As filed with the Securities and Exchange Commission on June 30,1994
Registration No. 33-50037
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
AMENDMENT NO. 2
TO
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
FOOD LION, INC.
(Exact name of registrant as specified in its charter)
North Carolina 56-0660192
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
2110 Executive Drive
Post Office Box 1330
Salisbury, North Carolina 28145-1330
(704) 633-8250
(Address, including zip code, and telephone number,
including area code, of registrant's principal executive office)
Dan A. Boone
Vice President of Finance,
Chief Financial Officer and Secretary
Food Lion, Inc.
2110 Executive Drive
Post Office Box 1330
Salisbury, North Carolina 28145-1330
(704) 633-8250, Ext 2642
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
Copies to:
Bruce S. Mendelsohn, P.C.
Akin, Gump, Strauss, Hauer & Feld, L.L.P.
1333 New Hampshire Avenue, N.W., Suite 400
Washington, D.C. 20036
Approximate date of commencement of proposed sale to the public:
From time to time after this Registration Statement becomes effe
ctive as the registrant may determine.
If the only securities being registered on this form are being
offered pursuant to dividend or interest reinvestment plans,
please check the following box: "
If any of the securities being registered on this Form are to be
offered on a delayed or continuous basis pursuant to Rule 415
under the Securities Act of 1933, other than securities offered
only in connection with dividend or interest reinvestment plans,
check the following box: x
The Registrant hereby amends this Registration Statement on
such date or dates as may be necessary to delay its effective
date until the Registrant shall file a further amendment which
specifically states that this Registration Statement shall
thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933 or until this Registration Statement
shall become effective on such date as the Commission, acting
pursuant to said Section 8(a), may determine.
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR
AMENDMENT. A REGISTRATION STATEMENT RELATING TO THESE SECURITIES
HAS BEEN FILED WITH THE SECURITIES AND EXCHANGE COMMISSION.
THESE SECURITIES MAY NOT BE SOLD NOR MAY OFFERS TO BUY BE
ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES
EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL
OR THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY
SALE OF THESE SECURITIES IN ANY STATE IN WHICH SUCH OFFER,
SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR TO REGISTRATION OR
QUALIFICATION UNDER THE SECURITIES LAWS OF ANY STATE.
Subject to Completion, dated June 30, 1994
PROSPECTUS
14,556,962 Shares
FOOD LION, INC.
Class A Common Stock
This Prospectus relates to up to 14,556,962 shares (the
"Shares") of Class A non-voting Common Stock, par value $.50 per
share ("Class A Common Stock"), of Food Lion, Inc., a North
Carolina corporation (the "Company"), issuable by the Company
upon conversion of the Company's 5% Convertible Subordinated
Debentures due 2003 (the "Debentures"). The Shares are issuable
prior to redemption of the Debentures at a conversion price of
$7.90 per share, subject to adjustment under certain
circumstances. As a result of the antidilution provisions
relating to the conversion price, this Prospectus covers an
indeterminable number of shares. See "The Offering."
At April 28, 1994, the Company had outstanding 244,135,824
shares of Class A Common Stock and 239,571,114 shares of Class B
voting Common Stock, par value $.50 per share ("Class B Common
Stock"). The holders of Class B Common Stock are entitled to one
vote on all matters on which the holders of Class B Common Stock
are entitled to vote. Holders of Class A Common Stock do not
have voting rights except to the extent provided by North
Carolina law. The Board of Directors of the Company may declare
and pay dividends on the Class A Common Stock and Class B Common
Stock out of earnings or assets of the Company legally available
for the payment thereof, provided that whenever a dividend is
declared and paid to the holders of the Class B Common Stock
(excluding a dividend payable in shares of the same class of
stock), the Board of Directors must declare and pay to the
holders of the Class A Common Stock a per share dividend greater
than the per share dividend declared and paid to the holders of
the Class B Common Stock. Upon dissolution and liquidation of
the Company, holders of the Class A Common Stock will be entitled
to receive an amount equal to the par value of the Class A Common
Stock before any payment is made with respect to the Class B
Common Stock. After such payment is made to the holders of the
Class A Common Stock, the holders of the Class B Common Stock
will be entitled to receive an amount equal to the par value of
the Class B Common Stock before any further payment is made with
respect to the Class A Common Stock. Thereafter, the remainder
of the assets of the Company will be distributed equally to all
shareholders pro rata. See "Description of Capital Stock."
The Company will receive no cash proceeds from the sale of
Shares. The Company will pay all costs and fees associated with
the registration of the Shares under Federal and state securities
laws and the preparation and delivery of this Prospectus. No
underwriting discounts or commissions are payable in connection
with the sale of the Shares.
Outstanding shares of Class A Common Stock are listed on the
NASDAQ National Market System under the symbol "FDLA," and the
Company intends to file a notification form with the NASDAQ Stock
Market to list the Shares on the NASDAQ National Market System.
On April 28, 1994, the last reported sale price of the Class A
Common Stock was $5.75 per share.
THESE SECURITIES HAVE NOT BEEN APPROVED OR
DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION
OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE
SECURITIES COMMISSION PASSED UPON THE ACCURACY OR
ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION
TO THE CONTRARY IS A CRIMINAL OFFENSE.
, 1994
No dealer, salesman or other person has been authorized to
give any information or to make any representations other than
those contained or incorporated by reference in this Prospectus,
and, if given or made, such information or representation must
not be relied upon as having been authorized by the Company or
any underwriter or agent. This Prospectus does not constitute an
offer to sell or a solicitation of an offer to buy any securities
other than the registered securities to which it relates. This
Prospectus does not constitute an offer to sell or a solicitation
of an offer to buy the securities offered hereby in any
jurisdiction to any person to whom it is unlawful to make such
offer or in any jurisdiction in which the person making such
offer or solicitation is not qualified to do so. Neither the
delivery of this Prospectus nor any sale made hereunder shall,
under any circumstances, create an implication that there has
been no change in the affairs of the Company since the date
hereof.
TABLE OF CONTENTS
Page
Available Information 3
Incorporation of Certain Information
by Reference 3
The Company 5
The Offering 6
Description of Capital Stock 9
United States Taxation 10
Legal Matters 18
Independent Accountants 18
AVAILABLE INFORMATION
The Company is subject to the informational requirements of
the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), and, in accordance therewith, files reports, proxy
statements and other information with the Securities and Exchange
Commission (the "Commission"). Such reports, proxy statements
and other information filed by the Company with the Commission
can be inspected and copied at the Public Reference Section of
the Commission at 450 Fifth Street, N.W., Room 1024, Washington,
D.C. 20549, and at the regional offices of the Commission located
at 75 Park Place, New York, New York 10007 and Northwestern
Atrium Center, 500 West Madison Street, Suite 1400, Chicago,
Illinois 60621-2511. Copies of such material can be obtained
from the Public Reference Section of the Commission at 450 Fifth
Street, N.W., Washington, D.C. 20549 at prescribed rates.
