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 December 30, 1995
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 reports), 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 6, 1996, was $842,408,601. This calculation
assumes that all shares of Common Stock beneficially held by directors and
executive officers of the Registrant are owned by "affiliates".
As of March 6, 1996, there were 42,290,090 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 14, 1996.
Exhibit Index on Page: 50
<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 1995, were $2,568 million, an
increase of 12.1% over last year's sales and other revenues of $2,292
million. Comparable same store sales were up 2.5% for fiscal year 1995 as
compared to an increase of 1.6% in 1994.
In July 1994, the Registrant acquired Wilson's Supermarkets based in
Wilmington, North Carolina. The purchase included 20 food stores in North
and South Carolina, five additional store sites and several shopping center
properties. During 1995, the Registrant constructed seven new food stores,
acquired six existing food stores and has purchased or leased a number of
other new store sites in the southeast region. These actions represent a
strategic decision by the Registrant to diversify its business outside of
its traditional Northeast market area.
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 2.1% of total sales in 1995. Other revenues
from such activities as trucking, real estate and retail services amounted
to about 1.3% of total sales.
FINANCIAL INFORMATION ABOUT INDUSTRY SEGMENTS
The Registrant, through its operations and those of its subsidiaries, is
principally involved in the retail food business. 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 is a multi-regional food retailer, with 134 supermarkets
located throughout Maine and New Hampshire, and in parts of New York,
Massachusetts, Vermont, Virginia, North Carolina and South Carolina. Its
stores are operated primarily under the names Shop 'n Save, Hannaford and
Wilson's. 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 74 pharmacies within the Registrant's supermarkets
and combination stores.
Of the Registrant's 100 supermarkets in the northeastern region of the
United States, 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 71 combination stores with selling areas ranging from
22,300 to 61,700 square feet. These combination stores offer under one roof
the traditional all-department supermarket, together with a bakery, video
rental center and other services, as well as expanded lines of general
merchandise.
The Registrant operates 34 supermarkets in Virginia, North Carolina and
South Carolina. Twenty of these stores were acquired by the Registrant in
July 1994, six were acquired in September 1995 and eight were newly
constructed. These stores range in size from 16,300 to 48,700 square feet
of selling area. In 1996, the Registrant expects to open several new stores
in North Carolina and Virginia and will expand or relocate a number of
others.
<PAGE>
The following tables set forth certain statistical information regarding the
Registrant's operations at the dates indicated:
FISCAL YEAR
NUMBER OF STORES 1991 1992 1993 1994 1995
Supermarkets
Beginning 89 88 93 93 118
Opened 3 7 4 10 13
Closed (2) (2) (4) (5) (3)
Sold (2) 0 0 0 0
Acquired 0 0 0 20 6
Ending 88 93 93 118 134
Drug Stores
Beginning 41 42 6 3 0
Opened 1 1 0 0 0
Closed (1) (3) (2) (3) 0
Sold 0 (34) (1) 0 0
Acquired 1 0 0 0 0
Ending 42 6 3 0 0
FISCAL YEAR-END
AVERAGE SQUARE FEET 1991 1992 1993 1994 1995
OF SELLING AREA
PER STORE
Supermarkets 26,700 28,200 29,800 30,100 31,100
Drug Stores 6,000 4,900 5,000 0 0
TOTAL SQUARE FEET OF
SELLING AREA
Supermarkets 2,347,000 2,619,000 2,771,000 3,547,000 4,166,000
Drug Stores 252,000 29,000 15,000 0 0
<PAGE>
As illustrated by the foregoing tables, the Registrant has continued to
expand its food store operations.
During 1995, net selling square footage increased 17.5%. In addition to the
acquisition of six supermarkets, the Registrant opened ten new food stores
with selling areas ranging from 33,300 square feet to 48,700 square feet.
In addition, three existing stores were relocated to larger, new facilities.
During 1996, the Registrant intends to open thirteen new food stores, three
of which will be located in the northeastern market area and ten in the
southeast. The new stores will range from 33,500 square feet to 46,000
square feet of selling area. The Registrant will also relocate two of its
existing stores in the northeast and four in the southeast to new
facilities. It is expected that net retail selling area will increase
approximately 14% in 1996.
As part of its ongoing expansion program, the Registrant will also consider
the acquisition of additional supermarkets, if attractive opportunities
become available.
The Registrant's distribution facilities which support its retail operations
include:
1. An owned distribution facility in South Portland, Maine which 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 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.
2. An owned distribution center and office facility in Schodack, New York,
which services certain store locations in New York, Vermont, New Hampshire
and Massachusetts. 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.
Although approvals have been received to expand this facility to
approximately 1,200,000 square feet, the Registrant has no current plans to
do so. 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>
3. An owned 200,000 square foot distribution facility in Winthrop, Maine.
This facility distributes health and beauty care products, specialty foods,
pharmaceuticals and some general merchandise to all of the Registrant's
retail outlets. This facility has converted from a conventional management
system to a team-based one similar to that used in the Schodack, New York,
distribution center.
During 1996, the Registrant will construct a 450,000 square foot
distribution facility in Butner, North Carolina. This new facility will
service its retail stores in Virginia, North Carolina and South Carolina
with grocery, dairy, frozen food, meat and fruits and vegetables. The
Registrant will own this facility which has sufficient land for future
expansion.
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.
Innovation in operating systems for competitive advantage 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 seeks to be an industry leader in the application of new
technology and systems to improve customer service, productivity and
financial information.
Raw materials, as such, are not essential to the business of the Registrant.
The Registrant sells private brand products under the names "Shop 'n
Save(R)" and "Hannaford(R)". During 1996, the Registrant intends to
complete the conversion of its primary private brand from "Shop 'n Save(R)"
to "Hannaford(R)", for use throughout its marketing territory.
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 9 of Notes to Consolidated Financial Statements.)
Inventory levels are maintained at distribution centers 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.
At the retail level, the Registrant's supermarkets are in direct competition
with regional, national and local food and drug chains, as well as
"supercenters", some of which have greater resources than the Registrant,
<PAGE>
and 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.
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. Wholesale sales are not
material.
No material expenditures were made during fiscal 1993, 1994 or 1995 on
research activities relating to new or improved products, services or
techniques.
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 December 30, 1995, the Registrant had approximately 7,100 full-time
and 13,300 part-time employees.
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 owns the locations of 59 of its 134 food stores and leases
the remaining 75 stores. It owns all 3 of its current distribution
facilities and leases its general office facility in Scarborough, Maine.
The Registrant will own its distribution facility in North Carolina which is
under construction. The Registrant's properties are located in Maine, New
Hampshire, Vermont, northeastern Massachusetts, eastern upstate New York,
southern Virginia, North Carolina and northeastern South Carolina. The
Registrant believes that its properties are well maintained and are
appropriate for its business needs.
The number of stores and facilities operated and the square feet of space at
December 30, 1995, consisted of:
Square Square Footage
Footage Selling
Units Gross Area Area
(in thousands)
Stores 134 5,871 4,166
Distribution and
administrative facilities 4 1,420 --
Total 138 7,291 4,166
The following table sets forth expiration dates of leased facilities,
assuming exercise of all renewal options:
Lease Administrative
Expiration Food stores Facilities
1996-2005 4
2006-2015 8
2016-thereafter 63 1
75 1
Further information concerning the Registrant's distribution facilities
appears under Item 1 at pages 5-6 above, which information is incorporated
herein by reference.
<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 1995.
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. 64 Chairman of the Board 04/28/60
Mr. Moody was elected Chairman of the Board in 1984. He also served in the
capacity of Chief Executive Officer from 1973 until 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 51 President 09/30/77
Chief Executive Officer
Mr. Farrington was elected President in 1984 and designated Chief Executive
Officer in 1992. He had held the position of Chief Operating Officer from
1984 to 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.
RICHARD A. ANICETTI 38 Senior Vice President & 08/10/94
General Manager,
Southeast Operations
Mr. Anicetti was elected Senior Vice President and General Manager,
Southeast Operations in December 1995. He had been Senior Vice President,
Retail Operations for the southeast since 1994 and Vice President - Retail
Operations/General Manager, New Hampshire and Massachusetts from 1989 to
1994. He has been employed by the Registrant since 1980 in various retail
management capacities.
<PAGE>
SERVED AS AN EXECU-
NAME AGE POSITION TIVE OFFICER SINCE:
PAUL A. FRITZSON 42 Senior Vice President, 01/02/92
Marketing, Merchandising
& Distribution
Mr. Fritzson was elected Senior Vice President, Marketing, Merchandising and
Distribution in December 1995. He had been Senior Vice President, Marketing
since 1994, Vice President - Marketing from 1992 to 1994 and Vice President,
General Merchandise from 1990 to 1992. He had served previously in various
staff and merchandising capacities since 1978.
RONALD C. HODGE 48 Senior Vice President, 08/10/94
Northeast Operations
Mr. Hodge was elected Senior Vice President, Northeast Operations in
December 1995. He had been Senior Vice President, Retail Operations since
1994 and Vice President - Retail Operations/General Manager, New York and
Vermont from 1989 to 1994. He has been employed by the Registrant in
various retail management capacities since 1980.
JAMES J. JERMANN 51 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.
BLYTHE J. MCGARVIE 39 Senior Vice President, 11/14/94
Chief Financial Officer
Ms. McGarvie was elected Senior Vice President and designated Chief
Financial Officer in May 1995. She joined the Registrant as Senior Vice
President - Finance in November 1994. From 1991 to 1994 she was Chief
Administrative Officer for the Pacific Rim Group of Sara Lee Corporation.
