FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
(Mark one)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OF 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended July 1, 1995
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
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
Indicate by check mark whether the Registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the Securities
Exchange Act of 1934 during the preceding 12 months (or for such shorter
period that the Registrant was required to file such reports), and (2)
has been subject to such filing requirements for the past 90 days.
Yes X . No .
As of July 24, 1995, there were 42,122,347 outstanding shares of
Common Stock, $.75 par value, the only authorized class of common stock
of the Registrant.
<PAGE>
INDEX
PART I - FINANCIAL INFORMATION
Page No.
Item 1. Financial Statements
Consolidated Balance Sheets, July 1, 1995 and
December 31, 1994 3-4
Consolidated Statements of Earnings, Three Months
Ended July 1, 1995 and July 2, 1994 5
Consolidated Statements of Earnings, Six Months
Ended July 1, 1995 and July 2, 1994 6
Consolidated Statements of Cash Flows, Six Months
Ended July 1, 1995 and July 2, 1994 7-8
Notes and Schedules to Consolidated Financial
Statements 9-10
Item 2. Management's Discussion and Analysis of
Second Quarter 1995 Results 11-14
PART II - OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders 15-16
Item 5. Other Information 16
Item 6. Exhibits and Reports on Form 8-K 17-18
Signatures 19
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HANNAFORD BROS. CO. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
ASSETS
(Dollars in thousands)
(UNAUDITED)
July 1, December 31,
1995 1994
Current assets:
Cash and cash items $ 65,714 $ 40,955
Accounts receivable, net 12,475 14,240
Inventories 134,644 132,423
Prepaid expenses 4,443 6,210
Deferred income taxes 8,035 7,519
Total current assets 225,311 201,347
Property, plant and equipment, net 519,647 503,941
Leased property under capital leases, net 56,622 58,821
Investment in financing leases 1,735 1,753
Other assets:
Deferred charges, net 105,557 101,548
Computer software costs, net 9,412 8,382
Notes receivable 1,142 1,229
Miscellaneous assets 613 584
Total other assets 116,724 111,743
$920,039 $877,605
See accompanying notes to consolidated financial statements.
<PAGE>
HANNAFORD BROS. CO. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
LIABILITIES AND SHAREHOLDERS' EQUITY
(Dollars in thousands)
(UNAUDITED)
July 1, December 31,
1995 1994
Current liabilities:
Current maturities of long-term debt $ 14,802 $ 14,409
Obligations under capital leases 1,380 1,382
Accounts payable 103,145 89,927
Accrued payroll 19,680 19,017
Other accrued expenses 29,711 29,738
Income taxes 2,793 4,167
Total current liabilities 171,511 158,640
Deferred income tax liabilities 21,811 21,886
Other liabilities 21,171 19,365
Long-term debt 150,671 153,687
Obligations under capital leases 68,531 69,552
Shareholders' equity
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 42,103,612
shares at July 1, 1995, and
41,779,342 shares at December
31, 1994 31,578 31,335
Additional paid-in capital 117,529 110,669
Preferred stock purchase rights 421 418
Retained earnings 336,816 312,053
Total shareholders' equity 486,344 454,475
$920,039 $877,605
See accompanying notes to consolidated financial statements.
<PAGE>
HANNAFORD BROS. CO. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EARNINGS
(Amounts in thousands except per share data)
(UNAUDITED)
THREE MONTHS ENDED
July 1, July 2,
1995 1994
Sales and other revenues $634,798 $538,216
Cost of sales 481,743 404,084
Gross margin 153,055 134,132
Selling, general and administrative
expenses 116,241 103,089
Operating profit 36,814 31,043
Interest expense, net 4,892 5,210
Earnings before income taxes 31,922 25,833
Income taxes 12,897 10,424
Net earnings $ 19,025 $ 15,409
Per share of common stock:
Net earnings $ .45 $ .37
Cash dividends $ .105 $ .095
Weighted average number of common shares
outstanding 42,049 41,463
See accompanying notes to consolidated financial statements.
<PAGE>
HANNAFORD BROS. CO. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EARNINGS
(Amounts in thousands except per share data)
(UNAUDITED)
SIX MONTHS ENDED
July 1, July 2,
1995 1994
Sales and other revenues $1,233,594 $1,057,294
Cost of sales 934,585 797,417
Gross margin 299,009 259,877
Selling, general and administrative
expenses 232,397 205,485
Operating profit 66,612 54,392
Interest expense, net 10,287 9,945
Earnings before income taxes 56,325 44,447
Income taxes 22,736 17,979
Net earnings $ 33,589 $ 26,468
Per share of common stock:
Net earnings $ .80 $ .64
Cash dividends $ .21 $ .19
Weighted average number of common shares
outstanding 41,969 41,389
See accompanying notes to consolidated financial statements.
<PAGE>
HANNAFORD BROS. CO. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollars in thousands)
(UNAUDITED)
SIX MONTHS ENDED
July 1, July 2,
1995 1994
Cash flows from operating activities:
Net income $ 33,589 $ 26,468
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization 33,741 29,198
(Increase) Decrease in inventories (2,221) 10,519
Decrease in receivables
and prepayments 3,618 1,429
Increase (Decrease) in accounts payable
and accrued expenses 14,713 (7,174)
Increase (Decrease) in income taxes payable (1,375) 1,888
Decrease in deferred taxes (591) (418)
Other operating activities (50) (1,719)
Net cash provided by operating
activities 81,424 60,191
Cash flows from investing activities:
Acquisition of property, plant and
equipment (47,841) (31,629)
Sale of property, plant and
equipment, net 1,894 1,431
Increase in deferred charges (2,473) (4,415)
Increase in computer software costs (2,343) (1,252)
Decrease in short-term investments -- 19,851
Net cash used in investing activities (50,763) (16,014)
Cash flows from financing activities:
Principal payments under capital
lease obligations (709) (679)
Issuance of common stock 7,103 5,944
Payments of long-term debt (3,474) (8,278)
Dividends paid (8,822) (7,946)
Net cash used for financing activities (5,902) (10,959)
Net Increase in cash and cash items 24,759 33,218
Cash and cash items at beginning of period 40,955 77,496
Cash and cash items at end of period $ 65,714 $110,714
See accompanying notes to consolidated financial statements.
<PAGE>
HANNAFORD BROS. CO. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
Supplemental disclosures of cash flow information
(Dollars in thousands)
(UNAUDITED)
SIX MONTHS ENDED
July 1, July 2,
Cash paid during the first half for: 1995 1994
Interest (net of amount capitalized,
$839 in 1995 and $1,013 in 1994) $11,667 $11,496
Income taxes $24,702 $16,509
Supplemental disclosure of non-cash investing and financing activity
Capital lease obligations of $5,383,000 were incurred
during the six month period ended July 2, 1994.
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 SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
1. CONSOLIDATED FINANCIAL STATEMENTS
The consolidated financial statements included herein have been
prepared by the Company, without audit, pursuant to the rules and
regulations of the Securities and Exchange Commission. Certain
information and footnote disclosures normally included in financial
statements prepared in accordance with generally accepted accounting
principles have been condensed or omitted pursuant to such rules and
regulations, although the Company believes that the disclosures are
adequate to make the information presented not misleading. In the
opinion of management, the amounts shown reflect all adjustments
necessary to present fairly the financial position and results of
operations for the periods presented. All such adjustments are of a
normal recurring nature.
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 preferred stock
dividends of $27,000 for the three months ended July 2, 1994 and
$74,000 for the six months ended July 2, 1994. All of the remaining
outstanding shares of preferred stock were redeemed in the second
quarter of 1994, so there were no preferred dividends paid in 1995.
It is suggested that the financial statements be read in conjunction
with the financial statements and notes thereto included in the
Company's latest annual report.
<PAGE>
HANNAFORD BROS. CO. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
2. PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment consists of the following:
(In thousands)
(Unaudited)
July 1, December 31,
1995 1994
Land and improvements $ 82,867 $ 81,667
Buildings 208,206 203,645
Furniture, fixtures & equipment 312,417 294,792
Leasehold interests & improvements 170,918 169,178
Construction in progress 21,606 6,193
796,014 755,475
Less accumulated depreciation and
amortization 276,367 251,534
$519,647 $503,941
3. LEASED PROPERTY
Leased property under capital leases consists of the following:
(in thousands)
(Unaudited)
July 1, December 31,
1995 1994
Real property $75,309 $76,552
Less accumulated amortization 18,687 17,731
$56,622 $58,821
4. ACQUISITION
On July 20, 1995 the Company announced it had reached an agreement to
purchase eight supermarket locations owned and operated by Farm
Fresh, Inc., for approximately $25 million in cash. The purchase
will include six stores located in Richmond, Virginia, and one in
Charlottesville, Virginia. Another store is currently under
construction in Richmond. The Company expects to complete this asset
purchase in the fall. The purchase will have no material impact on
Hannaford earnings for the year.