The Company has filed with the Commission a registration
statement on Form S-3 (herein, together with all amendments and
exhibits, referred to as the "Registration Statement") under the
Securities Act of 1933, as amended (the "Securities Act"),
relating to the Shares. This Prospectus does not contain all of
the information set forth in the Registration Statement, certain
parts of which are omitted in accordance with the rules and
regulations of the Commission. For further information,
reference is hereby made to the Registration Statement.
INCORPORATION OF CERTAIN INFORMATION BY REFERENCE
The following documents filed with the Commission are
incorporated herein by reference: (i) the Company's Annual Report
on Form 10-K for the fiscal year ended January 1, 1994; (ii) the
Company's Form 8-K filed on January 7, 1994; (iii) the Company's
Quarterly Report on Form 10-Q for the quarter ended March 26,
1994; and (iv) the description of the Company's Class A Common
Stock included under the heading "Description of Common Stock" on
pages 1-3 of the Company's Registration Statement on Form 8-A
dated February 27, 1984 filed with the Commission on March 1,
1984, and in any amendment or report for the purpose of updating
such description. All documents filed by the Company pursuant to
Section 13(a), 13(c), 14 or 15(d) of the Exchange Act subsequent
to the date of this Prospectus and prior to the termination of
the offering of the Shares shall be deemed to be incorporated by
reference into this Prospectus from the date of filing such
documents. Any statement contained herein or in a document, all
or a portion of which is incorporated or deemed to be
incorporated by reference herein, shall be deemed to be modified
or superseded for purposes of this Prospectus to the extent that
a statement contained herein or in any subsequently filed
document which also is or is deemed to be incorporated by
reference herein modifies or supersedes such statement. Any such
statement so modified or superseded shall not be deemed, except
as so modified or superseded, to constitute a part of this
Prospectus. The Company will provide without charge to each
person to whom this Prospectus is delivered, upon the request of
such person, a copy of the foregoing documents incorporated
herein by reference, other than exhibits to such document (unless
such exhibits are specifically incorporated by reference in such
documents). Requests should be directed to the attention of Dan
A. Boone, Vice President of Finance, Chief Financial Officer and
Secretary, 2110 Executive Drive, Post Office Box 1330, Salisbury,
North Carolina 28145-1330, telephone number (704) 633-8250, Ext.
2642.
THE COMPANY
General
The Company operates food supermarkets primarily in the
southeastern and parts of the southwestern United States. The
Company's stores, which are operated under the name "Food Lion,"
sell a wide variety of groceries, produce, meats, dairy products,
seafood, frozen food, deli/bakery and non-food items such as
tobacco, health and beauty aids and other household and personal
products. The Company currently operates deli-bakery departments
in approximately 50% of its stores. Deli/bakeries are included
in approximately 80% of new store openings. Deli/bakeries are
added to existing stores after research indicates a customer
demand for such products. The Company offers nationally and
regionally advertised brand name merchandise as well as products
manufactured and packaged for the Company under the private label
"Food Lion." The Company has a policy of selling merchandise at
low item prices in order to increase volume without a
proportionate increase in fixed and operating expenses.
As of March 26, 1994, the Company operated a total of 1,048
supermarkets in 14 states:
State Number State Number
of of
Stores Stores
North Carolina 359 Okl ahoma 12
Virginia 218 Maryland 21
Florida 110 Kentucky 12
South Carolina 97 West Virginia 13
Texas 67 Delaware 6
Tennessee 70 Louisiana 5
Georgia 51 Pennsylvania 7
The size of the Company's supermarkets averages 26,345
square feet and ranges from 15,600 square feet to 38,800 square
feet. All of the Company's supermarkets are self-service, cash
and carry stores which have off-street parking. The Company's
supermarkets are served by the Company's nine warehousing and
distribution facilities located in Salisbury and Dunn, North
Carolina; Prince George County, Virginia; Elloree, South
Carolina; Green Cove Springs and Plant City, Florida; Clinton,
Tennessee; Greencastle, Pennsylvania; and Roanoke, Texas.
An ever increasing base of existing stores makes it unlikely
that the Company will be able to consistently achieve growth
rates that it has experienced historically. Other factors that
may affect the Company's future growth include the Company's
ability to open and operate profitable stores and to project and
control capital-related expenditures. Acceptance of the
Company's merchandising strategies by customers located in new
markets, or the Company's ability to adapt its merchandising
strategies to generate increased revenues in new markets, also
will affect the Company's future growth.
The Company was incorporated in North Carolina in 1957 and
maintains its principal executive offices at 2110 Executive
Drive, Post Office Box 1330, Salisbury, North Carolina 28145-
1330, and its telephone number is (704) 633-8250.
Recent Developments
On November 5,1992, ABC Television's PrimeTime Live accused
the Company of improper food handling and sanitation practices.
Subsequent to the story, same store sales - sales for stores open in
comparable periods- declined 9.5% in November of 1992. Same store
sales improved steadily during 1993 and the first two quarters of 1994,
and sales for the Company have now recovered to pre-PrimeTime Live
levels. Gross profit has also improved each quarter since the story's
broadcast. Selling and administrative expenses as a percent of sales
are still approximately 10% higher than they were before the broadcast
due, in part, to increases in advertising, legal and public relation
costs associated with addressing continuing tactics from the United
Food and Commercial Workers Union International's "Corporate
Campaign" to discredit or damage the Company's credibility and for
ongoing strategic efforts to strengthen customer relations. Although
the Company continued to experience pressure on expenses during the
first two quarters of 1994, the Company anticipates that expenses as
a percent of sales should decline during the remainder of 1994.
During the second quarter of 1994, the Food & Drug Administration
awarded the Company a rating of "excellent" based on an in-depth
survey of food safety and sanitation of Food Lion stores.
THE OFFERING
The Shares covered by this Prospectus are those shares of
the Company's Class A Common Stock issuable upon conversion of
the Debentures. The Debentures were issued by the Company on
June 14, 1993 under an Indenture (the "Indenture") dated as of
June 1, 1993 between the Company and The Chase Manhattan Bank,
N.A., as Trustee (the "Trustee"). The Indenture governs the
terms of the Debentures, including the conversion of the
Debentures into shares of the Company's Class A Common Stock.
