 31, 1993,  were 8.25% to  9% and 5%,
respectively. The expected long-term rates of  return on assets at December  31,
1993, were 8.75% to 9%. The Company computes pension expense using the projected
unit credit actuarial cost method.
 
    The  profit sharing  plans maintained by  the Company are  for employees who
meet certain types of employment and length of service requirements.
 
    Contributions and costs of these profit sharing plans are determined at  the
discretion  of the Board of Directors.  However, the contributions to the profit
sharing plans shall not exceed the maximum amount deductible for Federal  income
tax purposes.
 
    For   union-sponsored,  multiemployer  plans,   contributions  are  made  in
accordance with negotiated contracts.
 
    The Company  provides certain  health care  and life  insurance benefits  to
eligible   retired  employees  covered  under  various  group  plans.  Benefits,
eligibility requirements and cost-sharing provisions for employees vary by group
plan and/or bargaining  unit. Generally, the  plans pay a  stated percentage  of
most medical expenses reduced for any deductible and payments made by government
programs  and other group  coverage. Several of the  group plans require retiree
contributions and  the majority  of  the group  plan's eligibility  for  retiree
benefits  are frozen. The Company  does not pre-fund these  benefits and has the
right to modify or terminate certain of these plans in the future.
 
    The Company adopted SFAS No. 106, "Employers' Accounting for  Postretirement
Benefits  Other Than Pensions"  as of the  beginning of 1993.  This new standard
requires that the expected cost of these postretirement benefits must be charged
to expense during the years that  the employees render service. The Company  has
elected  to  amortize the  unfunded  obligations that  were  measured as  of the
beginning of 1993,  over a  period of  20 years. The  effect of  this change  in
accounting  was to decrease 1993 pre-tax income  by $378,000. Prior to 1993, the
Company recognized postretirement health  care and life  insurance costs in  the
year  that the benefits were paid. Postretirement health care and life insurance
costs charged  to expense  in  1991 and  1992  were $1,296,000  and  $1,267,000,
respectively.
 
                                      F-36

                               HANIEL CORPORATION
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
       (INFORMATION WITH RESPECT TO JUNE 30, 1993 AND 1994 IS UNAUDITED)
 
5.  BENEFIT PLANS: (CONTINUED)
    The  following  table reconciles  the plans'  funded  status to  the accrued
postretirement health care and life insurance cost liability as reflected on the
balance sheet as of December 31, 1993 (in thousands of dollars):
 


                                                                                                            1993
                                                                                                          ---------
                                                                                                       
Accumulated postretirement benefit obligation:
  Retirees..............................................................................................  $  (6,627)
  Other fully eligible participants.....................................................................       (350)
  Other active participants.............................................................................     (1,103)
                                                                                                          ---------
                                                                                                             (8,080)
Unrecognized actuarial loss.............................................................................        553
Unrecognized transition obligation......................................................................      7,149
                                                                                                          ---------
    Accrued postretirement health care cost liability...................................................  $    (378)
                                                                                                          ---------
                                                                                                          ---------
Net postretirement health care cost for 1993 included the following components:
  Service cost -- benefits attributed to service during the period......................................  $      80
  Interest cost on accumulated postretirement benefit obligation........................................        595
  Amortization of transition obligation over 20 years...................................................        376
  Net amortization and deferral.........................................................................         --
                                                                                                          ---------
    Net postretirement health cost......................................................................  $   1,051
                                                                                                          ---------
                                                                                                          ---------

 
    The discount rate used in determining the accumulated postretirement benefit
obligation was 8.25%. A 12.5% annual rate of increase in the per capita cost  of
covered  health care  benefits was  assumed for  1993; the  rate was  assumed to
decrease gradually to 6% in year 2006 and remain at that level thereafter. A  1%
increase  in  the  assumed  health  care cost  trend  rates  would  increase the
accumulated postretirement  benefit  obligation  as  of  December  31,  1993  by
approximately  $531,000,  and  the  total  of  the  service  and  interest  cost
components of net  postretirement health care  cost for the  year then ended  by
approximately $72,000.
 
6.  PROVISION FOR INCOME TAXES:
    The  Company adopted SFAS  No. 109, "Accounting for  Income Taxes," in 1993,
and has elected to  apply the provisions retroactively  beginning with its  year
ended December 31, 1983. It was not practical to restate prior to 1983. SFAS No.
109 utilizes the liability method and deferred taxes are determined based on the
estimated  future tax effects of differences between the financial statement and
tax bases of  assets and  liabilities given the  provisions of  the enacted  tax
laws.  Prior to the  implementation of SFAS  No. 109, the  Company accounted for
income taxes using Accounting Principles Board Opinion No. 11.
 
