FORM 10-K
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 [FEE REQUIRED]
For the fiscal year ended January 1, 1994
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
For the transition period from to
Commission File Number 1-7603
HANNAFORD BROS. CO.
(Exact name of Registrant as specified in its charter)
Maine 01-0085930
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
145 Pleasant Hill Road, Scarborough, Maine 04074
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (207) 883-2911
Securities registered pursuant to Section 12(b) of the Act:
Title of each class Name of each exchange on which registered
Common Stock, $.75 par value New York Stock Exchange
Preferred Stock Purchase Rights New York Stock Exchange
Securities registered pursuant to Section 12(g) of the Act: None
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act
of 1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such report(s)), and (2) has been subject to
such filing requirements in the past 90 days. Yes [X]. No [ ].
Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, and will not be
contained, to the best of the Registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form
10-K or any amendment to this Form 10-K [ ].
The aggregate market value of the Common Stock, $.75 par value, held by
non-affiliates as of March 1, 1994, was $727,314,546. This calculation
assumes that all shares of Common Stock beneficially held by directors and
executives of the Registrant are owned by "affiliates".
As of March 1, 1994, there were 41,377,606 outstanding shares of Common
Stock, $.75 par value, the only authorized class of common stock of the
Registrant.
DOCUMENTS INCORPORATED BY REFERENCE
PART III: Proxy Statement for Annual Meeting of Shareholders to be held
on May 19, 1994.
Exhibit Index on Page: 51
<PAGE>
PART I
ITEM 1. BUSINESS
GENERAL DEVELOPMENT OF THE BUSINESS
Hannaford Bros. Co. (the "Registrant" or the "Company") was incorporated in
Maine in 1902 as the successor to a business established by the Hannaford
family in 1883. Its principal executive offices are located at 145 Pleasant
Hill Road, Scarborough, Maine 04074. Its telephone number is (207) 883-2911.
Approximately 25.6% of the outstanding shares of the Registrant's common
stock, par value $.75 per share, is owned by certain members of the Sobey
family of Stellarton, Nova Scotia, and certain companies and trusts controlled
by them (the "Sobey Parties").
Consolidated sales and other revenues for 1993 amounted to $2.055 billion, a
decrease of 0.5% from last year's sales and other revenues of $2.066 billion.
The decrease in sales for the year was primarily the result of the 53 week
year in 1992 and the sales from thirty-four Wellby Super Drug stores which
were sold to Rite Aid Corporation on May 27, 1992. Had the sales from these
stores, and the sales from the 53rd week, been excluded from 1992 results,
sales and other revenues for fiscal year 1993 would have increased 3.3%.
In May 1992 the Registrant sold 34 of its 41 free-standing drug stores to Rite
Aid Corporation. These drug stores had mostly been operated under the "Wellby
Super Drug Store" trade name. These stores represented less than 5% of the
total sales of the Registrant. The Registrant continues to operate pharmacies
within certain of its supermarkets and combination stores. Of the seven free-
standing drug stores not sold to Rite Aid, one has been sold, three have been
closed and the other three are intended to be closed. The pharmacy operations
of six of these seven stores have been or will be incorporated into
supermarkets or combination stores of the Registrant.
The Registrant ships food and food-related products from its distribution
centers to an additional 19 independent wholesale customers. Sales to these
wholesale accounts amounted to 2.8% of total sales in 1993. Other revenues
from such activities as trucking, real estate and retail services amounted to
about 1.7% of total sales.
On February 11, 1992, the Board of Directors of the Registrant declared a two-
for-one stock split effected in the form of a 100% stock dividend, payable on
March 10, 1992, to shareholders of record at the close of business on February
24, 1992.
FINANCIAL INFORMATION ABOUT INDUSTRY SEGMENTS
The Registrant, through its operations and those of its subsidiaries, is
principally involved in the retail food and drug business through supermarkets
and combination stores. The Registrant considers its business a single
segment under the applicable reporting rules. See Item 8, Financial
Statements and Supplementary Data.
<PAGE>
NARRATIVE DESCRIPTION OF THE BUSINESS
The Registrant believes it is northern New England's largest food retailer.
It currently operates 93 supermarkets throughout Maine and New Hampshire, and
in parts of New York, Massachusetts and Vermont under the names Shop 'n Save,
Alexander's, Martin's and Sun Foods. The Registrant's goal is to offer
consumers very competitive prices with comprehensive product variety and
outstanding freshness and quality in perishables from modern and convenient
facilities. The Registrant also operates 3 retail drug stores principally
under the Shop 'n Save Pharmacy name and 45 pharmacies within the Registrant's
supermarkets and combination stores.
Of the Registrant's 93 supermarkets, more than 75% are either new or have been
expanded or relocated in the past 10 years. During this period, a number of
smaller outdated facilities have been closed or sold. Since 1983, the
Registrant has opened or acquired fifty-five combination stores ranging in
size from 30,000 to 84,000 square feet. These stores offer under one roof the
traditional all-department supermarket, together with a bakery, video rental
center and other shops and services, as well as expanded lines of general
merchandise. All but 14 of these combination stores, as well as an additional
4 conventional supermarkets, have pharmacy departments. The new stores opened
by the Registrant since 1983 also include four super warehouse stores of
52,000 to 64,000 square feet, operated under the name Sun Foods.
These new and recently expanded stores illustrate the Registrant's belief that
one of the most important factors in the success of a store, in addition to
location, is format. The Registrant views the new and effective store formats
as creating opportunities to enter new markets, expand its share of markets
where it already operates, and strengthen its overall position.
<PAGE>
The following tables set forth certain statistical information regarding the
Registrant's operations at the dates indicated:
NUMBER OF STORES 12/30/89 12/29/90 12/28/91 1/2/93 1/1/94
Supermarkets
Wholly-owned
Beginning 64 76 89 88 93
Opened 4 4 3 7 4
Closed 0 (2) (2) (2) (4)
Transferred 8(A) 0 (2) 0 0
Acquired 0 11 0 0 0
Ending 76 89 88 93 93
Majority-owned
Beginning 8 0 0 0 0
Opened 0 0 0 0 0
Closed 0 0 0 0 0
Transferred (8)(A) 0 0 0 0
Ending 0 0 0 0 0
Total at Year End 76 89 88 93 93
Drug Stores
Beginning 36 41 41 42 6
Opened 5 0 1 1 0
Closed 0 (3) (1) (3) (2)
Sold 0 0 0 (34) (1)
Acquired 0 3 1 0 0
Ending 41 41 42 6 3
AVERAGE SQUARE FEET
OF SELLING AREA
PER STORE
Supermarkets 23,300 25,100 26,700 28,200 29,800
Drug Stores 5,500 5,700 6,000 4,900 5,000
TOTAL SQUARE FEET OF
SELLING AREA
Supermarkets 1,772,000 2,238,000 2,347,000 2,619,000 2,771,000
Drug Stores 226,000 232,000 252,000 29,000 15,000
(A) The Registrant formerly operated some of its stores through
subsidiaries in which one or more prior owners held a 49% common stock
interest. By 1989 the Registrant had bought out the last remaining
minority interests of this type.
<PAGE>
The Registrant has expanded its food store operations beyond Northern New
England and continues to seek large store opportunities within its present
five-state marketing territory. For example, in upstate New York, the
Registrant now operates 11 new combination stores, including new stores in
Gloversville and Colonie that were opened during 1993, and 3 super warehouse
stores, all ranging in size from 44,000 to 84,000 square feet, and has
selected a number of additional locations in which it plans to build
additional stores. The Registrant has also significantly expanded its
presence in southern New Hampshire and northeastern Massachusetts through its
December 1990 acquisition of the Alexander's supermarket chain. During 1993,
a new 55,000 square foot combination food/drug store was opened in Concord,
New Hampshire, while in Maine, one relocated 44,000 square foot combination
food/drug store opened in Farmington and four other stores, in Bangor,
Belfast, North Windham and Damariscotta, were expanded to combination
food/drug stores. As part of its ongoing expansion program, the Registrant
will also consider the acquisition of one or more supermarkets, if attractive
opportunities become available. Construction has commenced or will commence
on a number of stores for openings during 1994 and 1995 in both upstate New
York and in the Registrant's traditional market areas.
Innovation in operating systems is an important component of the Registrant's
strategy, and the Registrant is committed to investing in new technology and
the development of new systems. The Registrant intends to be an industry
leader in the application of new technology and systems in its retail,
distribution and administrative functions. In certain instances, such
technology and systems are designed to provide services directly for customers
and, in other instances, they are designed to increase efficiency and provide
the Registrant with greater information with respect to its operations.
The principal distribution center, in South Portland, Maine, occupies 521,000
square feet and is well located in the Registrant's marketing territory. It
handles a complete line of grocery, dairy, frozen food, produce and meat
products. The distribution center has a dedicated on-line computerized
warehouse management system, which efficiently controls the movement of
product through the facility and schedules labor for greater efficiency and
productivity. Productivity in the distribution facility also has been
enhanced through the use of incentive payment programs.
The Registrant opened a new distribution center in Schodack, New York, during
1990, to service certain store locations in New York, Vermont, New Hampshire
and Massachusetts. This facility occupies 489,000 square feet. This
distribution center operates under a team management system which the
Registrant calls Socio-Technical Systems. The Registrant believes this
operation to be one of the first successful non-manufacturing uses of this
type of team management concept in the country.
<PAGE>
A 200,000 square foot distribution center in Winthrop, Maine is operated by
Progressive Distributors, Inc., a wholly-owned service merchandise subsidiary
which for many years has supplied a comprehensive line of health and beauty
care products, specialty food items and some general merchandise to the
Registrant's stores. From this warehouse, Progressive also distributes a
significant portion of the pharmaceutical items supplied to the Registrant's
pharmacies. During 1993, this facility converted from a conventional
management system to a team-based one similar to that used by the Registrant
in its Schodack, New York, distribution center.
Merchandise is transported from the Registrant's distribution facilities by
Hannaford Trucking Company, a wholly-owned subsidiary, which is licensed as an
irregular route common carrier with 48 state authority. Hannaford Trucking
Company also hauls products for third-party customers, thereby reducing the
number of miles that its trucks travel empty.
Raw materials, as such, are not essential to the business of the Registrant.
The Registrant sells private label products under the names "Shop 'n Save,"
"Bonnie Maid" and "Green Meadow." During 1994, the Registrant will continue
to expand its use of the "Shop 'n Save" private label. The Registrant also
sells a line of large size/large pack items it calls "Budget Values".
Seasonal business affects the Registrant's operations in that sales are
generally greater in the second half of the year than in the first. (See Note
11 of Notes to Consolidated Financial Statements.)
Inventory levels are maintained at the distribution center and all retail
locations in amounts adequate to minimize "out of stock" conditions.
Backlog is not material to the Registrant's business.
No material portion of the business of the Registrant is subject to
renegotiation of profits or termination of contracts or subcontracts at the
election of the Government.
In its wholesale operations, the Registrant directly competes with numerous
other regional wholesalers, some of which supply franchised retail outlets.
The loss of any one or a few of the wholesale customers would not have a
materially adverse effect on the Registrant.
At the retail level, the Registrant's supermarkets and drug stores are in
direct competition with regional, national and local food and drug chains,
some of which have greater resources than the Registrant, as well as with
other independent operators. In addition, certain of the independent stores
served by the Registrant as wholesale customers are located in the same trade
areas as the Registrant's own stores and therefore compete with them.
No material expenditures were made during fiscal 1991, 1992 or 1993 on
research activities relating to new or improved products, services or
techniques.
<PAGE>
The Registrant does not foresee that material capital outlays will be needed
nor that material increases in operating expenses will be incurred for the
purpose of compliance with any statutory requirement respecting environmental
quality.
As of January 1, 1994, the Registrant had approximately 5,750 full-time and
8,950 part-time employees. During 1992, the Registrant conducted an early
retirement and voluntary resignation program aimed at eliminating about 100
positions from its corporate support staff. This restructuring was
successfully accomplished during the latter half of the year.
FINANCIAL INFORMATION ABOUT FOREIGN AND DOMESTIC OPERATIONS AND EXPORT SALES.
Neither the Registrant nor any of its subsidiaries engages in any operations
in foreign countries, nor is a material portion of sales and revenues derived
from retail customers in foreign countries.
<PAGE>
ITEM 2. PROPERTIES
The Registrant operates a distribution facility in South Portland, Maine.
This facility warehouses grocery, fresh fruits and vegetables, frozen foods,
meat, and dairy products in approximately 521,000 square feet of floor area,
and has dock facilities for 89 highway trailers. The Registrant acquired this
facility through a wholly-owned subsidiary in April 1983 and subsequently
expanded it to its current size. The Registrant operates a second
distribution and office facility in Schodack, New York. This facility
warehouses grocery, fresh fruit and vegetables, meat, dairy and frozen food
products in approximately 489,000 square feet of floor area and has dock
facilities for 129 highway trailers. The Registrant built this facility
through a wholly-owned subsidiary, completing Phase I in 1990 and Phase II in
1991. Approvals have been received to expand this facility to approximately
1,200,000 square feet although the Registrant has no current plans to do so.
The Registrant also operates a 200,000 square foot distribution facility in
Winthrop, Maine. This facility, completed in 1989, distributes health and
beauty care products, specialty foods, pharmaceuticals and some general
merchandise to all of the Registrant's retail outlets. The Registrant also
leases a warehouse facility in Scarborough, Maine, of 157,500 square feet,
under a lease and options which expire in 1994 and two other multi-use
buildings in Scarborough, Maine, totalling 48,000 square feet under leases and
options that expire in 1999 and 2004. The Registrant also leases its office
facility in Scarborough, Maine, under a lease and options which expire in
2020. The Registrant owns certain real estate consisting primarily of
distribution facilities, food stores, related shopping center properties and
land for future retail developments, some of which are encumbered by
mortgages. The Registrant currently owns approximately 37% of its retail
facilities and leases the remainder.
The following table sets forth expiration dates of leased retail stores,
assuming exercise of all renewal options.
2014 and
1994-2003 2004-2013 thereafter
Food Stores 3 8 48
Drug Stores 2 0 0
<PAGE>
ITEM 3. LEGAL PROCEEDINGS
There are no material legal proceedings, other than ordinary routine
litigation incidental to the business, to which the Registrant is a party or
to which any of its property is subject.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
There were no matters submitted to a vote of security holders during the
fourth quarter of fiscal 1993.
EXECUTIVE OFFICERS OF THE REGISTRANT
Information with respect to the Executive Officers of the Registrant is set
forth below.
Under the by-laws of the Registrant, all Executive Officers hold office, at
the pleasure of the Board of Directors, until the Annual Meeting of the
Directors next following their election or until others are elected and
qualified in their stead.
There are no family relationships between any of the Executive Officers of the
Registrant nor were there any special arrangements or understandings regarding
the selection of any officer.
SERVED AS AN EXECU-
NAME AGE POSITION TIVE OFFICER SINCE:
JAMES L. MOODY, JR. 62 Chairman of the Board 04/28/60
Mr. Moody was elected Chairman of the Board on May 29, 1984. He also served
in the capacity of Chief Executive Officer from 1973 until May 14, 1992. He
held the position of President for more than five years prior to his election
as Chairman and has been employed by the Registrant in various supervisory and
executive capacities since 1959.
HUGH G. FARRINGTON 49 President 09/30/77
Chief Executive Officer
Mr. Farrington was elected President on May 29, 1984 and designated Chief
Executive Officer on May 14, 1992. He had held the position of Chief
Operating Officer from May 29, 1984 to May 14, 1992. He had been Executive
Vice President from 1981 until his election as President. He has been
employed by the Registrant in various operating, supervisory and executive
capacities since 1968.
ROGER W. HOYT 57 Group Vice President, 05/17/71
Retail Operations
Mr. Hoyt was elected Group Vice President, Retail Operations in 1990. He had
been Senior Vice President, Retail Operations since 1977. He has been
employed by the Registrant in various supervisory and executive capacities
since 1971, including President and General Manager of a significant
wholly-owned subsidiary from 1980 to 1983.<PAGE>
SERVED AS AN EXECU-
NAME AGE POSITION TIVE OFFICER SINCE:
NORMAN E. BRACKETT 64 Senior Vice President & 10/07/74
Chief Financial Officer
Mr. Brackett was elected Senior Vice President in 1990 and designated Chief
Financial Officer in 1992. He served as Chief Accounting Officer from 1990 to
1992. He joined the Registrant as Vice President, Management Services in
1974, and has directed the Registrant's accounting, auditing and technical
information systems since that time.
JAMES J. JERMANN 49 Senior Vice President, 08/05/83
Merchandising
Mr. Jermann was elected Senior Vice President, Merchandising in 1990. He had
been Vice President, Merchandising from 1983 to 1990. He has been employed by
the Registrant since 1978 in various merchandising capacities. He was
previously Director of Grocery Merchandising.
LARRY A. PLOTKIN 43 Senior Vice President, 10/06/81
Development & Planning
Mr. Plotkin was elected Senior Vice President, Development & Finance in 1990
and Senior Vice President, Development & Planning on May 14, 1992. He had
been Vice President from 1989 to 1990. He previously served as Vice
President, Corporate Development from 1981 to 1987 and Vice President, Wellby
Super Drug Stores from 1987 to 1989. He has been employed by the Registrant
since 1972 in various real estate capacities.
ANDREW P. GEOGHEGAN, ESQ. 43 Vice President, Secretary 09/14/87
& General Counsel
Mr. Geoghegan joined the Registrant as Vice President, General Counsel in
September 1987. He was elected Secretary on December 9, 1992. From 1981 to
1987 he was in private law practice with the firm of Kassoy, Lopez & Geoghegan
Law Corporation, Beverly Hills, California, specializing in corporate, tax and
real estate law.
PAUL A. FRITZSON 40 Vice President, 01/02/92
Marketing
Mr. Fritzson was elected Vice President, General Merchandise and Progressive
on May 13, 1990 and Vice President, Marketing on May 14, 1992. He was
designated an executive officer on January 2, 1992. He has served in various
staff and merchandising capacities since 1978.
<PAGE>
SERVED AS AN EXECU-
NAME AGE POSITION TIVE OFFICER SINCE:
ANDREW N. WESTLUND 41 Vice President, 10/04/92
Distribution
Mr. Westlund was elected Vice President Warehousing on April 7, 1992, and Vice
President Distribution on October 13, 1992. He was designated an executive
officer on October 13, 1992. Prior to his election as Vice President, he
served as Director, Warehouse Operations-New York since his employment on July
16, 1989. He was previously employed by Super Valu, Minneapolis, Minnesota as
Warehouse Manager.<PAGE>
Part II
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED
STOCKHOLDER MATTERS
The Common Stock of the Registrant has been listed on the New York Stock
Exchange since July 18, 1986. The following table sets forth the dividends
per share and the high and low sales prices of the Common Stock on the New
York Stock Exchange composite tapes during each quarter of 1992 and 1993. All
per share amounts have been adjusted for a two-for-one stock split, effected
in the form of a 100% stock dividend, paid on March 10, 1992.
QUARTERLY
SALE PRICE DIVIDENDS
HIGH LOW PER SHARE
1st Quarter, 1992 $28.500 $21.375 .075
2nd Quarter, 1992 26.250 16.000 .075
3rd Quarter, 1992 22.250 17.875 .075
4th Quarter, 1992 24.000 19.250 .075
1st Quarter, 1993 $23.500 $20.500 .085
2nd Quarter, 1993 23.500 21.000 .085
3rd Quarter, 1993 24.250 20.250 .085
4th Quarter, 1993 25.000 20.000 .085
There are approximately 11,350 record holders of the Common Stock. Fiscal
1993 was the forty-fifth consecutive year that dividends were paid on the
Common Stock and the thirty-first consecutive year that the aggregate dividend
paid per share (after adjusting for stock splits) has increased. On February
8, 1994, the Board of Directors voted to increase the quarterly dividend to
$.095 per share for the dividend due to be paid on March 24, 1994. Future
dividends will depend on the Registrant's earnings and financial condition.
