-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: keymaster@town.hall.org Originator-Key-Asymmetric: MFkwCgYEVQgBAQICAgADSwAwSAJBALeWW4xDV4i7+b6+UyPn5RtObb1cJ7VkACDq pKb9/DClgTKIm08lCfoilvi9Wl4SODbR1+1waHhiGmeZO8OdgLUCAwEAAQ== MIC-Info: RSA-MD5,RSA, jnA7wURD9UeAmzowAxaTmxdix6WWxCiV87DE6NJBdDI9JnNnX6wP8dwlynYKIPHt VKN7yoXIfofQPKF2q+g5Hw== 0000950117-94-000099.txt : 19940516 0000950117-94-000099.hdr.sgml : 19940516 ACCESSION NUMBER: 0000950117-94-000099 CONFORMED SUBMISSION TYPE: 10-K PUBLIC DOCUMENT COUNT: 6 CONFORMED PERIOD OF REPORT: 19940129 FILED AS OF DATE: 19940427 FILER: COMPANY DATA: COMPANY CONFORMED NAME: TOYS R US INC CENTRAL INDEX KEY: 0000051734 STANDARD INDUSTRIAL CLASSIFICATION: 5945 IRS NUMBER: 135159250 STATE OF INCORPORATION: DE FISCAL YEAR END: 0131 FILING VALUES: FORM TYPE: 10-K SEC ACT: 1934 Act SEC FILE NUMBER: 001-01117 FILM NUMBER: 94524650 BUSINESS ADDRESS: STREET 1: 461 FROM RD CITY: PARAMUS STATE: NJ ZIP: 07652 BUSINESS PHONE: 2012627800 FORMER COMPANY: FORMER CONFORMED NAME: INTERSTATE STORES INC DATE OF NAME CHANGE: 19780525 FORMER COMPANY: FORMER CONFORMED NAME: INTERSTATE DEPARTMENT STORES INC DATE OF NAME CHANGE: 19700702 10-K 1 FORM 10-K UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington D.C. 20549 FORM 10-K [X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the Fiscal Year Ended January 29, 1994 [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission file number 1-1117 TOYS 'R' US, INC. (Exact name of registrant as specified in its charter) Delaware 13-5159250 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 461 From Road, Paramus, New Jersey 07652 (Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (201) 262-7800 Securities registered pursuant to Section 12(b) of the Act: Name of each exchange Title of each class on which registered Common Stock, par value $.10 New York Stock Exchange
Securities registered pursuant to Section 12(g) of the Act: None (Title of Class) Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes [ X ] No [ ] Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. [ X ] As of April 11, 1994, the aggregate market value of voting stock held by non-affiliates of the registrant was $10,087,000,000 1. As of April 11, 1994, 288,191,741 shares of the registrant's sole class of common stock were outstanding. DOCUMENTS INCORPORATED BY REFERENCE: The following documents, or portions thereof, have been incorporated herein by reference: (i) portions of the registrant's Annual Report to Stockholders for the fiscal year ended January 29, 1994 (the 'Annual Report') are incorporated by reference into Parts I and II hereof; and (ii) portions of the registrant's definitive proxy statement for the 1994 Annual Meeting of Stockholders (the 'Proxy Statement') are incorporated by reference into Part III hereof. - - ------------------------ 1 Included in this amount is voting stock having an aggregate market value of approximately $1,414,000,000 (representing 14.0% of the outstanding voting stock) which is owned by one stockholder. PART I Item 1. Business Toys 'R' Us, Inc. and its subsidiaries2 are principally engaged in the operation of 1,022 children's specialty retail stores consisting of 581 U.S. and 234 international toy stores under the name 'Toys 'R' Us' and 207 children's clothing stores under the name 'Kids 'R' Us', as of April 11, 1994. Recent Developments In April 1994, the Company entered into an agreement with Petrie Stores Corporation, a New York corporation ('Petrie'), the holder of approximately 14.0% of the Company's outstanding Common Stock. Pursuant to the agreement, (i) Petrie will sell or otherwise transfer its retail apparel business and other assets to a third party, (ii) the Company will exchange 37.1 million shares of newly-issued Common Stock for the 40.4 million shares currently owned by Petrie (subject to adjustment if Petrie sells any of the Common Stock it holds), and (iii) the Company will sell to Petrie additional shares of Common Stock (at market value) for up to $250 million in cash. Following these transactions Petrie will dissolve and distribute the Common Stock it holds (other than shares placed in escrow to cover contingent liabilities) to its shareholders. The exchange is expected to be completed in the latter part of 1994 or early 1995. The exchange is subject to, among other conditions, approval by holders of two-thirds of Petrie's outstanding common stock, Petrie's disposition of its retail operations, receipt of a - - --------------------------- 2 When used in this report the term 'Company' refers to Toys 'R' Us, Inc. and its subsidiaries, the term 'Toys 'R' Us' refers only to the Toys 'R' Us U.S.A. toy specialty retail chain and the term 'registrant' refers only to Toys 'R' Us, Inc., a Delaware corporation. favorable ruling from the Internal Revenue Service that the exchange will be tax-free and the ability of Petrie to reduce its liabilities remaining at the time of its dissolution. Milton Petrie, the owner of approximately 60% of Petrie's outstanding common stock (or 54% on a fully diluted basis), has agreed to vote in favor of the exchange. Toys 'R' Us - United States The Company believes that Toys 'R' Us is the largest and fastest growing operation of its type in the country in terms of sales and earnings. The overall merchandising philosophy of Toys 'R' Us is the development of strong consumer recognition and acceptance of its name by the use of mass media advertising that promotes its broad selection and everyday low prices. Toys 'R' Us operates in 46 states and Puerto Rico and sells children's and adult toys, games, bicycles and other wheel goods, sporting goods, electronic and video games, small pools, records, books, infant's and juvenile furniture, infant's and children's clothing and similar items. Most of the Toys 'R' Us stores conform to a prototype design consisting of approximately 46,000 square feet and are freestanding units or located in strip centers. As an integral part of its long- range growth plans, Toys 'R' Us has been increasing its toy store square footage by opening 40 to 45 new toy stores each year. At April 11, 1994, Toys 'R' Us utilized 19 warehouse/distribution centers averaging approximately 369,000 square feet each in size, and a large fleet of tractors and trailers, which it owns and maintains, to service its 581 stores. Toys 'R' Us believes that the flexibility afforded by its warehouse/distribution system and by ownership of its own fleet of trucks provides maximum efficiency and capacity, particularly in light of the seasonality of its business. Toys 'R' Us employs a computerized inventory system which allows management to constantly monitor the current activity and inventory in each region and in each store, and permits management to allocate the proper amount of merchandise to each store and to keep the stores adequately stocked at all times. The regional locations of Toys 'R' Us stores and warehouse/ distribution centers are listed in Item 2. Toys 'R' Us utilizes demographic information in determining which markets to enter. During the fiscal year ended January 29, 1994, the Company opened 41 new Toys 'R' Us stores. Plans for the fiscal year ending January 28, 1995 call for about 40 to 45 new Toys 'R' Us stores. Toys 'R' Us - International During the fiscal year ended January 29, 1994, the Company opened its first stores in the following countries; Australia (seven stores), Belgium (two stores), the Netherlands (five stores), Portugal (two stores) and Switzerland (four stores). In addition, the Company continued its international expansion with new toy store openings in Canada (six stores), France (eight stores), Germany (twelve stores), Japan (ten stores), Spain (five stores) and the United Kingdom (six stores). The above countries are serviced by executive and buying offices and warehouse/distribution centers (see Item 2-Properties). There were a total of 11 international warehouse/distribution centers in operation at April 11, 1994. In 1994, the Company plans to open approximately 65 to 70 new international toy stores, including its first stores in Denmark and Sweden. These stores will be serviced by the distribution center in the United Kingdom. The Company also operates, through 50%-owned joint ventures, four stores in Hong Kong and three stores in Taiwan. In 1993, the Company created a franchising division to provide for the opening of stores in additional parts of the world. Two franchise agreements were signed in 1993 which allow for the opening of toy stores in parts of the Middle East commencing in 1994. Financial information relating to foreign and domestic operations is hereby incorporated by reference to page 14 of the Company's Annual Report. Kids 'R' Us In 1993, the Company continued expansion of its Kids 'R' Us children's clothing store division which was inaugurated in 1983. These stores feature brand name first quality children's clothing. Ten additional stores were opened during 1993 and four stores which were not meeting expectations were closed. As part of a plan to improve profitability, the Company plans to close an additional 15 to 20 stores in 1994 (of which 10 stores have already closed through April 11, 1994), including all stores in Puerto Rico and Arizona. In 1994, the Company plans to open about 10 stores. All remaining stores will be serviced from three existing distribution centers. Competition Retailing remains an intensely competitive industry and all of the merchandise sold by the Company is available, in the markets in which the Company operates, from various retailers at competitive prices. Employees The Company employed approximately 55,000 associates at the end of the fiscal year. During the 1993 Christmas season, the number of employees increased to approximately 107,000. Seasonality and Working Capital The Company's business is highly seasonal, with most of its earnings occurring in the fourth quarter. See the quarterly financial data contained in the Company's Annual Report, which section is incorporated herein by reference to page 14 of the Company's Annual Report. For a discussion of the Company's working capital requirements, see 'Management's Discussion - Results of Operations and Financial Condition - Liquidity and Capital Resources' included in the Company's Annual Report, which section is incorporated herein by reference to page 6 of the Company's Annual Report. Incorporation The registrant was incorporated in Delaware in 1928. Item 2. Properties As of April 11, 1994, Toys 'R' Us operated 19 distribution centers, 15 of which are owned and four of which are leased. The distribution centers average approximately 369,000 square feet each in size. As of April 11, 1994, Toys 'R' Us operated 581 toy stores, 354 of which are owned and 227 of which are leased. Most of the stores conform to a prototype design consisting of approximately 46,000 square feet. Further, in smaller markets, the Company is also opening 30,000 square foot stores. The toy stores are typically freestanding units or located in strip centers. Prior to 1980, Toys 'R' Us leased most of its properties pursuant to long-term leases with multiple renewal options. Since 1981, a significant portion of the properties constructed by Toys 'R' Us have been owned. Toys 'R' Us plans to continue this policy in 1994. The following chart sets forth certain information concerning the operating properties of Toys 'R' Us as of April 11, 1994:
Distribution Region Number of Center Serviced Stores in Region Joliet, Illinois Illinois/Wisconsin/Minnesota 60 Rialto, California Southern California/Arizona/ Nevada/Hawaii 57 Atlanta, Georgia Georgia/South Carolina/ Tennessee/Alabama 47 Port Newark, New Jersey Elizabeth, New Jersey New York/Northern New Jersey 46 Landover, Maryland Virginia/Maryland/North Carolina 42 Houston, Texas Southern Texas/Louisiana/ Mississippi 37 Stockton, California Northern California 31
Northboro, Massachusetts New England 31 Youngstown, Ohio Northeastern Ohio/Western Pennsylvania/Northwestern New York 28 Fairfield, Ohio Central Ohio/Indiana/Kentucky 28 Canton, Michigan Michigan/Northwestern Ohio 27 Fairless Hills, Pennsylvania/Delaware/ Pennsylvania Southern New Jersey 27 Carrollton, Texas Northern Texas/Oklahoma/ Arkansas 24 Kansas City, Missouri Kansas/Missouri/Iowa/Nebraska 23 Miami, Florida Southern Florida/Puerto Rico 20 Orlando, Florida Northern Florida 19 Denver, Colorado Colorado/Utah/New Mexico 17 Kent, Washington Pacific Northwest/Alaska 17 --- 581 ===
The Company also has corporate offices, which it leases, in Paramus and Rochelle Park, New Jersey. Kids 'R' Us As of April 11, 1994, Kids 'R' Us operated 207 children's clothing stores, of which 95 are owned and 112 are leased. Most of the stores conform to prototypical designs consisting of approximately 18,000 to 21,500 square feet. Kids 'R' Us is also opening 15,000 square foot stores in smaller markets. The clothing stores are typically freestanding units or located in strip centers. As of April 11, 1994, Kids 'R' Us operated three distribution centers, all of which are owned. The distribution centers average approximately 307,000 square feet each in size. The following chart sets forth certain information concerning the operating properties of Kids 'R' Us as of April 11, 1994:
Distribution Centers Number of Stores Serviced Somerset, New Jersey 87 Southgate, Michigan 84 Irwindale, California 36 --- 207 ===
Toys 'R' Us - International Toys 'R' Us-International owns or leases properties in Australia, Austria, Belgium, Canada, France, Germany, Japan, the Netherlands, Portugal, Singapore, Spain, Switzerland and the United Kingdom. The Toys 'R' Us international stores generally conform to prototypical designs similar to those used in the United States. The following chart sets forth certain information concerning the operating properties of Toys 'R' Us-International, excluding joint venture properties, as of April 11, 1994:
Number Executive and Distribution Country of Stores Buying Office Centers Serviced Serviced Canada Concord, Ontario Canada 50 United Kingdom Conventry United Kingdom 45 Germany Koln(2), Germany,Austria Trossingen Belgium, The 60 Bocklemund Netherlands, Switzerland France Evry France 25 Spain Alcala de Henares Spain, Portugal 19 Japan Kobe Japan 16 Australia Regents Park, NSW Australia 7 - - -- Jurong Singapore 3 --- 225 ===
Four of the warehouse/distribution centers are owned and seven are leased. 82 of the stores are owned and 143 are leased. See the Note, 'Leases,' in the Company's Notes to Consolidated Financial Statements included in the Company's Annual Report, which note is incorporated herein by reference, for additional information with respect to the Company's leases. Item 3. Legal Proceedings None. Item 4. Submission of Matters to a Vote of Security Holders None. Item 4A. Executive Officers of the Company as of April 11, 1994
(a) The following persons are the executive officers of the Company, having been elected to their respective offices by the Board of Directors of the Company to serve until the election and qualification of their respective successors:
Name Age Office Michael Goldstein 52 Vice Chairman of the Board and Chief Executive Officer Robert C. Nakasone 46 President and Chief Operating Officer Larry D. Bouts 45 Vice President of the Company and President of the International Division of the Company Roger V. Goddu 43 Executive Vice President and General Merchandise Manager-USA Toy Stores Richard L. Markee 41 Vice President of the Company and President of the Kids 'R' Us Division of the Company Louis Lipschitz 49 Senior Vice President-Finance and Chief Financial Officer Jonathan M. Friedman 38 Vice President - Controller
(b) The following is a brief account of the business experience during the past five years of each of the executive officers of the Company: Mr. Goldstein has been employed by the Company for more than five years. Effective January 31, 1994, he became Vice Chairman of the Board and Chief Executive Officer. From February 1, 1993 to January 30, 1994, he was Vice Chairman of the Board and Chief Administrative Officer. From prior to 1989 to January 31, 1993, he was Vice Chairman of the Board and Chief Financial and Administrative Officer. Mr. Nakasone has been employed by the Company for more than five years. Effective January 31, 1994, he became President and Chief Operating Officer. From prior to 1989 to January 30, 1994, he was Vice Chairman of the Board and President of Worldwide Toy Stores. Mr. Bouts has been employed by the Company since September 1990. Effective February 3, 1991, he became Vice President of the Company and President of the International Division. From prior to 1989 to August 1990, he was Vice President - Finance, Chief Financial Officer of PepsiCo Foods International, a division of PepsiCo, Inc. Mr. Goddu has been employed by the Company since February 1989 as Executive Vice President - General Merchandise Manager - USA Toy Stores. Mr. Markee has been employed by the Company since October 1990. From March 1, 1993 to date, he has been President of the Kids 'R' Us Division and a Vice President of the Company. From October 1, 1990 to February 28, 1993, he was Vice President - General Merchandise Manager for the Kids 'R' Us Division, and from prior to 1989 to September 1990, he was employed by Target Stores, a specialty store division of Dayton Hudson Corporation, as Vice President - Divisional Merchandise Manager. Mr. Lipschitz has been employed by the Company for more than five years. From February 1, 1993 to date, he has been Senior Vice President-Finance and Chief Financial Officer. From April 1990 to January 31, 1993, he was Vice President - Finance and Treasurer, and from prior to 1989 to March 1990, he was Vice President - Treasurer. Mr. Friedman has been employed by the Company for more than five years. From April 1990 to date, he has been Vice President - Controller. From prior to 1989 to April 1990, he was Assistant Controller. PART II Item 5. Market for the Registrant's Common Stock and Related Stockholder Matters Market prices and other information with respect to the Company's common stock are hereby incorporated by reference to page 15 of the Company's Annual Report. Item 6. Selected Financial Data Selected financial data are hereby incorporated by reference to page 1 of the Company's Annual Report. Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations Management's discussion and analysis of financial condition and results of operations is hereby incorporated by reference to page 6 of the Company's Annual Report. Item 8. Financial Statements and Supplementary Data
The following financial statements and supplementary data are hereby incorporated by reference to pages 7 to 15 of the Company's Annual Report. (i) Consolidated Balance Sheets at January 29, 1994 and January 30, 1993; (ii) Consolidated Statements of Earnings for each of the three years in the period ended January 29, 1994; (iii) Consolidated Statements of Cash Flows for each of the three years in the period ended January 29, 1994; (iv) Consolidated Statements of Stockholders' Equity for each of the three years in the period ended January 29, 1994;
(v) Notes to Consolidated Financial Statements; and (vi) Opinion of Ernst & Young.
Individual financial statements of the registrant's subsidiaries are not furnished because consolidated financial statements are furnished. The registrant is primarily an operating company and all subsidiaries are at least 80% owned. Financial statements of 50%-owned joint ventures are not submitted because such companies, considered in the aggregate, are not considered a significant subsidiary as defined in Regulation S-X. Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure None.
PART III Item 10. Directors and Executive Officers of the Registrant Information with respect to the directors of the Company is hereby incorporated herein by reference to the section, 'Election of Directors', in the Company's Proxy Statement. Information with respect to the executive officers of the Company is set forth in Item 4A of Part I hereof. Item 11. Executive Compensation Information with respect to executive compensation is hereby incorporated herein by reference to the sections, 'Election of Directors - Compensation of Directors', '- Executive Compensation', '- Summary Compensation Table', '- Option Grants in Last Fiscal Year' and '- Aggregated Option Exercises in Last Fiscal Year and Fiscal Year-End Option Values', in the Company's Proxy Statement. The sections, '- Report of the Compensation Committee on Executive Compensation' and '- Five-Year Stockholder Return Comparison', in the Company's Proxy Statement are not incorporated by reference herein. Such sections are furnished solely for information and shall not be deemed to be soliciting material or to be 'filed' as a part of this report. Item 12. Security Ownership of Certain Beneficial Owners and Management Information with respect to security ownership of certain beneficial owners and management is hereby incorporated by reference to the sections, 'Principal Stockholder' and 'Election of Directors', in the Company's Proxy Statement.
Item 13. Certain Relationships and Related Transactions Information with respect to certain relationships and related transactions is hereby incorporated herein by reference to the section, 'Election of Directors - Certain Transactions', in the Company's Proxy Statement.
