===============================================================================
                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549


                                    FORM 10-K


[X]  ANNUAL REPORT  PURSUANT TO SECTION 13 OR 15(d) OF THE  SECURITIES  EXCHANGE
     ACT OF 1934 For the fiscal year ended January 30, 1999


                                       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)

           Securities registered pursuant to Section 12(b) of the Act:
                                                        Name of each Exchange
       Title of class                                    on which registered
Common Stock, $.01 par value                           New York Stock Exchange

           Securities registered pursuant to Section 12(g) of the Act:
                                 Title of Class
                   $250,000,000 7.150% Notes Due March 1, 2003
                   $750,000,000 7.375% Notes Due March 1, 2005
                   $750,000,000 7.450% Notes Due March 1, 2008

     Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes [X] No [ ]

     Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [ ]

     Aggregate market value of Common Stock held by nonaffiliates of the
registrant at March 3, 1999: $8,306,683,149

     Number of shares of Common Stock outstanding at March 3, 1999: 156,036,181

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

Item of Form 10-K                                                          Page

Part I

     Item 1    Business ..................................................  3

     Item 2    Properties ................................................  9

     Item 3    Legal Proceedings .........................................  9

     Item 4    Submission of Matters to a Vote of Security Holders ....... 10


Part II

     Item 5    Market for the Registrant's Common Stock
               and Related Stockholder Matters ........................... 11

     Item 6    Selected Financial Data ................................... 12

     Item 7    Management's Discussion and Analysis of Financial
               Condition and Results of Operations ....................... 13

     Item 7A   Quantitative and Qualitive Disclosures About Market Risks.. 19

     Item 8    Financial Statements and Supplementary Data ............... 21

     Item 9    Changes in and Disagreements with Accountants
               on Accounting and Financial Disclosure .................... 48


Part III

     Item 10   Directors and Executive Officers of the Registrant ........ 48

     Item 11   Executive Compensation .................................... 53

     Item 12   Security Ownership of Certain Beneficial Owners
               and Management ............................................ 58

     Item 13   Certain Relationships and Related Transactions ............ 59


Part IV

     Item 14   Exhibits, Financial Statement Schedules,
               and Reports on Form 8-K ................................... 61


Signatures ............................................................... 66

                                       2
<PAGE>
                                    Part I
-------------------------------------------------------------------------------

Item 1. Business.
----------------

Acquisition by Kroger Co.

          On October 18, 1998, the Company entered into an Agreement and Plan of
     Merger (the "Kroger Merger Agreement") with The Kroger Co., an Ohio
     corporation ("Kroger"), and Jobsite Holdings, Inc., a Delaware corporation
     and a wholly owned subsidiary of Kroger ("Jobsite Holdings"). Under the
     terms of the Kroger Merger Agreement, Jobsite Holdings will merge with and
     into the Company (the "Kroger Merger"), subject to certain conditions being
     satisfied or waived including stockholder approval and clearance from the
     Federal Trade Commission and the U.S. Department of Justice. After the
     Kroger Merger, the Company will be a wholly owned subsidiary of Kroger.
     Under the Kroger Merger Agreement, each outstanding Kroger share of common
     stock, $.01 par value per share, of the Company ("Fred Meyer Common
     Stock"), will be converted into the right to receive one share of common
     stock, $1.00 par value per share, of Kroger ("Kroger Common Stock").
     Holders of shares of Fred Meyer Common Stock will also have the right to
     receive together with each share of Kroger Common Stock issued at the
     effective time of the Merger, one associated right in accordance with the
     Rights Agreement, dated as of April 4, 1997, between Kroger and the Bank of
     New York, as Rights Agent. The Company expects the Kroger Merger to be
     completed in late April 1999.

General

          Fred Meyer, Inc. is one of the largest domestic food retailers,
     operating 781 supermarkets and multi-department stores at January 30, 1999.
     In September 1997, the Company acquired Smith's Food & Drug Centers, Inc.
     ("Smith's") in a merger, and in March 1998, the Company acquired Quality
     Food Centers, Inc. ("QFC") and Food 4 Less Holdings, Inc. ("Ralphs/Food 4
     Less") in two separate mergers. The Company is a geographically diversified
     food retailer that operates multiple formats that appeal to customers
     across a wide range of income brackets. In the Pacific Northwest, Southwest
     and Intermountain states, the Company operates multi-department stores
     principally under the Fred Meyer banner and food and drug combination
     stores principally under the Smith's Food & Drug Centers banner; in
     Southern California, the Company operates conventional supermarkets under
     the Ralphs banner and price-impact warehouse supermarkets under the Food 4
     Less banner; and in the Seattle/Puget Sound Region and in Portland, Oregon,
     the Company also operates premium supermarkets principally under the QFC
     banner.

          The Company was incorporated in Delaware in 1997 and commenced
     operations on September 9, 1997 as the successor to Fred Meyer Stores, Inc.
     (formerly known as Fred Meyer, Inc.) and Smith's. The Company's principal
     executive offices are located at 3800 SE 22nd Avenue, Portland, Oregon
     97202, and its telephone number is (503) 232-8844. The Company operates its
     business through four principal subsidiaries: Fred Meyer Stores, Inc.
     ("Fred Meyer Stores"), Smith's, QFC and Ralphs/Food 4 Less. Unless the
     context requires otherwise, references in this Annual Report on Form 10-K
     to the "Company" or "Fred Meyer" mean (a) before September 9, 1997, Fred
     Meyer Stores and its subsidiaries, (b) on and after September 9, 1997, Fred
     Meyer, Inc. and its subsidiaries (including Fred Meyer Stores and Smith's)
     and (c) on and after March 10, 1998, Fred Meyer, Inc. and its subsidiaries
     (including Fred Meyer Stores, Smith's, QFC and Ralphs/Food 4 Less). This
     Annual Report on Form 10-K contains financial statements of Fred Meyer,
     Inc. as of and for the fiscal year ending January 30, 1999. This financial
     information includes the financial results of QFC for all years presented,
     Smith's since September 9, 1997, and Ralphs/Food 4 Less since March 10,
     1998.

Competitive Strengths

          Leading Market Shares in Fast-Growing Markets. By offering superior
     customer service and competitive pricing, the Company's banners have
     developed leading market shares in each of their principal markets. The
     Company has the number one market share in the Los Angeles, Orange County,
     Seattle, Las Vegas, Salt Lake City and Albuquerque markets and the number
     two market share in the Phoenix, Portland and Riverside/San Bernardino
     markets which are among the largest and fastest growing population centers
     in the United States.

          Well-Positioned and Modern Store Base. Management believes that the
     Company's store locations include many sites in developed urban and
     suburban locations which would be difficult to replicate. The Company has
     invested

                                       3
<PAGE>
     significant capital in its store base over the last seven years through the
     addition of new stores and the remodeling of existing stores in order to
     improve the overall quality of its customer's shopping experience. As a
     result, approximately 77% of the Company's stores have been opened or
     remodeled within the past seven years.

          Modern Infrastructure. The Company believes it has state-of-the-
     industry warehousing and distribution systems which are conveniently
     located within the areas served by the Company. As a result of the recent
     mergers and the significant investment in its infrastructure over the last
     several years, management believes the Company will be able to lower its
     distribution costs as a percentage of net sales and maintain lower levels
     of inventory.

          Experienced Management Team. The senior operating management of Fred
     Meyer Stores, Smith's, QFC and Ralphs/Food 4 Less are continuing to operate
     their respective store bases supported in large part by centralized
     purchasing, distribution, and manufacturing. These senior operating
     managers have an average of over 24 years of experience in the food
     retailing industry. Moreover, many of the senior operating managers of the
     Company have spent much of their careers in their respective local markets.
     Members of the senior management team have successfully completed several
     acquisitions at their respective companies. The Company considers its
     senior management to be industry leaders in operating its principal store
     formats: one-stop shopping multi-department, food and drug combination,
     premium, conventional and price-impact supermarket stores.

Fred Meyer Stores

          At January 30, 1999, the Company operated 118 multi-department stores
     in the Pacific Northwest and Intermountain regions under the Fred Meyer
     banner, including 45 stores in Oregon, 48 stores in Washington, 9 stores in
     Utah, 7 stores in Alaska, 8 stores in Idaho, and 1 store in Montana. The
     average Fred Meyer multi-department store is 143,500 square feet with a
     flexible store format offering a full-service food department and a variety
     of nonfood departments. The Company emphasizes customer satisfaction, large
     selections of highly popular products and competitive pricing in
     multi-department stores. These stores typically sell over 225,000 items,
     with an emphasis on necessities and items of everyday use. These stores are
     organized into departments and sections within departments that specialize
     in the sale of particular products such as food, apparel, home electronics,
     products for the home, general merchandise and fine jewelry. Most of the
     multidepartment store locations have complementary third-party tenants
     (such as banks, optical centers, gourmet coffee bars, restaurants and video
     rental stores).

          The Fred Meyer stores are generally positioned as the lowest priced
     full-service food retailer in each of Fred Meyer's major markets.
     Management believes that Fred Meyer's everyday low price food strategy
     increases the shopping frequency of customers, builds customer loyalty and
     increases customer traffic, thereby generating higher levels of sales in
     nonfood departments. The nonfood departments carry a broad selection of
     national and private label brands and employ a promotional pricing
     strategy. The nonfood departments have recently focused on developing
     selected specialty boutique departments which management believes have
     increased overall same store sales and resulted in higher gross margins.

          The Company operates 284 specialty stores consisting primarily of 280
     mall jewelry stores under the names Fred Meyer Jewelers, Merksamer
     Jewelers, Fox's, Littman, and Barclay Jewelers.

Smith's

          At January 30, 1999, the Company operated a total of 176 stores,
     averaging 64,900 square feet, (including 148 food and drug combination
     stores under the Smith's Food & Drug Centers banner, 18 multi-department
     stores under the Smitty's banner; and 10 price-impact warehouse format
     stores under the PriceRite banner) in a seven-state area as follows:
     Arizona (61), Utah (42), Nevada (27), New Mexico (19), Wyoming (10),
     Montana (8), Idaho (5), and Texas (4). Substantially all of the Smith's
     Food & Drug Centers offer shopping convenience through a food and drug
     combination format which features a full-line supermarket with drug and
     pharmacy departments as well as some or all of the following specialty
     departments: delicatessens, hot prepared food sections, in-store bakeries,
     video rental shops, floral shops, one-hour photo processing labs,
     full-service banking, and frozen yogurt shops. In addition, combination
     stores carry a wide variety of general merchandise, including
     pharmaceutical products, toys, hardware, giftware, greeting cards and small
     appliances. Smith's utilizes its "Fresh Values Frequent Shopper Card" in
     conjunction with its lower regular retail prices as the core of its
     marketing strategy. The "Fresh Values" frequent shopper program is intended
     to increase customer shopping frequency and transaction size and to provide
     valuable information about consumer

                                       4
<PAGE>
     shopping habits. The 18 Smitty's multi-department stores offer an expanded
     selection of non-grocery merchandise in a format similar to Fred Meyer
     multi-department stores. The ten PriceRite Grocery Warehouse stores are
     targeted to price-conscious consumers rather than conventional supermarket
     consumers. The PriceRite stores offer lower prices, fewer stock keeping
     units ("SKUs") and fewer service departments than conventional supermarket
     stores.

QFC

          At January 30, 1999, QFC operated 86 QFC stores mainly in the
     Seattle/Puget Sound Region. The QFC stores range in size from 14,000 to
     68,000 square feet and average 34,100 square feet. During the past seven
     years, QFC has expanded its presence in the Seattle/Puget Sound Region and
     contiguous geographic markets by acquiring and successfully integrating 60
     stores from 13 operators, including 12 stores acquired from Olson's Food
     Stores in 1995 and 25 stores acquired from Kieth Uddenberg, Inc. in 1997.

          Management believes that QFC has historically achieved strong margins
     which it attributes primarily to QFC's merchandising and operating
     practices combined with favorable customer demographics in its markets.
     Offering a wide variety of high-quality meat, seafood and produce to its
     customers is a fundamental tenet of QFC's merchandising strategy which also
     includes superior customer service and high quality convenience-oriented
     specialty departments and services. Management believes that QFCs strengths
     in merchandising have earned QFC stores a reputation for providing superior
     value to their customers. QFC has significantly expanded its selection of
     prepared foods and "home meal replacements" which management believes
     appeals to the increasing convenience orientation of its customers. Many
     QFC stores also offer natural food sections, video rentals, fresh juice
     bars and pharmacies. In addition, QFC has leased space within its stores to
     branded specialty food operators including Starbucks Coffee, Cinnabon World
     Famous Cinnamon Rolls and Noah's New York Bagels, as well as to
     full-service banks such as Seafirst National Bank.

Ralphs/Food 4 Less

          Ralphs/Food 4 Less is the largest supermarket operator in Southern
     California, which is one of the largest food retailing markets in the
     United States with a population of 19 million. As of January 30, 1999,
     Ralphs/Food 4 Less' Southern California operations included 294
     conventional supermarkets, averaging 36,900 square feet, under the Ralphs
     banner and 87 price-impact supermarkets in a warehouse format, averaging
     52,400 square feet, under the Food 4 Less and Foods Co. banners. Operating
     two complementary formats allows Ralphs/Food 4 Less to serve a broader
     customer base than its competitors.

          Ralphs stocks between 35,000 and 45,000 merchandise items in its
     stores, including approximately 4,400 private-label products. Ralphs stores
     offer name-brand grocery products; quality and freshness in its produce,
     meat, seafood, delicatessen and bakery products and broad selection in all
     departments. Most Ralphs stores offer service delicatessen departments,
     on-premises bakery facilities and seafood departments. Ralphs emphasizes
     store ambiance and cleanliness, fast and friendly service, the convenience
     of debit and credit card payment (including many in-store branch banks) and
     24-hour operations in most stores.

          Ralphs utilizes innovative and aggressive marketing programs in an
     effort to increase sales, market share and profitability, which emphasize
     Ralphs' lower regular retail prices in conjunction with its premier
     quality, wide selection and enhanced customer service. The marketing
     programs are designed to increase store traffic and sales by a coordinated
     use of media advertisement, double coupon offerings and targeted marketing
     efforts with the "Ralphs Club Card" program. The "Ralphs Club Card" program
     is a frequent shopper program intended to increase customer shopping
     frequency and transaction size and to provide valuable information about
     consumer shopping habits. Ralphs continues to emphasize its successful
     merchandising programs and exceptional product mix, including its home meal
     replacement program and strong private label program.

          Food 4 Less and Foods Co. are a warehouse-style, price-impact store
     which is positioned to offer the lowest overall prices in its marketing
     areas by passing on to the consumer savings achieved through labor
     efficiencies and lower overhead and advertising costs associated with the
     warehouse format, while providing the product selection and variety
     associated with a conventional format. In-store operations are designed to
     allow customers to perform certain labor-intensive services usually offered
     in conventional supermarkets. For example, merchandise is presented on
     warehouse style racks in full cartons, reducing labor intensive unpacking,
     and customers bag their own groceries. Management believes that there is a
     significant segment of the market, encompassing a wide range of demographic
     groups, which

                                       5
<PAGE>
     prefers to shop in a warehouse format supermarket because of its lowest
     overall pricing.

          Ralphs/Food 4 Less also operates stores in Northern California. The
     Northern California division of Ralphs/Food 4 Less currently operates 20
     conventional supermarkets in the greater San Francisco Bay area under the
     Cala and Bell banners.

Distribution and Processing

          The Company has over 225,000 SKUs supplied by over 10,000 suppliers,
     none of which represents more than five percent of the Company's total
     purchases. Due to its many sources of supply, the Company believes that it
     has many alternative sources of supply for the products it purchases. The
     Company also believes its purchase terms are generally in line with
     industry practices.

          Fred Meyer Stores operates a 1.5 million square foot food and nonfood
     distribution center in Clackamas, Oregon, near Portland, a 310,000 square
     foot flow-through distribution facility in Chehalis, Washington and a
     600,000 square foot food distribution center in Puyallup near Seattle,
     Washington. Fred Meyer Stores' flow-through retail service center in
     Chehalis serves as the centralized distribution facility for certain
     apparel, music, seasonal and other nonfood items. This facility minimizes
     the required handling and processing of goods received from vendors and
     distributed to Fred Meyer stores. It has improved inventory management and
     reduced distribution costs for the goods shipped through this facility. The
     Puyallup facility serves stores in the Puget Sound Region and Alaska. The
     facility reduces the cost of transporting goods into the Puget Sound and
     Alaska markets and affords Fred Meyer Stores increased forward-buying
     opportunities. In addition, Fred Meyer Stores operates a large fleet of
     trucks and trailers for distribution of goods to its retail stores. QFC is
     in the process of converting the purchasing and distribution of the
     majority of the items that it historically purchased from wholesale
     suppliers to utilize Fred Meyer Stores' warehousing and distributions
     infrastructure.

          Smith's operates a 1.1 million square foot distribution center in
     Tolleson, Arizona, a 573,000 square foot grocery warehouse in Layton, Utah,
     and a 634,000 square foot nonfood distribution center in Salt Lake City,
     Utah. In addition, Smith's operates a large fleet of trucks and trailers
     for distribution of goods to its retail stores.

          Ralphs/Food 4 Less operates a warehousing and manufacturing space
     consisting of a 675,000 square foot dry grocery service center, a 270,000
     square foot refrigerated and frozen food facility and a 115,000 square foot
     creamery facility in Riverside, California. It also operates a 17 million
     cubic foot high-rise automated storage and retrieval system warehouse for
     non-perishable items, near Glendale, California and a 5.4 million cubic
     foot facility in Compton, California designed to process and store all
     perishable products. Due to its use of the Riverside facility, Ralphs/Food
     4 Less has been able to consolidate its distribution operations, allowing
     it to reduce transportation costs, management overhead and outside storage
     costs and to improve inventory management. The Glendale facility can hold
     substantially more inventory and requires fewer employees to operate than a
     conventional warehouse of equal size. The Compton facility has provided
     Ralphs/Food 4 Less with the ability to deliver perishable products to its
     stores on a daily basis, thereby improving the freshness and quality of
     these products. In addition, Ralphs/Food 4 Less operates a large fleet of
     trucks and trailers for distribution of goods to its retail stores.

          The Company owns and operates several processing facilities to better
     support its stores and realize additional profit opportunities. Products
     processed by the Company are sold primarily through its own retail stores.
     Dairies located in Portland, Oregon, Layton, Utah, Tolleson, Arizona,
     Compton, California and Riverside, California process a variety of milk,
     milk products and fruit beverages under the Company's private labels.
     Bakeries located in Portland, Oregon and La Habra, California and a frozen
     dough plant located in Layton, Utah process bakery products for in-store
     bakeries and commercial bread categories. A cultured dairy products plant
     in Layton, Utah produces yogurt, cottage cheese, sour cream, and chip dip
     products. Ice cream processing plants in Layton, Utah and Compton,
     California supply stores with a wide variety of private label ice cream and
     novelty items. A commissary located in Vernon, California produces selected
     delicatessen and home meal replacement items.

          The Company believes that its current distribution and manufacturing
     facilities have the capacity to handle the Company's current stores and
     stores expected to be opened during 1999. The Company's facilities are
     capable of expansion to handle stores expected to be added over the next
     several years.

                                       6
<PAGE>
          The Company has made significant capital investments in its
     distribution centers which, together with the management information
     systems ("MIS") improvements, are designed to improve operations, permit
     better inventory management and reduce distribution costs. The Company has
     established electronic data interchange ("EDI") and automated replenishment
     programs with many vendors. These quick response capabilities improve
     inventory management and reduce handling of inventory in the distribution
     process, which results in lower markdowns and lower distribution costs as a
     percentage of sales.

          The Company believes that its distribution and related information
     systems provide several additional advantages. First, they permit stores to
     maintain proper inventory levels for items supplied through its central
     distribution facilities. Second, centralized purchasing and distribution
     reduce the Company's cost of merchandise and related transportation costs.
     Third, because distribution can be made to stores frequently, the Company
     is able to reduce the in-store stockroom space and maximize the square
     footage available for retail selling.

Management Information Systems

          The Company operates highly integrated information systems, using the
     latest technology to support store, warehouse and office locations. In
     addition to making significant progress on Year 2000 programs, the Company
     completed its integration of Hughes stores with Ralphs and continued its
     efforts to integrate Smith's and QFC into its existing operations. It also
     completed the integration of 123 acquired stores into its current fine
     jewelry operation.

          Significant projects completed in 1998 include network improvements in
     the California, Utah, and Washington operations, and rolling out new
     point-of-sale equipment to over 500 stores. These projects resulted in
     improved communications costs and processes, enhanced cashier productivity
     and improved Customer service. The Company also completed the rollout of
     its pharmacy system to all Smith's locations and started pharmacy
     implementations in selected Ralphs and QFC locations, which will be
     completed in 1999.

          New corporate purchasing and wireless radio-controlled warehouse
     implementations in California position the Company to reduce inventories,
     track deal purchases more effectively, and optimize vendor loads delivered
     to facilities. Flow through processing for key distribution centers, and
     other product sourcing projects completed by the Company supported the
     achievement of significant merger savings in the distribution of both food
     and non-food merchandise.

          Progress was made to consolidate data centers during 1998. One data
     center was eliminated during the year. The Company's initiative to combine
     all data centers into two, providing more cost effective operations and
     leveraging common systems between the subsidiaries, is expected to be
     completed by the third quarter of 1999.

          In addition to several financial consolidation projects, a corporate
     payroll and benefits application was rolled out to Smith's and QFC. The
     rollout to Ralphs has started and will be completed during the summer of
     1999.

Store Expansion and Development

          The Company enlarges, remodels, closes or sells stores in light of
     their past performance or the Company's assessment of their potential. The
     Company continually evaluates its position in various market areas to
     determine whether it should expand or consolidate its operations in those
     areas. New store sites are determined based on a review of information on
     demographics and the competitive environment for the market area in which a
     proposed site is located. The Company's expansion focus is in existing
     areas of operation, primarily in or near well-populated residential areas.
     The Company determines store size and designs stores with a view toward
     making each store a very convenient store in the area it serves. The
     Company is flexible in its store design where land sites require
     specialized designs, such as two-level or smaller stores.


                                       7
<PAGE>
          The following table sets forth store expansions and acquisitions for
     the past three fiscal years ended January 30, 1999.

<TABLE>
<CAPTION>
                                   Full Size     Specialty and
                                      Stores           Jewelry         Total
                                   ---------     -------------         -----
<S>                  <C>                 <C>                <C>          <C>
 Balance at February 3, 1996             102                34           136
   Open                                    7                 5            12
   Acquired                                                 71            71
                                         ---               ---         -----
 Balance at February 1, 1997             109               110           219
   Open                                    9                15            24
   Closed                                 (2)               (6)           (8)
   Acquired                              152                44           196
                                         ---               ---         -----
 Balance at January 31, 1998             268               163           431
   Open                                   44                 6            50
   Closed                                (85)               (8)          (93)
   Acquired                              554               123           677
                                         ---               ---         -----
 Balance at January 30, 1999             781               284         1,065
                                         ===               ===         =====
</TABLE>

          The Company currently plans to open 35 to 40 stores in 1999 and to
     remodel 85 to 95 stores.

Promotion and Advertising

          The Company maintains separate promotion and advertising operations
     for each of its subsidiary companies as dictated by geographical
     preferences and product offerings. The Company promotes sales through
     weekly advertising, primarily in local and area newspapers, radio, and
     television and direct mail. Advertising features many high-demand products
     at competitive sale prices. Some advertising emphasizes low prices every
     day for some departments or items and offers promotional pricing for other
     departments or items.

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. The national competitors
     of the Company include, among others, Safeway, Albertson's, Lucky, Costco,
     and Wal-Mart. 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. The Company regularly monitors its competitors'
     prices and adjusts its prices and marketing strategy as management deems
     appropriate in light of existing conditions. The Company emphasizes
     customer satisfaction, large selections of high-quality popular products
     and competitive pricing. In addition, the Company believes that the
     convenience, attractiveness and cleanliness of its stores, together with a
     sales staff knowledgeable in specialty areas, enhances its retail sales
     effort and competitive position.

Employees

          At January 30, 1999, the Company had approximately 92,000 employees.
     The Company is party to more than 176 collective bargaining agreements with
     local unions covering approximately 60,000 employees representing
     approximately 65% of the Company's total employees. Among the contracts
     that have expired or will expire in 1999 are those covering 26,500
     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 can be no assurance,
     however, that such agreements will be reached without work stoppages. A
     prolonged work stoppage

                                       8
<PAGE>
     affecting a substantial number of stores could have a material adverse
     effect on the Company's results of operations or financial position.


Item 2. Properties. 
------------------

          The following table sets forth certain information regarding the
     Company's store base at January 30, 1999:

<TABLE>
<CAPTION>
                           Number of                                                 Avg Sq
Principal Banners             Stores    Owned   Leased  Formats                     Footage
--------------------------    ------   ------   ------  -------------------------   -------
<S>                              <C>      <C>      <C>  <C>                         <C>    
Fred Meyer (1)                   118       25       93  Multidepartment             143,500
Smith's Food & Drug Centers                                                                
  Smith's                        148      105       43  Food and drug combination    60,400
                                                                                           
  Smitty's                        18       10        8  Multidepartment             105,300
  PriceRite                       10        7        3  Price-impact warehouse       57,700
QFC                               86       14       72  Premium                      34,100
Ralphs                           294       53      241  Conventional                 36,900
Food 4 Less and Foods Co.         87        5       82  Price-impact warehouse       52,400
Other (2)                         20                20  Conventional and price-      18,750
                                                        impact warehouse
                               -----    -----    -----
TOTAL                            781      219      562
                               =====    =====    =====

(1)  Does not include 4 specialty stores and 280 jewelry stores.

(2)  Includes conventional format stores operated by Ralphs under the names Cala and Bell.
</TABLE>

          Approximately 76% of the Company's stores have been opened or
     remodeled within the past seven years.

          The Company owns additional facilities, including its corporate and
     Fred Meyer Stores headquarters in Portland, Oregon, its Ralphs/Food 4 Less
     headquarters in Compton, California, distribution and warehouse facilities
     in Chehalis and Puyallup, Washington, Compton and Glendale, California,
     Layton, Utah and Tolleson, Arizona, and Smith's distribution and
     administration facilities in Salt Lake City, Utah, and leases other
     facilities, including QFC's headquarters in Seattle, Washington and the
     Riverside, California distribution facility.


