<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 years ended December 31, 1995 and 1996
Commission file number 1-12082
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 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
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, 1996 and 1995, and the related
statement of changes in net assets available for benefits for the year ended
December 31, 1996. These financial statements and the schedules referred to
below 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 of the Plan as of
December 31, 1996 and 1995, and the changes in net assets available for
benefits for the year ended December 31, 1996, 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 of assets held
for investment purposes and reportable transactions are presented for
purposes 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. The Fund Information in the
statements of net assets available for benefits and the statement of changes in
net assets available for benefits is presented for purposes of additional
analysis rather than to present the net assets available for plan benefits and
changes in net assets available for plan benefits of each fund. The supplemental
schedules and Fund Information 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.
New York, New York ARTHUR ANDERSEN LLP
June 26, 1997
<PAGE> 3
HANOVER DIRECT, INC. SAVINGS AND RETIREMENT PLAN
(formerly The Horn & Hardart Company Savings Plan)
STATEMENTS OF NET ASSETS AVAILABLE FOR BENEFITS
AS OF DECEMBER 31, 1996 AND 1995
<TABLE>
<CAPTION>
1995
Fixed Conservative Capital Conservative Balanced Hanover
Income Bond Growth Equity Value Direct, Inc.
Fund Fund Fund Fund Fund Stock Fund
<S> <C> <C> <C> <C> <C> <C>
ASSETS:
Fund receivable $ 40,474 $ 13,984 $ 45,556 $ 34,818 $ 33,862 $ 11,521
Plan participant loan receivable 425,939
Unallocated contributions 16,613 6,975 22,534 18,380 20,669 6,045
Investment in Fund 4,225,843 741,289 2,140,680 1,896,783 2,322,203
Investment in Hanover Direct, Inc. Common
Stock (at market) - T. Rowe Price
Investment in Hanover Direct, Inc. Common
Stock (at market) - PW Trust 416,849
---------- --------- ---------- ---------- ---------- --------
Total assets 4,708,869 762,248 2,208,770 1,949,981 2,376,734 434,415
LIABILITIES AND FUND BALANCE:
Contributions payable to:
Hanover Direct, Inc and Subs (Forfeitures) 10,985 5,532 18,638 6,499 8,302 14,020
Participants 29,439 4,753 18,147 6,830 13,222 5,328
---------- --------- ---------- ---------- ---------- --------
Net assets available for benefits $4,668,445 $751,963 $2,171,985 $1,936,652 $2,355,210 $415,067
========== ========= ========== ========== ========== ========
</TABLE>
<TABLE>
<CAPTION>
1996
Stable Spectrum Spectrum New International
Value Income Growth Horizons Stock
Combined Fund Fund Fund Fund Fund
<S> <C> <C> <C> <C> <C> <C>
ASSETS:
Fund receivable $ 180,215 $ $ $ $ $
Plan participant loan receivable 425,939 411,083
Unallocated contributions 91,216
Investment in Fund 11,326,798 4,079,812 2,127,453 6,130,853 829,618 294,855
Investment in Hanover Direct, Inc. Common
Stock (at market) - T. Rowe Price
Investment in Hanover Direct, Inc. Common
Stock (at market) - PW Trust 416,849
---------- --------- ---------- ---------- ---------- --------
Total assets 12,441,017 4,490,895 2,127,453 6,130,853 829,618 294,855
LIABILITIES AND FUND BALANCE:
Contributions payable to:
Hanover Direct, Inc and Subs (Forfeitures) 63,976 130,302
Participants 77,719
---------- --------- ---------- ---------- ---------- --------
Net assets available for benefits $12,299,322 $4,360,593 $2,127,453 $6,130,853 $829,618 $294,855
========== ========= ========== ========== ========== ========
</TABLE>
<TABLE>
<CAPTION>
Hanover
Direct, Inc.
Stock Fund Combined
<S> <C> <C>
ASSETS:
Fund receivable $ $
Plan participant loan receivable 411,083
Unallocated contributions
Investment in Fund 13,462,591
Investment in Hanover Direct, Inc. Common
Stock (at market) - T. Rowe Price 169,969 169,969
Investment in Hanover Direct, Inc. Common
Stock (at market) - PW Trust
--------- ----------
Total assets 169,969 14,043,643
LIABILITIES AND FUND BALANCE:
Contributions payable to:
Hanover Direct, Inc and Subs (Forfeitures) 130,302
Participants
--------- -----------
Net assets available for benefits $169,969 $13,913,341
========= ===========
</TABLE>
The accompanying notes are an integral part of these statements.