From 1985 to 1991 she was employed by Kraft General Foods in various finance
positions.
LARRY A. PLOTKIN 45 Senior Vice President, 10/06/81
Corporate Development
Mr. Plotkin was elected Senior Vice President, Corporate Development in May
1995. He had been Senior Vice President, Development & Planning from 1992
to 1995, Senior Vice President, Development and Finance from 1990 to 1992,
Vice President from 1989 to 1990, Vice President Wellby Super Drug Stores
from 1987 to 1989 and Vice President Corporate Development from 1981 to
1987. He has been employed by the Registrant since 1972 in various real
estate capacities.
<PAGE>
SERVED AS AN EXECU-
NAME AGE POSITION TIVE OFFICER SINCE:
MICHAEL J. STROUT 41 Senior Vice President, 12/19/94
Human Resources
Mr. Strout rejoined the Registrant as Senior Vice President, Human Resources
in December 1994. From 1990 through 1994 he was Vice President - Human
Resources and later Senior Vice President - Human Resources at Topps
Markets, Inc., Buffalo, New York. From 1985 to 1990 Mr. Strout had been
employed by the Registrant in various Human Resource management positions.
ANDREW P. GEOGHEGAN, ESQ. 45 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 in 1992. From 1979 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.
ANDREW N. WESTLUND 43 Vice President, 10/04/92
Distribution
Mr. Westlund was elected Vice President, Distribution in 1992. He served as
Vice President - Warehousing in 1992 after holding the position of Director,
Warehouse Operations-New York since his employment in 1989. He was
previously employed by Super Valu, Minneapolis, Minnesota as Warehouse
Manager.
LARRY A. WILSON 37 Vice President, Wilson's 08/10/94
Mr. Wilson was elected Vice President, Wilson's in August 1994. For more
than five years prior to that date he held various executive positions with
Wilson's Supermarkets located in Wilmington, North Carolina.
<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 1994 and 1995.
QUARTERLY
SALE PRICE DIVIDENDS
HIGH LOW PER SHARE
1st Quarter, 1994 $26.250 $21.000 .095
2nd Quarter, 1994 24.000 19.750 .095
3rd Quarter, 1994 24.625 21.375 .095
4th Quarter, 1994 26.625 23.000 .095
1st Quarter, 1995 $27.000 $24.875 .105
2nd Quarter, 1995 29.000 24.750 .105
3rd Quarter, 1995 28.500 25.000 .105
4th Quarter, 1995 26.875 23.875 .105
There are approximately 13,000 record holders of the Common Stock. Fiscal
1995 was the forty-seventh consecutive year that dividends were paid on the
Common Stock and the thirty-third consecutive year that the aggregate
dividend paid per share (after adjusting for stock splits) has increased.
On February 13, 1996, the Board of Directors voted to increase the quarterly
dividend to $.12 per share for the dividend due to be paid on March 21,
1996. Future dividends will depend on the Registrant's earnings and
financial condition.
<PAGE>
<TABLE>
Item 6. Selected Financial Data
<CAPTION>
Fiscal Year
1995 1994 1993 1992 1991
(In thousands except per share amounts)
EARNINGS STATEMENT DATA:
<S> <C> <C> <C> <C> <C>
Sales and other revenues................................. $2,568,061 $2,291,755 $2,054,889 $2,066,023 $2,007,960
Cost of sales............................................ 1,951,248 1,728,499 1,543,932 1,552,155 1,513,130
Gross margin............................................. 616,813 563,256 510,957 513,868 494,830
Selling, general and administrative expense.............. 481,017 437,548 399,437 411,487 401,451
Operating profit......................................... 135,796 125,708 111,520 102,381 93,379
Interest expense, net.................................... 19,368 21,360 19,337 20,711 20,743
Earnings before income taxes............................. 116,428 104,348 92,183 81,670 72,636
Income taxes............................................. 46,227 42,060 37,578 32,476 29,286
Earnings before cumulative effect
of change in accounting principle...................... 70,201 62,288 54,605 49,194 43,350
Cumulative effect of accounting change................. - - 2,100 - -
Net earnings............................................. $ 70,201 $ 62,288 $ 56,705 $ 49,194 $ 43,350
Per common share(1):
Earnings before cumulative effect of accounting change $ 1.67 $ 1.50 $ 1.33 $ 1.21 $ 1.08
Cumulative effect of accounting change................ - - .05 - -
Net earnings.......................................... $ 1.67 $ 1.50 $ 1.38 $ 1.21 $ 1.08
Cash dividends........................................ $ .42 $ .38 $ .34 $ .30 $ .26
Weighted average number of common shares outstanding(1).. 42,092 41,544 41,049 40,520 39,939
<CAPTION>
December December January January December
30, 1995 31, 1994 1, 1994 2, 1993 28, 1991
BALANCE SHEET DATA: (Dollar amounts in thousands except per share data)
<S> <C> <C> <C> <C> <C>
Working capital.......................................... $ 23,512 $ 42,707 $ 118,830 $ 105,187 $ 68,140
Total assets............................................. 961,830 877,605 795,355 768,596 705,516
Current maturities:
Long-term debt........................................ 11,246 14,409 7,180 7,015 6,006
Obligations under capital leases...................... 1,467 1,382 1,412 1,387 1,480
Long-term debt, excluding current maturities............. 150,648 153,687 156,716 171,578 165,252
Obligations under capital leases, excluding current
maturities............................................. 69,747 69,552 58,835 54,930 49,315
Redeemable preferred stock of a subsidiary............... - - 1,883 2,781 2,781
Shareholders' equity..................................... 518,677 454,475 396,715 345,796 297,801
Book value per share(1).................................. $ 12.26 $ 10.88 $ 9.63 $ 8.48 $ 7.42
(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
Overview
In 1995, the Company continued to grow its business as evidenced by
increases of 12.1% in sales and other revenues and 12.7% in net earnings
when compared to 1994 financial results. The increase in net earnings was
achieved despite costs associated with the Company's significant expansion
in the Southeast and continuing competitive pressures throughout its
marketing territories. Programs to build sales and reduce the cost of doing
business continue to yield positive results. In 1995, the Company added
17.5% to its supermarket selling area and currently expects to add
approximately 14% in 1996.
<PAGE>
The following table sets forth for the years indicated the percentages which
selected items in the consolidated statements of earnings are to 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 1995 Fiscal 1994
Fiscal Year Compared to Compared to
1995 1994 1993 Fiscal 1994 Fiscal 1993
100.0% 100.0% 100.0% Sales and other revenues 12.1 11.5%
24.0 24.6 24.9 Gross margin 9.5 10.2
Selling, general and
18.7 19.1 19.4 administrative expenses 9.9 9.5
5.3 5.5 5.5 Operating profit 8.0 12.7
0.8 1.0 1.0 Interest expense, net (9.3) 10.5
4.5 4.5 4.5 Earnings before income taxes 11.6 13.2
1.8 1.8 1.8 Income taxes 9.9 11.9
Earnings before cumulative
effect of change in
2.7 2.7 2.7 accounting principle 12.7 14.1
Cumulative effect of change
-- -- 0.1 in income tax accounting -- --
2.7% 2.7% 2.8% Net earnings 12.7 9.8
$1.67 $1.50 $1.38 Earnings per common share 11.3 8.7
<PAGE>
Sales
Sales and other revenues rose 12.1% in 1995, to $2,568 million, an increase
of $276 million over 1994 results. Retail sales increased $277 million or
12.6% to $2,481 million, reflecting an increase of $53 million or 2.5% in
sales from supermarkets that were open in both periods presented ("same
store sales") and additional sales of $224 million from the net impact of
new, expanded, acquired and closed stores. Other sales and revenues, which
include trucking, wholesale, real estate and miscellaneous retail
operations, decreased $1.0 million in 1995.
The same store sales increase of 2.5% continues a positive trend that
started in 1993. Fourth quarter 1995 same store sales increased 2.6% in
comparison to fourth quarter 1994 due to strong sales throughout the period.
These increases were achieved despite low overall food inflation, intense
supermarket competition in the Company's marketing territories and expanding
"supercenter" competition.
In 1994, sales and other revenues were $2,292 million, an increase of $237
million or 11.5% over 1993 results. Retail sales increased $241 million or
12.3%. Excluding the sales and other revenues from Wilson's Supermarkets,
which was acquired in July, 1994, the Company's sales and other revenues
were up 5.8% for the year. Same store sales reflected an increase of 1.6%.
Other sales and revenues, which include trucking, wholesale, real estate and
miscellaneous retail operations, decreased $4 million in 1994.
Gross Margin
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.
Gross margin decreased in 1995 to 24.0% of sales and other revenues in
comparison to 24.6% in 1994. This decrease in margins continues a trend
that began in the second half of 1993. The decrease primarily reflects
lower gross margins earned by the Company's southeastern operations and
competitive pricing strategies.
Gross margins decreased in 1994 to 24.6% of sales and other revenues in
comparison to 24.9% in 1993. Competitive pressure and its resulting impact
upon pricing strategies accounted for the significant portion of this
decrease.
<PAGE>
Selling, General and Administrative Expenses
Selling, general and administrative expenses decreased to 18.7% of sales and
other revenues in 1995 as compared to 19.1% in 1994. This continues a
downward trend that began in 1992 when selling, general and administrative
expenses were 19.9% of sales and other revenues. Payroll and payroll
related expenses, which exceeded 50% of selling, general and administrative
expenses in both years, decreased as a percentage of sales in 1995 as
compared to 1994. This decrease reflects cost containment efforts coupled
with synergies resulting from the Company's recent acquisition and
corresponding sales growth.