<PAGE>
Item 6. Selected Financial Data
<TABLE>
<CAPTION>
Fiscal Year
1993 1992 1991 1990 1989
(In thousands except per share amounts)
EARNINGS STATEMENT DATA:
<S> <C> <C> <C> <C> <C>
Sales and other revenues................................. $2,054,889 $2,066,023 $2,007,960 $1,687,649 $1,520,600
Cost of sales............................................ 1,543,932 1,552,155 1,513,130 1,281,099 1,162,576
Gross margin............................................. 510,957 513,868 494,830 406,550 358,024
Selling, general and administrative expense.............. 399,437 411,487 401,451 323,853 285,595
Operating profit......................................... 111,520 102,381 93,379 82,697 72,429
Interest expense (net)................................... 19,337 20,711 20,743 12,955 9,981
Earnings before income taxes............................. 92,183 81,670 72,636 69,742 62,448
Income taxes............................................. 37,578 32,476 29,286 27,523 25,020
Earnings before cumulative effect
of change in accounting principle...................... 54,605 49,194 43,350 42,219 37,428
Cumulative effect of accounting change................. 2,100 - - - 1,874
Net earnings............................................. $ 56,705 $ 49,194 $ 43,350 $ 42,219 $ 39,302
Per common share(1):
Earnings before cumulative effect of accounting change $ 1.33 $ 1.21 $ 1.08 $ 1.06 $ .95
Cumulative effect of accounting change................ .05 - - - .05
Net earnings.......................................... $ 1.38 $ 1.21 $ 1.08 $ 1.06 $ 1.00
Cash dividends........................................ $ .34 $ .30 $ .26 $ .22 $ .18
Weighted average number of common shares outstanding(1).. 41,049 40,520 39,939 39,435 38,869
January January December December December
1, 1994 2, 1993 28, 1991 29, 1990 30, 1989
Balance Sheet Data: (Dollar amounts in thousands except per share data)
Working capital.......................................... $ 118,830 $ 105,187 $ 68,140 $ 54,467 $ 37,465
Total assets............................................. 795,355 768,596 705,516 629,239 470,199
Current maturities:
Long-term debt........................................ 7,180 7,015 6,006 5,301 3,482
Obligations under capital leases...................... 1,412 1,387 1,480 1,616 1,192
Long-term debt, excluding current maturities............. 156,716 171,578 165,252 159,521 94,310
Obligations under capital leases, excluding current
maturities............................................. 58,835 54,930 49,315 49,036 29,824
Redeemable preferred stock of a subsidiary............... 1,883 2,781 2,781 2,781 2,781
Shareholders' equity..................................... 396,715 345,796 297,801 256,036 214,059
Book value per share(1).................................. $ 9.63 $ 8.48 $ 7.42 $ 6.46 $ 5.48
(1)Restated for the effect of a two-for-one stock split in the form of a 100% stock dividend paid on March 10, 1992.
/TABLE
<PAGE>
ITEM 7 MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND
FINANCIAL CONDITION
This analysis of the Company's results of operations and financial condition
should be read in conjunction with the accompanying consolidated financial
statements, including the notes thereto, and the information presented in the
summary of selected financial data. All footnote references are to Notes to
Consolidated Financial Statements.
RESULTS OF OPERATIONS
In 1993, the Company achieved increased earnings on slightly lower sales.
Fiscal 1993 contained 52 weeks of operations as compared to 53 weeks in fiscal
1992. Consolidated sales and other revenues for 1993 amounted to $2,054.9
million, a decrease of 0.5% from last year's sales and other revenues of
$2,066.0 million. The decrease in sales was the result of the 53 week year in
1992 coupled with the sales from 34 Wellby Super Drug stores which were sold
during 1992 (Note 4). Had the sales from these drug stores, and the sales
from the 53rd week, been excluded from 1992 results, sales and other revenues
for 1993 would have increased 3.3%. Net earnings for 1993 were $56.7 million,
an increase of 15.3% over net earnings in 1992 of $49.2 million. During the
first quarter of 1993, the Company adopted STATEMENT OF FINANCIAL ACCOUNTING
STANDARDS NO. 109 - ACCOUNTING FOR INCOME TAXES. The cumulative effect of
this adjustment of $2.1 million is reflected in 1993 results. Net earnings
for 1993 before the effect of the accounting change were $54.6 million, an
increase of 11.0% over the $49.2 million reported in 1992.
During 1993, the Company experienced competitive pressures in several of its
market areas together with a continued weak economy throughout northern New
England. The Company saw its comparable supermarket sales decrease by 2.0% in
fiscal 1993 and 0.6% in the fourth quarter of 1993 as a result of these
factors. However, positive comparable store sales comparisons in December of
1993 have continued in early 1994. The Company is optimistic that these
positive comparable store sales signal improvements in regional economies
coupled with successful business strategies. Operating results reflect slight
inflation due primarily to perishable categories. The Company continues to
experience increased competition from mass merchandisers and club store
formats that have moved into the majority of its marketing territories. The
Company has successfully focused on reducing its operating costs to
effectively compete in its changing retail environment. The Company added
approximately 6% to its supermarket selling area in 1993 and currently expects
to add over 10% in 1994.
<PAGE>
The following table sets forth for the years indicated the percentages which
selected items in the consolidated statements of earnings bear to net sales
and other revenues and the percentage change in the dollar values of such
items as compared to the indicated prior year:
PERCENTAGE OF SALES YEAR-TO-YEAR PERCENTAGE
AND OTHER REVENUES CHANGE IN DOLLAR VALUES
EXCEPT PER SHARE AMOUNTS Fiscal 1993 Fiscal 1992
Fiscal Year Compared to Compared to
1993 1992 1991 Fiscal 1992 Fiscal 1991
100.0% 100.0% 100.0% Sales and other revenues (0.5)% 2.9%
24.9 24.9 24.6 Gross margin (0.6) 3.8
Selling, general and
19.4 19.9 20.0 administrative expenses (2.9) 2.5
5.5 5.0 4.6 Operating profit 8.9 9.6
1.0 1.0 1.0 Interest expense, net (6.6) (0.2)
4.5 4.0 3.6 Earnings before income taxes 12.9 12.4
1.8 1.6 1.4 Income taxes 15.7 10.9
Earnings before cumulative
effect of change in
2.7 2.4 2.2 accounting principle 11.0 13.5
Cumulative effect of change
0.1 -- -- in income tax accounting -- --
2.8% 2.4% 2.2% Net earnings 15.3 13.5
$1.38 $1.21 $1.08 Earnings per common share 14.0 12.0
Fiscal 1992 includes 53 weeks of operations.
<PAGE>
Sales
Sales and other revenues declined 0.5% in 1993 (52 weeks), to $2,054.9
million, a decrease of $11.1 million from 1992 (53 weeks) results. Retail
sales for supermarkets and drug stores decreased $7.0 million or 0.4%. This
decrease is the result of the 53rd week of operations included in 1992 coupled
with the sales of the 34 Wellby Super Drug stores that were sold in May 1992
(Note 4). Had the sales from these 34 drug stores and the 53rd week been
excluded from 1992 results, sales would have increased 3.3% in 1993.
Comparable store sales on a 52-week basis decreased 2.0% in 1993. Other sales
and revenues, which include trucking, wholesale, real estate and miscellaneous
retail operations, decreased $4.1 million in 1993.
The comparable store sales decrease of 2.0% in 1993 is the result of
competitive pressures in certain market areas, lower sales in established
stores located in specific market areas in which the Company has opened new or
remodeled supermarkets, a change in the Canadian exchange rate and other
factors which lowered sales in the Company's border stores, and the continuing
economic recession in most of the Company's marketing territory. Fourth
quarter 1993 comparable store sales decreased only 0.6% in comparison to
fourth quarter 1992. In addition, the Company experienced slight increases in
comparable store sales in late 1993 that have carried over into 1994. This is
a trend reversal in comparable store sales that had been running negative
since the latter part of 1991.
Wholesale sales were $57.3 million in 1993, a decrease of $4.9 million from
1992 wholesale sales of $62.2 million. Wholesale sales represented 3% of
sales and other revenues in all years presented. Drug store sales contributed
less than 1% of sales and other revenues in 1993, 3% in 1992 and 5% in 1991.
In 1992 (53 weeks), sales and other revenues were $2,066.0 million, an
increase of $58.0 million or 2.9% over 1991 (52 weeks) results. Retail sales
increased $63.3 million or 3.3% to $1,970.3 million. Comparable store sales
on a 52-week basis reflected a decrease of 1.8% in 1992. In 1992, other sales
and revenues decreased $5.3 million due primarily to the loss of a wholesale
customer.
Gross Margin
Gross margin remained steady in 1993 at 24.9% of sales and other revenues
which mirrors the 24.9% recorded in 1992. In comparing 1993 with 1992,
decreased margins in certain product categories were offset by increased
margins in other product categories. The Company has focused on maintaining a
competitive pricing strategy in its marketing areas. The Company intends to
continue this activity in 1994 so that efficiencies can be passed on to the
customer in the form of lower prices.
<PAGE>
Gross margin improved in 1992 to 24.9% of sales, up from 24.6% in 1991. This
increase reflects the result of improved selling margins in certain areas of
the Company's marketing territory, a favorable LIFO inventory adjustment and
continued improvement in the utilization of the Company's warehouse facility
in Schodack, New York. Due to overall price deflation coupled with inventory
decreases, the Company's LIFO (last-in, first-out) inventory adjustment
resulted in income for 1992 as opposed to expense in 1991.
Selling, General and Administrative Expenses
Selling, general and administrative expenses decreased to 19.4% of sales and
other revenues in 1993 as compared to 19.9% in 1992. This continues a
downward trend that began in 1992. The Company achieved this substantial
decrease despite lower comparable store sales. This achievement is a
continuing reflection of ongoing cost containment programs combined with the
restructuring that occurred following the sale of the Wellby Super Drug store
chain in May 1992. Payroll and payroll related expenses, which exceeded 50%
of selling, general and administrative expenses in both years, decreased as a
percentage of sales in 1993 as compared to 1992. This resulted from the cost
containment efforts as evidenced by specific programs that reduced employee
related insurance costs throughout the organization.
Selling, general and administrative expenses decreased to 19.9% of sales and
other revenues in 1992 as compared to 20.0% in 1991. Payroll and payroll
related expenses, which exceeded 50% of selling, general and administrative
expenses in both years, were primarily responsible for this decrease. This
resulted from the application of management planning techniques that reduced
labor hours in the Company's supermarkets coupled with a cost containment
program within the Company's administrative and distribution facilities. The
Company expected these ongoing programs to show continued positive results in
1993. Included in 1992 selling, general and administrative expenses was a
nonrecurring gain from the sale of the Wellby Super Drug store chain of $4.5
million and a charge for restructuring of $4.0 million, the net of which
amounted to a reduction in selling, general and administrative expenses of
$0.5 million (Note 4). The restructuring is in addition to the cost
containment measures previously discussed.
Interest Expense, Net
Net interest expense expressed as a percentage of sales and other revenues was
1.0% in all years presented. Net interest expense consists of the following:
(In thousands)
1993 1992 1991
Interest on debt $17,249 $17,975 $16,614
Obligations under capital leases 7,230 6,509 5,613
Capitalized interest (1,530) (1,264) (1,080)
Interest income (3,612) (2,509) (404)
$19,337 $20,711 $20,743<PAGE>
Net interest expense in 1993 was $19.3 million, a decrease of 6.6% from 1992
net interest expense of $20.7 million, reflecting an increase in interest
income coupled with a decrease in average debt levels. The increase in
interest income in 1993 is the result of a higher average level of invested
funds in 1993 as compared to 1992. The decreased debt levels are the result
of scheduled as well as early paydowns of the Company's debt instruments.
Net interest expense in both fiscal 1992 and 1991 amounted to $20.7 million.
Higher interest expense resulting from an increase in average debt levels and
capital lease obligations in comparing 1992 with 1991 was offset by an
increase in interest income. The increase in interest income in 1992 is the
result of a substantially higher level of invested funds generated from the
sale of the Wellby Super Drug store chain and a reduction in warehouse
inventories.
Income Taxes
The provision for income taxes includes both federal and state income taxes.
The effective tax rate increased in 1993 to 40.8% from 39.8% in 1992. This
increase is primarily the result of an increase in the federal corporate
income tax rate. The Revenue Reconciliation Act of 1993 was signed into law
in August 1993, and among other items, increased the federal corporate income
tax rate by 1% to 35%, retroactive to January 1, 1993.
During the first quarter of 1993, the Company adopted, as required, SFAS NO.
109 - ACCOUNTING FOR INCOME TAXES (Note 9). The cumulative effect of this
adjustment, which increased net earnings by $2.1 million, is reflected in 1993
results.
The effective tax rate decreased in 1992 to 39.8% from 40.3% in 1991. This
drop in rate is primarily the result of an increase in allowable state tax
credits during fiscal 1992.
Net Earnings and Earnings Per Common Share
Net earnings rose 15.3% in 1993 (52 weeks) to $56.7 million, an increase of
$7.5 million over 1992 (53 weeks) earnings of $49.2 million. Net earnings
were 2.8% of sales and other revenues in 1993 as compared to 2.4% in 1992.
This increase is the result of significantly reduced selling, general and
administrative expenses coupled with the cumulative effect of the change in
income tax accounting and offset by the current year income tax provision.
Net earnings for 1993 before the effect of the accounting change amounted to
$54.6 million, an increase of 11% over the $49.2 million reported in 1992.
Net earnings rose 13.5% in 1992 to $49.2 million, an increase of $5.8 million
over 1991 earnings of $43.4 million. Net earnings were 2.4% of sales and
other revenues in 1992 as compared to 2.2% in 1991. This increase is the
result of higher margins combined with a slight reduction in selling, general
and administrative expenses.
<PAGE>
Net earnings per common share increased 14.0% in 1993 (52 weeks) to $1.38 from
$1.21 in 1992 (53 weeks). Net earnings per common share increased 12.0% in
1992 (53 weeks) to $1.21 from $1.08 in 1991 (52 weeks). The cumulative effect
of the change in income tax accounting increased 1993 net earnings by $.05 per
share. Management estimates that the extra week of operations in 1992
increased net earnings by $.03 per share.
Other Items
Seasonal business affects the Company's operations in that sales are generally
greater in the second half of the year (Note 11).
The Company's business is characterized by large purchase and sales volumes
extended across diverse product lines, rapid inventory turns and relatively
moderate profit margins. In this environment, vendor price changes are
typically passed on to the customer. The Company does not believe inflation
or deflation has significantly affected its competitive position in the
industry.
<PAGE>
CAPITAL RESOURCES AND LIQUIDITY
Measures of liquidity for each of the last three fiscal years were as follows:
January 1, January 2, December 28,
1994 1993 1991
Cash and cash items $ 77.5 million $ 94.8 million $33.2 million
Short-term investments $ 19.9 million $ 5.0 million --
Working capital (FIFO inventory) $133.6 million $120.8 million $87.4 million
Current ratio (FIFO inventory) 1.98 1.83 1.64
Unused lines of revolving credit $ 50.0 million $ 79.0 million $79.0 million
Unused lines of short-term credit $ 30.0 million $ 31.0 million $28.0 million
The Company remained in a strong liquidity position at the end of fiscal 1993.
Cash and cash items decreased $17.3 million to $77.5 million at January 1,
1994 from $94.8 million at January 2, 1993. This reduction is primarily the
result of the Company's investing activities. Short-term investments
increased from $5.0 million at January 2, 1993 to $19.9 million at January 1,
1994, an increase of $14.9 million (Note 1C).
Working capital at year-end 1993, after adding back the LIFO inventory reserve
of $14.8 million, was $133.6 million or 16.8% of total assets. This compares
to $120.8 million or 15.7% of total assets at year-end 1992. The working
capital and current ratio levels are strong at year-end 1993. The increase
over 1992 year-end levels is attributable to increases in inventories combined
with decreases in accrued expenses. The Company reduced its lines of
revolving credit from $79 million at year-end 1992 to $50 million at year-end
1993. This reduction reflects the Company's strong liquidity position and the
fact that it has not utilized these lines of revolving credit at any time
during the past two years. Lines of credit represent a continuing source of
capital. The Company does not have a short-term plan for utilizing these
lines but they remain available for contingency purposes. The Company
continues to be in a sound financial position to carry out its current retail
expansion and remodelling plans in 1994 and beyond.
In February 1993, the Company announced a stock repurchase program authorizing
the purchase of up to $55 million in shares of Hannaford common stock over the
next three years. The program authorizes purchases on the open market and
through privately negotiated transactions if special market opportunities
arise. As of January 1, 1994, the Company had not repurchased any shares
under this program.
Cash Flows from Operating Activities
Cash provided by operating activities was $91.5 million, $110.4 million and
$112.6 million for fiscal 1993, 1992, and 1991, respectively. This cash
inflow is expected to continue supporting the Company's capital spending
program, dividend payments to shareholders and other capital needs. Cash
provided by operating activities decreased $18.9 million in 1993 from 1992 due
to increases in inventories and decreases in accrued expenses and income taxes
payable.
<PAGE>
Cash provided by operating activities of $110.4 million in 1992 was comparable
to the $112.6 million reported for 1991. Substantial increases in net income
as well as depreciation and amortization in 1992 were offset by changes in
certain components of working capital. The most significant of these changes
was a decrease in inventory levels. Overall, the Company experienced a
decrease of $25.1 million from year-end 1991 levels. The sale of the Wellby
Super Drug store chain accounted for $11.2 million of the decrease and this
component is reflected in cash flows from investing activities. The remaining
decrease in inventories of $13.9 million is the result of a decline in
warehouse inventories due to the drug store sale coupled with a change in
purchasing strategy from one emphasizing forward buying to one of contract
purchasing. This change in purchasing strategy was part of a larger mission
aimed to optimize the Company's overall distribution operations.
Cash Flows from Investing Activities
Cash used in investing activities was $86.9 million in 1993. Total capital
expenditures totalled $76.3 million during the year and were composed of $70.9
million in acquisitions of property, plant and equipment and $5.4 million in
non-cash capital lease additions. These 1993 capital expenditures were
primarily comprised of costs incurred in building and equipping new and
expanded supermarkets.
Net retail selling space for food stores increased 5.8% in 1993 to 2,771,000
square feet at year-end, an increase of 152,000 square feet over 1992 year-end
sales area. Four new supermarkets and four expanded supermarkets were opened
during 1993. In addition, the Company closed four outdated facilities. A
number of 1993 food store construction starts and expansion projects will not
be completed until 1994. The number of stores and square footage of selling
area at year-ends 1991, 1992 and 1993 are summarized below:
FOOD STORES DRUG STORES
Number of Square Footage Number of Square Footage
Units Selling Area Units Selling Area
1991 88 2,347,000 42 252,000
1992 93 2,619,000 6 29,000
1993 93 2,771,000 3 15,000
In January 1993, the Company opened a new supermarket in Gloversville, New
York, with approximately 33,000 square feet of retail selling space. In June
1993, the Company opened two new supermarkets, one in Concord, New Hampshire,
with approximately 42,000 square feet of retail selling space and one in
Farmington, Maine, with approximately 32,000 square feet of retail selling
space, which replaced a smaller, outdated facility. In addition, during June
1993, the Company held grand reopenings for expanded supermarkets in North
Windham, Damariscotta, and Belfast, Maine. In August 1993, the Company opened
a new supermarket in Latham, New York, with approximately 47,000 square feet
of retail selling space. In November 1993, the Company held a grand reopening
for an expanded supermarket in Bangor, Maine.
