<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 11-K
ANNUAL REPORT
Pursuant to Section 15(d)
of the Securities and Exchange Act of 1934
For the fiscal year ended December 31, 1993
A. Full Title of the plan and the address of the plan, if different from
that of the issuer named below:
HANOVER DIRECT, INC. SAVINGS & RETIREMENT PLAN
c/o HANOVER DIRECT, INC.
1500 Harbor Boulevard
Weehawken, New Jersey 07087
B. Name of the issuer of the securities held pursuant to the plan and the
address of its principal executive office:
HANOVER DIRECT, INC.
1500 Harbor Boulevard
Weehawken, New Jersey 07087
<PAGE> 2
HANOVER DIRECT, INC. SAVINGS AND RETIREMENT PLAN
DECEMBER 31, 1993
INDEX TO FINANCIAL STATEMENTS AND SUPPLEMENTAL SCHEDULES
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
FINANCIAL STATEMENTS
Report of Independent Public Auditors 1
Statements of Net Assets Available for Benefits 2
Statements of Changes in Net Assets Available for Benefits 3
Notes to the Financial Statements 4
SUPPLEMENTAL SCHEDULES
Form 5500 - Item 27A - Schedule of Assets Held for Investment
Purposes 8
Form 5500 - Item 27D - Schedule of Reportable Transactions 9
</TABLE>
<PAGE> 3
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Administrative Committee of Hanover Direct, Inc.
Savings and Retirement Plan:
We have audited the accompanying statements of net assets available for
benefits of Hanover Direct, Inc. Savings and Retirement Plan (formerly The Horn
& Hardart Company Savings Plan) as of December 31, 1993 and 1992, and the
related statements of changes in net assets available for benefits for the
three years ended December 31, 1993. These financial statements and the
supplemental schedules are the responsibility of the Administrative Committee.
Our responsibility is to express an opinion on these financial statements and
schedules 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 the Administrative Committee, as well as evaluating the
overall financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the net assets available for benefits as of December 31,
1993 and 1992, and the changes in net assets available for benefits for the
years ended December 31, 1993, in conformity with generally accepted accounting
principles.
Our audits were made for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplemental schedules referred to
in the index are presented for the purpose of additional analysis and are not a
required part of the basic financial statements but are supplementary
information required by the Department of Labor's Rules and Regulations for
Reporting and Disclosure under the Employee Retirement Income Security Act of
1974. These supplemental schedules have been subjected to the auditing
procedures applied in the audits of the basic financial statements and, in our
opinion, are fairly stated in all material respects in relation to the basic
financial statements taken as a whole.
ARTHUR ANDERSEN & CO.
New York, New York
June 8, 1994
<PAGE> 4
HANOVER DIRECT, INC. SAVINGS AND RETIREMENT PLAN
STATEMENTS OF NET ASSETS AVAILABLE FOR BENEFITS
AS OF DECEMBER 31, 1993 AND 1992
<TABLE>
<CAPTION>
December 31, 1993
-------------------------------------------------------------------------------------
Fixed Conservative Capital Conservative Balanced Hanover
Income Bond Growth Equity Value Direct, Inc.
Fund Fund Fund Fund Fund StockFund Combined
-------------------------------------------------------------------------------------
Assets:
- - - - - ------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Fund Receivable (Payable) $48,794 $3,307 $5,368 $5,924 $6,849 ($1,748) $68,494
Interfund Receivable (Payable) 38,352 (38,352) 0
Plan Participant Loan Receivable 208,526 208,526
Unallocated Contributions 38,168 6,210 14,055 10,488 15,455 5,902 90,278
Investment in Group Annuity Contract 11,641 11,641
Investment in GIC Fund - PW Trust 2,775,053 2,775,053
Investment in Bond Fund - PW Trust 493,213 493,213
Investment in Growth Fund - PW Trust 948,678 948,678
Investment in Equity Fund - PW Trust 982,663 982,663
Investment in Balanced Value
Fund - PW Trust 1,267,462 1,267,462
Investment in Hanover Direct, Inc.