<PAGE> 4
HANOVER DIRECT, INC. SAVINGS AND RETIREMENT PLAN
(formerly The Horn & Hardart Company Savings Plan)
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS
FOR THE YEAR ENDED DECEMBER 31, 1996
<TABLE>
<CAPTION>
Fixed Conservative Capital Conservative Balanced Hanover Combined
Income Bond Growth Equity Value Direct, Inc. Paine Webber
Fund Fund Fund Fund Fund Stock Fund Funds
-----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
INCREASES IN NET ASSETS:
Interest/dividend income $3,061 $35 $141 $84 $104 $593 $4,018
Change in plan participant loan
receivable (23,037) (23,037)
Contributions
Participants 392,236 392,236
Hanover Direct, Inc and
subsidiaries (net of credited
forfeitures of $0 in 1996 110,311 110,311
Interfund transfers (41,503) 5,388 56,284 4,477 (25,018) 372
-----------------------------------------------------------------------------------------
Total additions 441,068 5,423 56,425 4,561 (24,914) 965 483,528
DECREASES IN NET ASSETS:
Disbursements, withdrawals,
terminations and administrative
costs 251,050 12,801 40,667 48,062 42,887 (3,798) 391,669
Unallocated forfeitures 3,637 3,637
Net change in depreciation
(appreciation) on fund
investments (66,422) 6,245 (126,257) (102,996) (86,209) 96,393 (279,246)
-----------------------------------------------------------------------------------------
Total deductions (additions) 184,628 19,046 (85,590) (54,934) (43,322) 96,232 116,060
-----------------------------------------------------------------------------------------
Net increase (decrease) 256,440 (13,623) 142,015 59,495 18,408 (95,267) 367,468
NET ASSETS AVAILABLE FOR
BENEFITS, beginning of year 4,668,445 751,963 2,171,985 1,936,652 2,355,210 415,067 12,299,322
-----------------------------------------------------------------------------------------
Trustee Transfer (4,924,885) (738,340) (2,314,000) (1,996,147) (2,373,618) (319,800) (12,666,790)
-----------------------------------------------------------------------------------------
NET ASSETS AVAILABLE FOR
BENEFITS, end of year $0 $0 $0 $0 $0 $0 $0
=========================================================================================
</TABLE>
<TABLE>
<CAPTION>
Stable Spectrum Spectrum New International Hanover Combined
Value Income Growth Horizons Stock Direct, Inc. T. Rowe Plan
Fund Fund Fund Fund Fund Stock Fund Price Funds Totals
----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
INCREASES IN NET ASSETS:
Interest/dividend income $182,323 $124,780 $431,974 $76,933 $ 7,920 $282 $61,889 $645,907
Change in plan participant loan
receivable 13,628 (1,262) (39,431) 24,339 10,384 523 8,181 (14,856)
Contributions
Participants 550,792 50,120 361,436 401,341 153,316 11,182 1,528,187 1,920,423
Hanover Direct, Inc and
subsidiaries (net of
credited forfeitures
of $0 in 1996 159,308 188,693 89,977 87,707 31,516 3,205 560,406 670,717
Interfund transfers (213,609) (49,117) (198,248) 364,151 128,168 (31,345)
-------------------------------------------------------------------------------------------------
Total additions 692,442 313,214 645,708 954,421 331,304 (16,153) 2,920,986 3,408,532
DECREASES IN NET ASSETS:
Disbursements, withdrawals,
terminations and
administrative costs 979,478 202,349 448,238 70,178 46,249 42,633 1,789,125 2,180,794
Unallocated forfeitures 33,770 6,417 17,836 2,200 376 2,090 62,689 66,326
Net change in depreciation
(appreciation) on fund
investments 0 (44,778) (291,940) 52,475 (10,176) 117,840 (177,379) (456,628)
-------------------------------------------------------------------------------------------------
Total deductions (additions) 1 ,013,248 163,988 174,134 124,853 36,449 161,763 1,674,435 1,794,513
-------------------------------------------------------------------------------------------------
Net increase (decrease) (320,806) 149,226 471,574 829,618 294,855 (177,916) 1,246,551 1,614,019
NET ASSETS AVAILABLE FOR
BENEFITS, beginning of year 0 0 0 0 0 0 0 12,299,322
-------------------------------------------------------------------------------------------------
Trustee Transfer 4,681,399 1,978,227 5,659,279 0 0 347,885 12,666,790 0
-------------------------------------------------------------------------------------------------
NET ASSETS AVAILABLE FOR
BENEFITS, end of year $ 4,360,593 $2,127,453 $6,130,853 $829,618 $294,855 $169,969 $13,913,341 $13,913,341
================================================================================================
</TABLE>
The accompanying notes are an integral part of these statements.