<PAGE>
Cash used in investing activities increased $33.4 million in 1993 to $86.9
million from $53.5 million in 1992. This increase is primarily the result of
the Company's sale of the Wellby Super Drug store chain in 1992. Net proceeds
of $29.8 million were realized from this divestiture. In addition, the
Company's short-term investments increased by $14.9 million in 1993. The
Company's short-term investment objectives are to maximize yields while
minimizing risk and maintaining liquidity. To attain these objectives,
investment limits are placed on the amount, type and issuer of securities.
Cash used in investing activities decreased to $53.5 million in 1992 from
$82.7 million in 1991. This decrease of $29.2 million is primarily the impact
of the Wellby divestiture in 1992.
Cash Flows from Financing Activities
The Company has maintained a strong capital structure. Management believes
that maintaining such financial flexibility provides a significant competitive
advantage and allows the Company to be opportunistic in terms of acquisitions
and expansions.
Cash used for financing activities totalled $21.8 million in 1993 as the
Company did not issue any long-term debt during the year. The Company
experienced a decrease in its long-term debt of $14.7 million during 1993 as
it made early extinguishments and prepayments on certain debt secured by real
estate and equipment, totalling $7.8 million. The Company paid $14.2 million
in dividends to both common and preferred shareholders in 1993. These amounts
were offset by proceeds of $8.4 million received during 1993 from the issuance
of approximately 435,000 shares of common stock. The majority of these shares
were issued under certain employee stock plans (Note 8) and per agreement with
the Sobey Parties (Note 5).
Quarterly cash dividends declared during 1993 totalled $.34 per common share,
an increase of 13.3% over the $.30 per share declared during 1992. This was
the thirty-first consecutive year that the aggregate dividend paid per common
share, after adjustment for stock splits and stock dividends, has increased.
Common stock dividend payments in 1993 represented 24.7% of net earnings
available to common shareholders. In February 1994, the Company declared an
increased quarterly dividend on its common stock of $.095 per share, payable
March 24, 1994. The new quarterly dividend of $.095 per share represents an
increase of 11.8% over the $.085 per share paid in March 1993.
Cash provided by financing activities totalled $4.8 million in 1992 as the
Company experienced a net increase in its long-term debt of $7.3 million.
Total new debt of $18.2 million was offset by a reduction of $4.8 million for
early extinguishment of debt and scheduled principal paydowns of $6.1 million.
Proceeds of $11.2 million from the issuance of common stock were offset by
dividends paid of $12.4 million during the year.
1994 Capital Program
The Company expects to spend in the range of $100 million in 1994 primarily
for new, expanded and relocated store construction, equipment, vehicles and
<PAGE>
other asset expenditures. During 1994, this program will be subject to
continual change and review as conditions warrant. Net square footage of
retail selling space is expected to increase by approximately 10% during
1994. In addition, a number of projects scheduled to start in 1994 will not
be completed until 1995. The 1994 capital program is expected to be financed
by cash and cash items, short-term investments, internally generated funds and
leases.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
Presented below are the Registrant's Consolidated Balance Sheets, Consolidated
Statements of Earnings, Consolidated Statements of Changes in Shareholders'
Equity, Consolidated Statements of Cash Flows and accompanying Notes to
Consolidated Financial Statements.<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
Board of Directors and Shareholders of
Hannaford Bros. Co.:
We have audited the consolidated financial statements and the financial
statement schedules of Hannaford Bros. Co. and subsidiaries listed in Item
14(a) of this Form 10-K. These financial statements and financial statement
schedules are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements and
financial statement 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 management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements referred to above present
fairly, in all material respects, the consolidated financial position of
Hannaford Bros. Co. and subsidiaries as of January 1, 1994 and January 2,
1993, and the consolidated results of their operations and their cash flows
for each of the three years in the period ended January 1, 1994 in conformity
with generally accepted accounting principles. In addition, in our opinion,
the financial statement schedules referred to above, when considered in
relation to the basic financial statements taken as a whole, present fairly,
in all material respects, the information required to be included therein.
As discussed in Note 9 to the consolidated financial statements, the
Company changed its method of accounting for income taxes in 1993.
s/Coopers & Lybrand
Portland, Maine
January 24, 1994<PAGE>
HANNAFORD BROS. CO. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
ASSETS
(In thousands)
January 1, January 2,
1994 1993
Current assets:
Cash and cash items $ 77,496 $ 94,789
Short-term investments (note 1C) 19,855 5,003
Accounts receivable, net 15,765 12,168
Inventories (note 1D) 129,934 124,874
Prepaid expenses 4,695 3,983
Deferred income taxes (note 9) 7,920 9,243
Total current assets 255,665 250,060
Property, plant and equipment, net 437,606 418,015
(notes 1E and 2)
Leased property under capital leases, net 50,070 47,638
(note 3)
Investment in financing leases 1,787 1,816
Other assets:
Notes receivable 2,395 2,472
Deferred charges, net (note 1G) 38,416 39,125
Computer software costs, net (note 1H) 8,790 8,773
Miscellaneous assets 626 697
Total other assets 50,227 51,067
$795,355 $768,596
See accompanying notes to consolidated financial statements.
<PAGE>
HANNAFORD BROS. CO. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
LIABILITIES AND SHAREHOLDERS' EQUITY
(In thousands except share amounts)
January 1, January 2,
1994 1993
Current liabilities:
Current maturities of long-term debt (note 2) $ 7,180 $ 7,015
Obligations under capital leases (note 3) 1,412 1,387
Accounts payable 79,679 78,885
Accrued payroll 17,323 16,161
Other accrued expenses 29,348 34,880
Income taxes 1,893 6,545
Total current liabilities 136,835 144,873
Deferred income tax liabilities (note 9) 23,753 25,558
Other liabilities 20,618 23,080
Long-term debt (note 2) 156,716 171,578
Obligations under capital leases (note 3) 58,835 54,930
Redeemable preferred stock of a subsidiary,
par value $100 per share (note 6) 1,883 2,781
Shareholders' equity (notes 5 and 8):
Class A Serial Preferred stock, no par,
authorized 2,000,000 shares - -
Class B Serial Preferred stock, par value
$.01 per share, authorized 28,000,000 shares - -
Common stock, par value $.75 per share:
Authorized 110,000,000 shares;
issued and outstanding 41,210,774
shares at January 1, 1994, and
40,775,734 shares at January 2, 1993 30,908 30,582
Additional paid-in capital 99,748 91,673
Preferred stock purchase rights 412 408
Retained earnings 265,647 223,133
Total shareholders' equity 396,715 345,796
$795,355 $768,596
See accompanying notes to consolidated financial statements.
<PAGE>
HANNAFORD BROS. CO. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EARNINGS
(In thousands except share amounts)
FISCAL YEAR
1993 1992 1991
Sales and other revenues $2,054,889 $2,066,023 $2,007,960
Cost of sales 1,543,932 1,552,155 1,513,130
Gross margin 510,957 513,868 494,830
Selling, general and administrative
expenses 399,437 411,487 401,451
Operating profit 111,520 102,381 93,379
Interest expense, net (notes 1I and 2) 19,337 20,711 20,743
Earnings before income taxes 92,183 81,670 72,636
Income taxes (notes 1J and 9) 37,578 32,476 29,286
Earnings before cumulative effect of
change in accounting principle 54,605 49,194 43,350
Cumulative effect to January 3, 1993
of change in income tax accounting 2,100 -- --
Net earnings $ 56,705 $ 49,194 $ 43,350
Per share of common stock:
Earnings before cumulative effect of
change in accounting principle $ 1.33 $ 1.21 $ 1.08
Cumulative effect to January 3, 1993
of change in income tax accounting .05 -- --
Net earnings $ 1.38 $ 1.21 $ 1.08
Cash dividends $ .34 $ .30 $ .26
Weighted average number of common shares
outstanding (000's) 41,049 40,520 39,939
See accompanying notes to consolidated financial statements.
<PAGE>
<TABLE>
<CAPTION>
HANNAFORD BROS. CO. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
(In thousands)
Additional
Common Stock Paid-in Retained Preferred Stock
Shares Amount Capital Earnings Purchase Rights
<S> <C> <C> <C> <C> <C>
Balance, December 29, 1990 39,629 $29,722 $72,003 $153,916 $397
Net earnings 43,350
Cash dividends:
Redeemable preferred stock (278)
Common stock (10,395)
Preferred stock purchase rights (5) 5
Shares issued to certain
shareholders per agreement 138 104 2,631 (52)
Shares sold under an Employee
401(k) Savings Plan 192 143 3,962 (72)
Shares issued under an Employee
Stock Option Plan 106 79 853 (40)
Shares issued under a Long Term
Incentive Plan 25 19 496 (9)
Shares issued under an Employee
Stock Purchase Plan 58 44 951 (22)
Balance, December 28, 1991 40,148 30,111 80,896 186,393 402
Net earnings 49,194
Cash dividends:
Redeemable preferred stock (278)
Common stock (12,170)
Preferred stock purchase rights (6) 6
Shares issued to certain
shareholders per agreement 151 113 3,200
Shares sold under an Employee
401(k) Savings Plan 222 166 4,617
Shares issued under an Employee
Stock Option Plan 104 79 704
Shares issued under a Long Term
Incentive Plan 19 14 473
Shares issued under an Employee
Stock Purchase Plan 132 99 1,783
Balance, January 2, 1993 40,776 30,582 91,673 223,133 408
Net earnings 56,705
Cash dividends:
Redeemable preferred stock (220)
Common stock (13,967)
Preferred stock purchase rights (4) 4
Shares issued to certain
shareholders per agreement 127 95 2,660
Shares sold under an Employee
401(k) Savings Plan 109 82 2,321
Shares issued under an
Employee Stock Option Plan 73 55 598
Shares issued under a Long Term
Incentive Plan 13 9 260
Shares issued under an Employee
Stock Purchase Plan 73 55 1,369
Shares issued through redemption
of preferred stock 40 30 867
Balance, January 1, 1994 41,211 $30,908 $99,748 $265,647 $412
See accompanying notes to consolidated financial statements.
/TABLE
<PAGE>
HANNAFORD BROS. CO. AND
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
1993 1992 1991
Cash flows from operating activities:
Net income $ 56,705 $ 49,194 $ 43,350
Adjustments to reconcile net
income to net cash provided
by operating activities:
Depreciation and amortization 56,353 54,914 50,653
Cumulative effect of accounting
change (2,100) - -
Gain on divestiture - (4,556) -
Decrease (increase) in inventories (5,060) 13,875 (1,017)
Increase in receivables and
prepayments (4,232) (1,029) (701)
Increase (decrease) in accounts payable
and accrued expenses (6,038) (978) 19,169
Increase (decrease) in income
taxes payable (4,652) 2,004 1,059
Increase (decrease) in deferred
taxes 1,619 (2,762) 1,201
Other operating activities (1,097) (254) (1,099)
Net cash provided by
operating activities 91,498 110,408 112,615
Cash flows from investing activities:
Acquisition of property, plant
and equipment (70,891) (73,101) (81,120)
Net proceeds from divestiture - 29,814 -
Sale of property, plant and
equipment, net 6,498 1,363 3,115
Increase in deferred charges (4,569) (3,655) (2,024)
Increase in computer software costs (3,133) (2,956) (2,628)
Increase in short-term investments (14,852) (5,003) -
Net cash used in investing
activities (86,947) (53,538) (82,657)
Cash flows from financing activities:
Principal payments under capital
lease obligations (1,362) (1,375) (1,699)
Proceeds from issuance of long-
term debt - 18,252 42,033
Payments of long-term debt (14,697) (10,916) (35,597)
Issuance of common stock 8,402 11,248 9,088
Dividends paid (14,187) (12,448) (10,674)
Net cash provided by (used in)
financing activities (21,844) 4,761 3,151
Net increase (decrease) in cash and
cash items (17,293) 61,631 33,109
Cash and cash items at beginning of year 94,789 33,158 49
Cash and cash items at end of year $ 77,496 $ 94,789 $ 33,158
See accompanying notes to consolidated financial statements.<PAGE>
HANNAFORD BROS. CO. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
Supplemental disclosure of cash flow information (In thousands)
1993 1992 1991
Cash paid during the year for:
Interest (net of amount capitalized,
$1,530 in 1993, $1,264 in 1992 and
$1,080 in 1991) $23,468 $22,993 $21,115
Income taxes 40,529 33,151 26,765
Supplemental disclosure of noncash investing and financing activities
Capital lease obligations totalling $5,404,000, $7,490,000 and $2,680,000
were incurred during 1993, 1992 and 1991, respectively, when the Company
entered into leases for certain improved real estate.
Disclosure of accounting policy
For the purposes of the Consolidated Statements of Cash Flows, the
Company considers all highly liquid debt instruments purchased with
maturities of three months or less to be cash items.<PAGE>
HANNAFORD BROS. CO. AND
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
A. NATURE OF BUSINESS
The Company and its subsidiaries are principally involved in the distribution
and retail sale of food, drugs and related products through supermarkets and
combination stores. The Company's stores are located in Maine, New Hampshire,
Vermont, Massachusetts and upstate New York.
B. PRINCIPLES OF CONSOLIDATION
The Company's fiscal year ends on the Saturday closest to December 31. The
consolidated financial statements include the accounts of the Company and its
wholly-owned subsidiaries as of January 1, 1994, for fiscal year 1993 (52
weeks), January 2, 1993, for fiscal year 1992 (53 weeks) and December 28,
1991, for fiscal year 1991 (52 weeks).
All significant intercompany accounts and transactions have been eliminated in
consolidation.
C. SHORT-TERM INVESTMENTS
Short-term investments are highly liquid investments with original maturities
of more than three months and are stated at cost which approximates fair
market value.
D. INVENTORIES
Inventories consist primarily of groceries, meat, produce, general merchandise
and pharmaceuticals. Grocery, pharmaceutical and general merchandise
inventories are valued at the lower of cost, determined on the last-in,
first-out (LIFO) method, or market. Approximately 86% of inventories were
valued using the LIFO method in 1993 as compared to 87% in 1992. Other
inventories are stated at the lower of cost (first-in, first-out) or market.
The current cost of groceries, general merchandise and pharmaceuticals
exceeded the LIFO valuation by $14,805,000 at January 1, 1994 and $15,552,000
at January 2, 1993.
Had the inventories which are valued on the LIFO method been valued using the
first-in, first-out method, net earnings would have decreased by approximately
$444,000 ($.01 per share) in 1993, $2,213,000 ($.05 per share) in 1992, and
increased by $1,009,000 ($.03 per share) in 1991. The 1992 impact is the
result of current year LIFO income coupled with the LIFO inventory sold with
the Wellby Super Drug store chain (Note 4).
<PAGE>
HANNAFORD BROS. CO. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(continued)
E. PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment is recorded at cost and depreciated by the
straight-line method over the estimated useful lives of the assets. Leasehold
interests and improvements are amortized on the straight-line method over the
shorter of estimated useful life or lease term. The costs of repairs and
maintenance are expensed as incurred; renewals and betterments are
capitalized. Upon sale or retirement, the cost and related accumulated
depreciation are eliminated from the respective accounts and any resulting
gain or loss is included in the results of operations. Property, plant and
equipment consists of the following:
AVERAGE
DEPRECIATION (In thousands)
RATE 1993 1992
2% Land and improvements $ 55,699 $ 54,395
3% Buildings 175,894 160,136
13% Furniture, fixtures and equipment 252,474 233,081
4% Leasehold interests and improvements 145,595 136,095
Construction in progress 16,789 11,793
646,451 595,500
Less accumulated depreciation
and amortization 208,845 177,485
$437,606 $418,015
F. STORE OPENING AND CLOSING COSTS
The noncapital expenditures incurred in opening new stores or remodelling
existing stores are expensed in the year in which they are incurred. When the
decision is made to close a store, the remaining investment in fixtures and
leasehold improvements, not expected to be realized, is expensed over its
remaining productive life. The present value of any remaining liability under
the lease, net of expected sublease recovery, is also expensed on the same
basis.
G. DEFERRED CHARGES
Deferred charges consist of the following:
(In thousands)
1993 1992
Acquisition costs $22,948 $22,440
Goodwill 13,447 14,290
Miscellaneous 2,021 2,395
$38,416 $39,125
<PAGE>
HANNAFORD BROS. CO. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(continued)
Acquisition costs consist primarily of costs of obtaining new store sites,
covenants-not-to-compete, tradenames and initial direct lease costs. Costs of
obtaining new store sites are capitalized and depreciated over the estimated
useful lives of the related assets. Other intangible assets acquired in
connection with acquisitions are being amortized on the straight-line method
over periods ranging from five to ten years. Lease costs are being amoritized
on the straight-line method over the base lease terms.
Goodwill, representing the excess of the cost of acquisitions of assets,
minority interests of subsidiaries and the acquired stock of an independent
over the fair value of their respective net assets at dates of acquisition, is
being amortized on the straight-line method over various periods not exceeding
20 years. Amortization expense charged to operations was $843,000 in 1993,
$888,000 in 1992 and $506,000 in 1991.
H. CAPITALIZED COMPUTER SOFTWARE COSTS
Capitalized computer software used internally consists of costs to purchase
and develop software. The Company capitalizes internally developed software
costs based on a project-by-project analysis of each project's significance to
the Company and its estimated useful life. All capitalized software costs are
amortized on a straight-line method over a period of five years. Amortization
expense charged to operations was $3,116,000 in 1993, $3,251,000 in 1992 and
$2,926,000 in 1991.
I. CAPITALIZED INTEREST
The Company capitalizes interest as a part of the cost of acquiring and
constructing certain assets. Capitalized interest was $1,530,000 in 1993,
$1,264,000 in 1992 and $1,080,000 in 1991.
J. INCOME TAXES
The Company changed its method of accounting for income taxes, effective
January 3, 1993, to conform with STATEMENT OF FINANCIAL ACCOUNTING STANDARDS
NO. 109 - ACCOUNTING FOR INCOME TAXES (Note 9).
K. EARNINGS PER COMMON SHARE
Earnings per share of common stock have been determined by dividing net
earnings available to common shareholders by the weighted average number of
shares of common stock outstanding. The assumed exercise of existing employee
stock options has been excluded since it does not result in any material
dilution. Net earnings available to common shareholders is equal to net
earnings reduced by dividends paid of $220,000 in 1993 and $278,000 in both
1992 and 1991 on redeemable preferred stock of a subsidiary (Note 6).
Weighted average common shares outstanding have been adjusted to reflect a
two-for-one stock split effected in the form of a 100% common stock dividend
declared on February 11, 1992, and issued on March 10, 1992.
<PAGE>
HANNAFORD BROS. CO. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(continued)
L. FAIR VALUE DISCLOSURES ABOUT FINANCIAL INVESTMENTS
The following methods and assumptions were used by the Company in estimating
its fair value disclosures for financial investments:
Cash and cash items, short-term investments and notes receivable: The
carrying amounts reported in the balance sheet for these items
approximate their fair value.
Long-term debt: The fair values of the Company's long-term debt are
estimated using discounted cash flow analyses, based on the Company's
current incremental borrowing rates for similar types of borrowing
arrangements. The carrying amount of the Company's long-term debt,
including current maturities was approximately $163,900,000 at January
1, 1994. The fair value of the long-term debt is estimated to be
$191,700,000 at January 1, 1994.<PAGE>
HANNAFORD BROS. CO. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(continued)
2. EXTERNAL FINANCING
At January 1, 1994, the Company had revolving credit lines with several banks
totalling $50 million with interest rates determined by different borrowing
options including prime, quoted money market or LIBOR plus a premium. In
October 1993, the Company reduced its available lines of revolving credit from
$79 million to $50 million. At January 1, 1994, there were no outstanding
borrowings under these credit lines. The agreements provide for conversion of
revolving credit loans to term loans with principal payments due in quarterly
installments over a period of four years. The loan agreements contain certain
restrictive covenants, which among other provisions, require maintenance of
certain levels of working capital, debt and tangible net worth.
The lines require a commitment fee of from 1/4 to 1/2 of 1% on the unused
portion of the line. There are no compensating balances required during the
commitment period.