Item 3. Legal Proceedings.
-------------------------

          The Company and its subsidiaries are parties to various legal claims,
     actions and complaints which have arisen in the ordinary course of
     business. Although the Company is unable to predict with certainty whether
     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.

          In December 1992, three California state antitrust class action suits
     were commenced in Los Angeles Superior Court against Ralphs/Food 4 Less and
     other major supermarket chains located in Southern California, alleging
     that they conspired to refrain from competing in the retail market for
     fluid milk and to fix the retail price of fluid milk above competitive
     prices. Specifically, class actions were commenced by Diane Barela and
     Neila Ross, Ron Moliare and Paul C. Pfeifle on December 7, December 14 and
     December 23, 1992, respectively. A class has been certified consisting of
     all purchasers of milk in Los Angeles from December 7, 1988. The defendants
     in the actions, including Ralphs/Food 4 Less, have reached tentative
     settlement agreements, and settlements are in the process of being approved
     by the trial court.

          On September 13, 1996 a class action lawsuit titled McCampbell, et al.
     v. Ralphs Grocery Company, et al. was filed in the Superior Court of the
     State of California, County of San Diego, against Ralphs/Food 4 Less and
     two other grocery store chains operating in the Southern California area.
     The complaint alleges, among other things, that Ralphs/Food 4 Less and
     others conspired to fix the retail price of eggs in Southern California.
     The plaintiffs claim that the defendants'

                                       9
<PAGE>
     actions violate provisions of the California Cartwright Act and constitute
     unfair competition. The plaintiffs seek damages they purport to have
     sustained as a result of the defendants' alleged actions, which damages may
     be trebled under the applicable statute, and an injunction from future
     actions in restraint of trade and unfair competition. A class, consisting
     of all retail purchasers of eggs in Los Angeles, Riverside, San Diego,
     Imperial and Orange Counties during a period from 1992 to 1997 has been
     certified. Management of the Company intends to defend this action
     vigorously and Ralphs/Food 4 Less has filed an answer to the complaint
     denying the Plaintiffs' allegations and setting forth several defenses.

Environmental Matters

          The Company's Glendale facility property located in the Atwater area
     of Los Angeles, near Glendale, California, is within one of the areas that
     the U.S. Environmental Protection Agency (the "EPA") has designated in the
     San Fernando Valley as federal Superfund sites requiring response actions
     under the Comprehensive Environmental Response, Compensation and Liability
     Act of 1980, as amended, because of regional groundwater contamination. The
     Company's Glendale facility consists of about 50 acres located in an area
     with a history of industrial and commercial use and groundwater
     contamination. The Company is part of a group (the "Glendale Respondents")
     of 28 parties which EPA has notified that it considers to be potentially
     responsible parties ("PRP's"). The Glendale Respondents are attempting to
     negotiate a consent decree with EPA to govern their implementation of an
     "interim" remedy to the groundwater contamination. Pursuant to a 1997 EPA
     Administrative Order, the Glendale Respondents have begun to implement the
     interim remedy. In 1998 an engineer retained by the Glendale Respondents
     estimated the present value of total costs through 2011 to implement and
     operate the EPA approved interim remedy, which involves remedial
     groundwater pumping and treatment, at approximately $54,000,000, of which
     approximately $24,000,000 are capital costs. The principal issue which is
     disputed in the consent decree negotiations is the amount to reimburse EPA
     for pre-1998 EPA response costs. For costs through December 30, 1997 EPA
     has claimed $13,266,949. On March 12, 1999, the Glendale PRP Group offered
     to settle at $11,000,000. Based upon available information, management does
     not believe this matter will have a material adverse effect on the
     Company's financial statements.

          The Company removed underground storage tanks and remediated soil
     contamination at the Glendale facility property. In some instances, the
     removals and the contamination were associated with grocery business
     operations; in others, they were associated with prior property users.
     Although the possibility of other contamination from prior operations or
     adjacent properties exists at the Glendale facility property, management
     does not believe that the costs of remediating such contamination will have
     a material adverse effect on the Company's financial statements.

          The Company is subject to a variety of environmental laws, rules,
     regulations and investigative or enforcement activities, as are other
     companies in the same or similar business. The Company believes it is in
     substantial compliance with such laws, rules and regulations. These laws,
     rules, regulations and agency activities change from time to time, and such
     changes may affect the ongoing business and operations of the Company.


Item 4. Submission of Matters to a Vote of Security Holders.
-----------------------------------------------------------

          Not applicable

                                       10
<PAGE>
                                     Part II
-------------------------------------------------------------------------------


Item 5. Market for the Registrant's Common Stock and Related Stockholder
Matters.
------------------------------------------------------------------------

Common Stock Information

          The Company's common stock is traded on the New York Stock Exchange
     (NYSE) under the symbol "FMY." At March 3, 1999, the Company had
     approximately 4,800 stockholders of record.

          The Company has not paid dividends since the incorporation of its
     predecessor in 1981, and it is the current policy of the Board of Directors
     that all available cash flow be used for reinvestment in the business of
     the Company and for the reduction of debt.

<TABLE>
<CAPTION>
                                          Price Ranges of Common Stock (1)
                    ------------------------------------------------------------------------------
                             1998                        1997                        1996
Fiscal Quarter        High          Low           High          Low            High         Low
--------------      ---------    ---------      ---------    ---------      ---------    ---------
<S>                 <C>          <C>            <C>          <C>            <C>          <C>
First               $51          $35            $23  1/2     $16 13/16      $14 15/16    $11  1/8
Second               48  1/2      39 15/16       28 15/16     22             16           13  1/16
Third                55  3/16     36  5/8        33  1/2      25             18 13/16     14  3/8
Fourth               62 11/16     50  9/16       37  3/4      25             18  3/8      14 15/16

     1    Prices have been adjusted for a two-for-one stock split effective the close of business
          on September 30, 1997.
</TABLE>

                                       11
<PAGE>
Item 6. Selected Financial Data.
-------------------------------

<TABLE>
<CAPTION>
                                                                           Fiscal Year Ended
                                                 -----------------------------------------------------------------------
(In thousands, except per-share data)             January 30,    January 31,    February 1,    February 3,    January 28,
                                                        1999           1998           1997           1996           1995
                                                 -----------    -----------    -----------    -----------    -----------
<S>                                              <C>            <C>            <C>            <C>            <C>        
Income Statement Data
     Net sales                                   $14,878,771    $ 7,359,202    $ 4,530,120    $ 4,152,574    $ 3,698,514
     Gross margin                                  4,459,878      2,184,074      1,346,716      1,187,251      1,031,201
     Operating and administrative expenses         3,628,372      1,842,224      1,163,859      1,056,047        938,593
     Merger related costs                            268,854
     Writedown of California assets                                                                               15,978
                                                 -----------    -----------    -----------    -----------    -----------
     Income from operations                          562,652        341,850        182,857        131,204         76,630
     Interest expense                                378,236        102,094         48,855         48,716         24,924
     Recapitalization fees                                                                          1,400               
     Provision for income taxes                      129,244         96,445         50,039         30,586         18,161
                                                 -----------    -----------    -----------    -----------    -----------
     Income before extraordinary charge               55,172        143,311         83,963         50,502         33,545
     Extraordinary charge (1)                       (217,947)       (91,210)
                                                 -----------    -----------    -----------    -----------    -----------
     Net income (loss)                           $  (162,775)   $    52,101    $    83,963    $    50,502    $    33,545
                                                 ===========    ===========    ===========    ===========    ===========
     Basic earnings per common share:
       Income before extraordinary charge        $      0.36    $      1.37    $      1.05    $      0.61    $      0.37
       Extraordinary charge (1)                        (1.43)         (0.87)
                                                 -----------    -----------    -----------    -----------    -----------
       Net income (loss)                         $     (1.07)   $      0.50    $      1.05    $      0.61    $      0.37
                                                 ===========    ===========    ===========    ===========    ===========
     Diluted earnings per common share:
       Income before extraordinary charge        $      0.34    $      1.31    $      1.00    $      0.58    $      0.35
       Extraordinary charge                            (1.36)         (0.83)
                                                 -----------    -----------    -----------    -----------    -----------
       Net income (loss)                         $     (1.02)   $      0.48    $      1.00    $      0.58    $      0.35
                                                 ===========    ===========    ===========    ===========    ===========
Balance Sheet Data
     Working capital                             $   193,518    $   434,518    $   236,659    $   288,385    $   273,290
     Total assets                                 10,151,214      5,422,936      1,996,037      1,953,753      1,771,283
     Long-term debt                                4,821,635      2,184,794        666,512        820,760        540,166
     Stockholders' equity                          2,314,405      1,702,360        642,702        614,762        696,798

1.   Charge for early extinguishment of debt covering premiums paid and write-off of financing costs related to debt
     refinanced in the Smith's Acquisition for fiscal year ended January 31, 1998 and the QFC and Ralphs/Food 4 Less
     Acquisition for fiscal year ended January 30, 1999.
</TABLE>


                                                           12
<PAGE>
Item 7. Management's Discussion and Analysis 
of Financial Condition and Results of Operations.
------------------------------------------------

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 April 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 and in
     the Company's Joint Proxy Statement/Prospectus dated March 8, 1999.


MERGER RELATED COSTS

          The Company is in the process of implementing its plan to integrate
     its five primary operations (Fred Meyer Stores, Ralphs/Food 4 Less,
     Smith's, QFC and Hughes) resulting in merger related costs of $268.9
     million for 1998. The integration plan includes the consolidation of
     distribution, information systems, and administrative functions, conversion
     of 78 store banners, closure or sale of seven stores, and transaction costs
     incurred to complete the mergers. The costs were reported in the periods in
     which cash was expended except for $25.9 million that was accrued for
     liabilities incurred to exit certain activities, sever employees, and
     retain certain key employees and an $82.9 million charge to write-down
     certain assets. The Company estimates that the total cost to implement this
     plan will be approximately $355 million, of which $268.9 was incurred in
     1998. The remaining cost of $86 million includes $37 million to complete
     the systems integration, $4 million to complete the conversion of store
     banners, and $45 million to dispose of the Santee Dairy (see Disposal of
     Santee Dairy). Of the $86 million of remaining costs, approximately $45
     million is expected to be incurred in the second quarter of 1999 and the
     remaining $41 million is expected to be incurred ratably in 1999. The
     Company estimates that successful completion of its integration plan will
     result in net annual cost savings and improvements attributable to
     operating synergies of $150 million by 2000. Such cost savings and
     improvements consist of reduced advertising costs from eliminating banners,
     reduced distribution costs by eliminating distribution centers and
     independent wholesalers, increased efficiencies from volume purchasing and
     merchandising, increased efficiencies from maximizing capacity at
     manufacturing facilities, and elimination of general and administrative
     costs by consolidating offices, processing centers, and levels of
     supervision.

          The distribution consolidation includes the transfer of purchasing and
     distribution functions from the Hughes facility to various Ralphs'
     facilities and transfer of QFC's distribution and manufacturing functions
     from wholesalers to various Fred Meyer facilities. Costs incurred to
     complete the distribution consolidation and close the Hughes facility
     include the write-down of assets held for sale to net realizable value,
     severance and incremental labor and other costs. The Company has
     substantially completed the distribution consolidation except for the
     disposition of the Hughes facility.

          The information systems integration plan is to consolidate into two
     processing platforms: a northern platform in Portland, Oregon and a
     southern platform in Los Angeles, California. The consolidation requires
     the conversion of all Smith's and QFC systems into Fred Meyer systems and
     the conversion of all Hughes systems into Ralphs' systems which will result
     in the closure of three duplicate processing facilities. Costs incurred to
     complete the information systems integration include the write-down of
     assets that have been abandoned or become obsolete, incremental operating
     costs during the integration process, payments to third parties, training
     costs and severance. Computer hardware and software that was abandoned in
     1998 following the QFC merger was written-down to net realizable value.

                                       13
<PAGE>
     Computer hardware and software that will be utilized until the end of the
     integration process is being written-down over its reduced estimated useful
     life. The conversion of Hughes systems into Ralphs' systems is complete and
     the conversion of Smith's and QFC's systems into Fred Meyer systems is
     expected to be completed by the end of 1999. The remaining costs are
     expected to include charges for asset write-downs, incremental operating
     costs, payments to third parties and training costs.

          The administrative plan is similar to the information systems
     integration plan except that in addition to Portland and Los Angeles, some
     administrative functions will remain in Salt Lake City resulting in the
     closure of two administrative offices. This integration includes the
     consolidation of accounting, payroll processing, benefits and risk
     administration, property management and legal services into the remaining
     administrative offices. Costs incurred to complete the administrative
     consolidation primarily consist of labor and severance costs. One of the
     two excess administrative offices is closed and the remainder of the
     administrative consolidation is expected to be completed by the end of
     1999.

          The conversion of store banners includes the conversion of 55 Hughes
     stores to the Ralphs' banner, 15 Smitty's stores to the Fred Meyer banner,
     five QFC stores to the Fred Meyer banner and three Fred Meyer stores to the
     Smith's banner. Costs incurred to complete the banner conversions include
     incremental cash expenditures of $28.9 million for advertising and
     promotions to establish the banner, and $12.2 million for labor required to
     remerchandise the store inventory. The 55 Hughes stores have been converted
     to the Ralphs banner and the five QFC stores have been converted to the
     Fred Meyer banner. The remaining banner conversions are expected to be
     completed by the end of 1999. The remaining costs are expected to include
     charges for advertising and promotions costs incurred to establish the
     banner and labor to remerchandise the store.

          The closure or sale of seven stores includes three stores sold
     pursuant to a settlement agreement with the State of California (the "AG
     Stores") and four duplicate facilities. Costs incurred on these stores
     include the write-down of assets held for sale to net realizable value, the
     write-off of goodwill associated with the AG Stores and a charge for future
     contractual lease payments over the expected holding period, net of
     sublease income. The three AG Stores were sold during 1998. The remaining
     four duplicate stores have been closed and three have been sold as of
     January 31, 1999. All costs to close the stores have been charged to
     operations and expended in 1998 except for lease obligations.

          Transaction costs represent fees paid to outside parties, employee
     bonuses contingent upon the closing of the Kroger merger and an accrual for
     an employee stay bonus program.

DISPOSAL OF SANTEE DAIRY

          The Company is a 50% owner of Santee Dairies, L.L.C. ("Santee") and
     has a 10 year product supply agreement with Santee that requires the
     Company to purchase 9 million gallons of fluid milk and other products
     annually. The product supply agreement expires on July 29, 2007. Upon
     acquisition of Ralphs, Santee became excess capacity and a duplicate
     facility. The Company is currently engaged in efforts to dispose of its
     interest in Santee which may result in a loss of approximately $45 million
     in 1999.

RESULTS OF OPERATIONS

          The following discussion summarizes the Company's operating results
     for 1998 compared with 1997 and 1997 compared with 1996. However, 1998
     results are not comparable to 1997 results due to recent acquisitions (See
     Note 3 of Notes to Consolidated Financial Statements) and 1997 results are
     not comparable to 1996 results due to the Smith's and Hughes acquisitions.
     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,
     Hughes from March 19, 1997 and Smith's from September 9, 1997.


Comparison of the 52 weeks ended January 30, 1999 with the 52 weeks ended
January 31, 1998

          Net sales for the 52 weeks ended January 30, 1999 increased $7.5
     billion, or 101% to $14.9 billion from $7.4 billion for the 52 weeks ended
     January 31, 1998. 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 $1.9 billion of the increase and Ralphs/Food 4 Less accounted
     for $5.0 billion of the increase for the 52 weeks ended January 30, 1999.

                                       14
<PAGE>
          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 3.2% from the prior year for the 52
     weeks ended January 30, 1999.

          Gross margin increased as a percentage of net sales from 29.7% for the
     52 weeks ended January 31, 1998 to 30.0% for the 52 weeks ended January 30,
     1999. The increase in gross margin as a percent of sales was generated
     primarily from economies of scale resulting from the Company's increased
     sales offset almost entirely by losses on liquidated inventory of $8.9
     million incurred in connection with store banner conversions and
     distribution consolidations and 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 $3.5 billion and $1.8
     billion for the 52 weeks ended January 30, 1999 and January 31, 1998,
     respectively. Operating and administrative expenses decreased as a
     percentage of sales 1.0% from the prior year. 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 Ralphs/Food 4
     Less, which are lower cost operations. Additionally, the Company benefited
     from the suspension of contributions to certain multi-employer pension and
     benefit plans totaling $45.2 million for the 52 weeks ended January 30,
     1999.

          Amortization of goodwill increased $75.9 million from the prior year
     as a result of the recent acquisitions.

          The merger related costs of $268.9 million for the 52 weeks ended
     January 30, 1999, were incurred in connection with the Company's plan to
     integrate its five primary operations. See "Merger Related Costs."

          Interest expense increased to $378.2 million from $102.1 million for
     the 52 weeks ended January 30, 1999 and January 31, 1998, respectively. The
     increase in interest expense primarily reflects 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 70.1% and
     40.2% for the 52 weeks ended January 30, 1999 and January 31, 1998,
     respectively.

          Income before extraordinary charge was $55.2 million for the 52 weeks
     ended January 30, 1999, compared to $143.3 million for the 52 weeks ended
     January 31, 1998. The change is a result of the above mentioned factors.

          The extraordinary charges of $217.9 million and $91.2 million for the
     52 weeks ended January 30, 1999 and January 31, 1998, respectively, consist
     of fees incurred in conjunction with the refinancing of certain
     indebtedness and the write-off of related debt issuance costs.

          Net income (loss) decreased to a loss of $162.8 million for the 52
     weeks ended January 30, 1999 from income of $52.1 million for the 52 weeks
     ended January 31, 1998 primarily due to the factors discussed above.

Results of Operations -- 1997 Compared with 1996

          Net sales for the 52 weeks ended January 30, 1998 increased $2.8
     billion, or 62%, to $7.4 billion from $4.5 billion in the 52 weeks ended
     February 1, 1997. Sales from acquired stores accounted for $2.3 billion of
     the increase. The remainder of the increase resulted from 6.5% comparable
     store sales growth (excluding Smith's) over the prior year.

          Gross margin increased primarily due to the economies of scale
     resulting from the Company's increased sales offset 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 acquisitions of Smith's and Hughes.

          Operating and administrative expenses were $1.8 billion and $1.2
     billion for the 52 weeks ended January 31, 1998 and February 1, 1997,
     respectively. Operating and administrative expenses decreased as a
     percentage of sales 0.85% from the prior year primarily 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 Hughes, which
     are low cost operations.

          Interest expense increased to $102.1 million in 1997 from $48.9
     million in 1996. The increase primarily reflects the increased amount of
     indebtedness incurred in conjunction with the acquisition of Smith's.

                                       15
<PAGE>
          The effective tax rate was 40.2% for 1997 and 37.3% for 1996. The
     increase in the effective tax rate results from the increase in
     amortization of goodwill, which is not deductible for tax purposes.

          Income before extraordinary charge was $143.3 million for 1997 and
     $84.0 million for 1996. This increase is primarily the result of the
     above-mentioned factors.

          The extraordinary charge of $91.2 million recorded in the third
     quarter of 1997 consists of fees incurred in the prepayment of certain
     indebtedness and write-off of debt issuance costs.

          Net income was $52.1 million for 1997 and $84.0 million for 1996. This
     decrease is primarily the result of the increase in income before
     extraordinary charge offset by the extraordinary charge.

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 $727.9 million for the 52
     weeks ended January 30, 1999 compared to $253.8 million for the 52 weeks
     ended January 31, 1998. 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 $723.8 million for the 52 weeks
     ended January 30, 1999 compared to $598.7 million for the 52 weeks ended
     January 31, 1998. The investing activities consisted primarily of capital
     expenditures and business acquisitions. Capital expenditures of $722
     million in the current year were for the construction of new stores,
     remodeling existing stores and additions to distribution centers and
     offices. During the 52 weeks ended January 30, 1999, the Company opened
     [28] new stores and completed the remodel of 91 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
     1999, currently budgeted to be approximately $760 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.

          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 $56.5 million for the 52
     weeks ended January 30, 1999. 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 "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 ("Subsidiary Guarantor"). 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.

          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

                                       16
<PAGE>
     1998 Senior Credit Facility limits dividends on and redemption of capital
     stock. At January 30, 1999, the Company is in compliance with these debt
     covenants.

          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 January
     30, 1999, $364.0 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 January 30, 1999, the Company had $125.0 million of uncommitted
     money market lines with five banks and $1.15 billion 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 January 30, 1999, a total of approximately $511.7
     million was available for borrowings under the 1998 Senior Credit Facility
     and the commercial paper facilities and $20.0 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 $42.5 million of outstanding Letters of Credit as of
     January 30, 1999. 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 costs and efficiently utilize resources, the Company strives to
     minimize the effects of inflation on its operations.

Recent Pronouncements

          In June 1998, the Financial Accounting Standards Board issued SFAS No.
     133 "Accounting for Derivative Instruments and Hedging Activities". This
     statement is effective for fiscal years beginning after June 15, 1999 and
     establishes accounting and reporting standards for derivative instruments.
     The Company is evaluating the effect of this statement on its financial
     position and results of operations.

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

                                       17
<PAGE>
     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 January 30, 1999, based on information currently
     available:

<TABLE>
<CAPTION>
                                                 Percent Complete
                                   --------------------------------------------
                                   Category     Phase 1     Phase 2     Phase 3
                                   --------     -------     -------     -------
<S>                                    <C>          <C>         <C>         <C>
Information Technology                 1            95%         72%         43%
Merchandise and external entities      2            65%         40%         25%
Non-IT Systems                         3            71%         34%         10%
</TABLE>

          Phase 1 is expected to be completed by the end of the first quarter of
     1999. Phases 2 and 3 will continue throughout 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 unseen implementation problems, delays in the delivery of
     products, or inefficiencies in store operations resulting from loss of
     power or communication links between stores, distribution centers, and
     headquarters.

          Critical business partners have been contacted for their status on
     year 2000 readiness. Based on the Company's assessment of their responses,
     the Company believes that the majority of its business partners are taking
     action for year 2000 readiness. Notwithstanding the substantial efforts by
     the Company and its key business partners, the Company could potentially
     experience disruptions to some aspects of its various activities and
     operations. Consequently, in conjunction with the Plan, the Company's
     management is formulating contingency plans for critical functions and
     processes, which may be implemented to minimize the risk of interruption to
     the Company's business in the event of a year 2000 occurrence.

          Contingency planning, which utilizes a business process approach,
     focuses on the following priorities: ability to sell products to customers,
     continuously replenish stores with goods (ordering and distribution), pay
     employees, collect and remit on outstanding accounts, meet other regulatory
     and administrative needs, and address merchandising objectives. We expect
     that documented contingency plans for critical business processes will be
     in place by the end of the third quarter of 1999.

          The Company has committed significant resources in connection with
     resolving the potential impact of year 2000. The total estimated costs of
     the Plan, exclusive of capital expenditures, are projected to be $25.0 to
     $30.0 million. Costs charged to operations for the 52 weeks ended January
     30, 1999 totaled $6.0 million , which represented an immaterial portion of
     the Company's information services budget over the period, and were $3.0
     million in 1997. Estimated costs expected to be incurred and expensed in
     1999 are $12.0 to $17.0 million, based on available information. The costs
     of the Company's year 2000 efforts are funded from operating cash flow.

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. These
     forward-looking statements 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 Company may make other forward-looking statements
     from time to time. 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

                                       18
<PAGE>
     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; adverse determinations
     by federal or state regulatory authorities, including adverse
     determinations in connection with the recent mergers or other acquisitions;
     operational inefficiencies in distribution or other Company systems,
     including any that may result from the recent mergers; issues arising from
     addressing year 2000 computer issues; legislative or regulatory changes
     adversely affecting the business in which the companies are engaged; and
     other opportunities or acquisitions which may be pursued by the Company.

          Leverage; Ability to Service Debt. The Company is highly leveraged. As
     of January 30, 1999, the Company has total indebtedness (including current
     maturities and capital lease obligations) of $5.2 billion. Total
     indebtedness consists of long-term debt, including borrowings under the
     1998 Senior Credit Facility, 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 Facility
     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 could experience unexpected costs from such
     integration and/or a loss of customers or sales as a result of the recent
     mergers, including as a result of the conversion of Hughes Family Markets
     banners to Ralphs. There can also be 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 can be 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. Information regarding intense competition in the retail
     merchandising industry is set forth under Item 1.

          Labor Relations. Information regarding employees and labor matters is
     set forth under Item 1.

                                       19
<PAGE>
          Forward-looking statements speak only as of the date made. The Company
     undertakes no obligation to publicly release the result 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 7A. Quantitative and Qualitative Disclosures About Market Risks
--------------------------------------------------------------------

          The Company manages interest rate risk through the strategic use of
     fixed and variable interest rate debt and, to a limited extent, interest
     rate derivatives. At January 30, 1999, the Company's derivative instrument
     consisted of an interest rate 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 fluctuation
     outside of the limits.

