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                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION

                             Washington, D.C. 20549

                                    FORM 10-Q

[X]  QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
     ACT OF 1934

     For the quarterly period ended November 7, 1998


                                       OR

[ ]  TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
     EXCHANGE ACT OF 1934

                           Commission File No. 1-13339

                                FRED MEYER, INC.
             (Exact name of registrant as specified in its charter)

             Delaware                                     91-1826443
 (State or other jurisdiction of                      (I.R.S. Employer
  incorporation or organization)                      Identification No.)

        3800 SE 22nd Avenue
          Portland, Oregon                                  97202
(Address of principal executive offices)                  (Zip Code)

                                 (503) 232-8844
              (Registrant's telephone number, including area code)


     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 [ ]

     Number of shares of Common Stock outstanding at December 5, 1998:
155,169,609



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<PAGE>
                                Table of Contents
--------------------------------------------------------------------------------

Items of Form 10-Q                                                          Page

Part I - FINANCIAL INFORMATION

      Item 1     Financial Statements ....................................     3

      Item 2     Management's Discussion and Analysis of Financial
                 Condition and Results of Operations......................    12

      Item 3     Quantitative and Qualitative Disclosures About
                 Market Risk..............................................    19


Part II - OTHER INFORMATION

      Item 6     Exhibits and Reports on Form 8-K.........................    20


Signatures ...............................................................    21

                                       2
<PAGE>
                         Part I - FINANCIAL INFORMATION
--------------------------------------------------------------------------------


Item 1. Financial Statements.
-----------------------------


     Consolidated Statements of Income (Unaudited)

<TABLE>
<CAPTION>
                                                                       12 Weeks Ended                     40 Weeks Ended
                                                                  ---------------------------         --------------------------
                                                                  November 7,     November 8,         November 7,    November 8,
                                                                        1998            1997                1998           1997
(In thousands, except per share data)                             -----------     -----------         -----------    -----------

<S>                                                               <C>             <C>                <C>             <C>        
Net sales                                                         $ 3,477,091     $ 1,945,543        $ 11,022,471    $ 4,996,582
Cost of goods sold                                                  2,432,708       1,370,439           7,740,401      3,515,612
                                                                  -----------     -----------        ------------     ----------
Gross margin                                                        1,044,383         575,104           3,282,070      1,480,970

Operating and administrative expenses                                 833,836         488,660           2,668,306      1,272,227
Amortization of goodwill                                               22,930           6,514              66,166          8,269
Merger related costs                                                   33,737               -             290,701              -
                                                                  -----------     -----------        ------------     ----------
Income from operations                                                153,880          79,930             256,897        200,474
Interest expense                                                       92,945          30,174             284,720         66,189
                                                                  -----------     -----------        ------------     ----------
Income (loss) before income taxes and extraordinary charge             60,935          49,756             (27,823)       134,285
Provision for income taxes                                             31,771          21,091              29,619         53,655
                                                                  -----------     -----------        ------------     ----------
Income (loss) before extraordinary charge                              29,164          28,665             (57,442)        80,630
Extraordinary charge, net of taxes                                       (324)        (91,210)           (217,934)       (91,210)
                                                                  -----------     -----------        ------------     ----------
Net income (loss)                                                 $    28,840     $   (62,545)       $   (275,376)    $  (10,580)
                                                                  ===========     ===========        ============     ==========
Basic earnings per common share:
  Income (loss) before extraordinary charge                       $      0.19     $      0.24        $      (0.38)    $     0.83
  Extraordinary charge                                                    -             (0.77)              (1.45)         (0.94)
                                                                  -----------     -----------        ------------     ----------
  Net income (loss)                                               $      0.19     $     (0.53)       $      (1.83)    $    (0.11)
                                                                  ===========     ===========        ============     ==========
  Basic weighted average number of common
    shares outstanding                                                154,690         118,331             150,601         97,355
                                                                  ===========     ===========        ============     ==========
Diluted earnings per common share:
  Income (loss) before extraordinary charge                       $      0.18     $      0.23        $      (0.38)    $     0.79
  Extraordinary charge                                                    -             (0.74)              (1.45)         (0.89)
                                                                  -----------     -----------        ------------     ----------
  Net income (loss)                                               $      0.18     $     (0.51)       $      (1.83)    $    (0.10)
                                                                  ===========     ===========        ============     ==========
  Diluted weighted average number of common and
    common equivalent shares outstanding                              162,127         123,546             150,601        101,562
                                                                  ===========     ===========        ============     ==========

See Notes to Consolidated Financial Statements.
</TABLE>

                                       3
<PAGE>
Consolidated Balance Sheets (Unaudited)

<TABLE>
<CAPTION>
                                                                        November 7,    January 31,
(In thousands)                                                                1998           1998
                                                                        -----------    -----------
Assets
<S>                                                                     <C>            <C>
Current assets:
     Cash and cash equivalents                                          $   186,045    $   117,311
     Receivables                                                            140,291        108,496
     Inventories                                                          2,007,875      1,240,866
     Prepaid expenses and other                                              60,540         70,536
     Current portion of deferred taxes                                      218,318         90,804
                                                                        -----------    -----------
Total current assets                                                      2,613,069      1,628,013

Property and equipment--net                                               3,570,974      2,432,040

Other assets:
     Goodwill--net                                                        3,684,442      1,279,130
     Long-term deferred tax assets                                          272,573              -
     Other                                                                  170,919         83,753
                                                                        -----------    -----------
Total other assets                                                        4,127,934      1,362,883
                                                                        -----------    -----------
Total assets                                                            $10,311,977    $ 5,422,936
                                                                        ===========    ===========
Liabilities and Stockholders' Equity
Current liabilities:
     Accounts payable                                                   $ 1,294,311    $   766,678
     Accrued expenses and other                                           1,051,905        407,167
     Current portion of long-term debt and lease obligations                134,650         19,650
                                                                        -----------    -----------
Total current liabilities                                                 2,480,866      1,193,495

Long-term debt                                                            4,999,856      2,184,794
Capital lease obligations                                                   173,341         82,782
Deferred lease transactions                                                  30,175         38,556
Deferred income taxes                                                             -         83,183
Other long-term liabilities                                                 478,492        137,766

Stockholders' equity:
     Common stock                                                             1,550          1,288
     Additional paid-in capital                                           1,895,533      1,173,760
     Notes receivable from officers                                            (335)          (298)
     Unearned compensation                                                   (3,236)          (466)
     Retained earnings                                                      255,735        528,076
                                                                        -----------    -----------
Total stockholders' equity                                                2,149,247      1,702,360
                                                                        -----------    -----------
Total liabilities and stockholders' equity                              $10,311,977    $ 5,422,936
                                                                        ===========    ===========
See Notes to Consolidated Financial Statements.
</TABLE>

                                       4
<PAGE>
Consolidated Statements of Cash Flows (Unaudited)