PART IV Item 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K (a) (1) The response to this portion of Item 14 is set forth in Item 8 of Part II hereof. (2) Financial Statement Schedules (filed as part of this Report):
Page Consent of Ernst & Young and Opinion on Financial Statement Schedules for the years ended January 29, 1994 and January 30, 1993. Opinion on Financial Statements and Financial Statement Schedules of Deloitte & Touche for the year ended February 1, 1992. II--Amounts Receivable from Underwriters, Promoters, Directors, Officers, Employees, and Principal Holders (Other than Affiliates) of Equity Securities of the Person and its Affiliates. V--Property, Plant and Equipment VI--Accumulated Depreciation, Depletion and Amortization of Property, Plant and Equipment IX--Short-Term Borrowings
All other schedules have been omitted because they are inapplicable, not required, or the information is included elsewhere in the financial statements or notes thereto. (3) See accompanying Index to Exhibits. The Company will furnish to any stockholder, upon written request, any exhibit listed in the accompanying Index to Exhibits upon payment by such stockholder of the Company's reasonable expenses in furnishing any such exhibit. (b) On January 4, 1994, the Company filed a Form 8-K in connection with certain changes in the management of the Company which were announced in the Press Release dated January 3, 1994. On January 12, 1994, the Company filed a Form 8-K in connection with certain announcements made by the Company in the Press Release dated January 11, 1994. No other reports on Form 8-K have been filed by the Company during the last quarter of the period covered by this Report. (c) Reference is made to Item 14(a)(3) above. (d) Reference is made to Item 14(a)(2) above. REPORT AND CONSENT OF INDEPENDENT AUDITORS The Board of Directors and Stockholders Toys 'R' Us, Inc. We consent to the incorporation by reference in this Annual Report (Form 10-K) of Toys 'R' Us, Inc. and subsidiaries of our report dated March 9, 1994, included in the 1993 Annual Report to Stockholders of Toys 'R' Us, Inc. and subsidiaries. Our audit also included the financial statement schedules of Toys 'R' Us, Inc. and subsidiaries listed in the Index at Item 14(a)(2) for the years ended January 29, 1994 and January 30, 1993. These financial statement schedules are the responsibility of the Company's management. Our responsibility is to express an opinion based on our audits. In our opinion, the financial statement schedules referred to above, when considered in relation to the basic financial statements taken as a whole, present fairly in all material respects the information set forth therein. We also consent to the incorporation by reference in Registration Statements (Form S-3 Numbers 2-87794, 33-23264, 33-34273, 33-42237 and 33-51359) and in Registration Statements (Form S-8 Numbers 2- 64887, 2-91834, 33-16821 and 33-42627) of Toys 'R' Us, Inc. and subsidiaries of our report dated March 9, 1994, with respect to the consolidated financial statements incorporated herein by reference, and our report included in the preceding paragraph with respect to the financial statement schedules included in this Annual Report (Form 10-K) of Toys 'R' Us, Inc. and subsidiaries. /s/ Ernst & Young New York, New York March 9, 1994 INDEPENDENT AUDITORS' REPORT To the Board of Directors and Stockholders Toys 'R' Us, Inc. Paramus, New Jersey We have audited the accompanying consolidated statements of earnings, stockholders' equity and cash flows of Toys 'R' Us, Inc. and subsidiaries for the year ended February 1, 1992. Our audit also included the financial statement schedules listed in the Index at Item 14(a)(2). These financial statements and financial statement schedules are the responsibility of the Company's management. Our responsibility is to express an opinion on the financial statements and financial statement schedules based on our audit. We conducted our audit in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. In our opinion, such consolidated financial statements present fairly, in all material respects, the results of operations of Toys 'R' Us, Inc. and subsidiaries and their cash flows for the year ended February 1, 1992 in conformity with generally accepted accounting principles. Also, in our opinion, such financial statement schedules, when considered in relation to the basic consolidated financial statements taken as a whole, present fairly in all material respects the information set forth therein. /s/ Deloitte & Touche New York, New York March 11, 1992 TOYS 'R' US, INC. AND SUBSIDIARIES SCHEDULE II -- AMOUNTS RECEIVABLE FROM UNDERWRITERS, PROMOTERS, DIRECTORS, OFFICERS, EMPLOYEES, AND PRINCIPAL HOLDERS (OTHER THAN AFFILIATES) OF EQUITY SECURITIES OF THE PERSON AND ITS AFFILIATES YEAR ENDED JANUARY 30, 1993
COLUMN A COLUMN B COLUMN C COLUMN D COLUMN E - - ------------------------------------------ ------------ --------- ------------------------- ------------------ BALANCE AT END OF DEDUCTIONS PERIOD ------------------------- ------------------ BALANCE AT (1) (2) (2) BEGINNING OF AMOUNTS AMOUNTS (1) NOT NAME OF DEBTOR PERIOD ADDITIONS COLLECTED WRITTEN OFF CURRENT CURRENT - - ------------------------------------------ ------------ --------- ---------- ----------- ------- ------- Charles Lazarus........................... $ 1,108,000 $ -- $1,108,000 $ -- $ -- $ --
- - ------------ Represents a note receivable with interest at 6% in connection with the exercise of stock options. TOYS 'R' US, INC. AND SUBSIDIARIES SCHEDULE II -- AMOUNTS RECEIVABLE FROM UNDERWRITERS, PROMOTERS, DIRECTORS, OFFICERS, EMPLOYEES, AND PRINCIPAL HOLDERS (OTHER THAN AFFILIATES) OF EQUITY SECURITIES OF THE PERSON AND ITS AFFILIATES YEAR ENDED FEBRUARY 1, 1992
COLUMN A COLUMN B COLUMN C COLUMN D COLUMN E - - ------------------------------------------ ------------ --------- ------------------------- ------------------ BALANCE AT END OF DEDUCTIONS PERIOD ------------------------- ------------------ BALANCE AT (1) (2) (2) BEGINNING OF AMOUNTS AMOUNTS (1) NOT NAME OF DEBTOR PERIOD ADDITIONS COLLECTED WRITTEN OFF CURRENT CURRENT - - ------------------------------------------ ------------ --------- ---------- ----------- ------- ------- Charles Lazarus........................... $ 1,108,000 $ -- $ -- $ -- $1,108,000(A) $ -- Norman Ricken............................. 204,717 -- 204,717 -- -- --
- - ------------ (A) Represents a note receivable with interest at 6% due October 5, 1992 in connection with the exercise of stock options. TOYS 'R' US, INC. AND SUBSIDIARIES SCHEDULE V -- PROPERTY, PLANT AND EQUIPMENT YEAR ENDED JANUARY 29, 1994
COLUMN A COLUMN B COLUMN C COLUMN D COLUMN E COLUMN F - - ----------------------------------- ------------ --------- ----------- ------------------ ------------- BALANCE AT SALES OTHER CHANGES -- BEGINNING OF ADDITIONS AND ADD (DEDUCT) -- BALANCE AT CLASSIFICATION PERIOD AT COST RETIREMENTS DESCRIBE END OF PERIOD - - ----------------------------------- ------------ --------- ----------- ------------------ ------------- (IN THOUSANDS) Property and equipment used in operations: Land............................... $ 642,368 $ 48,772 $ (228) $ 14,367 (A) (11,542)(B) $ 693,727 Buildings.......................... 1,280,850 90,260 (336) 93,361 (A) (17,858)(B) 1,446,277 Furniture and equipment............ 809,772 177,416 (28,669) 1,794 (A) (6,953)(B) 953,360 Leasehold and leasehold 40,488 (A) improvements..................... 510,780 116,382 (2,407) (7,052)(B) 658,191 (150,379)(A) Construction in progress........... 72,895 120,294 -- (955)(B) 41,855 Leased property under capital leases........................... 20,193 4,167 -- -- 24,360 ------------ --------- ----------- ------------------ ------------- $ 3,336,858 $ 557,291 $ (31,640) $ (44,729) $ 3,817,780 ------------ --------- ----------- ------------------ ------------- ------------ --------- ----------- ------------------ -------------
- - ------------ (A) Transfers (B) Translation adjustments TOYS 'R' US, INC. AND SUBSIDIARIES SCHEDULE V -- PROPERTY, PLANT AND EQUIPMENT YEAR ENDED JANUARY 30, 1993
COLUMN A COLUMN B COLUMN C COLUMN D COLUMN E COLUMN F - - ----------------------------------- ------------ --------- ----------- ------------------ ------------- BALANCE AT OTHER CHANGES -- BEGINNING OF ADDITIONS ADD (DEDUCT) -- BALANCE AT CLASSIFICATION PERIOD AT COST RETIREMENTS DESCRIBE END OF PERIOD - - ----------------------------------- ------------ --------- ----------- ------------------ ------------- (IN THOUSANDS) Property and equipment used in operations: Land............................... $ 599,886 $ 49,926 $ -- $ 13,941 (A) (21,385)(B) $ 642,368 Buildings.......................... 1,164,323 71,931 -- 68,738 (A) (24,142)(B) 1,280,850 Furniture and equipment............ 695,820 123,798 (4,004) 3,707 (A) (9,549)(B) 809,772 Leasehold and leasehold improvements..................... 419,457 83,296 (1,111) 13,030 (A) (3,892)(B) 510,780 Construction in progress........... 83,032 93,829 -- (99,416)(A) (4,550)(B) 72,895 Leased property under capital leases........................... 21,172 -- (979) -- 20,193 ------------ --------- ----------- ------------------ ------------- $ 2,983,690 $ 422,780 $ (6,094) $ (63,518) $ 3,336,858 ------------ --------- ----------- ------------------ ------------- ------------ --------- ----------- ------------------ -------------
- - ------------ (A) Transfers (B) Translation adjustments TOYS 'R' US, INC. AND SUBSIDIARIES SCHEDULE V -- PROPERTY, PLANT AND EQUIPMENT YEAR ENDED FEBRUARY 1, 1992
COLUMN A COLUMN B COLUMN C COLUMN D COLUMN E COLUMN F - - ----------------------------------- ------------ --------- ----------- ------------------ ------------- BALANCE AT OTHER CHANGES -- BEGINNING OF ADDITIONS ADD (DEDUCT) -- BALANCE AT CLASSIFICATION PERIOD AT COST RETIREMENTS DESCRIBE END OF PERIOD - - ----------------------------------- ------------ --------- ----------- ------------------ ------------- (IN THOUSANDS) Property and equipment used in operations: Land............................... $ 479,802 $ 128,359 $ -- $ (139)(A) (8,136)(B) $ 599,886 Buildings.......................... 961,892 104,193 -- 109,767 (A) (11,529)(B) 1,164,323 Furniture and equipment............ 581,971 119,961 (5,616) 5,791 (A) (6,287)(B) 695,820 Leasehold and leasehold improvements..................... 364,065 37,777 (1,131) 26,563 (A) (7,817)(B) 419,457 Construction in progress........... 66,334 159,107 (107) (141,982)(A) (320)(B) 83,032 Leased property under capital leases........................... 21,172 -- -- -- 21,172 ------------ --------- ----------- ------------------ ------------- $ 2,475,236 $ 549,397 $ (6,854) $ (34,089) $ 2,983,690 ------------ --------- ----------- ------------------ ------------- ------------ --------- ----------- ------------------ -------------
- - ------------ (A) Transfers (B) Translation adjustments TOYS 'R' US, INC. AND SUBSIDIARIES SCHEDULE VI -- ACCUMULATED DEPRECIATION, DEPLETION AND AMORTIZATION OF PROPERTY, PLANT AND EQUIPMENT YEAR ENDED JANUARY 29, 1994
COLUMN A COLUMN B COLUMN C COLUMN D COLUMN E COLUMN F - - ---------------------------------- ------------ ---------- ----------- ------------------ ------------- ADDITIONS BALANCE AT CHARGED TO SALES OTHER CHANGES -- BEGINNING OF COSTS AND AND ADD (DEDUCT) -- BALANCE AT CLASSIFICATION PERIOD EXPENSES RETIREMENTS DESCRIBE END OF PERIOD - - ---------------------------------- ------------ ---------- ----------- ------------------ ------------- (IN THOUSANDS) Property and equipment used in operations: Buildings......................... $ 119,996 $ 26,802 $ (213) $ 304 (A) (695)(B) $ 146,194 Furniture and equipment........... 306,746 81,526 (27,518) (11)(A) (1,709)(B) 359,034 Leasehold and leasehold improvements.................... 92,196 24,135 (2,255) (284)(A) (984)(B) 112,808 Leased property under capital leases.......................... 14,370 907 -- -- 15,277 ------------ ---------- ----------- ------------------ ------------- $ 533,308 $133,370 $ (29,986) $ (3,379) $ 633,313 ------------ ---------- ----------- ------------------ ------------- ------------ ---------- ----------- ------------------ -------------
- - ------------ (A) Transfers (B) Translation adjustments TOYS 'R' US, INC. AND SUBSIDIARIES SCHEDULE VI -- ACCUMULATED DEPRECIATION, DEPLETION AND AMORTIZATION OF PROPERTY, PLANT AND EQUIPMENT YEAR ENDED JANUARY 30, 1993
COLUMN A COLUMN B COLUMN C COLUMN D COLUMN E COLUMN F - - ---------------------------------- ------------ ---------- ----------- ------------------ ------------- ADDITIONS BALANCE AT CHARGED TO OTHER CHANGES -- BEGINNING OF COSTS AND ADD (DEDUCT) -- BALANCE AT CLASSIFICATION PERIOD EXPENSES RETIREMENTS DESCRIBE END OF PERIOD - - ---------------------------------- ------------ ---------- ----------- ------------------ ------------- (IN THOUSANDS) Property and equipment used in operations: Buildings......................... $ 96,012 $ 25,938 $ -- $ (64)(A) (1,890)(B) $ 119,996 Furniture and equipment........... 240,803 73,244 (3,503) 10 (A) (3,808)(B) 306,746 Leasehold and leasehold improvements.................... 74,198 19,092 (395) 54 (A) (753)(B) 92,196 Leased property under capital leases.......................... 14,590 760 (980) -- 14,370 ------------ ---------- ----------- ------------------ ------------- $ 425,603 $119,034 $ (4,878) $ (6,451) $ 533,308 ------------ ---------- ----------- ------------------ ------------- ------------ ---------- ----------- ------------------ -------------
- - ------------ (A) Transfers (B) Translation adjustments TOYS 'R' US, INC. AND SUBSIDIARIES SCHEDULE VI -- ACCUMULATED DEPRECIATION, DEPLETION AND AMORTIZATION OF PROPERTY, PLANT AND EQUIPMENT YEAR ENDED FEBRUARY 1, 1992
COLUMN A COLUMN B COLUMN C COLUMN D COLUMN E COLUMN F - - ---------------------------------- ------------ ---------- ----------- ------------------ ------------- ADDITIONS BALANCE AT CHARGED TO OTHER CHANGES- BEGINNING OF COSTS AND ADD (DEDUCT)- BALANCE AT CLASSIFICATION PERIOD EXPENSES RETIREMENTS DESCRIBE END OF PERIOD - - ---------------------------------- ------------ ---------- ----------- ------------------ ------------- (IN THOUSANDS) Property and equipment used in operations: Buildings......................... $ 75,299 $ 21,285 $ -- $ (28)(A) (544)(B) $ 96,012 Furniture and equipment........... 185,661 62,043 (5,116) 3 (A) (1,788)(B) 240,803 Leasehold and leasehold improvements.................... 59,134 16,584 (879) 25 (A) (666)(B) 74,198 Leased property under capital leases.......................... 13,801 789 -- -- 14,590 ------------ ---------- ----------- ------------------ ------------- $ 333,895 $100,701 $ (5,995) $ (2,998) $ 425,603 ------------ ---------- ----------- ------------------ ------------- ------------ ---------- ----------- ------------------ -------------
- - ------------ (A) Transfers (B) Translation adjustments TOYS 'R' US, INC. AND SUBSIDIARIES SCHEDULE IX -- SHORT-TERM BORROWINGS YEAR ENDED JANUARY 29, 1994
COLUMN A COLUMN B COLUMN C COLUMN D COLUMN E COLUMN F - - ------------------------------------------- ------------ ------------- ----------- ----------- ------------- MAXIMUM AVERAGE WEIGHTED AMOUNT AMOUNT AVERAGE BALANCE AT WEIGHTED OUTSTANDING OUTSTANDING INTEREST RATE CATEGORY OF AGGREGATE END OF AVERAGE DURING THE DURING THE DURING THE SHORT-TERM BORROWINGS PERIOD INTEREST RATE PERIOD PERIOD PERIOD - - ------------------------------------------- ------------ ------------- ----------- ----------- ------------- (A) (B) (DOLLARS IN THOUSANDS) NOTES PAYABLE TO BANKS..................... $ 233,174 5.5% $ 360,355 $ 205,683 6.5% ------------ ------------- ----------- ----------- ------------- ------------ ------------- ----------- ----------- ------------- COMMERCIAL PAPER........................... $ 6,688 2.8% $ 219,982 $ 48,197 3.0% ------------ ------------- ----------- ----------- ------------- ------------ ------------- ----------- ----------- -------------
- - ------------ (A) Average amount outstanding during the period is computed by dividing the total of daily outstanding principal balances by 365. (B) Average interest rate for the year is computed by dividing the actual short-term interest expense by the average short-term debt outstanding. TOYS 'R' US, INC. AND SUBSIDIARIES SCHEDULE IX -- SHORT-TERM BORROWINGS YEAR ENDED JANUARY 30, 1993
COLUMN A COLUMN B COLUMN C COLUMN D COLUMN E COLUMN F - - ---------------------------------------------- ------------ ------------- ----------- ----------- ------------- MAXIMUM AVERAGE WEIGHTED AMOUNT AMOUNT AVERAGE BALANCE AT WEIGHTED OUTSTANDING OUTSTANDING INTEREST RATE CATEGORY OF AGGREGATE END OF AVERAGE DURING THE DURING THE DURING THE SHORT-TERM BORROWINGS PERIOD INTEREST RATE PERIOD PERIOD PERIOD - - ---------------------------------------------- ------------ ------------- ----------- ----------- ------------- (A) (B) (DOLLARS IN THOUSANDS) NOTES PAYABLE TO BANKS........................ $117,378 8.4% $ 284,544 $ 149,959 8.9% ------------ ------------- ----------- ----------- ----- ------------ ------------- ----------- ----------- ----- COMMERCIAL PAPER.............................. $ 3,394 2.6% $ 338,000 $ 153,108 3.5% ------------ ------------- ----------- ----------- ----- ------------ ------------- ----------- ----------- -----
- - ------------ (A) Average amount outstanding during the period is computed by dividing the total of daily outstanding principal balances by 365. (B) Average interest rate for the year is computed by dividing the actual short-term interest expense by the average short-term debt outstanding. TOYS 'R' US, INC. AND SUBSIDIARIES SCHEDULE IX -- SHORT-TERM BORROWINGS YEAR ENDED FEBRUARY 1, 1992
COLUMN A COLUMN B COLUMN C COLUMN D COLUMN E COLUMN F - - ---------------------------------------------- ------------ ------------- ----------- ----------- ------------- MAXIMUM AVERAGE WEIGHTED AMOUNT AMOUNT AVERAGE BALANCE AT WEIGHTED OUTSTANDING OUTSTANDING INTEREST RATE CATEGORY OF AGGREGATE END OF AVERAGE DURING THE DURING THE DURING THE SHORT-TERM BORROWINGS PERIOD INTEREST RATE PERIOD PERIOD PERIOD - - ---------------------------------------------- ------------ ------------- ----------- ----------- ------------- (A) (B) (DOLLARS IN THOUSANDS) NOTES PAYABLE TO BANKS........................ $241,659 9.5% $ 389,008 $ 165,536 9.8% ------------ ------------- ----------- ----------- ----- ------------ ------------- ----------- ----------- ----- COMMERCIAL PAPER.............................. $ 50,000 3.8% $ 708,000 $ 398,648 5.9% ------------ ------------- ----------- ----------- ----- ------------ ------------- ----------- ----------- -----
- - ------------ (A) Average amount outstanding during the period is computed by dividing the total of daily outstanding principal balances by 365. (B) Average interest rate for the year is computed by dividing the actual short-term interest expense by the average short-term debt outstanding. SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. TOYS 'R' US, INC. (Registrant) By Louis Lipschitz Senior Vice President-Finance and Chief Financial Officer Date: April 21, 1994 Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities indicated on the 21st day of April, 1994.
Signature Title Charles Lazarus Chairman of the Board Michael Goldstein Director, Vice Chairman of the Board and Chief Executive Officer (Principal Executive Officer) Robert A. Bernhard Director Milton S. Gould Director Shirley Strum Kenny Director Reuben Mark Director Howard W. Moore Director
Robert C. Nakasone Director Norman M. Schneider Director Harold M. Wit Director Louis Lipschitz Senior Vice President - Finance and Chief Financial Officer (Principal Financial and Accounting Officer)
The foregoing constitute all of the Board of Directors and the Principal Executive, Financial and Accounting Officers of the Registrant. GRAPHICS APPENDIX LIST
EDGAR VERSION TYPESET VERSION 1993 Form 10-K, Exhibit 13 -- 1993 Form 10-K, Exhibit 13 -- (Selected Portions of Toys 'R' Us (Selected Portions of Toys 'R' Us 1993 Annual Report to Stockholders) 1993 Annual Report to Stockholders) Page 1 -- One bar chart omitted Page 1 -- One bar chart depicting Consolidated Net Sales (billions). (The text and numbers used in this chart appear in the text of the EDGAR Version). Page 3 -- Two bar charts omitted Page 3 -- Two bar charts depicting Consolidated Net Earnings (millions) and Consolidated Stockholders' Equity (billions), respectively. (The text and numbers used in these charts appear in the text of the EDGAR Version). Page 4 -- Two bar charts omitted Page 4 -- Two bar charts depicting Consolidated Number of Stores and Net Sales -- International Division (millions), respectively. (The text and numbers used in these charts appear in the text of the EDGAR Version). Page 5 -- One bar chart omitted Page 5 -- One bar chart depicting Number of Countries -- International Division. (The text and numbers used in this chart appear in the text of the EDGAR Version).
INDEX TO EXHIBITS The following is a list of all exhibits filed as part of this Report:
Exhibit Paper(P) No. Document or Electronic(E) 3A Restated Certificate of Incorporation of registrant. Incorporated herein by reference to Exhibit 3A to registrant's Annual Report on Form 10-K for the year ended February 1, 1992. 3B By-Laws of registrant as amended and restated E effective January 31, 1994. 4 i) Form of Indenture dated as of January 1, 1987 between the registrant and United Jersey Bank, as Trustee, pursuant to which Securities in one or more series in an unlimited amount may be issued by the registrant. Incorporated herein by reference to Exhibit 4(a) to registrant's Registration Statement No. 33-11461. ii) Form of the registrant's 8 1/4% Sinking Fund Debentures due 2017 is incorporated herein by reference to Exhibit 4(b) to Registration Statement No. 33-11461. iii) Form of Indenture between the registrant and United Jersey Bank, as Trustee, pursuant to which one or more series of debt securities up to $300,000,000 in principal amount may be issued by the registrant. Incorporated herein by reference to Exhibit 4 to registrant's Registration Statement No. 33-42237. iv) Form of the registrant's 8 3/4% Debentures due 2021 is incorporated herein by reference to Exhibit 4 to registrant's Report on Form 8-K dated August 29, 1991. v) Substantially all other long-term debt of the registrant (which other debt does not exceed on an aggregate basis 10% of the total assets of the registrant and its subsidiaries on a consolidated basis) is evidenced by, among other things, (a) industrial revenue bonds issued by industrial development authorities and guaranteed by the registrant, (b) mortgages held by third parties on real estate owned by the registrant, (c) stepped coupon guaranteed bonds held by a third party and guaranteed by the registrant and (d) an agreement under which the registrant guaranteed certain yen-denominated loans made by a third party to a subsidiary of the registrant. The registrant will file with the Securities and Exchange Commission (the 'Commission') copies of the constituent documents relating to such debt upon request of the Commission.
Exhibit Paper(P) No. or Electronic(E) 10A* Stock Option Plan of the registrant, as amended as of April 22, 1993. Incorporated herein by reference to Exhibit 10A to registrant's Annual Report on Form 10-K for the year ended January 30, 1993. 10B* An employment agreement dated March 14, 1978 and an amendment thereto dated November 20, 1979 between registrant and Charles Lazarus are incorporated herein by reference to Exhibit 2 to a Schedule 13D dated February 1, 1980 filed by Charles Lazarus, et al. An amendment dated March 23, 1982 to such employment agreement is incorporated herein by reference to Exhibit 10B to registrant's Annual Report on Form 10-K for the year ended January 31, 1982. An amendment dated as of December 7, 1982 to such employment agreement is incorporated herein by reference to Exhibit 10B to registrant's Annual Report on Form 10-K for the year ended January 30, 1983. An amendment dated April 10, 1984 to such employment agreement is incorporated herein by reference to Exhibit 10B to the registrant's Annual Report on Form 10-K for the year ended January 29, 1984. An amendment dated as of March 14, 1989 to such employment agreement is incorporated herein by reference to Exhibit 10B to registrant's Annual Report on Form 10-K for the year ended January 29, 1989. 10C* A stock option plan and agreement dated March 6, 1984 between registrant and Charles Lazarus is incorporated herein by reference to Exhibit 10E to registrant's Annual Report on Form 10-K for the year ended January 29, 1984. The first amendment dated as of April 1, 1989 to such agreement is incorporated herein by reference to Exhibit 10E to registrant's Annual Report on Form 10-K for the year ended January 29, 1989. 10D* Form of Indemnification Agreement between registrant and each director is incorporated herein by reference to Exhibit 10F to registrant's Annual Report on Form 10-K for the year ended February 1, 1987. * Management contract or compensatory plan or arrangement required to be filed as an exhibit to this Form 10-K pursuant to Item 14(c) hereof.