          The following table provides information by year of maturity about the
     Company's other financial instruments that are sensitive to interest rate
     changes (dollars in thousands):

<TABLE>
<CAPTION>
                                                   Expected Year of Maturity
                              ------------------------------------------------------------------------
                                1999        2000        2001        2002          2003      Thereafter
                              --------    --------    --------    --------    ----------    ----------
<S>                           <C>         <C>         <C>         <C>         <C>           <C>       
Long-term Debt:
    Fixed rate                $ 29,539    $ 30,023    $ 14,752    $  4,733    $  253,156    $1,620,564
    Average interest rate        5.95%       6.75%       6.30%       8.97%         7.16%         7.54%

    Variable rate              117,481     221,770     357,172     467,954     1,847,858         3,674
    Average interest rate        5.87%       5.97%       6.08%       6.18%         6.30%         6.45%
</TABLE>


                                       20
<PAGE>
Item 8. Financial Statements and Supplementary Data.
---------------------------------------------------

Consolidated Statements of Income

<TABLE>
<CAPTION>
                                                                          Fiscal Year Ended
                                                              -------------------------------------------
                                                              January 30,     January 31,     February 1,
(In thousands, except per share data)                               1999            1998            1997
                                                             -----------     -----------     -----------
<S>                                                          <C>             <C>             <C>        
Net sales                                                    $14,878,771     $ 7,359,202     $ 4,530,120
Cost of goods sold:                                                                                     
  General                                                     10,418,893       5,175,128       3,177,838
  Related party lease (Note 5)                                                                     5,566
                                                             -----------     -----------     -----------
Total cost of goods sold                                      10,418,893       5,175,128       3,183,404
                                                             -----------     -----------     -----------
Gross margin                                                   4,459,878       2,184,074       1,346,716
Operating and administrative expenses:                                                                  
  General                                                      3,536,104       1,784,128       1,111,520
  Related party leases (Notes 5 and 9)                                 -          41,709          50,954
  Amortization of goodwill                                        92,268          16,387           1,385
  Merger related costs (Note 4)                                  268,854               -               -
                                                             -----------     -----------     -----------
Total operating and administrative expenses                    3,897,226       1,842,224       1,163,859
                                                             -----------     -----------     -----------
Income from operations                                           562,652         341,850         182,857
Interest expense                                                 378,236         102,094          48,855
                                                             -----------     -----------     -----------
Income before income taxes and extraordinary charge              184,416         239,756         134,002
Provision for income taxes (Note 7)                              129,244          96,445          50,039
                                                             -----------     -----------     -----------
Income before extraordinary charge                                55,172         143,311          83,963
Extraordinary charge, net of taxes (Note 6)                     (217,947)        (91,210)
                                                             -----------     -----------     -----------
Net income (loss)                                            $  (162,775)    $    52,101     $    83,963
                                                             ===========     ===========     ===========
Basic earnings per common share:                                                                        
  Income before extraordinary charge                         $      0.36     $      1.37     $      1.05
  Extraordinary charge                                             (1.43)          (0.87)
                                                             -----------     -----------     -----------
  Net income (loss)                                          $     (1.07)    $      0.50     $      1.05
                                                             ===========     ===========     ===========
  Basic weighted average number of common
    shares outstanding                                           151,699         104,520          79,794
                                                             ===========     ===========     ===========
Diluted earnings per common share:
  Income before extraordinary charge                         $      0.34     $      1.31     $      1.00
  Extraordinary charge                                             (1.36)          (0.83)              -
                                                             -----------     -----------     -----------
  Net income (loss)                                          $     (1.02)    $      0.48     $      1.00
                                                             ===========     ===========     ===========
  Diluted weighted average number of common and
    common equivalent shares outstanding                         160,218         109,591          84,068
                                                             ===========     ===========     ===========
See Notes to Consolidated Financial Statements.
</TABLE>

                                       21
<PAGE>
Consolidated Balance Sheets

<TABLE>
<CAPTION>
                                                            January 30,     January 31,
(In thousands)                                                    1999            1998
                                                           -----------     -----------
<S>                                                        <C>             <C>        
Assets

Current assets:
     Cash and cash equivalents                             $   177,907     $   117,311
     Receivables                                               126,315         108,496
     Inventories                                             1,820,186       1,240,866
     Prepaid expenses and other                                 70,576          70,536
     Current portion of deferred taxes (Note 7)                256,417          90,804
                                                           -----------     -----------
Total current assets                                         2,451,401       1,628,013

Property and equipment:
     Buildings, fixtures and equipment                       3,805,462       2,802,757
     Property held under capital leases                        170,038          67,542
     Land                                                      589,542         414,616
                                                           -----------     -----------
     Total property and equipment                            4,565,042       3,284,915
     Less accumulated depreciation and amortization          1,115,456         852,875
                                                           -----------     -----------
Property and equipment--net                                  3,449,586       2,432,040

Other assets:
     Goodwill--net                                           3,791,334       1,279,130
     Long-term deferred tax assets (Note 7)                    275,077                
     Other                                                     183,816          83,753
                                                           -----------     -----------
Total other assets                                           4,250,227       1,362,883
                                                           -----------     -----------
Total assets                                               $10,151,214     $ 5,422,936
                                                           ===========     ===========
See Notes to Consolidated Financial Statements.
</TABLE>

                                       22
<PAGE>
Consolidated Balance Sheets

<TABLE>
<CAPTION>
                                                            January 30,     January 31,
(In thousands, except per share data)                             1999            1998
                                                           -----------     -----------
<S>                                                        <C>             <C>        
Liabilities and Stockholders' Equity

Current liabilities:                                       
     Accounts payable                                      $ 1,140,386     $   766,678
     Current portion of long-term debt                                                
          and lease obligations (Notes 6 and 9)                188,059          19,650
     Accrued expenses:                                                                
       Compensation                                            317,175         188,417
       Other                                                   612,263         218,750
                                                           -----------     -----------
Total current liabilities                                    2,257,883       1,193,495

Long-term debt (Note 6)                                      4,821,635       2,184,794

Capital lease obligations (Note 9)                             158,938          82,782

Deferred income taxes (Note 7)                                       -          83,183

Other long-term liabilities (Note 10)                          598,353         176,322

Commitments and contingencies (Notes 9 and 12)                                        

Stockholders' equity (Note 8):
     Preferred stock, $.01 par value (authorized,
       100,000 shares; outstanding, none)
     Common stock, $.01 par value (authorized,
       400,000 shares; issued 155,775 shares in 1998
       and 128,809 shares in 1997; outstanding 155,770
       shares in 1998 and 128,809 shares in 1997)                1,558           1,288
     Additional paid-in capital                              1,948,486       1,173,760
     Other                                                      (3,991)           (764)
     Treasury stock (5 shares in 1998)                            (249)               
     Retained earnings                                         368,601         528,076
                                                           -----------     -----------
Total stockholders' equity                                   2,314,405       1,702,360
                                                           -----------     -----------
Total liabilities and stockholders' equity                 $10,151,214     $ 5,422,936
                                                           ===========     ===========

See Notes to Consolidated Financial Statements.
</TABLE>

                                       23
<PAGE>
Consolidated Statements of Cash Flows

<TABLE>
<CAPTION>
                                                                                    Fiscal Year Ended
                                                                       ------------------------------------------
                                                                       January 30,     January 31,     February 1,
(In thousands)                                                               1999            1998            1997
                                                                       ----------      ----------      ----------
<S>                                                                    <C>             <C>             <C>       
Cash flows from operating activities:
     Income before extraordinary charge                                $   55,172      $  143,311      $   83,963
     Adjustments to reconcile income before extraordinary                                                        
         charge to net cash provided by operating activities:
        Depreciation and amortization of property and equipment           323,029         195,318         134,946
        Amortization of goodwill                                           92,268          16,387           1,385
        Deferred lease transactions                                       (12,770)        (15,833)         (4,944)
        Deferred income taxes                                             (14,419)         17,090          10,548
        Merger related asset write-downs                                   82,925                                
        Changes in operating assets and liabilities:                                                             
          Inventories                                                       5,513        (104,693)        (83,841)
          Other current assets                                             26,704           6,592         (20,791)
          Accounts payable                                                 44,665          (6,784)        143,282
          Accrued expenses and other liabilities                          (35,526)         (8,495)         14,537
          Income taxes                                                    158,060          33,369           2,459
        Other                                                               2,280         (12,565)        (14,919)
                                                                       ----------      ----------      ----------
Net cash provided by operating activities                                 727,901         263,697         266,635

Cash flows from investing activities:                                                                            
     Cash acquired in acquisitions                                         68,889          71,635                
     Payments made for acquisitions                                      (155,329)       (425,855)               
     Purchases of property and equipment                                 (722,188)       (329,374        (179,898)
     Proceeds from sale of property and equipment                          65,673          79,508         126,002
     Other                                                                 19,141           5,375          12,340
                                                                       ----------      ----------      ----------

Net cash used for investing activities                                   (723,814)       (598,711)        (41,556)

Cash flows from financing activities:                                                                             
     Issuance of common stock - net                                        69,331         227,386           9,278
     Stock repurchase and related expenses                                                                (70,099)
     Long-term financing:                                                                                         
        Borrowings                                                      4,413,941       1,857,708                 
        Repayments                                                     (4,432,498)     (1,697,724)       (154,749)
     Other                                                                  5,735           1,615             (63)
                                                                       ----------      ----------      ----------
Net cash provided by (used in) financing activities                        56,509         388,985        (215,633)
                                                                       ----------      ----------      ----------

Net increase in cash and cash equivalents for the year                     60,596          53,971           9,436
Cash and cash equivalents at beginning of year                            117,311          63,340          53,904
                                                                       ----------      ----------      ----------

Cash and cash equivalents at end of year                               $  177,907      $  117,311      $   63,340
                                                                       ==========      ==========      ==========

See Notes to Consolidated Financial Statements.
</TABLE>

                                       24
<PAGE>
Consolidated Statements of Changes in Stockholders' Equity
<TABLE>
<CAPTION>
                                            Common Stock                    Treasury Stock
                                          ---------------                  ----------------
                                          Number             Additional    Number
                                              of                Paid-in        of                          Retained
 (In thousands)                           Shares   Amount       Capital    Shares    Amount      Other     Earnings         Total
                                         -------   ------    ----------    ------   -------    -------    ---------    ----------
<S>                                      <C>       <C>       <C>            <C>     <C>        <C>        <C>          <C>       
Balance at February 3, 1996               80,830     $813    $  223,982       ---   $   ---    $(2,045)   $ 392,012    $  614,762
Issuance/purchase of common stock:
    Stock options exercised                3,507       35         7,966                                                     8,001
    Stock bonus                               20                    166                           (566)                      (400)
    Tax benefits from stock options                                 877                                                       877
    Treasury stock                                                 (326)    4,400   (69,773)                              (70,099)
Other                                        278        3         5,030                            565                      5,598
Net income                                                                                                   83,963        83,963
                                         -------   ------    ----------    ------   -------    -------    ---------    ----------
Balance at February 1, 1997               84,635      851       237,695     4,400   (69,773)    (2,046)     475,975       642,702
Issuance of common stock:                                                                                                        
    Stock options exercised                3,077       31        33,361         1       (29)                               33,363
    Stock bonus                               12                    238                           (238)                       ---
    Tax benefits from stock options                              12,690                                                    12,690
    Fox acquisition                          332        3         9,201                                                     9,204
    Smith's acquisition                   33,301      333       719,630                                                   719,963
    KUI acquisition                        1,719       17        35,943                                                    35,960
    Hughes acquisition                     9,833       98       191,976                                                   192,074
Other                                        301        3         2,780                          1,520                      4,303
Retirement of treasury stock              (4,401)     (48)      (69,754)   (4,401)   69,802                                      
Net income                                                                                                   52,101        52,101
                                         -------   ------    ----------    ------   -------    -------    ---------    ----------
Balance at January 31, 1998              128,809    1,288     1,173,760       ---       ---       (764)     528,076     1,702,360
Adjustment for QFC                           118        1           311                                       3,323         3,635
Issuance of common stock:                                                                                                        
    Stock options exercised                4,879       49        66,920         5      (249)                               66,720
    Stock bonus                               64        1         2,857                         (2,858)                       ---
    Tax benefits from stock options                              47,373                                                    47,373
    Ralphs acquisition                    21,671      217       652,811                           (514)                   652,514
Other                                        234        2         4,454                            145          (23)        4,578
Net loss                                                                                                   (162,775)     (162,775)
                                         -------   ------    ----------    ------   -------    -------    ---------    ----------
Balance at January 30, 1999              155,775   $1,558    $1,948,486         5   $  (249)   $(3,991)   $ 368,601    $2,314,405
                                         =======   ======    ==========    ======   =======    =======    =========    ==========

See Notes to Consolidated Financial Statements.
</TABLE>

                                       25
<PAGE>
Notes to Consolidated Financial Statements

1. Summary of Significant Accounting Policies

          The Company--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 781 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.

          Principles of Consolidation--The accompanying financial statements
     include the consolidated accounts of the Company and its subsidiaries. All
     significant intercompany transactions and balances have been eliminated.

          Fiscal Year--The Company's fiscal year ends on the Saturday closest to
     January 31. Fiscal years 1998, 1997, and 1996 ended on January 30, 1999,
     January 31, 1998 and February 1, 1997, respectively. Operating results for
     fiscal years 1998, 1997, and 1996 include 52 weeks.

          Unless otherwise stated, references to years in this report relate to
     fiscal years rather than to calendar years.

          Business Segment--The Company's operations consist of one segment,
     retail sales.

          Cash and Cash Equivalents--The Company considers all highly liquid
     debt instruments purchased with a maturity of three months or less at the
     date of purchase to be cash equivalents.

          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
     $57.7 million at January 30, 1999 and $51.8 million at January 31, 1998 ,
     respectively. The pretax LIFO charge (income) was $5.9 million in 1998,
     ($3.7) million in 1997, and ($.9) million in 1996.

          Property and Equipment--Property and equipment is stated at cost.
     Depreciation on owned buildings and equipment is provided using the
     straight-line method over the estimated useful lives of the related assets
     of three to 31 years. Amortization of buildings and equipment under capital
     leases is provided using the straight-line method over the remaining
     related lease terms of 16 to 40 years. Accumulated amortization of
     buildings and equipment under capitalized leases was $28 million at January
     30, 1999 and $8.9 million at January 31, 1998.

          Goodwill--Goodwill is generally amortized on a straight-line basis
     over 40 years. Management periodically evaluates the recoverability of
     goodwill based upon current and anticipated net income and undiscounted
     future cash flows. Accumulated amortization was $115.5 million at January
     30, 1999 and $23.1 million at January 31, 1998.

          Impairment of Long-lived Assets--The Company reviews and evaluates
     long-lived assets for impairment when events or circumstances indicate
     costs may not be recoverable. The net book value of long-lived assets is
     compared to expected undiscounted future cash flows. An impairment loss
     would be recorded for the excess of net book value over the fair value of
     the asset impaired.

          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.

          Buying and Promotional Allowances--Vendor allowances and credits that
     relate to the Company's buying and merchandising activities are recognized
     as earned.

          Advertising--Advertising costs are expensed as incurred. Advertising
     costs were $148.1 million in 1998, $62.9 million in 1997and $40.0 million
     in 1996.

          Self-insurance--The Company is primarily self-insured for general
     liability, property loss, worker's compensation and non-union health and
     welfare. Liabilities for these costs are based on actual claims and
     actuarial statements for estimates of claims that have been incurred but
     not reported.

          Pre-opening Costs--All noncapital expenditures incurred in connection
     with the opening of new or acquired stores and other facilities or the
     remodeling of existing stores are expensed as incurred.

          Interest Costs--Interest costs are expensed as incurred, except for
     interest costs which have been capitalized as part of the cost of
     properties under development. The Company's cash payments for interest (net

                                       26
<PAGE>
     of capitalized interest of approximately $1.7 million in 1998, $1.0 million
     in 1997 and $1.4 million in 1996) totaled $369.1 million in 1998, $97.8
     million in 1997 and $49.5 million in 1996.

          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 (see Note 7).

          Cash paid (refunded) for income taxes was $(21.1) million in 1998,
     $44.9 million in 1997 and $36.9 million in 1996.

          Stock-based Compensation--As allowed under SFAS No. 123, Accounting
     for Stock-based Compensation, the Company measures compensation expense for
     its stock-based employee compensation plans using the intrinsic value based
     method, but provides pro forma disclosures of net income and earnings per
     share as if the method prescribed by SFAS No. 123 had been applied in
     measuring compensation expense (see Note 8).

          Comprehensive Income--The Company does not have any other
     comprehensive income. Accordingly, comprehensive income (loss) is the same
     as reported net income.

          Earnings Per Common 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. Common equivalent shares relate to
     outstanding stock options and warrants.

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

          Recent Accounting Pronouncements--In June 1998, the Financial
     Accounting Standards Board issued SFAS No. 133 "Accounting for Derivative
     Instruments and Hedging Activities". This statement is effective for fiscal
     years beginning after June 15, 1999 and establishes accounting and
     reporting standards for derivative instruments. The Company is evaluating
     the effect of this statement on its financial position, results of
     operations, and cash flows.

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 April 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.

                                       27
<PAGE>
3. Acquisitions and Dispositions

          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 on that date. 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        Consolidated
                                             Historical     Historical       Company
                                             ----------     ----------    ------------
<S>                                          <C>            <C>            <C>       
Fiscal 1997

  Net sales                                  $5,481,087     $1,878,115     $7,359,202
  Net income                                     12,094         40,007         52,101
  Diluted earnings per common share                0.17           1.95           0.48

Fiscal 1996

  Net sales                                   3,724,839        805,281      4,530,120
  Net income                                     58,545         25,418         83,963
  Diluted earnings per common share                1.05           1.71           1.00
</TABLE>

          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 was 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 acquisition of Ralphs/Food 4 Less and merger
     with 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. At
     January 30, 1999, the Company has sold 13 of the stores and has sale
     agreements or letters of intent on the other six 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 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 below.

          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 all 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

                                       28
<PAGE>
     financial statements 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 all 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 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 52 weeks ended January 30, 1999. On October 4,
     1998, the Company acquired 123 Littman Jewelers and Barclays Jewelers
     stores located primarily in 10 states on the East coast for $80.3 million
     in cash and assumption of $43.7 million in debt. On October 1, 1998, the
     Company acquired 13 Albertson's and Buttrey grocery stores in Montana and
     Wyoming for $31.3 million in cash. 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 below.

          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, for
     $45.2 million which approximated book value. Sales from the 38 stores
     included in 1998 results were $217.2 million.

          The following unaudited pro forma information presents the results of
     the Company's operations assuming the Ralphs/Food 4 Less, Smith's, 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>
                                                            Fiscal Year Ended
                                                     ------------------------------
                                                      January 30,        January 31,
                                                            1999               1998
                                                     -----------        -----------
<S>                                                  <C>                <C>        
Net sales                                            $15,424,303        $14,949,516
Income (loss) before extraordinary charge                 (5,597)           115,649
Net loss                                                (223,544)          (102,298)
Diluted earnings per common share:
  Income (loss) before extraordinary charge                (0.04)              0.75
  Net loss                                                 (1.45)             (0.66)
</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>
                                                            Fiscal Year Ended
                                                     ------------------------------
                                                      January 30,        January 31,
                                                            1999               1998
                                                     -----------        -----------
<S>                                                  <C>                <C>        
Fair value of assets acquired                        $ 2,208,910        $ 1,985,604
Goodwill recorded                                      2,389,917          1,252,081
Value of stock issued                                   (652,514)          (765,126)
Liabilities assumed                                   (3,790,984)        (2,046,704)
                                                     -----------        -----------
Cash paid                                            $   155,329        $   425,855
                                                     ===========        ===========
</TABLE>

                                       29
<PAGE>
          In conjunction with purchase acquisitions, the Company accrued certain
     costs associated with closing and divesting of certain acquired facilities
     and severance payments to terminate employees of the acquired companies.
     The following table presents the activity in the Company's accrued purchase
     liabilities. (in thousands)

<TABLE>
<CAPTION>
                                     Facility
                                      Closure     Employee
                                        Costs     Severance         Total
                                     --------     ---------      --------
<S>                                  <C>          <C>            <C>     
 Balance at February 1, 1997         $      -     $       -      $      -
   Additions                           22,498         8,903        31,401
   Payments                            (3,767)       (1,078)       (4,845)
                                     --------     ---------      --------
 Balance at January 31, 1998           18,731         7,825        26,556
   Additions                          122,448        21,265       143,713
   Payments                           (12,853)       (2,082)      (14,935)
   Reductions to goodwill                            (2,588)       (2,588)
                                     --------     ---------      --------
 Balance at January 30, 1999         $128,326     $  24,420      $152,746
                                     ========     =========      ========
</TABLE>

          Facility Closure Costs--The Company acquired certain idle facilities
     in its purchase acquisitions including 63 closed stores, four closed
     warehouses and one vacant parcel all of which are leased facilities. The
     Company also acquired 16 stores that the California Attorney General
     required divestiture of and 17 stores that were duplicate facilities in
     purchase acquisitions. Divestiture of thirteen stores required by the
     California AG has been completed and 7 of the duplicate facilities have
     been closed. The remaining 10 duplicate stores are expected to close by the
     end of 1999. Facility closure costs accrued include obligations for future
     contractual lease payments, net of sublease income, and closure costs.

          Employee Severance--Employee severance relates to 24 employees that
     have been terminated and 73 employees that will be terminated in the
     future. Under severance agreements, the severance will be paid over a
     period not to exceed three years following the date of termination.

                                       30
<PAGE>
4.  Merger Related Costs

          The Company is in the process of implementing its plan to integrate
     its five primary operations (Fred Meyer Stores, Ralphs/Food 4 Less,
     Smith's, QFC and Hughes) resulting in merger related costs of $268.9
     million in 1998. The integration plan includes the consolidation of
     distribution, information systems, and administrative functions, conversion
     of 78 store banners, closure of seven stores, and transaction costs
     incurred to complete the mergers. The costs were reported in the periods in
     which cash was expended except for $25.9 million that was accrued for
     liabilities incurred to exit certain activities and retain certain key
     employees and an $82.9 million charge to write-down certain assets. The
     following table presents components of the merger related costs (in
     thousands):

<TABLE>
<CAPTION>
                                                      Fiscal Year
                                                            Ended
                                                       January 30,
                                                             1999
                                                      -----------
<S>                                                    <C>       
Charges recorded as cash expended
     Distribution consolidation                        $   15,844
     Systems integration                                   50,408
     Store Conversions                                     48,105
     Transaction costs                                     33,436
     Store closures                                           133
     Administration integration                            12,054
                                                       ----------
                                                          159,980
Noncash asset write-down
     Distribution consolidation                            28,588
     Systems integration                                   25,620
     Store conversions                               
     Transaction costs                               
     Store closures                                        25,491
     Administration integration                             3,226
                                                       ----------
                                                           82,925
Accrued charges
     Distribution consolidation                      
     Systems integration                                    1,445
     Store conversions                               
     Transaction costs                                      5,797
     Store closures                                         6,686
     Administration integration                            12,021
                                                       ----------
                                                           25,949
                                                       ----------
Total merger related costs                             $  268,854
                                                       ==========

Total charges
     Distribution consolidation                        $   44,432
     Systems integration                                   77,473
     Store conversions                                     48,105
     Transaction costs                                     39,233
     Store closures                                        32,310
     Administration integration                            27,301
                                                       ----------
Total merger related costs                             $  268,854
                                                       ==========
</TABLE>

                                       31
<PAGE>
          Distribution Consolidation--Represents costs to consolidate
     manufacturing and distribution operations and eliminate duplicate
     facilities. The costs include a $28.6 million write-down to estimated net
     realizable value for the Hughes distribution center in Southern California.
     Net realizable value was determined by a market analysis. The facilities
     are held for sale and depreciation expense for the closed Hughes
     distribution facility has been suspended. Additional depreciation expense
     in 1998 would have totaled $1.7 million if it had not been suspended.
     Efforts to dispose of the facilities are ongoing and a sale is expected in
     1999. Also included are $12.9 million incurred for incremental labor during
     the closing of the distribution center and other incremental costs incurred
     as a part of the realignment of the Company's distribution system.

          Systems Integration--Represents the costs of integrating systems from
     QFC, Hughes and Smith's computer platforms into Fred Meyer and Ralphs'
     platforms and the related conversion of all corporate office and store
     systems. The asset write-down of $25.6 million includes $18.2 million for
     computer equipment and related software that have been abandoned and $7.4
     million associated with computer equipment at QFC which is being written
     off over 18 months at which time it will be abandoned. Costs totaling $50.4
     million were expensed as incurred and includes $26.4 million of incremental
     operating costs, principally labor, during the conversion process, $14.0
     million paid to third parties, and $9.3 million of training costs. Also
     included are severance costs for system employees who will be terminated as
     the integration is completed.

          Store Conversions--Includes the costs to convert 55 Hughes stores to
     the Ralphs' banner, 15 Smitty's stores to the Fred Meyer banner, five QFC
     stores to the Fred Meyer banner, and three Fred Meyer stores to the Smith's
     banner. The conversion of the Hughes and QFC stores are substantially
     complete. Costs totaling $48.1 million represented incremental cash
     expenditures for advertising and promotions to establish the banner,
     changing store signage, labor required to remerchandise the store inventory
     and other services which were expensed as incurred.

          Transaction Costs--Represents $33.4 million for fees paid to outside
     parties and employee bonuses that were contingent upon the completion of
     the mergers and $5.8 million for an employee stay bonus program. The stay
     bonus program was accrued ratably in 1998 over the stay period and was paid
     in the fourth quarter of 1998.

          Store Closures--Includes the costs to close four stores identified as
     duplicate facilities and to sell three stores pursuant to a settlement
     agreement with the State of California ("AG Stores"). Annual sales and
     operating income for the four duplicate facilities and three AG Stores are
     approximately $133 million and $3 million, respectively. The asset
     write-down represents $6.0 million of book value in excess of sale
     proceeds, $18.5 million for the write-off of the goodwill associated with
     the AG Stores, and $6.7 million of lease termination costs. As of January
     30, 1999, all stores were closed or sold except for one AG store which is
     expected to be sold in the first quarter of 1999. The net book value of the
     AG Stores representing building, fixtures and equipment was written down to
     an estimated net realizable value of $5.7 million. Depreciation expense
     continues to be recorded at the historical rate.

          Administration Integration--Includes $15.1 million for labor and
     severance costs of which $9.3 million has been expended and the employees
     have been terminated and $9.4 million to conform accounting policies of QFC
     and Hughes to Fred Meyer, including the calculation of bad debt and costs
     for real estate transactions.

                                       32
<PAGE>
          The following table presents the activity in the reserve accounts for
     the year ended January 30, 1999. The beginning balance was zero (in
     thousands):

<TABLE>
<CAPTION>
                                                                           Reserve
                                     Charged                              Balance at
                                        to         Cash                     Jan 30,
                                     Expense     Payments     Reclass        1999
                                     -------     --------     -------     ----------
<S>                                  <C>         <C>          <C>         <C>     
 Systems integration
       Severance                     $ 1,445     $    133                 $  1,312
 Transaction costs                      
       Stay bonus program              5,797        5,797                        -
 Store closures                         
      Lease obligation                 6,686        1,717                    4,969
 Administration integration             
       Severance                      12,021        8,158                    3,863
                                     -------     --------     -------     --------
 Total amounts included in              
   Current Liabilities               $25,949     $ 15,805     $     -     $ 10,144
                                     =======     ========     =======     ========
</TABLE>

          Severance--Severance relates to 183 Hughes administrative employees in
     Southern California and 75 QFC administrative employees in Seattle. As of
     year end, all of the Hughes employees have been terminated. The QFC
     employees have been notified and their termination dates will vary ranging
     from February 15, 1999 to December 31, 1999. Under severance agreements,
     the amount of severance will be paid over a period following the date of
     termination.

          Lease Obligation--Following the merger, the Company closed a QFC store
     and agreed to dispose of the AG Stores under a settlement agreement with
     the State of California. The lease obligation represents future contractual
     lease payments on these stores over the expected holding period, net of any
     sublease income. The Company is actively marketing the stores to potential
     buyers and sub-lease tenants.