Common Stock (at market) - Chemical
Bank 76,575 76,575
Investment in Hanover Direct, Inc.
Common Stock (at market) - PW Trust 1,326,883 1,326,883
-------------------------------------------------------------------------------------
Total Assets 3,120,534 502,730 968,101 999,075 1,289,766 1,369,259 8,249,465
Liabilities and Fund Balance:
Contributions Payable:
Hanover Direct, Inc. & Subsidiaries 0
Due to HDI Union Fund 5,045 322 1,400 910 1,248 685 9,610
Accrued Cash Withdrawals 0
-------------------------------------------------------------------------------------
Net Assets Available for Benefits $3,115,489 $502,408 $966,701 $998,165 $1,288,518 $1,368,574 $8,239,855
=====================================================================================
</TABLE>
The accompanying Notes to the Financial Statements are an integral part of
these statements.
<TABLE>
<CAPTION>
December 31, 1992
-------------------------------------------
Fixed Hanover
Income Direct, Inc.
Fund StockFund Combined
------------------------------------------
Assets:
- - - - - -----------------------------------------------
<S> <C> <C> <C>
Fund Receivable (Payable) $0
Interfund Receivable (Payable) ($106,739) $106,739 0
Plan Participant Loan Receivable 0
Unallocated Contributions 0
Investment in Group Annuity Contract 1,681,673 1,681,673
Investment in GIC Fund - PW Trust 3,785,036 3,785,036
Investment in Bond Fund - PW Trust 0
Investment in Growth Fund - PW Trust 0
Investment in Equity Fund - PW Trust 0
Investment in Balanced Value
Fund - PW Trust 0
Investment in Hanover Direct, Inc.
Common Stock (at market) - Chemical
Bank 0
Investment in Hanover Direct, Inc.
Common Stock (at market) - PW Trust 56,983 56,983
------------------------------------------
Total Assets 5,359,970 163,722 5,523,692
Liabilities and Fund Balance:
Contributions Payable:
Hanover Direct, Inc. & Subsidiaries 66,526 66,526
Due to HDI Union Fund 0
Accrued Cash Withdrawals 4,836 4,836
------------------------------------------
Net Assets Available for Benefits $5,293,444 $158,886 $5,452,330
==========================================
</TABLE>
The accompanying Notes to the Financial Statements are an integral part of
these statements.
2
<PAGE> 5
HANOVER DIRECT, INC. SAVINGS AND RETIREMENT PLAN
STATEMENTS OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS
FOR THE THREE YEARS ENDED DECEMBER 31, 1993
<TABLE>
<CAPTION>
December 31, 1991 December 31, 1992
--------------------------------------- ------------------------------------------
Fixed Hanover Fixed Hanover
Income Direct, Inc. Income Direct, Inc.
Fund StockFund Combined Fund StockFund Combined
--------------------------------------- ------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Increases in Net Assets
Attributed to:
Interest Income $360,623 $360,623 $354,811 $354,811
Plan Participant Loan Receivable 0 0
Contributions :
Participants 810,261 38,833 849,094 966,694 966,694
Hanover Direct, Inc. & Subsidiaries
(net of credited forfeitures of $49,886,
$45,223 and $0 in 1991, 1992 and
1993, respectively) 233,077 20,845 253,922 283,821 283,821
Interfund Transfers 32,646 (32,646) 0 (90,627) 90,627 0
--------------------------------------- ------------------------------------------
1,075,984 27,032 1,103,016 1,159,888 90,627 1,250,515
--------------------------------------- ------------------------------------------
Total Additions 1,436,607 27,032 1,463,639 1,514,699 90,627 1,605,326
Decreases in Net Assets
Attributed to:
Disbursements, Withdrawals, and
Terminations 1,409,904 7,644 1,417,548 657,195 657,195
Unallocated Forfeitures 0 95,292 95,292
Unrealized Depreciation (Appreciation)
on Fund Investments 12,580 12,580 (2,407) (2,407)
--------------------------------------- ------------------------------------------
Total Deductions 1,409,904 20,224 1,430,128 752,487 (2,407) 750,080
--------------------------------------- ------------------------------------------
Net Increase (Decrease) 26,703 6,808 33,511 762,212 93,034 855,246
Net Assets Available for Benefits:
Begining of Year 4,504,529 59,044 4,563,573 4,531,232 65,852 4,597,084
--------------------------------------- ------------------------------------------
End of Year $4,531,232 $65,852 $4,597,084 $5,293,444 $158,886 $5,452,330
======================================= ==========================================
</TABLE>
The accompanying Notes to the Financial Statements are an integral part of
these statements.