Selling, general and administrative expenses decreased to 19.1% of sales and
other revenues in 1994 as compared to 19.4% in 1993. Payroll and payroll
related expenses were primarily responsible for this decrease. The 1994
reduction was also favorably impacted by the operations of Wilson's
Supermarkets.
Interest Expense, Net
Net interest expense expressed as a percentage of sales and other revenues
was 0.8% in 1995, 1.0% in 1994 and 1.0% in 1993. Net interest expense
consists of the following:
(In thousands)
1995 1994 1993
Interest on debt $15,302 $16,508 $17,249
Capital lease interest 9,105 8,615 7,230
Capitalized interest (2,529) (1,669) (1,530)
Interest income (2,510) (2,094) (3,612)
$19,368 $21,360 $19,337
Net interest expense in 1995 was $19.4 million, a decrease of 9.3% from 1994
net interest expense of $21.4 million. This decrease is primarily the
result of a decrease in average debt levels coupled with a rise in
construction activity which is reflected as an increase in capitalized
interest.
<PAGE>
Net interest expense in 1994 was $21.4 million, an increase of 10.5% from
1993 net interest expense of $19.3 million, reflecting a decrease in
interest income coupled with an increase in capital lease interest. The
decrease in interest income in 1994 is the result of a lower level of
invested funds in 1994 as compared to 1993. The Company utilized the
majority of its invested funds when it acquired Wilson's Supermarkets in
July 1994. The increased capital lease interest resulted from the Company
entering into several long-term leases for new supermarkets.
Income Taxes
The provision for income taxes includes both federal and state income taxes.
The effective tax rate decreased in 1995 to 39.7% from 40.3% in 1994. This
lower effective tax rate is the result of a reduction in the Company's
overall state income tax rate. The effective tax rate decreased in 1994 to
40.3% from 40.8% in 1993. The higher effective tax rate in 1993 was due
primarily to a temporary reduction in 1993 of certain state income tax
credits. Assuming there are no federal or state income tax rate changes,
the Company expects the effective tax rate for 1996 and thereafter to be in
the 39% to 40% range.
During the first quarter of 1993, the Company adopted SFAS NO. 109 -
ACCOUNTING FOR INCOME TAXES. The cumulative effect of this adjustment,
which increased net earnings by $2.1 million, is reflected in 1993 results.
Net Earnings and Earnings Per Common Share
Net earnings increased 12.7% in 1995 to $70.2 million or 2.7% of sales and
other revenues, an increase of $7.9 million from 1994 net earnings of $62.3
million or 2.7% of sales and other revenues. This increase is the result of
increased sales and reduced selling, general and administrative expenses
expressed as a percentage of sales, offset by a reduction in gross margin
percentage.
Net earnings rose 9.8% in 1994 to $62.3 million, an increase of $5.6 million
over 1993 net earnings of $56.7 million. Excluding the change in accounting
for income taxes, 1994 net earnings increased 14.1% over those reported for
1993.
Net earnings per common share in 1995 were $1.67 as compared to $1.50 in
1994, an increase of 11.3%.
Net earnings per common share in 1994 were $1.50 as compared to $1.38 in
1993, an increase of 8.7%. Excluding the change in accounting for income
taxes, net earnings per common share in 1994 increased 12.8% over 1993
results.
<PAGE>
Other Items and Impact of Inflation
Seasonal business affects the Company's operations in that sales are
generally greater in the second half of the year (Note 9).
In recent years, the impact of inflation on the Company's operating results
has been minimal, reflecting generally lower rates of inflation in the
economy. The Company's business is characterized by large purchases and
high sales volumes extended across diverse product lines, rapid inventory
turns and low profit margins. In this environment, vendor price changes are
typically passed on immediately to the customer. The Company does not
believe inflation or deflation has significantly affected its competitive
position in the industry. However, since price changes do cause sales
dollars to fluctuate, the use of the LIFO method of accounting for
inventories reduces the impact of price changes on earnings by matching
current costs with current revenues.
CAPITAL RESOURCES AND LIQUIDITY
Overview
Measures of liquidity for each of the last three fiscal years are as
follows:
(Dollars in millions)
December 30, December 31, January 1,
1995 1994 1993
Cash and cash items $ 7.0 $41.0 $ 77.5
Short-term investments -- -- $ 19.9
Working capital (FIFO inventory) $39.1 $57.1 $133.6
Unused lines of revolving credit $63.6 $50.0 $ 50.0
Unused lines of short-term credit $43.9 $21.6 $ 22.0
Current ratio (FIFO inventory) 1.23 1.36 1.98
Management believes that the Company is maintaining a strong capital
structure despite the decrease in overall liquidity measurements. These
reductions are primarily the result of the Company's acquisition and store
construction activities. Lines of credit represent a continuing source of
capital and are available for purposes of short-term financing. At December
30, 1995, the Company had $11.4 million outstanding on its revolving lines
of credit. In December 1995, the Company completed a $75 million debt
offering of senior uncollateralized notes. In February 1996, the Company
received $36 million of proceeds from this offering and will receive the
remaining proceeds of $39 million in May 1996. The notes call for varied
repayment terms for each of four tranches ranging from 7 to 20 years with a
weighted average interest rate of 6.6%. The additional senior
uncollateralized debt financing will maintain a capital structure that
management believes is a conservative position within the industry. The
Company is in a solid financial position to carry out its current expansion
and growth plans in 1996.
<PAGE>
Cash and cash items decreased $34.0 million to $7.0 million on December 30,
1995 from $41.0 million on December 31, 1994. This decrease is primarily
the result of cash used in investing and financing activities offset by cash
provided by operating activities.
In February 1993, the Company authorized a stock repurchase program with a
life of three years which expired at the end of 1995. During the three year
period, the Company did not buy any shares under the program. In February
1996, the Company renewed the repurchase program authorizing the purchase of
up to $75 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. Any shares repurchased by the Company
will be held as treasury shares and be available to the Company for use in
funding its stock based benefit plans, and when authorized, for other
corporate purposes. In 1996, it is management's intention to fund its stock
based benefit plans using repurchased shares. Previously, the Company used
new shares to fund certain benefit plans.
Cash Flows from Operating Activities
Cash provided by operating activities was $138.2 million, a decrease of $5.7
million from the $143.9 million provided in 1994. This decrease is
primarily attributable to an increased investment in certain working capital
items offset by improved results of operations, higher depreciation and
amortization, and an increase in accounts payable and accrued expenses.
These changes reflect the Company's growth during 1995. Inventories
increased $25.5 million when comparing December 30, 1995 with December 31,
1994. The acquisition of six supermarkets accounts for $3.7 million of the
increase. The remaining increase of $21.8 million is attributable to
additional retail inventory in new stores coupled with higher warehouse
levels needed to meet the retail expansion. Accounts payable and accrued
expenses increased $27.8 million over the same period. This increase is
primarily attributable to the overall expansion of the Company's retail
operations coupled with buying patterns and their associated payment terms.
Cash provided by operating activities was $143.9 million in 1994, an
increase of $52.4 million over the $91.5 million provided in 1993. This
increase is primarily attributable to improved results of operations and
higher depreciation and amortization coupled with a decreased investment in
working capital.
Cash Flows from Investing Activities
Cash used in investing activities decreased $12.0 million during 1995 to
$157.7 million from $169.7 million in 1994. This decrease is primarily the
result of the Company's 1994 acquisition of Wilson's Supermarkets. Total
capital investments totalled $162.3 million in 1995 and were composed of
$133.6 million in additions to property, plant and equipment, $26.7 million
in goodwill, deferred charges and computer software costs, and $2.0 million
in non-cash capital lease additions. These 1995 capital investments were
primarily composed of costs incurred in building and equipping new and
expanded supermarkets and in acquiring six supermarkets.
<PAGE>
Net retail selling space for food stores increased 17.5% in 1995 to
4,166,000 square feet at year-end, an increase of 619,000 square feet over
1994 year-end sales area. The Company acquired 6 supermarkets or 190,000
square feet of retail selling space from Farm Fresh, Inc. in September,
1995. In addition, the Company opened 13 new supermarkets while closing 3
smaller, outdated facilities. A number of 1995 supermarket construction
starts will not be completed until 1996. The number of supermarkets and
square footage of selling area at year-ends 1995, 1994 and 1993 are
summarized below:
FOOD STORES
Number of Square Footage
Units Selling Area
1995 134 4,166,000
1994 118 3,547,000
1993 93 2,771,000
Newly constructed supermarkets in 1995, together with their square footage
of selling area, are listed below:
Square Footage
Location Selling Area
Northeast
Brunswick, ME 32,000
Skowhegan, ME 33,000
West Peabody, MA 33,000
Glenville, NY 38,000
South Troy, NY 33,000
Nashua, NH 48,000
Southeast
Fayetteville, NC 36,000
High Point, NC 34,000
Charlotte, NC 49,000
Raleigh, NC (Strickland Rd.) 34,000
Virginia Beach, VA 34,000
Richmond, VA 47,000
Raleigh, NC (Capital Blvd.) 47,000
<PAGE>
Cash used in investing activities increased $82.7 million during 1994 to
$169.7 million from $86.9 million in 1993. This increase is primarily the
result of acquiring Wilson's Supermarkets. The acquisition, net of the
reduction in short-term investments used to finance it, accounted for $75.5
million of the increase.