          Stay Bonus Program--Represents amounts which were paid under a stay
     bonus program in the fourth quarter of 1998.

5. Related-party Transactions

          The Company leases certain store locations and previously leased a
     distribution center from MetLife, which was a major beneficial stockholder
     of the Company's stock during 1997 and 1996. Rents paid to MetLife and
     other related parties on leases totaled $34.9 million in 1997 and $61.8
     million in 1996. Rents paid for store locations leased or subleased from
     related parties were included in operating and administrative expenses.
     Rents paid to related parties for the leased distribution center were
     included in cost of goods sold.

          The Company owns approximately 20% of the non-voting equity of the
     Associated Grocers, Inc. ("A.G., Inc.") cooperative, which is one of QFC's
     major suppliers. Additionally, the Company has a right to a seat on A.G.,
     Inc.'s board of directors. Amounts paid to A.G., Inc. for products and
     services totaled $172.6 million in 1998, $191.6 million in 1997 and $57.7
     million in 1996.

          The Company has a management agreement for management and financial
     services with The Yucaipa Companies ("Yucaipa"), whose managing general
     partner serves as the Company's chairman of the board. The agreement
     provides for annual management fees equal to $0.5 million plus
     reimbursement of all of Yucaipa's reasonable out-of-pocket costs and
     expenses. In addition, the Company may retain Yucaipa in an advisory
     capacity in connection with certain acquisitions or sale transactions, debt
     and equity financings, or any other services not otherwise covered by the
     agreement. In 1998, the Company paid to Yucaipa approximately $20 million
     for services rendered in conjunction with the Ralphs/Food 4 Less and QFC
     mergers and termination fees of Ralphs/Food 4 Less management agreement.

                                       33
<PAGE>
6. Long-term Debt

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

<TABLE>
<CAPTION>
                                                            January 30,    January 31,
                                                                  1999           1998
                                                            ----------     ----------
<S>                                                         <C>            <C>       
1997 Senior Credit Facility                                                $1,300,000

1998 Senior Credit Facility                                 $2,216,443
QFC Credit Facility                                                           214,293
Commercial paper with maturities through August,
  1999, classified as long-term, interest rates
  of 5.35% to 6.35% at January 30, 1999                        689,107        367,156
QFC 8.7% Senior Subordinated Notes, principal
  due 2007 with interest payable semi-annually                   3,065        150,000
Long-term notes secured by trust deeds, due
  through 2016, fixed interest rates from
  5.25% to 12.0%                                                59,611         61,075
Uncommitted bank borrowings classified as long-term            105,000         79,000
Senior notes, unsecured, due 2000 through 2008,
  fixed interest rates from 7.15% to 11.0%                   1,803,188
Other                                                           92,263         29,448
                                                            ----------     ----------
Total                                                        4,968,677      2,200,972
Less current portion                                           147,042         16,178
                                                            ----------     ----------
Total                                                       $4,821,635     $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
     January 30, 1999, the weighted average interest rate on both the five year
     term note and the amounts outstanding under the revolving credit facility
     was 5.9%.

          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 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).

                                       34
<PAGE>
          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 has $105 million outstanding under the
     uncommitted money market lines at January 30, 1999. The Company also has
     $1.15 billion 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 $689.1 million at January 30, 1999, as long-term debt. At January
     30, 1999, a total of approximately $511.7 million was available for
     borrowings under the 1998 Senior Credit Facility and the commercial paper
     facilities and $20.0 million was available for borrowings from the
     uncommitted money market lines.

          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 January 30, 1999, the Company had
     outstanding one interest rate 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 January 30, 1999, the 3-month
     adjusted LIBOR was 4.94%. 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.

          In 1998, the Company recorded an extraordinary charge of $357.8
     million less a $139.9 million income tax benefit which consisted of cash
     paid for premiums 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. In 1997, the Company recorded an extraordinary
     charge of $148.3 million less a $57.1 million income tax benefit which
     consisted of cash paid for premiums in the prepayment of certain notes and
     bank facilities of Fred Meyer Stores and Smith's and the write-off of their
     related deferred financing costs.

          Annual long-term debt maturities for the five fiscal years subsequent
     to January 30, 1999 are $147.0 million in 1999, $251.8 million in 2000,
     $371.9 million in 2001, $472.7 million in 2002, $2,101.0 million in 2003
     and $1,624.2 thereafter.

7. Income Taxes

     The provision for income taxes includes the following (in thousands):

<TABLE>
<CAPTION>
                                               Fiscal Year Ended
                                  ------------------------------------------
                                  January 30,     January 31,     February 1,
                                        1999            1998            1997
                                  ----------      ----------      ----------
<S>                               <C>             <C>             <C>       
Current                           $  143,663      $   80,479      $   39,491
Deferred                             (14,419)         15,966          10,548
                                  ----------      ----------      ----------
Total                             $  129,244      $   96,445      $   50,039
                                  ==========      ==========      ==========
</TABLE>

                                       35
<PAGE>
          A reconciliation between the 35% statutory federal income tax rate to
     the provision for income taxes is as follows (in thousands):

<TABLE>
<CAPTION>
                                                                  Fiscal Year Ended
                                                                  -----------------
                                                     January 30,     January 31,     February 1,
                                                           1999            1998            1997
                                                     ----------      ----------      ----------
<S>                                                  <C>             <C>             <C>       
Federal income taxes at the statutory rate           $   64,546      $   83,914      $   46,901
State income taxes                                       19,752           7,297           2,833
Effect of non-deductible goodwill amortization           28,573           5,649             356
Merger related costs                                     15,157
Other                                                     1,216            (415)            (51)
                                                     ----------      ----------      ----------
Provision for income taxes                           $  128,028      $   96,445      $   50,039
                                                     ==========      ==========      ==========
</TABLE>

          The tax effects of temporary differences that give rise to significant
     portions of the deferred tax assets and deferred tax liabilities at January
     30, 1999 and January 31, 1998 were as follows (in thousands):

<TABLE>
<CAPTION>
                                                           January 30,     January 31,
                                                                 1999            1998
                                                           ----------      ----------
<S>                                                        <C>             <C>       
Deferred tax assets:
  Compensation related costs                               $   43,382      $   16,776
  Insurance related costs.                                     94,692          34,141
  Lease accounting                                             34,157               -
  Property and equipment                                        1,910               -
  Net operating loss carryforwards                            457,466          68,728
  Tax credits                                                  25,372           9,133
  Other                                                        70,554          24,660
                                                           ----------      ----------
Total deferred tax assets                                     727,533         153,438
Valuation allowance                                          (157,333)        (11,708)
                                                           ----------      ----------
Net deferred tax assets                                       570,200         141,730

Deferred tax liabilities:
  Property and equipment                                            -          87,822
  Inventory related costs                                      38,706          31,527
  Lease accounting                                                             14,760
                                                           ----------      ----------
Total deferred tax liabilities                                 38,706         134,109
                                                           ----------      ----------
Net deferred income taxes - asset                          $ (531,494)     $   (7,621)
                                                           ==========      ==========
Current deferred income taxes--asset                       $ (256,417)     $  (90,804)
Noncurrent deferred income taxes--(asset) liability          (275,077)         83,183
                                                           ----------      ----------
Net deferred income taxes--asset                           $ (531,494)     $   (7,621)
                                                           ==========      ==========
</TABLE>

          At January 30, 1999, the Company has net operating loss carryforwards
     for federal income tax purposes of $1,257.4 million which expire from 2004
     through 2017. In addition, the Company has net operating loss carryforwards
     for state income tax purposes of $641.4 million which expire from 1999
     through 2017. The Company has federal Alternative Minimum Tax ("AMT")
     credit carryforwards of $8.6 million which are available to reduce future
     regular taxes in excess of AMT. These credits have no expiration date. The
     valuation allowance increased in 1998 due to the expected utilization of
     NOL carryforwards at Ralphs/Food 4 Less.

                                       36
<PAGE>
8. Stockholders' Equity

          At January 30, 1999, 17.1 million shares of common stock were reserved
     for issuance to employees, including officers and directors, and
     nonemployee agents, consultants and advisors, under stock incentive plans.
     These plans provide for the granting of incentive stock options,
     nonqualified stock options, stock bonuses, stock appreciation rights, cash
     bonus rights and performance units.

          Under the terms of the plans, the option price is determined by the
     Board of Directors at the time the option is granted. The option price for
     incentive stock options cannot be less than the fair value of the Company's
     stock on the date of grant. Nonqualified stock options may not be granted
     at less than 50% of the fair value on the date of grant.

          Stock Options--Activity under the plans was as follows (in thousands,
     except per share data):

<TABLE>
<CAPTION>
                                                                           Fiscal Year Ended
                                             -------------------------------------------------------------------------------
                                               January 30, 1999             January 31, 1998             February 1, 1997   
                                             ---------------------       ----------------------       ----------------------
                                                       Weighted                     Weighted                     Weighted
                                                        Average                      Average                      Average
                                                      Option Price                 Option Price                 Option Price
                                            Shares     Per Share         Shares     Per Share         Shares     Per Share
                                            ------    ------------       ------    ------------       ------    ------------
<S>                                         <C>        <C>               <C>        <C>               <C>        <C>      
Outstanding at beginning of year            13,661     $   17.26         10,272     $   12.84          7,709     $   12.41
  Granted                                    1,788         37.43          5,188         25.09          4,749         14.58
  Options added from acquired company                                     1,595          7.33                             
  Exercised                                 (4,972)        13.53         (3,075)        10.96           (375)         7.81
  Cancelled                                   (370)        26.55           (319)        13.17         (1,811)        16.65
                                            ------                       ------                       ------

Outstanding at end of year                  10,107         22.34         13,661         17.26         10,272         12.84
                                            ======    ============       ======    ============       ======    ============

Exercisable at end of year                   5,049     $   15.37          7,452     $   12.71          3,665     $   10.90
                                            ======    ============       ======    ============       ======    ============

Weighted-average fair value of
  options granted during the year           $22.18                       $13.30                       $ 6.08
                                            ======                       ======                       ======
</TABLE>

          Stock options granted in 1996, 1997, and 1998 expire in 10 years. The
     options vest over five years, 20 percent each year, beginning at the end of
     the first year. In conjunction with the Smith's acquisition, option holders
     could elect to accelerate to the closing date of September 9, 1997 the
     vesting of previously unvested options. Accordingly, nearly all options
     outstanding became fully vested at the closing date. Options outstanding at
     Smith's became fully vested at the closing date and were converted at the
     exchange ratio into options exercisable in the Company's Common Stock
     expiring on the original terms. In conjunction with the QFC acquisition,
     all options outstanding at QFC were converted at the exchange ratio into
     options exercisable in the Company's Common Stock expiring on the original
     terms. In addition, 629,803 options at QFC became fully vested at March 9,
     1998.

          All stock options granted in 1998 and 1996 were granted at an amount
     equal to or greater than the fair market value on the date prior to the
     grant date. Accordingly, no compensation was recorded for options granted
     in 1998 and 1996. Compensation expense for options granted in 1997 at an
     amount below the fair market value was recorded for the amortization of the
     difference between the market value on the date of grant and the grant
     price. The amortization was determined on a straight-line basis over the
     vesting period. The amount charged to operations in 1998 and 1997 was
     immaterial.

                                       37
<PAGE>
          The following table summarizes information concerning outstanding and
     exercisable options at January 30, 1999:

<TABLE>
<CAPTION>
                                     Options Outstanding                              Options Exercisable
                   -------------------------------------------------------     ---------------------------------
   Range of            Number          Weighted Average       Weighted             Number            Weighted
   Exercise          Outstanding          Remaining            Average           Exercisable          Average
    Prices         (in thousands)      Contractual Life     Exercise Price     (in thousands)     Exercise Price
   --------        --------------      ----------------     --------------     --------------     --------------
<S>                    <C>                   <C>              <C>                  <C>               <C>    
   $3 to $13            2,625                4.9              $ 10.90              2,432             $ 10.87
  13 to 17.25           2,048                7.2                15.18              1,411               15.52
17.30 to 28.25          2,895                8.5                24.90              1,031               22.29
  28.30 to 48           2,539                9.1                37.04                175               35.94
                       ------                                                      -----
    3 to 48            10,107                7.4                22.34              5,049               15.37
                       ======                                                      =====
</TABLE>

          Shares available for future option grants were 6.8 million as of
     January 30, 1999 and 8.5 million as of January 31, 1998.

          The Company issued a replacement grant election program in 1996 that
     allowed stock option holders with options granted at more than $13.00 per
     share to reset the price at $13.00, on up to 1,968,000 options that were
     previously granted at prices ranging from $13.62 to $20.63. For those who
     elected to reset their option price to $13.00, the vesting period started
     over.

          The Company applies the disclosure-only provisions of SFAS No. 123.
     Accordingly, no compensation cost has been recognized for stock options
     granted at the market value on the date of grant. Had compensation cost for
     the Company's stock option plans been determined based on the estimated
     fair value of the options at the date of grant, the Company's pro forma net
     income and income per share would have been as follows:

<TABLE>
<CAPTION>
                                                                    Fiscal Year Ended
                                     ------------------------------------------------------------------------------
                                         January 30, 1999            January 31, 1998           February 1, 1997
                                     --------------------------   ------------------------   ----------------------
                                        Actual      Pro forma       Actual     Pro forma       Actual     Pro forma
                                     --------------------------   ------------------------   ----------------------
<S>                                  <C>            <C>            <C>         <C>            <C>         <C>      
Net income (loss) (in thousands)     $(162,775)     $(187,911)     $52,101     $  25,849      $83,963     $  79,231
Diluted net income (loss) per        
  common share                           (1.02)         (1.17)        0.48          0.24         1.00          0.95
</TABLE>

          The fair value of each option grant was estimated on the date of grant
     using the Black-Scholes option-pricing model based on historical
     assumptions from Fred Meyer and QFC. The fair value of each option grant in
     1998 was estimated on the date of grant using the Black-Scholes
     option-pricing model based on historical assumptions from Fred Meyer. The
     following assumptions were used for grants awarded in each year:

<TABLE>
<CAPTION>
                                                                                      Fiscal Year Ended
                                                                         ------------------------------------------
                                                                         January 30,     January 31,     February 1,
                                                                               1999            1998            1997
                                                                         ----------      ----------      ----------
<S>                                                                          <C>             <C>             <C>   
Fred Meyer
Weighted average expected volatility (based on historical volatility)        39.37%          33.67%          34.97%
Weighted average risk-free interest rate                                      5.32%           6.10%           5.77%
Expected term                                                              5 years         5 years         5 years
QFC
Weighted average expected volatility (based on historical volatility)          n/a           43.50%          44.70%
Weighted average risk-free interest rate                                       n/a            5.50%           5.12%
Expected term                                                                  n/a         5 years         5 years
</TABLE>

          The effects of applying SFAS 123 in this pro forma disclosure are not
     indicative of future amounts. SFAS 123 does not apply to stock options
     granted prior to 1995. It is anticipated that additional stock options will
     be granted in future years.

                                       38
<PAGE>
          Other Option--FMI Associates, which was the Company's principal
     shareholder in 1996, exercised an option in 1996 for the purchase of 3.1
     million shares with an aggregate value of $5.1 million.

          Warrant--As part of the Smith's acquisition, the Company converted a
     warrant for Smith's stock into a warrant for Fred Meyer stock. The warrant,
     issued to Yucaipa, is for the purchase of up to 3.9 million shares of
     Common Stock at an exercise price of $23.81 per share. Half of the warrant
     expires in 2005 and half expires in 2006. Additionally, at the option of
     Yucaipa, the warrant is exercisable without the payment of cash
     consideration. Under this condition, the Company will withhold upon
     exercise the number of shares having a market value equal to the aggregate
     exercise price from the shares issuable.

          Management Bonus--In 1996, the Company awarded a stock bonus to a
     corporate officer for 20,000 shares totaling $291,250. Shares vest annually
     over five years.

          In 1997, the Company awarded stock bonuses to corporate officers for
     3,000 shares totaling $60,562 that vest annually over five years and 8,606
     shares totaling $177,498 that vest annually over three years.

          In 1998, the Company awarded stock bonuses to corporate officers for
     64,499 shares totaling $2,858,280 that vest annually over three years.

          Nonemployee Directors Stock Compensation Plan--In 1996, the Company
     purchased 25,116 shares of its common stock at market prices for the
     benefit of six of its nonemployee directors in lieu of a portion of current
     and future Board of Director fee payments. The cost of the shares totaled
     $400,103 and became fully vested in conjunction with the Smith's
     acquisition.

          In 1998, the Company awarded under the plan 17,326 newly issued shares
     of its common stock to twelve of its nonemployee directors. The value at
     the date of award was $700,219.


                                       39
<PAGE>
9. Leases

          The Company leases or subleases property and equipment used in its
     operations. The terms of certain leases include renewal options, escalation
     clauses, percentage rents based on sales, or payment of executory costs
     such as property taxes, utilities, insurance and maintenance. Portions of
     certain properties are subleased to others for periods of from one to 20
     years.

          At January 30, 1999, minimum rentals under noncancelable leases for
     future fiscal years were as follows (in thousands):

<TABLE>
<CAPTION>
                                                  Operating     Capitalized          Less            Net
Fiscal Year                                          Leases          Leases     Subleases        Rentals
----------------------------------------         ----------     -----------     ---------     ----------
<S>                                              <C>            <C>             <C>           <C>       
1999                                             $  343,592     $    50,055     $  33,870     $  359,777
2000                                                333,457          41,527        29,875        345,109
2001                                                316,231          30,366        23,709        322,888
2002                                                286,269          25,332        20,884        290,717
2003                                                278,912          22,846        17,653        284,105
Thereafter                                        2,726,575         212,254        66,224      2,872,605
                                                 ----------     -----------     ---------     ----------
Total                                            $4,285,036         382,380     $ 192,215     $4,475,201
                                                 ==========                     =========     ==========
Less imputed interest                                               182,542
                                                                -----------
Present value of minimum rental payments                            199,838
Less current portion                                                 40,900
                                                                -----------
Capitalized lease obligations                                   $   158,938
                                                                ===========
</TABLE>

          Rent expense under operating leases, including executory costs, were
     as follows (in thousands):

<TABLE>
<CAPTION>
                                                 Fiscal Year Ended
                                     ------------------------------------------
                                     January 30,     January 31,     February 1,
                                           1999            1998            1997
                                     ----------      ----------      ----------
<S>                                  <C>             <C>             <C>       
Minimum rent expense                 $  294,475      $  152,393      $  104,595
Contingent rent expense                   7,832           4,589           2,962
Rent income from subleases              (41,273)        (23,179)        (16,259)
                                     ----------      ----------      ----------
Net rent expense                     $  261,034      $  133,803      $   91,298
                                     ==========      ==========      ==========
</TABLE>

          At January 30, 1999, deferred lease transactions consisted of
     unamortized gains on lease financing transactions and cumulative net excess
     of rent expense over cash rents. The gains on lease financing transactions
     included the differences between property held under capital leases and
     capital lease obligations at the time of amendments to the capital leases
     which resulted in the leases qualifying as operating leases and gains
     resulting from sale-leaseback transactions. The gains are being amortized
     over the remaining life of the respective leases. The excess rent expense
     over cash rents results from charging to operations the average rent over
     the primary lease term on leases with escalating rent payments.

          On February 4, 1997, in a series of transactions with MetLife, the
     Company purchased, for approximately $49.0 million, six stores previously
     leased from MetLife and an option to purchase parcels at 18 of the 29
     stores which the Company will continue to lease from MetLife. Additionally,
     the Company entered into new 25-year leases on these remaining 29 stores
     that will result in reduced rents. A distribution center that was leased to
     the Company by MetLife was sold to a third party who leased the center to
     the Company at reduced rates.

          In 1996 and 1997, the Company completed sale-leaseback transactions on
     13 stores. The proceeds from the transactions were used to repay
     outstanding indebtedness on credit lines and for general working capital
     purposes. The initial lease terms are for 21 to 23 years and are subject to
     renewal at the option of the Company. The annual rent obligation, including
     amortization of fees and deferred gain, is approximately $12.1 million.

          On March 11, 1998, the Company entered into a $500.0 million five-year
     operating lease facility which refinanced $303.0 million in existing lease
     financing facilities. Lease payments are based on LIBOR applied to the
     utilized portion of the facility. As of January 30, 1999, the Company had
     utilized $364.0 million on the facility primarily for leasing 30 stores and
     one distribution center.

                                       40
<PAGE>
10. Employee Benefit Plans

          Employees' Profit-sharing Plan--Profit-sharing contributions under
     this Plan, which covers nonunion employees of Fred Meyer Stores, are made
     to a trust fund held by a third-party trustee. Contributions are based on
     the Company's pretax income, as defined, at rates determined by the Board
     of Directors and are not to exceed amounts deductible under applicable
     provisions of the Internal Revenue Code. The Plan also has an annual 1%
     basic contribution to all eligible employees' accounts subject to normal
     plan vesting. The Company expensed $10.8 million in 1998, $9.1 million in
     1997and $7.7 million in 1996 for these contributions.

          The Company also maintains a defined contribution profit-sharing plan
     which covers nonunion employees of QFC who meet certain service
     requirements. Contributions to the plan are based on a percentage of gross
     wages and are made at the discretion of the Company. The Company expensed
     $1.0 million in 1998, $0.9 million in 1997 and $0.6 million in 1996.

          Defined Contribution Plan--The Company sponsors a 401(k) Plan covering
     substantially all Ralphs/Food 4 Less employees who are not covered by
     collective bargaining agreements and who have at least one year of service
     during which 1,000 hours has been worked. The Company has committed to
     match a minimum of 20 percent of an employee's contribution to the 401(k)
     Plan that does not exceed 5 percent of the employee's eligible
     compensation. In 1998, the expense recorded for the 401(k) Plan was $0.8
     million.

          Multiemployer Pension Plans--The Company contributes to multiemployer
     pension plan trusts at specified rates in accordance with collective
     bargaining agreements. Contributions to the trusts were $47.3 million in
     1998, $35.1 million in 1997 and $13.6 million in 1996. The Company's
     relative positions in these plans with respect to the actuarial present
     value of the accumulated benefit obligation and the projected benefit
     obligation, net assets available for benefits and the assumed rates of
     return used by the plans are not determinable.

          Employee Stock Purchase Plan--The Company has a noncontributory
     employee stock purchase plan that allows employees to purchase stock in the
     Company at market prices via payroll deductions. The Company pays all
     brokerage fees associated with the purchase of the stock and administrative
     fees. The Company also pays a ten percent cash bonus at year end based on
     the number of shares purchased and held during the previous calendar year
     and the market price at year end. The plan is available to all employees
     over age 18 who have completed six months of continuous employment with the
     Company.

          Supplemental Retirement Programs--The Company has supplemental
     retirement programs for senior management, selected vice presidents and
     selected key individuals. Program provisions are as follows:

          Senior Management--The plan is funded with life insurance contracts on
     the lives of the participants. The Company is the owner of the contracts
     and made annual contributions per participant of $35,000 in 1998 and 1997
     and $25,000 in 1996. Total contributions were $773,000 in 1998, $865,000 in
     1997, and $400,000 in 1996. Retirement age under the plan is normally 62
     with an alternative age of 65, at which point the Company will make 15
     annual benefit payments to the executive.

          Selected Vice Presidents and Selected Key Individuals--The Company
     will contribute annually a percentage of each participant's gross salary.
     The plan is funded with life insurance contracts on participants age 54 and
     younger and variable annuity contracts for participants age 55 and older.
     Each participant is the owner of his/her respective contract.

          Selected Key Officers and Individuals at Ralphs/Food 4 Less--The
     Company maintains both a Supplemental Executive Retirement Plan ("SERP")
     and a Retirement Supplement Plan. The changes in benefit obligations and
     plan assets, the weighted average assumptions and the components of net
     pension cost since March 10, 1998 are included in the tables below.

                                       41
<PAGE>
          Pension and Other Postretirement Benefit Plans--The Company maintains
     defined benefit pension plans for all permanent, nonunion employees of
     Smith's and Ralphs/Food 4 Less and retiree health plans for postretirement
     health care coverage at Fred Meyer Stores and Ralphs/Food 4 Less.

          Aggregated information for the SERP, Supplemental Retirement Benefit
     Plan, Pension and Postretirement Benefit Plan is presented below (in
     thousands):

<TABLE>
<CAPTION>
                                                                Pension Benefits               Postretirement Benefits
                                                           --------------------------        --------------------------
                                                           January 30,     January 31,       January 30,     January 31,
                                                                 1999            1998              1999            1998
                                                           ----------      ----------        ----------      ----------
<S>                                                        <C>             <C>               <C>             <C>       
Benefit obligation at beginning of the year                $   46,058      $        -        $    7,407      $    5,764
Additions to benefit obligation from acquisitions              94,038          39,453            15,676               -
Service cost                                                    9,377           1,066               807             454
Interest cost                                                   8,624           1,184               800             455
Plan participants' contributions                                                                    159            (210)
Amendments                                                                                      (10,644)            868
Actuarial loss                                                  2,293           4,579             2,163              76
Benefits paid                                                  (7,257)           (224)             (650)              -
                                                           ----------      ----------        ----------      ----------
Benefit obligation at end of the year                         153,133          46,058            15,718           7,407

Fair value of plan assets at beginning of the year             58,266               -                 -               -
Addition to plan assets from acquisitions                      62,591          56,832                 -               -
Actual return on plan assets                                   14,853           1,658                 -               -
Employer contributions                                          7,678                               491             133
Plan participants' contribuions                                                                     159              76
Benefits paid                                                  (7,257)           (224)             (650)           (209)
                                                           ----------      ----------        ----------      ----------
Fair value of plan assets at end of the year                  136,131          58,266                 -               -
                                                           ----------      ----------        ----------      ----------
Funded status                                                 (17,002)         12,208           (15,718)         (7,407)
Unrecognized net actuarial loss                                 3,464           4,897             2,774             610
Unrecognized prior service cost                                     -               -            (9,755)            241
Unrecognized net transition obligation                              -               -             1,086           1,169
                                                           ----------      ----------        ----------      ----------
Prepaid (accrued) benefit obligation at end of the year    $  (13,538)     $   17,105        $  (21,613)     $   (5,387)
                                                           ==========      ==========        ==========      ==========
Amounts recognized in the balance sheet                                                                                
  consist of:                                                                                                          
  Accrued benefits in prepaid expense                      $   15,461      $   17,105                                  
  Accrued benefits costs included in:                                                                                  
    Accrued compensation                                      (23,070)                                                 
    Other long-term liabilities                                (5,929)              -        $  (21,613)     $   (5,387)
                                                           ----------      ----------        ----------      ----------
                                                           $  (13,538)     $   17,105        $  (21,613)     $   (5,387)
                                                           ==========      ==========        ==========      ==========
</TABLE>

                                       42
<PAGE>
          The weighted average assumptions are as follows:

<TABLE>
<CAPTION>
                                        Pension Benefits               Postretirement Benefits
                                   --------------------------        --------------------------
                                   January 30,     January 31,       January 30,     January 31,
                                         1999            1998              1999            1998
                                   ----------      ----------        ----------      ----------
<S>                                      <C>             <C>               <C>             <C> 
Discount rate                            7.5%            7.0%              6.5%            6.8%
Expected return on plan assets           9.0%            9.0%              N/A             N/A
Rate of compensation increase            5.0%            N/A               N/A             N/A
</TABLE>

          For measurement purposes, a 7.5% annual rate of increase in the per
     capita cost of covered health care benefits for participants under age 65
     was assumed for this current fiscal year, decreasing .05% per year to 6.0%.
     A 6.0% annual rate of increase in the per capita cost of covered health
     care benefits for participants over age 65 was assumed for all years.