Certain statements under this heading are summaries of, and are
subject to, the detailed provisions of the Indenture, a copy of
which is filed as an exhibit to the Registration Statement.
Capitalized terms used below but not defined have the meanings
ascribed to them in the Indenture. At April 28, 1994, there was
outstanding under the Indenture $115 million principal amount of
Debentures.
The Debentures or any portion of the principal amount
thereof (in an amount equal to $250,000 or an integral multiple
of $1,000 in excess thereof) are convertible into Class A Common
Stock of the Company, unless previously redeemed, at any time on
or after September 13, 1993 and prior to redemption or maturity,
initially at a conversion price of $7.90 per share ("Conversion
Price") subject to adjustment under certain circumstances. The
right to convert Debentures called for redemption will terminate
at the close of business on the tenth calendar day preceding the
date fixed for such redemption. In the event any holder of
Debentures exercises its right to cause the Company to repurchase
such holder's Debentures, such holder's conversion right will
terminate upon the Company's receipt of the written notice of
exercise of such repurchase right.
The right of conversion attaching to any Debenture may be
exercised by the holder by delivering the Debenture at the
specified office of a Conversion Agent, accompanied by a duly
signed and completed notice of conversion. Debentures may be
surrendered for conversion at the corporate trust office of the
Trustee in New York City (at the address set forth below) or, at
the option of the holder and subject to applicable laws and
regulations, at the office of any Conversion Agent. The Company
has initially appointed as Conversion Agents the banks set forth
below:
Trustee and Conversion Agent (U.S.)
The Chase Manhattan Bank, N.A.
4 Chase MetroTech Center
Brooklyn, New York 11245
Conversion Agent (U.K.)
The Chase Manhattan Bank, N.A.
Woolgate House, Coleman Street
London EC2P 2HD
England
Conversion Agent (Luxembourg)
Chase Manhattan Bank Luxembourg S.A.
5 Rue Plaetis
L-2338 Luxembourg
The Company may at any time terminate the appointment of any
Conversion Agent and appoint additional or other Conversion
Agents, provided that until all of the Debentures have been
delivered to the Trustee for cancellation, or moneys sufficient
to pay the principal of and premium, if any, and interest on all
the Debentures have been made available for payment and either
paid or refunded to the Company as provided in the Indenture, it
will maintain a Conversion Agent in New York City for surrender
of Debentures for conversion, and in a Western European city
which, so long as the Debentures are listed on the Luxembourg
Stock Exchange and the Luxembourg Stock Exchange shall so
require, will be in Luxembourg, for the surrender of Debentures
for conversion. Notice of any such termination or appointment and
of any change in the office through which any Conversion Agent
will act will be given as provided in the Indenture.
The conversion date shall be the date on which the Debenture
and the duly signed and completed notice of conversion shall have
been delivered as described above. A holder delivering a
Debenture for conversion will not be required to pay any taxes or
duties payable in respect of the issue or delivery of Class A
Common Stock on conversion but will be required to pay any tax or
duty which may be payable in respect of: (i) any transfer
involved in the issue or delivery of the Class A Common Stock in
a name other than the holder of the Debenture; (ii) the payment
of cash in lieu of fractional shares; (iii) payments made
subsequent to the date of conversion; and (iv) adjustments to the
Conversion Price. Certificates representing shares of Class A
Common Stock will not be issued or delivered unless all taxes and
duties, if any, payable by the holder have been paid.
The Conversion Price will be subject to adjustment under
certain circumstances, including (a) the declaration and payment
of dividends and other distributions in Class A Common Stock on
any class of capital stock of the Company, (b) the issuance to
all holders of Class A Common Stock of rights or warrants
entitling them to subscribe for or purchase Class A Common Stock
at less than the current market price (as defined in the
Indenture) on the date fixed for the determination of share
holders entitled to receive such rights or warrants or at less
than the current market price (as defined in the Indenture) on
the day preceding the date triggering the exercisability of the
right or warrant, (c) certain subdivisions, combinations and
reclassifications of Class A Common Stock, (d) the distribution
to all holders of Class A Common Stock of any rights or warrants
to subscribe for or purchase any Company securities (other than
those referred to above) or any evidence of indebtedness or other
securities of the Company (other than Class A Common Stock) and
(e) the distribution to all holders of Class A Common Stock of
cash or other assets (other than any regular quarterly dividends
payable solely in cash that may from time to time be fixed by the
Board of Directors of the Company), where the fair market value
(as determined by the Board of Directors of the Company) of all
such distributions in any 12-month period is equal to 5% or more
of an amount determined by multiplying the number of shares of
Class A Common Stock outstanding on the record date for
determination of holders entitled to receive such distribution by
the current average market price of the Class A Common Stock. In
addition to the foregoing adjustments, the Company will be
permitted, but shall not be obligated, to make such adjustments
in the Conversion Price as it considers to be advisable in order
that any event treated for United States Federal income tax
purposes as a dividend of stock or stock rights will not be
taxable to the holders of the shares of Class A Common Stock.
Adjustments in the Conversion Price of less than 1% of such price
will not be required, but any adjustment that would otherwise be
required to be made will be carried forward and taken into
account in the computation of any subsequent adjustment.
Conversion Price adjustments may in certain circumstances result
in constructive distributions that could be taxable as dividends
under the Internal Revenue Code of 1986, as amended (the "Code"),
to holders of Debentures or to holders of shares of Class A
Common Stock issued upon conversion of Debentures. See "United
States Taxation."
In case of certain consolidations or mergers to which the
Company is a party or the transfer of all or substantially all of
the assets of the Company, each Debenture then outstanding would,
without the consent of any holders of Debentures, become
convertible into the kind and amount of securities, cash or other
property receivable upon the consolidation, merger, conveyance or
transfer by a holder of the number of shares of Class A Common
Stock of the Company into which such Debentures might have been
converted immediately prior to such consolidation, merger,
conveyance or transfer assuming such holder of Class A Common
Stock failed to exercise his or her rights of election, if any,
as to the kind or amount of securities, cash and other property
receivable upon the consolidation, merger, conveyance or transfer
(provided that if the kind or amount so receivable is not the
same for each non-electing share, then the kind and amount
receivable for each non-electing share shall be deemed to be the
kind and amount so receivable per share by the holders of a
plurality of the non-electing shares).
Fractional shares of Class A Common Stock will not be issued
upon conversion, but, in lieu thereof, the Company will pay a
cash adjustment, as provided in the Indenture, based upon the
market price of the Class A Common Stock on the trading day
before the date of conversion.
