SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------
FORM 11-K
ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
(Mark One)
[X] Annual report pursuant to Section 15(d) of the Securities Exchange Act of
1934
For the fiscal year ended December 27, 2002
[ ] Transition report pursuant to Section 15(d) of the Securities Exchange Act
of 1934
For the transition period from ______________ to ______________
Commission file number 001-08140
THE FLEMING 401(k) PLAN
FLEMING COMPANIES, INC.
1945 Lakepointe Drive
P.O. Box 299013
Lewisville, Texas 75029
Name of issuer of the securities held pursuant to the plan and the address of
its principal executive office
THE FLEMING 401(k) PLAN
TABLE OF CONTENTS
Page
Report of Independent Certified Public Accountants 3
Financial Statements
Statements of Net Assets Available for Benefits, December 27, 2002 and
December 28, 2001 4
Statement of Changes in Net Assets Available for Benefits, Year Ended
December 27, 2002 5
Notes to Financial Statements 6
Supplemental Schedules
Schedule of Nonexempt Transactions, Year Ended December 27, 2002 12
Schedule of Assets Held for Investment Purposes, December 27, 2002 13
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
Plan Sponsor and Trustee
The Fleming 401(k) Plan
We have audited the accompanying statements of net assets available for benefits
of The Fleming 401(k) Plan as of December 27, 2002 and December 28, 2001, and
the related statement of changes in net assets available for benefits for the
year ended December 27, 2002. These financial statements are the responsibility
of the Plan's management. Our responsibility is to express an opinion on these
financial statements based on our audits.
We conducted our audits in accordance with auditing standards generally accepted
in the United States of America. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the net assets available for benefits of The Fleming
401(k) Plan as of December 27, 2002 and December 28, 2001, and the changes in
net assets available for benefits for the year ended December 27, 2002 in
conformity with accounting principles generally accepted in the United States of
America.
As discussed in Note H to the financial statements, Fleming Companies, Inc. and
its subsidiaries (the "Company") filed for reorganization under Chapter 11 of
the U.S. Bankruptcy Code. At this time, the Company cannot predict what
additional effects the reorganization might have on the Company's financial
condition, liquidity or results of operations or on the Plan's assets or
operations. The Plan's financial statements do not include any adjustments that
might result from these uncertainties.
Our audits were performed for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplemental schedules of nonexempt
transactions and assets held for investment purposes are presented for the
purpose of additional analysis and are not a required part of the basic
financial statements but are supplemental information required by the Department
of Labor's Rules and Regulations for Reporting and Disclosure under the Employee
Retirement Income Security Act of 1974. These supplemental schedules are the
responsibility of the Plan's management. Such supplemental schedules have been
subjected to the auditing procedures applied in the audits of the basic
financial statements and, in our opinion, are fairly stated in all material
respects in relation to the basic financial statements taken as a whole.
GRANT THORNTON LLP
Oklahoma City, Oklahoma
May 23, 2003 (except for the last paragraph of Note H,
as to which the date is July 7, 2003)
THE FLEMING 401(k) PLAN
STATEMENTS OF NET ASSETS AVAILABLE FOR BENEFITS
DECEMBER 27, December 28,
2002 2001
------------- -------------
ASSETS
Investments $ 312,350,841 $ 392,358,149
Receivables
Employer contributions 9,542,805 7,162,780
Participant contributions 237,326 240,900
Accrued interest, dividends and other 5,173 217,208
------------- -------------
9,785,304 7,620,888
Cash 188,268 152,156
------------- -------------
Total assets 322,324,413 400,131,193
LIABILITIES
Accrued expenses 42,117 112,304
------------- -------------
NET ASSETS AVAILABLE FOR BENEFITS $ 322,282,296 $ 400,018,889
============= =============
The accompanying notes are an integral part of these statements.