    As a  result  of  this  change, retained  earnings  at  December  31,  1990,
increased  by $1,510,000, the cumulative  effect of the change  in the method of
accounting for  income  taxes. The  effect  of adopting  SFAS  No. 109  was  not
material  to the Company's statements  of income for the  years ended 1991, 1992
and 1993, other than the valuation allowance adjustment discussed below.
 
    The Company reduced its valuation allowance by $3,187,000 for the year ended
December 31, 1993, as a result of the recognition of certain net operating  loss
carryforwards  for financial reporting purposes. The Company's ability to obtain
future benefit of its  net operating loss carryforwards  is attributable to  the
restructuring of subsidiaries implemented in 1993, as discussed in Note 2.
 
                                      F-37

                               HANIEL CORPORATION
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
       (INFORMATION WITH RESPECT TO JUNE 30, 1993 AND 1994 IS UNAUDITED)
 
6.  PROVISION FOR INCOME TAXES: (CONTINUED)
    Provision  for  income  taxes has  been  made  as follows  (in  thousands of
dollars):
 


                                                                           1991       1992       1993
                                                                         ---------  ---------  ---------
                                                                                      
Federal:
  Current..............................................................  $  16,957  $  15,104  $  16,086
  Deferred.............................................................      1,650      4,703      3,190
                                                                         ---------  ---------  ---------
                                                                            18,607     19,807     19,276
State (current and deferred)...........................................      4,283      4,684      5,450
                                                                         ---------  ---------  ---------
                                                                            22,890     24,491     24,726
Benefit of operating loss carryforward.................................         --         --     (3,187)
                                                                         ---------  ---------  ---------
                                                                         $  22,890  $  24,491  $  21,539
                                                                         ---------  ---------  ---------
                                                                         ---------  ---------  ---------

 
    The provision  for income  taxes  differs from  an  amount computed  at  the
statutory rate as follows (in thousands of dollars):
 


                                                                           1991       1992       1993
                                                                         ---------  ---------  ---------
                                                                                      
Income taxes at statutory rate (35% in 1993, 34% in 1992 and 1991).....  $  15,116  $  16,799  $  16,364
Amortization of excess purchase price..................................      3,028      3,036      3,541
Benefit of operating loss carryforward.................................         --         --     (3,187)
State income taxes, net of Federal benefit.............................      2,668      2,965      2,805
Other, net.............................................................      2,078      1,691      2,016
                                                                         ---------  ---------  ---------
                                                                         $  22,890  $  24,491  $  21,539
                                                                         ---------  ---------  ---------
                                                                         ---------  ---------  ---------

 
    The  1% increase in  the Federal statutory tax  rate increased the Company's
1993 provision  for  income  taxes  $1,540,000. This  consisted  of  a  $468,000
increase  in the current tax provision and a $1,072,000 increase in the deferred
tax provision as  a result  of adjusting the  deferred tax  asset and  liability
accounts recorded in the Company's balance sheets.
 
    Deferred  income taxes 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  following table
includes $1,780,000 of net current deferred tax liabilities, which are  included
in other current
 
                                      F-38

                               HANIEL CORPORATION
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
       (INFORMATION WITH RESPECT TO JUNE 30, 1993 AND 1994 IS UNAUDITED)
 
6.  PROVISION FOR INCOME TAXES: (CONTINUED)
liabilities  at December  31, 1993  and $4,965,000  of net  deferred tax assets,
included in  other current  assets at  December 31,  1992, in  the  consolidated
balance  sheets. The following is a summary of the significant components of the
Company's deferred tax assets and liabilities (in thousands of dollars):
 


                                                                                                  DECEMBER 31,
                                                                                              --------------------
                                                                                                1992       1993
                                                                                              ---------  ---------
                                                                                                   
Deferred tax assets:
  Net operating loss carryforwards, expiring 2003 to 2008...................................  $  15,566  $   7,501
  Provision for obligations and contingencies to be settled in future periods...............     22,524     20,394
  Other.....................................................................................      3,114      6,765
                                                                                              ---------  ---------
    Total deferred tax assets...............................................................     41,204     34,660
                                                                                              ---------  ---------
Deferred tax liabilities:
  Depreciation and amortization.............................................................     56,441     56,947
  Inventories...............................................................................     14,354     14,354
  Other.....................................................................................      6,585      7,721
                                                                                              ---------  ---------
    Total deferred tax liabilities..........................................................     77,380     79,022
                                                                                              ---------  ---------
Deferred tax valuation allowance............................................................      7,967         --
                                                                                              ---------  ---------
    Net deferred tax liability..............................................................  $  44,143  $  44,362
                                                                                              ---------  ---------
                                                                                              ---------  ---------

 
7.  LEASES:
    The Company leases certain of  its operating facilities under terms  ranging
up  to twenty-five years. In addition, the Company leases certain equipment used
in its operations under terms ranging up to ten years.
 