<PAGE>
HANNAFORD BROS. CO. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF SECOND QUARTER 1995
RESULTS
RESULTS OF OPERATIONS
Sales and other revenues rose 16.7% for the first half of 1995, to
$1,233.6 million, an increase of $176.3 million over the first half of
1994. Retail sales increased $177.0 million or 17.7% to $1,192.0
million, reflecting an increase of $15.0 million or 1.5% in sales
from supermarkets that were open in both periods presented ("same
store sales") and additional sales of $162.0 million from the
net impact of new, expanded, and closed stores as well as the
acquisition of Wilson's Supermarkets in July, 1994. Other sales and
revenues, which include trucking, wholesale, real estate and
miscellaneous retail operations, decreased $0.7 million.
In the second quarter of 1995, sales and other revenues were $634.8
million, an increase of $96.6 million or 17.9% over those reported for
the same period of 1994. Retail sales increased $96.8 million or
18.7% to $613.5 million, reflecting an increase of $15.9 million or
3.2% in same store sales and additional sales of $80.9 million from
the net impact of new, expanded and closed stores as well as the
acquisition of Wilson's Supermarkets in July, 1994. Other sales and
revenues decreased $0.2 million. Due to sales and other revenues from
the Easter holiday occurring in the first quarter last year and the
second quarter this year, same store sales were up 3.2% for the
quarter. Adjusting for estimated Easter sales, same store sales
increases in the second quarter were 1.9%. This increase sustains a
positive trend that started in 1993 and is slightly higher than the
adjusted increase of 1.2% reported for the first quarter of 1995.
Since sales have improved in the second quarter and initial summer
sales have been strong, it appears that the trend in same store sales
increases for the second half of 1995 is somewhat better than the 1.6%
reported for 1994.
Excluding the sales and other revenues from Wilson's Supermarkets, the
Company's sales and other revenues were up 7.4% for the quarter and
6.3% for the first half of 1995.
<PAGE>
HANNAFORD BROS. CO. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
MANAGEMENT'S DISCUSSION AND ANALYSIS OF SECOND QUARTER 1995 RESULTS
Gross margins decreased in the first half of 1995 to 24.2% of sales
and other revenues in comparison to 24.6% in the first half of 1994.
For the second quarter of 1995, gross margins were 24.1% versus 24.9%
for the second quarter of 1994. These decreases in margins continue
a trend that began in the second half of 1993. These decreases
reflect the ongoing competitive pressures throughout the Company's
marketing territories. The Company continues to focus on maintaining
a competitive pricing strategy in its marketing areas by passing
operating efficiencies on to its customers in the form of lower
prices. The decreases also reflect lower gross margins earned by
Wilson's Supermarkets.
Selling, general and administrative expenses decreased to 18.8% of
sales and other revenues in the first half of 1995 as compared to
19.4% in the first half of 1994. This continues a significant downward
trend that began in 1992 when first half selling, general and
administrative expenses were 20.3% of sales and other revenues. For
the second quarter of 1995, selling, general and administrative
expenses were 18.3% of sales and other revenues versus 19.2% for the
second quarter of 1994. Payroll and payroll related expenses, which
exceeded 50% of total selling, general and administrative expenses in
all periods presented, were primarily responsible for this decrease.
This resulted from cost containment efforts coupled with positive
synergies resulting from the acquisition of Wilson's Supermarkets.
These reductions were also favorably impacted by the lower operating
cost structure of Wilson's Supermarkets.
Net earnings increased 26.9% in the first half of 1995 to $33.6
million or 2.7% of sales and other revenues, an increase of $7.1
million from 1994 first half earnings of $26.5 million or 2.5% of
sales and other revenues. Second quarter 1995 net earnings were $19.0
million or 3.0% of sales and other revenues as compared to $15.4
million or 2.9% of sales and other revenues in the second quarter of
1994. These improvements reflect the impact of reduced selling,
general and administrative expenses expressed as a percentage of
sales, offset by a reduction in gross margins.
<PAGE>
HANNAFORD BROS. CO. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
MANAGEMENT'S DISCUSSION AND ANALYSIS OF SECOND QUARTER 1995 RESULTS
Management does not expect earnings increases of this magnitude
for the second half of fiscal 1995. The Company's 1995 store opening
schedule is heavily weighted toward the latter part of the year, and
it will be entering new markets in the Southeastern region.
Management expects those factors to impact the quarterly mix of
earnings in 1995 from that of prior years.
CAPITAL RESOURCES AND LIQUIDITY
The current ratio (FIFO basis) on July 1, 1995 was 1.40 while working
capital (FIFO basis) was $68.6 million or 7.5% of total assets. On
December 31, 1994, the current ratio (FIFO basis) was 1.36 while
working capital (FIFO basis) was $57.1 million, or 6.5% of total
assets. The Company values the majority of its inventories using the
LIFO method. The current cost of inventories exceeded the LIFO
valuation by approximately $14.8 million on July 1, 1995 and $14.3
million on December 31, 1994. The Company's liquidity position is
stronger than indicated by stated working capital and current ratios
because of available unused lines of revolving credit of $50 million
and available unused lines of short-term credit of $58 million on July
1, 1995. Cash and cash items increased $24.7 million to $65.7 million
at July 1, 1995 from $41.0 million at December 31, 1994. This
increase is primarily the result of cash provided by operating
activities partially reduced by cash used in investing activities.
Cash provided by operating activities was $81.4 million in the first
half of 1995, an increase of $21.2 million over the $60.2 million
provided in the first half of 1994. This increase is primarily
attributable to improved results of operations, higher depreciation
and amortization and a decreased investment in working capital.
Accounts payable increased $13.2 million in the first half of 1995 due
primarily to seasonal buying patterns and their associated payment
terms.
Cash used in investing activities increased $34.8 million during the
first half of 1995 to $50.8 million from $16.0 million during the
<PAGE>
HANNAFORD BROS. CO. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
MANAGEMENT'S DISCUSSION AND ANALYSIS OF SECOND QUARTER 1995 RESULTS
first half of 1994. This increase is the result of increased capital
expenditures during the 1995 period coupled with proceeds on
investments totaling $19.9 million in the first half of 1994. These
funds were used to finance the acquisition of Wilson's Supermarkets.
Total capital expenditures totaled $52.7 million in the first half of
1995 and were composed of $47.9 million in additions to property,
plant and equipment and $4.8 million in deferred charges and computer
software costs. These capital expenditures are primarily composed of
costs incurred in meeting the Company's 1995 capital program. In June
1995, the Company opened a new supermarket in Brunswick, Maine, with
approximately 32,000 square feet of retail selling space, which
replaced a smaller, outdated facility. Excluding the acquisition
(Note 4), during the second half, the Company expects to open 13
supermarkets, including 7 stores in four new southeastern markets, and
3 new stores, as well as three relocations, in the Northeast.
Excluding the acquisition (Note 4), the Company expects to spend in
the range of $150 million in 1995 for capital expenditures. This
program is subject to continuing change and review as conditions
warrant. Net square footage of retail selling space is expected to
increase by approximately 12% by year-end 1995. The 1995 capital
program is expected to be financed by cash and cash items, internally
generated funds and leases.
Cash used in financing activities was $5.9 million in the first half
of 1995 as compared to $11.0 million in the first half of 1994. The
Company continues to maintain 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.
<PAGE>
PART II - OTHER INFORMATION
Item 4: Submission of Matters to a Vote of Security Holders
(a) The Annual Meeting of Shareholders was held on May 24, 1995.
(b) Not applicable.
(c) The following issues were voted upon by shareholders. All
matters were approved as indicated:
1. ELECTION OF FOUR CLASS II DIRECTORS TO SERVE UNTIL THE ANNUAL
MEETING OF SHAREHOLDERS IN 1998.
WITHHOLD
AUTHORITY BROKER
FOR FOR TOTAL NON-VOTES
Hugh G. Farrington 34,212,118 117,319 34,329,437 0
Walter J. Salmon 34,227,064 102,373 34,329,437 0
David F. Sobey 34,220,973 108,464 34,329,437 0
Robert L. Strickland 34,227,791 101,646 34,329,437 0
2. RATIFICATION OF THE APPOINTMENT OF COOPERS & LYBRAND L.L.P. AS
INDEPENDENT AUDITORS OF THE COMPANY FOR THE FISCAL YEAR ENDING
DECEMBER 30, 1995.