<TABLE>
<CAPTION>
                                                                                            40 Weeks Ended
                                                                                   -------------------------------
                                                                                   November 7,         November 8,
(In thousands)                                                                           1998                1997
                                                                                   -----------         -----------
<S>                                                                                <C>                 <C>
Cash flows from operating activities:
     Income (loss) before extraordinary charge                                     $   (57,442)        $    80,630
     Adjustments to reconcile income (loss) before extraordinary
        charge to net cash provided by operating activities:
          Depreciation and amortization of property and equipment                      270,039             141,807
          Amortization of goodwill                                                      66,166               8,269
          Deferred lease transactions                                                   (9,791)             (8,884)
          Merger related asset write-offs                                               89,231                   -
          Deferred income taxes                                                         26,586              (1,140)
          Changes in operating assets and liabilities:
           Receivables                                                                  (4,740)            (10,156)
           Inventories                                                                (170,119)           (189,050)
           Other current assets                                                         12,896              12,780
           Accounts payable                                                            198,018             138,750
           Accrued expenses and other liabilities                                          (98)             (5,953)
           Income taxes                                                                 19,628               6,235
          Other                                                                         16,930                 (35)
                                                                                   -----------         -----------
Net cash provided by operating activities                                              457,304             173,253
Cash flows from investing activities:
     Cash acquired in acquisitions                                                      66,519              71,476
     Payments made for acquisitions                                                   (173,847)           (419,402)
     Purchases of property and equipment                                              (497,616)           (250,302)
     Proceeds from sale of property and equipment                                       23,028              64,625
     Other                                                                             (27,096)              5,375
                                                                                   -----------         -----------
Net cash used for investing activities                                                (609,012)           (528,228)
Cash flows from financing activities:
     Issuance of common stock - net                                                     59,377             223,679
     Net increase in notes receivable                                                      319                 928
     Payment of deferred financing fees                                                (69,571)                  -
     Long-term financing:
        Borrowings                                                                   4,514,075           1,989,653
        Repayments                                                                  (4,288,488)         (1,728,105)
     Other                                                                               4,730                   -
                                                                                   -----------         -----------
Net cash provided by financing activities                                              220,442             486,155
                                                                                   -----------         -----------
Net increase in cash and cash equivalents for the period                                68,734             131,180
Cash and cash equivalents at beginning of year                                         117,311              63,340
                                                                                   -----------         -----------
Cash and cash equivalents at end of period                                         $   186,045         $   194,520
                                                                                   ===========         ===========


See Notes to Consolidated Financial Statements.
</TABLE>


                                       5
<PAGE>
Notes to Consolidated Financial Statements

1.   Organization

          Fred Meyer, Inc., a Delaware corporation, collectively with its
     subsidiaries ("Fred Meyer" or the "Company") is one of the largest food
     retailers in the United States, operating 830 supermarkets and
     multi-department stores located primarily in the Western portion of the
     United States. The Company operates multiple formats that appeal to
     customers across a wide range of income brackets including stores under the
     following banners: Fred Meyer, Smith's Food & Drug Centers, Smitty's, QFC,
     Ralphs, and Food 4 Less.

2.   Recent Events

          On October 19, 1998, the Company announced the signing of a definitive
     merger agreement with The Kroger Co. ("Kroger"), the largest retail grocery
     chain in the United States. On that date, Kroger operated 1,398 food
     stores, 802 convenience stores and 34 manufacturing facilities that
     manufacture products for sale in all Kroger divisions, as well as to
     external customers. Under the terms of the merger agreement, Fred Meyer
     stockholders will receive one newly issued share of Kroger common stock for
     each share of Fred Meyer common stock. The transaction will be accounted
     for as a pooling of interests. It is expected to close in early 1999
     subject to approval of Kroger and Fred Meyer stockholders and antitrust and
     other regulatory authorities and customary closing conditions. In
     anticipation of the intended merger with Kroger, the Company has secured
     approval from its banks to amend its 1998 Senior Credit Facility (as
     defined herein) as well as its operating lease facility. These proposed
     amendments are subject to completion of the merger and will be guaranteed
     by Kroger. The Company's outstanding senior notes due 2003 through 2008 are
     expected to remain outstanding after the merger. Additional information
     regarding the merger can be found in the Company's current report on Form
     8-K dated October 20, 1998.

          On December 6, 1998, Ralphs Grocery Company, a subsidiary of the
     Company, sold 38 grocery stores located in Kansas and Missouri to
     Associated Wholesale Grocers, Inc., a member-owned grocery cooperative.

3.   Acquisitions

          On March 9, 1998, Fred Meyer issued 41.2 million shares of Fred Meyer
     common stock for all the outstanding stock of Quality Food Centers, Inc.
     ("QFC"), a supermarket chain operating 89 stores in the Seattle/Puget Sound
     region of Washington state and 56 Hughes Family Markets stores in Southern
     California as of the date of the merger. As a result, QFC became a wholly
     owned subsidiary of Fred Meyer. The merger of Fred Meyer and QFC was
     accounted for as a pooling of interests and the accompanying financial
     statements reflect the consolidated results of Fred Meyer and QFC for all
     periods presented. The amounts included in the prior year results of
     operations from Fred Meyer and QFC are as follows (in thousands, except per
     share data):

<TABLE>
<CAPTION>
                                                             Fred Meyer        QFC          Total
                                                             Historical     Historical     Company
                                                             ----------     ----------     -------

     <S>                                                     <C>            <C>          <C>        
     12 Weeks Ended November 8, 1997

       Net sales                                             $1,460,372     $  485,171   $ 1,945,543
       Net income (loss)                                        (72,933)        10,388       (62,545)
       Diluted earnings (loss) per common share                   (0.89)          0.25         (0.51)

     40 Weeks Ended November 8, 1997

       Net sales                                              3,611,323      1,385,259     4,996,582
       Net income (loss)                                        (40,554)        29,974       (10,580)
       Diluted earnings (loss) per common share                   (0.64)          0.79         (0.10)
</TABLE>

                                       6
<PAGE>
          On March 10, 1998, the Company acquired Food 4 Less Holdings, Inc.
     ("Ralphs/Food 4 Less"), a supermarket chain operating 409 stores primarily
     in Southern California on that date, which became a wholly-owned subsidiary
     of the Company. The Company issued 21.7 million shares of common stock of
     the Company for all of the equity interests of Ralphs/Food 4 Less. The
     acquisition is being accounted for under the purchase method of accounting.
     The financial statements reflect the preliminary allocation of the purchase
     price and assumption of certain liabilities and include the operating
     results of Ralphs/Food 4 Less from the date of acquisition.

          In conjunction with the acquisitions of Ralphs/Food 4 Less and QFC,
     the Company entered into a settlement agreement with the State of
     California in which it agreed to divest 19 specific stores in Southern
     California to settle potential antitrust and unfair competition claims.
     Currently, the Company has sold five of the stores and has sale agreements
     or letters of intent on another 13 stores.

          On September 9, 1997, the Company succeeded to the businesses of Fred
     Meyer Stores, Inc. ("Fred Meyer Stores" and known as Fred Meyer, Inc. prior
     to September 9, 1997) and Smith's Food & Drug Centers, Inc. ("Smith's"). At
     the closing on September 9, 1997, Fred Meyer Stores and Smith's, a regional
     supermarket and drug store chain operating 152 stores in the Intermountain
     and Southwestern regions of the United States on that date, became wholly
     owned subsidiaries of the Company. The Company issued 1.05 shares of common
     stock of the Company for each outstanding share of Class A Common Stock and
     Class B Common Stock of Smith's and one share of common stock of the
     Company for each outstanding share of common stock of Fred Meyer Stores.