Exhibit Paper(P) No. or Electronic(E) 10E* A stock option agreement dated as of February 1, 1988 between registrant and Robert Nakasone is incorporated herein by reference to Exhibit 10G to registrant's Annual Report on Form 10-K for the year ended January 31, 1988. The first amendment dated as of April 1, 1989 to such agreement is incorporated herein by reference to Exhibit 10G to registrant's Annual Report on Form 10-K for the year ended January 29, 1989. The second amendment dated as of September 19, 1989 to such agreement is incorporated herein by reference to Exhibit 10G to registrant's Annual Report on Form 10-K for the year ended January 28, 1990. 10F* A stock option agreement dated as of February 1, 1988 between registrant and Michael Goldstein is incorporated herein by reference to Exhibit 10H to registrant's Annual Report on Form 10-K for the year ended January 31, 1988. The first amendment dated as of April 1, 1989 to such agreement is incorporated herein by reference to Exhibit 10H to registrant's Annual Report on Form 10-K for the year ended January 29, 1989. The second amendment dated as of September 19, 1989 to such agreement is incorporated herein by reference to Exhibit 10H to registrant's Annual Report on Form 10-K for the year ended January 28, 1990. 10G* Stock Option Plan and Agreement dated as of March 14, 1989 between the registrant and Charles Lazarus, and a First Amendment thereto dated as of September 19, 1989 is incorporated by reference to Exhibit 10I to registrant's Annual Report on Form 10-K for the year ended January 28, 1990. 10H* Non-Employee Directors' Stock Option Plan as adopted by the Board of Directors on September 19, 1990 and approved by the registrant's stockholders on June 3, 1991. Incorporated herein by reference to Exhibit 10H to registrant's Annual Report on Form 10-K for the year ended February 1, 1992. 10I* Stock Option Plan and Agreement dated as of December 2, 1992 between the registrant and Robert C. Nakasone. Incorporated herein by reference to Exhibit 10I to registrant's Annual Report on Form 10-K for the year ended January 30, 1993. * Management contract or compensatory plan or arrangement required to be filed as an exhibit to this Form 10-K pursuant to Item 14(c) hereof.
[CAPTION] Exhibit Paper(P) No. or Electronic(E) 10J* Stock Option Plan and Agreement dated as of December 2, 1992 between the registrant and Michael Goldstein. Incorporated herein by reference to Exhibit 10J to registrant's Annual Report on Form 10-K for the year ended January 30, 1993. 10K* Toys 'R' Us, Inc. 1994 Stock Option and E Performance Incentive Plan effective November 1, 1993, subject to stockholder approval. 10L* Management Incentive Compensation Plan of the E registrant adopted March 28, 1994. 13 Registrant's Annual Report to Stockholders for E the year ended January 29, 1994. Except for the portions thereof which are expressly incorporated by reference into this report, such Annual Report is furnished solely for the information of the Commission and is not to be deemed 'filed' as part of this report. 22 Subsidiaries of registrant. E 24 Reference is made to the Report and Consent of Independent Auditors, Ernst & Young, contained on page 20 of this Form 10-K. * Management contract or compensatory plan or arrangement required to be filed as an exhibit to this Form 10-K pursuant to Item 14(c) hereof.
EX-3 2 EXHIBIT 3B BY-LAWS of TOYS 'R' US, INC. (As Amended and Restated effective January 31, 1994) TOYS 'R' US, INC. A Delaware corporation BY-LAWS ________________________________ ARTICLE I STOCKHOLDERS Section 1.1 Annual Meeting. An annual meeting of stockholders for the purpose of electing directors and of transacting such other business as may come before it shall be held each year at such date, time and place, either within or without the State of Delaware, as may be specified by the Board of Directors. Section 1.2 Special Meetings. Special meetings of stockholders for any purpose or purposes may be held at any time upon call of the Chairman of the Board, the President, or a majority of the Board of Directors, at such time and place either within or without the State of Delaware as may be stated in the call and notice. A special meeting of stockholders shall be called by the President upon the written request, stating time, place and the purpose or purposes of the meeting, of stockholders who together own of record a majority of the outstanding stock entitled to vote at such meeting. Section 1.3 Notice of Meetings. Notice of Stockholders meetings, stating the place, date and hour thereof, and, in the case of a special meeting, the purpose or purposes for which the meeting is called, shall be given by the Chairman of the Board, the President, any Vice President, or the Secretary, to each stockholder of record entitled to vote thereat at least ten days but not more than sixty days before the date of the meeting, unless a different period is prescribed by law. Section 1.4 Quorum. Except as otherwise provided by law, the certificate of incorporation, or these By-Laws, at any meeting of stockholders, the holders of a majority of the outstanding shares of stock entitled to vote at the meeting and, where a class vote is required by law or the certificate of incorporation, a majority of the outstanding shares of each class of stock entitled to a class vote, shall be present or represented by proxy in order to constitute a quorum for the transaction of business. In the absence of a quorum, a majority in interest of the stockholders present or the chairman of the meeting may adjourn the meeting from time to time in the manner provided in Section 1.5 of these By-Laws until a quorum shall attend. The absence from any meeting of the number of shares required by law, the certificate of incorporation, or these By- Laws for action upon any given matter shall not prevent action at such meeting upon any other matter or matters which may properly come before the meeting, if the number of shares required in respect of such other matters shall be present. Section 1.5 Adjournment. Any meeting of stockholders, annual or special, may adjourn from time to time to reconvene at the same or some other place, and notice need not be given of any such adjourned meeting if the time and place thereof are announced at the meeting at which the adjournment is taken. At the adjournment meeting, the Corporation may transact any business which might have been transacted at the original meeting. If the adjournment is for more than thirty days, or if after the adjournment a new record date is fixed for the adjourned meeting, a notice of the adjourned meeting shall be given to each stockholder of record entitled to vote at the meeting. Section 1.6 Organization. The Chairman of the Board, or in his absence the President, or in their absence any Vice President, shall call to order meetings of stockholders and shall act as chairman of such meetings. The Board of Directors, or if the Board fails to act, the Stockholders may appoint any stockholder or any director or officer of the Corporation to act as chairman of any meeting in the absence of the Chairman of the Board, the President and a Vice President. The Secretary of the Corporation shall act as secretary of all meetings of stockholders, but in the absence of the Secretary, the chairman of the meeting may appoint any other person to act as secretary of the meeting. Section 1.7 Voting. Except as otherwise provided by law, the certificate of incorporation, or these By-Laws, at any meeting duly called and held at which a quorum is present, a majority of the votes cast at such meeting upon a given question by the holders of outstanding shares of stock of all classes of stock of the Corporation entitled to vote thereon who are present in person or by proxy shall decide such question. ARTICLE II BOARD OF DIRECTORS Section 2.1 Number, Term of Office and Notice of Nomination. The business, property and affairs of the 2 Corporation shall be managed and controlled by a Board of eleven directors; provided, however, that the Board, by resolution adopted by vote of a majority of the then authorized number of directors, may increase or decrease the number of directors. The directors shall be elected at the annual meeting of stockholders, and serve (subject to the provisions of Article IV) until the next succeeding annual meeting of stockholders and until the election and qualification of their respective successors. Nominations for the election of directors may be made by the Board of Directors or by any stockholder entitled to vote for the election of directors. Nominations by any stockholder shall be made by notice in writing, delivered or mailed by first class United States mail, postage prepaid, to the Secretary of the Corporation not less than 14 days nor more than 50 days prior to any meeting of the stockholders called for the election of directors; provided, however, that if less than 21 days' notice of the meeting is given to stockholders, such written notice shall be delivered or mailed, as prescribed, to the Secretary of the Corporation not later than the close of the tenth day following the day on which notice of the meeting was mailed to stockholders. Notice of nominations which are proposed by the Board of Directors may be made at any time and shall be given by the Chairman on behalf of the Board. Each notice under the preceding paragraph shall set forth (i) the name, age, business address and, if known, residence address of each nominee proposed in such notice, (ii) the principal occupation or employment of each such nominee, and (iii) the number of shares of stock of the Corporation which are beneficially owned by each such nominee. The Chairman of the meeting may, if the facts warrant, determine and declare to the meeting that a nomination was not made in accordance with the foregoing procedure, and if he should so determine, he shall so declare to the meeting and the effective nomination shall be disregarded. Section 2.2 Meetings. The annual meeting of the Board of Directors, for the election of officers and the transaction of such other business as may come before the meeting, shall be held without notice at the same place as, and immediately following, the annual meeting of the stockholders. Regular meetings of the Board of Directors may be held without notice at such time and place as shall from time to time be determined by the Board. Special meetings of the Board of Directors shall be held at such time and place as shall be designated in the notice of the meeting whenever called by the Chairman of the Board, the President, or two of the directors then in office. 3 Section 2.3 Notice of Special Meetings. The Secretary, or in his absence any other officer of the Corporation, shall give each director notice of the time and place of holding of special meetings of the Board of Directors by mail at least five days before the meeting, or by telegram, cable or radiogram or personal service at least two days before the meeting. Unless otherwise stated in the notice thereof, any and all business may be transacted at any meeting without specifica- tion of such business in the notice. Section 2.4 Quorum and Organization of Meetings. A majority of the total number of members of the Board of Directors as constituted from time to time shall constitute a quorum for the transaction of business, but if at any meeting of the Board of Directors there shall be less than a quorum present, a majority of those present may adjourn the meeting from time to time, and the meeting may be held as adjourned without further notice or waiver. Except as otherwise provided by law, the certificate of incorporation, or these By-Laws, a majority of the directors present at any meeting at which a quorum is present may decide any question brought before such meeting. Meetings shall be presided over by the Chairman of the Board, or in his absence a Vice Chairman, or by such other person as may be selected by the directors. The Secretary of the Corporation shall act as secretary of the meeting, but in his absence the chairman of the meeting may appoint any person to act as secretary of the meeting. Section 2.5 Committees. The Board of Directors may, by resolution passed by a majority of the whole Board, designate one or more committees, each committee to consist of one or more of the directors of the Corporation. A majority of the total number of members of a Committee shall constitute a quorum for the transaction of business. The Board may designate one or more directors as alternate members of any committee, who may replace any absent or disqualified member at any meeting of the committee. In the absence or disqualification of a member of a committee, the member or members thereof present at any meeting and not disqualified from voting, whether or not he or they constitute a quorum, may unanimously appoint another member of the Board of Directors to act at the meeting in place of any such absent or disqualified member. Any such committee, to the extent provided in the resolution of the Board of Directors, shall have and may exercise all the powers and authority of the Board of Directors in the management of the business and affairs of the Corporation, and may authorize the seal of the Corporation to be affixed to all papers which may require it; but no such committee shall have power or authority in reference to amending the certificate of incorporation of the Corporation, adopting an agreement of merger or consolidation, recommending to the stockholders the sale, lease or exchange of all or substantially 4 all of the Corporation's property and assets, recommending to the stockholders a dissolution of the Corporation or a revocation of dissolution, or amending these By-Laws; and, unless the resolution expressly so provided, no such committee shall have the power or authority to declare a dividend or to authorize the issuance of stock. Each committee which may be established by the Board of Directors or these By-Laws may fix its own rules and procedures. Notice of meetings of committees, other than of regular meetings provided for by the rules, shall be given to committee members. All action taken by committees shall be recorded in minutes of the meetings. Section 2.6 Action Without Meeting. Nothing contained in these By-Laws shall be deemed to restrict the power of the directors or members of any committee to take any action, required or permitted to be taken by them, without a meeting, in accordance with applicable provisions of law. Section 2.7 Telephone Meetings. Members of the Board of Directors, or any committee designated by the Board, may participate in a meeting of the Board, or committee, by means of conference telephone or similar communications equipment by means of which all persons participating in the meeting can hear each other, and participation in a meeting pursuant to this Section shall constitute presence in person at such meetings. ARTICLE III OFFICERS Section 3.1 Executive Officers. The executive officers of the Corporation shall be one or more Vice Chairmen of the Board, a President, one or more Vice Presidents, a Treasurer and a Secretary, each of whom shall be elected by the Board of Directors. The Board may also elect or appoint a Chairman of the Board who shall not be an officer of the Corporation. The Chairman of the Board and any Vice Chairman shall be a director of the Corporation. The Board of Directors may elect or appoint such other officers (including a Controller and one or more Assistant Treasurers and Assistant Secretaries) as it may deem necessary or desirable, each of whom shall have such authority, shall perform such duties and shall hold office for such term as may be prescribed by the Board of Directors from time to time. Any person may hold at one time two or more offices. Section 3.2 Powers and Duties. The Chairman of the Board shall preside at all meetings of the stockholders and of the Board of Directors. In the absence of the Chairman, a Vice Chairman appointed by the Chairman of the Board shall perform all the duties of the Chairman. The Vice Chairman (or, if there shall be two or more Vice Chairmen, a Vice Chairman designated by 5 the Board of Directors) shall be the chief executive officer of the Corporation. The officers and agents of the Corporation shall each have such powers and perform such duties in the management of the business and affairs of the Corporation as generally pertain to their respective offices, as well as such powers and duties as from time to time may be prescribed by the Board of Directors. ARTICLE IV RESIGNATIONS, REMOVALS AND VACANCIES Section 4.1 Resignations. Any director or officer of the Corporation, or any member of any committee, may resign at any time by giving written notice to the Board of Directors, the President or the Secretary of the Corporation. Any such resignation shall take effect at the time specified therein or, if the time be not specified therein, then upon receipt thereof. The acceptance of such resignation shall not be necessary to make it effective. Section 4.2 Removals. The Board of Directors, at any meeting thereof, or by written consent, may, to the extent permitted by law, at any time, remove with or without cause from office or terminate the employment of any officer or member of any committee. Except as provided by law or the certificate of incorporation, the holders of a majority of the shares entitled to vote at an election of directors may remove any director with or without cause; provided, however, that if less than the entire Board is to be removed, no director may be removed without cause if the votes cast against his removal would be sufficient to elect him if voted cumulatively at an election of the entire Board. Section 4.3 Vacancies. Except as provided by law or the certificate of incorporation, any vacancy in the office of any director or officer through death, resignation, removal, disqualification or other cause, and any additional directorship resulting from increase in the number of directors, may be filled at any time by a majority of the directors then in office (even though less than a quorum remains) or by the stockholders, and, subject to the provisions of this Article, the person so chosen shall hold office until his successor shall have been chosen and shall have qualified; or if the person so chosen is a director elected to fill a vacancy, he shall hold office for the unexpired term of his predecessor. 6 ARTICLE V CAPITAL STOCK Section 5.1 Stock Certificates. The certificates for shares of the capital stock of the Corporation shall be in such form as shall be prescribed by law and approved, from time to time, by the Board of Directors. Section 5.2 Transfer of Shares. Shares of the capital stock of the Corporation may be transferred on the books of the Corporation only by the holder of such shares or by his duly authorized attorney, upon the surrender to the Corporation or its transfer agent of the certificate for such shares properly endorsed. Section 5.3 Fixing Record Date. In order that the Corporation may determined the stockholders entitled to notice of or to vote at any meeting of stockholders or any adjournment thereof, or to express consent to corporate action in writing without a meeting, or entitled to receive payment of any dividend or other distribution or allotment of any rights, or entitled to exercise any rights in respect of any change, conversion or exchange of stock or for the purpose of any other lawful action, the Board of Directors may fix, in advance, a record date, which shall not be more than sixty nor less ten days before the date of such meeting, nor more than sixty days prior to any other action. Section 5.4 Regulations. The Board of Directors shall have power and authority to make all such rules and regulations as it may deem expedient concerning the issue, transfer, registration, cancellation and replacement of certificates for shares of stock of the Corporation. ARTICLE VI MISCELLANEOUS Section 6.1 Corporate Seal. The corporate seal shall have inscribed thereto the name of the Corporation and shall be in such form as may be approved from time to time by the Board of Directors. Section 6.2 Fiscal Year. The fiscal year of the Corporation shall end on the Saturday which falls nearest to the last day of January in each year. Section 6.3 Notice and Waivers Thereof. Whenever any notice as required by law, the certificate of incorporation, or these By-Laws to be given to any stockholder, director, or officer, such notice, except as otherwise revised by law, may be 7 given personally or by mail, or, in the case of directors or officers, by telegram, cable or radiogram, addressed to such address as appears on the books of the Corporation. Any notice given by telegram, cable or radiogram shall be deemed to have been given when it shall have been delivered for transmission and any notice given by mail shall be deemed to have been given when it shall have been deposited in the United States mail with postage there on prepaid. Whenever a notice is required to be given by law, the certificate of incorporation, or these By-Laws, a waiver thereof in writing, signed by the person or persons entitled to such notice, whether before or after the meeting or the time stated therein, shall be deemed equivalent in all respects to such notice. Section 6.4 Stock of Other Corporations or Other Interests. Unless otherwise directed by the Board of Directors, the Chairman of the Board, the President, the Secretary and such attorneys or agents of the Corporation as may be from time to time authorized by the Board of Directors, the Chairman of the Board, or the President, shall have full power and authority on behalf of this Corporation to attend and to act and vote in person or by proxy at any meeting of the holders of securities of any corporation or other entity in which this Corporation may own or hold shares or other securities, and at such meetings shall possess and may exercise all the rights and powers incident to the ownership of such shares or other securities which this Corporation, as the owner or holder thereof, might have possessed and exercised if present. The Chairman of the Board, the President, or the Secretary, or such attorneys or agents, may also execute and deliver on behalf of the Corporation powers of attorney, proxies, consents, waivers, and other instruments relating to the shares or securities owned or held by this Corporation. Section 6.5 Periodic Reports. The Corporation shall send periodic reports to each of its stockholders, not less than once each year, which shall include profit and loss statements and balance sheets prepared in accordance with generally accepted accounting principles. ARTICLE VII AMENDMENTS The holders of shares entitled at the time to vote for the election of directors shall have power to adopt, alter, amend or repeal the By-Laws of the Corporation by vote of not less than a majority of such shares, and the Board of Directors shall have power equal in all respects to that of the stockholders to adopt, alter, amend or repeal the By-Laws by vote of not less than a 8 majority of the entire Board. However, any By-Law adopted by the Board may be amended or repealed by vote of the holders of a majority of the shares entitled at the time to vote for the election of directors. EX-10 3 EXHIBIT 10K TOYS 'R' US, INC. 1994 STOCK OPTION AND PERFORMANCE INCENTIVE PLAN TOYS 'R' US, INC. 1994 STOCK OPTION AND PERFORMANCE INCENTIVE PLAN TABLE OF CONTENTS
Page ARTICLE 1. ESTABLISHMENT AND PURPOSE . . . . . . . . 1 1.1 Establishment and Effective Date . . . . . 1 1.2 Purpose. . . . . . . . . . . . . . . . . . 1 ARTICLE 2. AWARDS . . . . . . . . . . . . . . . . . . 1 2.1 Form of Awards . . . . . . . . . . . . . . 1 2.2 Maximum Shares Available . . . . . . . . . 2 2.3 Return of Prior Awards . . . . . . . . . . 2 ARTICLE 3. ADMINISTRATION . . . . . . . . . . . . . . 2 3.1 Committee. . . . . . . . . . . . . . . . . 2 3.2 Powers of Committee. . . . . . . . . . . . 2 3.3 Delegation . . . . . . . . . . . . . . . . 3 3.4 Interpretations. . . . . . . . . . . . . . 3 3.5 Liability; Indemnification . . . . . . . . 3 ARTICLE 4. ELIGIBILITY. . . . . . . . . . . . . . . . 3 ARTICLE 5. STOCK OPTIONS. . . . . . . . . . . . . . . 4 5.1 Grant of Options . . . . . . . . . . . . . 4 5.2 Designation as Non-Qualified Stock Option or Incentive Stock Option. . . . . . . . . 4 5.3 Option Price . . . . . . . . . . . . . . . 4 5.4 Limitation on Amount of Incentive Stock Options. . . . . . . . . . . . . . . 5 5.5 Limitation on Time of Grant. . . . . . . . 5 5.6 Exercise and Payment . . . . . . . . . . . 5 5.7 Term of Options. . . . . . . . . . . . . . 5 5.8 Rights as Stockholder. . . . . . . . . . . 5 5.9 General Restrictions . . . . . . . . . . . 5 5.10 Cancellation of Stock Appreciation Rights. 6 ARTICLE 6. STOCK APPRECIATION RIGHTS. . . . . . . . . 6 6.1 Grants of Stock Appreciation Rights. . . . 6 6.2 Limitations on Exercise. . . . . . . . . . 6 6.3 Surrender or Exchange of Tandem Stock Appreciation Rights. . . . . . . . . . . . 6 6.4 Exercise of Nontandem Stock Appreciation Rights . . . . . . . . . . . . . . . . . . 6 - i -
6.5 Settlement of Stock Appreciation Rights . 7 6.6 Cash Settlement . . . . . . . . . . . . . 7 ARTICLE 7. NONTRANSFERABILITY OF OPTIONS AND STOCK APPRECIATION RIGHTS . . . . . . . . . . . 7 ARTICLE 8. EFFECT OF TERMINATION OF EMPLOYMENT, RELOCATION EVENT, DISABILITY, RETIREMENT, DEATH OR SPECIAL EVENT . . . . . . . . . . . . . . . . . . 7 8.1 General Rule. . . . . . . . . . . . . . . 7 8.2 Relocation Event. . . . . . . . . . . . . 8 8.3 Disability or Retirement. . . . . . . . . 8 8.4 Death . . . . . . . . . . . . . . . . . . 9 8.5 Special Event . . . . . . . . . . . . . . 9 8.6 Leave of Absence. . . . . . . . . . . . . 10 ARTICLE 9. RESTRICTED SHARES . . . . . . . . . . . . 10 9.1 Grant of Restricted Shares. . . . . . . . 10 9.2 Restrictions. . . . . . . . . . . . . . . 10 9.3 Restricted Stock Certificates . . . . . . 10 9.4 Rights of Holders of Restricted Shares. . 10 9.5 Forfeiture. . . . . . . . . . . . . . . . 10 9.6 Delivery of Restricted Shares . . . . . . 11 ARTICLE 10. PERFORMANCE SHARES. . . . . . . . . . . . 11 10.1 Award of Performance Shares . . . . . . . 11 10.2 Performance Period. . . . . . . . . . . . 11 10.3 Right to Payment of Performance Shares. . 11 10.4 Payment for Performance Shares. . . . . . 11 10.5 Voting and Dividend Rights. . . . . . . . 12 ARTICLE 11. PERFORMANCE UNITS . . . . . . . . . . . . 12 11.1 Award of Performance Units. . . . . . . . 12 11.2 Right to Payment of Performance Units . . 12 11.3 Payment for Performance Units . . . . . . 12 ARTICLE 12. UNRESTRICTED SHARES . . . . . . . . . . . 13 12.1 Award of Unrestricted Shares. . . . . . . 13 12.2 Delivery of Unrestricted Shares . . . . . 13 ARTICLE 13. TAX OFFSET PAYMENTS . . . . . . . . . . . 13 ARTICLE 14. ADJUSTMENT UPON CHANGES IN CAPITALIZATION. . . . . . . . . . . . . . 14 ARTICLE 15. AMENDMENT AND TERMINATION . . . . . . . . 14 - ii -