BROKER
FOR AGAINST ABSTAIN NON-VOTES
TOTAL 34,198,812 43,134 87,491 0
<PAGE>
3. ADOPTION OF A PROPOSED STOCK OWNERSHIP PLAN FOR OUTSIDE DIRECTORS.
BROKER
FOR AGAINST ABSTAIN NON-VOTES
TOTAL 32,665,712 1,067,732 595,993 0
4. APPROVAL OF CERTAIN AMENDMENTS TO THE 1988 STOCK PLAN TO REMOVE
A LIMITATION ON THE NUMBER OF SHARES OF COMMON STOCK THAT MAY BE
ISSUED UNDER THE PLAN, TO INCREASE THE NUMBER OF SHARES THAT MAY BE
ISSUED UNDER INCENTIVE STOCK OPTIONS, TO LENGTHEN THE POTENTIAL
VESTING PERIOD FOR RESTRICTED STOCK, AND TO ALLOW TRANSFERS OF STOCK
OPTIONS TO FAMILY MEMBERS UNDER CERTAIN CONDITIONS.
BROKER
FOR AGAINST ABSTAIN NON-VOTES
TOTAL 33,043,935 620,274 665,228 0
5. APPROVAL OF AN AMENDMENT TO THE EMPLOYEE STOCK PURCHASE PLAN TO
REMOVE THE SIX-MONTH SERVICE REQUIREMENT FOR ELIGIBILITY.
BROKER
FOR AGAINST ABSTAIN NON-VOTES
TOTAL 33,292,374 392,146 644,917 0
(d) Not applicable
Item 5: Other Information
A limited review was made of the results of the three-month and
six-month periods ended July 1, 1995, by Coopers & Lybrand.
Under an Asset Purchase Agreement dated as of July 31, 1995, the
Registrant has agreed to purchase certain supermarket properties from
Farm Fresh, Inc. for approximately $25 million plus the cost of
inventories. The transaction involves six supermarkets in and around
Richmond, Virginia, one supermarket under construction in Richmond, and
one supermarket in Charlottesville, Virginia. As part of the
transaction, the Registrant will also be acquiring two other sites in
Richmond that will be discontinued as supermarkets and held for resale to
third parties. In addition, the Registrant will receive rights of first
refusal on four other Farm Fresh supermarket locations in Richmond.
Consummation of the transaction with Farm Fresh is subject to various
conditions. The Registrant anticipates that the transaction will likely
be completed this fall.
<PAGE>
Item 6: Exhibits and Reports on Form 8-K
(a) Exhibits required by Item 601 of Regulation SK
10.1 First Amendment to the Hannaford Bros. Co. Employee Stock
Purchase Plan, approved by shareholders May 24, 1995
and effective February 7, 1995.
10.2 Second Amendment to the Amended and Restated Savings and
Investment Plan of the Registrant, approved by
shareholders May 24, 1995 and generally effective
January 1, 1993.
10.3 Third Amendment to the Amended and Restated Savings and
Investment Plan of the Registrant generally effective
July 1, 1995.
10.4 There is incorporated herein by reference the Hannaford
Southeast Savings and Investment Plan, a copy of which was
filed as Exhibit 4.5 to the Registrant's Form S-8, dated
June 8, 1995 (SEC Registration No. 033-60119).
10.5 There is incorporated herein by reference the Amended and
Restated Hannaford Bros. Co. 1988 Stock Plan, approved by
shareholders May 24, 1995 and effective February 6, 1995,
a copy of which was filed as Exhibit 4.5 to the
Registrant's Form S-8, dated June 27, 1995 (SEC
Registration No. 033-60655).
10.6 There is incorporated herein by reference the Hannaford
Bros. Co. Stock Ownership Plan for Outside Directors,
approved by shareholders May 24, 1995 and effective
January 1, 1996, a copy of which was filed as Exhibit 4.5
to the Registrant's Form S-8, dated June 27, 1995 (SEC
Registration No. 033-60691).
10.7 Letter Agreement between the Registrant and Norman E.
Brackett, dated June 30, 1995.
10.8 Consulting Agreement between the Registrant and Norman E.
Brackett, dated June 30, 1995.
15 Letter of Coopers & Lybrand L.L.P. furnished pursuant to
Regulation SX.
<PAGE>
23 Letter of Coopers & Lybrand L.L.P. regarding incorporation
by reference to certain forms S-8 of the Registrant.
27 Financial Data Schedule
(b) There were no reports on Form 8-K filed during the quarter ended
July 1, 1995.
<PAGE>
SIGNATURES
Pursuant to the requirements 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.
Date August 11, 1995 s/Blythe J. McGarvie
Blythe J. McGarvie
Senior Vice President
(Chief Financial Officer)
Date August 11, 1995 s/Charles H. Crockett
Charles H. Crockett
Assistant Secretary
Exhibit 10.1
FIRST AMENDMENT
TO THE
HANNAFORD BROS. CO. EMPLOYEE STOCK PURCHASE PLAN
The Hannaford Bros. Co. Employee Stock Purchase Plan (the "Plan") was last
amended and restated effective October 19, 1994. 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 (a) of Section 5 is hereby amended to read as follows:
"(a) REQUIREMENT. Each Employee of a corporation, the
Employees of which are offered Options, shall be eligible to
participate in such offering if he or she is employed by such
corporation on the Offering Date. Options shall be granted only
to Employees."
3. Section 13 is hereby amended to read as follows:
"13. AMENDMENT AND TERMINATION.
(a) AMENDMENT. The Committee, without further approval of
the stockholders 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
ratification by the Board and approval of the stockholders of the
Corporation which:
(i) increases the maximum number of Shares for which
Options may be granted; or
(ii) changes the provisions relating to Employees
eligible to receive Options under the Plan.
(b) TERMINATION. The Committee, without further approval
of the stockholders of the Corporation, may at any time terminate
the Plan."
4. This Amendment shall be effective February 7, 1995.
Exhibit 10.2
SECOND AMENDMENT
TO THE
HANNAFORD BROS. CO. SAVINGS AND INVESTMENT PLAN
The Hannaford Bros. Co. Savings and Investment Plan (the "Plan") was last
amended and restated effective generally January 1, 1993, and has been
further amended by a First Amendment effective generally January 1, 1994.
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. Sections 2.02, 2.31, 2.35 and 2.39 are hereby amended by replacing
"402(a)(8)" with "402(e)(3)".
3. Section 2.02 is hereby amended to read as follows:
"2.02 `Actual Deferral Percentage' for any Plan Year shall mean, except as
otherwise provided in Section 2.39, the average of the ratios, calculated
separately for each Eligible Employee, of the amount of Elective
Contributions made on behalf of such Employee for such year and, at the
election of the Employer, the amount of Matching Contributions made on
behalf of such Employee for such year to such Employee's compensation for
such year (whether or not the Employee was a Participant for the entire Plan
Year). For purposes of this Section, "compensation" shall mean compensation
as defined in Section 7.05 and may, at the election of the Employer, include
amounts excludable from gross income under Sections 125, 402(e)(3) and
402(h)(1)(B) of the Code."
4. Subsection (b) of Section 2.35 is hereby amended to read as follows:
"(b) A person owning (or considered as owning within the meaning of Section
318 of the Code) more than a one-half percent interest, as well as one of
the ten (10) largest interests in an Employer, and having annual
compensation (within the meaning of Section 7.05) from such Employer of more
than the limitation in effect under Section 415(c)(1)(A) of the Code for any
Plan Year;"
5. Section 2.39 is hereby amended to read as follows:
"2.39 `Matching Contribution Percentage' shall mean for any Plan Year the
average of the ratios, calculated separately for each Eligible Employee, of
the amount of Matching Contributions (excluding the Matching Contributions,
if any, taken into account under Section 2.02) made on behalf of such
Employee for such year and, at the election of the Employer, the amount of
Elective Contributions made on behalf of such Employee for such year to such
Employee's compensation for such year. For purposes of this Section,
"compensation" shall mean compensation as defined in Section 7.05 and may,
at the election of the Employer, include amounts excludable from gross
income under Sections 125, 402(e)(3) and 402(h)(1)(B) of the Code.
<PAGE>
Notwithstanding the foregoing provisions of this Section or Section 2.02 to
the contrary, no Elective Contributions may be taken into account in
calculating the Matching Contribution Percentage for any Eligible Employee
unless the requirement of Section 5.03(a) is satisfied both with and without
the exclusion of such Elective Contributions in calculating the Employee's
Actual Deferral Percentage."
6. Subsection (b) of Section 4.01 is hereby amended to read as follows:
"(b) The Matching Contributions, if any, to be made on behalf of each
Participant in its employ during such year at the rate determined by the
Human Resources Committee of the Board of Directors; provided, however, no
Matching Contribution may be made with respect to any Excess Deferral or
Excess Elective Contribution or any Elective Contribution which is returned
to the Participant pursuant to Section 7.04(b)."