    The Company also  leases certain facilities  which it in  turn subleases  to
some of its independent retail store operators. Some of these agreements contain
provisions  calling for additional rentals  based on sales. Amounts attributable
to capitalized subleases have  been included in direct  financing leases in  the
accompanying balance sheets.
 
    The  following is a summary of property and equipment under leases that have
been capitalized and included in  the accompanying balance sheets (in  thousands
of dollars):
 


                                                                                         DECEMBER 31,
                                                                                     --------------------
                                                                                       1992       1993
                                                                                     ---------  ---------
                                                                                          
Land and buildings.................................................................  $   5,224  $   3,688
  Less-Accumulated depreciation....................................................     (2,426)    (2,170)
                                                                                     ---------  ---------
Net property under capital leases..................................................  $   2,798  $   1,518
                                                                                     ---------  ---------
                                                                                     ---------  ---------

 
                                      F-39

                               HANIEL CORPORATION
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
       (INFORMATION WITH RESPECT TO JUNE 30, 1993 AND 1994 IS UNAUDITED)
 
7.  LEASES: (CONTINUED)
    The  following represents the  minimum lease payments  remaining at December
31, 1993, under the  capitalized leases and the  minimum sublease rentals to  be
received  under the direct  financing leases, covering  certain facilities which
are sublet to retail customers (in thousands of dollars):
 


                                                                                   TOTAL        DIRECT
                                                                                  CAPITAL      FINANCING
                                                                                   LEASES      SUBLEASES      NET
                                                                                ------------  -----------  ---------
                                                                                                  
1994..........................................................................   $    1,330    $    (593)  $     737
1995..........................................................................        1,202         (535)        667
1996..........................................................................        1,060         (482)        578
1997..........................................................................          777         (360)        417
1998..........................................................................          732         (350)        382
Later years...................................................................        3,294       (1,859)      1,435
                                                                                ------------  -----------  ---------
    Total minimum lease payments..............................................        8,395       (4,179)  $   4,216
                                                                                                           ---------
                                                                                                           ---------
  Less-Executory costs........................................................         (360)          --
  Less-Imputed interest (6% to 13.37%)........................................       (3,558)       1,574
                                                                                ------------  -----------
Present value of minimum lease payments.......................................        4,477       (2,605)
  Less-Current maturities.....................................................         (702)         325
                                                                                ------------  -----------
    Long-term obligations and receivables.....................................   $    3,775    $  (2,280)
                                                                                ------------  -----------
                                                                                ------------  -----------

 
    Total rental expense for all  operating (noncapitalized) leases amounted  to
(in thousands of dollars):
 


                           LEASE RENTALS                                 1991        1992        1993
- --------------------------------------------------------------------  ----------  ----------  ----------
                                                                                     
Minimum.............................................................  $   63,947  $   76,404  $   84,133
Contingent..........................................................       4,650       5,012       3,188
  Less-Sublease income..............................................     (36,728)    (39,344)    (38,737)
                                                                      ----------  ----------  ----------
                                                                      $   31,869  $   42,072  $   48,584
                                                                      ----------  ----------  ----------
                                                                      ----------  ----------  ----------

 
    The  future  minimum lease  commitments  as of  December  31, 1993,  for all
noncancelable operating leases are as follows (in thousands of dollars):
 


                                                                                 SUBLEASE
                                                                     EXPENSE      INCOME        NET
                                                                    ----------  -----------  ----------
                                                                                    
1994..............................................................  $   85,198  $   (35,897) $   49,301
1995..............................................................      81,229      (33,648)     47,581
1996..............................................................      76,078      (28,004)     48,074
1997..............................................................      69,798      (23,807)     45,991
1998..............................................................      63,089      (17,638)     45,451
Later years.......................................................     505,346      (53,435)    451,911
                                                                    ----------  -----------  ----------
                                                                    $  880,738  $  (192,429) $  688,309
                                                                    ----------  -----------  ----------
                                                                    ----------  -----------  ----------

 
    Most of the real estate and retail  store leases have renewal options of  up
to twenty-five years.
 
8.  COMMITMENTS AND CONTINGENCIES:
    During  the year ended December  31, 1992 and 1993  and the six months ended
June 30,  1994,  the  Company sold  $40,591,000,  $51,036,000  and  $12,138,000,
respectively, of its notes receivable to banks at cost.
 
                                      F-40

                               HANIEL CORPORATION
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
       (INFORMATION WITH RESPECT TO JUNE 30, 1993 AND 1994 IS UNAUDITED)
 
8.  COMMITMENTS AND CONTINGENCIES: (CONTINUED)
The  Company  is  contingently  liable,  up  to  approximately  $13,630,000  and
$12,620,764, for any future losses experienced  by the banks in connection  with
sold notes receivable at December 31, 1993 and June 30, 1994, respectively.
 