Debentures surrendered for conversion during the period from
the close of business on any Regular Record Date to the opening
of business on the next succeeding Interest Payment Date (unless
such Debentures have been called for redemption on a redemption
date within such period) must be accompanied by payment of an
amount equal to the interest payable on such Interest Payment
Date on the principal amount so converted. Unless previously
redeemed, interest on such Debentures will be payable by the
Company on the Interest Payment Date subsequent to the date of
conversion. A Debenture converted on an Interest Payment Date
need not be accompanied by any such payment, and the interest on
the principal amount of such Debenture will be paid on such
Interest Payment Date to the registered holder of such Debenture
on the immediately preceding Regular Record Date. In the case of
Debentures called for redemption between a Regular Record Date
and the opening of business on the next succeeding Interest
Payment Date, no interest will be payable on any such Debentures
converted during such period. Except as described above, no
payment or adjustment will be made by the Company on conversion
of a Debenture for interest accrued to the date of conversion or
for dividends on the Class A Common Stock issued on conversion
which were declared for payment to holders of Class A Common
Stock of record as of a date prior to the date of conversion.
DESCRIPTION OF CAPITAL STOCK
The Company's authorized capital stock consists of
1,500,000,000 shares of Class A Common Stock and 1,500,000,000
shares of Class B Common Stock. As of April 28, 1994,
244,135,824 shares of Class A Common Stock (excluding 3,302,450
shares issuable pursuant to outstanding stock options) were
issued and outstanding, and 239,571,114 shares of Class B Common
Stock were issued and outstanding. As of April 28, 1994, there
were 33,257 holders of record of the Company's Class A Common
Stock and 19,286 holders of record of the Company's Class B
Common Stock.
The holders of Class B Common Stock are entitled to one vote
per share on all matters on which the holders of Class B Common
Stock are entitled to vote and do not have cumulative voting
rights in the election of directors. Holders of Class A Common
Stock do not have voting rights except to the extent provided by
North Carolina law.
The Board of Directors of the Company may declare and pay
dividends on the Class A Common Stock and Class B Common Stock
out of earnings or assets of the Company legally available for
the payment thereof, provided that, whenever a dividend is
declared and paid to holders of Class B Common Stock (other than
a dividend payable in the same class of stock), the Board of
Directors of the Company must also declare and pay to the holders
of Class A Common Stock a per share dividend greater than the per
share dividend declared and paid to the holders of the Class B
Common Stock. The Board of Directors of the Company may declare
and pay dividends to the holders of Class A Common Stock without
declaring and paying dividends to the holders of the Class B
Common Stock.
Upon dissolution and liquidation of the Company, the holders
of Class A Common Stock will be entitled to receive an amount
equal to the par value of the Class A Common Stock before any
payment is made with respect to Class B Common Stock. After such
payment is made to the holders of Class A Common Stock, the
holders of Class B Common Stock will be entitled to receive an
amount equal to the par value of the Class B Common Stock before
any further payment is made with respect to the Class A Common
Stock. Thereafter, the remainder of the assets of the Company
will be distributed equally to all shareholders pro rata
according to the number of shares of common stock held,
regardless of class.
Holders of Class A Common Stock and Class B Common Stock
have no preemptive rights to subscribe for any additional
securities of any class which the Company may issue, nor any
conversion, redemption or sinking fund rights.
Transfer Agent
The transfer agent for the Class A Common Stock and Class B
Common Stock is Wachovia Bank of North Carolina, N.A.
UNITED STATES TAXATION
The following discussion is a summary of the material U.S.
federal income tax consequences of the purchase, ownership and
disposition of the shares of Class A Common Stock issuable upon
conversion of the Debentures. The discussion is limited solely
to investors who will own shares of Class A Common Stock issuable
upon conversion of the Debentures as "capital assets" within the
meaning of Section 1221 of the Code.
In the opinion of Akin, Gump, Strauss, Hauer & Feld, L.L.P.,
counsel to the Company, the material federal tax issues are set forth
below. The opinion of counsel is based on currently applicable law,
which is subject to change, on the facts and circumstances in existence
at closing, and on the continuing accuracy of certain
representations to be made by the Company. The opinion of
counsel is not binding on the Internal Revenue Service ("IRS"),
and no ruling will be requested from the IRS on any issues
described herein.
The following discussion is based on the provisions of the
Code, the applicable Treasury Regulations promulgated and
proposed thereunder, judicial authority and current
administrative rulings and practice, all as of the date of this
offering. Legislative, judicial or administrative changes or
interpretations may be forthcoming that could alter or modify the
statements and conclusions set forth below. Any such changes or
interpretations may or may not be retroactive. In particular,
potential investors should be aware that certain relevant
amendments to the Code have not been subject to definitive
interpretation by the Internal Revenue Service (the "Service") or
the courts.
The U.S. federal income tax treatment of an investor
acquiring Class A Common Stock may vary depending on its
particular situation. Certain investors (including, without
limitation, S corporations, insurance companies, tax-exempt
organizations, financial institutions, broker-dealers and
taxpayers subject to alternative minimum tax) may be subject to
special treatment under the federal income tax laws not discussed
below. In addition, the following discussion does not consider
the effect of any applicable foreign, state, local or other tax
laws.
The Company has not sought, nor does it intend to seek, a
ruling from the Service as to any of the matters covered by this
discussion, and there can be no assurance that the Service will
not successfully challenge the conclusions reached in this
discussion. Each investor should consult its own tax advisor
with respect to the particular situation of such investor, including
the specific tax consequences under United States federal, state,
local, foreign and other tax laws, of the purchase, ownership and
disposition of Class A Common Stock.
The following discussion is divided into two parts. The
first part summarizes certain U.S. federal income tax
considerations primarily applicable to "U.S. Holders" who acquire
the Shares offered by this Prospectus. In general, a "U.S.
Holder" is a person who for U.S. federal income tax purposes is
(i) a citizen or resident of the United States, (ii) a
corporation or partnership created or organized under the laws of
the United States or of any State or the District of Columbia, or
(iii) an estate or trust whose income is includible in gross
income for U.S. federal income tax purposes regardless of its
source. The second part summarizes certain U.S. federal income
tax considerations applicable to United States Aliens. As used
in this Prospectus, the term "United States Alien" means any
person who, for U.S. federal income tax purposes, is (i) a
foreign corporation, (ii) a nonresident alien, (iii) an estate or
trust that is not an estate or trust that is subject to U.S.
federal income taxation regardless of the source of its income,
or (iv) a foreign partnership one or more of the members of which
is, for United States federal income tax purposes, a foreign
corporation, a nonresident alien individual or an estate or trust
that is not an estate or trust that is subject to United States
federal income taxation regardless of the source of its income.