          The Smith's acquisition was accounted for under the purchase method of
     accounting. The financial statements reflect the allocation of the purchase
     price and assumption of certain liabilities and include the operating
     results of Smith's from the date of acquisition. In total, the Company
     issued 33.3 million shares of common stock to the Smith's stockholders.

          On August 17, 1997, the Company acquired substantially all of the
     assets and liabilities of Fox Jewelry Company ("Fox") in exchange for
     common stock with a fair value of $9.2 million. The Fox acquisition was
     accounted for under the purchase method of accounting. The results of
     operations of Fox do not have a material effect on the consolidated
     operating results, and therefore are not included in the pro forma data
     presented.

          On March 19, 1997, QFC acquired the principal operations of Hughes
     Markets, Inc. ("Hughes"), including the assets and liabilities related to
     57 stores located in Southern California and a 50% interest in Santee
     Dairies, Inc., one of the largest dairy plants in California. The merger
     was effected through the acquisition of 100% of the outstanding voting
     securities of Hughes for approximately $360.5 million in cash and the
     assumption of approximately $33.2 million of indebtedness of Hughes. The
     Hughes acquisition was accounted for under the purchase method of
     accounting. The financial statements reflect the allocation of the purchase
     price and assumption of certain liabilities and include the operating
     results of Hughes from the date of acquisition.

          On February 14, 1997, QFC acquired the principal operations of Keith
     Uddenberg, Inc. ("KUI"), including assets and liabilities related to 25
     stores in the western and southern Puget Sound region of Washington. The
     merger was effected through the acquisition of 100% of the outstanding
     voting securities of KUI for $34.5 million cash, 1.7 million shares of
     common stock and the assumption of approximately $23.8 million of
     indebtedness of KUI. The KUI acquisition was accounted for under the
     purchase method of accounting. The financial statements reflect the
     allocation of the purchase price and assumption of certain liabilities and
     include the operating results of KUI from the date of acquisition.

          Additionally, the Company completed the acquisition of food and fine
     jewelry stores during the 40 weeks ended November 7, 1998. On October 4,
     1998, the Company acquired 123 Littman Jewelers and 9 Barclays Jewelers
     stores located primarily in 10 states on the East coast. On October 1,
     1998, the Company acquired 13 Albertson's and Buttrey grocery stores in
     Montana and

                                       7
<PAGE>
     Wyoming. These acquisitions were accounted for under the purchase method of
     accounting. The results of operations for these acquired stores do not have
     a material effect on the consolidated operating results, and therefore are
     not included in the pro forma data presented.

          The following unaudited pro forma information presents the results of
     the Company's operations assuming the Ralphs/Food 4 Less, Smith's, QFC,
     KUI, and Hughes acquisitions occurred at the beginning of each period
     presented. In addition, the following unaudited pro forma information gives
     effect to refinancing certain debt as if such refinancing occurred at the
     beginning of each period presented (in thousands, except per share data):

<TABLE>
<CAPTION>
                                                                     40 Weeks Ended
                                                              -----------------------------
                                                              November 7,       November 8,
                                                                    1998              1997
                                                              -----------       -----------

     <S>                                                      <C>               <C>        
     Net sales                                                $11,568,003       $11,285,962
     Income (loss) before extraordinary charge                   (118,210)           55,684
     Net loss                                                    (336,144)         (161,926)
     Diluted earnings per common share:
       Income (loss) before extraordinary charge                    (0.77)             0.37
       Net loss                                                     (2.19)            (1.06)
</TABLE>

          The pro forma financial information does not reflect anticipated
     annualized operating savings and assumes all notes subject to the
     refinancings were redeemed pursuant to tender offers made. Additionally,
     each year includes an extraordinary charge of $217.9 million, net of the
     related tax benefit, on the extinguishment of debt as a result of
     refinancing certain debt. The pro forma financial information is not
     necessarily indicative of the operating results that would have occurred
     had the acquisitions been consummated as of the beginning of each period
     nor is it necessarily indicative of future operating results.

          The supplemental schedule of business acquisitions is as follows (in
     thousands):

<TABLE>
<CAPTION>
                                                      40 Weeks Ended
                                                 ----------------------------
                                                 November 7,      November 8,
                                                       1998             1997
                                                 -----------      -----------

     <S>                                         <C>              <C>        
     Fair value of assets acquired               $ 2,165,950      $ 2,055,091
     Goodwill recorded                             2,397,030        1,221,141
     Value of stock issued                          (652,514)        (767,145)
     Liabilities assumed                          (3,736,619)      (2,089,685)
                                                 -----------      -----------
     Cash paid                                   $   173,847      $   419,402
                                                 ===========      ===========
</TABLE>

4.   Summary of Significant Accounting Policies

          Basis of Presentation--The accompanying unaudited consolidated
     financial statements of the Company have been prepared in accordance with
     generally accepted accounting principles for interim financial information
     and in accordance with the instructions to Form 10-Q and Article 10 of
     Regulation S-X. Accordingly, the statements do not include all of the
     information and notes required by generally accepted accounting principles
     for complete financial statements. In the opinion of management, all
     adjustments of a normal recurring nature which are considered necessary for
     a fair presentation have been included. The consolidated results of
     operations presented herein are not necessarily indicative of the results
     to be expected for the year due to the seasonality of the Company's
     business. These consolidated financial statements should be read in
     conjunction with the financial statements and related notes incorporated by
     reference in the Company's latest annual report filed on Form 10-K.

                                       8
<PAGE>
          Fiscal Year--The Company's fiscal year ends on the Saturday closest to
     January 31. Fiscal year 1997 ended on January 31, 1998 ("1997") and fiscal
     year 1998 ends on January 30, 1999 ("1998"). As a result of its
     acquisition, QFC changed its year end to that of Fred Meyer beginning
     February 1, 1998, the first day of fiscal 1998. Revenues and expenses of
     QFC from the end of QFC's fiscal year 1997, ended on December 27, 1997, to
     February 1, 1998 (5 weeks) were immaterial and have been excluded from the
     statement of operations. Accordingly, net income of $3.3 million for that
     period has been added to retained earnings.

          Inventories--Inventories consist principally of merchandise held for
     sale and substantially all inventories are stated at the lower of last-in,
     first-out (LIFO) cost or market. Inventories on a first-in, first-out
     method, which approximates replacement cost, would have been higher by
     $66.9 million at November 7, 1998 and $51.8 million at January 31, 1998.
     The pretax LIFO charge in the third quarter was $4.1 million in 1998 and
     $2.1 million in 1997. The pretax LIFO charge for the first 40 weeks was
     $15.1 million in 1998 and $5.6 million in 1997.