ARTICLE 16. WRITTEN AGREEMENT. . . . . . . . . . . . 14 ARTICLE 17. MISCELLANEOUS PROVISIONS . . . . . . . . 14 17.1 Tax Withholding. . . . . . . . . . . . . 14 17.2 Compliance With Section 16(b). . . . . . 15 17.3 Successors . . . . . . . . . . . . . . . 15 17.4 General Creditor Status. . . . . . . . . 15 17.5 No Right to Employment . . . . . . . . . 15 17.6 Other Plans. . . . . . . . . . . . . . . 15 17.7 Notices. . . . . . . . . . . . . . . . . 16 17.8 Severability . . . . . . . . . . . . . . 16 17.9 Governing Law. . . . . . . . . . . . . . 16 - iii -
TOYS 'R' US, INC. 1994 STOCK OPTION AND PERFORMANCE INCENTIVE PLAN ARTICLE 1. ESTABLISHMENT AND PURPOSE 1.1 Establishment and Effective Date. Toys 'R' Us, Inc., a Delaware corporation (the 'Corporation'), hereby establishes a stock incentive plan to be known as the 'Toys 'R' Us, Inc. 1994 Stock Option and Performance Incentive Plan' (the 'Plan'). The Plan shall become effective as of November 1, 1993, subject to the approval of the Corporation's stockholders at the 1994 Annual Meeting of Stockholders. In the event that such stockholder approval is not obtained, any awards made hereunder shall be cancelled and all rights of employees with respect to such awards shall thereupon cease. Upon approval by the Board of Directors of the Corporation (the 'Board') and the Board's Management Compensation and Stock Option Committee (the 'Committee'), awards may be made as provided herein. 1.2 Purpose. The purpose of the Plan is to encourage and enable all employees (subject to such requirements as may be prescribed by the Committee) of the Corporation and its subsidiaries to acquire a proprietary interest in the Corporation through the ownership of the Corporation's common stock, par value $.10 per share ('Common Stock'), and other rights with respect to the Common Stock. Such ownership will provide such employees with a more direct stake in the future welfare of the Corporation and encourage them to remain with the Corporation and its subsidiaries. It is also expected that the Plan will encourage qualified persons to seek and accept employment with the Corporation and its sub- sidiaries. ARTICLE 2. AWARDS 2.1 Form of Awards. Awards under the Plan may be granted in any one or all of the following forms: (i) incentive stock options ('Incentive Stock Options') meeting the requirements of Section 422 of the Internal Revenue Code of 1986, as amended (the 'Code'); (ii) non-qualified stock options ('Non-qualified Stock Options') (unless otherwise indicated, references in the Plan to 'Options' shall include both Incentive Stock Options and Non-qualified Stock Options); (iii) stock appreciation rights ('Stock Appreciation Rights'), as described in Article 6 hereof, which may be awarded either in tandem with Options ('Tandem Stock Appreciation Rights') or on a stand-alone basis ('Nontandem Stock Appreciation Rights'); (iv) shares of Common Stock which are restricted as provided in Article 9 hereof ('Restricted Shares'); (v) units representing shares of Common Stock, as described in Article 10 hereof ('Performance Shares'); (vi) units which do not represent shares of Common Stock but which may be paid in the form of Common Stock, as described in Article 11 hereof ('Performance Units'); (vii) shares of Common Stock that are not subject to any conditions to vesting ('Unrestricted Shares'); and (viii) tax offset payments ('Tax Offset Payments'), as described in Article 13 hereof. - 1 - 2.2 Maximum Shares Available. The maximum aggregate number of shares of Common Stock available for award under the Plan is 15,000,000 subject to adjustment pursuant to Article 14 hereof. In addition, Tax Offset Payments which may be awarded under the Plan will not exceed the number of shares available for issuance under the Plan. Shares of Common Stock issued pursuant to the Plan may be either authorized but unissued shares or issued shares reacquired by the Corporation. In the event that prior to the end of the period during which Options may be granted under the Plan, any Option or any Nontandem Stock Appreciation Rights under the Plan expires unexercised or is terminated, surrendered or cancelled (other than in connection with the exercise of Stock Appreciation Rights) without being exercised in whole or in part for any reason, or any Restricted Shares, Performance Shares or Performance Units are forfeited, or if such awards are settled in cash in lieu of shares of Common Stock, then such shares or units shall be available for subsequent awards under the Plan, upon such terms as the Committee may determine. 2.3 Return of Prior Awards. As a condition to any subsequent award, the Committee shall have the right, at its discretion, to require employees to return to the Corporation awards previously granted under the Plan. Subject to the provisions of the Plan, such new award shall be upon such terms and conditions as are specified by the Committee at the time the new award is granted. ARTICLE 3. ADMINISTRATION 3.1 Committee. Awards shall be determined, and the Plan shall be administered, by the Committee as appointed from time to time by the Board, which Committee shall consist of not less than two (2) members of the Board. Except as permitted by Rule 16b-3 of the Securities Exchange Act of 1934, as amended (the 'Act'), and by Section 162(m) of the Code (or Regulations promulgated thereunder), no member of the Board may serve on the Committee if such member: (i) is or has been granted or awarded stock, stock options, stock appreciation rights or any other equity security or derivative security of the Corporation or any of its affiliates pursuant to the Plan or any other plan of the Corporation or its affiliates either while serving on the Committee or during the one year period prior to being appointed to the Committee; (ii) is an employee or former employee of the Corporation; or (iii) receives remuneration from the Corporation, either directly or indirectly, in any capacity other than as a director. 3.2 Powers of Committee. Subject to the express provisions of the Plan, the Committee shall have the power and authority (i) to grant Options and to determine the purchase price of the Common Stock covered by each Option, the term of each Option, the number of shares of Common Stock to be covered by each Option and any performance objectives or vesting standards applicable to each Option; (ii) to designate Options as Incentive Stock Options or Non-qualified Stock Options and to determine which Options, if any, shall be accompanied by Tandem Stock Appreciation Rights, (iii) to grant Tandem Stock Appreciation Rights and Nontandem Stock Appreciation Rights and to determine the terms and conditions of such rights; (iv) to grant Restricted Shares and to determine the term of the restricted period and other conditions and restrictions applicable to such shares; (v) to grant Performance Shares and Performance Units and to determine the performance objectives, performance periods and other conditions applicable to such shares or units; (vi) - 2 - to grant Unrestricted Shares; (vii) to determine the amount of, and to make, Tax Offset Payments; and (viii) to determine the employees to whom, and the time or times at which, Options, Stock Appreciation Rights, Restricted Shares, Performance Shares, Performance Units and Unrestricted Shares shall be granted. 3.3 Delegation. The Committee may delegate to one or more of its members or to any other person or persons such ministerial duties as it may deem advisable; provided, however, that the Committee may not delegate any of its responsibilities hereunder if such delegation would cause the Plan to fail to comply with the 'disinterested administration' rules under Section 16 of the Act. The Committee may also employ attorneys, consultants, accountants or other professional advisors and shall be entitled to rely upon the advice, opinions or valuations of any such advisors. 3.4 Interpretations. The Committee shall have sole discretionary authority to interpret the terms of the Plan, to adopt and revise rules, regulations and policies to administer the Plan and to make any other factual determinations which it believes to be necessary or advisable for the administration of the Plan. All actions taken and interpretations and determinations made by the Committee in good faith shall be final and binding upon the Corporation, all employees who have received awards under the Plan and all other interested persons. 3.5 Liability; Indemnification. No member of the Committee, nor any person to whom ministerial duties have been delegated, shall be personally liable for any action, interpretation or determination made with respect to the Plan or awards made thereunder, and each member of the Committee shall be fully indemnified and protected by the Corporation with respect to any liability he or she may incur with respect to any such action, interpretation or determination, to the extent permitted by applicable law and to the extent provided in the Corporation's Certificate of Incorporation and Bylaws, as amended from time to time, or under any agreement between any such member and the Corporation. ARTICLE 4. ELIGIBILITY Awards may be made to all employees of the Corporation or any of its subsidiaries (subject to such requirements as may be prescribed by the Committee); provided, however, that no employee may receive awards of or relating to more than 250,000 shares of Common Stock in the aggregate in any fiscal year of the Corporation. Awards may be made to a director of the Corporation who is not also a member of the Committee, provided that the director is also an employee. In determining the employees to whom awards shall be granted and the number of shares to be covered by each award, the Committee shall take into account the nature of the services rendered by such employees, their present and potential contributions to the success of the Corporation and its subsidiaries and such other factors as the Committee in its sole discretion shall deem relevant. As used herein, the term 'subsidiary' shall mean any present or future corporation, partnership or joint venture in which the Corporation owns, directly or indirectly, 40% or more of the economic interests. Notwithstanding the foregoing, only employees of the Corporation and any present or future corporation which is or may be a 'subsidiary corporation' of the Corporation (as such term is defined in Section 424 (f) of the Code) shall be eligible to receive Incentive Stock Options. - 3 - ARTICLE 5. STOCK OPTIONS 5.1 Grant of Options. Options may be granted under the Plan for the purchase of shares of Common Stock. Options shall be granted in such form and upon such terms and conditions, including the satisfaction of corporate or individual performance objectives and other vesting standards, as the Committee shall from time to time determine. 5.2 Designation as Non-qualified Stock Option or Incentive Stock Option. In connection with any grant of Options, the Committee shall designate in the written agreement required pursuant to Article 16 hereof whether the Options granted shall be Incentive Stock Options or Non-qualified Stock Options, or in the case both are granted, the number of shares of each. 5.3 Option Price. The purchase price per share under each Incentive Stock Option shall be the Market Price (as hereinafter defined) of the Common Stock on the date the Incentive Stock Option is granted. The purchase price per share under each Non-qualified Stock Option shall be specified by the Committee, but in no event shall it be less than 90% of the Market Price on the date the Non- qualified Stock Option is granted. In no case, however, shall the purchase price per share of either an Incentive Stock Option or Non-qualified Stock Option be less than the par value of the Common Stock ($.10). Notwithstanding the foregoing, to the extent required by the Code, the purchase price per share under each Non-qualified Stock Option granted to an employee who is treated as a 'covered employee' (as defined in Section 162(m)(3) of the Code) on the date such Non-Qualified Option is exercised shall not be less than 100% of the Market Price of the Common Stock on the date of grant. In the case of an Incentive Stock Option granted to an employee owning (actually or constructively under Section 424(d) of the Code), more than 10% of the total combined voting power of all classes of stock of the Corporation or of a subsidiary (a '10% Stockholder'), the option price shall not be less than 110% of the Market Price of the Common Stock on the date of grant. The 'Market Price' of the Common Stock on any day shall be determined as follows: (i) if the Common Stock is listed on a national securities exchange or quoted through the NASDAQ National Market System, the Market Price on any day shall be the average of the high and low reported Consolidated Trading sales prices, or if no such sale is made on such day, the average of the closing bid and asked prices reported on the Consolidated Trading listing for such day; (ii) if the Common Stock is quoted on the NASDAQ inter-dealer quotation system, the Market Price on any day shall be the average of the representative bid and asked prices at the close of business for such day; or (iii) if the Common Stock is not listed on a national stock exchange or quoted on NASDAQ, the Market Price on any day shall be the average of the high bid and low asked prices reported by the National Quotation Bureau, Inc. for such day. In no event shall the Market Price of a share of Common Stock subject to an Incentive Stock Option be less than the fair market value as determined for purposes of Section 422(b)(4) of the Code. The Option price so determined shall also be applicable in connection with the exercise of any Tandem Stock Appreciation Rights granted with respect to such Option. - 4 - 5.4 Limitation on Amount of Incentive Stock Options. In the case of Incentive Stock Options, the aggregate Market Price (determined at the time the Incentive Stock Option is granted) of the Common Stock with respect to which Incentive Stock Options are exercisable for the first time by any optionee during any calendar year (under all plans of the Corporation and any subsidiary) shall not exceed $100,000. 5.5 Limitation on Time of Grant. No grant of an Incentive Stock Option shall be made under the Plan more than ten (10) years after the date the Plan is approved by stockholders of the Corporation. 5.6 Exercise and Payment. Options may be exercised in whole or in part. Common Stock purchased upon the exercise of Options shall be paid for in full at the time of purchase. Such payment shall be made in cash or, in the discretion of the Committee, through delivery of shares of Common Stock or a combination of cash and Common Stock, in accordance with procedures to be established by the Committee. Any shares so delivered shall be valued at their Market Price on the date of exercise. Upon receipt of notice of exercise and payment in accordance with procedures to be established by the Committee, the Corporation or its agent shall deliver to the person exercising the Option (or his or her designee) a certificate for such shares. 5.7 Term. The term of each Option granted hereunder shall be determined by the Committee; provided, however, that, notwithstanding any other provision of the Plan, in no event shall an Incentive Stock Option be exercisable after ten (10) years from the date it is granted, or in the case of an Incentive Stock Option granted to a 10% Stockholder, five (5) years from the date it is granted. 5.8 Rights as a Stockholder. A recipient of Options shall have no rights as a stockholder with respect to any shares issuable or transferable upon exercise thereof until the date a stock certificate is issued to such recipient representing such shares. Except as otherwise expressly provided in the Plan, no adjustment shall be made for cash dividends or other rights for which the record date is prior to the date such stock certificate is issued. 5.9 General Restrictions. Each Option granted under the Plan shall be subject to the requirement that, if at any time the Board shall determine, in its discretion, that the listing, registration or qualification of the shares issuable or transferable upon exercise thereof upon any securities exchange or under any state or federal law, or the consent or approval of any governmental regulatory body, is necessary or desirable as a condition of, or in connection with, the granting of such Option or the issue, transfer, or purchase of shares thereunder, such Option may not be exercised in whole or in part unless such listing, registration, qualification, consent, or approval shall have been effected or obtained free of any conditions not acceptable to the Board. The Board or the Committee may, in connection with the granting of any Option, require the individual to whom the Option is to be granted to enter into an agreement with the Corporation stating that as a condition precedent to each exercise of the Option, in whole or in part, such individual shall if then required by the Corporation represent to the Corporation in writing that such exercise is for investment only and not with a view to distribution, and also setting forth such other terms and conditions as the Board or the Committee may prescribe. - 5 - 5.10 Cancellation of Stock Appreciation Rights. Upon exercise of all or a portion of an Option, the related Tandem Stock Appreciation Rights shall be cancelled with respect to an equal number of shares of Common Stock. ARTICLE 6. STOCK APPRECIATION RIGHTS 6.1 Grants of Stock Appreciation Rights. Tandem Stock Appreciation Rights may be awarded by the Committee in connection with any Option granted under the Plan, either at the time the Option is granted or thereafter at any time prior to the exercise, termination or expiration of the Option. Nontandem Stock Appreciation Rights may also be granted by the Committee at any time. At the time of grant of Nontandem Stock Appreciation Rights, the Committee shall specify the number of shares of Common Stock covered by such right and the base price of shares of Common Stock to be used in connection with the calculation described in Section 6.4 below. The base price of any Nontandem Stock Appreciation Rights shall be not less than 100% of the Market Price of a share of Common Stock on the date of grant. Stock Appreciation Rights shall be subject to such terms and conditions not inconsistent with the other provisions of the Plan as the Committee shall determine. 6.2 Limitations on Exercise. Tandem Stock Appreciation Rights shall be exercisable only to the extent that the related Option is exercisable and shall be exercisable only for such period as the Committee may determine (which period may expire prior to the expiration date of the related Option). Upon the exercise of all or a portion of Tandem Stock Appreciation Rights, the related Option shall be cancelled with respect to an equal number of shares of Common Stock. Shares of Common Stock subject to Options, or portions thereof, surrendered upon exercise of Tandem Stock Appreciation Rights shall not be available for subsequent awards under the Plan. Nontandem Stock Appreciation Rights shall be exercisable during such period as the Committee shall determine. 6.3 Surrender or Exchange of Tandem Stock Appreciation Rights. Tandem Stock Appreciation Rights shall entitle the recipient to surrender to the Corporation unexercised the related Option, or any portion thereof, and to receive from the Corporation in exchange therefor that number of shares of Common Stock having an aggregate Market Price equal to (A) the excess of (i) the Market Price of one (1) share of Common Stock as of the date the Tandem Stock Appreciation Rights are exercised over (ii) the option price per share specified in such Option, multiplied by (B) the number of shares of Common Stock subject to the Option, or portion thereof, which is surrendered. Cash shall be delivered in lieu of any fractional shares. 6.4 Exercise of Nontandem Stock Appreciation Rights. The exercise of Nontandem Stock Appreciation Rights shall entitle the recipient to receive from the Corporation that number of shares of Common Stock having an aggregate Market Price equal to (A) the excess of (i) the Market Price of one (1) share of Common Stock as of the date on which the Nontandem Stock Appreciation Rights are exercised over (ii) the base price of the shares covered by the Nontandem Stock Appreciation Rights, multiplied by (B) the number of shares of Common Stock covered by the Nontandem Stock Appreciation Rights, or the portion thereof being exercised. Cash shall be delivered in lieu of any fractional shares. - 6 - 6.5 Settlement of Stock Appreciation Rights. As soon as is reasonably practicable after the exercise of any Stock Appreciation Rights, the Corporation shall (i) issue, in the name of the recipient, stock certificates representing the total number of full shares of Common Stock to which the recipient is entitled pursuant to Section 6.3 or 6.4 hereof and cash in an amount equal to the Market Price, as of the date of exercise, of any resulting fractional shares, and (ii) if the Committee causes the Corporation to elect to settle all or part of its obligations arising out of the exercise of the Stock Appreciation Rights in cash pursuant to Section 6.6 hereof, deliver to the recipient an amount in cash equal to the Market Price, as of the date of exercise, of the shares of Common Stock it would otherwise be obligated to deliver. 6.6 Cash Settlement. The Committee, in its discretion, may cause the Corporation to settle all or any part of its obligation arising out of the exercise of Stock Appreciation Rights by the payment of cash in lieu of all or part of the shares of Common Stock it would otherwise be obligated to deliver in an amount equal to the Market Price of such shares on the date of exercise. ARTICLE 7. NONTRANSFERABILITY OF OPTIONS AND STOCK APPRECIATION RIGHTS No Option or Stock Appreciation Rights may be transferred, assigned, pledged or hypothecated (whether by operation of law or otherwise), except as provided by will or the applicable laws of descent and distribution, and no Option or Stock Appreciation Rights shall be subject to execution, attachment or similar process. Any attempted assignment, transfer, pledge, hypothecation or other disposition of an Option or Stock Appreciation Rights not specifically permitted herein shall be null and void and without effect. An Option or Stock Appreciation Rights may be exercised by the recipient only during his or her lifetime, or following his or her death pursuant to Section 8.4 hereof. Notwithstanding anything to the contrary in the preceding paragraph, the Committee may, in its sole discretion, cause the written agreement relating to any Non-qualified Stock Options or Stock Appreciation Rights granted hereunder to provide that the recipient of such Non-qualified Stock Options or Stock Appreciation Rights may transfer any of such Non-qualified Stock Options or Stock Appreciation Rights other than by will or the laws of descent and distribution in any manner authorized under applicable law; provided, however, that in no event may the Committee permit any transfers which would cause this Plan to fail to satisfy the applicable requirements of Rule 16b-3 under the Act, or would cause any recipient of awards hereunder to fail to be entitled to the benefits Rule 16b-3 or other exemptive rules under Section 16 of the Act or be subject to liability thereunder. ARTICLE 8. EFFECT OF TERMINATION OF EMPLOYMENT, RELOCATION EVENT, DISABILITY, RETIREMENT, DEATH OR SPECIAL EVENT 8.1 General Rule. Except as expressly determined by the Committee in its sole discretion, no Option or Stock Appreciation Rights shall be exercisable after 30 days following the recipient's termination of employment with the Corporation or a subsidiary, unless such termination of employment occurs by reason of (i) a Relocation Event (as defined in Section 8.2), (ii) Retirement (as - 7 - defined in Section 8.3), (iii) death or (iv) a Special Event (as defined in Section 8.5), provided that, in the case of a Special Event, the Committee shall have modified such Option or Stock Appreciation Rights to remain exercisable as provided in Section 8.5. Options and Stock Appreciation Rights shall not be affected by any change of employment so long as the recipient continues to be employed by either the Corporation or a subsidiary. The Committee may, in its sole discretion, cause any Option or Stock Appreciation Rights to be forfeited upon an employee's termination of employment if the employee was terminated for one (or more) of the following reasons: (i) the employee's conviction, or plea of guilty or nolo contendere to the commission of a felony, (ii) the employee's commission of any fraud, misappropriation or misconduct which causes demonstrable injury to the Corporation or a subsidiary, (iii) an act of dishonesty by the employee resulting or intended to result, directly or indirectly, in gain or personal enrichment at the expense of the Corporation or a subsidiary, (iv) any breach of the employee's fiduciary duties to the Corporation as an employee or officer, or (v) a violation by the employee of the Toys 'R' Us Ethics Agreement or any other serious violation of a Corporation policy. It shall be within the sole discretion of the Committee to determine whether the employee's termination was for one of the foregoing reasons, and the decision of the Committee shall be final and conclusive. 