7. Subsection (f) of Section 4.07 is hereby amended to read as follows:
"(f) Any Matching Contribution which is attributable to an Excess Deferral
or Excess Elective Contribution shall be forfeited and shall be disregarded
for purposes of subsection (a) of this Section. Forfeitures shall be used
to reduce Matching Contributions."
8. The last sentence of the first paragraph of Section 4.08 is hereby
amended to read as follows:
"Notwithstanding the foregoing to the contrary, an Employee who has received
an eligible rollover distribution (as hereinabove defined) solely by reason
of the death of his or her spouse or a distribution from an individual
retirement account (as hereinabove defined), which account is attributable
solely to a rollover contribution (as hereinabove defined) from an
employee's trust described in Section 401(a) of the Code which is exempt
from tax under Section 501(a) of the Code of amounts received by reason of
the death of his or her spouse, may not transfer any portion of such
distribution to the Trust."
9. The first paragraph of Section 4.09 is hereby amended by adding the
following new sentence at the end thereof:
"Notwithstanding the foregoing provisions of this Section to the contrary,
this Plan shall not accept any direct or indirect transfers after December
31, 1984, from a plan which is subject to Section 401(a)(11) of the Code."
10. The next to the last paragraph of Section 5.03 is hereby deleted and
replaced by the following two new paragraphs:
"For purposes of this Section, Elective Contributions and Matching
Contributions must be made before the last day of the twelve (12) month
period immediately following the Plan Year to which such contributions
relate. Any Elective Contributions returned to a Participant pursuant to
Section 7.04(b) shall be disregarded.
<PAGE>
If an Employee is a family member within the meaning of Section 2.31 of a
Five Percent Owner or one of the ten (10) Highly Compensated Employees
receiving the greatest compensation from an Employer during the Plan Year,
then the individual Actual Deferral Percentage attributable to such Employee
shall be treated as if it were attributable to the Five Percent Owner or
Highly Compensated Employee. An Employee who is a family member with
respect to a Five Percent Owner or one of the ten (10) Highly Compensated
Employees receiving the greatest compensation from an Employer shall not be
considered a separate Employee for purposes of determining the Actual
Deferral Percentage for Highly Compensated Eligible Employees and the Actual
Deferral Percentage for all other Eligible Employees."
11. The last paragraph of Section 5.04 is hereby amended to read as
follows:
"In the event that the sum of the Actual Deferral Percentage for Highly
Compensated Eligible Employees and the Matching Contribution Percentage for
Highly Compensated Eligible Employees for any Plan Year exceeds the
limitations prescribed in Section 5.03(b), the Administrative Committee
shall, within two and one-half months after the end of such year, reduce the
Matching Contribution Percentage for Highly Compensated Employees in the
manner prescribed in subsection (h) through (k) of Section 4.07."
12. Section 7.05 is hereby amended to read as follows:
"7.05 Definition of Compensation. For purposes of applying the limitations
of this Article, the term 'compensation' shall mean, with respect to a
Limitation Year, the total compensation paid by an Employer to an Employee
for services rendered while an Employee that constitutes wages as defined in
Section 3401(a) of the Code and all other payments by an Employer to an
Employee for services rendered while an Employee for which an Employer is
required to furnish the Employee a written statement under Sections 6041(d),
6051(a)(3) and 6052 of the Code without regard to any rules that limit the
remuneration included in wages based on the nature or location of the
employment or services performed.
For Limitation Years beginning after December 31, 1991, for purposes of
applying the limitations of this Article 'compensation' for a Limitation
Year shall mean the compensation actually paid or includable in gross income
during such Limitation Year. Notwithstanding the preceding sentence
'compensation' with respect to a Participant who is permanently and totally
disabled (within the meaning of Section 22(e)(3) of the Code) shall mean the
compensation such Participant would have received for the Limitation Year if
he or she had been paid at the rate in effect immediately before becoming
permanently and totally disabled; provided, such imputed compensation may be
taken into account only if the Participant is not a Highly Compensated
Employee and contributions made on behalf of such Participant are
nonforfeitable when made.
<PAGE>
Notwithstanding the foregoing to the contrary, for purposes of Sections
2.02, 2.39 and 10.03(b), effective January 1, 1989, the annual
`compensation' of any Employee 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, and, effective January 1, 1994,
the annual `compensation' of any Employee 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. In the event
`compensation' is determined based on a period of time which contains fewer
than twelve (12) calendar months, the annual compensation limit shall be an
amount equal to the annual compensation limit for the Limitation Year in
which the period begins multiplied by a fraction, the numerator of which is
the number of full calendar months in the period and the denominator of
which is twelve (12). For purposes of the annual compensation limit, any
`compensation' paid to an Employee who is the spouse or lineal descendant
(who has not attained age nineteen (19) by the close of the Plan Year) of an
Employee who is a Five Percent Owner or one of the ten (10) Highly
Compensated Employees paid the highest `compensation' for the Plan Year
shall be treated as paid to or on behalf of such Five Percent Owner or
Highly Compensated Employee. If the annual compensation limit is exceeded
as a result of the application of the preceding sentence, then the limit
shall be prorated among the affected Employees' `compensation' as determined
prior to the application of the annual compensation limit. If
`compensation' for a prior Limitation Year is taken into account for any
Limitation Year, such compensation shall be subject to the annual
compensation limit in effect for such prior Limitation Year."
13. Subsection (b)(i) of Section 9.01 is hereby amended to read as follows:
"(i) the termination of the Plan by the Participant's Employer, without the
establishment or maintenance of another defined contribution plan (other
than an employee stock ownership plan as defined in Section 4975(e)(7) of
the Code);"
14. Subsection (c) of Section 9.01 is hereby amended to read as follows:
"(c) Notwithstanding the foregoing provisions of this Section to the
contrary, if the value of a Participant's Account does not exceed Three
Thousand Five Hundred Dollars ($3,500.00) as of the Valuation Date following
the date he or she ceases to be employed by an Employer or a Related
Employer and is no longer employed by any of them (and did not exceed Three
Thousand Five Hundred Dollars ($3,500.00) as of the date of any prior
distribution), his or her Account shall be distributed in a lump sum as soon
as practicable after such Valuation Date."
15. Subsection (b) of Section 10.03 is hereby amended to read as follows:
"(b) the percentage of such Eligible Employee's compensation (as defined in
Section 7.05) which is equal to the largest percentage determined by
<PAGE>
dividing the sum of the Elective Contributions and Matching Contributions
allocated to the Account of each Key Employee by such Key Employee's
compensation (as so defined)."
16. The next to the last paragraph of Section 10.03 is hereby amended by
adding the following sentence at the end thereof:
"The preceding sentence shall be applied by substituting `three percent '
for `two percent' in Section 416(c)(1)(B)(i) of the Code and by increasing
(but not by more than ten percentage points) the percentage provided in
Section 416(c)(1)(B)(ii) of the Code for each Plan Year in which:
(i) the Plan is included in a Required Aggregation Group or a Permissive
Aggregation Group which includes a qualified defined benefit plan and the
Top Heavy Ratio does not exceed ninety percent; and
(ii) the limitation set forth in Section 7.02 would be exceeded if 1.0 is
substituted for 1.25 wherever 1.25 appears in said limitation."
17. Except as otherwise provided herein, this Amendment shall be effective
January 1, 1993; provided, however, that Part 6 shall be effective January
1, 1994.
Exhibit 10.3
THIRD AMENDMENT
TO THE
HANNAFORD BROS. CO. SAVINGS AND INVESTMENT PLAN
The Hannaford Bros. Co. Savings and Investment Plan (the "Plan") was last
amended and restated effective generally January 1, 1993. The Plan has been
further amended by a First Amendment, effective generally January 1, 1994,
and a Second Amendment, 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 Article I is hereby amended to read as follows:
"The purpose of this Plan is to encourage Eligible Employees to provide for
their financial security through regular savings."
3. Section 2.03 is hereby amended to read as follows:
"2.03 `Administrative Committee' shall mean the Committee appointed in
accordance with Section 13.01."
4. Section 2.07(a)(iii) is hereby amended to read as follows:
"(iii) Failure to return to the employ of an Employer or a Related Employer
prior to the expiration of the period entitling such Employee to
reemployment rights under the Uniformed Services Employment and Reemployment
Rights Act of 1994 or any other applicable federal law after military
service in the Armed Forces of the United States;"
5. Section 2.07(b)(iii) is hereby amended to read as follows:
"(iii) Failure to return to the employ of an Employer or a Related Employer
prior to the expiration of the period entitling such Employee to
reemployment rights under the Uniformed Services Employment and Reemployment
Rights Act of 1994 or any other applicable federal law after military
service in the Armed Forces of the United States;"
6. The first sentence of Section 2.11 is hereby amended to read as follows:
"2.11 `Compensation' shall mean the basic compensation paid, before any
reduction pursuant to a Deferral Election or a benefit election under an
Employer's Code Section 125 plan, by an Employer to an Employee for services
rendered while a Participant, excluding reimbursements or other expense
allowances, fringe benefits (cash and noncash), moving expenses, deferred
compensation, welfare benefits, unguaranteed overtime pay, bonuses, and
other irregular payments."