          Goodwill--Goodwill is being amortized on a straight-line basis over 15
     to 40 years. Goodwill recorded in connection with the acquisition of
     Ralphs/Food 4 Less, Smith's, Hughes, and KUI (see Note 3) is being
     amortized over 40 years. Goodwill recorded in connection with the Fox
     acquisition is being amortized over 15 years. Management periodically
     evaluates the recoverability of goodwill based upon current and anticipated
     net income and undiscounted future cash flows.

          Use of Estimates--The preparation of financial statements in
     conformity with generally accepted accounting principles requires
     management to make estimates and assumptions that affect the reported
     amounts of assets and liabilities and disclosure of contingent assets and
     liabilities at the date of the financial statements. Actual results could
     differ from those estimates.

          Income Taxes--Deferred income taxes are provided for those items
     included in the determination of income or loss in different periods for
     financial reporting and income tax purposes. Targeted jobs and other tax
     credits are recognized in the year realized.

          Deferred income taxes are recognized for the tax consequences in
     future years of differences between the tax bases of assets and liabilities
     and their financial reporting amounts at each year end based on enacted tax
     laws and statutory tax rates applicable to the periods in which the
     differences are expected to affect taxable income. Income tax expense is
     the tax payable for the period and the change during the period in deferred
     tax assets and liabilities.

          Deferred tax assets recognized by the Company are presented net of any
     deferred tax liabilities and valuation allowance and consist primarily of
     net operating loss carryforwards. The deferred tax assets will be used to
     offset future tax liabilities generated from taxable income. However, the
     amount available to offset the consolidated tax liability will be limited
     by each subsidiary's tax circumstances and availability of its net
     operating loss carryforwards.

          Earnings per Share--Basic earnings per common share are computed by
     dividing net income by the weighted average number of common shares
     outstanding. Diluted earnings per common share are computed by dividing net
     income by the weighted average number of common and common equivalent
     shares outstanding which consist of outstanding stock options and warrants.
     Common equivalent shares are excluded from the diluted weighted average
     share and common equivalent shares outstanding for the first 40 weeks of
     1998 due to the net loss.

          Reclassifications--Certain prior period amounts have been reclassified
     to conform to current period presentation. The reclassifications have no
     effect on reported net income.

                                       9
<PAGE>
5.   Comprehensive Income

          Effective February 1, 1998, the Company adopted Statement of Financial
     Accounting Standards No. 130, "Reporting Comprehensive Income," which
     requires items previously reported as a component of stockholders' equity
     to be more prominently reported in a separate financial statement as a
     component of comprehensive income. Components of comprehensive income
     include net income (loss) and the income tax benefit the Company receives
     upon the exercise of stock options. Comprehensive income (loss) for the
     third quarter was $29.4 million in 1998 and $(60.4) million in 1997.
     Comprehensive loss for the first 40 weeks was $270.3 million in 1998 and
     $4.6 million in 1997.

6.   Long-term Debt

          Long-term debt consisted of the following (in thousands):

<TABLE>
<CAPTION>
                                                                                November 7,   January 31,
                                                                                      1998          1998
                                                                                -----------   -----------

     <S>                                                                        <C>            <C>       
     1997 Senior Credit Facility                                                $         -    $1,300,000
     1998 Senior Credit Facility                                                  2,448,750             -
     Senior notes, unsecured, due 2003 through 2008, fixed interest               1,750,000             -
       rate from 7.15% to 7.45%
     QFC Credit Facility                                                                          214,293
     Commercial paper with maturities through February 10, 1999,                    628,075       367,156
       classified as long-term, interest rates of 5.78% to 6.10%
       at August 15, 1998
     QFC 8.7% Senior Subordinated Notes, principal due 2007 with                      3,065       150,000
       interest payable semi-annually
     Long-term notes secured by trust deeds, due through 2016,                       59,941        61,075
       interest rates from 5.00% to 10.50%
     Uncommitted bank borrowings classified as long-term                             85,000        79,000
     Ralphs senior subordinated notes, due 2002 through 2007,                        35,232             -
       fixed interest rates from 9.0% to 13.75%
     Ralphs senior notes, unsecured, due 2004, fixed interest rate                   13,458             -
       of 10.45%
     Other                                                                           70,475        29,448
                                                                                -----------     ---------
     Total                                                                        5,093,996     2,200,972
     Less current portion                                                            94,140        16,178
                                                                                -----------     ---------
     Total                                                                      $ 4,999,856    $2,184,794
                                                                                ===========    ==========
</TABLE>

          In conjunction with the acquisitions of QFC and Ralphs/Food 4 Less in
     March 1998, the Company entered into new financing arrangements that
     refinanced a substantial portion of the Company's principal debt facilities
     and indebtedness assumed in the acquisitions. The new financing
     arrangements included a new bank credit facility and a public issue of
     $1.75 billion senior unsecured notes. The new bank credit facility (the
     "1998 Senior Credit Facility") provided for a $1.875 billion five-year
     revolving credit agreement and a $1.625 billion five-year term note. All
     indebtedness under the 1998 Senior Credit Facility is guaranteed by certain
     of the Company's subsidiaries and secured by the stock in the subsidiaries.
     The revolving portion of the 1998 Senior Credit Facility is available for
     general corporate purposes, including the support of the commercial paper
     program of the Company. Commitment fees are charged at .30% on the unused
     portion of the five-year revolving credit facility. Interest on the 1998
     Senior Credit Facility is at Adjusted LIBOR plus a margin of 1.0%. At
     November 7, 1998, the weighted average interest rate on the five year

                                       10
<PAGE>
     term note and the amounts outstanding under the revolving credit facility
     were 6.5% and 6.3%, respectively.

          The unsecured senior notes issued on March 11, 1998, included $250
     million of five-year notes at 7.15%, $750 million of seven-year notes at
     7.38%, and $750 million of ten-year notes at 7.45% (the "Notes"). In
     connection with the issuance of the Notes, each of the Company's direct or
     indirect wholly-owned subsidiaries has jointly and severally guaranteed the
     Notes on a full and unconditional basis ("Subsidiary Guarantors"). The
     Subsidiary Guarantors are 100% wholly owned subsidiaries of the Company and
     constitute all of the Company's direct and indirect subsidiaries, other
     than inconsequential subsidiaries. The non-guaranteeing subsidiaries
     represent less than 3%, on an individual and aggregate basis, of the
     Company's consolidated assets, pretax income, cash flow and net investment
     in subsidiaries.

          The Company is a holding company with no independent operations or
     assets other than those relating to its investments in its subsidiaries.
     Separate financial statements of the Subsidiary Guarantors are not included
     because the guarantees are full and unconditional, the Subsidiary
     Guarantors are jointly and severally liable and the separate financial
     statements and other disclosures concerning the Subsidiary Guarantors are
     not deemed material to investors by management of the Company. No
     restrictions exist on the ability of the Subsidiary Guarantors to make
     distributions to the Company, except, however, the obligations of each
     Guarantor under its Guarantee are limited to the maximum amount as will
     result in obligations of such Guarantor under its Guarantee not
     constituting a fraudulent conveyance or fraudulent transfer for purposes of
     Bankruptcy Law, the Uniform Fraudulent Conveyance Act, the Uniform
     Fraudulent Transfer Act or any similar Federal or state law (e.g. adequate
     capital to pay dividends under corporate laws).