          Net pension and post retirement costs charged to operations includes
     the following components (in thousands):

<TABLE>
<CAPTION>
                                               Pension Benefits for                     Postretirement Benefits
                                                Fiscal Year Ended                        for Fiscal Year Ended
                                            --------------------------        ------------------------------------------
                                            January 30,     January 31,       January 30,     January 31,     February 1,
                                                  1999            1998              1999            1998            1997
                                            ----------      ----------        ----------      ----------      ----------
<S>                                         <C>             <C>               <C>             <C>             <C>       
Service cost                                $    9,377      $    1,066        $      807      $      454      $      411
Interest cost                                    8,624           1,184               800             455             410
Actual return on plan assets                   (10,644)         (1,658)                -               -               -
Amortization of prior service                        -               -              (648)             42              41
Amortization of transition obligation              208               -                84              84              84
Recognized net actuarial loss (gain)             1,048            (318)                -               -               -
                                            ----------      ----------        ----------      ----------      ----------
Net pension and post retirement costs       $    8,613      $      274        $    1,043      $    1,035      $      946
                                            ==========      ==========        ==========      ==========      ==========
</TABLE>

          Assumed health care costs trend rates have a significant effect on the
     amounts reported for the health care plans. A one-percentage-point change
     in the assumed health care cost trend rates would have the following
     effects on 1998 amounts presented:

<TABLE>
<CAPTION>
                                                               One-Percentage-     One-Percentage-
                                                               Point Increase      Point Decrease
                                                               --------------      --------------
<S>                                                                <C>                 <C>    
Effect on total service and interest cost components               $  411              $ (502)
Effect on postretirement benefit obligation                         3,880              (3,148)
</TABLE>

11. Estimated Fair Value of Financial Instruments

          The estimated fair value of financial instruments has been determined
     by the Company using available market information and valuation
     methodologies as shown below. The use of different assumptions and/or
     estimation methodologies may have a material effect on the estimated fair
     value amounts. Accordingly, the estimates presented herein are not
     necessarily indicative of the amounts that the Company could actually
     realize.

          Management is not aware of any factors that would significantly change
     the estimated fair value amounts shown below. A comprehensive revaluation
     for purposes of these financial statements has not been performed since
     January 30, 1999, and current estimates of fair value may differ from the
     amounts presented herein. The Company is not subjected to a concentration
     of credit risk.

          Cash and Cash Equivalents, Receivables, Prepaid Expenses and Other
     Current Assets, Other Long-term Assets, Outstanding Bank Overdrafts and
     Accounts Payable--The carrying amounts of these items are a reasonable
     estimate of their fair value because of the short time until realization.

          Long-term Debt and Interest Rate Agreements--The amount of long-term
     debt included in the balance sheet is $175.2 million less than its fair
     value at January 30, 1999. At January 31, 1998, the amount of long-term
     debt included in the balance sheet approximates its fair value. The fair
     value of notes, mortgages and real estate

                                       43
<PAGE>
     assessments payable is estimated by discounting expected future cash flows.
     The discount rate used is the rate currently available to the Company for
     issuance of debt with similar terms and remaining maturities. The amounts
     for commercial paper and bid lines of credit under the revolving credit
     agreement (see Note 6) approximates fair value at January 30, 1999 and
     January 31, 1998.

          The fair value of the interest rate collar agreement is the estimated
     settlement amount. At January 30, 1999, the Company could settle the collar
     agreement at a loss of $6.0 million at January 30, 1999 and a loss of
     $699,000 at January 31, 1998. The value is determined based on the notional
     amount of the collar, its term and the difference in rates between the date
     of measurement and when the collar was initiated.

12. 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.

          The Company is a 50% owner of Santee Dairies, L.L.C. ("Santee") and
     has a 10 year product supply agreement with Santee that requires the
     Company to purchase 9 million gallons of fluid milk and other products
     annually. The product supply agreement expires on July 29, 2007. Upon
     acquisition of Ralphs, Santee became excess capacity and a duplicate
     facility. The Company is currently engaged in efforts to dispose of its
     interest in Santee which may result in a loss of approximately $45 million
     in 1999.


                                       44
<PAGE>
13. Selected Quarterly Financial Data (Unaudited) (in thousands, except per
    share data)

<TABLE>
<CAPTION>
                                                        First         Second          Third      Fourth(1)           Total
                                                   ----------     ----------     ----------     ----------     -----------
<S>                                                <C>            <C>            <C>            <C>            <C>        
Fiscal 1998
Net sales                                          $4,040,448     $3,504,932     $3,477,091     $3,856,300     $14,878,771
Gross margin                                        1,185,255      1,045,814      1,042,130      1,186,679       4,459,878
Income from operations                                 15,776        131,529        153,880        261,467         562,652
Income (loss) before extraordinary charge             (68,582)         8,947         29,164         85,643          55,172
Extraordinary charge                                 (216,441)        (1,169)          (324)           (13)       (217,947)
Net income (loss)                                    (285,023)         7,778         28,840         85,630        (162,775)
Basic earnings per common share:
  Income (loss) before extraordinary charge(2)     $    (0.47)    $     0.06     $     0.19     $     0.55     $      0.36
  Extraordinary charge                                                 (0.01)                                        (1.43)
                                                   ----------     ----------     ----------     ----------     -----------
  Net income (loss)(2)                             $    (0.47)    $     0.05     $     0.19     $     0.55     $     (1.07)
                                                   ==========     ==========     ==========     ==========     ===========
  Weighted average number
    of shares outstanding                             145,141        153,551        154,690        155,357         151,699
                                                   ==========     ==========     ==========     ==========     ===========
Diluted earnings per common share:
  Income (loss) before extraordinary charge(2)     $    (0.47)    $     0.06     $     0.18     $     0.52     $      0.34
  Extraordinary charge                                  (1.49)         (0.01)                                        (1.36)
                                                   ----------     ----------     ----------     ----------     -----------
  Net income (loss)(2)                             $    (4.96)    $     0.05     $     0.18     $     0.52     $     (1.02)
                                                   ==========     ==========     ==========     ==========     ===========
  Weighted average number
    of shares outstanding                             145,141        161,979        162,127        163,886         160,218
                                                   ==========     ==========     ==========     ==========     ===========
                                                                                                                          
                                                        First         Second          Third      Fourth(3)           Total
                                                   ----------     ----------     ----------     ----------     -----------
Fiscal 1997
Net sales                                          $1,593,437     $1,457,602     $1,945,543     $2,362,620     $ 7,359,202
Gross margin                                          472,084        433,782        575,104        703,104       2,184,074
Income from operations                                 55,297         65,247         79,930        141,376         341,850
Income before extraordinary charge                     22,513         29,452         28,665         62,681         143,311
Extraordinary charge                                                                (91,210)                       (91,210)
Net income (loss)                                      22,513         29,452        (62,545)        62,681          52,101
Basic earnings per common share:
  Income before extraordinary charge4              $     0.27     $     0.32     $     0.24     $     0.49     $      1.37
  Extraordinary charge                                                                (0.77)                         (0.87)
                                                   ----------     ----------     ----------     ----------     -----------
  Net income (loss)(4)                             $     0.27     $     0.32     $    (0.53)    $     0.49     $      0.50
                                                   ==========     ==========     ==========     ==========     ===========
  Weighted average number
    of shares outstanding                              84,758         93,175        118,331        128,319         104,520
                                                   ==========     ==========     ==========     ==========     ===========
Diluted earnings per common share:
  Income before extraordinary charge4              $     0.25     $     0.30     $     0.23     $     0.46     $      1.31
  Extraordinary charge                                                                (0.74)                         (0.83)
                                                   ----------     ----------     ----------     ----------     -----------
  Net income (loss)(4)                             $     0.25     $     0.30     $    (0.51)    $     0.46     $      0.48
                                                   ==========     ==========     ==========     ==========     ===========
  Weighted average number                                                                                                 
    of shares outstanding                              88,335         97,207        123,546        136,007         109,591
                                                   ==========     ==========     ==========     ==========     ===========

1    The LIFO adjustment in the fourth quarter of 1998 increased gross margin and income from operations by $9,151, income
     before extraordinary charge and net income by $5,573 and diluted earnings per common share by $.03. Additionally, the
     Company recorded an adjustment in the fourth quarter of 1998 reducing depreciation expense to reflect adjusted values
     resulting from the acquisition of Ralphs/Food 4 Less. The consolidated depreciation expense recorded was $323.0
     million for 1998 and $53.0 million for the fourth quarter.

2    In 1998, the sum of the four quarters earnings per common share does not equal the annual amount due to the
     acquisition of Ralphs/Food 4 Less in the first quarter.

3    The LIFO adjustment in the fourth quarter of 1997 increased gross margin and income from operations by $9,417, income
     before extraordinary charge and net income by $5,814 and diluted earnings per common share by $.04.

4    In 1997, the sum of the four quarters earnings per common share does not equal the annual amount due to the
     acquisition of Smith's and the two-for-one stock split in the third quarter.
</TABLE>

                                       45
<PAGE>
Management's Report on Responsibility for Financial Statements

          The management of Fred Meyer, Inc. has the responsibility for
     preparing the accompanying financial statements and for their integrity and
     objectivity. The statements were prepared in accordance with generally
     accepted accounting principles. The financial statements include amounts
     that are based on management's best estimates and judgments. Management
     also prepared other information in the annual report and is responsible for
     its accuracy and consistency with the financial statements.

          The Company's financial statements have been audited by Deloitte &
     Touche LLP, independent auditors. Management has made available to Deloitte
     & Touche LLP all the Company's financial records and related data, as well
     as the minutes of shareholders' and directors' meetings.

          Management has established and maintains an internal control structure
     that provides reasonable assurance as to the integrity and reliability of
     the financial statements, the protection of assets from unauthorized use or
     disposition and the prevention and detection of fraudulent financial
     reporting. The internal control structure provides for the appropriate
     division of responsibility, which is monitored for compliance.

          The Company maintains an internal auditing program that assesses the
     effectiveness of the internal control structure and recommends
     improvements.

          Deloitte & Touche LLP also considered the internal control structure
     in connection with its audit. Management has considered the internal
     auditors' and Deloitte & Touche LLP's recommendations concerning the
     Company's internal control structure and has taken the appropriate actions
     to respond to these recommendations.

          The Company's principles of business conduct address, among other
     things, potential conflicts of interests and compliance with laws,
     including those relating to financial disclosure and the confidentiality of
     proprietary information.

          The Board of Directors pursues its responsibility for the quality of
     the Company's financial reporting primarily through its Audit Committee,
     which is comprised of outside directors. The Audit Committee meets
     approximately three times a year with management, the corporate internal
     audit manager, and the independent auditors to ensure that each is meeting
     its responsibilities and to discuss matters concerning internal controls
     and accounting and financial reporting. The corporate internal audit
     manager and independent auditors have unrestricted access to the Audit
     Committee.




     John T. Standley
     Senior Vice President, Chief Financial Officer


                                       46
<PAGE>
Independent Auditors' Report

     To the Shareholders and Board of Directors of Fred Meyer, Inc.:

          We have audited the accompanying consolidated balance sheets of Fred
     Meyer, Inc. and subsidiaries as of January 30, 1999 and January 31, 1998,
     and the related consolidated statements of income, changes in stockholders'
     equity, and cash flows for each of the three fiscal years in the period
     ended January 30, 1999. These financial statements are the responsibility
     of the Company's management. Our responsibility is to express an opinion on
     these financial statements based on our audits.

          We conducted our audits in accordance with generally accepted auditing
     standards. Those standards require that we plan and perform the audit to
     obtain reasonable assurance about whether the financial statements are free
     of material misstatement. An audit includes examining, on a test basis,
     evidence supporting the amounts and disclosures in the financial
     statements. An audit also includes assessing the accounting principles used
     and significant estimates made by management, as well as evaluating the
     overall financial statement presentation. We believe that our audits
     provide a reasonable basis for our opinion.

          In our opinion, such consolidated financial statements present fairly,
     in all material respects, the financial position of Fred Meyer, Inc. and
     subsidiaries at January 30, 1999 and January 31, 1998, and the results of
     their operations and their cash flows for each of the three fiscal years in
     the period ended January 30, 1999, in conformity with generally accepted
     accounting principles.

     DELOITTE & TOUCHE LLP
     Portland, Oregon
     March 10, 1999


                                       47
<PAGE>
Item 9. Changes in and Disagreements with Accountants on Accounting
        -----------------------------------------------------------
        and Financial Disclosure.
        ------------------------

        Not applicable.



                                    Part III
-------------------------------------------------------------------------------

Item 10. Directors and Executive Officers of the Registrant.
-----------------------------------------------------------

Board of Directors

          The Board of Directors currently consists of seventeen members and is
     divided into three classes pursuant to the Company's Bylaws. The following
     table identifies the Directors.


<TABLE>
<CAPTION>
Name and Year                Principal Occupation or                                Year First
Elected to Board             Position with Company                      Age      Elected Director
----------------             -----------------------                    ---      ----------------

<S>                          <C>                                         <C>           <C> 
Class A (Term Ending 2001)
         ----------------
 Vivian A. Bull              President, Linfield College                 64            1996
 Carlton J. Jenkins          Chairman, President and Chief Executive     43            1998
                             Officer of Founders National Bank of Los
                             Angeles
 John G. King                Former President and Chief Executive        60            1997
                             Officer of Legacy Health System
 Steven R. Rogel             President and Chief Executive Officer of    56            1996
                             Weyerhaeuser Company
 Stuart M. Sloan             Former Chairman of the Board of QFC;        55            1998
                             Principal of Sloan Capital Companies

Class B (Term Ending 1999)
         ----------------
 James J. Curran             Retired Chairman of the Board and Chief     58            1996
                             Executive Officer of First Interstate
                             Bank, Northwest Region
 George G. Golleher          President and Chief Operating Officer of    49            1998
                             the Company
 Bruce Karatz                Chairman of the Board, President and        52            1997
                             Chief Executive Officer of Kaufman &
                             Broad Home Corporation
 Jeffrey P. Smith            Former Chairman of the Board of Smith's     48            1997
 Samuel Zell                 Chairman of Equity Group Investments,       56            1998
                             Inc.
 Bertram R. Zweig            Administrative Partner, Jones, Day,         63            1998
                             Reavis & Pogue

                                       48
<PAGE>
Name and Year                Principal Occupation or                                Year First
Elected to Board             Position with Company                      Age      Elected Director
----------------             -----------------------                    ---      ----------------

Class C (Term Ending 2000)
         ----------------
 Robert D. Beyer             Group Managing Director, Trust Company      38            1998
                             of the West
 Ronald W. Burkle            Chairman of the Board of the Company;       45
                             Managing General Partner of The Yucaipa
                             Companies
 A. M. Gleason               Retired Chief Executive Officer of          68            1992
                             PacifiCorp
 Roger S. Meier              President, AMCO, Inc.                       72            1985
 Robert G. Miller            Vice Chairman and Chief Executive           54            1991
                             Officer of the Company
 Marc H. Rapaport            Chairman and Lead Investor of LA Soccer     41            1998
                             Partners L.P.
</TABLE>

          The business experience of the Directors of the Company is set forth
     below.

          Robert D. Beyer has been the Group Managing Director at Trust Company
     of the West, an investment management firm, since 1995. From 1991 to 1995,
     Mr. Beyer was the co-Chief Executive Officer of Crescent Capital
     Corporation, an investment management firm that he co-founded in 1991. Mr.
     Beyer is also a member of the Board of Directors of American Restaurant
     Group, Inc., TCW Asset Management Company and a member of the board of
     trustees of Harvard Westlake School.

          Vivian A. Bull has been President of Linfield College since August
     1992. Prior to that time she was in the Department of Economics at Drew
     University from 1960 to 1992. Dr. Bull is a director of the Oregon
     Independent College Foundation and a member of the Executive Committee of
     the Oregon Independent College Association. Dr. Bull is a former Director
     of Chemical Bank in New Jersey and Horizon Bank.

          Ronald W. Burkle has been Chairman of the Board of the Company since
     September 1997. He is the Managing General Partner of The Yucaipa
     Companies, a private investment group specializing in the acquisition and
     management of supermarket chains, which he founded in 1986. Until its
     merger with the Company in March 1998, Mr. Burkle served as director and
     Chairman of the Board of Ralphs/Food 4 Less. From May 1996 to September
     1997, Mr. Burkle was a director and the Chief Executive Officer of Smith's.
     Mr. Burkle also serves as Chairman of the Boards of Dominick's
     Supermarkets, Inc., D.A.R.E. America (Drug Abuse Resistance Eductation) and
     Trustee of the National Urban League, Founder and Chairman of the Board of
     Trustees of Ralphs/Food 4 Less Foundation and the Chairman of the
     Dominicks/Omni Foundation. and as a director of Kaufman & Broad Home
     Corporation.

          James J. Curran retired from First Interstate Bancorp in April 1996.
     At the time of his retirement he was a member of the Executive Operating
     Committee of First Interstate Bancorp and Chairman and Chief Executive
     Officer of First Interstate Bank, Northwest Region. Mr. Curran is a
     director of Coeur d'Alene Mines Corp.

          A. M. Gleason retired from PacifiCorp, a diversified public utility,
     in May 1995. At the time of his retirement he was Vice Chairman of
     PacifiCorp, having previously served as its President and Chief Executive
     Officer. Prior to that time he served as Chairman and Chief Executive
     Officer of Pacific Telecom, Inc., a former PacifiCorp subsidiary. Mr.
     Gleason is a director of Tektronix, Inc., Comdial Corporation, Oregon Coast
     Aquarium, Nature Conservancy and President of the Port of Portland.

          George G. Golleher has been President and Chief Operating Officer of
     the Company since July 1998. He was President and Chief Executive Officer
     of Ralphs/Food 4 Less from January 1996 to July 1998 and was Vice Chairman
     from June 1995 to January 1996. He was a Director of Food 4 Less
     Supermarkets from its inception in 1989 and was the President and Chief
     Operating Officer of Food 4 Less Supermarkets from January 1990 until June
     1995. From 1986 through 1989, Mr. Golleher served as Senior Vice President
     - Finance and Administration of The Boys Markets, Inc.

                                       49
<PAGE>
          Carlton J. Jenkins has served as Chairman, President and Chief
     Executive Officer of Founders National Bank of Los Angeles since January
     1991. Mr. Jenkins is also a Trustee of the Children Bureau of Los Angeles
     Foundation, board member of the Los Angeles Urban League, The Great Los
     Angeles Zoo Association, Govenors of Town Hall, Los Angeles, Los Angeles
     Area Chamber of Commerce, Los Angeles Educational Partnership, and a member
     of the Board of Regents of Children's Hospital of Los Angeles and Junior
     Achievement of Los Angeles.

          Bruce Karatz has been the Chairman of the Board of Kaufman & Broad
     Home Corporation since July 1993 and its President, Chief Executive Officer
     and a director since 1986. Mr. Karatz is also a director of Honeywell, Inc.
     and National Golf Properties, Inc. and a Trustee of the RAND Corporation.

          John G. King was President and Chief Executive Officer of Legacy
     Health System, a health care provider, from 1991 unitl 1999 and has over 30
     years experience in hospital and health care administration. Mr. King is
     also a director of Regence Blue Cross, Blue Shield of Oregon, Health East
     in Minnesota and Advisory Boards of Boston Scientific Governance 100.

          Roger S. Meier has been President and Chief Executive Officer of AMCO,
     Inc., a privately owned investment enterprise, for more than twenty years.
     During that time Mr. Meier was Chairman of the State of Oregon Investment
     Council, a member of the Board of Directors of Red Lion Inns, Ltd. and a
     Director of Key Bank of Oregon. He is trustee of Acorn Fund, Acorn
     International and Acorn USA. He is also an Advisory Board Member of Key
     Bank of Oregon and Chairman of the Investment Committee for Legacy Health
     System.

          Robert G. Miller became Vice Chairman of the Company in June 1998. He
     served as President in since April 1997 and has been Chief Executive
     Officer of the Company since 1991. He was Chairman of the Board from August
     1991 to July 1997. Prior to that time he was employed by Albertson's, where
     his most recent positions were Executive Vice President of Retail
     Operations from 1989 to 1991 and Senior Vice President and Regional Manager
     from 1985 to 1989. Mr. Miller is a director of PacifiCorp, Pathmark Stores,
     Inc. and Supermarkets General Holdings Corp.

          Marc H. Rapaport has been the Chairman and Lead Investor of LA Soccer
     Partners L.P., since 1994. Mr. Rapaport is the founder of the Los Angeles
     Galaxy of Major League Soccer. From 1990 to 1994, Mr. Rapapor served as
     Executive Vice President and Director of Corporate Finance of the Capital
     Division of Jefferies & Company, Inc. (which he co-founded in 1990). Mr.
     Rapaport is a member of the Board of Governors of Cedars-Sinai Hospital.

          Steven R. Rogel has been President and Chief Executive Officer and a
     director of Weyerhaeuser since December 1997. Prior to that time he was
     Chief Executive Officer, President and a director of Willamette Industries,
     Inc. He served as Chief Operating Officer of Willamette Industries, Inc.
     until October 1995 and, prior to that time, as an executive and group vice
     president for more than five years. He serves on various boards, including
     the American Forest & Paper Association, World Forestry Center, and the
     Cascade Pacific Council Boy Scouts of America.

          Stuart M. Sloan has been the owner of Sloan Capital Companies, a
     private investment company, since 1984. He served as the Chairman of the
     Board of QFC from October 1986 until QFC merged with the Company in March
     1998. Mr. Sloan currently serves on the Board of Directors of Anixter
     International, Inc. and a member of the Advisory Board of SeaFirst Bank and
     a trustee of the Swedish Medical Center in Seattle.

          Jeffrey P. Smith was Chairman of the Board of Smith's from 1988 until
     Smith's became a subsidiary of the Company in September 1997. He served as
     Chief Executive Officer of Smith's from 1988 until May 1996 and as Chief
     Operating Officer and President of Smith's from 1984 to 1988.

          Samuel Zell has been Chairman of the Board of Directors of Equity
     Group Investments, Inc., a private investment company, since 1986. Mr. Zell
     is an indirect general partner of Zell/Chilmark Fund, LP, a private
     investment firm, which was the beneficial owner of approximately 17% of
     QFC's common stock prior to its merger with the Company in March 1998. Mr.
     Zell is Chairman of the Board of Directors of American Classic Voyages Co.,
     Anixter International, Inc., Jacor Communications, Inc. and Manufactured
     Home Communities, Inc. He is Chairman of the Board of Trustees of Capital
     Trust, Equity Office Properties Trust and Equity Residential Properties
     Trust. He is also a director of Ramco Energy PLC, TeleTech Holdings, Inc.
     and Chart House Enterprises, Inc.

          Bertram R. Zweig has been a partner in the Los Angeles office of
     Jones, Day, Reavis & Pogue since 1995, and prior to that, from 1962 to
     1978. Between August 1992 and June 1995, Mr. Zweig was a partner with the
     law firm of Graham and James, and from January 1988 to July 1992 he was a
     partner with the law firm of Stroock & Stroock

                                       50
<PAGE>
     & Lavan. He is a member of the Board of Directors of E* Capital
     Corporation, the parent of Wedbush Morgan Securities, Inc., a regional
     investment banking firm in Los Angeles. Mr. Zweig is also a member of the
     Board of Directors of Aquatic Water Systems Incorporated, Nature Coast
     Industries, Inc.and The Dashew International Student Center of UCLA.

Executive Officers

          The executive officers of the Company are as set forth below.

<TABLE>
<CAPTION>
                                                                                                        Original
                                                                                                        Date of
Name                      Position                                                              Age    Employment
-----------------------------------------------------------------------------------------------------------------
<S>                       <C>                                                                    <C>      <C> 
Robert G. Miller          Vice Chairman and Chief Executive Officer                              54       1991
George G. Golleher        President and Chief Operating Officer                                  49       1998
Mary F. Sammons           President and Chief Executive Officer of Fred Meyer Stores             50       1973
Abel T. Porter            President and Chief Executive Officer of Smith's                       39       1997
Micheal E. Huse           President of QFC                                                       43       1998
Sammy K. Duncan           President of Ralphs                                                    47       1992
Harold McIntire           President of Food 4 Less                                               53       1998
Kenneth Thrasher          Executive Vice President and Chief Administrative Officer              47       1982
Kenneth A. Martindale     Executive Vice President, Purchasing                                   38       1997
George A. Schnug          Executive Vice President, Distribution and Manufacturing               53       1998
David R. Jessick          Executive Vice President. Finance and Investor Relations               44       1997
Roger A. Cooke            Executive Vice President, Regulatory and Legal Affairs and Secretary   50       1992
John T. Standley          Senior Vice President and Chief Financial Officer                      36       1998
</TABLE>

          The business experience of the executive officers of the Company is
     set forth below. There are no family relationships among the executive
     officers or directors of the Company. Information relating to Messrs.
     Miller and Golleher, directors of the Company, is set forth above.

          Mary F. Sammons became President and Chief Executive Officer of Fred
     Meyer Stores in January 1998. Prior to that time she was Executive Vice
     President - Nonfood Group of Fred Meyer. Ms. Sammons joined the Company in
     1973 and became a buyer in 1975. She was promoted to Vice President and
     Merchandiser in 1980, Senior Vice President of the Softgoods Division in
     1989 and Senior Vice President of Apparel and Home Electronics in 1995.