<PAGE> 5
HANOVER DIRECT, INC. SAVINGS AND RETIREMENT PLAN
(formerly The Horn & Hardart Company Savings Plan)
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1995 and 1996
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") who have attained the age of 21, have credit for
not less than one year of service (1,000 hours), and have applied for
participation in the Plan.
Participants whose annual base salary is under $66,000 may make pretax
contributions of up to 10% of their total annual compensation ("Basic
Contribution"). The Company matches one-third of these pretax contributions up
to 6% of their total annual compensation ("Employer Contribution"). These same
participants may contribute an additional amount up to 10% of their total annual
compensation on a voluntary basis ("Voluntary Contribution"). The Voluntary
Contributions are not tax-deferred and therefore, are considered to be an
after-tax contribution. Voluntary Contributions are not matched by the Company.
The participants have the right to elect that contributions (Basic, Employer,
and Voluntary Contributions) be allocated to any combination of six funds.
During 1995 and the first quarter of 1996, the six funds were Fixed Income Fund,
Hanover Direct, Inc. Stock Fund, a party in interest, Conservative Bond Fund,
Capital Growth Fund, Conservative Equity Fund, and a Balanced Value Fund. Paine
Webber Trust Company ("PWTC") served as trustee of these funds. As of April 1,
1996 the Plan's assets became administered by T. Rowe Price Retirement Plan
Services, Inc. ("TRP") which made available the following five new funds: Stable
Value Fund, Spectrum Income Fund, Spectrum Growth Fund, New Horizons Fund and
International Stock Fund. The Hanover Direct, Inc. Stock Fund also remains
available to participants and is entrusted to TRP.
A participant whose total annual compensation is in excess of $66,000, or a
highly compensated employee ("HCE"), is limited to pretax contributions of 5% of
their total annual compensation. The Company matches one-third of these
contributions. No Voluntary Contributions are permitted by an HCE.
The maximum limitation on employee pretax contributions for 1996 and 1995 was
$9,500 and $9,240, respectively. The HCE maximum compensation limit for
contributions was $150,000 for both years. The Plan elected to maintain a 5%
maximum contribution level on HCEs,
5
<PAGE> 6
limiting this group to a maximum contribution of $7,500.
There were 1,706 and 1,155 participants in the Plan at December 31, 1995 and
1996, respectively.
A participant will become 100% vested in the account value of the Employer's
Contribution upon the earlier of: the completion of five calendar years of
vesting service, retirement or termination after reaching age 62, death while an
employee, or because of permanent disability. Participants are fully vested in
their Basic Contributions immediately. A participant may elect to withdraw from
his Voluntary Contribution account an amount not to exceed his / her 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. In 1995, forfeitures amounted to $74, 215 of which $15, 321 were used to
reduce Company contributions for 1995. In 1996, total forfeitures amounted to
$130,302. No portion of this total was utilized to reduce Employer Contributions
during 1996.
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.
The Plan participant loan receivable amounted to $411,083 and $425,939 at
December 31, 1996 and 1995, respectively, with interest rates ranging from 7% to
10% at the end of 1996.
The Plan is administered by the Administrative Committee (the "Committee") which
is comprised of three persons who serve at the sole discretion of the Company's
Board of Directors without compensation from the Plan. The Committee has general
authority to control and manage the operation and administration of the Plan,
including authority to appoint and remove trustees and to adopt rules
interpreting or implementing the Plan.
Administrative costs of the Plan that were borne by the Plan were $36,730 and
$94,981 in 1996 and 1995, respectively. As of April 1, 1996, administrative
costs of the Plan are borne by participants of the Plan and amounted to $23,426
in 1996. These costs are included in disbursements, withdrawals, terminations
and administrative costs.