          The 1998 Senior Credit Facility requires the Company to comply with
     certain ratios related to indebtedness to earnings before interest, taxes,
     depreciation and amortization ("EBITDA") and fixed charge coverage. In
     addition, the 1998 Senior Credit Facility limits dividends on and
     redemption of capital stock.

          In conjunction with the Smith's acquisition in September 1997, the
     Company entered into a bank credit facility (the "1997 Senior Credit
     Facility") that refinanced a substantial portion of the Company's
     indebtedness and indebtedness assumed in the Smith's acquisition. The 1997
     Senior Credit Facility was refinanced by the 1998 Senior Credit Facility.

          The Company has established uncommitted money market lines with five
     banks of $125.0 million. These lines, which generally have terms of
     approximately one year, allow the Company to borrow from the banks at
     mutually agreed upon rates, usually below the rates offered under the 1998
     Senior Credit Facility. The Company also has $900.0 million of unrated
     commercial paper facilities with four commercial banks. The Company has the
     ability to support commercial paper and other debt on a long-term basis
     through its bank credit facilities and therefore, based upon management's
     intent, has classified these borrowings, which totaled $713.1 million at
     November 7, 1998, as long-term debt.

          The Company on occasion enters into various interest rate swap, cap
     and collar agreements to reduce the impact of changes in interest rates on
     its floating rate long-term debt. At November 7, 1998, the Company had
     outstanding one collar agreement which expires on July 24, 2003 and
     effectively sets interest rate limits on a notional principal amount of
     $300.0 million on the Company's floating rate long-term debt. The agreement
     limits the interest rate fluctuation of the 3-month adjusted LIBOR (as
     defined in the collar agreement) to a range between 4.10% and 6.50% and
     requires quarterly cash settlements for interest rate fluctuations outside
     of the limits. As of November 7, 1998, the 3-month adjusted LIBOR was
     5.38%. The Company is exposed to credit loss in the event of nonperformance
     by the counterparties to the interest rate collar agreement. The Company
     requires an "A" or better rating of the counterparties and, accordingly,
     does not anticipate nonperformance by the counterparties.

                                       11
<PAGE>
          Annual long-term debt maturities for the five fiscal years subsequent
     to November 7, 1998 are $18.1 million in 1998, $134.8 million in 1999,
     $240.9 million in 2000, $362.2 million in 2001, and 472.7 million in 2002.

          The Company recorded in the first 40 weeks of 1998 an extraordinary
     charge of $357.8 million less a $139.9 million income tax benefit which
     consisted of premiums paid in the prepayment of certain notes and bank
     facilities of Fred Meyer, QFC and Ralphs/Food 4 Less and the write-off of
     the related deferred financing costs.

7.   Commitments and Contingencies

          The Company and its subsidiaries are parties to various legal claims,
     actions and complaints, certain of which involve material amounts. Although
     the Company is unable to predict with certainty whether or not it will
     ultimately be successful in these legal proceedings or, if not, what the
     impact might be, management presently believes that disposition of these
     matters will not have a material adverse effect on the Company's
     consolidated financial statements.


Item 2. Management's Discussion and Analysis 
of Financial Condition and Results of Operations.
-------------------------------------------------

          This discussion and analysis should be read in conjunction with the
     Company's consolidated financial statements.

RECENT EVENT

          On October 19, 1998, the Company announced the signing of a definitive
     merger agreement with The Kroger Co. ("Kroger"), the largest retail grocery
     chain in the United States. On that date, Kroger operated 1,398 food
     stores, 802 convenience stores and 34 manufacturing facilities that
     manufacture products for sale in all Kroger divisions, as well as to
     external customers. Under the terms of the merger agreement, Fred Meyer
     stockholders will receive one newly issued share of Kroger common stock for
     each share of Fred Meyer common stock. The transaction will be accounted
     for as a pooling of interests. It is expected to close in early 1999
     subject to approval of Kroger and Fred Meyer stockholders and antitrust and
     other regulatory authorities and customary closing conditions. In
     anticipation of the intended merger with Kroger, the Company has secured
     approval from its banks to amend its 1998 Senior Credit Facility as well as
     its operating lease facility. These proposed amendments are subject to
     completion of the merger and will be guaranteed by Kroger. The Company's
     outstanding senior notes due 2003 through 2008 will remain outstanding
     after the merger. Additional information regarding the merger can be found
     in the Company's current report on Form 8-K dated October 20, 1998.

RESULTS OF OPERATIONS

          The following discussion summarizes the Company's operating results
     for 1998 compared with 1997. However, 1998 results are not comparable to
     prior year results due to the three recent acquisitions (See Note 3 of
     Notes to Consolidated Financial Statements). The 1998 results include the
     results from Fred Meyer Stores, Smith's and QFC for the full period and
     include Ralphs/Food 4 Less from March 10, 1998. The 1997 results include
     Fred Meyer Stores and QFC for the full period and Smith's from September 9,
     1997.

                                       12
<PAGE>
Comparison of the 12 and 40 weeks ended November 7, 1998 with the 12 and 40
weeks ended November 8, 1997

          Net sales for the 12 weeks ended November 7, 1998 increased $1.5
     billion to $3.5 billion from $2.0 billion for the 12 weeks ended November
     8, 1997 and increased $6.0 billion to $11.0 billion in the 40 weeks ended
     November 7, 1998 from $5.0 billion in the 40 weeks ended November 8, 1997.
     The increases in sales were caused primarily by the recent acquisitions of
     Ralphs/Food 4 Less and Smith's. Sales at Smith's accounted for $203.9
     million and $1.9 billion of the increases and Ralphs/Food 4 Less accounted
     for $1.5 billion and $4.3 billion of the increases for the 12 and 40 weeks
     ended November 7, 1998, respectively.

          Comparable store sales including the Ralphs/Food 4 Less and Smith's
     stores as if acquired at the beginning of the comparable periods and
     excluding the Hughes and Smitty's stores which are currently being
     converted to other formats increased 3.4% and 2.4% from the prior year for
     the 12 and 40 weeks ended November 7, 1998, respectively.

          Gross margin increased as a percentage of net sales from 29.6% for the
     12 weeks ended November 8, 1997 to 30.0% for the 12 weeks ended November 7,
     1998 and from 29.6% for the 40 weeks ended November 7, 1998 to 29.8% for
     the 40 weeks ended November 8, 1997. Increases in gross margin as a percent
     of sales were generated primarily from economies of scale resulting from
     the Company's increased sales offset almost entirely by changes in the
     Company's sales mix between food and nonfood. The amount of food sales,
     which have a lower gross margin percent, compared to total sales increased
     over the prior year due to the recent acquisitions.