U.S. Holders
The material U.S. federal income tax considerations
applicable to U.S. Holders may be summarized as follows:
Adjustment of Conversion Price
The conversion ratio of the Debentures is subject to
adjustment under certain circumstances. In relevant part,
Section 305 of the Code and the Treasury Regulations issued
thereunder treat shareholders as receiving a constructive
distribution, taxable as a dividend (subject to a possible
dividends received deduction in the case of corporate holders) to
the extent of the Company's current and/or accumulated earnings
and profits, if the result of a distribution (or series of
distributions) is the receipt of property by some shareholders
and the increase in the proportionate interests of other
shareholders in the assets or earnings and profits of the
corporation. For purposes of Code Section 305, holders of the
Debentures are treated as shareholders. Certain adjustments in
the conversion ratio (such as an adjustment to reflect a cash
distribution to holders of Class A Common Stock) will be deemed
to increase the proportionate interest of a holder of Debentures
in the fully diluted Class A Common Stock under Section 305 of
the Code, whether or not such holder ever exercises its
conversion privilege. Adjustments to the conversion ratio of the
Debentures, which may be subject to Section 305 of the Code, may
occur in limited circumstances.
Moreover, if a full adjustment is not made to the conversion
ratio of the Debentures to reflect a stock dividend or other
event that increases the proportionate interests of the holders
of outstanding Class A Common Stock in the assets or earnings and
profits of the Company, then such increase in the proportionate
interest of the holders of the Class A Common Stock generally
will be treated under Section 305 of the Code as a distribution
to such holders, taxable as ordinary income (subject to a
possible dividends received deduction in the case of corporate
holders) to the extent of the Company's current and/or
accumulated earnings and profits. The Indenture contemplates a
full adjustment to the conversion ratio of the Debentures and, in
addition, provides generally that the Company may increase the
conversion ratio as it deems advisable to avoid or diminish any
such adverse consequence to holders of Class A Common Stock.
Accordingly, the Company does not believe that the holders of
Class A Common Stock will be deemed to receive any such taxable
dividend distribution under Section 305 of the Code. See "The
Offering," above.
Conversion into Class A Common Stock
In general, no gain or loss will be recognized for U.S.
federal income tax purposes on a conversion of the Debentures
into shares of Class A Common Stock. However, cash paid in lieu
of a fractional share of Class A Common Stock will be treated as
a redemption by the Company of such fractional share. Such
payment will be treated as a distribution taxable as a dividend
to the redeemed stockholder under Section 302 of the Code unless
the redemption is "substantially disproportionate" with respect
to the stockholder under Section 302(b)(2) or is treated as a
distribution "not essentially equivalent to a dividend" with
respect to the stockholder under Section 302(b)(1). Most holders
would be expected to satisfy the substantially disproportionate
test upon a conversion, so the amount received for the fractional
share generally would be treated as an exchange under Section
302(a) of the Code. Such holders would recognize capital gain
(or loss) to the extent that the amount of such cash exceeds (or
is exceeded by) the portion of the adjusted basis of the
Debentures allocable to such fractional shares. The adjusted
basis of shares of Class A Common Stock received on conversion
will equal the adjusted basis of the Debentures converted,
reduced by the portion of adjusted basis allocated to any
fractional share of Class A Common Stock exchanged for cash. The
holding period of an investor in the Class A Common Stock
received on conversion will include the period during which the
converted Debentures were held.
Any payment of interest received by a U.S. Holder in
connection with a conversion would be taxable as ordinary income.
However, it is not anticipated that any interest will be payable
upon conversion, other than upon the conversion between the
Regular Record Date and the Interest Payment Date (which should
result in no net income to the holder because the interest paid
to the Company should offset the interest paid by the Company).
See "The Offering," above.
Section 1276 of the Code provides that gain on the
disposition of a market discount bond is ordinary income
(generally treated as interest) to the extent of the accrued
market discount. Congress contemplated that such gain would be
deferred, pursuant to regulations to be issued by the Treasury
Department, if the bond is disposed of in certain nonrecognition
transaction(s) (such as the conversion) until the disposition of
the property received in such transaction. At this time, no such
regulations have been issued.
Dividends on Class A Common Stock
Distributions on the shares of Class A Common Stock into
which Debentures have been converted will be taxable as dividends
(i.e., as ordinary income) to the extent of the Company's current
and/or accumulated earnings and profits. To the extent that the
amount of any distribution exceeds the Company's current and
accumulated earnings and profits for a taxable year, the
distribution will first be treated as a tax-free return of
capital, causing a reduction in the adjusted basis of the Class A
Common Stock (thereby increasing the amount of gain, or
decreasing the amount of loss, to be recognized by the investor
on a subsequent disposition of the Class A Common Stock), and the
balance in excess of adjusted basis will be taxed as capital gain
recognized on a sale or exchange of such stock. Corporate
shareholders will not be entitled to claim the dividends received
deduction with respect to distributions that do not qualify as
dividends. See the discussion regarding the dividends received
deduction below. For the remainder of this discussion, the term
"dividends" refers to a distribution paid entirely out of the
Company's current or accumulated earnings and profits, unless the
context otherwise requires.
Subject to important restrictions, dividends received by a
corporate holder of Class A Common Stock generally will qualify
for the 70 percent dividends received deduction provided by
Section 243(a)(1) of the Code. Under Section 246(b) of the Code,
the aggregate dividends received deduction permitted such a
corporate holder may not exceed 70 percent of such holder's
"taxable income," as specially computed for this purpose under
section 246(b). Under Section 246(c) of the Code, the dividends
received deduction is not available if the holder does not comply
with certain holding period requirements, or to the extent the
taxpayer is under any obligation to make related payments with
respect to a position in substantially similar or related
property. If, during any portion of a holder's actual holding
period, such holder's risk of loss with respect to the stock
investment is diminished due to certain circumstances described
in the Code, such portion of the holding period does not count
toward compliance with the statutory holding period requirement.
Section 246A of the Code may proportionately reduce the
percentage of the dividends received deduction available to a
corporate holder with respect to "debt-financed portfolio stock
as defined in Section 246A(c) of the Code. In addition, for
purposes of computing the "adjusted current earnings" adjustment
to alternative minimum taxable income, a corporate holder will be
denied the benefit of the 70 percent dividends received
deduction.