2. SIGNIFICANT ACCOUNTING POLICIES
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 and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from these estimates.
Investment Valuation and Income Recognition
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. In 1995, investments held by PWTC in the Fixed Income Fund,
Conservative Bond Fund, Balanced Value Fund, Conservative Equity Fund,
6
<PAGE> 7
and Capital Growth Fund are stated at market value. In 1996, investments held by
TRP in the Stable Value Fund, Spectrum Income Fund, Spectrum Growth Fund, New
Horizons Fund, International Stock Fund and the Company's Stock Fund are stated
at market value. Purchases and sales of securities are recorded on a trade date
basis. Realized gains and losses from security transactions are reported using
the moving weighted average method.
Basis of Accounting
The accompanying financial statements have been prepared on the accrual basis of
accounting. Certain prior year amounts have been reclassified to conform to the
current year presentation.
3. INVESTMENTS
In December 1992, the Company appointed PWTC as the Investment Advisor/Custodian
of the Plan funds. Five funds plus Company stock were made available to all plan
participants as investment options effective April 1, 1993.
A brief description of the investment strategies of each PWTC fund is as
follows: Contributions to the Conservative Bond Fund were invested in investment
grade bonds and other fixed income securities. The fund may have maintained a
cash equivalent position not exceeding 25% of the Fund's total value. Balanced
Value Fund contributions were invested in equity and fixed income securities.
Contributions to the Conservative Equity Fund were invested in equity securities
of conservative companies with medium to large market capitalizations.
Contribution to the Capital Growth Fund were invested in the equity of
companies.
On April 1, 1996, the Company transferred the Plan funds from PWTC to TRP. The
Plan's participants were given the option to invest in five new funds, in
addition to the Company's Stock Fund. These new funds are as follows: The Stable
Value Fund is a common trust fund which invests in investment contracts selected
by TRP which are reported at their estimated fair value. The Spectrum Income
Fund seeks a high level of current income consistent with moderate share price
fluctuation by investing primarily in domestic and foreign bond funds. It may
allocate up to 25% of its assets to stock funds. The Spectrum Growth fund seeks
long-term capital appreciation and growth of income, with current income as a
secondary objective. It invests primarily in domestic stock funds and also in a
foreign stock fund. The New Horizons Fund provides long-term capital growth by
investing primarily in common stocks of small, rapidly growing companies. The
International Stock Fund seeks to provide capital appreciation through
investment in well-established non-US companies. Contributions to the Hanover
Direct, Inc. Stock Fund were invested in the common stock of the Company, a
party in interest. As of December 31, 1995 and 1996, the stock fund held 254,915
and 226,626 shares, respectively, at corresponding market values of $416,849 and
$169,969 . The stock price at June 20, 1997, was .8125 per share. The PWTC funds
were transferred to the TRP funds in such a way as to consistently invest
participant funds into funds with like investment strategies. All contributions
and distributions were made to/from the Fixed Income Fund. All of the
above-mentioned investments exceed 5% of the Plan's net assets available for
benefits as of December 31, 1996 with the exception of the International Stock
Fund and the Hanover Direct, Inc. Stock Fund.
7
<PAGE> 8
4. UNALLOCATED CONTRIBUTIONS
The unallocated contributions consist of employee and employer contributions
that as of December 31, 1995 have not been allocated to the proper
participant-elected funds. These amounts were invested in a money market fund
earning interest until the allocations were made in the first quarter of 1996.
There were no unallocated contributions at December 31, 1996.
5. FUND RECEIVABLE
The fund receivable consists of unallocated employee and employer contributions
owed to the fund for 1995. These amounts were received by the fund in 1996.
There were no such receivables at December 31, 1996.
6. CONTRIBUTION PAYABLE
The December 31, 1995 contribution payable consisted of unvested employer
Contributions forfeited by terminated Plan participants and
participant-requested withdrawals not disbursed by the end of the Plan year. The
forfeited amounts were not used to reduce the Company's contributions to
participants in 1996. These amounts will be used to reduce Employer
Contributions in 1997. The Participant-requested withdrawals included loan
withdrawals which amounted to approximately $20,000 and were paid out to
participants in 1996.