          Operating and administrative expenses were $833.8 million and $488.7
     million for the 12 weeks ended November 7, 1998 and November 8, 1997,
     respectively and were $2.7 billion and $1.3 billion for the 40 weeks ended
     November 7, 1998 and November 8, 1997, respectively. Operating and
     administrative expenses decreased as a percentage of sales 1.1% and 1.25%
     from the prior year for the 12 and 40 weeks ended November 7, 1998,
     respectively. The reduction of operating and administrative expenses as a
     percent of sales is due to economies of scale resulting from the Company's
     increased sales and lower operating and administrative expenses as a
     percent of sales at Smith's and Ralph's/Food 4 Less, which were recently
     acquired and are lower cost operations. Additionally, the Company benefited
     from the suspension of contributions to certain multi-employer pension and
     benefit plans totaling $15.2 million and $32.3 million in the 12 and 40
     weeks ended November 7, 1998, respectively.

          Amortization of goodwill increased $16.4 million and $57.9 million
     from the prior year for the 12 and 40 weeks ended November 7, 1998,
     respectively, as a result of the recent acquisitions.

          Charges for merger related costs of $33.7 million and $290.7 million
     were recorded in the 12 and 40 weeks ended November 7, 1998 as a result of
     the recent acquisitions. Additional merger related costs will be recorded
     in future quarters as expenditures are incurred.

          Interest expense increased to $92.9 million from $30.2 million for the
     12 weeks ended November 7, 1998 and November 8, 1997, respectively and
     increased to $284.7 million from $66.2 million for the 40 weeks ended
     November 7, 1998 and November 8, 1997, respectively. The increase in
     interest expense for the 12 and 40 week periods primarily reflect the
     increased amount of indebtedness assumed and/or incurred in conjunction
     with the acquisitions of Smith's and Ralphs/Food 4 Less.

          The effective tax rates are affected by increased goodwill
     amortization and certain merger costs which are not deductible for tax
     purposes. The effective tax rates for the income tax expense were 52.1% and
     42.4% for the 12 weeks ended November 7, 1998 and November 8, 1997,
     respectively. For the 40 weeks ended November 7, 1998, the amount of
     nondeductible goodwill amortization and

                                       13
<PAGE>
     merger costs was greater than the loss before income tax which resulted in
     taxable income and income tax expense.

          Income (loss) before extraordinary charge was $29.2 million and
     $(57.4) million for the 12 and 40 weeks ended November 7, 1998,
     respectively, compared to $28.7 million and $80.6 million for the 12 and 40
     weeks ended November 8, 1997, respectively. The changes are a result of the
     above mentioned factors.

          The extraordinary charges of $.3 million and $217.9 million for the 12
     and 40 weeks ended November 7, 1998, respectively, consist of fees incurred
     in conjunction with the prepayment of certain indebtedness and the
     write-off of related debt issuance costs.

          Net income increased to $28.8 million for the 12 weeks ended November
     7, 1998 from a net loss of $62.5 million for the 12 weeks ended November 8,
     1997 and decreased to a loss of $275.4 million for the 40 weeks ended
     November 7, 1998 from a loss of $10.6 million for the 40 weeks ended
     November 8, 1997 primarily due to the factors discussed above.

LIQUIDITY AND CAPITAL RESOURCES

          The Company funded its working capital and capital expenditure needs
     in 1998 through internally generated cash flow and the issuance of unrated
     commercial paper, supplemented by borrowings under committed and
     uncommitted bank lines of credit and lease facilities.

          Cash provided by operating activities was $457.3 million for the 40
     weeks ended November 7, 1998 compared to $173.3 million for the 40 weeks
     ended November 8, 1997. The increase in cash provided from operating
     activities is due primarily to an improvement in operating income resulting
     from the recent acquisitions. The Company's principal use of cash during
     the period is for seasonal purchases of inventory. Because of the inventory
     turnover rate, the Company is able to finance a substantial portion of the
     increased inventory through trade payables.

          Cash used for investing activities was $609.0 million for the 40 weeks
     ended November 7, 1998 compared to $528.2 million for the 40 weeks ended
     November 8, 1997. The investing activities consisted primarily of capital
     expenditures and business acquisitions. Capital expenditures of $497.6
     million in the current period were for the construction of new stores,
     remodeling existing stores and additions to distribution centers and
     offices. During the 40 weeks ended November 7, 1998, the Company opened 17
     new stores and completed the remodel of 72 stores. The Company intends to
     use the combination of cash flows from operations and borrowings under its
     credit facilities to finance its capital expenditure requirements for 1998,
     currently budgeted to be approximately $750.0 million, net of estimated
     real estate sales and stores financed on leases. If the Company determines
     that it is preferable, it may fund its capital expenditure requirements by
     mortgaging facilities, entering into sale/leaseback transactions, or by
     issuing additional debt or equity. The Company currently owns real estate
     with a net book value of approximately $1.6 billion.

          Additionally, the Company completed several business acquisitions
     which resulted in the use of cash for investing activities. See Note 3 of
     Notes to Consolidated Financial Statements for a discussion of the
     Company's acquisitions.

          Cash provided by financing activities was $220.4 million for the 40
     weeks ended November 7, 1998. The financing activities consisted primarily
     of cash receipts on the exercise of stock options, principal payments on
     long-term debt and capital leases, and activity related to the debt
     refinancing completed in conjunction with the acquisitions of Ralphs/Food 4
     Less and QFC.

          On March 11, 1998 the Company entered into new financing arrangements
     which included a public issue of $1.75 billion of senior unsecured notes
     (the "Notes") and a bank credit facility (the

                                       14
<PAGE>
     "1998 Senior Credit Facility"). The 1998 Senior Credit Facility included a
     $1.875 billion five-year revolving credit agreement and a $1.625 billion
     five-year term loan. The Notes consisted of $250 million of five-year notes
     at 7.15%, $750 million of seven-year notes at 7.38% and $750 million of
     ten-year notes at 7.45%. Each of the Company's direct or indirect
     wholly-owned subsidiaries has jointly and severally guaranteed the Notes on
     a full and unconditional basis. No restrictions exist on the ability of the
     Subsidiary Guarantors to make distributions to the Company, except,
     however, the obligations of each Subsidiary Guarantor under its Guarantee
     are limited to the maximum amount as will result in obligations of such
     Guarantor under its Guarantee not constituting a fraudulent conveyance or
     fraudulent transfer for purposes of Bankruptcy Law, the Uniform Fraudulent
     Conveyance Act, the Uniform Fraudulent Transfer Act or any similar Federal
     or state law (e.g. adequate capital to pay dividends under corporate laws).
     The obligations of the Company under the 1998 Senior Credit Facility are
     guaranteed by certain subsidiaries and are also collateralized by the stock
     of certain subsidiaries.

          In addition to the 1998 Senior Credit Facility and Notes, the Company
     entered into a $500 million five-year operating lease facility, which
     refinanced $303 million in existing lease financing facilities. At November
     7, 1998, $332.0 million was outstanding on this lease facility. The
     remaining balance of this lease facility will be used for land acquisition
     and construction costs for new stores. The obligations of the Company under
     the lease facility are guaranteed by certain subsidiaries and are also
     collateralized by the stock of certain subsidiaries.