4
THE FLEMING 401(k) PLAN
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS
Year ended December 27, 2002
Additions
Employer contributions $ 9,749,102
Participant contributions 25,829,629
Interest and dividend income 6,269,578
Net depreciation in fair value of investments (63,044,446)
Direct transfers from other plans 4,448,870
-------------
(16,747,267)
Deductions
Benefits paid to participants, including distributions
from a partial Plan termination 60,836,367
Administrative fees 152,959
-------------
60,989,326
-------------
NET DEDUCTIONS (77,736,593)
Net assets available for benefits at beginning of year 400,018,889
-------------
Net assets available for benefits at end of year $ 322,282,296
=============
The accompanying notes are an integral part of this statement.
5
THE FLEMING 401(k) PLAN
NOTES TO FINANCIAL STATEMENTS
December 27, 2002 and December 28, 2001
NOTE A - DESCRIPTION OF PLAN
The following description of The Fleming 401(k) Plan (the "Plan") provides
only general information. Participants should refer to the Plan for a more
complete description of the Plan's provisions. Effective January 1, 2002,
the Plan Sponsor ("Fleming Companies, Inc.") amended and restated the Plan.
Additionally, the Plan's name was changed to The Fleming 401(k) Plan from
the Fleming Companies, Inc. Matching 401(k) Plan.
The Plan, established in 1980, and amended and restated at various times, is
a defined contribution plan subject to the provisions of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA"). The Plan is
designed to provide retirement benefits to eligible employees of Fleming
Companies, Inc. and its subsidiaries (the "Company"). Employees are eligible
to participate in the Plan after achieving three months of service and
attaining 21 years of age, or participation in a prior plan.
During 2002, the Minter Weisman Company 401(k) Plan was merged into the
Plan. The Plan recognized a transfer of net assets at fair value of
$4,448,870.
Partial Plan terminations occurred during 2002 and 2001 due to restructuring
activities in 2002 and restructuring and the finalization of the strategic
plan by the Company in 2001. Due to the bankruptcy restructuring of the
Company, a partial Plan termination is expected to occur in 2003. Transfers
of Plan assets resulting from the partial Plan terminations are shown as
deductions in the accompanying financial statements.
Each year, participants may make deferrals of compensation contributions in
accordance with the provisions of Internal Revenue Code (the "Code") section
401(k) of at least 1%, but not more than 25% (15% in 2001), of the
participant's compensation, subject to certain limitations. Participant
deferral accounts are 100% vested. For the participants employed on the
last day of the Plan year, the Company will make a matching contribution
equal to (1) 100% of the participant's deferrals of compensation but not to
exceed the first 2% of such participant's compensation for such Plan year
and (2) 25% of the participant's additional deferrals of compensation on the
next 4% of such participant's compensation for such Plan year. A participant
is 100% vested in the Company's contribution after three years of credited
service (five years in 2001).
Effective January 1, 2002, the Company also makes an annual contribution on
behalf of certain participants of the Plan, as defined by the Plan, based on
the following years of service:
Contribution rate as
Years of credited service percentage of compensation
1-7 1%
8-15 2%
16-23 3%
24 or more 4%
The Company may revoke or alter its obligation to make Company contributions
by giving written notice to all participants at any time during the relevant
Plan year. This revocation or alteration will be effective on the date of
notice and applicable for the entire Plan year.
6
THE FLEMING 401(k) PLAN
NOTES TO FINANCIAL STATEMENTS - CONTINUED
December 27, 2002 and December 28, 2001
NOTE A - DESCRIPTION OF PLAN - CONTINUED
Separate accounts are maintained for each participant. Accounts are
classified as follows:
o Accounts attributable to Company contributions and related
investment earnings.
o Accounts attributable to contributions by participants under
section 401(k) of the Code and related investment earnings.
o Accounts attributable to contributions by participants on an
after-tax basis and related investment earnings. This account no
longer receives contributions.
Participants or beneficiaries, with certain limitations, may borrow from
their vested accounts a minimum of $500 up to a maximum of $50,000 or 50% of
their vested account balance, whichever is less. The loans are
collateralized by the balance in the participants' accounts and bear
interest at rates that are established by the Company's Retirement
Committee. At December 27, 2002, the interest rates ranged from 5.25% to
11.5%. All interest payments made under the terms of the loans will be
credited to the participants' accounts and not considered general earnings
of the Plan. Participants' loans are repaid monthly through payroll
deductions.