<TABLE>
<CAPTION>
December 31, 1993
-------------------------------------------------------------------------------
Fixed Conservative Capital Conservative Balanced Hanover
Income Bond Growth Equity Value Direct, Inc.
Fund Fund Fund Fund Fund StockFund
-------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Increases in Net Assets
Attributed to:
Interest Income $73,172 $139 $275 $275 $313 $101
Plan Participant Loan Receivable 208,526
Contributions :
Participants 2,057,907
Hanover Direct, Inc. & Subsidiaries
(net of credited forfeitures of $49,886,
$45,223 and $0 in 1991, 1992 and
1993, respectively) 428,289
Interfund Transfers (3,767,622) 493,687 934,526 968,591 1,246,768 124,050
-------------------------------------------------------------------------------
(1,281,426) 493,687 934,526 968,591 1,246,768 124,050
-------------------------------------------------------------------------------
Total Additions (999,728) 493,826 934,801 968,866 1,247,081 124,151
Decreases in Net Assets
Attributed to:
Disbursements, Withdrawals, and
Terminations 1,200,843 4,126 9,389 9,273 12,488 3,083
Unallocated Forfeitures 24,135 384 759 555 777 9,969
Unrealized Depreciation (Appreciation)
on Fund Investments (46,751) (13,092) (42,048) (39,127) (54,702) (1,098,589)
-------------------------------------------------------------------------------
Total Deductions 1,178,227 (8,582) (31,900) (29,299) (41,437) (1,085,537)
-------------------------------------------------------------------------------
Net Increase (Decrease) (2,177,955) 502,408 966,701 998,165 1,288,518 1,209,688
Net Assets Available for Benefits:
Begining of Year 5,293,444 158,886
-------------------------------------------------------------------------------
End of Year $3,115,489 $502,408 $966,701 $998,165 $1,288,518 $1,368,574
===============================================================================
</TABLE>
The accompanying Notes to the Financial Statements are an integral part of
these statements.
<TABLE>
<CAPTION>
December 31, 1993
-----------------
Combined
-----------------
<S> <C>
Increases in Net Assets
Attributed to:
Interest Income $74,275
Plan Participant Loan Receivable 208,526
Contributions :
Participants 2,057,907
Hanover Direct, Inc. & Subsidiaries
(net of credited forfeitures of $49,886,
$45,223 and $0 in 1991, 1992 and
1993, respectively) 428,289
Interfund Transfers 0
-----------------
2,486,196
-----------------
Total Additions 2,768,997
Decreases in Net Assets
Attributed to:
Disbursements, Withdrawals, and
Terminations 1,239,202
Unallocated Forfeitures 36,579
Unrealized Depreciation (Appreciation)
on Fund Investments (1,294,309)
-----------------
Total Deductions (18,528)
-----------------
Net Increase (Decrease) 2,787,524
Net Assets Available for Benefits:
Begining of Year 5,452,330
-----------------
End of Year $8,239,855
=================
</TABLE>
The accompanying Notes to the Financial Statements are an integral part of
these statements.