<PAGE>
7. Section 2.19 is hereby amended to read as follows:
"2.19 `Employee' shall mean any individual who is employed by the Company
or one of its subsidiaries in its Northeast Division, excluding Leased
Employees."
8. Section 2.21 is hereby amended to read as follows:
"2.21 `Employer Contribution' shall mean any Elective Contribution,
Matching Contribution or such additional contribution as may be required
under Section 4.09 made by an Employer in accordance with the terms of the
Plan."
9. The last sentence of Section 2.32 is hereby amended to read as follows:
"The Hours of Service described in this paragraph shall be credited in the
computation period in which the absence begins, if the Employee would be
prevented from incurring a Break in Service in such period solely because
the Employee is credited with such Hours of Service, or, in all other cases,
in the immediately following computation period."
10. Section 2.40 is hereby amended to read as follows:
"2.40 `Named Fiduciary' or `Named Fiduciaries' shall mean, with respect to
the operation and administration of the Plan, the Administrative Committee,
and with respect to the management of the Trust Fund, the Finance Committee
and the Trustee."
11. Section 2.43 is hereby amended to read as follows:
"2.43 `Participant' shall mean an Eligible Employee who elects to
participate in the Plan in accordance with Section 3.01, or who has made a
Rollover Contribution or on whose behalf a direct transfer has been made in
accordance with Section 4.09."
12. Section 2.45 is hereby amended to read as follows:
"2.45 `Plan' shall mean the Hannaford Northeast Savings and Investment
Plan."
13. Section 2.57 is hereby amended to read as follows:
"2.57 `Valuation Date' shall mean the last day of each calendar month;
provided, however, when such term is used in the context of Article X, such
term shall mean the last day of each Plan Year."
14. Section 3.03 is hereby amended to read as follows:
"3.03 Reemployed Eligible Employee. An Eligible Employee who is reemployed
by an Employer shall again be eligible to participate in the Plan as of his
or her Reemployment Commencement Date."
<PAGE>
15. Section 3.04 is hereby amended to read as follows:
"3.04 Change of Employment Status.
(a) An Employee whose employment status changes by reason of being
transferred from the employ of a Related Employer that has not adopted the
Plan to the employ of an Employer (or by reason of being transferred within
the Company to its Northeast Division) shall be eligible to participate in
the Plan as of the later of the first day of the second month following the
date his or her employment status changes or the first day of the second
month following the month in which he or she meets the requirements of
Section 3.02. Notwithstanding the preceding sentence to the contrary,
(i) if such Employee is an eligible employee (but not a participant) under
the Hannaford Southeast Savings and Investment Plan as of the date his or
her employment status changes, he or she shall be eligible to participate in
this Plan as of such date; and
(ii) if such individual is a participant in the Hannaford Southeast Savings
and Investment Plan as of the date his or her employment status changes, he
or she shall be eligible to participate in the Plan as of such date, and his
or her deferral election and investment direction in effect under the
Hannaford Southeast Savings and Investment Plan as of such date shall be
deemed a Deferral Election under Section 5.01 and an investment direction
under Section 11.05 of this Plan.
(b) A Participant whose employment status changes by reason of being
transferred to the employ of a Related Employer that has not adopted the
Plan (or by reason of being transferred within the Company to its Southeast
Division) shall nevertheless continue to participate in the Plan, but
without the right to make a Deferral Election or share in an allocation of
Employer Contributions occurring after the date his or her employment status
changes, until the earlier of the date the assets credited to his or her
Account are transferred pursuant to Section 4.09 to the Hannaford Southeast
Savings and Investment Plan or any other plan of a Related Employer and the
date he or she ceases to be employed by the Company and any other Related
Employer."
16. Section 4.01(b) is hereby amended to read as follows:
"(b) The Matching Contributions, if any, to be made on behalf of each
Participant in its employ during such year who has made a Deferral Election
for such year at the rate determined by the Human Resources Committee of the
Board of Directors; provided, however, no Matching Contributions may be made
with respect to any Excess Deferral or Excess Elective Contribution or any
Elective Contribution which is returned to the Participant pursuant to
Section 7.04(b)."
<PAGE>
17. The first sentence of Section 4.07(g) is hereby amended to read as
follows:
"(g) For purposes of this Section, Matching Contributions shall be treated
as made for a Plan Year to which they relate if such contributions are made
no later than the end of the twelve (12) month period beginning on the day
after the close of the Plan Year."
18. The last sentence of Section 4.07(k) is hereby amended to read as
follows:
"The determination of the amount of Excess Matching Contributions with
respect to the Plan shall be made after first determining the amount of
Excess Deferrals under Article VI and then determining the amount of Excess
Elective Contributions under Section 5.03."
19. Section 4.09 is hereby amended to read as follows:
"4.09 Direct Transfers. The Administrative Committee may direct the
Trustee to transfer the assets credited to the Account of a Participant or
Former Participant to another employer's retirement plan, provided
immediately prior to the transfer, the transferee plan contains a provision
permitting such transfer and is qualified under Section 401(a) of the Code
and the related trust is exempt under Section 501(a) of the Code.
Notwithstanding the preceding sentence to the contrary, in the case of a
Participant whose employment status changes by reason of being transferred
to the employ of a Related Employer that has adopted the Hannaford Southeast
Savings and Investment Plan (or by reason of being transferred within the
Company to its Southeast Division), the Administrative Committee shall
direct the Trustee to transfer the assets credited to the Account of such
Participant to the Hannaford Southeast Savings and Investment Plan as of the
date of such change in employment status or as soon as practicable
thereafter. In the case of a Participant whose employment status changes
prior to July 1, 1995, by reason of being transferred to the employ of a
Related Employer that has adopted the Hannaford Southeast Savings and
Investment Plan (or by reason of being transferred within the Company to its
Southeast Division), the Administrative Committee shall direct the Trustee
to transfer the assets credited to the Account of such Participant to the
Hannaford Southeast Savings and Investment Plan as of July 1, 1995, or as
soon as practicable thereafter.
The assets of another profit sharing plan may, with the prior consent of the
Administrative Committee, be directly transferred to the Plan, provided
immediately prior to the transfer, the transferor plan contains provision
permitting such transfer and is qualified under Section 401(a) of the Code
and the related trust is exempt under Section 501(a) of the Code. Upon
receipt, the Administrative Committee shall credit the Account of each
Employee who participated in the transferor plan with the portion of the
transferred assets standing to the credit of such Employee under the
transferor plan immediately prior to such transfer, provided such amount
<PAGE>
shall be separately accounted for in accordance with Section 8.01. With
respect to a Participant who has an outstanding loan balance under the
transferor plan at the time of the transfer, the promissory note evidencing
such loan shall be transferred to this Plan and the outstanding loan balance
shall be treated in accordance with the provisions of Section 9.07 as an
outstanding loan balance under this Plan.
Except as hereinafter provided, each elective, matching or other type of
contribution comprising the Transfer Account of any Employee or Participant
shall be administered, invested and distributed in accordance with the
provisions of this Plan applicable to such type of contribution. An
Employee or Participant may direct the investment of each type of
contribution comprising his or her Transfer Account only to the extent
provided for in the transferor plan. The portion of the Transfer Account
invested in Company Stock at the time of the transfer and not subject to
participant investment direction under the transferor plan shall remain
invested in Company Stock. Each type of contribution comprising the
Transfer Account which was not fully vested under the transferor plan as of
the date of the transfer shall remain subject to the vesting schedule set
forth in the transferor plan; provided, however, when a Participant attains
Normal Retirement Age he or she shall have a fully vested right to his or
her Transfer Account. Each type of contribution comprising the Transfer
Account which was fully vested under the transferor plan as of the date of
the transfer shall remain fully vested under this Plan.
Notwithstanding the foregoing provisions of this Section to the contrary,
this Plan shall not accept any direct or indirect transfers after December
31, 1984, from a Plan which is subject to Section 401(a)(11) of the Code.
Notwithstanding the foregoing provisions of this Section and Section 9.01 to
the contrary, this Plan may accept a direct or indirect transfer of assets
from the Hannaford Southeast Savings and Investment Plan, and the following
provisions shall apply to such transfer.