Cash Flows from Financing Activities
Cash used in financing activities was $14.5 million in 1995, an increase of
$3.7 million over the $10.8 million reported in 1994. This increase is the
result of a reduction in proceeds from long-term debt partially offset by a
reduction in payments on long-term debt. During 1995, the Company received
$11.4 million in proceeds from borrowings on its revolving lines of credit.
In 1994, the Company received $25.0 million in senior uncollateralized debt
financings. In 1995, the Company made payments of $18.4 million on its
long-term debt as compared to $26.6 million in 1994. During both years the
Company made debt payments in early extinguishments and prepayments on
certain debt in addition to regular debt payments (Note 2). The Company
paid $17.7 million in dividends to common shareholders in 1995. These
amounts were offset by proceeds of $11.7 million received during 1995 from
the issuance of approximately 519,000 shares of common stock. These shares
were issued under certain employee stock plans (Note 7) and per agreement
with the Sobey Parties (Note 5).
Quarterly cash dividends declared during 1995 totalled $.42 per common
share, an increase of 10.5% over the $.38 per share declared during 1994.
This was the thirty-third 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 1995 represented 25.2% of net
earnings available to common shareholders. In February 1996, the Company
declared an increased quarterly dividend on its common stock of $.12 per
share, payable March 21, 1996. The new quarterly dividend of $.12 per share
represents an increase of 14.3% over the $.105 per share paid in March 1995.
Cash used in financing activities was $10.8 million in 1994 as compared to
$21.8 million in 1993. This decrease is primarily the result of proceeds of
$25.5 million from the issuance of long-term debt in 1994 offset by an
increase of $11.9 million in payments on long-term debt.
<PAGE>
1996 Capital Program
Total capital expenditure commitments are projected to be in excess of $200
million in 1996, primarily for new, relocated and expanded store
construction, a Southeast distribution facility, equipment, vehicles and
other asset expenditures. During 1996, this program will be subject to
continuing change and review as conditions warrant. Net square footage of
retail selling space is expected to increase by approximately 14% during
1996. In addition, a number of projects scheduled to start in 1996 will not
be completed until 1997. The 1996 capital program is expected to be
financed by internally generated funds, long-term debt 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 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 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 December 30, 1995 and December 31, 1994,
and the consolidated results of their operations and their cash flows for
each of the three years in the period ended December 30, 1995, in conformity
with generally accepted accounting principles.
In 1993, the Company changed its method of accounting for income taxes and
recorded the cumulative effect of the change in the Consolidated Statement
of Earnings.
s/Coopers & Lybrand
Portland, Maine
January 17, 1996
<PAGE>
HANNAFORD BROS. CO. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
ASSETS
(In thousands)
December 30, December 31,
1995 1994
Current assets:
Cash and cash items $ 7,017 $ 40,955
Accounts receivable, net 15,556 14,240
Inventories (note 1C) 157,968 132,423
Prepaid expenses 7,217 6,210
Deferred income taxes (note 8) 6,584 7,519
Total current assets 194,342 201,347
Property, plant and equipment, net (notes 1D
and 2) 577,126 503,941
Leased property under capital leases, net 56,691 58,821
(note 3)
Other assets:
Goodwill, net (note 1F) 93,348 78,075
Deferred charges, net (note 1G) 27,484 23,473
Computer software costs, net (note 1H) 10,063 8,382
Miscellaneous assets 2,776 3,566
Total other assets 133,671 113,496
$961,830 $877,605
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)
December 30, December 31,
1995 1994
Current liabilities:
Current maturities of long-term debt (note 2) $ 11,246 $ 14,409
Obligations under capital leases (note 3) 1,467 1,382
Accounts payable 113,846 89,927
Accrued payroll 20,652 19,017
Other accrued expenses 23,619 29,738
Income taxes - 4,167
Total current liabilities 170,830 158,640
Deferred income tax liabilities (note 8) 23,229 21,886
Other liabilities 28,699 19,365
Long-term debt (note 2) 150,648 153,687
Obligations under capital leases (note 3) 69,747 69,552
Shareholders' equity (notes 5 and 7):
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 42,298,230
shares at December 30, 1995, and
41,779,342 shares at December 31, 1994 31,724 31,335
Additional paid-in capital 121,974 110,669
Preferred stock purchase rights 423 418
Retained earnings 364,556 312,053
Total shareholders' equity 518,677 454,475
$961,830 $877,605
See accompanying notes to consolidated financial statements.
<PAGE>
HANNAFORD BROS. CO. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EARNINGS
(In thousands except per share amounts)
FISCAL YEAR
1995 1994 1993
Sales and other revenues $2,568,061 $2,291,755 $2,054,889
Cost of sales 1,951,248 1,728,499 1,543,932
Gross margin 616,813 563,256 510,957
Selling, general and administrative
expenses 481,017 437,548 399,437
Operating profit 135,796 125,708 111,520
Interest expense, net (notes 1I and 2) 19,368 21,360 19,337
Earnings before income taxes 116,428 104,348 92,183
Income taxes (note 8) 46,227 42,060 37,578
Earnings before cumulative effect of
change in accounting principle 70,201 62,288 54,605
Cumulative effect to January 3, 1993
of change in income tax accounting -- -- 2,100
Net earnings $ 70,201 $ 62,288 $ 56,705
Per share of common stock:
Earnings before cumulative effect of
change in accounting principle $ 1.67 $ 1.50 $ 1.33
Cumulative effect to January 3, 1993
of change in income tax accounting -- -- .05
Net earnings $ 1.67 $ 1.50 $ 1.38
Cash dividends $ .42 $ .38 $ .34
Weighted average number of common shares
outstanding 42,092 41,544 41,049
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 Preferred Stock Retained
Shares Amount Capital Purchase Rights Earnings
<S> <C> <C> <C> <C> <C>
Balance, January 2, 1993 40,776 $30,582 $91,673 $408 $223,133
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 issued under employee
benefit plans 268 201 4,548
Shares issued through redemption
of preferred stock 40 30 867
Balance, January 1, 1994 41,211 30,908 99,748 412 265,647
Net earnings 62,288
Cash dividends:
Redeemable preferred stock (74)
Common stock (15,802)
Preferred stock purchase rights 6 (6)
Shares issued to certain shareholders
per agreement 143 108 3,152
Shares issued under employee
benefit plans 332 249 5,839
Shares issued in the acquisition of
Wilson's Supermarkets 93 70 1,930
Balance, December 31, 1994 41,779 31,335 110,669 418 312,053
Net earnings 70,201
Cash dividends:
Common stock (17,693)
Preferred stock purchase rights 5 (5)
Shares issued to certain shareholders
per agreement 132 99 3,376
Shares issued under employee
benefit plans 387 290 7,929
Balance, December 30, 1995 42,298 $31,724 $121,974 $423 $364,556
See accompanying notes to consolidated financial statements.
</TABLE>
<PAGE>
HANNAFORD BROS. CO. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
1995 1994 1993
Cash flows from operating activities:
Net income $ 70,201 $ 62,288 $ 56,705
Adjustments to reconcile net
income to net cash provided
by operating activities:
Depreciation and amortization 69,016 62,756 56,353
Cumulative effect of accounting
change - - (2,100)
Decrease (increase) in inventories (25,545) 6,372 (5,060)
Decrease (increase) in receivables and
prepayments (1,196) 6,903 (4,232)
Increase (decrease) in accounts payable
and accrued expenses 27,821 4,988 (6,038)
Increase (decrease) in income
taxes payable (5,409) 2,274 (4,652)
Increase (decrease) in deferred
taxes 2,279 (1,466) 1,619
Other operating activities 1,059 (178) (1,097)
Net cash provided by
operating activities 138,226 143,937 91,498
Cash flows from investing activities:
Acquisition of Wilson's Supermarkets,
net of cash acquired - (110,201) -
Acquisition of property, plant
and equipment (133,587) (83,969) (70,891)
Sale of property, plant and
equipment, net 2,607 9,641 6,498
Increase in goodwill and deferred
charges (22,599) (2,308) (4,569)
Increase in computer software costs (4,130) (2,676) (3,133)
Decrease (increase) in short-term
investments - 19,855 (14,852)
Net cash used in investing
activities (157,709) (169,658) (86,947)
Cash flows from financing activities:
Principal payments under capital
lease obligations (1,404) (1,359) (1,362)
Proceeds from issuance of long-
term debt 11,400 25,500 -
Payments of long-term debt (18,452) (26,550) (14,697)
Issuance of common stock 11,694 9,348 8,402
Dividends paid (17,693) (15,876) (14,187)
Redemption of preferred stock - (1,883) -
Net cash used in
financing activities (14,455) (10,820) (21,844)
Net decrease in cash and
cash items (33,938) (36,541) (17,293)
Cash and cash items at beginning of year 40,955 77,496 94,789
Cash and cash items at end of year $ 7,017 $ 40,955 $ 77,496
See accompanying notes to consolidated financial statements.
<PAGE>
HANNAFORD BROS. CO. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
Supplemental disclosure of cash flow information
Acquisition of Wilson's Supermarkets, net of cash acquired:
(In thousands)
Working capital, other than cash $ 9,894
Property, plant and equipment 36,919
Goodwill 72,233
Other liabilities (2,345)
Note payable (4,500)
Issuance of common stock (2,000)
Net cash used to acquire Wilson's Supermarkets $110,201
Cash paid during the year for:
(In thousands)
1995 1994 1993
Interest (net of amount capitalized,
$2,529 in 1995, $1,669 in 1994 and
$1,530 in 1993 $21,986 $24,205 $23,468
Income taxes 49,254 41,286 40,529
Supplemental disclosure of noncash investing and financing activities
Capital lease obligations totalling $1,997,000, $12,480,000 and $5,404,000
were incurred during 1995, 1994 and 1993, respectively, when the Company
entered into real estate leases. Non-cash debt obligations totalling
$5,250,000 were incurred during 1994 primarily in the Company's
acquisition of Wilson's Supermarkets. In addition, the Company issued
$2,000,000 in common stock in the acquisition of Wilson's Supermarkets.