In addition, the Company had unused, uncommitted short-term lines of credit
with five banks totalling $38 million at January 1, 1994. Of this amount,
approximately $8 million is reserved to support outstanding standby letters of
credit which guarantee payment of certain insurance claims and premiums.
In December 1993, the Company extinguished certain debt, secured by real
estate and held by insurance companies, totalling $3,956,000. These loans had
terms of 15 years and interest rates of 12.25% and 13.5%. During 1993, the
Company made prepayments on certain debt, secured by real estate and
equipment, totalling $3,727,000. These loans had terms ranging from 7 to 20
years and interest rates between 9.5% and 10.4%.
At January 1, 1994, real estate and equipment with a net book value of
approximately $118,168,000 was pledged as collateral for debt of approximately
$126,138,000.
Net interest expense was as follows:
(In thousands)
1993 1992 1991
Interest on debt $17,249 $17,975 $16,614
Obligations under capital leases 7,230 6,509 5,613
Capitalized interest (1,530) (1,264) (1,080)
22,949 23,220 21,147
Less interest income (3,612) (2,509) (404)
Interest expense, net $19,337 $20,711 $20,743
<PAGE>
HANNAFORD BROS. CO. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(continued)
Long-term debt consists of the following:
(In thousands)
1993 1992
Collateralized by equipment, due in install-
ments through 1999 with interest from 6.3%
to 10.375% $ 18,991 $ 23,074
Collateralized by real estate,
due in installments through 2011 with
interest from 7.55% to 10.35% 93,389 98,939
Collateralized by real estate, due in
installments through 2004 with interest
at 13.7%. (12.25% to 13.7% in 1992) 13,758 18,770
Sale-leasebacks of improved real estate
accounted for as financings, due in
installments through 2013 with interest from
13.2% to 14.1% 3,498 3,530
Unsecured 8.97% senior notes due in 2001,
with varying annual installments starting
in 1995. 34,000 34,000
Other 260 280
163,896 178,593
Less current portion 7,180 7,015
$156,716 $171,578
The unsecured senior note agreements contain certain restrictive covenants,
which among other provisions, require maintenance of certain levels of debt
and tangible net worth.
Maturities of long-term debt at January 1, 1994, are as follows:
(In thousands)
1994 $ 7,180
1995 13,300
1996 11,835
1997 13,444
1998 13,463
1999 and thereafter 104,674
$163,896<PAGE>
HANNAFORD BROS. CO. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(continued)
3. LEASED ASSETS AND LEASE COMMITMENTS
The Company's financial structure includes leases of certain stores, office
facilities, transportation vehicles and equipment. Initial lease terms range
from 5 to 45 years with the majority of lease terms between 20 and 25 years.
Substantially all leases contain renewal options. Certain leases contain a
provision for the payment of contingent rentals based on a percentage of sales
in excess of stipulated amounts. Most of the real estate leases provide that
the Company pay taxes, insurance and maintenance applicable to the leased
premises.
The Company's investment in real property under capital leases was as follows:
(In thousands)
1993 1992
Real property $65,151 $60,751
Less accumulated amortization 15,081 13,113
Net real property under capital leases $50,070 $47,638
Amortization of property under capital leases was $3,132,000 in 1993,
$3,001,000 in 1992 and $2,888,000 in 1991.
Future minimum rental payments under capital lease obligations and operating
leases at January 1, 1994, are as follows:
(In thousands)
Capital Operating
Leases Leases
1994 $ 9,398 $ 10,886
1995 9,254 9,014
1996 9,154 7,940
1997 9,241 7,619
1998 9,224 7,100
1999 and thereafter 114,631 81,725
Total minimum lease payments 160,902 $124,284
Less:
Imputed interest (at rates
from 6.50% to 21.13%) 100,648
Estimated executory costs 7
Present value of net mini-
mum lease payments 60,247
Less current obligations 1,412
Long-term obligations $ 58,835
<PAGE>
HANNAFORD BROS. CO. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(continued)
Minimum payments for capital and operating leases have not been reduced by
minimum sublease rentals of $262,000 and $1,657,000, respectively, due in the
future under noncancellable subleases. They also do not include contingent
rentals that may be payable under certain leases.
Total rent expense, net of executory costs, was as follows:
(In thousands)
1993 1992 1991
Capital leases:
Contingent rentals $ 650 $ 727 $ 1,092
Operating leases:
Minimum rentals 12,409 13,114 13,159
Contingent rentals 435 470 618
Rentals from subleases (344) (140) (183)
12,500 13,444 13,594
$13,150 $14,171 $14,686
<PAGE>
HANNAFORD BROS. CO. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(continued)
4. SALE OF WELLBY SUPER DRUG STORES AND RESTRUCTURING CHARGES
In May 1992, the Company sold 34 of the 41 stores in its Wellby Super Drug
store chain. The net cash proceeds from the sale of this wholly-owned
subsidiary was $29,813,000. The sale resulted in a gain of $4,556,000. The
34 drug stores represented less than 5% of the total sales and other revenues
of the Company, and the divestiture did not have a material impact on 1992 net
earnings.
In July 1992, the Company offered special early retirement and voluntary
resignation programs to reduce expenses. The charges associated with these
programs were $4,012,000. These charges, when combined with the gain on the
sale of the Wellby Super Drug store chain, generated a net gain of $544,000.
This amount was included as a reduction of 1992 selling, general and
administrative expenses.
5. CAPITAL STOCK
In February 1993, the Board of Directors approved a stock repurchase program
authorizing the purchase of up to $55 million in shares of Hannaford common
stock. The program authorizes the Company to buy back shares from time to
time over the next three years in the open market and privately negotiated
transactions when special market opportunities arise.
In February 1992, the Board of Directors approved a two-for-one stock split,
effected in the form of a 100% common stock dividend payable March 10, 1992,
to shareholders of record at the close of business on February 24, 1992.
Accordingly, common share amounts, per share earnings and dividends, and
common stock and retained earnings for all years presented have been adjusted
to reflect this stock dividend.
In February 1988, an existing "standstill" agreement with certain shareholders
("the Sobey Parties") was amended and extended to December 31, 1992. This
agreement contains a provision for five one-year extensions provided that
neither party notifies the other at least five months in advance of a
scheduled termination date of its desire to terminate the agreement. Since
neither party gave such written notice, the term of the agreement has been
automatically extended to December 31, 1994. Pursuant to the terms of the
agreement, the Sobey Parties have agreed, among other things, not to increase
their percentage ownership of the Company's voting stock above 25.6%, except
in certain circumstances specified by the agreement. Under the agreement,
whenever the Company issues shares of voting stock to third parties, the Sobey
Parties generally have the right to purchase sufficient shares from the
<PAGE>
HANNAFORD BROS. CO. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(continued)
Company to maintain a 25.6% level of ownership. Since 1991 the Company has
issued to the Sobey Parties the following shares of common stock pursuant to
their purchase rights under the agreement: 1993, 126,803 shares; 1992,
150,906 shares; and 1991, 138,106 shares. All sales to the Sobey Parties
pursuant to the standstill agreement have been made at current market prices
(as defined in the agreement).
In February 1988, the Company declared a dividend of one preferred stock
purchase right (a "Right") for each outstanding share of common stock.
Pursuant to the Rights agreement each share of common stock issued subsequent
to the dividend declaration date will carry with it a Right. Each Right
entitles its holder to purchase, under certain circumstances, one
one-hundredth of a share of Series A Junior Participating Preferred Stock of
the Company at an exercise price of $125, subject to certain adjustments, or
under other circumstances, common stock or other securities and/or assets.
Such Rights are not currently exercisable and expire February 4, 1998. The
Rights become exercisable upon the occurrence of certain events and are
redeemable by the Company under certain circumstances, all as described in the
Rights agreement.
6. REDEEMABLE PREFERRED STOCK OF A SUBSIDIARY
In April 1988, the Company, through one of its wholly-owned subsidiaries,
issued 8,976 shares of a Series A Voting Preferred Stock of the subsidiary
with a par value of $100 per share and redeemable by the issuer or the holder
in whole or in part at its par value plus any accrued dividends. The
preferred stock paid cumulative dividends at the rate of 10%. The Company had
the option to redeem these shares beginning in April 1993, while the holder's
option commenced in June 1993. In April 1993, the Company redeemed these
shares at their par value of $100 per share, or a total of $898,000, in
exchange for 40,341 shares of the Company's common stock.
In December 1988, the Company, through one of its wholly-owned subsidiaries
issued 18,834 shares of a Series B Voting Preferred Stock of the subsidiary
with a par value of $100 per share and redeemable by the issuer in whole or in
part at $108 per share plus any accrued dividends. The preferred stock pays
cumulative dividends at the rate of 10%. The Company has the option to redeem
these shares beginning in January 1994. In addition, in the event of the
death of a holder, all or any part of said preferred stock may be redeemed by
the issuer or that holder's personal representative at the par value of $100
per share plus any accrued dividends. The Company expects to exercise its
option to redeem these shares in April 1994.
The Company has made all required dividend payments to the holders of the
redeemable preferred shares since the dates of issuance. Total dividends
accrued and paid on these shares were $220,000 in 1993 and $278,000 in both
1992 and 1991.
<PAGE>
HANNAFORD BROS. CO. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(continued)
7. PENSION PLANS
The majority all of the employees of the Company and its subsidiaries
participate in non-contributory, defined benefit pension plans. The plans
provide benefits based on the participants' years of service and compensation
in later years or stated amounts for each year of service. The Company only
funds amounts deductible for federal income tax purposes.
Net pension cost included the following components:
(In thousands)
1993 1992 1991
Service cost - benefits earned
during the year $ 3,197 $ 3,203 $ 2,997
Interest cost on projected
benefit obligation 3,993 3,472 2,979
Actual return on plan assets (5,229) (3,650) (7,305)
Net amortization and deferral 1,454 382 4,425
Net pension cost before special items 3,415 3,407 3,096
Sale of Wellby Super Drug stores - (517) -
Early retirement program - 1,304 -
Net pension cost $ 3,415 $ 4,194 $ 3,096<PAGE>
HANNAFORD BROS. CO. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(continued)
The following sets forth the funded status and amounts recognized in the
Company's consolidated balance sheets at January 1, 1994 and January 2, 1993:
(In thousands)
1993 1992
Actuarial present value of
benefit obligations:
Vested benefit obligation $43,387 $27,575
Accumulated benefit obligation $45,668 $35,746
Projected benefit obligation $65,863 $46,354
Plan assets, at fair value, consisting of
equities, fixed-income securities, real
estate and cash and cash equivalents 52,351 47,771
Plan assets less than (greater than)
projected benefit obligation 13,512 (1,417)
Unrecognized net asset
at transition 485 528
Unrecognized net (loss) gain (12,512) 3,579
Unrecognized prior service cost (2,353) (2,004)
(Prepaid) accrued pension cost $ (868) $ 686
The actuarial valuation was calculated using the Projected Unit Credit Cost
Method. The increase in the plans' liabilities is primarily due to a change
in actuarial assumptions.
Assumptions used in determining the funded status of the pension plans are as
follows:
1993 1992
Discount rate 7.5% 8.5%
Average rate of increase in compensation levels 4.5% 5.0%
Expected long-term rate of return on assets 8.5% 8.5%
The Company also administers certain defined contribution plans for eligible
employees and a supplemental executive retirement plan. The cost of these
plans was not significant.<PAGE>
HANNAFORD BROS. CO. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(continued)
8. EMPLOYEE STOCK PLANS
The 1985 and 1988 Incentive Stock Option Plans provide for granting officers
and other key employees options to purchase common stock at 100% of the market
price on the date of grant. Options for 50% of any grant are exercisable
after one year and the remainder after two years and may be exercised for cash
or by exchanging currently owned shares, or both. Options expire from seven
to ten years from the date of grant. Option activity for the fiscal years
ended January 1, 1994 and January 2, 1993, was as follows:
1993 1992
Shares Option Price Shares Option Price
Outstanding at
beginning of year 885,049 $ 9.22-$22.63 883,503 $ 5.82-$21.50
Granted 247,504 22.25 225,532 22.63
Exercised (115,423) 9.22- 22.63 (168,571) 5.82- 22.63
Canceled (30,410) 13.50- 22.63 (55,415) 10.59- 22.63
Outstanding at end
of year 986,720 10.59- 22.63 885,049 9.22- 22.63
Exercisable at end
of year 653,339 10.59- 22.63 587,276 9.22- 21.50
Available for future
grants 950,292 1,167,386
The 1982 Employee Stock Purchase Plan enables participating employees to
purchase common stock through payroll deduction of up to 5% of eligible
compensation. The Company pays interest on the accumulated withholdings.
These amounts may be used to purchase shares of company stock at the option
price (lesser of: (a) 85% of the fair market value at the date of grant or (b)
the greater of the market price at the close of business on the exercise date
or $10.00 per share). During 1993, employees purchased 73,153 shares, for
which $1,424,000 was paid to the Company. As of January 1, 1994, grants had
been exercised by employees for the purchase of 101,846 shares. As of
February 1994, $1,775,000 had been received by the Company upon issuance of
these shares. All shares issued under this Plan are from previously unissued
reserves. At January 1, 1994, 476,256 shares remain available for issuance
under the Plan.
<PAGE>
HANNAFORD BROS. CO. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(continued)
9. INCOME TAXES
Effective January 3, 1993, the Company changed its method of accounting for
income taxes from the deferred method to the liability method required by
STATEMENT OF FINANCIAL ACCOUNTING STANDARDS NO. 109 - ACCOUNTING FOR INCOME
TAXES (the Statement). The Statement requires a liability method be used in
accounting for income taxes. Under this method, deferred tax assets and
liabilities are determined based on differences between financial reporting
and tax bases of assets and liabilities and are measured using the enacted tax
rates and laws that will be in effect when the differences are expected to
reverse. Prior to the adoption of the Statement, income tax expense was
determined using the deferred method. Deferred tax expense was based on items
of income and expense reported in different years in the financial statements
and tax returns and were measured at the tax rate in effect in the year the
difference originated.
As permitted by the Statement, the Company has elected not to restate the
financial statements of any prior periods, the impact of which would not be
material. The cumulative effect of adopting the Statement for periods prior
to January 3, 1993 is $2.1 million or $.05 per share and is shown separately
in the Consolidated Statement of Earnings for 1993. The change did not impact
pretax income in 1993.
Significant components of the Company's deferred tax liabilities and assets as
of January 1, 1994 are as follows:
(In thousands)
Assets Liabilities
Depreciation and amortization $ - $31,877
Capital leases 4,350 -
Insurance reserves 9,918 -
Employee benefit plans 2,342 -
Other 1,328 1,894
17,938 33,771
Reclassification to net current/noncurrent (10,018) (10,018)
Amounts recorded in consolidated
balance sheet $ 7,920 $23,753
Net deferred income tax liability $15,833
The Company expects to realize the deferred tax assets in the ordinary course
of business operations in subsequent years, and, accordingly, has not
established a valuation reserve relative to these amounts.
<PAGE>
HANNAFORD BROS. CO. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(continued)
The components of the provision for income taxes are as follows:
(In thousands)
1993 1992 1991
Current
Federal $29,118 $27,848 $21,897
State 6,732 7,390 6,188
35,850 35,238 28,085
Deferred
Federal 842 (1,591) 1,056
State 886 (1,171) 145
1,728 (2,762) 1,201
Total income tax expense $37,578 $32,476 $29,286
The components of the provision for deferred income tax expense for 1992 and
1991 are as follows:
(In thousands)
1992 1991
Depreciation $ 931 $ 2,896
Insurance reserves (2,037) (2,251)
Other (1,656) 556
$(2,762) $ 1,201
<PAGE>
<TABLE>
<CAPTION>
HANNAFORD BROS. CO. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(continued)
The reconciliation of income tax computed at the U.S. Federal statutory tax rates to income tax expense
is:
(In thousands)
1993 1992 1991
Amount Percent Amount Percent Amount Percent
<S> <C> <C> <C> <C> <C> <C>
Tax at U.S. statutory rate $32,264 35.00% $27,768 34.00% $24,696 34.00%
State income taxes, net of federal
tax benefit 4,973 5.39 4,104 5.02 4,183 5.76
Other - net 341 .37 604 .74 407 .56
$37,578 40.76% $32,476 39.76% $29,286 40.32%
/TABLE
<PAGE>
HANNAFORD BROS. CO. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(continued)
10. RETIREE INSURANCE BENEFITS
The Company provides certain health care and life insurance benefits for
currently retired employees. Generally, qualified employees became eligible
for these benefits if they retired in accordance with the Company's
established retirement policy. The Company has reserved the right to modify
or terminate these plans. Subsequent to an early retirement program which was
completed in September 1992 (Note 4), the Company made several prospective
changes to its retiree insurance benefit plans. The major change was to
increase the cost-sharing of these plans for future retirees. Current
retirees were not materially affected by these changes.
Effective January 3, 1993, the Company adopted SFAS NO. 106 - EMPLOYERS'
ACCOUNTING FOR POSTRETIREMENT BENEFITS OTHER THAN PENSIONS (the Statement).
The Statement generally requires the Company to accrue the cost of retiree
health and other postretirement benefits during the working careers of active
employees. The Company elected the prospective transition approach and is
amortizing the transition obligation on a straight-line basis over a 20-year
period. The impact of this change on fiscal 1993 and the pro forma effect on
fiscal years 1992 and 1991 are not material.
The following sets forth the plan's unfunded status at January 1, 1994:
(In thousands)
Accumulated postretirement benefit obligation (APBO):
Retirees $ 9,098
Actives - eligible to retire 340
Actives - not eligible to retire 1,710
Total APBO 11,148
Plan assets at fair value 0
Accumulated postretirement benefit obligation in excess
of plan assets 11,148
Less: Unrecognized transition obligation 10,505
Accrued postretirement benefit liability $ 643
Net periodic postretirement benefit cost for 1993
included the following components:
Service Cost $ 117
Interest Cost 901
Amortization of transition obligation
over 20 years 553
Net periodic postretirement benefit cost $ 1,571
A 9% annual rate of increase in the per capita costs of covered health care
benefits was assumed for 1994, gradually decreasing to 5% by the year 2002.
<PAGE>
HANNAFORD BROS. CO. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(continued)
Increasing the assumed health care cost trends by one percentage point in each
year would increase the accumulated post retirement benefit obligation as of
January 1, 1994 by $1.0 million and increase the aggregate of the service cost
and interest cost components of net periodic postretirement benefit cost for
fiscal 1993 by $0.1 million. A discount rate of 7.5% was used to determine
the accumulated postretirement benefit obligation.
<PAGE>
<TABLE>
<CAPTION>
HANNAFORD BROS. CO. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(continued)
11. SELECTED QUARTERLY FINANCIAL DATA (UNAUDITED)
The following is a presentation of selected financial data for each of the four quarters of fiscal
years 1993, 1992 and 1991. During 1993, the Company adopted SFAS NO. 109 - ACCOUNTING FOR INCOME TAXES
(Note 9). The cumulative effect of this adjustment, which increased net earnings by $2,100,00, is reflected
in the first quarter of 1993. Fourth Quarter 1992 results are for 14 weeks of operations while all other
quarters presented are for 13 weeks. In addition, Fourth Quarter 1992 includes a LIFO credit of $1,865,000
(before income taxes) primarily due to a decrease in inventory levels and a change to management's estimated
inflation during the first three quarters of the year. All four quarters of 1991 are adjusted to reflect a
two-for-one stock split effected in the form of a 100% stock dividend issued on March 10, 1992.