(a) If a Participant is not vested in any portion of his or her Transfer
Account which is attributable to matching contributions and discretionary
contributions at the time he or she ceases to be employed by an Employer or
a Related Employer and is no longer employed by any of them, the balance of
such sub-accounts shall be forfeited as of the date he or she ceases to be
employed by an Employer or a Related Employer and is no longer employed by
any of them. If such Participant is reemployed by an Employer or any
Related Employer prior to incurring five (5) consecutive Breaks in Service,
the balance of his or her matching contributions and discretionary
contributions sub-accounts under the Transfer Account as of the Valuation
Date coinciding with or next following the date he or she ceased to be
employed shall be restored.
Restoration shall be made by the end of the Plan Year following the Plan
Year in which the Participant is reemployed by an Employer or any Related
Employer. Restoration shall first be made out of forfeitures and to the
extent forfeitures are insufficient, then out of Employer Contributions.
<PAGE>
The amounts forfeited by Participants in any Plan Year shall be used to make
restoration in accordance with this Section and, to the extent forfeitures
exceed the amounts required to make restoration, to reduce Employer
Contributions. The amount, if any, by which forfeitures occurring during a
Plan Year exceed the sum of the amounts required to make restoration and the
amount required to be contributed by an Employer for such Plan Year shall be
credited to an excess forfeiture account, which shall be adjusted for the
income, expenses, gains and losses attributable thereto in the same manner
provided for adjustment of Accounts. On the Valuation Date coinciding with
the last day of the next succeeding Plan Year, the excess forfeiture account
shall be closed and treated as a forfeiture occurring in such Plan Year.
This procedure shall be repeated for each Plan Year in which forfeitures
occurring during such year exceed the sum of the amount required to make
restoration and the amount required to be contributed by an Employer for
such year, subject, however, to such modification as may be required by the
Section governing termination of the Plan.
(b) Once each calendar month, a Participant or Former Participant may elect
to reinvest the balance of his or her Transfer Account attributable to
elective contributions, matching contributions and rollover contributions
allocated under the Hannaford Southeast Savings and Investment Plan in any
one or more of the Investment Funds, provided the portion of such
Participant's or Former Participant's Transfer Account attributable to such
contributions invested in any Investment Fund must be one percent, or any
multiple thereof, of such balance. Such election shall be made by such
written, telephonic or electronic means as shall be prescribed by the
Administrative Committee and shall be effective as of the first business day
of the calendar month following receipt by the Administrative Committee or
as soon as practicable thereafter."
20. The last sentence of the first paragraph of Section 5.01 is hereby
amended to read as follows:
"A Deferral Election shall be made by such written, telephonic or electronic
means as shall be prescribed by the Administrative Committee."
21. The first sentence of Section 5.02 is hereby amended to read as
follows:
"A Participant may amend his or her Deferral Election to increase or
decrease the deferral percentage within the limits of Section 5.01 or may
terminate his or her Deferral Election by such written, telephonic or
electronic means as shall be prescribed by the Administrative Committee."
22. The last sentence of the second paragraph of Section 5.01 is hereby
deleted and replaced with the following two sentences:
"A deemed Deferral Election pursuant to Section 3.04(a) shall be effective
as soon as practicable on or after the date of the affected individual's
change in employment status. A Deferral Election shall remain in effect
until amended or terminated in accordance with Section 5.02."
<PAGE>
23. Section 8.02 is hereby amended to read as follows:
"8.02 Adjustments. The Administrative Committee shall adjust the
Participants' Accounts as of each Valuation Date as follows:
(a) First, determine the net fair market value of each Investment Fund as
of the close of business on such date or, if that date is not a business
day, as of the close of business on the last preceding business day.
(b) Second, allocate the income, expenses, gains and losses of each
Investment Fund among the Accounts in proportion to the Account balances (to
the extent invested in such fund) as of the preceding Valuation Date,
increased by one-half (1/2) of the sum of the contributions and periodic
loan repayments invested on behalf of the Participant in such fund since the
preceding Valuation Date and by that portion of any lump sum loan repayment
invested in such fund since the preceding Valuation Date.
(c) Third, reduce the separate Account of each Participant to reflect
distributions, loans and withdrawals made from such Account since the
preceding Valuation Date.
(d) Fourth, credit each Participant's Account with the contributions made
on his or her behalf, the assets transferred from another qualified plan in
accordance with Section 4.09, and the Participant's loan repayments since
the preceding Valuation Date.
(e) Fifth, adjust each Participant's Account to reflect transfers among the
Investment Funds.
(f) Notwithstanding the foregoing provisions of this Section to the
contrary, the Administrative Committee may debit in a uniform and
nondiscriminatory manner the Account of any Participant or Former
Participant as of any Valuation Date in the amount of any reasonable expense
attributable to such Participant's or Former Participant's exercise of
control over his or her Account since the preceding Valuation Date. The
Administrative Committee shall establish, in writing, reasonable procedures
to inform Participants and Former Participants that such expenses may be
charged to their Accounts pursuant to this Section 8.02(f), to inform each
Participant or Former Participant at least annually of the actual expenses
incurred with respect to his or her Account, and to otherwise carry out this
subsection. A Participant's or Former Participant's "exercise of control
over his or her Account" shall include but not be limited to the following:
(i) a request for a loan pursuant to Section 9.07;
(ii) a request for a hardship withdrawal distribution pursuant to Section
9.08; and
(iii) an investment direction pursuant to Section 11.05 or Section 11.06."
<PAGE>
24. Section 9.01 is hereby amended to read as follows:
"9.01 Distribution to Participants. Except as otherwise provided in
Section 4.09, each Participant shall have a fully vested and nonforfeitable
interest in his or her Account.
(a) Subject to the provisions of subsections (c), (d), (e), (f) and (g)
below, a Participant may elect to receive distribution of the vested portion
of his or her Account as of any Valuation Date which occurs after the date
he or she ceases to be employed by an Employer or a Related Employer and is
no longer employed by any of them.
(b) With respect to any Plan Year commencing after December 31, 1984, a
Participant shall be entitled to a distribution of the vested portion of his
or her Account upon the occurrence of any of the following events:
(i) the termination of the Plan by the Participant's Employer, without the
establishment or maintenance of another defined contribution plan (other
than an employee stock ownership plan as defined in Section 4975(e)(7) of
the Code);
(ii) the sale or other disposition by an Employer to an unrelated
corporation of substantially all of the assets (within the meaning of
Section 409(d)(2) of the Code) used by such Employer in a trade or business
of the Employer, if the Participant continues employment with the
corporation acquiring such assets; or
(iii) the sale or other disposition by an Employer of such Employer's
interest in a subsidiary (within the meaning of Section 409(d)(3) of the
Code), to an unrelated entity if the Participant continues employment with
such subsidiary.
Subject to the provisions of subsections (c), (d), (e), (f) and (g) below, a
Participant may elect to receive distribution of the vested portion of his
or her Account as of any Valuation Date following the occurrence of such
event.
An election pursuant to subsections (a) or (b) above shall be made by
delivering a written election, on such form as the Administrative Committee
may prescribe, to the Administrative Committee at least fifteen (15) days in
advance of the Valuation Date, specified in the election, as of which
distribution is to be made. The Participant's Account shall be valued as of
the Valuation Date elected by the Participant and distribution shall be made
in a lump sum as soon as practicable thereafter.
(c) Notwithstanding the foregoing provisions of this Section to the
contrary, if the value of the vested portion of a Participant's Account does
not exceed Three Thousand Five Hundred Dollars ($3,500.00) as of the
Valuation Date following the date he or she ceases to be employed by an
Employer or a Related Employer and is no longer employed by any of them (and
<PAGE>
did not exceed Three Thousand Five Hundred Dollars ($3,500.00) as of the
date of any prior distribution), his or her Account shall be distributed in
a lump sum as soon as practicable after such Valuation Date.
(d) Notwithstanding the foregoing provisions of this Section to the
contrary, distribution to a Participant shall be made not later than the
sixtieth (60th) day after the later of the close of the Plan Year in which
the Participant attains the Normal Retirement Age or in which the
Participant ceases to be employed by an Employer or a Related Employer and
is no longer employed by any of them.
(e) Notwithstanding the foregoing provisions of this Section to the
contrary, a Participant may elect to receive or commence receiving
distribution of the vested portion of his or her Transfer Account, if any,
which is attributable to his or her account balance under the Hannaford
Southeast Savings and Investment Plan as of June 30, 1995, at such time and
in such manner as provided in Exhibit A to this Plan; provided, however,
this subsection (e) shall not apply if such vested portion does not exceed
Three Thousand Five Hundred Dollars ($3,500.00) as of such date (and did not
exceed Three Thousand Five Hundred Dollars ($3.500.00) as of the date of any
prior distribution).
(f) Notwithstanding the foregoing provisions of this Section to the
contrary, effective January 1, 1989, distribution to a Participant shall be
made or commence not later than April 1 of the calendar year following the
calendar year in which the Participant attains age seventy and one-half.