          Abel T. Porter has been President and Chief Executive Officer of
     Smith's since January 1998. Prior to that time, he was Senior Vice
     President and Regional Manager for Smith's, a position which he also held
     from 1990 to 1993. In the years prior to this appointment, Mr. Porter
     worked in both the Intermountain and Southwest regions in several
     positions.

          Michael E. Huse was appointed President of QFC in September 1998.
     Prior to that time, he was Senior Vice President and Chief Operating
     Officer of QFC from June 1997 to September 1998, Vice President Store
     Operations from October 1993 to June 1997and District Manager from
     September 1986 to October 1993.

          Sammy K. Duncan has been President of Ralphs since April 1998. Prior
     to that time he was Executive Vice President of the Food Group for Fred
     Meyer Stores, Inc.

          Harold McIntire became President of Food 4 Less in July 1996. From
     December 1991 until July 1996 to that he held the position of Senior Vice
     President/General Manager.

          Kenneth Thrasher became Executive Vice President and Chief
     Administrative Officer in January 1997. Prior to that time, he was Senior
     Vice President, Finance and Chief Financial Officer from March 1989 until
     January 1997, Vice President, Finance, Chief Financial Officer and
     Secretary from 1987 until 1989 and Vice President, Corporate Treasurer from
     1982 until 1987.

          Kenneth A. Martindale has been Executive Vice President of Purchasing
     and Procurement since January 1998. Prior to that time, Mr. Martindale was
     Senior Vice President of Sales and Procurement of Smith's. He served as
     Vice President of Merchandising in Smith's California region from 1991 to
     1995. From 1984 to 1991, he served as a district manager for Smith's
     Intermountain region.

                                       51
<PAGE>
         George A. Schnug has been Executive Vice  President,  Distribution  and
     Manufacturing  since March 1998.  Prior to that time,  Mr. Schnug was Group
     Senior Vice President,  Support Operations of Ralphs since January 1996. He
     served as Senior Vice President,  Manufacturing  and Construction from June
     1995 to  January  1996.  From 1992 to June 1995,  he served as Senior  Vice
     President, Corporate Operations of Food 4 Less.

          David R. Jessick has been Executive Vice President, Finance and
     Investor Relations since June 1998. He served as Senior Vice President,
     Finance and Chief Financial Officer from January 1997 to June 1998. Prior
     to that time, he was employed by Thrifty PayLess Holdings Inc., where his
     most recent positions were Executive Vice President and Chief Financial
     Officer from 1994 to 1996 and Senior Vice President, Finance and Chief
     Financial Officer from 1990 until 1994.

          Roger A. Cooke became Executive Vice President, Regulatory and Legal
     Affairs in September 1998. Prior to that he served as Senior Vice
     President, General Counsel and Secretary. Prior to that time he was Vice
     President, General Counsel and Secretary of the Company from August 1992
     until April 1993. From 1982 to 1992, he was an officer of Pan American
     World Airways, Inc., serving as Senior Vice President and General Counsel
     from 1990 to 1992. From 1973 to 1980, he was associated with the law firm
     Simpson Thacher and Bartlett.

          John T. Standley became Senior Vice President and Chief Financial
     Officer in July 1998. From January 1997 until July 1998 he was Senior Vice
     President and Chief Financial Officer of Food 4 Less.

Compliance with Section 16(a) Beneficial Ownership Reporting

          Section 16(a) of the Securities Exchange Act of 1934 requires the
     Company's directors and executive officers and persons who own more than
     ten percent of a registered class of the Company's equity securities, to
     file with the Securities and Exchange Commission (the "SEC") initial
     reports of ownership and reports of changes in ownership of Common Stock
     and other equity securities of the Company. Officers, directors and greater
     than ten-percent stockholders are required by SEC regulation to furnish the
     Company with copies of all Section 16(a) forms they file.

          To the Company's knowledge, based solely on a review of the copies of
     such reports furnished to the Company and representations that no other
     reports were required, the Company believes that during the fiscal year
     ended January 30, 1999 all Section 16(a) filing requirements applicable to
     its officers, directors and greater than ten-percent beneficial owners were
     complied with except that one statement of changes in beneficial ownership
     was inadvertently filed late on behalf of Mr. Jeffrey P. Smith involving
     one reportable transaction.


                                       52
<PAGE>
Item 11. Executive Compensation.

Summary Compensation Table

          The following table sets forth compensation paid to the Chief
     Executive Officer of the Company and the other four most highly compensated
     executive officers of the Company for services in all capacities to the
     Company and its subsidiaries during each of the last three fiscal years.

<TABLE>
<CAPTION>
                                        Annual Compensation               Long Term Compensation
                                  -------------------------------   -----------------------------------
                                                                             Awards            Payouts
                                                                    -----------------------   ---------
                                                                                 Securities
                                                          Other                  Underlying   Long-Term
                                                          Annual    Restricted     Options    Incentive    All Other
     Name and                                             Compen-     Stock         (# of        Plan       Compen-
Principal Position         Year   Salary(1)    Bonus(1)   sation      Awards       Shares)     Payouts     sation(6)
------------------         ----   ----------   --------   -------   ----------   ----------   ----------   ---------
<S>                        <C>    <C>          <C>            <C>   <C>             <C>              <C>   <C>      
Robert G. Miller           1998   $1,000,000   $660,000        --           --           --           --   $ 118,257
   Chief Executive         1997     731,923     274,377        --   $382,742(2)     500,000           --      79,787
   Officer                 1996     581,923     196,329        --     49,046(3)     150,000           --      59,593

George G. Golleher(4)      1998     893,939     660,000        --           --      250,000           --       1,600
   President and Chief     1997          --          --        --           --           --           --          --
   Operating Officer       1996          --          --        --           --           --           --          --

Mary F. Sammons            1998     400,000     230,800        --           --           --           --      65,035
   President, Fred         1997     301,154     103,021        --    156,940(2)     150,000           --      53,304
   Meyer Stores            1996     287,308      56,422        --     14,066(3)          --           --      41,398

Kenneth A. Martindale(5)   1998     399,995     220,000        --           --           --           --      24,205
   Executive Vice          1997      88,366     126,330        --           --           --           --      37,139
   President, Purchasing   1996          --          --        --           --           --           --          --

Abel T. Porter(5)          1998     399,995     194,433        --           --           --           --      24,331
   President, Smith's      1997      88,366      94,312        --           --           --           --      36,943
                           1996          --          --        --           --           --           --          --

--------------

     (1)  Includes compensation deferred at the election of the executive under
          the Company's Profit Sharing Plan and under the Company's Excess
          Deferral Plan. Under the Company's Profit Sharing Plan, officers and
          other employees of the Company may elect to defer up to the lesser of
          $9,500 or 15% of their compensation, subject to limitations under the
          Internal Revenue Code. Under the Excess Deferral Plan, officers and
          other employees of the Company may elect to defer up to 50% of base
          salary and up to 100% of any bonus award. Amounts under these plans
          are generally paid to employees upon retirement.

     (2)  Represents restricted stock grants made to Mr. Miller and Ms. Sammons
          in the amounts of 8,187 and 3,357 shares, respectively. The amount
          included in the table represents the market value of the shares at
          March 17, 1998, the date of the award. Vesting occurs over three
          years. The total number of shares of restricted stock held on January
          30, 1999 and the market value of such shares on that date were as
          follows: Mr. Miller - 9,771 shares ($610,688) and Ms. Sammons -3,811
          shares ($238,188).

     (3)  Represents restricted stock grants made to Mr. Miller and Ms. Sammons
          in the amounts of 2,378 and 682 shares, respectively. The amount
          included in the table represents the market value of the shares at
          March 31, 1997.

                                       53
<PAGE>
     (4)  The amounts included in the table represent compensation paid to Mr.
          Golleher since March 10, 1998, the date of acquisition of Ralphs/Food
          4 Less by the Company.

     (5)  The amounts included in the table represent compensation paid to
          Messrs. Martindale and Porter since September 9, 1997, the date of
          acquisition of Smith's by the Company.

     (6)  Amounts shown for 1998 consist of: (i) Company contributions of
          $77,187 and $26,806 to Mr. Miller and Ms. Sammons, respectively, under
          the Profit Sharing Plan and Excess Deferral Plan, (ii) $6,070, $0,
          $3,229, $2,205, and $2,331 paid by the Company for the above-named
          executive officers, respectively, as premiums under its Long-Term
          Disability Plan; and (iii) $35,000, $0, $35,000, $22,000, and $22,000
          paid by the Company for the above-named executive officers,
          respectively, for life insurance under the Supplemental Income Plan.
</TABLE>

Stock Option Grants in Last Fiscal Year

          The following table provides information as to options to purchase
     Common Stock granted to the Chief Executive Officer and the other four most
     highly compensated executive officers during 1998 pursuant to the Company's
     1990 Stock Incentive Plan and 1997 Stock Incentive Plan. No SARs were
     granted during 1998.

<TABLE>
<CAPTION>
                                                                                      Potential Realizable Value at
                        Number of                       Percentage                       Assumed Annual Rates of
                       Securities      Total Options   of Exercise                      Stock Price Appreciation
                       Underlying         Granted to         Price                          For Option Term(3)
                          Options       Employees in           Per   Expiration   ---------------------------------------
       Name            Granted(4)        Fiscal Year      Share(4)         Date        0%            5%            10%
       ----            ----------      -------------   -----------   ----------   -----------   -----------   -----------
<S>                       <C>                   <C>       <C>              <C>    <C>           <C>           <C>        
George G. Golleher        100,000 (1)           5.6%      $ 35.937         3/08   $ 1,006,300   $ 3,899,200   $ 8,337,500
                          150,000 (2)           8.4%        43.062         6/08                   4,062,150    10,294,500

     (1)  Options were approved for grants to employees of Fred Meyer, Smith's,
          QFC and Ralphs/Food 4 Less on January 20, 1998, with an exercise price
          of $35.937 per share, which was from the market price on that date.
          However the options approved for employees of QFC and Ralphs/Food 4
          Less became effective in March 1998 on completion of the merger. The
          options, which have terms of ten years, become exercisable 20% per
          year on the first five anniversaries of the original grant date. If
          the employment of the optionee is terminated within one year after a
          change in control of the Company, the options become exercisable in
          full.

     (2)  Options were granted for the numbers of shares indicated at an
          exercise price equal to the fair market value of the Common Stock on
          the date of grant. The options, which have terms of ten years, become
          exercisable 20% per year on the first five anniversaries of the
          original grant date. If the employment of the optionee is terminated
          within one year after a change in control of the Company, the options
          become exercisable in full.

     (3)  The dollar amounts under these columns are the result of calculations
          of the 0%, 5% and 10% rates required by the Securities and Exchange
          Commission for the maximum option term of 10 years and therefore are
          not intended to and may not accurately forecast possible future
          appreciation, if any, of the Company's Common Stock price.
</TABLE>

                                       54
<PAGE>
Stock Option Exercises in Last Fiscal Year and Fiscal Year-End Option Values

          The following table indicates (i) stock options exercised by certain
     executive officers during 1998, including the value realized on the date of
     exercise, (ii) the number of shares subject to exercisable (vested) and
     unexercisable (unvested) stock options as of January 30, 1999, and (iii)
     the value of "in-the-money" options, which represents the positive spread
     between the exercise price of existing stock options and the year-end price
     of the Common Stock.

<TABLE>
<CAPTION>
                                                                    Number of                       Value of
                                                              Securities Underlying         Unexercised In-the-Money
                                                            Unexercised Options Held              Options Held
                                                               at January 30, 1999           at January 30,1999(2)
                         Shares Acquired          Value    ---------------------------    ---------------------------
       Name                  on Exercise    Realized(1)    Exercisable   Unexercisable    Exercisable   Unexercisable
       ----              ---------------    -----------    -----------   -------------    -----------   -------------
<S>                               <C>       <C>                <C>             <C>        <C>             <C>        
Robert G. Miller                  35,696    $ 1,274,668        786,722         400,000    $49,170,125     $25,000,000

George G. Golleher                    --             --             --         250,000             --       5,572,000

Mary F. Sammons                   37,690      1,365,170             --         135,380             --       5,449,744

Kenneth A. Martindale             52,500      2,420,621         20,000          80,000        625,004       2,500,016

Abel T. Porter                    52,500      2,673,258         20,000          80,000        592,500       2,370,000

     (1)  Aggregate market value on the exercise date of the shares covered by
          the option, less the aggregate exercise price.

     (2)  Calculated based on the January 29, 1999 stock price of $62.50.
</TABLE>

Retirement Benefits

          The Company has a nonqualified Supplemental Income Plan to provide
     supplemental retirement and death benefits to key employees. The plan is
     administered by the Compensation Committee. Any key executive of the
     Company who holds a position of Senior Vice President or higher is eligible
     to participate in this plan. The Committee selects participants from those
     eligible employees recommended by the Company's Chief Executive Officer. A
     participant is entitled to receive full benefits under the Supplemental
     Income Plan upon normal retirement by termination of employment after age
     62. A participant is also entitled to receive reduced benefits if the
     participant voluntarily terminates his or her employment, is terminated
     without cause or dies before age 62. The normal retirement benefit under
     the Supplemental Income Plan is a projected annual amount, to be paid in
     equal monthly installments for 15 years, based upon the estimated cash
     surrender value, less the premiums paid and other expenses of the Company,
     of a Company-owned life insurance policy purchased on the life of the
     executive. The actual benefit will vary from the projected benefit based on
     actual dividend experience. The Company guarantees each participant a
     minimum benefit equal to at least 60 percent of the projected benefit.
     Based on certain assumptions, the projected annual benefits payable to Mr.
     Miller, Ms. Sammons, Mr. Martindale and Mr. Porter upon retirement at
     normal retirement age would be $60,427, $100,551, $251,688 and $238,055,
     respectively. 

          Mr. Martindale and Mr. Porter will also receive benefits under a
     retirement plan sponsored by Smith's (the "Smith's Plan") which is funded
     entirely by the Company's contributions. An employee's monthly benefit
     under the Smith's Plan is determined by multiplying a fixed dollar amount
     by the number of years of the employee's employment. The fixed dollar
     amount, which has varied from year to year, is currently $30 per month and
     is not subject to reduction for social security benefits. The estimated
     annual amounts payable following retirement to Messers, Martindale and
     Porter under the Smith's Plan are $14,328 and $13,884, respectively.

          Mr. Golleher is entitled to retirement benefits under the Ralphs
     Grocery Company Retirement Plan, the Ralphs Grocery Company Supplemental
     Executive Retirement Plan and the Ralphs Grocery Company Retirement
     Supplement Plan (collectively, the "Ralphs Plans"). Benefits payable under
     the Ralphs Plans are based on compensation which consists of salary and
     bonus. At normal retirement age, the amount of annual retirement benefit is
     determined by multiplying the average compensation for the highest three
     years of the ten year preceding retirement by 2% multiplied by the number
     of years of credited service (not to exceed 30 years of credited service).

Severance Agreements

          The Company has agreed to pay certain benefits to Mr. Miller in
     connection with his employment, including certain death, disability,
     retiree medical, retirement and severance benefits. Under Mr. Miller's
     employment agreement, originally dated August 27, 1991, and last amended on
     October 13, 1998, the Company pays Mr. Miller an annual base salary of $1
     million and a target annual bonus equal to 60% of his base salary. Assuming
     Mr. Miller retires at age 62, he

                                       55
<PAGE>
     will be entitled to receive an additional monthly retirement benefit of
     $25,000 for the remainder of his life. In the event of Mr. Miller's
     termination for any reason other than cause, death, permanent disability or
     in connection with a "change of control", Mr. Miller is entitled to payment
     of two years of compensation at his then current annual salary. The Company
     also agreed to pay Mr. Miller severance compensation and benefits upon a
     "qualifying termination" in connection with a "change in control." A
     "change of control," generally, is when the majority of the Company's
     stockholders or board changes. The approval of the Kroger Merger by the
     Company's stockholders will constitute a change in control under the
     agreement. A qualifying termination includes any:

          -    resignation by Mr. Miller for any reason within 18 months after
               the completion of the change of control,

          -    resignation initiated by Mr. Miller due to "constructive
               discharge" outside the 18-month period referred to above if the
               resignation is in anticipation of or within three years after the
               change of control, and

          -    termination of Mr. Miller's employment by the Company for any
               reason, other than for cause, in anticipation of or within three
               years after the change of control.

          Constructive discharge is defined as a material reduction, other than
     for cause, in Mr. Miller's compensation, benefits or responsibilities as
     Chief Executive Officer of the Company and a member of the Company's board
     of directors. Constructive discharge also includes an irreconcilable
     disagreement with the Company's board of directors over policy matters
     materially impairing his ability to carry out his responsibilities as Chief
     Executive Officer of the Company. Severance compensation due under the
     agreement upon a qualifying termination consists of:

          -    accrued and unpaid compensation through the date of termination,

          -    a pro rata bonus for the year of termination,

          -    a lump sum payment equivalent to three times his highest base
               salary and applicable bonus rate, discounted to present value
               over a three-year period,

          -    a payment equal to the actuarially determined present value of
               his projected accruals from three years of ongoing participation
               in Company-sponsored qualified and non-qualified retirement
               plans,

          -    continuation of health and welfare benefit coverage for 36
               months, and

          -    an additional payment to make him whole for any excise tax Mr.
               Miller must pay under the IRS rules relating to compensation Mr.
               Miller receives after a change of control.

          Under Mr. Miller's agreement, Fred Meyer will pay him severance
     compensation only if he meets the following conditions:

          -    he may not make unauthorized disclosure of confidential
               information relating to the Company or its affiliates for a
               period of three years after termination, and

          -    he may not compete with the Company or its affiliates during that
               three-year period.

          The Company has entered into employment protection and severance
     agreements (the "Severance Agreements") with Messrs. Golleher, Martindale,
     Porter and Ms. Sammons (the "Named Officers"). Under these agreements, the
     Company must pay severance compensation if the Company terminates an
     executive's employment without cause or if the executive terminates
     employment for good reason in anticipation of a change of control or during
     the 18 month period following a change of control. Under the agreement with
     George G. Golleher, the Company must also pay severance if Mr. Golleher
     terminates his employment for any reason within 18 months following a
     change of control. Severance compensation consists of:

          -    accrued and unpaid compensation through the date of termination,

          -    a pro rata bonus for the year of termination,

          -    continued payment for two or three years following the date of
               termination of the executive's annual base salary plus the target
               percentage of this base salary that was payable under the terms
               of the Company's annual bonus plan for its senior executives for
               the year in which the merger is completed,

          -    continued health and welfare benefits for two or three years,

                                       56
<PAGE>
          -    for some Named Officers, accelerated vesting of outstanding stock
               options held by the executive under Fred Meyer's stock option and
               stock incentive plans, and

          -    an additional payment to compensate the executives for any excise
               tax the executive must pay under the Internal Revenue Service
               rules relating to change of control.

     Executives will also continue to accrue annual retirement allocations and
     other benefits under the Company's Supplemental Income Plan or other
     supplemental retirement plans applicable to them for the two or three years
     following the date of termination. Cash compensation under these agreements
     will be reduced on a dollar for dollar basis by the amount of comparable
     cash compensation paid to the executives under any other severance
     agreement applicable to the executive. Other benefits provided by the
     employment protection agreements will be similarly reduced.


Compensation of Directors

          Directors who are not employees of the Company receive an annual fee
     of $40,000 and can elect to participate in the Non-Employee Directors'
     Deferred Compensation Plan. Such directors also receive a fee of $1,000 per
     board or committee meeting attended.

          Under the Non-Employee Directors' Deferred Compensation Plan (the
     Directors' Plan"), directors who are not employees may elect to have all or
     part of their annual cash retainers and meeting fees credited to a deferred
     compensation account. Participants may elect to receive their deferred
     compensation in the form of cash or shares of the Company's Common Stock.
     If a participant elects to receive all or part of his or her deferred
     compensation in the form of the Company's Common Stock, the amount of
     compensation credited quarterly to his or her account shall be the number
     of shares of the Company's Common Stock which can be purchased with 110% of
     the compensation so deferred at the median of the high and low trading
     prices of the Company's Common Stock as quoted on the New York Stock
     Exchange Composite Transactions on such date. Each participant's deferral
     account is increased quarterly prior to distribution (i) to reflect
     interest on the amount obtained by the cash deferral account balance at an
     average prime rate, and (ii) to reflect any dividends paid on Common Stock
     in the participant's deferral account. With respect to deferred amounts, a
     participant may specify (i) the date of the event on which payment of such
     deferred compensation is to commence (which, other than death, disability
     or termination may not be earlier than the later of two years from the date
     of the deferral election or termination of service as a director) and (ii)
     whether such payment is to be paid out in a single lump sum or in
     approximately equal annual installments over a period not to exceed 15
     years. The Company will annually issue stock to the Fred Meyer Deferred
     Compensation Trust to cover all outstanding stock credits under the
     Directors' Plan.


Compensation Committee Interlocks and Insider Participation

          Messrs. Burkle, Gleason, Rogel, and Smith served on the Company's
     Compensation Committee until June 1998. Messrs. Karatz, Meier, Rapaport,
     Rogel, Sloan and Smith have served on the Company's Compensation Committee
     since June 1998.

          See Item 13 for information relating to a Management Services
     Agreement between The Yucaipa Companies, an affiliate of Mr. Burkle, and
     the Company.

                                       57
<PAGE>
Item 12. Security Ownership of Certain Beneficial Owners and Management.
------------------------------------------------------------------------

          The following table shows ownership of shares of Common Stock of the
     Company on March 3, 1999, except as noted, with respect to (i) each
     director of the Company who beneficially owns shares; (ii) each executive
     officer of the Company named in the Summary Compensation Table who
     beneficially owns shares; (iii) all directors and executive officers of the
     Company as a group; and (iv) each beneficial owner who, to the knowledge of
     the Board of Directors, beneficially owned more than 5% of the Common
     Stock.

<TABLE>
<CAPTION>
                                                                     Number of      Approximate
     Name                                                            Shares (1)      Percent (2)
     ----                                                        -------------      ------------
     <S>                                                         <C>                    <C>  
     FMR Corp.                                                   19,084,664 (3)         12.2%
     82 Devonshire Street
     Boston, Massachusetts   97202
     
     Ronald W. Burkle                                            14,463,978 (4)          9.0%
     1000 Santa Monica Boulevard, Fifth Floor
     Los Angeles, California 90067
     
     Massachusetts Financial Services Company                    12,581,646 (5)          8.1%
     500 Boylston Street
     Boston, Massachuestts   02116
     
     Stuart M. Sloan                                              1,722,879 (6)            *
     
     Robert G. Miller                                               860,891 (7)            *
     
     Samuel Zell                                                    351,656 (8)            *
     
     George G. Golleher                                             283,876 (9)            *
     
     Jeffrey P. Smith                                               185,484                *
     
     Mary F. Sammons                                                130,711 (10)           *
     
     Abel T. Porter                                                  75,715 (11)           *
     
     Kenneth A. Martindale                                           65,887 (12)           *
     
     Robert D. Beyer                                                 57,825 (13)           *
     
     A. M. Gleason                                                   55,213 (14)           *
     
     Roger S. Meier                                                  46,173 (15)           *
     
     Marc H. Rapaport                                                20,815 (16)           *
     
     James J. Curran                                                  9,426 (17)           *
     
     Steven R. Rogel                                                  7,073 (18)           *
     
     Vivian A. Bull                                                   4,394                *
     
     John G. King                                                     4,104 (19)           *
     
     Bruce Karatz                                                     2,912 (20)           *
     
     Bertram R. Zweig                                                 2,659 (21)           *
     
     Carlton J. Jenkins                                                 242 (20)           *
     
     All directors and executive officers as a group
       (28 individuals)                                          18,593,644 (22)        11.5%
     
     --------------

          *    Less than 1%
          (1)  Shares held directly with sole voting and sole investment power
               unless otherwise indicated.
          (2)  Percentages based on 156,036,181 shares outstanding, which was
               the total number of shares outstanding as of March 3, 1999.
          (3)  This information is based on a Scheudle 13G filed with the
               Securities and Exchange Commission reporting that, as of December
               31, 1998, FMR Corp. and its subsidiaries had sole voting power as
               to 914,590 of such shares and sole dispositive power with respect
               to all of such shares.