(In thousands except per share amounts)
First Second Third Fourth
Quarter Quarter Quarter Quarter
1993
<S> <C> <C> <C> <C>
Sales and other revenues.......... $490,565 $517,974 $530,064 $516,286
Gross margin...................... 121,534 129,462 133,125 126,836
Net earnings...................... 11,869 14,486 16,000 14,350
Per common share............. $ .29 $ .35 $ .39 $ .35
Weighted average common shares
outstanding..................... 40,859 41,044 41,121 41,175
1992
Sales and other revenues.......... $486,769 $512,475 $526,438 $540,341
Gross margin...................... 121,281 126,813 131,606 134,168
Net earnings...................... 8,812 12,578 14,432 13,372
Per common share............. $ .22 $ .31 $ .35 $ .33
Weighted average common shares
outstanding..................... 40,275 40,473 40,602 40,715
1991
Sales and other revenues.......... $485,919 $492,293 $523,873 $505,875
Gross margin...................... 117,235 124,013 127,815 125,767
Net earnings...................... 8,095 11,968 12,574 10,713
Per common share............. $ .20 $ .30 $ .31 $ .27
Weighted average common shares
outstanding..................... 39,734 39,899 40,019 40,103
/TABLE
<PAGE>
ITEM 9: DISAGREEMENTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
None
Part III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
This item, except for certain information relating to Executive
Officers included in Part I, is incorporated by reference to the
Registrant's definitive proxy statement for the Annual Meeting of
Shareholders to be held on May 19, 1994.
ITEM 11. EXECUTIVE COMPENSATION
This item is incorporated by reference to the Registrant's definitive
proxy statement for the Annual Meeting of Shareholders to be held on
May 19, 1994.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
This item is incorporated by reference to the Registrant's definitive
proxy statement for the Annual Meeting of Shareholders to be held on
May 19, 1994.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
This item is incorporated by reference to the Registrant's definitive
proxy statement for the Annual Meeting of Shareholders to be held on
May 19, 1994.
<PAGE>
Part IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
The following documents are filed as a part of this report:
(a) 1., 2. Consolidated Financial Statements and Related
Schedules PAGES
Report of Independent Accountants............................. 24
Consolidated Balance Sheets - January 1, 1994 and
January 2, 1993.......................................... 25-26
Consolidated Statements of Earnings - Fiscal Years Ended,
January 1, 1994, January 2, 1993 and December 28, 1991... 27
Consolidated Statements of Changes in Shareholders'
Equity - Fiscal Years Ended, January 1, 1994,
January 2, 1993, and December 28, 1991................... 28
Consolidated Statements of Cash Flows
- Fiscal Years Ended, January 1, 1994,
January 2, 1993, and December 28, 1991................... 29-30
Notes to Consolidated Financial Statements.................... 31-49
Schedules to Consolidated Financial Statements:
Schedule V - Property, Plant and Equipment............... 58
Schedule VI - Accumulated Depreciation, Depletion,
and Amortization of Property, Plant and Equipment...... 59
Schedule IX - Short-Term Borrowings...................... 60
Schedules I, II, III, IV, VII, VIII, X, XI, XII, AND XIII are not included as
they are inapplicable, or the amounts involved are less than the minimum
required for preparation.
3. Exhibits Required by Item 601 of Regulation S-K
SEQUENTIAL
PAGE NUMBER
IN ORIGINAL 10-K
3.1 - Articles of Incorporation
Incorporated by reference to Exhibit 3.1 to the
Registrant's Annual Report on Form 10-K for the
fiscal year ended January 2, 1993 (SEC File
No. 1-7603).
3.2 - By-Laws of the Registrant 61-79
<PAGE>
PAGES
4.1 - Instruments Defining the Rights of Included in
Security Holders Exhibit 3
4.2 - There are incorporated herein by reference a (i) Rights
Agreement dated as of February 4, 1988 between the
Registrant and The First National Bank of Boston, as Rights
Agent, a copy of which was filed as Exhibit 2 to the
Registrant's Current Report on Form 8-K, dated February 16,
1988 (SEC File No. 1-7603) and (ii) an Appointment and
Amendment Agreement dated September 22, 1992 to said Rights
Agreement, substituting Continental Stock Transfer & Trust
Company as Rights Agent, a copy of which was filed as
Exhibit 4.3 to the Registrant's Annual Report on Form 10-K
for the fiscal year ended January 2, 1993 (SEC File No. 1-
7603).
10.1 - There are incorporated herein by reference (i) an Amended
and Restated Agreement, dated as of February 4, 1988, among
the Registrant and various Sobey Parties, a copy of which
was filed as Exhibit 1 to the Registrant's Current Report on
Form 8-K, dated February 16, 1988 (SEC File No. 1-7603) and
(ii) an Amendment Agreement dated as of January 1, 1992 to
said Agreement with the Sobey Parties, substituting certain
Sobeys Inc. employee benefit plans as parties thereto, a
copy of which was filed as Exhibit 10.2 to the Registrant's
Annual Report on Form 10-K for the fiscal year ended January
2, 1993 (SEC File No. 1-7603).
10.2 - There are incorporated herein by reference a Stock Purchase
Agreement, dated as of April 30, 1992, between the
Registrant and Rite Aid Corporation and (ii) an Amendment to
said Agreement, dated as of May 16, 1992, a copy of which
was filed as Exhibit 10.3 to the Registrant's Annual Report
on Form 10-K for the fiscal year ended January 2, 1993 (SEC
File No. 1-7603).
NOTE: Compensatory plans and arrangements and management contracts are
filed as Exhibits 10.3 through 10.26 below.
10.3 - There is incorporated herein by reference the amended and
restated Hannaford Bros. Co. Employees' Retirement Plan, a
copy of which was filed as Exhibit 10.4 to the Registrant's
Annual Report on Form 10-K for the fiscal year ended January
2, 1993 (SEC File No. 1-7603).
10.4 - First Amendment to the Hannaford Bros. Co. Employees' 80-83
Retirement Plan, effective on or before January 1, 1994.
10.5 - There is incorporated herein by reference the amended and
restated Supplemental Executive Retirement Plan, a copy of
<PAGE>
PAGES
which was filed as Exhibit 10.5 to the Registrant's Annual
Report on Form 10-K for the fiscal year ended January 2,
1993 (SEC File No. 1-7603).
10.6 - There are incorporated herein by reference (i) the
Registrant's 1982 Employee Stock Purchase Plan, a copy of
which was filed as Exhibit 4.2 to the Registrant's
Registration Statement on Form S-8 (Registration No.
2-77902); (ii) the First Amendment to said Plan, a copy of
which was filed as Exhibit 10.13 to the Registrant's Annual
Report on Form 10-K for the fiscal year ended December 31,
1988 (SEC File No. 1-7603); and (iii) the Second Amendment
to said Plan, a copy of which was filed as Exhibit 10.7 to
the Registrant's Annual Report on Form 10-K for the fiscal
year ended December 29, 1990 (SEC File No. 1-7603).
10.7 - There are incorporated herein by reference (i) the
Registrant's 1985 Incentive Stock Option Plan, a copy of
which was filed as Exhibit 4.3 to the Registrant's
Registration Statement on Form S-8 (Registration No.
2-98387); (ii) a First Amendment to said Plan, a copy of
which was filed as Exhibit 10.11 to the Registrant's Annual
Report on Form 10-K for the fiscal year ended January 2,
1988 (SEC File No. 1-7603); and (iii) a Second Amendment to
said Plan, a copy of which was filed as Exhibit 10.15 to the
Registrant's Annual Report on Form 10-K for the fiscal year
ended December 31, 1988 (SEC File No. 1-7603).
10.8 - The Registrant's 1993 Long Term Incentive Plan, effective 84-87
January 3, 1993.
10.9 - First Amendment to the Registrant's 1993 Long Term Incentive 88
Plan, effective January 2, 1994.
10.10 - There are incorporated herein by reference (i) the
Registrant's 1980 Long Term Incentive Plan, a copy of which
was filed as Exhibit 10B to the Registrant's Annual Report
on Form 10-K for the fiscal year ended January 3, 1981 (SEC
File No. 1-7603); (ii) an Amendment to said Plan, a copy of
which was filed as Exhibit 10.15 to the Registrant's Annual
Report on Form 10-K for the fiscal year ended January 3,
1987 (SEC File No. 1-7603); (iii) the Second Amendment to
said Plan, a copy of which was filed as Exhibit 10.13 to the
Registrant's Annual Report on Form 10-K for the fiscal year
ended January 2, 1988 (SEC File No. 1-7603); (iv) the Third
Amendment to said Plan, a copy of which was filed as Exhibit
10.14 to the Registrant's Annual Report on Form 10-K for the
fiscal year ended January 2, 1988 (SEC File No. 1-7603); (v)
the Fourth Amendment to said Plan, a copy of which was filed
as Exhibit 10.10 to the Registrant's Annual Report on Form
10-K for the fiscal year ended December 29, 1990 (SEC File
<PAGE>
PAGES
No. 1-7603); and (vi) the Fifth Amendment to said Plan, a
copy of which was filed as Exhibit 10.7 to the Registrant's
Annual Report on Form 10-K for the fiscal year ended
December 28, 1991 (SEC File No. 1-7603).
10.11 - There are incorporated herein by reference (i) the
Registrant's Annual Incentive Plan, a copy of which was
filed as Exhibit 10.19 to the Registrant's Annual Report on
Form 10-K for the fiscal year ended December 31, 1988 (SEC
File No. 1-7603) and (ii) a First Amendment to said Plan, a
copy of which was filed as Exhibit 10.12 to the Registrant's
Annual Report on Form 10-K for the fiscal year ended
December 29, 1990 (SEC File No. 1-7603).
10.12 - There are incorporated herein by reference (i) an Employment
Continuity Agreement between the Registrant and James L.
Moody, Jr., a copy of which was filed as Exhibit 10.13 to
the Registrant's Annual Report on Form 10-K for the fiscal
year ended December 29, 1990 (SEC File No. 1-7603) and (ii)
an Amendment to said Agreement, dated April 28, 1992, a copy
of which was filed as Exhibit 10.11 to the Registrant's
Annual Report on Form 10-K for the fiscal year ended January
2, 1993 (SEC File No. 1-7603).
10.13 - There are incorporated herein by reference (i) an Employment
Continuity Agreement between the Registrant and Hugh G.
Farrington, a copy of which was filed as Exhibit 10.14 to
the Registrant's Annual Report on Form 10-K for the fiscal
year ended December 29, 1990 (SEC File No. 1-7603) and (ii)
an Amendment to said Agreement, dated April 28, 1992, a copy
of which was filed as Exhibit 10.13 to the Registrant's
Annual Report on Form 10-K for the fiscal year ended January
2, 1993 (SEC File No. 1-7603).
10.14 - There are incorporated herein by reference (i) a standard
form of Employment Continuity Agreement between the
Registrant and various of its executive officers, a copy of
which was filed as Exhibit 10.15 to the Registrant's Annual
Report on Form 10-K for the fiscal year ended December 29,
1990 (SEC File No. 1-7603) and (ii) Amendment to Form of
said Agreement, dated April 28, 1992, a copy of which was
filed as Exhibit 10.13 to the Registrant's Annual Report on
Form 10-K for the fiscal year ended January 2, 1993 (SEC
File No. 1-7603).
10.15 - There is incorporated herein by reference a standard form
Deferred Compensation Agreement available to outside
directors of the Registrant, a copy of which was filed as
Exhibit 10.2 to the Registrant's Annual Report on Form 10-K
for the fiscal year ended December 29, 1984 (SEC File No.
1-7603).
<PAGE>
PAGES
10.16 - There is incorporated herein by reference the Amended and
Restated Savings and Investment Plan of the Registrant, a
copy of which was filed as Exhibit 10.17 to the Registrant's
Annual Report on Form 10-K for the fiscal year ended January
2, 1993 (SEC File No. 1-7603).
10.17 - There is incorporated herein by reference the Registrant's
Amended and Restated Deferred Compensation Plan available to
certain management employees of the Registrant, a copy of
which was filed as Exhibit 10.24 to the Registrant's Annual
Report on Form 10-K for the fiscal year ended January 2,
1988 (SEC File No. 1-7603).
10.18 - First Amendment to the Amended and Restated Deferred 89-90
Compensation Plan, adopted October 11, 1993.
10.19 - There is incorporated herein by reference a standard form of
Deferred Compensation Agreement available to certain
management employees pursuant to the Registrant's Amended
and Restated Deferred Compensation Plan, a copy of which was
filed as Exhibit 10.19 to the Registrant's Annual Report on
Form 10-K for the fiscal year ended January 2, 1993 (SEC
File No. 1-7603).
10.20 - There are incorporated herein by reference (i) the
Registrant's 1988 Stock Plan, a copy of which was filed as
Exhibit 4.3 to the Registrant's Registration Statement on
Form S-8 (Registration No. 33-22666); (ii) the First
Amendment to said Plan, a copy of which was filed as Exhibit
10.23 to the Registrant's Annual Report on Form 10-K for the
fiscal year ended December 29, 1990 (SEC File No. 1-7603);
and (iii) the Second Amendment to said Plan, a copy of which
was filed as Exhibit 10.18 to the Registrant's Annual Report
on Form 10-K for the fiscal year ended December 28, 1991
(SEC File No. 1-7603).
10.21 - Third Amendment to the Registrant's 1988 Stock Plan, 91
effective January 3, 1993.
10.22 - Fourth Amendment to the Registrant's 1988 Stock Plan, 92
effective January 1, 1994.
10.23 - There are incorporated herein by reference (i) a Retirement
Plan for Outside Directors of the Registrant, effective
December 30, 1990, a copy of which was filed as Exhibit
10.25 to the Registrant's Annual Report on Form 10-K for the
fiscal year ended December 29, 1990 (SEC File No. 1-7603) <PAGE>
PAGES
and (ii) the First Amendment to said Plan, a copy of which
was filed as Exhibit 10.21 to the Registrant's Annual Report
on Form 10-K for the fiscal year ended December 28, 1991
(SEC File No. 1-7603).
10.24 - There are incorporated herein by reference (i) an Agreement,
dated February 11, 1991, between the Registrant and James L.
Moody, Jr., a copy of which was filed as Exhibit 10.26 to
the Registrant's Annual Report on Form 10-K for the fiscal
year ended December 29, 1990 (SEC File No. 1-7603) and (ii)
an Amendment to said Agreement, dated May 14, 1992, a copy
of which was filed as Exhibit 10.24 to the Registrant's
Annual Report on Form 10-K for the fiscal year ended January
2, 1993.
10.25 - There is incorporated herein by reference a letter agreement
between the Registrant and Norman E. Brackett, dated
September 9, 1992, a copy of which was filed as Exhibit
10.25 to the Registrant's Annual Report on Form 10-K for the
fiscal year ended January 2, 1993.
10.26 - There is incorporated herein by reference a letter agreement
between the Registrant and Roger W. Hoyt, dated September 9,
1992, a copy of which was filed as Exhibit 10.26 to the
Registrant's Annual Report on Form 10-K for the fiscal year
ended January 2, 1993.
21 - Subsidiaries of the Registrant............................ 93
23 - Consents of Accountants................................... 94
(b) No reports on Form 8-K were filed during the last quarter of
the period covered by this report.<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 of the Securities Exchange Act
of 1934, the Registrant has duly caused this report to be signed on its behalf
by the undersigned, thereunto duly authorized.
HANNAFORD BROS. CO.
s/Norman E. Brackett
Norman E. Brackett
Sr. Vice President, Chief Financial
Officer
(Principal Financial Officer)
March 8, 1994
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the dates indicated.
s/James L. Moody, Jr. s/Laurel Cutler s/David F. Sobey
James L. Moody, Jr. Laurel Cutler David F. Sobey
Chairman of the Board Director Director
Director March 8, 1994 March 8, 1994
March 8, 1994
s/Walter J. Salmon s/William D. Ireland Jr.
s/Norman E. Brackett Walter J. Salmon William D. Ireland, Jr.
Norman E. Brackett Director Director
Sr. Vice President & March 8, 1994 March 8, 1994
Chief Financial Officer
(Principal Accounting Officer)
March 8, 1994
s/Richard K. Lochridge s/Claudine B. Malone
Richard K. Lochridge Claudine B. Malone
s/Hugh G. Farrington Director Director
Hugh G. Farrington March 8, 1994 March 8, 1994
President
Chief Executive Officer
Director
March 8, 1994 s/Robert D. Bolinder s/William A. Andres
Robert D. Bolinder William A. Andres
Director Director
s/Bruce G. Allbright March 8, 1994 March 8, 1994
Bruce G. Allbright
Director
March 8, 1994 s/James W. Gogan
James W. Gogan
Director
March 8, 1994
<PAGE>
<TABLE>
<CAPTION>
HANNAFORD BROS. CO. AND SUBSIDIARIES
Schedule V--Property, Plant and Equipment For
Fiscal Years 1993, 1992 and 1991
(In thousands)
Balance at Other Changes Balance at
Beginning Additions Additions Close
Classification of Period at Cost (a) Retirements (Deletions) of Period
<S> <C> <C> <C> <C> <C>
Fiscal Year 1993
Land and buildings $214,531 $ 14,964 $ 6,495 $ 8,593 (c) $231,593
Furniture and fixtures 233,081 32,350 13,583 626 (c) 252,474
Leasehold interests and
improvements 136,095 6,788 (111) 2,601 (c) 145,595
Construction in progress 11,793 16,789 - (11,793)(b) 16,789
$595,500 $ 70,891 $19,967 $ 27 $646,451
Fiscal Year 1992
Land and buildings $189,615 $ 18,803 $ 78 $ 6,191 (c) $214,531
Furniture and fixtures 214,509 33,320 14,580 (168)(c) 233,081
Leasehold interests and
improvements 128,463 9,369 7,994 6,257 (c) 136,095
Construction in progress 12,632 11,609 - (12,448)(b) 11,793
$545,219 $ 73,101 $22,652 $ (168) $595,500
Fiscal Year 1991
Land and buildings $172,833 $ 17,005 $ 518 $ 295 (c) $189,615
Furniture and fix 193,327 32,504 11,277 (45)(c) 214,509
Leasehold interests and
improvements 104,791 18,466 3,511 8,717 (c) 128,463
Construction in progress 9,803 13,145 - (10,316)(b) 12,632
$480,754 $ 81,120 $15,306 $ (1,349) $545,219
(a)Acquisition, in the normal course of business, of operating assets.
(b)Reclassification to other fixed asset accounts at net book value
(c)Reclassification from (to) other fixed asset and/or other asset accounts at net book value
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
HANNAFORD BROS. CO. AND SUBSIDIARIES
Schedule VI Accumulated Depreciation--Property, Plant and
Equipment For Fiscal Years 1993, 1992 and 1991
(In thousands)
Balance at Additions Other Changes Balance at
Beginning Charged to Additions Close
Classification of Period Costs and Expenses Retirements (Deletions) of Period
<S> <C> <C> <C> <C> <C>
Fiscal Year 1993
Land and buildings $ 30,664 $ 6,618 $ 877 $ (37) $ 36,368
Furniture and fixtures 122,974 32,577 11,899 - 143,652
Leasehold interests and
improvements 23,847 5,632 691 37 28,825
$177,485 $44,827 $13,467 $ 0 $208,845
Fiscal Year 1992
Land and buildings $ 24,710 $ 6,005 $ 42 $ (9) $ 30,664
Furniture and fixtures 100,580 31,481 9,088 - 122,973
Leasehold interests and
improvements 20,609 5,556 2,317 - 23,848
$145,899 $43,042 $11,447 $ (9) $177,485
Fiscal Year 1991
Land and buildings $ 19,555 $ 5,378 $ 286 $ 63 $ 24,710
Furniture and fixtures 79,930 29,021 8,354 (17) 100,580
Leasehold interests and
improvements 17,381 5,093 1,753 (112) 20,609
$116,866 $39,492 $10,393 $ (66) $145,899
</TABLE>
<PAGE>
HANNAFORD BROS. CO. AND SUBSIDIARIES
Schedule IX--Short-Term Borrowings
(Amounts in thousands)
Column A Column B Column C Column D Column E Column F
Daily
Maximum Average Daily
Category of Weighted Amount Amount Weighted
Aggregate Balance Average Outstanding Outstanding Average
Short-Term At End of Interest During The During The Interest
Borrowings Period Rate Period Period Rate
Fiscal Year 1993:
Banks $ -- -- $ 8,700 $ 66 6.0%
Fiscal Year 1992:
Banks $ -- -- $ 9,700 $ 88 6.4%
Fiscal Year 1991:
Banks $ -- -- $26,100 $5,137 7.7%
<PAGE>
Exhibit 3.2
BYLAWS
HANNAFORD BROS. CO.