(g) Notwithstanding the foregoing provisions of this Section to the
contrary, distribution to a Participant who has attained age seventy and
one-half before January 1, 1988, and is not a Five Percent Owner, shall be
made not later than April 1 of the calendar year following the later of the
calendar year in which the Participant attains age seventy and one-half or
the calendar year in which the Participant retires.
For purposes of this subsection (g), a Five Percent Owner shall mean a
Participant who is a Five Percent Owner at any time during the Plan Year
ending with or within the calendar year in which such Participant attains
age sixty-six and one-half or any subsequent Plan Year."
25. Section 9.02 and Section 9.03 are hereby amended by replacing "Section
9.01(e)" with "Section 9.01(f)."
26. The last sentence of the first paragraph of Section 9.04 is hereby
amended to read as follows:
"A Participant's Account shall be valued as of the Valuation Date next
following the date of his or her death and shall be distributed to his or
her surviving spouse or Beneficiary in a lump sum as soon as practicable
thereafter, but not later than sixty (60) days after the close of the Plan
Year in which the Participant's death occurs."
<PAGE>
27. Section 9.04 is hereby amended by adding the following paragraph at the
end thereof:
"Notwithstanding the foregoing provisions of this Section to the contrary, a
surviving spouse or Beneficiary may elect to receive or begin receiving
distribution of the portion of the Participant's Transfer Account balance,
if any, which was allocated to such Participant's account under the
Hannaford Southeast Savings and Investment Plan as of June 30, 1995, at such
time and in such manner as provided in Exhibit A to this Plan; provided,
however, this paragraph shall not apply if such portion does not exceed
Three Thousand Five Hundred Dollars ($3,500.00) as of such date (and did not
exceed Three Thousand Five Hundred Dollars ($3,500.00) as of the date of any
prior distribution)."
28. The first three lines of Section 9.07 are hereby amended to read as
follows:
"9.07 Loans. The Administrative Committee may direct the Trustee to make a
loan or loans from the vested portion of a Participant's Account to a
Participant or beneficiary who is a `Party in Interest' as defined in
Section 3(14) of ERISA, subject to the following:"
29. The first sentence of Section 9.07(c) is hereby amended to read as
follows:
"(c) No loan shall be made in an amount less than Five Hundred Dollars
($500.00)."
30. Section 9.07 is hereby amended by adding the following subsection (l)
at the end thereof:
"(l) In the event a loan is to be made to a Participant or Beneficiary with
a Transfer Account, notwithstanding Section 9.07(e) to the contrary, not
more than fifty percent of a Participant's vested interest in his or her
Account may be used as collateral for the loan, and `fifty percent of the
Participant's vested interest in his or her Account' shall be substituted
for `fifty percent of the Participant's Account' in subparagraph
9.07(d)(ii)."
31. Section 9.08(c)(i)(cc) is hereby amended to read as follows:
"(cc) Payment of tuition, related educational fees and room and board
expenses for the next twelve (12) months of post-secondary education for the
Participant, his or her spouse or dependent (within the meaning of Section
152 of the Code); and"
32. Section 9.08 is hereby amended by adding the following subsection (h)
at the end thereof:
<PAGE>
"(h) For purposes of this Section 9.08, the vested portion of a
Participant's Transfer Account, if any, attributable to matching
contributions and discretionary contributions which were allocated to his or
her account under the Hannaford Southeast Savings and Investment Plan as of
June 30, 1995, shall be deemed part of his or her Elective Contributions."
33. Section 10.02 is hereby amended to read as follows:
"10.02 Minimum Vesting Requirements. The vested percentage of each
Participant in the portion of his or her Transfer Account which was not
fully vested under the transferor plan as of the date of the transfer shall
be determined in accordance with the following schedule:
Number of Participant's
Years of Service Vested Percentage
Less than 3 0%
3 or more 100%
For purposes of this Section, a `Year of Service' shall have the meaning
given such term in Section 15.01."
34. Section 11.05 is hereby amended to read as follows:
"11.05 Investment of Elective Contributions. Each Participant may direct
that Elective Contributions made on his or her behalf shall be invested in
any one or more of the Investment Funds, provided the percentage of Elective
Contributions to be invested in any Investment Fund must be one percent, or
any multiple thereof. An investment direction should be made by such
written, telephonic, or electronic means as shall be prescribed by the
Administrative Committee.
A Participant's investment direction, if received by the Administrative
Committee prior to the date he or she commences participation, shall be
effective as of said date. If a Participant does not make an investment
direction or an investment direction is not received by the Administrative
Committee before he or she commences participation, the Elective
Contributions on behalf of such Participant shall be invested in the fund
which presents the least risk of loss as determined by the Trustee. An
investment direction received by the Administrative Committee after the date
a Participant commences participation shall be effective as of the first
business day of the calendar month following receipt by the Administrative
Committee or as soon as practicable thereafter. A deemed investment
direction pursuant to Section 3.4(a) shall be effective as of the date of
the affected individual's change in employment status.
Once each calendar month, a Participant may elect to have future Elective
Contributions on his or her behalf invested in the Investment Funds in
proportions other than those previously elected, but in multiples of one
percent. An election modifying a previous investment direction shall
be made by such written, telephonic or electronic means as shall be
prescribed by the Administrative Committee and shall be effective as of the
<PAGE>
first business day of the calendar month following receipt by the
Administrative Committee or as soon as practicable thereafter."
35. Section 11.06 is hereby amended to read as follows:
"11.06 Reinvestment of Elective Contributions Account. Once each calendar
month, a Participant, Former Participant, surviving spouse or Beneficiary
may elect to reinvest the balance of his or her Elective Contributions
Account in any one or more of the Investment Funds, provided the portion of
such Elective Contributions Account invested in any Investment Fund must be
one percent, or any multiple thereof, of such balance. An election to
reinvest an Elective Contributions Account shall be made by such written,
telephonic or electronic means as shall be prescribed by the Administrative
Committee and shall be effective as of the first business day of the
calendar month following receipt by the Administrative Committee or as soon
as practicable thereafter."
36. Article XIII is hereby amended by adding the following Section 13.11 at
the end thereof:
"13.11 Confidentiality of Participant Decisions Relating to Company Stock.
The Administrative Committee shall establish procedures designed to
safeguard the confidentiality of information relating to the purchase,
holding and sale of Company Stock, and the exercise of voting, tender and
similar rights with respect thereto, by Participants, Former Participants,
surviving spouses and Beneficiaries. The Administrative Committee shall be
responsible for ensuring that such procedures meet the requirements of ERISA
Reg. Section 2550.404c-1(d)(2). In the event the Administrative Committee
determines that a particular situation involves a potential for undue
Employer or Related Employer influence upon Participants, Former
Participants, surviving spouses and Beneficiaries within the meaning of
ERISA Reg. Section 2550.404c-1(d)(2), the Administrative Committee shall
promptly appoint an independent fiduciary to perform the role of the
Administrative Committee and carry out activities with respect to such
situation. Such independent fiduciary shall not be a person affiliated with
an Employer within the meaning of ERISA Reg. Section 2550.404c-1(e)(3)."
37. Section 12.01 is hereby amended by deleting subsection (f) and by
redesignating existing subsections (g) through (i) as (f) through (h).
38. Section 18.02(a)(v) is hereby amended to read as follows:
"(v) The fiduciaries, including but not limited to, the Trustee, the
Finance Committee, the Administrative Committee and any Investment Manager
shall have no responsibility for the investment elections made by
Participants, Former Participants, surviving spouses or Beneficiaries or for
the exercise of voting, tender or similar rights by Participants, Former
Participants, surviving spouses or Beneficiaries, except as otherwise
provided by applicable law."
39. This Amendment shall be effective July 1, 1995; provided, however, that
Part 36 shall be effective January 1, 1995.
Exhibit 10.7
June 30, 1995
Norman E. Brackett
13 Pillsbury Drive
Scarborough, ME 04074
RE: RETIREMENT
Dear Norm:
This letter confirms the terms of the agreement between you and Hannaford
Bros. Co. (the "Company") regarding your retirement from the Company and the
implementation of certain retirement benefits as outlined in a letter to you
from Hugh Farrington dated September 9, 1992 (the "Prior Letter").
1. Your last day of work as an employee of the Company will be June 30,
1995 (your "Retirement Date").
2. On or about June 30, 1995, the Company will pay you out of the
Supplemental Executive Retirement Plan ("SERP") a "lump sum"
supplemental pension benefit in the gross amount of $83,503. This
payment represents the value of the enhanced pension benefit you would
have received had you elected to participate in the Early Retirement
Incentive Program offered in 1992, pursuant to paragraph 2 of the Prior
Letter.