Disclosure of accounting policy
For the purposes of the Consolidated Statements of Cash Flows, the Company
considers all highly liquid debt instruments with maturities of three
months or less when purchased, to be cash items.
<PAGE>
HANNAFORD BROS. CO. AND SUBSIDIARIES
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, prescription drugs and related
products through supermarkets and combination stores. The Company's stores
are located in Maine, New Hampshire, Vermont, Massachusetts, upstate New
York, Virginia, North Carolina and South Carolina.
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 December 30, 1995, for fiscal year 1995,
December 31, 1994, for fiscal year 1994 and January 1, 1994, for fiscal year
1993. All significant intercompany accounts and transactions have been
eliminated in consolidation.
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities at
the date of the financial statements and the reported amounts of revenues
and expenses during the reporting periods. Actual results could differ from
those estimates.
C. 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 1995 and in 1994. 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 $15,608,000 at December 30, 1995 and
$14,343,000 at December 31, 1994.
<PAGE>
HANNAFORD BROS. CO. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(continued)
D. PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment is recorded at cost and depreciated using 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 1995 1994
2% Land and improvements $ 90,430 $ 81,667
3% Buildings 228,858 203,645
12% Furniture, fixtures and equipment 333,492 294,792
4% Leasehold interests and improvements 188,730 169,178
Construction in progress 16,179 6,193
857,689 755,475
Less accumulated depreciation
and amortization 280,563 251,534
$577,126 $503,941
E. 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 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.
F. GOODWILL
Goodwill, which represents the excess of costs of companies acquired over
the fair value of their net assets at dates of acquisition, is being
amortized on the straight-line method over various periods not exceeding 20
years. The Company evaluates, on an ongoing basis, the carrying value of
goodwill and would make a specific provision when impairment is identified.
The Company has not recognized any provision for impairment of goodwill.
Impairment would include the inability to generate operating income
sufficient to cover the amortization of goodwill, and in management's
<PAGE>
HANNAFORD BROS. CO. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(continued)
judgment, the business would not recover from this position. Impairment
would also be identified in the event of an unexpected loss on the sale of a
business. Goodwill amortization expense charged to operations was
$4,448,000 in 1995, $2,533,000 in 1994 and $843,000 in 1993.
G. DEFERRED CHARGES
Deferred charges 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, if ultimately developed, 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 amortized on the straight-line method over the
base lease terms.
Amortization expense related to these deferred charges was $5,609,000 in
1995, $5,483,000 in 1994 and $4,944,000 in 1993.
H. CAPITALIZED COMPUTER SOFTWARE COSTS
Capitalized computer software costs consist 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 $2,448,000 in 1995,
$3,085,000 in 1994 and $3,116,000 in 1993.
I. CAPITALIZED INTEREST
The Company capitalizes interest as a part of the cost of acquiring and
constructing certain assets. Capitalized interest was $2,529,000 in 1995,
$1,669,000 in 1994 and $1,530,000 in 1993.
J. 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 $74,000 in 1994 and $220,000 in
1993 on redeemable preferred stock of a subsidiary. All of the remaining
outstanding shares of preferred stock were redeemed in 1994, so there were
no preferred dividends paid in 1995.
<PAGE>
HANNAFORD BROS. CO. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(continued)
K. FAIR VALUE DISCLOSURES ABOUT FINANCIAL INSTRUMENTS
The following methods and assumptions were used by the Company in estimating
its fair value disclosures for financial instruments:
Cash and cash items 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 $161,900,000 at
December 30, 1995. The fair value of the long-term debt is estimated
to be $178,100,000 at December 30, 1995.
<PAGE>
HANNAFORD BROS. CO. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(continued)
2. EXTERNAL FINANCING
At December 30, 1995, the Company had revolving credit lines with several
banks totalling $75 million with interest rates determined by different
borrowing options including prime, quoted money market or LIBOR plus a
premium. At December 30, 1995, there were $11.4 million of 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 .21% 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 four banks totalling $48 million at December 30, 1995. Of this amount,
approximately $4.1 million is reserved to support outstanding standby
letters of credit which guarantee payment of certain insurance claims and
premiums.
During 1995, the Company extinguished certain debt, collateralized by real
estate and held by an insurance company, totalling $2,776,000. This loan
had a term of 15 years and an interest rate of 9.00%. Also, during 1995,
the Company made prepayments on certain debt, collateralized by real estate
and equipment, totalling $1,379,000. These loans had terms ranging from 7
to 20 years and interest rates between 9.5% and 10.2%.
In February 1996, the Company received approximately one-half of the
proceeds of a $75,000,000 senior uncollateralized debt financing, with the
balance to be received in May 1996. The terms of these notes range from 7
to 20 years, with a weighted average life of 9 years. Interest rates on the
notes vary from 6.2% to 7.1% with a weighted average rate of 6.6%. The
amounts of annual principal payments vary over the terms of the loans.
At December 30, 1995, real estate and equipment with a net book value of
approximately $98,951,000 served as collateral for debt of approximately
$90,544,000.
Net interest expense was as follows:
(In thousands)
1995 1994 1993
Interest on debt $15,302 $16,508 $17,249
Capital lease interest 9,105 8,615 7,230
Capitalized interest (2,529) (1,669) (1,530)
21,878 23,454 22,949
Less interest income (2,510) (2,094) (3,612)
Interest expense, net $19,368 $21,360 $19,337
<PAGE>
HANNAFORD BROS. CO. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(continued)
Long-term debt consists of the following:
(In thousands)
1995 1994
Collateralized by real estate, due in
varying installments through 2011 with
interest from 7.55% to 10.35% $ 80,294 $ 86,777
Uncollateralized senior notes due in varying annual
installments through 2006 with interest from
8.42% to 8.97%. 51,750 59,000
Collateralized by equipment, due in varying
installments through 1999 with interest
from 6.3% to 10% 10,250 13,006
Uncollateralized revolving credit loans with
interest at 6.2%. 11,400 -
Other 8,200 9,313
161,894 168,096
Less current portion 11,246 14,409
$150,648 $153,687
The uncollateralized 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 December 30, 1995, are as follows:
(In thousands)
1996 $ 11,246
1997 15,241
1998 16,989
1999 19,674
2000 17,563
2001 and thereafter 81,181
$161,894
<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)
1995 1994
Real property $76,457 $76,552
Less accumulated amortization 19,766 17,731
Net real property under capital leases $56,691 $58,821
Amortization of property under capital leases was $3,866,000 in 1995,
$3,526,000 in 1994 and $3,132,000 in 1993.
Future minimum rental payments under capital lease obligations and operating
leases at December 30, 1995, are as follows:
(In thousands)
Capital Operating
Leases Leases
1996 $ 10,580 $ 16,951
1997 10,679 15,272
1998 10,662 13,835
1999 10,858 13,377
2000 10,974 12,731
2001 and thereafter 120,934 138,032
Total minimum lease payments 174,687 210,198
Less:
Imputed interest (at rates
from 6.50% to 21.13%) 103,470
Estimated executory costs 3
Present value of net mini-
mum lease payments 71,214
Less current obligations 1,467
Long-term obligations $ 69,747
<PAGE>
HANNAFORD BROS. CO. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(continued)
Minimum payments for leases have not been reduced by minimum sublease
rentals of $1,917,000 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)
1995 1994 1993
Capital leases:
Contingent rentals $ 166 $ 379 $ 650
Operating leases:
Minimum rentals 13,847 11,578 12,409
Contingent rentals 517 291 435
Rentals from subleases (222) (344) (344)
14,142 11,525 12,500
$14,308 $11,904 $13,150
<PAGE>
HANNAFORD BROS. CO. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(continued)
4. ACQUISITION OF WILSON'S SUPERMARKETS
In July 1994, the Company acquired Boney Wilson & Sons, Inc. which operates
20 supermarkets in southeastern North Carolina and northeastern South
Carolina. The acquisition has been accounted for as a purchase, and
accordingly the assets acquired and liabilities assumed have been recorded
at their estimated fair values on the date of acquisition. The total cost
of the acquisition, including assumed liabilities was $126,739,000, which
exceeded the fair value of the acquired net assets by $72,233,000. The
excess has been recorded as goodwill and amortized utilizing the straight
line method over 20 years. Included within the assets acquired was
$3,947,000 of cash and $4,570,000 of cash advances to certain wholesalers.
Proforma unaudited results of operations of the Company, assuming the
acquisition had occurred on January 1, 1994, and January 2, 1993, are as
follows:
Unaudited
(In thousands except per share data) 1994 1993
Net sales $2,385,837 $2,242,741
Earnings before cumulative effect
of change in accounting principle $ 63,124 $ 56,907
Net earnings $ 63,124 $ 59,007
Per share of common stock:
Earnings before cumulative effect
of change in accounting principle $ 1.52 $ 1.38
Cumulative effect of change in
accounting principle -- .05
Net earnings $ 1.52 $ 1.43
The foregoing proforma data is not necessarily indicative of what would have
occurred had the acquisition been consummated at the beginning of each year,
nor of future operations of the combined companies.