8.2 Relocation Event. Options and Stock Appreciation Rights granted to an employee shall remain outstanding after termination of such employee's employment with the Corporation or a subsidiary, if such termination solely occurs by reason of a 'Relocation Event,' which shall be deemed to occur if (i) a husband and wife are both current employees of the Corporation, (ii) the Corporation transfers one spouse to a new location, (iii) the Corporation is unable to offer the other spouse a position that is substantially comparable to his or her current position, and (iv) as a result, the other spouse's employment with the Corporation is terminated and the other spouse, as recipient, holds outstanding Options or Stock Appreciation Rights. In case of a Relocation Event, the Options or Stock Appreciation Rights held by a terminated employee shall be exercisable for a period equal to the lesser of (i) the period such Options or Stock Appreciation Rights would be exercisable absent the termination of such employee, and (ii) the period such Options or Stock Appreciation Rights would be exercisable if granted to the spouse continuing in the Corporation's employ on the date originally granted to the terminated spouse. 8.3 Disability or Retirement. Except as expressly provided otherwise in the written agreement relating to any Option or Stock Appreciation Rights granted under the Plan, in the event of the Disability or Retirement of a recipient of Options or Stock Appreciation Rights, the Options or Stock Appreciation Rights which are held by such recipient on the date of such Disability or Retirement, whether or not otherwise exercisable on such date, shall be exercisable at any time until the expiration date of the Options or Stock Appreciation Rights; provided, however, that any Incentive Stock Option of such recipient shall no longer be treated as an Incentive Stock Option unless exercised within three (3) months of the date of such Disability or Retirement (or within one (1) year in the case of an employee who is 'disabled' within the meaning of Section 22(e)(3) of the Code). 'Disability' shall mean any termination of employment with the Corporation or a subsidiary because of a long-term or total disability, as determined by the Committee in its sole discretion. 'Retirement' shall mean a termination of employment with the - 8 - Corporation or a subsidiary either (i) on a voluntary basis by a recipient who is at least 60 years of age and has at least 15 years of service with the Corporation or a subsidiary or (ii) otherwise with the written consent of the Committee in its sole discretion. The decision of the Committee shall be final and conclusive. 8.4 Death. In the event of the death of a recipient of Options or Stock Appreciation Rights while an employee of the Corporation or any subsidiary, Options or Stock Appreciation Rights which are held by such employee at the date of death, whether or not otherwise exercisable on the date of death, shall be exercisable by the beneficiary designated by the employee for such purpose (the 'Designated Beneficiary') or if no Designated Beneficiary shall be appointed or if the Designated Beneficiary shall predecease the employee, by the employee's personal representatives, heirs or legatees at any time within three (3) years from the date of death (subject to the limitation in Section 5.7 hereof), at which time such Options or Stock Appreciation Rights shall terminate; provided, however, that any Incentive Stock Option of such recipient shall no longer be treated as an Incentive Stock Option unless exercised within three (3) months of the date of the recipient's death. In the event of the death of a recipient of Options or Stock Appreciation Rights following a termination of employment due to Retirement, Disability or a Special Event (as defined in Section 8.5 hereof), if such death occurs before the Options or Stock Appreciation Rights are exercised, the Options or Stock Appreciation Rights which are held by such recipient on the date of termination of employment, whether or not otherwise exercisable on such date, shall be exercisable by such recipient's Designated Beneficiary, or if no Designated Beneficiary shall be appointed or if the Designated Beneficiary shall predecease such recipient, by such recipient's personal representatives, heirs or legatees to the same extent such Options or Stock Appreciation Rights were exercisable by the recipient following such termination of employment. 8.5 Special Event. In the case of a Special Event, the Committee in its sole discretion may elect to modify all or any lesser number of any Options or Stock Appreciation Rights held by an employee terminated as a result of a Special Event which are or are not exercisable on the date of termination, to provide that any of such Options or Stock Appreciation Rights may continue to be exercisable for the term and in the manner specified therein or for such other term and subject to such other provisions and conditions (including, without limitation, acceleration of the time or times at which any such Options or Stock Appreciation Rights may be exercised) as the Committee shall specify. The Committee shall have the sole discretion to determine the employees to whom and in the manner in which any such modification shall be made. If the Committee does not elect to modify an Option or Stock Appreciation Rights, then only Options and Stock Appreciation Rights currently exercisable at the date of termination shall be exercisable as provided in the first sentence of Section 8.1 hereof. A 'Special Event' shall mean (i) the sale or other disposition of a subsidiary or division of the Corporation; (ii) the closing or discontinuation of a specific operation of the Corporation or any subsidiary; (iii) the elimination of job categories; or (iv) a limited program of terminations in connection with a personnel reorganization or restructuring of the Corporation or any subsidiary of the Corporation scheduled to be completed on a date certain, provided, however, that only those employees who meet the terms and conditions as established by the Board or the Committee in its discretion shall be eligible to receive accelerated vesting of Options and Stock Appreciation Rights. - 9 - 8.6 Leave of Absence. In the case of an employee on an approved leave of absence, the Options and Stock Appreciation Rights of such employee shall not be affected unless such leave is longer than 13 weeks. The date of exercisability of any Options or Stock Appreciation Rights of an employee which are unexercisable at the beginning of an approved leave of absence lasting longer than 13 weeks shall be postponed for a period equal to the length of such leave of absence. Notwithstanding the foregoing, the Committee may, in its sole discretion, waive in writing any such postponement of the date of exercisability of any Options or Stock Appreciation Rights due to a leave of absence. ARTICLE 9. RESTRICTED SHARES 9.1 Grant of Restricted Shares. The Committee may from time to time cause the Corporation to grant Restricted Shares under the Plan to employees, subject to such restrictions, conditions and other terms as the Committee may determine. 9.2 Restrictions. At the time a grant of Restricted Shares is made, the Committee shall establish a period of time (the 'Restricted Period') applicable to such Restricted Shares. Each grant of Restricted Shares may be subject to a different Restricted Period. The Committee may, in its sole discretion, at the time a grant is made, prescribe restrictions in addition to or other than the expiration of the Restricted Period, including the satisfaction of corporate or individual performance objectives, which shall be applicable to all or any portion of the Restricted Shares. The Committee may also, in its sole discretion, shorten or terminate the Restricted Period or waive any other restrictions applicable to all or a portion of such Restricted Shares. None of the Restricted Shares may be sold, transferred, assigned, pledged or otherwise encumbered or disposed of during the Restricted Period or prior to the satisfaction of any other restrictions prescribed by the Committee with respect to such Restricted Shares. 9.3 Restricted Stock Certificates. The Corporation shall issue, in the name of each employee to whom Restricted Shares have been granted, stock certificates representing the total number of Restricted Shares granted to the employee, as soon as reasonably practicable after the grant. The Corporation, at the direction of the Committee, shall hold such certificates, properly endorsed for transfer, for the employee's benefit until such time as the Restricted Shares are forfeited to the Corporation, or the restrictions lapse. 9.4 Rights of Holders of Restricted Shares. Holders of Restricted Shares shall not have the right to vote such shares or the right to receive any cash dividends with respect to such shares. All distributions, if any, received by an employee with respect to Restricted Shares as a result of any stock split, stock distribution, a combination of shares, or other similar transaction shall be subject to the restrictions of this Article 9. 9.5 Forfeiture. Any Restricted Shares granted to an employee pursuant to the Plan shall be forfeited if the employee terminates employment with the Corporation or its subsidiaries prior to the expiration or termination of the Restricted Period and the satisfaction of any other conditions applicable to such Restricted Shares. Upon such forfeiture, the Restricted Shares that are forfeited shall be retained in the treasury of the Corporation and available for subsequent awards under the Plan, unless the Committee directs that such Restricted Shares be cancelled upon forfeiture. If the employee's employment terminates as a result of his or her Disability, Retirement or death, or a - 10 - Relocation Event or Special Event, Restricted Shares of such employee shall be forfeited, unless the Committee, in its sole discretion, shall determine otherwise. 9.6 Delivery of Restricted Shares. Upon the expiration or termination of the Restricted Period and the satisfaction of any other conditions prescribed by the Committee, the restrictions applicable to the Restricted Shares shall lapse and a stock certificate for the number of Restricted Shares with respect to which the restrictions have lapsed shall be delivered, free of all such restrictions, to the employee or the employee's beneficiary or estate, as the case may be. ARTICLE 10. PERFORMANCE SHARES 10.1 Award of Performance Shares. For each Performance Period (as defined in Section 10.2), Performance Shares may be granted under the Plan to such employees of the Corporation and its subsidiaries as the Committee shall determine in its sole discretion. Each Performance Share shall be deemed to be equivalent to one (1) share of Common Stock. Performance Shares granted to an employee shall be credited to an account (a 'Performance Share Account') established and maintained for such employee. 10.2 Performance Period. 'Performance Period' shall mean such period of time as shall be determined by the Committee in its sole discretion. Different Performance Periods may be established for different employees receiving Performance Shares. Performance Periods may run consecutively or concurrently. 10.3 Right to Payment of Performance Shares. With respect to each award of Performance Shares under the Plan, the Committee shall specify performance objectives (the 'Performance Objectives') which must be satisfied in order for the employee to vest in the Performance Shares which have been awarded to him or her for the Performance Period. If the Performance Objectives established for an employee for the Performance Period are partially but not fully met, the Committee may, nonetheless, in its sole discretion, determine that all or a portion of the Performance Shares have vested. If the Performance Objectives for a Performance Period are exceeded, the Committee may, in its sole discretion, grant additional, fully vested Performance Shares to the employee. The Committee may also determine, in its sole discretion, that Performance Shares awarded to an employee shall become partially or fully vested upon the employee's Disability, Retirement or death, or upon a Relocation Event or Special Event, or upon the termination of the employee's employment prior to the end of the Performance Period. 10.4 Payment for Performance Shares. As soon as practicable following the end of a Performance Period, the Committee shall determine whether the Performance Objectives for the Performance Period have been achieved (or partially achieved to the extent necessary to permit partial vesting at the discretion of the Committee pursuant to Section 10.3). If the Performance Objectives for the Performance Period have been exceeded, the Committee shall determine whether additional Performance Shares shall be granted to the employee pursuant to Section 10.3. As soon as reasonably practicable after such determinations, or at such later date as the Committee shall determine at the time of grant, the Corporation shall pay to the employee an amount with respect to each vested Performance Share equal to the Market Price of a share of Common Stock on such payment date or, if the Committee shall so specify at the time of grant, an amount equal to (i) the - 11 - Market Price of a share of Common Stock on the payment date less (ii) the Market Price of a share of Common Stock on the date of grant of the Performance Share. Payment shall be made entirely in cash, entirely in Common Stock (including Restricted Shares) or in such combination of cash and Common Stock as the Committee shall determine in its sole discretion. 10.5 Voting and Dividend Rights. Except as provided in Article 14 hereof, no employee shall be entitled to any voting rights, to receive any cash dividends, or to have his or her Performance Share Account credited or increased as a result of any cash dividends or other distribution with respect to Common Stock. Notwithstanding the foregoing, within sixty (60) days from the date of payment of a cash dividend by the Corporation on its shares of Common Stock, the Committee, in its sole discretion, may credit an employee's Performance Share Account with additional Performance Shares having an aggregate Market Price equal to the cash dividend per share paid on the Common Stock multiplied by the number of Performance Shares credited to his or her account at the time the cash dividend was declared. ARTICLE 11. PERFORMANCE UNITS 11.1 Award of Performance Units. For each Performance Period (as defined in Section 10.2), Performance Units may be granted under the Plan to such employees of the Corporation and its subsidiaries as the Committee shall determine in its sole discretion. The award agreement covering such Performance Units shall specify a value for each Performance Unit or shall set forth a formula for determining the value of each Performance Unit at the time of payment (the 'Ending Value'). If necessary to make the calculation of the amount to be paid to the employee pursuant to Section 11.3, the Committee shall also state in the award agreement the initial value of each Performance Unit (the 'Initial Value'). Performance Units granted to an employee shall be credited to an account (a 'Performance Unit Account') established and maintained for such employee. 11.2 Right to Payment of Performance Units. With respect to each award of Performance Units under the Plan, the Committee shall specify Performance Objectives which must be satisfied in order for the employee to vest in the Performance Units which have been awarded to him or her for the Performance Period. If the Performance Objectives established for an employee for the Performance Period are partially but not fully met, the Committee may, nonetheless, in its sole discretion, determine that all or a portion of the Performance Units have vested. If the Performance Objectives for a Performance Period are exceeded, the Committee may, in its sole discretion, grant additional, fully vested Performance Units to the employee. The Committee may, in its sole discretion, adjust the Performance Objectives or the Initial Value or Ending Value of any Performance Units to reflect extraordinary events, such as stock splits, recapitalizations, mergers, combinations, divestitures, spin-offs and the like. The Committee may also determine, in its sole discretion, that Performance Units awarded to an employee shall become partially or fully vested upon the employee's termination of employment due to Disability, Retirement, death or otherwise, or upon a Relocation Event or Special Event. 11.3 Payment for Performance Units. As soon as practicable following the end of a Performance Period, the Committee shall determine whether the Performance Objectives for the Performance Period have been achieved (or partially achieved to the - 12 - extent necessary to permit partial vesting at the discretion of the Committee pursuant to Section 11.2). If the Performance Objectives for the Performance Period have been exceeded, the Committee shall determine whether additional Performance Units shall be granted to the employee pursuant to Section 11.2. As soon as reasonably practicable after such determinations, or at such later date as the Committee shall determine at the time of grant, the Corporation shall pay to the employee an amount with respect to each vested Performance Unit equal to the Ending Value of the Performance Unit or, if the Committee shall so specify at the time of grant, an amount equal to (i) the Ending Value of the Performance Unit less (ii) the Initial Value of the Performance Unit. Payment shall be made entirely in cash, entirely in Common Stock (including Restricted Shares) or in such combination of cash and Common Stock as the Committee shall determine in its sole discretion. ARTICLE 12. UNRESTRICTED SHARES 12.1 Award of Unrestricted Shares. The Committee may cause the Corporation to grant Unrestricted Shares to employees at such time or times, in such amounts and for such reasons as the Committee, in its sole discretion, shall determine. No payment shall be required for Unrestricted Shares. 12.2 Delivery of Unrestricted Shares. The Corporation shall issue, in the name of each employee to whom Unrestricted Shares have been granted, stock certificates representing the total number of Unrestricted Shares granted to the employee, and shall deliver such certificates to the employee as soon as reasonably practicable after the date of grant or on such later date as the Committee shall determine at the time of grant. ARTICLE 13. TAX OFFSET PAYMENTS The Committee shall have the authority at the time of any award under the Plan or anytime thereafter to make Tax Offset Payments to assist employees in paying income taxes incurred as a result of their participation in the Plan. The Tax Offset Payments shall be determined by multiplying a percentage established by the Committee times all or a portion (as the Committee shall determine) of the taxable income recognized by an employee upon (i) the exercise of Non-qualified Stock Options or Stock Appreciation Rights, (ii) the disposition of shares received upon exercise of Incentive Stock Options, (iii) the lapse of restrictions on Restricted Shares, (iv) the award of Unrestricted Shares, or (v) payments for Performance Shares or Performance Units. The percentage shall be established, from time to time, by the Committee at that rate which the Committee, in its sole discretion, determines to be appropriate and in the best interests of the Corporation to assist employees in paying income taxes incurred as a result of the events described in the preceding sentence. Tax Offset Payments shall be subject to the restrictions on transferability applicable to Options and Stock Appreciation Rights under Article 7. - 13 - ARTICLE 14. ADJUSTMENT UPON CHANGES IN CAPITALIZATION Notwithstanding any other provision of the Plan, the Committee may: (i) at any time, make or provide for such adjustments to the Plan or to the number and class of shares available thereunder or (ii) at the time of grant of any Options, Stock Appreciation Rights, Restricted Shares or Performance Shares, provide for such adjustments to such Options, Stock Appreciation Rights, Restricted Shares or Performance Shares, in each case, as the Committee shall deem appropriate to prevent dilution or enlargement of rights, including, without limitation, adjustments in the event of stock dividends, stock splits, recapitalizations, mergers, consolidations, combinations or exchanges of shares, separations, spin-offs, reorganizations, liquidations and the like. ARTICLE 15. AMENDMENT AND TERMINATION The Board may suspend, terminate, modify or amend the Plan, provided that any amendment that would (i) materially increase the aggregate number of shares which may be issued under the Plan, (ii) materially increase the benefits accruing to employees under the Plan, or (iii) materially modify the requirements as to eligibility for participation in the Plan, shall be subject to the approval of the Corporation's stockholders, except that any such increase or modification that may result from adjustments authorized by Article 14 hereof shall not require such stockholder approval. If the Plan is terminated, the terms of the Plan shall, notwithstanding such termination, continue to apply to awards granted prior to such termination. No suspension, termination, modification or amendment of the Plan may, without the consent of the employee to whom an award shall theretofore have been granted, adversely affect the rights of such employee under such award. ARTICLE 16. WRITTEN AGREEMENT Each award of Options, Stock Appreciation Rights, Restricted Shares, Performance Shares, Performance Units, Unrestricted Shares and Tax Offset Payments shall be evidenced by a written agreement containing such restrictions, terms and conditions, if any, as the Committee may require. In the event of any conflict between a written agreement and the Plan, the terms of the Plan shall govern. ARTICLE 17. MISCELLANEOUS PROVISIONS 17.1 Tax Withholding. The Corporation shall have the right to require employees or their beneficiaries or legal representatives to remit to the Corporation an amount sufficient to satisfy Federal, state and local withholding tax requirements, or to deduct from all payments under the Plan, including Tax Offset Payments, amounts sufficient to satisfy all withholding tax requirements. Whenever payments under the Plan are to be - 14 - made to an employee in cash, such payments shall be net of any amounts sufficient to satisfy all Federal, state and local withholding tax requirements. The Committee may, in its sole discretion, permit an employee to satisfy his or her tax withholding obligation either by (i) surrendering shares owned by the employee or (ii) having the Corporation withhold from shares otherwise deliverable to the employee. Shares surrendered or withheld shall be valued at their Market Price as of the date on which income is required to be recognized for income tax purposes. 17.2 Compliance With Section 16(b). In the case of employees who are or may be subject to Section 16 of the Act, it is the intent of the Corporation that the Plan and any award granted hereunder satisfy and be interpreted in a manner that satisfies the applicable requirements of Rule 16b-3, so that such persons will be entitled to the benefits of Rule 16b-3 or other exemptive rules under Section 16 of the Act and will not be subjected to liability thereunder. If any provision of the Plan or any award would otherwise conflict with the intent expressed herein, that provision, to the extent possible, shall be interpreted and deemed amended so as to avoid such conflict. To the extent of any remaining irreconcilable conflict with such intent, such provision shall be deemed void as applicable to employees who are or may be subject to Section 16 of the Act. 17.3 Successors. The obligations of the Corporation under the Plan shall be binding upon any successor corporation or organization resulting from the merger, consolidation or other reorganization of the Corporation, or upon any successor corporation or organization succeeding to all or substantially all of the assets and business of the Corporation. In the event of any of the foregoing, the Committee may, at its discretion prior to the consummation of the transaction and subject to Article 15 hereof, cancel, offer to purchase, exchange, adjust or modify any outstanding awards, at such time and in such manner as the Committee deems appropriate and in accordance with applicable law. 17.4 General Creditor Status. Employees shall have no right, title, or interest whatsoever in or to any investments which the Corporation may make to aid it in meeting its obligations under the Plan. Nothing contained in the Plan, and no action taken pursuant to its provisions, shall create or be construed to create a trust of any kind, or a fiduciary relationship between the Corporation and any employee or beneficiary or legal representative of such employee. To the extent that any person acquires a right to receive payments from the Corporation under the Plan, such right shall be no greater than the right of an unsecured general creditor of the Corporation. All payments to be made hereunder shall be paid from the general funds of the Corporation and no special or separate fund shall be established and no segregation of assets shall be made to assure payment of such amounts except as expressly set forth in the Plan. 17.5 No Right to Employment. Nothing in the Plan or in any written agreement entered into pursuant to Article 16 hereof, nor the grant of any award, shall confer upon any employee any right to continue in the employ of the Corporation or a subsidiary or to be entitled to any remuneration or benefits not set forth in the Plan or such written agreement or interfere with or limit the right of the Corporation or a subsidiary to modify the terms of or terminate such employee's employment at any time. 17.6 Other Plans. Effective upon the adoption of the Plan by the stockholders, no further awards shall be made under The Toys 'R' Us, Inc. Stock Option Plan, originally adopted on April 7, 1978 and last amended and restated as of April 22, 1993 (the 'Prior Plan'). Thereafter, all awards made under the Prior Plan prior to adoption - 15 - of the Plan by the stockholders shall continue in accordance with the terms of the Prior Plan. 17.7 Notices. Notices required or permitted to be made under the Plan shall be sufficiently made if personally delivered to the employee or sent by regular mail addressed (a) to the employee at the employee's address as set forth in the books and records of the Corporation or its subsidiaries, or (b) to the Corporation or the Committee at the principal office of the Corporation clearly marked 'Attention: Stock Option Committee.' 17.8 Severability. In the event that any provision of the Plan shall be held illegal or invalid for any reason, such illegality or invalidity shall not affect the remaining parts of the Plan, and the Plan shall be construed and enforced as if the illegal or invalid provision had not been included. 17.9 Governing Law. To the extent not preempted by Federal law, the Plan, and all agreements hereunder, shall be construed in accordance with and governed by the laws of the State of New York. - 16 -