The December 31, 1996 contribution payable consists of invested Employer
Contributions forfeited by terminated Plan participants. The forfeited amounts
will be used to reduce the Company's contributions to participants in 1997.
7. NET DEPRECIATION (APPRECIATION) ON FUND INVESTMENTS
The net (appreciation)/depreciation on fund investments at December 31, 1996 and
1995 consists of unrealized appreciation of approximately $1.1 million and $1.2
million and an aggregate realized gain of approximately $2.2 million and $.1
million, respectively. The Plan sold investments during Plan years 1996 and 1995
with approximate aggregate costs of $12.7 million and $1.4 million resulting in
aggregate proceeds of approximately $14.9 million and $1.5 million,
respectively. The realized gain/loss on the investments sold is the difference
between the market value at the beginning of the Plan year (or on the purchase
date if purchased during the Plan year) and the date of sale.
8. PLAN TERMINATION
The Plan may be terminated at any time at the Company's sole discretion although
the Company has not expressed any intention do so currently. Upon termination,
contributions by the Company and participants cease and all Company
contributions which had been credited to each
8
<PAGE> 9
participant's account become fully vested immediately.
9. TAX STATUS
The Plan has received a favorable determination letter from the Internal Revenue
Service stating that the Plan, as of October 6, 1994, 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.
9
<PAGE> 10
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 on its behalf by the undersigned hereunto duly authorized.
HANOVER DIRECT, INC. SAVINGS &
RETIREMENT PLAN
DATE: JUNE 26, 1997 /s/ Larry Svoboda
___________________________________
Larry Svoboda
Senior Vice President
Chief Financial Officer
/s/ Edward J. O'Brien
___________________________________
Edward J. O'Brien
Senior Vice President
Treasurer and Secretary
<PAGE> 11
HANOVER DIRECT, INC. SAVINGS AND RETIREMENT PLAN
(formerly The Horn & Hardart Company Savings Plan)
FORM 5500 - ITEM 27A
SCHEDULE OF ASSETS HELD FOR INVESTMENT PURPOSES
AS OF DECEMBER 31, 1996
<TABLE>
<CAPTION>
Current
Description Cost Value
----------- -------------------------------
<S> <C> <C>
INVESTMENT IN:
STABLE VALUE PORTFOLIO - T. Rowe Price
Retirement Plan Services, Inc. $4,074,812 $4,079,812
SPECTRUM INCOME PORTFOLIO - T. Rowe Price
Retirement Plan Services, Inc. 2,086,556 2,127,453
SPECTRUM GROWTH PORTFOLIO - T.Rowe Price
Retirement Plan Services, Inc. 5,892,920 6,130,853
NEW HORIZONS PORTFOLIO - T. Rowe Price
Retirement Plan Services, Inc. 881,930 829,618
INTERNATIONAL STOCK PORTFOLIO - T. Rowe
Price Retirement Plan Services, Inc. 286,171 294,855
HANOVER DIRECT, INC. COMMON STOCK (1) 184,405 169,969
PLAN PARTICIPANT LOAN RECEIVABLE (2) 411,083 411,083
-------------------------------
TOTAL ASSETS HELD FOR INVESTMENT PURPOSES 13,802,877 14,043,643
===============================
</TABLE>
(1) Represents party in interest.
(2) Terms of these loans generally range from 1 to 5 years and bear interest
ranging from 7.0% to 10.0%.