                                       58
<PAGE>
          (4)  Includes 13,636,658 shares owned by affiliates of Mr. Burkle as
               follows: (a) The Yucaipa Companies -- 4,377,743 (including a
               warrant to purchase 3,869,366 shares); (b) Yucaipa Arizona
               Partners, L.P. - 355,877; (c) Yucaipa Smitty's Partners, L.P. -
               391,109; (d) Yucaipa Smitty's Partners II, L.P. - 177,940; (e)
               Yucaipa SSV Partners, L.P. - 1,699,887; (f) F4L Equity Partners,
               L.P. - 2,352,925; (g) FFL Partners - 266,358; (h) Ronald W.
               Burkle Foundation - 66,390; (i) Yucaipa Capital Fund - 335,711;
               (j) Yucaipa/F4L Partners - 79,718, (k) GNHT 1, LLC - 1,071,900,
               (l) GNHT 2, LLC - 714,600, (m) GNHT 3, LLC - 714,000, (n) GNHT 4,
               LLC - 714,600, and (o) GNHT 5, LLC - 357,300. Mr. Burkle
               disclaims beneficial ownership as to these shares (except to the
               extent of his pecuniary interest therein). Mr. Burkle has the
               sole power to vote or to direct the vote, and to dispose or
               direct the disposition of shares beneficially held by him. The
               Yucaipa Companies is the record holder of a currently exercisable
               warrant entitling it to purchase up to 3,869,366 shares of Common
               Stock. See "Certain Relationships and Related Transactions."
          (5)  This information is based on a Scheudle 13G filed with the
               Securities and Exchange Commission reporting that, as of December
               31, 1998, Massachusetts Financial Services Company had sole
               voting power as to 12,468,576 of such shares and sole dispositive
               power with respect to all of such shares.
          (6)  Includes 586,910 shares which are subject to immediately
               exercisable options and 968 shares held in the Fred Meyer, Inc.
               Non-Employee Directors' Deferred Compensation Plan.
          (7)  Includes 786,722 shares subject to options that are currently
               exercisable for become exercisable within 60 days of the date of
               this table.
          (8)  Includes 968 shares held in the Fred Meyer, Inc. Non-Employee
               Directors' Deferred Compensation Plan and 333,651 shares held by
               Samstock/SIT, L.L.C., a Delaware limited liability company, which
               is wholly owned by Robert M. Levin as trustee of Sam Investment
               Trust. Mr. Zell is a primary beneficiary of the Trust and may be
               deemed to be beneficiary of the Trust amd my be deemed to be
               beneficial owner of the shares.
          (9)  Includes 20,000 shares subject to options that are currently
               exercisable for become exercisable within 60 days of the date of
               this table and 185,299 shares held by Yucaipa Smitty's Partners
               II, L.P. of which Mr. Golleher is a limited partner. Beneficial
               ownership is disclaimed as to such shares.
          (10) Includes 616 shares held by Ms. Sammons' spouse. Beneficial
               ownership as to such shares is disclaimed.
          (11) Includes 20,000 shares subject to immediately exercisable
               options.
          (12) Includes 8,904 shares by his sons of which Mr. Martindale is
               custodian. Also includes 20,000 shares subject to immediately
               exercisable options.
          (13) Includes 947 shares held in the Fred Meyer, Inc. Non-Employee
               Directors' Deferred Compensation Plan and 56,878 shares held by
               Yucaipa Arizona Partners, L.P. Mr. Beyer is a general partner of
               a partnership which is a limited partner of Yucaipa Arizona
               Partners, L.P. Beneficial ownership is disclaimed as to such
               shares.
          (14) Includes 2,600 shares owned by Mr. Gleason's spouse as to which
               beneficial ownership is disclaimed and 1,855 shares held in the
               Fred Meyer, Inc. Non-Employee Directors' Deferred Compensation
               Plan.
          (15) Includes 1,615 shares held in the Fred Meyer, Inc. Non-Employee
               Directors' Deferred Compensation Plan, 14,000 shares owned by Mr.
               Meier's spouse, and 5,000 shares owned by a family partnership of
               which Mr. Meier is general partner. Beneficial ownership is
               disclaimed as to such shares.
          (16) Includes 816 shares held in the Fred Meyer, Inc. Non-Employee
               Directors' Deferred Compensation Plan.
          (17) Includes 1,630 shares held in the Fred Meyer, Inc. Non-Employee
               Directors' Deferred Compensation Plan and 7,796 shares held in a
               family trust as to which beneficial ownership is disclaimed.
          (18) Includes 1,679 shares held in the Fred Meyer, Inc. Non-Employee
               Directors' Deferred Compensation Plan.
          (19) Includes 1,604 shares held in the Fred Meyer, Inc. Non-Employee
               Directors' Deferred Compensation Plan.
          (20) Shares held in the Fred Meyer, Inc. Non-Employee Directors'
               Deferred Compensation Plan.
          (21) Includes 2,135 shares held in the Fred Meyer, Inc. Non-Employee
               Directors' Deferred Compensation Plan.
          (22) Includes 5,574,886 shares subject to options that are currently
               exercisable or become exercisable within 60 days of the date of
               this table. Includes 14,079,277 shares for which beneficial
               ownership is disclaimed.
</TABLE>

                                       59
<PAGE>
Item 13. Certain Relationships and Related Transactions.
--------------------------------------------------------

          In September 1997, Fred Meyer acquired Smith's (the "Smith's Merger").
     Ronald W. Burkle, Jeffrey P. Smith and Bruce Karatz were elected to the
     Fred Meyer Board of Directors pursuant to the terms of the Smith's Merger
     Agreement. Mr. Burkle is the founder, managing partner and a principal
     owner of The Yucaipa Companies ("Yucaipa"). At the closing of the Smith's
     Merger, the Company and Yucaipa entered into a Management Services
     Agreement. Under the terms of the Management Services Agreement, Yucaipa
     provides management consultation and advice to the Company for a term of
     five years. The Company pays Yucaipa an annual management fee of $500,000
     and has agreed to reimburse Yucaipa for its reasonable out-of-pocket costs
     and expenses incurred in connection with the performance of its obligations
     under the Management Services Agreement. If during the term of the
     Management Services Agreement, the Board of Directors of the Company
     requests Yucaipa to provide (i) consulting services in connection with any
     proposed acquisition or divestiture transaction or any debt or equity
     financing or (ii) any other services not otherwise covered by the
     Management Services Agreement, Yucaipa will be entitled to such additional
     compensation for such services as may be agreed upon by Yucaipa and the
     Company (and approved by a majority of the Company's disinterested
     directors). In connection with Yucaipa's services, Mr. Burkle serves as the
     Chairman of the Board of Directors of the Company and has the right to do
     so during his initial three year term as a director of the Company. Mr.
     Burkle does not receive any compensation for serving in such capacity
     beyond the compensation paid to Yucaipa under the Management Services
     Agreement. During fiscal 1998, the Company paid Yucaipa $500,000 in fees
     under the Management Services Agreement and approximately $20 million for
     services rendered in conjunction with the Ralphs/Food 4 Less and QFC
     mergers and termination fees of Ralphs/Food 4 Less management agreement. It
     is expected that the Management Services Agreement will be terminated in
     connection with the Kroger Merger, and Yucaipa will receive a termination
     fee of approximately $3.4 million, calculated pursuant to the terms of the
     Management Services Agreement.

          In March 1998, the Company acquired Ralphs/Food 4 Less. Robert D.
     Beyer and Carlton J. Jenkins were elected to the Fred Meyer Board of
     Directors pursuant to the Food 4 Less merger agreement. In March 1998, the
     Company acquired QFC. Samuel Zell and Stuart M. Sloan were elected as
     directors of the Company pursuant to the QFC merger agreement.

                                       60
<PAGE>
                                     Part IV
-------------------------------------------------------------------------------


Item 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K.

     (a)(1) Financial Statements.

     The information required by this item is listed in Item 8, Part II of this
Annual Report on Form 10-K.

     (a)(2) Financial Statement Schedules.

          All schedules are omitted as the required information is inapplicable
     or is presented in the financial statements or related notes thereto.

     (a)(3) Exhibits.

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

        2A        Agreement and Plan of Merger among Quality Food Centers, Inc.,
                  Q-Acquisition Corp. and Fred Meyer, Inc. dated as of November
                  6, 1997, as amended as of January 20, 1998. Incorporated by
                  reference to Appendix A of the Joint Proxy and Consent
                  Solicitation Statement/Prospectus contained in the Company's
                  Registration Statement on Form S-4, No. 333-44871, filed on
                  January 26, 1998.

        2B        Agreement and Plan of Merger among Food 4 Less Holdings, Inc.,
                  FFL Acquisition Corp. and Fred Meyer, Inc. dated as of
                  November 6, 1997, as amended as of January 20, 1998.
                  Incorporated by reference to Appendix B of the Joint Proxy and
                  Consent Solicitation Statement/Prospectus contained in the
                  Company's Registration Statement on Form S-4, No. 333-44871,
                  filed on January 26, 1998.

        2C        Agreement and Plan of Merger by and between Smith's Food &
                  Drug Centers, Inc. and Fred Meyer, Inc. dated as of May 11,
                  1997. Incorporated by reference to Appendix A of the Joint
                  Proxy Statement/Prospectus contained in the Company's
                  Registration Statement on Form S-4, No. 333-32927, filed on
                  August 6, 1997.

        2D        Agreement and Plan of Merger, dated as of October 18, 1998,
                  among The Kroger Co., Jobsite Holdings, Inc. and Fred Meyer,
                  Inc. Incorporated by reference to Appendix A of the Company's
                  Joint Proxy Statement/ Prospectus dated March 8, 1999, SEC
                  File No. 1-13339, filed on March 10, 1999.

        2E        Stock Option Agreement, dated as of October 18, 1998, between
                  Fred Meyer, Inc. and The Kroger Co. (Fred Meyer, Inc. as
                  Issuer) . Incorporated by reference to Appendix B of the
                  Company's Joint Proxy Statement/Prospectus dated March 8,
                  1999, SEC File No. 1-13339, filed on March 10, 1999.

        2F        Stock Option Agreement, dated as of October 18, 1998, between
                  The Kroger Co. and Fred Meyer, Inc. (The Kroger Co. as
                  Issuer). Incorporated by reference to Appendix C of the
                  Company's Joint Proxy Statement/ Prospectus dated March 8,
                  1999, SEC File No. 1-13339, filed on March 10, 1999.

        3A        Restated Certificate of Incorporation, as amended, of Fred
                  Meyer, Inc. Incorporated by reference to Exhibit 3A of the
                  Company's Form 10-Q for the quarter ended May 23, 1998, SEC
                  File No. 1-13339.

        3B        Bylaws of Fred Meyer, Inc. Incorporated by reference to
                  Exhibit 3.2 of the Company's Form 10-Q for the quarter ended
                  November 8, 1997, SEC File No. 1-13339.

        4A        Specimen Stock Certificate. Incorporated by reference to
                  Exhibit 4.1 of the Company's Registration Statement on Form
                  S-4, Registration No. 333-32927, filed on August 6, 1997.

        4B-1      Guarantee, dated as of March 11, 1998, made by the Guarantors
                  referred to therein in favor of Bankers Trust Company, as
                  Administrative Agent and Collateral Agent, The Chase Manhattan
                  Bank, as Syndication Agent, The Various Financial Institutions
                  Identified as Lenders in the Participation Agreement, as
                  Lenders

                                       61
<PAGE>
                  and The Various Financial Institutions Identified as Investors
                  in the Participation Agreement, as Investors. Incorporated by
                  reference to Exhibit 4B-1 of the Company's Annual Report on
                  Form 10-K for the year ended January 31, 1998, SEC File No.
                  1-13339.

        4B-2      Participation Agreement among Fred Meyer, Inc., as Lessee and
                  as Construction Agent, FMS Trust 1997-1, a Delaware business
                  trust, as Lessor, Wilmington Trust Company, not in its
                  individual capacity, except as expressly specified therein,
                  but solely as Owner Trustee under the FMS Trust 1997-1, the
                  Investors party to the Trust Agreement, Bankers Trust Company,
                  as Administrative Agent, The Chase Manhattan Bank, as
                  Syndication Agent, and the Lenders Parties thereto, dated as
                  of March 11, 1998; Chase Securities Inc. and BT Alex. Brown,
                  as Arrangers. Incorporated by reference to Exhibit 4B-2 of the
                  Company's Annual Report on Form 10-K for the year ended
                  January 31, 1998, SEC File No. 1-13339.

        4B-3      Lease, Security Agreement and Financing Statement between
                  Wilmington Trust Company, not in its individual capacity, but
                  solely as Owner Trustee under the FMS Trust 1997-1, as Lessor,
                  and Fred Meyer, Inc., dated as of March 11, 1998. Incorporated
                  by reference to Exhibit 4B-3 of the Company's Annual Report on
                  Form 10-K for the year ended January 31, 1998, SEC File No.
                  1-13339.

        4B-4      Construction Agency Agreement, dated as of March 11, 1998,
                  between FMS Trust 1997-1, a Delaware business trust, and Fred
                  Meyer, Inc., a Delaware corporation. Incorporated by reference
                  to Exhibit 4B-4 of the Company's Annual Report on Form 10-K
                  for the year ended January 31, 1998, SEC File No. 1-13339.

        4B-5      Credit Agreement among FMS Trust 1997-1, as Borrower, The
                  Several Lenders from Time to Time Parties Thereto, Bankers
                  Trust Company, as Administrative Agent and The Chase Manhattan
                  Bank, as Syndication Agent, dated as of March 11, 1998.
                  Incorporated by reference to Exhibit 4B-5 of the Company's
                  Annual Report on Form 10-K for the year ended January 31,
                  1998, SEC File No. 1-13339.

        4B-6      Lease Guarantee, dated as of March 11, 1998, made by Fred
                  Meyer, Inc., as Lessee Guarantor, in favor of FMS Trust
                  1997-1, as Lessor, Bankers Trust Company, as Administrative
                  Agent, The Chase Manhattan Bank, as Syndication Agent, The
                  Various Financial Institutions Identified as Lenders in the
                  Participation Agreement, as Lenders, and The Various Financial
                  Institutions as Investors in the Participation Agreement
                  Therein, as Investors. Incorporated by reference to Exhibit
                  4B-6 of the Company's Annual Report on Form 10-K for the year
                  ended January 31, 1998, SEC File No. 1-13339.

        4B-7      Pledge Agreement, dated as of March 11, 1998, entered into by
                  Fred Meyer, Inc., a Delaware corporation, and each of the
                  undersigned subsidiaries of Fred Meyer, Inc. in favor of
                  Bankers Trust Company, as administrative agent and collateral
                  agent, for the Beneficiaries. Incorporated by reference to
                  Exhibit 4B-7 of the Company's Annual Report on Form 10-K for
                  the year ended January 31, 1998, SEC File No. 1-13339.

        4B-8      Intercreditor and Collateral Agency Agreement, dated as of
                  March 11, 1998, among Bankers Trust Company, as Administrative
                  Agent under the Loan Agreement, as Administrative Agent under
                  the Synthetic Lease Facility, and as Collateral Agent, Fred
                  Meyer, Inc. and the Subsidiary Pledgors. Incorporated by
                  reference to Exhibit 4B-8 of the Company's Annual Report on
                  Form 10-K for the year ended January 31, 1998, SEC File No.
                  1-13339.

        4B-9      Subsidiary Guarantee, dated as of March 11, 1998, executed by
                  each of the Guarantors listed on the signature page thereof
                  for the benefit of Bankers Trust Company, as Administrative
                  Agent under the Loan Agreement, and each Lender named therein.
                  Incorporated by reference to Exhibit 4B-9 of the Company's
                  Annual Report on Form 10-K for the year ended January 31,
                  1998, SEC File No. 1-13339.

        4B-10     $3,500,000,000 Loan Agreement, dated as of March 11, 1998,
                  among Fred Meyer, Inc., as Borrower, and The Lenders Party
                  Thereto; Bankers Trust Company, as Administrative Agent, and
                  The Chase Manhattan Bank, as Syndication Agent; Chase
                  Securities Inc. and BT Alex. Brown, as Arrangers. Incorporated
                  by reference to Exhibit 4B-10 of the Company's Annual Report
                  on Form 10-K for the year ended January 31, 1998, SEC File No.
                  1-13339.

        4B-11     Amendment and Restatement, dated as of December 18, 1998, of
                  Loan Agreement among Fred Meyer, and the other parties
                  thereto. Incorporated by reference to Exhibit 10.10 of
                  Amendment No. 3 to the

                                       62
<PAGE>
                  Registration Statement on Form S-4 of The Kroger Co., No.
                  333-66961, filed on March 5, 1999.

        4B-12     Amendment and Restatement, dated as of December 18, 1998, of
                  Participation Agreement among Fred Meyer and other parties
                  thereto. Incorporated by reference to Exhibit 10.11 of
                  Amendment No. 3 to the Registration Statement on Form S-4 of
                  The Kroger Co., No. 333-66961, filed on March 5, 1999.

        4B-13     Amendment and Restatement, dated as of December 18, 1998, of
                  Credit Agreement among FMS Trust 1997-1 and the other parties
                  thereto. Incorporated by reference to Exhibit 10.12 of
                  Amendment No. 3 to the Registration Statement on Form S-4 of
                  The Kroger Co., No. 333-66961, filed on March 5, 1999.

        4B-14     Amendment and Restatement, dated as of December 18, 1998, of
                  Lease, Security Agreement and Financing Statement among
                  Wilmington Trust Company, as Lessor, and Fred Meyer, as
                  Lessee. Incorporated by reference to Exhibit 10.13 of
                  Amendment No. 3 to the Registration Statement on Form S-4 of
                  The Kroger Co., No. 333-66961, filed on March 5, 1999.

        4C-1      Notes Indenture, dated as of March 11, 1998, among Fred Meyer,
                  Inc., the Guarantors named therein and First National Bank of
                  Chicago, Trustee. Incorporated by reference to Exhibit 4 of
                  the Company's Registration Statement on Form S-3, as amended,
                  No. 333-44537, filed on January 20, 1998.

        4C-2      Notes First Supplemental Indenture, dated as of March 11,
                  1998, among Fred Meyer, Inc., the Guarantors named therein and
                  First National Bank of Chicago, Trustee. Incorporated by
                  reference to Exhibit 4.2 of the Company's Current Report on
                  Form 8-K, dated March 4, 1998, SEC File No. 1-13339.

        4D-1      Registration Rights Agreement dated September 9, 1997 between
                  Fred Meyer, Inc. and the signatories thereto. Incorporated by
                  reference to Exhibit 4D-1 of the Company's Annual Report on
                  Form 10-K for the year ended January 31, 1998, SEC File No.
                  l-13339.

        4D-2      Amendment to Registration Rights Agreement dated September 9,
                  1997 between Fred Meyer, Inc. and the signatories thereto.
                  Incorporated by reference to Exhibit 4D-2 of the Company's
                  Annual Report on Form 10-K for the year ended January 31,
                  1998, SEC File No. 1-13339.

        4E        Registration Rights Agreement dated March 9, 1998 between Fred
                  Meyer, Inc. and the signatories thereto. Incorporated by
                  reference to Exhibit 4E of the Company's Annual Report on Form
                  10-K for the year ended January 31, 1998, SEC File No.
                  1-13339.

        4F        Registration Rights Agreement dated March 10, 1998 between
                  Fred Meyer, Inc. and the signatories thereto. Incorporated by
                  reference to Exhibit 4F of the Company's Annual Report on Form
                  10-K for the year ended January 31, 1998, SEC File No.
                  1-13339.

        Pursuant to Item 601(b)(4)(iii) of Regulation S-K, the registrant
                  agrees to furnish to the Commission upon request copies of
                  agreements relating to other indebtedness.

        *10A-1    Fred Meyer, Inc. 1983 Stock Option Plan, as amended.
                  Incorporated by reference to Exhibit 10D of the Company's
                  Annual Report on Form 10-K for the year ended January 28,
                  1989, SEC File No. 0-15023.

        *10A-2    Amended Fred Meyer, Inc.1990 Stock Incentive Plan.
                  Incorporated by reference to Exhibit 22 of the Company's Form
                  10-Q for the quarter ended August 12, 1995, SEC File No.
                  0-15023.

        *10A-3    Fred Meyer, Inc. 1997 Stock Incentive Plan. Incorporated by
                  reference to Appendix I to Exhibit 99.1 of the Company's
                  Current Report on Form 8-K dated September 9, 1997, SEC File
                  No. 1-13339.

        *10A-4    Quality Food Centers, Inc. Amended and Restated 1987 Incentive
                  Stock Option Plan. Incorporated by reference to Exhibit 10.1
                  of Quality Food Centers, Inc.'s Registration Statement on Form
                  S-8, No. 333-19913, filed on January 16, 1997.

        *10A-5    Quality Food Centers, Inc. 1993 Executive Stock Option Plan.
                  Incorporated by reference to Exhibit 10.1 of Quality Food
                  Centers, Inc.'s Registration Statement on Form S-8, No.
                  33-69514, filed on September 28, 1993.

        *10A-6    Quality Food Centers, Inc. 1997 Stock Option Plan.
                  Incorporated by reference to Exhibit 10.10 of Quality Food
                  Centers, Inc.'s Annual Report on Form 10-K for the fiscal year
                  ended December 27, 1997, SEC File No. 0-15590.

                                       63
<PAGE>
        *10A-7    Smith's Food & Drug Centers, Inc. Amended and Restated 1989
                  Stock Option Plan. Incorporated by reference to Exhibit 10.1
                  of Smith's Food & Drug Centers, Inc.'s Annual Report on Form
                  10-K for the fiscal year ended December 28, 1991, SEC File No.
                  1-10252.

        *10A-8    First Amendment to the Amended and Restated 1989 Stock Option
                  Plan dated as of February 7, 1995. Incorporated by reference
                  to Exhibit 20.1 of Smith's Food & Drug Centers, Inc.'s Annual
                  Report on Form 10-K for the fiscal year ended December 31,
                  1994, SEC File No. 1-10252.

        *10B      Fred Meyer, Inc. Bonus Plan Description, as amended to January
                  30, 1999.

        *10C      Form of Executive Severance Agreement among Fred Meyer, Inc.
                  and certain executive officers. Incorporated by reference to
                  Exhibit 10.1 of the Company's Form 10-Q for the quarter ended
                  November 8, 1997, SEC File No. 1-13339.

        *10D      Non-Employee Directors' Deferred Compensation Plan.
                  Incorporated by reference to Appendix J to Exhibit 99.1 of the
                  Company's Current Report on Form 8-K, dated September 9, 1997,
                  SEC File No. 1-13339.

        *10E      Form of contract for Senior Executive Long-Term Disability
                  Program. Incorporated by reference to Exhibit 10E of the
                  Company's Annual Report on Form 10-K for the year ended
                  January 30, 1993, SEC File No. 0-15023.

        *10F      Fred Meyer, Inc. Supplemental Income Plan dated January 1,
                  1994. Incorporated by reference to Exhibit 10H of the
                  Company's Annual Report on Form 10-K for the year ended
                  January 29, 1994, SEC File No. 0-15023.

        *10G-1    Employment Agreement between Fred Meyer, Inc. and Robert G.
                  Miller, as amended. Incorporated by reference to Exhibit 10.11
                  of the Company's Form 10-Q for the quarter ended November 8,
                  1997, SEC File No. 1-13339.

        *10G-2    Amended Employment Agreement of Robert G. Miller, dated
                  October 18, 1998, between Robert G. Miller and Fred Meyer,
                  Inc. Incorporated by reference to Exhibit 10.G of the
                  Company's Form 10-Q for the quarter ended November 7, 1998,
                  SEC File No. 1-13339.

        *10H      Form of Employment Agreement among Smith's Food & Drug
                  Centers, Inc. and certain executive officers. Incorporated by
                  reference to Exhibit 10H of the Company's Annual Report on
                  Form 10-K for the year ended January 31, 1998, SEC File No.
                  1-13339.

        *10I      Fred Meyer, Inc. Excess Deferral and Benefit Equalization
                  Plan. 1994 Restatement dated as of January 1, 1994.
                  Incorporated by reference to Exhibit 10T of the Company's Form
                  10-Q for the quarter ended November 4, 1995, SEC File No.
                  1-11274.

        10J       Management Services Agreement dated September 9, 1997 between
                  Fred Meyer, Inc. and The Yucaipa Companies. Incorporated by
                  reference to Exhibit 10L of the Company's Annual Report on
                  Form 10-K for the year ended January 31, 1998, SEC File No.
                  1-13339.

        10K       Yucaipa Warrant Agreement. Incorporated by reference to
                  Exhibit 10.3 of Smith's Food & Drug Centers, Inc.'s
                  Registration Statement on Form S-3, No. 333-14953, filed on
                  October 28, 1996. Supplemental Warrant, dated as of September
                  9, 1997 among Fred Meyer, Inc. (formerly Meyer-Smith Holdco,
                  Inc.) and the Yucaipa Companies. Incorporated by reference to
                  Exhibit 10.3 of the Company's Form 10-Q for the quarter ended
                  November 8, 1997, SEC File No. 1-13339.

        *10L-1    Employment Agreement dated as of June 14, 1995 between Food 4
                  Less Holdings, Inc., Ralphs Grocery Company and George G.
                  Golleher. Incorporated by reference to Exhibit 10.11 of Food 4
                  Less Holdings, Inc.'s Form 10-Q for the quarter ended July 16,
                  1995, SEC File No. 33-59212.

        *10L-2    Employment Protection Agreement dated September 22, 1998
                  between Fred Meyer, Inc. and George Golleher. Incorporated by
                  reference to Exhibit 10.N. of the Company's Form 10-Q for the
                  quarter ended November 7, 1998, SEC File No. 1-13339.

                                       65
<PAGE>
        *10M-1    Ralphs Grocery Company Retirement Supplement Plan, effective
                  as of January 1, 1994. Incorporated by reference to Exhibit
                  10.15.1 of Ralphs Grocery Company's Annual Report on Form 10-K
                  for the fiscal year ended January 28, 1996, SEC File No.
                  33-31152.

        *10M-2    Amendment to the Retirement Supplement Plan, effective as of
                  January 1, 1995. Incorporated by reference to Exhibit 10.15.2
                  of Ralphs Grocery Company Annual Report on Form 10-K for the
                  fiscal year ended January 28, 1996, SEC File No. 33-31152.

        *10M-3    Second Amendment to the Retirement Supplement Plan, effective
                  as of June 14, 1995, by and between Ralphs Grocery Company and
                  Ralphs Grocery Company Retirement Supplement Plan.
                  Incorporated by reference to Exhibit 10.15.3 of Ralphs Grocery
                  Company's Annual Report on Form 10-K for the fiscal year ended
                  January 28, 1996, SEC File No. 33-31152.

        *10M-4    Amendment 1999-1 to Ralphs Grocery Company Retirement
                  Supplement Plan effective March 31, 1999.

        *10N-1    Ralphs Grocery Company Supplemental Executive Retirement Plan,
                  amended and restated as of April 9, 1994. Incorporated by
                  reference to 10.16.1 of Ralphs Grocery Company's Annual Report
                  on Form 10-K for the fiscal year ended January 28, 1996, SEC
                  File No. 33-31152.

        *10N-2    Amendment to the Amended and Restated Supplemental Executive
                  Retirement Plan, effective as of January 1, 1995. Incorporated
                  by reference to Exhibit 10.16.2 of Ralphs Grocery Company's
                  Annual Report on Form 10-K for the fiscal year ended January
                  28, 1996, SEC File No. 33-31152.

        *10N-3    Second Amendment to the Supplemental Executive Retirement
                  Plan, dated as of June 14, 1995, by and between Ralphs Grocery
                  Company and Ralphs Grocery Company Supplemental Executive
                  Retirement Plan. Incorporated by reference to Exhibit 10.16.3
                  of Ralphs Grocery Company's Annual Report on Form 10-K for the
                  fiscal year ended January 28, 1996, SEC File No. 33-31152.

        *10N-4    Third Amendment to the Ralphs Grocery Company Supplemental
                  Executive Retirement Plan, effective as of July 1, 1995.
                  Incorporated by reference to Exhibit 10.16.4 of Ralphs Grocery
                  Company's Annual Report on Form 10-K for the fiscal year ended
                  January 28, 1996, SEC File No. 33-31152.

        *10O-1    Quality Food Centers, Inc. Deferred Compensation Plan, as
                  amended. Incorporated by reference to Exhibit 10Q of the
                  Company's Annual Report on Form 10-K for the year ended
                  January 31, 1998, SEC File No. 1-13339.