    The  Company has guaranteed the payment of  notes and leases made by certain
retail  store  operators  to  various   banks  and  lessors.  These   contingent
liabilities totaled approximately $3,301,000 and $4,160,000 at December 31, 1993
and  June 30, 1994.  The Company derives  interest income as  a guarantor of the
notes and leases.
 
    The Internal Revenue Service (the "IRS") has examined the Company's  Federal
income  tax returns for the  years 1983 through 1987,  and has issued notices of
proposed tax deficiencies for  those years. The  Company has formally  protested
the  IRS proposed deficiencies, and  the entire matter is  now being reviewed by
the IRS Appeals Office. The significant  issues have been tentatively agreed  to
for  settlement, subject to final  approval by the IRS.  The Company has accrued
reserves sufficient to provide for the proposed settlement amounts. The  Company
believes  that the ultimate resolution of these matters will not have a material
adverse effect on its financial position or future results of operations.
 
                                      F-41

                               [PICTURES TO COME]

- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
 
    NO  DEALER, SALESPERSON OR OTHER INDIVIDUAL  HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR  MAKE ANY  REPRESENTATIONS NOT  CONTAINED IN  THIS PROSPECTUS  IN
CONNECTION  WITH THE OFFERING COVERED BY THIS PROSPECTUS. IF GIVEN OR MADE, SUCH
INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED
BY THE  COMPANY, THE  SUBSIDIARY GUARANTORS  OR ANY  OF THE  UNDERWRITERS.  THIS
PROSPECTUS  DOES NOT CONSTITUTE AN OFFER TO  SELL, OR A SOLICITATION OF AN OFFER
TO BUY, THE  FIXED RATE NOTES  OR THE  FLOATING RATE NOTES  IN ANY  JURISDICTION
WHERE,  OR  TO  ANY  PERSON TO  WHOM,  IT  IS  UNLAWFUL TO  MAKE  SUCH  OFFER OR
SOLICITATION. NEITHER  THE  DELIVERY  OF  THIS  PROSPECTUS  NOR  ANY  SALE  MADE
HEREUNDER  SHALL, UNDER ANY CIRCUMSTANCES, CREATE  AN IMPLICATION THAT THERE HAS
NOT BEEN ANY CHANGE IN THE FACTS SET FORTH IN THIS PROSPECTUS OR IN THE  AFFAIRS
OF THE COMPANY OR THE SUBSIDIARY GUARANTORS SINCE THE DATE HEREOF.
 
                              -------------------
 
                               TABLE OF CONTENTS
 


                                                   PAGE
                                                 ---------
                                              
Available Information..........................          3
Incorporation of Certain Documents by
 Reference.....................................          3
Prospectus Summary.............................          4
Investment Considerations......................         13
The Company....................................         18
Use of Proceeds................................         18
Capitalization.................................         19
Pro Forma Financial Information................         20
Selected Financial Information.................         23
Management's Discussion and Analysis...........         25
Business.......................................         36
Management.....................................         46
The Credit Agreement...........................         48
Certain Other Obligations......................         49
Description of the Notes.......................         50
Underwriting...................................         73
Legal Opinions.................................         74
Experts........................................         74
Index to Financial Statements..................        F-1

 
                                  $500,000,000
 
                                     [LOGO]
 
                       $300,000,000 10 5/8% SENIOR NOTES
                                    DUE 2001
 
                           $200,000,000 FLOATING RATE
                             SENIOR NOTES DUE 2001
 
                             ---------------------
 
                                   PROSPECTUS
 
                             ---------------------
 
                              MERRILL LYNCH & CO.
 
                          J.P. MORGAN SECURITIES INC.
 
                                DECEMBER 8, 1994
 
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------

                                                                APPENDIX A


                        TABLE OF ADDITIONAL REGISTRANT

   This filing contains an additional co-registrant as set forth below.




             EXACT NAME OF SUBSIDIARY GUARANTOR                  JURISDICTION     I.R.S. EMPLOYER
                 REGISTRANTS AS SPECIFIED IN                   OF INCORPORATION   IDENTIFICATION
                  THEIR RESPECTIVE CHARTERS                     OR ORGANIZATION         NO.            CIK        FILE NO.
- -------------------------------------------------------------  -----------------  ---------------   --------      --------
                                                                                                    
Consumers Markets, Inc.......................................  Missouri             44-0559460      0000932744  033-55369-100





                                                             APPENDIX B


                       DESCRIPTION OF PRINTED MATERIAL



Page 2           Map of United States showing location of company operated
                 distribution centers, retail chains and headquarters.
                 Letterhead "Fleming Companies, Inc." displayed above map.


Inside Back      Color photographs of three distribution centers and three
 Prospectus      retail stores, each with a caption identifying the location
   Cover         appearing below the photograph.