Section 1059 of the Code will require a corporate holder to
reduce (but not below zero) its basis in the Class A Common Stock
by the "nontaxed portion" of any "extraordinary dividend" if the
holder has not held the Class A Common Stock subject to a risk of
loss for more than two years before the date the Company
declares, announces, or agrees to, the amount or payment of such
dividend, whichever is earliest. In addition, upon disposition
of such Class A Common Stock, a holder will recognize gain to the
extent that the nontaxed portion of all extraordinary dividends
exceeds the holder's adjusted tax basis in the stock. Generally,
the nontaxed portion of an extraordinary dividend is the amount
effectively excluded from income by virtue of allowance of a
dividends received deduction. An extraordinary dividend on
common stock, such as the Class A Common Stock, is a dividend
that (i) equals or exceeds 10 percent of the holder's adjusted
tax basis in the stock (reduced by the nontaxed portion of any
prior extraordinary dividend), treating all dividends having ex-
dividend dates within an 85-day period as one dividend, or (ii)
exceeds 20 percent of the holder's adjusted tax basis in the
stock, treating all dividends having ex-dividend dates within the
same 365-day period as one dividend. A stockholder may elect to
determine whether a dividend on the Class A Common Stock is
extraordinary by reference to the fair market value of the stock
on the day before the ex-dividend date (rather than by reference
to the stockholder's adjusted tax basis) for purposes of the 10
percent or 20 percent tests described above if the holder is able
to establish the fair market value of the Class A Common Stock as
of such date to the satisfaction of the Service. An
extraordinary dividend would also include any amount treated as a
dividend in the case of a redemption that is not pro rata as to
all stockholders or that is in partial liquidation of the
Company, regardless of the relative size of the dividend and
regardless of the corporate holder's holding period for the Class
A Common Stock.
Disposition of Class A Common Stock
Subject to certain special rules under Section 302 of the
Code in the case of redemptions (whereunder the total proceeds
received by a seller of Class A Common Stock may be treated as a
dividend) and to the discussion of Section 1059 of the Code in
cases of certain "extraordinary dividends" under "Dividends on
Class A Common Stock" above, each holder of Class A Common Stock
into which the Debentures are converted, in general, will
recognize gain or loss upon the sale, exchange, redemption or
other disposition of the Class A Common Stock, generally in an
amount equal to the difference between (i) the amount of cash and
the fair market value of any property received, and (ii) the
holder's adjusted tax basis in the Class A Common Stock. Any
gain or loss recognized on the sale, exchange, redemption,
retirement or other disposition of Class A Common Stock should be
capital gain or loss (subject to certain exceptions that may
apply if the holder of Debentures converted into Class A Common
Stock acquired such Debentures at a market discount under
Sections 1276 through 1278 of the Code, and did not recognize the
accrued market discount at the time of the conversion). Such
gain or loss will constitute long-term capital gain or loss if
the Class A Common Stock has been held for more than one year at
the time of the sale or exchange. Otherwise, it will be short-
term capital gain or loss.
Backup Withholding
Federal "backup withholding" at a rate of 31% on dividends,
interest payments, and proceeds from a sale, exchange, or
redemption of Class A Common Stock or the Debentures will apply
unless the holder either (i) is a corporation or comes within
certain other exempt categories, and, when required, demonstrates
this fact, or (ii) provides a social security number or other
taxpayer identification number ("TIN"), certifies as to no loss
of exemption from backup withholding, and otherwise complies with
applicable requirements of the backup withholding rules. A
holder who does not provide the Company with its correct TIN also
may be subject to penalties imposed by the Service. Any amount
withheld from a payment to an investor under the backup
withholding rules is creditable against such investor's federal
income tax liability and may entitle such holder to a refund,
provided the required information is furnished to the Service.
The Company will report to the holders of the Class A Common
Stock and to the Service the amount of any such reportable
payments for each calendar year and the amount of tax withheld,
if any.
United States Aliens
The following is a discussion of the material U.S. federal
income and estate tax consequences of the acquisition, ownership
and disposition of Class A Common Stock acquired upon conversion
of Debentures generally applicable to United States Aliens. The
discussion does not address aspects of taxation other than
federal income and estate taxation and does not address all
aspects of federal income and estate taxation. The discussion
does not consider any specific facts or circumstances that may
apply to a particular United States Alien or under any particular
tax treaty. Accordingly, holders are urged to consult their tax
advisors regarding the U.S. federal, state, local, and foreign
income and other tax consequences of acquiring, holding and
disposing of Class A Common Stock, and whether such a United
States Alien would be treated as a resident of the United States
for federal income tax purposes.
Dividends
In general, and provided that an applicable tax treaty does
not provide otherwise, dividends paid to a United States Alien
that are not effectively connected with a trade or business
carried on by the United States Alien within the United States
will be subject to United States withholding tax at a rate of 30%
of the gross amount thereof. Dividends effectively connected
with a U.S. trade or business of a United States Alien generally
will not be subject to withholding (if the United States Alien
files certain forms with the payor of the dividend) and generally
will be subject to U.S. federal income tax at the same rates and
in the same manner as if the income had been received by a U.S.
Holder. In the case of a foreign corporation, such effectively
connected income also may be subject to the branch profits tax.
United States Aliens should consult any applicable income tax
treaties, which may provide for rules different from those
described above. Under proposed regulations, a United States
Alien would be required to satisfy certain certification
requirements in order to claim treaty benefits or to otherwise
claim a reduction of or exemption from withholding under the
foregoing rules.
Conversion into Class A Common Stock
Except with respect to interest paid in connection with a
conversion and except with respect to those payments of cash in
lieu of fractional shares of Class A Common Stock which are
treated as a dividend (see the discussion of redemptions under
"U.S. Holders - Conversion into Class A Common Stock," above), no
U.S. federal income tax will be imposed upon United States Aliens
in connection with the conversion of a Debenture into shares of
Class A Common Stock. However, any dividends paid on shares of
Class A Common Stock issued upon conversion of a Debenture will
be subject to U.S. withholding tax as described in this section.
Sale of Common Stock
Generally, a United States Alien will not be subject to U.S.
federal income tax on any gain realized upon the disposition of
his Class A Common Stock. If, however, the Company is or has been
during the five-year period ending on the date of disposition, a
"United States real property holding corporation" for federal
income tax purposes (which the Company has not been and does not
believe it is or will become in the future) and the United States
Alien held, directly or indirectly at any time during the five-
year period ending on the date of disposition, more than 5% of
the Class A Common Stock, then the gain is deemed to be
effectively connected with a trade or business carried on by the
United States Alien within the United States. In addition, if
the gain actually is effectively connected with a trade or
business carried on by the United States Alien within the United
States (or, if a tax treaty applies, is attributable to a
permanent establishment), such gain will be subject to U.S.
federal income tax. Moreover, if the United States Alien is an
individual who holds the Class A Common Stock as a capital asset
and is present in the United States for 183 days or more in the
taxable year of the disposition, a U.S. federal income tax may be
imposed if the additional requirements set forth in Section
871(a)(2) of the Code are satisfied.