        *10O-2    Amendment Nos. 1 and 2 to Quality Food Centers, Inc. Deferred
                  Compensation Plan, as amended, dated December 1995 and January
                  1, 1999.

        *10P      Fred Meyer, Inc. 401(k) Restoration Plan, dated April 1, 1999.

        *10Q      Employment Protection Agreement dated September 22, 1998
                  between Fred Meyer, Inc. and Certain Officers. Incorporated by
                  reference to Exhibit 10.R of the Company's Form 10-Q for the
                  quarter ended November 7, 1998, SEC File No. 1-13339.

        *10R      Employment Protection Agreement dated September 22, 1998
                  between Fred Meyer, Inc. and Certain Officers. Incorporated by
                  reference to Exhibit 10.S of the Company's Form 10-Q for the
                  quarter ended November 7, 1998, SEC File No. 1-13339.

        10S       Voting Agreement, dated as of October 18, 1998 between Robert
                  G. Miller and The Kroger Co. Incorporated by reference to
                  Exhibit 10.3 of the Registration Statement on Form S-4 of The
                  Kroger Co., No. 333-66961.

        10T       Voting Agreement, dated as of October 18, 1998 among the
                  Stockholders identified on Annex A thereto and The Kroger Co.
                  Incorporated by reference to Exhibit 10.4 of the Registration
                  Statement on Form S-4 of The Kroger Co., No. 333-66961.

        21        List of Subsidiaries.

        23        Consent of Deloitte & Touche LLP

        24        Powers of Attorney

                                       65
<PAGE>
        27        Financial Data Schedule.


*This Exhibit constitutes a management contract or compensatory plan or
arrangement.


     (b) Reports on Form 8-K.

         None.

                                       66
<PAGE>
Signatures
----------

          Pursuant to the requirements of Section 13 or 15(d) of the Securities
     Exchange Act of 1934, the registrant has duly caused this report to be
     signed on its behalf by the undersigned, thereunto duly authorized.

     Date: April 14, 1999              FRED MEYER, INC.

                                       By JOHN T. STANDLEY
                                          --------------------------------------
                                          Senior Vice President and
                                          Chief Financial Officer

          Pursuant to the requirements of the Securities Exchange Act of 1934,
     this report has been signed below by the following persons on behalf of the
     registrant and in the capacities indicated on April 14, 1998.

          Signature                                     Title
          ---------                                     -----
 
     (1)  Principal Executive Officer

         *ROBERT G. MILLER                  Vice Chairman, Chief Executive 
          -----------------------------     Officer, and a Director
          Robert G. Miller


     (2)  Principal Financial and Accounting Officer

          JOHN T. STANDLEY                  Senior Vice President and Chief 
          -----------------------------     Financial Officer
          John T. Standley


     (3)  Directors

         *RONALD W. BURKLE                  Director
          -----------------------------     
          Ronald W. Burkle


         *ROBERT D. BEYER                   Director
          -----------------------------     
          Robert D. Beyer


         *VIVIAN A. BULL                    Director
          -----------------------------     
          Vivian A. Bull


         *JAMES J. CURRAN                   Director
          -----------------------------     
          James J. Curran


         *A.M. GLEASON                      Director
          -----------------------------     
          A.M. Gleason


         *GEORGE G. GOLLEHER                Director
          -----------------------------     
          George G. Golleher


         *CARLTON J. JENKINS                Director
          -----------------------------     
          Carlton J. Jenkins


         *BRUCE KARATZ                      Director
          -----------------------------     
          Bruce Karatz

                                       67
<PAGE>
         *JOHN G. KING                      Director
          -----------------------------     
          John G. King


         *ROGER S. MEIER                    Director
          -----------------------------     
          Roger S. Meier


         *MARC RAPAPORT                     Director
          -----------------------------     
          Marc Rapaport


         *STEVEN R. ROGEL                   Director
          -----------------------------     
          Steven R. Rogel


         *STUART M. SLOAN                   Director
          -----------------------------     
          Stuart M. Sloan


         *JEFFREY P. SMITH                  Director
          -----------------------------     
          Jeffrey P. Smith


         *SAMUEL ZELL                       Director
          -----------------------------     
          Samuel Zell


         *BERTRAM R. ZWEIG                  Director
          -----------------------------     
          Bertram R. Zweig


                     *By ROGER A. COOKE
                         -----------------------------
                         Roger A. Cooke
                         As Attorney in Fact

                                       68
<PAGE>
                                 EXHIBIT INDEX

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

        2A        Agreement and Plan of Merger among Quality Food Centers, Inc.,
                  Q-Acquisition Corp. and Fred Meyer, Inc. dated as of November
                  6, 1997, as amended as of January 20, 1998. Incorporated by
                  reference to Appendix A of the Joint Proxy and Consent
                  Solicitation Statement/Prospectus contained in the Company's
                  Registration Statement on Form S-4, No. 333-44871, filed on
                  January 26, 1998.

        2B        Agreement and Plan of Merger among Food 4 Less Holdings, Inc.,
                  FFL Acquisition Corp. and Fred Meyer, Inc. dated as of
                  November 6, 1997, as amended as of January 20, 1998.
                  Incorporated by reference to Appendix B of the Joint Proxy and
                  Consent Solicitation Statement/Prospectus contained in the
                  Company's Registration Statement on Form S-4, No. 333-44871,
                  filed on January 26, 1998.

        2C        Agreement and Plan of Merger by and between Smith's Food &
                  Drug Centers, Inc. and Fred Meyer, Inc. dated as of May 11,
                  1997. Incorporated by reference to Appendix A of the Joint
                  Proxy Statement/Prospectus contained in the Company's
                  Registration Statement on Form S-4, No. 333-32927, filed on
                  August 6, 1997.

        2D        Agreement and Plan of Merger, dated as of October 18, 1998,
                  among The Kroger Co., Jobsite Holdings, Inc. and Fred Meyer,
                  Inc. Incorporated by reference to Appendix A of the Company's
                  Joint Proxy Statement/ Prospectus dated March 8, 1999, SEC
                  File No. 1-13339, filed on March 10, 1999.

        2E        Stock Option Agreement, dated as of October 18, 1998, between
                  Fred Meyer, Inc. and The Kroger Co. (Fred Meyer, Inc. as
                  Issuer) . Incorporated by reference to Appendix B of the
                  Company's Joint Proxy Statement/Prospectus dated March 8,
                  1999, SEC File No. 1-13339, filed on March 10, 1999.

        2F        Stock Option Agreement, dated as of October 18, 1998, between
                  The Kroger Co. and Fred Meyer, Inc. (The Kroger Co. as
                  Issuer). Incorporated by reference to Appendix C of the
                  Company's Joint Proxy Statement/ Prospectus dated March 8,
                  1999, SEC File No. 1-13339, filed on March 10, 1999.

        3A        Restated Certificate of Incorporation, as amended, of Fred
                  Meyer, Inc. Incorporated by reference to Exhibit 3A of the
                  Company's Form 10-Q for the quarter ended May 23, 1998, SEC
                  File No. 1-13339.

        3B        Bylaws of Fred Meyer, Inc. Incorporated by reference to
                  Exhibit 3.2 of the Company's Form 10-Q for the quarter ended
                  November 8, 1997, SEC File No. 1-13339.

        4A        Specimen Stock Certificate. Incorporated by reference to
                  Exhibit 4.1 of the Company's Registration Statement on Form
                  S-4, Registration No. 333-32927, filed on August 6, 1997.

        4B-1      Guarantee, dated as of March 11, 1998, made by the Guarantors
                  referred to therein in favor of Bankers Trust Company, as
                  Administrative Agent and Collateral Agent, The Chase Manhattan
                  Bank, as Syndication Agent, The Various Financial Institutions
                  Identified as Lenders in the Participation Agreement, as
                  Lenders and The Various Financial Institutions Identified as
                  Investors in the Participation Agreement, as Investors.
                  Incorporated by reference to Exhibit 4B-1 of the Company's
                  Annual Report on Form 10-K for the year ended January 31,
                  1998, SEC File No. 1-13339.

<PAGE>
        4B-2      Participation Agreement among Fred Meyer, Inc., as Lessee and
                  as Construction Agent, FMS Trust 1997-1, a Delaware business
                  trust, as Lessor, Wilmington Trust Company, not in its
                  individual capacity, except as expressly specified therein,
                  but solely as Owner Trustee under the FMS Trust 1997-1, the
                  Investors party to the Trust Agreement, Bankers Trust Company,
                  as Administrative Agent, The Chase Manhattan Bank, as
                  Syndication Agent, and the Lenders Parties thereto, dated as
                  of March 11, 1998; Chase Securities Inc. and BT Alex. Brown,
                  as Arrangers. Incorporated by reference to Exhibit 4B-2 of the
                  Company's Annual Report on Form 10-K for the year ended
                  January 31, 1998, SEC File No. 1-13339.

        4B-3      Lease, Security Agreement and Financing Statement between
                  Wilmington Trust Company, not in its individual capacity, but
                  solely as Owner Trustee under the FMS Trust 1997-1, as Lessor,
                  and Fred Meyer, Inc., dated as of March 11, 1998. Incorporated
                  by reference to Exhibit 4B-3 of the Company's Annual Report on
                  Form 10-K for the year ended January 31, 1998, SEC File No.
                  1-13339.

        4B-4      Construction Agency Agreement, dated as of March 11, 1998,
                  between FMS Trust 1997-1, a Delaware business trust, and Fred
                  Meyer, Inc., a Delaware corporation. Incorporated by reference
                  to Exhibit 4B-4 of the Company's Annual Report on Form 10-K
                  for the year ended January 31, 1998, SEC File No. 1-13339.

        4B-5      Credit Agreement among FMS Trust 1997-1, as Borrower, The
                  Several Lenders from Time to Time Parties Thereto, Bankers
                  Trust Company, as Administrative Agent and The Chase Manhattan
                  Bank, as Syndication Agent, dated as of March 11, 1998.
                  Incorporated by reference to Exhibit 4B-5 of the Company's
                  Annual Report on Form 10-K for the year ended January 31,
                  1998, SEC File No. 1-13339.

        4B-6      Lease Guarantee, dated as of March 11, 1998, made by Fred
                  Meyer, Inc., as Lessee Guarantor, in favor of FMS Trust
                  1997-1, as Lessor, Bankers Trust Company, as Administrative
                  Agent, The Chase Manhattan Bank, as Syndication Agent, The
                  Various Financial Institutions Identified as Lenders in the
                  Participation Agreement, as Lenders, and The Various Financial
                  Institutions as Investors in the Participation Agreement
                  Therein, as Investors. Incorporated by reference to Exhibit
                  4B-6 of the Company's Annual Report on Form 10-K for the year
                  ended January 31, 1998, SEC File No. 1-13339.

        4B-7      Pledge Agreement, dated as of March 11, 1998, entered into by
                  Fred Meyer, Inc., a Delaware corporation, and each of the
                  undersigned subsidiaries of Fred Meyer, Inc. in favor of
                  Bankers Trust Company, as administrative agent and collateral
                  agent, for the Beneficiaries. Incorporated by reference to
                  Exhibit 4B-7 of the Company's Annual Report on Form 10-K for
                  the year ended January 31, 1998, SEC File No. 1-13339.

        4B-8      Intercreditor and Collateral Agency Agreement, dated as of
                  March 11, 1998, among Bankers Trust Company, as Administrative
                  Agent under the Loan Agreement, as Administrative Agent under
                  the Synthetic Lease Facility, and as Collateral Agent, Fred
                  Meyer, Inc. and the Subsidiary Pledgors. Incorporated by
                  reference to Exhibit 4B-8 of the Company's Annual Report on
                  Form 10-K for the year ended January 31, 1998, SEC File No.
                  1-13339.

        4B-9      Subsidiary Guarantee, dated as of March 11, 1998, executed by
                  each of the Guarantors listed on the signature page thereof
                  for the benefit of Bankers Trust Company, as Administrative
                  Agent under the Loan Agreement, and each Lender named therein.
                  Incorporated by reference to Exhibit 4B-9 of the Company's
                  Annual Report on Form 10-K for the year ended January 31,
                  1998, SEC File No. 1-13339.

        4B-10     $3,500,000,000 Loan Agreement, dated as of March 11, 1998,
                  among Fred Meyer, Inc., as Borrower, and The Lenders Party
                  Thereto; Bankers Trust Company, as Administrative Agent, and
                  The Chase Manhattan Bank, as Syndication Agent; Chase
                  Securities Inc. and BT Alex. Brown, as Arrangers. Incorporated
                  by reference to Exhibit 4B-10 of the Company's Annual Report
                  on Form 10-K for the year ended January 31, 1998, SEC File No.
                  1-13339.

        4B-11     Amendment and Restatement, dated as of December 18, 1998, of
                  Loan Agreement among Fred Meyer, and the other parties
                  thereto. Incorporated by reference to Exhibit 10.10 of
                  Amendment No. 3 to the Registration Statement on Form S-4 of
                  The Kroger Co., No. 333-66961, filed on March 5, 1999.

<PAGE>
        4B-12     Amendment and Restatement, dated as of December 18, 1998, of
                  Participation Agreement among Fred Meyer and other parties
                  thereto. Incorporated by reference to Exhibit 10.11 of
                  Amendment No. 3 to the Registration Statement on Form S-4 of
                  The Kroger Co., No. 333-66961, filed on March 5, 1999.

        4B-13     Amendment and Restatement, dated as of December 18, 1998, of
                  Credit Agreement among FMS Trust 1997-1 and the other parties
                  thereto. Incorporated by reference to Exhibit 10.12 of
                  Amendment No. 3 to the Registration Statement on Form S-4 of
                  The Kroger Co., No. 333-66961, filed on March 5, 1999.

        4B-14     Amendment and Restatement, dated as of December 18, 1998, of
                  Lease, Security Agreement and Financing Statement among
                  Wilmington Trust Company, as Lessor, and Fred Meyer, as
                  Lessee. Incorporated by reference to Exhibit 10.13 of
                  Amendment No. 3 to the Registration Statement on Form S-4 of
                  The Kroger Co., No. 333-66961, filed on March 5, 1999.

        4C-1      Notes Indenture, dated as of March 11, 1998, among Fred Meyer,
                  Inc., the Guarantors named therein and First National Bank of
                  Chicago, Trustee. Incorporated by reference to Exhibit 4 of
                  the Company's Registration Statement on Form S-3, as amended,
                  No. 333-44537, filed on January 20, 1998.

        4C-2      Notes First Supplemental Indenture, dated as of March 11,
                  1998, among Fred Meyer, Inc., the Guarantors named therein and
                  First National Bank of Chicago, Trustee. Incorporated by
                  reference to Exhibit 4.2 of the Company's Current Report on
                  Form 8-K, dated March 4, 1998, SEC File No. 1-13339.

        4D-1      Registration Rights Agreement dated September 9, 1997 between
                  Fred Meyer, Inc. and the signatories thereto. Incorporated by
                  reference to Exhibit 4D-1 of the Company's Annual Report on
                  Form 10-K for the year ended January 31, 1998, SEC File No.
                  l-13339.

        4D-2      Amendment to Registration Rights Agreement dated September 9,
                  1997 between Fred Meyer, Inc. and the signatories thereto.
                  Incorporated by reference to Exhibit 4D-2 of the Company's
                  Annual Report on Form 10-K for the year ended January 31,
                  1998, SEC File No. 1-13339.

        4E        Registration Rights Agreement dated March 9, 1998 between Fred
                  Meyer, Inc. and the signatories thereto. Incorporated by
                  reference to Exhibit 4E of the Company's Annual Report on Form
                  10-K for the year ended January 31, 1998, SEC File No.
                  1-13339.

        4F        Registration Rights Agreement dated March 10, 1998 between
                  Fred Meyer, Inc. and the signatories thereto. Incorporated by
                  reference to Exhibit 4F of the Company's Annual Report on Form
                  10-K for the year ended January 31, 1998, SEC File No.
                  1-13339.

        Pursuant to Item 601(b)(4)(iii) of Regulation S-K, the registrant
                  agrees to furnish to the Commission upon request copies of
                  agreements relating to other indebtedness.

        *10A-1    Fred Meyer, Inc. 1983 Stock Option Plan, as amended.
                  Incorporated by reference to Exhibit 10D of the Company's
                  Annual Report on Form 10-K for the year ended January 28,
                  1989, SEC File No. 0-15023.

        *10A-2    Amended Fred Meyer, Inc.1990 Stock Incentive Plan.
                  Incorporated by reference to Exhibit 22 of the Company's Form
                  10-Q for the quarter ended August 12, 1995, SEC File No.
                  0-15023.

        *10A-3    Fred Meyer, Inc. 1997 Stock Incentive Plan. Incorporated by
                  reference to Appendix I to Exhibit 99.1 of the Company's
                  Current Report on Form 8-K dated September 9, 1997, SEC File
                  No. 1-13339.

        *10A-4    Quality Food Centers, Inc. Amended and Restated 1987 Incentive
                  Stock Option Plan. Incorporated by reference to Exhibit 10.1
                  of Quality Food Centers, Inc.'s Registration Statement on Form
                  S-8, No. 333-19913, filed on January 16, 1997.

        *10A-5    Quality Food Centers, Inc. 1993 Executive Stock Option Plan.
                  Incorporated by reference to Exhibit 10.1 of Quality Food
                  Centers, Inc.'s Registration Statement on Form S-8, No.
                  33-69514, filed on September 28, 1993.

        *10A-6    Quality Food Centers, Inc. 1997 Stock Option Plan.
                  Incorporated by reference to Exhibit 10.10 of Quality Food
                  Centers, Inc.'s Annual Report on Form 10-K for the fiscal year
                  ended December 27, 1997, SEC File No. 0-15590.

<PAGE>
        *10A-7    Smith's Food & Drug Centers, Inc. Amended and Restated 1989
                  Stock Option Plan. Incorporated by reference to Exhibit 10.1
                  of Smith's Food & Drug Centers, Inc.'s Annual Report on Form
                  10-K for the fiscal year ended December 28, 1991, SEC File No.
                  1-10252.

        *10A-8    First Amendment to the Amended and Restated 1989 Stock Option
                  Plan dated as of February 7, 1995. Incorporated by reference
                  to Exhibit 20.1 of Smith's Food & Drug Centers, Inc.'s Annual
                  Report on Form 10-K for the fiscal year ended December 31,
                  1994, SEC File No. 1-10252.

        *10B      Fred Meyer, Inc. Bonus Plan Description, as amended to January
                  30, 1999.

        *10C      Form of Executive Severance Agreement among Fred Meyer, Inc.
                  and certain executive officers. Incorporated by reference to
                  Exhibit 10.1 of the Company's Form 10-Q for the quarter ended
                  November 8, 1997, SEC File No. 1-13339.

        *10D      Non-Employee Directors' Deferred Compensation Plan.
                  Incorporated by reference to Appendix J to Exhibit 99.1 of the
                  Company's Current Report on Form 8-K, dated September 9, 1997,
                  SEC File No. 1-13339.

        *10E      Form of contract for Senior Executive Long-Term Disability
                  Program. Incorporated by reference to Exhibit 10E of the
                  Company's Annual Report on Form 10-K for the year ended
                  January 30, 1993, SEC File No. 0-15023.

        *10F      Fred Meyer, Inc. Supplemental Income Plan dated January 1,
                  1994. Incorporated by reference to Exhibit 10H of the
                  Company's Annual Report on Form 10-K for the year ended
                  January 29, 1994, SEC File No. 0-15023.

        *10G-1    Employment Agreement between Fred Meyer, Inc. and Robert G.
                  Miller, as amended. Incorporated by reference to Exhibit 10.11
                  of the Company's Form 10-Q for the quarter ended November 8,
                  1997, SEC File No. 1-13339.

        *10G-2    Amended Employment Agreement of Robert G. Miller, dated
                  October 18, 1998, between Robert G. Miller and Fred Meyer,
                  Inc. Incorporated by reference to Exhibit 10.G of the
                  Company's Form 10-Q for the quarter ended November 7, 1998,
                  SEC File No. 1-13339.

        *10H      Form of Employment Agreement among Smith's Food & Drug
                  Centers, Inc. and certain executive officers. Incorporated by
                  reference to Exhibit 10H of the Company's Annual Report on
                  Form 10-K for the year ended January 31, 1998, SEC File No.
                  1-13339.

        *10I      Fred Meyer, Inc. Excess Deferral and Benefit Equalization
                  Plan. 1994 Restatement dated as of January 1, 1994.
                  Incorporated by reference to Exhibit 10T of the Company's Form
                  10-Q for the quarter ended November 4, 1995, SEC File No.
                  1-11274.

        10J       Management Services Agreement dated September 9, 1997 between
                  Fred Meyer, Inc. and The Yucaipa Companies. Incorporated by
                  reference to Exhibit 10L of the Company's Annual Report on
                  Form 10-K for the year ended January 31, 1998, SEC File No.
                  1-13339.

        10K       Yucaipa Warrant Agreement. Incorporated by reference to
                  Exhibit 10.3 of Smith's Food & Drug Centers, Inc.'s
                  Registration Statement on Form S-3, No. 333-14953, filed on
                  October 28, 1996. Supplemental Warrant, dated as of September
                  9, 1997 among Fred Meyer, Inc. (formerly Meyer-Smith Holdco,
                  Inc.) and the Yucaipa Companies. Incorporated by reference to
                  Exhibit 10.3 of the Company's Form 10-Q for the quarter ended
                  November 8, 1997, SEC File No. 1-13339.

        *10L-1    Employment Agreement dated as of June 14, 1995 between Food 4
                  Less Holdings, Inc., Ralphs Grocery Company and George G.
                  Golleher. Incorporated by reference to Exhibit 10.11 of Food 4
                  Less Holdings, Inc.'s Form 10-Q for the quarter ended July 16,
                  1995, SEC File No. 33-59212.

        *10L-2    Employment Protection Agreement dated September 22, 1998
                  between Fred Meyer, Inc. and George Golleher. Incorporated by
                  reference to Exhibit 10.N. of the Company's Form 10-Q for the
                  quarter ended November 7, 1998, SEC File No. 1-13339.

<PAGE>
        *10M-1    Ralphs Grocery Company Retirement Supplement Plan, effective
                  as of January 1, 1994. Incorporated by reference to Exhibit
                  10.15.1 of Ralphs Grocery Company's Annual Report on Form 10-K
                  for the fiscal year ended January 28, 1996, SEC File No.
                  33-31152.

        *10M-2    Amendment to the Retirement Supplement Plan, effective as of
                  January 1, 1995. Incorporated by reference to Exhibit 10.15.2
                  of Ralphs Grocery Company Annual Report on Form 10-K for the
                  fiscal year ended January 28, 1996, SEC File No. 33-31152.

        *10M-3    Second Amendment to the Retirement Supplement Plan, effective
                  as of June 14, 1995, by and between Ralphs Grocery Company and
                  Ralphs Grocery Company Retirement Supplement Plan.
                  Incorporated by reference to Exhibit 10.15.3 of Ralphs Grocery
                  Company's Annual Report on Form 10-K for the fiscal year ended
                  January 28, 1996, SEC File No. 33-31152.

        *10M-4    Amendment 1999-1 to Ralphs Grocery Company Retirement
                  Supplement Plan effective March 31, 1999.

        *10N-1    Ralphs Grocery Company Supplemental Executive Retirement Plan,
                  amended and restated as of April 9, 1994. Incorporated by
                  reference to 10.16.1 of Ralphs Grocery Company's Annual Report
                  on Form 10-K for the fiscal year ended January 28, 1996, SEC
                  File No. 33-31152.

        *10N-2    Amendment to the Amended and Restated Supplemental Executive
                  Retirement Plan, effective as of January 1, 1995. Incorporated
                  by reference to Exhibit 10.16.2 of Ralphs Grocery Company's
                  Annual Report on Form 10-K for the fiscal year ended January
                  28, 1996, SEC File No. 33-31152.

        *10N-3    Second Amendment to the Supplemental Executive Retirement
                  Plan, dated as of June 14, 1995, by and between Ralphs Grocery
                  Company and Ralphs Grocery Company Supplemental Executive
                  Retirement Plan. Incorporated by reference to Exhibit 10.16.3
                  of Ralphs Grocery Company's Annual Report on Form 10-K for the
                  fiscal year ended January 28, 1996, SEC File No. 33-31152.

        *10N-4    Third Amendment to the Ralphs Grocery Company Supplemental
                  Executive Retirement Plan, effective as of July 1, 1995.
                  Incorporated by reference to Exhibit 10.16.4 of Ralphs Grocery
                  Company's Annual Report on Form 10-K for the fiscal year ended
                  January 28, 1996, SEC File No. 33-31152.

        *10O-1    Quality Food Centers, Inc. Deferred Compensation Plan, as
                  amended. Incorporated by reference to Exhibit 10Q of the
                  Company's Annual Report on Form 10-K for the year ended
                  January 31, 1998, SEC File No. 1-13339.

        *10O-2    Amendment Nos. 1 and 2 to Quality Food Centers, Inc. Deferred
                  Compensation Plan, as amended, dated December 1995 and January
                  1, 1999.

        *10P      Fred Meyer, Inc. 401(k) Restoration Plan, dated April 1, 1999.

        *10Q      Employment Protection Agreement dated September 22, 1998
                  between Fred Meyer, Inc. and Certain Officers. Incorporated by
                  reference to Exhibit 10.R of the Company's Form 10-Q for the
                  quarter ended November 7, 1998, SEC File No. 1-13339.

        *10R      Employment Protection Agreement dated September 22, 1998
                  between Fred Meyer, Inc. and Certain Officers. Incorporated by
                  reference to Exhibit 10.S of the Company's Form 10-Q for the
                  quarter ended November 7, 1998, SEC File No. 1-13339.

        10S       Voting Agreement, dated as of October 18, 1998 between Robert
                  G. Miller and The Kroger Co. Incorporated by reference to
                  Exhibit 10.3 of the Registration Statement on Form S-4 of The
                  Kroger Co., No. 333-66961.

        10T       Voting Agreement, dated as of October 18, 1998 among the
                  Stockholders identified on Annex A thereto and The Kroger Co.
                  Incorporated by reference to Exhibit 10.4 of the Registration
                  Statement on Form S-4 of The Kroger Co., No. 333-66961.

        21        List of Subsidiaries.

        23        Consent of Deloitte & Touche LLP

        24        Powers of Attorney

        27        Financial Data Schedule.

*This Exhibit constitutes a management contract or compensatory plan or
arrangement.