<PAGE>
HANNAFORD BROS. CO. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(continued)
5. CAPITAL STOCK
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, 1996. 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 Company to maintain a 25.6% level of
ownership. Since 1993 the Company has issued to the Sobey Parties the
following shares of common stock pursuant to their purchase rights under the
agreement: 1995, 132,000 shares; 1994, 143,000 shares; and 1993, 127,000
shares. All sales to the Sobey Parties pursuant to the standstill
agreement have been made at market prices.
<PAGE>
HANNAFORD BROS. CO. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(continued)
6. EMPLOYEE BENEFIT PLANS
The Company has a non-contributory, defined benefit pension plan covering
approximately 50% of its employees. The plan provides for payment of
retirement benefits on the basis of employees' length of service and
earnings. The Company's policy is to fund the plan based upon legal
requirements and tax regulations. Plan assets consist of common stocks,
cash and cash equivalents and fixed income investments. At September 30,
1995 and 1994, the plan's measurement dates, the discount rates used in
determining the actuarial present values of the projected benefit
obligations were 7.75% and 8%, respectively; the long term rate of increase
in compensation levels was 4.5% in both years. The expected long term rate
of return on plan assets used in determining net pension expense was 9% for
1995 and 1994 and 8.5% for 1993.
The components of net pension expense were as follows:
(In thousands)
1995 1994 1993
Service cost $ 4,248 $ 4,547 $ 3,197
Interest expense 4,916 4,882 3,993
Actual return on plan assets (8,566) (682) (5,229)
Net amortization and deferral 3,769 (3,670) 1,454
Net pension expense $ 4,367 $ 5,077 $ 3,415
<PAGE>
HANNAFORD BROS. CO. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(continued)
The following summarizes the funded status of the plan at December 30, 1995
and December 31, 1994:
(In thousands)
1995 1994
Actuarial present value of
benefit obligations:
Vested benefit obligation $48,144 $43,340
Accumulated benefit obligation $49,378 $44,756
Projected benefit obligation $67,880 $62,041
Plan assets at fair value 62,766 56,894
Plan assets less than
projected benefit obligation 5,114 5,147
Unrecognized net asset
at transition 396 440
Unrecognized net loss (841) (5,254)
Unrecognized prior service cost (2,129) (2,160)
Accrued (prepaid) pension cost $ 2,540 $(1,827)
<PAGE>
HANNAFORD BROS. CO. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(continued)
The Company also provides certain health care and life insurance benefits
for retired employees. The discount rates used to determine the accumulated
benefit obligation at September 30, 1995 and 1994, the plan's measurement
date, were 7.75% and 8%, respectively. A 7% annual rate of increase in the
per capita costs of covered health care was assumed for 1996, gradually
decreasing to 5% by the year 2003. A 1% increase in the assumed rate of
increase would not have a material effect on the benefit obligation or
expense. The Company does not separately fund this plan.
The components of postretirement benefit expense were as follows:
(In Thousands)
1995 1994 1993
Service cost $ 65 $ 82 $ 117
Interest expense 530 686 901
Net amortizations 231 497 553
Net periodic postretirement
benefit expense $ 826 $ 1,265 $ 1,571
The following summarizes the funded status of the plan at December 30, 1995
and December 31, 1994:
(In thousands)
1995 1994
Accumulated benefit obligation:
Retirees $ 4,432 $ 7,403
Actives - eligible to retire 582 461
Actives - not eligible to retire 964 1,230
Total obligation 5,978 9,094
Unrecognized transition obligation (9,400) (9,952)
Unrecognized net gain 4,849 1,918
Accrued postretirement benefit liability $ 1,427 $ 1,060
The Company also provides a defined contribution 401(k) plan to
substantially all employees. Amounts charged to expense for this plan were
$2,744,000 in 1995, $2,277,000 in 1994 and $2,063,000 in 1992. The Company
also administers a supplemental executive retirement plan for which the cost
was not significant.
<PAGE>
HANNAFORD BROS. CO. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(continued)
7. EMPLOYEE STOCK PLANS
The 1985 Incentive Stock Option Plan and the 1988 Stock Plan provide for the
granting to officers and other key employees options to purchase common
stock at 100% of the market price on the date of grant. The 1988 Stock Plan
allows the granting of both incentive stock options and non-qualified stock
options. Under the Incentive Stock Option Plans, options for 50% of any
grant are exercisable after one year and the remainder after two years.
Non-qualified options may have various vesting schedules, but generally none
are exercisable until one year following the grant. All options may be
exercised for cash or by exchanging currently owned shares, or both. Under
the 1988 Plan, exchanged shares may be regranted as non-qualified options.
Original option grants expire from seven to ten years from the date of
grant. Non-qualified stock option activity was not material. Incentive
stock option activity for the fiscal years ended December 30, 1995 and
December 31, 1994, was as follows:
1995 1994
Shares Option Price Shares Option Price
Outstanding at
beginning of year 1,184,740 $10.59-23.38 982,782 $10.59-22.63
Granted 335,636 26.75 367,501 21.63-23.38
Exercised (137,338) 10.59-23.38 (143,695) 10.59-22.63
Cancelled (20,777) 23.63-26.75 (21,848) 10.59-23.38
Outstanding at end
of year 1,362,261 13.50-26.75 1,184,740 10.59-23.38
Exercisable at end
of year 859,526 13.50-23.38 717,144 10.59-22.63
Available for future
grants 1,308,846 - 224,105 -
The 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 1995, employees purchased 95,499 shares, for which
$1,887,776 was paid to the Company. As of December 30, 1995, grants had
been exercised by employees for the purchase of 105,200 shares. As of
February 1996, $2,213,145 had been received by the Company upon issuance of
these shares. At December 30, 1995, 307,279 shares remain available for
issuance under the Plan.
<PAGE>
HANNAFORD BROS. CO. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(continued)
In 1995, the Financial Accounting Standards Board issued "Statement of
Financial Accounting Standard (SFAS) No. 123 - Accounting for Stock Based
Compensation". This statement requires a fair value based method of
accounting for employee stock options and would result in expense
recognition for the Company's employee stock plans. It also permits a
Company to continue to measure compensation expense for such plans using the
intrinsic value based method as prescribed by Accounting Principles Board
opinion No. 25 (APB No. 25), "Accounting for Stock Issued to Employees".
Companies electing to continue following the accounting rules of APB No. 25
must make pro forma disclosures of net income and earnings per share, as if
the fair value based method for accounting as defined in SFAS No. 123 had
been applied. The Company has elected to continue to measure its cost using
APB No. 25 and, as required, will disclose the impact of SFAS No. 123 with
its 1996 financial statements.
<PAGE>
HANNAFORD BROS. CO. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(continued)
8. INCOME TAXES
The components of the provision for income taxes were as follows:
(In thousands)
1995 1994 1993
Current
Federal $35,689 $34,585 $29,118
State 8,259 9,100 6,732
43,948 43,685 35,850
Deferred
Federal 2,024 (1,209) 842
State 255 (416) 886
2,279 (1,625) 1,728
Total income tax expense $46,227 $42,060 $37,578
The reconciliation of income tax computed at the United States Federal
statutory tax rates to income tax expense is:
(In thousands)
1995 1994 1993
Amount Percent Amount Percent Amount Percent
Tax at U.S.
statutory rate $40,750 35.00% $36,522 35.00% $32,264 35.00%
State income taxes,
net of federal tax
benefit 5,530 4.75 5,645 5.41 4,973 5.39
Other - net (53) (.05) (107) (.10) 341 .37
$46,227 39.70% $42,060 40.31% $37,578 40.76%
<PAGE>
HANNAFORD BROS. CO. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(continued)
Deferred income taxes arise because of differences in the treatment of
income and expense items for financial reporting and income tax purposes.
Significant components of the Company's deferred tax assets and liabilities
for the fiscal years ended December 30, 1995 and December 31, 1994 were as
follows:
(In thousands)
1995 1994
Deferred Tax Liabilities:
Depreciation and amortization $33,240 $32,113
Other 4,496 2,325
37,736 34,438
Deferred Tax Assets:
Capital leases (5,938) (5,072)
Insurance reserves (9,379) (9,742)
Associate benefit plans (3,922) (3,576)
Other (1,852) (1,681)
(21,091) (20,071)
16,645 14,367
Net current deferred tax assets 6,584 7,519
Net non-current deferred tax liabilities $23,229 $21,886
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>
<TABLE>
HANNAFORD BROS. CO. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(continued)
9. SELECTED QUARTERLY FINANCIAL DATA (UNAUDITED)
The following is a presentation of selected financial data for each of
the four quarters of fiscal years 1995, 1994 and 1993. During 1993, the
Company adopted SFAS NO. 109 - ACCOUNTING FOR INCOME TAXES. The
cumulative effect of this adjustment, which increased net earnings by
$2,100,000 or $.05 per share, is reflected in the first quarter of 1993.
<CAPTION>
(In thousands except per share amounts)
First Second Third Fourth
Quarter Quarter Quarter Quarter
1995
<S> <C> <C> <C> <C>
Sales and other revenues...... $598,796 $634,798 $653,879 $680,588
Gross margin...................... 145,954 153,055 155,410 162,394
Net earnings...................... 14,564 19,025 19,714 16,898
Per common share............. $ .35 $ .45 $ .47 $ .40
Weighted average common shares
outstanding..................... 41,888 42,049 42,168 42,263
1994
Sales and other revenues...... $519,078 $538,216 $622,554 $611,907
Gross margin...................... 125,745 134,132 151,612 151,767
Net earnings...................... 11,059 15,409 19,102 16,718
Per common share............. $ .27 $ .37 $ .46 $ .40
Weighted average common shares
outstanding..................... 41,316 41,463 41,655 41,745
1993
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
</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 14, 1996.