Gain that is effectively connected with the conduct of a
trade or business within the United States by a United States
Alien will be subject to the same U.S. federal income tax on net
income as applies to United States persons (and, with respect to
corporate holders under certain circumstances, the branch profits
tax) but will not be subject to withholding. An individual
described in (iii) above generally will be subject to tax at a
30% rate on any gain recognized on such disposition. Individual
United States Aliens also may be subject to tax pursuant to
provisions of United States federal income tax law applicable to
expatriates. United States Aliens should consult applicable
treaties, which may provide for different rules.
Legislative Developments
Legislation was proposed in 1990 and again in 1992 which, if
enacted into law, would, under certain circumstances, result in
the imposition of United States federal income tax on gain
realized from the disposition of Class A Common Stock by certain
United States Aliens who own or owned 10% or more of the Class A
Common Stock.
Estate Tax
Class A Common Stock, owned or treated as owned by an
individual who is not a citizen or resident (as specially defined
for U.S. federal estate tax purposes) of the United States at the
time of death will be includable in the individual's gross estate
for U.S. federal estate tax purposes, unless an applicable tax
treaty provides otherwise. Such individual's estate may be
subject to U.S. federal estate tax on the property includable in
the estate for U.S. federal estate tax purposes. Estates of
nonresident aliens are generally allowed a credit that is
equivalent to an exclusion of $60,000 of assets from the estate
for U.S. federal estate tax purposes.
Backup Withholding and Information Reporting
The Company must report annually to the Service and to each
United States Alien the amount of dividends paid to, and the tax
withheld with respect to, each United States Alien. These
information reporting requirements apply regardless of whether
withholding was reduced or eliminated by an applicable tax
treaty. Copies of these information returns also may be made
available under the provisions of a specific treaty or agreement
to the tax authorities in the country in which the United States
Alien resides. United States information reporting and backup
withholding tax (discussed above for U.S. Holders) generally will
not apply to dividends paid on Class A Common Stock to a United
States Alien either at an address outside the United States
(provided that the payor does not have definite knowledge that
the payee is a United States person) or if the dividends are
subject to withholding at the 30% rate (or lower treaty rate).
The payment of the proceeds from the disposition of Class A
Common Stock to or through the United States office of a broker
will be subject to information reporting and backup withholding
unless the owner, under penalties of perjury, certifies, among
other things, as to its status as a United States Alien or
otherwise establishes an exemption (and the broker has no actual
knowledge to the contrary). The payment of the proceeds from the
disposition of Class A Common Stock to or through a non-United
States office of a broker may be subject to information reporting
or backup withholding under certain circumstances.
Backup withholding tax is not an additional tax and may be
credited against a holder's U.S. federal income tax liability,
provided that required information is furnished to the Service.
United States Aliens generally may obtain a refund of any excess
amount withheld under the backup withholding rules by filing the
appropriate refund claim with the Service.
The backup withholding and information reporting rules
currently are under review by the Treasury Department and their
application to the Class A Common Stock is subject to change.
EACH INVESTOR SHOULD CONSULT ITS OWN TAX ADVISOR WITH RESPECT TO THE
PARTICULAR SITUATION OF SUCH INVESTOR, INCLUDING THE SPECIFIC TAX
CONSEQENCES UNDER UNITED STATES FEDERAL, STATE, LOCAL, FOREIGN AND
OTHER TAX LAWS, OF THE PURCHASE, OWNERSHIP AND DISPOSITION OF CLASS
A COMMON STOCK.
LEGAL MATTERS
The validity of the Shares will be passed upon for the
Company by Akin, Gump, Strauss, Hauer & Feld, L.L.P., 1333 New
Hampshire Avenue, N.W., Suite 400, Washington, DC 20036.
EXPERTS
The balance sheets as of January 1, 1994 and January 2, 1993
and the statements of income, shareholders' equity, and cash
flows and related financial statement schedules for each of the
three fiscal years in the period ended January 1, 1994,
incorporated by reference in this Prospectus, have been
incorporated herein in reliance on the report of Coopers &
Lybrand, independent accountants, given on the authority of that
firm as experts in accounting and auditing. The financial
statements of the Company at January 1, 1994 and for each of the
three fiscal years in the period ended January 1, 1994, which are
incorporated herein by reference to the Company's Annual Report
on Form 10-K for the year ended January 1, 1994, have
been audited by Coopers & Lybrand, independent accountants, as set
forth in their report dated February 9, 1994.
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 14. Other Expenses of Issuance and Distribution.
The following tables set forth the costs and expenses, other
than underwriting discounts and commissions, payable by the
Registrant in connection with the sale of the Common Stock being
registered. All items are estimated except the registration and
filing fees.
SEC registration fee $35,938
Legal fees and expenses 50,000
Accounting fees and expenses 5,000
Miscellaneous 9,062
Total 100,000
Item 15. Indemnification of Directors and Officers.
Sections 55-8-50 through 55-8-58 of the revised North
Carolina Business Corporation Act contain specific provisions
relating to indemnification of directors and officers of North
Carolina corporations. In general, the statutes provide that (i)
a corporation must indemnify a director or officer who is wholly
successful in his defense of a proceeding to which he is a party
because of his status as such, unless limited by the articles of
incorporation, and (ii) a corporation may indemnify a director or
officer if he is not wholly successful in such defense, if it is
determined as provided by statute that the director or officer
meets a certain standard of conduct, provided when a director or
officer is liable to the corporation or is adjudged liable on the
basis that personal benefit was improperly received by him, the
corporation may not indemnify him. A director or officer of a
corporation who is a party to a proceeding also may apply to the
courts for indemnification, unless the articles of incorporation
provide otherwise, and the court may order indemnification under
certain circumstances set forth in the statute. A corporation
may, in its articles of incorporation or bylaws or by contract or
resolution, provide indemnification in addition to that provided
by statute, subject to certain conditions.
The Registrant's bylaws provide for the indemnification of
any director or officer of the Registrant against liabilities and
litigation expenses arising out of his status as such, excluding
(i) any liabilities or litigation expenses relating to activities
which were at the time taken known or believed by such person to
be clearly in conflict with the best interests of the Registrant
and (ii) that portion of any liabilities or litigation expenses
with respect to which such person is entitled to receive payment
under any insurance policy other than a directors' and officers'
insurance policy maintained by the Registrant.
The Registrant's articles of incorporation provide for the
elimination of the personal liability of each director of the
Registrant to the fullest extent permitted by law.