3. In addition, on or about June 30, 1995, the Company will pay you out of
the SERP the lump sum of $101,300. This amount is in lieu of retiree
medical benefits and is intended to equal the present value of retiree
medical coverage for you and your wife which you would have had
available to you had you participated in the Early Retirement Incentive
Program in 1992.
4. Upon retirement, you will be eligible to continue to participate in the
Long-Term and Short-Term Incentive Plans provided by the Company for
award periods commencing with, or prior to, the Company's current fiscal
year. Accordingly, you will be entitled to receive payment from each
Plan in accordance with its terms.
5. Upon retirement, you will no longer be eligible to receive awards under
the Company's stock option plan. Any qualified stock options you then
hold must be exercised, under the terms of the plan, within ninety (90)
days after your retirement. In the event that you elect to exercise any
<PAGE>
such options which contain a reload provision and were granted to you
after 1990 by tendering shares of the Company's stock before your
Retirement Date, you will receive a nonqualified "reload" option for a
number of shares equal to those tendered and having a term equal to the
remainder of the term of the options being exercised (but in no event
longer than three years following your Retirement Date).
6. All other accrued Company benefits (401(k), Pension Plan, SERP, Deferred
Compensation Plan, etc.) will be paid to you in accordance with the
provisions of those plans. After your Retirement Date, except as
provided by the applicable plans, you will have no further accrual of
Company benefits.
7. In consideration of the benefits extended to you under this agreement to
which you would not otherwise be entitled, your signature below
constitutes your agreement to hereby waive, release and forever
discharge the Company, its subsidiaries and affiliates, and their
respective shareholders, directors, officers, employees, agents,
successors and assigns of and from any and all claims or causes of
actions which you ever had or may hereafter claim to have and which are
connected in any way, directly or indirectly, with your employment by
the Company or its affiliates, including but not limited to claims
arising out of the Prior Letter, but expressly excluding claims arising
out of the failure of the amount paid in lieu of retiree medical
benefits to adequately cover the cost of medical coverage as intended
hereunder.
This letter sets forth the entire agreement between you and the Company
regarding your retirement from the Company (it being understood that you and
the Company intend to negotiate and execute a separate Consulting Agreement
relating to certain other matters, including the provisions of consulting
services by you as an independent contractor). This agreement may be
amended only by a written document signed by both you and the Company and
will be governed by the laws of the State of Maine.
If this letter sets forth our understanding and agreement accurately, would
you please sign both copies, return one to me, and keep one for your files.
Sincerely yours,
s/Hugh G. Farrington
Hugh G. Farrington
President and
Chief Executive Officer
Seen and agreed to this
30th day of June, 1995.
s/Norman E. Brackett
Norman E. Brackett
Exhibit 10.8
July 1, 1995
Norman E. Brackett
13 Pillsbury Drive
Scarborough, ME 04074
RE: CONSULTING AGREEMENT
Dear Norm:
Hannaford Bros. Co. (the "Company") and you have executed a letter agreement
dated June 30, 1995, outlining our mutual understanding regarding certain
matters, including supplemental retirement benefits which the Company
provided to you upon your retirement. This letter sets forth our further
understanding regarding certain consulting services that you will provide to
the Company following your retirement.
1. CONSULTING SERVICES. Beginning on July 1, 1995, and for so long as this
agreement remains in effect, you agree to provide the Company with
consulting services relating to supermarket information systems and such
other topics as may be requested by the Company's CEO. In no event will
such services exceed a total of twenty five (25) consulting sessions,
none of which shall exceed one day in length.
2. COMPENSATION; EXPENSES. As compensation for your consulting services
hereunder, the Company will pay you the sum of Sixty One Thousand
Dollars ($61,000), payable as follows: Eleven Thousand Dollars
($11,000) on July 31, 1995, and Ten Thousand Dollars ($10,000) on the
last day of each calendar month thereafter until December 31, 1995. The
Company will also reimburse you for all reasonable out-of-pocket
expenses incurred by you in connection with such services, and upon
request by the Company, you agree to provide reasonable written
documentation supporting such expenditures.
3. INDEPENDENT CONTRACTOR STATUS. Any services rendered by you pursuant to
this paragraph shall be rendered as an independent contractor and not as
an employee, partner, joint venturer, or agent of the Company. You
further agree that the Company shall have no responsibility to furnish
any workers' compensation insurance and that you will provide reasonable
amounts of automobile and liability insurance coverage of your own
expense. You acknowledge that, in your capacity as an independent
contractor, you will not be entitled to any of the employee benefits
available to Hannaford associates nor will the Company supply you with
an office, secretary, or any other technical or personnel support.
<PAGE>
4. TERMINATION. This agreement shall terminate on December 31, 1995. The
Company shall have the right to terminate this agreement earlier for
cause if it determines, in good faith, that you have breached any
provision hereof. In the event the Company elects to terminate this
agreement for cause, it will provide you with seven (7) days written
notice.
5. MISCELLANEOUS. Upon the written request of either you or the Company,
the other party agrees to execute such other documents as you, the
Company, and our respective counsel reasonably deem necessary or
advisable to implement the terms of this letter. This agreement sets
forth the entire agreement between you and the Company regarding any
services you may render to the Company hereafter. This agreement may be
amended only by a written document signed by both you and the Company
and will be governed by the laws of the State of Maine.
If this letter accurately sets forth our understanding and agreement, would
you please sign both copies, return one to me, and keep one for your
records.
Sincerely yours,
s/Hugh G. Farrington
Hugh G. Farrington
President and
Chief Executive Officer
Seen and agreed to this
7th day of July, 1995.
s/Norman E. Brackett
Norman E. Brackett
Exhibit 15
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors and Shareholders of
Hannaford Bros. Co.:
We have reviewed the accompanying consolidated balance sheet of Hannaford
Bros. Co. and Subsidiaries as of July 1, 1995, and the related consolidated
statements of earnings for the three month and six month periods ended July 1,
1995, and July 2, 1994 and the consolidated statements of cash flows for the
six month periods then ended. These financial statements are the
responsibility of the Company's management.
We conducted our review in accordance with standards established by the
American Institute of Certified Public Accountants. A review of interim
financial information consists principally of applying analytical procedures
to financial data and making inquiries of persons responsible for financial
and accounting matters. It is substantially less in scope than an audit
conducted in accordance with generally accepted auditing standards, the
objective of which is the expression of an opinion regarding the financial
statements taken as a whole. Accordingly, we do not express such an opinion.
We previously audited and expressed an unqualified opinion on the Company's
consolidated financial statements for the year ended December 31, 1994 (not
presented herein). In our opinion, the information set forth in the
accompanying balance sheet as of December 31, 1994, is fairly stated in all
material respects, in relation to the statement of financial position from
which it has been derived.
Based on our review, we are not aware of any material modifications that
should be made to the accompanying financial statements for them to be in
conformity with generally accepted accounting principles.
s/Coopers & Lybrand L.L.P.
Portland, Maine
July 19, 1995
Exhibit 23
Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, DC 20549
RE: Hannaford Bros. Co.
Registrations on Form S-8
We are aware that our report dated July 19, 1995 on our review of interim
financial information of Hannaford Bros. Co. and Subsidiaries as of July 1,
1995 and for the six month periods ended July 1, 1995 and July 2, 1994, and
included in this Form 10-Q is incorporated by reference in the Company's
registration statements on Form S-8 (Numbers 2-77902, 2-77903, 2-98387,
33-1281, 33-22666, 33-31624, 33-45273, 33-60119, 33-60655 and 33-60691).
Pursuant to rule 436(c) under the Securities Act of 1933, this report should
not be considered a part of the Registration Statements prepared or certified
by us within the meaning of Sections 7 and 11 of that Act.
s/Coopers & Lybrand L.L.P.
Portland, Maine
August 7, 1995
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<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-30-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> JUL-01-1995
<CASH> 65,714
<SECURITIES> 0
<RECEIVABLES> 12,700
<ALLOWANCES> 225
<INVENTORY> 134,644
<CURRENT-ASSETS> 225,311
<PP&E> 796,014
<DEPRECIATION> 276,367
<TOTAL-ASSETS> 920,039
<CURRENT-LIABILITIES> 171,511
<BONDS> 219,202
<COMMON> 31,578
0
0
<OTHER-SE> 454,766
<TOTAL-LIABILITY-AND-EQUITY> 920,039
<SALES> 1,233,594
<TOTAL-REVENUES> 1,233,594
<CGS> 934,585
<TOTAL-COSTS> 934,585
<OTHER-EXPENSES> 232,397
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<INTEREST-EXPENSE> 10,287
<INCOME-PRETAX> 56,325
<INCOME-TAX> 22,736
<INCOME-CONTINUING> 33,589
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