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 14, 1996.
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 14, 1996.
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 14, 1996.
<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 - December 30, 1995 and
December 31, 1994.......................................... 25-26
Consolidated Statements of Earnings - Fiscal Years Ended,
December 30, 1995, December 31, 1994 and January 1, 1994... 27
Consolidated Statements of Changes in Shareholders'
Equity - Fiscal Years Ended, December 30, 1995,
December 31, 1994 and January 1, 1994...................... 28
Consolidated Statements of Cash Flows
- Fiscal Years Ended, December 30, 1995,
December 31, 1994 and January 1, 1994...................... 29-30
Notes to Consolidated Financial Statements.................... 31-48
Schedules I, II, III and IV are not included as they are not applicable.
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
Incorporated by reference to Exhibit 3.2 to the
<PAGE>
PAGES
Registrant's Annual Report on Form 10-K for the
fiscal year ended January 1, 1994 (SEC File
No. 1-7603).
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).
NOTE: Compensatory plans and arrangements and management contracts are
filed as Exhibits 10.2 through 10.21 below.
10.2 - There are incorporated herein by reference (i) 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); (ii) the First Amendment
to said 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 1, 1994 (SEC File No. 1-7603); (iii) the
Second Amendment to said Plan, 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 December 31, 1994 (SEC File No.
<PAGE>
PAGES
1-7603) and (iv) the Third Amendment to said Plan, a
copy of which was filed as Exhibit 10.3 to the Registrant's
Quarterly Report on Form 10-Q for the fiscal quarter ended
September 30, 1995 (SEC File No. 1-7603).
10.3 - There are incorporated herein by reference (i) the amended and
restated Supplemental Executive Retirement Plan, a copy of
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); (ii) the First Amendment to said
Plan, a copy of which was filed as Exhibit 10.5 to the
Registrant's Annual Report on Form 10-K for the fiscal
year ended December 31, 1994 (SEC File No. 1-7603) and (iii)
the Second Amendment to said Plan, which was filed as
Exhibit 10.4 to the Registrant's Quarterly Report on Form
10-Q for the fiscal quarter ended September 30, 1995 (SEC
File No. 1-7603).
10.4 - There are incorporated herein by reference (i) the Amended
and Restated Hannaford Bros. Co. Employee Stock Purchase
Plan, a copy of which was filed as Exhibit 10.6 to the
Registrant's Annual Report on Form 10-K for the fiscal
year ended December 31, 1994 (SEC File No. 1-7603); (ii)
the First Amendment to said Plan, a copy of which was
filed as Exhibit 10.1 to the Registrant's Quarterly Report
on Form 10-Q for the fiscal quarter ended July 1, 1995
(SEC File No. 1-7603) and (iii) the Second Amendment
to said Plan, a copy of which was filed as Exhibit 10.1
to the Registrant's Quarterly Report on Form 10-Q for
the fiscal quarter ended September 30, 1995 (SEC File
No. 1-7603).
10.5 - 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) the 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) the
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).
<PAGE>
PAGES
10.6 - There are incorporated herein by reference (i) the
Registrant's 1993 Long Term Incentive Plan, a copy of
which was filed as Exhibit 10.8 to the Registrant's
Annual Report on Form 10-K for the fiscal year ended
January 1, 1994 (SEC File No. 1-7603) and (ii) the
First Amendment to said Plan, a copy of which was
filed as Exhibit 10.9 to the Registrant's Annual
Report on Form 10-K for the fiscal year ended January
1, 1994 (SEC File No. 1-7603).
10.7 - 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 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).
10.8 - Amended and Restated Hannaford Bros. Co. Annual Incentive 59-63
Plan, effective December 7, 1995.
10.9 - 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); (ii)
the First Amendment to said Agreement, a copy of which
was filed as Exhibit 10.11 to the Registrant's Annual
<PAGE>
PAGES
Report on Form 10-K for the fiscal year ended January
2, 1993 (SEC File No. 1-7603) and (iii) the Second Amendment
to said Agreement, 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 31, 1994 (SEC File No. 1-7603).
10.10 - 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); (ii)
the First Amendment to said Agreement, 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) and (iii) the Second Amendment
to said Agreement, 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 31, 1994 (SEC File No.
1-7603).
10.11 - 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); (ii) the First
Amendment to Form of said Agreement, 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) and (iii) the Second
Amendment to form of said Agreement, a copy of which was
filed as Exhibit 10.16 to the Registrant's Annual Report
on Form 10-K for the fiscal year ended December 31, 1994
(SEC File No. 1-7603).
10.12 - 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).
10.13 - There are incorporated herein by reference (i) the Amended
and Restated Hannaford Savings and Investment Plan, 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
<PAGE>
PAGES
2, 1993 (SEC File No. 1-7603); (ii) the First Amendment to
said Plan, which was filed as Exhibit 10.19 to the
Registrant's Annual Report on Form 10-K for the fiscal
year ended December 31, 1994 (SEC File No. 1-7603);
(iii) the Second Amendment to said Plan, a copy of
which was filed as Exhibit 10.2 to the Registrant's
Quarterly Report on Form 10-Q for the fiscal quarter
ended July 1, 1995 (SEC File No. 1-7603); (iv) the Third
Amendment to said Plan, a copy of which was filed as
Exhibit 10.3 to the Registrant's Quarterly Report on
Form 10-Q for the fiscal quarter ended July 1, 1995
(SEC File No. 1-7603) and (v) the Fourth Amendment to
said plan (renamed the Hannaford Northeast Savings
and Investment Plan), a copy of which was filed as
Exhibit 10.2 to the Registrant's Quarterly Report
on Form 10-Q for the fiscal quarter ended September
30, 1995 (SEC File No. 1-7603).
10.14 - 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 Registration
Statement on Form S-8, dated June 8, 1995 (SEC
Registration No. 33-60119).
10.15 - There are incorporated herein by reference (i) 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)
and (ii) the First Amendment 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 January 1,
1994 (SEC File No. 1-7603).
10.16 - 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).
<PAGE>
PAGES
10.17 - There is incorporated herein by reference the Amended and
Restated Hannaford Bros. Co. 1988 Stock Plan, a copy of
which was filed as Exhibit 4.5 to the Registrant's
Registration Statement on Form S-8, dated June 27, 1995 (SEC
Registration No. 33-60655).
10.18 - 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 Registration Statement on Form S-8,
dated June 27, 1995 (SEC Registration No. 33-60691).
10.19 - 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 (SEC File No. 1-7603).
10.20 - There are incorporated herein by reference (i) a Letter
Agreement between the Registrant and Norman E. Brackett,
dated June 30, 1995, a copy of which was filed as Exhibit
10.7 to the Registrant's Quarterly Report on Form 10-Q for
the fiscal quarter ended July 1, 1995 (SEC File No. 1-7603)
and (ii) a Consulting Agreement between the Registrant
and Norman E. Brackett, dated June 30, 1995, a copy of
which was filed as Exhibit 10.8 to the Registrant's
Quarterly Report on Form 10-Q for the fiscal quarter
ended July 1, 1995 (SEC File No. 1-7603).
<PAGE>
PAGES
10.21 - There are incorporated herein by reference (i) a Letter
Agreement between the Registrant and Roger W. Hoyt, dated
June 1, 1994, a copy of which was filed as Exhibit 10.28
to the Registrant's Annual Report on Form 10-K for the fiscal
year ended December 31, 1994 (SEC File No. 1-7603) and (ii)
a Letter Agreement between the Registrant and Roger W. Hoyt,
dated August 15, 1994, a copy of which was filed as Exhibit
10.29 to the Registrant's Annual Report on Form 10-K for the
fiscal year ended December 31, 1994 (SEC File No. 1-7603).
21 - Subsidiaries of the Registrant............................ 64
23 - Consents of Accountants................................... 65
27 - Financial Data Schedule
(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/Blythe J. McGarvie
Blythe J. McGarvie
Sr. Vice President, Chief
Financial Officer
(Principal Financial Officer)
March 12, 1996
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 12, 1996 March 12, 1996
March 12, 1996
s/Walter J. Salmon s/Robert L. Strickland
s/Blythe J. McGarvie Walter J. Salmon Robert L. Strickland
Blythe J. McGarvie Director Director
Sr. Vice President, March 12, 1996 March 12, 1996
Chief Financial Officer
(Principal Accounting Officer)
March 12, 1996
s/Richard K. Lochridge s/Claudine B. Malone
Richard K. Lochridge Claudine B. Malone
s/Hugh G. Farrington Director Director
Hugh G. Farrington March 12, 1996 March 12, 1996
President
Chief Executive Officer
Director
March 12, 1996 s/Robert D. Bolinder
Robert D. Bolinder William A. Andres
Director Director
s/Bruce G. Allbright March 12, 1996 March , 1996
Bruce G. Allbright
Director
March 12, 1996 s/William T. End s/James W. Gogan
William T. End James W. Gogan
Director Director
March 12, 1996 March 12, 1996
Exhibit 10.8
SUMMARY OF AMENDMENT AND RESTATEMENT
OF THE
HANNAFORD BROS. CO. ANNUAL INCENTIVE PLAN
The Company's Annual Incentive Plan has been amended and restated in
the following respects:
- to eliminate provisions relating to an individual performance award;
- to reflect that the Chief Executive Officer and Chairman of the Board
receive the same basic award (percentage of base salary) as other
executive officers;
- to eliminate references to salary grades;
- to eliminate references to Wellby Super Drug Stores; and
- to make the plan document generally more flexible and concise by
conforming the style to that of the 1993 Long Term Incentive Plan.