EX-10 4 EXHIBIT 10L TOYS 'R' US, INC. MANAGEMENT INCENTIVE COMPENSATION PLAN 1. DEFINITIONS 'Award' shall mean the amount payable to a Participant as determined by the Committee in accordance with this Plan as an annual incentive bonus for any Fiscal Year. 'Base Amount' shall have the meaning ascribed thereto in Section 4(b) hereof. 'Base Salary Percentage' shall have the meaning ascribed thereto in Section 4(c) hereof. 'Board of Directors' shall mean the Board of Directors of the Company. 'Code' shall mean the Internal Revenue Code of 1986, as amended, and references to particular provisions of the Code shall include any amendments thereto or successor provisions and any final, temporary or proposed rules and regulations promulgated thereunder. 'Committee' shall mean the Management Compensation and Stock Option Committee of the Board of Directors or any other duly established committee or subcommittee of the Board of Directors in each case satisfying the requirements of Section 162(m)(4)(C) of the Code that the Board of Directors hereinafter determines shall act as the Committee for purposes of the Plan. 'Company' shall mean Toys 'R' Us, Inc., a Delaware corporation. 'Covered Employee' shall mean any Participant who is deemed to be a 'covered employee' within the meaning of Section 162(m) of the Code. 'Financial Goals' shall have the meaning ascribed thereto in Section 4(a) hereof. 'Fiscal Year' shall mean the fiscal year of the Company ending on the Saturday closest to January 31 or such other period which the Company may hereafter adopt as its fiscal year. 'Participant' shall mean each management employee of the Company or its subsidiaries or divisions who has been designated for participation in the Plan by the Committee in accordance with Section 4 hereof. 'Plan' shall mean this Toys 'R' Us, Inc. Management Incentive Compensation Plan, as it may be amended from time to time. 'Pool Amount,' for any Fiscal Year, shall mean 0.5% of the consolidated pre-tax earnings of the Company, determined in accordance with generally accepted accounting principles consistently applied. 'Target' shall have the meaning ascribed thereto in Section 4(a) hereof. 2. PURPOSE The purpose of the Plan is to permit the Company, through awards of annual incentive compensation, to attract and retain qualified management employees and to motivate such management employees to achieve maximum profitability and stockholder returns. 3. ADMINISTRATION The Plan shall be administered by the Committee, which shall have full authority to interpret the Plan, to establish rules and regulations relating to the operation of the Plan, to determine the amount of any Awards (subject to the terms and conditions hereof) and to make all other determinations and take all other actions necessary or appropriate for the proper administration of the Plan. The Committee's interpretation of the Plan, and all actions taken within the scope of its authority, shall be final and binding on the Company, any Participants, former Participants or their designated beneficiaries, and other employees of the Company and its subsidiaries. No member of the Committee shall be eligible to participate in the Plan. 4. DETERMINATION OF TARGET, BASE AMOUNT AND BASE SALARY PERCENTAGE Prior to the beginning of each Fiscal Year (or with respect to the Fiscal Year ending January 28, 1995, prior to April 1, 1994), or prior to any later date to the extent the determinations set forth in this Section 4 may be made prior to a later date without causing any Award to fail to qualify as performance-based compensation under Section 162(m) of the Code (the 'Determination Date'), the Committee shall select the Participants for the Fiscal Year and adopt in writing, with respect to each Participant, each of the following: (a) a Target which shall be equal to a desired level for such Fiscal Year of any or a combination of the following: (i) pre-tax earnings, (ii) operating earnings, (iii) after-tax earnings, (iv) return on - 2 - investment or (v) earned value added (collectively, the 'Financial Goals'), in each case determined in accordance with generally accepted accounting principles (subject to modifications approved by the Committee) consistently applied for the Company on a consolidated basis; provided, however, that, with respect to Participants who are employees of any of the Company's divisions, the Financial Goals may be based on divisional rather than consolidated results, or a combination of the two; (b) a Base Amount, with respect to each Target, based upon one or more Financial Goals, representing a minimum amount which, if not exceeded, would result in no Award being made to the Participant; and (c) a Base Salary Percentage, representing the percentage of the Participant's base salary which shall be payable as an Award in the event that 100% of the Participant's Target is achieved. The Committee shall also determine on each Determination Date for each Participant a mathematical formula or matrix which shall indicate the extent to which Awards will be made if the Base Amount is exceeded, including if the Target is attained or exceeded, and the Committee may also determine on any Determination Date alternative formulas or matrices to account for potential or anticipated significant transactions or events during such Fiscal Year. 5. CALCULATION OF AWARDS; CERTIFICATION As soon as practicable after the close of each Fiscal Year in which any Participant is participating in the Plan, the Committee shall determine with respect to each Participant whether and the extent to which the applicable Base Amount is exceeded, including the extent to which, if any, the Target was attained or exceeded. Each Participant's Award, if any, for such Fiscal Year shall be determined in accordance with the mathematical formula or matrix determined pursuant to Section 4, and subject to the limitations set forth in Section 6 hereof. The Committee shall certify in writing to the Board of Directors the amounts of such Awards and whether each material term of the Plan relating to such Awards has been satisfied. 6. LIMITATIONS WITH RESPECT TO AWARDS Each Award determined pursuant to Section 5 hereof shall be subject to modification or forfeiture in accordance with the following provisions: - 3 - (a) No Participant shall have any right to receive payment of any Award unless the Participant remains in the employ of the Company or its subsidiaries through the date of certification of such Award; provided, however, that the Committee may, in its sole discretion, pay all or part of an Award to any Participant whose employment with the Company or its subsidiaries is terminated prior to such date of certification for any reason. The determination of the Committee shall be final and conclusive. (b) In no event shall Covered Employees, as a group, receive awards in excess of 100% of the Pool Amount for any Fiscal Year and in no event shall any Covered Employee receive an Award in excess of 35% of the Pool Amount for any Fiscal Year. Each Covered Employee's Award shall be reduced pro rata in the event that the foregoing 100% limitation is exceeded. (c) The Committee may, in its sole discretion, (i) increase or decrease the Award payable to any Participant who is not a Covered Employee and who would not become a Covered Employee as a result of such increase or (ii) decrease the Award payable to any Covered Employee (or increase such Award to the extent permitted under Section 162(m) of the Code), in each case, to reflect the individual performance and contribution of, and other factors relating to, such Participant. The determination of the Committee shall be final and conclusive. 7. PAYMENT OF AWARDS Subject to the limitations of Section 6 hereof, each Participant shall receive, as soon as practicable after the amount of such Participant's Award for a Fiscal Year has been determined and certified in accordance with Section 5 hereof, the amount of such Award in cash. 8. DESIGNATION OF BENEFICIARY A Participant may designate a beneficiary or beneficiaries who, in the event of the Participant's death prior to the payment of any Award earned hereunder, shall receive such payment when due under the Plan. Such designation shall be made by the Participant on a form prescribed by the Committee. The Participant may at any time change or revoke such designation. A beneficiary designation, or revocation of a prior beneficiary designation, will be effective only if it is made in writing on a form provided by the Company, signed by the Participant and received by the Company. If the Participant does not designate a beneficiary or the designated beneficiary dies prior to the - 4 - payment of any Award, any amounts remaining to be paid shall be paid to the Participant's estate. 9. ADJUSTMENTS If any Target or other criterion upon which Awards for any Fiscal Year is based shall have been affected by special factors (including material changes in accounting policies or practices, material acquisitions or dispositions of property, or other unusual or unplanned items) which in the Committee's judgment should or should not be taken into account, in whole or in part, in the equitable administration of the Plan, the Committee may, for any purpose of the Plan, adjust such Target or criterion for such Fiscal Year (and subsequent Fiscal Years, as appropriate) and make credits, payments and reductions accordingly under the Plan; provided, however, that the Committee shall not have the authority to make any such adjustments with respect to Awards paid to any Participant who is at such time a Covered Employee. 10. AMENDMENTS The Committee may at any time amend this Plan, provided that no such amendment shall be effective which alters the Award, Target or other criteria relating to an Award applicable to a Covered Employee for the Fiscal Year in which such amendment is made or any prior Fiscal Year, except any such amendment which may be made without the loss of any tax deduction to the Company under Section 162(m) of the Code. 11. TERMINATION The Board of Directors may terminate this Plan at any time; provided, however, that any Award determined and certified pursuant to Section 5 hereof but not yet paid as of the date of such termination shall be paid as soon as practicable, but in no event later than 30 days after the date of such termination. 12. MISCELLANEOUS PROVISIONS (a) This Plan is not a contract between the Company and any Participant or other employee. No Participant or other employee shall have any claim or right to be paid an Award under this Plan until the amount of such Award shall have been determined and certified in accordance with Section 5 hereof. Neither the establishment of this Plan, nor any action taken hereunder, shall be construed as giving any Participant or other employee any right to remain in the employ of the Company or its subsidiaries for any period. Nothing contained in this Plan shall limit the ability of the Company to make payments or awards to employees under any other plan, agreement or arrangement. - 5 - (b) A Participant's right and interest in any Award under the Plan may not be assigned or transferred, except as provided in Section 8 hereof, and any attempted assignment or transfer shall be null and void and shall permit the Committee, in its sole discretion, to extinguish the Company's obligation under the Plan to pay any Award with respect to such Participant. (c) The Plan shall be unfunded. The Company shall not be required to establish any special segregation of assets to assure payment of Awards. (d) The Company shall have the right to deduct at the time of payment of any Award any amounts required by law to be withheld for the payment of taxes or otherwise. (e) If the Company for any reason fails to make payment of an Award at the time such Award becomes payable, the Company shall not be liable for any interest or other charges thereon. (f) Except where federal law is applicable, the provisions of the Plan shall be governed by and construed in accordance with the laws of the State of New York. (g) If any provision of this Plan is found to be illegal or invalid or would cause any Award not to constitute performance-based compensation under Section 162(m)(4)(C) of the Code, the Committee shall have discretion to sever that provision from this Plan and, thereupon, such provision shall not be deemed to be a part of this Plan. (h) No member of the Board of Directors or the Committee, and no officer, employee or agent of the Company or its subsidiaries shall be liable for any act or action hereunder, whether of commission or omission, taken by any other member, or by any officer, agent, or employee, or, except in circumstances involving bad faith, for anything done or omitted to be done in the administration of the Plan. 13. EFFECTIVE DATE The Plan shall be effective beginning with the Fiscal Year ending January 28, 1995. - 6 - EX-13 5 EXHIBIT 13
TABLE OF CONTENTS - - ------------------------------------------------------------------------------------------------------------------- 1 Financial Highlights 2 Letters to Our Stockholders 6 Management's Discussion -- Results of Operations and Financial Condition 7 Financial Statements 15 Report of Management 15 Market Information 15 Report of Independent Auditors 16 Directors and Officers 17 Corporate Data
Toys 'R' Us is the world's largest and fastest growing children's specialty retail chain in terms of both sales and earnings. At January 29, 1994, the Company operated 581 toy stores in the United States, 234 international toy stores and 217 Kids 'R' Us children's clothing stores. STORE LOCATIONS TOYS 'R' US UNITED STATES -- 581 LOCATIONS Alabama - 7 Alaska - 1 Arizona - 10 Arkansas - 2 California - 74 Colorado - 9 Connecticut - 8 Delaware - 2 Florida - 36 Georgia - 14 Hawaii - 1 Idaho - 1 Illinois - 33 Indiana - 12 Iowa - 6 Kansas - 4 Kentucky - 7 Louisiana - 8 Maine - 2 Maryland - 16 Massachusetts - 16 Michigan - 23 Minnesota - 11 Mississippi - 3 Missouri - 12 Montana - 1 Nebraska - 3 Nevada - 3 New Hampshire - 5 New Jersey - 21 New Mexico - 3 New York - 36 North Carolina - 15 Ohio - 27 Oklahoma - 4 Oregon - 5 Pennsylvania - 27 Rhode Island - 1 South Carolina - 8 Tennessee - 11 Texas - 43 Utah - 5 Virginia - 17 Washington - 10 West Virginia - 3 Wisconsin - 11 Puerto Rico - 4 KIDS 'R' US -- 217 LOCATIONS Alabama - 1 Arizona - 4 California - 31 Connecticut - 6 Delaware - 1 Florida - 7 Georgia - 4 Illinois - 21 Indiana - 7 Iowa - 1 Kansas - 1 Maine - 2 Maryland - 8 Massachusetts - 4 Michigan - 13 Minnesota - 6 Missouri - 4 Nebraska - 1 New Hampshire - 2 New Jersey - 17 New York - 20 Ohio - 19 Pennsylvania - 14 Rhode Island - 1 Tennessee - 1 Texas - 5 Utah - 3 Virginia - 7 Wisconsin - 3 Puerto Rico - 3 TOYS 'R' US INTERNATIONAL -- 234 LOCATIONS Australia - 7 Austria -5 Belgium -2 Canada - 50 France - 25 Germany -44 Hong Kong - 4 Japan - 16 Malaysia - 2 Netherlands - 5 Portugal - 2 Singapore - 3 Spain - 17 Switzerland - 4 Taiwan - 3 United Kingdom - 45 [RECYCLED SYMBOL] Printed on recycled paper TOYS 'R' US, INC. AND SUBSIDIARIES FINANCIAL HIGHLIGHTS
(Dollars in millions except per share information) Fiscal Year Ended Jan. 29, Jan. 30, Feb. 1, Feb. 2, Jan. 28, Jan. 29, Jan. 31, Feb. 1, Feb. 2, Feb. 3, 1994 1993 1992 1991 1990 1989 1988 1987 1986 1985 - - ----------------------------------------------------------------------------------------------------------------------------- OPERATIONS: Net Sales..................... $ 7,946 $ 7,169 $ 6,124 $ 5,510 $ 4,788 $ 4,000 $ 3,137 $ 2,445 $ 1,976 $ 1,702 Net Earnings.................. 483 438 340 326 321 268 204 152 120 111 Earnings Per Share............ 1.63 1.47 1.15 1.11 1.09 .91 .69 .52 .41 .39 FINANCIAL POSITION AT YEAR END: Working Capital............... 633 797 328 177 238 255 225 155 181 222 Real Estate-Net............... 2,040 1,877 1,751 1,433 1,142 952 762 601 423 279 Total Assets.................. 6,150 5,323 4,583 3,582 3,075 2,555 2,027 1,523 1,226 1,099 Long-Term Obligations......... 724 671 391 195 173 174 177 85 88 88 Stockholders' Equity............ 3,148 2,889 2,426 2,046 1,705 1,424 1,135 901 717 579 NUMBER OF STORES AT YEAR END: Toys 'R' Us -- United States.. 581 540 497 451 404 358 313 271 233 198 Toys 'R' Us -- International.. 234 167 126 97 74 52 37 24 13 5 Kids 'R' Us................... 217 211 189 164 137 112 74 43 23 10
CONSOLIDATED NET SALES (BILLIONS) (GRAPHIC MATERIAL OMITTED) FISCAL YEAR 1984 $1,702 1985 1,976 1986 2,445 1987 3,137 1988 4,000 1989 4,788 1990 5,510 1991 6,124 1992 7,169 1993 7,946
TO OUR STOCKHOLDERS FINANCIAL HIGHLIGHTS We are pleased to report another excellent year for Toys 'R' Us. In 1993, we once again achieved record sales and earnings as well as significant market share gains. Since Toys 'R' Us became a public company, we have reported 15 consecutive years of sales and earnings increases, with an annual compounded growth rate over that period of 25%. Our sales reached $7.9 billion, an 11% increase over the $7.2 billion reported in the previous year. Pre-tax earnings increased 12% while net earnings rose to $483 million, a 10% increase over the $438 million in 1992. Earnings per share were $1.63 compared to $1.47 a year ago. Our stockholders' equity increased to $3.1 billion by the end of 1993. We achieved these outstanding results by having the best selection of merchandise, being stocked in depth, and by being competitive with our everyday low prices. Our strong performance also reflects several new marketing and merchandising initiatives implemented this year; including the wider distribution of our Holiday Toy Catalog, the expansion of Books 'R' Us shops within our U.S.A. toy stores and increased customer service initiatives. Our existing and new strategies contributed to comparable store sales increases in our U.S.A. toy stores of 6.5% in the fourth quarter and 3.3% for the year. These results are particularly impressive as they come on top of strong increases in each of the last two years. Internationally, Germany and Japan had comparable store sales decreases in their local currencies, reflecting the recessionary economic conditions in those countries. Canada, the United Kingdom, France and Spain had comparable store sales increases. We continue to be pleased with the acceptance of our new stores throughout the world. Our International division once again, demonstrated its ability to improve inventory management and increase labor and distribution productivity in spite of the difficult economic environment in Europe and Japan. [Photo of Robert C. Nakasone, President and Chief Operating Officer and Michael Goldstein, Vice Chairman and Chief Executive Officer.] We have created a franchising division that will enable us to bring additional countries into the Toys 'R' Us family on an accelerated basis, and provide for the opening of stores in additional parts of the world. We have already signed two franchise agreements which allow for the opening of Toys 'R' Us stores in the Middle East commencing in 1994. We will receive royalty and other related franchise service fees providing meaningful cash flow and earnings for our International division. Our Kids 'R' Us children's clothing stores' sales improved throughout the second half of the year, and despite a difficult apparel sales environment, ended the year with a slight increase. Operating profits increased approximately 25% following a 50% increase in 1992 reflecting the improved expense and inventory control as well as new marketing and merchandising strategies. Kids 'R' Us continues to make strategic improvements to increase its profitability. In 1993, four stores were closed and we anticipate closing another 15 to 20 stores which are not meeting expectations. Lastly, we announced a plan to buy back $1 billion of our common stock over the next several years. Even with our aggressive expansion, Toys 'R' Us expects to generate excess cash flow. We believe that in addition to investing in our ongoing business, the repurchase of Toys 'R' Us common stock will increase shareholder value. OPERATIONAL HIGHLIGHTS We are proud of our ability to provide our customers with the best selection of merchandise, stocked in depth with everyday low prices, while maintaining one of the lowest expense structures in the industry. The following highlights some 1993 accomplishments along with our plans for 1994. In 1993, we significantly expanded the distribution of our Holiday Toy Catalog providing our customers with even more coupons than in prior years. The catalog was very successful and allowed us to highlight the broad selection of merchandise that can be found at Toys 'R' Us. Customers used the catalog as a shopping aid throughout the Holiday season. We have continued testing various 'specialty shops' within our stores: the most notable being 'Books 'R' Us'. 2
CONSOLIDATED NET EARNINGS (MILLIONS) (GRAPHIC MATERIAL OMITTED) FISCAL YEAR 1984 $111 1985 120 1986 152 1987 204 1988 268 1989 321 1990 326 1991 340 1992 438 1993 483
The Books 'R' Us shops offer a broad selection of children's books and encourage children to read. In 1993, we added about 160 'Books 'R' Us' shops and plan to have over 300 shops by the end of 1994. We have also been experimenting with other shops such as construction toys, large outdoor playsets and stuffed animals. We believe that these shops help distinguish Toys 'R' Us from our competitors. Enhancing customer service continues to be a primary focus for Toys 'R' Us. In 1993, we expanded our successful 'Geoffrey Helper' program in both the U.S.A. and International toy stores. In 1994, we will install customer friendly in-aisle price scanners and other service oriented technology to assist our customers who are our number one priority. In 1990, we began remodeling about fifteen of our older U.S.A. toy stores each year. The remodeled stores enhance the customers' shopping experience while increasing in-store productivity. In 1993, we accelerated this program to about 25 stores and expect to remodel another 25 to 30 stores in 1994. The use of technology to control expenses is a priority at Toys 'R' Us. We again increased productivity and improved our ability to replenish stores by building an automated state-of-the-art distribution facility in southern Germany and retrofitting an existing facility in California with our new automated systems. In 1994, we plan to replace four U.S.A. toy distribution centers with two automated facilities in Missouri and Florida. Distribution facilities in France, Germany and Spain will also be retrofitted with new automated systems. All U.S.A. toy stores were provided with laser radio terminal (LRT) technology in 1993, which takes advantage of wireless radio frequency communications within our stores. This equipment enhances shelf replenishment and improves employee productivity. We installed satellite technology in North America. This technology instantaneously links our stores with our headquarters' computer databases as well as our customer transaction authorization networks in a more cost effective manner. We have also been able to utilize business television in our North American stores. STORE GROWTH In 1993, we opened 41 toy stores in the United States. Internationally, 67 stores opened in 11 countries, including our first stores in Australia, Portugal, Belgium, Switzerland and the Netherlands. For the first time, our International division opened more toy stores than the United States division. We also opened 10 Kids 'R' Us stores. At the end of 1993, we had 815 toy stores operating in 46 states and Puerto Rico, Canada; Europe -- the United Kingdom, Germany, France, Spain, Austria, Switzerland, the Netherlands, Belgium and Portugal; Asia -Japan, Hong Kong, Singapore, Malaysia and Taiwan; and Australia. We also had 217 Kids 'R' Us stores operating in 29 states. In 1994, we plan to open 40 to 45 toy stores in the U.S.A. and 65 to 70 stores internationally, including our first stores in Scandinavia. The new Scandinavian stores will be serviced from the United Kingdom. Once again, our anticipated opening of international stores will exceed the openings in the U.S.A. The international stores will capitalize on the existing infrastructure thereby enhancing the profitability of new
CONSOLIDATED STOCKHOLDERS' EQUITY (BILLIONS) (GRAPHIC MATERIAL OMITTED) FISCAL YEAR 1984 $ 579 1985 717 1986 901 1987 1,135 1988 1,424 1989 1,705 1990 2,046 1991 2,426 1992 2,889 1993 3,148
3 and existing stores. We plan to open about 10 new Kids 'R' Us stores. With our financial strength, we intend to capitalize on our strong competitive position throughout the world, by continued expansion to achieve greater sales, earnings and market share gains. CORPORATE CITIZENSHIP Toys 'R' Us maintains a corporate-wide giving program focusing on improving the health care needs of children by supporting many national and regional children's health care organizations. In 1993, we contributed funds to more than 10 new children's health care organizations. We expanded our Hospital Playroom Program in 1993 by opening 4 additional playrooms bringing the total to 18. This program fixtures and equips quality children's play centers in hospitals. We expect to expand our program into eight additional hospitals in 1994. Once again we were very involved in assisting those in need in the aftermath of the floods in the Midwest and the Southern California earthquake by providing free diapers and other basic consumables. Toys 'R' Us is a signatory to a Fair Share Agreement with the NAACP and has taken steps to support women and other minorities in the workplace. We are the leading purchaser of products from several minority-owned toy companies.