          At November 7, 1998, the Company had $125.0 million of uncommitted
     money market lines with five banks and $900.0 million in unrated commercial
     paper facilities with four banks. The uncommitted money market lines and
     unrated commercial paper are used primarily for seasonal inventory
     requirements, new store construction and financing existing store
     remodeling, acquisition of land, and major projects such as management
     information systems. At November 7, 1998, a total of approximately $265.6
     million was available for borrowings under the 1998 Senior Credit Facility
     and the commercial paper facilities and $40.0 million was available for
     borrowings from the uncommitted money market lines.

          See Note 6 of Notes to Consolidated Financial Statements for a
     discussion of the Company's interest rate swap, cap and collar agreements.

          The Company had $44.3 million of outstanding Letters of Credit as of
     November 7, 1998. The Letters of Credit are used to support the importation
     of goods and to support the performance, payment, deposit or surety
     obligations of the Company.

Effect of LIFO

          During each year, the Company estimates the LIFO adjustment for the
     year based on estimates of three factors: inflation rates (calculated by
     reference to the Department Stores Inventory Price Index published by the
     Bureau of Labor Statistics for soft goods and jewelry and to internally
     generated indices based on Company purchases during the year for all other
     departments), expected inventory levels, and expected markup levels (after
     reflecting permanent markdowns and cash discounts). At year-end, the
     Company makes the final adjustment reflecting the difference between the
     Company's prior quarterly estimates and actual LIFO amount for the year.

Effect of Inflation

          While management believes that some portion of the increase in sales
     is due to inflation, it is difficult to segregate and to measure the
     effects of inflation because of changes in the types of merchandise sold
     year-to-year and other pricing and competitive influences. By attempting to
     control

                                       15
<PAGE>
     costs and efficiently utilize resources, the Company strives to minimize
     the effects of inflation on its operations.

Recent Accounting Changes

          There are no issued and pending accounting changes which are expected
     to have a material effect on the Company's financial reporting.

Year 2000

          The Company and each of its subsidiaries are dependent on computer
     hardware, software, systems, and processes ("Information Technology") and
     non-information technology systems such as telephones, clocks, scales, and
     refrigeration units or other equipment containing embedded microprocessor
     technology ("Non-IT Systems") in several critical operating areas,
     including store and distribution operations, product merchandise and
     procurement, manufacturing plant operations, inventory and labor
     management, and accounting.

          The Company is currently working to resolve the potential effect of
     the year 2000 on the processing of date-sensitive information within these
     various systems. The year 2000 problem is the result of computer programs
     being written using two digits (rather than four) to define the applicable
     year. Company programs that have date-sensitive software may recognize a
     date using "00" as the year 1900 rather than 2000, which could result in a
     miscalculation or system failure. The date issue also applies to equipment
     with embedded microprocessor chips.

          The Company has developed a plan (the "Plan") to access and update its
     Information Technology systems and Non-IT Systems for year 2000 readiness
     and to provide for continued functionality. The Plan focuses on critical
     business areas, which are separated into three major categories: (1)
     Information Technology, which includes all hardware and software on all
     processing platforms; (2) merchandise and external entities, including
     product suppliers, service providers, and those with whom the Company
     exchanges information; and (3) Non-IT Systems. Additionally, the Plan
     consists of three phases: (1) creating an inventory of systems and
     assessing the scope of the year 2000 problem as it relates to those
     systems; (2) remediating any year 2000 problems; and (3) testing and
     implementing systems following remediation.

          The following table estimates the Company's completion status for each
     phase of the Plan as of November 7, 1998, based on information currently
     available:

<TABLE>
<CAPTION>
                                                                  Percent Complete 
                                                           -------------------------------
                                              Category     Phase 1     Phase 2     Phase 3
                                              --------     -------     -------     -------

     <S>                                         <C>           <C>         <C>         <C>
     Information Technology                      1             83%         55%         28%
     Merchandise and external entities           2             63%         28%          3%
     Non-IT Systems                              3             63%         15%          5%
</TABLE>

          Phase 1 is expected to be completed by the end of the first quarter of
     1999 for all three categories. Phase 2 and 3 will continue throughout
     calendar 1999. Systems are regularly monitored and procedures are in place
     to detect potential re-introduction of date problems.

          The Company's management is currently formulating contingency plans in
     the event that any critical elements of the Plan should fail, or any of the
     Company's vendors or service providers fail to be year 2000 ready. The
     contingency plans may be implemented to minimize the risk of interruption
     of the Company's business. We expect that contingency plans will be
     completed by the end of the third quarter of 1999.

                                       16
<PAGE>
          The Company's principal vendors, service providers, and other third
     parties on which the Company relies for business operations have been
     contacted for a status on year 2000 readiness. Based on the Company's
     assessment of their responses, the Company believes that many of its
     principal vendors, service providers and other third parties are taking
     action for year 2000 readiness. However, the Company has limited ability to
     test and control such third parties' year 2000 readiness and no assurance
     can be given that failure of such third parties to address the year 2000
     issue will not cause an interruption of the Company's business.

          The Company expects the Plan for critical systems to be substantially
     completed during the fourth calendar quarter of 1999. However, the
     Company's ability to timely execute its Plan may be adversely affected by a
     variety of factors, some of which are beyond the Company's control,
     including the potential for unforeseen implementation problems, delays in
     the delivery of products, and disruption of store operations resulting from
     a loss of power or communication links between stores, distribution
     centers, and headquarters. Based on currently available information, the
     Company is unable to determine if such interruptions are likely to have a
     material adverse effect on the Company's results of operations, liquidity,
     or financial condition.

          The Company has committed significant resources in connection with
     resolving its year 2000 issue. The total estimated costs of the Plan,
     exclusive of capital expenditures, are expected to be $25.0 to $30.0
     million, of which approximately $3.0 million was expensed in 1997. Costs
     charged to operations for the 40 weeks ended November 7, 1998 totaled $4.0
     million, which represents an immaterial portion of the Company's
     information services budget over the period. Estimated costs expected to be
     incurred and expensed are approximately $2.0 million in the fourth quarter
     of 1998 and $13.0 to $21.0 million thereafter.

Forward-looking Statements; Factors Affecting Future Results

          Certain information set forth in this report contains "forward-looking
     statements" within the meaning of federal securities laws. The Company may
     make other forward-looking statements from time to time. These
     forward-looking statements may include information regarding the Company's
     plans for future operations, expectations relating to cost savings and the
     Company's integration strategy with respect to its recent mergers, store
     expansion and remodeling, capital expenditures, inventory reductions and
     expense reduction. The following factors, as well as those discussed below,
     are among the principal factors that could cause actual results to differ
     materially from the forward-looking statements: business and economic
     conditions generally and in the regions in which the Company's stores are
     located, including the rate of inflation; population, employment and job
     growth in the Company's markets; demands placed on management by the
     substantial increase in the Company's size; loss or retirement of senior
     management of the Company or of its principal operating subsidiaries;
     changes in the availability of debt or equity capital and increases in
     borrowing costs or interest rates, especially since a substantial portion
     of the Company's borrowings bear interest at floating rates; competitive
     factors, such as increased penetration in the Company's markets by large
     national food and nonfood chains, large category-dominant stores and large
     national and regional discount retailers (whether existing competitors or
     new entrants) and competitive pressures generally, which could include
     price-cutting strategies, store openings and remodels; results of the
     Company's programs to decrease costs as a percent of sales; increases in
     labor costs and deterioration in relations with the union bargaining units
     representing the Company's employees; unusual unanticipated costs or
     unanticipated consequences relating to the recent mergers and integration
     strategy and any delays in the realization thereof; operational
     inefficiencies in distribution or other Company systems, including any that
     may result from the recent mergers; issues arising from addressing the year
     2000 problem; legislative or regulatory changes adversely affecting the
     business in which the Company is engaged; and other opportunities or
     acquisitions which may be pursued by the Company.