<PAGE>
HANNAFORD BROS. CO.
ANNUAL INCENTIVE PLAN
(effective December 7, 1995)
1. PURPOSE. The purpose of this Plan is to provide additional
compensation as an incentive to employees upon whose efforts the continued
successful and profitable operations of Hannaford Bros. Co. and its
Subsidiaries are largely dependent, and to ensure the continued availability
of the services of such employees to Hannaford Bros. Co. and its
Subsidiaries.
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 6.
(b) "Basic Award" means the percentage of a Participant's base
salary, not exceeding 50%, determined by the Human Resources Committee
pursuant to Section 3.
(c) "Board" means the Board of Directors of the Company.
(d) "Budgeted Sales" means net sales and other revenues of an
Incentive Unit, as included in the Incentive Unit's annual operating
budget as accepted by the Board.
(e) "Committee" means the Human Resources Committee of the Board
of Directors.
(f) "Company" means Hannaford Bros. Co.
(g) "Employee" means an employee of the Company or a Subsidiary,
excluding any employee who participates in the Retail Management
Incentive Plan or whose employment is governed by a collective
bargaining agreement.
(h) "Incentive Unit" means an operating unit of the Company any/or
a Subsidiary or Subsidiaries as described in Section 4.
(i) "Participant" means an Employee to whom a Basic Award has been
made under the Plan.
(j) "Plan" means the Hannaford Bros. Co. Annual Incentive Plan, as
from time to time amended.
<PAGE>
(k) "Profit (Loss)" means the pre-tax profit (loss), determined
before any charges to income for payments to be made under this Plan or
under any other cash or deferred incentive plan, as such Profit (Loss)
is computed for public reporting purposes.
(l) "Subsidiary" means a corporation of which the Company owns
directly or indirectly at least 50 percent of the total combined voting
power of all classes of stock entitled to vote.
3. DESIGNATION OF BASIC AWARDS. The Committee shall designate which,
if any, Employees shall be Participants for a fiscal year and shall make a
Basic Award to each such Participant.
4. INCENTIVE UNIT. The Committee shall define an Incentive Unit for
each Participant in such manner as it deems appropriate. An Incentive Unit
shall include:
(a) for those Participants who are employed by the Company and
whose responsibilities influence all or a major portion of the
Company's consolidated operations, the Company and each Subsidiary
reflected in the consolidated financial statements of the Company;
(b) for other Participants, the department, division, Subsidiary
and/or portions thereof which are operated as separate profit centers,
for which separate books of account are maintained and, in the judgment
of the Committee, for which the Participant has direct operating
responsibility.
The Committee may define two Incentive Units for a Participant, in
which case the Incentive Unit for which the Participant is directly
responsible shall be referred to as the "Primary Incentive Unit" and such
Participant's other Incentive Unit shall be referred to as the "Secondary
Incentive Unit." The Primary Incentive Unit of a general manager shall be
the divisions and/or Subsidiaries for which he or she serves as general
manager, and the Secondary Incentive Unit shall be the Company and each
Subsidiary reflected in the consolidated financial statements of the
Company.
The Basic Award of a Participant for whom two Incentive Units have been
defined shall be allocated, in the discretion of the Committee, between such
Participant's Primary Incentive Unit and Secondary Incentive Unit.
5. BUDGETED PROFIT (LOSS) OF INCENTIVE UNIT. For each fiscal year
during which a Basic Award is in effect, a Profit (Loss) shall be budgeted
for each Incentive Unit as part of the annual planning process.
<PAGE>
6. ACTUAL AWARD. A Participant's Actual Award, if any, shall be
determined by the relationship of (i) the difference between actual Profit
(Loss) and budgeted Profit (Loss) to (ii) two percent of Budgeted Sales:
PA - PB
A = T[1+(.02(S))], where
A = Actual Award
T = Dollar Amount of Basic Award
PA= Actual Profit (Loss)
PB= Budgeted Profit (Loss)
S = Budgeted Sales
If two Incentive Units have been defined for a Participant, the Actual
Award shall be determined by applying the foregoing formula to the Primary
Incentive Unit (using the portion of the Basic Award allocated to such unit
as the factor "T") and to the Secondary Incentive Unit (using the portion of
the Basic Award allocated to such Unit as the factor "T").
The Committee shall have the right to adjust any one or more of the
above factors if it finds such adjustment necessary to provide fair and
equitable treatment of the interests of both the Participants and the
Company's shareholders.
In no event shall a Participant's Actual Award exceed 125 percent of
the Basic Award. Further, no Actual Award shall be paid if such award is
less than Eighty-Five percent (85%) of a Participant's Basic Award.
The Board shall have the right to adjust the Actual Award of any
Participant if, in its sole judgment, the Actual Award is inconsistent with
such Participant's performance during the fiscal year. In exercising this
discretion, the Board may rely on reports or other information furnished to
it, either directly or through the Committee, by the Chief Executive Officer
of the Company.
7. PAYMENT OF ACTUAL AWARDS. Except as hereinafter provided, Actual
Awards shall be paid in cash after the close of the fiscal year to which the
awards relate.
Prior to the payment of any Actual Award, the Board shall review the
amounts payable to determine (a) whether the consolidated earnings and
return on assets of the Company are adequate to justify such payments, and
(b) whether such payments, if made, would seriously impair the Company's
cash position.
If in its sole judgment, the Board determines that such earnings or
return are inadequate, or such cash position would be so impaired, it shall
have the right to disallow, in whole or part, any Award, and neither the
Company nor any Subsidiary shall have any obligation to any Participant for
any portion of an Award so disallowed.
<PAGE>
8. TRANSFERRED OR PROMOTED EMPLOYEE. The Committee may redefine an
Incentive Unit and designate a new Basic Award for a Participant who is
transferred or promoted. The Basic Award for each Incentive Unit defined
for such Participant shall be based on base salary received while included
in such Incentive Unit.
9. NEW EMPLOYEE. The Committee may define an Incentive Unit and
designate a Basic Award for an Employee who was not in the employ of the
Company or a Subsidiary on the first day of the fiscal year. Such award
shall be based on base salary received while included in such Incentive
Unit.
10. TERMINATION OF EMPLOYMENT. If a Participant terminates employment
with the Company and its Subsidiaries during a fiscal year because he or she
retires after attaining age 55 and completing 5 years of service, becomes
disabled or dies, such Participant's Actual Award, if any, shall be based on
base salary received during such fiscal year. Any Actual Awards payable to
a deceased Participant shall be paid to his or her estate.
If a Participant's employment terminates during a fiscal year for any
reason other than retirement, disability, or death, the Participant shall
forfeit any Actual Award otherwise payable, unless the Committee determines
that such Award shall be paid, in whole or in part, in accordance with this
Section.
11. GOVERNING LAW. This Plan shall be governed and construed in
accordance with the laws of the State of Maine.
12. AMENDMENT OR TERMINATION. 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 Actual Award to which the
Participant became entitled prior to the effective date of such action. An
amendment or termination may be given retroactive effect with respect to the
fiscal year in which it is adopted.
13. 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.
14. EFFECTIVE DATE. This amendment and restatement of the Plan shall
be effective December 7, 1995.
Exhibit 21
Hannaford Bros. Co. Parents and Subsidiaries
Percentage
State of Voting
of Securities
Registrant Incorporation Owned
Hannaford Bros. Co. Maine
Subsidiaries (1)
Athenian Real Estate Development, Inc. Virginia 100.00%(2)
Boney Wilson & Sons, Inc. North Carolina 100.00%(2)
Hannaford Trucking Company Maine 100.00%(2)
HHR, Inc. Massachusetts 100.00%(2)
Martin's Foods of South Burlington, Inc. Vermont 100.00%(2)
Plain Street Properties, Inc. Maine 100.00%(2)
Progressive Distributors, Inc. Maine 100.00%(2)
Shop 'n Save-Mass., Inc. Massachusetts 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.
Exhibit 23
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference in the Registration Statements
of Hannaford Bros. Co. and subsidiaries on Form S-8 (File Nos.
2-77902, 2-77903, 2-98387, 33-1281, 33-22666, 33-31624, 33-45273, 33-60119,
33-60655 and 33-60691) of our report dated January 17, 1996, on our audits
of the consolidated financial statements and financial statement schedules
of Hannaford Bros. Co. and subsidiaries as of December 30, 1995 and December
31, 1994, and for each of the three years in the period ended December 30,
1995, which report is included in this annual report on Form 10-K.
s/Coopers & Lybrand
Portland, Maine
March 12, 1996
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-30-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> DEC-30-1995
<CASH> 7,017
<SECURITIES> 0
<RECEIVABLES> 15,769
<ALLOWANCES> 213
<INVENTORY> 157,968
<CURRENT-ASSETS> 194,342
<PP&E> 857,689
<DEPRECIATION> 280,563
<TOTAL-ASSETS> 961,830
<CURRENT-LIABILITIES> 170,830
<BONDS> 220,395
0
0
<COMMON> 31,724
<OTHER-SE> 486,953
<TOTAL-LIABILITY-AND-EQUITY> 961,830
<SALES> 2,568,061
<TOTAL-REVENUES> 2,568,061
<CGS> 1,951,248
<TOTAL-COSTS> 1,951,248
<OTHER-EXPENSES> 481,017
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 19,368
<INCOME-PRETAX> 116,428
<INCOME-TAX> 46,227
<INCOME-CONTINUING> 70,201
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 70,201
<EPS-PRIMARY> 1.67
<EPS-DILUTED> 1.67
</TABLE>