3
<PAGE> 6
HANOVER DIRECT, INC.
SAVINGS AND RETIREMENT PLAN
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1993
NOTE 1. DESCRIPTION OF THE PLAN
The Hanover Direct, Inc. Savings and Retirement Plan (the "Plan"),
formerly The Horn & Hardart Company Savings Plan, commenced April 1, 1983.
Participation in the Plan is available to all eligible employees of Hanover
Direct, Inc. and its subsidiaries (the "Company") that have attained the age of
21, have credit for not less than one year of service (1000 hours), and have
applied for participation in the Plan.
Participants whose annual base salary is under $64,245 may make
pre-tax contributions of up to 10% of their total annual compensation ("Basic
Contribution") . The Company matches one-third of these pre-tax contributions
up to 6% of their total annual compensation ("Employer Contribution"). These
same participants may contribute up to 10% of their total annual compensation
on a voluntary basis. The voluntary contributions are not tax-deferred and
must, therefore, be considered an after-tax contribution. Voluntary
contributions are not matched by the Company. The participants have the right
to elect that contributions (both Basic and Employer matching contribution) be
allocated to any combination of six funds. The six funds are Fixed Income
("GIC") Fund, Hanover Direct, Inc. Stock Fund, which invests only in common
stock of the Company, a party in interest, Conservative Bond Fund, Capital
Growth Fund, Conservative Equity Fund, and a Balanced Value Fund. In 1992
there were only two funds, the Fixed Income Fund and the Hanover Direct, Inc.
Stock Fund.
Participants whose total annual compensation is in excess of $64,245
are limited to pre-tax contributions of 4-1/2% of their total annual
compensation. The Company matches one-third of these contributions. No
voluntary contributions are permitted by those participants whose total annual
compensation exceeds $64,245.
There is an $8,994 maximum limitation on employee pre-tax
contributions for 1993 ($8,728 in 1992).
There were 841, 868 and 1,621 participants in the Plan at December 31,
1991, 1992 and 1993, respectively.
Beginning April 1, 1993, participants are allowed to take out loans of
up to 50% of their individual vested balance as of the most current Plan
valuation. The minimum loan is $500 while the maximum is $50,000. The loans
can be for a period between one to five years, in whole year increments,
bearing a fixed rate of interest of the Prime Rate plus one percent, determined
at the time of loan issuance. Each participant can have only one loan
outstanding at any one time and the loan can be repaid before the end of the
original term.
4
<PAGE> 7
A participant is 100% vested in the account value of the employer's
contribution upon completion of five calendar years of vesting service, upon
retirement or termination after reaching age 62, upon death while an employee,
or because of permanent disability. A participant is 20% vested in the
Company's matching contribution for each year of service to the Company after a
one year eligibility period. A participant may elect to withdraw from his
supplemental account an amount not to exceed his vested account value.
Forfeitures by reason of termination, withdrawal or lapse of participation are
used to reduce the Company's contribution for that particular year.
Unallocated forfeitures of $36,579 will be used to reduce Company
contributions to participants in 1994.
Administrative costs of the Plan are borne by the contributions and
earnings of each fund, and are $34,762 in 1993. These costs are included in
disbursements, withdrawals, and terminations.
NOTE 2. SIGNIFICANT ACCOUNTING POLICIES
Investments in the Company's common stock are stated at market value
as determined by reference to published market data. Purchases and sales of
securities are recorded on a trade date basis, and interest is recorded on the
accrual basis. Investments in the Fixed Income Fund and Guaranteed Income
Contract Portfolio (GIC Portfolio) are stated at Contract value which
represents cost plus a guaranteed return. Investments in the Conservative Bond
Fund, Balanced Value Fund, Conservative Equity Fund, and Capital Growth Fund
are stated at initial unit value plus income earned and accrued as of the
valuation date, the last bank business day of the month.
Certain prior year amounts have been reclassified to conform to the
current year presentation.