<PAGE> 12
<TABLE>
<CAPTION>
HANOVER DIRECT, INC. SAVINGS AND RETIREMENT PLAN
(formerly The Horn & Hardart Company Savings Plan)
FORM 5500 - ITEM 27D
SCHEDULE OF REPORTABLE TRANSACTIONS (1)
FOR THE YEAR ENDED DECEMBER 31, 1996
SERIES OF TRANSACTIONS
Identity of
Party Purchase Selling Lease
Involved Description Price (2) Price (2) Rental
- ------------------------------------------------------- -----------------------------
<S> <C> <C> <C> <C>
Paine Webber Investment in Guaranteed Income
Trust Contract Portfolio $0.00 $18.02 $0
Paine Webber Investment in Balanced Value
Trust Fund 0 24.22 0
Paine Webber Investment in Conservative Bond
Trust Fund 0 19.59 0
Paine Webber Investment in Capital Growth
Trust Fund 0 16.16 0
Paine Webber Investment in Conservative Equity
Trust Fund 0 25.48 0
T. Rowe Price
Retirement Plan
Services, Inc. Investment in Stable Value Fund 1.00 0.00 0
T. Rowe Price
Retirement Plan
Services, Inc. Investment in Stable Value Fund 0.00 1.00 0
T. Rowe Price
Retirement Plan
Services, Inc. Investment in Spectrum Income Fund 10.98 0.00 0
T. Rowe Price
Retirement Plan
Services, Inc. Investment in Spectrum Growth Fund 14.48 0.00 0
T. Rowe Price
Retirement Plan
Services, Inc. Investment in Spectrum Growth Fund 0.00 15.02 0
T. Rowe Price
Retirement Plan
Services, Inc. Investment in New Horizons Fund 23.15 0.00 0
</TABLE>
<TABLE>
<CAPTION>
Identity of Expense
Party Incurred With Current Net
Involved Transaction Cost Value Gain
- -----------------------------------------------------------------------
<S> <C> <C> <C> <C>
Paine Webber
Trust $0 $3,864,703 $4,378,695 $513,992
Paine Webber
Trust 0 1,927,513 2,513,183 585,670
Paine Webber
Trust 0 681,695 768,937 87,242
Paine Webber
Trust 0 1,781,915 2,411,849 629,934
Paine Webber
Trust 0 1,530,132 2,102,728 572,596
T. Rowe Price
Retirement Plan
Services, Inc. 0 5,298,629 5,298,629 0
T. Rowe Price
Retirement Plan
Services, Inc. 0 1,247,743 1,247,743 0
T. Rowe Price
Retirement Plan
Services, Inc. 0 2,398,933 2,398,933 0
T. Rowe Price
Retirement Plan
Services, Inc. 0 6,673,599 6,673,599 0
T. Rowe Price
Retirement Plan
Services, Inc. 0 783,551 816,851 33,300
T. Rowe Price
Retirement Plan
Services, Inc. 0 972,112 972,112 0
</TABLE>
<PAGE> 13
<TABLE>
<CAPTION>
INDIVIDUAL TRANSACTIONS
Identity of
Party Purchase Selling Lease
Involved Description Price (2) Price (2) Rental
- ---------------------------------------------------- ----------------------------
<S> <C> <C> <C> <C>
Paine Webber Investment in Guaranteed Income $0.00 $18.02 $0
Trust Contract Portfolio
Paine Webber Investment in Balanced Value 0 24.22 0
Trust Fund
Paine Webber Investment in Conservative Bond 0 19.58 0
Trust Fund
Paine Webber Investment in Capital Growth 0 16.17 0
Trust Fund
Paine Webber Investment in Conservative Equity 0 25.47 0
Trust Fund
T. Rowe Price
Retirement Plan
Services, Inc. Investment in Stable Value Fund 1.00 0.00 0
T. Rowe Price
Retirement Plan
Services, Inc. Investment in Spectrum Income Fund 10.96 0.00 0
T. Rowe Price
Retirement Plan
Services, Inc. Investment in Spectrum Growth Fund 14.38 0.00 0
</TABLE>
<TABLE>
<CAPTION>
Identity of Expense
Party Incurred With Current Net
Involved Transaction Cost Value Gain
- -------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Paine Webber $0 $3,654,043 $4,141,126 $487,083
Trust
Paine Webber 0 1,821,471 2,373,618 552,147
Trust
Paine Webber 0 654,903 738,340 83,437
Trust
Paine Webber 0 1,709,852 2,314,000 604,148
Trust
Paine Webber 0 1,453,553 1,996,147 542,594
Trust
T. Rowe Price
Retirement Plan
Services, Inc. 0 4,227,002 4,227,002 0
T. Rowe Price
Retirement Plan
Services, Inc. 0 1,978,227 1,978,227 0
T. Rowe Price
Retirement Plan
Services, Inc. 0 5,659,279 5,659,279 0
</TABLE>
(1) Defined as five percent of Plan net assets at beginning of Plan year.
(2) Average price
<PAGE> 1
Exhibit 1
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 (formerly The
Horn & Hardart Company) previously filed Registration Statement File No.
2-94286.
New York, New York ARTHUR ANDERSEN LLP
June 26, 1997