                                       17
<PAGE>
          Leverage; Ability to Service Debt. The Company is highly leveraged. As
     of November 7, 1998, the Company has total indebtedness (including current
     maturities and capital lease obligations) of $5.3 billion. Total
     indebtedness consists of long-term debt, including borrowings under the
     1998 Senior Credit Facilities, and the notes, and capitalized leases. Total
     indebtedness does not reflect certain commitments and contingencies of the
     Company, including operating leases under the lease facility and other
     operating lease obligations. The Company has significant interest and
     principal repayment obligations and significant rental payment obligations,
     and the ability of the Company to satisfy such obligations is subject to
     prevailing economic, financial and business conditions and to other
     factors, many of which are beyond the Company's control. A significant
     amount of the Company's borrowings and rental obligations bear interest at
     floating rates (including borrowings under the 1998 Senior Credit
     Facilities and obligations under the lease facility), which will expose the
     Company to the risk of increased interest and rental rates.

          Merger Integration. The significant increase in size of the Company's
     operations resulting from the recent mergers has substantially increased
     the demands placed upon the Company's management, including demands
     resulting from the need to integrate the accounting systems, management
     information systems, distribution systems, manufacturing facilities and
     other operations of Fred Meyer Stores, Smith's, QFC and Ralphs/Food 4 Less.
     In addition, the Company may experience additional unexpected costs from
     such integration and/or a loss of customers or sales as a result of the
     recent mergers. There is no assurance that the Company will be able to
     maintain the levels of operating efficiency which Fred Meyer Stores,
     Smith's, QFC and Ralphs/Food 4 Less had achieved separately prior to the
     mergers. The failure to successfully integrate the operations of the
     acquired businesses, the loss of key management personnel and the loss of
     customers or sales could each have a material adverse effect on the
     Company's results of operations or financial position.

          Ability to Achieve Intended Benefits of the Recent Mergers. Management
     believes that significant business opportunities and cost savings are
     achievable as a result of the Smith's, QFC and Ralphs/Food 4 Less mergers.
     Management's estimates of cost savings are based upon many assumptions
     including future sales levels and other operating results, the availability
     of funds for capital expenditures, the timing of certain events as well as
     general industry and business conditions and other matters, many of which
     are beyond the control of the Company. Estimates are also based on a
     management consensus as to what levels of purchasing and similar
     efficiencies should be achievable by an entity the size of the Company.
     Estimates of potential cost savings are forward-looking statements that are
     inherently uncertain. Actual cost savings, if any, could differ from those
     projected and such differences could be material; therefore, undue reliance
     should not be placed upon such estimates. There is no assurance that
     unforeseen costs and expenses or other factors (whether arising in
     connection with the integration of the Company's operations or otherwise)
     will not offset the estimated cost savings or other components of the
     Company's plan or result in delays in the realization of certain projected
     cost savings.

          Competition. The retail merchandising business in general, and the
     supermarket industry in particular, is highly competitive and generally
     characterized by narrow profit margins. The Company's competitors in each
     of its operating divisions include national and regional supermarket
     chains, discount stores, independent and specialty grocers, drug and
     convenience stores, large category-dominant stores and the newer
     "alternative format" food stores, including warehouse club stores, deep
     discount drug stores, "supercenters" and conventional department stores.
     Competitors of the Company include, among others, Safeway, Albertson's,
     Lucky, Costco, Wal-Mart and Target. Retail businesses generally compete on
     the basis of location, quality of products and service, price, product
     variety and store condition. The Company's ability to compete depends in
     part on its ability to successfully maintain and remodel existing stores
     and develop new stores in advantageous locations.

                                       18
<PAGE>
          Labor Relations. The Company is party to more than 171 collective
     bargaining agreements with unions and locals, covering approximately 60,000
     employees representing approximately 65% of the Company's total employees.
     Among the contracts that have expired or will expire in 1998 are those
     covering 15,500 employees. Typical agreements are three years in duration,
     and as such agreements expire, the Company expects to negotiate with the
     unions and to enter into new collective bargaining agreements. There is no
     assurance, however, that such agreements will be reached without work
     stoppages. A prolonged work stoppage affecting a substantial number of
     stores could have a material adverse effect on the Company's results of
     operations or financial position.



          Forward-looking statements speak only as of the date made. The Company
     undertakes no obligation to publicly release the results of any revisions
     to any forward-looking statements which may be made to reflect subsequent
     events or circumstances or to reflect the occurrence of unanticipated
     events.

Item 3.  Quantitative and Qualitative Disclosures About Market Risk
-------------------------------------------------------------------

         Not applicable.

                                       19
<PAGE>
                           Part II - OTHER INFORMATION
--------------------------------------------------------------------------------


Item 6. Exhibits and Reports on Form 8-K
----------------------------------------

     (a) Exhibits

         10.G  Employment Agreement between Fred Meyer, Inc. and Robert G.
               Miller, as amended.

         10.N  Employment Protection Agreement dated September 22, 1998 between
               Fred Meyer, Inc. and George Golleher.

         10.R  Employment Protection Agreement dated September 22, 1998 between
               Fred Meyer, Inc. and certain officers.

         10.S  Employment Protection Agreement dated September 22, 1998 between
               Fred Meyer, Inc. and certain officers.

         27    Financial Data Schedule

     (b) Reports on Form 8-K

         The Company filed a report on Form 8-K dated October 18, 1998 to
     disclose information under Item 5 thereof. On November 5, 1998, the Company
     also filed a Form 8-K/A dated March 9, 1998 to amend certain financial
     statement information under Item 7.

                                       20
<PAGE>
                                   Signatures
                                   ----------

          Pursuant to the requirements of the Securities Exchange Act of 1934,
     the registrant has duly caused this report to be signed on its behalf by
     the undersigned thereunto duly authorized.

                                       FRED MEYER, INC.


     Date:  December 18, 1998          By  JOHN STANDLEY
                                           -------------------------------------
                                           John Standley
                                           Senior Vice President and
                                           Chief Financial Officer

                                       21
<PAGE>
                                 EXHIBIT INDEX

Exhibit No.     Description
-----------     -----------

   10.G  Employment Agreement between Fred Meyer, Inc. and Robert G. Miller,
         as amended.

   10.N  Employment Protection Agreement dated September 22, 1998 between
         Fred Meyer, Inc. and George Golleher.

   10.R  Employment Protection Agreement dated September 22, 1998 between
         Fred Meyer, Inc. and certain officers.

   10.S  Employment Protection Agreement dated September 22, 1998 between
         Fred Meyer, Inc. and certain officers.

   27    Financial Data Schedule