NOTE 3. INVESTMENTS
Effective January 1, 1987, New York Life Insurance Company ("New York
Life"), 51 Madison Avenue, New York, New York 10010, became the custodian of
the funds invested in the Fixed Income Fund. Contributions to the Fixed Income
Fund were invested in a Group Annuity Contract with New York Life which
guaranteed interest at the rate of 9.45% per annum through 1991 on
contributions made in 1989, and for contributions made in 1990 guaranteed
interest at a rate of 8.70% per annum through 1992. Effective January 1, 1991,
a new Group Annuity Contract (the "Contract") with New York Life was approved.
The Contract provides for a guaranteed 8.15% rate of return for 1991 through
1993, on contributions made in 1991. Contributions made during 1993 were
invested in the six Paine Webber Funds.
In December 1992, the Company appointed Pain Webber Trust Company as
the new Investment Advisor/Custodian of the Plan funds. Five new funds plus
Company stock were made available to all plan participants as investment
options effective on April 1, 1993. Maturing funds that were held at New York
Life were rolled over into the GIC Portfolio at Paine Webber Trust Company on
December 31, 1992. The Fixed Income Fund, $1.6 million, remained in the
5
<PAGE> 8
New York Life Contract earning a rate of 8.15% per annum, until its maturity on
December 31, 1993, when it was transferred to the Paine Webber Trust GIC
Portfolio.
Contributions to the Conservative Bond Fund are invested in investment
grade bonds and other fixed income securities offering the best total return
prospectus. The fund may maintain a cash equivalent position not exceeding 25%
of the Fund's total value. Balanced Value Fund contributions are invested in
equity and fixed income securities where the potential return is greatest and
risk is least. Contributions to the Conservative Equity Fund are invested in
equity securities of conservative companies with medium to large market
capitalizations and strong balance sheets so as to have the Fund perform
superior to the Standard and Poors 500 Index in dividend yield, price to
earnings ratio and return on shareholders' equity. Contributions to the
Capital Growth Fund are invested in the equity of companies capable of
consistent long-term above-average growth with favorable earnings potential.
Contributions to the Hanover Direct, Inc. Stock Fund are invested in the common
stock of the Company. As of December 31, 1992 and December 31, 1993, the stock
fund held 23,993 and 227,387 shares, respectively, at corresponding market
values of $56,983 and $1,403,356. The stock price at June 8, 1994, was $5.875
per share. All contributions and distributions are made to/from the Fixed
Income Fund.
NOTE 4. UNALLOCATED CONTRIBUTIONS
The unallocated contribution consists of employee and employer
contributions that as of December 31, 1993 have not been allocated to the
proper participant elected funds. This amount was invested in a money market
fund earning interest until the allocation was made in the first quarter of
1994.
NOTE 5. FUND RECEIVABLE
The fund receivable consists of unallocated employee and employer
contributions owed to the fund for 1993. These amounts were received by the
fund in 1994 and then subsequently allocated among the proper funds.
NOTE 6. CONTRIBUTIONS/WITHDRAWALS PAYABLE
Contributions payable for 1992 included unallocated forfeitures which
were used to reduce 1993 Company contributions and excess contributions reduced
for transaction costs paid by the Plan. The payable for 1993 consists of The
Company Store Union Savings and Retirement Plan contributions and earnings
deposited in the Plan. The Company acquired Company Store Holdings, Inc.
during the 1993 fiscal year. A portion of their employees are covered by a
collective bargaining agreement which would prohibit these individuals from
participating in the Plan. Contributions by the above mentioned employees were
originally made to the Plan until their prohibition was determined. At that
time a separate plan was established and substantially all of the contributions
were transferred to the new plan. The remaining contributions and earnings
were transferred to the new plan in 1994.
6
<PAGE> 9
Some participants requesting withdrawals during the 1993 plan year
were not paid until 1994. These withdrawals amounted to $10,380.