ARTICLE I
NAME, LOCATION, CORPORATE SEAL
SECTION 1.1 NAME
The name of this corporation (hereinafter referred to as the Company) is
Hannaford Bros. Co.
SECTION 1.2 LOCATION
The principal office of the Company is at Scarborough in the County of
Cumberland, State of Maine, and the Company may have offices at such other
places as the Board of Directors may from time to time determine or as the
business of the Company may require.
SECTION 1.3 CORPORATE SEAL
The corporate seal of the Company shall have inscribed thereon the name
of the corporation, the year of its creation and the words: Corporate Seal,
Maine.
ARTICLE II
STOCK
SECTION 2.1 AUTHORIZED CAPITAL STOCK
The authorized capital stock of the Company, and the rights, preferences
and designations of each class or series of the capital stock, shall be as set
forth in the Articles of Incorporation, as the same may be from time to time
amended.
SECTION 2.2 CERTIFICATES OF STOCK
Every shareholder shall be entitled to a certificate, in such form as
the Board of Directors shall approve from time to time, certifying the number
and class of shares of stock of the Company owned by him. Each stock
certificate shall be signed in the name of the Company by any two of the
Chairman of the Board, the President, the Treasurer, the Secretary, an
Assistant Secretary or the Clerk. Signatures of such officers may be
facsimiles to the extent permitted by the Maine Business Corporation Act. In
case any officer whose signature or facsimile signature appears on a stock
certificate shall have ceased to hold such office before such certificate is
issued, it may be issued by the Company with the same effect as if he or she
were such officer at the date of its issue. Stock certificates shall bear
such legends, if any, as the Secretary or any Assistant Secretary shall
consider appropriate to reflect applicable restrictions on transfer or
ownership.
SECTION 2.3 TRANSFER OF STOCK
Transfers of stock shall be made only upon the transfer books of the
Company, kept at the office of the Company or of the respective transfer
agents designated to transfer the relevant class or series of stock. Before a
new certificate is issued, the old certificate shall be surrendered for
cancellation.
<PAGE>
SECTION 2.4 SHAREHOLDERS TO BE REGISTERED
Only those persons whose names are registered on the books of the
Company shall be entitled to be treated by the Company as the holders of the
stock outstanding in their respective names; and the Company shall not be
bound to recognize any equitable or other claim to or interest in any share on
the part of any other person, whether or not it shall have express or other
notice thereof, except as expressly provided by the laws of Maine.
SECTION 2.5 LOSS OR DESTRUCTION OF CERTIFICATE
In case of loss or destruction of any certificate of stock, another may
be issued in its place upon proof of such loss or destruction, and upon the
giving of a satisfactory bond of indemnity to the Company and/or to the
transfer agent (and to the registrar, if any) of such stock, in such sum as
the Company may reasonably require.
SECTION 2.6 DETERMINATION OF RECORD DATES; CLOSING OF TRANSFER
BOOKS
For the purpose of determining shareholders entitled to notice of or to
vote at any meeting of shareholders or any adjournment thereof, or entitled to
receive payment of a dividend or other distribution, or in order to make a
determination of shareholders for any other proper purpose, the Board of
Directors may fix in advance a record date for any such determination of
shareholders. Such date shall not in any case be more than 60 days prior to
the date on which the particular action, requiring such determination of
shareholders, is to be taken, and, in case of a shareholders' meeting, not
less than 10 days. If the Board does not fix a record date for a meeting of
shareholders, the day next preceding the date on which notice of the meeting
is first given to shareholders shall be deemed to be the record date for the
meeting. In lieu of fixing a record date, the Board of Directors may close
the stock transfer books in the manner contemplated by the Maine Business
Corporation Act.
SECTION 2.7 NONASSESSABLE SHARES
The capital stock of this Company when duly issued shall be fully paid
and non-assessable.
ARTICLE III
MEETINGS OF SHAREHOLDERS
SECTION 3.1 PLACE OF MEETINGS
All meetings of the stockholders of the Company shall be at the
principal office of the Company in the Town of Scarborough, County of
Cumberland, State of Maine, or at such other place within or without the State
of Maine as shall be determined by the Board of Directors.
SECTION 3.2 ANNUAL MEETING OF SHAREHOLDERS
The Board of Directors each year shall call an annual meeting of
shareholders for the election of Directors and the transaction of other proper
business. Such meeting shall be held at 9:30 a.m. on the second Monday in May
of each year, or at such other date and hour as the Board of Directors shall
determine.
SECTION 3.3 SPECIAL MEETINGS OF SHAREHOLDERS
Except as otherwise provided by statute, special meetings of
shareholders may be called only by the Board of Directors, the Chairman of the
Board, the President or the holders of more than 20 percent of the outstanding
shares entitled to vote for Directors.
<PAGE>
SECTION 3.4 NOTICE OF MEETINGS
Written notice of each annual or special meeting of shareholders shall
be delivered to each shareholder of record entitled to vote at such meeting.
Notice shall be given not less than 15 nor more than 60 days before the date
of the meeting. Such notice shall state the place, date and hour of the
meeting, and shall in each case state the items of business to be transacted
at the meeting. If mailed, such notice shall be deemed delivered when
deposited with postage prepaid in the United States mail, addressed to the
shareholder at his address as it appears on the stock transfer books of the
Company. Notice of an adjourned meeting need be given only if required by
statute.
SECTION 3.5 QUORUM
At each meeting of shareholders, the holders of a majority of the shares
entitled to vote thereat, present in person or by proxy, shall constitute a
quorum for the transaction of business. When a specified item of business is
required to be voted on separately by two or more classes of shareholders, a
majority of the shares held by each such class shall constitute a quorum for
the transaction of such item of business.
SECTION 3.6 CONDUCT OF MEETINGS
Each meeting of shareholders shall be presided over by the Chairman of
the Board or, in the Chairman's absence, the President or such other person as
the Board of Directors has designated to act as chairman of the meeting. The
Clerk, or such other person as the Board or the chairman of the meeting shall
designate, shall act as secretary of the meeting. The chairman of the meeting
shall determine the order of business at the meeting and shall have full
authority to set reasonable rules of procedure by which the meeting is to be
governed. Rulings of the chairman of the meeting on the order of business and
other procedural matters may be overturned only by the affirmative vote of
two-thirds of the shares present in person or by proxy at the meeting. The
chairman of the meeting shall have authority to rule out of order any item of
business to be voted upon (other than procedural votes incidental to the
conduct of the meeting) not previously identified in a notice duly and timely
given to shareholders in accordance with these Bylaws. The secretary of the
meeting shall keep a record of all actions taken by the shareholders at the
meeting. Minutes of the meeting shall thereafter be filed with the Clerk as
part of the corporate records.
SECTION 3.7 VOTING INSPECTORS
At or before each meeting of shareholders, the Chairman of the Board or
other chairman of the meeting shall appoint two individuals to act as voting
inspectors at the meeting. The inspectors shall determine the number of
shares outstanding and the voting power of each, the shares represented at the
meeting, the existence of a quorum and the authenticity, validity and effect
of proxies. The inspectors shall receive all written votes, hear and
determine all challenges and questions arising in connection with the right to
vote, count and tabulate all votes, determine the result and otherwise see
that the vote or election is conducted with fairness to all shareholders. In
case of disagreement between the inspectors on any question, the chairman of
the meeting shall determine the matter at issue.
SECTION 3.8 PROXIES
A shareholder may vote either in person or by a written proxy executed
by the shareholder or by his duly authorized attorney-in-fact. Proxies shall
not be given effect unless delivered to the Company in a timely manner.
<PAGE>
ARTICLE IV
DIRECTORS
SECTION 4.1 GENERAL POWERS
Except to the extent expressly reserved to the shareholders by statute,
the Articles of Incorporation or these Bylaws, the Board of Directors shall
have full authority to manage and direct the management of the business and
affairs of the Company.
SECTION 4.2 NUMBER
Within the limits fixed by the Articles of Incorporation, the number of
Directors constituting the Board of Directors may be changed from time to time
by resolution of the shareholders or the Board. Resolutions by the
shareholders or the Board to change the number of Directors shall require,
respectively, (i) the affirmative vote of at least two-thirds of the
outstanding shares entitled to vote for Directors or (ii) the affirmative vote
of at least two-thirds of the Directors then in office.
SECTION 4.3 ELECTION AND TERM
The Directors shall be divided into classes having the respective terms
set forth in the Articles of Incorporation. Each Director shall hold office
until the expiration of the term for which he or she is elected and until his
or her successor has been elected and qualified, or until his or her earlier
resignation, removal from office, death or incapacity.
SECTION 4.4 QUALIFICATIONS; NOMINATIONS
Directors must have attained the age of 21 years. No person shall stand
for election or reelection as a Director after attaining the age of seventy,
and the term of a Director who attains the age of seventy years shall
terminate at the annual meeting of shareholders following his or her 70th
birthday. Directors need not be shareholders. Nominations for the election
of Directors may be made by the Board of Directors or any duly authorized
committee of the Board. Subject to the procedures set forth below,
nominations for the election of Directors may also be made by shareholders.
Any shareholder wishing to propose one or more candidates for election
as a Director at the annual meeting of shareholders in a given year shall, not
earlier than January 1 nor later than February 28 of that year, provide
written notice of such intended nomination to the Secretary of the Company.
Such notice shall identify the proposed nominee or nominees and shall set
forth the same information regarding the shareholder and each nominee as would
be required to be set forth in a proxy statement under the proxy rules of the
Securities and Exchange Commission. Upon receipt of such notice, the
Secretary shall forward a copy thereof to the Board, which may consider
whether to endorse the proposed candidate(s). A shareholder who has satisfied
the foregoing notice requirements shall thereafter be entitled at the next
annual meeting of shareholders to place in nomination the nominee or nominees
so described, regardless of whether the Board has chosen to endorse the
proposed candidate(s). Nothing contained herein shall relieve any person from
obligations imposed under the proxy rules of the Securities and Exchange
Commission or shall obligate the Company to give notice of, or include in its
proxy statement a description of, an intended Director nomination by a
shareholder.
SECTION 4.5 VACANCIES
Vacancies in the Board of Directors, including those created by an
increase in the number of Directors or by removal, may be filled by a majority
of the Directors then in office, even if less than a quorum, or by a sole
remaining Director. Any Director elected to fill any vacancy shall be elected
for the unexpired term of his or her predecessor.
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SECTION 4.6 MEETINGS AND NOTICE
Following the annual meeting of shareholders, the Board of Directors
shall hold its annual meeting of Directors. No notice of such meeting shall
be required if held at the place of the annual meeting of shareholders. Other
regular meetings of the Board may be held without notice at such place, date
and hour as the Board may determine.
Special meetings of Directors may be called by the Chairman of the
Board, the President, any two Directors or such other persons as are
specifically permitted by statute to call special meetings of Directors.
Notice of the place, date and hour of each special meeting shall be given to
each Director at least two days prior to the meeting. Without limiting the
foregoing, notice addressed to a Director's place of residence or business, as
it appears in the Company's records, shall be deemed given when sent by
telegram, cable, facsimile transmission or equivalent means of communication;
on the next business day after being sent by overnight mail or delivery
service; or on the third business day after being deposited with postage
prepaid in the United States mail. Notice shall also be deemed given when
actually received in person or by telephone.
Except as otherwise expressly required by the Maine Business Corporation
Act, the Articles of Incorporation or these Bylaws, notices of meetings need
not describe the items of business to be transacted at the meeting. Notice of
any meeting of the Board need not be given to any Director who is present at
such meeting or who signs a written waiver of notice, either before or after
the meeting. Notice of adjournment of any meeting need not be given if the
time and place to which it is adjourned are fixed and announced at such
meeting. Notwithstanding any provision of these Bylaws, defects in the
calling or notice of a meeting of Directors shall be deemed waived to the
extent provided by statute.
SECTION 4.7 QUORUM; VOTING
At each meeting of the Board of Directors, a majority of the Directors
then in office shall constitute a quorum for the transaction of business.
Except as otherwise provided by statute, the Articles of Incorporation or
these Bylaws, the vote of a majority of the Directors present at the meeting
shall constitute the act of the Board of Directors.
SECTION 4.8 CONDUCT OF MEETINGS
The Chairman of the Board, or in the Chairman's absence such other
Director as the Board of Directors shall designate, shall preside at meetings
of Directors. At each such meeting the Secretary, or in the Secretary's
absence such other person as the chairman of the meeting shall designate,
shall keep minutes of all actions taken by the Directors. Such minutes shall
thereafter be filed with the Clerk as part of the corporate records.
SECTION 4.9 EXECUTIVE COMMITTEE; OTHER COMMITTEES
The Board of Directors may designate an executive committee, consisting
of not less than three nor more than seven members of the Board. Within the
limitations prescribed by law, the executive committee may, when the Board is
not in session, exercise all the powers and rights and be entitled to all of
the privileges and immunities of the Board.
The Board shall designate a human resources committee with duties
prescribed in Section 5.2 below and may from time to time designate other
committees from among its membership, and may delegate, within limitations
prescribed by law, general or specific duties exercisable by the Board.
SECTION 4.10 TELEPHONIC MEETINGS
Members of the Board of Directors or any committee thereof may
participate in a meeting of the Board of Directors or such committee by means
of a conference telephone or similar communications equipment by means of
which all persons participating in the meeting can hear each other.
Participation in a meeting pursuant to this Section 4.10 shall constitute
presence in person at such meeting.
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SECTION 4.11 CONSENT OF DIRECTORS
Any action required or permitted to be taken at a meeting of the Board
of Directors or of any committee thereof may be taken without a meeting if
written consents, setting forth the action taken, are signed (at any time
before or after the intended effective date of such action) by all members of
the Board or committee, as the case may be. Such consents shall be filed with
the Clerk as part of the corporate records.
SECTION 4.12 COMPENSATION OF DIRECTORS
Directors shall receive reasonable compensation for their services,
which compensation shall be from time to time determined by the Board of
Directors, and may be reimbursed for reasonable expenses actually incurred
while engaged in Company business.
ARTICLE V
OFFICERS
SECTION 5.1 ELECTION OR APPOINTMENT OF OFFICERS
The Board of Directors shall elect a Chairman of the Board, President,
Secretary, Treasurer and Clerk of the Company, and one or more Vice Presidents
of the Company, and the Board may elect such other officers as it from time to
time deems appropriate. The Board shall designate either the Chairman of the
Board or the President as the Chief Executive Officer of the Company, and may
designate which officers, if any, shall serve as Chief Operating Officer and
Chief Financial Officer. The Board may also elect such other officers, and
make such other designations, as it deems appropriate from time to time.
Any two or more offices may be held by the same person.
SECTION 5.2 COMPENSATION OF OFFICERS
Compensation of officers shall be determined by the Board of Directors,
except as the Board may otherwise direct by resolution or as may otherwise be
provided under any employee benefit plan approved by the Board or a duly
authorized committee of the Board. Recommendations regarding officer
compensation shall be submitted to the Board from time to time by a human
resources committee consisting of not less than three nor more than four
members of the Board who are not employees of the Company. The human
resources committee shall perform such other duties as shall be specified from
time to time by the Board.
SECTION 5.3 TERM OF OFFICE; REMOVAL; RESIGNATION
Officers other than the Clerk shall hold office until the next annual
meeting of Directors and until their successors are chosen and have qualified,
or until their earlier resignation or removal from office. The Clerk shall
hold office until his or her replacement or resignation in accordance with the
Maine Business Corporation Act.
All officers serve at the pleasure of the Board of Directors and may be
removed at any time by the Board, with or without cause. Removal from office,
however effected, shall not prejudice the contract rights, if any, of the
officer removed, nor shall election or appointment of an officer of itself
create contract rights.
Officers other than the Clerk may resign by giving written notice to the
Chief Executive Officer, Secretary or Clerk. Unless otherwise specified
therein, a resignation shall take effect upon receipt of such notice, and the
acceptance of such resignation shall not be necessary to make it effective.
SECTION 5.4 VACANCIES
A vacancy in any office, however occurring, shall be filled in the
manner prescribed by these Bylaws for regular election or appointment to such
office.
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SECTION 5.5 CHAIRMAN OF THE BOARD
The Board of Directors shall from time to time elect one of its members
as Chairman of the Board. The Chairman, when present, shall preside at all
meetings of the Board, and shall perform such duties as the Board may assign
to him or her from time to time. In the case of absence or disability of the
President, the Chairman shall perform the duties of the President unless the
Board, acting pursuant to Section 5.6 below, shall have designated another
officer to perform such duties.
SECTION 5.6 PRESIDENT
Subject to direction by the Board of Directors, and by the Chief
Executive Officer if the Chairman of the Board has been designated as Chief
Executive Officer, the President shall at all times exercise such general
authority, direction and supervision over all of the affairs of the Company as
its interest and security may require. In all cases where the duties of the
subordinate officers and agents of the Company are not specifically prescribed
by the Bylaws or by resolution of the Board, such subordinate officers and
agents shall perform their duties under the general direction of the
President. The President (or such other officer as may have been designated
as Chief Executive Officer) shall make an annual report to the shareholders of
the affairs of the Company.
In the case of absence or disability of the Chairman of the Board, the
President shall perform the duties of the Chairman.
Whenever the Company shall own stock of another corporation, the
President, the Treasurer or any Vice President (in that order), acting either
in person or by proxy, may, in the absence of specific action by the Board of
Directors, exercise in the name and on behalf of the Company all rights of
ownership thereof; but the Board may from time to time, either generally or in
any specific instance, delegate like authority to any one or more other
persons. The Board may instruct the President, Treasurer or other authorized
person as to the manner of exercise of such rights, but in the absence of such
instruction, such person shall exercise such rights in his or her discretion.
The Board may designate one or more officers who shall exercise the
powers and discharge the duties of the President in the case of his or her
absence or disability.
SECTION 5.7 VICE PRESIDENTS
The Vice Presidents shall perform such duties as may be assigned to them
from time to time by the President or by the Board of Directors.
SECTION 5.8 SECRETARY; ASSISTANT SECRETARIES
The Secretary shall attend meetings of the Board of Directors and record
its proceedings. He or she may give, or cause to be given, notice of all
meetings of shareholders and Directors of the Company. The Secretary may
certify all votes, resolutions and actions of the shareholders, the Board and
committees of the Board and may attest all documents executed on behalf of the
Company.
An Assistant Secretary may certify all votes, resolutions and actions of
the shareholders, the Board or committees of the Board, may attest all
documents executed on behalf of the Company and, at the direction of the
Secretary or the President or in the case of absence or disability of the
Secretary, may perform the other functions of the Secretary. The office of
Assistant Secretary shall be ministerial in nature, and the Assistant
Secretary, in his or her capacity as such, shall have no authority to engage
in any policymaking function on behalf of the Company, or to enter into
contracts or incur debts on behalf of the Company.
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SECTION 5.9 TREASURER; ASSISTANT TREASURER
The Treasurer shall have charge of, and be responsible for, all funds
and securities of the Company, shall maintain full and accurate accounts of
the Company's disbursements and receipts, shall report to the Board of
Directors from time to time on the financial condition of the Company and
shall otherwise exercise the powers and perform the duties incident to the
office of Treasurer. The Treasurer may certify or attest documents executed
on behalf of the Company.
In the case of absence or disability of the Treasurer, the Assistant
Treasurer (if any) shall have and exercise all of the powers and discharge all
of the duties of the Treasurer as hereinbefore described, except as the
President or the Board may otherwise direct.
SECTION 5.10 CLERK
As required by the Maine Business Corporation Act, the Company shall
have and continuously maintain a Clerk, who shall be a resident of the State.