The Registrant maintains directors' and officers' liability
insurance, under which any controlling persons, director or
officer of the Registrant is insured or indemnified against
certain liabilities which he may incur in his capacity as such.
Item 16. List of Exhibits.
Exhibit No. Description
4.1 Article V of the Company's Articles of Incorporation, as
amended, which is incorporated by reference to Exhibit (i)
of the Company's Quarterly Report on Form 10-Q for the quarter
ended July 4, 1981, and Exhibit (4)(a) to Amendment No. 1 to
the Company's Registration Statement on Form S-3 filed
on September 22, 1983
4.2+ Indenture dated as of June 1, 1993 between the Registrant
and The Chase Manhattan Bank, N.A., as Trustee
5 + Opinion of counsel to the Registrant regarding legality
of the Shares
8 Opinion of counsel regarding tax matters
23.1 Consent of Akin, Gump, Strauss, Hauer & Feld, L.L.P.
(included in Exhibit 5)
23.2 + Consent of Independent Accountants
24 + Power of Attorney
__________
+ Previously Filed
Item 17. Undertakings
The undersigned Registrant hereby undertakes:
(l) To file, during any period in which offers or sales are
being made, a post-effective amendment to the Registration
Statement, to include any material information with respect to
the plan of distribution not previously disclosed in the
Registration Statement or any material change to such information
in the Registration Statement.
(2) That, for the purpose of determining any liability
under the Securities Act of 1933, each such post-effective
amendment shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of
such securities at that time shall be deemed to be the initial
bona fide offering thereof.
(3) To remove from registration by means of a post-
effective amendment any of the securities being registered which
remain unsold at the termination of the offering.
The undersigned Registrant hereby undertakes that, for
purposes of determining any liability under the Securities Act of
1933, each filing of the Registrant's annual report pursuant to
Section 13(a) or Section 15(d) of the Securities Exchange Act of
1934 (and, where applicable, each filing of an employee benefit
plan's annual report pursuant to Section 15(d) of the Securities
Exchange Act of 1934) that is incorporated by reference in the
Registration Statement shall be deemed to be a new registration
statement relating to the securities offered herein, and the
offering of such securities at that time shall be deemed to be
the initial bona fide offering thereof.
Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers
persons controlling the Registrant pursuant to the foregoing
provisions, or otherwise, the Registrant has been informed that
in the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the Act
and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment
by the Registrant of expenses incurred or paid by a director,
officer or controlling person of the Registrant in the successful
defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the
securities being registered, the Registrant will, unless in the
opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the
question whether such indemnification by it is against public
policy as expressed in the Act and will be governed by the final
adjudication of such issue.
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933,
the Registrant certifies that it has reasonable grounds to
believe it meets all of the requirements for filing on Form S-3
and has duly caused this Amendment No. 2 to its Registration
Statement to be signed on its behalf by the undersigned,
thereunto duly authorized, in the City of Salisbury, State of
North Carolina, on June 30,1994.
FOOD LION, INC.
By:
Tom E. Smith
Chairman of the
Board, President and
Chief Executive Officer
Pursuant to the requirements of the Securities Act of 1933,
this Amendment No. 2 to Food Lion, Inc.'s Registration Statement
has been signed by the following persons in the capacities
indicated on June 30, 1994.
Tom E. Smith Gui de Vaucleroy
Chairman of the Board, President, Director
Chief Executive Officer and Director
Dan A. Boone Charles de Cooman
Vice President-Finance, Chief Financial d' Herlinckhove
Officer and Director (Principal Director
Financial Officer)
Carol Herndon William G. Ferguson
Controller (Principal Accounting Officer) Director
Pierre Beckers Jacques LeClercq
Director Director
Jacqueline Kelly Collamore John P. Watkins
Director Director
Dr. Bernard W. Franklin
Director
EXHIBIT INDEX
to
Registration Statement on Form S-3 of
Food Lion, Inc.
Exhibit No.
Page No. Description Sequential
4.1 Article V of the Company's
Articles of Incorporation, as
amended, which is incorporated
by reference to Exhibit (i) of
the Company's Quarterly Report
on Form 10-Q for the quarter
ended July 4, 1981, and
Exhibit (4)(a) to Amendment
No. 1 to the Company's
Registration Statement on Form
S-3 filed on September 22,
1983
4.2+ Indenture dated as of June 1,
1993 between the Registrant
and The Chase Manhattan Bank,
N.A. , as Trustee
5+ Opinion of counsel to the
Registrant regarding legality
of the Shares
8 Opinion of counsel regarding
tax matters
23.1 Consent of Akin, Gump,
Strauss, Hauer & Feld, L.L.P.
(included in Exhibit 5)
23.2 + Consent of Independent
Accountants
24 + Power of Attorney
_____________
+ Previously Filed
Exhibit 8
June 29, 1994
Food Lion, Inc.
2110 Executive Drive
P.O. Box 1330
Salisbury, North Carolina 28145-1330
Gentlemen:
We have acted as counsel to Food Lion, Inc. a North Carolina
corporation (the "Company") in connection with the registration
of an 14,556,962 shares of Class A non-voting Common Stock, par
value $.50 per share (the "Class A Common Stock"), issuable upon
conversion of the Company's 5% Convertible Subordinated
Debentures due 2003 (the "Debentures"), pursuant to the
Registration Statement on Form S-3 (the "Registration Statement")
filed by the Company under the Securities Act of 1933, as
amended.
As such counsel, we have examined the Registration
Statement, and have made such other factual and legal
investigations as we considered necessary or appropriate for
purposes of this opinion. We are familiar with the proceedings
undertaken by the Company in connection with the authorization
and issuance of the Class A Common Stock in the event that
holders of the Debentures elect to convert.
Based upon such examinations and investigations, it is our
opinion that the principal federal income tax consequences
expected to apply to the Class A Common Stock (as defined in the
prospectus included in the Registration Statement (the
"Prospectus"),) and of the acquisition by conversion of the
Debentures, ownership and disposition of the Class A Common Stock
under currently applicable law are as set forth in the Prospectus
under the heading "United States Taxation."
This opinion is based on the relevant law in effect (or, in
the case of Proposed Regulations, proposed) and the relevant
facts that exist as of the date hereof. We have no obligation to
advise the Company or any other person of changes of law or fact
that occur after the date hereof.
We consent to the inclusion of this opinion in the
Registration Statement and reference to our firm under the
caption "United States Taxation" in the Prospectus.
Very truly yours,
AKIN, GUMP, STRAUSS, HAUER & FELD,
L.L.P.