Benefits of the Plan are payable upon reaching normal retirement, early
retirement or termination, or in the event of death or disability. Lump-sum
distributions are the only distribution option available. In 2001, benefit
payments were available as either a lump sum or periodic installment for a
period of up to 15 years.
Upon termination of a participant's employment with the Company, the
nonvested portion of the Company's contribution account is used first to pay
Plan expenses and then to reduce future Company contributions. At December
27, 2002, forfeited nonvested accounts totaled approximately $513,000.
Approximately $377,000 in forfeitures were used to reduce the Company's 2002
matching contribution.
Participants may direct their contributions into 18 investment funds.
Participants should refer to the information provided by Fidelity Management
Trust Company for a complete description of the investment options.
The trustee for the Plan is Fidelity Management Trust Company. The trustee
also serves as custodian of the Plan's investments. The Plan provides for
the appointment of, and the Company has, a committee responsible for Plan
administration.
NOTE B - SUMMARY OF ACCOUNTING POLICIES
A summary of the Plan's significant accounting policies consistently applied
in the preparation of the accompanying financial statements follows.
1. Plan Year End
The Plan's fiscal year ends on the Friday before the last Saturday in
December.
7
THE FLEMING 401(k) PLAN
NOTES TO FINANCIAL STATEMENTS - CONTINUED
December 27, 2002 and December 28, 2001
NOTE B - SUMMARY OF ACCOUNTING POLICIES - CONTINUED
2. Investments
Mutual funds are stated at net asset value as determined based on the
closing market prices of the underlying investments held. Investments in
shares of collective trust funds are valued at their estimated fair values,
as determined in good faith by the trustee. Corporate common stocks are
valued based upon quoted market prices. Participant loans are valued at cost
which approximates fair value.
3. Cash
The Plan maintains its cash in accounts which may not be federally insured.
The Plan has not experienced any losses in such accounts and believes it is
not exposed to any significant credit risks on cash.
4. Administrative Fees
Certain expenses incurred in connection with the general administration of
the Plan are paid by the Plan and are recorded as administrative fees.
5. Use of Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect certain reported amounts and disclosures;
accordingly, actual results could differ from those estimates. Investment
securities, in general, are exposed to various risks, such as interest rate,
credit and overall market volatility. Due to the level of risk associated
with certain investment securities, it is reasonably possible that changes
in the values of investment securities will occur in the near term and that
such changes could materially affect the amounts reported in the statements
of net assets available for benefits.
8
THE FLEMING 401(k) PLAN
NOTES TO FINANCIAL STATEMENTS - CONTINUED
December 27, 2002 and December 28, 2001
NOTE C - INVESTMENTS
The Plan's investments are held by Fidelity Management Trust Company at
December 27, 2002 and December 28, 2001. The following is a schedule of
investments by type at:
December 27, 2002 December 28, 2001
----------------- -----------------
Mutual funds $ 274,312,259 $ 349,657,849
Collective trust funds 17,340,547 16,371,771
Corporate common stocks - Fleming Companies, Inc. (1) 12,678,694 16,807,823
Participant loans 8,019,341 8,129,341
Other -- 1,391,365
---------------- ----------------
$ 312,350,841 $ 392,358,149
================ ================
(1) The Company's stock held by the Plan has been delisted from the New York
Stock Exchange and its per-share price has declined from $6.57 per share
at December 31, 2002 to $0.17 per share at May 23, 2003.