The office of Clerk shall be ministerial in nature, and the Clerk, in his or
her capacity as such, shall have no authority to engage in any policymaking
function on behalf of the Company, or to enter into contracts or incur debts
on behalf of the Company. The Clerk shall maintain books containing the
records of all meetings of the shareholders, the Board of Directors and
committees of the Board, and shall perform such other duties as are expressly
prescribed by law. The Clerk may certify all votes, resolutions and actions
of the shareholders, the Board and committees of the Board, and may attest all
documents executed on behalf of the Company.
SECTION 5.11 FIDELITY BONDS
The Board of Directors may by resolution require any and all of the
officers of the Company to give bond to the Company assuring the faithful
performance of the duties of their respective offices in such sum or sums with
sufficient surety or sureties as the Board may require. The premium on such
bonds may be paid by the Company.
ARTICLE VI
INDEMNIFICATION OF DIRECTORS, OFFICERS, EMPLOYEES AND AGENTS
SECTION 6.1 INDEMNIFICATION OF DIRECTORS AND OFFICERS
To the maximum extent permitted by law, the Company shall indemnify any
current or former Director or officer who was or is a party or is threatened
to be made a party to any threatened, pending or completed action, suit or
proceeding, whether civil, criminal, administrative or investigative, by
reason of the fact that such person is or was a Director or officer of the
Company, or is or was serving at the request of the Company as a director,
officer, trustee, employee, partner, fiduciary or agent of another
corporation, partnership, joint venture, trust, pension or other employee
benefit plan or other enterprise, against expenses (including attorneys'
fees), judgments, fines and amounts paid in settlement actually and reasonably
incurred by him or her in connection with such action, suit or proceeding.
SECTION 6.2 INDEMNIFICATION OF OTHER EMPLOYEES AND AGENTS
(a) Within limitations prescribed by law and subject to paragraph (b)
of this Section 6.2, the Company may indemnify any other person who was or is
a party or is threatened to be made a party to any threatened, pending or
completed action, suit or proceeding, whether civil, criminal, administrative
or investigative, by reason of the fact that such person is or was an employee
or agent of the Company, or is or was serving at the request of the Company as
a director, officer, trustee, employee, partner, fiduciary or agent of another
corporation, partnership, joint venture, trust, pension or other employee
benefit plan or other enterprise, against expenses (including attorneys'
fees), judgments, fines and amounts paid in settlement actually and reasonably
incurred by him or her in connection with such action, suit or proceeding.
(b) Except to the extent that indemnification is otherwise ordered by a
court or required by Section 6.1 above, indemnification shall be made under
this Section 6.2 only as authorized in the specific case upon a determination
(made in accordance with Section 6.7(b) below) that indemnification of such
person is proper in the circumstances and in the best interests of the
Company.
<PAGE>
SECTION 6.3 INDEMNIFICATION NOT PERMITTED IN CERTAIN CASES
Notwithstanding Sections 6.1 and 6.2 above and except as a court may
otherwise permit or order, the Company shall not
indemnify any person with respect to any matter as to which such person shall
have been finally adjudicated not to have met the following standard of
conduct:
(1) That such person acted honestly and in the reasonable belief
that his or her action was in or not opposed to the best interests of
the Company or its shareholders or, in the case of a person serving as a
fiduciary of an employee benefit plan or trust, in or not opposed to the
best interests of that plan or trust or its participants or
beneficiaries; and
(2) With respect to any criminal action or proceeding, that such
person had no reasonable cause to believe that his or her conduct was
unlawful.
The termination of any action, suit or proceeding by judgment, order or
conviction adverse to such person, or by settlement or plea of nolo contendere
or its equivalent, shall not of itself create a presumption that such person
did not satisfy the foregoing standard of conduct. Satisfaction of the
foregoing standard of conduct shall not of itself make mandatory any
indemnification that is otherwise permitted but not required by this Article
VI.
SECTION 6.4 ADVANCE PAYMENT OF EXPENSES
(a) Expenses reasonably incurred by a Director or officer of the
Company in connection with any action, suit or proceeding referred to in
Section 6.1 above shall promptly be paid by the Company, even in advance of
the final disposition of that action, suit or proceeding.
(b) Expenses reasonably incurred by an employee or agent of the Company
in connection with any action, suit or proceeding referred to in Section 6.2
above may be paid by the Company, if so authorized by the Board of Directors,
in advance of the final disposition of that action, suit or proceeding;
provided, however, that expenses of an employee or agent may be paid under
this paragraph (b) only upon a determination (made in accordance with Section
6.7(b) below) that, based solely on the facts then known to those making the
determination and without further investigation, the person seeking
indemnification satisfied the standard of conduct set forth in Section 6.3
above. The Board, in its sole discretion, may impose such conditions as it
deems appropriate on any advance payment of expenses to an employee or agent
under this paragraph (b).
(c) Notwithstanding paragraphs (a) and (b) of this Section 6.4, no
advance payment of expenses shall be made thereunder unless the Company shall
be in receipt of:
(1) A written affirmation by the Director, officer, employee or
agent that such person has met the standard of conduct set forth in
Section 6.3 above; and
(2) A written undertaking by or on behalf of the Director,
officer, employee or agent to repay the advance if such person is
finally adjudicated not to be entitled to indemnification by the
Company, which undertaking shall be an unlimited general obligation of
the person seeking the advance but (except to the extent otherwise
provided by the Board of Directors pursuant to paragraph (b) of this
Section 6.4) need not be secured and may be accepted without reference
to financial ability to make the repayment.
(d) Notwithstanding paragraphs (b) and (c) of this Section 6.4, the
Chief Executive Officer may authorize the Company to pay up to $25,000 of
expenses incurred by a current or former employee or agent of the Company
(other than a Director or officer) in connection with any action, suit or
proceeding referred to in Section 6.2 above, even in advance of the final
disposition of that action, suit or proceeding. No advance payment of
expenses shall be made under this paragraph (d) unless the Company shall be in
receipt of a written affirmation by the employee or agent that he or she has
met the standard of conduct set forth in Section 6.3 above. The Chief
Executive Officer may impose such other conditions as that officer deems
appropriate on any advance payment of expenses under this paragraph (d),
including without limitation the requirement of a written undertaking by the
employee or agent to reimburse expenses incurred by the Company in the event
such person is finally adjudicated not to be entitled to indemnification by
the Company. The Chief Executive Officer shall from time to time submit to
the Board a report of payments authorized pursuant to this paragraph (d).
<PAGE>
SECTION 6.5 INDEMNIFICATION NOT EXCLUSIVE
The indemnification and entitlement to advances provided by this Article
VI shall not be deemed exclusive of any other rights to which those
indemnified may be entitled under any statute, Bylaw, agreement, vote of
shareholders or disinterested Directors or otherwise, both as to action in
such person's official capacity and as to action in another capacity while
holding such office, and shall continue as to a person who has ceased to be a
director, officer, employee, agent, trustee, partner or fiduciary and shall
inure to the benefit of the heirs, executors and administrators of such a
person.
SECTION 6.6 INSURANCE
The Company shall have power to purchase and maintain insurance on
behalf of any person who is or was a Director, officer, employee or agent of
the Company, or is or was serving at the request of the Company as director,
officer, trustee, employee, partner, fiduciary or agent of another
corporation, partnership, joint venture, trust, pension or other employee
benefit plan or other enterprise against any liability asserted against such
person and incurred by him or her in any such capacity, or arising out of his
or her status as such, whether or not the Company would have the power to
indemnify such person.
SECTION 6.7 GENERAL
(a) For purposes of this Article VI, references to the "Company" shall
include, in addition to the surviving corporation or new corporation, any
participating corporation in a consolidation or merger.
(b) The "determinations" referred to in Sections 6.2(b) and 6.4(b)
above shall be made (i) by the Board of Directors by a majority vote of a
quorum consisting of Directors who are not parties to that action, suit or
proceeding, (ii) if such a quorum is not obtainable (or even if obtainable, if
a quorum of disinterested Directors so directs) by independent legal counsel
in a written opinion or (iii) by the shareholders.
(c) Any decision of the Company made pursuant to the provisions of this
Article VI to indemnify any person or to advance expenses to any person shall
be irrevocable except to the extent that the implementation of such decision
by the Company would be unlawful.
(d) On any claim, issue or matter asserted by or in the right of the
Company as to which (i) indemnification would otherwise be required by Section
6.1 above, or the Board of Directors or the shareholders have authorized
indemnification pursuant to Section 6.2 above, (ii) the Director, officer,
employee or agent of the Company is finally adjudicated by a court to be
liable to the Company but has not been adjudicated to have violated the
standards set forth in Section 6.3 above and (iii) the Company's power to
indemnify such person is at issue before the court, the Company shall:
(1) Inform the court that it is the Company's policy (subject to
limitations prescribed by law and this Article VI) to provide
indemnification without regard to whether a claim, issue or matter is
asserted by or in the right of the Company; and
(2) Request the court to find that, in view of all the
circumstances of the case, such person is fairly and reasonably entitled
to indemnity.
(e) The Company may, without limitation, indemnify any current or
former director, officer, employee or agent of any subsidiary of the Company,
and may advance expenses to such person, to the same extent that the Company
may indemnify employees and agents of the Company, and advance expenses to
such persons, pursuant to Sections 6.2 and 6.4 above.
<PAGE>
ARTICLE VII
DIVIDENDS, HANDLING OF FUNDS, BORROWING, FISCAL YEAR
SECTION 7.1 DIVIDENDS
Dividends of cash, stock or other property may be declared by the Board
of Directors in their discretion from funds and/or accounts as may be lawfully
available therefor.
SECTION 7.2 DEPOSIT OF FUNDS
The moneys of the Company may be deposited in the name of the Company in
such depository institutions as the Board of Directors, or the Treasurer or
such officers as are authorized by the Board, shall determine.
SECTION 7.3 BORROWING MONEY
Within such maximum limits as may, but need not be, from time to time
prescribed by the Board of Directors, the Treasurer may from time to time
borrow funds as the needs of the Company dictate; and in so doing the
Treasurer may execute, in the name of the Company, evidence of indebtedness of
the Company, and may execute such supporting or collateral documents relating
thereto as may be appropriate.
SECTION 7.4 FISCAL YEAR
The fiscal year of the Company shall consist of a 52 week or 53 week
period which ends on the Saturday closest to the end of the calendar year.
ARTICLE VIII
BOOKS, ACCOUNTS AND RECORDS
SECTION 8.1 RETENTION AND LOCATION
The books, accounts and records of the Company, except as may otherwise
be required by the laws of the State of Maine, shall be kept at the principal
or registered office of the Company or at such other place or places as the
Board of Directors may from time to time designate.
SECTION 8.2 INSPECTION BY SHAREHOLDERS
No shareholder as such shall have any right to inspect any account or
book or document of the Company, except as such right may be conferred by law.
ARTICLE IX
GENERAL PROVISIONS
SECTION 9.1 FACSIMILE SIGNATURES
Facsimile signatures of any officer of the Company may be used whenever
authorized by the Board of Directors, the Chairman of the Board, the President
or any Vice President. The Company may rely upon the facsimile signature of
any person if delivered by or on behalf of such person in a manner evidencing
an intention to permit such reliance.
SECTION 9.2 AMENDMENT OF BYLAWS
Except as may otherwise be prescribed by statute or the Articles of
Incorporation, these Bylaws may be amended or repealed, and new Bylaws may be
adopted, by vote of the shareholders or the Board of Directors. For any
meeting at which Bylaws are to be adopted, amended or repealed, specific
notice of such proposed action shall be given, either setting out the text of
the proposed new Bylaw, amendment or Bylaw to be repealed, or summarizing the
changes to be effected by such adoption, amendment or repeal.
SECTION 9.3 INTERPRETATION
Headings and captions used herein are inserted for convenience only and
shall not be used to construe the scope or content of any provision. Whenever
used herein, the masculine gender shall include the feminine and neuter
genders, as the context requires. In the case of any conflict between the
provisions of the Articles of Incorporation and these Bylaws, the Articles
shall control. In the case of any ambiguity or other question concerning
interpretation of these Bylaws, the good faith interpretation of the Board of
Directors shall be binding on the Company and its shareholders.
Exhibit 10.4
FIRST AMENDMENT
TO THE
HANNAFORD BROS. CO. EMPLOYEES' RETIREMENT PLAN
The Hannaford Bros. Co. Employees' Retirement Plan (the "Plan") was last
amended and restated effective generally January 1, 1993. The Plan is hereby
further amended in the following respects:
1. The terms used in this Amendment shall have the meanings set forth
in the Plan unless the context indicates otherwise.
2. The first sentence of the second paragraph of Section 1.11 is
hereby amended to read as follows:
"Notwithstanding the preceding sentence to the contrary, for
benefits accruing in Plan Years beginning on or after January 1, 1989,
the annual Compensation of any Participant in excess of Two Hundred
Thousand Dollars ($200,000.00), or such higher amount as the Secretary
of the Treasury may prescribe, shall not be taken into account under the
Plan, and, for benefits accruing in Plan Years beginning on or after
January 1, 1994, the annual Compensation of any Participant in excess of
One Hundred Fifty Thousand Dollars ($150,000.00), or such higher amount
as the Secretary of the Treasury may prescribe, shall not be taken into
account under the Plan."
3. Section 2.01 is hereby amended to read as follows:
"2.01 DATE OF PARTICIPATION. Each Employee who is a Participant
on the Effective Date shall continue to participate in the Plan in
accordance with its terms. Each Employee who commenced employment with
an Employer on or before December 31, 1987, after attaining age sixty
(60) and who satisfied the minimum service requirements set forth in
Section 2.02 as of December 31, 1987, shall commence participation on
January 1, 1988, provided he or she is credited with at least one (1)
Hour of Service after December 31, 1987. Each other Employee who
satisfied the minimum age and service requirements specified in Section
2.02 on or before June 30, 1993, shall commence participation in the
Plan on the first day of the calendar month following the date on which
such Employee first satisfies such requirements unless such Employee
separates from service and does not return prior to such commencement
date. Each other Employee who satisfies the minimum age and service
requirements specified in Section 2.02 shall commence participation in
the Plan on the earlier of the first day of the Plan Year or the first
day of the seventh month of the Plan Year coinciding with or next
following the date on which such employee first satisfies such
requirements unless such employee separates from service and does not
return prior to such commencement date.
<PAGE>
An Employee who separates from service after satisfying the
requirements of Section 2.02, but before he or she commences
participation in the Plan shall commence participation in the Plan
immediately upon the later of his or her reemployment date, or his or
her participation commencement date before separating from service,
unless the number of his or her consecutive Breaks in Service after his
or her Reemployment Commencement Date equals or exceeds five (5), in
which even he or she shall be considered a new Employee."
4. Subsection (iii) of Section 9.01(a) is hereby amended to read as
follows:
"(iii) If such Participant is not survived by a spouse to whom he
or she has been legally married for a period of at least one (l) year,
his or her Beneficiary or surviving spouse, as the case may be, shall be
entitled to receive a death benefit in the amount equal to two percent
(2%) of such Participant's Average Annual Compensation determined as of
the date of his or her death, multiplied by the number of his or her
Years of Benefit Service determined as of such date, up to maximum of
twenty-five (25) years. Such death benefit shall be in the form of an
annuity, payable monthly for the life of the Beneficiary or surviving
spouse and, with the consent of such person, shall commence on the first
day of the month following the month in which the Participant dies;
unless such person elects in writing to be paid in a lump sum, in which
case such death benefit shall be paid in a lump sum as soon as
practicable following receipt by the Retirement Committee of such
written election."
5. The third paragraph of Section 25.01 is hereby amended to read as
follows:
"A surviving spouse who is entitled to receive a lump sum payment
from the Plan by reason of the Participant's death may elect to have
such payment (or a portion thereof not less than $500.00) made directly
to an individual retirement account described in Section 408(a) of the
Code or an individual retirement annuity described in Section 408(b) of
the Code. A surviving spouse who is the Participant's beneficiary under
a Five Year Certain and Life Annuity and who is entitled to receive
payments under such annuity by reason of the Participant's death may
elect as hereinafter provided to have such payments (or a portion
thereof not less than $500.00) may directly to an individual retirement
account described in Section 408(a) of the Code or an individual
retirement annuity described in Section 408(b) of the Code, provided the
aggregate amount of such payments for the calendar year will be at least
$200.00."
6. Section 25.02 is hereby amended to read as follows:
"25.02 NOTICE. No earlier than ninety (90) days and no later than
thirty (30) days before a lump sum payment is to be made under the Plan,
or before payments commence to a surviving spouse under a Five Year
Certain and Life Annuity, the Retirement Committee shall provide the
Participant, alternate payee, or surviving spouse, as the case may be,
with a written explanation of -
(a) the rules under which he or she may elect a payment pursuant
to this Article ("direct rollover");
(b) the legal requirement that federal income tax be withheld
from the payment if he or she does not elect a direct
rollover;
(c) the rules under which the amount that he or she actually
receives will not be subject to federal income tax if such
amount is transferred ("rolled over") within sixty (60) days
after being received pursuant to Section 402(c) of the Code;
<PAGE>
(d) the rules, if applicable, for receiving special income tax
averaging, or capital gain treatment, under Section 402(d)
of the Code; and
(e) the Plan provisions under which a direct rollover election
by a surviving spouse with respect to one payment in a
series of periodic payments under a Five Year Certain and
Life Annuity will apply to all subsequent payments until
such election is changed.
Such written explanation shall be provided annually to a surviving
spouse receiving benefits under a Five Year Certain and Life Annuity.
If the time requirements in this paragraph would require that written
explanation be given prior to January 1, 1993, such requirements shall
not apply, and the Retirement Committee shall provide the written
explanation within a reasonable period of time before payment is to be
made.
Notwithstanding the foregoing to the contrary, if an individual,
after receiving the written explanation required by this Section,
affirmatively elects to make or not make a direct rollover, an eligible
rollover distribution may be made less than thirty (30) days after the
date such written explanation was given, provided the Retirement
Committee has informed such individual, in writing, of his or her right
to a period of at least thirty (30) days to make such election."
7. Section 25.03 is hereby amended by adding the following new
paragraph at the end thereof:
"An election by a surviving spouse to make a direct rollover with
respect to one payment in a series of periodic payments under a Five
Year Certain and Life Annuity shall apply to all subsequent payments in
the series until such election is changed; such change with respect to
subsequent payments may be made at any time."
8. Article XXVI is hereby amended by adding the following new Section
at the end thereof:
"26.16 DIRECTED PAYMENTS. Effective January 1, 1994, a former
Participant, surviving spouse or Beneficiary who is entitled to receive
monthly benefit payments from the Plan and who is a participant in the
Hannaford Bros. Co. Retiree Medical Plan ("Retiree Medical Plan") may
direct the Trustee to deduct such portion of each monthly benefit
payment as is necessary to satisfy his or her required monthly
contribution under the Retiree Medical Plan and to remit such amount to
the Hannaford Bros. Co. Tax Exempt Employee Benefits Trust ("Tax Exempt
Trust"). Such direction shall be made on such form and in such manner
as the Retirement Committee may prescribe and shall be effective as of
the first monthly benefit payment following receipt by the Retirement
Committee, provided it is received at least fifteen (15) days in advance
of such payment.
Notwithstanding the foregoing to the contrary, a "party in
interest" (as defined in Section 3(14) of ERISA) shall not be permitted
to direct payments pursuant to this Section.
A direction pursuant to this Section may be revoked, in writing,
by the former Participant, surviving spouse or Beneficiary, as the case
may be, at any time, and shall be effective as soon as practicable
following receipt by the Retirement Committee.
<PAGE>
The Retirement Committee may terminate the availability of this
direct payment provision upon thirty (30) days' prior written notice to
the Trustee and each affected former Participant, surviving spouse and
Beneficiary.