CONSOLIDATED NUMBER OF STORES (GRAPHIC MATERIAL OMITTED) FISCAL YEAR 1984 213 1985 269 1986 338 1987 424 1988 522 1989 615 1990 712 1991 812 1992 918 1993 1,032
NET SALES - INTERNATIONAL DIVISION (MILLIONS) (GRAPHIC MATERIAL OMITTED) FISCAL YEAR 1984 $ 14 1985 34 1986 101 1987 210 1988 368 1989 534 1990 773 1991 970 1992 1,374 1993 1,667
Toys 'R' Us continues to have a strong toy safety program which includes the inspection of directly imported toys. Furthermore, we continue to take numerous pro-active initiatives, including a leadership position in eliminating the sale of look-a-like toy guns. Through our new Books 'R' Us shops, we are promoting literacy by demonstrating to children that reading is fun. We introduced a reading initiative called Geoffrey's Reading Railroad which offers a free reading kit with prize incentives for reading up to nine books. In conjunction with the opening of Books 'R' Us shops, Toys 'R' Us reached out to the community and selected Reading Is Fundamental (RIF) as the recipient of a grant. Part of this grant went towards RIF's Project Open Book, a program that provides books to children in homeless shelters. HUMAN RESOURCES The excellence of our management team and associates enables Toys 'R' Us to expand aggressively and profitably. We have made the following important promotions and additions to our executive ranks: CORPORATE AND ADMINISTRATIVE: Michael J. Corrigan, Vice President -- Compensation and Benefits TOYS 'R' US, UNITED STATES: Lee Richardson, Vice President -- Advertising Karl S. Taylor, Vice President -- Merchandise Planning and Allocation TOYS 'R' US, INTERNATIONAL: Ken Bonning, Vice President -- Logistics Keith C. Spurgeon, Vice President -- Toys 'R' Us, Asia/Australia KIDS 'R' US: Virginia Harris, Senior Vice President -- General Merchandise Manager Lorna E. Nagler, Vice President -- Divisional Merchandise Manager 4
NUMBER OF COUNTRIES - INTERNATIONAL DIVISION (GRAPHIC MATERIAL OMITTED) FISCAL YEAR 1985 3 1986 4 1987 5 1988 6 1989 8 1990 8 1991 10 1992 11 1993 16 1994* 18
- - ----------- * Projected SUMMARY The exciting world of Toys 'R' Us continues to expand. We look forward to a strong year in 1994, with profit improvement in all three divisions. We will work hard to continue being the most trusted store in town. We value our excellent relationships with our innovative suppliers and commend them for their products, which create excitement in our stores. Our assessment of the February New York Toy Fair indicates an exciting year in basic categories such as crafts, construction, action figures, preschool and dolls with reasonably priced quality product. We recognize the dedication and quality work of our associates around the world who have made this another record year. Our appreciation is also extended to you, our stockholders, for your commitment and loyalty to Toys 'R' Us. Finally, we would like to thank Charles Lazarus, our founder and the Chairman of the Board for his confidence in us and the rest of the Toys 'R' Us team. He has created an impressive organization and a great legacy. We intend to fully meet his expectations and live up to the standards he set. Sincerely, /s/ Michael Goldstein Michael Goldstein Vice Chairman and Chief Executive Officer /s/ Robert C. Nakasone Robert C. Nakasone President and Chief Operating Officer March 30, 1994 [Photo of Charles Lazarus, Chairman of the Board] LETTER FROM THE CHAIRMAN Over the past 46 years since I opened my first toy store in Washington, D.C., I have seen Toys 'R' Us grow to become a sophisticated, multinational company with stores throughout the world. Many people have contributed to the success of our company, none more than Mike Goldstein, our new Vice Chairman and Chief Executive Officer, and Bob Nakasone, our new President and Chief Operating Officer. These appointments are an integral part of our succession planning process and give added responsibilities to our two most senior executives. In my new role, I will continue to be significantly involved with Toys 'R' Us in a variety of ways. First and foremost, I will ensure that the vision of Toys 'R' Us remains intact by visiting our U.S.A. and International operations. I will also be providing guidance in the development of new merchandising and marketing concepts. Lastly, I will be working with governmental officials throughout the world to ensure that Toys 'R' Us is able to continue its global expansion. I look forward to my new role and remain as excited about the future prospects of Toys 'R' Us today, as I first did more than four decades ago. /s/ Charles Lazarus Charles Lazarus Chairman of the Board 5 MANAGEMENT'S DISCUSSION -- RESULTS OF OPERATIONS AND FINANCIAL CONDITION RESULTS OF OPERATIONS* The Company has experienced sales growth in each of its last three years; sales were up 10.8% in 1993, 17.1% in 1992 and 11.1% in 1991. Part of the growth is attributable to the opening of 130 new U.S.A. toy stores, 137 international toy stores and 57 children's clothing stores during the three year period, and a portion of the increase is due to comparable U.S.A. toy store sales increases of 3.3%, 6.9% and 2.4% in 1993, 1992 and 1991, respectively. Cost of sales as a percentage of sales decreased to 69.2% in 1993 from 69.3% in 1992 and from 70.0% in 1991 due to a more favorable merchandise mix. Selling, advertising, general and administrative expenses as a percentage of sales increased to 18.8% in 1993 from 18.7% in 1992 primarily as a result of start-up costs for the opening of our new market in Australia. These expenses decreased in 1992 from 18.8% in 1991 as a result of labor productivity gains and other cost cutting measures. Interest expense increased in 1993 and 1992 compared to 1991 due to increased average borrowings, the mix between short-term and long-term borrowings and the mix between countries, partially offset by lower short-term interest rates. Short-term interest income increased during these periods due to an increase in cash available for investment. The effective tax rate increased to 37.5% in 1993 from 36.5% in 1992, due to a 1% increase in the U.S. Federal corporate income tax rate and an adjustment for the retroactive impact of this tax change. The effective tax rate decreased to 36.5% in 1992 from 37.0% in 1991, due to a change in the mix of foreign earnings and certain foreign tax benefits. The Company believes its deferred tax assets, as reported, are fully realizable. The Company believes that its risks attendant to foreign operations are minimal as it operates in sixteen different countries which are politically stable. International sales and operating earnings were unfavorably impacted by the translation of local currency results into U.S. dollars at lower average exchange rates in 1993 than in 1992. However, the strong dollar had a favorable impact on the cost of international capital investment in 1993. Inflation has had little effect on the Company's operations in the last three years. LIQUIDITY AND CAPITAL RESOURCES The Company continues to maintain a strong financial position as evidenced by its working capital of $633 million at January 29, 1994 and $797 million at January 30, 1993. The long-term debt to equity percentage is 23.0% at January 29, 1994 as compared to 23.2% at January 30, 1993. The Company plans to open 105 to 115 toy stores in 1994 in the United States, Australia, Austria, Belgium, Canada, France, Germany, Japan, the Netherlands, Portugal, Spain, Switzerland and the United Kingdom, as well as the new markets of Denmark and Sweden. Additionally, the Company plans to open about 10 Kids 'R' Us children's clothing stores and close approximately 15 to 20 stores (4 stores closed in 1993). The Company believes that the store closings will not have a significant impact on its financial position. The Company opened 108 toy stores in 1993, 84 in 1992 and 75 in 1991 and 10 Kids 'R' Us children's clothing stores in 1993, 23 in 1992 and 25 in 1991. Since 1981, the Company has purchased a significant portion of its real estate and plans to continue this policy. Generally, real estate acquisitions are financed through internally generated funds. For 1994, capital requirements for real estate, store and warehouse fixtures and equipment, leasehold improvements and other additions to property and equipment are estimated at $650 million (including real estate and related costs of $400 million). In 1993, the Company completed its five million share repurchase program and announced a new one billion dollar share repurchase program which will occur over the next several years. During the three years ended January 29, 1994, the Company repurchased 5,648,000 shares of its common stock for $210,477,000 pursuant to these programs. The repurchase of shares during 1994 is anticipated to be financed by internally generated funds. The seasonal nature of the business (approximately 49% of sales take place in the fourth quarter) typically causes cash to decline from the beginning of the year through October as inventory increases for the Christmas season and funds are used for land purchases and construction of new stores, which usually open in the first ten months of the year. Therefore, the Company has commitments and backup lines from numerous financial institutions to adequately support its short-term financing needs. Management expects that seasonal cash requirements will continue to be met primarily through operations, issuance of short-term commercial paper and bank borrowings for its foreign subsidiaries. Where appropriate, the Company may convert short-term borrowings to long-term debt to achieve a balance between fixed and variable interest rates. In this regard, during 1993 the Company's Japanese subsidiary borrowed 4 billion yen (approximately $36 million) at various interest rates with a third party in Japan. * References to 1993, 1992 and 1991 are for the 52 weeks ended January 29, 1994, January 30, 1993 and February 1, 1992, respectively. 6 TOYS 'R' US, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF EARNINGS
Year Ended - - -------------------------------------------------------------------------------------------------------------- (In thousands except per share information) January 29, January 30, February 1, 1994 1993 1992 Net sales............................................................... $7,946,067 $7,169,290 $6,124,209 Costs and expenses: Cost of sales........................................................... 5,494,766 4,968,555 4,286,639 Selling, advertising, general and administrative........................ 1,497,011 1,342,262 1,153,576 Depreciation and amortization........................................... 133,370 119,034 100,701 Interest expense........................................................ 72,283 69,134 57,885 Interest and other income............................................... (24,116) (18,719) (13,521) ---------- ---------- ---------- 7,173,314 6,480,266 5,585,280 ---------- ---------- ---------- Earnings before taxes on income......................................... 772,753 689,024 538,929 Taxes on income......................................................... 289,800 251,500 199,400 ---------- ---------- ---------- Net earnings............................................................ $ 482,953 $ 437,524 $ 339,529 ---------- ---------- ---------- ---------- ---------- ---------- Earnings per share...................................................... $ 1.63 $ 1.47 $ 1.15 ---------- ---------- ---------- ---------- ---------- ----------
See notes to consolidated financial statements. 7 TOYS 'R' US, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS
(In thousands) - - -------------------------------------------------------------------------------------------------------------- January 29, January 30, 1994 1993 ASSETS Current Assets: Cash and cash equivalents............................................................. $ 791,893 $ 763,721 Accounts and other receivables........................................................ 98,534 69,385 Merchandise inventories............................................................... 1,777,569 1,498,671 Prepaid expenses and other............................................................ 40,400 52,731 ---------- ---------- Total Current Assets.................................................................. 2,708,396 2,384,508 Property and Equipment: Real estate, net...................................................................... 2,035,673 1,876,835 Other, net............................................................................ 1,148,794 926,715 ---------- ---------- Total Property and Equipment.......................................................... 3,184,467 2,803,550 Other Assets.......................................................................... 256,746 134,794 ---------- ---------- $6,149,609 $5,322,852 ---------- ---------- ---------- ---------- LIABILITIES AND STOCKHOLDERS' EQUITY Current Liabilities: Short-term borrowings................................................................. $ 239,862 $ 120,772 Accounts payable...................................................................... 1,156,411 941,375 Accrued expenses and other current liabilities........................................ 471,782 361,661 Income taxes payable.................................................................. 206,996 163,841 ---------- ---------- Total Current Liabilities............................................................. 2,075,051 1,587,649 Deferred Income Taxes................................................................. 202,663 175,430 Long-Term Debt........................................................................ 710,365 660,488 Obligations Under Capital Leases...................................................... 13,248 10,264 Stockholders' Equity: Common stock.......................................................................... 29,794 29,794 Additional paid-in capital............................................................ 454,061 465,494 Retained earnings..................................................................... 3,012,806 2,529,853 Foreign currency translation adjustments.............................................. (56,021) 14,317 Treasury shares, at cost.............................................................. (292,358) (150,437) ---------- ---------- 3,148,282 2,889,021 ---------- ---------- $6,149,609 $5,322,852 ---------- ---------- ---------- ----------
See notes to consolidated financial statements. 8 TOYS 'R' US, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS
Year Ended - - ------------------------------------------------------------------------------------------------------------- (In thousands) January 29, January 30, February 1, 1994 1993 1992 CASH FLOWS FROM OPERATING ACTIVITIES Net earnings............................................................... $ 482,953 $ 437,524 $ 339,529 --------- --------- --------- Adjustments to reconcile net earnings to net cash provided by operating activities: Depreciation and amortization......................................... 133,370 119,034 100,701 Deferred income taxes................................................. 36,534 13,998 15,817 Changes in operating assets and liabilities: Accounts and other receivables...................................... (29,149) (5,307) 9,092 Merchandise inventories............................................. (278,898) (108,066) (115,436) Prepaid expenses and other operating assets......................... (39,448) (36,249) (16,176) Accounts payable, accrued expenses and other liabilities............ 325,165 112,232 462,152 Income taxes payable................................................ 26,588 40,091 7,071 --------- --------- --------- Total adjustments.......................................................... 174,162 135,733 463,221 --------- --------- --------- Net cash provided by operating activities............................. 657,115 573,257 802,750 --------- --------- --------- CASH FLOWS FROM INVESTING ACTIVITIES Capital expenditures, net.................................................. (555,258) (421,564) (548,538) Other assets............................................................... (58,383) (22,175) (17,110) --------- --------- --------- Net cash used in investing activities................................. (613,641) (443,739) (565,648) --------- --------- --------- CASH FLOWS FROM FINANCING ACTIVITIES Short-term borrowings, net................................................. 119,090 (170,887) (94,811) Long-term borrowings....................................................... 40,576 318,035 197,802 Long-term debt repayments.................................................. (1,335) (7,926) (1,590) Exercise of stock options.................................................. 29,879 86,323 32,707 Share repurchase program................................................... (183,233) (27,244) -- --------- --------- --------- Net cash provided by financing activities............................. 4,977 198,301 134,108 --------- --------- --------- Effect of exchange rate changes on cash and cash equivalents............... (20,279) (8,691) 38,378 CASH AND CASH EQUIVALENTS Increase during year....................................................... 28,172 319,128 409,588 Beginning of year.......................................................... 763,721 444,593 35,005 --------- --------- --------- End of year................................................................ $ 791,893 $ 763,721 $ 444,593 --------- --------- --------- --------- --------- ---------
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION The Company considers its highly liquid investments purchased as part of its daily cash management activities to be cash equivalents. During the years ended January 29, 1994, January 30, 1993 and February 1, 1992, the Company made income tax payments of $220,229, $151,722 and $155,469 and interest payments (net of amounts capitalized) of $104,281,$83,584 and $46,763, respectively. See notes to consolidated financial statements. 9 TOYS 'R' US, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
Common Stock ----------------------------- Issued In Treasury ----------------- -----------Additional paid-in Retained (In thousands) Shares Amount Amount capital earnings - - ------------------------------------------------------------------------------------------------------- Balance, February 2, 1991........................... 297,938 $ 29,794 ($ 129,340) $353,924 $1,752,800 Net earnings for the year........................... -- -- -- -- 339,529 Exercise of stock options (1,640 Treasury shares)... -- -- 1,623 15,259 -- Tax benefit from exercise of stock options.......... -- -- -- 15,620 -- -------- -------- ----------- --------- ---------- Balance, February 1, 1992........................... 297,938 29,794 (127,717) 384,803 2,092,329 Net earnings for the year........................... -- -- -- -- 437,524 Share repurchase program (708 Treasury shares)...... -- -- (27,244) -- -- Exercise of stock options (4,479 Treasury shares)... -- -- 4,524 35,301 -- Tax benefit from exercise of stock options.......... -- -- -- 45,390 -- -------- -------- ----------- --------- ---------- Balance, January 30, 1993........................... 297,938 29,794 (150,437) 465,494 2,529,853 Net earnings for the year........................... -- -- -- -- 482,953 Share repurchase program (4,940 Treasury shares).... -- -- (183,233) -- -- Exercise of stock options (1,394 Treasury shares)... -- -- 41,312 (21,464) -- Tax benefit from exercise of stock options.......... -- -- -- 10,031 -- -------- -------- ----------- --------- ---------- Balance, January 29, 1994........................... 297,938 $ 29,794 ($ 292,358) $454,061 $3,012,806 -------- -------- ----------- --------- ---------- -------- -------- ----------- --------- ----------
See notes to consolidated financial statements. 10 TOYS 'R' US, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - - -------------------------------------------------------------------------------- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - - -------------------------------------------------------------------------------- FISCAL YEAR The Company's fiscal year ends on the Saturday nearest to January 31. References to 1993, 1992 and 1991 are for the 52 weeks ended January 29, 1994, January 30, 1993 and February 1, 1992, respectively. PRINCIPLES OF CONSOLIDATION The consolidated financial statements include the accounts of the Company and its subsidiaries. All material intercompany balances and transactions have been eliminated. Assets and liabilities of foreign operations are translated at current rates of exchange at the balance sheet date while results of operations are translated at average rates in effect for the period. Translation gains or losses are shown as a separate component of stockholders' equity. The increase (decrease) in the foreign currency translation adjustment was ($70,338,000), ($33,650,000), and $7,539,000 for 1993, 1992 and 1991, respectively. MERCHANDISE INVENTORIES Merchandise inventories for the U.S.A. toy store operations, which represent over 66% of total inventories, are stated at the lower of LIFO (last-in, first-out) cost or market as determined by the retail inventory method. If inventories had been valued at the lower of FIFO (first-in, first-out) cost or market, inventories would show no change at January 29, 1994 or January 30, 1993. All other merchandise inventories are stated at the lower of FIFO cost or market as determined by the retail inventory method. PROPERTY AND EQUIPMENT Property and equipment are recorded at cost. Depreciation and amortization are provided using the straight-line method over the estimated useful lives of the assets or, where applicable, the terms of the respective leases, whichever is shorter. PREOPENING COSTS Preopening costs, which consist primarily of advertising, occupancy and payroll expenses, are amortized over expected sales to the end of the fiscal year in which the store opens. CAPITALIZED INTEREST Interest on borrowed funds is capitalized during construction of property and is amortized by charges to earnings over the depreciable lives of the related assets. Interest of $7,300,000, $8,403,000 and $12,237,000 was capitalized during 1993, 1992 and 1991, respectively. FINANCIAL INSTRUMENTS The carrying amounts reported in the balance sheets for cash and cash equivalents and short-term borrowings approximate their fair market values. FORWARD FOREIGN EXCHANGE CONTRACTS The Company enters into forward foreign exchange contracts to eliminate currency movement relating to certain transactions denominated in foreign currency. Gains and losses which offset the movement in the underlying transactions are recognized as part of such transactions. As of January 29, 1994, the Company had $290,000,000 of outstanding forward contracts maturing in 1994. There were no open contracts at January 30, 1993. The Company does not expect to incur any losses as a result of counterparty defaults. PROPERTY AND EQUIPMENT - - --------------------------------------------------------------------------------
Useful Life January 29, January 30, (In thousands) (in years) 1994 1993 - - -------------------------------------------------------------------------------------------------------- Land.................................................................... $ 693,737 $ 642,368 Buildings............................................................... 45-50 1,446,277 1,280,850 Furniture and equipment................................................. 5-20 953,360 809,772 Leaseholds and leasehold improvements................................... 12 1/2-50 658,191 510,780 Construction in progress................................................ 41,855 72,895 Leased property under capital leases.................................... 24,360 20,193 ---------- ---------- ---------- 3,817,780 3,336,858 Less accumulated depreciation and amortization.......................... 633,313 533,308 ---------- ---------- $3,184,467 $2,803,550 ---------- ---------- ---------- ----------
11 LONG-TERM DEBT - - --------------------------------------------------------------------------------
January 29, January 30, (In thousands) 1994 1993 - - --------------------------------------------------------------------------------------------------------------- Industrial revenue bonds, net of expenses (a)...........................................$ 74,208 $ 74,174 Mortgage notes payable at annual interest rates from 7 1/8% to 11% (b).................. 13,318 13,708 Japanese yen loans payable at annual interest rates from 3.85% to 6.46%, due in varying amounts through 2012.................................................................. 142,688 93,904 British pound sterling 11% Stepped Coupon Guaranteed Bonds, due 2017.................... 194,415 193,180 8 1/4% sinking fund debentures, due 2017, net of discounts.............................. 88,117 88,013 8 3/4% debentures, due 2021, net of expenses............................................ 197,978 197,906 ----------- ----------- 710,724 660,885 Less current portion.................................................................... 359 397 ----------- ----------- $ 710,365 $ 660,488 ----------- ----------- ----------- -----------
(a) Bank letters of credit of $57,135,000, expiring in 1995, support certain industrial revenue bonds. The Company expects the bank letters of credit expiring in 1995 will be renewed. The bonds have fixed or variable interest rates with an average of 2.5% at January 29, 1994. (b) Mortgage notes payable are collateralized by property and equipment with an aggregate carrying value of $18,628,000 at January 29, 1994. The fair market value of the Company's long-term debt at January 29, 1994 is approximately $846,000,000. The fair market value was estimated using quoted market rates for publicly traded debt and estimated current interest rates for non-public debt. The annual maturities of long-term debt at January 29, 1994 are as follows:
Year ending in (In thousands) - - ------------------------------------------------------------------------------------------- 1995..........................................................................$ 359 1996.......................................................................... 1,655 1997.......................................................................... 3,045 1998.......................................................................... 4,360 1999.......................................................................... 5,310 2000 and subsequent........................................................... 695,995 ------------- $ 710,724 ------------- -------------
LEASES - - -------------------------------------------------------------------------------- The Company leases a portion of the real estate used in its operations. Most leases require the Company to pay real estate taxes and other expenses; some require additional amounts based on percentages of sales. Obligations under capital leases require minimum payments as follows:
Year ending in (In thousands) - - ------------------------------------------------------------------------------------------- 1995..........................................................................$ 2,582 1996.......................................................................... 2,630 1997.......................................................................... 2,475 1998.......................................................................... 2,255 1999.......................................................................... 1,996 2000 and subsequent........................................................... 12,451 ------------- Total minimum lease payments.................................................. 24,389 Less amount representing interest............................................. 9,957 ------------- Obligations under capital leases.............................................. 14,432 Less current portion.......................................................... 1,184 ------------- $ 13,248 ------------- -------------
Minimum rental commitments under noncancellable operating leases having a term of more than one year as of January 29, 1994 were as follows:
Gross Net (In thousands) minimum Sublease minimum Year ending in rentals income rentals - - -------------------------------------------------------------------------------------------------------- 1995.......................................................................$ 207,664 $ 7,139 $ 200,525 1996....................................................................... 207,462 6,593 200,869 1997....................................................................... 204,867 5,754 199,113 1998....................................................................... 204,730 5,587 199,143 1999....................................................................... 203,461 4,688 198,773 2000 and subsequent........................................................ 2,770,005 31,359 2,738,646 ----------------------------- $3,798,189 $61,120 $3,737,069 ----------------------------- -----------------------------
Total rental expense was as follows:
Year ended - - ---------------------------------------------------------------------------------------------------------- January 29, January 30, February 1, (In thousands) 1994 1993 1992 - - ---------------------------------------------------------------------------------------------------------- Minimum rentals......................................................$ 180,118 $ 149,027 $ 118,583 Additional amounts computed as percentages of sales.................. 5,604 5,447 5,140 ------------------------------------- 185,722 154,474 123,723 Less sublease income................................................. 7,935 5,788 2,629 ------------------------------------- $ 177,787 $ 148,686 $ 121,094 ------------------------------------- -------------------------------------
12 STOCKHOLDERS' EQUITY The common shares of the Company, par value $.10 per share, were as follows:
January 29, January 30, (In thousands) 1994 1993 - - --------------------------------------------------------------------------------------------------------------- Authorized shares....................................................................... 550,000 550,000 ----------- ----------- ----------- ----------- Issued shares........................................................................... 297,938 297,938 ----------- ----------- ----------- ----------- Treasury shares......................................................................... 8,416 4,870 ----------- ----------- ----------- -----------
Earnings per share is computed by dividing net earnings by the weighted average number of common shares outstanding after reduction for treasury shares and assuming exercise of dilutive stock options computed by the treasury stock method using the average market price during the year. Weighted average numbers of shares used in computing earnings per share were as follows:
Year ended - - -------------------------------------------------------------------------------------------------------------- January 29, January 30, February 1, (In thousands) 1994 1993 1992 - - -------------------------------------------------------------------------------------------------------------- Common and common equivalent shares........................................ 296,463 297,718 296,139 ----------- ----------- ----------- ----------- ----------- -----------
TAXES ON INCOME The provisions for income taxes consist of the following:
Year ended - - -------------------------------------------------------------------------------------------------------------- January 29, January 30, February 1, (In thousands) 1994 1993 1992 - - -------------------------------------------------------------------------------------------------------------- Current: Federal............................................................... $ 200,303 $ 186,013 $ 138,779 Foreign............................................................... 17,259 15,605 15,378 State................................................................. 35,704 35,884 29,426 ----------- ----------- ----------- 253,266 237,502 183,583 ----------- ----------- ----------- Deferred: Federal............................................................... 49,961 17,187 19,545 Foreign............................................................... (16,186) (6,705) (7,678) State................................................................. 2,759 3,516 3,950 ----------- ----------- ----------- 36,534 13,998 15,817 ----------- ----------- ----------- Total...................................................................... $ 289,800 $ 251,500 $ 199,400 ----------- ----------- ----------- ----------- ----------- -----------
Deferred tax liabilities and deferred tax assets reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. The Company has gross deferred tax liabilities of $251.7 million at January 29, 1994 and $190.4 million at January 30, 1993 which consist primarily of temporary differences related to fixed assets of $194.0 million and $171.9 million, respectively. The Company had gross deferred tax assets of $92.8 million at January 29, 1994 and $63.8 million at January 30, 1993, which consist primarily of net operating losses of foreign start-up operations of $60.4 million and $38.5 million, and operating costs not currently deductible for tax purposes of $23.2 million and $18.6 million, respectively. Valuation allowances are not significant. A reconciliation of the federal statutory tax rate with the effective tax rate follows:
Year ended - - ----------------------------------------------------------------------------------------------------------------- January 29, January 30, February 1, (In thousands) 1994 1993 1992 - - ----------------------------------------------------------------------------------------------------------------- Statutory tax rate........................................................... 35.0% 34.0% 34.0% State income taxes, net of federal income tax benefit........................ 3.2 4.0 4.1 Foreign...................................................................... (0.5) (1.2) (0.5) Other, net................................................................... (0.2) (0.3) (0.6) ----- ----- ---- 37.5% 36.5% 37.0% ----- ----- ---- ----- ----- ----
Deferred income taxes were not provided on unremitted earnings of foreign subsidiaries that are intended to be indefinitely invested. Unremitted earnings were approximately $101 million at January 29, 1994, exclusive of amounts that if remitted would result in little or no tax under current U.S. tax laws. Net income taxes of approximately $35 million would be due if these earnings were to be remitted. PROFIT SHARING PLAN The Company has a profit sharing plan with a 401(k) salary deferral feature for eligible domestic employees. The terms of the plan call for annual contributions by the Company as determined by the Board of Directors, subject to certain limitations. The profit sharing plan may be terminated at the Company's discretion. Provisions of $29,961,000, $29,824,000 and $15,513,000 have been charged to operations in 1993, 1992 and 1991, respectively. 13 STOCK OPTIONS - - ------------- The Company has Stock Option Plans (the 'Plans'), including a new plan subject to shareholder approval, which provide for the granting of options to purchase the Company's common stock to substantially all employees and non-employee directors of the Company. The Plans provide for the issuance of non-qualified options, incentive stock options, performance share options, performance units, stock appreciation rights, restricted shares and unrestricted shares. The majority of the options become exercisable four years and nine months from the date of grant. Certain non-qualified options become exercisable nine years from the date of grant, however the exercise date of all or a portion of such options may be accelerated if the price of the Company's common stock reaches certain target amounts. The options granted to non-employee directors are exercisable 20% each year on a cumulative basis commencing one year from the date of grant. In addition to the aforementioned Plans, stock options aggregating 6,659,375 shares were granted to certain senior executives during the period from 1984 to 1993 pursuant to individual plans. These options are exercisable 20% each year on a cumulative basis commencing one year from the date of grant. The exercise price per share of all options granted has been the market price of the Company's common stock on the date of grant. Outstanding options must be exercised within ten years from the date of grant. At January 29, 1994, 13,327,781 shares were available for future grants under the Plans and 4,807,607 options were exercisable. All outstanding options expire at dates varying from May 1994 to December 2003. At January 29, 1994, an aggregate of 30,574,872 shares of authorized common stock was reserved for all of the Plans noted above. Stock option transactions are summarized as follows:
Shares Under Option - - ---------------------------------------------------------------------------------------- (In thousands except price range) Incentive Non-Qualified Price Range - - ---------------------------------------------------------------------------------------- Outstanding January 30, 1993............ 752 13,201 $7.03 - 39.63 Granted................................. -- 5,645 36.44 - 40.94 Exercised............................... (224) (1,170) 7.03 - 36.94 Cancelled............................... (1) (956) 9.74 - 39.88 --------- ------ ------------- Outstanding January 29, 1994............ 527 16,720 $7.68 - 40.94 --------- ------ ------------- --------- ------ -------------
The exercise of non-qualified stock options results in state and federal income tax benefits to the Company related to the difference between the market price at the date of exercise and the option price. During 1993, 1992 and 1991, $10,031,000, $45,390,000 and $15,620,000, respectively, was credited to additional paid-in capital. FOREIGN OPERATIONS - - ------------------ Certain information relating to the Company's foreign operations is set forth below. Corporate assets include all cash and cash equivalents and other related assets.
Year ended - - ---------------------------------------------------------------------------------------- January 29, January 30, February 1, (In thousands) 1994 1993 1992 - - ---------------------------------------------------------------------------------------- Sales Domestic........................ $6,278,591 $5,795,119 $5,154,215 Foreign......................... 1,667,476 1,374,171 969,994 ---------- ---------- ---------- Total............................. $7,946,067 $7,169,290 $6,124,209 ---------- ---------- ---------- ---------- ---------- ---------- Operating Profit Domestic........................ $724,818 $647,640 $527,695 Foreign......................... 102,923 101,132 62,846 General corporate expenses........ (6,821) (9,333) (7,248) Interest expense, net............. (48,167) (50,415) (44,364) ---------- ---------- ---------- Earnings before taxes on income... $772,753 $689,024 $538,929 ---------- ---------- ---------- ---------- ---------- ---------- Identifiable Assets Domestic........................ $3,630,921 $3,277,527 $3,095,178 Foreign......................... 1,694,565 1,248,827 1,009,455 Corporate....................... 824,123 796,498 477,975 ---------- ---------- ---------- Total............................. $6,149,609 $5,322,852 $4,582,608 ---------- ---------- ---------- ---------- ---------- ----------
QUARTERLY FINANCIAL DATA - - ------------------------ The following table sets forth certain unaudited quarterly financial information.
(In thousands except First Second Third Fourth per share information) Quarter Quarter Quarter Quarter - - ---------------------------------------------------------------------------------------------------------- YEAR ENDED JANUARY 29, 1994 - - --------------------------- Net Sales.......................... $1,286,479 $1,317,012 $1,449,118 $3,893,458 Cost of Sales...................... 882,876 902,414 982,151 2,727,325 Net Earnings....................... 35,436 35,505 37,457 374,555 Earnings per Share................. $.12 $.12 $.13 $1.27 YEAR ENDED JANUARY 30, 1993 - - --------------------------- Net Sales.......................... $1,172,476 $1,249,144 $1,345,835 $3,401,835 Cost of Sales...................... 809,929 864,511 922,619 2,371,496 Net Earnings....................... 28,304 32,709 36,796 339,715 Earnings per Share................. $.10 $.11 $.12 $1.14
14 REPORT OF MANAGEMENT - - -------------------- Responsibility for the integrity and objectivity of the financial information presented in this Annual Report rests with Toys 'R' Us management. The accompanying financial statements have been prepared from accounting records which management believes fairly and accurately reflect the operations and financial position of the Company. Management has established a system of internal controls to provide reasonable assurance that assets are maintained and accounted for in accordance with its policies and that transactions are recorded accurately on the Company's books and records. The Company's comprehensive internal audit program provides for constant evaluation of the adequacy of the adherence to management's established policies and procedures. The Company has distributed to key employees its policies for conducting business affairs in a lawful and ethical manner. The 1993 and 1992 financial statements of the Company have been audited by Ernst & Young, independent auditors, in accordance with generally accepted auditing standards, including a review of financial reporting matters and internal controls to the extent necessary to express an opinion on the consolidated financial statements. /s/ Michael Goldstein /s/ Louis Lipschitz Michael Goldstein Louis Lipschitz Vice Chairman and Senior Vice President-Finance Chief Executive Officer and Chief Financial Officer MARKET INFORMATION - - ------------------ The Company's common stock is listed on the New York Stock Exchange. The following table reflects the high and low prices (rounded to the nearest one-eighth) based on New York Stock Exchange trading since February 1, 1992. The Company has not paid any cash dividends and a change in this policy is not under consideration by the Board of Directors. The number of stockholders of record of common stock on March 9, 1994 was approximately 25,500.
High Low - - ---------------------------------------------------------------------- 1992 1st Quarter 38 5/8 30 3/8 2nd Quarter 37 1/8 31 3rd Quarter 41 34 3/4 4th Quarter 41 1/4 35 5/8 1993 1st Quarter 42 3/8 36 5/8 2nd Quarter 39 3/4 32 3/8 3rd Quarter 40 3/8 33 3/4 4th Quarter 42 7/8 36
REPORT OF INDEPENDENT AUDITORS - - ------------------------------ The Board of Directors and Stockholders Toys 'R' Us, Inc. We have audited the accompanying consolidated balance sheets of Toys 'R' Us, Inc. and subsidiaries, as of January 29, 1994 and January 30, 1993, and the related consolidated statements of earnings, stockholders' equity and cash flows for the years then ended. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audit. The consolidated statements of earnings, stockholders' equity and cash flows of Toys 'R' Us, Inc. and subsidiaries for the year ended February 1, 1992 were audited by other auditors whose report dated March 11, 1992, expressed an unqualified opinion on those statements. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the 1993 and 1992 financial statements referred to above present fairly, in all material respects, the consolidated financial position of Toys 'R' Us, Inc. and subsidiaries at January 29, 1994 and January 30, 1993 and the consolidated results of their operations and their cash flows for the years then ended in conformity with generally accepted accounting principles. /s/ Ernst & Young New York, New York March 9, 1994 15 DIRECTORS AND OFFICERS - - ---------------------- DIRECTORS - - --------- CHARLES LAZARUS Chairman of the Board of the Company ROBERT A. BERNHARD Real Estate Developer MICHAEL GOLDSTEIN Vice Chairman and Chief Executive Officer of the Company MILTON S. GOULD Attorney-at-law; Partner - Shea & Gould SHIRLEY STRUM KENNY President, Queens College of The City University of New York REUBEN MARK Chairman and CEO Colgate-Palmolive Company HOWARD W. MOORE Former Executive Vice President-General Merchandise Manager of the Company; Consultant ROBERT C. NAKASONE President and Chief Operating Officer of the Company NORMAN M. SCHNEIDER Former Chairman, Leisure Products Division of Beatrice Foods Company; Consultant HAROLD M. WIT Managing Director, Allen & Company Incorporated; Investment Bankers OFFICERS - CORPORATE AND ADMINISTRATIVE - - --------------------------------------- MICHAEL GOLDSTEIN Vice Chairman and Chief Executive Officer ROBERT C. NAKASONE President and Chief Operating Officer DENNIS HEALEY Senior Vice President - Management Information Systems LOUIS LIPSCHITZ Senior Vice President-Finance and Chief Financial Officer MICHAEL P. MILLER Senior Vice President-Real Estate JEFFREY S. WELLS Senior Vice President-Human Resources GAYLE C. AERTKER Vice President - Real Estate MICHAEL J. CORRIGAN Vice President - Compensation and Benefits JONATHAN M. FRIEDMAN Vice President - Controller EILEEN C. GABRIEL Vice President - Information Systems JON W. KIMMINS Vice President - Treasurer MATTHEW J. LOMBARDI Vice President - Information Technology ERIC A. SWARTWOOD Vice President - Architecture and Construction MICHAEL L. TUMOLO Vice President - Real Estate Counsel PETER W. WEISS Vice President - Taxes ANDRE WEISS Secretary-Attorney-at-law; Partner-Schulte Roth & Zabel TOYS 'R' US UNITED STATES - OFFICERS AND GENERAL MANAGERS - - --------------------------------------------------------- ROGER V. GODDU Executive Vice President- General Merchandise Manager VAN H. BUTLER Senior Vice President - Marketing and Divisional Merchandise Manager BRUCE C. HALL Senior Vice President - Store Operations and Support Services MICHAEL J. MADDEN Senior Vice President - Distribution THOMAS J. REINEBACH Senior Vice President - Chief Financial Officer ERNEST V. SPERANZA Senior Vice President - Advertising/Marketing ROBERT J. WEINBERG Senior Vice President - Divisional Merchandise Manager KRISTOPHER M. BROWN Vice President - Distribution Operations RICHARD N. CUDRIN Vice President- Employee and Labor Relations HARVEY J. FINKEL Vice President - Operations MARTIN FOGELMAN Vice President - Divisional Merchandise Manager LEE RICHARDSON Vice President - Advertising JOHN P. SULLIVAN Vice President - Divisional Merchandise Manager KARL S. TAYLOR Vice President - Merchandise Planning and Allocation GENERAL MANAGERS ROBERT F. PRICE Vice President New York/Northern New Jersey LARRY D. GARDNER Pacific Northwest/Alaska MICHAEL A. GERETY Georgia/South Carolina/Tennessee/Alabama GARY H. GILLIARD Colorado/Utah/New Mexico/Montana MARK H. HAAG Southern California/Arizona/Nevada/Hawaii DANIEL D. HLAVATY Central Ohio/Indiana/Kentucky DEBRA M. KACHURAK New England RICHARD A. MOYER S. Texas/Louisiana/Mississippi GERALD S. PARKER Northern California JOHN J. PRAWLOCKI Florida/Puerto Rico J. MICHAEL ROBERTS Pennsylvania/Delaware/Southern New Jersey EDWARD F. SIEGLER Kansas/Missouri/Iowa/Nebraska CARL P. SPAULDING N.E. Ohio/W. Pennsylvania/N. New York WILLIAM A. STEPHENSON Illinois/Wisconsin/Minnesota JOHN P. SUOZZO Maryland/Virginia/North Carolina BRIAN L. VOORHEES N. Texas/Oklahoma/Arkansas DENNIS J. WILLIAMS Michigan/N.W. Ohio 16 KIDS 'R' US - OFFICERS - - ---------------------- RICHARD L. MARKEE President VIRGINIA HARRIS Senior Vice President - General Merchandise Manager JAMES L. EASTON Vice President - Divisional Merchandise Manager JEREL G. HOLLENS Vice President - Merchandise Planning and Management Information Systems DEBRA G. HYMAN Vice President - Divisional Merchandise Manager ELIZABETH S. JORDAN Vice President - Human Resources LORNA E. NAGLER Vice President - Divisional Merchandise Manager JAMES G. PARROS Vice President - Stores and Physical Distribution TOYS 'R' US INTERNATIONAL - OFFICERS AND COUNTRY MANAGEMENT - - ----------------------------------------------------------- LARRY D. BOUTS President GREGORY R. STALEY Senior Vice President - General Merchandise Manager LAWRENCE H. MEYER Vice President - Chief Financial Officer PHILIP BLOOM Vice President - General Merchandise Manager KEN BONNING Vice President-Logistics JOSEPH GIAMELLI Vice President - Information Systems ADAM SZOPINSKI Vice President - Operations KEITH VAN BEEK Vice President - Development COUNTRY MANAGEMENT DAVID RURKA President - Toys 'R' Us Europe Managing Director - Toys 'R' Us Holdings PLC (United Kingdom) ARNT KLOSER President - Toys 'R' Us Central Europe Managing Director - TRU A.G. (Switzerland) JACQUES LE FOLL President - Toys 'R' Us S.A.R.L. (France) CARL OLSEN Managing Director - Toys 'R' Us (Australia) Pty. Ltd. GUILLERMO PORRATI Managing Director - Toys 'R' Us Iberia, S.A. (Spain) MANABU TAZAKI President - Toys 'R' Us Japan, Ltd. ELLIOTT WAHLE President - Toys 'R' Us (Canada) Ltd. KEITH C. SPURGEON Vice President-Asia/Australia SCOTT CHEN General Manager - Toys 'R' Us Lifung Taiwan Limited MICHAEL YEO General Manager - Toys 'R' Us Metro Pte. Ltd. (Singapore) CORPORATE DATA - - -------------- ANNUAL MEETING - - -------------- The Annual Meeting of the Stockholders of Toys 'R' Us will be held at the offices of the Company, 461 From Road, Paramus, New Jersey on Wednesday, June 8, 1994 at 10:00 a.m. STOCKHOLDER INFORMATION - - ----------------------- The Company will supply to any owner of Common Stock, upon written request to Mr. Louis Lipschitz of the Company at the address set forth below, and without charge, a copy of the Annual Report on Form 10-K for the year ended January 29, 1994, which has been filed with the Securities and Exchange Commission. COMMON STOCK LISTED - - ------------------- New York Stock Exchange, Symbol: TOY THE OFFICE OF THE COMPANY IS LOCATED AT - - --------------------------------------- 461 From Road Paramus, New Jersey 07652 Telephone: 201-262-7800 GENERAL COUNSEL - - --------------- Schulte Roth & Zabel 900 Third Avenue New York, New York 10022 INDEPENDENT AUDITORS - - -------------------- Ernst & Young 787 Seventh Avenue New York, New York 10019 REGISTRAR AND TRANSFER AGENT - - ---------------------------- American Stock Transfer and Trust Company 40 Wall Street New York, New York 10005 Telephone: 718-921-8200 [RECYCLED SYMBOL] Printed on recycled paper 17 EX-22 6 EXHIBIT 22 EXHIBIT 22 SUBSIDIARIES OF THE REGISTRANT AS OF JANUARY 29, 1994 Name Jurisdiction of Incorporation - - ---- ----------------------------- TRU, Inc. Delaware Geoffrey, Inc. Delaware Toys 'R' Us-NY Holdings, Inc. Delaware Toys 'R' Us-Ohio, Inc. Delaware Toys 'R' Us-Headquarters, Inc. Delaware KRU, Inc. Delaware Toys 'R' Us-Mass., Inc. Massachusetts ABG Corp. Nevada Toys 'R' Us-N.J., Inc. New Jersey Toys 'R' Us-NYTEX, Inc. New York Toys 'R' Us-N.Y. Limited Partnership New York Toys 'R' Us-Penn., Inc. Pennsylvania TRU of Puerto Rico, Inc. Puerto Rico Toys 'R' Us-Texas, Inc. Texas Toys 'R' Us Handelsgesellschaft m.b.H. Austria Toys 'R' Us (Australia) Pty, Ltd. Australia TRU (Barbados), Ltd. Barbados Toys 'R' Us - Belgium, N.V. Belgium Toys 'R' Us (Canada) Ltd. Ontario, Canada Geoffrey Toys (Canada) Ltd. Canada TRU (NRO) Investments Ltd. Alberta, Canada TRU (NRO) II Investments Ltd. Alberta, Canada Toys 'R' Us A/S Denmark Toys 'R' Us S.A.R.L. France Toys 'R' Us GmbH Germany Toys 'R' Us Operations GmbH Germany Toys 'R' Us Logistik GmbH Germany Toys 'R' Us Service GmbH Germany TRU (HK) Limited Hong Kong Toys 'R' Us Limited Hong Kong Toys 'R' Us S.r.l. Italy Toys 'R' Us-Japan, Ltd.* Japan Toys 'R' Us (Mexico), S.A. de C.V. Mexico TRU (Netherlands) B.V. Netherlands Toys 'R' Us (Netherlands) B.V. Netherlands Toys R Us Portugal, Limitada Portugal Toys 'R' Us-Singapore (Pte) Limited Singapore Toys R Us, Iberia, S.A. Spain Toys 'R' Us, Aktiebolag Sweden TRU Toys R Us AG Switzerland TRU AG, Switzerland Switzerland Toys 'R' Us Limited United Kingdom Toys 'R' Us Holdings PLC United Kingdom Toys 'R' Us Properties Limited United Kingdom
Other subsidiaries are omitted because considered in the aggregate such subsidiaries would not constitute a significant subsidiary. * 80% owned -----END PRIVACY-ENHANCED MESSAGE-----