The following table presents the fair value of investments that represent 5%
or more of the Plan's net assets available for benefits at:
December 27, 2002 December 28, 2001
----------------------------- -----------------------------
Number Fair Number Fair
of shares value of shares value
------------- ------------- ------------- -------------
Fidelity Contrafund 572,950 $ 22,115,868 645,165 $ 27,593,725
Fidelity Equity-Income Fund 575,685 22,837,414 635,435 30,990,156
Janus Twenty Fund 668,628 19,396,899 853,912 32,841,447
Fidelity Magellan Fund 834,903 65,923,913 956,168 99,651,872
Fidelity Managed Income Portfolio 17,340,547 17,340,547 16,371,771 16,371,771
Fidelity Puritan Fund 2,141,948 33,821,363 2,350,136 41,526,905
Fidelity Retirement Money Market Fund 49,336,964 49,336,964 51,856,946 51,856,946
Fidelity Intermediate Bond Fund 1,854,927 19,903,364 1,658,558 17,116,319
The following table presents the net depreciation (including gains and
losses on investments bought and sold, as well as held during the year) by
type of investment for the year ended December 27, 2002:
Mutual funds $(53,642,129)
Corporate common stocks - Fleming Companies, Inc. (9,402,317)
------------
$(63,044,446)
============
9
THE FLEMING 401(k) PLAN
NOTES TO FINANCIAL STATEMENTS - CONTINUED
December 27, 2002 and December 28, 2001
NOTE D - NONPARTICIPANT-DIRECTED INVESTMENTS
Information about the net assets and the significant components of the
changes in net assets relating to the nonparticipant-directed investments is
as follows at:
December 27, 2002 December 28, 2001
----------------- -----------------
Net assets
Limited partnerships $ -- $ 1,391,365
============== =============
Year ended
December 27, 2002
-----------------
Changes in net assets
Net appreciation $ 25,624
Distributions to participants (276,222)
Plan transfers (1,140,767)
--------------
$ (1,391,365)
==============
NOTE E - TAX STATUS
The Internal Revenue Service has determined and informed the Company in a
letter dated March 26, 2003 that the Plan, as amended on November 2, 2001,
meets the requirements of section 401(a) of the Code and is tax-exempt under
section 501(a) of the Code.
However, effective January 1, 2002, the Plan was amended and restated. The
Company has not yet received a determination letter from the Internal
Revenue Service for the amended and restated Plan. The Company believes that
the Plan currently is designed and is being operated in compliance with the
applicable requirements of the Code. Therefore, no provision for income
taxes is included in the Plan's financial statements.
NOTE F - PLAN TERMINATION
Although it has not expressed any intention to do so, the Company has the
right under the Plan to discontinue its contributions at any time and to
terminate the Plan subject to the provisions of ERISA. In the event of Plan
termination, all Plan assets, except those required to meet necessary
expenses incurred during the termination period, will be distributed on a
pro rata basis based on participants' account balances. Upon Plan
termination, all Company contributions would become 100% vested.
10
THE FLEMING 401(k) PLAN
NOTES TO FINANCIAL STATEMENTS - CONTINUED
December 27, 2002 and December 28, 2001
NOTE G - REFUNDS
The Plan approved refunds of $252,121 of excess contributions to highly
compensated members in 2001. Refunds were necessary in order to satisfy the
actual deferral percentage limitation, the actual contribution percentage
limitation and multiple-use test under Code section 401(m) for the year
ended December 28, 2001. The Code requires these refunds be made prior to
the end of the following year. These refunds were made within the first
three months after December 28, 2001. No such refunds were required for
2002.
NOTE H - SUBSEQUENT EVENTS
In January 2003, the Head Distributing Company 401(k) Plan and the Core-Mark
International Nest Egg Savings Plan were merged into the Plan. The Plan
recognized a transfer of net assets at fair value of approximately $31.5
million.
On April 1, 2003, the Company filed a voluntary petition for reorganization
under Chapter 11 of the U.S. Bankruptcy Code. Company contributions for the
2003 Plan year, if any, would require affirmative approval by the U.S.
Bankruptcy Court and would be contingent upon the financial condition of the
Company as of the due date in 2004 for such contributions. The Company's
stock held by the Plan has been delisted from the New York Stock Exchange
and its per-share price has declined from $6.57 per share at December 31,
2002 to $0.17 per share at May 23, 2003. The Company cannot predict what
additional effects the reorganization might have on the Company's financial
condition, liquidity or results of operations or on the Plan's assets or
operations. The Plan's financial statements do not include any adjustments
that might result from these uncertainties.