The Retirement Committee shall maintain records sufficient to
demonstrate that no payments have been made to the Tax Exempt Trust
pursuant to this Section before the monthly benefit payment would have
been otherwise made to the former Participant, surviving spouse or
Beneficiary, as the case may be, and that no expense has been incurred
by the Plan as a result of this Section."
9. This Amendment shall be effective, generally, as of January 1,
1993, provided, however, that part 3 shall be effective as of July 1, 1993,
and parts 2 and 8 shall be effective as of January 1, 1994.
Exhibit 10.8
HANNAFORD BROS. CO.
1993 LONG TERM INCENTIVE PLAN
(effective January 3, 1993)
1. PURPOSE. The purpose of this Plan is to provide additional
compensation as an incentive to selected key employees upon whose efforts the
continued successful and profitable operations of Hannaford Bros. Co. are
largely dependent, and to ensure the continued availability of the services of
selected key employees to Hannaford Bros. Co.
2. DEFINITIONS. As used in this Plan, unless the context clearly
indicates otherwise:
(a) "Actual Award" means the amount payable to a Participant
pursuant to Section 5.
(b) "Award Period" means a period of at least 3 fiscal years, as
designated by the Compensation Committee.
(c) "Basic Award" means the percentage of a Participant's
Compensation, not exceeding 25 percent, determined by the Compensation
Committee pursuant to Section 3.
(d) "Board" means the Board of Directors of Hannaford Bros. Co.;
provided, however, that in all instances in which the Board exercises any
discretion under the Plan with respect to the amount of an Actual Award,
"Board" means only those members of the Board of Directors of Hannaford
Bros. Co. who have not been employees of the Corporation or one of its
Subsidiaries.
(e) "Compensation" means the aggregate base salary and annual
incentive compensation payable by the Corporation to a Participant during
an Award Period (or during the portion of an Award Period for which he or
she is a Participant), without regard to any deferral of such amounts.
(f) "Compensation Committee" means the Compensation Committee of the
Corporation.
(g) "Corporation" means Hannaford Bros. Co.
(h) "Earnings Per Share" means earnings per share as reported in the
Consolidated Statement of Earnings in the Corporation's Annual Report,
but before any extraordinary items that the Board, in its sole
discretion, disregards for purposes of the Plan.
(i) "Participant" means an employee of the Corporation or one of its
Subsidiaries to whom a Basic Award has been made under the Plan.
(j) "Performance Goal" means a growth objective established by the
Compensation Committee pursuant to Section 4.<PAGE>
<PAGE>
(k) "Plan" means the Hannaford Bros. Co. 1993 Long Term Incentive
Plan, as it may be amended from time to time.
(l) "Subsidiary" means a corporation of which Hannaford owns
directly or indirectly at least 50 percent of the total combined voting
power of all classes of stock entitled to vote.
3. PARTICIPATION. The Compensation Committee shall: (a) designate
which, if any, employees of the Corporation or a Subsidiary shall be
Participants for an Award Period; (b) determine the duration of such Award
Period; and (c) award a Basic Award for each such Participant. The
Compensation Committee may designate that a newly hired or newly promoted
employee of the Corporation or a Subsidiary shall be a Participant for an
Award Period that commenced prior to the date of such designation.
4. PERFORMANCE GOALS. The Compensation Committee shall establish both a
low and a high Performance Goal for each Award Period. The Performance Goals
for any Award Period need not be the same with respect to all Participants.
The Performance Goals for an Award Period shall be expressed in terms of
cumulative Earnings Per Share, stock price, a combination thereof or a similar
quantifiable measure. The low Performance Goal ("Low Goal") shall represent,
in the sole judgment of the Compensation Committee, at least minimally
acceptable performance. The high Performance Goal ("High Goal") shall
represent, in the sole judgment of the Compensation Committee, a challenging
but attainable goal.
5. ACTUAL AWARDS. The amount of the Actual Award, if any, that is
earned by a Participant during an Award Period shall be determined initially
by multiplying the Basic Award by a fraction, the numerator of which is the
amount by which the Corporation's actual performance exceeds the Low Goal, and
the denominator of which is the amount by which the High Goal exceeds the Low
Goal:
A=B x [(P-L)/(H-L)]
where: A=Actual Award
B=Basic Award
P=Performance
L=Low Goal
H=High Goal
The Compensation Committee shall have the right to adjust any one or more
of these factors if it finds such adjustment necessary to provide fair and
equitable treatment of the interests of both the Participants and the
Corporation's shareholders.
The Board shall have the right to adjust the Actual Award of any
Participant, either increasing or decreasing the same, if in its sole judgment
the Actual Award is inconsistent with the Participant's performance during the
relevant Award Period, measured individually or as a member of a group. In
exercising this discretion, the Board may rely on reports or other information
furnished to it, either directly or through the Compensation Committee, by the
Chief Executive Officer of the Corporation.<PAGE>
<PAGE>
6. PAYMENT OF ACTUAL AWARDS. The Actual Award earned by a Participant
shall be paid after the close of the final fiscal year of the relevant Award
Period. The Actual Award may, at the sole option of the Compensation
Committee, be paid in cash, common stock of the Corporation at fair market
value at the time of payment, or any combination of cash and common stock;
provided, however, that to the extent that a Participant's Actual Award
exceeds his or her Basic Award, such excess shall be paid in cash.
Prior to the payment of any Actual Award, the Board shall review the
aggregate amount of all such Awards then payable to determine whether the
consolidated earnings and return on assets of the Corporation are adequate to
justify such payments. If in its sole judgment the Board determines that such
earnings or return are inadequate, it shall have the right to disallow, in
whole or in part, any Award, and the Corporation shall not have any obligation
to any Participant for any portion of an Award so disallowed.
7. TERMINATION OF EMPLOYMENT. If a Participant terminates employment
with the Corporation and its Subsidiaries during an Award Period because he or
she retires under the Hannaford Bros. Co. Employees' Retirement Plan, becomes
disabled or dies, such Participant shall be entitled to an Actual Award based
on his or her Compensation during the portion of the Award Period that he or
she was actively employed. Any Actual Awards payable to a deceased
Participant shall be paid to his or her estate.
Upon a Participant's termination of employment for any reason other than
retirement or disability, the dates on which the Participant's Basic Awards
become Actual Awards under the Plan shall be accelerated to the last day of
the fiscal year in which the termination occurs. For purposes of calculating
the Participant's Actual Award for any Award Period curtailed by reason of
such acceleration, the Compensation Committee shall reestablish the High and
Low Performance Goals to reflect only the number of years in the curtailed
Award Period.
If a Participant's employment terminates during an Award Period for any
reason other than retirement, disability, or death, the Participant shall
forfeit any Actual Award otherwise payable, unless the Compensation Committee
determines that such Award shall be paid, in whole or in part, in accordance
with this Section.
8. ADMINISTRATION. This Plan shall be administered by the Compensation
Committee. The Compensation Committee shall have sole and complete discretion
with respect to the exercise of all permissive powers and authority granted to
the Committee by this Plan, and shall have sole and complete authority to
construe and interpret the Plan. All actions, determinations, and decisions
of the Compensation Committee shall be final, conclusive, and binding on all
parties, unless otherwise determined by the Board.
9. GOVERNING LAW. This Plan shall be governed and construed in
accordance with the laws of the State of Maine.
10. AMENDMENT OR TERMINATION OF PLAN. The Board may amend or terminate
this Plan at any time, provided, however, that no such action shall affect the
rights of a Participant with respect to any Award to which the Participant
became entitled prior to the effective date of such action.
<PAGE>
11. ACCELERATION OF AWARDS UPON CHANGE IN CONTROL. Upon the occurrence
of a Change in Control Event, the dates on which Basic Awards become Actual
Awards under the Plan shall be accelerated to the date of such Event. For
purposes of calculating Actual Awards for any curtailed Award Period, the
Compensation Committee shall reestablish the High and Low Performance Goals to
reflect only the number of years and full calendar months in the curtailed
Award Period.
Payment of an Actual Award determined pursuant to this Section shall be
made in a lump sum cash payment on or before the earlier of the following
dates: (i) 90 days after the Participant's employment with the Corporation
terminates; or (ii) 90 days after the close of the final fiscal year of the
relevant Award Period, without regard to any curtailment pursuant to this
Section.
If any acceleration or payment pursuant to this Section is, in the sole
judgment of the Compensation Committee as constituted prior to the occurrence
of the Change in Control Event, unnecessary to protect Participants' rights
under the Plan, the Committee may make such other adjustments (or make no
adjustments) as it deems appropriate to protect Participants' rights, in lieu
of the protections provided in this Section.
The term "Change in Control Event" shall have the meaning given such term
in the Hannaford Bros. Co. Supplemental Executive Retirement Plan.
12. NONALIENATION OF BENEFITS. Awards under this Plan shall not be
subject to alienation, assignment, garnishment, attachment or levy of any
kind, and any attempt to cause an award to be so subjected shall not be
recognized.
13. EFFECTIVE DATE. This Plan shall be effective January 3, 1993.
14. TRANSITION RULES. If in any fiscal year a Participant is entitled to
payment of an Actual Award under this Plan and payment of an actual award
under the Company's 1980 Long Term Incentive Plan ("Prior Plan"), the amount
payable under this Plan for such year shall be reduced by the amount paid
under the Prior Plan for such year.
The Compensation Committee may designate that a newly hired or newly
promoted employee of the Corporation or a Subsidiary shall be a Participant
for an award period that commenced under the Prior Plan after 1988 and prior
to the effective date of this Plan. In such event, the Participant's Actual
Award shall be determined based on the low and high performance goals
established by the Compensation Committee under the Prior Plan for such award
period.
Exhibit 10.9
FIRST AMENDMENT
TO THE
HANNAFORD BROS. CO. 1993 LONG TERM INCENTIVE PLAN
The Hannaford Bros. Co. 1993 Long Term Incentive Plan (the "Plan") was
adopted by the Board of Directors, subject to shareholder approval, February
9, 1993, and approved by shareholders on May 19, 1993. The Plan is hereby
amended in the following respects.
1. The terms used in this Amendment shall have the meanings set forth
in the Plan unless the context indicates otherwise.
2. Section 10 is hereby amended to read:
"10. AMENDMENT OR TERMINATION OF PLAN. The Compensation Committee
may amend or terminate this Plan at any time; provided, however, that no
such action shall affect the rights of a Participant with respect to any
Award to which the Participant became entitled prior to the effective
date of such action."
3. This Amendment shall be effective January 2, 1994.
Exhibit 10.18
FIRST AMENDMENT
TO THE
HANNAFORD BROS. CO. DEFERRED COMPENSATION PLAN
The Hannaford Bros. Co. Deferred Compensation Plan (the "Plan") was
amended and restated February 4, 1988. The Plan is hereby further amended in
the following respects:
1. The terms used in this Amendment shall have the meanings set forth in
the
Plan unless the context indicates otherwise.
2. Subsection (b) of Section 2 is hereby amended to read as follows:
"(b) `Committee' shall mean the Retirement Committee appointed by
the Board in accordance with Section 19.01 of the Hannaford Bros. Co.
Employees' Retirement Plan."
3. Section 6 is hereby amended by adding the following sentence at the
end thereof.
"The Committee shall administer the Plan in accordance with its terms and
shall have complete discretionary authority and all powers necessary to
carry out its terms, including, but not limited to, the following:
(i) to determine all questions concerning the eligibility of
Employees to receive benefits under the Plan and to notify Employees
of the availability and terms of the Plan.
(ii) to furnish Employees with the information necessary to make
deferral elections.
(iii) to determine the manner in which deferral elections shall be
made in accordance with Section 3(a).
(iv) to interpret the provisions of the Plan and to make rules
and regulations for the administration of the Plan.
(v) to employ or retain counsel, accountants, actuaries or such
other persons as may be required to assist in administering the Plan.
(vi) to act as agent for service of legal process."
4. Section 7 is hereby amended to read as follows:
"7. CLAIMS PROCEDURE. An Employee or other person entitled to
payments under the Plan may make a claim for payments by filing a written
request with the Committee. If a claim is wholly or partially denied,
the Committee shall furnish the claimant with a written notice setting
forth in a manner calculated to be understood by the claimant:
(a) the specific reason or reasons for the denial;
(b) the specific reference to pertinent Plan provisions on which
the denial is based;
<PAGE>
(c) a description of any additional material or information
necessary for the claimant to perfect his or her claim and an
explanation why such material or information is necessary; and
(d) appropriate information as to the steps to be taken if the
claimant wishes to submit his or her claim for review.
Such notice shall be furnished to the claimant within ninety (90) days
after receipt of his or her claim, unless special circumstances require an
extension of time for processing such claim. If an extension of time for
processing is required, the Committee shall, prior to the termination of
the initial ninety (90) day period, furnish the claimant with written
notice indicating the special circumstances requiring an extension and
the date by which the Committee expects to render its decision. In no
event shall an extension exceed a period of ninety (90) days from the end
of the initial ninety (90) day period.
A claimant may request the Committee to review a denied claim. Such
request shall be in writing and must be delivered to the Committee within
sixty (60) days after receipt by the claimant of written notification of
denial of the claim. A claimant or his or her duly authorized
representative may review pertinent documents and submit issues and
comments in writing.
The Committee shall notify the claimant of its decision on review not
later than sixty (60) days after receipt of a request for review, unless
special circumstances require an extension of time for processing, in
which case a decision shall be rendered as soon as possible, but not
later than one hundred twenty (120) days after receipt of a request for
review. If an extension of time for review is required because of
special circumstances, written notice of the extension must be furnished
to the claimant prior to the commencement of the extension. The
Committee's decision on review shall be in writing and shall include
specific reasons for the decision, as well as specific references to the
pertinent Plan provisions on which the decision is based."
5. This Amendment shall be effective November 30, 1992.
Exhibit 10.21
THIRD AMENDMENT
TO THE
HANNAFORD BROS. CO. 1988 STOCK PLAN
The Hannaford Bros. Co. 1988 Stock Plan (the "Plan") was adopted by the
Board of Directors, subject to shareholder approval, February 4, 1988, and
approved by shareholders on May 25, 1988. The Plan was last amended effective
January 1, 1991. The Plan is hereby amended in the following respects.
1. The terms used in this Amendment shall have the meanings set forth
in the Plan unless the context indicates otherwise.
2. Subsections (f) and (g) of Section 7 are hereby amended to read:
"(f) TERMINATION OF EMPLOYMENT. In the event an Optionee ceases to
be employed by the Corporation or any Subsidiary, and is no longer
employed by any of them, for any reason other than death or Disability,
such Optionee may exercise an Option at any time prior to the expiration
date of such Option (or, in the case of an Incentive Stock Option, within
three (3) months after the date the Optionee's employment ceases,
whichever is earlier), but only to the extent the Optionee had the right
to exercise such Option at the date his or her employment ceased.
(g) DISABLED OPTIONEE. In the event an Optionee who is disabled
ceases to be employed by the Corporation or any Subsidiary by reason of
such Disability, and is no longer employed by any of them, such Optionee
may exercise an Option at any time prior to the expiration date of such
Option (or, in the case of an Incentive Stock Option, within one (1) year
after the date such Optionee's employment ceases, whichever is earlier),
but only to the extent the Optionee had the right to exercise such Option
at the date his or her employment ceased."
3. This Amendment shall be effective January 1, 1993.
Exhibit 10.22
FOURTH AMENDMENT
TO THE
HANNAFORD BROS. CO. 1988 STOCK PLAN
The Hannaford Bros. Co. 1988 Stock Plan (the "Plan") was adopted by the
Board of Directors, subject to shareholder approval, February 4, 1988, and
approved by shareholders on May 25, 1988. The Plan was last amended effective
January 1, 1993. The Plan is hereby amended in the following respects.
1. The terms used in this Amendment shall have the meanings set forth
in the Plan unless the context indicates otherwise.
2. Section 12 is hereby amended to read as follows:
"12. AMENDMENT AND TERMINATION.
(a) AMENDMENT. The Committee, without further approval of
the shareholders of the Corporation, may amend the Plan from time to
time in such respects as the Committee may deem advisable, provided
that no amendment shall become effective prior to approval of the
shareholders of the Corporation if such amendment:
(i) increases the maximum number of shares for which
Awards may be granted; or
(ii) modifies the class of employees eligible to
participate in the Plan.
(b) TERMINATION. The Committee, without further approval of
the shareholders of the Corporation, may at anytime terminate the
Plan.
(c) EFFECT OF AMENDMENT OR TERMINATION. Any such amendment
or termination of the Plan shall not affect Awards already granted
and such Awards shall remain in full force and effect as if the Plan
had not been amended or terminated."
3. This Amendment shall be effective January 1, 1994.
Exhibit 21
Hannaford Bros. Co. Parents and Subsidiaries
Percentage
State of Voting
of Securities
Registrant Incorporation Owned
Hannaford Bros. Co. Maine
Subsidiaries (1)
Analytical Services, Inc. Maine 100.00%(2)
Commercial Developers, Inc. Maine 100.00%(2)
Cottle's Shop 'n Save, Inc. Maine 100.00%(2)
Gay's Super Markets,Inc. Maine 100.00%(3)
South Paris Shop N' Save, Inc. Maine 100.00%(3)
Eagle Pharmacy Services Maine 100.00%(3)
Hanbro Inc. Maine 100.00%(2)
Hannaford Properties, Inc. Maine 100.00%(2)
Hannaford Trucking Company Maine 100.00%(2)
HKS Development, Inc. Delaware 100.00%(2)
Martin's Foods of South Burlington, Inc. Vermont 100.00%(2)
MB-Elm, Inc. Maine 100.00%(2)
MB-Fir, Inc. Maine 100.00%(2)
MB-Hemlock, Inc. Maine 100.00%(2)
MB-Maple, Inc. Maine 100.00%(2)
MB-Mass, Inc. Maine 100.00%(2)
MB-New York, Inc. Maine 100.00%(2)
MB-Pine, Inc. Maine 100.00%(2)
MB-Save, Inc. Maine 100.00%(2)
MB-Super, Inc. Maine 100.00%(2)
Plain Street Properties, Inc. Maine 100.00%(2)
Progressive Distributors, Inc. Maine 100.00%(2)
Freezer Properties, Inc. Maine 100.00%(3)
The Sampson Supermarkets, Inc. Maine 100.00%(2)
Sun Foods, Inc. New Hampshire 100.00%(3)
Second Hannaford Properties, Inc. Maine 100.00%(2)
Shop & Save Co., Inc. Maine 100.00%(2)
Shop 'n Save-Mass., Inc. Massachusetts 100.00%(2)
Shop 'n Save Realty, Inc. Maine 100.00%(2)
Shop Rite Super Markets, Inc. Maine 100.00%(2)
Mr. B's Enterprises Maine 100.00%(3)
Shopping Center Properties, Inc. Maine 100.00%(2)
Third Hannaford Properties, Inc. Maine 100.00%(2)
Warehouse Properties, Inc. Maine 100.00%(2)
(1) Each of the subsidiaries is included in the consolidated financial
statements of the Registrant.
(2) Percentage of voting securities shown is that owned by the Registrant.
(3) Percentage of voting securities shown is that owned by the
subsidiaries' immediate parent and not that owned by the Registrant.
Exhibit 23
CONSENT OF INDEPENDENT ACCOUNTANTS
Board of Directors and Shareholders of
Hannaford Bros. Co.:
We consent to the incorporation by reference in the registration
statements of Hannaford Bros. Co. and subsidiaries on Form S-8 (Files Nos. 2-
77902, 2-77903, 2-98387, 33-1281, 33-22666, 33-31624 and 33-41273) of our
report dated January 24, 1994, on our audits of the consolidated financial
statements and financial statement schedules of Hannaford Bros. Co. and
subsidiaries as of January 1, 1994 and January 2, 1993 and for each of the
three years in the period ended January 1, 1994, which report is included in
this Annual Report on Form 10-K.
s/Coopers & Lybrand
Portland, Maine
March 17, 1994