NOTE 7. TAX STATUS
The Plan has received a favorable determination letter from the
Internal Revenue Service stating that the Plan, as of December 10, 1982, is
qualified under Section 401(k) of the Internal Revenue Code and, accordingly,
is exempt from federal income taxes. The plan was amended and restated during
the year ended December 31, 1989 to reflect the impact of the Tax Reform Act of
1986 and the Technical and Miscellaneous Revenue Act of 1988. In management's
opinion, based on the advice of counsel, the Plan continues to be a qualified
plan as defined by the Internal Revenue Code.
7
<PAGE> 10
HANOVER DIRECT SAVINGS AND RETIREMENT PLAN
FORM 5500 - ITEM 27A
SCHEDULE OF ASSETS HELD FOR INVESTMENT PURPOSES
AS OF DECEMBER 31, 1993
<TABLE>
<CAPTION>
Description Cost Market Value
- - - - - --------------------------------------------------------------------
<S> <C> <C>
Interest Receivable on Investment in
Guaranteed Income Contract - maturity
12/31/93 at 8.15% $0 $11,641
Investment in Guaranteed Income
Contract Portfolio - Paine Webber Trust 2,726,722 2,862,015
Investment in Conservative Bond
Portfolio - Paine Webber Trust 479,983 502,730
Investment in Capital Growth
Portfolio - Paine Webber Trust 906,356 968,101
Investment in Conservative Equity
Portfolio - Paine Webber Trust 943,262 999,075
Investment in Balanced Value
Portfolio - Paine Webber Trust 1,212,448 1,289,766
Investment in Hanover Direct, Inc.
Common Stock (1) 548,401 1,407,611
Plan Participant Loan Receivable $208,526 208,526
-----------
Total assets held for investment purposes $8,249,465
===========
</TABLE>
(1) Represents party in interest.
8
<PAGE> 11
HANOVER DIRECT SAVINGS AND RETIREMENT PLAN
FORM 5500 - ITEM 27D
SCHEDULE OF REPORTABLE TRANSACTIONS
FOR THE YEAR ENDED DECEMBER 31, 1993
<TABLE>
<CAPTION>
Expense
Identity Purchase Selling Lease Incurred With
Party Involved Description Price (1) Price (1) Rental Transaction Cost Market Net Gain
- - - - - ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Paine Webber
Trust Investment in Guaranteed
Income Contract Portfolio $15.40 ------- ------- $298,777 $298,777 -------
Paine Webber
Trust Investment in Guaranteed
Income Contract Portfolio $14.71 ------- ------- $3,183,400 $3,248,502 $65,102
Paine Webber
Trust Investment in Capital
Growth Portfolio $11.28 ------- ------- $894,724 $894,724 -------
Paine Webber
Trust Investment in Balanced
Value Portfolio $17.53 ------- ------- $1,199,201 $1,199,201 -------
Paine Webber
Trust Investment in Conservative
Bond Portfolio $16.93 ------- ------- $474,126 $474,126 -------
Paine Webber
Trust Investment in Conservative
Equity Portfolio $17.45 ------- ------- $934,874 $934,874 -------
</TABLE>
(1) Average price
9
<PAGE> 12
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the members of the Administrative Committee have duly caused this annual report
to be signed by the undersigned thereunto duly authorized.
HANOVER DIRECT, INC
SAVINGS AND RETIREMENT PLAN
Date: June 8, 1994 s/Wayne P. Garten
-------------------
Wayne P. Garten
s/Michael P. Sherman
--------------------
Michael P. Sherman
s/Edward J. O'Brien
--------------------
Edward J. O'Brien
10
<PAGE> 13
EXHIBIT I
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation of
our report included in this Form 11-K, into Hanover Direct, Inc.'s (successor
to The Horn & Hardart Company) previously filed Registration Statement File No.
2-94286.
/S/ ARTHUR ANDERSEN & CO.
-------------------------
New York, New York
June 13, 1994