By letter dated March 6, 2003, the Employee Benefits Security Administration
of the United States Department of Labor (the "DOL") confirmed to the
Company that it had initiated an investigation of certain of the retirement
plans (including the Plan) sponsored by the Company (collectively, the
"Retirement Plans") pursuant to the authority provided by Section 504 of
ERISA. According to the confirmation letter from the DOL, the investigation
will consist of interviews and the review of records of the Retirement Plans
for the 2002 year through present.
The Company has provided access to the documents requested by the DOL and
will provide copies of such documents as requested. The Company has not
received any formal or informal results or finding from the DOL with respect
to its investigation.
On July 7, 2003, the Company and certain of its subsidiaries entered into an
Asset Purchase Agreement with C&S Wholesale Grocers, Inc. and C&S
Acquisition LLC (collectively, "C&S") regarding the sale of the Company's
wholesale grocery operations and assets to C&S, other than accounts
receivable and certain other excluded assets.
11
THE FLEMING 401(k) PLAN
SCHEDULE G, PART III - SCHEDULE OF NONEXEMPT TRANSACTIONS
Year ended December 27, 2002
Identity of party Relationship to Plan Description of transaction Cost/amount Interest incurred
----------------- -------------------- -------------------------- ----------- -----------------
Fleming Companies, Inc. Sponsor Remitted participant contributions $ 14,429 $ 1,738
between 60 and 31 days late ========= ==========
12
THE FLEMING 401(k) PLAN
SCHEDULE H, LINE 4i - ASSETS HELD FOR INVESTMENT PURPOSES
December 27, 2002
Identity of issuer, borrower, lessor Current
or similar party; description of investment Units Cost value
------------------------------------------- ----- ---- -----
Fidelity investments*
Asset Manager 151,188 ** $ 2,086,393
Asset Manager - Growth 268,953 ** 3,219,366
Asset Manager - Income 57,125 ** 620,379
Contrafund 572,950 ** 22,115,868
Equity-Income Fund 575,685 ** 22,837,414
Intermediate Bond Fund 1,854,927 ** 19,903,364
Magellan Fund 834,903 ** 65,923,913
Overseas Fund 188,116 ** 4,138,544
Puritan Fund 2,141,948 ** 33,821,363
Low-Priced Stock Fund 486,900 ** 12,255,282
Spartan US Equity Index 213,578 ** 6,652,941
Janus Worldwide Fund 279,479 ** 8,979,656
Janus Twenty Fund 668,628 ** 19,396,899
PIMCO High Yield Fund 181,060 ** 1,542,628
Templeton Developing Markets Trust A 148,128 ** 1,481,285
Managed Income Portfolio 17,340,547 ** 17,340,547
Retirement Money Market Portfolio 49,336,964 ** 49,336,964
--------------
Total Fidelity investments 291,652,806
Corporate common and preferred stocks
Fleming Companies, Inc.* 1,929,786 ** 12,678,694
Participant loans* (1) ** 8,019,341
--------------
TOTAL $ 312,350,841
==============
*Party in interest
**Cost omitted for participant-directed investments
(1) Participant loans, 5.25% to 11.5%, maturing at various dates through
September 2019
13
EXHIBIT INDEX
The following exhibit has been filed as part of this Form 11-K, and is
incorporated herein by reference.
EXHIBIT
NUMBER DESCRIPTION
------- -----------
23 Consent of Grant Thornton LLP
SIGNATURES
THE FLEMING 401(k) PLAN. Pursuant to the requirements of the Securities
Exchange Act of 1934, the trustees (or other persons who administer the employee
benefit plan) have duly caused this annual report to be signed on its behalf by
the undersigned hereunto duly authorized.
THE FLEMING 401(k) PLAN
FLEMING COMPANIES, INC.
By: /s/ D. Dee Jerome
---------------------------------------
D. Dee Jerome
(Member of the Fleming Companies, Inc.
retirement committee which administers
the Plan)
Date: July 10, 2003